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EFF's Sony Complaint Includes MediaMax & Unconscionable EULA Claims
Monday, November 21 2005 @ 10:23 PM EST

The EFF's complaint [PDF] is now available, and it's a beaut. They filed it as a class action in California, with two California firms, (Green Welling, and Lerach, Coughlin, Stoia, Geller, Rudman & Robbins), and they include every charge you could think of. They even mention the warranty of merchantability. California has some laws that are useful, such as the Consumer Protection Against Computer Spyware Act and the Computer Legal Remedies Act, so they throw them in too. But this is the sentence I have not seen in any other complaint that made me happy:
The CDs also condition use of the music on unconscionable licensing terms.

At last, a direct confrontation regarding EULAs. Perhaps you saw the joke on IRQ about throwing a brick through a window with a EULA attached:

I will write on a huge cement block "BY ACCEPTING THIS BRICK THROUGH YOUR WINDOW, YOU ACCEPT IT AS IS AND AGREE TO MY DISCLAIMER OF ALL WARRANTIES, EXPRESS OR IMPLIED, AS WELL AS DISCLAIMERS OF ALL LIABILITY, DIRECT, INDIRECT, CONSEQUENTIAL OR INCIDENTAL, THAT MAY ARISE FROM THE INSTALLATION OF THIS BRICK INTO YOUR BUILDING."

That's an example of an unconscionable EULA, because no one except someone under improper pressure would say yes to such terms. That isn't all. EFF is suing not only over the rootkit, but over the MediaMax DRM too. That is a much bigger story than the rootkit, in that it affects, EFF says, over twenty million CDs -- ten times the number of CDs as the XCP software. Also, MediaMax wasn't written by the same firm as XCP, so it makes it harder for Sony to claim they didn't know the gun was loaded, so to speak. And EFF is asking the court to make Sony fix all the compromised computers.

EFF wrote Sony a letter asking them to rectify the mess they made, and Sony wrote back [PDF]. EFF wasn't satisfied with the Sony response, so they are asking the court to provide the relief they feel is due consumers:

In its response, Sony BMG did not agree to provide compensation or to discuss a process for assessing claims. Therefore, Plaintiffs and the Class also request (a) actual damages; (b) restitution of money to Plaintiffs and Class members; (c) punitive damages; (d) attorneys' fees and costs; and (e) other relief that this Court deems proper."

They also ask for an order enjoining Sony from engaging in the methods, acts or practices alleged herein, including an order enjoining Sony from continuing to sell and martket XCP and MediaMax CDs and continuing to disclaim the risks of using such CDs.

One paragraph in the letter stands out:

Sony BMG encourages legitimate security research into copy protection technologies and, accordingly, Sony BMG will not assert claims under title 17 of the United States Code (or similar statutes in other countries) against legitimate security researchers who have been, are or will be working to identify security problems with copy protection technologies used on Sony BMG compact discs.

How do they define "legitimate security researchers"? And does the carefully worded statement mean they might sue illegitimate researchers? Is Mark Russinovich legimitate in Sony's eyes? I also note that Sony calls the CDs "enhanced" in paragraph 12. They still don't seem to get it.

I took some quick notes from the complaint, and I do mean quick, so don't expect word-for-word. Check the original for precision, please:

-- Sony BMG has engaged in deceptive practices, unlawful methods of competition and/or unfair acts as defined by Civ. Code Section 1770, to the detriment of Plaintiffs and the Class. Plaintiffs and members of the Class have suffered harm as a proximate result of the violations of law and wrongful conduct of Defendant alleged herein.

-- In violation of Civil Code section 1770(5), Sony has represented that its CDs have characteristics, uses or benefits which they do not have.

-- In violation of Civil Code section 1770(a)(9), Sony has advertised its CDs with intent not to sell them as advertised.

-- In violation of Civil Code section 1770(a)(14) Sony has represented that the purchse and/or use of its XCP and MediaMax CDs confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law.

-- In violation of Civil Code section 1770(a)(19), Sony has inserted several unconscionable provisions into the end-user license agreement that accompannies the XCP and MediaMax CDs.

-- Sony concealed material information regarding the XCP and MediaMax CDs, including but not limited to the existence of the rootkit program and its effects on users' computers and the lack of a reasonable way to uninstall the software in the event of security or privacy violations.

-- 148. Sony BMG's policies and practices are unlawful, unethical, oppressive, fraudulent and malicious.

-- 149. Pursuant to Civil Code section 1780(a), Plaintiffs seek an order enjoining Sony from engaging in the "methods, acts or practices alleged herein, including an order enjoining the defendant from continuing to sell and martket XCP and MediaMax CDs and continuing to disclaim the risks of using such CDs."

-- 150. Pursuant to Civil Code section 1782, on November 14, 2005, Plaintiff notified Sony BMG of its commission of unlawful acts under Civil Code section 1770, specifying the particular violations, and demanded that Sony BMG rectify its illegal acts within 30 days. The demand letter requested that Sony BMG compensate consumers for computer problems related to the XCP and MediaMax software.

-- 151. On November 18, 2005, Sony BMG responded. In its response, Sony BMG did not agree to provide compensation or to discuss a process for assessing claims. Therefore, Plaintiffs and the Class also request (a) actual damages; (b) restitution of money to Plaintiffs and Class members; (c) punitive damages; (d) attorneys' fees and costs; and (e) other relief that this Court deems proper.

Second Claim for Relief (Violation of California Business and Professions Code Section 17200)

-- 153. Plaintiffs and the Class have suffered injury in fact and lost money or property, such as computer damage, time and effort spent identifying and attempting to remove the damaging software, loss of use of the ability to listen to the music on the CDs, and the purchase price of the CDs.

-- 158. Specifically, Sony BMG marketed and sold the XCP and MediaMax CDs in defective condition and deceptively failed to disclose their defects as described above; advertising its XCP and MediaMax CDs with intent not to sell them as advertised; represented that the purchase and/or use of its XCP and MediaMax CDs confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law; inserted several unconscionable clauses into the EULA that accompanies the XCP and MediaMax CDs infected with the SCP and MediaMax software; took control and modified the settings of user's computers, collected personally identifiable information about users, tracked users as they listen to the CDs and attempted to prevent users from blocking or disabling the XCp and Media Max software; violated the implied covenant of good faith and fair dealing; and failed to comply with the implied warranty of merchantability.

-- Relief: an order awarding restitution, disgorgement, injunctive relief and all other relief allowed under Section 17200, et seq.

-- 3rd claim for relief, Breach of Implied Covenant of Good Faith and Fair Dealing

-- 4th: False and Misleading Statements

See what I mean? Very thorough. And here is the EFF press release.

************************

SonyBMG Litigation and Rootkit Info

By including a flawed and overreaching computer program in over 20 million music CDs sold to the public, Sony BMG has created serious security, privacy and consumer protection problems that have damaged music lovers everywhere.

At issue are two software technologies - SunnComm's MediaMax and First4Internet's Extended Copy Protection (also known as XCP) - which Sony BMG claims to have placed on the music CDs to restrict consumer use of the music on the CDs but which in truth do much more, including monitoring customer listening of the CDs and installing undisclosed and in some cases hidden files on users' computers that can expose users to malicious attacks by third parties, all without appropriate notice and consent from purchasers. The CDs also condition use of the music on unconscionable licensing terms in the End User Licensing Agreement (EULA).

After a series of embarrassing public revelations about security risks associated with the XCP software, including warnings issued by the United States Government, Microsoft and leading anti-virus companies, Sony BMG has taken some steps to respond to the security risks created by the XCP technology. Sony BMG has failed, however, to address security concerns raised by the MediaMax software or the consumer privacy and consumer fairness problems created by both technologies. Background

Problems with XCP

Security researchers have shown that the XCP technology was designed to have many of the qualities of a "rootkit." It was written with the intent of concealing its presence and operation from the owner of the computer, and once installed, it degrades the performance of the machine, opens new security vulnerabilities, and installs updates through an Internet connection to Sony BMG's servers. The nature of a rootkit makes it extremely difficult to remove, often leaving reformatting the computer's hard drive as the only solution. When Sony BMG offered a program to uninstall the dangerous XCP software, researchers found that the installer itself opened even more security vulnerabilities in users' machines.

Problems with MediaMax

The MediaMax software, which is included on over 20 million Sony BMG CDs, has different, but similarly troubling problems. It installs on the users' computers even if they click "no" on the EULA, and does not include a way to uninstall the program. The software transmits data about users to SunnComm through an Internet connection whenever purchasers listen to CDs, allowing the company to track listening habits -- even though the EULA states that the software will not be used to collect personal information and SunnComm's website says "no information is ever collected about you or your computer."

If users repeatedly request an uninstaller for the MediaMax software, they are eventually provided one. But they first have to provide more personally identifying information. Worse, security researchers recently determined that SunnComm's uninstaller creates significant security risks for users, as the XCP uninstaller did.

EFF's Open Letter

On November 14, 2005, EFF wrote an Open Letter to Sony BMG, asking the company to publicly commit to fixing the problems it has caused for its music fans and take steps to reassure the public that its future CDs will respect its customers' ownership of their computer. Among the make-good measures recommended by EFF: a recall of all XCP and SunnComm MediaMax-infected CDs, from both consumers and store shelves; a guarantee to repair, replace, or refund the purchase price of the CDs to anyone who bought the merchandise; and a major publicity campaign warning about the security risks of XCP and SunnComm MediaMax. EFF also asked Sony BMG to pay all consumer costs associated with the damage caused by the XCP or SunnComm MediaMax technology and compensate people for the time, effort, and expense required to verify that their computer was or was not infected with the rootkit.

Sony BMG's Response

Initially Sony BMG denied there was a problem, saying the the XCP rootkit "component is not malicious and does not compromise security." Thomas Hesse, President of Sony BMG's global digital business division, asked in an interview for a National Public Radio "Most people, I think, don't even know what a rootkit is, so why should they care about it?"

After receiving harsh public criticism and EFF's Open Letter, Sony BMG took strong steps in acknowledging the security harm caused by the XCP CDs, including a recall of the infected discs. However, these measures still fall short of what the company needs to do to fix the problems caused to customers by XCP, including both privacy problems and fixing its outrageous EULA. See Sony BMG's November 18, 2005, written response to EFF's Open Letter here [PDF].

Critically, Sony BMG has still refused to refund the cost of CDs to consumers or even widely publicize its recall program using its powerful marketing abilities, or to compensate consumers whose computers have been affected. And, Sony has not agreed to eliminate the outrageous terms found in their EULA.

Moreover, Sony BMG has failed entirely to respond to concerns about MediaMax, which affects over twenty million CDs -- ten times the number of CDs as the XCP software.


  


EFF's Sony Complaint Includes MediaMax & Unconscionable EULA Claims | 151 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections, please
Authored by: ankylosaurus on Monday, November 21 2005 @ 10:37 PM EST
Wow - you've been busy today, PJ!

---
The Dinosaur with a Club at the End of its Tail

[ Reply to This | # ]

Correction? EFF's Sony Complaint Includes MediaMax & Unconscionable EULA Claims
Authored by: Anonymous on Monday, November 21 2005 @ 10:39 PM EST
Is this correct? I know you're working fast, but...

"Sony wasn't satisfied with the response..." after EFF wrote them.

-brice

[ Reply to This | # ]

Off-topic here.
Authored by: ankylosaurus on Monday, November 21 2005 @ 10:46 PM EST
Please make links clickable using the instructions on the Post a Comment page -
and remember to post in HTML mode.

---
The Dinosaur with a Club at the End of its Tail

[ Reply to This | # ]

This differs from the SCO case in one important respect.
Authored by: Anonymous on Monday, November 21 2005 @ 11:05 PM EST
SCO does not care if it goes bankrupt. The company does not fear anything the
court can do to it.

Sony, on the other hand, is a going concern. They can't afford the kind of
nonsense that SCO is foisting on the court. They may also fear extensive
discovery. On that basis, I think this case won't go on nearly as long. They
might try to drag things out to run the EFF out of money, but I don't think that
would work. On the other hand, they can't afford to pay $100,000 for every CD
they sold. Their back may be against the wall. I think they will settle.

[ Reply to This | # ]

EFF's Sony Complaint Includes MediaMax & Unconscionable EULA Claims
Authored by: Anonymous on Monday, November 21 2005 @ 11:16 PM EST
It looks like they did leave off one point: if the user inserted the CD and did
NOT accept the license (the software was still installed, without the user
agreeing or knowing, and with no utility for removal, and all the other things
still apply)... Yeah, I know maybe 1 person didn't click the "I
agree", if that many, but still?

[ Reply to This | # ]

Title 18, Part 1, Chapter 47, Section 1030
Authored by: AllParadox on Monday, November 21 2005 @ 11:36 PM EST
Could be that I missed it, but I don't think so.

This Federal statute (Title 18, Part 1, Chapter 47, Section 1030) appears to
make it a crime to tamper with a computer.

I am not criticising EFF for not including it. I am not trying the case, and I
do not know what went into the planning. I always respect the attorney on the
spot. They know things that I do not.

FWIW, though, Federal laws may be enforced in State Courts, violation of
criminal laws may create an action in civil courts for tort damages without
bringing up the double jeopardy bar, and a few actions like this would embarass
Federal District Attorneys enough that they would start prosecuting people who
foolishly violate this law.

It seems to me that I do not see District Attorneys, whether State or Federal,
enforcing these laws enough.

---
PJ deletes insult posts, not differences of opinion.

AllParadox; retired lawyer and chief Groklaw iconoclast. No legal opinions,
just my opinion.

[ Reply to This | # ]

C-I-L-L Sony for their abuse, and lack
Authored by: Anonymous on Tuesday, November 22 2005 @ 12:01 AM EST
of concern about the end users rights and security.

This is one of the most blatant, ridiculous, scammy, stinky stories I've seen
develop since Darl opened his mouth and started blabbering (oh so wrongly, we
all knew/know) about Linux...

Sony needs to get seriously "readjusted" for this malfeasance. Kudos
for EFF throwing the book (and the book stand) at them. They fully, in every way
shape and form, deserve it. Twice.

Thanks again to PJ for covering Good Stuff(TM) in her blog (and thx to the
volunteers who help her, too!).

Yes, I am glad I made the switch to Linux 8 years ago, for any number of reasons
- it has improved my computing life immeasurably. Stories like this remind me to
this day how bad it could be if I hadn't chosen Freedom and Openness over
Gatesworld and Ballmerdom. But, even before I got smart and Switched, I was
smart enough to turn off autorun on my win boxen... ;)

Good luck to all the peeps who have Sony's (and/or others hidden, proprietary)
rootkit(s) on their computers!

[ Reply to This | # ]

HELP! - someone stole my SHIFT key!
Authored by: SpaceLifeForm on Tuesday, November 22 2005 @ 12:58 AM EST
Allegedly, it was a DMCA circumvention tool.

[ Reply to This | # ]

1770(a)(14)
Authored by: Anonymous on Tuesday, November 22 2005 @ 01:22 AM EST

Now that's interesting, very very interesting. Based on what I've read in the complaint, that can also be applied to computer software EULAs. I'm sure MS will be very curious about that.

...involves rights, remedies or obligations which it does not have or involve, or which are prohibited by law.

RAS

[ Reply to This | # ]

DISCLAIMER OF ALL WARRANTIES and so forth...
Authored by: Anonymous on Tuesday, November 22 2005 @ 03:12 AM EST
Well, one can argue that even the GNU GPL contains
such a language. So, I don't think this problem is
specific to Sony or other companies selling proprietary
softwares.

Although in the latter case, it is clear that you don't get
what you paid for... well, most of the time that is...

NNP

[ Reply to This | # ]

EFF's Sony Complaint Includes MediaMax & Unconscionable EULA Claims
Authored by: jsusanka on Tuesday, November 22 2005 @ 07:45 AM EST
This is great news. I hope they get the book thrown at them.

They deserve everything that is coming to them. Along with any other company
that does this to their legitmate buying customers.

[ Reply to This | # ]

EFF's Sony Complaint Includes MediaMax & Unconscionable EULA Claims
Authored by: jsusanka on Tuesday, November 22 2005 @ 08:10 AM EST
I hope they get the book thrown at them. They deserve everything they get.

Good for the EFF.

If this was hacker joe/jane they would already be in jail.

[ Reply to This | # ]

EFF's Sony Complaint Includes MediaMax & Unconscionable EULA Claims
Authored by: Anonymous on Tuesday, November 22 2005 @ 08:35 AM EST
At this point in time, since the flaws are know, would any company (retailer)
that continues to sell the "flawed" disk be liable for the damage the
cd's can cause?. If there is even a hint of a lawsuit hitting a major retailer,
all those disks will disappear off store shelves in hours. I bet that would get
Sony's attention.

[ Reply to This | # ]

Identify yes, circumvent no?
Authored by: Anonymous on Tuesday, November 22 2005 @ 08:54 AM EST
About that paragraph:

"Sony BMG encourages legitimate security research into copy protection technologies and, accordingly, Sony BMG will not assert claims under title 17 of the United States Code (or similar statutes in other countries) against legitimate security researchers who have been, are or will be working to identify security problems with copy protection technologies used on Sony BMG compact discs."

Besides the weasel-word "legitimate", I notice that they say they won't assert claims against those who identify security problems. That doesn't provide any assurance for those whose products remove (i.e., circumvent) the malware. In other words, this paragraph doesn't offer any DMCA protection at all.

[ Reply to This | # ]

What is meant by "unconscionable"?
Authored by: ray08 on Tuesday, November 22 2005 @ 09:15 AM EST
Does this mean "ridiculous"?

---
Caldera is toast! And Groklaw is the toaster! (with toast level set to BURN)

[ Reply to This | # ]

Non-Returnable Media and EULA's
Authored by: cmg on Tuesday, November 22 2005 @ 10:32 AM EST
Most, if not all, retailers have a non-returnable policy on opened media. At
best, they will only replace the product with a new package of exactly the same
product. A consumer who purchases such a product and decides they can not accept
the terms of the embedded EULA is left with no recourse - you can't get your
money back, and you can't use the product you paid for. Maybe, you could get a
new copy of the same product at the retailer, which you can't use by nature of
rejecting the EULA, what good is the remedy? And because the EULA is embedded,
you can't inspect the exact contract prior to purchase.

This issue applies to the Sony problem, but is even more insidious when applied
to software purchases. In the Sony case, they could claim that you could still
use the product in a regular CD player. In the software case, it can only be
used with consent to the EULA. Was the XCP EULA available for inspection prior
to purchase at the point of sale? Prior to the XCP story breaking, how would the
purchaser know which EULA even applied to the a Sony CD (if it was even
available for inspection on the Sony site)?

Retailers won't accept returns/refunds on opened media because of distributors
policies. Distributors won't accept returns/refunds because of the manufacturers
policy - the same party who specified the terms of the EULA, to which I can not
agree. In addition, you can't see the EULA before you purchase. Does the control
of the distribution channel open issues with anti-trust, coersion, or and issue
of one sided and unfair contracts?

Maybe I could convince the manufacturer to refund my purchase. I had that occur
once, because of defective antivirus software, the vendor finally agreed to
refund the purchase price, but I was out money for the sales taxes paid. And
just how would you contact Sony to get a refund if you actually refused the
XCP/MediaMax EULA? How do you get Microsoft to refund you money if you didn't
agree to the EULA? Or a video editing package with noxious terms not listed on
the package? Or you don't agree to the multitude of EULA's presented when you
crank up your new Dell?

I realize that manufacurers have this policy to prevent pirating of the media.
Given the non-refundable policies in place, the "expect" all
purchasers to accept the EULA. Thus, you are being forced (maybe coerced is a
better term) into accepting contract terms of the EULA, since you have no
recourse otherwise! This just can't be legal. Is it?

IANAL, so is my tinfoil hat on too tight? Does anyone see anti-trust, contract
law, or other legal issues with the non-returnable policies when conbined with
declining EULA's?

I don't see any converage of this issue in the media and I think it should be
exposed.

---
Got linux?

[ Reply to This | # ]

"Enhanced" CD's
Authored by: laitcg on Tuesday, November 22 2005 @ 10:48 AM EST
I also note that Sony calls the CDs "enhanced" in paragraph 12. They still don't seem to get it.
Actually, I believe Sony is correct in using this terminology as any audio CD that also contains other CD content is generically known as an E-CD or Enhanced CD as supposedly described in the audio "Bluebook" (which I have not seen).

Generic Info (Google).

[ Reply to This | # ]

EFF's Sony Complaint Includes MediaMax & Unconscionable EULA Claims
Authored by: blacklight on Tuesday, November 22 2005 @ 10:59 AM EST
It's almost a given that everyone and his brother is going to be suing Sony BMG.
In this context, we are going to have to brace ourselves for an avalanche of
lawsuits to report on and keep track of. If time and resources run short, we'll
have to make a determination on whether the SCOG litigations take absolute
priority or whether some SCOG filings can be taken care of later because they
are less critical.

---
Know your enemies well, because that's the only way you are going to defeat
them. And know your friends even better, just in case they become your enemies.

[ Reply to This | # ]

Self-denying illegal EULA Provisions?
Authored by: turing_test on Tuesday, November 22 2005 @ 11:28 AM EST
In Paragraph 142, the complaint says:
In violation of Civil Code section 1770(a)(19), Song BMG has inserted several unconscionable provisions into the end-user license agreement (EULA) that accompanies the XCP and MediaMax CDs.
But it appears that all the unconscionable provisions are self-denying, to the extent that they are illegal:
SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF IMPLIED WARRANTIES, TERMS OR CONDITONS IN CERTAIN INSTANCES, SO THE ABOVE EXCLUSION MAY NOT APPLY TO YOU. THIS ARTICLE WILL NOT APPLY ONLY WHEN AND TO THE EXTENT THAT APPLICABLE LAW SPECIFICALLY MANDATES LIABILITY, DESPITE THE FOREGOING DISCLAIMER, EXCLUSION, AND LIMITATION.
So, does such a self-denying provision accomplish its purpose: to shield Sony BMG from a complaint such as that in Paragraph 142 of the Complaint? Will the second sentence of the provision, designed to make sure that they are giving away as little as possible, compromise their protection from liability for their EULA provisions? It will be fascinating to see how this plays out.

[ Reply to This | # ]

Sony's Defense: Windows Made Me Do It...
Authored by: Anonymous on Tuesday, November 22 2005 @ 02:42 PM EST
Sony:

Your Honor, we can't be responsible for the total lack of security of a Windows
system, as evidenced by patch after patch issued by MS. Furthermore, Windows is
fundamentially unreliable, easily becomes unstable, crashes, fails to reboot
properly and with so many other faults, it is impossible to specifically claim
what software causes what problem...........

Yes, Thats The Ticket...

[ Reply to This | # ]

Sony BMG settles on payola probe
Authored by: Anonymous on Tuesday, November 22 2005 @ 03:28 PM EST
I'm not getting the impression from what I read in the news that Sony BMG are law abiding types.

Here's a Google news link for you searching sony+bmg+payola

[ Reply to This | # ]

Is Sony the only one?
Authored by: mamling on Tuesday, November 22 2005 @ 05:11 PM EST
Don't First4Internet and SunnComm have any other clients? If so, we should also
be looking for non-Sony CD buyers that are equally vulnerable.

[ Reply to This | # ]

No Copyright?
Authored by: LPrecure on Tuesday, November 22 2005 @ 11:02 PM EST

I was really looking forward to a "Sony BMG Sued For Copyright Infringement" headline.

[ Reply to This | # ]

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