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Utah lawmakers think it’s unfair for companies to use their competitor’s trademarks as keywords in Internet marketing campaigns tied to maximizing search-engine results, so they’ve passed a state law to stop it. The only problem is that lawyers in Utah and outside the state think it’s unconstitutional. Jerome Mooney, a Salt Lake City-based entertainment and intellectual property lawyer, anticipates a court challenge to Utah’s Trademark Protection Act, which goes into effect on April 30. “I see no possible way that this one stands,” Mooney said. “States aren’t allowed to regulate and burden commerce that goes on between states. That’s the job of Congress.” Companies seeking to boost traffic to their Web sites and maximize sales pay search engines to display their listings when Internet users type specific words into a browser. Another type of disputed marketing practice involves Internet software companies that deliver pop-up ads to users’ computers when they visit certain Internet sites � including those run by the advertiser’s competitors � tagged by the software. Since the law regulates the Internet advertising activity of companies outside of Utah, lawyers believe it violates the dormant commerce clause, a legal doctrine that restricts states from placing undue burdens on interstate commerce. The doctrine evolved from court interpretation of the U.S. Constitution’s commerce clause, which gives Congress the power to regulate interstate commerce. Michael Mangelson, the Salt Lake City chairman of Stoel Rives’ technology and intellectual property section, expects a court challenge to the law on commerce clause grounds “sooner rather than later,” based on the law’s impact on commerce outside the state. “I can’t see how this law, practically, is going to work out without affecting commerce outside of Utah,” Mangelson said. “I can’t see how this law, practically, is going to work out without affecting commerce outside of Utah.” A right to regulate? One of the bill’s drafters, Matthew Prince, who is both an adjunct legal professor at The John Marshall Law School in Chicago and CEO of Park City, Utah, software company Unspam Technologies Inc., said Utah has the right to regulate ads displayed in the state. “You can still place an ad on your Web site that says Pepsi is better than Coke,” Prince said. “[The new law] prohibits a company from buying access to a competitor’s trademark to direct someone to their product. The only company that should be able to sell use of a trademark is the company that owns it.” Utah’s Office of Legislative Research and General Counsel disagreed by attaching a report to the bill before its passage noting the “high probability” that it would be deemed unconstitutional. The law allows companies to apply for a Utah electronic registration mark that cannot be used to generate a competitor’s advertising on the Internet. The law also calls for a database to administer the trademarks. In addition to challenges under the commerce clause, the law is likely to face First Amendment constitutional challenges, said Rodrick Enns of Enns & Archer in Winston-Salem, N.C., who is also the vice chair of the legislation and regulatory analysis committee of the New York-based International Trademark Association. That’s because Utah’s law regulates commercial speech beyond normal trademark law boundaries, which limit confusing and deceptive commercial speech, and allow comparative advertising, Enns said. “We’ve evolved legislative and common law lines that draw the line where it makes sense to best accommodate those interests,” Enns said. Enns also noted that while court cases over keyword advertising have yielded mixed verdicts, the emerging majority approach is that the mere use of a keyword that is someone else’s trademark isn’t necessarily an infringing trademark use. Courts are typically looking at the content of the ads to see if they are confusing or misleading, Enns said. “Keyword advertising mostly has not given rise to liability,” Enns said. “This law essentially cuts out those nuances.” Mounting an offensive Meanwhile, search engine and Internet companies AOL, Google Inc., Microsoft Corp. and Yahoo! Inc. are mounting a combined offensive. The companies are meeting with key state legislative leaders on April 24 to air their concerns. The bill’s House sponsor, David Clark, who is also the House majority leader, considers the law more protective than onerous. He said the law doesn’t violate the commerce clause because it simply allows the trademarked entity to sue the violator instead of creating an active enforcement role for the state. “We’d like to sit down with these businesses and explain our interests,” Clark said. In an e-mailed response, Microsoft said it is still “analyzing the full impact of the legislation.” The company also said it “does not discuss its lobbying activities or private meetings.” AOL did not respond to requests for comment, but Google said it plans to work with other Internet companies to educate Utah officials about the law’s consequences, said spokesman Adam Kovacevich. “This law hurts consumers, violates free speech, and is inconsistent with both established U.S. trademark law and our capitalist system,” Kovacevich said. Jim Cullinan, Yahoo’s director of public affairs, said Yahoo also has legal concerns about the law. “It goes far beyond the federal copyright law, which provides a consistent landscape for Internet companies like Yahoo across the country,” Cullinan said.

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