Playboy and Netscape settle trade mark advertising case

The case was bought by Playboy Enterprises in 1999 against the search engines Excite (now defunct) and its licensee Netscape Communications (now owned by AOL).

Playboy sued the companies because their search engines displayed banner ads from competing pornography companies whenever its trade marks "playboy" or "playmate" were used as search terms. This practice, popular among search engines, is known as "keying" or "key word" advertising.

In September 2000 a federal court ruled against Playboy in a decision that the company's lawyers said "essentially legitimises" some unauthorised sales of trade marks.

The decision was reversed on appeal less than two weeks ago, and the case sent back to the district court for reconsideration.

The key factor for the three-judge panel appears to have been the fact that the pop-up ads did not make clear that they were neither from nor endorsed by Playboy. This meant that the user viewing the ads could be confused as to whether they were Playboy ads or not.

Judge Thomas Nelson wrote:

"The above evidence suggests, at a minimum, that defendants do nothing to alleviate confusion, even when asked to do so by their advertisers, and that they profit from confusion."

According to Reuters, Nicholas Graham, a spokesman for AOL, announced on Friday that a settlement had been reached between Netscape and Playboy Enterprises. "The terms of the settlement are not disclosable" said Graham.