Katz Drug Co. v. Katz

• Decision Date: 22 March 1950
• Docket Number: No. 4495.,4495.
• Citation: 89 F. Supp. 528
• Parties: KATZ DRUG CO. v. KATZ.
• Court: U.S. District Court — Eastern District of Missouri

89 F. Supp. 528

KATZ DRUG CO. v. KATZ.

No. 4495.

United States District Court E. D. Missouri, E. D.

March 22, 1950.

Paul R. Stinson, Kansas City, Mo., Stinson, Mag, Thompson, McEvers & Fizzell, Kansas City, Mo., Thomas S. McPheeters, Sr., St. Louis, Mo., Bryan, Cave, McPheeters & McRoberts, St. Louis, Mo., for plaintiff.

Joseph J. Gravely, St. Louis, Mo., Roy A. Lieder, St. Louis, Mo., for defendant.

MOORE, Chief Judge.

This is an unfair competition suit. Plaintiff operates a chain of stores and conducts and advertises its business in its corporate name "Katz Drug Company", and also under the trade names "Katz", "Katz Drug Stores" and Katz Super Stores". It uses drawings of cats or kittens in connection with the printed words and names.

The defendant, Meyer L. Katz, a registered pharmacist, owns and manages one small neighborhood drug store in a residence district in the City of St. Louis. He was born in the City of St. Louis in 1910 and has lived in said city throughout his life. He finished grammar school at the age of thirteen and having developed a desire to become a druggist he decided to take a scientific course in high school. After graduating from such a course, he entered the St. Louis College of Pharmacy and graduated from said college in 1929 at the age of twenty. While attending the College of Pharmacy he worked after school hours in a drug store, and after graduation was employed in several local drug stores.

On March 1, 1933, defendant purchased a drug store at 5393 Easton Avenue in St. Louis, which will be hereafter referred to as the "Easton Avenue Store". This store was operated continuously until January 18, 1946.

Immediately after the opening of the Easton Avenue Store, defendant had painted on the windows "Katz Drugs" in block letters with the representation of the head of a cat. Later, defendant displayed a neon sign "Katz Drugs". From the beginning in 1933, until 1936, defendant's drug store was listed in the St. Louis Telephone Directory as "Katz Drug Store" and thereafter the listing was "Katz Drugs", which is his present listing.

Shortly after the opening of his store, the defendant adopted labels with "Katz Drugs" and the representation of the head of a cat, and this type of label he has continued to use to now.

In 1945 defendant bought a drug store at the corner of Union Avenue and Delmar Boulevard in St. Louis, which he now operates, and three months later he sold his Easton Avenue Store and the name on that store was changed.

The history of the plaintiff goes back to 1914, when Isaac Katz operated a cigar store carrying also such items as fruit and candy, but not drugs, at 8th and Grand Avenue in Kansas City, Missouri. About a year later Isaac Katz was joined in a partnership with his brother, Michael Katz, and a second store was opened at 12th and McGee in Kansas City. The name "Katz Brothers" was used at that time. About the beginning of the First World War the Katz Brothers added some drugs to their stock and commenced using the terms "Katz Drugs", or "Katz Drug Stores", or "Katz Drug Company".

Isaac Katz and Michael Katz operated as partners until 1926, in which year they were incorporated under Missouri law, and so continued until 1929 when the Company became a Delaware corporation.

In August, 1929, plaintiff opened a store in St. Joseph, Missouri; in April, 1930, another in Kansas City; in May, 1930, a store in Des Moines, Iowa; in December, 1930, another store in Kansas City, Kansas; and another one in Kansas City, Missouri, in October, 1931. Subsequently, plaintiff opened a number of other stores, some of them in St. Louis.

Plaintiff, in its advertising, has always featured its corporate name and the words "Katz Drugs" and "Katz Super Stores", and it had long used cats and kittens as symbols in its advertising.

Plaintiff prays that the defendant be enjoined from using the name "Katz", "Katz Drugs", or "Katz Drug Co.", and from using the symbol or symbols of a cat or cats in St. Louis or elsewhere.

Defendant in his answer and counterclaim avers that he was well established in the retail drug business in St. Louis under the name "Katz Drugs" and "Katz Drug Store" before plaintiff ever opened a store in St. Louis, and denies that any act of his and any use by him of the name "Katz Drugs" or "Katz Drug Store", or a picture of a cat, is misleading or confusing plaintiff's customers or the buying public, or has ever done so; and defendant further avers that if there be any confusion on the part of the buying public, the fault is that of plaintiff, which has invaded defendant's trade territory, although well knowing defendant was already established in the drug business in St. Louis under the name "Katz Drugs" or "Katz Drug Store".

Defendant's answer and counterclaim concluded with a prayer that plaintiff be restrained and enjoined from using the name "Katz", "Katz Drugs", or "Katz Drug Company" in the City of St. Louis and surrounding trade territory, and that plaintiff be required to account for all damages suffered by defendant and for all profits made by plaintiff in the operation of its stores in St. Louis and Wellston.

Plaintiff's trial brief sets forth that "Plaintiff's asserted right to injunctive relief will be pressed in these points:

"(1) Years of advertising of `Katz' in plaintiff's corporate and trade names has given it a secondary meaning and created a property right in plaintiff;

"(2) That property right had extended to St. Louis in 1933 (a) because the secondary meaning was already there, and (b) in contemplation of law because St. Louis was within the natural field of plaintiff's expansion;

"(3) Plaintiff being `first in the field', defendant is bound to distinguish his business from plaintiff's. He has no absolute right to the use of his own name;

"(4) Plaintiff has not been guilty of laches; but even laches does not bar injunctive relief;

"(5) The equities overwhelmingly preponderate in plaintiff's favor."

At the beginning plaintiff contended that plaintiff was "first in the field" in metropolitan St. Louis (a) because its corporate and trade names had acquired a secondary meaning there before 1933 when defendant opened his Easton Avenue Store and (b) St. Louis was in the normal field of plaintiff's expansion: plaintiff further contended that whether or not the earned secondary meaning attached to plaintiff's corporate and trade names included St. Louis in 1933, nevertheless that area was then within the normal and legitimate field of plaintiff's expansion; and that plaintiff's rights and the law's protection were then the same as in Kansas City, St. Joseph and elsewhere.

Defendant testified that at the time he opened his store on Easton Avenue, in March, 1933, he had never heard of the plaintiff.

On March 5, 1934, Max Skeer of Kansas City, Missouri, a real estate agent, who was the representative of the plaintiff, called on the defendant and demanded that the defendant take his name off the window. The defendant testified that Skeer offered him $25 if he would take the sign down and have it changed to "Meyer Katz Drug Store"; and that Skeer then raised his offer to $100 and finally to either $250 or $500, and that he told Mr. Skeer he would think it over.

The testimony of Skeer was that he explained to defendant that Katz of Kansas City was coming to St. Louis and that there might be some confusion, and asked defendant if he could not change his sign and eliminate the use of the cat and use the name "Meyer Katz"; and that he told defendant he would recommend to plaintiff that it pay the expense of changing the sign. Skeer testified he told defendant that he had no right to use the name "Katz" or the symbol of a cat.

Defendant testified that after the visit of Mr. Skeer, during which Mr. Skeer told him he would have to take his name off the sign at his store, he went downtown and consulted an executive of the Meyer Bros. Drug Company and Mr. Alex Rubenstein of the Economical Drug Co., defendant being a customer of both companies. Defendant testified that Mr. Rubenstein asked him why he didn't open some more stores.

The day following his first visit, defendant stated Mr. Skeer made a second call and offered him $2500 and then $5,000; and that he told Mr. Skeer he would keep his name on his drug store. Defendant further testified that after the second visit from Mr. Skeer he again saw Mr. Rubenstein, who said: "Why not open some stores of your own?"; that Mr. Rubenstein told him he thought he could get him the money; that he could get some financial people who would be willing to make a loan. Following this, Mr. Rubenstein took him to Rubenstein's lawyers, and a company was incorporated "The Druggists Investment Co.", and defendant signed a contract April 6, 1934, to go into business with the Druggists Investment Co., operating his Easton Avenue Store and opening another store at 711 Olive Street, St. Louis, profits of the Easton Avenue Store to be divided fifty-fifty, and seventy-thirty so far as 711 Olive Street was concerned. Defendant agreed to give the enterprise the use of the name "Katz", "Katz Drugs" and "Katz Drug Stores"; and they contemplated opening other stores.

Previous to April 6, 1934, when said contract was signed, there had appeared an article on March 11, 1934, in the St. Louis newspapers, stating that the Kansas City Katz was coming to St. Louis and would open a store at the Southwest Corner of 7th and Locust Streets, which is just around the corner from 711 Olive St.

Defendant testified he never knew until twelve years later who was back of Druggists Investment Company; that he did not know that the real backer was the May Department Stores, owners of Famous-Barr store, which operated the largest department store in St. Louis, just across the street from the proposed location of plaintiff. Another store was later opened by the Druggists Investment Company on Lee Avenue, in which defendant was interested,...