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

II.A Second Look At Early Trademark Protection

The use of marks to identify and distinguish one’s property dates to antiquity, and regulations regarding use of those marks is almost as old. Much of the history has been investigated thoroughly, and I do not intend to offer a complete historical account here.²⁴ This article focuses in particular on the traditional normative premises of American trademark. Understanding the origins of American trademark law, however, necessarily requires historical context, including some understanding of the English trademark law on which American law explicitly was based.

AMedieval Marks as Liabilities

Scholars have identified a number of ways in which individuals and producers historically have used distinguishing marks. Most basically, merchants used marks to demonstrate ownership of physical goods, much in the way that ranchers use cattle brands to identify their cattle.²⁵ Use of marks to indicate ownership of goods was particularly important for owners whose goods moved in transit, as those marks often allowed owners to claim goods that were lost. Producers often relied on identifying marks, for example, to demonstrate ownership of goods recovered at sea.²⁶

Marks also were quite important to the operation of the guild system in medieval England. Local guilds often developed reputations for the quality of their products, and when they did, the names of the towns or regions in which those guilds operated became repositories of goodwill. To maintain that goodwill, guilds needed to be able to restrict membership and identify and punish members who produced defective products. Guilds therefore required their members to affix distinguishing marks to their products so the guilds could police their ranks effectively.²⁷

Importantly, guilds required members to display their marks for the purpose of developing and maintaining collective goodwill for the guild; marks were not used for the purpose of establishing individual producer goodwill. Indeed, intraguild competition was strictly forbidden.²⁸ Moreover, these regulations were not motivated primarily by a concern for consumers. Even in the cutlers’ trade, where marks seem to have been the most analogous to modern trademarks,²⁹ regulation was intended for “guidance and control of those working in rivalry, rather than to protect purchasers.”³⁰ In fact, though it is not clear how often mark owners sought enforcement of their marks during this period, there is evidence that enforcement attempts generally were motivated by a guild member’s concern about being held responsible for products it did not make.³¹

BEnglish Trademark Cases

Commentators often cite Southern v. How³² for the proposition that English cases based on a party’s replication of an identifying mark have been identified as early as the seventeenth century.³³ Popham’s report of that case stated that

An action upon the case was brought into the common pleas by a clothier that whereas he had gained great reputation for his making of his cloth by reason of which he had great utterance to his great benefit and profit, and that he used to set his mark to his cloth whereby it should be known to be his cloth and another clothier perceiving it used the same mark to his ill made cloth on purpose to deceive him, and it was resolved that the action did well lie.
In his seminal work The Historical Foundations of Trademark Law, however, Frank Schechter raised significant questions about the accuracy of Popham’s report on Southern v. How. Popham’s was only one of five known reports of the case,³⁴ and other reports are inconsistent with Popham’s description. Some of the reports contain no reference at all to the clothier’s case,³⁵ and at least one of the reports suggests that it was the deceived customer who brought the action.³⁶ This disagreement about the nature and basis of the clothier’s case foreshadowed years of imprecision regarding the basis of trademark claims, and Popham’s characterization of Southern v. How played a prominent role in the development of the law. In fact, several English judges deciding trademark cases in the eighteenth century relied solely on Popham’s report for the proposition that cases based on use of another’s mark could be brought as actions on the case, sounding in deceit.³⁷

(1)Trademarks in Courts of Law and Equity

The first reported decision clearly based on a competitor’s use of a trademark was issued by a court of equity in Blanchard v. Hill in 1742.³⁸ In that case, Lord Hardwicke rejected the request for injunctive relief by the plaintiff, a maker of playing cards who sought an injunction restraining the defendant from “making use of the Great Mogul as a stamp upon his cards, to the prejudice of the plaintiff, upon a suggestion, that the plaintiff had the sole right to this stamp, having appropriated it to himself, conformable to the charter granted to the cardmakers’ company by King Charles the First.”³⁹ The factual context of Blanchard is particularly noteworthy; the plaintiff was seeking protection of a mark for playing cards pursuant to a royal charter, and charters granting exclusive rights to cardmakers had been at the center of a long political struggle between Parliament and the Crown.⁴⁰ Thus the decision was clearly colored by the important role marks played in the contested charter scheme.⁴¹ Lord Hardwicke noted that he believed that “the intention of the charter [under which the plaintiff claimed rights] [was] illegal,”⁴² and said the court would “never establish a right of this kind, claimed under a charter only from the crown, unless there ha[d] been an action to try the right at law.”⁴³

Lord Hardwicke’s concerns about granting an injunction, however, seem to have been focused on situations in which the plaintiff’s claim was based on an exclusive right attendant to a monopoly granted by charter. Though he denied relief in Blanchard, Lord Hardwicke distinguished the case from the clothier’s claim referenced in Popham’s report of Southern v. How. The plaintiff in Blanchard based its claim simply on the defendant’s use of the plaintiff’s mark, whereas the clothier in Southern v. How based its case on the defendant’s “fraudulent design, to put off bad cloths by this means, or to draw customers from the other clothier.”⁴⁴ When the defendant intended to pass off its goods as those of the plaintiff, Lord Hardwicke implied, an injunction might be appropriate.

Despite the initial reluctance of courts of equity to recognize exclusive rights in trademarks and Lord Hardwicke’s obvious suggestion to pursue trademark claims in courts of law, the first reported decision by an English common law court was the 1824 decision in Sykes v. Sykes.⁴⁵ In that case, the court upheld a verdict for the plaintiff against defendants who marked their shot-belts and powder-flasks with the words “Sykes Patent” in imitation of the plaintiff’s use of the same mark for its shot-belts and powder-flasks.⁴⁶ After specifically noting that the plaintiff’s sales had decreased after the defendants began selling their identically labeled products, the court concluded that the defendants were liable for having marked their goods so as “to denote that they were of the genuine manufacture of the plaintiff” and “[selling] them to retail dealers for the express purpose of being resold as goods of the plaintiff’s manufacture.”⁴⁷

Several common law cases following the Sykes decision recognized similar claims and imposed liability when the defendant sought to pass off his goods as those of the plaintiff.⁴⁸ Those cases generally were brought as actions on the case, in the nature of deceit.⁴⁹ Yet one must be careful not to read those cases through modern lenses – despite the form of action, courts in these early cases invariably described the harm as resulting from fraud on the plaintiff.⁵⁰

Courts of equity became more solicitous of trademark claims in the first part of the nineteenth century, around the same time common law courts began deciding trademark cases. Of particular significance, courts very early on came to agreement that, where a claimant could demonstrate and exclusive right to use a particular mark, equity intervened to protect a property interest and evidence of fraudulent intent was not necessary. Despite limited reported decisions following Blanchard v. Hill,⁵¹ for example, Lord Cottenham confidently held in Millington v. Fox⁵² that equity could be invoked to protect the plaintiff’s title to his marks, even absent evidence that the defendant knew of the plaintiff’s marks or intended to defraud her.⁵³ Likewise in Hall v. Barrows,⁵⁴ the court noted that the “jurisdiction of the Court of Chancery in the protection of trade marks rests upon property, and fraud in the defendant is not necessary for the exercise of that jurisdiction.”⁵⁵

As Lord Westbury said in Leather Cloth Co. v. American Leather Cloth Co.,⁵⁶ rejecting any contention that courts of equity based jurisdiction on fraud:

[t]he true principal, therefore, would seem to be that the jurisdiction of the Court in the protection of trademarks rests upon property, and that the Court interferes by injunction, because that is the only mode by which property of this description can be effectually protected.⁵⁷

Significantly, Lord Westbury reached this conclusion after noting that holding out one’s goods as those of another gave no right to the latter to complain unless the act caused him some pecuniary loss or damage.⁵⁸ “Imposition on the public, occasioned by one man selling his goods as the goods of another, cannot be the ground of private right of action.”⁵⁹ The court in Levy v. Walker⁶⁰ was even more explicit that the protection of trademarks was not intended for the benefit of consumers: “The Court interferes solely for the purpose of protecting the owner of a trade or business from a fraudulent invasion of that business by somebody else. It does not interfere to prevent the world outside from being misled into anything.”⁶¹

(2)Reconciling Law and Equity Approaches

Some readers of the English trademark cases have viewed courts of law and equity as having developed incompatible theories of trademark protection, one based on fraud (law) and the other on property (equity).⁶² That reading is understandable, since many early courts were not particularly clear about the relationship between actions at law and in equity. For example, in The Leather Cloth case, Lord Westbury thought it evident that, at law,

the remedy for the piracy of a trade mark is an action on the case in the nature of a writ of deceit. This remedy focused on fraud, and originally it seems that an action was given not only to the trader whose mark had been pirated, but also to the buyer in the market, if he had been induced by the fraud to buy goods of an inferior quality.⁶³
Notwithstanding this characterization of claims at law as fraud claims, he believed that equity intervened to protect a property interest that courts of law could not adequately protect. “In equity, the right to give relief to the trader whose trade has been injured by the piracy appears to have been originally assumed by reason of the inadequacy of the remedy at law, and the necessity of protecting property of this description by injunction.”⁶⁴

Despite this apparent dichotomy, courts often discussed the same precedents and spoke in the same terms regardless of the form of action. As a result, in many cases it is difficult to tell whether the action was brought in equity or at law based solely on the way the court is discussing the nature of the wrong. In Croft v. Day,⁶⁵ for example, an equity action, the court enjoined the defendant’s use after describing the harm in types of fraud:

The principal in these cases is, that no man has a right to dress himself in colors, or adopt and bear symbols, to which he has no peculiar or exclusive right, and thereby impersonate another person, for the purpose of inducing the public to suppose either that he is that other person, or that he is connected with and selling the manufacture of such other person, while he is really selling his own. It is perfectly manifest, that to do these things is to commit a fraud, and a very gross fraud.⁶⁶
Likewise in Hogg v. Kirby,⁶⁷ the chancery court intervened because it considered the publication by the defendant of what appeared to be a continuation of plaintiff’s magazine “a fraud upon the goodwill of [the plaintiff’s] periodical.”⁶⁸

But this apparent ambiguity regarding the real basis of trademark law was more semantic than substantive. Common law actions were denominated actions on the case sounding in deceit because of the peculiarities of pre-merger forms of action. At law, parties could bring two different claims to recover for injuries to their interests: trespass and case. To oversimplify, a party brought a trespass action when its injury was direct and brought an action on the case to remedy indirect injuries.⁶⁹ Because the trademark cases litigated in courts of law were cases where the defendant’s use was not considered categorically illegitimate but only illegitimate to the extent it was intended to deceive,⁷⁰ the mark owner’s injury was indirect.

The important point is that plaintiffs in these actions at law were not vindicating the rights of consumers – they were making claims based on injury to their own interests that resulted indirectly from deception of consumers. Courts intermingled talk of fraud and property, not because of any confusion as to the basis of protection, but because in all these cases their real concern was that the defendant improperly diverted the plaintiff’s trade.⁷¹

Nor was trademark protection was classified as protection or property solely to gain the jurisdiction of courts of equity: injuries to property interests were remediable at law through trespass actions and actions on the case (depending on whether the injury was direct or indirect), and courts of equity would enter injunctions even in the absence of a right in a particular name or mark if there was evidence that the defendant sought to sell his own goods as those of another.⁷² Rather, what determined whether a party could invoke equity jurisdiction was whether a plaintiff could establish exclusive rights in its mark or whether the defendant might have a legitimate reason for using the designation at issue.

An action warranted interference by equity, in the first instance, when a plaintiff could demonstrate title to a mark by showing substantially exclusive use of the mark. In those cases, the defendant had no legitimate reason to use the same mark. If the mark owner could not demonstrate exclusive rights, perhaps because the mark had descriptive significance, the defendant’s use could not automatically be deemed illegitimate, and the plaintiff was forced to prove its right to relief at law before it could earn the right to an injunction.⁷³