Opinion
18105.
ARGUED JANUARY 14, 1953.
DECIDED FEBRUARY 24, 1953.
Petition for injunction. Before Judge Atkinson. Bibb Superior Court. November 25, 1952.
Clarke Anderson, Paul H. Anderson, Wallace Miller Jr. and Miller, Miller Miller, for plaintiff in error.
Hall Bloch and Denmark Groover Jr., contra.
1. The use of the trade name "Varsity Drive-in" is such an imitation of the trade name "The Varsity" that a reasonably cautious person might confuse the two when they are engaged in identical kinds of business and employ the same methods of operation.
2. A trade-mark differs from a trade name in that the former identifies a product or its manufacturer but not the owner of the business selling it, while the latter primarily identifies the owner or operator of a business and may, but need not, identify the products handled. There being no allegations to show trade-mark infringement, all averments referring to trade-mark should be stricken from the petition. But there being no alternative pleadings, the allegations relating to trade name are not affected by this ruling as to the trade-mark.
3. While there is no direct market competition shown, yet encroachment by injury to good will and reputation is alleged, and this is alleged to have been done for the purpose of deceiving the public; and, under Code § 37-712, a case of unlawful imitation of a trade name is alleged.
4. The portions of the petition alleging that the petitioner contemplates future expansion that would be impaired by the operations of the defendants is too remote and speculative to constitute a basis for legal complaint, and the court did not err in sustaining the special demurrers thereto.
No. 18105. ARGUED JANUARY 14, 1953 — DECIDED FEBRUARY 24, 1953.
W. Frank Gordy, doing business as "The Varsity," and the plaintiff in error here, seeks injunctive relief against W. E. Dunwody Jr., Kenneth W. Dunwody, and Mrs. Rose Jones Kingman, individually and as partners, doing business as "Varsity Drive-in," for the alleged fraudulent simulation of his trade name and mark, "The Varsity," causing irreparable damage to the preestablished business and good will of the petitioner. The case comes to this court complaining of a judgment of the trial court, sustaining certain grounds of renewed general and special demurrers to the petitioner's amended petition.
The petition as amended alleges: The petitioner is the sole owner and operator of eating establishments in Atlanta and Athens, under his trade name, "The Varsity." The business has been in continuous operation since 1926, when the Atlanta establishment opened, and has been operated and publicized under the trade name, "The Varsity," since 1928, the Athens establishment opening and being in continuous operation since 1930. The Atlanta establishment feeds approximately 10,000 customers daily, over 8000 of whom receive service in private automobiles in a parking area adjacent to the building, about 20% being non-residents of Atlanta, and including a large number of students from the Georgia Institute of Technology with permanent homes in all parts of Georgia. The Athens establishment serves approximately 4000 daily, about 20% being non-residents of Athens, and including large numbers of students from the University of Georgia whose permanent homes are located in all parts of Georgia and in other States. Over a period of years the name "Varsity" has been publicized in connection with the petitioner's business through various types of advertising media to the population throughout Georgia. In 1937 the petitioner registered his trade-name affidavit in Fulton Superior Court, and in 1948 registered his trade name and trade-mark, "The Varsity," with the Secretary of State of Georgia pursuant to Title 106, Chapter 1 (Annotated Code). The petitioner has, at great expense, placed his trade name and mark upon glasses, spoons, sugar, matches, and cups used in the establishments. Through prompt and efficient service of delicious foods and beverages, none kept over 12 hours after preparation, he has built up the good will of the business until it occupies a unique and enviable position in this type of business and is recognized throughout Georgia under the trade name and mark, he being the first in Georgia to use the name "Varsity" in any manner for the type of business operated by him, and the word when used in connection with eating establishments has become to the public synonymous with fine food and beverages, and he has acquired a property right in the name "Varsity" and is entitled to its exclusive use. In 1951 the petitioner first learned of the operation of the eating establishment in Macon, Georgia, operating under the name of "Varsity Drive-in," serving food and beverages to the general public in the same manner as the petitioner. The defendants purchased this business and have continued to advertise this establishment by large and conspicuous signs and in Macon newspapers and over the radio under the name of "Varsity Drive-in." Hundreds of thousands of people of Macon and middle Georgia have patronized the petitioner's establishments, and his business, trade name and mark are well known in that section. Many people have confused the defendants' business with that of the petitioner, and some have complained that his Macon establishment is inferior to his Atlanta and Athens establishments, when in fact the petitioner is in no way connected with the ownership and operation of said business. Both defendants and their predecessors knew of the petitioner's business in Georgia, his trade name, the immense good will attached thereto, and have used and continue to use and advertise the word "Varsity" in the name of that establishment for the purpose of benefiting from the reputation of the petitioner's goods and services which he has built up throughout many years and at great expense. The use of the word in their business is an imitation of the petitioner's business, trade name and mark, and is likely to confuse and does confuse the public into believing that the petitioner is in some way connected with or is sponsor for their business, and the use of the name is with the intent to deceive and mislead the public.
The petitioner further alleges that he caters to college students in Athens and Atlanta; that Macon, where there are two colleges, is a likely area for the normal expansion of his business, and that, prior to learning of the defendant's establishment, he had under consideration opening, under the trade name, an establishment in Macon similar to the others operated by him, but so long as the defendants use the name "Varsity" in Macon he is deprived of the right to engage in business in Macon under his trade name, which he had, at great expense over the years, publicized and made known to the general public in Macon and throughout the State, and the appropriation by the defendants, if continued, will forestall the petitioner from extending his business to Macon and exclude him from an area where his business would normally expand. Immediately upon learning of the use by the defendants of the name "Varsity," the petitioner then and ever since has continuously attempted to no avail to prevail upon them to desist from their use and infringement of his trade name and mark and their unfair competition thereby. The past, present, and future operation by the defendants is and will continue to be an infringement upon the petitioner's business, trade name and trade-mark, and has been, is, and will be illegal and unfair competition which has worked, is working, and will work a fraud upon the petitioner and his business, causing him irreparable injury and damage, for which he has no adequate remedy at law. The type of service offered and their methods of service are so similar to those of the petitioner that the general public is deceived and misled by the almost identical names into believing that the goods and services of the defendants are those of the petitioner and that he is connected with the defendants' business.
The prayers of the petition are for process, rule nisi; that the defendants jointly and severally, as partners and individuals, be temporarily and permanently enjoined from advertising, displaying, or in any manner using the word "Varsity" therein in conjunction, directly or indirectly, with the conduct and operation of their business establishment as described in the petition; and for all other relief as is just and proper.
The grounds of the general demurrer were that the petition sets out no cause of action against the defendant, that the petitioner is not entitled to the relief prayed, and that the allegations of the petition affirmatively show that there has been no unfair competition for which relief could be granted. A special demurrer was sustained to paragraph 12, which alleges that the petitioner registered his trade-mark and trade name with the Secretary of State pursuant to a specified section of the law, the ground of demurrer being that the allegations are irrelevant and immaterial. A special demurrer was sustained to that portion of paragraph 28 which alleges that the defendants' use of the word "Varsity" is an imitation of the petitioner's trade-mark, the ground of demurrer being that the allegations do not show how the defendants imitate it, what mark the defendants use, or in any way describe the trade-mark used by the defendants. Special demurrers were also sustained to paragraphs 32 and 33, in which it is alleged that prior to learning of the defendants' establishment he was considering locating a business in Macon under his trade name, since it was a logical location for an expansion of his business, the grounds of demurrer being that the allegations are irrelevant and immaterial in this action and contain erroneous conclusions of the pleader.
1. That the petitioner by long use and registration had acquired a right to the trade-mark and trade name "The Varsity," is clearly shown by the petition. Therefore, at the outset it is necessary to determine whether or not this trade name and trade-mark of the petitioner is infringed and imitated by the trade name of the defendants, which is "Varsity Drive-in." It is readily seen that the word "Varsity" is common to both and the other words in each are relatively unimportant, and undoubtedly some people would confuse the two and conclude that they were the same, but that is not the test the law makes. If a reasonably cautious person would mistakenly confuse the two trade names of the parties and believe that the separate businesses had a common ownership, then the imitation, if other legal requisites are present, would be unlawful. Industrial Investment Co. v. Mitchell, 164 Ga. 437 ( 138 S.E. 908); 52 Am. Jur., p. 501, Trademarks, Trade-names, etc. Because each contains the word "Varsity" and the parties are engaged in precisely the same kind of business, and the methods of operation are identical, we must conclude that any reasonably cautious person might well believe that they are the same.
2. A decision in this case is made more difficult by reason of the fact that the petition throughout links trade name and trade-mark together in all allegations of infringement and imitation as grounds for the relief sought. The two are identical, being "The Varsity," and doubtless by joining allegations of infringement it is hoped that, if it be held that there has been no infringement of the one, a ruling that the other has been illegally imitated will sustain the action, and that is precisely what we shall hold in this opinion. Counsel for the defendants challenge this mixture of allegations, upon the contention that this constitutes alternative pleading and subjects the petition as a whole to the rule that where an alternative pleading is assailed by a demurrer, if either of such alternatives is found invalid, the entire pleading must be dismissed. Consolidated Distributors v. City of Atlanta, 193 Ga. 853, 858 ( 20 S.E.2d 421); W. P. Brown Sons Lumber Co. v. Echols, 200 Ga. 284 ( 36 S.E.2d 762). The fallacy of this contention of counsel is that these matters are not pleaded in the alternative but on the contrary are pleaded conjunctively, that is, both are alleged to have been infringed and imitated and the right to the relief sought is predicated thereon. When such pleadings are attacked by demurrer, if either the trade-mark or trade name has been infringed or imitated contrary to law and the other has not, the petition is sufficient to withstand the demurrer.
Our statutory law, as it appeared in Code § 106-101 and as it now appears in Georgia Laws, 1952, page 134, which repealed the foregoing Code section, so describes and defines the trade-mark therein referred to as to clearly distinguish it from a trade name. The former law described trade-mark as "any label, trade-mark, or form of advertisement," adopted for the protection of goods by attaching such label, trade-mark, and form of advertisement to such goods to show the manufacturer thereof. And it further provided that "it shall be unlawful for any person or corporation to counterfeit or imitate such label, trade-mark, or form of advertisement with intent to use the same for the purpose of deceiving the public in the sale of the goods." The 1952 act, by section 6 (a) and (e), repeats the substance of the old law and clearly confines the use and purpose of a trade-mark to the placing of it upon the goods and the containers or on the tags and labels affixed thereto to distinguish them from goods made or sold by others. These provisions of our law, restricting the meaning and function of a trade-mark to the identification of goods and their manufacture, are in complete harmony with the general law on the subject. See 42 Words Phrases, p. 253. A trade name primarily identifies the owner or operator of a business and may also be used to identify the goods handled by such owner.
Although the amended petition alleges that the defendants constantly display the word "Varsity" upon their premises, and it is contended that this constitutes an infringement of the trade-mark, yet under the definition of trade-mark in the law above cited this would not constitute an infringement. Therefore, in order that the case relating to the alleged imitation of trade name might be clearly presented and tried, all allegations in the amended petition with reference to the trade-mark should, in the absence of allegations of infringement, be stricken from the petition.
3. We now consider the petition and demurrers in so far as they relate to illegal imitation of the petitioner's trade name. We believe that this court has heretofore adequately and plainly discussed the essential requisites to the maintenance of an action to prevent the imitation of a trade name. See Larrabee Co. v. Lewis, 67 Ga. 561 (44 Am. R. 735); Foster, Milburn Co. v. Blood Balm Co., 77 Ga. 216 ( 3 S.E. 284); Creswill v. Grand Lodge K. P. of Georgia, 133 Ga. 837 ( 67 S.E. 188); Emory v. Grand United Order of Odd Fellows, 140 Ga. 423 ( 78 S.E. 922); Carter v. Carter Electric Co., 156 Ga. 297 ( 119 S.E. 737); Industrial Investment Co. v. Mitchell, 164 Ga. 437 ( 138 S.E. 908); Tanner-Brice Co. v. Sims, 174 Ga. 13 ( 161 S.E. 819); Gano v. Gano, 203 Ga. 637 ( 47 S.E.2d 741); Kay Jewelry Co. v. Kapiloff, 204 Ga. 209 ( 49 S.E.2d 19); First Federal Sav. Loan Assn. v. First Finance Thrift Corp., 207 Ga. 695 ( 64 S.E.2d 58); Womble v. Parker, 208 Ga. 378 ( 67 S.E.2d 133). Our only comment upon the foregoing decisions at this time will be confined to the contention of counsel for the defendants in error that the decision in Kay Jewelry Co. v. Kapiloff, 204 Ga. 209 (supra), is in conflict with Tanner-Brice Co. v. Sims, 174 Ga. 13 (supra), is unsound, and should be disapproved. The decision in the Tanner-Brice case was expressly based upon the fact that the complainant there had given his oral consent to the use of his name and the user had incurred expenses in reliance thereon, and that therefore the consent was irrevocable. All discussion in the opinion concerning the necessity for direct market competition in order to show illegal imitation and infringement as required under the common law was plainly obiter dicta. Therefore no conflict in the two decisions appears. The decision in the Kay case is in accord with Code § 37-712, where it is provided that "any attempt to encroach upon the business of a trader, or other person, by the use of similar trade-marks, names, or devices, with the intention of deceiving and misleading the public, is a fraud for which equity will grant relief." An encroachment upon the business of another may be made without direct market competition. Such an encroachment was found in the Kay case, where credit methods that caused dissatisfied customers did injury to the credit business of the first user by damaging its reputation. It was there considered that the imitator sought to profit by the reputation of the first user in its crediting system.
In the present case, it is doubtful if direct competition is shown, since the businesses of the first user are located in Atlanta and Athens and that of the second user is in Macon. Yet they are engaged in the same type of business and their general methods of operation are precisely the same, and it is alleged that the defendants imitated the trade name of the petitioners for the purpose of and with the intention of deceiving and misleading the public to believe that they were the same. The above Code section declares that such practice is fraud for which equity will grant relief. The petition therefore alleges such facts that, if proven upon a trial, would entitle the petitioner to the relief sought. For the reason set forth in the foregoing opinion, the court erred in sustaining both the general and special demurrers in so far as the allegations relating to the trade name are concerned, but it was not error to sustain such demurrers in so far as they relate to the allegations concerning an infringement of the trade-mark; nor was it error to strike paragraphs 32 and 33 of the petition which allege interference with future expansion of the petitioner's business.
Judgment reversed in part and affirmed in part. All the Justices concur, except Wyatt, J., who dissents, and Atkinson, P. J., not participating.