Peninsular Chemical Co. v. Levinson

• Decision Date: 14 December 1917
• Docket Number: 3043.
• Citation: 247 F. 658
• Parties: PENINSULAR CHEMICAL CO. v. LEVINSON et al.
• Court: U.S. Court of Appeals — Sixth Circuit

247 F. 658

PENINSULAR CHEMICAL CO. v. LEVINSON et al.

No. 3043.

United States Court of Appeals, Sixth Circuit.

December 14, 1917

Wm Lucking, of Detroit, Mich. (F. T. Nelson, of Detroit, Mich of counsel), for appellant.

Littleford James, Ballard & Frost, of Cincinnati, Ohio, for appellees.

The Nelson-Baker Company is engaged, at Detroit, in the business of manufacturing drugs and medicines. Observing that other manufacturers of similar goods were putting out a 'line' of drug store supplies and sundries and supplying many or most of the needs of a chain of drug stores throughout the country, which stores were designated by the trade-name adopted for such line of supplies, the Nelson-Baker Company determined to adopt that method of business. Accordingly, it organized a corporation under the laws of Michigan, with stockholders and officers mainly identical with those of the Nelson-Baker Company. This corporation was named 'Peninsular Chemical Company,' and is the plaintiff herein. Its goods, sold in this country, it bought mainly, or took over from the Nelson-Baker Company but bought some articles from other manufacturers. It adopted, as its general trade-name and trade-mark, for the goods which it handled, 'Penslar,' and this arbitrary name was commonly used in a peculiar script form with certain underscoring and other selected and decorative features.

At the time the present controversy arose the situation is thus accurately and briefly stated by Judge Hollister: 'To such an extent had complainant introduced its goods at the time this suit was brought (December 2, 1915) that it had more than 3,500 agencies in the United States and Canada, and its sales had risen to more than $300,000 annually. These drug stores display the name 'Penslar' on the front glass of the show window, or on the door of the store, and the dealer agencies are known as 'Penslar Drug Stores.' The complainant does not own the drug stores, nor has it any interest in them, so far as appears. The mark is distinctive, attracts attention, and is composed of a coined word written with peculiar characteristics. It has no meaning except as a name for complainant's goods, but it denotes origin, not only from that fact, but also because it is an abbreviation of the adjective 'Peninsular' in complainant's corporate name. The name has become identified with complainant's goods, which enjoy a high reputation for quality and reliability.'

It should be added that, at this time, the plaintiff's 'line' had been extended until it included more than 175 articles, each of which was called 'Penslar,' and was sold at the 'Penslar' drug stores. It had never sold cigars.

The defendants had been engaged at Cincinnati, in a small way, making and selling cigars. They were brothers, and one had charge of producing and one of selling. The latter made his sales mostly by traveling about and by personal solicitation. Shortly before suit was brought, the defendants began to offer for sale, to the Penslar drug stores, cigars which were marked 'Penslar' and 'Made by the Penslar Co.,' and which they offered as being made by plaintiff or in its interest. Their general representation was that plaintiff had determined to add cigars to its line, and had put out these cigars, or caused them to be put out; that defendants were engaged on behalf of plaintiff in introducing the cigars to the Penslar drug stores; and that, if the dealer would not buy them and add them to his line, it would be necessary to offer them to some competitor who did not have Penslar goods. The invoices and bills, which accompanied defendants' shipments when they made a sale, purported to be from the Penslar Company, at Cincinnati, and specially directed that all remittances and correspondence should be addressed to Cincinnati; but in spite of this plaintiff, at Detroit, received remittances and correspondence regarding the cigars.

Thereupon, plaintiff filed this bill in the court below, alleging infringement of a common-law trade-mark, infringement of a registered trade-mark, and unfair competition and asking an injunction. There was the necessary diverse citizenship to give jurisdiction on that ground. The District Court, while finding the facts as claimed by plaintiff, and while accepting, in the main, plaintiff's theories of its rights, felt constrained to dismiss the bill practically on the theory of damnum absque injuria; and plaintiff appeals.

Before WARRINGTON, KNAPPEN, and DENISON, Circuit Judges.

DENISON Circuit Judge (after stating the facts as above).

1. So far as concerns the registered trade-mark and the jurisdiction and rights which rest solely thereon, plaintiff can have no relief. The certificate of registration was issued April 8, 1911, No. 52,253, and specifies that the trade-mark was used for the specified line of articles, all of which were included in 'class No. 6, chemicals, medicines, and pharmaceutical preparations. ' Cigars are not included in this list, nor can they be said to be of the same descriptive properties as the specified articles.

2. Based upon its common-law trade-mark rights, plaintiff argues that it has adopted the name 'Penslar' for articles commonly sold in drug stores; that cigars are so sold; that, although it has not yet sold cigars, it plans to do so, and that this would be a natural and ordinary development of its business; and that it has, therefore, a right to exclude from the use of the name one who adopts it for the sole purpose of forestalling plaintiff's impending adoption. This argument presents the very interesting question as to how far, if at all, a trade-mark may be pre-empted or reserved in advance of actual use-- a question one aspect of which was somewhat considered by this court in Rectanus v. United Drug Co., 226 F. 545, 549, 553, 141 C.C.A. 301 (now pending in the Supreme Court). Its special color in the present case arises from the commercial practice, not yet, as far as we know, considered in any decided case, where a manufacturer or jobber is in the course of establishing and expanding throughout the country a chain of stores which use a trade-name and handle a constantly increasing line of articles sold under that same trade-name.

We have concluded that this question, as well as the somewhat correlative argument by defendants that the terms of plaintiff's charter do not permit it to sell cigars, do not require any decision in this case. We also pass without consideration the argument that since plaintiff is not selling cigars, there is no competition at all between the parties, and so there can be no unfair competition.

3. It is not denied that the good will of a business and the good reputation of an output, when considered in connection with the business itself, are a species of property which may not be destroyed with impunity; and ...