The U.S. Court of Appeals for the Second Circuit recently held there was no "use" of a trademark within the meaning of the Lanham Act either where a defendant marketing company used activity monitoring software that caused pop-up ads of the plaintiff’s competitors to appear when computer users attempted to access the plaintiff’s website, or where the trademark owner’s website address was included in an unpublished directory of terms triggering the delivery of those pop-up ads. 1-800 Contacts, Inc. v. WhenU.com, Inc., Case. No. 04-0026-cv (L) (2nd Cir. June 27, 2005) (Walker, C.J.).
The defendant, WhenU, offers computer users a software package comprising a directory of unpublished website addresses and search terms. As users search the internet, this software contemporaneously analyzes their interests, randomly selecting and delivering to each user various pop-up ads relating to corresponding product or service categories. The plaintiff, 1-800 Contacts, alleged the defendant infringed its trademarks by delivering pop-up ads of its direct competitors to users who intentionally accessed the plaintiff’s website. The district court agreed, granting the plaintiff a preliminary injunction. WhenU appealed.
On appeal, the Second Circuit not only reversed the grant of the injunction but dismissed the plaintiff’s trademark infringement claims with prejudice. In so doing, the court concluded that any number of activities may be "in commerce" or may create a likelihood of confusion, but such activity is not actionable under the Lanham Act absent the "use" of a mark.
The court found the defendant did not "place" plaintiff’s trademarks on any goods or services "in order to pass them off as emanating from or authorized by 1-800." Indeed, the court noted the defendant’s pop-up ads did not even display the plaintiff’s trademarks. Rather, the ads appeared in a separate window branded with the WhenU mark. The court further noted the ads did not alter or affect the plaintiff’s website in any way, nor did they divert or misdirect users away from the plaintiff’s website. The pop-up ads would be triggered by a number of search terms, e.g., "contacts" or "eye care," regardless of a user’s search for the plaintiff’s website address or the appearance of the 1-800 trademark on the website, and they were randomly selected, i.e., a competitor could not pay to have its ad appear on certain websites or otherwise manipulate the appearance of these ads. While such overall conduct may have been an attempt by the defendant to capitalize on the plaintiff’s goodwill and reputation, it did not constitute trademark infringement under the Lanham Act because there was no improper "use" of the plaintiff’s trademarks.
Additionally, the court found the defendant included the plaintiff’s website address, not the "1-800" trademark, on its internal directory, and this directory was inaccessible to users and the general public. The court concluded "[a] company’s internal utilization of a trademark in a way that does not communicate it to the public is analogous to a [sic] individual’s private thoughts about a trademark. Such conduct simply does not violate the Lanham Act."
Practice Note
The Second Circuit seems to refine further the limits of trademark law as applied to the internet, viewing WhenU’s practices merely as "product placement" marketing strategies for the internet where the user is distracted with additional consumer choices for related products or services.
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