Scott Paper Co. v. Scott's Liquid Gold, Inc.

Citation589 F.2d 1225
Decision Date12 December 1978
Docket NumberNo. 78-1166,78-1166
PartiesSCOTT PAPER COMPANY, a corporation v. SCOTT'S LIQUID GOLD, INC., a corporation, Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Herbert Blecker, Watson, Leavenworth, Kelton & Taggart, New York City, for appellant; Nicholas John Stathis, Robert E. Kosinski, Watson, Leavenworth, Kelton & Taggart, New York City, James F. Burnett, Potter, Anderson & Corroon, Wilmington, Del., of counsel.

Rudolf E. Hutz, Connolly, Bove & Lodge, Wilmington, Del., for appellee; James M. Mulligan, N. Richard Powers, Connolly, Bove & Lodge, Wilmington, Del., John W. Kane, Jr., John A. Weygandt, Scott Paper Co., Philadelphia, Pa., of counsel.

Before ROSENN and WEIS, Circuit Judges, and HANNUM, District Judge. *

OPINION OF THE COURT

ROSENN, Circuit Judge.

In his classic "Essay on Walking," Thoreau expressed the notion that there is nothing in a name. This view has been vigorously rejected by both parties to this litigation, not to mention almost all of mankind to whom a name is an important means of identification. Very often, intangible connotations which are not facially apparent are attached to a name. The long history of the development and growth of the companies involved in this controversy bears testimony to the force of the biblical aphorism that "a good name is better than precious oil," 1 particularly in the corporate and commercial life of this nation.

The primary issue raised on this appeal is whether the surname "Scott," a registered mark applied to plastic and paper household products, had acquired a secondary meaning of such significance as to bar its use on noncompeting products. Scott Paper Company ("Scott Paper") filed suit against Scott's Liquid Gold, Inc. ("SLG"), in the United States District Court for the District of Delaware alleging infringement of trademarks, false attribution of origin of its product, and unfair competition. After a bench trial on the merits, the district court granted a permanent injunction, enjoining SLG from using the surname "Scott" in its trade name, but denying plaintiff's request for money damages, an accounting, and attorney's fees, Scott Paper Co. v. Scott's Liquid Gold, Inc., 439 F.Supp. 1022 (D.Del.1977). The district court reached the following principal conclusions: (1) that Scott Paper had established a secondary meaning in "Scott" for household cleaners; (2) that it had established a likelihood of confusion between the two trademarks; (3) that Scott Paper's mark had priority; and (4) that Scott Paper had not been guilty of laches. SLG appealed. We reverse and vacate the judgment.

I.

Our review of the facts will be brief; a more detailed recitation can be found in the district court opinion. Defendant's origin can be traced to Lee Scott of Colorado, who, as early as 1925, manufactured, and sold door-to-door, a furniture polish under the name of Scott's Liquid Gold. For a long time this remained a small operation confined to the Denver area with some change in ownership. In 1951 a partnership purchased the business for $350. Three years later, it was incorporated in Colorado under the name of Scott's Liquid Gold, Inc., and efforts were made to develop a nationwide market for the product.

Not until 1969 did sales of the furniture polish show significant signs of improvement. In that year, the company decided to sell shares of its stock to the public. The proceeds derived went largely into advertising, generating a marked rise in revenues. As the figures demonstrate, the business expanded dramatically in the 1970's. 2 On May 24, 1971, SLG applied for registration of the trademark "Scott's Liquid Gold" in the United States Patent Office. The mark was officially published for opposition purposes. When notice of it came to Scott Paper's attention, it requested and received a thirty day extension to investigate a possible conflict, but then decided not to oppose it. On December 19, 1972, the Patent Office issued its registration of the trademark.

Plaintiff, Scott Paper, has been selling paper goods since 1879. The earliest use of the company name on a product appears to have been 1911, when the company began selling Scot-Tissue paper towels. In 1916, Scott Paper obtained a federal trademark registration for this name. By 1925, sales of Scott Paper products aggregated nearly 4 million dollars nationwide. Over the years, the company prospered and expanded. By 1975 its annual sales exceeded 450 million dollars. During this time, additional trademark registrations were obtained. In all, nineteen trademark registrations allegedly have been infringed by the defendant. None of these, however, pertain to a furniture polish.

II.

The appellant challenges each of the four primary conclusions reached by the district court. We will address the first three of these conclusions. In view of our disposition of the case on the merits, we find it unnecessary to decide SLG's contention that laches barred any relief to Scott Paper.

Under the common law and the Lanham Act, 15 U.S.C. §§ 1051-1127, owners of trademarks are protected from other marks that are likely to cause confusion. However, a non-distinctive trademark, such as a common-name mark, only achieves protection if the mark is shown to have secondary meaning. See Safeway Stores, Inc. v. Safeway Properties, Inc., 307 F.2d 495, 498-99 (2d Cir. 1962); 3 Restatement of the Law of Torts, § 716(b) and Comment b (1938). Proof of secondary meaning was Scott Paper's first hurdle in its action for infringement.

Secondary meaning exists when the trademark is interpreted by the consuming public to be not only an identification of the product, but also a representation of the product's origin. E. g., Blisscraft of Hollywood v. United Plastics Co., 294 F.2d 694, 697 (2d Cir. 1961); G & C Merriam Co. v. Saalfield, 198 F. 369, 373 (6th Cir. 1912), Cert. denied, 243 U.S. 651, 37 S.Ct. 478, 61 L.Ed. 947 (1917). Secondary meaning is generally established through extensive advertising which creates in the mind of consumers an association between different products bearing the same mark. This association suggests that the products originate from a single source. F. S. Services, Inc. v. Custom Farm Services, Inc., 471 F.2d 671, 674 (7th Cir. 1972). Once a trademark which could not otherwise have exclusive appropriation achieves secondary meaning, competitors can be prevented from using a similar mark. The purpose of this rule is to minimize confusion of the public as to the origin of the product and to avoid diversion of customers misled by a similar mark. "The trademark laws exist not to 'protect' trademarks, but . . . to protect the consuming public from confusion, concomitantly protecting the trademark owner's right to a non-confused public." James Burrough Ltd. v. Sign of the Beefeater, Inc., 540 F.2d 266, 276 (7th Cir. 1976).

Under certain circumstances, a trademark can develop a secondary meaning as to goods or services to which the mark has not been applied. Reasons advanced by this court for extending protection of a trademark into a noncompeting market are the potential dangers that: (1) the reputation of the holder of the mark may be tarnished or (2) the user of an infringing mark may be attempting to benefit from the general goodwill developed by the holder of the protected mark. Wall v. Rolls-Royce of America, Inc., 4 F.2d 333, 334 (3d Cir. 1925); Akron-Overland Tire Co. v. Willys-Overland Co., 273 F. 674, 676 (3d Cir. 1921).

SLG does not contest the district court finding that Scott Paper has established secondary meaning for Paper goods. SLG does contest, however, the court's conclusion that Scott Paper "has secondary meaning in the use of 'Scott' as an endorsement on household cleaners." This holding prompted the district court to decide that the mark deserved protection beyond the scope of its actual use paper and plastic wares and that it could attach to other goods, namely household cleaners. Unfortunately, the court failed to delineate explicitly the evidence upon which it relied in concluding that Scott Paper had satisfied its burden of proving secondary meaning in a noncompeting market. The extensive discussion in the district court's exhaustive opinion of the evidence presented at trial focuses on the likelihood of confusion, not secondary meaning. Likelihood of confusion is an analytically distinct, albeit closely related element of the case. Even assuming Arguendo that proof of likelihood of confusion is A fortiori proof of secondary meaning, we believe that the trial court erred in concluding that sufficient likelihood of confusion exists in this case to warrant injunctive relief. 3

Likelihood of confusion exists when consumers viewing the mark would probably assume that the product or service it represents is associated with the source of a different product or service DB identified by a similar mark. See James Burrough Ltd. v. Sign of the Beefeater, Inc., supra, 540 F.2d at 275. The trial court carefully enumerated the factors to be considered in making this determination: (1) the degree of similarity between the owner's mark and the alleged infringing mark; (2) the strength of owner's mark; (3) the price of the goods and other factors indicative of the care and attention expected of consumers when making a purchase; (4) the length of time the defendant has used the mark without evidence of actual confusion arising; (5) the intent of the defendant in adopting the mark; (6) the evidence of actual confusion; (7) whether the goods, though not competing, are marketed through the same channels of trade and advertised through the same media; (8) the extent to which the targets of the parties' sales efforts are the same; (9) the relationship of the goods in the minds of the public because of the similarity of function; (10) other facts suggesting that the consuming public might expect the prior owner to manufacture a...

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