Dynamet Technology, Inc. v. Dynamet Inc.

FORD, Judge,

dissenting.

It is my view that, as between Dynamet Technology, Inc. (plaintiff) and Dynamet Incorporated (defendant), plaintiff has superior rights, i. e., priority of use, in the term DYNAMET.

The TTAB found, 197 USPQ at 709, and defendant has not asserted otherwise, that on March 12, 1968, plaintiff delivered an order of processed powdered titanium to the Wyman-Gordon Company packed in a drum on which the name DYNAMET appeared along with the company address. Regardless of whether this is construed as a trademark or trade name usage, plaintiff can rely at least on this date for the purpose of priority. 1 See Alfred Electronics v. Alford Manufacturing Co., 333 F.2d 912 , 51 CCPA 1533, 142 USPQ 168 (1964); 1 J. T. McCarthy, Trademarks and Unfair Competition § 20:25, at 823-24 (1973); J. Gilson, Trademark Protection and Practice § 3.02[1], at 3-24 (1976). Moreover, for the purpose of determining priority, the fact that the shipment was in intrastate commerce is of no moment. Bourns, Inc. v. International Resistance Co., 341 F.2d 146 , 52 CCPA 962, 144 USPQ 424 (1965).

The majority, in affirming the award of priority to defendant, indicates that defendant was making trade name use of DYNAMET from January of 1968, and that defendant can rely on this date for priority. I do not, for the reasons set forth infra, agree with this position.

The Supreme Court has recognized that trade names are protectable under the same common-law principles as are trademarks, American Steel Foundries v. Robertson, 269 U.S. 372, 380 , 46 S.Ct. 160 , 70 L.Ed. 317 (1926), and that trademarks are not the subject of property except in connection with an existing business. 2 United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90 , 39 S.Ct. 48 , 63 L.Ed. 141 (1918); Hanover Milling Co. v. Metcalf, 240 U.S. 403 , 36 S.Ct. 357 , 60 L.Ed. 713 (1916). In Rectanus, supra 248 U.S. at 97 , 39 S.Ct. at 50 , the Court stated:

The law of trade-marks is but a part of the broader law of unfair competition; the right to a particular mark grows out of its use, not its mere adoption; its function is simply to designate the goods as the product of a particular trader and to protect his good will against the sale of another’s product as his; and it is not the subject of property except in connection with an existing business. [Emphasis added.]

On this record, it is my view that, as of March 12, 1968, the date on which plaintiff can rely for priority, defendant was not an existing business entity, i. e., was not an ongoing business. See J. Gilson, supra § 3.02, at 3-17.

Defendant’s Washington, Pennsylvania plant was leased in April 1968. Rossin testified that the equipment which was necessary to produce the products he contemplated manufacturing was ordered on December 18, 1967, and subsequently delivered and installed at the Washington, Pennsylvania plant. The TTAB found, 197 USPQ at 711, and defendant does not contend otherwise, that:

After the defendant’s plant was leased in April 1968 and employees hired, the *1013 equipment installed, and the raw materials purchased, services were rendered in converting materials other than its own and titanium and nickel mill products were made and shipped under the “DYNAMET” name or trademark.

While defendant introduced into evidence a price list dated January 1, 1968, at oral argument counsel for defendant, upon being asked from the bench when was the earliest date the items on the price list were manufactured, responded “probably a day or so” prior to the June 12, 1968, shipment (this was the shipment defendant relied upon for use in commerce). Considering the record as a whole, defendant, as of April 1968, had neither a product to sell nor the capability of producing a product or providing a conversion service (a service performed on material which a customer would supply); it merely had an intention to do business in the future. Therefore, any use it made of DYNAMET before this date cannot be relied upon for establishing priority. Accordingly, it has not established trademark or trade name use of DYNAMET sufficient for priority over plaintiff. See United Drug Co. v. Theodore Rectanus Co., supra; Hanover Milling Co. v. Metcalf, supra; Steer Inn Systems, Inc. v. Laughner’s Drive-In, Inc., 405 F.2d 1401 , 56 CCPA 911, 160 USPQ 626 (1969); Duff v. Kansas City Star Co., 299 F.2d 320 , 132 USPQ 483 (8th Cir. 1962); Modular Cinemas of America, Inc. v. Mini Cinemas Corp., 348 F.Supp. 578 , 175 USPQ 355 (S.D.N.Y.1972); Heinemann v. General Motors Corp., 342 F.Supp. 203 , 173 USPQ 214 (N.D.Ill.1972); 1 J.T. McCarthy, supra § 16:4, at 572; J. Gilson, supra § 3.02, at 3-19; 3 R. Callmann, The Law of Unfair Competition Trademarks and Monopolies §§ 76.1, 76.2(d), at 272, 285 (3d. ed. 1969).

While recognizing that no property rights in a trademark can exist except in conneetion with an existing business entity, the majority indicates that no property rights in a trade name can exist except “in connection with its use with a business entity that has engaged in sufficient activities to have acquired goodwill, because a trade name is representative of the goodwill of a business entity.” [Emphasis in original.] 3 The activities of defendant which the majority finds to be “sufficient” are outlined as follows:

[A] prospectus had been prepared and distributed to potential investors, commitments for financial support from some twenty-three investors had been obtained, and the defendant had been incorporated under a name that included DYNAMET; a corporate office had been established; Rossin had visited potential purchasers of defendant’s products; and other activities, each involving use of the corporate name, had been carried out— obtaining telephone service, checking account, checks, stationery, and business cards, ordering equipment necessary for manufacturing operations, and offering products to be manufactured in the price list dated January 1, 1968. [Footnotes omitted.]

In the past, activities such as those enumerated above, have not been considered sufficient to establish a date of first use: utilization of a term in a prospectus — insufficient, In re Holiday Mobil Home Resorts, Inc., 144 USPQ 510 (TTAB 1965); incorporation under a term — insufficient, Lawyers Title Ins. Co. v. Lawyers Title Ins. Corp., 71 App.D.C. 120 , 109 F.2d 35 , 43 USPQ 166 (1939), cert. denied, 309 U.S. 684 , 60 S.Ct. 806 , 84 L.Ed. 1028 , 45 USPQ 713 (1940); various uses of a term prior to opening for business, such as use on a business office door sign, letterheads, and architectural drawings — insufficient, Steer Inn Systems, Inc. v. Laughner’s *1014 Drive-In, Inc., supra; filing a certifícate of incorporation, leasing of premises for a movie theater, advertising the impending opening, booking films for future presentation, and contracting with theater service agencies (such as concessionaires) — insufficient, Modular Cinemas of America, Inc. v. Mini Cinemas Corp., supra. While conceding that “[s]ome of these activities, considered together, might not be sufficient to enable a business entity to acquire the goodwill required for trade name use,” the majority finds that when these same activities are viewed as a “package of activities,” they are sufficient. I detect no substantive transformation by the mere denomination of these activities as a “package.” Perceived individually or as a “package,” in my view they are insufficient to evince an ongoing business, or using the majority’s terminology, are insufficient to “enable a business entity to acquire the goodwill required for trade name use.” These activities evince nothing more than an intention to do business in the future. Absent the presence of an ongoing business, there can be no goodwill for a trade name to represent.

Defendant argues that Sproat testified that at least as of December 18, 1967, he associated Rossin and the consulting services which were then being provided to Standard Pressed Steel Company with the name DYNAMET. While the majority apparently finds it unnecessary to reach this issue, it is not clear whether defendant is now asserting that during December 1967, Rossin, acting as DYNAMET, was in the business of providing consulting services. If this is defendant’s position, neither the Sproat deposition, nor the record as a whole, supports it. Specifically, recalling his first meeting with Rossin, which was on September 29, 1967, Sproat testified as follows:

To the best of my recollection, Mr. Rossin visited Standard Pressed Steel in my office and indicated that he had left the employment of Crucible Steel Company and was giving consideration to entering into a business. He requested information concerning Standard Pressed Steel’s practices and plans for purchasing of titanium stock for the manufacture of fasteners. [Emphasis added.]

Regarding the second meeting Rossin had with him, which was on December 12, 1967, Sproat testified that:

The December 12 meeting, to the best of my recollection, included a report by Mr. Rossin of his future plans to enter into business and supply the fastener industry with titanium stock. [Emphasis added.]

When asked when did he first learn that Rossin’s company was DYNAMET, Sproat responded:

To the best of my recollection I learned of this in a telephone conversation prior to the December 12 meeting. The purpose of the telephone conversation was to agree to the meeting date of December 12 and also to communicate the fact that Mr. Rossin had decided to go into business, furnishing fastener materials. [Emphasis added.]

With respect to consulting services by Rossin, the Sproat testimony includes the following:

Q91 Was Mr. Rossin acting in a consulting capacity with you at that time?

A As a voluntary consultant.

Q92 And at least as of the date of December 18, 1967, when you received his letter Defendant’s Exhibit SS, was Mr. Rossin acting as Dynamet?

A Yes, he was.

Q93 Did you associate the company which Mr. Rossin was putting together and the consulting services which he then was providing to you on a voluntary basis with the name Dynamet?

A Yes, I did.

Sproat then testified that he had no further contacts with Rossin until the spring of 1968 when Sproat visited defendant’s facilities in Washington, Pennsylvania. When asked what was the purpose of this visit, Sproat testified:

It was a preliminary review of the facility. It was also the intent of the visit to establish a possible business relationship between Standard Pressed Steel and *1015 Dynamet, where we would either purchase material or purchase services from the Dynamet corporation. [Emphasis added.]

With respect to the purchases ultimately made, Sproat testified:

Q101 What kind of products does SPS purchase from Dynamet?

A There are two forms of our purchasing contracts with Dynamet. One has to do with service of cold drawing material which Standard Pressed Steel owns, and the other would be the outright purchase of material in the form of cold drawn bar or coil stock from Mr. Rossin or Dynamet. Q102 This is the same kind of purchase that you were talking about in 1967 and January of 1968, is that correct?

A Yes. [Emphasis added.]

Notwithstanding Sproat’s use of the term “consulting services,” the Sproat deposition, read in its entirety, supports the conclusion that during December 1967, Rossin was attempting to cultivate a potential customer for defendant’s future products and future conversion service. The gratuitous information given by Rossin was a natural part of the cultivating process.

Summarizing, since plaintiff can rely on at least March 12, 1968, for the purpose of priority, and since defendant was not an ongoing business as of that date, as between the parties, plaintiff possesses superi- or rights in the term DYNAMET. Therefore, I would reverse the decision of the TTAB. 4

. For reasons which will become apparent, I find it unnecessary to decide whether the TTAB was correct in its determination that plaintiff could also rely on February 1968, for priority.

. This is not to say, as the majority correctly recognizes at note 10, that certain eleemosynary organizations could not also acquire rights.

. The majority appears to find it significant that defendant is relying on trade name use of DYNAMET in contradistinction to trademark use. It is clear that regardless of whether a term is being used as a trade name, trademark or service mark, the basic underlying requirement that no property right in the term can be created except in connection with an existing business is the same. Cf. American Steel Foundries v. Robertson, supra 269 U.S. at 380 , 46 S.Ct. 160 . J. Gilson, supra § 3.07, at 3-17. While it is trae that trade names are representative of goodwill, trademarks also symbolize goodwill. See Hanover Milling Co. v. Metcalf, supra.

. Since, in my view, plaintiff possesses superior rights in the term DYNAMET, I find no need to remand this case for a determination of the sufficiency of defendant’s June 12, 1968, shipment.