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April 5, 2006, Alert No. 1,343.
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New York State Sues Spyware Distributor

4/4. The state of New York filed a complaint [PDF] in state court in New York City against DirectRevenue LLC and several individuals alleging violation of New York law in connection with their installation of computer spyware and adware without consent of the computer owners.

The complaint was filed in the Supreme Court for the State of New York (a trial court) in the County of New York. It names as defendants Direct Revenue LLC, which is a Delaware corporation based in New York, and several individuals who are its founders, directors or owners.

The complaint alleges that "Since 2002, DirectRevenue has installed more than 150 million ad-serving programs (also know as ``spyware创 or ``adware创), directly from its own servers onto consumers' computers. During most of this period, it has rarely obtained consumers' consent to perform these installations, or given consumers anything approaching reasonable or conspicuous notice that spyware was being installed. Through these downloaded programs, Direct Revenue has then deluged consumers with streams of pop-up ads, for which its own advertisers have paid it millions of dollars." (Parentheses in original.)

The complaint states that "In most cases, these spyware installations were instigated when Direct Revenue (or one of its distributors or sub-distributors) advertised to consumers ``free创 programs, such as screensavers or games. Once the consumers agreed to download these ``free创 applications, a small string of code was placed onto consumers' computers, which in turn instructed Direct Revenue's servers to silently install its spyware onto users' desktops." (Parentheses in original.)

"As a general rule, at no time during this process were consumers given reasonable or conspicuous notice that Direct Revenue would download its spyware -- neither by Direct Revenue, nor its distributors." Notice in some, but not all cases, came in the form of small print in a large document accessible only by clicking on a hyperlink.

"Compounding this invasive fraud, Direct Revenue designed its spyware so that, once downloaded, it was extremely difficult for users to detect and remove." The complaint further alleges that some of Direct Revenue's spyware was installed by "drive by downloads" through "malicious code that exploited security vulnerabilities in Microsoft's web browser and operating system" as result of the consumer visiting certain web sites.

The complaint also alleges harm to consumers. It states that "Direct Revenue's spyware is extremely invasive and burdensome to consumers. It generates a persistent stream of pop-up advertisements. Even worse, it allows Direct Revenue permanent, stealth ``backdoor创 access to consumers' computers. Worse still, Direct Revenue has used this backdoor to install even more sophisticated versions of its spyware onto users' desktops, and to install other spyware programs."

The complaint ads that this software "displays a persistent stream of pop-up ads. These ads are often delivered less than a minute apart ..."

The complaint also alleges that the "spyware monitors the websites users visit, as well as information they type into web forms, such as search engines ..."

The complaint alleges violation of the New York state statute that bans deceptive acts or practices in the conduct of business (General Business Law 349), violation of the New York state statute that bans false advertising (GBL 350), violation of the New York state criminal statute than bans tampering with computers (New York Penal Law 156.20), and trespass to chattels and negligent supervision under New York state common law.

The complaint seeks injunctive relief, disclosure of information, an accounting, and civil monetary penalties.

Eliot SpitzerElliot Spitzer (at right), Attorney General of New York, stated in a release that "Surreptitiously installed spyware and adware harm consumers and businesses, and my office will continue to prosecute these practices aggressively ... These applications are deceptive and unfair to consumers, bad for businesses that rely on efficient networks to do their jobs, and bad for online retailers that need consumers to trust and enjoy their online experience. We will continue to side with consumers in their fight for control of their desktops."

Ari Schwartz, Deputy Director of the Center for Democracy and Technology (CDT), stated in a release that "The practice of forcing consumers into downloading software they neither want nor need has threatened the essential trust that lies at the heart of Internet communication. Aggressive law enforcement is an essential component in the ongoing fight to stem the tide of unwanted spyware. We applaud Attorney General Spitzer for attacking this problem at its source and for sending a message that years of illegal behavior will not go unanswered."

This case is People of State of New York v. Directrevenue LLC, Joshua Abram, Allan Murray, Daniel Kaufman and Rodney Hook, Supreme Court of the State of New York, County of New York.

In November of 2005 the state of Texas filed a spyware related lawsuit against Sony BMG. See, story titled "Texas Sues Sony BMG Alleging Violation of Texas Spyware Statute" in TLJ Daily E-Mail Alert No. 1,258, November 22, 2005, and story titled "" in TLJ Daily E-Mail Alert No. 1,280, December 29, 2005.

Martin Discusses Newspaper Broadcast Cross Ownership Rule

4/4. Federal Communications Commission (FCC) Chairman Kevin Martin gave a speech [PDF] to the Newspaper Association of America in which he argued that the FCC's newspaper broadcast cross ownership rule is obsolete with the proliferation of the internet and other new media.

He stated that "the rule prohibiting a newspaper from owning a broadcast property in the same market has not changed since it was put in place in 1975. Much has changed since the days of disco and leisure suits, including the media marketplace. Over the last 30 years, we have seen an explosion in media outlets and other sources of news and information. The rule that is in place today was based on a market structure that bears little resemblance to the current environment. That rule was adopted in an era with little cable penetration, no local cable news channels, fewer broadcast stations, and no Internet."

Kevin MartinMartin (at right) elaborated that "the Internet as we know it today did not even exist in 1975, whereas more than 180 million Americans last year turned to the Internet for their news and information. Companies like Microsoft, Google and Yahoo! -- companies that did not even exist in 1975 -- operate some of the most visited sites."

He also said the the number, circulation, and stock prices of city newspapers have all declined, with "the proliferation of the Internet and other new media, this downward trend shows no sign of abating."

He added that "In 2003, the Commission finally eliminated this rule, replacing it with a general cross-media ownership limit. But as you all know, the Third Circuit overturned our order, finding that the Commission's actions were not fully justified. ... While the Third Circuit affirmed our decision to eliminate the newspaper/broadcast cross-ownership prohibition, it overturned the Commission's new cross-media ownership limit and sent it back to us. As a result, we now need to start the regulatory process all over again."

See also, story titled "FCC Announces Revisions to Media Ownership Rules" in TLJ Daily E-Mail Alert No. 672, June 3, 2003. On June 24, 2004, the U.S. Court of Appeals (3rdCir) issued its opinion [213 pages in PDF] in Prometheus Radio Project v. FCC. See, story titled "3rd Circuit Rules in Media Ownership Case" in TLJ Daily E-Mail Alert No. 930, July 1, 2004. This opinion is reported at 373 F.3d 372 (3d Cir. 2004). The Supreme Court denied certiorari.

He also argued that "allowing cross-ownership may help to forestall the erosion in local news coverage by enabling companies to reduce duplicative costs and amortize their news products across multiple platforms."

People and Appointments

4/4. Rep. Tom DeLay (R-TX) gave a speech in which he announced that "I am announcing my intention to resign my seat in the House. I will make that resignation effective sometime before mid-June, but largely dependent on the congressional calendar."

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Washington Tech Calendar
New items are highlighted in red.
Wednesday, April 5

The House will meet at 10:00 AM for legislative business. It may consider HRes 541, which honors Roy Glauber, John Hall, and Theodor Hansch for being awarded the Nobel Prize in Physics for 2005. The Nobel Foundation stated that they won this prize for "their contributions to the development of laser-based precision spectroscopy, including the optical frequency comb technique". HRes 541 states that their work "has led to improvements in the accuracy of precision instruments such as GPS locators". See, Republican Whip Notice.

The Senate will meet at 9:30 AM. It will then consideration of S 2454, the "Securing America's Borders Act".

8:30 AM - 4:30 PM. The Department of Homeland Security's (DHS) Privacy Office will host a public workshop titled "Transparency and Accountability: The Use of Personal Information within the Government". See, notice in the Federal Register, March 24, 2006, Vol. 71, No. 57, at Page 14934. Location: Horizon Ballroom, Ronald Reagan Building and International Trade Center, 1300 Pennsylvania Ave., NW.

10:00 AM. The House Commerce Committee's (HCC) Subcommittee on Telecommunications and the Internet will meet to continue its mark up of HR __ [PDF], a committee print of a bill that may be titled the "Communications Opportunity, Promotion, and Enhancement Act of 2006", or COPE Act. See, notice. See also, story titled "Summary of COPE Act" and story titled "House Subcommittee on Telecommunications and the Internet Holds Hearing on COPE Act" in TLJ Daily E-Mail Alert No. 1,341, April 3, 2006. Press contact: Larry Neal (Barton) at 202-225-5735 or Terry Lane (Barton) at 202-225-5735. This mark up session will be webcast by the HCC. Location: Room 2123, Rayburn Building.

10:00 AM. The Senate Finance Committee (SFC) will hold a hearing on the nomination of Ralph Basham to be Commissioner of Customs at the Department of Homeland Security (DHS). See, notice. Location: Room 215, Dirksen Building.

10:00 AM. The House Science Committee will continue its March 29 mark up HRes 717, a resolution that states that "the Secretary of Commerce is directed to transmit to the House of Representatives, not later than 14 days after the date of the adoption of this resolution, a copy of the final draft report, produced by the professional staff of the Technology Administration, entitled: `Six-Month Assessment of Workforce Globalization In Certain Knowledge-Based Industries." On March 29, a motion to report the resolution favorably failed on a vote of 19-14. A motion to report unfavorably produced a 17-17 tie. See, story titled "House Science Committee Debates Commerce Department's Outsourcing Study" in TLJ Daily E-Mail Alert No. 1,339, March 30, 2006. The meeting will be webcast by the HSC. For more information, contact Sara Gray (Republican staff) at 202-225-6371, or Dan Pearson (Democratic staff) at 202-225-6375. Location: Room 2318, Rayburn Building.

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Silicon Image v. Genesis Microchip, No. 2005-1538. Location: Courtroom 201, 717 Madison Place, NW.

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Phillips Electronics v. Contec, No. 2005-1351. Location: Courtroom 203, 717 Madison Place, NW.

10:30 AM. The House Ways and Means Committee will hold a hearing titled "Implementation of the United States-Oman Free Trade Agreement". See, notice. Press contact: 202-225-1721. Location: Room 1100, Longworth Building.

2:00 PM. The House Judiciary Committee's (HJC) Subcommittee on Crime will hold a hearing on HR 4777, the "Internet Gambling Prohibition Act". See, notice. This hearing will be webcast by the HJC. Press contact: Jeff Lungren or Terry Shawn at 202-225-2492. Location: Room 2141, Rayburn Building. Location: Room 2141, Rayburn Building.

2:00 - 4:00 PM. The Department of State's (DOS) International Telecommunication Advisory Committee (ITAC) will meet to prepare for the CITEL PCC.I (Telecommunication) meetings on May 23-26, 2006 in San Domingo, Dominican Republic, and on September 12-15, 2006, in Washington DC. See, notice in the Federal Register, March 29, 2006, Vol. 71, No. 60, at Page 15798. Location: __.

3:00 PM. The House Ways and Means Committee's Subcommittee on Human Resources will hold a hearing titled "Use of Technology to Improve Public Benefit Programs". See, notice. For more information, contact 202-225-1025. Location: Room B-318, Rayburn Building.

TIME CHANGE. 4:00 PM. The House Judiciary Committee's (HJC) Subcommittee on Courts, the Internet and Intellectual Property will hold a hearing titled "Patent Quality Enhancement in the Information-Based Economy". The witnesses will be Jon Dudas (Director of the U.S. Patent and Trademark Office), Robert Stewart (UBS AG), Jim Balsillie (Research in Motion), and Mark Lemley (Stanford Law School). See, notice. The hearing will be webcast by the HJC. Press contact: Jeff Lungren or Terry Shawn at 202-225-2492. Location: Room 2141, Rayburn Building. Location: Room 2141, Rayburn Building.

Day two of a three day conference hosted by the National Institute of Standards and Technology (NIST) titled "5th Annual PKI R&D Workshop: Making PKI Easy to Use". See, notice. Location: NIST, Green Auditorium, Bldg. 101, 100 Bureau Drive, Gaithersburg, MD.

Thursday, April 6

The House will meet at 10:00 AM for legislative business. See, Republican Whip Notice.

9:00 AM. The House Judiciary Committee (HJC) will hold an oversight hearing on the Department of Justice (DOJ). See, notice. The hearing will be webcast by the HJC. Press contact: Jeff Lungren or Terry Shawn at 202-225-2492. Location: Room 2141, Rayburn Building.

9:00 AM. The House Homeland Security Committee's Subcommittee on Intelligence, Information Sharing, and Terrorism Risk Assessment will hold a hearing titled "Protection of Privacy in the DHS Intelligence Enterprise". The witnesses will include Maureen Cooney (acting Chief Privacy Officer at DHS). Location: Room 311, Cannon Building.

9:00 - 11:00 AM. The American Enterprise Institute (AEI) will host a panel discussion titled "Data Pricing and Dissemination in a Competitive Securities Market". The speakers will be Peter Wallison (AEI), Jeff Brown (Charles Schwab & Co.), Adena Friedman (NASDAQ), Kevin O'Hara (NYSE), and Jamie Selway (White Cap Trading). See, notice. For more information, contact Daniel Geary at DGeary at aei dot org or Veronique Rodman (reporters) at vrodman at aei dot org. Location: AEI, 12th floor, 1150 17th St., NW.

9:30 AM. The Senate Judiciary Committee (SJC) may hold an executive business meeting. See, notice. The SJC frequently cancels or postpones hearings without notice. Location: Room 226, Dirksen Building.

9:30 AM. The National Center for Missing and Exploited Children will hold a news conference titled "Outlawing Global Child Pornography". For more information, contact Tina Schwartz at 703-837-6251. Location: First Amendment Lounge, National Press Club, 529 14th St. NW, 13th Floor.

10:00 AM. The House Commerce Committee's (HCC) Subcommittee on Oversight and Investigations will hold a hearing titled "Sexual Exploitation of Children Over the Internet: What Parents, Kids and Congress Need to Know About Child Predators". The witnesses will include John Clark (Deputy Assistant Secretary of the DHS's Immigration and Customs Enforcement (ICE)) and James Plitt (Supervisory Special Agent for ICE's Cyber Crimes Center). See, notice. Press contact: Larry Neal (Barton) at 202 225-5735. The hearing will be webcast by the HCC. Location: Room 2322, Rayburn Building.

10:00 AM. The House Education and Workforce Committee will hold a hearing titled "Building America抯 Competitiveness: Examining What is Needed to Compete in a Global Economy". The witnesses will be Elaine Chao (Secretary of Labor) and Margaret Spelling (Secretary of Education). See, notice. Location: Room 2175, Rayburn Building.

10:00 AM. House Armed Services Committee's (HASC) Subcommittee on Tactical Air and Land Forces will hold a hearing on the FY 2007 National Defense Authorization budget request for unmanned aerial vehicles (UAV) and intelligence, surveillance, and reconnaissance capabilities. Location: Room 2212, Rayburn Building.

1:00 PM. The House Armed Services Committee's (HASC) Subcommittee on Terrorism, Unconventional Threats and Capabilities will hold a hearing on information technology issues and defense transformation. The witnesses will be John Grimes (Assistant Secretary of Defense, Networks and Information Integration), Lt. Gen. Charlie Croom (USAF, Director of the Defense Information Systems Agency), Lt. Gen. Steven Boutelle (CIO of the Department of the Army), Dave Wennergren (CIO of the Department of the Navy), Brig. Gen. George Allen (CIO of the Marine Corps), Lt. Gen. Michael Peterson (CEO of the Air Force), Paul Brinkley (Deputy Under Secretary of Defense for Business Transformation), and Thomas Modly (Deputy Under Secretary of Defense for Financial Management). Location: Room 2212, Rayburn Building.

2:00 PM. The Senate Judiciary Committee's (SJC) Subcommittee on Intellectual Property will hold a hearing titled "Orphan Works: Proposals for a Legislative Solution". See, notice. Location: Room 226, Dirksen Building.

2:00 PM. The House Ways and Means Committee's Subcommittee on Health will hold a hearing titled "Health Care Information Technology". See, notice. For more information, contact 202-225-3943. Location: Room 1100, Longworth Building.

5:00 - 6:30 PM. The U.S. Chamber of Commerce, the National Chamber Foundation, and the Department of Commerce will host an event titled "Anti-Counterfeiting and Piracy 2006". The speakers will include Sen. Orrin Hatch (R-UT) and Secretary of Commerce Carlos Gutierrez. See, notice and registration page. Location: Room 385, Russell Building, Capitol Hill.

Day three of a three day conference hosted by the National Institute of Standards and Technology (NIST) titled "5th Annual PKI R&D Workshop: Making PKI Easy to Use". See, notice. Location: NIST, Green Auditorium, Bldg. 101, 100 Bureau Drive, Gaithersburg, MD.

Friday, April 7

The House will meet at 10:00 AM for legislative business. See, Republican Whip Notice.

9:00 AM - 4:00 PM. The Federal Communications Commission's (FCC) Consumer Advisory Committee will meet. See, FCC notice [PDF] and notice in the Federal Register, March 23, 2006, Vol. 71, No. 56, at Page 14693. Location: FCC, 445 12th Street, S.W., Room TW-C305.

10:00 AM. The House Judiciary Committee's (HJC) Task Force on Telecom and Antitrust will hold a hearing titled "Network Neutrality: Competition, Innovation and Nondiscriminatory Access". The witnesses may include Walter McCormick (U.S. Telecom Association), Earl Comstock (CompTel), Paul Misener (Amazon), Lawrence Lessig (Stanford law school). See, notice. The hearing will be webcast by the HJC. Press contact: Jeff Lungren or Terry Shawn at 202-225-2492. Location: Room 2141, Rayburn Building.

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in M-Star Semiconductor v. ITC, No. 2005-1129. Location: Courtroom 203, 717 Madison Place, NW.

Deadline to submit applications to the Federal Communications Commission (FCC) for participation in the FCC's 2006 Attorney Honors Program. The is an employment recruitment program directed at "graduating law school students and recent law school graduates". See, FCC release [PDF].

Monday, April 10

The House will not meet on Monday, April 10, through Friday, April 21. See, Majority Whip's calendar.

The Senate will not meet on Monday, April 10, through Friday, April 21. See, 2006 Senate calendar.

5:30 - 7:00 PM. The American Enterprise Institute (AEI) will host a panel discussion on the book titled Who Controls the Internet? Illusions of a Borderless World [Amazon] by Jack Goldsmith (Harvard Law School) and Timothy Wu (Columbia Law School). The speakers will be Goldsmith, Wu, Alan Davidson (Google), David Gross (Department of State), and Sebastian Mallaby (Washington Post). See, notice. Press contact: Veronique Rodman at 202-862-4870 or VRodman at aei dot org. Location: AEI, 12th floor, 1150 17th St., NW.

Tuesday, April 11

10:00 AM - 12:00 NOON. The Department of State's (DOS) International Telecommunication Advisory Committee (ITAC) will meet to prepare for the CITEL PCC.II (Radiocommunication including Broadcasting) meetings on June 20-23, 2006, in Lima, Peru, and on October 17-20, 2006, in San Salvador, El Salvador. See, notice in the Federal Register, March 29, 2006, Vol. 71, No. 60, at Page 15798. Location: __.

2:00 - 4:00 PM. The Department of State's (DOS) International Telecommunication Advisory Committee (ITAC) will meet to prepare for the CITEL PCC.I (Telecommunication) meetings on May 23-26, 2006 in San Domingo, Dominican Republic, and on September 12-15, 2006, in Washington DC. See, notice in the Federal Register, March 29, 2006, Vol. 71, No. 60, at Page 15798. Location: __.

Wednesday, April 12

9:30 AM. The Federal Communications Commission (FCC) will hold a meeting. The event will be webcast by the FCC. Location: FCC, 445 12th Street, SW, Room TW-C05 (Commission Meeting Room).

2:00 - 4:00 PM. The Department of State's (DOS) International Telecommunication Advisory Committee (ITAC) will meet to prepare for a meeting of the ITU Council. See, notice in the Federal Register, March 29, 2006, Vol. 71, No. 60, at Page 15798. Location: __.