FRAUD AS AN ELEMENT OF UNFAIR
COMPETITION.

No

O branch of the law has undergone a more interesting development within the past fifty years than that which deals with the subject of unfair competition. "A court of equity," remarks Judge Townsend in a recent case,2 "keeps pace with the rapid strides of the sharp competitors for the prize of public favor and insists that it shall be won only by fair trade."

The general principle upon which one trader is granted relief against the sale of another trader's goods in such a guise or with such distinguishing marks as to deceive the purchasing public into accepting them as the wares of the first trader, was long ago stated by Lord Langdale, M. R.:3

"I think that the principle on which both the courts of law and of equity proceed in granting relief and protection in cases of this sort is very well understood. A man is not to sell his own goods under the pretense that they are the goods of another man; he cannot be permitted to practice such a deception, nor to use the means which contribute to that end. He cannot therefore be allowed to use names, marks, letters or other indicia by which he may induce purchasers to believe that the goods which he is selling are the manufacture of another person."

In the recent famous "Camel Hair Belting" case, Lord Chancellor Halsbury has crystallized the law of unfair competition in the following terse summary:

4

1 The phrase "unfair competition" throughout this article is intended to mean any passing off of one man's goods for another's, whether by a deceptive use of another's trade-marks or by other means. See Bradford, J, in Dennison Mfg. Co. v. Mfg. Co. (C. C. 1899), 94 Fed. Rep. 651 at 659: “The law of trade-marks is but part of the law of unfair competition "

2 R. Heinisch's Sons Co. v. Boker (C. C. 1898), 86 Fed. Rep. 765 at 768.

Perry v. Truefitt (1842), 6 Beav. 66. Lord Langdale summed up the principle even more briefly in Croft v. Day (1843), 7 Beav. 84 at 88: "It has been very correctly said that the principle in these cases is this, that no man has a right to sell his own goods as the goods of another." So Turner, L. J., in Burgess v. Burgess (1853), 3 De G. M. & G. 896: "No man can have a right to represent his goods as the goods of another person."

✦ Reddaway v. Banham, [1896] A. C. 199 at 204.

"I believe the principle of law may be very plainly stated, and that is, nobody has any right to represent his goods as the goods of somebody else. How far the use of particular words, signs, or pictures does or does not come up to the proposition which I have enunciated in each particular case must always be a question of evidence; and the more simple the phraseology, the more like it is to a mere description of the article sold, the greater becomes the difficulty of proof; but if the proof establishes the fact, the legal consequence appears to follow."

This proposition that "nobody has any right to represent his goods as the goods of somebody else" has been adopted as the basis of all the recent decisions1 in England dealing with the passing off of one trader's wares as those of another.

In the United States the basic principle of relief in this class of cases is similarly stated. In 1877 Justice Clifford, in delivering the opinion of the Supreme Court in the case of McLean v. Fleming, summed up the law in the statement that "Equity gives relief in such a case upon the ground that one man is not allowed to offer his goods for sale, representing them to be the manufacture of another trader in the same commodity." And in a recent unfair competition case before the Supreme Court, National Elgin Watch Company v. Illinois Watch Case Company, Chief Justice Fuller, in speaking for the court, says tersely: "The essence of the wrong consists in the sale of the goods of one manufacturer or vendor for those of another."

Taken by themselves, these various statements of the principle of relief against unfair competition would lead one to believe that the courts of last resort of both countries were in substantial accord. Yet a study of the application of that principle in specific cases reveals a striking difference. It appears that relief will not be given by the United States Supreme Court except in case of fraudulent intent on the part of the defendant; while in the English courts, as the law is to-day settled, it is immaterial whether the defendant's motive be fraudulent or innocent, once it is proven that the dress or the distinguishing marks of his wares deceive or are likely to deceive customers into purchasing his wares for and as the plaintiff's wares. To state accurately the principle of relief, as applied by the United States Supreme Court, it would seem that

1 For instance Kekewich, J., in Saxlehner v. Apollinaris Co., [1897] 1 Ch. 893 at 899.

296 U. S. 245 at 255.

8 (1901) 179 U. S. 665 at 675.

Chief Justice Fuller's statement ought to read: "The essence of the wrong consists in the sale with fraudulent intent of the goods of one manufacturer or vendor for those of another." Whether or not this statement of the ground of relief is open to criticism is the object of inquiry in this article.

In order to clear the ground for discussion, it must be premised that courts distinguish between trade-marks proper, to which a trader may have an absolutely exclusive right in connection with a particular class of goods, and other distinguishing marks (words or symbols) to which a trader cannot acquire this exclusive right;1 and this distinction is recognized, although it is frequently true of these last-mentioned marks that by long and exclusive use they acquire such an understood reference to the user's goods, that an unrestricted use of the same word or symbol by others in connection with similar goods inevitably leads to confusion and deception. In passing, it may be remarked that there seems to be a strong tendency to-day to admit that an exclusive right may be acquired in certain distinguishing devices which would have been held, some years ago, to be non-exclusive marks and open to all the world. The decisions upholding the plaintiff's exclusive right to a certain shape of bottle, for example, seem to overthrow the old decisions that no exclusive right can be acquired in the mere shape or form of a package. With less certainty, it may also be said, that in certain cases the courts to-day recognize an exclusive right to a color in connection with particular goods 1 — a view clearly at variance with the earlier authorities. But even though the class of marks be broadening which are recognized as capable of exclusive appropriation, and as constituting what are variously termed "trade-marks" or "technical trade-marks"

1 For an elaborate discussion of this distinction, and the authorities in support of it, see Shaver v. Heller & Merz Co. (C. C. A. 1901), 108 Fed. Rep. 821. See also Dennison Mfg. Co. v. Mfg. Co. (C. C. 1899), 94 Fed. Rep. 651.

2 Mt. Vernon Whiskey Bottle, Cook & Bernheimer Co. v. Ross (C. C. 1896), 73 Fed. Rep. 203. Hires Root Beer Bottle, - Hires Co. v. Consumers' Co. (C. C. A. 1900), 100 Fed. Rep. 809.

3 Moorman v. Hoge (C. C. A. 1871), Fed. Cas. No. 9783; Harrington v. Libby (C. C. 1877), Fed. Cas. No. 6107; Adams v. Heisel (C. C. 1887), 31 Fed. Rep. 279; Enoch Morgan's Sons Co. v. Troxell (1882), 89 N. Y. 292.

4 Von Mumm v. Frash (C. C. 1893), 56 Fed. Rep. 830; Franck v. Frank Chickory Co. (C. C. 1899), 95 Fed. Rep. 818; Rains v. White (Ky. 1899), 52 S. W. Rep. 970.

Fleischman v. Starkey (C. C. 1885), 25 Fed. Rep. 127; Faber v. Faber (1867), 49 Barb. (N. Y). 357; Fischer v. Blank (1893), 138 N. Y. 244; Mfg. Co. v. Rouss (C. C. 1889), 40 Fed. Rep. 585; Mumm v. Kirk (C. C. 1889), 40 Fed. Rep. 589.

I common law trade-marks," the line is still drawn between trademarks proper and other distinguishing earmarks. The line of demarcation between what a trade-mark proper may and may not comprise is thus defined by Chief Justice Fuller in the "Elgin"

"It may consist in any symbol or in any form of words, but as its office is to point out distinctively the origin or ownership of the articles to which it is affixed, it follows that no sign or form of words can be appropriated as a valid trade-mark, which from the nature of the fact conveyed by its primary meaning, others may employ with equal truth, and with equal right, for the same purpose."

Yet it frequently happens that just such a sign or word as is here barred from the domain of technical trade-marks is adopted as a distinguishing mark by a trader, or perhaps fastened upon his goods by the public against his own intentions, and in course of time becomes so associated with his goods as to acquire a secondary signification, and in connection with goods made or sold by him, to mean simply that goods so marked are his wares. This may be true of personal names, common to both the plaintiff and defendant; it may be true of geographical names of districts wherein both plaintiff and defendant raise or manufacture their products; it may be true of descriptive words which in their primary sense describe both plaintiff's and defendant's goods with equal accuracy.

1 It should be noticed, perhaps, that in England, by reason of the statutes providing for registration of marks, the term "trade-mark" has become practically synonymous with "registered trade-mark."

2179 U. S. 665 at 673.

* See the singular history of the adoption by the public of the name Angostura Bitters" in Siegert v. Findlater (1878), L. R. 7 Ch. Div. 801, commented on by Putnam, J., in Levy v. Waitt (C. C. A. 1894), 61 Fed. Rep. 1008. See also the case of "Dolly Blue," Edge v. Gallon (C. A. 1899), 16 Rep. Pat. Cas. 509, per Lindley, M. R., at p. 514; and the notable "Bhe Hathi" case, Orr v. Johnson (1880), 13 Ch. Div. 434, and (1882) 7 App. Cas. 219, 221.

For examples of a "secondary significance" which has been proven for a personal name, see Clark Thread Co. v. Armitage (C. C. A. 1896), 74 Fed. Rep. 936; Baker v. Sanders (C. C. A. 1897), 80 Fed. Rep. 889; Massam v. Cattle Food Co. (C. A. 1880), 14 Ch. Div. 748; Valentine Co. v. Valentine Co. (C. A. 1900), 17 R. P. C. 673; J. & J. Cash, Ltd. v. Cash (1901), 18 R. P. C. 213, (C. A. 1902), 19 R. P. C. 181. For a geographical name, American Waltham Watch Co. v. United States Watch Co. (1899), 173 Mass. 85; Watch Co. v. Sandman (C. C. 1899), 96 Fed. Rep. 330; Heller & Merz Co. v. Shaver (C. C. 1900), 102 Fed. Rep. 882, affirmed (C. C. A. 1901) 108 Fed. Rep. 821; Wotherspoon v. Currie (1872), L. R. 5 H. L. 508; Montgomery v. Thompson, [1891] A. C. 217; Rockingham Ry. Co. v. Allen, 12 Times L. R. 345;

When such words have once acquired this secondary meaning in connection with some one trader's goods, another trader cannot truthfully describe his goods by the same term, despite the fact that originally, and before the growth of the secondary meaning, he could have done so. Yet it is clear that if a plaintiff's wares have come to be known as "Clark's Spool Cotton," for example, he cannot on that account absolutely enjoin another manufacturer or trader in spool cotton by the name of Clark from indicating in some way that he is the manufacturer or vendor of the cotton that he makes or sells. This other Clark will not be allowed to call his spool cotton "Clark's Spool Cotton," but in some way he will be allowed to indicate that he is the maker or the seller, as the case may be, of his goods. So where two persons make camel hair belting, but that phrase has come to have a secondary meaning denoting the belting of the first in the field, the second manufacturer will not be absolutely restrained from informing the world in some way that his belting is made of camel hair, so long as he does not do it in a way to confuse his belting with the plaintiff's. So in the case of a geographical name.

Relief in equity in the case of technical trade-marks is given by an absolute injunction against the further use of the infringing marks; in the case of non-exclusive marks, which have come to be identified with the plaintiff's wares, by an injunction against the use of the marks (or words) in question without " clearly and unmistakably" distinguishing the defendant's wares from plaintiff's.3

Bewlay v. Hughes (1898), 15 R. P. C. 290; Worcester Royal Porcelain Co. v. Locke (1902), 19 R. P. C. 479. For a descriptive name, Singer Mfg. Co. v. June Mfg. Co. (1896), 163 U. S. 169; Fuller v. Huff (C. C. A. 1900), 104 Fed. Rep. 141; Wells, etc., Co. v. Siegel (C. C. 1900), 106 Fed. Rep. 77; Hansen v. Siegel-Cooper Co. (C. C. 1900), 106 Fed. Rep. 691; Reddaway v. Banham, [1896] A. C. 199; Draper v. Skerrett (C. C. 1902), 116 Fed. Rep. 206.

1 For language to this effect see, per Shipman, J., Clark Thread Co. v. Armitage, supra, at p. 943. See also the remarks of Lord Herschell and of Lord Macnaghten in the "Camel Hair Belting" case, [1896] A. C. 199, 212, 218, 219; Shiras, J., in Heller & Merz Co. v. Shaver (C. C. 1900), 102 Fed. Rep. 882, 889; Sanborn, J., in same case on appeal (C. C. A. 1901), 108 Fed. Rep. 821, 825; Hargis, C. J., in Avery v. Meikle (1883), 81 Ky. 73; 27 O. G. 1027, 1032.

2 For a typical case, containing a thorough discussion as to the measure of the relief in technical trade-mark cases, see Bass v. Feigenspan (C. C. 1899), 96 Fed. Rep. 206.

See the injunctions in the "Camel Hair Belting" case, [1896] A. C. 199, and the "Singer" case, 163 U. S. 169. In these cases of non-exclusive marks, it is said that whether defendant can continue to use the word in controversy, and yet surround it