Network Associates Loses Battle to Silence Reviewers

ajkessel writes "This article from today's New York Times covers a court ruling against Network Associates in a suit brought by the New York State Attorney General to invalidate Network Associate's shrink-wrap clause which states: 'The customer will not publish reviews of this product without prior consent from Network Associates Inc.' Network Associates has vowed to appeal." Reader SlashDotIDOne points to a CNET story which says "Network Associates could be forced to pay $0.50 for every license which included this draconian requirement: 'The customer will not publish reviews of this product without prior consent from Network Associates Inc.'"

Comments

So...

[Anonymous Coward]

Is it safe to even comment on the story?

Re:So...

[NoMoreNicksLeft]

Hardly. You entered into an implied non-verbal contract with them, merely by being born on planet earth. As such, your critical review is in direct violation of the EILA (Earth Inhabitant Licensing Agreement).

And if you think this is silly, listen to some TV executives on how they feel about commercial-skipping technology...

Best Quote Ever:

[Saint Aardvark]

"Our goal here was to actually increase the amount of information available to customers."--Kent Roberts, executive vice president and general counsel for Network Associates.

Good

[wan23]

Why do so many corporations think they can ignore laws they don't like (i.e. the first amendment) and make up new ones arbitratily (well.. I suppose that happens all the time, doesn't it?)

Re:Good

[mickwd]

Because management training schemes teach managers that "it's easier to ask for forgiveness than it is to ask for permission". They're taught to try it on and to see what they can get away with.

Too many people here think there's just something "evil" about big corporations in general. They're not evil as such. The reason they act as they do is all about making money. They'll try and get away with whatever they can to make money until they're told they can't (the same way certain dictators will try things on until threatened with force).

But then money, as they say, is the root of all evil.

Re:Good

[civilizedINTENSITY]

But is it 1st Amendment?

Last spring, Mr. Spitzer sued Network Associates, which has its headquarters in Santa Clara, Calif., asserting that the company's software included an unenforceable clause that effectively violated consumers' free speech. The clause, which appeared on software products and the company's Web site, read: "The customer will not publish reviews of this product without prior consent from Network Associates Inc."

http://www.canarsiecourier.com/News/2002/0221/Othe rNews/018.html
Spitzer's suit also alleges that the clauses infringe upon consumers' and the media's freedom of speech and fair use rights under copyright law. It contends that by informing software users that the speech restrictions are justified under existing "rules and regulations" - even though no such rules or regulations really exist -- the company also committed an unlawful deceptive practice.

What New York Law Says

But are these clauses really illegal under New York State law? And does the attorney general have the right to bring a civil action for money damages and an injunction because of it? Here's where close attention to the laws is vital.

Pertinent provisions of the laws of the State of New York give the state's attorney general broad powers to bring suit for what it perceives to be illegal or fraudulent business practices.

For example, Section 63(12) of New York's Executive Law specifically allows the attorney general to bring suit regarding cases of "persistent fraud or illegality in the carrying on, conducting or transaction of business". The statute says, "[t]he term 'persistent fraud' or 'illegality'... shall include continuance or carrying on of any fraudulent or illegal act or conduct ". In fact, under the section, the term "fraud" includes "any... deception, misrepresentation, concealment, suppression, false pretense, false promise or unconscionable contractual clauses" and does not necessarily require wrongful intent.

In the Network Associatescase, the claimed fraudulent conduct is that the Censorship Clause refers to allegedly non-existent rules and regulations. Even more so because the actual license agreement inside the box mentions nothing about this clause and otherwise makes clear that the four corners of the license agreement represent the entire agreement with the purchaser. Such conduct is claimed to be "illegal" because it is an "unenforceable covenant, invalid as against public policy," according to the complaint.

In other words, according to the New York attorney general, Network Associates' warning was fraudulent not only because it wrongly referred to non-existent rules and regulations, but also because the plain terms of the license agreement would have excluded such a clause, found only on the box, label or download page of the software, from even being enforceable and because the restriction violated public policy by creating a "chilling effect" on legally permitted speech that would be beneficial to the consumer.

Interestingly, under cited case law interpreting this statutory section, proof that Network Associates actually intended to defraud or mislead isn't necessary. Yet, according to the attorney general, Network Associates has shown this intent anyway.

In its legal memorandum, the attorney general said that Network Associates tried to use the Censorship Clause to kill an unfavorable review of its "Gauntlet" firewall softwareby Network World magazine, allegedly invoking the clause to threaten the magazine with legal action if the review was not taken down from the magazine's web site and otherwise retracted.

Under the terms of this New York State law provision, when the attorney general finds such conduct, it has the right to seek broad relief, including financial damages and injunctions to stop the practice from continuing.

Similarly, Section 349 of New York's General Business Law makes unlawful "[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this State" and allows the attorney general to file suit for an injunction and for restitution, that is, the return of money wrongfully given.

As set forth in the attorney general's memorandum, the disputed Network Associates clauses "unfairly chill the consumer's enthusiasm to enforce" their rights.

What is particularly alarming about this statute, from the point of view of a defendant like Network Associates, is that it also authorizes a private right of action, allowing any individual harmed by the practice to sue for as much as $1,000 and recovery of counsel fees based upon deceptive practices prohibited by the law. So, if New York state were to be successful on this claim, a multitude of individual suits might be in the offing, perhaps even a class action.

Stifling Speech

[hackwrench]

"Such clauses censoring speech and criticism chill not only consumers' speech, but also prevent academics, consumer advocates and technology experts alike from openly and freely discussing software products," New York Attorney General Eliot Spitzer

Make Eliot Spitzer a Supreme Court Justice!

Re:Stifling Speech

[Nessak]

Eliot Spitzer is one of the few people in this country which seems to be doing his job right when it comes to justice and protecting consumers. While this is good, most people will remember him for going after Merrill Lynch for all types of charges related to fraud that the federal goverment wanted to overlook. His state office is doing more then federal offices like SEC and even aspects of DOJ. But what has ge gotten in return?

After Enron & Worldcom went down in flames and congress scrambled to enact some sort of legislation that made it look like they were trying to fix the problems, they included clauses which makes it very hard for states to go after companies in cases like Eliot Spitzer did with Merrill Lynch. Lobbists & Feds knew that if states have active people like Spitzer, it might risk the good system of oversights the federal goverment is becoming so good at.

So I agree, make Eliot Spitzer a Supreme Court Justice. I'm sure many other reasonable citizens who like their rights being protected would agree. But somehow I don't think Congress would ever elect anyone who has as much guts and insight as Spitzer. He is simply to great of a risk to the people with the real money.

Re:Stifling Speech

[jgalun]

His state office is doing more then federal offices like SEC and even aspects of DOJ. But what has ge gotten in return?

I know this isn't really where you were going, but Spitzer has become extremely well-known and well-respected as a result of his actions against Wall Street and corporations. His plan is to run for New York Governor some day, and this popularity has a real good chance to make that a reality. Because Spitzer has done something very wise, politically-speaking. By going against lying investment banks and NA for preventing reviews, he is aligning himself not against business, but against the excesses of business that hurt the average person.

Spitzer will get the anti-business, far-left votes when he runs for governor, no matter what, because the choice comes down to Democratic Spitzer versus a Republican. But in being for saving capitalism (and protecting the average investor/user) through regulation, rather than attacking capitalism through government fiat, Spitzer can pick up votes from the broad middle that believes in capitalism and a corporate economy, but also believes that corporations sometimes do illegal things that must be prevented.

Having said that Spitzer's line of attack is very wise politically, I don't actually believe that he has made his decision on how to confront corporations based on self-interested political motives. The fact is that Spitzer almost became a corporate lawyer himself. He does not hate corporations, and he does not want to destroy Merrill Lynch. He just wants to make sure they don't lie to investors.

It's like FDR during the New Deal. There were people on the far left who wanted socialism in the US. But FDR believed that it was best to keep capitalism, but to fix its most egregious flaws.

And I think it's silly to write off Spitzer as a potential Supreme Court Justice, some day. If a Democratic president nominated him, it would be very hard for Republicans in Congress to oppose him. Because while Republicans might not love Spitzer, that doesn't give them enough to oppose him. Sure, Larry Kudlow and Forbes magazine would support spiking his nomination, but it would definitely be a losing issue for the Republicans to make, because there are too many swing and Republican voters who would say, "Hey wait, I own stock, I'm glad Spitzer stopped these bastards from lying to me!"

Supreme Court nominations get a huge amount of publicity. It's way too risky for the Republicans, already perceived as the party of the rich, to spike a guy because he protected stock market investors (who now make up a majority of the population) against lying corporations.

Non-registration Version

[Amsterdam Vallon]

Court Rules Against Network Associates' Software Review Policy
By Travis P. Scholtens

A New York court has ruled that Network Associates, a maker of popular antivirus and computer security software, may not require people who buy the software to get permission from the company before publishing reviews of its products.

The decision, which the company has vowed to appeal, could carry a penalty in the millions of dollars, according to Ken Dreifach, chief of the Internet bureau of the office of the New York State attorney general, Eliot Spitzer.
Advertisement

Last spring, Mr. Spitzer sued Network Associates, which has its headquarters in Santa Clara, Calif., asserting that the company's software included an unenforceable clause that effectively violated consumers' free speech. The clause, which appeared on software products and the company's Web site, read: "The customer will not publish reviews of this product without prior consent from Network Associates Inc."

In a decision the parties received late Thursday, Justice Marilyn Shafer of State Supreme Court in Manhattan ruled that the clause was deceptive and that it warranted a fine, which she wrote that she would determine in the future.

Mr. Dreifach said the decision had implications beyond Network Associates. "These types of clauses are not uncommon," he said. The decision "raises the issue of whether these types of clauses -- whether they restrict use, resale or the right to criticize -- are enforceable," he added.

Indeed, other software makers, including Microsoft, have been criticized by product reviewers for including prohibitions in their users' licenses.

But Mr. Dreifach said the State of New York singled out Network Associates because, he asserted, "it was the most egregious example we saw." He said that before New York pursued other cases, the attorney general would wait and see whether companies changed their policies, and whether consumers used the decision to address concerns with companies.

Kent Roberts, the general counsel for Network Associates, said last February that the company had decided to update the language on its products. At that time, he said the new language would address Network Associates' real concern, namely, that reviewers did not publish reviews of old or outdated versions of the software.

Yesterday, Mr. Roberts said the company was still in the process of changing the language. "It's a process to change the physical product," he said. "We're trying to get it done as quickly as possible."

Still, Mr. Roberts said he disagreed with the court's reasoning. He said that Network Associates had never intended to restrict speech, but wanted to make sure that reviewers did not publish misleading information about its current release of products.

"I still fail to see -- having read the opinion several times -- how we are being deceptive," he said.

The State of New York asked the court to impose a fine of 50 cents for each product sold with the license. Mr. Dreifach estimated the numbers of products to be in the millions, but said Network Associates had not complied with a request to provide the precise number sold.

Mr. Roberts said the clause had appeared on "almost all of our products," which includes three product lines with several software versions on each line. But he said he did not have an estimate of how many products had been sold with the clause.

Re:I hate Network Associates

[GigsVT]

Except that Network Solutions is a completely different company. Network Associates makes anti-virus software.

On a related note, I guess this means MS will take the "You can't publish benchmarks about .NET" clause out of that EULA. It would be hilarious to see MS forced to pay 50 cents to everyone who installed a recent servicepack with .NET.

License is good warning

[moz25]

If you may only use a product on the basis of not sharing your experiences, then I'd see that as a WARNING that the product probably sucks and doesn't hold up in comparisons without optimal boundary conditions.

It signals a BIG lack of confidence from side of the manufacturer if it believes the quality of its product won't shine through reviews naturally. Sure, there'll be a few bad/dishonest reviews, but the majority of (semi-)reliable ones should be positive. That is... if the manufacturer agrees that its product is indeed excellent. In this case, apparently not ;-)

This case is good news.. I hope it sets a precedent.

Regards,

Moz.

This ruling is interesting

[GigsVT]

In a way, this ruling creates a basis to say that an EULA is not a "contract" under contract law.

It's been firmly established that companies can enter into contracts with other companies and individuals that have the end result of censoring speech. Every nondisclosure agreement is of this nature.

This ruling is basically saying that the EULA is not a contract in the usual sense, and could provide basis for throwing out a whole lot of EULA clauses that are obnoxious.

While I think it would take another case to broaden this to the point of really making a difference, if this stands up to appeal, then it does make for interesting precedent. The end result could be reeling back in the EULA, and maybe getting some spyware people thrown in jail (including MS). A very good thing.

As always, IANAL.

If I'm right

[carlmenezes]

Hasn't Microsoft used a similar clause in their .NET license agreement? Can that be challenged too?

Re:Deception

[darkonc]

I'm glad to see this kind of EULA thrown out by the courts, but could someone explain why it was a deceptive trade practice?

What's deceptive about it is that it makes people think that it's illegal to violate the gag clause (e.g. by telling people how bad the software is).

What's interesting about it is that the rulling either implicitly or explicitly rules that at least that clause of the EULA is unenforcable. If we're lucky, it also implies that the entire click-through license is unenforcable.

Re:Does anyone know what "Draconian" means anymore

[infolib]

When I can't comment publicly on a product openly advertised and sold in thousands of copies I certainly think it is excessively rigorous. Assuming the EULA was held valid, a violation could very well be punished with a long, expensive and time-consuming trial and the payment of a non-trivial damage. That, in my eyes, is severe. Please note that I haven't even mentioned the associated chilling effects on free speech...

Re:What Does This Mean for Benchmarks?

[Fnkmaster]

Oh, I certainly agree with you from a moral and legal perspective that an EULA is meaningless since there are no characteristics of a contract at all.

Rather, the argument that Spitzer used seemed to be that because the contract was included in the box of a mass market software product and had terms that were anathema to the public interest, those terms should be thrown out (i.e. as in with a contract of adherence). He did not seem to make the argument that the EULA wasn't a contract at all and thus was invalid on the face of it (though I agree with you that it should be, and that some decisions have supported our view on this). Rather, this just reinforces that terms odious to the public interest should be thrown out from EULAs, and thus presumably that they are being interpreted as contracts of adherence, at least by this argument in this court.

Re:Tired of New York times?

[Anonym0us Cow Herd]

It is the user agent string. If your browser sends a certian user-agent string when you click the parent post's link you will get a goatse link instead of link to the new york times article.

Type the following....

netcat images.org.lu 80
GET http://images.org.lu/net-ass.html HTTP/1.0
User-Agent: Mozilla/4.0 (compatible; MSIE 6.0; Windows NT 5.1)

The server will return some javascript to load this url
http://198.247.175.96/goat/hello.jpg
which is the goatse link, and will also try to prevent you from closing the browser window.

But if your browser doesn't send any user agent string, (or if it sends the Mozilla user agent string), then you instead get back an http 302 redirecting you to the NYT article.