DEP Corp. v. Interstate Cigar Co., Inc., 730

• Decision Date: 01 May 1980
• Docket Number: D,No. 730,730
• Citation: 622 F.2d 621
• Parties: DEP CORPORATION, Plaintiff-Appellant, v. INTERSTATE CIGAR COMPANY, INC. and L. S. Amster & Company, Inc., Defendants- Appellees. ocket 79-7779.
• Court: U.S. Court of Appeals — Second Circuit

Page 621

622 F.2d 621

206 U.S.P.Q. 673

DEP CORPORATION, Plaintiff-Appellant, v. INTERSTATE CIGAR COMPANY, INC. and L. S. Amster & Company, Inc., Defendants- Appellees.

No. 730, Docket 79-7779.

United States Court of Appeals, Second Circuit.

Argued Feb. 21, 1980.

Decided May 1, 1980.

J. Lawrence Blades, New York City (Finley, Kumble, Wagner, Heine & Underberg, Donald S. Snider, New York City, of counsel), for plaintiff-appellant.

Noel W. Hauser, P. C., New York City, for defendants-appellees.

Before MOORE, MULLIGAN and MESKILL, Circuit Judges.

MULLIGAN, Circuit Judge:

A. & F. Pears Ltd. ("Pears") is a corporation organized and operating under the laws of Great Britain. For more than 100 years it has manufactured Pears Soap (a translucent bar soap) and other products. Pears is the owner of the tradename and mark "Pears" which is registered in the United States. Unilever Export Ltd. ("Unilever") is also a British corporation which has the exclusive right to distribute Pears Soap worldwide except for the United Kingdom, Australia, India and South Africa. On July 1, 1978 Unilever entered into an agreement with appellant DEP Corporation ("DEP"), a California corporation. Under this contract, DEP was appointed as Unilever's exclusive distributor of Pears Soap and, at the option of Unilever, of other Pears products in the United States and Puerto Rico. Shortly after this agreement was entered into, it came to the attention of DEP that the appellees, Interstate Cigar Company, Inc. and L. S. Amster & Company, Inc., related New York corporations collectively referred to hereinafter as "Interstate", were selling Pears Soap in the United States. It is conceded that the source of this soap is not DEP but European middlemen who are able to sell the soap at a price considerably less than that charged by DEP.

On August 20, 1979 DEP commenced an action in the United States District Court for the Eastern District of New York seeking injunctive relief and damages against Interstate. The first cause of action charged Interstate with trademark infringement in violation of the Lanham Trade-Mark Act of 1946, 15 U.S.C. § 1114 et seq. ("the Lanham Act"), and the second cause alleged common law unfair competition. Jurisdiction over the claims was grounded on the Lanham Act (15 U.S.C. § 1121), on 28 U.S.C. § 1338, and on diversity of citizenship (28 U.S.C. § 1332(a)). On the same day as the complaint was filed DEP sought by order to show cause a temporary restraining order and preliminary injunctive relief. Since no material issues of fact were raised at a hearing on September 5, 1979, trial on the merits was consolidated with the hearing on the preliminary injunction. On September 19, 1979, United States District Judge George C. Pratt denied the preliminary injunction and dismissed the complaint in its entirety. This appeal followed.

I

The dismissal of the trademark infringement action under the Lanham Act was based upon a finding that DEP lacked standing since it was not the owner of the trademark. It is undisputed that Pears is the owner of the trademark and has registered it in the United States. It is not a party to this action, nor did it enter into any agreements with DEP. Whatever interests DEP has in this matter are governed by its agreement with Unilever, the terms of which are quite explicit:

You (DEP) shall not during the continuance of this arrangement or thereafter have or claim any right whatsoever whether of user or otherwise to or in any such trade marks, trade names or brands used in connection with Products. . . . In the event of any infringement of any such trade marks, trade names or brands coming to your notice, you shall promptly notify us and shall take at our expense such steps as we may reasonably require for their protection.

(paragraph 6 of the Unilever-DEP agreement). Whatever rights Unilever may have to the Pears trademark do not appear in the record and Unilever is not a party to this action.

The Lanham Act (15 US.C. § 1114(1)) provides that an action for trademark infringement may only be brought by the "registrant," and further defines that term to include the legal representatives, predecessors, successors and assigns of the registrant. (15 U.S.C. § 1127). However paragraph 6 of the agreement, set forth supra, clearly provides that DEP has no rights whatsoever to or in the Pears trademarks, tradenames or brands. In the face of such explicit language, it is obvious that Pears is not an assignee expressly or impliedly of the trademark allegedly infringed by Interstate. ¹ In fact, the Lanham Act precludes the assignment of a registered trademark unless it is assigned with the good will of the business in which the mark is used, or with that part of the good will connected with the use of and symbolized by the mark. The assignment must further be in writing. (15 U.S.C. § 1060). There is obviously no sale here of the Pears business or good will and in fact the only writing we have seen negatives any interest whatever by DEP in the Pears mark.

Appellant relies upon G. H. Mumm Champagne v. Eastern Wine Corp., 142 F.2d 499 (2d Cir.), cert. denied, 323 U.S. 715, 65 S.Ct. 41, 89 L.Ed. 575 (1944) which held that the exclusive distributor in the eastern part of the United States of a French company's trademarked champagne had standing to bring a trademark infringement action against another domestic corporation which had imitated the foreign producer's distinctive mark. We note initially that this case was decided before the Lanham Act became effective. As we have already pointed out, a trademark infringement action may only be brought under the Act by the registrant or by his legal representative, predecessor, successor, or assignee. DEP fits none of these categories with respect to Pears. Moreover, G. H. Mumm Champagne is distinguishable from the instant situation since in that case the French company, which was not a party to the action by reason of its enemy alien status in World War II, had organized the domestic distributor plaintiff and owned 53% of its common stock and all of its preferred stock. 142 F.2d at 500. Further, according to the facts set forth in the district court opinion, the domestic distributor had been designated by the French company as the party upon whom process or notice of proceedings affecting the right to ownership of the trademark under the laws of the United States might be served. 52 F.Supp. 167, 168 (S.D.N.Y.1943). In the case at hand, DEP has no relationship at all with Pears, but rather only with Pears' major distributor, Unilever. Finally, we note that the contract between the French trademark owner and its domestic distributor in G. H. Mumm Champagne contained a clause similar to one quoted supra from the agreement between DEP and Unilever to the effect that the distributor shall notify the trademark owner of any conduct constituting infringement, and the trademark owner will determine what steps should be taken to protect its rights. However, an additional clause in the contract in the instant case flatly asserts that DEP has no claim or right whatsoever in the Pears mark, thus completely negating DEP's interest in the trademark and hence its standing to sue for infringement.

DEP also relies upon dictum in Quabaug Rubber Co. v. Fabiano Shoe Co., Inc., 567 F.2d 154, 159 (1st Cir. 1977) that "trademark infringement suits (may) be maintained by exclusive distributors and sellers of trademarked goods, i. e., 'exclusive licensees' who had a right by agreement with the owner of the trademark to exclude even him from...