Third District Judge Timothy R. Hanson's ruling effectively affirmed Overstock's right to sue SmartBargains.com under a revised Utah anti-spyware statute. The decision also supports Overstock's accompanying arguments that it could also sue SmartBargains under common law prohibitions - one of the first such precedents in the nation, Overstock attorney John Ashton said Tuesday.

Specifically, the common law claims are based on alleged interference with contractual relationships and unfair business practices.

"Overstock has been the victim of a competitor's use of pop-up advertising that invades [its] Web site," Ashton said. "SmartBargains [allegedly intended] to confuse and deceive customers as to the source of the competitor's products."

Overstock also alleges that in addition to detouring its customers, the pop-ups' transmission "can cause significant computer operational problems and delays in individual computer processing."

The Boston-based SmartBargains referred questions to Dan Beder, vice president for marketing. He did not immediately return calls and e-mails Tuesday seeking comment.

For Overstock, which first sued SmartBargains in May 2004, the decision means it can proceed with evidence discovery in its case - and assert damages under state law for up to $10,000 per incident of unsolicited pop-up advertising.

"There are hundreds of thousands of such hits," Ashton said. "Under the statute, damages could be a very big number."

Assuming a minimum of 100,000 incidents proved at trial, at $10,000 each, a successful award would reach $1 billion.

Overstock's right to sue had originally been upheld by Judge Frank Noel in December 2004, but SmartBargains sought to reverse the ruling when he later retired. Last week, Hanson denied the motion for reconsideration.

Hanson also found that another judge's granting of an injunction in a separate case to temporarily halt the state's enforcement of its Spyware Control Act did not actually change the law's effective May 2004 date. Thus, that case - adware maker WhenU.com's suit against the state of Utah - had no impact on Overstock's claim, Hanson affirmed.

Spyware facts

Spyware, or adware, is software that tracks computer users' actions online or uses a computer's resources to pop up advertisements or other messages.

Utah's anti-spyware statute provides for damages of up to $10,000 for each incident of unsolicited pop-up advertising.

Overstock.com claims visitors to its online closeout retail site have been redirected by pop-up ads to its competitor, SmartBargains.com.