Thomas & Betts Corp. v. Panduit Corp.

• Citation: 65 F.3d 654
• Decision Date: 23 October 1995
• Docket Number: 95-1793,Nos. 94-3911,s. 94-3911
• Parties: THOMAS & BETTS CORPORATION and Thomas & Betts Holdings, Inc., Plaintiffs-Appellees, v. PANDUIT CORP., Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 654

65 F.3d 654

36 U.S.P.Q.2d 1065

THOMAS & BETTS CORPORATION and Thomas & Betts Holdings, Inc., Plaintiffs-Appellees, v. PANDUIT CORP., Defendant-Appellant.

Nos. 94-3911, 95-1793.

United States Court of Appeals,

Seventh Circuit.

Argued May 15, 1995.

Decided Sept. 14, 1995.

Rehearing and Suggestion for Rehearing En Banc Denied Oct. 23, 1995.

Malcolm H. Brooks, Marc L. Fogelberg, Jerry Kronenberg, McBride, Baker & Coles, Chicago, IL, Keith E. Gilman, Lawrence I. Lerner (argued), Sidney David, Charles P. Kennedy, Lerner, David, Littenberg, Krumholz & Mentlik, Westfield, NJ, for Plaintiff-Appellee Thomas and Betts Corporation, Thomas and Betts Holdings, Incorporated.

John T. Brown, David C. Hilliard (argued), Nancy L. Clarke, Pattishall, McAuliffe, Newbury, Hilliard & Geraldson, Chicago, IL, Charles R. Wentzel, Mark D. Hilliard, Panduit Corporation, Tinley Park, IL, for defendant-appellant Panduit Corp.

Before CUMMINGS, BAUER and ROVNER, Circuit Judges.

CUMMINGS, Circuit Judge.

Panduit appeals a preliminary injunction barring it from producing cable ties with certain features disclosed in an expired patent. Because the plaintiff has not established that the features are protectable trade dress, we reverse.

Background

The combatants in this litigation are the nation's largest suppliers of cable ties, small nylon belts used to bundle wires. Cable ties, simple devices which cost pennies apiece to produce, are ubiquitous in industries which involve electronics, which is to say almost all industries; billions are sold each year.

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 bundle of wires to be secured and the tail is inserted through the slit in the head and pulled snug--first by hand, then by a device which tightens the loop around the bundle and snips off the excess tail flush with the head of the tie. The result is a tight bundle with only the thickness of the head protruding above the strap and bundled wires. The head is made as small as possible to avoid snagging on other wires or components with which the bundle may come in contact.

Cable ties feature two types of locking mechanisms: one-piece or two-piece. In the one-piece system, a nylon pawl molded into the head of the cable tie protrudes into the horizontal slit through which the strap passes. The strap in turn incorporates, along essentially its entire length, small, closely spaced, transverse ridges or teeth. When the strap is inserted through the slit, the pawl engages the ridges on the strap like a one-way ratchet allowing the loop to be tightened around the bundle but not lengthened. Military size and strength requirements and the need to fit the nylon pawl mandate an essentially rectangular shape for the head of the one-piece cable tie. Defendant Panduit, the largest of a handful of producers of one-piece cable ties, sells its product under the trade-mark PAN-TY. Thomas & Betts ("T & B"), the plaintiff in this case, and several other producers also make one-piece cable ties, which like Panduit's meet military specifications and have rectangular heads [Pl.Ex. 233]. ¹

In the two-piece tie, the nylon pawl is replaced by a metal barb which is inserted into the head of the tie and sits in a slot transverse to the slit for the strap. When the strap is inserted through the slit, the barb flexes into the transverse slot. When the strap is pulled taut, the tension on the strap causes the flexed barb to bite into the nylon strap and hold tight. Because the metal barb eliminates the need for teeth or ridges on the strap, the two-piece cable tie has a number of advantages, including infinite adjustability and a stronger strap. There are also disadvantages to this design, however, including the danger, real or perceived, that the metal barb may come loose and short out surrounding electronic equipment.

In 1965, T & B obtained a patent on the two-piece cable tie ("the Schwester patent"). That patent disclosed a two-piece cable tie with an oval head, metal barb and transverse slot. The top half of the slot allows for the insertion of the barb during manufacturing and the bottom half is required for the barb to flex and bite. The slot, barb and head portion are elements in each of the patent's claims. The oval shape of the head is not specifically claimed but is illustrated and described in the specifications. T & B currently markets a two-piece cable tie under the trademark TY-RAP that is essentially identical to the model disclosed in the Schwester patent. Though the Schwester patent expired in 1982 and a related patent also held by T & B expired in 1986, until 1993 T & B remained the sole producer of two-piece cable ties with annual sales of almost $100 million worldwide.

In 1993, Panduit entered the two-piece cable tie market with the BARB-TY, an oval-headed, metal-barbed cable tie essentially identical to T & B's TY-RAP. T & B promptly sued Panduit for trade dress infringement under Section 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a), and the common law. T & B claimed that its trade dress "includes a rounded, low profile head configuration with a vertical slot which is aligned with the body of the cable tie and, in the case of Thomas & Betts' dominant product, includes a metal barb visible in the lower portion of the vertical slot." [R. 8 at 5]. T & B also brought an unfair competition claim under the same provision of the Lanham Act based on Panduit's use of the BARB-TY trademark and ancillary state law claims under the Illinois Consumer Fraud and Deceptive Business Practices Act, the Uniform Deceptive Trade Practices Act and the Illinois Anti-Dilution Act.

T & B moved for a preliminary injunction prohibiting Panduit from selling its BARB-TY. After an evidentiary hearing, the magistrate judge found in an order dated December 14, 1994, that "the transverse slot, the vertical slot, the steel barb and the tail or body" were all "functional parts" and thus not entitled to trade dress protection [Def.App. 48], but that the oval shape of the head was not functional and thus was protectable trade dress. The magistrate judge preliminarily enjoined Panduit "from further sales, advertising, promotion, or marketing of cable ties incorporating a steel barb locking mechanism with an oval shaped head and a transverse or vertical slot in the head." [Def.App. 56].

Panduit's request for a stay of the injunction was denied by both the magistrate judge and a panel of this Court. Panduit now appeals, contending that the magistrate judge erred in finding that T & B had established some likelihood of success on the merits. In reviewing the grant of a preliminary injunction we review factual findings for clear error and legal conclusions de novo. Schwinn Bicycle Co. v. Ross Bicycles, Inc., 870 F.2d 1176, 1181 (7th Cir.1989).

Discussion

A. Trade dress and the patent laws

Trademark law aims to aid consumers in identifying the source of goods by allowing producers the exclusive right to particular identifying words or symbols which they may attach to their products as a designator of source. Allowing a particular producer to monopolize a symbol in this way is no burden on competition, the theory goes, ² because symbols are a dime a dozen. The only value of the initially arbitrary symbol comes from its association with the producer's products and the good or bad will consumers feel toward that producer based on the quality of those products. Because the symbol itself adds nothing to the product, consumer desire for products marketed with that symbol must derive solely from the belief that products bearing the mark originated with the producer for whom the consumers have developed goodwill. Therefore, the only reason a competitor would copy a mark would be to pass off his product as that of the original producer.

This simple theory becomes a bit more problematic when a trademark is descriptive or has some other value apart from its associated goodwill. In such a case, a court must determine whether the mark really signifies a particular source or the product itself. Still, the dispute concerns limitations on the language competitors can use to communicate with consumers about their products and the effect such limitations would have on competition. The products themselves remain unconstrained.

Trade dress protection in the configuration of the product itself opens up another can of worms. While it is true that features of a product may serve primarily to signify its source (e.g., the pink color of Owens-Corning fiberglass insulation, see In re Owens-Corning Fiberglas Corp., 774 F.2d 1116 (Fed.Cir.1985)), these features are still part of the product itself and may be valued by consumers as such ("I just could not sleep at night if the insulation above my head wasn't pink"). Trade dress protection only extends to the role of such features as signifier of source; when competitors are barred from duplicating features whose value to consumers is intrinsic and not exclusively as a signifier of source, competition is unduly hindered.

[I]mitation is the life blood of competition. It is the unimpeded availability of substantially equivalent units that permits the normal operation of supply and demand to yield the fair price society must pay for a given commodity. [citations omitted].

American Safety Table Co., Inc. v. Schreiber, 269 F.2d 255, 272 (2nd Cir.1959), certiorari denied, 361 U.S. 915, 80 S.Ct. 259, 4 L.Ed.2d 185 (1959). Copying is not only good, it is a federal right--a necessary complement to the patent system's grant of limited monopolies.

Both the novelty and the nonobviousness requirements of federal patent law are grounded in the notion that concepts within the public grasp, or those so obvious that they readily could be, are the tools of creation available to all. They provide the baseline of competition...