Fleischmann Distilling Corp. v. Maier Brewing Company

• Decision Date: 19 March 1963
• Docket Number: No. 17696.,17696.
• Parties: The FLEISCHMANN DISTILLING CORP., a corporation, etc., Appellants, v. MAIER BREWING COMPANY, a corporation, et al., Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

314 F.2d 149 (1963)

The FLEISCHMANN DISTILLING CORP., a corporation, etc., Appellants, v. MAIER BREWING COMPANY, a corporation, et al., Appellees.

No. 17696.

United States Court of Appeals Ninth Circuit.

February 12, 1963.

Rehearing Denied March 19, 1963.

Brobeck, Phleger & Harrison, Moses Lasky, San Francisco, Cal., Davis, Polk, Wardwell, Sunderland & Kiendl and Porter R. Chandler, New York City, for appellant.

Mellin, Hanscom & Hursh, Oscar A. Mellin and Carlisle M. Moore, San Francisco, Cal., Hill, Farrer & Burrill and Robert Nibley, Los Angeles, Cal., for appellee.

Before POPE, BROWNING and DUNIWAY, Circuit Judges.

POPE, Circuit Judge.

Fleischmann Distilling Corporation, here called Fleischmann, filed in the court below its complaint for trademark infringement and unfair competition against Maier Brewing Company, here called Maier, and Ralphs Grocery Company, here called Ralphs, seeking an injunction restraining the defendants from using the name "Black & White" upon beer manufactured by Maier and sold by Ralphs. It asserted that such use of that name was an infringement of a trademark "Black & White" used on Scotch whisky manufactured abroad by James Buchanan & Company, here called Buchanan, and imported and sold by Fleischmann in the United States.

Jurisdiction in the court below was invoked by reason of the diversity of citizenship of the parties with the requisite amount in controversy, and also on the ground that it "arises under Acts of Congress relating to trademarks, citing the Acts of February 20, 1905, and of July 5, 1946, hereafter referred to, and also asserts a related claim of unfair competition." Subsequently Buchanan filed a complaint in intervention against the same defendants adopting and incorporating therein Fleischmann's complaint and joining with Fleischmann in the prayer for relief.

Fleischmann and Buchanan, together will be referred to herein as plaintiffs. After trial to the Judge, sitting without a jury, the court below entered its findings of fact and conclusions of law and a judgment finding generally for the defendants and against the plaintiffs, dismissing the action and awarding the defendants their costs. This appeal followed.

As the trial Judge noted in his opinion, the record presents no basic dispute as to the facts. Buchanan and its predecessor have blended and sold Scotch whisky under the name "Black & White" since before the turn of the century, and have marketed the product in the United States under that name for more than 50 years. Buchanan registered the name as its trademark for Scotch whisky in the United States Patent Office in 1908, and in California in 1911. The federal registration was renewed under the Act of 1946 in 1948. Fleischmann has been the sole importer of Black & White whisky in the United States since 1948.

With respect to this Scotch whisky the trial court found as follows: "8. `Black & White' Scotch whisky is a widely known Scotch whisky. It is the leader among Scotch whiskies. Its sales have exceeded one hundred million bottles during the tenure of Fleischmann and more than five hundred thousand cases have been sold in the six year period between 1951 and 1957, in California, more than half of which were sold in Los Angeles County where Ralphs does business. In the alcoholic beverage industry the name `Black & White' has come to mean Scotch whisky." During the six year period mentioned, the plaintiffs expended more than five million dollars in advertising their Black & White Scotch whisky.

Maier is a brewing company in Los Angeles, and Ralphs owns and operates a chain of grocery stores in that area. Maier brews a low price beer which it sells under a variety of different labels. In the summer of 1956, Ralphs was seeking to obtain an inexpensive beer for sale in its chain of stores under a label for Ralphs' exclusive use. The upshot was that Maier sold beer to Ralphs through a wholesaler under the label Black & White. In December, 1957, Maier was notified by attorneys for Buchanan that they considered Maier's use of the Black & White name a trademark infringement and unfair competition. Maier was asked to discontinue using the name. A similar notice was sent to Ralphs the following May. These demands were refused and this suit followed.

Among the findings from which the trial court drew its conclusion that plaintiffs had not made a case against the defendants was Finding No. 28 as follows: "28. There is no real competition between plaintiffs' Scotch whisky and defendants' beer. This lack of real competition renders it unlikely that there is, or will be, any confusion as to source in the mind of a buyer." This finding seems to suggest that Buchanan, as owner of a registered trademark, would be foreclosed from recovery if there was no real competition between plaintiffs' Scotch whisky and the beer. We think this finding indicates a misconception of the law here applicable, and of the significance of lack of competition.

The earlier trademark Act, that of 1905 (33 Stat. 724 et seq.), provided that a right of action to suppress an infringement of a registered mark arose only if the infringement was used on "goods of the same descriptive properties" as the registrant's goods. However, the Lanham Act of 1946 (60 Stat. 427, 15 U.S.C. § 1051 et seq.) made plain that infringement might be found and prohibited, though the use of the registered mark was upon goods having different descriptive properties than those set forth in the registration, and though in consequence there was no actual competition between the parties. This Act prohibits use without the registrant's consent "of any registered mark in connection with the sale, offering for sale, or advertising of any goods or services on or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers as to the source of origin of such goods or services."

Thus the question to be determined here is whether the use by Maier and Ralphs of the name "Black & White" on their beer "is likely to cause confusion or mistake or to deceive purchasers as to the source of origin of such goods or services." Before we examine the evidence here for the purpose of answering that question we must consider whether it is our function as an appellate court to furnish such an answer.

Numerous cases in this and other circuits hold that under the circumstances here present, the question of the likelihood of confusion is one for us to decide. In Sleeper Lounge Company v. Bell Manufacturing Co., 9 Cir., 253 F.2d 720, 723, this court quoted with approval the quotation in Miles Shoes, Inc. v. R. H. Macy & Co., 2 Cir., 199 F.2d 602, that "we are in as good a position as the trial judge to determine the probability of confusion."

One reason for applying the rule of that case and of the other cases in accord cited in the margin¹ is that this determination of likelihood of confusion partakes more of the character of a conclusion of law than of a finding of fact. The inference to be drawn from the undisputed facts here are "derived from application of a legal standard." Lundgren v. Freeman, 9 Cir., 307 F.2d 104, 115.² Appellant asserts that this function of determining the likelihood of confusion is for us, and this has not been challenged by the appellees.

We proceed then to the inquiry whether under the circumstances here shown the use of the name Black & White on defendants' beer is likely to cause confusion as to the source of origin. Another finding of the trial court which may tend to explain the conclusion arrived at is Finding 22 as follows: "22. Scotch whisky and beer, although both containing alcohol, are goods of distinctly different properties."

For the reasons previously noted this finding is of no assistance in determining te question of likelihood of confusion. The Lanham Act has done away with the old concept of "goods of the same descriptive properties." We think that the trial court failed fully to appreciate this effect as is evidenced by the fact that in the court's opinion which accompanied its findings, reliance was made upon certain court decisions all of which antedated the Lanham Act.

In support of its contention that the use of a name on unlike goods may be enjoined, plaintiffs have cited here a substantial number of cases illustrating that proposition.^2a The defendants do not undertake to question those decisions but contend that they cannot be applied here because the mark "Black & White" belonging to the plaintiffs is not a distinctive or "strong" mark since the same name has been used on a great multitude of other products and for a variety of goods and services, and that as a result plaintiffs' trademark has been diluted and has lost its original distinctiveness and serves no purpose of pointing to goods from a single source.

The defendants produced evidence showing that the name Black & White had been applied and used by producers or dealers in a large number of different products. These included medicines, cosmetics, coffee, candy, bags, fountain pens, sheet music, hoof-rot remedy, corn meal, flour, soap, pencils, ginger ale, cotton prints, canned goods, and tobacco. Many of these marks were registered in the Patent Office and elsewhere.

The record shows, however, that the name Black & White has never been registered in the United States Patent Office for any alcoholic beverage other than Buchanan's Scotch whisky. In 1935, the St. Claire Brewing Co. of San Jose, California, began using the name Black & White as a trademark for bottled beer and had registered the mark for use on beer with the Secretary of State of the State of California. In 1936, National Distillers, which was then the sole importer in the United States of Buchanan's whisky, learned of St. Claire's use and in August, 1936, the St. Claire Brewing Company was notified on behalf of the American agents for Buchanan that the latter considered that St. Claire was infringing...