It is very common for Canadian companies to expand their customer base into the US, and it is also common for Canadians to encounter difficulties when they discover that they have the same brand name as a US competitor. Trade-mark law permits the same trade-mark to owned by different companies in different countries. But internet marketing blurs those lines, leading to trade-mark disputes and turf wars.

An American court has saddled a Canadian company with “corrective advertising compensatory damages” or what might be termed “Google damages”. The decision in Punch Clock Inc. v. Smart Software Development, No. 07-61684 (S.D. Fla., April 7, 2008) started as a complaint by the owner of PUNCH CLOCK, a US trademark registered for payroll and time-keeping software. The Canadian defendant marketed a competing product in Canada, also under the mark PUNCH CLOCK. When the US company launched a lawsuit in Florida, the Canadians changed their mark to LION CLOCK, but they never responded to the lawsuit, and the US company won a default judgment.

The US company complained that Google searches for the terms “punch clock” produced results that listed the Canadian website above the US company’s site. Alexa searches also showed that the traffic rank for the Canadian website was much higher than for the US company’s site. As a result, the court awarded seven years worth of “corrective advertising” – specifically, the Canadians were ordered to pay the cost for the US company to purchase top placement of its website on Google search listings for five keywords for seven years. At $136 per day for seven years, the corrective advertising damages totaled $347,480, which the court tripled to $1,042,440, on the grounds that the infringement was willful.

Corrective advertising is not a new concept, but it has traditionally been employed in consumer-protection situations where it is ordered to counter false advertising. In this case, it is hard to see why one company should have a “right” to be at the top of Google search results.  There are many reasons why a site enjoys higher or lower rankings on Google search results that have nothing to do with infringement, and the court’s effort to push an aggrieved party to the top of Google’s ranking seems a bit misplaced.  Nevertheless, Canadian companies need to be aware of this risk when facing trade-mark disputes south of the border.

Calgary – 11:30 MST