Net News

First Suit Filed Against Internet 'Spyware'

The U.S. government has sued a New Hampshire man in its first attempt to crack down on Internet “spyware” that seizes control of a user's computer without permission.

The U.S. Federal Trade Commission (FTC) recently asked a federal court to shut down an operation that it said disables users' computers in an attempt to bully them into buying anti-spyware products.

Internet users unwittingly download the software when they visit Web sites that contain certain banner ads, the FTC said.

The software exploits a hole in Microsoft Corp.'s Internet Explorer Web browser to work its way onto computers without users' knowledge, according to the lawsuit.

The software hijacks Web browsers, causes CD-ROM trays to mysteriously slide open and slows down computers or causes them to cease working altogether.

A torrent of “pop up” messages urges consumers to buy programs called Spy Wiper or Spy Deleter to clean up the mess.

The FTC has taken action against companies that redirect browsers before but has never sued a company for secretly installing software.

Spyware comes in many forms ' from keystroke loggers that can capture passwords, credit-card numbers and other sensitive data to relatively harmless programs that deliver pop-up ads.

Currently there are no national anti-spyware laws on the books, though several states have them ' although as seen in the next item, the House of Representatives passed two anti-spyware bills this week and another is pending in the Senate.

The FTC used deceptive-business laws to go after New Hampshire resident Sanford Wallace and his two companies, Seismic Entertainment Productions Inc. and SmartBot.Net Inc.

The FTC asked the court to shut down Wallace's operations and force him to return any money he has made.

Under the current bill, called the “Internet Spyware Prevention Act” or I-SPY, those found guilty of using spyware to commit crimes such as identity theft would face an additional 5 years of prison, on top of any sentencing based on their criminal activity. Those using spyware with the intent to commit a crime could be sentenced to 2 years in prison.

The bill also applies to those launching phishing attacks, which use seemingly official-looking e-mail messages and Web sites to lure consumers into giving out credit card numbers and bank information.

“This legislation will help deter the use of spyware, and thus help protect consumers from these aggressive acts,” says bill sponsor Representative Bob Goodlatte in a statement.

Under the current law, it is difficult to determine what is illegal. Goodlatte adds I-SPY would clearly define illegal actions and access restrictions.

In addition to stiffening jail penalties, the bill would give the U.S. Justice Department $10 million to crack down on spyware producers.

Both bills have found broad bipartisan support, with only one dissenting vote on the Spy Act.

Both the current bill and the Spy Act are awaiting Senate approval, but it is unclear whether they will be discussed during the post-election “lame duck” session.

Officials with the Grokster file-trading network have agreed to pay $500,000 to settle charges they operated a separate music download service without permission, a recording-industry trade group said.

The Recording Industry Association of America (RIAA) has been unsuccessful in a copyright infringement lawsuit against Grokster, which enables users to copy music from each others' computers for free.

But the RIAA had better luck when Grokster officials attempted to set up a paid download service along the lines of Apple Computer Inc.'s iTunes.

Called Puretunes.com, the service allowed users to download as many songs as they wanted for $24.99 per month, but the RIAA charged the company never obtained clearance from copyright holders.

“Puretunes.com duped consumers by claiming it was a legitimate online music retailer when, in fact, it was no such thing,” RIAA President Cary Sherman said in a press release.

One man named in the settlement, former Grokster president Wayne Rosso, says the company's lawyer had obtained e-mail agreements from Spanish performing-rights organizations, but had not signed off on the actual documents themselves when the Web site opened for business.

Rosso, along with Daniel Rung, Michael Rung and Matthew Rung agreed to pay a total of $500,000 to settle the case.

As part of the settlement, Puretunes.com's parent company, Sakfield Holding Co., is ordered to pay $10 million.

Two U.S. courts have ruled Grokster cannot be held liable for copyright infringement because it cannot control user behavior and, like a videocassette recorder, can be used for legitimate purposes.

America Online, Inc. (AOL) has filed the first official suit against “spimmers” ' those who send bulk electronic messages to those on its Instant Messenger (IM) service and in chat rooms. According to a press release, the suit was filed against 20 “John Does.”

AOL also announced the filing of another lawsuit in conjunction with anti-spam partners Yahoo!, Microsoft and Earthlink ' this one, according to the press release, is the “very first AOL legal action to target a spammer peddling controlled substances, including Vicodin and other pharmaceuticals, which are legally available only with a physician's prescription.” Filed in the Eastern District of Virginia against 10 “John Does,” it's also the first suit filed based on complaints known mainly to be European and Canadian members of the ISP.

It seems like we use that headline every month, but yet again, the Recording Industry Association of America (RIAA) has filed suits against alleged song-swappers. Like the others, this round of suits were filed against “John Does,” and this batch includes 25 university students at 13 schools, according to the RIAA, including Indiana State, Iowa State, Ohio State, State University of New York, University of Southern Mississippi, University of Wisconsin at Oshkosh and Southern Mississippi. The individual colleges and universities were not named as defendants. The newest round of suits also includes 213 defendants who were previously named but who have yet to settle their cases.

“Our legal efforts help build an essential foundation for the continued development of the legal online music marketplace,” RIAA President Cary Sherman said in a press release. “On that count, we continue to see promising developments.”

Despite Sherman's claims, an Associated Press report on the new suits cites a recent study by researchers at the University of California, Riverside, that concluded that traffic on peer-to-peer networks has never declined and is at least comparable to the same levels it was a year ago. The AP report puts the total number of users sued by the RIAA at 6,191 (have you been counting?), with 1,207 settling their cases out of court.

U.S. soccer's most expensive player, teenage prodigy Freddy Adu, has won his cybersquatting case against a man who claimed to be preparing a fan-based Web site, an international arbitrator ruled.

Adu, a Ghanaian-born 15-year-old who plays for Washington's DC United, filed a complaint against Frank Fushille, a soccer fan who registered the domain name freddyadu.com in 2002.

Richard Lyon, an arbitrator appointed by the World Intellectual Property Organization (WIPO), ordered the domain name transferred to Adu after ruling that Fushille had acted in bad faith.

Fushille had contacted Adu's agent seeking majority ownernship of the disputed site, participation in corporate advertising negotiations and admission to all matches.

Italy's Francesco Totti, Dutch defender Jaap Stam and Chelsea midfielder Joe Cole are among other soccer players to have won decisions at WIPO, a United Nations agency offering a fast-track, low-cost procedure to resolve domain name disputes.

Adu ' the highest paid player in professional U.S. soccer after being the first pick in Major League Soccer's superdraft ' also successfully claimed his name had trademark protection even if it was not formally registered, the ruling said.

The U.S. Justice Department recently outlined what it called its most sweeping crackdown on bootleg DVDs, fake designer goods, illegal music downloads and counterfeit drugs.

Attorney General John Ashcroft announced measures to expand and strengthen specialist units to fight intellectual property crimes in the United States and in Eastern Europe and Asia, where many counterfeit goods are made.

Ashcroft, speaking to reporters in Los Angeles, cited a new Justice Department report that estimates intellectual property theft worldwide costs U.S. companies $250 billion a year.

“Theft of this national resource has become an epidemic,” Ashcroft said. “This represents a hemorrhaging of the work product of American citizens.”

He said the Motion Picture Association of America estimates that 2.6 billion songs, movies and software programs are illegally distributed over the Internet every month.

Counterfeit entertainment and luxury goods are only a small part of the problem. Thieves increasingly target prescription drugs such as Viagra, batteries and baby food, the Justice Department report said.

It highlighted the case of an American teenager whose counterfeit cell phone battery exploded, causing a fire in his bedroom, and a man prosecuted for selling adulterated pesticides to city governments trying to control the spread of the West Nile virus.

Ashcroft said the government will add five specialist units dedicated to identifying and prosecuting intellectual property suspects to the 13 already operating across the country.

Federal prosecutors will go to U.S. embassies in Hungary and Hong Kong to help with efforts in those countries, and the United States will ensure that intellectual property crimes are included in all its international extradition treaties.

Ashcroft said the FBI also would increase the number of agents assigned to investigations, and develop youth information programs to encourage respect for artists' rights.

The measures represent “the most aggressive, most ambitious, most far-reaching law enforcement effort ever undertaken to protect intellectual property,” he said.

Ashcroft gave no time scale for the implementation of the measures and declined to say how much they would cost.

First Suit Filed Against Internet 'Spyware'

The U.S. government has sued a New Hampshire man in its first attempt to crack down on Internet “spyware” that seizes control of a user's computer without permission.

The U.S. Federal Trade Commission (FTC) recently asked a federal court to shut down an operation that it said disables users' computers in an attempt to bully them into buying anti-spyware products.

Internet users unwittingly download the software when they visit Web sites that contain certain banner ads, the FTC said.

The software exploits a hole in Microsoft Corp.'s Internet Explorer Web browser to work its way onto computers without users' knowledge, according to the lawsuit.

The software hijacks Web browsers, causes CD-ROM trays to mysteriously slide open and slows down computers or causes them to cease working altogether.

A torrent of “pop up” messages urges consumers to buy programs called Spy Wiper or Spy Deleter to clean up the mess.

The FTC has taken action against companies that redirect browsers before but has never sued a company for secretly installing software.

Spyware comes in many forms ' from keystroke loggers that can capture passwords, credit-card numbers and other sensitive data to relatively harmless programs that deliver pop-up ads.

Currently there are no national anti-spyware laws on the books, though several states have them ' although as seen in the next item, the House of Representatives passed two anti-spyware bills this week and another is pending in the Senate.

The FTC used deceptive-business laws to go after New Hampshire resident Sanford Wallace and his two companies, Seismic Entertainment Productions Inc. and SmartBot.Net Inc.

The FTC asked the court to shut down Wallace's operations and force him to return any money he has made.

Under the current bill, called the “Internet Spyware Prevention Act” or I-SPY, those found guilty of using spyware to commit crimes such as identity theft would face an additional 5 years of prison, on top of any sentencing based on their criminal activity. Those using spyware with the intent to commit a crime could be sentenced to 2 years in prison.

The bill also applies to those launching phishing attacks, which use seemingly official-looking e-mail messages and Web sites to lure consumers into giving out credit card numbers and bank information.

“This legislation will help deter the use of spyware, and thus help protect consumers from these aggressive acts,” says bill sponsor Representative Bob Goodlatte in a statement.

Under the current law, it is difficult to determine what is illegal. Goodlatte adds I-SPY would clearly define illegal actions and access restrictions.

In addition to stiffening jail penalties, the bill would give the U.S. Justice Department $10 million to crack down on spyware producers.

Both bills have found broad bipartisan support, with only one dissenting vote on the Spy Act.

Both the current bill and the Spy Act are awaiting Senate approval, but it is unclear whether they will be discussed during the post-election “lame duck” session.

Officials with the Grokster file-trading network have agreed to pay $500,000 to settle charges they operated a separate music download service without permission, a recording-industry trade group said.

The Recording Industry Association of America (RIAA) has been unsuccessful in a copyright infringement lawsuit against Grokster, which enables users to copy music from each others' computers for free.

But the RIAA had better luck when Grokster officials attempted to set up a paid download service along the lines of Apple Computer Inc.'s iTunes.

Called Puretunes.com, the service allowed users to download as many songs as they wanted for $24.99 per month, but the RIAA charged the company never obtained clearance from copyright holders.

“Puretunes.com duped consumers by claiming it was a legitimate online music retailer when, in fact, it was no such thing,” RIAA President Cary Sherman said in a press release.

One man named in the settlement, former Grokster president Wayne Rosso, says the company's lawyer had obtained e-mail agreements from Spanish performing-rights organizations, but had not signed off on the actual documents themselves when the Web site opened for business.

Rosso, along with Daniel Rung, Michael Rung and Matthew Rung agreed to pay a total of $500,000 to settle the case.

As part of the settlement, Puretunes.com's parent company, Sakfield Holding Co., is ordered to pay $10 million.

Two U.S. courts have ruled Grokster cannot be held liable for copyright infringement because it cannot control user behavior and, like a videocassette recorder, can be used for legitimate purposes.

America Online, Inc. (AOL) has filed the first official suit against “spimmers” ' those who send bulk electronic messages to those on its Instant Messenger (IM) service and in chat rooms. According to a press release, the suit was filed against 20 “John Does.”

AOL also announced the filing of another lawsuit in conjunction with anti-spam partners Yahoo!, Microsoft and Earthlink ' this one, according to the press release, is the “very first AOL legal action to target a spammer peddling controlled substances, including Vicodin and other pharmaceuticals, which are legally available only with a physician's prescription.” Filed in the Eastern District of Virginia against 10 “John Does,” it's also the first suit filed based on complaints known mainly to be European and Canadian members of the ISP.

It seems like we use that headline every month, but yet again, the Recording Industry Association of America (RIAA) has filed suits against alleged song-swappers. Like the others, this round of suits were filed against “John Does,” and this batch includes 25 university students at 13 schools, according to the RIAA, including Indiana State, Iowa State, Ohio State, State University of New York, University of Southern Mississippi, University of Wisconsin at Oshkosh and Southern Mississippi. The individual colleges and universities were not named as defendants. The newest round of suits also includes 213 defendants who were previously named but who have yet to settle their cases.

“Our legal efforts help build an essential foundation for the continued development of the legal online music marketplace,” RIAA President Cary Sherman said in a press release. “On that count, we continue to see promising developments.”

Despite Sherman's claims, an Associated Press report on the new suits cites a recent study by researchers at the University of California, Riverside, that concluded that traffic on peer-to-peer networks has never declined and is at least comparable to the same levels it was a year ago. The AP report puts the total number of users sued by the RIAA at 6,191 (have you been counting?), with 1,207 settling their cases out of court.

U.S. soccer's most expensive player, teenage prodigy Freddy Adu, has won his cybersquatting case against a man who claimed to be preparing a fan-based Web site, an international arbitrator ruled.

Adu, a Ghanaian-born 15-year-old who plays for Washington's DC United, filed a complaint against Frank Fushille, a soccer fan who registered the domain name freddyadu.com in 2002.

Richard Lyon, an arbitrator appointed by the World Intellectual Property Organization (WIPO), ordered the domain name transferred to Adu after ruling that Fushille had acted in bad faith.

Fushille had contacted Adu's agent seeking majority ownernship of the disputed site, participation in corporate advertising negotiations and admission to all matches.

Italy's Francesco Totti, Dutch defender Jaap Stam and Chelsea midfielder Joe Cole are among other soccer players to have won decisions at WIPO, a United Nations agency offering a fast-track, low-cost procedure to resolve domain name disputes.

Adu ' the highest paid player in professional U.S. soccer after being the first pick in Major League Soccer's superdraft ' also successfully claimed his name had trademark protection even if it was not formally registered, the ruling said.

The U.S. Justice Department recently outlined what it called its most sweeping crackdown on bootleg DVDs, fake designer goods, illegal music downloads and counterfeit drugs.

Attorney General John Ashcroft announced measures to expand and strengthen specialist units to fight intellectual property crimes in the United States and in Eastern Europe and Asia, where many counterfeit goods are made.

Ashcroft, speaking to reporters in Los Angeles, cited a new Justice Department report that estimates intellectual property theft worldwide costs U.S. companies $250 billion a year.

“Theft of this national resource has become an epidemic,” Ashcroft said. “This represents a hemorrhaging of the work product of American citizens.”

He said the Motion Picture Association of America estimates that 2.6 billion songs, movies and software programs are illegally distributed over the Internet every month.

Counterfeit entertainment and luxury goods are only a small part of the problem. Thieves increasingly target prescription drugs such as Viagra, batteries and baby food, the Justice Department report said.

It highlighted the case of an American teenager whose counterfeit cell phone battery exploded, causing a fire in his bedroom, and a man prosecuted for selling adulterated pesticides to city governments trying to control the spread of the West Nile virus.

Ashcroft said the government will add five specialist units dedicated to identifying and prosecuting intellectual property suspects to the 13 already operating across the country.

Federal prosecutors will go to U.S. embassies in Hungary and Hong Kong to help with efforts in those countries, and the United States will ensure that intellectual property crimes are included in all its international extradition treaties.

Ashcroft said the FBI also would increase the number of agents assigned to investigations, and develop youth information programs to encourage respect for artists' rights.

The measures represent “the most aggressive, most ambitious, most far-reaching law enforcement effort ever undertaken to protect intellectual property,” he said.

Ashcroft gave no time scale for the implementation of the measures and declined to say how much they would cost.