Indy-based Wine & Canvas loses trademark infringement appeal

The 7th Circuit Court of Appeals has affirmed the grant of summary judgment to a California wine and canvas company on a series of trademark infringement claims, finding the original Indiana parent company to the California business failed to prove any of its claims on appeal.

Indianapolis-based Wine & Canvas, owned by Anthony Scott and Tamara McCracken, has locations in Indiana and across the country. In 2008, Christopher Muylle and Theodore Weisser began discussing a franchise arrangement in which Muylle and Weisser would move from Indiana to San Francisco to open a Wine & Canvas operation. The two men signed a license agreement on behalf of their entity, which was known as YN Canvas CA, LLC, with Wine & Canvas.

Both Scott and McCracken were present at the August 2011 launch of the California business, and McCracken taught the first class. She also helped Muylle and Weisser approve the paintings to use at their “painting nights,” while she, Scott and Donald McCracken gave out company email address and advertised the San Francisco operation on the website for their company, Wine & Canvas.

However, disagreements arose about the amount of ownership the plaintiffs would have in the California company, so Muylle and Weisser decided to terminate the license agreement on Nov. 18, 2011, and renamed their business to Art Uncorked. Wine & Canvas and its owners filed a trademark infringement claim in November 2011, and Muylle filed trademark cancellation and abuse of process counterclaims.

During the proceedings, the plaintiffs in the case failed to serve written discovery responses by their due date and also failed to respond to a motion to compel. By the end of the case, the plaintiffs had been sanctioned three times for a total of $2,156. Also during the proceedings Weisser defaulted.

Meanwhile, the district court dismissed the California franchise law counterclaims, then granted Wine & Canvas’ motion for summary judgment on the trademark cancellation counterclaim. However, the abuse of process counterclaim survived, and the court granted summary judgment and partial summary judgment to Muylle on most of the plaintiffs’ claims.

Only Wine & Canvas’ trademark infringement and false designation of origin claims and Muylle’s abuse of process claim proceeded to trial. A jury found in favor of Muylle on all counts, and the court granted him $175,882.68 in fees. Wine & Canvas raised 14 issues on appeal, but the 7th Circuit Court of Appeals determined only five should be addressed in a Thursday opinion. The appellate court found in favor of Muylle on each of the five issues.

First, the 7th Circuit determined the district court did not abuse its discretion in imposing sanctions against Wine & Canvas in connection with its untimely discovery responses, as the company had missed multiple deadlines. The $2,156 in sanctions consisted only of the costs Muylle incurred related to the sanctions motion. The district court also did not err in admitting a statement that Scott made to Muylle during settlement discussions because the statement showed Scott’s “improper intent…in filing (the) the lawsuit,” Judge Gary Feinerman, sitting by designation from the Northern District of Illinois, wrote.

The appellate court also found that Muylle was entitled to summary judgment on the trademark infringement claim, as he established implied consent to use the Wine & Canvas trademark when the California company initially launched. Further, while the district court did err in determining Wine & Canvas failed to address the issue of confusion between the two company marks in its opposition brief, such error does not warrant reversal because the jury found for Muylle on the trademark infringement claim for the period after Nov. 18, 2011.

“It follows that there would be no point to reversing the grant of summary judgment on the unfair competition claim and remanding for trial,” Feinerman wrote.

Finally, the 7th Circuit affirmed the award of attorney fees to Muylle, noting that previous case law allows the grant of a motion for attorney fees even after a notice of appeal is filed.

The cases are Wine & Canvas Development, LLC, Anthony Scott, Tamara McCracken, and Donald McCracken v. Christopher Muylle, Theodore Weisser, YN Canvas LLC d/b/a Art Uncorked, Art Uncorked, LLC, and Weisser Management Group, LLC, 15-2088 and 15-3658.