Electronics Corporation of America v. Honeywell, Inc.

• Decision Date: 02 June 1970
• Docket Number: No. 7493.,7493.
• Citation: 428 F.2d 191
• Parties: ELECTRONICS CORPORATION OF AMERICA, Plaintiff, Appellant, v. HONEYWELL, INC., Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

428 F.2d 191 (1970)

ELECTRONICS CORPORATION OF AMERICA, Plaintiff, Appellant, v. HONEYWELL, INC., Defendant, Appellee.

No. 7493.

United States Court of Appeals, First Circuit.

Heard April 7, 1970.

Decided June 2, 1970.

Daniel F. Featherston, Jr., Boston, Mass., for plaintiff-appellant.

Norman A. Hubley, Boston, Mass., Alex J. McFarland and Herrick, Smith, Donald, Farley & Ketchum, Boston, Mass., on brief, for defendant-appellee.

Before ALDRICH, Chief Judge, COFFIN, Circuit Judge, and FORD, District Judge.

ALDRICH, Chief Judge.

This is a diversity action for unfair competition in which plaintiff appeals from the denial of a temporary injunction following the submission of affidavits by both sides. 303 F.Supp. 1220. We do not reach a further count under the Lanham Act, 15 U.S.C. § 1125, possibly of questionable merit. Cf. Samson Crane Co. v. Union Nat. Sales, Inc., D. Mass., 1949, 87 F.Supp. 218, aff'd, 1 Cir., 180 F.2d 896. Plaintiff, Electronics Corporation of America, is a company of national stature engaged in the manufacture of various safety control systems. The one here involved performs the function of monitoring, supervising and managing large capacity oil, gas, and coal burners in utility, industrial and commercial heat and power plants. Defendant Honeywell, Inc., is a substantially larger concern, with a wider variety of products, which competes with plaintiff in the field of safety controls. Apparently here, over the years, plaintiff has had substantially greater success.

Plaintiff's so-called Fireye control consists of an electronic programmer, a terminal strip, a control house, a sensor and a sensor housing. Its principal component is the programmer, but the customer's installation expense relates to the rest of the system. Once this has been completed, plaintiff's programmer is installed simply by pushing it into the control house, hereinafter box, which has receptacles designed to receive it, and tightening two set screws. It is removed with like facility. Programmers wear out and need to be replaced. In addition, in February 1969 plaintiff declared its old Model 1008 programmer "obsolete." Its new Model 6008 was designed to be inserted in the same manner in the old box.

Because of the facility of exchange, it is much easier to replace a programmer than it is to install a whole new system. It is, correspondingly, easier, since because of plaintiff's past success most of the extant control systems are plaintiff's, for plaintiff to sell its replacement than it is for defendant to compete. To meet this, defendant reconstructed its own programmer so that it could be installed in plaintiff's box and thus permit defendant to compete in the replacement field. For reasons not gone into below, defendant's Model R4150H was not designed to fit into plaintiff's box with a single push. Defendant supplied a metal harness, or subbase, to make it compatible.

In order to install defendant's programmer in plaintiff's box, holes are bored in the base and defendant's subbase is mounted thereon. Some fifteen emanating wires, terminating in banana plugs, are then inserted manually into the original base receptacles designed to receive automatically the prongs extending from plaintiff's device. Although these plug-in connectors are numbered to correspond with numbers on the plaintiff's box, this installation is not a simple operation. Among other things, defendant's instructions (not part of its advertising brochure hereinafter referred to) stated in capital letters the necessity, in installing the defendant's harness, of using "extreme caution not to damage any wiring that may be behind the cabinet." An uncontradicted affidavit from the plaintiff points out that a mistake in putting a plug in the wrong hole could cause an explosion.

When defendant had completed its Model R4150H it released a single sheet, fold-over, advertising brochure. The cover announced, "NOW YOU CAN REPLACE OBSOLETE * FIREYE * WHEELCO * McGRAW EDISON * HONEYWELL Programmers in less than an hour with this new Programmer that plugs right into the old subbase. See inside for other special features." Wheelco and McGraw Edison were other competitors, but concededly of small consequence in this area. Inside, the brochure referred only to replacement of Honeywell and Fireye programmers, and had a large cut illustrating defendant's programmer being installed in one of plaintiff's boxes. The brochure was addressed to the retail trade, as is apparent not only from its wording, but by the form of the detachable coupon which could be used to request further information.¹ And, obviously, the retail trade is not everyone in the market for control systems, but solely those who already have a system and need to replace the programmer component.

Plaintiff complains of this brochure. It also complains of the entire substance of defendant's activities.² While, strictly, the latter aspect may not be before us, we must consider it, tentatively, to the extent that it bears upon the nature of plaintiff's present attack upon the brochure. Although, in a sense, defendant's programmer is a cuckoo in plaintiff's nest, there has been no deceit as to its parentage. Defendant's programmer is not only advertised, but conspicuously and permanently marked with its name, a name too well known to be thought a subsidiary trade name of the plaintiff's. When it is purchased for installation in plaintiff's box, there is no palming off. Once in the box, it becomes affixed to the customer's building and is not likely to be resold to some further customer. There are, conceivably, a few situations in which an owner could subsequently be mistaken, or might blame plaintiff if defendant's programmer failed to operate, but some slight danger of confusion accompanies any competition in the sale of replacement parts. It would be difficult to take seriously a claim that defendant is precluded from openly selling replacements to be used in, or as part of, plaintiff's total unit, at least in the absence of very special circumstances not here suggested. Myles Standish Mfg. Co. v. Champion Spark Plug Co., 8 Cir., 1922, 282 F. 961, 967; 2 Callman, The Law of Unfair Competition, Trademarks, and Monopolies § 62.2(b) (3 ed. 1968).

At the same time, sight must not be lost of the fact that defendant is not competing in a general market. Not only is plaintiff's Fireye Model 6008, as the court put it, the "chief target of the advertising campaign," but, so far as owners of plaintiff's system are concerned, their sole alternatives are plaintiff's replacement or defendant's. In these circumstances we do not consider applicable the "traditional" doctrine that competitors' actions for false advertising are limited to instances of trademark infringement, passing off, and product disparagement. See Developments in the Law — Deceptive Advertising, 80 Harv. L.Rev. 1005, 1017-18 (1967); 1 Callman, ante, § 18(1) at 599-600; American Washboard Co. v. Saginaw Mfg. Co., 6 Cir., 1900, 103 F. 281, 43 C.C.A. 233; Chamberlain v. Columbia Pictures Corp., 9 Cir., 1951, 186 F.2d 923. We agree with the reasoning of L. Hand, J., speaking for the court in Ely-Norris Safe Co. v. Mosler Safe Co., 2 Cir., 1925, 7 F.2d 603, 604, rev'd on other gr'ds, 1927, 273 U.S. 132, 47 S.Ct. 314, 71 L.Ed. 578.

"The reason, as we think, why such deceits have not been regarded as actionable by a competitor, depends only upon his inability to show any injury for which there is a known remedy. In an open market it is generally impossible to prove that a customer, whom the defendant has secured by falsely describing his goods, would have bought of the plaintiff, if the defendant had been truthful. Without that, the plaintiff, though aggrieved in company with other honest traders, cannot show any ascertainable loss. He may not recover at law, and the equitable remedy is concurrent. The law does not allow him to sue as a vicarious avenger of the defendant\'s customers."

Smith-Victor Corp. v. Sylvania Electric Products, Inc., N.D.Ill., 1965, 242 F.Supp. 302, 309, makes a similar point. The court interpreted American Washboard Co. v. Saginaw Mfg. Co. ante, and Ely-Norris to mean that a competitor does not have "standing" to sue for false advertising unless there has been passing off, or the plaintiff "has a complete monopoly of the goods involved," since "it is generally impossible for the plaintiff to prove that a customer * * * would have bought the goods of the plaintiff if the advertisements of the defendant had been truthful. * * *"

Owners of worn-out Fireye programmers have nowhere to turn except to the plaintiff or the defendant. Material misrepresentations in defendant's advertising will damage the plaintiff, whether or not there is passing off or express disparagement.³ We hold them actionable.

The initial...