Articles Posted in Attorney’s Fees

The United States Court of Appeals for the Seventh Circuit issued an opinion reversing the denial of attorney’s fees, remanding for an entry BlogPhoto-300x96of a reasonable fee reward under 15 U.S.C. § 1117(a), and affirming all other aspects of the judgment of the district court in the case of 4SEMO.com Incorporated (“4SEMO”) versus Southern Illinois Storm Shelters, Inc. (“SISS”), et al. (collectively “Defendants”). While the Defendants originally sued 4SEMO in this case, the case was reconfigured as above for the July 2017 bench trial and decision, which was on appeal.

According to the opinion, 4SEMO began selling storm shelters manufactured by SISS in 2005. 4SEMO is a Missouri-based home-remodeling firm while Robert Ingoldsby and his brother Scott (the “Ingoldsbys”) run the Illinois based company, SISS. 4SEMO began marketing the storm shelters under a wordmark “Life Saver Storm Shelters” and a matching logo (the “Marks”) that it affixed to the shelters it sold in Missouri and Arkansas pursuant to an exclusive dealership agreement with SISS. The Ingoldsbys were granted a limited license to use the 4SEMO Marks for shelters marketed in southern Illinois. However, the Ingoldsbys violated the limited license by using the 4SEMO Marks on shelters sold throughout the country.

SISS sued 4SEMO for trademark infringement over the “Life Saver” wordmark, claiming they had used it prior to 4SEMO and that they had ownership of the wordmark. 4SEMO counterclaimed for trademark infringement and false endorsement, along with various state-law claims. After SISS’s claim did not survive summary judgement, 4SEMO’s counterclaims were tried to the bench and the district court found in favor of 4SEMO on all counts and awarded $17,371,003 in damages for profit disgorgement and $26,940 for breach of contract. However, 4SEMO’s motion for vexatious-litigation sanctions and attorney’s fees under 28 U.S.C. § 1927 and the Lanham Act, respectively, was denied.

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Attorneys for Plaintiff, Marco Verch (“Verch”) of Germany, filed suit in the Northern District of Indiana allegingVerch-BlogPhoto-300x89 that Defendant, Toolfarm.com, Inc. (“Toolfarm”) of South Bend, Indiana, infringed his rights in United States Copyright Registration No. VA 2-106-766.  Verch is seeking actual damages, profits, income, receipts, or other benefits received by Toolfarm, costs, expenses, attorneys’ fees, and pre-judgment interest.

According to the complaint, Verch is a professional photographer claiming Toolfarm has reproduced and publicly displayed his copyrighted photograph of traditional Russian wooden dolls (the “Photograph”). Verch claims Toolfarm ran the Photograph on its website without a license, permission, or consent from Verch. As such, Verch is seeking damages for copyright infringement pursuant to 17 U.S.C. §§ 106, 501, and 504.

This case was filed by Verch’s attorney, Mr. Leibowitz, just six days after he was ordered to personally pay $28,567.50 to a defendant in another case.  In that case, Mr. Leibowitz was found to have engaged in discovery misconduct by failing to identify witnesses as required by Rule 26.  The court stated that Mr. Leibowitz was:

more focused on the business of litigation than on selling a product or service or licensing their copyrights to third parties to sell a product or service. A copyright troll plays a numbers game in which it targets hundreds or thousands of defendants seeking quick settlements priced just low enough that it is less expensive for the defendant to pay the troll rather than defend the claim.

The Court then ordered his client to post a $50,000 bond to continue with the case.  When his client failed to do so, the court dismissed the case.

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LHO Chicago River, LLC (“LHO”) filed a trademark infringement suit against Joseph J. Perillo, Rosemoor Suites, LLC, and Portfolio HotelsBlogPhoto1-300x138 & Resorts, LLC (collectively the “Defendants”) in the Northern District of Illinois, Eastern BlogPhoto2-300x172District. The case was voluntarily dismissed by LHO and after being denied their Lanham Act attorney fees, the Defendants appealed to the United States Court of Appeals for the Seventh Circuit. The Court of Appeals held the Supreme Court’s decision in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (2014), which was a patent case, should guide district courts when facing attorney fee applications under the Lanham Act.

LHO’s upscale hotel in downtown Chicago underwent a branding change to become “Hotel Chicago” in February 2014. Just over two years later, the Defendants opened their own “Hotel Chicago” about three miles from LHO’s hotel. LHO then sued “for trademark infringement and unfair competition under the Lanham Act, 15 U.S.C. § 1125(a), and for trademark infringement and deceptive trade practices under Illinois state law.” After litigating for over one year, LHO moved to voluntarily dismiss its claims and the judgment was entered on February 21, 2018.

After judgment was entered, pursuant to 15 U.S.C. § 1117(a), Defendants made a post-judgment request for attorney fees. In their brief, the Defendants cited two different standards for determining if attorney fees should be granted: (1) the Seventh Circuit’s prevailing standard, “that a case is exceptional under § 1117(a) if the decision to bring the claim constitutes an ‘abuse of process’; and (2) the more relaxed totality-of-the-circumstances approach under the Patent Act” from the Octane case. The district judge acknowledged Octane in his findings but did not adopt that approach and denied Defendants request for attorney fees.

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Indianapolis, Indiana – Judge Richard L. Young of the Southern District of Indiana issued a decision on cross-motions for attorneys’ fees and costs in the case of Richard N. Bell (“Bell”) versus Michael Maloney (“Maloney”). The Court first entered judgment in favor of Bell on June 11, 2019 granting him $200 in statutory damages, and costs. Bell sought $33,536,25 in attorney’s fees and $4,719.80 in costs. Maloney made a cross-motion “for leave to file a Bill of Costs totaling $2,183.77 and to enforce the Rule 68 offer. The Court found that the Rule 68 offer should be enforced and Maloney is entitled to the costs he incurred after the offer was rejected.

Bell sent a demand letter to Maloney for $5,000.00 prior to filing this suit. After Bell filed suit, Maloney filed his Answer and then sent Bell an Offer of Judgment pursuant to FRCP 68. This offer was for $2,500.00 for Bell to take judgment against Maloney and would include all attorney’s fees and costs. Bell denied the Rule 68 offer and after the denial of cross-motions for summary judgment, the case went to a bench trial. After the one-day bench trial, the Court found Bell was the prevailing party and was entitled to $200 in statutory damages. Bell filed his motion for fees and costs eleven months after the bench trial occurred.

FRCP 68 provides in part, “[i]f the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.” The court in Payne v. Milwaukee Cty., 288 F.3d 1021, 1024 (7th Cir. 2002), found that “Rule 68 is designed to provide a disincentive for plaintiffs from continuing to litigate a case after being presented with a reasonable offer.” In determining if a final judgment obtained is less favorable than a Rule 68 offer, “the attorney’s fees and costs that accrued before the offer must be added to the judgment.” Lawrence v. City of Philadelphia, 700 F.Supp. 832, 836 (E.D. PA. 1988).

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FBlogPhoto-300x199ort Wayne, Indiana – Attorneys for Plaintiff, Design Basics, LLC and W.L. Martin Home Designs, LLC, filed suit in the Northern District of Indiana alleging that Defendants, Heller & Sons, Inc. d/b/a Heller Homes and Heller Development Corporation, infringed numerous copyright registrations. The Court granted the Defendants’ Motion for Summary Judgment on June 24, 2019. Design Basics filed its Notice of Appeal on July 19, 2019. Although Design Basics had filed its Notice of Appeal, Defendants submitted their Petition for Attorney Fees and Costs and were awarded $310,759.34.

According to the Opinion and Order dated September 3, 2019, the “Court invited Defendants to file a request for attorneys’ fees pursuant to 17 U.S.C. § 505, and further invited Design Basics to file a response in opposition.” The Court cites an exception from general rules of jurisdiction following a filing of a notice of appeal from Terket v. Lund, 623 F.2d 29, 33-34, in which a district court may enter an award for attorneys’ fees while the merits of the case are on appeal. In this case, Defendants submitted their Petition for Attorney Fees and Costs and Design Basics submitted its response in opposition.

District courts consider at least four different factors listed in Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n. 19 (1994) when determining whether to award attorneys’ fees, including: “(1) frivolity of the claim; (2) motivation in filing the claim; (3) objective reasonableness of the claim; and (4) considerations of compensation and deterrence.” Here, the Court found that while the Defendants argued the Seventh Circuit’s decision in Design Basics, LLC v. Lexington Homes, Inc., 858 F.3d 1093 (7th Cir. 2017) rendered all copyright cases filed by Design Basics frivolous, Design Basics may still recover on copyright infringement claims although it may be difficult. When analyzing Design Basics’ motivation for filing its infringement claims, the Court noted that Design Basics “realized approximately $5 million in net litigation profits in 2016 and 2017 alone, while the gross revenues for Design Basics during the same period of time were approximately $2.5 million.” Based off this finding, among others, the Court believes that this case, and most infringement cases filed by Design Basics, are filed due to a financial motive.

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Indianapolis, Indiana – Judge Richard L. Young in the Southern District of Indiana granted default judgment in favor of Engineered by Schildmeier, LLC (“Engineered”) and against WUHU Xuelang Auto Parts Co., LTD and Amazing Parts Warehouse (collectively the “Defendants”). Engineered filed suit seeking a declaratory judgment of both patent and trade dress infringement in late 2018. The patentEngineered-BlogPhoto-300x254 allegedly infringed in the complaint is United States Patent No. D 816,584 (the “‘584 Patent”) for a “Pair of Bed Rail Stake Pocket Covers”.

When a defendant fails to plead or defend a case against them within the allotted time frame, they are in default. A plaintiff may motion the court for a default judgment, which is a binding judgment of the court for failure of the defendant to answer the allegations. The court can then grant a default judgment. If a proof of damages hearing is necessary, the judge can order such a hearing, but the defendant may not appear at that point to defend the amount of damages asserted by the plaintiff. A default judgment may be set aside upon request of the defendant, but they must show a good defense and legitimate excuse as to why they were in default to the court.

In this case, neither of the Defendants plead or otherwise defended themselves against the allegations set forth in Engineered’s complaint. As such, the court granted Engineered’s motion for default judgment and awarded damages accordingly. First, the Court found that the Defendants infringed the ‘584 Patent. Second, the Court found the Defendants violated Section 43(a) of the Lanham Act by infringing Engineered’s trade dress. Third, the Defendants were enjoined from importing, selling, or offering for sale any imitations of the ‘584 Patent. Finally, Engineered was awarded a total of $1,424,070.00. The damages award was calculated by adding $470,020.00 in lost profits; $940,040.00 in treble damages for willful infringement; $13,610.00 in attorneys’ fees; and $400.00 in court costs. By failing to appear and defend themselves, not only will defendants have default judgments granted against them, but as shown in this case, extremely large damages may also be imposed.

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Indianapolis, Indiana –Plaintiff and Attorney Richard N. Bell of McCordsville, Indiana filed suit in theBell-v-Powell-BlogPhoto-300x63 Southern District of Indiana alleging that Defendants, David N. Powell and Midwest Regional Network for Intervention with Sex Offenders (“MRNISO”), infringed his rights in his copywritten photograph. In this case, the Court was faced with cross-motions for summary judgment, which it ruled in favor of the Defendants. After being granted summary judgment, the Defendants filed their separate Motions for Attorney Fees and Bill of Costs. While Powell’s motion was denied as moot, MRNISO’s motion was granted.

Bell, in his motion for summary judgment asserted that he was owed for damages caused by the Defendants for their unauthorized use of his photograph. However, Powell asserted Eleventh Amendment immunity against Bell’s claims and MRNISO claimed it was protected by the fair use doctrine. The Court agreed with both Powell and MRNISO and granted them summary judgment.

Following the final entry of judgment against Bell, Powell and MRNISO each filed a separate motion for attorney fees. According to the Court, Bell filed a “Report of Settlement Between Powell and Bell” and requested all deadlines for Powell’s motion be stayed. Powell did not file a response to the Report of Settlement and thus the dates were vacated by the Court. Powell’s motion was denied by the Court without prejudice leaving Powell the opportunity to refile his motion if the settlement was not able to be finalized.

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Indianapolis, Indiana – Attorneys for Plaintiff, Dexas International, Ltd. of Coppell, Texas filed suit in the Southern District of Indiana alleging that Defendant, Menard, Inc. of Eau Claire, Wisconsin infringed its rights in United States Copyright Registration No. VA 2-118-094 (“Dexas Cutting Board Photo”). Plaintiff is seeking costs, reasonable attorneys’ fees, injunctive relief, and post judgment interest.

A Dexas employee created an original art piece entitled “Dexas Cutting Board Photo” within the scope of hisDexas-v-Menard-BlogPhoto-300x113 employment in 2013 (the “Dexas Photo”). This art piece was for use in the product insert label for the Dexas cutting board. On April 4, 2018, Dexas applied for copyright registration for the Dexas Photo.

Dexas alleges that at least as of 2017, if not earlier, Menard began selling a “Collapsible Colander Cutting Board Set” with a label insert that includes the unauthorized copy of or derivative work based on the Dexas Photo. Further, Dexas believes Menard has manufactured, imported, published, sold, and/or distributed unauthorized copies of, or derivative works based upon the Dexas Photo and those were sold to consumers.

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Indianapolis, Indiana  – Stone Basket Innovations, LLC of Austin, Texas, filed a patent infringement lawsuit in the Eastern District of Texas which was transferred to the Southern District of Indiana alleging that Cook Medical, LLC of Bloomington, Indiana, infringed Patent No. 6,551,327 (“‘327 Patent”), Endoscopic Stone Extraction Device with Improved Basket, issued by the US Patent Office.Stonebasket-BlogPhoto-300x204

The initial Complaint for this case was filed on April 8, 2015. Defendant served their invalidity contentions in October 2015 and deposed the ‘327 patent’s inventor in January of 2016. During the deposition, the inventor stated in regards to an addition to overcome an examiner’s rejection, “I realize there is nothing novel about it.” Defendant then petitioned the U.S. Patent and Trademark Office for inter partes review (IPR) of all the claims. The District Court case was stayed pending the outcome of the petition for an IPR based off a joint motion.

After the IPR was instituted in September 2016, Plaintiff offered to license the ‘327 patent to Defendant for $150,000.00. Negotiations fell through and the settlement did not occur. Plaintiff then filed a motion requesting an adverse judgment in the IPR proceeding in December 2016 and moved to dismiss the District Court case with prejudice, both of which were granted.

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BlogPhoto-6Indianapolis, IN – The National Collegiate Athletic Association had filed a Trademark infringement lawsuit in the Southern District of Indiana alleging that Kizzang LLC, infringed trademarks registered by the NCAA.

A recent Order signed by Judge Jane Magnus-Stinson grants the National Collegiate Athletic Association’s Motion for Default Judgment and Motion for Permanent Injunction against Defendant, Kizzang LLC.

The NCAA sued over Defendant’s use of the terms “Final 3” and “April Madness,” which Plaintiff alleges infringe on the trademarked phrases “Final Four” and “March Madness,” which are commonly used to refer to the annual men’s college basketball championship tournament.

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