Roger Cleveland Golf Company Inc v. Prince et al

Filing 137

REPLY to Response to Motion re 127 MOTION for Attorney Fees Response filed by Roger Cleveland Golf Company Inc. (Attachments: # 1 Exhibit A - Jury Trial Discussions excerpt, # 2 Exhibit B - Verdict Form, # 3 Exhibit C - 9.29.10 ltr & Amended Notices of Depos to Doolittle, # 4 Exhibit D - Rolex v. Brown, # 5 Exhibit E - Chanel v. French, # 6 Exhibit F - Rolex v. Jones, # 7 Exhibit G - Lorillard Tobacco v. S&M Central Serv. Corp., # 8 Exhibit H - Employers Council v. Feltman, # 9 Exhibit I - Rodgers v. Anderson, # 10 Exhibit J - Silhouette v. Chakhbazian)(McElwaine, John)

Exhibit H

Page 1

LEXSEE 384 FED. APPX. 201
EMPLOYERS COUNCIL ON FLEXIBLE COMPENSATION, Plaintiff - Appellee,
v. KENNETH FELTMAN; ANTHONY W. HAWKS; EMPLOYERS COUNCIL ON
FLEXIBLE COMPENSATION, LTD., Defendants - Appellants.
No. 09-2085
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
384 Fed. Appx. 201; 2010 U.S. App. LEXIS 12688
May 12, 2010, Argued
June 21, 2010, Decided
NOTICE:
PLEASE REFER TO FEDERAL RULES
OF
APPELLATE
PROCEDURE
RULE
32.1
GOVERNING THE CITATION TO UNPUBLISHED
OPINIONS.
PRIOR HISTORY: [**1]
Appeal from the United States District Court for the
Eastern District of Virginia, at Alexandria.
(1:08-cv-00371-JCC-TRJ). James C. Cacheris, Senior
District Judge.
Flexible Bens. Council v. Feltman, 2009 U.S. Dist.
LEXIS 40686 (E.D. Va., May 14, 2009)
DISPOSITION: AFFIRMED.

COUNSEL: ARGUED: Edward A. Pennington,
HANIFY & KING, Washington, D.C., for Appellants.
Bernard Joseph DiMuro, DIMUROGINSBERG, PC,
Alexandria, Virginia, for Appellee.
ON BRIEF: Anthony W. Hawks, HAWKS LAW
OFFICE, Bethany Beach, Delaware, for Appellants.

[*202] PER CURIAM:
In 2008, the Employers Council on Flexible
Compensation ("ECFC") instituted this civil action in the
Eastern District of Virginia against Kenneth Feltman,
Anthony W. Hawks, and the Employers Council on
Flexible Compensation, Ltd. (collectively, the
"defendants"), alleging trademark infringement and
cybersquatting. Shortly thereafter, the parties entered into
a Permanent Injunction Order (the "Consent Order"),
agreeing that certain of ECFC's marks were protected
under the Lanham Act and the Anticybersquatting
Consumer Protection Act (the "ACPA"). Deeming the
Consent Order a concession of liability on the trademark
infringement and cybersquatting claims, the district court
awarded ECFC attorney [**2] fees under the Lanham
Act and statutory damages pursuant to the ACPA. See
Flexible Benefits Council v. Feltman, No. 1:08-cv-371,
2009 U.S. Dist. LEXIS 40686 (E.D. Va. May 14, 2009)
(the "Damages Opinion"). 1 The defendants [*203] have
appealed, primarily contending they did not admit
liability in the Consent Order and, in any event, that
attorney fees and statutory damages were not warranted.
As explained below, we affirm.

JUDGES: Before WILKINSON and KING, Circuit
Judges, and HAMILTON, Senior Circuit Judge.

1
The Damages Opinion is found at J.A.
1328-58. (Citations herein to "J.A. " refer to the
Joint Appendix filed by the parties in this appeal.)

OPINION
I.

Page 2
384 Fed. Appx. 201, *203; 2010 U.S. App. LEXIS 12688, **2

ECFC - a nonprofit lobbying organization dedicated
to the maintenance and expansion of private employee
benefit programs - was incorporated in 1981 in the
District of Columbia under the name "Employers Council
on Flexible Compensation." Between 1981 and 2008,
ECFC continuously and exclusively used "Employers
Council on Flexible Compensation" as its legal and trade
name. The organization also used the acronym "ecfc," as
well as an "ecfc" logo, to further designate its products
and services. For example, in 1999, ECFC registered the
domain name "ecfc.org," at which it maintained a website
promoting flexible benefit compensation programs.
In 1996, ECFC encountered [**3] severe financial
problems, which threatened the organization with
bankruptcy. Defendant Kenneth Feltman, who was then
ECFC's executive director, was asked to create a separate
management company that could assume ECFC's
day-to-day operations and minimize the organization's
indebtedness. Accordingly, Feltman incorporated Radnor,
Inc. ("Radnor"), a political consulting firm specializing
in, inter alia, management services. In 1997, 2003, and
2005, ECFC and Radnor entered into separate
management service agreements ("MSAs"), under which
Radnor agreed to hire ECFC's staff (including Feltman)
and to exercise management services for ECFC. Thus,
although Feltman was technically no longer an ECFC
employee after the 1997 MSA, he continued to play a
significant role in its management.
In 2007, ECFC's relationship with Radnor soured,
prompting ECFC to terminate the 2005 MSA. In
November 2007, ECFC initiated an arbitration
proceeding against Radnor in the District of Columbia,
alleging that Radnor and Feltman had pilfered millions of
dollars owed to ECFC. Radnor thereafter filed a
counterclaim in the arbitration proceeding, asserting that
ECFC had wrongfully terminated the 2005 MSA.
In January 2008, [**4] defendant Anthony W.
Hawks - a lawyer representing Radnor and Feltman in the
arbitration proceeding - discovered that ECFC's corporate
charter had been revoked in September 1998 because
ECFC had failed to file certain reports with the D.C.
Department of Consumer and Regulatory Affairs (the
"DCRA"). Rather than notifying ECFC, Feltman and
Hawks instead attempted to determine the legal
implications of the revocation. Based on limited legal
research, Hawks concluded that, pursuant to D.C. law,
ECFC was dissolved as a matter of law and had forfeited

any rights it had in the marks "ecfc" and "Employers
Council on Flexible Compensation." Accordingly, in
February 2008, Feltman and Hawks formed a for-profit
corporation in the District of Columbia under the name
"Employers Council on Flexible Compensation, Ltd."
("ECFC Ltd."), with each serving as part owner thereof.
Feltman and Hawks reserved with the DCRA the
acronym "ecfc," the trade name "Employers Council on
Flexible Compensation," and twenty-one variations of
that name. Moreover, in March 2008, Hawks applied to
the United States Patent and Trademark Office to register
the
mark
"Employers
Council
on
Flexible
Compensation," as well as a [**5] design mark identical
to ECFC's "ecfc" logo. Finally, Feltman and Hawks
obtained the domain name "ecfc.com" - which was
similar to ECFC's domain name, "ecfc.org" - and
maintained a website that was nearly identical to that of
ECFC.
[*204] In March 2008, ECFC first learned of the
revocation of its corporate charter and promptly filed for
reinstatement. Because Feltman and Hawks had reserved
"Employers Council on Flexible Compensation" as the
trade name of ECFC Ltd., ECFC could not be reinstated
under its former name and instead chose "Flexible
Benefits Council" (though it continued to operate its
website at the domain name "ecfc.org"). Soon thereafter,
on April 17, 2008, ECFC filed this lawsuit against the
defendants in the Eastern District of Virginia, alleging,
inter alia, trademark infringement, in contravention of §
43 of the Lanham Act, 15 U.S.C. § 1125(a), and
cybersquatting, in contravention of the ACPA, 15 U.S.C.
§ 1125(d). By its complaint, ECFC sought injunctive
relief (1) prohibiting the defendants from using the name
"Employers Council on Flexible Compensation" and any
variation thereof, as well as the acronym "ecfc," and (2)
ordering the defendants to relinquish the "ecfc.com"
[**6] domain name. ECFC also sought reasonable
attorney fees under § 35(a) of the Lanham Act, which
authorizes a court "in exceptional cases [to] award
reasonable attorney fees to the prevailing party." 15
U.S.C. § 1117(a). Finally, pursuant to the ACPA, ECFC
sought up to $ 100,000 in statutory damages on its
cybersquatting claim. See id. § 1117(d) (authorizing
recovery of "an award of statutory damages in the amount
of not less than $ 1,000 and not more than $ 100,000 per
domain name").
During various hearings conducted over the ensuing
months, ECFC and the defendants indicated to the district

Page 3
384 Fed. Appx. 201, *204; 2010 U.S. App. LEXIS 12688, **6

court that they were intent on settling the lawsuit, but that
they disagreed on damages. The defendants maintained
that, because they had reasonably believed that they
could legally use the name "Employers Council on
Flexible Compensation" and the "ecfc" logo, their
conduct did not warrant awarding ECFC attorney fees
under the Lanham Act or statutory damages under the
ACPA. Because the only issue in dispute was whether
attorney fees and statutory damages were warranted, the
parties agreed to the Consent Order, entered by the court
on October 22, 2008. Therein, the defendants agreed "not
to contest [**7] further the distinctiveness of [ECFC's]
marks" or its "ownership of or rights in" those marks.
J.A. 974. The defendants also acknowledged that ECFC's
"marks are subject to the protections of the Lanham Act."
Id. The Consent Order permanently enjoined the
defendants from using in any manner ECFC's marks and
any names affiliated with the organization, thereby
allowing ECFC to re-register itself with the DCRA under
the
name
"Employers
Council
on
Flexible
Compensation." Finally, the defendants agreed to transfer
the domain name "ecfc.com" to ECFC.
Thereafter, the district court - by the Damages
Opinion of May 14, 2009 - granted ECFC's request for
attorney fees and statutory damages. Notably, the court
predicated its ruling on the Consent Order, recognizing
"[a]t the outset . . . that Defendants have admitted liability
for trademark infringement . . . and cybersquatting."
Damages Opinion 6. The court also observed that, "[a]s
agreed to by the parties, the issues remaining for the
Court are [ECFC's] requests for two of the types of
damages available under these statutes: attorney[] fees . .
. and statutory damages." Id. In other words, the court
deemed the Consent Order to be the defendants' [**8]
concession of liability under the Lanham Act and the
ACPA, obviating any need to assess the merits of ECFC's
claims.
Turning to ECFC's request for attorney fees under
the Lanham Act, the district court found that the
defendants had willfully and deliberately copied ECFC's
logo and other items from ECFC's website in [*205]
order to divert ECFC's profits to themselves. The court
also found that Feltman and Hawks had intentionally
reserved the name "Employers Council on Flexible
Compensation" in an effort to prevent ECFC from
reinstating its corporate charter under that name. The
court thus determined that the defendants had acted in
bad faith and that the dispute amounted to an

"exceptional case," warranting an award of reasonable
attorney fees to ECFC in an amount to be determined
following an evidentiary hearing. See Damages Opinion
28. 2 As to ECFC's request for statutory damages under
the ACPA, the court found that the defendants had
deliberately registered a domain name ("ecfc.com") that
was confusingly similar to ECFC's domain name
("ecfc.org"). Accordingly, the court awarded ECFC $
20,000 in statutory damages. See id. at 30.
2 The district court ultimately awarded ECFC $
292,500 in attorney [**9] fees under the Lanham
Act. The amount of the award is not an issue in
this appeal.
On May 29, 2009, the defendants filed a motion for
reconsideration pursuant to Federal Rule of Civil
Procedure 59(e), contending that the district court's award
of attorney fees and statutory damages was based on the
clearly erroneous factual finding that the defendants had,
by the Consent Order, admitted liability under the
Lanham Act and the ACPA. In addition, simultaneous
with their motion for reconsideration, the defendants
moved the court to amend the Consent Order to clarify
that they had not conceded liability on ECFC's trademark
and cybersquatting claims. By its Memorandum Opinion
of August 20, 2009, the court denied each of the
defendants' motions, finding that the Consent Order's
unambiguous terms, coupled with the parties'
representations to the court before and after the Consent
Order was entered, demonstrated that the defendants had
conceded liability. See Employers Council on Flexible
Comp. v. Feltman, No. 1:08-cv-371, 2009 U.S. Dist.
LEXIS 77175 (E.D. Va. August 20, 2009). 3 In denying
both motions, the court emphasized that, "[w]hen both
parties (repeatedly) represent to the Court that they have
resolved most of the [**10] issues between them and
only one issue remains, they are necessarily representing
that they have resolved all of the issues but that one." Id.
at 8. Because the court could find "no reason to
second-guess the parties' representations on settlement
matters," it again concluded that the defendants had
conceded liability in the Consent Order. Id. at 9.
Accordingly, the court denied the defendants' motion for
reconsideration and their motion to amend the Consent
Order.
3
The district court's August 20, 2009
Memorandum Opinion is found at J.A. 1403-18.
The defendants have filed a timely notice of appeal,

Page 4
384 Fed. Appx. 201, *205; 2010 U.S. App. LEXIS 12688, **10

and we possess jurisdiction pursuant to 15 U.S.C. §
1121(a) and 28 U.S.C. § 1291.
II.
We review for abuse of discretion a district court's
award of attorney fees under the Lanham Act. See Retail
Servs. Inc. v. Freebies Publ'g, 364 F.3d 535, 550 (4th Cir.
2004). Any factual findings underpinning such an award,
however, including the court's determination of whether
the case is "exceptional," are reviewed for clear error
only. See Carolina Care Plan Inc. v. McKenzie, 467 F.3d
383, 390 (4th Cir. 2006), abrogated on other grounds by
Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 128 S. Ct.
2343, 171 L. Ed. 2d 299 (2008); see also Schlotzsky's,
Ltd. v. Sterling Purchasing & Nat'l Distrib. Co., 520 F.3d
393, 402 (5th Cir. 2008) [**11] ("The findings of the
district court regarding the exceptional nature of a [*206]
case are reviewed for clear error."). Similarly, in
assessing a district court's award of statutory damages
within the range prescribed by statute, we review factual
findings for clear error and the decision to award
damages for abuse of discretion. See Lyons P'ship, L.P. v.
Morris Costumes, Inc., 243 F.3d 789, 799 (4th Cir.
2001).
III.
On appeal, the defendants raise several challenges to
the district court's award of attorney fees and statutory
damages. The crux of the defendants' appeal, however, is
their contention that the court rested its damages award
on a clearly erroneous factual finding with respect to the
Consent Order - namely, that the defendants had therein
conceded liability under the Lanham Act and the ACPA.
Accordingly, we must first assess the defendants'
contention that the court erred by not independently
determining whether they were liable on ECFC's
trademark infringement and cybersquatting claims. We
then turn to the defendants' assertion that the court erred
in deeming the matter an "exceptional case," warranting
an attorney fees award under the Lanham Act. Finally,
we assess the defendants' [**12] contention that the
court abused its discretion in determining that their
conduct warranted an award of statutory damages under
the ACPA.
A.
The defendants' primary contention on appeal is that
the district court abused its discretion because its award

of attorney fees and statutory damages was based on the
erroneous finding that they had admitted liability in the
Consent Order. Emphasizing the terms thereof, the
defendants maintain that the Consent Order enjoined
them only from using ECFC's marks in the future and
contained no explicit admission of liability with respect
to their past use of ECFC's marks. They contend that,
before the court could properly assess whether the
defendants' conduct was willful - and warranted awarding
attorney fees and statutory damages - the court first had
to determine whether they were in fact liable under the
Lanham Act and the ACPA. The defendants conclude
that, because the court made no such determination, its
award of attorney fees and statutory damages must be
vacated.
The defendants' contention on their concession of
liability is belied by the record, however, which is replete
with representations to the district court that the Consent
Order resolved [**13] all issues concerning the merits of
the trademark and cybersquatting claims. For example,
during a motions hearing on October 15, 2008 - before
the parties had agreed to the Consent Order - ECFC
informed the court that the parties had resolved "98
percent" of the issues and that the only remaining issue
was ECFC's request for attorney fees and statutory
damages. J.A. 960. Indeed, both parties confirmed to the
court that there was no longer any need for a jury trial,
which had been scheduled for early December 2008, and
that the damages issue could be resolved following a
short evidentiary hearing. Shortly thereafter, during an
evidentiary hearing on the damages issue, the court asked
the parties whether there were any outstanding issues
other than ECFC's request for attorney fees and statutory
damages, and all parties responded that there were none.
In light of these unambiguous representations, the
district court did not clearly err in finding that, by the
Consent Order, the defendants had conceded liability
under the Lanham Act and the ACPA. See In re Charlie
Auto Sales, Inc., 336 F.3d 34, 37 (1st Cir. 2003) ("A
court's interpretation of a contract or consent order is
reviewed for [**14] clear error . . . if the court relies on
extrinsic evidence such as the parties' intent." [*207]
(citation omitted)). At no point after entry of the Consent
Order did the defendants indicate to the court that the
issue of their liability on the trademark and
cybersquatting claims was outstanding and needed to be
resolved. To the contrary, they asserted that those issues
had been resolved by the Consent Order. See, e.g., J.A.

Page 5
384 Fed. Appx. 201, *207; 2010 U.S. App. LEXIS 12688, **14

1367 (defendants' counsel explaining to court that "the
only thing left [after the Consent Order] was the issue of
willfulness" and that "[t]he only reason that was an issue
is because of [ECFC's request for] attorney[] fees").
Accordingly, the defendants cannot successfully claim
that the court erred in finding that, by agreeing to the
Consent Order, they had admitted liability. Thus, the
court did not abuse its discretion in declining to further
assess the merits of ECFC's trademark infringement and
cybersquatting claims. 4
4 Because this record supports the district court's
finding that the defendants conceded liability in
the Consent Order, we also reject their appellate
contention that the court abused its discretion in
refusing to amend the Consent Order. Similarly,
[**15] the defendants' assertion - presented for
the first time on appeal - that they could not be
held liable under the ACPA because they were not
the "registrants" of the "ecfc.com" domain name,
see 15 U.S.C. § 1125(d)(1)(D), is without merit.
B.
The defendants next contend that, in awarding
attorney fees pursuant to § 35(a) of the Lanham Act, the
district court erred in finding this to be an "exceptional
case." Section 35(a) authorizes a district court, in
"exceptional cases" involving trademark infringement or
cybersquatting, to "award reasonable attorney fees to the
prevailing party." 15 U.S.C. § 1117(a). Although the
statute does not define the term "exceptional case," we
have recongized that an "exceptional case" is one in
which "the defendant's conduct was malicious,
fraudulent, willful or deliberate in nature." People for the
Ethical Treatment of Animals v. Doughney, 263 F.3d 359,
370 (4th Cir. 2001) (internal quotation marks omitted).
Put differently, "for a prevailing plaintiff to succeed in a
request for attorney fees, she must show that the
defendant acted in bad faith." Scotch Whisky Ass'n v.
Majestic Distilling Co., Inc., 958 F.2d 594, 599 (4th Cir.
1992). If the court deems [**16] the case exceptional, it
must then exercise its discretion to determine whether
attorney fees should be awarded. See Enzo Biochem, Inc.
v. Calgene, Inc., 188 F.3d 1362, 1370 (Fed. Cir. 1999).
The defendants maintain that the district court erred
in deeming this case exceptional. More specifically, they
contend that, when Feltman and Hawks reserved
"Employers Council on Flexible Compensation" as their
new business's trade name, they in good faith believed

that ECFC had abandoned any rights it had in that name.
Because Hawks and Feltman reasonably believed that
they could legally use ECFC's marks, the theory goes, the
court could not have made the requisite finding of bad
faith.
The record, however, provides ample support for the
district court's determination that Feltman and Hawks
willfully and deliberately infringed on ECFC's marks and
reserved the name "Employers Council on Flexible
Compensation" in order to prevent ECFC from
reinstating itself under that name. Indeed, the defendants'
ill-will toward ECFC is highlighted in emails exchanged
between Hawks and Feltman, wherein they admit that
their goal in copying ECFC's marks was to "cause[]
consternation in the ranks." J.A. 764. Moreover, [**17]
the record reveals that Hawks and Feltman believed that
ECFC had wrongly "stolen" the company and its profits
when it terminated the 2005 MSA, and that the
revocation of ECFC's corporate [*208] charter presented
"an opportunity [for Feltman to] retrieve his business by
competing directly against ECFC." Id. at 227. There is
also ample support for the court's determination that
Hawks had only conducted minimal legal research before
concluding that ECFC had lost any rights to the name
"Employers Council on Flexible Compensation" and the
"ecfc" logo. Hawks himself testified that he spent "no
more than one to two hours" researching the trademark
issues, despite not having encountered such a legal issue
in the past "ten to twenty" years. Id. at 1075-76.
In these circumstances, the district court did not
clearly err in finding that the defendants acted in bad faith
and that the matter was an "exceptional case" under §
35(a) of the Lanham Act. And, having so concluded, the
court did not abuse its discretion in determining that
attorney fees were warranted, given the nature of the
defendants' conduct. Accordingly, we reject the
defendants' contentions in this regard and affirm the
award of attorney [**18] fees.
C.
Finally, the defendants contend that the district court
abused its discretion in concluding that their conduct
warranted an award of statutory damages under the
ACPA. That statute authorizes the owner of a protected
mark to bring an action against any person who "has a
bad faith intent to profit from that mark" and "registers,
traffics in, or uses a domain name that . . . is identical or
confusingly similar to . . . that mark." 15 U.S.C. §

Page 6
384 Fed. Appx. 201, *208; 2010 U.S. App. LEXIS 12688, **18

1125(d)(1)(A). Upon proving a violation of the ACPA,
the owner of the protected mark may "recover, instead of
actual damages and profits, an award of statutory
damages in the amount of not less than $ 1,000 and not
more than $ 100,000 per domain name, as the court
considers just." Id. § 1117(d).
The district court acted well within its discretion in
awarding ECFC $ 20,000 in statutory damages under the
foregoing statutory provisions. The court carefully
weighed several aggravating and mitigating factors
before concluding that the defendants' conduct warranted
that award. For example, the court acknowledged that the
defendants had used the "ecfc.com" domain name for
only a short time and apparently earned no profits
therefrom. Indeed, the court [**19] observed that there
had been only one occasion of actual confusion between
the two domain names. Nevertheless, the court identified

several factors that supported the award of statutory
damages. In particular, the court emphasized that Feltman
had exploited a long and close working relationship with
ECFC; that the defendants had acted surreptitiously in
registering their domain name, without first notifying
ECFC of its corporate revocation; and that Hawks had
only briefly researched whether ECFC had abandoned its
legal rights in the marks "ecfc" and "Employers Council
on Flexible Compensation." In these circumstances, the
court did not abuse its discretion in making the award of
statutory damages.
IV.
Pursuant to the foregoing, we reject the defendants'
contentions and affirm.
AFFIRMED