1-800 Contacts, Inc. v. JAND, Inc., DBA Warby Parker
119 F.4th 234 (2d Cir. 2024). (2024)
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Rule of Law:
The mere act of purchasing a competitor's trademark as a search engine keyword does not, by itself, constitute trademark infringement under the Lanham Act; rather, a likelihood of consumer confusion must be plausibly alleged based on the advertisement's visible appearance and content, and any linked landing page.
Facts:
- 1-800 Contacts, Inc. is an online retailer of contact lenses, and many consumers navigate to its website by searching for its registered trademarks, such as '1-800 Contacts' and '1800contacts.com'.
- Warby Parker, originally an online retailer of eyeglasses, entered the online contact lens marketplace around November 2019, becoming a competitor of 1-800 Contacts.
- Warby Parker purchased 1-800 Contacts' trademarks as keywords in search engine advertising auctions (e.g., Google Ads).
- When consumers searched for 1-800 Contacts' trademarks, Warby Parker's paid advertisement appeared as a sponsored result, labeled 'Ad,' displaying 'www.warbyparker.com,' and offering a discount (e.g., '15% Off First Contacts Order').
- Clicking on Warby Parker's paid advertisement directed consumers to a 'Deep Linked Ad Page' on warbyparker.com, which featured a light blue rectangular box, images of contact lens boxes, and a discount offer.
- 1-800 Contacts alleged that Warby Parker's Deep Linked Ad Page intentionally used a layout and color scheme that confusingly resembled 1-800 Contacts' website's appearance, and differed from Warby Parker's standard homepage or its generic contact lens landing page.
Procedural Posture:
- 1-800 Contacts, Inc. filed a complaint in the United States District Court for the Southern District of New York, alleging trademark infringement and unfair competition against JAND, Inc., d.b.a. Warby Parker.
- Warby Parker filed a motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c).
- The District Court for the Southern District of New York (Castel, J.) granted Warby Parker’s motion for judgment on the pleadings in its entirety, dismissing the complaint.
- 1-800 Contacts, Inc. appealed the district court's judgment to the United States Court of Appeals for the Second Circuit, with 1-800 Contacts, Inc. as Plaintiff-Appellant and JAND, Inc., d.b.a. Warby Parker as Defendant-Appellee.
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Issue:
Does the mere purchase of a competitor's trademark as a search engine keyword, combined with allegedly source-ambiguous ads and a deep-linked webpage, plausibly allege a likelihood of consumer confusion sufficient to establish trademark infringement under the Lanham Act when the competitor's trademarks are not displayed in the ads or on the landing page?
Opinions:
Majority - Eunice C. Lee, Circuit Judge
No, the mere purchase of a competitor's trademark as a search engine keyword, even when combined with allegedly source-ambiguous ads and a deep-linked webpage, does not plausibly allege a likelihood of consumer confusion when the competitor's marks are not actually displayed in the advertisements or on the landing page itself. The Second Circuit affirmed the district court's judgment, reiterating that simply purchasing a competitor’s trademark as a keyword, without additional use of the mark in the visible advertisement or landing page, does not constitute trademark infringement. The court applied the eight-factor Polaroid test to assess the likelihood of confusion, emphasizing that 'the labeling and appearance of the advertisements and the surrounding context on the screen displaying the results page' is a critical factor. It found that while 1-800's marks were strong and some factors (e.g., products' proximity, relative quality, and consumer sophistication) might slightly favor 1-800, the critical factor of 'similarity of the marks' heavily favored Warby Parker. The court noted that Warby Parker's ads were clearly labeled 'Ad,' displayed 'www.warbyparker.com,' and did not use 1-800 Contacts' marks. Similarly, the deep-linked landing page prominently displayed 'Warby Parker' and was devoid of 1-800's marks. Allegations of actual confusion were deemed conclusory without supporting evidence like consumer surveys. The court also clarified that 1-800's allegations of 'mimicry' in website design, without pleading protectable trade dress, could not form the basis of a trademark infringement claim focused solely on the use of trademarks.
Analysis:
This case solidifies the principle that trademark infringement in keyword advertising hinges on the visible elements of the advertisement and landing page, not just the underlying keyword purchase. It reinforces the high bar for proving 'likelihood of confusion,' particularly in the online context, where consumers are presumed to be able to discern sources when names are clearly displayed. The ruling narrows the scope of actionable trademark infringement claims stemming from keyword bidding, suggesting that clear branding in ads and on landing pages can largely mitigate claims of confusion, even when a competitor's name is used for targeting. This decision provides guidance for online advertisers, affirming the permissibility of bidding on competitor keywords as long as the resulting advertisements and landing pages clearly identify the advertiser and do not display the competitor's marks.
