Universal Sewing Mach. Co. v. Standard Sew. Equip. Corp.

• Decision Date: 08 July 1960
• Citation: 185 F. Supp. 257
• Parties: UNIVERSAL SEWING MACHINE CO., Inc., Plaintiff, v. STANDARD SEWING EQUIPMENT CORPORATION, Defendant.
• Court: U.S. District Court — Southern District of New York

185 F. Supp. 257

UNIVERSAL SEWING MACHINE CO., Inc., Plaintiff, v. STANDARD SEWING EQUIPMENT CORPORATION, Defendant.

United States District Court S. D. New York.

July 8, 1960.

Henry L. Burkitt, New York City, for plaintiff.

Gordon, Brady, Caffrey & Keller, New York City, for defendant. Leroy C. Curtis and James V. Joy, Jr., New York City, of counsel.

THOMAS F. MURPHY, District Judge.

The parties to this trademark controversy are both New York corporations and the plaintiff has no registered mark. Although the action has been pending for almost eight years defendant made no motion to test the sufficiency of plaintiff's claim or the court's jurisdiction until the first day of trial. We reserved decision on the motion and tried the case on the merits.

Plaintiff's complaint seeks four different forms of relief: (1) a declaratory judgment declaring its prior right to the trademark "Universal" for which defendant has procured registration in the Patent Office under the provisions of the Lanham Act, 15 U.S.C.A. §§ 1051-1127; (2) to enjoin defendant from further use of that mark; (3) damages for infringement and unfair competition, and (4) to cancel defendant's federal registration of the said mark.

Since the declaratory judgment prayed here seeks to vindicate plaintiff's common law rights inhering in its trade name(we will assume that plaintiff used its name as a common law trademark) that claim, not based on a federal right, is not independently enforceable in this court. And even if we construe that claim as one to declare defendant's federal registration invalid, similarly as with respect to patents, the same result would obtain because of the absence of a justiciable controversy, i. e., defendant has never threatened plaintiff, directly or indirectly, or in any manner, with litigation. Cf. Eastman Kodak Co. v. Velveray, D.C.S.D.N.Y.1959, 175 F. Supp. 646.¹ Neither could the claims for infringement, unfair competition, or for an injunction stand by themselves jurisdictionally under the facts disclosed herein. The only colorable basis for federal district court jurisdiction to be found under the complaint is with regard to the suit for cancellation. But after analyzing the statutes and cases construing them, we are of the opinion that, absent some other basis of jurisdiction, a suit for cancellation by one in plaintiff's position may not be independently maintained in this court.

Section 14 of the Lanham Act, 15 U.S.C.A. § 1064, provides in part that, "Any person who believes that he is or will be damaged by the registration of a mark on the principal register * * *, may upon the payment of the prescribed fee, apply to cancel said registration * * *." Section 39 of that Act, 15 U.S.C.A. § 1121, provides for jurisdiction in the district courts "of all actions arising under this chapter, without regard * * * to diversity or lack of diversity of the citizenship of the parties." Section 14, together with § 21, 15 U.S.C.A. § 1071, would seem to require that the aggrieved party's remedy of cancellation must be sought in the administrative tribunals of the Patent Office and then, if unsuccessful, by appeal to the Court of Customs and Patent Appeals, or in the alternative, to then proceed in the district court under §§ 145, 146 of Title 35.² In other words, one seeking cancellation offensively and relying solely upon that claim for federal jurisdiction would seem to be relegated to first exhausting his administrative remedies before resorting to the courts. Such a situation, exemplified by the instant action, must be distinguished from the cases where there is present some independent basis of federal jurisdiction, and wherein the validity of a registered trademark is brought into issue, for example, by way of defense (Bascom Launder Corp. v. Telecoin Corp., 2 Cir., 1953, 204 F.2d 331, 335) or counterclaim. See, e. g., Avon Shoe Co. v. David Crystal, Inc., D.C.S.D.N.Y.1959, 171 F.Supp. 293, 297, affirmed 2 Cir., 1960, 279 F.2d 607. The issue may arise also as in the case of Simmonds Aerocessories v. Elastic Stop Nut Corp., 3 Cir., 1958, 257 F.2d 485. There there was diversity of citizenship present, the monetary prerequisite involved, and a justiciable controversy because the defendant therein had in effect threatened the plaintiff with litigation for infringement of defendant's registered trademark. Plaintiff there, as here, had no registered mark and sought, inter alia, cancellation of defendant's registration. The Court of Appeals in Simmonds said that the adminstrative remedies were concurrent with those provided in § 37 of the Lanham Act, 15 U.S.C.A. § 1119, which provides as follows: "In any action involving a registered mark the court may determine the right to registration, order the cancelation of registrations, in whole or in part, restore canceled registrations, and otherwise rectify the register with respect to the registrations of any party to the action. Decrees and orders shall be certified by the court to the Commissioner, who shall make appropriate entry upon the records of the Patent Office, and shall be controlled thereby." We agree with the result in that case but not with the statement that the remedies of § 14 and § 37 are concurrent if that were taken to mean as is here contended, that an original suit may be instituted by one in the position of the present plaintiff, in the district court for cancellation of another's federal registration where no other basis of jurisdiction is present. Compare the cases cited by that court in support of its statement (at page 491) and also the cases cited in Note 2, supra. In our view § 37 assumes a properly instituted and otherwise jurisdictionally supportable action involving a registered mark. That not being the case here, we are without jurisdiction of the subject matter and upon that ground we must dismiss the complaint.

However, upon the assumption that we may be in error in that disposition, we will proceed to determine the merits and and we will assume that we have pendent jurisdiction of all the claims with the exception of that seeking a declaratory judgment. As to that claim there is a complete absence of a justiciable controversy.

Plaintiff was incorporated in 1935 and is wholly owned by its president and secretary, Morris Shapiro. Although Shapiro has been in the sewing machine business since 1910, substantially all of plaintiff's business is in rebuilding used sewing machines, principally industrial machines used in the canvas and awning trade. Its source of supply is various secondhand dealers. It buys, sells and rents machines, and also repairs them and sells parts and accessories. Plaintiff's letterhead lists ten different brands of machines it deals in, including Singer, Merrow, Union Button Sewer, etc. It has never handled machines with only the trademark "Universal." All of plaintiff's sales, repairs or rentals are conducted at its sole place of business in Manhattan. After a sale is made, or a machine repaired or rented, and while in the shipping room, plaintiff affixes to such machine its decalcomania (decal) bearing its corporate name, address and telephone number. This decal is affixed to show the name of plaintiff as the dealer as distinguished from the brand name of the original manufacturer which is left intact on the machine. The decal also serves to advertise plaintiff as well as for ready reference by the purchaser in the event repairs are needed. Plaintiff's sales of new home sewing machines total about 22 since 1949, and many of those were procured specially by plaintiff to fill some customer's order. The extent of advertising done by plaintiff is encompassed in the New York City classified telephone directory and in two trade journals, Fraser's Canadian Textile Directory and The National Canvas Review. The cost of this advertising approximates $300 per year.

Prior to defendant's formation in 1947, its president and presently sole shareholder, together with one Harry Kron, formed a Massachusetts corporation of the same name as defendant, which conducted a secondhand reconditioning and sales business of used home sewing machines. It moved to New York in 1947, formed defendant and began importing new home sewing machines from England and then Italy. The Massachusetts corporation was dissolved and the business of the defendant was thereafter confined to the field of new home machines. The Italian machines bore the name "Universale," which name, prior to importation and at defendant's direction, was Americanized to "Universal." Defendant's imports are now solely from manufacturers in Japan. Defendant's business consists of the distribution and sale, nationally and in some foreign countries, of a complete line of new home sewing machines under the trademark "Universal." Besides New York, it has branch offices in Chicago and Los Angeles. Defendant imports the machine heads and then assembles them with cabinets and motors and sells wholesale to jobbers and retail outlets which in turn sell to the ultimate consumers. Since May 1955, pursuant to an order of the Federal Trade Commission, defendant has used its corporate name in connection with the mark "Universal." Defendant's advertising is modest but more extensive than plaintiff's. That evidence was limited to the years 1955-1959. The average cost from 1955 to 1957 was $20,000, and in 1958 and 1959 it averaged $30,000. It appeared that defendant placed advertisements in magazines such as Vogue, McCall's and Good Housekeeping, in trade journals, telephone directories, and in 1949 in the New York Sunday News, and in 1952 in the Daily News. Defendant's first advertisement in the New York Classified Directory was in 1949. Plaintiff's objection to the publisher resulted in the discontinuance of that listing until 1954. It appeared also that there was much advertising of the "Universal" sewing machine by defendant's dealers for which defendant did not have to contribute.

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