Court Opinion

ID: 9639979
Source: CourtListenerOpinion
Date Created: 2023-08-22 16:54:23.651454+00
Date Added: 2024-06-11T18:10:24.397186
License: Public Domain

O’CONNELL, Associate Judge
(dissenting).
The subject matter of the appeal nowise involves the issue that a proper license agreement is valid and does not indicate abandonment on the part of the owner, since appellant from the outset of the proceedings heretofore begun in the Patent Office has consistently prosecuted its petition upon the basic principle that where the mark is used in no such manner as to cause the mark to lose its significance as an indication of origin and to deceive the public, the owner thereof may authorize others, including subsidiaries and those who are completely independent, to legitimately use the mark on goods produced under his supervision and control or, in other words, without effecting its abandonment.
By the specific terms of the license agreement, the Aniline Corporation was granted a “personal license” and was to act as “one” of appellee’s agents “for the purpose of affixing labels” bearing the trademark Celanese to packages containing the said dyestuffs, and no other product, manufactured by “Aniline” and by it sold to the public. The agreement further contemplated the additional use of appellee’s mark by such “other agents” as appellee might appoint for the same or other purpose.
The Aniline Corporation, was to have the right on its own account to publish in circulars and other advertising matter that its dyestuffs were designated by the trademark Celanese, and, to protect 'itself, appellee reserved the right to .veto all such circulars and advertising matter, which were first to be submitted to appellee and by it approved in writing prior to the circulation and distribution thereof. Appellee specifically reserved the further right to inspect at any time the quality of “Aniline’s” dyestuffs marketed by it under the name Celanese, and to terminate the license “upon six (6) months notice in writing.”
There is no evidence before the court, however, and there was none before the tribunals of the Patent Office, that these rights were actually exercised by appellee, as appellee filed no answer and took ■ no testimony but elected to rely solely upon its motion to dismiss.
The primary issue therefore involves the sole and elementary question raised by the *491pleadings of whether the registration of the mark Celanese is invalid and has become abandoned because that name, by-reason of the described license agreement and appellee’s conduct in connection with the performance thereof, no longer constitutes a means whereby the goods of appellee may be distinguished from goods of the same class marketed by other vendors under the provisions of the Act of 1905.
The examiner in his dismissal of appellant’s petition, it will be noted, relied primarily upon the case of Mathy v. Republic Metalware Company, 35 App.D.C. 151. In addition to the Mathy case he cited, among others, the case of Smith v. Dental Products Co., Inc., et al., 7 Cir., 140 F.2d 140.
The commissioner in reaching the identical conclusion relied upon the Mathy case; but in further support of his position quoted the excerpt from the opinion in the Smith case which is accurately quoted also in the prevailing opinion, and to which appellant has offered no objection as a correct statement of the law applicable to the facts recited in the Smith case.
The Commissioner of Patents correctly stated the established rule of evidence that the action of an owner who assigns his mark to another for use on goods of the same descriptive properties, and apart from the business with which the mark has been used, thereby effects the abandonment of his mark; and no proof whatever of his clear intent to do so is further required from the person alleging such abandonment, “because the assignment is conclusive evidence of his [assignor’s] intent to abandon.”
Appellant has contended and here contends that the identical rule of evidence applies to one who has likewise licensed his mark, and-relies upon the holding to that effect by this court in the Hollingshead case, supra, and upon other citations or holdings to the same effect by courts throughout the nation, including the Supreme Court of the United States.
The commissioner overruled appellant’s contention on the ground that one who licenses his mark without the business with which the mark has been used does not thereby abandon the mark, and that such a license does not constitute conclusive evidence of an intent to abandon the mark, where the licensor reserves his own right to continue the concurrent use of the mark, and the license granted is nonexclusive and subject to termination by the licensor. This court in the prevailing opinion has approved and ratified that decision.
It is not deemed important to quote the text of the well-known provisions of the sections of the Act of 1905 which are here involved, but it is important to note that in addition to sections 5 and 13, sections 2 and 12 of the act have a bearing on the issue.
What Congress had in mind in the enactment of sections 2 and 5 was the clear and obvious intent to prohibit the registration of a trade-mark calculated to deceive the public with respect to the origin of goods by reason of the fact that the applicant for registration did not have the right to the exclusive use of the mark on goods of the same descriptive properties at the date of his application for registration. In re Laskin Brothers, Inc., 146 F.2d 308, 32 C.C.P.A. Patents 820; Crown Fabrics Corporation v. American Viscose Corporation, 145 F.2d 246, 32 C.C.P.A., Patents, 701. In the enactment of section 12, Congress provided in effect that an existing registration which has not become abandoned shall be renewable upon request by the registrant or his successors in interest.
However, the action of appellee whereby it voluntarily divested itself of the right to the exclusive use of its mark apart from the business with which the mark has been used, and caused the mark to be used by another on identical goods, constituted an abandonment of the mark within the purview of section 13 of the Act of 1905. R. M. Hollingshead Corp. v. Davies-Young Soap Co., 121 F.2d 500, 28 C.C.P.A., Patents, 1286, 1292; Everett O. Fisk & Co., Inc., v. Fisk Teachers’ Agency, Inc., et al., 8 Cir., 3 F.2d 7, 9; McKesson & Robbins, Inc., v. Charles H. Phillips Chemical Co., 2 Cir., 53 F.2d 342 and 1011; Chas. H. Phillips Chemical Co. v. McKesson & Robbins, 285 U.S. 552, 52 S.Ct. 407, 76 L.Ed. 942. See also American Photographic Publishing Co. v. Ziff-Davis Publishing Co., 127 *492F.2d 308, 29 C.C.P.A., Patents, 1014; In re La Monte & Son, 146 F.2d 302, 32 C.C.P.A., Patents, 806, 808; E. F. Prichard Co. et al. v. Consumers Brewing Co., 6 Cir., 136 F.2d 512.
The examiner in the present case found “that in a number of instances, at least,” American Aniline Products, Inc. had not complied with the condition contained in the agreement with respect to giving notice in advertisements of appellee’s ownership of the mark Celanese. On this point, the examiner held that failure by appellee’s licensee to observe that specific condition of the agreement “could not well enlarge the limited right of use granted the licensee in the agreement.”
On the same point, the commissioner held: “Contrary to this latter provision of the license agreement, it appears that the licensee has frequently advertised the mark without reference to respondents ownership, and without respondent’s approval. But it seems to me that this constitutes nothing more than a breach of contract on the part of the licensee, which may hardly be said to work an abandonment of its trade-mark rights by respondent, or to evidence an intent to abandon.” (Italics not quoted)
In rendering those decisions the tribunals ot the Patent Office entirely overlooked the predominant fact that such frequent breach of the agreement by appellee’s licensee constituted a series of acts each and all of which would be likely to deceive the public as to the origin of the goods. This is doubly true-in the case at bar because “Celanese” is not only the appellee’s trademark but also the appellee’s corporate name. Moreover, those decisions completely disregarded the admitted fact that at least a portion of such advertising material was circulated by the Aniline Corporation over a period of years with “the knowledge and approval” of appellee.
In any event the question of such advertising, while important, as an element of deceit, is not in itself of controlling influence herein. The tribunals of the Patent Office had the false conception that the situation in the instant case, as explained by the examiner, “in its essentials is identical with that involved in the Mathy case, supra.” The situation in the Mathy case, in its essentials, is identical with that involved in the Smith case but not with those essentials involved in the instant case.
The situation in each of those two cases in the court of equity discloses that the marketed merchandise during the existence of the license agreement had but the one source of origin in the licensor and no other person, that the mark was used in no such manner as to deceive the public, and that those two decisions were rendered in accordance with the accepted rule of law that, as against his licensee, the owner of a trade-mark does not lose such ownership by the mere grant of the privilege of the use of the mark by his licensee in connection with the owner’s business when the goods are produced under his supervision and control. No such situation exists in the case at bar.
The Commissioner of Patents referring to the Smith and Mathy cases properly stated in his decision that “In each of those cases it was held that a license from the original proprietor to use a trade-mark did not result in abandonment, and the exclusive rights of the licensor were restored upon termination of the license.”
In making such a statement the commissioner failed to consider, however, that in restoring the mark to the licensor, the court in each of those two cases held that the goods were produced under the owner’s supervision and control, and properly applied the law that a trade-mark in order to be a valid one must indicate origin of the goods in a particular vendor and that the mark cannot be assigned or its use licensed apart from the business with which the mark is used.
Appellant here, as in the Patent Office, asserted and relied upon the authority of the Plollingshead case. With reference thereto appellee submits the following criticism in its brief: “The appellant appears to believe that the mere granting of a license constitutes an abandonment of the mark, and relies on the quotation to that effect in R. M. Hollingshead Corp. v. Davies-Young Soap Co., 121 F.2d 500, 28 C.C. P.A.Patents, 1286. It is .pointed out that *493this is merely dictum and was not required for a decision of the case which was decided on the basis of a contract between the parties directly involved in the case and not on the basis of a contract with a third party as is involved in the present case. The Examiner of Interferences shows fully the irrelevance of this decision (R. 30). * $ *»
The basic issue in the Hollingshead case was the validity of the appellant’s existing trade-mark, by virtue of the license agreement therein set forth, and was there raised in an opposition proceeding. The court, as properly stated in the opinion, might have affirmed the decision appealed from on that ground alone, and thereby required that the issue be deferred and decided in a cancelation proceeding as provided by section 13 of the Trade-Mark Act of 1905. The court, however, was not content to rely upon that procedure and decided the issue on its merits, as had been done in that case by the tribunals of the Patent Office.
With reference to appellee’s quoted criticism it is noted that appellant has nowhere contended or evinced a belief that the granting of a proper license constitutes an abandonment of the mark, nor has it relied “on the quotation to that effect” in the Hollingshead case, for there is no quotation to that effect in that case. That quotation together with other pertinent facts of the case are recited in the prevailing opinion herein.
The court there correctly held, in effect, and by a unanimous decision, that a license of a mark for use, as in the present case, on a particular product, and no other, apart from the business with which the mark had been used, constituted an abandonment of the mark and rightfully so. Furthermore, the invalidity of appellee’s trade-mark in the present case, as in the Hollingshead case, is challenged by appellant on the basis of a contract between the parties directly involved in the agreement.
The irrelevance of the decision in the Hollingshead case by no means has been shown by the Examiner of Interferences or anjmne else. The examiner’s decision was that in the instant case the agreement between the parties “* * * does not purport to acknowledge the possession of an exclusive right in the mark by other than the respondent [appellee]; and the doctrine enunciated in R. M. Hollingshead Corp. v. Davies-Young Soap Co., supra, is therefore deemed to have no bearing upon the question of respondent’s [appellee’s] right of registration.”
That decision by the examiner ignored the fact conceded by appellee from the outset, that it had no right to the exclusive use of the mark under the agreement and that appellee had thereby granted its concurrent use to another for identical goods. Appellee in its brief here states “ * * * In the present case, appellee was not entitled to stop use of its trade mark by American Aniline, since it was granted a license.”
In this connection, it will be noted that six months must elapse under the actual terms of the agreement before appellee’s intent to terminate the agreement could possibly take effect.
While the -facts are varied, the principle of law applied by this court in refusing the registration of the mark in the La Monte case hereinbefore cited is applicable in the present case to the effect that the exclusive use of a trade-mark is to indicate origin, and when the mark loses that distinguishing feature, it is considered an invalid mark. Furthermore, in the Fisk case hereinbefore cited, which presents a state of facts quite similar to those in the instant case, the court upon the basis of a wide accumulation of competent authority held that the abandonment of a trade-mark may be inferred from circumstances evidencing the intention of the owner to discontinue the distinctiveness of the mark as indicating origin.
Appellant also asserted and relied upon the authority of other cases in the proceedings heretofore begun in the Patent Office. The commissioner stated with reference to two of such citations:
“Petitioner cites Macmahan Pharmacal Co. v. Denver Chemical Mfg. Co., 113 F. 468, 51 C.C.A. 302, from which the Court of Appeals of the District of Columbia, in Mayer Fertilizer & Junk Co. v. Virginia-Carolina Chemical Co., 35 App.D.C. 425, *4941910 C.B. 399, quoted the following statement:
“ ‘A trade-mark cannot he assigned, or its use licensed, except as incidental to a transfer of the business or property in connection with which it has been used.’
“The latter case did not involve a license, however; and it is interesting to note that the decision was rendered less than two months after the decision in the Mathy case, supra, and that both were written by the same judge. And in the opinion from which the quoted language was taken, it may properly be characterized as dictum.”
In thus noting with interest that the decision in the Mayer case was rendered less than two months after the decision in the Mathy case and both opinions were written by the same judge, the commissioner failed to note that the judge who wrote both opinions applied the same doctrine in his disposition of the Mathy case that he quoted from the Macmahan Pharmacal Co. case. Moreover, this court, in effect, has recently applied the doctrine in question in a case in which no assignment was involved. See In re Laskin Brothers, Inc., supra.
It has been held in any number of cases that the registration of an invalid or abandoned trade-mark cannot be maintained in a cancelation proceeding against a party who deems himself injured or subject to further injury by the maintenance of such registration. See American Photographic Publishing Co. v. Ziff-Davis Publishing Co., supra; Penetrene Corp., etc., v. Plough, Inc., 121 F.2d 539, 28 C.C.P.A.,Patents, 1307, 1312; McKesson & Robbins, Inc., v. Charles H. Phillips Chemical Co., supra; R. M. Hollingshead Corp. v. Davies-Young Soap co., supra.
Therefore, since appellee’s mark admittedly no longer serves to indicate origin of the described dyestuffs solely in appellee, and since appellant is deemed injured by appellee’s registration, under the provisions of section 13 of the Trade-Mark Act of 1905 and the authorities hereinbefore cited, appellant obviously was entitled to prevail in the proceedings it had heretofore begun in the Patent Office on the ground that appellee’s mark has become abandoned.
The prevailing opinion cites no competent authority which constitutes any valid basis for (he conclusion therein expressed to the effect that the doctrine of the Hollingshead case on the point here in issue is merely dictum and should be overruled. That is an erroneous action because, in addition to what has been hereinbefore stated, the doctrine of the Hollingshead case is based upon the universally accepted principle that where the mark is used in such-manner as to cause the mark to lose its significance as an indication of origin and -to deceive the public, such use effects the abandonment of the mark and its registration should be canceled. Appellee by its own admission has established the existence of the same situation in the case at bar, and in accordance with that principle and under the authorities hereinbefore cited, the decision of the Commissioner of Patents should be reversed. In view of that conclusion, it is deemed unnecessary to discuss herein other questionable points which have been made in the prevailing opinion.
With reference to the Act of July 5, 1946, which has taken force and effect since the decision was rendered by the Commissioner of Patents, it is my view that, contrary to appellee’s contention, the provisions of section 5 of the new act may not be applied to the subject matter of the appeal for appellee’s benefit, since such application is not otherwise specifically provided for in the act as required by section 46(a) ; and that the equitable principles of estoppel and acquiescence, as applied in the analogous situation in the Fisk case hereinbefore cited, should be applied by the court to the subject matter of the appeal for the benefit of appellant and against the appellee.
For the reasons hereinbefore stated, the decision of the Commissioner of Patents should be reversed.