April 1, 2019
Appeals from the United States District Court for the
Southern District of Illinois. No. 3:13-cv-00297 DRH/SCW -
David R. Herndon, Judge.
Easterbrook, Sykes, and Brennan, Circuit Judges.
appeal involves a long-running trademark dispute over
ownership and misuse of a word-mark 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
sued 4SEMO for trademark infringement, claiming prior use and
ownership of the "Life Saver" wordmark. That claim
did not survive summary judgment. 4SEMO counter-claimed 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.
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.
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.
Fielack is the president of 4SEMO, a home-remodeling company
located in southeast Missouri. Bob and Scott Ingoldsby have
been manufacturing storm shelters since 1998. They began
operating under the SISS name in 2000 and continued to do so
as Ingoldsby Excavating, Inc., since 2008.
4SEMO purchased a storm shelter from an SISS dealer and
installed it at the direction of a remodeling client. Pleased
with the product, 4SEMO expressed interest in buying more
shelters from the dealer and began promoting them to
potential customers. The dealer asked if 4SEMO would be
interested in simply purchasing its existing inventory and
becoming a dealer in its own right. 4SEMO agreed to do so.
decided that a set of identifiable trademarks would assist
his company's foray into storm-shelter marketing and
installation. In late March or early April 2005, he settled
on the name "Life Saver Storm Shelters." He also
designed a logo: a red Greek cross on a black background with
the "Life Saver" product name written across its
horizontal bar in yellow lettering. Fielack testified at
trial that no one at 4SEMO had seen the name or logo before.
took possession of the former dealer's inventory,
stenciled its new logo and wordmark onto the shelters, and
displayed them for sale. Starting in April or early May 2005,
4SEMO's brochures and signage, and the shelters it sold,
featured the marks as shown below:
5 4SEMO signed a formal dealership agreement with SISS. The
contract granted 4SEMO exclusive retail rights in a territory
that included portions of Missouri and Arkansas. It did not
mention the marks. Around this time Scott Ingoldsby visited
4SEMO to exchange one of the inventory shelters for an
updated model. He expressed no familiarity with the marks.
4SEMO continued to market its inventory under the "Life
Saver Storm Shelters" brand.
February 2006 the Ingoldsbys asked 4SEMO for permission to
use the "Life Saver Storm Shelters" marks in
connection with retail sales and installations in southern
Illinois. 4SEMO orally agreed to permit use of the marks in
that region on three conditions: only shelters manufactured
by the Ingoldsbys could be sold under the marks, the
Ingoldsbys would install all branded shelters in a manner
familiar to 4SEMO, and 4SEMO would maintain control over all
promotional materials bearing the marks.
Ingoldsbys did not comply with the license agreement. Doing
business as SISS and later as Ingoldsby Excavating, they used
the marks to promote a nationwide sales campaign, supplied
other dealers with "Life Saver" branded shelters,
and even registered the domain name
Ingoldsbys planned to continue this activity until 4SEMO
discovered it, at which point they would try to buy the
marks. And that's precisely what happened. In 2011 4SEMO
discovered the widespread unauthorized use and demanded
cessation. Scott Ingoldsby immediately offered to purchase
the marks. The parties were headed toward an agreement until
August 2012 when ...