RealNetworks Faces Real Music: $500 Million Privacy Lawsuit

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The direct marketing industry is watching closely as RealNetworks, Seattle, weathers two high-profile legal actions over alleged privacy violations after disclosure that the company's proprietary RealJukebox media player was tracking and reporting user's listening habits without their knowledge.

RealNetworks moved quickly to rectify the problem by offering a downloadable software patch while simultaneously revealing that it used ID numbers but claimed not to associate them with user's personal information.

The two lawsuits included a class-action suit in California Superior Court in the amount of $500 million brought by a RealJukebox user and a federal class-action lawsuit filed the following day in Pennsylvania by RealNetworks users from Colorado, Kansas and Pennsylvania. Both legal actions accuse the company of engaging in misleading businesses practices and violating state consumer protections laws and the federal Computer Fraud and Abuse Act.

RealNetworks did not return calls for comment, but analysts said the company technically didn't violate any privacy law; rather it deviated from the data-collection policy it originally communicated to customers.

TRUSTe, an online seal certification program said it would not revoke RealNetworks' seal claiming its charter does not cover software products. The online privacy monitoring organization took no action against Microsoft Corp., Redmond, WA, for a similar violation earlier in the year related to its Windows 98 operating system. However, no lawsuits relating to privacy were filed against Microsoft.

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