Court Opinion

ID: 8797044
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:14:58.908253+00
Date Added: 2024-06-11T17:03:41.182818
License: Public Domain

On Petition for Rehearing.
The petition for rehearing urges us to reconsider the conclusion that plaintiff’s valid trade-mark is not entitled to full protection by injunction against Rectanus. It is said that our opinion is without precedent, in that it finds that plaintiff owns a valid trade-mark and has moved promptly after having actual knowledge of the infringement and yet .refuses relief; in other words, and using the nomenclature of the petition, it is said that an injunction, in a trade-mark case has never been denied on the ground of “estoppel by negligence,” * and the petitioner’s counsel think that the adoption of such principle is in serious conflict with established trade-mark law and will lead to very unfortunate practical results.
We did not originally fail to1 ’ appreciate that our conclusion was without specific precedent, and we then gave what consideration we could to the matter of practical results; but we were without the aid now given by the thorough presentation found in the petition. The arguments now presented and the novelty of the question justify some further discussion.
[4] It is settled that injunction against future trade-mark infringement may not be denied because of the mere laches of plaintiff (see cases infra); and it must be conceded that the record here discloses no actual knowledge by Mrs. Regis or her successors of the fact that Rectanus was using the mark until they acquired such knowledge shortly before suit brought. Since, in order to raise an estoppel in pais, it is essential that one party shall do some act, or neglect some act, and that the other party, in reliance on such doing or neglecting, shall change his position so as to import prejudice if the first act or neglect is repudiated, it follows that our conclusion of estoppel cannot be maintained unless it shall be assumed that Mrs. Regis was guilty of some neglect toward the public or toward the class of which Rec-tanus was a member, and that Rectanus, because of that neglect, has changed his position.
[5] It is true there can be no neglect, unless there is a duty; but these are relative terms. There can be no absolute duty resting on one *553who adopts a trade-mark to bring it at once to the attention of everybody. Such duty as there may be in this direction must rest upon the obligation of the one adopting to realize that, in the absence of a widespread knowledge, of the existence of Ms claim to the mark, others will be likely to adopt it and spend their money iti its promotion in their own interest. This obligation must be as variant in degree as are the circumstances of each case from those of another case; but we cannot doubt that, under present-day conditions, there are cases in which some measure of such obligation does exist. Formerly, the number of competing traders in a given line — and, hence, the probability that another would hit upon the same trade-mark — was slight as compared to ihai number and that probability now; and formerly the means by which a trade-mark owner could spread general knowledge of his ciaio were comparatively ineffective, and the trade customs which now make it so much a matter of course for trade-marks to be put before the public the country over, were largely nonexistent. Mrs. Regis and her successors used as a trade-mark a word which, though not descriptive in the forbidden degree, was yet so far suggestive of quality that its adoption by others was as likely as its choice by her had been natural. ' From 1883 (when Reclaims’ use began), until now, It has been true that a small expense in trade journal advertising enables the trade-mark proprietor to put his article and its name before the entire trade; and the custom of so doing has been well-nigh universal. As business methods and business customs change, so change the fact standards of reasonable prudence and care in guarding business rights.
[6] Mrs. Regis, at least prior to 1900, made no appreciable effort to extend her trade or her mark beyond Massachusetts; the instances of sales beyond that .field are almost negligible.2 She advertised in no journal. She employed no outside solicitors. Knowledge of the remedy and its name did not spread, save as one user told another, and save as she and one or two others canvassed from house to house in a few Massachusetts towns. Until 1898 she did no act adapted to give any general notice of her claim; and the act then doue — the state registration — was, of course, confined in its effect to that state (chapter 72, Rev. Laws Mass.). In 1900 she registered in the Patent Office, and then, for the first time, clearly disclosed her claims to a countrywide trade-mark.
[7] Registration under the federal Trade-Mark Act is not expressly made notice of the rights claimed, and so it cannot, as matter of law, he called a constructive notice; and yet that it in fact tends to give notice is well known. The substance of the registration is published in an official journal. This published list is regularly scrutinized by many manufacturers and dealers; and it is common practice for any one proposing to adopt a trade-mark to have a search made in the classified lists of legistrations in order to determine whether the pro*554posed mark has been already appropriated. The application for registration itself, shows that a use which may have been indefinite or fugitive has grown and developed into a definite claim of right, covering interstate and foreign commerce. It may well be that either a federal registration or some suitable advertising would, in a particular case, be notice enough to the public of which the defendant was a member, so that every obligation of fairness resting on the claimant would be satisfied, and so the defendant would have no basis to say that he had been both innocent and diligent while the claimant had been careless and indifferent in creating the situation tending to make an es-toppel. These questions are not presented; nor is it necessary to say that at any particular time Mrs. Regis became charged with any particular degree of duty to make her claim generally known.
[8] It is enough to say that in (e. g.,) 1895, at the end of more than 15 years of this policy of doing nothing in any of the customary methods to give either the trade or the general public knowledge of the claimed trade-mark, Mrs. Regis was bound to know that others would be likely to adopt or to -be using the same word in ignorance of her appropriation, and to be making investments therein. If she was bound to know this, it must be conclusively presumed that she did know it; Rectanus’ continued investment from 1895 to 1900 in exploiting what he thought was his trade-mark, makes a satisfactory case of estoppel; and 10 or 12 years more of indifference to other than comparatively local trade, after th.e 1900 notice, accompanied by defendant’s continued expenditure, does not weaken the defense. It is, perhaps, not accurate to say that she is conclusively presumed to know what she was bound to know, but the distinction is here immaterial. One is bound to know the law, and so is bound to anticipate the results which, by law, must follow from his acts;- and it would seem that others who rely upon the knowledge and intent so presumed could claim the -protection of an estoppel just as much as if the knowledge and intent had been actual.
We cannot join in counsel’s apprehension that from this principle serious harm will come to trade-mark owners. We carefully refrained, in this opinion and the accompanying opinion in Gaines v. Rock Spring Co., 226 Red. 531, - C. C. A. -, from.deciding what degree of diligence, if any, by the trade-mark owner in exploiting his claims, was necessary to protect him from losing, in this way, a fraction of his trade-mark right. Only in an extreme case would a court reach the conclusion which we here reached. The trade-mark owner, prosecuting and exploiting his business in the ordinary way, can have nothing to fear from the rule of the opinion. Not only will the cases, where this situation arises, be rare, but only in a fraction of those cases will there be practical difficulty in determining the conflicting rights of the general owner and the one, who must be left in the possession of what he has taken. Such difficulties as may develop we must think to be a lesser evil than it would be to permit plaintiff, by asserting a prior right, to destroy that which had been built up in the reasonable belief, induced by plaintiff’s conduct, that no such prior right existed. Of course, it is not necessary to the theory of *555estoppel that the one claiming it should have acted upon an affirmative misrepresentation. It is enough if he has acted as he would not have done if he had known the truth, aud if the one against whom the estoppel is claimed kept silent when he should have spoken.
So much by way of reference to the principles, the proper application of which must control this case. We turn now to the decided cases, and the discussion of them in the petition. Those cited in our opinion, so far as petitioner’s counsel think they give color of support to the conclusions of the opinion, are sought to be distinguished on one or the other of two grounds. It is said that the finding of an estoppel, where that result has been allowed to defeat a valid trade-mark (as in the Baltimore Club Case, 183 Fed. 22, 105 C. C. A. 314, in the Circuit Court of Appeals) has been based on actual knowledge by plaintiff that defendant was using the mark and on plaintiff’s acquiescence after such knowledge. In the case just cited, this is true; but it is difficult to distinguish between the effect of knowledge proved in fact and knowledge imputed by law. A doubtful inference is not so satisfactory as clear and direct proof; but, when once the inference is drawn, the fact is established. We must doubt whether ihe result in the Baltimore Club Case would have been different if it had appeared only that plaintiff had done nothing for 20 years toward extending his trade-mark beyond Baltimore; that plaintiff had been indifferent as to what was done in New York; that any ordinarily vigorous pushing of plaintiff’s business, at any time for twenty years, would have disclosed defendant’s use; and that the mark consisted of such a quasi descriptive or suggestive word as to he rather likely to be selected by others. We think that case differs from ¡he present, not in principle but in degree.
Nor can we think that the presence of actual competition between the parties at the time suit'is commenced is the sole criterion by which cases are to be distinguished, as the petition urges with reference to Hanover Co. v. Allen Co., 208 Fed. 513, 125 C. C. A. 515, supra. Whether the ground of the defense be laches or estoppel, if the defense is good to-day, it does not seem that it can be bad next week, merely because in the meantime plaintiff first brings in and offers for sale ids goods in the local territory where defendant is established. If so, then neither defense could ever avail, because plaintiff could always delay bringing suit for a few months or a year and until after he liad come in and was selling some goods in defendant’s territory —which is practically wdiat happened in this case.
The insistence of the petition that our opinion runs counter to settled principles is based chiefly on McLean v. Fleming, 96 U. S. 245, 24 L. Ed. 828; and Menendez v. Holt, 128 U. S. 514, 9 Sup. Ct. 143, 32 L. Ed. 526. In the former case, plaintiff’s acquiescence and delay were held sufficient to bar an accounting, but not to prevent an injunction; but it clearly enough appeared that defendant’s actions liad not been innocent. He had been fully aware of plaintiff’s right to the marks and labels, and he„had copied them as closely as he dared. His contention was that he had not infringed; but he had ahvays known that if he was wrong in this contention his conduct *556was unlawful. The element of good-faith expenditure by defendant in building up a business on a mark which he had a right to suppose was his, is wholly lacking in McLean v. Fleming. Without that basis, there could be no estoppel; and so the case has no bearing upon the latter question. In Menendez v. Holt, there was the same situation. Defendants were using the mark under Ryder, who had formerly been in partnership with plaintiff in the business to which the mark was incidental, and it is clear that defendants made no claim that they had been ignorant of plaintiff’s rights. They had taken their chances on the validity of the trade-mark and the sufficiency of plaintiff’s title. Surely there could be no estoppel; and so the court expressly says. 128 U. S. on page 524, 9 Sup. Ct. 143, 32 L. Ed. 526. The plaintiffs had always been diligent in giving notice, and the defendants had never been innocent.
Reliance is had, also, on the two Hunyadi-Janos Cases in 179 U. S. — the Eisner Case, 179 U. S. at pages 19, 39, 21 Sup. Ct. 7, 45 L. Ed. 60, and the Siegel-Cooper Case, 179 U. S. at page 42, 21 Sup. Ct. 16, 45 L. Ed. 77. In the Eisner Case, the conclusion reached seems to have depended on the theory of unfair competition, and not on that of trademark infringement. The title to the word “Hunyadi,” as a trade-mark, was held to have been lost; but the characteristic red and blue label was protected against fraudulent simulation. Not only was the original ground of relief found to lie in defendant’s fraud, but perhaps for the same reason only the defense of laches was overruled. In the Siegel-Cooper Case, it appeared that defendant was merely a retailer .under purchases made from the Eisner Company, and that the Eisner Company was the actual defendant. Perhaps it was inevitable that the case should have the same result as the Eisner Case; and yet it is not quite clear why, in the latter case, relief should have been denied on.the ground of trade-mark infringement and given on the ground of fraud, and in the Siegel-Cooper Case the absence of any fraudulent intention by defendant should have been held immaterial, and on the authority of strict trade-mark cases; but, whatever may be the proper view of the Eisner and Siegel-Cooper Cases, they do not militate against the defense of “estoppel by negligence” in a proper case. Not only did neither defendant claim an estoppel, but the Eisner Company could not have done so because estoppel cannot be based on fraud, and the -Siegel-Cooper Company could not have done so because it had made no expenditures based upon its belief, in its own title to the subject-matter, nor was it ignorant of plaintiff’s claim.
We are cited, also, to several decisions in patent cases (of which Taylor v. Sawyer Co. [C. C. A. 31 75 Fed. 301, 22 C. C. A. 203, and Ide v. Trorlicht [C. C. A. 8] 115 Fed. 137, 53 C. C. A. 341, are typical) to the effect that an injunction against the continuation of a patent infringement will not be denied because of equities which have arisen in defendant’s favor through plaintiff’s indifference or delay. These cases usually themselves save the question of a possible estoppel; but suits upon a patent and a trade-mark present, in this respect, a very imperfect analogy. A patent is an absolute monopoly; the pat-entee is under no obligation to work the patent; he has received a *557grant' of a right to exclude all others unconditionally and entirely; and all ci hers have constructive notice of his rights. With reference to a trade-mark, the monopoly is only incidental to an existing business; unless the business Is prosecuted, the right is lost; there is (at least, lacking registration) no constructive notice to others; others have a right to appropriate the mark to themselves, if plaintiff stops using it. Obviously there is in trade-mark cases much more room than in patent cases for a defendant to acquire, on the theory of es-toppel, a right which a court of equity will protect.
A study of these cases, as well as of the others presented, has not convinced us that our conclusion was mistaken, and the petition for rehearing is denied.
It should be understood, as was more fully stated in the “Old Crow” Case, that, such an adjudication as is here directed is confined in its effect to the territory' which the Rectanus Company had reached and was occupying to a substantial extent when it received notice of plaintiff's claims. How far, if at, all, it may promote an increase or accept a natural increase constitutes one of the “difficulties which may develop” from conflicting rights, as specified in a previous paragraph, and which we do not undertake to consider.

 By this phrase meaning that estoppel which at last rests, not upon a trade-mark owner’s actual knowledge of the use by the person afterwards made defendant, but rather upon a knowledge imputed to the owner because of his indifference and neglect.

 Mrs. Begis sent a few bores into Maine, New Hampshire, Vermont, and New York. She sold a few which the buyers were to send to Canada or Virginia. No one of these is fixed as before 1900; all may as well have been, as the business reached its largest volume shortly before she sold out in 1910.