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Playboy Loses Banner Ad Battle with Excite and Netscape Banner ad keying is an increasingly common practice in which search services sell banner ads linked to keywords, so that the banner ad appears whenever a particular word is searched. Ronald R. Urbach Craig M. Mersky e-mail this article URL Excite and Netscape scored a big victory this past September when District Court Judge Alicemarie H. Stotler upheld their practice of keying banner ads for adult Web sites to Playboy's trademarks. This decision is a significant one for online advertisers and search engines, most of whom rely on this Internet marketing technique for substantial revenue. Banner ad keying is an increasingly common practice in which search services sell banner ads linked to keywords, so that the banner ad appears whenever a particular word is searched. Competitors frequently "buy" each other's trademarks, keywords and brand names, so that consumers who search for one will receive ads for the other along with his search results. For example, when you search for Barnesandnoble, a banner for Amazon.com may appear. And when you search for Amazon, it may bring up a banner for Barnesandnoble.com. This uniquely digital form of ambush marketing dates back to 1995, when Ogilvy & Mather bought every Windows 95 related term its media department could think of on behalf of IBM, in a last-ditch effort to promote IBM's OS/2Warp operating system. Playboy argued that the use of its trademarks "Playboy" and "playmate" to key banner ads of Adult Web sites constitutes trademark infringement and dilution. Relying on New Kids on the Block v. News America Publishing, Inc., a 1992 federal Court of Appeals case, Judge Stotler rejected both of Playboy's arguments on the ground that Excite and Netscape are not using "Playboy" and "playmate" to identify goods and services. Using the trademarks in search engines constitutes a non-trademark use, and does rise to the level of infringement or dilution. The Playboy decision seems on the money, both from a legal and practical perspective. In the real world, any company looking to be where a competitor is can buy real estate close to it, be it a physical retail location, space in a print magazine or a counter in the cosmetics department of a major retailer. As is the case in any mall, a retailer can negotiate for exclusivity, so that the mall owners will not lease space to a competitor. However, the retailer must pay for this privilege and so it is the case with banner ad keying. If a company does not want a competitor's ads to appear when its brands are searched, then it can pay for the privilege and buy the space itself. Otherwise, the site owner should be free to sell space to the highest bidder. The practice is no different than selling mailing lists of persons who purchase certain types of goods from a store or company, like Macy's selling a list of its customers who purchase fragrances to Estee Lauder for it to use for its own marketing and advertising purposes. Some analysts have also speculated that this is all much ado about nothing, because banner ads keyed to competitor's brands are not as valuable in drawing customers as banner ads keyed to generic terms. It has been suggested that, if a consumer searches for a particular brand, his mind is more likely to have already been made up-the decision as to which brand to buy has probably already been made. The search terms with the real value may be more generic words, such as "cosmetics," "baby food," and "computer monitors," since customers inputting these terms are less likely to have already decided which brand to buy. In a similar case, Estee Lauder sued Excite and iBeauty (formerly Fragrance Counter) in the United States, France and Germany over banner ad keying. Lauder claimed that Excite had infringed its trademark by selling the banner above the keyword search for "Estee Lauder" to iBeauty, a company selling a variety of fragrances, including Estee Lauder's. Earlier last year the District Court in Hamburg held that Excite's selling of "Estee Lauder" improperly exploited the brand and constituted unfair competition under German law. In the New York case, the parties entered into a stipulation on August 16, 2000 that dismissed plaintiff's action without prejudice. The only notable ruling by the Court was a denial of Estee Lauder's motion to strike Excite's affirmative defense of "trademark misuse." © 2001 Davis & Gilbert LLP       Davis & Gilbert LLP • 1740 Broadway • New York, NY 10019 tel: 212.468.4800 • fax: 212.468.4888   Privacy Policy • Terms & Conditions