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San Francisco-The Playboy bunny hopped out of the nation’s largest appellate court last week with a ruling that could put a wrinkle in one Internet advertising business model. The 9th U.S. Circuit Court of Appeals, with the reservations of at least one judge on a unanimous panel, ruled that search engines may not display advertising related to trademarked search terms. In other words, you can’t point customers in the direction of one company if they’re searching for another. Playboy Enterprises Inc. sued Netscape Communications Corp. and Excite Inc. for selling advertisers the use of the trademarked terms “playboy” and “playmate” to generate banner ads on the search engine’s Web site. Playboy is upset that the use of its marks triggers ads featuring explicit content. The process, called “keying,” helps Web sites generate revenue by increasing the number of times that Internet surfers click on the advertisement. Playboy Enter. v. Netscape Communications, No. 04 C.D.O.S. 317, echoes 1999′s Brookfield Communications v. West Coast Entertainment Corp., 174 F.3d 1076. In a concurrence, however, Judge Marsha Berzon wrote that Judge Diarmuid O’Scannlain’s 5-year-old Brookfield decision needs to be revisited, since it leads to trademark violations where an ad is clearly labeled as something other than Playboy.

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