PLAY WITH YOUR OWN MATES

BY DANIEL C. GLAZER | SHEARMAN & STERLING LLP

THE CASE

Playboy Enterprises, Inc. v. Netscape Communications Corp. The defendants required adult-oriented companies US Court of Appeals for the Ninth Circuit requesting keyed banner ads to link such advertisements 14 January 2004 to a predetermined list of over four hundred terms related to sex and adult entertainment. The list included PEI’s proprietary terms PLAYBOY and PLAYMATE. PLAYBOY FORCES A RETHINK ON THE NATURE OF ONLINE INFRINGEMENT As a result, Internet users entering “playboy” or n a decision that both expanded and potentially “playmate” as search terms would be confronted on the I narrowed the scope of initial interest confusion on search results page with banner ads for adult-oriented the Internet, the US Court of Appeals for the Ninth companies unrelated to (but often competitive with) Circuit has ruled that Playboy Enterprises, Inc. (PEI) PEI. However, some banner ads did not clearly indicate can protect its trademarks PLAYBOY and PLAYMATE that the source of the advertisement was not PEI, and from being used as Internet search engine keywords. the defendants did not require such identification.

The defendants, Netscape Communications Corp. and In 1999, PEI brought an action in federal district Excite, Inc., utilized a practice called “keying” in court in California, claiming that the defendants’ connection with their Internet search engines. When keying practices infringed and diluted PEI’s rights in Internet users typed in certain search terms, advertisements PLAYBOY and PLAYMATE. PEI asserted that Internet would appear on the top or side of the ensuing search users were likely to assume that the keyed banner ads results page (so-called “banner ads”). By linking the banner were associated with PEI, and not realize their mistake ads to pre-identified terms, the defendants could allow until they had already accessed the advertisers’ websites. advertisers to target their advertisements at individuals The district court granted the defendants’ motion for with certain specific interests. summary judgment in September 2000, finding no actionable use of PEI’s marks because defendants and In Brookfield, the defendant used plaintiff’s their advertisers did not use the marks to identify their MOVIEBUFF mark in the metatags3 for defendant’s goods or services.1 A three-judge panel of the Ninth westcoastvideo.com website. The Ninth Circuit found that Circuit overturned the district court’s ruling following defendant’s use of MOVIEBUFF created actionable an appeal by PEI, finding genuine issues of material fact initial interest confusion “in the sense that, by using with respect to PEI’s arguments that defendants’ search ‘moviebuff.com’ or ‘MovieBuff’ [in its metatags] to divert engines infringed and diluted its trademarks. people looking for ‘MovieBuff’ to its web site, West Coast improperly benefits from the goodwill that Brookfield PLAYBOY AT APPEAL developed in its mark.” 4 In reversing the district court’s decision, the Ninth Circuit observed that PEI’s strongest argument for In Playboy, as in Brookfield, the plaintiff claimed that its trademark infringement was that defendants’ practices goodwill in the marks was used to benefit its competitors created “initial interest” confusion, that is, customer by diverting unwitting Internet users to competitors’ confusion that creates initial interest in a competitor’s websites. Even after the initial confusion had dissipated, product. Although dispelled prior to the point of sale, there was a risk that such users would be satisfied with initial interest confusion allows a competitor to “get its the competitors’ services and not seek out the plaintiff’s foot in the door” with consumers seeking to purchase website. Such unauthorized use of PEI’s marks, the court goods and services sold by both the competitor and the concluded, is actionable. trademark owner. The Playboy court also appeared to be persuaded by PEI’s PEI argued that Internet users using PEI’s marks as search evidence that defendants refused to remove the terms engine keywords were likely to be initially confused as to PLAYBOY and PLAYMATE from defendants’ the source of unmarked or ambiguously marked banner predetermined list of keywords provided to advertisers, ads that appeared on the search results page. Users even when advertisers requested that they do so. As the accessing competitors’ websites linked to such court noted, such evidence suggested “at a minimum, that advertisements were likely to do so under the mistaken defendants do nothing to alleviate confusion, . . . and that belief that PEI sponsored or affiliated the websites. they profit from confusion.” Even if they realized immediately upon arriving at a competitor’s website that the site was unrelated to PEI, The court rejected defendants’ fair use, nominative use the competitor gained a customer (at least temporarily) and functional use defenses. Because the court found that by misappropriating PEI’s goodwill in its marks. genuine issues of fact existed as to likelihood of confusion, the fair use defense necessarily failed. As the As the court noted, PEI’s theory was similar to the approach court observed, “a fair use may not be a confusing use.” that the Ninth Circuit adopted in its seminal case on initial interest confusion on the Internet, Brookfield Likewise, the defendants’ nominative use defense Communications, Inc. v. West Coast Entertainment Corp.2 (i.e., that defendants used only so much of PEI’s marks

2 as was necessary to identify PEI’s services) failed because In her concurring opinion, Judge Berzon went a step defendants used PEI’s marks as a prompt for displaying further and called for a reconsideration of Brookfield to its competitors’ advertisements, which lacked any the extent it suggests an “insupportable rule” that initial comparison to PEI or explanation of any relationship interest confusion can exist where Internet users are between the competitors and PEI. never confused and consciously choose to access a competitor’s website. Finally, the court rejected Netscape’s functional use argument, i.e., that PEI’s marks are functional and Internet search engines do not take users directly to should not be granted trademark protection in the websites potentially responsive to a given keyword query. context of Internet search engine keywords. The court Rather, based on several factors (including the website’s concluded that “PEI could easily have called its magazine metatags) search engines typically generate lists of and its models entirely different things without losing any of hyperlinks to websites for users to consider, as well as their intended function.” some additional information describing the websites and their content. Unless such additional information The Ninth Circuit also reversed the district court’s ruling creates confusion, any diversion of an Internet user’s for the defendants on PEI’s dilution claim. The appeals interest is made of the user’s own free will. The principle court found that genuine issues of material fact remained is the same in the case of banner ads—Internet users are with respect to the famousness of PEI’s marks and presented with a set of advertisements and may choose defendants’ commercial use of such marks. Further, the to access the websites linked to such advertisements. court directed the district court to allow PEI to conduct additional discovery in light of the new standard for As Judge Berzon stated, “There is a big difference proving dilution articulated by the US Supreme Court in between hijacking a customer to another website by Moseley v. V Secret Catalogue,5 i.e., that plaintiff must making the customer think he or she is visiting the show actual dilution, not a likelihood of dilution. trademark holder’s website (even if only briefly), which is what may be happening in this case when the banner WHITHER BROOKFIELD? advertisements are not labeled, and just distracting a The Playboy decision also is notable because of the issues potential customer with another choice, when it is clear the Ninth Circuit expressly declined to consider. As the that it is a choice.” The consumer may choose to go to the court stated, “we note that we are not addressing a trademark owner’s website, or to a competitor’s website, situation in which a banner advertisement clearly identifies but “such choices do not constitute trademark its source with its sponsor’s name (doing so might infringement off the [I]nternet, and I cannot understand eliminate the likelihood of initial interest confusion that why they should on the [I]nternet.” exists in this case) or in which a search engine clearly identifies a banner advertisement’s source.” The court IMPLICATIONS OF PLAYBOY noted that it was evaluating only the situation in which Playboy is the most recent in a series of cases in which banner ads placed by PEI’s competitors were not clearly the Ninth Circuit has modified its approach to initial identified as unrelated to PEI. interest confusion in the context of the Internet.6

3 In some ways, Playboy appears to expand initial interest Endnotes: confusion in cyberspace. Previously, courts had utilized the doctrine primarily in cases involving website metatags 1 Playboy Enters., Inc. v. Netscape Communications Corp., and domain names. The Ninth Circuit’s application of 2000 WL 1308815 at *1 (C.D. Cal. Sept. 13, 2000). initial interest confusion to search engine keywords allows trademark owners to prevent an additional type of 2 174 F.3d 1036 (9th Cir. 1999). unauthorized use of their marks on the Internet. 3 Metatags are a part of the code in which web pages are On the other hand, the Ninth Circuit appears to be written and are often used to describe and catalogue questioning the scope of Brookfield and subsequent initial a website’s contents. Although typically invisible to interest confusion decisions that found actionable a Internet users, Internet search engines can use competitor’s use of another’s mark in the metatags of the metatags to find and rank websites that are potentially competitor’s website. Playboy suggests that liability should responsive to an Internet user’s search query. be restricted to cases where Internet users are likely to go to the competitor’s website without knowing in advance 4 174 F.3d at 1062. that the website is unrelated to the trademark owner. Under such an approach, using another’s trademark to 5 537 U.S. 418 (2003). The Playboy court’s directive is generate search engine results and banner ads that are moot, however, as the parties announced a settlement clearly labeled as being unrelated to the trademark owner of the litigation soon after the Ninth Circuit released likely would not result in initial interest confusion. As its decision. Judge Berzon reasoned, liability would attach only if the Internet user is unable to make an informed, conscious 6 Compare Brookfield with, e.g., Interstellar Starship choice before going to a competitor’s website. Servs. Ltd. v. Epix, Inc., 304 F.3d 936, 945 n.10 |(9th Cir. 2002) (noting that search engine results now are Given Judge Berzon’s strong suggestion that the Ninth “largely irrelevant” to an initial interest confusion Circuit revising the issues presented by Playboy and analysis). Brookfield, it is quite possible that the Ninth Circuit will have more to say on the topic of initial interest confusion This article originally appeared in the March 2004 issue of on the Internet. In the meantime, Playboy stands as an Trademark World. For more information about Trademark World, excellent example of how trademark law continues to please visit www.ipworldonline.com. evolve and adapt to the changing realities of cyberspace.

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