Jury Sides With Seacrets In Trademark Suit

OCEAN CITY — A popular Ocean City establishment was successful this week in its trademark infringement lawsuit against a travel destination company and its subsidiaries that piggybacked on its success and name recognition with a series of similar resorts in and around the Caribbean.

A U.S. District Court jury this week ruled in favor of O.C. Seacrets, the corporation that owns and operates the popular Seacrets nightclub complex along a three-block section of the bayfront in Ocean City, in its trademark infringement civil suit against the Coryn Corporation and its subsidiaries, which have opened nine resort destinations in Jamaica, Mexico, the Dominican Republic and other areas operating under the name “Secrets.”

After a seven-day trial, the federal jury deliberated just over two hours on Tuesday before returning with a favorable outcome for O.C. Seacrets and a $1 award for the plaintiff, along with punitive damages.

For Seacrets’ owner Leighton Moore, the case was less about a possible financial award and more about protecting his company’s intellectual property and the goodwill and reputation his company has earned over several years of successful operation in Ocean City. While Coryn was also hit with a little over $200,000 in punitive damages, the $1 award for Seacrets was more symbolic, according to Moore.

“We won the case and we got a dollar,” said Moore this week. “I’ve said all along this wasn’t about the money. So, we got a $1 award and I will frame it and hang it on the wall.”

In October 1997, O.C. Seacrets successfully registered the trademark “Seacrets” for “restaurant and bar services” at its location along the bay at 49th Street. Over the years, the restaurant and nightclub complex expanded to a three-block area including several bars, restaurants, a nightclub, a hotel, condominiums and its own radio station. According to court documents, the complex draws between 4,000 and 6,000 guests each weekend during the summer season.

In June 2000, Coryn filed an intent-to-use application for the trademark “Secrets” for “resort hotel services” with the U.S. Patent and Trademark Office, which officially registered the “Secrets” mark for Coryn in October 2003. In January 2004, O.C. Seacrets petitioned the patent office’s Trademark Trial and Appeals Board (TTAB) to cancel Coryn’s “Secrets” mark, arguing that its own mark “Seacrets” covered services closely related to if not identical to “resort hotel services” and there was a likelihood of confusion between the marks.

In August 2008, the TTAB ordered the cancellation of Coryn’s registration because O.C. Seacrets had a priority of usage in its Seacrets mark and there was a likelihood of confusion between the marks. The TTAB also denied Coryn’s petition for partial cancellation or restriction because it found the proposed restriction would not avoid confusion.

In October 2008, Coryn appealed the TTAB’s decision to the U.S. District Court. In December 2008, O.C. Seacrets counterclaimed for trademark infringement and unfair competition under the Lanham Act and Maryland common law, which is how the case ended up in front of a jury in U.S. District Court.

“The jury found they were culpable,” said Moore this week. “They acquired the trademark under less than above-board circumstances. They didn’t do it accidentally, they did it with malicious intent.”

According to Moore, not only did Coryn use the name and borrow liberally from the success of the Ocean City operation, they continued to do so even after the TTAB ordered the cancellation of its “Secrets” trademark usage.

“It was taken from them in 2008 but they appealed, and they continued to build ‘Secrets’ while their trademark was in a state of suspension,” he said.

While the federal jury sided with Moore and Seacrets this week, Coryn is not legally bound to change the name of its nine “Secrets” resorts around the Caribbean because they are not in the U.S. However, the outcome prohibits Coryn from marketing its “Secrets” resorts to the vacation-minded public in this country, which might have confused the destinations with the popular nightclub complex in Ocean City.

“They’re out of the country, so they can still legally use that name, but they can’t use the name to market their resorts anywhere in this country,” said Moore. “If they can’t market them to their target audience in this country, they’re probably going to change the name.”

Meanwhile, the victory in the trademark suit on Tuesday is just part of the good news this week for Moore, who will be honored tomorrow night with the second annual Hal Glick Community Service Award at a special gala at the Clarion.

The award, which was begun last year by a group of local business and community leaders and is named for its inaugural recipient, honors outstanding service to the resort and surrounding areas through philanthropic endeavors and community leadership.

With the resolution of the trademark suit this week, Moore said he ready to do even more in the community.

“I’ve been bogged down with this case for a couple of years now and I haven’t been able to do as much as I usually do,” he said this week. “With this behind me, I’m ready to jump back in again.”