In my opinion, this is the most significant Internet legal ruling of the first decade of the new millennium. (Originally posted December 30, 2010 but inadvertently deleted)
- I am not an attorney, so my thoughts are an opinion uninformed by professional legal training.
- My original interest in the case had to do with SEO (Search Engine Optimization) practices in which every marketeer engages and which would have been outlawed had the plaintiff won his lawsuit.
- This is one of the few federal cases that deals with who-owns-what? on the Internet, which means…
- This case directly relates to the legality of anyone attacking and trying to gain access to my servers.
- Between 2003 and 2008, 1-800CONTACTS spent $11 million advertising with Google alone [p.2]. Over the same period of time, LENS.COM spent between $3 million and $4.7 million in Internet advertising [p.3]. LENS.COM used 9 keywords contested by 1-800CONTACTS to generate about 1,626 impressions, 25 clicks, and about $20.51 in profits. That's right. 1-800CONTACTS declared war over $20 in profits. Obviously, this sounded ridiculous even to 1-800CONTACTS, so they pulled in LENS.COM affiliates (of which there were over 10,000 [p.11]. I'll talk about that later.
- But dig this. While 1-800CONTACTS went to war over $20 in profits, they engaged in buying "1-800-lenses" and similar keywords which generated 91,768 impressions, 8,477 clicks and about $219,314 in profits [p.8] for them! Hummmm. Same behavior. Reminds me of the schizophrenic line out of Blazing Saddles as Cleavon Little holds a gun to his own head and says, "Drop your weapons or I'll shoot the…[African American]."
- Not to be daunted, 1-800CONTACTS admitted that their suit was for more than 1,600 impressions generated by LENS.COM, but for the activities of LENS.COM affiliates. Doing the "click-arithmetic" conversion, even the affiliates "haul" was a pittance [p.13]. 480,000 first impressions and 65,183 second and third impressions generated by the affiliates accounted for 3,515 clicks or (using the $25.51 in profits from 25 clicks metric) approximately $3,586.71 in profits. Okay, you could buy a used Yugo for that kind of dough. Sheesh!
- Both law firms engaged in the laughable "Hey-let's-crank-up-the-billable-hours" game as illustrated on page 15 of the ruling: "The following day, Plaintiff's counsel sent a return e-mail thanking Defendant's counsel for discussing the matter with him that morning. He further stated, '[w]e appreciate your client's willingness to work towards an amicable solution on this matter.' He then listed twenty terms and asked defendant and its affiliates to implement negative matching for the specified terms." They probably each billed their clients for the used Yugo based on that one call and associated action items.
- [p.16] Since 1-800CONTACTS alleged confusion, they had to prove it. While earlier courts [p.25] concluded that "…use of another's mark 'to trigger internet advertisements for itself,' is a use in commerce…", Judge Waddoups said (in effect), "Get serious!" [p.31] "Plaintiff asserts that whenever a Lens.com advertisement appears when a consumer enters the search term '1800Contacts,' it is akin to a consumer asking a pharmacist for Advil and the pharmacist handing the consumer Tylenol. This analogy mischaracterizes how search engines function. A more correct analogy is that when a consumer asks a pharmacist for Advil, the pharmacist directs the consumer to an aisle where the consumer is presented with any number of different pain relievers, including Tylenol. If a consumer truly wants Advil, he or she will not be confused by the fact that a bottle of Tylenol is on the shelf next to Advil because of their different appearances." Good job, Judge! You actually understand how the Internet works.
- One of the more amusing last-ditch/desperation moves by 1-800CONTACTS was to assert that telephone conversations between attorneys of the opposing sides constituted a binding contract to which LENS.COM did not live up. Judge Waddoups kills this on two grounds. First, such an agreement between competitors makes "…[the court question] whether it would survive an antitrust challenge." [p. 59] But more entertaining, a very astute Judge Waddops reiterated my point 4 above stating that "…Plaintiff appreciated Defendant being willing to work towards an amicable solution…" doesn't sound at all like a contract, nor does it sound like they had "…reached a meeting of the minds." Hear that gong? BONG!
APPEALS COURT UPDATE ON AUGUST 9, 2013: 1-800CONTACTS appealed this decision, and got whacked. Again. See posting here.