T & T Mfg. Co. v. A. T. Cross Co.
| Decision Date | 29 November 1978 |
| Docket Number | No. 78-1206,78-1206 |
| Citation | 201 USPQ 561,587 F.2d 533 |
| Court | U.S. Court of Appeals — First Circuit |
| Parties | T & T MANUFACTURING COMPANY, Plaintiff, Jonathan Bradley Pens, Inc., Intervenor, The Quill Company, Inc., Second Intervenor, Appellee, v. A. T. CROSS COMPANY, Defendant, Appellant. |
Leslie D. Taggart, New York City, with whom Herbert B. Barlow, Jr., Barlow & Barlow, Providence, R. I., Frank J. Colucci, Howard B. Barnaby, Jr., and Watson, Leavenworth, Kelton & Taggart, New York City, were on brief, for appellant.
James K. Edwards, Providence, R. I., with whom Edwards & Angell, Providence, R. I., Robert L. Thompson, and Thompson, Birch, Gauthier & Samuels, Boston, Mass., were on brief, for The Quill Company, Inc., appellee.
Before KUNZIG, * Judge, U. S. Court of Claims, BOWNES, Circuit Judge and DUMBAULD, ** District Judge.
The sole issue presented for review in this trademark infringement appeal is the validity and enforceability of a Settlement Agreement entered into by the defendant A. T. Cross Company (Cross) and The Quill Company (First Quill) permitting the manufacture and sale of certain pens and pencils. Chief Judge Raymond J. Pettine of the United States District Court for the District of Rhode Island held, Inter alia, the Agreement was valid and enforceable and hence estopped Cross from asserting trademark infringement and unfair competition claims as outlined Infra. Because we agree with the district court, we affirm.
The history of the case is confused and complicated. On June 15, 1951, trademark registrations were issued to Cross for a black top and on April 11, 1967 for a gold top on its mechanical pens and pencils.
In 1965, The Quill Company (First Quill) was engaged in the manufacture of mechanical pens and pencils. On October 25, 1965, Cross filed suit against First Quill alleging infringement and unfair competition of its black top trademark. The action was subsequently settled by an agreement (the "Settlement Agreement") under the terms of which First Quill was allowed to continue manufacturing its writing instruments that had black, silver and gold conical tops. The precise wording of the Settlement Agreement is:
1. QUILL hereby agrees not to manufacture or sell any writing instrument which has an exterior appearance closer to the exterior appearance of the CROSS pen and pencil attached hereto as Exhibits A and B than the exterior appearance of the QUILL pen and pencils attached hereto as Exhibits C, D and F, so long as the said CROSS trademark registrations remain in full force and effect.
2. CROSS agrees that it will not sue QUILL for unfair competition, infringement of said trademark or infringement of said trademark registrations unless QUILL breaches the agreement of paragraph 1.
3. CROSS hereby releases QUILL and its customers from all debts, complaints, demands and causes of action whatsoever such as have arisen by reasons of or in any manner grown out of the facts alleged in said Civil Action prior to the date of this agreement.
4. The parties agree that forthwith after the execution of this agreement said Civil Action shall be terminated by a Consent Judgment dismissing it without prejudice and without any award of damages or costs to either party.
5. This agreement shall be deemed to constitute a contract made under the laws of the State of Rhode Island and for all purposes shall be construed in accordance with the laws of such State.
6. This agreement shall be binding upon and inure to the benefit of each party, its successors in business and assigns.
On November 21, 1969, Cross sought to register a variation of its black top trademark, a silver top, in the United States Patent and Trademark Office. T & T Manufacturing Company (T&T) opposed the application on the grounds of prior first use and continuous manufacture of its pen and pencils with a silver top. The Trademark Trial and Appeal Board (the Board) held in favor of Cross concluding that it had the right to register the silver top trademark.
T&T then timely filed its complaint in the district court seeking to overturn the Board's decision. 1
In March 1972, before the Board decision was rendered, T&T purchased from First Quill the Settlement Agreement between First Quill and Cross. Additionally, T&T also purchased the pen and pencil equipment and supplies that First Quill had on hand. Thereafter, on September 21, 1972, T&T incorporated Second Quill as a wholly owned subsidiary. Seven days later, T&T executed an assignment of its rights under the Settlement Agreement to Second Quill as well as selling to it the equipment it had acquired from First Quill. From that time on, Second Quill has been in the business of manufacturing and selling pens and pencils, conceded by both parties to be legally identical to those instruments covered in the Settlement Agreement.
Shortly after T&T filed its complaint in the district court, First Intervenor Jonathan Bradley Pens, Inc. (Bradley) joined with T&T in also seeking the overturn of the Board's decision. Bradley further requested a declaration that its use of a silver top on its pens and pencils did not infringe any of Cross' trademarks. Cross then counter-claimed against Bradley seeking injunctive relief and an accounting.
Second Quill then entered the litigation as Second Intervenor, joining with Bradley and T&T in seeking the relief sought by T&T (challenging Cross' right to register the silver top as a trademark). By counter-claim against Second Quill, Cross asked the court for an injunction preventing Second Quill from manufacturing and selling its writing instruments on grounds of unfair competition and trademark infringement. Second Quill, in its defense to the counter-claim, asserted (1) that it had not infringed and (2) that Cross was estopped on the basis of the 1967 Settlement Agreement it had entered into with First Quill from suing Second Quill for unfair competition and trademark infringement in the manufacture and selling of writing instruments, conceded to be legally identical to those covered by the Agreement.
By a Stipulation of Partial Discontinuance entered on June 29, 1977, the Complaints of T&T and Bradley, as well as Cross' counter-claims against them, were dismissed with prejudice. Additionally, Second Quill's opposition to the Board's ruling permitting Cross to register its silver top as a trademark was dismissed with prejudice and the Board's decision was affirmed. Thus, the district court was left to resolve two questions: (1) whether Second Quill infringed Cross' registered trademarks and engaged in unfair competition; and (2) whether by virtue of the Settlement Agreement Cross was estopped from suing Second Quill.
The district court, by decision entered March 24, 1978, held that (1) Cross' trademarks were valid; and the writing instruments being manufactured and sold by Second Quill were legally identical to Cross' registered trademarks and thus infringed them But (2) by virtue of the 1967 Settlement Agreement, Cross was estopped from suing Second Quill for the infringement of its trademarks and unfair competition.
By judgment entered April 11, 1978, Chief Judge Pettine dismissed Cross' counter-claim against Second Quill with prejudice and noted that Second Quill had the right to continue the manufacture and sale of the pens and pencils in question. Thereafter, Cross timely perfected its appeal to this court. Both parties have agreed and conceded at oral argument that the sole issue for review is whether or not the Settlement Agreement is valid and enforceable so as to permit Second Quill's continued manufacture and sale of the pens and pencils covered by the Agreement.
Thus, the remaining parties in this action are Cross, by counter-claim, seeking an injunction against Second Quill to bring a halt to the alleged trademark infringement.
Cross draws upon a two-tiered approach in attacking the validity and the enforceability of the Agreement. First, (a) it maintains that the Settlement Agreement originally conferred rights in its trademarks to First Quill which were later Abandoned when First Quill went out of business. Thus, the resulting assignment of the Settlement Agreement between First Quill and T&T was a nullity, contends Cross, since a trademark may not be assigned without the accompanying business and attendant good will. As a consequence, First Quill had no rights which it could assign to T&T and Second Quill can therefore not rely on the Settlement Agreement in defense of Cross' counter-claim for infringement and unfair competition.
Next (b), Cross urges that even if the assignment is deemed valid, the Settlement Agreement should not be enforced on grounds of public policy since the district court made a finding of "likelihood of public confusion" between the products of Second Quill and Cross.
Second Quill counters (a) that the assignment of the Settlement Agreement, conveyed no rights in Cross' trademark but merely was an agreement not to sue. Hence any argument as to trademark rights or abandonment of such rights is irrelevant. Moreover, (b) Second Quill argues that likelihood of public confusion is not the Sine qua non as to the enforceability of the Settlement Agreement and that other considerations of policy dictate that the Agreement be enforced against Cross.
We hold for Second Quill.
The threshold issue to be resolved is whether the Settlement Agreement is to be governed by the principles of trademark law, and thus the law of abandonment and non-use, or is it a contract to be enforced as such?
Cross has argued that the law of abandonment and non-use of a trademark by an original owner prevents a subsequent assignment of such a trademark.
Cross' position, however, fails to address itself to the essential inquiry of whether First Quill obtained in the Settlement Agreement any rights in Cross' trademark. We agree with Chief Judge Pettine when he pointed out...
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