Sony to refund consumers in 'rootkit' lawsuit

The record label has agreed to compensate buyers of CDs that contained the XCP and MediaMax DRM programs and to provide software utilities to allow consumers to uninstall both types of software from their computer.

The controversy over Sony's DRM software began at the end of October when a U.S. programmer discovered that XCP software on a Sony music CD had installed copy-restriction software on his computer that was hidden using a rootkit. Antivirus companies later discovered Trojan horses that exploited this software to avoid detection and found that another type of Sony DRM, MediaMax, also posed a security risk.

During November a number of individuals filed cases against Sony at courts across America. These cases were granted class action status on December 1st..

Sony BMG met lawyers from the firm handling the class action suit in early December and engaged in "virtual round-the-clock settlement negotiations", according to the settlement filing, which has been posted on the Sunbelt Software Web site.

In the settlement filing, Sony states that it will immediately recall all XCP CDs and replace them with non-content-protected CDs. It has also agreed to offer incentives to U.S. customers to "ensure that XCP CDs are promptly removed from the market." Sony first released details about its CD recall scheme in late November.

Customers who exchange their XCP CD can either download three albums from a list of over 200 titles, or claim a cash payment of $7.50 and a free download of one album. To claim this compensation, customers must return their XCP CDs to Sony or provide the company with a receipt showing they returned or exchanged the CD at a retailer after November 14.

Sony is not recalling MediaMax CDs, but has agreed to compensate buyers of these albums by allowing them to download one free album, as well as offering them MP3 versions of the music on the MediaMax album.

The settlement filing is awaiting approval by the U.S. District Court for the Southern District of New York.