1-800 Contacts, Inc. v. WhenU.com, Inc., 309 F. Supp. 2d 467 (S.D.N.Y. 2003)

In 1-800 Contacts, the plaintiff eye-product retailer sells and markets replacement contact lenses through its website, telephone, and mail orders.   The plaintiff owns 1-800Contacts.com website.  Additionally,
the company owns several trademarks including "We Deliver, You Save," and "1-800 Contacts." One of the elements contained in WhenU’s SaveNow proprietary directory included the URL “1800Contacts.com.” Thus, when computer users who had the SaveNow software installed on their computers accessed the plaintiff’s website, a pop-up advertisement for a direct competitor would appear on the user’s screen. As a result of this unsolicited competition, 1-800 Contacts filed a motion for a preliminary injunction to enjoin WhenU from delivering these competitive pop-up advertisements in violation of federal trademark and copyright laws.  Although following the previous precedent for dismissal of copyright infringement claims, the District Court for the Southern District of New York, contrary to previous the pop-up decisions, held that WhenU “used” the 1-800 Contacts trademark in commerce and thereby granted the preliminary injunction.

Similar to the previous pop-up decisions, the district court defined “use” according to the “use in commerce” definition of section 1127.  The court restated that a trademark is ‘used in commerce’ for purposes of the Lanham Act ‘when it is used or displayed in the sale or advertising of services and the services are rendered in commerce and the person rendering the services is engaged in commerce in connection with the services.  However, unlike the previous decisions which narrowed the definition of “use” to fit the boundaries of section 1114, the district court interpreted this phrase as its literal meaning.

The court held that WhenU “used” 1-800 Contacts’ trademarks in two ways.  First, the court concluded WhenU caused the competitor’s pop-up advertisement to appear when users accessed the plaintiff’s website while the screen displayed the 1-800 Contacts trademark.  As a result, WhenU displayed the 1-800 Contacts trademark in the advertising of the competitor’s services. Thus, the court considered this display sequence “use” under the Lanham Act. Additionally, the court concluded that WhenU capitalized on the SaveNow user’s prior knowledge of the reputation and goodwill related to the plaintiff’s trademark, which was demonstrated by the fact that the user typed “1-800 CONTACTS” into the search engine to access the plaintiff’s website.  Furthermore, the court found that WhenU used 1-800 Contact’s trademark in commerce by including it in the SaveNow directory and using it as a “trigger” to dispatch competitor pop-up advertisements that appeared on the user’s screen within moments of being initiated.  Accordingly, the district court held that WhenU “used” the plaintiff’s mark in commerce.

The district court for the Southern District of New York’s decision in 1-800 Contacts marked a dramatic reversal in the trend to ignore a company’s intellectual property rights in cyberspace. The court’s decision denoted an important victory for e-businesses’ hoping to curb competition from pop-up advertisements.  Moreover, the court adopted a working definition of “use in commerce” that helped prevent trademark piracy on the Internet.  However, this celebration was short lived, as WhenU quickly appealed the decision to the United States Court of Appeals for the Second Circuit

Continue to the upcoming Second Circuit decision