JA Dougherty's Sons v. Kasko Distillers Products Corp.

• Decision Date: 19 November 1940
• Docket Number: No. 365.,365.
• Citation: 35 F. Supp. 561
• Parties: J. A. DOUGHERTY'S SONS, Inc., DISTILLERS, v. KASKO DISTILLERS PRODUCTS CORPORATION.
• Court: U.S. District Court — Western District of Pennsylvania

35 F. Supp. 561

J. A. DOUGHERTY'S SONS, Inc., DISTILLERS, v. KASKO DISTILLERS PRODUCTS CORPORATION.

No. 365.

District Court, E. D. Pennsylvania.

November 19, 1940.

Beekman Aitken, of New York City, and Marshall Coyne, of Philadelphia, Pa., for plaintiff.

Jerome J. Rothschild and Fox, Rothschild, O'Brien & Frankel, all of Philadelphia, Pa., for defendant.

BARD, District Judge.

This suit was instituted by J.A. Dougherty's Sons, Inc., Distillers, against the Kasko Distillers Products Corporation, to obtain an injunction restraining the Kasko corporation from infringing upon the rights of the plaintiff in the trade-mark "Country Gentleman", using it in any manner, or otherwise unfairly competing with the plaintiff. The plaintiff prayed for further relief in the form of an accounting of damages done to the plaintiff and profits received by the defendant as a result of the defendant's use of the trade-mark "Country Gentleman". Other relief, auxiliary to the injunctive relief, was also sought.

In its complaint, the plaintiff avers that it had been in the business of manufacturing and distributing distilled spirits prior to April, 1932, and that during April it selected as a trade-mark for its products the words "Country Gentleman". It is further averred that, during April 1932, under special government permit, the plaintiff commenced to distribute and sell distilled spirits in bottles labelled "Country Gentleman", within Pennsylvania and throughout the United States. The product so labelled is alleged to have been and now to be one of high quality. Large sums of money are alleged to have been spent in promoting the sale of the product in the United States generally and in Pennsylvania particularly. These expenditures, the plaintiff avers, resulted in the sale of large quantities of the product in the United States and Pennsylvania. By reason of these alleged facts, the plaintiff avers that it thereby became and now is the owner of the exclusive right to use this trade-mark in connection with sale of its liquor products in interstate commerce.

The plaintiff avers that the defendant, with knowledge of the plaintiff's prior use of and success with the trade-mark "Country Gentleman", began, in June 1934, to put out and distribute and sell, in Pennsylvania and other states, corn whiskey in bottles labelled similarly to those of the plaintiff. These alleged acts of the defendant have, it is averred, constituted unfair competition and an infringement of the plaintiff's rights resulting in damage to the plaintiff and profit to the defendant.

It is admitted by the defendant that it adopted the trade-mark "Country Gentleman" in June, 1934, and averred that it adopted the same only after thorough investigation revealed no prior or current use. The defendant denies that it knew of the alleged prior appropriation by the plaintiff until the plaintiff informed the defendant of the plaintiff's claim to priority in April, 1939. The defendant further avers that it spent large sums of money to acquire its allegedly large volume of sales of corn whiskey under the "Country Gentleman" label. Valuable good will is averred as another result of defendant's expenditures and efforts. The defendant denies that the plaintiff has spent large sums for promotion and advertising of its "Country Gentleman" brand and alleges that the plaintiff spent no money for such purposes during the last five years preceding the filing of its complaint. The defendant also alleges that the plaintiff has sold no whiskey under the "Country Gentleman" trade-mark in Pennsylvania during the last five years preceding the filing of the complaint. Defendant avers that the plaintiff has known of the defendant's use of the trade-mark "Country Gentleman" for several years and has been delinquent in instituting an action for protection of the plaintiff's alleged rights in the trade-mark. Defendant finally denies that its acts constitute an infringement of the plaintiff's rights.

A counterclaim was asserted by the defendant for injunctive and other relief similar to that sought by the plaintiff against the defendant. In addition to averments appearing in the answer, the defendant avers that it registered the trade-mark with the proper United States and Pennsylvania authorities in June and September, 1934, that plaintiff has long known of the defendant's use of the trade-mark, and that the plaintiff contemplates appropriation of the defendant's good will pertaining to the trade-mark.

The plaintiff answered the counterclaim, denying the material averments thereof and reiterating its previous position that it is the owner of exclusive rights in the trademark "Country Gentleman" and demanding that the counterclaim be dismissed.

Trial was had before the court without a jury. Thereafter, and before judgment, the plaintiff moved for a partial new trial under Rule 59 of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, on the ground of newly discovered evidence. This motion was not formally determined, but the evidence was considered, along with the evidence previously adduced, in the instant findings of fact.

I make the following special findings of fact:

1. The plaintiff is a Maryland corporation organized and existing under the laws of the State of Maryland, and is engaged in the business of bottling and selling whiskies, with its principal place of business in Philadelphia, Pennsylvania.

2. The defendant is a corporation, organized and existing under the laws of the Commonwealth of Pennsylvania, and is engaged in the business of bottling and selling whiskies, with its principal place of business in Philadelphia, Pennsylvania.

3. The plaintiff commenced to sell whiskey under the trade-mark "Country Gentleman" during April, 1932.

4. The sales referred to in paragraph three were under a special permit from the United States Treasury Department, authorizing the sale of whiskey for medicinal purposes only.

5. The plaintiff sold whiskey trademarked "Country Gentleman" to purchasers in Pennsylvania and in the United States generally, for medicinal purposes, between April, 1932, and December, 1933, when the Eighteenth Amendment was repealed.

6. From the date of the repeal of the Eighteenth Amendment until the effective date of the Pennsylvania Liquor Control Act, January 1, 1934, 47 P.S. § 744 — 1 et seq., the plaintiff sold "Country Gentleman" whiskey to but one purchaser, The Adelphia Hotel, Philadelphia, Pennsylvania.

7. Since January 1, 1934, the Pennsylvania Liquor Control Board has been the only agency for distribution and marketing of spiritous liquors in Pennsylvania.

8. Between January 1, 1934, and April 5, 1934, the plaintiff sold three cases of "Country Gentleman" to the Pennsylvania Liquor Control Board on special order.

9. Since April 5, 1934, the plaintiff, though making sales in adjacent states and in the United States generally, has made no sales to the Pennsylvania Liquor Control Board.

10. Since April 5, 1934, the plaintiff has made no effort and spent no money to promote sales of its "Country Gentleman" brand in Pennsylvania.

11. In June, 1934, the defendant, after reasonable and customary investigation as to its prior or current use revealed no prior or current user of the trade-mark "Country Gentleman", innocently, in good faith, and without any knowledge of its prior use, commenced to use the trade-mark "Country Gentleman" for its whiskey.

12. The defendant registered this trademark with the proper Pennsylvania and United States authorities in September, 1934, and June, 1935, respectively, although the United States Patent Office, in proceedings instituted by the plaintiff, recommended on November 8, 1940, that this registration be cancelled.

13. The defendant, since June, 1934, has spent over $80,000 to publicize and promote the "Country Gentleman" brand in Pennsylvania.

14. Since June, 1934, the defendant has sold increasingly large amounts of whiskey under the trade-mark "Country Gentleman" to the Pennsylvania Liquor Control Board.

15. The defendant now sells to the Pennsylvania Liquor Control Board over 80% of the corn whiskey sold in Pennsylvania, and sold whiskey of a retail value of nearly $1,000,000 in 1939 to the Board — all of which was trade-marked "Country Gentleman".

16. The plaintiff knew of the defendant's use of the trade-mark "Country Gentleman" on or before the year 1937.

17. The plaintiff made no objection to the defendant's use of the trade-mark "Country Gentleman" until April 28, 1939.

18. The plaintiff did not affirmatively consent to the defendant's continued use of the trade-mark "Country Gentleman".

19. The defendant's "Country Gentleman" has the exclusive recognition of the Pennsylvania market.

20. The plaintiff's "Country Gentleman" is known in the "Philadelphia Market Area", but not to the consuming public in Pennsylvania.

21. The defendant has established a valuable trade in its "Country Gentleman" brand in Pennsylvania.

Discussion.

There is no such thing as a valid trade-mark except as appurtenant to an established and continuing business with which it is employed. United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 39 S.Ct. 48, 63 L.Ed. 141; Ph. Schneider Brewing Co. v. Century Distilling Co., 10 Cir., 107 F.2d 699. Although it was the rule that the right of protection would not be projected in advance of the extension of trade, United Drug Co. v. Theodore Rectanus Co., supra, and Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 36 S.Ct. 357, 60 L.Ed. 713, protection will now be accorded in areas where the business is developing or where expansion is a normal expectation. Sweet Sixteen Co. v. Sweet "16" Shop, 8 Cir., 15 F.2d 920; Western Oil Refining Co. v. Jones, 6 Cir., 27 F.2d 205.

In order that a trade-mark be established as appurtenant to a business in a particular area, there must be an actual occupation of the...