The opinion of the court was delivered by: MACMAHON
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. Theodor Steinweg" for ten years, but because of confusion with defendant the name was changed by agreement to "Grotrian, Helfferich, Schulz, Successors to Th. Steinweg."
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, understanding that plaintiff would cease using the names Steinweg and Grotrian-Steinweg in the United States.
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:
"I have discussed with our people responsible for the sale of our pianos in our retail stores the acceptability and salability of pianos manufactured by you but not bearing the Grotrian-Steinweg name on the fallboard. In their opinion, without the prestige and background of the name, it would be virtually impossible to compete because of the price structure." PX 27.
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 plaintiff on November 21, 1967 after having purchased only 24 of plaintiff's pianos during the year of the relationship.
Since all of the issues depend on the merits of defendant's counterclaim for trademark infringement and unfair competition, we first consider the counter-claim.
The Lanham Act, 15 U.S.C. § 1114(1), provides a remedy for trademark infringement against "[any] 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."
The amendment, however, eliminated the qualifying language respecting confusion as to source, "thereby evincing a clear congressional purpose to outlaw the use of trademarks which are likely to cause confusion, mistake or deception of any kind, not merely of purchasers nor simply as to source or origin."
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.3
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.
That approach, we think, is still useful in our analysis, although, obviously, confusion of buyers as to source or origin, although material, is no longer essential.
The relevant factors are variable. No single factor is determinative, and the court may take still other variables into account.
We must, therefore, weigh the evidence relative to each factor along with other applicable factors, such as, the prior owner's alleged delay in asserting its claim. Finally, we must balance the equities between the parties.
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 for 123 years. The business was founded in Germany and the first instrument was made in 1835 by Heinrich E. Steinweg, the great grandfather of defendant's president, Henry Z. Steinway. The great grandfather emigrated to New York City in 1850, Anglicized his name to Henry E. Steinway, and started the defendant firm of Steinway & Sons in 1853.
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."
As we have noted earlier, Wurlitzer was unmistakably sure of the strength of the mark.
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 countries. The ancestral Grotrians candidly adopted the name Steinweg for the sole purpose of exploiting the Steinweg name in exporting pianos to English-speaking countries. Moreover, they did this despite knowledge of defendant's trademark and its objections. The conclusion, we think, is inescapable that plaintiff's owners adopted the name Steinweg as the dominant portion of plaintiff's trademark for the conscious and, indeed, the avowed purpose of exploiting and trading on the good will and reputation of defendant. It would be difficult to conceive of a more deliberate intent of an infringer to imitate and palm off his products as those of another.
This longstanding intention, as we shall see, is further borne out by plaintiff's later activities in the United States. Such conscious imitation, in itself, is strong evidence of the likelihood of confusion.
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,
and both pianos are considered "the very finest and expensive pianos that cater and administer to artists and the professions."
Thus, the products are virtually identical and compete on a direct basis. Competitive proximity is also shown by the parties' (1) common prospective purchasers, (2) ...