Thursday, January 15, 2004
Playboy Suit Over Use of Trademark in Search Engine Reinstated
From Staff and Wire Service Reports
A suit in which Playboy Enterprises Inc. contends Netscape Communications Inc. infringed its trademark on the terms “playboy” and “playmate” by using them to generate adult advertising was reinstated yesterday by the Ninth U.S. Circuit Court of Appeals.
The court said U.S. District Judge Alicemarie H. Stotler of the Central District of California erred in granting summary judgment for Netscape, both on Playboy’s infringement claim and on its cause of action for trademark dilution.
Senior Judge Thomas G. Nelson said Playboy produced evidence which raised issues of fact as to whether Netscape’s Internet search engine made improper use of “keying”—a process by which banner advertising promoting items related to search terms typed in by users is generated on the Web page which provides the results.
Netscape’s search engine—originally created by Web portal Excite.com—included advertising for adult-oriented sites and products on the resulting page when users’ search terms included “playboy” or “playmate.” The ads were not related to Playboy Enterprises, but did not clearly identify their sponsors.
Both terms are Playboy trademarks.
Nelson noted that Playboy produced a study in which an expert concluded that a statistically significant number of Web users would think Playboy or a related company sponsored the advertising links. While the criticisms of the study made by the defendant might be valid, he said, Stotler denied a motion to exclude it and was not free to then disregard it in granting summary judgment.
The expert evidence alone was “probably” enough to create an issue of fact as to consumer confusion, precluding summary disposition, the judge declared.
Nelson conceded that it would become clear to users, once they clicked on an advertisement, that they were reaching a site not associated with Playboy. But he said Playboy had done enough to make out a case of infringement on a “initial interest” theory.
“Although dispelled before an actual sale occurs,” the judge observed, “initial interest confusion impermissibly capitalizes on the goodwill associated with a mark and is therefore actionable trademark infringement.”
Playboy’s theory of recovery “strongly resembles” the theory accepted by the Ninth Circuit in Brookfield Communications, Inc. v. West Coast Entertainment Corporation, 174 F.3d 1036 (1999), Nelson said.
Brookfield involved “metatags,” which are terms embedded in the coding that produces a Web page. Metatags are not visible on the page, but are used by search engines to identify content relevant to a Web user’s search.
The court ruled that a video rental company which used the term “moviebuff” in the metatags for its Web site infringed on the rights of the firm that had trademarked the term.
Netscape’s reliance on the defense of “nominative use” was misplaced, Nelson said, since it requires that the product or service in question be one not readily identifiable without use of the trademark.
“Defendants could use other words, besides PEI’s marks, to trigger adult-oriented banner advertisements. Indeed, they already do so. The list they sell to advertisers includes over 400 terms besides PEI’s marks. There is nothing indispensable, in this context, about PEI’s marks. Defendants do not wish to identify PEI or its products when they key banner advertisements to PEI’s marks. Rather, they wish to identify consumers who are interested in adult-oriented entertainment so they can draw them to competitors’ websites. Accordingly, their use is not nominative.”
Stotler also erred in granting summary judgment on the plaintiff’s trademark dilution claim, the judge explained, since there were issues of fact as to whether Playboy’s marks were distinctive and famous, and as to whether defendant’s commercial use of them “blurred” or “tarnished” their association with Playboy.
Senior Judge Betty B. Fletcher joined in Nelson’s opinion.
Judge Marsha S. Berzon authored a separate concurring opinion in which she suggested that the holding of Brookfield might be too broad.
While Playboy was entitled to pursue its claim that initial interest confusion was created by banner advertising the sponsor of which was not identified, Brookfield would appear to support a claim even if the ads had included that information, Berzon said.
“There is a big difference between hijacking a customer to another website by making the customer think he or she is visiting the trademark holder’s website (even if only briefly), which is what may be happening in this case when the banner advertisements are not labeled, and just distracting a potential customer with another choice, when it is clear that it is a choice,” she declared.
“Accordingly, I simply cannot understand the broad principle set forth in Brookfield.”
Netscape was acquired in March of 1999 by Dulles, Va.-based America Online Inc. Excite.com merged with @Home to become Excite@Home in January 1999, but the $6.7 billion company swiftly foundered and ceased operations in February 2002.
Although the original target of Playboy’s case no longer conducts business, Playboy attorneys plan to proceed to set a precedent. Playboy is suing Netscape for financial damages “well into the seven figures,” Barry G. Felder, who represents Playboy for New York-based Brown Raysman Millstein Felder & Steiner, said.
“There are all types of methods used by search engines and Internet advertisers to sell products, and I believe that the principles established here—that one cannot use trademarks in a confusing way on the Internet—will have an impact on other cases,” Felder said. “We feel very good about what happened today.”
AOL spokesman Nicholas Graham said the ruling “disappointed” AOL. He said the company is “assessing and considering the legal options available.”
The case is Playboy Enterprises, Inc. v. Netscape Communications Corporation, 00-56648.
Copyright 2004, Metropolitan News Company