Utah Pleases Google with Trademark Law Change, Frustrates Utah's 1-800 Contacts

  |  March 7, 2008   |  Comments

Rewrite of controversial legislation clears Utah Senate following last-minute hearings and meetings between legislators and AOL, Google, Microsoft, Yahoo.

A new version of Utah's controversial Trademark Protection Act pleases Google and other big search firms, but Utah-based 1-800 Contacts is bitter. A rewrite of the legislation was finally passed late Wednesday night, following last-minute committee hearings and recent meetings between legislators and representatives of AOL, Google, Microsoft, and Yahoo.

"I have agreement from Google, Microsoft and AOL," the law's senate sponsor, Senator Dan Eastman told ClickZ News, adding the state altered the law for fear of being sued by the companies. "The state didn't want to get into a lawsuit," he continued, noting the firms had threatened legal action. Eastman said he talked with representatives of the three firms Wednesday night. A tech industry source familiar with the situation said Yahoo also had been involved in ongoing discussions with Utah legislators regarding amendments to the law.

The law adopted last year bans advertisers from using the trademarked terms of their competitors to target ads to Utah users, and particularly affects search marketers. The search firms and many search industry execs have argued the law as originally written was unconstitutional and established an unprecedented set of rights for Utah trademark owners inconsistent with traditional trademark law recognized throughout the U.S.

1-800 Contacts General Counsel Joe Zeidner doesn't think the threat of lawsuits is the real reason for Eastman's decision to appease the search giants. "He must have had some secret agreement with these big search companies," said Zeidner. "We are still just dumbfounded."

"Comparative advertising is as old as Coke vs. Pepsi TV ads, and we're glad that this bill will help ensure that consumers continue to see comparative ads when they search online," said John Burchett, Google's state policy counsel. "We appreciate Senator Eastman's leadership in making sure that consumers' rights and free speech will continue to be protected."

The contact lens purveyor was hoping for language requiring search engines to label ads using competitors' trademarked terms as "paid" advertisements, rather than sponsored links or results, as is current practice. 1-800 Contacts sued adware firm WhenU in 2002 for delivering ads promoting a competitor to users visiting the 1-800 Contacts site.

According to Eastman, the newly-passed measure is essentially the same as a version of the law written last September. The new version no longer calls for punitive damages or enforcement against advertisers using marks of their competitors, though it does allow for civil action. It also states registrants cannot recover profits or damages unless its mark has been used "to cause confusion or mistake; or to deceive."

"We're not going to be the trademark police," Eastman said.

The new measure also deletes the provision of establishment of a new type of trademark, an "electronic registration mark," and instead simply refers to a "mark."

Zeidner claims 1-800 Contacts was led by Eastman to believe he was looking for a senate sponsor for an amendment to legislation recently passed by the State House recently that included provisions supported by 1-800 Contacts. "I think he was just playing us," said Zeidner, who said he thinks, "A lot of people deferred to Eastman because it was his bill and his issue." Zeidner believes if the House version of the bill had ended up in the Senate, it would have passed there as well.

"Frankly we're kind of licking our wounds," he said. "We're frustrated [Eastman] would not protect a Utah company and treat us the way he did." Zeidner did not know whether 1-800 Contacts has ever donated money to Senator Eastman, a Republican. However, he said, "We donate to almost all the representatives and senators in the state.... We believe we've enjoyed a very good relationship with the senator." 1-800 Contacts is based in Draper, Utah.

According to Eastman and the industry source, representatives of AOL, Google, Microsoft, and Yahoo met in Salt Lake City about two weeks ago to discuss the morphing law. Eastman said, "We sat down and had an agreement that there weren't going to be any changes" to the revisions agreed upon by Eastman and the firms last autumn. "I told them I wouldn't accept the changes from 1-800 Contacts."

Eastman said 1-800 Contacts previously concurred with the revisions agreed upon by the other parties last year, but the firm had a change of heart "in the last 90 days." Zeidner said 1-800 Contacts had been "neutral" on the amendments now passed into law.

All in all, Eastman is pleased with the outcome since he's succeeded in his primary goal of establishing a new trademark registry for Utah trademark owners, a main component of the original law. Inclusion of a trademark in the registry will require a fee of no more than $250; registration will expire in five years, and can be renewed for another five years thereafter.

"We don't want it to be a money maker as much as" provide funding for maintaining the database of registered marks, said Francine Giani, executive director of Utah's Department of Commerce, which is responsible for overseeing the creation of the registry. According to Giani, it will be built by Utah Interactive, a firm that has partnered with several Utah state agencies and built and maintains the Utah.gov site. Giani aims for the registry to be built "in the next six months."

When the original law was passed last year, Eastman told ClickZ News he hoped registry fees would spur new revenue streams for Utah attorneys and technology firms. "We see it as an economic development piece of the puzzle," he said at the time. According to the new version of the law, funds leftover after maintenance has been accounted for will be used to promote the registration of marks to federal trademark holders, "promote the state as a desirable location for business; and provide incentives to businesses considering relocation to the state."

As for 1-800 Contacts, the company hasn't closed the book on the Trademark Protection Act. "This is not an issue that we're done talking about," said Zeidner. "We still are going to look for ways to solve it." The company is currently embroiled in "four or five" lawsuits involving trademark disputes, he said.

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ABOUT THE AUTHOR

Kate Kaye

Kate Kaye was Managing Editor at ClickZ News until October 2012. As a daily reporter and editor for the original news source, she covered beats including digital political campaigns and government regulation of the online ad industry. Kate is the author of Campaign '08: A Turning Point for Digital Media, the only book focused on the paid digital media efforts of the 2008 presidential campaigns. Kate created ClickZ's Politics & Advocacy section, and is the primary contributor to the one-of-a-kind section. She began reporting on the interactive ad industry in 1999 and has spoken at several events and in interviews for television, radio, print, and digital media outlets. You can follow Kate on Twitter at @LowbrowKate.

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