1-800 Contacts Seeks To Nix Order Stemming From Battle Over Search Ads

Contact lens retailer 1-800 Contacts is asking the Federal Trade Commission to stay part of a recent order that requires the company to stop engaging in some efforts to police the use of its trademark.

That order “threatens irreparable harm to 1-800’s trademark enforcement efforts and rights, relationships with industry partners, and competitive position generally,” the contact lens retailer argues in papers filed with the FTC last week.

The order also “imposes additional costs and interjects uncertainty” into the company's “brand enforcement efforts,” 1-800 Contacts contends.

The FTC issued the order after it found that 1-800 Contacts violated antitrust law by attempting to prevent its name from being used to trigger search ads for competitors. Those attempts unlawfully limited the information provided to consumers who searched for 1-800 Contacts' trademark terms, according to the FTC.

1-800 Contacts, which also faces a class-action antitrust lawsuit by consumers, says it will appeal the FTC's decision to the U.S. Circuit Court of Appeals.

The FTC's ruling stemmed from an administrative complaint against 1-800 Contacts filed in 2016. That complaint centered on business practices dating to 2004, when 1-800 Contacts first threatened to sue a competitor for allegedly infringing trademark by purchasing the term 1-800 Contacts as a trigger for pay-per-click search ads.

From 2004 through 2013, the company allegedly sued or threatened to sue at least 15 competitors over trademark infringement on search engines. Fourteen of those companies entered into agreements to restrict the use of the company's trademarks in search ads.

Only Lens.com fought the lawsuit, which ended in a ruling largely in Lens.com's favor.

1-800 Contacts argued that the search-ad agreements helped the company protect its trademark, but the FTC said the deals restricted ads that may not have proven confusing to consumers.

“When an agreement limits truthful price advertising on the basis of trademark protection, it must be narrowly tailored to protecting the asserted trademark right,” FCC Chairman Joseph Simons wrote in a decision issued last month. “The agreements here are not -- they restrict advertising regardless of whether the ads are likely to be confusing.”

The FTC ordered the company to refrain from enforcing those prior agreements, and to avoid entering into similar agreements in the future. The order also includes provisions that, according to 1-800 Contacts, affect a broad range of activity beyond just agreements with rivals -- including its ability to enter into agreements with manufacturers and marketing affiliates.

The Order also reaches well beyond the challenged provisions,” 1-800 Contacts writes. “Although this case centers on agreements not to use certain trademarked keywords in search advertising on the internet — one of many advertising platforms — the Order deputizes the Commission as overseer of 1-800’s entire brand enforcement program.”

The company is seeking to stay those portions of the order that affect programs beyond its search-ad agreements with rivals.

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