SAN FRANCISCO -- In a decision that could prompt scrutiny of Internet search engines and online advertisers, a federal appeals court Wednesday reinstated a trademark infringement lawsuit by Playboy Enterprises against Netscape Communications.
A three-judge panel of the 9th U.S. Circuit Court of Appeals said the Chicago-based adult entertainment company could proceed with its case against the Mountain View-based subsidiary of America Online Inc., which used words such as "playboy" and "playmate" in online search engines to link to advertisements for adult-themed rivals. Playboy argued the links tarnished and diluted its brand name by associating its trademarks with inferior products.
The case, originally filed in Los Angeles in 1999, could determine the legal limits of "keying." The online advertising practice allows advertisers to target individuals who are most likely interested in specific types of products.
For example, a person who types "circular saw" into a Yahoo search engine might see a listing sponsored by Home Depot.
"Playboy" and "playmate" were included in a list of about 400 words that Netscape's search engine used to identify people who were likely interested in buying adult-themed merchandise. Other words included "sex" and the names of certain body parts. People who typed in those words would receive banner ads for numerous adult-themed sites that were not associated with Playboy.
Playboy is suing Netscape for financial damages "well into the seven figures" and hopes the case will set a precedent, said attorney Barry G. Felder, who represents Playboy.
"There are all types of methods used by search engines and Internet advertisers to sell products, and I believe that the principles established here - that one cannot use trademarks in a confusing way on the Internet - will have an impact on other cases," Felder said. "We feel very good about what happened today."
AOL spokesman Nicholas Graham said the ruling "disappointed" AOL. He said the company, which acquired Netscape in 1999, is "assessing and considering the legal options available."
No court date has been set.
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