In the

United States Court of Appeals

For the Seventh Circuit ____________________

Nos. 18-1998 & 18-2095

4SEMO.COM INCORPORATED,

Plaintiff-Appellee/

Cross-Appellant,

v.

SOUTHERN ILLINOIS STORM SHELTERS, INC.,

INGOLDSBY EXCAVATING, INC., and BOB INGOLDSBY,

Defendants-Appellants/

Cross-Appellees,

and

ROMAN A. BASI and ALFRED E. SANDERS JR.,

Intervenors/

Appellees.

____________________

Appeals from the United States District Court

for the Southern District of Illinois.

No. 3:13-cv-00297 DRH/SCW — David R. Herndon, Judge.

____________________

ARGUED APRIL 1, 2019 — DECIDED OCTOBER 7, 2019

____________________
2 Nos. 18-1998 & 18-2095

Before EASTERBROOK, SYKES, and BRENNAN, Circuit Judges.

SYKES, Circuit Judge. This appeal involves a long-running 

trademark dispute over ownership and misuse of a wordmark and logo for below-ground storm shelters. The story 

begins in 2005 when a Missouri-based home-remodeling 

firm known as 4SEMO.com Inc. began selling storm shelters

manufactured by Southern Illinois Storm Shelters, Inc.

(“SISS”), an Illinois company run by Robert “Bob” Ingoldsby 

and his brother Scott. The dealership agreement gave 

4SEMO the exclusive right to sell SISS shelters in portions of 

Missouri and Arkansas. As part of its marketing campaign, 

4SEMO created a wordmark—“Life Saver Storm Shelters”—

and a logo using that name, which it affixed to the shelters. 

In 2006 the Ingoldsbys asked 4SEMO for permission to use 

these marks on shelters marketed in southern Illinois. 

4SEMO granted a limited license for that purpose, but the 

Ingoldsbys violated it by using the marks on products sold 

throughout the country.

SISS sued 4SEMO for trademark infringement, claiming

prior use and ownership of the “Life Saver” wordmark. That 

claim did not survive summary judgment. 4SEMO counterclaimed for trademark infringement and false endorsement 

under the Lanham Act, along with several state-law claims. 

The counterclaims were tried to the bench, and the district 

judge found for 4SEMO across the board, entered a ceaseand-desist order, and awarded more than $17 million in 

disgorged profits as damages. The judge denied 4SEMO’s 

motion for vexatious-litigation sanctions under 28 U.S.C. 

§ 1927 and attorney’s fees under the Lanham Act. 

On appeal SISS does not contest the judge’s factual findings. It argues instead that 4SEMO’s logo violates a statute 
Nos. 18-1998 & 18-2095 3

that makes it a crime to use the iconic emblem reserved to 

the American Red Cross: a red Greek cross on a white background. SISS also raises a novel legal argument to attack 

4SEMO’s ownership of the wordmark. Finally, SISS challenges the eight-figure monetary award. In a cross-appeal 

4SEMO seeks review of the denial of § 1927 sanctions and 

Lanham Act attorney’s fees. 

We affirm for the most part. SISS’s statutory argument is 

meritless and its legal theory challenging 4SEMO’s ownership of the marks is new on appeal and thus is waived. We 

also reject the challenge to the damages award; the judge’s

conclusion that SISS engaged in trademark infringement on 

a vast scale is well supported by the evidence. Finally, 

although the judge reasonably concluded that § 1927 sanctions were not warranted, his summary denial of Lanham 

Act fees cannot be squared with his factual findings and 

legal conclusions on the merits of the infringement claim.

Because those findings and conclusions satisfy the Act’s 

standard for recovery of attorney’s fees, we remand for the 

limited purpose of determining a reasonable fee award.

I. Background

Ray Fielack is the president of 4SEMO, a homeremodeling company located in southeast Missouri. Bob and 

Scott Ingoldsby have been manufacturing storm shelters

since 1998. They began operating under the SISS name in 

2000 and continued to do so as Ingoldsby Excavating, Inc.,

since 2008.

In 2004 4SEMO purchased a storm shelter from an SISS 

dealer and installed it at the direction of a remodeling client. 

Pleased with the product, 4SEMO expressed interest in 
4 Nos. 18-1998 & 18-2095

buying more shelters from the dealer and began promoting 

them to potential customers. The dealer asked if 4SEMO 

would be interested in simply purchasing its existing inventory and becoming a dealer in its own right. 4SEMO agreed 

to do so. 

Fielack decided that a set of identifiable trademarks 

would assist his company’s foray into storm-shelter marketing and installation. In late March or early April 2005, he

settled on the name “Life Saver Storm Shelters.” He also 

designed a logo: a red Greek cross on a black background 

with the “Life Saver” product name written across its horizontal bar in yellow lettering. Fielack testified at trial that no 

one at 4SEMO had seen the name or logo before.

4SEMO took possession of the former dealer’s inventory, 

stenciled its new logo and wordmark onto the shelters, and 

displayed them for sale. Starting in April or early May 2005, 

4SEMO’s brochures and signage, and the shelters it sold,

featured the marks as shown below: 

On May 5 4SEMO signed a formal dealership agreement 

with SISS. The contract granted 4SEMO exclusive retail 

rights in a territory that included portions of Missouri and 

Arkansas. It did not mention the marks. Around this time

Scott Ingoldsby visited 4SEMO to exchange one of the

inventory shelters for an updated model. He expressed no 
Nos. 18-1998 & 18-2095 5

familiarity with the marks. 4SEMO continued to market its 

inventory under the “Life Saver Storm Shelters” brand. 

In February 2006 the Ingoldsbys asked 4SEMO for permission to use the “Life Saver Storm Shelters” marks in 

connection with retail sales and installations in southern 

Illinois. 4SEMO orally agreed to permit use of the marks in 

that region on three conditions: only shelters manufactured 

by the Ingoldsbys could be sold under the marks, the 

Ingoldsbys would install all branded shelters in a manner 

familiar to 4SEMO, and 4SEMO would maintain control over 

all promotional materials bearing the marks.

The Ingoldsbys did not comply with the license agreement. Doing business as SISS and later as Ingoldsby Excavating, they used the marks to promote a nationwide sales

campaign, supplied other dealers with “Life Saver” branded 

shelters, and even registered the domain name 

“www.lifesaverstormshelters.com.” The Ingoldsbys planned 

to continue this activity until 4SEMO discovered it, at which 

point they would try to buy the marks. And that’s precisely 

what happened. In 2011 4SEMO discovered the widespread 

unauthorized use and demanded cessation. Scott Ingoldsby

immediately offered to purchase the marks. The parties were

headed toward an agreement until August 2012 when Bob 

Ingoldsby called off the deal. The Ingoldsbys later terminated the dealership agreement with 4SEMO and continued to 

use the marks even up to the month of trial.

In March 2013 SISS and Ingoldsby Excavating sued

4SEMO alleging trademark infringement in violation of the 

Lanham Act and several state-law claims. The suit was 

premised on a theory of retroactive ownership. The 

Ingoldsbys claimed that SISS and one of its licensed distribu-
6 Nos. 18-1998 & 18-2095

tors sold shelters under the name “Life-Saver Storm Shelters” (with a hyphen) years before 4SEMO entered the 

picture. They characterized the 2006 license agreement as 

covering only the logo, not the wordmark.

4SEMO responded with multiple counterclaims against 

SISS, Ingoldsby Excavating, and Bob Ingoldsby (collectively 

“SISS” unless the context requires otherwise): trademark 

infringement and false endorsement under the Lanham Act, 

violation of the Illinois Uniform Deceptive Practices Act, 

breach of contract, unjust enrichment, and civil conspiracy.

After several years of litigation, SISS acknowledged that

most of its claims against 4SEMO lacked an adequate factual 

or legal basis. The judge dismissed most counts of the complaint and entered summary judgment for 4SEMO on the 

Lanham Act claims.

In late July 2017, the judge commenced a bench trial on 

the counterclaims with the case now reconfigured to show

4SEMO as the plaintiff. Fielack and the Ingoldsby brothers 

testified. 4SEMO presented a damages expert who testified 

that SISS’s revenue from its decade-long nationwide sales of 

“Life Saver” branded shelters totaled approximately 

$17.4 million. SISS did not contest that calculation and 

waived its right to prove up offsetting costs.

Confronted with irreconcilable factual accounts, the 

judge sided with 4SEMO and entered findings of fact, conclusions of law, and a remedial award in its favor. The judge 

found that the Ingoldsbys were not credible witnesses. He

found that 4SEMO owned both marks and SISS breached a 

valid license, generating consumer confusion and deception,

and thus violated the Lanham Act, 15 U.S.C. § 1125(a). The 

judge also found for 4SEMO on the state-law claims.
Nos. 18-1998 & 18-2095 7

Addressing damages, the judge found that the decadelong infringement was willful, intentional, egregious, even 

malicious. He awarded $17,371,003 in damages under

15 U.S.C. § 1117(a) and $26,940 for the breach of contract. He 

also ordered injunctive relief in the form of a cease-anddesist order. Finally, the judge held Bob Ingoldsby and his 

proprietorships jointly and severally liable for the judgment

and denied 4SEMO’s motions for attorney’s fees under the 

Lanham Act and sanctions under 28 U.S.C. § 1927.

SISS appealed. 4SEMO filed a cross-appeal seeking review of the denial of attorney’s fees and sanctions. Two of 

SISS’s trial attorneys, Roman A. Basi and Alfred E. Sanders 

Jr., intervened as cross-appellees. After oral argument we 

issued an order noting a defect in the form of the order for 

injunctive relief under Rule 65 of the Federal Rules of Civil 

Procedure. We stayed the appeal pending entry of a proper 

injunction. The district court promptly entered an amended 

judgment, and the case is now ready for decision.

II. Discussion

“We review the judge’s factual findings following a 

bench trial for clear error and his conclusions of law de 

novo.” Ill. Liberty PAC v. Madigan, 904 F.3d 463, 469 (7th Cir. 

2018). SISS has not challenged the judge’s factual findings, so 

we take them as established.

A. The Red Cross Statute 

SISS first argues that 4SEMO’s logo is unlawful and thus

unprotected by trademark law. This argument rests on a 

federal criminal statute reserving the emblem of a red Greek 

cross on a white background for the American Red Cross:
8 Nos. 18-1998 & 18-2095

Whoever wears or displays the sign of the Red 

Cross or any insignia colored in imitation 

thereof for the fraudulent purpose of inducing 

the belief that he is a member of or an agent for 

the American National Red Cross; or

Whoever, whether a corporation, association or 

person, ... uses the emblem of the Greek red cross 

on a white ground, or any sign or insignia made or 

colored in imitation thereof or the words “Red 

Cross” or “Geneva Cross” or any combination 

of these words—

Shall be fined under this title or imprisoned 

not more than six months, or both.

18 U.S.C. § 706 (emphasis added).

This language is straightforward: only the American Red 

Cross may use the emblem of a red Greek cross on a white 

background or an insignia “made or colored in imitation 

thereof.” Id. SISS contends that 4SEMO’s logo clearly violates 

§ 706,1 noting that in 2012—while the parties were negotiating a sale of the marks—the Patent and Trademark Office

rejected 4SEMO’s application to register the logo on § 706 

grounds. But the Trademark Office explained that 4SEMO

could still secure registration if it “submit[ed] a substitute 

specimen ... in a color other than red.” 4SEMO promptly 

filed a replacement depicting a yellow cross with red lettering. Satisfied, the Trademark Office was prepared to register

 1 The judge considered and rejected this argument in a pretrial order, 

reasoning that § 706 only “prohibits someone from fraudulently trying to 

hold themselves out as an agent or a member of the American National 

Red Cross.” 
Nos. 18-1998 & 18-2095 9

4SEMO’s logo but stayed its proceedings pending the results 

of this litigation.

That history aside, the original version of 4SEMO’s logo 

wasn’t a red Greek cross on a white background, nor was it 

“made or colored in imitation” of the insignia reserved to the 

American Red Cross. Id. The Trademark Trial and Appeal 

Board has held that inclusion of additional design elements 

on or around a red Greek cross can make § 706 inapplicable. 

For example, in In re Health Maintenance Organizations, Inc., 

188 U.S.P.Q. (BNA) 473 (T.T.A.B. 1975), 1975 WL 20855, a

trademark applicant submitted a dark Greek cross with a 

caduceus—the familiar medical symbol featuring two 

serpents entwined around a winged rod. The Appeal Board

framed the inquiry as “whether [the] mark so resembles the 

Greek red cross that such mark can be said to consist of 

matter which may disparage or falsely suggest a connection 

with the” protected symbol. Id. at 473, at *1. On this understanding, the applicant’s submission did not violate the 

statute, in part because “the representation of the caduceus ... remove[d] any hint or suggestion of resemblance.” Id.

The Appeal Board’s logic is consistent with the statutory 

text, which prohibits logos “made or colored in imitation” of 

the familiar Red Cross insignia. We find the Board’s analysis 

persuasive. The logo at the center of this dispute is a red 

Greek cross on a black background emblazoned with “Life 

Saver Storm Shelters” in large, yellow letters. The words fill 

nearly the entire horizontal bar of the cross, making it predominantly yellow. These different design elements provide 

what the caduceus provided in Health Maintenance Organizations: an obvious distinguishing feature from the traditional

icon of the American Red Cross. 4SEMO’s logo thus is not 
10 Nos. 18-1998 & 18-2095

“made or colored in imitation” of the Red Cross symbol, so 

§ 706 does not bar 4SEMO’s commercial use or negate the 

judge’s finding of trademark infringement.

B. Ownership of the Wordmark

In the district court, SISS claimed to have marketed storm 

shelters under a virtually indistinguishable name—“LifeSaver Storm Shelters” (with a hyphen)—years before the 

relationship with 4SEMO. The judge rejected that prior-use

theory, and his factual findings on that point are unchallenged on appeal. 

Instead, SISS offers a new legal theory derived from observations in a widely cited trademark treatise. Discussing 

trademark disputes between manufacturers and their distributors, the McCarthy trademark treatise observes: “In the 

absence of an agreement defining ownership,” there is a 

“rebuttable presumption that the manufacturer of [the] 

goods is the owner of the trademark of those goods.” 

2 J. THOMAS MCCARTHY, MCCARTHY ON TRADEMARKS AND

UNFAIR COMPETITION § 16:48 (5th ed. 2018). The treatise goes 

on to describe a six-factor balancing test to determine 

whether the presumption has been rebutted. Id.

SISS argues that Professor McCarthy’s factors weigh in 

its favor. This argument is new on appeal and thus is

waived. See, e.g., In re Veluchamy, 879 F.3d 808, 821 (7th Cir. 

2018). Still, we note for completeness that Professor 

McCarthy’s “test” might be relevant “where the initial

allocation of trademark rights is in dispute.” TMT N. Am., 

Inc. v. Magic Touch GmbH, 124 F.3d 876, 884 n.4 (7th Cir. 

1997). But where, as here, a party’s initial ownership of a 

mark has been conclusively established as a factual matter, 
Nos. 18-1998 & 18-2095 11

the owner may “lose its rights by assignment or by abandonment, but not by some nebulous balancing test.” Id.

Accordingly, the presumption and balancing test announced in the McCarthy treatise cannot displace the judge’s 

unchallenged factual findings that 4SEMO created the 

marks, used them in commerce, and granted the Ingoldsbys

a tightly limited license to use them. Indeed, if SISS already 

owned the wordmark, why would the Ingoldsbys have 

asked for a license to use it? Whatever force Professor 

McCarthy’s balancing test may have in other cases, it has no 

effect here. 

C. Disgorged Profits

We turn now to a series of challenges to 4SEMO’s 

$17.4 million judgment. SISS argues that the award constitutes a windfall for 4SEMO, imposes an inequitable penalty, 

and unlawfully contains profits earned in markets outside of 

4SEMO’s contractual dealership range. 

Under the Lanham Act’s damages provision, the district 

court may award a prevailing plaintiff “(1) [the] defendant’s 

profits, (2) any damages sustained by the plaintiff, and 

(3) the costs of the action.” 15 U.S.C. § 1117(a). The statute 

installs a burden-shifting framework: “In assessing profits 

the plaintiff shall be required to prove defendant’s sales 

only; defendant must prove all elements of cost or deduction 

claimed.” Id. 4SEMO took the first step. Its expert calculated 

approximately $17.4 million in revenue from unlicensed

sales of “Life Saver” branded shelters. And before trial SISS

affirmatively waived its right to prove up any deductions. 

Nor did SISS object to the expert’s calculations or introduce

countervailing evidence at trial.
12 Nos. 18-1998 & 18-2095

These litigation decisions are fatal to SISS’s appellate 

attacks on the damages award. Because SISS effectively

conceded the expert’s calculation at trial, its attack on the

judgment as a windfall comes too late. SISS points to language in § 1117(a) saying that profits are awarded “subject to 

the principles of equity.” Id. True enough, but a “trial court’s 

primary function is to make violations of the Lanham Act 

unprofitable to the infringing party.” Otis Clapp & Son, Inc. v. 

Filmore Vitamin Co., 754 F.2d 738, 744 (7th Cir. 1985). Moreover, “[§] 1117 confers a great deal of discretion on a district 

court in fashioning a remedy for trademark infringement.”

Bandag, Inc. v. Al Bolser’s Tire Stores, Inc., 750 F.2d 903, 917 

(Fed. Cir. 1984). The judge’s decision to award the full 

$17.4 million without sua sponte reductions was not an 

abuse of discretion, especially given his finding that the 

infringement was “egregious.”

SISS also argues that the judge should have excluded

profits earned in geographic areas beyond 4SEMO’s dealership territory. In other words, because 4SEMO could not sell

SISS’s shelters outside of specified counties in Missouri and 

Arkansas, its trademark rights were also confined to those 

counties. This argument too was not raised below and thus 

is waived. It’s also meritless. The dealership agreement did 

not impose geographic restrictions on 4SEMO’s trademark 

rights. The agreement gave 4SEMO the exclusive right to 

resell SISS products within the identified territory, but it

placed no limits on 4SEMO’s right to sell other products—

including storm shelters manufactured by other companies—anywhere in the United States.

Next, SISS seeks refuge in the Tea Rose–Rectanus defense, 

a common-law trademark doctrine that stems from a pair of 
Nos. 18-1998 & 18-2095 13

century-old Supreme Court cases. See Hanover Star Milling 

Co. v. Metcalf, 240 U.S. 403 (1916); United Drug Co. v. Theodore 

Rectanus Co., 248 U.S. 90 (1918). It provides that a “senior 

user of an unregistered mark cannot stop the use of a territorially ‘remote’ good faith ... junior user who was first to use 

the mark in that territory.” 5 MCCARTHY, supra, § 26:2. We’ve 

referred to this rule as the “good faith junior user” defense. 

Money Store v. Harriscorp Fin., Inc., 689 F.2d 666, 674 (7th Cir. 

1982).

This argument rests on the same flawed view of the dealership agreement, which we’ve already addressed. Regardless, the Ingoldsbys clearly did not act in good faith when 

they appropriated 4SEMO’s marks. As we explained in 

Money Store, “[a] good faith junior user is one who begins 

using a mark with no knowledge that someone else is already using it.” Id.; see also Hanover Star, 240 U.S. at 412 

(explaining that the junior user adopted the mark “in perfect 

good faith, with no knowledge that anybody else was using 

or had used those words”). The defense shields those who 

unwittingly develop a mark that duplicates another, not

intentional counterfeiters. 

The next attack on the damages award focuses not on the 

judgment’s size or legal basis but on who must pay it. The 

judge held SISS, Ingoldsby Excavating, and Bob Ingoldsby 

jointly and severally liable for the judgment. Bob Ingoldsby 

challenges the judge’s decision to hold him personally liable, 

characterizing his brother Scott as the moving force behind 

any trademark infringement.

A corporate officer is individually liable if he “personally 

participates in the manufacture or sale of the infringing 

article ... , uses the corporation as an instrument to carry out 
14 Nos. 18-1998 & 18-2095

his own willful and deliberate infringements, or ... knowingly uses an irresponsible corporation with the purpose of 

avoiding personal liability.” Dangler v. Imperial Mach. Co., 

11 F.2d 945, 947 (7th Cir. 1926). The judge’s unrebutted 

factual findings defeat this argument. He found no evidence 

that the Ingoldsbys respected the corporate form of either 

SISS or Ingoldsby Excavating: “The record is devoid of any 

corporate formation documents, articles of incorporation, 

bylaws, operating agreements, board resolutions, or any 

other evidence of corporate activity in general ... .” These

businesses were proprietorships, not truly independent 

corporate entities.

Moreover, Bob Ingoldsby’s attempt to shift blame to his 

brother doesn’t stand up to scrutiny. That 4SEMO typically 

interacted with SISS and Ingoldsby Excavating through Scott

does not undermine the judge’s well-founded conclusion

that Bob maintained full operational control. And while Bob

occasionally claimed ignorance at trial, the judge specifically 

“found the Ingoldsbys’ claimed inability to recall important 

details of, or claimed non-involvement with, certain matters” 

to be “suspect.” Even if Bob could inculpate his brother, he 

faces another problem: the judge concluded that the 

Ingoldsbys were each other’s agents as well as participants 

in a civil conspiracy. Any act or omission by Scott must be 

imputed to Bob, so the latter’s fraternal finger-pointing is 

ultimately pointless. 

D. Sanctions and Fees

4SEMO’s cross-appeal challenges the judge’s refusal to 

award attorney’s fees under the Lanham Act’s fee-shifting 

provision or sanctions under 28 U.S.C. § 1927. We take the 

latter argument first. Under § 1927, “[a]ny attorney ... who 
Nos. 18-1998 & 18-2095 15

so multiplies the proceedings in any case unreasonably and 

vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably 

incurred because of such conduct.” 4SEMO’s sanctions claim 

is directed at intervenors Basi and Sanders. We review for 

abuse of discretion. Fox Valley Const. Workers Fringe Benefit

Funds v. Pride of Fox Masonry & Expert Restorations, 140 F.3d 

661, 666 (7th Cir. 1998). 

Vexatious-litigation sanctions under § 1927 require a 

showing of either subjective or objective bad faith. Dal Pozzo 

v. Basic Mach. Co., 463 F.3d 609, 614 (7th Cir. 2006). 4SEMO 

focuses on the latter. Objective bad faith consists of reckless 

indifference to the law: “pursu[ing] a path that a reasonably 

careful attorney would have known, after appropriate 

inquiry, to be unsound.” Riddle & Assocs., P.C. v. Kelly, 

414 F.3d 832, 835 (7th Cir. 2005) (quotation marks omitted).

4SEMO insists that Basi and Sanders engaged in vexatious 

behavior and made objectively unreasonable legal arguments. The district court disagreed. Though he ruled summarily, we see no abuse of discretion. Basi and Sanders were 

entitled to zealously represent their clients, and although 

SISS’s claims were meritless, we’re hard-pressed to find 

reckless indifference. 

The claim for attorney’s fees is another story. The 

Lanham Act permits district courts “in exceptional cases” to 

“award reasonable attorney fees to the prevailing party.” 

§ 1117(a). Interpreting identical language in the Patent Act, 

the Supreme Court held “that an ‘exceptional’ case is simply 

one that stands out from others with respect to the substantive strength of a party’s litigating position ... or the unreasonable manner in which the case was litigated.” Octane 
16 Nos. 18-1998 & 18-2095

Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554 

(2014). Again we review for abuse of discretion. Fin. Inv. Co. 

(Berm.) v. Geberit AG, 165 F.3d 526, 530 (7th Cir. 1998).

Based on our reading of the judge’s findings and conclusions, this was an exceptional case. The judge found that the 

Ingoldsbys engaged in a vast infringement campaign and

indeed planned in advance to offer to buy the marks only “if 

and when 4SEMO discovered the[ir] improper use and 

complained.” He found their conduct “willful, egregious[,]

and intentional.” Likewise, he found that they “acted in bad 

faith, intentionally, willfully[,] and maliciously[;] [and] have 

refused to cease the infringing activity[] and ... caused

4SEMO unnecessary trouble and expense.” Then, in the next 

sentence, the judge summarily denied 4SEMO’s motion for 

Lanham Act attorney’s fees. Respectfully, that conclusion

simply doesn’t follow from the factual findings of willfulness, maliciousness, and bad faith.

We therefore REVERSE the denial of attorney’s fees and 

REMAND for entry of a reasonable fee award under § 1117(a). 

In all other respects, the judgment below is AFFIRMED.