Trademarkia cleared to continue infringement complaint against LegalZoom

By Scott Holland | May 29, 2019

SAN FRANCISCO – A federal judge has denied a dismissal of a trademark dispute centered on two competing legal advice websites.

In the underlying trademark infringement and cyberpiracy complaint, LegalForce Inc., which operates Trademarkia, accused LegalZoom of buying the domain name LegalZoomTrademarkia.com in 2012 and — from 2014 to 2018 — using it to direct people to LegalZoom.com.

In an opinion issued May 13, Judge Maxine Chesney of the U.S. District Court for the Northern District of California said the court dismissed Trademarkia’s initial complaint for lack of standing on March 13, finding no support for the idea Trademarkia suffered a real or threatened injury as a result of LegalZoom’s URL. Trademarkia amended its complaint, but LegalZoom sought to have it dismissed, arguing the flaws weren’t remedied.

Chesney evaluated Trademarkia’s amendments, such as the allegation it offered LegalZoom a license to use the term LegalZoom Trademarkia for $120,000 per month, but that LegalZoom ended those negotiations in December 2011 before registering the disputed domain six months later.

LegalZoom argued the amended complaint doesn’t show how Trademarkia should be entitled to a $120,000 monthly fee, but Chesney said “the issue at this stage is whether Trademarkia has sufficiently pleaded it incurred an ‘injury-in-fact’ … not whether it in fact incurred such harm or whether it is in fact entitled to an award in the amount it seeks.”

The other flaw with the amended complaint, according to LegalZoom, is the alleged inadequacy of the three trademark infringement claims. Specifically, LegalZoom said the complaint lacks allegations of potential customers being exposed to the disputed domain name, that LegalZoom ever promoted that URL or that any customers every visited such a website.

Chesney rejected that argument, pointing to allegations in Trademarkia’s amended complaint that “LegalZoom has a number of ‘affiliates,’ namely, entities and individuals who have ‘blogs,’ ‘community newsletters’ or other types of websites, who ‘promote’ on those sites ‘LegalZoom products using banners ads or text links’ directly connecting to LegalZoom.com and who receive a ‘commission’ from LegalZoom ‘each time a visitor clicks on a LegalZoom link… and completes a purchase.”

Trademarkia further alleged “millions of visitors” viewed affiliate sites displaying such ads, attracting users already familiar with Trademarkia’s name and branding. Chesney said those allegations are sufficient to support a claim there was a likelihood of customer confusion.

Chesney also sided with Trademarkia on its unjust enrichment claim, noting the allegation of sales made through LegalZoom.com to customers who arrived there because of advertisements containing the disputed domain.

LegalZoom said Trademarkia’s allegation that the act of registering the domain name was “calculated to deceive consumers” couldn’t be used to raise an infringement claim, but Chesney pointed out Trademarkia only used those allegations for its cyberpiracy claim, and “LegalZoom has not sought dismissal for failure to state a claim” on that count.

Finally, Chesney rejected LegalZoom’s argument the second infringement claim failed to sufficiently allege statutory standing, noting the companies both provide trademark watch and monitoring services and writing “Trademarkia has sufficiently alleged an injury to a commercial interest.”

While refusing to dismiss the complaint, Chesney also denied Trademarkia’s request for leave to file another reply, saying LegalZoom raised no new arguments in its motion to dismiss and that its proposed reply “is wholly based on factual assertions not set forth in the first amended complaint.”

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