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States Speed up Spyware Race


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By David McGuire Staff Writer
Thursday, May 13, 2004; 5:13 PM

State lawmakers' eagerness to crack down on Internet "spyware" could force the federal government to move sooner than expected to pass its own law, despite misgivings in the Bush administration and among technology executives.

Only one state -- Utah -- has an anti-spyware law, but New York and California both are considering proposals. If enough states pass similar laws, businesses say the resulting "patchwork" of conflicting statutes would be almost impossible to obey, adding further pressure on Congress to act.

"If the states are busy writing laws and particularly if they're writing inconsistent laws or laws that strongly interfere with certain markets, that certainly would strengthen the case for federal legislation," said Howard Beales, the Federal Trade Commission's top consumer protection official, in an interview.

Spyware is a broad term used to define programs that surreptitiously install themselves on people's personal computers where they can collect personal data or display pop-up advertisements. Users often inadvertently download the programs along with free file-sharing software. Some programs display pop-up ads on computer monitors. Other more insidious programs let their creators track everything people do online.

Internet security firm McAfee reported that the number of "potentially unwanted programs" on its customers' computers grew from 643,000 in September 2003 to more than 2.5 million in March. At an April FTC hearing on spyware, witnesses testified that computer users often don't know how the programs got onto their machines or how to remove them.

Congress is considering several bills that would outlaw spyware, including proposals by Reps. Mary Bono (R-Calif.) and Jay Inslee (D-Wash.), as well as Sens. Conrad Burns (R-Mont.) and Ron Wyden (D-Ore.). The bills differ in their specifics, but each would require a consumer's consent before companies or individuals download certain kinds of software onto their computers.

Any national spyware law probably would preempt various state laws, much like the federal Can-Spam Act preempted tougher anti-spam laws in California and Washington. Congress appears ready to push spyware legislation to the front of the line, even though 2004 is an election year when legislators typically spend more time making political hay in their districts than taking care of business on Capitol Hill.

House Energy and Commerce Committee Chairman Joe Barton (R-Texas) promised at a hearing earlier this month that his committee would approve a spyware bill but did not say when this would happen. He also castigated the FTC's Beales and Federal Trade Commissioner Mozelle Thompson for saying that Congress should refrain from passing a bill until it the government can define what "spyware" actually is.

Beales said that Congress should not let the threat of state laws goad it into passing a poorly written bill. "We're certainly better off with the threat of a patchwork than with bad federal legislation and right now we're not sure how to write good federal legislation."

The problem, according to the administration and technology industry lobbyists, is that anti-spyware legislation could have the unintentional effect of restricting the use of some companies' software products. Antivirus programs that automatically download virus updates to PCs could be inadvertently restricted, as could Windows Update, a Microsoft program that automatically downloads patches for the Windows operating system, said VeriSign Inc. Vice President Ken Silva.

"I do think we need to be careful as do the states," Silva said at a spyware briefing on Capitol Hill on Tuesday that was sponsored by the trade association Americans for a Secure Internet. "We're going to end up doing more harm than good if we're not careful."

Utah's law, which restricts spyware and pop-up advertising, went into effect last week. Salt Lake City-based Internet retailer already has used it to file a lawsuit against Massachusetts-based online advertising firm Smartbargains Inc. The case was filed in a state court in Salt Lake City. Internet "adware" company, meanwhile, filed a state court lawsuit in April to get the law overturned.

If California lawmakers enact a similar law, it could jump-start Congress into action, said Emily Hackett, state policy director for the Internet Alliance.

California State Sen. Kevin Murray (D), author of a stringent anti-spam measure, agreed. Murray's bill -- which would reach Gov. Arnold Schwarzenegger's (R) desk as soon as August -- would allow Californians to sue companies that install spyware on their computers without providing adequate notice. Consumers could seek $1,000 in damages for each piece of spyware installed.

Murray said he does not mind if his bill gets preempted by a national law as long as it is tough on the criminal use of spyware. The state had a strict law that allowed computer users to sue e-mail spammers, but it was partially overridden by the national Can-Spam Act.

"I don't mind being preempted as long as I'm preempted by something that will actually do something," he said.

Stephen Urquhart (R), the state representative who sponsored the Utah law, said he is worried that a national bill will be ineffective. "I do worry that the preemption will be toothless," he said. "I don't think the feds have thought through what they're doing." Home

© 2004 Washingtonpost.Newsweek Interactive

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