Menell on State Anti-Spyware Regulation
By Eric Goldman
Peter Menell has posted his article “Regulating ‘Spyware’: The Limitations of State ‘Laboratories’ and the Case for Federal Preemption of State Unfair Competition Laws” to SSRN. This article thoroughly examines state-level unfair competition laws and how they may apply to regulating spyware and adware. He also raises some fundamental questions about the wisdom and utility of state-level efforts to regulate the Internet generally.
“Drawing on Justice Brandeis’s oft-cited observation that states can serve as “laboratories” of policy experimentation, this Article develops a framework for assessing the allocation of governance authority for regulating Internet activities. In particular, it focuses on whether states should be free to experiment with regulatory approaches or whether the federal government should have principal, if not exclusive (preemptive), regulatory authority over Internet-related activities. Using recent efforts to regulate spyware and adware as a case study, the analysis shows that the lack of harmonization of, and uncertainty surrounding, state unfair competition law produces costly, confusing, multi-district litigation and pushes enterprises to adhere to the limits of the most restrictive state. Such a governance regime unduly hinders innovation in Internet business models. On this basis, the Article favors a uniform federal regulatory system and pre-emption of state statutes and unfair competition common law as applied to spyware and adware. The final section of the Article extrapolates from this study of spyware and adware regulation to the larger context of Internet governance.”