Court Opinion

ID: 9651252
Source: CourtListenerOpinion
Date Created: 2023-08-23 16:11:25.141778+00
Date Added: 2024-06-11T18:12:31.323247
License: Public Domain

LINDLEY, District Judge
(dissenting in part).
I think that upon the second question, namely, whether in order to sustain a suit for injunction against the use of a similar corporate name, plaintiff must show in addition to probable confusion in the minds of people, fraud, “palming off” or other intentional acts of unfair competition, the present day rule is more liberal than that announced by my brethren.
In Investors Syndicate of America, Inc., et al. v. Hughes; 378 Ill. 413, 38 N.E.2d 754, 758, in interpreting a statute forbidding the Secretary of State to issue a certificate of authority to a foreign corporation which has a name “deceptively similar” to that of a corporation authorized to do business in the state, the court remarked: “While it is true that a majority of the adjudicated cases involving the use of a corporate name have arisen between hostile corporations, thus raising questions of unfair competition and property rights in the use of a corporate name, it is obvious both from a standpoint of public policy and from the construction of the statutes involved, that such a statute has the dual purpose of protecting competing corporations and likewise the public, from deception in the use of deceptively similar corporate names.” It then proceeded to a discussion of the necessity of fraud or imposition. It commented that prayers for injunctive relief had in many cases been based upon the protection of property rights which would be injured but that at the present time “Even in injunction cases between competing corporations, the trend of decision is to place less emphasis on competition and more on confusion (italics mine) as is evidenced by the following cases: Vogue Co. v. Thompson-Hudson Co., 6 Cir., 300 F. 509, Aunt Jemima Mills Co. v. Rigney & Co., 2 Cir., 247 F. 407, L.R.A.1918C, 1039. As was said in Ward Baking Co. v. Potter-Wrightington, 1 Cir., 298 F. 398, 403, ‘The test should be whether the public is likely to be deceived.’ * * * The use of the term ‘deceptively similar’ indicates that it was not the sole purpose of the act to protect the property rights of existing corporations, but also that the public be protected against any deception arising out of the use of similar names.” After referring with approval to United States Ozone Co. v. United States Ozone Co. of America, 7 Cir., 62 F.2d 881, Mutual Export & Import Corp. v. Mutual Export & Import Corp. of America, D.C., 241 F. 137, and Benevolent and Protective Order of Elks of the United States v. Improved Benevolent and Protective Order of Elks of the World, 122 Tenn. 141, 118 S.W. 389; Glucose Sugar Refining Co. v. American Glucose Sugar Refining Co., N.J. Ch., 56 A. 861, each of which indicates that probability of deception or confusion is sufficient, the court held that, in the absence of any further proof, the Secretary of State could not be compelled to issue the charter.
While the issue there did not arise between hostile corporations, it was presented in a later case in the appellate court, which was not reviewed by the Supreme Court,
*479Lady Esther, Ltd., v. Lady Esther Corset Shoppe, Inc., 317 Ill.App. 451, 46 N.E.2d 165, 167, 148 A.L.R. 6. The court said: “Counsel for defendant contends that ‘Illinois adheres to the “palming off” rule in case of unfair competition. Where there is no competition, there can be no “palming off.” Since defendant was not in competition with the plaintiff, in any manner whatsoever, plaintiff was not entitled to the injunction prayed for in its complaint.’ And in support of this four Illinois cases are cited: Stevens-Davis Co. v. Mather & Co., 230 Ill.App. 45; DeLong Co. v. Hump Hairpin Co., 297 Ill. 359, 130 N.E. 765; Johnson Mfg. Co. v. Johnson Skate Co., 313 Ill. 106, 144 N.E. 787; and Ambassador Hotel Co. v. Hotel Sherman Co., 226 Ill.App. 247. Without stopping to analyze the four cases, we think it sufficient to say that an examination of them discloses the fact that in each there was direct competition between the parties in the business each was conducting — plaintiff and defendant being engaged in the same line of business — and therefore the palming off rule was applicable.” The court then continued: “The holding in those cases, that where there was direct competition between plaintiff and defendant there must be a ‘palming off’ to warrant relief, is far from saying that courts will not grant injunctive relief where the defendant’s conduct is likely to cause confusion of the traders so that the public believes or is likely to believe that the goods of the defendant are the goods of the plaintiff, or that the plaintiff is in some way connected with or is a sponsor of the defendant. In such situation relief will be granted although there is no competition. 38 Harvard Law Review, 370-374, Eckhart v. Consolidated Milling Co., 72 Ill.App. 70; Aunt Jemima Mills Co. v. Rigney & Co., 2 Cir., 247 F. 407, L.R.A.1918C, 1039; Ward Baking Co. v. Potter-Wrightington, 1 Cir., 298 F. 398; Vogue Co. v. Thompson-Hudson Co., 6 Cir., 300 F. 509; Investors’ Syndicate v. Hughes, 378 Ill. 413, 38 N.E.2d 754; Philadelphia Storage Battery Co. v. Mindlin, 163 Misc. 52, 296 N.Y. S. 176; Edison Storage Battery Co. v. Edison Automobile Co., 67 N.J.Eq. 44, 56 A. 861.” The court quoted with approval from Harvard Law Review this language: “Courts of equity in these unfair competition cases are seeking to protect the goodwill and reputation of the plaintiff. Insistence by the courts upon the presence of competition between the parties can only be justified upon a theory that good-will and reputation can only be damaged by competitors. But such a theory is untenable, in the light of human experience. If the defendant’s conduct is likely to cause confusion of the traders, so that the public believes or is likely to believe that the goods of the defendant are the goods of the plaintiff or that the plaintiff is in some way connected with or is a sponsor for the defendant, then a sufficient case is made out for injunctive relief. The result of a contrary rule would make the good-will and reputation of the plaintiff depend not only upon the conduct of the plaintiff but also upon the acts of the defendant and the excellence, or, what is more likely, the inferiority, of his products. * * * Another change that has come with the realization of this broad basis for ‘unfair competition’ is the elimination of the requirement of ‘fraud.’ Although the law of unfair competition has evolved through the application of principles of fraud, * * * a realization that the true basis of equity’s interference in such cases is not fraud but the protection of good-will has caused many courts to question the propriety of inquiry into the defendant’s mental state.”
The Illinois court remarked that the motives of the defendant in adopting the name are immaterial, citing Eckhart v. Consolidated Milling Co., 72 Ill.App. 70, Aunt Jemima Mills Co. v. Rigney & Co., 2 Cir., 247 F. 407, L.R.A.1918C, 1039, Ward Baking Co. v. Potter-Wrightington, 1 Cir., 287 F. 398 and gave weight to the remark of the supreme court of Illinois in Investors’ Syndicate v. Hughes, 387 Ill. 413, 38 N.E.2d 754, that the modern tendency has grown to place less emphasis on competition and more on confusion. It concluded: “In the instant case we think it clear that the public might be deceived into thinking there was some connection between the defendant and the plaintiff companies. And the good-will of plaintiff, which it had built up at great expense over a period of years, would be whittled away. Courts of equity *480ought not to be so feeble as to be unable to prevent this.” Other illustrative cases may be found in the annotations of American Law Reports, 66 A.L.R. 948 et seq.
It is apparent from the Illinois authorities that they approve generally the rules announced in other jurisdictions, including the opinions of the federal courts they have cited. Apparently that rule is that which this court mentioned in California Fruit Growers Exchange v. Windsor Beverages, 7 Cir., 118 F.2d 149, 152, when we said: “The real test is whether the use of identical or similar trade-marks would be likely to cause confusion or mistake in the minds of the public.”
That likelihood of confusion exists seems to be generally recognized as sufficient to support the complaint; it is not necessary to await consummation of threatened injury before, applying for relief. Pennsylvania v. West Virginia, 262 U.S. 553, 43 S.Ct. 658, 67 L.Ed. 1117, 32 A.L.R. 300, Standard Oil Co. of New Mexico v. Standard Oil Co. of California, 10 Cir., 56 F.2d 973. Thus, in Scalise et al v. National Utility Service, Inc., 5 Cir., 120 F.2d 938, 940, the court said: “It is a wrongful act to organize a domestic corporation by the same name as that already known to be used in the state by a foreign corporation, although the foreign corporation is not domesticated, but is doing business in the state without-a permit, and an injunction will issue, not merely after the charter has been obtained to prevent the use of the name in unfair competition, but to restrain the procuring or issuing of the charter under the proposed name or if the charter has been issued, to restrain the use of the name.” To the same effect are Purcell et al. v. Summers, D.C., 54 F.Supp. 279; Id., 4 Cir., 145 F.2d 979; General Film Co. of Missouri v. General Film Co. of Maine, 8 Cir., 237 F. 64.
Defendants rely upon the fact that plaintiff has not complained of other corporations in other states using names similar to its own. I think this wholly beside the point. Acquiescence in the use of a similar name by another corporation and failure to sue are generally held to constitute no defense. Celluloid Mfg. Co. v. Cellonite Mfg. Co., C.C., 32 F. 94; Atlas Assur. Co. v. Atlas Ins. Co., 138 Iowa 228, 112 N.W. 232, 114 N.W. 609, 15 L.R.A.,N.S., 625, 128 Am. St.Rep. 189; State ex rel. Cohen v. Hinkle, 139 Wash. 651, 247 P. 1029.
I think the judgment should be affirmed.