Trademark Infringement

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7^th Circuit Court of Appeals

Case Name: 4SEMO.com Inc., v. Southern Illinois Storm Shelters, Inc., et al.

Case No.: 18-1998; 18-2095

Officials: EASTERBROOK, SYKES, and BRENNAN, Circuit Judges.

Focus: Trademark Infringement

This appeal involves a long-running trademark dispute over ownership and misuse of a wordmark and logo for below-ground storm shelters. The story begins in 2005 when a Missouri-based home-remodeling firm known as 4SEMO.com Inc. began selling storm shelters manufactured by Southern Illinois Storm Shelters, Inc. (“SISS”), an Illinois company run by Robert “Bob” Ingoldsby and his brother Scott. The dealership agreement gave 4SEMO the exclusive right to sell SISS shelters in portions of Missouri and Arkansas. As part of its marketing campaign, 4SEMO created a wordmark—“Life Saver Storm Shelters”— and a logo using that name, which it affixed to the shelters. In 2006 the Ingoldsbys asked 4SEMO for permission to use these marks on shelters marketed in southern Illinois. 4SEMO granted a limited license for that purpose, but the Ingoldsbys violated it by using the marks on products sold throughout the country.

SISS sued 4SEMO for trademark infringement, claiming prior use and ownership of the “Life Saver” wordmark. That claim did not survive summary judgment. 4SEMO counterclaimed for trademark infringement and false endorsement under the Lanham Act, along with several state-law claims. The counterclaims were tried to the bench, and the district judge found for 4SEMO across the board, entered a cease-and-desist order, and awarded more than $17 million in disgorged profits as damages. The judge denied 4SEMO’s motion for vexatious-litigation sanctions under 28 U.S.C. § 1927 and attorney’s fees under the Lanham Act.

On appeal SISS does not contest the judge’s factual findings. It argues instead that 4SEMO’s logo violates a statute that makes it a crime to use the iconic emblem reserved to the American Red Cross: a red Greek cross on a white background. SISS also raises a novel legal argument to attack 4SEMO’s ownership of the wordmark. Finally, SISS challenges the eight-figure monetary award. In a cross-appeal 4SEMO seeks review of the denial of § 1927 sanctions and Lanham Act attorney’s fees.

We affirm for the most part. SISS’s statutory argument is meritless and its legal theory challenging 4SEMO’s ownership of the marks is new on appeal and thus is waived. We also reject the challenge to the damages award; the judge’s conclusion that SISS engaged in trademark infringement on a vast scale is well supported by the evidence. Finally, although the judge reasonably concluded that § 1927 sanctions were not warranted, his summary denial of Lanham Act fees cannot be squared with his factual findings and legal conclusions on the merits of the infringement claim. Because those findings and conclusions satisfy the Act’s standard for recovery of attorney’s fees, we remand for the limited purpose of determining a reasonable fee award.

Affirmed in part. Reversed and remanded in part.

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Derek A Hawkins is trademark corporate counsel for Harley-Davidson. Hawkins oversees the prosecution and maintenance of the Harley-Davidson’s international trademark portfolio in emerging markets.