According to a complaint filed in the United States District Court for the Northern District of California by California law firm LegalForce RAPC Worldwide, LegalZoom engages in the unauthorized practice of law when its non-attorneys instruct customers on how to register trademarks. The lawsuit names various other defendants, including the Patent and Trademark Office and several bar associations, as alleged conspirators in LegalZoom’s attempt to restrain trade.
According to the Complaint, LegalZoom has helped filed over 250,000 trademark applications for its customers. Accordingly, LegalForce took it upon itself to register two trademarks through LegalZoom’s website. During the process, LegalZoom’s “trademark document specialists” assisted LegalForce in preparing the application, including selecting the international classification and preparing the goods and services description. According to the Complaint, LegalZoom also advised LegalForce about how potentially conflicting marks could reduce the chances of obtaining federal registration, which, according to LegalForce, constituted legal advice provided by non-attorneys.
Compounding the problem, the advice given by the trademark specialists was allegedly incorrect. Specifically, the specialists allegedly advised LegalForce that only similar marks in the same international class could prevent registration despite the fact that marks outside of the same international class can, in fact, prevent registration.
In addition to alleging that LegalZoom engages in the unauthorized practice of law, LegalForce alleges that LegalZoom is unfairly competing because it is not required to run conflict checks, maintain malpractice insurance, or employ U.S. licensed attorneys “to review and sign off on trademark matters filed before the USPTO like similarly situated law firms are required to do. Accordingly, LegalZoom has allegedly gained an unfair competitive advantage because it does not have to pay to follow federal and state laws regarding the practice of law. And although “LegalZoom represents on its website that it does not practice law, this representation is false and/or misleading,” according to the complaint.
LegalForce also claims that LegalZoom is using Google and related search engines to compete with law firms, and spends more than $100,000 each month to do so. According to LegalForce, LegalZoom is outspending its competitors for certain keywords used by consumers, such as “trademark lawyer,” further exacerbating the unfair competition. Perhaps more concerning, LegalForce alleges that LegalZoom has used search terms such as LegalForce and Trademarkia to misdirect customers to its own ads, despite those terms being directly related to LegalForce.
According to LegalForce, LegalZoom’s conduct demonstrates an “intentional, willful and malicious intent to deceive consumers and unfairly compete with plaintiffs.” It will be interesting to see the outcome of this litigation. On the one hand, competition is competition, but on the other hand, unlicensed individuals cannot be permitted to practice law, and therefore should not be allowed to compete.