Primepoint, LLC v. Primepay, Inc.

Camden, New Jersey intellectual property lawyers represented Plaintiff and Defendant in a trademark infringement dispute.





Primepoint is a New Jersey company with its principal place of business in Bordentown, New Jersey. Primepoint provides payroll processing and payroll tax services using the "Primepoint" trademark (hereinafter the "Primepoint mark"). Primepoint was founded in 2000 by Alexander and David Bothwell who, at that time, were working in their family's payroll and bookkeeping company, Delaware Valley Payroll.



        Primepoint offers payroll processing and payroll tax services via four types of products and services: 1) Full payroll processing, which includes processing payrolls and accounts for payroll taxes for business customers; 2) Branded payroll processing solutions, offered to banks and financial institutions, which allows Primepoint's bank customers to offer branded payroll processing solutions with Primepoint providing all of the payroll processing; 3) Bank product/services marketing — offered by Primepoint to assist banking and financial institution customers to market their products to their own customers; 4) Human Resource Information Services ("HRIS") system, which provides customers with Human Resource information such as OSHA reports and benefits-related information.



        Primepoint's customers are mainly businesses including banks in New York, New Jersey, Pennsylvania and Delaware. Primepoint utilizes a person to person method of sales and its sales and marketing efforts include payroll presentations to banks and other businesses.



        Primepoint avers that prior to choosing the name, its team members performed an internet search to determine if that name was in use by any other business and the search revealed no competing uses. In 2000, Primepoint designed a logo which depicts "Prime" in blue and "point" in green. The logo includes an "arc-like design element extending to the letter `i'." Later, Primepoint began using the "lead-in" line "powered by Primepoint" to describe its role in the payroll process; this lead-in line is currently used in almost all promotional activities. The Primepoint logo is used on a variety of promotional materials and Primepoint owns and operates an internet website including www.eprimepoint.com. Since 2000, Primepoint has spent approximately $7,000-10,000 per year on marketing, and utilizes a public relations firm to, promote its brand, including targeted activities to promote its brand to banks. Alexander Bothwell testified that in December 2000, Primepoint approached hundreds of potential investors about a private placement stock offering and used the "Primepoint" name and logo. PrimePay alleges that Primepoint's alleged use of the mark in the context of private placement in December 2000, was not open and notorious and not directed at the general public. Defs.'



        On August 7, 2001, Primepoint filed an application to register the Primepoint trademark with the U.S. Patent and Trademark Office ("PTO") for "financial services." Parties' SOF at 41. On October 1, 2001, the PTO informed Primepoint that there were no conflicting marks, but required Primepoint to revise the rendering of its logo and specify the services it provides more specifically as "[t]he wording `financial services' in the recitation of services is unacceptable as indefinite." Primepoint revised its drawing and amended its characterization of services to "Financial Services, namely banking and payroll services in international class 36." International class 36 encompasses: "Insurance; financial affairs; monetary affairs; real estate affairs." On February 18, 2003, Primepoint's mark was published for third-party opposition, and none was filed. The PTO issued registration to Primepoint for its mark in May 13, 2003, Also, in 2003, Primepoint began using the mark "Primetax" for its payroll tax services and did not seek to register the mark. The Primetax mark already had been registered to Defendant, PrimePay, Inc., ("PrimePay").



        PrimePay provides several services to business owners throughout the U.S. including, but not limited to, the following: 1) Payroll services under the mark "PrimePay"; 2) Tax services under the mark "PrimeTax"; 3) Retirement plan administration and investment services under the mark "PrimePlans"; 4) Flexible benefit plan administration under the mark "PrimeFlex"; and, 5) Workers' compensation insurance under the mark "PrimeComp."





PrimePay also provides "unemployment cost control services, customer referral and information resources services, COBRA administration services, [and] electronic pay stub services." PrimePay's various services are marketed to clients through sales personnel, the internet, referrals from clients, accountants, banks, national affinity programs, and strategic partnerships with software companies.



        PrimePay has offices in Newark, Philadelphia, Baltimore, Washington, D.C., Hartford, Albany, Long Island and Manhattan and can handle payroll and related services in all 50 states. "PrimePay primarily serves and targets small to medium sized local businesses including retail banks." PrimePay distributes its services via direct and remote sales, including referrals and its sales methods include face to face presentations, its web site, and distribution of PrimePay memorabilia.



        The "PrimePay" mark has been used since 1995. The PrimePay mark, when fully stylized in color, includes a gradation from blue to green in which the top of each letter is blue and the bottom is green. PrimePay avers that it spent between $200,000 and $550,000 per year on marketing and advertising using its marks between 1995-2005. PrimePay has two separate trademark registrations of its "PRIMEPAY" mark: 1) international trademark class 35, which encompasses "advertising, business management, business administration, office functions," and, 2) international trademark class 9, which encompasses, inter alia, electrical and scientific apparatus such as calculating machines, data processing equipment and computers. While the parties dispute the exact date that Primepoint became aware of PrimePay, the parties agree that there were several instances where Primepoint made presentations to potential customers who were customers of PrimePay.



        On February 10, 2006, PrimePay's counsel sent a cease and desist letter to Alexander Bothwell, Primepoint's CEO, alleging that Primepoint's use of "Primepoint" and "Primetax" infringed on PrimePay's "PrimePay" and "PrimeTax" marks. In response, Primepoint's counsel contacted PrimePay's counsel and advised that Primepoint would cease using the "Primetax" mark. PrimePay's counsel then wrote directly to Primepoint (PrimePay avers it had misplaced counsel's name and address) and stated that PrimePay would seek legal remedies if Primepoint did not cease using the Primepoint trademark.



        On April 3, 2006, Primepoint filed a Complaint for Declaratory Relief with this Court. Pursuant to its Complaint, Primepoint asks for declaratory judgment that its use of the mark "Primepoint": 1) does not infringe on the alleged trademark rights of PrimePay under 15 U.S.C. § 1114(1)(a); 2) does not constitute false designation of origin under 15 U.S.C. § 1125(a); and, 3) does not constitute unfair competition under state law. Primepoint's Complaint also asks the Court to declare that equitable estoppel prohibits PrimePay from enforcing its alleged trademark rights. .



        PrimePay filed a counter-claim asking this Court to declare that Primepoint's use of "PRIMEPOINT" and "PRIMETAX" marks infringes on PrimePay's trademarks and that Primepoint's use of these marks infringes on PrimePay's family of marks. Moreover, PrimePay avers that Primepoint's registration of its Primepoint trademark is invalid "because it was procured through fraud on the United States Patent and Trademark Office in that [Primepoint] filed a declaration with the patent and Trademark Office to the effect that [Primepoint] had been engaged in, was engaged in, and intended to be engaged in banking services."



        On August 15, 2007, Primepoint filed the instant summary judgment motion as to Count I (declaration of non-infringement under the Lanham Act), Count II (declaration of no false designation of origin under the Lanham Act), and Count III (declaration of no unfair competition under state common law). Primepoint is not moving for summary judgment as to Count IV (the declaration of equitable estoppel prohibiting enforcement), because, according to Primepoint, "the claims raised in Count IV will be moot because there will be no infringement." PL's Br. at 1. Primepoint also asks this court to dismiss Primepay's counterclaim "unless [PrimePay] can show genuine issues of material fact that would allow it to meets its burden of showing by clear and convincing evidence that Primepoint's mark was fraudulently obtained."

This Court finds that Plaintiff/Counter-claim Defendant Primepoint's motion for summary judgment should be denied with regard to likelihood of confusion between the Primepoint and PrimePay marks. Primepoint is, however, entitled to summary judgment on the family of marks issue. This Court also finds that summary judgment is warranted as to PrimePay's Counter-claim that the "Primepoint" mark is invalid because of fraud against the PTO.