G. & C. Merriam Co. v. Saalfield

• Citation: 198 F. 369
• Decision Date: 17 July 1912
• Docket Number: 2,097.
• Parties: G. & C. MERRIAM CO. v. SAALFIELD.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

198 F. 369

G. & C. MERRIAM CO. v. SAALFIELD.

No. 2,097.

United States Court of Appeals, Sixth Circuit.

July 17, 1912

W. B Hale, of New York City (F. F. Reed and E. S. Rogers, both of Chicago, Ill., on the brief), for appellant.

George F. Bean, of Boston, Mass., and Lawrence Maxwell, of Cincinnati, Ohio, for appellee.

Before WARRINGTON, KNAPPEN, and DENISON, Circuit Judges.

DENISON Circuit Judge.

Pursuant to the reservation in the opinion filed October 28, 1911, a rehearing has been had upon the sole question whether or not an accounting should be ordered. As reasons why this should not be done, defendant urges the Massachusetts decree as being an adjudication upon this subject, and also urges the decisions and the arguments recited by Judge Putnam and referred to in our former opinion, to the effect that, in a situation like this, an accounting can result in nothing but expense and confusion. In favor of an accounting, complainant urges: (1) That such is the usual and almost invariable practice; (2) that Judge Putnam's comments on this branch of the subject were dicta, and the legal rule is not as he thought it should be; (3) that the rule of accounting, in a case like this, should be, and is, the same as in a trade-mark case.

In addition to these matters, and in answer to the insistence of defendant's counsel that defendant has not infringed since the Massachusetts decree, complainant's counsel asserts himself to be in possession of proof showing unquestionable violations of the rule since that time, and on a considerable scale, and further asserts that, as such an accounting extends up to the date of the master's report it is not essential that the record, on an appeal taken before an accounting is had, should disclose all of complainant's proof entitling him to an accounting, but that he may, under the prevailing practice, withhold such proof until after the interlocutory decree, or it may not come into existence until after the interlocutory decree.

We have first to consider the direct effect of the Massachusetts decree. That decree was entered by the Circuit Court on April 21, 1909, pursuant to the opinion of the Court of Appeals as reported in 170 F. 167, 95 C.C.A. 423. The defendant in this case, Saalfield, succeeded the defendant in that case Ogilvie, in the business, in December, 1908. That decree speaks as of its date, and, in connection with the opinion it is an adjudication that, by reason of complainant's former misconduct, it was not entitled to an accounting against the defendant for anything done by the defendant up to that date.

We think it is the proper conclusion on this record, and we interpret our former opinion to be a conclusion, that after December, 1908, Saalfield was, in substantial effect, the defendant in the Massachusetts case, and it follows that he may take advantage of that adjudication, just as he is bound by it, and that for his alleged misconduct upon this subject-matter, committed prior to April 21, 1909, there can be now no accounting ordered against him.

What, then, is the general rule as to an accounting, to be applied to defendant's acts after April 21, 1909, and under such a situation as that here disclosed? In so far as Judge Putnam's discussion is founded upon the rule in patent cases, it finds its essential support in Garretson v. Clark, 111 U.S. 121, 4 Sup.Ct. 291, 28 L.Ed. 371. This case has often, if not commonly, been understood as laying down the rule that, where it is impossible to apportion the infringer's profits between those resulting from the patented and nonpatented features of his device, it was, therefore, impossible for complainant to sustain the apportioning burden placed upon him by the rule, and hence, in such cases, that only nominal damages could be recovered. That this decision should not be so broadly interpreted is made apparent by Westinghouse Co. v. Wagner Co., 225 U.S. 604, 32 Sup.Ct. 691, 56 L.Ed. 1222, announced by the Supreme Court June 7, 1912. The rule is there stated, apparently by way of a deliberate and careful effort to clarify some of the existing confusion on the subject, that complainant satisfies the burden when he establishes that the infringer has so conducted the affair as to make impossible even an approximate or fairly estimated apportionment, and that, in such case, the infringer must account for and pay over all the profits earned upon the entire structure. If, therefore, the analogy between patent cased and cases like the present is as close as Judge Putnam supposed, and if, as he feared, the difficulties of apportioning profits or damages are here insoluble, the complainant is entitled to recover all the profits resulting from those publications by defendant which were characterized or materially affected by false indicia of origin.

The only decision in an unfair competition case which is relied upon against the propriety of an accounting in such a situation, is Ludington v. Leonard (C.C.A. 2) 127 F. 155, 62 C.C.A. 269. We are satisfied that such case presented a very different problem of accounting from that now involved. On the other hand, the Circuit Court of Appeals in the Second Circuit has recently ruled that an accounting must be had in an unfair competition case, where the difficulty was perhaps as great as it may be here (Florence Co. v. Dowd, 189 F. 46, 110 C.C.A. 608); and, applying the rule there recognized, it is sufficient for the purposes of the present case to say that the usual practice contemplates an accounting and that such practice should be followed, and an accounting ordered, unless it is made clearly and certainly to appear that neither upon the existing record, nor upon any record which complainant can make before the master, could there be any substantial recovery. If there remains any fair probability that the complainant can produce the necessary proof, or that, upon final hearing, and as aided by all such proof, the trial court or the reviewing court may think that complainant is entitled to a recovery of damages or profits (beyond the amount of any which may be tendered, if a tender is made), then the complainant should have the opportunity to make and present his case. ^[1]

Applying this conclusion to this record, we find that since the final Massachusetts decree defendant has continued the publication of his books and of his advertisements in a manner which he claims fully conforms to the decree, but which complainant insists is a continued evasion, and hence violation, of the decree. The record does not purport to show defendant's conduct in this respect later than December, 1909; and complainant, if proceeding in good faith, as we are bound to presume it is proceeding, is entitled to show such later or other conduct of defendant as may be different from that developed by the record. Upon the question whether such new or other forms, differing from those shown by the present record (if any there are), are in compliance with the decree, complainant has a right to be heard.

We do not doubt that the respective rights of the parties are fixed and declared by the Massachusetts decree. This is just as much an adjudication that the complainant is not entitled to that general character of relief which it sought by its bill and failed to obtain by the decree, or to the specific items of relief contained in its draft decree proposed and stricken out on settlement (in so far as such items are not otherwise covered by the decree as settled), as it is an adjudication that complainant is entitled to the relief granted.

The questions which will arise on this accounting are incidental to the application of the decree to situations subsequently existing, and such application necessarily calls for interpretation. In the decisions upon this case in the First Circuit, the opinions of the courts only undertook to apply to the facts of the case rules and adjudications that were assumed to be familiar. The interpretative conflicts which have arisen seem to make it advisable to ascertain, somewhat more completely than those courts thought their statement necessary, the principles which underlie those decisions. A trade-mark is a trade-mark because it is indicative of the origin of the goods. The original right to its exclusive use was not based upon any statute, but upon principles of equity; and the right is acquired, not by discovery or invention or registration, but by adoption and use. The entire substantive law of trade-marks (excepting statutory provisions and construction) is a branch of the broader law of unfair competition. The ultimate offense always is that defendant has passed off his goods as and for those of the complainant. Capewell Horse Nail Co. v. Mooney (C.C.A. 2) 172 F. 826, 97 C.C.A. 248; Elgin, etc., Co. v. Illinois Watch Co., 179 U.S. 665, 674, 21 Sup.Ct. 270, 45 L.Ed. 365. More or less confusion has arisen because it happened that specific offense and the specific rule were recognized and a body of law grew up concerning the same before the broader and inclusive offense was recognized and defined; but this does not prevent proper classification after both are understood.

Primarily it would seem that one might appropriate to himself for his goods any word or phrase that he chose; but this is not so, because the broader public right prevails, and one may not appropriate to his own exclusive use a word which already belongs to the public and so may be used by any one of the public. Hence comes the rule, first formulated in trade-mark cases, that there can be no exclusive appropriation of geographical words or words of quality. This is because such words are, or may be, aptly descriptive, and one may properly use for his own product any descriptive words, because such words are...