Ely-Norris Safe Co. v. Mosler Safe Co

Brief Fact Summary. Plaintiff had a patent on explosive chambers in safes designed to protect against burglars. Plaintiff claimed that Defendant infringed upon its patent. Plaintiff sued Defendant for unfair competition.

Synopsis of Rule of Law. A loss of business can be inferred in a suit for unfair competition.

Facts. Ely (Plaintiff) made and sold safes with explosive chambers in them that were designed to protect against burglars. Plaintiff had letters patent, which held this feature as one of their distinctive features. The public has come to recognize the value of an explosive chamber because of Plaintiff’s efforts. Plaintiff alleged that Mosler (Defendant) has infringed upon its patent and further that Defendant has sold safes without an explosive chamber and has falsely told customers that a band around the door of its safes was used to cover and close an explosion chamber. Plaintiff alleged that customers have been led to buy safes from Defendant based on this misrepresentation. Plaintiff asked for an injunction against selling safes with the metal bands and against representing that the safes contained an explosion chamber. The case was dismissed and Plaintiff appealed.

Issue. Must a loss of business be shown in a suit for unfair competition?

Held. No. Judgment for Plaintiff. Decree reversed.
* While a competitor may, generally speaking, take away all the customers of another that he can, there are means, which he must not use. One of these is deceit. The false use of another’s name as maker or source of his own goods is deceit, of which the false use of geographical or descriptive terms is only one example. In this case, the means are plainly unlawful. The reason why such deceits have not been regarded as actionable by a competitor, depends only upon his inability to show any injury for which there is a know remedy.
* It is virtually impossible for Plaintiff to prove that a customer that Defendant procured by his deceit would have bought from Plaintiff if Defendant had been truthful. However, if Plaintiff has a monopoly of a product and to secure a customer, Defendant must represent that he has the same type product, then there is a fair inference that the customer wants those and those only. Under these facts, the issue is not that Defendant manufactured the safes under his name but used the product attributes of Plaintiff to sell his safes to those wishing those attributes. Plaintiff has a patent on these attributes and as such Plaintiff has a cause of action in that he can show a loss of business.

Discussion. In this case, the Court found Defendant’s conduct to be harmful to Plaintiff. The Court then allowed Plaintiff to prove damages by inference because of Plaintiff’s patent.