Lustgarten v. Felt & Tarrant Mfg. Co.

BIGGS, Circuit Judge. The appellee, Felt & Tarrant Manufacturing Company, in the summer of 1929, was, and still is, manufacturing and selling calculating machines under the trade-mark “Comptometer.” In connection therewith, and as an aid to its commercial enterprise, this appellee established and licensed numerous schools wherein students were instructed in the correct use of the calculating machines. One of these schools had been established and licensed in the Concourse building in Jersey City, N. J., with the other appellee, Hugo S. Phillipson, in charge thereof. By a bill of complaint filed in the District Court of the United States for the District of New Jersey the appellees alleged that the appellants, in order to trade upon the name and good will of the Felt & Tarrant Manufacturing Company and this established school, added the name “School of Comptometry” to the name “Jersey City Preparatory School” under which the appellants had been conducting a commercial school, and leased the floor of the Concourse building immediately below the school which Phillip-son was conducting for the Felt & Tarrant Manufacturing Company under the name “Comptometer School.” The bill of complaint further alleged that misleading signs were put by the appellants upon the hallways and across the ways of ingress to the school conducted by Phillipson to the end that the public and those seeking instruction might be led to believe that the appellants’ school was in fact the school conducted by Phillipson for the Felt & Tarrant Manufacturing Company. No answer was filed to this bill of complaint. On the contrary, upon December 8, 1931, a final decree was entered by the court upon the consent of the parties. Since the questions in controversy here turn in a large part upon the interpretation of the terms of this decree, it is set out in full: “First: That Felt & Tarrant Manufacturing Company, a corporation of Illinois, and Hugo S. Phillipson, a resident of New York, are entitled to the relief prayed in the bill of complaint in the above-entitled cause. “Second: That a perpetual injunction issue out of and under the seal of this Court directed to these defendants and each of them, their officers, agents, attorneys, clerks, servants, workmen, and employees enjoining and restraining them, and each of them, from using or employing the name ‘School of Comptometry’ as title for or in connection with the conduct and management and/or advertisement of the school heretofore operated by defendants and/or either of them, and any school which they and/or either of them may hereafter operate or control; and from employing the word ‘Comptometer’ or the word ‘Comptometry’ in the name or title of any school now owned or controlled, or which may hereafter be owned or controlled by them, or either of them; and from in any way asserting or implying, directly or indirectly, that any school now owned or controlled by these defendants and/or either of them is or is connected with the Conjptometer School of plaintiffs; and enjoining and restraining them, and each of them, from representing, either directly or indirectly, in any manner whatsoever that they are connected with or identified with the Comptometer School of plaintiffs; and enjoining and restraining them, and each of them, from confusing, directly or indirectly, calculating machines of other manufacturers with the calculating machine manufactured by the plaintiff, Felt & Tarrant Manufacturing Company, and identified by the trade-mark ‘Comptometer,’ in the teaching of the operation of calculating and adding machines.” Followinsr this final decree, upon January 23, 1932, a decree of perpetual injunction was entered by the court, which, in its injunctive provisions, followed in identical terms the decree of December 8, 1931. What immediately followed is not entirely clear from the record, but upon December 1, 1936, the appellees filed a petition in the case alleging that the appellants had violated the terms of the perpetual injunction by a catalogue offering instruction in “Comptometry” and by a sign affixed to the building in which the appellants’ school is located advertising instruction in comp-tometry. The petition further alleges that the appellants confuse calculating machines of other manufacturers with the calculating machine manufactured and sold by the Felt & Tarrant Manufacturing Company and that by offering and continuing to offer instruction in comptometry in the teaching and operation of calculating machines. There are no basic facts in dispute. The dispute is rather in the interpretation of the facts in the light of the final decree [279] of December 8, 1931, and the perpetual injunction based thereon. The final decree made by consent of the parties cannot now be altered in the absence of fraud, Thompson v. Maxwell, 95 U.S. 391, 398, 24 L.Ed. 481, and no fraud is alleged. The facts of the case appear from the affidavits in support of the petition and those in opposition to it. Those facts are as follows: After the entering of the perpetual injunction, and in response to it, the appellants moved their school to a new location over a quarter of a mile distant from the school licensed by the Felt & Tarrant Manufacturing Company and operated by the appellee Phillipson, and in addition thereto changed the name of the commercial division of their school, first to “Institute of Business” and then to “Webster Institute of Business.” They further refrained from using the word “Comp-tometry” in connection with the title of their school. That part of the catalogue issued by the appellants, dealing specifically with the course relating to the science of calculation, stated: “In addition, this course includes thorough training in the theory and operation of the comptometer and calculator.” Upon the same page of the catalogue under the subjects listed for second term study reference is made to “Comptometry and Calculating.”' Under the title “Comptometry course,” the appellants state through their catalogue that “This course is designed to train the student in the theory and practice of both the Comptometer (Felt & Tarrant) and the Calculator (Burroughs).” Upon page 5 of the catalogue reference is made to the subjects listed for third term study among which again appear “Comptometry and Calculating.” Upon page 7 reference is again made to a “Comptometry Course,” and on page 9 of the catalogue the description of the course is headed “Comptometry and Calculating,” and that description states: “This course includes theory and practice in the operation of the Felt & Tarrant Comptometer and the Burroughs Calculator.” The affidavit of the appellant, Lustgarten, states that his school possesses a comptometer which he acquired by legitimate purchase, that this comptometer is copper-colored, as are all comptometers manufactured by the Felt & Tarrant Manufacturing Company, and that the Calculators of the Burroughs Company are black. The statements contained in the last sentence are in fact controverted by the petition and affidavits of the appellees, but we take them to be true. Upon these facts, the learned District Judge made the following findings and order: “1. That the word ‘Comptometry’ is the natural derivative of the coined word ‘Comptometer’ which is the registered trade-mark of the plaintiff, Felt & Tarrant Mfg. Co. “2. That the word ‘Comptometry’ has acquired a secondary meaning and describes the method or science of operating a ‘Comptometer’. “3. That the plaintiff, Felt & Tarrant Mfg. Co., is entitled to the exclusive use of the word ‘Comptometry’ in connection with the advertising and teaching of the operation of ‘Comptometers’. “4. That the, use of ‘Comptometry’ by others than those teaching the use of the ‘Comptometer’ is misleading to the public. “5. That respondents have no right to use the word ‘Comptometry’ in advertising that they teach the operation of mechanical calculating machines. “6. That respondents are in contempt of Court, in that they have violated said injunction of December 8, 1931, by using the word ‘Comptometry’ on a sign used to advertise a course of instruction taught in their school, and also in the use of the word ‘Comptometry’ in their catalogue describing a course of instruction in the use and operation of mechanical calculating machines. “Now, Therefore, it is hereby ordered, adjudged and decreed that respondents have violated the injunction of December 8, 1931, by using the word ‘Comptometry’ on a sign used to advertise a course of instruction taught in their school, and also in the use of the word ‘Comptometry’ in their cata-logues describing a course of instruction in the use and operation of mechanical calculating machines and are in contempt of Court, and it is further ordered that they shall forthwith remove the word ‘Comptometry’ from any and all signs used in connection with their school and remove said word ‘Comptometry’ from their cata-logues and any other matter in which they advertise the teaching of the use and operation of mechanical calculating machines.” The contentions of the appellants are as follows: First, that they have exactly fulfilled the duties laid upon them by the [280] perpetual injunction in that they removed from the premises occupied by them in the Concourse building and changed the offending title of the commercial division of their school; second, that they have a legal right to use the comptometer purchased by them to teach the science of calculation- by machine and that their instruction in this behalf is the same whether given on the Felt & Tarrant comptometer or on the Burroughs calculators; third, that no confusion can exist by reason of the plain language of their catalogue distinguishing between the use of the Felt & Tarrant comptometer and the Burroughs calculators and the different colors of the machines; fourth, that the sign referred to by the appellees states “Prepare for College or Business Comptometry Stenography Accounting,” which courses they are legally entitled to teach; fifth, that the ap-pellees have stood by for years while the appellants built up a valuable good will in the business of teaching comptometry and calculation and now suddenly move to destroy that good will; fast, that in view of the foregoing, no issue of unfair competition, deceit, or misleading of the public is involved herein. The appellants assert that the findings of the District Judge and his adjudication of their contempt enlarges the scope of the perpetual injunction in a manner unwarranted by law and imposes a burden upon them which they in nowise bargained for by their consent to the final decree of December 8, 1931. We are aware of the admonitions laid upon us by a great number of decided cases which hold in effect that, in contempt proceedings for the enforcement of a decree, the meaning of that decree will not be expanded by implication or inference beyond the fair meaning of what was intended to be prohibited in the light of the issues. Such a rule was laid down by the Supreme Court in the leading case of Terminal Railway Association v. United States, 266 U.S. 17, 45 S.Ct. 5, 69 L.Ed. 150, and has been strictly adhered to by the courts of the United States. In our view, if there be any additional questions of unfair competition presented by the facts referred to in the appellee’s petition and the affidavits of the parties, they are resolved by the terms of the consent decree and the perpetual injunction. Whatever might have been our decision upon the facts presented here, had the decree of December 8, 1931, and the perpetual injunction been otherwise phrased, we are none the less bound by the plain intendment of those decrees. In our opinion, the word “Comptometry” is a natural derivative of the coined word “Comptometer,” registered as its trade-mark for its machines by the appellant Felt & Tarrant Manufacturing Company, and that the word “Comptometry” means, and must mean, the method, business, or science of operating a “Comptometer.” To hold otherwise would, in our judgment, b'e the equivalent of holding that the word “Comptometer,” despite its protecting trade-mark in use in an admittedly existing business, had in some wise been dedicated to the public. In our opinion, the prohibition put upon the appellants from the use of the phrase “School of Comptometry” as the title used to advertise the commercial division of their school was meant to apply to the advertisement of instruction in comptometry by any means, and therefore that prohibition by fair intendment and by necessary implication extends to the advertisement by sign and catalogue, such as in the case at bar, of instruction in comptometry. The very letter of the decree prohibits the appellants from holding themselves out to the public as conducting a school of “Comptometry.” To advertise instruction in “Comptometry” is to advertise a school of “Comptometry.” The appellants were bound to obey the injunction of the District Court and, if they proceeded to violate it, they were acting at their peril. Rodgers v. Pitt et al. (C.C.) 89 F. 424, 425, 430. See 2 High on Injunctions 1416. That the appellants may have deemed that they were in nowise violating the injunction and were acting in good faith may be taken into consideration in mitigation of their offense. In this connection we note that the appellees have already waived all claim for compensatory damages. But the legal fact remains, the belief, motive, or intent of the appellants do not excuse them. Thompson v. Railroad Co., 48 N.J.Eq. 105, 108, 21 A. 182; 7. Am. & Eng.Enc.Law (2d Ed.) 76, and authorities there cited. The appellants have violated the injunction put upon them both in letter and in spirit. Such conclusion is inevitable. The order of the court below is affirmed.