The Second Circuit Court of Appeals overturned an FTC decision regarding trademark enforcement against online competitors.
Defense counsel retained Cornerstone Research to support a marketing expert in an antitrust case brought by the Federal Trade Commission. The FTC alleged that 1-800 Contacts harmed competition by entering into agreements with competitors that settled disputes over alleged trademark infringement. These settlement agreements restricted the ability of contact lens retailers to bid to display their advertisements in response to online searches for 1-800 Contacts’ trademarks.
Our expert analyzed large sets of search engine data to study user behavior. He provided analysis showing that the legal settlements were narrow enough that they did not prevent consumers from learning about competing retailers’ offers and therefore were unlikely to harm consumers.
In 2018, the FTC ruled that the agreements violated antitrust law and harmed consumers. 1-800 Contacts appealed the ruling and the Second Circuit Court of Appeals overturned the FTC commissioners’ decision in June 2021. The circuit court judges opined, “In light of the strong procompetitive justification of protecting petitioner’s trademarks, we conclude the challenged agreements merely regulate and perhaps thereby promote competition.”