• by Wendy Davis  @wendyndavis, March 9, 2009

Utah has moved one step closer to attempting, for the fourth time this decade, to regulate keyword-based Web advertising.

On Friday, its House narrowly passed H.B. 450, which would bar companies from using rivals' trademarks to trigger ads on search engines, directories or other Web sites.

The measure, approved by a vote of 38-36, now moves to the state Senate.

The bill comes after three prior failed attempts by the state to regulate keyword ads. A 2004 effort resulted in legislation that was unconstitutional for restricting interstate commerce and interfering with freedom of speech. That law was amended in 2005, but the new version was written so narrowly that it had no practical effect. A third bill in 2007 would have restricted the use of trademarked terms to trigger search ads, but that was repealed.

This most recent measure has some provisions aimed at limiting its impact to within the state--which could potentially help Utah show that the law doesn't interfere with interstate commerce. One clause provides a defense for marketers who use trademarks to trigger ads if those ads were displayed by publishers who couldn't realistically use geotargeting to block them from appearing within the state.

In its current form, the bill only regulates marketers who purchase ads and not sites like Google that display them. But a coalition of Web companies, including Google, AOL, Microsoft and eBay, say the act could hurt ad-supported sites by choking off potential revenue. Last week, the group sent a letter opposing the bill to Utah House Speaker David Clark.

The bill's sponsor, Rep. Brad Last, said the measure was backed by 1-800-Contacts, according to the Deseret News. Last did not respond to Online Media Daily's requests for comment.

1-800-Contacts, which is headquartered in Utah, gave $72,950 to the state's politicians and parties last year, according to the Deseret News. The company has extensively litigated against rivals that have used the name 1-800-Contacts to trigger ads. But to date, the contact lens retailer lost its most significant case--a lawsuit against adware company WhenU. The Second Circuit Court of Appeals ruled in that case that arranging for a term to trigger an ad was not likely to confuse consumers and, therefore, didn't violate trademark law.