Wow. Via Techdirt, news from the EFF that the Utah legislature has passed a Trademark Protection Act law preventing people from buying ads linked to terms that are also trademarks of others. The Trademark Blog notes the law probably violates the US Constitution. Certainly it will be hard to enforce. In addition, we’ve got US federal rulings that already might ride any state laws.
Establishes a new type of mark, called an electronic registration mark, that may 10 not be used to trigger advertising for a competitor and creates a database for use in 11 administering marks.
Want to reserve your mark? That will cost up to $250 annually. Once registered, it gives the owner the ability to take action against anyone deemed violating protection by, among other things, using the registered word in a way deemed to cause confusion:
uses an electronic registration mark to cause the delivery or display of an advertisement for a business, goods, or a service:
(i) of the same class, as defined in Section 70-3a-308 , other than the business, goods, or service of the registrant of the electronic registration mark; or
(ii) if that advertisement is likely to cause confusion between the business, goods, or service of the registrant of the electronic registration mark and the business, goods, or service advertised.
Liability is determined based on whether the ad is shown in the state or if the advertiser is located in the state.
Problems with the law? From me, to start, search engines can’t tell for certain if someone is in Utah. Yes, they do provide some local targeting tools, but these are not foolproof. As a result, some advertisers potentially could not run campaigns that would be "allowed" in other states for fear they would show up for some in Utah.
Another issue is that past rulings in the US, at the federal level, have found linking ads to terms that are also trademarks are not a violation of trademark law. So this positions Utah as trying to trump federal trademark protection.
In addition, Utah’s own general counsel has warned that the law might violate the US constitution by infringing on interstate commerce protections. But this was one of the best parts of the warning:
A large Internet search engine must first determine whether a user is located within Utah. If the user is in Utah, the Internet search engine must check search terms against Utah’s registry of trademarks to prevent the unlawful triggering of advertising. Literally millions of search requests from locations worldwide each day would be subject to verification of location. Once verified, the search engine would then use a separate process for delivering advertising to Utah. This results in multiple systems of advertisement for a search engine to manage.
Can you imagine registering common words like "Orange" or "Egg" or, hmm, "Apple" for protection? Then someone wants to use these words in a non-competitive way. How can the system automatically know this?
The law was signed on March 19, so I guess we’ll see what happens next. For Yahoo advertisers, at least, it should pose little worry. Yahoo already prevents some forms of directly competitive advertising, a policy it started in March 2006. That policy came about not because of legal threats, by the way. It was – in my opinion — because Yahoo started getting major brand holders to spend money on television ads that generated searches, only to discover competitors riding on the coattails of the upsurge in searches with their own ads (as Mazda did to Pontiac).