Rogers v. Ercona Camera Corporation

• Decision Date: 17 March 1960
• Docket Number: No. 14856.,14856.
• Citation: 277 F.2d 94
• Parties: William P. ROGERS, Attorney General of United States, Robert B. Anderson, Secretary of Treasury, and Ralph Kelly, Commissioner of Customs, Appellants, v. ERCONA CAMERA CORPORATION and Steelmasters, Incorporated, Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

277 F.2d 94 (1960)

William P. ROGERS, Attorney General of United States, Robert B. Anderson, Secretary of Treasury, and Ralph Kelly, Commissioner of Customs, Appellants, v. ERCONA CAMERA CORPORATION and Steelmasters, Incorporated, Appellees.

No. 14856.

United States Court of Appeals District of Columbia Circuit.

Argued October 16, 1959.

Decided March 17, 1960.

Mr. Irving Jaffe, Atty., Dept. of Justice, for appellants. Messrs. George B. Searls and Irwin A. Seibel, Attys., Dept. of Justice, were on the brief for appellants. Mr. Walter T. Nolte, Atty., Dept. of Justice, also entered an appearance for appellants.

Mr. Harry I. Rand, Washington, D. C., for appellees.

Before PRETTYMAN, Chief Judge, and WASHINGTON and BASTIAN, Circuit Judges.

WASHINGTON, Circuit Judge.

This suit was instituted in the District Court by the appellees, Steelmasters and Ercona, against three Government officials, appellants here. It prayed for a declaratory judgment that the Attorney General acquired no rights of ownership in the German trademark "Zeiss" as a result of various purported seizures under Section 7(c) of the Trading With the Enemy Act, 40 Stat. 416 (1917), as amended, 50 U.S.C.A.Appendix, § 7(c) and for an injunction against an embargo on the importation and sale in the United States by the plaintiffs-appellees of Zeiss-marked products from East Germany. The District Court concluded that the attempts to vest the Zeiss trademark in the Alien Property Custodian and his successor, the Attorney General,¹ were ineffective, because the mark was not appurtenant to any business conducted in the United States which was seized. Hence, it ordered the injunction prayed for. The principal question on appeal is whether the Attorney General can be deemed to have sufficient ownership rights in the Zeiss trademark to enable him to prohibit the use of the mark by the appellees on the goods they import. A brief statement of the facts, first of the period from 1912-1941, and then the period 1942 to the present, will illuminate the issue before us.

The trademark "Zeiss" was first registered in the U. S. Patent Office on February 20, 1912, by the German firm known as Carl Zeiss, which was engaged in the manufacture and sale of scientific, optical, and photographic instruments and equipment at Jena, Germany (hereafter referred to as "Zeiss Jena"). The trademark had long before this been used continuously in its business. Thereafter until 1926 (with the exception of a period during the First World War) Zeiss Jena sold its "Zeiss"-marked products in the United States to various wholesalers and retailers. Commencing in 1920, however, its sales were made predominantly through a New York firm known as Harold M. Bennett, which was under its control. In 1925 a corporation, Carl Zeiss, Inc., was organized under the laws of New York (hereafter called "Zeiss New York"), all its stock being owned by or for the benefit of Zeiss Jena. Thereafter until 1941 (when World War II hostilities interfered) Zeiss Jena sold its Zeiss-marked products in the United States predominantly to Zeiss New York, although it also continued to sell to other concerns.

In 1919 the Alien Property Custodian of the United States undertook to seize from Zeiss Jena as an enemy the registered trademark Zeiss "and the business of said enemy appurtenant thereto," under the Trading With the Enemy Act. In 1921 the then Custodian again "seized" the Zeiss mark with its appurtenant business. Following both purported seizures, he assigned the mark and the business and goodwill appurtenant thereto to a firm called The Chemical Foundation (hereafter referred to as "Chemical"), which later in 1921 granted the United States a royalty-free, non-exclusive, and non-assignable license to use the Zeiss mark in the United States. The mark was never used by the United States, however, in the manufacture or marketing of products. The registration of the mark in the U. S. Patent Office was renewed by Chemical in 1932.

In 1942 the Alien Property Custodian issued a vesting order, vesting in himself all of the capital stock of Zeiss New York, then owned by Zeiss Jena, and all rights of Zeiss Jena in any indebtedness owed to it by Zeiss New York. It is not disputed by the parties in this case that since 1942 the stock of Zeiss New York has been completely owned by the Attorney General.² The firm imported no German "Zeiss" products during World War II.

After the cessation of World War II hostilities, some 126 employees of Zeiss Jena, including scientists, designers, technicians, and managing personnel, were moved from Jena (in the Eastern Zone of Germany) to West Germany, where they engaged in the manufacture and sale of Zeiss-marked products at plants established by Zeiss Jena in West Germany. (These plants will be referred to as "Zeiss West.") Some employees remained at Jena and continued to manufacture Zeiss-marked products there. In 1945, the plants and business at Jena were sequestered by the occupying Soviet authorities and in 1948 they were confiscated by the East German Government and became "Property of the People" operated by a firm called "Optik, Carl Zeiss, Jena, V.E.B." (hereafter called "Optik Jena"). Optik Jena continued to use the Zeiss trademark on its products. Following confiscation of the Jena plants and business, the domicile of Zeiss Jena was registered in West Germany.

Notwithstanding the confiscation, Zeiss Jena as so registered (Zeiss West) maintained business relations with the Jena plant and until 1950 acted as sales agent of the latter, outside the Soviet bloc, for those Jena products which were not manufactured in West Germany or were not produced in sufficient quantity there. From the end of World War II until 1950 Zeiss New York (wholly owned by the Attorney General), as well as other concerns in the United States, imported and sold both the Jena-produced and the Zeiss West products.

In 1950 the appellee Steelmasters entered into a contract with Optik Jena, under which Steelmasters was given the exclusive right to import into the United States the products of the Optik Jena plant. Appellee Ercona was then organized by Steelmasters to serve as exclusive distributor of such products in the United States. Thereafter up to the present time Zeiss New York has bought and sold in the United States only such Zeiss-marked products as were manufactured in West Germany.

In 1950 Chemical, then dissolved, executed an assignment to the Attorney General of its interest in the Zeiss mark. In 1951 Chemical's successor corporation, to which Chemical's trademarks had been conveyed, ratified this assignment. In 1952 the registration of the mark in the U. S. Patent Office was renewed by the Attorney General.

In 1953 the Attorney General issued a Vesting Order purporting to vest in himself all interest of Zeiss Jena and its successors and assigns in the "goodwill" of the business of Zeiss New York and in all "trade-marks and trade-names appurtenant to such business or heretofore transferred or assigned to, or now owned by, the Attorney General."

In 1951, over the objection of Steel-masters, the Secretary of the Treasury recorded the Zeiss trademark as registered in the Attorney General under Section 42 of the Trade-Mark Act of 1946, 60 Stat. 440, 15 U.S.C.A. § 1124, and Section 526 of the Tariff Act of 1930, 46 Stat. 741, 19 U.S.C.A. § 1526, and notified Steelmasters that it would thereafter be barred from importing any goods bearing the "Zeiss" mark unless written consent had first been obtained from the Attorney General. All Collectors of Customs were notified to withhold entry to all goods bearing the "Zeiss" mark without such consent. Until August 21, 1955, the Attorney General gave his consent to the importation by Steelmasters of certain shipments of Jena-produced Zeiss goods but refused it with respect to other shipments. In June, 1955, the Attorney General notified Steelmasters that effective August 21, 1955, he would authorize only importation of Zeiss West products, and would not allow the importation of Zeiss-marked Optik Jena products. This suit followed.

The Attorney General has undertaken to bar the importation of Zeiss-marked Jena products solely on the premise that he owns the trademark "Zeiss" in the United States. We are not required to consider or decide whether Zeiss-marked products produced in East Germany may be barred from the United States for some other reason.³ Similarly, we are not required to consider or decide whether Optik Jena possesses any rights of ownership in the mark.⁴ Our only question is whether the Attorney General acquired a sufficient interest in the United States rights in the trademark by reason of the various seizures of the mark to entitle him to bar use of the trademark in the United States by others.

Effect of the seizures made in 1919 and 1921, and transfers made to and from Chemical Foundation

We turn first to the interest the Attorney General may have as a result of the "seizures" of the registered trade-mark by the Alien Property Custodian in 1919 and 1921, his conveyance of the seized mark to Chemical Foundation, and Chemical's subsequent assignment, ratified by Chemical's successor, of its interest in the mark to the Attorney General in 1950-1951.

We take it as settled that ownership rights in a trademark in the United States, in the case of private persons, exist only as an appurtenance to a manufacturing or marketing business conducted in the United States in which the mark is used.⁵ As we stated in Watson v. E. Leitz, Inc., 1958, 103 U.S.App.D.C. 74, 77, 254 F.2d 777, 780:

"A trademark must be appurtenant to some enterprise which is related to the marketing of goods. It is both philosophically and legally impossible for it to exist in gross. But a merchant as well as a manufacturer may have a trademark."

Or as phrased in United Drug Co. v. Rectanus Co., 1918, 248 U.S. 90, 97, 39 S.Ct. 48, 50, 63 L.Ed. 141:

"There is no such

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