Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_17-cv-07303/USCOURTS-cand-3_17-cv-07303-4/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 15:0045 Federal Trade Commission Act

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United States District Court 

Northern District of California 

IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF CALIFORNIA 

LEGALFORCE RAPC WORLDWIDE, 

P.C., et al., 

Plaintiffs, 

v. 

TRADEMARK ENGINE LLC, et al., 

Defendants. 

Case No. 17-cv-07303-MMC 

ORDER GRANTING DEFENDANTS' 

MOTION TO DISMISS FIRST 

AMENDED COMPLAINT; DENYING AS 

MOOT DEFENDANTS' MOTION TO 

DISMISS INITIAL COMPLAINT; 

AFFORDING PLAINTIFFS LEAVE TO 

AMEND 

Re: Dkt. Nos. 27, 53 

Before the Court is defendants Trademark Engine, LLC ("Trademark Engine") and 

Travis Crabtree's ("Crabtree") "Motion to Dismiss Plaintiffs' First Amended Complaint," 

initially filed April 2, 2018, and renoticed April 16, 2018.1

 Plaintiffs LegalForce RAPC 

Worldwide, P.C. ("LegalForce RAPC") and LegalForce Inc. ("LegalForce") have filed 

opposition, to which defendants have replied. Having read and considered the papers 

filed in support of and in opposition to the motion, the Court rules as follows.2

BACKGROUND 

In the operative complaint, the First Amended Complaint ("FAC"), plaintiffs allege 

that LegalForce RAPC, a law firm, "practices patent and trademark law before the 

USPTO [United States Patent and Trademark Office]" (see FAC ¶ 2), and that 

 1

Defendants' motion, filed February 26, 2018, to dismiss plaintiffs' initial complaint 

is hereby DENIED as moot. See Bullen v. De Bretteville, 239 F.2d 824, 833 (9th Cir. 

1956), cert. denied, 353 U.S. 947 (1957) (holding "amended pleading supersedes the 

original, the latter being treated thereafter as non-existent). 

2

By order filed June 12, 2018, the Court took the matter under submission. 

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LegalForce is a corporation "offering law firm automation and free trademark search 

services through its website Trademarkia.com" (see FAC ¶ 3). 

Plaintiffs allege that Trademark Engine, one of LegalForce RAPC's "competitors," 

operates a website known as "TrademarkEngine.com," which website is "one of the 

largest filers of trademarks before the [USPTO]" (see FAC ¶¶ 7, 13, 19), and that 

defendant Crabtree, "a licensed Texas attorney," is "an alter ego of Trademark Engine" 

(see FAC ¶ 5). According to plaintiffs, Trademark Engine has made "false and 

misleading advertising statements" statements (see FAC ¶ 24), and has engaged in the 

"unauthorized practice of law" (see FAC ¶ 29). 

 On March 19, 2018, plaintiffs filed their FAC, asserting therein three Claims for 

Relief: (1) "False Advertising and Unfair Competition [under] the Lanham Act, 15 U.S.C. 

§ 1125(a)"; (2) "California Unfair Competition in Violation of Cal. Bus. & Prof. Code 

§ 17200 et seq."; and (3) "California False & Misleading Advertising in Violation of Cal. 

Bus. & Prof. Code § 17500 et seq. and § 17600 et seq." 

 The instant motion followed. 

LEGAL STANDARD 

 Dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure "can be 

based on the lack of a cognizable legal theory or the absence of sufficient facts alleged 

under a cognizable legal theory." See Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 

699 (9th Cir. 1990). Rule 8(a)(2), however, "requires only 'a short and plain statement of 

the claim showing that the pleader is entitled to relief.'" See Bell Atlantic Corp. v. 

Twombly, 550 U.S. 544, 555 (2007) (quoting Fed. R. Civ. P. 8(a)(2)). Consequently, "a 

complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual 

allegations." See id. Nonetheless, "a plaintiff's obligation to provide the grounds of his 

entitlement to relief requires more than labels and conclusions, and a formulaic recitation 

of the elements of a cause of action will not do." See id. (internal quotation, citation, and 

alteration omitted). 

 In analyzing a motion to dismiss, a district court must accept as true all material 

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allegations in the complaint, and construe them in the light most favorable to the 

nonmoving party. See NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). "To 

survive a motion to dismiss, a complaint must contain sufficient factual material, accepted 

as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 

662, 678 (2009) (quoting Twombly, 550 U.S. at 570). "Factual allegations must be 

enough to raise a right to relief above the speculative level[.]" Twombly, 550 U.S. at 555. 

Courts "are not bound to accept as true a legal conclusion couched as a factual 

allegation." See Iqbal, 556 U.S. at 678 (internal quotation and citation omitted). 

DISCUSSION 

 Defendants argue that each of plaintiffs' claims is subject to dismissal. 

A. Federal Claim 

 The Lanham Act prohibits any "false or misleading description of fact, or false or 

misleading representation of fact, which . . . in commercial advertising or promotion, 

misrepresents the nature, characteristics, qualities, or geographic origin of his or her or 

another's goods, services, or commercial activities." See 15 U.S.C. § 1125(a)(1). 

In the First Claim for Relief, plaintiffs allege that defendants, in violation of the 

Lanham Act, have "made false and misleading descriptions and representations of fact." 

(See FAC ¶ 53.) 

1. Liability of Crabtree 

 At the outset, defendants contend the FAC includes no facts to support a finding 

that Crabtree engaged in the conduct on which the Lanham Act claim is based, i.e., that 

he made or is otherwise responsible for the challenged statements. 

A "corporate officer or director" can be held liable for a Lanham Act violation 

committed by the corporate entity where the officer or director "authorize[d] or direct[ed]" 

the violation, or otherwise "participate[d]" in the violation. See Coastal Abstract Service, 

Inc. v. First American Title Ins. Co., 173 F.3d 725, 734 (9th Cir. 1999). Here, plaintiffs do 

not allege Crabtree engaged in any such conduct, nor, in their opposition, do they assert 

they could make such allegation. Rather, plaintiffs seek to base their Lanham Act claim 

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against Crabtree on the theory that he is the alter ego of Trademark Engine. 

Under California law,3 there are "two general requirements" for establishing liability 

under an alter ego theory; in that regard, the plaintiff must show: (1) "there [is] such unity 

of interest and ownership that the separate personalities of the corporation and the 

individual no longer exist;" and, (2) "if the acts are treated as those of the corporation 

alone, an inequitable result will follow." See Mesler v. Bragg Mgmt. Co., 39 Cal.3d 290, 

300 (1985) (internal quotation and citation omitted). 

Here, although the FAC includes conclusory allegations that the two requirements 

are met (see FAC ¶¶ 5, 9), plaintiffs fail to allege sufficient facts to support those 

conclusions. See Twombly, 550 U.S. at 555 (requiring more than “labels and 

conclusions” to survive motion to dismiss). The sole facts pleaded in the FAC that 

address the nature of Crabtree's interest, ownership and/or control of Trademark Engine 

are the following: (1) his name has been listed as "the contact person" or "correspondent" 

on some trademark applications submitted to the USPTO on behalf of Trademark Engine 

clients (see FAC ¶¶ 9, 13); (2) he has supervised at least some employees of Trademark 

Engine (see FAC ¶¶ 10.A, 10.F); (3) he has "normally answered any type of Office 

Actions from the USPTO" (see FAC ¶ 10.D); and (4) Crabtree has been "practicing law" 

on behalf of Trademark Engine (see FAC ¶ 11). Such facts, however, are insufficient as 

a matter of law to support a finding of alter ego, even if the Court were to assume that 

Crabtree is the sole owner of Trademark Engine, an allegation plaintiffs have not made. 

See Katzir's Floor & Home Design, Inc. v. M–MLS.com, 394 F.3d 1143, 1149 (9th Cir. 

2004) (holding "mere fact of sole ownership and control does not eviscerate the separate 

corporate identity that is the foundation of corporate law"; observing, "[e]ven if the sole 

shareholder is entitled to all of the corporation's profits, and dominated and controlled the 

corporation, that fact is insufficient by itself to make the shareholder personally liable"). 

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State law governs a district court's determination as to whether, for purposes of 

the Lanham Act, an individual and a corporation are alter egos. See U-Haul Int'l, Inc. v. 

Jartran, Inc., 793 F.2d 1034, 1043 (9th Cir. 1986). 

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2. Challenged Statements/Acts 

 The Court next considers whether, as to each challenged statement and act on 

which the Lanham Act claim is based, plaintiffs have sufficiently alleged a claim.4

 a. "Let the Professionals File Your Trademark Today" 

 Plaintiffs allege the following statement, contained in "[a]d copy," is "mislead[ing]": 

"Let the Professionals File Your Trademark Today." (See FAC ¶¶ 14.a.) According to 

plaintiffs, the statement "misleads consumers into believing that the services 

TrademarkEngine.com provides [are] professional or at least lawful" (see id.), but 

Trademark Engine "does not comply with the rules of technical or ethical standards for 

practice before the USPTO," such as when it allegedly "uses non-attorneys to sign off on 

privacy rights without [clients'] consent" (see FAC ¶ 17). 

 Defendants argue that plaintiffs, to the extent their claim is based on such 

statement, have failed to comply with Rule 9(b). In response, plaintiffs contend Rule 9(b) 

does not apply. Where a claim "sound[s] in fraud," however, even where fraud is not a 

"necessary element" of the subject cause of action, the plaintiff must comply with Rule 

9(b). See Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009). Here, plaintiffs 

repeatedly allege that Trademark Engine's advertisements are deceptive, for example, 

that Trademark Engine's "false and misleading advertisements deceive consumers into 

purchasing inferior services." (See FAC ¶ 41; see also FAC ¶ 29 (alleging Trademark 

Engine "deceiv[es] clients about what its services really are" and that its clients "are often 

harmed as a result"); FAC at 2:15 ("TrademarkEngine.com's advertisements deceive 

consumers"); FAC ¶ 21 (alleging "TrademarkEngine.com's trademark landing page is 

particularly deceptive"); FAC ¶ 23 (alleging "consumers are deceived" by 

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In the First Claim for Relief, wherein plaintiffs set forth the basis for their Lanham 

Act claim, plaintiffs do not identify each statement and act they are challenging; rather, 

plaintiffs "incorporate by reference" all allegations made earlier in the FAC. (See FAC 

¶ 51.) In their motion, defendants identify the statements and acts on which they believe 

plaintiffs are basing the First Claim for Relief, and plaintiffs, in their opposition, do not 

dispute defendants' interpretation. 

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"TrademarkEngine.com's advertising").)5 Given such allegations, plaintiffs' false 

advertising claims are subject to Rule 9(b). See Kearns, 567 F.3d at 1125; see also, e.g., 

Mahfood v. QVC, Inc., 2007 WL 9363986, at *3-4 (C.D. Cal. February 7, 2007) (finding 

allegation that defendant engaged in "deceptive advertisements" by "making, in one form 

or another, certain misleading and/or deceptive representations regarding [its products]" 

was "certainly grounded in fraud"). 

 Plaintiffs do not contend they have complied with Rule 9(b), and they plainly have 

not, as plaintiffs fail to identify the nature of the "ad copy" in which the statement is 

assertedly found, and fail to state when such advertisement was broadcast or otherwise 

made available to the public. See Vess v. Ciba-Geigy Corp., USA, 317 F.3d 1097, 1106 

(9th Cir. 2003) (holding "[a]verments of fraud must be accompanied by 'the who, what, 

when, where, and how' of the misconduct charged"). Moreover, to the extent plaintiffs 

may be asserting the challenged statement is located somewhere on the website 

operated by Trademark Engine, plaintiffs fail to allege where on the website it can be 

located, and, particularly, where it is located in relation to statements disclaiming that 

Trademark Engine provides legal services. (See FAC ¶ 22 (alleging Trademark Engine's 

website states that Trademark Engine "is not a law firm," that it "is not a 'substitute for an 

attorney or law firm'," and that it "cannot 'review [a client's] answers for legal sufficiency, 

draw legal conclusions, provide legal advice, opinions or recommendations about [a 

client's] legal rights, remedies, defenses, options, selection of forms, or strategies, or 

apply the law to the facts of [a client's] particular situation").) 

 Defendants also argue that plaintiffs' allegation that the challenged statement 

"give[s] consumers the impression that [Trademark Engine] provides legal advice" (see 

FAC ¶ 14) is insufficient to support a finding that the statement is actionable. The Court 

agrees. Where, as here, a plaintiff does not allege a statement is "literally false," the 

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In addition, although pleaded in support of the Second Claim for Relief, plaintiffs 

expressly characterize Trademark Engine's "false and misleading statements" as 

"fraudulent." (See FAC ¶¶ 68.e-f.) 

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plaintiff must establish the statement "has misled, confused, or deceived the consuming 

public." See Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1140 (9th Cir. 

1997). Stated otherwise, "where the advertisements are not literally false," the plaintiff 

"cannot obtain relief by arguing how consumers could react; [the plaintiff] must show how 

consumers actually do react." See Sandoz Pharmaceuticals Corp. v. Richardson-Vicks, 

Inc., 902 F.2d 222, 228-29 (3rd Cir. 1990) (emphasis omitted). Plaintiffs fail, however, to 

allege any facts to support their conclusory assertion that the challenged statement has 

actually "give[n] consumers" the misleading impression that Trademark Engine provides 

legal advice. 

Accordingly, to the extent the Lanham Act claim is based on "Let the Professionals 

File Your Trademark Today," the claim is subject to dismissal. 

b. "'Have a Look Around!' because 'professionals' 'help you every 

 step of the way'" 

 Plaintiffs allege that the following "statement," as described by plaintiffs, is found 

on Trademark Engine's website and is "misleading": "'Have a look around!' because 

'professionals' 'help you every step of the way'." (See FAC ¶ 21.) According to plaintiffs, 

the statement is "misleading because average customers do not understand the 

difference between a lawyer practicing law through a law firm and through an LLC -- the 

former [being] legal but the latter [being] illegal." (See id.)6

 Defendants argue that, to the extent the Lanham Act claim is based on such 

statement, it is subject to dismissal for the same reasons that the claim, to the extent 

based on "Let the Professionals File Your Trademark Today," is subject to dismissal. 

The Court agrees. 

First, plaintiffs have failed to comply with Rule 9(b), as they do not identify with the 

requisite particularity the allegedly actionable statement. Rather, it appears plaintiffs 

have taken one statement, specifically, "Have a look around!," and added to it portions of 

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Plaintiffs cite no authority for the proposition that an attorney may not practice law 

through an LLC. 

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one or two other statements, specifically, the word "professionals" and the phrase "help 

you every step of the way," and are treating them as one statement that would convey a 

particular meaning to a consumer when read together. Plaintiffs fail, however, to explain 

how such statements appear on the Trademark Engine website, and, thus, fail to support 

a finding that consumers would read those particular words together. 

Second, as noted, given plaintiffs do not allege the challenged statement is literally 

false, they must show the statement "has misled, confused, or deceived the consuming 

public." See Southland Sod Farms, 108 F.3d at 1140. Plaintiffs fail, however, to allege 

any facts to support a finding that consumers who have read the challenged "statement" 

have understood it as an assertion that Trademark Engine practices law in a unlawful 

manner. 

 Accordingly, to the extent the Lanham Act claim is based on "'Have a look 

around!' because 'professionals' 'help you every step of the way'," the claim is subject to 

dismissal. 

c. Use of Keywords 

Plaintiffs allege that Trademark Engine is "among the largest purchasers of online 

advertising (including Google and Bing) for trademark filing-related search terms/ 

keywords" (see FAC ¶ 19), and that it "purchases advertisements whenever consumers 

search terms related to the practice of trademark filing, including 'trademark search' and 

'trademark registration[,]' with copy that misleads consumers into believing that they will 

be represented by professionals or at least will provide the services by lawful means" 

(see FAC ¶ 20). Plaintiffs also allege that Trademark Engine also "makes false 

comparisons directly by purchasing keywords that include [p]laintiff LegalForce's 

'Trademarkia' term, the website through which [LegalForce RAPC] perform[s] only 

attorney-led U.S. trademark preparation and prosecution services[,] by falsely comparing 

it with non-attorney unauthorized practice of law services of defendants." (See id.) 

Defendants argue plaintiffs have not complied with Rule 9(b). Again, plaintiffs do 

not argue they have so complied, but, rather, contend Rule 9(b) does not apply, which 

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argument, the Court, for the reasons stated above, finds unpersuasive. Further, plaintiffs 

have not complied with Rule 9(b), as they have not identified the "copy" in the Google or 

Bing "advertisements" that "misleads consumers" (see id.) and have not stated when 

such advertisements were published, nor have they identified the content of any 

statement that "falsely compar[es]" LegalForce RAPC's services with those of Trademark 

Engine (see id.), or stated where and when any such comparison was made. 

 Further, to the extent the claim is based on a theory that consumers who, after 

performing an internet search using "Trademarkia," ended up viewing Trademark 

Engine's website, such a claim, to be cognizable under the Lanham Act, would require a 

showing that Trademark Engine's website was "likely to mislead consumers" into 

believing Trademark Engine was affiliated with plaintiffs. See TrafficSchool.com, Inc. v. 

Edriver, Inc., 653 F.3d 820, 827-29 (9th Cir. 2011) (affirming judgment finding defendant 

violated Lanham Act, where defendant's website, "DMV.org," was designed in manner 

"likely to mislead consumers into thinking [defendant] was affiliated with a government 

agency"). Here, however, plaintiffs fail to allege any facts to support a finding that such 

consumers would be likely to believe they were viewing a website affiliated with Legal 

Force. 

Accordingly, to the extent the Lanham Act claim is based on the use of keywords, 

the claim is subject to dismissal. 

B. State Law Claims 

1. Claims Based on False Advertising 

Plaintiffs' Second Claim for Relief, titled "California Unfair Competition in Violation 

of Cal. Bus. & Prof. Code § 17200 et seq.," is based in part on the same conduct as that 

on which plaintiffs base their Lanham Act claim. (See FAC ¶¶ 61, 65.b, 65.i, 66, 67, 

68.e(1).) To the extent so based, plaintiffs' § 17200 claim is subject to dismissal for the 

reasons stated above with respect to their Lanham Act claim. See Cleary v. News Corp., 

30 F.3d 1255, 1262-63 (9th Cir. 1994) (holding, where Lanham Act claim properly 

dismissed, § 17200 claim based on same factual allegations likewise subject to 

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dismissal). 

 Plaintiffs' Third Claim for Relief, titled "California False & Misleading Advertising in 

Violation of Cal. Bus. Code § 17500 et seq. and § 17600 et seq.," is based on the same 

conduct as that on which plaintiffs base their Lanham Act claim (see FAC ¶¶ 72-75), and, 

consequently, is subject to dismissal for the reasons stated above with respect to their 

Lanham Act claim. See Appliance Recycling Centers of America, Inc. v. JACO 

Environmental, Inc., 378 Fed. Appx. 652, 656 (9th Cir. 2010) (holding, where judgment 

properly granted in favor of defendant on Lanham Act false advertising claim, judgment in 

favor of defendant on § 17500 claim likewise proper). 

2. Claims Not Based on False Advertising 

In the Second Claim for Relief, plaintiffs include claims alleging defendants have 

violated § 17200 by "engaging in the unlawful practice of law" (see FAC ¶¶ 64, 65.h, 

68.b), by "waiving" the "privacy rights" of their clients (see FAC ¶¶ 65.f, 68.e(3)), and by 

submitting to the USPTO "fraudulent specimens" that "include fraudulent proofs of use" 

(see FAC ¶¶ 65.c-d, 68.e(2)).7

To the extent the Second Claim for Relief is based on such alleged conduct, the 

Court, given the dismissal of plaintiffs' federal claims and the early stage of the 

proceedings, declines to exercise supplemental jurisdiction.8 See 28 U.S.C. 

§ 1367(c)(3) (providing, where district court has dismissed claims over which it has 

original jurisdiction, it may decline to exercise supplemental jurisdiction over remaining 

claims). 

Accordingly, such claims, as included in the Second Claim for Relief, will be 

dismissed pursuant to § 1367(c)(3), without prejudice to refiling in state court, or, if 

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The Court understands the word "specimen" to refer to the "mark as used on or in 

connection with the goods or services" that is submitted for registration to the USPTO. 

See 37 C.F.R. § 2.56(a). 

8

Plaintiffs allege the Court's jurisdiction over plaintiffs' state law claims is 

supplemental in nature. (See FAC ¶ 6.) 

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plaintiffs elect to amend their federal claims, without prejudice to refiling in this action. 

CONCLUSION 

For the reasons stated above, defendants' Motion to Dismiss Plaintiffs' First 

Amended Complaint is hereby GRANTED and the First Amended Complaint is 

DISMISSED in its entirety. Plaintiffs are hereby afforded leave to amend for purposes of 

curing the deficiencies identified above.9 Any such Second Amended Complaint shall be 

filed no later than August 10, 2018, and plaintiffs may not add therein any new 

defendants or any new claims, without first obtaining leave of court. See Fed. R. Civ. P. 

15(a)(2). 

IT IS SO ORDERED. 

Dated: July 19, 2018 

 MAXINE M. CHESNEY 

 United States District Judge 

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If plaintiffs file a Second Amended Complaint, they also may amend the portions 

of the Second Claim for Relief that have been dismissed pursuant to § 1367(c). 

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