Draft July 28, 2006 Please do not circulate or cite without permission The Normative Foundations of Trademark Law

64 Id. at 139-140 (emphasis added).

65 7 Beavan 84 (Rolls Court 1843).

66 Id. at 88.

67 2 Ves. 226

68 Id. at __. See also See Hall v. Barrows, 4 D. J. & S. 150, 159 (1863) (“Imposition on the public is indeed necessary for the plaintiff’s title, but in this way only, that it is the test of the invasion by the defendant of the plaintiff’s right of property; for there is no injury if the mark used by the defendant is not such as is mistaken, or is likely to be mistaken, by the public for the mark of the plaintiff; but the true ground of this Court’s jurisdiction is property, and the necessity of interfering to protect it by reason of the inadequacy of the legal remedy.”).

69 See Reynolds v. Clarke, 92 Eng. Rep. 410 (K.B. 1726) (“[I]f a man throws a log into the highway, and in the act it hits me, I may maintain trespass, because it is an immediate wrong; but if as it lies there I tumble over it, and receive an injury, I must bring an action upon the case; because it is only prejudicial in consequence, for which originally I could have no action at all.”). For a very brief general discussion of the difficulty of distinguishing trespass and case, see Richard A. Epstein, Cases and Materials on Torts, 90-99 (8th ed. 2004).

70 See Section __ below.

71 See Perry v. Truefitt, 6 Beavan 66. Thus, the mark owner’s stake, both at law and in equity, was its returning customers. Compare Bone, Hunting Goodwill at 19 (“Because trademark law was based on preventing fraud and the fraud at question was perpetrated on the public at large, it was not clear what individual stake the trademark owner had that could justify injunctive relief.”).

72 See, e.g., Croft v. Day, 7 Beav. 84, 89-90 (1843) (noting that the decision to enjoin the defendant was not dependant on “any peculiar or exclusive right of the Plaintiffs” but on the fact that the Defendant was using the mark “in a manner calculated to mislead the public, and to enable the Defendant to obtain, at the expense of [the Plaintiff], a benefit for himself, to which he [was] not, in fair and honest dealing, entitled.”). As the court said in Farina v. Silverlock, 6 De. G. M. & G. 214, 217 (1856), a plaintiff’s right to “equity is founded on the jurisdiction of [courts of equity] to give relief in the shape of preventive justice in order to make more effectual a legal right, the legal right [in trademark cases] being a right to have a particular trade-mark to designate a commodity.”

73 See Farina, 6 De G. M. & G. 214 (in case where plaintiff’s mark consisted of a label in a certain form and there was evidence that labels the same or similar to it might be sold for a legitimate purpose, and where there was no proof of actual fraud, the court would refrain from entering an injunction until plaintiff established his case at law). See also, Edmund Robert Daniell, The Practice of the High Court of Chancery 1516 (2nd ed. 1845) (“if the legal right is disputed, the Court does not, except in a strong case, interfere in the first instance by injunction, but it puts the party upon establishing his right at Law before it confers the equitable remedy.”); Croft v. Day, 7 Beav. at 87 (noting cases in which the injunction is granted at once and those in which the injunction is refused until the plaintiff has established his right at law).

74 Rodgers v. Nowill, 5 C.B. 109 (1847) for example reflects the court’s recognition that it was forced to deal with the case as one of the recognized forms. In that case, counsel responded to the judge’s question “Is this an action on the case for a deceit?” by noting that “there is no other title under which such an action can be classed.” Id. at 116.

75 Like its English predecessor, American trademark law was predominantly a product of judicial decision. Prior to the first federal Trademark Act in 1870, statutory protection, to the extent it existed, was highly trade-specific. Massachusetts, for example, passed a law specifically regulating the use of marks on sail-cloth and the sail-makers pressed Congress for federal protection. See Schechter, Historical Foundations at 130-32. The first federal trademark legislation in 1870 was followed by additional legislation in 1876 that imposed criminal sanctions against one who fraudulently used, sold or counterfeited trademarks. 19 Stat. 141. Both statutes ultimately were declared unconstitutional in The Trademark Cases, 100 U.S. 82, 99 (1879). Even after the Trademark Act of 1870, trademark law remained a creature of common law. The Lanham Act, passed in 1946, is widely noted to have predominantly codified existing common law. See 15 U.S.C. § 1051 et seq.

76 2 Sand. Ch. 586, 7 N.Y. Ch. Ann. 713 (C.C.N.Y. 1845).

77 Id. at __.

78 5 N.Y.Leg.Obs. 94, 2 Barb.Ch. 101, 5 N.Y. Ch. Ann. 572, 47 Am.Dec. 281 (CCNY 1847).

79 2 Barb. Ch. at 103

80 Upton, supra note __ at 2.

81 80 U.S. 311 (1871)

82 Id at 322-23.

83 See, e.g., Derringer v. Plate, 29 Cal. 292, 294-95 (1865); Blackwell v. Armistead, 3 F.Cas. 546, 548 (W.D. Va. 1872); Trade-Mark Cases, 100 U.S 82, 92 (1879); Avery & Sons v. Meikle & Co., 4 Ky.L.Rptr. 759 (1883). See also, Schechter, Historical Foundations at 141-44, 150-53, 154 n.1. (and cases cited therein).

84 Thus, even if English law and equity decisions did reflect a deeper disagreement about the basis of trademark protection, decisions of American courts reveal no similar disagreement.

85 See Oliver R. Mitchell, Unfair Competition, 10 Harv. L. Rev. 275, 275 (1896) (“Logically speaking, the fact is that Unfair Competition is properly a generic title, of which trade mark is a specific division.”).

86 “The entire substantive law of trademarks … is a branch of the broader law of unfair competition. The ultimate offense always is that defendant has passed off his goods as and for those of the complainant.” G. & C. Merriam Co. v. Saalfield, 198 F. 369, 373 (6th Cir. 1912); see also, Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 412-13 (1916) (“The essence of the wrong consists in the sale of the goods of one manufacturer or vendor for those of another. This essential element is the same in trademark cases as in cases of unfair competition unaccompanied with trademark infringement. In fact, the common law of trademarks is but a part of the broader law of unfair competition.”) (internal citations omitted); Moseley v. V Secret Catalogue, Inc., 537 U.S. 418, 428 (2003) (“Traditional trademark infringement law is part of the broader law of unfair competition, that has its sources in English common law …) (internal citations omitted).

87 Herbert Spencer, The Morals of Trade (1859), quoted in Hopkins, supra note __ at author’s note p. vi (emphasis added).

88 Hopkins, supra note __ at § 2 at 2-3 (emphasis added). According to Hopkins, commentators had argued that the right of those engaged in commerce to be subjected to none but fair competition, upon which unfair competition law is based, is “closely allied” to recognized property rights in patents and copyrights. Id.

89 Id. at § 2, at 3.

90 Technical trademarks were arbitrary terms applied particularly to articles that were sold. restatement (third) of unfair competition § 9 (1993). See also McCarthy § 4:4 (defining technical trademarks as marks that were “fanciful, arbitrary, distinctive, non-descriptive in any sense and not a personal name”).

91 Tradenames then cumulatively can be thought to comprise what we now think of as indicators which lack inherent distinctiveness and are protectable only with evidence of secondary meaning.

92 See Note 70, supra.

93 See Schechter, Historical Foundations at 161

94 See Hanover Star Milling, 240 U.S. at 413 (Th[e] essential element is the same in trade-mark cases as in cases of unfair competition unaccompanied with trade-mark infringement.”); Hopkins, supra note __ at § 4 at 12 (“The principles involved in trademark cases and tradename cases have been substantially identical.”).

95 “The qualified right in the tradename [or a trademark], a right to prevent a defendant from passing off his goods as those of the plaintiff by the use of it – exists only with regard to goods of the kind for which the plaintiff uses it, and to which the connection with his business suggested by the use of the name extends.” Hopkins at § 5 at 15 quoting Kerly on Trademarks 475 ( 2d. ed. London 1901).

96 See, e.g., Marsh v. Billings, 61 Mass. 322, 330 (1851).

97 Hopkins, supra note __ at § 2 at 3 (“It is true, as well, that the development of the law of the technical trademark tended to encourage the buccaneers of commerce to invent new and subtler means of stealing another’s trade without trespassing upon his trademark rights. But the law, steadily though slowly, extended its bulwark of protection about the legitimate trader, until at length he was afforded legal redress in some form, not always adequate or complete, against the fraudulent diversion of his trade, in whatever form it might appear.”). See also, Oliver R. Mitchell, Unfair Competition, 10 Harv. L. Rev. 277, 284 (1896) (“In every unfair competition case the defendant’s attempt is to appropriate to himself some part of the good will, or the entire good will, of the plaintiff’s business.”).

98 2 Sandf. 599 (N.Y. Super. 1849)

99 Id. At 605. Note that, although he would elaborate on the harm, Justice Duer framed the issue in terms of the rights of the trademark owner.

100 Id. at 605-06. See also Alff & Co. v. Radam, 14 S.W. 164 (1890) (plaintiff entitled to protection against deception not because of his trademark, but because of fraud and deception practiced by the defendant upon the plaintiff and the public); Goldwyn Pictures Corp. v. Goldwyn, 296 F. 391 (2d Cir. 1924) (noting that, in unfair competition cases, fraud is the basis of the complaint and the court acts to promote honesty and fair dealing, and because no one has a right to sell his own goods as the goods of another; the court seeks to protect the purchasing public from deception and also the property rights of the complainant).

101 Upton, supra note __ at 15-16. Foreshadowing contemporary economic justifications of trademark protection, Upton noted that a trademark is “the means, and in many instances, the only means, by which [the manufacturers] are enabled to inspire and retain public confidence in the quality and integrity of the things made and sold – and thereby secure for them a permanent and reliable demand – which is the life of manufacturing and mercantile operations. And it is also… the only means, by which the public is protected against the frauds and impositions of the crafty and designing …” Id.

102 Upton, supra note __ at 13.

103 35 Conn. 402 (1868)

104 Id. at __. See also, Taylor v. Carpenter, 2 Sand. Ch. 603, 604 (1846) (“It is a fraud upon both the trademark owner and the public to allow another to deceive purchasers and … to deprive the owners thereof of the profits of their skill and enterprise.”); William D. Shoemaker, Trade-Marks, Vol. I, 4 (1931) (“This protection is afforded, not only as a matter of justice to him, but to prevent imposition upon the public.”):

105 One commentator did claim that “the interference of courts of equity, instead of being founded upon the theory of protection to the owner of trademarks, is now supported mainly to prevent fraud upon the public.” Charles E. Coddington, a Digest on the law of trademarks § 36 (1878). The authorities Coddington cites, however, do not support his conclusion. In fact, each of the cases he cites fairly clearly seeks to protect the mark owner from trade diversion. In Lee v. Haley, for example, the court held that, while the plaintiff had no exclusive right in the name Guinea Coal Company, “the principle upon which the cases on this subject proceed is, not that there is a property in the word, but that it is a fraud on a person who has established a trade, and carries in on under a given name, that some other person should assume the same name, or the same name with a slight alteration, in such a way as to induce persons to deal with him in the belief that they are dealing with the person who has given a reputation to the name.” Lee v. Haley 5 Chy. App. Cas. (Law R.) 155, 161 (1869) (emphasis added). In Wotherspoon v. Currie, the court noted that “the employment of [a name that has become a trade denomination and as such the property of a particular person who first gives it to a particular article of manufacture] by another person for the purpose of describing an imitation of that article, is an invasion of the right of the original manufacturer, who is entitled to protection by injunction.” 5 Eng. & I. App. (Law R.) 508, (1872). See also, Id. At 521-22 (Lord Westbury referring to the Glenfield mark as plaintiff’s property).Newman v. Alvord is the only one of Coddington’s cases that even mentions a benefit to consumers, and it makes the consumer benefit a secondary one. Newman v. Alvord, 51 N.Y. 189, 193, 195 (NY Sup. Ct. 1877) (stating, in the summary preceding the decision that “the principle upon which relief is granted is that defendant shall not be permitted by the adoption of a trade-mark which is untrue and deceptive, to sell his own goods as those of plaintiff, thus injuring the latter and defrauding the public” and noting several times that the defendant “injured the plaintiff and defrauded the public”). Thus, it is probably no surprise that Coddington’s was a rather isolated opinion. See Hopkins, supra note __ at § 19 at 40a n. 21 (arguing that Coddington “erred in ascribing [fraud on the public] as the only reason for trademark protection. The prevention of fraud upon the person whose goods are pirated is equally important and cogent.”).

106 See, e.g., Zippo Mfg. v. Rogers Imports, Inc., 216 F. Supp. 670, 694-95 (S.D.N.Y. 1963) (“the law of unfair competition has traditionally been a battleground for competing policies. The interest of the public in not being deceived has been called the basic policy. Moreover, a plaintiff’s interest in not having the fruit of his labor misappropriated should not be disregarded. But there is also the policy of encouraging comepetition from which the public benefits.”); Norwich Pharmacal Co. v. Sterling Drug, Inc., 271 F.2d 569, 570-71 (2d Cir. 1959), cert. denied, 362 U.S. 919 (1960) (“Distaste for sharp or unethical business practices has often caused the courts to lose sight of the fundamental consideration in the law of unfair competition – protection of the public.”).

107 4 De G.J. & S. 137 (1863).

108 Id. at 141.

109 Id.

110 44 F. 277 (C.C.E.D. Pa. 1890)

111 Id. at 278-79

112 Pillsbury-Washburn Flour Mills Co. v. Eagle, 86 F. 608 (7^th Cir. 1898), cert denied 173 U.S. 703 (1899), provides an interesting comparison. In that case, the plaintiffs consisted of all the companies milling flour in Minneapolis, and the court granted them injunctive relief against the defendant, which was located in Chicago and sold flour milled in Milwaukee under the “Minnesota Patent” label. Joseph Bauer suggests that the case reflects a broader understanding of unfair competition law since the court rejected the “property right” prerequisite suggested by the Rosendale Cement and American Washboard cases when it said that “in cases where the question is simply one of unfair competition in trade it is not essential [that] there should be any exclusive or proprietary right in the words or labels used, in order to maintain the action.” Joseph P. Bauer, A Federal Law of Unfair Competition: What Should Be The Reach of Section 43(a) of the Lanham Act?, 31 U.C.L.A. L. Rev. 671, 676 (1984). But, as we have seen, a proprietary right was never a prerequisite to unfair competition relief – the lack of such a proprietary right only meant that the plaintiff had to prove intent to pass off. In the Pillsbury case, the plaintiffs could quite plausibly allege that the defendants were diverting trade that otherwise would have gone to them since they collectively comprised all of the companies milling flour in Minneapolis.

113 Rosendale, 44 F. at 279. Where a plaintiff used a geographic designation to which it did not have exclusive rights, it was forced to demonstrate that the defendant intended to sell its products as those of the plaintiff in order to prevail. See Newman v. Alvord, 51 N.Y. 189 (1872) (finding for plaintiff, which had no exclusive right to designate its cement as originating from “Akron,” on the ground that the plaintiff was the sole manufacturer of cement from stone near Akron at the time of the suit and the defendant sought to sell its goods as those of the plaintiff); Lea v. Wolf, 13 Abb.Pr.(N.S.) 389 (N.Y. Sup. 1872) (holding that plaintiff had no exclusive right to designate its product “Worcestershire sauce,” since that mark consisted of the name of the place the sauce was manufactured and the descriptive name of the article, but granting an injunction against defendant’s use of labels and wrappers that so resembled plaintiff’s that defendant’s intent to divert plaintiff’s customers was clear); Anheuser-Busch Brewing Ass’n v. Piza, 24 F. 149 (S.D.N.Y. 1885) (holding that Anheuser-Busch had no exclusive right to “St. Louis Lager Beer,” but granting injunction since AB was the only party exporting beer under that name, and the defendant, who was not from St. Louis, sought to divert AB’s trade by misleading customers); Southern White Lead Co. v. Cary, 25 F.125 (N.D. Ill. 1885) (holding plaintiff entitled to injunction where defendants stamped their kegs “Southwestern, St. Louis” in the same form as plaintiff stamped its kegs “Southern Company, St. Louis,” and where there was evidence defendants’ kegs could be and were sold as the plaintiff’s).

114 80 U.S. 311 (1871).

115 Canal Co. v. Clark, 80 U.S. 311, 323 (1871) (“No one can claim protection for the exclusive use of a trade-mark or trade-name which would practically give him a monopoly in the sale of any goods other than those produced or made by himself. If he could, the public would be injured rather than protected, for competition would be destroyed.”).

116 Id. at 327.

117 Id. at 327. Commentators often refer to the bar on claiming descriptive terms as trademarks as evidence of concern for consumers. Canal Co. does provide some support for that view, given its statement that “[n]o one can claim protection for the exclusive use of a trade-mark or trade-name which would practically give him a monopoly in the sale of any goods other than those produced or made by himself. If he could, the public would be injured rather than protected, for competition would be destroyed.” Id. at 323. But to read Canal Co. v. Clark that way would be to take one statement out of context and ignore the rest of that decision, which recognized the potential for confusion but still determined that the defendant’s actions were legitimate.

118 103 F. 281 (6^th Cir. 1900).

119 Today, such a false description of the nature of one’s product would be a clear violation of § 43(a) of the Lanham Act. See 15 U.S.C. § 1125(a).

120 American Washboard, 103 F. at 285. Importantly, the court was only concerned about the defendant fraudulently stealing consumers by passing off its goods as those of the plaintiff. Id. at 284-85. One could easily describe the defendant as having fraudulently stolen American Washboard’s customers. There is no doubt that the defendant misrepresented to consumers that its product was made of aluminum. Id. at 285; see also Bauer, supra note __ at 673 n.17. And since plaintiff in that case was the only domestic manufacturer of aluminum washboards, and as a result, defendant’s sales clearly came at the plaintiff’s expense. But the plaintiff could not show that any such trade diversion resulted from the defendant’s passing off its goods as the plaintiff’s.

121 American Washboard, 103 F. at 284.

122 Id. (emphasis added); see also Bates Mfg. Co. v. Bates Numbering Mach. Co. 172 F. 895 (C.C.N.J. 1909) (quoting American Washboard); Avery & Sons v. Meikle & Co., 4 Ky.L.Rptr. 759, __ (1883) (fraud upon the public is not sufficient to invoke jurisdiction unless probable or possible injury to plaintiff is shown).

123 201 F. 510 (7th Cir. 1912).

124 Id. at 513. Very similar language appears in Taylor v. Carpenter, 23 F.Cas. 742 (C.C.D. Mass. 1844); The Trademark Cases, 100 U.S. 82, 93-94 (1879);; Chadwick v. Covell, 23 N.E. 1068 (1890) (Holmes, J.); Crescent Tool Co v. Kilborn & Bishop, 247 F. 299 (2d Cir. 1917); Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 413-15 (1916); Mishawaka Rubber & Woolen Mfg. Co. v. S.S. Kresge Co., 316 U.S. 203, 206-07 (1942).

125 Rosendale, 44 F. at 279; American Washboard, 103 F. at 285 (“It is doubtless morally wrong and improper to impose upon the public by the sale of spurious goods, but this does not give rise to a private right of action unless property rights of the plaintiff are thereby invaded. There are many wrongs which can only be righted through public prosecution, and for which the legislature, and not the courts, must provide a remedy.”)

126 See, e.g., Levy v. Walker, L.R. 10 Ch. Div. at 448 (“If there is any misleading, that may be for the Criminal Courts of the country to take notice of, or for the Attorney-General to interfere with, but an individual Plaintiff can only proceed on the ground that, having established a business reputation under a particular name, he has a right to restrain any one else from injuring his business by using that name.”). See also, Schechter, Historical Foundations at 143. Depending on the accuracy of the various reports of Southern v. How, a claim on behalf of the defrauded purchaser might well have been what the court was contemplating there.