Opinion
No. 839894
Decided June 5, 1967.
Trade practices — Corporate names — Unfair competition — Ohio corporation, distributor for foreign manufacturing corporation — Using similar name — Cancellation of distributorship contract by manufacturer — Appointment by manufacturer of distributor Ohio corporation — Use of trade name — Injunction — Damages.
1. A foreign corporation which, during the eight years that an Ohio corporation acted as distributor of its products, acquiesced in the use of a corporate name identifying it with the manufacturer and its product, and which had no contractual provision defining their respective rights in such name, may not, upon cancellation of the distributorship, require such Ohio corporation to discontinue use of its corporate name.
2. An Ohio corporation which has for eight years served as the distributor of the products of a foreign corporation, which acquiesced in the use of a similar corporate name by the distributor, may, after cancellation of the contract between the parties, which contained no limitations on the use of such name, obtain an injunction against the use of another similar name by an Ohio corporation formed as a wholly owned subsidiary of the manufacturer corporation, for the purpose of serving as the new Ohio distributor, when this has caused confusion with impairment of plaintiff's name, good will and business.
3. An Ohio corporation which has used a similar name to that of a foreign corporation for whose products it served as distributor in this state may not, after cancellation of their contract, secure an injunction against the manufacturer prohibiting its use of its corporate name when engaging in business in this state as a licensed foreign corporation.
4. A petition of an Ohio corporation which alleges that the (new party) defendant foreign corporation, after acquiescing for eight years in the use by the plaintiff of a corporate name similar to its own while the plaintiff was its Ohio distributor under a contract not defining their respective rights in the name, cancelled the contract and formed an Ohio corporation, as its wholly owned subsidiary, for the purposes of acting as its distributor in this state under another similar name, thereby causing confusion and an impairment of the established business and good will of the plaintiff, states a cause of action for money damages against the manufacturer corporation.
Messrs. Carney, Carney Broadbent, for plaintiff.
Messrs. Kane, Ray Elder, for defendants.
This action was commenced when the plaintiff, The Manitowoc Sales Service Corporation, filed its petition against the defendant, Manitowoc Crane Shovel Sales Corporation, in which it asks the court to enjoin that defendant from the use of the word Manitowoc in connection with its business, charging the defendant with a course of conduct which plaintiff alleges constitutes "unfair competition" in business.
The defendant filed an answer in which it joined Manitowoc Company, Inc., as a new party defendant.
The original parties will be hereafter referred to as the plaintiff and the defendant and the new party defendant will be referred to as Manitowoc.
Consideration of the relief requested by the plaintiff in its petition is limited to a determination of whether the plaintiff is entitled to have the defendant enjoined from using the word "Manitowoc" in its corporate name.
To decree that the defendant be enjoined from the use of the word "Manitowoc" at all times and in every respect "in connection with its (the crane and shovel) business" would be tantamount to a decree that the defendant could not engage in the crane and shovel business.
A crane manufactured by Manitowoc is known as a Manitowoc Crane in the same manner as a crane manufactured by the Link-Belt Company is known as a Link-Belt Crane or a shovel manufactured by the Thew-Lorain Division of Koehring Company is known as a Lorain Shovel, or an automobile manufactured by the Ford Motor Company is known as a Ford automobile, or a deep freeze refrigerator manufactured by Manitowoc is known as a Manitowoc Freezer. The word "Manitowoc" is not itself symbolic of a product as are "Listerine," "Lysol," "Alemite" or "Gombault's Caustic Balsam."
Regardless of the corporate name under which a dealer in cranes and shovels may operate he must necessarily use the word "Manitowoc" if he is offering for sale, advertising for sale, trading, selling or leasing a new or used Manitowoc crane. Obviously such use of the word would not be misleading or confusing to the public. Use of the same or a similar corporate name of another, however, while engaged in a competitive business, in the same general area could result in confusion and impairment of the established business and good will of the prior user of a name.
Upon being joined as a defendant Manitowoc filed a cross-petition against the plaintiff in which it asks that the plaintiff be restrained from continuing the use of the word "Manitowoc" in connection with the crane and shovel business in the state of Ohio. Manitowoc alleges that it is a Wisconsin corporation and has engaged in the business of manufacturing and sales of power cranes and shovels and parts since 1930; that the defendant is a wholly owned subsidiary; that Manitowoc adopted and used the name "Manitowoc" in connection with its business for over 39 years; that although plaintiff has used the name "Manitowoc Sales and Service Corporation" since 1959 it has been without Manitowoc's consent or prior approval; that plaintiff's use of the name "Manitowoc" has been to confuse its identity with Manitowoc and such confusion has deceived the public into believing plaintiff is a branch of Manitowoc and has been patronized under such delusion; that it has spent millions of dollars advertising the name "Manitowoc" in the United States and elsewhere; that its trade has been and will be diverted by plaintiff's deception and it will be greatly damaged by plaintiff's continued use of the word "Manitowoc."
The plaintiff subsequently filed an answer and cross-petition against Manitowoc in which it prays for a money judgment against Manitowoc in the amount of $5,000,000 and also asks that Manitowoc be restrained from establishing other distributorships using the word "Manitowoc" in their name within the state of Ohio and, further, that Manitowoc be restrained from engaging in the same or similar business as is presently being conducted by the defendant within the state of Ohio using in its name the word "Manitowoc."
Plaintiff claims in this cross-petition that while it acted as a distributor for products manufactured by Manitowoc since 1959 it has also engaged in other business operations, including the sale and purchase of used equipment, service of equipment, rental of equipment, distributorship of equipment manufactured by others than Manitowoc, etc.; that its distributorship of Manitowoc products in Ohio was at the request and the name was used with the consent of Manitowoc; that it has taken trade-ins; that its inventory of used equipment and that of its affiliates is approximately $1,450,000; that it is liable, under recourse arrangements, for obligations of its customers; that because it refused to sign a contract under which Manitowoc would have the right to require it to give up its true corate name Manitowoc conspired with the defendant to put the plaintiff out of business and cause it great financial loss by means which plaintiff alleges are unlawful; that Manitowoc intentionally interfered with plaintiff's business contracts, created a monopoly and engaged in unfair competition and unlawful restraint of trade.
Since the business of the defendant is that of selling, leasing and dealing in new and used cranes, shovels and their parts at the retail level, the plaintiff in its request for injunctive relief is actually asking that the court enjoin Manitowoc from selling, leasing and dealing in cranes, shovels and parts, at retail, within Ohio — in addition to also asking that Manitowoc be enjoined from having any other person, firm or corporation do so while using the word "Manitowoc" in its name. This is tantamount to asking that Manitowoc be prohibited from selling or disposing of any of its products in Ohio in a normal course of business.
Prior to the commencement of the trial, it was agreed that the court should first determine what, if any, injunctive relief the plaintiff and Manitowoc are entitled to; that thereafter the portion of the cross-petition of the plaintiff against Manitowoc asking for money damages should be submitted for the determination of a jury.
The word "Manitowoc" is the subject matter of this phase of the lawsuit. It is actually a geographical name. However, the law with reference to the use of a geographical word or name in a trade name is of no importance under the facts here presented.
We shall not endeavor to review all of the citations pertaining to trade names and unfair competition that counsel have called to the attention of the court or which the court itself has reviewed.
However, see 52 Ohio Jurisprudence 2d, Trademarks, Trade Names and Unfair Competition, pages 339 through 415. Also, see 52 American Jurisprudence, Trademarks, Trade Names and Trade Practices, pages 501 through 673; Restatement of the Law, Torts, Chapter 35, Confusion of Source, Section 711 to Section 756, pages 534 to 683.
Restatement of the Law, Torts, at page 558, defines a trade name:
"A trade name is any designation which (a) 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 (b) through its association with such goods, services or business, has acquired a special significance as the name thereof * * *." (Emphasis supplied.)
52 Ohio Jurisprudence 2d, page 346:
"A trade name involves the individuality of the maker for protection in trade, for avoidance of confusion in business, and for securing the advantage of a good reputation."
Reported cases involving alleged infringement of trade names and unfair competition in business are legion. None contain fact situations akin to those present in this action.
The facts and circumstances of each individual case are all important.
The admissions, stipulations and evidence disclosed the following:
The plaintiff is an Ohio corporation whose articles of incorporation were filed September 30, 1959. From then to now it has been engaged in the business of selling, leasing, servicing and dealing in cranes, shovels, drag lines, hoisting equipment and parts, therefor. From 1959 until January 5, 1967 (the date its distributorship contract was termnated by Manitowoc), it was the distributor in most of Ohio for cranes, shovels, etc., and parts that were manufactured by Manitowoc. Its business however has not been limited to Manitowoc products.
Plaintiff's contract with Manitowoc (plaintiff's exhibit 4) provides:
"9. It is expressly understood by Manitowoc and Distributor that this contract shall not be considered or interpreted as naming, appointing or constituting the Distributor as an employee or as an agent of Manitowoc, and the Distributor shall have no authority to bind or obligate Manitowoc in any manner but at all times have the status of an independent contractor."
At the time of plaintiff's incorporation there was no other corporation licensed to do business in Ohio with the word "Manitowoc" in its corporate name, or at least none has been called to the attention of the court. This situation continued until March 10, 1962, when Manitowoc (The Manitowoc Company, Inc., a "Wisconsin Corporation") qualified as a foreign corporation in Ohio. Mr. John B. West, the president of Manitowoc, testified that this qualification was in connection with the operations of the division of Manitowoc that manufactures freezers and like products.
The rental of equipment, the sale of used equipment, and the sale of equipment other than that manufactured by Manitowoc has become a substantial and profitable portion of plaintiff's business. This has resulted to a high degree from plaintiff's aggressive advertising of, and promotion of, its corporate name.
The defendant was incorporated in Ohio on January 23, 1967. It has entered into a distributorship contract (defendant's exhibit XX) with Manitowoc covering the area that had been included in the distributorship contract between the plaintiff and Manitowoc. All of its capital stock is owned by Manitowoc. Mr. Ralph Helm, the executive vice president of Manitowoc, is president of the defendant corporation.
Since its creation it has been engaged in the business of selling, leasing and dealing in cranes, shovels and parts, therefor, including Manitowoc products and others.
The defendant located its office at 11324 Brookpark Road, Cleveland, Ohio, which was within two miles of 16891 Brookpark Road, which was the address of the principal office of the plaintiff; erected a sign similar to that maintained by plaintiff, hired Mr. Richard Leppla, who had been the sales manager of plaintiff, as vice president; advertised and otherwise caused itself to be held out as "* * * exclusive distributor for sales, service, and rental of all Manitowoc, Bay City Manitowoc and Potain equipment." (plaintiff's exhibit 24) "Remember genuine Manitowoc and Bay City parts only from us." (plaintiff's exhibit 25.) While Mr. Leppla was still on the payroll of the plaintiff — and was also either an actual employee of defendant or had been hired to become an employee of defendant — he attempted on behalf of defendant to dissuade prospective purchasers of parts to withhold placing orders with plaintiff and attempted to induce Mr. Ice to leave his employment with plaintiff for employment with defendant. Sales of Manitowoc products have been concluded by Mr. Leppla for the defendant with firms that he had contacted for business while in the employ of the plaintiff.
Manitowoc is a Wisconsin corporation and has been engaged in the business of manufacturing and selling cranes, shovels, etc., for over 30 years. Its equipment has borne the words Manitowoc Speedcranes, Speed Shovels, Speed Trenchoes, Speed Draglines, and Manitowoc Cranes and Excavators. Its cranes, shovels and hoisting equipment are recognized by persons engaged in the construction and allied industries as being a very high quality.
It is the position of Manitowoc and defendant that since Manitowoc has used the word "Manitowoc" as a trade name or a trademark on its cranes and shovels for over thirty years that it has special property rights in that word; that it may restrict the use of that word by any other firm engaged in the selling, leasing or dealing in cranes and shovels any place in the world; that its rights therein include the right as a matter of law — irrespective of any contractual rights — to require the plaintiff to cancel out or withdraw the word "Manitowoc" from the corporate name under which it has been engaged in business for approximately eight years.
A manufacturer in the absence of a contract has no such unlimited rights as claimed by Manitowoc.
Granting that Manitowoc would have the right to enjoin another manufacturer of cranes and shovels from marketing such products under the name of "Manitowoc" we cannot agree that it has such property rights in the word as is here contended by both defendants.
While the evidence admitted at the trial generally bore upon the issues presented in all of the alleged causes of action the court is called upon to decide three separate actions — each asking equitable relief in the form of an injunction.
They are:
1. The action of the plaintiff against the defendant where the issues are made up by the petition of the plaintiff and the answer of the defendant.
2. The action of the defendant Manitowoc against the plaintiff where the issues are made up by the cross-petition of Manitowoc against the plaintiff and the plaintiff's answer thereto.
3. The action of plaintiff against Manitowoc where the issues are made up by the plaintiff's cross-petition against Manitowoc.
Each of the actions must be decided separately.
1. In the action of the plaintiff against the defendant where the issues are made up by the petition of the plaintiff and the answer of the defendant, the court finds that the plaintiff has established its right to enjoin the defendant from using the word "Manitowoc" in its corporate name.
Plaintiff's corporate name constitutes a distinctive trade name in Ohio; it has been so used and developed for approximately eight years prior to any attempted use by defendant; plaintiff has made a substantial investment of money, time and effort in advertising and promoting its business under its trade name; eight years after plaintiff commenced business defendant entered into competition with it in the same kind of business and in the same business area; confusion with impairment of plaintiff's name, good will and business, has resulted from defendant's adoption of a corporate name similar to that of plaintiff.
2. The court further finds for the plaintiff on the issues joined on the cross-petition of Manitowoc against the plaintiff. No valid reason has been shown why plaintiff should not be permitted to continue doing business, using the corporate name under which it was duly incorporated eight years ago. Further, it is conclusive from the evidence that if Manitowoc did not actually request the plaintiff to establish its business under the corporate name of Manitowoc Sales and Service Corp., that it did acquiesce in and consent to the use of such name. Manitowoc further recognized plaintiff's property right in and to its corporate name by its efforts in 1966 and 1967 to require that the plaintiff contract away its right to the continued use of its name.
3. The court finds, in the action of plaintiff against Manitowoc, that plaintiff has not established a right to the injunctive relief that it requests. The cross-petition of plaintiff does state a cause of action for recovery of money damages, and actually demonstrates that plaintiff has an adequate remedy at law in the premises.
To grant the injunction against Manitowoc that is requested by the plaintiff would be tantamount to enjoining Manitowoc from selling in Ohio, under its own name, the equipment that it manufactures or arrange to have others do so in a normal course of business.
Even though it may be found by a jury that Manitowoc wrongfully caused damage to plaintiff for which a money judgment should be entered, the court is still not thereby authorized to decree that it cannot conduct normal business operations in Ohio. A party suffering damages as a result of unfair competition in business is not always entitled to injunctive relief.
The decree on plaintiff's petition enjoning the defendant from using the word "Manitowoc" might ultimately become a vain act in view of the finding of the court with reference to the cross-petition of the plaintiff against Manitowoc but it must be remembered that the defendant is a separate and distinct legal entity — an Ohio corporation. The injection of Manitowoc into this lawsuit does not vary the issues between the plaintiff and defendant, nor the relief to which plaintiff is entitled, on its petition. The decision of the court on plaintiff's petition is based on what transpired in the latter part of 1966 and early 1967, as affecting the rights of the plaintiff and the defendant.
Further, the distributorship contract between Manitowoc and the defendant contains the following:
"12. General Provisions
"(a) It is expressly understood by the parties hereto that this contract shall not be considered or interpreted as naming, appointing or constituting the DISTRIBUTOR as an employee or agent of MANITOWOC and the DISTRIBUTOR shall have no authority to bind or obligate MANITOWOC in any manner, but at all times shall have the status of an independent contractor as to MANITOWOC."
Counsel for the plaintiff shall prepare a journal entry in accordance with this memorandum and submit it for approval to counsel for the defendants. The journal entry shall not be filed with the clerk for journalization until a journal entry on plaintiff's action for money damages is ready for filing. Both journal entries shall be filed concurrently.
Defendant, Manitowoc Crane and Shovel Sales Corp., is not a party to the action of plaintiff against Manitowoc for money damages although it is named as a conspirator therein.
The action for recovery of money damages is based principally upon the claim of plaintiff that Manitowoc and the defendant conspired to unlawfully interfere with the business of the plaintiff. The cross-petition also contains averments constituting allegations of acts of unfair competition by Manitowoc independent of a conspiracy. Plaintiff shall be obligated to prove all the material averments of its cross-petition that are denied by Manitowoc. However, in its charge to the jury the court will, if requested by counsel for the plaintiff, instruct the jury that if they decide, from a preponderance of the evidence, that Monitowoc and defendant did conspire to unlawfully interfere with the business of the plaintiff, that, the adoption of the name Manitowoc Crane and Shovel Sales Corp., being so similar to that of the plaintiff, did in fact constitute an act of unfair competition by that corporation.