In March of this year, Utah became the first state to enact new legislation addressing certain types of "spyware" -- with its Spyware Control Act. (Spyware is software that tracks a consumer"s online activities, and uses the data it collects to choose targeted pop-up advertisements and other promotional messages, which are then displayed to the user.)
Then, in May, a suit was brought pursuant to Utah"s new act. Overstock.com sued Massachusetts-based online retailer SmartBargains, Inc. in the Third District Court in Salt Lake City, claiming that SmartBargains used spyware to display pop-up ads over the Overstock.com Web site. Overstock.com is seeking injunctive relief, damages, attorney"s fees and other costs.
Meanwhile, other states are also considering legislation on this topic, and several bills on this issue have been introduced in Congress. In addition, the Federal Trade Commission recently hosted a spyware workshop in an attempt to craft useful policy solutions. The Utah law has been the subject of criticism from industry as well as from privacy advocates alike. But on closer examination, many of these criticisms are without merit.