Saratoga Vichy Spring Co., Inc. v. Lehman

• Decision Date: 05 June 1980
• Docket Number: D,No. 660,660
• Citation: 208 USPQ 175,625 F.2d 1037
• Parties: SARATOGA VICHY SPRING CO., INC., Plaintiff-Appellant, v. Orin LEHMAN, Commissioner of Parks and Recreation of the the State of New York and Waters of Saratoga Springs, Inc., Defendants-Appellees. ocket 79-7671.
• Court: U.S. Court of Appeals — Second Circuit

Page 1037

625 F.2d 1037

208 U.S.P.Q. 175

SARATOGA VICHY SPRING CO., INC., Plaintiff-Appellant, v. Orin LEHMAN, Commissioner of Parks and Recreation of the the

State of New York and Waters of Saratoga Springs,

Inc., Defendants-Appellees.

No. 660, Docket 79-7671.

United States Court of Appeals, Second Circuit.

Argued Jan. 23, 1980.

Decided June 5, 1980.

Jay W. Seeman and Singer, Hunter, Levine & Seeman, New York City, submitted a brief, for plaintiff-appellant.

Robert Abrams, Atty. Gen., William J. Kogan, Asst. Sol. Gen., Lawrence J. Logan, Asst. Atty. Gen., Albany, N.Y., submitted a brief, for defendant-appellee Lehman.

Albert Holland and Howard & Holland, New York City, submitted a brief for plaintiff-appellee Waters of Saratoga Springs, Inc.

Before OAKES, VAN GRAAFEILAND and NEWMAN, Circuit Judges.

NEWMAN, Circuit Judge:

This appeal concerns primarily the issue of timeliness of a trademark suit in the context of a claim of trademark abandonment.

Facts

Saratoga Vichy Spring Co. produces a variety of soft drinks and mineral waters; one of its products, mineral water from a spring in Saratoga Springs, N.Y., has been produced since 1876, almost always under the name "Saratoga Vichy." This name was registered with the U.S. Patent and Trademark Office in 1920, and continues to be protected under that registration. New York State began bottling mineral water from the Saratoga Springs area in 1910 under a variety of names, one of which is "Saratoga Geyser." Between 1910 and the commencement of the present suit in 1979, there was no litigation between the two bottlers. However, nearly 40 years ago Saratoga Vichy did bring suit in the Southern District of New York against a company marketing a product named "Saratoga Carlsbad Vichy." In granting relief to Saratoga Vichy, the District Court defined its rights as follows: "I do not hold that defendants may not use the word 'Vichy', or that they may not use the name 'Saratoga' in connection with their product, but I do hold that they may not use the combination together, 'Saratoga Vichy', which I find by long usage, exclusively by the plaintiff (since 1873), has acquired a secondary meaning." Saratoga Vichy Spring Co. v. Saratoga Carlsbad Corp., 45 F.Supp. 260, 262 (S.D.N.Y.1942).

In 1971, the New York State legislature decided to eliminate its budget appropriation for the State's Saratoga bottling operation, which had become a losing venture, and to lease the facilities to a private producer. ¹ When Saratoga Vichy learned of this decision, it wrote to the State, indicating an interest in obtaining the license, and stating: "We feel strongly that the water bottled at the Spa compliments (sic ) our products in the sale of all Saratoga waters in the marketplace." However, the State became involved in litigation with its former distributor and was unable to obtain a licensee. During this period, it closed down the bottling operation and dismissed its employees, but it also filed an application for registration of the trademark "Saratoga Geyser" with the New York Department of State. The litigation with the distributor ended in 1976, and, two years later, the State reached a satisfactory license agreement with Waters of Saratoga Springs, Inc., ² which announced its intention to sell its product under the name "Saratoga Geyser."

At approximately the same time, 1978, Saratoga Vichy decided to revamp its mineral water product, abandoning its quaint image and developing a trendy new one in order to benefit from the dramatic success of Perrier mineral water in the United States. The company changed the name of its products from "Saratoga Vichy" to "Saratoga," adopted a new trade dress, and embarked on a one million dollar advertising campaign.

In 1979, when Saratoga Vichy learned that the State's license had been granted to Waters of Saratoga, it offered to buy the "Saratoga Geyser" trademark for $50,000. This offer was refused. Saratoga Vichy then brought this suit against both Waters of Saratoga and the State of New York, claiming infringement of its federal trademark, unfair competition and false designation of origin under the federal trademark act, infringement and dilution under New York trademark law, and unfair competition under the common law of New York. It argued that its use of "Saratoga" had acquired secondary meaning, that the State had abandoned any rights it may have had in its own mark, and that the actions of Waters of Saratoga were unfair according to both state and federal standards. The defendants argued that the suit was barred by laches, that the mark was not abandoned, and that its present use was not unfair.

The District Court for the Northern District of New York (James T. Foley, Chief Judge) granted summary judgment for the defendants. ³ We affirm. We hold that Saratoga Vichy's suit is barred by laches, as a matter of law, as to all alleged grounds of relief.

Discussion

The Laches Defense

It is often said that "mere delay" will not, by itself, bar a plaintiff's suit, but that there must be some element of estoppel, such as reliance by the defendant. See Johanna Farms, Inc. v. Citrus Bowl, Inc., 468 F.Supp. 866, 880-82 (E.D.N.Y.1978); John Wright, Inc. v. Casper Corp., 419 F.Supp. 292, 322-23 (E.D.Pa.1976), aff'd in part, rev'd as to damages, sub nom. Donsco, Inc. v. Casper Corp., 587 F.2d 602 (3d Cir. 1978); Varsity House, Inc. v. Varsity House, Inc., 377 F.Supp. 1386 (E.D.N.Y.1974) (applying New York trademark law); Holiday Inns, Inc. v. Holiday Inn, 364 F.Supp. 775, 783-84 (D.S.C.1973), aff'd mem., 498 F.2d 1397 (4th Cir. 1974); Abbey Funeral Directors, Inc. v. Smith, 24 Misc.2d 492, 204 N.Y.S.2d 439 (Sup.Ct.1960), aff'd mem., 14 A.D.2d 837, 218 N.Y.S.2d 527 (1961). All this means, however, is that a balancing of equities is required, which would be the case with any principle of equity. Adopting this view, Judge Weinfeld has offered the following rule: "Defendant's proof in its laches defense must show that plaintiff had knowledge of defendant's use of its marks, that plaintiff inexcusably delayed in taking action with respect thereto, and that defendant will be prejudiced by permitting plaintiff inequitably to assert its rights at this time." Cuban Cigar Brands, N.V. v. Upmann International, Inc., 457 F.Supp. 1090, 1096 (S.D.N.Y.1978) (footnotes omitted).

The laches defense, as thus defined, is clearly available for all asserted causes of action: the federal trademark act, see Carl Zeiss Stiftung v. VEB Carl Zeiss Jena, 433 F.2d 686, 703-04 (2d Cir. 1970), cert. denied, 403 U.S. 905, 91 S.Ct. 2205, 29 L.Ed.2d 680 (1971) (defense rejected on facts); Polaroid Corp. v. Polarad Electronics Corp., 287 F.2d 492 (2d Cir.) cert. denied, 368 U.S. 820, 82 S.Ct. 36, 7 L.Ed.2d 25 (1961); Emerson Electric Mfg. Co. v. Emerson Radio & Phonograph Corp., 105 F.2d 908 (2d Cir.) cert. denied, 308 U.S. 616, 60 S.Ct. 262, 84 L.Ed. 515 (1939), the New York law of unfair competition, see Polaroid, supra; Hershey Ice Cream Co. v. Hershey Creamery Corp., 4 Misc.2d 812, 158 N.Y.S.2d 654 (Sup.Ct.1957) aff'd mem., 5 A.D.2d 890, 173 N.Y.S.2d 254 (1958); Renofab Process Corp. v. Renotex Corp., 158 N.Y.S.2d 70 (Sup.Ct.1970), and the New York trademark and anti-dilution statutes, see Polaroid, supra; Rainbow Ranch Corp. v. Rainbow Shops, Inc., 89 Misc.2d 808, 392 N.Y.S.2d 796 (Sup.Ct.1977) (rejecting defense on facts); Cue Publications Co. v. Colgate-Palmolive Co., 23 A.D.2d 829, 259 N.Y.S.2d 377 (Sup.Ct.1965); Town Taxi Service Corp. v. Green Cab & Brokerage Co., 38 N.Y.S.2d 529 (Sup.Ct.1943).

Saratoga Vichy argues that in trademark suits the defense of laches is not available to defeat equitable claims for an injunction, but only to defeat equitable claims for an accounting of profits. With respect to the federal law claims, this position has long been rejected; one leading example is a decision of the United States Supreme Court in favor of Saratoga Vichy itself. French Republic v. Saratoga Vichy Spring Co., 191 U.S. 427, 24 S.Ct. 145, 48 L.Ed. 247 (1903). For more recent rejections, see Carl Zeiss, supra, 433 F.2d at 703; Cuban Cigar Brands, supra, 457 F.Supp. at 1096; Haviland & Co. v. Johann Haviland China Corp., 269 F.Supp. 928, 955 (S.D.N.Y.1967). With respect to the state law claims, there is greater support for Saratoga Vichy's position. See Cohn & Rosenberger Inc. v. Kaufman & Ruderman, Inc., 280 A.D. 241, 113 N.Y.S.2d 62 (Sup.Ct.1952); Columbia Records, Inc. v. Goody, 278 A.D. 401, 105 N.Y.S.2d 659, 665-66 (Sup.Ct.1951); Tiffany & Co. v. Tiffany Productions, Inc., 147 Misc. 679, 264 N.Y.S. 459 (Sup.Ct.) aff'd per curiam, 237 A.D. 801, 260 N.Y.S. 821 (1932), aff'd mem., 262 N.Y. 482, 188 N.E. 30 (1933). But even with respect to New York law, the distinction is made only "in the absence of elements creating an equitable estoppel," Cohn & Rosenberger, supra, 280 A.D. at 241, 113 N.Y.S.2d at 63.

Saratoga Vichy acknowledges that any possibility of relief against use of the "Saratoga Geyser" trademark by New York State prior to 1971 was barred by Saratoga Vichy's failure to bring suit during the period between 1910 and 1971. ⁴ It claims, however, that after 1971 the State effectively abandoned its mark by closing the bottling facility and discontinuing its use of the mark for some seven years. This abandonment, Saratoga Vichy asserts, entitles it to bring this suit to prevent use of the mark "Saratoga Geyser" by Waters of Saratoga. However, the undisputed facts establish that Saratoga Vichy continues to be equitably precluded from asserting its claim herein.

In 1971, when the State closed its facility, Saratoga Vichy wrote the State a letter suggesting that it not only regarded the State's trademark as valuable, but that it regarded the continued existence of the State's product as beneficial to its own interests. During the next seven years, Saratoga Vichy continued to acquiesce as it had from 1910 to 1971, although it knew that the State was...