US Court Rules Accident Law Group’s ‘Conquesting’ Lerner & Rowe's Trademark Does Not Violate Lanham Act

US Court Rules Accident Law Group’s ‘Conquesting’ Lerner & Rowe's Trademark Does Not Violate Lanham Act

However, Judge Roopali H Desai implores the law fraternity to reconsider the matter

The US Court of Appeals for the Ninth Circuit has stated, "The principle underlying trademark protection is that distinctive marks — words, names, symbols, and the like can help distinguish a particular artisan's goods from those of others."

Thus, in the B&B Hardware, Inc. v. Hargis Industries, Inc., 575 U.S. 138, 142 (2015) case, “The one who first uses a distinct mark in commerce, acquires rights to that mark."

However, a recent judgment of the Court of Appeals for the Ninth Circuit in the Lerner & Rowe PC v. Brown Engstrand & Shely LLC, 119 F.4th 711 (9th Cir. 2024) case highlighted the limits of trademark protection under the Lanham Act related to online keyword searches.

Accident Law Group (ALG) is a personal injury law firm founded in 2015. It has nine lawyers who operate out of six offices, five of which are in Arizona.

Lerner & Rowe, PC, also an Arizona-based personal injury law firm, was established in 2005. It comprises 19 offices in Arizona and over three dozen attorneys listed on its website. Since its founding, the firm has spent over $100 million to promote its trademark brand.

To capitalize on the name recognition of its far larger competitor, ALG purchased the term ‘Lerner & Rowe’ as a Google Ads keyword. If someone searched the name Lerner & Rowe, the ALG advertisement appeared at the top of the results.

The practice is known as ‘conquesting’.

However, Lerner & Rowe was frustrated by a competitor's efforts to capitalize on its established name and trademark. It sued ALG for trademark infringement.

The court held that ALG's ‘conquesting’ of Lerner & Rowe's trademark did not violate the Lanham Act.

Citing the Network Automation, Inc. v. Advance Systems Concepts, Inc., 638 F.3d 1137, 1144 (9th Cir. 2011) case, it explained that to prevail on a trademark infringement claim, “A party must prove that it has a protectable ownership interest in the mark and the defendant's use of the mark is likely to cause customer confusion."

The parties did not dispute that Lerner & Rowe had a protectable interest in its trademarked name. The issue was whether ALG's ‘conquesting’ would cause customer confusion.

The court ruled that it would not.

Focusing on the ‘initial interest confusion’, it held, "Although dispelled before an actual sale occurs, initial interest confusion impermissibly capitalizes on the goodwill associated with a mark and is therefore actionable trademark infringement."

However, it added that the use of a trademark was prohibited, if it was "misleading and deceptive," not if used in "legitimate comparative and contextual advertising." Therefore, the plaintiff "must demonstrate the likely confusion, not mere diversion."

The bench stated that Lerner & Rowe failed to present sufficient evidence about ‘confusion’. The record disclosed that from 2017-2021, there were 109,322 Google searches for Lerner & Rowe and the ALG advertisement showed at the top of the results page.

But ALG's intake department reported only 236 calls when a caller mentioned Lerner & Rowe by name. it suggested that customers were apparently ‘confused’ only 0.216 percent of the time.

The court said that internet users clicked on ALG's ad 7,452 times (6.82 percent). The results show, “Those accustomed to online shopping are savvy enough to differentiate between search engine results. Thus, ALG's use of the Lerner & Rowe mark is not likely to cause consumer confusion.”

The panel under prior circuit precedent, Network Automation mentioned that ‘conquesting’ constituted a ‘use in commerce’ that could expose a defendant to liability under the Lanham Act.

However, Judge Roopali H. Desai urged the court to reconsider the decision.

She explained that a mark is ‘used in commerce’ when it is ‘displayed in the sale or advertising of services.’ But ‘bidding on keyword’, which a defendant does when ‘conquesting’ "involves no display or presentation of a mark."

The judge continued that by submitting the highest bid for the keyword, ALG "paid Google to place its own advertisement near the top of the list when users use that search term. Thus, it was Google, not ALG, that displayed, offered, and sold the advertising term consisting of Lerner & Rowe's mark.”

Judge Desai requested her colleagues to consider the issue en banc, because "emerging technologies require a flexible approach in the internet context."