Emerson Electric Mfg. Co. v. Emerson Radio & P. Corp.

• Decision Date: 17 July 1939
• Docket Number: No. 336.,336.
• Citation: 105 F.2d 908
• Parties: EMERSON ELECTRIC MFG. CO. v. EMERSON RADIO & PHONOGRAPH CORPORATION et al.
• Court: U.S. Court of Appeals — Second Circuit

105 F.2d 908 (1939)

EMERSON ELECTRIC MFG. CO. v. EMERSON RADIO & PHONOGRAPH CORPORATION et al.

No. 336.

Circuit Court of Appeals, Second Circuit.

July 17, 1939.

Lawrence C. Kingsland and Edmund C. Rogers, both of St. Louis, Mo., and Pennie, Davis, Marvin & Edmonds, of New York City (Estill E. Ezell, of St. Louis, Mo., of counsel), for appellant.

Darby & Darby, of New York City (Samuel E. Darby, Jr., Louis D. Fletcher, and David Williams, all of New York City, of counsel), for appellees.

Before L. HAND, CHASE, and PATTERSON, Circuit Judges.

L. HAND, Circuit Judge.

Judge Goddard's opinion in the district court (24 F.Supp. 481) so fully states the facts that we may proceed at once to a discussion of the merits, supplementing his statement as we go, so far as that may be necessary. In 1923 shortly after Abrams bought the old Victor H. Emerson business, then in bankruptcy, the defendants began to make and sell radios in combination with a manually operated phonograph. The bankrupt company had already been in existence for eight years, during which it had continuously made and sold phonographs and records. It was a natural step to combine these with radios, when radios became commercially available, and to put both into a single cabinet. The defendants changed to separate radios in 1924 or 1925, and their sales have since then increased, as set forth in Judge Goddard's opinion. In 1923 the plaintiff had already been in existence for thirty-three years, during no part of which had it made or sold radios; indeed it has never done so. It had, however, from the outset sold electric motors of one sort or another, installed in all sorts of household apparatus and devices. Its first excursion into the radio field was in 1922 when it made and sold a generator to supply power to a radio transmitter: this it sold for two or three years. In 1926 it made experiments with receiving sets which, however, it never marketed; and in 1926 and 1927 it sold a "converter with filter", as an attachment to a receiving set. Its most important item was the "dynamotor", an attachment for stepping up the voltage for a radio in a motor car. This it began to market in 1931, but the sales had substantially disappeared by 1935. These are the plaintiff's nearest approaches to the radio market. Outside of that market in 1923, when the defendants first made the combination radio-phonograph, they and the plaintiff both had an interest in the name, "Emerson"; the plaintiff, because of its long continued use, just described, and the defendants, because it is universally recognized that the sale of a business does not break the continuity of that reputation upon which customers are likely to rely. Kidd v. Johnson, 100 U.S. 617, 25 L.Ed. 769; Brown Chemical Co. v. Meyer, 139 U.S. 540, 11 S.Ct. 625, 35 L.Ed. 247; Richmond Nervine Co. v. Richmond, 159 U.S. 293, 16 S.Ct. 30, 40 L.Ed. 155.

The doctrine upon which the plaintiff must rely is an outgrowth from the general principles of unfair competition. It depends upon two supposititious interests which the putative wrongdoer invades. One of these is, not in any sales of which he will deprive the plaintiff at the time, for the plaintiff is not selling any of the wares in question, but in those sales which the plaintiff will lose in case he chooses to extend his business into the market which the wrongdoer has begun to exploit. In the case at bar the defendants will not take away any customers from the plaintiff, unless the plaintiff begins to sell radios, and, so far as appears, it has no such purpose, for the present at least. The other interest is the plaintiff's general reputation which goes with his name. Buyers from the putative wrongdoer may also buy from the plaintiff, and may confuse the two; the plaintiff will not wish to expose his reputation to the chances of the wrongdoer's conduct of his business. Again in the case at bar, nothing, with the exception of a single postcard, has as yet come to light to indicate that the plaintiff has suffered in public esteem. So far as appears, the defendants carry on their business in an entirely respectable way, though they make and sell a very cheap radio. Courts have not always thought these two interests — both, it will be observed, altogether future and contingent — substantial enough to justify their intervention. Borden Ice Cream Co. v. Borden's Condensed Milk Co., 7 Cir., 201 F. 501. However, more recently it has become settled that they may be; that is to say, if one merchant has established a business under his name in wares of one sort, a second merchant may not use that name in selling other wares, if these are so like the first merchant's that the public will be apt to think that the first merchant is selling them. We have so held a number of times. Aunt Jemima Mills Co. v. Rigney & Co., 2 Cir., 247 F. 407, L.R.A.1918C, 1039; Anheuser-Busch v. Budweiser Malt Products Corp., 2 Cir., 295 F. 306; France Milling Co. v. Washburn-Crosby Co., 2 Cir., 7 F.2d 304; Yale Electric Corp v. Robertson, 2 Cir., 26 F.2d 972; L. E. Waterman v. Gordon, 2 Cir., 72 F.2d 272. (It would serve no purpose to collect the many authorities from other circuits). The situation may take various forms. The second merchant may have no excuse whatever; he may be a mere pirate. This would be true if he used a trade-mark of the first; and such cases offer no difficulty. On the other hand, the second merchant may have already established a business in his name, which he may wish to extend into a new market, but a market altogether alien to that which he has been exploiting, yet akin to that of the first merchant. That would probably not be a good excuse. Again, as here, the new market may be equally appropriate and akin to the old markets of each, and equally important to the business of each. In that event perhaps the first of the two to occupy it might succeed in retaining possession, although he is junior to the other as between the markets each has theretofore been exploiting. Indeed some courts have even gone so far as to excuse a merchant who extends an existing business into another's market, if the extension is reasonably appropriate to his business. W. & H. Walker, Inc., v. Walker Bros. Co., 1 Cir., 271 F. 395; Federal Securities Co. v. Federal Securities Corp., 129 Or. 375, 276 P. 1100, 66 A.L.R. 934. Finally, the second merchant may be forced to exploit the new market to preserve the business he already has; as would for example have been true here, if it had been impossible to sell phonographs...