Armstrong Paint Varnish Works v. Nu-Enamel Corporation/Opinion of the Court

The Nu-Enamel Corporation of Illinois filed its bill of complaint in a District Court of the United States in Illinois to enjoin the Armstrong Paint and Varnish Works, a corporation of the same state, from using in the sale of paints, varnishes and similar goods the words 'Nu-Beauty Enamel' or any name including the words 'Nu-Enamel' or other colorable imitation of plaintiff's registered trade-mark Nu-Enamel or otherwise infringing it; to require an accounting of profits, and to recover treble damages. Pending the litigation, the plaintiff sold its assets to the other respondent Nu-Enamel Corporation of Delaware but continued its own corporate existence. The purchaser was permitted to intervene.

The bill showed the registration by the plaintiff of Nu-Enamel under the Act of March 19, 1920, 15 U.S.C.A. § 121 et seq., Trade-Mark 308,024, for mixed paints, varnishes, paint enamels, prepared shellacs, stains, lacquers, liquid cream furniture polishes and colors ground in oil. It set out that the name 'Nu-Enamel' through wide use by plaintiff had come to mean 'plaintiff and plaintiff's products only' and the 'word 'Nu-Enamel' is a mark by which the goods of the plaintiff are distinguished from other goods of the same class.' There were further allegations that defendant had adopted the name 'Nu-Beauty Enamel' with full knowledge of prior and extensive use by plaintiff of 'Nu-Enamel'; that as a result of defendant's use of the mark 'Nu-Beauty Enamel', merchants passed off defendant's products for plaintiff's, and that the products of both manufacturers were sold in interstate commerce. An exhibit showed that plaintiff used its mark with this slogan printed above it 'The coat of enduring beauty.'

Defendant admitted 'that the name 'Nu-Enamel' has come to mean and is understood to mean, thoughout the United States, including the State of Illinois and the City of Chicago, the plaintiff and plaintiff's products only, and the word 'Nu-Enamel' is a mark by which the goods of the plaintiff are distinguished from other goods of the same class'; denied the validity but not the fact or extent of the coverage of the registration; asserted 'Nu-Enamel' was a descriptive and generic term and that it had adopted 'Nu-Beauty' in connection with enamel and kindred products before it heard of the trade-mark or trade name 'Nu-Enamel.' Defendant answered specifically that it marketed only enamels under the designation 'Nu-Beauty Enamel' and that it did not market paints and varnishes under this name. The jurisdiction of the court over the subject matter was denied.

The District Court made the following material findings of fact:

'1. Plaintiff and defendant at the time of the filing of the bill of complaint herein were and are now both citizens of the State of Illinois. The intervener, Nu-Enamel Corporation, is a corporation of the State of Delaware.

'2. 'Nu' in 'Nu-Enamel', appearing on plaintiff's label, is a phonetic spelling or misspelling of the English word 'new' and means 'new'.

'3. 'Enamel' is a common English word describing a paint which flows out to a smooth coat when applied and which usually dries with a glossy appearance, and has long been known as such in the paint industry and to the public in general.

'4. 'Nu-Enamel' used in connection with paint or enamel sold by plaintiff means 'new enamel' and is a common and generic term descriptive of the product to which it is applied and of its new or recent origin.

'5. 'Nu' was commonly used in the paint and other industries in combination with other words as a misspelling or phonetic spelling of 'new' to designate brands and kinds of enamel, paint and other commodities before plaintiff and its prodecessors adopted the name 'Nu-Enamel." It determined that 'Nu-Enamel' was not a valid trade-mark under the Trade-Mark Acts or at common law and, having so determined, refused jurisdiction of unfair competition.

The Circuit Court of Appeals reversed. That court held the trade-mark nondescriptive, valid and infringed. It was of the opinion that the mark had acquired a secondary meaning. It found that the petitioner's conduct enabled merchants to palm off the Armstrong product for 'Nu-Enamel' and concluded that the District Court had jurisdiction of the issue of unfair competition. We granted certiorari on account of the importance in trade-mark law of the issues of the descriptive character of the mark and the effect of its acquired meaning under the Trade-Mark Act of 1920, 15 U.S.C.A. § 121 et seq. 305 U.S. 580, 59 S.Ct. 64, 83 L.Ed. --.

As the petitioner concedes by answer that 'Nu-Enamel' has acquired the meaning of respondent and respondent's products only and is a mark which distinguishes respondent's goods from others of the same class, no evidence or finding is needed to establish that fact. It may be noted, also, that the allegation of the use of 'Nu-Beauty Enamel' by Armstrong on products other than enamels, fails of proof. Armstrong uses this mark on enamels only. On other products, there is the mark 'Nu-Beauty,' followed by some descriptive word, such as paint, varnish or brush.

Federal Trade-Mark Act of 1920. The registration of 'Nu-Enamel' does not create any substantive rights in the registrant. Trade-marks registered under the 1920 act may be attacked collaterally. Kellogg Co. v. National Biscuit Co., 2 Cir., 71 F.2d 662, 666.

The act forbids the unauthorized use of the registered mark in foreign and interstate commerce and adopts the procedural provisions of the Trade-Mark Act of 1905. Through the inclusion of these procedural sections the lower Federal courts are given original and appellate jurisdiction of 'all suits at law or in equity respecting trade-marks registered in accordance with the provisions of this Act, arising under the present Act' and this Court was given jurisdiction for certiorari 'in the same manner as provided for patent cases.' Section nineteen of the 1905 act, 15 U.S.C.A. § 99, vesting power to grant injunctions in trade-mark cases is applicable also to proceedings under the 1920 act. By section twenty-three, 15 U.S.C.A. § 103, former remedies in law and equity are left available. The significant distinction between the two acts is the omission in the 1920 act of the provision of section sixteen of the earlier act making the registration of a trade-mark prima facie evidence of ownership.

On its face the act shows it was enacted to enable American and foreign users of trade-marks to register them in accordance with the provisions of the convention for the protection of trade-marks and commercial names, signed at Buenos Aires in 1910. In addition section one, paragraph (b), 15 U.S.C.A. § 121(b), provides, without limitation to the export trade, for the registration of marks not registerable under section 5 of the Trade-Mark Act of 1905, 15 U.S.C.A. § 85, after one year's use in interstate or foreign commerce. This enables the (b) marks to be registered abroad.

While the Act of 1920 does not vest any new substantive rights, it does create remedies in the Federal courts for protecting the registrations and authorizes triple damages for infringement. As a consequence of these remedial provisions, when a suit is begun for infringement, bottomed upon registration under the 1920 act, the district courts of the United States have jurisdiction. Unless plainly unsubstantial, the allegation of registration under the act is sufficient to give jurisdiction of the merits. In this case the trial court concluded that the invalidity of the trade-mark divested it of jurisdiction over unfair competition. This was erroneous. Once properly obtained, jurisdiction of the one cause of action, the alleged infringement of the trade-mark, persists to deal with all grounds supporting it, including unfair competition with the marked article. The cause of action is the interference with the exclusive right to use the mark 'Nu-Enamel.' If it is a properly registered trade-mark, a ground to support the cause of action is violation of the Trade-Mark Act. If it is not a properly registered trade-mark, the ground is unfair competition at common law. The facts supporting a suit for infringement and one for unfair competition are substantially the same. They constitute and make plain the wrong complained of, the violation of the right to exclusive use.

In the Oursler Case there was a valid copyright which was held not infringed. Here the trial court determined the trade-mark was invalid. The Oursler Case held that where the causes of action are different, the determination that the federal cause fails calls for dismissal. But where there is only one cause of action we do not consider that the holding of the invalidity furnishes any basis for a distinction between this and the Oursler Case. Registration of 'Nu-Enamel' furnished a substantial ground for federal jurisdiction. That jurisdiction should be continued to determine, on substantially the same facts, the issue of unfair competition.

Registration of Descriptive Mark under 1920 Trade-Mark Act. Even though under the facts alleged and the admission that respondent's mark has acquired a secondary meaning the Federal courts have jurisdiction to determine whether petitioner is chargeable with unfair competition, it becomes necessary to determine whether registration of 'Nu-Enamel' is permissible or impermissible under the Act of 1920 in order that it may be known whether section four, the basis of the prayer in the bill for triple damages, is applicable. Section one (b) of the 1920 act, 15 U.S.C.A. § 121(b) permits registration of the marks used for one year in interstate commerce which were not registerable under the Act of 1905 'except those specified in paragraphs (a) and (b) of section 5 (section 85 of this chapter)' of the Act of 1905, 15 U.S.C.A. § 85(a, b). That section is set out below. The point raised is whether the phrase'except those specified in paragraphs (a) and (b) of section 5 (section 85 of this chapter)' of the 1905 act is effective to bar not only marks, contra bonos mores, under (a) and marks, infra dignitatem, under (b) but also the following provisos, particularly the one concerned with descriptive words or devices.

It seems clear that the mark 'Nu-Enamel' is descriptive of a type of paint long familiar to manufacturers, with the addition of the adjective new, phonetically spelled or misspelled. Obviously this slight variation from the orthographic normal is not unusual. Numerous illustrations of such use by paint and varnish manufacturers are given by petitioner in its answer. The trade-mark is registered by the Nu-Enamel Corporation for a variety of products from enamels through paint brushes to glue, solder and tack rags. It is quite true that the mark is not descriptive as applied to many of respondent's products but the use by petitioner, the Armstrong Company, of which the Nu-Enamel Corporation complains is the use of 'Nu-Enamel' or 'Nu-Beauty Enamel.' This use, Armstrong answers and the evidence supports the assertion, is confined to the enamels. We must therefore consider the case as though the only products of Nu-Enamel Corporation were enamels. As applied to them it is descriptive.

That the mark is descriptive of paint enamels does not bar it from registration as to them under the 1920 act. This has been the construction of the Patent Office. To construe (b) of the 1920 act to bar names, descriptive marks and merely geographical terms would make the subsection useless. The obvious purpose of its inclusion was to widen the eligibility of marks. A dictum has expressed a view contrary to that of the Patent Office.

This administrative interpretation, contemporary with the legislation, and the legislative history have weight'when choice is nicely balanced.' We construe section 1(b) of the 1920 act to be applicable to the categories expressed in Section 5 of the Act of 1905 under (a) and (b) including the first proviso but not to include the other provisos of (b). This conclusion is fortified by the addition of the proviso to section one (b) of the 1920 act, relating to identical trade-marks. The proviso in section 5(b) of the 1905 act refusing registration to identical marks in much the same language was construed in Thaddeus Davids Co. v. Davids Mfg. Co., 233 U.S. 461, 34 S.Ct. 648, 58 L.Ed. 1046, Ann.Cas.1915B, 322, as not permitting the registration of such marks when used for ten years under the fourth, now fifth, proviso of that section. We think that Congress in adopting the corresponding proviso in subsection (b) of the 1920 act, must be taken to have adopted the accepted construction of the similar proviso of the 1905 act. If the language of the 1920 act had been intended to exclude from registration all the classes excluded by the provisos of section five of the 1905 act, it would have been unnecessary to include this proviso.

This Court has had several occasions within the last few years to construe statutes in which conflicts between reasonable intention and literal meaning occurred. We have refused to nullify statutes, however hard or unexpected the particular effect, where unambiguous language called for a logical and sensible result. Any other course would be properly condemned as judicial legislation. However, to construe statutes so as to avoid results glaringly absurd, has long been a judicial function. Where, as here, the language is susceptible of a construction which preserves the usefulness of the section, the judicial duty rests upon this Court to give expression to the intendment of the law.

Remedies. Registration under the 1920 act conferred no substantive rights in the registered mark but it does permit suits in the Federal courts to protect rights otherwise acquired in the marks. The 1905 act, section one, 15 U.S.C.A. § 81, authorizes the 'owner' to obtain registration of eligible trade-marks; section two, 15 U.S.C.A. § 82, require the applicant to make oath that he 'believes himself * *  * to be the owner of the trade-mark'; section five, 15 U.S.C.A. § 85 refers to the 'owner of the mark'; section sixteen, 15 U.S.C.A. § 96, then declares that 'the registration of a trade-mark under the provisions of this Act (subdivision of this chapter) shall be prima facie evidence of ownership'; section 23, 15 U.S.C.A. § 103, reserves all remedies at law or in equity which any party aggrieved by the wrongful use of his trade-mark would have had without the Act of 1905.

The 1920 act omits the quoted portion of section sixteen as to the effect of registration as prima facie evidence of ownership. Under section one, 15 U.S.C.A. § 121, the register includes all marks communicated to the Commissioner of Patents by the international bureaus provided for by the Buenos Aires convention of 1910 and all other marks not registerable under the Trade-Mark Act of 1905, with the exceptions discussed in the preceding section of this opinion, in bona fide use by the proprietor thereof for one year in commerce other than intrastate. Section four, which protects the trade-mark, is substantially the same as section sixteen of the 1905 act, except for the omission of the prima facie presumption of ownership. It is the owner who has the rights of action under this act, unaided by any presumption from registration. The owner, on the other hand, is not limited in any way by the Act, as section 23 of the Act of 1905 is made specifically applicable. This section preserves the legal and equitable remedies to an aggrieved owner. The Committee on Patents in the Senate was quite positive that the effect of the act on domestic rights was nil. The registrant acquires by the acceptance of his mark under the 1920 act the right to proceed in the Federal courts against infringers and to recover triple damages if he can establish his ownership of the trade-mark at common law.

'Nu-Enamel' is descriptive of the enamels in issue. The use on the numerous other articles of respondent's manufacture, in its advertising, on store window valances, on electric and other displays, and as the name of many stores and the sign of several thousand dealers, justify petitioner's concession that the name means respondent and respondent's products only and the word distinguishes its goods from others of the same class. But a mark which is descriptive is not a good trade-mark at common law.

It was said in Thaddeus Davids Co. v. Davids Mfg. Co., that names registered under the last proviso of section 5 of the 1905 act, 15 U.S.C.A. § 85, became technical trade-marks upon valid registration under that act. Assuming that descriptive terms in this respect would be analagous to proper names, there are clear distinctions between the acts. The 1920 act does not define 'trade-mark' to include any mark registered under its terms, as does section 29 of the 1905 act, 15 U.S.C.A. § 108. Remedies are afforded registrants under the 1920 act but these remedies are for 'owners,' and actual and exclusive use, short of a secondary meaning, does not qualify a registrant under the 1920 act as an owner. That ownership must be established by proof. Unless this ownership is established, no rights of action under the 1920 act for infringement exist. Here we have a secondary meaning to the descriptive term, 'Nu-Enamel.' This establishes, entirely apart from any trade-mark act, the common law right of the Nu-Enamel Corporation to be free from the competitive use of these words as a trade-mark or trade name. As was pointed out in the Davids Co. Case, in considering the ten-year clause of the 1905 act, 15 U.S.C.A. § 85, this right of freedom does not confer a monopoly on the use of the words. It is a mere protection against their unfair use as a trade-mark or trade name by a competitor seeking to palm off his products as those of the original user of the trade name. This right to protection from such use belongs to the user of a mark which has acquired a secondary meaning. He is, in this sense, the owner of the mark. We agree with the conclusion of the Circuit Court of Appeals that infringement is shown.

The rights of Nu-Enamel Corporation to be free of the competitive use of 'Nu-Enamel' may be vindicated, also, through the challenge of unfair competition, as set out in the bill. The remedy for unfair competition is that given by the common law. The right arises not from the trade-mark acts but from the fact that 'Nu-Enamel' has come to indicate that the goods in connection with which it is used are the goods manufactured by the respondent. When a name is endowed with this quality, it becomes a mark, entitled to protection. The essence of the wrong from the violation of this right is the sale of the goods of one manufacturer for those of another.

The questions as to damages, profits, and the form of the decree will be passed upon more appropriately by the trial court. The decree of the Circuit Court of Appeals reversing the decree of the District Court is affirmed and this cause is remanded to the District Court with directions to proceed in conformity with the opinion of this Court.

It is so ordered.

Affirmed and cause remanded.