2d Cir.: WhenU Pop-Up Ads Not Trademark Use

On June 27, 2005, the U.S. Court of Appeals for the Second Circuit rejected a trademark infringement action against WhenU.com for causing competitors pop-up ads to appear on the 1-800 Contacts.com website:

We hold that, as a matter of law, WhenU does not “use” 1-800’s trademarks
within the meaning of the Lanham Act, 15 U.S.C. § 1127, when it (1) includes 1-800’s website address, which is almost identical to 1-800’s trademark, in an unpublished directory of terms that trigger delivery of WhenU’s contextually relevant advertising to C-users; or (2) causes separate, branded pop-up ads to appear on a C-user’s computer screen either above, below, or along the bottom edge of the 1-800 website window. Accordingly, we reverse the district court’s entry of a preliminary injunction and remand with instructions to (1) dismiss with prejudice 1-800’s trademark infringement claims against WhenU, and (2) proceed with 1-800’s remaining claims.

As discussed by Mark Hamblett in the New York Law Journal on July 1, 2005, the decision reverses that of Southern District of New York Judge Deborah A. Batts, who had granted a preliminary injunction against WhenU.com, an Internet marketing company that uses a propriety software that monitors a computer user's Internet activity and then delivers advertising compatible with that activity. According to the appellate court,

The primary issue to be resolved by this appeal is whether the placement of pop-up ads on a computer user's (“C-user's”) screen contemporaneously with either the 1-800 website or a list of search results obtained by the C-user’s input of the 1-800
website address constitutes “use” under the Lanham Act, 15 U.S.C. §§1114(1), 1125(a). The district court reasoned that WhenU, by “causing pop-up advertisements for Defendant Vision Direct to appear when SaveNow users have specifically attempted to access [1-800]’s website, . . . [is] displaying [1-800]’s mark in the . . . advertising of . . . Vision Direct’s services.”

The fatal flaw with this holding is that WhenU’s pop-up ads do not display the
1-800 trademark. The district court’s holding, however, appears to have been
based on the court’s acceptance of 1-800’s claim that WhenU’s pop-up ads appear
“on” and affect 1-800’s website. As we explained above, the WhenU pop-up ads appear in a separate window that is prominently branded with the WhenU mark; they have has absolutely no tangible effect on the appearance or functionality of the 1-800 website.

More important, the appearance of WhenU’s pop-up ad is not contingent upon or related to 1-800’s trademark, the trademark’s appearance on 1-800’s website, or
the mark’s similarity to 1-800’s website address. Rather, the contemporaneous display of the ads and trademarks is the result of the happenstance that 1-800 chose to use a mark similar to its trademark as the address to its web page and to place its trademark on its website. The pop-up ad, which is triggered by the C-user’s input of
1-800’s website address, would appear even if 1-800’s trademarks were not displayed on its website. A pop-up ad could also appear if the C-user typed the 1-800 website address, not as an address, but as a search term in the browser’s search engine, and then accessed 1-800’s website by using the hyperlink that
appeared in the list of search results.

In addition, 1-800’s website address is not the only term in the SaveNow directory that could trigger a Vision Direct ad to “pop up” on 1-800’s website. For example, an ad could be triggered by a C-user’s search for “contacts” or “eye care,” both terms contained in the directory, and then clicked on the listed hyperlink to 1-800’s website. . . .

Significantly, WhenU’s activities do not alter or affect 1-800’s website in any way. Nor do they divert or misdirect C-users away from 1-800’s website, or alter in any way the results a C-user will obtain when searching with the 1-800 trademark or website address. . . . In addition, unlike several other internet advertising companies, WhenU does not “sell” keyword trademarks to its customers or otherwise manipulate which category-related advertisement will pop up in response to any particular terms on the internal directory. In other words, WhenU does
not link trademarks to any particular competitor’s ads, and a customer cannot pay to have its pop-up ad appear on any specific website or in connection with any particular trademark. Instead, the SaveNow directory terms trigger categorical associations (e.g., www.1800Contacts.com might trigger the category of “eye care”), at which point, the software will randomly select one of the pop-up ads contained in the eye-care category to send to the C-user’s desktop.