Issue: January 2003
Trade Dress Settlement

Hinckley and an Annapolis boatbuilder agree to settle the lawsuit that has rattled some of the boatbuilding industry.

 

An Annapolis boatbuilder, yacht broker and yacht importer have settled the lawsuits brought against them by the Hinckley Company, which alleged that they were unlawfully copying and selling the Maine-based builder’s most popular line of powerboats. At least one more Hinckley suit against an Annapolis yacht broker is still in negotiation. Another, brought in Maryland against a Washington (state) boatbuilder, has been dismissed.

 

    A confidentiality clause in the settlement between Larry Belkov of Annapolis and his boatbuilding business, Belkov Yacht Carpentry, and Talaria Company LLC (which sells and services boats as the Hinckley Company), prevents either party from discussing the deal’s details. In a press release issued Sept. 26, 2002 - 10 months after it filed the lawsuits in a Baltimore federal court - Hinckley said it agreed to drop its lawsuit against Belkov and his business, and Belkov agreed to drop his counterclaim that Hinckley was attempting to establish an unlawful monopoly in a particular part of the powerboat market. Belkov also agreed to make some changes in future boats. “There are some minor changes we’ve agreed to,” he said. “I can tell you that I’m very happy.” At the U.S. Powerboat Show in October, Belkov’s 42-foot Express was on display, albeit with a notice that the model was no longer available (a similar note is on the company’s website). Still, in its lawsuit against Belkov, Hinckley had requested a recall of all Belkov boats it felt infringed on its trade dress; none has been recalled.

 

    The settlement stems from eight lawsuits Hinckley filed in U.S. District Court in Baltimore in late November 2001, alleging that the businesses were either building or selling boats that too closely copied its highly successful 36-foot Picnic Boat and its 40- and 44-foot Talaria models. Hinckley argued that it had specifically combined about a dozen design elements to create the boats, and that those elements - and the “unique look of elegance and luxury” they produced - comprised Hinckley’s trade dress. The “copycat” boats resulted in unfair competition and dilution of Hinckley’s trade dress, as well as its boats’ value, the lawsuits said. Hinckley also argued that the “copycat” boats confused potential customers.

 

    Among those sued were Belkov; Bristol Yacht Sales in Annapolis, which sold Belkov’s 42-foot Express; Annapolis Sail Yard, which sells the Turkish-built Vicem motoryacht; Lazmar International of Severna Park, Md., which imported the Vicem boats; Capital Yacht Sales in Annapolis, which sells the Australian-built Avalon 38, San Juan Composites in Anacortes, Wash.; and three Florida yacht brokers that sell the boats in question. The legal action provoked a wave of reaction in the relatively small world of high-end, semi-custom powerboat builders. Some small Chesapeake Bay builders halted projects they feared would incur a lawsuit from Hinckley, and some marine lenders grew reluctant to financially back builders whose boats resembled the Downeast, lobster-style yacht that Hinckley took to a new level of finish and power with its Picnic and Talaria models.

 

    Hinckley has also settled with Lazmar International and the Annapolis Sail Yard, whose suit both sides agreed to dismiss. In a press release announcing that settlement in May 2002, Hinckley said the deal means Lazmar admitted no liability but agreed “to stop selling the Vicem boats incorporating the elements of the Hinckley trade dress that are 50 feet or less in length in the United States and further agreed to make a number of design changes to certain boats to be built in lengths over 50 feet.” Meantime, as of November, the builders of the Avalon 38 were still in discussions with Hinckley, according to a representative of Capital Yacht Sales. Pat Mayben, president of Bristol Yacht Sales, agreed to stop selling the Belkov Express soon after the lawsuit was filed against his business, although he said he disagreed wholeheartedly with Hinckley’s arguments. 

 

    The lawsuit against San Juan Composites, which builds the San Juan 38 and 48, was dismissed in July, after San Juan argued that the Maryland court lacked jurisdiction to hear it. Hinckley had argued that because San Juan exhibited its boats at the U.S. Powerboat Show in Annapolis in 2000 and 2001, the court did have jurisdiction. But Judge Frederic N. Smalkin disagreed. San Juan was “simply present in Maryland to attract interest in its product among an audience obviously not limited to Maryland residents, and that presence led to no actual business transactions with Maryland residents,” he wrote. “The fact that [San Juan] has never sold any boats or otherwise done any business in Maryland certainly speaks to the extent of confusion among Maryland residents, i.e., none.” Rather than instruct that the case be moved to a Washington court, Smalkin dismissed it altogether.