Pezon Et Michel v. Ernest R. Hewin Associates, Inc.

• Decision Date: 07 June 1967
• Docket Number: No. 67 Civ. 1072.,67 Civ. 1072.
• Parties: PEZON ET MICHEL, Plaintiff, v. ERNEST R. HEWIN ASSOCIATES, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

270 F. Supp. 423

PEZON ET MICHEL, Plaintiff, v. ERNEST R. HEWIN ASSOCIATES, INC., Defendant.

No. 67 Civ. 1072.

United States District Court S. D. New York.

June 7, 1967.

COPYRIGHT MATERIAL OMITTED

Burns, Lobato & Zelnick, New York City, for plaintiff, Allan Zelnick, New York City, of counsel.

Jesse K. Robinson, New York City, for defendant, Darby & Darby, Donald J. Overocker, William F. Dudine, Jr., New York City, of counsel.

OPINION

BRYAN, District Judge:

In this action for trademark infringement and unfair competition plaintiff moves for preliminary injunctive relief. Jurisdiction is based on diversity of citizenship, 28 U.S.C. § 1332, and the Lanham Act, 15 U.S.C. §§ 1121, 1114(1), 1125(a), 1126(h); 28 U.S.C. § 1338.

Pezon et Michel (Pezon) is a French corporation doing business in France which sells fishing tackle and equipment throughout the world. Defendant Ernest R. Hewin Associates, Inc. (Hewin) is a New York corporation doing business in this district which imports and distributes fishing tackle and equipment.

Since about 1935 Pezon has exported to the United States various sizes and types of spinning reels under the trademark LuXor. These reels were mechanically designed, allegedly at the instance of Pezon, by Paul Mauborgne, a well known French industrial designer now deceased, whose interests are presently represented by P. Mauborgne & Co., a French partnership. P. Mauborgne & Co. (or Mauborgne's Estate) presently holds fifteen unexpired United States mechanical patents and also a number of French patents on spinning reels.

Pursuant to long standing arrangements between Mauborgne and Pezon the reels were manufactured in France under Mauborgne's supervision by Lemaignen Leche Vallier Mercierf (Lemaignen). The reels so manufactured, exported to the United States by Pezon and sold by its distributors here, had cast in raised letters on the housing the word "LuXor", the name "Pezon et Michel" and the legends "Licence P. Mauborgne" and "Made in France—Brevete & G. D. G." The trademark "LuXor" for "fishing-tackle (excluding fishnets,)" was registered in the United States Patent Office by Pezon on March 8, 1966.

The present controversy between the parties stems from a dispute in France between P. Mauborgne & Co. and Pezon concerning rights to license, manufacture and distribute the reels which were being sold by Pezon under the LuXor trade-mark. After the death of Paul Mauborgne in 1963 the relations between Pezon and P. Mauborgne & Co., controlled by his widow, deteriorated. On August 10, 1966 Mauborgne & Co. terminated its arrangements with Pezon, refused to sell them any more of the reels manufactured under the Mauborgne patents by Lemaignen, and forbad any further sales. On September 19, 1966 Mauborgne and Lemaignen entered into an agreement with Hewin for the exclusive distributorship of Mauborgne reels in the United States under Mauborgne trademark CrAck. Hewin has been selling these reels in the United States for some months under the CrAck trademark pursuant to this agreement. The parties concede that the CrAck reels are identical in all respects with the reels sold by Pezon under the LuXor trademark except that the trademark "CrAck" and the legends "Licence P. Mauborgne," "Bernouville-Eure" and "Made in France— Brevete & G. D. G." are cast in the housing in raised letters.

Mauborgne and Pezon have brought suit against each other in the French courts to determine their rights with respect to the manufacture and sale of the reels involved in this action and to the tools and dies used in their manufacture. The French litigation is pending and undetermined though it appears that an application by Pezon for preliminary relief was denied on April 8, 1967. Hewin is not a party to the French litigation.

The issues in the case at bar are much narrower than those in France. For purposes of this action Pezon concedes that Hewin has the right to sell the reels designed by Mauborgne under the mark CrAck which are identical with the reels Pezon sells under the tradename LuXor. Pezon's suit here is directed solely at alleged infringement of its LuXor trademark by Hewin and alleged unfair competition in Hewin's sale of the CrAck reel.

Pezon contends that by his methods of sale, advertising and promotion, Hewin is attempting to palm off the CrAck reel as the LuXor reel; is creating confusion in the minds of the purchasing public as to source; is falsely creating the impression that the LuXor reel is no longer imported or available; and is trading on and appropriating the goodwill of Pezon and the LuXor trademark. Pezon claims that as a result of such conduct its United States distributor has stopped handling LuXor reels and that its American market is being destroyed.

Hewin, on the other hand, insists that everything which it has done in the sale and promotion of its CrAck reels is lawful, legitimate and entirely proper in the light of the termination of the prior arrangements between Mauborgne and Pezon and its distributorship agreement with Mauborgne and Lemaignen. It contends, moreover, that Pezon no longer has any right to distribute the Mauborgne reels in the United States and that any attempt to do so under the mark LuXor would be in violation of Mauborgne's rights generally and an infringement of Mauborgne's valid United States patents.

Nevertheless, Hewin by letter to the court dated April 14, 1967, has represented that it "agrees not to use the mark LUXOR on its reels, reel parts or packaging. Likewise defendant agrees not to represent to the trade that it owns the LUXOR mark or that Hewin or CRACK reels are in any way related to Pezon et Michel. Defendant further agrees not to represent to the trade that Pezon et Michel is no longer in business, or that Pezon et Michel no longer sells LUXOR reels."

I.

Despite trademark infringement overtones, Pezon's claim here is essentially one of unfair competition.¹ The reels sold by Pezon and Hewin are identical both mechanically and in appearance except for the marks LuXor and CrAck. Pezon claims no monopoly in the sale of these reels by way of patent protection or otherwise. From the standpoint of Pezon these reels, for purposes of this motion at least, must be considered to be in the public domain and a free competitive market in them is to be encouraged in the public interest.

As Pezon recognizes, manufacture and sale of an exact copy of an unpatented design by a new entrant into the market does not in itself constitute unfair competition. E. g., Feathercombs, Inc. v. Solo Prods. Corp., 306 F.2d 251, 257 (2d Cir. 1962); G. Ricordi & Co. v. Haendler, 194 F.2d 914 (2d Cir. 1952). Nor does plaintiff claim here that the LuXor mark has acquired a secondary meaning as to the mechanism or its source. Compare Mastercrafters Clock & Radio Co. v. Vacheron & Constantin-Le Coultre Watches, 221 F.2d 464 (2d Cir. 1955); Triangle Publications v. Rohrlich, 167 F.2d 969 (2d Cir. 1948). In order to establish unfair competition absent a claim of secondary meaning, Pezon must show that Hewin is palming off the reels he sells as those of Pezon; or that Hewin's practices have actually created confusion among purchasers as to the source of the reels which he sells; or that Hewin has misappropriated Pezon's property or goodwill. Flexitized, Inc. v. National Flexitized Corp., 335 F. 2d 774 (2d Cir. 1964); Blisscraft of Hollywood v. United Plastics Co., 294 F. 2d 694 (2d Cir. 1961); Norwich Pharmacal Co. v. Sterling Drug, Inc., 271 F.2d 569 (2d Cir. 1959).

Palming off is an attempt to make the purchaser believe that the product of the subsequent entrant is that of his better known competitor. See Enders Razor Co. v. Christy Co., 85 F.2d 195 (6th Cir. 1936); Bristol-Myers Co. v. R. H. Macy & Co., 151 F.Supp. 513 (S.D.N.Y.1957). The line between palming off and creating confusion as to source is indistinct; in effect, palming off is simply a direct and more flagrant means of misleading purchasers as to the source of the product. Both palming off and creating confusion as to source can easily lap over into misappropriation of the property or goodwill of a competitor.

A product in the public domain may be manufactured and sold by anyone. But one who seeks to market a product similar to that marketed by another, is required to merchandise his product in such a way as to differentiate it in the mind of the average purchaser from the product of his competitor. Feathercombs, Inc. v. Solo Prods. Corp., 306 F.2d 251 (2d Cir. 1962); Midwest Plastics Corp. v. Protective Closures Co., 285 F.2d 747 (10th Cir. 1960); Harold F. Ritchie, Inc. v. Chesebrough-Ponds, Inc., 281 F.2d 755 (2d Cir. 1960); Norwich Pharmacal Co. v. Sterling Drug, Inc., 271 F.2d 569 (2d Cir. 1959). While the promotion of competition in products in the public domain is favored, the competitive advantages obtained by the earlier entrant into the field in terms of the goodwill associated with his name and reputation are entitled to protection. For though the goodwill of an unpatented product or device is in the public domain, Kellogg Co. v. National Biscuit Co., 305 U.S. 111, 59 S.Ct. 109, 83 L.Ed. 73 (1938); Hygienic Specialties Co. v. H. G. Salzman, Inc., 302 F.2d 614 (2d Cir. 1962), the goodwill, name and reputation of the producer remain his private property and may not be traded upon or exploited by his competitors. See, e. g., Flexitized, Inc. v. National Flexitized Corp., 335 F. 2d 774, 781 (2d Cir. 1964). The facts in each case must be carefully examined to determine whether they come within these well settled principles.

II.

Before discussing the contentions of the parties in the light of the applicable law some preliminary observations are in order.

It is impossible from the papers before me to determine the terms of the arrangements between Pezon and Mauborgne prior to cancellation on August 16, 1966. There was apparently no written contract between the parties and such understanding as there...