Murphy Door Bed Co. v. Interior Sleep Systems

• Decision Date: 13 May 1988
• Docket Number: No. CV 86-4256.,CV 86-4256.
• Citation: 687 F. Supp. 754
• Parties: The MURPHY DOOR BED CO., INC., Plaintiff, v. INTERIOR SLEEP SYSTEMS, INC., d/b/a Murphy Beds, Etc., Murphy Bed Co. of America, Inc. in Florida, Murphy Bed Co. of America, Inc. in Georgia, and Frank Zarcone, individually, Defendants.
• Court: U.S. District Court — Eastern District of New York

687 F. Supp. 754

The MURPHY DOOR BED CO., INC., Plaintiff, v. INTERIOR SLEEP SYSTEMS, INC., d/b/a Murphy Beds, Etc., Murphy Bed Co. of America, Inc. in Florida, Murphy Bed Co. of America, Inc. in Georgia, and Frank Zarcone, individually, Defendants.

No. CV 86-4256.

United States District Court, E.D. New York.

May 13, 1988.

Robert I. Skoy, Mineola, N.Y., for plaintiff; Leon Friedman, Hofstra Law School, Hempstead, N.Y., of counsel.

Malin, Haley & McHale, P.A., Fort Lauderdale, Fla., Lilling & Greenspan, White Plains, N.Y., for defendants; Edward F. McHale and Dale P. DiMaggio, Fort Lauderdale, Fla., of counsel.

MEMORANDUM OF DECISION AND ORDER

MISHLER, District Judge.

Murphy Door Bed Co., Inc. ("Murphy") seeks compensatory and punitive damages and injunctive relief on three claims stated as: (1) infringement of the trademark Murphy Bed; (2) unfair competition; and (3) breach of contract dated December 9, 1981.

Defendants deny the material allegations of the complaint and, inter alia, assert as affirmative defenses: (1) estoppel by reason of Murphy's "inequitable conduct in inducing Interior Sleep Systems, Inc. to enter into a purported `franchise agreement' based exclusively on alleged trademark rights; (2) failure of consideration in the fraudulent representation that Murphy owned the trademark `Murphy Bed'; (3) fraud in inducing Interior Sleep Systems, Inc. and Frank Zarcone (I.S.S. and Zarcone will be referred to as Zarcone) to enter into the agreement of December 9, 1981 in representing ownership of the trademark `Murphy Bed.'"¹ The court severed the claims of Zarcone against third parties and directed a trial of the issues of liability on Murphy's claims against Zarcone and the other corporate defendants and Zarcone's counterclaims against Murphy.

The issues of fact were tried to the court without a jury. The court finds:

In or about 1900, William L. Murphy started the manufacture of a wall bed in San Francisco, California. The bed was concealed in a closet of a wall when not in use. When ready for use it was lowered to a sleeping position by a counter-balancing mechanism. In 1918, the United States Patent Office granted Mr. Murphy a patent on a "pivot bed" designed along the lines of the wall bed, but permitting the bed to be swung out of the closet for access to the closet. William L. Murphy did business in California under the name Murphy Door Bed Company. He manufactured and sold the wall bed under the name "Murphy" and "Murphy Bed."

In 1925 the Murphy Door Bed Company moved its base of operations, including the manufacture of the wall bed, to Suffolk County, New York and incorporated Murphy Door Bed Company, Inc. under the laws of the State of New York. William L. Murphy, the founder of Murphy, died in 1959 and his son, William K. Murphy, succeeded him as president of Murphy. Though some minor changes were made in the design of the wall bed throughout the years, Murphy has continued to the present time to market the wall bed, as originally conceived, under the trademark "Murphy Bed." It is sold through distributors and agents throughout the fifty states of the United States. Murphy, its distributors and its agents engage in extensive advertising of the wall bed as "Murphy" or "Murphy Bed." Murphy distributes a catalog of its various models nationwide through its distributors and advertises in Sweets Catalog, a service to the building trade.

The 1966 edition of Webster's Third New International Dictionary recorded the definition of a Murphy bed as "a bed that may be folded or swung into a closet when not in use." The definition was repeated in the 1981 and 1986 editions. The 1976 edition of the American Heritage Dictionary defines a Murphy bed as "A bed that folds into a closet for concealment (Designed by William Lawrence Murphy (1876-1959), U.S. inventor.)" Morris Dictionary of Word and Phrase Origins records the origin of Murphy bed as follows:

Before "convertible" sofas came into vogue, the Murphy bed was a commonplace in small apartments. It was simply a bed which folded or swung into a closet for concealment during the hours when it was not in use. It was designed by an American named William Lawrence Murphy (1876-1959), whose other contributions to social advancement, if any, have gone unrecorded. Various forms of folding beds (but not ones that disappeared into closets) have been displayed at the Philadelphia Centennial Exposition (1876), and General Washington used a portable folding cot during the Revolution.

Denial of Registration by the Trademark Trial and Appeal Board

By letter dated August 6, 1981, Murphy's counsel advised that the bed should carry the trademark Murphy. Thereafter, Murphy commenced using the mark "Murphy (tm) Beds." On August 29, 1984, the Trademark Trial and Appeal Board of the Patent and Trademark Office denied Murphy's application to register the trademark "Murphy Bed." In re Murphy Door Bed Co., Inc., 233 U.S.P.Q. 1030. The Board, in classifying the mark as generic, noted:

A generic designation identifies the product itself rather than the manufacturer or other source thereof. It cannot be exclusively appropriated to the use of one party but must remain in the public domain.... Certain designations are generic in the first instance being common words of the English language, i.e., book, chair, table. Others may start out as non-generic terms but, being applied to a newly-invented product having no readily applicable generic name, may become synonymous therewith and in time lose whatever source significance they might originally have had. See McCarthy, Trademarks and Unfair Competition, § 12:8 (1984). This chain of events may occur with respect to a personal name as well as any other designation used in the first instance as a source indicator for a new product. A case in point is SINGER. (McCarthy, supra, § 13:9). That is, if a term has become the accepted designation for the product to which it is applied, it has been rendered a common descriptive or generic name for said product and is unregistrable.

Id. at 1031.

....

We are of the opinion that MURPHY bed has for a long period of time been used by a substantial segment of the public as a generic term for a bed which folds into a wall or a closet.

Id. at 1033.

The application which the Trademark Trial and Appeal Board denied was originally filed on July 22, 1980. On March 23, 1981, the Examining Attorney of the Patent and Trademark Office wrote:

Registration is refused on the Principal Register because the mark, when applied to goods and/or services, is considered to be merely of the Trademark Act; TMEP Section 1207. It is merely descriptive of a characteristic of the goods.

The proof of distinctiveness under Section 2(f) of the Trademark Act overcomes any difficulties with regard to the issue of applicant's mark being primarily merely a surname under Section 2(e)(3) of the Act.

(Exh. 6).

On July 26, 1982, Murphy requested reconsideration of the March 23, 1981 determination and attempted to show that the trademark "Murphy Bed" indicated that Murphy manufactured and distributed the product. Murphy showed that other manufacturers of wall beds used the trademarks "Cabinet Bed," "Sleeping Device," "Convert-A-Room" and "Automatic Adjustable Hydraulic Bed." (Ex. 6 — letter of Curtis, Morris, Safford, P.C.). This request was supplemented by a further request for reconsideration filed on August 6, 1982. On November 16, 1982 the Examining Attorney wrote:

the term "Murphy" is at least merely descriptive of the goods in question. In re G.E. Smith, Inc., 138 U.S.P.Q. 518 (TTAB 1963). The crucial question is whether the claim of distinctiveness is enough to indicate that the mark has come to identify the source of the goods ... As we previously noted in the record, the word "Murphy" has become "generic" and can be found in the dictionary to mean `a bed that can be folded or swung into a closet.' Accordingly, the refusal to register applicant's mark is hereby repeated, and this refusal is made FINAL.

(Exh. 6).

The December 9, 1981 Agreement

Prior to the execution of the agreement made the subject of this litigation, Zarcone was employed by Castro Convertibles, engaged in the business of manufacture and sale of sofas and club chairs which could be converted into beds. In the summer of 1981, Zarcone called William K. Murphy, president of Murphy, for an appointment to discuss a distributorship of the Murphy bed in Florida. By letter dated July 30, 1981, Murphy suggested an exclusive franchise for the sale of Murphy beds for Broward County, which franchise would be extended to Palm Beach and Dade Counties if Zarcone ordered "a minimum of 50 Murphy beds by the end of 1981." (Ex. 11). Zarcone placed orders with Murphy beginning August 6, 1981 for delivery to a showroom he had leased at 2241 S.W. 59th Avenue, Hollywood, Florida. On November 27, 1981, Zarcone formally opened the showroom at that address in the name of Interior Sleep Systems, Inc., d/b/a Murphy Beds, Etc. ("ISS").

In the meantime, Zarcone retained Coleman R. Rosenfield to prepare a letter agreement granting ISS an exclusive franchise for the sale of Murphy beds in Broward County. The letter was signed by Zarcone as president of ISS and mailed to Murphy. (Ex. 15). Murphy rejected the letter drafted by Zarcone's counsel and on December 9, 1981 mailed a letter agreement granting an exclusive franchise for the sale of Murphy beds to ISS for a period of one year beginning December 31, 1981 for the Counties of Broward, Dade, Palm Beach and Monroe. The letter was captioned: "Re: Agreement for the Sale of Murphy (tm) Beds." It provided that at the end of the term of one year the agreement would "continue indefinitely subject to either party giving the other 60 days warning of consideration of cancellation and 90 days additional notice of definite cancellation." The agreement further provided in pertinent part:

4) Interior Sleep Systems will pay for

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