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Seacrets wins $265K trademark verdict

Popular Ocean City nightclub Seacrets has won a $265,036 jury verdict against a Pennsylvania company that operates a chain of Caribbean hotels under the name “Secrets.”

The verdict stemmed from a 2008 lawsuit filed by The Coryn Group II LLC, which operates AMR Resorts and whose portfolio of holdings includes the Secrets hotels.

The lawsuit was filed to appeal an earlier U.S. Patent and Trademark Office decision to cancel the company’s Secrets trademark. Ocean City Seacrets Inc., the owner of Seacrets, filed a counterclaim against Coryn alleging trademark infringement and unfair competition.

The case went to a jury on Oct. 31; the trial ended Nov. 9 with Seacrets being awarded $1 for compensatory damages and $265,035 in punitive damages. U.S. District Court Judge William D. Quarles Jr. presided over the trial.

Barth X. deRosa, with Dickinson Wright PLLC in Washington, D.C., who represented Ocean City Seacrets, said the jury’s decision to find that Coryn Group had infringed on the Seacrets trademark drove home his argument.

“I believe we were vindicated strongly in our belief all along that Coryn Group knew about the mark and just proceeded as if we didn’t exist,” deRosa said.

The case was initially an appeal of an Aug. 8, 2008 decision by the Trademark Trial and Appeal Board, which cancelled Coryn’s “Secrets” trademark. The board found there was a likelihood of confusion between the two names. After Coryn appealed, Seacrets filed a counterclaim alleging trademark infringement and unfair competition.

Lawyers for the Coryn Group last week asked the court to stay the award of damages until they have time to file post-trial motions for relief. In their motion, the Coryn Group argued that the jury’s punitive damages were excessive given that the hotel group was not trying to pass itself off as being related to Seacrets.

“Coryn had no knowledge of O.C. or its mark when it adopted its SECRETS mark and, further, there is a paucity of evidence showing ‘malicious, wanton, or fraudulent’ conduct following adoption,” the motion reads. “Therefore, recovery of punitive damages should be denied.”

Calls to the Coryn Group and its lawyers for comment were not returned.

If the court’s decision is upheld and an injunction granted, Coryn will be blocked from using the Secrets name in marketing the hotels in the U.S. The properties would not have to be rebranded because they are outside the country.

The Secrets chain of hotels consists of nine properties in Mexico, Jamaica and the Dominican Republic. The newest is Secrets Marquis Los Cabos, which opened Nov. 9 in Mexico.

Seacrets in Ocean City was opened in 1988 by Leighton Moore in a small building at 49th Street and the Chesapeake Bay. Seacrets has grown exponentially since then and now bills itself as a “vacation entertainment complex” with 18 bars, six stages, enclosed and beach dining areas, and a 28,000-square-foot nightclub.

Seacrets has an estimated 800,000 customers annually. The property also includes a hotel and a radio station, WOCM-FM.

It was this success, deRosa said, which he thinks led Coryn to try their luck using the Secrets name.

“They had a whole universe of names to choose from,” deRosa said. “They were just enamored with Seacrets and figured they’d just take their chances with Secrets.”

THE CORYN GROUP II LLC V. O.C. SEACRETS INC.

Court:

U.S. District Court, Baltimore

Case No.:

1:08-cv-02764-WDQ

Proceeding:

Jury trial

Judge:

William D. Quarles Jr.

Outcome:

Defense verdict

Dates:

Event: Aug. 8, 2008

Suit filed: Oct. 20, 2008

Trial: Oct. 31, 2011 – Nov. 8, 2011

Jury verdict: Nov. 8, 2011

Plaintiff’s Attorneys:

Kristin H. Altoff, J. Kevin Fee, Steven Andrew Luxton, Daniel S. Marks and Seth Ian Shaifer, of Morgan Lewis and Bockius LLP in Washington. Wade Bennett Wilson in Baltimore.

Defendants’ Attorneys:

Karen Ann Kovacs, Samuel Dickinson Littlepage, Steven D. Lustig, H. Jonathan Redway and Barth X. deRosa, of Dickinson Wright PLLC in Washington.

Count:

Trademark infringement.