For businesses, the stakes of cyber crime are high

Although most consumers remain ignorant about the serious threat of “spyware” – an emerging device used in cyber crime and intrusive attacks on PCs — it is silently taking control of computers and threatens productivity and even confidentiality for many businesses.

For Web users both at home and at work, the U.S. House recently passed the SPY Act (Securely Protect Yourself Against Cyber Trespass Act), marking a step in the right direction for regaining control of violated personal privacy rights.

Spyware works against consumers and businesses in several ways. It is software that attaches itself to a PC hard drive or operating system and is capable of collecting personal information by tracking Web surfing habits and scanning hard drives for sensitive files. Web users, whether at home or at work, visit Web sites, stay long enough to read the contents of a page and perhaps click on a graphic or link to view an enlarged image or download free software.

Spyware is often hidden in image files or piggybacked while downloading “free” programs. Meanwhile, spyware can go to work with an unrequested code it insinuates onto the hard drive. IT security experts warn that employee Web surfing is the leading cause of the proliferation of spyware in corporate networks. And for businesses, particularly those small enough to not have an IT department, the dangers are even greater, as malicious spyware can steal passwords, sensitive information and confidential corporate documents.

Along with the risks to individual privacy rights, spyware can impose substantial financial expenses for businesses, ranging from a lengthy service call with the IT department to excessive spyware-generated pop-up ads, waste of bandwidth and reductions in productivity caused by time spent cleaning hundreds of unwanted programs off the hard drive. It also can cause the PC to unknowingly allow others to copy private files, or may accidentally download materials protected by copyright laws or pornography labeled as something else, leaving employees or business owners vulnerable to legal trouble.

Spyware also undermines customer relationships by gathering private information that is frequently used to display pop-up ads or to divert a user’s chosen Web page to someone else’s — a trademark violation known as “unfair competition.”

For example, a company called Peet’s Coffee sells products on line. While customers are on the Peet’s Web site, they place an order. Spyware views Peet’s customers’ Web travel and now knows that they are interested in coffee. Peet’s competitor, Greg’s Coffee, now has access to his customers’ interest in coffee and soon they are seeing Greg’s Coffee pop-up ads.

In the most egregious situation, Greg’s Coffee is unlawfully suggesting a connection to the trademark “Peet’s Coffee,” which confuses consumers and undermines the customer relationship Peet’s Coffee has established.

Even in the most benign case, Peet’s Coffee is disadvantaged by potentially losing customers and revenue to Greg’s Coffee.

Alfred C. Frawley is an attorney with Preti Flaherty’s office in Portland, Maine, and Peter G. Callahan works out of the firm’s Concord, N.H., office.

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