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Allied Maintenance Corp. v. Allied Mechanical Trades, Inc.

Court of Appeals of the State of New York
Oct 18, 1977
42 N.Y.2d 538 (N.Y. 1977)

Summary

holding that "to merit protection [under the anti-dilution law], the plaintiff must possess a strong mark"

Summary of this case from NYcityVAN, LLC v. Thomas

Opinion

Argued September 8, 1977

Decided October 18, 1977

Appeal from the Appellate Division of the Supreme Court in the First Judicial Department, PELHAM ST. GEORGE BISSELL, 3RD, J.

Emanuel Dannett, Robert I. Gosseen and Barbara E. Schlain for appellant. Howard C. Amron for respondent.


We are called upon today to decide whether the trade name "Allied Maintenance" is entitled to protection pursuant to section 368-d of the General Business Law — commonly referred to as the anti-dilution statute.

The plaintiff, Allied Maintenance Corporation, has been in business, in one form or another, since 1888. Throughout the many years since its inception, Allied Maintenance has concentrated the scope of its services upon the cleaning and maintenance of large office buildings. The defendant, Allied Mechanical Trades, Inc., a corporation organized in 1968 as a successor to Controlled Weather Corporation, is engaged primarily in the installation and repair of heating, ventilating and air-conditioning equipment.

Alleging that the defendant performed maintenance services identical to those it performed, Allied Maintenance brought this action to enjoin Allied Mechanical from operating under the name "Allied" or "Allied Mechanical Trades, Inc.", or using the word "Allied" in any way in connection with its business. The trial court granted the injunction, finding that the parties were actual and potential competitors in the cleaning and maintenance industry in the metropolitan New York City area and that the auditory and visual similarity between their names created a likelihood of confusion. On this basis, the court concluded that defendant's use of the name Allied Mechanical would result in irreparable injury to plaintiff's reputation, good will, and proprietary business interests, and would thus constitute unfair competition. The Appellate Division reversed, however, finding an absence of either competition or confusion, actual or potential. The court concluded that "no user of the services of either party has been or may probably be confused or deceived by any similarity in the names of the parties." ( 55 A.D.2d 865, 866.)

In addition to the protection of trade-marks and trade names afforded by the traditional actions for trade-mark infringement and unfair competition, New York, as well as a number of other States, has adopted an anti-dilution statute. (General Business Law, § 368-d.) This statute provides: "Likelihood of injury to business reputation or of dilution of the distinctive quality of a mark or trade name shall be a ground for injunctive relief in cases of infringement of a mark registered or not registered or in cases of unfair competition, notwithstanding the absence of competition between the parties or the absence of confusion as to the source of goods or services." (Emphasis added.) The purpose behind the enactment of this statute was the prevention of trade-mark or trade name dilution — i.e., "the whittling away of an established trade-mark's selling power and value through its unauthorized use by others upon dissimilar products." (NY Legis Ann, 1954, p 49 [emphasis added].) In the absence of a statute of this nature, a plaintiff seeking to prohibit the use of a trade name by another would be required to frame his complaint within the strictures of an action for either trade-mark infringement or unfair competition. A brief review of the elements of these actions is useful in interpreting the legislative intent behind the enactment of section 368-d.

(Ark Stat Ann, § 70-550; Cal Business Professional Code, § 14330; Conn Gen Stat Ann, § 35-11i, subd [c]; Del Code, tit 6, § 3313; Fla Stat Ann, § 495-151; Idaho Code, § 48-512; Ill Rev Stat, ch 140, § 22; Iowa Code Ann, § 548.11, subd 2; Mass. Gen Laws Ann, ch 110B, § 12; Mo Ann Stat, § 417.061; Neb Rev Stat, § 87-122; N.H. Rev Stat Ann, § 350-A:12; NM Stat Ann, § 49-4-11.2; Ore Rev Stat, § 647.107; RI Gen Laws, § 6-2-12.) Although minor differences in wording exist, each of these statutes is a substantive duplicate of New York's anti-dilution statute.

Historically, two causes of action have existed to protect the user of a trade-mark or trade name from its improper use by another — viz., trade-mark infringement and unfair competition. Trade-mark infringement developed as the remedy designed to protect technical trade-marks — i.e., those marks which were arbitrary, fanciful or coined. (See 3 Callman, Unfair Competition, Trademarks and Monopolies [3d ed], § 66.1.) Trade-marks such as "Kodak", "Xerox", "Exxon" and "Coke" would fall within this category. As the law evolved, the protection provided by an action for trade-mark infringement was supplemented by the formulation of a broader remedy — an action for unfair competition. (See Dell Pub. Co. v Stanley Pub., 9 N.Y.2d 126, 133.) This remedy was intended to protect nontechnical, common-law trade-marks — marks used although not registered — as well as trade names. (1 Callman, Unfair Competition, Trademarks and Monopolies [3d ed], § 4.1.)

At one time fine distinctions existed between trade-marks, technical and nontechnical, and trade names. Only a technical trade-mark could be registered and protected via an action for infringement. But today, it is recognized that nontechnical marks and trade names are also registrable and can be protected in an action for infringement. (3 Callman, Unfair Competition, Trademarks and Monopolies, [3d ed], § 66.1.) However, since a trade name or nontechnical trade-mark cannot claim the procedural advantages (see Dell Pub. Co. v Stanley Pub., 9 N.Y.2d, at p 133, supra) afforded a technical mark, it is necessary to show in an action for infringement that the name or mark has acquired a secondary meaning. Secondary meaning can be established by showing that notwithstanding the absence of an arbitrary, fanciful or coined expression, a trade-mark or trade name has, through exclusive use and advertising by one entity, become so associated in the mind of the public with that entity or its product that it identifies the goods sold by that entity and distinguishes them from goods sold by others. (Truck Equip. Serv. Co. v Fruehauf Corp., 536 F.2d 1210, 1219, cert den 429 U.S. 861; Shoppers Fair of Ark. v Sanders Co., 328 F.2d 496, 499; Merriam Co. v Saalfield, 198 F 369, 373; Liberty Mut. Ins. Co. v Liberty Ins. Co. of Tex., 185 F. Supp. 895, 903.)
In addition to the erosion of technical distinctions in the theory of infringement, the gravamen of an action for unfair competition has also undergone a liberalization. At one time it was necessary to show in an action for unfair competition that plaintiff's trade-mark or trade name had acquired a secondary meaning. Gradually, courts have begun to recognize that, in essence, an action for unfair competition turns not upon the acquisition of a secondary meaning, but upon whether the acts of the defendant can be characterized as unfair. (See International News Serv. v Associated Press, 248 U.S. 215; Sample, Inc. v Porrath, 41 A.D.2d 118, affd 33 N.Y.2d 961.)

Today, in an action for trade-mark infringement brought pursuant to either New York (General Business Law, § 368-b) or Federal law (Lanham Act, § 32, subd [1], US Code, tit 15, § 1114, subd [1]), it is necessary to show that the defendant's use of the trade-mark is likely to cause confusion, mistake or to deceive; actual confusion need not be shown. (See Dell Pub. Co. v Stanley Pub., 9 N.Y.2d, at p 134, supra; James Burrough Ltd. v Sign of Beefeater, 540 F.2d 266, 274; Bunn Co. v AAA Replacement Parts Co., 451 F.2d 1254, 1261; General Mills v Regnery Co., 421 F. Supp. 359, 361; Chips `n Twigs v Chip-Chip, 414 F. Supp. 1003, 1013.) Similarly, it has been held that in an action for unfair competition a showing of a likelihood of confusion, rather than actual confusion, is all that is required to state a cause of action. (See Dell Pub. Co. v Stanley Pub., 9 N.Y.2d, at p 132, supra; Avon Shoe Co. v David Crystal, Inc., 279 F.2d 607, 614; Field Enterprises Educ. Corp. v Grossett Dunlap, 256 F. Supp. 382, 390.)

Since an action for infringement as well as an action for unfair competition both require a showing that the public is likely to confuse the defendant's product or service with that of the plaintiff, relief may be difficult to secure in situations in which the parties are not in competition, nor produce similar products or perform similar services. It is for this reason that section 368-d specifically provides that an injunction may be obtained notwithstanding the absence of competition or confusion.

Generally, courts which have had the opportunity to interpret an anti-dilution statute have refused to apply its provisions literally. New York courts, State and Federal, have read into the statute a requirement of some showing of confusion, fraud or deception. (See, e.g., Cue Pub. Co. v Colgate-Palmolive Co., 45 Misc.2d 161, affd 23 A.D.2d 829; King Research v Shulton, Inc., 324 F. Supp. 631, affd 454 F.2d 66; Geisel v Poynter Prods., 295 F. Supp. 331; but see National Lampoon v American Broadcasting Cos., 376 F. Supp. 733 , affd 497 F.2d 1343.)

Judicial hesitance to enforce the literal terms of the anti-dilution statute has not been limited to New York. In Illinois, for example, some courts have gone so far as to declare the statute inapplicable where the parties are competitors and a likelihood of confusion does exist. These decisions were premised upon the belief that a plaintiff who can frame his complaint under a theory of infringement or unfair competition — albeit unsuccessfully perhaps — should not succeed under a dilution theory. (See Filter Dynamics Int. v Astron Battery, 19 Ill. App.3d 299, 314-315; Edgewater Beach Apts. Corp. v Edgewater Beach Mgt. Co., 12 Ill. App.3d 526, 534; Alberto-Culver Co. v Andrea Dumon, Inc., 466 F.2d 705, 709.) However, one court in Illinois has interpreted the anti-dilution statute literally, reasoning that unless recovery for dilution is permitted in the absence of competition or confusion the statute adds nothing to existing law. (Polaroid Corp. v Polaraid, Inc., 319 F.2d 830, 836-837.) This approach has also been taken in Massachusetts. (See, e.g., Tiffany Co. v Boston Club, 231 F. Supp. 836, 844; Clairol, Inc. v Cody's Cosmetics, 353 Mass. 385, 391.)

Notwithstanding the absence of judicial enthusiasm for the anti-dilution statutes, we believe that section 368-d does extend the protection afforded trade-marks and trade names beyond that provided by actions for infringement and unfair competition. The evil which the Legislature sought to remedy was not public confusion caused by similar products or services sold by competitors, but a cancer-like growth of dissimilar products or services which feeds upon the business reputation of an established distinctive trade-mark or name. Thus, it would be of no significance under our statute that Tiffany's Movie Theatre is not a competitor of, nor likely to be confused with Tiffany's Jewelry. (See N Y Legis Ann, 1954, p 50, citing Tiffany Co. v Tiffany Prods., 147 Misc. 679, affd 237 App. Div. 801, affd 262 N.Y. 482. ) The harm that section 368-d is designed to prevent is the gradual whittling away of a firm's distinctive trade-mark or name. It is not difficult to imagine the possible effect which the proliferation of various noncompetitive businesses utilizing the name Tiffany's would have upon the public's association of the name Tiffany's solely with fine jewelry. The ultimate effect has been appropriately termed dilution.

Although section 368-d does not require a showing of confusion or competition to obtain an injunction, it does require a "likelihood of injury to business reputation or of dilution of the distinctive quality of a mark or tradename." (Emphasis added.) The statute prohibits any use of a name or mark likely to dilute the distinctive quality of a name in use. To merit protection, the plaintiff must possess a strong mark — one which has a distinctive quality or has acquired a secondary meaning which is capable of dilution. Courts interpreting Massachusetts' anti-dilution statute — applying its terms literally — have required a showing that the trade-mark or name to be protected is either unique or has acquired a secondary meaning before issuing an injunction. (See, e.g., Skil Corp. v Barnet, 337 Mass. 485, 491; Mann v Parkway Motor Sales, 324 Mass. 151, 157.)

Turning to the case before us, it is quite apparent that the name "Allied" is a weak trade name. Rather than being distinctive, arbitrary, fanciful or coined, it is, in essence, generic or descriptive. Although the name "Allied" bespeaks of more originality than "maintenance", it is nevertheless a common word in English usage today. There is nothing in the name "Allied Maintenance" itself which indicates that it is an inherently strong trade name susceptible to dilution. (See Dell Pub. Co. v Stanley Pub., 9 N.Y.2d, at p 136, supra; Esquire, Inc. v Esquire Slipper Mfg. Co., 243 F.2d 540, 543; Exquisite Form Inds. v Exquisite Fabrics of London, 378 F. Supp. 403, 415.) Nor can it be said that the name Allied Maintenance has acquired a secondary meaning. Plaintiff seeks to prevent the defendant from using the word "allied" in any connection with its business. To establish secondary meaning it must be shown that through exclusive use and advertising by one entity, a name or mark has become so associated in the mind of the public with that entity or its product that it identifies the goods sold by that entity and distinguishes them from goods sold by others. (Truck Equip. Serv. Co. v Fruehauf Corp., 536 F.2d, at p 1219, supra.) A quick glance at the New York City phone directories will reveal the existence of at least 300 business entities in the metropolitan area incorporating the word "allied" in their trade name. In light of the large number of business entities using the generic term allied in their trade name, it cannot be said that the name "allied" has acquired a secondary meaning. We remain unconvinced that the public associates the word "allied" with the plaintiff's cleaning and maintenance service.

In sum, although section 368-d should be interpreted literally to effectuate its intended purpose — protection against dilution — only those trade names which are truly of distinctive quality or which have acquired a secondary meaning in the mind of the public should be entitled to protection under the anti-dilution statute. "Allied Maintenance" cannot be said to have attained this stature.

Accordingly, the order of the Appellate Division should be affirmed.


I dissent, voting for a reversal of the Appellate Division order and reinstatement of the judgment of Trial Term granting an injunction in favor of plaintiff.

The majority's analysis of section 368-d of the General Business Law, it is respectfully submitted, imposes a narrow, overly technical gloss on its terms and, in effect, dilutes the "anti-dilution" statute. For the reason that future litigants may suffer from this interpretation, a broader view is needed and, in my opinion, was intended.

In interpreting this legislation, the court should not overemphasize the importance of a memorandum in support of this statute (see N Y Legis Ann, 1954, pp 49-51). That writing describes the author's view of the purpose of the proposed legislation and enumerates various problems in the area of dilution of a trade name or trade-mark. Dilution of a trade name through sales of dissimilar products is illustrated by somewhat fanciful examples such as "Buick aspirin tablets", "Schlitz varnish", "Kodak pianos", and "Bulova gowns" (p 49). Indeed, that dilution can occur even in the case of dissimilar products, as the memorandum notes (p 50), has long been recognized by our common law which granted the right to enjoin the use of another's name even in the absence of competition (see, e.g., Tiffany Co. v Tiffany Prods., 147 Misc. 679, 681, affd 237 App. Div. 801, affd 262 N.Y. 482). Nevertheless, if the statute was intended to "codify the State common law concerning dilution" (NY Legis Ann, 1954, p 49; see, also, 3 N.Y. Law Forum, 313, 316), there is no basis for restricting its application in the manner suggested by the majority.

Dilution does not occur only in the case of a name that is widely known. To be sure, the name Tiffany would be diluted if many noncompeting businesses used that name. However, a less well-known name can also be diluted, perhaps in a more harmful and direct manner. And dilution can occur in instances where there is competition, though in that instance a more appropriate remedy will ordinarily be found under general principles of unfair competition. The difficult case is where a specialized business, with a generic name used in other unrelated businesses, is used by a relatively small segment of the public who rely on its name. The problem occurs when that business is confronted with a newer company, bearing the same or a similar name, engaging in a field that, while perhaps noncompeting, is so closely related to that of the more established business that its customers will identify its name with the newcomer. This is such a case.

It is asserted that the legislative intent was to remedy "not public confusion caused by similar products or services sold by competitors, but a cancer-like growth of dissimilar products or services which feeds upon the business reputation of an established distinctive trade-mark or name" (p 544). It is then concluded that Allied is not sufficiently distinctive but rather is "a weak trade name" (p 545). But the terms of the statute do not require this interpretation and the protection it affords should be available to plaintiff based on the facts of this case.

While the trial court determined that plaintiff and defendant are actual and potential competitors, the Appellate Division majority found that the parties are not competitors in their own peculiar specialties nor are they likely to be. Whichever view of the facts one takes, however, it is apparent that the businesses are closely related. There is no basis in the statutory language for concluding that the enactment was not intended to provide a remedy for confusion caused by similar (though perhaps not actually competing) services such as these. The statute provides a remedy "notwithstanding the absence of competition" but does not mandate that in order to benefit from its provisions there must be no competition or dissimilar services, as urged to the contrary. Therefore, if plaintiff's name is of a distinctive quality, it is entitled to a remedy under the anti-dilution statute.

It is wrong to conclude that the name Allied Maintenance is not "an inherently strong trade name susceptible to dilution" (p 545). Of course its name is not as unique as other names held capable of dilution, but it is, to a limited audience, as distinctive as many others. The word Allied is a generic term but, as the trial court determined, that name has long been associated by the public, including customers and competitors in the building cleaning and maintenance industry, with plaintiff and its subsidiaries. Even a generic or descriptive name may acquire a secondary meaning in a given circumstance (see Columbia Broadcasting System v Columbia of N.Y., 97 N.Y.S.2d 455, affd 277 App. Div. 856; Metropolitan Opera Assn. v Pilot Radio Corp., 189 Misc. 505, 508 [SHIENTAG, J.]). That plaintiff's name is not distinctive enough to allow it to prevent its use by others in noncompeting industries should not be a ground for allowing one in a closely related business to dilute the distinctive quality of its name in its field.

The majority opinion may be read as limiting the statute in question to the protection of only the most well-known names, such as Tiffany, of which there are few, from dilution by noncompeting products or services. The common law of the State has not so narrowed the protection afforded to less unique names and the fact that the statute operates even in the absence of competition does not, as noted, mean that it should have no effect where there is potential, if not actual, competition. A good illustration of this point is Long's Hat Stores Corp. v Long's Clothes ( 224 App. Div. 497). There, the plaintiff conducted a business of selling retail hats and haberdashery and, although it had discontinued its sales of clothing, it declared an intention to resume that branch of its business. The plaintiff there had developed a trade name and had a number of retail stores to which customers were attracted by the name "Long's". Some 22 years later, an individual engaged in the retail clothing business incorporated a business which maintained a retail clothing shop called "Long's Clothing." In granting an injunction to protect plaintiff's name, the Appellate Division reasoned (p 498): "In this case the plaintiff is damaged because the articles sold by the defendant are so closely related to those presently sold by the plaintiff and so identical with those which the plaintiff has sold and intends to sell in the future, that there is direct appropriation of the plaintiff's good will. In the enjoyment of its trade name the plaintiff is to be protected not only with respect to the merchandise it presently sells, but also with respect to that which the public would believe, through the deception practiced by the defendant, that the plaintiff was selling. When a trade mark has been used by the owner and by another on goods of the same class, `though different in species, the question whether they are so closely related — so near akin — as to be regarded as having the "same descriptive properties' arises."' (Rosenberg Bros. Co. v. Elliott, 7 F. [2d] 962, 964.)"

The circumstances here are closely analogous. The name Allied, like the name Long's, is not so unique that all would know its business, but it is known to a segment of the public that makes use of the service of cleaning and maintenance of buildings. After plaintiff was in business for many years, defendant entered into a related area and, depending upon whether one accepts the view of the Appellate Division majority or the trial court, may provide in some instances the same services. The use of a name associated with a particular business by one in a closely related field is a dilution of a less well-known name and is of no less significance to the particular plaintiff than use of an extremely well-known trade name by a totally unrelated business. This is the rationale underlying the holding in Long's (supra), a case that has been regarded as a forerunner of the anti-dilution theory (see N Y Legis Ann, 1954, p 50; Tiffany Co. v Tiffany Prods., 147 Misc, at p 681, supra). Section 368-d of the General Business Law was intended to codify cases such as Long's and that is why the statute should be applicable here.

Plaintiff should be granted the relief it seeks because, as a result of the similarity of names, those using defendant's services may well be confused as to the source. But the cause of action would not necessarily fail even if the two could be distinguished. Under the statute recovery is allowed even in "the absence of confusion" and, despite any suggestion to the contrary, this State's appellate courts have not expressed acceptance of any reading into the statute of a requirement of some showing of confusion (see Cue Pub. Co. v Colgate-Palmolive Co., 23 A.D.2d 829, affg on more limited grounds 45 Misc.2d 161 [cited by majority, p 544]).

To conclude, prior to enactment of the statute in question, in cases of this sort it was not determinative that a generic or descriptive name was so commonly used that the plaintiff could not prevent its use by unrelated businesses. For example, an injunction was granted against another business' use of the name Columbia, a word that, like Allied, is commonly found in the title of many businesses (see, e.g., Columbia Broadcasting System v Columbia of N.Y., 277 App. Div. 856, supra; see, also, Metropolitan Opera Assn. v Pilot Radio Corp., 189 Misc. 505, supra). Moreover, the prestatutory cases recognized that a trade name should be protected from businesses that offer similar products or services (see Long's Hat Stores Corp. v Long's Clothes, 224 App. Div. 497, supra), and that is the situation faced by plaintiff in this matter. Section 368-d of the General Business Law was intended to make clear the broad reach of our State's case law, which protected trade names even in the absence of competition, but, as noted in the memorandum relied on by the majority as indicative of the legislative intent, the statute is "essentially * * * a codification of common law" (NY Legis Ann, 1954, p 50). Therefore, interpreting the statute in light of the State's common law, it is submitted that under the circumstances of this case plaintiff is entitled to the relief it seeks. Accordingly, for the reasons stated, the order of the Appellate Division should be reversed.

Judges GABRIELLI, JONES and FUCHSBERG concur with Judge JASEN; Judge COOKE dissents and votes to reverse in a separate opinion in which Chief Judge BREITEL and Judge WACHTLER concur.

Order affirmed, with costs.


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Court of Appeals of the State of New York
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Case details for

Allied Maintenance Corp. v. Allied Mechanical Trades, Inc.

Case Details

Full title:ALLIED MAINTENANCE CORPORATION, Appellant, v. ALLIED MECHANICAL TRADES…

Court:Court of Appeals of the State of New York

Date published: Oct 18, 1977

Citations

42 N.Y.2d 538 (N.Y. 1977)
399 N.Y.S.2d 628
369 N.E.2d 1162

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