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The US state of Utah has outlawed the use of other people's trade marks to generate business through search engines. The plan has been called unconstitutional and impractical.

In creating a new kind of electronic trade mark with specific online protections, the state hopes to clamp down on one company buying the right to display search engine adverts when a person searches for a rival's products.

Court cases across the US have largely backed the right of companies to purchase an association with a search for a rival's products, though one state ruled that that term must not appear within the actual advert.

Google and Yahoo! operate the most popular search advertising programmes which display adverts related to the term typed into the search engine itself. The ads are displayed separately to the actual search results, which are unaffected by any company's purchase of advertising space.

Under the Trademark Protection Act, trade mark owners can apply for additional protection in Utah which will mean that their marks cannot be used as a trigger by rivals. "This bill 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 marks," says the Act.

The law "prohibits the use of a registered electronic registration mark to trigger advertising for a business, goods, or services of the same class as those represented by the electronic registration mark," according to the Act.

Both the advertiser and the seller of the advert can be liable under the law.

Corynne McSherry, an attorney for the Electronic Frontier Foundation, said in a statement that the law is impractical. "To comply with the law, a search engine that received a search request would have to determine whether a user was located within Utah and, if so, check the search terms against Utah's registry of trademarks to prevent the unlawful triggering of advertising. The cost to search engines would be staggeringly high," she said.

Last October a New York district court threw out a case brought by a brand owner against Google over its AdWords system's selling of its name as a search term. Computer firm Rescuecom alleged trade mark infringement.

Judge Norman Mordue said that the sale of trade marks as search terms was not a violation, but that it would be an infringement to include that trade mark in the text ad itself, since that caused a 'likelihood of confusion'. A previous case involving car insurance firm GEICO had come to a similar conclusion.

French courts, on the other hand, have twice ruled against Google in similar cases, agreeing with brand owners that the firm should not sell trade marks as search terms.

In the UK a case involving Reed Business Information and Reed Executive ended in a similar result to the US cases, where an advert was found not to be an infringement, largely because it did not mention the competing firm in the ad itself.

The EFF's McSherry said that the new law was not only impractical but also most likely unconstitional because of the strain it puts on inter-state commerce. "Aside from its constitutional flaws, the law is just bad public policy. It undermines the fundamental purpose of trademarks: to improve consumer access to accurate information about goods and services," she said. "The good news is that, given the constitutional problems, the law is likely to be challenged in court."

Google has one trade mark policy for the US and Canada and another for the rest of the world. For the US and Canada, Google will act on complaints from trade mark holders about the use of their marks within ad text. However, it will not investigate complaints about the use of trade marks as keywords. Outside North America, perhaps influenced by the French court rulings, Google will investigate complaints about the use of a trade mark either as ad text or as a keyword. In contrast, Yahoo! changed its rules on 1st March to forbid the use of a trade mark as a keyword.

Copyright © 2007, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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