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Trademark Infringement in Keyword Advertising: 1-800 Contacts Brings Things into Focus

Companies pay big bucks to have their advertisements appear alongside the results of certain Google searches.  It’s called keyword advertising.  For example, Nike may pay for its ad to be shown on a search results page for “basketball shoes.”  But what about a company paying for its ad to appear alongside the search results for its competitor’s name?  Is that fair?

Not according to 1-800 Contacts, Inc.  The giant online lens retailer has taken the position that its competitors paying for advertising space on a search results page for “1-800 Contacts” is trademark infringement.  And over the last decade, 1-800 Contacts, Inc. has allegedly entered into contracts with its competitors to stop them from show up in “1-800 Contacts” Google searches.

But 1-800 Contacts, Inc.’s position may have been a little near-sighted.  In 2013 the U.S. Court of Appeals for the Tenth Circuit rejected 1-800 Contacts’ trademark infringement argument.  And about three months ago the Federal Trade Commission targeted 1-800 Contacts, Inc. for violations of law related to its trademark enforcement practices.

These recent developments are causing 1-800 Contacts, Inc. a little double vision.  Nearly 15 years ago it sued a software vendor for trademark infringement because the vendor made it so that, after people accessed the 1-800 Contacts website, pop up ads for 1-800 Contacts’ competitors would appear.  But there the court found no infringement either.

So, can a company bid on a competitor’s trademark to be used as a keyword for its Google AdWords campaign?  The short answer is yes.  But there are many factors to consider in trademark infringement, which is why this issue is still a little blurry.  Perhaps clarity will follow 1-800 Contacts’ dispute with the FTC.

By: Benjamin L. Mitchell

Ben Mitchell

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