July 18, 2019

Tenth Circuit: Ruling That Advertiser Violated Lanham Act Reversed in Part and Affirmed in Part After Its Use of Internet Keywords That Resembled a Competitor’s Service Mark

The Tenth Circuit Court of Appeals published its opinion in 1-800 CONTACTS v. Lens.com on Tuesday, July 16, 2013.

The Lanham Act prohibits the infringement of trademarks (used to identify products) and service marks (used to identify services). It was enacted in 1946, but it can be applied to technologies unimagined at the time of enactment. The Internet has created a number of challenging issues. This case concerned Internet search engines, which present advertisers with new means of targeting prospective customers and therefore new possibilities for claims under the Lanham Act. This dispute arose out of advertising through AdWords, a program offered by the search engine Google. An advertiser using AdWords pays Google to feature one of its ads onscreen whenever a designated term, known as a keyword, is used in a Google search. The Tenth Circuit had to resolve whether the Lanham Act was violated by an advertiser’s use of keywords that resembled a competitor’s service mark.

Plaintiff 1-800 Contacts, Inc. (1-800) dominates the retail market for replacement contact lenses. It owns the federally registered service mark 1800CONTACTS. Defendant Lens.com, Inc. is one of 1-800’s  competitors. To police the use of its mark, 1-800 enters different variations of the mark into Google searches and monitors what search results are displayed. When 1-800 found that several searches generated paid ads for Lens.com’s websites, it concluded that Lens.com had reserved the mark as a keyword. After attempting to resolve the situation informally, 1-800 sued Lens.com for service-mark infringement. Its primary claim was that Lens.com itself had infringed the 1800CONTACTS mark by purchasing keywords resembling the mark. As the case progressed, 1-800 supplemented its claim by alleging that third-party marketers hired by Lens.com, known as affiliates, had also purchased keywords resembling the mark and that at least one affiliate was using the mark in the text of its online ads. 1-800 sought to hold Lens.com secondarily liable for its affiliates’ conduct. The theories of secondary liability were common-law agency and contributory infringement. The district court awarded summary judgment to Lens.com on all claims. 1-800 appealed.

To the extent that the district court based summary judgment on the ground that no likelihood of confusion existed, the Tenth Circuit affirmed. Rational analysis and actual marketplace data revealed that the keyword use by Lens.com and its affiliates was highly unlikely to divert consumers. As for the remaining secondary-liability claims, the Court affirmed the denial of liability under agency law because the affiliates, even if agents of Lens.com, lacked authority to include 1-800’s mark in ads for Lens.com. But the Tenth Circuit reversed the denial of liability for contributory infringement because the evidence could support a reasonable finding that Lens.com did not take reasonable steps to halt the display of 1-800’s marks in affiliate ads once it learned of such display.

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