WhenU floored by pop-up ad u-turn

In 1-800 Contacts Inc v WhenU.com, the US District Court for the Southern District of New York has granted 1-800 Contacts Inc's motion for a preliminary injunction, finding that WhenU's pop-up advertising was likely to violate the Lanham Act. The decision marks a reversal of fortune for pop-up ad provider WhenU as federal courts in Michigan and Virginia had previously held that its ads did not infringe trademark law (see Important U-Haul pop-up decision should help clarify legal landscape and WhenU pops up with another victory).

In the case at hand, WhenU's pop-up ads promoted Vision Direct, a competitor of 1-800 Contacts and appeared when internet users accessed 1-800 Contacts' website. 1-800 Contacts, which owns the 1-800 CONTACTS mark, took issue with the ads. It filed trademark and copyright infringement proceedings against WhenU and Vision Direct. It also brought a claim against Vision Direct under the Anti-cybersquatting Consumer Protection Act (ACPA) as a result of its registration of 'www1800Contacts.com'.

Although the district court determined that 1-800 Contacts was not likely to succeed on its copyright claim, it ruled that WhenU's pop-up ads were likely to confuse consumers. The court held that the ads constituted "use in commerce" under the Lanham Act. It stated that WhenU was using 1-800 Contacts' mark (i) simply by causing pop-up ads to appear when users accessed 1-800 Contacts' site, and (ii) because it had included 1-800 Contacts' URL (uniform resource locator) in its directory of terms that would trigger the pop-up advertisements.

Having found that WhenU's pop-up ads constituted commercial use under the Lanham Act, the court then analyzed whether the pop-up ads were likely to cause confusion. The court first recognized that the concept of "initial interest confusion" was applicable because the ads allowed Vision Direct to gain crucial credibility during the "initial phases of the deal". The court further ruled that 1-800 CONTACTS is an inherently distinctive trademark and that WhenU's use of '1800contacts.com' in its directory of terms constituted use of a similar mark. The court also recognized that Vision Direct was offering a service that was identical to that offered by 1-800 Contacts' - the sale of replacement contact lenses over the Internet. The court was not persuaded by WhenU's argument that its use of a disclaimer on the pop-up ad alleviated the likelihood of consumer confusion.

Accordingly, the court granted 1-800 Contacts' motion for a preliminary injunction preventing WhenU's and Vision Direct's use of the pop-up ads.

With respect to 1-800 Contacts' claim under the ACPA, the court observed that Vision Direct had registered the domain name 'www1800contacts.com' in bad faith to redirect consumers from 1-800 Contacts' site. As a result, it ruled that 1-800 Contacts was likely to succeed on this claim as well.

Howard Michael, Brinks Hofer Gilson & Lione, Chicago