Playboy Enterprises Inc. v. Netscape Communications Co. (C.D. Cal. 1999)

Alicemarie H. Stotler, United States Distict Judge

On April 15, 1999, plaintiff Playboy Enterprises, Inc. ("PEI") filed a Motion for Preliminary Injunction against defendant Netscape Communications Corp. and against defendant Excite, Inc. On May 10, 1999, defendants filed a joint opposition. PEI filed its reply on May 17, 1999. The Court heard oral argument on the motion on May 24, 1999. At the end of the hearing, the Court took the matter under advisement, and ordered the parties to lodge proposed Findings of Fact and Conclusions of Law. Plaintiff lodged its proposed Findings on June 1, 1999; defendants lodged theirs on June 8, 1999. The Court has considered all of the parties' submissions, as well as arguments presented at the hearing.

Defendants operate search engines on the Internet. When a person searches for a particular topic in either search engine, the search engine compiles a list of sites matching or related to the user's search terms, and then posts the list of sites, known as "search results."

Defendants sell advertising space on the search result pages. Known as "banner ads," the advertisements are commonly found at the top of the screen. The ads themselves are often animated and whimsical, and designed to entice the Internet user to "click here." If the user does click on the ad, she is transported to the web site of the advertiser.

As with other media, advertisers seek to maximize the efficacy of their ads by targeting consumers matching a certain demographic profile. Savvy web site operators accommodate the advertisers by "keying" ads to search terms entered by users. That is, instead of posting ads in a random rotation, defendants program their servers to link a pre-selected set of banner ads to certain "key" search terms. Defendants market this context-sensitive advertising ability as a value-added service and charge a premium.

Defendants key various adult entertainment ads to a group of over 450 terms related to adult entertainment, including the terms "playboy" and "playmate." Plaintiff contends that inclusion of those terms violates plaintiff's trademarks rights in those words.

Plaintiff has a trademark on "Playboy(R)" and "Playmate(R)." Plaintiff contends that defendants are infringing and diluting its trademarks (1) by marketing and selling the group of over 450 words, including "playboy" and "playmate," to advertisers, (2) by programming the banner ads to run in response to the search terms "playboy" and "playmate" (i.e., "keying"), and (3) by actually displaying the banner ad on the search results page. As a result, plaintiff contends, Internet users are diverted from plaintiff's official web site and web sites sponsored or approved by plaintiff, which generally will be listed as search results, to other adult entertainment web sites. Plaintiff further argues that defendants intend to divert the users to the non-PEI sites. Plaintiff does not contend, however, that defendants infringe or dilute the marks when defendants' search engines generate a list of Web sites related to "playboy" or "playmate."

Defendants respond that while plaintiff may have a trademark on "Playboy(R)" and "Playmate(R)," defendants do not actually "use" the trademarks qua trademarks. Moreover, even if defendants do use the trademarks, defendants argue that a trademark does not confer an absolute property right on all uses of the protected terms, and that defendants' use of the terms is permitted. Finally, defendants dispute that they have any intent to divert users from clicking on search results (such as PEI's sites) to clicking on banner ads.

A. Legal Standard for Preliminary Injunction

In order for plaintiff to obtain a preliminary injunction, it "must show either (1) a combination of probable success on the merits and a possibility of irreparable harm, or (2) the existence of serious questions on the merits and the balance of hardships weighing heavily in its favor."

B. Law and The Internet

"The Internet is 'a unique and wholly new medium of worldwide human communication.'" The parties and the Court are conversant with the workings of the Internet, as well as with the constantly expanding body of law that seeks to craft a legal contour for it. The Court is mindful of the difficulty of applying well-established doctrines to what can only be described as an amorphous situs of information, anonymous messenger of communication, and seemingly endless stream of commerce. Indeed, the very vastness, and manipulability, of the Internet forms the mainspring of plaintiff's lawsuit.

C. Trademark Use

Integral to plaintiff's success on the merits of its case, on either the infringement or dilution theory, is a showing that defendants use plaintiff's trademarks in commercePlaintiff does not so show. Rather, plaintiff can only contend that the use of the words "playboy" and "playmate," as keywords or search terms, is equivalent to the use of the trademarks "Playboy(R)" and "Playmate(R)." However, it is undisputed that an Internet user cannot conduct a search using the trademark form of the words, i.e., Playboy(R) and Playmate(R). Rather, the user enters the generic word "playboy" or "playmate." It is also undisputed that the words "playboy" and "playmate" are English words in their own right, and that there exist other trademarks on the words wholly unrelated to PEI. Thus, whether the user is looking for goods and services covered by PEI's trademarks or something altogether unrelated to PEI is anybody's guess. Plaintiff guesses that most users searching the Web for "playboy" and "playmate" are indeed looking for PEI sites, goods and services. Based on that theory, plaintiff argues that since defendants also speculate that users searching for "playboy" and "playmate" are looking for things related to Playboy(R) and Playmate(R), defendants use the trademarks when they key competing adult entertainment goods and services to the generic "playboy" and "playmate."

Plaintiff has not shown that defendants use the terms in their trademark form, i.e., Playboy(R) and Playmate(R), when marketing to advertisers or in the algorithm that effectuates the keying of the ads to the keywords. Thus, plaintiff's argument that defendants "use" plaintiff's trademarks falls short.

D. Trademark Infringement and Dilution

Even if use of the generic "playboy" and "playmate" were construed to be use the trademark terms Playboy(R) and Playmate(R), plaintiff still must show that the use violates trademark law. Plaintiff has asserted two theories, trademark infringement and trademark dilution.

1. Infringement

"The core element of trademark infringement is the likelihood of confusion, i.e., whether the similarity of the marks is likely to confuse customers about the source of the products." Assuming arguendo that defendants' use of "playboy" and "playmate" is use of plaintiff's marks, plaintiff must still show that confusion is likely to result from that use. Plaintiff has not so shown.

Rather, plaintiff relies on the recent case from the Court of Appeals for the Ninth Circuit, Brookfield Communications, Inc. v. West Coast Entertainment Corp., for the proposition that defendants cause "initial interest confusion" by the use of the words "playboy" and "playmate." Initial interest confusion, as coined by the Ninth Circuit, is a brand of confusion particularly applicable to the Internet. Generally speaking, initial interest confusion may result when a user conducts a search using a trademark term and the results of the search include web sites not sponsored by the holder of the trademark search term, but rather of competitors. The Ninth Circuit reasoned that the user may be diverted to an un-sponsored site, and only realize that she has been diverted upon arriving at the competitor's site. Once there, however, even though the user knows she is not in the site initially sought, she may stay. In that way, the competitor has captured the trademark holder's potential visitors or customers.

Brookfield is distinguishable from this case, and where applicable, supportive of defendants' position.

First, the trademark at issue in Brookfield was not an English word in its own right. In Brookfield, the Court compared Brookfield's trademark "MovieBuff" with competitor West Coast's use of the domain name "moviebuff.com," and found them to be "essentially identical" despite the differences in capitalization, which the Court considered "inconsequential in light of the fact that Web addresses are not caps-sensitive . . ." However, the Court held that West Coast could use the term "Movie Buff" (or, presumably, "movie buff") with the space, as such is the "proper term for the 'motion picture enthusiast'. . . . It cannot, however, omit the space." On the other hand, "in light of the fact that it is not a word in the English language, when the term 'MovieBuff' is employed, it is used to refer to Brookfield's products and services, rather than to mean 'motion picture enthusiast.'"

As English words, "playboy" and "playmate" cannot be said to suggest sponsorship or endorsement of either the web sites that appear as search results (as in Brookfield) or the banner ads that adorn the search results page. Although the trademark terms and the English language words are undisputedly identical, which, presumably, leads plaintiff to believe that the use of the English words is akin to use of the trademarks, the holder of a trademark may not remove a word from the English language merely by acquiring trademark rights in it.

Second, the use by defendant of plaintiff's trademark in Brookfield was more suspect because the parties compete in the same market -- as online providers of film industry information. The Ninth Circuit analogized the capture of unsuspecting Internet users by a competitor to highways and billboards:

Suppose West Coast's competitor . . . puts up a billboard on a highway reading -- "West Coast Video: 2 miles ahead at Exit 7" -- where West Coast is really located at Exit 8 but Blockbuster is located at Exit 7. Customers looking for West Coast's store will pull off at Exit 7 and drive around looking for it. Unable to locate West, Coast, but seeing the Blockbuster store right by the highway entrance, they may simply rent there. Although the customer is not confused as to where she ultimately rents a video, Blockbuster has misappropriated West Coast's goodwill through causing initial consumer confusion. The customer has been captured by the competitor in much the same way that defendant in Brookfield captures Internet users looking for plaintiff's web site.

2. Dilution

Trademark dilution is defined as "the lessening of the capacity of a famous mark to identify and distinguish goods or services." However, dilution is "not intended to serve as a mere fallback protection for trademark owners unable to prove trademark infringement."

To establish dilution, plaintiff must show that "(1) [defendants have] made use of a junior mark sufficiently similar to the famous mark to evoke in a relevant universe of consumers a mental association of the two that (2) has caused (3) actual economic harm to the famous mark's economic value by lessening its former selling power as an advertising agent for its goods and services." Dilution generally occurs through the blurring of a famous mark or tarnishment of the mark, but is not limited to these categories. Plaintiff has not shown blurring of its marks, which would occur if defendants used the marks to identify defendants' goods or services. First, as discussed supra, plaintiff has not shown that defendant use its marks Playboy(R) and Playmate(R). Further, plaintiff has not presented any evidence that defendants' use of the words "playboy" and "playmate" causes any severance of the association between plaintiff and its marks Playboy(R) And Playmate(R), much less in the minds of Internet users.

Plaintiff has also failed to show tarnishment, which occurs when a famous mark is associated improperly with an inferior or offensive product or service. Plaintiff contends that because the content of the banner ads is more sexually explicit that PEI's content, PEI's marks are being tarnished. Again, plaintiff's argument is based on the incorrect assumption that defendants use plaintiff's marks, rather than the generic words "playboy" and "playmate." But even if the defendants could be said to use plaintiff's marks, plaintiff would still be required to show that associating marks admittedly famous for adult entertainment with other purveyors of adult entertainment somehow harms plaintiff's marks. Whether PEI is a cut above the rest, as it contends, is undercut by the fact that PEI's marks are associated with other purveyors of adult entertainment in other marketing channels, as defendants' exhibits graphically establish. Adoption of plaintiff's tarnishment would secure near-monopoly control of the placement of plaintiff's marks and the associated goods and services on the Internet, where, arguably, "placement" is a nebulous concept. A greater showing of harm is required.

Accordingly, and for the foregoing reasons, the plaintiff's motion is denied. The Court hereby adopts and issues the parties' proposed Findings of Fact and Conclusions of Law, as modified, appended hereto. The Court grants defendants' Request for Judicial Notice.

CO259--Cyberlaw
Copyright © 2009 Dale A. Herbeck
Last update: 15 January 2009