Outlawing a widely used marketing ploy that often misleads consumers on the Internet, a federal appeals court has ruled that companies cannot boost traffic to their Web sites by littering them with rivals' trademarks.
For consumers, the ruling could help end a bait-and-switch tactic that frustrates millions of people who depend on "search engines" such as Yahoo and Lycos, which guide users to Web sites on topics they are interested in.
Driven by fierce competition for users' attention online, countless Web sites have resorted to a range of deceptive techniques designed to boost their rankings in results produced by search engines, programs that comb the Web in response to queries.
This week's ruling by the U.S. 9th Circuit Court of Appeals repudiates one of those sneaky tactics used against a Los Angeles firm and establishes the first set of clear rules for the enforcement of trademark laws online.
"Because e-commerce is new, some businesses feel there are no laws in place that govern their actions," said Jonathan Rosenoer, a cyber-law expert at the consulting firm Arthur Andersen. "The court is saying this is not the Wild West."
Rosenoer and other legal experts said the decision could widely affect the Web, where the practice of co-opting a competitor's name, often by embedding "meta-tags" in code that users don't see, is widespread.
The practice is underhanded but effective because millions of computer users find their way around the Net primarily by typing keywords into search engines. Tossing a rival's trademarks into the text of your Web site means it will be among the search "hits" when the competitor's brand name is queried, offering a valuable chance to divert potential customers.
The judicial panel compared it to "posting a sign with another's trademark in front of one's store," and said the practice creates precisely the type of confusion trademark laws are designed to prevent.
"From a user perspective, this is great," said Nilo Zaratan, manager of search technology for Infoseek Corp. "It will let us do a better job of helping people get to information."
Still, Zaratan and others cautioned that the ruling applies to just one trick in an ever-growing arsenal employed by Web sites fighting for users' attention.
And others said that, even with the law firmly on their side, companies will still face the daunting task of keeping track of their trademarked names in a digital universe that continues to explode.
The case that led to this week's ruling pitted Brookfield Communications Inc., a Los Angeles seller of entertainment industry software, against West Coast Entertainment Corp., one of the nation's largest video rental chains.
Brookfield long ago registered the trademark "MovieBuff," but in a suit filed last year it accused West Coast of infringing on the term by staking claim to the address www.moviebuff.com and sprinkling the term in the text of its site.
Reversal of Earlier Ruling
A federal judge in Los Angeles ruled against Brookfield, saying West Coast had some rights to use the name because it was first to register that Internet address. If that had been upheld, many corporate lawyers say, it would have given companies a green light to exploit rivals' trade names.
But the appeals court reversed that decision Thursday, ordering U.S. District Judge Carlos R. Moreno to issue a permanent injunction barring West Coast from using either the domain name or the meta-tags.
The ruling still allows the use of a competitor's trademark in legitimate product comparisons and similar circumstances.
Richard Lee Stone, a Los Angeles lawyer who represented Brookfield, said his client was elated by the ruling.
"This decision helps to protect intellectual property, which is driving our booming economy," Stone said. "Brand names have value, and this helps companies preserve that value."
The ruling is binding in California and eight other Western states, and legal experts say they expect courts across the nation to follow the panel's reasoning.
But because it addresses only trademarks, the ruling does not prevent Web sites from spiking their pages with generic terms or even names of Hollywood celebrities.
The prevalence of such tactics stems from the intense competition to get noticed among the more than half-billion sites that make up the Net.
Search engines are by far the most important source of traffic for the vast majority of Web sites. They employ powerful computers and programs to scan the Net continually, updating vast indexes of sites and categorizing them according to the contents of their pages.
When users type in keywords such as "golf," engines point them to lists of matching sites, supposedly ranked in order of relevance.
But Web site operators have come up with a range of techniques to skew the results. "Keyword stuffing" is one of the best-known tricks and involves larding a site with frequently used search terms.