Opinion
No. 114907
Decided March 30, 1959.
Tradenames — Deception of public by similarity of names — Profiting by acquisition of established good will not permitted — Permanent injunction granted.
Where defendants act in bad faith in adopting and using a business name that might deceive the public into thinking there is some connection between the defendant and the plaintiff companies and the goodwill of plaintiff, which it has built up at great expense over a period of years, will be whittled away, plaintiff is entitled to a permanent injunction.
Messrs. Pickrel, Schaeffer Ebeling, for plaintiff.
Mr. John W. Dale, for defendants.
Plaintiff, Guild Landis, Inc., brings this action to restrain and enjoin defendants from using, advertising or conducting business under the name of Liles Landis Liquidators, Inc.
Plaintiff claims that it has engaged in the insurance business in the Dayton area under the trade name of Guild Landis for thirty-five years, during which period it has rendered good insurance service and has developed a good name, reputation and extensive goodwill in the insurance business; that it has expended much time, effort and money in building and creating the goodwill associated with its name, particularly through extensive advertising in the newspapers and on radio and television; that as a result the name of Guild Landis has become familiarly associated in the public mind with insurance in the Dayton area.
Plaintiff further claims that the defendant, Jack W. Liles, knowing plaintiff's name, the general public's familiarity therewith, and the good reputation and extensive goodwill associated therewith, adopted and used the name Liles Landis Liquidators in early 1958, and after July 29, 1958, the corporate name of Liles Landis Liquidators, Inc., because of the likeness and similiarity of such name to plaintiff's name.
That said defendants by extensively advertising said name on television, radio and in the newspapers, intended to and did confuse, and did deceive the public, and thereby unlawfully appropriated to their own use and advantage the good name, reputation and long-established goodwill of plaintiff, thereby injuring plaintiff's good name and goodwill to plaintiff's irreparable damage, for which plaintiff claims it has no adequate remedy at law.
Defendant, Jack Liles, and the defendant corporation, Liles Landis Liquidators, Inc., admit that the latter is doing business at 2301 North Main Street, Dayton 1, Ohio, selling furniture, appliances and other merchandise; admits that the defendant corporation is an Ohio corporation and that defendant, Jack W. Liles, is the principal shareholder, officer and the general manager thereof.
Defendants deny that plaintiff is entitled to an injunction restraining and enjoining them from the use of the name Liles Landis Liquidators, Inc., first, on the ground that defendant corporation does not operate a business competing with plaintiff's business, which is confined to the sale of insurance; and second, that the name Liles Landis Liquidators, Inc., is sufficiently different from plaintiff's name so that a reasonably careful and intelligent person would not confuse the names or lines of business engaged in by the parties; and third, that plaintiff has sustained no damage as a result of the use of the name Liles Landis Liquidators, Inc.
This case was tried to the court on the merits, in which the following facts were clearly established: that plaintiff, Guild Landis, Inc., has been engaged in the sale of insurance in this community for more than thirty-five years, having operated as a partnership for the first ten years, and as a corporation the last twenty-five years (since 1933); that plaintiff sells and writes many lines of insurance, but has specialized for many years in the fire and casualty fields; that it occupies, and has occupied for more than twenty years, offices in the Gem City Building at 4 North Main Street, Dayton, Ohio, the same street on which Liles Landis has its store or outlet; that it has advertised extensively for many years in this community through television, radio and the newspapers, having expended therefor, not including its agents' expenditures, the sum of more than seventy-five thousand dollars during the past eight years; that the purpose of such advertising was to identify the plaintiff's name with insurance, and vice versa; that as a result of plaintiff's business practice and its advertising, it has built up an extensive volume of business in excess of $1,700,000 premium income per year, and in connection therewith has developed an extensive goodwill and good business reputation throughout the greater Dayton area; that people generally in the greater Dayton community have been and are familiar with the name Guild Landis, and identify such name with insurance, particularly fire and casualty insurance, and have not, until defendant started using the name Liles Landis Liquidators, Inc., associated it with any other line of business; that Jack W. Liles began operating under the name of Liles Landis Liquidators in the spring of 1959 at 2301 North Main Street, Dayton, Ohio, at which place he operates a carnival-type store or outlet selling furniture, household appliances, boats and miscellaneous articles; that thereafter, on July 29, 1959, he incorporated his business under the name of Liles Landis Liquidators, Inc., in which he was the principal stockholder, officer and general manager; that prior thereto, and more extensively thereafter he advertised his business to the public as a liquidating business using as a slogan, "We stipulate we liquidate"; that such business expended for a period of weeks as much as five hundred dollars per week in advertising on radio, television and the newspapers; that the name "Liles" was at all times pronounced in vocal advertising with a long "i" — the same as "ui" in "Guild" (as in "mild") that the two words "Liles" and "Guild," used in connection with " Landis" had such similarity of sound that many persons mistook the name "Liles Landis" for "Guild Landis," including such persons as telephone operators, who mistakenly routed at least fourteen calls in the fall of 1958 to the offices of Guild Landis that were in fact intended for a store that sold cut-rate furniture on a liquidating basis.
That Jack Liles, as a promoter, engaged in the cut-rate sale of merchandise in which he used carnival tactics and puffing; that when he first started in business, he stated to the manager of the Dayton Better Business Bureau that the name "Landis" in the name "Liles Landis," was the name of his silent partner who lived in New Jersey and furnished financial backing for the enterprise; that at the time of trial, Liles admitted that he had no such silent partner by the name of Landis, but claimed that he used the name Landis because it was the name of a town in North Carolina in the same general locality where he purchased much of his merchandise; that Liles from time to time represented to the public that he had two branch offices, one in New Jersey and one in California, which Liles admitted were not in fact branch offices bearing the company name, but only the telephone numbers of relatives, to wit, his uncle in California, and his father-in-law in New Jersey.
That the name of Guild Landis, Inc., was known to Liles before he started using the name Liles Landis in connection with his business; that since he admitted he had no partner or backer by the name of Landis, and had no office, business or goodwill established in Landis, North Carolina, his final attempt to justify his adoption of the " Landis" name by the statements that the three "Ls" in Liles Landis Liquidators sounded good or euphonious, was an admission that such name sounded good to the public; that Liles must have adopted the " Landis" for the purpose of appropriating and taking a ride on plaintiff's good name and goodwill.
That plaintiff's insurance business and defendant's furniture and appliance business were not competitive; that reasonably intelligent persons would probably not have assumed that plaintiff and defendants were selling the same products; that defendants' use of the name Liles Landis Liquidators did not directly tend to divert insurance business from plaintiff, but did constitute an exploitation and appropriation of plaintiff's good name, goodwill and reputation to defendants' advantage and gain; that the use of the name Liles Landis, a portion of the time without the word "Liquidators," confused and deceived a portion of the public in that they gained or received the impression that plaintiff's business may have been some line other than insurance, and thereby clouding or weakening the identification between plaintiff's name and its insurance business; that the natural tendency of defendants' advertising was to impair and damage to some extent plaintiff's goodwill and good name; that the effectiveness of plaintiff's past, present and future advertising, and plaintiff's investment therein, was thereby impaired. That plaintiff's damages are not susceptible of calculation in money.
The facts hereinbefore recited show that plaintiff's and defendants' businesses are not competitive, and that defendant, Liles Landis Liquidators, Inc., have not diverted any insurance business from plaintiff to themselves. However, defendants, by taking a ride on plaintiff's name, reputation and goodwill established through long years of service and by a large investment in advertising, has gained an unfair trade advantage at plaintiff's expense. Such practice, if continued, will result in damage to and impairment of plaintiff's goodwill and business.
The law governing unfair trade practices and unfair competition has in recent years evolved into something different from its more primitive and less ethical form.
Originally, the unfair competitor must have intended to deceive the buying public by passing off his product as the product of his competitor. Formerly, competition in the same line was necessary before the courts would grant relief on the theory that such competition was necessary before unfair competition was possible.
In addition, the similarity in names, tradenames, trademarks, etc., was required to be very close, — so close in some cases as to be almost identical.
Furthermore, the unfair competitor must have diverted business from the complainant to himself, to complainant's damage.
However, in more recent years plaintiff need not prove, in certain cases, that defendant is competing with plaintiff in the same line of business. Intent to deceive or defraud need no longer be proven. If the natural and probable consequences of the use of a simlar name would be to mislead, deceive or confuse the public, the presence or absence of actual intent to deceive is immaterial. Nor do actual damages have to be shown. Nor do slight differences in names, tradenames, and trademarks any longer excuse or justify a wrongdoer where there is a general similarity in names, and the public is likely to be confused or deceived. Stein Cloak Co. v. Stein Son, Inc., 58 Ohio App. 377; Henry Furnace Co. v. Kappelman, 91 Ohio App. 451; Marshall Drug Co. v. Drug Co., 28 Nisi Prius, New Series 412; 38 Harvard Law Review 370 to 374; 148 American Law Reports, 12 et seq., particularly pages 31 and 34; Berthold v. Seaton, 111 U.S. Patents Quarterly 115.
The general objective of courts today in unfair trade practice or competition cases, is to protect the goodwill and reputation of the complainant, whether or not the defendant is a competitor. It is obvious that a person other than a competitor can damage the goodwill and reputation of a business; it is not always too material whether such persons derive a benefit that otherwise would have accrued to the damaged business.
148 American Law Reports, pages 41 to 44; 38 Harvard Law Review, supra.
In those cases where a person uses his own name in a deceptive or confusing context or way likely to injure the established business reputation and goodwill of another who has theretofore used the same or similar name, he is required by the courts to so differentiate or change such context as to eliminate or to diminish as much as reasonably possible the deception or confusion, consistent with a person's right to use his natural name in an unincorporated business.
Marshall Drug Company v. Drug Co., supra; Stein Cloak Co. v. Stein Son, Inc., supra; 47 A. L.R. 1189 to 1229; 44 A. L. R 2d 1156 to 1182; 12 Harvard Law Review, 243; Kay Jewelry Co. v. Morris et al (1943), 171 S.W.2d 410; Thomas Patrick, Inc., v. K. W. K. Investment Co. (1947), 357 Mo. 100.
In the Henry Furnace Company case, supra, the court, quoting from the Hugo Stein Cloak Co. case, supra, stated at the top of page 60:
"Under the overwhelming weight of authority the appellant is entitled to protection against the use, by another, of its established trade name and trademark in such manner as to mislead the trade and the public to believe that when they are dealing with one they are dealing with the other, or in such manner that such use results, or may result, in appropriation of the goodwill, a property right of the other — in the first case a fraud upon the public; in the second, an infringement of a property right."
The court further stated on page 61 of its decision, the following:
"As stated in the note in 38 Harvard Law Review, 370, 372, previously cited:
`Courts of equity in these unfair competition cases are seeking to protect the goodwill and reputation of the plaintiff. Insistence by the courts upon the presence of competition between the parties can only be justified upon a theory that good will and reputation can only be damaged by competitors. But such a theory is untenable, in the light of human experience. If the defendant's conduct is likely to cause confusion of the traders, so that the public believes or is likely to believe that the goods of the defendant are the goods of the plaintiff or that the plaintiff is in some way connected with or is a sponsor for the defendant, then a sufficient case is made out for injunctive relief. * * *'
"One of the well reasoned cases is Lady Esther, Ltd., v. Lady Esther Corset Shoppe, Inc. (1943), 317 Ill. App. 451, 46 N.E.2d 165, 148 A.L.R. 6. In that case, the Illinois Appellate Court granted an injunction to a cosmetic concern against a corset shop incorporated under a similar name. Although no one was likely to be mistaken in assuming that the two concerns were selling the same product, the court found equity was able to grant relief to prevent deception and protect goodwill. The court declared:
"In the instant case we think it clear that the public might be deceived into thinking there was some connection between the defendant and the plaintiff companies. And the goodwill of plaintiff, which it had built up at great expense over a period of years, would be whittled away. Courts of equity ought not to be so feeble as to be unable to prevent this. And the fact that defendant received a charter to use the name `Lady Esther Corset Shoppe, Inc.' does not protect it."
In the Thomas Patrick case, supra, the court, at page 104, stated:
"At least in some spheres of activity, nowadays, a plaintiff's trade name is entitled to protection against a subsequent user of the name if the designation complained of is so similar to the plaintiff's trade name that there is reasonable likelihood of confusion of source, such that prospective purchasers or clients are likely to regard the same as indicating the source identified by the name and consequently future injury to good will, reputation or business."
Under the facts and circumstances of this case, it appears that the defendants, Jack Liles and the corporation, Liles Landis Liquidators, Inc., acted in bad faith in adopting and using the name " Landis" as a part of his and its business name. We see no reason why the name Liles Liquidators, Inc., would not be equally, if not more euphonious than "Liles Landis Liquidators, Inc.," and plaintiff has no objection to defendants adopting and using such name.
From the foregoing it follows consequently that plaintiff is entitled to a permanent injunction permanently restraining and enjoining the defendants from using, advertising or conducting business under the name of Liles Landis Liquidators, Inc.
Judgment accordingly.