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September 2, 1953


The opinion of the court was delivered by: Platt, District Judge.

After the Court entered its opinion herein plaintiff and defendants moved for a rehearing in accordance with Rule 59(a) (2), Federal Rules of Civil Procedure, 28 U.S.C.A., and the parties stipulated further evidence in the record. The Court has amended its opinion and made findings of fact and conclusions of law in accordance with this amended opinion.

This action is based upon alleged trademark infringement and unfair competition. Plaintiff seeks to enjoin the defendants from using its trademarked insignia and emblem without its consent. Plaintiff prays an accounting of profits, damages, attorney fees, and costs. The parties have submitted the case to the court upon the plaintiff's right to an injunction and accounting, and have reserved the right to submit further evidence on an accounting and for damages, if the court finds plaintiff is entitled to injunction and accounting. No question of jurisdiction has been raised.*fn1

The facts as shown by the evidence are not in dispute. The parties, however, place different interpretations, deductions, and inferences upon this evidence. The court finds the pertinent facts to be briefly as follows: The Future Farmers of America is a corporation chartered by Act of Congress. 36 U.S.C.A. §§ 271-291; Pub.Law 740, 81st Cong., 2nd Sess., Ch. 823, Aug. 30, 1950. Plaintiff's predecessor, Future Farmers of America, a Virginia corporation, was organized and incorporated in 1928. The emblems of the organization were in continuous use since 1928. These emblems were registered in the United States Patent Office by the Virginia corporation in 1941 and 1942. The Virginia corporation was dissolved on November 10, 1950, and an affidavit and certificate to this effect were filed in the office of the Clerk of the United States District Court for the District of Columbia, on February 2, 1951. On November 20, 1951 the Virginia corporation assigned its interests in the trademarks to the plaintiff together with the goodwill of the business in connection therewith, and this assignment was recorded the following day. The assignment read: "nunc pro tune as of February 2, 1951" and was signed and acknowledged by the president and secretary of the Virginia corporation, as the authorized act of the corporation.

The defendants, doing business under the names of Chapter Supply Company and Southwestern Chapter Supply Company, with offices in Danville, Illinois, are in the business of supplying various clubs and organizations with jackets, T-shirts and other merchandise. Defendants were aware of the Virginia corporation's trademarks as early as 1945 and entered into written contracts with the Virginia corporation providing for the direct sale to F.F.A. members of particular items bearing the F.F.A. emblem and for payment of royalties to the Virginia corporation. These contracts ran from January 1, 1945 to January 1, 1948. The Virginia corporation authorized defendants to sell T-shirts bearing the F.F.A. emblem directly to its supply service, and defendants were permitted to dispose of the T-shirts remaining on hand at the close of 1949. The defendants claim no other permission from plaintiff or its predecessor to sell items bearing the F.F.A. trademarked emblems.

There was also organized the Future Farmers of America Foundation, chartered in the District of Columbia, which by agreement with the Virginia corporation conducted the supply business for the Virginia corporation with the right to use the trademarked emblems. This supply service was taken over by the plaintiff upon its incorporation.

The plaintiff published an official catalogue illustrating its official supplies and equipment which consisted of T-shirts, jackets, neckties, shirts, and other items. All of these had the emblems or trademarks upon them. Defendants made a "deal" with the Texas association of Future Farmers of America in 1951 to sell jackets, T-shirts, and other items bearing the trademarked emblem and insignia, and since that time have sold substantial quantities of these items in Texas. Defendants paid the Texas association a ten percent royalty on all of these sales, and in return Texas published free advertisements of defendants' products in its official magazine. One such advertisement in the May 1951 issue of Texas Future Farmers Magazine stated in part: "We have just secured permission from your state FFA association to sell Corduroy Jackets and other items of clothing with your state name, chapter name and emblem imprinted." This statement was deleted from subsequent advertisements, but the advertisement in the November 1951 issue stated: "We have just secured permission from your state FFA association to sell All Types Of F.F.A. Supplies."

Since 1949 defendants have made sporadic sales of F.F.A. items outside of Texas,*fn2 including the sale of 23 jackets in Moncks Corner, South Carolina on April 17, 1951 and the sale of one jacket to an F.F.A. member in West Virginia in June or July of 1951. The defendants have also solicited orders from various state agricultural educational leaders, who were advisers of F.F.A., for various F.F.A. items from 1949 to 1952. These solicitations were made by circulars bearing facsimiles of plaintiff's trademarked emblems on equipment.

On November 20, 1951, Dr. William T. Spanton, Chairman of the Board of Directors of F.F.A., plaintiff herein, wrote a letter to Robert A. Manire, second in charge in Texas, saying in part: "It is unfortunate that you have misconceived the extent of the rights and powers of State associations in this connection." But the advertisements with the "permission" statement deleted therefrom were run through the May-June 1952 issue of the Texas Future Farmer. Vannoy Stewart, officer immediately below Mr. Manire in the Texas organization and editor of the Texas magazine, knowing of Dr. Spanton's letter of November 20, 1951, wrote several letters in 1952 to Robert Romack, one of the defendants and manager of Chapter Supply Company, showing his eagerness to continue the arrangement between the defendants and the Texas association.

The May 1951 advertisement was inserted with the knowledge of Mr. Stewart and Mr. Manire, and the advisory council of the Texas association. M. A. Browning, Director of the Division of Vocational Instruction Services in Texas and as such administrator of the Texas F.F.A. program, became apprised of the entire situation in December, 1951. Most of the major decisions concerning the Texas association were made by the advisory council. Mr. Stewart had been delegated blanket authorization to accept advertisements for the magazine. The Texas association accepted royalty checks as late as November 3, 1952, and the money so received went into the association's treasury.

Plaintiff, by Dr. W. T. Spanton, wrote to the defendants on July 26, 1951 and again on November 14, 1951 demanding that the defendants desist from infringing plaintiff's trademarks in its representations, advertisements, and selling, to the Texas association or its members, or to any State association or their members. The defendants refused to change their course of conduct.

This court after preliminary hearing granted a temporary injunction on October 9, 1952 restraining the defendants from selling, advertising, or distributing merchandise or advertising media bearing the trademarked emblems and insignia in all states except Texas. This injunction was entered without prejudice to the questions of fact and law to be herein determined. The final hearing in this case was held on November 24, 1952.

Based upon these facts, plaintiff's principal contentions are: (1) That the Texas association never gave the defendants permission to use its registered trademarks; (2) That if the May 1951 advertisement constituted such permission this permission was withdrawn immediately after that advertisement appeared; and (3) That even if the Texas association purported to give the defendants this permission it was of no legal effect since the plaintiff is the only registered owner of the marks, and since its charter does not "dilute" its sole and exclusive trademark rights.

Plaintiff seeks to substantiate its first two contentions by pointing to the testimony of the Texas officials that they never gave defendants permission to use the marks and that the deal was solely an exchange of advertising for revenue, but actions often speak louder than words, especially when the words are uttered after a controversy is brought into the courts. This court attaches considerable weight to the May 1951 advertisement; to the letter of Dr. Spanton showing his interpretation of the Texas association's conduct in giving consent; and to the fact that the Texas association continued to carry defendants' advertisement long after the receipt of the Spanton letter, long after Texas knew how the plaintiff felt toward the defendants' use of the trademark. And finally, the Texas association continued to accept royalty payments after the instant suit was filed, so that even if the actions of the Texas officials were originally unauthorized when the royalties were received and placed in the treasury of the Texas association, it amounted to a ratification of the act of their officers.*fn3 The Texas association's entire course of conduct makes it clear that it consented and gave permission to the defendants to place the trademarked emblem and insignia on merchandise to be sold in Texas.

Plaintiff's third contention, that the Texas grant of permission to the use of the registered marks could have no legal effect, requires a close scrutiny and analysis of the plaintiff's charter. The ...

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