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Search engine operators celebrated a federal judge’s ruling last week that places limits on intellectual property rights online. The decision, by Judge Alicemarie H. Stotler of the U.S. District Court for the Central District of California in Santa Ana, Calif., upholds “keying” — the controversial, yet increasingly popular, business practice of offering advertisers the ability to display specific banner ads whenever users enter selected search terms, including their competitors’ trademarks. The judge dismissed a lawsuit from Playboy that claimed the search engines of Netscape and Excite display ads for rival adult Web sites whenever searchers enter the trademarked terms “playboy” or “playmate.” ( Playboy Enterprises Inc. v. Netscape Communications Corp. (SA CV 99-320 AHS (EEx) Related case: SA CV 99-321 AHS (EEx)). According to her ruling, search engines do not violate trademark laws when they use a company’s well-known brands as keywords without authorization. The decision is significant because, in effect, it expands the ways in which trademarked terms can be used online, thereby limiting the intellectual property rights of the trademark holder. Some legal experts are calling the ruling a victory for consumers because keying trademarks can provide more variety in Web search results. Others feel that the judgment does not sufficiently protect trademark holders’ rights on the Internet. “Five years from now, when a law professor summarizes how Net law developed, this decision will be cited as out-of-step with the leading cases,” predicts Playboy lawyer Barry G. Felder of New York’s Brown Raysman Millstein Felder & Steiner. Felder, who plans to appeal the decision, reasons that the judge’s ruling basically upholds the sale of a trademark as a search term. “The Napster and MP3 cases are going the way of recognizing that intellectual property rights have to be respected on the Internet. This goes the other way.” Jeffrey Kuester, an Atlanta lawyer who specializes in Internet law, echoes Felder’s sentiment: “It doesn’t pass the smell test to use a famous trademark to link a consumer to a competitor.” A lawyer for Excite hailed the ruling on keying, calling it “pro-consumer” because searchers get more choices when a variety of keywords are used. “Trademarks are intended to identify your goods, not grant you a monopoly on the word,” says Jeffrey K. Riffer of Jeffer Mangels Butler & Marmaro in Los Angeles. The Playboy case turns on the fact that the terms “playboy” and “playmate” have general English-language definitions alongside their trademark meaning, says attorney Katherine C. Spelman of Steinhart & Falconer, a San Francisco-based intellectual property and media law firm. If the plaintiff was Kodak or another trademarked brand name with no other regular meaning, “it would be a slam dunk in the plaintiff’s favor,” Spelman says. While an appeal is pending, Felder and others say they fear that unless an appeals court overturns the ruling, search engines may be free to demand that trademark holders pay a fee to prevent competitors from using the brand as a keyword. Playboy lost an appeal it filed last year when Judge Stolter turned down the company’s bid for a preliminary injunction against further keying. Intellectual property specialist Carl Oppendahl says the decision is sound and points out the similarities between keying and comparative advertising. “This is not so different from a drugstore that puts a generic product on the shelf next to a name-brand product,” the Larson, Colo., attorney says. “Nobody sues the drugstore.” Copyright � 2000 The Industry Standard

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