1-800 Contacts, Inc. v. JAND, Inc.

608 F.Supp.3d 148

1-800 CONTACTS, INC., Plaintiff,

v.JAND, INC. d/b/a Warby Parker, Defendant.

21-cv-6966 (PKC)

United States District Court, S.D. New York.

Signed June 27, 2022

Thomas Agnello, Michael Best & Friedrich LLP, Milwaukee, WI, Brian Hauser, Shearman & Sterling LLP, Washington, DC, Jeffrey H. Brown, Michael Best & Friedrich LLP, Chicago, IL, Steven J. Joffee, Michael Best & Friedrich LLP, Cottonwood Heights, UT, Susan Loeb, Stephen Robert Fishbein, Shearman & Sterling LLP, New York, NY, for Plaintiff.

Lauren Danielle Toaltoan, Davis Wright Tremaine LLP, New York, NY, Robert Donald Carroll, Goodwin Procter, LLP, Boston, MA, for Defendant.

OPINION AND ORDER

CASTEL, United States District Judge Plaintiff 1-800 Contacts, Inc. ("1-800 Contacts") is an online retailer of contact lenses. Defendant JAND, Inc., doing business as Warby Parker ("Warby Parker"), is an online and physical retailer of eyeglasses and a recent entrant into the online contact lens marketplace. As against Warby Parker, 1-800 Contacts now brings claims of trademark infringement and unfair competition under both New York common law and the Lanham Act. 15 U.S.C. §§ 1114, 1125(a).

1-800 Contacts primarily alleges that Warby Parker, as part of its recent foray into the online contact lens market, has sought to confuse and mislead consumers searching for 1-800 Contacts's online store, 1800contacts.com. Specifically, 1-800 Contacts alleges that Warby Parker bids for advertisements on search engine results for trademarks belonging to 1-800 Contacts, such that when a consumer conducts an online search for "1800 contacts" or other trademarks belonging to 1-800 Contacts, the search results page will display a paid search result for Warby Parker's website at, or near the top of the results page, often above the search results linking to the actual 1-800 Contacts website. 1-800 Contacts alleges that the paid search result, labeled as an "Ad" and displaying Warby Parker's website address, directs the consumer instead to a specific "deep-linked" landing page for contact lenses on Warby Parker's website, which allegedly mimics 1-800 Contacts's website and causes consumer confusion as to whether the contact lenses sold on Warby Parker's website are related to 1-800 Contacts, thus inflating Warby Parker's online contact lens sales at the cost of 1-800 Contacts. After filing its answer, Warby Parker now moves under Rule 12(c), Fed. R. Civ. P., for dismissal of all claims brought by 1-800 Contacts and judgment on the pleadings in Warby Parker's favor. (Doc 34.)

As will be explained, in viewing the Complaint's factual allegations in the light most favorable to non-movant 1-800 Contacts and through an analytical lens drawing all reasonable inferences in favor of 1-800 Contacts, the Court concludes that 1-800 Contacts has failed to plausibly plead a claim for relief as to its claims for trademark infringement and unfair competition under both federal and New York common law. Warby Parker's motion for judgment on the pleadings will be granted.

BACKGROUND

The Court summarizes the complaint's factual allegations, and, for the purposes of the motion, accepts them as true, drawing all reasonable factual inferences in favor of the plaintiffs as the non-movants. See Eastman Kodak Co. v. Henry Bath LLC, 936 F.3d 86, 93 (2d Cir. 2019) (noting that a motion to dismiss pursuant to Rule 12(c), Fed. R. Civ. P. is governed by the same standards as a motion to dismiss pursuant to Rule 12(b)(6), Fed. R. Civ. P.); In re Hain Celestial Grp., Inc. Sec. Litig., 20 F.4th 131, 133 (2d Cir. 2021) (laying out the standard for a motion to dismiss pursuant to Rule 12(b)(6), Fed. R. Civ. P.).

Over the past three decades, 1-800 Contacts, a "well-known pioneer" in the online contact lens marketplace, has spent hundreds of millions of dollars on advertising and marketing to cultivate strong consumer recognition of its brand, services and trademarks. (Compl. ¶ 1.) Because 1-800 Contacts is an online, rather than a brick-and-mortar retailer of contact lenses, consumers reach 1-800 Contacts through its website, 1800contacts.com. (Id. ¶ 3.) In trying to navigate to 1-800 Contacts's website, many consumers conduct online searches for terms such as "1800 Contacts," "1 800 Contacts," "1800contacts.com" and "1800contacts," which are trademarks belonging to 1-800 Contacts (the "1-800 Contacts Marks"). (Id. ¶¶ 3, 22.) 1-800 Contacts currently serves millions of customers—for example, between June 1, 2020 and June 30, 2021, 1-800 Contacts's website averaged more than 1.5 million unique monthly visitors. (Id. ¶ 2.)

At issue in this case is a method of internet advertising called "search advertising," which involves advertisers’ bidding on keywords that generate paid search results in auctions hosted by the search engines. (Id. ¶ 32.) When online shoppers use a search engine such as Google or Microsoft Bing to search for terms related to 1-800 Contacts—such as the 1-800 Contacts Marks—the search engine returns "two main types of search results: (1) sponsored, or paid, search results, and (2) organic, or natural, search results. Both sponsored and organic search results provide links to webpages." (Id. ¶ 32.) When a consumer conducts a search, the paid advertisements appear either at, or near the top of the search results, accompanied by a small designation signaling that they are an "Ad." (Id. ¶ 38.)

Warby Parker, a company recognized for selling eyeglasses, is a relatively new entrant in the online contact lens marketplace, having begun selling contact lenses nationwide through its warbyparker.com website and its physical stores around November 2019. (Id. ¶¶ 5, 18, 49, 50.) Warby Parker uses the trade name and trademark "Warby Parker" in connection with online and retail sales of eyeglasses, sunglasses, and more recently, contact lenses. (Id. ¶ 51.) As part of its marketing efforts, Warby Parker bids on search engine keywords that include the 1-800 Contacts Marks, such that the search engine keywords generate results pages with advertisements linking to Warby Parker's own website at or near the top of the results page. (Id. ¶ 5.) The Warby Parker advertisements are labeled "Ad," and also list the website https://www.warbyparker.com/ next to the "Ad" label. (Id. ¶¶ 58-59, 61, Ex. 3)

1-800 Contacts alleges that upon clicking on such advertisements bought by Warby Parker, consumers who conducted a search using one of the 1-800 Contacts Marks are instead sent to the Warby Parker website's landing page for contact lenses, which "deceptively and intentionally mimics the look and feel of 1-800 Contacts’ website, including through use of a confusingly similar color scheme, layout, and discount offering, along with imagery evoking the 1800contacts.com website," such as by using a "familiar light blue colored background displaying representative contact lens products and a discount offer, just like that found at 1800contacts.com." (Id. ¶¶ 7, 10.)

1-800 Contacts also alleges that Warby Parker purchases advertising search results such that consumers searching for "Warby Parker contacts" are led to paid searches linking to a different landing page at warbyparker.com from those consumers searching for the 1-800 Contacts Marks. Allegedly, the landing page provided to consumers searching for "Warby Parker contacts" appears distinctively different from the landing page provided to consumers searching for the 1-800 Contacts Marks. The former "replicates the look and feel of the WarbyParker.com homepage and other pages at WarbyParker.com" in contrast to the landing page for searches with the 1-800 Contacts Marks, which appears to intentionally mimic the look and feel of the 1-800 Contacts website instead. (Id. ¶¶ 7, 73-79.)

1-800 Contacts alleges that it has spent substantial sums to outbid Warby Parker on paid search results to combat the perceived likelihood of consumer confusion caused by Warby Parker's bidding on paid searches for the 1-800 Contacts Marks. (Id. ¶ 84.) Despite its efforts, however, 1-800 Contacts has not always succeeded in securing "the critical top search result position" for searches performed for the 1-800 Contacts Marks, as Warby Parker's ads often appear above both the paid and natural search results linking to 1-800 Contacts's own website, 1800contacts.com. (Id. ¶ 86.)

1-800 Contacts alleges that Warby Parker's conduct therefore "diverts a material number of customers who expected to be taken to 1-800 Contacts’ website," to Warby Parker's own website, which they either "reasonably believe to be affiliated with 1-800 Contacts," or belatedly realize is not 1800contacts.com, resulting in the inflation of Warby Parker's online contact lens sales and 1-800 Contacts's advertising costs. (Id. ¶ 12.)

RULE 12(C) STANDARD

Rule 12(c) states that "[a]fter the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." Rule 12(c), Fed. R. Civ. P. A motion to dismiss pursuant to Rule 12(c) is governed by the same standards as a motion to dismiss pursuant to Rule 12(b)(6), Fed. R. Civ. P. Eastman Kodak Co. v. Henry Bath LLC, 936 F.3d 86, 93 (2d Cir. 2019).

To survive a motion to dismiss under Rule 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Legal conclusions are not entitled to the presumption of truth, and a court assessing the sufficiency of a complaint disregards them. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. Instead, the Court must examine only the well-pleaded factual allegations, if any, "and then determine whether they plausibly give rise to an entitlement to relief." Id. at 679, 129 S.Ct. 1937. A complaint must include non-conclusory factual allegations that " ‘nudge[ ]’ " its claims " ‘across...