City Law Requiring Taxi Co to Refer Competitors Isn’t TM Infringement–MCQ’s v. Philadelphia Parking

By Eric Goldman

MCQ’s Enterprises, Inc. v. Philadelphia Parking Authority, No. 07-0067 (E.D. Pa. Jan. 11, 2007)

As part of making the cab system more consumer-friendly, Philadelphia created a “coordinated dispatch system” for taxicabs. Each taxicab would install GPS. Then, when a taxicab company gets a call requesting a cab, it is required to check to see where its nearest cabs were located as well as the location of competitor cabs. If the company’s nearest cab is too far away (an undetermined time, but about 15-20 minutes) and a competitor’s cab is closer, the rule requires the company to ask the caller if they would prefer the competitor’s cab.

The Yellow Cab Co. sought a TRO against this law based on several legal doctrines, including takings, trade secrets, tortious interference, and (importantly for our purposes here) the Lanham Act. The argument is that the regulation is forcing Yellow Cab to redirect consumers even though the consumer had requested Yellow Cab by calling its trademarked phone number.

The court has little difficulty rejecting this argument, saying that “Plaintiff cites no legal authority for the proposition that offering an alternative service to Plaintiff’s customers violates Plaintiff’s trademark in the Yellow Cab name, color, or phone number.” Instead, the regulation simply increases consumer choices by giving them the option of getting quicker service from a competitive cab or waiting for the trademark owner’s cab.

In theory, this case has some bearing on the keyword advertising cases. Clearly, from this court’s perspective, advertising competitive alternatives–even when triggered by a trademark owner’s trademark (in this case, the phone number)–doesn’t support a TRO. The court specifically references the lack of confusion because of the clear delineation between the two offerings, although I wonder if this court could have also rejected the claim for a lack of trademark use.

Unfortunately, I’m not sure if this case has too much precedential power. It’s a TRO ruling, and a rather efficient one at that. Second, the case has already settled. Nevertheless, the case is an interesting example of how keyword-triggered adjacent comparative advertising, if clearly delineated, might drop out of the Lanham Act.

While I think the court got the Lanham Act right, I have mixed emotions towards the law generally. As a taxicab consumer, I think this law has some merit assuming that taxicab companies actually implemented it properly (I can imagine some dispatchers being less than enthusiastic or forthcoming when referring competitors). However, I’m bothered by the takings issue (which the court called “colorable”) and the compelled speech issue, even though the plaintiff didn’t raise the First Amendment issue. Then again, I don’t normally deal with heavily regulated industries like taxicabs–I’m sure glad we don’t need medallions to become bloggers! (Of course, if Cass Sunstein had his way as described in, even we as bloggers would be forced to promote the “competition.”)