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AOL, Playboy Settle Keyword-Advertising Case

Playboy Enterprises and AOL settled their trademark-infringement case over keyword advertising last week, just days after a court ruled the 5-year-old case could proceed.

AOL spokesman Nicholas Graham said the companies settled the case in the past few days and soon would inform the court. He said the terms of the settlement precluded disclosing its details.

A three-judge panel for the U.S. Court of Appeals for the Ninth Circuit said recently the case could continue after a lower court had issued a summary judgment for Netscape, now owned by AOL. Playboy, Chicago, accused Netscape and Excite in 1999 of infringing on and diluting its trademark by using Excite to trigger banner ads based on searches for “playboy” and “playmate.” After typing in those words, Netscape would serve ads for other adult-content providers, which Playboy said would confuse users into thinking the ads came from it. Excite filed for bankruptcy protection in October 2001.

Playboy lawyer Barry Felder said the case was “settled satisfactorily to all sides.”

The deal short-circuits a case that might have had far-reaching implications in the still-unsettled field of trademark law and paid search. Both Google and Yahoo's Overture Services offer trademark holders the chance to report any misuse of their marks, in which case they will remove the listings. Last August, Google acquiesced to demands from eBay that it stop triggering ads for other businesses on searches for its many trademarked terms, including generic terms like “bay.”

Search engines have still faced legal challenges to their keyword-advertising system from trademark owners. Google last month sought a declaratory judgment in federal court in response to a demand from American Blind & Wallpaper Factory Inc. that it remove competitive ads for terms like “blind” and “wallpaper.” Google requested a judgment that its AdWords paid search system does not constitute trademark infringement. A judge could rule on that motion in six to nine months.

Playboy accused Netscape of trademark infringement through its “keying” ad system that offered advertisers a list of more than 400 keywords, including the two trademarked Playboy terms, which would trigger adult-oriented ads. Unlike Google and Overture, Netscape did not offer companies recourse to remove their trademarked terms.

Brian Morrissey covers search marketing for DM News.com. To keep up with the latest search marketing news subscribe to our free e-mail weekly newsletter Search Engine Marketing by visiting www.dmnews.com/cgi-bin/newslettersub.cgi .

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