On June 11, 2021, the Second Circuit vacated an FTC order misapplying the “quick look” antitrust standard to a leading contact lens maker’s trademark settlements. The decision was a victory for WLF, which, joined by five prominent antitrust scholars, filed an amicus brief in the case urging vacatur. 1-800 Contacts accused rivals of violating its trademarks by buying internet-search advertisements keyed to 1-800’s trademark terms. As part of 1-800’s settlements with them, the firms agreed to cease buying ads keyed to such terms. The FTC condemned the settlements as an antitrust violation. Instead of conducting an extensive analysis of the evidence, however, the FTC applied the “quick look” standard, under which the conduct at issue is presumed anticompetitive. The antitrust scholars and WLF contended that this was error. The Second Circuit agreed. It held that although trademark settlements are not immune from antitrust scrutiny, the FTC erred by (1) considering the agreements to be “inherently suspect” and (2) incorrectly concluding that the agreements violated the FTC Act under the rule of reason.
On August 26, 2021, the Second Circuit denied the FTC’s petition for rehearing or, in the alternative, for rehearing en banc.
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