Standard Oil Co. of Maine v. Standard Oil Co. of New York, 2477.

• Decision Date: 26 November 1930
• Docket Number: No. 2477.,2477.
• Parties: STANDARD OIL CO. OF MAINE, Inc., v. STANDARD OIL CO. OF NEW YORK.
• Court: U.S. Court of Appeals — First Circuit

45 F.2d 309 (1930)

STANDARD OIL CO. OF MAINE, Inc., v. STANDARD OIL CO. OF NEW YORK.

No. 2477.

Circuit Court of Appeals, First Circuit.

November 26, 1930.

Carl C. Jones, of Portland, Me. (Bradley, Linnell & Jones, of Portland, Me., on the brief), for appellant.

Nathan W. Thompson, of Portland, Me. (Woodman, Skelton & Thompson, of Portland, Me., on the brief), for appellee.

Before BINGHAM, ANDERSON, and WILSON, Circuit Judges.

WILSON, Circuit Judge.

A bill in equity to restrain the appellant from using the corporate name, the Standard Oil Company of Maine, Inc., or any corporate name that includes the words "Standard," "Standard Oil," or "Standard Oil Company," in such a manner as to cause confusion and uncertainty in the public mind as to the quality or character of the goods sold by the appellant in distinction from those of the appellee.

The bill, while grounded on the principles of unfair competition, is in the nature of a bill quia timet; that is, to restrain impending or threatened injury, and not a bill to restrain actual unfair competition, a distinction important to bear in mind in analyzing the decided cases.

The appellee is a corporation well known to the public as dealing in petroleum products for use in internal combustion engines, for lubrication and for heating purposes, and has built up a reputation in New York and the New England States for the quality and uniformity of its products in its line of business.

The appellant has recently been organized in the state of Maine to deal in petroleum products, including gasoline, and to do various other kinds of business, some of which are associated, directly or indirectly, with petroleum products.

Before it has actually begun to do business, the appellee brings this bill to restrain it from using the corporate name it has adopted or any similar name in such a manner as would confuse it in the public mind with that of the appellee.

The court below, 38 F.(2d) 677, granted an injunction restraining the appellant from using the name "The Standard Oil Company of Maine," or any corporate name containing the words "Standard," "Standard Oil," or any similar name or any variations thereof, so closely similar in sound or appearance to the corporate name of the complainant as to lead to uncertainty or confusion in the use thereof.

The appellant contends: (1) That it is entitled to use of its name; (2) that it should be permitted to sell products under that name, at least in territory not covered by the appellee, or to sell goods not sold by the appellee; (3) that there has been no unfair competition, for the reason that the appellant has never done any business, and hence the bill is prematurely brought.

The appellee is not relying on its rights from having registered the word "Standard" as a trade-mark under the statutes of Maine, but on the broader ground that the words "Standard," "Standard Oil," and "Standard Oil Company" have acquired a secondary meaning in the petroleum products trade, and that the narrower rule as to trade-marks does not apply. Nims on Unfair Competition, § 57; Richmond Remedies Co. v. Dr. Miles Medical Co. (C. C. A.) 16 F.(2d) 598, 602.

The court below found, and we think correctly, upon the record that the words "Standard Oil" and "Standard Oil Company" and the word "Standard," when used in connection with petroleum products, have acquired a secondary meaning, and to the public mind guarantee a high grade and uniform quality of petroleum products, and that the appellee has thereby acquired a right thereto, and is entitled to be protected against unfair or fraudulent use thereof in competition with it. It is too obvious to require proof that to permit the appellant, under the corporate name it has selected, to do business in petroleum products in the same territory as the appellee, would necessarily result in confusion, and in what the courts in numerous cases have held to be unfair competition.

As to whether the appellee should be protected against the possible future use of it in other territory, or in the sale of other products not associated with the petroleum trade, may not on the record be so clear as to warrant an injunction against its use in other territory, or in connection with the sale of other products.

That confusion may arise, however, even in such instances, to the damage of the party first adopting the name is not impossible, as was held in Armour & Co. v. Master Tire & Rubber Co. (D. C.) 34 F.(2d) 201; Akron-Overland Tire Co. v. Willys-Overland Co. (C. C. A.) 273 F. 674.

The main defense relied on by the appellant is that the bill is premature; that injunction will not issue to restrain unfair competition until competition actually exists. Unfair competition, it is urged, is the "passing off" of one's goods as those of another, and therefore, to constitute unfair competition, there must be actual competition, which has not taken place in this instance.

But this misconceives the nature of these proceedings, which are in the nature of a bill quia timet. The cases in which the courts have said: "There must be actual unfair competition," and that unfair competition consists in "passing off" one's own goods as those of another, have no application to the facts of this case. This is well illustrated in the Borden Condensed Milk Case (C. C. A.) 201 F. 510, 515, relied on by the appellant, and from which counsel for the appellant in his brief quotes as follows: "If it bases its right to an injunction upon the doctrine of unfair competition, no competition of any kind has been shown by the record. If it relies upon some supposed damage which may result from appellants' use of the name `Borden' in connection with inferior goods, the action is premature, because the appellants, as yet, have neither sold nor made anything."

The other cases cited by the appellant to the same effect, it will be found upon examination, are to be differentiated and are not applicable to the facts of the instant case. In the Borden Case it was held that the sale of ice cream in no way competed with the sale of condensed milk, hence the bill could not be maintained in any event, as the complainant was not in the ice cream business. It was in view of this situation that the court said to sustain such a bill there must be competition; and, while it further added that, if the complainant relied on supposed damage which may result from the use of the name "Borden," the action was premature, the ground for holding the action premature was that it did not then appear that the use of the name "Borden" in connection with ice cream would result in unfair competition in the future, since the complainant was not then in the ice cream business, and might never engage in it, and that to base an injunction on what might result in the future "on speculation and remote contingencies" was not sufficient to warrant the use of the extraordinary remedy of a writ of injunction.

That, however, is not the appellant's case. We apprehend that the appellant, if it were now actually engaged in the business of selling gasoline or petroleum product in the appellee's territory, would not really seriously contend that it could defend on the ground that no confusion would thereby result, and that it could not properly be enjoined from conducting, under such a name as it has selected, the business of dealing in petroleum products in such territory. It now merely says: "You have not yet been injured. Nothing has been done except the organization of a corporation." This defense loses sight of the fact that one of the important functions of a court of equity is to prevent injury from a wrongful act before it occurs, whenever it appears to be imminent and that irreparable injury would result.

The power of the equity court to interfere and prevent injury by injunction in such a case is too well settled to require citation of authorities. High on Injunctions (2d Ed.) vol. 1, § 18; Vicksburg Waterworks Co. v. Vicksburg, 185 U. S. 65, 82, 22 S. Ct. 585, 46 L. Ed. 808. Pomeroy in his work on Equitable Remedies (2d Ed.) (see volume 5, Pomeroy's Equity Jurisprudence, § 1965), in defining what constitutes threatened injury, says: "The character of the threatened injury which will justify an injunction is simply that which would support an injunction on any ground, if it were already being done."

The only questions here are whether this salutary remedy can be properly applied to threatened unfair competition, and whether, in this case, the necessary degree of imminence exists. We can conceive of no reason why this protection should not be afforded against unfair competition, if imminent, as well as against other threatened injuries. On the contrary, there are compelling reasons why it should be so applied, whenever it appears that, if put into practice, the proposed course of a defendant would result in unfair competition, since there is no damage more difficult of full and complete measurement and compensation than injuries of this nature.

The law of unfair competition in trade is of comparatively recent origin and growth, Nims on Unfair Competition, § 2; but it has been and is being extended to cover all instances of fraudulent interference with another business. Courts of equity are extending the principles of equity to enjoin unfair competition in all its phases. There can be no good reason why it should not exercise its power to prevent threatened unfair competition before it is put into effect any more than any other species of unlawful acts from which irreparable damage may result.

And again, under section 365, Nims says: "Injunctions will be granted to prevent threatened acts of unfair competition. It is not necessary to wait until a name that tends to mislead the public and is likely to be used for that purpose, actually is used in the business of the defendant. Equity...