People of the State of New York v. Direct Revenue, LLC - Documents and Analysis
Benjamin Edelman - Spyware Research, Legislation, and Suits

[ Introduction | Plaintiff's Documents | Defendants' Documents ]


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"Spyware": Research, Testing, Legislation, Suits

Other Research by Ben Edelman


This page provides case documents associated with the New York Attorney General's suit against Direct Revenue, including documents beyond those publicly posted by the Attorney General's office.

These documents are lengthy, so I have attempted to identify and flag sections likely to be of particular interest to typical readers. In general I flag explicit discussion of malevolent or otherwise controversial actions, financial information (including revenues and payouts), and information about Direct Revenue's partners. I welcome and specifically solicit readers' contributions as to other sections of particular interest.

This page reflects all the New York Attorney General documents I have obtained to date.

Although many of the documents provided here are labeled "confidential" (e.g. via stamps on the PDF pages), I received these documents with a specific indication that they are all now public materials, and that they may all be shared with the public. My understanding is that all the materials posted on this page are available in the New York County Clerk's office.


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Plaintiff's Documents

Complaint - Claims a repeated and persistent pattern of non-consensual spyware installation, including deceptive installations and installations through security vulnerabilities. Argues that Direct Revenue is factually and legally responsible for the deceptive installations of its spyware. Claims that Direct Revenue's spyware is invasive, harmful, and hard to remove. Includes claims under New York's General Business Law (prohibiting false advertising and deceptive business practices), New York's Penal Law (prohibiting computer tampering), and New York's common law prohibitions against trespass. Seeks relief including prohibiting installations of any ad-serving or behavior monitoring software, providing an accounting of all revenues, and paying money damages for deceptive practices.

Affirmation of Attorney Brookman - Describes investigator's personal observations of nonconsensual and deceptive installations. Claims that Direct Revenue "tolerated" deceptive acts of its distributors. (41) Sets out the harms caused by Direct Revenue's spyware. Analyzes Direct Revenue's revenue sources, including misleading ads. (42-47) Presents Direct Revenue's effort to prevent detection and removal. (48-55) Notes other software installed by Direct Revenue (including eBates "Moe Money" Maker). (56) Presents individual defendants' specific knowledge of Direct Revenue's practices. (58-75) Notes Direct Revenue's staff's tracking of anti-spyware researchers (65-66), threatening the Center for Democracy and Technology with legal action, and hiring a private investigator to threaten a critic. (67)

Affidavit of Investigator Ip - Describes the specific methods, procedures, and findings of Ip's tests of Direct Revenue installation practices. Describes Ip tests of or at FasterXP (1-7), Atomic Clock (8-11), My Panic Button (11-15), Luke the Screen Washer (15-19), My Tracks Eraser (19-24), Holistyc (24-27), AIMPhuck (27-30), Wallpapers4u (30-33), FlashTalk as pushed by Stlyrics (33-34), (34-37), PCWeatherAlert (37-40), TaskBuddy (40-44), (44-48), and search engine results for certain Direct Revenue product names (48-49). A representative example: Ip searched Google for "holistyc," chose a listing on the first page of results, and declined an ActiveX installation prompt when offered, yet nonetheless received Direct Revenue software. Exhibit index.

Affidavit of Investigator Rivela - Describes the specific methods, procedures, and findings of Rivela's tests of Direct Revenue's installation practices. Describes Rivela tests of or at (1-5) and (6-13) (August 3, 2005 testing, August 5, 2005 testing).

Affidavit of Investigator Thomas - Describes the specific methods, procedures, and findings of Thomas's tests of Direct Revenue's installation practices. Describes Thomas tests of or at (1-6), FlashTalk as pushed by Iowrestling (6-11), (11-13), (13-16), on a PC with low ActiveX security (16-18), FreePhone (18-22), (22-25), (25-29), and Blubster (31-32). Also presents archived site images. Exhibit index.

Brookman Affirmation exhibits

Exhibit 1 - Direct Revenue privacy policy.

Exhibit 2 - 146-page compilation of December 1, 2005 interrogatory responses and attachments. Includes the following:

Discusses Direct Revenue's installation counts. (2)

Discloses revenues of ($6.9 million in 2003, $39 million in 2004, and $33 million in January-October 2005. (4)

Discusses the role and effects of Insight Venture Partners' 2004 purchase of 25% of Direct Revenue for $12 million, and Direct Revenue's borrowing from Insight and Technology Investment Capital Corp (TICC), yielding inflows of $21.7 million total in 2004. (4-5) Shows specific 2004-2005 payments to Direct Revenue's senior staff, totaling more than $27 million. (6)

Discusses the ad networks used to track advertising display, including Aquantive's Atlas and DoubleClick. (8) Discusses other sources from which Direct Revenue receives ads, including LinkShare and eBay (8) Says Direct Revenue sold a "majority" of its advertising through Traffic Marketplace and ValueClick. (9)

Discusses uninstall methods available prior to the creation of Direct Revenue's MyPCTuneUp website. (9-10)

Lists specific Direct Revenue distributors that have been terminated, and the reason for such termination. (11-15) Termination reasons include misleading methods (such as a distributor "using a file name that was confused with the name of an executable file of the Windows Media Player" (12)), as well as multiple distributors performing "downloads of the target software without notice and consent" (12-15).

Lists specific programs Direct Revenue has removed from users' computers, including IBIS Toolbar, HuntBar, IST, CDT, Avenue Media, iDownload, and eXact Advertising. (16-18)

Reports Direct Revenue's acquisition of 750,000 users from Lycos Inc. (18)

Lists Direct Revenue's many affiliated entities and subsidiaries. (19-20)

Direct Revenue user counts by day, February 1, 2003 through December 11, 2005. (21-35)

Direct Revenue distributors, including installation counts by month and year. Includes substantial installations (more than 5,000 per distributor) from 24/7 Real Media,, Adperform, Adscpm, Adtegrity, Advelocity, Advolt, Argonaut, Bane Media, Blubster, Briony Hurn, Bundleware, Carl, CDT, Club Jenna, Coloumb, Cydoor, Dio, Dmagroup, Elite Media Group, Eprocessing, EU Software, Evolution World Wide, ExitExchange, Flying Crocodile, Fortunecity, Grokster, Holistyc, Icmd, Idownload, IE Plugin, Imgiant, Integrated Search, ISuply, JonesMedia, Kazaa, LEC Dialer, Lycos SideSearch (upgrade), Madnight, Magic Window, Mamma Media, Marketing Metrix Group, Max Online, Media Motor, Media Whiz, MindSet, Music Civy Morpheus, MyGeek, Net Thinkmedia, Newmedia, Online Traffic Broker, Opt-In Big, Protected Media, Qoolaid, Razor Media, Ride Marketing Group, Seed Corn, Simpel, Simple Internet, Skyhorn, Standard Internet, Sunny View, Target Comm, Terrapin Media, Traffix, Vendare, Vera Pass, Verticlick, West Frontier, Wild Media, and WSW Telecom. (36-73)

Lists specific files included in Direct Revenue products, including date, user count, and description. Specifically mentions installation of TopMoxie. (74-129)

Lists distributor names and methods (ActiveX, bundle, "onclick", banner). (130-133)

Lists distribution methods by monthly count. (134-142)

Presents materials from the Tps108 site (145-146)

Exhibit 3 - Direct Revenue management team listing, printout from web site.

Exhibit 4 - Direct Revenue LLC agreement. Reports Joshua Abram as 36% owner, Daniel Kaufman as 32% owner, Alan Murray as 27% owner, and Rodney Hook as 5% owner.

Exhibit 5 - User complaints and threats, and Direct Revenue's responses (including jokes). Tabulation of user complaints, including uninstall requests and claims of unsuccessful uninstall attempts.

Exhibit 6 - 122-page compilation of January 17, 2006 interrogatory responses and attachments. Includes the following:

Discusses the limited circumstances in which Direct Revenue elected to automatically remove its software from users' computers after concluding that installations were nonconsensual. Argues that such automated removal constitutes "throw[ing] the baby out with the bathwater" because it would (purportedly) not be "in the best interests of the many users who had accepted [Direct Revenue's] value proposition." (2-6)

Discusses disclosures shown to Lycos users as to "the search panel feature of your Internet Explorer program" being "under new ownership." (11-13)

Presents the Thinstaller and Bootstrap methods by which Direct Revenue installs its software. (13-17)

Presents Direct Revenue's installation methods from April 1, 2005 and onwards. Reports Direct Revenue's methods of monitoring distribution practices. Reports Direct Revenue's retention of Alan Chappell, "a noted internet privacy expert, to consult ... on ... distribution and disclosure practices," specifically noting that Chappell "later became the main drafter of the TRUSTe [adware] guidelines." (21)

Discusses a "KZ Torpedo" to remove unknown other software. (23-34)

Tracks installation counts attributable to distributor CDT. (35)

Presents Direct Revenue's records of specific users, including individual users' IP addresses. (36)

Lists Direct Revenue's many company names, addresses, and domain names. (38-41)

Presents the code to provide Direct Revenue software to Lycos SideSearch. (42-44) Correspondence with Lycos as to installation counts, terms of sale, and the fact that "any users of the software ... shall be deemed Buyer's 'property'" (106).

Exhibits 7-9 - Lists Direct Revenue companies, subsidiaries and affiliated entities, including creation date and state ID number. Discusses difficulties setting up additional companies. Discusses the benefit of using multiple company names in order to "customize the name on the ActiveX." (See my separate analysis of ActiveX installation methods and misleading company names.)

Exhibit 10 - Direct Revenue staff unhappy with a PC Pitstop web page.

Exhibits 11-12 - Direct Revenue's "Skyhorn" product.

Exhibit 13 - Discusses "torpedos" to remove competing spyware and adware. Admits that there is no uninstall procedure for the code by which Direct Revenue redirects users' search results (sending this traffic to Yahoo Overture, which pays Direct Revenue a fee).

Exhibits 14-15 and 17 - Discusses registration practices and contact information for Direct Revenue domains. Shows Whois data.

Exhibit 16 - Dohan declaration in Sotelo v. Direct Revenue (consumer class action).

Exhibit 18 - Discusses distribution methods with distributor Holistyc. Discusses possible use of "tricks" to improve installation rates, as well as methods of "dodging SP2 and anti-virus programs "

Exhibit 19 - Discusses a Microsoft invitation to a September 2004 "Microsoft VC Roundtable." Admits that Direct Revenue "takes advantage of their [Microsoft's] vulnerability and poor design."

Exhibit 20 - Transcript of Dohan deposition by NYAG attorneys on January 26, 2006. Admits that Direct Revenue software would install without user notice or consent if a user's ActiveX security was set to low. (8) Discusses distribution of TopMoxie software. (14-15)

Exhibit 21 - Photocopies from Malware: Fighting Malicious Code by Ed Skoudis. Covers sections as to ActiveX generally and as to malicious ActiveX controls specifically.

Exhibit 22 - Mindset Interactive web site as of November 2004.

Exhibit 23 - Reports specific amounts paid to Direct Revenue distributors from May 2004 to April 2005. Top-paid distributors include CDT ($1.9 million), Integrated Search ($1.7 million), Mindset ($1.2 million), ICMD ($600,000), Traffix ($479,000), ($361,000), West Frontier ($356,000), Adtegrity ($314,000), Flying Crocodile ($298,000), Standard Internet ($293,000), MaxW ($229,000), SurfAssistant WSW ($214,000), iDownload ($181,000), Motor Media ($126,000), and Argonaut Media ($102,000). Separately, Exhibit 2 page 4 reports larger 2005 payments to certain distributors: West Frontier ($1.6 million), WSW Surf Assistant ($1 million), iDownload ($490,000), TeleSolutions ($224,000), Sharman Networks (Kazaa) ($108,000).

Exhibit 24 - Affidavit of Alan Murray - Discusses installation practices, information collection (including search terms and domain names). Admits that users' GET and POST data was provided to HitWise and until December 2003. (6) Admits that Direct Revenue distributed Ebates "Moe Money Maker" (made by TopMoxie) until March 2005. (6-7) Provides a table of Direct Revenue versions, including which versions transmit "forensic" data as well as user GET and POST data. (9-10) Sets out the specific personal information collected from online forms: first name, last name, e-mail address, street address, and zip code. (10)

Exhibit 25 - Email admitting that "we do not presently make much effort to assure that people are [] getting our ads legitimately, but it would not be that hard for us to make fraudulent ad consumption a near-impossibility."

Exhibit 26 - Email discussing CDT repeated installations ("they tried to install us six times") and efforts to block such repeat installations.

Exhibit 27 - Email discussing ICMD and Integrated Search installation counts.

Exhibit 28 - Email among Direct Revenue staff describing their Aurora software as "pretty spooky." Refers to anti-spyware researcher Webhelper as "our stalker friend."

Exhibit 29 - Email discussion of ad frequency. Staff say "we are popping too much" and "we are hammering users too often" to create a "really negative user experience and now advertiser reluctance to participate in this kind of negative user experience." A Direct Revenue (SOHO Digital) staff person reports installing Direct Revenue's Ceres software, and finding that Direct Revenue "literally disabled my computer from functioning in a normal manner" because "programs like Excel ceased to work." (3)

Exhibit 30 - Email discussion reporting a plan to "dial back significantly on the user abuse" (seemingly referring to ad frequency).

Exhibits 31 and 32- Complaints about Direct Revenue submitted to NYAG through its web site.

Exhibits 33 and 34 - Discusses ad frequency and labeling changes to improve revenues. Suggests removing the question mark (which provides uninstall instructions). Reports a 13% drop in revenue based on change in ad spacing (requiring two minutes between ads). Reports that 15% of Direct Revenue users receive more than 15 ads per day.

Exhibit 35 - Discusses plans for increasing revenues, in part by changing to CPA ("cost per acquisition") advertising. Describes "super targeting to help max out current clients by adding in crap and then giving them love at the same time" -- schemes to maximize fees charged to advertisers by adding low-value traffic. "Super targeting" possibly a euphemism for targeting a merchant's own organic traffic.

Exhibits 36, 37, 38 - Discusses advertising policies. Discusses improper advertising by Software Online, and Software Online payments of $3,000 to $5,000 per day. Discusses changes in number of Direct Revenue users and effects on revenues.

Exhibit 39 - Reports Soho Digital revenue. Reports "all boats ... lifted by the Firefox tide" (seemingly a reference to a new feature that targets ads at Firefox users). Distinguishes "good" brands from others such as Software Online and Adult Friend Finder.

Exhibit 40 - Discusses dropping user base and under-delivery of advertising to Software Online and others. Instructs increasing of the frequency cap (per-user ad maximum) to increase the total number of advertisements served to all users.

Exhibit 41 - Reports a "difficult" call with Kazaa, including dissatisfaction with Direct Revenue's software and with advertisement quality and quantity. Reports that Kazaa claims some ads are "purposefully confusing to the user." Admits that Kazaa's claims are "probably correct."

Exhibit 42 - Reports that Casale Media and Error Guard have paused new adware campaign due to concerns about NYAG investigations, despite being "arguably the most aggressive buyer of adware in last six months."

Exhibit 43 - Analyzes Direct Revenue advertising sales by channel -- ad agency versus big brand, internet brand, upmarket direct marketer, downbrand direct marketer, and ad broker.

Exhibit 44 - Discusses a new version of Direct Revenue software that is "incredibly polymorphic" (harder for anti-spyware programs to detect), but presents the risk that Direct Revenue distributors will be unwilling to distribute such software.

Exhibit 45 - Sends Alan Chapell a new "Poller" Direct Revenue program.

Exhiibit 46 - Staff meeting agenda. Specifically discusses relationships with Overture and TopMoxie. (4)

Exhibit 47 - Financial records for 2003 and 2004, including profit and loss. (3-4) Reports 2004 total income of $38.2 million, with $13 milllion of expenses (distribution, employees, hosting, equipment), for a profit margin of 66%. (4) Says Direct Revenue sells ads via ValueClick,, and Traffic Marketplace. (5, 8) Mentions dialers and adult content as important methods of Direct Revenue insatllation (in addition to P2P, VOIP, Internet accelerators, and privacy protection). (6) Reports daily total revenue exceeding $55,000, and daily revenue per user exceeding $0.015. (10-11)

Exhibit 48 - Direct Revenue web page regarding consolidation of company brands and product names.

Exhibit 49 - FTC staff report - Monitoring Software on Your PC: Spyware, Adware, and Other Software

Exhibit 50 - Email from Dave Methvin of PC Pitstop regarding Direct Revenue distributed with child porn. Dave's subsequent article.

Exhibit 51 - Argues that it is preferable to pay installers per installation, rather than on a revenue-share basis. Discusses new distribution methods via banner ads.

Exhibit 52 - Discusses uninstall rates and uninstall methods. Says Morpheus's requirement is "the only reason" to include a Control Panel uninstall option. Suggests using that Control Panel option as a test case, but abandoning it if uninstall rates are "unacceptably high." Suggests an uninstall procedure that requires a user to submit a valid email address because this "would drastically reduce the uninstall rate," but admits that this is "unfriendly." Concludes that "my own personal vote would be that we have no uninstall ... until such time as doing so is required by law."

Exhibit 53 - Discusses Symantec and McAfee security software blocking uninstallation of Direct Revenue spyware via the MyPCTuneup web site.

Exhibit 54 - Rejects a distributor's request for a version of Direct Revenue that includes a Control Panel option for removal.

Exhibit 55 - Specification for obfuscation of Direct Revenue software and encryption of transmissions.

Exhibit 56 - Discusses alternative installation methods -- "stubby" and "poller."

Exhibit 57 - Schedules a planning meeting re "all the Anti Spyware and Antivirus we are currently looking at," saying these programs need to be "resolved."

Exhibit 58 - June 2005 tests of major antispyware and antivirus programs, to determine their treatment of Direct Revenue software.

Exhibit 59 - Email among Direct Revenue staff, expressing dissatisfaction that Direct Revenue can be removed by restarting Windows into Safe Mode and running certain anti-spyware software.

Exhibit 60 - Expresses concern at inability of Ceres-branded Direct Revenue software to remove competing spyware. Suggests switching to an unbranded version of Direct Revenue software (where ads lack any distinctive Direct Revenue name or logo) as a way to restore the ability to remove competing spyware.

Exhibit 61 - Reports that Direct Revenue earned $226,964 from showing Yahoo Overture pay-per-click advertising during April 2005, with similar amounts for May and June 2005. Separately, Exhibit 13 admits that there is no uninstall procedure for the code by which Direct Revenue redirects users' search results

Exhibit 62 - Debugging certain installation errors.

Exhibit 63 - blank

Exhibit 64 - Discusses new software features, including "undetected" new versions of Direct Revenue client software. Specifically discusses a desire to make the ad client more "stealthy" and avoid detections during installation or afterwards. Instructs invocation of "torpedos" to remove BullsEye (eXact Advertising), Dyfuca, and WinTools (IBIS).

Exhibit 65 - Email messages analyzing revenue trends and installation counts.

Exhiibt 66 - Reports substantial revenues from "taking over" IE's search panel. Discusses other kinds of advertising to show users, including host-not-found error messages and links inserted into web pages.

Exhibit 67 - Discusses pricing for sending email.

Exhibit 68 - 2002 correspondence with Hitwise staff regarding data collection from non-US users. Hitwise describes Direct Revenue's efforts as yielding "good match rates" and says Direct revenue's "mining efforts are certainly working." For Australia alone, Hitwise reports that Direct Revenue data includes more than 30,000 user IDs, 14,000 gender records, and 8,000 phone numbers.

Exhibits 69 and 70 - Complaint from ISP abuse department regarding spam allegedly sent by Direct Revenue. Spam body shows cookie-stuffing by loading a LinkShare tracking link into a 1x1 pixel IMG.

Exhibit 71 - Email messages regarding ad frequency and user complaints. Doman writes that "we are serving WAY TOO MANY pops per hour" which "drive[s] users to get us the hell of[f] their machine."

Exhibit 72 - Strategy document for communications with consumers, the press, regulators, and publishers. (4) Describes DR software as showing "the much-maligned pop-up ad" and notes that desktop software is "distrusted now" and facing "increasing resistance." Suggests developing "a study that demonstrates that consumers like to receive marketing messages that are relevant to them." (6)

Exhibit 73 - Email and attachments entitled "legal questions" and "offense defense overview." Specifically admits that when users' ActiveX is set to low security, installation occurs without users indicating consent. (3) Specifically admits that Direct Revenue does not have a specific record that a given bundle partner was presented with Direct Revenue's terms and conditions, and opted in. (4) Admits awareness of the possibility of distributors using security holes. (4) Considerse showing Terms and Conditions during installation, but describes such a procedure as "terrible for us." (8) Describes a desire to block "competitive apps" from becoming installed on a computer even after Direct Revenue software is removed. (9)

Exhibit 74 - Forwards and discusses an article from that criticizes Direct Revenue's practices. Declines to respond because "the website is not that big/popular."

Exhibit 75 - Email response to a Vital Security article about Direct Revenue installation practices. Claims "inaccuracies" in the article.

Exhibit 76 - Email correspondence among Direct Revenue staff and partners as to anti-spyware researcher Webhelper's identification of the name of a Direct Revenue partner. Notes that Webhelper's reporting of this partner's name interferes with that company's attempts to obtain new business liability insurance with that person as the contact. Admits that the partner is attempting to create a new company name to conceal (from its new insurer) its relationship with pornography. Describes Webhelper as "a small timer."

Exhibit 77 - Email regarding establishing a bundling relationship with VertiClick.

Exhibit 78 - User complaint as to ActiveX installation prompt triggered by a mouseover in an email from advertising newsletter AdBumb. Direct Revenue staff demean the complaint by saying "We haven't 'done' anything. It's complete crap."

Exhibit 79 - Email discussing whether Direct Revenue's installation practices will satisfy Google's Software Principles. Notes that extra disclosures "ha[ve] the potential to hurt conversion" (i.e. by causing users to decline Direct Revenue's software).

Exhibit 80 - Email correspondence with a staff person, who requests "a newer, more stealthier version" of Direct Revenue software. Direct Revenue staff reply by offering "a very stealthy version" which, they say, "will not be caught."

Exhibit 81 - Discusses paying distributors on a revenue-share basis rather than a per-install basis. Considers technical difficulties of calculating payments.

Exhibit 82 - Admits acquiring "some" installations "through second rate distributors and possibly via suspicious mechanisms." Suggests automatic removal of Direct Revenue software installed by long-terminated installers because "we have long since monetized [those] client[s]." Suggests that this would provide an edge over other spyware vendors that have not abandoned prior improper installations. Forwards a BusinessWeek article regarding NYAG's case against Intermix.

Exhibit 83 - In an email with subject line "It's ugly out there," Abram reports a large number of programs all bundled by a single distributor: Direct Revenue as well as 180solutions, Euniverse, Clear Search, Excite, Lycos, Shop At Home, Prizesurfer, Delphin, Tax, Adestroyer, and casino icons & favorites -- more than a dozen different programs in total.

Exhibit 84 - Presents plans for a new "headless ad client" that doesn't show pop-ups, which will work with AOL and Netscape users.

Exhibit 85 - Direct Revenue CEO endorses NYAG's suit against Intermix as an "important opportunity to draw a bright line between purveyors of spyware and legitimate behavioral marketing companies like Direct Revenue." (2) Reports that Direct Revenue "came out way ahead of everyone else" at the CNET Spyware Workshop. Admits that I (Edelman) "may have some awful videos to show about [Direct Revenue's] antics." (3) Claims that lawyers from NYAG and FTC "consider him [me, Edelman] to be a fanatic." (3-4) Favorably reports Claria "caught in a lie about ActiveX" -- not mentioning that it was me who caught them. (4)

Exhibit 86 - Admits that "with the exception of p2p, none of our products ... has the slightest traction with consumers." Describes's no-spyware no-adware policy as "blowing up."

Exhibit 87 - Forwards a Webhelper article about nonconsensual installations of Direct Revenue.

Exhibit 88 - Investigates my (Edelman) article about Direct Revenue installed by PacerD without on-screen notice and consent. Dowhan's analysis: "I'm hesitant to say Ben is 100% wrong." Claims I want to "wield" TRUSTe against Direct Revenue. Says I am "actually losing credibility in the industry" and suggests "giv[ing me] more rope to hang [myself]."

Exhibit 89 - Further investigates my (Edelman) article about Direct Revenue installed by PacerD without on-screen notice and consent. Doman initially claims my report is "absurd," but later concedes "we are doing what they are accusing us of doing."

Exhibit 90 - Kaufman forwards a complaint from a New York user who knows the approximate geographic location of Direct Revenue's offices.

Exhibit 91 - In October 2002, Kaufman forwards a complaint from an Australian user seeking an uninstall procedure, not then available on Direct Revenue's web site.

Exhibit 92 - User complaints and threats, and Direct Revenue's responses (including jokes). Tabulation of curse words most frequently included within user complaints.

Exhibit 93, 94, 95 , 97, and 98 - User complaints, including various off-color remarks.

Exhibit 96 - Complaint from US Army Computer Emergency Response Team Coordination Center.

Exhibit 99 - Email from Scott Maxwell of Insight Partners reporting that some of his associates have "caught" a "bad" adware from Direct Revenue, and that they have suffered harm as a result. Asks that other Insight Partners staff "make sure that the company is squeaky clean in its approach and also make sure there is no liability back to the firm [Insight Partners]."

Exhibit 100 - Abram asks another Direct Revenue staff member to assist Barry Osherow of Technology Investment Capital Corp. (TICC, a Direct Revenue investor) in removing Direct Revenue software.

Exhibit 101 - A consumer complains to Insight Partners about their funding of Direct Revenue. Insight's Ben Levin passes the message on to Deven Parekh, who directs that Insight be removed from Direct Revenue's web site. Deven specifically worries that "all I need is Bob Rubin getting this email," referring to the former Secretary of the Treasury who later became a special limited partner at Insight.

Exhibit 102 - In June 2005, ValueClick's Fastclick ad network terminates its relationship with Direct Revenue. (2) Fastclick's Manager of Media Operations reports that he personally was "hit" with Direct Revenue and found it "extremely difficult to remove." (4)

Exhibit 103 - Domain forwards Slashdot coverage of Direct Revenue, referencing Newsweek's "Is This Software On Your Hard Drive?"

Exhibit 104 - A Direct Revenue staff member forwards an announcement message I sent upon release of The Effect of 180solutions on Affiliate Commissions and Merchants.

Exhibit 105 - Webhelper discovers that Freephone is linked to Direct Revenue, based on its sharing an IP address with other Direct Revenue sites. Direct Revenue staff say Webhelper's discovery blocks their plan to "obscure" Freephone from Direct Revenue's existing brands.

Exhibit 106 - Newsweek's "Is This Software On Your Hard Drive?" covers Direct Revenue practices in detail.

Exhibit 107 - Forwards an article entitled "CoolWebSearch, Dubbed Adware's "Ebola," Tops Spyware Threat List." Comment that "At least we are not Ebola."

Exhibit 108 - The Wikipedia entry for Ebola.

Exhibit 109 - Analysis of Yahoo's anti-spyware toolbar. One staff member posits the possibility of an exempt list for Yahoo partners such as Claria, and suggests seeking addition to such a list. Another staff member notes that Yahoo will not successfully remove Direct Revenue due to a "poller" which automatically reinstalled Direct Revenue when a test computer was restarted.

Exhibit 110 - Google Alerts for selected Direct Revenue product terms.

Exhibit 111 - Joshua Abram emails the Center for Democracy & Technology. He threatens CDT: "I have received communications from our customers complaining that you were trying to intimidate them and interfere in their contractual dealings with Direct Revenue. If this indeed is the case it would be a very serious matter. ... We'll need to speak immediately to avert immediate legal action against you and CDT. ... Please be in touch with me prior to 10am tomorrow morning."

Exhibit 112 - Davis & Gilbert attorney Sara Edelman (no relation) attorney forwards a message from a CNET attorney, confirming that CNET has revised a piece by Wayne Cunningham in the manner that Direct Revenue requested.

Exhibit 113 - Davis & Gilbert attorney Gary Kibel reports hiring a "security firm" to investigate Webhelper. Reports learning his home address, age, and employer, although Webhelper's WHOIS address points to a Mailboxes, Etc. (Does not comment on the specific method by which the investigator learned Webhelper's home address from Mailboxes, Etc.) Suggests that "Once we get all the information together, perhaps a letter to his true home address showing that we know more about him will have some results."

Exhibit 114 - States that Direct Revenue will allow its partners to reinstall its software daily, even if a user has removed the software using an anti-spyware program or other method, so long as the user's disk does not indicate the use of the official (MyPCTuneup) removal method. Claims that "our EULA allows for it." Suggests that this "will buy some time until a new tougher / more stealthy app comes out."

Exhibit 115 - Instructs terminating all unbranded installations, as of May 2, 2005.

Exhibit 116 - Forwards a new EULA, calling it "a lawyer approved license to kill." Calls for less "aggressive" behavior "during diligence" (likely referring to pending funding by investors).

Exhibit 117 - Instructs immediate removal from the Control Panel Add/Remove listing (as of May 3, 2004) (2) because "insane" numbers of users were turning to that feature to remove Direct Revenue software (3).

Exhibit 118 - Reports various technical difficulties harming the prior day's operations.

Exhibit 119 - Discusses technical details of removal procedure.

Exhibit 120 - Decision to add a one-day delay between installation of Morpheus and showing the first ad, to "reduce the correlation" between users downloading Morpheus and receiving ads. This delay will prevent users from understanding that installing Morpheus caused the Direct Revenue pop-up ads.

Exhibit 121 - Reviewing correspondence with distributor Integrated Search, Dowhan admits that "we promised them an uninstaller, and then when we thought they weren't watching any more, removed it on purpose." Dowhan describes this as "a successfully managed process," although the distributor complains that "I really find insulting that I need to monitor your install process and tell you to get that fixed every time I do some tests." Another Direct Revenue staff person adds "we are MUCH less profitable with an add/remove function in place." Integrated Search also complains of Direct Revenue's random filenames, random Run registry name, automatic reinstallation, and promotion of adware removers, concluding that these behaviors don't "fit within my values" or "future regulations."

Exhibits 122, 123, 125, 126 - User complaints. Direct Revenue staff describe one complaining user (in 126) as an "idiot."

Exhibit 124 - Alan Chapell, consultant to Direct Revenue, approaches Symantec staff as to Symantec's firewall product interfering with the Mypctuneup uninstall procedure.

Exhibit 127 - A United Airlines customer complains to United about its ads shown by Direct Revenue. My testing indicates that United continued its campaign with Direct Revenue -- ongoing through at least March 2006.

Exhibit 128 - Suggests that Direct Revenue "continue to distribute a healthy chunk of unbranded clients" because the installed base is dropping faster than previously expected.

Exhibit 129 - Instructs omitting Direct Revenue from Control Panel's Add/Remove listing because inclusion there leads to high removal rates.

Exhibit 130 - Discusses a planned teleconference with the Center for Democracy & Technology.

Exhibit 131 - Compares alternative frequency caps, and their effects on revenues and uninstall rates. Suggests loosening frequency restrictions beacuse "we're in a situation where every bit of revenue is needed." (3) A table reports that 6% of Direct Revenue's users received 26 or more ads in a single day, while 15% received 16 or more, and 26% received 11 or more. (4) Within a single hour (when many computers weren't even in use), 12% of Direct Revenue's users received 6 or more ads, and 33% received 3 or more. (5)

Exhibit 132 - Reports revenues and impressions from Error Guard and Software Online advertising campaigns. With data from Error Guard and Software Online, compares Direct Revenue advertising effectiveness with ads from 180solutions and Limbo/IBIS.

Exhibit 133 - Reports implementation of error-page advertising -- showing Yahoo Overture pay-per-click ads if users request nonexistent domain names. Reports average cost-per-click of $0.17, and average daily revenues of approximately $6,000. Separately, Exhibit 13 admits that there is no uninstall procedure for the code by which Direct Revenue redirects users' search results

Exhibit 134 - Letter from the NYAG to Direct Revenue and to counsel for Abram, Murray, Kaufman, and Hook.

Exhibit 135 - A user complains of a malfunctioning uninstaller. Dohan suggests increased emphasis on uninstaller reliability.


See also my listing of key documents, and others' analysis.


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Defendants' Documents

Direct Revenue Rebuts New York Attorney General's Charges - Press release - April 4, 2006 - in response to the New York Attorney General's complaint. Calling the lawsuit "baseless," Direct Revenue says the suit "attempts to rewrite the rules of the adware business." Direct Revenue says the lawsuit "focuses exclusively on the company's past practices" and "mislabel[s] our products as 'spyware' ... creating an atmosphere of hysteria."

Motion to Dismiss - June 6, 2006 - Claims the NYAG's suit covers "historic" practices that were "commonplace" at the time and "utilized by such well-known companies as Google and Ask Jeeves." Invokes the EULA as an "enforceable contract" that bars the NYAG's claims when a user is admited to have clicked an "accept" (or similar) button (even where NYAG claims the notice and consent procedure was inadequate). Claims Direct Revenue is not responsible for installations made by Direct Revenue's "independent third party" distributors. Argues for dismissal of the claim that Direct Revenue was negligent in supervising its distributors. Seeks to limit the case to the specific transactions that the petition identifies, not to Direct Revenue's practices more generally.



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