Prior to today's announcement, there was industry-wide speculation that Playboy could potentially take AOL to the cleaners for damages that date back as far as five years. However, the two companies have decided to settle quietly outside of court.
"A settlement has been reached on this pending litigation," said Nicholas Graham, a spokesman for AOL. "The terms of the settlement are not disclosable."
The U.S. Appeals Court determined on Jan. 15 that a lower court had wrongly ruled in the case against Playboy. Charges stemmed from a 1999 case against now-defunct Excite.com and Netscape for infringing on the "Playboy" and "Playmate" trademarks using misleading search engine banner ads that had nothing to do with Playboy content.
The appeals court gave Playboy the right to sue Netscape for liability.
At the time the infringement occurred, Netscape was using Excite's search engine technology on its site.
In its original lawsuit, Playboy named around 400 words the two companies had used that insinuated a relationship with Playboy Enterprises and deliberately confused consumers. Playboy contended that the misleading banner "tarnished and diluted" its brand name.
The case was originally lost in 2001, but the appeals court last week decided that the Playboy trademark was equally protected in the virtual world as it was in more traditional mediums.
The appeals court decision to overturn an earlier ruling was one of the first times an appellate court has weighed in on the issue of search engine advertising as it relates to trademark infringement.
"The decision makes clear that the rules apply in the actual world with equal force to the virtual world," Playboy's attorney was quoted as saying at last week's ruling. "In the Internet as in the actual world, trademarks are not to be used in a way that is confusing or that dilutes the value of the mark."
In a similar vein, Google filed a complaint in a San Jose court in November 2003 in an effort to make sure that its method for keyword search advertising is within the boundaries of the law, in particular, trademark law.
Google has been in battle with a company called American Blind & Wallpaper Factory that has threatened to sue Google if it doesn't stop selling keyword phrases that the company claims violate its trademarks, CNET reports.
Google reportedly agreed to block keywords that directly infringe on American Blind & Wallpaper trademarks, but the search engine has refused to block all other similar phrases that American Blind feels infringe on its trademark.
Google is no stranger to similar trademark infringement threats. The search engine has also had rifts with eBay over trademark disputes, and luggage maker Louis Vuitton fined Google last year for trademark infringement in a French court.