While consumer protection authorities like the Federal Trade Commission and key committees of the Congress carefully examine the issues surrounding so-called "spyware," last week the Utah Legislature became the first to pass a law on the subject, HB323.

Despite the well-placed intentions of the bill's sponsors, unfortunately, HB323 would have serious unintended consequences on everyday, legitimate activities on the Internet. These activities include, for example, use of software that consumers depend on to ensure a positive and safe experience in their shopping and e-commerce transactions and tools that combat fraud and theft over the Internet.

Gov. Walker is deciding now whether to let the bill become law or veto it. The best step for Gov. Walker to take is to veto the bill and ask that all the key parties sit down to come up with a focused, less controversial approach.

What few legislators probably realized at the time of the vote is that rather than curtailing the bad spyware, the bill in its current form could potentially criminalize some of the most popular consumer software on the market, including popular media players, anti-virus programs, Internet services, e-mail programs, and networking software. An even greater irony: Some of the most effective anti-spyware software solutions available today could potentially be outlawed by this "anti-spyware" legislation.

Over the past 12 years, Govs. Walker and Leavitt have worked very hard to make Utah an attractive place for Internet and software companies to locate and do business. And Internet companies have responded by investing in Utah and employing people.

The American Electronics Association estimates that in 2002 Utah ranked 13th in the country with more than 5,000 jobs in software development and more than 50,000 tech jobs. A study by Nathan Associates, done for the Business Software Alliance, estimates that the software industry and the jobs it generated contributed $134 million in state taxes to Utah in 2002. HB323 would send an entirely different signal.

Innovative software and e-commerce companies, many of whom are adversely impacted by technologies labeled as so-called "spyware," would have to think very hard about innovating and giving consumers interactive, seamless software that makes use of the Internet easy and engaging. They would also have to bury consumers with notices about details of the way that current software works.

We've been down this path before, and we need to learn the lessons of those experiences. Two years ago, Utah passed a spam bill that resulted in hundreds of lawsuits being filed. The spyware bill runs many of the same risks: It includes a very broad definition of spyware that includes many legitimate, consumer-friendly and fraud-preventing tools; big damage awards for plaintiffs; and confusing legal standards about notice to consumers.

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HB323 contains outright bans on common Internet advertising and includes a definition of "spyware" that is extremely broad.

To top it off, HB323 includes significant liability and damages of $10,000 per advertisement displayed — $30,000 if a jury finds a "knowing" violation.

These rigid requirements and big dollar liabilities would constrain and dry up advertising revenues for Internet software and other technology companies, while denying consumers accurate information and beneficial purchasing choices.

Before March 23, the best course of action on this difficult but important question would be for the governor to veto this flawed bill, bring the stakeholders together to focus on what is really the problem with "spyware" and invite the Legislature to revisit this issue when there has been time to fully review the issues and craft something that Utah can be proud of.

Ryan Richards is vice president and deputy general counsel for Novell Inc.