AMCOL Sys., Inc. v. Lemberg Law, LLC, No. 3:15-3422, 2015 WL 8493955 (D.S.C. Dec. 10, 2015)
AMCOL provides debt collection services and is subject to the Fair Debt Collection Practices Act (FDCPA)’s ban on “harassment” in debt collection. AMCOL alleged that it had substantial goodwill associated “recognized by the relevant consumers, including AMCOL’s clients and debtors.” (Seems unlikely that the debtors have much goodwill towards AMCOL, though.) Lemberg allegedly used the internet to advertise its services using AMCOL’s marks, interfering with internet users’ ability to reach AMCOL’s own website, and misleading potential clients into believing that AMCOL’s services violated applicable laws such as the FDCPA.
Lemberg runs “several websites soliciting potential clients to file lawsuits against debt collectors, including www.stopdebtcollector.com and www.debtbulldog.com.” One of its headings was “Stop AMCOL Systems Harassment,” which allegedly defamed AMCOL by suggesting a violation of the FDCPA. The “heading” for Lemberg’s YouTube Channel stated “Amcol Systems Calling You? Sue Amcol Systems for Harass[ment].” Debtors would allegedly choose to retain Lemberg rather than working with AMCOL. [Debtors are involuntarily involved with AMCOL. Query whether debt sellers, AMCOL’s actual customers, would care what happens after sale, as long as AMCOL pays them for the debt.]
The court kicked out the Lanham Act claims and declined to exercise jurisdiction over pendent state law claims. First, likely confusion: Lemberg was using AMCOL’s marks in connection with advertising their own services, but AMCOL still failed to allege actionable consumer confusion. Both Radiance Foundation, Inc. v. N.A.A.C.P., 786 F.3d 316 (4th Cir. 2015), and Lamparello v. Falwell, 420 F.3d 309 (4th Cir. 2005), hold that criticism of a plaintiff “via use of its marks” does not equate to consumer confusion. Although those cases involved “First Amendment issues” [and this doesn’t?], the broader holding is that trademark law doesn’t affect the rights of critics and commentators, because it requires use that is likely to cause confusion as to source or sponsorship.
Allied Interstate LLC v. Kimmel & Silverman P.C., No. 12 Civ. 4204(LTS)(SN), 2013 WL 4245987 (S.D.N.Y. Aug. 12, 2013), and NCC Business Services, Inc. v. Lemberg & Associates, LLC, No. 3:13-cv-795-J-39MCR, 2014 WL 5510892 (M.D. Fl. June 6, 2014), adopted by 2014 WL 5514247 (M.D. Fl. July 23, 2014), similarly found no plausible allegations of likely confusion based on lawyers’ websites targeting particular debt collectors. The websites made clear that they belonged to law firms that sued debt collectors like AMCOL, and references to its name were “merely for the purpose of advertising Defendant’s services and generating leads for potential lawsuits.” [This could be taken care of as nominative fair use, possibly even under the Third Circuit’s restrictive test which requires that the defendant need to use the plaintiff’s mark to explain the defendant’s own goods and services. Interesting that the court doesn’t even need to do that, and can rely on basic plausibility. Seriously, why isn't this fee-worthy? Rule 11-worthy?]
It was implausible that the relevant consumers—businesses seeking to hire AMCOL to collect debts—would be confused as to the source or sponsorship of Lemberg’s services based on its use of AMCOL’s marks. Nor could debtors be said to be part of the relevant consuming public even if they “choose” to work with Plaintiff to pay off debts. They were subjects, not customers.
How about false advertising, such as allegations that AMCOL harassed debtors in violation of the FDCPA? AMCOL didn’t specifically identify false or misleading representations of fact. The two identified headings – “Stop AMCOL Systems Harassment” and “Sue AMCOL Systems for Harassment” – wouldn’t be enough to mislead the relevant consumers, given the context. Although AMCOL claimed damages from debtors refusing to work with it, the relevant damage would have to come from the merchandising context—from AMCOL’s consumers. [Here the court repeats its no-confusion-as-to-source conclusion, though that’s wrong for false advertising. The basic Lexmark reasoning, that AMCOL needs to plausibly allege a competitive injury, still seems obviously correct.]