Ben Edelman’s Response to My Post on Utah’s Spyware Law

I got an email from Ben Edelman in response to my earlier posting on Utah’s anti-spyware law. If you don’t know Ben, you should. Ben has done some first-rate empirical research on the Internet, and I cited several of his research projects in my Internet search paper. Ben also is a leading crusader against spyware and adware, so we have crossed swords in the past.

Ben suggested that I overstated my argument that the proposed Utah amendments make adware illegal. Ben is right—I did overstate. As Ben reminded me, some types of adware are not covered, such as adware that delivers untargeted ads or that displays trademark-triggered ads on a delayed basis (he think this would not satisfy the “contemporaneous” requirement, though that may depend on judicial interpretation of the word).

While I may have gotten carried away in my earlier post, I think my core point stands. While some adware is not covered by the law, I think the law outlaws the only types that have commercial viability. For example, the law still allows adware displaying untargeted advertising, but who wants that? Most/all of the adware programs that delivered ads on a poorly targeted basis are dead—AllAdvantage is a leading example, but they are just one of dozens/hundreds of browser bars that failed. Consumers (and advertisers) have little interest in software that just throws up random ads. If that’s what the Utah law allows, gee thanks (for nothing)—there’s no one left in that space, and isn’t that a good thing?

Instead, consumers do want software that infers consumer interests through behavior. This is why trademark-triggering adware gets high clickthrough and conversion rates. This is also the wave of the future—in the future, software will try to read our minds through the words we type and our online activities. These types of useful software programs are precisely what the Utah amendment targets.

The more I think about this law, the more depraved I think it is. I did a thought exercise that clarified for me exactly why this law is so objectionable. Let’s start with a simple question. This law is basically a trademark law, so why doesn’t Utah just amend its state trademark laws instead of proposing a new law?

This would be easy to do. Utah could simply pass a law saying that a trademark “use” occurs when a trademark is used to trigger ads. This approach has a chance of surviving the dormant commerce clause. State trademark laws presumably aren’t immune from a DCC inquiry, but given the long-standing state regulation of trademarks, courts will likely be far more deferential about upholding a state trademark law than a sui generis law. Also, defining “use” would have a secondary “benefit” of giving plaintiffs the right to go after all types of trademark triggering, including search engines.

However, defining trademark “use” would still require plaintiffs to show likelihood of consumer confusion. But plaintiffs who would take advantage of Utah’s proposed law don’t want to be required to show consumer confusion because they probably can’t. Doesn’t this reinforce the problem with the proposed Utah amendments? The proposed law requires zero showing of consumer confusion. In fact, defendants lose under the law even if no consumer is ever confused about anything. As I mentioned before, this law applies even if consumers expressly and unambiguously want the software to trigger ads based on online behavior.

Even so, Utah could still use existing trademark law by saying that it is presumptively confusing to consumers to trigger ads based on third party trademarks. Doesn’t this accomplish the goal?

The short answer is no. Why not? Its principal advocates include 1-800 Contacts and Overstock.com—both companies with extremely weak “trademarks.” They do not want to rely on trademark law. They want protection for words/phrases that aren’t trademarks. This explains why the law covers “registered domain names” in addition to trademarks. Protecting domain names is the key to this bill—strike that, and there’s no reason why its advocates need this law. In other words, this law is really about creating sui generis property rights for the few Utah companies that chose weakly-trademarkable domain names.

As a result, this law isn’t about protecting consumers from software that harms their computer. This law isn’t about protecting consumer privacy. This law isn’t about protecting consumers from being misled when making purchases. This law is about taking choices out of consumer hands. This law is about restricting competition to increase profits for a few Utah companies. This law represents everything that’s wrong with our current legislative system.

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