Mastercrafters Clock & Radio Co. v. Vacheron & Constantin-Le Coultre Watches, Inc. - 221 F.2d 464 (2d Cir. 1955)

Rule:

The actionable harm, in a secondary-meaning case, may result either from the likelihood (a) of loss of customers or (b) of loss of reputation, or (c) of both. Such loss can result from the customer's belief that the competing article derives from the same source as that of the party complaining; and it matters not whether the customers know just who is the source.

Facts:

Plaintiff clock manufacturer began distribution of a Model 308 clock. Defendant distributor of Swiss watches warned plaintiff that its Model 308 was a counterfeit of the appearance and configuration of the Atmos clock distributed by defendant and that it would commence legal action if necessary. Defendant brought suit in several state courts against the distributors and customers of plaintiff. Plaintiff responded by filing a claim seeking a declaratory judgment that its Model 308 clock did not unfairly compete with defendant, damages, and an injunction restraining defendant from prosecuting the suits against it. Defendant and intervenors counterclaimed for damages due to unfair competition and an injunction restraining the manufacture and distribution of the Model 308 clock. The trial court dismissed defendant's counterclaims and ruled for plaintiff on the grounds that there was no unfair competition, because there was more than one distributor of the Atmos clock.

Issue:

Did the plaintiff engage in unfair competition, thereby entitling the defendant to damages and an injunction?  

Answer:

Yes.

Conclusion:

The court reversed the trial court’s decision, holding that the defendant was entitled to damages and an injunction, because plaintiff clock manufacturer engaged in unfair competition in light of the fact that it intentionally produced a copy of a clock distributed by defendant distributor of Swiss watches, causing harm to the reputation of defendant's product and loss of customers. The case was remanded with instructions to grant an injunction to defendant and intervenors and to determine the damages due to the unfair competition.