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COCA-COLA CO. v. DIXI-COLA LABS.

February 27, 1940

COCA-COLA CO.
v.
DIXI-COLA LABORATORIES, Inc., et al.



The opinion of the court was delivered by: COLEMAN

This is a trade-mark and unfair competition case brought by plaintiff against three corporations, Dixi-Cola Laboratories, Inc., MarBert Products, Inc., and Apola Extract & Syrup Corporation, and eleven individual defendants.

The bill of complaint charges all of the defendants with infringement of plaintiff's trade-mark "Coca-Cola" by the sale of defendants' products under the names Dixi-Cola, MarBert-Cola, MarBert The Distinctive Cola, Apola-Cola, Lola-Kola, Kola and May-Cola. The defendants are also charged with being guilty of unfair competition by simulating plaintiff's products, and by causing dealers to substitute and to pass off defendants' products for plaintiff's products.

 The defendants deny both the charge of trade-mark infringement and unfair competition with respect to all of their products. However, at the trial, counsel for defendants abandoned any right to continue to use the name "Apola-Cola", and there is little, if any, evidence respecting the use of the name "Lola-Kola" of "May-Cola" by any of the defendants.

 The defendant MarBert Products, Inc., manufactures a concentrate out of which the beverages Dixi-Cola and MarBert Cola are made, Dixi-Cola Laboratories, Inc., purchasing the concentrate from the MarBert Products, Inc., and, in turn, reselling it to its distributors. Dixi-Cola is sold to the consumers in bottles only, but MarBert-Cola is sold not only as a concentrate and as a bottled drink, but also as syrup which is purchased direct by fountain dispensers. These latter sales, however, represent only about 10 per cent of the gross business. The bottling is done by so-called independent bottlers, that is, bottlers who bottle other products and who have the right to, and do bottle and distribute the concentrate to a large extent under various names, as well as under the name MarBert-Cola. The Apola Extract & Syrup Company is a New York corporation no longer doing business, the MarBert Products, Inc., having purchased its assets several years ago, but never having operated it. MarBert Products, Inc., and the Dixi-Cola Laboratories, Inc., are domiciled in Baltimore and have little separate identity. Their places of business are in the same building, which, being on a corner, however, has enabled the companies to use, as they do, different addresses. The various individual defendants are all either officers, salesmen or representatives in some capacity of the MarBert Products, Inc., the defendant, R. W Kruse, being the President of both companies.

 Reduced to concrete form, the plaintiff seeks relief of two kinds: First, an injunction against the use by the defendants of the word "Cola" as a terminal or suffix to the prefixes now used by the Defendants as part of their trade names, or to any other prefix; and, second, an injunction against the sale by the defendants of any of their products to the consumer except in bottle form, unless the color of such products is changed from the brown, now virtually identical with that of Coca-Cola, to some other color distinctively different.

 The defendants' answer to these two claims for relief can be summarized as follows: First, as to the matter of alleged infringement of the trade-mark, a denial that in the name "Coca-Cola" plaintiff has a valid trade-mark because, (a) the word is merely descriptive of the ingredients of plaintiff's product; (b) registration of the name "Coca-Cola" under the Act of 1905, 15 U.S.C.A. § 81 et seq., was accomplished by fraudulent misrepresentation; (c) the word "Cola" has become a generic term for a class of drinks, and plaintiff cannot monopolize its use; and (d) plaintiff has abandoned any right which it might otherwise have had to monopolize the use of the word "Cola" by acquiescing, over a long period of time, in its use in various forms.

 We turn first to the question of the validity of the trade-mark "Coca-Cola." This is no longer an open question. The Supreme Court in Coca-Cola Company v. Koke Company, 254 U.S. 143, 41 S. Ct. 113, 65 L. Ed. 189, set it at rest in 1920, as did also the Circuit Court of Appeals for this Circuit, a little later, in Coca-Cola Company v. Old Dominion Beverage Corporation, 271 F. 600. The Supreme Court in the "Koke" case said, 254 U.S. at pages 145, 146, 147, 41 S. Ct. at page 113, 65 L. Ed. 189:

 "It appears that after the plaintiff's predecessors in title had used the mark for some years it was registered under the Act of Congress of March 3, 1881 [c. 138], (21 Stat. 502), and again under the Act of February 20, 1905, c. 592, 33 Stat. 724 [ 15 U.S.C.A. § 81 et seq.]. Both the Courts below agree that subject to the one question to be considered the plaintiff has a right to equitable relief. Whatever may have been its original weakness, the mark for years has acquired a secondary significance and has indicated the plaintiff's product alone. * * * The name now characterizes a beverage to be had at almost any soda fountain. It means a single thing coming from a single source, and well known to the community. It hardly would be too much to say that the drink characterizes the name as much as the name the drink. In other words 'Coca-Cola' probably means to most persons the plaintiff's familiar product to be had everywhere rather than a compound of particular substances. Although the fact did not appear in United States v. Coca-Cola Co., 241 U.S. 265, 289, 36 S. Ct. 573, 60 L. Ed. 995, Ann.Cas.1917C, 487, we see no reason to doubt that, as we have said, it has acquired a secondary meaning in which perhaps the product is more emphasized than the producer but to which the producer is entitled. * * *

 "The product including the coloring matter is free to all who can make it if no extrinsic deceiving element is present. * *" (Italics inserted)

 A few months later, in the Old Dominion Beverage Corporation case, the Circuit Court of Appeals for this Circuit said, in holding that the name "Taka-Kola" infringed, 271 F. at page 601: "Plaintiff's trade-mark 'Coca-Cola' is duly registered under the ten-year proviso of the federal trade-mark law (Comp.St. § 9490 [ 15 U.S.C.A. § 85]). It is therefore immaterial that it may once have been descriptive or that to a degree it may be so still. * * * The Supreme Court has very recently overruled the contention that, because of what is said to have been or to be its deceptive character, plaintiff may not be heard to complain of its infringement. Coca-Cola v. Koke Co., 254 U.S. 143, 41 S. Ct. 113, 65 L. Ed. [189], decided December 6, 1920."

 Defendants stress, in support of their position, the case of Warner & Company v. Lilly & Company, 265 U.S. 526, 44 S. Ct. 615, 68 L. Ed. 1161, in which it was held that the names "Coco-Quinine" and "Quin-Coco", applied to a liquid preparation of quinine in combination with chocolate and other things, cannot be appropriated as trade-marks, because these names are merely descriptive of the ingredients, qualities, or characteristics of an article of trade. This case, decided several years after the Coca-Cola case, does not cite that case. This is significant and very indicative of the obvious distinction between the articles involved in the two cases. In the Quinine case both of the syllables of both of the names involved were, as the Court found, merely descriptive of the primary ingredients of the article itself, namely, quinine and chocolate. There was merely an attempt to color and to make more palatable a long-established medicine, namely, quinine, by adding chocolate. In the case of Coca-Cola, on the other hand, it is not true to say that the coca leaf and the cola nut represent the basic ingredients because, as a matter of fact, the amounts of coca and cola extract are relatively very small -- the exact percentages of each being kept secret and not capable of ascertainment by laboratory analysis, of the beverage as marketed -- and the basic ingredients are sugar, phosphoric acid and caffeine, -- the latter being in relatively small percentage, comparable to the various flavoring materials that are added.

 Evidence in the present case stands without contradiction that no such thing as a "cola" beverage was known or spoken of prior to the advent of Coca-Cola on the market, which first occurred in 1886 when one Pemberton introduced and sold as a beverage his so-called "Coca-Cola Syrup and Extract," although separate extracts of coca leaves and cola nuts had previously been known and used by druggists in compounding medicines; and in 1887 Pemberton, who was the plaintiff company's predecessor in title, registered his "Coca-Cola Syrup and Extract." Thus, defendants' argument is untenable that "Cola" antedated "Coca-Cola" as a generic term for a certain class of soft drinks free to all who desire to use it as part of a trade name, just like the words "ginger-ale", "sarsaparilla", and "root-beer." Since Coca-Cola appeared, there has been a veritable flood of drinks of this type, as evidenced by the fact that there have been no less than 143 registrations in the United States Patent Office of names embodying the word "cola" as a suffix. But it is idle to argue that Coca-Cola's competitors can capitalize a condition which has arisen entirely as a consequence the creation and marketing of Coca-Cola. There is absolutely no evidence in the present case that plaintiff has ever abandoned its right to be protected in the use of its name, or that it has ever acquiesced in the use of infringing marks. Abandonment is primarily a question of intention. It has been disclosed in the present case that the Coca-Cola Company for many years had been, and still is, contesting alleged infringements by competitors at the rate of approximately one case a week.

 There are four factors which the defendants in the present case constantly play up and rely upon: First, what we have already been considering, namely, the use of the suffix "cola"; second, copying the color of Coca-Cola; third, offering the consumer in bottle form a larger quantity of their beverages for the same price than does Coca-Cola; and, fourth, selling their concentrates to the jobber and bottler at a cheaper price.

 In Coca-Cola Company v. Old Dominion Beverage Corporation, supra, where, as already stated, the mark "Taka-Kola" was held to infringe, the Court had the following to say, (271 F. at page 603, 604), which is most pertinent to the present case: "May defendant employ, for the sole purpose of bringing its wares speedily and cheaply into notice, a variant of plaintiff's trade-mark so close as to suggest the latter to every one, thereby turning to its own profit the reputation which the plaintiff has built up through many years of skill and effort, and at the cost of millions expended in advertising its goods under its mark? It may tell the thirsty that its ...


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