Utah spyware law draws N.Y. suit

A New York City-based Internet advertising company is suing Utah, alleging that the recently passed Spyware Control Act violates the U.S. and state constitutions.

The suit, filed late Monday in 3rd District Court by WhenU.com Inc., lists the state, Gov. Olene Walker and Attorney General Mark Shurtleff as defendants. It seeks to have the court prohibit the act from taking effect early next month.

The act, passed by the Legislature during the 2004 general session, is designed to cut down on spyware by making it illegal to create or install the software, which monitors Internet activity and sends that information elsewhere, usually without the user being aware of it or consenting to it. The law also curbs pop-up advertising on the Internet and calls for penalties of $10,000 per violation.

The lawsuit, which claims the law violates WhenU's constitutionally protected right to advertise, indicates lawmakers intended to combat software programs that invade computer users' privacy.

"While protecting the privacy of computer users is an important objective, the act does little or nothing to achieve it," the suit states. "WhenU's software, one of the apparent targets of the act, is installed only with user consent, and does not invade the privacy of computer users. The state of Utah does not have a valid interest in regulating a company like WhenU, nor, given the nature of the Internet, can it promulgate such regulations without impermissibly burdening interstate commerce."

Paul Murphy, spokesman for the Utah Attorney General's Office, said the state has not seen the lawsuit and is not prepared to comment.

The suit claims the act, while intended to prohibit spyware from delivering advertisements to computer users, actually protects Web sites of online merchants "from lawful competition from software-based contextually relevant advertisements, regardless of whether the software invades user privacy."

The suit says the act was formed in large part due to lobbying by Draper-based 1-800 Contacts Inc., which sells replacement contact lenses via the Internet. 1-800 Contacts and WhenU have been involved in litigation since 2002 in federal court in New York, with 1-800 Contacts trying to prohibit WhenU from placing Internet ads for 1-800 Contacts' competitors.

1-800 Contacts has been perturbed by the look-alike pop-up ads, showing offers from competitors but made to look as if they were placed by 1-800 Contacts.

But WhenU states that its advertising is "contextual marketing," meaning it advertises products and services to consumers who have a "demonstrated interest in those products and services."