Sony BMG Settles Suit Over CDs

LOS ANGELES -- Sony BMG Music Entertainment will pay $1.5 million and kick in thousands more in customer refunds to settle lawsuits brought by California and Texas over music CDs that installed a hidden anti-piracy program on consumers' computers.

Not only did the program itself open up a security hole on computers, but attempts to remove the software by some customers also damaged the PCs.

The settlements, announced Tuesday, cover lawsuits over CDs loaded with one of two types of copy-protection software _ known as MediaMax or XCP.

Under the terms of the separate settlements, each state will receive $750,000 in civil penalties and costs.

In addition, Sony BMG agreed to reimburse consumers whose computers were damaged while trying to uninstall the XCP software. Customers in both states can file a claim with Sony BMG to receive refunds of up to $175.

State officials estimate some 450,000 compact discs carrying the XCP software were sold in California, while about 130,000 were sold in Texas.

Customers have 180 days to file claims, which must include a description of how their computer was harmed and documentation of repair expenses.

Some who used certain antispyware software to remove the programs installed by the Sony BMG CDs ended up with a glitch that disabled their CD-ROM drives.

As part of the settlements, Sony BMG also agreed not to distribute any compact discs loaded with any copy-protection software that hinders computer users from easily locating it or removing it from their computers.

The record company also agreed to improve its disclosure practices.

"Companies that want to load their CDs with software that limits the ability to copy music should fully inform consumers about it, not hide it, and make sure it doesn't inflict security vulnerabilities on computers," California Attorney General Bill Lockyer said in a statement. "To its credit, Sony BMG learned this lesson and has stopped the practices that led to this lawsuit."

According to the complaint filed by Lockyer, Sony BMG did not disclose in the outer packaging the presence of the software, which was loaded on consumers' computers without their knowledge or consent when they played the CDs on their computers.