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1-800-Contacts
Type Privately Held
Founded 1995
Headquarters Draper, Utah
Key people Jonathan C. Coon, CEO
Brian Bethers, President
Rob Hunter, CFO
Joe Zeidner General Counsel
Industry contact lens retail
Products contact lenses
Revenue $237,950,000 (2005)[1]
Operating income $5,734,000 (2005)[1]
Net income ($2,605,000) (2005)[1]
Employees 680 (as of August 12, 2007)[citation needed]
Parent Fenway Partners
Website 1800contacts.com
1-800 Contacts headquarters in Draper

1-800 Contacts is a privately held company based in Draper, Utah that sells various brands of contact lenses, including Johnson & Johnson Vision Care, Ciba Vision, Bausch & Lomb and CooperVision. The company's last publicly reported net sales, in the 2006 fiscal year, were US$ 247 million.[2]

First incorporated in February 1995, the company sued advertising software developer WhenU in 2002 and entered a long-term agreement with Wal-Mart in 2008.[citation needed]

Contents

Origin

1-800 Contacts was founded in 1995 by Jonathan C. Coon and John F. Nichols, and first incorporated in February that year. As the company's 2005 10-K report states, "Mr. Nichols is a certified optician in the State of California and was the owner of the Discount Lens Club from 1991 until February 1995. Mr. Nichols worked with Bausch & Lomb as a Senior Sales Representative from 1989 to 1991."[1]

Brand awareness

By utilizing a Toll Free number as its brand, a consumer can instantly recognize the product, be directed to call for a purchase, and buy a product within minutes. It was hoped that consumers would more easily remember the company's phone number, and thus be more likely to become repeat customers.[citation needed] This concept is also evidenced by 1-800-Flowers, as they reportedly purchased their telephone number from a company that was deeply in debt.[citation needed] 1800Contacts.com is also a domain name owned by the company in which a customer may order online. The combined toll free number and matching domain is called a "Toll Free Domain" or a "Teledotcom" and is considered one of the most valuable branding properties.[citation needed]

In fact, the brand 1800Contacts is so valuable that even if it were to not be profitable, it would likely have buyers for the special and unique brand of a toll free number that spells its product along with a matching domain name "url".[citation needed] The phone number is the same as the website domain name, which adds up considerably and deems it a top brand in both today's traditional & internet marketing world.[citation needed]

Alliance with Wal-Mart

In January 2008, 1-800 Contacts entered a long-term agreement with Wal-Mart Stores Inc. to align their contact lens businesses.[citation needed]

Pop-up ad lawsuit

1-800 contacts sued WhenU over pop-up advertisments in 2002.[3] In the suit against WhenU, which also named Vision Direct as a co-defendant,[4] 1-800 Contacts alleged that the advertisements provided by WhenU, which advertised competitors of 1-800 Contacts (such as Vision Direct) when people viewed the company's web site, as "inherently deceptive" and one that "misleads users into falsely believing the pop-up advertisements supplied by WhenU.com are in actuality advertisements authorized by and originating with the underlying Web site".[3]

In December 2003 Judge Deborah Batts of the United States District Court for the Southern District of New York granted a preliminary injunction, barring WhenU from delivering the advertisements to some web surfers, on the grounds that it constituted trademark infringement violating the Lanham Act.[5]

However, WhenU appealed, and the United States Court of Appeals for the Second Circuit held that WhenU's actions did not amount to the "use" that the Lanham Act requires in order to constitute trademark infringement. The appeal court reversed the preliminary injunction and ordered the dismissal of all claims made by 1-800 Contacts that were based upon trademark infringement, leaving the claims based upon unfair competition and copyright infringement.[6] The District court had already found that 1-800 Contacts was unlikely to prevail in its copyright infringement claims, finding that "the conduct neither violated [the] plaintiff's right to display its copyrighted website, nor its right to create derivative works therefrom".[7]

The Electronic Frontier Foundation criticized the case, stating that it was "not to help [people] fight off adware and spyware" but was rather intended to allow companies "to gain control over [a computer's] desktop", where the legal principles being employed "would create a precedent that would enable trademark owners to dictate what could be open on your desktop when you visit their websites". At the time of the appeal it filed an amicus curiae brief urging the Appeals Court to limit the reach of the "initial interest confusion" doctrine that had been applied by the District Court.[8]

Other Trademark Infringement Lawsuits

In addition to the WhenU case, 1-800 Contacts has been involved in a number of trademark infringement suits revolving around the issue of keyword advertising. On March 8, 2010, 1-800 Contacts sued Contact Lens King, Inc. for trademark infringment based on their use of "1-800 Contacts" trademarks as keywords to trigger sponsored ads directing consumers to Contact Lens King's website and products.[9]

References

  1. ^ a b c d 2005 10-K Report, accessed October 13, 2006
  2. ^ 1-800 Contacts. "company website". http://www.1800contacts.com/ExternalRelations/TheCompanyHistory.aspx. 
  3. ^ a b Christopher Saunders (2002-10-14). "U-Haul, 1-800 Contacts Join Anti-Pop-Up Bandwagon". ClickZ News (Incisive Interactive Marketing LLC). http://www.clickz.com/showPage.html?page=1481481. 
  4. ^ 1-800 Contacts, Inc. v. WhenU.Com and Vision Direct, Inc. 309 F.Supp.2d 467 (S.D.N.Y., 2003-12-22), reversed in part and remanded, F.3d—2d. Cir., 2005-06-27
  5. ^ Stefanie Olsen (2004-01-05). "Pop-up seller loses round in court". CNET News.com. http://news.com.com/Pop-up+seller+loses+round+in+court/2100-1024_3-5135313.html. 
  6. ^ Chloe Hecht (2005-09-25). "Court Sees Clearly Now: "Use" in 1 800-Contacts, Inc. v. WhenU.Com, Inc. and Vision Direct, Inc.". Chilling Effects. http://www.chillingeffects.org/weather.cgi?WeatherID=519. 
  7. ^ Martin H. Samson. "1-800 Contacts, Inc. v. WhenU.Com and Vision Direct, Inc.". Phillips Nizer LLP Internet Library of Law and Court Decisions. http://www.phillipsnizer.com/library/cases/lib_case335.cfm. 
  8. ^ "1-800 Contacts v. WhenU". Electronic Frontier Foundation. http://www.eff.org/legal/cases/1800contacts_v_whenu/. 
  9. ^ Inside Trademarks, [1], March 13, 2010

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