The Federal Trade Commission is asking the Second Circuit federal appeals court to uphold a finding that 1-800 Contacts violated antitrust law by preventing rivals from using its trademarked name in search ads. Meanwhile, 1-800 Contacts is also defending against a class-action lawsuit brought on behalf of consumers centering on the same conduct, but also naming additional retailers as defendants, including National Vision, Vision Direct, Luxxotica and Walgreens. Luxxotica recently agreed to pay $5.9 million to settle the claims against it in the lawsuit and National Vision settled for $7 million in 2017.
The dispute centers on 1-800 Contacts’s business practices dating back to 2004, when it brought or threatened legal action against numerous rivals accusing them of infringing its trademarks by purchasing search ads using the phrase “1-800 Contacts” to trigger a pay-per-click search ad. From 2004 through 2013, the company sued or threatened to sue at least 13 competitors over alleged trademark infringement on various search engines. 1-800 Contacts asserted that the act of purchasing ad words using its registered mark violated its trademark. In most cases, the rival companies responded to these threats or lawsuits by agreeing to enter agreements requiring them to cease bidding on search engine ad words using the 1-800 Contacts mark. Only Lens.com fought back and largely prevailed in the suit. Continue reading ›