United States District Court, Northern District of Illinois, Eastern Division
May 18, 1999
THOMAS & BETTS CORPORATION AND THOMAS & BETTS HOLDINGS, INC., PLAINTIFFS,
PANDUIT CORPORATION, DEFENDANT.
The opinion of the court was delivered by: Morton Denlow, United States Magistrate Judge.
MEMORANDUM OPINION AND ORDER
The saga continues. After several trips between this Court and
the Seventh Circuit Court of Appeals, the case is back. The
Seventh Circuit previously reversed this Court's grant of summary
judgment to Panduit on Count II and remanded for further
proceedings. Panduit Corporation (hereinafter "Panduit") now
brings a motion to dismiss Count II of the complaint filed by
Plaintiffs Thomas & Betts Corporation and Thomas & Betts
Holdings, Inc. (hereinafter collectively "T & B"). Panduit
contends the Court no longer has jurisdiction over Count II. The
Court disagrees. For the reasons set forth below, Panduit's
motion to dismiss Count II is denied.
I. BACKGROUND FACTS
T & B and Panduit are the nation's largest suppliers of cable
ties. Cable ties are nylon plastic straps used to tie together
cables or wires. T & B obtained a utility patent on the two-piece
cable tie in 1965, which expired in 1982. T & B also obtained a
design patent on the cable tie in 1966, which expired in 1980. In
late 1993, Panduit began to produce a cable tie similar to that
of T & B, sold under the trademark "BARB-TY." Panduit's cable tie
is substantially similar in appearance to T & B's cable tie.
T & B brought this action in five counts against Panduit. Count
I alleges that Panduit's metal barb oval head shaped cable tie
infringes on the trade dress of T & B's cable tie in violation of
Section 43(a) of the Lanham Act. 15 U.S.C. § 1125(a). Count II
alleges that Panduit's registration and use of the trademark
BARB-TY constitutes unfair competition under the Lanham Act,
15 U.S.C. § 1125(a)(1)(A), and seeks cancellation of Panduit's
trademark registration of the term BARB-TY. T & B also alleged
that Panduit's conduct violates the common law of unfair
competition in Count III; the Illinois Consumer Fraud and
Deceptive Business Practices Act, 815 ILCS 505/2, and the Uniform
Deceptive Trade Practices Act, 815 ILCS 510/1, in Count IV; and
the Illinois Anti-Dilution Act, 765 ILCS 1035/15, in Count V.
T & B previously brought a motion for a preliminary injunction
which was granted by the trial court in Thomas & Betts Corp. v.
Panduit Corp., No. 94 C 2656, 1994 WL 714619 (N.D.Ill.Dec.19,
1994), and later reversed by the Seventh Circuit, Thomas & Betts
Corp. v. Panduit Corp., 65 F.3d 654 (7th Cir. 1995). The case
was then transferred to this Court which granted summary judgment
against T & B on Counts I, III, IV, and V. Thomas & Betts Corp.
v. Panduit Corp., 935 F. Supp. 1399 (N.D.Ill. 1996) ("T & B
I"). This Court subsequently granted summary judgment against T
& B with regard to Count II. Thomas & Betts Corp. v. Panduit
Corp., 940 F. Supp. 1337 (N.D.Ill. 1996) ("T & B II"). On
appeal, the Seventh Circuit reversed the grant of summary
judgment on Counts I and II. Thomas & Betts Corp. v. Panduit
Corp., 138 F.3d 277 (7th Cir. 1998) ("T & B III"). No appeal
was taken regarding Counts III through V and they are no longer
part of the case.
II. ANALYSIS OF COUNT II
Panduit now brings a motion to dismiss Count II for lack of
subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). A review of
the history of Count II is a necessary background.
A. Count II of the Complaint.
Count II is captioned "Unfair Competition Under
15 U.S.C. § 1125(a) and Withdrawal Of Application For Registration (or
Cancellation of Registration Under 15 U.S.C. § 1064(3))" and
consists of several components. In Count II, T & B alleges the
term "barb tie" has become associated with Thomas & Betts'
products, "although this term is also a generic expression for
identifying two-piece self-locking cable ties having a metal
locking device or a barb." (Compl. ¶ 26.) According to T & B, the
term BARB-TY is virtually indistinguishable from and phonetically
identical to the "barb tie" designation which is uniquely
associated with Thomas & Betts' cable ties. (Compl. ¶ 27.) As a
result, T & B believes Panduit is using the BARB-TY trademark to
trade on T & B's reputation. (Compl. ¶ 29.) In sum, T & B asserts
all of the above allegations demonstrate a violation of
15 U.S.C. § 1125(a)(1)(A) because Panduit's use of the term BARB-TY as a
trademark for its cable ties constitutes a false designation of
origin, "which is likely to cause confusion, or to cause mistake,
or to deceive as to the affiliation, connection, or association
of Panduit with Thomas & Betts or as to the origin, sponsorship
or approval of Panduit's two-piece self-locking cable ties, or
the commercial goods or activities of others." (Compl. ¶ 28.)
In Count II, T & B also claims that, because of "barb tie's"
association with T & B's products and generic quality, Panduit
obtained its registration of the trademark BARB-TY fraudulently
and did not have the right to register the mark BARB-TY. (Compl.
¶¶ 32-33.) To support this allegation, T & B reviews Panduit's
application history before the U.S. Patent and Trademark Office
("PTO") for the BARB-TY mark. Panduit's Application Serial No.
74/331,294, covering the mark was allowed on July 13, 1993.
(Comp. ¶ 30.) T & B asserts Panduit failed to advise the PTO of
the significance of the term "barb tie" while making its
application. (Comp. ¶ 31.) This is in direct contravention to
15 U.S.C. § 1064(3) according to T & B. (Comp. ¶ 33.)
T & B claims damages from the registration of the BARB-TY mark
arising out of a misrepresentation as to the source of the cable
tie or in connection with the way the mark is used. (Comp. ¶ 35.)
In addition, as part of its prayer for relief, T & B seeks an
order pursuant to 15 U.S.C. § 1119 directing the PTO Commissioner
to cancel the BARB-TY registration. (Comp. ¶ B, p. 17.)
B. T & B I, 935 F. Supp. 1399 (N.D.Ill. 1996).
Although there were earlier opinions in this case, Count II was
first addressed on the merits in this Court's August 15, 1996
decision in connection with Panduit's motion for summary
judgment. T & B I, 935 F. Supp. 1399, 1418 (N.D.Ill. 1996). The
Court denied Panduit's motion for summary judgment on Count II
because the record was incomplete. Id. The parties were given
an opportunity to further brief and argue the issue. Id.
C. T & B II, 940 F. Supp. 1337 (N.D.III. 1996).
On October 17, 1996, following additional briefing and oral
argument, the Court entered its decision granting summary
judgment to Panduit on Count II. T & B II, 940 F. Supp. 1337
(N.D.Ill. 1996). In the decision, this Court analyzed two
separate claims under Count II: 1) T & B's claim that Panduit's
use of the BARB-TY trademark constitutes a misleading use and
violates § 43(a)(1) of the Lanham Act, 15 U.S.C. § 1125 (the
"unfair competition claim"); and 2) T & B's claim that Panduit's
trademark be canceled pursuant to § 14 of the Lanham Act,
15 U.S.C. § 1064,*fn1 because of either the genericness of the term
"barb tie" (the "genericness issue") or the fraudulent
procurement of the BARB-TY mark (the "fraudulent procurement of
trademark claim"). Id. at 1339.
With respect to the first issue, this Court granted summary
judgment to Panduit because Panduit's use of the term BARB-TY did
not violate § 43(a)(1) of the Lanham Act as a matter of law
because the term "barb tie" is not generic and the BARB-TY
trademark does not create confusion as to source. Id. at
1339-1343. The Court held the term barb tie was not generic and
the primary designation of the product is the term cable tie.
Id. at 1341. The Court next held Panduit's use of the term
BARB-TY is not likely to cause confusion with T & B's TY-RAP
cable ties. Id. at 1342. The Court stated "even assuming
arguendo that the term `barb tie' is a generic term, Panduit's
actions would not violate the Lanham Act." Id. T & B produced
no evidence to show that consumers refer to its products as barb
ties. Id. The
Court distinguished the three cases relied upon by T & B*fn2
because in each of those cases, "a trademarked term became
generic after prolonged use by the sole manufacturer." Id. at
1343. T & B has never had a trademark in the term "barb tie" and
T & B had failed to show the public has come to know the product
as a barb tie. Id. The Court made three findings with respect
to the false designation of origin claim. First, T & B failed to
submit sufficient evidence to show the term "barb tie" has a
source indicating quality as to T & B; second, T & B failed to
demonstrate the term "barb tie" is a generic or principal
designation of a cable tie; and, third, the Court found the term
"barb tie" and its phonetic equivalent BARB-TY, will not likely
confuse the general public. Id. at 1343.
With respect to the second issue, this Court held that
Panduit's BARB-TY trademark should not be canceled pursuant to §
14 of the Lanham Act, 15 U.S.C. § 1064, because the term "barb
tie" is not generic and because no fraud was committed against
the U.S.Patent and Trademark Office. Id. at 1343-4.
D. T & B's Appeal Brief on Count II.
T & B appealed this Court's grant of summary judgment to
Panduit on Counts I and II. In its brief to the Seventh Circuit,
T & B's Statement of Issues regarding Count II read as follows:
2. Did Magistrate Judge Denlow err in granting
summary judgment against T & B on its claim to cancel
Panduit's trademark registration by finding the term
Barb-Ty to be non-generic?
(Panduit's Mem. in Resp. to T & B's Surreply in Opp'n to
Panduit's Mot. to Dismiss Count II, Ex. N, T & B's Br. at 1). In
its brief regarding Count II, T & B captioned its argument as
F. The District Court Erred In Finding The Term
Barb-Ty To Be Non-generic As A Matter of Law.
Id. at 44. T & B began its four-page argument on Count II
stating: "T & B also seeks cancellation of Panduit's registration
for the term Barb-Ty because of genericness and/or fraudulent
procurement." Id. T & B asserted that it filed its complaint
before Panduit's registration issued and therefore Panduit was
not entitled to a presumption of nongenericness. Id. T & B
claimed the term "barb tie" was generic for a variety of reasons
and the issue of genericness raised a fact question. Id. T & B
concluded its argument stating: "At the very least, the trier of
fact should have the opportunity to consider the propriety of
Panduit's registration in light of information which was not
available to the U.S. Patent and Trademark Office." Id. at 47.
In its conclusion, T & B requested "the district court's grant of
summary judgment should be reversed and this case remanded with
guidance for further discovery and trial by jury." Id.
Nowhere in its briefs to the Seventh Circuit does T & B
specifically assert an unfair competition claim based on the
alleged genericness of Panduit's BARB-TY mark. In its statement
of the case, T & B briefly reviews the history of the case and
states: "In T & B V and T & B VI, Judge Denlow granted the
motion, finding no issue of material fact remaining on six
dispositive issues in the case. T & B seeks reversal of the
summary judgment on the trade dress claim under federal and state
law, and on the cancellation claim." Id. at 2. A fair reading
of this statement is that the trade dress claim refers to Count I
and the cancellation claim refers to Count II.
E. T & B III, 138 F.3d 277 (7th Cir. 1998).
The Seventh Circuit reversed this Court's grant of summary
Panduit on Count II. T & B III, 138 F.3d 277, 302 (7th Cir.
1998). Early in its decision, the Seventh Circuit framed the
issue under Count II: "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 question of fact exists." Id. at 281. In its analysis
of Count II later in its decision, the Seventh Circuit captioned
the section: "III. Cancellation of Panduit's Barb-Ty Trademark."
Id. at 300. The Seventh Circuit framed the issue as follows:
"In its complaint, T & B also sought the cancellation of
Panduit's trademark `Barb-Ty,' arguing that it was a generic term
or, alternatively, that registration had been obtained
fraudulently." Id. The Seventh Circuit observed that T & B had
waived its fraudulent procurement of trademark claim. Id. at
300 n. 9 ("T & B does not present any argument in its brief
relating to the fraudulent procurement claim, and as such we need
not address it.") (citations omitted). The Seventh Circuit held
Panduit was entitled to a presumption of nongenericness of its
"Barb-Ty" trademark because T & B waived the argument by failing
to cite any case law in support. Id. at 301. However, the
presumption of genericness could be rebutted and despite the
weakness of T & B's evidence, issues of material fact made
summary judgment inappropriate. Id. at 301-302. Consequently,
the Seventh Circuit reversed this Court's grant of summary
judgment to Panduit on Count II and remanded the case for further
proceedings consistent with the opinion. Id. at 301. However,
the opinion did not state that the unfair competition claim on
genericness was waived, nor did it specifically state that such
claim still existed.
F. What Remains of Count II.
The following portions of Count II are no longer at issue.
First, T & B acknowledges that it is not pursuing a declaratory
judgment cause of action to cancel the BARB-TY trademark. (Tr. of
Apr. 27, 1999 Oral Arg. at 5.) Second, regarding the unfair
competition claim, T & B acknowledges its waiver of its claim of
likelihood of confusion based on the public's association of the
BARB-TY mark with T & B. (T & B's Surreply Mem. in Opp'n to
Panduit's Mot. to Dismiss at 5.) This argument was fully
discussed by this Court in T & B II but never argued by T & B on
appeal. T & B II, 940 F. Supp. 1337, 1342-43 (N.D.Ill. 1996).
This Court rejected T & B's argument that T & B's use of the
trademark BARB-TY was likely to cause confusion because T & B
"failed to submit sufficient evidence that the term `barb tie'
has either a source indicating quality as to T & B . . .". Id.
at 1343. Third, T & B waived its fraudulent procurement of
trademark claim. T & B III, 138 F.3d at 300 n. 9. Having waived
these arguments on appeal or in oral argument before this Court,
we now turn to the question of what remains of Count II.
The Seventh Circuit expressly addressed the genericness issue
and held "issues of material fact remain on the topic of
genericness and . . . summary judgment was inappropriate here."
T & B III, 138 F.3d at 301. However, the parties disagree about
the impact of the surviving genericness issue on the other claims
in Count II. Panduit contends the genericness claim relates only
to the issue of cancellation, and this Court has no jurisdiction
to cancel a trademark in the absence of an existing unfair
competition claim in Count II. T & B contends the unfair
competition claim based on genericness still exists, and even if
it does not, this Court has jurisdiction to cancel the mark
because an unfair competition claim did exist at the time of
filing the lawsuit. The Court must address the issues of
independent jurisdiction under 15 U.S.C. § 1119 and whether an
unfair competition claim must still exist before tackling the
G. No Independent Jurisdiction Under 15 U.S.C. § 1119
For this Court to have subject matter jurisdiction to hear a
case, a justiciable
case must exist. Merely bringing suit for cancellation of a
wrongfully registered generic term is insufficient to create a
justiciable case or controversy. See Windsurfing Int'l, Inc. v.
AMF, Inc., 828 F.2d 755, 758-59 (Fed.Cir. 1987); Performance
Industries Inc. v. Morton Intern, Inc., 22 U.S.P.Q.2d 1632,
1634, 1992 WL 50083 (E.D.Penn. 1992).
Under the Lanham Act, district courts have the power
to cancel registrations, but only in an "action
involving a registered mark." 15 U.S.C. § 1119.
"Involving" cannot mean the mere presence of a
registered trademark, but must be read as involving
the right to use the mark and thus the right to
maintain the registration. . . . There must,
therefore, be something beyond the mere competitor
status of the parties to serve as a basis for the
court's jurisdiction. Such a basis may, for example,
be a suit for trademark infringement or a "case of
actual controversy" referred to in the Declaratory
Windsurfing Int'l, 828 F.2d at 758-59. See also Performance
Industries, 22 U.S.P.Q.2d at 1634 ("[A] plaintiff with no
registered mark cannot obtain jurisdiction in federal court by
relying on Section 37 of the Lanham Act [15 U.S.C. § 1119] alone.
. . . There must be some other independent ground of
jurisdiction, such as a claim of infringement or a `case of
actual controversy.'") (citing Windsurfing Int'l, 828 F.2d at
758-59). The Court in Windsurfing International noted that the
test for determining the existence of an actual case or
controversy under the Declaratory Judgment Act required the
plaintiff to have a real and reasonable apprehension of
litigation and to have engaged in a course of conduct which
created an adversarial conflict with the defendant. 828 F.2d at
757. See also Ditri v. Coldwell Banker Residential Affiliates,
954 F.2d 869
, 873 (3d. Cir. 1992); Universal Sewing Mach. Co. v.
Standard Sewing Equip. Corp., 185 F. Supp. 257, 259 (S.D.N Y
1960) (stating "even if we construe that claim as one to declare
defendant's federal registration invalid . . . the same result
would obtain because of the absence of a justiciable controversy,
i.e., defendant has never threatened plaintiff, directly or
indirectly, or in any manner, with litigation.").
As the above courts have noted, the Lanham Act power to cancel
registrations, 15 U.S.C. § 1119, "is not an independent source of
jurisdiction, however; it merely defines certain available
remedies." Clamp-All Corp. v. Cast Iron Soil Pipe Institute, 3
U.S.P.Q.2d 1018, 1024 n. 12, 1987 WL 9760 (D.Mass. 1987). See
also Maljack Productions Inc. v. Motion Picture Ass'n of
America, 22 U.S.P.Q.2d 1867, 1869, 1992 WL 78735 (D.D.C. 1992)
(holding that 15 U.S.C. § 1119 is not an independent source of
jurisdiction and there must be some other violation of the Lanham
Act providing for redress in the courts), rev'd on other
grounds, 52 F.3d 373 (D.C.Cir. 1995); Universal Sewing Mach.
Co., 185 F. Supp. at 260 (holding that the court is without
jurisdiction to hear a 15 U.S.C. § 1119 claim when there is no
other justiciable controversy between the parties involving the
defendant's mark and stating "[i]n our view § 37
[15 U.S.C. § 1119] assumes a properly instituted and otherwise
jurisdictionally supportable action involving a registered mark.
That not being the case here, we are without jurisdiction of the
subject matter. . . ."). T & B does not contend that it was under
the reasonable apprehension of suit by Panduit asserting its
registration against T & B and is not pursuing a declaratory
judgment action. Consequently, absent an unfair competition claim
in Count II, this Court does not have jurisdiction to grant T & B
relief under 15 U.S.C. § 1119.
H. The Unfair Competition Claim Must Still Exist In Order For
This Court To Exercise Jurisdiction.
T & B asserts the allegations contained in Count II are
sufficient to present a case or controversy. First, T & B argues
need not allege impending litigation because its claim for
cancellation of the registration was brought in the context of a
valid trademark infringement claim. The parties agree that an
unfair competition claim existed at the time the suit was filed.
Panduit argues that a case or controversy, in the form of an
unfair competition claim in the present case, must exist between
the parties throughout the pendency of a case. T & B argues that
determinations of subject matter jurisdiction and the existence
of a case or controversy should be made at the complaint stage. T
& B cites International Harvester Co. v. Deere & Co.,
623 F.2d 1207
, 1210 (7th Cir. 1980), for support. The Court in
International Harvester stated that "[i]n deciding whether the
plaintiff has carried [the burden of supporting the
jurisdictional allegations of the complaint], the court must look
to the state of affairs as of the filing of the complaint; a
justiciable controversy must have existed at that time." Id.
However, while International Harvester requires a justiciable
controversy at the complaint stage, the Seventh Circuit's
statements in International Harvester does not support the
proposition for which T & B cites it, that the Court is limited
to looking at only the complaint stage when making the
determination of whether there is a case or controversy. To the
contrary, a case or controversy must exist at the complaint stage
but must also exist at every stage of the litigation. "The rule
in federal cases is that an actual controversy must be extant at
all stages of review, not merely at the time the complaint is
filed." Preiser v. Newkirk, 422 U.S. 395, 401, 95 S.Ct. 2330,
2334, 45 L.Ed.2d 272 (1975) (quoting Steffel v. Thompson,
415 U.S. 452, 459 n. 10, 94 S.Ct. 1209, 1216 n. 10, 39 L.Ed.2d 505
(1974)). It is proper to consider post-filing events in the
evaluation of continuing jurisdiction. Spectronics Corp. v. H.B.
Fuller Co., 940 F.2d 631, 636 (Fed.Cir. 1991). While T & B's
allegations as to its Lanham Act unfair competition claim created
a justiciable case or controversy at the complaint stage, the
Court concludes that the unfair competition claim must continue
to be viable in order for this Court to grant the relief of
canceling the mark under 15 U.S.C. § 1119.
I. The Genericness Issue
The question remains as to whether Count II still raises a
viable claim for unfair competition when the only remaining
substantive issue is genericness and one of the remedies sought
is cancellation of the BARB-TY trademark. T & B argues Count II
of T & B's complaint was, and still is, a claim for unfair
competition under Section 1125(a) of the Lanham Act based on
Panduit's misleading use of a generic mark. This claim appears
extremely weak. First, in that T & B argues that the term "barb
tie" is generic, it can have no rights in that term. "Because a
generic term denotes the thing itself, it cannot be appropriated
by one party from the public domain. . . ." Blinded Veterans
Ass'n v. Blinded American Veterans Found., 872 F.2d 1035, 1039
(D.C.Cir. 1989). If the term was generic as T & B argued, T & B
could not have acquired rights to the term nor received trademark
protection for its use of the term. "[G]eneric terms receive no
trademark protection." Mil-Mar Shoe Co., Inc. v. Shonac Corp.,
75 F.3d 1153, 1156 (7th Cir. 1996). See also Miller Brewing Co.
v. G. Heileman Brewing Co., 561 F.2d 75, 79 (7th Cir. 1977) ("A
generic or common descriptive term is one which is commonly used
as the name or description of a kind of goods. It cannot become a
trademark under any circumstances."). Since, T & B has no rights
to the term, it is difficult to comprehend what claim for unfair
competition it now asserts.
However, given the Seventh Circuit's statement that summary
judgment on Count II is reversed, this Court is hard-pressed to
now throw T & B out of Court on Count II. The Seventh Circuit
concluded that T & B did raise a genuine issue of material fact
regarding the genericness issue
and reversed and remanded Count II to this Court. The Seventh
Circuit clearly identified certain issues waived on appeal. See
T & B III, 138 F.3d 277, 283, 300 n. 9 (7th Cir. 1998)
(identifying the fraudulent procurement of trademark claim and
Counts III-V as waived). The claim for unfair competition based
on genericness was not one of them. Panduit has not provided a
sufficient reason why this Court should not adhere to the Seventh
Circuit's ruling reversing summary judgment on Count II and
remanding it. "When matters are decided by an appellate court,
its rulings, unless reversed by it or by a superior court, bind
the lower court." Insurance Group Comm. v. Denver & R.G.W.R.R.,
329 U.S. 607, 612, 67 S.Ct. 583, 585, 91 L.Ed. 547 (1947).
"Whatever was before the court, and is disposed of, is considered
as finally settled. The inferior court is bound by the decree as
the law of the case, and must carry it into execution, according
to the mandate." Sibbald v. United States, 37 U.S. (12 Pet.)
488, 492, 9 L.Ed. 1167 (1838). Consequently, based upon the
Seventh Circuit's ruling in T & B III, this Court is bound to
proceed with Count II.
The determination that Count II should be dismissed is better
left to the Seventh Circuit. In the event the Seventh Circuit did
not intend to preserve an unfair competition claim under Count
II, the parties may later appeal this issue. In the meantime, T &
B will be permitted to proceed on the theory that Panduit is
unfairly competing because the term barb tie is a generic term
which is likely to cause confusion as to the origin or
sponsorship of Panduit's cable ties.
For the foregoing reasons, Panduit's motion to dismiss Count
II of Plaintiff's complaint for lack of subject matter
jurisdiction is hereby DENIED.