New York-based WhenU, whose software is the subject of several lawsuits, filed a lawsuit in April to, called the Spyware Control Act, on the grounds that it is unconstitutional. The suit, filed in the 3rd Judicial District Court in Salt Lake County, Utah, was filed shortly before the law was set to go into effect in May.
"This is an important decision for the entire online advertising industry," said Avi Naider, CEO of WhenU. "Spyware is a problem and we want to put an end to it. WhenU supports anti-spyware legislation at the federal level, but Utah's act unfortunately impairs legitimate online advertising as well."
Representatives for the state were not immediately available for comment.
Utah is the first state to pass a law regulating spyware and other advertising software. "Spyware" and "adware" are rarely clearly defined, but the terms typically refer to software that tracks computer users' actions online or uses a computer's resources to pop up advertisements or other messages.
Many of these programs are bundled quietly with other pieces of software and are sometimes difficult or impossible to find and uninstall. WhenU has said its software can be installed only after people agree to accept terms of service that explicitly describe all of its practices.
The bill also bars "context based" tools from triggering unrelated advertisements based on visiting Web sites on a certain topic, a concern that arose from a problem reported by a local contact lens direct marketer.
That has caused worry among some Internet businesses, which are concerned that state laws may unintentionally hamper some means of doing legitimate business on the Net. The Internet Alliance, a trade organization that includes America Online, eBay and Microsoft, has opposed anti-spyware legislation.
In March, 1-800-Contacts filed the first lawsuit under the Utah law, charging that its competitor Coastal Contacts had used WhenU and other adware to deliver ads that infringe on its copyrights and trademarks.