The Murphy Door Bed Co., Inc. v. Interior Sleep Systems, Inc.

874 F.2d 95 (2d Cir. 1989)

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Nature of the Case

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Facts

Murphy invented and manufactured a bed that when not in use could be concealed in a wall closet. By using a counterbalancing mechanism, the bed could be lowered from or raised to a closet in a wall to which the bed is hinged. The PTO granted Murphy a patent for a 'pivot bed,' which was substantially similar to the wall bed. Murphy incorporated in New York in 1925 as Pand began to sell the wall bed under the name of 'Murphy bed.' Since its inception, the Murphy Co. has used the words Murphy and Murphy bed as its trademark for concealed beds. Other manufacturers of wall beds generally describe their products as 'wall beds,' 'concealed beds,' 'disappearing beds,' 'authentic adjustable hydraulic beds' and the like, but rarely as Murphy beds. In 1981, and 1982, the PTO denied the P's application to register the Murphy bed trademark. It held that the words 'Murphy bed' had become generic and that the phrase Murphy bed was 'merely descriptive of a characteristic of the goods.' The TTAB affirmed the denial of registration. It noted that 'Murphy bed has for a long period of time been used by a substantial segment of the public as a generic term for a bed which folds into a wall or a closet.' Frank Zarcone, on behalf of D and himself, entered into a distributorship agreement with P and became the exclusive distributor of the Murphy bed in the four Florida counties. As part of that agreement, 5) -- Whenever the Murphy name is used, it must be in capital letters and identified by the word trademark or TM adjacent to Murphy. 8) -- Upon termination of this agreement D agrees to discontinue the use of the name 'Murphy bed.' D began producing its own Murphy beds and delivering them to customers who thought they were getting the original. P sued D seeking compensation, punitive damages, and injunctive relief based on claims of: (i) trademark infringement, (ii) unfair competition, and (iii) breach of contract. D asserted four affirmative defenses: (i) equitable estoppel, (ii) failure of consideration in forming the distribution contract, (iii) fraud in the inducement of the contract, and (iv) res judicata and collateral estoppel by reason of the TTAB's denial of registration. The district court found for P on all counts. In part, the court ruled that the name Murphy was not generic because a 'secondary meaning' had been attributed to it by the general public, and that the common law of trademark, therefore, protected the Murphy Co. D appealed.