Sony BMG settles over anti-piracy measures that opened computers to viruses

TORONTO (CP) - Music fans who bought CDs loaded with anti-piracy software that opened their computers to hackers and viruses have won compensation from Sony BMG.
An Ontario court approved a settlement deal Thursday that has the music giant offering $8.40, a replacement CD and free downloads of selected CDs to hundreds of thousands of customers who bought the affected discs.

Details on eligibility and benefits are on the Sony BMG website at www.sonybmg.ca. Those seeking compensation must fill out a form at the site or download the form and mail it to a Sony BMG administrator.

The settlement, which applies to all affected customers in Canada except those in Quebec and British Columbia, is similar to one reached in the United States earlier this year, said lawyer Harvey Strosberg, who represented customers in the Ontario class action.

"This was a case that was always about behavioural modification and I think that this was a good result for the Canadian public," Strosberg said, noting that Sony BMG promised not to use the offending software and that any future anti-piracy programs would be vetted for possible privacy infractions.

Lawyer Jason Young said those promises expire in 2008.

"What we're hoping is, that ... Sony BMG will have learned its lesson by that point," said Young, who represented the Canadian Internet Policy and Public Interest Clinic (CIPPIC) in the case.

Strosberg suspected the same terms would be extended to proposed settlements in two class-action lawsuits filed in Quebec and British Columbia. Settlement approval hearings have been scheduled for Sept. 28 in Montreal and Sept. 29 in Victoria.

A statement issued by Sony BMG said simply that the company was "delighted" the Ontario Superior Court settlement had been approved.

Dozens of lawsuits emerged in Canada and the United States after it was revealed that Sony BMG sold millions of copy-protected CDs worldwide that contained software known as XCP and MediaMax which effectively acted as spyware.

When an encoded CD was played on a computer, XCP surreptitiously placed what's known as a "rootkit" on Microsoft Windows PCs, rendering the computer vulnerable to attack by hackers and viruses.

The technology was also able to read and transmit IP addresses, thereby identifying the user and sending personal information back to Sony BMG, said CIPPIC's executive director Philippa Lawson.

The music company could then use that information to go after illegal file-sharers in Canada, said Lawson, whose group monitors policy and law-making on issues arising out of new technologies.

Thursday's settlement included promises by Sony BMG to destroy any personal information gathered through the software, said Strosberg.

Lawson, who had yet to see the final settlement agreement as of Thursday afternoon, said her group filed complaints earlier that day with the federal competition bureau and several consumer protection agencies accusing the music giant of violating privacy and consumer rights.

"We want the privacy commissioners to step in and clarify Sony BMG's obligations with respect to this personal information," she said.

Young said the settlement had no impact on CIPPIC's attempts to bring further scrutiny to Sony BMG's controversial tactics.

About 80,000 music CDs encoded with XCP were sold in Canada, while roughly 1.4 million CDs sold contained MediaMax. The CDs included selected music by artists including Ray Charles, Kasabian, Sloan, Alicia Key s and Roseanne Cash.

Sony BMG began encoding XCP into music CDs sold worldwide in March 2005, and MediaMax software in 2003.

© The Canadian Press, 2006