Sterling Brewers, Inc. v. Schenley Industries, Inc., Patent Appeal No. 8433.

• Decision Date: 13 May 1971
• Docket Number: Patent Appeal No. 8433.
• Citation: 169 USPQ 590,441 F.2d 675
• Parties: STERLING BREWERS, INC., Appellant, v. SCHENLEY INDUSTRIES, INC., Appellee.
• Court: U.S. Court of Customs and Patent Appeals (CCPA)

169 USPQ 590, 441 F.2d 675 (1971)

STERLING BREWERS, INC., Appellant, v. SCHENLEY INDUSTRIES, INC., Appellee.

Patent Appeal No. 8433.

United States Court of Customs and Patent Appeals.

May 13, 1971.

Joseph A. DeGrandi, Washington, D. C., attorney of record, for appellant. Francis C. Browne, Andrew B. Beveridge, Browne, Beveridge & DeGrandi, Washington, D. C., of counsel.

Milton B. Seasonwein, New York City, for appellee.

Before RICH, ALMOND, BALDWIN and LANE, Judges, and DURFEE, Judge, United States Court of Claims, sitting by designation.

BALDWIN, Judge.

This appeal is from the decision of the Patent Office Trademark Trial and Appeal Board¹ granting appellee's petition to cancel three trademark registrations assigned to appellant, Sterling Brewers, Inc. The registrations are for the mark "COOK'S GOLDBLUME", alone² or in association with a design,³ for beer and ale.

The record shows that appellee, Schenley Industries, Inc., is the owner of a number of registrations for the trademarks "COOK'S" and "COOK'S IMPERIAL" used in association with wine, particularly champagne.⁴ The petition to cancel asserted that the "COOK'S GOLDBLUME" mark had become abandoned. It was further urged that the continued registration of the mark would cause damage to appellee on the ground that its use by appellant in connection with beer would be likely to cause confusion, mistake or deception as to source.

At the time the petition to cancel was filed on February 18, 1965, the incontestability provisions of section 15 of the Trademark Act (15 U.S.C. § 1065) applied to the "COOK'S GOLDBLUME" registrations in issue as the result of compliance with the requirements for affidavits in that section and section 8 (15 U.S.C. § 1058). The Trademark Trial and Appeal Board, therefore, correctly noted that it was a prerequisite to appellee's right to have the registration cancelled that a condition specified in section 14(c) (15 U.S.C. § 1064(c)) as permitting the filing of a petition to cancel "at any time" be applicable. See Hy-Cross Hatchery, Inc. v. Osborne, 303 F.2d 947, 49 CCPA 1163 (1962). One such condition, and the one of course relied on by appellant, is that each of the registered marks "has become abandoned."

In a thorough and detailed opinion, the board thereafter reviewed the facts and held that the marks in issue had become abandoned. It further concluded that the concurrent sale of beer and champagne under the marks "COOK'S GOLDBLUME" and "COOK'S" or "COOK'S IMPERIAL", respectively, would be "likely to cause confusion in trade as to source." We will review these holdings in the same order in which they were made by the board.

The record⁵ before us establishes that the registrations of "COOK'S GOLDBLUME" were originally obtained by the F. W. Cook Company (hereinafter Cook), which opened a brewery in Evansville, Indiana around 1900 and used "COOK'S GOLDBLUME" as a trademark. For many years prior to 1950, its "COOK'S GOLDBLUME" beer was in competition with the beer of another Evansville brewery, Sterling Brewers, Inc. (appellant's predecessor),⁶ in parts of Indiana and several other mid-western and southern states. In 1950, the controlling stock interest in Cook was acquired by one Hulman & Company (hereinafter Hulman), which among other interests, was in the wholesale grocery business. A new brewing house was opened late in 1950 to increase the output of the brewery, which had continued in operation. In 1955, however, a labor dispute arose, culminating in a strike that closed the brewery on June 9, 1955. The strike was never settled and in September of that year, a decision was made that the brewery would not be reopened. As it turned out, the brewery was never again operated on a continuing basis. The mark "COOK'S GOLDBLUME" was also not used again until appellant began marketing beer under that label in early 1964 after acquiring an assignment of the registrations in issue in late 1963.

Throughout the period from 1955 to the time of the assignment to appellant, three employees, including two engineers, were stationed at the brewery for maintenance of the plant and equipment. In the portion of that period prior to 1960, several attempts were made to sell the brewery, representatives of Cook calling by telephone the representatives of other breweries which there was reason to believe might be interested in expanding. Representatives of some of those breweries inspected the Cook plant from time to time. In 1960, an Evansville resident founded a corporation called Cook Brewery, Inc. to purchase and reopen the brewery and paid thirty thousand dollars for an option. Due to financial difficulties, and perhaps other circumstances, the option was not exercised. During this period, appellant attempted from time to time to buy the rights to the "COOK'S GOLDBLUME" label but was turned down because Cook wanted to sell the assets of the brewery only as a single package.

Cook was dissolved as a corporation as of December 30, 1960, at which time its assets were transferred to Hulman, the largest stockholder. Hulman continued to seek a buyer for all of the assets as a package. In 1962, a group paid one hundred and twenty-five thousand dollars for an option to purchase all the assets of the brewery but that option too was allowed to lapse. During this period, Hulman continued to refuse to consider offers by appellant to buy the rights to the "COOK'S GOLDBLUME" label.

In early 1963, a local civic group, the Central Evansville Improvement Corporation, was formed to develop an area in Evansville which included the brewery property for a major civic and cultural center. Hulman was approached by this group with an offer to purchase the physical assets of the brewery. Although Hulman considered the amount offered to be less than the property was worth, it felt that retention of a proper image in Evansville, where it had other interests, required it to cooperate. In the summer of 1963, members of the civic group met with Hulman representatives and an agreement to sell the physical assets of the brewery was reached. Mr. R. T. Riney, chairman of the board of appellant and a member of the civic group, was in attendance and at that time he offered again to buy the rights to the "COOK'S GOLDBLUME" label. The Hulman representatives agreed. Subsequently, formal agreements with the civic group⁷ and appellant were completed, with the trademarks and the present registrations being sold to appellant along with the trade names used by Cook and the good will of the business for seventy-five hundred dollars. With its purchase of the trademarks, appellant also received miscellaneous advertising materials and some labels and crowns. It did not receive any customer lists, beer, bottles or a formula for the beer that had been brewed by Cook.

In undertaking to produce beer under the newly acquired "COOK'S GOLDBLUME" marks, appellant found that there was no actual written formula for Cook's beer in anyone's possession at that time. However, it did attempt to duplicate that beer on the basis of information that was available, and apparently was successful in doing so.

Appellant then test-marketed the new "COOK'S GOLDBLUME" beer in the early part of 1964 in Memphis, Tennessee and Birmingham, Alabama, two of the market areas for the beer formerly produced by Cook, placing newspaper advertisements advising that "COOK'S GOLDBLUME" beer was back on the market. The response to the beer under labels corresponding to the registrations was favorable, and the marketing area was expanded into many of the other states originally served by Cook. Sales of appellant's "COOK'S GOLDBLUME" beer exceeded three hundred thousand dollars in 1964, six hundred and fifty thousand dollars in 1965, and approximately five hundred and fifty thousand dollars in the first nine months of 1966. Advertising expenditures for the product were around thirty-five thousand dollars in 1964 and three thousand dollars in 1965.

Determination whether these circumstances show that appellant's mark had become abandoned is governed by the statutory definition of abandonment, appearing in section 45 of the Trademark Act of 1946 (15 U.S.C. § 1127). That definition reads:

Abandonment of mark. A mark shall be deemed to be `abandoned\' —

(a) When its use has been discontinued with intent not to resume. Intent not to resume may be inferred from circumstances. Nonuse for two consecutive years shall be prima facie abandonment.

(b) When any course of conduct of the registrant, including acts of omission as well as commission, causes the mark to lose its significance as an indication of origin.

The board seems to have based its finding of abandonment on part (a) of this definition. It first noted that the non-use of the "COOK'S GOLDBLUME" mark from 1955 through 1963 amounted to prima facie abandonment under the statute. After then considering the facts outlined above, it was concluded that appellant had not overcome this prima facie case. In response to appellant's urgings that the purpose for purchasing the "COOK'S GOLDBLUME" mark was to reap the good will built up in the mark over the years, the board stated:

While there may be some residual good will in the mark immediately or shortly after the discontinuance thereof, where, as here, there has been no sale or promotion of any product under a mark for approximately nine years, whatever good will resided in the mark must necessarily have been dissipated over the years.

Finally, the board held that, since the mark in question had been abandoned for non-use prior to 1964,

the assignment thereof to respondent, especially after the physical assets of the brewery had previously been sold to another, was nothing more than a naked assignment of the mark disassociated from any business or accompanying good will of the assignor and from which no derivative rights to the mark could have attached. Hence, it conferred no rights in the mark upon the respondent. (Citation

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