should be restrained, on reentering the business in competition with the purchaser, from soliciting the custom of those who patronized the business at the time of sale.1 Similarly, where a grocery and cigar business was sold, and the vendor, together with several former employees, organized a competing company, the Federal circuit court enjoined the new company from soliciting trade from customers of the business which had been sold; 2 and a similar ruling was made by a Federal circuit court in 1910. In like manner where the vendor of a business and good will agreed not to engage in a similar business within 1,000 miles of the city in which the business was located, without the written consent of the purchaser, the court, although refusing to enforce the contract, because it was not shown that an agreement covering such a wide area was necessary, enjoined the vendors from soliciting the trade of the customers of the old business. So, also, the Court of Errors and Appeals of New Jersey held that one who had sold the good will of a milk business, together with the personal property used in connection therewith, should be restrained, when he subsequently engaged in a competing business owned either by himself or his wife, from soliciting the custom of those who, prior to the sale of the property, had been his customers, and from serving any such customers whose business had been secured by solicitation.5 Similarly, the Supreme Court of Pennsylvania held that one who contracted to sell all of his right, title, and good will in a newspaper route violated his contract by calling on subscribers on the route with a view to inducing them not to buy papers from the purchaser of the route, but to patronize him instead. Decisions in Maryland, Massachusetts, New Jersey," and

1 Ranft v. Reimers, 200 Ill., 386 (1902).

2 Acker, Merrall & Condit Co. v. McGaw et al., 144 Fed., 864, 865 (C. C., 1906). Per Morris, J.: "It would be a reproach to the law if no adequate remedy could be afforded for the protection of a property so valuable as such a good will against the attacks of the vendor who had sold it, and who afterwards attempts to regain it to the damage of his vendee.

"As the continued patronage of the customers of such a business is what makes the good will of value, and as it is utterly repugnant to the contract by which it was assigned that the vendor should be allowed to seek to regain it by soliciting the customers to come back to him, and as the damage thus inflicted is irreparable and is diffi cult, if not impossible, in such a business as this to compute, I think a court of equity should not hesitate to grant a remedy by injunction."

3 Myers . Tuttle, 183 Fed., 235 (1910).

4 Althen v. Vreeland, 36 Atl., 479 (N. J. Ch., 1897).

5 Snyder Pasteurized Milk Co. v. Burton, 80 N. J. Eq., 185 (Ct. of Errors and Appeals, 1912).

• Wentzel v. Barbin, 189 Pa. St., 502 (1899). Per Curiam: "When the defendant agreed to sell to the plaintiff all his right, title and good will to the Oakland paper route, until now, controlled by the said R. M. Barbin,' he became bound in honor and in law to carry out his contract in good faith. He was certainly not at liberty, especially after receiving a large part of the purchase money, to filch away from the plaintiff the veritable substance of that which he had sold. It was not like the setting up of another business of the same kind, but it was the taking away of the very thing he had sold that was complained of by the plaintiff.

7 Brown v. Benzinger, 118 Md., 29 (1912).

8 Foss v. Roby, 195 Mass., 292 (1907); Fairfield v. Lowry et al., 207 Mass., 352 (1911). Snyder Pasteurized Milk Co. v. Burton, 80 N. J. Eq., 185 (Ct. of Errors and Appeals, 1912).

Rhode Island1 are also to the effect that the vendor should be enjoined from soliciting the patronage of those who were customers of the old business at the time of sale. On the contrary, well-considered opinions in Connecticut, Michigan, and Wisconsin hold that such solicitation will not be enjoined.

2

3

In those jurisdictions where the vendor is denied the right to solicit his former customers, the courts have also restrained certain other acts by which the vendor sought to secure the trade of such customers. Thus the Illinois Supreme Court affirmed a decree enjoining the vendor of a business, on opening a competing establishment, from inducing the telephone company to give her the same number which was used by the old establishment, the patrons having been accustomed to send in a large part of their orders over the telephone. A similar ruling was made by the Maryland Court of Appeals," and an injunction restraining the use of a cable address of the old firm was recently affirmed by the New York Court of Appeals.'

ENGLISH DECISIONS.

8

It appears to be well settled in England that the vendor of a business and its good will is at liberty, in the absence of express contract to the contrary, to set up a competing business. There appears to be no case decided contrary to this rule, and the decisions of the Massachusetts courts enjoining the vendor from setting up a competing business where, having regard to the facts of the particular case, it would derogate from the grant, have apparently no support in the decisions of the English courts. The general rule, however, that the vendor may reenter the business in competition with the purchaser is apparently qualified by the further rule that, while he may do this, he will not be allowed privately by letter, personally, or by traveler to solicit any person who was prior to the sale of the good will a customer of the old firm. This limitation was clearly established for the first time in 1872, when it was held that one of the vendors of a brewery business, together with the good will and the right to use the old company name, should be restrained, on establishing a competing business, from soliciting the patronage of those who were

1 Zanturjian v. Boornazian, 25 R. I., 151 (1903).

2 Cottrell v. Babcock Printing Press Co., 54 Conn., 122 (1886).

3 Williams v. Farrand, 88 Mich., 473 (1891). But see Myers v. Kalamazoo Buggy Co., 54 Mich., 215 (1884).

4 Fish Bros. Wagon Co. v. La Belle Wagon Works, 82 Wis., 546 (1892).

Ranft v. Reimers, 200 Ill., 386 (1902).

6 Brown v. Benzinger, 118 Md., 29 (1912).

7 Von Bremen v. MacMonnies, 200 N. Y., 41 (1910).

8 Labouchere v. Dawson, L. R. (1871), 13 Eq., 322; Trego v. Hunt, L. R. (1896), A. C., 7; Jennings v. Jennings, L. R. (1898), 1 Ch., 378; Gillingham v. Beddow, 69 L. J. Ch., 527 (1900).

customers of the firm at the time of the sale.1 This case was approved and followed by the English courts until 1884,2 when it was overruled by the court of appeal on the ground that it was wrongly decided and went much beyond any previously decided case. The question involved in this case did not reach the House of Lords until 1895, when that tribunal reestablished the old doctrine and held that where, by the terms of the articles of partnership, a retiring partner had no interest in the good will of a business, he, his partners, servants, and agents should be restrained from soliciting the trade of any person who was, prior to the dissolution of the partnership, a customer of the old firm.*

The decision of the House of Lords in this case has been closely adhered to by the English courts.5

1 Labourchere v. Dawson, L. R. (1871), 13 Eq., 322, 324, 325. Per Lord Romilly, M. R.: "The sale of the business did not prevent him from carrying on the same business in the same place or at Burton, which is a considerable distance off. But the question is this: Was he entitled to solicit personally the customers of the old firm to come and deal with him? * * I am of opinion that the principle of equity must prevail, that persons are not at liberty to depreciate the thing which they have sold. * ** I will specify what appears to me to be the rule in the present case, so far as it can be laid down. In the first place the new firm, the defendant in this case, is entitled to publish any advertisement he pleases in the papers, stating that he is carrying on such business. He is entitled to publish any circulars to all the world to say that he is carrying on such a business; but he is not entitled, either by private letter or by a visit, or by his traveller or agent, to go to any person who was a customer of the old firm and solicit him not to continue his business with the old firm, but to transfer it to him, the new firm. That is not a fair and reasonable thing to do after he has sold the good will. Customers, it is true, may be affected by public advertisements and public circulars, but that does not in the slightest degree militate against the principle I have laid down."

Ginesi v. Cooper & Co., L. R. (1880), 14 Ch. Div., 596; Leggott v. Barrett, L. R. (1880), 15 Ch. Div., 306; Mogford v. Courtenay, 45 Law Times Reps., 303 (1881). 3 Pearson v. Pearson, L. R. (1884), 27 Ch. Div., 145.

4 Trego v. Hunt, L. R. (1896), A. C., 7, 20. Per Lord Herschell: "I quite feel the force of this argument, but it does not strike me as conclusive. It is often impossible to draw the line and yet possible to be perfectly certain that particular acts are on one side of it or the other. It does not seem to me to follow that because a man may, by his acts, invite all men to deal with him, and so, amongst the rest of mankind, invite the former customers of the firm, he may use the knowledge which he has acquired of what persons were customers of the old firm, in order, by an appeal to them to seek to weaken their habit of dealing where they have dealt before, or whatever else binds them to the old business, and so to secure their custom for himself. This seems to me to be a direct and intentional dealing with the good will and an endeavor to destroy it. If a person who has previously been a partner in the firm sets up in business on his own account and appeals generally for custom, he only does that which any member of the public may do, and which those carrying on the same trade are already doing. It is true that those who were former customers of the firm to which he belonged may of their own accord transfer their custom to him; but this incidental advantage is unavoidable, and does not result from any act of his. He only conducts his business in precisely the same way as he would if he had never been a member of the firm to which he previously belonged. But when he specifically and directly appeals to those who were customers of the previous firm he seeks to take advantage of the connection previously formed by his old firm, and of the knowledge of that connection which he has previously acquired, to take that which constitutes the good will away from the persons to whom it has been sold and restore it to himself.”

Jennings . Jennings, L. R. (1898), 1 Ch. Div., 378; Gillingham v. Beddow, 69 L. J. Ch., 527 (1900); Curl Bros. v. Webster, L. R. (1904), 1 Ch. Div., 685. See also MacFarlane v. Dumbarton Steamboat Co. Ltd., 36 Scottish Law Rep., 771 (1899), where the Court of Session held that the vendor of a business should be enjoined from applying by letter, circular, or other written communication, or personally, or by traveler, agent, or servant, to any former customer, asking such person to deal with the defendant, or not to deal with the complainant.

Section 16. Passing off the goods of one manufacturer or dealer as those of another.

This practice is commonly termed "unfair competition" in this country, while the equivalent term used by the English courts is "passing off." The subject has been so thoroughly treated in textbooks and reference books that only a brief resumé of the leading cases and established principles will be undertaken here.

Although the term "unfair competition" has been gradually extended so as to include other unfair methods used to secure the trade of a rival, as generally used by the courts, it applies especially to cases where one attempts to palm off his merchandise or business as that of another. In many of the digests, cases of this character are classified under the general head of trade-marks, although the law governing trade-marks in this respect is really a branch of the broader doctrine of unfair competition. The principal distinction is that in so-called unfair competition cases no exclusive proprietary interest in the names or marks used is necessary to relief, while in registered trademark cases an exclusive right is necessary.

AMERICAN DECISIONS.

Trade-marks are not defined in the act of February 20, 1905,1 authorizing the registration of trade-marks, but section 2 of this act provides that a verified declaration stating that the applicant has an exclusive right to the particular mark sought to be registered, must accompany each application. That to entitle a name to equitable protection as a trade-mark the right to its use must be exclusive is clearly shown in the case of Canal Co. against Clark 2 where the complainant sought to have the name "Lackawanna," as applied to coal, protected as a trade-mark and was refused on the ground that others might use the name with as much truth as the complainant. And in Lawrence Manufacturing Co. against Tennessee Manufacturing Co.3 the Supreme Court of the United States refused to protect the mark "LL" used by the complainant on sheetings as a trade-mark, holding that an exclusive right to the use of words, letters, or symbols to indicate merely the quality of the goods could not be acquired.

In order to obtain protection on the ground of unfair competition, however, both the Federal and State courts have held that an exclusive right to the name, mark, etc., is not absolutely necessary. For example, the circuit court of the United States granted an injunction restraining the manager of a company from using the name "Clark" or," Clark's," in connection with the manufacture of thread, although William Clark was the principal incorporator of the company.*

133 U. S. Stat. L., p. 724, and amendments thereto.
213 Wall., 311 (1871).

2 138 U. S., 537 (1891).

Clark Thread Co. v. Armitage, 67 Fed., 896 (1895).

And certain wholesale and retail grocers in Chicago were enjoined from using the word "Minnesota" in connection with the manufacture of flour.1 There the court observed that it was hardly necessary to cite authority for the doctrine that in cases where the question is simply one of unfair competition in trade it is not essential that there should be an exclusive or proprietary right in the word or labels used, in order to maintain the action.

Another distinction is that in order to establish one's right to a trade-mark actual use with the intent to adopt the same is the test, rather than the length of time used. In the class of cases under discussion it is necessary to prove that the mark or name has acquired a secondary meaning, which generally requires a showing of longcontinued use. In a recent case 2 the Supreme Court of Iowa held that before the courts will afford protection to the use of a name, symbol, or device it must be shown that as to the party complaining it has secondary meaning in the public mind, which only comes from use, and, that it is understood to represent the goods of the party complaining, so that one using it, after such meaning had attached, would be in a position to practice fraud upon the complainant and the public.

Another distinction frequently drawn by the courts is that, while fraudulent intent need not be proved in trade-mark cases, it must be proved directly or by inference in all cases of "unfair competition" which do not involve a registered trade-mark. However, the courts are not unanimous in holding that it is necessary that fraudulent intent be proved in order to obtain an injunction against unfair competition. The Federal courts apparently adhere to the rule that fraudulent intent is necessary. In 1891, although denying the complainant relief, the Supreme Court held that unfair and fraudulent competition, if conducted with intent on the part of the defendant to avail itself of the reputation of the plaintiff to palm off its goods as plaintiff's, would, in a proper case, constitute ground for relief.3 And in the Elgin Watch Co. case, decided in 1901, the same conclusion was reached. This rule has been adopted and applied by the

1 Pillsbury-Washburn Flour Mills v. Eagle, 86 Fed., 608 (C. C. A., 1898).

2 Motor Accessories Manufacturing Co. v. Marshalltown Motor Material Manufacturing Co., 149 N. W., 184 (1914).

3 Lawrence Manufacturing Co. v. Tennessee Manufacturing Co., 138 U. S., 537 (1891). 4 Elgin National Watch Co. v. Illinois Watch Case Co., 179 U. S., 665, 674 (1901). The court by Chief Justice Fuller said: "If a plaintiff has the absolute right to the use of a particular word or words as a trade-mark, then if an infringement is shown, the wrongful or fraudulent intent is presumed, and although allowed to be rebutted in exemption of damages, the further violation of the right of property will nevertheless be restrained. But where an alleged trade-mark is not in itself a good trade-mark, yet the use of the word has come to denote the particular manufacturer or vendor, relief against unfair competition or perfidious dealing will be awarded by requiring the use of the word by another to be confined to its primary sense by such limitations as will prevent misapprehension on the question of origin. In the latter class of cases such circumstances must be made out as will show wrongful intent in fact or justify that inference from the inevitable consequences of the act complained of."