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4/7/2006
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Adware Firm Facing NY Lawsuit Denies Wrongdoing

The lawsuit focuses on practices that Direct Revenue has already stopped, the company's lawyer says.

The lawyer for the New York adware company sued earlier this week by the state's attorney general said late Thursday that the firm has done nothing illegal.

"Our practices were legal and appropriate then," said Andrew Celli, the attorney who is representing Direct Revenue in the case. "And our new practices are legal and appropriate."

Celli, a partner in the New York City-based firm Emery Celli Brinkerhoff & Abady, also complained that the lawsuit only focused on practices that Direct Revenue has stopped.

"Our current practices are not the subject of the complaint," he said.

"That's not a compelling legal defense," retorted Ben Edelman, a noted anti-spyware researcher as well as a graduate of Harvard Law School. "The fact that you've stopped doing something is not a defense."

Tuesday, the office of New York state's Attorney General Eliot Spitzer filed a lawsuit that charged Direct Revenue and four co-founders with installing millions of copies of their adware programs on users' PCs, and said that the company used deceptive business practices, including drive-by downloads, to put its adware on machines. The lawsuit seeks an immediate injunction, requests an audit of Direct Revenue's finances, and demands "appropriate" financial penalties.

That same day, Direct Revenue released its only official statement. "This lawsuit is a baseless attempt by the Office of the Attorney General to rewrite the rules of the adware business," a spokesman said.

"It focuses exclusively on the company's past practices - practices we and other industry leaders changed long ago - and says not a word about what we're doing today."

Celli said that the company would "use every defense" in the case, but hinted that the Tuesday statement was not a legal defense per se, but one of its business practices. "We have an ongoing business that must be protected," he said.

Edelman agreed. "That's a public relations defense, not a legal defense," he said.

"This suit complains solely about past practices - practices, in fact, that were consistent with those of virtually all of the leading players in the rapidly evolving adware industry," the Direct Revenue spokesman said on Tuesday.

"The fact that everyone else was doing it is not a defense, either," countered Edelman.

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