MacMAHON, District Judge.
This is an action for declaratory judgment, injunctive relief and damages by Grotrian, Helfferich, Schulz, Th. Steinweg Nachf., a German corporation engaged in the manufacture and sale of pianos, against Steinway & Sons, a New York corporation engaged in the same business. The action was tried by the court without a jury.
Plaintiff seeks a declaratory judgment that its trade name, Grotrian-Steinweg, and corporate name, Grotrian, Helfferich, Schulz, Th. Steinweg Nachf., do not conflict with, nor infringe, defendant's trademarks, Steinway & Sons and Steinway; that the use of plaintiff's marks or names in the United States does not constitute unfair competition; that defendant is barred by laches from asserting any claim of conflict between the respective marks or names; and that plaintiff has the right to use its trade or corporate name free from interference by defendant. Plaintiff also seeks to enjoin defendant from interfering with the use of plaintiff's mark or name by plaintiff or its licensees and from instituting suit anywhere challenging the right of plaintiff or its licensees to use plaintiff's mark or name. Finally, plaintiff seeks damages for defendant's alleged tortious interference with a prospective contract between plaintiff and The Wurlitzer Company ("Wurlitzer") for the sale and distribution of plaintiff's pianos through a chain of retail stores in the United States.
Defendant's answer generally denies the significant allegations of the complaint and counterclaims under the Lanham Act, 15 U.S.C. § 1051 et seq., for injunctive relief, an accounting and damages for wilful infringement of its trademark and unfair competition. Plaintiff's reply denies the significant allegations of the counterclaim and alleges affirmative defenses of laches and unclean hands.
Before discussing the issues, it is necessary to review the historical relationship between the parties.
Defendant Steinway & Sons, manufacturer and seller of renowned Steinway pianos, was founded in 1853 by Heinrich E. Steinweg, who emigrated to the United States from Germany in 1850. Heinrich's eldest son, C. F. Theodor Steinweg, remained in Germany and began to make pianos in 1851 under the firm name C. F. Theodor Steinweg, which was registered in Germany. Later, he sold his business to his three employees, F. W. Grotrian, Adolph Helfferich and H. G. W. Schulz, moved to New York and joined the defendant as a partner on January 1, 1866. C. F. Theodor Steinweg granted the German buyers the privilege of continuing the business under the firm name "Successors to C. F.
Later, however, plaintiff first registered the trademark Grotrian-Steinweg in Germany and then, in 1895, registered the name Steinweg. Plaintiff's use of the latter name caused defendant to bring an action in Germany resulting in the cancellation of the registration. Nevertheless, in December 1918, shortly after the armistice, the Grotrian family, plaintiff's owners, petitioned for an official change of the family name to "Steinweg or at least Grotrian-Steinweg," despite the fact that the Grotrians were never related by blood or marriage to anyone in a Steinway or Steinweg family. The petition admitted that "the focal point of our firm is on the name Steinweg. The word `Grotrian' is unpronounceable for an Englishman. . . . [A] shortening of the long business name would be an extraordinary blessing and benefit . . . especially for the export of the product." The petition was granted to the extent that the Grotrian family was permitted to change its name to "Grotrian-Steinweg."
There is no evidence that plaintiff ever spent any money or made any effort before 1925 to publicize, promote or sell its product outside Germany under the mark Grotrian-Steinweg, but since it acquired that name plaintiff's owners have often been called "Steinweg" and have been asked whether there is any connection between plaintiff and the defendant. Similarly, plaintiff's piano has often been identified as a "Steinweg."
Plaintiff first tried to enter the American market in 1925 when it established a Delaware corporation named "Grotrian-Steinweg Company" for the purpose of distributing pianos bearing the mark Grotrian-Steinweg which it registered in the United States. In 1926, plaintiff exported four pianos to the United States; in 1927 nine; and in 1928 twelve. During this period, plaintiff also sold pianos in the American market through a New York dealer named S. L. Curtis. When defendant learned, in 1928, that plaintiff was selling pianos in the United States, it immediately notified both the Delaware distributor and the New York dealer of defendant's rights to the trade names Steinway and Steinway & Sons, vigorously protested that the mark Grotrian-Steinweg infringed defendant's trade names, predicted that it was "bound to be a source of confusion with the trademark and trade name Steinway," and demanded that the distributor discontinue the use of the words "Grotrian-Steinweg" on pianos in the United States. Unimpressed, plaintiff's shipments mounted to forty-seven in 1929.
Confronted with an impasse, William Steinway, an officer of the defendant, decided to talk face to face with plaintiff about the trade name dispute. He therefore went to Germany in 1929, discussed the dispute and negotiated a settlement, signified by smoking a cigar with plaintiff's then principal owner.
There was no proof of the express terms of the settlement. Plaintiff contends that the "peace cigar" evidenced defendant's surrender to plaintiff's use of the trade name Grotrian-Steinweg in the United States. The ensuing conduct of the parties, however, points to the opposite inference, viz., that plaintiff agreed to cease using the names Steinweg and Grotrian-Steinweg in the United States. Thus, the distributing company was disbanded in 1930; the dealer, Curtis, stopped selling plaintiff's pianos; plaintiff's exports to the United States dwindled to four pianos by 1932; and not one Grotrian-Steinweg piano came into this country for the next twenty years. In 1950, plaintiff even abandoned its unused 1926 United States trademark registration which never had been published for opposition.
The inference is clear that the cordial relations which existed between the parties during the twenty-year period were attributable not to defendant's surrender of its rights but to a tacit, if not an express,
However, in 1952, plaintiff quietly reentered the American market on a mail order basis and for the next twenty years regularly shipped a relatively insignificant number of pianos to small dealers who sold only in their own localities. During the next twenty years, plaintiff shipped a total of only 458 pianos, having an aggregate retail value exceeding $1,890,000, the shipments ranging from a low of four in 1954 to a peak of forty-eight in 1970. However, plaintiff itself never made or sold any pianos in the United States, never employed an advertising agency nor a public relations firm, nor did it require any advertising by its United States dealers, although, as we shall see, it did supply them with promotional material. No representative of the plaintiff ever came here for the thirty-seven year period from 1929 until 1966. Moreover, plaintiff never had a resident agent in the United States for service of process.
Commencing in August 1966, by an exchange of letters ending in January 1967, plaintiff entered into an agreement with Wurlitzer for the distribution and sale of plaintiff's pianos in Wurlitzer's chain of thirty-one retail music stores located in prime metropolitan markets throughout the United States, The agreement was not for any definite period of time, and, although plaintiff urged Wurlitizer to buy at least 200 pianos, Wurlitizer refused to agree to any definite number but did agree to use its best efforts to promote the sale of plaintiff's pianos throughout its chain of stores. Wurlitzer assured plaintiff that no time would be wasted in getting underway with an aggressive sales program and, upon plaintiff's insistence, agreed to describe plaintiff's piano as the "Grotrian-Steinweg."
Accordingly, in July 1967, Wurlitzer issued a press release announcing that the world-famous Grotrian-Steinweg piano would be sold in Wurlitzer's retail stores. The release proclaimed that Grotrian-Steinweg was an internationally renowned grand piano available up to the nine-foot concert size, that it was the most cultivated piano in the world, that it represented the most perfect product of the art of piano making, and that Grotrian-Steinweg, founded in 1835, was long known as the manufacturer of the classic grand piano which was the most famous piano in Germany and which was endorsed by eminent piano artists throughout the world. When the announcement came to defendant's attention, it promptly warned Wurlitzer that Steinway & Sons considered the mark Grotrian-Steinweg an infringement of its trademarks Steinway and Steinway & Sons, "long registered with the U.S. Patent Office" and "would take prompt legal action to prevent the advertising and sale of this piano" under the name Grotrian-Steinweg in this country.
Thereafter, Wurlitizer's president met with the plaintiff's president and his brother to discuss the problem which confronted them. Plaintiff apparently suggested that one solution would be for Wurlitzer to sell plaintiff's piano without using the Grotrian-Steinweg name. Wurlitzer's reply to the suggestion is convincing evidence that one of this country's largest dealers in musical instruments knew that plaintiff's piano would have little acceptance on the American market without exploitation of the Steinway name and good will:
Thereafter, Wurlitzer's officers, accompanied by counsel, met with defendant, and Wurlitzer, upon advice of counsel that there was no solution to the problem, cancelled its contract with
Since all of the issues depend on the merits of defendant's counterclaim for trademark infringement and unfair competition, we first consider the counterclaim.
The Lanham Act, 15 U.S.C. § 1114(1), provides a remedy for trademark infringement against "[a]ny person who shall, without the consent of the registrant —(a) use in commerce any reproduction . . . or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods . . . on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive. . . ."
Before the amendment to § 1114(1) in 1962, both the Act and the cases applying it required confusion of "purchasers as to the source or origin of such goods or services."
Thus, the essential question to be answered is whether, under all of the circumstances, the mark Grotrian-Steinweg on the piano is similar enough to Steinway or to Steinway & Sons that its use is likely to cause confusion, mistake or deception of any kind.
In determining the existence of a likelihood of confusion, a number of factors must be considered. Among these are: the strength of the Steinway marks; the alleged infringer's purpose in adopting its marks; the degree of similarity between the marks; the degree of similarity between the products; the competitive proximity of the products; actual confusion; and the degree of care likely to be exercised by consumers.
The relevant factors are variable. No single factor is determinative, and the court may take still other variables into account.
We turn, now, to consideration of the relevant factors.
THE STRENGTH OF THE STEINWAY MARKS.
There is no dispute that defendant has been continuously making and selling pianos throughout the United States
The trademarks Steinway and Steinway & Sons have long been registered, advertised, promoted and used exclusively to identify defendant's product. The names have been affixed to defendant's pianos in a variety of styles, types and forms, and defendant's registered slogan, "Steinway, The Instrument of Immortals," has been continuously used for fifty years.
There is no dispute that a Steinway piano is an instrument of distinctive quality and that defendant has earned and long enjoyed immense good will. Defendant has made a considerable investment to ensure public identification and recognition of the mark. The name "Steinway" differentiates defendant's piano from all others, not only to professional pianists, concert artists and music recording companies, but also to amateur musicians, students, prospective buyers and the public. There can be little doubt that upon hearing the name "Steinway," anyone the least familiar with music would instantly think not so much of the identity of the producer as of the piano itself. Indeed, the name "Steinway" is so associated in the minds of prospective buyers and the public with defendant and its product that plaintiff's own dealers were of the opinion that "Steinway competition is tough, since the name STEINWAY has a magic influence on buyers," has an "attraction" or "excitement," and that "people seem to be swayed by this name."
Confronted with irrefutable facts, plaintiff understandably concedes that it is "perfectly obvious" that "Steinway is a famous name." "We don't contest that for a second."
Likewise, it is plain to us that there is a strong link between the names Steinway and Steinway & Sons and defendant producer and its piano. Defendant's mark is thus strong and its name famous. As such, it is entitled to broader protection than a suggestive, weak or commonplace mark.
The registration of defendant's mark entitled it to the full scope of statutory protection afforded trademarks, including the provision of § 7(b) of the Lanham Act, 15 U.S.C. § 1057(b), that a "certificate of registration . . . shall be prima facie evidence of the validity of the registration . . . and of registrant's exclusive right to use the mark in commerce in connection with the goods or services specified in the certificate . . . ."
We next consider plaintiff's purpose in adopting its mark.
PLAINTIFF'S PURPOSE IN ADOPTING ITS MARK.
There is no evidence that plaintiff ever expended any money or made any effort whatever before the filing of the German petition to change the family name to publicize, promote or sell its product outside Germany under the mark Grotrian-Steinweg or Grotrian. Neither of those names, as the then petitioners pleaded, meant anything in English-speaking
This brings us to consideration of the degree of similarity between the products.
THE DEGREE OF SIMILARITY BETWEEN AND THE COMPETITIVE PROXIMITY OF THE PRODUCTS.
Both parties manufacture lines of upright and grand pianos,
This high degree of competitive proximity is demonstrated by evidence that individual Grotrian-Steinweg dealers exploited the confusing similarity between the products to induce sales. For example, one Grotrian-Steinweg dealer advertised: "If you are in the market for a new Steinway, consider a new Grotrian-Steinweg."
We now turn to the similarity between the marks.
THE DEGREE OF SIMILARITY BETWEEN THE MARKS.
Where products are virtually identical, as is the case here, the degree of similarity in trademarks necessary to support a finding of infringement is less than in a case of dissimilar, non-competing products.
The 1962 amendment to the Lanham Act, broadening the kind of trademark confusion prohibited, recognized the commercial reality that in our modern marketing structure goods are sold and offered for sale not so much on the identity of the producer as on the buyer's assurance from the mark that he is buying the genuine product and not an imitation. This allows the consumer to make an informed choice simply by reliance upon the mark, whether or not he
The buying public, as Wurlitzer implied, would clearly differentiate the name "Grotrian," but just as surely it would not be likely to differentiate the name "Grotrian-Steinweg." It was thus the Steinway name which stirred Wurlitzer's commercial instincts, not the unknown and unpronounceable "Grotrian." In any event, the junior user cannot avoid infringement of a valid trademark simply by taking the mark and adding his own name to it.
Thus, infringement may exist where the substantial and distinctive part of the trademark is copied or imitated.
Plaintiff's owners have often been called "Mr. Steinweg" and have been asked whether there is any connection between the plaintiff and the defendant. Similarly, plaintiff's piano has often been identified as a "Steinway."
It is implicit in plaintiff's petition to change the family name "Grotrian" to "Grotrian-Steinweg" that the name "Steinweg," unlike "Grotrian," could be easily pronounced in the English language. There is an obvious visual and audible similarity between "Steinway" and "Steinweg," which is enhanced when the German "veg" is translated to the English "way." The probability of audible identity of the marks is virtually assured by plaintiff's instructions to its dealers.
The similarity is no less with the name "Grotrian-Steinweg," especially in the United States, where double surnames are uncommon, and the conclusion that "Grotrian" is simply the first name and "Steinweg" the last is perfectly natural. It is plain that plaintiff and Wurlitzer were certain of such confusion. It was the Steinway name that had the prestige and background which Wurlitzer wanted to exploit. After all, defendant had spent more than $20,000,000 over a period of seventy-five years in promoting and advertising the Steinway name in the United States. Against this, plaintiff had never spent a penny on promotion or advertising its name in the United States.
Although evidence of actual confusion is not essential to a finding of trademark infringement,
One example of actual confusion occurred when a Grotrian-Steinweg dealer, who advertised his product as "a Grotrian-Steinway,"
Stronger evidence of actual confusion is revealed in the first of two surveys commissioned by Steinway.
The specific objectives of the second survey, conducted by Crosley Surveys, Inc., was to determine the existence and estimate the magnitude of confusion between Steinway and Grotrian-Steinweg as to business connection and name.
The surveys are strong evidence of the likelihood of confusion which the Lanham Act was designed to prohibit.
DEGREE OF CARE LIKELY TO BE EXERCISED BY CONSUMERS.
The ordinary consumer of a Steinway or Grotrian-Steinweg piano is profiled in the record. He plays the piano well,
Plaintiff argues that purchaser will not be confused because of the degree of their sophistication and the price.
Misled into an initial interest, a potential Steinway buyer may satisfy himself that the less expensive Grotrian-Steinweg is at least as good, if not better, than a Steinway. Deception and confusion thus work to appropriate defendant's good will. This confusion, or mistaken beliefs as to the companies' interrelationships, can destroy the value of the trademark which is intended to point to only one company.
Plaintiff asserts the defenses of laches and estoppel alleging Steinway's tenyear silence after discovery of sales by plaintiff in the United States.
The mere lapse of time is not sufficient to constitute laches. The delay must have been unreasonable and have resulted in prejudice to the plaintiff. The crucial issue on the first element, unreasonable delay, is the question of knowledge; did defendant knowingly sleep on his rights?
Plaintiff commenced sales activity in the United States in 1926, but defendant did not learn of plaintiff's sales until 1928 when it immediately protested and warned of infringement of its trademark. No Grotrian-Steinwegs were sold in the United States for twenty years thereafter, and there was no need for the defendant to assert its rights during that period, believing that Grotrian-Steinweg had agreed to avoid the United States market, in the "peace cigar" incident.
Grotrian-Steinweg entered the American market again in 1952. The date Steinway learned of this second entry is disputed. Although Henry Z. Steinway (president of Steinway & Sons) testified that he was uncertain as to exactly when he first heard of Grotrian-Steinweg sales in the United States, he believed it was not before the middle 1960s that he learned of two Grotrian-Steinweg dealers operating on the west coast.
This letter would appear to have given defendant notice of Grotrian-Steinweg's participation in the American market. One would expect Steinway & Sons to investigate the leads contained in this letter, especially as the Grotrian-Steinweg was being misrepresented as the "original Steinway." Henry Steinway testified that after receiving this letter, he reviewed the total German import figures but due to the small number took no action.
Plaintiff also calls attention to a July 3, 1957 letter from Steinway & Sons to Grotrian-Steinweg which read in part:
The subject of the "dispute" referred to in this passage is unclear, but the letter may indicate knowledge by Steinway that plaintiff had selling agents in the United States.
Between 1952 and 1968, Grotrian-Steinweg sold 320 pianos in the United States with a retail value of over $1,323,000. The volume of plaintiff's sales is important because though actual knowledge is usually required to prove laches, a defendant may be barred when the plaintiff's conduct has been open and no adequate justification for ignorance is offered.
Plaintiff's activities were always open, as evidenced by numerous playbill and yellow page advertisements,
While the evidence on delay appears to weigh in plaintiff's favor, we find it unnecessary to decide this issue since the second element of laches, prejudice, is not present. The burden is on plaintiff to show prejudice suffered due to Steinway's delay in suing. Mere delay is not sufficient to constitute laches.
Commonly cited criteria of prejudice are the expenditure of significant amounts for the advertising and promotion of the mark or a general business expansion as a result of the increased demand for the product being sold under the mark in question. For example, in Landers, Frary & Clark v. Universal Cooler Corp., 85 F.2d 46 (2d Cir. 1936), the defendant had invested $140,000 in advertising and its capital investment
Plaintiff Grotrian-Steinweg has expended nothing on advertising or promotion in the American market. Nor has it expanded its production or distribution facilities. At the time of suit, its production capacity was less than it had been in 1927. A planned expansion in response to the Wurlitzer agreement never came about due to a depression in 1967.
In short, plaintiff has not relied on its mark,
Plaintiff's laches defense is further weakened by its conscious imitation and attempted exploitation of Steinway's mark.
Plaintiff having failed to prove prejudice, an essential element of the laches defense, it must follow that defendant's counterclaim is not barred by laches.
We observe briefly at this juncture that the adjudications on the matter of the marks in question that may have been made in a foreign court have no application here. "[W]hen trademark rights within the United States are being litigated in an American court, the decisions of foreign courts concerning the respective trade-mark rights of the parties are irrelevant and inadmissible."
We now turn to the collective significance of the various factors on infringement.
The first factor in importance and chronology in balancing the various factors and equities relevant to the question of infringement is Grotrian-Steinweg's deliberate purpose in adopting and using the disputed mark in the United States.
Plaintiff's course of conduct, indicative of its expert corporate judgment, is, in itself, powerful evidence of a substantial likelihood of confusion with Steinway's marks.
The other relevant factors, including the close competitive proximity and similarity of the products, the extensive similarity between the marks, the great strength of the Steinway mark, and the evidence of actual confusion all point to the likelihood of confusion. These considerations lead us to the conclusion that plaintiff is infringing defendant's trademarks Steinway and Steinway & Sons because the name Grotrian-Steinweg is likely to cause confusion, mistake or deception; defendant is, therefore entitled to the relief sought, and plaintiff's claims for declaratory and injunctive relief are denied.
THE TORTIOUS INTERFERENCE WITH CONTRACT CLAIM.
Since we find that plaintiff has infringed Steinway & Sons' trademark, it follows that defendant's warning to Wurlitzer of possible legal action to protect its marks is not actionable as a tortious interference with contract. Defendant was entitled to insist, in good faith, on its legal rights, even if such insistence resulted in the cancellation of the Wurlitzer-Grotrian contract.
Both parties have made claims alleging unfair competition.
Trademark law must be distinguished from the law of unfair competition.
There exists unfair competition where there is sufficient similarity between the products, their packaging, appearance, advertising, prices and methods of
Since the basis of a finding of trademark infringement is confusion, such a finding necessarily also constitutes unfair competition.
We find that the name Grotrian-Steinweg, as appearing upon plaintiff's pianos, is likely to lead to confusion among consumers as to the source of the pianos. Therefore, Grotrian-Steinweg is guilty of unfair competition by its sales of pianos marked "Grotrian-Steinweg" in the United States.
Accordingly, we declare the trade name Grotrian-Steinweg and the corporate name Grotrian, Helfferich, Schulz, Th. Steinweg Nachf. as infringing defendant's trademarks Steinway and Steinway & Sons. We find that the use of plaintiff's names in the United States also constitutes unfair competition. Defendant is not barred by laches from asserting its claims because plaintiff is not prejudiced therefrom. Plaintiff's various requests for injunctive relief and for damages for defendant's alleged tortious contract interference are denied. Defendant's demand for permanent injunctive relief, pursuant to 15 U.S.C. § 1116, is granted.
A Special Master will be appointed, pursuant to Rule 53, Fed.R.Civ.P., to take an accounting and determine the amount of plaintiff's profits by reason of its sales using the infringing mark and to find defendant's damages due to plaintiff's acts of infringement and unfair competition since its re-entry into the American market in 1952.
The foregoing opinion constitutes this court's findings of fact and conclusions of law, in accordance with Rule 52(a), Fed.R.Civ.P., and also disposes of defendant's motion to dismiss the action as wholly insufficient to establish damages upon which we reserved at trial.
The parties are directed to settle a judgment not inconsistent with this opinion within twenty (20) days.