by Wendy Davis @wendyndavis, August 8, 2017

Contact lens retailer 1-800 Contacts is asking a federal judge to dismiss a class-action complaint alleging that the company violated antitrust laws by preventing rivals from using its trademarks in search advertising.

The retailer argues that the consumers who filed suit have not presented enough facts to show that the alleged search advertising practices resulted in prices higher than a competitive market would bear. 1-800 Contacts also argues that the lawsuit was filed after the expiration of a four-year statute of limitations.

Consumers sued the contact lens company last year, shortly after the FTC alleged that 1-800 Contacts illegally prevented rivals from using the term “1-800 Contacts” to trigger search ads. The FTC contends that 1-800 Contacts’ tactics amounted to a violation of antitrust laws and an unfair business.

The FTC said in its complaint that 1-800 Contacts either sued or threatened to sue competitors for allegedly infringing trademark by purchasing the keyword “1-800Contacts” as a trigger for pay-per-click search ads. From 2004 through 2013, the company allegedly sued or threatened to sue at least 15 competitors over trademark infringement on search engines, according to the FTC. Of those rivals, only Lens.com fought the lawsuit, which resulted in a ruling largely in Lens.com’s favor.

The agency argues that the agreements to restrict keyword advertising harmed search engines by distorting their ad auctions and reducing the quality of the search results. The FTC also says the agreements resulted in higher prices for consumers, arguing that 1-800 Contacts charges more than online rivals, but that consumers stop searching and order from 1-800 Contacts if it is the only advertiser in the search results.

The FTC action is still pending before an administrative law judge.

1-800 Contacts said in a motion filed late last week with U.S. District Court Judge Tena Campbell in the Central District of Utah that the consumers’ lawsuit should be dismissed for several reasons. The company contends that most of its settlement agreements occurred before August of 2012, putting them beyond the four-year statute of limitations for antitrust violations. The online seller adds that even if the settlement agreements are treated as ongoing, could only obtain monetary damages for activity occurring in the last four years.

1-800 Contacts also argues that the consumers did not present facts to show how the settlement agreements led to price increases “above competitive levels.”

The lawsuit also names several contact lens retailers — including Vision Direct, Walgreen and Luxottica — which allegedly entered into the restrictive search advertising agreements with 1-800 Contacts. Those companies filed separate papers seeking dismissal of the case.

Two other retailers — National Vision and Arlington Contact Lens — recently agreed to settle the allegations “in exchange for a monetary payment plus specified cooperation,” according to court documents. More detailed terms haven’t yet been disclosed.

MediaPost.com: Search Marketing Daily

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