The Playboy empire has been given the go ahead to re-open legal action against internet search engines using the words "Playmate" and "Playboy" to trigger pop-up ads from rival companies.

A US appeal court ruled yesterday that Excite, and Netscape, which uses Excite technology, were wrong to include the two trademarks in a list of 400 words that would bring up sexually explicit advertisements.

Playboy now has the right to sue AOL, which acquired Netscape in 1999, over the infringement.

According to court records, surfers who typed in "Playboy" or "Playmate" into a Netscape search engine received ads whose fonts mirrored those of the official Playboy site.

Playboy argued the pop-ups tarnished and diluted its brand name by associating it with inferior products. It said it was not made clear that the advertisements were from other companies.

The three-judge panel said in its ruling that Netscape and Excite had sought to "profit from confusion".

"The above evidence suggests, at a minimum, that defendants do nothing to alleviate confusion, even when asked to do so by their advertisers," wrote judge Thomas Nelson.

Playboy's lawyer, Barry Felder, said that he would still seek damages against Excite even though the company has since gone into bankruptcy protection.

"The decision makes clear that the rules apply in the actual world with equal force to the virtual world," he said. "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."

AOL spokesman Nicholas Graham said the ruling "disappointed" the company. He said it was "assessing and considering the legal options available".

No court date has been set.

One US lawyer, Thomas Zellerbach of Menlo Park, California, told Reuters that the court's objection was principally against banner ads that hide their origin.

"If the banner ads identified their source then the use of those key words to trigger those ads would be OK."