Appeals Court Weighs Battle Over Search Ads

Contact lens retailer 1-800 Contacts on Friday asked a federal appellate court to revive a lawsuit accusing rival Warby Parker of wrongly using the term “1-800 Contacts” to drive search users to Warby Parker's website.

In a 30-minute argument before the 2nd Circuit Court of Appeals, attorney Stephen Fishbein said Warby Parker was “siphoning off” consumers who searched for 1-800 Contacts.

He said people who type “1-800 Contacts” into a search engine expect to find that company's website, and that WarbyParker “hijacked that consumer interest in 1-800 Contacts” by using it to trigger a search ad.

“1-800 Contacts has invested hundreds of millions of dollars in marketing, promotion and customer service,” he told a three-judge appellate panel. “That investment, which the trademark law and policy encourages, has resulted in millions of customers using 1-800's trademarks to search the internet for 1-800 Contacts' website.”



Warby Parker attorney Roxanne Elings countered that “an appreciable number of consumers are not likely to be confused” when they conduct online searches and are served with ads that were triggered by trademarks.

Elings also said using a rival's trademark to trigger an ad was “legal in this day and age,” noting that 1-800 Contacts previously lost a similar complaint it brought against rival

Friday's arguments came in a battle dating to August of 2021, when 1-800 Contacts sued Warby Parker for trademark infringement based on search ads.

U.S. District Court Judge Kevin Castel in New York threw out 1-800 Contacts' case before either side presented evidence, ruling that even if 1-800 Contacts' allegations were true, Warby Parker's search ads would not have been likely to confuse consumers. He wrote that consumers today are “sophisticated enough” to review search results and websites before making purchases.

1-800 Contacts says questions about consumer confusion are factual, and that it should have been able to prove its contentions at a trial.

Circuit Judge Denny Chin pressed Warby Parker's attorney on that point.

“Was the district court making a finding of fact when it concluded that these days, consumers are so sophisticated, and know the internet so well, that they are not likely to be confused?... Is that not a finding of fact?” Chin asked Elings.

She responded that other judges have ruled it wasn't necessary to hold a trial in similar cases -- particularly when, as was the situation with Warby Parker, the ad and landing page contained no reference to 1-800 Contacts.

The judges also questioned Fishbein about whether 1-800 Contacts could proceed if consumers who made a purchase from Warby Parker's site understood that they weren't buying lenses from 1-800 Contracts.

Fishbein said the answer was yes, based on the concept of “initial interest confusion” -- a controversial doctrine dating to the 1970s that allows companies to sue if consumers are temporarily confused by a rival's use of a trademark, even if they are no longer confused by the time they make a purchase.

The appellate panel questioned whether that decades-old concept was a good fit for disputes over search ads, given that consumers today are familiar with search engines and online shopping.

1-800 Contacts has a long history of suing competitors over their search ads.

Between 2004 and 2013, the company sued or threatened to sue at least 14 other eyewear and contact lens companies for trademark infringement. Thirteen of those companies settled with 1-800 Contacts by agreeing to restrict the use of its trademark in search advertising.

Those prior settlements were at the center of an antitrust action by the Federal Trade Commission, which ruled several years ago that 1-800 Contacts acted anticompetitively by forging deals with rivals that limited their ability to advertise.

The 2nd Circuit later reversed the FTC's ruling, writing that courts should defer to settlement agreements in trademark cases, even if the deals limited competition.

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