Utah—a state infamous in online marketing circles for passing terribly crafted Internet legislation—has apparently seen the error of its ways in at least once instance and acted on it.
The Utah Senate in February passed a set of amendments that would gut the state’s Trademark Protection Act, a law passed last March ostensibly aimed at stopping companies from buying competitor’s trademarks to trigger keyword ads on search engines.
The rewritten bill is pending in the House.
Under the original law, Utah was to establish a database on which companies could register so-called “electronic registration marks” for a yearly fee of up to $250. Competitors would then be banned from buying keyword ads triggered by the registered terms.
Critics of the law said, among other things, it would stifle competition and hurt consumers.
“I was opposed to it because it was designed to reduce the ability of consumers to get information and help them make better choices in the marketplace,” said Eric Goldman, a Santa Clara University Law School professor who maintains a technology and advertising blog at http://blog.ericgoldman.org.
Also much to the frustration of companies with a vested interest in a viable online advertising market, the law was passed unanimously with no debate.
Within weeks, representatives of Google, eBay, Microsoft, America Online, Yahoo, 1-800 Contacts and Overstock.com descended on Salt Lake City to explain to the state’s lawmakers how wrongheaded they believed Utah’s Trademark Protection law was.
According to multiple sources, it didn’t take too much explaining before the lawmakers realized they had made a mistake.
In the new bill—SB 151—all language allowing for the establishment of a so-called electronic registration mark and banning the use of “an electronic mark to cause the delivery or display of an advertisement for a business goods of services … other than the business goods or services of the registrant” has been struck.
The bill still calls for the establishment of a trademark database, the fees from which will be used to promote Utah as a place to locate businesses and “provide incentives to businesses considering relocation to the state.”
Though gutting Utah’s original Trademark Protection Act is certainly a step in the right direction, it is unclear what state legislators now have in mind with the database.
Also, the battle over trademark use in triggering keyword ads is far from over, wrote Goldman on his blog.
“Even when the Utah Trademark Protection Act has been fully gutted and eliminated as a threat to the keyword advertising industry, I guarantee that the war is hardly over,” he wrote. “Future state legislators are going to find regulating online advertising irresistible, and each of these legislative initiatives poses grave risks to our information economy.”
Utah has a long history of passing wrongheaded Internet legislation. In 2005 it passed a law establishing its infamous child-protection do-not-e-mail registry forcing marketers who want to include in e-mail anything it is illegal for minors to view or buy are to scrub their lists against it for a fee. Rather than protect children, the registry puts them at greater risk of being contacted by online predators, according to the Federal Trade Commission.
Also in 2005, Utah passed a law allowing Utah’s Attorney General to designate porn sites as off limits to Utah. How this would be accomplished was unclear.
“I think it's safe to say that Utah has an unrivaled track record of enacting dumb, regressive, unproductive Internet laws,” wrote Goldman in a blog post. “But Utah’s three-year battle against keyword advertising represents the strongest support for this assertion.”