Globe-Wernicke Co. v. Safe-Cabinet Co

• Decision Date: 10 June 1924
• Docket Number: 18171
• Citation: 144 N.E. 7110,110 Ohio St. 609
• Parties: The Globe-Wernicke Co. v. The Safe-Cabinet Co.
• Court: Ohio Supreme Court

144 N.E. 7110

110 Ohio St. 609

The Globe-Wernicke Co. v. The Safe-Cabinet Co.

No. 18171

Supreme Court of Ohio

June 10, 1924

Unfair competition - Infringement of trademark or imitation of product - Injunction and recovery of profits - Recovery not limited to deceptive sales - Actual profits recoverable - Deduction of interest on capital invested.

1.Where a manufacturer of an article infringes a trade. mark or imitates a distinctive mark, dress, or label Of the product of another, which has become established in the trade, and the Infringement or imitatiOn is willful, deliberate, and with the purpose of deceiving, upon application of the party injured not only will further manufacture and sale thereof be enjoined, but the injured party Is also entitled to recover from the wrongdoer the profits realized from the sale of such infringing article.

2.The profits recoverable in equity for unfair competition are governed by the same rule as in cases of infringement o trademarks, and are not limited to such as accrue from sales In which it is shown that the customer is actually deceived but Include all profits made on the goods sold in the simulated dress or package and in violation of the rights of the original proPrietor.

3.The profits to be accounted for in such case are not those which might reasonably have been made, but those which were actually realized from the sale of the infringed article. The wrongdoer is not permitted to profit from his own wrong, but actual cost and expense of production and sale should be considered in rendering such account.

4.In determining such profits, interest on capital invested In a business, to the extent of actual employment in the infringing operations, along with other items of expense of production and sale, should be deducted from the gross amount received for such product.

This case comes into this court on error from the Court of Appeals, which court, except as subsequently noted, affirmed the finding of the master theretofore appointed. A special master had been appointed pursuant to a former judgment of the Court of Appeals, which, with certain modifications, had been affirmed by this court, as shown by the journal entry appearing in 92 Ohio St. at page 532, 112 N. E., 478, wherein the Globe-Wernicke Company was perpetually enjoined from continuing certain acts of unfair competition, therein enumerated, in connection with or in respect to the business and trade of the defendant in error, the Safe-Cabinet Company. The portion of the journal entry now material is as follows:

"It is further ordered that the Master heretofore designated and appointed by the court of appeals be and he hereby is directed to take the testimony of witnesses, make examination of all documents, books and papers that may in any manner aid or enable him to state an account between said parties plaintiff in error and defendant in error, of the gains and profits made by the Globe -Wernicke Company, plaintiff in error, by reason of the sale by it of metal containers such as that exhibited in `Plaintiff's exhibit defendant's cabinet' by the said acts of unfair competition in trade found by the court of appeals, together with such damage or damages as the defendant in error, The Safe-Cabinet Company, may have suffered by reason of the wrongful acts in that behalf on the part of The Globe-Wernicke Company, plaintiff in error * * *."

The acts of unfair competition found by the Court of Appeals, as shown by its entry, were as follows:

"1. That the plaintiff in error, the plaintiff below, The Safe-Cabinet Company, has heretofore manufactured metal containers or cabinets for the filing and preservation of documents, papers or other articles, and has extensively sold the same under the trade name `The Safe-Cabinet,' and that said trade name has come to mean and indicated to the plaintiff's customers, the trade and the general public that goods sold under the said trade name are manufactured and sold by the plaintiff and emanate from it and none other.

"That the plaintiff's containers or cabinets have been constructed with a shape, design and appearance of a distinctive character, and have been decorated in an olive green color, ornamented with gold and yellow lines, in imitation of paneling, and that such an article so constructed and dec&rated has come to mean and indicate to plaintiff's customers, the trade and the general public, an article made and sold by the plaintiff and emanating from it and none other.

"2. That the defendant in error, The Globe-Wernicke Company, in disregard of the rights of plaintiff as aforesaid has made metal containers or cabinets which are or purport to be of like nature with those of the plaintiff as aforesaid, and has sold the same under the name `Globe Cabinet Safe,' and has constructed them with a shape, design and appearance simulating the plaintiff's article aforesaid, and has decorated them in an olive green color ornamented with gold or yellow lines in imitation of paneling, all of which were intended to deceive and did deceive the public, the trade, and the plaintiff's customers, and were calculated to injure the plaintiff in its good will and reputation, and to divert and secure to the defendant in error the profits and emoluments arIsing from the plaintiff's good will, extensive advertising and sale of its said article under the said name `The Safe-Cabinet'; that in so doing the defendant in error The Globe-Wernicke Company, has been guilty of unfair competition in trade, and the plaintiff in error The Safe-Cabinet Company is therefore entitled to an injunction as prayed for in its petition.

"3. The court further find that the defendant in error The Globe-Wernicke Company, has by the use of the name `Globe Cabinet Safe,' and by the structure, design, appearance and decoration simulating the plaintiff in error's article known as `The Safe-Cabinet' aforesaid and by means of advertising its said article `Globe Cabinet Safe' extensively in a manner and style simulating the advertising by the plaintiff in error of its article `The Safe-Cabinet,' materially injured the business of the plaintiff in error, and its good will and trade have been damaged, and plaintiff has thereby suffered a loss in the profits of its said business which it would not have suffered but for the unfair trade aforesaid of the defendant in error, and that by reason thereof the plaintiff in error is entitled to recover from the defendant in error such damages as it may have suffered by reason of the said unfair competition in trade, together with its costs herein expended."

During the progress of the hearing before the master, evidence was offered tending to show that in certain sales of safes there had been no deception or misleading of purchasers by the Globe-Wernicke Company or its agents, and that purchasers knew that the safes they were getting were safes manufactured by the Globe-Wernicke Company, which evidence was rejected by the master

The report of the master disclosed that the gross receipts realized by the plaintiff in error from the manufacture and sale of the safes and metal containers involved in such investigation amounted to the sum of $430,741.40; that the total deductions therefrom allowed by the master amounted to the sum of $318,732.57; and that the net profits realized by the plaintiff in error therefrom, and for which he found it to be accountable, here $112,008.83. The master found that the correct calculation of interest at 6 per cent. upon the proportion of plaintiff in error's invested capital, as represented by the ratio borne by the gross sales of the safes in question to the gross sales of its entire business, is the sum of $30,464.93, but his conclusion was that such was not a proper item of deduction. The master also found that plaintiff in error was not entitled to deduct from its gross receipts the sum of $17,338.10, or any part thereof, which it had expended for attorney fees, costs and expenses in connection with the suit brought by the defendant in error against the plaintiff in error in the United States District Court for the Western District of New York for infringement of the "Wege" patent which plaintiff in error claimed to be a part of the general ox- penses of its business and included in its administrative office and general expenses. On the other hand, the master found that the defendant in error was not entitled to recover the sum Of $15,308.95, paid by it to Ernst & Ernst for their services as accountants. These were the items particularly in dispute.

The Court of Appeals held that the interest on capital invested was a proper item of expense of manufacture and sale of said safes and should have been allowed. To that extent it modified the finding of the master, and, as so modified, affirmed and rendered judgment.

The questions above indicated are now presented to this court by petition in error and cross-petition in error. The further facts necessary to a consideration of the case are stated in the opinion,

Mr. R. H. Parkinson and Messrs. Harmon, Colston, Goldsmith & Hoadly, for plaintiff in error. Mr. John E. Fitzpatrick; Mr. James L. Steuart and Mr. Frank S. Moore, for defendant in error.

MATTHIAS J.

In the consideration of this case we shall refer to the Safe-Cabinet Company as the plaintiff and to the Globe-Wernicke Company as the defendant, they having thus appeared in the trial court.

Some of the questions suggested in the briefs and urged upon the court in oral argument for further consideration were fully determined by this court in the former proceeding(92 Ohio St. 532, 112 N. E., 478), and must be regarded as adjudicated, and will be referred to only as it is necessary incidentally to do so in the discussion and the decision...