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The removal of the existing safeguards against the sale of food and drug products under names which are not understandable to the ordinary individual would be a step of serious detriment to the consuming public. Yet this would, in general, be the effect of the provisions of the pending bill for an extension of existing rights in so-called trade-mark names.

The present rule of law relating to trade-mark rights is consistent with the requirements of the Food, Drug, and Cosmetic Act with respect to the use on the label of foods and drugs of names by which such products are commonly known to the purchasers, i. e., the common or usual names of the products. The present rule appears to be that when, upon the expiration of a patent, manufacturers other than the holder of the patent acquire the right to make a substance whose name has become descriptive of such substance rather than being primarily an indica tion of its origin, such manufacturers also acquire the right to call such substance by that name, even though that name has been registered as a trade-mark. The use of such a name would be necessary for compliance with the Food, Drug, and Cosmetic Act. For example, the patent on one type of the drug insulin is about to expire. The word "insulin" has been registered as a trade-mark. Under the provisions of the Food, Drug, and Cosmetic Act that word, being the common or usual name of the drug, would have to be the name used on the label of the drug whether it is manufactured by the original holder of the patent or by other persons who have the right to make it upon expiration of the patent. This is the only name which conveys the information to purchasers contemplated by the Food, Drug, and Cosmetic Act, and "insulin" which does not bear that name would be misbranded under the act. These requirements of the act, it will be seen, fit in with the present rule of trade-mark law which has been referred to above.

It is also generally recognized at present that a name which is purely descriptive of the article to which it relates is not a valid trade-mark. This again is consistent with the provisions of the Food, Drug, and Cosmetic Act which contemplate that names describing articles shall be used by all manufacturers to identify them on their labels.

These rules appear to be abrogated by the proposed provisions of section 2 (f) of the bill, since this section makes it possible for a registrant to acquire an incontestable right to the use of a term which "is merely descriptive" of the goods to which it relates, and by section 34 (b) which, for all practicable purposes, appears to limit the defenses in an action for infringement to "abandonment."

If the proposed bill becomes law, it appears that one of two results would follow either proper labeling of foods and drugs could not be required under the Food, Drug, and Cosmetic Act; or, if proper labeling could be required, a perpetual monopoly in the manufacture and sale of originally patented goods would result, because no one but the registrant of the trade-mark could use the alleged trademark name and the Food, Drug, and Cosmetic Act prohibits the use of any other. In view of the repealing provisions contained in the proposed legislation, the former appears to be the more likely result. The only important exception would be a case where "abandonment" of the trade-mark can be established. "Abandonment" is stated in section 46 of the proposed bill to have occurred when "any course of conduct of the registrant, including acts of omission as well as commission, cause the mark to lose its significance as an indication of origin."

In view of the fact that the descriptive character of a term is no longer regarded as a factor which would indicate public dedication or abandonment, and in view of the further fact that under other provisions of the proposed bill use of the mark by various other concerns (related companies) would not constitute evidence of abandonment, it would be most difficult to establish a course of conduct which, as a matter of law, could be said to have resulted in the loss by that term of "its significance as an indication of origin." Under that definition it would be necessary to establish (1) that the primary significance of the term was the thing to which it related and not the maker of that thing, and (2) that this result came about through a "course of conduct" of the registrant. From the standpoint of the Food, Drug, and Cosmetic Act, it is immaterial how this came about. Once it is established that a certain term has become to consumers generally the common or usual name for a given food or drug, the intent of the Food. Drug, and Cosmetic Act is that all persons who manufacture and market such food or drug identify it on its label by that name. No "course of conduct" will alter the fact that consumers are not adequately informed unless the food or drug is identified by that name.

The protective provisions of the Food, Drug, and Cosmetic Act cannot be effective in the interest of the purchasing public unless, so far as foods, drugs, and cosmetics are concerned descriptive terms are denied the trade-mark right of

exclusive use, and unless abandonment is so defined as to require only establishment of the fact that the primary significance of the alleged trade-mark in the minds of the public is the product to which it relates, eliminating the requirement that this must have become so by reason of the registrant's "course of conduct." It is urged that an opportunity be given to this agency to work out with the proper representatives of the committee a satisfactory solution of this difficulty so that it will be made clear that the bill does not affect any of the provisions of the Food, Drug; and Cosmetic Act with respect to misbranding of foods, drugs, and cosmetics.

Although time has not permitted the clearance of this matter with the Bureau of the Budget, since it is of great importance to the public, I ask that you carefully consider the views above expressed.

Very truly yours,

PAUL V. MCNUTT, Administrator.

FEDERAL TRADE COMMISSION,
Washington, October 31, 1941.

Re Hearings on trade-marks.

Hon. CHARLES KRAMER,

Chairman, Committee on Patents,

House of Representatives, Washington, D. C.

DEAR CONGRESSMAN KRAMER: This will acknowledge receipt of your letter of October 22, 1941, advising the Commission of the hearings on trade-marks to be held by the Subcommittee on Patents under the chairmanship of Hon. Fritz G. Lanham.

I should like to draw your attention to a report by the Federal Trade Commission on S. 895, the companion to the bill H. R. 5461, which is under consideration by your committee. In this report the suggestion was made that section 15, the so-called incontestability clause, be stricken in order that the Federal Trade Commission may continue effectively to exercise its jurisdiction in preventing unfair methods of competition and unfair and deceptive acts and practices insofar as trade-marks are concerned.

The suggestion was also made that a section be added to the bill providing that nothing contained therein shall be construed to affect or limit the jurisdiction of the Commission. In view of the various fundamental changes in trademark law besides the feature of incontestability made by the bill, including a prohibition against registering deceptive marks, I feel that such a proviso should be added to H. R. 5461.

In the bill which is before your committee, the clause which makes a registrant's right to use his trade-mark in commerce incontestable after a specified period (sec. 15, lines 6 and 7) has been modified by various exceptions. These exceptions, however, only pertain to rights and remedies under the trade-mark laws and do not cure the defects found in the Senate bill insofar as the Federal Trade Commission is concerned. I feel that the safest way to avoid all doubts this section may raise, concerning the jurisdiction of this Commission, would be to strike the clause altogether. If for any reason this is not done, may I suggest that the Commission feels it is imperative that the sentence at least be modified to read as follows:

"The right of the registrant to use such registered mark in commerce shall be incontestable for the purpose of any proceeding arising under the trade-mark laws."

Sincerely yours,

W. T. KELLEY, Chief Counsel.

FOLDING PAPER BOX ASSOCIATION OF AMERICA,
Chicago, Ill., November 19, 1941.

Provisions relating to remedies in proposed trade-mark legislation.
The COMMITTEE ON PATENTS,

House of Representatives, Washington, D. C.

GENTLEMEN: The manufacturers of folding paper boxes are interested only in one section of the trade-mark bills now under consideration, to wit, the section on "remedies," but they are vitally interested in that section.

The folding paper box industry is distributed widely over the United States with between 400 and 500 plants located in 34 States. The Folding Paper Box Association of America represents about 60 percent of this industry in volume.

The manufacturers of folding paper boxes are concerned with this legislation, because they generally print on the box the label of the customer. They are not directly concerned with the conflicting rights of holders of trade-marks, and they do not have anything to suggest about the general scope of a trade-mark bill. They find, however, that the provisions relating to "remedies" in some of the proposed bills would involve them in the disputes of their customers and would subject them to serious liability which does not now exist, and which should not in justice be imposed upon them.

Under the present law one who uses the trade-mark of another in connection with the sale of goods of the type with which the mark is associated infringes the right of the owner of the trade-mark. It is not an infringement of a trademark merely to print the mark. Its use in a way calculated to deceive the public is the wrong. The present law is therefore that the mere printing of a label bearing a trade-mark does not subject the printer to liability unless his act is with knowledge that he is contributing to a wrong which is to be done to the owner of the mark by its use in connection with the sale of goods.

Thus the essence of a trade-mark is its use in connection with the sale of goods, and the trade-mark bill should only apply to the use of trade-marks in connection with the sale of goods, not to the mere printing of trade-marks.

Members of the folding paper-box industry were thus greatly disturbed by the provisions of section 32 of H. R. 102 and in the identical S. 895, which would have made them liable for the mere printing of a label for a customer who did not own the mark in question. Such a provision would be most unjust for two

reasons:

(1) The folding paper-box manufacturer cannot ever know with any certainty whether his customer owns the mark.

(2) No harm is done the owner by the mere printing. The use by a competitor in connection with the sale of goods is what does the harm.

After considerable discussion among the parties interested, the American Bar Association finally sponsored a bill in the form contained in the present committee print, section 33 of which is as follows:

"SEC. 33. (1) Any person who shall, in commerce, (a) use, without the consent of the registrant, any reproduction, counterfeit, copy, or colorable imitation of any registered mark in connection with the sale, offering for sale, or advertising of any goods or services on or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers as to the source or origin of such goods or services; or (b) reproduce, counterfeit, copy, or colorably imitate any such mark and apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers, receptacles, or advertisements intended to be used upon or in connection with the sale in commerce of such goods or services, shall be liable to a civil action by the registrant for any or all of the remedies hereinafter provided, except that under subsection (b) hereof the registrant shall not be entitled to recover profits or damages unless the acts have been committed with knowledge that such mark is intended to be used to cause confusion or mistake or to deceive purchasers."

While the members of the folding paper-box industry do not believe that any liability should be imposed upon them, they have acquiesced in the provision just quoted with a view to removing all elements of controversy, and they will be satisfied if the bill contains this provision.

One of the bills, however, which is being considered by the committee, H. R. 5461, contains remedy provisions in its section 32 which are entirely unsatisfactory to the folding-paper-box industry. This is not the bill sponsored by the American Bar Association. We understand it represents an earlier draft, for which the present committee print has been substituted.

Mr. Edward S. Rogers, a witness at the hearing, proposed an amendment to section 32 of H. R. 5461. This proposed amendment is even more unsatisfactory to the folding paper-box industry, since it imposes liability for the mere printing of a label and allows the defendant's "innocent intention" to be considered merely "in mitigation of any recovery of profits or damages." This proposed amendment is so vague in its terms that it is impossible to foresee with any certainty how it would be construed by the courts, but apparently it increases the possibility of liability and imposes a heavy burden on the innocent box box manufacturer.

There is really no reason for the bill for impose any liability upon a folding paper-box manufacturer. If a seller of goods puts another man's trade-mark on his goods he should respond in damages to the owner of the trade-mark. The owner of a trade-mark will thus have an opportunity to recover full damages

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for the injury that has been done him. But until the trade-mark has been used in connection with the sale of goods no injury has been done the owner of the trade-mark. The mere printing of a trade-mark by a box manufacturer does not injure the owner of the trade-mark in the least, and there is no reason why a box manufacturer should be made to respond in damages for something which has caused no damage.

With a view to settling this controversy, however, we are willing to have the box manufacturer held if the "acts have been committed with knowledge that such mark is intended to be used to cause confusion or mistake or to deceive purchasers," as provided in the bar association draft.

The present bar association bill, embodied in the printed committee draft goes far enough in holding the box manufacturers. Perhaps it goes too far. But We are, however, willing to have the printed committee draft adopted. we seriously oppose the adoption of any of the other proposals covering the remedies section.

Respectfully submitted.

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Re H. R. 5461-Lanham trade-mark bill.

Hon. FRITZ G. LANHAM,
House of Representatives,

Washington, D. C.

DEAR MR. LANHAM: Hon. Charles Kramer, chairman of the Committee on Patents, advised me on October 22 that a subcommittee of the Committee on Patents, under the chairmanship of Hon. Fritz G. Lanham, will hold hearings on trade-marks, beginning Tuesday, November 4, 1941, at 10 a. m., and stated that if I wish to make any comments with respect to this proposed legislation, or desire to testify orally, I should communicate with the committee in advance of the date of the scheduled hearings.

I shall not be able to testify orally at the hearings, but, in accordance with Hon. Charles Kramer's letter, I herewith send to you my comments on the proposed legislation.

As a member of the committee on trade-marks and unfair competition of the Bar Association of the City of New York, and as a member of the law department of General Foods Corporation, which owns several hundred trade-marks, I would like to register my opposition to the proposed legislation in toto for the following reasons: There has never been advanced one sound reason for the necessity of this legislation, and all objections to the present trade-mark acts inay be obviated by amendments. There has never been presented one serious objection to the law as it now stands which would justify the complete overthrow and destruction, as proposed by the Lanham bill, of much of the law developed and interpreted over a period of 100 years. The enactment of the Lanham bill would impose on present owners_of valuable trade-marks, the United States Government, and the public a tremendous expense, a great uncertainty in the law, and a vast amount of litigation for many years to come, to the detriment of everybody in the United States.

As an indication of the complications which will arise in the event this bill is enacted, I respectfully call your attention to section 46 of the act, which originally provided that the act would take effect 60 days from its enactment. It is now proposed to change this period of time to 1 year, which change, I understand, was suggested by Assistant Commissioner Leslie Frazer, who originally suggested that it be made 2 years, because of the great changes which will be required in handling trade-marks in the Patent Office. It clearly appears that if the Patent Office itself realizes that it will take at least 2 years to prepare itself to handle effectively the proposed change in trade-mark procedure, it will take the courts a great many more years to interpret the proposed act, which will result in great uncertainty in the interim with respect to the rights of owners of trade-marks, which rights at this time have been long well established.

In opposing this legislation I have not failed to take into consideration the arduous and serious labor in which you, your committee, and the several committees of lawyers have engaged in attempting to make this a good bill. How

ever, the amount of labor, no matter how arduous and serious, is no justification for voting in favor of unsound legislation.

Percy E. Williamson, Jr., Esq., a fellow member of the committee on trademarks and unfair competition of the Association of the Bar of the City of New York, in voting to approve the revision of the Lanham bill, stated:

"I feel, with Mr. Fuldner, that there is no reason for adopting an entirely new trade-mark statute rather than correcting a few defects in the old one by amendment. However, it now seems obvious that a complete new statute is bound to be enacted, and I am voting in favor of this bill in its present form, since it does not contain objectionable features which are included in earlier drafts and which might be adopted if this bill did not receive sufficient support." (Yearbook, 1941, the Association of the Bar of the City of New York, annual report of the committee on trade-marks and unfair competition for 1940-41, pp. 274-275.)

I respectfully request that my opposition to the Lanham bill be inserted in the minutes of the hearings to be held commencing November 4, 1941, so that the record may clearly show my opposition and the reasons therefor, and I believe it will also indicate that my opposition is not based upon caprice or any other irrelevant or superficial matter, but is based upon my honest opinion after several years of serious consideration.

I also wish to take this opportunity to thank you sincerely for all of the courtesies which you and your committee have extended to me in the past.

Respectfully yours,

MANSFIELD C. FULDNER.

Hon. FRITZ G. LANHAM,

LAW OFFICES, MILTON HANDLER,
New York, November 18, 1941.

United States Congress, House Office Building, Washington, D. C.

MY DEAR CONGRESSMAN: I am enclosing herewith for insertion in the record of the hearings of the Subcommittee on Trade-Marks of the Committee on Patents of the House of Representatives a statement which I have revised, and which you are so graciously permitting me to have inserted in the record.

I am deeply appreciative of the courtesies extended to me by you and your committee.

With all best wishes,
Faithfully yours,

MILTON HANDLER.

STATEMENT OF MILTON HANDLER BEFORE THE COMMITTEE ON PATENTS, SUBCOMMITTEE ON TRADE-MARKS, ON H. R. 5461, AS AMENDED IN THE HOUSE OF REPRESENTATIVES COMMITTEE PRINT

This statement will consider those provisions of the pending trade-mark bill (H. R. committee print) which, in my judgment, are unfair or have a monopolistic tendency.

I. RETROACTIVE PROVISIONS OF THE BILL

Section 19 of the committee print (sec. 19, H. R. 5461) reads as follows: "In all interpartes proceedings the equitable principles of laches, estoppel, and acquiescence, where applicable may be considered and applied. The provisions of this section shall also govern proceedings heretofore begun in the Patent Office and not finally determined."

A

It is manifestly unfair to effect an ex post facto change in the law applicable to pending litigation in the Patent Office and thus to change the rules in the middle of the game. The second sentence of this section is thus contrary to the fundamental principles of fair play.

Litigants who have expended time and money in the prosecution of a suit are entitled to have their cause determined on the basis of the rules in force when the proceeding was begun.

Applying the doctrine of laches to pending Patent Office litigation is more than making available an equitable defense to the registrant; it may be conferring an incontestable right in an invalid registration which may hereafter be used for oppressive purposes, by virtue of the incontestability provisions of the statute.

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