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Trademark use in banner advertising limited?

Sex sells and few things sell better on the internet than sex (protectkids link), a fact which has not missed the advertising industry.

Via GrepLaw we are directed to a January 15, 2004 article by Stefanie Olsen on CNET News.com entitled “Web ad trademark law to be retested”, reporting on a 2-1 decision (in Playboy Enterprises v. Netscape Communications and Playboy Enterprises v. Excite [Nos. 00-56648 and 00-56662]) by the 9th Circuit U.S. Court of Appeals (majority opinion by T.G. Nelson) finding that “Playboy” and “Playmate” are clearly held trademarks and that Playboy Enterprises – contrary to the reversed district court decision (commented here by Martin Samson of Phillips Nizer) – can pursue charges against Excite and Netscape Communications for using these marks as entered in search engine searches to “trigger” banner advertisements which link to competitive and even non-competitive products.

The decision has important precedential value for the developing internet law on trademarks because it is the first decision on this issue by a U.S. Court of Appeals.

The Majority Opinion

As Circuit Judge T.G. Nelson writes in the majority opinion:

“This case involves a practice called ‘keying’ that defendants use on their Internet search engines. Keying allows advertisers to target individuals with certain interests by linking advertisements to pre-identified [search] terms….

Defendants have various lists of terms to which they key advertisers’ banner ads. Those lists include the one at issue in this case, a list containing terms related to sex and adultoriented entertainment. Among the over-400 terms in this list are two for which [Playboy Enterprises] holds trademarks: ‘playboy’ and ‘playmate.’ … Defendants require adult-oriented companies to link their ads to this set of words. Thus, when a user types in ‘playboy,’ ‘playmate,’ or one of the other listed terms, those [other] companies’ banner ads appear on the search results page….

We hold that genuine issues of material fact exist with respect to defendants’ keying practices. Thus, we conclude that summary judgment was inappropriate on the trademark infringement claim….

We reverse the district court’s grant of summary judgment on [Playboy Enterprises] second cause of action, trademark dilution (48) and remand for further proceedings. We conclude that [Playboy Enterprises] has established that genuine issues of material fact exist regarding two of the three elements that the parties dispute: the famousness of the marks and defendants’ commercial use of the mark.(49)

…

(49) The dilution statute, 15 U.S.C. § 1125(c), provides relief to the owners of famous marks by providing ‘an injunction against another person’s commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark….’ The only portion of [Playboy Enterprises] claim not in dispute is the time of defendants’ use, which was clearly after [Playboy Enterprises] registered the mark. That leaves the famousness of the mark, defendants’ commercial use of the mark, and dilution of the mark in dispute.”

The Concurring Opinion

Of interest is also Circuit Judge Berzon’s concurring opinion with detailed critical obiter dicta discussion of Brookfield Communications v. West Coast Entertainment Corp., 174 F.3d 1036 (9th Cir. 1999) which held that the trademarked name “moviebuff” used as a metatag by a non-trademark holder infringed on that trademark.

1-800 Contacts, Inc. v. WhenU.com

In a similar decision by a district court, 1-800 Contacts, Inc. v. WhenU.com and Vision Direct, Inc., as discussed by Gibson Dunn, and as written by Stefanie Olsen in a January 5, 2004 CNET News.com article:

“[T]he United States District Court for the Southern District of New York granted a preliminary injunction that prohibits WhenU from triggering pop-ups when people visit 1-800-Contacts’ Web site.”

The preliminary injunction in that case by Judge Deborah A. Batts is also handled by Anthony Lin in the New York Law Journal of December 30, 2003 at Law.com in the article “Pop-Up Advertising Enjoined in Trademark Suit”.

See also CNET’s “The Big Picture” for other links relating directly to trademark issues.