Wednesday, February 01, 2012

Trademark scammer, overreaching complaint?

Leason Ellis LLP has sued a scammy “trademark protection”firm that will “register” your trademark in its “catalog” for the low, low price of under a thousand dollars a year, alleging state and federal false advertising. I’m all for the bulk of the claims in the lawsuit, but I was disturbed by the non-false advertising Lanham Act allegation: 
The foregoing acts and conduct … have caused and are likely to cause confusion, to cause mistake, and/or to deceive the public, including clients of Plaintiff, into mistakenly believing that USA Trademark and its activities are authorized, endorsed, sponsored or approved by Plaintiff, the trademark bar, and/or the USPTO, or that USA Trademark and its activities originate with, are connected with, or are associated with Plaintiff, licensed trademark counsel, and/or the USPTO. 
Look, defendants are fraudsters. They are engaging in false advertising. But trademark-like false affiliation claims are the wrong form of attack for this plaintiff, which lacks standing to claim false affiliation with the PTO or “the trademark bar” and which should know better than to claim that merely sending a solicitation suggests affiliation with a current provider. Consider this theory as applied to a legitimate competitor who offers to provide a client with a service already being provided by someone else. If the fact of the overlap is enough to allege confusion, we ought to give up on competition now.  If the solicitations said something like “in connection with your current counsel, we offer …” or “invoice for the services we’ve already provided you,” then that could be a different matter, but the ones attached to the complaint didn’t as far as I saw.  I expect some recipients are confused—that’s how defendants make their money, after all.  But false advertising completely and without overreaching addresses the harm to competition caused by defendants’ fraudulent suggestions that they can provide trademark protection and by their deceptive quasi-“invoices,” and it does so without stretching the concept of affiliation confusion to “do I need to pay this?” confusion.  We have universities arguing that depicting them causes confusion over source, and now law firms arguing that not mentioning them causes confusion over source.  Enough!


Mark Edw. Andrews said...

If, while drafting a complaint, an attorney could have any confidence that the to-be-randomly-allotted judge would have a conventional, or even a predictable view of Section 43(a), then the complaint might be more precisely targeted. But as this blog knows so well, the courts are all over the map, and the pleading rules say put it all in the complaint. With any luck, if the specific scam documents do not have indicia of being "official", the claims will be appropriately trimmed in the course of litigation. My own experience is that the scams DO pretend to be official, and that my clients are confused enough so that some of them have asked me to handle whatever payments are due to the scammers. Some clients have asked me why I did not advise them of these added charges when I quoted them a flat fee for a trademark application. This is a bad scam.

RT said...

But the complaint is not a detailed one, reciting only the elements. I looked at the exhibits and saw only other awfulness, not the fraudulent claim of connection to any entity this plaintiff has standing to represent.

Mark Edw. Andrews said...

You raise an excellent point about standing. For example, I am a registered patent attorney, and I'm involved in 2 locally prominent trademark cases. I get a lot of cold calls from the general populace. I think most of my potential clients think of me as part of the "official" government system, which is an impenetrable mystery to them. (After all, they are calling wanting to patent their names and trademark their ideas.) Several of these callers have already contacted the USPTO and have been told by those officials to get an attorney, so it is understandable that they see me as a part of the system. Even my clients who are competent businesspersons feel bewildered about IPR-- that's why they need me to keep it sorted out.
The scammers play perfectly to this bewilderment. They are knocking on doors wearing a uniform and flashing a badge.
But do I, as a practitioner, have any standing to challenge these scammers? I know that I'm not a government official. The government calls me an "officer of the court", but only when they want to beat up on me-- if "officer of the court" means anything at all, it does not seem to mean anything good. The government can stand up for itself, right?
In this new case, as I understand it, the law firm is itself the trademark applicant and the direct intended victim. Although it seems unlikely that an IPR law firm is going to fall victim to the scam, there is always the possibility that an invoice might get paid anyway. But then, would that be a different type of claim? Do they have standing as the direct victim?
You've got a good point about the outlying claim, but my sympathies are strongly against the scammers, and with whatever legitimate claims can be made against them.

RT said...

The law firm as intended victim is a hard sell because it wasn't fooled. The case wasn't brought as a class action, and many courts these days would say the plaintiff would have to be fooled to represent other deceived consumers. The firm's best claim is as competitor, though it would be nice if discovery turned up and reimbursed any customer-victims.

I too would like to see these "firms" expunged from the face of the earth. State AGs have on occasion gone after similar invoice scams (you can see the effect of this, however limited, in the not-small-print-though-not-prominent statement on the solicitations in the exhibits that the amount listed in huge font is actually not due & owing) and maybe they should deputize some private firms to act as private AGs.

My concern, however, is that we not get used to making extreme claims about source confusion that could easily be used against more legitimate competitors, which I find especially unnecessary given that the ordinary false advertising causes of action clearly do apply.

Pamela Chestek said...

Thanks Rebecca for mentioning this. I saw a lot of "attaboy" commentary but no mention of the standing / stating a claim weakness of the Lanham Act claims, but I assume they were added for purposes of federal jurisdiction. I expect that the firm's prospects with the state law unfair trade practices theories are on firmer ground though.

Rebecca Tushnet said...

I don't even think the affiliation claim is needed for federal jurisdiction, Pamela--43(a)(1)(B) false advertising, to the extent that plaintiff competes with defendant to provide TM-like services, should cover that. These days 43(a)(1)(B) claims in many circuits include a rather annoying standing inquiry, and of course the parties are not providing exactly the same services--one provides useful legal services, the other doesn't--but I think there's a basis for federal jurisdiction in that consumers may well think that defendants' services substitute for plaintiff's. If plaintiff sold computers and defendant sold empty computer cases marketed as cheap computers, I don't think anyone would have a problem calling them competitors for false advertising law purposes, and that seems to me to be the situation here.