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

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

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

Hyson USA and Hyson 2U are food distributors. Hyson USA is wholly owned by its president, Tansky, and has operated since 2006. Kaminskas was one of its managers. In 2012, Hyson USA encountered serious financial difficulty, culminating in the loss of its liability insurance, forcing the company to suspend operations. Months later, Kaminskas established Hyson 2U. Hyson USA transferred its branded inventory and equipment to the new company. Hyson 2U leased the warehouse from which Hyson USA had operated. Tansky then switched roles with Kaminskas and went to work at the new company. Hyson 2U operated in the same manner and in the same markets as Hyson USA. In 2014, Tansky was fired. He and Hyson USA, again operational, sued Hyson 2U and Kaminskas alleging trademark infringement under the Lanham Act. The judge dismissed the trademark claims, citing acquiescence, and relinquished supplemental jurisdiction over the state-law claims. The Seventh Circuit reversed, stating that acquiescence is a fact-intensive equitable defense that is rarely capable of resolution on a motion to dismiss. View "Hyson USA Inc. v. Hyson 2U, Ltd." on Justia Law

Hugunin first sold fishing tackle in Land O’ Lakes, Wisconsin, in 1997. Hugunin’s manufacturing enterprise now sells fishing tackle to retailers in several states. In 2000 the U.S. Patent and Trademark Office registered LAND O LAKES as the trademark of his fishing tackle. A large agricultural cooperative named Land O’ Lakes is based in Minnesota and sells dairy products throughout the United States. It has used LAND O LAKES trademark since the 1920s. In 1997 the dairy company became the official dairy sponsor of a sport-fishing tournament and began advertising its products in fishing magazines. Three years later, having learned that Hugunin had registered LAND O LAKES as a trademark, the dairy company wrote him that he was infringing its trademark. He refused either to apply for a license or to give up the trademark. The Trademark Trial and Appeal Board proceeding was suspended pending the outcome of litigation. The Seventh Circuit affirmed dismissal of Hugunin’s suit, stating “It’s hard to believe that a giant dairy company wants to destroy or annex Hugunin’s tiny fishing-tackle business, or that Hugunin’s tackle sales are being kept down by Land O’ Lakes’ having an identical trademark.” View "Hugunin v. Land O'Lakes, Inc." on Justia Law

Hampton's contracts with Window World, allowed Hampton to use WW trademarks. WW alerted Hampton that their dealings were subject to the Illinois Franchise Disclosure Act, and that Hampton had 35 days to elect between rescinding the contracts and signing a franchise agreement. Hampton did neither, but filed suit, alleging violation of the Act and fraud. WW sued under the Lanham Act (Suit 2). Hampton returned a waiver of service, but did not hire a lawyer for Suit 2. Hampton dismissed Suit 1, without prejudice, but did not respond to Suit 2. WW successfully moved for default, then for default judgment. All motions and notices were in the electronic filing system, but Hampton was not using that system and did not respond. The court entered a default judgment for $100,000 in damages and costs, and an injunction. Hampton continued calling his business Window World, but did not make payments or pay the judgment. Hampton closed the business, then filed Suit 3, presenting the same claims as Suit 1, and sought to reopen Suit 2 and set aside the judgment. The judge concluded that Hampton’s failure to follow the electronic filings, plus his professed belief that Suits 1 and 2 had been dismissed together, amounted to excusable neglect, but conditioned reopening of Suit 2 on payment of $33,000. Hampton did not pay. The court reinstated the default judgment. Suit 3 was dismissed; Hampton’s claims in Suit 3 were compulsory counterclaims in Suit 2. The Seventh Circuit affirmed. If the suits are separate, claim preclusion blocks Hampton’s current claims; if they are consolidated, law of the case leads to the same outcome. View "Window World of Chicagoland v. Window World, Inc." on Justia Law

In 1956, Ephrem, a Catholic nun, experienced apparitions of the Virgin Mary. Devotions to Our Lady of America was launched. Ephrem joined a cloistered house, approved by the Pope. Fuller entered the cloister in 1965. In 1979 its three members (including Fuller and Ephrem) formed a new congregation. In 1993 Ephrem founded Our Lady of America Center. Upon her death in 2000, she was succeeded by Fuller and willed her property to Fuller. Most had been created by Ephrem or donated to the cloister or the Center. Fuller registered trademarks for artifacts, including Ephrem’s diary, medallions, and statues. In 2005 McCarthy, a lawyer, and Langsenkamp, “a Papal Knight,” began helping Fuller promote devotions to Our Lady. Fuller gave them a statue and other artifacts. In 2007, the three had a disagreement that resulted in this lawsuit. The men claim to be the authentic promoters of devotions to Our Lady and the lawful owners of the artifacts. Another layman, Hartman, began a campaign to smear McCarthy’s and Langsenkamp’s reputations. Fuller is no longer a nun. A jury returned a verdict in favor of McCarthy and Langsenkamp. The Seventh Circuit affirmed awards: $150,000 in compensatory damages, $200,000 in punitive damages (against Hartman only), plus $295,000 in attorney’s fees and sanctions and $281,000 in costs, to be paid by Fuller, Hartman, and their lawyer. The court vacated an injunction concerning the defamation. View "McCarthy v. Fuller" on Justia Law

Sorensen is the CEO of Inhibitor Technology, which produces rust-inhibiting products containing volatile corrosion inhibitor (VCI), branded with the federally registered trademark THE INHIBITOR. That word mark is owned by Sorensen; he also claims common law trademark rights in a design mark associated with his products, an orange-and-black crosshair. The WD-40 Company, maker of the spray lubricant, introduced the new WD-40 Specialist product line. Sorensen claimed that the branding for those products infringed upon his marks. WD-40 Specialist Long-Term Corrosion Inhibitor, which contains VCI and has a purpose similar to that of Sorensen’s products, contains on its packaging both the word “inhibitor” and an orange crosshair. The district court granted summary judgment, finding that WD-40’s use of the word “inhibitor” was a non-trademark descriptive fair use of the word. As to the crosshair mark, the court found that Sorensen had not presented sufficient evidence to demonstrate a genuine issue of material fact as to a likelihood of confusion. The Seventh Circuit affirmed. The most important factors: similarity of the marks, bad faith intent, and evidence of actual confusion, weigh in favor of WD-40. No consumer would think that the marks are similar. The court noted the” clear weakness of Sorensen’s marks,” which appear inconsistently on his products. View "Sorensen v. WD-40 Co." on Justia Law

Burford agreed to facilitate the purchase and sale of accounting practices for APS. The parties initially signed a contract assigning Louisiana to Burford. They later orally agreed that Burford should also cover Alabama, Mississippi, Tennessee, and Kentucky. APS terminated the contract. Burford sued for breach of contract; APS filed a counterclaim under the Lanham Act, 15 U.S.C. 1051, claiming that Burford started a rival business, “American Accounting Practice Sales,” after APS terminated his contract. APS obtained summary judgment on the contract claim, arguing that the contract was terminable at will. APS voluntarily dismissed its counterclaim with prejudice. As the prevailing party on the Lanham Act claim, Burford sought attorney fees. The district court denied the motion, reasoning that APS’s Lanham Act claim could have been pursued by a rational party seeking to protect its trademark. The Seventh Circuit reversed grant of summary judgment on the contract claim, but affirmed the denial of attorney fees. The contract provided that it could be terminated by APS only if Burford violated the terms of the agreement; even if it was indefinite in duration, the parties contracted around the default rule making such contracts terminable at will. View "Burford v. Accounting Practice Sales, Inc" on Justia Law

After leaving Gensler, an architectural firm with projects throughout the world, where he had been a Design Director, Strabala opened his own firm, 2Define Architecture. Strabala stated online that he had designed five projects for which Gensler is the architect of record. Gensler contends that Strabala’s statements, a form of “reverse passing off,” violated section 43(a) of the Lanham Act, 15 U.S.C.1125(a). The district court dismissed, ruling that, because Strabala did not say that he built or sold these structures, he could not have violated section 43(a), reading the Supreme Court decision Dastar Corp. v. Twentieth Century Fox (2003), to limit section 43(a) to false designations of goods’ origin. The Seventh Circuit vacated, reasoning that Gensler maintains that Strabala falsely claims to have been the creator of intellectual property.View "M. Arthur Gensler, Jr. & Assocs., Inc. v. Strabala" on Justia Law

Fortres develops and sells a desktop management program called “Clean Slate” and holds a federally-registered trademark for use of that name to identify “[c]omputer software used to protect public access computers by scouring the computer drive back to its original configuration upon reboot.” When Warner Bros. Entertainment used the words “the clean slate” to describe a hacking program in the movie, The Dark Knight Rises, Fortres experienced a precipitous drop in sales of its software. Fortres sued, alleging that the use of the words “clean slate” in reference to the software in its movie infringed its trademark in violation of Lanham Act, 15 U.S.C. 1114, 1125, and Indiana unfair competition law. The district court dismissed, reasoning that Fortres had not alleged a plausible theory of consumer confusion, upon which all of its claims depend, and that Warner Bros.’ use of the words “the clean slate” was protected by the First Amendment. The Seventh Circuit affirmed without reaching the constitutional question. Juxtaposed against the weakness of all the other relevant factors, the similarity of the marks is not enough to establish confusion. Trademark law protects the source-denoting function of words used in conjunction with goods and services, not the words themselves.View "Fortres Grand Corp. v. Warner Bros. Entm't, Inc." on Justia Law