138 F.3d 277 (7th Cir. 1998), 96-3914, Thomas & Betts Corp. v. Panduit Corp.

Docket Nº:96-3914, 97-2108.
Citation:138 F.3d 277
Party Name:46 U.S.P.Q.2d 1026 THOMAS & BETTS CORPORATION and Thomas & Betts Holdings, Inc., Plaintiffs-Appellants, v. PANDUIT CORPORATION, Defendant-Appellee.
Case Date:March 04, 1998
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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138 F.3d 277 (7th Cir. 1998)

46 U.S.P.Q.2d 1026

THOMAS & BETTS CORPORATION and Thomas & Betts Holdings,

Inc., Plaintiffs-Appellants,

v.

PANDUIT CORPORATION, Defendant-Appellee.

Nos. 96-3914, 97-2108.

United States Court of Appeals, Seventh Circuit

March 4, 1998

Argued Oct. 24, 1997.

Rehearing and Suggestion for Rehearing En Banc Denied April 30, 1998.

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Malcolm H. Brooks, Marc L. Fogelberg, McBride, Baker & Coles, Chicago, IL, Roy H. Wepner, Keith E. Gilman, Sidney David (argued), Lerner, David, Littenberg, Krumholz & Mentlik, Westfield, NJ, James Hay, Lewis & McKenna, Saddle River, NJ, for Plaintiffs-Appellants.

John T. Brown (argued),David C. Hilliard, John M. Murphy, Mark F. Schultz, Pattishall, McAuliffe, Newbury, Hilliard & Geraldson, Chicago, IL, Charles R. Wentzel, Mark D. Hilliard, Robert A. McCann, Panduit Corp., Tinley Park, IL, for Defendant-Appellee.

Before CUMMINGS, BAUER, and ROVNER, Circuit Judges.

BAUER, Circuit Judge.

In this case, plaintiffs Thomas & Betts Corporation and Thomas & Betts Holdings, Inc. appeal from the district court's grant of summary judgment to the defendant. The plaintiffs advance two primary theories with respect to Count I of their complaint, which alleged unfair competition on the part of defendant Panduit Corporation: 1) the district court erred in finding that a product configuration disclosed in a utility patent is not entitled to trademark protection; and 2) questions of fact exist which preclude the district court's grant of summary judgment. With respect to Count II of the complaint, which sought cancellation of one of the defendant's trademarks, the plaintiffs allege that the district court erroneously found that no questions of fact exist. Because we find that Thomas & Betts' contentions are meritorious,

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we reverse the judgment of the district court and remand this case for trial.

BACKGROUND

This case is presently on its third sojourn to the court of appeals. On its first sally, we denied the defendant's motion to stay a preliminary injunction pending an appeal on the merits. Thomas and Betts Corp. v. Panduit Corp., 34 U.S.P.Q.2d 1607 (7th Cir.1994). During the next visit, we reached the merits of the defendant's appeal from the grant of a preliminary injunction to the plaintiffs, reversing the district court's decision because we found that the plaintiffs had not demonstrated a reasonable likelihood of success on the merits. Thomas & Betts Corp. v. Panduit Corp., 65 F.3d 654, 664 (7th Cir.1995), cert. denied, 516 U.S. 1159, 116 S.Ct. 1044, 134 L.Ed.2d 191 (1996) (hereinafter "T & B I"). In our present rendezvous, the plaintiffs appeal from the district court's grant of summary judgment to the defendant on all counts of their complaint. While we assume familiarity with our previous opinions, we will borrow from them in the following brief summary of pertinent facts.

The parties in this case are the nation's largest suppliers of cable ties, which, as their name implies, are small nylon belts used to bundle wires. Cable ties consist of a strap terminating at one end in a tapered tail and at the other in a head which incorporates a horizontal slit and locking mechanism. The strap is looped around the group of wires to be secured and the tail is inserted through the slit in the head and pulled tight, triggering the locking mechanism and prohibiting reverse movement of the tail. The result is a tight bundle of wires with only the thickness of the head (which is made as small as possible to avoid snagging) protruding above the strap and bundled wires.

Cable ties feature either a one-piece or a two-piece locking mechanism. While we need not wade too heavily into the technical aspects of these mechanisms (a detailed explanation is provided in T & B I, 65 F.3d at 656), a brief description will further the understanding of this case. In a onepiece system, a nylon pawl is molded into the head of the cable tie, protruding into the slit in the head through which the strap of the tie passes. The pawl acts as a one-way ratchet, catching on ridges molded into the strap and preventing the strap from slipping out of the slit once the strap is tightened around the bundle of wires. At issue in this case is the two-piece tie, in which the nylon pawl is replaced by a metal barb inserted into the head of the tie. The metal barb sits in a slot transverse to the slit for the strap, and when the strap is pulled taut through the slit, the tension on the strap causes the barb to flex, bite into the nylon strap, and hold tight.

Plaintiff Thomas & Betts Corporation ("T & B") obtained a patent on the two-piece cable tie in 1965 (referred to throughout this opinion as the "Schwester patent"), which remained in effect until its expiration in 1982. The Schwester patent disclosed a two-piece cable tie with an oval head, metal barb, and transverse slot. While the slot, barb, and head portions of the cable tie were part of the claims of the Schwester patent, the oval shape was not; it was illustrated in a drawing of the cable tie and mentioned in the patent's specifications. At present, T & B markets a two-piece cable tie under the trademark "TY-RAP" which is essentially identical to that disclosed in the Schwester patent. In about 1994, defendant Panduit Corporation ("Panduit") began to produce a cable tie similar to that of T & B, sold under the trademark "BARB-TY." Panduit's product is substantially similar in appearance to that produced by T & B.

In response, T & B filed suit in the Northern District of Illinois on April 29, 1994, seeking a permanent injunction against Panduit's manufacture of the BARB-TY product and asserting the following claims: 1) trade dress infringement pursuant to 15 U.S.C. § 1125(a); 2) unfair competition under 15 U.S.C. § 1125(a) and withdrawal of Panduit's "BARB-TY" trademark registration under 15 U.S.C. § 1064(3); 3) common law unfair competition; 4) violations of the Illinois Consumer Fraud and Deceptive Business Practices Act and the Uniform Deceptive Trade Practices Act; and 5) violation of the Illinois Anti-Dilution Act. T & B also sought a preliminary injunction against Panduit. The parties consented to proceed before a magistrate,

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and Magistrate Judge Ronald Guzman held an evidentiary hearing on T & B's motion for a preliminary injunction on July 19, 20, and 21, 1994. On December 19, 1994, Judge Guzman found in favor of T & B and entered a preliminary injunction against Panduit's copying of T & B's cable tie. Thomas and Betts Corp. v. Panduit Corp., 1994 WL 714619 (N.D.Ill.1994). Panduit appealed, and this court reversed. T & B I, 65 F.3d 654.

The case was subsequently transferred to Magistrate Judge Morton Denlow, and Panduit filed a motion for summary judgment on March 26, 1996. T & B filed its response on April 23, 1996, and oral argument was held on July 11. On August 15, 1996, Judge Denlow granted Panduit's motion with respect to Counts I, III, IV, and V of T & B's complaint. Thomas & Betts Corp. v. Panduit Corp., 935 F.Supp. 1399 (N.D.Ill.1996). After further briefing, the district court granted Panduit's motion with respect to Count II on October 17, 1996. Thomas & Betts Corp. v. Panduit Corp., 940 F.Supp. 1337 (N.D.Ill.1996). Final judgment was entered in favor of Panduit on the same day. On November 14, 1996, T & B filed a timely notice of appeal, and the case is now properly before this court.

DISCUSSION

As a preliminary matter, we note that while the district court granted summary judgment to Panduit on all five counts of T & B's complaint, T & B is only appealing the district court's judgment on Counts I and II, the federal law claims brought by T & B. Since there is no challenge to the district court's grant of summary judgment on Counts III, IV, and V, we merely acknowledge the existence of these state-law claims for the sake of completeness and then bid them adieu for the remainder of this opinion.

I. Entitlement of Cable Tie Head to Trademark Protection

The first, and foremost, issue presented in this appeal is a matter of law and a matter of first impression in the Seventh Circuit. Succinctly stated, the question is this: can a product configuration that is disclosed in an expired utility patent be protected as a trade dress under the Lanham Act? 1 The district court answered this question in the negative, holding that "the subject of an expired utility patent which is disclosed as the 'best mode' in the patent cannot be the subject of trademark protection with respect to the invention disclosed to the public." 935 F.Supp. at 1409. Since this is a conclusion of law, we examine the district court's holding de novo. In the Matter of 203 N. LaSalle Street Partnership, 126 F.3d 955, 961 (7th Cir.1997). We believe that the district court's sweeping holding misstates the law regarding the availability of trademark (or trade dress) protection for previously patented articles, and we reverse in this respect.

At the heart of this dispute is the relationship between patent law and trademark law; thus, an appropriate place to begin is with a summary of the purposes of and policies behind each. The roots of patent law extend to the beginning of our country, with the Constitution providing that "The Congress shall have the power ... [t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." U.S. Const., art. I, § 8, cl. 8. To carry out this objective, American patent law offers "a right of exclusion for a limited period as an incentive to inventors to risk the often...

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