Netscape Communications (defendant) operated an Internet search engine. Netscape utilized a practice called keying that allowed advertisers to link their ads to specific search terms. Netscape maintained lists of terms to be linked or keyed to ads. Netscape’s lists contained terms trademarked by Playboy Enterprises, Inc. (PEI) (plaintiff). These terms included “playboy” and “playmate.” Through Netscape, adult-oriented advertisers linked their ads to PEI’s trademarked terms. Thus, if a user searched “playboy” or “playmate,” these adult ads would appear on the search-result page. PEI sued Netscape, asserting that keying ads to PEI’s trademarked terms infringed upon and diluted the marks. PEI presented evidence that the ads linked to PEI’s marks were often graphic in nature and were confusingly labeled. Netscape argued, among other defenses, that it made a nominative use of PEI’s marks. The trial court granted summary judgment in favor of Netscape. PEI appealed.