Second Circuit Sees Eye to Eye With Warby Parker in Trademark Google Ads Dispute

While it has become common practice to bid on or purchase a competitor’s trademark to use as a search engine keyword, there remains some confusion about when such practices create liability for trademark infringement. The Second Circuit Court recently weighed in on this debate when it considered how certain uses of a third party’s trademark may be protected and allowed, while other uses may give rise to liability.

In its recent decision in 1-800 Contacts, Inc. v. Jand, Inc. dba Warby Parker, the Second Circuit analyzed the purchase and use of a competitor’s trademarks, both as a search engine keyword and in the resultant ads. The case arose when Warby Parker purchased Google search engine keywords consisting of 1-800 Contacts, Inc.’s (1-800) trademarks, including 1-800-CONTACTS and related variations. 1-800 alleged that Warby Parker not only purchased these critical and competing keywords but also used 1-800’s trademarks to create misleading paid ads in an effort to confuse consumers about the source of the ads.

Specifically, 1-800 pointed to Warby Parker’s ad copy and the deep link that accompanied that ad copy to argue that consumers would believe 1-800 was the source of the ads in question. 1-800 alleged that Warby Parker’s actions constituted trademark infringement and unfair competition, focusing on Warby Parker’s purchase of 1-800’s trademarks as search keywords, use of ad copy that was ambiguous about its source (“15% Off First Contacts Order — 90 Daily Contacts for Only $55”), and directing consumers to a landing page that mimicked 1-800’s homepage. The Second Circuit thus considered what constitutes “use” of a competitor’s trademark for purposes of determining liability, and whether any such use by Warby Parker in fact infringed upon 1-800’s trademark rights.

The Warby Decision

Taking each of these in turn, the Court of Appeals first noted that bidding on competitor trademarks for keyword search advertising is a standard and permissible practice. Advertisers often outbid competitors for certain keywords, including competitor trademarks, to boost ad placement in the sponsored section of search engine results. The Second Circuit reiterated that the mere act of purchasing trademarks for search engine optimization (SEO) does not itself constitute trademark infringement; 1-800 conceded that this is not a prohibited practice. As such, the court concluded that Warby Parker’s purchase of the keywords related to 1-800’s trademarks was permissible and did not create liability, noting “[t]his well-known marketing strategy — standing alone — cannot support a claim of trademark infringement absent additional use of 1-800’s trademarks.”

Having lost this initial argument, 1-800 had to demonstrate that Warby Parker’s remaining actions constituted impermissible use of 1-800’s trademarks and caused consumer confusion. Notably, the banner for Warby Parker’s ad did not contain any indication of source; the paid ads did not display Warby Parker’s house mark WARBY PARKER or any of 1-800’s trademarks. Rather, the ad was silent about the entity behind the ad and instead consisted of promotional slogans such as “15% Off First Contacts Order — 90 Daily Contacts for Only $55.”

After reviewing the search results and the ads themselves, the court explained that the surrounding context of an ad is critical in determining whether consumers are likely to be confused. In its review of the paid ad link at issue, the court noted that while Warby Parker’s banner did not contain Warby Parker’s trademark, the URL link to Warby Parker’s homepage (warbyparker.com) clearly indicated the source of the ad. The court further highlighted that the word “Ad” immediately preceded Warby Parker’s ad copy, signaling to consumers that the link following was a paid ad. Taken in its totality, the surrounding context of Warby Parker’s paid ad clearly labeled Warby Parker as the source of the ad. As such, the Court of Appeals concluded that the ad itself did not create a likelihood of confusion among consumers.

Last, the Second Circuit considered whether Warby Parker’s linked landing page was likely to confuse consumers about the source of the page. The linked page in question did not land on Warby Parker’s homepage but instead linked to a page that 1-800 claimed mimicked the look and feel of 1-800’s homepage; the page led consumers to a section of the Warby Parker website dedicated to the sale of contact lenses, which contained a light-blue banner and a picture of contact lens boxes. 1-800 argued that these elements were similar to elements of 1-800’s homepage. 1-800 also argued that Warby Parker’s linked landing page did not match the rest of Warby Parker’s website design, or even the linked landing web page for when someone clicks on a paid ad for “Warby Parker contacts.” 1-800 alleged that all of these elements would lead consumers to believe that 1-800 was behind the landing page associated with the paid ad.

While the lower court noted Warby Parker’s design choices and made a passing reference to the possibility of bad faith by Warby Parker, the Second Circuit maintained the web page in question did not create a likelihood of confusion among consumers — notwithstanding the overlap of design elements — because the page prominently displayed Warby Parker’s house mark on the landing page. The Court of Appeals noted that 1-800’s claim that Warby Parker copied the “look and feel” of its website would be a trade dress claim, requiring that 1-800 demonstrate the distinctiveness of its own website design. 1-800 failed to argue, let alone demonstrate, that the look and feel of its web page was protectible as trade dress. Because Warby Parker did not use 1-800’s trademarks on the landing page in question (and in fact prominently displayed its own WARBY PARKER trademark), the Second Circuit agreed with the lower court that consumers were not likely to confuse the two web pages.

1-800 also argued on appeal that the district court ignored its plausible allegations that Warby Parker’s actions created confusion among consumers about whether 1-800 was affiliated with Warby Parker. 1-800 did not provide any evidence to support this allegation. Rather, 1-800 simply stated the possibility and likelihood. The court explained that such allegations require survey evidence or anecdotal evidence from consumers demonstrating actual confusion. Without such evidence, the Second Circuit found 1-800’s statements to be conclusory and not actionable.

Having considered the totality of the circumstances surrounding Warby Parker’s paid ad, the Second Circuit concluded that Warby Parker did not infringe upon 1-800’s trademarks. Warby Parker used the 1-800 trademarks only in its initial keyword purchase and did not use those trademarks in any other context, including in the ad wording or linked landing page. These distinctions were critical, allowing Warby Parker to direct consumers to its own page without liability for trademark infringement. As a result, the Second Circuit affirmed the district court’s decision in favor of Warby Parker.

Key takeaways:

• You may bid on and purchase a competitor’s trademarks as part of your internet marketing strategy and SEO. This alone, without additional use of a competitor’s trademark, will not create liability for trademark infringement. 
• The context of a linked ad and landing page will be critical in determining liability for trademark infringement; use of a competitor’s trademark as an unseen Google Adword is acceptable, but use in ad copy likely is not. 
• There is no requirement to place your own trademark within the ad copy to identify the source of the linked landing page. 
• The linked landing page need not direct to your main homepage. You may direct consumers to a product page, provided that product page clearly identifies you as the owner of the page. 
• The look and feel of your web page may give rise to liability if it appears too similar to a competitor’s protectible trade dress; proceed with caution and be mindful of elements that resemble others’ web pages.

Goodwin brings decades of experience in advising clients on all aspects of trademark and intellectual property matters. Please contact a member of our intellectual property team with any questions.

 

This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee similar outcomes.