## Facts

- Playboy Enterprises, Inc. (PEI) owned registered trademarks including “Playboy,” “Playmate,” and “Playmate of the Year.”
- Terri Welles was designated “Playboy Playmate of the Year 1981” and operated a commercial website offering information, free photos, paid photos, memberships, and promotional services.
- The website used PEI’s marks in: (1) metatags (“Playboy,” “Playmate”); (2) a masthead reading “Playmate of the Year 1981”; (3) banner ads using “Playboy Playmate of the Year 1981” and “Playmate of the Year 1981” (including ads that could appear on other sites); and (4) a repeated “PMOY ’81” watermark/background across pages.
- The site included biographical content describing Welles’s selection and later displayed a disclaimer of association with PEI.
- PEI sued for trademark infringement, dilution, unfair competition, and breach of contract; Welles asserted nominative fair use.
- The district court granted summary judgment for Welles on PEI’s trademark-related and contract claims, and PEI appealed.

## Issues

1. Whether Welles’s use of PEI’s marks on her website (masthead, banner ads, metatags, and repeated “PMOY ’81” background) constituted infringement or dilution, or was protected nominative fair use.
2. Whether the Lanham Act barred the metatag use based on initial interest confusion in Internet search results.
3. Whether PEI could pursue contract liability against related entities or individuals under an alter-ego theory.

## Decision

- The Ninth Circuit affirmed that Welles’s use of “Playboy,” “Playmate,” and “Playmate of the Year 1981” in the masthead and banner ads was nominative fair use and not actionable infringement or dilution.
- The Ninth Circuit affirmed that placing “Playboy” and “Playmate” in metatags was nominative fair use on these facts and did not establish Lanham Act liability based on initial interest confusion.
- The Ninth Circuit reversed summary judgment as to the repeated, stylized “PMOY ’81” wallpaper/background use and remanded for further proceedings because that presentation exceeded nominative use.
- The Ninth Circuit affirmed summary judgment against PEI on contract claims, finding PEI failed to support alter-ego liability.

## Legal Principles

- Nominative fair use applies when: (1) the product or service is not readily identifiable without using the mark; (2) only so much of the mark is used as reasonably necessary; and (3) the use does not suggest sponsorship or endorsement by the mark owner.
- Nominative use differs from classic descriptive fair use; it permits use of a mark to identify the mark owner’s product, affiliation, or title where truthful identification is necessary.
- In Internet contexts, use of a mark in metatags may be permissible when it truthfully describes the user’s own affiliation or identity and does not mislead consumers about source, sponsorship, or endorsement.
- Presentation matters: repeated or stylized uses functioning as design elements may exceed what is “reasonably necessary” for identification and can fall outside nominative fair use.
- Alter-ego liability requires evidentiary support sufficient to pierce the corporate veil; unsupported assertions do not defeat summary judgment.

## Conclusion

The court held that a former titleholder could accurately use Playboy’s marks to describe her status in website text, banner ads, and metatags under nominative fair use, but remanded the separate issue of a repeated “PMOY ’81” background that could exceed necessary identification and potentially support Lanham Act liability.


Playboy Enters., Inc. v. Welles, 279 F.3d 796 (9th Cir. 2002)