PENNWALT CORP. v. BECTON, DICKINSON & CO.Civ. No. 77-0399.
434 F.Supp. 758 (1977)
PENNWALT CORPORATION, Plaintiff,
BECTON, DICKINSON & COMPANY, Defendant.
BECTON, DICKINSON & COMPANY, Defendant.
United States District Court, D. New Jersey.
April 22, 1977.
Robinson, Wayne & Greenberg by Donald A. Robinson, Newark N. J., for plaintiff; Miller & Prestia by Robert Danehower, and Austin Miller, Philadelphia, Pa., of counsel.
Stryker, Tams & Dill, Newark, N. J., for defendant, by Burtis W. Horner, Newark, N. J., Kane, Dalsimer, Kane, Sullivan & Kurucz by David S. Kane, Davis H. Kane, Siegrun D. Kane, and John Boyle, New York City, of counsel.
BIUNNO, District Judge.
This is a trademark infringement and unfair competition case. Jurisdiction is grounded both on diversity of citizenship, 28 U.S.Code § 1332 and on the Lanham Act, 15 U.S.Code § 1051 et seq. This calls for consideration of both similarity of the marks used and of the other features such as trade dress.
In any event, no differences between federal and state law applicable to the issues appear to exist in regard to the major controversy.
The complaint was filed February 25, 1977, with process served February 28, 1977, and the matter was scheduled for hearing on application for preliminary injunction.
However, due to an extended jury trial of a criminal case which was called on January 11, 1977 — not yet completed — the Court suggested to the parties that evidence be gathered by deposition, document discovery and otherwise, which would not call for judicial time that was unavailable; and also that trial on the merits be advanced and consolidated with the hearing on the application under F.R.Civ.P. 65(a)(2).
This course was followed and over a period from March 17, 1977, to March 31, 1977, deposition testimony, comprising 925 pages, was adduced from nine witnesses and more than 120 exhibits were marked.
On the afternoon of April 15, 1977, after the jury in the criminal case had been instructed, the combined hearing and trial were begun and continued daily through April 20, 1977, when arguments on both sides were completed.
On review of these materials, together with the briefs and arguments of counsel, the Court is satisfied that the matter is ripe for both preliminary and final adjudication except for certain collateral aspects to be noted later.
Pennwalt markets a product with the mark CRUEX,
The product was originally marketed by William H. Singer, who sold it on mail order back in 1963. At that time he operated a sole proprietorship business as Package Services, in White Plains. The product was then sold as CRUEX, as a spray powder in a plastic bottle with the CRUEX label.
His ads were published in the New York Daily News and he received some 400 orders over about a year. A photocopy of the labeling shows that the bottle was a squeeze bottle.
In 1964 Singer sold CRUEX to Strasenberg Laboratories and turned over his customer list. He also forwarded later mail orders as received. Strasenberg Laboratories had merged with Wallace & Tiernan effective January 1, 1961, became a division of that company, and later was called W. T. S. Pharmaceutical.
In 1964 Pharmacraft was acquired from the Seagram Company and in 1969 Wallace & Tiernan merged with the Pennsalt Company to become Pennwalt, with the pharmaceutical business continuing as Pharmacraft, a division of Pennwalt.
As of 1961 Pharmacraft had been marketing two products sold as non-prescription ethical drugs, that is, to physicians rather than to consumers. One was DESENEX, an anti-fungal agent primarily offered for athlete's foot and general fungus infections; and CALDESENE, a powder to treat diaper rash in babies.
In 1961 marketing of these items as proprietary products over the counter to consumers was begun. The anti-fungal agent in DESENEX was undecylenic acid, and in CALDESENE it was calcium undecylenate.
CRUEX was marketed specifically for "jock itch," tinea cruris, and is still so marketed. For a period it was packaged as an aerosol powder, but with the hue and cry about claims of long-term ecological damage from fluorocarbons and the risk that they might be banned, as cyclamates have been, and as saccharine may be, it has been packaged as a spray powder in a squeeze bottle for the last 18 months or so as it was when Singer sold it.
National retailing of CRUEX began with test marketing in 1966 under the direction of Mark Logan, now an employee of defendant. Logan explained that market tests are used for a new product primarily to avoid a mistake at the national level so that if there were a complete market failure it would be on a small scale.
From that time on obstacles were encountered in securing advertising to emphasize the term "jock itch." The evidence shows the term is widely known and has been for many years but that its appearance in print for advertising or its use on the air for radio and TV broadcast was taboo. Its use was regarded as "not in good taste."
The reason for this is not entirely clear, as the views are doubtless reflections of subjective notions, as observed by the witness Popofsky. Inspection of entries in Webster's Third International Dictionary indicates that the squeamishness may be due to the association of the term with "jock strap," a common term for an athletic supporter, the derivation of which is given in the dictionary as employing the Scottish word for "penis".
The term "jock itch" is also in the dictionary and is denoted as synonymous with the Latin term "tinea cruris," and the definition indicates that it is a fungus infection of the groin.
References to Latin dictionaries disclose that "tinea" means ringworm or the like and "cruris" is the genetive case of the noun "crus," meaning leg or shin. Thus, tinea cruris translates as ringworm of the groin for which the commonly recognized expression is "jock itch," doubtless due to association of the condition with an improperly fitted or inadequately washed jock strap. The medical texts show that it is a fungus condition.
The resistance of the larger newspapers, including the New York Times, was gradually overcome. Next, magazines were taken on and the same resistance was encountered and eventually overcome.
The witness Gale was familiar with this history because he first began selling CRUEX in the market tests of 1966 and recalls that resort to euphemisms such as "groin irritation" had to be used if ads were to be placed.
Other approaches were to say "If you're too old to have diaper rash it must be something else," implying the term "jock itch" even though that term could not be used. He places the time of efforts with magazines as beginning in 1967-8. These
The experience again was that the placements sought the most, i. e., in TV Guide, Readers Digest and the like, insisted on euphemisms instead of the bold headlines using the term "jock itch", for some time. And the indication is that this resistance was overcome in 1974-5.
Clearance to say "jock itch" in radio ads came in 1975, evidently on spot ads rather than network ads. A test was run for the New York Metropolitan area and in the course of one year the sales in that area doubled.
Radio ads were then taken and run throughout the country and national sales increased to 10% over the prior year which included the New York increase.
Also, in 1976 the first test ad was run on a single TV station in New Orleans, but full details of the experience were not adduced.
The advertising agency for CRUEX, as well as for other Pharmacraft products, was Rumrill-Hoyt. David Popofsky worked there and with its predecessor from 1963-4 to April or May of 1971. Later that year he formed his own agency which now handles advertising for defendant's product.
The Court is satisfied from his testimony and other evidence in the case that he had good awareness of the CRUEX programs and its progress while with Rumrill-Hoyt and after he left there. He observed billboard usage in 1974-5. He heard radio ads in about the same period and was aware that such ads had been rejected while he was at Rumrill-Hoyt.
He knew that TV response was similar but saw a TV ad for another product with the term "jock itch" within the last year and a half or two. He thought it was in Atlanta on a local broadcast. The evidence also shows that Singer provided him with copies of his early ads in the New York Daily News.
Popofsky himself knew the term from when he was in the seventh or eighth grade in school and is aware of other kinds of advertising that are rejected on substantive grounds of various sorts including the subjective test of "not in good taste."
Discussion of the production of defendant's product started in December of 1975 when talk was had of turning out one or more items on a list of selected ones marketed by others. One of these was a "jock itch" item noted to be "a non-aerosol CRUEX." The name chosen for defendant's product, JOCKEX, was originated by Popofksy. He had recommended it to a company for which he handled advertising in which a brother of his owned an interest and suggested that it be listed in some trade reference books anticipating that it be used for a "jock itch" remedy.
Later on he suggested the company sell the name, though not ever formally registered
The schedule was changed to early 1977. The first ad evidently appeared in drug trade magazines about February 1977. There were no market tests despite the plan for national retailing.
Popofsky also suggested the subhead "The name that sells itself" for the jacket of promotional materials to be distributed by sales for defendant.
The trade dress for JOCKEX adopts many features of the CRUEX trade dress. The squeeze bottle is white, the brand is black, the "O" of JOCKEX is colored like the circle part of the male symbol on the CRUEX bottle and carries within the circle an imprint in black "For Jock Itch Relief." Miscellaneous legends are in black, blue and orange; while the CRUEX colors are black, blue and red.
The main visual differences are that JOCKEX and the statements of directions,
The bottles and caps are procured from the same suppliers and have the same appearance except for size. The JOCKEX bottles are somewhat larger and the caps are somewhat smaller.
Taken all in all, the Court finds that the names JOCKEX and CRUEX are confusingly similar and it also finds that taken as a whole the trade dress is confusingly similar. The Court does not judge this question as a close one. The evidence strongly supports plaintiff's position.
The applicable legal principles are neither novel nor of recent origin. While the reported cases are legion and in some respects seemingly inconsistent, the great mass reflect the same view that has often been expressed in cases involving fraud, namely, that the law will not attempt a fixed definition, out of concern that some ingenious person will find a way to defraud by some novel artifice that is outside the definition. The law of unfair competition is but a segment of the broader area of fraud. See, Hilton v. Hilton, 89 N.J.Eq. 149, 102 A. 16 (Ch.1917), at page 154, where the court said, "Unfair competition is fraudulent conduct." Each case must, therefore, be decided on its own facts.
The interest to be protected in such cases is good will achieved by labor and expense even when the risk of loss arises without any actual competition at all. See Vogue Co. v. Thompson-Hudson Co., 300 F. 509 (CA 6, 1924), involving a magazine publisher and a hat manufacturer, and American Philatelic Soc. v. Claibourne, 3 Cal.2d 689, 46 P.2d 135 (1935). Reasonable expectations for the future arising out of past achievements and trends are entitled to protection. Yale Electric Corp. v. Robertson,
The acts to be protected against are those which are fraudulent, whether intentionally or innocently, which are uncalled for, and the prohibition of which will have little or no effect on the wrongdoer. See, International News Service v. Associated Press,
As long ago as 1910 the principle was expressed in Florence Mfg. Co. v. J. C. Dowd & Co., 178 F. 73, at 75 (CA-2, 1910): "It is so easy for the honest businessman who wishes to sell his goods upon their merits to select from the entire material universe which is before him symbols, marks and coverings which by no possibility can cause confusion between his goods and those of his competitors, that the courts look with suspicion upon one who, in dressing the goods for the market, approaches so near to his successful rival that the public may fail to distinguish between them." See also, Jersey City Printing Co. v. Cassidy, 63 N.J.Eq. 759, 53 A. 230 (Ch.1912) where Vice-Chancellor Stevenson said: "A large part of what is most valuable in modern life seems to depend more or less directly upon `probable expectancies'. When they fail, civilization as at present organized may go down. As social and industrial life develops and grows more complex, these `probable expectancies' are bound to increase. It would seem to be inevitable that courts of law, as our system of jurisprudence is evolved to meeting the growing wants of an increasingly complex social order, will discover, define, and protect from undue interference more of these `probable expectancies.'"
To the same effect as the view expressed in Florence Manufacturing is the case of Guggenheim v. Cantrell & Cochrane, Ltd.,
Also, as observed in Eureka Fire Hose Co. v. Eureka Rubber Mfg. Co., 69 N.J.Eq. 159, 60 A. 561 (Ch.1905) dealing with cases where the name involved is descriptive, personal or geographic: "In such cases, proof of other facts than the mere choice of a name may be necessary to justify either the presumption or conclusion that the use of the name by defendant is for the purpose of representing his goods to be the goods of the complainant, and therefore unfair competition. * * *
"In the class of cases involving the purely arbitrary selection of a name, the selection of an arbitrary name to which another has given a trade reputation or value, in connection with the very class of goods defendant intends to put on the market, under a name containing the arbitrary or trade name, would seem to be ordinarily, of itself, sufficient proof of unfair competition, without further proof of fraudulent intent."
Here, CRUEX is an arbitrary fanciful name. Though constructed from the Latin term for "jock itch" and its elimination, defendant has chosen a name that is largely descriptive and equivalent in sight and sound to the term "jock itch" itself. It is more descriptive than it is arbitrary or fanciful. Yet it closely resembles the mark CRUEX particularly in conjunction with the condition "jock itch."
Federal Trade Commission v. Standard Education Society,
The Supreme Court reversed and in respect to that passage in the opinion below made the following comment: "The fact that a false statement may be obviously false to those who are trained and experienced does not change its character nor take away its power to deceive others less experienced. There is no duty resting upon a citizen to suspect the honesty of those with whom he transacts business. Laws are made to protect the trusting as well as the suspicious. The best elements of business have long since decided that honesty should govern competitive enterprises and that the rule of caveat emptor should not be relied upon to reward fraud and deception."
Of course, Q-Tips v. Johnson & Johnson,
So, also, is an older case, Cotex v. Oxtex, 121 N.J.Eq. 377, 187 A. 750 (E & A, 1936), where there was unanimous affirmance on Vice-Chancellor Bigelow's opinion. He denied relief because the competing products, which were coated textiles or imitation leather for use in luggage, automobiles and other articles, were sold by the parties only to manufacturers and the marks on the artificial leather were either trimmed off or tucked under so that the retail customer who bought the finished articles never saw them; and he said, "The case would be different if sales to the ultimate consumer were involved." They are involved here.
In arriving at these rulings it should be made clear that they are supported without regard to the proofs offered of actual intent to confuse, that is, to deceive, or to injure. The effect is identical either way.
A punch below the belt, to the groin, so to speak, is a foul even if not intended. And if repeated after warning, little justification can be seen. It may be that the self-restraints of the advertising world are too weak. The brief account of Popofsky's major role in this unfortunate controversy makes this clear. He said he expressed the view that the name, trade dress or both for the new product should be as different as possible from CRUEX. His handiwork indicates that he does not understand the ordinary meaning of the term "as different as possible" and defendant is unfortunately saddled with his myopic vision.
During the trial the Court expressed the view that a reading of Popofsky's deposition gave the impression of a witness who was fencing with counsel and evasive. The Court asked that he testify so that he could be observed. Under questioning by the Court he was informative, responsive and forthright and the earlier impression was erased. Under questioning by counsel at trial the same behavior noted in the transcript reappeared, suggesting that the impression and the behavior were due to a mutual personality conflict. The Court does not question Mr. Popofsky's credibility.
At this point in the matter the Court will enter an order today for preliminary injunction to take effect today and to remain in effect until the form of permanent injunction can be settled. That order has been prepared. Pennwalt's prompt action has reduced defendant's risk and considerations of equity demand that the Court should continue along the same line.
The preliminary injunction contains provisions in the nature of a freeze but short of a recall. Information needed to deal with later steps is not in the record but it is called for. Waste and loss should be minimized and the Court should assist that effort. The order is so designed.
The claims for accounting, damages and counsel fees are reserved for later consideration and may even be reserved in the final
The term "jock itch" itself, of course, is wholly descriptive and the order recognizes that the defendant may use it, however prominently displayed.
The same is true of the BAUER & BLACK MEDICATED SPRAY POWDER for "jock itch" which the defendant acquired in mid-1976 and planned to phase out in favor of the JOCKEX line.
Finally, the Court finds the special defenses not proven. The evidence is to the contrary. This applies to the contention that CRUEX was not sold in commerce as early as claimed, to the issue about the elimination of hexachlorophene, and to the claim that the former product with hexachlorophene was sold in commerce after the date when the substance was barred. Plaintiff clearly made its last shipment before that date. If others later made improper shipments they are not chargeable to Pennwalt.
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