Lawsuit Filed Under Utah’s Challenged Anti-Spyware Act

By: Janis Mara and Ron Miller

Utah retailer Overstock.com filed a lawsuit in Utah under that state’s new anti-spyware statute, though the law is temporarily blocked by a court order.

Overstock sued its competitor, Massachusetts-based SmartBargains.com, in Third District Court in Salt Lake City for allegedly serving pop-up ads over Overstock.com’s site in violation of Utah’s Spyware Control Act. However, that law is currently blocked until a hearing in another lawsuit takes place in June.

Legal experts consulted by ClickZ say it’s not unusual to sue under a law that’s in dispute, because the law is still on the books despite being under scrutiny.

In April, adware firm WhenU sued Utah alleging that the state’s new anti-spyware statute is unconstitutional and limits companies’ rights to commercial speech. Utah’s Attorney General was granted a stipulated order delaying the law that has been extended to the first week of June.

J. Randall Call, an attorney representing Overstock.com, said he was aware of the temporary restraining order. He said Overstock.com could sue under the act because “we are not a party to that action.”

Also, he said, Overstock.com’s action includes two other causes of action beside the Spyware Control Act. The company also claims unfair competition and interference with prospective economic advantage, citing common law. These causes of action will not be affected by the fate of the act.

Overstock.com and SmartBargains.com are competitors in the e-commerce bargain and overstock market. Overstock sees the pop-ups as an illegal attempt to grab its customers and deface its Web site.

“The unauthorized Smart Bargains advertisements alter the appearance of the Overstock.com Web page. The actions constitute an unauthorized invasion of Overstock’s ‘showroom’ and create an advertising location for this major competitor in Overstock’s own ‘house,'” the lawsuit says.

“All of the pop-up advertisements that SmartBargains.com has displayed on the Overstock Web Site have been displayed without the authorization or permission of Overstock,” the lawsuit goes on to say.

Overstock’s Byrne said his company made a strategic decision not to work with firms using spyware.

“Several years ago we decided on principle to cease any advertising with such firms, and have encouraged members of the vast affiliate marketing community to respect the position we have taken by refusing to act as affiliates for sites that avail themselves of parasiteware,” Byrne said.

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