On March 19, Utah Governor Jon Huntsman, Jr. signed a bill into law that bans some forms of key word advertising. The Trademark Protection Act, SB 236, establishes a new type of mark called an Electronic Registration Mark. Once a mark is electronically registered, the statute prohibits use of the Electronic Registration Mark to trigger advertising for a business, goods, or services of the same class as those represented by the Electronic Registration Mark.
Wow. I will admit this: For years I have been arguing that this field is so far out from what Congressman Lanham could ever have had in mind when he introduced our modern trademark law shortly after World War II that legislators, not courts, should decide how the Act should apply to keyword advertising. So I don’t have a huge problem with the concept.
My problems, however, are these:
- As applied to fair use, which some keyword advertising utilizing someone else’s trademark, this law may be unconstitutional.
- This should be the subject of national, not local, policy — a decision for Congress, not state legislatures.
- The actual legislative outcome here is bad for commerce. I believe keyword advertising is often a useful method of comparative advertising. I do not believe at all in the “diversion” theory of trademark infringement, which is mere sophistry.
Hm. Utah, of all places, too. Who knew?
UPDATE: Since this post first went up in 2007, Eric Goldman addressed the issue here (2009) and then, in the context of the 1-800 Contacts, Inc. v. Lens.com, Inc. case out of the District of Utah, wrote this:
[1-800 Contacts] flip-flopped on the Utah legislature’s efforts to ban keyword advertising, helping to kibosh the first law and then trying to sneak in a second law that favored their interests–aided by the fact that their in-house lobbyist is also a legislator and voted in favor of the bill her employer advocated. Yet, on its site, 1-800 Contacts claims “1-800 CONTACTS engages on public policy issues related to ocular health and the right of contact lens wearers to choose where they fill their prescriptions. We have not and will not get involved in public policy outside of the scope of this interest.” Sorry, I’m going to have to call BS on that.
And so he does. The law, evidently, is still out there in the desert — as I am, from time to time, myself. And you know how I love the desert.
This law will ruin the Internet for Utah businesses and consumers. Here are my two scenarios that illustrate the absurdity of this law:
#1 THE CONCIERGE EXAMPLE:
When I go to a hotel concierge and ask, “Where’s the closest P.F. Chang’s?” He’ll probably say, “Well, it’s right on A street (Search Results), but there is a far-better little Chinese restaurant I like over on B street (Sponsored Result).”
Is Utah going to legislate all of its concierge desks into illegality, as well?
Google is nothing more than an online concierge that we visit when we are wanting to find something. They gladly do the service of pointing us in the right direction, but they also offer some additional advice on the side, literally. True, they get their kick-backs on the side, but hey, you, the consumer, make the final decision of whether to accept their advice. Only difference, Google (and search engines) are kind enough to clearly label their “side advice” as “sponsored results.”
#2 THE SUPERMARKET EXAMPLE:
The government has no right telling Google or your supermarket what to display on store shelves. When a consumer walks into Google and asks to be pointed to a certain brand of cough syrup, Google has every right to stock the neighboring shelves with competitors’ products. In the end, the consumer picks-up/clicks on the product of its own choosing!!!
Utah lawmakers passed a bad law, on the bad advice of bad men looking to score a bad-ass contract!