Lerner & Rowe Pc v. Brown Engstrand & Shely LLC
119 F.4th 711 (9th Cir. 2024) (2024)
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Rule of Law:
An alleged infringer's practice of purchasing a competitor's trademark as a keyword for online advertising does not constitute trademark infringement under the Lanham Act where the resulting advertisements are clearly labeled as ads, do not display the competitor's mark, and there is only de minimis evidence of actual consumer confusion, particularly given the heightened degree of care exercised by sophisticated online consumers.
Facts:
- Lerner & Rowe PC (Lerner & Rowe), a personal injury law firm, was founded in Arizona in 2005 and has since expanded to nineteen offices.
- Lerner & Rowe holds three registered trademarks, including the name 'Lerner & Rowe' registered on May 19, 2020.
- Lerner & Rowe has spent over $100 million promoting its brand and trademarks in Arizona.
- Brown, Engstrand & Shely, LLC, doing business as The Accident Law Group (ALG), is also an Arizona personal injury law firm, founded in 2015.
- From 2015 until 2021, ALG purchased the term 'Lerner & Rowe' as a Google Ads keyword.
- This 'conquesting' strategy caused ALG's advertisements to appear near the top of Google's search results when users searched for 'Lerner & Rowe'.
- The format and copy of ALG’s advertisements never included or referenced the term 'Lerner & Rowe'.
- Google data showed that between 2017 and 2021, searches for 'Lerner & Rowe' returned results featuring ALG’s advertisements 109,322 times, and users clicked on ALG’s advertisements 7,452 times.
Procedural Posture:
- On September 8, 2021, Lerner & Rowe PC filed a complaint in the United States District Court for the District of Arizona, alleging claims for trademark infringement, unfair competition, false designation of origin, false description under the Lanham Act, state trademark infringement, unfair competition, and unjust enrichment against Brown, Engstrand & Shely, LLC (ALG).
- On May 18, 2023, the district court granted summary judgment in favor of ALG on 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 entered summary judgment as to all claims.
- Lerner & Rowe PC (Plaintiff-Appellant) timely appealed the district court's ruling to the Ninth Circuit.
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Issue:
Does a personal injury law firm's practice of 'conquesting' a competitor's trademark as a Google Ads keyword, which triggers its own clearly labeled advertisements that do not display the competitor's mark, establish a likelihood of consumer confusion sufficient for trademark infringement under the Lanham Act, despite de minimis actual confusion and sophisticated online consumers?
Opinions:
Majority - de Alba
No, a law firm's use of a competitor's trademark as a Google Ads keyword, triggering clearly labeled ads that do not display the competitor's mark, does not establish a likelihood of consumer confusion for trademark infringement under the Lanham Act. The court affirmed summary judgment for ALG, finding that while Lerner & Rowe’s mark is strong due to its registration and extensive advertising, the evidence of actual confusion was de minimis. Only 236 calls out of 109,322 ad exposures, a rate of 0.216%, was insufficient to create a genuine dispute of material fact. The court emphasized that consumers for legal services are sophisticated, and general internet users are increasingly adept at distinguishing sponsored links from organic search results. Furthermore, Google's search results pages clearly labeled ALG's advertisements with a bolded 'Ad' designation, and organic results for Lerner & Rowe typically appeared on the same page, dispelling any potential confusion. Other factors, such as the proximity of goods and marketing channels, were deemed less important in this context given the clear labeling and consumer sophistication, and the similarity of marks favored ALG because its advertisements did not display Lerner & Rowe's mark. Lerner & Rowe also failed to distinguish ALG's intent to compete from an intent to deceive.
Concurring - Desai
While concurring in the majority's opinion and its outcome, Judge Desai wrote separately to urge the court to reconsider en banc whether keyword bidding and purchasing constitutes a 'use in commerce' under the Lanham Act. Judge Desai noted that the court's binding precedent, Network Automation, concluded it was a 'use in commerce' without providing sufficient analytical support and relied on factually distinguishable cases. The concurring opinion distinguished Rescuecom Corp. v. Google, Inc. by highlighting that it concerned Google, the seller of keywords displaying marks, not the advertiser (ALG) who merely bid on keywords without displaying the competitor's mark. It also distinguished metatag cases (like Brookfield Commc'ns, Inc.) where a defendant 'affixed' a competitor's mark to its own website code, functionally similar to a display, unlike mere keyword bidding. Judge Desai argued that trademark infringement typically requires presenting the mark to confused consumers, which ALG did not do, and that traditional likelihood of confusion factors are poorly suited for this context, leading to an over-reliance on the 'labeling and appearance' factor. Given the ubiquity of internet advertising, sophisticated consumers likely understand the distinction between sponsored and organic results, suggesting that the 'use in commerce' boundary should potentially exclude mere keyword bidding that does not involve displaying the mark.
Analysis:
This Ninth Circuit decision solidifies the high bar for proving trademark infringement in keyword advertising, particularly against a backdrop of increasing internet literacy among consumers. It provides valuable clarity by quantitatively defining 'de minimis' actual confusion (0.216%), distinguishing such cases from those where actual confusion data lacks a clear denominator. The court's emphasis on clear ad labeling and consumer sophistication signals that simply appearing high on search results via keyword bidding, without displaying the competitor's mark, is unlikely to be sufficient for a Lanham Act claim. The concurring opinion's call for en banc review on the 'use in commerce' element highlights ongoing legal uncertainty in this evolving technological space, suggesting future challenges to the foundational precedent in this area.
