July 20, 1999 4:30 PM PDT

Playboy loses round in trademark suit

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In a federal ruling that stands to impact online advertising practices, Playboy Enterprises lost a round in lawsuit aiming to bar two portals from generating hard-core sex ads when visitors search for the term "playboy."

Playboy alleged in a lawsuit filed in U.S. District Court in the Central District of California that Excite and Netscape Communications violated its trademarks by presenting other companies' banner ads when surfers sought out the magazine's Web site.

Some search engines often charge more for "targeted" advertising. Excite's search technology, which powered the search engine at Netscape's Netcenter portal at the time the lawsuit was filed, uses 450 keywords, including "playboy" and "playmate," to generate an array of sex site ads when a visitor conducts a search. Advertisers buy into the keyword program to reach users seeking content related to their offerings. But Playboy said the program diluted its trademark.

However, U.S. District Judge Alicemarie Stotler disagreed with the publisher. In a ruling issued late last month, which was in regard to a preliminary motion filed by Playboy that asked the court to halt the portals from using Playboy's trademarks, Stotler said Playboy's trademarks were not infringed by the portals' ad technologies because the terms "playboy" and "playmate" are part of the English language and the company can't dominate their usage. An attorney for Playboy said today that the firm plans to appeal the ruling.

"Indeed, by seeking a prohibition on all advertisements that appear in response to the search words "playboy" and "playmate," [Playboy] would effectively monopolize the use of these words on the Internet," the ruling stated.

The decision is significant because it gives search engines, Net advertisers, and Web site developers clearer rules for using other entities' registered trademarks to bolster traffic to their sites or customers. Similar legal battles have been waged over the use of "metatags," terms hidden in Web sites' code that are read by search engines.

Playboy, for one, won a past case against an adult site that embedded "playboy" in its metatags in a 1997 Ninth Circuit decision. But Playboy lost another case it filed against a former Playmate to prevent her from embedding the company's trademarks in the code of her Web site. In that case, the judge said the terms applied to the woman and weren't deceitful.

Still, when it comes to search engines--which aren't direct competitors to Playboy--Stotler said it was acceptable for them to use the terms to drive traffic elsewhere. She noted that there are other firms that hold trademarks on "Playboy" and "Playmate": Igloo Products holds a trademark on "Playmate" for its beverage coolers, and W.E. Bailey & Son holds "Playboy" for its line of yams and sweet potatoes.

Playboy, a staunch protector of its intellectual property and trademarks, plans to appeal the ruling.

"If you think about it from a common-sense perspective, how would Apple feel if someone typed in "apple" and got an ad for IBM?" said attorney Jeffrey Neuburger of Brown, Raysman, Millstein, Selder, & Steiner, who represents Playboy.

"The search engines have sold 'playboy' and 'playmate' as search terms to adult entertainment sites," he added. "The judge didn't focus on the issue of, 'Why else would people be willing to buy these search terms if not to play off of the goodwill of Playboy's marks?'"

Some legal experts said Playboy's court loss will greatly impact portals' ability to sell banner ads.

"This is a very important decision. It does indicate the search engines will have a much more flexible approach to [advertising]?If the decision were to go the other way, it would take words out of circulation," said Mark Radcliffe, an attorney with Gray, Cary, Ware & Freidenrich.

Michael Overly, attorney with Foley & Lardner, said Stotler's ruling shows a shift in courts' tendencies to side with powerful trademark owners.

"A lot of people were very concerned after the Ninth Circuit decision regarding metatags and trademarks online--the court was taking a very narrow view," he said.

But Kevin Goering, attorney with Coudert Brothers, disagreed about the importance of the decision.

"I don't know if that has any really strong implications other than to say that search engines aren't [violating] the trademark," he said. "It preserves the current practices of the search engines."

 

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