Manufacturers Settle Class-Action Over Carrier IQ's 'Spyware'

HTC, Samsung and four other mobile phone manufacturers have agreed to settle a class-action lawsuit alleging that they violated consumers' privacy by pre-installing software created by Carrier IQ, according to court papers filed on Thursday.

The settlement details, including any financial terms, are expected to be revealed next month. If approved by U.S. District Court Judge Edward Chen in San Francisco, the deal will resolve litigation surrounding Carrier IQ's software, which allegedly was able to track and record users' keystrokes. Those capabilities came to light in November of 2011, when a researcher posted a video that appeared to show the company logging keystrokes.

After that report surfaced, consumers filed class-action lawsuits against Carrier IQ, as well as six device manufacturers -- HTC, Samsung, Huawei Devices USA, LG Electronics, Motorola Mobility and Pantech Wireless. The consumers alleged that Carrier IQ and the manufacturers violated the federal wiretap act, as well as a variety of state laws.

Last year, shortly after losing a bid to send the case to arbitration, Carrier IQ agreed to resolve the litigation. But HTC, Samsung and the other manufacturers continued to fight the lawsuit. They raised a number of arguments, including that the consumers lacked “standing” to proceed in federal court because they weren't harmed by the software.

In January, Chen rejected the contention that consumers weren't injured, but dismissed several of the allegations against the manufacturers -- including the claim that they violated the federal wiretap law by intercepting communications without permission. He ruled that there were no allegations that the manufacturers themselves “acquired the contents” of any messages or other transmissions.

But Chen allowed the consumers to proceed with other counts, including that the manufacturers violated various state laws. The manufacturers agreed to settle the matter after meeting with a mediator in April, according to court records.

After reports about Carrier IQ's potential keystroke logging surfaced in 2011, the company acknowledged that its software sometimes logs the contents of messages, but said the data isn't readable. The company also said that its software was intended to help mobile carriers to discover the source of network problems, like dropped calls.

The Federal Trade Commission ultimately brought an enforcement action against manufacturer HTC, accusing the company of failing to disable a code that was used in testing. HTC also allegedly installed Carrier IQ in such a way that many third-party apps could access users' keystrokes and gain access to the phone numbers users' called, browsing histories and other data.

The manufacturer settled those charges by agreeing to issue software patches. The company also agreed to establish a security program and undergo security audits for 20 years.

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