E. I. Du Pont De Nemours & Co. v. Celanese Corp. of America , 167 F.2d 484 ( 1948 )

HATFIELD, Associate Judge.

This is an appeal in a trade-mark cancelation proceeding from the decision of the Commissioner of Patents, 69 U.S.P.Q. 258, affirming the decision of the Examiner of Interferences granting appellee’s motion to dismiss appellant’s petition to cancel the registration of appellee’s mark “Celanese,” with the word “Brand” enclosed in smaller letters within the term “Celanese,” for use on dyestuffs.

Appellee’s trade-mark, registration No. 189,399, was registered September 16, 1924, under the Trade-Mark Act of February 20, 1905, 15 U.S.C.A. § 81 et seq., on an application filed April 15, 1924, by the American Cellulose & Chemical Manufacturing Company, Limited, which, by change of its name later, became the Celanese Corporation of America, a corporation organized under the laws of the State of Delaware. The registration was renewed September 16, 1944, to the Celanese Corporation of America.

On October 26, 1944, appellant, E. I. du Pont de Nemours & Company, filed its petition for cancellation of appellee’s registered mark, in which it was claimed that on April 2, 1935, appellee had entered into a non-exclusive license with American Aniline Products, Inc., of New York, New York, granting to the latter company “ ‘a non-exclusive license to employ said trade mark in connection with dyestuffs’ and ‘the right — to publish advertising matter — in connection with the sale of dyestuffs, to the effect that such dyestuffs are designated by said trademark’ ”; that in accordance with said license agreement, American Aniline Products, Inc., “published from time to time, beginning in the year 1935, and running at least through the year 1943, numerous displays of advertising matter, such advertising matter appearing in the following periodicals (among others), namely:- — • ‘American Drycleaner,’ ‘American Dyestuff Reporter,’ ‘Cotton,’ ‘Rayon Textile Monthly,’ and ‘Textile Colorist,’ ” and in such advertisements, featured dyestuffs offered under the name “Celanese”; that said products under said trade-mark were advertised as the product of American Aniline Products, Inc., without any reference in any way to appellee; that it filled the orders received for dyestuffs and placed on such dyestuffs labels bearing the trade-mark and displayed its own name as the source of the goods “Celanese” and shipped such labeled goods directly to purchasers; that the trade-mark “Celanese” no longer served to denote origin in appellee and therefore, the trade-mark “Celanese,” as applied to dyestuffs, has ceased to function as a trademark; and that appellee’s registration has, therefore, been abandoned and is invalid.

Appellant further alleged, in order to establish that it deemed itself injured by the registration of appellee’s trade-mark, that appellee had relied on its registration in a cancelation proceeding against appellant’s registration No. 365914, for the mark “Zelan” by reasons of which cancelation proceeding appellant has been “grievously harrassed and otherwise seriously injured.”

Subsequent to the filing of appellant’s petition for cancelation, appellee, on November 10, 1944, filed a motion under Rule 12(e) of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, requiring appellant to furnish appellee with a further and better statement of appellant’s claims. Attached to the motion was a license agreement dated April 2, 1935, between the Celanese Corporation of America and American Aniline Products, Inc., designated as Exhibit A, together with photostat copies of two advertisements of American Aniline Products, Inc., appearing in Volume 32 of the American Dyestuff Reporter of April 26, 1943, and in Volume 10 of the American Drycleaner of November 1943, each respectively referred to in the motion as Exhibits B. and C.

Without quoting the entire agreement between appellee and American Aniline Products, Inc., it is stated therein that American Aniline Products, Inc., was desirous of selling dyestuffs under the trade-mark “Celanese” ; that it agreed “to acknowledge and does hereby acknowledge the validity” of the trade-mark “Celanese,” and “further agrees that it will never do anything or use” the trade-mark “Celanese” “in any way to infringe the rights” of appellee in its trade-mark. It is further stated in the license agreement that American Aniline Products, Inc., was granted “a non-exclusive, non-transferable and personal license” to employ the trade-mark “Celanese” “in connection with dyestuffs and no other product”; that American Aniline Products, Inc., was appointed as one of appellee’s agents “for the purpose of affixing labels bearing” the trade-mark “Celanese” to “packages containing said dyestuffs”; that American Aniline Products, Inc., agreed to attach such labels “only to dyestuffs manufactured by it and only so long as the right granted herein has not been terminated as provided in Clause 6 under this agreement”; and that “Nothing herein contained shall be construed to mean” that American Aniline Products, Inc., “has the sole and exclusive right to use” the trade-mark “Celanese” and appellee reserved the right to use said trade-mark and to appoint other agents to use the same.

It further appears from the license agreement that it was agreed that the trademark should be employed by American Aniline Products, Inc., “to designate only such dyestuffs which shall in quality be up to such standard as may be fixed or approved by the party of the first part and that for the purpose of ascertaining the quality of said dyestuffs,” appellee “shall through such agents or representatives as it may designate, have the right to inspect and test from time to time, such dyestuffs before they are offered for sale”; that American Aniline Products, Inc., might publish in circulars or other advertising in connection with the sale of dyestuffs “to the effect that such dyestuffs are designed by” the trade-mark “Celanese” “until such time as the right granted herein has not been terminated as provided in Clause 6 under this agreement”; that notice of the fact that the trade-mark “Celanese” was registered and owned by appellee should be indicated in all such advertising matter and that before such advertising matter was published it should be submitted to appellee for its approval; and that in Clause 6 of the agreement, it is provided that the license agreement may be terminated by appellee upon six months notice in writing to the second party.

In Exhibit B, published by American Aniline Products, Inc., it appears that the trade-mark “Celanese” was merely used to indicate to the public a particular type or quality of dye.

Exhibit C is an advertisement of American Aniline Products, Inc., in which it stated, among other things, that Celanese dyes might properly be used for the purpose intended.

On November 24, 1944, appellant, in response to the motion filed by appellee under Rule 12(e) of the Federal Rules of Civil Procedure, acknowledged the existence of Exhibits A, B, and C, hereinbefore referred to, and stated that there were other advertisements similar to Exhibits B and C and particularly referred to a copy of an advertisement in the American Dyestuff Reporter of July 15, 1935, and apparently attached the same to its bill of particulars. That advertisement, however, does not differ substantially from Exhibits B and C, hereinbefore referred to, and does not indicate that American Aniline Products, Inc., is the owner of the trademark “Celanese.”

On December 11, 1944, appellant moved to amend its petition for cancellation by adding thereto the allegation that American Aniline Products, Inc., with the knowledge and approval of appellee, “issued and distributed to the trade color books or ‘cards’ illustrating various shades of ‘Celanese’ colors or dyestuffs which were being offered, such color books or ‘cards’ bearing only the name American Aniline Products, Inc., as the source of the ‘Celanese’ dyestuffs described therein” and displayed its own name as a source of the dyestuffs. The motion to amend was granted by the Examiner of Interferences and appellant was granted until January 4, 1945, in which to furnish the particulars requested in appellee’s motion hereinbefore referred to.

Appellee, on December 12, 1944, filed an additional motion under Rule 12(e) of the Federal Rules of Civil Procedure, to require appellant to file an additional bill of particulars.

On December 30, 1944, appellant, in response to the second motion for a bill of particulars, attached two photostat copies of the covers of color books or “cards” and stated further that the original books from which the attached photostats had been made, might be examined either in Room 7090 of the du Pont Building, Wilmington, Delaware, or in Room 866 of the National Press Building, Washington, D. C.

The two photostat copies attached to the bill of particulars refer to Celanese colors but do not indicate to the purchasing public that the trade-mark “Celanese” is owned by American Aniline Products, Inc., but rather suggests that the Celanese colors are-of a particular quality.

The sole issue in the case, therefore, in accordance with the facts as stated is whether appellant’s petition for cancelation, the record not containing any other matter of which we may take judicial notice, is sufficient to state a cause of action in accordance with section 13 of the TradeMark Act of February 20, 1905, in view of appellee’s motion to dismiss the petition for cancellation, the bills of particulars, and the exhibits attached thereto.

The Examiner of Interferences, in a rather lengthy opinion, in which he cited, among others, the cases of E. F. Prichard Co. et al. v. Consumers Brewing Co., 6 Cir., 136 F.2d 512; Socony-Vacuum Oil Co., Inc. v. Atomol Mfg. Co., 58 U.S.P.Q. 497, and Smith v. Dental Products Co., Inc., et al., 7 Cir., 140 F.2d 140, held that appellant’s petition for cancelation should be dismissed in accordance with appellee’s motion. In his decision, the examiner distinguished the case of R. M. Hollingshead Corp. v. Davies-Young Soap Co., 121 F.2d 500, 28 C.C.P.A., Patents, 1286, from the facts in the instant case, reference to which will hereinafter be made.

On appeal, the Commissioner of Patents affirmed the decision of the Examiner of Interferences and in support of his decision cited the cases of Smith v. Dental Products Co., Inc., et al., supra, and Mathy v. Republic Metalware Co., 35 App.D.C. 151. The commissioner also referred to the cases of Macmahan Pharmacal Co. v. Denver Chemical Mfg. Co., 8 Cir., 113 F. 468, and Mayer Fertilizer & Junk Co. v. Virginia-Carolina Chemical Co., 35 App. D.C. 425.

It is unnecessary that we recite all of the statements contained in the commissioner’s decision. It is sufficient to say that he stated that it was well settled that one who assigns his trade-mark with or without the business with which it has been' used, abandons his mark, but that a license agreement, not merely a naked license to use, where the licensor expressly reserves his right to continue the use of the mark and which license agreement provides that the agreement may be terminated by the licensor, is not an abandonment of its registered mark.

In the case at bar, it clearly appears from the license agreement that the licensee agreed to use the trade-mark on such dyestuffs only as were of the quality and of the standard as might be fixed or approved by the licensor, and that the licensor might, through its agents or representatives, have the right to inspect arid test from time to time the dyestuffs made by the licensee. The license agreement further provided, as hereinbefore noted, that the licensor reserved the right to use said trade-mark and to appoint other non-exclusive agents for the use thereof; that American Aniline Products, Inc., acknowledged the validity of appellee’s registered trade-mark and that it would not do anything in any way to infringe the rights of appellee. The agreement further provided that it might be terminated by appellee by giving six months notice in writing to the licensee. There is nothing in the license agreement to indicate that appellee had abandoned its mark for use on its dyestuffs. On the contrary, it clearly appears from the agreement that it retained not only its right to use, but its full ownership of the trade-mark, subject to the right of American Aniline Products, Inc., to manufacture appellee’s dyestuffs in accordance with the quality and standard required by appellee. It is obvious, therefore, that the license agreement is not a naked license agreement, and that appellee has not abandoned its mark within the purview of section 13 of the Trade-Mark Act of February 20, 1905, as argued by counsel for appellant.

It is noted in the petition for cancellation, as hereinbefore stated, that contrary to the license agreement, American Aniline Products, Inc., did not, at least in some instances, comply wtih the terms of the contract in that it advertised its dyestuffs under the trade-mark “Celanese,” apparently as the source of such dyestuffs, without reference in any way to appellee.

When it filed its bills of particulars in accordance with the motions by appellee, appellant referred to Exhibits B and C, hereinbefore set forth, as conforming to its allegation that American Aniline Products, Inc., advertised its dyestuffs as though the “Celanese” trade-mark was its own. It failed, however, to introduce into the record any other advertisements by American-Aniline Products, Inc., differing substantially from Exhibits B and C, herein-before referred to, but reserved the right to introduce evidence of'other advertising which it claimed was contrary to the contract, if such advertising specimens were later discovered.

We have examined Exhibits B and C attached to appellee’s motion under Rule 12(e) of the Federal Rules of Civil Procedure, and are of opinion that neither of those exhibits indicates in any way that American Aniline Products, Inc., was the owner of the trade-mark “Celanese” and the only matter of importance appearing in those exhibits is that the Celanese dyes therein referred to indicated quality and were manufactured by American Aniline Products, Inc. That, we think it had a perfect right to do and that such advertising does not indicate in any way that appellee abandoned, or intended to abandon its registered trade-mark “Celanese.” It is true that Exhibits B and C do not state that the trade-mark “Celanese” is registered and owned by appellee, and to that extent American Aniline Products, Inc., violated the terms of the license agreement.

In view of the fact that appellee filed a motion to dismiss, it acknowledged that, at least as to Exhibits B and C, American Aniline Products, Inc., violated that portion of the license agreement. However, there is no statement alleged in the petition for cancelation that either the public or anyone else was deceived by the failure of American Aniline Products, Inc., to comply with that portion of the terms of the license agreement. Furthermore, there is no allegation that the other terms of the agreement were not fully carried out by each of the parties to the license agreement.

Counsel for appellant has cited several cases to the effeot that the primary object of a trade-mark is to indicate origin, as well as the product of a particular trader and that appellee, having entered into a license agreement, has voluntarily divested itself of the exclusive use of the mark; that appellee could not register the mark in view of the license agreement and, therefore, has abandoned the mark within the purview of section 13 of the Trade-Mark Act of February 20, 1905.

One of the cases relied on by counsel for appellant is that of R. M. Hollingshead Corp. v. Davies-Young Soap Co., supra. That case involved an opposition proceeding between the parties to a contract in which appellee opposed the registration of the mark “Whiz” to appellant. It appeared that appellant in that case had entered into a contract with appellee in which it voluntarily relinquished its exclusive right to the use of the mark upon grit paste soap and, for the reasons therein stated, was not entitled to the exclusive use of the mark and, therefore, not entitled to register the same under the Trade-Mark Act of February 20, 1905. It is true that in our decision in that case we q.uoted from Nims on Unfair Competition and Trade-Marks, Third Edition, section 22, page 68, that “ * * A lease or license of a mark apart from its business with which it is used, constitutes an abandonment of the mark and rightfully so.’ ” No cases were cited in support of the quoted statement. It is significant that if the quoted statement should be interpreted literally, it is contrary to decisions hereinafter cited. A similar statement appears in Nims on Unfair Competition and TradeMarks, Fourth Edition, section 22, page 123, and cases are cited in support of the author’s statement. However, we have examined all of the Federal cases there involved and find that they are not in point. The author also states that: “Nevertheless, a trade-mark or trade name may be the subject of a lawful and valid license or lease, even as it may be legally sold. ‘A trade name, like a trade-mark, may be assigned, as long as it remains associated with the same product or business with which it has become associated in the public mind. * * * And upon the same conditions it may be licensed or lent, and its exclusive use may be resumed by its owner according to the terms of the lending.’ ”

Attention is also called by the author, in a footnote to section 22, page 123, to section 408, page 1264, where it is stated, relating to abandonment, that

“ ‘Abandonment in industrial property is an act by which the public domain originally enters or re-enters into the possession of the thing (commercial name, mark or sign), by the will of the legitimate owner. The essential condition to constitute abandonment is that the one having a right should consent to the dispossession. Outside of this there can be no dedication of the right, because there cannot be abandonment in the juridical sense of the word.’ Abandonment results in a forfeiture and must be strictly proved, and the burden of its establishment is upon the party affirming it.

“Abandonment is purely a question of intent.

“In 1915, the Supreme Court said that ‘trade-mark rights, like others that rest in user, may be lost by abandonment, nonusfr, laches or acquiescence. Abandonment, in the strict sense, rests upon an intent to abandon; and we have no purpose to qualify the authority of Saxlehner v. Eisner [179 U.S. 19, 21 S.Ct. 7, 45 L.Ed. 60] to that effect.’ [Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 36 S.Ct. 357, 60 L.Ed. 713.]

. “The rule that intention governs abandonment, is not disputed. When conduct is consistent with the intention to retain trade-mark rights, or when acts which unexplained might establish abandonment are answered by affirmative proof that there never was an intention to give up the right claimed, abandonment is not established.”

That that quotation is an accurate statement of the law cannot seriously be challenged. Cases were cited in support thereof.

It is well settled that the owner of a trade-mark may license its use to another and others so long as such agreements are not merely naked license agreements. See Menendez v. Holt, 128 U.S. 514, 524, 9 S. Ct. 143, 32 L.Ed. 526; Bacardi Corporation of America v. Domenech et al., 311 U.S. 150, 61 S.Ct. 219, 85 L.Ed. 98; Shaver et al. v. Heller & Merz Co., 8 Cir., 108 F. 821, 65 L.R.A. 878; Mathy v. Republic Metalware Co., supra; Saalfield Pub. Co. et al. v. G. & C. Merriam Co., 6 Cir., 238 F. 1; and E. F. Prichard Co. et al. v. Consumers Brewing Co., supra.

In the case of Smith v. Dental Products Co., Inc., et al., supra, the court, among other things, there said [140 F.2d 146] : “Again defendant relies upon authorities such as Hanover Star Mill Co. v. Metcalf, supra [240 U.S. 403, 36 S.Ct. 357, 60 L.Ed. 713], and United Drug v. Theodore Rectanus, supra [248 U.S. 90, 39 S.Ct. 48, 63 L.Ed. 141], which, in our judgment, are not controlling. This is so for the reason that in the instant case defendant’s use was definitely limited by the agreements between the parties. In none of the authorities relied upon by the defendant has it been held that the owner of a trade-mark loses such ownership by the mere grant to another of the privilege of its use.”

In the case of Mathy v. Republic Metalware Co., supra, the court clearly recognized that a proper license was valid.

It is true that in the case of Mayer Fertilizer & Junk Co. v. Virginia-Carolina Chemical Co., supra, the court stated that “A trademark cannot be assigned, or its use licensed, except as incidental to a transfer of the business or property in connection with which it has been used” and, in support of the quoted statement, cited the case of Macmahan Pharmacal Co. v. Denver Chemical Mfg. Co., supra, in which case the sole issue was whether the naked assignment of the trade-mark was valid, and the court there properly held that a mark could not be assigned apart from the business and good will of the owner of the mark. Accordingly, in its statement in the case of Mayer Fertilizer & Junk Co. v. Virginia-Carolina Chemical Co., supra, the court was wrong in saying, as the issue was not presented, that a trade-mark could not be legally licensed without a transfer of the business or property and the good will thereof, and the holding in that case in connection to a proper license agreement was contrary to the decisions in the case of Mathy v. Republic Metalware Co., supra.

Although the case of Crown Fabrics Corp. v. American Viscose Corp., 145 F.2d 246, 32 C.C.P.A., Patents, 701, is not exactly in point, it does approve the rule that a proper license agreement is valid and does not indicate abandonment on the part of the owner of the mark.

It is unnecessary that we cite other cases in support of our holding that a trade-mark registration may be licensed in accordance with the license agreement hereinbefore set forth. We are of opinion, therefore, that for the reasons hereinbefore stated, appellee has not abandoned its mark under section 13 of the Trade-Mark Act of February 20, 1905. It is unnecessary, therefore, that we consider the applicability of the Trade-Mark Act of July 5, 1946, effective July 5, 1947, 15 U.S.C.A. § 1051 et seq.

For the reasons hereinbefore stated, the decision of the Commissioner of Patents should be and is, accordingly, affirmed.

Affirmed.

BLAND, Associate Judge, sat during the argument of this case, but resigned before the opinion was prepared.