Topp-Cola Company v. Coca-Cola Company

Decision Date25 February 1963
Docket NumberNo. 209,Docket 27574.,209
Citation314 F.2d 124
PartiesTOPP-COLA COMPANY, a corporation, Plaintiff-Appellee, v. The COCA-COLA COMPANY, a corporation, Defendant-Appellant.
CourtU.S. Court of Appeals — Second Circuit

James L. Dooley, Washington, D. C., on the brief, for plaintiff-appellee.

Gilbert H. Weil, New York City (Alfred T. Lee, New York City, Pope F. Brock and John D. Goodloe, Julius R. Lunsford, Jr., Atlanta, Ga., on the brief), for defendant-appellant.

Hiram R. Cancio, Attorney General, Commonwealth of Puerto Rico (Abe Fortas, Ralph Temple, Arnold, Fortas & Porter, Washington, D. C., on the brief), as amicus curiæ of the Commonwealth of Puerto Rico.

Before LUMBARD, Chief Judge, and SMITH and HAYS, Circuit Judges.

LUMBARD, Chief Judge.

This is an appeal from a summary judgment for the plaintiff in an action for a declaratory judgment pursuant to the Declaratory Judgments Act, 28 U.S. C. § 2201. On a prior motion, Judge Bryan had granted partial summary judgment for the defendant, 185 F.Supp. 700 (S.D.N.Y.1960); no appeal has been taken from that order. The defendant appeals from an order of Judge Murphy of January 31, 1962, which granted the plaintiff's motion for summary judgment on that portion of the complaint left undisturbed by Judge Bryan's order. We find that the district court erred in asserting jurisdiction over the plaintiff's claim. Accordingly, we reverse the judgment below and remand to the district court with directions to dismiss the complaint.

Topp-Cola Co., the plaintiff, competes under the federally registered trademark "Topp-Cola" with the defendant, Coca-Cola Co., for the sale of soft drinks. On February 11, 1959, Topp-Cola filed an application for local registration of its mark in Puerto Rico, under the laws of Puerto Rico, 10 L.P.R.A. § 191 et seq. Pursuant to local procedure, Coca-Cola, which had previously registered its trademark in Puerto Rico, filed a Notice of Opposition. In its complaint, Topp-Cola alleged that this opposition, which asserts a likelihood of confusion between the marks "Topp-Cola" and "Coca-Cola", amounts to a charge of trademark infringement. It alleged also that the opposition was a step in the defendant's "plan to hamper and frustrate competition in cola type beverages." Asserting a lack of confusing similarity between the marks, Topp-Cola sought a declaratory judgment to that effect, a judgment of non-infringement, and a decree enjoining Coca-Cola from opposing applications of Topp-Cola for local registration in Puerto Rico or elsewhere, and from otherwise "interfering with the legitimate expansion of the plaintiff's cola beverage business." Judge Bryan found that the complaint stated separate causes of action, one for a declaratory judgment and injunctive relief pertinent to the registration proceedings in Puerto Rico, and one based on the broad allegations of general interference with the plaintiff's business. He ruled that the first cause of action was adjudicable under the Declaratory Judgments Act. As to the second, he found that the only fact relied on "to establish a `plot' or `scheme' to exclude plaintiff from foreign commerce is the notice of opposition filed by defendant in Puerto Rico." 185 F. Supp. at 707. As the plaintiff had shown "not one fact, not one single circumstance," id., at 708, to support the broad claim, the defendant was entitled to summary judgment as to it. Judge Bryan ordered stricken from the complaint the paragraphs pertaining to this cause of action, leaving for trial only the claims pertaining to the Puerto Rican registration proceeding. Thereafter, Judge Murphy found that there was no issue of fact remaining on the surviving claim and granted the plaintiff's motion for summary judgment.

One who is subjected to charges of infringement and the threat of legal proceedings need not wait until his accuser chooses to bring suit to secure a determination of his rights. One of the purposes of the Declaratory Judgments Act is to avoid the unfairness of allowing one party to create a controversy by making such charges but, by withholding suit, to prevent the other party from conclusively refuting them. See, e. g., Shell Oil Co. v. Frusetta, 290 F.2d 689 (9 Cir., 1961); Wells v. Universal Pictures Co., 166 F.2d 690 (2 Cir., 1948); Merrimac Hat Corp. v. Crown Overall Mfg. Co., 91 F.Supp. 49 (S.D.N.Y.1950), aff'd 186 F.2d 505 (2 Cir., 1951). In this case, however, it is clear from the affidavits of the parties and the order of Judge Bryan that the only controversy between the plaintiff and the defendant concerns the former's right to register its trademark in Puerto Rico. All that the defendant has done is to file a notice of opposition in the Puerto Rican proceedings. While one of the bases of the opposition is that the plaintiff's mark is confusingly similar to the defendant's, the filing of an opposition in a local registration proceeding is not by itself a charge or warning of a future charge of infringement. Merrick v. Sharp & Dohme, Inc., 185 F.2d 713 (7 Cir., 1950), cert. denied, 340 U.S. 954, 71 S.Ct. 573, 95 L.Ed. 687 (1951); see Emerson Electric Mfg. Co. v. Emerson Radio & Phonograph Corp., 105 F.2d 908, 911 (2 Cir.), cert. denied, 308 U.S. 616, 60 S.Ct. 262, 84 L.Ed. 515 (1939).

The precise issue before us, therefore, is whether a district court in the Southern District of New York should resolve, as between the parties, the issues on which the plaintiff's right to registration in Puerto Rico depends, and if it finds for the plaintiff, enjoin the defendant from appearing in the proceedings in Puerto Rico. The answer is no. Puerto Rico has the same power to enact local trademark legislation as do the states. See People of Puerto Rico v. Shell Co. (P.R.), Ltd., 302 U.S. 253, 58 S.Ct. 167, 82 L.Ed. 235 (1937) (affirming...

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    ...by making such charges but, by withholding suit, to prevent the other party from conclusively refuting them. Topp-Cola Company v. Coca-Cola Company, 314 F.2d 124, 125 (2d Cir.1963). 30 Section 43(a) of the Lanham Trademark Act provides Any person who shall affix, apply, or annex, or use in ......
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