Opinion
8-27-1953
SCHWARTZ v. SLENDERELLA SYSTEMS OF CALIFORNIA, Inc. * Civ. 19671.
Samuel Maidman, Los Angeles, for appellant. Newlin, Holley, Tackabury & Johnson, and Hudson B. Cox, Los Angeles, for respondent.
SCHWARTZ
v.
SLENDERELLA SYSTEMS OF CALIFORNIA, Inc. *
Aug. 27, 1953.
Rehearing Granted Oct. 22, 1953.
Samuel Maidman, Los Angeles, for appellant.
Newlin, Holley, Tackabury & Johnson, and Hudson B. Cox, Los Angeles, for respondent.
ROBERT H. SCOTT, Justice pro tem.
Plaintiff appeals from an adverse judgment in an action in which he sought an injunction to restrain defendant corporation from using the name 'Slenderella'. The facts are not in dispute and both parties state that they are as follows:
Ever since July 13, 1939, appellant has been engaged in the business of selling women's apparel at retail at two locations in the City of Los Angeles, County of Los Angeles, State of California, operating under the tradenames 'Slenderella' and 'Slenderella of Hollywood'. Appellant specializes in and sells large and half-size women's apparel and accessories. Large-size garments are specially designed for the woman of more than average or standard proportions, and half-size are specially designed for the short, heavy-set woman.
On July 14, 1939, appellant filed a certificate in the office of the County Clerk of the County of Los Angeles, State of California, of doing business under said fictitious firm names pursuant to Sections 2466 and 2468 of the Civil Code of the State of California, and on August 2, 1944, and August 8, 1944, the Secretary of State of the State of California issued to appellant certificates of registration covering tradenames 'Slenderella' and 'Slenderella of Hollywood.'
Since 1939, appellant has consistently identified the goods sold by him by the use of said tradenames in local newspaper advertising, direct mail advertising to a list of approximately 17,500 customers, and by affixing labels to approximately fifty to sixty per cent of all his merchandise. By reason of appellant's experience and the great care exercised by him in his business and the high standards set by him under the said tradenames, he has established a good reputation, and his goods, wares and merchandise have become known to the users and prospective users thereof by the names 'Slenderella' and 'Slenderella of Hollywood'.
Respondent is a California corporation incorporated in the State of California on June 8, 1951, under the name 'Silooette Systems of California, Inc.' which name was changed to 'Slenderella Systems of California, Inc.' on or about January 14, 1952. Respondent is engaged in the business of operating slenderizing and weight reducing salons specializing in weight reduction, diet control and posture correction for women, with two branches in the City of Los Angeles, one in the City of Pasadena and one in the City of Beverly Hills, all within the County of Los Angeles, State of California.
Respondent is one of a number of affiliated companies operating in various parts of the United States under the tradename 'Slenderella Systems', and the earliest use of the tradename 'Slenderella' by any of the affiliated companies was after December 1, 1951. One of the affiliated companies, Slenderella Systems, Inc., a Delaware corporation, acquired by assignment a United States patent trademark 'Slenderella' previously registered by one Erika Schneider under Registration No. 386,714, dated April 22, 1941. This trademark registration was adopted and used for sugarless foods for health purposes, specifically, candies.
Respondent has used the tradename 'Slenderella' by permission of its affiliated company, Slenderella Systems, Inc., a Delaware corporation, since January 2, 1952, which is approximately two and one-half months prior to the filing of the complaint herein.
Prior to appellant's use of the tradename 'Slenderella', it had been used and abandoned by one Henry Semaria in connection with certain retail stores located in Sacramento and San Francisco, California. There was also one other prior use of the tradename 'Slenderella' by one J. P. Schwarze, of Los Angeles, California, who, in the year 1933, was engaged in the manufacture of wheat flour. There is no showing that the tradename 'Slenderella' was used after that time except by the appellant, and at the time of the trial only appellant and respondent were using said tradename in California. Since respondent commenced the use of the tradename 'Slenderella', said tradename has been advertised by it in the metropolitan newspapers of Los Angeles, and up to May 31, 1952, respondent had spent a sum in excess of $15,000 for such advertising. Respondent's affiliated companies or corporations maintain uniformity in their general advertising throughout the various states in which they operate.
Respondent's business consists of a slenderizing course for women, and it sells no women's apparel or clothing accessories, nor does it manufacture any thereof, or own or operate any dress shops or women's apparel shops.
Appellant is not engaged in the business of weight reduction, diet control or posture correction.
Since the inception of respondent's business in California under the tradename 'Slenderella', the following incidents have occurred:
1. Employees in appellant's establishment have received numerous telephone calls intended for the respondent.
2. That the said misdirected telephone calls have continued since the listing of respondent's name in the Central Telephone Directory of Los Angeles.
3. That many of the appellant's customers and prospective customers have inquired as to appellant's ownership or connection with respondent's establishments, which requires the taking of time in the explanation by appellant and his employees to these inquiries.
4. That certain of appellant's customers and prospective customers have gone to the respondent's locations in Hollywood and Beverly Hills believing that appellant had opened women's clothing shops at the said locations.
5. That customers and prospective customers have stated to appellant and his employees that since appellant is in the weight-reducing business, they would rather first reduce their weight before purchasing large or half-size apparel from the appellant.
6. That the appellant and his employees have been asked on recurring occasions to quote prices for reducing treatments, necessitating the taking of time to make explanations.
7. That the appellant is considering opening a branch store in Beverly Hills upon the termination of his lease of the Hollywood store.
8. That some mail, not including numbered street addresses, intended for the respondent's establishments, have been received by appellant.
The trial court made findings consistent with the facts above stated and found in addition thereto that confusion arising from similarity of names resulted principally from inattention and carelessness on the part of persons so confused. It further found:
'9. The respective businesses operated by plaintiff and defendant respectively are non-competitive and are in unrelated fields and the use by defendant of the trade name 'Slenderella' in the metropolitan area of Los Angeles and elsewhere has not occasioned damage or injury to the plaintiff and has not resulted in the deception or misleading of the public.
'10. Notwithstanding that at the time of the adoption and use of said name in California by defendant it was advised and knew of plaintiff's use of said name in connection with his business, defendant's adoption and use of the trade name 'Slenderella' was in good faith and without design or intent to capitalize upon plaintiff's prior use of said name in his non-competitive and unrelated business.'
It then concluded:
'2. That the use by defendant of the trade name 'Slenderella' does not infringe upon plaintiff's use of said name in his non-competing and unrelated business and does not constitute an unfair or improper use of said name.
'3. That plaintiff's use of the name 'Slenderella' has not resulted in its acquiring any secondary meaning in the mind of the public.
'4. That plaintiff is not entitled to protection against the use of the trade name 'Slenderella' by defendant in connection with its slenderizing and reducing treatment business, including the sale and distribution to its patrons of mints and bulking compounds under said trade name', and rendered judgment accordingly.
In urging a reversal of the trial court's decision in the instant case, plaintiff declares: '* * * it must be borne in mind that even though the goods and services of the appellant and respondent are dissmilar, nevertheless each of the parties caters to the same class of the public, namely, women who do not enjoy the benefits of a standard figure and who must either wear large or half-size apparel or take reducing courses with the hope of acquiring a standard size figure. Notwithstanding the fact that competition need not be proved, it is not difficult to perceive that both appellant and respondent are competing for the same purchasing dollar.'
The foregoing must be considered, however, in the light of the allegation in plaintiff's complaint: '* * * that plaintiff and his business have been the subject of ridicule and derision by reason of the apparent inconsistency in having a business catering to the apparel needs of larger-sized women, while at the same time conducting a business specializing in the weight reduction of larger-sized women.'
There is an obvious difference in the state of mind of the woman resolutely seeking a reducing salon and one who accepts ample proportions as reasonable and proper and only requiring suitable clothing. Use of the same tradename by the parties in this case could not reasonably be expected to change the mind of a prospective client or customer. Where weight reduction was sought, plaintiff's wares would not satisfy, and when larger sized apparel was desired, a weight reducing salon would be no substitute.
In the interest of fair dealing, courts of equity will protect the person first in the field doing business under a given name to the extent necessary to prevent deceit and fraud upon his business and upon the public. No inflexible rule can be laid down as to what conduct will constitute unfair competition. Each case is, in a measure, a law unto itself. The universal test question is whether the public is likely to be deceived. Winfield v. Charles, 77 Cal.App.2d 64, 71, 175 P.2d 69; see also American Distilling Co. v. Bellows & Co., 102 Cal.App.2d 8, 25, 226 P.2d 751; MacSweeney Enterprises v. Tarantino, 106 Cal.App.2d 504, 512, 235 P.2d 266.
Section 14400, Business and Professions Code, provides: 'Any person who has first adopted and used a trade name, whether within or beyond the limits of this State, is its original owner.' H. Moffat Co. v. Koftinow, 104 Cal.App.2d 560, 564, 232 P.2d 15. The rules of unfair competition are based, not alone upon the protection of a property right existing in the complainants, but also upon the right of the public to protection from fraud and deceit. American Philatelic Society v. Claibourne, 3 Cal.2d 689, 698, 46 P.2d 135.
While '* * * a similarity which would be likely to deceive or mislead an ordinary unsuspecting customer is obnoxious to the law', Academy of Motion Picture, etc., v. Benson, 15 Cal.2d 685, 692, 104 P.2d 650, 653, the record in the case now before us does not show that prospective customers of plaintiff were deceived or misled into going to defendant's salon and taking reducing treatments when their purpose and intention was to obtain larger sized garments. There is no intimation that they could secure such garments or any wearing apparel from defendant or would be led away from the plaintiff's places of business when the momentary confusion as to identity was cleared away, as it inevitably would be.
'* * * before equity will grant its aid there must be some connection between the products in question * * * a mere possibility of confusion of identity is not sufficient, * * * there must exist a reasonable likelihood of confusion, since there is always a remote possibility of some confusion arising from the use of the same word in connection with different businesses', 52 Am.Jur. p. 579. The conclusion of the trial court on this aspect of the case is well grounded in fact, and the inferences based on those facts no doubt were warranted by a consideration of the natural and usual propensities and passions of prospective customers, 'the course of business' and 'the course of nature.' Section 1960, subd. 2, Code of Civ.Proc.
In the case of Cole of California v. Grayson Shops, 72 Cal.App.2d 772, at page 776, 165 P.2d 963, 965, cited by plaintiff, we find a penetrating judicial analysis of one aspect of feminine psychology. This might be regarded as supporting our conclusion that prospective customers will decide which of the two parties to this action they will patronize after they have given intelligent consideration to the respective merits of the sartorial luxury of extra large garments and of the Spartan demands of a weight reducing program, and not because of 'a passing whimsical emotion'.
Plaintiff expresses great concern over the probability which he forsees that defendant through the 'whittling away' or 'dilution' process will depreciate and destroy a valuable property right of plaintiff and urges that this property right is entitled to protection.
'Where the goods, services, or businesses of the litigants are not in actual competition, a junior appropriator of a trademark or tradename or trade symbols ordinarily is not actually diverting custom and trade from the complaining party. Consequently it has been recognized that in this situation diversion of trade and the resulting direct loss of sales or actual monetary loss cannot be the basis of relief. However, the courts have also recognized that diversion of trade and the attendant direct loss of sales is not the only injury which may result, but that other injuries may follow, such as an injury to the complaining party's reputation and goodwill, the forestalling of the normal potential expansion of his business, or the 'whittling away' or 'dilution' of his trademark or tradename or symbols. * * *
'Where the goods, services, or businesses of the litigants are not in actual competition, the right to injunctive relief has frequently been rested upon the necessity of preventing injury to the complaining party's reputation and good will.' (Citing cases.) 148 A.L.R. 66.
'The issue in each case is whether the goods, services or businesses of the actor (defendant) and of the other (plaintiff) are sufficiently related so that the alleged infringement would subject the goodwill and reputation of the other's (plaintiff's) trademark or tradename to the hazards of the actor's (defendant's) business.' Restatement of Torts, Vol. 3, p. 599. 'It is easy to visualize', plaintiff asserts, 'that should financial difficulties beset the junior appropriator (defendant)--which is always a possibility in these fast-moving and changing times--with consequent public notoriety, the good name established by the senior user (plaintiff) would be adversely affected. This, a court of equity should seek to prevent.'
The trial court had before it plaintiff's business record as stated by his own counsel:
'That for the year 1947 the gross volume was $74,238.83; the advertising expenses were $3,430.21; that the net profits for that year were in the sum of $6,073.43.
'That the sales for the year of 1948 were in the sum of $112,925.80; the expenditure for advertising was $4,399.66; and net profit for the period was $3,590.54.
'That the sales for 1949 were in the sum of $96,664.47; there were advertising expenses during that year of $2,069.65 and the net loss was $511.50.
'That for the period 1950 the figures show sales of $88,567.66; advertising expenditures of $1,868.91; and a profit for the period of $441.65.
'The statement for the period ending December 31, 1951, shows sales of $89,160; advertising expenditures of $1,488.27; and net profit for the period of $3,815.72.'
Defendant discloses that for the first five months of 1952 defendant's businesses spent $15,145.28 for advertising. On the record before it the trial court was justified in concluding that there was no sufficient evidence to show defendant's activities would prove detrimental to the good name and reputation of plaintiff because of economic instability of defendant.
As another matter which he believes should be considered, 'appellant (plaintiff) contends that the tradename 'Slenderella' is a fancilful and distinctive word; it is not generic or geographic.' See 24 Cal.Jur. 618 et seq.; 52 Am.Jur. 542, Sec. 56. He also urges that the names used by plaintiff have 'acquired a secondary meaning, particularly in Southern California where are located the respondent's establishments'. See 52 Am.Jur. 554, Sec. 72; 63 C.J. 393 et seq. These contentions find their answer in the adverse determination by the trial court on all of the issues raised by plaintiff and covered by the trial court's findings of fact and conclusions of law, and its specific holding as to the latter point 'that plaintiff's use of the name 'Slenderella' has not resulted in its acquiring any secondary meaning in the mind of the public'.
As part of his closing argument, plaintiff's counsel was permitted to file with the record on appeal a thoughtful article entitled 'Injunctive Protection of Trade Names in California', appearing in the May, 1953, issue of 'Dictum', published by Southwestern University Law Students Association. We have considered the authorities cited therein and the many other cases and textual analyses offered for our consideration by both parties, in addition to those mentioned above.
Our conclusion is that the findings of the trial court and judgment based thereon are correct both as to facts and as to law applicable thereto.
Judgment affirmed.
WHITE, P. J., and DORAN, J., concur. --------------- * Subsequent opinion 271 P.2d 857.