The 3rd U.S. Circuit Court of Appeals has affirmed a district court’s ruling that the conduct of an entrepreneur, who used a former Major League Baseball pitcher’s name in the name of his businesses, did not meet a threshold that would necessitate an award of attorneys’ fees.
Tyler Green was a pitcher with the Philadelphia Phillies for the better part of a decade. His grandest achievement was being named to the MLB All-Star game in 1995. After retiring in 2000, Green has stayed in the Philadelphia area, serving as a pitching coach for the nationally acclaimed Germantown Academy varsity baseball team and participating in various Phillies-related charitable events.
“From this evidence, Green no doubt retains some name recognition in the greater Philadelphia community,” concluded the Circuit Court in its opinion.
Next, the court turned to the defendant, Greg Fornario was a former bartender at a Philadelphia-area sports bar, who the late 1990s started a sports handicapping business called Tyler Green Sports. That business was operational, however, for only one day. In 2000, he started an entertainment promotion company and gave it the name Tyler Green Sports. Fornario incorporated the company in Pennsylvania, and registered to it the name Tyler Green Sports. Before registering the name, he testified that he engaged an attorney to do a trademark search. According to Fornario, this search revealed that the name Tyler Green Sports was not registered to any business or person. Tyler Green Sports never achieved significant commercial success, according to the court.
In the fall of 2003, Tyler Green’s agent Rex Gary discovered that a local business was using the name Tyler Green Sports. After investigating its activities, he phoned the company and spoke to Fornario. He confirmed that the business was not affiliated with anyone named Tyler or Green, and on that basis demanded that Fornario cease trading under the name. When Fornario declined, Green’s attorneys sent formal cease and desist letters in February and March 2004.
After the second letter, Fornario offered to stop using the name in return for $3,000. In his answer, Fornario denied liability and asserted a counterclaim of libel against Green and his attorneys. Specifically, Fornario alleged that accusing him in the February 2004 letter of using Tyler Green’s name to “sell alcohol and sex” libelously insinuated that he was involved in, to be euphemistic, “Mrs. Warren’s profession.” (http://en.wikipedia.org/wiki/Mrs._Warren’s_Profession)
Green responded with a Rule 11 motion, and Fornario withdrew the counterclaim. Within two weeks of the answer, Fornario signed a consent decree in which he agreed to stop using the name Tyler Green in trade. But the action continued on the issues of damages, costs and attorneys’ fees.
The district court ultimately declined to award attorneys’ fees, spawning the appeal, finding that the evidence did not show that Fornario named his company after the pitcher. While suspicious, the court declined to refute Fornario’s explanation that the word “Tyler” arose from his affection for the band Aerosmith and its lead singer Stephen Tyler and that the word “Green” was selected because of its connotation with money.
Nevertheless, the plaintiff appealed the lower court’s finding.
In the instant opinion, the appeals court noted that the dispute over attorney’s fees centers on whether the case could be deemed “exceptional,” pursuant to the Lanham Act.
“Determining whether a case is exceptional is a two-step process,” wrote the appeals court. “First, the District Court must decide whether the defendant engaged in any culpable conduct. Ferrero U.S.A., Inc. v. Ozak Trading, Inc., 952 F.2d 44, 47 (3d Cir. 1991). We have listed bad faith, fraud, malice, and knowing infringement as non-exclusive examples of the sort of culpable conduct that could support a fee award. Id.; see also Securacomm Consulting, Inc. v. Securacom, Inc., 224 F.3d 273, 280 (3d Cir. 2000). Moreover, the culpable conduct may relate not only to the circumstances of the Lanham Act violation, but also to the way the losing party handled himself during the litigation. Securacomm, 224 F.3d at 282.
“Second, if the District Court finds culpable conduct, it must decide whether the circumstances are ‘exceptional’ enough to warrant a fee award. See Ferrero, 952 F.2d at 49 (noting that the court may consider factors other than the defendant’s culpable conduct, such as the closeness of the liability question and whether the plaintiff suffered damages).
“In sum, a district court may not award fees without a finding of culpable conduct, but it may decline to award them despite a finding of culpable conduct based on the totality of the circumstances.
“Here, Green alleges two basic categories of culpable conduct: (1) Fornario’s knowing infringement, and (2) his bad-faith failure to stop at Green’s request. We deal with each in turn.”
In addressing the first category, the panel of judges agreed with the district judge that while Fornario may have named his company after the pitcher, there was no evidence to support that conclusion. “Because the District Court’s resolution of this disputed issue of fact was not clearly erroneous, we cannot disturb it notwithstanding our suspicions about Fornario’s explanation for his trade name,” it wrote.
As for the defendant’s refusal to immediately comply with cease and desist letters, the appeals court noted that “in general, putative defendants have every right to decline pre-litigation requests without adverse consequences, but they must do so in good faith–that is, believing that they have a colorable claim of right to engage in the challenged behavior. See Northern Light Tech., Inc. v. Northern Lights Club, 236 F.3d 57, 65 (1st Cir. 2001).”
The court added that “if Fornario maintained a good-faith belief that he was rightfully using the trade name Tyler Green Sports, he was entitled to decline pre-litigation requests and defend his position as he saw fit. The District Court found that the evidence did not support a finding of bad faith, and that determination also is not clearly erroneous. Thus, we affirm the Court’s conclusion that this case is not ‘exceptional’ enough to merit an award of attorneys’ fees to Green.”
Tyler Green v. Greg Fornario and Tyler Green Sports; 3rd Cir.; No. 06-2649; 486 F.3d 100; 2007 U.S. App. LEXIS 10873; 5/8/07
Attorneys of Record: (for appellant) John M. Elliott, Esquire, John P. Elliott, Esquire, Elliott, Greenleaf, and Siezikowski, P.C., Blue Bell, Pennsylvania. (for appellees) Gregory M. Castaldo, Esquire, Schiffrin & Barroway, LLP, Radnor, Pennsylvania.
