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THE EVOLUTION OF THE LAW OF UNJUST

TRADE AND UNFAIR COMPETITION.

BY

OTTO RAYMOND BARNETT,

OF CHICAGO, ILLINOIS.

At the threshold of our law studies we were told by Sir William Blackstone of blessed memory that where reason ends there the law ends, and that where there is a wrong there is always a remedy. Yet, in the awakening which soon came with further knowledge, we were tempted to believe that in these days of much lawmaking it only too often seems to be true that where reason ends there the law begins, and that, from the standpoint of the courts, the absence of the remedy is proof conclusive that no wrong exists.

And yet there is one branch of the law which has been evolved from the common law, free from the trammels of statutory interference, which very closely approaches pure ethics.

The late Rowland Cox has been reported as saying that the essence of trade-mark law is found in the Mosaic command, "Thou shalt not steal." It is also said that upon one occasion when, true to his conception of the spirit of the law of trade-marks, he urged this view, the court replied: "The trouble, Mr. Cox, is that you are twenty years in advance of the times." Be that as it may, out of the technical common law of trade-marks, broad and elastic as it is, has so rapidly been evolved, or, should I rather say, has so rapidly been adopted, in recent years the doctrine of unjust trade and unfair competition that even the contentions of Rowland Cox would, in many cases, be less than the established law now is, though less than a decade has passed since that illustrious specialist made his last argument and filed his last brief.

The law of trade-marks under the common law has long been afforded some of the broadest, most permanent and most just rights afforded by the law. But broad and elastic as those rights are, even the law of trade-marks has been hampered by technicalities and limitations which have only too often prevented justice from being done.

In the law as to unjust trade as it prevails today, we find the courts casting aside the technical questions of the trade mark law and broadly and effectively enforcing the command, "Thou shalt not steal." In such cases, the gist of the court's inquiry appears to be: "Is the defendant seeking by any unfair device to divert to himself trade which would otherwise fairly, justly and probably go to the complainant?" If that is the case, no technicality, no subterfuge and no indirection will avail defendant to avoid the entry of an efficient decree against him.

It will be well to note here wherein, in this paper, the subject of unjust trade and unfair competition is distinguished from the more limited subject of trade-marks. We note the definition of a trade-mark in Newman vs. Alvord, 51 N. Y. 189-193, as follows: "A trade-mark must be used to indicate not the quality, but the origin or ownership of the article to which it is attached. It may be any sign, mark, symbol, word or words which others have not an equal right to employ for the same purpose." While we find in the decision of Dennison Mfg. Co. vs. Thomas Mfg. Co., 94 Fed. 651-659, the following: "Unfair competition in trade, as distinguished from infringement of trade-marks, does not involve the violation of any exclusive right to the use of the word, mark or symbol. The word may be purely generic or descriptive, and the mark or symbol indicative only of style, size, shape or quality, and as such open to the public, yet there may be unfair competition in trade by an improper use of such word, mark or symbol."

A material difference in procedure arises from these differences, to wit, when the adoption and use of a technical trademark is proven, it has been held that the complainant need

not have affirmative proof that he has built up a reputation under such trade-mark. And infringement of a trade-mark having been proven, complainant need not show fraudulent intent on the part of the defendant. In unfair competition, however, since complainant bases his right upon the use of words, characters and the like, as to which he has no exclusive right, he must plead and prove that such words, characters or symbols have acquired a peculiar significance in connection with his business, and he must plead and prove that the defendant has fraudulently used the same or like words, characters or symbols for the purposes of unfairly taking advantage of complainant's reputation, although even in such cases the deliberate and obvious simulation of complainant's device may create a sufficient presumption of fraud where no other sufficient reason for such simulation is shown.

In seeking the origin of the doctrine now under consideration, we are carried back to the genesis of trade-mark law, and we find that what we are so apt to look upon as a modern doctrine has its tap-root deep in the common law of fraud, from which it has been developed concurrently with the law of trade-marks, although the law as to trade-marks has had the more rapid development and the more general attention of the courts until comparatively recent years.

As the law of trade-marks began to take definite form, we find the first court record relating to trade-marks in that cause in the time of Elizabeth (A. D. 1590) where a suit was brought against a clothier who had fraudulently applied another's trade-mark to his own inferior cloth. As late, however, as 1742 Lord Hardwicke held that he knew of no instance of granting an injunction to restrain one trader from using the mark of another, his lordship adding, "and I think it would be of mischievous consequence to do it."

112

In view of that pronouncement, we may consider that the law of trade-marks, so far as the right to enjoin infringement.

1 Southern vs. How, Common Pleas, Popham 144.

2 Blanchard vs. Hill, 2 Atk. 484; R. Cox, 633.

is concerned, dates no further back than the middle of the eighteenth century. During the succeeding hundred years that branch of the law gradually took definite form until about 1850 many of its broad principles had begun to be fairly settled. But even in this formative period of trade-mark law, there were occasional pronouncements on broad lines by wise jurists which foreshadowed that more liberal and most just development of the law which we are now considering.

Thus, in 1809, in Longman vs. Winchester,' involving the pirating of a published law calendar, Lord Eldon said: "Each party might publish his own collection but the one could not excite the public curiosity by copying into his work from that of the other."

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In 1811, the defendant in Sedon vs. Senate was enjoined, among other things, from putting forth advertisements containing verses which had been used by him in the business which he had sold to plaintiff.

3

In the case of Henry vs. Price, decided in 1831, it is not clear to what extent the case turned on the fact that the defendant used the same peculiarly shaped bottles which had been adopted by plaintiff for marketing his product, yet in Blofeld vs. Payne,* decided about two years later, the case was squarely decided in favor of plaintiff because defendant sold hones in special envelopes like those of plaintiff, and damages were awarded for the fraud.

5

Five years later in Knott vs. Morgan, decided in 1836, a decision was rendered which appears to be a starting point in the law of unfair competition. In that case the London Conveyance Company painted its omnibuses and clothed its servants in a special and distinctive manner. The defendant began to run 'buses similarly painted and with servants similarly clothed. Here surely was no technical trade-mark applied to an article 1 Longman vs. Winchester, 16 Ves. 269.

2 Cited 2 V. & B. 220.

31 Leg. Obs. 364.

44 B. & Ad. 410.

52 Keen. 213.

of commerce and as to which the plaintiff possessed exclusive rights because of its arbitrary character and adoption, but manifestly there was most unfair competition, or, as characterized by one commentator, "An obvious attempt to trade upon the plaintiff's reputation, a constructive fraud which was made the basis of the issuance of a broad injunction.' This case is notable because of the broad equities upon which it was decided, and in view of this and subsequent cases it would seem that the law as to unjust trade and unfair competition is as old as the law of trade-marks, but unlike the law of trade-marks it went through prolonged periods of suspended

animation.

Following the broad, equitable principles announced and followed in Knott vs. Morgan, came the decision in Croft vs. Day2 in 1843, which is one of the first of that long line of decisions enjoining a defendant from the unfair or fraudulent use of his own name in an endeavor to trade on a competitor's established reputation. The defendant, Day, who had succeeded in associating with him a man named Martin, was enjoined as to the manner of using the name Day & Martin, not only on labels, but also on show cards, in competition with the established business of the old shoe-blacking firm of Day & Martin.

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Lord Langdale there said: "You may say that no man has a right to dress himself in colors, or adopt and bear symbols to which he has no peculiar or exclusive right for the purpose of inducing the public to suppose either that he is another person or that he is connected with and selling the manufacture of such other person while he is really selling his It is perfectly manifest that two things are required for the accomplishment of a fraud such as is here contemplated. First, there must be such a general resemblance of the forms, words, symbols and accompaniments as to mislead the public; and, secondly, a sufficient distinctive indi1 Cox's Manual, Case 57, note 2.

own.

27 Beav. 84.

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