Unauthorized Use Of A Trademark To Identify Owner’s Goods Is Not Infringement

The United States District Court for the Southern District of New York has held that Defendants’ use of the Plaintiff’s trademark to identify Plaintiff’s goods or services is not trademark infringement under federal or New York law.  Allied Interstate LLC v. Kimmel & Silverman P.C., et al., Case No. 12 Civ. 4204 (LTS)(SN) (S.D.N.Y. August 12, 2013) (available here).  Plaintiff Allied Interstate LLC (“Allied”) sued Kimmel & Silverman P.C. (“K&S”), a law firm, and Craig Thor Kimmel for trademark infringement.  Allied wanted to prevent K&S from using its trademark “ALLIED INTERSTATE” and any confusingly similar terms in commerce.  The Court granted K&S moved for a judgment on the pleadings.

Allied provides customer retention, accounts receivable, and debt collection services to its clients.  Allied is governed by the Fair Debt Collection Practices Act (FDCPA), to prevent abusive debt collection practices.  K&S run a website that solicits new clients for the K&S law firm, advertises K&S services, and generates leads for potential FDCPA claims against Allied.  Allied alleged that K&S unlawfully used its ALLIED INTERSTATE mark as part of an Internet advertising campaign.  As part of the sign up form for a case review, K&S offered a drop down menu for users to select which debt collection agencies they have heard from and Allied is one of the options.  In addition, on the left side of every page of K&S’ website is a link to “Stop Allied Interstate Debt Harassment,” which redirects the user to a page discussing Allied’s alleged misconduct.

Allied alleged that in addition to this, K&S used the trademark in two ways.  First, Allied alleged that K&S incorporated the mark into the metatags, hidden words, and keywords of the website in order to increase its popularity in search engine results.  Second, Allied alleged that K&S purchased the term “Allied Interstate” as a keyword through Google’s AdWords program.

K&S moved for a judgment on the pleadings.

Use of Mark in Keywords is “Use in Commerce”

K&S argued that Allied’s federal trademark infringement claims should be dismissed because K&S’ use of the mark in metatags, hidden words, and keywords is not “use in commerce” under the Lanham Act, which defines “use in commerce” as “when it is used or displayed in the sale or advertising of services.” 15 U.S.C.S. § 1127.  However, the metatags and hidden words bring users to the K&S’ website, which promotes K&S’ services, thereby steering potential customers.  Thus, this use is within the meaning of “use in commerce.” As such, the K&S’ use of Google Adwords to advertise their products and services constitutes “use in commerce.”

The Court then addressed Allied’s claims under the federal trademark act, the Lanham Act.   First, the Court looked at Allied’s claims of trademark dilution, which is defined as an “association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark.” 15 U.S.C.S. § 1125(c)(2)(C).  The Court noted that the Second Circuit Court of Appeals does not recognize an action for trademark dilution when a defendant used a plaintiff’s mark to identify goods or services of the plaintiff.  Here, K&S did not use Allied’s trademark to denote their goods or services, they used the trademark to identify Allied’s services.  Even if this use was dilution, it is protected by fair use: “fair use … of a famous mark by another person other than as a designation of source for the person’s own goods or services, including use in connection with … criticizing or commenting upon the famous mark owner or the goods or services of the famous mark owner” is not “actionable as dilution by blurring or dilution by tarnishment.” 15 U.S.C.S. § 1125(c)(3)(A).

Second, the Court looked at Allied’s claims of trademark dilution under New York law.  However, New York’s statute on trademark dilution may be analyzed with a trademark dilution claim under the Lanham Act.  “Accordingly, [Allied’s] state law dilution claim fares no better than its federal claim. As explained above, [K&S’] use of [Allied’s] mark is limited to identification of the [Allied] and suggests no dilutive association between Plaintiff’s mark and Defendants’ services.”  Allied Interstate LLC, Slip Op. P. 8.  The Court granted K&S’ motion for judgment on the pleadings on Allied’s federal and state trademark dilution claims.

Second, the Court looked at Allied’s claims for unfair competition, false designation of origin, which stem from the section 43(a) of the Lanham Act, and trademark infringement under New York common law.  Allied must show that its mark deserves protection and that K&S’ used the mark in a way that created a likelihood of confusion as to the source of K&S’ services. “It is well-established that the elements necessary to prevail on causes of action for trademark infringement and unfair competition under New York common law mirror the Lanham Act claims.” Lorillard Tobacco Co. v. Jamelis Grocery. Inc., 378 F. Supp. 2d 448, 456 (S.D.N.Y. 2005).  Thus, the Court considered these three claims together.

The Court assumed that Allied had proved that its mark warranted protection and turned to whether there was a likelihood of confusion created by K&S’ use of the mark.  The Court noted that the K&S’ use of the mark was clearly to solicit complaints about Allied’s services.  For instance, a Google search results labels K&S’ sponsored advertisement as one that is related to Allied Interstate.  “The Court finds that Plaintiff’s generalized, conclusory assertions that Defendants’ conduct constitutes a false designation of origin or association with Plaintiff’s mark that is likely to confuse consumers are not supported by plausible factual pleading.”  Allied Interstate LLC, Slip Op. P. 11.

The Court granted K&S’ motion for judgement on the pleadings in its entirety and allowed Allied to move to amend its Complaint by September 10, 2013 or else the case would be dismissed with prejudice.

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