Stix Products, Inc. v. United Merchants & Mfrs., Inc.

• Decision Date: 19 December 1968
• Docket Number: No. 62 Civil 814.,62 Civil 814.
• Parties: STIX PRODUCTS, INC., Plaintiff, v. UNITED MERCHANTS & MANUFACTURERS, INC., Defendant, v. The FIRESTONE TIRE & RUBBER COMPANY, Counterclaim Defendant.
• Court: U.S. District Court — Southern District of New York

295 F. Supp. 479

STIX PRODUCTS, INC., Plaintiff, v. UNITED MERCHANTS & MANUFACTURERS, INC., Defendant, v. The FIRESTONE TIRE & RUBBER COMPANY, Counterclaim Defendant.

No. 62 Civil 814.

United States District Court S. D. New York.

December 19, 1968.

COPYRIGHT MATERIAL OMITTED

Pennie, Edmonds, Morton, Taylor & Adams, New York City, for plaintiff and counterclaim defendant, Stanton T. Lawrence, Jr., Charles J. Brown, New York City, of counsel.

Kenyon & Kenyon, New York City, for defendant, John A. Reilly, Donald J. Lisa, Michael T. Platt, Paul H. Heller, John P. Kirby, Jr., Arthur D. Gray, Stroock & Stroock & Lavan, Milton N. Scofield, Alvin K. Hellerstein, New York City, of counsel.

OPINION, FINDINGS OF FACT and CONCLUSIONS OF LAW

EDWARD WEINFELD, District Judge.

The defendant, United Merchants & Manufacturers, Inc. (United), is the owner of the registered trade-mark CONTACT.¹ The plaintiff, Stix Products, Inc. (Stix), commenced this action for a declaratory judgment that the trademark is invalid,² and further that its use of the word "contact" in the promotion and sale of its goods does not infringe United's trade-mark rights.³ United counterclaimed, charging Stix with trade-mark infringement⁴ and unfair competition,⁵ and seeks injunctive relief.

United later joined The Firestone Tire & Rubber Company (Firestone) as a counterclaim defendant, alleging against it the same charges of trade-mark infringement and unfair competition. Firestone asserted the same defenses as Stix and further alleged that it had merely assembled the components of the goods in bulk form on order from Stix.

Upon the trial United was deemed the lead-off litigant and presented its case first. The trial extended over a three-week period; almost 2,000 pages of testimony were taken, and hundreds of exhibits received in evidence.

UNITED'S ACTIVITIES

United, for many years, has manufactured and sold textile products and synthetics. Its Comark Division makes a wide variety of plastic products, including those involved in this suit. In the early 1950's, David Silman, an employee of United and now President of Comark, created a new self-adhesive decorative plastic product for covering shelves, tables and other surfaces. It consists of a textile-sized sheet of plastic, having on one surface a decorative pattern and on the reverse surface a pressure-sensitive adhesive. A removable paper backing sheet, bearing the trade-mark, descriptive matter and instructions, covers the self-adhesive surface. The product is used by removing the backing sheet, applying the adhesive side to a surface with pressure and smoothing away any wrinkles or air bubbles. Retailers receive the product in large rolls from which they sell by the yard, and in small rolls which they sell as a unit.

Prior to the introduction of its new product, United decided upon the trademark CON-TACT. Before filing its first registration, United secured an assignment of the mark "CONTACT" from Dan River Mills, Inc., following which it decided upon its own logostylized script with hyphen form—CONTACT. This mark was granted registration on the Principal Register for distinctive marks on November 8, 1955;⁶ thereafter, thirteen additional registrations for the mark were issued, ten of which are in suit.

In July, 1954, United began to market its new product under the trade-mark CON-TACT and described it as a self-adhesive plastic. In August, 1954, CONTACT was introduced in New York City department stores. It was advertised by Gimbels and Abraham & Straus, and was an immediate and sensational success; their stocks were depleted upon initial offering. Macy's soon ordered the product, followed by large chain stores and mail order houses. In the next few months sales increased to such an extent that United had difficulty in supplying the demand. The product, as well as the trade-mark, was given wide publicity in articles in contemporary newspapers and consumer and trade magazines. These articles used apt phrases in describing the product and also used the term CONTACT as a trade-mark.⁷

Since the introduction of its initial line, United has marketed a variety of self-adhesive decorative plastics under the CON-TACT trade-mark.⁸ United's licensee, Freydberg Manufacturing Co., has marketed ten additional products under the CON-TACT brand.⁹ Arnel Plastron, a company wholly owned by United since 1961, markets a parallel line of self-adhesive decorative plastics under the trade-mark KWIK-KOVER, mainly for sales in discount stores.

Since 1955, United has engaged in extensive advertising and promotion of its CON-TACT brand products. These programs include (1) consumer advertising in national magazines and Sunday supplements, and cooperative advertising with retail dealers; (2) advertising in trade magazines; (3) advertising at point of sale through the use of placards, streamers, rack headers and give-aways in stores carrying CON-TACT trade-mark products; and (4) displays and special promotions.¹⁰

In advertising its CON-TACT brand products United has adopted a policy evidently designed to avoid the problem that arose in the Thermos case.¹¹ Through the years its advertising and promotional activities have featured: (1) a prominent display of the CON-TACT trade-mark; (2) descriptive or generic phrases in close proximity to the trade-mark; and (3) words and pictures telling and showing what the product is and how and where to use it. United has consistently used its trade-mark CON-TACT in conjunction with apt descriptive terms, both on the products themselves and in the advertising and display thereof. Typical of the terms used in conjunction with its trade-mark is the phrase "self-adhesive plastic."

From 1954 to 1959 United spent about one million dollars in advertising its CON-TACT products; the total for 1954 to 1968 is about five million dollars. Consumer exposures to the CON-TACT brand name have averaged, since 1955, about one hundred million a year, and for the year 1966, about one hundred fifty million; if retailers' cooperative advertising is included, the exposures are one billion annually.

Sales of CON-TACT brand products amounted to some twenty million dollars from 1954 to 1959 and to about ninety million dollars from 1954 to 1968. Today CON-TACT brand products account for approximately fifty to sixty per cent of all sales of self-adhesive decorating plastics in the United States which are sold by some 50,000 retail establishments. By 1958 United's products under its trade-mark CON-TACT had gained commercial acceptance, and the name was recognized by the industry and the purchasing public as a Famous Brand.

COMPETITORS IN THE INDUSTRY

Since United introduced its CON-TACT brand in 1954, Stix and seventeen other firms have manufactured and sold self-adhesive decorative plastic products. Of these, sixteen continue to sell the product. Those in the industry, including Stix, have always described the product as "self-adhesive plastic," "self-adhesive decorative plastic," "self-adhesive decorating plastic," or variations thereof; however, in 1959 Stix commenced to use the word "contact" in captions and otherwise as hereinafter described. None of United's other competitors has ever used "contact" or any variation either in its advertising or promotional activities.

STIX'S ACTIVITIES

Matthew Shulman, President of Stix, first learned of United's new product in about October, 1954, through buyers who showed him the product and said it was in short supply and in great demand.¹² He consulted with Firestone, following which, in November, 1954, he formed Stix and began to sell the product under the trade-mark STIX.¹³

From late 1954, when Stix began marketing its products under the trade-mark STIX, through 1959, its advertising in captions used such phrases as "SELF-ADHESIVE DECORATING PLASTIC," "THE AMAZING Self-Adhesive DURABLE MIRACLE PLASTIC," "Fabulous New PLASTIC Decorating Material," and "WASHABLE, DURABLE, SELF-ADHESIVE PLASTIC." The captions are placed in conspicuous positions in advertising and promotional material. They are eye-catching headline or banner phrases designed to attract the quick attention of a prospective customer. At points of sale at retail outlets, the rolls of merchandise are displayed on a rack at the top of which and as part of the display is a rack header containing the eye-catching caption. The captions also appear on other point of sale devices, wrappers, backing sheets, packages, cartons and in advertising and other promotional material.

At no time during its first five years of business did Stix use the word "contact" in any form, either in its advertising or in its line of self-adhesive plastics. In late 1959 or early 1960, however, it commenced to use the word as part of the caption headline in all its advertising, promotional and sale display material.¹⁴ Since that time it has advertised its products as "SELF-ADHESIVE CONTACT DECORATING PLASTIC." It also redesigned the Stix backing sheet to read "WASHABLE, DURABLE, Self-Adhesive CONTACT PLASTIC." The only change from the prior forms was the addition of the word "CONTACT."

Stix has followed the same policy with respect to its products sold under its other trade-marks. In 1963 Stix introduced its line of products to be sold in discount houses under the trade-mark ADORN, and in 1968 introduced two new lines under the trade-marks CARESSE and FAWN. ADORN, CARESSE and FAWN also have been advertised as "SELF-ADHESIVE CONTACT DECORATING PLASTIC," or "SELF-ADHESIVE CONTACT PLASTIC," or "CONTACT PLASTIC SHELF COVER." Since its introduction in 1963, the caption on the ADORN backing sheet has read, "self-adhesive contact decorating plastic." In addition, the backing sheet contains textual material, close to the caption, which reads: "ADORN is a self-adhesive contact decorating plastic that will adhere on contact without paste, water or glue to any smooth, clean, dry, nonporous surface." This was Stix's first use...