United Drug Co. v. Theodore Rectanus Co.
1918 U.S. LEXIS 1694, 39 S. Ct. 48, 248 U.S. 90 (1918)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A senior user's trademark rights do not extend to a remote geographic territory where it has no market presence, and it cannot enjoin a junior user who, in good faith and without knowledge of the senior use, established rights to the same mark in that separate territory.
Facts:
- Around 1877, Ellen M. Regis of Massachusetts began compounding and selling a medicinal preparation for dyspepsia under the trademark 'Rex'.
- Regis and her successor firm confined their business activities and sales of 'Rex' products almost exclusively to the New England states.
- Around 1883, Theodore Rectanus, a druggist in Louisville, Kentucky, independently and without any knowledge of Regis's product, began using the mark 'Rex' for his own medicinal 'blood purifier'.
- Rectanus and his successor, the Rectanus Company, built up a substantial local trade and goodwill for their 'Rex' product in Louisville and the surrounding vicinity.
- In 1911, United Drug Co. purchased the Regis business and its 'Rex' trademark rights.
- In June 1911, prior to entering the Kentucky market, United Drug Co. was explicitly notified that the Rectanus Company was already using the 'Rex' mark in Louisville.
- In April 1912, United Drug Co. made its first shipments of 'Rex' branded products into Louisville, Kentucky.
Procedural Posture:
- United Drug Co. sued Theodore Rectanus Co. in the U.S. District Court for the Western District of Kentucky, seeking to enjoin trademark infringement.
- The District Court (trial court) ruled in favor of United Drug Co. and granted the injunction.
- Theodore Rectanus Co. appealed the decision to the U.S. Circuit Court of Appeals.
- The Circuit Court of Appeals (intermediate appellate court) reversed the trial court's decision and ordered the case dismissed.
- 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 the senior user of a trademark have superior rights that allow it to enjoin a junior user's good-faith use of the same mark in a geographically separate and remote market where the senior user had not previously established a trade presence?
Opinions:
Majority - Mr. Justice Pitney
No. The senior user of a trademark cannot enjoin a good-faith junior user in a geographically remote market where the senior user has no established trade. The court reasoned that trademark rights are not rights 'in gross' or at large, like a patent or copyright, but are appurtenant to an established business or trade in a specific territory. The right to a mark grows out of its use, not its mere adoption. The general rule that priority of appropriation determines the question only applies when parties are competing in the same market. Where two parties independently employ the same mark in separate and remote markets, the question of who was first is 'legally insignificant' unless the junior user acted in bad faith. Because Rectanus adopted the mark in good faith and built up local goodwill in Kentucky before United Drug entered that market, Rectanus acquired valid common law rights in that territory. United Drug, as the newcomer to the Kentucky market, must enter subject to the pre-existing rights established by Rectanus.
Analysis:
This case establishes the foundational common law principle of territoriality in U.S. trademark law, often referred to as the 'Tea Rose-Rectanus' doctrine. It clarifies that trademark rights are not inherently national in scope but are limited to the geographic areas of actual use and reputation. This decision created the 'good-faith junior user' defense, which protects local businesses that develop goodwill in a mark without knowledge of a senior user in a distant market. The principles from this case were later influential in the drafting of the Lanham Act of 1946, which provides for concurrent use registrations and limits remedies against innocent junior users who adopted a mark prior to federal registration by the senior user.
Unlock the full brief for United Drug Co. v. Theodore Rectanus Co.