Rival's suit aims to end 1-800 Contacts' 'bullying'
Draper-based 1-800-Contacts is battling a lawsuit by a competitor that claims the Utah company has engaged in an campaign of "frivolous" legal actions over Internet search results in order to stifle competition.
The lawsuit, filed last year in Las Vegas, was recently transferred to U.S. District Court in Utah, where 1-800-Contacts is trying to get a judge to dismiss it.
Lens.com, based in Las Vegas, claims that 1-800-Contacts engaged in litigation with competitors to force them to swallow high legal costs and prevent them from lowering prices and investing in company growth.
"We want to put them out of the bullying business," said Cary Samourkachian, president and CEO of Lens.com. "They shouldn't be suing their competitors. They should be taking it up with the search engines. That would be the correct route to take."
The two contact lens merchants have been engaged in litigation since June 2011. 1-800 Contacts and its lawyers declined comment.
"A competitor like Lens lacks standing to sue on the basis of alleged harm to other competitors," reads 1-800-Contact's June 4 memorandum to U.S. District Court for Utah. "Lens must allege an injury that it suffered as a direct consequence of 1-800's supposedly unlawful conduct."
Lens.com's complaint stems from 1-800-Contacts' accusations of alleged trademark infringement by Lens.com and 14 other companies starting in 2005. 1-800-Contacts sent cease-and-desist letters to competitors for allegedly using its "1-800-Contacts" trademark for advertising on search engines, and ultimately sued Lens.com in 2007 when the latter refused to accept a 1-800-Contact's settlement. 1-800-Contact's 2007 lawsuit was dismissed in Utah District Court.
In 2003, 1-800-Contacts registered several trademarks with the U.S. Patent and Trademark Office. They included the words and numbers "1-800-Contacts."
To enforce its trademark, according to Lens.com's lawsuit, 1-800-Contacts "coerced" agreements and other settlements from 14 competitors, allegedly forcing companies to pay high litigation costs. Agreements served to settle potentially drawn-out legal battles, and stated competitors could no longer bid on search engine keywords resembling "1-800-Contacts."
"1-800 knew that its trademark allegations had little or no merit," the June 2011 lawsuit states. "But [it] continued to file and pursue them because its conduct yielded and continued to yield anticompetitive benefits."
A slew of lawsuits from 1-800-Contacts allegedly forced a competing company to direct financial resources at "frivolous" litigation. "Competitors could not afford to lower prices or otherwise invest in their organization," states the Lens.com lawsuit.
Lens.com is asking the court to rule that it is not infringing on 1-800-Contacts' trademark and award financial damages caused by litigation.
"We want to end this bullying, and we want to make sure this is a level playing field," Samourkachian said. "They made us spend $1.4 million, that's what their main objective is here. For us that's a lot of money, for them its a drop in the bucket."