by Jeremy Malcolm, Internet lawyer
Spyware is software that covertly gathers information about the computer on which it is installed without the computer owner's knowledge, and sends this information back to the program's author. Typically this is done to collect personal information about the computer user to allow targeted advertising to be directed at them. It can also be done for more nefarious purposes such as snooping and identity theft, so there is often a fine line between spyware and trojan computer viruses.
Spyware is not always illegal, because in most cases the software does warn its user before they install it that their personal information will be collected and shared with other parties. The main complaint against spyware is that this warning is often only found in the fine print of its licence agreement that most users never read, and so they never become aware of its spying functions. Examples of such spyware include a popular file sharing program, and a popular Web browser enhancement.
Having said that, under Australian law a spyware publisher could be guilty of breaching the Privacy Act if inadequate disclosure is made to the user of the spying functions of the software. It is also possible that the publisher could be sued for engaging in misleading or deceptive conduct in trade or commerce if it did not adequately disclose those functions.