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Exploring the Latest in Intellectual Property Law
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“Conquesting”: Use of Rival’s Name as Keyword Search Term Isn’t Actionable Under Lanham Act

by | Nov 7, 2024 |

Noting how rare it is for trademark infringement cases to be decided on summary judgment, the US Court of Appeals for the Ninth Circuit affirmed a district court’s grant of summary judgment finding that the plaintiff law firm failed to establish a likelihood of consumer confusion by virtue of the defendant’s purchase of a keyword search term. Lerner & Rowe PC v. Brown, Engstrand & Shely, LLC, et al., Case No. 23-16060 (9th Cir. Oct. 22, 2024) (Desai, de Alba, JJ.; Chen, Dist. J, sitting by designation) (Desai, J., concurring).

The parties in this matter are rival personal injury law firms based in Arizona. Lerner & Rowe, PC, is the larger of the two firms. It has 19 offices and has spent more than $100 million promoting its brand and trademarks in the state. Brown, Engstrand & Shely, LLC, does business as The Accident Law Group (ALG). From 2015 to 2021, ALG engaged in an internet advertising strategy called “conquesting,” whereby companies promote themselves to potential customers who search for a competitor on the internet. ALG purchased the term “Lerner & Rowe” as a keyword search term so that whenever someone searched for that term, ALG’s advertisements would appear near the top of the search results list. The ALG advertisements themselves never included the term “Lerner & Rowe.”

In 2021 Lerner & Rowe filed a complaint alleging federal and state trademark infringement, unfair competition, and unjust enrichment claims. In 2023 the district court granted summary judgment in favor of ALG as to the trademark infringement and unjust enrichment claims but denied summary judgment on the unfair competition claims. ALG moved for reconsideration, and the district court subsequently granted summary judgment as to all the claims. Lerner & Rowe appealed.

Because there was no dispute that Lerner & Rowe had a protectable interest in its marks, the Ninth Circuit’s trademark infringement analysis focused on assessing the likelihood of consumer confusion. At issue here was “initial interest confusion,” confusion that arises when an alleged infringer uses a competitor’s mark to direct attention to its own product. The Ninth Circuit used the four-factor test articulated in its 2011 decision in Network Automation v. Advanced Sys. Concepts to analyze likelihood of confusion in a keyword advertising context:

  • Strength of the mark.
  • Evidence of actual confusion.
  • Type of goods and degree of care likely to be exercised by the purchaser.
  • Labeling and appearance of the advertisements and the surrounding context on the screen displaying the results page.

Other less relevant factors include “the proximity of the goods, similarity of the marks, marketing channels used, defendant’s intent in selecting the mark, and likelihood of expansion of the product lines.”

The Ninth Circuit found, and ALG did not dispute, that Lerner & Rowe’s mark was strong, but the Court concluded that the other three factors favored ALG. As to evidence of actual confusion, Lerner & Rowe offered 236 phone calls received by ALG in which the caller mentioned Lerner & Rowe by name when asked [...]

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Foreign Sales to Foreign Customers Are Not Actionable Under the Lanham Act

by | May 9, 2024 |

Issuing a revised opinion following the Supreme Court’s 2023 decision in Abitron Austria GmbH v. Hetronic Int’l, Inc., the US Court of Appeals for the Tenth Circuit determined that none of the defendant’s purely foreign sales to foreign customers can premise liability for the plaintiff’s Lanham Act claims and that any permanent injunction issued against the defendant cannot extend beyond qualifying domestic conduct. Hetronic International, Inc. v. Hetronic Germany GmbH; Hydronic-Steuersysteme GmbH; ABI Holding GmbH; Abitron Germany GmbH; Abitron Austria GmbH; Albert Fuchs, Case Nos. 20-6057; -6100 (10th Cir. Apr. 23, 2024) (Murphy, McHugh, Phillips, JJ.)

Hetronic is a US company that manufactures radio remote controls for heavy-duty construction equipment. Hetronic sued its foreign distributors and licensees (collectively, Abitron) in the US District Court for the Western District of Oklahoma for trademark infringement when, following termination of the Hetronic distribution and license agreements, Abitron reverse-engineered Hetronic’s products and began manufacturing and selling their own copycat products bearing Hetronic’s trade dress (a “distinctive black-and-yellow color scheme”). Abitron’s sales of the copycat products took place primarily in Europe. In the first rounds of this dispute, the district court rejected Abitron’s argument that Hetronic sought an impermissible extraterritorial application of the Lanham Act, and a jury awarded Hetronic $96 million in damages related to Abitron’s global use of Hetronic’s marks. Abitron was also permanently enjoined from using the marks anywhere in the world. Abitron appealed to the Tenth Circuit.

As a matter of first impression, the Tenth Circuit fashioned its own test to determine the extraterritoriality of the Lanham Act, upholding the district court’s ruling but narrowing the injunction to only the countries where Hetronic marketed or sold its products. Abitron appealed to the Supreme Court.

The Supreme Court granted certiorari to resolve a circuit split over the Lanham Act’s extraterritorial reach. Specifically, the Supreme Court was asked to decide whether the Lanham Act applies to “purely foreign sales that never reached the United States or confused U.S. customers” and considered its long-standing presumption against extraterritoriality, with the first step of its analysis consisting of asking whether Congress has “affirmatively and unmistakably instructed” that a particular statute “should apply to foreign conduct.” As the second step, the Supreme Court determined whether a claim seeks a permissible domestic or impermissible foreign application of a statute.

The Supreme Court held that Sections 32(1)(a) and 43(a)(1)(A) of the Lanham Act are not extraterritorial and that the infringing conduct – being “use in commerce” of a trademark – determines the dividing line between foreign and domestic application of the Lanham Act. The Supreme Court vacated the Tenth Circuit’s findings and remanded for further proceedings, instructing the Tenth Circuit to reevaluate which of Abitron’s allegedly infringing activities count as use in commerce under the Supreme Court’s exterritoriality frameworks and to determine on which side of the dividing line Abitron’s conduct falls.

With the Supreme Court having already determined step one, on remand, the Tenth Circuit started with step two of the extraterritoriality analysis and found [...]

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Took a DNA Test, Turns Out “100% THAT BITCH” Is 100% Registrable

by | Feb 16, 2023 |

Addressing a refusal to register for failure to function as a trademark, the Trademark Trial & Appeal Board (Board) reversed, finding that the evidence of consumer perception of “100% THAT BITCH” did not demonstrate that the proposed mark is such a widespread and common expression that it failed to function as a source identifier. In re Lizzo LLC, Serial Nos. 88466264, 88466281 (TTAB Feb. 2, 2023) (Cataldo, Pologeorgis, Coggins, ATJ).

World-renowned, Grammy-winning artist Lizzo, through her company, Lizzo LLC, filed two applications to register 100% THAT BITCH for use in connection with clothing and related goods in International Class 25. The mark is a reference to a lyric (“I just took a DNA test, turns out I’m 100% that bitch”) from her chart-topping hit, “Truth Hurts.” The US Patent & Trademark Office (PTO) issued an office action refusing to register the mark based on failure to function as a trademark under Sections 1, 2 and 45 of the Trademark Act. Specifically, the examining attorney asserted that the phrase is a “commonplace expression widely used by a variety of sources to convey an ordinary, familiar, well-recognized sentiment.” The PTO denied the request for reconsideration, and Lizzo appealed.

In assessing a refusal to register for failure to function as a trademark, the Board must look to consumer perception of the mark; specifically, whether the mark serves merely an ornamental or informational purpose rather than a source-identifying one. In this case, the relevant consumer consists of the general public, as there were no limitations on the channels of trade or classes of consumers identified in the applications. The examining attorney argued that the evidence demonstrated only that the mark, as used on the relevant goods, portrayed “a message of self-confidence and female empowerment used by many different entities in a variety of settings”—a message that Lizzo “did not originate[,] . . . but merely popularized.”

The Board discounted much of the evidence proffered to show that the mark was ornamental as it largely all referred to Lizzo, her music and/or her song, “Truth Hurts,” demonstrating that “consumers encountering 100% THAT BITCH on the specific types of clothing identified in the application—even when offered by third parties—associate the term with Lizzo and her music.” The Board further noted that all of the evidence regarding third-party use corresponded with the release of Lizzo’s “Truth Hurts”—a correlation that suggests the term was not widely known or used until Lizzo popularized it.

Although there was no disagreement that the proposed mark conveys a “feeling of female strength, empowerment and independence,” the Board found that the record supported that “most consumers would perceive 100% THAT BITCH used on goods in the application as associated with Lizzo rather than as a commonplace expression.” Accordingly, the Board reversed the refusal to register.



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Ninth Circuit Extends § 230 Immunity to Domain Name Registrars

by | Feb 16, 2023 |

The US Court of Appeals for the Ninth Circuit affirmed a district court’s dismissal of the plaintiff’s suit against a domain name registrar, holding that the plaintiff did not adequately allege that the registrar used the disputed trademark “in commerce” as required by the Lanham Act. The Court also extended immunity under the Communications Decency Act to include domain name registrars. Rigsby v. GoDaddy Inc. et al., Case No. 21-16182 (9th Cir. Feb. 3, 2023) (Clifton, McKeown, Thomas, JJ.).

Scott Rigsby, the first double leg amputee to complete an IRONMAN triathlon and founder of the Scott Rigsby Foundation (a nonprofit for wounded veterans and disabled persons), registered the domain name “scottrigsbyfoundation.org” with GoDaddy.com in 2007. GoDaddy is the world’s largest domain name registrar. When Rigsby failed to renew the domain name in 2018 because of a billing glitch, a third party registered the domain name and changed the content to an online gambling site. Rigsby filed suit against GoDaddy in the US District Court for the Northern District of Georgia, seeking declaratory judgment and alleging Lanham Act and state law claims. The suit was transferred to the US District Court for the District of Arizona pursuant to the forum selection clause in GoDaddy’s terms of service. The district court dismissed all claims with prejudice. Rigsby appealed, challenging dismissal and transfer of venue.

The Ninth Circuit affirmed dismissal. As an initial matter, the Court determined that it lacked jurisdiction to review the transfer order because the transferor fell within the Eleventh Circuit.

Turning to the Lanham Act claims under 15 U.S.C. § 1125(a), Rigsby alleged that GoDaddy knowingly provided use of the domain name in a deceptive manner. The Ninth Circuit rejected this argument for two reasons. First, § 1125(a) has a use in commerce requirement, and GoDaddy simply granted the third-party gambling site access to the domain name. The Court held that the third party’s use in commerce does not subject the registrar to liability for trademark infringement or unfair competition. Second, as a domain name registrar that did not engage in activities other than registration, GoDaddy is shielded from liability for cybersquatting under the Anticybersquatting Consumer Protection Act (ACPA). Importantly, the Court held that the plaintiff did not prove that GoDaddy registered, used or trafficked the domain name with a bad-faith intent to profit—a registrar’s lack of intervention with an infringing third-party use is not equivalent to use in commerce or active promotion of infringement.

The Ninth Circuit also barred Rigsby’s state law claims and related injunctive relief, explaining that GoDaddy is entitled to statutory immunity under Section 230 of the Communications Decency Act (CDA). (See § 230(c)(1) (“[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider”).) The Court identified three reasons why GoDaddy qualifies for CDA immunity. First, the Ninth Circuit joined the Second Circuit in ruling that domain name registrars and website hosting companies qualify as interactive computer services because [...]

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Long Live the Kingpin: No Abandonment Based on Nonuse During Drug Sanctions Period

by | Oct 13, 2022 |

In a precedential decision, the Trademark Trial & Appeal Board (Board) dismissed an opposition, finding that the trademark applicant’s long period of nonuse due to government sanctions was excusable nonuse and not abandonment. ARSA Distributing, Inc. v. Salud Natural Mexicana S.A. de C.V., Opposition No. 91240240, 91243700 (TTAB Sept. 28, 2022) (Taylor, Greenbaum, English, ATJ)

Salud sought a trademark registration of the standard character mark EUCALIN for “pharmaceutical products, namely, vitamin supplements, nutritional supplement made with a syrup with jelly base, honey base, and with a mixture of plants with propolis base, and herbal remedies in the nature of herbal supplements,” and the composite mark set forth below for “herbal supplements; nutritional supplements; vitamin supplements.”

ARSA opposed the registration, alleging prior common law use of the mark EUCALIN for “dietary and nutritional supplements.” ARSA argued that its sales and advertising of its EUCALIN product from 2008 to October 6, 2015, and October 9, 2017, established that ARSA had used its EUCALIN mark long before the constructive use filing dates of Salud’s application. Thus, ARSA had priority of use of the EUCALIN mark on nutritional and dietary supplements.

In response, Salud asserted it had priority in the EUCALIN mark based on use since 1999. Salud argued that between 1999 and October 2008, ARSA was Salud’s US distributor and, therefore, all goodwill for any EUCALIN-labeled product went to Salud as the supplier of the goods and products.

ARSA asserted that there was no distribution agreement between the parties, but even if Salud “could have reasonably claimed rights based on some alleged distribution agreement before 2008,” Salud “has long since abandoned any rights it would have had.” ARSA asserted that Salud was legally banned from conducting business in the United States between October 2, 2008, and May 2015 because it was declared a Specially Designated Narcotics Trafficker (SDNT). ARSA argued that Salud failed to produce any evidence establishing that it had concrete plans or intent to resume use between 2008 and 2015.

The Board found that there was no clear manufacturing-distribution agreement between the parties, and therefore there was a rebuttable presumption that the manufacturer (Salud) owned the mark. The Board explained that the following six factors are considered in determining which party has superior rights:

  1. Which party created and first affixed the mark to the product
  2. Which party’s name appeared with the trademark on packaging and promotional materials
  3. Which party maintained the quality and uniformity of the product, including technical changes
  4. Which party the consuming public believes stands behind the product (g., the party to which customers direct complaints and contact for correction of defective products)
  5. Which party paid for advertising
  6. What a party represents to others about the source or origin of the product.

The Board concluded that, on the balance, the factors favor Salud. The Board explained that the first, second, third and sixth factors favored Salud because it created the mark and product, maintained quality control over [...]

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You Want Some “Metchup” with That?

by | Apr 22, 2021 |

The US Court of Appeals for the Fifth Circuit found no infringement by a large, well-known company that used the registered mark of an individual whose own use was local and generated only a few sales and minimal profits. The Court vacated and remanded the case to determine whether plaintiff had abandoned the mark. Dennis Perry v. H.J. Heinz Co. Brands, L.L.C., Case No. 20-30418 (5th Cir. Apr. 12, 2021) (Graves, J.)

In 2010, Dennis Perry created a condiment concoction in his home kitchen that he named “Metchup,” constituting a blend of private label mustard and ketchup, and a blend of mayonnaise and ketchup. Perry sold the concoction in the lobby of his small motel in Louisiana. The US Patent & Trademark Office granted registration for his trademark “Metchup” and after five years declared his mark “incontestable.” Perry had slow sales, however, only selling about 60 bottles with $50 total profit over the years. Perry had a Facebook page for his product, but did not advertise or sell the product in stores or online.

Meanwhile, Heinz produced a condiment called “Mayochup,” a blend of mayonnaise and ketchup, that it began selling in the United States in 2018. Heinz held an online naming contest to promote its product, and when one participant suggested the name “Metchup,” Heinz posted a mock-up picture with the “Metchup” name, along with other proposals. Heinz’s counsel saw Perry’s trademark registration, but because Heinz was not actually selling a product named “Metchup” and there were so few indications that Perry’s product was actually being sold, Heinz concluded that Perry’s mark was not in use and could be used in its promotion. When Perry saw Heinz’s posting, he sued for trademark infringement.

The district court found that while Perry may have once had a valid trademark registration for “Metchup,” there was no likelihood of confusion with the Heinz product and the mark had been abandoned as a consequence of de minimis use. Perry appealed.

The Fifth Circuit analyzed the dispute based on the eight-factor likelihood of confusion test. The Court found three factors weighed in Perry’s favor:

  • Product similarity: Both products were mixed condiments.
  • Potential purchaser care: Consumers would exercise less care for a low-priced condiment.
  • Mark similarity: Both products used the same word “Metchup,” although the Court noted that the packaging design looked very different.

The Court also found five factors weighed in Heinz’s favor:

  • The type of mark on the spectrum (i.e., whether the name is related to what the product is): Here, the mark was “suggestive” because it was a mash-up of names related to the sauces used.
  • Outlet and purchaser identity: The parties targeted different markets because Perry had limited sales in one motel, while Heinz targeted online and at almost all grocery stores.
  • Advertising identity: Perry did not advertise besides his one Facebook page without online sales, while Heinz had large-scale advertising and sales.
  • Defendant’s intent: Heinz did not intend to infringe because it assumed Perry’s mark was no longer [...]

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