Utah judge halts anti-spyware law

A district court judge in Utah ruled in favor of a New York company that makes advertising software, sometimes referred to as ‘spyware,’ that tracks Web surfers’ activities, blocking the nation’s first-ever law targeting spyware.

A district court judge in Utah ruled in favor of a New York company that makes advertising software, sometimes referred to as “spyware,” that tracks Web surfers’ activities, blocking the nation’s first-ever law targeting spyware.

Judge Joseph Fratto of the Third Judicial District Court in Salt Lake City issued an injunction Tuesday that temporarily blocked the Utah law, known as the Spyware Control Act, which was signed into law by Utah Gov. Olene Walker on March 23, after WhenU.com applied for a temporary restraining order, claiming the law would cause “irreparable harm” to its business.

WhenU runs what it calls a “global desktop advertising network” using software that it bundles with other, popular applications that are distributed, for free, on the Internet. The WhenU software is installed on users’ systems along with those applications. Once installed, the software displays advertisements in pop-up windows, Web page banners, buttons, toolbars and text links, the company said.

Utah’s Spyware Control Act defines “spyware” broadly as any software that monitors the computer’s use, sends information about the computer’s use to a remote computer or server without prior consent of the computer owner and prohibits individuals from installing spyware on another person’s computer.

WhenU claims that users agree to have the company’s software installed and be shown advertisements in exchange for receiving free software. The company adheres to rigorous privacy policies and says it does not track information on individual users, place cookies on users’ systems or profile users.

The company argued that the Utah law violates the First Amendment of the U.S. Constitution protecting free speech and the Constitution’s Commerce Clause, which gives Congress the right to regulate commerce between the states and gives courts the power to strike down state legislation that interferes with interstate commerce.

In a statement, WhenU CEO Avi Naider called the injunction an “important decision” for Internet advertisers and said that his company supports “appropriate anti-spyware legislation at the federal level,” but not the Utah law.

Momentum is picking up for a federal anti-spyware law. Last week, the U.S. House Subcommittee on Commerce, Trade and Consumer Protection approved a spyware bill called the Securely Protect Yourself Against Cyber Trespass Act (SPY ACT) that authorizes fines up to $3 million for companies that are found guilty of collecting personal information, diverting Web browsers and delivering some pop-up advertisements to computer users without their consent.

A House committee will hold a hearing to amend SPY ACT on Thursday, the last step before the bill is taken to the floor of the House for a vote. The bill could be further amended in that hearing.

A separate Senate bill, called the Software Principles Yielding Better Levels of Consumer Knowledge (SPYBLOCK) Act, was also introduced in February, but is moving more slowly. That law prohibits the installation of software on computers without proper notice and consent. It also mandates that software have features for removing it from systems. Like the SPY ACT, SPYBLOCK would also prevent outlaw intruders from collecting information on users, displaying advertisements or altering system settings without the user’s consent.

Many technology companies and technology industry trade groups have expressed reservations about broadly written anti-spyware legislation. The Business Software Alliance, which counts Microsoft, IBM and HP as members, has advocated laws that focus on explicitly illegal activities, like surreptitiously collecting information on users, without impinging on legitimate online marketing practices or business-customer interaction.

Grant Gross, in Washington, D.C., contributed to this article.