who participates in unfair trade by furnishing fraudulent labels is liable in equity to the party injured for the whole damage resulting from the unfair competition."4

Whether or not a technical trademark is involved, the successful complainant in an action for unfair competition is entitled to an account.65 A bill for a naked account of profits can not be sustained; 66 the accounting will only be granted as an incident to the award of injunctive relief."

In rare cases the court will decree the destruction of the goods bearing the infringing mark.s

69

The defense of laches can not be raised for the first time before the master, and the same is true as to the defense that the plaintiff's goods were withdrawn from the market before the infringement commenced.70

Trademark infringement and unfair competition as aggrava tions of patent infringement.—Although the court has no jurisdiction over questions of trademark infringement and unfair competition because of the absence of diversity of citizenship, "if defendants have aggravated the damages by unfair competition in the sale of the very infringing articles (infringing the patent in suit) any damages thus caused may be awarded on the accounting." Mack, J., in W. F. Burns Co. v. Automatic Recording Safe Co., 241 Fed. Rep. 472, 486 (C. C. A. 7), following Payson Mfg. Co. v. Ludwigs, 206 Fed. Rep. 60, 124 C. C. A. 194.

Similarly, in a patent infringement case, "violation of a common-law trademark, by its use on the infringing article, may also be shown in aggravation of damages." Mack, J., in W. F. Burns Co. v. Automatic Recording Safe Co., 241 Fed. Rep. 472, 486 (C. C. A. 7).

reputation. It is impossible that the quantum of damage in cases of this class can be mathematically ascertained; no account can possibly reach such a matter. It must always be a matter of discretion for the court and jury." Littlejohn v. Mulligan, 3 New Zealand Rep. 446. 64-Hildreth v. Sparks Mfg. Co., 99 Fed. Rep. 484.

65-Singer Mfg. Co. v. June Mfg. Co., 163 U. S. 169, 204; 41 L. Ed. 18; Worcester Brewing Corp. v.

Reuter & Co., 84 C. C. A. 065; 157
Fed. Rep. 217.

66-Root v. L. S. & M. S. Ry. Co., 105 U. S. 189; 26 L. Ed. 975. 67-Van Raalt v. Schneck, 159 Fed. Rep. 248, 251.

68-Peerless Rubber Mfg. Co. v. Nichol, 187 Fed. Rep. 238.

69-DeLong Hook & Eye Co. v. Francis Hook & Eye & F. Co., 168 Fed. Rep. 898; 94 C. C. A. 310. 70-Ibid

§ 193. The decree in unfair competition cases as to the accounting.-It has been held that where the defendant's unfair competition was not wilful or fraudulent, the accounting would be limited to the damages sustained by the plaintiff, and would not extend to the defendant's profits." While the general rule has been stated to be that the defendant will be held to account for profits, it is clearly for the court to determine whether the account shall include damages only, profits only, or both. A decree reading as follows:

72

"That the complainant recover of the defendant damages sustained by said complainant from the unlawful acts of the defendant herein adjudged, in its use of said two labels recited in paragraphs 2 and 3 hereof, in the packaging and the sale of Neufchatel cheese, together with its costs of suit in this behalf expended, with leave to complainant to apply hereafter for a reference to a master to ascertain and assess said damages, should it be so advised."

does not authorize an accounting as to profits.73

The form of the account.-Equity Rule 63 prescribes the form, but not the contents of the account. That the defendant may, as an aid to the assessment of damages, be directed to

C. C. A. 386; 193 Fed. Rep. 390 (C. C. A. 3).

73-P. E. Sharpless Co. v. Lawrence, 130 C. C. A. 59; 213 Fed. Rep. 423. "In the ny, a technical trademark, like a patent right, is a species of property, and when it is invaded or appropriated, the owner thereof is entitled, not only to protection from further trespass, but, to the recovery of the profits issuing therefrom, as incident to and a part of his property right. In suits for unfair competition, on the other hand, the complaint is not of an appropriation of a property right, but of a tort committed by the defendant, in that his conduct has been unlawful by reason of the consequential injury to the plaintiff. In such a case, it is contended the

include in the account the names and addresses of purchasers of the infringing articles is weli settled. "The claim of defendant that he ought not to be required to disclose the names and addresses of his customers might rest upon a somewhat more substantial foundation, if the profits made by him in the manufacture and sale of the infringing goods alone were involved; but the accounting is ordered to ascertain both his gains and profits and the damages suffered by plaintiff. In a recent petition defendant has averred that he has made no profits. If this averment is true, and he can not now gainsay its truth, plaintiff will be limited in its recovery to the damages (as distinguished from the infringer's profits) it has sustained. An important element of such damages, if any, may be sales of goods bearing the infringing trademark, which have prevented sales by plaintiff of its own goods to its own customers. Whether any such sales have been made can not be learned until after the discovery of the names of the purchasers of infringing goods from defendant. An account merely stating dates, amounts, and prices would afford little, if any, assistance in the determination of this important question. To hold that plaintiff is not entitled to such information until after the filing of his account and exceptions thereto, and not even then unless, possibly, it can be obtained from an examination of the defendant either viva

recovery should be for damages actually suffered by the plaintiff, and for those only, the wrong complained of being somewhat analogous to that which would be the basis of an action on the case at common law.

"It is true, however, as contended by the plaintiffs below, that courts of equity, in granting injunctive relief in cases of unfair competition, have sometimes decreed that the plaintiffs should recover of defendant, not only damages, but the profits, gains and advantages that have accrued to the defendant by reason of his unfair competition. Such an enlargement of the scope of the decree is generally made on the ground that the unfair competition is adjudged to have been wilful

and fraudulent, and the recovery of profits in such cases is a punitive addition to the ordinary decree of compensatory damages. A number of cases have been cited in the brief of plaintiffs below, where, under these circumstances, an accounting of profits has been allowed in cases of unfair competition. We have examined all of them, and it is to be observed that in almost every case the recovery of such profits was included in the decree in addition to the recovery of damages, and in none of them was the precise question here presented discussed. The distinction between the recovery of damages and profits was thus recognized.

"What we conclude from the cases cited is, that courts of equity

voce or upon interrogatories, would be to create and to invite the delays which the rule was intended to prevent.

173a

§ 194. Forbidding publication of the decree.—Everyone who has experience in the use of decrees by way of unfair competition is aware of the damage that may be inflicted thereby. A decree of injunction, however carefully drawn, is apt to convey to the public an entirely erroneous impression of its scope and effect, as well as of the facts which occasioned it. Where the defendant has not been guilty of intentional fraud, the plaintiff may be required to abstain from harmful use of the injunction as a condition to the injunction remaining in effect."4

misrepresentations

concerning the

§ 195. Restraining decree. A defendant who circulates false statements regarding an interim order made in the cause may be restrained in the cause, on motion, from further circulation of the false statements, and the costs of the motion may be assessed against him."

75

§ 196. Punitive damages in equity. "The question of the true measure of damages in cases of this sort is an interesting one. The injured party is entitled to full compensation for the injury, but how shall that be measured? Manifestly, the profits which the infringer has made would not in all cases be compensation to the injured. The latter's loss in part inheres in the failure to acquire a just and deserved gain; also in the injury to the reputation of his product by reason of the substitution of the spurious article. The latter element is difficult, if not in

in cases of unfair competition may upon what seems to them sufficient grounds, include in their decrees an accounting of profits as well as an award of damages. We think, however, that the distinction between a decree for the recovery of damages and one for the recovery of profits, should not be lost sight of, and in general is not lost sight of, and that the latter is not included in the former." Gray, J., in P. E. Sharpless Co. v. Lawrence, supra, 213 Fed. Rep. at p. 426.

73a-Sessions, J., in O. & W. Thum Co. v. Dickinson, 254 Fed. Rep. 219.

74-"I see no reason why the plaintiff should advertise its decree in any way. There is nothing unfair in the defendant's prior advertising to correct, and, when that is the case, neither side should be allowed to scare off customers by the flourish of a decree. The plaintiff will therefore refrain from any advertisement at the peril of losing its decree." Learned Hand, J., in Champion Spark Plug Co. v. A. R. Mosler & Co., 233 Fed. Rep. 112,

118.

75-Gillette Safety Razor, Ltd. v. Pellett, Ltd., 26 R. P. C. 588. English authority, but equally applicable here.

possible of accurate admeasurement. It can only be approximately compensated by an allowance in the nature of punitory damages, resting largely in discretion." 76 This happens to be merely a dictum, as the issue was not before the court. But it is the statement of a sound principle, though one difficult of practical application, and is flatly opposed to Hennessy v. Wilmerding-Loewe Co., which denies the right to recover punitive damages in equity in this class of cases.

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§197. Increase of damages in equity.-Sec. 19 of the Act of 1905 provides that: "Upon a decree being rendered in any such case for wrongful use of a trademark the complainant shall be entitled to recover, in addition to the profits to be accounted for by the defendant, the damages the complainant has sustained. thereby. The court shall have the same power to increase such damages, in its discretion, as is given by section sixteen of this act for increasing damages found by verdict in actions of law."

This provision was doubtless intended to enable the trial court, having regard to the questions of fraudulent intent and guilty knowledge of the defendant, to assess damages by way of punishment, in addition to those damages found by the master to have been actually sustained by the complainant.

$198. The defendant's credits upon accounting.-Sec. 19 of the Act of 1905 provides that "In assessing profits the plaintiff shall be required to prove defendant's sales only; defendant must prove all elements of cost which are claimed."

These provisions are evidentiary, shifting the burden of proof upon the defendant, after the complainant has proven the extent of sales, to establish such credits or off-sets as he may be entitled to.

Where the defendant carried on the infringing traffic in connection with his regular business, it has been held, the master in chancery will not make any deduction for the general expenses

76-Jenkins, J., in Walter Baker

& Co. v. Slack, 130 Fed. Rep. 514, 519; 65 C. C. A. 138.

77-103 Fed. Rep. 90.