Saxlehner v. Eisner Mendelson Company/Opinion of the Court

This case involves the question of plaintiff's exclusive right to the use of the name 'Hunyadi' as a trademark for Hungarian bitter waters, as well as her right to the red and blue label and its characteristic features used by her upon the bottles in which she has been accustomed to sell 'Hunyadi Janos' water.

From the foregoing summary of the facts it appears:

1. That Saxlehner was the first to appropriate and use the name 'Hunyadi' as a trademark for bitter waters, and that such name being neither descriptive nor geographical, but purely arbitrary and fanciful as applied to medicinal waters, was the proper subject of a trademark.

2. That in the shape of his bottles, the design of his capsules and his labels, he was originally entitled to be protected against a fraudulent imitation.

3. That the defendant is selling a water under the name of 'Hunyadi Matyas' in bottles of the same size and shape as the plaintiff's containing a label in three parallel panels of the same colors, size, and general design as those of the plaintiff; that their general appearance is such as to deceive the casual purchaser; and that such bottles and labels were evidently designed for the purpose of imposing the defendant's waters upon the public as those of the plaintiff. A moment's comparison of the two labels will show that, while the printed matter upon each is different from that upon the other, their general resemblance is such as would be likely to mislead the public into the purchasing of one for the other. While the proprietors of the 'Hunyadi Matyas' water undoubtedly found a justification for their use of the word 'Hunyadi' in the decision of the minister of agriculture of 1873, that decision did not cover the use of the simulated label, the adoption of which seems to have been an act of undisguised piracy.

Practically, the only defenses pressed upon our attention are those of abandonment and laches.

1. To establish the defense of abandonment it is necessary to show not only acts indicating a practical abandonment, but an actual intent to abandon. Acts which unexplained would be sufficient to establish an abandonment may be answered by showing that there never was an intention to give up and relinquish the right claimed. ''Singer Mfg. Co. v. June Mfg. Co.'' 163 U.S. 169, 186, 41 L. ed. 118, 125, 16 Sup. Ct. Rep. 1002; Moore v. Stevenson, 27 Conn. 14; Livermore v. White, 74 Me. 452, 43 Am. Rep. 600; Judson v. Malloy, 40 Cal. 299; Hickman v. Link, 116 Mo. 123, 22 S. W. 472. And in a recent English case this doctrine has been applied to a case of trademarks. Mouson v. Boehm, L. R. 26 Ch. Div. 398. With regard to the defense of abandonment, it may with confidence be said that there is but very slight evidence of any personal intention on the part of Andreas Saxlehner or his wife to abandon the use of the word 'Hunyadi' or dedicate the same to the public, and none at all of an intent to abandon the peculiar bottles and labels in connection with which he sold his waters. In fact, Saxlehner's whole life was a constant protest against the use by others of the name 'Hunyadi.' He discovered his spring in 1862, and in 1863 obtained permission to give it the name of Hunyadi Spring. He carried on an uninterrupted trade under that name until 1872. It also appears from the certificate of the Chamber of Commerce and Industry that the trademark 'Hunyadi Janos' was, on December 12, 1872, registered, and that previously to such registration no trademark was entered in which the name 'Hunyadi' or 'Janos' was contained. It further appears that Ignatius Markus had no sooner petitioned the town council for a license to apply to his spring the name of 'Hunyadi Matyas' than Saxlehner entered his protest, and was at first successful, but was finally defeated, and that upon the strength of this decision other springs were opened by various parties under trademarks, of which the word 'Hunyadi' was the principal component. At that time, owing to the inefficacy of the Hungarian laws upon the subject of trademarks, he could do no more. In 1877 he registered the trademark 'Hunyadi Janos' in the Patent Office of the United States. In 1884 he registered both his red and white and red and blue labels in the Buda-Pesth Chamber of Commerce, the latter being intended for use by the Apollinaris Company. In 1887 he instituted an unsuccessful suit in Hungary, against the use of the words 'Hunyadi Josef.' Upon the passage of the Hungarian law of 1890, legalizing the use of pictorial trademarks, the plaintiff again registered the three labels, and in the following year instituted suits against all infringers in Hungary, which finally resulted in a complete establishment of her rights to the name of 'Hunyadi.' In 1887 Saxlehner registered the word 'Hunyadi' as his trademark in the Patent Office of the United States, and in 1895, when the act for the protection of verbal trademarks was enacted, plaintiff registered the same word in Hungary. Saxlehner appears, however, to have successfully protested against Mattoni & Wille's registration of 'Hunyadi Matyas' in Germany. In June, 1896, plaintiff also instituted a suit against the Apollinaris Company in England, and obtained a final injunction against the illegal use of the name 'Hunyadi.' In the decree of the court of chancery, which is reproduced, it was ordered that the Apollinaris Company deliver up to the plaintiff for destruction all labels, trade documents, and capsules in their possession which, by reason of their exhibiting the name 'Hunyadi,' are capable of being used for business in the United Kingdom for any Hungarian bitter water not being Hunyadi Janos water. Immediately upon the determination of the Hungarian litigation, and in the spring of 1897, plaintiff began these suits.

There is nothing in these facts tending to show an abandonment by Saxlehner or the plaintiff of their rights either in the name of Hunyadi or in the labels, unless it be the fact that the trademark registered in the United States in 1887 contained the words 'Hunyadi Janos,' which, it is insisted, was a waiver of a right thereafter to register the name 'Hunyadi' alone. That position, however, assumes that, in the absence of such re-registration, other dealers would have the right to seize upon and appropriate the principal word 'Hunyadi' of the prior trademark, provided they changed the final word and substituted another. We are not prepared to indores this contention. It is not necessary to constitute an infringement that every word of a trademark should be appropriated. It is sufficient that enough be taken to deceive the public in the purchase of a protected article. It was said by Vice Chancellor Shadwell, in 1847, 'that if a thing contains twenty-five parts and but one is taken, an imitation of that one will be sufficient to contribute to a deception, and the law will hold those responsible who have contributed to the fraud.' Guinness v. Ulmer, 10 Law Times, 127. While this may be a somewhat exaggerated statement, the reports are full of cases where bills have been sustained for the infringement of one of several words of a trademark. Shrimpton v. Laight, 18 Beav. 164; Clement v. Maddick, 1 Giff. 98; Hostetter v. Vowinkle, 1 Dill. 329, Fed. Cas. No. 6,714; Morse v. Worrell, 10 Phila. 168, 9 Am. L. Rev. 368; Grillon v. Guenin, Weekly Notes (1877), 14; ''American Grocer Pub. Asso. v. Grocer Pub. Co.'' 25 Hun, 398. It would seem that the registration in 1887 of the single word 'Hunyadi' was really unnecessary for the protection of Saxlehner's rights, though we see no reason for holding the former registration an estoppel. The evidence shows that these Hungarian bitter waters were largely known in this country as Hunyadi waters, and that in a certain sense Hunyadi had become a generic word for them. Of course, if it became such with the assent and acquiescence of Saxlehner, he could not thereafter assert his right to its exclusive use. But as this appropriation was made against his constant protest, and as he apparently made every effort in his power to put a stop to the use of it, it ought not to be charged up against his claim that the word had become generic.

It is contended, however, that the conduct of the Apollinaris Company was such as to show an abandonment both of the name and label, and that plaintiff is estopped by their act in further asserting title to them. This defense presupposes that the Apollinaris Company had power to bind Saxlehner by its admission and contract. Certainly the contract gave it no such power in express terms. Saxlehner did not purport to make the company his agent. He agreed to sell the company a certain number of cases of his water at a certain price, and also agreed to sell to no one else during the pendency of the contract. It was agreed that their consignments should carry the label 'Sole importers, Apollinaris Company, Limited, 19 Regent street, London, S. W.' The company agreed not to compete with Saxlehner upon the continent, and upon his part he agreed to make over to the company all orders arising from countries reserved to it, as well as to refuse such orders where he had good reason to suppose they were intended for such countries. This is practically all there is of the contract. No agreement was made with respect to the trademark or the goodwill of the business, and the company reserved the right, which it subsequently exercised, of canceling the contract upon notice. While such contract may have authorized the company to prosecute infringers here, and in the conduct of those particular suits Saxlehner may have been bound, it did not agree to do so or preclude the institution of other suits by him, nor was there any authority on the part of the company to bind him by its admissions.

The conduct of the Apollinaris Company, relied upon as evidence of abandonment, consists principally in the discontinuance of the two suits against Ungar and Andres after preliminary injunctions had been obtained (Saxlehner was not shown to have had knowledge of these suits); of a conversation between Mendelson, treasurer of the defendant company, and Steinkopf, a director of the Apollinaris Company in London, in which Mendelson spoke of his intention to sell the Hunyadi Matyas water, of which he had obtained control, and Steinkopf stated 'that he could have no objection to that; that there were other Hunyadi waters,' and of some other statements equally unimportant. There is little in any of these indicative of an intent on the part of the Apollinaris Company to abandon its exclusive right to the use of the word 'Hunyadi' in America. Certainly, nothing indicative of such an intent on the part of Saxlehner, whose conduct in Hungary was wholly inconsistent with that theory. Evidence that the Apollinaris Company intended to abandon an exclusive right to the name 'Hunyadi' might be sufficient as against them to defeat a suit for an injunction, but would not be binding upon the plaintiff unless done with her knowledge and acquiescence.

2. The defense of laches depends upon somewhat different considerations, and, so far as it applies to the use of the word 'Hunyadi,' we think it is established. It appears that after the decision of the minister of agriculture in 1873 sustaining the claim of Markus to the trademark 'Hunyadi Matyas,' other springs were opened whose waters were bottled under different trademarks, in all of which the word 'Hunyadi' was a component, and as early as 1886 these waters found their way to the United States, and were put on sale here with the knowledge of the Apollinaris Company. There is no evidence that Saxlehner had personal knowledge of these infringements, and while something may be said in his favor in view of his persistent efforts to establish his rights in Hungary, he was bound to know the law in this country, and to take steps within a reasonable time to vindicate his rights. The infringers were making use of their trademarks under licenses from the Hungarian government, and we see no reason to doubt that they were proceeding in good faith to dispose of their waters under the trademarks registered in Hungary. Under these circumstances, if Saxlehner had intended to assert his rights, under the laws of this country, to the exclusive use of the word 'Hunyadi,' he was bound to act with reasonable promptness. It is true that he may have supposed the Apollinaris Company would assert his rights in that particular for their own benefit; but if, as we have already held, he was not bound by their admissions, he is in no position to take advantage of their inaction, and, as against traders who were selling bitter waters under trademarks legalized by the Hungarian government, he should not have waited until the name 'Hunyadi' had become generic in this country, and indicative of this whole class of medicinal waters.

We do not find it necessary to decide exactly what effects shall be given to the various decrees of the Hungarian ministers and courts. It is quite sufficient to observe that the use of the words 'Hunyadi Matyas' was expressly sanctioned within the Kingdom of Hungary by the minister of agriculture in 1873, and it would seem that under our treaty with the Austro-Hungarian Empire of June 1, 1872 (17 Stat. at L. 917), the right to use the word became available in the United States. By the first article of this treaty 'every reproduction of trademarks which, in the countries or territories of the one of the contracting parties, are affixed to certain merchandise. . . is forbidden in the countries or territories of the other of the contracting parties:' and by the same article, 'If the trademark has become public property in the country of its origin, it shall be equally free to all in the countries or territories of the other of the two contracting parties.' In view of the decision of the minister of agriculture of 1873, sustaining the trademark 'Hunyadi Matyas,' and the subsequent adoption of the word 'Hunyadi' in connection with some other word by numerous proprietors of similar waters, it seems to be clear that the word became, and continued to be for twenty years, public property in the Kingdom of Hungary, and it is difficult to escape the conclusion that it also became so here. It is true the law of Hungary was subsequently changed in this particular, and that the courts of that country held the plaintiff entitled to the benefit of that change; but it needs no argument to show that, if the word once became public property here, a subsequent change in the law in her own country would not inure to the advantage of the plaintiff here. The right to individual appropriation once lost is gone forever.

If, upon the other hand, we assume that the case can be decided without reference to the law of Hungary or the decisions of its officers and courts, the plaintiff is still at a disadvantage by reason of not instituting her suits more promptly. Saxlehner knew, as a matter of fact, that the minister of agriculture had overruled his protest, and that the word 'Hunyadi' had become public property in the Kingdom of Hungary. He knew that a large number of dealers would appropriate the word, and that he was himself selling a large quantity of bitter water in the United States. He must also have known, or at least had good reason to know, that his competitors were doing the same thing. Under such circumstances he should have instituted inquiries upon his own account, and, regardless of his contract with the Apollinaris Company, have seen to it that his own interests were protected. If the Apollinaris Company were not his agent for the protection of his rights in the United States, then it was incumbent upon him to assert such rights personally or through some other recognized medium. In now invoking our laws, his successor is bound to show that she has complied with our requirements of diligence and promptness in instituting suit. She has failed in this particular. By twenty years of inaction she has permitted the use of the word by numerous other importers, and it is now too late to resuscitate her original title.

3. This argument, however, has but a limited application to the appropriation of the bottles and red and blue labels covering them, which appear to have been seized upon by the proprietors of the Matyas spring as well as by others, without a shadow of justification and in fraud of plaintiff's rights. As already stated, Saxlehner, when he began selling his water, adopted not only the name 'Hunyadi Janos,' but a straight bottle with a short neck, to the top of which was attached a metal capsulewith an inscription, as well as a peculiar label, covering almost the whole body of the bottle, divided into three rectangular panels of red and white, which at the time of his contract with the Apollinaris Company was changed to red and blue, so far as it applied to waters sold to that company for the American market. A narrow strip on the top of the label was added, containing the imprint of the Apollinaris Company as importers, and from 1876, the date of the contract, until 1886 the business was carried on by the Apollinaris Company in this country without any important competitors. In 1886, however, Mattoni & Wille began to consign 'Hunyadi Matyas' bitter water to New York, put up in bottles bearing a red and white label. In 1889 the Eisner & Mendelson Company, defendant herein, made a contract with Mattoni & Wille, by which it obtained the sole agency for the United States and Canada for the sale of their bitter waters for the term of twenty years. During 1889 and 1890 defendant imported some 20,000 bottles under the name of 'Royal Hungarian Bitter Water,' under a red and white label devised by themselves. In 1890 the defendant took a new lease for five years, with an option for a renewal for twenty years, from Mattoni of the Hunyadi Matyas spring. The circuit court found in this connection that 'the reason which induced Eisner to make this lease was his desire to control the American label, so that neither Mattoni & Wille nor European purchasers could interfere with the American trade. A new label was therefore forthwith devised by Eisner, which was a reddish brown and blue label, and is described in the complaint containing the name 'Hunyadi Matyas,' 'Buda Keser uviz' and a medallion portrait of King Stephen in the center of the red division. He intentionally simulated the Saxlehner United States label for the purpose of obtaining, by means of the simulation, a part of the goodwill which the Janos water had gained.' [88 Fed. Rep. 61.]

We are pointed to no decision of the Hungarian authorities authorizing the use of Saxlehner's label by other parties. The petition of Markus did not ask for permission to use it. The decision of 1873 did not grant it. The decree favorable to Saxlehner did not mention it, but dealt only with the name 'Hunyadi.' Notwithstanding repeated violations of his label, he seems to have been unable to obtain redress on account of the inefficacy of the laws until 1896, when a competitive trademark was ordered to be canceled in his favor by reason of its resemblance to Saxlehner's label, as well as by the use of the word 'Hunyadi.' In all his applications, both in Hungary and the United States, for the registration of his trademark name, there is an express reservation of his right to the medallion head of Hunyadi and to his label. Indeed, we find no authority whatever for the appropriation of this label by any of Saxlehner's competitors, and nothing to show that it was not a case of undisguised piracy. The only justification for its appropriation now insisted upon is the fact that, by general use in this country for the past ten years, it has come to be recognized as a kind of generic label applicable to all Hungarian bitter waters, and if Saxlehner had originally an exclusive right to make use of it, that right has been lost by his acquiescence and that of the Apollinaris Company in its general use by other importers. But in cases of actual fraud, as we have repeatedly held, notably in the recent case of McIntire v. Pryor, 173 U.S. 38, 43 L. ed. 606, 19 Sup. Ct. Rep. 352, the principle of laches has but an imperfect application, and delay even greater than that permitted by the statute of limitations is not fatal to plaintiff's claim. We have only to refer to the cases analyzed in that opinion for this distinguishing principle that, where actual fraud is proved the court will look with much indulgence upon the circumstances tending to excuse the plaintiff from a prompt assertion of his rights. Indeed, in a case of an active and continuing fraud like this, we should be satisfied with no evidence of laches that did not amount to proof of assent or acquiescence.

As applicable to trademarks, two cases in this court are illustrative of this principle. In Mclean v. Fleming, 96 U.S. 245, 24 L. ed. 828, there had been apparently a delay of about twenty years in instituting proceedings, but the court observed that 'equity courts will not, in general, refuse an injunction on account of delay in seeking relief where the proof of infringement is clear, even though the delay may be such as to preclude the party from any right to an account for past profits.' An injunction was granted in this case, but it was held that by reason of inexcusable laches, the complainant was not entitled to an account of gains or profits. See also Harrison v. Taylor, 11 Jur. N. S. 408. An effort was made in Menendez v. Holt, 128 U.S. 514, 32 L. ed. 526, 9 Sup. Ct. Rep. 143, to obtain a reconsideration of the principle of McLean v. Fleming, so far as it was therein held that an injunction might be awarded, though the complainant were precluded by his delay from obtaining an account of gains and profits. But the Chief Justice observed: 'The intentional use of another's trademark is a fraud; and when the excuse is that the owner permitted such use, that excuse is disposed of by affirmative action to put a stop to it. Persistence then in the use is not innocent, and the wrong is a continuing one, demanding restraint by judicial interposition when properly invoked. Mere delay or acquiescence cannot defeat the remedy by injunction in support of the legal right, unless it has been continued so long and under such circumstances as to defeat the right itself,. . . nor will the issue of an injunction against the infringement of a trademark be denied on the ground that mere procrastination in seeking redress for depredations had deprived the true proprietor of his legal right. (Fullwood v. Fullwood, L. R. 9 Ch. Div. 176.). . . So far as the act complained of is completed, acquiescence may defeat the remedy on the principle applicable when action is taken on the strength of encouragement to do it, but so far as the act is in progress and lies in the future, the right to the intervention of equity is not generally lost by previous delay, in respect to which the elements of an estoppel could rarely arise.'

In the case under consideration we do not see how it is possible to wring an abandonment on the part of Saxlehner or the plaintiff from the repeated and persistent efforts made by them in Hungary to assert their rights. But it was not until the law was amended in 1895 that these efforts were successful. It can scarcely be wondered at that, in view of the disabilities under which he labored in his own country, Saxlehner should have thought it futile to undertake the prosecution of his rights in a distant land. As the defendant is unable to call to his assistance any authority from the home government for the use of these simulated labels, and as they and their vendors in Hungary seized upon these labels with knowledge of Saxlehner's rights, it is no hardship to enjoin their further use, and to hold defendant liable for such profits as it may have realized or for such damages as the plaintiff may have sustained by reason of the illegal use.

It seems, however, that in 1893 the defendant company began to affix to their bottles of Matyas water an additional label, consisting of a red seal upon a white ground, and containing the words, 'Ask for the Seal brand. This label has been adopted to protect the public from imitation and as a guarantee of the genuineness of the Hunyadi Matyas Water imported solely by Eisner & Mendelson Co., New York.' The attention of druggists was called to this Seal brand by advertisements in the trade papers. The circuit court was of opinion that, as the word 'Hunyadi' had become generic, and was no longer subject to individual appropriation, this label was a sufficient attempt on the part of defendant to assert that it was the seller of the Matyas water, and that from its adoption it freed the defendant from the charge, which before that time was true, that it was cajoling or deceiving the ordinary purchaser into the belief that he was buying the Janos water; and in its decree refused to enjoin the defendant from selling such water under the red and blue label bearing the name 'Hunyadi Matyas' in connection with the Seal brand label.

We are of opinion, however, that as defendant's bottle and label are a clear infringement upon those of the plaintiff, it would be destructive to her just rights to permit the use of such bottles and labels by the defendant, notwithstanding the affixing of the Seal brand, which is a mere private mark of the importer. The injury to her is in the simulation of her bottle and label, and she has the right to require that her competitors shall be forced to adopt a style of bottle which no one with the exercise of ordinary care can mistake for hers. While this label may have been adopted in good faith, we do not think its employment would prevent the casual customer from purchasing this water as that of the plaintiff, and that the injunction should also go against its use and that plaintiff should recover her damages therefor.

We are therefore of opinion that the decree of the Circuit Court of Appeals must be reversed, and the case remanded to the Circuit Court for the Southern District of New York, with directions to reinstate its decree of April 29, 1898, except so far as it denies to the plaintiff an injunction against the use of the Seal brand labels and damages sustained by such use, and for further proceedings not inconsistent with the opinion of this court.