Lens.com, Inc. v. 1-800 Contacts, Inc., No. 2011-1258 (Fed. Cir. Aug. 3, 2012) (Judges Newman, Linn, and Moore)
Getting a Clear View of the Trademark Facts
Lens.com sells contact lenses online. In 2001, it applied for a federal trademark registration for LENS in connection with “retail store services [in International Class 35] featuring contact eyewear products rendered via a global computer network.” The examining attorney rejected the application for likelihood of confusion with a registration owned by the Wesley-Jessen Corporation for LENS in connection with “computer software [goods in International Class 9] featuring programs used for electronic ordering of contact lenses in the field of ophthalmology, optometry, and opticianry.” Then Lens.com petitioned for cancellation of Wesley-Jessen’s mark. In September 2001, Lens.com acquired Wesley-Jessen’s LENS mark as part of a settlement agreement. Lens.com’s original application, however, was also refused as merely descriptive of online retail services, so acquiring Wesley-Jessen’s mark didn’t solve all of its problems.
To sum up: Lens.com didn’t get the Class 35 LENS service mark it initially applied for that was associated with retail store services. Instead, it got Wesley-Jessen’s Class 9 LENS mark for software (a good, not a service).
Fast-forward to September 2008. 1-800 Contacts asked the U.S. Patent & Trademark Office (PTO) to cancel Lens.com’s LENS mark for software on the grounds that Lens.com had either fraudulently obtained or abandoned the mark, since Lens.com wasn’t in the business of selling software. The Trademark Trial and Appeal Board (TTAB) granted summary judgment in 1-800 Contacts’ favor on the abandonment issue, stating, “software is merely incidental to its retail sale of contact lenses, and is not a ‘good in trade,’ i.e., ‘solicited or purchased in the market place for [its] intrinsic value.” The TTAB ordered cancellation of Len.com’s mark, and Lens.com appealed that order to the Federal Circuit.
Use Doesn’t Mean Use (in the Trademark Sense)
The main question the Federal Circuit had to deal with was whether the software that Lens.com uses to sell contacts is “use[d] in commerce” for trademark purposes. The Trademark Act defines “use in commerce” as “the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark.” The Federal Circuit has said that “use in commerce” is “commercial use which is typical in a particular industry.” Here, the Court also noted (relying on legislative history), “use” should have a flexible interpretation so that “genuine, but less traditional” trademark uses won’t be excluded.
Lens.com said that its website distributes software over the Internet as part of its contact lenses sales, and that should be enough to meet the “use” requirement. It also argued that “public awareness” isn’t a prerequisite for trademark protection. 1-800 Contacts argued that Lens.com isn’t offering software to customers simply because Lens.com sells contacts via its website. It said that any software distribution is “merely incidental” to Lens.com retail sales of contact lenses.
The Court recognized that a trademark owner doesn’t have to actually sell goods in commerce for the goods to be “used” for trademark purposes—simply transporting goods can be enough. But just because goods are crossing state lines doesn’t guarantee that there’s trademark-style use. A product is not a “good in trade” for trademark purposes if it’s just the conduit for services or has no value apart from services that the trademark owner offers. So, was Lens.com actually providing software for the sale of contact lenses, or was the website just a conduit?
Playing Hard Ball with Software Trademarks
The Federal Circuit commented that, although there are plenty of cases addressing this question in the physical transportation context, there aren’t many that tackle the software-services relationship in the Internet context. In 2001, an Eleventh Circuit case held that software met the “use in commerce” baseline when the software’s file name included the mark, and there was evidence that the public associated the mark with the software.
The Federal Circuit agreed with the Eleventh Circuit that software can meet the “use in commerce” requirement (in theory), but the court held that it Lens.com didn’t get there. The court clarified the factors for deciding it there’s “use in commerce” in the software context:
[W]hether the software is: (1) simply the conduit or necessary tool useful only to obtain applicant’s services; (2) is so inextricably tied to and associated with the service as to have no viable existence apart therefrom; and (3) is neither sold separately from nor has any independent value apart from the services.
(See page 9 of the Lens.com opinion). Here, the court concluded that Lens.com’s software just facilitated the sale of contact lenses, which is Lens.com’s primary business. While the court didn’t mention it, I think it’s telling that Lens.com’s original trademark application was for retail store services in International Class 35, but it acquired this mark for software in International Class 9 via assignment. Lens.com never actually applied for a mark in International Class 9, which strengthens the court’s conclusion.
I think this is an important decision as cloud-based services become more and more prevalent. For instance, what does this test mean for smartphone apps or cloud-based data storage systems? Trademark applicants will have to be very clear about what they are providing—software or a service. This test might make it harder to get or keep trademark protection for software without showing some consumer association of the mark with the software itself.
Can you see the future of software trademarks clearly through the Federal Circuit’s test, or did the court just make things blurrier? Please share your thoughts!
Photo credit: Andres Rueda