Defunct Zango Loses Case Over Kaspersky’s Filter Program

SEATTLE — Defunct adware company Zango now has become a loser at the federal appeals level.

The 9th U.S. Circuit Court of Appeals ruled this week that antivirus maker Kaspersky Internet Security is entitled to immunity, under the safe harbor provision of the Communications Decency Act, from a suit claiming that its software interfered with the use of downloadable programs by customers of Zango.

The court ruled that Kaspersky, which treated Zango's software as malware and "protected" users from it, could not be held liable for any actions it took to make the technical means to restrict access to objectionable material available to others.

Zango had argued that Kaspersky disabled the Zango toolbar that displays ads related to a user's searches. Whenever Zango's software tried to access the Internet, Kaspersky would display a warning and block the program.

Zango, which had worked with adult companies to find more customers, pulled the plug on its business in April after it was left unable to pay off its debts.

The company, in the complaint, attributed a decline in the number of its customers in 2007 to interference by the Kaspersky software and by other antispyware software that blocked the operation of the Zango program.

The 9th Circuit, in its ruling, said the case zeroed-in on the degree of threat posed to users by Zango's software.

“Kaspersky contends that Zango's software is adware, and possibly spyware,” the court said. “Spyware, which is often installed on a computer without the user's knowledge or consent, covertly monitors the user's activities and exposes the user to the risk that his or her passwords and confidential information may be stolen.

“Zango maintains that it installs its software only upon receiving user consent, and that it provides easy means of uninstalling Zango software from a user's computer.”

In its original case filed at King County Superior Court, Zango was seeking claims for an injunction, tortious interference with contractual rights, violation of the Washington Consumer Protection Act, trade libel and unjust enrichment.

After Kaspersky removed the case to federal court, the district court denied Zango’s request for a temporary restraining order, and Kaspersky subsequently filed a motion to dismiss, which was then granted on the ground that Kaspersky was entitled to immunity.

Zango argued that Congress intended statutory immunity under the CDA to apply to Internet content providers and not companies that provide filtering tools, but the court disagreed.

The case is Zango Inc. vs. Kaspersky Lab Inc., 07-35800.