A New York City-based Internet advertising company is suing Utah,alleging that the recently passed Spyware Control Act violates theU.S. and state constitutions.
The suit, filed late Monday in 3rd District Court by WhenU.comInc., lists the state, Gov. Olene Walker and Attorney General MarkShurtleff as defendants. It seeks to have the court prohibit the actfrom taking effect early next month.
The act, passed by the Legislature during the 2004 generalsession, is designed to cut down on spyware by making it illegal tocreate or install the software, which monitors Internet activity andsends that information elsewhere, usually without the user beingaware of it or consenting to it. The law also curbs pop-upadvertising on the Internet and calls for penalties of $10,000 perviolation.
The lawsuit, which claims the law violates WhenU'sconstitutionally protected right to advertise, indicates lawmakersintended to combat software programs that invade computer users'privacy.
"While protecting the privacy of computer users is an importantobjective, the act does little or nothing to achieve it," the suitstates. "WhenU's software, one of the apparent targets of the act, isinstalled only with user consent, and does not invade the privacy ofcomputer users. The state of Utah does not have a valid interest inregulating a company like WhenU, nor, given the nature of theInternet, can it promulgate such regulations without impermissiblyburdening interstate commerce."
Paul Murphy, spokesman for the Utah Attorney General's Office,said the state has not seen the lawsuit and is not prepared tocomment.
The suit claims the act, while intended to prohibit spyware fromdelivering advertisements to computer users, actually protects Websites of online merchants "from lawful competition from software-based contextually relevant advertisements, regardless of whether thesoftware invades user privacy."
The suit says the act was formed in large part due to lobbying byDraper-based 1-800 Contacts Inc., which sells replacement contactlenses via the Internet. 1-800 Contacts and WhenU have been involvedin litigation since 2002 in federal court in New York, with 1-800Contacts 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 wereplaced 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."
"Because they are contextually relevant, WhenU's advertisementsare useful to consumers and effective for advertisers," the suitstates.
WhenU alleges the classifications among different kinds ofInternet businesses created by the act are arbitrary and unrelated tothe state's legitimate interest in protecting the privacy of Utahns.Its suit also says the scope of the law is unclear, making it"impossible for WhenU to know how these terms will be interpreted,and thus how the act will be enforced."
Even if WhenU made changes to comply with the act, the suitstates, "private enforcers, motivated by the act's draconianpenalties and the promise of attorneys' fees, may still seek to sueWhenU for allegedly violating the act."
The suit continues: "Thus, the act presents WhenU with theimpossible choice of either foregoing constitutionally protectedadvertising and spending significant sums to comply with the act(thereby reducing the effectiveness of its business), without anyguaranty that it will avoid liability in doing so, or else beingsubjected to millions of dollars of claims by private litigants."
E-mail: bwallace@desnews.com
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