Consumer Confusion Key for Internet Search Engine Ad Trademark Infringement: Fifth Circuit | Practical Law

Consumer Confusion Key for Internet Search Engine Ad Trademark Infringement: Fifth Circuit | Practical Law

In Jim S. Adler, P.C. v. McNeil Consultants, LLC, the US Court of Appeals for the Fifth Circuit reversed the decision of the US District Court for the Northern District of Texas and held, in a matter of first impression, that when analyzing initial interest confusion in trademark infringement cases involving internet search engine advertising, the key issue is whether there is consumer confusion, and the visibility of the trademark is a relevant, but not dispositive, factor.

Consumer Confusion Key for Internet Search Engine Ad Trademark Infringement: Fifth Circuit

by Practical Law Intellectual Property & Technology
Law stated as of 11 Aug 2021 • USA (National/Federal)
In Jim S. Adler, P.C. v. McNeil Consultants, LLC, the US Court of Appeals for the Fifth Circuit reversed the decision of the US District Court for the Northern District of Texas and held, in a matter of first impression, that when analyzing initial interest confusion in trademark infringement cases involving internet search engine advertising, the key issue is whether there is consumer confusion, and the visibility of the trademark is a relevant, but not dispositive, factor.
On August 10, 2021, in Jim S. Adler, P.C. v. McNeil Consultants, LLC, the US Court of Appeals for the Fifth Circuit reversed the decision of the US District Court for the Northern District of Texas, holding that when analyzing initial interest confusion in cases alleging trademark infringement based on search engine advertising, the key issue is whether there is consumer confusion, not mere distraction, and the visibility of the trademark is a relevant, but not dispositive, factor ().
Jim S. Adler, P.C., a personal injury law firm, filed a trademark infringement suit against McNeil Consultants, LLC, Quintessa Marketing, LLC, and Lauren Von McNeil (together, McNeil), which operate a lawyer referral call-center.
Adler and McNeil both purchased Google keyword advertisements, which caused certain advertisements to appear when a user searched certain keywords. Adler purchased Google keyword ads for certain of its trademarked terms, including JIM ADLER, THE HAMMER, TEXAS HAMMER, and EL MARTILLO TEJANO. McNeil also purchased Google keyword ads for some of Adler's trademark terms that caused "click-to-call" ads to appear when those keywords were searched. If a user clicked on such an ad, the user's mobile phone would automatically call McNeil's call-center.
Adler sued McNeil for trademark infringement under Sections 32 and 43 of the Lanham Act, alleging that McNeil's tactics were confusing customers searching for Adler's business (15 U.S.C. §§ 1114(1) and 1125(a)). McNeil then filed a motion to dismiss for failure to state a claim, and Adler moved to amend its claim.
The US District Court for the Northern District of Texas, adopting the findings, conclusions, and recommendations of a magistrate judge, granted McNeil's motion to dismiss and denied Adler's move to amend its claim, determining that Adler's claim was futile because:
  • The claim was based only on McNeil's purchase of Adler's trademarks as keywords for internet search engine advertising.
  • McNeil's ads were generic and did not visibly include Adler's marks, so they could not result in confusion.
On appeal, the Fifth Circuit noted that it had not previously analyzed initial interest confusion in the context of search engine advertising and therefore, looked to an earlier Fifth Circuit non-precedential opinion involving meta tags and Ninth Circuit internet-search precedent for guidance. The Fifth Circuit determined that, in initial interest confusion cases involving search engine advertising:
  • The critical issue is whether there is consumer confusion, such as where a potential consumer searching for trademark terms initially believes that unlabeled advertisements are links to the trademark owner's site.
  • Mere consumer distraction, such as where a potential consumer is presented with a clearly labeled advertising link for a different product or service, is not sufficient.
The Fifth Circuit further concluded that whether an advertisement incorporates a trademark that is visible to the consumer is a relevant, but not dispositive, factor in determining likelihood of confusion in search-engine advertising cases.
Applying its reasoning to the case at hand, without opining on the merits of Adler's claims, the Fifth Circuit held that Adler's complaint contained sufficient factual allegations of McNeil's use of Adler's marks as keywords for search-engine advertising, combined with generic, unlabeled advertisements and misleading call-center practices, to state a claim of initial interest confusion.
Accordingly, the Fifth Circuit reversed the district court's dismissal, vacated the denial of Adler's leave to amend, and remanded the case for continued proceedings.