1-800 Contacts v. WhenU.com

Citation: 1-800 Contacts, Inc. v. WhenU.com, Inc., 309 F. Supp. 2d 467 (S.D.N.Y. 2003), rev’d and remanded, 414 F.3d 400, 75 U.S.P.Q.2d 1161 (2d Cir.), ''cert. denied,'' 546 U.S. 1033 (2005).

Factual Background
The appellee, 1-800 Contacts (“1-800”), sued appellant WhenU.com (Whenu”) for trademark infringement. 1-800 claimed that WhenU’s sale and distribution of pop-up advertising keyed to 1-800’s trademark was a violation of the Lanham Act.

An Internet user first downloads WhenU’s software. Once downloaded onto the user’s computer, the software monitors the user’s online activities. WhenU has a directory containing web addresses, search terms and other information.

If a user goes to one of the addresses in the WhenU database, or uses a search term in the database, a pop-up advertisement will be displayed on the user’s computer screen. The advertisements are selected on the theory that if the user is going to a particular website or using a particular search term, that user will be interested in certain advertisements that WhenU is distributing. So, for example, if a user was going to the 1-800-Contacts website, WhenU might cause a pop-up ad for a competitor’s site to appear in a window obscuring the home page of 1-800’s website. The user would then be required to close that pop-up window in order to view 1-800’s website.

Trial Court Decision
The federal district court had entered a preliminary injunction against WhenU, barring it from using or otherwise displaying 1-800’s trademarks, or anything confusingly similar to such trademarks in connection with WhenU’s contextually relevant advertising. WhenU appealed.

Appellate Court Decision
The appellate court concluded that the district court had erred as a matter of law in entering the injunction, since there was no showing that WheuU had “used” 1-800’s trademarks within the definition of that term in the Lanham Act.

The Lanham Act defines “use in commerce” as follows:


 * For purposes of this Chapter, a mark shall be deemed to be used in commerce &mdash; (1) on goods when &mdash; (A) it is place in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto, or if the nature of the goods makes such placement impracticable, then on documents associated with the goods or their sale, and (B) the goods are sold or transported in commerce, and (2) on services when it is used or displayed in the sale or advertising of services and the services are rendered in commerce. ..

The district court had found “use” of the 1-800 trademarks in two ways:


 * 1. By causing a pop-up ad to appear on a user’s screen when he/she attempts to access the 1-800 website is displaying the mark “in the . . . advertising of” WhenU’s advertiser’s services, and thus is “using” 1-800 marks.


 * 2. By incorporating 1-800’s domain name  in its directory of terms that trigger pop-up ads, WhenU “uses” 1-800’s mark “to advertise and publicize companies that are in direct competition with 1-800.

Rejecting the district court’s analysis, the Second Circuit Court of Appeals held that the use of the 1-800 mark in the WhenU internal directory is not a “use” of the mark under the Lanham Act:


 * A company’s internal utilization of a trademark in a way that does not communicate it to the public is analogous to a[n] 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 or goods or services in a manner likely to lead to consumer confusion as to the source of such goods or services.

As for the placement of the pop-up advertisements on the user’s screen contemporaneously with the 1-800 home page, the appellate court again rejected the district court’s conclusion that this is a “use” under the Act, stating:


 * The fatal flaw with this holding is that WhenU’s pop-up ads do not display the 1-800 trademark. The district court’s holding, however, appears to have been based on the court’s acceptance of 1-800’s claim that WhenU’s pop-up ads appear “on” and affect 1-800s website. . . As we explained above, the WhenU pop-up ads appear in a separate window that is prominently branded with the WhenU mark, they have absolutely no tangible effect on the appearance or functionality of the 1-800 website.


 * More important, the appearance of WhenU’s pop-up ad is not contingent upon or related to 1-800’s trademark, the trademark’s appearance on 1-800’s website, or the mark’s similarity to 1-800’s website address. Rather, the contemporaneous display of the ads and trademarks is the result of the happenstance that 1-800 chose to use a mark similar to its trademark as the address to its web page and to place its trademark on its website. The pop-up ad . . . would appear even if 1-800’s trademarks were not displayed on its website.