Adler v. McNeil Consultants
10 F.4th 422
| 5th Cir. | 2021Background
- Plaintiff Jim S. Adler P.C. (Adler) owns and uses several trademarks (e.g., JIM ADLER, THE HAMMER) and buys Google keyword ads for those marks.
- Defendant McNeil Consultants, LLC and related entities (McNeil) operate a lawyer-referral call center and purchased Adler’s marks as search-engine keywords to trigger their own ads.
- McNeil’s ads used generic, unlabeled text and "click-to-call" functionality; callers are routed to a call center where representatives initially do not identify McNeil, allegedly prolonging a bait‑and‑switch to obtain referrals.
- Adler sued under the Lanham Act (trademark infringement/initial-interest confusion) and Texas law; the district court dismissed for failure to state a claim and denied leave to amend as futile.
- The Fifth Circuit reviewed de novo, held Adler plausibly alleged likelihood of confusion based on the combination of keyword use, unlabeled ads, and call‑center practices, reversed the dismissal, vacated the denial of leave to amend, and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Adler plausibly alleged a Lanham Act likelihood of confusion from keyword purchases and ads | Adler: purchase of Adler marks as keywords plus generic unlabeled ads and click‑to‑call/bait‑and‑switch plausibly cause initial‑interest confusion | McNeil: claims rest solely on buying keywords; ads are generic and do not display Adler marks, so no confusion as a matter of law | Reversed: allegations (keywords + unlabeled ads + call‑center conduct) are specific enough to plead plausible likelihood of confusion; factual question remains for later proceedings |
| Whether use of a trademark must be visible to consumers to state a claim | Adler: visibility is not required; consumer confusion can arise from invisible keyword use combined with other misleading practices | McNeil: because ads don’t show Adler’s mark, there can be no confusion as a matter of law | Held: visibility is a relevant but not dispositive factor; no per se rule requiring visible use |
| Whether the district court properly treated allegations of bait‑and‑switch as conclusory | Adler: pleaded concrete facts about ad text and call‑center practices (double‑blind survey evidence proffered) | McNeil: argued those allegations are conclusory and should be ignored at pleading stage | Held: the complaint included specific factual allegations beyond mere keyword purchase and those allegations must be considered on a 12(b)(6) review |
| Whether denial of leave to amend as futile was appropriate | Adler: sought to add survey evidence of actual confusion; amendment would cure deficiencies | McNeil: argued amendment would be futile because legal theory fails as a matter of law | Held: vacated denial of leave to amend because the underlying dismissal was erroneous; futility finding reversed and remanded for district court reconsideration |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard: factual allegations must state a plausible claim)
- Xtreme Lashes, LLC v. Xtended Beauty, Inc., 576 F.3d 221 (5th Cir. 2009) (lists non‑exhaustive "digits of confusion" for likelihood‑of‑confusion analysis)
- Elvis Presley Enters., Inc. v. Capece, 141 F.3d 188 (5th Cir. 1998) (initial‑interest confusion is actionable under the Lanham Act)
- Playboy Enters., Inc. v. Netscape Commc’ns Corp., 354 F.3d 1020 (9th Cir. 2004) (keyword/ad cases can create initial‑interest confusion when unlabeled ads mislead users)
- Network Automation, Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 1137 (9th Cir. 2011) (distinguishes legitimate contextual advertising from misleading ads; labeling matters)
- 1‑800 Contacts, Inc. v. Lens.com, Inc., 722 F.3d 1229 (10th Cir. 2013) (addresses relevance of keyword choice and consumer visibility of trademark use in search ads)
- Thomas v. Chevron U.S.A., Inc., 832 F.3d 586 (5th Cir. 2016) (de novo review of district court denial of leave to amend when based on futility)