Opinion
Civil Action No. 96-3153 (JBS)
Filed: October 28, 1999
Susan S. Singer, Esquire, Singer Groger Newark, New Jersey and Roberta Jacobs-Meadway, Esquire Jordan A. LaVine, Esquire Akin, Gump, Strauss, Hauer Feld, LLP, Philadelphia, PA., Attorneys for Plaintiff.
Robert J. Del Tufo, Esquire, Kenneth Plevan, Esquire, Bruce Goldner, Esquire, Skadden, Arps, Slate, Meagher Flom LLP, Newark, New Jersey, Attorneys for Defendant.
OPINION
Plaintiff Checkpoint Systems, Inc., has brought this Lanham Act case alleging that defendant, Check Point Software Technologies, Inc., infringed plaintiff's Checkpoint trademark and engaged in unfair competition in violation of 15 U.S.C. § 1114 1125(a). Plaintiff is a leader in the physical security industry manufacturing and selling Checkpoint products including integrated electronic security systems designed to help retailers prevent losses caused by theft of merchandise. These Checkpoint products include electronic article surveillance, access control, point of sale monitoring systems, and closed circuit television systems, some of which are computer driven and can be integrated into a customer's computer network. Defendant's main product, on the other hand, is the Check Point network firewall which prevents unauthorized access to computer networks, preventing theft, destruction, or alteration of computer data.
In an opinion dated May 26, 1998 (hereinafter referred to as "5/26/98 Opinion"), this Court denied plaintiff's and defendant's cross-motions for summary judgment. In a May 19, 1999 order, I granted the plaintiff's motion to renew its summary judgment motion based upon new evidence. Thereafter, the parties each filed renewed motions for summary judgment, supplementing their earlier motions with new exhibits. Both sides have presented evidence in support of their respective positions which create material issues of fact regarding liability. For the reasons herein stated, in considering whether plaintiff has carried its heavy burden on summary judgment regarding likelihood of confusion concerning the origin of defendant's Check Point products, while this Court finds that, on balance, a plurality of relevant factors have been established in plaintiff's favor, this Court is not permitted to weigh the evidence at the summary judgment stage in the presence of other material and disputed factors. Regarding defendant's claim that plaintiff has failed to present evidence of actual damages or of defendant's bad faith, however, this Court will grant partial summary judgment to the defendant to the extent that defendant moves to preclude plaintiff from seeking damages and attorneys' fees. In all other respects, the parties' cross-motions for summary judgment will be denied. The trial will commence on November 1, 1999, upon the issues remaining in dispute.
I. Background
The background of this case is very familiar to all parties, was set out in the May 26, 1998 Opinion, and does not bear repeating here.
II. Discussion of Law
A. Trademark Infringement
In the May 26, 1998 Opinion discussing the parties' cross-motions for summary judgment on plaintiff's trademark infringement and unfair competition claims under the Lanham Act, 15 U.S.C. § 1114 1125(a), this Court laid out the legal standards which apply to the case. To prove either trademark infringement or unfair competition, a plaintiff must show that (1) the mark is valid and legally protectable; (2) the mark is owned by the plaintiff; and (3) the defendant's use of the mark to identify goods or services is likely to cause confusion concerning their origin. (5/25/98 Opinion at 7, citing Fisons Horticulture, Inc. v. Vigoro Indus., Inc., 30 F.3d 466, 472 (3d Cir. 1994).) The parties agreed that plaintiff established the first two elements, and thus the focus rested on the third element, likelihood of confusion.
This Court thus examined the ten-factor test which the Third Circuit applies to determine the likelihood of confusion in the marketplace as to a product's source when the parties do not have directly competing products. (5/25/98 Opinion at 8.) These factors are:
(1) the degree of similarity between the owner's mark and the alleged infringing mark;
(2) the strength of the owner's mark;
(3) the price of the goods and other factors indicative of the care and attention expected of consumers when making a purchase;
(4) the length of time the defendant has used the mark without evidence of actual confusion;
(5) the intent of the defendant in adopting the mark;
(6) the evidence of actual confusion;
(7) whether the goods, though not competing, are marketed through the same channels of trade and advertised through the same media;
(8) the extent to which the targets of the parties' sales efforts are the same;
(9) the relationship of the goods in the minds of consumers because of the similarity of function; and
(10) other facts suggesting that the consuming public might expect the prior owner to manufacture a product in the defendant's market, or that he is likely to expand into that market.
(Id., citing Fisons, 30 F.3d at 473.) As this Court pointed out, none of the factors is determinative, but rather they must all be weighed and balanced. (Id.) This Court also noted that summary judgment is the exception in cases of trademark infringement. But see Midway Mfg. Co. v. Bandai-America, Inc., 546 F. Supp. 125, 155 (D.N.J. 1982) (finding summary judgment of trademark infringement where the name "Galaxian" on a hand-held video game was exactly the same as the name Galaxian" on an arcade game, the owner's mark was strong, the price of the defendant's game was low, there was no actual confusion, there was evidence of willful infringement, and the parties operated in related fields).
In defendant's reply memorandum in support of its motion for summary judgment, defendant points out that name similarity is not determinative in trademark analysis and cites fifteen cases for the proposition that this Court could enter summary judgment in defendant's favor notwithstanding the strong similarity in the corporate and product names. This Court agrees that name similarity is not determinative, but fails to find support in these cases for the notion that summary judgment is the proper place to make the ultimate factual determinations. Of plaintiff's fifteen cases, seven were decided post-trial rather than on summary judgment. Estee Lauder Inc. v. Gap, Inc . , 108 F.3d 1503 (2d Cir. 1997); First Savings Bank, F.S.B. v. First Bank Sys., Inc . , 101 F.3d 645 (10th Cir. 1996); Vitarroz Corp. v. Borden, Inc . , 644 F.2d 96-(2d Cir. 1981); Scott Paper Co. v. Scott's Liquid Gold, Inc . , 589 F.2d 1225 (3d Cir. 1978); Harlem Wizards Entertainment Basketball, Inc. v. NBA Properties, Inc . , 952 F. Supp. 1084 (D.N.J. 1997); Mejia Assocs., Inc. v. International Bus. Machs. Corp . , 920 F. Supp. 540 (S.D.N.Y. 1996); Sunenblick v. Harrell , 895 F. Supp. 616 (S.D.N.Y. 1995). Of the eight cases that were decided upon summary judgment, six are distinguishable from the facts of the instant case in a way that makes the granting of summary judgment more appropriate. See Heartsprings, Inc. v. Heartspring, Inc . , 143 F.3d 550, 556-57 (10th Cir.) (no substantial likelihood of confusion in the marketplace because plaintiff made anti-violence media materials which were distributed to schools, which have nothing to do with defendant's school for educating disabled children), cert. denied , 119 S.Ct. 408 (1998); Accuride Int'l v. Accuride Corp . , 871 F.2d 1531, 1537-38 (9th Cir. 1989) (no overlapping markets between plaintiff's drawer slide mechanisms and defendant's truck wheels and rims); Smith v. Ames Dep't Stores, Inc . , 988 F. Supp. 827, 840 (D.N.J. 1997) (plaintiff's mark had not penetrated the market); Taj Mahal Enters., Ltd. v. Trump , 745 F. Supp. 240, 251 (D.N.J. 1990) (plaintiff's mark "Taj Mahal" was diluted by widespread use, the defendant's restaurant was very local, and no one could think that defendant's restaurant was a casino); M-F-G Corp. v. EMRA Corp . , 626 F. Supp. 699, 702-05 (N.D.Ill. 1985) (plaintiff's mark was weak); Kinark Corp. v. Camelot, Inc . , 528 F. Supp. 429, 448-50 (D.N.J. 1982) (plaintiff's mark was weak). Of the seven cases decided after trial, six of them are also distinguishable on other grounds. See Estee Lauder , 108 F.3d at 1510-11 (plaintiff's mark was weak); Vitarroz , 644 F.2d at 967-69 (decision based not on the elements, but on the equities; defendant's use actually helped plaintiff); Scott Paper , 589 F.2d at 1229-30 (while decision was partially based on determination that plastic and paper household products are different than household cleaners, Third Circuit largely based decision on plaintiff's mark not having acquired a secondary meaning and the district court's improper formulation of priority); Harlem Wizards , 952 F. Supp. at 1095 (plaintiff's mark was weak); Mejia Assocs . , 920 F. Supp. at 547-48 (distinct IBM in defendant's mark distinguished it from plaintiff's mark); Sunenblick , 895 F. Supp. at 629-30 (plaintiff's mark was weak). Finally, this Court notes that the two remaining cases that are difficult to distinguish, Lang v. Retirement Living Publ'g Corp . , 949 F.2d 576 (2d Cir. 1991) (plaintiff published New Choices Press books and defendant published magazines for the elderly with mark "New Choices for the Best Years;" summary judgment for defendant), and Astra Pharm. Prods. Inc. v. Beckman Instruments, Inc . , 718 F.2d 1201 (1st Cir. 1983) (summary judgment for defendant, who made Astra products sold in hospital's pharmacy, versus plaintiff, who made Astra products sold to hospital chemical lab), are not from the Third Circuit. Moreover, the overall effect of these fifteen cases proves that questions of likelihood of confusion are extremely fact dependent and vary case by case.
Applying those factors, this Court found that two factors, the similarity of the marks and the strength of plaintiff's mark, seem to weigh in plaintiff's favor (5/26/98 Opinion at 19), while the cost of the goods and other factors indicative of the care and attention expected of consumers seem to weigh in defendant's favor. (Id. at 20.) Nonetheless, the Court found that genuine issues of material fact remained on each of the other seven factors.
On these renewed cross-motions for summary judgment, this Court finds that while both sides have amassed additional evidence, the evidence generally points to more of the same. With the exception of the fifth factor, defendant's intent in adopting the mark, genuine issues still remain on each of the factors. The evidence is still clear on the first three factors. No genuine dispute of fact remains as to the similarity of the marks or the strength of plaintiff's mark, both of which fall in plaintiff's favor, or as to the fact that the price of the goods indicates that consumers would take care in purchasing the products, which falls in defendant's favor. Moreover, plaintiff has conceded for the purposes of this motion "that Check Point Software did not intentionally infringe Checkpoint's `CHECKPOINT' mark and name" (Pl.'s Br. Supp. Summ. J. at 2) and this Court agrees with defendant that there is no evidence of bad faith. Therefore, the first two factors fall in plaintiff's favor, and the third and fifth factors fall in defendant's favor.
In its brief, plaintiff notes that it concedes the lack of willful infringement for the purposes of this motion only, apparently leaving open the option of raising that argument later. Despite this concession, it was clear from the information presented by both sides that there is no evidence of bad faith or willful infringement. See, infra, Part II.B. At oral argument, this Court gave plaintiff the opportunity to point to evidence of bad faith or willfulness. In an attempt to do so, plaintiff noted its arguments that defendant knew about plaintiff's mark when it first used the name in the United States, that defendant did not cease and desist when asked to stop using the mark despite its then-knowledge that plaintiff was in the security business, and that defendant did not have a policy for responding when customers phoned and asked for Checkpoint Systems. This evidence is unavailing for several reasons. First, plaintiff's argument does nothing to dispute the fact that defendant adopted the name of its Israeli parent-company, also previously called Check Point. Second, that defendant did not cease and desist is not evidence of bad faith in adopting the mark, especially since defendant was under the belief (even if that belief is mistaken) that the parties operate in different markets. Third, the lack of a policy for passing customers onto Checkpoint Systems does not, in itself, evidence anything more than unpreparedness. There is no evidence, for example, that the defendant's personnel attempted to persuade these customers to purchase defendant's products. Fourth, plaintiff has come forward with no evidence that defendant has profited at plaintiff's expense, let alone that such profit provided a motive to continue using the disputed mark. Thus, even if plaintiff had not conceded that there was no willful infringement, this Court would be compelled to find for defendant on this element.
As discussed below, the fourth and sixth factors also fall in plaintiff's favor. However, giving all reasonable inferences to each party's evidence (since both parties are non-movants for the purposes of the other's summary judgment motion), the remaining four factors still contain genuine issues of material fact.
1. Factor Four, The Length of Time Defendant Used the Mark Without Evidence of Actual Confusion, and Factor Six, Actual Confusion
These two factors will be discussed together, as they are closely related. In the May 26, 1998 Opinion discussing the parties cross-motions for summary judgment, this Court noted that genuine issues of material fact remained as to the extent and relevance of plaintiff's evidence of actual confusion. In doing so, this Court noted that while evidence of actual confusion between the parties is a significant factor, it is neither necessary nor sufficient to making out a trademark infringement claim. (5/26/98 Opinion at 11, citing Versa Prods. Co. v. Bifold Co., 50 F.3d 189, 205 (3d Cir.), cert. denied, 516 U.S. 808 (1995).) This Court also explained that "[t]he weight attributed to instances of actual confusion depends to some extent upon the circumstances of the case, including the volume of sales of good involved. If isolated instances of actual confusion result from the sale of a substantial number of goods, the weight given to that evidence of actual confusion is markedly reduced." (5/26/98 Opinion at 11, citing Nippodenso Co. v. Denso Distributors, Civ. NO. 86-3982, 1987 WL 10703, at *5 (E.D.Pa. 1987).) Additionally, this Court noted that evidence of a "reasonably prudent purchaser" who was in fact confused by defendant's trademark is the most relevant evidence of actual confusion; "[g]eneralized confusion is not what courts look to, but rather, evidence of confusion in mistaken purchasing decisions." (5/26/98 Opinion at 11, citing First Keystone Federal Savings Bank v. First Keystone Mortgage, Inc., 923 F. Supp. 693, 705 (E.D.Pa. 1996).)
As described in the May 26, 1998 Opinion, the evidence of actual confusion before this Court at that time included plaintiff's evidence of confusion by people in the media and investment communities, a mistaken conclusion that plaintiff had entered the firewall business by one of plaintiff's experts, and evidence of several telephone calls that were misdirected to the plaintiff. (Id. at 12.) This Court balanced that evidence against defendant's argument that the media and investment community evidence was both de minimis and irrelevant because it was not evidence of customer confusion, against defendant's evidence that plaintiff itself did not discuss the topic at its own executive meetings, and against the context of plaintiff's large sales volume. Altogether, this Court found that genuine issues of material fact remained.
In its Renewed Motion for Summary Judgment, plaintiff argues that there have been over sixteen specific instances of actual confusion since October of 1997. More specifically, Craig Knick, plaintiff's manager of dealer support for access control, has been approached by numerous people at trade shows asking about their non-existent firewall product. (Knick Decl. ¶ 6.) Kevin Dowd, plaintiff's CEO, received a letter from the Vice President of the Computer Communications Industry Association asking him to speak on Microsoft's impact on computer and communications companies. (Dowd Decl. ¶ 7.) Plaintiff received at least five e-mails requesting information on firewalls. (Dowd Decl., LaVine Decl.) In October of 1997, plaintiff was mistakenly listed as the company denying reports of insider trading, when that company was actually defendant, and a Smart Money magazine website article reported a jump in plaintiff's stock price of unusually heavy volume when defendant announced higher than expected earnings. (Dowd Decl. ¶ 8.) Additionally, defendant's web publisher received at least six inquiries intended for plaintiff, defendant's inside sales manager received an unidentified number of telephone calls intended for plaintiff, and defendant's former Vice President of Services received at least one telephone call intended for plaintiff. (O'Connor Dep. at 7-10.)
In response to this evidence, defendant makes several points. First, defendant argues, most of these sixteen incidents of "actual confusion" were clerical or mechanical errors; the people who accidentally reached the wrong company knew who they were trying to reach but were given the wrong number by directory assistance. (See, e.g., Lavelle Decl. ¶ 12, explaining that the misdirected phone calls to him were a result of directory assistance mistakes.) Second, these incidents are, as before, de minimis, both because the incorrect inquiries at trade shows were immediately remedied and because the number of phone calls to plaintiff wrongfully seeking defendant, and vice versa, is minuscule in comparison to the volume of business (Rieman Decl. ¶ 20.) Third, defendant argues that incidents of investor and media confusion are irrelevant because they are not evidence of actual customer confusion. Finally, defendant argues that none of these incidents of "confusion" are evidence of actual confusion at all since none of them led to mistaken purchases and because the initial interest confusion theory does not apply. This Court disagrees with defendant that plaintiff's evidence of investor confusion and initial interest confusion by potential customers who did not actually purchase products is irrelevant. The District of Delaware addressed this exact question in Acxiom Corp. v. Axiom, Inc., 27 F. Supp.2d 478, 501 (D.Del. 1998). In that case, the defendant argued that the plaintiff failed to cite any incidents of confusion by potential customers, that the evidence was too insubstantial, that any confusion was quickly remedied, and that most of the incidents were just careless errors. Id. at 501. In response to these arguments, the Court found that plaintiff had cited at least one incident of a potential product purchaser calling plaintiff to learn more about a product plaintiff did not make, and that this one example was enough because "very little proof of actual confusion" is necessary. Id. Moreover, the court noted that not all incidents were "quickly remedied," as exemplified by the fact that confusion by a journalist resulted in a mistake in a magazine, and not all confusion is the product of careless errors, as in investors who received misinformation about the plaintiff's stocks. Id. The District of Delaware court specifically relied on investor and media confusion in making these determinations, noting that the language of the Lanham Act shows a clear congressional intent to "outlaw the use of trademarks which are likely to cause confusion, mistake, or deception of any kind, not merely of purchasers nor as to source of origin." Id. (internal citation omitted). The question at this stage is not whether there has been actual consumer confusion leading to damages, but, rather, whether there is evidence that actual people (most relevantly consumers, but not limited thereto) are actually confused about the origin of defendant's products or services, such that there is a high likelihood that other consumers are confused.
Defendant, in paragraph seven of the Cohen Declaration, also explained that Cohen was told that the mistaken stock symbol was a magazine intern's mistake rather than a result of confusion. This evidence is unreliable hearsay though and thus can play no role in this Court's consideration of the motions for summary judgment.
Here, then, as in Acxiom, plaintiff's evidence of actual confusion (though not actual consumer confusion at the time of purchase leading to a loss of sales), including investor and media confusion as well as initial interest confusion by potential purchasers, is more than "very little proof" of actual confusion. Plaintiff's trading symbol has been listed in articles about defendant. Financial analysts have called plaintiff when defendant was the subject of the inquiry. Financial reporters have attributed to one the activity of the other. Individuals seeking information about firewalls have called plaintiff. Most importantly, potential customers have called the companies, or approached them at trade shows, confused. Even if it is true, as defendant argues, that most of the sixteen instances of confusion were clerical errors or misdirected phone calls made by people who knew exactly what company they were seeking, defendant does not argue that no single customer was actually confused in expressing its initial interest in the companies' products. As the court said in Acxiom, if even one customer was actually confused (even if that confusion did not ultimately manifest itself in a mistaken purchase), that is actual confusion and is evidence in favor of the likelihood of confusion. That there may have only been one or two instances of actual initial interest confusion, and that the mistaken and misdirected inquiries were remedied quickly, may speak to the lack of damages (which, as explained later, are not available in this case anyway), but those facts (even if true) do not make these instances of actual confusion de minimis. This factor falls in plaintiff's favor for a finding of likelihood of confusion.
2. The Remaining Four Factors
The remaining four factors, including whether the parties market their products through the same trade channels and markets, whether they have the same target customers, the relationship of the goods in the minds of potential customers, and other factors showing that consumers expect plaintiff to enter defendant's field or that plaintiff is likely to expand into defendant's market, are hotly contested by the parties, and genuine issues of material fact exist in all of them. This Court will discuss them all together because the parties have largely lumped them together in a discussion of whether the parties' markets are converging or diverging.
In the May 26, 1998 Opinion, the Court found that defendant presented evidence that the parties have separate marketing and advertising chains, that they target their goods at different types of executives, that physical security and network security are two different fields that consumers would not link together, and that, because of those facts, consumers would not expect that plaintiff would expand into defendant's market and plaintiff has not, in fact, been expanding into that field. In contrast, plaintiff argued that the fields of physical and network security were converging in a general field of corporate security, as shown by placement of ads in magazines discussing plaintiff's products by defendant's competitors (even if plaintiff and defendant do not advertise in the same magazines), discussion of both physical and network security at security trade shows, involvement of corporate security officers in decisions to purchase defendant's products, development of products employing computer technology by plaintiff, and requests by plaintiff's customers for plaintiff to offer networked security software. In each of these four factors, this Court found that the parties' evidence contradicted each other and that genuine issues of material fact therefore existed.
Contrary to the defendant's suggestions, plaintiff need not prove that the markets are converging in all respects. If plaintiff presents evidence that the markets are converging in some respect, then it does not matter that it has not converged for all consumers and all products. More specifically, if some of the customers of plaintiff's products also purchase network security products or if consumers of plaintiff's products are learning about products in the network security field through magazine articles, trade shows, and advertisements, then it does not necessarily matter that plaintiff's customers have not yet actually purchased defendant's firewalls, that defendant itself has not attended those trade shows, or that some of defendant's resellers have themselves never sold network security equipment to physical security directors.
A decision of the Northern District of California provides strong support for this idea. See Charles Schwab Co., Inc. v. Hibernia Bank, 665 F. Supp. 800 (N.D.Cal. 1987). In Charles Schwab, the Northern District of California granted a preliminary injunction against defendant bank's use of the name "The Equalizer" for a line of home equity credit because of plaintiff's trademark name "the Equalizer" for its computer program that provides financial services such as margin transactions, securities, investments, etc. The district court noted that the markets were not identical, as plaintiff was concerned with investment finances while defendant was concerned with loan financing, but that the markets nonetheless tended to converge. Id. at 810. The court found that while the consumers of the two products were different, constituting different submarkets, those submarkets overlapped and/or were in the same general class of financial consumers. Id. at 809-10. Based on that, for the purposes of preliminary injunction, the Northern District of California held that the markets converged.
In many ways, the Charles Schwab case is analogous to the instant case and is supportive of the idea that there need not be total market convergence. True, in the instant case, as described below, there is evidence by way of plaintiff's expert testimony that some of the parties' consumers are actually the same people (as in security directors who focus on both physical and network security, or security officers who send MIS officers to deal with network companies but play a role in the decision-making process for all security issues). In that sense, the instant case has even stronger evidence of market convergence than in theCharles Schwab case. However, even if the expert testimony is discredited or fails to prove its point, this Court would be faced with a situation in which the plaintiff and defendant simply sell to different submarkets of the same general security market, just as in Charles Schwab. Thus, theCharles Schwab case stands for the proposition that there need not be total convergence and that the sale of products with a strongly similar name in closely related submarkets may suffice to support a finding of likelihood of confusion.
Some additional support comes from the Ninth Circuit's decision inAcademy of Motion Picture Arts and Sciences v. Creative House Promotions, Inc., 944 F.2d 1446 (9th Cir. 1991), in which the plaintiff sued the manufacturer and distributor of a look-alike of the Oscar trophy. Though the facts of Creative House are not on par with those of the instant case, as nobody is claiming that defendant's product is an appropriation of the distinctive design of plaintiff's products, a portion of the Ninth Circuit's reasoning provides additional support here. The appellate court looked to "post-sale confusion" in determining whether the parties' markets converged, id. at 1455, defining post-sale confusion as occurring "when consumers view a product outside the context in which it is originally distributed and confuse it with another, similar product."Id. In the Creative House case, the Ninth Circuit noted that while the initial purchasers of defendant's product would know its source, the ultimate recipients of the Star Award and those who see the award would not and might assume that it is somehow related to the Oscar. Id. Thus, while the original purchasers might not have always been in the same market, the ultimate recipients of the awards and their viewers, in a general way, were. Based in part on this, the Ninth Circuit found that the markets did sufficiently converge. The Third Circuit has recognized the concept and relevance of post-sale confusion, although finding none in the particular circumstance. American Home Products Corp. v. Barr Laboratories, Inc., 834 F.2d 368, 370 (3d Cir. 1987).
This Court does not necessarily agree with the Ninth Circuit that there was a prospect of actual post-sale confusion in the Creative House case — that, for example, the sales manager for the Akron region of a company would think that he had won an Oscar. Nonetheless, it is the Ninth Circuit's method of reliance on the concept of post-sale confusion that this Court deems important.
In American Home Products , manufacturers of Advil brand 200 mg. ibuprofen tablets sued the manufacturers of a virtually identically colored and sized 200 mg. ibuprofen tablet that said "I-2" on it. In attempting to determine whether there was actual confusion in the marketplace, the court looked for evidence of post-sale confusion, finding that it was unlikely in that case because the tablets were a different shape and finish. 834 F.2d at 370 .
There may well be evidence of post-sale confusion in the instant case, constituting additional proof of market convergence. Even if it is true, as defendant says, that the initial purchasers of these security goods for the varies consumer companies are different, it is very likely that there are security guards, for example, who are operating surveillance systems manufactured by plaintiff which operate on computers that are protected by defendant's firewalls or VPNs, or businesspeople working on computers protected by defendant's firewall who have to use plaintiff's smartcard to get to the computer in the first place. It is reasonable to infer that such people may well see the Checkpoint name on both products and be confused into thinking they come from the same source.
Defendant's arguments suggest that the plaintiff must show a congruence of the marketplace for physical and network security; this overstates plaintiff's burden. Such convergence is instead a matter of degree, of tendencies, and of perceptions of the market by a meaningful segment of its participants. Plaintiff could meet its burden of proof on the final four factors simply by showing that there is some evidence of convergence. Here, plaintiff has come forth with sufficient evidence to place defendant's facts into dispute, and thus defendant is not entitled to summary judgment.
However, the defendant does contest plaintiff's evidence with evidence of its own. While a plaintiff need only present evidence of each factor and not necessarily strong evidence, see Midway, 546 F. Supp. at 155 n. 45, these four areas are hotly disputed by the parties, each of which arms itself with evidence. The situation, therefore, is no different at this juncture. True enough, both parties have presented additional evidence of their arguments. The sum total of this evidence seems to weigh more heavily in favor of plaintiff than defendant. However, while at bench trial this Court can rely upon this evidence to find in plaintiff's favor, at the summary judgment stage, this Court cannot weigh the evidence, but rather, for each summary judgment motion, must decide if the nonmovant has presented enough evidence, giving all reasonable inferences to that evidence, to survive the motion by raising a genuine dispute as to a material fact. Where, as here, both parties seek summary judgment and both parties have presented evidence which could lead to judgments in their favor on each of these four factors, the Court has no choice but to find that material questions of fact still exist, for reasons now discussed in greater detail.
a. Advertising and Trade Channels
Plaintiff has presented a myriad of evidence that while plaintiff and defendant do not currently advertise in the same magazines or attend the same trade shows, their two fields have converged such that other manufacturers of similar physical security and network security products are advertising in the same media, attending the same trade shows, and training in each others' issues at trade shows.
One of plaintiff's experts provides examples of how both physical and network security products are marketed to the same people at trade shows and conferences. According to Robert McCrie, a professor of security management at the John Jay College of Criminal Justice at City University of New York, the publisher and editor of Security Letter, and the founding Editor in Chief of the American Society of Industrial Security's (ASIS's) Security Journal, network security products, including firewall software, were displayed at the ASIS' 1998 "Seminar and Exhibits," which featured both physical and network security products as exhibitors. (McCrie Suppl. Decl. ¶ 8.) Likewise, Dr. McCrie indicates, corporate security directors, MIS directors, and security experts all attend the ASIS conferences and trade shows, and computer security has received a notable increase in attention since September 1998. (Id. at ¶ 9.) More specifically, Dr. McCrie notes, the 1998 ASIS conference and trade show featured seven computer-related sessions under the heading of "Information Security." (Id.) The 1999 ASIS conference will include sessions on information and computer security, as well. (Id.) A number of defendant's competitors, as well as other companies offering computer security products, attend the ASIS conference and trade show and promote their products, as does plaintiff, even if defendant itself chooses not to attend. (Id. at ¶ 10.) Furthermore, Dr. McCrie explains, computer security software education and trade shows, such as the VanGuard Enterprise Security Expo, which is primarily directed at information security officers, also increasingly covers physical security as well. (Id. at ¶ 13.)
Plaintiff admits that plaintiff and defendant have never advertised in the same magazine. Nonetheless, plaintiff has come forward with evidence that physical security and network security products are advertised and discussed in magazines read by both physical and information security officers, increasing the likelihood that consumers of the two products will be confused about their source. (See, e.g., Olhausen Decl. ¶ 6.) The 1998 ASIS Exhibits Directory, for example, contains advertisements for both physical security products (such as Garrett Metal Detectors, GBC security cameras, and DSX access control) and information security products (such as Radionics' RISSC information security system), in addition to containing plaintiff's listing as an exhibitor. (McCrie Suppl. Decl. Ex. 4.) The "Marketplace" section of April 1999 issue of Security Management, which is what plaintiff's expert Peter Olhausen calls the most important monthly magazine focused strictly on issues of security and traditionally directed at physical security topics, featured a product announcement by Radionics for a firewall product (similar to the type sold by defendant) adjacent to a product announcement by Lenal Systems International for a remote access control system (similar to the type sold by plaintiff). (Olhausen Decl. ¶¶ 8-9 and Ex. 2.) A full page advertisement by Sensormatic, one of plaintiff's biggest competitors in the physical security market, appeared on the reverse page of a November 1998 Security Management spotlight feature on firewalls which identified defendant as the market share leader in the firewall industry. (Id. at ¶ 10 and Ex. 3.) Additionally, the 1998 Security Magazine "Buyer's Guide," which is primarily directed to physical security issues and read by physical security directors, had "Computer Security" and "Communications" listed on the cover, in addition to "Access Control," "CCTV," and six other areas of security products. (Somerson Decl. Ex. 5.)
In response, defendant points out (as plaintiff has already acknowledged) that defendant does not advertise in Security or Security Management and that defendant does not attend ASIS seminars and trade conferences and in fact never heard of ASIS — or plaintiff, for that matter — prior to discovery in this case. (Schick Decl. ¶¶ 5-6.) Rather, defendant says, it advertises in Network World, PC Magazine, and other networking/internet magazines in which plaintiff itself does not advertise (and, other than the single Sensormatic advertisement, neither do plaintiff's competitors). (O'Connor Decl. ¶ 6.) Additionally, defendant argues that while there may be evidence that "computer network security" companies have attended physical security trade shows, none of those companies are actually competitors of defendant. (Schick Decl. ¶ 7. )
b. Target Customers
Plaintiffs have several pieces of evidence that corporate security officers, who have typically dealt with their businesses' physical security concerns, are involved in the purchasing decisions for network security products such as defendant's firewall software. For example, one of plaintiff's experts, David L. Johnston, the Director of Corporate Security for the Educational Testing Service and past corporate security director for other businesses, notes that the two parties' products are complementary (one protects computers from physical attack while the other protects the information in the computer from hackers and viruses) and there are people who buy both parties' products, including the directors of computer centers, who often buy both physical security programs and firewalls and network management software without consulting a security manager. (Johnston Decl. ¶¶ 4, 6.) In the last two years, says Johnston, corporate security managers have been more involved with purchasing and implementing computer security products; that is why, he says, there has been more of a demand by corporate security officer for instruction on network security, as shown by the number of seminars taught at ASIS seminars on information security. (Id. at ¶ 9.) Even where security directors are not directly responsible for purchasing the network security products, he says, they must be familiar with how the network security products fit with the physical security products and with what product features are important. (Id. at ¶ 10.)
Another of plaintiff's experts, Robert McCrie, noted that corporate security officers, plaintiff's traditional customer, are being trained in network management. For example, he says, a computer course is one of the core classes in the B.S. program in Security Management at John Jay, and numerous network security courses are offered to fulfill the masters program in security management. (McCrie Suppl. Decl. ¶ 11.)
Likewise, Dr. Sanford Sherizen, Ph.D., the president of Data Security Systems, which creates management strategies for information protection, and the author or several books on information security and computer protection, certifies that companies are integrating information and physical security. More specifically, he notes that his clients are using both physical and information security products together in an integrated way, that professional readings show that integrated security strategy is becoming more prevalent, and that security officers are forging closer relationships with MIS directors, as advised by Pricewaterhouse Cooper. (Sherizen Decl. ¶¶ 7-8.) Several articles, he says, show that firewalls are getting easier to use, so they are therefore capable of use by inexperienced managers. (Id. at ¶ 15.) Moreover, Dr. Sherizen notes, information security officers are increasingly being trained in physical security as well, such as at an MIS Training Institute, attended by both security and MIS personnel, which covered seminars on Electronic Access Control ("EAC"), physical security, and computer network security, including firewalls. (Id. at ¶ 20.) One of eight full days at a seminar preparing information security professionals for a certification examination was also spent on physical security. (Id. at ¶ 23.) Dr. Sherizen also indicated that he worked with Digital Equipment Corporation's ex-director of corporate security, whose information security department reported to him, and who was involved with all purchasing decisions of network security products. (Sherizen Suppl. Decl. ¶ 4.)
Additionally, plaintiff's expert Peter Olhausen, a journalist on corporate security and the senior editor of ASIS's Security Management magazine, notes that Security Management, which has traditionally focused on physical security, has been increasingly addressing computer network security issues, including a focus on firewalls in November 1998, a special section on computer security in February 1999, a section on integration with information technology in March of 1999, and a recent story on VPNs. (Olhausen Decl. ¶¶ 8, 12-14.) Compare with Sherizen Decl. ¶ 18, which noted that Information Security magazine has information on both information security products as well as more traditional physical security products, such as computer rail locks and disk drive locks.) In contrast to defendant's argument that the ASIS articles and seminars covering network security are designed only to heighten awareness on areas of general interest (Riemen Decl. ¶ 6; Stern Decl. ¶ 24), Mr. Olhausen points out that there would be no reason for the magazine to cover issues such as this if they were not important to the work of physical security directors; while the issues may be of general interest to the public, Security Management does not publish articles of general interest. (Olhausen Decl. at ¶ 17.) Moreover, Mr. Olhausen notes that "computer security companies have an advertising presence in the same channels as those used by physical security companies, such as Checkpoint." (Id. at ¶ 8.) Mr. Olhausen also points specifically to several individuals whose jobs involve an overlap of physical and network security, including Lew Wagner, the Chief Information Officer of CISCO, one of defendant's competitors, who belongs to ASIS and who teaches network security to physical security officers. (Olhausen Suppl. Decl. ¶ 13.)
Plaintiff's expert Ira Somerson, who works in physical security management consulting services, notes that companies have asked him to partner with information security experts to come up with an integrated approach, leading him to meet with both corporate security directors and MIS personnel. (Somerson Decl. ¶ 7.)
The implications of all of these forms of evidence offered by the plaintiff is that security directors and MIS directors and their teams are working together in making decisions about network security products, and the target audience for products like defendant's firewall includes the corporate security directors who traditionally handled only physical security work, and who make up the core of plaintiff's customers. Additionally, as discussed later in this opinion, plaintiff is offering new products which operate through computer systems, and thus plaintiff has to deal with MIS directors, too, in selling its products, lest corporate security officers buy physical security products which are incompatible with the company's computer operating systems. (See Upshur Decl. ¶ 12, discussing meetings with corporate security officers and MIS groups in order to sell plaintiff's new products.) This is strong evidence of the tendency toward convergence in the marketplace for corporate security.
In response, defendant argues that the two companies' target customers are in fact quite different and are becoming more, rather than less, specialized. As examples of this, defendant offers the declarations of three of defendant's regional sales directors and territory managers, all of whom indicate that they work directly with defendant's VARs, who sell only network products, and with end users such as MIS personnel or information officers, and that they are not aware of any physical security officers having a voice in purchasing decisions for network products. (Gilley Decl. ¶ 5; Mitra Decl. ¶¶ 5-8; Lavelle Decl. ¶¶ 4-5, 7.) Each of these three individuals indicates that no one has ever asked them if they are associated with plaintiff. Additionally, Gary Fish, President and CEO of Fishnet Consulting, a network security consulting company that is a VAR of defendant's products, and Rakeesh Loonkar, President of Infosolv, a network security systems integration company that is also a VAR of defendant's product, both indicate that they never heard of plaintiff before this lawsuit, that they have no interaction with physical security officers, and that they have no knowledge of physical security officers being involved with purchasing decisions for network security products. (Fish Decl. ¶¶ 9-11; Loonkar Decl. ¶¶ 11-13.) Mr. Loonkar also indicates that he never heard of ASIS. (Loonkar Decl. ¶ 17.) These anecdotes suggest that defendant has some customers who are unaware of any convergence between the markets for information security and physical security.
Defendant also offers the testimony of several other individuals who indicate that they believe that physical and network security are becoming more divergent, rather than more convergent. There is no such thing, says defendant, as an overall "corporate security" strategy in which both network and physical security play a part. (Rieman Decl. ¶ 13; Gilley Decl. ¶ 16; Lavelle Decl. ¶ 8.) Philip Stern, the senior managing director of the Fairfax Group ("DSFX"), avers that security directors are different than MIS directors and that he has never seen a security director get involved in a firewall purchase decision or a MIS director get involved with a physical security product purchase. (Stern Decl. ¶¶ 12-13.) He agrees that both facility and information security must be accounted for in any security program, but that they are nonetheless different areas in which purchasing decisions are made by different people. (Id.) That is why, he says, DSFX has separate security consulting groups, which do not answer to each other or any common person, for physical and network security. (Id. at ¶ 14-19.)
Plaintiff contests this statement, noting that DSFX advertises itself as providing physical security services and computer and telecommunications services together as part of a comprehensive suite of services and that DSFX personnel work as a team. (LaVine Suppl. Decl. ¶ 3 and Ex. A.) Thus, DSFX itself engages in advertising to promote or exploit the perception that the corporate security market includes the integration of network and physical security services.
John Morency, an expert from Renaissance Worldwide, an information technology management consulting firm, likewise indicates that information directors simply are not seeking anything from physical security companies; while physical security directors should be aware of network management, they are not an information security company's target customers because they do not have the expertise to select, implement, and support a network system. (Morency Decl. ¶ 5.) This comports with a statement by Deborah Rieman, defendant's Executive Director and Past President/CEO, that firewalls are too complex for physical security officers without training to manage. (Rieman Decl. ¶ 12.)
Finally, defendant also offers as evidence of its argument the statistics that information and physical security personnel are not target customers of each other's fields the facts that only 4.6% of the subscribers of SC magazine (an information security magazine in which a Sensormatic advertisement asking consumers to call or visit its website for information on "Securing Corporate Assets" appears, see Sherizen Decl. Ex. 9) and that only 0.8% of the subscribers of Information Security Magazine are physical security personnel. (O'Connor Decl. ¶¶ 13-14.)
In response to defendant's arguments, plaintiff points out (in addition to its original evidence) that Ms. Rieman herself indicated in an article that firewalls are becoming simpler to use. (Sherizen Decl. Ex. 5.) Toward that end, plaintiff argues, physical security officers are receiving at least some training on firewalls through ASIS conferences and articles, and, in any case, whereas MIS directors may ultimately deal with the network security product VAR, physical security officers are working alongside MIS directors, not replacing them.
c. The Relation Between the Parties' Businesses, Now and in the Future
Plaintiff presents evidence that its current area of business, as well as the areas in which it may well expand, is becoming more and more related to defendant's area of business, such that the two are linked in the minds of consumers.
In August 1997, when the parties filed their original cross-motions for summary judgment, plaintiff's business was the design, manufacture, and distribution of integrated electronic security systems designed primarily to help retailers prevent losses caused by theft of merchandise. (5/26/98 Opinion at 2.) Plaintiff primarily made four types of products: electronic article surveillance ("EAS"), access control, point of sale ("POS") monitoring systems, and closed circuit television systems ("CCTV"), some of which are software and computer driven and can be integrated into a customer's computer network. (Id.) Defendant was the United States marketing subsidiary of an Israeli computer network software development company, and defendant's main product was a network firewall which prevents unauthorized access to computer networks, a product which defendant is the world leader in. (Id. at 3.) At that time, defendant had begun to offer non-security related network software, as well. (Id.)
Since 1997, plaintiff has continued to grow and expand, offering new products. These include radio frequency identification ("RFID") products, "intelligent tags" which hold more data than an average bar code without bar coding's line-of-sight limitations on data capture, and which carry information from distribution to retail sales to consumer record keeping over integrated circuits. (Upshur Decl. ¶¶ 6, 7, 13.) The RFID line is directed not only to retail applications, but to libraries and commercial and industrial applications, as well. (Id. at ¶ 9.) The new products also include "THRESHOLD," a line of electronic access control products which incorporate Microsoft's Windows 98 and Windows NT operating systems, such that electronic access control systems can monitor other occurrences as well. (Knick Decl. ¶ 3.) Additionally, plaintiff's POS and CCTV products have seen advances, such as "INNOVISION," a high speed remote video tele-surveillance system which allows for surveillance and investigation from remote locations on a user's computer screen over an Integrated Services Digital Network ("ISDN"). (Dowd Decl. ¶ 4.) The INNOVISION product is transmitted through an industrial computer with a Pentium processor running Windows 95. (Id.)
Plaintiff also indicates that in the near future, electronic access control products will advance to confront new security threats in the information world, using as an example "smart cards," plastic cards with magnetic stripes that can act both as a building access card and an access card for securing entry through a computer firewall. (Somerson Decl. ¶ 9.) According to the Security Director's Report, this technology is being developed in response to rising theft of portable computers, in order to protect the computer itself and the information inside of it. (Id.) Likewise, CCTV systems will transmit video images through computer networks, which themselves will require network security protection, such as through a firewall. (Sherizen Decl. ¶ 12.)
Plaintiff therefore has presented evidence of where the field of physical security is going. Even based on plaintiff's current products, however, plaintiff has evidence that there is a strong relationship between physical security and network security. For example, Ira Somerson notes that EAS is being used to protect computer hardware and software. (Somerson Decl. ¶ 8.) Thomas Upshur, plaintiff's Senior Director of RFID Marketing, indicates that he works with both MIS and corporate security officers in marketing the RFID products because the RFID physical security products operate on computer networks and have to interface with a consumer company's network software. (Upshur Decl. ¶ 12.) Additionally, Upshur indicates that plaintiff is seeking alliances with software companies and is developing relationships with VARs (like those affiliated with defendant) in its RFID program. (Id. at ¶ 25.)
Defendant, however, contends that information security is moving away from smart card technology, in favor of "digital certificates," electronic keys on computers that use mathematical algorithms to create a string of numbers which communicate with a key management server which, in turn, authenticate the user as an individual authorized to log onto a particular network. (Gilley Decl. ¶¶ 23-24.)
Defendant disagrees with the contention that plaintiff's products' use of computers makes plaintiff's products complementary or related to defendant's products. Moreover, defendant argues that even as plaintiff expands more into use of computers in its physical security, defendant is moving away from network security and into network management. Defendant contends that while it is still the leader in firewalls, it now does a greater range of business, including network bandwith management and load security. It offers, for example, in addition to firewalls, Virtual Personal Networking ("VPN"), which mixes firewall security together with encryption and network traffic control. (Riemen Decl. ¶¶ 34-40.) Defendant also offers two programs which have no security function: a traffic management program called "Floodgate" and an address allocation program. (Id. at S 41-43.) Defendant anticipates that by the end of 1999, nonfirewall products (including VPNs) will comprise more than 50% of its sales. (Rieman Decl. ¶ 70.)
At oral argument, defendant's attorney argued that the products are not complementary "like pancakes and maple syrup." Plaintiff's counsel challenged this, saying that like maple syrup, physical security and network security can be used separately but are not as good as when used together because physical security is useless if people can get to all of the information anyway by hacking, and vice versa.
Plaintiff responds by arguing that defendant is incorrect that defendant's growing segment — VPNs and other network management — is something that holds little interest for plaintiff's customers. The July 1999 issue of Security Management magazine just ran a six page feature on VPNs, which concluded with a list of additional resources for readers who wish to learn more, obtain VPNs, or build VPNs, thus indicating that customers of physical security products made by plaintiff and others are eager to keep up to date on developments in network technology. (Olhausen Suppl. Decl. ¶ 3 and Ex. A.) Moreover, says plaintiff, defendant can try all it wants to call its products "policy-based network management software tools," but its trademark application for its "CHECKPOINT" mark is for "computer software for use to protect security of computer networks." (Id. at ¶ 4.) Therefore, says plaintiff, it has been moving into defendant's field, which is unchanged from where it was when this lawsuit was instituted.
Plaintiff also presents evidence about its natural field of expansion. Plaintiff has not presented evidence that it has actually taken steps to enter the firewall market or that some of its customers have asked it to make network security products (other than unsupported assertions in its brief). Plaintiff has, however, presented evidence that other companies have integrated network and physical security, making it more likely that consumers would be confused about the source of defendant's firewall because consumers could assume that plaintiff, like other physical security companies, has simply expanded into the network security field. These integrated companies include Kroll O'Gara, a largely physical security provider, which acquired Securify, Inc., a network security company (Sherizen Decl. ¶ 25), as well as security consultants such as Gateway Group of Lafayette, CA (LaVine Decl. ¶ 5) and Trident Data Systems, a VAR of defendant's software, which consults on both physical and network security. (LaVine Decl. ¶ 5.)
Here, too, defendant contests the plaintiff's evidence. First, defendant argues that the fact that plaintiff's nine acquisitions in the last two years have been in its traditional business area of physical security (as have been plaintiff's competitors' acquisitions) indicates that plaintiff will not expand into the network security market. (Rieman Decl.) It is illogical, defendant says, for a physical company to expand into the network world because the two worlds involve different customers and different areas of technical expertise. (Stern Decl.) Defendant also argues that Kroll-O'Gara, which plaintiff uses as an example of an integrated company, is an international risk mitigation company which provides a broad array of services, of which information security is just one part, and that all of Kroll-O'Gara's practice groups operate separately, with different personnel and different directors, such that Kroll-O'Gara is not really an integrated company at all. (Breed Decl. ¶¶ 11-13.)
B. Damages
In its Complaint, plaintiff seeks all of the remedies possibly available to it under the Lanham Act, including injunctive relief, destruction of property, damages to the plaintiff, defendant's profits/accounting, and attorneys' fees. Defendant seeks summary judgment that plaintiff is not entitled to an accounting or defendant's profits or attorneys' fees. Defendant is correct as a matter of law.
Section 35 of the Lanham Act, 15 U.S.C. § 1117, provides that a plaintiff who proves trademark infringement or unfair competition under the Lanham Act is entitled to receive, subject to the principles of equity, (1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action. The Court shall assess such profits or cause the same to be assessed under its direction. In assessing profits the plaintiff shall be required to prove defendant's sales only; defendant must prove all elements of cost of reduction claimed. In assessing damages the court may enter judgment, according to the circumstances of the case, for any sum above the amount found as actual damages, not exceeding three times such amount. . . . The court in exceptional cases may award reasonable attorney fees to the prevailing party.Id.
A plaintiff can attempt to prove its own damages, such as through loss of sales due to actual confusion. Here, plaintiff has essentially abandoned any claim to damages based on its own lost sales, as the evidence shows that plaintiff has not, in fact, lost any sales as a result of defendant's alleged infringement. Any monetary relief in this case could only come, then, through an accounting of defendant's profits and an award of attorneys' fees.
In order to recover either of these two forms of relief, plaintiff must prove that the defendant willfully infringed its trademark. Plaintiff argues that this is not the case, citing to Acxiom Corp. v. Axiom, Inc., 27 F. Supp.2d 478, 501 (D.Del. 1998) and Securacomm Consulting, Inc. v. Securacom Inc., 984 F. Supp. 286, 301 (D.N.J. 1997), to support its proposition that it need not prove actual confusion at time of actual purchase, but only confusion at the time that a consumer is drawn into consideration of doing business. Plaintiff's argument is misplaced. While both Acxiom and Securacomm do say that a plaintiff need not prove actual confusion in order to prove infringement, both of those cases also indicate that willful deceptiveness is necessary to an award of defendant's profits. See Acxiom, 27 F. Supp. at 506; Securacomm, 984 S. Supp. at 303. Moreover, Securacomm was appealed to the Third Circuit, which overturned the district court's finding of willful infringement.Securacomm Consulting Inc. v. Securacom Inc., 166 F.3d 182 (3d Cir. 1999). In doing so, the Third Circuit explained that willful infringement is central to both an award of defendant's profits and attorneys' fees.Id. at 187. Because the defendant in that case did not willfully infringe plaintiff's trademark rights, the Third Circuit concluded that an accounting was not appropriate. Id. at 190. Moreover, the Third Circuit found that the district court had abused its discretion in awarding attorneys' fees because there had been no showing of "bad faith, fraud, malice or knowing infringement." Id. (citing Ferrero U.S.A., Inc. v. Ozak Trading, Inc., 952 F.2d 44, 47 (3d Cir. 1991)).
In Securacomm, the Third Circuit defined willful infringement as thus:
Knowing or willful infringement consists of more than the accidental encroachment of another's rights. It involves an intent to infringe or a deliberate disregard of a mark holder's rights. The Second Circuit has aptly described willful infringement as involving "an aura of indifference to plaintiff's rights" or a "deliberate and unnecessar[y] duplicating [of a] plaintiff's mark . . . in a way that was calculated to appropriate or otherwise benefit from the good will the plaintiff had nurtured.166 F.3d 182 (citing W.E. Bassett Co. v. Revlon, Inc., 435 F.2d 656, 662 (2d Cir. 1970)). In the instant case, extensive discovery has been concluded and plaintiff simply has not come forward with any evidence that defendant adopted of the Checkpoint mark with either deliberate indifference to plaintiff's known rights or deliberate intent to benefit from plaintiff's good will, nor has plaintiff come forward with any evidence to contradict defendant's evidence of good faith.
The following is uncontroverted. In June of 1993, according to the declaration of Shlomo Kramer, Executive Vice President and one of the founders of Check Point Software Technologies, Ltd., defendant's Israeli parent company, defendant's parent company was formed and its name was chosen. (Kramer Decl. ¶¶ 1-2.) The founders chose the name "Check Point Software Technologies" because the "Check Point" "connotes a point in a network where traffic is checked." (Kramer Decl. ¶¶ 3.) At the time the name of the parent company was picked, Mr. Kramer had never heard of plaintiff and no one mentioned plaintiff. (Id. at ¶ 4.) The United States' subsidiary of Mr. Kramer's company chose its name and mark to track that of its Israeli-parent. There is therefore no evidence of bad faith in the selection of plaintiff's name and mark.
Moreover, defendant's decision not to discontinue its use of "CHECKPOINT" after receiving plaintiff's cease and desist request is not evidence of bad faith that would entitle plaintiffs to defendant's profits or attorneys' fees. "Infringement is not willful if the defendant might have reasonably thought that its proposed usage was not barred by the statute." Securacomm, 166 F.3d at 188. Here, even if defendant is ultimately incorrect as a matter of a fact or law that the companies' markets are different and that defendant's use of "Check Point" does not constitute infringement, this Court cannot say that it was unreasonable for defendant to believe that it was not infringing. Even if defendant is incorrect that corporate security officers have nothing to do with firewall and other network software purchases, certifications by defendant's own executives as well as by executives of other companies in the field of network security indicate that they deal only with MIS and other information officers and thus were not aware of any overlap with the physical security field. Moreover, the United States Patent and Trademark Office ("PTO) approved two of defendant's trademark applications without citation to plaintiff's registrations as a potential conflict, one on December 14, 1994 for CHECK POINT Design (a stylized computer terminal and keyboard design) for "software for use to protect security of networks," and one of March 7, 1996 for "CHECKPOINT" for computer software for use to protect security of computer networks." (Stipulated Facts ¶¶ 16-17; Defense Exs. 6 at 10 and 7 at 13.)
Rather than presenting any evidence of bad faith or willfulness, plaintiff simply argues that bad faith is not necessary for an award of fees or an accounting. As plaintiff is incorrect about the law underSecuracomm, and as plaintiff has come forward with no evidence of willfulness or bad faith to contradict the defendant's evidence of good faith, plaintiff is not entitled to an accounting of the defendant's profits or an award of attorneys' fees, and partial summary judgment will be granted for the defendant on that ground. The Court notes, however, that if the evidence ultimately shows that defendant infringed plaintiff's mark, even in good faith, this Court could still issue the injunctive relief which plaintiff seeks.
III. Conclusion
As stated above, this Court finds that the first (similarity between marks), second (strength of plaintiff's mark), fourth (length of time defendant uses mark without actual confusion), and sixth factors (actual confusion) fall in plaintiff's favor while the third and fifth factors (price of goods and intent of defendant in adopting the mark, respectively) fall in defendant's favor. As to the remaining four factors, all of which are tied up in the parties' arguments about whether their markets are converging or diverging, this Court has noted that the plaintiff need not prove that the markets have actually converged (and will continue to converge) with respect to all customers and all products, but rather that there is at least some convergence such that confusion as to origin of source of products is likely. Using that standard, the evidence weighs more heavily in plaintiff's favor, but nonetheless, genuine disputes remain as to the material facts relevant to these factors. Thus this Court cannot find that plaintiff is entitled to summary judgment on those factors and, consequently, on its entire claim of likelihood of confusion.
Additionally, because plaintiff concedes that there is no evidence of bad faith or willful infringement and because, even when given the opportunity to present such evidence plaintiff was unable to come forward with anything that would create a genuine dispute of fact as to the defendant's intent in adopting the mark, this Court agrees with defendant that damages and attorneys' fees are unavailable to the plaintiff, such that the plaintiff would only be entitled to injunctive relief. Therefore, this Court will grant the defendant's motion for summary judgment to the extent to which it argues that plaintiff is not entitled to monetary damages or attorneys' fees and will deny the parties' cross-motions for summary judgment in all other respects. The accompanying Order is entered.
ORDER
This matter having come before the Court upon the parties' cross-motions for summary judgment; and the Court having considered the parties' arguments; and for the reasons expressed in an Opinion of today's date;
IT IS this day of October 1999 hereby
ORDERED that defendant's motion for summary judgment be, and hereby is, GRANTED IN PART to the extent to which it argues that plaintiff is not entitled to damages, and plaintiff's claims for damages and attorney's fees will be dismissed; and it is
ORDERED that the parties' cross-motions for summary judgment be, and hereby are, DENIED in all other respects.