Next week, the Utah State legislature begins formal consideration of the Utah E-Commerce Integrity Act, a bill that aims to strengthen intellectual property protection in Utah and shield consumers and businesses from online fraud. If passed, it could serve as a harbinger for U.S. congressional efforts to similarly amend the federal 1999 Anticybersquatting Consumer Protection Act (ACPA). A key provision in the Utah bill updates and strengthens the weak enforcement provisions of ACPA by allowing brand owners to sue “affiliates” as well as registrants of trademark infringing domain names. The proposed legislation is strongly supported by a broad coalition of national and local businesses,

as it will protect them and their consumers from the bad faith misappropriation and diversion of their trademarks online. Cybersquatting, the registration of domain names similar to others’ trademarks for the purpose of misleading Internet users, is estimated to cost brand owners worldwide over $1 billion a year by diverting legitimate traffic and revenue, undermining hard-earned trust and goodwill, and increasing the enforcement expense of protecting consumers from online fraud. If enacted, the Utah E-Commerce Act would improve consumer safety on the Internet and save businesses millions of dollars dedicated to combating online fraud.

In addition to allowing trademark owners to sue “affiliates,” the Utah E-Commerce bill creates a presumption of statutory damages starting at $100,000 per domain name if a pattern of willful infringement is present. This marks a significant change from ACPA, in which statutory damages begin at $1,000. Other sections of the bill address phishing and pharming by allowing registrars and Internet service providers to remove or disable Website content involved in fraudulent activities; defining phishing and pharming as third degree felonies; allowing for either actual damages or rewards of up to $150,000 per violation in related civil suits; and permitting $1 million in penalties for the use of spyware.

Utah State Senator Stephen Urquhart (R-29), chairman of the Utah Senate Transportation and Public Utilities and Technology Committee, is the sponsor of the Utah E-Commerce Integrity Act. After Senator Urquhart informally introduced his bill before the Public Utilities and Technology Interim Committee late last year, he formally introduced his bill for consideration this year and it was referred to his committee for hearings and mark up. The Utah state legislature is bicameral and bills must pass both chambers before consideration by the governor. The Utah 2010 general legislative session begins on January 25, 2010. When the legislative session gets underway, formal debate over final language will take place in Senator Urquhart’s committee.