Spyware law delay sought
In court, N.Y. company decries Utah legislation
WhenU.com Inc.'s request for a preliminary injunction was the subject of a 3rd District Court hearing Thursday that is expected to continue today.
The company in April sued the state, Gov. Olene Walker and Attorney General Mark Shurtleff, claiming that the act violates the U.S. and state constitutions and federal commerce and copyright laws. A temporary restraining order is keeping the act, which was passed in the 2004 regular legislative session, from taking effect until a few days after the preliminary injunction hearing.
The act 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 hopes to curb pop-up advertising on the Internet and calls for penalties of $10,000 per violation.
WhenU pop-up ads alert computer users to coupons, offers and advertising based on their browser activity. The ads may come when the user is scanning news, Web sites or other screens about a particular subject.
Sullivan also said there is no way "to carve out Utah from the 50 states, the 200 countries, where it does business."
Avi Naider, chief executive officer, testified that carve-out costs "pale in comparison to millions in costs" the company faces if the act is implemented. They include a potential loss of distribution channels, lost consumers and costs from litigation filed by companies claiming business lost to WhenU advertisers.
"WhenU would not have come to this court unless it faced the threat of irreparable injury," Sullivan said. He added that there is "no public crisis" warranting immediate implementation of the act.
Naider said the act contains "ambiguous wording" and "draconian penalties for even a single violation." The ambiguity includes a lack of definitions for "Utah computers" and "Utah businesses," he said.
Naider said his company's software does not transmit browser-use information back to WhenU. The company doesn't even known the users' names or other personal information, he said.
WhenU has more than 400 advertisers, and about 7 million consumers use it on a typical day. During cross-examination, Naider said that while WhenU cannot identify computer users' locations, it has told potential advertisers that the company can "geo-target" advertising campaigns.
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