1-800 Contacts

1-800 Contacts headquarters in Draper

1-800 Contacts is a company based in Draper, Utah, USA, that sells contact lenses, including Johnson & Johnson Vision Care, Ciba Vision, Bausch & Lomb and CooperVision brands. The company was incorporated in 1995. In 2006, its last year as a public company, the company reported net sales of US$ 247 million.^[2] In 2008, 1-800 CONTACTS entered into a partnership with Wal-Mart,^[3] which ended in 2013. In June 2012, WellPoint acquired 1-800 Contacts from Fenway Partners.^[4]

History

1-800 CONTACTS was founded in 1995 by Jonathan C. Coon and John F. Nichols, and incorporated in February that year. As the company's 2005 10-K report states, "Mr. Nichols is a certified optician in the State of California and was the owner of the Discount Lens Club from 1991 until February 1995. Mr. Nichols worked with Bausch & Lomb as a Senior Sales Representative from 1989 to 1991."^[1]

In 2002, they acquired Lens Express.^[5]

Brand awareness

By using a toll-free number as its brand, a consumer can recognize the product, be directed to call for a purchase, and buy a product within minutes. It was hoped that consumers would more easily remember the company's phone number, and thus be more likely to become repeat customers. 1800Contacts.com is also a domain name owned by the company in which a customer may order online. The combined toll-free number and matching domain is called a "Toll-Free Domain" or a "Teledotcom".

Alliance with Wal-Mart

In January 2008, 1-800 CONTACTS entered an agreement with Wal-Mart Stores Inc. to align their contact lens businesses.^[3] The alliance partnership ended January 1, 2013.

Pop-up ad lawsuit

1-800 CONTACTS sued WhenU over pop-up advertisments in 2002.^[6] In the suit against WhenU, which also named Vision Direct as a co-defendant,^[7] 1-800 CONTACTS alleged that the advertisements provided by WhenU, which advertised competitors of 1-800 CONTACTS (such as Vision Direct) when people viewed the company's web site, as "inherently deceptive" and one that "misleads users into falsely believing the pop-up advertisements supplied by WhenU.com are in actuality advertisements authorized by and originating with the underlying Web site".^[6]

In December 2003 Judge Deborah Batts of the United States District Court for the Southern District of New York granted a preliminary injunction, barring WhenU from delivering the advertisements to some web surfers, on the grounds that it constituted trademark infringement violating the Lanham Act.^[8]

However, WhenU appealed, and the United States Court of Appeals for the Second Circuit held that WhenU's actions did not amount to the "use" that the Lanham Act requires in order to constitute trademark infringement. The appeals court reversed the preliminary injunction and ordered the dismissal of all claims made by 1-800 CONTACTS that were based upon trademark infringement, leaving the claims based upon unfair competition and copyright infringement.^[9] The district court had already found that 1-800 CONTACTS was unlikely to prevail in its copyright infringement claims, finding that "the conduct neither violated [the] plaintiff's right to display its copyrighted website, nor its right to create derivative works therefrom".^[10]

The Electronic Frontier Foundation criticized the case, stating that it was "not to help [people] fight off adware and spyware" but was rather intended to allow companies "to gain control over [a computer's] desktop", where the legal principles being employed "would create a precedent that would enable trademark owners to dictate what could be open on your desktop when you visit their websites". At the time of the appeal it filed an amicus curiae brief urging the Appeals Court to limit the reach of the "initial interest confusion" doctrine that had been applied by the District Court.^[11]

Other trademark lawsuits

In addition to the WhenU case, 1-800 CONTACTS has been involved in trademark infringement suits revolving around the issue of keyword advertising. On March 8, 2010, 1-800 CONTACTS sued Contact Lens King, Inc. for trademark infringement based on their use of "1-800 CONTACTS" trademarks as keywords to trigger sponsored ads directing consumers to Contact Lens King's website and products.^[12]

1-800 CONTACTS was also involved in several lawsuits against Lens.com, Inc., including a trademark cancellation case in the United States Court of Appeals for the Federal Circuit, Lens.com, Inc. v. 1-800 Contacts, Inc., in which the Court determined that Lens.com's trademark "LENS", held in connection with "computer software", had been abandoned because Lens.com merely used software to sell contact lenses over the internet, while consumers had no association between the trademark and computer software.

Patent Infringement Lawsuit

On April 17, 2013 the Electronic Frontier Foundation claimed that 1-800 Contacts is abusing patent law by acting like a patent troll in its lawsuit against DITTO. In a blog post, the EFF accused 1-800 Contacts of “leveraging the massive expense of patent litigation to squelch the competition”^[13] and asked its followers to help DITTO by crowdsourcing prior art.

References

External links

• Company website
• SEC Filing on NASDAQ