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SecuraComm Consulting Inc. v. Securacom Inc.

United States Court of Appeals for the Third Circuit

June 26, 1998, Argued ; January 20, 1999, Filed

No. 97-5794

Opinion

 [***1445]   [*183] OPINION OF THE COURT

ALITO, Circuit Judge:

In this trademark infringement case, we are required to consider whether the District Court erred when it awarded the plaintiffs a percentage of the profits of the defendant corporation and then trebled that award and also assessed attorneys' fees. Central to these awards was the District Court's finding that the defendant corporation had willfully infringed the plaintiff's trademark. Because we conclude that the evidence does not support a finding of willful infringement, we reverse and remand for further proceedings.

 [*184]  I. 

 [**2]  In 1980, Ronald Libengood lost his job in the Westinghouse corporate security department, and he then began a small company that he called SecuraComm Associates. SecuraComm Associates was a security systems consulting firm that consulted with clients, surveyed facilities, designed security systems, managed projects, reviewed bids and evaluations, developed training programs, and presented security-related workshops. The firm deliberately refrained from arranging for the purchase and installation of equipment and from providing maintenance and technical support. The firm took this approach because many clients insisted on the separation of consulting from installation and support services so that the advice given would not be affected by conflicts of interest. Initially, most of SecuraComm [***1446]  Pennsylvania's business consisted of work for Westinghouse in Western Pennsylvania, but Libengood subsequently developed other clients in other areas.

Libengood formed the SecuraComm name from the terms "security" and "communications." When he coined this name, he was unaware of any other use of the word. All brochures, letters, and correspondence of his company bore the name SecuraComm Associates.

 [**3]  After losing Westinghouse as a client in 1992, Libengood incorporated his firm as SecuraComm Consulting, Inc. hereinafter ("SecuraComm Pennsylvania") and continued to do business through the corporation. Libengood was and is the president and major shareholder of SecuraComm Pennsylvania. After incorporation, the business expanded, but SecuraComm Pennsylvania remained a small company, with average annual revenues between 1992 and 1996 of slightly more than $ 250,000 per year. Since its inception, SecuraComm Pennsylvania has used the SecuraComm mark with Libengood's permission, and on January 1, 1995, Libengood and SecuraComm Pennsylvania entered into a formal licensing agreement.

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166 F.3d 182 *; 1999 U.S. App. LEXIS 803 **; 49 U.S.P.Q.2D (BNA) 1444 ***

SECURACOMM CONSULTING INC. v. SECURACOM INCORPORATED; KUWAM CORPORATION; WIRT D. WALKER, III, v. RONALD S. LIBENGOOD; SECURACOM INCORPORATED v. RONALD S. LIBENGOOD; CLIFFORD J. INGBER; SECURACOM INCORPORATED; KUWAM CORPORATION; WIRT D. WALKER, III, Appellants

Subsequent History:  [**1]  As Modified February 11, 1999.

Prior History: ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY. (D.C. Civil No. 95-cv-05393). (Senior District Judge: Honorable Dickinson R. Debevoise).

Disposition: Reversed and remanded.

CORE TERMS

infringement, profits, willful, trademark, attorney's fees, damages, circumstances, registration, Lanham Act, trebled, enhanced, rights, unfair competition, bad faith, registered, equitable, willfully, cease and desist, awarding, file suit, third-party, Associates, Consulting, deliberate, similarity

Trademark Law, Remedies, Damages, General Overview, Antitrust & Trade Law, Private Actions, Costs & Attorney Fees, Clayton Act, Civil Procedure, Attorney Fees & Expenses, Basis of Recovery, Statutory Awards, Unfair Competition, Federal Unfair Competition Law, Factors for Determining Confusion, Intent of Defendant to Confuse, Criminal Law & Procedure, Standards of Review, De Novo Review, Infringement Actions, Trademark Cancellation & Establishment, Registration Procedures, Monetary Damages, Copyright Law, Types of Damages, Infringement Profits, Profits, Causes of Action Involving Trademarks, Burdens of Proof