Prestonettes, Inc. v. Coty
264 U.S. 359 (1924)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A trademark owner's rights do not extend to prohibiting a subsequent purchaser from using the trademark to truthfully identify that the trademarked good is a component of a new, altered, or repackaged product, provided the labeling is not deceptive and clearly discloses the role of the repackager.
Facts:
- Coty, a French company, manufactures and sells perfumes and toilet powders under the registered trademarks 'Coty' and 'L’Origan'.
- Prestonettes, Inc., a New York corporation, purchases genuine loose powder manufactured by Coty.
- Prestonettes adds its own binder to Coty's powder, subjects it to pressure, and sells the resulting product as a compact in a metal case.
- Prestonettes also purchases genuine Coty perfume in large bottles and rebottles it into smaller containers for resale.
Procedural Posture:
- Coty filed a bill in equity against Prestonettes, Inc. in the U.S. District Court for the Southern District of New York, seeking to enjoin the use of its trademarks.
- The District Court (trial court) issued a decree permitting Prestonettes to sell the products with specific labels that disclosed Prestonettes' role as an independent rebottler and compounder.
- Coty, the plaintiff, appealed the District Court's decision to the U.S. Circuit Court of Appeals.
- The Circuit Court of Appeals reversed, issuing an absolute injunction against Prestonettes' use of the Coty trademarks on any product not in its original packaging.
- The U.S. Supreme Court granted a writ of certiorari to review the decision of the Circuit Court of Appeals.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a trademark owner have the right to prohibit a third party from using the owner's mark on products that the third party created by rebottling or altering the owner's genuine goods, when the third party's label truthfully identifies the original product and the role of the third party as the rebottler or compounder?
Opinions:
Majority - Mr. Justice Holmes
No. A trademark owner cannot prohibit a third party from making truthful, non-deceptive use of the mark in this manner. A trademark's function is to protect the owner's goodwill against the sale of another's product as their own; it is not a copyright that grants an absolute monopoly over the word itself. Once Prestonettes purchased the genuine products, it acquired ownership rights, including the right to alter, divide, and resell them. Using the 'Coty' mark collaterally to state a fact—that Coty's product is a component of the new article—is permissible as long as it does not deceive the public. The District Court's required label, which gives no prominence to the Coty name and clearly states that Prestonettes is the independent compounder or rebottler, prevents such deception. The potential for the product to be deteriorated by the repackager does not grant the original manufacturer a new right; if the repackaged product is inferior, the public will learn to associate the poor quality with the repackager, who is clearly identified on the label.
Dissenting - Mr. Justice McReynolds
Mr. Justice McReynolds dissents without a written opinion.
Analysis:
This decision is a foundational case for the 'first sale' or 'exhaustion' doctrine in trademark law. It establishes that a trademark holder's right to control their product is exhausted after the first authorized sale. The ruling balances the trademark owner's interest in protecting brand integrity against a subsequent purchaser's property rights and the public interest in a competitive market. It allows for the resale of altered or repackaged goods, conditioning it on full and truthful disclosure to prevent consumer confusion. This precedent shapes how courts analyze cases involving repackaged goods, parallel imports, and repair services that use original manufacturers' trademarks.
Unlock the full brief for Prestonettes, Inc. v. Coty