Volume II

Issue : 2: January 22, 2004

• U.S. Court of Appeals Finds Trade-mark Rights May Limit "Keyed" Internet Searches
• Canadian Race Track First to Offer Online Gambling
• Microsoft Still on the Hook in EOLAS Patent Battle
• USPTO Releases List of Top Ten Patent Recipients for 2003
• U.S. Court of Appeals Rules that "Lawoffices" is Not Entitled to Trademark Protection
• VoIP: Level 3 Files Petition Seeking Exemption - FCC Chair Opposes Application of Existing Regulation - FBI Seeks Ability to Intercept Conversions - Bangladesh Telecom Breaks Law
• Canadian Firm Required to Pay Redress for Misleading Domain Name Marketing
• Copyright Ruling Appealed by Industry Groups - CRIA Launching Lawsuits Against File Swappers
• US-Court-of-Appeals-Dismisses-Honeywells-Attempt-to-Utilize-Trademark-Protection-in-Expired-Patent-Case
• Canadian Consumer Ministers Approve E-Commerce Code

Home > Volume II > Issue 2: January 22, 2004 > U.S. Court of Appeals Finds Trade-mark Rights May Limit "Keyed" Internet Searches

U.S. Court of Appeals Finds Trade-mark Rights May Limit "Keyed" Internet Searches

The United States Court of Appeals for the Ninth Circuit has ruled that Playboy Enterprises Inc. (PEI) has at least an arguable case against Netscape Communications Corp. and Excite Inc. for trade-mark infringement.

PEI owns trade-marks for "Playboy" and "Playmate". The defendants included these terms in a list of about 400 terms to which they "keyed" advertisers' banner ads. Thus, when a user typed in Playboy or Playmate, other companies' banner ads would appear on the search results page. The defendants monitored click rates and used the statistics to convince advertisers to renew their key word contracts. PEI was concerned that users were being directed to adult-oriented banner ads that were graphic in nature and confusingly labelled. The defendants conceded that they used the words for their secondary meanings. The Court pointed out that this must be true as the defendants did not use the term "Playmate" for its dictionary definition of a "companion, especially a child, in games and play".

The lower Court granted summary judgment in favour of the defendants. The Appeal Court reversed and concluded that there were genuine issues of material fact which required a trial because PEI had a strong case for trade-mark infringement based on the likelihood of confusion. In particular, PEI was able to show the likelihood of initial interest confusion. Following Brookfield Communications, Inc. v. West Coast Entertainment Corporation, 174 F. 3d 1036 (Ninth Circuit, 1999) the Court accepted the argument that Internet users searching for PEI's website would find themselves at another website. Although they might realize immediately that it was an unrelated site, some customers who were originally seeking a PEI website might be perfectly content to stay at the other site. Those customers would have found the unrelated site due to the defendants' "misappropriation of PEI's goodwill in its mark". Such use of PEI's use was actionable. The Court went on to analyse the eight factor test set out in AMF Inc. and Sleekcraft Boats, 599 F. 2d 341 (Ninth Circuit, 1979) and found that a number of factors weighed in favour of PEI and demonstrated genuine issues to be tried.

The result of this case is that a search engine would be wise not to use trade-marked search terms to point customers to advertisements for companies other than the trade-mark owners.

For a copy of the decision, visit:
http://caselaw.findlaw.com/data2/circs/9th/0056648P.pdf