Regis v. Jaynes

• Citation: 77 N.E. 774,191 Mass. 245
• Parties: REGIS et al. v. JAYNES et al.
• Decision Date: 07 March 1906
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

191 Mass. 245

77 N.E. 774

REGIS et al. v. JAYNES et al.

Supreme Judicial Court of Massachusetts, Suffolk.

March 7, 1906

COUNSEL

Robert F. Herrick and Guy Cunningh, for appellants.

Arthur F. Hardy, for appellees.

OPINION

SHELDON, J.

After the decision in this case reported in 185 Mass. 458, 70 N.E 480, a decree was entered enjoining the defendants from using the words 'Rex' or 'Rexall' in connection with the sale of preparations for the cure of dyspepsia, and ordering that, upon the filing of a supplemental bill, the case should be recommitted to the master for an accounting of profits since the filing of the original bill; and the first qeustion which now comes before us is raised by the defendants' appeal from this decree. The plaintiffs' supplemental bill avers that since the filing of the original bill the defendants have sold numerous boxes of dyspepsia tablets under the names 'Rexall' and 'Rexall Dyspepsia Tablets,' and prays for an accounting of the plaintiffs' damages and of the defendants' profits therefrom. The defendants' contention is that, although the injunction was rightly issued under the previous decision (Regis v. Jaynes, 185 Mass. 458, 70 N.E. 480), yet no accounting of profits should have been ordered. The facts which were then before the court were those stated in the master's report. They claim that it appeared by this report that they had acted in good faith, in ignorance of the plaintiffs' rights, until about a month before the filing of the bill; that there had been no actual interference with the sale of the plaintiffs' goods by reason of the similarity of the word 'Rexall' to their trade-mark that the plaintiffs had not suffered any actual monetary loss; and that it did not appear that the defendants had derived any advantage from the use of the trade-mark or good will.

The general principle that one who has shown that he is entitled to the exclusive use of a trade-mark may in equity recover from an infringer, against whom he obtains an injunction, the amount of the profits arising from the sale of goods upon which the trademark has been wrongfully used, is not denied by the defendants and is abundantly sustained by authority. Saxlehner v. Eisner & Mendelson Co. (C. C. A.) 138 F. 22; Oakes v. Tonsmierre (C. C.) 49 F. 447; Société Anonyme v. Western Distilling Co. (C. C.) 46 F. 921; Benkert v. Feder (C. C.) 34 F. 534; Atlantic Milling Co. v. Rowland (C. C.) 27 F. 24; Sawyer v. Kellogg (C. C.) 9 Fed. 601; Collins Co. v. Oliver Ames Corporation (C. C.) 20 Blatchf. 542, 18 F. 561; Stonebraker v. Stonebraker, 33 Md. 252; Avery v. Meikle, 85 Ky. 435, 3 S.W. 609, 7 Am. St. Rep. 604; El Modello Cigar Co. v. Gato, 25 Fla. 886, 7 So. 23, 6 L. R. A. 823, 23 Am. St. Rep. 537; Graham v. Plate, 40 Cal. 593, 6 Am. Rep. 639; Cartier v. Carlile, 31 Beav. 292. And the same rule is applied to cases of unfair competition merely, as well as to cases of the infringement of a trade-mark properly so called. N. K. Fairbank Co. v. Windsor (C. C.) 118 F. 96, overruled as to some points 124 F. 200, 61 C. C. A. 233; Walter Baker Co. v. Slack, 130 F. 514, 65 C. C. A. 138; Williams v. Mitchell, 106 F. 168, 45 C. C. A. 265; Lewis v. Goodwin, 36 Ch. D. 1. Equity in such a case holds the infringer as trustee for the benefit of the rightful owner to the extent of the profits realized from the unlawful or wrongful business. Paul, Trade-Marks, § 326, and cases cited. And see Tilghman v. Proctor, 125 U.S. 136, 148, 8 S.Ct. 894, 31 L.Ed. 664; Root v. Railway Co., 105 U.S. 189, 214, 215, 26 L.Ed. 975. This account will indeed be taken upon equitable principles; and laches of a plaintiff, or the existence of any other facts which would make the application of the general rule inequitable, will be a sufficient bar to its exercise. McLean v. Fleming, 96 U.S. 245, 24 L.Ed. 828; La Republique Francaise v. Hegeman (C. C.) 116 F. 1021; Drummond Tobacco Co. v. Addison Tinsley Tobacco Co., 52 Mo.App. 10; Millington v. Fox, 3 Myl. & Cr. 338; Magnolia Metal Co. v. Atlas Metal Co., 14 Rep. Pat. Cas. 389. If it appears that the amount of damage to the plaintiff or of profits realized by the defendant is only insignificant, or that no actual damage has been sustained, the court may confine its relief to an injunction against any future infringement. Liebig's Extract Co. v. Walker (C. C.) 115 F. 822; Little v. Kellam (C. C.) 100 F. 353; S. Howes Co. v. Howes Grain Cleaner Co., 24 Misc. 83, 52 N.Y.S. 468; Sanitas Co. v. Condy, 14 Rep. Pat. Cas. 530. And this is specially true in cases in which a defendant is doing only what he has the general right to do, but equity requires that his right should be restricted so as not to interfere with some right which the plaintiff has acquired. Ludington Novelty Co. v. Leonard, 127 F. 155, 62 C. C. A. 269; Baker v. Baker, 115 F. 297, 53 C. C. A. 157. So, if the right to use a trade-mark is common to two or more separate holders, neither one of them will be allowed to recover the full profits realized by an infringer, but each can recover only according to his own interest. Clark Thread Co. v. William Clark Co., 56 N. J. Eq. 789, 40 A. 686, affirming 55 N. J. Eq. 658, 37 A. 599. But we do not find anything in the decisions above cited which would prevent the entry of the decree in question in the case at bar for an account of the profits made by the defendants since the filing of the original bill. Lawrence v. Hull, 169 Mass. 250, 47 N.E. 1001, was a bill under Rev. Laws, c. 72, § 5, and raised none of the question now before us.

The defendants argue that in such a case as this, while an injunction may be granted to protect the rights of the plaintiffs in their trade-name, yet the defendants should not be held for the profits which they have realized by selling articles bearing a name like the one used by the plaintiffs, in the absence of any fraudulent intention on their part, when it was found that they had acted in ignorance of the plaintiffs' rights, and it did not appear that substantial injury had been done to the plaintiffs before the filing of their bill. There is some conflict in the decisions; but we think that the weight of modern authority is in favor of the rule that an account of profits will not be taken where the wrongful use of a trade-mark or a tradename has been merely accidental or without any actual wrongful intent to defraud a plaintiff or to deceive the public. Elgin Watch Co. v. Illinois Watch Case Co., 179 U.S. 665, 674, 21 S.Ct. 270, 45 L.Ed. 365; Saxlehner v. Siegel Cooper Co., 179 U.S. 42, 21 S.Ct. 16, 45 L.Ed. 77; N. K. Fairbank Co. v. Windsor, 124 F. 200, 61 C. C. A. 233; George T. Stagg Co. v. Taylor, 95 Ky. 651, 669, 27 S.W. 247; Beebe v. Tolerton & Stetson Co., 117 Iowa, 593, 91 N.W. 905; North Cheshire & Manchester Brewery Co. v. Manchester Brewery Co. [1899] App. Cas. 83, 86; Moet v. Conston, 33 Beav. 578; Hodgson v. Kynoch Limited, 15 Rep. Pat. Cas. 465. And see 21 Ency. Pl. & Pr. 779, and cases there collected. But we do not think that the defendants are protected by this principle against the taking of the account here in question. The account is ordered to be taken only since the filing of the original bill, upon the charge made in the supplemental bill that during the litigation the defendants have persisted in their infringement. It cannot be said that this conduct on their part was in ignorance of the plaintiff's rights. They were at least put upon inquiry, and must be charged with knowledge of what they would have learned upon reasonable inquiry. Nor can it be said that their conduct since the filing of the bill was innocent or free from wrongful intent within the meaning of the rule which has been stated. They chose, after full notice and warning, to persist in violating the plaintiffs' rights. If the facts, as they were afterwards proved, could have been made manifest to the court when the bill was filed, an injunction must have issued then. It does not lie in the defendants' mouths to say that conduct on their part which afterwards was proved to have been wrongful, and as to which they had either full knowledge, or the means of obtaining full knowledge, of the facts, was either lawful or innocent. Their continued use was not, as in N. K. Fairbank Co. v. Windsor, 124 F. 200, 61 C. C. A. 233, in reliance upon the decision of a competent tribunal. Nor was there here any laches or acquiescence on the part of the plaintiffs, as in McLean v. Fleming, 96 U.S. 245, 24 L.Ed. 828. The defendants must be treated as having, after the filing of the original bill, that knowledge of the plaintiffs' prior right which was required in Edelstein v. Edelstein, 1 De G., J. & S. 185. In Ford v. Foster, L. R. 7 Ch. 611, a case very similar to this, except that there was in that case considerable fault to be found with the conduct of the plaintiff, an order was made similar to that here in question. We are of opinion that the decree appealed from was correct in ordering an account of the defendants' profits since the filing of the bill to be taken.

The defendants have also filed exceptions to the master's report made under this decree, and these we now proceed to consider. The first and second exceptions are to the master's ruling that the defendants were liable to account for all profits made by them on all sales of 'Rexall' goods made since the filing of the original bill, without regard to whether the 'Rexall' tablets were sold as and for the goods of the plaintiff or not, and that it was immaterial and the defendants were not entitled to show whether any actual deception or mistake had occurred or not. We cannot sustain these exceptions. In taking an account of the profits, the defendants should be charged with the entire profit made upon sales of the tablets under the guise of...