1-800 Contacts Seeing Red Over Alleged Trademark Infringement

Can a company purchase a competitor’s trademark as a keyword to help its Internet search results? These are murky legal waters, and contact lens distributor 1-800 Contacts has waded into them again. A frequent litigant over use of its trademarks, 1-800 Contacts just sued the Walgreen drugstore chain in federal district court in Utah. 1-800 Contacts believes consumers are confused when they run a search on variants of 1-800 contacts, and in their results they see a link for Walgreen’s website and contact lens offerings. As of today, I confirmed that Walgreen’s website appeared on the right of the screen in search results for searches under “1-800 Contacts,” and “1-800Contacts” but not under “1 800 Contacts.” When it did appear, it was as a sponsored link.

Whether 1-800 Contacts succeeds will have a lot to do with what viewers of these results think about Walgreen’s relationship to 1-800 Contacts. The law is still not settled when it comes to how trademarks work in the context of Internet search engines, but the major premise of trademark law is that it protects a company’s goodwill and brand identity against competitive confusion. Even though 1-800 Contacts has filed suit in Utah, where the governing case law is favorable and allows a claim based on purchase of a competitor’s trademark, 1-800 Contacts still has to show that consumers are being confused. If the sponsored link is the only basis for confusion, 1-800 Contacts has some problems. I suspect most Internet users are now aware of the difference between organic search results, based upon a search engine’s algorithm, and sponsored links, for which a competitor pays.

There’s another interesting twist. The Complaint implies that though Walgreen itself may have stopped purchasing 1-800 Contact’s trademarks, Walgreen has an obligation to go further and affirmatively purchase “negative keywords” to make sure that its website does not come up in searches for 1-800 Contacts. In effect, that means paying Google not to display the Walgreen’s site when someone searches on certain terms. But Walgreen does not have any control over the algorithm used by Google or other search engines. In responding to 1-800 Contact’s claim, then, it can fairly pose the question: Should a business be required to handicap itself in the market, and in the process, restrict the information that consumers have about an alternative source of products?

--Andrew Flake

Andrew B. Flake is a partner in the Litigation Group at Arnall Golden Gregory LLP (andrew.flake@agg.com). Our firm serves the business needs of growing public and private companies, helping clients turn legal challenges into business opportunities. We don't just tell you if something is possible, we show you how to make it happen. Please visit our website for more information, www.agg.com.