Spangler Candy Company v. Crystal Pure Candy Company

• Decision Date: 11 January 1966
• Docket Number: No. 14918-9.,14918-9.
• Citation: 353 F.2d 641
• Parties: SPANGLER CANDY COMPANY, Plaintiff-Appellant, v. CRYSTAL PURE CANDY COMPANY, Defendant-Appellee. SPANGLER CANDY COMPANY, Plaintiff-Appellee, v. CRYSTAL PURE CANDY COMPANY, Defendant-Counterclaimant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

353 F.2d 641 (1965)

SPANGLER CANDY COMPANY, Plaintiff-Appellant, v. CRYSTAL PURE CANDY COMPANY, Defendant-Appellee.

SPANGLER CANDY COMPANY, Plaintiff-Appellee, v. CRYSTAL PURE CANDY COMPANY, Defendant-Counterclaimant-Appellant.

No. 14918-9.

United States Court of Appeals Seventh Circuit.

December 6, 1965.

Rehearing Denied January 11, 1966.

George B. Christensen, Chicago, Ill., for Spangler.

Dean A. Olds, Chicago, Ill., for Crystal Pure.

Before HASTINGS, Chief Judge, and DUFFY and KILEY, Circuit Judges.

DUFFY, Circuit Judge.

Plaintiff sought injunctive relief and an accounting for profits and damages allegedly occasioned by trademark infringement and unfair competition. Defendant counterclaimed seeking injunctive relief, damages and attorneys' fees for alleged unfair competition, asserting that plaintiff had issued unfair press releases and had threatened defendant's customers with involvement in the pending litigation.

The District Court held that the plaintiff's copyright had not been infringed and that the defendant had not engaged in unfair competition. The District Court also held there had been no unfair competition as alleged in defendant's counterclaim and the counterclaim was dismissed.

Both plaintiff and defendant manufacture lollipops which, in this record, are often referred to as "suckers." Lollipops are a hard candy made in various flavors and molded on the end of a stick which is made of wood or strongly compressed paper.

In 1953, plaintiff entered the lollipop business by purchasing from another company the necessary machinery and the trademark Dum-Dums. This trademark had been registered in 1924. Since 1953, plaintiff continuously has marketed its suckers under the Dum-Dums mark.

For years, suckers were usually sold individually in the stores. With the coming of supermarkets, package sales of suckers became predominant. By 1960, plaintiff's "29¢ supermarket bag" alone accounted for almost 50% of its sucker sales.

Customers at supermarkets usually wait upon themselves. In the candy section of a modern supermarket there may be displayed three or four brands of suckers. Many times candy customers are accompanied and influenced by their children, some of whom may not be old enough to read. "Impulse buying" is often the basis for the selection which is made.

Lollipop manufacturers have attempted to identify their products by decorating the labels. The suckers are usually individually wrapped in either clear or colored cellophane. However, plaintiff used colored wax paper. Plaintiff was the only manufacturer making a ball-shaped and banded penny lollipop using wax paper wrappers and offering self-liquidating premiums.

Plaintiff's sales of suckers, marked and dressed as hereinbefore described, rose from 61,593,000 in 1953, to 286,182,000 in 1959, the last full year before defendant's accused acts. Of the 1959 sales, approximately 119,000,000 were made in the so-called "29¢ supermarket bag." Testimony of supermarket and drugstore operators established there was a steady consumer demand for Dum-Dums suckers.

For many years, defendant had marketed suckers of various shapes and sizes under various brand names. In 1954, it had registered the trademark "Tot Pops." However, in the late 1950's, defendant's leading brand was "Kiddie Pops."

Jewel Tea Company was an important customer of defendant. In the spring or summer of 1959, it transferred its lollipop business to plaintiff. Defendant's managing partner, Abbey, testified — "Well, I felt that if a good customer of mine thought that that was a good item to handle, I should put it in my line since I made nothing but pops."

Abbey sat down with one of plaintiff's packages before him as well as certain other packages. He frankly testified he tried "to get as close to plaintiff's as I thought good ethics and good taste would allow me to." Abbey's endeavor to have his package look like plaintiff's is shown by the copying of errors which occurred on plaintiff's package. Plaintiff had printed "Save Wraps" on its bags, but "Save Wrappers" on the labels. This error was copied exactly by Abbey.

Abbey sent one of plaintiff's suckers to a candy mold maker so that the mold maker could design a mold which would duplicate the form of plaintiff's product. He devised a new trademark. Abbey designed a wrapper with plaintiff's wrapper before him, and substituted the words "Pop-Pops" for "Dum-Dums."

Abbey then devised the decoration for an outer polyethylene bag nearly the identical size of plaintiff's, and used shades of colors as in plaintiff's outer bag. He used slogans on the bag almost identical with those used by plaintiff. One side of defendant's bag was printed vertically and the other horizontally, just as was plaintiff's. About the only place where defendant differed from plaintiff's color scheme was that plaintiff's name was printed in deep blue against the clear polyethylene background where plaintiff's name could be easily read, while defendant's name was printed on opaque white and was not so readily discernible.

Hence almost every element which Abbey put into his new sucker, mark and dress save the word "Pop-Pops" was borrowed without consent, from plaintiff. It would seem to be an unusual example of "good ethics" and "good taste."

There was no evidence of confusion, or confusing similarity, between the numerous competing suckers until the advent of defendant's accused mark and dress. Subsequently, there was proof of instances of actual confusion. One instance was — Mrs. Robert Smith was a Sunday School teacher who was familiar with Dum-Dums. She went to a supermarket in Georgia where she had previously purchased Dum-Dums in order to obtain a package of suckers to be distributed to her Sunday School class. She asked the assistant manager for Dum-Dums and he brought her a bag and laid it on the counter. After glancing at it, Mrs. Smith paid for it, took it home and thereafter distributed the contents to the children. Her brother-in-law, who was one of plaintiff's distributors and whose children were, apparently, in the class, telephoned Mrs. Smith chiding her for giving his competitor's product to the children. She replied — "I thought that I had Dum-Dums; I asked for Dum-Dums and it looked like Dum-Dums." There was other evidence of actual confusion. "There can be no more positive proof of likelihood of confusion than evidence of actual confusion." Standard Oil Co. v. Standard Oil Co., 10 Cir., 252 F.2d 65, 74, 76 A.L.R.2d 600.

Supermarkets did not customarily carry both Pop-Pops and Dum-Dums. The reason is the one assigned by the District Court, that one wrapped and packaged item could be substituted for the other. It is interesting to note that after defendant copied plaintiff's product, wrapping and dress, Jewel Tea Company dropped plaintiff's Dum-Dums and substituted Pop-Pops.

ALLEGED TRADEMARK INFRINGEMENT

The test for establishing trademark infringement was stated by this Court nearly forty years ago in Northam Warren Corp. v. Universal Cosmetic Company, 7 Cir., 18 F.2d 774, 775, and reaffirmed in Independent Nail & Packing Company v. Stronghold Screw Products, Inc., 7 Cir., 205 F.2d 921, 924, and National Van Lines, Inc. v. Dean, 7 Cir., 288 F.2d 5, 9, as follows: "It is sufficient if one adopts a trade name or a trade-mark so like another in form, spelling, or sound that one, with a not very definite or clear recollection as to the real trade-mark, is likely to become confused or misled."

Plaintiff claims that defendant copied precisely the type font and logo of its mark. However, the District Court held the defendant's mark does not resemble the plaintiff's mark so as to be likely to confuse or to deceive purchasers. The Court stated that plaintiff's mark cannot be dissected, but should be viewed as a whole and emphasized that the sounds of the words in the marks are different, in contrast to the words "Dramamine" and "Bonamine" which were held to infringe in G. D. Searle & Co. v. Chas. Pfizer & Co., 7 Cir., 265 F.2d 385.

We agree with the District Court that the claim of trademark infringement has not been sustained.

UNFAIR COMPETITION

In most of the unfair competition cases which have come before this Court, the cause of action has arisen in Illinois, and we have held that Illinois law was to be applied. In Kellogg Co. v. National Biscuit Co., 305 U.S. 111, 113, 59 S.Ct. 109, 83 L.Ed. 73 (Note 1), Justice Brandeis, speaking for the Court, it was pointed out that the doctrine of Erie Railroad Company v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, makes state law controlling in unfair competition litigation brought in the federal courts under diversity jurisdiction. The instant case comes within that category.

When this case commenced, plaintiff claimed relief from product simulation by defendant in making its Pop-Pops suckers identical in shape and appearance with plaintiff's Dum-Dums product. Plaintiff's suckers were not a mere ball, but a banded ball which defendant copied precisely. Subsequently, the Supreme Court handed down its decisions in Sears, Roebuck & Co. v. Stiffel Company, 376 U.S. 225, 84 S.Ct. 784, 11 L.Ed.2d 661, and Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234, 84 S.Ct. 779, 11 L.Ed. 2d 669. In view of these decisions, plaintiff has conceded it is not entitled to protection with reference to the shape of its suckers.

Prior to the Supreme Court's decisions in Sears and Compco, this Court had taken a dim view of the chiseling tactics of predatory and unscrupulous business competitors such as deliberately copying the product, dress and packaging of a successful competitor. Originally, we may have been influenced by the Second Circuit's opinion in My-T Fine Corp. v. Samuels, 69 F.2d 76, 77, where Judge Learned Hand wrote for the Court — "But when intent appears we think it has an important procedural result; a late comer who deliberately copies the dress of his competitor already in the...