In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 06-3560

MOSTLY MEMORIES, INCORPORATED,

a Missouri corporation,

Plaintiff-Appellee,

v.

FOR YOUR EASE ONLY, INCORPORATED,

an Illinois corporation, LORI GREINER,

individually, and DANIEL GREINER,

individually and d/b/a CLEVER & UNIQUE

CREATIONS WITH LORI GREINER, ON QVC TV,

Defendants-Appellants,

____________

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 05 C 7058—Ruben Castillo, Judge.

____________

ARGUED MAY 2, 2007—DECIDED MAY 27, 2008

____________

Before EVANS, WILLIAMS, and SYKES, Circuit Judges.

SYKES, Circuit Judge. Mostly Memories, Inc. (“Mostly

Memories”) sued For Your Ease Only, Inc. (“For Your

Ease”) and its owners alleging copyright infringement

and various state-law claims. After the district court

dismissed the entire case with prejudice, the defendants
2 No. 06-3560

moved for an award of attorney’s fees on several grounds:

the Copyright Act, 17 U.S.C. § 505; the Illinois Trade

Secrets Act (“ITSA”), 765 ILL. COMP. STAT. 1065/5 (2004);

the vexatious litigation statute, 28 U.S.C. § 1927; and the

court’s inherent power. Although the suit had been dismissed on Mostly Memories’ own motion because its

counsel had concluded it was completely baseless, the

district court denied the defendants’ motion without

explanation. The court also sua sponte dismissed the

defendants’ counterclaims with leave to refile them in

the District of Missouri. The defendants argue that

neither ruling can withstand appeal, and we agree.

First, the district court did not explain why it dismissed the counterclaims. The court’s apparent rationale—a defect in jurisdiction or venue—is not supported by the record. Second, the court’s summary

denial of the defendants’ motion for attorney’s fees was

too threadbare to constitute a reviewable exercise of

discretion. The court neither identified nor applied the

legal principles informing a court’s decision to award

attorneys’ fees under any of the theories asserted by

the defendants. This omission is particularly conspicuous

in light of a prevailing party’s presumptive entitlement

to attorney’s fees under § 505 of the Copyright Act. We

reverse and remand for entry of an appropriate award

of attorney’s fees and reinstatement of the defendants’

counterclaims.

I. Background

Mostly Memories manufactures decorative candles

and other home accessories. For Your Ease specializes in

selling products through QVC, the popular home-shopping
No. 06-3560 3

cable network. Lori Greiner, who co-owns For Your Ease

with her husband, Daniel Greiner, approached Mostly

Memories at a trade show in 2000 and offered to promote

its products to QVC “buyers.” Those buyers determine

which products QVC will offer to the viewing public,

so winning them over is a critical first step for companies looking to market their wares to the legions of QVC

viewers. Mostly Memories accepted Greiner’s offer and

signed a contract in which For Your Ease agreed to act as

Mostly Memories’ exclusive sales agent with respect to

QVC. For Your Ease also agreed to work with Mostly

Memories to develop new products to pitch to the network. In exchange, For Your Ease received a 6% commission on each Mostly Memories product QVC ordered.

That commission increased to 10% for any Mostly Memories products Greiner featured in her own QVC segment, Clever & Unique Creations with Lori Greiner.

After a three-year honeymoon period, the relationship

between Mostly Memories and For Your Ease began to

deteriorate. In 2004 Mostly Memories notified For Your

Ease that it would be unable to fill outstanding candle

orders from QVC. Afraid of damaging its reputation

with QVC, For Your Ease scrambled to cover the outstanding orders, ultimately purchasing substitute candles from a third-party manufacturer. Mostly Memories

President Tricia Derges felt that For Your Ease was to

blame for Mostly Memories’ inability to fill the QVC candle orders. As such, Derges believed Mostly Memories

was entitled to a “reverse commission” on the substitute

candles. For Your Ease refused to pay any “reverse

commissions,” prompting Derges to write a letter to

QVC accusing For Your Ease of passing off proprietary

Mostly Memories’ product designs (i.e., the substitute
4 No. 06-3560

candles) as its own. In that letter Derges also offered to

bypass For Your Ease and sell its products directly to

QVC, an offer For Your Ease later characterized as a

breach of Mostly Memories’ covenant not to compete.

Mostly Memories and For Your Ease then exchanged a

volley of increasingly accusatory letters before Mostly

Memories brought this lawsuit in December 2005. For

Your Ease and Lori and Daniel Greiner were named

defendants. (We will refer to them collectively as “For

Your Ease”.) QVC was also named as a defendant but is

not a party to this appeal.

Mostly Memories’ mammoth complaint alleged 47

counts of copyright infringement and various state-law

claims. For Your Ease responded with several counterclaims, alleging (among other things) that For Your

Ease and Lori Greiner, not Mostly Memories and Derges,

owned the copyrights to many of the products at issue,

and that it was Mostly Memories and its affiliates who

were guilty of infringement. For Your Ease also alleged

that Mostly Memories owed roughly $88,000 in commissions under the parties’ sales contract. The case proceeded to discovery and For Your Ease eventually deposed Derges. She made several statements directly at odds

with the infringement and breach-of-contract allegations

she had verified in Mostly Memories’ complaint. Accordingly, John Bickley, Jr., Mostly Memories’ lead counsel,

cut off further questioning and conferred with Derges in

another room.

Bickley returned shortly thereafter and announced that

he would be moving to dismiss Mostly Memories’ complaint. He promptly did so, premising the motion upon

Rule 11 of the Federal Rules of Civil Procedure and stating

that Derges’s “testimony has caused so much damage to
No. 06-3560 5

her credibility, that to continue the proceedings, by attempting to move to Amend the Complaint, would be

irresponsible.” The district court granted the motion and

dismissed Mostly Memories’ entire case with prejudice.

Mostly Memories immediately retained different counsel and moved to vacate the dismissal under Rule 59(e)

on the ground that Bickley acted without Mostly Memories’ authorization. The district court denied that motion

on June 7, 2006, and Mostly Memories did not timely

appeal.

In the meantime, For Your Ease filed a “Motion for

Attorney’s Fees and Sanctions” based on the Copyright

Act, the ITSA, 28 U.S.C. § 1927, and the court’s inherent

authority. At a hearing on August 23, 2006, the district

court denied the motion, stating only that the “unfortunate

series of events that occurred here [do not] warrant the

imposition of sanctions.” At that hearing the court also

dismissed sua sponte For Your Ease’s counterclaims

without prejudice, telling For Your Ease it could refile

them in the District of Missouri. The court then concluded: “This case is over [within] this district, as far as

I’m concerned.” These oral rulings were consolidated

into an August 23 minute order from which For Your

Ease took this timely appeal.

At the end of the August 23 hearing, counsel for

QVC announced his intention to file an attorney’s fees

petition on behalf of QVC. He later did so, at which point

For Your Ease filed another motion for attorney’s fees,

reiterating its prior arguments and adding one based on

the contract between the parties. The district court summarily denied these motions in a separate order dated

October 19, 2006, roughly one month after For Your

Ease filed its notice of appeal from the August 23 order.

No appeal was taken from this order.
6 No. 06-3560

Also on October 19, the district court denied Mostly

Memories’ Rule 60(b) motion seeking reinstatement of

its claims. Mostly Memories then timely appealed this

order and belatedly attempted to appeal the earlier dismissal of its lawsuit and the denial of its Rule 59(e) motion.

In a brief unpublished order, we dismissed the untimely

appeal of the district court’s earlier orders dismissing

the case and denying the Rule 59(e) motion and summarily affirmed the denial of Mostly Memories’ Rule 60(b)

motion.

II. Analysis

For Your Ease challenges the dismissal of its counterclaims and the denial of its motion for attorney’s fees.

Before considering the merits, we must address two

issues of appellate jurisdiction. See Wingerter v. Chester

Quarry Co., 185 F.3d 657, 660 (7th Cir. 1998) (“A court of

appeals has an obligation to examine its jurisdiction sua

sponte, even if the parties fail to raise a jurisdictional

issue.”). The first issue is whether the court’s August 23

order dismissing For Your Ease’s counterclaims without

prejudice was final for purposes of 28 U.S.C. § 1291. A

dismissal without prejudice is normally nonfinal because

the plaintiff remains free to refile his case. Doctor’s Assocs.

v. Duree, 375 F.3d 618, 622 (7th Cir. 2004); see also

Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 712 (1996)

(“[A] decision is ordinarily considered final and appealable under § 1291 only if it ‘ends the litigation on the

merits and leaves nothing for the court to do but execute

the judgment.’ ” (quoting Catlin v. United States, 324

U.S. 229, 233 (1945))). In some instances, however, a

dismissal without prejudice may effectively end the

litigation and thus constitute a final order for purposes
No. 06-3560 7

of appellate review. Duree, 375 F.3d at 622 (citing as

examples a party’s inability to amend the dismissed

complaint or file a new complaint within the statute of

limitations).

Here, the district court’s dismissal of For Your Ease’s

counterclaims (following the dismissal of Mostly Memories’ complaint) unequivocally ended the litigation in

the Northern District of Illinois. The judge made it clear

that he considered the case “over [within] this district, as

far as I am concerned.” Neither an amended pleading nor

a newly filed action could resurrect For Your Ease’s

counterclaims in the Northern District. See Kaba v. Stepp,

458 F.3d 678, 680 (7th Cir. 2006) (“[D]ismissal without

prejudice . . . is effectively a final order because no amendment could resolve the problem.”); ITOFCA, Inc. v.

MegaTrans Logistics, Inc., 235 F.3d 360, 363 (7th Cir. 2000)

(no final order where defendant was free to refile its

counterclaims in the district court). The risk of piecemeal

appeals from the district court—one of the concerns

underlying the “final order” requirement in § 1291—is

therefore nonexistent here. ITOFCA, 235 F.3d at 364. The

district court conclusively disposed of For Your Ease’s

counterclaims in the Northern District, and For Your

Ease is entitled to appeal that final disposition in this

circuit. See Hill v. Potter, 352 F.3d 1142, 1144 (7th Cir.

2003) (“The test [for finality] is whether the district

court has finished with the case.”).

The second issue is whether For Your Ease can challenge the denial of its motion for attorney’s fees in this

appeal given that it later filed a second motion adding

a contractual basis for an award of fees. The district

court’s October 19 order denying this second motion was

separately appealable, see Sonii v. Gen. Elec. Co., 359 F.3d
8 No. 06-3560

448, 449 (7th Cir. 2004) (“[P]ost-judgment decisions on

requests for attorneys’ fees are appealable independently

of the merits.”), but no appeal was taken. That does not

affect the finality of the court’s August 23 order, however. For Your Ease has confined its appellate arguments

to the points it raised in the district court in its first

motion for attorney’s fees, and the August 23 order denying that motion is properly before this court.

A. For Your Ease’s Counterclaims

For Your Ease seeks reinstatement of its counterclaims, and ordinarily our review of the district court’s

decision dismissing them would be for an abuse of discretion. That deferential standard of review applies to

certain categories of dismissals (e.g., a dismissal of pendant

state-law claims under 28 U.S.C. § 1367, see Montano v. City

of Chicago, 375 F.3d 593, 601 (7th Cir. 2004), or a forum

non conveniens dismissal, see Sinochem Int’l Co. v. Malay.

Int’l Shipping Corp., 127 S. Ct. 1184, 1190 (2007)), but here,

the district court’s one-sentence dismissal order defies

categorization and thus is a poor candidate for deferential appellate review. Indeed, we have no idea why

the district court dismissed For Your Ease’s counterclaims. The order is silent on that matter, and the record

offers little in the way of clarification. If the district

court dismissed the counterclaims for reasons committed

to its discretion (as opposed to nondiscretionary reasons

such as want of subject-matter jurisdiction, see FED. R.

CIV. P. 12(h)(3)), this dearth of explanation could itself

warrant a reversal and remand. See Montano, 375 F.3d at

601 (district court’s failure to explain its dismissal decision is “practically a fatal one for abuse-of-discretion

review”). The order might be entitled to the benefit of the
No. 06-3560 9

1 For Your Ease conceded in its brief and at oral argument

that the dismissal with prejudice of Mostly Memories’ complaint rendered moot two of its counterclaims seeking declaratory relief: counterclaim IV for declaration of invalidity

of copyrights and counterclaim V for declaration of noninfringement of copyrights. We agree and affirm the dismissal of

these two counterclaims. See 28 U.S.C. § 2201(a); Super Sack Mfg.

Corp. v. Chase Packaging Corp., 57 F.3d 1054, 1059 (Fed. Cir. 1995).

doubt if the record otherwise established a basis for

the dismissal, Burrell v. Powers, 431 F.3d 282, 285 n.1 (7th

Cir. 2005), but our review of the record has revealed none.

One passing statement in the transcript implies that the

court’s rationale for the dismissal had something to do

with the state of residency (Missouri) of the counterclaim defendants. To the extent the court was hinting

at a defect in jurisdiction or venue, this was error. Because

For Your Ease’s copyright infringement counterclaim

presented an independent and live federal controversy,

jurisdiction was proper under §§ 1331 and 1338 (along

with § 1367 for the supplemental state-law claims), and

thus the counterclaim defendants’ state of residency or

domicile is irrelevant.1

 Any objection to personal jurisdiction or venue in the Northern District of Illinois was

waived. See FED. R. CIV. P. 12(b)(2), (3), & 12(h); see also

§ 1406(b) (“Nothing in this chapter shall impair the jurisdiction of a district court of any matter involving a

party who does not interpose timely . . . objection to the

venue.”).

The district court does have discretion to transfer a

case to another proper venue “in the interest of justice” and

“[f]or the convenience of parties and witnesses,” § 1404(a),

but the court dismissed rather than transferred For Your

Ease’s counterclaims. Cf. Hyatt Int’l Corp. v. Coco, 302 F.3d
10 No. 06-3560

707, 717 (7th Cir. 2002) (“[W]ith respect to cases wholly

within the system of U.S. federal courts, the doctrine [of

forum non conveniens] has been largely replaced by

the transfer of venue statute.”). Having found no defect

in jurisdiction or venue, we can discern no rationale for

the dismissal of For Your Ease’s counterclaims. Accordingly, we remand with instructions to reinstate them.

B. For Your Ease’s Entitlement to Attorney’s Fees as the

“Prevailing Party”

For Your Ease moved for attorney’s fees under § 505

of the Copyright Act of 1976 and section 1065/5 of the

ITSA. See 17 U.S.C. § 505; 765 ILL. COMP. STAT. 1065/5

(2004). Section 505 authorizes an award of fees to the

prevailing party in a suit under the Copyright Act; the

state statute permits an award of fees as a sanction for

bad faith ITSA litigation. Compare Fogerty v. Fantasy, Inc.,

510 U.S. 517, 534 n.19 (1994) (concerning fee-shifting

under § 505), with 765 ILL. COMP. STAT. 1065/5 (the sanctioned party must have acted in “bad faith”). For Your

Ease also invoked the vexatious litigation statute, 28

U.S.C. § 1927, and the court’s inherent authority. The

district court denied the motion without explanation.

While an award of attorney’s fees under § 505 is entrusted to the district court’s discretion, FASA Corp. v.

Playmates Toys, Inc., 108 F.3d 140, 141 (7th Cir. 1997), we

have held that the prevailing party in Copyright Act

litigation is presumptively entitled to an award of fees

under § 505, Woodhaven Homes & Realty, Inc. v. Hotz,

396 F.3d 822, 824-25 (7th Cir. 2005); Assessment Techs. of WI,

LLC v. WIREData, Inc., 361 F.3d 434, 436-37 (7th Cir. 2004).

In the case of prevailing defendants, we have described
No. 06-3560 11

2 As noted in note 1, however, we affirm the dismissal of the

counterclaims For Your Ease has conceded are moot.

USCA-02-C-0072—5-27-08

this presumption as “very strong.” Assessment Techs., 361

F.3d at 437. There is no question that a dismissal with

prejudice makes the defendant the prevailing party for

purposes of an award of attorney’s fees under § 505.

Claiborne v. Wisdom, 414 F.3d 715, 719 (7th Cir. 2005). This

is no less true when a case is dismissed because the plaintiff “threw in the towel”—that is, where the dismissal is

on the plaintiff’s own motion. Riviera Distributors, Inc. v.

Jones, 517 F.3d 926, 928 (7th Cir. 2008).

The district court’s summary ruling reflects no consideration of these principles. The judge simply said Mostly

Memories’ conduct did not “warrant[ ] the imposition of

sanctions,” but the loser’s conduct need not be

“sanctionable” for the winner to be entitled to attorney’s

fees under § 505. Id. For Your Ease was the prevailing

party and is entitled to an award of attorney’s fees under

the Copyright Act. Because For Your Ease is entitled

to reimbursement of its attorney’s fees under § 505,

we need not consider its arguments for an award of

fees under the ITSA, § 1927, or the court’s inherent authority.

Accordingly, we REVERSE the district court’s order

dismissing For Your Ease’s counterclaims and remand

with instructions to reinstate them.2

 We also REVERSE

the court’s order denying For Your Ease’s motion for

attorney’s fees under § 505 and REMAND with instructions to enter an appropriate award of fees.