R&B, Inc. v. Needa Parts Manufacturing, Inc. ( 2002 )

Opinions of the United
2002 Decisions States Court of Appeals
for the Third Circuit
8-20-2002
R&B Inc v. Needa Part Mfg Inc
Precedential or Non-Precedential: Non-Precedential
Docket No. 01-3411
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 01-3411
R&B, INC.,
Appellant
v.
NEEDA PARTS MANUFACTURING, INC.;
JAMES KOLESZAR
ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN
DISTRICT OF PENNSYLVANIA
(Dist. Court No. 01-cv-01234)
District Court Judge: Honorable Mary A. McLaughlin
Argued: July 15, 2002
Before: SCIRICA, ALITO, and FUENTES, Circuit Judges
(Opinion Filed: August 20, 2002)
ANTHONY S. VOLPE (argued)
JOHN J. O’MALLEY
Volpe & Koenig, P.C.
Suite 400, One Penn Center
1617 John F. Kennedy Blvd.
Philadelphia, PA 19103
Counsel for Appellant
ANTHONY R. SHERR (argued)
3031 Walton Road, Building A
Suite 330, P.O. Box 1547
Blue Bell, PA 19422-0440
Counsel for Appellees
MARC L. FLEISCHAKER
ELIZABETH H. COHEN
Arent Fox Kintner Plotkin & Kahn, PLLC
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036-5339
Counsel for Amicus Curiae Motor &
Equipment Manufacturers Association
OPINION OF THE COURT
PER CURIAM:
This is an appeal from the District Court’s denial of a preliminary injunction.
Because we write for the parties only, we do not set out the background of this case.1
R&B challenges the denial of the preliminary injunction on primarily two
grounds. First, R&B argues that its part numbers satisfy the requirements for copyright
1
“We review the District Court’s order denying a preliminary injunction under an
abuse of discretion standard, its factual findings under a clear error standard, and its
findings of law under a de novo standard.” Rose Art Industries, Inc. v. Swanson, 235 F.3d
165, 170-71 (3d Cir. 1999). Because the decision to enter a preliminary injunction is
committed to the sound discretion of the trial court, we will reverse such a decision “only
if the court abused its discretion, committed an obvious error in applying the law, or made a
serious mistake in considering the proof.” Loretangeli v. Critelli, 853 F.2d 186, 193 (3d
Cir. 1988).
2
protection and that its copyrighted catalogue was infringed by Needa such that it showed a
likelihood of success on the merits of its copyright infringement claim. Second, R&B
argues that there is a likelihood of confusion between the Need! and Needa? marks such
that R&B showed a likelihood of success on the merits of its trademark infringement
claim.
I.
When seeking this preliminary injunction, it was R&B’s burden to show a
likelihood of success on the merits. In a case alleging copyright infringement, this requires
a plaintiff to show ownership of the copyright and copying by the defendant. See Whelan
Associates, Inc. v. Jaslow Dental Laboratory, Inc., 797 F.2d 1222, 1231 (3d Cir. 1986).
The first issue raised in this appeal is whether R&B’s part numbers meet the requirements
for copyright protection.
We recently held in a case very similar to the one at bar that the “modicum of
creativity” requirement for copyright protection is not met where a manufacturer simply
assigns numbers to parts in a mechanical systematic fashion. See Southco, Inc. v.
Kanebridge Corp., 258 F.3d 148 (3d Cir. 2001). In Southco, we reversed the grant of a
preliminary injunction on a copyright infringement claim involving part numbers for
various types of captive screw fasteners. Id. at 149. There, Southco had developed a
numbering system to identify its fasteners, whereby each fastener was assigned a unique
nine-digit number, with each digit describing a specific physical parameter of the fastener.
Id. The defendant sold competing fasteners using Southco’s part numbers. We
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distinguished between the actual part numbers and the numbering system itself and decided
the case based only on the issue of whether the part numbers themselves were
copyrightable. We held that Southco’s part numbers were completely devoid of originality
because they merely resulted from “the mechanical application of the numbering system.”
Id. at 152. We noted that Southco had “devoted time, effort, and thought to the creation of
the numbering system” but that the very existence of the system “ma[de] it impossible for
the numbers themselves to be original.” Id. at 153. Under the system, there was no room
for creativity when assigning a number to a new panel fastener because there was only one
possible part number for any new panel fastener that Southco created. Id.Applying our decision in Southco, the District Court in this case held that
R&B’s part numbers do not satisfy the originality requirement of copyright law. It is
important to note that the District Court’s opinion here distinguished between the part
numbers themselves and the part numbering system. Dist Ct. Op. at 20. Even though R&B
in its oral and written arguments before that court used the two terms interchangeably, the
District Court determined that there was no evidence that Needa used the part numbering
system to assign a new number to a new part that it had created. Id. The only claim was that
Needa copied R&B’s part numbers. Id. Thus, the District Court ruled only on the claim
with respect to the part numbers themselves. Id. Although the District Court found that
R&B’s numbering system is not as fully developed and predictable as Southco’s system
was, it found that R&B’s system was similar enough that the part numbers were
uncopyrightable under the Southco decision. Id. at 23.
4
Because we agree with the District Court that R&B’s part numbers are not
materially different from the part numbers at issue in Southco, we affirm the District
Court’s denial of a preliminary injunction on the copyright infringement claim with respect
to the alleged copying of R&B’s part numbers.
II.
Plaintiff’s second copyright claim focuses on R&B’s catalogues. R&B
claims that Needa infringed the copyright in its 1994 catalogue. Needa admits to using the
plaintiff’s catalogue for research but denies copying it. The issue before us is whether
R&B showed a likelihood of success on the merits of the copyright infringement claim
with regard to its 1994 catalogue such that a preliminary injunction should have been
issued.
Responding to Needa’s first argument -- that R&B did not have a valid
copyright in the catalog -- the District Court assumed for purposes of the motion that the
Copyright Office had received the plaintiff’s application for a copyright in the 1994
catalogue -- which was submitted to the Copyright Office after the complaint was filed --
and that the certificate of registration was forthcoming. Dist Ct. Op. at 29. On the second
issue of infringement of the catalogue, the District Court properly identified the two-part
test for “substantial similarity”, namely: (1) the extrinsic test -- whether there is sufficient
similarity between the two works to conclude that the defendants used the copyrighted
work in making their own; and (2) the intrinsic test -- whether there was an illicit or
unlawful appropriation of the copyrighted work. In making the first determination, expert
5
testimony and a visual comparison between the copyrighted work and the allegedly
infringing work are frequently utilized. See 511 F.2d at 907. The second determination is
made from the perspective of a lay person. See id. The District Court agreed with Needa
that Needa’s catalogue was not substantially similar to R&B’s catalogue, citing the
following: (1) the plaintiff’s catalogue consists of 685 pages whereas the defendant’s
catalogue consists of only 85; (2) the catalogues differ in artwork, layout, text, and
photography; and (3) the part numbers are similar to the plaintiff’s part numbers, but that
the part numbers were a de minimis portion of the catalogues as a whole. Id. at 30-31.
Therefore, the District Court held that the plaintiff had failed to establish either of its
copyright claims.
The main issue before us is that of “substantial similarity.” The plaintiff
disagrees with the District Court’s conclusion that the copying of part numbers from
R&B’s catalogue was de minimis. The District Court found the part numbers copied were a
de minimis part of the catalogue as a whole because Needa’s part numbers constituted less
than 6% of R&B’s part numbers under the MOTORMITE brand (Needa took 1,000 part
numbers out of R&B’s 18,000 MOTORMITE part numbers). The plaintiff explains that
Needa took only the best moving parts from the R&B MOTORMITE product line and that
under the qualitative value test adopted by the Supreme Court in Harper & Row Publishers,
Inc. v. Nation Enterprises, 471 U.S. 539, 565 n. 8 (1985), Needa infringed its copyright by
taking virtually all of the valuable protected matter. R&B cites our decision in Educational
Testing Services v. Katzman, 793 F.2d 533, 542 (3d Cir. 1986), where we found the
6
substantial similarity test satisfied where only a handful of questions out of thousands had
been copied. R&B argues that the qualitative test is the appropriate test to apply, that the
qualitative value of R&B’s part numbers is high, and that Needa acknowledges as much
when it admitted copying the work in order to “make it easy for the customers to change
over from MOTORMITE to Needa.”
Based on the analysis set forth below, we find that the District Court was
correct that the plaintiffs did not show a likelihood of success on the merits of their
catalogue claim, but for different reasons than those identified by the District Court. The
District Court was incorrect to use the de minimis quantitative standard, rather than the
qualitative standard set out by the Supreme Court in Harper & Row, but ultimately this does
not entitle the plaintiff to a preliminary injunction. The plaintiff has not shown that the
substantial similarity between the parts copied and the catalogue were of copyrightable
information and, therefore, their infringement claim could not have been successful on the
merits.
A leading treatise states that catalogues constitute “compilations” as that
term is defined in the Copyright Act. Melville B. Nimmer & David Nimmer, Nimmer on
Copyright § 2.04[B], at 2-46 (2002) (“Nimmer”). The Copyright Act defines
“compilations” as “a work formed by the collection and assembling of pre-existing
materials or of data that are selected, coordinated, or arranged in such a way that the
resulting work as a whole constitutes an original work of authorship. . .” Id. at n.11 (quoting
17 U.S.C. § 101). The treatise continues:
7
A work will constitute a compilation “regardless of whether the individual
items in the material have been or ever could have been subject to copyright.”
. . . [E]ven if a compilation consists merely of a selection or arrangement of
“facts” that individually would not be copyrightable, the originality involved
in the selection and/or arrangement of such facts is sufficient to constitute
the resulting compilation a protectable literary work. Note that the requisite
originality may inhere in selection and arrangement alone, even if the other
ingredient is lacking. In such circumstances, however, protection is
concomitantly narrow; thus, a work that is copyrightable solely by virtue of
its selection is not infringed by another highly similar work, if the latter does
not closely follow the former in terms of selection of the data.
Id. at 2-46. Indeed, section 103 of the Copyright Act states that “the copyright in a
compilation . . . extends only to the material contributed by the author of such work . . . .
The copyright in such work is independent of, and does not affect or enlarge the scope,
duration, ownership, or subsistence of, any copyright protection in the preexisting
material.” 17 U.S.C. § 103.
The scope of protection for a compilation extends only to “those elements
contained therein that are original with the copyright claimant.” Nimmer, § 3.04[A].
Therefore, according to Nimmer, a copyright over a compilation “does not per se render
protectable the pre-existing or underlying work upon which the later work [compilation] is
based.” Id. Indeed, we have agreed that a compilation may be copyrightable when the facts
contained therein are not necessarily themselves copyrightable. See ETS, 793 F.2d at 538(section 103(a) of the Copyright Act expressly extends copyright protection to
compilations, such that a copyright for a telephone book as an original compilation has
been upheld even though the addresses contained therein could not be protected).
To say that uncopyrightable part numbers do not transform into copyrightable
8
entities merely because they are listed in a copyrightable work is not necessarily to say that
the copying of these numbers from a catalogue does not constitute infringement of the
catalogue itself. The question whether a catalogue or compilation can be infringed when
the taking is of uncopyrightable information, here the part numbers, was not addressed in
the parties’ briefs or in oral argument.
Nimmer states on this issue that the substantial similarity test must be
analyzed with reference to copied portions that are themselves worthy of protection under
copyright law:
Even when extended similarity exists between plaintiff’s and defendant’s
works when taken as a whole, the analysis is not finished. To the extent that
such similarity inheres in ideas, which are by definition unprotected, or in
expression that is not proprietary to plaintiff, then an essential ingredient is
lacking from plaintiff’s prima facie case . . . . [A]n essential element of an
infringement case is that “plaintiff must show that defendant’s works are
substantially similar to elements of plaintiff’s work that are copyrightable or
protected by the copyright.”
Nimmer, § 13.03[B][2], at 13-59. This is precisely why this case differs from our decision
in ETS. In ETS, we held that if the individual ETS multiple choice questions were
copyrightable, then ETS’ registrations of the tests as compilations covered the questions.
793 F.2d at 539. But, in ETS we held that the individual questions were “original works of
authorship” within the meaning of the copyright laws. Id. This case is different from ETS
because the part numbers are not copyrightable under our decision in Southco. As such,
ETS is of doubtful help to the plaintiff. At the present stage of this litigation, the issue
need not be definitively resolved. It is sufficient that we are convinced that the plaintiff has
9
not shown a likelihood of success. Therefore, the motion for preliminary injunction for
the alleged copyright infringement of R&B’s catalogue was appropriately denied.
III.
It was R&B’s burden, when seeking this preliminary injunction, to show a
likelihood of success on the merits, which in a case alleging trademark infringement,
requires a showing that (1) the marks are valid and legally protectable; (2) the marks are
owned by the plaintiff; and (3) the defendant’s use of the mark is likely to cause confusion
concerning the origin of the goods and services. See Optician Ass’n of America v.
Independent Opticians of America, 920 F.2d 187, 192 (3d Cir. 1990). The third issue on
appeal relates to whether Needa has infringed R&B’s rights in four R&B trademarks.
The District Court concluded that R&B failed to show a likelihood of
success on the merits of its trademark claims. Beginning with the registered marks, the
District Court found that Needa had never used the MOTORMITE mark and therefore
R&B’s claim could not succeed. On the “Need!” mark, the District Court disagreed with
the defendant’s abandonment argument, but nevertheless held that there was no likelihood
of confusion between the Needa? and NEED! marks. Moving to the unregistered marks, the
District Court found that the “MM” mark had not developed a secondary meaning that
would give the unregistered mark validity and that R&B had not shown any evidence of
likelihood of confusion. On the unregistered part numbers, the District Court held that
R&B did not prove that the part numbers are validly trademarked works because there was
insufficient evidence of secondary meaning. On the repackaging claim, the District Court
10
found that R&B did not show that Needa’s repackaging involved any of R&B’s trademarks
and as such did not carry its burden with respect to this claim.
In Interpace Corp. v. Lapp, Inc., 721 F.2d 460 (3d Cir. 1983), we set out 10
factors to be considered in determining likelihood of confusion:
(1) the degree of similarity between the marks;
(2) the strength of the owner’s mark;
(3) the price of the goods and other factors indicative of the care and
attention expected of consumers when making a purchase;
(4) the length of time the defendant has used the mark without evidence of
actual confusion arising;
(5) the intent of the defendant in adopting the mark;
(6) the evidence of actual confusion;
(7) whether the goods . . . are marketed through the same channels of trade
and advertised through the same media;
(8) the extent to which the targets of the parties’ sales efforts are the same;
(9) the relationship of the goods in the minds of consumers because of the
similarity of function; and
(10) other facts suggesting that the consuming public might expect the prior
owner to manufacture a product in the defendant’s market, or that he is likely
to expand into that market.
Lapp, 721 F.2d at 462-63. Although these factors were initially established in the context
of non-competing goods, we held in A & H Sportswear, Inc. v. Victoria’s Secret Stores,
Inc., 237 F.3d 198, 213 (3d Cir. 2000) that these factors should also be applied to directly
competing goods as well, with modifications to factors 7, 9, and 10.2 But we stated that
2
We suggested the following revision: factor 7 “whether the goods, competing or
not competing, are marketed through the same channels of trade and advertised through the
same media”; factor 9 “the relationship of the goods in the minds of consumers, whether
because of the near-identity of the products, the similarity of function, or other factors”;
factor 10 “ other facts suggesting that the consuming public might expect the prior owner
to manufacture both products, or expect the prior owner to manufacture a product in the
11
when the goods are directly competing and the marks are clearly very similar, “a district
judge should feel free to consider only the similarity of the marks themselves.” Id. at 214
(citing Opticians Ass’n of Am. v. Independent Opticians of Am., 920 F.2d 187, 195 (3d Cir.
1990) (very little analysis was necessary in a case where a splinter group of a larger
organization continued to use the organization’s collective mark)). Moreover, we stated
that the lower court “often need not apply each and every factor; when goods are directly
competing, both precedent and common sense counsel that the similarity of the marks
takes on great prominence. At all events, the factors are meant to be tools, not hurdles.”
Id. Finally, the Lapp test is qualitative not quantitative: “[n]ot all factors will be relevant in
all cases” and “the different factors may properly be accorded different weights depending
on the particular factual setting.” Id. at 215.
The District Court found that R&B had offered support as to only three of the
Lapp factors: (1) degree of similarity between the marks, (2) similar channels of trade for
the goods, and (3) the targets of the parties sales efforts. R&B contends that it offered
evidence on other Lapp factors, namely, (3) factors indicative of the care and attention
expected of consumers when making a purchase, (5) the intent of the defendant in adopting
the mark, and (10) other facts suggesting that the consuming public might expect the prior
owner to manufacture a product in the defendant’s market. R&B’s arguments at base are an
objection to the weight accorded by the District Court to various evidence under the Lapp
defendant’s market, or expect that the prior owner is likely to expand into the defendant’s
market.” 237 F.3d at 215.
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factors.
The District Court did not err in its evaluation of the Lapp factors here. Our
scope of review is clear: we cannot reverse the District Court’s denial of a motion for
preliminary injunction “unless the trial court has committed an obvious error in applying
the law or serious mistake in considering proof.” Pappan Enterprises, Inc. v. Hardee’s Food
Systems, Inc., 143 F.3d 800, 802 (3d Cir. 1998). The District Court did find that the marks
are virtually identical, that the goods moved in similar channels of trade, and that the targets
of the parties’ sales efforts were the same. However, the District Court also concluded
that: (1) the strength of the NEED! mark was limited because the paintbrush sales under the
NEED! mark amounted to only $10,000 per year; (2) the prices of the goods at issue are
relatively low; (3) the functions of the goods are dissimilar: the NEED! certificate of
registration lists mostly household items such as picture hangers, nails, and electrical
plugs, and the current use of the mark is limited to selling paintbrushes, whereas the Needa?
mark focuses on automotive parts; and (4) there is no evidence that the NEED! has ever
been used to sell automotive parts or that it will ever be so used. Although it is true that the
similarity of the marks -- especially in the context where the goods are in direct
competition -- is an important factor, it is not the only or even dispositive factor. The
District Court properly weighed the evidence under the Lapp factors and concluded that
there was no likelihood of success on the merits of R&B’s trademark claim with respect to
the NEED! mark. This was not in obvious error under Lapp and its progeny.
R&B contends that the District Court erred when it concluded that the “MM”
13
logo was not a valid trademark, because it was a descriptive mark and therefore R&B had to
establish secondary meaning, but did not. R&B claims that the defendants sold products
under the Needa name that were stamped or imprinted with the plaintiff’s unregistered
“MM” mark, in violation of the plaintiff’s trademark rights. However, the District Court
correctly concluded that there was no evidence that the defendant’s products were stamped
with the “MM” mark. The District Court correctly noted that the defendants have admitted
that they resell R&B products, but they have not admitted that those products are stamped
with the MM mark. In its reply brief, R&B states that Needa has admitted this, but
examination of the record suggests that this statement is in error. R&B cites Needa’s
counsel’s statement that “[Needa] sold parts, at least they’ve packaged parts with the M.
They actually didn’t prove it. We admitted it because it’s true.” The question is not
whether the packaging had an M on it but whether the packaging had a “MM” on it which is
short for MOTORMITE. Thus, this “admission” does not get R&B anywhere.
The District Court went on to hold that even if there were imprints on the
packaging, R&B failed to show that the unregistered “MM” mark is valid and protectable.
Because R&B did not prove that the mark was inherently distinctive, it was required to
prove that it was descriptive with a secondary meaning. R&B argues that because it
registered the MOTORMITE mark and the MM mark is an abbreviation of MOTORMITE,
R&B did not have to prove that MM is descriptive or that there is a secondary meaning.
Even so, R&B did present some evidence with regard to secondary meaning, but this
evidence was very thin. It consisted solely of one regional sales manager’s testimony that
14
some of R&B’s customers identify the “MM” designation with MOTORMITE. The District
Court properly found that this statement alone was insufficient to support a finding of
secondary meaning and therefore validity had not been shown by R&B.
Next, the District Court concluded that the evidence for secondary meaning
of the part numbers was insufficient to prove that they were descriptive marks and thus
R&B did not meet its burden of proving validity of the mark. R&B argued that the part
numbers served as grade or style designations, and that the defendants’ use of the part
numbers constitute trademark infringement. Needa admits that it has used the part
numbers, but argues that R&B has not shown that the part numbers were valid trademarked
works. As the District Court stated, because grade or style designations are descriptive
marks, R&B was required to show secondary meaning to qualify for trademark protection.
See J.M. Huber Corp. v. Lowery Wellheads, Inc., 778 F.2d 1467, 1469 (10th Cir. 1985);
McCarthy on Trademarks and Unfair Competition § 11:37 (4th ed. 1998). R&B’s only
evidence of secondary meaning consisted of testimony of a former regional sales manager
who stated that some consumers asked him for products by part number, but did not testify
as to whether the consumers associated the part number with the source -- R&B -- or with
the product itself. As such, the District Court properly concluded that R&B failed to show
that its part numbers have become “uniquely associated with its goods or business in the
minds of consumers.”
Finally, the plaintiff frames its repackaging argument as a trademark
infringement claim. R&B argues that Needa purchases new R&B products, repackages
15
them under the Needa? name and then resells them as Needa parts. The District Court
concluded that R&B had not shown that Needa’s repackaging involved any of R&B’s
trademarks. According to the District Court, R&B does not contest that the mark is not on
the packaging, but claims that the MM mark is embossed directly onto the product
themselves that are resold by Needa. The analysis of this claim is similar to that of the MM
trademark infringement claim. Because R&B has not shown that the MM mark is valid and
has not carried its burden of proving that the MM mark is actually on the repackaging, the
District Court appropriately denied preliminary injunctive relief.
We have considered all of the plaintiff’s arguments and see no basis for
reversal. The judgment of the District Court denying the motion for preliminary injunction
is therefore AFFIRMED.
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