Quincy Bioscience, LLC v. Ellishbooks, No. 19-1799 (7th Cir. 2020)

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Justia Opinion Summary

Quincy’s Prevagen® dietary supplement is sold through brick‐and‐mortar stores and online. Ellishbooks, which was not authorized to sell Prevagen® products, sold dietary supplements identified as Prevagen® on Amazon.com, including items that were in altered or damaged packaging; lacked the appropriate markings that identify the authorized retail seller; and contained Identification and security tags from retail stores. Quincy sued under the Lanham Act, 15 U.S.C. 1114. The court entered a $480,968.13 judgment in favor of Quincy, plus costs, and permanently enjoined Ellishbooks from infringing upon the PREVAGEN® trademark and selling stolen products bearing the PREVAGEN® trademark.

The Seventh Circuit affirmed and subsequently awarded $44,329.50 in sanctions under Federal Rule of Appellate Procedure 38. Ellishbooks’s arguments “had virtually no likelihood of success” on appeal and it appeared that Ellishbooks attempted to draw out the proceedings for as long as possible.

This opinion or order relates to an opinion or order originally issued on April 24, 2020.

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In the United States Court of Appeals For the Seventh Circuit ____________________ No. 19 1799 QUINCY BIOSCIENCE, LLC, Plaintiff Appellee, v. ELLISHBOOKS, et al., Defendants Appellants. ____________________ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:17 cv 08292 — Sharon Johnson Coleman, Judge. ____________________ DECIDED JULY 22, 2020 ____________________ Before FLAUM, RIPPLE, and WOOD, Circuit Judges. PER CURIAM. After our decision on the merits, Quincy Bio science, LLC v. Ellishbooks, 957 F.3d 725 (7th Cir. 2020), we lat er granted Quincy Bioscience, LLC’s (“Quincy”) motion for sanctions. The order directed Quincy to submit a statement of its costs and fees incurred in the case within fourteen days and gave the appellants (collectively “Ellishbooks”) fourteen days to raise any objections. Quincy has submitted its state ment and requests $50,059.50 in attorneys’ fees. Ellishbooks 2 No. 19 1799 has responded in opposition and also seeks confirmation that sanctions were not imposed against its attorney, Robert DeWitty. Quincy sought, and was granted, leave to file a sur reply to counter Ellishbooks’s assertion that the sanc tions were imposed only against Ellishbooks, and not its counsel. The underlying facts are fully set forth in our merits opinion, see Quincy Bioscience, LLC, 757 F.3d at 726–28, and we therefore only briefly summarize them here. Quincy filed suit against Ellishbooks alleging that it violated the Lanham Act, 15 U.S.C. §§ 1114, 1125, and various state laws when it engaged in the unauthorized and unlawful sale of Quincy’s dietary supplements bearing the Prevagen® trademark. Quincy successfully sought a default judgment, and, after a prove up hearing the district court awarded Quincy $480,968.13 plus costs. The court also permanently enjoined Ellishbooks from infringing upon Quincy’s trademark and selling stolen products bearing the Prevagen® mark. We af firmed, concluding that Ellishbooks’s arguments on appeal were meritless. Quincy then moved for sanctions under Fed eral Rule of Appellate Procedure 38. We granted the motion because Ellishbooks’s arguments “had virtually no likeli hood of success” on appeal and because it appeared that El lishbooks had attempted to draw out the proceedings for as long as possible. Quincy Bioscience, LLC v. Ellishbooks, 961 F.3d 938, 941 (7th Cir. 2020) (per curiam). Quincy submitted a timely statement seeking a total of $50,059.50 in attorneys’ fees for the time that attorneys Jona than J. Krit and Sanjay S. Karnik had spent litigating the ap peal. Ellishbooks filed a timely response, objecting to time spent on mediation and the request for sanctions, time du No. 19 1799 3 plicated by the two attorneys, and time spent performing legal research for specific rules. Ellishbooks also sought con firmation that the attorneys’ fees were imposed against the appellants and not their attorney, Robert W. DeWitty, or his law firm. Quincy then moved to file a sur reply addressing the scope of the sanctions award, and we granted the mo tion. We first address the scope of the sanctions award. Ellish books argues that because the court’s opinion never referred to Mr. DeWitty nor explicitly awarded sanctions against him or his law firm, the sanctions award should be limited to El lishbooks. We cannot accept this argument. We granted Quincy’s motion for sanctions, and in that motion Quincy repeatedly requested that the court award sanctions against the appellants and their counsel. Further, the opinion cited actions by counsel as support for granting the motion. The sanctions were awarded against both Ellishbooks and Mr. DeWitty. Next Ellishbooks argues that the court should not award attorneys’ fees for time “directed to efforts occurring outside 1 the appeal brief or oral proceeding before this Court.” We have indicated that fees awarded as a sanction should be limited to the time spent defending the appeal and should not include time spent after the litigant has won in this court. See, e.g., Wachovia Sec., LLC v. Loop Corp., 726 F.3d 899, 910 (7th Cir. 2013) (awarding fees “expended in defense of” appeal); Blockley v. Work Ctr., Inc., No. 99 1421, 2000 WL 973625, at *2 (7th Cir. July 11, 2000) (unpublished) (describ ing “just damages” as “the reasonable attorneys’ fees … in 1 App. R. 63 at 2. 4 No. 19 1799 curred in defending the appeal” (internal quotation marks omitted)). The Supreme Court similarly has described Rule 38 as giving appellate courts authority to award “expenses” that are “caused by a frivolous appeal.” Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 407 (1990). And the Ninth Cir cuit has explicitly held that a sanction award should not en compass fees spent preparing the motion for sanctions. See Blixseth v. Yellowstone Mountain Club, LLC, 854 F.3d 626, 631 (9th Cir. 2017). Ellishbooks argues that fees for time spent in four catego ries of work should be excluded: mediation proceedings, sanctions proceedings, researching specific rules, and com 2 munications with Counsel Press. We believe that Quincy’s fees should be limited to work defending the appeal. We is sued our opinion resolving the appeal on April 24, 2020; we therefore will exclude attorneys’ fees requested for time on or after April 24, 2020. Subtracting these entries from each attorney’s requested time results in a total reduction of $5730.00 ($3120.00 from Mr. Krit’s entries and $2610.00 from Mr. Karnik’s entries). Ellishbooks also argues that some of counsel’s time en tries are duplicative of each other, but the entries it identifies do not appear unnecessary. For example, both attorneys re viewed the notice of appeal and a court order; both attorneys 2 In support of its arguments, Ellishbooks cites only a bankruptcy deci sion, In re Thompson, 520 B.R. 713 (Bankr. E.D. Wis. 2014), in which the court declined to award attorneys’ fees under 28 U.S.C. § 1927 because the creditor had not “unreasonably and vexatiously multipl[ied] the pro ceedings by [its] conduct in this case,” including participating in a failed mediation. Thompson has no application here. No. 19 1799 5 took part in drafting and filing two status reports; and both attorneys either reviewed or responded to email from op posing counsel. It is not clear that counsel’s work was dupli cative. These entries will not be excluded. Ellishbooks also submits that the court should exercise its discretion and limit its liability to a much smaller amount than the requested fees because it is a “very small entity,” 3 with “essentially no assets.” But as Quincy points out, El lishbooks provides no support for its claim of insolvency. There is no basis for a reduction of an award on this basis. It is therefore ordered that sanctions are awarded against both the appellants and Mr. DeWitty in the amount of $44,329.50. 3 App. R. 63 at 4.
Primary Holding

Seventh Circuit awards sanctions for a Lanham Act appeal that “had virtually no likelihood of success.”

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