More Canadian Action Against Sony-BMG

Jeannine Palmer and Janet Cook are the latest plaintiffs in the fourth class action lawsuit against Sony BMG Music (Canada) Inc., Sony-BMG Music Entertainment and First4Internet.

Note: This is an article I wrote that was published elsewhere first. It has been republished here for archival purposes

Michael Geist reported the filing of this lawsuit in his latest blog entry, and provided the statement of claim against the entertainment companies. The lawsuit was dated January 16, 2006.

The lawsuit claims that Sony-BMG had breached the manufacturer’s warranty, the terms under the EULA (End User License Agreement), and the consumer protection legislation. If the defendants are found guilty, the damages could be paying 65 million dollars in damages and aggravated damages, exemplary damages and punitive damages totaling 25 million dollars.

The lawsuit also states, “While Sony eventually recalled the CDs on November 30, 2005, in Canada, that contained XCP system, the web-based uninstaller by then developed was investigated by noted researchers Ed Felton and J. Alex Halderman, who discovered that the ActiveX component used for removing the software exposed users to far more significant security risks, including arbitrary code execution from any site on the internet.”

The lawsuit notes that since March of 2005, Sony distributed 52 music titles with XCP, shipping 5 million CDs and selling 2 million of them. In Canada in particular, “Sony BMG distributed at least 34 titles with XCP…Approximately 120 thousand CDs were sold…”

Switchfoot, a Canadia rock group, went public with the issue stating that they were “horrified.” Many bands affected promptly offered free MP3 alternatives on their website. The paper states, “Sony’s artists include Canadians, whose titles were sold with the artist [unaware] of XCP including the artist Celine Dion.”

Other interesting aspects of the lawsuit include:

“30. The Plaintiffs and Class Members plead that subject to s. 17(1) of the Consumer Protection Act, no person shall engage in an unfair practice, and (2) A person who performs one act referred to in section 14, 15 or 16 shall be deemed to be engaging in an unfair practice.”

“34. Subject to s. 51 of the Sales of goods Act, where there is a breach of warranty by the seller, or where the buyer elects, or is compelled, to treat a breach of a condition on the part of the seller as a breach of warranty, the buyer is not by reason only of such breach of warranty entitled to reject the goods, but may, (a) set up against the seller the breach of warranty in diminution or extinction of the price; or (b) maintain an action against the seller for damages for the breach of warranty.”

“50. Risks, among others, in addition to affecting the performance of the computer, include enabling unauthorized third-parties to gain access to the computer system.”

“59. The plaintiffs and Class Members plead that this response was approximately two weeks slower than that in the US, for which a similar announcement was made on or about November 18, 2005.”

“61. The plaintiffs and Class Members plead that matters were made more difficult, in that while some CDs marked are containing XCP did not, others which were unmarked for XCP, did contain XCP and were, for most users, without investing a lot of time studying the issue, virtually impossible to detect.”

“63. It was only on November 18, 2005, and November 30, 2005 for Canadians, that Sony BMG stated publicly on its website that it had learned that a virus could be written to conceal itself inside the XCP software in a manner difficult for anti-virus programs to detect.”

“65. Sony BMG publicly, even as late as on or about November 4, 2005, took the position and made statements that ‘Most people, I think, don’t even know what a rootkit is, so why should they care about it?'”

“80. The plaintiffs and Class Members plead that although Song BMG made statements that it is working with its retail partners to withdraw CDs with XCP software from distribution and retail chains, and that it has asked retailers to cease sale of those discs and to return them to Sony BMG, and that this withdrawal program has been and is being widely communicated, many of the XCP CDs remain on the shelf at major retail outlets in Canada at the time of the issuance of this pleading in January of 2006.”

Humorously, it seems as though in the United States, major record labels file lawsuits against many consumers; in Canada, it’s the other way around.

Drew Wilson on Twitter: @icecube85 and Google+.

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