Antitrust Law Daily Wrap Up, ADVERTISING—D.S.C.: Use of debt collector’s mark by law firm representing debtors did not violate Lanham Act, (Dec 11, 2015)

By Jody Coultas, J.D.

AMCOL Systems, Inc. was unable to state Lanham Act false advertising claims based on Lemberg Law, LLC’s use of AMCOL’s trademarks in advertising for the firm’s debtor representations services, according to the federal district court in Columbia, South Carolina (AMCOL Systems, Inc. v. Lemberg Law, LLC, December 10, 2015, Currie, C.). The court declined to exercise jurisdiction over AMCOL’s South Carolina unfair trade practices claim after dismissing the federal claim.

AMCOL holds two marks, AMCOL and AMCOL SYSTEMS, for use in its debt collection services. Lemberg Law represents plaintiffs in actions against debt collectors, and solicits potential clients at www.stopdebtcollector.com and www.debtbulldog.com. The law firm also operates a channel on YouTube.com that advertises its legal services and solicits potential clients. Lemberg Law’s websites and YouTube channel used AMCOL’s marks in its advertising.

False advertising. The court dismissed AMCOL’s Lanham Act false advertising claim. To state a Lanham Act false advertising claim against Lemberg Law, AMCOL needed to establish that: (1) Lemberg Law made a false or misleading description of fact or representation of fact in a commercial advertisement about his own or another’s product; (2) the misrepresentation was material; (3) the misrepresentation actually deceived or has the tendency to deceive; and (4) an injury caused by the misrepresentation. AMCOL alleged that Lemberg Law made false and misleading descriptions and representations of fact about the nature, characteristics, and qualities of AMCOL’s services and commercial activities. Specifically, Lemberg Law allegedly stated that AMCOL harassed debtors. However, AMCOL could not establish that the use of the marks was “likely to mislead and to confuse consumers given the merchandising context.” Consumers were not likely to believe that Lemberg Law provided debt collection services on behalf of creditors.

Trademark infringement. Lemberg Law was entitled to dismissal of the Lanham Act infringement claims because the use of the marks was not likely to confuse creditors about the source or sponsorship of the law firm’s services, according to the court. An alleged infringer’s use must be in connection with the infringer’s services in a manner likely to cause confusion among consumers as to the services’ source or sponsorship. The relevant consuming group of AMCOL’s services, i.e. creditors, would not be confused by the use of the marks as to the “source or sponsorship” of the services offered by Lemberg Law. It was clear that Lemberg Law’s services were aimed at suing debt collectors.

Debtors were not part of the relevant consuming group, even if they “choose” to work with AMCOL to pay off debts because debtors were subjects of the collection work AMCOL was hired to perform by creditors. A debtor choosing to work with AMCOL was not a customer of AMCOL and could not be considered part of the relevant consuming group for the purposes of the Lanham Act claims.

State law claims. The court declined to exercise jurisdiction over the state law claims and remanded the claims to the Richland County Court of Common Pleas. The court’s practice is to decline to exercise supplemental jurisdiction over state law claims when the federal claims are dismissed in advance of trial.

The case is No. 3:15-3422-CMC.

Attorneys: Francis M. Ervin (Rogers Townsend & Thomas, PC) for AMCOL Systems, Inc. Brian Joseph Headley (The Headley Law Firm) for Lemberg Law, LLC and Sergei Lemberg.

Companies: AMCOL Systems, Inc.; Lemberg Law, LLC

Cases: Advertising SouthCarolinaNews