Full opinion text
OPINION BIUNNO, Senior District Judge. This lawsuit involves the respective rights of Natural Footwear, Ltd., a Canadian corporation and Don Green and Michael Budman (collectively, “Natural”) on the one hand, and Hart, Schaffner & Marx and Roots, Inc., (collectively, “Roots”) to the use of the tradename and mark “Roots” in respect to the business of selling shoes, and other articles of apparel and as applied to the goods themselves. Roots began operations in Jersey City in 1917 as a retail store founded by Adolph Root, selling articles of apparel and some housewares (such as curtains) of various brands. Eventually the store located in Summit, N.J. and it was there, in about 1950, that the founder’s son, Perry Root, undertook a program to enhance the name by obtaining and selling what is called “private label” goods of a style and quality referred to as aimed at the “upscale market”. Private label goods are goods manufactured by others according to the style, materials, colors and other features selected by the merchant and with the merchant’s label, sometimes alone and sometimes together with the manufacturer’s label. Perry Root also undertook to establish the name and reputation of the business and its goods beyond the geographic area directly served by the store through two major modes. One was an advertising campaign consisting of mail order ads in the New Yorker magazine, which has a national circulation, and the other by the building up of a list of customers both within and without the State of New Jersey, to whom seasonal brochures or catalogs were regularly mailed. By 1965, his effort had achieved sufficient success to make the business an attractive one for acquisition, and in that year the assets, goodwill and the exclusive use of the name were sold to Hart Schaffner & Marx which placed its acquisition into a wholly-owned subsidiary, Roots, Inc., a New Jersey corporation. Since then the business has prospered, and sales have increased, under the management of Perry Root who has continued as president of Roots, Inc., and has opened a number of additional stores in New Jersey. There are plans for another Roots store to be opened in Boston, where Roots labeled merchandise has been sold on several occasions through the well-known Filene’s store there. The name “Roots” has never been registered as a trademark under the Lanham Act although interstate sales have been made with the name Roots, both as a service mark and as the mark of the goods themselves, for a long period of time. Whatever rights Roots has, then, are of common law origin as part of a tradename and as a trademark for its labelled goods. Natural was begun in Toronto, Canada by Don Green and Michael Budman, both originally from Detroit, in about 1973. The historical account given is that while the pair were searching for a business to go into, they saw a pair of “earth shoes” that a friend had purchased at a store in Ann Arbor, and saw in that shoe a possible business opportunity. The earth shoe is described as one designed around a sole in which the heel of the foot is substantially below the level of the sole, an arrangement thought to provide a more natural mode for walking since the sole could not bend and was rocked, while walking, from heel to toe. It is said that the sole was the subject of a patent issued to an inventor in Denmark, but aside from oral testimony of the witnesses on the subject, and some printed articles in the newspapers or in advertising matter, no formal evidence of the patent was introduced. The basic design is called a “negative heel” shoe. In any event, Don and Michael decided to try out the earth shoe. On their next visit to Detroit, they drove to Ann Arbor and each bought a pair at the store there (which sold only the earth shoe). They liked the shoe and felt it could be profitably sold in Canada, and so attempted to locate a representative of the manufacturer. They found a Mr. Jacobs, a distributor in New York, who was the U.S. representative and, together with Don Green’s father, who evidently had extensive business experience as a manufacturer in the auto parts business, they went to New York and met Jacobs. When they explained to him their interest in making arrangements for a Canadian franchise to market the earth shoe in Canada, he is said to have supported the idea but to have explained that it would not be commercially feasible to do so because of the added expense of customs duties to import the shoe to Canada. He suggested that if they were interested, they would do better to find a manufacturer in Canada to produce the shoe for them. This was in about August of 1972. They left in an enthusiastic and high-spirited mood, and began searching for shoe manufacturers and a retail store location. They had also been interested in marketing a brand of ice cream and a brand of yogurt, and had made one phone call to the ice cream company but never approached the yogurt company, although neither brand was then marketed in Canada. Between August and November, 1972 they visited at least 10 shoe manufacturers in the Toronto area after discovering (from yellow pages listings) that it was a shoe manufacturing center, although neither had any technical background at all in the shoe manufacturing business. In November, 1972, Don, Michael and Don’s father again visited Jacobs in New York, and were extremely disappointed. Jacobs’ attitude seemed to have changed greatly, and he was very vague. He said he had just opened an earth shoe factory in Massachusetts, and when they said they would like to see it, he replied that he did not want them to visit it. He had just set it up and did not want any visitors at that time. Having put months of energy into the effort, Don and Michael felt Jacobs was misleading them and was not interested in their opening a Toronto store, or manufacturing the shoe in Canada. He had changed completely from being very positive to very negative. So, instead of seeking a Canadian franchise from Jacobs, they discussed making improvements to the earth shoe and making their own product. The literature for the earth shoe they had bought had a “patent pending” indication. Don’s father said he would have his Detroit lawyer look into the patent, and as a consequence they learned that a Danish woman, Anna Kalso had a patent (in the U.S. only) on the sole of the shoe, specifically on the items of the arch support and the slope of the heel. How the patent aspect was resolved does not appear. It may have expired. If it did, this would explain the opening of the Jacobs factory and his changed attitude. In late November, 1972, Don and Michael met the Kowalewski family in Toronto as the BOA Shoe Company, the first name they found in the yellow pages. Mr. Kowalewski had emigrated from Poland to Argentina, and after some years there emigrated to Canada where they settled in Toronto. Mr. Kowalewski was a highly skilled shoemaker specializing in custom made shoes for customers with foot problems who needed shoes that would fit them properly. Their work was very customized and very little, mostly special orders, was sold to retail outlets. The business was successful but small, and in an effort to enter the mass production market and compete with existing factories, it lacked the facilities and manpower and got into debt. An ad was placed in a Toronto paper to sell the business or find a partner who could provide financial backing, and about this time (though not in response to the ad) Don and Michael showed up looking for someone able to make an improved and modified earth shoe with a negative heel. They had worn their earth shoes for some months and found them severe and uncomfortable. The heel slope was severe and the arch support hit the foot in the wrong place. Don and Michael showed Kowalewski the earth shoes they had and asked if he could make them. He said he could although the design and workmanship could be improved. Some elements for improvement came from Don and Michael, others from Kowalewski. The difficulties and their solutions were as follows: 1. The difference in level between the sole and heel was too great for comfort; it was decided to lower the level of the sole. 2. The arch support embodied in the sole was too far forward and too near the ball of the foot to be comfortable; it was decided to move it back. 3. The earth shoe had no heel counter (the stiffened part of the upper that hold the back of the foot in place); it was decided to add heel counters. 4. The toe of the shoe upper was unsupported, leaving the toes subject to injury; it was decided to use a box toe. To manufacture prototypes or samples, gum rubber soles of the new design were needed. A Toronto company could form the soles but needed a mold. Working with a model presumably made by Kowalewski, molds were made in Italy for a size 9 shoe (which both Don and Michael wore). The molding company made some soles and the Kowalewskis built them into shoes as prototypes. Everyone was pleased with the results, . feeling that the prototype modification was superior to the original earth shoe. The first sample mold was made in June, 1973. Michael thinks he called Jacobs in New York to report their progress, but he was very discouraging. Being satisfied with the redesigned sole, molds were ordered for the range of sizes from 5 through 12, hoping to have them finished by the end of July before the mold shops in Italy closed for the month of August. The deadline was met and the array of molds arrived in early August, 1973. Meanwhile, the Kowalewskis were designing patterns for the uppers and making uppers, as well as 25 samples for the size 9 mold they had, in different samples, so that a number of people could try them out. They sent 6 pair of these size 9 samples to Don’s brother, Richard, in Berkeley, California where he was a student at University of California to try out. By the end of July, while awaiting the molds, the Kowalewskis had designed the uppers in all 8 sizes in 6 or 7 styles and were producing them. When the molds arrived the soles were pressed and the shoes finished. A typical sole in Exh. P-144A. The first store opened in Toronto on August 15, 1973 with Don and Michael as the sales persons, and with an inventory of 125 pair in all sizes, with 6 or 7 styles. Before that, in the earlier part of 1973, Don and Michael considered selection of a name and symbol for their product going into the market. Michael testified that in about March, 1973 while he and Don were driving to their cabin, Don mentioned that he had noticed the word “roots" in a biology or botany book of a girlfriend and thought it would be a good name to use. They had previously talked about “roots” in respect to family background, and the word had also been used on the jacket of a popular phonograph record. Michael said the selection did not come from Alex Haley’s book, or the TV series, which were in 1975. The name was given to Burns and Cooper, a graphic designer and illustrating firm in Toronto that specialized in trademarks, symbols and logos and discussed it. Burns prepared artwork for the name “Liberty Boots”, but Don and Michael did not like the name or the symbol. They wanted “roots” and a symbol with a Canadian identity. A week or 10 days later, Burns had prepared a symbol and logo using “roots”, plus a beaver in a semi-circle and “Natural Footwear” (evidently much like the design shown on the registration, Exh. B to the complaint). A store location was found in Toronto with a semi-circle facade that the design would fit and this was the place they picked, taking possession about April 1, 1973. They then consulted the Canadian lawyer, Mr. Marvin Cohen, who had formed the Don-Michael partnership (later renamed Brian-Joel) for advice on securing trademark protection. He in turn referred them to a patent and trademark lawyer in Canada, Mr. Iver Hughes in April, 1973. Don’s father suggested they look into securing name protection in the U.S. in case they ever decided to do business there. Mr. Hughes briefly described the procedure and said he would need to make some type of search in Canada and the U.S. to see if it had been trademarked. In early June, 1973, Hughes notified them that they would be able to use “roots” and the symbol in both Canada and the U.S., and the registration was thereafter accomplished in about mid-1973 in Canada, and within two months after that, in the United States. The search documents are not in the record, though sought. [Michael Budman’s recollection is not quite the same as is shown on the U.S. registrations. No. 995,891 recites a Canadian application for “ROOTS” filed May 14, 1973, and the U.S. application August 13, 1973. The design and symbol, No. 1,008,-601, recites a Canadian application filed July 5, 1973 and the U.S. Application August 22, 1973]. The Toronto store was prepared and furnished in mostly natural materials, such as oiled natural oak and natural cedar (with no stain). It opened on August 15, 1973. Don and Michael staffed it for two or three weeks, with a helper on weekends, and then hired their first store employee. The demand proved to be “phenomenal” and it became necessary to plan more production and make new arrangements with the Kowalewskis. Initially, Don and Michael bought all the materials (soles, lasts, leather, patterns, and so on) except small items (glue, laces, thread and eyelets), while the Kowalewskis provided the labor on a piecework basis. Around the end of September, 1973 arrangements were made to buy all assets of BOA Shoe Co. from the Kowalewskis for $20,000, to get larger facilities and more machinery, and worked out an employment arrangement to pay the Kowalewskis a salary plus a bonus based on the excess over the first 12 months’ estimated production of 25,000 pair. The new location opened in October, and actual production in the first 12 months ended up at 125,000 pair. At one point, they reached 400 to 500 pair a day. The factory continued at its new location until May of 1974 when they again outgrew it. A second Canadian retail store was opened in Montreal in December, 1973. The first shipment of production shoes into the U.S. was December 14, 1973 to Don’s brother Richard, in Berkeley, Cal. His store opened in the period between Christmas, 1973 and early January, 1974. Without setting down the extensive detail adduced at the final 12 days of trial, the record shows that Natural undertook to market its own modified negative heel shoe in Canada and the United States through two major modes: one was through so called “company stores”, which were owned 50% each by Don and Michael, and the other was through “franchise” stores. In both cases, the only goods sold were the shoes made by Natural in Canada, along with small quantities of “accessories” such as shoe polish, saddle soap, mink oil, belts, scarves, wallets, leather bags, and some T-shirts, socks and hosiery, all of which (except the leather goods) were made by others for Natural and carried the name and logo. The testimony is that franchise stores paid no license fee or commission for the franchise but were committed to buy their inventory only from Natural and to sell no one else’s goods. At some early stage in about late December, 1973 an intermediate wholesaler was formed in Detroit called Century Importers, owned 48% each by Don and Michael and 4% by Don’s father. The purpose of Century was to simplify the task of clearing U.S. customs and paying import duty. The goods evidently were shipped by air to a single airport, with each carton addressed to the consignee store, where Century would attend to the customs duty and services of a customs broker. The goods were invoiced to Century at one price and it, in turn, invoiced the U.S. retailers after a markup. There is no clear measure of the pricing arrangements. Don Green testified that the factory cost for goods manufactured by Natural in its own factory was marked up 20% for sale to retailers, and goods made by others for Natural were marked up by it by 10%. See 11/2/79 Transcript page 130, line 21 to page 132, line 13, for example. Exh. P-70, marked on 10/25/83 shows the “markup” reflected in the price to U.S. stores over the price charged by Natural to Century, for shoes, to range from a low of 10.16% ($3. out of $29.50) to a high of 22.97% ($4.25 out of $18.50). Michael Budman’s testimony in the afternoon of October 24, 1983 was that for an item that cost $10. to make in Toronto, the price to Century was $13. (or 23%). Customs duty would be 8% of the $13., or $1.04 and the broker’s fee would be 10% or $1.30, for a total of $15.34 (Mr. Budman said $14.50), and Century would then sell to the retail outlet for $17.00, and the price to the customer would be $35 for this example, which indicates a 23% markup from factory to Century, about 9% from Century to retailer, and about 50% from retailer to customer. The revised Exh. P-91 A (marked 10/25/83) shows that the U.S. stores were opened more or less in time groups. Aside from the Berkeley store, opened in December, 1973 or January, 1974, 4 stores were opened in March, 1974, 3 in June, 1974, one in August, 1974, 3 in September, 1974 and one each in October and November, 1974. During 1975, 5 opened in January, one in February, 7 in March, one in May, 2 in June, 2 in July, 3 in August, 2 in September, 4 in October and 2 in November. During 1976, there were 11 stores opened from February to September. Only one store opened in each of 1977 and 1978. Of these 54 U.S. stores (two of which may be location transfers), 22 had closed by about June of 1977 and 18 more had closed by August of 1979 (before the present complaint was filed). In all, 16 stores remained in operation and of these, 7 had changed name and no longer carried Natural’s shoes exclusively. Mr. Budman testified on the morning of October 25, 1983 that in 1977 Natural had a change of philosophy as the negative heel began to wane in popularity, and it developed new products because the stores could not survive if they were not successful. Many customers told them they liked the quality of the shoe but were not happy with the negative heel, so they revamped the styles. Richard Kowalewski testified that the first shoe Natural made with a positive heel was in April, 1977 (Tr. p. 1.114 et seq.), and see, also, Exh. P-144. Negative heel shoes are still made today, but Natural makes more positive heel shoes than before, and the small number with negative heel go mostly to Europe (Tr. p. 1.153, 1.154). In recent years, as shown by actual shoes marked in evidence, the trend has been away from the molded gum rubber soles, used mostly for athletic shoes, boat shoes, hiking shoes and boots, and the like, to all-leather shoes of the traditional type such as loafers, and a number of styles of the business shoe type. Also, in early 1977, Mr. Budman testified that Natural explored selling shoes through established outlets. They met with a Saks buyer in New York and showed a line of 6 or 7 shoes or boots and obtained an order to start delivery in 1977, for tryout in 7 Saks stores. The shoes are shipped to a central warehouse in the New York City area, labelled for the particular stores, and Saks attends to the distribution from there. In this period, about 20 of the U.S. stores closed. Some were in secondary locations and lacked the finances to keep going when sales diminished. So Natural decided to concentrate on the factory level to develop new products and not devote time involved in operating company stores. The situation was not working for them and they saw their future with department stores where an order from one buyer would reach many retail outlets in the chain. The first ad by Saks in the N.Y. Times was in September, 1977 when Natural’s shoes were put on sale there for the first time. The ad, Exh. P-119, uses the name “Roots”. When the September, 1977 Saks ad appeared, both Don and Michael were aware of Roots, Inc. and of the cancellation petition dated May 18, 1977 and filed June 2, 1977 with the U.S. Patent and Trademark Office (see Complaint, par. 10 and Exhibit C, the institution of which is admitted in the Answer and Counterclaim). At first, Mr. Budman testified at trial that he first learned of the cancellation petition in about August, 1977 from his Toronto attorney. Later on (in his cross-examination) he said he became aware of Roots, Inc. several months before the ad and spoke to Perry Root by phone in the Summer. Don Green testified at the preliminary injunction hearing that “we” became aware of Roots in the Spring of 1977 through the cancellation petition (11/1/79 Transcript, pages 69-71). Mr. Budman testified he never heard of Roots, Inc. before the 1977 cancellation petition. Mr. Green was asked if he had heard (before the 1977 phone call) of Perry Root’s letter of June 20, 1975 to Mr. Novak, the manager of the New York store operated by Natural, and he said he had not (11/1/79 Transcript, p. 71). The an- ■ swers to interrogatories report that Mr. Novak is no longer with Natural and his ! whereabouts are not known. In any event Saks was not told about the trademark cancellation petition, and they continued to market shoes through that chain of stores. The change of selling channels continued, and in 1978 Natural also began to sell shoes to Bloomingdale (N.Y.) and Nordstrom (California). There was no longer any need for Century Importing because Natural could ship directly to Saks’ central warehouse at landed cost, and because of the closing of the stores that had been used ■in the U.S., they did not want the expense of an office and a corporation in Detroit. Early in 1979, the Saks merchandise manager for men's clothing (including shoes) suggested that Natural consider bringing out a line of clothing for the Pall of 1979 to be tried out in New York, Chicago and Detroit. This was to include leather and suede jackets, pants, sweaters, blazers and accessories. Goods of this kind had not been sold anywhere by Natural before this. Don and Michael returned to Toronto and by the end of March, 1979 had style prototypes ready, some made in their factory and some elsewhere, but to their patterns and materials. A Saks representative was sent to Toronto to see the samples, and he bought the line, placing an order for $50,-000 to $60,000 of merchandise. The goods were shipped in August, 1979 and the offering at the three stores was a success, accompanied by considerable publicity. But in October, 1979 the issue of the U.S. trademark came up again. Their Toronto attorney, Mr. Hughes, said that the U.S. Attorney, Mr. Dominik, had reported revived activity and recommended a meeting with him, which was held in Toronto. At the meeting, Dominik reported that Don, Michael and Natural were faced with a lawsuit in New York and that he felt it was serious. His view was that Natural should file suit first in New Jersey. Mr. Hughes concurred, and it was done. (See the Complaint, par. 12 and the Answer, par. 12). After the preliminary injunction in December, 1979 (dealing with wearing apparel other than shoes) Natural took the clothing out of Saks and returned it to Toronto where it was sold through a Toronto boutique. Although the preliminary injunction did not prevent Natural from selling apparel under any brand or mark other than “Roots”, this was not done, and Saks never asked if they would market the same line under the Don-Michael label or some other label, although some clothing was shipped in to the U.S. under the Don-Michael label, but not to Saks. Saks did not lose enthusiasm after the injunction but was nervous about getting into litigation. The Fall, 1979 order for Spring, 1980 (Exh. P-78) was cancelled as a joint decision of Natural and Saks. Since then, Natural has continued to develop the clothing line and as of final trial in 1983, the business is 60% shoes and 40% clothing, the clothing being sold mostly in Canada and Europe, with some in the U.S. under the Don-Michael name. As of the same time there were two Natural stores in Michigan, while the ones left in Seattle and San Francisco have changed their names. From this detailed summary of a much lengthier account the pattern of Natural’s history seems fairly clear. The enterprise began as an idea to manufacture a patented Danish shoe in Canada for sale there under some kind of franchise from or through Mr. Jacobs but those negotiations collapsed and a modified design of negative heel shoe was produced under the name “Roots”, registered in both Canada and the United States. The early success was exceptionally good. In the first full calendar year, 1974, shoe sales to the U.S. were $865. thousand, and in 1975 topped $3.7 million. After that sales declined, with fluctuations, at the following levels (rounded off): 1976 $2.9 million 1977 1.9 million 1978 1.5 million 1979 2.0 million 1980 1.6 million 1981 1.5 million 1982 1.9 million The peak year, 1975, is the year of a major advertising campaign involving expenses of some $300,000 paid by Century Importing alone. It is also the year in which Haley’s book and the TV series, “Roots” received massive national attention and the good fortune of that coincidence is mentioned in an article in December, 1977, quoting Mr. Budman to that effect, Exh. P-81. Despite this, sales evidently were not enough to sustain the company store and franchise store network, and many stores closed in 1976. The evidence is that the attraction of the negative heel declined, and the heavy sales may have satisfied much of the demand, especially for the curious. Changing to regular heel shoes and marketing through department stores, all of which began in 1977 was not enough to keep Natural’s sales from declining by about one-third in 1977, and still more in 1978. There was a one-third increase from 1978 to 1979, then two more declining years, followed by a 25% or so rise from '1981 to 1982, which about matched 1977. Not a great deal can be told from these figures because of a number of uncertainties. The figures are dollars, not units, and so how much reflects inflation over the term is unknown. The discontinued stores doubtless had some inventory, and there is some testimony by Mr. Budman that this was either sent back to Toronto or sold to a wholesaler in Florida who could match up broken sizes. There is no information about the volume involved either as units or in dollars. The parties and witnesses quite obviously went to great lengths to try to bring greater precision to the details, but as the lengthy testimony and numerous exhibits (some modified and updated during trial) show quite clearly, the manual bookkeeping system used simply did not record the kind of breakdown and detail that was sought to be gathered, and as Ms. Elizabeth Baer noted in her affidavit in early 1980, reconstructing that detail would be an enormous undertaking. But it does not matter because the broad lines do appear and complete precision or accuracy is not essential for a fair understanding of the issues and for sound findings of fact. In the case of Roots, Inc.', a much older operation, the broad pattern is plainly discernable without the need for detailed breakdown and utter precision. The figures of significance begin with fiscal 1966 (there were only 3 months to fiscal 1965 after Hart Schaffner & Marx purchased Roots). Total sales that year were $1.7 million (rounded). By fiscal 1973 (just before major production by Natural) they had risen some 2.3 times to nearly $4. million. There have been increased sales in every year, and no decline, and by fiscal 1982 had reached $11.3 million which is nearly three times the 1973 level and nearly seven times the 1966 level. These are total figures, taken from Exh. CC-63 (marked 10/31/83). The figures for footwear are equally instructive, starting in 1969 (the year Roots opened a separate shoe store) at the nominal level of $28,150., increased by fiscal 1982 to $548,489. This history shows declines along the way, as from 1973 to 1974 to 1975, from 1979 to 1980, with 1979 the highest volume in the series, but the overall increase is in two trends, one from 1969 to 1976, and then another rise from 1977 on. In both cases, the magnitudes are small. Some perspective is obtained from the figures discussed in Brown Shoe v. U.S., 370 U.S. 294, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962), especially at pages 297-304, 82 S.Ct. at 1508-1512, 8 L.Ed.2d at 519 to 523. They show for example that as of some 30 years ago, the G.R. Kinney Company, Inc. was the eighth largest company by dollar volume selling shoes in the U.S. Its annual retail sales were more than $42. million and it sold less than 2% of the total. This means that total U.S. retail sales of shoes were then more than $2. billion. Increasing population combined with inflation have doubtless increased that total since the middle 1950’s. The figures for Brown Shoe (370 U.S. at 302-303, 82 S.Ct. at 1511, 8 L.Ed.2d at 522) for 1955 are that it then produced 25.6 million pairs of shoes or 4% of the Nation’s total footwear production. This means that total production was of the order of 640 million pairs in that year, and population increases have no doubt made that total grow. It is in this sense that both enterprises are small, even though they are surely very important to their respective owners and operators. The dispute, as well as the respective rights, duties and obligations involves only Natural and Roots. None but these two are known to be in the apparel business, including footwear, in the United States, according to the record of the case, using the name or mark “ROOTS”. After the witnesses had finished their testimony and exhibits had been marked, the court asked for views on the propriety of taking judicial notice of broad industry information, noting in particular the figures discussed in the Browri Shoe case, and some examples of tables published in the 1972 Statistical Abstract of the United States (see Tr. pages 12.18 to 12.32, Nov. 3, 1983). Natural felt that the Brown Shoe figures were both too old and discussed in the antitrust context of that case. So far as the Statistical Abstract data were concerned, Natural felt that the analytical basis was not relevant to this case and also could not comment on their accuracy. Roots, Inc. took the view that both references were proper sources of judicial notice under Fed.Ev.Rule 201 for providing some general context within which the specific figures of the opposing parties might be viewed. This latter application was the only use the court indicated that this kind of general data might be helpful, making clear that it had no idea at that point whether the data would be helpful, or to what extent. These data have been studied by the court after deliberations, and in view of the lack of any information otherwise in the record, the court is persuaded that reference to them is proper for the very limited purpose of providing a perspective of the orders of magnitude involved in the activities of both sides. Some broad perspectives of this kind are clearly needed for several reasons. One is that both the expert witnesses who testified for Natural testified in terms of national markets, which implicates some understanding of what those markets are. The other is that the market structures indicate two branches of the apparel trade as well as an infinite variety of combinations of them. Brown Shoe, for example, illustrates the rather dramatic changes in market channel structure for shoes in the immediate post-World War II era. It notes that the largest U.S. producer, International Shoe, had no retail outlets in 1945 but by 1956 had acquired 130. General Shoe, then the 4th largest, had only 80 retail outlets in 1945 but grew to 526 by 1956. Brown Shoe, the third largest (if combined with Kinney) had no retail outlets before 1951, but by 1956 had acquired 845 (not including the 400 or so Kinney stores). See 370 U.S. 294, at pp. 300-303, 82 S.Ct. 1502, at pp. 1510-1511. Footnote 1 of Brown Shoe, 370 U.S. at p. 297, 82 S.Ct. at p. 1508, briefly describes the “Wohl Plan” under which independently owned shoe stores agreed to concentrate on lines sold by Brown through Wohl, in exchange for credit and merchandising aid, in contrast to the Brown “Franchising Program”, under which independently owned stores agreed not to carry competing lines of shoes in return for “certain aid” from Brown. This kind of historical and descriptive data is useful in understanding the Natural retail channel structure before the first sale of shoes through Saks, because the record is scanty (no examples of retail store agreements are in the record) and because from what evidence there is, both the “company stores” and the “franchise stores” were expected to carry only goods supplied by Natural (through Century), and the only difference between them was that the opportunity for profit and the risk of loss flowed to Don and Michael for “company stores” and to the independent owner for “franchise” stores. It is also clear from Michael Budman’s review of the several versions of Exh. P-91, that “franchise” stores that sold goods from other sources than Natural were obliged to change their names to disassociate from Natural and Roots in the store name. The data from the Statistical Abstract discloses more background because pertinent tables provide data for apparel as a whole, and also subdivided as men’s and women’s clothing (excluding shoes) and shoes as such. These data are informative because Natural’s sales in the U.S. have been of shoes and not clothing, for all practical purposes, while Roots’ sales are primarily for clothing and related goods, with shoes being a clearly smaller segment though not an insignificant one. The Statistical Abstract provides broad outlines for this kind of general perspective, with full recognition of the risks of placing too much confidence in tabular statistics. The fact remains that such data are widely recognized and relied upon for many much more important problem-solving decisions, that they are generally accepted sources of substantially undisputed accuracy (to the extent that such data can have some kind of accuracy), and are accordingly available for consideration in lieu of formal proofs. The difference is the usual one between admissibility and weight and the traditional caution is to use the data gingerly and for narrow purposes. At the time of colloquy on the subject before summations, the court had for discussion some of the tables from the 1972 Statistical Abstract. Since then it has located more current data from the 1981 Statistical Abstract, and both are looked to for this broad perspective. Some population figures (to be discussed) were later found in the 1982 World Almanac, citing census figures, and are looked to for the same narrow purposes. The U.S. population in 1950, when Perry-Root came to his father’s store, was not quite 151. million. By 1970, five years after HS & M bought Roots and four years before Natural’s first full year of production, it was slightly more than 203. million (a rise of 35% calculated on the specific figures). By 1980, it was 226.5 million (a 50% increase over 1950, and an 11.4% increase over 1970) see U.S. Population by Official Census, 1790 to 1980, 1982 World Almanac, pp. 198-199. Except for the District of Columbia, New Jersey was the most densely populated State in 1970 (953. per sq. mile) and 1980 (979. per sq. mile), and in 1960 had been second (805.5 per sq. mile) only to Rhode Island (819.3 per sq. mile). Aggregate population of New Jersey went from 4.8 million in 1950 to 7.2 million in 1970 and 7.3 plus million in 1980. Idem. Total Canadian population is not reported for the same years, but the levels and trends from the available data are instructive. It was 20. million in 1966, 23. million in 1976, and 24 million by way of estimate as of January, 1980. Idem, p. 507. It seems to run, over the pertinent period, at a level somewhat above 10%-11%, or so of the U.S. population, and it would be reasonable to expect that population size would be a major factor influencing market volume for wearing apparel, including shoes, along with other factors. There are other census tables that are informative. Table 1205 (1972 Abstract, p. 722) shows that annual production of shoes and slippers has been remarkably stable, being 552. million pair in 1950 and nearly 559. million in 1971. Retail sales (dollars) of all footwear are given as $4.2 billion in 1963 and $5.3 billion in 1967 (1972 Abstract, Table 1239), $7.7 billion in 1972 and $10.6 billion in 1977 (1981 Abstract, Table 1473. p. 815). No doubt the retail sales figures, in dollars, not only reflect shoes produced outside the U.S., but also price changes due to rising costs and inflation. Since the retail sales tables do not reflect unit volume (number of pairs) as do the production tables, no reliable conclusions can be grounded on either set of tables or both combined, other than to have a general indication of the size of the two enterprises in relation to the entire U.S. market. Like observations apply to census data about apparel other than shoes. For 1963, men’s and boys clothing (excluding footwear) was $7.3 billion and for 1967 $9.5 billion; while women’s and girl’s clothing (except footwear) was $14.4 billion in 1963 and $18.8 billion in 1967 (1972 Abstract, Table 1239, p. 742). For 1972, the figures for men and boys is $15. billion and for 1977 it is $22.7 billion. Women’s and girls data are $26. billion in 1972 and $36.5 billion in 1977 (1982 Abstract, Table 1473, p. 815). Useful production figures do not appear since what is there is subdivided along different lines, and sometimes gathered on a selected basis, but without easily available totals. Thus, while the data have some value, their proper use is quite narrow and in this sense Natural’s objections are fully taken into account. Analysis of the pleadings. THE COMPLAINT asserts two grounds of jurisdiction: federal question (28 U.S.C. § 1338 is cited, presumably for Lanham Act claims, but 28 U.S.C. § 1331 is also implicated) and diversity of citizenship (28 U.S.C. § 1132 [sic], meaning § 1332). Venue is laid in this district under 28 U.S.C. § 1391(b) and (c), with Roots, Inc. “residing” in this District and H S & M doing business here and so “residing” here. [NOTE: The allegation that “all the acts complained of” were committed in this District would be more accurately read to say that they were committed “from” this District, as the evidence shows interstate activity.] “Facts common to all counts” are alleged to be: ... par. 6. Natural has the exclusive license to market products in the U.S. under the name “ROOTS” under the two trademark registrations attached as Exh. A and B, by acquisition from Don Green and Michael Budman, once doing business as “Don-Michael”. [NOTE: The court does not find any evidence in the record of a license from Don-Michael to Natural, other than oral testimony, and assumes there was such a license but without details of date and terms]. ... par. 7. Natural has applied “ROOTS” to goods sold throughout the U.S. such as shoes, scarfs, pens, carrier bags, packaging bags, shoe polish, saddle soap, mink oil and men’s clothing. [NOTE: The evidence also indicates some T-shirts, wallets, belts, sheepskin lined vests and the like. It also indicates the first significant sale of “men’s clothing” to be the tryout line sold to Saks for the Fall of 1979]. ... par. 8. Natural sold its “ROOTS” products in a list of States through licensees and distributors, with a business volume of more than $1. million for each of the five years 1975 through 1979 [NOTE: the evidence shows such volume over those years but only for shoes, with the other items far below]. ... par. 9. ROOTS, INC. is owned by HS & M ... par. 10. ROOTS, INC. is a modest retail store chain located in and doing business “solely in” New Jersey and on June 2, 1977 lodged a cancellation proceeding (petition attached as Exh. C) to cancel the Don-Michael trademark registrations. ... par. 11. After acquiring ROOTS, INC., HS & M asserted ownership to the mark “ROOTS” for all goods HS & M made and sold from the time when ROOTS, INC. was first established [NOTE: The record contains no evidence to support this independently of the parent/subsidiary relation]. ... par. 12. ROOTS, INC. and/or HS & M intended to sue one or more of Natural’s “affiliates” in the United States, consciously to interfere with Natural’s right to distribute its products in the U.S. [NOTE: What was said to be a draft complaint for filing in New York was shown to Perry Root but he had never seen it and it was never authenticated or received in evidence. The ROOTS answer does say that it was prepared to bring such a suit and so informed Natural, if agreement to resolve the controversy could not be reached, that it refrained from filing during settlement discussions, but that while awaiting Natural’s response, the present suit was filed. The only specific evidence on this aspect was Mr. Budman’s testimony about the Toronto meeting where Mr. Dominik recommended that suit be filed here and Mr. Hughes concurred, mentioned in the history above]. ... par. 13. Alleges the existence of a case or controversy for the court to resolve. There then follow three separate counts: COUNT I After repeating the earlier paragraphs, says that the court is authorized by 15 U.S.C. § 1119 to decide whether the Don-Michael registrations for “ROOTS” should be cancelled, and asks that the rights be determined. Judgment sought on this count is a permanent injunction from pursuing the trademark cancellation proceeding and requiring withdrawal of the petition for cancellation (Exh. C). COUNT II After repeating the preceding allegations, says that ROOTS, INC. is violating 15 U.S.C. § 1125(a) by sales in and to territory where Natural has established its rights, in that Natural’s goods are recognized as high quality Canadian goods and in that purchasers of ROOTS, INC. goods are misdirected as to “source of origin” [sic]. The demand is for a permanent injunction against use of the mark “ROOTS”, or any variants, in connection with “the sale of merchandise through retail stores located anywhere except in the State of New Jersey.” COUNT III After repeating the preceding allegations, it asserts that ROOTS, INC. is infringing Natural’s exclusive license rights in marketing merchandise marked “ROOTS” or other term confusingly similar thereto. The demand is for a permanent injunction, plus damages. [NOTE: This count was described in summation as the “common law trademark infringement count”, see 11/3/83 Tr., p. 12.-100 lines 18-19], Both HS & M and Roots are named defendants. Although Counts II and III allege conduct only by Roots on the § 1125(a) claim and the common law claim (except for the general embodiment of all earlier allegations), judgment is asked against both. THE ANSWER is by both HS & M and Roots, and denies the major elements of Natural’s claimed rights. It also sets up the affirmative defense of laches. THE COUNTERCLAIM is by Roots, alone. It is in two counts. COUNT I asserts an unfair competition claim, with jurisdiction under 28 U.S.C. § 1338 and diversity under § 1332(a). It alleges senior use by Roots for its goods, services and business in the sale of men’s and women’s wearing apparel, including footwear, in many parts of the United States and in foreign countries, with extensive advertising and promotion in the “New Yorker” and “Wall Street Journal”, by nationally circulated catalogs and by mail order sales throughout the United States. It charges Green and Budman with registering the name and design, “Roots” in the U.S. Patent and Trademark office and alleges the filing of Roots’ cancellation petition. It charges Natural, Green and Budman with using “Roots” for shoes, and with beginning to sell a line of men’s wearing apparel under the mark “Roots” through Saks retail stores in New York and other States, with full knowledge of Roots’ prior use, without Roots’ consent or permission and notwithstanding the pending cancellation proceeding. It alleges that Natural’s use of “Roots” is likely to cause confusion, mistake or deception on the part of purchasers. It charges that Natural’s conduct is a false representation and designation of origin in violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). It charges that Natural’s conduct is unfair competition under the common law and in violation of Roots’ prior rights in the tradename in violation of § 44(g) and (i) of the Lanham Act, 15 U.S.C. § 1126. It charges irreparable injury unless Natural is enjoined, and the lack of adequate remedy at law. COUNT II Repeats the earlier allegations and charges that Natural’s conduct constitutes trademark infringement under the common law (paralleling Count III of the Complaint) and under N.J. trademark statutes N.J.S.A. 56:3-13.1, et seq. (a 1966 revision amended in 1971), and of other States [NOTE: The record does not indicate registration by any party in this case under any State trademark statute, so only the common law aspect is in the case]. The demands for judgment, which follow both counts of the counterclaim, are as follows: 1. Preliminary and permanent injunction from using ROOTS, or any colorable imitation, in connection with the offering for sale of wearing apparel, including footwear, and related goods. 2. Damages (jointly and severally) sustained by Roots as a result of unfair competition and trademark infringement. 3. Accounting for profits in the U.S. by reason of the unfair competition and trademark infringement complained of. 4. Costs, and reasonable attorneys fees. 5. Delivery up to Roots for destruction of all infringing labels, packages, wrappings, advertising and the like, and the plates, molds, matrices and other means for making them. 6. Order to the Commissioner of Patents and Trademarks to cancel Natural’s registrations, pursuant to 15 U.S.C. § 1119. THE REPLY TO THE COUNTERCLAIM asserts that Roots abandoned any trademark significance to the mark “Roots” in favor of a stylized mark consisting of a “mirror image ‘R’ ” [Perry Root described it as a “double R”; the court called it a “butterfly R”]. It denies that any sales by Roots amount to sales in “interstate commerce”, particularly those marked with “Roots”. It admits only that Roots, with its “new” mirror image R operates a limited number of retail stores in New Jersey with merchandise selections intended for a limited market of wealthy, up-scaled demographic clientele, whose purchases are miniscule for achieving trademark use and even in New Jersey, within a limited part of the State. It admits limited ads featuring the stylized mirror image R in local advertising media, and otherwise denies the advertising and promotion allegations. It “admits” that Natural has extensively used “Roots” for wearing apparel throughout the U.S., and was unaware of any activity of Roots until May, 1977. It “admits” that Natural’s line of wearing apparel was extended progressively and was then (November, 1979) featured in exclusive stores throughout the U.S. including Saks, and the Roots (Natural) stores. At a magistrate’s hearing of January 11, 1982, the damage claims were abandoned (but not the accounting claims) and on February 11, 1982 a consent order was filed abandoning the damage claims and setting a non-jury trial. See, also, the colloquy of May 3, 1982 at Tr. page 2, line 9 to page 4, line 12. At the same hearing trial on the merits was advanced and consolidated with the preliminary injunction hearing (Tr. page 4, line 13 to page 7, line 4), and a formal order to that effect was filed May 6, 1982. Examined in the light of the final evidential record, the issues raised by the formal pleadings are more easily summarized. Don Green testified, after having read to him Natural’s prayer for an injunction to restrain Roots from using the mark “Roots” in connection with the sale of merchandise “through retail stores located anywhere except in the State of New Jersey”, that he felt Natural had put 6 years of hard work into creating a very heavy impact in many American States, that people’s awareness of the Roots concept was very strong; “we are willing to — in New Jersey we look at it as a different situation. Across America we feel we own the trademark Roots.” (11/2/79 Tr., p. 122, line 25 to p. 124, line 20). Toward the end of the day’s testimony on October 25, 1983, Michael Budman testified about the 1979 conference at which it was decided to sue first and in New Jersey. He was asked if the purpose was to prevent Roots from shipping goods under the “Roots” mark to customers around the United States, and said they sued because they did not want Roots to open stores outside New Jersey, but did not remember anything about shipping to customers outside New Jersey. He said he had seen Natural’s complaint, and that what he wanted was not to allow Roots to open stores outside New Jersey. He was shown paragraph 19, from Count III of the Complaint and the demand for judgment, and said it was to stop Roots from using the name outside New Jersey. He was not sure if he wanted also to prevent the mailing of catalogs to out-of-N.J. customers, with the name Roots. He did not object to the use of the catalog interstate where a New Jersey customer moved to another State. He did not know how a customer would know of a Roots product if the customer never lived in New Jersey. From these two segments, in the context of the evidence taken as a whole, it is plain that Natural does not seriously advance a claim that it may prevent Roots from doing what it had done before Natural was born, namely to use the word “Roots” as a corporate name, a business name (or service mark) and as a trademark for the goods sold by it and so marked, at retail stores in New Jersey to New Jersey customers, and interstate to customers ordering by mail or phone or interstate to out-of-state customers coming to a New Jersey store to buy either because they formerly lived in New Jersey or because of interstate advertising, including the mailed catalogs and brochures. The activity Natural wished to prevent was the opening of any Roots store outside New Jersey. This considerably narrows the issues, since Roots is shown by undenied and highly credible evidence to have been making interstate sales of both clothing and shoes, and of “accessories”, for a good number of years, in increasing amounts and by various modes, before Natural was born. The issue is not whether Roots is free to do business interstate under the name and mark, but only whether it may do so through new retail stores located outside of New Jersey (but leaving unanswered whether the restriction sought is limited to Roots’ own stores, or whether it includes sales through out-of-N.J. stores of others, such as Filene’s in Boston, a pre-existing activity). It is not clear whether Natural claims the right to sell shoes, or other wearing apparel, or both (along with accessories) under the mark “Roots” within New Jersey. There also appears to be no real dispute that the marks are distinctive or unique, not merely a surname, and are identical and the risk of confusion, deception or mistake high. See testimony of Don Green, 11/2/79, page 119, line 2 to page 127, line 18. Non-final rulings. There have been two major rulings in the case so far, neither of which is final. The first ruling, dated December 4, 1979, concluded that Roots was entitled to a preliminary injunction on the counterclaim. An injunctive order was then entered applicable to all the goods in dispute except shoes, in the United States. Shoes were not dealt with at all, as the ruling makes explicit, because the Don-Michael registrations in the U.S. were limited to footwear, and were the subject of a petition for cancellation filed in early June, 1977 and was pending before the Trademark Trial and Appeals Board. The preliminary injunction was appealed, and a motion panel granted a motion by Natural to limit the scope of the injunction pending appeal by confining it to New Jersey and New York. After submission on the appeal itself, the merits panel affirmed the order for preliminary injunction by judgment order in lieu of mandate issued April 14, 1980 and vacated the territorial restriction imposed by the motion panel pending appeal. The affirmance is noted at 620 F.2d 289 (CA-3, 1980), but no opinion was published. [NOTE: As recorded in the record history above, Natural removed the only clothing shipment of substance, which had been to Saks and one Michigan store, to Toronto, and made no attempt pending appeal to sell such clothing under the “Roots” label anywhere outside New Jersey and New York, or under some different label anywhere except for small sales in Michigan under the Don-Michael label]. The second ruling was dated August 18, 1983 and dealt with Count I of the Natural complaint (seeking declaratory rulings in respect to the two Don-Michael U.S. trademark registrations and an injunction to forbid Roots from further prosecuting its 1977 petition for their cancellation), and with demand 6 on Roots’ counterclaim (seeking a determination that the two Don-Michael trademark registrations were invalid and ordering the Commissioner to cancel them under 15 U.S.C. § 1119). Cross-motions for partial summary judgment on the conflicting sides of the same issue were the means to bring this aspect before the court. The court tended to demur from this approach, having pressed for completion of trial since the early part of 1982, when it formally ordered trial on the merits advanced and consolidated with the preliminary injunction hearing (which was much more extensive than most are) under F.R. Civ.P. 65(a)(2). It was also concerned that the effort might well be wasted, and eventual trial further delayed, because the rule of decision on summary judgment motions in this Circuit is quite strict. See, Meyer v. Riegel Products, 720 F.2d 303 (CA-3, 1983). ' However, both sides insisted that the issue was suitable for determination on cross-motions, that pendency of the cancellation petition before the PTO was no obstacle in view of 15 U.S.C. § 1119, that in fact nothing was going forward in that proceeding until this litigation was over, and that a partial summary judgment on the registration dispute, one way or the other, would advance trial preparation and completion. The thorough briefs, and the argument, focused on the question whether Roots needed to establish “secondary meaning” to succeed on its claim that the registrations were barred by its senior use under 15 U.S.C. § 1052(d). Natural’s argument was that § 1052(d) did not bar registration unless Roots could establish “secondary meaning” for footwear throughout the United States, before Natural’s Canadian filing date under treaty. Natural claimed that such a showing was essential, under Scott Paper Co. v. Scott’s Liquid Gold, Inc., 589 F.2d 1225 (CA-3, 1978), and N. Hess & Sons, Inc. v. Hess Apparel, Inc., 216 USPQ 721 (D-Md., 1982), among others, on the theory that “Roots” was the surname of the store’s founder, and also of his son who now conducts the business for HS & M since the latter’s 1965 acquisition. Roots took the position that under 15 U.S.C. § 1052(d) there was no need to establish “secondary meaning”; it is sufficient, to bar registration, if “Roots” consists of a mark which so resembles a “mark” or a “trade name” previously used in the United States by another, and not abandoned, as to be likely, when applied to the goods of the applicant, to cause confusion, or to cause mistake, or to deceive. As the ruling of August 18, 1983 discloses, the court concluded that Roots’ position was correct and that its use of the word as part of its corporate name, as a merchant to identify its business in engaging in trade or commerce (even though originating as a surname) was sufficient by itself to bar Natural’s registrations under 15 U.S.C. § 1052(d), without regard to secondary meaning. See 577 F.Supp. 128 (D-NJ, 1983). The order denied Natural’s motion and granted Roots’ motion on that issue, but since the order was not final and was subject to revision, see F.R.Civ.P. 54(d), and Curtiss-Wright v. General Electric, 446 U.S. 1, 100 S.Ct. 1460, 64 L.Ed.2d 1 (1980), the Commissioner was expressly not ordered to correct the Register by cancelling Natural’s registrations at that time. Had the law been seen as Natural argued, it would have been necessary to deny both motions for partial summary judgment because the trial record to that point contained extensive evidence of “secondary meaning” but no summary judgment could have been grounded on it since the evidential record was not closed. Now that it is closed, and in light of the finding (discussed hereafter) that “ROOTS” had acquired “secondary meaning” throughout the United States, and in light of the clarification of this court’s (mis)understanding of the Scott Paper case by the decision in Interpace Corp. v. Lapp, Inc., 721 F.2d 460 (CA-3, 1983), reversing 574 F.Supp. 1072 (D-N.J.1982) the outcome on the completed record is the same even on Natural’s theory on the point. The differences on the law are thus mooted out, and the final judgment will include a provision ordering the Commissioner to cancel the registrations. The Applicable Law At the outset, it is noted that the claims and counterclaims grounded on state law of unfair competition, tradenames and trademarks are here on two jurisdictional grounds. One is diversity jurisdiction, 28 U.S.C. § 1332, and the other is pendency to a federal claim, 28 U.S.C. § 1338(b). Jurisdiction under 15 U.S.C. § 1121 is without regard to amount in controversy or diversity- Although the court ruled in August, 1983 that Natural’s U.S. trademark registrations were barred by Roots’ senior use under the Lanham Act, and that Roots was entitled to have them cancelled, that ruling was not then final and was subject to revision. The jurisdiction to deal with the conflicting claims centered on the registrations is original federal jurisdiction because the actions arise under an Act of Congress relating to trademarks, 28 U.S.C. § 1338(a), although that jurisdiction is not exclusive. See O’Brien v. Westinghouse, 293 F.2d 1 (CA-3, 1961). The claims and counterclaims under state law are unfair competition claims pendent to the substantial and related claims under the federal trademark laws, 28 U.S.C. § 1338(b), and are also within the diversity jurisdiction, 28 U.S.C. § 1332. So far as the diversity jurisdiction is concerned, Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) controls on substantive law; the law of the forum state (New Jersey) is to be applied, and see 28 U.S.C. § 1652. Procedural matters, at least for aspects dealt with by federal procedural rules (or statutes) are governed by federal law under Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965). Thus, state law controls the substantive aspects of the common law on unfair competition (usually state equity law), whether it be here under § 1338(b), Flexitized, Inc. v. Nat’l Flexitized Corp., 335 F.2d 774 (CA-2, 1964) (cert. den.), or because of diversity of citizenship, Pecheur v. Nat’l Candy Co., 315 U.S. 666, 62 S.Ct. 853, 86 L.Ed. 1103 (1942); from this circuit. The first step in the process is to determine the forum state’s “choice of law” rules. Again, this is the same whether the claim be pendent to a federal claim, Systems Operations, Inc. v. Scientific Games, etc., 555 F.2d 1131 (CA-3, 1977) or based on diversity of citizenship, Klaxon Corp. v. Stentor Electric, etc., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). At the outset of the last 12 days of trial, the court advanced the proposition t