Opinion
No. 955.
October 30, 1963. On Rehearing January 15, 1964. Writ Granted March 11, 1964.
APPEAL FROM THIRTY-FIRST JUDICIAL DISTRICT COURT, JEFFERSON DAVIS PARISH, STATE OF LOUISIANA, HONORABLE MINOS D. MILLER, JR., J.
Plauche Stockwell, by Oliver P. Stockwell, Lake Charles, for plaintiff-appellant.
Knight Knight, by Herschel N. Knight, Jennings, for defendant-appellee.
Before FRUGÉ, SAVOY and CULPEPPER, JJ.
En Banc.
This is an appeal from the judgment of the district court denying injunctive relief and damages in a suit filed by plaintiff against defendant. The trial judge has summarized the facts in the instant case, and the only question before this Court is one of law. The facts as found by the trial judge are as follows:
"Straus Frank Company, owner of the trade name `Lake Auto Parts' is seeking to enjoin Curlin Brown from using the trade name `Lake Auto Supply' for Mr. Brown's business located in Lake Arthur, Louisiana. Both businesses sell auto parts. `Lake Auto Parts' sells primarily to wholesale accounts with a small volume to retail accounts. `Lake Auto Supply' sells primarily to retail accounts, with a small volume to wholesale accounts.
"`Lake Auto Parts' has one branch store in Lake Charles and another in Sulphur, Louisiana. The company plans to expand and locate one or more branch stores in Jefferson Davis Parish. `Lake Auto Parts' has always had its principal place of business in Lake Charles, Louisiana, but has employed a traveling salesman to call on accounts in Jefferson Davis Parish for many years. All of these accounts in Jefferson Davis Parish are wholesale accounts. The salesman responsible for the Jefferson Davis Parish business testified that he has five accounts in Lake Arthur; seven accounts in Welsh; a small number of accounts in Jennings, and one account in Thornwell. This salesman testified that the Lake Arthur customers are still purchasing from him, but that the volume has decreased.
"Plaintiff advertises its business in Jefferson Davis Parish by sending calendars, trade literature and memorandum pads to its customers. On each of these items plaintiff plainly stated that its business houses are located in Lake Charles and Sulphur. So far as the record shows plaintiff uses no other type of advertising.
"Defendant knew that plaintiff was operating under the name `Lake Auto Parts' when he decided to open his store in Lake Arthur using the name `Lake Auto Supply'. As soon as Mr. Van Norman, manager of plaintiff's business, knew that defendant had opened the Lake Arthur store with the name `Lake Auto Supply', Mr. Van Norman wrote to defendant requesting that defendant change the name of his Lake Arthur business. When defendant refused, this suit followed.
"Plaintiff brought evidence showing that the Lake Charles Post Office employees on several occasions routed defendant's mail to the plaintiff. In addition plaintiff proved that there were some four to six cases where supply houses erroneously charged plaintiff with defendant's purchases. Further, plaintiff proved that an employee of one of plaintiff's regular Lake Arthur customers asked if the `Lake Auto Supply' business in Lake Arthur was a branch of `Lake Auto Parts'. Plaintiff's salesman immediately answered this question, and there seems to have been no further confusion with this customer or with any of the other regular Jefferson Davis Parish customers.
"An employee of Halliburton, who was and still is one of plaintiff's customers, asked defendant's store manager if the `Lake Auto Supply' was connected with plaintiff's stores. Defendant's employee answered in the negative. Nevertheless the Halliburton employee purchased the needed item from defendant over the counter.
"This suit was filed April 6, 1962, and was tried on December 20, 1962. Since April, 1962, there has been no confusion such as has been above referred to either by the post office, by any of plaintiff's regular customers or by the general public trading with defendant.
"As has been noted above the extent of the trade activities of the plaintiff in Jefferson Davis Parish consists of calling on some 20 regular customers at their places of business in connection with wholesale sales. All of the orders taken were subsequently filled and delivered during the following week either by plaintiff's delivery truck which called once a week or by parcel post. In some instances the purchaser would go to Lake Charles to pick up parts."
It is the contention of counsel for defendant that when a party relies on a secondary or special meaning of a trade name, which by itself can never be the property of one exclusively, he must establish that the use by the defendant in that situation amounts to a false representation, expressed or implied, designed or incidental, that he is trading upon the plaintiff's name and thereby it is actually as a result of the use of the name or similar name alone that is causing plaintiff real or material harm, or that the continued use of the name can result in only harm to plaintiff's business by the result only of the use of plaintiff's trade name or a name similar thereto.
Plaintiff, on the other hand, takes the position that it is immaterial whether or not the defendant acted with fraudulent intent to harm plaintiff.
Counsel for defendant relies heavily on the case of Home Beverage Service v. Baas, 210 La. 873, 28 So.2d 481, to sustain his position; however, that case is distinguishable on its facts from the instant case.
This Court is of the opinion that the facts of the instant case are similar to those in Capehart v. Lund, D.C., 107 F. Supp. 10. In that case the plaintiff established a motor trucking business, operating his trucks between Anchorage and Seward, Alaska, and other cities. Later the defendant commenced operations between Anchorage and Seward and adopted the name of "Anchorage Freight Distributors". Plaintiff sought to enjoin the infringement of his trade name "Anchorage Freight Lines". The defendant contended that the words "Anchorage Freight" were geographical and descriptive of the services, and, hence, the use of them could not become the basis for the rights asserted by plaintiff. The court, in granting an injunction and upholding the contentions advanced by plaintiff, stated that the contention advanced by defendant was a well known limitation on the establishment of trademarks, but was not applicable to trade names, citing Sections 715 and 716, Restatement of Torts. The court held further that it is immaterial whether or not the defendant acted with fraudulent intent to harm the plaintiff, citing Section 717, comment (a), Restatement of Torts.
This Court is of the opinion that the use by defendant of the name "Lake Auto Supply", whereas plaintiff has used the name "Lake Auto Parts" for many years, is misleading to the public and injurious to plaintiff's business, and that an injunction should be granted in the premises.
Counsel for plaintiff has also asked for damages. After reading the record, this Court does not believe that it can award plaintiff damages in the instant case under the evidence adduced therein. Plaintiff is reserved the right to sue for damages in another action.
For the reasons assigned, the judgment of the district court is reversed, and judgment is hereby rendered granting plaintiff a permanent injunction enjoining defendant from using the name "Lake Auto Supply" or any other name similar to that of "Lake Auto Parts". Costs of this proceeding to be paid by defendant-appellee.
Reversed and rendered.
ON REHEARING
We granted a rehearing in the instant case because some of the members of this Court felt that our original majority opinion might be in conflict with the holding in Home Beverage Service v. Baas, 210 La. 783, 28 So.2d 481.
As the majority of this Court understands the Home Beverage Service case, supra, it follows the almost universally accepted jurisprudence that even though a trade name is merely descriptive of a business or a geographical area or feature, so that as a general rule such a trade name could not be monopolized in that particular market area, it is likewise true that where, through long use over a period of years, such a trade name has acquired a secondary meaning identifying it in the minds of the people in that market area with the plaintiff's particular business, the plaintiff may enjoin the use of such a name by another where such use would constitute unfair competition. The court in the Home Beverage case, supra, held that under the particular facts of that case the defendant was not guilty of unfair competition in using the name "Victory Home Beverage Service". The court pointed out that 95% of the orders received for beverages were received by telephone and that the two names would appear in different parts of the phone book. The court also noted that the signs on the delivery trucks and on the place of business clearly showed the word "Victory" which should not confuse the public and lead it to believe that the two businesses were the same.
In the present case the evidence shows that because "Lake Auto Parts" is so similar to "Lake Auto Supply" there was considerable confusion among the people living in the area as to whether this was the same business. We think this was the logical and probable result of the similarity of these two names, and that such confusion will probably continue in the future despite the suggestion that there was no evidence to show there had been any actual damage to plaintiff's business or confusion in the two names for several months before this suit was tried.
In the instant case there is no contention made by able counsel for defendant that the plaintiff must show some intentional fraud, deceit or misrepresentation. There are several Louisiana cases which hold squarely, following the general rule in other states, that proof of fraudulent intent is not required where the necessary and probable consequence of defendant's trade name is to deceive the public and pass off his business as that of the plaintiff. See Williams v. Ferguson, (La.App., 2 Cir., 1958), 104 So.2d 267, and the many cases cited therein. Furthermore, we find no authority to support any argument that the plaintiff must show he has actually lost business.
A general discussion of the nature and purpose of the doctrine of unfair competition is set forth in 87 C.J.S. Trade-Marks, Trade-Names, And Unfair Competition § 14, p. 246. As we understand it, the essence of unfair competition is that no one by the use of the same or a very similar trade name or by other conduct has the right to deceive a prospective purchaser into believing that he is buying the goods of another. A merchant does not have the right to avail himself of another's favorable reputation in order to sell his own goods. It is a matter of common business integrity.
In the instant case we cannot understand why Mr. Brown chose to use the name so similar to the trade name of the plaintiff if he did not want to deceive prospective purchasers. Furthermore, it is immaterial whether he actually intended to deceive the public or not because the public actually was deceived and confused, and we think this confusion will continue. Both the plaintiff and defendant are selling automobile parts and supplies at wholesale and retail in the same market area.
For the reasons herein assigned, our original opinion and decree are hereby reinstated and made the final judgment of this Court.
Original decree reinstated.
I cannot concur in the views expressed by the majority. In my opinion, the trial court correctly held that the plaintiff was not entitled to an injunction prohibiting the defendant from using the trade name "Lake Auto Supply" for his business located in Lake Arthur, Louisiana.
The term "Auto Supply" is not only different from "Auto Parts," but it also is descriptive of the type of business, and the plaintiff certainly has acquired no monopoly with regard to appellations similar to this in the territory served by it. Likewise, the term "Lake" is a geographical designation given to areas situated near a lake and towns named for a lake, such as Lake Arthur and Lake Charles.
The use of "Lake" in the trade name of a business is common in Lake Charles. Aside from the trade name of the present plaintiff ("Lake Auto Parts"), I counted twenty other businesses with "Lake" prefixes to their trade names in the March, 1963, Lake Charles city telephone directory, including such derivatives as "Lake City," "Lake Side," etc.
As the trial court found, the slight initial confusion resulting from the similarity of defendant's trade name with that of plaintiff's, was soon cleared up and, in fact, the plaintiff has not been and is not actually prejudiced by the defendant's adoption of this name for his own new business conducted in Lake Arthur, Louisiana.
Thus, even though it be conceded that plaintiff's well established business may have given its geographically-designated trade name a secondary meaning identifying it with the plaintiff's particular business, nevertheless the law of Louisiana does not, under the above facts, permit the plaintiff to obtain an injunction. As stated in Home Beverage Service v. Baas, 210 La. 873, 28 So.2d 481, 486, even though a plaintiff's geographically-designated trade name has acquired such a secondary meaning, the plaintiff cannot prevent defendant from using such trade name if "the defendant was not guilty of unfair competition, specifically, of any representation that the business establishment conducted by him was the establishment owned and conducted by the plaintiff."
In distinguishing the facts in the Home Beverage case, supra, from those in the instant suit the majority points out that in that case one of the reasons for denying injunctive relief was that the names of the two businesses "would appear in different parts of the phone book." They apparently have overlooked the fact that in the present suit the names of the two businesses involved will not appear in the same phone book at all, since these establishments are located in different cities. But, even if these two names should appear adjacent to each other in the same phone book the difference in the names alone should indicate that they designate and relate to separate businesses.
In my belief, therefore, the majority opinion of this court is in conflict with the controlling jurisprudence enunciated by the Louisiana Supreme Court in the Home Beverage case cited above, and this court thus is in error in reversing our trial brother who had followed that jurisprudence.
For these reasons, I respectfully dissent from the judgment rendered by the majority.