The Utah State Legislature has passed a bill that would make it illegal to purchase keywords relating to a competitor’s product in order to show up alongside them in search results. The Trademark Protection Act has come under much public scrutiny, most notably by Google.

The Trademark Protection Act made its way quietly through the Utah legislature, not receiving so much as a whimper of opposition as Governor Jon Huntsman Jr. in signed it into law mid-March. Since then, however, the bill has created a firestorm of controversy comprising issues of keywords, trademark, and separation of powers.

The general purpose of the Trademark Protection Act is this:

This bill establishes a new type of mark, called an electronic registration mark, that may not be used to trigger advertising for a competitor and creates a database for use in administering marks.

When you start messing with online advertising, however, you’re infringing on Google’s turf, and they don’t like it very much:

Google, other search leaders and trademark experts are taking notice of Utah's latest grand experiment in trying to control the global Internet. An earlier law to ban advertising spyware was knocked down in the federal courts. Only the federal government can regulate interstate commerce.

Trademark law is not the underlying issue in this piece of legislation. In fact, the concerns stem from a much more fundamental issue concerning the separation of powers between state and federal government.

In particular, the power to regulate interstate commerce is directly endowed to the federal government within the framework of the Constitution and is, consequently, beyond the jurisdiction and purview of the states.

Trademark lawyer Martin Schwimmer examines the TPA within this context in his blog post:

Because of the potential impact on interstate commerce from the state's regulation of electronic registration mark use on Internet search engines, this legislation has a high probability of being held to be unconstitutional.

In the context of this legislation, there has been no specific delegation by Congress of the authority to regulate the type of Internet advertising that this legislation targets, whether triggered by an electronic registration mark or any other method.

As if the mounting case against the Constitutionality of the bill weren’t bad enough for Utah, now the Electronic Frontier Foundation is involved. EFF attorney Corynne McSherry was unavailable for comment when contacted, but has issued a statement concerning Utah’s Trademark Protection Act:

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.

Attempts to gather the Utah legislature’s side of the story have thus been unsuccessful, the TPA’s chief sponsor, Dan R. Eastman, failed to respond to requests for comment at the time of publication.

This will be an interesting news item to follow as the story develops, given the implications for all the major search engines that make use of paid advertising models driven by keyword sales. 

Tags: Trademark Protection Act, Google, Trademark, Keywords, Constitutional Law