# Petition for Writ of Certiorari — Borg-Warner Corp. v. York-Shipley, Inc. (No. 509) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386420_1305%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1961 ## Text MLR O MSY TA Te wee etki. ED “~c° ‘ —" BSP. pelle JAMES R.B2 Ott Supreme Court of the United States OcTOBER TERM, L961. No. 509 BORG-WARNER CORPORATION, s Petitioner, Us. YORK-SHIPLEY, INC., Respondent. PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT Epwarp A. Haicut 209 South La Salle Street Chicago 4, Tilinois Stuart S. Bau 11 South La Salle Street Chicago 3, Illinois Attorneys for Petitioner. Of Counsel: DonaLp W. BanNER Joun T. LaNaHANn 200 South Michigan Avenue, Chicago 4, Illinois RicHarp J. Ftynn 11 South La Salle Street, Chicago 3, Illinois Joon W. Horevpr 209 South I Salle Street, Chicago 4, Illinois ne hee The Scheffer Press, Inc—ANdover 3-6850 INDEX. PAGE Petition for Writ of Certiorari ...cccccccccccccccccccccoscscecccs.., 1 I 4 a 2 EAS AR 2 Statutes and Federal Rules Involved oo.ccccccccccccseccccooseses.. 3 I 3 Reasons for Granting The Writ ...ccccccccccccccccccscccscocecescss... i) RSE ENS SE SU eSe NC a ea 18 APPENDIX A: SEES a la Rule 52(a) Federal Rules of Civil Procedure (28 |p A SSESSS SESE Sota nn ea la APPENDIX B: | Opinion (U.S.C.A. 7) July 26, 1961 woes. Ba Judgment of the Court of Appeals for the Seventh I i csssdeidniascasmmoenceens 17a Order Denying Petition Of Plaintiff-Appellant for Re- hearing and Appellee’s Petition for Rehearing and Clarification, September 13, 1961 oo...ccccceccccccscsceceee, 18a TABLE oF CasEs. Bank of Madison v. Graber, 7 Cir., 1946, 158 F.2d 137 12 Federal Glass Co. v. Loshin, D.C. Conn., 1954, 126 Ne ssctemiésnononns 9 il PAGE Hubsman v. Louis Kerr Shoe Co., 7 Cir., 1942, 129 EF cs ssnsnmsnsensaiesstdinnewbowianenionstiaubonsneranueianssusccenesacsse i2 Kweskin v. Finkelstein, 7 Cir., 1955, 223 F.2d 677...... 12 Lucien Lelong, Inc. v. Lander, 2 Cir., 1947, 164 F.2d TT... cscasusenhiinncoubenssasennsnbeinininetnasbadbuniananayaparenenssesendsayanseess 9 Speed-Products Co., Ine. v. Tinnerman Products, Inc., S.D. N.Y., 1951, 93 U.S.P.Q. 193. .escesseseseseseeeeeneenenees iW) Speed-Products Co., Inc. v. Tinnerman Products, Inc., 2 Cir, 1949, 179 F.2d 778 ..scsesesesssesssssesssrssesesneeeeneeenes 9 Quaker State Oil Refining Co. v. Steinberg, 1937, 325 i I nics cicsassinscotstacarnvvnnerninermnnessbiveninmiuastsnenbecovesanssenesoes 12 Upjohn Co. v. Wm. S. Merrell Chemical Co., 6 Cir., 1920, 269 Fed.. 209 w.c.scccccsssssesessersseessrssssssesseseensnessensarens 9,11 STATUTES AND AUTHORITIES. Lanham Trademark Act of 1946, Title 15 U.S.C., See. COE... ssc vemisasasionnsenndhtedsnneinedeaninnnenatinene tab tmnanias 16 Rule 52(a), Federal Rules of Civil Procedure (28 U.S.C.) ccsccscssssscssececssssecssenssesscsncseensesensenssssvesesssssnenesseseaness 12 1 Nims, Unfair Competition and Trademarks, Secs. 37 and 334 (4th ed, 1947) ...cccccscsseceseeneseeeeseeterseeees 11, 13 Unfair Competition—Secondary Meaning, 150 A.L.R. TN vscecinsdcssiGisndecctsoenstennaninesnieannedeesioeediiialaniadehtntianesinivictsoocnaseness ‘3 IN THE SUPREME COURT OF THE UNITED STATES October Term, 1961. —_—__—-- No. BORG-WARNER CORPORATION, Petitioner, vs. YORK-SHIPLEY, INC, Respondent. PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT Petitioner, Borg-Warner Corporation, respectfully prays that a writ of certiorari issue to review a final judgment of the United States Court of Appeals for the Seventh Cireuit modifying the judgment for respond- ent entered by the United States District Court for the Northern District of TIlinois. ») OPINION BELOW The Findings of Fact and Conclusions of Law of the District Court for the Northern District of Illinois, East- ern Division, (P.A. 348-357)* were not officially reported. The opinion of the Court of Appeals for the Seventh Cir- euit. (Op. cicin ) is reported at .......... ee. ensue , and a copy thereof is appended hereto (App. B, infra, pp. 38a-16a). The judgment of the Court of Appeals and the order denying petitions for rehearing of petitioner and re- spondent are printed in Appendix B hereto (App. B, infra, pp. 17a-18a). JURISDICTION The judgment for the Court of Appeals for the Sev- enth Circuit was entered July 26, 1961. Timely petitions for rehearing, filed by both parties, were denied on Sep- tember 13, 1961 (App. B, infra, p. 18a). Jurisdiction of this Court is invoked under 28 U.S.C. 1254 (1). QUESTIONS PRESENTED 1. Can trademark rights in a geographic word be acquired absent proof that such word had acquired a sceondary meaning identifying the source of specific products prior to the initial use of such geographic word on the same products by another user? 2. Where, to establish exclusive trademark rights in a geographic word, a seller must prove that the word *The following parts of the record below are referred to herein as follows; Plaintiff-Appellant’s Appendix to Court of Appeals, (P.A.— —-) ; Defendant-Appellee’s Appendix to Court of Appeals, (D.A.————-) ; Exhibit Volume (Ex. Vol. —_ ). — had aeqnired the necessary secondary meaning as to a particular product prior to the use of that word by an- other seller on a similar product, does Rule 52(a) of the Federal Rules of Civil Procedure permit a court to grant the first seller exclusive trademark rights in the coim- plete absence of any finding that secondary meaning has been established prior to such use by the other seller? 3. Can use only of a combination trademark estab- lish monopoly rights in a geographical word which is merely a component of such trademark? STATUTES AND FEDERAL RULES INVOLVED Pertinent portions of the Lanham Trademark Act (15 U.S.C. See. 1127) and Rule 52(a) of the Federal Rules of Civil Procedure (28 U.S.C.) are set forth in Appen- dix A hercto. STATEMENT Petitioner, Borg-Warner Corporation, is the successor to a Pennsylvania partnership, York Manufacturing Company, formed in 1874, and incorporated in 1895, under the same name. In 1927, the corporation merged with certain of its distributors to form York Ice Ma- chinery Co., and in 1942, changed its name to York Cor- poration. The business was merged into petitioner in 1956, and since that time has been operated as the York Division of Borg-Warner Corporation. Through its York Division, Petitioner manufactures and sells a full! line of commercial and residential air-conditioning equip- ment, including warm-air furnaces, sold under the trade- mark YORK. Respondent, York-Shipley, Ine., was organized in 1926 as Thomas Shipley, Inec., a holding company. In 1938, Thomas Shipley, Inc., aequired the stock of York Oil oes Burner Co., which was the successor to a partnership formed in 1922. In 1943, the name of Thomas Shipley, Inc., was changed to York-Shipley, Ine. Respondent manufactures and sells heating equipment, including warm-air furnaces, sold under combination trademarks within a fanciful design which include the word YORK. Both petitioner and respondent have carried on their business from York, Pennsylvania. Petitioner brought this action against respondent in 1958 charging infringement of petitioner’s trademark YORK and unfair competition. Respondent counter- claimed, charging trademark infringement and unfair competition by reason of petitioner’s use of YORK in connection with the sale of residential furnaces. The District Court found in favor of respondent and entered judgment enjoining petitioner from using the word YORK in any way in connection with the sale of any furnace or heat-generating products and awarding re- spondent damages and an accounting for profits. The Court of Appeals reversed the District Court’s award of an accounting, set aside the award of damages as unsupported by the evidence, and directed that the injunction be modified to limit its application to hot-air furnaces and oil conversion burners. The Court of Appeals stated that petitioner should not be restrained from employing its trademark on air-conditioning equip- ment containing heating coils or on other air-conditioning devices containing heating units such as had been pre- viously used by petitioner or by the air-conditioning in- dustry. It further stated that respondent should not be permitted to advertise its furnaces as YORK air-condi- tioners. (Op. 14a) The Court of Appeals remanded the proceeding to the Distriet Court with instructions that it recompute damages. ee en For purposes of this petition, petitioner is not now challenging the denial of the affirmative relief which it sought below. Nor is petitioner challenging that part oi the decision below granting respondent the exclusive right to use YORK for oil conversion burners. The sole issue presented by this petition is whether or not the courts helow properly granted respondent a monopoly right to the trademark YORK as applied to hot-air furnaces sold as separate units. The facts relating to this issue are as follows: The courts below found that respondent began manu- facturing and selling furnaces in 1933 (P.A. 363). The record, however, contains no sales figures for furnaces prior to 1938 nor did respondent report sales of furnaces through 1937 in sworn reports of the products which it sold as required by the State of Pennsylvania. Respondent did not advertise furnaces at all prior to 1936 and then only to a very limited extent in trade journals. Respondent began selling gas-fired furnaces in 1953. There is no evidence that respondent ever sold furnaces branded with the single word YORK elthough it used such word on its oil conversion burners and boiler-burner units along with the names PRESSURE and LEADER (P.A. 190). In 1935, respondent adopted the eombi- nation YORK Yh HEAT vertical design (P.A. 326). In 1943, respondent registered Yh as its trademark (P.A. 334), and in 1950, secured a registration of the combi- nation mark YORK Yh HEAT within a fanciful verti- eal design (P.A. 325). In securing the later registra- tion, respondent disclaimed the word “Heat”, and. of- fred to disclaim “York”, stating that “applicant’s trade- mark is not ‘York’” (P.A. 339). pa eas Petitioner, on the other hand, has used the single word YORK as its trademark and trade name since at least IS@&. (x. Vol, PX 168-171, 174-183; DX 121). In 1897, petitioner’s predecessor began to specialize in the manufacture of ice-making and refrigeration equipment (ix. Vol, PX 169, June, 1920). Such refrigeration equipment was later put to use for the conditioning of air for human comfort and by the “late 1920's” (Finding 7, P.A. 348), air-conditioning apparatus was a regular part of the “YORK” line (Ex. Vol, DX 172, P.A. 62, 70). Karly uses of petitioner’s refrigeration equipment for the conditioning of air included storage rooins, factori¢cs (1908), hotels (1912), and theatres (1914), all long prior to 1922, when respondent commenced business (Ex. Vol., PX 150, Aug., 1922, Oct., 1922, and Nov., 1922; PX 174, March, 1931; P.A. 80). The air conditioning of resi- dences by petitioner goes back as early as 1924 (Ex. Vol., PX 150, Feb., 1924). Petitioner’s ice-making, refrigeration, and air-condi- tioning equipment was all sold under the single name and trademark YORK (Finding 7, P.A. 348), and peti- tioner obtained registrations of that single word as its trademark (Iinding 8, P.A. 349). Petitioner's sales of YORK trademarked — products were $46,000,000 from 1922 to 1928, $147,460,000 from 1928 to 1938, and over $900,000,000 from 1989 to 1959. During the years 1929 through 1937, when respondent was spending less than $6,500 per year on all of its advertising, petitioner was spending $179,000 per year. From 1922 through 1937, petitioner spent $2,400,000 advertising YORK. Petitioner’s early YORK installations included heat- ing as well as cooling apparatus (see, e.g., banana-ripen- Ing room and storage installations, Ex. Vol, PX 172, PLA. 60, Ob; Rochester bank systems, lex. Vol, PN 150, July, 1925). Petitioner supplied heat-generating boilers in connection with theatre air conditioning in the ’20"s (POA. 71, 72). Beginning in the early 1930's, and con- tinuing to the present time, petitioner has marketed combination heating and cooling equipment for stores, restaurants, theatres, hotels, office buildings, railroad passenger cars, and private and multiple residences (Ix. Vol, VX 152, 147, 148, 166, 174, 175, 219). From 1934 to Ted, 249 YORK cooling and heating systems were installed by petitioner in Woolworth stores throughout th» country. Many of these YORK installations through. out the period, included furnaces (Ex. Vol, PX 213). In 1958, petitioner purchased residential furnaces Which it resold as separate units and as part of complete air-conditioning systems under its trademarks YORK and YORKAIRI (Op. 11a) and eontinued such sales until World War I] (Op. 11a; D.A. 5). Sales of YORK branded furnaces Was resumed by petitioner in 1953 (D. A. 27). Since 15s, when York was acquired by petitioner, it jas sold furnaces which it manufactured itself (D. A. 27). Respondent’s officers (e.g, PA. 117) admitted that prior to the time respondent's predecessor came into existence in 1922, YORI surrounded by a border. In 1955, defendant registered a second similar design in which ‘‘GAS” was substituted for oY /H.”? Plaintiff and its predecessors, and defendant and its predecessors each have been doing »usiness with head- ‘The term plaintiff includes its predecessors unless other- wise indicated. ow §@ = quarters in York, Pennsylvania, for more than 35 years prior to the commencement of this action. For many years, one of defendant’s predecessors was located across the street from the main entrance to the general offices of plaintiff’s predecessor. The parties and their prede- eessors had many dealings and transactions with each other. In 1958, plaintiff completed the amalgamation of its Ingersoll furnace business into its York Division, and commenced the manufacture and sale of a line of York furnaces and heating products. In the same year, plain- tiff announced to the trade and public in large advertise- ments, “York invades the heating market,” and com- menced a large scale intensive advertising campaign. Some of these advertisements apparently directed to plaintiff’s distributors or dealers, stated: “Now take charge of the compiete market for both heating and air-conditioning with York.’’ Until shortly before it commenced this action, neither the plaintiff nor its predecessors had ever objected to defendant’s use of YORK for its furnace and heating products business. Plaintiff strongly urges that the record contains no proof of finding of fact that defendant had acquired a secondary meaning in the name YORK before plaintiff applied that name to its furnace and heating products. Plaintiff refers to Conclusion of Law No. 3 which states defendant’s long priority of use of the name and trade- mark YORK for furnace and heating products entitles defendant to the exclusive use of the name and trademark for furnace and heating products. Plaintiff argues that prior use is not sufficient and secondary meaning is not mentioned. We agree that where a geographical or de- scriptive word is at issue, prior use alone is not sufficient. Finding of Fact No. 27 states: “As a result of the sales and advertising of YORK furnace and heating products and services by defend- ant and its predecessors since 1922, defendant’s name and trademark YORK had been and is known, by — 18, — the trade and public, as the means of identifying the furnace and heating products and services of defend- ant, and said name and trademark YORK has acquired a distinctiveness and secondary meaning signifying defendant and its furnace and heating products and services, and defendant and its predecessors have developed, and defendant now has, a valuable business and good will which is represented and symbolized by the name and trademark YORK.” Finding of Fact No. 38 is as follows: ‘‘Plaintiff’s advertising and use of YORK for fur- nace and heating products dilutes the distinctive quality of defendant’s name and trademark YORK, pre-empts and irreparably damages defendant’s good will therein, and irreparably damages the secondary meaning thereof indicating defendant, its services and products.”’ Although Finding No. 38 is directed principally to the Illinois statute, we think this Finding, together with Finding No. 27 is a sufficient finding as to secondary mean- ing. We do not think it fatal to defendant’s cause on its counterclaim that the words “secondary meaning” were not repeated in Conclusion of Law No. 3. The name YORK is a geographical term. Cenerally speaking, trademarks in a geographical name are narrow in scope. Elgin National Watch Co. v. Illinois Watch Case Co., 179 U.S. 665, 673. Neither plaintiff nor defendant may monopolize the use of YORK for all manner of products. In French Republic vy. Saratoga Vichy Spring Co., 191 U.S. 427, 435, the Supreme Court said: “True the name is geographical; but geographical names often acquire a secondary signification... which enables the owner to assert an exclusive right to such name as against every one not doing business within the same geographical limits; and even as against them, if the name be used fraudulently for the — on purpose of misleading buyers as to the actual origin of the thing produced, or of palming off the produe- tions of one person as those of another.’’ Under the federal trademark registration sta te (15 U.S.C. $1051, et seq.) plaintiff’s and defendant's rs ristra- tions containing the name YORK are limited w “the coods or services specified in the certificate.’’ 15 U.S.C. §1057 (b). Assuming plaintiff has made a sufficient showing to en- title it to the exclusive use of YORK as to ice-making and refrigeration machinery and apparatus, and also as to air- conditioning apparatus, this does not determine the ques- tion as to its claim of exclusive use of YORK in connec- tion with furnaces and heating products or equipment used in connection therewith. Much of the difficulty in this case arises because of the claims of the parties that each is entitled to the exclusive use of YORK to designate “heat-generating products” or “heat-generating devices.’? The judgment of the District Court enjoins the plaintiff from manufacturing and selling any furnace or heat-generating products in connection with any business which includes the name YORK. Before the incorporation of York Manufacturing Com- pany in 1895, it was selling steam engines and _ boilers. Plaintiff now argues that such products were “heat-gen- erating devices.” These products were manufactured and sold by plaintiff’s predecessor long prior to the date of defendant’s manufacture and sale of oil conversion units in 1922. Also, plaintiff says that in the early 1930s, when its predecessor was manufacturing and selling air-condi- tioning systems for stores, theaters, hotels and other buildings, heating coils were included with some of these installations. The District Court was entitled to consider various statements and advertisements of the plaintiff's prede- eessor which would indicate that the early references to ‘‘air-conditioning’’ referred to refrigeration and ice-making machinery. To illustrate, in February 1915, plaintiff’s ad- — vertisements emphasized that it was devoted erclusively’ to the manufacture of ice-making and refrigeration ma- chines. In April 1920, the previous advertisement was changed slightly in wording to claim that York Manufac- turing Company made “Iee Making and Refrigerating Machinery E-rclusively.’" This advertisement was used throughout 1920-1923. By 1925, the advertisement of plain- tiff’s predecessor proclaimed ‘‘The York Organization is the largest in the world, devoted erclusively? to the manu- facture of Ice Making and: Refrigerating Machinery.” This claim was repeated as late as 1926. These advertisements belie plaintiff’s present claim, that prior to 1923 a see- ondary meaning attached to its use of YORK as to heat- generating products or air-conditioning products as those terms are generally understood. It is clear that plaintiff was the first to use the term YORK to refer to itself and its products; yet, in 1922- 1923, plaintiff's principal products were ice-making and ~ _ refrigerating machinery. The June 1922 issue of the house organ publication of plaintiff’s predecessor stated, “The idea of the York Manufacturing Company was to devote itself entirely to the development of the highest type of refrigerating. machine. . . .” This publication also listed plaintiff’s 1922 products as various items and_ parts, “needed to equip a complete ice-making or refrigerating plant.’’ It is important to note that no mention was made of any heating or air-conditioning products. Under the related goods doctrine, plaintiff claims it sheuld be protected as to YORK because the first user of a name has rights in that name even as to goods to which it had not applied the name or trademark, We do not think that in 1922-1923, conversion oil burners produced by defendant were so related in their common function as to be likely to cause confusion with the use by York Manufacturing Company of the term YORK on ice-anaking or refrigerating machinery. As hereinbefore stated, neither party was entitled to monopolize the geographical naine YORK for all manner of products. * Emphasis supplied. — 10a — In Consumers Petroleum Company v. Consumers Co. of Illinois, 7 Cir., 169 F.2d 153, this Court decided a case wherein the facts were somewhat similar to the facts in the case at bar. The action was brought by Consumers Petroleum Company to enjoin the defendant from using the name “Consumers” in the business of marketing fuel oils. Plaintiff had been incorporated in 1925: defendant was incorporated in 1937 as a result of a reorganization of a corporation established in 1913. Defendant’s prede- cessor was authorized by its articles to deal in coal, coke, wood and other fuels of all kinds. However, in 1925, when plaintiff was incorporated, defendant was not selling fuel oils. Defendant did start to sell fuel oil in 1927, but did so under various trade names and not its own. In 1938, how- ever, defendant changed its method and commenced selling fuel oil on its own account. The parties agreed that no confusion existed in the mind of the public prior to 1938. Defendant argued that plaintiff was charged with the knowledge that defendant might, at any time, commence to sell fuel oil in addition to other fuels. This Court first decided that the solid fuels sold by defendant were not in the same deseriptive class as fuel oil. We held that even though defendant might decide to sell fuel oil as part of its corporate business, it did not follow that it had a right to engage in the sale of such oil under a name, even its own name, which had been pre- viously put to use by a competitor in the sale of such commodity. In Consumers, this Court stated, 169 F.2d at page 161: “From these authorities and others which could be cited, it appears to be an established principle that a person or corporation can acquire a property right in a trade mark or trade name only by use of such mark or name in connection with goods of the same descriptive class. Applying this principle, we are of the view that the defendant acquired no property right in the trade name ‘Consumers’, as applied to —lla— fuel oil, for the reason that it did not use such name in that connection until 1938, and long prior to that time the trade name had been appropriated and used by the plaintiff in connection with such business. As a corollary, plaintiff in 1925 had a right to appropriate and use the name in connection with fuel oil.”’ Plaintiff argues that defendant has proved no sales of furnaces prior to 1938, whereas plaintiff’s predecessor sold furnaces under the YORK trademark and name in 1937. There is credible evidence to prove plaintiff's sale of furnaces in 1937. However, there is also credible evidence that defendant sold warm air furnaces under the name YORK as early as 1933, and such evidence sustains the findings of the District Court in this respect. In 1938, plaintiff’s predecessor undertook the purchase and resale of some furnaces under the brands YORK- AIRE and YORK. Edward R. Walsh, a man with heating experience, was employed to organize a furnace and heat- ing department. In 1941, the venture of selling furnaces was abandoned. The heating equipment on hand was liqui- dated. An attempt was made to sell some of it to defend- ant. A former official of plaintiff’s predecessor attributed the failure of the heating venture in the following man- ner: “Well, our marketing was through our own dealers and branch offices who were unfamiliar with the heating field. They didn’t have any contract with the home builder end the residential market. ... And the dealers wercn't ioo enthused about getting into this new field... .’* On the other hand, there were some dealers of plaintiff who were already handling established furnace lines including defendant’s furnaces, In 1943, when York Ice Machinery Corporation obtained its federal registration for YORK (Reg. No. 403,923), it disavowed any use of YORK for furnaces and heating products, and stated a furnace is for “heating purposes and is widely different from air-conditioning apparatus,” and that “any possibility of confusion is non-existent.” The manufacture and sale by plaintiff of steam engines and boilers as well as heating coils in connection with some — 12a — air-conditioning devices, under the name of YORK, and all prior to 1933, the date when defendant commenced the manufacture of warm air furnaces, does not provide a sufficient basis for granting judgment to the plaintiff. Another reason why plaintiff should not be granted the relief requested is that it is guilty of laches. Plaintiff's predecessor, although a much larger company, was fully aware that defendant’s predecessor had applied the name YORK to its conversion burners which were used in fur- naces since 1922. It knew that defendant’s furnaces were advertised and sold under the name YORK since 1933. The manufacturing plants of plaintiff and defendant were located in close proximity to each other. Commencing as early as 1927, a number of plaintiff’s high officers and officials caused defendant’s oil conversion units to be in- stalled in furnaces in their homes. Yet, the record does not disclose a single objection by any of plaintiff’s prede- eessors to defendant’s use of YORK over a period of at least thirty to thirty-five years. The friendly and cordial relationship between plaintiff's and defendant’s predecessor for several decades may have cooled somewhat in 1954 when defendant refused to sell out to its larger neighbor, but that does not change the applicable law. This Court recently held in Seven-Up Company v. O-So- Grape Co., 283 F.2d 103, that prolonged and inexcusable laches bars injunctive relief in trademark cases. We stated, at page 106: “Laches does not necessarily constitute a conclusive and automatic bar to injunctive relief in trade- mark actions. However, in many instances, the delay may be so prolonged and inexcusable that it would be inequit- able to permit the plaintiff to seek injunctive relief as to future activities.’’ In the case at bar, we hold it would he inequitable for plaintiff to be awarded an injunction as to defendant’s use of the word YORK on oil conversion units and furnaces. We now pass to consideration of the judgment rendered in favor of the defendant on its counterclaim. It should —13a— be noted that defendant never registered the name YORK alone as to any of its products, In the 1950 registration, the words YORK and HEAT appear, the Ictters thereof arranged vertically. The words YORK and HEAT were separated by the letters Y/H. The design of the 1909 reg- istration was the same excepting the word “GAS” was substituted for “Y/H."’ Defendant's competitive conduct has not been entirely blameless. As an illustration, in 1936, when plaintiff had widely advertised ‘YORK leadership”’ in “air condition- ing’, defendant followed shortly thereafter with an adver- tisement asserting that “it remained for YORK to lead the industry’? with its “Winter Air Conditioner.” Defendant's advertising copied terms and phrases used in plaintiff’s advertising. Plaintiff had frequently adver- tised YORK quality. Thereafter, defendant advertised with reference to its products, “There is no substitute for YORK quality.’’ Since 1931, plaintiff had consistently ad- vertised “York Experience.” Thereafter, defendant ad. vertised as to its products, * York’s Experience.’’ Nevertheless, the record supports the District Court’s findings and holding that defendant has the exclusive right to use YORK on oil conversion burners and furnaces. Plaintiff‘s crash program of entering the heating markct by the sale of furnaces under the name of YORK did cause damage to the defendant. A complication, difficult of solution, is that in recent vears the air-conditioning industry and the heating indus- trv have come together to the extent that a unit is now manufactured which, in its capacity as a furnace, heats a home or other building in cool weather, while in warm weather, the same unit in its capacity as an air-conditioner, can cause cool air to pass through the ducts to the rooms of the building. Defendant has advertised that its furnaces are adapted to receive and utilize cooling units. In the injunction below, plaintiff was enjoined from selling any “heat generating products”’ in connection with any business which includes the name YORK. As hereto- —l4a— fore pointed out, ‘‘heat generating products”’ is a broad designation. Plaintiff should not be restrained from using heating eoils or units in its air-conditioning devices such as have previously been used by plaintiff or the air-condi- tioning industry. On the other hand, defendant should not be permitted to advertise its furnaces as air condi- tioners under the name YORK. The provisions of the decree pertaining to damages can- not be sustained in the form entered in the District Court. The judgment provides plaintiff shall pay defendant $2.- 280,000 for the amount of damages sustained by defend- ant resulting from plaintiff’s use of YORK for furnace and heating products. It also provides plaintiff shall account for and pay over to defendant all profits derived from plaintiff’s sale of furnace and heating products under the name and trademark YORK. It is not clear what part of the $2,280,000 allowed as damages is for defendant’s lost profits. The theory upon which this sum was determined was based on lost profits from lost sales. Plaintiff insists an award of both damages plus plaintiff’s profits permits a doubie or duplicate re- covery and is improper. Century Distilling Co. v. Contt- nental Distilling Corp., 3 Cir., 205 F.2d 140. Defendant has the burden of proving by competent evi- dence what its actual damages were. On the other hand, damages are not rendered uncertain because they cannot be caleulated with absolute exactness. It is sufficient if a reasonable basis of computation is afforded. Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 379. When defendant made its calculations as to damages, it gave no consideration as to the great proportionate in- crease in the sale of gas-fired furnaces. From 1948 to 1959, the period under consideration, sales of gas-fired units rapidly increased, while the sale of oil-fired furnaces remained relatively stable. In 1948, there were sold 143,075 oil units and 218,900 gas units. In 1958, there were 190,223 sales of oil units, but during the same period, 975,900 gas units were sold. — 15a — Without any evidence as to how many gas-fired units it sold after 1953, defendant says it is entitled to estimate its sales at 1.69 of the combined national oil and gas — unit sales, because this is the share of the national market - defendant held in the pre-infringement period. Defend- ant’s calculations and the judgment below fail to make any allowance or adjustment for the fact that the national market in 1959 was a different market than it was in the pre-infringement period. It is not reasonable for defend- ant to assume it was entitled to 1.66 cf a national market wherein the emphasis had shifted from a product pioneered by the defendant to a product to which it was a newcomer. There is also in the record, evidence of several inter- vening causes of defendant’s decline in business in 1953 aitributable to defendant or to causes other than plaintiff. Consideration xhould be given to these factors. As stated, the District Court was correct in awarding judgment in favor of the defendant on its counterclain. However, the remedy devised wes improper under the circumstances of this case. The injunction was too broad in its scope and should be revised to incorporate the sug- zestions previously considered in this opinion. The de- fendant’s damages must be recomputed in the light of the shift in consumer demand from oil-fired to gas-fired fur- naces, and any intervening causes responsible for the de- cline in defendant’s business. The defendant is not en- titled to an accounting to recover the plaintiff's profits. An accounting for an infringer’s profits is an cquitable remedy. The federal statute provides that the trademark owner’s right to recover damages, profits and costs is “subject to the principles of equity.”? 15 U.S.C. C1117. A finding of infringement does not, as a matter of right, en- title the owner to recover the infringer’s profits. William- son-Dickie Mfg. Co. v. Davis Mfg. Co., 3 Cir. 251 F.2d 924: Morgenstern Chemical Co. v. G.D. Searle &P€0., 3 Cir., 253 F.2d 390. — 16a — We have previously considered the fact that the de- fendant’s conduct has not been entirely blameless. Under the circumstances of this case, we feel that complete justice will be accomplished by limiting defendant’s remedy to an injunction and recovery of its actual damages. This case is, therefore, remanded to the District Court with instruc- tions to revise the injunction and recompute the damages on a reasonable basis in the light of this opinion. Tax- able attorney fees shall not be allowed. JUDGMENT for defendant is modified and the cause remanded for a recomputation of damages. —lja— Unitep States Court or APppPEALs For The Seventh Circuit Chicago 10, Illinois Wednesday, July 26, 1961 Before Hon. John S. Hastings, Chief Judge Hon. F. Ryan Duffy, Cireuit Judge Hon. Win G. Knoch, Circuit Judge BORG-WARNER CORPORA-) Appeal from the — a United States Dis. . 9 Plaintift-Appellant, trict Court for the ails si > Northern District of illinois, Eastern Division YORK-SH IPLEY, INC., Defendant-Appellee. } This cause came on to be heard on the transcript of the record from the United States District Court for the — Northern District of Illinois, Eastern Division, and was argued by counsel. On consideration whereof, it is ordered and adjudged by this court that the judgment of the said District Court in this cause appealed from be modified, and that this cause be and it is hereby, remanded to the said District Court with instructions to revise the injunction and _ re- compute the damages on a reasonable basis in the light of the opinion of this Court filed this day. Taxable at- torney fees shall not be allowed. It is further ordered and adjudged by this Court that the costs on appeal be equally divided between the parties. = Unitep States, Court or APPEALS For The Seventh Circuit Chicago 10, Illinois Wednesday, September 13, 1961 Before Hon. John S. Hastings, Chief Judge Hon. F. Ryan Duffy, Cireuit Judge Hon. Win G. Knoch, Circuit Judge BORG-WARNER CORPORA-) Appeal from the TION é; : ee United States Dis- Plaintiff-Appellant, trict Court for the No. 13211 - Northern District vs. weet : YORK-SHIPLEY, INC., a. Defendant-Appellee. } It Is Ordered by the Court that plaintiff-appellant’s petition for rehearing be, and the same is hereby, denied. It Is Further Ordered by the Court that defendant- appellee’s petition for rehearing and clarification be, and the same is hereby, denied; no taxable attorney fees ~~ shall be iaxed into this Court or in the District Court. — 19a — Unitep States Court or APPEALS For The Seventh Circuit Chieago 10, Illinois I, Kenneth J. Carrick, Clerk of the United States Court of Appeals for the Seventh Circuit, do hereby certify that the foregoing ........ pages contain a true copy of the Opinion, filed July 26, 1961; Judgment, entered July 26, 1961; Order denying petition for rehearing, entered Sep- tember 13, 1961 in: Cause No. 13211 BORG-WARNER CORPORATION, Plaintiff-Appellant, Vs. YORK-SHIPLEY, INC., Defendant-Appellee. - as the same remains upon the files and records of the United States Court of Appeals for the Seventh Circuit. In Testimony Whereof I hereunto subscribe iny name and affix the seal of said United States Court of Appeals for the Seventh Cireuit, at the City of Chicago, this eleventh day of October A.D. 1961. (Seal) /s/ Kenneth J. Carrick Clerk of the United States Court of Appeals for the Seventh Circuit. nA --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386420_1305%3A2. Public record. Not legal advice.