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PRIVACY SUIT TARGETS NETSCAPE

Posted on July 25, 2000

      New Jersey-based website operator has filed a class action lawsuit charging that AOL/Netscape's Internet software violates electronic privacy law.

      The suit alleges that the companies secretly monitor file transfers between Internet sites and Internet users.

      "Unbeknownst to (Netscape users) ... defendants have been spying on their Internet activities," said the complaint, which was filed June 30 in the U.S. District Court for the Southern District Court of New York by New Jersey-based website operator Chris Specht.

      The "SmartDownload" feature in the Netscape Communicator Web browser secretly transmits file download information to Netscape and America Online (which acquired Netscape in 1998), it states.

      Chris Specht "has executable files he offers to Internet users browsing his sites to be downloaded, and he does not like the fact that Netscape is tracking file downloads on his website," said Specht's attorney Joshua Rubin, of New York law firm Abbey, Gardy & Squitieri.

      Seeking to represent all affected website operators and users, Specht's class action suit claims the Netscape software's behavior violates two 1986 laws governing privacy in electronic communications.

      America Online did not respond to repeated requests for comment on the suit.

      The Communicator product information describes SmartDownload as software that assists users downloading files from Internet sites. In addition to allowing users to pause downloads and continue them during a later connection, Netscape says the product shows "informative content from Netcenter while downloading."

      This electronic awareness of all download activity conducted with SmartDownload is the target of Specht's complaint. The suit specifies Netscape's collection of data that identifies the name, type, and source of executable files users downloads, which Netscape collects along with cookie information that uniquely identifies the user.

      The Netscape product material does briefly mention privacy policy: "As we expand the services of SmartDownload and its InfoBrowser, SmartDownload Profiling will allow us to send you customized information about the file you are downloading. To protect your privacy, none of this information is saved." It also notes that the feature can be turned off.

      But Specht's suit charges that the "continuing surveillance" and uniquely identifying cookies let Netscape, over time, create a "continuing profile" of each visitor's file transfers.

      "Your electronic communications are being bugged," said Rubin. "...The contents of an Internet server's computer -- which contains communications between the site and the user -- is being compromised."

      The suit lays out an example: "If an Internet user uses SmartDownload to download Microsoft's Internet Explorer from Microsoft's Web site, SmartDownload will transmit to defendants the Internet user's identification string along with the name of the file and the file's location on the Internet... In so doing, Netscape is using SmartDownload to eavesdrop."

      The suit says the company is in violation of the Electronic Communications Privacy Act of 1986, which addresses privacy issues that arose with the increased use of computers and electronic communications systems in the 1980s. The act updated the codes, which were established in 1968, to clarify invasion of privacy when electronic surveillance is involved.

      The second act cited, the Computer Fraud and Abuse Act of 1986, clarifies criminal fraud and abuse felonies for federal computer crimes.

      On this legal footing, Specht's suit seeks statutory damages: the greater of $100 per day for every day the software has been available (it was introduced in late 1998), or $10,000 per user for "theft of private information" on behalf of himself and all affected Netscape users.

      Junkbusters' privacy advocate Jason Catlett said the suit is a descendant of a class action lawsuit filed after it was discovered that RealNetworks' music playback software was tracking users' listening habits.

      In November 1999, a Pennsylvania law firm filed a still-pending class action suit charging that RealNetworks violated the Computer Fraud and Abuse Act, as well as state privacy laws and consumer protection statutes.

      Soon after the practice was discovered, RealNetworks modified the software to cease the collection of data.

      "Companies whose software collects information surreptitiously can now routinely expect to see these kinds of lawsuits, so we're starting to see more fine print (posted on the websites)," Catlett said in an email. "At least that's easier to read than an executable file."

      If Specht's lawsuit, or the case against RealNetworks, is successful, companies could be forced to rethink their privacy policies.

      "If a jury ever awards significant damages, all companies will be forced to change their attitude towards 'spyware,' because it will become a significant investment risk," Catlett said.

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