Texas Attorney General Greg Abbott said it was the first lawsuit filed under the state’s Consumer Protection Against Computer Spyware Act of 2005. He accused Sony BMG of installing files on consumers’ computers without their owners’ knowledge and which hide other files installed by Sony. The state is seeking civil penalties of $100,000 for each violation of the law, attorneys’ fees and investigative costs.

“Sony has engaged in a technological version of cloak-and-dagger deceit against consumers by hiding secret files on their computers,” Abbott said. “Consumers who purchased a Sony CD thought they were buying music. Instead, they received spyware that can damage a computer, subject it to viruses and expose the consumer to possible identity crime.”

Abbott’s office investigated the matter and found that “this technology revealed that it remains hidden and active at all times after installation, even when Sony’s media player is inactive, prompting concerns about its true purpose,” according to the suit.

The Texas suit also notes that representatives were able to purchase numerous copies of Sony BMG discs that had the controversial technology embedded in them, despite Sony’s assertion that all such CDs had been recalled.

The CDs in question are protected by Extended Copy Protection technology from the British company First 4 Internet and MediaMax technology from SunnComm — products designed to deter piracy by circumscribing how consumers use the music on the discs.

The consumer activist foundation filed suit, along with two national class-action law firms, in the Superior Court of California, County of Los Angeles.

The advocacy group’s charges are similar to those levied in Texas. “By including a flawed and overreaching computer program in over 20 million music CDs sold to the public, including California residents, Sony BMG has created serious security, privacy and consumer protection problems that have damaged plaintiffs and thousands of other Californians,” the suit states.

In addition, the foundation asserts that the End User Licensing Agreement is “unconscionable.” The agreement is a set of conditions each consumer must agree to before the CD can be played in a computer.

The foundation’s documents further state that the MediaMax software gets installed on user’s PCs even if they click “no” to refuse the agreement.