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

Bell sued Vacuforce for copyright infringement, accusing it of publishing his photograph of the Indianapolis skyline on its website without a license. Vacuforce hired attorney Overhauser. The parties quickly settled; the federal lawsuit was dismissed with prejudice. Overhauser then moved to recover attorney fees from Bell, arguing that because the settlement produced a dismissal with prejudice, Vacuforce was the “prevailing party” for purposes of fees under the Copyright Act, 17 U.S.C. 505. The district court denied Overhauser’s as motion frivolous and misleading and ordered monetary sanctions against Overhauser: one under Federal Rule of Civil Procedure 11 and another under 28 U.S.C. 1927. The Seventh Circuit affirmed the sanctions, rejecting an argument that a party can “prevail” for purposes of a fee-shifting statute by paying a settlement and obtaining a dismissal with prejudice. The district court did not abuse its discretion by imposing the section 1927 sanction. “Objective bad faith” will support such a sanction. A lawyer demonstrates objective bad faith when she “pursues a path that a reasonably careful attorney would have known, after appropriate inquiry, to be unsound.” The district court found that Overhauser’s legal contentions were baseless and that he failed to disclose the proper factual foundation necessary to evaluate his legal argument. View "Overhauser v. Bell" on Justia Law

Bolson develops products and processes for use in 3D printing. Soarus is a distributor of specialty polymers, including G-Polymer. In 2009, Bolson and Soarus began discussing Bolson’s acquisition and use of GPolymer in connection with developing a new 3D printing process. Soarus sought to protect its rights in G-Polymer while also allowing for its potential entry into the lucrative 3D printing market. The parties executed a nondisclosure agreement (NDA). Soarus then provided Bolson with confidential information regarding G-Polymer and samples. Shortly after executing the NDA, Bolson filed a provisional patent for the 3D printing process it developed using G-Polymer; the 171 Patent issued in 2013. Soarus claimed that Bolson’s patent application revealed confidential information about G-Polymer, in violation of the NDA. The district court granted Bolson summary judgment, concluding that the plain meaning of the NDA, while conferring generally broad confidentiality protection on Bolson’s use of information about G-Polymer, authorized Bolson to use such confidential information in pursuing a patent in the specific area of the fused deposition method of 3D printing. The Seventh Circuit affirmed. The NDA clearly authorise Bolson to freely patent and protect new applications of GPolymer in the specified 3D printing process, not confined by the NDA’s confidentiality restrictions. View "Soarus L.L.C. v. Bolson Materials International Corp." on Justia Law

Wine & Canvas (W&C) hosts “painting nights.” Patrons, following a teacher’s instructions, create a painting while enjoying wine. W&C operated in Indianapolis, Bloomington, and Oklahoma City. Muylle signed a license agreement, moved to San Francisco, and opened a W&C operation. W&C’s executives were present and taught the first class, worked with Muylle to approve paintings for use, gave Muylle company email addresses, and advertised the San Francisco operation on the W&C website. Disagreements arose. Muylle gave notice to terminate the agreement, changed the business name to “Art Uncorked,” and ceased using the W&C name and marks. W&C alleged trademark infringement, 15 U.S.C. 1051. Muylle’s counterclaims invoked California franchise law, federal trademark cancellation. and Indiana abuse of process law. Plaintiffs failed to meet discovery deadlines, despite being sanctioned three times. The Seventh Circuit affirmed: dismissal of the California law counterclaims; W&C's summary judgment on Muylle’s trademark cancellation counterclaim; Muylle's summary judgment on trademark dilution, sale of counterfeit items, unfair competition, bad faith, tortious conduct, abuse of process, breach of contract, fraud, and a claim under the Indiana Crime Victims Act; and Muylle's partial summary judgment on trademark infringement. Through November 18, 2011, W&C impliedly consented to Muylle’s using the marks. On claims of trademark infringement and false designation of origin (for any use after November 18, 2011), and Muylle’s abuse of process counterclaim, the court affirmed awards to Muylle of $270,000 on his counterclaim and $175,882.68 in fees. View "Wine & Canvas Development, LLC v. Muylle" on Justia Law

Design Basics claims rights to about 2700 home designs and sued Lexington for copyright infringement, contending that Lexington built homes that infringed four Design Basics’ designs. The district court granted Lexington summary judgment, finding no evidence that Lexington ever had access to Design Basics’ home plans. The Seventh Circuit affirmed, agreeing that Design Basics has no evidence of access and stating that no reasonable jury could find that Lexington’s accused plans bear substantial similarities to any original material in Design Basics’ plans. The court noted that its owner acknowledged in his deposition that “potential copyright infringement cases influence[d his] decision to become an owner of Design Basics.” He testified that proceeds from litigation have become a principal revenue stream for Design Basics. “Design Basics’ business model of trawling the Internet for intellectual property treasures is not unique.” View "Design Basics, LLC v. Lexington Homes, Inc." on Justia Law

Plaintiff sells personal care kits. Plaintiff’s products include a line of “Minimergency Kits,” which come in small fabric bags designed to look like men’s Dopp Kits (a now-cancelled trademark for travel kits, originally for men’s shaving gear, used widely by the military in World War II). Urban Aid also sells personal care kits. It agreed to create a custom kit for a shoe distributor, for use in a sales promotion. The distributor wanted the kits to come in a bag similar to plaintiff’s bag and gave Urban Aid a picture of plaintiff’s bag to work from. After the distributor began its sales promotion, plaintiff filed suit, alleging that the shape and design of its bag were protected trade dress, that Urban Aid’s bag violated the Lanham Act, the Illinois Uniform Deceptive Trade Practices Act, and the Illinois Consumer Fraud and Deceptive Business Practices Act, and that Urban Aid’s bag tortiously interfered with plaintiff’s prospective business relations. The district court found that plaintiff’s claimed trade dress was functional as a matter of law and granted Urban Aid summary judgment on the Lanham Act and the related state-law claims. The Seventh Circuit affirmed; the undisputed evidence shows that the claimed design features affect product quality. View "Arlington Specialties, Inc. v. Urban Aid, Inc." on Justia Law

Plaintiff sued Amazon, claiming that it permitted third parties to advertise counterfeit copies of books, Vagabond Natural and Vagabond Spiritual, that the plaintiff wrote and self‐published, detailing his experiences as a vagabond homeless man. He says Amazon refused repeated requests to remove the advertisements, although Amazon did eventually remove them. He insists that legitimate sales would have generated “millions of dollars for Amazon” and allowed him “to end homelessness,” but that Amazon “forcefully exploited” his books by counterfeiting them. He claims to have examined copies of each book purchased through Amazon by his cousin and determined that all were unauthorized reproductions because genuine copies would bear his fingernail indentations on the covers. The district judge dismissed. The Seventh Circuit affirmed, noting that the books at issue are hard copies, rather than online copies, and are almost certainly Hart’s self‐published books because they are identical to those books. Only six copies were sold by Amazon. There is no plausible allegation that, even if the books sold by Amazon are counterfeits, Amazon was aware of the fact. Counterfeiting cannot be presumed; Hart’s claims did not meet even a minimum standard of plausibility. View "Hart v. Amazon.com, Inc." on Justia Law

In the 1980s, a wilderness guide, Maine developed and bottled an all-natural bug repellant under the mark “BUG OFF.” She did not conduct trademark searches. Maine sold BUG OFF at craft fairs, by catalog and website, and at trade shows. From 1992-1998, she took orders for BUG OFF from every state. In 1994, Smith & Hawken began carrying BUG OFF in its catalog and stores. In 1998 Chervitz, who later assigned to Kaz, filed an application for the BUG OFF trademark, which was registered in 2000. In 1999, Kaz sold millions of BUG OFF wristbands. In 2002, Maine sought to register the BUG OFF mark. The PTO refused, based on the Chervitz-Kaz registrations; Maine did not then assert pre-dating rights. In 2003, S.C. Johnson filed an intent-to-use application for the BUG OFF mark. Maine’s attorney communicated that she had used the mark since at least 1992. The PTO refused S.C. Johnson’s application. In 2007 Kaz assigned its rights to S.C. Johnson. In 2010, S.C. Johnson began using the mark. In 2011 Maine sold to Nutraceutical; S.C. Johnson’s application advanced to registration. S.C. Johnson sued Nutraceutical. Afte the bench trial, S.C. Johnson asserted that Nutraceutical had not shown continuous use after 2012. The court found that while Nutraceutical had proved that it was the senior user and was using the mark nationally from 1995-1998 and continued sales through 2012, it did “not demonstrate continued sales after 2012, which constitutes non-use for more than one year.” The Seventh Circuit reversed. The district court abused its discretion in considering the post-trial argument. Trademark ownership is not acquired by registration, but from prior appropriation and actual use in the market. View "S.C. Johnson & Son, Inc. v. Nutraceutical Corp." on Justia Law

In 1984, Jesus Muhammad‐Ali painted a portrait of the leader of the Nation of Islam, Louis Farrakhan. Ali later testified that his agreement with Farrakhan included only the portrait, not lithographs, and that Farrakhan never asked him to produce lithographs. In 2013, Ali sued Final Call, a newspaper that describes itself as the “propagation arm of the Nation of Islam,” for copyright infringement. Final Call admittedly had sold 115 copies of a lithograph of Ali’s Farrakhan portrait, but claimed it had authority to do so. The Seventh Circuit reversed the district court’s judgment in favor of Final Call. The law places the burden of proof on the party asserting license or authorization. Ali proved all he was required to prove, a prima facie case of infringement. A plaintiff is not required to prove that the defendant’s copying was unauthorized in order to state a prima facie case of copyright infringement. View "Ali v. Final Call, Inc." on Justia Law

Slep-Tone has filed more than 150 suits under the Lanham Act, 15 U.S.C. 1051, challenging the unauthorized copying and performance of its commercial karaoke files. In addition to the registered Sound Choice trademark, Slep-Tone claims ownership of distinctive trade dress, consisting of typeface, style, and visual arrangement of the song lyrics displayed in the graphic component of the accompaniment tracks; a display version of the Sound Choice mark; and the style of entry cues that are displayed to signal when singers should begin to sing. Slep-Tone alleges that it has used this trade dress for decades and that it is sufficiently recognizable to enable customers to distinguish a Slep-Tone track from a track produced by a competitor. The pub operators own hard drives containing allegedly illegitimate “bootleg” copies of Slep-Tone tracks and, allegedly, are improperly “passing off” the copies as genuine Slep-Tone tracks. The district court dismissed claims of trademark infringement, reasoning that the complaint did not plausibly suggest that the unauthorized use of Slep-Tone’s trademark and trade dress is likely to cause confusion among customers as to the source of any tangible good containing the tracks, a prerequisite to relief under either cited section of the Lanham Act. The Seventh Circuit affirmed. Slep-Tone’s real complaint concerns theft, piracy, and violation of Slep-Tone’s media policy rather than trademark infringement. View "Phoenix Ent. Partners, LLC v. Rumsey" on Justia Law

Bell sued several defendants for copyright infringement, alleging that they impermissibly displayed a photo of the Indianapolis skyline that belongs to Bell on websites promoting their respective businesses. With respect to one defendant, Bell misidentified the photograph. As for the other defendants, the court concluded that although Bell had established ownership of the photo, he had failed to prove damages: Bell had not demonstrated the photo’s fair market value, nor had he shown that defendants profited from their use of his photo. The district court granted summary judgment for defendants on both damages and injunctive and declaratory relief. Bell filed a second copyright infringement lawsuit against some of the defendants in the same court. The district court dismissed the second case based on res judicata. The Seventh Circuit affirmed both decisions, noting that the photographs were removed from the websites long ago and that the websites no longer exist. The second lawsuit involved a common core of operative facts. View "Bell v. Taylor" on Justia Law