Dietary supplement vendor Ellishbooks loses appeal against biotechnology co. Quincy Bioscience in a TM infringement suit

Date Published: Jun 21, 2021

Quincy Bioscience, LLC ("Quincy") is a biotechnology company based in Madison, Wisconsin, focused on discovering and developing various novel technologies that support cognitive function and other routine health challenges. It is the only manufacturer of the dietary supplement - Prevagen, which is known to be a leading memory support and brain health supplement in America. Prevagen, which contains a substance called apoaequorin, an ingredient originally discovered in jellyfish, is clinically shown to improve certain aspects of cognitive function associated with aging. Marketed and sold through brick and mortar stores and other internet websites, Prevagen is packed carefully with all relevant information that may not otherwise be available on the bottle label. Quincy is known to have registered its Prevagen trademark in 2007 and has been using it continuously ever since. Ellishbooks Corporation, related individuals, and entities (collectively, "Ellishbooks") is a vendor who is known to sell dietary supplements identified as Prevagen on Amazon.com without Quincy's authorization. The products includes items that (1) are in altered or damaged packaging that lack the product information sheets found in Prevagen products sold by authorized sellers; (2) lack the appropriate purchase codes or other markings that identify the appropriately authorized retail seller of the product; (3) contain Radio Frequency Identification tags and security tags from retail pharmacy stores. On discovering the above, Quincy filed a suit against Ellishbooks alleging claims for trademark infringement, false advertising, dilution, and unfair competition under the Lanham Act, 15 U.S.C. §§ 1114, 1125, as well as claims under Illinois Statutory and Common Law. Ellishbooks were to pay damages amounting $480,968.13 to Quincy after the District Court for the Northern District of Illinois, Eastern Division ("District Court") granted Quincy's motion for a permanent injunction that prevented them from using the Prevagen mark. Dissatisfied, Ellishbooks appealed to the U.S. Court of Appeals for the Seventh Circuit, ("Seventh Circuit") (Quincy Bioscience LLC v. Ellishbooks 957 F.3d 725 (7th Cir. 2020)), challenging the decision on several grounds, which were ultimately waived and considered meritless by the jury, thereby affirming the order of the District Court. 

Quincy, the trademarked manufacturer of Prevagen, a dietary supplement used to support cognitive function, is a renowned company with a high reputation. Marketed and sold through brick‐and‐mortar stores and internet websites by Quincy, Prevagen is packed in a single-facing box containing a bottle of dietary supplements and a product information sheet. Both the box and the sheets are known to contain valuable information regarding the product, which is otherwise unavailable on the bottle label. The dispute at hand arose when Ellishbooks Corporation, an Amazon vendor who was not authorized to sell Prevagen products, sold dietary supplements identified as Prevagen on Amazon.com. 

In their suit of action, Quincy claimed that Ellishbooks "knew or had reason to know that at least some of the Prevagen products [it] sold were at one time stolen from retail outlets across the country." Violations of the Lanham Act and Illinois Statutory and Common Law were brought forth by Quincy, where they sought (1) preliminary and permanent injunctive reliefs to prevent Ellishbooks from using the Prevagen mark or any symbol/mark representing the Prevagen mark; and (2) from falsely representing their products to be associated with Quincy. In addition, damages, lost profits, statutory damages, treble damages, and attorneys' fees, along with a request for an accounting of profits derived by Ellishbooks from Prevagen products was also sought by Quincy. 

Considering Ellishbooks' non-response to the complaint, Quincy filed a motion for entry of default, which the District Court granted. The Court, in its judgment, noted Ellishbooks' request for the default be vacated on substantive grounds but rejected the same, citing their "failure to establish good cause for their default, quick action to correct it, and a meritorious defense to the plaintiff's complaint." 

Following the default judgment, the Court called for a prove-up hearing to determine the value of damages to be awarded, where Quincy subpoenaed and submitted documents from Amazon.com that established Ellishbooks had received $480,968.13 in sales from products sold as Prevagen. Quincy also moved to amend the Court's default judgment, as it failed to address the request for a permanent injunction against Ellishbooks. The Court granted Quincy's motion and amended the judgment, thereby banning Ellishbooks from (1) infringing Quincy's Prevagen trademark; and (2) selling stolen products bearing the Prevagen trademark.

Dismayed by the decision, Ellishbook appealed to the Seven Circuit, raising three challenges to the existing decision of the District Court. Firstly, it was appealed that the District Court failed to make "factual findings on decisive issues" as required by the Federal Rule of Civil Procedure 52(a). Addressing the matter, the Seventh Circuit, after a thorough examination of the contentions raised by both the parties up to date, along with the interpretations of the District Court, came to the conclusion that it had already been established that Ellishbooks knew, or had reason to believe that some of the Prevagen products it sold were stolen, thereby reaffirming the District Court's findings on the same. The second appeal raised was that the District Court erred in holding that Ellishbooks knew or had reason to believe that a portion of the Prevagen products being sold was stolen. Citing Fednav Int’l Ltd. v. Cont’l Ins. Co., 624 F.3d 834, 841 (7th Cir. 2010) on the matter, the Seventh Circuit was of the view that Ellishbooks had waived its chance of appeal by having failed to present the argument to the District Court. The final appeal raised by Ellishbooks was that the District Court erred in ordering a permanent injunction against them when Quincy had not established that Ellishbooks knew that a portion of the Prevagen products were being stolen. Reiterating their conclusion on the previous ground for appeal, the Seventh Circuit held that, having forfeited the opportunities to contest or counter the evidence for the same in the District Court, the argument has been waived for purposes of the appeal. 

Given the meritless nature of the appeals by Ellishbooks, the Seventh Circuit reaffirmed the decision of the District Court (Quincy Bioscience, LLC v. Ellishbooks, 961 F.3d 938, 941 (7th Cir. 2020) (Per Curiam)). Following this, Quincy moved for sanctions (in the Seventh Circuit) under the Federal Rules of Appellate Procedure, wherein they submitted a timely statement seeking a total of $50,059.50 in attorneys' fees. Ellishbooks questioned the same in another response that objected to the attorney's fee being granted to (1) time spent on mediation and the request for sanctions; (2) time duplicated by the two attorneys; and (3) time spent performing legal research for specific rules. After a thorough perusal on the matter, the Court granted a motion in favor of Quincy, but reduced sanctions from the requested $50,059.50 to $44,329.50. This was because the holder's fees should be limited to work defending the appeal, and the fees for the time on or after the issuance of the opinion resolving the appeal are to be excluded.

Quincy Bioscience LLC v. Ellishbooks 957 F.3d 725 (7th Cir. 2020)