Internet Trademark Case Summaries

Punch Clock, Inc. v. Smart Software Development

553 F. Supp. 2d 1353 (S.D. Fla. 2008)

Plaintiff Punch Clock, Inc. (“PCI”) marketed payroll and time-keeping software since 1993 under the federally registered PUNCH CLOCK mark. PCI sold its software on the Internet at “punchclock.com.” Defendant Smart Software Development (“SSD”), a Canadian corporation, marketed and sold a competing PUNCH CLOCK time-keeping software in the U.S. at its “punch-clock.com” website. Following SSD’s website launch in 2001, PCI sent SSD an email alleging infringement of its PUNCH CLOCK trademark and the parties exchanged follow-up emails regarding the matter. SSD denied infringement because it operated in Canada, but later expanded its U.S. presence despite knowing of PCI’s PUNCH CLOCK mark. PCI sued in 2007 alleging trademark infringement, cybersquatting, and unfair competition. SSD was served with the complaint under the Hague Convention and retained counsel, but later abruptly fired counsel and never filed an answer. In March 2008, the court entered default judgment against SSD on all claims. The court found that PCI had sufficiently proven its trademark infringement and unfair competition claims, including evidence of “extensive” consumer confusion over the past seven years. For the ACPA claim, PCI established the distinctiveness of its mark by its registration on the Principal Register; the competing domain names were “nearly identical and confusingly similar”; and SSD’s bad-faith intent from PCI’s mark to profit by diverting consumers away from PCI through use of the confusingly similar domain name and its ongoing, willful infringement of PCI’s PUNCH CLOCK trademark. Turning to remedies, PCI sought trebled corrective advertising compensatory damages, ACPA statutory damages, and attorneys’ fees. Regarding corrective advertising, the court concluded that PCI lost traffic to its website based on SSD’s infringement. PCI submitted evidence that Google searches for the terms “punch clock” and “punch-clock” produced results that listed SSD’s website above PCI’s site in the organic search results. Although SSD changed its product name to LION CLOCK after the litigation began, the same searches on Google still returned results that placed SSD’s site above PCI’s, most likely because SSD still used the domain name “punch-clock.com” to redirect consumers to its “lionclock.com” site. This loss of traffic to PCI’s site was also documented through website traffic statistics using the Alexa service. Alexa searches showed that the traffic rank for SSD’s website was much higher than for PCI’s site, even after SSD changed its product name to LION CLOCK. According to the court, “[t]his evidence shows the significantly higher Web traffic that SSD has received as a result of its infringing use of the Punch Clock mark, to the detriment of . . . PCI.” The court awarded seven years of corrective advertising, which consisted of the cost for PCI to purchase top placement of its website on Google search listings for the top five keywords associated with the PUNCH CLOCK mark (punch clock; punchclock; punch clock software; punch clocks; and punch time clock). At a cost of $136 per day to purchase these keywords for seven years, the corrective advertising damages totaled $347,480, which the court trebled to $1,042,440 due to the willful nature of the infringement. The court also awarded $100,000 in ACPA statutory damages, the maximum allowable amount, citing “the willful and blatant nature of the infringement . . . as well as the duration of the infringement and the level of harm caused to the Plaintiff.” Finally, after ordering the domain name www.punch-clock.com transferred to PCI, the court also held that this was an “exceptional” case due to the bad-faith and willful nature of SSD’s acts, and awarded PCI its attorneys’ fees and costs of $31,811.05.