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American Shops Inc. v. American Fashion Shops of Journal Square Inc.

Decided: May 8, 1951.


McGeehan, Jayne and Wm. J. Brennan, Jr. The opinion of the court was delivered by Jayne, J.A.D.


A lecturer on the subject which is identified in the law as "Unfair Competition" once asked a student for his conception of the subject. The student replied: "Well, it seems to me that the courts try to stop people from playing dirty tricks." It is difficult to discover in the many adjudications a definition more satisfactory. The theme is said to exemplify the embodiment in the law of the ancient rule of the playground -- "Play fair." There is the expression: "The law will not permit the trespasser to take the crop away from the sower."

More specifically, Lord Chancellor Halsbury remarked: "Nobody has any right to represent his goods as the goods of somebody else." The English nicknames, "passing off" or its equivalent "palming off," although expressive of the rationale of the early cases, are no more definitive today than our name "unfair competition." The American Law Institute has preferred to employ the appellation "unfair trade practices." However, it becomes apparent that there is no fetish in the word "competition." The invocation of equitable relief rests vitally upon the element of unfairness. It is at once acknowledged that a detriment to one's business which is wholly incidental to fair and lawful competition is damnum absque injuria.

Relatively few cases implicating acts which would now be considered as actionable under the rules of unfair competition were decided in England or in America prior to 1850. Since then, due partly to the flexibility of equitable relief and partly to the changes in business methods and standards of commercial morality, the scope of this field of litigation has constantly expanded.

No catalogue exists of all acts which constitute unfair competition. No prophet has undertaken to foretell what acts will be held to constitute unfair competition in the future, because equity broadly concerns itself with the suppression of injurious deception and fraud whatever the means by which they are wrongfully accomplished. It must be realized that injunctive relief is not confined to the protection of those having trade-marks and trade-names. It reaches beyond to encompass all cases in which it is evident that fraud and deception are practiced by one in disparaging or capturing the trade of a competitor. The ingenuity of the unfair competitor thus eludes classification but not always the restraint of a court of equity.

Gradually the list of adjudicated unfair acts grows; gradually the legal concept of fairness becomes more elastic, for as Lord Holt forewarned, "if men will multiply injuries, actions must be multiplied too. * * *"

Assuredly the most common form of unfair competition is the imitation of a trade-name, trade symbol or device by a competitor. It is emphasized by counsel for the appellant that this is not a trade-mark case. An examination of the decisional law in its development during the past half-century discloses that trade-mark infringement and unfair competition have been almost amalgamated. The similarity between them in many instances is obvious. In both, the defendant is likely passing off his goods as the plaintiff's goods by the use of a symbol. Deceit may be noticed to drip out of both kinds of imitation. And so, Mr. Justice Pitney in Hanover Star Milling Co. v. Metcalf , 240 U.S. 403, 412 (1916) stated: "This essential element is the same in trademark cases as in cases of unfair competition unaccompanied with trademark infringement. In fact, the common law of trademarks is but a part of the broader law of unfair competition."

True, the struggles of some judges and lawyers to magnify a distinction between technical trade-marks and devices which were protected for their secondary meaning are discernible in the reported cases, but it is also observable that for the most

part the difference has made no difference. Whatever the tort was named, the judicial protection afforded against it was substantially the same.

It is so, that the distinction between descriptive and non-descriptive words is recognized. The criterion of whether a given brand is a trade-mark or trade-name is after all etymological. A trade-mark must be fanciful, arbitrary, unique, distinctive, non-descriptive, whereas words descriptive of qualities or attributes, generic designations, personal, partnership, and corporate names, geographical terms, and the like are trade-names. Trade-marks are protected in a suit for infringement, trade-names in an action to restrain "passing off," "palming off," or other more modern forms of unfair competition. Although the decisions are not unanimous, it may now be confidently stated that the trade-name cases tend so closely to approximate the trade-mark cases that the supposedly sharp line of demarcation is being substantially extinguished except with regard to the scope of the protection accorded. In a non-technical sense the trade-name is the trade-mark augmented by secondary meaning.

The issue of free competition is sometimes raised where the protection of fair competition requires restrictions on someone's use of a word in an unusual sense which is not literally descriptive. The use of such words may nevertheless in proper circumstances be protected from a deceitful use in competitive trades. For example, Ivory soap is not made of ivory. There is no gold in Gold Dust washing powder, or in Gold Medal flour. Old Crow whiskey is not distilled from old crows. There is no bull in Bull Durham tobacco. White Rock is in fact water.

It is now the established law that such a word or associated words may by usage and popular acceptance acquire a secondary, special or, shall we say, trade meaning, as indicative of the identification of the goods, business, or services of the user and therefore entitle such person or corporation to protection against an unfair and deceptive usage by another. 1 Nims, Unfair Competition and Trade-marks, ch. IV, p.

152; 52 Am. Jur., Trade-Marks, Trade Names, &c. , 554, sec. 72.

So also where a geographical name has become the generic designation of a business or product, the courts have been alert to recognize the circumstances of the particular case and have not hesitated to grant often times precisely the same relief that would be conferred in trade-mark cases. American Waltham Watch Co. v. United States Watch Co. , 173 Mass. 85, 53 N.E. 141 (Sup. Jud. Ct. 1899), is in this respect instructive. Cf. Polackoff v. Sunkin , 115 N.J. Eq. 134 (E. & A. 1934), anent the use of the trade-names "New Jersey Malt Supply" and "New Jersey Malt Products Co." See, too, American Automobile Association v. Automobile Association of New Jersey , 142 N.J. Eq. 673 (E. & A. 1948). The word "American" was also implicated in the following decisions: American Clay Mfg. Co. v. American Clay Mfg. Co. of N.J. , 47 A. 936 (Sup. Ct. Pa. 1901); Hamilton Shoe Co. v. Wolf Brothers , 240 U.S. 251 (1916) -- "American Girl"; American Radio Stores, Inc., v. American Radio & Television Stores Corporation , 150 A. 180 (Del. Ch. 1930); R.W. Eldridge Co., Inc., v. Southern Handkerchief Mfg. Co. , 23 Fed. Supp. 179 (U.S.D.C.T. 1938) -- "All American"; American Oil Co. v. Norkus , 57 A. 2 d 868 (Sup. Ct. Pa. 1948).

In cases in which the usage of descriptive words ordinarily freely afloat in the public domain is alleged to incite unfair competition, the inquiry envelops the question whether the plaintiff's commercial employment of the words in the territory of his business has also infused them with a so-called secondary meaning.

Certainly, the words of our language are normally public property. The control of equity over words arises from the use which is made of them. They may be lifted from the public domain when their use has come to denote to the purchasing public the particular manufacturer or vendor.

Although universality of recognition of such an artificial trade-name is not required, its ...

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