Appeal from the District Court of the United States for the Southern District of New York.
Before MANTON, L. HAND, and SWAN, Circuit Judges.
The very thorough and able opinion of the District Court sets forth the facts in great detail. We shall repeat them only so far as seems necessary to outline the controversy and to present the questions which we deem decisive of this appeal.
The litigation is between two New York corporations, each using, and claiming the right to use, the trade-mark "4711" upon eau de cologne and other toilet preparations. For almost one hundred and forty years the Muelhens family of Cologne, Germany, has been engaged in manufacturing eau de cologne under a secret recipe handed down from father to son. Its business began at 4711 Glockengasse in that city in 1792, and its cologne and some other toilet preparations have been advertised and marketed throughout the world under the trade-mark "4711." The defendant corporation, Ferd. Muelhens, Inc., was recently established by the German house as its selling agent in the United States. It has sold toilet preparations under the aforesaid trade-mark, and has advertised that the cologne which plaintiff sells under the same mark is not the genuine "4711" eau de cologne and is not made under the original secret formula.
The plaintiff claims the exclusive right to use this trade-mark in the United States by virtue of a seizure by the Alien Property Custodian, a sale by the Custodian to Kropff, and Kropff's assignment to the plaintiff corporation, which he caused to be organized in 1920. It appears that Kropff came to New York in 1878 to establish, in partnership with Julius Muelhens, a brother of Ferdinand, who was then proprietor of the German house, an agency for the sale of its products in the United States. In 1881 the selling arrangement was evidenced by a partnership agreement between Kropff and Ferdinand Muelhens. This gave the firm of Mulhens & Kropff a revocable license to use the trademarks and labels of the German house and "to have them registered, without prejudice, however, to the continued sole proprietorship of Ferdinand Muelhens" therein. Under this agreement the trade-mark "4711" was registered in 1882 by the firm of Mulhens & Kropff. In 1889 a new partnership agreement was formed between Kropff and Ferdinand Muelhens which recited that the purpose of the business was "the importation of products manufactured by Ferdinand Muelhens in Cologne, and the manufacture of eau de cologne, glycerine soaps and other perfumeries under the trade-marks of the said Ferdinand Muelhens, of Cologne, as well as under trade-marks which the new firm of Mulhens & Kropff may possibly accept." Muelhens was obligated to supply at cost the raw products and compounded essences required for the business and the firm was obligated to buy the raw products from him. In the event of dissolution of the firm, Muelhens reserved the right to take over the business and to have all recipes forthwith returned to him. The partnership was to continue for ten years and to be renewed thereafter for successive five-year periods unless notice of termination was previously given.This agreement continued unrevoked up to the entry of the United States into the European war. In 1905 the trade-mark "4711" was re-registered by the partnership; and it was renewed by the plaintiff corporation in 1925. On May 6, 1918, the Alien Property Custodian demanded of Kropff the entire interest of Ferdinand Muelhens in the firm of Mulhens & Kropff, and a supplementary demand specifically enumerated the "4711" trade-mark. In 1920 Kropff, who in the meantime had continued the business on his own account and under a license to liquidate the Muelhens interest, purchased from the Custodian all the seized rights of Muelhens, and forthwith Kropff assigned to the plaintiff the business, good will, and trade-marks formerly belonging to the firm of Mulhens & Kropff. Thereafter the plaintiff sold its products under the "4711" label and advertised that they were prepared in accordance with the original recipe; but, after denial of its application for a preliminary injunction on the ground that its assertion of manufacture under the secret formula was false, it abandoned this form of advertising
The decree, from whih both parties have appealed, finds that the plaintiff has the exclusive right to use the trade-mark "4711" in the United States, and that the defendant has infringed. It finds also that prior to April, 1917, the firm of Mulhens & Kropff had applied this trade-mark, in connection with the sale of eau de cologne, eau de cologne face powder, and eau de cologne smelling salts, only to such cologne, face powder, and smelling salts as were manufactured in accordance with secret recipes owned solely by the German house of Muelhens; that neither plaintiff nor its immediate predecessor, Kropff, knew the secret recipes; but nevertheless, for ten years they had applied said trade-mark to eau de cologne, face powder, and smelling salts manufactured under different formulas, and had falsely made public statements that their products were made under the original secret recipes. Accordingly, infringement by defendant was enjoined only upon condition that plaintiff would purge its fault until December 31, 1937, by applying to each bottle or package of eau de cologne, eau de cologne face powder, and eau de cologne smelling salts sold under its trade-mark "4711" a label stating, "Not manufactured in accordance with the original secret recipe in use since 1792 and before 1917." The decree also denied an accounting and left each party to bear its own costs.
The opinion below first discusses the chief dispute of fact, namely, whether or not Kropff had knowledge of the secret recipe for 4711 eau de cologen. This was decided adversely to the plaintiff, and it will suffice to say that we consider the correctness of the finding fully demonstrated. Indeed, upon the argument on appeal this fact was conceded.
The legal rights of the parties prior to the declaration of war were then considered, the court concluding that Muelhens individually was the owner of the secret recipe and of the trade-mark, the registration of which inured to the benefit of the firm as licensee for the duration of the partnership. Attention was then directed to the effect of the declaration of war and the Alien Property Custodian's seizure and assignment. It was held that the war terminated the partnership, and that the Custodian could not seize, and did not purport to seize, the secret recipe, but that he did seize from Muelhens and convey to Kropff "the potential good will of any business in '4711' products which might thereafter be established in the United States," and that the plaintiff as successor to Muelhens' American business may apply the trade-mark to articles which approximate those made under the secret recipe, although the recipe itself was not transferred nor known to the plaintiff or to Kropff, its predecessor in title.
We are in entire accord with the opinion below except upon the one point last stated. As applied to eau de cologne, the mark "4711" meant two things: (1) Origin in the house of Muelhens; and (2) manufacture under a secret recipe. The secondary meaning is now disputed, but on the record it is clear, and indeed plaintiff's attorney conceded in his brief filed on the motion for a preliminary injunction that "* * * the long continued representations, in the present case, with respect to the formula of 4711 cologne made and sold in this country, * * * impressed upon the mark a substantial guarantee that any cologne bearing said mark was made according to said original recipe; so that, in 1917, neither the partnership nor Kropff could have properly sold any other cologne as 4711 than that of the original recipe, without expressly stating or in some way bringing to the attention of the public that said cologne was not according to the original recipe although bearing the trademark."
Plaintiff has succeeded to Muelhens' business in this country, which would entitle plaintiff to use the mark in its first meaning. It has not succeeded to Muelhens' ownership of the recipe, and therefore may not truthfully use the second meaning. The defendant, on the other hand, if allowed to use the mark, will truthfully represent the quality of its article, but will misrepresent that it is continuing Muelhens' former American business. Under such circumstances, which user of the mark has the superior right? Logic will hardly solve the problem. On the one hand, it is said that to allow one who does not know the recipe to seize the good will dependent on marketing the product of the secret formula runs counter to the admitted principle that good will cannot be assigned in gross; on the other, that, since Muelhens would have had the privilege of somewhat changing the formula and still applying to the modified product the old mark, his successor in business should have the same privilege, and the right to prevent Muelhens' user. While the question is very doubtful, a majority ity of the court believe that assignment of the recipe is essential to give the assignee the exclusive right to a mark which denotes a product manufactured thereunder. Otherwise the public will be unable to procure the genuine product under th name by which it has always been known. The law affords trade-mark protection to a merchant in order that prospective customers may not be lured away by one who counterfeits his goods. Those who insist upon the genuine 4711 eau de cologne are not prospective customers of the plaintiff, for he cannot supply it. On the whole we think the plaintiff should not be protected in the use of a mark which he can himself use only deceptively. See Cotton v. Gillard, 44 L.J. Ch. 90; Lecouturier v. Rey, 1910 A.C. 262; Ingenohl v. Wing On & Co., 44 Rep. Pat. Cas. 343, 352; G.H. Munn & Co., 39 Rep. Pat. Cas. 379, 389; Baglin v. Cusenier, 221 U.S. 580, 595, 31 S. Ct. 669, 55 L. Ed. 863; Baldwin v. Von Micheroux, 5 Misc. Rep. 386, 389, 25 N.Y.S. 857.
With respect to articles as to which the 4711 mark has not a secondary meaning but connotes only origin in the German house of Muelhens, the injunction was properly issued and an accounting should be granted. As to the few articles as to which the mark connotes preparation under a secret formula, the injunction should be denied.
The decree is reversed for further proceedings in ...