Eric Goldman has been blogging about Utah H.B. 450. The bill would prohibit companies from buying search engine ads triggered by their competitors’ trademarks. Thus: go to Google, type in “priceline,” and if you get back—as I do—ads for Travelocity and Expedia, those are potential violations. (There’s an additional “bad-faith attempt to profit” threshold, which depends on a seven-factor balancing test; while we might hope that courts will be careful about what ads are really placed in bad faith, we can’t count on anything when there’s a multifactor balancing test involved.)
Goldman has been a consistent skeptic about Utah’s forays into legislation on keyword advertising. The state’s last two tries were unconstitutional in ways that should have been obvious to the drafters. The new version is narrower; Goldman still doesn’t like it.
Ben Edelman, though, has come out in favor of H.B. 450. His argument is based on consumer confusion:
Search for Hertz, and most of the links will indeed take you to Hertz or bona fide Hertz-related sites (like booking agents or consumer reviews). In this context, what is a user to think when a search engine serves up an ad for something altogether different from a user’s request? Because search engines are generally so good at providing just what users requested, there’s likely user confusion any time a search engine instead replies with links to competitors. After all, if a user asked for Hertz, it’s perfectly reasonable for the user to expect that resulting links will be responsive to the user’s request. …
Search engines also often claim users benefit from ads for competitors. I guess it’s possible that some users might search for Hertz, not knowing that Avis even exists. But how many users does this really describe? If a consumer actually wants offers from multiple providers, those are easy to get; just search for “car rental” or “rental car deals” to get plenty of choices. In contrast, as described above, when a user searches for a specific provider, competitors’ ads are more likely to be confusing, and less likely to be useful.
To the extent that consumer confusion about search advertising sponsorship is a real problem—and the jury is still out on that one, pending more and better empirical work—the legal system ought to attack it directly. Require better disclaimers and more prominent differentiation between paid and organic results on search engines. Be stricter about potentially confusing text in search ads. Disclose the advertiser’s name with the ad. Focus on actual point-of-sale confusion in trademark litigation (e.g., with a court-ordered survey of customers during the defendant’s checkout process).
But please don’t break my Internet just because you’re concerned about someone else’s hypothetical confusion. I know what I’m doing when I use a search engine, and I regularly search on trademarked terms precisely because I want to find out about competitors. Sometimes, it’s easier than thinking of the generic term, even though I don’t care what brand I end up with. That can happen when the market is segmented in ways that I as a consumer can’t easily understand; if I search on “chocolate,” I get ads for Godiva, i.e. chocolate fail. “gourmet chocolate” is closer, but still mixes responsive and nonresponsive ads. I’d rather just search on a trademark—“jacques torres,” say—and find out which other companies consider themselves suitable substitutes.
Similarly, sometimes the appropriate generic term has multiple meanings—it’s generic for the thing I’m looking for, but also for something else—so it’s hard to find an unambiguous search term. Sometimes, the so-called trademark itself is descriptive or generic and the law hasn’t caught up with usage. And sometimes I just can’t be bothered to think of the generic term—which is really the fault of the trademark owner, precisely because they chose a catchy trademark and then advertised so heavily it’s hard to think of anything else. In all of these cases, I as a user will have an easier, more successful search if we don’t foreclose the possibility of searching on a trademarked term and getting a competitor’s ads. Perhaps Utah S.B. 450 will allow that to continue. But I fear it won’t.