United Drug Co. v. Theodore Rectanus Co.

delivered the opinion of the court.

This was a suit in equity brought September 24, 1912, in the United States District Court for the Western District of Kentucky, by the present petitioner, a Massachusetts corporation, against the respondent, a Kentucky corporation, together with certain individual, citizens of the latter State, to restrain infringement of trade-mark and unfair competition.

The District Court granted an injunction against the corporation defendant pursuant to the prayer of the bill. 206 Fed. Rep. 570 . The Circuit Court of Appeals reversed the decree and remanded the cause with directions to dismiss the bill. 226 Fed. Rep. 545 . An appeal was allowed by one of the judges of that court, and afterwards we allowed a writ of certiorari. Pursuant to a stipulation, the transcript of the record filed for the purposes of the-appeal was treated as a return to the writ. Under § 128, Judicial Code, as amended by Act of January 28, 1915, c. 22, § 2, 38 Stat. 803 , the appeal must be dismissed, and the cause will be determined on the writ of certiorari.

Meanwhile, about the year 1883, Theodore Rectanus, a druggist in Louisville, familiarly known as “Rex,” employed this word as a trade-mark for a medicinal prepara- . tion known as a “blood purifier.” He continued this use to a considerable extent in Louisville and vicinity, spending money in advertising and building up a trade, so that—

Petitioner’s first use of the word "Rex” in connection with the sale of drugs in Louisville or vicinity was in April, 1912; when two shipments of “Rex Dyspepsia Tablets,” aggregating 150 boxes and valued at $22.50, were sent to one of the “Rexall” stores in that city. Shortly after this the remedy was mentioned by name in local newspaper advertisements published by those stores. In' the previous September, petitioner shipped a trifling amount — five boxes — to a drug store in Franklin, Kentucky, approximately 120 miles distant from Louisville. There is nothing to. show that before this any customer in or near Kentucky had heard of the Regis remedy, with or without, the description “Rex,” or that this word ever possessed any meaning to the purchasing public in that State except as pointing to Rectanus and the Rectanus Company and their “blood purifier.” That it did and does convey the latter meaning in Louisville and vicinity is proved without dispute. Months before petitioner’s first shipment of its remedy to Kentucky, petitioner was distinctly notified (in June, 1911,) by one. of its Louisville distributors that respondent.'was. using the word “Rex” to designate its medicinal preparations, and that such use had been commenced by Mr. Rectanus as much as 16 or 17 years before that time.

There 'was nothing to sustain the allegation of .unfair competition, aside from the question of trade-mark infringement. As to this, both courts found, in substance, that the use of the same mark upon different but somewhat:

The entire argument for the petitioner is summed up in the contention that whenever the first user of a trade-mark ha^-been reasonably diligent in extending the

The asserted doctrine is based upon the fundamental error of supposing that a trade-mark right is a right in gross or at large, like a statutory copyright or a patent for an invention, to either of which, in truth, it has little or no analogy. Canal Co. v. Clark, 13 Wall. 311 , 322; McLean v. Fleming, 96 U. S. 245 , 254. There is no such thing as property in a trade-mark except as a right appurtenant to an established business or trade in connection .with which the mark is employed. The law of trade-marks is but a part of the broader law of unfair competition; the right to a particular mark grows out of its use, not its mere adoption; its function is simply to designate the goods as the product of a particular trader and to protect his good will against the sale of another’s product as his; and it is not the subject of property except in connection with an existing business. Hanover Milling Co., v. Metcalf, 240 U. S. 403 , 412-414.

The owner of a trade-mark may not, like the proprietor

In truth, a trade-mark confers no monopoly whatever in a proper sense, but is merely a convenient means for facilitating the protection of one’s good-will in trade by placing a distinguishing mark or symbol — a commercial signature — upon the merchandise or the package in which it is. sold. •,

It results that the adoption of a trade-mark does not, at least-in the absence of some valid legislation enacted for the purpose, project the right of protection in advance of the extension of the trade, or operate as a claim of territorial rights over areas into which it thereafter may be deemed desirable to extend the trade. And the-expression, sometimes met with, that a trade-mark right is not limited in its enjoyment by territorial bounds, is true only in the sense that wherever the trade goes, attended by the use of the mark, the right of the trader to be protected against the sale by others of their wares in the place of his wares will be sustained.

Property in trade-marks and- the right to their exclusive use rest upon the laws of the several States, and depend upon them for security and protection; the power of Congress to legislate on the subject being only such as arises from the authority to regulate commerce with foreign nations, and among the several Státes and with the Indian tribes. Trade-Mark Cases, 100 U. S. 82 , 93.

Conceding everything that is claimed in behalf, of the petitioner, the entire business conducted by Mrs. Regis and her firm prior to April, 1911, when petitioner acquired it, was confined to the New England States with inconsiderable sales in New York, New Jersey, Canada, and Nova Scotia. There was nothing in all of this to give her

It is not' contended, nor is there ground for the contention, that registration of the Regis trade-mark under either the Massachusetts statute or the act of Congress, or both, had the effect of enlarging the rights df Mrs. Regis or of petitioner beyond what they would be under common-law principles. Manifestly, the Massachusetts statute (Acts 1895, p. 519,' c. 462) could have no extraterritorial effect. And the Act of Congress of March 3, 1881, c. 138, 21 Stat. 502 / applied only to. commerce with foreign nations or the Indian tribes, with either of which this case has nothing to do. See Ryder v. Holt, 128 U. S. 525 . Nor is there any provision making registration equivalent to notice of rights claimed thereunder. The Act of February 20, 1905, c. 592, 33 Stat. 724 , which took the place of the 1881 Act, while extending protection to trade-marks used in interstate commerce, does not en

Undoubtedly, the general rule is that, as between conflicting claimants to the right to use the .same' mark, priority of appropriation determines the question. See Canal Co. v. Clark, 13 Wall. 311 , 323; McLean v. Fleming, 96 U. S. 245 , 251; Manufacturing Co. v. Trainer, 101 U. S. 51 , 53; Columbia Mill Co. v. Alcorn, 150 U. S. 460 , 463. But the reason is that purchasers have come to understand the mark as indicating the origin of the wares, so that its use by a second producer amounts to an attempt to sell his goods as those of his competitor. The reason for the rule does not extend to a ease where the same trademark happens to be employed simultaneously by two manufacturers in different markets separate and remote from each other, so that the mark means one thing in one market, an entirely different thing in another. It would be a perversion of the rule of priority to give it such an application in our broadly extended country that an innocent party who had in good faith employed a trademark in one State, and by the use of it had built up a trade there, being the first appropriator in that jurisdiction, might afterwards be prevented from using it, with consequent injury to his trade and good-will, at the instance of one who theretofore had employed the same mark but only in other and remote jurisdictions, upon the ground that its first employment happened to antedate that of the first-mentioned trader.

In several cases federal courts have held that a prior use of a trade-mark in a foreign country did not entitle its owner to claim exclusive trade-mark rights in the United States as against one who in good faith had adopted a like trade-mark here prior to the entry of the foreigner into this market. Richter v. Anchor Remedy Co., 52 Fed.

The same point .was involved in Hanover Milling Co. v. Metcalf, 240 U. S. 403 , 415, where we said: “In. the ordinary case of parties competing under the same mark , in the same market, it is correct to say that prior appropriation settles the question. But where two parties independently are employing the same mark upon goods of thé same class, but in separate markets wholly remote the one from the other, the question of prior appropriation is legally insignificant, unless at least it appear that the second adopter, has selected the mark with some design inimical to the interests of the first mser, such as to take the benefit of the reputation of his goods; to forestall the extension of his trade, or the like.”

In this case, as already remarked, there is no suggestion of a sinister purpose on the part of Rectanus or .the Rectanus Company; hence the passage quoted correctly defines the status of the parties prior to. the time where, they came into: competition in the Kentucky market. And it results, as a necessary inference from what we' have said, that petitioner, being the newcomer in that market," must enter' it -subject to whatever rights had previously been acquired there in good faith by the Rectanus Company and its predecessor. To hold otherwise — to require Rectanus to retire from the field upon the entry of Mrs. Regis’ successor — would be to establish the right of-the latter as a right in gross, and to extend it to territory wholly remote from the furthest‘reach of the trade to which it was annexed, with the effept not merely of depriving Rectanus of the benefit of the good-will resulting from his ^long-continued use of the mark in Louisville and vicinity, and his substantial expenditures in building up his trade, but of enabling petitioner to reap substantial benefit from the publicity that Rectanus.

■ In support of its contention petitioner cites the same cases that were relied upon by the District Court, namely, McLean v. Fleming, 96 U. S. 245 ; Menendez v. Holt, 128 U. S. 514 ; Saxlehner v. Eisner & Mendelson Co., 179 U. S. 19 , 39; and Saxlehner v. Siegel-Cooper Co., 179 U. S. 42 . They exemplify the rule that, where the proof of infringement is clear, a court of equity will not ordinarily refuse an injunction for the future protection of the proprietor of a trade-mark right, even where his acquiescence and laches have been such as to disentitle him to an accounting for the past profits of the infringer. The rule finds appropriate application in cases of conscious infringement or fraudulent imitation, as is apparent from a reading of the opinions in those cases; but it has no pertinency to such a state of facts as we are now dealing with. In McLean v. Fleming, the only question raised in this court that affected the right of the appelleé to an injunction was whether the Circuit Court had erred .in finding that defendant’s labels “Dr. McLean’s Universal Pills,” etc., infringed complainant’s label “Dr. ó. McLane’s Celebrated Liver Pills,” and this turned upon whether the similarity was sufficient to deceive ordinarily careful purchasers. The evidence showed without dispute that from the beginning of his use of the offending labels the defendant (McLean) had known of the McLane liver pills, and raised at least a serious question whether he did not adopt his labels for the purpose of palming off his goods as those of complainant. What he controverted was that his labels amounted to an infringement of complainants, and when this was decided against him the propriety of the injunction was clear. In Menendez v.

Here the essential facts are so closely, parallel to those that furnished the basis of decision in the Allen & Wheeler Case, reported sub nom. Hanover Milling Co. v. Metcalf, 240 U. S. 403 , 419-420, as to render further discussion unnecessary. Mrs. Regis and her firm, having during a long period of years confined their use of the “Rex” mark to a limited territory wholly remote from that in con-, troversy, must be held to have taken the risk that some innocent party might in the meantime hit upon the same mark, apply it to goods- of similar character, and expend money and effort in building up’ a trade under it; and since it appears that Rectanus in good faith, and without notice of any prior use by others, sélected and used the “Rex” mark, and by the expénditure of money and effort succeeded in building up a local but valuable, trade under it in Louisville 0 nd vicinity before petitioner entered that field, so that “Rex” had come to be recognized there as the “trade signature” of Rectanus and of respondent as his successor) petitioner is estopped to set up their continued use of the mark in that territory as an infringement of the Regis trade-mark. Whatever confusion may have

Decree affirmed.