Dealing a potential setback to the Web search advertising market, a federal appeals court has reopened a lawsuit challenging the unauthorized use of trademarks in ads linked to search engine keywords. The Ninth Circuit U.S. Court of Appeals in San Francisco on Wednesday found Playboy Enterprises can pursue charges that Excite and Netscape Communications violated its trademark by selling banner advertisements triggered by the terms "playboy" and "playmate." The decision reverses a district court ruling that dismissed the suit without a trial in 2000.
Playboy "clearly holds the marks in question, and defendants used the marks in commerce without (its) permission," a split three-judge panel wrote in its majority decision. "Some consumers, initially seeking Playboy"s sites, may initially believe that unlabeled banner advertisements are links to Playboy"s sites...Once they follow the instructions to "click here," and they access the site, they may well realize that they are not at a Playboy-sponsored site." The decision comes at a time when search engine-related trademark cases are mounting, thanks to the growing popularity of keyword-auctioned advertising programs pioneered by Yahoo-owned Overture Services. Google, the darling of Internet search engines, faces trademark complaints from advertisers of its popular keyword-auction program that charge misuse of their trademarks. In December, Google asked a court to rule on whether its keyword-advertising policy is legal as a result.
Wednesday"s court opinion backs up a recent decision related to another form of online advertising: pop-ups. In late December, as part of a lawsuit filed against WhenU by 1-800-Contacts, a New York district court granted a preliminary injunction that prohibits WhenU from triggering pop-ups when people visit 1-800-Contacts" Web site. Scant trademark law exists when it comes to this type of advertising, and the opinion is the first on the issue from an appellate court, according to attorneys following the case. John Baum, a partner in trademark and copyright law at San Francisco-based Townsend and Townsend, who is not involved in the case, said trademark owners stand to benefit from the decision, which offers a needed clarification of trademark rights in search engine marketing.