The opinion of the court was delivered by: KALODNER
This is a trademark infringement and unfair competition suit, tried before me without a jury. The complaint allges that the plaintiff, a Pennsylvania corporation, owns a valid and subsisting trademark, Y.P.M., which it uses in connection with its manufacture, sale and distribution of whiskey; and that the defendant, a Virginia corporation, uses a trademark PM in connection with its manufacture, sale and distribution of an identical product, whiskey; whereby the defendant is guilty of trademark infringement, unfair competition, and "palming-off".
The complaint contains the conventional averments of long prior use of the trademark by the plaintiff and its predecessor, and the acquisition of a "secondary significance" and "valuable reputation" by the trademark Y.P.M. for whiskey, as indicating whiskey originating exclusively with the plaintiff. The complaint also sets forth its certificates of registration of the trademark Y.P.M. for whiskey.
The plaintiff prays for temporary and permanent injunctions; for damages and accounting for profits; for costs; for the delivery and destruction of infringing labels, etc.; and for general relief.
The answer sets forth the following defenses:
(a) The plaintiff has no valid trademark in the letters Y.P.M.
(b) Defendant's rights in the trademark PM became fixed prior to any acquisition in a valid trademark Y.P.M. by the plaintiff, because of prior abandonment of the trademark, and because of defects in the plaintiff's chain of title to the trademark.
(c) Defendant is guilty of neither infringement or unfair competition.
At the trial, evidence was adduced relating to the ownership, validity, abandonment or nonabandonment, and chain of title of the trademark Y.P.M. The greater part of the testimony, however, was directed, on the plaintiff's part, to proving that the two trademarks Y.P.M. and PM were confusingly and deceptively similar, and that the public was misled into purchasing defendant's product. The defendant's testimony on that score was directed towards proving the opposite.
Preliminarily, the discussion will be devoted to this last-mentioned aspect of the case, whether or not defendant's use of the trademark PM constitutes trademark infringement and unfair competition.
This, in turn, depends for the most part upon whether or not the public may be, or is, actually deceived and misled by the alleged similarity between the two trademarks, into purchasing the defendant's products for the plaintiffs.
It is also appropriate to consider the question whether or not the trademark PM was deliberately adopted by the defendant in an attempt to benefit from any goodwill which the plaintiff's trademark might possess. For this reason, it is desirable first to review the history of the presently litigating parties, and the evolution and final adoption of their respective trademarks by each.
According to the plaintiff, the trademark Y.P.M. for whiskey was originally used by Alexander Young Company, Limited, a partnership; subsequently, by the plaintiff; and later by Margulis & Co., a corporation, under the terms of an agreement made first between the plaintiff and Samuel Margulis, and later under the terms of an agreement made between owners of the plaintiff's corporate stock and Samuel Margulis; under the provisions of which latter agreement Margulis acquired all the outstanding capital stock of the plaintiff. Still later, there was an agreement between Margulis & Co. and the plaintiff, whereby the latter acquired all the assets of the former, including trademarks and goodwill will of Margulis & Co.
The defendant corporation, organized in 1924, created a wholly-owned subsidiary, Penn-Maryland Corporation, in 1933.
In 1934 the subsidiary began advertising and selling three whiskeys of different grades and prices:
The above whiskies were sold in Interstate Commerce from and after 1934.
In January, 1936, all assets, goodwill, etc., of Penn-Maryland Corpoation were transferred to its sole stockholder, Penn-Maryland, Inc. (incorporated in 1933), and thereafter immediately to the defendant, which owned all of its stock. The whiskies were still sold under the names shown above.
In March, 1936, and in November, 1936, the defendant adopted and began to sell and distribute whiskey under two trademarks consisting of the names Penn-Maryland Private Stock and PM Bar Special, respectively. (Both of these brands have been discontinued except that small sales of Penn-Maryland Private Stock are still made in New York.)
In May, 1936, the Penn-Maryland Imperial brand having meanwhile become inactive, the defendant began considering a change in the style of the labels bearing the names Penn-Maryland DeLuxe, Penn-Maryland Regal, and Penn-Maryland Private Stock. The changes in the labels consisted of an increase in the size of the initials P and M in the compound word Penn-Maryland, and also changes in the color and style. The changed labels have been used on whiskey sold and distributed by the defendant since December, 1936, or January, 1937.
The enlargement of the initial letters PM in the name Penn-Maryland (as used on the defendant's labels) results in so disproportionate a relation between the size of the initial letters and the other letters in the name Penn-Maryland, that for the purposes of this case it may be almost assumed that the defendant uses only the letters PM on its labels, in designation of the product. This conclusion is further justified by the circumstance that, because of different coloring, the initial letters PM stand out more visibly than the other letters.
It must be noted at this point that all of the defendant's labels bear the following: "Blended by National Distillers Products Corporation, Cincinnati, Ohio".
In November, 1938, the defendant launched an advertising campaign in promotion of the Penn-Maryland DeLuxe brand, using the letters PM by themselves in the text of the advertising in referring to the product, so that it read: PM DeLuxe. In November, 1939, defendant began to use the letters PM by themselves on the back label of the Penn-Maryland DeLuxe brand. Incidentally, the defendant di not advertise the Penn-Maryland brands in 1937, and spent only $7,523 for advertising in 1938.
As far as the present situation is concerned, the defendant now uses only two Penn-Maryland brands, the DeLuxe and Regal. The DeLuxe brand, it may be mentioned, is a higher ...