Securacomm Consulting Inc. v. Securacom Inc.
| Decision Date | 21 August 2000 |
| Docket Number | No. 99-5326,99-5326 |
| Citation | 224 F.3d 273 |
| Parties | (3rd Cir. 2000) SECURACOMM CONSULTING, INC. v. SECURACOM INCORPORATED, KUWAM CORPORATION, WIRT D. WALKER, III, Defendants/Third-party Plaintiffs v. RONALD S. LIBENGOOD, Third-party Defendant SECURACOM INCORPORATED, v. RONALD S. LIBENGOOD, CLIFFORD J. INGBER Securacom Incorporated, KuwAm Corporation, Wirt D. Walker, III, Appellants |
| Court | U.S. Court of Appeals — Third Circuit |
On Appeal from the United States District Court for the District of New Jersey District Judge: Honorable Dickinson R. Debevoise, (D.C. No. 95-cv-05393), (D.C. Civil No. 95-5393), (D.C. Civil No. 96-3247) Attorneys for Appellants: Arthur E. Newbold (Argued) Michael Doluisio Dechert, Price & Rhoads Philadelphia, PA 19103
Attorneys for Appellees: Robert B. Golden (Argued) Howard N. Aronson Lackenbach, Siegel, Marzullo, Aronson & Greenspan Scarsdale, NY 10583
BEFORE: SLOVITER, SCIRICA, and McKEE, Circuit Judges
OPINION FOR THE COURT
This appeal marks the second time the remedial portion of this trademark case has come before us. In the first appeal, defendants Securacom Incorporated, KuwAm Corporation, and Wirt D. Walker, III (collectively "Securacom New Jersey") sought reversal of the District Court's award of profits, treble damages, and attorney's fees after the court found that Securacom New Jersey had willfully infringed the trademark of SecuraComm Consulting, Inc. We reversed the award of profits and treble damages on the ground that the record did not support a finding of willful infringement and remanded as to the award of attorney's fees. See SecuraComm Consulting Inc. v. Securacom Inc., 166 F.3d 182 (3d Cir. 1999) ("SecuraComm Consulting I").
On remand, the District Court again awarded attorney's fees and denied Securacom New Jersey's motion for the judge's recusal. Securacom New Jersey appeals. It argues primarily that the District Court erred in awarding fees under S 35(a) of the Lanham Act, 15 U.S.C. S 1117(a), which authorizes an award of fees to the prevailing party only in "exceptional cases."
The underlying trademark dispute involved the adoption by two security systems consulting firms of similar marks, the mark "SecuraComm" by plaintiff SecuraComm Consulting (who with its principal Ronald Libengood will be referred to as "SecuraComm Pennsylvania") and the mark "Securacom" by defendant Securacom New Jersey. The detailed facts of the case are set forth in our previous opinion, SecuraComm Consulting I, and we restate them here only insofar as they are relevant to the narrow issues presented in this appeal.
In 1980, Ronald Libengood started a small security systems consulting business called SecuraComm Associates after losing his job in the Westinghouse corporate security department to downsizing. After the business lost Westinghouse as its principal client in 1992, Libengood incorporated the firm as SecuraComm Consulting, Inc., and expanded its range of services and client base. Notwithstanding its expansion after incorporation, SecuraComm Pennsylvania remained a relatively small company, with average annual revenues between 1992 and 1996 of slightly more than $250,000 per year.
In 1993, Libengood applied for registration of "Securacomm" as a service mark for security communication consulting and systems engineering; the mark was registered on the principal register on May 20, 1997. Plaintiff is licensed by Libengood to use the mark.
Defendant Securacom New Jersey, the other firm in the dispute, is the successor of a firm formed by Sebastian Cassetta in 1987. The firm affiliated with the engineering firm Burns & Roe, and operated under the name Burns & Roe Securacom. Burns & Roe Securacom's business was confined primarily to the nuclear security field.
Libengood first became aware of Burns & Roe Securacom in 1987 at a trade conference where he saw Cassetta throw a business card bearing the name "Burns & Roe Securacom" into a fish bowl. Libengood promptly approached Cassetta about the use of the name. Cassetta told him that he knew about Libengood's firm but that his attorneys had informed him that the similarity in the companies' names would not cause problems. Cassetta noted that the "Securacom" in his company name was preceded by "Burns & Roe" and that the two companies, SecuraComm Consulting and Burns & Roe Securacom, served different clienteles. As a result of the conversation, Libengood took no action.
In 1992, Burns & Roe Securacom hired Ronald Thomas as its chief executive officer, and terminated Cassetta's employment within two days. The company soon became independent of Burns & Roe after it received a substantial investment from KuwAm Corporation, a venture capital firm of which Wirt D. Walker, III is a shareholder and officer. The new, independent company expanded its activities into the full range of security services and changed its name to Securacom Incorporated.
In January 1993, Libengood learned that Burns & Roe Securacom had changed its name to Securacom Incorporated and had expanded its range of security services. Shortly thereafter, he mailed a cease-and-desist letter to Securacom New Jersey. For the next two and a half years, Libengood and Thomas attempted to settle the dispute. Libengood met with Thomas on two occasions and exchanged correspondence in which Libengood maintained his ownership of the mark, but stated that although he was not interested in selling his business, he would be willing to change his name if Securacom New Jersey were willing to pay for it. In fact, Libengood hired an appraiser in November 1994 who valued the SecuraComm Pennsylvania mark, together with the cost of changing its name, at $275,000.00. Libengood provided the appraisal to Thomas in May 1995.
In June 1995, Libengood informed Thomas that, as he had received no response concerning his offer to sell the SecuraComm Pennsylvania mark, he would institute legal proceedings after 30 days. Some time later, Thomas informed Libengood that he would have to deal with Walker, the chairman of the board of Securacom New Jersey. When Libengood spoke with Walker, Walker became abusive and told Libengood that if he filed suit, Walker would bury him financially and take everything he had.
On October 19, 1995, Libengood filed suit against Securacom New Jersey (later amended to add as defendants KuwAm Corporation and Walker) alleging, inter alia, service mark infringement and false designation of origin in violation of the Lanham Act, 15 U.S.C. SS 1114 and 1125(a). On October 27, the Board of Directors of Securacom New Jersey signed a document stating that Libengood's suit was meritless and that Libengood had attempted to "extort" a payment of $250,000 by threatening to file a lawsuit. The document resolved that Securacom New Jersey's attorneys would be "instructed" to take the following action:
1) to vigorously defend the Corporation's position and seek summary judgment and Rule 11 sanctions against the plaintiff and Mr. Libengood's attorneys;
2) to file a lawsuit against the plaintiff and his attorneys for attempted extortion, business interference and interruption, malicious prosecution, scheming and artifice to defraud and to obtain money by means of false and fraudulent pretenses and representations, Racketeer Influenced and Corrupt Organizations Act (RICO) violations, usurpation of corporate opportunity, malicious and tortious interference with contractual rights and expectancy of economic advantage, breach of the covenant of good faith and fair dealing, and anything else the attorneys would deem appropriate; and
3) to file complaints with the American Bar Association, the New Jersey Bar Association and the New York Bar Association bringing to their attention the unethical behavior of the plaintiff's attorneys regarding their mischaracterization of the plaintiff's name in court documents as well as their complete lack of due diligence prior to the filing of this lawsuit on their client's behalf.
On November 13, 1995, Securacom New Jersey filed an answer, defenses and counterclaims, including the same four claims that SecuraComm Pennsylvania had asserted, plus a fifth claim for libel, and also filed a third-party complaint against Libengood. By letter dated November 16, 1995, Walker informed Securacom New Jersey's attorneys of the instructions of the Board.
Thereafter, in accordance with Walker's letter and the Board's instructions, the attorneys for Securacom New Jersey filed a separate suit against Libengood and his attorney in Superior Court of New Jersey charging them with attempted extortion, business interference and interruption, malicious prosecution, scheming and artifice to defraud and to obtain money by means of false and fraudulent pretenses and misrepresentations, and RICO violations. As a result of his being named in the case, Libengood's attorney concluded that he could no longer represent SecuraComm Pennsylvania and Libengood in the Lanham Act case. The state suit was ultimately removed to federal court, consolidated with the existing Lanham Act action, and dismissed as meritless.
Securacom New Jersey subsequently filed a petition to cancel Libengood's trademark with the Patent and Trademark Office, seeking the same relief that it sought in its counterclaims in this case. Further, in June 1997 Securacom New Jersey filed another action in the District of Columbia Superior Court, alleging service mark infringement. The action was removed to the District Court of the District of Columbia. The District Court in this case enjoined Securacom New Jersey from proceeding with that action pending this trial.
The case was tried before the District Court in a bench trial in October 1997. After considering evidence from both sides, including extensive testimony from the parties, the court found that the facts "conclusively establish Libengood's ownership" of the name "Sec...
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