Clapp, Jayne and Francis. The opinion of the court was delivered by Francis, J.A.D.
In this action an injunction was granted which provided that so long as the plaintiff continues to operate a furniture store at or in the area of 75 Market Street, Newark, New Jersey, the defendant shall not sell furniture in that area under the name "Sachs." The legal and equitable propriety of the restraint has been submitted to us for examination.
The plaintiff Sachs Furniture & Radio Co., a New Jersey corporation, had been conducting a store for the retail sale of furniture at 75 Market Street, Newark, New Jersey, for
a number of years. In October 1954 defendant Sachs Quality Stores, Inc., a New York corporation, opened a store at 51 Market Street for the sale of furniture, household appliances, wearing apparel and other items. Defendant's establishment is 300 to 350 feet west of that of plaintiff, on the same or north side of the street. A very narrow intersecting street intervenes. This side of Market Street is known as "furniture row" because of the concentration of such stores, there being 12 of them between defendant's place of business and the west side of Washington Street, which is the next block east of plaintiff.
Proper development of the problem to be considered requires a statement of the history of these two corporations, which, as is noted immediately, carry the name "Sachs" as the first word in their business names.
HISTORY OF DEFENDANT, SACHS QUALITY STORES, INC.
In 1896 Israel Sachs established a retail store on Second Avenue in New York City, under the name "F. Sachs" for the sale of furniture, floor coverings and bedding. It continued as a proprietorship until 1927 when incorporation occurred as "Sachs Quality Furniture, Inc." The present name "Sachs Quality Stores, Inc." was taken in 1947, because in the intervening years the operation was expanded to include curtains, slipcovers, bedspreads, radios, televisions, wearing apparel and jewelry.
The business has always been a family dominated and controlled one. When Israel Sachs died in 1949, his descendants acquired ownership. From that time on, sons and sons-in-law took over the management, one son becoming president and one chairman of the board of directors. All of the voting stock and most of the equity remain in the family.
The passing years brought considerable growth and at present, excluding the Newark establishment, defendant maintains five stores: two in Manhattan, two in the Bronx and one in Jamaica. The total gross business for the year ending June 30, 1954 was approximately $8,000,000. Apparently the high point was $9,600,000 in 1952 or 1953.
Newspaper advertising was instituted in 1917 and has been engaged in extensively since that time. The New York Times, Journal-American, Daily and Sunday News and Daily and Sunday Mirror were used. All of these have wide circulation in Newark and throughout the State of New Jersey. Newark papers were employed also, after the store in that city was given the Sachs name.
Since 1921 radio broadcasting and later television became additional advertising media. Although New York stations were the emanation points, the messages were designed for reception and were received over wide areas in New Jersey. The names Sachs and Sachs Quality were widely publicized; a musical jingle of defendant's New York telephone number, Melrose 5-5300, became well known and the stores were spoken of constantly in these media as "Home of the Three Little Sachs." The expenditure for advertising for the fiscal year 1954 was almost $790,000; millions of dollars had been spent in that way over the years.
The names Sachs and Sachs Quality have always featured its advertising. In 1931 the word "Sachs" was registered as a federal trademark. The form was a signature cut with a wide line from the terminal S sweeping under the word and back to the capital S, with "Quality Furniture, Inc." printed in smaller letters on the underline. A new trademark was applied for December 1, 1945 and its registration was granted October 7, 1947. It pictured the word "Quality" with a large Q and the name "Sachs" encircled by the Q. Reregistration of the same mark occurred in 1953, the only change being a heavier and blacker shading of the Q.
Although no store was maintained in New Jersey prior to October 1954, defendant's mail order business and sales to residents of this State ran from $400,000 to $500,000 annually.
HISTORY OF PLAINTIFF, SACHS FURNITURE & RADIO CO.
Louis Sachs (no relative of the family owning the defendant), then and now a resident of Paterson, New Jersey,
opened a retail furniture store in that city in 1929. He incorporated in 1931 under the name "Sachs Furniture & Radio Co." After six years, the company moved to Passaic, where it remained until 1939. Throughout the years advertising was carried on in the Paterson and Passaic papers.
In 1935 defendant ascertained that plaintiff had simulated its trademarked signature cut practically to the point of identity, the only difference (in one cut used) being that the sweeping underline said "Furniture & Radio Co." followed by three marks indicating sparks, instead of defendant's "Quality Furniture, Inc." Suit was threatened and a written compact was executed by plaintiff to desist from the practice.
This agreement recited that Sachs Quality Furniture, Inc. was engaged in the sale of house furnishings, furniture and similar merchandise throughout the states of New York, Connecticut and New Jersey , and that the plaintiff was conducting a similar business in Paterson and Passaic. Plaintiff stipulated that the "trade name, trade mark * * *" described "and as used by" this defendant "in its business belongs to and is [its] sole property," and that "so long as it [the plaintiff here] exists in the business under the name it has assumed * * * it [plaintiff] will not at any time * * * use its trade name so as to possibly lead the public to believe that it is identified with 'Sachs Quality Furniture, Inc.'" and that it would not simulate or infringe upon the Sachs Quality trade mark. And plaintiff covenanted that it would not represent to any of its customers that it was connected with that company. In return, Sachs Quality agreed that plaintiff here could use its own new and distinguishable trade mark incorporating "Sachs" anywhere in New Jersey free of a claim of infringement.
In 1939 plaintiff came to Newark and established its place of business at 75 Market Street in furniture row. Adjoining it on both sides are large furniture houses. In 1950 or 1951 it opened another place on Route 4, Paramus, New Jersey, and at the time of the trial was building a third on Route 46, Paterson.
Plaintiff limited its advertising to newspapers and direct mail to customers every month or two, except between 1939 and 1942 when radio broadcasting was engaged in.
According to defendant's president, in 1940 and 1941 during the time plaintiff was advertising by means of radio, some confusion arose among members of the public as to which store was publicizing its wares over WNEW. As a result, in both those years defendant sent notices to its New Jersey customers to the effect that all of its stores were in New York and that it was not connected with any establishment in this State. And on May 23, 1941 defendant wrote to plaintiff complaining about the confusion caused by its radio program, and particularly about an upholstery item which apparently plaintiff was calling attention to over the air. Defendant charged that it had begun advertising the item by radio more than a year earlier through WMCA. The letter referred also to the earlier controversy over the simulation of the signature cut and to the agreement "to do nothing in your advertising which would tend to create the confusion which has evidently been created as the result of both of our radio programs advertising the identical item." Plaintiff's president, when testifying, recalled the 1940 and 1941 notices but said that his company's successful broadcasting campaign influenced defendant to disseminate them. In any event, plaintiff company ceased using the radio as a medium in 1942, "when the war came on."
Plaintiff's store has continued in Newark since 1939 and during that period the name "Sachs" has been emphasized on its facade. As already shown, a new place was established in Paramus four or five years ago, and another was about to be opened on Route 46, Paterson, at the time of the hearing in the trial court.
CIRCUMSTANCES ATTENDING ACQUISITION BY DEFENDANT OF THE NEWARK STORE
Following a series of transactions which began on May 28, 1954, defendant acquired the assets of Michaels Brothers, Inc., a retail furniture ...