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Tuesday, February 7, 2023

Will Utah's New Trademark Bill Stop Competitive Keyword Buys?

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.

The law:

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
).


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