Sweetarts v. Sunline, Inc.

• Decision Date: 24 August 1967
• Docket Number: No. 18587.,18587.
• Citation: 380 F.2d 923
• Parties: SWEETARTS, a corporation, Appellant, v. SUNLINE, INC., and Menlo F. Smith, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

380 F.2d 923 (1967)

SWEETARTS, a corporation, Appellant, v. SUNLINE, INC., and Menlo F. Smith, Appellees.

No. 18587.

United States Court of Appeals Eighth Circuit.

July 18, 1967.

Rehearing Denied August 24, 1967.

J. Pierre Kolisch, Portland, Ore., for appellant and filed brief with John W. Stuart, Portland, Or., and John D. Pope, III, St. Louis, Mo.

Ralph W. Kalish, St. Louis, Mo., for appellees and filed brief.

Before VOGEL, Chief Judge, and GIBSON and HEANEY, Circuit Judges.

FLOYD R. GIBSON, Circuit Judge.

This is a suit between two candy manufacturers, each using the trademark "SweeTarts". The trial court held that plaintiff's registered trademark was invalid for nonuse and that plaintiff-appellant was not entitled to injunctive relief for violation of its common law technical trademark or for unfair competition. Plaintiff appeals.

The facts of this case are as follows: Plaintiff's predecessor SweeTarts Company of Dundee, Oregon commenced business in 1926. It manufactured and sold glazed and candied fruits under the trademark "SweeTarts". This mark was registered with the United States Patent Office in 1928 for stuffed dried prunes. In 1930 the Sweetarts Company moved from Dundee to Portland, Oregon and in the mid-1930s began making various types of candy, including chocolates and toffee, which it also marketed under the name "SweeTarts".

In 1947 Patrick Johnson, the president of plaintiff corporation, purchased the SweeTarts Company as a going business. Part of the assets of the Company was the exclusive ownership of the mark "SweeTarts". Johnson who is the chief shareholder, named his corporation simply "Sweetarts" and continued the business without breaking the continuous use of the trademark "SweeTarts" on candy. Since 1947 plaintiff has sold various types of candies, in various types of packages, at various prices all under the corporate name and trademark "SweeTarts". For a short period of time plaintiff manufactured 10 cent toffee bars and 39 cent bags of toffee, the sale of which has since been discontinued.

About 90% of the candy presently made by plaintiff is a butter toffee, individually wrapped, and packaged in boxes selling retail for $1.00. These butter toffees are also packaged in decorator tins and sold at prices ranging from $1.35 to $5.75. The remaining 10% of plaintiff's sales are of mixed chocolates with prices from $1.70 to $7.70 a box.

Plaintiff does not market its candy through usual commercial channels but relies mainly upon direct mail orders and personal solicitations by its president. About 87% of plaintiff's sales come through orders from fraternal organizations, the best single customer being Job's Daughters. These fraternal organizations, through their members, sell the candy made by plaintiff to the public, thus securing funds for organizational activities. Most of the remainder of plaintiff's candy is sold to various companies that distribute the candy to customers and employees as seasonal gifts.

With the exception of the boxes sold to Job's Daughters in Oregon, all of plaintiff's candy is clearly labeled or marked in large letters with the name "SweeTarts". The Job's Daughters in Oregon receive their candy in a specially designed box on which a label is attached to the side stating that the candy was manufactured for Job's Daughters by "SweeTarts, Inc."

Plaintiff is a small concern. It expends virtually nothing for advertising and has annual sales in the neighborhood of $135,000. Plaintiff's principal market area is the states of Washington, Oregon and California. Since 1947 sales in these three states has totaled something over $1,700,000. Plaintiff also has had significant sales in Idaho, Montana, Pennsylvania, Florida, Wyoming, Kansas, Illinois, Nebraska, Indiana, and New York as well as isolated sales in twenty-two other states and Washington, D. C.

Defendant, Sunline, Inc., began business in 1952 in St. Louis, Missouri. Until 1963 defendants sold an artificially flavored powder formula for use in making soft drinks under the names "Lik-M-Aid" and "Pixy Stix". In 1963 defendants decided to start selling the same formula as a candy compressed into tablet form. Defendant Menlo F. Smith, president of Sunline, selected the name "SweeTarts" for the new product. A trademark search was made in the United States Patent Office, and the search turned up the name "Sweetheart" for candy products, "Sweetart" for cranberries, and plaintiff's "SweeTarts" for dried prunes. Smith decided to take a "businessman's risk" and use the mark "SweeTarts".¹

Defendants began test marketing their new "SweeTarts" candy in June 1963. By October 1963 defendants began promotion among candy brokers and commenced large scale nation-wide marketing.

Defendants' candy is presently sold throughout the United States at over 200,000 retail establishments. It is marketed through the usual channels, in which the candy is initially sold to candy brokers, who, in turn, place the candy for sale on the counters of supermarkets, drugstores, restaurants, etc. To the time of trial defendant corporation had sold over $8,000,000 worth of its "SweeTarts" and expended over $2,000,000 in promotion and advertising.

The candy sold by defendants is a small brightly colored, powdery tablet with an artificial fruit flavoring. It is described as having an extremely tart flavor designed primarily for "kids". The tablets are packaged in tinfoil, about twelve to a package, and sold for 5 cents a package. The tinfoil wrappers are colorfully marked across their face with the word "SweeTarts".

In October 1963 plaintiff objected by letter to defendants' use of the mark "SweeTarts". Unable to secure satisfaction from the defendants, plaintiff sought to enjoin the use of the "SweeTarts" mark by filing this suit in the United States District Court for the Eastern District of Missouri in June 1964.

The trial was to the court without a jury. The trial judge found that plaintiff's trademark registration, though renewed in 1948, was invalid for lack of use. On the charge of unfair competition and common law trademark infringement, the court found that defendants adopted the mark in good faith and since there was no likelihood of confusion plaintiff was not entitled to injunctive relief.

On this appeal plaintiff admits that its trademark registration for prunes is invalid, but contends that it has a valid common law trademark on its candy that was adopted and used prior to defendants' use of the same mark. Further, appellant argues that as a matter of law there is a likelihood of confusion among consumers resulting from defendants' use of this mark. Consequently, though no claim is made for money damages, nor has any loss of sales been proved, appellant contends that it is entitled to injunctive protection, at least within its existing market areas. We agree.

We think the trial court erred in failing to hold and find that plaintiff had a good common law technical trademark irrespective of the registered trademark for use on dried prunes and was clearly erroneous under Rule 52(a) Fed.R.Civ.P. in finding that there was no likelihood of confusion between the two trademarks of plaintiff and defendants by the ultimate purchasers or consumers.

A trademark is generally any name, sign, or mark which one adopts to denominate commercial goods originating from him. 3 Callmann, Unfair Competition and Trademarks, § 76.2(a), p. 1186 (2nd Ed. 1950); Restatement of Torts, § 715; 87 C.J.S. Trademarks § 1, p. 218. If the word used to denominate the goods is arbitrary, unique, distinct, and non-descriptive it is known as a technical trademark. Blisscraft of Hollywood v. United Plastics Company, 294 F.2d 694, 700 (2 Cir. 1961). A technical trademark is a common law property right that exists independently of statutory provisions for registration. Trademark Cases, 100 U.S. 82, 25 L.Ed. 550 (1879); Armstrong Paint & Varnish Works v. Nu-Enamel Corp., 305 U.S. 315, 333, 59 S.Ct. 191, 83 L.Ed. 195 (1938); Brown & Bigelow v. B-B Pen Co., 191 F.2d 939, 942 (8 Cir. 1951); 4 Callmann, Unfair Competition and Trademarks, § 97.3(a), p. 2066-68 (2nd Ed. 1950); 1 Nims, Unfair Competition and Trademarks, §§ 185, 199(a), 214 (4th Ed. 1947).

It is generally said that exclusive right to use a mark belongs to the first who appropriates it and uses it in connection with a particular business. Canal Company v. Clark, 13 Wall. 311, 80 U.S. 311, 322, 20 L.Ed. 581 (1871); 3 Callmann, supra, § 76.1, p. 1182. In resolving the issue of infringement, that is, in determining if the prior user of a mark is entitled to protection against a subsequent user, the test universally applied is whether there is a likelihood of confusion among the consumers. David Sherman Corporation v. Heublein, Inc., 340 F.2d 377 (8 Cir. 1965); United Drug Co. v. Obear-Nester Glass Co., 111 F.2d 997 (8 Cir. 1940), cert. denied 311 U.S. 665, 61 S.Ct. 22, 85 L.Ed. 427. Hanson v. Triangle Publications, 163 F.2d 74 (8 Cir. 1947), cert. denied 332 U.S. 855, 68 S.Ct. 387, 92 L.Ed. 424; 3 Callmann, Unfair Competition and Trademarks, § 84.1 at pp. 1628-1629 (2nd Ed. 1950). Plaintiff need not show actual confusion. David Sherman Corporation v. Heublein, Inc., supra. Nor need plaintiff show actual or possible monetary injury. Durable Toy & Novelty Corporation v. J. Chein & Co., 133 F.2d 853, 855 (2 Cir. 1943) cert. denied 320 U.S. 211, 63 S.Ct. 1447, 87 L.Ed. 1849.

Applying this law to the facts of this case we believe it is evident that plaintiff is entitled to relief. Plaintiff corporation adopted the word "SweeTarts" to be used on candy made by it. The word is not to be found in the dictionary. To our ears it is uncommon, arbitrary, and distinct. See discussion of "Sweetheart" as a valid mark in Purex Corporation, Ltd. v. Maryland Paper Products Co., 287 F.2d 186 (CCPA 1961).

The word is certainly not descriptive of plaintiff's toffee and mixed chocolates. Consequently, we believe "SweeTarts...