Kronish Team Obtains Preliminary Injunction In Much-Watched Internet Advertising Case

Kronish Lieb won a much-watched constitutional challenge on behalf of client WhenU.com, Inc., a leading online advertising company, to the State of Utah's recently enacted Spyware Control Act. Although billed as an effort to counter "spyware," the Utah Act was replete with provisions which would have crippled legitimate commercial uses of the Internet.

Kronish Lieb litigators filed a complaint against the State of Utah, its Governor and Attorney General on April 12, 2004 in Salt Lake City to stop the statute from going into effect. The complaint asserts that the Act violates the Dormant Commerce Clause and the First and Fourteenth Amendments of the United States Constitution, the equal protection and freedom of expression provisions of the Utah Constitution, and is preempted by the federal Copyright Act. The complaint seeks to enjoin the Act as an unconstitutional effort to regulate Internet advertising; alternatively, it seeks damages from Utah on the ground that the Act constitutes an unconstitutional taking of property under the Utah Constitution.

On June 22, 2004, following an evidentiary hearing, the Utah court stated that it would issue the preliminary injunction, finding that if the Act were to go into effect, it would cause irreparable harm to WhenU and other legitimate Internet businesses, and that WhenU was likely to succeed in showing that substantial portions of the Act are unconstitutional. The preliminary injunction order was issued on July 2, 2004.

This story is being widely covered in the national press. Lead partner Celia Goldwag Barenholtz is quoted in both the Associated Press and the Deseret Morning News.

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