Action by Telechron, Inc., against the Telicon Corporation for trade-mark infringement and unfair competition, wherein the plaintiff filed a motion for a preliminary injunction.
Preliminary injunction issued.
This is a motion for a preliminary injunction. Where there is refusal or the granting of a preliminary injunction, the facts required to be found by Federal Rules of Civil Procedure, rule 52(a), 28 U.S.C.A. following section 723c, will follow and the others may be found in the court's memorandum of decision.
The action is for trade-mark infringement and unfair competition. Verified pleadings and affidavits have been filed by both parties. Plaintiff seeks to enjoin defendant from the use of Telicon as a trade-mark or as part of its corporate name.
Plaintiff began to use its mark Telechron in December 1919. It registered on November 13, 1923 (No. 175,808) for clocks and on August 5, 1924 (No. 187,400) for electric motors; both registrations have been renewed. Plaintiff's use of its mark has been continuous. In addition to its use on electric clocks and motors it has been used in the radio field. The war caused a limitation of plaintiff's manufacture of articles to which it applied its mark, but the use throughout the period of the war was continuous. Plaintiff has used Telechron as part of its corporate name since April 1926. Plaintiff was organized in May 1914 under the name of Warren Clock Company. From 1926 until May 1, 1946 its name was Warren Telechron Company. From May 1, 1946 its name has been Telechron, Inc. The change of name was made because wide advertising of plaintiff's mark Telechron had caused it to become familiar to the public.
Plaintiff's parent corporation is the General Electric Company which has been in the radio field as a large manufacturer of radio receiving sets, accessories and equipment.
Defendant on June 1, 1942 changed its name from Telectron Corporation to Telicon Corporation. It was organized on May 21, 1942 under the former name. Thereafter defendant began the manufacture of piezo electric crystals which are devices for controlling frequency in radios, types of radio transmission and clocks. During the war defendant's activities were limited to the manufacture of these crystals. Large quantities of these were sold to the government. Defendant has been in the radio field since November 7, 1945, although its advertisements since 1944 show its prime purpose to operate in the radio and television fields. Its earliest marketing of a Telicon radio was in the spring of 1946 and the earliest consumer advertising of defendant's radios was in March, 1946. It would appear the Telicon television receivers were first shown to the public in October 1946.
In 1931 plaintiff sold 5000 Telechron electric clocks to RCA to be used with radio sets which RCA was manufacturing. General Electric Company also made some of these sets for RCA. Also in 1931 plaintiff sold 3000 of its electric clocks to Grigsby-Grunow Company to be placed into the Majestic radios of that company. The dials of these radio clocks all had the trade-mark Telechron. In 1934, 5300 of plaintiff's clocks bearing the same trade-mark were sold to Atwater-Kent Company.
In 1935 plaintiff offered for sale under its mark a preselector to be plugged into a radio and adjusted to turn the radio on and off at pre-set intervals. This preselector enables the radio to be used as an alarm clock as it may be set to turn on the radio at whatever hour one desires to awake. This Telechron preselector has a potential market for use with the television sets. Plaintiff sells its preselector to radio manufacturers for incorporation in their radio sets. These preselectors were advertised and sold from 1935 to 1942, at which time production was stopped. Between 1935 and 1942, 37,000 preselectors were sold for sales prices of $398,000. After the war production has been resumed.
In 1937 plaintiff offered the Telechron world time clock. It was adapted for use with radio communication. It shows the time throughout the world and is used with short wave radio receiving sets. During the war plaintiff produced a clock for the armed services for timing radio signals and radio communications. These were sold to the Army, Navy, Maritime Commission and Signal Corps and became known to thousands of radiomen in the armed services.
In 1940 plaintiff began plans for a Telechron radio with a built-in preselector. In 1941 these plans were set aside because of the war. In 1944, as war demands relaxed, work on this project was resumed. In January 1944 the production of 90,000 Telechron radio sets was authorized. Plaintiff's sales representatives were notified of the new line in April 1945. Plaintiff's district managers were requested to estimate what the demand would be. The price was $19.95. Later, OPA allowed a price boost to $27.35. Plaintiff was held up for lack of material but in October 1945 samples of its radio were complete. In November 1945 radios were shipped to plaintiff's sales offices in Boston, Chicago, Cleveland, New York, Philadelphia, St. Louis, San Francisco, Atlanta, Dallas and Denver for demonstration purposes. Demands of distributors exceeded plaintiff's productive capacity and rationing became necessary. In December 1945 plaintiff advertised the Telechron radio to the trade. Actual distribution occurred in June 1946. National advertising commenced a month before. By October 1946, 39,291 of plaintiff's radios were on the market.
Plaintiff bases its claim of good-will which has attached to its trade-mark Telechron on five basic factors which are (1) the wide use of the Telechron synchronous motor which since 1924 has sold 5,500,000 for sales prices of $9,000,000; (2) the wide sale of the Telechron master-clock which is used to control the frequency of the alternating current output of power stations and which is used by 99% of electric power stations in the United States; (3) the great distribution of the Telechron electric clock of which 7,000,000 have been sold at sales prices of more than $25,000,000; (4) plaintiff's advertising — which consists of distributing 100,000 catalogs each year to dealers, distributors and consumers and circulars to the amount of 750,000 each year — which shows between 1924 and 1945 advertising expenditures of $3,168,398; and (5) the sale of Telechron products through the same outlets as pertain to the radio and electrical appliance equipment throughout every state through 580 wholesale distributors, in the radio stores and department stores, both wholesale and retail; these are the same outlets which would buy and deal in piezo electric crystals and other electrical and radio equipment.
LEAHY, District Judge.
Both to sight and sound Telechron and Telicon are similar. The mere utterance of the two words approaches an absolute identity in sound. Beside the point, says defendant, because the plaintiff's first field of endeavor was clocks and motors, not radio or television and I was first in the field. Defendant alleges it made up its name from two Greek words "Tele", meaning distant and "ikon", meaning image, because these two words in combination are suggestive of defendant's proposed field — television — and, in adopting the name it had no intent to ride on the coattails of a clock manufacturer. At this point, I shall not pause to re-examine or discuss the question whether the parties operate in wholly different fields, in allied fields, or deal in closely related or the same products. The facts, as found, supra, afford definite answers to each of these questions. My memorandum of decision will be devoted, in the main, to certain conclusions of law based upon certain other facts which are just as pivotal as the master facts already found.
1. The question is, Do the goods of plaintiff and defendant have the same descriptive properties? Infringement or unfair competition do not call for identity of goods. This Circuit has said unfair competition may be found when goods, though different, are so related as to fall within the mischief which equity should prevent. Again this court has said: "The goods capable of being so passed off are not limited to those that are identical or even to those that have the same descriptive properties."
Kotabs, Inc. v. Kotex, 3 Cir., 50 F.2d 810.
Wm. A. Rogers, Limited v. Majestic Products Corp., D.C.Del., 23 F.2d 219, 220.
2. Here, we have not only prospective potential confusion but also present confusion. A study of the sound and appearance of the warring words is sufficient. But, there is, also, evidence of actual confusion. Letters and telegrams intended for plaintiff went to defendant and letters for defendant went to plaintiff. While I do not think the evidence was sufficient to establish a palming off, yet it was sufficient to establish confusion where on three instances orders were received for plaintiff's radios (Telechron) and defendant filled those orders and sold its own radios (Telicon). A clerk in Macy's radio department when asked to point out plaintiff's product was concerned with demonstrating defendant's product. There were other instances of confusion on the part of many other store employees of different concerns. There is also certain "expert opinion" evidence. Executives of such companies as Consolidated Edison Co. of N.Y., Inc., RCA, and Graybar Electric Company, Inc. — persons of experience and knowledge in the radio and electrical industry — were of the view that the continued use of the names of both plaintiff and defendant as trade-marks for radios and radio equipment will cause confusion among wholesalers, retailers and consumers.
One letter intended for defendant was received by plaintiff. The writer was an indignant purchaser of one of defendant's (Telicon) radios. He stated: "I had a lot of radios in my time but never a lemon like this one". This letter obviously shows that where confusion exists the writer of the "lemon" letter, for example, will think less kindly of plaintiff's products in future. This is threatened potential damage.
3. The corporate names are likewise strikingly similar. True, at the time defendant began to use Telicon, plaintiff's Telechron was not the sole element of its corporate name. But, Telechron was its mark and the predominant word in its corporate name; and both its products and its business had been generally known by the use of the word Telechron. Under such circumstances it is entitled to protection from the junior party who attempts to enter an allied field. House of Westmore, Inc. v. Denney, 3 Cir., 151 F.2d 261; Standard Oil Co. of New Mexico v. Standard Oil Co. of California, 10 Cir., 56 F.2d 973; Goodyear Rubber Co. v. Goodyear's Rubber Mfg. Co., C.C., 21 F. 276. Moreover, where confusion is present, it must, of necessity, be caused, in part at least, by the resemblance of the names in conflict. American Radio Stores v. American Radio Television Stores Corp., 17 Del. Ch. 127, 150 A. 180. It matters not, even, that the business of the parties is different. This Circuit so held where one of the parties sold tires, the other automobiles. See Akron-Overland Tire Co. v. Willys-Overland Co., 3 Cir., 273 F. 674, affirming this court, D.C.Del., 268 F. 151.
4. Apprised of invasion plaintiff acted promptly to protect its right. Plaintiff first learned of defendant's Telicon in January 1946. One of GE's patent attorneys had for over twenty years presided as guardian angel in protecting plaintiff's mark Telechron. In January 1946 he saw in the Patent Office Gazette publication of the mark Telicon for piezo electric crystals. GE then recommended that plaintiff should institute proceedings in opposition. At once, such action was instituted (January 1946). Those proceedings are now pending. It was not until May 1946 that plaintiff learned of defendant's use of Telicon with radios. After this, plaintiff investigated defendant's activities; there followed the formal infringement notice and the institution of the case at bar. Although proceedings in opposition made known to defendant that plaintiff challenged the use of Telicon, defendant thereafter commenced advertising its product and in the spring of that year (1946) offered its radio product for sale. Aware of plaintiff's challenge of the use of Telicon, which might result in vindication of plaintiff's claim for injunctive relief, defendant's repetitive utterances throughout this case that if an injunction issues — presently defendant plans a public issue of its shares to attract risk capital — it will spell financial ruin for defendant and its enterprise, must fall on deaf ears. Absent pressure from monopolistic groups, there must remain in our enterprise system a form of corporate free will. Our courts do not function to protect corporate litigants when they make a bad guess as to their legal immunity in determining a course of conduct vis-a-vis their competitors.
Cf. William Goldman Theatres. Inc. v. Loew's Inc., et al., 3 Cir., 150 F.2d 738.
5. Upon this background of awareness since January 1946 that its conduct would inevitably be called to judicial scrutiny, defendant has nevertheless gone into the markets and stands today ready and anxious to catch the incoming tide of public demand for the competitive products. While this case has been tried by affidavits — in general, I am opposed to "trial by affidavits" — this is a case where I fail to see what new proof could be offered which would be of assistance in determining the bare legal questions involved. There is little dispute of fact; and a "full dress trial" would simply present the same issues. Yet, it is not my function to be categorical about such a matter; it may be a trial might bring forward new proofs, which would give a new vision of the controversy. At this phase of examination, however, I see potential damage to plaintiff which may only be safeguarded by a preliminary injunction. This is precisely the situation which has stimulated other courts to use that traditional process. Liberty Life Assurance Society v. Heralds of Liberty Delaware, 15 Del. Ch. 369, 138 A. 634; Coca-Cola Co. v. Los Angeles Brewing Co., D.C., 1 F.R.D. 67; G.G. White Co. v. Miller, C.C., 50 F. 277. Particularly appropriate is Judge Learned Hand's statement: "In choosing an arbitrary trade-name, there was no reason whatever why they should have selected one which bore so much resemblance to the plaintiff's; and in such cases any possible doubt of the likelihood of damage should be resolved in favor of the plaintiff. Of course, the burden of proof always rests upon the moving party, but having shown the adoption of a similar trade name, arbitrary in character, I cannot see why speculation as to the chance that it will cause confusion should be at the expense of the man first in the field."
Lambert Pharmacal Co. v. Bolton Chemical Corp., D.C., 219 F. 325, 326.
The preliminary injunction should issue.