WhenU Sues Utah over Spyware Law

Adware maker WhenU has filed suit against Utah alleging that the state’s new anti-spyware statute is unconstitutional and limits companies’ rights to commercial speech.

In the case, filed this week in the Third Judicial District Court in Salt Lake County, WhenU seeks a declaration that Utah’s Spyware Control Act violates the U.S. and Utah Constitutions. It also seeks a temporary restraining order preventing the law from being implemented.

WhenU is arguing that the Act regulates interstate commerce — a right reserved for the federal government in the constitution. WhenU also says the law limits companies’ rights to commercial speech.

The recently passed Act, slated to go into effect May 3, prohibits the installation of spyware on a person’s computer. It also makes it illegal to “use a context based triggering mechanism to display an advertisement that partially or wholly covers or obscures paid advertising or other content on an Internet Web site in a way that interferes with a user’s ability to view the Internet Web site.”

The Act would effectively make software by WhenU, along with that by rival Claria, illegal. Both make applications that track online behavior and use that behavioral information to target ads, which pop up while users are surfing Web sites.

“If the injunction is successful, whatever logic led to an injunction would lead to other states and possibly action on the federal level. It will be discussed on the federal level when decisions are made whether to pass the federal bill,” said R. Bruce Dickson, an attorney with Paul, Hastings, Janofsky & Walker in Washington, D.C.

The issue is already taking an important place on the federal stage. U.S. Sens. Conrad Burns and Barbara Boxer recently introduced legislation to prohibit spyware, adware and other intrusive software. The proposed act, known as SPYBLOCK, would make it illegal to install software on a user’s computer without notice and consent. Additionally, the Federal Trade Commission is holding a workshop on the issue next week.

WhenU is no stranger to legal action. It has both won and lost cases involving its pop-up ads. One of its ongoing legal opponents is online contact lens merchant 1-800 Contacts Inc. In the Utah lawsuit, WhenU claims that lobbying by Draper, Utah-based 1-800 Contacts spurred legislators to pass the Act.

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