Quabaug Rubber Co. v. Fabiano Shoe Co., Inc.

• Decision Date: 07 April 1977
• Docket Number: No. 76-1572,76-1572
• Citation: 567 F.2d 154,195 USPQ 689
• Parties: QUABAUG RUBBER COMPANY, Plaintiff, Appellee, v. FABIANO SHOE CO., INC., Defendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 154

567 F.2d 154

195 U.S.P.Q. 689

QUABAUG RUBBER COMPANY, Plaintiff, Appellee, v. FABIANO SHOE CO., INC., Defendant, Appellant.

No. 76-1572.

United States Court of Appeals, First Circuit.

Heard April 7, 1977.

Decided Oct. 31, 1977.

As Amended Dec. 1, 1977.

Sewall P. Bronstein, Boston, Mass., with whom John D. Woodberry, Dike, Bronstein, Roberts, Cushman & Pfund, David D. Dretler, and Robert E. Meyer, Boston, Mass., were on brief, for defendant, appellant.

I. Stephen Samuels, Boston, Mass., with whom Thompson, Birch, Gauthier & Samuels, and David Silverstein, Boston, Mass., were on brief, for plaintiff, appellee.

Before COFFIN, Chief Judge, CAMPBELL, Circuit Judge, and MILLER, ^** Judge.

MILLER, Judge.

Fabiano Shoe Company, Inc. ("Fabiano") appeals from an amended judgment (1) enjoining it from using in the United States or its territories either of two specified yellow label trademarks ¹ or any other yellow label confusingly or deceptively similar thereto in connection with the manufacture, sale, offer for sale, or advertisement of boot soles, boots, or other goods in the footwear field, except in the case of boots with genuine VIBRAM soles manufactured by Vibram or its licensees in foreign countries, and (2) awarding damages of $45,296 to

                plaintiff-appellee Quabaug.  2 Quabaug sought relief from trademark infringement under both 15 U.S.C. § 1114 and the common law and from unfair competition under 15 U.S.C. § 1125(a), the common law of unfair competition, and the Massachusetts Anti-Dilution Statute (Mass.Gen.Laws (Ter. ed.) ch. 110, § 7A).  We affirm the award of injunctive relief and reverse the award of damages
                

BACKGROUND

Quabaug is a domestic manufacturer of rubber soles and heels. Since 1937 Vibram has manufactured and sold rubber lug soles under its VIBRAM trademark in Italy and the United States and has licensed others to manufacture and sell soles using Vibram's molds and rubber formulations under the VIBRAM mark. In 1964, Quabaug and Vibram entered into a licensing agreement which provided in pertinent part that

1. Licensor (Vibram) grant to Licensee (Quabaug) the sole right for manufacturing and selling in the whole territory of the United States of America soles, heels, heel tips, rubber plates and other accessories for boots, sport articles and any other product now already manufactured by Licensor, in all the types and models which Licensee deems interesting for sale in the U.S.A. market, including also those products which should be created by Licensor during the validity of this Agreement.

2. Soles, heels, etc. and all the other articles thus manufactured by Licensee shall bear Licensor's trademark "VIBRAM" in its characteristic script and framing, such as it is already used by Licensor for its own products.

In an amendment to the agreement, effective January 1, 1974, ³ the parties cancelled the above paragraphs 1 and 2 of the 1964 agreement and substituted therefor the following

Vibram grants to Quabaug a sole and exclusive right and license in the United States to use the trademarks listed on the attached Exhibit A as well as all other trademarks now owned by or subsequently owned by Vibram. The licensed trademarks are to be used on soles, heels, and other footwear-related goods. Quabaug has the right to enforce the licensed trademark rights against infringers in the United States.

The district court found that this amendment was "for purposes of clarification."

When the 1964 agreement was entered into, the mark VIBRAM in an octagon was standardly applied to boots by molding it into the shank or instep portion of all soles in the same color as the soles. Vibram and Quabaug did not begin marketing the so-called "yellow label" soles in the United States until 1968.

Fabiano is engaged in the importation and sale of boots through retail stores and mail order catalogs. Since its inception in 1956, substantial numbers of these boots have been fitted abroad with VIBRAM soles manufactured by Vibram or one of its foreign licensees. Beginning in December 1971, Fabiano began importing and reselling boots in the United States which were not fitted with soles manufactured by Vibram or its licensees. These boots bore the mark "The Alps Fabiano Roccia," or similar wording, within a yellow-colored elongated oval molded into the shank or instep portion of the soles of the boots.

The district court found that while Fabiano continued to advertise that Fabiano boots had VIBRAM soles, it frequently filled customer orders with boots having the "Alps Fabiano" soles without informing its customers of the substitution. The court also found that Fabiano's customers were deceived by its practices, in part because of the similarity of Fabiano's yellow-colored oval mark and the genuine VIBRAM mark, and in part because they were conditioned

by Fabiano's previous advertising and delivery of shoes with genuine VIBRAM soles. The court further found that these activities by Fabiano "irreparably injured Quabaug's fine business reputation and have caused Quabaug financial loss."

OPINION

Fabiano's Motion to Dismiss

On July 19, 1972, Fabiano filed a motion to dismiss, which was denied on November 1, 1972. Although the motion did not specify under which rule of the Federal Rules of Civil Procedure it was made, a motion to dismiss need not do so. Galdi v. Jones, 141 F.2d 984 (2d Cir. 1944). Moreover, although Fabiano inexplicably referred to a section of the Copyright Act, 17 U.S.C. § 8, as a basis for the dismissal, we are satisfied that its statement, that Quabaug "is not a proper party to bring this action as it is a licensee," and Quabaug's response thereto, that it is the proper party as "the sole and exclusive party which is allowed to use the trademark in suit within the United States, even as against its licensor," sufficiently alerted the district court that the motion was being made pursuant to Fed.R.Civ.P. 12(b)(7). The fact that the court denied the motion at a hearing prior to trial, as provided for in Fed.R.Civ.P. 12(d), indicates that the court treated the motion as made pursuant to Rule 12(b). After denial of its motion, nothing further was required of Fabiano to preserve this point for review, and the correctness of the denial is properly before us. ⁴

(a) Trademark Infringement Claims

The correctness of the denial of the motion to dismiss depends upon whether Quabaug's status is such that it had a right to bring suit in the absence of Vibram, the owner of the United States registered trademark; or, in other words, whether Vibram is an indispensable party to the suit. Fed.R.Civ.P. 19. On this point, the findings of fact by the district court are contradictory. Findings 13 and 26, that Quabaug is "exclusively licensed" to use the VIBRAM mark in the United States and that Quabaug and Vibram have adhered to that agreement, are contradicted by Findings 12, 17, 19, and 20, that Vibram has sold soles with the VIBRAM mark to customers in the United States other than Quabaug. Although Quabaug maintains that such sales by Vibram were made through Quabaug or with Quabaug's permission, the record contains invoices showing sales by Vibram directly to customers in the United States, and there is no evidence showing that such sales were made with Quabaug's permission. ⁵

Quabaug admits that it does not have the power, under either the original 1964 agreement with Vibram or the 1974 amendment, to exclude importation of soles bearing the VIBRAM mark. However, an owner, assignee, or " exclusive licensee" of a registered United States trademark would have such power. 15 U.S.C. § 1124; Bourjois Co. v. Katzel, 260 U.S. 689, 43 S.Ct. 244, 67 L.Ed. 464 (1923). In Bourjois, the foreign owner of trademarks for face powder transferred its business, including the ownership of the trademarks and goodwill associated therewith, to a company in the United States. In a suit by the United States company against an importer who purchased the genuine face powder abroad, the Court held that, by virtue of its ownership of the trademarks in the United States, the company could maintain an infringement suit and lawfully exclude any importations of the trademarked goods even though genuine (and, in dictum, even as against the former owner of the marks). In drawing an analogy to patents, ⁶ the Court stated:

If the goods were patented in the United States a dealer who lawfully bought similar goods abroad from one who had a right to make and sell them there could not sell them in the United States. Boesch v. Graff, 133 U.S. 697 (10 S.Ct. 378, 33 L.Ed. 787). The monopoly in that case is more extensive, but we see no sufficient reason for holding that the monopoly of a trade mark, so far as it goes, is less complete. (Id. at 692, 43 S.Ct. at 245.)

The pertinent portion of the Lanham Act relating to trademark infringement actions provides that an infringer "shall be liable in a civil action by the registrant for the remedies hereinafter provided." (Emphasis ours.) 15 U.S.C. § 1114(1). Although one court, at least, has stated that "only the registrant" can pursue such remedies (Volkswagenwerk Aktiengesellschaft v. Dreer, 224 F.Supp. 744, 746 (E.D.Pa.1963)), other courts have followed the approach used in patent infringement cases and permitted trademark infringement suits to be maintained by exclusive distributors and sellers of trademarked goods, i. e., "exclusive licensees" who had a right by agreement with the owner of the trademark to exclude even him from selling in their territory. See G. H. Mumm Champagne v. Eastern Wine Corp., 142 F.2d 499 (2d Cir.), cert. denied, 323 U.S. 715, 65 S.Ct. 41, 89 L.Ed. 575 (1944); Alfred Dunhill of London, Inc. v. Kasser Distillers Products Corp., 350 F.Supp. 1341 (E.D.Pa.1972), aff'd per curiam, 480 F.2d 917 (3d Cir. 1973); Browne-Vintners Co. v. National Distillers and Chemical Corp., 151 F.Supp. 595 (S.D.N.Y.1957); Graef Cowen Corp. v. Honey Web, Inc., 7 N.Y.S.2d 134 (1938). ⁷ There appear...