1-800 Contacts v. Lens.com (10th Cir.), No. 11-4114, 7/16/13

FACTS:

  • Plaintiff 1-800 Contacts, Inc. (“1-800”), “dominates” the retail market for replacement contact lenses.
  • The company registered and owns the service mark “1 800CONTACTS.”
  • Defendant Lens.com, Inc. (“Lens.com”), is a competitor of 1-800.
  • 1-800 “polices” its mark to protect against infringement by entering variations of its mark into Google searches and reviewing the search results that are displayed. 
  • After conducting such a search, 1-800 concluded that Lens.com was using the mark as a keyword.
  • Searches using keywords such as “1800contacts” and “1-800-contacts” and the like, were generating Lens.com’s ads.
  • 1-800 brought an action against Lens.com under Section 32 of the Lanham Act for service mark infringement associated with purchasing keywords resembling the mark.
  • Plaintiff alleged that Lens.com used the 1 800CONTACTS trademark as a triggering keyword to display and promote Lens.com’s directly competitive goods and services.
  • Lens.com moved for summary judgment.

ELEMENTS OF AN INFRINGEMENT CLAIM:

  • Plaintiff has a protectable interest in the mark;
  • The defendant has used “an identical or similar mark” in commerce; and
  • The defendant’s use is likely to confuse consumers.

INITIAL-INTEREST CONFUSION:

  • 1-800 claimed that Lens.com’s purchase of keywords resembling its mark resulted in “initial-interest confusion” within the meaning of the Lanham Act.
  • Such confusion occurs “when a consumer seeks a particular trademark holder’s product and instead is lured to the product of a competitor by the competitor’s use of the same name or similar mark.”

GOOGLE'S ADWORDS PROGRAM:

  • Advertisers bid on words or phrases (keywords) that would trigger the display of their ad(s). 
  • Advertisers can pay to be displayed as a sponsored link, which would include advertising copy and the advertiser’s website address.
  • Users who click on the subject ad(s) are connected to the website.
  • The display of a sponsored link in response to a user’s search is an “impression.”
  • Advertisers paid Google only if the user clicked on their sponsored links.  A bid for a keyword represented the amount per click that an advertiser was willing to pay.  The more one paid, the better the placement among the sponsored links.
  • A click that led to a sale through the advertiser’s web page is known as a “conversion.”

DISTRICT COURT:

  • The lower court ruled in favor of Lens.com, holding that merely purchasing such keywords cannot, on its own, create the likelihood of confusion required for infringement liability.
  • Instead, the court held that keyword use “divorced from the text of the resulting ads, could not result in a likelihood of confusion.”
  • 1-800 appealed, arguing that Lens.com’s bidding on the nine (9) challenged keywords caused Lens.com ads to appear in response to searches for the mark – diverting customer interest away from its own website to that of Lens.com.

10TH CIRCUIT COURT OF APPEALS:

  • The main issue on appeal was whether there was a likelihood of confusion.
  • The court pointed out, “Initial-interest confusion occurs when a consumer in search of the plaintiff’s product ‘is lured to the product of a competitor.’”
  • To help determine if this occurred, the court examined the associated “AdWords data” – which set an upper limit on how often consumers really were lured in this way.
  • After reviewing the statistics, the court concluded that “initial-interest confusion occurred at most 1.5% of the time that a Lens.com ad was generated by a Challenged Keyword in those eight months [at issue].”
  • According to the court, this percentage cannot support an inference that Lens.com’s keyword activity was likely to lure customers away from 1-800.

TAKE AWAY:

  • Google’s AdWords program is one of the leading methods of online advertising.
  • Lens.com took some risks by purchasing a variety of keywords that closely resemble the well-established service mark of 1-800.
  • Significantly, here, the court held that this alone was not enough to find infringing behavior.
  • The court took into account that users who are searching for 1-800 -- versus other potential customers who are randomly looking for contact lenses -- will take note of the search results and will notice the dissimilarity between it and Lens.com, thereby reducing the chance that consumers will think that they are related businesses.