Hat Corporation of America v. DL Davis Corporation

• Decision Date: 23 June 1933
• Docket Number: No. 2263.,2263.
• Citation: 4 F. Supp. 613
• Court: U.S. District Court — District of Connecticut
• Parties: HAT CORPORATION OF AMERICA v. D. L. DAVIS CORPORATION.

4 F. Supp. 613

HAT CORPORATION OF AMERICA v. D. L. DAVIS CORPORATION.

No. 2263.

District Court, D. Connecticut.

June 23, 1933.

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Parmelee & Thompson (by Henry F. Parmelee), of New Haven, Conn., and Briesen & Schrenk (by Hans v. Briesen), and Karl Pohl, all of New York City, for complainant.

Lind, Shlivek, Marks & Brin (by Max Shlivek), of New York City, and Cummings & Lockwood, of Stamford, Conn., for defendant.

HINCKS, District Judge (after stating the facts as above).

Although I have separately stated the facts of this case and my controlling conclusions, the importance of the case, and, even more, the importance of the principles of law involved, seem to me to justify a fuller discussion.

The first glimpse of the facts discloses that Wm. H. Dobbs has no part in the corporate organization of the defendant. Yet, the defendant is distributing its product under his name. Such use by the defendant of the name of one not a part of its organization, in view of its close similarity to the name "Dobbs," so long used by the plaintiff and its predecessors and so thoroughly established as indicating the plaintiff's product, clearly gives rise to an inference of fraud. This inference must stand unless rebutted or explained. In an apparent effort to offset this inference, the defendant has introduced much evidence to show that precautions were taken not only by itself but also by Wm. H. Dobbs and Bert Pope, Inc., to prevent confusion amongst the purchasing public between the plaintiff's product under the name "Dobbs" and the defendant's product under the name "Wm. H. Dobbs." But since on the evidence it is clear that confusion has resulted, irrespective of the bona fides of these efforts (which the plaintiff disputes), these facts at most attest an effort to minimize the damages resulting from the tort, and standing alone do not constitute a defense to the plaintiff's right of action, at least against the defendant herein.

Nor do the other facts exonerate the defendant from this imputation of fraud. On the contrary, the evidence furnishes clear and convincing confirmation of that imputation. It is wholly clear that Wm. H. Dobbs personally had never acquired any particular reputation in the hat trade in New York City, to which his activities up to the time of his association with the defendant had been almost wholly confined; outside of New York he was wholly unknown. The fact that the defendant, whose president had had a long experience in the hat business, was ready to split its earnings with Wm. H. Dobbs either directly or indirectly through interposed corporations can only be attributed to a desire to acquire the name for its propensity to mislead and confuse the public to the defendant's gain and the plaintiff's hurt. There is nothing here to show that the name had any legitimate "residual advantage" to Wm. H. Dobbs, within the meaning of the opinion in Waterman Co. v. Modern Pen Co., 235 U. S. 88, 35 S. Ct. 91, 59 L. Ed. 142.

The form of the relations between Wm. H. Dobbs and the defendant and their subsequent history serve but to confirm this conclusion. The interposition of Bert Pope, Inc., a corporation in which, to be sure, Wm. H. Dobbs had a stock interest, as the "distributor" of the defendant's product, cannot disguise the fact that the defendant itself under the name "Wm. H. Dobbs" sold the hats which it manufactured. To be sure, Bert Pope hired and directed the salesmen; he may have "approved" the design of the product. But Bert Pope, Inc., including Wm. H. Dobbs, its officer and employee, did nothing in connection with the distribution of the product that is not ordinarily performed by a sales manager of the manufacturer. That the defendant manufacturer had a right to employ Bert Pope, Inc., and Wm. H. Dobbs to assist in its sales I have no doubt. That it could compensate them for their services on a contingent basis I have no doubt. But all this the defendant could do and can still do without poaching on the plaintiff's good will.

The fraudulent character of the defendant's conduct is further manifested by the calculated deliberation with which it subordinated its own name in the merchandising of its product to the name which it had attempted to hire. Instead of emphasizing its product as its own, it has consistently and deliberately designated it, and encouraged others to designate it, by the name of "Wm. H. Dobbs" alone. On the women's hats of its manufacture, it has imprinted the Wm. H. Dobbs facsimile on the sweatband; its own name nowhere appears on the product. On the men's hats, the Wm. H. Dobbs name and crest are conspicuously printed on the sweatband or lining, and its own name is relegated to a paper size-label pasted to the felt beneath the sweatband. The hatboxes, though they bear no resemblance to those of the plaintiff or its predecessors, are conspicuously marked with the Wm. H. Dobbs name and crest; the defendant's name nowhere appears thereon. The defendant's shipping labels, salesmen's cards, invoices, and stationery, to be sure, show the defendant's name. But such papers are not normally seen by the ultimate consumer. And even these papers stress the legend, "Sole Manufacturers of Wm. H. Dobbs Hats." And in the advertising of the product, most of which is done by the defendant's retailers but with the defendant's acquiescence, the defendant's name is wholly absent. The conclusion is irresistible that the use of the name by the defendant was an act deliberately intended to enable the defendant to reap the plaintiff's harvest by indirect imposition upon the purchasing public.

And so the defendant in its answer seeks to justify the use of the name under a claim of right derived from the contract in evidence as "Exhibit R."

It may be noted at the outset that Exhibit R purports to license the defendant to use the name "Wm. H. Dobbs" in the manufacture only of men's felt hats. It contains no authority to use the name in connection with ladies' hats. The defense of a special license is therefore at most a defense pro tanto. However that may be, it is apparent that the defendant's use of the name is with the full consent of Wm. H. Dobbs, and it makes no difference for present purposes whether the license upon which the defendant relies for its justification is a special license such as set forth in Exhibit R or a license implied from the underlying facts.

In any event, this license, according to the plaintiff, is at most an attempted assignment of a trade-name in gross, and such an assignment, plaintiff contends, is illegal and ineffective. The plaintiff cites many cases in support of this contention but makes no effort to reconcile the doctrine of these cases with the remark of Justice Holmes in Waterman Co. v. Modern Pen Co., supra, at page 96 of 235 U. S., 35 S. Ct. 91, 93, 59 L. Ed. 142, where it was said: "While it very well may be true that the transfer of a name without a business is not enough to entitle the transferee to prevent others from using it, it still is a license that may be sufficient to put the licensee on the footing of the licensor as against the plaintiff."

Does this mean that any man who has no business, but who happens to have a name which others have made valuable as a trade-name, may license another to use the name in competition with the proprietor of a trade-name? I think not. Such a holding, impliedly authorizing one to capitalize the nuisance value of his name, would be an invitation to blackmail and deception.

The language quoted must rather be given such scope as the underlying facts require, and the opinion on its face shows that the learned justice had before him the case of "a man who for years has been trying to do business," "who has established himself in the business," and who assigns to a partnership of which he becomes a member — at least to the extent that "he had pecuniary reasons for wishing to see it succeed" — "his name and whatever good will he has." By such an assignment, it was said, the transferee derived the immunity which the transferor enjoyed as against a plaintiff of the same family name who was first in the field of competition.

This decision, I think, does not reach the facts of the case at bar, and so its authority cannot sustain the validity of the purported license here; for at the time of the attempted transfer, the only pecuniary value of this name to Wm. H. Dobbs or any one else was its nuisance value. Nor did Wm. H. Dobbs, like Waterman, couple the assignment of his trade-name with the transfer of his business and its good will. Cf. Kidd v. Johnson, 100 U. S. 617, 25 L. Ed. 769.

But it is not necessary to base my decision upon the sole ground of the invalidity of the attempted license of the name; for even if the license were held valid, under the Waterman Case it would pass only such immunity as the licensor theretofore enjoyed. And I am satisfied that at the time the "license" was given, the licensor, Wm. H. Dobbs, as against the plaintiff, had no right himself to use his name as the defendant herein has subsequently used it. Thus by the license the defendant, as against the plaintiff, acquired exactly nothing.

This conclusion depends upon the limitations which attach to a man's right to use his own name in his own business, a subject upon which there is much uncertainty in the law.

One of the earliest cases on this point in England seems to have been that of Burgess v. Burgess, 3 DeG. M. & G. 896, decided in 1853. There the bill and affidavits in support thereof show that the plaintiff's predecessor had first adopted the name of "Burgess's Essence of Anchovies" long prior to its use by the defendant, and that large quantities of the product had been sold by the plaintiff and his predecessor under a label which to a certain extent the defendant had imitated. But the published report of the case, at...