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1-800, Inc. v. Memorial Eye, P.A.

1-800, Inc. v. Memorial Eye, P.A., 2010 WL 5149269 (D. Utah Dec. 13, 2010). Plaintiff 1-800, Inc., the market leader in the field of replacement contact lenses, sold its products online under the federally registered trademark 1-800-CONTACTS.  Defendant Memorial Eye, P.A., which also sold replacement contact lenses online, purchased keywords incorporating the 1-800 CONTACTS mark from Google and other search  engines.  When users searched for 1-800 CONTACTS, the search results displayed defendant’s advertisements in the paid sponsored links.  Plaintiff objected to defendant’s actions several times over a period of a few years, but defendant continued to purchase the disputed keywords.  Plaintiff sued defendant for trademark infringement.  Defendant asserted both an affirmative defense and a counterclaim based on the alleged unclean hands of plaintiff.  Defendant’s unclean hands allegations were based in large part on plaintiff’s own acts of purchasing competitors’ trademarks (but not defendant’s trademarks) as search-engine keywords.  Plaintiff filed a motion for summary judgment on defendant’s unclean hands defense and counterclaim.  The district court granted plaintiff’s motion for summary judgment.  Defendant’s affirmative defense simply pled that “[Defendant] asserts the defense of unclean hands,” and its counterclaim alleged that plaintiff itself purchased and keywords incorporating competitors’ trademarks, the same activities for which it was suing defendant.  In response, plaintiff argued that defendant could not benefit from the unclean hands defense because plaintiff’s alleged misconduct was not related to the 1-800-CONTACTS trademark at issue in this case.  The threshold issue before the court was thus whether an unclean hands defense may be based on a plaintiff’s conduct regarding marks unrelated to those the plaintiff asserted in its complaint.  The court sided with plaintiff, citing the Tenth Circuit’s rule from Worthington v. Anderson that the inequitable conduct must be related to the plaintiff’s cause of action.  The district court noted that two kinds of “related conduct” may support application of the unclean hands defense in a trademark case: (1) inequitable conduct toward the public, such as deception in or misuse of the trademark itself, or (2) inequitable conduct toward the defendant in relation to the trademark at issue.  The court also noted the Tenth Circuit’s decision in Utah Lighthouse Ministry. v. Discovery Computing, which held that the unclean hands doctrine “requires that the inequitable conduct on the part of the plaintiff be related to the plaintiff’s cause of action.”  The court further cited Professor McCarthy’s treatise on trademarks and unfair competition, in which he states that “[t]he plaintiff’s alleged infringement of a different trademark does not furnish grounds for an unclean hands defense.” Applying this precedent to the facts of this case, the court held that defendant’s unclean hands allegations were not sufficiently related to plaintiff’s claims regarding the infringement of its 1-800 CONTACTS mark, i.e., plaintiff’s keyword activities did not involve its 1-800 CONTACTS mark.  Defendant argued that unclean-hands conduct did not need to relate to the mark asserted by plaintiff if the defense lies in inequitable conduct towards the public, as opposed to the other party.  The court held, however, that Worthington required that the inequitable conduct be related to plaintiff’s cause of action, even for inequitable conduct toward the public.