The maker of so-called spyware program WebWatcher can be sued for violating state and federal wiretap laws, a U.S. appeals court has ruled, in a case that may have broader implications for online monitoring software and software as a service.

The U.S. Court of Appeals for the Sixth Circuit rejected WebWatcher vendor Awareness Technologies' motion to dismiss a lawsuit against the company. The appeals court overturned a lower court ruling granting the motion to dismiss.

The appeals court, in a 2-1 decision Tuesday, rejected Awareness' claims that WebWatcher does not intercept communications in real time, in violation of the U.S. wiretap act, but instead allows users to review targets' communications. While plaintiff Javier Luis' lawsuit doesn't address real-time interception of communications, his allegations "give rise to a reasonable inference" of that happening, Judge Ronald Lee Gilman wrote.

Awareness pitches WebWatcher as monitoring software for parents and employers. "All WebWatcher products install easily in 5 minutes or less, are undetectable (thus tamper proof) and all recorded data is sent to a secure web-based account which allows you to monitor kids and employees at your convenience from any computer," the company says.



The original lawsuit against Awareness and other defendants was filed in 2012 by Luis, a Florida man who developed an online friendship with Ohio resident Catherine Zang in early 2009, according to court records. The two met in a metaphysics chatroom hosted by America Online. Zang's husband, Joseph, suspicious of his wife's online activities, installed WebWatcher on her computer in 2009 and used the program to intercept her chat records and email.

Luis complained that Awareness markets WebWatcher "as a means for suspicious spouses to illegally monitor their partners’ communications without their partners’ knowledge or consent," Gilman wrote in the court's decision. "Luis specifically alleges that Awareness 'intentionally targets their product at spouses in their marketing campaigns -- enticing them with the lure of finding out everything that goes on in the targeted computer’s private accounts.'"

The ruling could have an impact on company monitoring of employees, some lawyers said.

While employers generally have legal authority to monitor their employees' work communications, private communications exist in more of a gray area.

"Usually, if an employee does not expect privacy when using a corporate device, a company would not be found in violation for searching the device," said Alena Shautsova, a New York City lawyer focused on employment discrimination and other issues. "If, however ... the corporation monitors intentionally his private email or other private accounts, then I believe violations will be found."

The case also may have implications for corporate monitoring of employees when those employees correspond with people outside the company, added Braden Perry, a regulatory and government investigations attorney with Kansas City-based Kennyhertz Perry.

"If services monitor in 'real-time' even with the employees’ consent, those that the employee corresponds with may have a cause of action," he said by email. "This decision not only places potential liability on the individual using the service but the service itself."

The case could also raise alarm bells for vendors of software as a service, said Dimitri Sirota, CEO and founder of BigID, an enterprise privacy management vendor.

The ruling "raises serious questions about the liability of software-as-service companies in suits where software is used to violate privacy, " he said by email. "With many software packages now delivered as SaaS, the case "raises the specter that a vendor could end up as a co-defendant if a user (company or individual) makes use of the software-as-service in an illegal way."

Awareness Technologies didn't immediately respond to a request for comments on the court ruling.