• by Wendy Davis , Staff Writer @wendyndavis, March 13, 2009

A bill to regulate the use of trademarks in search ads in Utah died this week in the state senate.

The law would have banned companies from using rivals' trademarks as triggers for Web ads, including ads on search engines. If passed, it would have marked the fourth time the state had enacted legislation aimed at preventing the use of trademarks as triggers for online ads. Previous efforts were declared unconstitutional, repealed, or written so narrowly that they had no practical effect.

The state is home to 1-800-Contacts and Overstock.com, both of which have filed trademark infringement suits when their names were used by rivals to trigger online ads. 1-800-Contacts appeared to be the main business proponent of the most recent proposed bill in Utah.

A coalition of Web companies lobbied against the bill, arguing that it would hurt ad-supported businesses. But it's not only businesses that would have been hurt by this measure: Consumers also would have been deprived of the opportunity to gain additional information about matters that interested them.

Consider, someone who searches for "iPod" might want to learn about all types of portable music players, not only those made by Apple. Allowing Apple rivals to use the term iPod to trigger paid ads simply means that rivals' ads will be displayed to consumers, empowering them to make a more informed decision about what to purchase.

That's one reason why groups like the Electronic Frontier Foundation have asked the courts in other instances to rule that using keywords to trigger ads isn't the type of "use in commerce" that would violate a company's trademark.

The proposed Utah bill drew jeers by observers like Eric Goldman, director of the High Tech Law Institute at Santa Clara, who called the measure "an ill-conceived anti-competitive law designed principally to advance the protectionist interests of a local Utah company."

But Goldman also is warning that state lawmakers will almost certainly reintroduce similar legislation: "Utah's legislative hubris plus local company rent-seeking creates a toxic brew that ensures repeat surfacing of bad policy proposals."