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v. Foster:1 on the other, Lawrence v. Hull;? Baker v. Baker ;3 Clark Thread Co. v. The William Clark Co.;4 Hodgsdon v. Simpson & Kynoch, Ltd. These are the closest authorities for and against the principal case.
It is respectfully submitted that the case was wrongly decided. No court has a right to confiscate the defendant's property to make a present to the plaintiff. The doctrine of exemplary damages is repudiated in Massachusetts ; 6 and courts of equity in particular are supposed to act on the principle that equity abhors a forfeiture. Accordingly, some just reason must be found which makes it equitable that the plaintiff should receive the defendant's profits. In the ordinary case of infringement of a trade-mark the justice of such a payment is easily seen. The defendant has attempted to obtain and has obtained the benefit of a part of the plaintiff's good will by so marking his goods that the public buy on the strength of the good reputation of goods bearing the mark. The infringing goods being accordingly sold by virtue of the plaintiff's good reputation and not by reason of their own merit, it is certainly more reasonable to say that the profits are the property of the plaintiff than of the defendant. This is the only justification for giving the plaintiff the profits made by the defendant. The principal case falls entirely outside this rule. The plaintiffs had no good will of value in Boston, and the public did not buy the infringing goods on the plaintiffs' good will, of which they had never heard, but did buy on the defendants', which was well known. Accordingly, the profits, being due to the defendants' reputation and not to the plaintiffs', are properly the property of the defendants, and the court should not confiscate them and give them to the plaintiffs.
The plaintiffs are amply protected by injunction against any future confusion, and ex hypothesi there has been none in the past. Had the defendants never used the mark held to resemble that of the plaintiffs, the latter would have been in precisely the same commercial position as they actually were. None of the defendants' customers had the plaintiffs in mind in making their purchases. Not one cent of the defendants' profits was made from the plain
tiffs' mark. Rulings that the defendant should account for profits where there has been actual diversion of business, or where the purchaser has confused the competing marks, even though that purchaser would not have been a customer of the plaintiff had the defendant not crossed his path, are fair enough, because in both of these cases the defendant's profit comes out of the plaintiff's reputation. But it seems completely unjustifiable to hold that the money of the defendant's customers, who never heard of the plaintiff or of the plaintiff's goods, and who bought on the good reputation of the defendant's goods, rightfully belongs to the plaintiff.
The rule adopted in this case is not supported by the analogy of bills for the infringement of patents. The complainant in patent accountings has cast upon him the burden of proving affirmatively what profits the defendant derived from his infringement. This sum may be nothing, or a part, or the whole of the profit derived from the sale of the infringing machine or product, according as the plaintiff succeeds or fails in proving that a part, or the whole of such profits was due to the patented invention. In the case of sales of patented products ordinarily the entire profits must be accounted for, because it must be that the patented product is different from any other article or it would not be patentable; and therefore it is hard to escape the inference that the profits from selling it all proceeded from the patented invention. But it has never been held that the defendant is precluded from proving that the patented invention had no effect on his profits. For instance, if the defendant should contract to deliver a certain number of bolts suitable for certain work, and should supply patented bolts when unpatented bolts equally good for the particular purpose could have been supplied under the contract, there is no doubt the plaintiff would not be entitled to any of the profits from such a sale, although if the contract had required the use of the patented bolts the defendant would have been obliged to pay his entire profits. The distinction is not technical. It is simply a matter of common sense. In the first case the defendant got no advantage whatever by the infringement, and in the latter case his entire profit was due to it; and so in the first case he should pay nothing, and in the second case all. It is hard to see, therefore, how the court, in the principal case, could adopt the following analogy:
1 Garretson v. Clark, 111 U. S. 120.
“If any analogy from patent cases is to be adopted, we ought rather to follow the rule that where the infringing machine or device derives its entire commercial value from the patented feature or improvement, then the patentee is entitled to the entire profits realized from its sale."
This remark refers to the well-known rule of patent law, that where no apportionment is possible, because the infringing feature dominates the whole machine, the defendant must account for all profits. This rule, in other words, governs only in a case where the defendant is unable to apportion. Why the court thought that, in a trade-mark case where the defendants offered to prove affirmatively that none of the value of these infringing goods was due to the resemblance to the plaintiffs' mark, it ought to adopt the rule of patent law laid down for cases where the plaintiff proves affirmatively that the entire value of the infringing goods is derived from the patented feature, is not apparent. The direct contrary seems to be the natural conclusion. Under the view held by the court in this extract, if an unfortunate defendant happened by one label to infringe several trade-marks, he would be obliged to account to the owner of each for the full profits derived from the sale of goods bearing that label. He would have no chance, as he would if the rule of the patent law were adopted, to apportion the profit due to each feature of the infringing label, and to account to each owner only for the profits derived from the use of that feature which involved his mark.
It is interesting to note that, not content with giving the plaintiffs all the money actually earned by the defendants, no part of which was earned by the aid of any resemblance to the plaintiffs' trademark, the court gave in addition a fictitious profit by refusing to permit the defendants to charge as a part of the expense of the business the fair proportion of rent, heat, light and clerk hire, on the ground that the defendants could not prove that these charges would have been less if the infringing goods had not been sold. The court, in so doing, directly rejected the doctrine of the carefully considered Tremolo case in the Supreme Court of the United States, and established an artificial profit as the profit to be paid instead of the real profit figured as any business man would figure it.
It is suggested that a rule which requires the plaintiff to prove what profits are derived from confusion and what are not, is too
harsh; that this would place a burden on injured merchants which they could not sustain. Yet in patent cases the complainant is obliged to apportion what profits are due to the patented device and what to other elements of the infringing machine. This burden was so difficult in the case of design patents that Congress had to be resorted to for relief which the courts could not afford.3 The difficulty that a plaintiff may have in proving his case has not been considered in other branches of the law an adequate reason for relieving him of that burden. Such an argument, at best, only affects the burden of producing proof, not the burden of establishing the case after the proof is all in. Were this burden shifted by allowing the plaintiff to recover all profits, unless the defendant can show affirmatively that none were the result of deception, this hardship on the plaintiff would no longer exist. However, it is respectfully submitted that the plaintiff should be compelled to prove his case in accordance with rules of just compensation. Any questions with reference to the difficulty of proof, real or fancied, in this regard, should be left to the decision of Congress or the state legislatures, as in the case of design patents, not to the courts.
Joseph Warren. BOSTON.
1 Garretson v. Clark, u U. S. 120, 121.
4 Compare cases where a depositor sues a warehouseman for negligence in reference to the res. Willett v. Rich, 142 Mass. 356; Murray v. Internat'l S. S. Co., 170 Mass. 106. See, however, Saxlehner v, Eisner, 138 Fed. Rep. 22, and Graham v. Plate, 40 Cal. 593, 598, where this difficulty affected the courts' decisions in favor of the complainants.
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CONSTITUTIONALITY OF LEGISLATION AFFECTING CORPORATIONS EXCLUSIVELY. — It has been peremptorily decided that corporations as well as natural persons are within the protection of the Fourteenth Amendment ;? but, like natural persons, they are subject to regulation by the states under the police power, which cuts across that amendment. May police regulations, however, be put upon corporations exclusively? Undoubtedly under the police power there may be classification, but it must be based on some reasonable distinction. In the earlier cases in the United States Supreme Court, the rule was loosely laid down that "special legislation is not class legislation if all persons brought under its influence are treated alike under the same conditions." 2 The later cases define the rule more sharply, and require further that the legislation in its classification bring within its influence all who are under the same conditions. By this test regulations concerning corporations solely, when correcting evils arising only from corporate enterprises, would be constitutional. No doubt it is on this ground that statutes abolishing the fellow-servant rule with regard to railroad corporations are to be upheld; the hazards of railroading afford a reason for the discrimination, and the court takes judicial notice that railroads are run exclusively by corporations. It must be admitted, however, that some courts have sustained these statutes on the ground that the word “corporation" therein is to be construed as also including natural persons. On the other hand, where the evils sought to be checked are incident to private as
i Santa Clara County v. R. R., 118 U. S. 394, 396; R. R. v. Nebraska, 164 U. S. 403
3 Missouri Pac. R. R. v. Mackey, 127 U. S. 205, 209. 8 Connolly v. Union Sewer Pipe Co., 184 U. S. 540 ; R. R. v. Ellis, 165 U. S. 150. 4 For a collection of these statutes, see 2 Labatt, Master and Servant, 743 et seq. 6 See Ballard v. Miss. Cotton Oil Co., 81 Miss. 507, 569.
6 Pittsburgh, etc., R. R. v. Lightheiser, 78 N. E. Rep. 1033 (Ind.); Schus v. Powers-Simpson Co., 85 Minn. 447.