Playboy Enterprises, Inc., a Delaware Corporation, Plaintiff–Appellee, Argued and Submitted Sept

Home , Nominative use, Playboy Enterprises

796 279 FEDERAL REPORTER, 3d SERIES

Playboy Enterprises, Inc., a Delaware PLAYBOY ENTERPRISES, INC., corporation, Plaintiff–Counter– a Delaware corporation, Defendant–Appellee, Plaintiff–Appellant, v. Terri Welles, an individual, Defendant, v. and Terri WELLES, an individual; Terri Michael Mihalko, an individual; Ste- Welles, Inc., a California corporation; phen Huntington, an individual, Stephen Huntington, an individual; Defendants–Appellants. Michael Mihalko, an individual; Pip- Nos. 00–55009, 00–55229, 00– pi, Inc., a California corporation, De- 55537 and 00–55538. fendants–Appellees. United States Court of Appeals, Ninth Circuit. Playboy Enterprises, Inc., a Delaware corporation, Plaintiff–Appellee, Argued and Submitted Sept. 11, 2001 Filed Feb. 1, 2002. v.

Terri Welles, an individual; Ter- Publisher of magazine sued model it ri Welles, Inc., a California cor- designated as ‘‘Playmate of the Year 1981’’ from using that phrase and others involv- poration, Defendants–Appellants, ing its trademarks on her Internet web- and site. The United States District Court for the Southern District of California, Judith Stephen Huntington, an individual; Mi- N. Keep, Chief District Judge, granted summary judgment for model. Publisher chael Mihalko, an individual; Pippi, appealed. The Court of Appeals, T.G. Nel- Inc., a California corporation, Defen- son, Circuit Judge, held that: (1) use of dants. trademarks in website’s headlines and banner advertisements was nominative use; (2) Playboy Enterprises, Inc., a Delaware model’s inclusion of terms ‘‘playboy’’ and corporation, Plaintiff–Counter– ‘‘playmate’’ in metatags of her website was Defendant–Appellee, nominal use; (3) model’s repeated, stylized use of ‘‘PMOY 881,’’ on her wallpaper, or v. background, of her website was not nomi- Terri Welles, an individual; Terri native use. Welles, Inc., a California corporation, Affirmed in part, reversed and re- Defendants–Counter–Claimants–Ap- manded in part. pellants, 1. Federal Courts O776 and The Court of Appeals reviews a district court’s grant of summary judgment Pippi, Inc., a California corporation, de novo. Fed.Rules Civ.Proc.Rule 56, 28 Defendant–Appellant. U.S.C.A. PLAYBOY ENTERPRISES, INC. v. WELLES 797 Cite as 279 F.3d 796 (9th Cir. 2002)

2. Trade Regulation O375.1 bols associated with trademarks, and mod- The classic fair use case is one in el did nothing in conjunction with her use which the defendant has used the plain- of marks to suggest sponsorship or en- tiff’s mark to describe the defendant’s own dorsement by publisher. product. 8. Trade Regulation O375.1 3. Trade Regulation O375.1 To satisfy the first part of the three In a trademark infringement case, the part test for nominative use, the product test for ‘‘nominative use’’ is as follows: or service in question must be one not first, the product or service in question readily identifiable without use of the must be one not readily identifiable with- trademark; this situation arises when a out use of the trademark; second, only so trademark also describes a person, a place much of the mark or marks may be used or an attribute of a product and there is no as is reasonably necessary to identify the descriptive substitute for the trademark. product or service; and third, the user must do nothing that would, in conjunction 9. Trade Regulation O375.1 with the mark, suggest sponsorship or endorsement by the trademark holder. Model’s inclusion of terms ‘‘playboy’’ See publication Words and Phras- and ‘‘playmate’’ in metatags of her Inter- es for other judicial constructions net website was nominal use, excepted and definitions. from trademark infringement law, since there was no practical way of identifying 4. Trade Regulation O375.1 content of website without referring to In the context of trademark infringe- trademarked terms, trademarked terms ment, a nominative use may also be a accurately described contents of model’s commercial one. website in addition to describing model, 5. Trade Regulation O375.1 metatags used only so much of marks as In cases in which the defendant raises reasonably necessary and nothing was a nominative use defense to trademark done in conjunction with them to suggest infringement, the three factor nominative sponsorship or endorsement by trademark use test should be applied instead of the holder, website’s metatags did not repeat test for likelihood of confusion. terms extensively, and her site was not at top of list of search results when searching 6. Trade Regulation O340.1 by those terms. When a defendant uses a trademark nominally, the trademark will be identical 10. Trade Regulation O375.1 to the plaintiff’s mark, at least in terms of Model’s use of ‘‘PMOY 881,’’ as abbre- the words in question. viation for trademarked term ‘‘Playmate of 7. Trade Regulation O375.1 the Year 1981,’’ on her wallpaper, or back- Model’s use of trademarks of maga- ground, of her Internet website was not zine publisher in her headlines and banner nominative use and, on that basis, could advertisements was nominative use, ex- not be excepted from trademark infringe- cepted from law of trademark infringement law, since name of model or her ment, since there was no practical way of likeness did not appear before or after identifying content of website without re- ‘‘PMOY 881’’ designation and repeated, ferring to trademarked terms, model used stylized use of ‘‘PMOY 881’’ designation only trademarked words, not font or sym- was not necessary to describe model. 798 279 FEDERAL REPORTER, 3d SERIES

11. Trade Regulation O375.1 or service, but by creating an association Model’s reference on her Internet in consumers’ minds between a mark and a website to her title as ‘‘Playmate of the different good or service. Lanham Trade– Year 1981’’ was nominative use, and as Mark Act, § 43(c)(1), 15 U.S.C.A. such, was excepted from anti-dilution law; § 1125(c)(1). although model was in effect referring to 17. Trade Regulation O366 publisher’s product when she referred to Uses that do not create an improper her title, she did not diminish or dilute title association between a mark and a new by truthfully identifying herself as its one- product, but merely identify the trademark time recipient. Lanham Trade–Mark Act, holder’s products, are excepted from the § 43(c)(1), 15 U.S.C.A. § 1125(c)(1). reach of the anti-dilution statute. Lanham 12. Trade Regulation O366 Trade–Mark Act, § 43(c)(1), 15 U.S.C.A. Nominative uses, by definition, do not § 1125(c)(1). dilute trademarks. Lanham Trade–Mark 18. Trade Regulation O366 Act, § 43(c)(1), 15 U.S.C.A. § 1125(c)(1). Uses in comparative advertising are 13. Trade Regulation O366 excepted from the anti-dilution law. Lan- In the context of trademark dilution, ham Trade–Mark Act, § 43(c)(1), 15 ‘‘blurring’’ occurs when another person’s U.S.C.A. § 1125(c)(1). use of a mark creates the possibility that 19. Trade Regulation O366, 375.1 the mark will lose its ability to serve as a unique identifier of the plaintiff’s product. Nominative uses are excepted from Lanham Trade–Mark Act, § 43(c)(1), 15 anti-dilution law on the basis that a nomi- U.S.C.A. § 1125(c)(1). native use merely refers to the trademark See publication Words and Phras- holder’s product; it does not create an es for other judicial constructions improper association in consumers’ minds and definitions. between a new product and the trademark holder’s mark. Lanham Trade–Mark Act, 14. Trade Regulation O366 § 43(c)(1), 15 U.S.C.A. § 1125(c)(1). In the context of trademark dilution, ‘‘tarnishment’’ occurs when a famous 20. Trade Regulation O366, 375.1 trademark is improperly associated with Model’s repeated, stylized use of an inferior or offensive product or service. ‘‘PMOY,’’ as abbreviation for trademarked Lanham Trade–Mark Act, § 43(c)(1), 15 term ‘‘Playmate of the Year,’’ on her wall- U.S.C.A. § 1125(c)(1). paper, or background, of her Internet web- See publication Words and Phras- site was not nominative and, on that basis, es for other judicial constructions could not be excepted from anti-dilution and definitions. law. Lanham Trade–Mark Act, § 43(c)(1), 15. Trade Regulation O366 15 U.S.C.A. § 1125(c)(1). Dilution of a trademark may occur 21. Trade Regulation O366 through uses on the internet as well as elsewhere. Model’s repeated, stylized use of term ‘‘PMOY’’ on her Internet website could 16. Trade Regulation O366 not, as a matter of law, dilute trademarked Dilution of a trademark works its term ‘‘Playmate of the Year,’’ since trade- harm not by causing confusion in consum- marked term ‘‘Playmate of the Year’’ was ers’ minds regarding the source of a good not identical or nearly identical to term PLAYBOY ENTERPRISES, INC. v. WELLES 799 Cite as 279 F.3d 796 (9th Cir. 2002)

‘‘PMOY.’’ Lanham Trade–Mark Act, ment as to its claims of trademark in- § 43(c)(1), 15 U.S.C.A. § 1125(c)(1). fringement, unfair competition, and breach of contract against Terri Welles; Terri 22. Corporations 1.6(3) O Welles, Inc.; Pippi, Inc.; and Welles’ cur- Corporate veil would not be pierced, rent and former ‘‘webmasters,’’ Steven under California law, to impute to model, Huntington and Michael Mihalko. We who controlled corporation, obligation of have jurisdiction pursuant to 28 U.S.C. corporation not to use magazine’s designa- § 1291, and we affirm in part and reverse tion of model as ‘‘Playmate of the Year in part. 1981’’ without magazine’s consent; although magazine advanced sufficient evi- In a separate memorandum disposition, dence to establish unity of interest, there we resolve Welles’ cross-appeal of the dis- was no indication that adherence to fiction trict court’s grant of summary judgment of separate existence of corporation would as to her counterclaims for defamation, sanction a fraud or promote injustice. intentional infliction of emotional distress, unfair competition, and interference with prospective economic advantage. Welles, Huntington and Mihalko also appeal the district court’s denial of their requests for Anthony Glassman, Glassman, Browning attorney’s fees. We resolve that issue in & Saltsman, Beverly Hills, California; the memorandum disposition as well. Ronald M. Johnston, Blanc Williams John- ston & Kronstadt, LLP, Los Angeles, Cali- I. fornia; Barry G. Felder, Brown Raysman Millstein Felder & Steiner LLP, Los An- Background geles, California, for the plaintiff-appellant. Terri Welles was on the cover of Play- David J. Noonan, Post Kirby Noonan & boy in 1981 and was chosen to be the Sweat LLP, San Diego, California; Jay S. Playboy Playmate of the Year for 1981. Kopelowitz, Kopelowitz & Associates, San Her use of the title ‘‘Playboy Playmate of Diego, California; Darren J. Quinn, Law the Year 1981,’’ and her use of other trade- Offices of Darren J. Quinn, San Diego, marked terms on her website are at issue California, for the defendants-appellees. in this suit. During the relevant time period, Welles’ website offered information Appeal from the United States District about and free photos of Welles, adver- Court for the Southern District of Califor- tised photos for sale, advertised member- nia; Judith N. Keep, Chief District Judge. ships in her photo club, and promoted her D.C. No. CV–98–00413–JNK. services as a spokesperson. A biographi- cal section described Welles’ selection as Before: B. FLETCHER, T.G. Playmate of the Year in 1981 and her NELSON, and BERZON, Circuit Judges. years modeling for PEI. After the lawsuit began, Welles included discussions of the T.G. NELSON, Circuit Judge. suit and criticism of PEI on her website Playboy Enterprises, Inc. (PEI), appeals and included a note disclaiming any associ- the district court’s grant of summary judg- ation with PEI.1

1. The disclaimer reads as follows: ‘‘This site ated with Playboy Enterprises, Inc. PLAY- is neither endorsed, nor sponsored, nor affili- BOYb PLAYMATE OF THE YEARb AND 800 279 FEDERAL REPORTER, 3d SERIES

PEI complains of four different uses of that the terms of the contract are current- its trademarked terms on Welles’ website: ly enforceable against Welles. The district (1) the terms ‘‘Playboy’’ and ‘‘Playmate’’ in court rejected this argument and granted the metatags of the website; 2 (2) the summary judgment on PEI’s contract phrase ‘‘Playmate of the Year 1981’’ on the claims in favor of Welles. We affirm. masthead of the website; (3) the phrases ‘‘Playboy Playmate of the Year 1981’’ and II. ‘‘Playmate of the Year 1981’’ on various banner ads, which may be transferred to Standard of Review other websites; and (4) the repeated use of [1] We review the district court’s grant the abbreviation ‘‘PMOY 881’’ as the water- of summary judgment de novo.4 Viewing 3 mark on the pages of the website. PEI the evidence in the light most favorable to claimed that these uses of its marks consti- the nonmoving party, we must determine tuted trademark infringement, dilution, whether there are any genuine issues of false designation of origin, and unfair com- material fact and whether the district petition. The district court granted defen- court correctly applied the relevant sub- dants’ motion for summary judgment. stantive law.5 The court must not weigh PEI appeals the grant of summary judg- the evidence or determine the truth of the ment on its infringement and dilution matter but only determine whether there claims. We affirm in part and reverse in is a genuine issue for trial.6 part.

The district court also granted summary III. judgment on PEI’s contract claims. Those claims arose from a contract between PEI Discussion and a corporation created by Welles, ‘‘Pip- A. Trademark Infringement pi, Inc.’’ When Welles agreed to be Play- mate of the Year in 1981, Pippi, Inc., Except for the use of PEI’s protected signed a contract with PEI. The contract terms in the wallpaper of Welles’ website, contained a term requiring prior written we conclude that Welles’ uses of PEI’s approval from PEI before Welles made trademarks are permissible, nominative any ‘‘non-Playboy use of her name with the uses. They imply no current sponsorship designation ‘Playmate of the Year.’ ’’ Pippi, or endorsement by PEI. Instead, they Inc., was dissolved in 1984. PEI argues serve to identify Welles as a past PEI that Pippi, Inc., was Welles’ alter ego and ‘‘Playmate of the Year.’’ 7

PLAYMATE OF THE MONTHb are registered 6. Abdul–Jabbar v. General Motors Corp., 85 trademarks of Playboy Enterprises, Inc.’’ F.3d 407, 410 (9th Cir.1996).

2. Metatags are hidden code used by some 7. See New Kids on the Block v. News America search engines to determine the content of Publ’g, Inc., 971 F.2d 302, 306 (9th Cir.1992) websites in order to direct searchers to relevant sites. (describing a nominative use as one that ‘‘does not imply sponsorship or endorsement 3. PEI claims that ‘‘PMOY’’ is an unregistered of the product because the mark is used only trademark of PEI, standing for ‘‘Playmate of to describe the thing, rather than to identify the Year.’’ its source’’).

4. Lopez v. Smith, 203 F.3d 1122, 1131 (9th Cir.2000).

5. Id. PLAYBOY ENTERPRISES, INC. v. WELLES 801 Cite as 279 F.3d 796 (9th Cir. 2002)

[2] We articulated the test for a per- [5, 6] In cases in which the defendant missible, nominative use in New Kids On raises a nominative use defense, the above The Block v. New America Publishing, three-factor test should be applied instead Inc.8 The band, New Kids On The Block, of the test for likelihood of confusion set claimed trademark infringement arising forth in Sleekcraft.14 The three-factor test from the use of their trademarked name better evaluates the likelihood of confusion by several newspapers. The newspapers in nominative use cases. When a defen- had conducted polls asking which member dant uses a trademark nominally, the of the band New Kids On The Block was trademark will be identical to the plain- the best and most popular.9 The papers’ tiff’s mark, at least in terms of the words use of the trademarked term did not fall in question. Thus, application of the within the traditional fair use doctrine. Sleekcraft test, which focuses on the simi- Unlike a traditional fair use scenario, the larity of the mark used by the plaintiff and defendant newspaper was using the trade- the defendant, would lead to the incorrect marked term to describe not its own prod- conclusion that virtually all nominative uct, but the plaintiff’s.10 Thus, the factors uses are confusing. The three-factor used to evaluate fair use were inapplica- test—with its requirements that the defen- ble.11 The use was nonetheless permissi- dant use marks only when no descriptive ble, we concluded, based on its nominative substitute exists, use no more of the mark nature. than necessary, and do nothing to suggest sponsorship or endorsement by the mark [3, 4] We adopted the following test for holder—better addresses concerns regard- nominative use: ing the likelihood of confusion in nomi- First, the product or service in question native use cases. must be one not readily identifiable We group the uses of PEI’s trade- without use of the trademark; second, marked terms into three for the purpose of only so much of the mark or marks may applying the test for nominative use. be used as is reasonably necessary to First, we analyze Welles’ use of the terms identify the product or service; and in headlines and banner advertisements. third, the user must do nothing that We conclude that those uses are clearly would, in conjunction with the mark, nominative. Second, we analyze the use of suggest sponsorship or endorsement by the terms in the metatags for Welles’ web- 12 the trademark holder. site, which we conclude are nominative as We noted in New Kids that a nominative well. Finally, we analyze the terms as use may also be a commercial one.13 used in the wall-paper of the website. We

8. 971 F.2d 302 (9th Cir.1992). 599 F.2d 341, 348–49 (9th Cir.1979), and applied in fair use cases). 9. Id. at 304. 12. New Kids, 971 F.2d at 308 (footnote omit- 10. The ‘‘classic fair use case’’ is one in which ted). ‘‘the defendant has used the plaintiff’s mark to describe the defendant’s own product.’’ Id. 13. Id. at 309 (‘‘Where, as here, the use does at 308 (emphasis in original). not imply sponsorship or endorsement, the fact that it is carried on for profit and in 11. See New Kids, 971 F.2d at 308–09 (adopt- competition with the trademark holder’s busi- ing a three-factor test for nominative use, not ness is beside the point.’’). the eight-factor test for likelihood of confusion set forth in AMF, Inc. v. Sleekcraft Boats, 14. 599 F.2d at 348–49. 802 279 FEDERAL REPORTER, 3d SERIES

conclude that this use is not nominative [T]here is no other way that Ms. Welles and remand for a determination of wheth- can identify or describe herself and her er it infringes on a PEI trademark. services without venturing into absurd descriptive phrases. To describe herself 1. Headlines and banner advertise- as the ‘‘nude model selected by Mr. Hef- ments. ner’s magazine as its number-one proto- [7, 8] To satisfy the first part of the typical woman for the year 1981’’ would test for nominative use, ‘‘the product or be impractical as well as ineffectual in service in question must be one not readily identifying Terri Welles to the public.20 identifiable without use of the trademark[.]’’ 15 This situation arises ‘‘when a We agree. Just as the newspapers in New trademark also describes a person, a place Kids could only identify the band clearly or an attribute of a product’’ 16 and there is by using its trademarked name, so can no descriptive substitute for the trade- Welles only identify herself clearly by us- mark. In such a circumstance, allowing ing PEI’s trademarked title. the trademark holder exclusive rights [4] The second part of the nominative would allow the language to ‘‘be depleted use test requires that ‘‘only so much of the in much the same way as if generic words mark or marks may be used as is reason- were protectable.’’ 17 In New Kids, we gave the example of the trademarked ably necessary to identify the product or 21 term, ‘‘Chicago Bulls.’’ We explained that service[.]’’ New Kids provided the fol- ‘‘one might refer to the ‘two-time world lowing examples to explain this element: champions’ or ‘the professional basketball ‘‘[A] soft drink competitor would be enti- team from Chicago,’ but it’s far simpler tled to compare its product to Coca–Cola (and more likely to be understood) to refer or Coke, but would not be entitled to use to the Chicago Bulls.’’ 18 Moreover, such a Coca–Cola’s distinctive lettering.’’ 22 Simi- use of the trademark would ‘‘not imply larly, in a past case, an auto shop was sponsorship or endorsement of the product allowed to use the trademarked term because the mark is used only to describe ‘‘Volkswagen’’ on a sign describing the the thing, rather than to identify its cars it repaired, in part because the shop source.’’ 19 Thus, we concluded, such uses ‘‘did not use Volkswagen’s distinctive let- must be excepted from trademark in- tering style or color scheme, nor did he fringement law. display the encircled ‘VW’ emblem.’’ 23 The district court properly identified Welles’ banner advertisements and head- Welles’ situation as one which must also be lines satisfy this element because they use excepted. No descriptive substitute exists only the trademarked words, not the font for PEI’s trademarks in this context. The or symbols associated with the trade- court explained: marks.

15. New Kids, 971 F.2d at 308. 20. PEI v. Welles, 78 F.Supp.2d 1066, 1079 (S.D.Cal.1999). 16. Id. at 306. 21. New Kids, 971 F.2d at 308. 17. Id. 22. Id. at n. 7. 18. Id. 23. Id. (quoting Volkswagenwerk Aktiengesells- 19. Id. chaft v. Church, 411 F.2d 350 (9th Cir.1969)). PLAYBOY ENTERPRISES, INC. v. WELLES 803 Cite as 279 F.3d 796 (9th Cir. 2002)

The third element requires that the user headlines and banner advertisements is a do ‘‘nothing that would, in conjunction with nominative use excepted from the law of the mark, suggest sponsorship or endorse- trademark infringement. ment by the trademark holder.’’ 24 As to this element, we conclude that aside from 2. Metatags. the wallpaper, which we address separate- [9] Welles includes the terms ‘‘play- ly, Welles does nothing in conjunction with boy’’ and ‘‘playmate’’ in her metatags. her use of the marks to suggest sponsor- Metatags describe the contents of a web- ship or endorsement by PEI. The marks site using keywords. Some search engines are clearly used to describe the title she search metatags to identify websites rele- received from PEI in 1981, a title that vant to a search.27 Thus, when an internet helps describe who she is. It would be searcher enters ‘‘playboy’’ or ‘‘playmate’’ unreasonable to assume that the Chicago into a search engine that uses metatags, Bulls sponsored a website of Michael Jor- the results will include Welles’ site.28 Be- dan’s simply because his name appeared cause Welles’ metatags do not repeat the with the appellation ‘‘former Chicago terms extensively, her site will not be at Bull.’’ Similarly, in this case, it would be the top of the list of search results. Ap- unreasonable to assume that PEI current- plying the three-factor test for nominative ly sponsors or endorses someone who de- use, we conclude that the use of the trade- scribes herself as a ‘‘Playboy Playmate of marked terms in Welles’ metatags is nomi- the Year in 1981.’’ The designation of the native. year, in our case, serves the same function As we discussed above with regard to as the ‘‘former’’ in our example. It shows the headlines and banner advertisements, that any sponsorship or endorsement oc- Welles has no practical way of describing 25 curred in the past. herself without using trademarked terms. In addition to doing nothing in conjunc- In the context of metatags, we conclude tion with her use of the marks to suggest that she has no practical way of identifying sponsorship or endorsement by PEI, the content of her website without refer- Welles affirmatively disavows any sponsor- ring to PEI’s trademarks. ship or endorsement. Her site contains a A large portion of Welles’ website dis- clear statement disclaiming any connection cusses her association with Playboy over to PEI. Moreover, the text of the site the years. Thus, the trademarked terms describes her ongoing legal battles with accurately describe the contents of Welles’ 26 the company. website, in addition to describing Welles. For the foregoing reasons, we conclude Forcing Welles and others to use absurd that Welles’ use of PEI’s marks in her turns of phrase in their metatags, such as

24. Id. at 308. 27. See Brookfield Communications, Inc. v. West Coast Entertainment, 174 F.3d 1036, 25. We express no opinion regarding whether 1045 (9th Cir.1999). an individual’s use of a current title would suggest sponsorship or endorsement. 28. We note that search engines that use their 26. By noting Welles’ affirmative actions, we own summaries of websites, or that search do not mean to imply that affirmative actions the entire text of sites, are also likely to identi- of this type are necessary to establish nomi- fy Welles’ site as relevant to a search for native use. New Kids sets forth no such re- ‘‘playboy’’ or ‘‘playmate,’’ given the content of quirement, and we do not impose one here. the site. 804 279 FEDERAL REPORTER, 3d SERIES

those necessary to identify Welles, would to suggest sponsorship or endorsement by be particularly damaging in the internet the trademark holder. We note that our search context. Searchers would have a decision might differ if the metatags listed much more difficult time locating relevant the trademarked term so repeatedly that websites if they could do so only by cor- Welles’ site would regularly appear above rectly guessing the long phrases necessary PEI’s in searches for one of the trade- to substitute for trademarks. We can marked terms.31 hardly expect someone searching for Welles’ site to imagine the same phrase 3. Wallpaper/watermark. proposed by the district court to describe Welles without referring to Playboy—‘‘the [10] The background, or wallpaper, of nude model selected by Mr. Hefner’s orga- Welles’ site consists of the repeated abbre- nizationTTTT’’ Yet if someone could not re- viation ‘‘PMOY 881,’’ which stands for member her name, that is what they would ‘‘Playmate of the Year 1981.’’ 32 Welles’ have to do. Similarly, someone searching name or likeness does not appear before or for critiques of Playboy on the internet after ‘‘PMOY 881.’’ The pattern created by would have a difficult time if internet sites the repeated abbreviation appears as the could not list the object of their critique in background of the various pages of the their metatags. website. Accepting, for the purposes of There is simply no descriptive substitute this appeal, that the abbreviation ‘‘PMOY’’ for the trademarks used in Welles’ meta- is indeed entitled to protection, we con- tags. Precluding their use would have the clude that the repeated, stylized use of this unwanted effect of hindering the free flow abbreviation fails the nominative use test. of information on the internet, something The repeated depiction of ‘‘PMOY 881’’ which is certainly not a goal of trademark is not necessary to describe Welles. 29 law. Accordingly, the use of trade- ‘‘Playboy Playmate of the Year 1981’’ is marked terms in the metatags meets the quite adequate. Moreover, the term does first part of the test for nominative use. not even appear to describe Welles—her We conclude that the metatags satisfy name or likeness do not appear before or the second and third elements of the test after each ‘‘PMOY 881.’’ Because the use of as well. The metatags use only so much of the abbreviation fails the first prong of the the marks as reasonably necessary 30 and nominative use test, we need not apply the nothing is done in conjunction with them next two prongs of the test.

29. Admittedly, this hindrance would only oc- fore PEI’s on occasion. However, an exami- cur as to search engines that use metatags to nation of the evidence PEI cites shows that direct their searches. Welles’ site, although sometimes ranked highly, was still listed below PEI’s in search re- 30. It is hard to imagine how a metatag could sults. use more of a mark than the words contained in it, but we recently learned that some search engines are now using pictures. 32. ‘‘PMOY’’ is not itself registered as a trade- Searching for symbols, such as the Playboy mark. PEI argued before the district court bunny, cannot be far behind. That problem that it is nonetheless protected because it is a does not arise in this case, however, and we well-known abbreviation for the trademarked need not address it. term ‘‘Playmate of the Year.’’ In this court PEI cites one affidavit that supports this argu- 31. PEI asserts that it introduced evidence ment. showing that Welles’ site has been listed be- PLAYBOY ENTERPRISES, INC. v. WELLES 805 Cite as 279 F.3d 796 (9th Cir. 2002)

Because the defense of nominative use ability to serve as a unique identifier of the fails here, and we have already determined plaintiff’s product.’’ 35 Tarnishment, on that the doctrine of fair use does not apply, the other hand, occurs ‘‘when a famous we remand to the district court. The mark is improperly associated with an in- court must determine whether trademark ferior or offensive product or service.’’ 36 law protects the abbreviation ‘‘PMOY,’’ as As we recognized in Panavision, dilution used in the wallpaper. may occur through uses on the internet as well as elsewhere.37 B. Trademark Dilution [16] Dilution works its harm not by [11, 12] The district court granted causing confusion in consumers’ minds re- summary judgment to Welles as to PEI’s garding the source of a good or service, claim of trademark dilution. We affirm on but by creating an association in consum- the ground that all of Welles’ uses of PEI’s ers’ minds between a mark and a different marks, with the exception of the use in the good or service.38 As explained in a First wallpaper which we address separately, Circuit case, in dilution (as compared to are proper, nominative uses. We hold that infringement) ‘‘an entirely different issue nominative uses, by definition, do not di- is at stake—not interference with the lute the trademarks. source signaling function but rather pro- [13–15] Federal law provides protec- tection from an appropriation of or free tion against trademark dilution: riding on the investment [the trademark The owner of a famous mark shall be holder] has made in its [trademark].’’ 39 entitled, subject to the principles of eq- Thus, for example, if a cocoa maker began uity and upon such terms as the court using the ‘‘Rolls Royce’’ mark to identify deems reasonable, to an injunction its hot chocolate, no consumer confusion against another person’s commercial use would be likely to result. Few would as- in commerce of a mark or trade name, if sume that the car company had expanded such use begins after the mark has be- into the cocoa making business. However, come famous and causes dilution of the the cocoa maker would be capitalizing on distinctive quality of the markTTTT 33 the investment the car company had made Dilution, which was not defined by the in its mark. Consumers readily associate statute, has been described by the courts the mark with highly priced automobiles of as ‘‘the gradual ‘whittling away’ of a trade- a certain quality. By identifying the cocoa mark’s value.’’ 34 Traditionally, courts with the Rolls Royce mark, the producer have recognized two forms of dilution: would be capitalizing on consumers’ associ- blurring and tarnishment. Blurring oc- ation of the mark with high quality items. curs when another’s use of a mark creates Moreover, by labeling a different product ‘‘the possibility that the mark will lose its ‘‘Rolls Royce,’’ the cocoa company would

33. 15 U.S.C. § 1125(c)(1). 36. Id.

34. Academy of Motion Picture Arts & Sciences 37. Id. at 1326–27. v. Creative House Promotions, Inc., 944 F.2d 1446, 1457 (9th Cir.1991) (citing J. McCarthy, 38. See 4 J. McCarthy, Trademarks and Unfair Trademarks and Unfair Competition, § 24:13 Competition, § 24:70 (4th ed.2001). (2d ed.1984)).

35. Panavision Int’l, L.P. v. Toeppen, 141 F.3d 39. I.P. Lund Trading ApS v. Kohler Co., 163 1316, 1326 n. 7 (9th Cir.1998). F.3d 27, 50 (1st Cir.1998). 806 279 FEDERAL REPORTER, 3d SERIES be reducing the ability of the mark to the two-time winner of an Academy Award identify the mark holder’s product. If would dilute the award by referring to him someone said, ‘‘I’m going to get a Rolls or herself as a ‘‘two-time Academy Award Royce,’’ others could no longer be sure the winner.’’ Awards are not diminished or person was planning on buying an expen- diluted by the fact that they have been sive automobile. The person might just be awarded in the past. Similarly, they are planning on buying a cup of cocoa. Thus, not diminished or diluted when past recipi- the use of the mark to identify the hot ents truthfully identify themselves as such. chocolate, although not causing consumer It is in the nature of honors and awards to confusion, would cause harm by diluting be identified with the people who receive the mark. them. Of course, the conferrer of such honors and awards is free to limit the [17] Uses that do not create an im- honoree’s use of the title or references to proper association between a mark and a the award by contract. So long as a use is new product but merely identify the trade- nominative, however, trademark law is mark holder’s products should be excepted unavailing. from the reach of the anti-dilution statute. Such uses cause no harm. The anti-dilu- [20, 21] The one exception to the above tion statute recognizes this principle and analysis in this case is Welles’ use of the specifically excepts users of a trademark abbreviation ‘‘PMOY’’ on her wallpaper. who compare their product in ‘‘commercial Because we determined that this use is not advertising or promotion to identify the nominative, it is not excepted from the competing goods or services of the owner anti-dilution provisions. Thus, we reverse of the famous mark.’’ 40 as to this issue and remand for further proceedings. We note that if the district [18, 19] For the same reason uses in court determines that ‘‘PMOY’’ is not enti- comparative advertising are excepted from tled to trademark protection, PEI’s claim anti-dilution law, we conclude that nomi- for dilution must fail. The trademarked native uses are also excepted. A nomi- term, ‘‘Playmate of the Year’’ is not identi- native use, by definition, refers to the cal or nearly identical to the term trademark holder’s product. It does not ‘‘PMOY.’’ Therefore, use of the term create an improper association in consum- ‘‘PMOY’’ cannot, as a matter of law, dilute ers’ minds between a new product and the the trademark ‘‘Playmate of the Year.’’ 41 trademark holder’s mark. When Welles refers to her title, she is in C. Contract effect referring to a product of PEI’s. She [22] The district court granted sum- does not dilute the title by truthfully iden- mary judgment against PEI on its contract tifying herself as its one-time recipient any claims. We affirm. Although we conclude more than Michael Jordan would dilute the that PEI advanced sufficient evidence to name ‘‘Chicago Bulls’’ by referring to him- establish unity of interest, the first prong self as a former member of that team, or of the alter ego test,42 we agree with the

40. 15 U.S.C. § 1125(c)(4)(A). J. McCarthy, McCarthy on Trademarks and Unfair Competition, § 24:90.2 (4th ed.2001). 41. See Luigino’s, Inc. v. Stouffer Corp., 170 F.3d 827, 832 (8th Cir.1999) (holding that 42. Roman Catholic Archbishop of San Fran- marks must be ‘‘similar enough that a signifi- cisco v. The Superior Court of Alameda Coun- cant segment of the target group of customers sees the two marks as essentially the same’’); CHRISTENSEN v. GEORGIA–PACIFIC CORP. 807 Cite as 279 F.3d 807 (9th Cir. 2002) district court that PEI advanced insuffi- cient evidence to defeat summary judg- Bruce W. CHRISTENSEN, ment on the second prong. PEI did not Plaintiff–Appellant, show that ‘‘the facts are such that an v. adherence to the fiction of the separate existence of the corporation would, under GEORGIA–PACIFIC CORPORATION, the particular circumstances, sanction a a Georgia corporation; Southern fraud or promote injustice.’’ 43 We note Route Maritime, S.A., a foreign corpo- that the alter ego rule is generally applied ration; Anglia Maritime, S.A., a for- with caution.44 The district court did not eign corporation, Defendants–Appel- err by declining to apply it here. lees. No. 00–35922.

IV. United States Court of Appeals, Conclusion Ninth Circuit.

For the foregoing reasons, we affirm the Argued and Submitted Nov. 9, 2001. district court’s grant of summary judg- Filed Feb. 1, 2002. ment as to PEI’s claims for trademark infringement and trademark dilution, with the sole exception of the use of the abbre- Longshoreman brought action under viation ‘‘PMOY.’’ We reverse as to the Longshore and Harbor Workers’ Compen- abbreviation and remand for consideration sation Act (LHWCA) against several ships of whether it merits protection under ei- and a dock owner seeking compensation ther an infringement or a dilution theory. for injuries he suffered while helping to We also affirm as to PEI’s claims for retie ship that had broken free from dock. breach of contract. In a separate memo- The United States District Court for the randum disposition, we resolve the issues District of Oregon, Thomas M. Coffin, raised by Welles’ cross-appeal. United States Magistrate Judge, granted summary judgment for defendants. Long- AFFIRMED in part, REVERSED and shoreman appealed. The Court of Appeals, REMANDED in part. Costs to Terri T.G. Nelson, Circuit Judge, held that: (1) Welles and Terri Welles, Inc. ship owner had duty to longshoreman under active control doctrine; (2) ship owner had duty to longshoreman under interven- tion duty doctrine; (3) genuine issues of material fact existed precluding summary , judgment; and (4) incident had sufficient maritime nexus to be considered a maritime tort. Reversed and remanded.

ty, 15 Cal.App.3d 405, 411, 93 Cal.Rptr. 338 44. See William M. Fletcher, FLETCHER CY- (1971). CLOPEDIA OF CORPORATIONS § 41.10 (perm. ed.2000). 43. Id. (quoting Associated Vendors, Inc. v. Oakland Meat Co., 210 Cal.App.2d 825, 837, 26 Cal.Rptr. 806 (1962)).