The Lobbyist, the Congressmen and the Utah Search Ad Law

Sometime around the 2005 fall semester, Matthew Prince, adjunct professor of law at Chicago’s John Marshall Law School, proposed a final exam question to his students dealing with the use of trademarked terms in paid search advertising. That subject became the launching pad for a law passed last month in Utah, home to Prince’s software and services firm Unspam.

The law bans advertisers from using the trademarked terms of their competitors to target ads to Utah users, and particularly affects search marketers. Though its proponents say it will provide marketers with more control over their brands, the law’s chief sponsor, Utah Senator Dan Eastman hopes it will spur new revenue streams for Utah attorneys and technology firms.

“We see it as an economic development piece of the puzzle,” Eastman, a Republican, told ClickZ News. The law, which some believe will be found unconstitutional, also establishes an “electronic registration mark” protecting trademark owners that file words with a to-be-created registry.

According to Eastman, Utah-based tech entities like Unspam could provide the backend system to run the new trademark registry. Unspam also manages do-not-contact child protection registries for the states of Utah and Michigan, which both Unspam CEO Prince and Eastman say are not similar to the proposed trademark system. The bidding process on the project to develop the new registry has yet to begin, but according to the legislation, a regulatory fee for registration with the database may not exceed $250 annually. The payments “would go to whoever creates the registry,” said Eastman.

Eastman said he believes Unspam is interested in fulfilling that service for the state, but Prince stressed otherwise. “Unspam has no financial interest in this legislation…. Unspam has no plans to bid on that contract, but that doesn’t say I won’t be involved at some point,” he said. Prince assisted in drafting the legislation, and stressed his connection to it is on a separate basis as a lawyer who has studied the use of trademarks in keyword advertising, not as CEO of Unspam. Prince said he began consulting with the state in January on the new legislation.

Unspam is currently embroiled in a legal battle against the adult industry trade group The Free Speech Coalition, which filed suit against the state of Utah in 2005 challenging its child protection registry law. A defendant in that case, Unspam Registry Services, Inc. has contracted with Utah to scrub e-mail lists at a cost of .5 cents per name.

Utah’s new Trademark Protection Act, signed into law March 19, “establishes a new type of mark, called an electronic registration mark, that may not be used to trigger advertising for a competitor and creates a database for use in administering mark,” as noted in documentation of the legislation.

According to the act’s sponsor in Utah’s House of Representatives, Republican David Clark, “There was very little lobbying for and absolutely no lobbying against this legislation,” information affirmed by Eastman. Clark did tell ClickZ News, “A proponent of [Trademark Protection Act] on [Salt Lake City’s] Capitol Hill was a group called Unspam.” He added, “This was a very quiet and small piece of legislation.”

Some say too quiet. Though some marketers and companies in the search ad sector doubt it will have much bearing on their day-to-day operations, most had little or no knowledge of the bill prior to its passing. According to the Utah State Legislature’s Web site, the bill was made available for public distribution January 27.

Senator Eastman told ClickZ News he worked closely with lobbyist Craig Peterson when designing the legislation. A former Republican Utah Senator, Peterson listed Unspam as a client in 2005, according to The Center for Public Integrity. Prince confirmed Peterson is still lobbying on behalf of Unspam, and the two had discussed the Trademark Protection Act. Prince doesn’t consider the new law significant for Unspam because it doesn’t involve spam; however, Prince said, “I told Craig that I supported it.”

The new law could help local law firms score new clients for trademark-related cases, according to Eastman. “It may be a marketing tool to increase the client base so they could help individuals who have had trademark violations committed against them,” he explained. He also said the state of Utah “would have no direct responsibility for enforcement,” of the registry. “It would have to be done by an attorney, a law firm,” he said.

Eastman said his involvement with Peterson regarding the new legislation was in conjunction with a Salt Lake City law firm the lobbyist works with. Peterson could not be located for comment.

Previous online ad-related laws passed in Utah, including the state’s Spyware Control Act, have come under fire from industry execs and legal professionals. Adware firm WhenU filed suit against Utah in 2004 alleging that the anti-spyware regulation was unconstitutional, and claimed Utah-based 1-800 Contacts lobbied for the legislation. 1-800 Contacts sued WhenU in 2002 for delivering adware-served ads promoting a competitor to users visiting the 1-800 Contacts site. According to the National Institute on Money in State Politics, 1-800 Contacts gave $500 to Representative Clark’s 2006 election campaign.