Playboy Settles Netscape Search Engine Advertising Case

By Matthew Hicks  |  Posted 2004-01-23 Print this article Print

Playboy and AOL reached undisclosed terms a week after an appeals court ruled that Playboy could proceed with its trademark infringement lawsuit.

A week after an appeals court ruling revived a Playboy Enterprises Inc. trademark infringement lawsuit against Netscape Communications Inc., the companies have reached a settlement in the case. On Friday, a spokesman for Netscape parent America Online Inc. and the attorney representing Playboy confirmed that a settlement had been reached in recent days but declined to discuss the terms of the settlement. Chicago-based Playboy had sued Netscape for linking to advertisements of its competitors when users entered words such as "playboy" and "playmate" in search engines. Playboy had claimed that the practice, known as "keying," damaged its brand because its trademarks were associated with other products.
Last week, the Ninth Circuit Court of Appeals in San Francisco reversed a district courts 2002 dismissal of the suit, allowing it to head to trial. But this weeks settlement puts an end to the case, which has been closely watched in the search engine advertising field.
While the Playboy case dealt specifically with banner ads triggered by keywords, it is likely to have a bearing on other cases that involve the use of specific words to launch search engine advertising, said Robert Andris, a partner at Ropers, Majeski, Kohn & Bentley LLP, in Redwood City, Calif. Keyword-base advertising has become big business for search engines such as Google Inc. and Yahoo Inc. subsidiary Overture, that let advertisers bid on terms that return paid search listings. Google, of Mountain View, Calif., already has faced legal challenges over its keyword-based ad service, AdWords. It is embroiled in a lawsuit with Luis Vuitton SA regarding keyword-based ads. And in November, Google asked for a California courts ruling to back its trademark policy for AdWords after facing the threat of a lawsuit from American Blind & Wallpaper Factory Inc. Andris, who was not involved in the Playboy case, said that a settlement was likely Netscapes best option following the Ninth Circuits decision. Netscape could have appealed the ruling further to the U.S. Supreme Court or gone to trial, but both options can be expensive and difficult to win, Andris said. "There really are only a couple places that the losing party can go if it doesnt agree with result," Andris said.
Matthew Hicks As an online reporter for, Matt Hicks covers the fast-changing developments in Internet technologies. His coverage includes the growing field of Web conferencing software and services. With eight years as a business and technology journalist, Matt has gained insight into the market strategies of IT vendors as well as the needs of enterprise IT managers. He joined Ziff Davis in 1999 as a staff writer for the former Strategies section of eWEEK, where he wrote in-depth features about corporate strategies for e-business and enterprise software. In 2002, he moved to the News department at the magazine as a senior writer specializing in coverage of database software and enterprise networking. Later that year Matt started a yearlong fellowship in Washington, DC, after being awarded an American Political Science Association Congressional Fellowship for Journalist. As a fellow, he spent nine months working on policy issues, including technology policy, in for a Member of the U.S. House of Representatives. He rejoined Ziff Davis in August 2003 as a reporter dedicated to online coverage for Along with Web conferencing, he follows search engines, Web browsers, speech technology and the Internet domain-naming system.

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