1-800 Contacts, Inc. v. whenu.com, Inc. And Vision Direct, Inc.
75 U.S.P.Q. 2d (BNA) 1161, 414 F.3d 400, 2005 U.S. App. LEXIS 12711 (2005)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
Including a trademarked website address in an internal, unpublished directory to trigger competitor pop-up advertisements, and the resulting display of those ads in a separate, branded window, does not constitute a 'use in commerce' of the trademark under the Lanham Act.
Facts:
- WhenU.com, Inc. ('WhenU') distributes a free proprietary software called 'SaveNow' that computer users voluntarily download, often as part of a software bundle.
- Once installed, the SaveNow software monitors a user's internet activity, including websites visited and terms typed into a browser.
- WhenU maintains a non-public, internal directory of website addresses and search terms, which includes 1-800 Contacts' website address.
- When a user with SaveNow navigates to the 1-800 Contacts website, the software recognizes the address from its directory and is triggered.
- The software then causes a pop-up advertisement for a competitor of 1-800 Contacts, Inc. ('1-800') to appear on the user's screen.
- These pop-up ads are displayed in a separate window that is branded with the WhenU name and do not alter the content or functionality of the 1-800 website.
Procedural Posture:
- 1-800 Contacts, Inc. sued WhenU.com, Inc. in the United States District Court for the Southern District of New York for trademark infringement under the Lanham Act.
- 1-800 Contacts moved for a preliminary injunction to stop WhenU's software from generating pop-up ads when users visited its website.
- The district court granted the preliminary injunction in favor of 1-800 Contacts, finding a likelihood of success on the trademark claims.
- WhenU.com, Inc., as the appellant, filed an interlocutory appeal of the district court's preliminary injunction order to the United States Court of Appeals for the Second Circuit.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a software company's inclusion of a trademarked website address in an internal directory to trigger competitor pop-up ads, and the resulting display of those ads in a separate, branded window, constitute a 'use in commerce' of the trademark under the Lanham Act?
Opinions:
Majority - John M. Walker, Jr.
No. A software company's conduct does not constitute a 'use' of a trademark under the Lanham Act where it merely includes a website address in a proprietary, internal directory to trigger pop-up ads and causes those ads to appear in a separate, branded window. The court reasoned that 'use' requires the placement of a mark on goods or services or its display in the sale or advertising of services. Here, WhenU's inclusion of the website address in its hidden directory is not a public-facing use that communicates the mark to consumers; it is an internal, functional use analogous to a private thought, which is not actionable. Furthermore, the pop-up ads themselves do not display 1-800's trademark; they appear in a distinct, separate window clearly branded as 'A WhenU Offer' and have no tangible effect on the 1-800 website. The court analogized this practice to a retail store placing its generic products next to trademarked competitors on a shelf, which is a permissible form of competition, not trademark infringement.
Analysis:
This decision significantly narrowed the definition of 'use in commerce' under the Lanham Act in the context of emerging internet advertising technologies like adware. It established that an internal, functional use of a trademark that does not display the mark to consumers is not an actionable infringement. This ruling provided legal protection for certain adware models, distinguishing them from practices like selling trademarked keywords, where the mark itself is sold as a commodity to trigger advertising. The case highlighted a circuit split on applying traditional trademark principles to the internet, creating a more defendant-friendly standard in the Second Circuit for cases not involving direct reproduction of a mark or diversion of web traffic.
