Appellate court awards attorney’s fees in an exceptional trademark infringement case. 4SEMO v. SISS

Appellate court awards attorney’s fees in an exceptional trademark infringement case. 4SEMO v. SISS

A trademark is something that a manufacturer brands its products with, to let consumers know who manufactured the product. Traditionally, a trademark is thought of as a word, phrase or symbol used to label a product, but it is possible to gain trademark protection for things such as colors or scents. Trademarks are intended to protect consumers from inferior quality products. Trademark owners are granted the exclusive right to brand their products with a trademark to prevent consumer confusion about who manufactured a product. If someone other than the trademark owner uses a trademark in a way which creates consumer confusion, that can be considered trademark infringement.  A trademark owner can sue to stop trademark infringement with an injunction and to get monetary damages for trademark infringement which has already occurred.

Trademark law in the United States is defined by state law, federal law and case precedent, therefore it can sometimes be difficult to determine what damages a trademark plaintiff can recover.  The Lanham Act is a federal law which defines what is considered trademark infringement and what damages can be awarded to a trademark owner.  Even though there is only one Lanham Act, different federal circuit courts have slight differences in their interpretation of the law. Specifically there was a difference of opinion in the circuit courts about whether trademark infringement must be willful for a trademark owner to get a defendant’s profits related to trademark infringement.  The Lanham Act states, in ‘exceptional cases’ a court may award reasonable attorney fees to the prevailing party. 15 U.S.C. § 1117(a). But the courts differed on what constituted an exceptional case.  Some courts imposed the requirement that the plaintiff must prove that the infringement was willful, other courts did not require the plaintiff demonstrate that the infringement was willful.

This ambiguity in trademark law lead to ROMAG FASTENERS, INC. v. FOSSIL, INC., 2016-1115, 2016-1116, 2016-1842 (C.A.F.C. 2017).  In that case, the district court declined to award the plaintiff attorneys fees because Romag had not proven that Fossil’s trademark infringement was willful, which was a requirement for an award of attorney’s fees under Second Circuit case law.  Romag appealed to the United States Supreme Court.  The Supreme Court remanded the case with the guidance that a trademark infringement case can be exceptional, and attorneys fees appropriate, even if willful trademark infringement is not proven. ROMAG was a long path to follow to ultimately reach the conclusion that attorneys fees may be awarded in trademark infringement cases based on the totality of the circumstances, a showing of willfulness is not required.

4SEMO.COM INC. v. SOUTHERN ILLINOIS STORM SHELTERS, INC, 18-1998, (7th Cir. 2019) is a trademark infringement case where the court awarded the plaintiff attorney’s fees.  The dispute centers around a trademark for below ground storm shelters.  Both the plaintiff and the defendant operate in the midwest region of the United States which is known for powerful wind storms so below ground shelters are big business.  The relationship between the plaintiff and defendant began with an agreement that the plaintiff would be the exclusive seller of shelters manufactured by the defendant in the states of Missouri and Arkansas.  The plaintiff developed a logo and trademark “LIFE SAVER STORM SHELTERS”.  The plaintiff granted the defendant a limited license to use the trademark in Illinois, but the defendant then began using the trademark to sell products throughout the United States.  The plaintiff sued the defendant for trademark infringement.  The district court judge found for the plaintiff, entered a ceaseand-desist order, and awarded more than $17 million in disgorged profits as damages.  However the district court did not award the plaintiff with attorney’s fees.

The plaintiff appealed to the Court of Appeals for the Seventh Circuit.  The circuit court reviewed the factual findings of the district court and held that there was adequate evidence to award the plaintiff with attorney’s fees.  The defendants engaged in a vast infringement campaign and planned in advance to offer to buy the trademarks only if
and when the plaintiff discovered the improper use and complained.  The district court judge noted that the defendant acted in bad faith, intentionally, willfully, and maliciously; refused to cease the infringing activity and caused the plaintiff unnecessary trouble and expense.  Based on these findings the circuit court found that there was adequate evidence that this was an exceptional case and the plaintiff was entitled to attorneys fees under 15 U.S.C. § 1117(a).

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