NEW YORK—The U.S. Court of Appeals for the Second Circuit on Friday overturned a decision by the Federal Trade Commission that claimed 1-800 Contacts had violated antitrust law by aggressively enforcing its trademarks against online competitors. The court, in its ruling, noted the FTC failed to provide evidence to support those claims of anticompetitive practices carried out by 1-800 Contacts. The court's decision confirms that the original complaint had “no evidentiary merit and the agreements were lawfully put in place to protect 1-800 Contacts' trademark,” the retailer said in a statement.

The advertising agreements in question prohibited 1-800 Contacts’ competitors from using 1-800 Contacts' trademarks to trigger paid-search ads. The FTC had found that these agreements hurt competition by limiting the information available to consumers who were searching online for contact lenses.
In December 2018, VMAIL reported on the FTC’s complaint against 1-800 Contacts, and the retailer’s request that the agency stay part of the order.
The FTC had ruled that 1-800 Contacts, through its agreements related to online advertising, “unlawfully entered into a web of anticompetitive agreements with rival online contact lens sellers.” In addition, the FTC ruled that the agreements between 1-800 Contacts and 14 other online contact lens retailers “constitute unfair methods of competition.”
The Circuit Court’s decision, issued late last week, can be read here.
“Agreements to protect trademarks ... should not immediately be assumed to be anticompetitive,” Circuit Judges Gerard Lynch and Steven Menashi wrote in the Circuit Court's decision.
The final ruling states that the FTC "incorrectly concluded that the agreements are an unfair method of competition" and the court sent the case back to the trade commission with orders to dismiss the administrative complaint.
“Late last week, 1-800 Contacts won a complete victory in our challenge to the FTC's ruling alleging we engaged in anti-competitive search marketing practices," chief executive officer John Graham said in a statement on Monday. "We were confident the FTC lacked evidence to justify their claims, and we feel vindicated with the Second Circuit court's decision. [This] ruling is another win for consumers and a confirmation of our 26-year mission as a champion of consumer choice in vision care."

The FTC can seek to appeal to the decision to the Supreme Court, or the agency can ask the entire 2nd Circuit to reconsider the case. According to a Media Post report, Maribeth Petrizzi, the acting director of the FTC Bureau of Competition, said Friday the agency is disappointed in the decision and will consider its options. VMAIL had not received a response from the FTC about its plans at presstime.

Founded in 1995, 1-800 Contacts was the first company to deliver contact lenses directly to consumers, the company said. Over the years, 1-800 says its "innovative offerings and a customer-centric approach" have helped to make it one of the most successful DTC brands today.