So far as I have been able to discover, the last sentence of section 19 did not appear in the bills considered by this committee prior to 1939.

Thus, H. R. 4744 (March 3, 1939) provided (sec. 47):

"This Act shall be in force and take effect sixty days from its enactment, but shall not affect any suit, proceeding or appeal then pending."

Furthermore, it is quite unclear whether the other sections of the bill are intended to have a retrospective effect. There are provisions looking both ways. On the one hand, section 47 (a) of the committee print (sec. 46 (a) of H. R. 5461) reads in part as follows:

"This Act shall be in force and take effect one year from its enactment, but except as otherwise herein specifically provided shall not affect any suit, proceeding, or appeal then pending."

Section 50 of the committee print (sec. 49 of H. R. 5461) reads:

"Nothing herein shall adversely affect the rights or the enforcement of rights in marks acquired in good faith prior to the passage of this Act."

On the other hand, under section 48 (b) of the committee print (sec. 47 (b) of H. R. 5461), the courts are given discretion to apply any of the provisions of the statute which they deem applicable to pending appeals.

Section 48 (b) appears to be inconsistent with section 47 (a) and tends to heighten the ambiguity of the phrase "except as otherwise herein specifically provided" in the latter section.

While it was stated at the hearings that the only specific provision in the statute applicable to pending litigation was the second sentence of section 19, it would appear that section 48 (b) makes applicable, at the discretion of the court, any of the provisions of the act to any pending appeal.

The ambiguity and inconsistency of these sections requires clarification and revision.

It is my firm conviction that nothing in the proposed legislation should affect rights heretofore acquired which are involved in any pending litigation. There is no occasion for applying any provisions of the statute to litigations begun before its effective date.

It is recommended:

(a) The second sentence of section 19 should be omitted;

(b) The following clause at page 46, lines 23 to 24, "except as otherwise herein specifically provided," should be stricken from the first sentence of section 47 (a), which will then read:

"SEC. 47. (a) This Act shall be in force and take effect one year from its enactment, but shall not affect any suit, proceeding, or appeal then pending."

(c) Section 48 (b) should be omitted or, if not omitted, should be expressly limited to appeals in respect of the applications for registration covered by section 48 (a).

This can be accomplished by inserting the word "such" in line 22 of page 49 between the words "any" and "case" so that this sentence will start "in any such case"; and by omitting the word “or” in line 23, the entire lines 24, 25, 26, and line 1 of page 50, and the word "act" in line 2 of page 50, and the words "or to the district court" in line 5 of page 50. The entire section as so revised will read as follows:

"(b) In any such case in which an appeal is pending before the United States Court of Customs and Patent Appeals, the court, if it be of the opinion that the provisions of this Act are applicable to the subject matter of the appeal, may apply such provision or may remand the case to the Commissioner for the taking of additional evidence or a new trial or for reconsideration of the decision on the record as made, as the appellate court may deem proper."

B

The essential unfairness of the first part of section 19 becomes apparent when it is read in connection with the incontestability provisions of the bill (secs. 15 and 34 of the committee print; secs. 15 and 33 of H. R. 5461). Under the bill marks now on the register may obtain the incontestability benefits of the act upon the expiration of a period of 5 years after the publication provided for in section 12 (c). In order to prevent marks which were improperly registered from acquiring the status of incontestability, sound policy would require that the present remedies that may be invoked for the purification of the register be strengthened and not weakened. Section 19, on the one hand, tends to make it impossible to remove from the register marks which should never have been

placed on it in the first place; sections 15 and 34, on the other hand, make such improper registrations incontestable after a period of 5 years.

There might be no objection to the first sentence of section 19 if the benefits of incontestability were not conferred by the bill. If the incontestability provisions of the bill are retained, the first sentence of section 19 should be omitted from it.

It is recommended that the first sentence of section 19 be similarly stricken from the bill.

II. INCONTESTABILITY PROVISIONS OF THE BILL

A

Incontestability in the law of trade-marks is a doctrine of repose; its function is to preclude an attack upon the validity of a registration after the lapse of a stated period of time. It should not be an aggressive instrument for the suppression of fair competition.

Sections 15 and 34 (b) of the committee print (secs. 15 and 33 (b) of H. R. 5461) are objectionable since they go beyond the true purpose of incontestability and substantially enlarge the affirmative rights of registrants, to the material prejudice of other traders.

No claim has been made or can be made that the doctrine of incontestability is necessary to protect trade-mark proprietors against confusion or deceitful competition. The purpose of section 34 (b) is manifestly to prevent the use of important terms in the trade-marks of defendants notwithstanding that such use is not calculated to deceive purchasers.

A few concrete illustrations will make clear the catastrophic effects upon our competitve institutions which are portended by these sections.

If this law had been in effect at the time of the Shredded Wheat litigation, the registration of this vital generic term would have become incontestable and no other manufacturer would be permitted to use the only designation by which this product is known to consumers. The same observations hold true of such terms as "cellophane" and "aspirin."

To say that these and similar terms may be used descriptively, but not deceptively, is to beg the question. Section 34 would prevent the use of Shredded Wheat in another mark no matter how distinguishable and despite the fact that such use would not be likely to result in confusion. It prevents the only type of use which makes it possible for another trader to compete effectively with the registrant. It draws distinctions between permissible and nonpermissible uses which are incapable of practical observance.

No one was able to point out at the hearings how the term "Shredded Wheat" could be used by another trader without violating section 34, once the registration of this term became incontestable.

If it is intended to preclude any use of such a term in a trade-mark, it is clear that fair competition is being suppressed. The right of a competitor to use the term "Shredded Wheat," or any other generic term common to the trade, should depend upon whether his use is fair and not likely to cause deception, and not upon whether he is using it in a trade-mark.

It has long been the settled rule in this country and England that the name by which a patented article is designated during the period of the patent becomes publici juris upon the expiration of the patent. That does not mean that all the patentees' trade-marks are lost. It does mean that the term used to describe and designate the article falls in the public domain. Under the bill, if the accepted name of the product is registered during the period of the patent and is on the register for 5 years, no one thereafter at any time may use that term in a trademark. Obviously, during the period of the patent when there is only one producer of the article, there is no one with sufficient standing or incentive to maintain any action in the Patent Office. Thus, if this statute had been in force during the life of the initial aluminum patent, the producers of that article, now so vital for national defense, could have obtained a perpetual monopoly of this word by registering it as a mark.

This committee is familiar with the facts concerning the misuse of patents for the suppression of competition which recently were reviewed by the T. N. E. C. and the proposals that have been recommended for the correction of these evils. Section 34 (b) provides a new method for the perpetuation of patent monopolies.

The proponents of this bill have assured the committee at the hearing that section 34 (b) (4) does not change the present law and that the Shredded

Wheat, Aspirin and Cellophane cases would be decided the same way under the bill as under the prior law. If this be so, what is the necessity for this provision and why the change from section 32 (2) in H. R. 102? Reliance was placed upon the definition of abandonment in section 46 to sustain the construction of section 34 (b) (4) as not changing prior law. Certainly, there could be no claim of abandonment in the patent-expiration cases. The vital right of the public and competing tradesmen to use words which have become generic is not dependent, under the authorities, upon the element of abandonment. Nor should this vital public right be dependent upon the esoteric element of abandonment. The reference at the hearing to the irrelevant element of abandonment is proof of the possibilities of misconstruction of this section and the need for clarification.

In view of the position taken by the proponents of the bill, that the important precedents above referred to are unchanged by section 34 (b), it is believed that in the interests of clarity this subdivision should be materially revised to make certain that the established right of all traders to use generic words is not impaired. The similar provision in H. R. 102 (section 32 (2)) is simpler, more direct, and less ambiguous than section 34 (b) (4) of the committee print. It is believed that some revisions of section 32 (2) of H. R. 102 would result in further clarification and it is therefore recommended that the following subdivision 4 be substituted for the present subdivision 4 of the committee print: "(4) That the use by the defendant of the name, term, or device charged to be an infringement is a commercially fair use, made in a manner not calculated to confuse the public, of the defendant's individual name in his own business, or of the individual name of anyone in privity with the defendant who uses his own name in his own business, or of a descriptive, generic, or geographical term or device."

B

It has been assumed in this discussion of section 34 (b) (4) that the advantages of incontestability do not relate to the disclaimed parts of a registered mark and do not relate to the common features or component parts of a combination mark which are widely used by numerous tradesmen in the same industry.

There are numerous combination marks on the register and in use in every industry containing a part which is descriptive, generic, or otherwise common to the trade. It is not unusual to find on the register many marks containing identical common features. If the committee desires, it would be possible to collate such marks and it would be most revealing to note how frequently such combination marks include words of ordinary common usage. We may take as a hypothetical illustration the fictitious marks "Alpha-Seltzer" and "Beta-Seltzer." Consider the chaos that would result if the first registrant were to acquire a monopoly of the word "Seltzer" by reason of the incontestability provisions of the bill.

As none of the proponents of the bill cared to indicate at the hearings whether section 34 (b) (4) had any application to compound word marks of this nature, it is recommended, in the interests of clarity and the correct interpretation of the bill, that the following subdivision be added to section 34: "(6) That the marks of the defendant and the registrant though containing a common part are in their totality not likely to cause confusion or misake or to deceive purchasers."

C

Subdivision (5) of section 34 (b) deals with the situation where the defendant has continuously used his mark from a date prior to the publication_of_the registrant's mark under subdivision (a) or (c) of section 12. In H. R. 5461 it was a complete defense for the defendant to show that his mark had been continuously used before such publication. The American Bar Association amendment to this section qualifies this defense by requiring not only continuous use prior to the date of publication but proof that the defendant's mark "was adopted without knowledge of the registrant's prior use." The inequity of this amendment is apparent when one considers the case of two companies which have been using their respective marks for three or four decades, initially in different parts of the country and latterly in the same markets. If the second of such users obtained incontestable rights first, the first user would have a defense under subdivision (5). Were the situation reversed and

the first user to obtain incontestable rights, the second would be compelled to prove that his mark was adopted without the knowledge of the registrant's prior use. Such proof would depend upon the facts existing three or four decades ago and place an unfair burden upon one whose mark may have been on the register or in use for many years.

It will be noted that a defendant who adopted a mark in the honest belief and on advice of counsel that his mark did not constitute an infringement might be deprived of his defense under subdivision (5), despite a lengthy use, since his adoption might be said to be with knowledge of the registrant's prior use. A further objection to subdivision (5) of this section is that it affords protection to a defendant only in respect of the areas in which business was done before the publication under section 12, but does not protect the defendant in respect of the normal expansion of his business in other areas during the 5-year period following the publication of such statement.

It is accordingly recommended: that subdivision (5) of H. R. 5461 be substituted for subdivision (5) of this section in the committee print. This involves striking from lines 21 and 22 of page 30 of the committee print the words "was adopted without knowledge of the registrant's prior use."

D

The hearings disclose that it is unclear to the proponents of the bill whether the acquisition of incontestable rights by the registrant will affect the rights of proprietors of other trade-marks which had been registered under the old acts and which are at present upon the Register. A chaotic and unfair condition will result if by virtue of a registrant's mark having become incontestable he can claim that marks registered under the old acts and presently on the Register can no longer be used by the owners of those marks. The present bill should be clarified to avoid that unjustifiable result by the addition of the following provision which I recommend:

"(7) That the mark whose use by the defendant is charged as an infringement was registered prior to the publication under subsection (a) or (c) of section 12 of this act of the registered mark of the registrant."

It is noteworthy that no objection was voiced at the hearing to this recommendation and that the desirability of protecting the rights of the proprietors of trademarks now upon the Register was apparently recognized.

III. OPPOSITION PROCEEDINGS

Under section 12 (c), the benefits of the new act may be obtained by the registrant of a mark registered under the act of 1881 or the act of 1905 by the filing with the Commissioner of a statement that the mark is in use and that the registrant claims the benefits of the new act for his mark.

Under section 13 the registration of a mark may be opposed by any person who believes that he would be damaged thereby.

It is not entirely clear from the wording of section 13 whether, if the statement as provided for by section 12 (c) is filed, that opposition to such mark may be then interposed under section 13.

It is not believed that it is intended to permit the interposition of oppositions in the case of the filing of the statement provided for by section 12 (c). Were such oppositions to be permitted, the Patent Office would be overwhelmed by a flood of litigation in respect of the registrability of the thousands of marks now upon the Register, as to which the time for opposition has long expired. It is recommended that section 13 should be clarified so as to make it entirely clear that there can be no opposition in respect of the filing of the statement provided for in section 12 (c), by adding at the end of section 13 the following sentence: "No notice of opposition may be filed in respect of the filing of an affidavit claiming the benefits of this act pursuant to section 12 (c)."

IV. CANCELATION PROCEEDINGS

As I read section 14 of the bill relating to cancelation proceedings, no change is effected in the prior law in respect of the grounds upon which the cancelation of a registration may be obtained. Section 14 appears merely to limit the times within which cancelation suits may be brought.

However, the section may possibly be interpreted as limiting not merely the time but the grounds upon which cancelation may be sought of marks registered

under the old acts. To obviate any possible ambiguity, it is recommended that subdivision (c) of section 14 be subdivided and that the numeral “(1)” be inserted in line 21 after the word "if" and before the word "the"; that the numeral "(2)" be inserted in line 22 after the word "or" and before "its," that the numeral “(3)” be inserted at page 17, line 1 after the word "or" and before the word “if”; and that the numeral "(4)" be inserted in line 5, after "or" and before "if." The subsection as thus revised will read as follows:

"(c) At any time if (1) the registered mark has been abandoned or (2) its registration was obtained fraudulently or contrary to the provisions of subsections (a), (b), or (c) of section 2 of this act for a registration hereunder, or contrary to similar prohibitory provisions of said prior acts for a registration thereunder, or (3) if the registered mark has been assigned and is being used by, or with the permission of, the assignee so as to misrepresent the source of the goods or services in connection with which the mark is used, or (4) if the mark was registered under the act of March 3, 1881, or the act of February 20, 1905, and has not been published under the provisions of subsection (c) of section 12 of this act."

In this connection, the committee's attention should be called to the wording of the last sentence of the first paragraph of section 47 (b) of the committee print (sec. 46 (b) of H. R. 5461) at page 48, lines 17 to 22. This provides that marks registered under the 10-year proviso of section 5 of the act of 1905 shall be deemed to have become distinctive of the registrant's goods under subsection (f) of section 2.

It seems clear that it is intended that the benefits of this provision shall extend only to marks validly registered under the 10-year proviso. Otherwise by legislative fiat, marks improperly registered under the 10-year proviso and which are not in fact distinctive would be registrable under this bill. This would result in great inequity in the case of marks such as "Milk of Magnesia" which the Court has held was improperly registered under the 10-year proviso. Upon the publication of such a mark under section 12 (c), the use of ordinary commercial terms could be materially restricted. It is accordingly recommended that there be inserted in line 17 of page 48 of the committee print the word "validly" between the words "marks" and "registered."

V. CONTRIBUTORY INFRINGEMENT

Under the wording of section 33 (1) (b) of the committee print (sec. 32 (1) (b) of H. R. 5461), it would appear that manufacturers of labels, signs, prints, packages, wrappers, or receptacles, bearing or containing an infringing mark, are guilty of contributory infringement, and subject to an injunction prior to any judicial determination that the mark constitutes an infringement in a suit against the producer or distributor of the product bearing such mark. They are also subject to liability for damages and profits if they had knowledge that the mark was intended to be used to cause confusion or mistake. The wording of the section is such as to suggest that a similar liability may be imposed upon the publisher of any newspaper, magazine, or periodical containing advertisements of products claimed to be infringements, as well as to radio broadcasting companies who permit their facilities to be used for broadcasting similar advertisements. Indeed any advertising agency which causes such advertisements to be published may similarly be guilty of contributory infringement.

To require publishers of newspapers, magazines, and other periodicals, as well as the operators of radio broadcasting stations, to determine at their peril whether the advertising material submitted for publication or broadcast reproduces a mark which infringes is to place upon them a burden both onerous and unworkable. One claiming that a mark constitutes an infringement can, in view of the penalties imposed by this section, easily, through mere threats of suit, prevent the publication of another's advertisements and cut off his necessary sources of supply.

This section can be used as a potent instrument for the suppression of competition. If the use of a mark constitutes an infringement, why should it not be sufficient for the registrant to sue the manufacturer of the infringing article or his distributors directly instead of proceeding against newspaper publishers, label manufacturers, sign painters, receptacle and package manufacturers, who have no direct interest in the claim of infringement and who would not normally be disposed to defend the suit brought against them?

The doctrine of contributory infringement in trade-mark law permits one who is unwilling to submit the issue of infringement to the determination of a court in a contested proceeding to drive a competitor out of business by threatening third persons serving such competitor.