# Petition for Writ of Certiorari — American Aloe Corp. v. Aloe Creme Laboratories, Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385604_1671%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1970 - **Citation:** 400 U.S. 820 ## Text ' ..s ‘ _ ’ z : RT, US ob ft No. Sm PEPSI. i '. i Jae ic: ° if , : as Sn nthe i Supreme Court af the Gnited States OCTOBER Tew, a My 76 2 "eT z “AMERICAN? ALOK CORPORATION, =! : : Petitioner, , a zs 9” ld AKOR CREME LABORATORIES, INC: : : —* . Respondent. CROSS. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS ee? ____ FOR THE SEVENTH CIRCUIT- oe an ae: ¥ & , | Davin R. Macnonatp 0 re James G. Barnes : Attorneys for American Aloe Corporation! Petitioner. 2 Ae OF Counsel: - Baker & McKenzik ae 700 P rude ntial Plaza” oe ne hicago, “Tilinois 606014 ar 312-828-0400 -- i PO recy ‘ “lhe | : - The Scheffer Press, Inc.—ANdover 3-6850 PN Dts as ae 3 PAGE Opinions Below. Vaan ee sees te ARE NABI tee ssscosiyees : 1: . Jurisdiction ees sea paths sewions aamuaeaeal Cae 2. , * 4 ; Questions Presé ted Nerueat pai astieiaeudaes DSvacane LDR ae ee ae ‘ sis o Statutes. “{nvolved - pail petteeeeneatens seta gs secesedeesessenee Rises 4, Statemsht “Of the Pi ca: he OS ies aR genes The Reasons for Granting: the: gb ES at ER Rar ane te Conclusion ..2...c.cee: — seas igbessieieicanses VERMA a TABLE or © ASES’ Becknay Instruments, Ine. v. me ‘hemtronies, Inc., 1970 Trade Cases, Para 7 (3,158 th © ir. L900), Le oe ; Continental. Ore Co. ve U mion Carbide © Corp. is 370 US. ce ica eed Riiccttukantes 15, 19 Delawars & H. Canal Co. v. Clack; 13 Wall 311 (B72) eessseseeeeeee eaeaenetied Syereeeseeaenetesessmemeteoeytiones AS Kellog ge v. Rational Biss uit Co, 305 US. M1 (18) . 15 Kelloge Company ¢. National Rise ‘uit Company, fi F.2d 662 (2nd. Cir. 1934) serene ee eee = ell- 13 steMing Nelson: & Sons, : Inc. v.. Rangen, Ene. 23h F.Supp. 393 ().. Idaho, 1964), aff'd. 351 F.2d Bal." (oe oe.) emer eceemmnenmer Sate My NA ee pee Meee 15 Timken Roller Bearing Co. v. eer States ,o4lL-US - *) 3 2 . a te” et 093 ( 1951 ) eis a crecsinnavameniies Nepeseeeeeeeenedteenee ne gy spain Mises ee Fs mee Union Leader or p. Ve: ‘Newspapers of New England, : Ine., 284 F.2d 582. (ist Cir. 1960), cert. denied 365 U.S. 833 (1961) Cee ho Oe Tes a Cee an ae 19 | 2 : 3 e.at ot 7 ony . , : ‘ os ! ot ony . ’ e / eee a ‘ : : Q é 7 eat me gS - ll a gil : : PAGE United Stites v. Besser Mig. a 96° F.Supp. 304 -(E.D. Mich. 1951), aff'd. ‘on gther grounds, 343 U.S. ER 6a Seetet nan yo 19. - Walker. Process Equipment t} Food ighiners ‘&- Chemical an 382 US. 172 (1965) ........:.10-14 © : ~— ey Pe 7 % Sherman Act, Section 2 (15 USC. $2) ae 2, 4,,10,11, . Pee *, 20 ' Robinson- Piitiann Act, “Section 2(e) (15 U.S.C. §13_ oe, “RIED sapencaienniens heen See? veivelcts wevndy 4, 14, 15, 18.. Clayton. Act,. Section 3 (15 ust. TS Sean ore “15,18 Lanham Act, Section 33(b) (7) (15 U.S.C. § 1115(b) OF Pawn ated AE aes RONG Sew ner aie tee is F s -” -MiscenLangous ~ ' Rowe, ‘Price *Discrimination under the Robinson- - Patnian Act, page 151. (1962) .........22... sacar (aa ‘ : ig : . . +. . | Oe a oes : 9 # f ¢-. a » . \ e Gat ‘ righ IN THE © ; Bo | ea | SUPREME COURT OF THE UNITED STATES " Octoser Term, 1969 : oe Ms AMERICAN ALOE CORPORATION, . ~ -£% ~ a . ALOE CREME LABORATORIES, INC., Petitioner, . ‘Respondent. -CROSS- PETITION FOR A WRIT OF CERTIORARI ‘TO. ‘THE UNITED STATES COURT OF APPEALS > -FOR THE SEVENTH CIRCUIT See Se ar The cross-petitioner American Aloe Corporation® re: | spectfully prays that a writ of certiorari, issue to review -the. judgment and opjnion.of the United: States Court of | Appeals for the Seventh Circuit entered in this proceeding ' on January 9, = “OPINION BELOW: The. opinion of the District Court for ‘the’ Northern a sg.enas of Hlinois, Bastern Division, is reported in 291 * ices. petitioner, American ‘Aloe Corporation, wilt be referred to as plaintiff, and eross-respondent, Aloe Creme. are Laboratories, tye will be referred to as defendant. a. ™ rm) ’ FE Supp. G45. The opinion of the Coiirtof Perens on peti-;” + tions for rehearing, 4 420.1? 2d. l: 248, | 1970 CCH ‘Trade Cases, \ | : - Parai-73,027, mepe rs in the appendix hereto and Ts, ited | fis “Op, sitececee w ranse eript Shh aig i are cited as ae. an a ee ae JURISDICTION: 7% °° The’ judgrnent ot the ‘Court of Appials for the Seventh: Circuit upon petitions for rehearing was enter edoon Janu » ary 9 1970, Leave. to-files petitions for a second rehearing Was granted on Januery 26. LITO. The: ‘petitions were de- -nied on: ‘February 25, “1970 and this cross-petition for cer- tidrari. was: fiked within finety days of ‘that date: Phis ‘Court's jurisdiction is invoked under 28 -.U.S.C.- “2#(), . . ’ © [ - QUESTIONS PRESENTED Magy an attempt to exelude competition ht mdemé of adel publicized, bad faith claims to trademark owner: : os eship of. the generic maine of an agrieulturdl” commodity contravene Section ” of the She rman Acta Bo Ps ’ *y. S) Anas te 2. Does the defendant viplate See tion : Slo) of the. Robin, ". son- Patman Act by making a practice of granting a i per-. voriak incentive chonus tora pet tait store. mamaser tvhiet ler or not the manager Is also the’ store Divner), the amount of whigti bonus ts tied to incre: ASCs in. thie store’s purchaser: : yi of de Te ndaitt’s s entire: lme of products? a ‘~~ . 3. Given thé following steyR taken by defendant, duiring . a" ®t the anid-1960's and. established by the record in this. case, snambly, that’: : oa inte see ere Nae ny on ra oot, oe s 4 Soe wep ne co —- () Defendant. maintained 2b ten-year céntracts with - independent aloe. growers W ee gave defendant an exclu-- sive option on the entire aloe. output of these ZL growers {approximately four times the amount of aloe that defen- és dant normally: needs) and> which’ are - Ac meal ah defen- dant! s option only, for another ten years oe * “¢h) tilentedl! ‘which enjoyed a monopoly in aloe’ products for ov er ten years, represented to tlie. public that defendant's contracts gave. it 80% tor 85% control over the aloe stipplys (@) “Defendant iicmcabed and maintained 750 to 1,000 “Exclusive Drug Store Franchise Agreements” which pro- vided for. full line foreing and a personal ‘bonus to the — drugstgre - maanager (whether or ‘not. the manager is the st »sowner), which bonus. increases with the store’s in- creasing - pitreliases of defendant’s produets ; | (d) . Defendant summarily cut off the aloe supply to a competitor (who was: then put out of business) for refus- ing to obey defendant’» cease ‘and , desist letter against. cae using the word “aloe”; oe Fe (ef, Defendant threatened infringement suits’ against all of its new aloe competitors ( plaintiff admittedly being , the prime target) and hundreds of retail. stores handling -aloe~products based upon defendant’s claims to exclusive rights in the common ‘generic word “aloe” and to a non- > existent “registered” ALO- and design trademark; (f) Defendant falsely ‘accused all of its new aloe com- petitor’ ( plaintiff admittedly ‘being the. prime target) in’ its lettets to hundreds .of retail stores, of “capitalizing on defendant’s research” and’falsely implied. that none of its « Ree competitors could make a competent produet unless they ~had- misappropriated defendant? s trad secrets; is plaintiff, on remand, entitled toa judicial, redetermination - of its monopolization cliarge’ in. which ‘the above acts. are : not considéred separately, but together as steps in the un- .. | "lawful maintenance. of a monopoly; over the production and : sale of aloe products? -= - > ©) lating i alee - STATUTORY PROVISIONS INVOLVED - : Sherman Act, Section 2 (15 U.S.C. § 2): Every person who shall monopolize or attempt to - oaaeniii or combine or conspire with any, other person or persons, to monopolize dny part of the . trade or commerce among the several states, or with . foreign nations, shall.be deemed guilty of a misde- | meanor} and, on conviction thereof shall be punished by fine Kot exceeding five hundred thousand dollars, or by jmprisonment not exceeding one year, or by . both said punishments, in the discretion of the. court. . Robinson-Patmarr’ Act, Section 2(c) (15 US. C.-§ 13(¢) That it shall be unlawful for any person, engaged In commerce, in the course of such commerce, ‘to pay _ or grant, or to receive or accept, anything of vaiue as & commission, brokerage, or other. ‘compensation, or any allowance or discount in lieu thereof, exeept- _for services rendered _in_eonnection with the-sale—or—— purchase of goods, wares, or mefchandise, either to the other party to such transaction or to an agent, repre- ' sentative, or- other intermediary therein where such intermediary is acting in fact for or in behalf, or is subject to the direct or indirect control, of any party ‘ to such transaction other than the person by whom | such compensation is so- granted or paid. STATEMENT OF. THE CASE Aloe is the generic name of a large genus of ‘succulent plants and of products prepared from the aloe vera vari- ety of that plant. It has, since biblical times, been noted _ for its _— and soothing qualities.* ants plant is cul- * “As the valleys are they spread forth, as. gardens by the river’s side, as the trees of lign aloes ‘which the Lord ‘ had planted, and as cedar trees beside the waters.” Num- — bers 24:6. “All thy garments smell of myrrh, and aloes, | and cassia, out of the ivory palaces, whereby they have made thee glad.” Psalms 45:8. “And there came also Nicodemus, which at the first came to Jesus by night, and brought a mixture of myrrh and aloes, about a hundred went , 4 ohn 19:39. : ; 7] .* caniae =) eaten tivatedy as a row crop in southern’ Florida ‘and southern Texas an: requires approximately. three and one-half years to mature into. commerctal usefulness. Normally, it asst adequate supply, Dut after a frost or freeze ‘In the Florida or Texag arewing area, the aloe supply becomes: very limited. ea , , . ‘Defendant, Moe Creme Ladvovatovies, Inc., i in the business of selling cosmetics and other produets which |” contain as their principal substance the gel of the aloe. Defendanit: Way virtually the sole processor of aloe pro- ducts: and maintained its Inonopoly over a relatively long period of time, from 1953 to mid-1960’s. (Op.6). Dur- Ing the mid-4960's other distributors attempted to enter the gnarket for aloe products. Besides th® plaintiff, which operated as “House of Aloe, there were Patricia _Carrel}——— Cosmetics Co. Inc. (Aloe (ilo) ; T ‘D. Hazelwood (Aloe-V |. Acne Creme); Betty Willis, Ine: ( Aloe Gel); Milsan, Ine. (Aloe Magic, Aloe Vita and Oil of Aloe) ; Aloe 99, Ine. (Aloe 99); Pet Beauty P roducts, Ine, (‘Pet Beauty” aloe products for dogs) + and Regenertro] (Regenertrol, an Aloe sprodurt). : : Defendant greeted the entry of these competitors as | ‘follows: to ur Vee mes (1) By categorically denouncing all of its new com- petitors ax. trademark . infringers: hy apousing: ite com- petitors of " ‘apitalizing on its research”: and by threéaten- ing retailers With infringement litigation for carrying products which contained the word “Aloe” on their labels or which avere advertised asy Aloe products or otherwise eanphasized their aloe content, (2) By utilizing “against competition” dete nilant’s contractual control over 80C° to 855% of the supply of aloe, particularly against (1) plaintiff, Which had to: pay exor- —6—. bitantly to obtain a satisfactory aloe. supply, and (2) Patrieia Carroll Cosmetics, which had its gupply of aloe ae’ cut off for refusing to acquiesce in defendant's trademark claims. (3) ~ By executing Exclusive Drug Store . Franchise Agreements with 750 .to 1,000 prestige drugstores, which agreements provide for “full line forcing” together with an increasing personal bonus té the store manager (whether or not he is the store owner) in return for increasing an- nual purchases by the retailer of defendant’s products. Illustrative’ of this type of predatory activity during the x mid-1960’s is the defendant's attack’ upon “Regenertrol”. Jackson/Byron’s department store in. Miami posted a sign advertising Regenertrol as an “Aloe Product”, which, of , S hese. ’ ’ - course, it was. The defendant immediately threatened the ° retailer with trademark ere ee Ee, retailer replied; : We have received your letter dated May 11, 1964 in _regard to the Jace kson’ ; ¢ ‘ . }- or indirect control, of any party to stch transaction — other than the person by Whom such compensation , Ineaddition, defendant scile no steps to obtain the: store .* -owner’s signature. to the agreement and confessed ignor-: ance as to whether the store, owner. was aware. of the — fs. bonus arrangement with the’ manager. This conduct has = a _ been held to constitute tr aditional commercial bribery to / which Section 2(e) has ‘been held applicable. Sterling ‘ . Nélson & Sons, Inc. . Rangen, .[nk.,- 235. F.Supp. 393 . (D. Idaho, 1964), aff a 351 F.2d "851 (9th: Cir, 1965). , j The granting of a. per rsonal bonus ‘Paped on quantity purchases 40 the individual responsible for the customer’ S purchases tis a pernicious . practice. - Like tying and- re¢]- - _ procity, if injects an “alie-factor Anto* the struggle for’ 4 that- customer’s “ busingss and werks imevitdhly toward - . " exelusive dealing between the grantor ‘and thie ‘recipient \ of the br ibe. _ Give en the scale upon which defendant’ engages + ~ in this practice, these volume, bonuses should: be held ° 2. to, violate, Seetion 3 of the Clayton Act as well. Cf. Rowe, . Price Discrimination” ‘under the’ Robinson-Patman . Act, . page 151, footnote 47 (1962). be ee x This Court’s observations upon the. legality of such bonuses Within the context of Section 2(c) of the Robinson- - Patman Act. and Section 3 of the Clayton Act would be - | welcome to any new competitor who faces this rcseinian cd i 2 prevalent p ‘actice. | ke eae re 3. The Court of Appeals seinnaded the antitrust issue of defendant’s exelusive aloe supply contracts’ (Op. 12), | but: failed to allow ‘the-district court -to consider the ~ ~~" remaining activities of the defendant as component parts © ‘of ‘oné monopolization plan. In, so limiting the District — * Court, the Court of Appeals..misapplied, the rile of — Continental Ore Co. v. Union C arbide Corp., 370 U. S. 690, 699 (1962), that the- trier of fact “must logk at the whole | * ‘picture and not ‘merely at the individual figures in it.” e . . : 2 : ‘+ ’ , ‘ , y In this ease, the “whole. picture’ is sordid indeed. Besides its campaign to exelude others from using the word “aloe”, the defendant's exclusionary. efforts éxtended to every facet of the aloe industry.” . Erclusion of others from aloe supply: Because aloe takes so long to mature, and can be so easily damaged by frost or freeze, defendant realized that by cornering - the aloe supply, it could effectively prevent anyone from competing With it. To accomplish this, defendant entered into ten year contracts with’ 21 aloe suppliers. Utider these contracts the- defendant has: the right (but not the @obligation) to take the aloe grower’s entire output, and defendant (but not: the grower) has the right to. renew this privilege for another ten years, LAGE T 62- G9 | Defendant's purpose in entering into these contracts and the extent of control gained by defendant’ s contracts is best stated in a News Release which defendant Hself distributed in’ 1965, Quoting an investment analyst, Lin Tso, the defendant stated" . Perhaps of greatest importance... . ix his statement. “itis the access lo the raw material that counts” Investment) analyst and author. Lin Tso, explains that Aloe Creme has 85% of the production of the “stloe Vera plant under contract and that the gompany enjoys a large raw material position, vol only agamst - competition, but also against: possible damage by the elements to the Aloe Vera plants”. *. (emphasis added) | PX- 6; EF 69-76) Subsequently, defendant prepared and circulated 100000 reprints of a magazine article (PX-7) which stated: Rodney Stockton knew that his company was making progress when major cosinetic houses offered to, buy himr- out: one company futilely tried to acquire the ° es majority. of his stock. An effort to restrict him by cornering the market on his plants also failed when hi _it Was discovered ‘that Stockton already: controlled “SO percent of the rare: aloe vera growing in the country. . . “Keeping women beautiful is a cut-throat business,” he admits. (emphasis added) | PX-7; T 7 77-79, 443- 444, 1493, 1994] The use of these’ supply contracts as ah offensive “competitive weapon cannot be fully appreciated until it is realized that) defendant normally purchases ey 25% of He aloe supply that it has under codtract FStockton, T 149]. ) Nor has defendant hesitated to use its monepoly power to close off the aloe supplé In September, 1964, the de- fondant learned that its aloe purchasing agent.in Texas Was also supplyitig a small competitor, Patricia Carrol Cosmetics, which sold “Aloe Glo”. Defendant threatened Patricia Carrollawith trademark infringement because sof the “aloe” in Aloe Glo. After” Patricia Carroll refused to change the name, defendant did not attempt to enforce its claims ina court of law. Much easier it was for defen- dant to ease iis Texas agent merely to cancel Patricr Carroll’s aloe supply. As defendant's Viee President in charge of supply” put ite: i = (): "Now. why is Patricia Carroll Canes: He longer on the market? ac . , A: Well, because they had what I felt was a trade- QQ: And so what happened? AX: Well, Mis. lewald | the Texas agent of defen- dant | didn't produce it for them any more, | Holland, T 552] mark that: was -in conflict With ours, and they ‘had - nade some renarks around Texas, derogatory to us., ~ jf a eee - eRe One small group of aloe growers in Brownsville, under the leadership of T. D. Hazelwood,-refused to sign defen-. dant’s ten year contract. Defendant then complained to ‘the Texas Department of Agriculture (and others) that Hazelwood’s plants were diseased, and accused Hazelwood of violating | defendant’s right to “aloe” (Hazelwood marketed alge d/b/a “Aloe-V Distributors”).’ Defendant then instructed the same Texas agent in’ September of 1964: s As you and | know, people are funny and there are . always those who try to ride the coattails of success- ’ ful operations. | am sure with some of your connee- ‘ . tions you can spike their sales and we also will take “any action we. can to clean up this unethical competition. (emphasis added) [PX-124; Holland, T 537-538 | ; f Exclusion of competilion ‘from prestige drugstores: Defendant's 750-1,000 “Exclusive Drug Store Franchise Agreements” contain “full line forcing” clauses, ic, requirements that the drugstore stock and sell defendant's full. line of aloe cosmetics. More- important, the agree- ments have a most unusual clause granting the drugstore manager (whether or not he is the store wwner) a personal bonus which increases: as’ the store’s purchases of defen- dant’s products increase. The inevitable effect of these contracts, which defendant began to use in 1 January of - 1965, is to induce the store manger not tot purchase competitive aloe products. These commissions, as previ- / x ously noted, violate Section 2(¢) of the Robinson-Patman Act, Section 3 of the Clayton Act, and the laws against commercial bribery. For the purposes of this issue, how- ~~ + ever, these “private concessions” constitute steps in the unlawful maintenance of monopoly power which have been — 4 , ee . . > % %,6 ‘ ° ° characterized as “an unfair, practice evincing an exelu- sionary intent” under Section 2. Union Leader Corp. v Newspapers of New, England, Ine., 284 F.2d 582 (1st C ir., 1960), cert. denied 365 ULS. 833° (1961). a During the same period (1965-1966) the drugstore managers were told, under threat of infringement, not to deal with ‘any’ of defendant’s aloe competitors, whom «lefendant. categorically condémned as trademark and trade secrets infringers. Threats of infringement suits such as defendant made against retailers and: competitors like Patricia Carroll and plaintiff, which threats are not intended to be followed by the actual filing off.a lawsuit? have been held to constitute steps in a scheme to monopo- lize. Eonited States ve Besser Alfa. ('o., 96 F.Supp. 304 (EOD. Mich. 1951), affirmed on other grounds, 343 -ULS. 444 (1952). The Court of Appeals erred in “compartmentalizing” plaintiif’s monopolization case and thereby overrode a fundamental Sherman Act dectrine established By this Court in Continental Ore’ Co. vy. Union’ Carbide Corp... 370 US. 690, G9S-99 (1962) : It ‘is apparent from the foregoing that ‘the Court of Appeals approached Continental's claims as if’ they were five completely separate and unrelated lawsuits. We think this. was improper. In cases such as this, plaintiffs should be given the: full benefit of their . proof Without tightly coinpartmentalizing the various factual components and wiping the slate clean after sertitiny of each... |The character and effect of a conspiracy are not to bes judged by dismembering it-and viewing its-separateé parts, but only by looking at it as a whole. United States v. "Patten, 226 US N25, OH. . ' ‘ — 20— In the light of the “mechanical adoption” by the trial court of defendant’s proposed findings of fact and the resultant determination that plaintiff's hands were un- clean, plaintiff's monopolization charge “was never fully considered below. Plaintiff should be afforded an oppor- tunity on remand to obtaina full and meaningful redeter- mination of~plaintiti’s charge under Section 2 of the Sherman Act. a ” é , CONCLUSION | -_ ~. lor the reasons given, this Cross-Petition for Writ of Certiorari should be granted. | e . . Respectfully submitted, ~ Davip R. Macponaup, . *. JAMES Gi. BARNES, Attorneys for American Aloe Corporation, Petitioners Of Counsel: . Baker & “McKENzirE 700 Prudential Plaza Chicago, [linois 60601 312 828-0400 “ — la— APPENDIX he a THe” “UNITE dD STATES COURT OF APPEALS: . For THe ‘SEVENTH Circurr, No. 17250 Sepremper Term 1968— Apri Session 1969 _ AMERICAN ALOE CORPORATION, ) Appeal from. the Plaintiff-A ppellant, United: States Dis- ’ : ; trict Court for the = ee Ste ‘ r. Northern District ALOE CremMr Laporatorizs, INc., of Illinois. Eastern Defendant-Appellec.) Division. January 9, 1970 ieecsibias aE PETITIONS FOR, REHEARING!’ Before Casti’, Chief Judge, Fatrenitp, Circwt Judge »- and Beamer, District Judge? ' : Beamer, District Judge. This is. an appeal. from the Northern District of Mlinois*involving claims.of trademark infringement and invalidity, unfair competition and anti- trust violation and counterclaims based on similar charges. The central question, before the Court.is the validity of defendant-appellee’s, “ALLO-” trade ‘names, and plaintiff- appellant’ s alleged infringement -thereof. , 1 On consideration: of the petitions for rehearing filed by each of the parties and the answer of defendant- appellee to’ plaintiff- appetlant’s » tition (filed at the re- quest of the Court) the opinion filed herein July 31, 1969, - is withdrawn and this opinion Is adopted as the opinion of the Court. a) | * Judge Beamer is sitting by designation trom the Northern District of Indiana. ! e-: —- 2a — Defendant, Aloe Creme Laboratories, Ine. began -the sale of an ointment in 1953, and cosmetics in 1957, both containing the gel of. the sub-tropical aloe vera. plant. The use of the fresh gel from the cut leaves of this plant had long heen known. to the natives of the region in which - it.is grown as a remedy for’sun burn. Prior to defendant’s entry into the market.and its development of ca process of stabilizing and preserving the gel, it had too short a’ shelf life to be commercially, valuable. Due to defendant's: efforts over the intervening vears, its products, containing - Atoe vera gel, became widely known and commercially suceessfid. Beginning in 1953 and throughout this period, the defendant operated under the trade name “Aloe Creme Laboratories; Ine.”. Its. first product was. known under the trade name ALO-C REME OINTALE NT which was changed to ALO-OINTMENT in) 1963, Commencing in 1957, defendant began ‘the manufacture of various cos-. metics known as ALO-CREME FACK, and ALO-CREME HANDS, and ALO-CREME BODY, which names were abbreviated to ALO-FACK. ALO-TANDS. and ALO- BODY in 1965. Since: 1963, the defendant has also used the trademarks ABO-PLUS,. TRAV-ALO, ALO-MOLS-. ‘TURE PLUS, ALO-V SKIN CLEANSER, ALOSBEAU- ‘TY MATTE. ALO-TONE, ALO-ROUGE, ALO-LIP- STICK, ALO-POUDRE. ALO-V SHAMPOO, ALO-COS- METICS, ALO-CABANA SET. ALO-LEGS. FASHION TAN and AFTER TAN, all of which were the subject of trademark registrations. Plaintiff commenced operations on January 20, 1964, and made its first ‘sales of products bearing trademarks | on March 8. 1965. Plaintiff adopted as its trademarks, HOUSE OF ALOK, ALOK ESSENCE, DESIGN: OF PLANT, JEL D’ALOK,: MASQUE OF ALOK and TROPICALOE. After defendant notified plaintiff of Jits claim to a, family of ALO trademarks, whieh it claimed . was infringed by plaintiff's use of ALO in its trade names, plaintiff commenced this action asking a declara- tory. judgment finding defendant's trademarks invalid and upholding plaintiff's. right to use its ALOK trademarks, —3a— Bane with a claim. of unfair ‘competition and antitrust violation. Defendant counterclanned for trademark in- fringement and unfair competition. The- district ‘court found for the defendant-counterclaimant on all issues, dismissed the complaint, awarded treble damages and enjoined the plaintiff from using ALOE in its trade names or trademarks. seinen 3 ‘ies Central to a dete Pnliaicbiann of the: issues in this ease is whether deferdant’s ‘ise of the term ALO- is sufficient to preclude others from using the words’ Aloe or Alo. ‘Also in question is defendant’s claim to trademark regis- tration of “ALO- and Design”. We hold that defendant has no trademark rights, through use or registration, in the term “ALO-" by itself. 7 3 Aloe is the generic name of a large genus of succulent plants and of the drugs pre pared from the aloe vera’ variety of that. plant. (Webster’s New. International Dic- tionary, 2d ed. 1934:) In particular, for purposes of this ease; it is the generic name for the eel of the aloe. vera plant. It is gndisputed that in the absence of a strong ; showing of secondary meaning, a generic name cannot be the basis of a trademark. Nelldgg Co. v.. National Bisewt Co., 305 UeS. 111, 83 Lied. 73) (1938) . ‘(shredded ° wheat); JTenry Heide, Inc. v. George Ziegler Co., 354 F.2d 574 (7th Cir.. 1965) (ju-jubes); Donald F. Dunean,. Inc. v. Royal Tops Manufacturing Co.. 343 F.2d 655 (7th ’ Cir. 1965) (vo-yos). ‘Defendant concedes that this is the law, but maintains that it is not marketing “Aloe” as such, but is. selling cosmetics containing Aloe, which are not: encompassed within the generic or descriptive name. and with respect to which. the word “Aloe” is at most. suggestive, In view of the fact that Al6e is the distinguishing. ingredient i defendant’s produets’ upon ‘which its claims ‘to apioeii effectiveness are based, the Court must find that “Aloe” is the generic and descriptive term for that. class of cos- meties containing Aloe and that any claim to a trademark in the name must be based Gn “secondary meaning”. . qs setae ep The. case is unlike Coca-Cola Co. v. Noke Co., 254 US. 143, 65 L.Ed 189 (1920). where the term Coke or Coca Was originally descriptive of the extract of Coca leaves, or cocaine contained in ‘the plant, bot which “lost. this generi¢ sense when the plaintiff. was compelled to remove any. effective cocaine from the product, after which Coea or Coke acquired ‘a purcly secondary. Meaning. Neither ix this ease controlled by those decisions which have found that exact copies or phonetic equivalents infringe purely suggestive names which have acquired trade “name: sig- nifieance, such as Douglas Labs: Corp. v: Copper Tan, Ine., 210 F.2d 453 (2nd Cir. 1954) which said “copper tone” for sun ‘tan lotion was suggestive rather than de- seriptive; and Orange Crush. Co. v. California Crushed Fruit Co., 297 I. 892. (D.C. Cir, 1924) whieh said “Crush” Was not descriptive’ of a soft drink and was. not used: in its generic sense: nor is it in the same ‘class with those which hold that terms having a genéral deseriptive but not denoininative -se i acquired secondary meaning. “Weller Products, Ine. Rubber Linings Corp... 213) Fd. 382 (7th Cir, ie (Fab ( ‘ove Vv. Tub Nove): Speaker . Shaler, Co, 87 F.2d 985 (7th Cir. 1987) (Ilot Patches . Tot Patche tor vileanizing products); Bartou v. Rew- ‘oi Co., Inc.,- 29° Fd 474 (3rd Cir. 1928) -(Dyanshine > Dye & Shine hor shoe polish). It must also be distin- Bee ie" from the Supreme Court's decision inutrmstrong Paimt & Varnish Works v. Nu-Enamel Corp., 305 U.S. 315: 83 bed. 195 (1939) where the essentially deseriptive and denominative term “nu-enamel” had acquired a see- ondary meaning at least partially through its widespres ud application to products other the in racine panies as paint | brushes. | This case is, properly classified with ‘those where the temn in question was the common name Yor the article sold and herice sie igang of that article regardless’ ‘of mae Kellogg Co. National Biscuit Co., 305 U.S. - 111, 3 Led. 73 (1938) oe shredded wheat) : Ile sti Ileide Pigg? v; isle Ziegler Co., 354 Fe ad 574 (7th Cir. 1965) (ju-jubes); Donald F. Duncan, Inc. v. Royal “1 wee Mana- ~ * Se the product. Compare LeBhane . ~ fil. 1900) the: Court found that. the expression “Celery Compound” had acquired a, secondary meaning and that. others could not copy it, but it did not. find:thati “Celery” had acquired a similar meaning. Thus’ a term which in. itself does not have trademark significance nay be ecom-— bined witli others. in such a manner’as to mean one prod- uct and one manufacturer only. While “Aloe” and “Hands” may both be: generic terms—as are most words—their combination in the phrase “*ALO-Hands” may constitute a valid trademark as found by the Patent Office in issuing a registration for that -term. Therefore, here the. Court: holds that the varions ALO- trademarks of defendant in themselves are valid, but’ cannot be considered to have established a secondary, meaning in the word Aloe itself. Others may. not copy the exact trademarks used by defen dant, because those have come to. mean defendant’s prod-' ucts exclusively, but*they may use the avord “Aloe” as -part-of their own trademark, Just as defendant has Gone, - a) : ® oe * rigs ° +, J Defendant contends, and the trial court found, that’ it: has a “family of ALO- trademarks” such as to preclude others fromy using the term “Aloe” in their trade names! This conclusion must be reversed, It is apparent that a generic term cannot be the basis of a family of trade- marks such as to preclude others from using thie term ‘uniess the term has acquired : “seconditry meaning”, Compare Lauritz cu & Co., Ine. v. Borden C ompany, 939 ° 2d 405 (Court of C axtoms il Patent Appeals, 1956) with Motorola, Inc. v. Griffiths Electronics, Ince., 317 F.2d 397 (Court of Coat and Patent Appeals, 1963). The family of trademarks doctrine is essentially similar to that of “secondary meaning”. Without “secondary mean- ing” there.is no “family of trademarks” in the sense. defendant contends here. The lack of a “family of ALO- trademarks” does not. of course, invalidate each of defen- dant’s registered trade names whieh. share the “ALO-” term. Each trade name in itself may be. distinetive enough to ereate a valid trademark even though the common tern among the group has bot achieyad sufficient, secondary meaning to preclude others from using the term. Having determined that. the veneric term "ALO hats neither achived trademark signifieance, nor become thre basis of a “family of trademarks”, we now examine de- fendant’s claim of trademark registration of “ALO. and, . Design” in Registration No. 804,536. The ‘trial court in its finding of faet No.-16 > found: “Defendant is the owner of the following trademarks and registrations therefor issued to it by the United States Patent Office: .. ..No. SOLD for NLO- and Design... 2” This portion of finding No, 16 is clearly erroneous. Trade. mark Registration -No. “ge ote while owned by the defen- dant, is ‘nof for “ALO- Design” . but rather for’ “Queen Nefertiti ALO ; Design’. "Phis facet is made clear by the ‘lly are Mirsene. of application for regis- tration and the proceedings thereafter in the Patent Office. . ; ; t ~~ f —_— On July 30, 1964, defendant applied for registration of “ALO- and design of a plant”. The following drawing was submitted by the defendant: s — 10a— The Patent Office treated this as an application for a trademark for “ALO and Design”; the Patent Office dropped the hyphen after ALO presumably because the drawing submitted included no hyphen. On February 3, 1965,.the Patent Office sent defendant notice of its refusal to register “ALO and Design”. Among other reasons for the refusal, the Trademark Examiner pointed out that the mark was “merely deserip- — tive of the goods . . . in that it sets forth the substance from which the preparations are made together with a representation thereof, inasmuch as ALO is short for’ Aloe which is the genus designation for the species Aloe Vera and others.” Defendant’s application for registration included a spec- imen of the following. mark which had been used in defen- dant’s advertising: oA Nefertiti \ —lla—- The Patent Office pointed ont that this drawing could not he the basis of a registered mark’ in “ALO and Design” by itself since the word ALO and the design of the plant “ix tied in. with the portrait of Queen Nefertiti and docs molt create a separate impression.” (Emphasis added.) The Patent Office requfred the defendant to add the. words “Queen Nefertiti” and her portrait to the drawing origi- nally submitted. Defendant was further required to include a disclaimer of registration of the word * ALO” and the represe ntation of the aloe vera plant. . Defendant amended. its: application to.inelude the dis- -¢lainier of ‘registration of ALO and a of “plant and submitted a new. drawing which included the words “Queen Nefertiti” and the portrait of the Queén. The Patent Office then renamed the amended application “Queen Nefertiti ALO and Design”. Defendant was sent notice. that the “Queen Nefertiti ALO and Design’ mark would be published on December 14, 1965. On Mareh 1, 1966. the mark was registered and oe No. 804,536. A sérious “question as to defendant's wood t faith ix raised) by its claimothat in No, 804.536 it owns the registration ‘for “ALO- and Design.” The Patent Offiee specifically rejected defendant’s application for vegistration of “ALO and Design” stating that “ALO” is a descriptive term. There can be no claim that "ALO and Design” as included in “Queen Nefertiti ALO and Design has separate signifi- cance since the Patent Office informed.defendant that the ° “ALO and Design” docs not create a separate impression. Furthermore, in obtaining registration for “Queen Nefer- titi ALO and Design” defendant. specifically disclaimed registration rights in "ALO and*the representation of the aloe plant” (as it was required to do hy the Patent Office): Defendant's questionable use of No. 804,536 began even before the mark was registered: On February 21, 1966, defendant Sent letters to” several hundred -retailers in which it claimed to be the owner of “ALO- and design,” ‘e Wademmnrs “registered im the United’ States. Patent * o — 12a — _ Office.” This letter, which threatened to “take whatever steps necessary” to stop. “newly erst competitors” from infringing on this and other trademarks, was sent | ‘nearly two weeks before the sl Office registered the “Queen Nefertiti ALO and Design” mark. : In light of the foregoing, we remand this case for redetermination, of the question of defendant’s unfair tom- ‘petition. We pverrule: the finding that defendant is the omnet of a registered "ALO- and Design” trademark. We hold that defendant's use of the generie term “ALO-” has not created a secondary mei ining in that word, and there- fore; defendant has no exclusive trademark rights .in the word “ALO-" by itself. We reverse the trial couirt’s con- clusion that defendant owns a “ family of ALO- trade- marks” such as to” preclude others. from using the word “Aloe” in theiy trade names. We reverse the trial court’s conclusion that plaintiff’s TAN LAFE infringed defendant’s, FASHION TAN and AF TER TAN trademarks, beéause the only common word, “tan”, ix too descriptive tobe the hasis: of trademark rights.under the facts of this, case. . ( On the basis of ‘these conclusions we reverse the district court’s holding that plaintiff was guilty of trademark infringement. We leave to the district court the determina- tion of whether plaintiff.was guilty of unfair competition . absent of showing a trademark infringement. Finally we come to the question of whether defendant * is guilty of violating the antitrust laws by. its use of its’ growers’ supply’ contracts and its dpugstore franchise agreements. We. affirm the conclusions of the trial court that defendant’s drugstore franchise agreements were not used in violation of the antitrust laws. However, we must set aside the conclusion of the trial court that defendant’s growers’ supply contracts were not used in violation of the antitrust laws since the district court’s findings of fact are insufficient to support this conclusion. — 13a — Before there can be a conclusion as to whether there’ has been a substantial lessening of competition, monopo: lization, or a contract in restraint of trade, a.determina- tion must be made’ as to what are the relevant. product markets within which to guage a firm’s power or the effect of its activities. In Brown Shoe Co. v. United States, 370 U.S. 294, 325, 8 L.ed.2d 535 (1962) the Su. . preme Court stated: ‘The outer boundaries of a product. market arddeter- mined by the reasonable, interchangeability of use or the cross-elasticitv of demand between the product itself and substitutes for it. However, within this broad market, well defined submarkets may exist which, in themselves, constitute product markets for antitrust purposes. Factors such as a product’s peculiar characteristies and uses, distinct prices, and sensitivity to price ‘changes are all indicia which may he used in determining boundaries of a submarket. . | The. findings of fact made by the trial court do ‘not provide .a basis for its’ conclusion that ‘the cosmeties - industry is the relevant market. On remand, the district court should/re-examine this question weighing the factors set out in the Brown Shoe opinion. It will be necessary » to make a determination whether there exists a separate market for aloe vera leaves.’ The-distriet court will als6 need to inquire whether aloe vera products constitute a submarket of the cosmetic industry. | Once the district court has decided which product mar- kets are relevant: for antitrust consideration, the effect .of defendant’s growers? supply'-contracts will have to he weighed within those markets. The ease of entry into these, markets and the cost of aloe vera leaves to defen- dant and its competitors are findings of fact which will have to -he. made. On the basis of these findings, the district court will he able to decide the issues raised by a — Ida — plaintiff's charges of antitrust violation. based on the defendant's exclusive contracts with the growers of a large percentage of aloe vera leaves produced in the United States. Affirmed in part and reversed in parts Remanded to the district court for further proceedings consistent with this: opinion. Appellant shall recover its costs of appeal. - Suprene Court of. ‘the nite States 7 a ee cron Tm, ae )970 AMERICAN ALOE CORPORATION, | Re eae eee: ee _ ALOE CREME | LABORATORIES, INO, oS nee Z fot Respondent. | Reece BRIEF IN OPPOSITION TO CROSS” os |" PETITION FOR WRIT OF OERTIORARY . ee »~ . *. GHARLES' J. OLAUGHLIN ~~ ee were JENNER & BLOCK: ieee B: - 7 ys ss S185 South Le Salle Street : WT teat gegen nee © Chicago, Minos Soc Sone Cp ae SAMS R. MeKNIGHT Sore “ : ‘= 807 North Michigan avenue ; PE as Chicago, Illinois. ee megccience oe Respondent met es Sy Aa oe Pee yuna stATES LAW rare os GHICAGD, ILLINDIS 60618 (312) 525-6581 ee - ina Lae : oa ee “ ° --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385604_1671%3A1. Public record. Not legal advice.