Found on InfoWorld.com.
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Spyware and Copyright Punishment
The comparisons between two news stories last week struck me as rather telling. You probably saw some of the coverage about a jury decision ordering a Minnesota woman to pay $220,000 for infringing copyright on 24 songs. But you may have missed the FTC's announcement of its successful action against a spyware outfit that's going to cost the offenders $330,000 ... of the $3,595,925 in illicit revenue they earned from their scam. Gee, what message does that send?
Well, one message we could take from it is that the priorities of our legal system are badly skewed toward punishing those individuals who may have trespassed on corporate interests while giving businesses that cheat individual consumers only a slap on the wrist. And that's certainly not going to be news to any of my readers. But these two stories also raise some interesting questions about what we should ask our representatives in Congress to do about this, or if we're better off assuming that Congress will only make it worse.
On the Minnesota case, I only know what the press has reported. It sounds like the Minneapolis mom may have indeed distributed songs
By Ed Foster
October 9, 2007
The comparisons between two news stories last week struck me as rather telling. You probably saw some of the coverage about a jury decision ordering a Minnesota woman to pay $220,000 for infringing copyright on 24 songs. But you may have missed the FTC's announcement of its successful action against a spyware outfit that's going to cost the offenders $330,000 ... of the $3,595,925 in illicit revenue they earned from their scam. Gee, what message does that send?
Well, one message we could take from it is that the priorities of our legal system are badly skewed toward punishing those individuals who may have trespassed on corporate interests while giving businesses that cheat individual consumers only a slap on the wrist. And that's certainly not going to be news to any of my readers. But these two stories also raise some interesting questions about what we should ask our representatives in Congress to do about this, or if we're better off assuming that Congress will only make it worse.
On the Minnesota case, I only know what the press has reported. It sounds like the Minneapolis mom may have indeed distributed songs illegally over a P2P network. And while almost $10,000 in penalties per song may seem a trifle steep, it's really not a surprise considering the various laws, like the Family Entertainment and Copyright Act, that Congress has passed in recent years piling on additional monetary and even criminal penalties for copyright infringement. And it's certainly is in line with other ideas Congress is considering to use taxpayer money to help the big media corporations fight online file sharing. The Minnesota woman's case just confirms that - except perhaps for counter-terrorism -- punishing copyright transgressors seems to be the highest national priority on which both sides of the aisle in Congress sing the same tune.
I've managed to learn a bit more about the ERG Ventures spyware case, particularly concerning that line at the end of the FTC press release that says that the "FTC's case was brought with assistance from the Microsoft Corporation." In fact, there's been a little bit of misinformation in the blogosphere about Microsoft's role in the case, so let me take a minute to straighten that out if I can. Microsoft's own case against this spyware operation was never "rolled into" the FTC action, says Ethan Arenson, lead attorney for the FTC on the ERG Ventures case. "Microsoft provided technical assistance for our case," says Arenson. "Our case was brought under the FTC Act, so it stands completely on its own. Of course, it's safe to say that the FTC appreciates the existence of companies like Microsoft that have the expertise in the field and can provide technical assistance."
Last November Microsoft brought a case against one of the individuals involved with the ERG outfit. "On June 18, 2007, a default judgment was ordered against Timothy P. Taylor and in favor of Microsoft Corporation for $300,000, under the Washington State Spyware Act," says Scott Stein, Microsoft senior attorney. "Microsoft alleged that Taylor and others were engaged in a spyware operation where a number of unwanted and intrusive programs were packaged with innocuous programs, such as celebrity screensavers, and installed on unsuspecting consumers' computers. The Federal Trade Commission's lawsuit also targeted Taylor and others involved in the same spyware operations. Microsoft has been successful in using the Washington State Spyware statute to file civil lawsuits against several spyware operations, we believe that it has been very effective in the battle against the distribution of spyware."
Now let me make it clear that I think that the FTC, and Microsoft, are to be congratulated for their success against ERG. We need a lot more cases like this, because there a lot more bad guys. And while the idea of an anti-spyware tag team of feds and Redmond is a but unnerving in several respects, let's hope spyware purveyors are scared enough by it to cease their activities. After all, those accused of copyright infringement face the possibility of being double-teamed by the government and corporate interests, so why not the spyware vendors as well?
As for ERG paying only $330,000 when it had ten times that in revenue, Arenson explains that in FTC cases it's fairly common that the disgorgement of ill-gotten gains only reflects how much money remains. "$3,595,925 is the gross revenues made by this venture during its existence," he says. "Typically defendants in FTC cases will spend a lot of the money they take in, so the $330,000 constitutes virtually all of the money that's left. If it turns out the defendants have lied about their financial situation, they would be subject to paying the $3 million figure."
Well, OK, you can't get blood from a stone. But it's interesting to note that we have a system of rules where spyware scammers who've made millions only have to pay what they say they have left of the ill gotten gains, while a woman who shared $24-worth of songs is supposed to pay $220,000 she probably doesn't have. Of course, that's not the FTC's fault - it's Congress that's made these rules. And the only changes to the laws that Congress seems to be serious contemplating are just going to make this situation worse.
Along with the never-ending stream of copyright code changes demanded by music and motion picture industry lobbyists, Congress continues to be attracted to spyware laws that won't help the problem and may very well make things worse. In particular, H.R. 964 aka "the Spy Act, " which I discussed earlier this year, was overwhelmingly approved by the House and has now been referred to the Senate. Not only is the Spy Act not necessary to help the FTC pursue actions like the ERG case, as currently written it will make it much harder for private entities - maybe even including Microsoft - from bringing suit against spyware vendors themselves. That's because it specifically preempts state anti-spyware law like the Washington Spyware Act that Microsoft used and also hamstrings state and local enforcement actions in a variety of ways.
In other words, both copyright and spyware laws are designed to protect corporate interests, not to protect us. And any changes we're likely to see will only make things worse. But at least we can still hold out hope that Congress will do what it's best at - doing nothing at all.
Have you got a mesage for Congress? Post it on my website or write me at Foster@gripe2ed.com.
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