Gai Audio of New York, Inc. v. Columbia Broadcasting System, Inc.

Moore, J., delivered the opinion of the Court. This appeal brings before us for the first time, and in the context of a civil action for compensatory and punitive damages, the nationwide phenomenon of “piracy” or “duplication” of musical recordings. 1 Columbia Broadcasting System, Inc., and Atlantic Recording Corporation, appellees, are the owners of exclusive contracts with popular recording artists and are the manufacturers and distributors of tapes and records on which performances of such artists are recorded. Appellants are four corporations and cne individual who, in 1971 and 1972, without appellees’ consent, duplicated and sold more than a half-million copies of appellees’ tapes at a plant in Elk Mills, Cecil County, Maryland. 2 ¹⁷⁵ On May 2, 1972, appellees brought suit in the Circuit Court for Cecil County, alleging unfair competition, conversion and conspiracy, each claiming $300,000 in compensatory and punitive damages against Deeds Music Company, Inc., Deeds Electronic Company, GAI Audio of New York, Inc., Jack Kessler, and ALP Distributing Company. A writ of attachment on original process was issued and certain equipment and other personal property of the appellants, including 58,682 assorted 8-track stereophonic tapes, were seized by the Sheriff of Cecil County on May 3,1972.

After discovery in this and a related federal proceeding 3 Kesco Textile Company, Inc. (“Kesco”), Playgirl Industries, Inc., Playgirl Fashions, Inc., and Julius Kessler were added as additional parties-defendant by leave of court on February 28, 1973 and July 23, 1973. The trial before Judge H. Kenneth Mackey, sitting without a jury, began on January 28, 1974 and consumed six (non-consecutive) days. During the course of trial, on February 7, 1974, the defendant, Deeds Music Company, Inc., consented to entry of judgment against it in the amount of $150,000. All claims against the remaining defendants were reserved.

The latter offered no testimony and rested at the close of plaintiffs’ case. 4 On March 1, 1974, at the conclusion of the trial, Judge Mackey, in an oral opinion from the bench, entered judgment nisi against each of the other defendants under the counts alleging unfair competition and civil conspiracy, 5 in the amounts of $93,701.74 in compensatory and $50,000 in ¹⁷⁶ punitive damages in favor of Columbia Broadcasting System, Inc., and $53,383.25 in compensatory and $25,000 in punitive damages in favor of Atlantic Recording Corporation. Appellees were awarded itemized costs totalling $8,102.99 and were awarded judgment of condemnation absolute against the attached chattels. (A comprehensive supplemental opinion was thereafter filed on May 3,1974). From those judgments, made absolute on March 7, 1974, appeals were taken by GAI Audio of New York, Inc., Playgirl Industries, Inc., Playgirl Fashions, Inc., and Julius Kessler.

I FA CTUAL BA CKGRO UND From the extensive record in this case, the numerous exhibits and the opinion and supplemental opinion of Judge Mackey, the following facts emerge: Early in 1971, Mr. Jack Kessler, who had engaged in tape duplicating operations elsewhere in the United States, 6 embarked upon a similar enterprise in Maryland. He did so, not alone, but with the extraordinary assistance of his brother, Julius Kessler and an associate of Julius, one Daniel Eisenstein, who were engaged in business in New York’s “garment district.” The trial court found: “In the Spring of 1971 Daniel Eisenstein, New York City entrepreneur, formed the Maryland Corporation, Deeds Electronics Co. Inc. He later changed the name of this corporation to Elk Mills Enterprises Inc. About the same time Jack Kessler appeared operating a sole proprietorship known as Deeds Electronic Inc. Mr. Kessler rented buildings from the Defendant, Kesco Textile Company Inc., purchased raw material and supplies and leased equipment from G.A.I. Audio of New York Inc., another Defendant, and in the Kesco buildings at ¹⁷⁷ Elk Mills, Cecil County, Maryland commenced a tape bootlegging operation wherein he duplicated the tapes of the Plaintiffs, put them in cartridges, packaged them and sold them on the open market. He employed upwards of a score of young ladies, used very sophisticated equipment and turned out these duplicated tapes by the tens of thousands. ” (Emphasis added.) The trial court thus described the role of Julius Kessler: “Jack Kessler’s brother, Julius, was, during all times pertinent to this suit, President of G.A.I. Audio of New York Inc., Kesco Textile Company Inc. and Play Girl Fashions Inc., all of which corporations were subsidiaries of Play Girl Industries Inc. of which he was also President. Daniel Eisenstein was the Secretary-Treasurer of each of said corporations.

Each corporation shared common office space at 225 West 35th Street, New York City. G.A.I. Audio of New York Inc. had no employees. ” (Emphasis added.) In the fall of 1971, after the U. S. Congress passed Public Law 92-140 amending the copyright law to extend protection to sound recordings and to provide for criminal penalties effective February 15, 1972, Jack Kessler attempted to insulate himself and presumably his associates, from potential federal liability by transferring the duplicating end of the operation to Mr. Leonard Lockhart, a practicing lawyer in Elkton. Mr. Lockhart had been providing legal advice to Jack Kessler, specifically with regard to the compulsory licensing provisions of the Copyright Act, 17 U.S.C. § 1 (e). 7 Mr. ¹⁷⁸ Lockhart was of the opinion that so long as appellants paid 2 cents a copy to the original composer of the music they could duplicate records and tapes of major companies with impunity. The trial judge, in his Supplemental Opinion found that Daniel Eisenstein told Lockhart that Jack Kessler “had certain troubles with the Internal Revenue Service and felt that he would like to get out of the tape duplicating operation.” The court expressed doubt that the attorney was aware of the pendency of Public Law 92-140.

The transfer was accomplished first by Mr. Lockhart’s formation of a Delaware corporation, Deeds Music Company, Inc. (Deeds), with himself as president and sole stockholder. Then, on November 11, 1971, Mr. Lockhart went to a meeting at 225 W. 35th Street, New York City, with Jack Kessler and his brother, Julius Kessler, Barton Nachamie, an attorney, and Daniel Eisenstein. With respect to the agenda of the New York meeting, the trial court found: “When Leonard [Lockhart] arrived in New York Mr. Nachamie, on behalf of the other participants, already had several papers prepared. These consisted of a lease of the real estate ‘for the purpose of manufacturing and recording tapes and similar devices electronically.’ In this lease Deeds rented from Kesco for a period from November 15, 1971 to March 14, 1972 at an annual rental of $18,000.

This was signed by Julius Kessler, President of Kesco, and Leonard Lockhart, President of Deeds Music Company, Inc. The tenant had an option to renew the lease for three (3) years at an annual rental of $24,000. Mr. Nachamie also had prepared a lease of the equipment from GAI Audio of New York, Inc. to Deeds Music Company, Inc. signed by Julius Kessler, President of GAI, and Leonard H. Lockhart, President of Deeds. The rental was $1,000 per week, total rent $191,000.00, effective November 15, 1971. An inventory of the equipment is attached to the lease.

The list commenced with one Ampex duplicator and the ¹⁷⁹ second item is 5 Ampex slaves. Another agreement of the same date between GAI and Deeds signed by Julius Kessler, President of GAI, and Leonard H. Lockhart, President of Deeds called for GAI to provide raw materials on consignment to Deeds to be paid for within 30 days. These were proven to be the raw materials necessary to operate the duplicating process and to package the finished tapes. Four (4) days later when Leonard was back in Elkton he agreed with Jack Kessler — an agreement that had been discussed in New York with the other parties — that Deeds Music Company, Inc. would buy from Deeds Electronics Company, an individual proprietorship owned by Jack Kessler, the business for the sum of $5,000.

This agreement of sale refers to a ‘Memorandum of Understanding Between GAI Audio of New York) Inc., Jack Kessler and Deeds Music Company, Inc. signed November 11, 1971.’ This agreement was signed by Jack Kessler, individually, and Leonard H. Lockhart as President of Deeds Music Company, Inc.” (Emphasis added.) Thereafter, Jack Kessler continued to live within 300 yards of the duplicating plant at Elk Mills and, in addition, as head of a newly established “ALP Distributing Company,” he occupied business space in a separate room adjacent to the terminus of Lockhart’s production line. Jack Kessler, as ALP, distributed all of the tapes copied by Deeds. He was, in fact, Deeds’ only customer and paid Deeds $1.15 per tape. The tapes were resold for about $3.00 retail. 8 Selected for duplication were the most popular and best selling tapes of the appellees.

Mr. Lockhart, called as an adverse witness by the appellees, testified in this connection: “You see, Atlantic and Columbia have a great gimmick in what they do. They put two good songs ¹⁸⁰ on and six bad ones and they will sell it for $6.95. Now, very honestly, what we did was we put eight good ones on and they were sold to the market for $3.00. So that it was a value to the kids around the country and its serves a purpose, in my mind.

I do not want to argue the case with you, but I want to disagree when you say that we took theirs and we made one master. That is not so. Instead of giving you one good one and six bums that you have to ride down the road and hear, we would take one from one and one from another as that catalog will indicate.” During the relatively short period of its existence, from November 15, 1971 until March 31, 1972, Deeds Music Company under Leonard Lockhart had gross income of approximately $496,000 but nevertheless operated at a loss of approximately $38,000. True to his own commitment, Lockhart paid royalties to publishers in the sum of $95,578.65 but checks aggregating $53,000 remained uncashed.

A veritable mass of invoices relating to equipment, raw materials and supplies used by Deeds Music Company in its duplicating operations, were received in evidence. A large number of these invoices were from appellant, GAI Audio of New York, Inc. As previously noted, that company had no employees. Somewhat mysteriously, its invoices to Deeds Music contained only the name of a company with which GAI had placed an order, the amount of the charge, plus 5%. The trial court found that no details of these invoices were ever given by GAI nor requested by Lockhart.

In addition, thousands of dollars of invoices for materials and supplies sold by such suppliers as Ampex, Data Packaging Corporation, Elpan Marketing Co., Weldotron, Harvey Radio, Minnesota Mining and Manufacturing and Joganburg were made not to Deeds Music, nor to GAI Audio but to Playgirl Industries, Inc., and to one of its wholly-owned subsidiaries, Playgirl Fashions, Inc., a company engaged in the manufacture of ladies’ dresses. Julius Kessler was president of both companies and his ¹⁸¹ name appears on numerous invoices as the person placing the order. The inevitable denouement came in March, 1972. It did not result, as might be anticipated, from Deeds’ financial collapse.

On or about March 31, 1972, certain music publishers initiated a copyright infringement suit in the United States District Court, District of Maryland, against Deeds Music Company, Inc., and Leonard H. Lockhart, individually. Jondora Music Publishing Company, et al. v. Deeds Electronic Company, et al., supra, n. 3. This resulted in a consent decree whereby Lockhart and Deeds Music agreed to discontinue the duplicating operations at Elk Mills. 9 On this appeal, the brief of appellants contains “many scatter-gun arguments,” as appellees’ brief aptly suggests. We treat them in the following order.

II TRIAL COURT RULINGS Appellants’ argument entitled “The rulings of the trial court irreparably prejudiced appellants, depriving them of due process of law” contains the following “discussion:” “We refer to all the questions appearing under item #5 of the Questions Presented on page 2 of this brief, on the record of the case sent up to this Appellate Court without further ado. The limitation to 25 pages of brief under Rule 1031 (b) of the Rules of this Court prevents further argument.” (Emphasis added.) The rulings of the trial court thus sought to be challenged are the following: 10 ¹⁸² “i. Failure to quash and dissolve attachment, ii. Granting amendment to declaration to bring in previously known new parties, including Julius Kessler, Playgirl Fashions, Inc., February 27, 1973, iii.

Failure to declare a mistrial upon the confession of judgment of alleged conspirator Deeds Music Co., Inc., February 7, 1974, iv. Allowing appellees to introduce into evidence, but not placing into the record, matters taken in camera, and on which appellants were denied due process of law in denial of right of confrontation and cross-examination on matters taken into consideration by the trial court determining the issues and v. Violation of substantial rights of appellants by permitting improper testimony to be admitted, consisting of opinions on ultimate facts properly and exclusively the province of the trier of the facts, upon unsupported-by-record conclusions of fact by witnesses, opinions by non-experts, failure to reject hearsay evidence, and evidence the result of patent improper leading by counsel, and the result of rulings and failure to rule upon objections taken in the record. vi. Failure to credit appellants with the value of tapes, machinery and equipment, lost rentals and damages caused to appellants by seizure of properties of appellants, as well as by failure to safeguard same against a subsequent theft thereof.” We first observe that Rule 1031 has, since July 1, 1973, imposed a 35, not 25, page limitation on briefs before this Court. Moreover, this rule expressly recognizes that the page limitation may be exceeded by “special permission of this Court.” Secondly, subsection c 4 of Rule 1031 provides: “The brief ¹⁸³ of the appellant shall contain (emphasis added): ‘Argument in support of the position of the appellant.’ ” This rule has been clearly violated.

We do not consider any of the points above listed because there is no argument in support of them and they are, in effect, waived. As Judge Davidson said very recently for this Court in Kimbrough v. Giant Foods, Inc., 26 Md. App. 640 : “Maryland Rule 1031 c 4 provides that the brief of an appellant to this Court shall contain argument in support of his position. The Court of Appeals has held that issues, even of constitutional dimension, can be waived for failure to comply with the procedural requirements to preserve the right to appellate review. Under the present circumstances the constitutional issue is not properly before this Court and will not be considered.” 11 Furthermore, with respect to appellants’ question v. above, we would reiterate what was said by the Court of Appeals in Clarke v. State, 238 Md. 11 , 207 A. 2d 456 (1965). “[W]e cannot be expected to delve through the record extract to unearth motions or contentions that are not named and argued in the brief.” See also, State Roads Commission v. Halle, 228 Md. 24, 32 , 178 A. 2d 319 (1962).

Ill FEDERAL COPYRIGHT LAW As previously noted, the federal copyright laws were amended in 1971, so as to afford protection to sound recordings for the first time. Act of October 15, 1971, Pub. L. 92-140, 85 Stat. 391, 17 U.S.C. §§ 1 (f) and 101 (e). The statute was made specifically applicable “only to sound recordings fixed, published and copyrighted” on or after February 15, 1972 and before January 1, 1975.

The amendment was not to have retroactive effect. ¹⁸⁴ Appellants argue that their duplicating enterprise, since it occurred prior to February 15, 1972, was entirely legal, protected by the compulsory licensing provisions of the copyright law, 17. U.S.C. § 1 (e), adopted in 1909, which reads: 12 “.. . And as a condition of extending the copyright control to such mechanical reproductions, that whenever the owner of a musical copyright has used or permitted or knowingly acquiesced in the use of the copyrighted v/ork upon the parts of instruments serving to reproduce mechanically the musical work, any other person may make similar use of the copyrighted work upon the payment to the copyright proprietor of a royalty of 2 cents on each such part manufactured, to be paid by the manufacturer thereof;.. .” The effect of the law, therefore, was that the composer had the right to select the licensee who would originally produce a record of the musical work but, thereafter, any other manufacturer could record upon 3 conditions: (a) Payment of royalties of 2 cents per record or tape. (b) Filing a notice of intent to use; and (c) Making a “similar use of the copyrighted work.” Appellants’ claim of “similar use” is an apparent misapplication of the compulsory licensing section of the federal copyright law.

It confuses the copyright interest of the composer with the interest of the recording company licensee authorized to reproduce, by recording the composer’s musical creation. Marks Music Corp. v. Colorado Magnetics, Inc., 497 F. 2d 285, 290 (10th Cir. 1974). In Marks, as in the principal cases in other appellate circuits wherein the question of “similar use” has been interpreted, see Duchess Music Corporation v. Stern, 458 F. ¹⁸⁵ 2d 1305 (9th Cir. 1972), cert. denied, 409 U. S. 847 (1972); Jondora Music Publishing Company v. Melody Recordings, Inc., 506 F. 2d 392 (3d Cir. 1974), the publisher — not the third-party recorder — was seeking relief under the copyright law. In Marks, Circuit Judge McWilliams made the following cogent observation concerning the application and effect of the compulsory licensing provisions: “ . . .

This means, to us, that one who complies with royalty payment called for by the statute, though not having any authorization from the copyright owner, may nonetheless then ‘use,’ not a third party’s record, but the copyrighted composition, which has been characterized as the ‘raw material,’ in a manner ‘similar’ to that employed by the recording company which did have authorization from the copyright owner. There is, of course, nothing in the statute which affirmatively authorizes Magnetics to duplicate and copy the recording of one licensed by the copyright owner to reproduce his composition. However, under the statute Magnetics may ‘use’ the copyrighted composition in a manner ‘similar’ to that made by the licensed recording company. All of which means, to us, that Magnetics may make its own arrangements, hire its own musicians and artists, and then record.

It does not mean that Magnetics may use the composer’s copyrighted work by duplicating and copying the record of a licensed recording company. Such, in our view, is not a similar use.” (Emphasis added.) Indeed, this was the interpretation of “similar use” and the basis for its application in the very first case to construe the language of the amendment of 1909, Aeolian Co. v. Royal Music Roll Co., 196 F. 926 (W.D. N.Y. 1912), where the District Court said: “. . . but the subsequent user does not thereby secure the right to copy the perforated rolls or records. He cannot avail himself of the skill and ¹⁸⁶ labor of the original manufacturer of the perforated roll or record by copying or duplicating the same, but must resort to the copyrighted composition or sheet music, and not pirate the work of a competitor who has made an original perforated roll.” 196 F. at 927 . In Jondora, supra, the Third Circuit expressed agreement with the interpretation above quoted from Aeolian as well as with the quoted language from Marks but felt impelled to state further in the majority opinion: “We agree with this interpretation of the statute but feel even more strongly that the duplicators or pirates do not ‘use’ the composer’s work in a ‘similar’ fashion — indeed, they do not utilize the composer’s work at all.

It is a recording which is used. Rather than permit the use of a recording of the composition, the statute only authorizes the use of the copyrighted work, that is, the written score.” (Emphasis added.) It is plain, therefore, tha: the majority opinions of the federal circuit courts which have considered the issue of “similar use” under the federal copyright law, reject the interpretations argued by appellants in this case. 13 This, however, is not dispositive of the central issue before us, whether the common law right to protection against unfair competition is violated when the music production (tape or ¹⁸⁷ record) of a recording company is duplicated and sold in the open market, with the label of the duplicator. The reason why the status of the appellants’ conduct under the federal copyright law is not dispositive of that issue is to be found in the decision of the United States Supreme Court in Goldstein v. California, 412 U. S. 546 (1973). The petitioners in Goldstein were convicted under a California penal statute involving record piracy.

They argued that the federal copyright law preempted the field, thus invalidating the State law. In an opinion by Mr. Chief Justice Burger, dealing only with recordings “fixed” before February 15, 1972, the majority of the Court held that the Constitution neither implicitly precludes States from granting copyrights nor grants such authority exclusively to the federal government. Affirming the convictions, the Court concluded that California, in enacting the law against tape piracy, had exercised a power it retained under the Constitution and that the statute did not intrude into an area which Congress had preempted. We concur with the holding of the Supreme Court of Wisconsin in Mercury Record Productions, Inc. v. Economic Consultants, Inc., 218 N.W.2d 705 (1974), that Goldstein permits State protection against record piracy by common law as well as by statute.

As the Court there stated (p. 712): “Under the standards of Goldstein , state law may be applied. We see no indication that the United States Supreme Court put its imprimatur on statutory law, but not upon the power of a common-law court acting in accordance with the accepted public policy of its state. The same conclusion was reached in Jondora Music Publishing Co. v. Melody Recordings, Inc. (D C.D.N.J., 1973), 362 F.Supp. 494, 497 ; Note, Copyrights: States Allowed to Protect Works Not Copyrightable Under Federal Law, 58 Minn.Law Rev. 316, 324 (1973); and Note, 8 Univ. of San Francisco Law Rev., supra, 199, 211.” See also Capitol Records, Inc. v. Mercury Records ¹⁸⁸ Corporation, 221 F. 2d 657, 662 (2d Cir. 1955); Tape Head Company v. R.C.A. Corporation, 452 F. 2d 816 (10th Cir. 1971). Accordingly we now consider the merits of this appeal in the light of common law principles concerning unfair competition.

IV UNFAIR COMPETITION AND CONSPIRACY No issue of fact arises as to the nature of the business conducted in 1971 and 1972 at Elk Mills, Maryland by Deeds Music Company, Inc. and its predecessor Deeds Electronic Company. Indeed, it is plain from the record in this case, including the answers to interrogatories read into evidence, that everyone connected with the enterprise in Cecil County knew precisely that its purpose was “to produce prerecorded tapes.” Nor is there any contradiction of appellees’ testimony concerning the identity of the performers with whom they had entered into exclusive contracts, nor the cost of producing the recordings which have been duplicated by the appellees. The record shows, for example, that the cost ranges from $15,000 up to hundreds of thousands of dollars per record or tape; that advances to certain artists might be made in the hundreds of thousands of dollars and that the recording companies are obligated to pay royalties not only to the artists themselves but to (a) music publishers, (b) the American Federation of Musicians and (c) the American Federation of Television and Radio Artists. In return, of course, the recording organization receives not only the exclusive services of the artists but also the ownership of the “Master” for an unlimited period of time. 14 In addition to the costs of making the recordings and the royalties involved, appellees also expend substantial sums of money in ¹⁸⁹ packaging and in sales promotion through the recognized advertising media.

Appellants, by merely copying the final product, thus producing tapes at a nominal cost, were relieved of all of the burdens incurred by appellees in producing the original recordings. Furthermore, appellants shared none of the risk, inherent in the music recording industry, since they would record only the star performers and “hit” songs, taking advantage of a market which appellees had created. Protesting innocence of any wrongdoing, however, appellants argue that there was no passing off as their own in their operations — that the labels of Deeds Music Company were affixed to every tape and package. Whatever vitality this defense may have afforded prior to the celebrated decision of the United States Supreme Court in International News Service v. Associated Press, 248 U. S. 215 (1918), that case clearly eliminated “passing off” as a required element of a cause of action for unfair competition. 15 There, the Associated Press sought an injunction against its competitor, the International News Service (INS) from appropriating news gathered from around the world, using such techniques as copying from the early editions of Associated Press papers and disseminating it as INS news to INS subscribing newspapers, copying the news releases from the bulletin boards of Associated Press and otherwise obtaining Associated Press news submitted to east coast newspapers and sending it by telegraph or telephone to offices of INS on the west coast.

The Court, in an opinion by Mr. Justice Pitney, held that these facts stated a proper case for unfair competition irrespective of whether or not there was a general and absolute property right in the news as such. The majority of the Court thus established “misappropriation” as a new concept of unfair competition — em ¹⁹⁰ phasizing the competitive relationship and stressing the reciprocal rights and duties arising from it. See, 2 Callmann, The Law of Unfair Competition, Trademarks and Monopolies (3d ed. 1968), § 60.3, p. 508. The constituent elements of the “misappropriation” cause of action postulated in the INS case are (1) time, labor, and money spent in the creation of the thing misappropriated, (2) a competitive relationship between plaintiff and defendant and (3) commercial damage bo the plaintiff.

The Court stated 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. ... It is this right that furnishes the basis of the jurisdiction in the ordinary case of unfair competition.” (p. 236). The Court then referred to the activities of the International News Service in terms strikingly apposite to the instant case (p. 239): “In doing this defendant, by its very act, admits that it is taking material that has been acquired by complainant as the result of organization and the expenditure of labor, skill, and money, and which is salable by complainant for money, and that defendant in appropriating it and selling it as its own is endeavoring to reap where it has not sown, and by disposing of it to newspapers that are competitors of complainant’s members is appropriating to itself the harvest of those who have sown. Stripped of all disguises, the process amounts to an unauthorized interference with the normal operation of complainant’s legitimate business precisely at the point where the profit is to be reaped, in order to divert a material portion of the profit from those who have earned it to those who have not; with special advantage to defendant in the competition because of the fact that it is not burdened with any part of the expense of gathering the news.

The transaction speaks for itself, and a court of equity ought not to hesitate long in ¹⁹¹ characterizing it as unfair competition in business.” (Emphasis added.) It is clear that appellants here appropriated the product of the appellees “precisely at the point where the profit is to be reaped, in order to divert a material portion of the profit from those who have earned it to those who have not.” In Maryland the concept of unfair competition enunciated by Mr. Justice Pitney in the International News Service case has not yet been applied but was cited by Judge Delaplaine speaking for the Court of Appeals in the case of Edmondson Village Theatre, Inc. v. Einbinder, 208 Md. 38 , 116 A. 2d 377 (1955). He wrote: “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. “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. ¹⁹² “The essential elemer.t 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.” The principle that unfair competition is no longer limited to misrepresentation by the wrongdoer in using the name of another to palm off his own product and that it now embraces other schemes in which the wrongdoer uses his own name by misappropriating the property of another, is clearly recognized in other jurisdictions. In its application of the misappropriation theory in Mercury Record Productions, Inc. v. Economic Consultants, Inc., 218 N.W.2d 705, 709 (Wis. 1974), supra, the Supreme Court of Wisconsin found the thread of this theory in a 1916 Wisconsin case, J. I. Case Plow Workers v. J. I. Case Threshing Machine Company, 155 N. W. 128, 134 , an action for unfair competition, when; the Court said: “The legal principles which are controlling here are simply the principles of old-fashioned honesty. One man may not reap where another has sown nor gather where another has strewn.” Again, in a suit by the National Broadcasting Company for an injunction based upon unfair competition and for an accounting and damages based upon tape piracy, National Broadcasting Company, Inc., and Columbia Broadcasting System, Inc. v. Nance, 506 S.W.2d 483 (1974), the Missouri Court of Appeals stated: “In principle, the present defendants’ misappropriation is worse than that in International News and National Directory. Here defendants are trebly appropriating plaintiffs’ property rights: (1) the musical performances plaintiffs have produced and advertised, (2) the names of the artists whose performances plaintiffs had the exclusive right to use and (3) the album titles plaintiffs have created and advertised.

Thus defendants ¹⁹³ have put a new cover on copies of plaintiffs’ products and sold it as their own. As we said in affirming the trial court’s injunctive relief in National Directory: ‘A more flagrant case of unfair competition is nowhere disclosed by the books. In fact, the scheme is more than unfair competition; it amounts to an actual appropriation of the plaintiff’s property by the defendants to their own business purposes. A court of equity ought not to hesitate long to interpose its protection against a scheme of this character.’ ” (Emphasis added.) In reversing and remanding with instructions for the issuance of a permanent injunction against the defendants and for an adjudication of plaintiffs’ claims for accounting and damages the Court in the Nance case pointed out that the “growing practice of ‘tape piracy’ ” by re-recording original phonographic tapes has been enjoined in at least five states, citing Capitol Records, Inc. v. Spies, 130 Ill.App.2d 429 , 264 N.E.2d 874 (1970); Capitol