Edmondson Village Theatre, Inc. v. Einbinder

Delaplaine, J., delivered the opinion of the Court. Edmondson Village Theatre, Inc., lessee of Edmondson Village, Inc., has been operating a moving picture theatre under the name of “Edmondson Village Theatre” in Edmondson Village, a shopping center on Edmondson Avenue in Baltimore, since June, 1949. In May, 1954, Joseph Y. Einbinder opened a drive-in moving picture theatre in Baltimore County under the name of “Edmondson Drive-In Theatre” about three miles west of the shopping center. Edmondson Village Theatre, Inc., thereupon entered suit in the Circuit Court for Baltimore County to enjoin Einbinder from using the name “Edmondson Drive-In Theatre.” Complainant alleged in its bill of complaint that Edmondson Village Theatre is a first-run neighborhood ⁴² theatre with 1,205 seats; and that it has spent large sums of money in advertising it and has built up a valuable good will; that the name of defendant’s theatre bears a confusing similarity to the name of complainant’s theatre, and many people have been confusing them; that defendant’s theatre is located on the Baltimore National Pike (U. S. Route 40), and there was no reason for using the name of “Edmondson” except to confuse the public and appropriate a part of complainant’s good will; that complainant requested defendant to stop using the name “Edmondson Drive-In Theatre,” but he refused to do so; and that the use of that name constitutes unfair competition and will continue to cause complainant irreparable loss and damage unless defendant is enjoined by the Court.

Defendant alleged in his answer to the bill that the Baltimore National Pike is also commonly called the New Edmondson Boulevard; that the Edmondson Drive-In Theatre will not be confused with the Edmondson Village Theatre, as the former is an outdoor theatre where patrons look at the moving pictures from their automobiles, while the latter is an indoor theatre; and that he has had no intention to appropriate any of complainant’s good will, as the name “Edmondson” is used by many types of business in that locality. Complainant presented evidence at the trial of the case to show that the Edmondson Village Theatre had established a reputation for excellence of accommodations and had built up a large patronage. Defendant did not dispute complainant’s claim that its theatre is an attractive one with modern equipment; but he asserted that his theatre also is a fine theatre of its kind. He stated that he had graded, surfaced, and marked the tract of land for the parking of automobiles; had installed underground wiring to carry the sound of the pictures to speakers installed on the metal posts beside each car space; and had erected a box office and a substantial building to house the business office, projection equipment and refreshment concessions. ⁴³ Isadore K. Makover, manager of the Edmondson Village Theatre, testified that Edmondson Village covers nearly twelve acres in the western section of Baltimore a short distance east of the city boundary line.

He asserted that his theatre has the finest equipment of all the moving picture theatres in Baltimore. Its accommodations include a special room for young children; checking of parcels with refrigeration for perishable foods; earphones for deaf patrons; and visual paging for professional men. He also mentioned that free parking space is provided for more than 1,000 automobiles to accommodate the patrons of the theatre and. the 28 stores in the shopping center. Makover claimed that the similarity in names had caused confusion among his patrons.

He produced the cashier of his theatre who said that, during the eight months following the opening of defendant’s theatre, she had received 62 telephone calls, or an average of about two calls a week, from patrons who inquired about pictures which were then being shown at defendant’s theatre. Makover also testified that there had been some confusion in the delivery of mail. He said that seven contracts intended for Edmondson Drive-In Theatre had been sent to Edmondson Village Theatre. The Court found no evidence of unfair competition, and accordingly entered a decree dismissing the bill of complaint.

The appeal is from that decree. Like most doctrines of the common law, the law of unfair competition is an outgrowth of human experience. The rules relating to liability for harm caused by unfair trade practices developed from the established principles in the law of torts. These rules developed largely from the rule which imposes liability upon one who diverts custom from another to himself by fraudulent misrepresentation that the goods he is offering are the goods produced by the other.

In England this type of fraud is commonly called “passing off” or “palming off” one’s goods as those of another. ⁴⁴ The American Law Institute made the following comment in 3 Restatement, Torts, ch. 35, pages 539, 540, on this constantly developing doctrine: “The law has not yet developed a complete generalized standard for measuring trade practices like the standard of reasonable care in negligence. In part this is due to differing standards of commercial morality in the various industries; in part it is due to the fact that this branch of the law developed eclectically from the law dealing with the older wrongs which were not directly related to trade practices and competition. But the tendency of the law, both legislative and common, has been in the direction of enforcing increasingly higher standards of fairness or commercial morality' in trade.” While the original basis of equitable relief was the fraudulent deception of the purchaser, the United States Supreme Court, in the opinion delivered by Justice Pitney in 1918 in International News Service v. Associated Press, 248 U. S. 215 , 39 S. Ct. 68, 71 , 63 L. Ed. 211 , 2 A. L. R. 293, held that “the right to acquire property by honest labor or the conduct of a lawful business” is as much entitled to protection as the right to guard property already acquired, and that it is this right that furnishes the basis of the jurisdiction in the case of unfair competition. The essential element of unfair competition is deception, by means of which the goods of one dealer are passed off as the goods of another, and the seller receives the profit which he would not have received except for such deception.

Therefore, in order to warrant a court of equity in granting an injunction to restrain unfair competition, the acts complained of must be of such a nature as to mislead and deceive the public, so that the defendant is in effect taking advantage of the good will and business reputation which the complainant has built up through service or advertising or in any manner regarded as lawful and proper. Anheuser-Busch, Inc., v. ⁴⁵ Budweiser Malt Products Corporation, 287 F. 243, 246 . While the law of trade-marks is a part of the doctrine of unfair competition, there is a difference between them. The infringement of a trade-mark is a violation by one person of an exclusive right of another person to the use of a word, mark or symbol.

On the other hand, where two rivals in business have an equal right to use the same words on similar articles sold by them, but such words were used by one of them before the other and by association have come to indicate to the public that the goods to which they applied were produced by the former, the latter will not be permitted to use them in such a manner as to deceive or be capable of deceiving the public as to the origin, manufacture or ownership of the goods to which they are applied. Dennison Mfg. Co. v. Thomas Mfg. Co., 94 F. 2d 651, 659 .

A trade name is any designation which is adopted and used by a person to denominate goods which he markets, or services which he renders, or a business which he conducts, or has come to be so used by others, and through its association with such goods, services, or business, has acquired a special significance as the name thereof. 3 Restatement, Torts, sec. 716. One infringes another’s trade name if (1) without a privilege to do so, he uses in his business, in the manner of a trade-mark or trade name, a designation which is identical with or confusingly similar to the other’s trade name, though he does not use the designation for the purpose of deception, and (2) the other’s interest in his trade name is protected with reference to the goods, services or business in connection with which the actor uses his designation, and the markets in which the actor uses his designation. 3 Restatement, Torts, sec. 717. It has been held in some cases that the plaintiff must prove a fraudulent intent on the part of the defendant to pass off his business or goods as that of the plaintiff in order to establish unfair competition; while in other cases it has been held that proof of fraudulent intent is ⁴⁶ not required where the necessary and probable tendency of the defendant’s conduct is to deceive the public-, and pass' off his business or goods as that of the plaintiff, especially where only preventive relief against continuance of the wrong is sought and granted. George G. Fox Co. v. Glynn, 191 Mass. 344 , 78 N. E. 89, 92 , 9 L. R. A., N. S., 1096; Kansas Milling Co. v. Kansas Flour Mills Co., 89 Kan. 855 , 133 P. 542 ; Martell v. St. Francis Hotel Co., 51 Wash. 375 , 98 P. 1116, 1118 .

We hold that generally in cases of unfair competition, fraudulent intent is not essential for - injunctive relief. The absence of fraudulent intent ought not-to stay the hand of the court where a trade name is adopted so similar to a trade name already in use by a business competitor that it is obvious that injury to the original user will inevitably result. It is plain on principle--that there should be no distinction in this respect between a case Of unfair competition and a case of infringement of a trade-mark. As Justice Holmes' said in an unfair competition case in the Supreme Judicial Court of Massachusetts: “The principles upon which’the rights of the parties are to be determined are similar to those which are well known to govern trademarks, although the- combination of elements is more complex than in devices which commonly go by that name.” New England Awl & Needle Co. v. Marlborough Awl & Needle Co., 168 Mass. 154, 155 , 46 N. E. 386 .

It is a general rule, subject to exceptions, -that"a.'geographical, locational Or place name is common property aiid cannot be appropriated as the subject of an exclusive trade-mark or trade name.- But where a geographical name acquires a secondary meaning indicating not nnly the place of production but also the producer and the quality of his product, the owner may assert an exclusive right