PROVIDING FOR THE REGISTRATION AND PROTECTION OF TRADEMARKS USED IN COMMERCE, TO CARRY OUT THE PROVISIONS OF CERTAIN INTERNATIONAL CONVENTIONS

FEBRUARY 26, 1945.-Committed to the Committee of the Whole House on the state of the Union and ordered to be printed

Mr. LANHAM, from the Committee on Patents, submitted the following

REPORT

[To accompany H. R. 1654]

The Committee on Patents, to whom was referred the bill (H. R 1654) to provide for the registration and protection of trade-marks used in commerce, to carry out the provisions of certain international conventions, and for other purposes, having considered the same, report favorably thereon with amendments and recommend that the bill as amended do pass.

The amendments are as follows:

Page 5, line 1, strike out "of" and insert "or".

Page 26, line 7, strike out the word "in", second appearance, and insert "on".

Page 31, line 9, strike out "an" and insert "and".

Page 34, line 25, strike out "the", first occurrence, and insert "any"; and strike out final "s" of the word "rights", changing the word to "right".

Page 35, line 1, strike out "in", last occurrence.

Page 35, line 2, strike out "any civil action arising under this Act". Page 35, line 5, insert after the word "the", first occurrence, and before the word "mark" the word "registered"; and strike out "of the plaintiff".

Page 43, line 4, strike out "to" and insert "through".

Page 43, line 6, strike out "to" and insert "through".

All of these amendments are simply for the purpose of correcting typographical or clerical errors. No question of principle or substance is involved.

THE STATUTES

The Federal Trade-Mark Act has been in operation for over 38 It has been frequently amended, and these amendments are years. well scattered throughout the United States statutes. There are con

fusing and conflicting interpretations of these various statutes by the courts. There is much that is good in the present acts. Their results, on the whole, have been beneficial. The present bill preserves the things which have demonstrated their usefulness.

The purpose of this bill is to place all matters relating to trademarks in one statute and to eliminate judicial obscurity, to simplify registration and to make it stronger and more liberal, to dispense with mere technical prohibitions and arbitrary provisions, to make procedure simple and inexpensive, and relief against infringement prompt and effective. This bill effects this necessary codification and coordination.

BASIC PURPOSES OF TRADE-MARK LEGISLATION

The purpose underlying any trade-mark statute is twofold. One is to protect the public so it may be confident that, in purchasing a product bearing a particular trade-mark which it favorably knows, it will get the product which it asks for and wants to get. Secondly, where the owner of a trade-mark has spent energy, time, and money in presenting to the public the product, he is protected in his investment from its misappropriation by pirates and cheats. This is the well-established rule of law protecting both the public and the trademark owner. It is succinctly stated by Mr. Justice Frankfurter in Mishawaka Rubber and Woolen Company v. S. S. Kresge Company, decided on May 4, 1942:

The protection of trade-marks is the law's recognition of the psychological function of symbols.

Your committee believes the proposed bill accomplishes these two broad basic principles.

TRADE-MARKS DEFEAT MONOPOLY BY STIMULATING COMPETITION

This bill, as any other proper legislation on trade-marks, has as its object the protection of trade-marks, securing to the owner the good✓ will of his business and protecting the public against spurious and falsely marked goods. The matter has been approached with the view of protecting trade-marks and making infringement and piracy unprofitable. This can be done without any misgivings and without the fear of fostering hateful monopolies, for no monopoly is involved in trade-mark protection.

Trade-marks are not monopolistic grants like patents and copyrights (Trade-mark cases, 100 U. S. 82). In Prestonettes v. Coty (264 U. S. 359), Mr. Justice Holmes said (368):

It [a trade-mark] does not confer a right to prohibit the use of the word or words. It is not a copyright. * * * A trade-mark only gives the right to prohibit the use of it so far as to protect the owner's goodwill against the sale of another's product as his.

In United Drug Co. v. Rectanus (284 U. S. 90, 97-98), Mr. Justice Pitney said:

The owner of a trade-mark may not, like the proprietor of a patented invention make a negative and merely prohibitive use of it as a monopoly.

In truth, a trade-mark confers no monopoly whatever in a proper sense

There is no essential difference between trade-mark infringement. and what is loosely called unfair competition. Unfair competition is the genus of which trade-mark infringement is one of the species; "the law of trade-marks is but a part of the broader law of unfair competition" (United Drug Co. v. Rectanus, 248 U. S. 90, 97). All trademark cases are cases of unfair competition and involve the same legal wrong. As Mr. Justice Pitney observed in Hanover Star Milling Co. v. Metcalf (240 U. S. 403, 412):

The essence of the wrong consists in the sale of the goods of one manufacturer or vendor for those of another. * * *

This essential element is the same in trade-mark cases as in cases of unfair competition unaccompanied with trade-mark infringement.

The protection accorded trade-marks is merely protection against. swindling.

As Mr. Justice Holmes observed in Dupont v. Masland (244 U. {S. 100, 102):

*

The word "property" as applied to trade-marks is an unanalyzed expression of certain secondary consequences of the primary fact that the law makes some rudimentary requirements of good faith.

Trade-marks, indeed, are the essence of competition, because they make possible a choice between competing articles by enabling the buyer to distinguish one from the other. Trade-marks encourage the maintenance of quality by securing to the producer the benefit of the good reputation which excellence creates. To protect trade-marks, therefore, is to protect the public from deceit, to foster fair competition, and to secure to the business community the advantages of reputation and goodwill by preventing their diversion from those who have created them to those who have not. This is the end to which this bill is directed.

PURPOSES OF THE PRESENT BILL

There are many reasons why there whould be a new trade-mark statute. The present act is substantially the act of February 20, 1905. It has been amended from time to time and supplemented by the act of March 19, 1920, which has also been amended in several particulars. The result is a confused situation.

There are many statutes dealing with trade-marks which are widely scattered and difficult of access. There are provisions dealing with trade-marks in tariff acts and other unlikely places. It seems desirable to collect these various statutes and have them in a single

enactment.

Moreover, ideas concerning trade-mark protection have changed in the last 30 years and the statutes have not kept pace with the commercial development. In addition the United States has become a party to a number of international conventions dealing with trademarks, commercial names, and the repression of unfair competition. These conventions have been ratified, but it is a question whether they are self-executing, and whether they do not need to be implemented by appropriate legislation.

Industrialists in this country have been seriously handicapped in securing protection in foreign countries due to our failure to carry out, by statute, our international obligations. There has been no serious attempt fully to secure to nationals of countries signatory to the conventions their trade-mark rights in this country and to protect them

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against the wrongs for which protection has been guaranteed by the conventions. Naturally under such circumstances foreign governments do not always give to citizens of the United States their convention rights. To remedy this discreditable situation is merely an act of international good faith.

This bill attempts to accomplish these various things:

1. To put all existing trade-mark statutes in a single piece of legislation.

2. To carry out by statute our international commitments to the end that American traders in foreign countries may secure the protection to their marks to which they are entitled. Although it has solemnly pledged at inter-American conventions to do so, the United States has failed adequately to protect owners of trade-marks in the other American countries doing business with this country. As a result of this inaction, our business organizations have not received reciprocal advantages in the other Americas. The bill remedies this matter, eliminates these sources of friction with our Latin-American friends, and will facilitate mutual trade in this hemisphere. These features make this bill of primary importance now.

3. To modernize the trade-mark statutes so that they will conform to legitimate present-day business practice.

4. To remedy constructions of the present acts which have in several instances obscured and perverted their original purpose. These constructions have become so ingrained that the only way to change them is by legislation.

5. Generally to simplify trade-mark practice, to secure trademark owners in the goodwill which they have built up, and to protect the public from imposition by the use of counterfeit and imitated marks and false trade descriptions.

The theory once prevailed that protection of trade-marks was entirely a State matter and that the right to a mark was a common-law right. This theory was the basis of previous national trade-mark statutes. Many years ago the Supreme Court held and has recently repeated that there is no Federal common law. It is obvious that the States can change the common law with respect to trade-marks and many of them have, with the possible result that there may be as many different varieties of common law as there are States. A man's rights in his trade-mark in one State may differ widely from the rights which he enjoys in another.

However, trade is no longer local, but is national. Marks used in interstate commerce are properly the subject of Federal regulation. It would seem as if national legislation along national lines securing to the owners of trade-marks in interstate commerce definite rights should be enacted and should be enacted now.

There can be no doubt under the recent decisions of the Supreme Court of the constitutionality of a national act giving substantive as distinguished from merely procedural rights in trade-marks in commerce over which Congress has plenary power, and when it is considered that the protection of trade-marks is merely protection to goodwill, to prevent diversion of trade through misrepresentation, and the protection of the public against deception, a sound public policy requires that trade-marks should receive nationally the greatest protection that can be given them.