1-800 Contacts Girds for Fight on Utah House Floor Today

Momentum is building for and against the latest iteration of Utah state legislation restricting the use of trademarked terms to target online ads to Utah residents. The Utah State House is expected to vote today on the bill, which alters previous legislation banning advertisers from using the trademarked terms of their competitors to target ads to Utah users. The new bill is seen by legal observers as less far-reaching; however, companies including AOL, eBay, Google, Microsoft, and Yahoo strongly oppose it.

But the bill’s biggest supporter is girding for a fight. Utah-based 1-800 Contacts, a firm with a history of filing search keyword-related lawsuits, was busy yesterday reaching out to Utah businesses to build support for the proposed legislation.

“We’ve pushed back and have letters now from at least a dozen Utah businesses,” 1-800 Contacts General Counsel Joe Zeidner told ClickZ News. Zeidner said companies employing thousands of Utah residents including Wal-Mart, Geico, and Utah-based Nu Skin Enterprises, have provided written support for H.B. 450. Letters from those firms were distributed to Utah lawmakers yesterday, according to Zeidner.

“All the businesses that we’ve talked to are very annoyed [by search keyword trademark infringement] and see this as a big problem,” said Zeidner.

The bill, proposed by Utah State Representative Bradley Last, a Republican, was scheduled for a House floor vote yesterday, but was postponed until today. Even if the legislation passes the House, it will need to pass the Utah Senate to take effect.

Utah’s search keyword-related trademark legislation has been on an odyssey through the state legislature over the past few years. Last is a new sponsor of the most recent version, while fellow Republicans, Senator Dan Eastman and Rep. David Clark, sponsored the Trademark Protection Act, signed into law in March 2007. Following negotiations with representatives of AOL, Google, Microsoft, and Yahoo, Eastman and fellow lawmakers rewrote the law in March 2008, mainly to stave off a lawsuit threatened by the corporations.

The rewrite removed language calling for punitive damages or enforcement against advertisers using marks of their competitors, allowed for civil action, and stated that trademark registrants could not recover profits or damages unless their marks were used to cause confusion or deceive consumers. That revision appeased the likes of Google and Yahoo, but 1-800 Contacts was not happy with the outcome. At the time, Zeidner told ClickZ the firm was “dumbfounded” by the alteration, and suggested Eastman “must have had some secret agreement with these big search companies.”

Now those big search companies have implied that the sponsor of the new bill, Last, has proposed that legislation as a favor to 1-800 Contacts. “It’s pretty clearly 1-800 Contacts’ bill; they have been pushing it all along,” said a representative of one of the firms opposing the new bill who asked to remain anonymous.

According to the Utah Lieutenant Governor’s Office, Last received a $500 contribution from 1-800 Contacts in support of his 2006 election campaign. The contact lens seller spoke on behalf of the new bill in February, along with representatives of XanGo, a multi-level marketing firm, also headquartered in the Beehive State. Representatives of eBay, Google, and the Utah Technology Council stood in opposition to the bill during that hearing.

The newly proposed legislation only affects advertisers targeting ads to Utah residents, and would not penalize search engines or other keyword targeted ad sellers that do not offer geotargeting.

In its opposing missive sent to Clark — a sponsor of the earlier legislation and the Speaker of Utah’s House — signatories called the bill “a confusing, special, discriminatory obstacle to Internet advertising and consumer choice that exists nowhere else in the country.”

The previous rewritten Trademark Protection Act called for the creation of a new registry for Utah state trademarks, unaffiliated with the federal trademark registry. Currently, Utah has a system in place that automates the establishment, renewal, and search for Utah trademarks, which charges $50 for new registrations and renewals.

If the new legislation passes, companies like Google and Yahoo may be required to access data from that registry in order to prevent advertisers targeting Utah users from buying Utah-registered trademarked terms. “It wouldn’t be too hard for us to modify the system,” said someone familiar with the registry and how it operates.

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