The opinion of the court was delivered by: HARRIS
1. Plaintiff Subscription Television of Greater Washington is a general partnership organized and existing under the laws of the District of Columbia, having its principal place of business in McLean, Virginia. The remaining corporate plaintiffs (hereinafter collectively referred to as STV GW) are general partners in that venture.
2. The defendant, A. Bart Kaufmann, is a citizen of the State of New Jersey, trading as A. B. Kaufmann Associates, and/or New Video Engineering, unincorporated business entities whose principal office is (or was) located at Route 527, Box 140, Livingston, New Jersey 07309.
3. The plaintiffs are engaged in the business of providing Subscription Television (STV) program service to Northern Virginia, Southern Maryland, and the District of Columbia under the trade name "Super TV." The plaintiffs provide STV program service by transmission over two ultra high frequency television channels: WNUV, Channel 54, Baltimore, Maryland, and WCQR, Channel 50, Washington, D.C. This programming consists primarily of copyrighted movies, sporting events, and other specialty programming not generally available on advertiser-sponsored commercial television.
4. The plaintiffs commenced STV service on November 1, 1981. To date, they have invested substantial capital in the development of their STV service. Plaintiffs have constructed or purchased two television stations, purchased an inventory of decoders for lease to their customers, and expended substantial sums in acquiring broadcast rights to movies, sporting events, and other programming. Moreover, the plaintiffs have engaged in a large scale advertising campaign to inform the viewing public of the availability of STV broadcast service in the Washington, D.C., metropolitan area. At present, STV GW serves approximately 75,000 fee-paying subscribers.
5. Plaintiffs' STV transmissions are "scrambled" or encoded television signals. The STV broadcast signals are thus unintelligible when received by conventional television sets. In order to view the STV station, one must possess an electronic decoder capable of unscrambling the signal and presenting it in an intelligible form.
6. As part of its service, STV GW generally leases each of its subscribers a specially manufactured decoder box to unscramble the STV signal. Both the decoder and the antenna are connected to the subscriber's television set. The cost of plaintiffs' unrestricted programming (not including one-time only specials) is $29.95 per month. Because there is no commercial advertising on Super TV, virtually all of plaintiffs' revenues come from these monthly subscription fees.
8. In addition to its capacity to unscramble the STV broadcast signal, the decoder has an "addressability" function which permits STV GW to turn on (or off) the decoder's unscrambling function by its computers. This function would be used, for example, when a subscriber elects voluntarily to terminate service, or when STV GW is forced to turn the descrambler function off for non-payment of the monthly service fee.
9. On or about February 3, 1984, the defendant began to place advertisements in The Washington Post and The Baltimore Sun which read as follows:
Assembled. 1 year warranty, consumer oriented company. 1-800-631-3403
10. The foregoing advertisement appeared periodically over the course of several months in both newspapers. The advertisement did not advise potential decoder customers that they were obligated to pay the signal provider, plaintiff STV GW, for the use of the STV service.
11. The advertisement thereafter was amended so as to inform potential customers of the need to notify the signal provider that they would be receiving the signal. The amended version of the defendant's advertisement which appeared in The Washington Post on May 8, 1984, read as follows:
$ 225. 1 Yr. warranty (must pay fees to cable co.) 1-800-631-3403
12. Both The Baltimore Sun and The Washington Post ultimately refused to accept any further advertising from the defendant.
13. Defendant Kaufmann then began a saturation direct-mail advertising campaign to residents of Washington, D.C., and the surrounding metropolitan area. The advertisement consisted of a one-page flyer, printed on both sides, which stated in part:
Now you can own your own decoder! That's right! Our Zenith Box is identical to that being used by the Pay T.V. Company. It will enable you to view all phases of Super T.V. -- a $ 30 monthly service -- for $ 225 with a one-year unconditional warranty. [Emphasis in original.]
14. The flyer addresses itself as coming from the maker of the finest "T.V. By-Pass Equipment," which is a technical term for the ability to by-pass the addressability feature of the decoding device. The flyer directed potential customers to call the same toll-free number as that which appeared in the earlier newspaper advertisements, but did not inform the reader of the obligation to contact the signal provider.
15. One of the plaintiffs' employees, using a pseudonym, ordered a decoder from the defendant, which was sent from defendant's New Jersey address to plaintiffs' offices in Northern Virginia. When the decoder arrived, the plaintiffs' engineers determined that it was a Zenith decoder of the type leased by STV GW, but that it had been modified so that the addressability feature no longer functioned. The package containing the decoder also included installation instructions, and a small piece of paper which stated in ...