Adware maker WhenU.com filed a lawsuit in Utah state court to quash the recently enacted anti-spyware law on the grounds that it violates existing federal and state law.
WhenU.com's motion, filed in Salt Lake City judicial court, said the law, while designed to protect computer users' privacy, actually serves to protect online merchants from competition.
Utah's law, set to take effect May 3, bans software that delivers ads based on a user's Internet behavior.
WhenU's SaveNow software pops up ads tied to words the user types into the browser or search engines. SaveNow is bundled with popular software such as file-sharing service BearShare. Users agree to the display of SaveNow ads on their desktop in exchange for the free software. The company says response rates average 5 percent for the ads and can run as high as 20 percent for instant coupon offers.
Its adware and that of Claria have raised the ire of Web publishers and online businesses, who assert that the ads violate copyright and trademark law and amount to unfair competition. WhenU and Claria are both embroiled in multiple legal actions brought by online businesses, including Utah-based 1-800 Contacts.
WhenU asserts that the Utah bill was passed by the legislature and signed by Gov. Olene Walker “due in large part to the legislative lobbying efforts of a single company, 1-800 Contacts.”
Claria cited the Utah law as a major risk factor in its filing for a $150 million stock offering last week. The company said the law would stop it from doing business in the state.