Utah Search Bill Passes House, Moves to Senate

The latest iteration of a controversial keyword ad related bill passed the Utah State House Friday. But the heat is on for the legislation to pass the Senate to become law. Utah’s legislature meets each year for just 45 days, and this Thursday marks the end of its 2009 general legislative session.

The Utah House vote to pass H.B. 450 was a tight one; 38 representatives were for it, and 36 against it. One lawmaker was not present for the vote.

“It’s a highly contested bill,” said Joe Zeidner, general counsel for 1-800 Contacts, a key corporate entity behind the measure. “The other side has 20-plus lobbyists and we have one,” said Zeidner. “Obviously we’ve got to have something right on the issue or we wouldn’t have had a chance.”

Zeidner, the lone lobbyist, spent part of last week gathering statements from various companies supporting the new bill, to present to its House sponsor, Rep. Bradley Last, to bolster his argument during Friday’s floor vote.

Zeidner expected the bill, which was subject to a possible second House vote Friday evening, to get to the Senate floor before the legislature’s general session ends.

The bill would alter a law that prohibits advertisers from using trademarked terms of their competitors to target keyword-based ads to Utah users. Web behemoths including AOL, eBay, Google, Microsoft, and Yahoo strongly oppose it. Those firms and others deemed the legislation “confusing” in a letter they sent recently to Utah House Speaker Rep. David Clark. Clark co-sponsored the earlier version of the legislation, the Trademark Protection Act, signed into law in March 2007.

The letter referred to the bill as a “discriminatory obstacle to Internet advertising and consumer choice that exists nowhere else in the country.”

AT&T did not sign on to the opposition letter, but the firm also has reservations about the bill. “AT&T understands the importance of a robust Internet environment and, as such, has concerns that this bill could mark a real regulation and restriction of Internet commerce,” an AT&T spokesperson told ClickZ News.

The measure passed in the House 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.

The previous Trademark Protection Act, which was eventually rewritten a year ago to stave off a lawsuit threatened by opposing corporations, in effect defanged the bill, removing 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. Search giants and other opponents of the original language were pleased with the changes, but others, namely 1-800 Contacts weren’t.

If the bill becomes law, companies like Google and Yahoo may be required to access data from an existing Utah trademark registry in order to prevent advertisers targeting Utah users from buying Utah-registered trademarked terms.

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