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Willful infringement is not a requirement for the award of attorneys’ fees in a trademark dispute, the 3rd U.S. Circuit Court of Appeals ruled Aug. 21 ( SecuraComm Consulting Inc. v. Securacom Inc., et al., Case No. 99 -5326, 3rd Cir.). The panel affirmed the award of $233,600 in fees to SecuraComm Consulting Inc. in a suit against Securacom Inc., citing the lower court’s finding of bad faith in filing suit and during litigation of the action. SecuraComm, a security systems consulting firm, was formed in 1980 by Ronald Libengood, a former employee of Westinghouse Corp. The firm was originally known as SecuraComm Associates; Libengood incorporated as SecuraComm Consulting in 1992. Libengood applied for registration of the word “Securacomm” without reference to capitalization or stylization. The application indicated a first use on Jan. 1, 1980, and a first use in interstate commerce on Sept. 3, 1981. Defendant Securacom’s predecessor corporation was formed in 1987 as Burns & Roe Securacom. Libengood became aware of the company that same year when he met its founder, Sebastian Cassetta, at a conference. Cassetta informed Libengood that he knew of his firm but had been assured by his attorneys that the similarity in names would not result in confusion. Libengood took no action in response to the encounter. In 1992, Burns & Roe Securacom dropped the Burns & Roe designation and expanded its business to include a full line of security services. In November of that year, Securacom filed a trademark application to register the term “Securacom, Incorporated.” The application was rejected because two other companies, neither of which was Securacomm, had filed similar applications. CEASE-AND-DESIST LETTER Libengood learned about Securacom’s name change in January 1993 and sent a cease-and-desist letter. Libengood and Securacom CEO Ronald Thomas attempted to settle the controversy but were unsuccessful. Libengood sued in the U.S. District Court for the District of New Jersey in October 1995, alleging service mark infringement, false designation of origin, and appropriation of name, good will and reputation. After a bench trial, Judge Dickinson Debevoise enjoined Securacom’s use of the word Securacom, finding that confusion was likely because of the slight difference between the companies’ businesses. The judge awarded SecuraComm 10 percent of Securacom’s gross profits, then trebled the award based on the “egregious circumstances” of the case. He also awarded attorneys’ fees on the ground that Securacom’s conduct showed bad faith and knowing infringement. Securacom appealed only the finding of willfulness. FIRST APPEAL Reversing and remanding, the 3rd Circuit said that no direct evidence was produced to show that Securacom knew about Libengood and his firm prior to the cease and desist letter in 1993. Further, the panel noted that Libengood did not attach much significance to the similarities in the companies’ names when he encountered Cassetta in 1987. Nor is Securacom’s failure to conduct a trademark search sufficient to support a finding of willful infringement, the panel said. The court found further that Securacom’s failure to comply with the cease-and-desist demand does not demonstrate willful infringement. On remand, Judge Debevoise awarded SecuraComm attorneys’ fees of $233,600, finding that Securacom “sought to secure use of the trademark Securacom not simply through fair and vigorous use of the legal process .. [but] by first engaging in bad faith negotiations and then seeking to destroy a financially weaker adversary through oppressive litigation tactics.” ‘CULPABLE CONDUCT’ Affirming, the 3rd Circuit rejected Securacom’s argument that only a case involving willful infringement can be an “exceptional case” justifying the award of attorneys’ fees. “The case involved a deliberate effort by Securacom New Jersey to ‘bury’ Libengood financially and ‘take everything he had’ by filing multiple suits and complaints against him and his attorneys in a variety of legal fora,” the panel said. “As the District Court found, based on documents and testimony presented at trial, Securacom New Jersey ‘did not confine itself to litigating the case fairly on the merits. Rather, it tried to prevail by crushing Libengood and his corporation.’ “The facts of this case support the District Court’s conclusion that this is an exceptional case involving culpable conduct on the part of Securacom New Jersey.” SecuraComm Consulting is represented by Arthur E. Newbold and Michael Doluisio of Dechert, Price & Rhoads in Philadelphia. Securacom Inc. is represented by Robert B. Golden and Howard N. Aronson of Lackenbach, Siegel, Marzullo, Aronson & Greenspan in Scarsdale, N.Y. �; Copyright 2000 Mealey Publications, Inc.

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