Last month in  In the Matter of 1-800 Contacts, Inc., the Federal Trade Commission (“FTC”) provided insight into the circumstances under which retail price competition may take place in the 21st century internet economy.  In the Opinion authored by Chairman Joseph J. Simons (“Commission’s Opinion”) the Commission decided that 1-800 Contacts, the country’s largest online retailer of contact lenses, unlawfully entered into anticompetitive agreements with 14 rival online sellers (“Agreements”).  The Agreements, which, in most cases were trademark litigation settlements, required the parties, when bidding as part of search engine advertising auctions, to take measures ensuring their advertisements do not appear in response to searches for the other party’s trademark terms.  According to the Commission’s Opinion, approved 3-1-1, the “decision will affect not only the price that consumers pay for some contact lenses but also the very manner in which substantial parts of price competition will occur throughout consumer markets today and tomorrow.”  This week, 1-800 Contacts filed an application with the FTC for a partial stay pending review by the U.S. Court of Appeals.

The Agreements between 1-800 Contacts and Rival Retailers

By way of background, more than a decade ago, 1-800 Contacts began bringing trademark infringement actions against rival contact retailers, who were selling lenses at lower prices.  The infringement claims were based on the retailers’ online advertisements appearing in response to consumers’ searches for “1-800 Contacts.”  The Agreements, which resulted from the litigation, restricted the parties’ ability to bid on certain “keywords” in search engine auctions.  “Keywords” are words or phrases that trigger the display of a party’s advertisements as “sponsored links” on a search engine when the words or phrases “match” a user’s search.  As relevant here, the Agreements specifically prohibited each party from bidding on keywords that allegedly infringe upon the other party’s trademarks and additionally required the parties to employ “negative” keywords to prevent their advertisements from displaying whenever a search included the other party’s trademarks. 
Continue Reading Sights on Online Search Advertising: FTC Finds Practices by 1-800 Contacts to Unlawfully Harm Competition and Restrict the Availability of Truthful Advertising to Consumers

By David Fagan and Sumon Dantiki

Last week the Antitrust Division of the Department of Justice (“DOJ”) issued a business review letter in response to a request by CyberPoint International LLC (“CyberPoint”).   At issue in the request was whether a proposed cyber threat information sharing system among possible competitors (“the TruSTAR platform”) raised antitrust concerns.  Following a review, DOJ announced in the letter that it had no intention of challenging the TruSTAR  platform under antitrust laws.

The TruSTAR letter is significant for multiple reasons.  First, the letter generally reaffirms the joint “Antitrust Policy Statement on Sharing of Cybersecurity Information,” set forth by the DOJ and Federal Trade Commission (FTC) earlier this year on April 10.  In fact, in a press release accompanying the TruSTAR letter, the DOJ cited to the Policy Statement to emphasize that the “antitrust laws are not an impediment to legitimate private-sector initiatives to share specific information about cyber incidents and mitigation techniques.”

Continue Reading Department of Justice Clears Cybersecurity Information Sharing Platform

On April 10, 2014, the U.S. Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) issued a joint “Antitrust Policy Statement on Sharing of Cybersecurity Information.”

Information sharing between the government and the private sector and among private sector entities has been a major consideration in ongoing legislative and executive branch efforts to address cybersecurity, and the statement released by DOJ and the FTC is a significant development that should advance the private sector’s efforts to address cybersecurity threats.  In particular, concerns have permeated the business community regarding whether private-to-private information-sharing with respect to cybersecurity threats might pose antitrust concerns for the entities involved, and some legislative proposals have included exemptions from antitrust liability for companies that share cybersecurity information.  The latest announcement makes clear that, from the government’s perspective, sharing of cyber-related threat information should generally not implicate antitrust concerns.  

Continue Reading DOJ and FTC Issue Antitrust Policy Statement on Sharing of Cybersecurity Information