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United Drug Co. v. Theodore Rectanus Co. - 248 U.S. 90, 39 S. Ct. 48 (1918)

Rule:

In the ordinary case of parties competing under the same trademark in the same market, it is correct to say that prior appropriation settles the question. But where two parties independently are employing the same mark upon goods of the same class, but in separate markets wholly remote the one from the other, the question of prior appropriation is legally insignificant, unless at least it appear that the second adopter has selected the mark with some design inimical to the interests of the first user, such as to take the benefit of the reputation of his goods, to forestall the extension of his trade, or the like.

Facts:

About the year 1877, petitioner Ellen Regis began to compound and distribute a preparation for medicinal use in cases of dyspepsia and other ailments, to which she applied as a distinguishing name the word, “Rex.” The word was put upon the boxes and packages in which the medicine was placed upon the market, after the usual manner of a trademark. In 1898, Ellen Regis recorded the word “Rex” as a trademark under the laws of Massachusetts. Petitioner, United Drug Company, then purchased the business with the trademark right, and has carried it on in connection with its other business. Meanwhile, about the year 1883, Theodore Rectanus, a druggist in Louisville) (Kentucky, commonly known as “Rex,” employed the same as a trademark for a medicinal preparation known as a “blood purifier.” Thereafter, Theodore Rectanus sold his business, including the right to use the word “Rex” to respondent, Theodore Rectanus Company. In 1911, petitioner was distinctly notified that respondent was using the word “Rex” to designate its medicinal preparations. Petitioner then filed a complaint for unfair competition and trademark infringement. The District Court granted an injunction in favor of petitioner, which the appellate court reversed. According to the appellate court, petitioner’s predecessor did nothing to make her medicine or its trademark known outside her region. Petitioner appealed.

Issue:

Did drug manufacturer infringe petitioner’s "Rex" trademark?

Answer:

No.

Conclusion:

The Court affirmed the judgment of the appellate court, holding that where petitioner's use of its trademark for medicine was confined to a limited territory far from the territory in which respondent's contested use of the trademark took place, petitioner was held to have taken the risk that an innocent party might use the same trademark for similar goods and spend money building up its trade. According to the Court, respondent in good faith and without notice of any prior use did build up a local trade using the name. Under those circumstances, the general rule of priority used in trademark infringement cases did not apply.

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