Excite Wins Playboy Lawsuit

A federal court in southern California has ruled against Playboy
Enterprises Inc., in a case involving the sale of online banner ads keyed
to specific search terms.

A U.S. District judge for the central district of California, southern
division, refused to grant Playboy’s request for a preliminary injunction
against Excite Inc. and Netscape Communications Corp., which operated a co-branded version of Excite’s search service at its Netcenter site.

On June 24, the court ruled that the search sites’ sale of the search
keywords “playboy” and “playmate” to third-party advertisers which operate
adult entertainment sites does not constitute trademark infringement or
dilution.

The case was closely watched by trademark lawyers and search site operators
alike. They’ve been looking for guidance from the courts on the legality of
the common practice by search engines of keying ads displayed on search
results pages to specific search terms, rather than posting banners in a
random rotation. The ability to provide such context-sensitive advertising
allows search sites to charge advertisers a premium at a time when ad rates
overall are dropping.

But legal experts said Thursday the decision by District Judge Alicemarie
Stotler failed to clarify whether selling trade marked search terms to a
third party is generally considered infringement.

Jessica Friedman, a new media attorney with the New York law firm Leavy
Rosensweig & Hyman, said the court effectively skirted the issue, ruling
narrowly that the terms playboy and playmate are generic, and Playboy
Enterprises has no monopoly on those words in all forms.

“The court saw a slippery slope if it gave Playboy what it wanted. It would
remove words from the English language which mean other things than the
company’s goods and services,” said Friedman.

Diane Cabell, an attorney with Boston’s Fausett, Gaeta & Lund, called the
ruling “most encouraging to consumers and to the other commercial
enterprises that share commonplace words to identify their businesses. To
prohibit cost recovery for such valuable services as search engines would
defeat the utility of the Internet as an information medium.”

Had the case involved a
unique name such as Kodak, the court might have ruled differently, she said.
Instead, the court’s decision may have eroded the value of trademarks on
the Web, according to Sally Abel, a trademark attorney with the Bay Area
law firm Fenwick & West. She said companies will have to wait for future
rulings to determine whether the technique rises to the level of trademark
infringement.

“In some ways it’s no different than slapping up a billboard next to your
competitor’s front door, except that this is arguably a deliberate attempt
to divert traffic, and on the Internet, eyeballs are everything.”

Playboy’s attorney, Barry Felder of Brown, Raysman Millstein, Felder and Steiner in New York, said Thursday the company will appeal the ruling on the preliminary injunction to the 9th Circuit Court of Appeals. Playboy also intends to proceed to trial in the lower court on its request for permanent injunctive relief and damages.

A similar case is still pending against
Excite. Filed this past spring by Estee Lauder, the suit accused Excite of
trading on its name to divert traffic to a perfume web site operated by a
third party.

In related news Thursday, the Web-based credit card company NextCard is suing Providian, the big offline credit card firm, for allegedly copying one of its online
banner ads.

NextCard accuses Providian of stealing the idea behind an ads which
incorporates an image of a thermometer to represent the idea of falling
interest rates. NextCard claims it has had nearly 700,000 click-throughs on
its ad this year.

Providian reportedly believes it’s competing fairly and there are no
proprietary rights in banner ads. A U.S. District Court in San Francisco
will consider both arguments.

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