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.
House Majority Leader David Clark, R-Santa Clara, Utah, likened the deed to diverting a shopper who enters a particular department store to buy a dress shirt.
"You get right to the front door and somebody whisks you away to a different store," said Clark, who said he didn't need persuading to become a sponsor of the law.
Eastman and Clark said they didn't come up with the idea but believe in the cause. They said they understood they were doing the bidding of a select group of Utah companies. That group, they said, includes 1 800 Contacts Inc., which has been fighting a losing court battle against pop-up advertiser WhenU.com. They also mentioned Internet retailer Overstock.com.
Representatives at both companies acknowledged they have a problem with rivals stealing their customers but insist they weren't involved in drafting the Internet trademark law.
Eastman and Clark said they were approached by Unspam Technologies Inc., a Utah company that maintains a state database of children's e-mails kept off-limits to adult advertising. Unspam operates a similar database for Michigan, and critics say the company is angling to maintain Utah's new trademark registry.
At first, Unspam Chief Executive Matthew Prince denied his company was involved, but the legislative sponsors said Unspam Vice President Erin Barry, who also is a registered lobbyist, pushed the legislation.
Ask for clarification, Prince said Barry was freelancing when she talked up legislators about "ways this could benefit Utah."
"We wear different hats," Prince wrote Monday by e-mail.
In one of his own hats, Prince is identified only as an adjunct professor at Chicago's John Marshall Law School on the Utah Senate's blog site, where he wrote a defense of the Trademark Protection Act. The blog makes no mention of Prince's business interests.
In an interview, Prince called Utah a laboratory of democracy.
"This is a very hot and controversial area of trademark law," he said.
Goldman maintains that Utah has made a mess of trying to regulate the Internet. McLaughlin said the law is so badly written it allows anyone to register another's trademark or any generic word.
"We got some scientists in the Utah Legislature cooking up some really bad experiments," Goldman said.