United States Ozone Co. v. United States Ozone Co.

• Decision Date: 22 February 1933
• Docket Number: No. 4641.,4641.
• Parties: UNITED STATES OZONE CO. et al. v. UNITED STATES OZONE CO. OF AMERICA.
• Court: U.S. Court of Appeals — Seventh Circuit

62 F.2d 881 (1932)

UNITED STATES OZONE CO. et al. v. UNITED STATES OZONE CO. OF AMERICA.

No. 4641.

Circuit Court of Appeals, Seventh Circuit.

December 20, 1932.

Rehearing Denied February 22, 1933.

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COPYRIGHT MATERIAL OMITTED

Fred Gerlach, of Chicago, Ill., for appellants.

D. P. Wolhaupter, of Washington, D. C., and Wm. Nevarre Cromwell, and F. Allan Minne, both of Chicago, Ill., for appellee.

Before ALSCHULER and SPARKS, Circuit Judges, and WHAM, District Judge.

WHAM, District Judge (after stating the facts as above).

Trade-marks, trade-names, business good will, and unfair competition involve closely related principles of law. Trade-marks and trade-names are valuable to their owner because they serve to build up and protect the good will of his business. They are valuable to the buying public, when used as the law contemplates, as a shield against deception. Any use of the trade-mark or the trade-name of another which injures the good will of its owner or deceives the public, or both, constitutes unfair competition. Hanover Star Milling Co. v. Metcalf, 240 U. S. 403 at page 412, 36 S. Ct. 357, 60 L. Ed. 713.

Trade-mark rights growing out of prior appropriation and use of a device or symbol to distinguish or identify commodities made or sold by the owner of the trade-mark have long been and continue to be recognized by the common law as property, and as such entitled to protection by the courts. Trade-Mark Cases, 100 U. S. 82, 25 L. Ed. 550; Stephano Bros. v. Stamatopoulos (C. C. A.) 238 F. 89, L. R. A. 1917C, 1157. Hanover Star Milling Co. v. Metcalf, supra. While trade-mark rights may be fixed or limited by statute, they are not dependent on statutory enactment, but arise under the common law from prior, exclusive appropriation and use. Trade-mark Cases, supra; Piggly Wiggly Corporation v. Saunders (D. C.) 1 F.(2d) 572; Phillips v. Hudnut, 49 App. D. C. 247, 263 F. 643; Stephano Bros. v. Stamatopoulos, supra.

The Trade-Mark Act of 1905, as amended (15 USCA §§ 81-133), without changing the substantive law, provides for the registration of marks used in interstate or foreign commerce which, without statute, would be entitled to legal and equitable protection. Beckwith v. Com'r of Patents, 252 U. S. 538, 40 S. Ct. 414, 64 L. Ed. 705.

Registration of a trade-mark simply constitutes prima facie evidence that the registrant is entitled to the mark, Henderson v. Peter Henderson & Co., 9 F.(2d) 787 (C. C. A. 7); 15 USCA § 96, and in itself gives no property right in the mark, Robertson v. U. S., 52 App. D. C. 368, 287 F. 942; Fulton Waterworks Co. v. Bear Lithia Springs Co., 47 App. D. C. 437; Spiegel v. Zuckerman, 188 F. 63 (C. C. A. 2); Anheuser-Busch, Inc., v. Cohen, 37 F.(2d) 393 (D. C.); United Drug Co. v. Rectanus Co., 248 U. S. 90, 39 S. Ct. 48, 63 L. Ed. 141. Nor is such registration controlling in a suit involving the common-law rights to the registered mark or in a suit for unfair competition involving its use. B. F. Goodrich Co. v. Kenilworth Mfg. Co. (Cust. & Pat. App.) 40 F.(2d) 121; Postum Cereal Co. v. California Fig Nut Co., 272 U. S. 693, 47 S. Ct. 284, 71 L. Ed. 478.

Any person, partnership, corporation, or unincorporated association capable of holding title to personalty may acquire the right to a trade-mark. The owner may be the manufacturer of the article to which the trade-mark is applied or the seller of goods of a particular manufacture or quality to which the distinguishing mark is applied. McLean v. Fleming, 96 U. S. 245, 24 L. Ed. 828; Nelson v. Winchell, 203 Mass. 75, 89 N. E. 180, 23 L. R. A. (N. S.) 1150; Hughes v. Alfred H. Smith Co. (D. C.) 205 F. 302; Id. (C. C. A.) 209 F. 37; Manitou Springs Mineral Water Co. v. Schueler (C. C. A.) 239 F. 593; Schmalz v. Wooley, 57 N. J. Eq. 303, 41 A. 939, 43 L. R. A. 86, 73 Am. St. Rep. 637; Atlantic Milling Co. v. Robinson (C. C.) 20 F. 217.

A registered trade-mark is assignable in connection with the good will of the business in which the mark is used by a duly acknowledged instrument in writing. 15 USCA § 90.

Trade-mark rights are assignable by the owner with the business or the right to make or sell the commodity which it distinguishes or identifies (Sarrazin v. W. R. Irby Cigar & Tobacco Co., 93 F. 624, 46 L. R. A. 541 C. C. A. 5; Kidd v. Johnson, 100 U. S. 617, 25 L. Ed. 769; though not apart therefrom (The Coca-Cola Bottling Co. v. The Coca-Cola Co. (D. C.) 269 F. 796; Sawilowsky v. Brown (C. C. A.) 288 F. 533; In re Jaysee Corset Co. (D. C.) 201 F. 779; Carroll v. Duluth Superior Milling Co. (C. C. A.) 232 F. 675), and, in the absence of evidence to the contrary, will be assumed to have passed, without formal assignment, with the business when the business with which the trade-mark has been identified is sold or transferred (26 R. C. L. 863; Laughman's Appeal, 128 Pa. 1, 18 A. 415, 5 L. R. A. 599; Seabrook v. Grimes, 107 Md. 410, 68 A. 883, 16 L. R. A. (N. S.) 483, 126 Am. St. Rep. 400; Fish Bros. Wagon Co. v. La Belle Wagon Works, 82 Wis. 546, 52 N. W. 595, 16 L. R. A. 453, 33 Am. St. Rep. 72; Hoxie v. Chaney, 143 Mass. 592, 10 N. E. 713, 58 Am. Rep. 149; Woodward v. White Satin Mills Corporation (C. C. A.) 42 F.(2d) 987. Reploge v. Air Way Co., 52 App. D. C. 364, 287 F. 765; President Suspender Co. v. Macwilliam (C. C. A.) 238 F. 159).

Trade-marks, trade-names, and business good will, in connection with the business to which they relate, constitute property in the hands of their owner. When owned by a bankrupt, except when strictly personal in nature, trade-marks and trade-names pass with the good will of the bankrupt's business to the trustee for the benefit of creditors, and, when the business to which they relate is sold intact by the trustee, they pass in connection with the sale of the business to the purchaser without being specifically mentioned. 11 USCA § 110; Woodward v. White Satin Mills Corporation, supra; S. F. Myers Co. v. Tuttle (C. C.) 183 F. 235; Sarrazin v. W. R. Irby Cigar & Tobacco Co., supra; Wilmer v. Thomas, 74 Md. 485, 22 A. 403, 13 L. R. A. 380; Children's Bootery v. Sutker (1926) 91 Fla. 60, 107 So. 345, 349, 44 A. L. R. 698; Lothrop Pub. Co. v. Lothrop, etc., Co., 191 Mass. 353, 77 N. E. 841, 5 L. R. A. (N. S.) 1077.

Reverting to the facts disclosed by the record as stated above, in the light of the enunciated principles of law, we conclude that the ozone company, even though defectively organized as a corporation, was capable of holding title to the trade-mark in question, and that as a selling agent of equipment of a particular quality and source it could and did acquire the trade-mark. It is apparent from the facts that the ozone company and the sterilizer company had common interests, were intended to be and in fact operated as a practical unit. Though the trade-mark was registered by the ozone company, it was used and treated in the operation of the business of the two corporations as the common property of both. The sterilizer company was permitted to and did use the trade-mark in the manufacture, advertisement, and sale of its manufactured products, and the ozone company, acting as the sales and advertising agent of the manufacturer, used it to promote the sales of the same products. By right of prior, exclusive appropriation and use, as against the rest of the world, the two companies acquired the common-law rights to the trade-mark before any dealings were had by either with Montgomery Bros. The respective rights of the two companies as against each other are not here at issue, since the appellee has acquired all the rights in and to the trade-mark owned or possessed by both companies. The ozone company, by duly acknowledged instrument in writing, has assigned the trade-mark and all its rights therein with all its good will as a sales agent of the sterilizer company and its successors to the appellee. The assets of the sterilizer company, consisting of its manufacturing plant and patents, were sold intact by the trustee in bankruptcy to Loucks and by Loucks to appellee. Since it appears that they were not specifically withheld, the sale intact of the assets and business carried to the purchaser the trade-marks and trade-names used therewith, including the company's rights to the trade-mark in suit.

The situation set forth with reference to the trade-mark also prevailed with reference to the trade-name, "United States Ozone Company." The sterilizer company and the ozone company both used the name to identify, advertise, and sell the equipment manufactured by the sterilizer company. Before any contract was entered into with Montgomery Bros. and since, the products of the sterilizer company have been identified in the public mind by the name "United States Ozone Company."

It would be impossible to protect the good will of the sterilizer company to which the appellee has succeeded if the appellee is not protected in the use of the trade-mark and trade-name around which that good will has been built. Likewise, if the trade-mark and trade-name be permitted to be used by appellants in connection with their manufactured products, which, though similar in character, are different in source and admittedly different in construction from those manufactured by the sterilizer company and its successors, the public would undoubtedly be deceived and misled.

The claims of appellants to the ownership of and the right to use the trade-mark and trade-name are not convincing. Such claims as they have originated in the sales agency contracts wherein they were given exclusive sales rights, and, solely for the purpose of the contract, were permitted to use the trade-mark and trade-name in advertising and selling the products manufactured by the sterilizer company. Nothing appears in the contract or elsewhere in the evidence which indicates any intention on the part of either the sterilizer company or the ozone company to give up the trade-mark or the trade-name to appellants...