United States - Review of WhenU Pop-Up Case Refused by Supreme Court
The U.S. Supreme Court refused to grant certiorari to review the ruling of the Court of Appeals for the Second Circuit in 1-800 Contacts, Inc. v. WhenU.com, Inc., in which the Second Circuit held that the use of a company’s domain name to trigger contextually relevant Internet advertising does not qualify as trademark use under the Lanham Act.
1-800 Contacts, Inc. sued WhenU.com, a provider of Internet pop-up advertising, alleging trademark infringement under the Lanham Act. WhenU.com is the developer of an advertising program called SaveNow that is bundled with free software and installed on computers as a condition to using the free software. Once installed, SaveNow monitors Internet activity and searches its directory of keywords and website addresses which are associated with categories of goods and/or services. If a search term employed by a computer user while browsing the Internet matches one of the SaveNow database entries, an advertisement relating to the category of goods and/or services is randomly selected and displayed as a pop-up, pop-under or panoramic ad. Often, the SaveNow software results in the display of a competitor’s advertisement being displayed to a website owner’s potential customer.
1-800 took issue with WhenU’s inclusion of its “1800contacts.com” domain name, which is nearly identical to its 1-800 CONTACTS trademark, in the SaveNow directory, claiming that the pop-up advertisements triggered by entering the domain name into an Internet browser interfered with the display of the 1800contacts.com website. The district court, finding 1-800 likely to prevail on its claims of trademark infringement, issued a preliminary injunction enjoining WhenU from using 1-800’s domain name. WhenU appealed.
On appeal, the Second Circuit Court of Appeals reversed the district court’s entry of a preliminary injunction and ordered that the court dismiss 1-800’s trademark infringement claims. The Second Circuit found that WhenU’s use of “1800contacts.com” in its SaveNow directory did not qualify as trademark use, since:
• WhenU’s pop-up ads did not display the 1-800 trademark;
• the appearance of WhenU’s pop-up ads in conjunction with the 1-800’s website was the result of 1-800’s decision to use a domain name similar to its trademark as its website address, not the result of WhenU including 1-800’s trademark in its directory; and
• other keywords and domain names also triggered the same pop-up ads that were triggered by “1800contacts.com.”
Although WhenU sought to capitalize on Internet users’ attempts to access the 1-800’s website, it did not “use” the 1-800 trademark to do so. The Court analogized WhenU’s pop-up ad placement strategy to the retail practice of placing store brand generic products in close proximity to trademarked products and also noted that WhenU does not allow clients to select the triggers for their ads. The Court concluded that 1-800 had failed to establish “use” and that:
“ ‘use’ must be decided as a threshold matter because, while any number of activities may be ‘in commerce’ or create a likelihood of confusion, no such activity is actionable under the Lanham Act absent the ‘use’ of a trademark.”
The Second Circuit decision and the Supreme Court’s failure to grant certiari appear to be a boon to Internet pop-up advertisers. WhenU’s use of 1-800’s domain name and not its actual trademark, however, leaves open the question of whether using a trademark to trigger advertising would amount to infringing use under the Lanham Act.
