Articles Posted in Seventh Circuit News

Attorneys for Plaintiff-Appellant, SportFuel, Inc. (“SportFuel”), of Chicago, Illinois, originally filed suit against Defendants-Appellees, PepsiCo, Inc. (“Pepsi”) and The Gatorade Company (“Gatorade”) (collectively the “Appellees”), for trademark infringement in the United States District Court for the Northern District of Illinois, Eastern Division. After the District Court granted summary judgment for GatoradeGatorade-BlogPhoto and Pepsi, SportFuel appealed to the United States Court of Appeals for the Seventh Circuit. Circuit Judge Kanne wrote the opinion affirming the grant of summary judgment by the District Court.

SportFuel provides personalized nutrition services to professional and amateur athletes and sells its own brand of dietary supplements. SportFuel registered two trademarks for “SportFuel” the first of which was registered for “food nutrition consultation, nutrition counseling, and providing information about dietary supplements and nutrition.” Pursuant to 15 U.S.C. § 1065, the first registration became “incontestable” in 2013. The second registration for “SportFuel” was for “goods and services related to dietary supplements and sports drinks enhanced with vitamins.”

Gatorade, now a household name, was created in 1965. Although Gatorade is known for its traditional sports drinks, it also sells customizable sports drinks for individual professional athletes and other sports nutrition products. Starting in 2013, Gatorade began describing and marketing its products as “sports fuels” and registered the trademark “Gatorade The Sports Fuel Company” in 2016 with the United States Patent and Trademark Office (“PTO”). During the registration process, “Gatorade disclaimed the exclusive use of ‘The Sports Fuel Company’ after the PTO advised the company that the phrase was merely descriptive of its products.”

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Bodum USA, Inc. (“Bodum”) originally filed this case against A Top New Casting Inc. (“A Top”) in the Northern District of Illinois on claims of trade dress infringement. After a jury verdict found for Bodum and awarded $2 million in damages, A Top brought this appeal in the United States Court of Appeals for the Seventh Circuit. The Court of Appeals affirmed the findings and damages awarded.

BlogPhoto-1-300x232Bodum began selling French press coffeemakers in the 1970s and began distributing the Chambord French press at issue in this case in 1983. Bodum claimed it acquired exclusive distribution rights to the Chambord French press in 1991 and has since spent millions of dollars in marketing and advertising the product. A Top began selling their French press, the SterlingPro, through Amazon in 2014.

In March 2016, Bodum filed a complaint for “trade dress infringement under the Lanham Act, 15 U.S.C. § 1125(a); common law unfair competition; and violation of the Illinois Uniform Deceptive Trade Practices Act”. While A Top moved for summary judgment twice, these motions were denied, and a jury trial took place in March 2018. The jury found that A Top willfully infringed the Chambord trade dress and awarded Bodum $2 million in damages. The district court denied A Top’s motion for judgment as a matter of law and granted Bodum’s motion for enhanced damages to $4 million dollars and a permanent injunction against A Top selling the SterlingPro products.

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Eli Lilly & Company and its subsidiary, Elanco US Inc., both of Greenfield, Indiana, filed suit in the Eastern District of Wisconsin alleging that Arla Foods, Inc. USA of Denmark, and Arla Foods Production LLC a Delaware Corporation used false advertising and unfair businessLilly-v-Arla-BlogPhoto-233x300 practices in regards to Arla brand cheeses.

In 2017, Arla Foods launched a $30 million advertising campaign focused on expanding its cheese sales in the U.S. These advertisements included ads featuring a seven-year-old girl describing recombinant bovine somatotropin (“rbST”), an artificial growth hormone used to treat cows, as a type of monster. The ads implied that milk from cows that were treated with rbST was unwholesome and unnatural, therefore not good for your family.

Elanco makes the only FDA-approved rbST supplement, marketed under the name Posilac®. After the Arla campaign launched, Elanco filed suit alleging that Arla was in violation of the Lanham Act and simultaneously moved for a preliminary injunction with supporting copies of ads, evidence that a major cheese distributor decreased its purchasing of rbST in response to the ad campaign, and scientific literature pertaining to rbST’s safety. The district judge issued the requested injunction and later modified the injunction to cure technical deficiencies.

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Chicago, Illinois – The Seventh Circuit Court of Appeals has ruled against Plaintiff Reginald Hart in an intellUntitled-300x122ectual property lawsuit filed against Amazon.com.

Plaintiff Hart, filing pro se, sued Amazon.com, Inc. alleging various state and federal claims, including copyright infringement, aiding and abetting counterfeiting, and intentional infliction of emotional distress.  Hart, the author of two self-published books, Vagabond Natural and Vagabond Spiritual, claimed that Amazon had permitted six counterfeit copies of his books to be advertised for sale and/or sold on its website by third parties.  Hart further claimed that Amazon had “forcefully exploited” the books by counterfeiting them “for its own commercial use.”  He stated that the books, which detailed his experiences as a homeless man, would have generated “millions of dollars for Amazon” and allowed him “to end homelessness [and not only for himself] both in the U.S. and abroad.”

Hart asserted to the court that he was certain that the books were unauthorized reproductions of his works as they did not bear “indicia of authenticity known only to him.”  The indicator that a book was genuine, according to Plaintiff, was his fingernail indentations on the cover of the book.  Plaintiff provided photographs purporting to show both authorized copies of Plaintiff’s books and books alleged to be fake.  The court, however, concluded that the “two types of book are in all respects identical.”

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Chicago, Illinois – The Seventh Circuit Court of Appeals held that an injunction against Defendants effecting a prior restraint on defamatory speech regarding the Plaintiffs was improper.

This lawsuit springs from an Indiana event occurring in 1956 wherein Mary Ephrem, a Catholic Sister, claimed to have encountered a series of apparitions of the Virgin Mary. Those apparitions told her: “I am Our Lady of America.” A program of devotions to Our Lady began, which Patricia Fuller joined in 1965. When Sister Ephrem passed away, she willed her property to Fuller. Between Sister Ephrem’s efforts to register intellectual property pertaining to Our Lady and Fuller’s efforts, the program’s assets included both copyrights and trademarks.

In 2005, Kevin McCarthy and Albert Langsenkamp volunteered to assist Fuller in promoting devotions to Our Lady. By 2007, however, the relationship had soured. Langsenkamp established the Langsenkamp Family Apostolate and McCarthy and Langsenkamp (and the latter’s apostolate) claimed to be the authentic promoters of devotions to Our Lady. They also claimed ownership to all documents and artifacts accumulated by Fuller and Sister Ephrem.

Paul Hartman intervened on Fuller’s behalf, “launching a campaign to smear McCarthy’s and Langsenkamp’s reputations.” McCarthy and Langsenkamp, as well as the Langsenkamp Family Apostolate, sued Fuller and Hartman asserting tortious conduct, including conversion, fraud and defamation. Plaintiffs also sought a declaratory judgment that they had not infringed any of Fuller’s intellectual property. Fuller and Hartman counterclaimed, accusing Plaintiffs of theft, infringement and defamation.

The district court conducted a jury trial that resulted in a verdict in favor of Plaintiffs, who were awarded compensatory and punitive damages, as well as attorney’s fees, sanctions and costs. The district court also issued an injunction prohibiting Defendants from making certain statements “as well as any similar statements that contain the same sorts of allegations or inferences, in any manner or forum” and ordered that Fuller take down his website.

Judge Posner, writing for the Seventh Circuit, upheld the damages, fees and costs but vacated the injunction. He noted that, while the jury had held that Plaintiffs had been defamed, there was no specific indication regarding which of the many of Defendants’ statements had been deemed by the jury to be defamatory. Thus, by prohibiting all of the statements, the injunction was overbroad.

Moreover, the injunction’s preamble greatly expanded the scope of the prohibited conduct by enjoining “any similar statements [that is, similar to the injunction’s specific prohibitions] that contain the same sorts of allegations or inferences, in any manner or forum,” as those listed in the body of the injunction. This was also held to be improper as overly expansive, as an injunction must be specific about the acts that it prohibits.

The mandate within injunction that Hartman take down his website, made without a finding that everything published on the website defamed any of the Plaintiffs, was also held to be overly broad.

Finally, the Seventh Circuit opined on the injunction as it related to the First Amendment, which forbids, with some exceptions, “prior restraints” on speech by the government. One permissible exception outlined by the other jurisdictions, including the Sixth Circuit, is for defamatory statements, which may be enjoined but only where the injunction is “no broader than necessary to provide relief to plaintiff while minimizing the restriction of expression.”

The appellate court thus concluded that the trial court’s injunction could not be sustained. Without ruling that the law of the Seventh Circuit allowed the enjoining of defamatory speech, it held that, even were such an injunction permissible in the Seventh Circuit, the injunction issued by the trial court was vague, open-ended and overbroad; that it was thus a patent violation of the First Amendment; and that as a consequence the injunction must be vacated.

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Chicago, Illinois – One of the copyright lawsuits of Plaintiff Richard N. Bell of McCordsville, Indiana has been terminated by the trial court. Bell filed an appeal on multiple grounds with the United States Court of Appeals for the Seventh Circuit.

This Indiana lawsuit alleged copyright infringement of a photo that Bell, an Indiana copyright lawyer and professional photographer, took and copyrighted. The photo, U.S. Copyright Registration No. VA0001785115, was of the Indianapolis skyline. Bell has sued numerous Defendants alleging copyright infringement of this photo. In this lawsuit, the Defendants were Cameron Taylor, Taylor Computer Solutions, Insurance Concepts, Fred O’Brien, and Shanna Cheatham, all of Indianapolis, Indiana.

On December 4, 2015, District Judge Tanya Walton Pratt of the Southern District of Indiana entered a final judgment in favor of all Defendants and terminated the case. Within days, Bell appealed to the Seventh Circuit. Bell contends that the district court acted improperly regarding:

• The district court’s opinion, order and final judgment granting summary judgment in favor of the Defendants;
• The denial of “Plaintiff’s Second Motion to Compel and sanctions against Defendants for failing to answer Interrogatories and product [sic] requested documents … on October 16, 2013″ as well as his “appeal to the District Judge” on June 9, 2014 regarding that motion;
• The denial of “Plaintiffs [sic] Motion for Leave to File Fourth Amended Complaint”;
• The denial of an additional motion to compel and for sanctions;
• The district court’s ruling on partial summary judgment;
• The district court’s ruling on “Bell’s Motion to Relieve Plaintiff from Orders of the Court”; and

• The district court’s entry of final judgment against Bell.

Practice Tip: This is not the first time Bell has appealed in this litigation. We blogged about a prior appeal to the Seventh Circuit wherein Bell, after appealing, then argued that his appeal was premature and should not yet be heard by the appellate court.

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Indianapolis, Indiana – Earlier this month, Judge John Tinder officially retired from the United States Court of Appeals for the Seventh Circuit, stepping down after more than 30 years of federal service.

Judge Tinder, a jurist who once described himself as a person with “too many hobbies” but “not enough time,” officially retired from the bench in early October. The announcement of his retirement inadvertently came not through the usual channels, but rather via a letter that he wrote in response to an unsolicited application that he received from someone seeking employment as a law clerk. In his reply, Judge Tinder wrote, “Thank you for applying for a clerkship with me. Your credentials are outstanding. However, I recently decided that I will be leaving the court in 2015 so I will not be hiring any additional clerks….” That letter was leaked to AboveTheLaw.com, which broke the news of Judge Tinder’s impending retirement.

A lifelong resident of Indiana, Judge Tinder received both his undergraduate degree and law degree from the Indiana University – Bloomington. Prior to his appointment to a federal judgeship, he served as an Assistant United States Attorney for the Southern District of Indiana and, later, as the United States Attorney for the Southern District. In addition, he had engaged in the private practice of law in Indianapolis, had served as the Chief Trial Deputy for the Marion County Prosecutor’s Office and had been a public defender for the Criminal Division of the Superior Court of Marion County. Judge Tinder also taught as an adjunct professor at the Indiana University School of Law.

Chicago, Illinois – The United States Court of Appeals for the Seventh Circuit affirmed the 

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ruling of the United States District Court for the Northern District of Illinois, Western Division in the matter of Sorenson v. WD-40 Company, holding that WD-40’s use of “inhibitor” and a crosshair graphic on its product labels did not constitute trademark infringement.

Plaintiff Jeffrey Sorensen founded and is the CEO of a company that produces a line of rust-inhibiting products, which were first sold in 1997. These products contain a substance called volatile corrosion inhibitor (“VCI”). Sorenson owns a federally registered trademark – THE INHIBITOR – for this line of products. He also claims common-law trademark rights to an orange-and-black crosshair design mark that is associated with these products.

Chicago, Illinois – The Seventh Circuit affirmed the denial of attorneys’ fees under the Lanham Act by the District Court for the Southern District of Illinois.

Plaintiff William Burford and Defendant Accounting Practice Sales, Inc. (“APS”) were parties to a contract under which Burford had agreed to market and facilitate the purchase and sale of accounting practices on behalf of APS. APS terminated the contract. Shortly thereafter, Burford started a competing business. For this business, Burford chose the name “American Accounting Practice Sales.” Burford also sued APS and Gary Holmes, the owner of APS, for breach of contract.

In response to Burford’s contract-claims lawsuit, APS filed a four-count counterclaim. Included in those counterclaims was an allegation that Burford had misappropriated APS’s trade name in violation of the Lanham Act, 15 U.S.C. § 1051 et seq. by using the business name “American Accounting Practice Sales.”

The district court held for APS on the contract claim, reasoning that the contract between the parties was of indefinite duration and was therefore terminable at will. After this ruling in favor of APS, but before the district court could consider the counterclaim, APS voluntarily dismissed its counterclaim under the Lanham Act with prejudice.

Burford then contended that, as the prevailing party on the Lanham Act claim, he was entitled to attorneys’ fees under 15 U.S.C. § 1117(a), asserting that APS’s pursuit of the Lanham Act claim was meritless and amounted to an abuse of process. The district court refused to grant attorneys’ fees on the theory that APS’s claim under the Lanham Act claim could have been pursued by a rational party seeking to protect its trademark.

Burford appealed. As part of his appeal, he asked the Seventh Circuit to reverse the district court’s denial of his request for attorneys’ fees under the Lanham Act. Circuit Judges William J. Bauer and David F. Hamilton, and District Court Judge Sara L. Ellis, sitting by designation, heard the matter.

The Seventh Circuit first held that the district court had erred in holding that the contract had not been breached. While indefinite-term contracts are by default terminable at will, it noted that the parties had contracted around that general rule by providing that APS could terminate the contract only if Burford violated the terms of the contract. On this issue, the Seventh Circuit reversed the district court.

On the question of attorneys’ fees, the Seventh Circuit affirmed the district court. Under 15 U.S.C. § 1117(a)(3), district courts have the discretion to award attorneys’ fees to those prevailing under the Act in “exceptional cases.” Such an “exceptional case” within the meaning of the Lanham Act can be found in those cases where the district court determines that the decision to bring the claim could be called an abuse of process.

In turn, such an abuse of process can be discerned in cases where, for example, “a rational litigant would pursue [the claim] only because it would impose disproportionate costs on his opponent” or where there was evidence that the party advancing the Lanham Act claim had done so “to obtain an advantage unrelated to obtaining a favorable judgment.”

The Seventh Circuit noted that Burford had failed to persuade the district court that the pursuit of the claim was objectively unreasonable or was intended to harass or to obtain an advantage unrelated to winning a favorable judgment. Consequently, because decision whether to award attorneys’ fees under the Lanham Act is left to the district court’s sound discretion, the lower court’s refusal to grant such fees was affirmed.

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Chicago, Illinois – California attorney Leslie S. Klinger, co-editor of multiple collections of annotated works based on Arthur Conan Doyle‘s Sherlock Holmes fiction sued Conan Doyle Estate, Ltd. under the Declaratory Judgment Act in the Northern District of Illinois seeking a declaratory judgment that he may freely use material from those Sherlock Holmes works for which copyright protection has expired. The district court held that Klinger’s use of material that was no longer subject to copyright was permissible. The Seventh Circuit affirmed.

Arthur Conan Doyle published 56 stories and 4 novels featuring the fictional character Sherlock Holmes. Of these stories, only the final 10, published between 1923 and 1927, are still protected by copyright.

Leslie Klinger, Plaintiff-Appellee, co-edited an anthology called A Study in Sherlock: Stories Inspired by the Sherlock Holmes Canon. Klinger had not sought a license from Doyle’s estate, presuming that one was not necessary, as the copyrights on most of the works in the “canon” had expired. The estate disagreed and demanded that Random House, which had agreed to publish Klinger’s book, pay $5,000 for a copyright license. Random House acquiesced and, in 2011, the anthology was published.

The trouble began when Klinger and his co-editor decided to create a sequel, “In the Company of Sherlock Holmes” and entered into negotiations with Pegasus Books, a publisher. The Doyle estate again demanded a fee for a copyright license and threatened to interfere with distribution of the book if that copyright license fee was not paid, telling Pegasus, “If you proceed instead to bring out Study in Sherlock II [the original title of “In the Company of Sherlock Holmes”] unlicensed, do not expect to see it offered for sale by Amazon, Barnes & Noble, and similar retailers. We work with those compan[ies] routinely to weed out unlicensed uses of Sherlock Holmes from their offerings, and will not hesitate to do so with your book as well.” No threat of a lawsuit for copyright infringement was explicitly made. Pegasus subsequently refused to publish the book unless and until Klinger obtained a copyright license from the Doyle estate.

Instead of purchasing a license, Klinger sued the estate seeking a declaratory judgment that he could freely use any material from the Sherlock Holmes works for which the period of copyright protection had expired.

The district court held in Klinger’s favor. The estate appealed to the Seventh Circuit on two alternative grounds. The estate first contended that the district court lacked subject matter jurisdiction under the Declaratory Judgment Act because there was no “actual case or controversy.” Second, it asserted that a copyright on a “complex” character, whose full complexity is not revealed until a later story, remains protected under copyright law until the later story falls into the public domain.

Circuit Judge Posner, writing for the court, rejected both arguments. The “case or controversy,” necessary for federal jurisdiction was demonstrated by the estate’s “twin threats” of blocking the distribution of the book and the implied threat of a copyright lawsuit against the publisher, Klinger and the book’s co-editor for copyright infringement if the book were published without a license. That such a case or controversy existed was also demonstrated by the fact that Klinger could have sued on a claim of tortious interference with advantageous business relations as a result of the estate’s intimidation of his publisher.

The court then considered the question of “whether copyright protection of a fictional character can be extended beyond the expiration of the copyright on it because the author altered the character in a subsequent work.” The estate urged the court to grant additional copyright protection in its case, arguing that characters such as Sherlock Holmes were “round” and/or “complex” and thus deserving of greater shelter under copyright law than fictional characters that were “flat” and/or “simple.”

The court could find no basis in statute or case law to support the extension of a copyright beyond its expiration. Thus, it affirmed the uncontested matter of copyright protection for the later works – namely, a right to recover for copyright infringement still existed for some portions of the Sherlock Holmes works for which the copyrights had not yet expired. However, that protection was limited to only those elements of the later Sherlock Holmes works that included “incremental additions of originality.” The remainder, the court opined, had passed into the public domain, regardless of the dimensions of the characters portrayed.

Practice Tip: The court was also unpersuaded by the Doyle estate’s argument to extend copyright law on the grounds that failure to do so would diminish authors’ incentives to create. After noting that Arthur Conan Doyle had died 84 years prior, thus rendering the argument inapplicable in the current litigation, the court noted that “extending copyright protection is a two-edged sword from the standpoint of inducing creativity, as it would reduce the incentive of subsequent authors to create derivative works (such as new versions of popular fictional characters like Holmes and Watson) by shrinking the public domain.”

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