[NYT] Playboy Ruling Recognizes Limits to Online Rights of Trademark Holders

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From: Adam Rifkin (adam@KnowNow.com)
Date: Sun Sep 17 2000 - 03:28:02 PDT

"You shouldn't have to pay to keep your own name." But how many names
are there really in the world?


> Playboy Ruling Recognizes Limits to Online Rights of Trademark Holders
> September 15, 2000
> In an important decision that recognizes limits to intellectual
> property rights online, a federal judge earlier this week ruled
> that a company's well-known trademarks may be used without
> authorization by search engines in some programming and sales
> practices.
> The four-page decision, published Tuesday by Judge Alicemarie H.
> Stotler of the United States District Court in Santa, Ana,
> California, dismissed a lawsuit brought by Playboy Enterprises
> against Excite, Inc. and its search engine licensee, Netscape
> Communications.
> The summary judgment ruling, if not reversed on appeal, may serve
> as a precedent to safeguard a common but controversial Internet
> advertising practice known as "keying," said lawyers who were
> familiar with the decision. Under the scheme, a search engine
> offers advertisers the ability to display specific banner ads
> whenever users enter selected search terms, including trademarks.
> Playboy sued Excite and Netscape last year, claiming that the
> search engines displayed banner ads from pornography companies
> whenever "playboy" or "playmate" were used as a serch term. Both
> words are trademarks owned by the Bunny Empire.
> The decision, which has already touched off some disagreement among
> intellectual property experts, may also remind companies that their
> rights to capitalize on their trademarks on the Internet are
> subject to traditional restrictions.
> Barry G. Felder, Playboy's lead lawyer in the case, said that his
> client plans to appeal. "We're essentially puzzled by the
> decision," he said. He added that under the reasoning expressed by
> Judge Stotler, some sales of trademarks "have been essentially
> legitimized."
> "We think that is clearly the wrong result," Felder, a partner with
> the New York-based law firm Brown Raysman Millstein Felder &
> Steiner, said. "We think the result will be corrected on appeal."
> Jeffrey K. Riffer, a lawyer for Excite, hailed the court's brief
> decision. He said the victory is important not just for Excite but
> for consumers.
> "Search engines do engage in selling keyword advertising -- it's an
> important business model," he said. Riffer, who works at Jeffer,
> Mangels, Butler & Marmaro, a Los Angeles law firm, said search
> engines can continue to offer their services to consumers for free
> only because of robust advertising revenues.
> Excite is one of many search engine portals that, for a premium
> rate, cause a pre-selected banner ad to pop up when certain search
> terms are used. Often a generic search term, such as "car," will
> trigger related ads. But sometimes search engine companies take the
> more controversial approach of displaying a company's banner ad
> whenever a competitor's trademark is used as a search term. Marissa
> Gluck, an online advertising analyst with Jupiter Communications,
> estimated that portals garner about 20 to 30 percent of their ad
> revenues from keyword banner ads.
> In its legal papers, Playboy argued that the use of its trademarks
> for the sales scheme amounted to trademark infringement and
> dilution. In the summer of 1999, Judge Stotler denied Playboy's
> request for a preliminary injunction barring Excite from the
> practice. Her ruling was affirmed by the U.S. Court of Appeals for
> the Ninth Circuit.
> In her most recent decision dismissing Playboy's case, Judge
> Stotler essentially found that in its advertising scheme Excite did
> not use the trademarks "playboy" and "playmate" in an unlawful
> manner. She suggested that rather than using the words to identify
> its own goods and services -- which might be illegal -- Excite
> merely used the terms in an appropriate manner to refer to Playboy.
> This "non-trademark use of a mark," she said, is a use to which the
> infringement laws do not apply.
> Moreover, said Judge Stotler, even if there were a trademark use,
> there could be no finding of infringement because there was no
> evidence that consumers confused Playboy products with the services
> of defendants. Elsewhere in the opinion, Judge Stotler said that
> Playboy's claim for dilution could not be sustained because there
> was no evidence that either Excite or Netscape "on its products"
> made use of Playboy's marks.
> Jessica Litman, a law professor at Detroit's Wayne State University
> School of Law who specializes in intellectual property and the
> Internet, said that Judge Stotler was "clearly right" on the
> infringement point.
> "You can look at this as a form of [lawful] comparative
> advertising," said Litman. "The people who are buying the keywords
> are saying to the consumer, 'You are a person who is interested in
> Playboy. You might therefore be interested in our goods.' That
> convention is pretty well known," she said.
> A real-world analogy, Litman offered, would be a store that sells a
> name-brand perfume but also sells the shelf-space next to to that
> luxury item to a competing brand.
> Litman also maintained that it was reasonable for the court to find
> that no consumers would be confused whether the keyed banner ads
> were affiliated with Playboy.
> "It's a short decision and it's hard to know how far it will
> extend," she said. "But given the increasing tendency among some
> courts to grant trademark owners expansive rights over the use of
> their marks on the Net, it's always nice to see a court applying
> traditional principles. In that sense it's a sound decision."
> Jeffrey R. Kuester, an Internet law expert at Thomas, Kayden,
> Horstemeyer & Risley, an Atlanta law firm, said in an interview
> that he disagreed with the court's ruling.
> "I come back to a basic premise," he said. "Excite is making money
> using Playboy's trademarks to send people to Playboy's competitors.
> Doesn't something sound wrong with that?"
> Kuester said that if the court's ruling held sway, then Fuji Film
> would be able to key its banner ads to the search term "Kodak" and
> Pepsi to "Coke." More likely, he said, the search engines would
> approach the trademark holders and offer, for a fee, to not sell
> keyword-linked banners to competitors.
> "You shouldn't have to pay to keep your own name," he said.
> The Playboy case is not the only lawsuit that challenges keyed banner
> ads. Last year, three subsidiaries of the Estee Lauder Companies,
> Inc. filed lawsuits against Excite and an online cosmetics company,
> Fragrance Counter, Inc., in the U.S., France and Germany. The
> Lauder Companies claimed, among other things, that when a consumer
> used the Excite search engine and typed in the search term "Estee
> Lauder," a Fragrance Counter banner ad appeared.
> Earlier this month, the Estee Lauder Companies and iBeauty, a
> successor to the Fragrance Company, announced a settlement under
> which iBeauty voluntarily agreed to refrain from using the Estee
> Lauder trademarks as Internet keywords. But the multi-national
> lawsuit against Excite is still pending, said Joshua Paul, a lawyer
> for the Estee Lauder Companies.


Famous people are just more interesting. -- Almost Famous

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