Antitrust Law Daily Wrap Up, ADVERTISING—WDMo: Television Commercials Promoting TurboTax Software Did Not Infringe H&R Block’s Marks, (May 23, 2013)

By Cheryl Beise, J.D.

A trademark infringement claim brought by H&R Block against software provider Intuit, Inc. in connection with television commercials comparing Intuit’s TurboTax software product to H&R Block’s tax preparation services were dismissed by the federal district court in Kansas City (H&R Block Eastern Enterprises, Inc. v. Intuit, Inc., May 22, 2013, Gaitan, F.) There was no possibility that the ads caused consumers to be confused as to the source, origin, sponsorship, affiliation, or endorsement of the parties’ goods and services, according to the court.

H&R Block’s suit against Intuit arose out of two television commercials, known as the “Master Plumber” and “Return Expert,” which compared TurboTax software to H&R Block’s in-store tax preparation services.

In mid-January, H&R Block filed suit against Intuit, asserting claims for false advertising under Section 43(a) of the Lanham Act, trademark infringement under section 32(a) of the Lanham Act, and unfair competition under Missouri common law.

On January 29, the court issued an order denying H&R Block’s motion for a temporary restraining order and preliminary injunction prohibiting Intuit from airing the commercials. In that order, the court found that H&R Block failed to sufficiently demonstrate a probability of success on its false advertising claim; specifically, that the statements in the advertisements were “literally false” or that “actually deceived” or had a tendency to deceive their audience.

At issue was a claim in the advertisements that “more Americans trusted their federal taxes to TurboTax last year than H&R Block stores and all other major tax stores combined.” The commercials also included a bar graph comparing TurboTax use versus other major tax stores, including H&R Block. TurboTax is represented by a red bar, while H&R Block is represented by a green bar.

Now before the court was Intuit’s Rule 12(b)(6) motion to dismiss H&R Block’s trademark infringement claim under Section 32(1)(A) of the Lanham Act, 15 U.S.C. § 1114, and a Rule 12(f) motion to strike reference to trademark infringement allegations in H&R Block’s common law unfair competition claim.

Intuit argued that H&R Block failed to state a claim for trademark infringement because there was no likelihood of confusion arising from the comparative advertisements. Intuit also asserted that H&R Block’s infringement claim was barred by the “nominative fair use” doctrine. Finding that H&R Block failed to plausibly allege likelihood of consumer confusion, the court did not reach Intuit’s fair use argument.

Likelihood of confusion. To establish trademark infringement under the Lanham Act, a plaintiff has the burden to prove that the defendant’s use of the plaintiff’s mark “is likely to produce confusion in the minds of consumers about the origin of the goods or services in question.” Intuit argued that H&R Block’s trademark infringement claim was implausible on its face because a purchaser could not be confused by the advertisements so as to believe TurboTax software was endorsed by H&R Block.

H&R Block contended that “confusion” under trademark infringement law should be read more broadly to include general confusion, mistake, or deception regarding the quality and nature of the parties’ services. H&R Block cited cases from outside the Eighth Circuit purportedly standing for the proposition that in 1962, Congress broadened the scope of the phrase “likely to cause confusion, or to cause mistake, or to deceive” in 15 U.S.C. § 1114 by removing the words “purchasers as to the source of origin of such goods or services” from the end. However, none of the cases cited by H&R Block expanded trademark infringement law to include alleged confusion where it was clear from the context of the ads that the plaintiff was not an originator, sponsor, or endorser of the ad, the court observed.

Moreover, H&R Block’s broad reading of the term “confusion” had no support under current Eighth Circuit law, which provides that the type of confusion contemplated under 15 U.S.C. § 1114 is confusion as to source, origin, sponsorship, affiliation, or endorsement of a good or service, the court said.

The court concluded that H&R Block failed state a claim for trademark infringement. “Although consumer confusion is typically an issue of fact reserved for summary judgment,” in this case, there was “no possibility that consumers could be confused as to whether plaintiffs endorse or sponsor defendant’s products or services.” The court also struck the trademark infringement allegations from H&R Block’s Missouri unfair competition law claim.

The case is No. 13-0072-CV-W-FJG.

Attorneys: Adam G. Levine (O'Melveny & Myers LLP) for H&R Block Eastern Enterprises, Inc. Bernard J. Rhodes (Lathrop & Gage LLP) for Intuit, Inc.

Companies: H&R Block Eastern Enterprises, Inc.; Intuit, Inc.

Cases: Advertising MissouriNews