Last month, the United States District Court in Santa Anna, California dismissed a lawsuit brought by Playboy Enterprises against Excite, Inc. and its search engine licensee, Netscape Communications. The summary judgment for the defendants denying Playboy’s request for a preliminary injunction could serve as a precedent to protect the Internet advertising practice known as "keying". The court’s ruling essentially allows for search engine companies, such as Netscape, to use "word" trademarks without consent in some programming and sales practices.

Playboy Enterprises which owns both trademarks "playboy" and "playmate" sued Excite and Netscape last year claiming that the search engine’s practice of displaying banner ads from pornographic companies whenever the words "playboy" or "playmate" were typed in as search terms was an unlawful use of its registered trademark.

Playboy claims that a user who clicks on the banner ads will be led into a web of pornographic sites. Playboy does not want to be associated with these sites reasoning that the other sites’ hard-core pornography nature dilutes the value of Playboy’s trademark. In addition, Playboy’s suit objects to Excite’s profit earned from the use of Playboy’s trademark.

Typically, infringement on a company’s trademark occurs when another company uses the exact same trademark and customers confuse the two products and purchase the infringing product. In this instance, Playboy claimed infringement without its trademark ever being displayed.

The court stated two main reasons for rejecting Playboy’s core argument that Excite was unlawfully using Playboy’s trademark. In her opinion, Federal District Court Judge Alicemarie H. Stotler found that Playboy did not have a monopoly on the generic use of those words in English and, therefore, Excite had not made commercial use of Playboy’s trademark. In addition, she ruled that there was no evidence that customers were confusing Playboy with the banner ad pornography sites.

This is an important decision for search engine companies because banner ad keying is a crucial business model for them, often contributing up to 30% of their ad revenue. Similar to other media industries such as newspapers, television, and radio, the Internet is an industry supported by advertising. Search engines sell the banner ads that pop up on the screen above the search results. These ads are often related to the key words so to connect industry related products with targeted customers.

Another important policy implication is that a victory for Playboy would have led to more intrusive lawyering on the Internet. Each banner ad sale would have to be cleared by lawyers to determine if the ad would infringe upon a company’s trademark thus hindering business online. However, it appears for the moment that the practice of selling banner ads related to key words can continue freely, though Playboy is appealing. This issue is also still in debate because there are other cases pending regarding the issue that trademark holders should not have to pay to keep their own name. If future cases are decided in a like manner, the possible result could be trademark holders paying search engines not to sell keyword-linked banners to competitors.

SearchEngineWatch.com - News, techniques and information related to various search engines.

C-Net.com News brief concerning the verdict and its effects.

New York Times article concerning the verdict (Need free username for access to article).