DCA Food Industries Inc. v. Hawthorn Mellody, Inc.

• Decision Date: 03 May 1979
• Docket Number: No. 78 Civ. 2988 (CHT).,78 Civ. 2988 (CHT).
• Citation: 470 F. Supp. 574
• Parties: DCA FOOD INDUSTRIES INC., Plaintiff, v. HAWTHORN MELLODY, INC., Hawthorn Mellody Farms Dairy of Wisconsin, Inc., and H. M. D. Corporation, Defendants.
• Court: U.S. District Court — Southern District of New York

470 F. Supp. 574

DCA FOOD INDUSTRIES INC., Plaintiff, v. HAWTHORN MELLODY, INC., Hawthorn Mellody Farms Dairy of Wisconsin, Inc., and H. M. D. Corporation, Defendants.

No. 78 Civ. 2988 (CHT).

United States District Court, S. D. New York.

May 3, 1979.

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Amster, Rothstein & Engelberg, New York City, for plaintiff; Morton Amster, Daniel Ebenstein, Roy H. Wepner, Jay Bondell, New York City, of counsel.

Battle, Fowler, Jaffin, Pierce & Kheel by Gerald J. Fields, New York City, for defendants; Brownstein, Zeidman & Schomer by Donald A. Kaul, Washington, D. C., of counsel.

OPINION

TENNEY, District Judge.

In pursuit of the American dessert and snack food dollar, the plaintiff and the defendants have come to loggerheads over the use of the brand name YOZERT to identify their respective frozen yogurt products and ingredients. Plaintiff DCA Food Industries Inc. ("DCA") is a New York corporation that manufactures and sells, inter alia, a variety of dairy products and their ingredients. Defendants Hawthorn Mellody, Inc. ("Hawthorn Mellody"), H.M.D. Corporation ("HMD") and Hawthorn Mellody Farms Dairy of Wisconsin, Inc. ("Hawthorn Wisconsin") are related foreign corporations engaged in similar trade. Neither plaintiff nor defendants have federal registration for the name YOZERT.

The facts, derived from the Complaint, are as follows: in the spring of 1977, the plaintiff developed formulas for a line of frozen yogurt products and a program — including packaging and display — for the merchandising of these products to and through a market consisting of wholesalers, manufacturers and supermarket chains. Although the plaintiff initially thought to use its registered FUNZERT mark for the line, it chose YOZERT in early June 1977 after a registration search that revealed the availability of the term. In the middle of that month the plaintiff made its first shipment of YOZERT frozen whipped yogurt products in interstate commerce in order to establish its right to federal registration: at the same time it moved ahead with its merchandising efforts for the line. On August 29, 1977, plaintiff filed to register the name YOZERT with the United States Patent and Trademark Office.

In late September 1977, Hawthorn Wisconsin began to use the YOZERT name for some business relating to the sale of its frozen yogurt products: the plaintiff claims that this use was with knowledge of the plaintiff's prior adoption of the mark. In the middle of October, Hawthorn Wisconsin filed for federal registration of the mark, and plaintiff alleges that one or more of the defendants continued to use the YOZERT name in connection with the actual sale of frozen yogurt products. In April 1978, some time after plaintiff's counsel had formally apprised the defendants of plaintiff's assertion of rights in the mark, defendant HMD received a New York State trademark registration for YOZERT.

Asserting first rights in the mark, the plaintiff has now brought this federal action charging violation of section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), which prohibits false designations of origin and false descriptions of goods in interstate commerce. The plaintiff also claims trademark infringement and unfair competition under New York law and alleges dilution of the YOZERT trademark within the meaning of section 368-d of the New York General Business Law. It has asked for cancellation of the New York State trademark and for damages as a result of the allegedly fraudulent registration. Jurisdiction to hear the federal claim is asserted under 28 U.S.C. § 1338(a); the state claims are suggested alternatively under 28 U.S.C. § 1338(b) (pendent to a claim arising under the federal trademark law) or in this court's diversity jurisdiction, 28 U.S.C. § 1332.

All three defendants have moved to dismiss the Lanham Act charge on grounds that it fails to state a claim on which relief can be granted, Rule 12(b)(6), Federal Rules of Civil Procedure ("Rules"), and to dismiss the state claims on a variety of theories including loss of pendent jurisdiction if the Lanham Act claim falls. HMD and Hawthorn Wisconsin have further moved to dismiss for lack of in personam jurisdiction and for improper venue. Rules 12(b)(2) and (3). Alternatively, all three defendants have moved to transfer the proceedings to the United States District Court for the Northern District of Illinois. 28 U.S.C. §§ 1404(a) and/or 1406(a). For the following reasons, the motions are denied in toto.

The Federal Claim

Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), states in pertinent part:

Any person who shall . . . use in connection with any goods or services . . . a false designation of origin, or any false description or representation . . . and shall cause such goods or services to enter into commerce, and any person who shall with knowledge of the falsity . . . cause or procure the same to be . . . used in commerce . . ., shall be liable to a civil action . . . by any person who believes that he is or is likely to be damaged by the use of any such false description or representation.

The defendants claim that no cause of action is stated against them under this language because the mark in question is unregistered and because their names and addresses appear on their YOZERT labels. On the latter fact they reason that there can be no "false designation of origin" within the meaning of the statute.

This Court does not adopt so narrow and technical a reading of section 43(a) and neither have the cases construing the statute since it was passed. The court of appeals for this circuit has stated that section 43(a) embodies the congressional will to "create a special and limited unfair competition remedy . . . to protect the interests of a purely commercial class against unscrupulous commercial conduct." Colligan v. Activities Club of New York, Ltd., 442 F.2d 686, 692 (2d Cir.), cert. denied, 404 U.S. 1004, 92 S.Ct. 559, 30 L.Ed.2d 557 (1971). The ethos endorsed by the Colligan court is found in language which, it said, succinctly stated the import of § 43(a):

"You may not conduct your business in a way that unnecessarily or unfairly interferes with and injures another; you may not destroy the basis of genuine competition by destroying the buyer's opportunity to judge fairly between rival commodities by introducing such factors as false descriptive trademarks which are capable of misinforming as to the true qualities of the competitive products."

Id. at 692 n. 27, quoting Gold Seal Co. v. Weeks, 129 F.Supp. 928, 940 (D.D.C.1955), aff'd sub nom. S. C. Johnson & Son, Inc. v. Gold Seal Co., 97 U.S.App.D.C. 282, 230 F.2d 832 (D.C. Cir. 1956) (per curiam).

In Geisel v. Poynter Products Inc., 283 F.Supp. 261 (S.D.N.Y.1968), the court held that "section 43(a) provides relief against that kind of unfair competition which is analogous to the misappropriation or misuse of trade names or trademarks." Id. at 267. A right of action is provided against the

deceptive and misleading use of words, names, symbols, or devices, or any combination thereof, which have been adopted by a manufacturer or merchant to identify his goods and distinguish them from those manufactured by others.

Id., quoting Federal-Mogul-Bower Bearings Inc. v. Azoff, 313 F.2d 405, 409 (6th Cir. 1963).

Within this broad context it is difficult to see what could more fairly present a claim under section 43(a) than an alleged purloining and use interstate of a coined merchandise mark. The fact that the mark is not registered does not cut off a remedy under section 43(a). Apollo Distributing Co. v. Apollo Imports Inc., 341 F.Supp. 455, 458 (S.D.N.Y.1972), and cases cited therein. Moreover, there is ample precedent to address by this statute a dispute concerning the primacy of a mark. In Beech-Nut, Inc. v. Warner-Lambert Co., 480 F.2d 801, 803 (2d Cir. 1973), the claim involved two similarly named candy breath mints. Endorsing jurisdiction, the court remarked:

Despite considerable doubt created by the language of the statute as to whether . . . it covers mere trademark infringement and unfair competition, the many cases decided since its enactment leave no doubt that, as construed by the courts, the claims advanced here may properly be brought under section 43(a).

Id. at 803.

And, while there does not seem to be so clear an example of racing to the registry door as we have here, an analogous situation was resolved under this statute in Sutton Cosmetics (P. R.) v. Lander Co., 455 F.2d 285 (2d Cir. 1972). In that case the court endorsed the grant of a preliminary injunction under section 43(a) where the first user of an abandoned trademark exploited it for only five months prior to the junior user's adoption of the identical mark for identical goods. See also Apollo Distributing Co. v. Apollo Imports Inc., supra (section 43(a) invoked against junior user of unregistered mark where senior user had well established reputation using identical mark for similar goods); Mortellito v. Nina of California, Inc., 335 F.Supp. 1288 (S.D.N. Y.1972) (relief under this section where second comer with slightly different name found to have deliberately infringed plaintiff's good will in similar, but not identical, merchandising field); Scarves by Vera, Inc. v. United Merchants and Manufacturers, Inc., 173 F.Supp. 625 (S.D.N.Y.1959) (good cause of action under section 43(a) to protect common law rights in merchandise mark infringed by use of same mark, differently spelled).

The defendants urge, however, that the prophylactic purposes of section 43(a) cannot be invoked where, as here, the manufacturer's or distributor's name appears on the product. They rely on The American Rolex Watch Corp. v. Ricoh Time Corp., 491 F.2d 877 (2d Cir. 1974) ("Rolex"), a case of product design copy coupled with use of a somewhat similar trade symbol.¹ Under Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234, 84 S.Ct. 779,...