Competitive Keyword Ad Lawsuit Fails…Despite 236 Potentially Confused Customers–Lerner & Rowe v. Brown Engstrand

May 22, 2023 · by Eric Goldman · in Marketing, Search Engines, Trade Secrets

This case involves two rival personal injury law firms in Arizona, one of which engaged in competitive keyword advertising against the other. The court dismisses the lawsuit on summary judgment.

The court focuses on the likelihood of consumer confusion. The court starts with a general observation: “Although it might at first seem that one firm’s purchase of another firm’s trademark as a Google keyword would constitute infringement, courts generally have not adopted that view,” citing Network Automation. The plaintiff invoked initial interest confusion, but per Network Automation, the court merges IIC back into the standard multi-factor test. Also per Network Automation, the court prioritizes four of the standard likelihood-of-confusion factors: mark strength, actual confusion, purchaser care, and whether the search results are labeled as ads.

On the question of actual confusion, the defendant’s log of inbound phone calls is the key piece of evidence:

Defendants maintained call logs for four years which show that callers to Defendants’ phone number mentioned Lerner & Rowe 236 times. Each log entry includes the date of the call and the caller’s name, as well as a column labeled “[w]hat they said referred by.” Plaintiff contends that many of the responses in this column show actual confusion, including: “Referred by L&R (they had a conflict)”; “referred by L&R”; “googled – L&R”; “Internet – Lerner & Rowe”; “thought he called L&R”; “Lerner/Rowe/TV”; and “Wanted L&R.”

The court says the call logs are ambiguous. Even if the notes suggested the prospective client initially was looking for the plaintiff, they may have understood the (lack of) relationship between the rival firms or perhaps they became interested in the rival after seeing the comparative ad. The court says it needs more information to understand the call logs.

The court doesn’t dig into that question further. Instead, the court says that any actual confusion evidenced by the call logs was de minimis as a matter of law. “Isolated incidents” don’t show actual confusion; “there must be actual confusion among significant numbers of consumers.” The ads in question generated about 109k ad impressions and generated 7,400 clicks, an impressive 6.8% clickthrough rate. Assuming each of the 236 references to Lerner & Rowe in the call logs is a confused consumer, the court says that means only about 0.2% of exposed consumers experienced actual confusion:

This tiny percentage cannot reasonably be said to constitute an “appreciable” or “significant” number of consumers confused by Defendants’ advertising strategy. Nor can it be said to show that Defendants’ marketing strategy made confusion likely.

The court summarizes its conclusion on the multi-factor analysis:

The three relevant screenshots produced by Plaintiff show clear labeling of Defendants’ entry, using Defendants’ name and prominently labelled as an “Ad,” and with no use of Plaintiff’s trademark or confusingly similar language or content. Reasonably savvy Internet users with a strong incentive to select the right lawyer would not be confused by these clearly labeled ads into believing that Defendants were Plaintiff. Plaintiff produces no survey evidence showing a likelihood of confusion, and its evidence that, at most, 0.215% of all consumers exposed to Defendants’ ads were in fact confused by them is simply not enough to show a likelihood. Two-tenths of one percent is not an appreciable or significant portion of consumers exposed to Defendants’ keyword-generated ads. Plaintiff does have a strong mark, but no reasonable jury viewing Plaintiff’s thin evidence could find that potential clients viewing Defendants’ clearly labeled ads are likely to be confused into thinking Defendants were in fact Plaintiff.

* * *

Defense counsel engaged in some impressively crafty lawyering to get the court to accept the 109k ad impressions as the denominator in its formula. (The defense team included lawyers from Jaburg & Wilk, Wilenchik & Bartness, and the Law Office of Robert W Shely). The math does have some problems. First, the numerator is individual people, while the denominator is ad impressions. If prospective clients saw the ads more than once, the denominator overstates the number of individual people. Second, we don’t know anything about the 102k prospective clients who didn’t click on the ads. Maybe they didn’t click on the ads because they were confused? Third, if the court used 7,400 clickthroughs as the numerator (which is still not precise, because a single prospective client might have clicked multiple time), the rate of actual confusion increases to 3.2%. While this is still a low rate if we’re measuring net consumer confusion in a consumer survey, it would have been a lot more compelling if the court had expressly rejected this higher ratio.

(On that front, this case brought to mind the uncited 10th Circuit 1-800 Contacts v. Lens.com opinion, which held that a 1.5% clickthrough rate proved that there was NOT legally sufficient initial interest confusion because it was well below the standard 10-15% net confusion threshold courts normally require. Here, the court could have said that the 6.8% clickthrough rate–overcounting every consumer click as confused–similarly disproved consumer confusion).

It’s unusual to see a court dismiss the probative implications of potentially hundreds of confused consumers. While this is a startling good defense ruling from a trademark law standpoint, I could see a state bar arguing that ads violate ethics rules if they produce hundreds of potentially misdirected prospective clients. Before the state bar could reach that conclusion, they would have to do more work to validate that the 236 entries are indeed misdirected, something this court punted on. When that work is done, perhaps the actual number of confused consumers becomes small enough to obviate the concerns.

For more on competitive keyword ads by lawyers, see this article.

Case citation: Lerner & Rowe PC v. Brown Engstrand & Shely LLC, No. CV-21-01540-PHX-DGC (D. Ariz. May 18, 2023)

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Competitive Keyword Ad Lawsuit Fails…Despite 236 Potentially Confused Customers–Lerner & Rowe v. Brown Engstrand

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