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To: RDR who wrote (20022)	2/14/1999 10:06:00 AM
From: Glenn D. Rudolph	Respond to of 27307

Posted at 07:22 p.m. PST; Sunday, February 14, 1999 Search-engine ads sully trademarks, lawsuits contend by Greg Miller and Davan Maharaj Los Angeles Times Though few Internet users know it, the simple act of typing a keyword into a search engine typically produces not only a list of Web sites, but also a carefully targeted banner advertisement. How search engines sell those ads, and to whom, is at the heart of an emerging legal battle that could jeopardize one of the most lucrative advertising practices online. Two of the leading portal sites on the Internet, Excite and Netscape, are the targets of recent lawsuits filed by companies that say their trademarks and reputations have been damaged by this obscure marketing practice. Legal sources say similar lawsuits are in the works, and that they could have a devastating effect on portal sites that depend on keyword-based ads for up to 25 percent of the hundreds of millions in advertising revenue they collect. At issue is the marketing of so-called "keywords," terms that users type into search engines to find information on the Net. Excite and others have long "sold" these words to advertisers who want their banner ads to pop up whenever certain keywords are entered. But Estee Lauder and Playboy Enterprises, plaintiffs in separate federal lawsuits, argue that portal sites should be restricted in their ability to sell certain keywords - "Estee Lauder" and "Playboy," for instance - that are trademarked. Portals have become gateways for millions of Internet users by bundling search capabilities, e-mail, shopping and other popular services. "If Excite is held liable, this sets a dangerous precedent for all of the portals," said Drew Ianni, an online advertising analyst for Jupiter Communications in New York. "Banner ads and keyword searches have always been the meat and potatoes of their business." Thousands of companies have paid search engines so that their own banner ads will pop up when their trademarks are used as search terms. Typing in the word "Chevrolet" on Excite, for instance, does not alter the search results, but does produce a banner Chevrolet ad across the center of the page. That is not what happens when users type "Estee Lauder" on Excite. Instead, an ad appears for a company called The Fragrance Counter, a New York firm that does sell some Estee Lauder products but also sells cosmetics made by many other manufacturers. Estee Lauder's suit accuses Excite and The Fragrance Counter of trademark infringement, false representation, unfair competition and false advertising. The suit seeks to compel Excite to stop selling trademarked keywords and to pay unspecified damages. The Playboy suit goes even further, alleging that Excite not only infringed on the magazine's trademark, but also sullied the company's name because many of the ads that pop up in response to a "Playboy" keyword search are for raunchy, X-rated sites. Attorneys for Estee Lauder, Playboy and Excite declined to comment. An earlier conflict centered on whether companies have the exclusive right to domain names, or Internet addresses, based on their trademarks. Courts have generally held that they do, and also that firms cannot lard their Web sites with hidden text containing rival trademarks in an attempt to catch the attention of search engines trolling the Net. These latest suits mark the first time that courts will be asked to decide whether search engines can sell trademarked keywords without restriction. Portals such as Yahoo, Netscape, Excite and Lycos have become such huge online hits largely because of the help they offer users in navigating the Internet. Most use powerful software to comb the Internet, compiling enormous lists of sites that users can search by scanning for keywords embedded in their text. But the portals' financial success hinges on advertising revenue, and keyword ad sales enable them to offer advertisers access to users according to their interests. Prices vary according to the popularity of the keyword, but generally sell at a premium over more arbitrary banner placements. The average price for a keyword deal is about $40 for every thousand times the ad is displayed, analysts said, while nontargeted banner advertising runs about $25 per thousand impressions.