Southco, Inc. v. Kanebridge Corp.

• Decision Date: 03 December 2004
• Docket Number: No. 02-1243.,02-1243.
• Citation: 390 F.3d 276
• Parties: SOUTHCO, INC., Appellant v. KANEBRIDGE CORPORATION.
• Court: U.S. Court of Appeals — Third Circuit

390 F.3d 276

SOUTHCO, INC., Appellant v. KANEBRIDGE CORPORATION.

No. 02-1243.

United States Court of Appeals, Third Circuit.

Argued: December 3, 2002.

Reargued En Banc: October 8, 2003.

Filed: December 3, 2004.

James C. McConnon (Argued), Alex R. Sluzas, Paul & Paul, Philadelphia, PA, for Appellant.

Stanley H. Cohen, Caesar, Rivise, Bernstein, Cohen & Pokotilow, Philadelphia, PA, Steven B. Pokotilow (Argued), Stroock, Stroock, and Lavan, New York, NY, for Appellee.

Mark S. Davies (Argued), United States Department of Justice, Civil Division, Appellate Staff, Washington, DC, for Amicus Curiae The United States of America.

Before SCIRICA, Chief Judge, SLOVITER, NYGAARD, ALITO, ROTH, MCKEE, RENDELL, BARRY, AMBRO, FUENTES, SMITH, CHERTOFF, and BECKER, Circuit Judges.

OPINION OF THE COURT

ALITO, Circuit Judge:^*

This is an appeal in a copyright case. Southco, Inc. alleges that Kanebridge Corp. violated its copyright by referring to the serial numbers that Southco assigned to certain parts that it manufactures. The District Court issued a preliminary injunction forbidding Kanebridge from making such references, but a panel of this Court reversed, holding that Southco was unlikely to succeed on the merits because the serial numbers lacked sufficient originality to be copyrighted. On remand, the District Court granted Kanebridge's motion for summary judgment on the copyright claim, but a different panel of our Court reversed, holding that an affidavit submitted by Southco in opposition to Kanebridge's summary judgment motion was sufficient to demonstrate that the numbers reflected considerable creativity. We now hold that the numbers are not protected by copyright, and we therefore affirm the order granting summary judgment in favor of Kanebridge.

I.

Southco manufactures a variety of products, including rivets, latches, handles, and "captive fasteners" that are used to fasten two panels together. A "captive" fastener is one whose components are retained in the outer panel when the two panels are detached. "Captive screws" are a type of captive fastener. Each captive screw consists of a "knob" (the component that surrounds the screw head), the screw itself, and a "ferrule" (a component that houses the screw). The captive screw is mounted in the outer panel by means of the ferrule. The other panel contains an internally threaded insert that receives the screw. Captive screws differ among themselves with respect to a few characteristics, such as composition, screw length, screw diameter, thread size, and finish.

To assist its employees and customers in identifying and distinguishing among its products, Southco developed a numbering system under which each particular digit or group of digits signifies a relevant characteristic of the product. Southco has referred to one of the numbers at issue in this case, part number 47-10-202-10, to show how the system works. The first two digits ("47") show that the part falls within a class of captive screws. Other digits indicate characteristics such as thread size ("632"), composition of the screw (aluminum), and finish of the knob ("knurled"). See Southco, Inc. v. Kanebridge Corp., 258 F.3d 148, 149 n. 2 (3d Cir.2001) ("Southco I") (quoting Southco's brief).

A person who understands the Southco system can use it in two ways. First, the person can readily determine from a product number the characteristics of the product designated — for example, the type of product (say, a screw), the type of screw, and all of the characteristics that a user might need to know. Second, working in reverse, a person who knows the characteristics of the product needed for a particular job can determine the number of the product with the desired characteristics. Southco includes its product numbers in handbooks that it publishes each year, and Southco has secured copyright registrations for several of its handbooks.

According to Southco, its part numbers play a significant role in the subcontracting of work on computers and telecommunications equipment. Computer and telecommunications equipment manufacturers often use "subassemblies" supplied by subcontractors, and manufacturers often use Southco part numbers to specify the captive fasteners to be used in these subassemblies. However, manufacturers sometimes permit subcontractors to substitute equivalent fasteners manufactured by companies other than Southco, and this gives the subcontractors an incentive to substitute cheaper fasteners made by Southco's competitors. See Joint Appendix ("A") 18-19.

Matdan America ("Matdan") is a Southco competitor that manufactures panel fasteners. Kanebridge, known as Matdan's "master distributor," sells Matdan fasteners to other distributors, often at prices lower than Southco's. In order to demonstrate that its fasteners have the same characteristics as Southco's but are sold at lower prices, Kanebridge began to use Southco's part numbers in comparison charts that were included in advertisements and other literature provided to customers. These charts display Kanebridge's and Southco's numbers for equivalent fasteners in adjacent columns, making it clear that the two companies' parts are interchangeable. According to Kanebridge, the "ability to cross-reference Southco panel fasteners in an honest, accurate and comparative manner" is necessary to make competition viable. Kanebridge's Southco I Brief at 7. Without this ability, Kanebridge insists, customers would lose the opportunity to obtain lower-cost alternative fasteners. Id.

Southco commenced this action against Kanebridge, asserting a claim for copyright infringement under 17 U.S.C. §§ 501-05, 509, as well as Lanham Act claims for false advertising (15 U.S.C. § 1125(a)), trademark infringement (15 U.S.C. § 1114(1)), and unfair competition (15 U.S.C. § 1125(a)), and claims for common law trademark infringement and trademark dilution. In support of its copyright infringement claim, Southco alleged that Kanebridge had copied 51 part numbers for Southco's "Class 47 captive screw fasteners." A23. Examples of the numbers that Southco claimed are protected by copyright are the following:

47-10-202-10 47-11-502-10 47-10-502-50 47-12-502-50 47-62-501-20

A24. Southco alleged that Kanebridge had used these copyrighted numbers in "advertising, product brochures, catalogs, reference guides, packaging and/or price lists." Id.

The parties agreed to a temporary restraining order containing various restrictions on Kanebridge's use of Southco's part numbers, but when the parties failed to agree on the scope of a preliminary injunction, Southco moved for a preliminary injunction preventing Kanebridge from making any reference to Southco's numbers. The District Court granted the motion, concluding, among other things, that Southco's "numbering system is copyrighted." Southco, Inc. v. Kanebridge Corp., No. 99-4337, 2000 WL 21257, at *1 (E.D.Pa.2000) (emphasis added). The Court wrote:

The Numbering System, with its unique, non-intuitive and highly complex attributes, easily satisfies the standard for originality. It was created out of nothing, and has developed to some use as an industry standard.... It is expandable as new products are developed, and is of use to Southco employees and customers.

Id. at *3 (emphasis added).

On appeal, a panel of this Court reversed. Southco I, 258 F.3d at 148. The Southco I panel began by noting that, "[f]or purposes of copyright law, ... Southco's numbering system and the actual numbers produced by the system are two very different works" and that Southco's claim was based exclusively on the actual numbers and not on the system. Id. at 151-52 (footnote omitted). The panel wrote that Southco had "unquestionably devoted time, effort, and thought to the creation of the numbering system" but that Southco's system made it "impossible for the numbers themselves to be original." Id. at 153 (emphasis omitted). Focusing on the use of the Southco system to assign a number to a product in an existing product line,¹ the Southco I panel wrote:

The part has certain relevant characteristics, and the numbering system specifies certain numbers for each of those characteristics. As a result, there is only one possible part number for any new panel fastener that Southco creates. This number results from the mechanical application of the system, not creative thought. If Southco were to develop a new fastener and for some reason decide to exercise creativity when assigning it a number, the resulting part number would fail to accomplish its purpose. Regardless of how small the change is, customers could not effectively identify the relevant characteristics of the panel fastener by simply looking at its part number.

Id. at 153. The Southco I panel thus concluded that "the creative spark is utterly lacking in Southco's part numbers and that these numbers are examples of works that fall short of the minimal level of creativity required for copyright protection." Id. at 152.

On remand, Kanebridge moved for summary judgment. In response, Southco submitted the affidavit of Robert H. Bisbing, a retired Southco engineer who had designed numerous fasteners for Southco and had assigned them product numbers. A262-63. Bisbing explained how he had assigned product numbers to a new class of enclosed retractable captive screws that included 405 variations. A264-71. Bisbing recounted that "it had long been Southco's practice to create a system of numbers for each class of its products," including classes of drive rivets, latches, pulls, and handles, as well as fasteners. A264. He stated that the relevant characteristics of this new class differed from those of previous classes and that he therefore adapted the system to apply to the new line. A267. Bisbing elaborated:

Although there were a variety of Southco numbering systems in existence in 1971 when I created the enclosed retractable captive screw, including for several classes of captive screws, none...