Seven-Up Bottling Co. v. Seven-Up Co.
| Decision Date | 20 September 1976 |
| Docket Number | No. 75-973C (A).,75-973C (A). |
| Citation | 420 F. Supp. 1246 |
| Parties | SEVEN-UP BOTTLING COMPANY, a Missouri Corporation, Plaintiff, v. The SEVEN-UP COMPANY, a Missouri Corporation, and Seven-Up Services, Inc., a Missouri Corporation, Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
Thompson & Mitchell, St. Louis, Mo., for plaintiff.
Bryan, Cave, McPheeters & McRoberts, Veryl Riddle, St. Louis, Mo., for defendants.
This matter is before the Court on the motion of defendants, The Seven-Up Company and Seven-Up Services, Inc., to dismiss the complaint of plaintiff, Seven-Up Bottling Company, for lack of jurisdiction over the subject matter, Rule 12(b)(1) FRCP, and for failure to state a claim upon which relief can be granted, Rule 12(b)(6) FRCP.
Plaintiff, Seven-Up Bottling Company (hereinafter referred to as plaintiff or Bottling), brings this action seeking relief from alleged unfair competition of defendants and for consideration of various claims alleged to be cognizable under the Trademark Act of 1946 (Lanham Act), 15 U.S.C. §§ 1051, et seq. Plaintiff bases jurisdiction of this Court on 28 U.S.C. § 1338.
For purposes of the motion to dismiss, all well pleaded allegations of fact will be taken as true.
The principal allegations in the complaint may be summarized as follows: Plaintiff, Bottling, is a Missouri corporation, which since 1929 has bottled a soft drink under the trademark "Seven-Up." Defendant, The Seven-Up Company (hereinafter referred to as defendant or Company), is a Missouri corporation, which since 1929 has been a seller of extracts used in the flavoring of soft drinks. Defendant, Seven-Up Services, Inc. (hereinafter referred to as Services), is the wholly-owned subsidiary of Company incorporated in Missouri in 1957, to aid distributors of the soft drink "Seven-Up" in production and marketing of that beverage.
During its corporate existence defendant Company has filed numerous applications to register the trademarks "Seven-Up" and "7-Up" with designs on various commodities, including soft drinks, syrups, extracts and flavors. In 1928 and 1935, Company filed applications to register the trademarks "Seven-Up" and "7-Up", respectively, for "NONALCOHOLIC, NONCEREAL, MALTLESS BEVERAGES SOLD AS SOFT DRINKS AND SYRUPS, EXTRACTS AND FLAVORS USED IN MAKING THE SAME" * * *. Plaintiff Bottling has alleged that Company did not produce soft drinks or syrups on the dates of the applications, thus rendering the registrations maturing from said applications invalid and void as based on materially false and fraudulent statements.
Since at least 1929, Company has sold a soft drink flavoring extract used in the manufacture of the soft drink "Seven-Up". Plaintiff in the past has purchased this flavoring extract from defendant, producing the drink "Seven-Up" and packaging it for sale to outlets for resale to consumers. In 1938, Company instituted a franchise policy supplanting the unwritten and relatively informal process by which their "Seven-Up" flavoring extract had been sold in the past. Until 1970, defendant Company induced manufacturers and packagers of soft drinks to accept franchises under which they would purchase extract for use in the production, packaging and selling of soft drink under the trademark "Seven-Up", though Company itself did not produce soft drink during that period. Those entering into these agreements were to develop their separate soft drink businesses in prescribed territories specifically reserved to them along with "the exclusive rights within said territories to prepare such soft drink according to the formula of Company in packages bearing the trademark `Seven-Up.'" Plaintiff Bottling entered into such a franchise agreement on January 24, 1939, receiving as its exclusive territory portions of Missouri and Illinois. An affiliate of Bottling entered into a similar agreement regarding a different territory on January 25, 1939, which territory subsequently joined with that of plaintiff in 1959. Plaintiff alleges that such agreements constituted perpetual agreements.
Prior to 1943, the various licensees of Company under the above-described agreements advertised their product individually within their respective exclusive territories. Both content and format were subject to approval by the Company. In 1943, a national "Seven-Up" media advertising program was organized by certain of Company's licensees ("Seven-Up" Developers), including plaintiff. Pursuant to this program the individual licensees contributed $17.50 per gallon of "Seven-Up" extract purchased from Company to a fund administered by Company as trustee. Although the Company itself made no monetary contributions to this fund, it did use those monies received to purchase national media advertising to develop the good will of the "Seven-Up" Developers and the Company. This fund terminated in 1950.
Once in 1942, and three times in 1943, Company filed applications to register the mark "Seven-Up" along with accompanying drawings as a "collective" mark for * * "carbonated, nonalcoholic, noncereal, maltless beverages, sold as soft drinks * * * showing the collective mark as actually used upon the goods by persons duly authorized by applicant * * *." On these applications the "collective" mark is stated to have been used since 1928 by persons authorized by Company, such use of the "collective" mark upon the goods intended to indicate that "extracts or other ingredients used in compounding the beverage came from a single source, the above named corporation Company." Plaintiff claims that these "collective" marks are valid, have become incontestable by passage of time and prevent defendant Company from using the trademark "Seven-Up" on soft drinks and syrups, this since the registration of the marks in question reflected the use of the marks by a collective group of authorized persons (Company's licensees) rather than Company itself.
In 1954, 1956, 1957 and 1959, Company obtained registrations showing "7-Up" or that symbol in a particular slogan. All of these registrations covered soft drinks. Plaintiff avers that at the time these registrations were issued neither defendant Company nor defendant Services, manufactured or sold soft drinks, and, therefore, such registrations were based on materially false and fraudulent statements much like the applications of 1928 and 1935. Plaintiff further alleges that these registrations are inconsistent with the so-called "collective" marks of the 1940's and represent an attempt by Company to compete unfairly with plaintiff.
The year 1956 saw Bottling and Company enter into a contract covering the manufacture, promotion and sale of a premix soft drink through vending machines and dispensing equipment under the trademark "Seven-Up". Bottling has expended over one million dollars on equipment necessary to this process, and as a result of its efforts owns a valuable good will in this business.
Since 1961, plaintiff Bottling has manufactured and sold soda fountain syrup in its exclusive territory under the trademark "Seven-Up". Bottling was offered early in 1961, a contract from Company which would have covered the promotion and sale of the syrup but reserved to Company the right to make and sell syrup in that territory under the trademark "Seven-Up" or designate others to do so. Bottling claims this attempted reservation of rights would permit Company to engage in unfair competition with Bottling and would represent as well an infringement of Bottling's beneficial rights under the "collective" trademark registrations of the 1940's. Accordingly, Bottling refused the offer, preferring instead to buy its syrup from Services until later in 1961 when a contract agreeable to both Bottling and Company was negotiated.
In 1966, Company obtained Registration Numbers 801,421 and 816,189 showing "7-Up" and "Seven-Up" for soft drinks. Plaintiff alleges that both said registrations should be cancelled as inconsistent with the "collective" marks obtained in the 1940's and in derogation of Bottling's rights under those marks. It is claimed by Bottling that cancellation of the registrations will also be warranted if it is found that Company was manufacturing and selling "Seven-Up" soft drink in cans as a violation of the law governing collective marks wherein the registrant is barred from manufacturing, packaging or selling the product on which the mark is used. It is further alleged that Registration Number 816,189 was falsely and fraudulently procured by the statement that Company had exclusive use of the mark since 1928, when such exclusive use did not exist.
There is presently pending before the United States Patent and Trademark Office, Application, Serial Number 45,076, to register "7-Up" and a design to be used in conjunction with soft drinks, syrups and extracts. In this application Company represents that it has the exclusive right to use such mark in commerce. Bottling alleges that this representation of exclusive right to use of the mark is materially false and fraudulent, that the application is inconsistent with the "collective" marks obtained by Company, and that the application represents yet another attempt on the part of Company to appropriate Bottling's good will, thus constituting unfair competition.
During 1958, defendants Company and Services began to procure the canning of the soft drink "Seven-Up". In 1959, Bottling commenced to purchase this canned "Seven-Up" from Services. This purchasing continued on an informal basis until January of 1968, at which time Bottling and Company executed a written agreement concerning Bottling's purchase of canned "Seven-Up" for resale. Under this agreement Bottling was allowed to purchase canned "Seven-Up" from those designated by Company as "approved packagers." Recently, however, Company has required Bottling to purchase canned "Seven-Up" from Services, which corporation generally charges...
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