Justia U.S. 7th Circuit Court of Appeals Opinion Summaries

NBA Properties owns the trademarks of the NBA and NBA teams. In 2020, a Properties investigator accessed HANWJH’s online Amazon store and purchased an item, designating an address in Illinois as the delivery destination. The product was delivered to the Illinois address. Properties sued, alleging trademark infringement and counterfeiting, 15 U.S.C. 1114 and false designation of origin, section 1125(a). Properties obtained a TRO and a temporary asset restraint on HANWJH’s bank account, then moved for default; despite having been served, HANWJH had not answered or otherwise defended the suit. HANWJH moved to dismiss, arguing that the court lacked personal jurisdiction over it because it did not expressly aim any conduct at Illinois. HANWJH maintained that it had never sold any other product to any consumer in Illinois nor had it any “offices, employees,” “real or personal property,” “bank accounts,” or any other commercial dealings with Illinois.The Seventh Circuit affirmed the denial of the motion to dismiss and the entry of judgment in favor of Properties. HANWJH shipped a product to Illinois after it structured its sales activity in such a manner as to invite orders from Illinois and developed the capacity to fill them. HANWJH’s listing of its product on Amazon.com and its sale of the product to counsel are related sufficiently to the harm of likelihood of confusion. Illinois has an interest in protecting its consumers from purchasing fraudulent merchandise. HANWJH alleges no unusual burden in defending the suit in Illinois. View "NBA Properties, Inc. v. HANWJH" on Justia Law

The Seventh Circuit affirmed the judgment of the district court granting summary judgment to Defendants on all claims asserted against them, including misappropriation of trade secrets and breach of an implied contractual obligation to assign patent rights but vacated the judgment awarding attorneys' fees, holding that a reduction in fees was warranted.REXA, Inc. sued Mark Chester and MEA, Inc. for misappropriation of trade secrets and breach of an implied contractual obligation to assign patent rights, alleging that Chester and MEA incorporated and disclosed confidential designs. The district court granted summary judgment to Defendants. The Seventh Circuit affirmed in part and vacated in part, holding that the district court (1) properly granted summary judgment in favor of Defendants; but (2) abused its discretion in awarding Chester and MEA approximately $2.357 million in attorneys' fees, which they requested as a sanction for REXA's litigation conduct, where the court did not make specific findings about each of REXA's objections to the fee petition. View "REXA, Inc. v. Chester" on Justia Law

Life Spine makes and sells a spinal implant device called the ProLift Expandable Spacer System. Aegis contracted with Life Spine to distribute the ProLift to hospitals and surgeons. Aegis promised to protect Life Spine’s confidential information, act as a fiduciary for Life Spine’s property, and refrain from reverse-engineering the ProLift. Aegis nonetheless funneled information about the ProLift to its parent company, L&K Biomed to help L&K develop a competing spinal implant device. Shortly after L&K’s competing product hit the market, Life Spine sued Aegis for trade secret misappropriation and breach of the distribution agreement. The district court granted Life Spine a preliminary injunction barring Aegis and its business partners from marketing the competing product. Aegis argues that the injunction rested on a flawed legal conclusion—that a company can have trade secret protection in a device that it publicly discloses through patents, displays, and sales.The Seventh Circuit affirmed. While public domain information cannot be a trade secret, a limited disclosure does not destroy all trade secret protection. Life Spine did not publicly disclose the specific information that it seeks to protect by patenting, displaying, and selling the ProLift. Life Spine’s trade secrets are not in the public domain but are accessible only to third parties who sign confidentiality agreements. View "Life Spine, Inc. v. Aegis Spine, Inc." on Justia Law

The Kerstiens family runs companies that build single-family homes out of Jasper, Indiana. Plan Pros and Prime Designs are home design companies that license their plans through Design Basics, which acts as a broker, serving as an intermediary between home builders and design firms. Design Basics markets the thousands of plans it holds copyrights to through trade publications, promotional materials placed in home improvement stores, and national builder associations and “has become a serial litigant,” having filed more than 100 infringement suits against home builders.In affirming the dismissal of Design Basic’s suit against the Kerstiens, the Seventh Circuit referred to “intellectual property trolls,” enforcing copyrights not to protect expression, but to extract payments through litigation. Design Basics has thin copyright in its plans because they consist largely of standard features found in homes across America. View "Design Basics, LLC v. Kerstiens Homes & Designs, Inc" on Justia Law

Design Basics is a copyright troll and holds registered copyrights in thousands of floor plans for suburban, single-family tract homes. Its employees trawl the Internet in search of targets for strategic infringement suits of questionable merit, hoping to secure “prompt settlements with defendants who would prefer to pay modest or nuisance settlements rather than be tied up in expensive litigation.” The Seventh Circuit has previously (Lexington Homes) held that Design Basics’ copyright in its floor plans is thin. The designs consist mainly of unprotectable stock elements—a few bedrooms, a kitchen, a great room, etc. Much of their content is dictated by functional considerations and existing design conventions for affordable, suburban, single-family homes. When copyright in an architectural work is thin, only a “strikingly similar” work gives rise to a possible infringement claim.Design Basics sued Signature Construction for copying 10 of its registered floor plans for suburban, single-family homes. The district court granted Signature summary judgment based largely on the reasoning of Lexington Homes. The Seventh Circuit affirmed. For this category of claims, only extremely close copying is actionable as unlawful infringement. That standard is not satisfied in this case. View "Design Basics, LLC v. Signature Construction, Inc." on Justia Law

LHO owns a downtown hotel that it rebranded as “Hotel Chicago” in 2014. In 2016, Rosemoor renamed its existing westside hotel as “Hotel Chicago.” LHO sued Rosemoor for trademark infringement and unfair competition under the Lanham Act and for deceptive advertising and common-law trademark violations under Illinois law. The district court denied preliminary injunctive relief, finding that “LHO has failed, at this juncture, to show that it is likely to succeed in proving secondary meaning" and was unlikely to show that “Hotel Chicago” was a protectable trademark. LHO appealed but successfully moved to voluntarily dismiss its claims with prejudice before briefing.Rosemoor requested more than $500,000 in attorney fees, arguing that the case qualified as “exceptional.” The district court denied the request under the Seventh Circuit's “abuse-of-process” standard. The Seventh Circuit held that the district court should have evaluated Rosemoor’s attorney-fee request under the Supreme Court’s “Octane Fitness” holding. On remand, Rosemoor filed a renewed request for more than $630,000 in fees, arguing that the weakness of LHO’s position on the merits, LHO’s motives in bringing suit, and its conduct in discovery, made the case exceptional under Octane Fitness. The Seventh Circuit affirmed the denial of the request. The district court applied the Octane Fitness standard and reasonably exercised its discretion in weighing the evidence before it. View "LHO Chicago River, L.L.C. v. Rosemoor Suites, LLC" on Justia Law

Without permission from Epic, TCS downloaded thousands of documents containing Epic’s confidential information and trade secrets. TCS used some of the information to create a “comparative analysis”—a spreadsheet comparing TCS’s health-record software (Med Mantra) to Epic’s software. TCS’s internal communications show that TCS used this spreadsheet in an attempt to enter the U.S. health-record-software market, steal Epic’s client, and address key gaps in TCS’s own Med Mantra software.Epic sued. A jury ruled in Epic’s favor on all claims, including multiple Wisconsin tort claims. The jury then awarded Epic $140 million in compensatory damages, for the benefit TCS received from using the comparative-analysis spreadsheet; $100 million for the benefit TCS received from using Epic’s other confidential information; and $700 million in punitive damages for TCS’s conduct. The district court upheld the $140 million compensatory award and vacated the $100 million award. It reduced the punitive damages award to $280 million, reflecting Wisconsin’s statutory punitive-damages cap. The Seventh Circuit remanded. There is sufficient evidence for the jury’s $140 million verdict based on TCS’s use of the comparative analysis, but not for the $100 million verdict for uses of “other information.” The jury could punish TCS by imposing punitive damages, but the $280 million punitive damages award is constitutionally excessive. View "Epic Systems Corp. v. Tata Consultancy Services Ltd." on Justia Law

Quincy’s Prevagen® dietary supplement is sold through brick‐and‐mortar stores and online. Ellishbooks, which was not authorized to sell Prevagen® products, sold dietary supplements identified as Prevagen® on Amazon.com, including items that were in altered or damaged packaging; lacked the appropriate markings that identify the authorized retail seller; and contained Identification and security tags from retail stores. Quincy sued under the Lanham Act, 15 U.S.C. 1114. The court entered a $480,968.13 judgment in favor of Quincy, plus costs, and permanently enjoined Ellishbooks from infringing upon the PREVAGEN® trademark and selling stolen products bearing the PREVAGEN® trademark.The Seventh Circuit affirmed and subsequently awarded $44,329.50 in sanctions under Federal Rule of Appellate Procedure 38. Ellishbooks’s arguments “had virtually no likelihood of success” on appeal and it appeared that Ellishbooks attempted to draw out the proceedings for as long as possible. View "Quincy Bioscience, LLC v. Ellishbooks" on Justia Law

Apple owns Madison, Wisconsin vitamin stores. Knott, a former Apple employee, was fired in 2017. Knott founded his own vitamin shop, Embrace Wellness, in Middleton, Wisconsin. Embrace allegedly shared design features and a similar layout with Apple’s locations and carried comparable products. Apple sued, alleging infringement of its trademark, trade dress, and copyrights. The defendants filed counterclaims for tortious interference and retaliation. Apple sought a preliminary injunction on the trademark and trade dress claims, which the court denied, explaining that Apple had failed to show a likelihood of irreparable harm. Apple then moved to dismiss its own claims without prejudice. Because the defendants had already expended resources litigating an injunction, the court ordered Apple to withdraw its motion or accept dismissal with prejudice, expressing its opinion that no party’s claim was strong. Apple agreed to dismiss its claims with prejudice.The court subsequently denied defendants’ motion for fees; they appealed with respect to the copyright claims. The Seventh Circuit affirmed. Apple’s copyright claims were frivolous—common-law copyright was abolished in 1976—but the totality of the circumstances did not warrant fees. There was no evidence that Apple had filed suit with an improper motive, and no need to deter future frivolous filings. The case was primarily about trademark and trade dress. no motions were filed related to copyright. Apple dismissed the copyright claims voluntarily before defendants had to argue against them. View "Timothy B. O'Brien LLC v. Knott" on Justia Law

Quincy’s Prevagen® dietary supplement is sold at stores and online. Quincy registered its Prevagen® trademark in 2007. Ellishbooks, which was not authorized to sell Prevagen®, sold supplements identified as Prevagen® on Amazon.com, including items that were in altered or damaged packaging; lacked the appropriate purchase codes or other markings that identify the authorized retail seller; and contained tags from retail stores. Quincy sued under the Lanham Act, 15 U.S.C. 1114. Ellishbooks did not respond. The court entered default judgment. Ellishbooks identified no circumstances capable of establishing good cause for default. The district court entered a $480,968.13 judgment in favor of Quincy, plus costs, and permanently enjoined Ellishbooks from infringing upon the PREVAGEN® trademark and selling stolen products bearing the PREVAGEN® trademark.The Seventh Circuit affirmed and subsequently awarded Rule 38 sanctions. Ellishbooks’ appellate arguments had virtually no likelihood of success and its conduct during the course of the appeal was marked by several failures to timely respond and significant deficiencies in its filings. These shortcomings cannot be attributed entirely to counsel’s lack of experience in litigating federal appeals. A review of the dockets suggests that Ellishbooks has attempted to draw out the proceedings as long as possible while knowing that it had no viable substantive defense. View "Quincy Bioscience, LLC v. Ellishbooks" on Justia Law