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The Keys to Keyword Advertising

By Mark D. Robins
March 01, 2004

Until recently, courts have had relatively little to say about the practice of keyword advertising ' ie, triggering Internet advertisements to appear when users search for a keyword identical to a competitor's trademark. Practitioners could look only to a single decision denying Playboy Enterprises, Inc.'s (“PEI”) motion for a preliminary injunction against Netscape Communications Corp. (“Netscape”) and Excite, Inc. (“Excite”). Now, four courts have recently issued decisions reaching starkly different results on keyword advertising practices, including a Ninth Circuit decision reversing summary judgment that had been entered against PEI in its litigation with Netscape and Excite. While much remains to be resolved, certain factors have been particularly influential.

Practices at Issue

In PEI's litigation, PEI sued Netscape and Excite for selling to online adult-oriented Web sites the right to have banner advertisements displayed near search results when users of those search engines searched for the keywords “playboy” and “playmate,” which are identical in spelling to PEI's trademarks. According to the appellate decision, Netscape and Excite did not merely give such adult advertisers the option of linking their advertisements to these keywords, but required them to do so. These advertisements were found to be graphic in nature and either confusingly labeled or not labeled at all.

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