Ph. Schneider Brewing Co. v. Century Distilling Co.

• Decision Date: 24 October 1939
• Docket Number: No. 1901.,1901.
• Citation: 107 F.2d 699
• Parties: PH. SCHNEIDER BREWING CO. v. CENTURY DISTILLING CO.
• Court: U.S. Court of Appeals — Tenth Circuit

107 F.2d 699 (1939)

PH. SCHNEIDER BREWING CO. v. CENTURY DISTILLING CO.

No. 1901.

Circuit Court of Appeals, Tenth Circuit.

October 24, 1939.

Albert J. Fihe, of Chicago, Ill., and Harry S. Silverstein, of Denver, Colo., for appellant.

Edward S. Rogers of Chicago, Ill. (Frank T. Miller and Val C. Guenther, both of Peoria, Ill., William T. Woodson and James H. Rogers, both of Chicago, Ill., and Wm. V. Hodges, Henry C. Vidal, and Joseph G. Hodges, all of Denver, Colo., on the brief), for appellee.

Before LEWIS, PHILLIPS, and BRATTON, Circuit Judges.

PHILLIPS, Circuit Judge.

Philip Freiler was engaged in the wholesale liquor business at Elgin, Illinois, from 1883 to 1914. During that period he purchased whiskey from distillers and sold it at wholesale under the trade-mark "Century Club." On March 19, 1907, Freiler registered the mark "Century Club" for distilled alcoholic liquors on an application filed April 20, 1905. Elgin became dry territory under local option in 1914 and Freiler discontinued his wholesale liquor business. He sold all his merchandise, labels, and advertising matter to Henry A. Klein, of Chicago, for a valuable consideration. It does not appear that any written assignment of the registered mark was made to Klein. Klein continued the business at Chicago under the name of the Freiler Company from 1914 to the advent of national prohibition in 1919. He employed salesmen who had worked for Freiler, advised the trade by letter that he had taken over the Freiler business, and used the mark "Century Club" on whiskey sold under the trade name Freiler Company. He also sold other brands under other trade names. Freiler's registration expired in 1927 and was not renewed. After the adoption of the Twenty-First Amendment to the Constitution of the United States, U.S.C.A., Klein again engaged in the wholesale liquor business through the Liquor Dealers Supply Company,¹ an Illinois corporation, the stock of which was owned by Klein, his wife, and his son, and continued to use the mark "Century Club." Twenty-five separate invoices of the Supply Company covering the sales of Century Club whiskey to its customers in May, 1934, were introduced in evidence. The Supply Company purchased the whiskey which it sold under that mark from the Century Distilling Company.² No formal assignment of the mark "Century Club" was made by Klein to the Supply Company, but he impliedly consented to its use by the Supply Company. On July 10, 1934, the Supply Company registered the trade-mark "Century Club" for whiskey and gin on an application filed April 3, 1934. In its statement the Supply Company claimed use of the trade-mark by it and its predecessors from May 1, 1883.

Century Company was organized under the laws of Illinois on November 1, 1933. It built a modern distillery at Peoria, Illinois, completing it in January, 1934, and engaged in the distillation of whiskey, gin, and other alcoholic liquors.

On July 25, 1934, the Supply Company, by written assignment, transferred to the Century Company its registered mark "Century Club" and the good will associated with that mark.

Ph. Schneider Brewing Company,³ a Colorado corporation, is engaged in the manufacture and sale of beer at Trinidad, Colorado. In 1908 it adopted the word "Century" as a trade-mark for beer and used it continuously from that date until 1916, when the state of Colorado became dry territory. From 1916 until 1933 the Schneider Company used the mark "Century" on nonalcoholic cereal malt beverages containing less than one-half of one per cent of alcohol by volume, commonly called "near beer." On August 9, 1932, the Schneider Company registered the mark "Century" for nonalcoholic cereal malt beverages containing less than one-half of one per cent of alcohol by volume on an application filed July 11, 1928. Since 1933 the Schneider Company has continuously used the name "Century" as a trade-mark for beer.

Since 1934 the Century Company has carried on a nation-wide business in whiskey, gin, and other distilled alcoholic beverages identified by the mark "Century." Its products are well known and highly esteemed by the trade and public in general. Its sales have aggregated in excess of $3,000,000. It expends $150,000 annually in advertising its brands "Century" and "Century Club," and those brands are well known throughout the United States.

Since 1908 the Schneider Company has expended the sum of approximately $30,000 annually in advertising "Century" beer and "Century" near beer.

On April 13, 1936, the Century Company applied to the United States Patent Office for registration of the trade-mark "Century" for gin. The Patent Office placed the application in interference with the registration of the Schneider Company of the mark "Century" for nonalcoholic cereal malt beverages. On May 17, 1938, the Examiner of Interferences decided the interference in favor of the Schneider Company. The decision of the Examiner of Interferences was affirmed by the Assistant Commissioner of Patents on October 28, 1938. Thereafter, counsel for the Schneider Company wrote letters to a number of the Century Company's customers in Wyoming and Colorado asserting that the Schneider Company owned the mark "Century"; that the Century Company's use of the word "Century" on whiskey and gin infringed the Schneider Company's mark, and threatened suit against such customers unless they discontinued selling Century Company's goods labeled "Century" or "Century Club."

The Century Company does not now and never has engaged in the manufacture or sale of cereal malt beverages, and the Schneider Company does not now and never has engaged in the manufacture or sale of distilled alcoholic liquor.

The Century Company brought this suit against the Schneider Company to establish its right to use the mark "Century" on distilled alcoholic beverages and to enjoin the Schneider Company from interfering or attempting to interfere with such use. The Schneider Company filed an answer and cross-bill in which it sought to establish its exclusive right to use the mark "Century" on alcoholic beverages, including beer, whiskey, and gin, and to enjoin the Century Company from using the mark "Century" or any colorable variation thereof.

At a pretrial conference a stipulation was entered into which reads in part as follows:

"The first user of the trademark `Century' or `Century Club' for distilled alcoholic liquors was Philip Freiler of Elgin, Illinois, who used `Century Club' on whiskey as early as May 1, 1883, and established it as a well known brand which had a wide distribution primarily in the states of Illinois, Wisconsin, Minnesota, Iowa, Indiana and Michigan. He continued its use on whisky until the year 1914 when the City of Elgin voted dry under local option and he was compelled to discontinue the liquor business there. * * *

"By reason of plaintiff's wide use and exploitation of the trademarks `Century' and `Century Club' in connection with whisky, gin and alcohol, said trademarks, as applied to such products, are the means by which they are identified and distinguished by the trade and public from whisky, gin and alcohol produced by others; and as to whisky, gin and alcohol, the trademarks `Century' and `Century Club' refer and are understood by the trade and public to refer only to plaintiff's goods."

The following is a label used by the Century Company and is typical of the other labels used by that company:

It will be observed that the name and location of the Century Company prominently appear on the label.

The following is a label used by the Schneider Company and is typical of the other labels used by that company:

It will also be observed that the name and location of the Schneider Company prominently appear on the label.

The labels used by the two companies bear no resemblance, except both employ the word "Century."

The trial court found the facts as above stated. It entered a decree by which it adjudged that the Century Company is the owner of the mark "Century" as applied to distilled alcoholic beverages, including whiskey, gin, and alcohol, and is entitled against the Schneider Company to the exclusive use of the mark "Century" as applied to distilled alcoholic beverages, and that the goods of the Century Company are distinguished from other goods of the same class by that mark, and enjoined the Schneider Company from interfering or attempting to interfere with the Century Company's use of the mark "Century" in connection with distilled alcoholic beverages, and from interfering with Century Company's registration of the mark "Century Club" for whiskey and gin. It dismissed the cross-bill of the Schneider Company. The Schneider Company has appealed.

A trade-mark is a right appurtenant to a business or trade in connection with which the mark is employed. The right to a particular mark grows out of its use. Its function is to designate the goods as the product of a particular trader and to protect his good will against the sale of another's product as his. United Drug Co. v. Rectanus Co., 248 U.S. 90, 97, 39 S.Ct. 48, 63 L.Ed. 141.

The United States statutes, 15 U.S. C.A. § 81 et seq., providing for the registration of trade-marks and the assignment of registered trade-marks neither confer nor limit substantive rights. They merely confer certain procedural advantages to the registrant. The substantive rights are determined wholly by common-law principles.⁴ Registration does not create a trade-mark; neither is it essential to its validity. Armour & Co. v. Louisville Provision Co., 6 Cir., 283 F. 42, 45.

15 U.S.C.A. § 90 provides for the assignment of a registered trade-mark by an instrument in writing duly acknowledged. It follows that the sale from Freiler to Klein did not pass Freiler's registered...