Wine & Canvas Development, LLC v. Theodore Weisser
868 F.3d 534
| 7th Cir. | 2017Background
- Wine & Canvas (Plaintiffs) operates social "painting nights" and licensed a San Francisco location to Muylle and Weisser (YN Canvas CA, LLC) in 2011; disagreements arose and the license was terminated Nov. 18, 2011, after which defendants rebranded as Art Uncorked.
- Plaintiffs sued in Indiana state court asserting Lanham Act and state-law claims; defendants removed; Muylle counterclaimed (including abuse of process under Indiana law and trademark cancellation).
- Pretrial litigation was contentious and slow; Plaintiffs missed discovery deadlines, received multiple sanctions, and the district court granted extensive summary judgment to Muylle on many claims, leaving only trademark infringement/false designation (post-Nov. 18, 2011) and Muylle’s abuse of process claim for trial.
- At trial the jury found for Muylle on all three claims and awarded him $270,000 on the abuse-of-process counterclaim; the district court later awarded Muylle Lanham Act attorney fees (~$175,882).
- Plaintiffs appealed fourteen rulings; the Seventh Circuit affirmed, addressing only the few meritorious arguments (sanctions, implied consent, admissibility of settlement statement, unfair-competition summary judgment, and fee jurisdiction).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sanctions for tardy discovery responses | Sanctions inconsistent because later the court excused the lack of a damages itemization as caused by defendant's discovery failures | Responses were untimely and incomplete; sanctions for costs of sanctions motion were appropriate | Affirmed: district court did not abuse discretion; untimeliness alone justified reasonable sanctions |
| Implied consent to use marks (Aug–Nov 2011) | Plaintiffs: Seventh Circuit requires three-part test (active representation, inexcusable delay, undue prejudice) before finding implied consent | Muylle: Plaintiffs’ conduct (helping launch/operate SF location) constituted implied consent | Affirmed: even under the three-part Hyson test, Plaintiffs’ delay was inexcusable and caused prejudice, so implied consent disposed of infringement for that period |
| Admissibility of settlement negotiation statement | Statement during settlement talks about shutting defendant down was protected by FRE 408 and inadmissible | Statement offered to prove Plaintiffs’ ulterior motive for filing suit (element of abuse of process), so admissible for non-prohibited purpose | Affirmed: statement admissible to show intent/ulterior purpose; Rule 408 does not bar using settlement statements to prove liability on a different claim filed later |
| Summary judgment on state-law unfair competition | Plaintiffs: district court erred in deeming the claim abandoned because they incorporated likelihood-of-confusion argument elsewhere | Defendant: claim was abandoned and summary judgment proper | Affirmed (procedurally vacated but harmless): court erred in deeming abandoned but no relief warranted because jury rejected the corresponding federal trademark claim; result would be same |
| District court jurisdiction to award Lanham Act attorney fees after notice of appeal | Plaintiffs: filing notice of appeal divested district court of jurisdiction, so fee order was void | Muylle: district court retained authority to award fees post-appeal under established exceptions | Affirmed: Terket/Kusay exception allows district court to award fees after appeal; fee award stands |
Key Cases Cited
- Hyson USA, Inc. v. Hyson 2U, Ltd., 821 F.3d 935 (7th Cir. 2016) (adopts three-part implied-consent test)
- Scott v. Chuhak & Tecson, P.C., 725 F.3d 772 (7th Cir. 2013) (standard of review for discovery sanctions)
- Terket v. Lund, 623 F.2d 29 (7th Cir. 1980) (district court may award attorney fees after notice of appeal)
- Griggs v. Provident Consumer Discount Co., 459 U.S. 56 (U.S. 1982) (general rule that filing notice of appeal divests district court of jurisdiction)
- Bankcard Am., Inc. v. Universal Bancard Sys., 203 F.3d 477 (7th Cir. 2000) (settlement statements may be admissible to show intent)
- Palmer v. Marion County, 327 F.3d 588 (7th Cir. 2003) (abandonment of issues on summary judgment when not argued)