Pure Oil Co. v. Puritan Oil Co.

• Decision Date: 31 May 1941
• Docket Number: No. 256 Civil.,256 Civil.
• Citation: 39 F. Supp. 68
• Court: U.S. District Court — District of Connecticut
• Parties: PURE OIL CO. v. PURITAN OIL CO., Inc.

39 F. Supp. 68

PURE OIL CO. v. PURITAN OIL CO., Inc.

No. 256 Civil.

District Court, D. Connecticut.

May 12, 1941.

Additional Opinion May 31, 1941.

COPYRIGHT MATERIAL OMITTED

Kelly Bell, of Chicago, Ill. (Gross, Hyde & Williams, of Hartford, Conn., and Vinson, Elkins, Weems & Francis, of Houston, Tex., on the brief), for plaintiff.

George H. Cohen and Joseph Ress, both of Hartford, Conn. (Naaman Cohen, of Hartford, Conn., on the brief), for defendant.

CLARK, Circuit Judge (sitting as District Judge pursuant to statutory designation).

The plaintiff in this action, The Pure Oil Company, is a producer, refiner, and distributor of gasoline and other petroleum products, selling its products to motorists through filling stations in at least twenty-five states east of the Rocky Mountains. At the present time, however, it does not distribute gasoline or other products through filling stations in Connecticut. In fact, its only sales in this State are of industrial and lubricating oils and greases to industrial concerns, not bought for or used in automobiles.

The defendant owns and operates a single filling station in Hartford, Connecticut, through which it sells lubricating oils and greases under the nationally advertised trade-marks of their producers, and gasoline under the trade-mark, "Pure Gasoline."

Plaintiff, alleging the ownership of several trade-marks registered under federal law, brought this action to enjoin defendant's use of the word "Pure" in connection with the sale of its gasoline and of the name "Puritan," and for damages and an accounting. It claims protection under the Federal Trade-Marks Act, 15 U.S.C.A. § 81 et seq., and under the common law of unfair competition, and alleges federal jurisdiction by reason of the Federal Act and of the diverse citizenship of the parties. It alleges that it is an Ohio, and defendant a Connecticut, corporation, and that the matter in controversy exceeds $3,000, exclusive of interest and costs. Defendant in its answer admitted its conduct of the business in question, notwithstanding plaintiff's notice to desist, and either denied, or asserted lack of knowledge of, all the other allegations of the complaint.

It affirmatively appears, however, that defendant's use of the word and name alleged to be an infringement of plaintiff's rights is solely in connection with its operation of its own filling station in Hartford and its sale of motor fuels and oils from that station to persons making purchases on the spot. Clearly this is not a use of the infringing symbols in interstate commerce, and the claim under the Federal Act must therefore be dismissed. United States Printing & Lithograph Co. v. Griggs, Cooper & Co., 279 U.S. 156, 49 S.Ct. 267, 73 L.Ed. 650; Youngs Rubber Corp. v. C. I. Lee & Co., 2 Cir., 45 F.2d 103.

Turning to the alternate ground of jurisdiction, the question at once arises as to whether or not the matter in controversy is of a value of more than $3,000. On the trial, plaintiff declined to offer any proof whatsoever of damage to its business occasioned by defendant's alleged wrong; and when defendant offered to prove in rebuttal of damages that it had continuously operated at a loss, plaintiff renounced its prayer for damages and an accounting, and stood merely on its prayer for an injunction. It was further shown, however, in other connections, that defendant's average sales through its single station had been at the rate of 200,000 gallons of gasoline per year, and that at least 95 per cent, or practically all, of these sales were made to residents of the City of Hartford. There was no showing of the quality of defendant's service.

On these facts it cannot be maintained that plaintiff has sustained injury through a diversion of its business, for the geographical market of a filling station is necessarily so localized that few motorists would ever practically weigh the advantages of being served by one filling station in Hartford or by another in New York City. Of course, a wrongful diversion of business is not an essential part of an action for unfair competition, Yale Electric Corp. v. Robertson, 2 Cir., 26 F.2d 972, but is one of the most easily calculable elements of damages. In the absence thereof the mere assumption of power by one merchant over the reputation of another through an unjustified appropriation of the latter's name or marks may be a wrong, but it carries with it definite damage to the latter only if the former's service is of lower quality, or if his use of the name destroys what would otherwise be the uniqueness of its associations. It does not appear that defendant's commodities are of lower quality or its service less efficient than plaintiff's. But assuming, arguendo, that defendant's service is poor, it is at least doubtful that enough Pure Oil customers or prospective customers call at defendant's station so as to cause injury to plaintiff's reputation to the extent of $3,000. If this is so, and if such injury, present and prospective, is the correct measure of the amount in controversy, Winchester Repeating Arms Co. v. Butler Bros., D.C.N.D.Ill., 128 F. 976; Draper v. Skerrett, C.C.E.D. Pa., 116 F. 206; Griggs, Cooper & Co. v. Erie Preserving Co., C.C.W.D.N.Y., 131 F. 359, it obviously is not sufficient here to support the jurisdiction of a federal court, and the second ground of jurisdiction must also fail.

This conclusion is not shaken by reference to statements that the amount in controversy in an action for unfair competition is the value of the mark, name, or good will sought to be protected. Lambert v. Yellowley, 2 Cir., 4 F.2d 915, 918, affirmed 272 U.S. 581, 47 S.Ct. 210, 71 L.Ed. 422, 49 A.L.R. 575; Harvey v. American Coal Co., 7 Cir., 50 F.2d 832, 834, certiorari denied 284 U.S. 669, 52 S.Ct. 43, 76 L.Ed. 566; Ury v. Mazer Cigar Mfg. Co., 8 Cir., 253 F. 551; Wisconsin Electric Co. v. Dumore Co., 6 Cir., 35 F.2d 555, 556, certiorari dismissed 282 U.S. 813, 51 S.Ct. 214, 75 L.Ed. 728. In all of these cases it seems obvious that the court considered the entire value of the good will to be threatened by the alleged infringement, and that the value of the good will was thus exactly equivalent to the amount of the present and prospective damage. The significance of the statement in each case was that the amount in controversy was not to be taken as limited by the amount of damages already accrued, but should include those reasonably to be expected to accrue in the future. This is equally obvious from the citation in the Dumore case of Hunt v. New York Cotton Exchange, 205 U.S. 322, 333, 27 S.Ct. 529, 51 L.Ed. 821, and from the citation in both the Dumore and Lambert cases of Bitterman v. Louisville & N. R. Co., 207 U.S. 205, 224, 28 S.Ct. 91, 52 L.Ed. 171, 12 Ann.Cas. 693. See also Hennessy v. Herrmann, C.C.N.D.Cal., 89 F. 669; and Symonds v. Greene, C.C.S.D.N.Y., 28 F. 834.

To measure the amount in controversy by reference to the value of certain property, irrespective of the extent of injury to it, would be entirely arbitrary, and inconsistent with the general principle by which the amount in controversy is defined as the "value of the object to be gained" by the action. Glenwood Light & Water Co. v. Mutual Light, Heat & Power Co., 239 U.S. 121, 125, 36 S.Ct. 30, 32, 60 L.Ed. 174. Compare KVOS, Inc. v. Associated Press, 299 U.S. 269, 57 S.Ct. 197, 81 L.Ed. 183; Central Mexico Light & Power Co. v. Munch, 2 Cir., 116 F.2d 85, 87, and authorities there cited; Carroll v. Somervell, 2 Cir., 116 F.2d 918.

Finally it may be suggested that the court at least acquired jursidiction to pass on the federal question of trade-mark infringement, although the allegations and proof were insufficient to establish a right of recovery, Siler v. Louisville & N. R. Co., 213 U.S. 175, 192, 29 S.Ct. 451, 53 L.Ed. 753; Binderup v. Pathe Exchange, 263 U.S. 291, 305-308, 44 S.Ct. 96, 68 L.Ed. 308; Moore v. New York Cotton Exchange, 270 U.S. 593, 609, 46 S.Ct. 367, 70 L.Ed. 750, 45 A.L.R. 1370, and that it should retain that jurisdiction to pass on the claim of unfair competition as having arisen out of the same state of facts. Hurn v. Oursler, 289 U.S. 238, 53 S.Ct. 586, 77 L.Ed. 1148.

It is doubtless true that the facts supporting an action for trade-mark infringement under the federal statute and one for unfair competition are substantially the same, although the former requires a showing of a use in interstate commerce. Armstrong Paint & Varnish Works v. Nu-Enamel Corp., 305 U.S. 315, 325, 59 S.Ct. 191, 83 L.Ed. 195; cf. Kasch v. Cliett, 5 Cir., 297 F. 169. But whether the court acquired jurisdiction in the first place unquestionably depends on the further question whether the federal claim was substantial. Hurn v. Oursler, supra, 289 U.S. at page 242, 53 S.Ct. 586, 77 L.Ed. 1148.

Certainly there was and could be no substantial claim here that defendant's infringing use was in interstate commerce. The complaint alleged only that defendant operated a filling station in the City of Hartford, in connection with which these infringing words were used, and the proof has made the restricted area of defendant's business clearly apparent. Indeed, plaintiff has never suggested the contrary.

Hence there can be no substantial federal claim here unless plaintiff may seriously contend that the infringing use need not be in interstate commerce in order to create a claim under the Federal Act. It might once have done so, for the clause of 15 U.S.C.A. § 96 requiring the infringing use to be in interstate commerce is not found in other remedial sections, 15 U.S.C.A. §§ 97, 99 et seq. But this possibility has long been laid to rest by the Supreme Court, United States Printing & Lithograph Co. v. Griggs, Cooper & Co., supra, by the Second Circuit, Youngs Rubber Corp. v. C. I. Lee & Co., 2 Cir., supra, and by the First, Fifth, Eighth, and Ninth Circuits. Edgar P. Lewis & Sons, Inc. v. Mars, Inc., 1 Cir., 62 F.2d 406, certiorari denied 288 U.S....