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A federal judge has awarded nearly $300,000 in attorneys’ fees and costs in a trademark infringement suit brought by the makers of a build-it-yourself airplane where the defendants were found liable for a “bad faith effort to confuse Internet users.” In SNA Inc. v. Array, Senior U.S. District Judge Marvin Katz found that “defendants’ culpable conduct qualifies this case as exceptional under Section 35(a) of the Lanham Act.” Defense lawyers argued that under the 3rd U.S. Circuit Court of Appeals’ decision in Ferrero U.S.A. v. Ozak Trading Inc. in 1991, no fees should be awarded in a Lanham Act case where the plaintiff could not prove any pecuniary losses that resulted from the infringement. Katz disagreed, saying the 3rd Circuit recently affirmed a district court’s award of attorneys’ fees under Section 35(a) of the act even though the prevailing party in Securacomm Consulting Inc. v. Securacom Inc. suffered no monetary damages. Katz also found that the plaintiffs were entitled to attorneys’ fees for their breach of contract claim because the contract specifically allowed for recovery of attorney fees in the event of breach. “These contract provisions are enforceable under Pennsylvania law,” Katz wrote. The decision is a victory for attorneys Terry Elizabeth Silva and Kenneth J. Benton of Silva & Associates in Philadelphia. Silva and Benton filed two lawsuits on behalf of SNA Inc., Silva Enterprises and Richard Silva, the manufacturers of the “Seawind,” an amphibious aircraft that is sold in kits that contain most of the materials necessary to produce the shell of a flying aircraft but that must be assembled by the purchaser. The kits are sold only under a purchase agreement that protects the plaintiffs’ trademark and trade secrets and prohibits duplicating parts, obtaining Seawind parts from any other source, modifying construction to conflict with SNA’s manual, and copying or molding by the purchaser or any of his assistants. The first lawsuit was filed against Douglas Karlsen and his company, Turbine Design Inc., (TDI) based in Deland, Fla. Evidence showed that Karlsen was occasionally hired by Seawind purchasers to assemble and sometimes to modify the kit for a turbine installation — a service SNA objected to because Seawind kits are neither designed nor aeronautically sound for a turbine application. SNA claimed that despite the explicit prohibition signed by Karlsen against copying of Seawind parts, he was molding Seawind parts from customers whose planes he was assembling and from parts stolen from SNA’s suppliers. In the second lawsuit, SNA accused Paul Array of funding the production and sale of the counterfeit aircraft, partly with a newsletter and Internet site designed to disparage SNA and Silva. SNA said it had smoking-gun proof of Array’s bad intentions — “a startlingly incriminating letter” that Array sent to Karlsen in which Array “specifically identified his objectives in publishing the defamatory material at his Web site, telling Karlsen that he was trying to ‘fry that bastard,’ referring to plaintiff Silva.” Array also wrote: “Maybe we can put him out of business and go into the kit [plane] business.” Array’s cover letter also indicated that the newsletter was being distributed to builders and members of the Seawind Pilot Association and all of Silva’s customers. The suit alleged that Array “relentlessly campaigned at Seawind.net to besmirch and defame the name and reputation of Silva and SNA.” In a preliminary injunction hearing in May 1999, Katz found that Array’s use of the Internet domain name Seawind.net was a violation of SNA’s trademark. After a trial in June 1999, Katz found that all of the defendants had breached contracts executed with SNA, but he awarded no damages on that claim, instead ordering the return of a mold from a part that TDI and Karlsen arranged to have stolen. Katz also found that SNA had proved its claim of defamation and commercial disparagement, but again awarded no damages. But on the Lanham Act claim, Katz ordered Karlsen and TDI to pay $5,500 in compensatory damages and $10,000 in punitive damages on a civil conspiracy claim. Katz also permanently enjoined use of “Seawind.net” and enjoined Array’s practice of “metatagging” his Web sites with SNA’s trademark. After the 3rd Circuit upheld those rulings, SNA filed a motion for attorney fees, arguing that the case qualified as an “exceptional” one because of proof of the defendants’ malicious bad faith. Katz agreed but said he found the request for nearly $385,000 “excessive.” Silva and Benton said they logged 2,021 hours on the case at $190 per hour. But Katz found that “on many occasions, plaintiffs’ counsel, Ms. Silva, billed her client over 24 hours a day.” Reviewing her time records, Katz found that on 10 days, Silva had billed for as much as 39.5 hours in a single day. Silva explained that her firm employed a “primitive” computer software program and that other attorneys used her log-on when working on the case. As a result, she said, even though the billing records appear to be excessive, the records simply reflect the labor of all the attorneys who worked on the case at her firm. But Katz found that the bill was nonetheless flawed because Silva failed to distinguish between the work she performed and the work performed by attorneys with less experience. “Since plaintiffs failed to establish that all the attorneys who worked on these days have the same experience and skill as Ms. Silva, the court will exclude these hours from the total claimed. Therefore, the total numbers of hours claimed should first be reduced by 337.5 hours for a total of 1,684.27,” Katz wrote. And the trimming wasn’t done. Katz also sided with defense lawyers who said Silva was submitting her bill for every stitch of work she performed for the client and had failed to cut out the hours unrelated to her successful claims. As a result, Katz cut the bill by one third, resulting in an award for nearly 1,123 hours, or $213,341 in attorney fees. He also awarded $81,792 in costs, for a combined award of $295,133. Array was represented by attorney Richard Klineberger in Philadelphia. Karlsen and TDI were represented by attorney Tracy Oandasan and Martin A. Pedata of Woodstown, N.J.

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