THOMAS GRAHAM, (admr. etc.,) Respondent, v. A. J. PLATE, Appellant

No. 2,404. THOMAS GRAHAM, (admr. etc.,) Respondent, v. A. J. PLATE, Appellant. Tbade-Maek, — Meastoe op Damages. — In an action to recover damages for a violation of plaintiff’s trade-mark, the profitaetually realized by defendants from the sales of the spurious article under the simulated trademark, is a proper measure of damages, but the recovery of the plaintiff is not limited to the amount of such profits. Appeal from the District Court of- the Twelfth District, City and County of San Francisco. This is an action by the plaintiff for damages for an alleged violation of the trade-mark of his intestate, by the defendant. Judgment was rendered for plaintiff, and defendant appealed. The other facts are stated in the opinion. Crittenden &, Wilson, for Appellant. - In cases of this character, there are usually two sources of damage — first, injury to reputation; and second, loss of trade and business. Tbe first of these sources only exists when the trade-mark is used on an inferior article; and in the present case, it appears that the pistols sold by the defendant were superior to those manufactured by Deringer. On this point the evidence is direct and conclusive, the witnesses being experts, and unanimous in their testimony; and it follows, of course, that the reputation of Deringer was not injured by the acts of the defendant. The inquiry is limited, therefore, to the loss of trade and business; and there is no evidence of the extent of this loss, or whether any loss was sustained in point of fact. It is not shown that Deringer was deprived of customers, or compelled to reduce his prices; or that more pistols could have been manufactured by him than he did manufacture and actually sell. The case is utterly barren of any evidence on which to base an estimate of damages, unless it be assumed that Deringer was entitled to the profits made by the defendant. It was on this assumption that the damages were assessed by the Court below, and we confidently claim that an error was committed. The cases in which damages may be recovered in equity are exceptional, and it is well settled that in an equitable action damages cannot be awarded beyond compensation. (Sedg. on Dam. 9 note; 538 note; Bird v. Hie W. &M. B. B. Go., 8 Eich. Eq. 46; Sanders v. Anderson, 10 Eich. Eq. 232.) In suits for the infringement of patents, the rule in equity is to decree an account of profits'; but there are reasons for this rule which have no application to cases of the violation of a trade-mark. A patent gives the exclusive right to vend the thing patented, and any profit arising from its sale be longs to the patentee, not only legally, but in equity and conscience. The effect of a trade-mark, however, is different. The only exclusive right attaching to it is the right to use it. Placed upon the goods of a manufacturer its purpose is to distinguish them from similar goods manufactured by others, the field of competition so far as the goods are concerned being open to any one who chooses to enter it. No interest either in the goods, or in the profits arising from them, can be claimed on the ground that tbe manufacturer bas placed upon them the trade-mark of another. The act of affixing the trade-mark does not operate as a transfer; it is simply a wrong for which the party is answerable in damages, In our view of the matter, the question is one of dam-, ages and not of profits; and if we are correct in this, it is clear that the profits do not constitute the measure of damages. The latter may be precisely equal to the former, but they may also be more or less; and damages estimated in this manner would be purely speculative. There may be cases in which it would be proper to speculate in regard to the damages, but if so, they are cases in which the damages are incapable of ascertainment by direct proof, or where punitive or exemplary damages may be recovered; and we have seen that such damages cannot be awarded in equity. Even at law, the fraudulent use of a trade-mark is ground for nominal damages only, unless special damages are proved. (Blofeld v. Payne, 4 Barn. & Ad. 410.) It cannot be pretended that the defendant is chargeable with actual fraud. The evidence showed that he acted under the belief that the trade-mark of s Deringer was placed upon the pistols by his authority; and the case is not one in which speculative, or exemplary, damages could be recovered in any forum. (Nightingale v. Scannell, 18 Cal. 315; SéldenY. CasJman. 20 Cal. 56.) Nathaniel Holland, for Respondent. The profits made by the defendant by the piracy of the trade-mark has not been rejected as a proper measure of -damages in any adjudicated case that I have seen. In the case of Goats v. Holbroolc, the Judges held that the plaintiff was entitled to an account (this certainly meant an account of the profits) made by the use of the plaintiff’s trade-mark, and it sehms that the profits was a proper measure .of damages. (2 Sahdford’s Chancery, Rep. page 611, 621.) An order for an)account is also proper. Idem 612.) , In that case tbe profits made bj tbe use of tbe plaintiff’s trade-mark as a measure of damages was not questioned by ^the counsel, chancellor, or tbe Court of Errors on appeal; on tbe contrary, it was beld that tbe plaintiff was entitled to an account, and a decree that tbe plaintiff pay sucb damages. Tbe same rule of damages is adopted in tbe case of tbe infringement of patents, where tbe profits have been made in fraudulently using the patent rights of owners. {Earle v. Sawyer, 4 Mass., 112.) It is an equitable rule of damages, in sucb cases as trademarks wherein profits, by tbe fraudulent use thereof, have been made; and, by analogy, is adopted in tbe case of a fraudulent use of a patent right. Tbe counsel has failed to cite a single case wherein it has been disregarded in those classes of cases, either at law or in equity. It is not established by tbe evidence, or by tbe findings of tbe Court, that tbe spurious were a superior article; tbe evidence on that point is conflicting. Besides, a superior article does not go in mitigation of tbe damages, nor is that fact any defence, nor will it answer either purpose. {Bloomfield v. Payne, Note to English cases; 2 Sandford’s Chancery Bep. page 601.) If there is sucb a similarity between tbe genuine and tbe spurious article as might impose on ordinary persons, and calculated to mislead tbe public, tbe intention to deceive is manifest. {Schawsbury v. Thompson, Note to English cases; 2 Sandford’s Chancery Bep. 602.) A trade-mark is personal property, and tbe owner’s right of property in it is as complete as that in which be possesses tbe goods to which it is attached, and tbe law protects him in tbe enjoyment of tbe one as well as tbe other. {Deringer v. Plate, 29 Cal. 292.) The law protects tbe exclusive right in trade-marks as property. {Sylces v. Sylces, 3 B. and Ores., 541; Milerton v. Fox, Mylne and Cr., 384; Upton, Trade-marks, 97, 101, 103. Howard v. Henriques, 3 Sand. S. C. B., 725.) [MAJORITY — CroGKETT J.,] CroGKETT J., delivered tbe opinion of tbe Court, Rhodes, C. J., Wallace, J., and Temple, J., concurring: Tbe two grounds chiefly relied upon by tbe defendant for a reversal of tbe judgment are: First — That tbe evidence shows that tbe trade-mark of Henry Deringer was used under a license from him by tbe defendant; and, Second— That there was no proof that Deringer suffered any damage by tbe use of tbe trade-mark, and tbe damages awarded by tbe Court are excessive. But neither point is tenable. Tbe evidence in respect to tbe license, when viewed in tbe light most favorable for tbe defendant, was, at least, conflicting. Deringer testifies explicitly that be never granted any such license; and it is highly improbable that be ever did, considering all tbe circumstances disclosed by tbe evidence. I think tbe finding on this point is fully supported by tbe weight of evidence. On tbe second point there is as little room for doubt. It clearly appears in proof, that tbe defendant has made a profit of $1,770 by tbe sale of pistols made in imitation of tbe Deringer pistol, and bearing Deringer’s trade-mark stamped thereon without bis consent; and tbe Court rendered a judgment for this amount against tbe defendant. It is insisted, on behalf of tbe defendant, that tbe profit realized by him from sales of tbe spurious article under tbe simulated trade-mark, is not a proper measure of damages. It is conceded that this is tbe proper rule in an action for damages for tbe infringement of a patent. It is said that tbe patentee, having tbe exclusive right to- manufacture and vend the patented article, is entitled,» legally and equitably, to all the profits made by any one from tbe manufacture and sale of it in violation of tbe rights of tbe patentee; but that one, who has acquired an exclusive right to use a particular trade-mark, has not thereby acquired an exclusive right to make and vend tbe commodity to which the trade-mark is affixed; that any one has the right to make and vend the same commodity, in exact imitation of that made by tbe owner of tbe trade-mark, and that the offence consists, not in imitating the commodity, but the trade-mark only. Hence, it is argued, the profit made by a sale of the commodity ought not to be a measure of the damages; but the party is entitled to only such damages as resulted from a piracy of the trade-mark; and the profit realized by a sale of the commodity does not establish the amount of this damage, which may be greater or less than the amount of the profit. It is evident that the profit realized by the wrong-doer is not the only measure of damages. The spurious article may have injured the credit of the genuine one, and the profits of the owner of the trade-mark may have been greatly reduced, whilst the wrong-doer has made little or no profit. But whilst the profit made by the latter does.not limit the recovery, the owner of the trade-mark is entitled to all the profit which was in fact realized. In sales made under a simulated trade-mark it is impossible to decide how much of the profit resulted from the intrinsic value of the commodity in the market, and how much from the credit given to it by the trade-mark. In the very nature of the case it would be impossible to ascertain to what extent he could have effected sales and at what prices except for the use of the trade-mark. No one will deny that on every principle of reason and justice the owner of the trade-mark is entitled to so much of the profit as resulted from the use of the trademark. The difficulty lies in ascertaining what proportion of the profit is due to the trade-mark, and what to the intrinsic value of the commodity; and as this cannot be ascertained with any reasonable certainty, it is more consonant with reason and justice that the owner of the trade-mark should have the whole profit than that he should be deprived of any part of it by the fraudulent act of the defendant. It is the same principle which is applicable to a confusion of goods. If one wrongfully mixes his own goods with those of another, so that they cannot be distinguished and separated, he shall lose the whole, for the reason that the fault is his; and it is but just that he should suffer the loss rather than an innocent party, who in no degree contributed to tbe wrong. I tbink, therefore, there was no error in awarding to the plaintiff the wfiole profit made by the defendant. This view of the law appears to be supported by the following authorities: Coats v. Holbrook, (2 Sandf. Ch. R., 611); Upton on Trade-Marks (245); Spottswood v. Clark, (2 Sandf. Ch. R., 629.) But if there were no authorities on the point, every consideration of reason, justice and sound policy, demands that one who fraudulently uses the trade-mark of another should not be allowed to shield himself from liability for the profit he has made by the use of the trade-mark, on the plea that it is impossible to determine how much of the profit is due to the trade-mark, and how much to the intrinsic value of the commodity. The fact that it is impossible to apportion the profit, renders it just that he should lose the whole. Judgment affirmed.