United States District Court, Northern District of Illinois, E.D
June 8, 1972
COMPUMARKETING SERVICES CORPORATION, A CORPORATION, PLAINTIFF,
BUSINESS ENVELOPE MANUFACTURERS, INC., A CORPORATION, DEFENDANT.
The opinion of the court was delivered by: McLAREN, District Judge.
MEMORANDUM OPINION AND ORDER
Plaintiff Compumarketing Services Corp. ("Compumarketing") has
sued defendant Business Envelope Manufacturers
("Business Envelope") for breach of contract, conversion,
misappropriation, and infringement of common law copyright. A
non-jury trial was held and post-trial briefs were filed. The
Court finds that the defendant breached its contract and that
plaintiff's recovery is not precluded by Sears Roebuck & Co. v.
Stiffel Co., 376 U.S. 225, 84 S.Ct. 784, 11 L.Ed.2d 661 (1964)
and Compco Corp. v. Day-Brite Lighting Co., 376 U.S. 234, 84
S.Ct. 779, 11 L.Ed.2d 669 (1964).
Compumarketing is in the business of compiling and marketing
mailing lists to customers who use its lists in making direct
mail solicitations to the businesses whose names and addresses
appear on the lists. Business Envelope is in the business of
manufacturing envelopes and selling them through the use of
direct mail solicitations.
Compumarketing, and its predecessor corporation, did business
with the defendant for at least five years prior to the
transactions which are the subject of this lawsuit. From April
1967 through the end of 1968, plaintiff and defendant entered
into numerous transactions whereby plaintiff supplied defendant
with mailing lists printed on labels on a one-time-use-only
basis. Defendant never copied any of these lists.
All of the transactions between plaintiff and defendant in 1967
and 1968 evolved in the same way and along the following lines:
defendant's vice president would contact plaintiff's East Coast
sales manager, and indicate a need for a mailing list.
Plaintiff's sales manager would then forward the order to the
Chicago office where it was reviewed and approved. Upon approval,
a five-part, two-sided carbon form would be filled out
designating the precise terms and conditions of the transaction.
The form was entitled "Production Order" and at the bottom of
the first side thereof appeared the printed legend "ALL ORDERS
SUBJECT TO THE TERMS ON THE REVERSE SIDE." Among the terms
included on the reverse side of each copy of the form was: "Lists
provided in any other form, such as labels . . . are for one time
use only and are not to be copied."
Upon being filled out, the fourth part of the carbon form,
designated "Customer Copy," would be mailed to defendant.
Subsequently, the order would be filled and the labels shipped to
defendant along with the "Packing List" copy of the carbon form.
The labels themselves came printed on sheets of paper which bore
the following printed designation in four separate places on each
sheet: "No Copies May Be Made Out of This List Without Express
Written Permission From National Business Lists" (plaintiff's
Given this prior course of conduct, the apparent custom and
usage in the trade, and the testimony of defendant's president
and vice president, the Court finds that the lists in question
were purchased in 1969 on a one-time-use-only basis, and that
defendant breached its contract with the plaintiff by using some
names and addresses on the lists more than once. Furthermore, the
Court finds that this was not an inadvertent breach, since the
Court finds that defendant's president and vice president were
aware of the restrictions on the use of this information. The
Court finds that defendant's evidence to the contrary is not
The Court also finds that Sears and Compco, supra, do not
preclude enforcement of this agreement. The Court was not dealing
in those cases with a contractual relationship, and, in Lear,
Inc. v. Adkins, 395 U.S. 653, 675, 89 S.Ct. 1902, 23 L.Ed.2d 610
(1969), it declined to extend Sears-Compco to contractual
relationships. See Painton & Co. v. Bourns, Inc., 442 F.2d 216,
225 (2d Cir. 1971).
Furthermore, this case involves misappropriation, not copying,
great majority of the courts which have considered the question
have ruled that misappropriation is not within the scope of
Sears-Compco. Note, The "Copying-Misappropriation" Distinction:
A False Step In The Development Of The Sears-Compco Pre-Emption
Doctrine, 71 Colum.L.Rev. 1444, 1445 n. 10 (1971). See, e.g.,
Bailey v. Logan Square Typographers, Inc., 441 F.2d 47, 50 (7th
Cir. 1971); Capitol Records, Inc. v. Spies, 264 N.E.2d 874, 877
(Ill. App. 1970). The Court declines to follow the cases relied
upon by defendant on this issue. See Columbia Broadcasting
System, Inc. v. DeCosta, 377 F.2d 315, 321 (1st Cir. 1967); Cable
Vision, Inc. v. KUTV, Inc., 335 F.2d 348, 352 (9th Cir. 1964).
Whether the enforcement of the agreement is judged by its effect
on federal patent-copyright law or its effect on competition in
the mailing list market, this Court is unable to conclude that
the agreement in question is an unreasonable one, or contrary to
public policy. See Goldstein, The Competitive Mandate: From Sears
to Lear, 59 Calif.L.Rev. 873, 900 (1971). This conclusion is
reinforced by the fact that plaintiff made its lists available on
alternative bases, i.e., plaintiff's lists were available on an
unlimited, as well as on a single-use, basis, on varying pricing
arrangements. Cf. Zenith Radio Corp. v. Hazeltine Research, Inc.,
395 U.S. 100, 137-140, 89 S.Ct. 1562, 23 L.Ed.2d 129 (1969).
The parties have advanced various formulae for assessing
damages. The Court finds the contract price ($7,188.16) for the
list in 1969, multiplied by the number of unauthorized uses
(six), to yield a practicable damage figure. The defendant also
is enjoined from making further mailings based on the 1969 list.
Within fifteen days hereof, plaintiff will prepare and supply to
the Court a proposed form of injunction.
Although the Court has found that defendant's officers knew of
the use-limitation provision and might be said to have wilfully
breached its contract, punitive damages will not be awarded.
However, a judgment of $43,128.96 will be entered, and costs will
be taxed to defendant.
This Opinion shall serve as and for the Court's findings of
fact and conclusions of law.
It is so ordered.
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