Spyware Litigation Recap

By Eric Goldman

There’s been an explosion of litigation involving spyware/adware–so much that I’ve not been able to blog it all on a timely basis. This post “catches up” some of the lawsuits from the last couple of months.

In re. Trudeau. On November 7, a Minnesota attorney was disciplined for using spyware in her personal dealings.

FTC v. Enternet Media, No. CV05-7777 (C.D. Cal. complaint filed Oct. 27, 2005). The FTC got a TRO against some adware/spyware distributors, their principals and an affiliate. The defendants allegedly bundled adware and spyware with various freeware. According to Para. 38 of the complaint, the defendants had a EULA but did not encourage or require users to read it before the download commenced. (As a backup, the FTC claims the EULA disclosures were too general to adequately disclose the bundled software’s implications). FTC press release.

Lawsuits against Sony for its DRM software. I’ve written about Sony’s DRM software here and here. Not surprisingly, the lawsuits are mounting, including class actions in CA and NY.

FTC v. Odysseus Marketing (D. N.H. complaint dated Sept. 21, 2005). Software vendor and its principal sued for alleged spyware/adware. Interestingly, the FTC implicitly acknowledges that the EULA formation process and disclosures were pretty good. The complaint is a little vague (and I didn’t have time to trace through the exhibits), but it appears that the EULA explains most of the software’s operation, and users had to check a box acknowledging that they had read the T&Cs before downloading (see complaint Para. 14-20). Nevertheless, the FTC initiated the bust based on (1) false representations about how the software would anonymize P2P file sharing, (2) inadequate disclosure of bundled software coming along for the ride (this claim seems difficult given the EULA disclosures), and (3) inability to remove the software. I’m not convinced that these defendants should be free from liability, but to me it looks like the FTC is stretching a bit here. FTC press release.

Michaeli v. eXact Advertising, No. 05 CV 8331 (SDNY complaint filed Sept. 27, 2005). The third lawsuit in a troika of class action lawsuits against adware vendors (the Sotelo and Simios cases are the other two). The plaintiffs allege trespass to chattels, deceptive consumer acts under NY law (NY Gen. Bus. Law 349), false advertising under NY law (NY Gen. Bus. Law 350), common law negligence and unjust enrichment. See my write-ups on Sotelo and Simios for critiques about these causes of action. Suzi’s comments.

I hate to state the obvious, but I can pass along a friendly tip to current/prospective law students: spyware/adware litigation appears to be a growth industry!