*105

to exclude them, without prejudice, however, I Such occupancy and use constituted a most to the government's right to obtain an in- important consideration and were rightly

junction against their disclosure upon proper proof of an intention to use the devices in proceedings supplemental to this action or in an independent action. Hitchman Coal & Coke Co. v. Mitchell, 245 U. S. 229, 262, 38 Sup. Ct. 65, 62 L. Ed. 260, L. R. A. 191SC, 497, Ann. Cas. 1918B, 461.

The decree is modified as stated, and, as modified, affirmed. Affirmed.

The CHIEF JUSTICE dissents.

Mr. Justice McREYNOLDS took no part in the consideration or decision of the case.

expected to yield larger public benefits than the small required payment of one dollar and a quarter per acre.

Decision of this cause requires us to consider the meaning and validity of section 4 of the Act (R. S. § 2296 [Comp. St. 1916, § 4551]), which provides:

"No lands acquired under the provisions of this Act shall in any event become liable to the şatisfaction of any debt or debts contracted prior to the issuing of the patent therefor."

#106

Plaintiff in error made preliminary home stead entry of designated land within the state of Idaho August 6, 1903; submitted final proofs October 4, 1909; obtained 3 *final receipt and certificate November 12, 1909; final patent issued August 26, 1912. In 1914 two judgments were obtained (Submitted Nov. 13. 1918. Decided Dec. 9, against him; the first upon indebtedness in

(248 U. S. 104)

RUDDY v. ROSSI.

1918.)

No. 17.

1. PUBLIC LANDS - LANDS OF UNITED STATES-POWER OF CONGRESS.

Under Const. U. S. art. 4, § 3, cl. 2, Congress has power to dispose of public lands of the United States, and they may be leased, sold, or given away on such terms and conditions as the public interests require.

2. PUBLIC LANDS140

EXEMPTION OF HOMESTEAD LANDS FROM LIABILITY FOR DEBTS.

Under Const. U. S. art. 4, § 3, cl. 2, Congress, in exercise of its discretion in disposal of public lands, had power, by Rev. St. § 2296 (Comp. St. 1916, § 4551), the fourth section of the Homestead Act, to restrict alienation of homestead lands after conveyance by United States in fee simple, by providing no such lands shall become liable to satisfaction of debts contracted prior to issuance of patent.

Mr. Justice Holmes, dissenting.

curred prior to November 12, 1909; the second upon debts contracted subsequent to that date and prior to patent. Executions were issued and levied upon the homestead; and thereupon the original proceeding was begun to declare asserted liens invalid and a cloud upon the title. The court below held the first judgment unenforceable against the land since it represented indebtedness which accrued prior to final entry. It further held the second judgment could be so enforced as it was based upon debts contracted after final entry, at which time the homesteader became legally entitled to his patent. 28 Idaho, 376, 154 Pac. 977.

The language of section 4 is clear and we find no adequate reason for thinking that it fails precisely to express the lawmaker's intention.

In Error to the Supreme Court of the State Did Congress have power to restrict alienaof Idaho. tion of homestead lands after conveyance Action by Charles F. Ruddy against Her- by the United States in fee simple? This man J. Rossi. From a judgment for plain- question undoubtedly presents difficulties tiff, defendant appealed to the Supreme which we are not disposed to minimize. In Court of Idaho, which modified and affirmed

(28 Idaho, 376, 154 Pac. 977), and plaintiff brings error. Reversed, and cause remanded.

Messrs. Charles E. Miller and Carlton Fox, both of Wallace, Idaho, for plaintiff in er

ror.

Wright v. Morgan, 191 U. S. 55, 58, 24 Sup. Ct. 6, 48 L. Ed. 89, a similar point was suggested but not decided.

[1] The Constitution (article 4, § 3, cl. 2) declares:

"The Congress shall have power to dispose of and make all needful rules and regulations respecting the territory or other property belong

*Mr. Justice McREYNOLDS delivered the ing to the United States." opinion of the Court.

By "An act to secure homesteads to actual

settlers on the public domain," approved May 20, 1862 (12 Stat. c. 75, p. 392), Congress prescribed the conditions under which citizens could acquire unappropriated public lands in tracts of not exceeding 160 acres. A manifest purpose was to induce settlement upon and cultivation of these lands by those who, five years after proper entry, would become owners in fee through issuance of patents. The great end in view was to convert waste places into permanent homes.

And it is settled that Congress has plenary power to dispose of public lands. United States v. Gratiot et al., 14 Pet. 526, 537 (10 L. Ed. 573). They may be leased, sold or given away upon such terms and conditions as the public interests require. Instead of granting fee simple titles with exemption from certain debts, long leases might have been made or conditional titles bestowed in such fashion as practically to protect homesteads from all indebtedness.

"The sound construction of the Constitution must allow to the national Legislature that dis

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

107

mate, let it be within the scope of the Constitu- with that. There is no condition, no reservtion, and all means which are appropriate, which ed right of reentry, no reversion in the Unitare plainly adapted to that end, which are not prohibited, but consist with the letter and spirit ed States, saved either under the Idaho law of the Constitution, are constitutional." Mc- as any private grantor might save it, or by Culloch v. Maryland, 4 Wheat. 316, 421 (4 L. virtue of antecedent title. All interest of

*110

*111

and all control over it, shall have passed lence. When the Act of 1862, now Rev. St. from the United States, and have become $ 2296, was passed the United States owned vested in a citizen or resident of the terri- territories to which it could be applied with tory, then indeed the territorial regulations full scope. Irvine v. Marshall, 20 How. 558, may operate upon it," and later in the deci- 15 L. Ed. 994. The greater part of the public sion there is cited a passage from Wilcox v. Jackson, 13 Pet. 498, 517, 10 L. Ed. 264, to the same effect-a passage also cited and relied upon by the four justices who dissented and held that the territorial laws governed even them. It has been repeated ever since. McCune v. Essig, 199 U. S. 382, 390, 26 Sup. Ct. 78, 50 L. Ed. 237; Buchser v. Buchser, 231 U. S. 157, 161, 34 Sup. Ct. 46, 58 L. Ed. 166.

Coming to the precise issue, the question of the power of the United States to restrict alienation of land within a State after it had conveyed the land in fee was left open in Wright v. Morgan, 191 U. S. 55, 58, 24 Sup. Ct. 6, 48 L. Ed. 89, but it was said that the clearest expression would be necessary be

fore it would be admitted that such a restriction was imposed. In Buchser v. Buchser, 231 U. S. 157, 34 Sup. Ct. 46, 58 L. Ed. 166, it was held that the laws of the United States did not prevent homestead land becoming community property at the moment that title was acquired, and it was said that, the acquisition under the United States law being complete, that law had released its control. The statement in Wilcox v. Jackson, supra, that when the title has passed the land "like all other property in the State is subject to state legislation" was repeated. In Alabama v. Schmidt, 232 U. S. 168, 34 Sup. Ct. 301, 58 L. Ed. 555, following Cooper v. Roberts, 18 How. 173, 15 L. Ed. 338, it was held that land conveyed to the State by the United States for the use of schools could be acquired by adverse possession under state law, and that the trust, although as was said in the earlier case "a sacred obligation imposed on its public faith" imposed only an honorary obligation on the State. Northern Pacific Ry. Co. v. Townsend, 190 U. S. 267, 23 Sup. Ct. 671, 47 L. Ed.

land was in those territories. Without stopping to suggest other possibilities of construction this fact is enough to explain and give validity to the Act when passed. There is no need to import to it the intent to anticipate the future and to reach the States that were still in the bosom of time.

Of course the United States has power to choose appropriate means for exercising the authority given to it by the Constitution. But I see no sufficient ground for extending that authority to a case like this. It is not the business of the United States to determine the policy to be pursued concerning privately owned land within a State. According to all cases in this Court, so far as I know, when the patent issued its authority

was at an end.

I am aware that my doubts are contrary to manifest destiny and to a number of decisions in the State Courts. I know also that when common understanding and practice have established a way it is a waste of time to wander in bypaths of logic. But as I have a real difficulty in understanding how the Congressional restriction is held to govern this case a question which nothing that I have heard as yet appears to me to answerI think it worth while to mention my misgivings, if only to show that they have been

considered and are not shared.

(248 U. S. 90)

UNITED DRUG CO. v. THEODORE
RECTANUS CO.

(Argued March 12 and 13, 1918. Decided
Dec. 9, 1918.)
No. 27.

1044, was distinguished as having been de- 1. COURTS 382(1) - CERTIORARI AND AP

cided on the ground that in the grant to the Railway there was an implied condition of reverter in case the company ceased to hold the land for the purpose for which it was granted, a ground, which, as I have said, is

absent here.

PEAL-DISMISSAL OF APPEAL-STATUTE.

Under Judicial Code, § 128, as amended by Act Jan. 28, 1915, § 2 (Comp. St. 1916, § 1120), where plaintiff in trade-mark infringement suit was allowed appeal from decree of Circuit Court of Appeals, and brought certiorari, and pursuant to stipulation, transcript of record filed for purof appeal was treated as return to writ, appeal must be dismissed, and cause will be determined on writ of certiorari.

2. TRADE-MARKS AND TRADE-NAMES
CHARACTER OF RIGHT.

31

A trade-mark right is not a right in gross,

It is said that where a statute is susceptible of two constructions, by one of which grave constitutional questions arise and by the other of which they are avoided, our duty is to adopt the latter. United States v. Delaware & Hudson Co., 213 U. S. 366, 408, 29 Sup. Ct. 527, 53 L. Ed. 836. I am aware that this principle like some others more often is invoked in aid of a conclusion reached on other grounds than made itself the basis of decision, but it seems to me that it properly should govern here. It might without vio-las a monopoly.

or at large, like a statutory copyright or a patent for an invention, the law of trade-marks being but a part of the broader law of unfair competition, for the right to a particular mark grows out of its use in trade, not its mere adoption, and the owner of a trade-mark may not, like the proprietor of a patented invention, make a negative and merely prohibitive use of it

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

*93

TRADE.

competition.

3. TRADE-MARKS AND TRADE-NAMES 31-tucky corporation, together with certain inPROTECTION IN ADVANCE OF EXTENSION OF dividual citizens of the latter state, to reAdoption of trade-mark in connection with strain infringement of trade-mark and unfair proprietary medicine sold in New England States did not, in absence of valid legislation, project adopter's right of protection in advance of extension of her trade, or operate as claim of territorial rights over areas into which it was thereafter advisable to extend trade, as Kentucky, where New England adopter was subject to rights of subsequent user of name, who had been a prior user in the Kentucky field. 4. TRADE-MARKS AND TRADE-NAMES 23

-LAWS OF STATES.

Property in trade-marks and right to their exclusive use rest upon laws of several states, and depend upon them for security and protection; power of Congress to legislate on subject being only that arising from authority to regulate commerce with foreign nations, among the states, and with Indians.

5. COMMON LAW 11-EXISTENCE OF PRINCIPLES IN KENTUCKY.

The principles of the common law obtain in

Kentucky.

6. TRADE-MARKS AND TRADE-NAMES 42 REGISTRATION-STATE

RITORIAL EFFECT.

STATUTE-EXTRATER

A Massachusetts statute for the registration of trade-marks could have no extraterritorial

effect.

7. TRADE-MARKS AND TRADE-NAMES 21

PRIORITY OF APPROPRIATION.

The general rule is that, as between conflicting claimants to the right to use the same trade-mark, priority of appropriation determines the question; the underlying reason being that purchasers have come to understand the mark as indicating the origin of the wares. 8. TRADE-MARKS AND TRADE-NAMES ENJOINING INFRINGEMENT-CONSCIOUS INFRINGEMENT FRAUDULENT IMITATION.

The rule that, where proof of infringement of trade-mark or trade-name is clear, equity will not ordinarily refuse injunction for future protection of proprietor, even where his acquiescence and laches disentitle him to accounting for profits, applies in cases of conscious infringe ment or fraudulent imitation, not to cases of good-faith use of mark or name.

On Writ of Certiorari to and Appeal from the United States Circuit Court of Appeals for the Sixth Circuit.

Suit by the United Drug Company against Theodore Rectanus Company. From a decree of the District Court for plaintiff (206 Fed. 570), defendant appealed to the Circuit Court of Appeals, which reversed and remanded the cause, with directions to dismiss the bill (226 Fed. 545, 141 С. С. А. 301), and plaintiff appeals and brings certiorari. Decree affirmed.

Messrs. Lawrence A. Janney, of Chicago, Ill., and Frederick L. Emery, of Boston, Mass., for petitioner and appellant.

Mr. Clayton B. Blakey, of Louisville, Ky., for respondent and appellee.

[1] The District Court granted an injunetion against the corporation defendant pursuant to the prayer of the bill. 206 Fed. 570. The Circuit Court of Appeals reversed the de cree and remanded the cause with directions to dismiss the bill. 226 Fed. 545, 141 С. С. A. 301. An appeal was allowed by one of the judges of that court, and afterwards we allowed a writ of certiorari. Pursuant to a stipulation, the transcript of the record filed for the purposes of the appeal was treated as a return to the writ. Under section 128, Judicial Code (Act March 3, 1911, с. 231, 36 Stat. 1133), as amended by Act of January 28, 1915 (38 Stat. 803, c. 22, § 2; Comp. St. 1916, § 1120), the appeal must be dismissed, and the cause will be determined on the writ of certiorari.

*The essential facts are as follows: About the year 1877 Ellen M. Regis, a resident of Haverhill, Mass., began to compound and distribute in a small way a preparation for medicinal use in cases of dyspepsia and some other ailments, to which she applied as a distinguishing name the word "Rex"-derived from her surname. The word was put upon the boxes and packages in which the medicine was placed upon the market, after the usual manner of a trade-mark. At first alone, and afterwards in partnership with her son under the firm name of "E. M. Regis & Co.," she continued the business on a modest scale; in 1898 she recorded the word "Rex" as a trade-mark under the laws of Massachusetts (Acts 1895, p. 519, c. 462, § 1); in 1900 the firm procured its registration in the United States Patent Office under the Act of March 3, 1881 (21 Stat. 502, c. 138); in 1904 the Supreme Judicial Court of Massachusetts sustained their trade-mark right under the state law as against a concern that was selling medicinal preparations of the present petitioner under the designation of "Rexall Remedies" (Regis v. Jaynes, 185 Mass. 458, 70 Ν. E. 480); afterwards the firm established priority in the mark as against petitioner in a contested proceeding in the Patent Office; and subsequently, in the year 1911, petitioner purchased the business with the trade-mark right, and has carried it on in connection with its other business, which consists in the manufacture of medicinal preparations, and their distribution and sale through retail drug stores, known as "Rexall stores," situate in the different states of the Union, four

*Mr. Justice PITNEY delivered the opinion of them being in Louisville, Ky. of the Court.

Meanwhile, about the year 1883, Theodore This was a suit in equity brought Sep- Rectanus, a druggist in Louisville, familiartember 24, 1912, in the United States District ly known as "Rex," employed this word as a Court for the Western District of Kentucky trade-mark for a medicinal preparation by the present petitioner, a Massachusetts known as a "blood purifier." He continued corporation, against the respondent, a Ken-this use to a considerable extent in Louisville

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes
39 SUP. CT. -4

and vicinity. spending money in advertising 19, 39, 21 Sup. Ct. 7, 45 I. Ed. 60; Saxlehner and building up a trade, so that-*except for v. Siegel-Cooper Co., 179 U. S. 42, 21 Sup. Ct. whatever effect might flow from Mrs. Regis' 16, 45 L. Ed. 77. The Circuit Court of Ap

prior adoption of the word in Massachusetts, of which he was entirely ignorant-he was entitled to use the word as his trade-mark. In the year 1906 he sold his business, including the right to the use of the word, to respondent; and the use of the mark by him and afterwards by respondent was continuous from about the year 1883 until the filing of the bill in the year 1912.

Petitioner's first use of the word "Rex" in connection with the sale of drugs in Louisville or vicinity was in April, 1912, when two shipments of "Rex Dyspepsia Tablets," aggregating 150 boxes and valued at $22.50, were sent to one of the "Rexall" stores in that city. Shortly after this the remedy was mentioned by name in local newspaper advertisements published by those stores. In the previous September, petitioner shipped a trifling amount-5 boxes-to a drug store in Franklin, Ky., approximately 120 miles distant from Louisville. There is nothing to show that before this any customer in or near Kentucky had heard of the Regis remedy, with or without the description "Rex," or that this word ever possessed any meaning to the purchasing public in that state, except as pointing to Rectanus and the Rectanus Company and their "blood purifier." That it did and does convey the latter meaning in Louisville and vicinity is proved without dispute. Months before petitioner's first shipment of its remedy to Kentucky, petitioner was distinctly notified (in June, 1911) by one of its Louisville distributors, that respondent was using the word "Rex" to designate its medicinal preparations, and that such use had been commenced by Mr. Rectanus as much as 16 or 17 years before that time.

peals held that in view of the fact that Rectanus had used the mark for a long period of years in entire ignorance of Mrs. Regis' remedy or of her trade-mark, had expended money in making his mark well known, and had established a considerable though local business under it in Louisville and vicinity, while on the other hand during the same long period Mrs. Regis had done nothing, either by sales agencies or by advertising, to make her medicine or its mark known outside of the New England States, saving sporadic sales in territory adjacent to those states, and had made no effort whatever to extend the trade to Kentucky, she and her successors were bound to know that, misled by their silence and inaction, others might act, as Rectanus and his successors did act, upon the assumption that the field was open, and therefore were estopped to ask for an injunction against the continued use of the mark in Louisville and vicinity by the Rectanus Company.

The entire argument for the petitioner is summed up in the contention that whenever the first user of a trade-mark has been reasonably diligent in extending the *territory of his trade, and as a result of such extension has in good faith come into competition with a later user of the same mark who in equal good faith has extended his trade locally before invasion of his field by the first user, so that finally it comes to pass that the rival traders are offering competitive merchandise in a common market under the same trade-mark, the later user should be enjoined at the suit of the prior adopter, even though the latter be the last to enter the competitive field and the former have already established a trade there. Its application to the case is based upon the hypothesis that the record shows that Mrs. Regis and her firm, during the entire period of limited and local trade in her medicine under the Rex mark, were making efforts to extend their trade so far as they were able to do with the means at their disposal. There is little in the record to support this hypothesis; but, waiving this, we will pass upon the principal contention.

There was nothing to sustain the allegation of unfair competition, aside from the question of trade-mark infringement. As to this, both courts found, in substance, that the use of the same mark upon different but somewhat related preparations was carried on by the parties and their respective predecessors contemporaneously, but in widely separated localities, during the period in question-between 25 and 30 years in perfect good faith; neither side having any knowledge or notice of what was being done [2] The asserted doctrine is based upon the by the other. The District Court held that, fundamental error of supposing that a tradebecause the adoption of the mark by Mrs. mark right is a right in gross or at large, Regis antedated its adoption by Rectanus, like a statutory copyright or a patent for petitioner's right to the exclusive use of an invention, to either of which, in truth, it the word in connection with medicinal prepahas little or no analogy. Canal Co. v. Clark, rations intended for dyspepsia and kindred 13 Wall. 311, 322, 20 L. Ed. 581; McLean diseases of the stomach and digestive or- v. Fleming, 96 U. S. 245, 254, 24 L. Ed. 828. gans must be sustained, but without account- There is no such thing as property in a ing for profits or assessment of damages for trade-mark except as a right appurtenant to unfair trade, citing McLean v. Fleming, 96 U. an established business or trade in connecS. 245, 24 L. Ed. 828; Menendez v. Holt, 128 tion with which the mark is employed. The U. S. 514, 9 Sup. Ct. 143, 32 L. Ed. 526; Sax- law of trade-marks is but a part of the lehner v. Eisner & Mendelson Co., 179 U. S. broader law of unfair competition; the