CITE:  86 F.2d 958
CMON:  December 1936
PLAIN: Affiliated Enterprises
DEFND: Gruber et al.
COURT: Circuit Court of Appeals, First Circuit
DATE:  December 18, 1936

Appeal from the District Court of the United States for the District of
Massachusetts; George Sweeney, Judge.  Suit by Affliated Enterprises,
Incorporated, against Meyer Gruber and others.  From a decree dismissing
the bill, plaintiff appeals.  AFFIRMED.

  Lottery business method is a system not copyrightable.

JUDGE: BINGHAM, Circuit Judge.

Before BINGHAM, WILSON, and MORTON, Circuit Judges.

This is an appeal from a decree of the District Court for Massachusetts
dismissing the plaintiff's bill of complaint on the ground that plaintiff's
plan or system for which it sought protection by injunction was a gambling

The bill set out that for advertising purposes plaintiff had devised and
used a plan or system contemplating "the gratuitous award of a specified
sum of money at stated periods to the persons who may then be designated
in accordance with the terms and stipulations of the plan." Under this plan  
any person above 17 years of age had the right to register and have his
name, or a serial number identifying him, placed in a receptacle from which
at a specified time or place (usually in a moving picture theater) it might
be drawn, and he would then be entitled to the award which had previously
been determined and made known to the public. The registration was free
and open to the public generally, the purchase of a ticket of admission to
the theater not being "a condition to registration or to participation in
the plan." "The name of the person whose number is drawn is announced as
the donee of the award, both from the stage and outside the theatre and
at any other place that may have been designated. If such person is outside
the theatre at the time he will be admitted free for the purpose of 
claiming the award." He must, however, appear within a reasonable time or
he will lose his right to the award, and the amount will be carried over
and added to that of the next drawing. It thus appears from the bill that
no consideration is demanded for the right to participate in the drawing.

"The three essential elements of a lottery [or other gambling device] are:
First, consideration; second, prize; and third, chance", and "the gratuitous
distribution of property by lot or chance, if not resorted to as a device
to evade the law, and if no consideration is derived directly or indirectly
from the party receiving the chance, does not constitute a lottery."
17 R.C.L. 1222. This is supported by the great weight of authority. Post
Publishing Co. v. Murray (C.C.A.) 230 F. 773; People v. Farmer Miller et al.,
271 N.Y. 44, 2 N.E. (2d) 38; Yellow-Stone Kit v. State of Alabama,
88 Ala. 196, 7 So. 383,7 L.R.A. 599, 16 Am. St.Rep. 38.

This particular plan has been before the courts, and, on such facts as are
here alleged, has been declared legal. State v. Eames, 87 N.H. 477, 183 A.
590; Commonwealth v. Wall (Mass.) 3 N.E. (2d) 28; State v. Hundling,
220 Iowa, 1369, 264 N.W. 608, 103 A.L.R. 861 State ex rel. Dist. Attorney
Gen. v. Crescent Amusemen1: Co. (Tenn.Sup.) 95 S. W.(2d) 3; 10. True
evidence might develop a situation where it could be found that the
registration privilege was not free and open to the public, and in  
the practical operation of the device there would necessarily be some
consideration for the privilege of taking a chance. State v. Eames, supra;
Commonwealth v. Wall, supra; State v. Hundling, supra. But here the
allegations of the bill must be taken as true.

We think the dismissal of the bill of complaint on the ground stated was

As stated in plaintiff's brief, "the bill asks for relief on two principal
grounds: Infringement of copyright and unfair competition."  It sets out
that the plaintiff is now, and has been for some time, "engaged in the
business of vending or licensing throughout the United States a plan or
system originated, prepared, arranged and compiled by it, for the purpose
of advertising the business of, and of encouraging, stimulating and
promoting patronage in commercial establishments, particularly in motion
picture theatres"; that the plan is generally known as "Bank Night", but
may be designated by other similar names; that in connection with the plan
plaintiff is engaged in manufacturing or otherwise acquiring, and in
supplying to its licensees, "the necessary registration books and cards,  
'trailers' or screen advertising, and in furnishing them printed instructions
and other information and suggestions for the successful operation of the

The bill further alleges that the plaintiff is the sole and exclusive owner
of the plan or system, "of the good-will appurtenant thereto, of a form of
license agreement, and of the right to print, publish and use said plan or
system, the said trade names, instructions for operation of plan, special
notice to licensees, and the advertising trailers, circulars, registration
book and cards, drawing cards and devices, and other matter printed or
published for the effective operation of said plan or system and in these
it has acquired a property right, and the sole right, title and ownership";  
that "the plaintiff is the sole and original author of writings describing
the said plan or system and providing for its successful operation,
including a form of license agreement, an explanation of the system, a
special notice, and instructions to licensees, the contents of which may be  
profitably used, in whole or in part, on 'heralds' or 'trailers' of motion
picture theatres," and has copyrighted such publications and instructions;
that it had secured a property right and interest and the sole right to use
the name "Bank Night" and similar names to designate similar plans or
systems. The bill states that a patent had been applied for to secure the  
sole rights of the plaintiff in the plan or system, but that no patent had
been granted when the bill was filed.

The defendants are charged with appropriating to themselves the benefits
to be derived from the advertising done by the plaintiff and its licensees,
and with appropriating the income and profits of plaintiff's business, by
engaging in the business of selling, or attempting to sell, licenses to  
use a scheme or plan known as "Parlay Cash Night," which is substantially
the same as that of plaintiff; that they have delivered, or offered to
deliver, to exhibitors, advertising matter and notices and instructions
in connection with the "Parlay Cash Night" plan substantially the same as
those used by plaintiff; that the language used in defendants' publications
is "substantially identical in all material respects with the language in
the plaintiff's copyrighted publications, and compliance with the
instructions will result in the operation of a plan or system substantially
the same as the plaintiff's."

The prayers of the bill are that plaintiff's right, title, and interest in
and to the plan or system known as "Bank Night" be adjudged and established;
that defendants be adjudged to have infringed upon such right, title, and
interest and particularly upon said copyrights, and to have been guilty
of unfair competition with the plaintiff ; for an accounting; and for an  
injunction against the defendants.

The defendants moved to dismiss the bill on ten grounds. It is not necessary
to specify them. The principal ones in substance allege that the bill of
complaint does not state a cause entitling plaintiff to the relief prayed
for, in that it does not show infringement of copyrights, infringement of
any trade-mark, or invasion of plaintiff's right through unfair competition.

As stated, the bill asks for relief on two principal grounds-infringement of  
copyright and unfair competition. It will be sufficient to consider whether
the bill, fairly interpreted, can be said to show either.

There is no claim that the defendants represent their exhibitions or
drawings to be those of the plaintiff or to be authorized by the plaintiff,
or that they are in any way subject to being confused with the plaintiff's
exhibitions or drawings.

"Bank Night" indicates to a certain extent the character of the plaintiff's
business, while "Parlay Cash Night" is used to indicate to a like extent
the character of the defendant's business. Since the businesses are
substantially the same, the descriptive trade-names necessarily carry  
the same idea. One cannot adopt a descriptive name as a trade-mark and
thus bar others from using all names tending to describe the same article
or business. See 63 C.J. 346, Section 43 et seq.  At any rate, we think
that the name "Parlay Cash Night" to designate the defendants' business  
through exhibitions or drawings will have no tendency to confuse the public
or plaintiff's possible customers or licensees and cause them to believe
that defendants' business through such exhibitions or drawings is promoted
by the plaintiff ; and that plaintiff's trade-mark, if it has one, is not
shown by the allegations to have been infringed.

There is no allegation in the bill that plaintiff's copyrights have been
infringed - that the language of plaintiff's publications have been copied,
either directly or indirectly. "The [copyright] statute is infringed only
by 'copying' that which is 'copyrighted.' " Davies v. Bowes (D.C.),
209 F. 53, 55. "One work does not violate the copyright in another simply
because there is a similarity between the two, if the similarity results
from the fact that both works deal with the same subject or have the same
common sources."  13 C.J. 1114, Section 278. See Harold Lloyd Corp. v.
Witwer (C.C.A.) 65 F.(2d) 1, 4; Perris v. Hexamer, 99 U.S. 674, 25 L. Ed.
308. The statement in the bill that the language in defendants' publications
"is substantially identical in all material respects with the language in
plaintiff's copyrighted publications" is simply a rehearsal of evidence
that might be used in showing infringement, but it is not an allegation of
infringement, and the bill cannot be sustained for infringement of the
alleged copyright.

The bill alleges unfair competition in that defendants have taken
plaintiff's property and used it for their own profit. But an analysis of
the bill as a whole shows no taking or interfering with anything belonging
to the plaintiff. The most that can be said is that there has been a
following of plaintiff' plan or system. The burden of the contention
running through the bill seems to be that, because plaintiff has expended
a large amount of money, time, and effort in promoting, developing, and
putting on the market its system, or because it owned copyrights of its
instructions, etc., which, if followed, would result in the practice of
the system, it has acquired a property right in the system, not simply in
the business, and equity should enjoin the defendants from appropriating
it to their own use and profit. But this position is altogether too broad.
If sustained, it would result in a monopoly to the plaintiff preventing
any other person from entering the field and, through his own efforts and
the expenditure of time and money in advertising, etc., building up a
business of supplying to moving picture houses and others, advertising
trailers, registration book cards, and other matter used in connection
with a system so as to bring about a drawing and award.

As said in Chadwick v. Covell, 151 Mass, 190, 191, 23 N.E. 1068, 6 L.R.A.
839, 21 Am.St.Rep. 442, and paraphrasing:

  "So far as the right to manufacture and sell the medicines [to exhibit
  in accordance with the system] goes, the plaintiff's case may be
  disposed of in a few words. Dr. Spencer [plaintiff] had no exclusive
  right to the use of his formulas [its system]. His [its] only right was
  to prevent any one from obtaining or using them [the system] through a
  breach of trust or contract. Anyone who came honestly to the knowledge
  of them [the system] could use them [it] without Dr. Spencer's
  plaintiff's] permission, and against his [its] will."

See, also, Kaeser & Blair, Inc., v. Merchants' Ass'n, Inc. (C.C.A.),
64 F.(2d) 575.

However good and valuable an idea, plan; scheme, or system is, the moment it
is disclosed to the public without the protection of a patent, it becomes
public property, and the fact that it has been made popular by advertising
and the expenditure of effort, time, and money on the part of the originator
does not alter the situation.

As the system has not been copyrighted and, being in no sense a writing,  
could not be (Constitution, art. 1, Section 8, cl. 8; 17 U.S.C. Section 4
(17 U.S.C.A. Section 4]) and has not been patented, if it could be, we
are constramed to hold that, although plaintiff has expended time and money
in originating and developing a system, it has no property right therein
which has been appropriated by the defendants.  While the plaintiff
restricts operating under the system to its licensees, by its very nature,
in order for it to operate, knowledge thereof must be thrown open to the  
public and any property right based upon secrecy was lost as early, at
least, as the first public exhibition, and there was no surreptitious
appropriation of knowledge of the system by the defendants. In this  
respect it differs from the case of Board of Trade v. Christie Grain &
Stock Co., 198 U.S. 236, 25 S.Ct. 637, 49 L.Ed. 1031, and other like
cases. The situation is analogous to that where an inventor of an  
unpatented machine licenses others to use it in a way disclosing the
device to the public, in which case there is nothing to prevent the
public from building and using it.

In working under its system the plaintiff stands on the same footing as
others.  It can come into equity for an injunction against unfair
competition, prohibiting another from representing the exhibitions  
promoted by him are exhibitions promoted by it and preventing the
unwarranted use of its property to aid him in competing with it. It is
not alleged that the defendants have done any of these things. They have  
worked under the system, which we hold they had a right to do, and this
has resulted in exhibitions similar to those promoted by plaintiff. If
they were advantaged by advertisements, etc., to enhance the value and
popularity of the plaintiff's exhibitions, it was only such advantage as
necessarily results from any competitor advertising similar wares.

In International News Service v. Associated Press, 248 U.S. 215, 39 S.Ct. 68,
63 L.Ed. 211, 2 A.L.R. 293, one of the cases relied upon by the plaintiff,
no complaint was made that the defendant adopted a similar system of
collecting and distributing news. That was admittedly a legitimate thing
to do, and that is all the defendants here have done. What was complained
of and what the court condemned was the taking by defendant of news gathered
by and at the expense of the plaintiff and transmitting it, while still
valuable as news, for commercial use in competition with the plaintiff and
thus wrongfully interfering with plaintiff's business by taking its profits.
On page 239 of 248 U.S., 39 S.Ct. 68,72, 63 L.Ed. 211, 2 A.L.R. 293, the
court said :

  "In doing this defendant, by its very act, admits that it is taking
  material that has been acquired by complainant as the result of
  organization and the expenditure of labor, skill, and money, and
  which is salable by complainant for money, and that defendant in
  appropriating it and selling it as its own is endeavoring to reap
  where it has not sown," and thus appropriating to itself the harvest
  of those who have sown.

No such element of unfair competition is present in this case. There is
no allegation that defendants have taken any property, property right or
quasi property right, of the plaintiff except the system and its property
right in that was lost when disclosed to the public. The International
News Service Case has no bearing here.

Meccano Ltd., v. Wagner (D.C.) 234 F. 912, and Meyer v. Hurwitz (D.C.)
5 F. (2d) 370, relied on by the plaintiff, present matters of unfair
competition similar to the situation disclosed in the International News
Service Case. In the Meccano Case what the defendant did was to make and  
sell to plaintiff's customers who had purchased from the plaintiff a
complete set of its parts, additional parts which could be used with the
plaintiff's complete sets, and in connection with whIch plaintiff also  
made and sold additional parts, by going to plaintiff's customers and
selling, or offering to sell, its additional parts and at a much less
price. In the Meyer Case the manufacturer of picture post cards built up  
a business of selling them through a coin operated vending machine and
the defendant appropriated to himself such business by manufacturing and
selling similar cards to dealers at a lower price, to be sold by them
through plaintiff's machines. What was done in both cases was found to be  
unfair competition. But the condition of unfair trade there found to exist
is wanting here.

The plaintiff further complains that the defendants have represented that
the plaintiff's system was not protected and defendants' right to the
"Parlay Cash Night" system was equal to the plaintiff's "Bank Night"
system, and in this there was unfair competition. If the defendants had
the right to operate the system, as we hold they did, of course there was  
nothing unfair in so representing to their customers.

Although we do not agree with the District Court that the bill should be
dismissed on the ground there given, we do hold, for the reasons above
stated, that the order of the District Court dismissing the bill must be

The order or decree of the District Court is AFFIRMED, with costs to the