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December 21, 2006
McKenna announces $4 million settlement and consumer refunds in SONY BMG Music case; Stealth anti-copying software made consumers' computers vulnerable to viruses and other security risks

Attorney General Rob McKenna announced today that SONY BMG Music Entertainment has agreed to pay $316,000 to the state of Washington and nearly $4 million to 39 other states as part of a settlement. The company also agreed to provide refunds of up to $175 per individual consumer to resolve problems that arose when SONY BMG caused anti-copying software to be surreptitiously downloaded onto consumers’ computers by the simple act of playing a SONY BMG music CD.

“No one should have to worry that stealth software is being downloaded onto their computer without their knowledge and permission,” McKenna said. “Worse yet, the stealth software that SONY BMG deployed through their music CDs opened the door to viruses and other security risks. If companies want to use technology to protect their interests, they need to be up-front about it, and give consumers the opportunity to make informed choices about buying and using these products.”

During 2005, SONY BMG distributed more than 12 million CDs with two kinds of anti-copying software. SONY BMG did not clearly disclose on the outside of the CD boxes or elsewhere that the CDs contained anti-copying software or Digital Rights Management (DRM) software. One version of the software was called XCP, and was designed to hide or “cloak” a number of the program’s files and operations so that when consumers played XCP CDs in their Windows-based computers, it would be difficult for consumers to identify or locate the anti-copying software that had been downloaded onto their hard drive. XCP created vulnerabilities on Windows-based computers by exposing them to potential security threats, including viruses and other problems. Also, when consumers did discover XCP on their computers, they experienced problems when they tried on their own to remove the software. Some consumers who tried to remove XCP had their CD- ROM drives crash. Because of the cloaking characteristic of XCP, some anti-spyware programs used by consumers treated the XCP as spyware and tried to remove the XCP resulting in CD-ROM drives "disappearing" from desktops for some consumers.

Another version of the anti-copying software used by SONY BMG, called MediaMax, caused a driver to download on a consumer’s computer even if the consumer declined to accept the software. One version of MediaMax, Media Max 5.0, also created a security vulnerability on consumers’ computers, although it was less significant than the potential risk posed by the XCP software.

The settlement agreement signed today, called an Assurance of Discontinuance, also sets forth SONY BMG’s agreement to broad injunctive relief terms which will prevent SONY BMG from using anti-copying software on its music CDs in the future without first complying with the reforms required by the settlement.

Under the terms of the settlement, SONY BMG will provide refunds of up to $175 to all consumers who experienced harm to their computers when they sought to remove the DRM software. Refund claims must be submitted to SONY BMG through a claims process which SONY BMG will publicize on its website.

The injunctive relief provisions will specifically prohibit SONY BMG from using XCP or MediaMax DRM software in the future, and will sharply limit the ways in which SONY BMG may use anti-copying software in the future. If it does choose to use DRM software in the future, SONY BMG must inform consumers about it.

The other states participating in today’s settlement are: Alabama, Alaska, Arizona, Arkansas, Connecticut, Delaware, Florida, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Vermont, Virginia, West Virginia, Wisconsin, and Wyoming, and also the District of Columbia.

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Contact: Kristin Alexander, Public Information Officer, (206) 464-6432
Cheryl Kringle, Assistant Attorney General, (206) 389-2514

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