Fleischmann Distilling Corporation v. Maier Brewing Company

PETITIONER:Fleischmann Distilling Corporation
RESPONDENT:Maier Brewing Company
LOCATION:Leon County Jailhouse

DOCKET NO.: 214
DECIDED BY: Warren Court (1965-1967)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 386 US 714 (1967)
ARGUED: Feb 14, 1967
DECIDED: May 08, 1967

Facts of the case

Question

Audio Transcription for Oral Argument – February 14, 1967 in Fleischmann Distilling Corporation v. Maier Brewing Company

Earl Warren:

Number 214, the Fleischmann Distilling Corporation et al., Petitioners, versus Maier Brewing Company, et al.

Mr. Lasky.

Moses Lasky:

Mr. Chief Justice, may it please the Court.

It was nearly nine years ago that the makers and American distributors of the famous ‘Black & White’ whiskey sought to have the respondents discontinue an infringement of the ‘Black & White’ label on alcoholic beverages.

As the District Court has said in the record, “We used every reasonable effort to obtain some reasonable accord about that without bringing a suit.

But we were defied.”

The suit was brought for trademark infringement.

And as a result of the decision of the Ninth Circuit about three years ago to which this Court then denied review in 1963, we obtained an injunction against the respondents pirating the ‘Black & White’ trademark on alcoholic beverages.

Upon concurrent findings of both courts below, it is the law of this case that the respondents’ conduct was not only an infringement but that it was willful, fraudulent, and bad faith.

And that the only rational explanation of respondents’ conduct in adopting the name ‘Black & White’ in the first place and then in persistently defying the petitioners when asked to cease and even of carrying the case or attempting to carry it up to this Court was that they were trying to trade on the real ‘Black & White’s goodwill, in other words if this was a case of a careless and recalcitrant attitude, a willful and persistent defiance.

Now, if the Court please, for years, it has been accepted indeed as harmful blow that in trademark infringement suits in the federal courts in equity, federal courts have the power in appropriate and proper circumstances to assess against the infringing defendants, the litigation expenses including attorney’s fees which their conduct has imposed upon the plaintiff.

The circumstance on which that power could be and should be exercised has been variously expressed.

But I think they can all be summed up in terms of willful conduct — willful misconduct where the infringer has acted knowingly and with deliberate purpose to fill the goodwill of the trademark owner and in persistent defiance of the owner’s rights.

Now, until this case now before the Court came to the court below, every Federal Court of Appeals had to dealt with this matter, every — at least every Court of Appeals in which there is any report of the matter, and numerous District Courts have upheld the power.

And it has been repeatedly been exercised below and above where awards of fees have been affirmed and additional awards have been granted.

Our briefs cites to the Court decisions of the First, Second, Third and Seventh Circuits in trademark cases indeed from the First — from the Second Circuit, a decision on which this Court denied review just last term.

We cite decisions on unfair competition cases from the Sixth and the Seventh Circuit.

And one from the Second Circuit handed down just two months ago, a week or two after the petitioner’s opening brief was filed in this Court where an award of attorney’s fees was justified by the Court because defendant’s conduct was described as intentional, vexatious, and fraudulent.

We cited decisions from the Fourth Circuit which relies on these very trademark decisions.

And until this case, that had also been the settled law in the whole series of decisions in the Ninth Circuit.

There were no cases to the contrary.

And so after the remand from the Court of Appeals several years ago, we applied to the District Court to enter judgment accordingly and we got our injunction against infringement.

And proceeding upon this solid and unanimous chain of authority, the District Court then appraised the circumstances and determined in the exercise of its discretion and its appraisal of the facts that an award of fees and litigation expenses should be made and an award was entered.

An interlocutory appeal was taken to the Ninth Circuit, from that order it allowed and the Ninth Circuit reversed.

It overruled its prior decisions.

In so many words, it said they were bad law.

And it looked at the decisions from the other Courts of Appeals.

And it said as to them, they are not well considered.

It said it would not follow them and its conclusion was this, “We hold that attorney’s fees are not recoverable in trademark infringement cases under the Lanham Act primarily because the Congress has not provided for them”.

In other words, the case as it now comes before this Court for consideration presents about as fundamental question in the administration of justice as you could find, namely, a question of the power, of an equity court because the Court of Appeals has held that in no circumstances whatever, has the federal court the power to award attorney’s fees.

Byron R. White:

In the Lanham Act?

Moses Lasky:

If the case comes here in regard of the Lanham Act case.

But what they have said, if the Court please, what the Court says is so broad that it extends to all kinds, any kind of equity case unless you can turn specifically to an Act of Congress that says in this kind of case, you may award fees.

William J. Brennan, Jr.:

So you mean whether fund from which the —

Moses Lasky:

Short of the fund case.

William J. Brennan, Jr.:

Yes.

Moses Lasky:

Yes, Your Honor.

William J. Brennan, Jr.:

Yes, that’s Sprague — Sprague is the funding.

Moses Lasky:

They — that’s right.

They tried to distinguish the prior cases as being fund cases only.

William J. Brennan, Jr.:

Yes.

Byron R. White:

What if we don’t — what if — what if — what if we don’t read the opinion as broadly, what you said is that in — sort of — that they did say clearly that never remand on that case.

Moses Lasky:

Well, then it’s still an important question.

Byron R. White:

Yes.

Would you still have the same argument?

Moses Lasky:

I have the same argument.

Byron R. White:

(Inaudible)

Moses Lasky:

Exactly, exactly.

Abe Fortas:

Well, you — you’re not arguing, are you, that the Lanham Act authorizes attorney’s fees in any case?

Moses Lasky:

Yes, I do.

Abe Fortas:

You do argue that?

Moses Lasky:

Yes I do.

Abe Fortas:

And then you argue that if the Lanham Act does not authorize that the Court nevertheless has equity power.

Moses Lasky:

I say —

Abe Fortas:

Is that correct?

Moses Lasky:

— that the Lanham Act does authorize it, but if it doesn’t, it does not subtract from a power already present.

My submission Mr. Justice Fortas is in the simplest possible terms that a federal equity court has this power because it has been granted by Congress and it was granted by Congress in the year this republic was born in 1789 —

Abe Fortas:

I understand that —

Moses Lasky:

— the first Judiciary Act.

Abe Fortas:

But are you relying, — so far as your Lanham Act argument is concerned, are you relying on Section 35 or are you relying on any specific —

Moses Lasky:

No never.

Abe Fortas:

— language of the Lanham Act?

Moses Lasky:

Your Honor, there is no expression in the Lanham Act which have those words.

Ipsissima verba says, the Court may award attorney’s fees.

Abe Fortas:

I see.

Moses Lasky:

There is no such.

Abe Fortas:

So you’re saying that —

William J. Brennan, Jr.:

What is —

Abe Fortas:

— it’s implicit in the Lanham Act or if it’s not implicit in the Lanham Act, then the power resides in the courts of general equity jurisdiction?

Moses Lasky:

Yes, the power — the Lanham Act Section 35 says that a registrant whose rights have been violated is entitled — is entitled to injunction or injunctions of previous section, to the defendant’s profits, to the plaintiff’s damages, and the cause of action and it prefixes all by saying subject to the principles of equity.

William J. Brennan, Jr.:

Well, Mr. Lasky, do you bring this within any of those three as example cause of action or you say —

Moses Lasky:

Yes.

William J. Brennan, Jr.:

— independently at all?

Moses Lasky:

No.

It’s my submission that the term cause of actions covers this question.

William J. Brennan, Jr.:

Well, does it ordinarily?

On —

Moses Lasky:

Yes.

William J. Brennan, Jr.:

It does in England of course, but does it in the United States?

Moses Lasky:

Yes, yes.

It does.

And we get back then to — to this very question.

This question first came to this Court in 19 —

Abe Fortas:

But I — excuse me —

Moses Lasky:

Yes sir.

Abe Fortas:

— but — I — this is important point to me.

Are you saying that these specific words in the Lanham Act, the course of the action support your request for attorney’s fees?

Moses Lasky:

I think they do.

Now —

Abe Fortas:

— and then you are relying on the system as therapies?

Moses Lasky:

No.

I say that if the Lanham Act had nothing in it, we would — the Court would have the power.

But it happens to have these words in here which reaffirm the power already existing.

Now, I go back to Sprague.

It was, of course in 1928, that this Court first had the question before it whether the term cost, the power to award costs is included within it, the power to award attorney’s fees.

William J. Brennan, Jr.:

But it — in the United States, generally do we get that, that’s the cost?

Moses Lasky:

Well in 1928, this Court said we do not have to pass on it now.

Then that question came back to this Court in Sprague in ‘39.

And my submission is that in the historical review, this Court traced the power back to the first Judiciary Act and said that a federal court has all the power to —

William J. Brennan, Jr.:

Except — except with those, because that really was in the context of the fund, wasn’t it?

Moses Lasky:

It was —

William J. Brennan, Jr.:

— and that is ordinarily (Voice Overlap) —

Moses Lasky:

Not exactly.

It was in the context of something approaching a fund —

William J. Brennan, Jr.:

And subject to it.

Moses Lasky:

Yes, I think so.

But the Court took pains to point out that their decision was not so limited.

And it said we – a discre – that this chancellor has a broad discretion.

And I submit that what this Court said in Sprague and the other lower courts, since it was so construed it, that the power to award attorney’s fees was not confined to a fund case.

Now —

William J. Brennan, Jr.:

Is that — were all five Circuit Court cases think I haven’t read them, that you cite are — they were — this has been sustained?

Are they all Lanham Act cases or are they —

Moses Lasky:

Yes.

I think —

William J. Brennan, Jr.:

The First, Second, Third, and Seventh?

Moses Lasky:

Yes, they’re Lanham.

The — and one of the best of course is the most recent one from the Second Circuit, the Monsanto case was a Lanham Act case.

William J. Brennan, Jr.:

But in all of these are in the Lanham Act?

Moses Lasky:

All are Lanham Act case except the first one, the Aladdin case which was decided in 1941, five years before the Lanham Act was passed.

And I think that’s significant.

Moses Lasky:

Now, in 1939 this Court in the Sprague case held and what it held I think is — is best summed up in this Court’s own language in Vaughan versus Atkinson a couple of years ago or about three years ago in these words.

And I quote, “As we said in Sprague versus Ticonic Bank, 307 U.S. and so forth, allowance of counsel fees and other expenses entailed by litigation, but not included in the ordinary taxable costs regulated by statute is part of the historic equity jurisdiction of the federal courts.”

And that was not a fund case.

And this Court was summing up what was held.

Now, two years later after this decision came the Aladdin decision in the Seventh Circuit.

And in the Aladdin case, this is what the Court said, “Counsel fees necessitated by the tort”, this was a trademark case under the Act of 1905, “It had been sent in some instances to be recoverable as part of the compensatory damages in another cases as part of exemplary damages.

Now, it’s five years later after this, the Lanham Act was passed.

The Lanham Act was passed.

It has in it the words, the Court allows the cause of the action subject to the principles of equity and my submission is that having — if we accomplished — let me put it this way.

Under the Bell and the Sprague case and that it was part of the historic power of the federal court and equity to award cost in an appropriate case.

Having the Aladdin case which says that traditionally, a cost on attorney’s fees were allowed in trademark cases, along comes the Lanham Act, uses the term subject to the principles of equity.

And that’s why I submit that in that sense, the Lanham Act affirmed the doctrine.

Now, let’s suppose the Lanham Act have been totally silent and had nothing on it.

The Lanham Act did not confer a jurisdiction on federal courts in trademark cases.

Under the diversity of jurisdiction, the federal courts could have had jurisdiction of common law state trademark demands.

It is true the Act of 1905 in the Lanham Act put aside the necessity of diversity by giving a jurisdiction based on the Commerce Clause.

But unless — now, I have no doubt at all that Congress by an act would extract — subtract away from a District Court’s power in any particular kind of case.

And so I submit that if the Lanham Act did wanted to subtract that power, it would have to say so expressly and had it said nothing on the subject, the power would still be there, but it went further and said subject to the principles of equity.

Now, let me go further and make this submission.

We submit the trademark cases are peculiarly warranting the exercise of this power.

Perhaps I should say at this point, I am not urging the English rule.

The English rule — even though this power derives from traditional equity practice, the English rule comes pretty close to being ‘the prevailing party always gets his attorney’s fees’.

This is not the rule that I know of, that any American court has laid down.

It’s not the rule I have urged.

The rule I have urged stands out by way contrast to the — to the English rules.

And the English rule in trademark cases has been beautifully set forth in the leading English textbook on trademark litigation.

I’d like to read this because the contrast is appealing.

An unsuccessful defendant must usually pay costs.

Although he has only defended the mark which he honestly adopted without being aware of its true great resemblance to the plaintiff’s mark and though he has acted without fraud and an ignorance of the plaintiff’s rights and the actions has been commenced against him without notice”.

Now notice, the author of that statement assumes it to be too obvious to need demonstration that from a standpoint of justice and fairness of equity, the trademark infringer ought to pay the attorney’s fees where he adopted the trademark in full awareness of the plaintiff’s rights, acting fraudulently to profit from plaintiff’s goodwill, and defiantly after a notice to cease, none of those elements are necessary in England.

Moses Lasky:

We have all those elements necessary here.

Now, my submission is that there is the power.

And the next question is “What are the outer boundaries of the power beyond which a District Court in the exercise of its discretion would be guilty of an abuse of discretion?”

Abe Fortas:

Well, is your position that this power exists with respect to trademark infringement cases but not for example with respect to unfair competition kind of like other than by trademark?

Moses Lasky:

No, no.

I think it would exist in an unfair competition case —

Abe Fortas:

Now, how about any other kind of tort, how about business secrets torn or whatever?

Moses Lasky:

It has been applied on business secret cases.

Abe Fortas:

Well, what — what is your — what’s the position you’re urging on us that —

Moses Lasky:

Well, I think —

Abe Fortas:

— that’s something — something special about handling cases?

Moses Lasky:

Let me explain Your Honor.

In fact, it was just where I want to comment.

Originally, we had in this country the pioneer notion that a lawsuit was a kind sporting event.

And in that event, a situation everybody based it on costs of that sport.

Now, as times — as we become more sophisticated to decide, if I may use the term, it has come to be recognized more and more that in some kind of situations, it’s fair that the party who causes the expense should pay for it.

Now, we know that we have many actions in the law.

And if I may generalize, if I just try a generalization, I would say that whenever a public interest is to be protected as well as a private right to be vindicated and where particularly in addition otherwise, there would be little deterrent to willful misconduct, there is a strong policy in allowing a court to impose this assessment.

Byron R. White:

Are you — are you asking us that we have to have (Inaudible)?

Moses Lasky:

No.

I — I submit to the Court in law cases where you don’t have the historic equity power as this Court has announced, Congress has had and frequently does make specific provision in that kind of case as in the Sherman Act cases, as in securities regulation.

Now, I submit in equity matters where the power already exists, it would be anachronistic to withdraw that equity power.

Abe Fortas:

Mr. Lasky, perhaps I — I seem to having difficulty in getting my question to you.

What I want to know is, are you suggesting to us that there is something peculiar about trademark cases and that there ought to be in trademark cases and circumstances where you have willfulness and all these other elements that you’re talking about?

That in trademark cases, as distinguished from other types of equity cases or the law cases, there ought to be a rule permitting the trial court to award attorney’s fees?

Moses Lasky:

Yes.

Abe Fortas:

That’s what I’m trying to get to.

Moses Lasky:

Yes, Your Honor.

I’m not saying that there are not other kinds of equity cases where the power ought to be or ought not to be.

Abe Fortas:

Well, now why — what is there about the trademark cases —

Moses Lasky:

A fair question —

Abe Fortas:

— that distinguishes it?

Moses Lasky:

— which I’ll attempt to answer right now.

The trademark right is recognized and protected under the Lanham Act because it protects not merely the private right but the public interest.

When the Lanham Act was enacted in 1946, the Senate Report which — upon which the enactment was based contains very pertinent statements.

It said the purpose underlying any trademark statute is twofold.

One is to protect the public so it may be confident that in purchasing a product bearing a particular trademark which is favorably knows, it will get the product that is asked for and wants to get.

To protect trademarks, therefore, is to protect the public from deceit, foster fair competition, and to secure to the business community advantages of reputation and goodwill.

The emphasis then is that it’s not merely the private right.

It’s the protection of the public.

That’s the element number one why trademark cases peculiarly had been recognized by the lower courts who’s justifying this.

Element number two is that the right being protected in the trademark case while tremendously valuable is intangible.

It’s a case of goodwill.

And a defendant doesn’t have to pay attorney’s fees.

He feels that he doesn’t have to, it’s a kind of “heads I win, tails I don’t lose” proposition.

I’ll go ahead, I’ll defy it.

You’ll get your injunction, I’ll stop.

It’s a slap on the wrist.

These are the two major considerations that you find over and over again in these cases.

Byron R. White:

Now, but what remedy — what remedy is allowed under the Lanham Act?

Doesn’t it — isn’t it rather broad range of remedies?

Moses Lasky:

The Lanham Act provides of course, you may recover damages if you can control them.

Unfortunately, as this Court in several cases like the Nishiwaki case has said from the nature of a trademark violation, it’s almost impossible ever to prove actual confusion, you can’t get the proof to prove the damages which is why trademarks infringements suits are hardly ever brought at law.

It also provides for an accounting of profits.

But unless you can prove that the defendant has made some profits, there is nothing there either.

The defendant gaily goes along, diluting your trademark.

If he puts an inferior product on the market, it dilutes the distinctiveness of your mark.

It erodes it away and you’ll end with an injunction after he has been defiantly trying to pirate.

These — this is why I think all the Courts which heretofore have approached this matter and felt that a trademark case peculiarly wanted —

Byron R. White:

This is judging — isn’t the judging have entitled to allow some additional sum as he think is — is just under the Lanham Act?

Moses Lasky:

I think Section 36 confines that statement to the assessment of damages, damages owned.I have Section 35 rather, in assessing damages, the Court may enter judgment according to the circumstances of the case where any sum above the amount found is actual damages, not exceedingly to that.

Byron R. White:

There have to be some actual damage before he can use this provision?

Moses Lasky:

Well, that’s what bothers me.

Now, some of the courts as Your Honors have seen from these cases have said that the award of attorney’s fees in this kind of case is to be justified as a kind of damages.

And it’s never seemed to me to be important whether you brought it under that rubric of costs or damages, it’s part of the equity power.

Abe Fortas:

Except, you’re really suggesting it seems to me that the criterion for attorney’s fees or one of the criteria should be a kind of a punitive damage consideration?

Moses Lasky:

It is — I wouldn’t agree with that Mr. Justice Fortas because punitive damages imposes a penalty which it has no relation to compensation and we do not claim here that the plaintiff should have get an award more —

Abe Fortas:

That’s what —

Moses Lasky:

— than its own attorney’s fees (Voice Overlap) —

Abe Fortas:

Yes, but that — that’s measuring it.

But the factors that give rise to attorney’s fees as you say, I don’t know if I’m correct in understanding, it sounds to me very much like the fact doesn’t or give rise to a claim of punitive damages and say willfulness etcetera, etcetera.

Moses Lasky:

The cases, the Aladdin case I cited, said that these are — it had never been justified as punitive damages.

It says that they’ve always been allowed as compensatory.

And the only — when the District Court here made its award, the question put to them is what would be the reasonable amount that the petitioners should pay their counsel?

And we said, “No more than that is what should be awarded”.

So that it isn’t — it isn’t punitive damages because when this case is over, and if we prevail here, all that the petitioners will be able to have is the reimbursement of what this litigation has cost.

So I don’t think it is the — it can’t be said to be punitive.

Now, with the —

Hugo L. Black:

When the Lanham Act was passed —

Moses Lasky:

Pardon?

Hugo L. Black:

When the Lanham Act was passed, did the report say anything about lawyer’s fees?

Moses Lasky:

Not a word.

Hugo L. Black:

Was anything said about lawyer’s fees in the hearing?

Moses Lasky:

The legislative —

Hugo L. Black:

— in the hearing, the legislative —

Moses Lasky:

There appears to be not a word on it.

Hugo L. Black:

Not a word?

Moses Lasky:

Not a word on it.

And —

Hugo L. Black:

But why does the Congress had wanted to give attorney’s fee when they have nothing to do in the number of other cases?

Moses Lasky:

Well, I — I think the answer is —

Hugo L. Black:

I think —

Moses Lasky:

— it was necessary.

Hugo L. Black:

— quite frankly, I have to test it if I see it, but I think you give a little too much omniscious to pertinent committee when you think that they would have understood from the cryptic words of equity that that meant they were going to get lawyer’s fees.

Moses Lasky:

Well, this very question of what the Lanham Act did and did not do has been thoroughly set forth in an opinion in the A. Smith Bowman case by Chief Judge Leahy in the District of Delaware, case I cite.

The reason I refer to that is that just the Uniform Deceptive Trade Practices Act which had viewed the Uniform Law Commissioners approved of in 1964, the American Bar Association approved of in 1964 and which has since been adopted by a number of states, provides for attorney’s fees and says what they are doing is kind of model it upon the power exercised by the federal courts in trademark cases and they cite the A. Smith Bowman case as an exposition.

Hugo L. Black:

What committee is that?

Moses Lasky:

This was the Uniform —

Hugo L. Black:

Committee of lawyers?

Moses Lasky:

Commissioners on Uniform State Law.

Hugo L. Black:

Were they lawyers?

Moses Lasky:

I believe they are, yes.

It supposed to be —

Hugo L. Black:

They — they suggested that they get lawyers too?

Moses Lasky:

If — Your Honor, it isn’t a question from whether a lawyer gets his fees or not.

I’m going to be paid for the work, my firm and I, one way or the other.

They — we’re going to be paid by our client.

The question is whether the client is going to be reimbursed.

I don’t think it’s a question of lawyer’s fees at all.

Hugo L. Black:

It’s not a question of lawyer’s fees?

Moses Lasky:

I don’t think it’s a question of whether a lawyer is going to get his compensation for his services or not.

Hugo L. Black:

Would that be a pretty good way to get it, wouldn’t it?

Likely, it’s pretty liberal?

Moses Lasky:

It depends on who’s more solved; your own client or the other party.

I see I have the white light here and —

Hugo L. Black:

But you have five more minutes.

Moses Lasky:

I would — yes, I know.

I would be glad to answer your question, otherwise I would reserve —

Hugo L. Black:

That’s all.

Moses Lasky:

— for a reply.

Hugo L. Black:

Alright.

Moses Lasky:

I’ll simply make this submission that the power — the power as such does exist.

The next question is what are the outer limits of that power?

And once you’ve circumscribed the outer limits, there’s a wide range of discretion in the District Judge.

That was exercised and the concurrent findings of both courts below showed that it was appropriate degree of exercise.

Hugo L. Black:

Mr. Hutchinson.

J. Albert Hutchinson:

Mr. Justice Black, may it please the Court.

Respondents submit, if I may first outline our view of the matter, that first, we have eliminated all state issues of unfair competition.

It was eliminated by earlier opinions in the case which are now final and binding on all parties.

There is no question of misrepresentation coming on advertising, discouragement, or injury.

There are no damages.

And at the time this was made, there was no accounting.

The first appeal the Court of Appeals particularly held that they were going to decide the case and did so entirely on the Lanham Act dealing with what appears to be the delusion theory as I read some of the cases and comments, but they spelled it out in that opinion as anticipation of future confusion.

It is a — an unqualified and unreversed, uncriticized finding of the District Court in the trial.

There was only evidence that there was in fact no confusion.

We therefore have the case limited strictly within the confines of the Lanham Act.

Hugo L. Black:

May I ask you the statement of your understanding of what can be assessed against a defendant in the Lanham Act case?

J. Albert Hutchinson:

As I understand the Lanham Act provision which is Section 1117 of the U.S. Code 36 as I believe is the Lanham Act Section, the Court may award compensation, actual damages which can be measured by either one or perhaps and I’m not certain about this, a combination of two measures.

The actual damages and those are the words used in the section separated by the trademark plaintiff, and an accounting of the profits of the infringer and accounting on the —

Hugo L. Black:

In other words — in other words all the profits?

J. Albert Hutchinson:

— that can get one or both or perhaps its one recovery.

The Act then provides that the Court may allow additional amounts up to three times the amount of actual damages.

Hugo L. Black:

So that the Act itself provides that a defendant can be held out also three times the amount of the damages he suffered?

J. Albert Hutchinson:

Up to three times the actual damages as determined by either one of these methods or a combination of them.

The Act, however, has a very specific provision in the same section which says that all such awards must be — shall constitute and I think I’m quoting exactly, “Shall constitute compensation and not a penalty”.

Now, there’s another factor which I think is raised by the question.

All of these damages must come from the Act of the infringer that is described as actionable in the earlier section, which is in the Code 1114, and it there provides that this use must be in commerce.

In other words, as we read it, no damages of any kind or nature can be recovered unless the acts that are complained of occurred in interstate of foreign commerce by the use of the mark which is registered.

If that is so then, attorney’s fees obviously is not the use of the mark in commerce and I don’t see how the wording of the Act must be stretched to cover attorney’s fees at any kind of damages.

William J. Brennan, Jr.:

What was the result on the merits here, Mr. Hutchinson?

J. Albert Hutchinson:

On the merits, in the first trial, the trial judge — District Judge, Chief Justice incidentally of this district ruled in favor of the defendants without qualification or limitation —

Byron R. White:

That’s your client?

J. Albert Hutchinson:

Yes, Maier and Ralphs — Maier and Ralphs.

Byron R. White:

Yes.

J. Albert Hutchinson:

On appeal, the Court of Appeals stated that the — that that Court was not to be bound by the District Court’s finding as to the likelihood of confusion.

It didn’t disturb the finding that there was no confusion, no damage and so on, but it did say that it could independently determine the likelihood of future confusion by the use of the mark.

And that that was, if not a mix question, probably a question of law.

It then determined that because the products sold by our parties, the respondents here was beer and the trademark registrant, had registered his mark in connection with scotch whiskey that because they both dealt with beverages in the alcoholic fields, they were so closely related that likelihood and confusion would result.

And they mandated an injunction and reserved expressly only one issue toward the District Court namely to have an accounting or to determine the issues of an accounting.

Hugo L. Black:

Accounting which was inclusive to cover for damages and so on?

J. Albert Hutchinson:

Yes, as I understand the accounting, it’s another way of determining the plaintiff’s damages.

Some of the cases seemed to say it’s an independent avenue to recovery.

But since the controlling section in the last sentence of the section says there must be an award only of compensation, it would seem that it’s just another way of determining the financial or economic loss to the plaintiff whether it’s done by proving loss of sales, that’s conceded not the case here, or injured the goodwill which is apparently also conceded, there would be only the recovery of what would be compensatory damages.

Hugo L. Black:

That accounting has not been held?

J. Albert Hutchinson:

No.

And this order was made immediately, I say, immediately was the first step in the case after the mandate and the entry of a responsive judgment of the District Court enjoining future use and then the parties clearing up the odd quantities that were left and reporting back to the Court.

So this was the first thing that was done, to determine attorney’s fees.

Therefore, as it now stands —

William J. Brennan, Jr.:

Well, let’s see if I understand your point.

On the original judgment of the District Court, there would have been no attorney’s fees, weren’t there?

J. Albert Hutchinson:

There would be no recovery of any kind, even —

William J. Brennan, Jr.:

Because your clients prevailed.

J. Albert Hutchinson:

Yes.

William J. Brennan, Jr.:

But then, there was an injunction mandated that held it?

J. Albert Hutchinson:

Yes.

William J. Brennan, Jr.:

And this then brought on one motion to assess attorney’s fees or something?

J. Albert Hutchinson:

Yes sir.

At the time the — shortly after the remand came down, the plaintiffs noticed a motion for judgment to conform to the mandate.

And the form of judgment, without any further hearing, any taking of evidence, it was then entered and there were no further evidences taken and no additional findings of the true sort may —

William J. Brennan, Jr.:

They based it on the merits but what — in other words, the $60,000 counsel fee allowed?

J. Albert Hutchinson:

Yes, attorney’s fees were $60,000 and the —

William J. Brennan, Jr.:

But why is it — how was that it arrived — arrived at?

J. Albert Hutchinson:

It was arrived at by the testimony of the —

William J. Brennan, Jr.:

Then there was a hearing on this thing?

J. Albert Hutchinson:

Yes, on the amount, yes sir.

William J. Brennan, Jr.:

I see.

J. Albert Hutchinson:

The order for attorney’s fees was made without any additional evidence.

And the actual determination was heard and there were experts on both sides as well as factual witnesses and that’s the record we have here.

Hugo L. Black:

But there has been no accounting?

J. Albert Hutchinson:

No, and it was —

Hugo L. Black:

How did it — how was it subject to appeal?

J. Albert Hutchinson:

We felt we could not take a chance on it as being treated as the final order, so we appealed.

The Court of Appeals held that it was premature because there was no judgment, no final judgment.

However, they undertook to consider the case if the District Court made a certificate that it was a matter of general interests on which there will be a —

William J. Brennan, Jr.:

Under the interlocutory appeal?

J. Albert Hutchinson:

Yes, Section 1292 of the — of 28 U.S.C.

Such a certificate was made on the application of our parties, the respondents here.

The District Judge made the certificate, the Court then received the case on the then existing record and the argument that had been made.

And I might point out that this Court’s probably noticed it already, this was an en banc hearing in the unanimous decision.

And the case, the opinion I feel deals with the issues we have here so fully and analyzes the cases so fully that would be — and a threat almost for me to attempt to further back up the Court.

I think the Court analyzed the case thoroughly.

As we see it, this is simply a question of legislative purpose.

Now, the Congress, as the Court of Appeals points out, knows how to do this and it’s quite interestingly I think, it compares the copyright and patent laws where there are some augmented provisions for the award of attorney’s fees.

And in the patent situation, this Court, a good number of years ago, held that attorney’s fees could not be recovered in this situation of a patent infringement in the absence of any statutory authority in the acts of Congress relating to patents.

Following that, the Congress did then amend those acts to provide for attorney’s fees in exceptional extreme cases.

It did not do so at anytime in connection with this Act.

Now, the legislative history according to Court of Appeals is not significant.

We’re inclined to think that it does have some significance because subsequent to the passage of the immediate Act which has only been amended in regard to the section on damages and other recoveries than injunction, in a technical respect just to correctly site two other sections rather than the one originally cited.

But there had been at least two proposals to amend the Act to provide for attorney’s fees.

And neither of the proposals has succeeded and it would look to us, and though the Congress had recognized that the Act did not provide for attorney’s fees.

J. Albert Hutchinson:

And some of the proponents of the legislation thought it should be considered by the Congress and resulted in no action.

Granted that that is negative, it is nevertheless, we feel, significant.

It shows an awareness of the fact the Act does not now provide in the opinion of the proponents of such bills and the fact that the matter should be subject to congressional review.

Byron R. White:

What would you say absent the Lanham Act, would you say that — that you would — I gather your suggestion of the provision of the Lanham Act itself indicate there should be no attorney’s fee?

J. Albert Hutchinson:

Yes, as we see it —

Byron R. White:

But now what – absence of the Act– in the absence of the Act.

J. Albert Hutchinson:

Well, the facts of this case — there could be no recovery because all these state-generated issues had been eliminated.

No, pending jurisdiction —

Byron R. White:

Do you think — do you think Aladdin was in rule?

J. Albert Hutchinson:

I believe insofar as it dealt with — sure Lanham Act was used, yes sir.

Byron R. White:

Yes, but that was before the Lanham Act?

J. Albert Hutchinson:

Yes.

Under the old Act, that — that case involved unfair competition and other things which we do not have here.

There was no —

William J. Brennan, Jr.:

Well I doubt, didn’t it — didn’t that opinion deal with this subject anyway.

I think as Aladdin suggested too in terms of a form of compensation that the violation —

J. Albert Hutchinson:

As I recall Aladdin treated the award of attorney’s fees as compensatory damages rather than exemplary.

William J. Brennan, Jr.:

Yes.

J. Albert Hutchinson:

This sort of thing doesn’t fit, in my idea at least, as damages, any — unless we adopt the English system or some modification of it, attorney’s fees either way are not what we call damages.

If they are to be awarded in the — it’s the antitrust statutes, of course they’re awarded because the private plaintiff is — the private attorney general sometimes said.

William J. Brennan, Jr.:

But that was something in the antitrust law has provided for.

J. Albert Hutchinson:

Yes, they’re all — they are very expressed —

William J. Brennan, Jr.:

(Voice Overlap)

J. Albert Hutchinson:

— very expressed.

Now, I would say that when the Court has concluded in its review of this record, it will agree with this proposition, that if an award is to be upheld here, there would be no other Lanham Act case in which the Court would properly deny them.

Byron R. White:

Well, I take that the position of the other side is that even — even in the Lanham Act case were damages where a jury trial is required that attorney’s fees would be awarded.

J. Albert Hutchinson:

Well, they seem to take the view that the inherent powers of the courts, the federal courts in equity matters somehow throws a cloak over as purely statutory proceeding in such ways to augment or assimilate some unstated power.

Our view is that when you have a purely legislative jurisdiction and I don’t see how that can be fairly disputed, then you look to the — to the Act and since this is a matter on which the Congress has —

Byron R. White:

Yes, but once, they traded mark actions before they were statutes?

J. Albert Hutchinson:

I doubt that there were any in the federal jurisdiction other than on diversity grounds.

J. Albert Hutchinson:

I don’t recall any historical examples.

As a matter of fact, that some questions whether there would be any federal common law in this area.

Absent the constitutional authority to pass laws and then an enactment by the Congress whether there would be any substantive right within the federal jurisdiction.

The common law of course was approved — was adopted by the states and many of the states have further adopted the statutes.

Now, I hope the Court will not be concerned with what I hesitate to characterize as hyperbole and I particularly on the other side and I think they refer to what I consider something that Court should disregard altogether.

I was served on the 6th of February with the petitioner’s reply brief and contained in it particularly at the passage on page — page 14 and turning over to 15, it’s quite a bit of material that is both irrelevant and immaterial, I think fairly might be considered scandalous.

This is not in this record.

It was not submitted to the Court of Appeals.

It’s under review here and I think it abuses the privilege of advocacy and it’s unfair to these respondents.

And then conserves the late and otherwise it made a motion.

I hope the Court will disregard those remarks by —

Hugo L. Black:

What are the remarks?

J. Albert Hutchinson:

They referred to a deposition of a witness prior to the first trial and state that they are quoting from their brief in the first appeal and apparently, trying to make our people because though they were named pirates or something of the sort.

That is not in this record.

And if it were properly here, it would be here and we would have met it.

Also, these statements are contrary to the existing record, the testimony that’s reproduced.

In that regard, this record was prepared on stipulation of counsel.

I believe the Court has a copy of our stipulation.

I think we should be able to come here with the records as both so made up.

If there’s any further question, I would be happy to respond, otherwise, I believe the subject has been covered from our side.

The Court of Appeals I believe has done a very thorough job of analysis.

It should be of real assistance to the Court.

As we see it, we’re dealing with the statute and the Congress can, if it wishes, make any reasonable provision in this area.

And this legislative gratefully as we see it did not intend to provide for recovery of non-taxable cost about $4000 allowed here for that and attorney’s fees in the present form of the statute.

Your — your view in this if I understand your argument, the Lanham Act wipes out the equity power of the Court too?

J. Albert Hutchinson:

I — I don’t think it impinges on equity powers of the Court.

The —

Or could the Court in this case, who said, “Well, we’re not going to — we think we’ve got no right under the Lanham Act to award mention allowance but we’ll now exercise our equity power on that allowance.”

J. Albert Hutchinson:

Well, I don’t think that the Court could do it when it’s a pure Lanham Act case as we have here.

I don’t think —

But as you —

J. Albert Hutchinson:

— I wasn’t trying to wiping out any —

You said the Lanham Act is exclusive.

Its — or as the Lanham Act cases are concerned.

J. Albert Hutchinson:

Yes, being a comprehensive, all inclusive statute —

So there is no residual equity power in the Court in the Lanham Act case?

J. Albert Hutchinson:

Well, there are of course certain residual powers because among other things, an injunction is expressly provided for in — once the proceeding sections for this one.

No, I meant as far as fees are concerned, the award of fees.

J. Albert Hutchinson:

I see no way in which to support it, because I don’t think that the awarding of attorney’s fees is a specific reserved equity power.

It applies in equity cases such as the Sprague versus Ticonic Bank where you have the common fund case there.

You have a two-case of unjust enrichment if certain people take advantage of the expense and efforts of others and share equally with them.

But as I see it, that — an equitable remedy is just something that the court can utilize if it otherwise has authority to Act.

In other words, as I see it, equity does not create substantive rights but it deals with remedies and always had originally to catch the conscience of the king when he have the final say later to temper the harshness of the common law.

Well, the reason I asked you that question, I wasn’t clear from the Court of Appeals’ opinion with whether or not on the candor of equitable powers of the Court, they said there were no such powers available under the Lanham Act, or whether they said, yes there was power to this but this is not an appropriate case where they’re exercised.

J. Albert Hutchinson:

Well, the Court, I believe, determined that first there was no such power in equity or elsewhere under a pure Lanham Act case to award attorney’s fees and that’s what we have with the pure Lanham Act case.

They didn’t go into the other phases of it and I think that’s the meaning when they said primarily because the Act does not provide for them.

Now, all of the arguments that didn’t made here in the briefs were made through the Court of Appeals in respect to why whether the Act is applied or not, award is correct.

So those things were rather exhaustibly presented by the respondent — the appellees there and the petitioners here.

Well, at least the Court of Appeals had those points before them.

We have, of course, argued as we do here that we’re dealing with the statutory matter and that these other matters were only secondarily involved in the event that was to — to the contrary of our intention.

We did attempt there as we have briefly attempted to do in our brief here to point out that there were none of the things in this case which would normally invoke any extraordinary equity remedy even if the other theory were adopted.

I might say that as we see it, the request of the petitioners here should not be granted as to requiring even if we’re entirely wrong that the Court carry out its judgment because we’ve reserved all of the issues as to the proper amount as well as all of the evidentiary support issues.

They were not passed to form by the Court of Appeals.

And as we see it if — if we are mistaken about the Lanham Act and general principles, the case would have to be remanded before the proceedings in any event, and this is the question I’ll refer to in my associate.

Hugo L. Black:

Mr. Lasky.

Moses Lasky:

Yes, if the Court please.

I think it comes necessary for me to straighten out the narration of what happened in this case particularly in view of the fact that I say we’ve been accused of some impropriety here.

When this case was first tried, the trial judge decided for the defendants and on appeal, he was reversed and the Court pointed that he had gone off on a complete misconception of the rule of law, namely that the goods has to be of the same descriptive properties which was the test under the old Act.

That was a mistake of a legal application.

The Court of Appeals examined it and had no doubt at all that apart from that, the defendants had been guilty of bad faith.

Moses Lasky:

And in their opinion, they stated and when the case came back down with the trial court advice of the true rule of law, he made a finding.

And I had assumed that that finding was behind us and we come into the Court upon the basis of that finding which is this.

Without seeking legal advise and for the purpose of capitalizing upon the popularity of the name thus chosen, defendant Maier did deliberately adopted the name ‘Black & White’ knowing that ‘Black & White’ was the name and trademark of the plaintiff Buchanan, and knowing that this popularity would extend to its product because the public would associate the name ‘Black & White’ with a long established reliability and meritoriousness of Buchanan’s product.

Defendants intended to adopt plaintiff Buchanan’s ‘Black & White’ name or mark for the purpose of taking advantage of the aura of goodwill which surrounded the name.

And they deliberately adopted the name with a view to obtaining advantage from the goodwill, good name and good trade, which Buchanan had build up, and expecting that there would be confusion and result in profit.

Defendants refused to discontinue their use on beer of the name ‘Black & White’ upon request made before a suit filed and they have knowingly, willfully, and deliberately infringed the said marked ‘Black & White’ complainant’s rights thereto.

And the Court of Appeals said that this was bad faith.

Now, in their brief here, counsel said that the Court of Appeals finding was without evidence to support it.

It was in that connection that in the footnote in my reply brief I quoted some of the evidence in which was before the Court of Appeals.

It hadn’t been put into the record that brought out there because I thought the finding was behind us.

But if it becomes important, it’s in the record of the case and the Court could take judicial notice.

Now, when the case went back down, if the Court remanded it for all purposes consistent with its opinion and I made a motion to enter judgment in accordance with the opinion of the Court of Appeal.

As for the injunction, attorney’s fees, accounting of profits, counsel have its predecessors.

This counsel was not in the case that every opportunity introduced any further evidence they wanted.

And the matter was submitted in the Court, in due course, entered its order that were entitled to injunction, to an accounting, to a reasonable attorney’s fees and set down a time for hearing each one of these.

Following it through the procedures of this calendar, it heard the amount of the reasonable attorney’s fees first, entered an order while we were still fussing with the accounting.

An appeal ought not to have been taken at that time.

This interlocutory appeal was improper and an appeal should have been taken only when the accounting was completed.

It has since been completed.

And there is now an appeal pending from a judgment for the profits too.

When it got up under the Court of Appeals, they properly dismissed this interlocutory appeal.

And then over my opposition, the District Court certified that it was an appropriate interlocutory appeal.

Again, another appeal was taken and that’s how we happen to be here.

But now, Your Honor suggested that I was arguing that there should be attorney’s fees allowable on a jury tried case.

No, not at all.

That’s an action of law.

The equity power would not extend it to it but in an action of law where damages are recovered and proved, we come in under the other section of three times the damages allowed.

And most trademark cases are in equity as this was in equity because of the impossibility of getting the evidence to prove confusion.

It was never admitted there was not confusion.

It was simply the impossibility that the courts have always referred to about getting the evidence of confusion.

Moses Lasky:

Reference has been made to the patent history in which it has been said that this Court, years ago, held that attorney’s fees could not be recovered in the patent case.

On the contrary, what this Court had held in two or three cases a hundred years ago was something rather different.

Counsel fees are not a proper element for the consideration of the jury in the estimation of damages and actions for the infringement of a patent right.

Many patent cases are jury actions because there, you prove the damages because the plaintiff has a monopoly of the product in any sale is a violation.

Byron R. White:

Do you have any cases regarding attorney’s fees in equity in the past cases?

Moses Lasky:

Had there been?

This provision has been on the books for long — the courts relate to the — referred to the statute.

Byron R. White:

Well, I know, but that’s — you don’t have any cases of attorney’s fees was not allowed in patent case or equity or law.

Moses Lasky:

No.

Attorney’s fees are frequently allowed in patent cases.

Byron R. White:

When was the statute —

Moses Lasky:

When was the statute —

Byron R. White:

Under the statute, the statute permits it?

Moses Lasky:

Yes, I would think so.

Byron R. White:

Is that the only case that’s been known?

Moses Lasky:

Very well, probably the statute has been there so long that the people would actually refer to the statute.

I had hoped to have one more remark but I see my red light is up.

Thank you.