Bid on trademark keywords? Not in Utah…

April 3, 2007

This from the EFF (Electronic Frontier Foundation):

A Bad Idea From Utah: A Ban on Comparative Advertising
March 30, 2007

The Utah legislature has quietly passed a dangerous law allowing trademark owners to prevent their marks from being used as keywords to generate comparative ads. If this law takes effect, a company like Chevrolet couldn’t purchase “sponsored link” space on the Google results page when a user types “Toyota” as part of a search query–at least if the latter term is registered in Utah as an “electronic registration mark.”

As Martin Schwimmer notes, Utah’s own General Counsel warned the legislature that the law was likely to be found unconstitutional given the burden it would put on interstate commerce. To comply with the law, a search engine that received a search request would have to determine whether a user was located within Utah and, if so, check the search terms against Utah’s registry of trademarks to prevent the unlawful triggering of advertising. The cost to search engines would be staggeringly high: “Literally millions of search requests from locations worldwide each day would be subject to verification of location.”

Aside from its constitutional flaws, the law is just bad public policy. It undermines the fundamental purpose of trademarks: to improve consumer access to accurate information about goods and services. Trademarks are just shorthand terms that designate the origin of a product. Comparative advertising uses those shorthand terms to provide more information about the trademarked product and competitive products. That’s why comparative trademark use is clearly protected under federal trademark law. If it weren’t, Pepsi wouldn’t be able to tell consumers that more people think Pepsi tastes better than Coke, and Apple wouldn’t be able to make fun of Microsoft on national television every night.

The good news is that, given the constitutional problems, the law is likely to be challenged in court. But it’s too bad the Utah legislature didn’t heed its own counsel’s advice and save Utah taxpayers the cost of defending this anti-consumer legislation.

Now, as far as I know Google will stop people from bidding on a trademarked term if they are notified of the fact. I have instigated this myself in the past when we’ve found someone bidding on our company name. So quite why these lawsuits are happening is beyond me, I know Yahoo etc don’t apply the same controls over trademarks but with the bulk of the paid search market poured into Google I question the point of trying to ban it (also find it hard to imagine how it could be policed purely for Utah).


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