That is the decision of the FTC Initial Law Judge Decision in the case of 1-800 Contacts, Inc, In the Matter of. 1-800 Contacts entered into at least 14 agreements with contact lenses competitors. Pursuant to these agreements 1-800 Contacts' competitors promised and agreed not to use the word 1-800 contacts for search engine optimization [SEO] purposes. As a result of these agreements, customers paid higher prices for contact lenses.
The Challenged Agreements restricted advertisements for the sale of contact lenses on the internet by prohibiting competitors from presenting paid advertisements on the search engine results page in response to searches for 1-800 Contacts’ trademarks.” Chief Administrative Law Judge D. Michael Chappell
We have all experienced this. You enter a brand name into Google, and the search engine results yield a stream of the competitor websites. Why is that? One reason is brands commonly use the names of their competitors for search engine optimization or SEO purposes.
1-800 Contacts and others have historically and successfully argued that this practice is a trademark infringement. Now the FTC is arguing it is a bidding agreement that
eliminated competition in auctions to place advertisements on the search results page generated by online search engines such as Google and Bing. The complaint alleges that these bidding agreements constituted an unfair method of competition in violation of federal law, by unreasonably suppressing price competition in certain online search advertising auctions, and restricting truthful and non-misleading advertising to consumers. As a result, some consumers paid higher retail prices for contact lenses, the complaint stated.
It is an interesting proposition that could turn SEO sideways. Trademark owners may no longer be able to prohibit others from using their trademarks for SEO purposes. Asserting SEO trademark infringement is misleading advertising?
To buttress its argument, the FTC reports having evidence that consumers paid higher prices because 1-800 Contracts entered into an agreement with competitors to prevent SEO trademark infringement. It is a head-on conflict between trademark protection and advertising laws, two laws designed to protect the consumer. Trademark protection is designed to protect consumers by ensuring that consumers know whom they are buying products and services from. Which consumer protection law will win?
1-800 Contacts has a right to appeal the FTC Initial Law Judge Decision to the full Federal Trade Commission. If no appeal is filed, the Initial Judge’s decision will become effective.
It is not recommended that you change your SEO search terms just yet. Wait 30 days to see what happens. If the FTC Initial Law Judge Decision becomes final, it may open the floodgates open to SEO competition. But, will evidence of actual higher prices be required?