United States v. Scarfo, 180 F.Supp.2d 572 (D.N.J. 2001) (full-text).
Trial Court Proceedings
A New Jersey judge, in a criminal case involving gambling and loansharking, held that the FBI's keylogger software that records and reports all of the keystrokes occurring on a targeted computer is legal, and needs only a search warrant to authorize installation.
Scarfo had challenged the use of the software, since it overcame the encryption allegedly used by the defendant to hide his criminal activities and exposed the passwords used to gain access to the encrypted information. The court held that since no “communications” were intercepted by the program (the software was automatically disabled if the user was “online”), a wiretap order (which has more stringent requirements on law enforcement) was not required.