P. E. Sharpless Co. v. Lawrence

• Decision Date: 27 April 1914
• Docket Number: 1761.
• Citation: 213 F. 423
• Parties: P. E. SHARPLESS CO. v. LAWRENCE et al.
• Court: U.S. Court of Appeals — Third Circuit

213 F. 423

P. E. SHARPLESS CO. v. LAWRENCE et al.

No. 1761.

United States Court of Appeals, Third Circuit.

April 27, 1914

Duell Warfield & Duell, of New York City (C. H. Duell, F. P Warfield, H. S. Duell, and R. W. France, all of New York City, of counsel), for W. A. Lawrence.

H. T Fenton, of Philadelphia, Pa., for P. E. Sharpless Co.

Before GRAY, BUFFINGTON, and McPHERSON, Circuit Judges.

GRAY Circuit Judge.

The above entitled cause was an appeal by the defendant below and a cross-appeal by the complainant below, from an interlocutory decree in equity, entered March 24, 1913, on final hearing by the United States District Court for the Eastern District of Pennsylvania. The appeal and cross-appeal were decided November 24, 1913, by this court, in an opinion and decree affirming the decree below and dismissing the cross-appeal. 208 F. 886. Thereafter, on December 27, 1913 the mandate in this court issued accordingly and was presented and filed in the court below.

The action was begun by a bill in equity, alleging two distinct causes of action; one of them an averment of ownership by complainants of a trade mark at common law and by force of a registration thereof, dated March 27, 1906, for domestic Neufchatel cheese, with an allegation of infringement thereof by defendant; and the other of them, an allegation of unfair competition in the use by defendant of two certain tin foil package labels for said domestic Neufchatel cheese made and sold by it; with prayers, specific and general, for equitable relief.

After issue joined and proofs taken, the cause came on to be heard, and was adjudicated in by a decree entered Marcy 24, 1913, wherein the relief prayed in the bill, as to the first cause of action, viz., the trade-mark, was denied; and the relief prayed as to the second, viz., unfair competition, was granted.

Accordingly, the trade-mark, whether at common law or as registered, was decreed to be invalid as a basis of the exclusive right claimed by the complainant. It was decree, however, that the defendant was guilty of unfair competition in the sale of Neufchatel cheese, in respect to the use of two certain labels, referred to and described. These labels were adjudged to be an unlawful simulation of plaintiffs' label, and to have been used by defendant on Neufchatel cheese in willful and fraudulent competition with plaintiffs.

It was further decreed that a perpetual injunction issue, enjoining the defendant, etc., from any further use on its packages of Neufchatel cheese of said labels, or any like label in imitation of plaintiffs' label. The decree the closes as follows: 'That the complainant recover of the defendant damages sustained by said complainant from the unlawful acts of the defendant herein adjudged, in its use of said two labels recited in paragraphs 2 and 3 hereof, in the packaging and sale of Neufchatel cheese, together with its costs of suit in this behalf expended, with leave to complainant to apply hereafter for a reference to a master to ascertain and assess said damages, should it be so advised.'

Thereupon the defendant appealed to this court from so much of said decree as adjudged the charge of unfair competition against it; and plaintiffs, by cross-appeal from so much of the decree as adjudged the issue of a technical trade-mark against them. Said appeal and cross-appeal came on to be heard in this court, and were disposed of in an opinion which referred to the distinct causes of action, as follows:

'In this proceeding, William A. Lawrence & Son sought relief against the P. E. sharpless Company, averring (1) infringement of a trade-mark, and (2) unfair competition. The decree adjudged the trade-mark invalid, but granted an injunction on the second ground. Each party has appealed from the decree, the plaintiffs from so much of it as declares their trade-mark invalid, and the defendant company from so much as restrains the unfair competition.'

Pursuant to its opinion, this court, on the 24th day of November, 1913, made its decree, affirming the interlocutory decree aforesaid, and dismissing said cross-appeal, and on the 27th day of December, 1913, issued its mandate, reciting said decree, concluding as follows:

'You are therefore hereby commanded that such execution and further proceedings be had in said cause as, according to right and justice and the laws of the United States ought to be had, the said appeal and cross appeal notwithstanding.'

After the presentation and filing of this mandate in the trial court, upon a motion made by plaintiffs for the entry of an order appointing a master, and against the objection of the defendant on the hearing of said motion, the court entered, on the 19th of January, 1914, the following order:

'And now, January 19, 1914, on motion of Duell, Warfield & Duell, attorneys for the plaintiffs in the above entitled cause, for the appointment of a special master herein, it is ordered and decreed that the case be referred to John Douglass Brown, Jr., residing at Philadelphia, as special master to ascertain, take, state and report an account of the number of packages of Neufchatel cheese made, used or sold by defendant under' (the denounced labels), 'and also the gains, profits and advantages which the defendant has received or which have accrued to it from infringing upon the rights of the plaintiffs by the manufacture, use and sale of Neufchatel cheese under said labels, and the damages which the plaintiffs have suffered by said infringement.'

Thereupon the present petition, sworn to and subscribed in behalf of the defendant, was presented to this court on the 5th day of February, 1914. An order on the plaintiffs to show cause was granted by this court on the 3d of March, 1914, and an answer pursuant to said rule filed by them. In this answer, the facts set forth in the petition as above recited are not denied.

It is contended by the petitioner that the decretal order of January 19, 1914, above set forth, is in substance a new decree, in substitution for paragraph 4 of the final decree of March 14, 1913, as affirmed by this court and ordered by its mandate to be executed as affirmed; that said new decree is a radical enlargement of the scope of the original decree so affirmed, in that it is not limited to a recovery of the 'damages which the complainants have suffered' from the unfair competition adjudged. It is further contended that the language of the decree so affirmed is the correct measure of recovery for unfair competition, and that the enlargement of the original decree, so as to include the recovery of gains, profits and advantages in addition to the damages originally adjudged, is applicable only to the infringement of trade-marks, as to which the prayer of the bill was denied.

The latter contention presents some difficulties. In theory, a technical trade-mark, like a patent right, is a species of property, and when it is invaded or appropriated, the owner thereof is entitled, not only to protection from further trespass, but, to the recovery of the profits issuing therefrom, as incident to and a part of his property right. In suits for unfair competition, on the other hand, the complaint is not of an appropriation of a property right, but of a tort committed by the defendant, in that his conduct has been unlawful by reason of the consequential injury to the plaintiff. In such a case, it is contended the recovery should be for damages actually suffered by the plaintiff, and for those only, the wrong complained of being somewhat analogous to that which would be the basis of an action on the case at...