The Massachusetts court, therefore, when the principal case was presented for its consideration, was dealing with an open question, except in so far as the defendants' position was favorably affected by Lawrence v. Hull. Outside of Massachusetts there are but few cases in the United States involving this point. Such a one, however, seems to be Baker v. Baker,1 in which the court says: 2 "The evidence shows that the substantial grievance of the complainant is found in the conduct of William H. Baker at the inception and early in the history of his competition. This was remedied as to the future by the preliminary injunction in the first action. That injunction gave the full measure of relief to which the complainant, under the circumstances of the case, was entitled, except such a recovery for profits and damages as he might be found entitled to. The evidence upon the accounting failed to disclose that the complainant was entitled to any recovery of profits, or any except nominal damages, by reason of the defendant's conduct. It failed to disclose that a single person had purchased goods marketed by the defendant, supposing them to be the product of the complainant, or that the complainant had lost a single customer by the defendant's conduct." Therefore the complainant recovered only nominal damages.3 There is a class of cases holding that the defendant cannot prove in reduction of profits what proportion is due to the com 8 The case of N. K. Fairbank Co. v. Windsor, 118 Fed. Rep. 96, tending the other way, was overruled in 124 Fed. Rep. 200. Paul, Trade Marks, ¶ 326, relies on this overruled case and on Lever v. Goodwin, 36 Ch. D. 1 (see infra), for his statement, "Profits recoverable in equity for unfair competition are governed by the same rule as in cases for infringement of trade-marks, and are not limited to such as accrue from sales in which it is shown that the customer is actually deceived, but include all made on goods sold in the simulated dress or package, and in violation of the rights of the original proprietor." And see to HARV. L. REV. 275, 298. See Little v. Kellam, 100 Fed. Rep. 353; Liebig's Extract Co. v. Walker, 115 Fed. Rep. 822, 828; La Republique Française v. Hegeman, 116 Fed. Rep. 1021; Luddington Novelty Co. v. Leonard, 127 Fed. Rep. 155, 157; Williams v. Metcalf, 106 Fed. Rep. 168, 172. In Sawyer v. Kellogg, 9 Fed. Rep. 601, there is general language that a defendant must account for all profits. But the particular point now under discussion was not presented to the court, nor did it indicate how it would decide it. But in Atlantic Milling Co. v. Rowland, 27 Fed. Rep. 24, 25, the court said extra-judicially: "It is argued that the evidence does not show that the orator would have made this profit if the defendants had not. This might be true, and not affect the rights of the parties. If the defendants made profits by their invasion of the orator's rights, the orator is entitled to them whether the same profits would have been made by the orator or not, and not to any more if they would, for the same profits could not be made by both." modity itself and what to the trade-mark, by showing that he could have sold other like goods to other people under a different mark.1 These authorities are not decisive of the position taken by the Supreme Court of Massachusetts in the present case, though their reasoning tends to support it. Outside the federal courts the Supreme Court of Massachusetts finds in the United States substantial support in a case in Kentucky. There the defendants closely imitated the plaintiff's plows down to minute details, except the trade-mark. Although the complainant had sustained no damage, the court ordered an injunction and accounting of all profits on the ground that the defendants were endeavoring to palm off their plows as the plows of the plaintiff. Real intent to commit fraud existed in this case, and the court emphasized this in its decision: 8 "In this case it has been adjudged that the imitation was made with the design on the part of the appellees to make profit by the deception, and we perceive no reason why the appellants should not have the profits if they claim nothing more." 4 The court was clearly wrong in granting the injunction at all, which somewhat discredits the case. The defendants had a clear right to imitate the complainant's plows, provided they did not imitate the trade-mark and took reasonable means to distinguish 1 Benkert v. Feder, 34 Fed. Rep. 534 (where there was undoubtedly confusion, as the defendant marked his goods with the complainant's own name); Saxlehner v. Eisner, 138 Fed. Rep. 22; Graham v. Plate, 40 Cal. 593; Hopkins, Trade-Marks, 2 ed., 383. 2 Avery & Sons v. Meikle & Co., 85 Ky. 435. 8 P. 446. 4 See also Beebe v. Tolerton & Stetson Co., 117 Ia. 593. This was an action under a statute allowing profits for a forged label. On p. 597 the court said: "The statute can only be upheld on the theory that these profits are either compensatory or penal in character. If compensatory, the plaintiff must show that he or the association he represents has suffered some damage, and there is no pretense of any such proof in this case." El Modello Cigar Mfg. Co. v. Gato, 25 Fla. 886. The bill alleged that the defendant had palmed off their cigars as and for those of the plaintiff, and that the defendants had deprived the plaintiff of profits. The defendants demurred that damages were not recoverable in excess of profits. No question of profits was involved, though the court said by way of dictum that all profits were recoverable. But in view of the allegations of the bill admitted by demurrer, none of this language is in point. Drummond Tobacco Co. v. Tinsley Tobacco Co., 52 Mo. App. 10, 31. Accounting was here denied on the ground that it was difficult to determine the exact data which formed the elements of such an account. Stonebraker v. Stonebraker, 33 Md. 252, 263; Stagg Co. v. Taylor, 95 Ky. 651, 669. the two makes. The court could properly enjoin the sales of the plows unless marked with a distinguishing characteristic, but the relief should have gone no further. The correct rule in such a case is that adopted in Flagg Mfg. Co. v. Holway. In that case the defendants imitated the plaintiffs' zither closely, except the trade-mark. The Supreme Court held that the plaintiffs were entitled to an injunction restraining the defendants from selling zithers not more plainly marked with their own name, or some other distinguishing mark; no accounting was granted, although asked for. Avery & Sons v. Meikle & Co.2 was cited with approval in the recent case of W. R. Lynn Shoe Co. v. Auburn-Lynn Shoe Co.,3 not cited by the court in the principal case. It is probable, though not entirely clear from the report, that in the Maine case all profits were the fruit of the defendant's deception. The approval given to the far reaching Kentucky rule, that profits recoverable in equity in cases of trade-mark or of unfair competition are not limited to such as accrue from sales where it is shown that the customer is deceived, is therefore, in all likelihood, obiter dictum. On the other hand, in Clark Thread Co. v. William Clark Co.4 two manufacturers were entitled to a mark which the defendant was enjoined from infringing. The court did not hold the defendant liable to each owner separately for all profits earned from wrongful sales, or to each owner for half the profits. It said: "Its responsibility to the complainant should be confined to such profits. as were diverted from the complainant, and such damages as the complainant otherwise sustained, leaving the defendant answerable to the Mile-End Company for the profits unlawfully diverted from it." Whatever general language in the earlier federal cases there can be found against the rule favoring the defendants, must be considered as superseded by Baker v. Baker. In other American jurisdictions the rule favoring the plaintiffs receives substantial support from the somewhat doubtful case of Avery v. Meikle, and discredit from Clark Thread Co. v. William Clark Co. To the other United States authorities outside Massachusetts not much importance can be attached. 1 178 Mass. 83. 8 100 Me. 461, 479. 5 115 Fed. Rep. 297. 7 56 N. J. Eq. 789. 2 85 Ky. 435. The English authorities are not entirely clear.1 The later cases throw some doubt on the earlier ruling which favored the plaintiffs' contention in the case under discussion. In Edelsten v. Edelsten,2 the vice-chancellor in the court below refused to limit the account of profits required of an infringer in a trade-mark case on the ground that there was no proof of deception of the public. This order was affirmed shortly in the upper court. Except in so far as the defendant did not offer actual proof negativing deception, this case is authority for Judge Sheldon. In Ford v. Foster, accounting was allowed of profits earned after the filing of the bill. No point was made by counsel that the defendant's liability should be reduced in the absence of proof of actual deception. The question was very shortly dealt with. But there seems to be some doubt indirectly cast on these rulings by the more recent case of Hodgsdon & Simpson v. Kynoch, Ltd. The court said: 5 "I grant an injunction restraining the defendant company, its servants and agents, from selling or offering for sale, any of its soaps in any of the four wrappers above mentioned in their present forms with lions' heads upon them, or so as to induce the belief that any of such soaps were manufactured by the plaintiffs. Then, though no actual case of a purchaser being misled into buying the defendants' instead of the plaintiffs' soap has been proved before me, I think if the plaintiffs insist upon more than nominal damages and ask for an inquiry as to damages, I must grant such an inquiry, reserving the costs of it." Nevill, Q. C. "May we have, instead of an inquiry as to damages, an account of profits ?" Romer, J. "No, certainly not. I think it would be most unjust in this case." 6 1 In England the plaintiff stands in a better position in patent, trade-mark, and unfair competition cases than in the United States. In patent litigation in England the defendant may be compelled to destroy the infringing article or deliver it to the plaintiff. Betts v. DeVitre, 34 L. J. Ch. 289; Lancashire Explosives Co. v. Roburite Explosive Co., 12 R. P. C. 470. In trade-mark and unfair competition cases in England it is unnecessary to prove fraud on the part of the defendant to obtain an injunction. Millington v. Fox, 3 Myl. & C. 338, 352; Cellular Clothing Co. v. Maxton, [1899] A. C. 326, 334, 335. 2 1 De G. J. & S. 185. 8 L. R. 7 Ch. 611. 4 15 R. P. C. 465. 5 P. 475. 6 And see Magnolia Metal Co. v. Atlas Metal Co., 14 R. P. C. 389; Sanitas Co., Ltd. v. Condy, 4 R. P. C. 530. Kerley, Trademarks, 2 ed., 425: "But if the court is satisfied that the defendant's goods have not, to any substantial extent, been passed off as those of the plaintiff, The English cases bring out another important point. If goods are sold in a deceptive dress, the infringing manufacturer is not helped by selling only to jobbers who knew of the fraud. This fact makes the jobbers equally guilty, but does not diminish the moral or legal guilt of the manufacturer. As to him the fact that the jobbers bought because of the opportunity for fraud given them only shows that the manufacturer's profits were due to the wrongful dress and not to the quality of his goods, and that therefore he should not be allowed to retain such wrongful profits. And so it was held in Lever v. Goodwin, where Cotton, L. J., said: 2 "The defendants, as I understand, do not sell anything to retail purchasers; what they sell they sell to middlemen, that is to say, to people who purchase from them as wholesale merchants, and who are going to sell it by retail; and the complaint against the defendants is this: 'You have dressed up your soap in such a dress that those middlemen to whom you sell it are enabled, by its having that deceptive dress upon it, to sell it to the ultimate purchasers as the soap of the plaintiffs.' The profit for which the defendants must account is the profit which they have made by the sale of soap in that fraudulent dress to the middlemen. It is immaterial how the middlemen deal with it. If they find it for their benefit not to use it fraudulently, but to sell the soap to the purchasers from them as Goodwin's, that cannot affect the question whether the sale by the defendants to those middlemen of this soap in a fraudulent dress was a wrongful act. It still remains a wrongful act, because it put into the hands of the middlemen the means of committing a fraud on the plaintiffs by selling the soap of the defendants as the soap of the plaintiffs." " It is obvious that the case would be entirely different if the jobber bought in ignorance of the resemblance complained of and no user was ever deceived, because the wrongful acts would not have led to any sales, and none of the defendant's profits would have been due to the wrongful acts. 4 On the one side are Avery v. Meikle; W. R. Lynn Shoe Company v. The Auburn-Lynn Shoe Co.;5 Eldesten v. Eldesten; 6 Ford although infringing or deceptive marks have been used upon them, the plaintiff ought not, it is submitted, to have any option. To allow him to take the profits made by the defendant's trade in goods which were in fact sold without deception would be unjust." 1 36 Ch. D. I. So Saxlehner v. Apollinaris Co., 14 R. P. C. 645, 657. doubted the correctness of this ruling, but felt bound by it. 4 85 Ky. 435. |