Utah could face court battle over keyword advertising

Google Inc. is objecting to a Utah law that limits the common practice of keyword-triggered advertising, where competitors can show their ads alongside a search query or with a news story on another brand.

The measure was approved by Gov. Jon Huntsman and a unanimous Legislature with little notice or fanfare despite warnings from state lawyers that it offered a "high probability" of being overturned in court.

Aides to the governor said nobody protested before Huntsman signed the law March 19.

Now, Google, other search leaders and trademark experts are taking notice of Utah's latest grand experiment in trying to control the global Internet. An earlier law to ban advertising spyware was knocked down in the federal courts. Only the federal government can try to regulate interstate commerce.

"We were all blindsided by it," said Eric Goldman, a law professor in Santa Clara, Calif., who specializes in Internet regulation and trademarks. "Everyone's kind of shell-shocked, and it's just leaking out slowly."

Utah's innocently named Trademark Protection Act is set to take effect June 30.

"It tries to stop keyword advertising across the world," said Goldman, who expressed shock at the scale of Utah's ambitions. He said the bill's history shows that Utah lawmakers are "easily captured by industry interests" and eager to serve up bad Internet experiments.

The law is deeply flawed, said Corynne McSherry, an attorney for the San Francisco-based public-interest group Electronic Frontier Foundation.

"Consumers also have an interest here. This isn't just harmful to Google. It's harmful to consumers who benefit from comparative advertising," she said.

Legislative sponsors say the law will serve as a welcome mat for business.

"You put 1 800 Contacts into Google and you get 47 different contact lens makers," said Senate Majority Whip Dan Eastman, R-Bountiful.

On the Internet, "all major ad platforms work this way," said Andrew McLaughlin, Google's director of public policy and government affairs. He acknowledged courts outside of North America have forced Google to adopt stricter trademark policing.

For a fee in North America, Google and other Web sites charge rivals to work off a company's name to make their advertising appear when people type a search query on a company or product. Many newspaper Web sites do the same, and even banner ads can be tailored to particular news stories, McLaughlin said.

Consumers might wonder what the fuss is all about, but another Utah legislator says the practice is deceptive.