Perry v. American Hecolite Denture Corporation

• Decision Date: 19 September 1935
• Docket Number: No. 10247.,10247.
• Citation: 78 F.2d 556
• Parties: PERRY v. AMERICAN HECOLITE DENTURE CORPORATION.
• Court: U.S. Court of Appeals — Eighth Circuit

78 F.2d 556 (1935)

PERRY v. AMERICAN HECOLITE DENTURE CORPORATION.

No. 10247.

Circuit Court of Appeals, Eighth Circuit.

September 19, 1935.

John E. Stryker, of St. Paul, Minn. (John E. Stryker, Jr., of St. Paul, Minn., on the brief), for appellant.

Francis E. Marsh, of McMinnville, Or. (Wilbur, Beckett, Howell & Oppenheimer, of Portland, Or., and Paul, Paul & Moore, of Minneapolis, Minn., on the brief), for appellee.

Before GARDNER, SANBORN, and WOODROUGH, Circuit Judges.

WOODROUGH, Circuit Judge.

The American Hecolite Denture Corporation brought this suit in equity against David Perry setting up two causes of action. The first cause of action was based on the claim that the defendant was guilty of unfair competition in connection with the sale of denture blanks in that he falsely represented to the dental trade that he was selling denture blanks of the plaintiff company. In the second cause of action the defendant is charged with infringing the plaintiff's trade-marks under the Act of February 20, 1905 (33 Stat. 724, as amended, 15 USCA §§ 81-109). Besides injunctional relief, plaintiff prayed for damages and accounting.

It appears that the plaintiff is a corporation organized under the laws of Oregon and that the defendant is a citizen of Minnesota with his principal place of business at Minneapolis, and more than $3,000 is involved.

About February 18, 1925, a German corporation known as Heko-Werk Chemische Fabrik A-G adopted the trade-mark "Hekolith" applied to the plastic material it manufactured for making prosthesis and artificial dentures for false teeth. It sold a small amount of this product in the United States, but in about August of 1926, Doctor Leif Underdahl, a dentist residing at Portland, Or., acquired from the Heko-Werk Company the exclusive selling rights in the United States. He continued to sell the product until October, 1926, when he organized the plaintiff corporation and transferred his selling rights to it. Since that time the corporation has continuously bought the product from the Heko-Werk Company and sold it in interstate commerce in the United States. On March 22, 1927, the Heko-Werk Company filed application for registration of the trade-mark Hekolith in the United States patent office in connection with its material, the registration having been granted on December 27, 1927, and being still in force.

On April 8, 1927, the Heko-Werk Company, by written agreement with the plaintiff, constituted the plaintiff its exclusive agent, for ten years, to sell Hekolith in the United States and Canada, agreeing to supply the plaintiff with the material, and that it would not sell to others, but would use every means in its power to protect the exclusive agency of the plaintiff. The agreement contained the provision: "The Heko-Werk will protect its sole agents but cannot be made responsible if the material without their knowledge and fault is supplied from any other unknown source." The contract has remained in force.

The plaintiff adopted the word "Heco-lite" in the name of its corporation and applied it to the product it was selling interchangeably with "Hekolith." Hecolite is Hekolith anglicized or translated, and the word "Hecolite" is said by Dr. Underdahl to "have more sound than `Hekolith.'" "It has a better range to it than `Hekolith.'" The plaintiff labeled the box in which the denture blanks were shipped: "Hecolite — The crowning achievement of creative chemistry and dental art." At first common boxes were used, but later plaintiff put the dentures up in distinctive little green boxes. The blanks themselves had embossed thereon by the manufacturer "Hekolith," size numbers, and the words "Made in Germany" in both the French and the English languages. The plaintiff put no markings of its own upon the denture blanks. It does not appear that the plaintiff, in selling or shipping Hecolite or Hekolith ever attached to the goods or containers any notification of trade-mark registration, except that in the early part of 1932, about the time this suit was brought, the plaintiff put on the inside cover of its boxes "Hecolite is a trade-mark of the American Hecolite Denture Corporation and is registered in the United States Patent Office. Products not imported and distributed by the American Hecolite Denture Corporation constitute an infringement thereof." The denture material and blanks were referred to in the trade as either "Hekolith" or "Hecolite." The plaintiff not only made selections and rejections out of the denture blanks received from the German manufacturer, but also subjected the blanks which it offered for sale to a secret process, something like drying out lumber, which greatly improved them. It also made immediate replacement of any plates claimed to be defective.

By assignment dated December 12, 1929, in Germany, and recorded in the United States Patent Office January 21, 1930, Heko-Werk assumed to transfer to plaintiff the entire title and interest in and to its Hekolith trade-mark, together with the good will of the business appurtenant thereto in the United States, the plaintiff having, on September 19, 1929, itself applied for registration of the trade-mark "Hecolite," obtaining certificate of registration on December 23, 1930. The document offered to evidence the assignment of the trade-mark Hekolith to the plaintiff is acknowledged by one Hengstmann, said to be "Direktor" of the German corporation, as his act and deed, but there is no acknowledgment that the signing was the act and deed of the corporation. The document also lacks certification that it is acknowledged according to the laws of the country (Germany) in which it was executed. (Act of Feb. 20, 1905, § 10, 15 US CA § 90.) A further document executed in Germany offered as a ratification of the assignment by the German corporation similarly lacks acknowledgment of the corporation and certification of conformity to the German laws. Plaintiff expended large sums of money in advertising the denture blanks in this country and in demonstrating their uses and advantages, and had built up a large business in them in the United States and had sold more than 2,000,000 at the time of trial. In all of the advertising, demonstrating, and selling done by the plaintiff the name "Hecolite" was always applied to the denture blanks.

The defendant, David Perry, has been in the dental supply business for 45 years, selling to dealers and dentists and having a mailing list of some 8,000 prospective customers, and between August 3, 1928, and September, 1928, he bought around 2,000 Hecolite denture blanks from the plaintiff for resale. He was then fully informed of the exclusive selling rights the plaintiff had acquired from the German manufacturer and of the plaintiff's extensive advertising, but, as he found out that he could buy the blanks even from retailers in Germany and sell them in this country far below the prices maintained here, he determined to do so. He applied to the Heko-Werk Company in Germany, but that company refused to sell to him and referred him to their sole agent in America, the plaintiff. He succeeded, however, in buying supplies of the genuine blanks in Germany and circularized his customers in regard to them. Through such advertising and otherwise he has sold a large number of the denture blanks, which he imported, throughout the states of Minnesota and the Northwest in interstate commerce, and in selling such blanks he has represented them to the trade to be Hecolite blanks; they being embossed with the manufacturer's trade-mark "Hekolith" exactly as were those sold by the plaintiff. There is no claim that he ever handled anything but the genuine product of the Heko-Werk Company. Not knowing of any trade-mark registered in this country covering the material or the denture blanks, he applied for registration of the trademark "Hekolith" in his own name, and his application was passed to issue and published, but was subsequently rejected on account of the prior issuance of the certificate to the German manufacturing company. Perry sold the blanks for less than $2, against the price maintained by the plaintiff of around $3, and his competition was injurious to the plaintiff.

The trial court found that Perry was guilty of unfair competition against the plaintiff and also of infringment of the plaintiff's trade-marks, and issued injunction and ordered accounting.

It appeared on the trial that Hecolite is only one of a great many denture blank materials that have come on the American market made up from material more like celluloid than rubber composition, and Perry is now handling one that he calls "Perolite," having no intention to sell any more Hecolite. He consented to an injunction so far as Hecolite or Hekolith was concerned, but insisted that he had not infringed under the Trade-Mark Act, nor competed unfairly with the plaintiff, and that he was not subject to an accounting. Such are his contentions on this appeal.

We consider first the alleged cause of action based upon the Trade-Mark Act.

Such a suit rests "on the ownership of the trade-marks" and "title to the trade-marks is indispensable to a good cause of action." Shaver v. Heller & Merz Co. (C. C. A. 8) 108 F. 821, 826, 65 L. R. A. 878; Krauss v. Jos. R. Peebles' Sons Co. (C. C.) 58 F. 585; Hopkins on Trade-marks, Tradenames & Unfair Competition (3d Ed.) § 175; 63 Corpus Juris, § 535. The statute reads "any person who shall, without the consent of the owner thereof, reproduce * * * any such trade-mark and affix the same to merchandise" and shall use the same in interstate commerce "shall be liable to an action for damages therefor at the suit of the owner thereof." 15 USCA § 96. Until December, 1929, the trade-mark "Hekolith" belonged to and was registered in the United States patent office in the name of the German manufacturer as the owner thereof, and the plaintiff has made no claim to any ownership therein prior to that date....