LegalZoom Loses Appeal inTrademark App Fee Class Action Lawsuit

Earlier this month, the Texas Supreme Court declined to hear an appeal by LegalZoom.com Inc. in which the company claimed that a class action lawsuit should be tossed because the plaintiff suffered no harm from the alleged misrepresentation.

LegalZoom petitioned the Texas high court to review an intermediate appellate court decision upholding a class action lawsuit that accused the company of falsely telling prospective customers that their $474 payment for an app would cover a $325 U.S. Patent and Trademark Office filing fee, when the fee actually only cost $275. Plaintiff Simon Solotko argued that this $50 discrepancy amounted to consumer fraud.

LegalZoom operates the www.legalzoom.com website, which has offered an automated online federal trademark filing service since 2001, allowing customers to establish an account and register a trademark through the convenient filing system. Customers who use the service get access to LegalZoom’s online trademark application software, a preliminary trademark search, a non-legal review of the application for completeness and consistency, generation of the mark to meet filing standards, and electronic filing of the trademark application with the U.S. Patent and Trademark Office.

In July, the Third District Court of Appeal affirmed a 2010 ruling that denied nationwide certification of the LegalZoom class action lawsuit, but left open the possibility for a Texas action. The trial court’s 2010 ruling had rejected LegalZoom’s argument that Solotko lacked standing because he did not actually suffer an injury from the alleged misrepresentation.

LegalZoom filed the appeal to the Texas Supreme Court, arguing that “Despite paying a single, indivisible fee of $474, despite being fully satisfied with LegalZoom’s services, and despite receiving a superior service for the same fixed price of $474, Solotko filed a putative nationwide class action.”

LegalZoom says that the U.S. Patent and Trademark Office uses a system called “Trademakr Electronic Application Service” or “TEAS” to accept trademark applications that are filed electronically. The processing fee for the TEAS service is $325. However, the federal agency also offers a streamlined system called “TEAS Plus,” which is only available for trademark applications with a goods and services description that exactly matches one of the descriptions contained in the agency’s Acceptable Identification of Goods and Services Manual. The processing fee for applications filed using the TEAS Plus system is $275. According to LegalZoom, “The processing time for a TEAS Plus application is typically shorter than for a TEAS application, and TEAS Plus provides a quicker, less error-prone trademark application process.”

According to LegalZoom’s petition for review, Solotko actually received a superior service for the price and he failed to show that he “suffered any personal, concrete harm traceable to LegalZoom’s statement that the government filing fee was $325.” LegalZoom argued that the Court of Appeals erred when it determined that Solotko had standing to bring the class action lawsuit because he was not injured from the alleged misrepresentation about the trademark filing fee.

Solotko’s class action lawsuit alleges that as many as 15,000 customers overpaid for LegalZoom’s trademark application service.

Solotko is represented by the Law Office of Don Cruse and Robert B. Kleinman of Kleinman Law Firm PLLC.

The LegalZoom Trademark App Fee Class Action Lawsuit is LegalZoom.com Inc. v. Solotko, Case No. 13-0840, in the Supreme Court of Texas