Germanow v. Standard Unbreakable Watch Crystals, Inc.

• Decision Date: 23 April 1940
• Citation: 27 N.E.2d 212,283 N.Y. 1
• Parties: GERMANOW et al. v. STANDARD UNBREAKABLE WATCH CRYSTALS, Inc.
• Court: New York Court of Appeals Court of Appeals

283 N.Y. 1

27 N.E.2d 212

GERMANOW et al.

v.STANDARD UNBREAKABLE WATCH CRYSTALS, Inc.

Court of Appeals of New York.

April 23, 1940.

Appeal from Supreme Court, Appellate Division, Fourth Department.

Action by Harry Germanow and another, copartners, doing business under the name and style of Germanow-Simon Machine Company, against Standard Unbreakable Watch Crystals, Incorporated, for injunction to restrain various trade practices alleged to constitute unfair competition in the marketing and sale of unbreakable watch crystals. From a judgment of the Appellate Division entered March 10, 1939, 256 App.Div. 1031, 10 N.Y.S.2d 976, unanimously affirming a judgment of Special Term for plaintiff, 168 Misc. 814, 6 N.Y.S.2d 571, defendant appeals by permission, reargument having been denied in 257 App.Div. 913, 12 N.Y.S.2d 773, and from so much of such judgment as affirmed the trial court's omission to decree that defendant be perpetually enjoined from continued use of plaintiffs' scale for measuring diameter of round crystals and from continued and further use of envelopes corresponding in size and similar in color to those used by plaintiffs, plaintiffs appeal.

Reversed, and complaint dismissed. Byron A. Johnson, of Rochester, for plaintiffs, appellants, and respondents.

Edward H. Cumpston, of Rochester, for defendant, respondent, and appellant.

CONWAY, Judge.

These are cross-appeals in an action commenced in April, 1937, to restrain acts of unfair competition. The plaintiffs, copartners, are the largest manufacturers of their product in the world, employing approximately eighty people, and since 1916 have been engaged in the manufacture of unbreakable watch crystals, known as ‘G-S' crystals, made of celluloid or similar material. They have also developed and marketed a cabinet containing drawers to store the product. This cabinet is known in the jewelry trade as the ‘G-S' cabinet, and plaintiffs' trade-mark ‘G-S' is affixed by label and stamped on the drawer handles. The plaintiffs have likewise perfected a numbering system for fancy crystals to facilitate the selection of the particular crystal sought. Such numbering system is used in connection with plaintiffs' cabinet.

For an understanding of the issues involved and the facts out of which they arose, it is necessary to set forth an outline of the acts complained of, a description of the product manufactured by the plaintiffs and defendant, an explanation of the numbering system and a description of the cabinets used.

In 1916 plaintiffs designed a special gauge or ruler, made of metal, about four inches long, to measure the diameter of the round (as distinguished from fancy) crystals manufactured by them. This gauge had gradations of fortieths of an inch, beginning one-half inch from its end. The trial court found that the measurements obtained were used by plaintiffs as descriptive or size marks and not to indicate the source of manufacture and also found those measurements to be a ‘stock-filling and numbering system,’ i. e., the measurements by the gauge became the numbers of the round crystals. It is conceded that those numbers were not part of the ‘numbering system’ of the plaintiffs, which applied to fancy crystals only.

The defendant, incorporated in 1927, is a competitor of the plaintiffs. Beginning in 1927, the defendant offered to the trade a gauge or ruler based upon the same arbitrary system of measurement as that developed by the plaintiffs to measure the round crystals manufactured by them. Defendant's gauge differed in shape from that of plaintiffs and carried defendant's trademark. Since 1927 defendant has advertised and sold round crystals in envelopes marked with numbers obtained by measuring with such round crystals scale and the plaintiffs have known of that fact during that entire period.

In 1927 the plaintiffs began to sell their round crystals in blue envelopes, and, although defendant had previously used a brown envelope for such purposes, it, too, subsequent to 1927 began to use a blue envelope of almost identical size and shade.

The trial court also found that since 1927 at least four specifically named competitors of the plaintiffs and defendant employed small, rectangular, transparent paper envelopes in which round and unbreakable crystals were sold.

Plaintiffs, in 1931, commenced to place their fancy crystals in ribbed glassine envelopes and they were the first to use such envelopes for that purpose. Thereafter defendant made use of a similar glassine envelope.

Likewise, in 1931, plaintiffs were the first to use a blue insert envelope which was enclosed within the ribbed glassine envelope. In 1934 defendant adopted an almost identical insert envelope for the same purpose. In that year plaintiffs complained of defendant's use of such insert envelope and as soon as its stock was exhausted the defendant changed the color of its inner envelope from blue to green and of its printing ink from blue to black.

In 1931-1932 plaintiffs issued a catalogue containing approximately one thousand illustrations of watch crystals of various sizes and shapes arbitrarily arranged to conform to their new numbering system. The letters preceding the numbers in plaintiffs' numbering system were the letters previously used by a competitor which manufactured glass crystals. They indicated the shapes of the crystals. Defendant adopted a numbering system as follows: Each fancy crystal manufactured by it received a number exactly 200 lower than that given to a similar crystal manufactured by plaintiffs. The letters which preceded the numbers, with the exception of three, were different.

The defendant also began the practice of using envelopes on the front of which it printed its own number and also the number used by plaintiffs for the same crystal. The notation on defendant's envelope read ‘same size as G-S_ _.’ After this action was commenced defendant omitted plaintiffs' trade-mark but continued to print plaintiffs' number on its envelopes as well as its own number.

The defendant printed its numbering system in its own catalogue and also, in 1934, issued to the jewelry trade a comparative list which contained each crystal number contained in the plaintiffs' numbering system and opposite each such number of the defendant's own number for the same crystal.

Neither plaintiffs nor defendant sells to the public but only to jewelers or retailers or jobbers. The public sees neither the numbering system nor the envelope containers for the crystals.

The record is barren of any proof of any suggestion by defendant that there be a palming off or passing off of defendant's goods as those of plaintiffs.

At the trial the plaintiff Germanow testified that the numbers used in the numbering system were arbitrary numbers and had no relation to the size or dimensions of the crystals illustrated in their catalogue or to the dimensions printed on the envelope containers.

To illustrate the envelope containers and the printing on them I shall take plaintiffs' Exhibit 26, subdivisions 5, 6, 7 and 8. See footnote. ^* The defendants' containers are of light green color and the plaintiffs' light blue. For the purpose of this illustration the color is of no consequence, since the containers could not be mistaken for each other even if identical in color. Defendant has indicated in every possible way by print that the container and the crystal are not plaintiffs'.

What the defendant has done or attempted to do for its own benefit is to put on its envelope a number which will enable the jeweler or retailer to put its envelope containers into the same compartment and drawer of the plaintiff's cabinet with similarcrystals of the plaintiffs. In fact, the case revolves about the desire of defendant to enable the jeweler or retailer to accomplish that result. We must determine whether that is unfair competitive practice under the facts of this case, which is unusual in that the consumer purchases neither from plaintiffs nor defendant and does not see the product until it is in his watch. Plaintiffs' theory is that it is defendant's intention that a jeweler may palm off defendant's crystals for plaintiffs', if he wishes. However, there is no suggestion in the proof that any one ever asked for plaintiffs' product and failed to receive it. Hence, in the absence of proof of a single instance of such conduct or of a single suggestion by defendant that that be done, we cannot presume dishonest conduct. Rather the facts indicate that it was defendant's desire to distribute its wares and that necessitated enabling the jeweler to carry those wares. That brings us back to plaintiffs' cabinet, a description and discussion of which appears infra.

The trial court decided that the development and use by defendant of a numbering system based upon that of the plaintiffs and having a uniform numerical difference for each crystal of exactly two hundred, and the use by defendant of a comparative list setting forth the various numbers contained in the plaintiffs' numbering system and opposite each such number the defendant's number for the same sized crystal, constituted unfair competition. The trial court also decided that the practice of defendant in placing upon certain of its envelopes containing watch crystals the plaintiffs' numbers for the same sized crystals, thus, ‘same size as G-S_ _, was unfair competition and that this was so even if the trade-mark ‘G-S' were omitted therefrom, as it was after the commencement of this action. The trial court further decided that the use of the gauge or ruler, the use of glassine or transparent paper for crystal envelopes and the use of a mere color, as ‘blue,’ for the paper of an envelope container were not such as to constitute unfair competition.

Taking the matters so referred to in their inverse order: (1) The use of a mere color is not subject to appropriation as a trade-mark in the absence of a finding that it has acquired by use a secondary...