TRADEMARK—Playboy Appeal Has Major Implications for Internet Ads

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Punch in the classic play “Playboy of the Western World” on some Internet search engines and you might wind up seeing X-rated advertising teases that writer J.M. Synge could hardly have imagined back in 1907.

Literary purists would be aghast over the electronic non sequitur.

Playboy Enterprises Inc. is in court over it.

In a case being closely watched by trademark attorneys and companies doing business on the Internet, a federal appeals court in Los Angeles will hear arguments in early September in Playboy’s ongoing battle with Excite Inc. and Netscape Communications Corp.

Playboy, whose Internet operations are based in Los Angeles, claim the search engines infringed on its trademark names “playboy” and “playmate” when selling advertising. The process, called “keying,” involves tying ads from other companies in this case pornography sites to search results from queries for those names.

Playboy brought the case in 1999, and Excite moved quickly to have it thrown out. U.S. District Judge Alicemarie Stotler granted Excite’s request for summary judgment, prompting Playboy to appeal the case to the 9th U.S. Circuit Court of Appeals.

That hearing, set for Sept. 11, could serve as a precedent for how ads are sold on the Internet in the future, and could throw the question of keying to the U.S. Supreme Court.

“The decision will have an impact on the practice of keying, which is a standard business practice of search engines that provide targeted advertising,” said Rohit Shendrikar, trademark attorney with Mitchell Silberberg & Knupp LLP in Los Angeles. “It’s analogous to advertising based on demographics.”

In the Playboy case, Excite sold the “playboy” and “playmate” names along with 448 other words most of them “words you’d understand to be those you can’t use in everyday language,” said Barry Felder, lead lawyer for Playboy at Brown Raysman Millstein Felder and Steiner LLP.

The ads are placed on the Web page showing results of the search, one of which is the official Playboy site. Playboy contends the practice causes confusion over whether the advertisers are official Playboy sites and are selling official Playboy goods and services. By diverting a potential buyer to other sites, Playboy claimed it misses out on potential revenues.


Dilution of trademark

The company is not contesting the practice of keying in general, but whether the search engines can sell ads by using keyword names that also are trademarks.

“It’s probably the first time the appellate court in the U.S. has addressed the question of whether keyword targeted banner advertisements can amount to trademark infringement or dilution,” Felder said.

If Playboy which has a strong history of defending its trademark wins its appeal and the following trial, search engines will have to be careful about other search terms with questionable trademark ownership, said John Sullivan, associate general counsel for Excite. Apple, for instance, may be a fruit, but it’s also the trademark of a computer company and would be therefore unavailable to advertisers.

“It would certainly hamper the ability of advertisers to get the advertising in front of the people they want the most,” he said.

But Playboy’s case didn’t get off to a good start.

The summary judgment issued last September found that Playboy did not have trademark rights to the names “playboy” and “playmate” because the two are regular words in the dictionary. Also, the search engines claim they did not make money off the use of those words because the ads themselves do not display the words “playboy” or “playmate” on them.

“Playboy’s position is novel,” Sullivan said. “Trademark law prohibits one company to use a mark that is confusingly similar to another company’s that competes with the trademark owner. Here, no goods or services are being branded with ‘playboy’ or ‘playmate’ or anything similar to those terms. I don’t know of any cases of a media company that has been challenged for running advertising where it’s not actual infringement but positioning.”

Therefore, the summary judgment found, there is no confusion as to whether the banner ads are official sites for Playboy.

Still, no case has addressed the issue of keying using potential trademark names. And not all trademark attorneys agreed with the lower court’s ruling.

“There’s concern perhaps the court didn’t apply the trademark principles here,” Shendrikar said. “As long as trademark owners see the law is correctly applied, that’s the key. In the future they can rely on this case, and it can provide a precedent value in the context of Internet advertising.”