Smith v. Dental Products Co., 8278

• Decision Date: 17 February 1944
• Docket Number: 8279.,No. 8278,8278
• Parties: SMITH v. DENTAL PRODUCTS CO., Inc., et al. (two cases).
• Court: U.S. Court of Appeals — Seventh Circuit

140 F.2d 140 (1944)

SMITH v. DENTAL PRODUCTS CO., Inc., et al. (two cases).

Nos. 8278, 8279.

Circuit Court of Appeals, Seventh Circuit.

January 14, 1944.

Rehearing Denied February 17, 1944.

COPYRIGHT MATERIAL OMITTED

James R. McKnight, of Chicago, Ill., Marie K. Saunders, of Washington, D. C., and Harold E. Allport, of Los Angeles, Cal., for Arthur E. Smith.

Max W. Zabel, W. Bayard Jones, Francis V. Healy, and Melvin L. Goldman, all of Chicago, Ill. (Zabel, Carlson, Gritzbaugh & Wells, and Goldman, Allshouse & Healy, all of Chicago, Ill., of counsel), for Dental Products Co. Inc., and others.

Before MAJOR and MINTON, Circuit Judges, and LINDLEY, District Judge.

MAJOR, Circuit Judge.

This is an appeal from a decree of the lower court, entered December 2, 1942, in a suit by plaintiff against defendant¹ alleging trade-mark infringement, unfair competition and patent infringement, and to recover damages and profits occasioned by such infringement and unfair acts. The District Court dismissed the complaint so far as it related to trade-mark infringement and unfair competition, but declared the patents in suit valid and infringed and directed an accounting. No. 8278 is plaintiff's appeal from that portion of the decree unfavorable to him, and No. 8279 is defendants' appeal from that portion of the decree unfavorable to them.

We shall first consider the appeal in No. 8278, in which plaintiff seeks to reverse that portion of the decree which dismisses his complaint as to trade-mark infringement and unfair competition. Plaintiff is a dentist and oral surgeon of nation-wide reputation. So far as pertinent to this case, his activities commenced in 1914, since which time he has specialized in a certain type of anesthetic used by dentists. The technique of administering this anesthetic is called nerve blocking, and the anesthetic used for such purpose is generally called "conductive" or "conduction" anesthetic. In connection with this technique, plaintiff has done a large amount of research work, partially devoted to instruments by which conductive anesthetic may be administered to a patient. From 1914 to 1918, plaintiff devoted a large amount of his time to lectures which were given before many and perhaps practically all of the dental schools and state societies in the United States. In connection with such lectures, numerous instruments and medicaments were created and used by him. His lectures were largely attended by men who were eminent in the profession or who subsequently became so, and a considerable demand was created for the instruments and medicaments explained in his lectures. In order to supply this demand, plaintiff had a quantity of such items manufactured. He coined, adopted and was the first user of two of the trademarks relied upon in this suit, Conducto and Den Pro, to identify his goods. Attached to his goods were printed labels bearing such trade names. The third trade-mark declared upon in this suit, Conducto Unitube, will be subsequently referred to.

The defendant is a corporation which has been continuously, since the year 1916, engaged in the business of selling dental supplies to dentists through dealers or supply houses. It does not practice the profession of dentistry and it does not sell any drugs or supplies to the public generally, that is, the patients of dentists.

After plaintiff had pursued for some four years the activities above suggested, we find the beginning of a series of transactions between him and the defendant, which in the main form the basis for the instant controversy. Such transactions include the making of three written agreements, designated by plaintiff as license agreements. The first of such agreements was entered into September 18, 1918, the second April 20, 1922, and the third and last August 27, 1930. The third was cancelled by plaintiff in accordance with its terms, effective February 10, 1935, for alleged breach of contract on the part of defendant. Later we shall make more detailed reference to these agreements. For the present it is sufficient to state that during all the time from the execution of the first agreement until the cancellation date of the last, defendant sold dental products and supplies in accordance with the terms of such agreements and paid plaintiff royalties provided thereby.

During the existence of such agreements, plaintiff filed an application in the United States Patent Office to register his trademark, Conducto Unitube. This application was rejected on two prior registrations of Conducto, taken out by defendant without plaintiff's knowledge. Upon plaintiff's demand, defendant on February 13, 1928 transferred to him by assignment the two registrations of the trade-mark Conducto. Subsequently, the rejection of plaintiff's application for registration of his trademark, Conducto Unitube, was withdrawn and a certificate of registration issued to him on September 17, 1929.

With this brief outline of the situation, we shall endeavor to state the contentions of the respective parties. In this connection, it is unfortunate that we are unable to discern, from the lower court's memorandum opinion or from its conclusions of law, the basis upon which plaintiff's cause was dismissed. The nearest approach to the problem appears in the following statement contained in the memorandum: "The entire theory of the plaintiff in this regard seems to be based upon alleged ownership of the trade-marks in question, as if it were similar to ownership of patents or other personal property." It would appear from this statement that the court's action was predicated on plaintiff's lack of ownership of the trade-marks in suit. The statement just quoted also appears in the court's conclusions of law, in connection with the statement that plaintiff has failed to establish trade-mark infringement. As to the charge of unfair competition, the court, both in its memorandum opinion and conclusions of law, merely states that plaintiff has failed to prove the necessary elements.

Of the numerous contentions presented here, we are of the view that a decision is dependent upon the answer to two questions: (1) Was the plaintiff at the time of the execution of the first agreement with the defendant the owner of the trademarks Conducto and Den Pro, and did he subsequently become the owner of the trade-mark Conducto Unitube? and (2) If so, did he abandon such ownership by reason of his agreements and course of conduct with the defendant? Plaintiff contends that (1) must be answered in the affirmative and (2) in the negative, while defendant contends to the contrary. As is apparent, plaintiff to succeed must sustain his position on both questions, while defendant will prevail if its contention is accepted as to either. In this connection, it is interesting and perhaps pertinent to note that defendant in its brief concedes that it infringes "if in fact these trademarks are owned by plaintiff."

Defendant's argument that plaintiff was never the owner of the trademarks in suit rests on the premise that they were never used by him in connection with a business or trade. Upon this premise, defendant relies principally on Hanover Star Mill Co. v. Metcalf, 240 U.S. 403, 36 S.Ct. 357, 60 L.Ed. 713, and United Drug v. Theodore Rectanus, 248 U.S. 90, 39 S.Ct. 48, 63 L.Ed. 141. These cases and others no doubt sustain defendant's contention to the effect that a trademark is treated as a protection for good will, is not the subject of property except in connection with an existing business or trade, and that its function is simply to designate the goods to which it is applied as the product of a particular trader and to protect his good will against the sale of another's product as his. It has also been held that no property right is concluded by the registration of a trade-mark. Patton Paint Co. v. Sunset Paint Co., 53 App. D.C. 351, 290 F. 326; Fulton Water Works Co. v. Bear Lithia Springs Co., 47 App. D.C. 437. Accepting the law as thus stated, we are confronted with the problem of ascertaining the soundness of the premise to which it is sought to be applied.

In the first place, the court below, notwithstanding its conclusion above stated, expressly found, in findings 6, 7 and 12, as follows:

"6. Beginning in 1914 Arthur E. Smith's name was associated with his new dental instruments and medicaments, which also bore his trade marks Conducto and Denpro.

"7. Arthur E. Smith was the original owner and user of the trade marks Conducto and Denpro on dental products and preparations.

"12. Arthur E. Smith was the original owner and user of the trade mark Conducto Unitube * * *."

We are of the view that such findings are amply supported by the evidence and must be accepted. We have heretofore briefly stated plaintiff's activities during the period prior to his first agreement with the defendant and we think it unnecessary to relate in detail the evidence which clearly shows that plaintiff was engaged in the manufacture, and sale in practically every portion of the United States, of dental supplies under the trade names Conducto and Den Pro, that such trade names were attached to his products in the form of printed labels, and that they were generally recognized by those of his profession as being the trade names for his products. (We have heretofore and will again refer to the circumstances under which plaintiff became the owner of the trade-mark Conducto Unitube.)

It appears appropriate in this connection to refer to defendant's counterclaim to the effect that it became the owner of the trade-mark Den Pro by use prior to that of the plaintiff, and that plaintiff's registration on October 8, 1935 was fraudulently obtained. We find nothing in the findings of the lower court with reference to this counterclaim. As already noted, the court did find that the plaintiff was the "original owner and user" of such trade-mark and dismissed defendant's counterclaim. We have examined the...