Donsco, Inc. v. Casper Corp.
| Decision Date | 31 October 1978 |
| Docket Number | 77-2550,Nos. 77-2549,s. 77-2549 |
| Citation | 199 U.S.P.Q. 705,587 F.2d 602 |
| Parties | DONSCO, INC., trading as John Wright, Inc., a Pennsylvania Corporation, Appellant and Cross-Appellee, v. CASPER CORPORATION, a New York Corporation and Casper Pinsker, Individually and doing business as Casper Imports, Appellees and Cross-Appellants. |
| Court | U.S. Court of Appeals — Third Circuit |
Manny D. Pokotilow, Caesar, Rivise, Bernstein & Cohen, Ltd., Philadelphia, Pa., for plaintiff-appellant and cross-appellee.
J. Stokes Adams, III, Hepburn, Ross, Wilcox & Putnam, Philadelphia, Pa., Marie V. Driscoll, Jeffrey W. Herrmann, Rogers, Hoge & Hills, New York City, for defendants-appellees and cross-appellants.
Before ADAMS, WEIS and HIGGINBOTHAM, Circuit Judges.
This case involves a conflict between two merchants dealing in reproductions of a very special type of Americana, mechanical penny banks from the turn of the century. Donsco, Inc. trading as John Wright, Inc. (Donsco) brought this action against Casper Corporation (Casper), Casper Pinsker (Pinsker) individually and Casper Pinsker doing business as Casper Imports, alleging that defendants have committed acts of unfair competition and false advertising. The district court below found that Casper Corporation had committed such acts and awarded Donsco $62,500 in damages as well as certain injunctive relief. Casper Pinsker was, however, held not to be personally liable. John Wright, Inc. v. Casper Corp., 419 F.Supp. 292 (E.D.Pa.1976). Both parties raise a series of objections to various aspects of the district court's decision. We will affirm the district court's finding of Casper Corporation's liability for unfair competition and false advertising. We will affirm as well the district court's refusal to allow counsel fees to Donsco and its refusal to hold Casper Corporation in contempt of the district court's injunction. We will reverse the district court's holding that Casper Pinsker is not individually liable for the wrongful acts involved here and we will remand to the district court for more specific findings as to damages.
In 1869 some enterprising entrepreneur (or perhaps doting grandfather) obtained the first patent on a cast-iron mechanical penny bank. Although this initial bank had only a simple balance mechanism, its progeny incorporated a variety of fancy and fanciful balance and spring devices. In the half-century after the first mechanical bank was patented, approximately 250 different models were made. Original penny banks from this era are now collectors items.
Beginning in 1957, pursuant to a promotional scheme conceived by a Mr. Lee Howard in cooperation with the Grolier Society, Inc., the publishers of The Book of Knowledge encyclopedia, a collection of original penny banks was assembled and replicas were made from the originals. The replicas were sold with a Certificate of Authenticity signed by Ellen V. McLoughlin, then Editor-in-Chief of The Book of Knowledge. That certificate read as follows:
This mechanical coin bank is an authentic reproduction of the original antique in the collection of The Book of Knowledge. The very same processes and technique which created the original have been employed in the making of this fine reproduction. Molds were painstakingly made from the original bank, handcast in sand, and this reproduction then hand-assembled and hand decorated.
Therefore, it is much more than merely a coin bank more than a toy. It is a replica of a product of ingenuity and craftsmanship. It is, indeed, a collector's item with historical interest and value.
Treasure it!
Ellen V. McLoughlin
Editor-in-Chief
In 1960, Howard's rights in connection with what came to be known as The Book of Knowledge Collection were sold to the Grey Iron Casting Company of Mt. Joy, Pennsylvania which had been making the replicas. John Wright, Inc. purchased Grey Iron in 1967. Donsco, Inc., a holding company, took over John Wright, Inc. in the early 1970's. With Grolier's tacit consent, the replicas continued to be sold under The Book of Knowledge name and the Certificate of Authenticity continued to be used even though Ellen V. McLoughlin was no longer editor of The Book of Knowledge and The Book of Knowledge Collection was no longer under the ownership of any one person or entity some banks are still owned by Grolier, others may be viewed at the Perelman Toy Museum in Philadelphia, Pennsylvania.
Until 1973, Donsco had only one competitor in the mechanical penny bank reproduction market. In 1972, Casper Pinsker and three others formed Casper Corporation to manufacture and market penny banks. After an abortive attempt to have copies made by a Japanese manufacturer, arrangements were made for manufacture in Taiwan. These banks were first marketed, in January 1973, at a trade show under the name of a middle level retailer. Later in 1973, Casper began a direct mail-order campaign under the name "Casper's Collector's Society." Casper commissioned Richard Buehrer to design a certificate of authenticity for its banks. Pinsker gave Buehrer background material including a catalogue in which The Book of Knowledge Certificate of Authenticity was reproduced.
The resulting certificate used by Casper in the marketing of its penny banks contained the following text:
The mechanical coin bank accompanied by this certificate is an exact and authentic duplicate reproduction of the original antique. Your mechanical coin bank will bear objective comparison with originals in museums and banks of record described in collector's references and in "Old Penny Banks," Library of Congress Catalog Card No. 60-13061.
It is further certified that the same techniques, processes and skills were used in making this fine replica. Molds were skillfully made by professional craftsmen like the originals and then hand-cast, after which this bank was assembled and carefully decorated by hand. It was then tested and inspected to be certain it is in good working order and free of flaws and defects often found in cast metal.
It is, furthermore, more than a mere toy coin bank, it is a true replica of the skill and ingenuity of the late 19th Century and truly a treasured collector's item of considerable historical value and interest.
The district court concluded that although Donsco holds no trademark for its Certificate of Authenticity, that certificate constitutes "trade dress" and is protected against imitation under Pennsylvania's law of unfair competition. To make out a claim for unfair competition, the two central elements are secondary meaning (that the certificate of authenticity is associated in the public's mind with The Book of Knowledge Collection) and likelihood of confusion. The district court found that Donsco's "long, intensive, exclusive, and highly-publicized use and promotion of its Book of Knowledge-endorsed certificate of authenticity between the years 1957 and 1972 created a secondary meaning for that certificate . . . ." John Wright, supra, 419 F.Supp. at 318. The district court also found a likelihood of confusion relying on the degree of similarity between the two certificates, Casper's intent in using the certificate, the comparative use and marketing of the two certificates and the degree of care likely to be used by purchasers. John Wright, supra, 419 F.Supp. at 319-20, citing to Section 729 of the Restatement of Torts as cited in Goebel Brewing Co. v. Esslinger's Inc., 373 Pa. 334, 95 A.2d 523 (1953). The court also considered evidence of actual confusion including unsolicited letters to Donsco from shop owners and customers "asking if (or assuming that) Casper banks, advertised as 'certified, authentic' replicas with a certificate of authenticity (but with no manufacturer's name given), are (Donsco's) banks." John Wright, supra, 419 F.Supp. at 321. There was also evidence that copywriters writing advertisements for Casper banks mistakenly included copy relating to The Book of Knowledge in its copy. Id. at 322.
The district court further found that section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), was violated by Casper's use of its certificate because such use amounts to a "false designation of origin" in that customers are deceived into believing that Casper's banks are made by Donsco. The court also found that Casper violated 43(a) in that it committed several acts of false advertising.
There is sufficient evidence in the record to support the factual findings made by the district court and we conclude, therefore, that those findings are not clearly erroneous. Furthermore, the district court made no errors of law in concluding on the basis of these factual findings that Casper Corporation had committed acts of unfair competition and false advertising. Therefore we hold that the district court did not err in finding Casper Corporation liable for acts of unfair competition and false advertising.
We will now examine the district court's conclusions as to the personal liability of Casper Pinsker. This action was brought against Casper Corporation and Casper Pinsker individually and doing business as Casper Imports. The district court held that only Casper Corporation is liable for the damages assessed. The court found that Casper Imports which it referred to as Casper Pinsker's "corporate alter ego" was "completely divorced from Casper Corporation and its penny banks" and therefore is not liable for the wrongful acts here. John Wright, supra, 419 F.Supp. at 315-16. Donsco has not challenged this conclusion. The district court also held, however, that Casper Pinsker is not personally liable for the actions he took as the agent of Casper Corporation. Id. at 312 ( of Fact No. 84), 313 (Conclusion of Law No. 3) and 315. Donsco does contest...
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