Fifth Circuit Drops THE HAMMER, Reinstates Law Firm's Keyword Trademark Infringement Suit Alleging Initial Interest Confusion

• Published date: 23 August 2021
• Subject Matter: Intellectual Property, Media, Telecoms, IT, Entertainment, Trademark, Advertising, Marketing & Branding
• Law Firm: Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
• Author: Mr Matthew Samet and Margaret A. Esquenet

Texas personal injury law firm Jim S. Adler P.C. and its founder Jim Adler (collectively, 'Adler'), known for their 'eccentric' TV spots, succeeded in reversing dismissal of their trademark infringement claims against operators of a lawyer referral service and call center, McNeil Consultants, LLC and Quintessa Marketing, LLC, and their sole owner Lauren Von McNeil (collectively, 'McNeil'). In a matter of first impression, the United States Court of Appeals for the Fifth Circuit held that Adler adequately alleged likelihood of confusion based on McNeil's use of Adler's marks as keywords for search-engine advertising and that Adler's complaint should not have been dismissed.

According to the complaint, Adler had purchased Google 'keyword ads' for their registered marks JIM ADLER, THE HAMMER, TEXAS HAMMER, and EL MARTILLO TEJANO (collectively, the 'Adler Marks'), meaning that searching any of the Adler Marks using Google search returned Adler's advertisements among the results. McNeil also purchased keyword ads for the Adler Marks'at higher prices'to ensure their advertisements appeared next to or before Adler's own.

Specifically, McNeil's advertisements did 'not identify a particular lawyer or law firm as the source of the advertisement,' but instead 'display[ed] generic terms that consumers might associate with any personal injury law firm.' The advertisements were also 'click-to-call,' or in other words, clicking on them using a mobile phone placed a call to McNeil's call center. Adler alleged that McNeil's advertisements 'confused consumers, who were specifically searching for Jim Adler and the Adler Firm, on the phone and talking to [McNeil's] employees as long as possible in a bait-and-switch effort to build rapport with the consumer and ultimately convince [the consumer] to engage lawyers referred through [McNeil] instead.'

In response, Adler sued McNeil for trademark infringement under the Lanham Act and other claims under Texas law. As the Fifth Circuit recounted, to plead a claim for trademark infringement in violation of the Lanham Act, a plaintiff must allege that: '(1) [the plaintiff] possesses a legally protectable trademark and (2) [the defendant's] use of this trademark 'creates a likelihood of confusion as to source, affiliation, or sponsorship.'' Streamline Prod. Sys., Inc. v. Streamline Mfg., Inc., 851 F.3d 440, 450 (5th Cir. 2017) (citation omitted).

The magistrate judge, however, recommended dismissal of the complaint for failure to...