Utah Amends Trademark Protection Act (But Only After Some Drama)

By Eric Goldman

One of the arguments in favor of federalism is that it enables states to act as “laboratories of experimentation,” a phrase attributed to Louis Brandeis. The idea is that if enough states try different things legislatively, then some good ideas will percolate up the system and other states can emulate the best ideas. But the “Law of Large Numbers” argument cuts the other way too. If we have enough different legislatures trying out different things, inevitably some legislatures are going to cook up some really crazy shit. And when it comes to state legislatures trying to impose their experiments on a global Internet, even a single mad scientist can wreak a lot of havoc.

Unfortunately, the Utah legislature is the Dr. Frankenstein of Internet regulation. With their track record, I consider the Utah legislature the flagship example of why Internet federalism doesn’t work.

And among the bad experiments by the Utah legislature is the Utah Trademark Protection Act, one of the worst pieces of Internet legislation of all time. Fortunately, the Utah legislators responsible for the act ultimately realized the errors of their ways and decided to repeal the substantive provisions.

But isn’t it so true-to-form that the Utah legislature nearly botched the repeal of their botched law? At the 11th hour, after the Utah Senate had passed the repealing amendments and after 2 readings in the Utah House, a Utah representative introduced a different amendment that attempted to salvage some of the act’s substantive restrictions. You can see the proposed amendments here. Kate Kaye reports that this amendment was introduced at the behest of our old friend 1-800 Contacts, who initially had been part of the coalition to repeal the Utah Trademark Protection Act but apparently had a last-minute change of mind.

I don’t fully understand the substantive consequences of the proposed amendments. According to Kate, 1-800 Contacts apparently wants Google to call its keyword ads “paid advertising” instead of “sponsored links,” but I’m not sure why that would be particularly valuable to 1-800 Contacts, and in any case this clearly isn’t something that can or should be legislated at the state level. Ironically, due to sloppy drafting, the proposed amendments squarely seemed to govern Catalina Marketing’s widely used system of in-store delivery of coupons triggered by competitive purchases, so these amendments would likely have stirred up a hornet’s nest of protests from local grocery stores. That’s what happens when legislatures act too fast on topics they don’t understand, and here raising new substantive amendments on the House floor without any time for critical review and discussion ensured that confusion would reign. As a result, it was guaranteed that if 1-800 Contacts’ amendments passed, (a) Google and other Internet companies were going to make yet another trip to the Utah legislature to school them, and (b) if that reeducation didn’t lead to the repeal that was promised, a lawsuit would be forthcoming.

Remarkably, despite the fact that Utah already had so badly muffed the initial Trademark Protection Act, and despite the process violation of introducing a major substantive amendment with no time to critically vet it, the Utah House handily passed 1-800 Contacts’ proposed legislation. Since the Utah Senate had already passed the substantive repeal of the Trademark Protection Act, the bills went to a committee for reconciliation. I haven’t yet gotten any insight into these backroom negotiations, but the House backed down and passed the repeal in the form passed by the Senate. Whew, that was close!

So the law now goes to the governor for signature. Given Utah’s track record, it wouldn’t surprise me in the least if there is some more nonsense before his ink hits the paper.

Meanwhile, this 11th hour drama only reinforces how important it is that we as a community monitor developments in every legislative forum. As 1-800 Contacts’ end run shows, we can never be too vigilant. And as I mentioned in my last post and in light of 1-800 Contacts’ ominous statements (and as Tom O’Toole reports, also noting that keyword plaintiffs American Blinds and American Airlines also were urging on the Utah legislature too), I guarantee you that the legislative battles over keyword advertising aren’t going away. If nothing else, with term limits, new mad scientists are joining the legislative ranks constantly.

UPDATE: Google’s Public Policy Blog lauds the amendment.

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