Preliminary Settlement Filed in Sony Suit

By Nate Mook, BetaNews
December 29, 2005, 2:24 AM

Lawyers in a class action lawsuit filed against Sony BMG, First 4 Internet and SunnComm last month have submitted a preliminary settlement, which calls for Sony to stop manufacturing CDs with XCP and MediaMax DRM, provide replacement discs, and make cash payments to affected customers.

Lawsuits were filed on November 14 in New York and other states by Girard Gibs and Kamber & Associates, and class action status was granted December 1. The cases claimed that Sony's digital rights management, which attempts to stop computer users from copying a CD's audio tracks to a hard drive, is invasive and damaging to computer systems.

Sony employed technology from First 4 Internet (F4I) that uses a "rootkit" to hide the DRM and prevent its removal. Shortly thereafter, it was discovered that Sony's other copy protection software, SunnComm MediaMax, also poses a security risk and installs without a user's permission.

The two sides met in early December and began "virtual round-the-clock" negotiations about reaching an agreeable settlement. According to the settlement filing viewed by BetaNews, the goal was to provide prompt relief to affected customers and "limit the risk that these consumers' computers would be vulnerable to malicious software."

The settlement terms include all customers who "came into possession of or otherwise used" at least one CD with MediaMax or XCP software on it since August 1, 2003. Sony BMG resellers and distributors are not included, nor are former and current employees of the company.

Sony will continue its exchange program to replace XCP affected CDs with "clean" DRM-free copies and enable customers to download MP3 versions from its Web site. In addition, the company will offer a choice of two incentive packages to ensure XCP CDs are removed from the market.

"Incentive #1" will provide customers with a cash payment of $7.50 and a free download of one album from a list of more than 200 titles. "Incentive #2" removes the cash payment but allows for downloads of three albums.

The downloads will be handled using a promotion code with three major music download services, of which one will be Apple's iTunes. Promotion codes will be valid for six months. Owners of MediaMax CDs, meanwhile, will be offered MP3 versions of the music and one free album download.

In order to be eligible, an individual must return the XCP laden CD to Sony, or provide the company with a receipt showing the return or exchange of the CD at a retailer after November 14. A claim form will be required, as will verification that XCP was uninstalled or updated.

As part of the settlement Sony will continue to issue the XCP Update software, which removes the rootkit cloaking mechanism, and make available a full uninstaller. An update to correct the MediaMax vulnerability will also be issued, and Sony has agreed to work with security professionals to ensure the software is free of known vulnerabilities.

In addition, the three defendants have agreed not to use the data collected from MediaMax and XCP, and will no longer collect personal information from any copy protected CD without a user's express consent. An independent third party will be hired to verify this requirement for 2006 and 2007, and the results will be posted on Sony's Web site.

The defendants will also waive certain provisions of the XCP and MediaMax license agreements, including the restricted use of audio files and requirement that the DRM be updated.

Until 2008, Sony has agreed not to manufacture or distribute CDs with the XCP software, and will no longer manufacture MediaMax 3.0 or MediaMax 5.0 CDs. Unlike albums with XCP, MediaMax CDs currently in circulation will not be recalled.

If Sony decides to ship CDs with new copy protection software before 2008, it must ensure the DRM will not be installed without proper consent, make an uninstaller readily available to customers, and ensure it will not create known security vulnerabilities.

The company has additionally agreed to collect only limited information, such as IP address and data on the CD itself, and will include "a written disclosure in plain English that the CD contains content protection software and a brief description of the software."

If approved, the class will be notified of the settlement terms through e-mail and advertising, and a hearing will be scheduled for a final approval. The current terms do not include an award of attorneys' fees and reimbursement of costs, which could be in the millions.

As class members will release Sony BMG, F4I and SunnComm of all claims by agreeing to the settlement, they may opt out. If more than 1,000 individuals decide to opt out, Sony could withdraw from the settlement. F4I and SunnComm may also choose to be excluded before January 16, 2006, which would leave the companies open to individual lawsuits.

The settlement filing was first posted by Sunbelt Software CEO Alex Eckelberry.

Pfft! It's good in one respect but bad in another. They still plan on copy protecting their CD's. They should be forced to stop it altogether!

"Incentive #1" will provide customers with a cash payment of $7.50 and a free download of one album from a list of more than 200 titles. "Incentive #2" removes the cash payment but allows for downloads of three albums.'

you would think I'd have learned not to eat or drink while I read this tripe...

I'll be off line cleaning my keyboard again....

"DeadMan2003
Date: December 29, 2005 @ 3:26 PM
Pfft! It's good in one respect but bad in another. They still plan on copy protecting their CD's. They should be forced to stop it altogether!"

even if they warn a user? why? It's someone's right to have a crippled CD played on his (her) computer. It's another one's right to sell such a crap.

The *informed consent* is the crucial thing. It's totally unacceptable and criminal to install anything one John Doe's computer contrary to John Doe's will or fraudulently, without his knowledge. As a person, who favors the legality of narcotic drugs (both soft and hard) I wouldn't like to summon the law in order to stop someone selling the DRM-ed CDs.

Also, for me, who wishes the "music industry" to go bankrupt, it would be a good news if they DRMed all of their products in such way, as it would probably lead them to the loss of all their customers. After all, who likes to be peeped in his house?
In Liberty,
Critto

No compensatory benefit for those hapless computer users who suffered loss of data (not to mention loss of time or composure) from the nefarious rootkit infecting their operating system?
Hmm.

"Incentive #1" will provide customers with a cash payment of $7.50 and a free download of one album"

So, give one back half of what they originally paid for the infected CD and let them download one of 200 albums. One can only guess that those 200 albums will be ones that aren't even top 500.

"An independent third party will be hired to verify this requirement for 2006 and 2007, and the results will be posted on Sony's Web site."

Nothing is said about WHO will hire the independent third party. As to why these results must be posted on Sony's website, one can only surmise it's so that Sony can make the necessary edits to ensure that they are complying with the settlement.

"As part of the settlement Sony will continue to issue the XCP Update software, which removes the rootkit cloaking mechanism, and make available a full uninstaller. An update to correct the MediaMax vulnerability will also be issued, and Sony has agreed to work with security professionals to ensure the software is free of known vulnerabilities."

In other words, they're still going to be allowed to use their DRM. If it's already on your computer and you don't know it, then you're still screwed. It'll update and continue restricting how you use your CD, it just won't collect information.

If you ask me, they should be made to issue a full uninstall for both DRMs and be made to stop using it, instead focusing on providing relief for those whose computers were most severely affected by XCP and MediaMax. Aftwerwards, they should be made to undergo a restructuring that will make their product more available to the public (ie pricing) and give more incentive to NOT download the album off of p2p. One thing could be to offer a free bonus track.

Some retailers do this. You'll get a code and be allowed to download a bonus track(s) using that code. This isn't really feasible since you could just give the code to a friend.

Two years ago, Wind Up records tried something else. They offered a bonus track to the Evanescence album "Fallen" but to get it you actually had to possess a factory pressed CD of the album. A small, easilly uninstalled program did this check and then you downloaded.

If one of the labels would use this better, such as encoding unique identifiers into each CD, then they could offer these bonus tracks without DRM and the albums themselves without DRM.

People like incentives. I'll buy any decent sounding CD if they offer to let me download a few bonus tracks, without DRM.

They used bonus tracks to sell the original CD. They could use bonus downloads to sell new CDs.

But, then again, since when have the labels ever listened to common sense?

If Sony (or any other company) wants to protect a CD (or any other media) so that it can't be downloaded, that remains the company's right, as the manufacturer.
What they can't do is invade your computer with their software without your express permission. Which, of course, Sony did.
You have a reasonable expectation of merchantability, as the purchaser. That means the company cannot make the CD unplayable in whole or in part, or degrade the quality of the music, in any attempt to restrict copying.
And, since copying within limits falls within current fair use expectations, the company has to make it clear before purchase that the CD you are buying is protected against copying.
There's no sense in ranting against a company's trying to protect its wares by physically blocking copying -- as long as they don't interfere with consumers' rights by doing so.
It sounds the same, but it's a different issue from suing people for sharing music that did manage to get copied and put out on the p2p networks without any commercial gain to the sharer.

So let's assess this thing...

Sony is offering to do what they have been promising to do since they got caught....And has yet to deliver on. To add insult to injury, their idea of a fair compensation includes more DRM crap!

Oh boy, where do I sign up for this generous offering (dripping with sarcasm)

Since we are dealing with a group that wants to treat this stuff like brick and mortar, then let's apply the compatable logic.

If someone rear-ends my car, I'm entitled to collect full compensation for all damages related to the accident. In addition, you could be assessed with a fine for a traffic violation.

Sony - Not only should you replace the defective CD, but you should pay for all costs related to fixing the damage. If you go broke from it, then so be it. I don't recall the courts letting anyone off the hook for the above mentioned example because they could go broke.
As far the "fine" in concerned, this is needed to help "educate" the offender on why they should obey the law....Another perspective supported by folks such as....YOU.

This deal offers no punitive consequences for a tech crime commited
by a known tech savy group of people. I can't see how any court or attorney could agree to it and keep a straight face.

CONTINUE THE BOYCOTT

"As far the "fine" in concerned, this is needed to help "educate" the offender on why they should obey the law....Another perspective supported by folks such as....YOU."

TotallyFrustrated, you're absolutely right!! And it's gotta HURT....parenting 101.

"The company has additionally agreed to collect only limited information, such as IP address and data on the CD itself.."

Would this be the same IP address info that was found sufficient for use as identifying information in recent lawsuits?

Sony will likely get off with a "slap on the wrist" settlement. Nothing new there.

EVERY single time the courts take action against the RIAA it's the same thing. They get away with a small fine that simply gets chalked up to "cost of doing business" and maybe a few meaningless reparations... then, they go back to business as usual.

Folks, we ain't NEVER gonna beat the enemy in the courts these ways, so stop day-dreaming. HOWEVER, take HEART in the fact that these things do get some media attention and the public learns more and more about how corrupt things are ...THAT'S where the "victory" lies for us.

In this particular case, I hope there ARE 1000 folk who turn down the settlement offer by Sony. I'd like to see this stay in the public's view for a while longer.

I still think the best thing that can happen is complete DRM by Sony, so that nothing plays without completely hosing a machine. THAT will start to get somebody's attention.

Sheeple won't do anything until it's so bad they have no choice. Can't make an omelette without breaking some eggs.

Right now, I'm not buying ANYTHING new with the Sony name on it.

I'm with you Olde-Phart...added them to my list of things to boycott. It's getting kinda long, too.

"That means the company cannot make the CD unplayable in whole or in part..."

Ah, but DRM does make a CD unplayable in part. What the labels use for DRM almost always favors the Windows WMA system. iPods do not support this system. Now, I know the labels will say "but that's Apple's fault," but does that give them the right to say what player we may listen to their product on? Some will say yes, that they do. But then that would say that it's ok for the label to be a monopoly.

Here in the US we still, to some extent, have a freedom of choice. That means that we have a choice of what player we want to listen to our music on, whether it be radio, TV, computer, iPod, etc. This is OUR option, not a corporate executive with lots of money.

Like I said, a better way would be to offer incentives to buy CDs. Some artists record tracks that rarely make it onto any CD. These usually end up on the Internet as bootlegs (gee, wonder how THAT could happen) and people usually enjoy them. If a label would say "If you buy the new CD from so and so artist, we will offer you three free downloads of several unreleased songs by so and so. And, best of all, you can share these songs with friends. There will only be a limited number of CDs produced with this ability so go out and get yours today!"

Each CD could allow for different downloaded tracks. Eventually all the CD identifiers would be used up and the unreleased tracks would be distributed around the world. Now people would want the complete set of these tracks and, perhaps using BitTorrent, could do so, ensuring very happy fans and giving free advertising to the label.

I remember a few years back a label tried a similar tactic with one of their groups CDs (I think it was Blink-182). It wasn't a download, but four bonus tracks were created, but only one was put on a CD. To prevent fans from just buying four CDs, it was never revealed which CD had which track (I believe there were four different covers too, but even if you bought a different album cover, it didn't guarantee you'd get a different bonus track).

Not sure where it went, but I'm sure a lot of fans were upset that they couldn't get all the bonus tracks. It was a lost opportunity for the label. They could have made a lot of money by having the fans buy the four different album covers (which many probably did anyway) and getting all the bonus tracks. But they didn't and, most likely, the fans had to turn to the Internet to get them.

sony cant be trusted! i bet the new PS3 is gonna have stuff on it just like the cds! and i used to be a mad crazy sony fan...

Levi

Yeah, pullmytrigger...they will have to be watched. No doubt about it. And welcome to Boycott, Levi.

The difference with the PS3 is, within a month or so after it's released someone somewhere will start selling mod chips for it.

They failed with the PSX...
They failed again with the PS2...
They will fail again with the PS3.

The only way they will not fail is if they put on the box "Broadband internet connection required to receive mandatory updates from Sony". Of course they will fail then since not everyone has a broadband connection.

Most likely the class action member will be required to give out their credit card in order to signup for the free album.

lawyers, anything for money, not caring about the cause.

I realize now that DRM is a really good thing. And I hope the music industry finds ways of making CD’s that cost $20 that will only play a certain number of times and then be useless. I mean, seriously, who needs to boycott companies that are hell bent on making products that no one in their right mind would want in the first place and then charging people an arm and a leg for them?

Meanwhile, everybody else will be selling DRM free CD’s for half the price. More money will be flowing into indie labels, allowing for better production and improvement of indie music.

So, like, why are we bitching about DRM? It would seem more effective if we patted Sony on the back and said “Way to go. Keep up the good work.” Or, maybe we should create some kind of electronic document we could all sign that thanked Sony profusely for the harm they are doing to themselves and the rest of the music industry. Or better still, lets send them more bad ideas for DRM schemes that would make their music totally unplayable and not wanted by anybody. These guys are such idiots they might actually do it.

“sony cant be trusted! i bet the new PS3 is gonna have stuff on it just like the cds! and i used to be a mad crazy sony fan... “

Oh, you mean like that little piece of technology Sony patented recently but promised not to use? The one where once you play a game it will only work on the first machine you play it on. So that if your console breaks you have to buy all your games over again.

Darn, it’s just a shame I’m not a part of Sony’s target market. I don’t buy their CD’s anymore, as they have long since stopped putting out stuff I like. And I never bought a PS2 because it made video games too complicated for me. So now a PS3 isn’t even on my list of curiosities. How can I boycott a company I wouldn’t be buying anything from anyway?

Actually, the last thing I bought from Sony was a CD-R hard drive that came with a Roxio program that made making CD’s easy and fun. It encouraged me to make copies of my music. If that’s illegal, and I ever get hauled into court for copying Sony music, I wonder if I could make a case for entrapment.

"I realize now that DRM is a really good thing."

You nailed it right on the head with your hammer Otaku!!!

The more STUPID and blatently evil/greedy/wrong the RIAA keeps stretching the bounds of credibility with DRM and rootkits and payola and etc. etc., the more the "sheepole" wake up and become aware of things.

I/we as a website (Boycott-Riaa) fail MISERABLY at getting our point across to the vast masses on our own... but with enemies like the RIAA, who needs friends?



(Sad and funny at the same time!)

Our enemy keeps giving us the ammunition.

"Our enemy keeps giving us the ammunition." yes they do! and thats how we shall win!

oh and Otaku i hope the entrapment case goes well! hahaha thats so great! i hate how they do that! sony makes cd-r and all the nessasary equiptment for the illeagel schemes but still the riaa sues... bleh

levi

"Our enemy keeps giving us the ammunition."

Seems they can't shoot themselves in the feet fast enough.

"Seems they can't shoot themselves in the feet fast enough." mabye not... but they will! and when they do, it will be the end of em!

independentmusician,
"Folks, we ain't NEVER gonna beat the enemy in the courts these ways, so stop day-dreaming. HOWEVER, take HEART in the fact that these things do get some media attention and the public learns more and more about how corrupt things are ...THAT'S where the "victory" lies for us."

So you're going to suggest, that the US courts are like the ones of Banana Republic, that always favor the big business and local strongmen? It would be really sad if it was the case, but heck, it's better to know the hard truth, especially for one who wants to make a REAL CHANGE. I'm just asking, because I'm unaware of the most of legal reality in the USA. In Europe, fortunately we have the European Court of Human Rights, and the protection and defense of Human Rights is the supreme rule of all legal systems in the EU. Polish constitution does additionally contain a provision against making the laws that "make the state untrustworthy" (it's being called a rule of citizen's trust to the state: that the state can't make dumb and unprecise laws that are non-trustworthy, eg. the rules that are dubious and unclear).
It's a sad thing that the USA doesn't want to submit to the European Court of Human Rights (echr.coe.int), for it would really help to foster the HR in your country. Furthermore, the ECHR does NOT limit the rights you already have: it only provides some "minimal background": the states falling below this background are punished and must compensate damages to the individual. Those that protect MORE rights are of course OK.

In Liberty,
Critto

"Polish constitution does additionally contain a provision against making the laws that "make the state untrustworthy" (it's being called a rule of citizen's trust to the state: that the state can't make dumb and unprecise laws that are non-trustworthy, eg. the rules that are dubious and unclear)."

"""There are such things as roving wiretaps. Now, by the way, any time you hear the United States government talking about wiretap, it requires -- a wiretap requires a court order. Nothing has changed, by the way. When we're talking about chasing down terrorists, we're talking about getting a court order before we do so. It's important for our fellow citizens to understand, when you think Patriot Act, constitutional guarantees are in place when it comes to doing what is necessary to protect our homeland, because we value the Constitution."

Bush, April 2004, Buffalo NY

And Americans have the gall to make Polish jokes. Why don't we learn from them?