1-800 Contacts, Inc. v. Lens.Com, Inc. - 722 F.3d 1229 (10th Cir. 2013)

Rule:

A defendant may be held liable for service-mark infringement even though it has not directly infringed on the plaintiff's mark through its own acts. The Lanham Act, 15 U.S.C.S. § 1051 et seq., incorporates common-law agency principles: a principal may be held vicariously liable for the infringing acts of an agent. Contributory infringement can violate the Act. Akin to aiding and abetting, contributory infringement generally consists of either intentionally causing or knowingly facilitating the infringement of the plaintiff's mark by a third party. The Inwood decision formulated the theory as follows: Liability for trademark infringement can extend beyond those who actually mislabel goods with the mark of another. Even if a manufacturer does not directly control others in the chain of distribution, it can be held responsible for their infringing activities under certain circumstances. Thus, if a manufacturer or distributor intentionally induces another to infringe a trademark, or if it continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement, the manufacturer or distributor is contributorially responsible for any harm done as a result of the deceit.

Facts:

Plaintiff 1-800 Contacts, Inc. owned the federally registered service mark 1800CONTACTS. Defendant Lens.com, Inc. was one of plaintiff’s competitors. To police the use of its mark, plaintiff entered different variations of the mark into Google searches and monitored what search results were displayed. When plaintiff found that several searches generated paid ads for defendant’s websites, it concluded that defendant had reserved the mark as a keyword. After attempting to resolve the situation informally, plaintiff sued defendant for service-mark infringement, arguing that defendant had infringed the 1800CONTACTS mark by purchasing keywords resembling the mark. According to plaintiff, this conduct had directed potential customers for plaintiff to defendant by creating what was known as "initial-interest confusion," which can be actionable under the Lanham Act. Plaintiff also alleged that certain third-party marketers hired by defendant had also purchased keywords resembling the mark and that at least one affiliate was using the mark in the text of its online ads. Plaintiff sought to hold defendant secondarily liable for its affiliates' conduct. The district court awarded summary judgment to defendant on all claims. On the direct-liability claim and most of the secondary-liability claims, the court ruled that plaintiff had raised no genuine issue of fact regarding the likelihood of initial-interest confusion. On the remaining secondary-liability claims—which concerned the use of plaintiff’s mark in the content of ads displayed on Google's site—the court ruled that plaintiff’s evidence was insufficient to hold defendant liable for any misconduct of its affiliates. Plaintiff appealed. 

Issue:

Was the Lanham Act, 15 U.S.C.S. § 1051 et seq., violated by an advertiser's use of keywords that resembled a competitor's service mark? 

Answer:

No, except with respect to the contributory-infringement claim.

Conclusion:

The court held that for the most part, the defendant did not violate the Lanham Act. Regarding direct liability for ads placed by the defendant, the contested issue was likelihood of confusion. The plaintiff’s theory of confusion was initial-interest confusion. According to the court, the plaintiff’s direct-infringement claim failed for lack of adequate evidence of initial-interest confusion. Next, the plaintiff’s theories of secondary liability were vicarious liability and contributory infringement. Absent any evidence of direct infringement, the defendant could not be held secondarily liable; thus, the district court properly granted summary judgment to the defendant on keyword use. The plaintiff’s only remaining claim was that the defendant was secondarily liable for an affiliate's publication of ads that featured variations of the mark in their text. Regarding vicarious liability, the court found that the subjective component of actual authority was absent. The plaintiff did present enough evidence to support a contributory infringement claim, which had to be predicated on some direct infringement by the third party. Accordingly, the court affirmed on all issues but one: contributory infringement. The court reversed and remanded for further proceedings on the contributory-infringement claim.