Keyword Advertising as Corporate Identity Theft—Sen. Eastman Defends New Utah Law Banning Keyword Advertising

By Eric Goldman

Last month, Utah quietly passed SB 236 to outlaw keyword advertising. Last week, SB 236’s sponsor, Sen. Dan Eastman, blogged a defense of the law. I really respect Sen. Eastman for engaging his critics in the blogosphere, but his response also illustrates how Utah passed such a rotten and anti-consumer law.

Sen. Eastman’s blog post is entitled “Identity Theft: The Next Generation,” and he explains that keyword advertising is a “creative new kind of identity theft.” Apparently, then, banning competitive keyword advertising should prevent a type of corporate identity theft. While invoking the Big Scary Threat of “identity theft” is a clever rhetorical move, it’s also analytically indefensible. Identity theft occurs when someone makes a false representation, but this law bans competitive keyword advertising that is completely truthful and does not confuse anyone.

Along the way, Sen. Eastman picks some colorful verbs to describe competitive keyword advertising, analogizing competitive keyword advertising to “carjacking” someone’s trademark (should we call this “markjacking”?) and suggesting that searchers presented with a comparative ad are being “shanghaied by a pirate.” These chosen verbs imply that somehow searchers are being forcibly deprived of their rights, as if a thief is holding a gun to the searcher’s head, saying “GIVE ME YOUR CLICK,” or that a careless searcher will wake up one morning with a bad headache trapped on a square-rigged ship as an indentured servant. But, there is no compulsion taking place with keyword advertising; searchers aren’t being forced to do something they don’t want to do. Search engines present keyword advertising, and searchers click on it when they think it’s relevant. Search engines increase consumer choice, not limit it, so in my opinion the only people being shanghaied here are Utah citizens harmed by this law and its bogus justifications.

Sen. Eastman also declares: “I make no apologies. Utah is a highly tech-savvy, super business-friendly state. We have more computers per capita than anywhere else in the nation.”

I can’t argue with his business-friendly characterization, as this law amply confirms that Utah happily sells out consumers to help businesses seeking to limit fair and legitimate competition. However, his reference to the number of computers in Utah is more puzzling. Utah residents may own a lot of computers, but the Utah legislature appears to be trying to render those computers useless by passing a dizzying array of regressive, anti-consumer, anti-Internet laws.

Finally, Sen. Eastman’s intransigence (“I make no apologies”) is understandable but unfortunate. This law will fail in the courts, and it would be a true public service to declare a “mea culpa” than to waste a lot of Utah taxpayers’ money in a futile defense of the law.

In addition to Sen. Eastman’s post, Matthew Prince, CEO of Unspam, also blogged his own defense of the law. I’m still trying to parse Unspam’s interest in this law–are they hoping to become the electronic registration mark’s database vendor?

In any case, I thoroughly dissected Prince’s proffered rationales (such as the bogus claim that Mazda “diverts” searchers for Pontiac) in this article, so I’ll spare you the rehash here. However, I will address one legal point: it’s misleading to suggest that the “Trademark Protection Act merely extends the same rights already enjoyed by mark holders throughout the rest of the world to Utah.” Just like US courts, foreign courts are struggling to determine the proper application of their trademark laws to competitive keyword advertising, so there are numerous foreign rulings validating the legitimacy of competitive keyword advertising (see, e.g., Israel’s endorsement of the practice in the Matim Li v. Crazy Line case).

UPDATE: It appears that Matthew Prince knows more about the dormant commerce clause than Utah’s General Counsel. If this law isn’t generating profits for Unspam, it’s very generous of Unspam to give Matthew so much time to write lengthy legal memoranda.

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