Juan F. Portuondo Cigar Manufacturing Co. v. Vicente Portuondo Cigar Manufacturing Co.

Trade-marks — Name—Portuondo cigar — Trade name — Unfair competition in trade — Fraud—Injunction—Equity—Laches—Estoppel. A dealer will be enjoined from using trade-marks, labels, and indices where they bear such resemblance to those of another dealer that it is impossible to reach any other conclusion than that they were designed from those of the other dealer, with not too much variation to prevent them from being accredited by the unobservant and unwary to the other dealer, and with just enough variation to distinguish one from the other when comparison is made between them. The general rule is that anything done by a rival m the same business, by imitation or otherwise, designed or calculated to mislead the public in the belief that in buying the product offered by him for sale, they were buying the product of another manufacturer, is in fraud of that other’s rights, and will afford just ground for equitable interference. Where a dealer not only simulates the labels, marks and designs of a rival, but addresses advertisements and circulars to the trade containing claims calculated to create the belief, contrary to the truth, that his goods, and not those of his rival, are the original goods known to the public under a particular name, such dealer is guilty of unfair competition in trade as well as an infringement of trade-mark, and will be duly enjoined. Where a dealer manufactures and sells cigars which become widely known by the dealer’s name, and he eventually incorporates his business, using his name in the corporate title, the corporation so formed has a standing in equity to enjoin another corporation from using the same name in its title, and in its business, where it appears that the second corporation based its claim to the use of the name from a brother of the oi'iginal dealer who had left the dealer’s employment, started a similar business in which he used the family name, subsequently became bankrupt, and thereafter made the assignment of the alleged right to use the name; and this is the case although the first corporation had never enjoined the brother from using the name, and had stood silent while the second corporation was spending large sums in extending its business under the name in controversy. In such a case the mere assignment of a name, without an assignment of any secret process or particular formula for making the cigars, is evidence that the assignment is a fraud on the first corporation’s rights, and is in itself sufficient to deprive the second corporation from claiming any benefit whatever from the doctrine of laches and estoppel. Where a party would be denied relief, because of his own laches, against a particular infringer, the immunity which results to the latter is not a right which can be made the subject of assignment to another. The doctrine of estoppel is only applied to promote justice and fair dealing; never to aid-a fraudulent purpose. Elkin, J., dissents.

Appeals, Nos. 306 and 307, Jan. T., 1907, by plaintiffs and defendants, from decree of O. P. No. 3, Phila. Go., March T., 1906, No. 1,178, on bill in equity in case of The Juan F. Portuondo Cigar Manufacturing Company v. The Vicente Portuondo Cigar Manufacturing Company, Charles H. Kors, Louis Weinberg, T. R. Goodwin and Nathan Schwab. Bill in equity for an injunction. The facts are stated in the opinion of the Supreme Court. The opinion of the court was delivered by von Mosohzisker, J., which'apart from the formal findings of fact and conclusions of law was as follows: In the disposition of this case the court has answered elaborate requests for findings of fact and law, in addition to making separate findings of its own. These answers and findings practically cover all the points involved, and for that reason we do not feel that the case requires-extended discussion. The court is satisfied that to a considerable degree there was a studied effort on the part of Vicente Portuondo to imitate the markings, labels and general method of dressing his goods that had been pursued by Juan F. Portuondo and thereby to profit on the magic that had already been given to the name of Portuondo by his brother. When the business of Vicente Portuondo went into bankruptcy the defendants in this case purchased the labels and other markings which had been used by Vicente, and their use was continued in a like manner by these defendants. In addition to this the defendants organized the defendant corporation under the name of “ The Vicente' Portuondo Cigar Manufacturing Company,” and advertised their goods as the original “ Portuondo ” cigar, using an imi* tation of the business signature.of “Juan F. Portuondo.” This course of dealing was such as to constitute that which is known in the law as unfair trade competition coupled with an infringement of a business name and in some instances infringement of trade-marks, to such an extent as to entitle the plaintiffs to relief. But the question is as to the measure of the relief that should be given. The plaintiffs and their predecessor, with full knowledge of everything that was going on, have seen fit to rest on their oars and to do nothing to protect their rights for a period óf about sixteen years. During this period the business of Vicente Portuondo grew and thrived, and subsequently declined and went into bankruptcy. The' tangible assets were bought from the receiver in bankruptcy and turned over to the corporation defendant in this case, which corporation also acquired, through an’agreement, executed by the said Vicente Portuondo, the right to use the name of Vicente Portuondo, for which right they are'now paying the widow of Vicente Portuondo a yearly allowance of $2,000. The name of Vicente Portuondo was the lawful and proper name of that individual; and after the individual Vicente Portuondo has been allowed the free use of his name for business purposes without any practical protest during this long and continued period-of years, should a court of equity step in and use the strong hand of a chancellor to stop even a fair and proper use of the name by Yicente Portuondo if alive or by the defendant corporation under the agreement executed by him now that he is dead? That is the question. In this connection it has been strongly argued by the defendants that the plaintiffs have been guilty of such gross laches in asserting their alleged legal rights that they are not entitled to any relief in equity; and many cases are cited to sustain this position. On the other hand, the plaintiffs cite authorities to the effect that long continued acquiescence, or failure to act, in cases of infringement of trade-marks and of unfair trade competition, although amounting to unreasonable delay or inexcusable laches, will not bar the right to an injunction to stop the unfair and fraudulent conduct complained of, but will only act as a bar to the right to an accounting of profits: McLean v. Fleming, 96 U. S. 245; approved in Menendez v. Holt, 128 U. S. 514. No Pennsylvania authorities, one way or the other, directly on this point have been presented, but the case of Go wans v. Ahlbor'n, 4 ICulp, 31, decided by Judge Rice when in the common pleas, follows the rule contended for by the plaintiffs. As this rule laid down by the supreme court of the United States has been followed by such an eminent Pennsylvania jurist as Judge Rice, and, further, as the rule appears to be supported by reason, we consider it controlling in the case at bar. However, as has been well said by the present chief justice of the supreme court of the United States, in Menendez v. Holt, 128 U. S. 514 : “It is in the exercise of discretionary jurisdiction that the doctrine of reasonable diligence is applied, and those who seek equity must do it. A court might hesitate as to the measure of relief where the use by others for a long period under assumed permission of the owner had largely enhanced the reputation of a particular brand.” • So in a case like the present, where a brother'who is a cigarmaker leaves the employ of his elder brother, who' is likewise a cigarmaker, to start in the cigar manufacturing business for himself under his own name, and is' allowed to continue the use of that nafne without practical protest for a period of upwards of sixteen years, and where toward the end of this long period after business reverses an arrangement is made to continue the use of his name in the cigar manufacturing business for his own benefit, and after his death for the benefit of his estate by a payment of an annuity to his wife, and where, on the faith of this arrangement, large sums of money are paid out and invested by innocent third parties in order to thus continue the use of the name, even though it may appear that in the conduct of this business the younger brother had been guilty of certain distinct acts of unfair infringement of the elder brother’s trade rights which had been continued by his successor under a belief of right — in a case like this a court may well hesitate as to the measure of relief, and the relief to be given may very properly be measured in accordance with the circumstances, taking into consideration the long delay and the effect thereof. Of course, it can be argued that the use of the name of Vicente Portuondo by the defendant corporation, and the use of the labels and other markings by that corporation, are a new use against which the plaintiff corporation has proceeded promptly enough, and as a strict legal proposition such a contention might be maintained ; but, on the other hand, it could as well be maintained that the use of the labels, name, etc., by the plaintiff corporation, dating from the time they acquired their rights from Juan F. Portuondo, would constitute a new use. But the eyes of a chancellor will see that in both in-, stances the facts really constitute the continuation of a prior use rather than the beginning of a new one. In considering the measure of relief to be given, it must be borne in mind that a certain business value was added to the name of Vicente Portuondo during this sixteen years by perfectly fair means and business enterprise, as well as by the unfair means complained of. We cannot say, under these circumstances, that it is plain that Vicente Portuondo had no right in the use of his name ; we can say, however, under our findings of fact in this case, that it is perfectly plain .that he had been guilty of abuses in the use of the name by his acts of unfair trade conduct. These acts stand out plainly in themselves. They speak for themselves. They have been written down, and are therefore plain, and can be stopped in the future. Although a chancelor will not be keen to sort the good from the evil for the benefit of a sinner, yet the court may, in measuring its relief, do so for the benefit of third parties whose rights are to be directly affected, where the plaintiff has been guilty of such gross laches as in this case. After this long lapse of years, where the rights of others have intervened, we are not inclined to grant an injunction that will act to restrain a fair and proper use of the name “Vicente Portuondo” by the defendants in the conduct of their business, so long as no unfair or fraudulent trade use is made thereof. In other words, we do not feel called upon, under the circumstances of this case, to drive the defendants out of business and entirely cut off the annuity of the widow of Vicente Portuondo, which happens to be her sole and only support. However, Vicente Portuondo would not have had the right during his lifetime to use his own name in the cigar business in such a manner as to deceive the public into the belief that his business and the business of his brother were one and the same, or to have attracted custom to himself on the belief that his product was the same product as that of his brother, nor to have made any other tricky, dishonest and fraudulent use of his own name calculated to decoy the purchasing public under a misapprehension as to the real facts; nor would he have been allowed to use the name Portuondo, standing alone as against his brother, Juan F. Portuondo, after that brother had built up a particular and general reputation for a brand of cigars known as the Portuondo cigars, and such a use of the name would have been restrained against Vicente Portuondo if alive, and will now be restrained against others claiming under him. The use of the signature of Vicente Portuondo, which is an imitation of the Juan F. Portuondo signature, and the use of the labels, which are an imitation of the Juan F. Portuondo labels, as found by the court in its findings of facts' in this case, will be restrained; and, further, defendants will be restrained from the use of the signs, circulars and affidavit complained of by the plaintiffs which have been, and are now, being used in an unfair manner. The exhibit “ F ” in plaintiffs’ bill has elements of unfair trade competition about it which must be discontinued by the defendants, but we will not restrain the use of the picture of the head and shoulders of Yicente Portuondo. In this connection we will say that although plantation scenes were to a degree, and no doubt still are, in common use upon the labels in the cigar trade, still, the predominant features in the plantation scene used by the plaintiff are the negro with a hoe, occupying a particular pose, the overseer with an extended arm and the particular low house in the rear of the scene, and the general color effect. These features immediately attract the eye, and whether the overseer is put on horseback or on foot, or the negro with this particular pose is put on one side or the other of the óvérseer, makes but little difference. The plantation label of the defendants in several respects is plainly an imitation of this plantation label of the plaintiffs and its use must be discontinued as it now is, or in any other form, using these particular features. It has been urged that many of the features on the cigar box of the plaintiffs, such as the word “ Chico,” the oval mark on the top, the red and yellow paper around the edges, are markings common to many cigar boxes in general use, and, therefore, no complaint should be made of their use by the defendants in this case. While this is true, it is also true that when we find these marks of similarity between the two boxes together, with the other imitations of labels, imitation of particular wordings and the plain imitations of the signature of Juan F. Portuondo — all these things taken together justify the finding of unfair trade conduct on the part of the defendants. Of course, the defendants have the right to use the word “ Chico,” but in doing so it is not necessary for them to use exactly the same type as the plaintiffs have used, nor to place’ it on’ their boxes in exactly the same position relatively to the name of the manufacturer as the plaintiffs happen to do. We would say that the'defendants also have the right to use an oval mark, but in doing so care should be taken not to have it so’ much like the oval mark of the plaintiffs that the one would be readily taken for the other. The yellow'and red edgings are stock trimmings in general use, but taken with the other imitations of plaintiffs’ boxes; their use by the defendants, although possibly without any particular unfair intent, appears suspicious. The name of the' defendant corporation, “ The Yicente Portuondo Cigar Manufacturing Company,” is plainly and unquestionably an infringement on the business name of the plaintiff corporation and will be restrained as such. It was not necessary for the defendants to have taken exactly the same words and the same arrangement of words so far as at all possible under the circumstances, in order to have found a name for their corporation ; but this they have done, as plainly appears by arranging the name of the defendant corporation under that of the plaintiff 'corporation, thus: “ The Juan F. Portuondo Cigar Manufacturing Company.” “ The Yicente Portuondo Cigar Manufacturing Company.” Such a similarity in names is in prejudice of the plaintiffs’ right and will be enjoined ¿s an infringement on the business name of the plaintiff corporation. The plaintiffs are entitled to relief to the extent indicated in this opinion and in the findings in this case, and to that extent only. The chief point of similarity between the markings of the boxes of the defendants and those of the plaintiffs are present and are most noticeable in certain of the “ Chico ” size boxes, where the coloring of the labels is the same with the exception of the caution notice which on the plaintiffs’ box is printed in red, while on the box of the defendants it is printed in blue. However, the whole dressing and general appearance of these two boxes is so similar that an ordinarily careful person using due caution would be likely to be misled into buying one cigar for the other. With certain exceptions as particularly pointed out in the findings of fact, the new box of the defendants with the picture of Yicente Portuondo thereon has but few unfair markings or trimmings, but it is not shown in the testimony how extensively this new box is being used or to what extent the old box has been abandoned. The adoption of this new box, although to a degree a meritorious act on the part of the defendants, cannot be viewed without seeing therein á show of appreciation on their part of the fact that they bad been guilty of certain features of imitation in their old boxes which were to be replaced by these new ones, and, again, the placing of the word “ Registered ” on the plantation label of the defendants, when, in point of fact the label was not duly registered, looks suspiciously as though the defendants themselves appreciated the fact that they had no real right to register that particular label, as in its essential features it was an imitation of the duly registered plantation label of the plaintiffs. We have not overlooked the testimony as to the words “ Five cent straight ” marked on the inside ends of plaintiffs’ Chico box, and the like marking on the defendants’ box (plaintiff’s exhibit 33), nor have we overlooked the use of the brown bands around the cigars of the defendants which are like those used by the plaintiffs. But we have not been able to find any testimony to justify a finding that the plaintiffs or their predecessors adopted or used those markings prior to their use by the defendants or their predecessors. In reaching our conclusions in this case the letters put in evidence at page 25 of the notes have not been considered. These letters were offered together in three files containing a large number of miscellaneous written orders, for the purpose of showing that the goods of the plaintiffs were therein referred to as “ Portuondo ” cigars, so that the inference might be drawn therefrom that the plaintiffs’ cigars were popularly and generally known by that name. The fact sought to be thus established is relevant and the character of proof offered is competent, but the documents relied upon as proof in this instance were neither properly identified, nor was their history sufficiently shown, to justify the admission thereof as evidence in the case. The court further states that of all the depositions, offered at pages 6-9, and again at pages 128-131 of the notes, only the deposition of Yicente Portuondo has been considered. That particular deposition is competent as a declaration against interest, but the other depositions are not competent evidence at all in the present case. The several features of unfairness which have been pointed out, the infringement on the plantation trade-mark, and the imitation signature must all be abandoned by the defendant corporation, and the name of that corporation must be changed so as not to infringe on the title of the plaintiff corporation. With these changes there is not any reason why both concerns should not live and indulge in fair and honorable business competition. And now, July 3, 1907, it is ordered, adjudged and decreed: That the Yicente Portuondo Cigar Manufacturing Company, Charles EL Kors, Louis Weinberg, Theodore EL Goodwin and Nathan Schwab, the defendants, and each of them, and their and each of their servants, agents, salesmen and all persons in privity with them or any of them, be and they are hereby perpetually enjoined as follows: 1. From using in connection with the manufacture, sale or advertisement of cigars, upon packages, boxes, cards, plates or otherwise, any representation, exactly or colorably simulating the trade-mark of the plaintiffs, The Juan F. Portuondo Cigar Manufacturing Company, called the “LaFlor de Portuondo ” mark, consisting of the word symbol “ La Flor de Portuondo,” said mark being registered in the United States patent office, August 11, 1885, No. 12,500 ; also registered in the United States patent office, December 19, 1905, No. 18,271; also registered in the office of the secretary of the commonwealth of Pennsylvania, January 23,1906. 2. From using in connection with the manufacture, sale or advertisement of cigars, upon packages, boxes, cards, plates or otherwise any label, mark, picture, impression or representation, exactly or colorably simulating the trade-mark of the plaintiffs, The Juan F. Portuondo Cigar Manufacturing Company, called the “Matador,” said mark being registered in the United States patent office, August 11, 1885, No. 12,199; also registered in the United States patent office, December 26, 1905, No. 18,128; also registered in the office of the secretary of the commonwealth of Pennsylvania, January 29,1906; also registered in the office of the secretary of state of Illinois, October 10,1901, and there recorded in Trade Mark Record, page 155. 3. From using in connection with the manufacture, sale, or advertisement of cigars, upon packages, boxes, cards, plates or otherwise any label, mark, picture, impression or representation, exactly or colorably simulating the trade-mark of the plaintiffs, The Juan F. Portuondo Cigar Manufacturing Company, called the “ Plantation Scene ” mark, said mark being registered in the United States patent office, December 29, 1885, No. 12,879; also registered in the United States patent office, December 19, 1905, No. 48,272; also registered in the office of the secretary of the commonwealth of Pennsylvania January 23, 1906; also registered in the office of the secretary of state of Illinois, October 10, 1901, and there recorded in Trade Mark Record, page 154. 4. From using in connection with the manufacture, sale or advertisement of cigars, upon packages, boxes, cards, plates or otherwise, any label, mark, picture, impression or representation, exactly or colorably simulating the personal signature of Juan F. Portuondo, or the name Yicente Portuondo in script with a dash thereunder. (Exhibit “ D ” of bill and described in the eighteenth finding of fact by the court in the adjudication filed in this case.) Or the corporate title “ The Yicente Portuondo Oigar Manufacturing Company,” or the words “ genuine Portuondo,” without the word “ Yicente ” in connection and immediately before the word “ Portuondo,” such word “ Yicente ” to be in the same size and style of type as the word “Portuondo,” or the word “original” in connection with “ Portuondo,” or the advertisement set forth in the court’s thirty-seventh finding of fact, or the word “Chicos” on cigar boxes in simulation of the style or size of type used by the plaintiffs in its word “ Chicos,” or the words “ Trade-mark registered” on any matter excepting where actual registry thereof has been made, or a label in general imitation of the plaintiffs’ end label, or inside label, or the particular small white label on the front of defendants’ box with the words “The genuine Yicente Portuondo cigars are strictly Cuban hand made, and bear this label and signature Yicente Portuondo,” (described in finding of fact fifty-four by the court in the adjudication filed in this case), or the words “ none genuine without the signature of Yicente Portuondo,” (described in finding of fact forty-six by the court in the adjudication filed in this case), or the “ Trade Warning Advertisement ” set forth in the court’s finding of fact No. 39, or the affidavit set forth in the court’s finding of fact No. 40, or the words “ Only survivors of the originators making the famous Portuondo cigars,” or the words “ the late Joseph M. Portuondo, the founder of the famous brand of Portuondo cigars,” either alone or in combination with any other word or words, or any word or words, device or devices, color or colors, letter or letters, mark or marks of like import or so similar to any of the foregoing as to be calculated to deceive. 5. From using for any purpose whatever the word “ Portuondo” unless immediately preceded by the word “Yicente” in the same size and style of letters as the word “ Portuondo.” 6. From using any box or boxes similar in general dress and style to the boxes marked and described in the adjudication as “ Plaintiffs’ Box,” “ Defendants’ Box 1,” or “ Defendants’ Box 11,” excepting that the defendants may use the stock edging referred to in the adjudication and an oval mark on the top of the box, such mark not to contain lettering made to imitate the general effect of the mark on plaintiffs’ box. 7. From holding out or representing in any way that the goods manufactured by the defendants are the same as those manufactured by the plaintiffs. 8. From authorizing, doing, writing, speaking or uttering any other act, matter or thing calculated to cause confusion between the goods of the plaintiffs and the goods of the defendant, with the intention of thereby entering into and indulging in unfair trade competition against the plaintiffs. 9. This decree in its operation is expressly limited to cigars sold by the defendants after the date of the entry hereof and is not to affect cigars in the hands of the defendants’ customers delivered before the date of this decree; the decree to be operative on all cigars manufactured by the defendants or any of them after the date of the decree and on all cigars sold by the defendants or any of them after the date of the decree. 10. The defendants are to pay the costs of this proceeding, with the exception of the witness fees; each side to bear the cost of its respective witness fees. Exceptions to the adjudication by both parties were dismissed, and both parties appealed. Errors assigned were in the dismissal of the exceptions and the portions of the decree.