Google faults Utah law restricting keyword advertising

Computerworld - Google Inc. is opposing a Utah law that limits the types of keywords companies can use to generate competitive ads.

The Trademark Protection Act, which goes into effect June 30, allows companies to register an electronic trademark that would prohibit competitors from using those marks to trigger their own advertising on search engines and other Web sites that allow keyword advertising.

In a statement e-mailed to Computerworld, a Google spokesman said the law hurts consumers, violates free speech, and is inconsistent with established U.S. trademark law and the capitalist system.

"Federal courts have consistently upheld the right to use trademarked terms in comparative ads," the spokesman said. "And competition  which generally helps lower prices and benefits consumers  is fueled in part by companies being able to use advertising to draw contrasts with their competitors."

The spokesman said Google believes the new law is likely to be challenged in court and struck down as unconstitutional.

"We'll certainly be working with other Internet companies to help educate officials in Utah about the numerous consequences of this piece of legislation," the spokesman said.

Google's belief is shared by the attorney for the Utah State Legislature.

"The most prominent application for this type of mark is the use of user-entered search terms in an Internet search engine to trigger advertisements," according to a legislative review note by the Office of Legislative Research and General Counsel.

"These triggered advertisements are often advertisements for a competitor of an entity whose name is entered in the search engine by a potential customer. 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," the review note said.

The law has captured the attention of people on both sides of the issue.

In a blog posting, Corynne McSherry, staff attorney at the Electronic Frontier Foundation in San Francisco, said the Utah State Legislature has quietly passed a "dangerous law" allowing trademark owners to prevent their marks from being used as keywords to generate comparative ads.

She said that under the new law, if Toyota registered its trademark in Utah, another company such as Chevrolet couldn't purchase the word "Toyota" in order to redirect users searching for Toyotas to its own Chevrolet ads on Google's sponsored links space on the right hand side of the results page.

"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," she said. "The cost to search engines would be staggeringly high."