• Spyware Revisited
  • April 29, 2004
  • Law Firm: Manatt, Phelps & Phillips, LLP - Los Angeles Office
  • Spyware has moved front and center as online privacy concerns continue to escalate. As reported in the March 15 issue of [email protected], a spyware bill was introduced in Congress under the bipartisan sponsorship of Senators Barbara Boxer (D, CA), Ron Wyder (D, OR), and Conrad Burns (R, MT), and a bill was passed by the Utah legislature and awaited only the governor's signature. Since then the governor has signed it and, as expected, a constitutional challenge was filed almost immediately in Utah on commercial free-speech grounds.

    Spyware is the umbrella term commonly used to describe software that tracks and records online consumer activity without consent. Consumers are largely unaware that they could download spyware when they visit a Web site, when they engage in peer-to-peer file sharing or when they accept a software licensing agreement on the many so-called free sites available on the Internet. They are also unaware that spyware can track their Web site preferences, follow their e-mail traffic and ascertain their passwords, all for the commercial benefit of a marketer with which they have no interest or concern. Despite the obvious abuses inherent in spyware, it has adherents, particularly marketers who maintain that it can be tailored to serve a legitimate use.

    To obtain a consensus as to how the intrusive aspects of spyware can be eliminated and how the legitimate uses can be retained (cookies, features required for technical support, instant e-mail messaging and the like), the Federal Trade Commission conducted a workshop on April 19, at which time spyware issues were discussed and comments from interested parties were solicited. Topics included, among others: (1) how to satisfactorily define spyware, (2) how spyware is transferred and to what extent spyware is bundled with other software, (3) how security concerns can be better addressed and (4) how governmental and consumer groups can deal with responses to spyware-related issues. Comments can be sent to [email protected]

    Significance: The increasing government interest in privacy concerns cannot be ignored. Spyware regulation appears inevitable, either at the federal level or through a patchwork of state laws. In either case, marketers who benefit from spyware must remain alert to ensure they operate within the restrictions of the law.