By Matthew Prince
Adjunct Professor of Law
John Marshall Law School
There have been a number of questions surrounding the Utah Trademark Protection Act (SB236) and the new Electronic Registration Mark the act creates. In order to understand the new law, it is important to understand the problem it addresses.
If you ask people how Google makes money, the answer inevitably comes back either: 1) "I don't know" or 2) "They sell ads." The later is correct, however it misses the most interesting part of the story. Google, and other search engines, as well as popup advertisers, like WhenU.com, sell what is referred to as "keyword" advertising. Ads are triggered based on searches that are run or terms that appear on web pages. In other words, a dentist with a liberal attitude toward nitrous oxide could buy the term "pain free dentist, utah" and whenever someone searched for that term, or surfed to a page that contained it, the dentist's ad would appear.
The above example of the dentist is not controversial. What is controversial, on the other hand, is when the keyword being purchased is a trademark of another company. Companies spend millions of dollars to create brands and trademark law has existed for decades on the state, federal, and international levels in order to protect that investment. Contrary to the protection trademarks are supposed to afford, the current practices of search engines and pop-up advertisers allow competitors to inexpensively capitalize on the goodwill of a brand in order to promote themselves.
A recent example illustrates the point. You may have seen a televised advertising campaign to promote Pontiac brand cars. "Pontiac" is a trademark of the General Motors corporation. The ads encouraged viewers to go to Google and search for "Pontiac" in order to learn more. To General Motors' surprise, Mazda had purchased the keyword "Pontiac" and viewers were shown ads for the competitor's cars. A substantial portion of the attention Pontiac had spent millions of dollars generating for their own brand was diverted by Mazda. This diluted Pontiac's brand and was essentially a form of corporate identity theft. Imagine if the same thing happened to your company -- and without Utah's law there is nothing stopping it -- and you can understand why Pontiac was so upset.
It may seem Pontiac could have protected themselves by purchasing ads for their own trademark. Unfortunately for trademark holders, however, the systems search engines run typically works as an auction. Generally, the more money you bid, the more likely it is your ad will appear. If Pontiac had bid for their trademarked keyword, Mazda could have simply bid more. This creates an arms race that benefits no one other than the search engine or pop-up advertiser. Even if a company is able to buy up all the search terms around their brand -- as Pontiac has subsequently done -- why should they have to? Doing so is the equivalent of paying protection money to secure rights that should already be protected by law.
Several trademark holders have sued disputing the practice of search engines and popup advertisers. Unfortunately for the mark holders, courts evaluating the cases have said the Lanham Act, the federal trademark law, never contemplated this situation. That is not surprising since the Lanham Act was implemented before the Internet and the idea of a search engine was even a twinkle in Al Gore's eye. The lack of clarity in existing trademark law has meant courts have had to tell brand holders who need this protection that they must look to the legislatures and clear up the law. That, of course, is what SB236 was passed in order to do.
It is important to note that Utah's legislature, in enacting the Trademark Protection Act, was not making up wholly new rights. In fact, with the exceptions of the United States and Canada, in most countries the practice of using someone else's trademarked term to trigger an advertisement is considered a violation of trademark law. Google, and other search engines, respect international law and will not use registered trademarks in order to trigger ads that appear in overseas (see Page 13 of this PowerPoint presentation
from Google's own attorneys where they explain the company's policy).
Try it yourself. As I write this, if you search for "BMW" at www.google.de
-- the German version of Google's site -- you get only ads that are friendly to the car company. If you search for "BMW" on www.google.com
-- the U.S. version of the site -- the first ad that appears in the right hand column is for Infiniti. The Trademark Protection Act merely extends the same rights already enjoyed by mark holders throughout the rest of the world to Utah.
While undoubtedly search engines, popup advertisers, and their supporters will rail against the Utah Trademark Protection Act, the vast majority of companies in the world, who rely on brands to sell their products, will see it as a benefit.
Utah has long prided itself as a business-friendly state. Utah's offering enhanced protections to trademark holders through the creation of the Electronic Registration Mark proudly continues this tradition.