Socony-Vacuum Oil Co. v. Oil City Refiners

• Decision Date: 22 June 1943
• Docket Number: No. 9335,9336.,9335
• Parties: SOCONY-VACUUM OIL CO., Inc., v. OIL CITY REFINERS, Inc., et al. OIL CITY REFINERS, Inc., v. SOCONY-VACUUM OIL CO., Inc.
• Court: U.S. Court of Appeals — Sixth Circuit

136 F.2d 470 (1943)

SOCONY-VACUUM OIL CO., Inc., v. OIL CITY REFINERS, Inc., et al. OIL CITY REFINERS, Inc., v. SOCONY-VACUUM OIL CO., Inc.

Nos. 9335, 9336.

Circuit Court of Appeals, Sixth Circuit.

June 22, 1943.

C. W. Sellers, of Cleveland, Ohio (Thompson, Hine & Flory, of Cleveland, Ohio, Frank E. Lewellen, of Detroit, Mich., and John J. Manning, of New York City, on the brief), for Socony-Vacuum Oil Co.

Albert R. Teare, of Cleveland, Ohio (Bates, Teare & McBean, of Cleveland, Ohio, on the brief), for Oil City Refiners.

Before ALLEN, HAMILTON, and MARTIN, Circuit Judges.

HAMILTON, Circuit Judge.

These are appeals from a judgment of unfair competition growing out of the use of conflicting trademarks. The questions presented are: First, whether the second user of one of various trademarks and composites of such trademarks sporadically used by the first user may be enjoined from competing with the latter; second, whether the court applied an erroneous conception of pertinent law in finding as a fact that the Oil City Refiners, Inc., appellee in No. 9335, changed the coloring and design of its trademark knowingly and in bad faith, thereby seeking to profit by inducing the public to purchase its wares under the belief they were the goods of the Socony-Vacuum Oil Company, appellant in No. 9335; third, assuming that the court correctly applied the law, was its remedy adequate?

The court referred the whole case to a Special Master to take testimony and report findings of fact and conclusions of law. On exceptions, the Master's findings of fact were approved, but the court rejected his conclusions of law in one particular. We shall refer to appellant in No. 9335, plaintiff below, as "Socony" and appellee in No. 9335, defendant below, as "Oil City."

The Patent Office issued a certificate of trademark registration No. 83,100 to the Standard Oil Company of New York, predecessor of Socony, exemplified in the symbol of a flying horse in combination with the words "Pegasus Brand." In the original registration statement, dated August 15, 1911, the applicant declared it theretofore had used the mark in the sale of naphtha and gasoline, oils and greases. Certificate of renewal was issued July 28, 1931. On August 6, 1931, an additional certificate of registration, No. 287,746, was duly issued to Socony's predecessor, extending the original mark to all of its petroleum products with or without admixture of other materials.

The Socony and its predecessor used the registered mark from 1911 to 1932 only in the sale of products in foreign commerce. In April of 1932, Socony planned to use the mark wherever it sold its products in the United States and during that year had shield signs manufactured for display at gasoline stations bearing the mark of the flying red horse. These signs were first used in Cleveland, Ohio, in March 1933. Beginning in August 1932, Socony's products were widely advertised under this trademark.

The first advertisement appeared in Cleveland, Ohio, October 4, 1932, and from that time to the trial of this case, Socony extensively advertised and sold its products under its trademark by the use of various media, including the radio, newspapers and magazines.

The Master found that Oil City used as a trademark the symbol of a flying horse in the Cleveland, Ohio, trade territory as early as 1930, which use it continued until October 1934, when it commenced marketing the products of the American Oil Company and continued to use that Company's trademarks and symbols, until September 1935, during which period it made but slight use of the flying horse. The horse on the Oil City's mark was usually white imposed on a dark background, although occasionally it used other colors, among them, red. Prior to December 1931, there was little use by Oil City of a single horse but the symbol sometimes had two horses facing in opposite directions. Prior to October 1932, and subsequent thereto Oil City intermittently used the figures of airplanes, a herd of running horses without wings, a quartet of singers and a series of flying horses in varying colors ascending in an arc. The use of a red horse during this period was sporadic. From April 1934, to September 1935, Oil City operated twenty-two gasoline stations, most of which were devoted to the sale of the American Oil Company's products under that Company's trademark. Between September and the latter part of 1935, Oil City distributed the products of the Columbia Refining Company through twelve of Oil City's stations using, in connection therewith, Columbia trademarks. Prior to 1940, Oil City sporadically used the sign of a white horse on billboards and cut-out signs, one of which had on it a gray horse with red outlined wings and it used a red horse on some of its pump globes. During 1940 and since that time the Oil City has used exclusively, a red horse strikingly similar to Socony's. Socony was familiar with Oil City's trade symbols as early as January 1933 and since that time has known the uses to which they have been put. Oil City first knew of Socony's use of its trade symbol in October 1932.

On March 19, 1940, after this action was begun, Oil City registered the flying red horse as a trademark in Ohio under the provisions of the Ohio General Code, Section 6240, subsections 1-4.

On January 19, 1933, Oil City notified Socony that it was the sole owner of the winged horse trademark and insisted that Socony discontinue its use. Socony instituted this action claiming it was the owner of the mark and had used it continuously since October 22, 1932, in marketing its products in Ohio and elsewhere. It charged that Oil City was using Socony's mark in northeastern Ohio and in western Pennsylvania. Oil City, in its answer, admitted the sale of petroleum products in northeastern Ohio under the trademark of a flying red horse, but denied it had sold any products in western Pennsylvania. It charged Socony had sold products throughout the State of Ohio and counterclaimed, alleging it was the sole owner of the mark and sought an injunction and an accounting from Socony.

The Master concluded as a matter of law that Socony acquired no rights in the use of its trademark in the Cleveland trade territory until 1932 and that Oil City had made sufficient use of the mark of a flying horse to acquire a prior right therein before Socony entered the territory. The Master also concluded that the difference in color between a flying red horse and a flying white horse was not sufficient to avoid confusion in the public mind, but he concluded that because Oil City had in 1940 discontinued the use of all trademarks except a flying red horse, confusingly similar to the trademark of Socony, it was guilty of an unfair trade practice and should be permanently enjoined from the use of said mark. The Master recommended that there be no accounting, and that Oil City's counterclaim be dismissed and Socony's action be dismissed as to John Roski, appellee in No. 9335.

The court accepted the Master's findings and conclusions with the exception that he refuses to enjoin the Oil City from the use of a flying white horse as a symbol in the State of Ohio.

Oil City, appellant in No. 9336, insists that the court erred in dismissing its counterclaim. Socony in No. 9335 insists that the court should have enjoined the Oil City from using the trademark in any form and further that in any event, the use of the mark by Oil City should have been restricted to Cleveland, Ohio, and its vicinity.

The Master found that Oil City was the first user of the flying horse as a trade symbol in the Cleveland territory and the court adopted this finding.

Under Rule 53(e) (2), Rules of Civil Procedure, Title 28 U.S.C.A. following section 723c, the court should accept the Master's findings of fact unless clearly erroneous. Socony filed no exceptions to the Master's report and since the findings of the Master in this particular are supported by substantial evidence, we accept them.

If nothing else appeared in the case, this finding would be sufficient to support Oil City's counterclaim and it would be entitled to an injunction against Socony, but even though Oil City was the first user of the trademark, it is not thereby relieved of the charge of unfair competition and if this charge is supported by the findings of the Master, the court was correct in dismissing its counterclaim. Drake Medicine Co. v. Glessner, 68 Ohio St. 337, 67 N.E. 722; Globe-Wernicke Co. v. Safe-Cabinet Co., 92 Ohio St. 532, 112 N.E. 478; Safe-Cabinet Co. v. Globe Wernicke Co., 3 Ohio App. 24; Pillsbury-Washburn Flour Mills Co. v. Eagle, 7 Cir., 86 F. 608, 41 L.R.A. 162; Samson Cordage Works v. Puritan Cordage Mills, 6 Cir., 211 F. 603, L.R.A., 1915F, 1107. According to the findings of the Master the confusion which Oil City seeks to abate was of its own creation and it caused the unfair competition in trade for which it asks relief. There was no finding by the Master of unfair competition by Socony and Oil City makes no claim of unfair dealing by Socony, aside from technical trademark infringement.

Rule 53(e) (2) does not operate to relieve this court of the burden of reviewing inferences or conclusions drawn by the Master and the trial court that the use by Oil City of the flying horse symbol to identify its trade and products constituted unfair competition. While accepting the facts competently found by the Master as correct, an appellate court remains free to draw the ultimate inferences and conclusions which, in its opinion, the findings reasonably induce. Kycoga Land Co. v. Kentucky River Coal Corporation, 6 Cir., 110...