Judge grants WhenU’s request to delay Utah’s anti-spyware act

The US District Court for the Third District of Utah has granted an injunction to adware manufacturer WhenU.com against the implementation of the Spyware Control Act. The act is designed to prohibit spyware from being installed without explicit user consent. It would also make it illegal to use “context-based triggering mechanisms to display advertising that partially or wholly obscures paid advertising or other online content” – in other words, pop-up ads.

WhenU filed suit before the district court seeking to have the act, which is the first of its kind to be passed in the United States, declared unconstitutional. It claimed that the act:

  • unfairly targets online contextual advertising services that are not linked to websites or search engines, but that instead sell advertisements based on real-time consumer browsing preferences;

  • is an outgrowth of a suit brought against the company by 1-800 Contacts Inc, which is seeking to stop WhenU delivering pop-up ads on behalf of competitors to users that access the 1-800 Contacts website; and

  • would require companies to drastically change the way in which they (i) seek consent before installing software, and (ii) update users regarding changes to their advertising policy.

WhenU is no stranger to the courts regarding its business, but the decisions have not all been as favourable as this latest ruling. Although in 2003 a Michigan court ruled that its pop-up ads did not infringe trademark or copyright law (see WhenU pops up with another victory), shortly afterwards a New York court granted a preliminary injunction against the ads, ruling that it was likely that they violated federal trademark law (see WhenU floored by pop-up ad u-turn). However, following this decision, the Electronic Frontier Foundation and Google filed amicus briefs in support of WhenU’s advertising methods (see Pop-ups similar to offline ads, claims amicus brief).

Concern about the new anti-spyware law is widespread. A coalition that includes Amazon.com, America Online, Google, Microsoft and Yahoo warned in a letter to Utah officials that the law could have “serious unintended consequences” for legitimate internet activities. However, at least three other states (California, Iowa and Virginia) are reported to be considering anti-spyware legislation, while a bill known as the SPYBLOCK Act has been introduced in the US Senate.

In related news, Google has published suggested principles to be followed by software companies writing adware and spyware programs. Due to the nature of the software, the principles are broad and will need to be continually updated. Among other points, they state that:

  • computer users should be aware when they are installing or enabling software, and be able to easily disable or delete the application;

  • the software should make clear its principal functions; and

  • application providers should not allow their products to be bundled with applications that do not follow these principles.

Douglas Wood, Reed Smith Hall Dickler LLP, New York

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