Legal Niches

Yesterday, Eric Goldman posted that 1-800-Contacts has filed its latest keyword advertising suit in federal court in Utah.  The company is apparently hoping for better luck than it had in its earlier forays into trademark litigation. 

Several years ago, 1-800-Contacts brought a trademark infringement claim against WhenU.com, alleging that the defendant infringed 1-800 Contacts's trademarks "by delivering advertisements to Internet users who intentionally accessed the plaintiff's website."  1-800-Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400, 404 (2d Cir. 2005).  The United States Court of Appeals for the Second Circuit reversed the trial court's award of an injunction in the case, holding that

[a] company's internal utilization of a trademark in a way that does not communicate to the public is analogous to a individual's private thoughts about a trademark.  Such conduct simply does not violate the Lanham Act, which is concerned with the use of trademarks in connection with the sale of goods or services in a manner likely to lead to consumer confusion as to the source of such goods or services.

The Second Circuit's opinion has been used several times by other courts in rejecting similar trademark infringement claims and holding that the use of another's trademark in keyword advertising is not a "use in commerce" which may support a trademark infringement action.  (For more information on 1-800-Contacts, Inc. v. WhenU.com and other early keyword advertising cases, see Jonathan D. Frieden and Sean Patrick Roche, E-Commerce: Legal Issues of the Online Retailer in Virginia, 14 RICH. J. L. & TECH. 5 (Fall 2006), http://law.richmond.edu/jolt/v13i2/article5.pdf.)

Thomas O'Toole at the E-Commerce and Tech Law Blog thinks that the Tenth Circuit (which includes Utah) may be more sympathetic to 1-800-Contacts's claims.  If so, we may be creeping closer to the day when the Supreme Court will have to weigh in on the issue.