Pleading is Key: Northern District of Texas Clarifies Liability for Use of Another’s Trademark in Pay-Per-Click Advertising

Magistrate Judge David Horan of the Northern District of Texas recently provided additional insight into the less-than-clear jurisprudence surrounding liability for trademark infringement in pay-per-click or keyword advertising. In Jim Adler, P.C., et al. v. McNeil Consultants, LLC, et al., No. 3:19-cv-2025-K-BN (N.D. Tex. Aug. 10, 2020), Judge Horan considered Defendant’s Rule 12(b)(6) Motion to Dismiss the trademark infringement claims brought by a personal injury law firm against a lawyer referral service.  In granting the motion to dismiss, the Court made clear that trademark infringement claims can arise out of such conduct, so long as specific key elements are satisfied and properly plead. Judge Horan’s recommendation for dismissal was based on the plaintiffs’ failure to properly plead those specific facts.

Trademarks in Pay-Per-Click Advertising

In Adler, the plaintiff law firm and attorneys maintained that the defendant law referral service and its owner intentionally used the law firm’s registered trademarks such as JIM ADLER, and THE TEXAS HAMMER (the “Adler Marks”) to confuse consumers using mobile devices to search online for plaintiffs into mistakenly contacting defendants instead. Specifically, plaintiffs asserted that the defendant purchased the Adler Marks as keyword advertisements through Google’s search engine on mobile devices and used the Marks in conjunction with click-to-call advertisements. Defendants’ use of the Adler Marks in keyword advertising ensured that their own advertisements appeared at the top of any Google search using the Adler Marks, particularly for mobile users, as shown below:

Defendants did not use the Adler Marks in the specific content of the ads and did not identify any lawyer or firm by name but displayed generic terms consumers might associate with any personal injury law firm. Moreover, the ads included a “click-to-call” link that sent consumers to a call center for defendants, but did not cite to, reference, or link to any competitor’s website. 

When is Trademark Use in PPC Ads Infringement?

In reviewing the defendants’ motion to dismiss the trademark infringement claims, Judge Horan clearly noted that: 

“[a] defendant’s use of plaintiff’s marks in keyword search engine ads to direct users to the defendant may be unlawful if it causes confusion.” Id. at *14, citing e.g. Abraham v. Alpha Chi Omega, 781 F. Supp. 2d 396, 423 (N.D. Tex. 2011). 

Conversely, “[t]he purchase of a competitor’s trademark as a keyword for search-engine advertising, without more, is insufficient for a claim of trademark infringement.” Id., citing Coll. Network, Inc. v. Moore Educ. Publishers, Inc., 378 F. App’x. 403, 414 (5th Cir. 2010) (emphasis added).  Here, because the parties did not dispute the trademark protections afforded the Adler Marks, the only remaining dispute was whether the defendants’ use was likely to cause confusion.  Since “liability for trademark infringement depends on how the defendant is using the mark,” the key inquiry focuses on whether the defendant participated in “something more” than the use of trademarks in keyword advertising.  See id., citing Tempur-Pedic, N. Am. LLC v. Mattress Firm, Inc., Civil Action H017-1068, 2017 WL 2957912, at *7-8 (S.D. Tex., July 11, 2017). This “something more” involves conduct like misdirecting consumers to a potentially confusing website or one owned by a competitor of the mark’s owner.  Tempur-Pedic, 2017 WL 2957912 at *7-8. The central issue, then, is whether a defendant’s keyword ad purchases, combined with the look and placement of the ads, creates a search results page that misleads, confuses, or misdirects a consumer searching for a specific brand and leads them directly to that brand’s competitor.

Failure to Plead Key Elements in Pay-Per-Click Ad Trademark Infringement Claims

Here, while the facts may have supported the existence of this “something more,” the plaintiffs failed to plead such facts. Instead, plaintiffs’ pleading complained of defendants’ use of generic terms in their ads rather than the specific Adler Marks.  Given that generic terms are not entitled to trademark protections and plaintiffs failed to plead any specific facts showing a connection between defendants’ use of the Adler Marks in misleading or misdirecting consumers to plaintiffs’ competitors, Judge Horan recommended the dismissal of plaintiffs’ trademark infringement claims. Horan also recommended dismissal of all claims plead against the defendant owner, in her individual capacity, due to plaintiffs’ failure to attribute any misconduct to the owner, specifically.

Judge Horan having provided much-needed clarification regarding potential liability for trademark infringement related to the use of keyword and pay-per-click advertising, the overall takeaway is straightforward:  a defendant may be liable for trademark infringement arising out of the use of another’s trademarks in keyword or pay-per-click advertising, but the plaintiff must plead specific facts demonstrating that such use mislead or misdirected consumers to its competitors.

Key Takeaways for Pleading Trademark Infringement in Pay-Per-Click Advertising

In a recent case in Texas, the judge found that trademark infringement claims can arise out of use of third-party trademarks in PPC ads if the following specific key elements are satisfied and properly plead:

  • there was purchase of a competitor’s trademark in PPC advertising;

  • the ad diverted users from the trademark owner’s goods/services offerings; and

  • consumers were misled, confused, and/or misdirected from the trademark owner’s goods/services offerings they were seeking.

For more insights on Trademark Litigation, see our Intellectual Property Litigation Overview and Ecommerce Industry Legal Solutions pages.

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