was and is no prohibition on the owner of the PINE-SOL mark to compete in the household cleaning products with LYSOL, including disinfectant products, with any mark other than PINE-SOL as limited by the agreements.
The 1987 agreement provides that CLOROX may use the PINE-SOL mark without limitation on any product so long as it is not advertised as a disinfectant and may market any product as a disinfectant with the endorsement "From PINE-SOL" or "From the Makers of PINE-SOL." Up to the time of this litigation CLOROX has not chosen to utilize that option.
Moreover, CLOROX is free to market any other product under any other trademark without limitation. CLOROX has in fact marketed Formula 409, Tilex, Soft Scrub, Clorox Clean Up and Clorox Toilet Bowl Cleaner in direct competition with LYSOL products. All of these CLOROX products have enjoyed remarkable success. See California Packing Corp. v. Sun-maid Raisin Growers, 165 F. Supp. 245 (S.D. Cal. 1958), aff'd, 273 F.2d 282 (9th Cir. 1959).
For a complete background of this litigation see Clorox Co. v. Sterling Winthrop, 836 F. Supp. 983, 985 (E.D.N.Y. 1993).
CLOROX has totally misconstrued the nature of this case in attempting to squeeze the square trademark peg into the round antitrust hole. From the beginning of the first litigation between L&F (Reckitt predecessor) and MAGNOLIA (a CLOROX predecessor) the matter has been one of use of a trademark. There has been no competitive limitation on the owner of the PINE-SOL market; no price fixing; no division of markets territorial or product; no group boycott; or concerted refusals to deal with a competitor. The agreements uniformly express a desire of the parties to protect the use of the LYSOL trademark and PINE-SOL mark. CLOROX attempts to confuse the matter by largely ignoring who the competitors are in the market place. The competitors in the household cleaning product market are CLOROX and RECKITT, not PINE-SOL and LYSOL. Trademarks are only an exclusive right to use a trademark as identification of the product using the trademark to the exclusion of all others of the same or confusing trademarks. The PTO effectively granted that exclusionary power in this matter to RECKITT when the Patent Office Examiner in Chief affirmed the decision of the Examiner of Trade Mark Interferences. 96 PSPQ 57 (1953). At that time L&F was empowered to lay to eternal rest the PINE-SOL mark without the luxury of a eulogy. After litigation commenced by L&F to execute the ruling of the PTO, the parties, L&F and MAGNOLIA [succeeded by MILNER PRODUCTS CO. (MILNER)], chose to use the alternative to a judgment by settlement agreement. L&F gave MILNER the ability to use the PINE-SOL mark in marketing a dilutable liquid cleaner with certain restrictions on the products formula and labeling. At that time MILNER, CLOROX'S predecessor, chose to consider the ruling of the PTO valid without the necessity of review, by a court, of the validity of the PTO'S findings in the 1952 interference proceedings. Although CLOROX eschews the term license for what the 1956 agreement created, it is hardly without dispute that what L&F granted to MILNER was a limited license. With this limited license the PINE-SOL product has flourished competitively in the household cleaner market. The result of the 1956 agreement and its progeny is pro-competitive simply because there has been no dilution of competition by CLOROX in any manner and PINE-SOL has been permitted an opportunity in the market place. The agreement is neither violative of Section 2 of the antitrust laws nor an unreasonable protection of the LYSOL trademark under the trademark laws.
The 1967 agreement was the result of a settlement in litigation where STERLING now the owners of the LYSOL trademark and AMERICAN CYANAMID (CYANAMID) locked horns in a dispute over the marketing of a PINE-SOL disinfectant spray. The parties in this litigation - no midgets in the market place - again agreed that the decision of the PTO was correct and again chose to forego the risk of a court judgment.
Turning the tables CYANAMID sued STERLING in 1983. In 1986 both parties still in litigation over use of the PINE-SOL mark STERLING then sued CYANAMID for breach of the 1967 agreement. Both these actions were resolved in 1987, again affirming the parties belief in the validity of the PTO'S ruling and foregoing a court ruling. After 4 years of intense litigation the parties in an attempt to avert any further disagreements spelled out with particularity what the obligations of the parties were under the 1956 and 1967 agreements. In considering the 1987 agreement vel non Judge Dearie of this Court concluded "it is not per se illegal. A product of arm's length negotiations after a period of years, the Agreement limits the uses of the PINE-SOL mark in an apparent effort to insure co-existence between senior and junior marks." Clorox, supra, at page 989. In 1990 CLOROX acquired the PINE-SOL mark to add to its stable of household cleaning products. Almost immediately CLOROX attempted to find a way to abrogate the 1987 agreement. In 1991 CLOROX launched a national advertising program that promoted PINE-SOL primarily as a disinfectant. Sterling brought suit in the New Jersey Superior Court seeking to enjoin the advertising. CLOROX in defense charged STERLING with violation of Section 1 and 2 of the Sherman Act. Rejecting CLOROX'S antitrust argument the New Jersey Superior Court granted STERLING an injunction, saying about the antitrust charges:
It is unlikely that [CLOROX] will be able to prove that an agreement which merely provides for emphasis in advertising could be a violation of any antitrust laws. There is no price fixing or division of markets or the like. . . .The 1967 agreement was an arm's length agreement between two large companies, no fraud or other equitable defenses are alleged. . . .The public will be told the truth about PINE-SOL as long as the cleaning properties are emphasized over the disinfectant properties. Also the public interest is furthered by the settlement of litigation and enforcement of fair agreements.
CLOROX stretching for an antitrust hook makes a generic argument that misuse of a trademark can be a violation of the antitrust law citing Timken Roller Bearing Co. v. United States, 341 U.S. 593, 95 L. Ed. 1199, 71 S. Ct. 971 (1951), and Judge Edward Weinfeld's ruling in United States v. Bayer Co., 135 F. Supp. 65, 70-71 (S.D.N.Y.). The citations for the generic principal of trademarks in antitrust law is indisputable but the agreements in Timken, supra, and Bayer, supra, bear no resemblance to the agreement being considered here. In both those cases there was a direct division of markets Timken, supra, bearings and Bayer, supra, in pharmaceuticals. The lack of justification of a trademark licensing system is very succinctly stated by Justice Black in Timken, supra, when he wrote at page 598:
Nor can the restraints of trade be justified as reasonable steps taken to implement a valid trademark licensing system, even if we assume with appellant [Timken] that it is the owner of the trademark "Timken" in the trade areas allocated to the British and French corporations. Appellant's premise that the trade restraints are only incidental to the trademark contracts is refuted by the District Court's finding that the "trademark provisions [in the agreement] were subsidiary and secondary to the central purpose of allocating trade territory" (emphasis added).