Yet another development in the Sony DRM saga. Looks like Sony might have moved rather slowly after they were first alerted to a serious risk to consumer safety. BusinessWeek has a fascinating update called “Sony BMG’s Costly Silence”:

Sony BMG is in a catfight with a well-known computer-security outfit that became aware of the software problem on Sept. 30 and notified the music company on Oct. 4 — nearly a month before the issue blew up. F-Secure, a Finland-based antivirus company that prides itself on being the first to spot new malware outbreaks, says Sony BMG didn’t understand the software it was introducing to people’s computers and was slow to react.

“If [Sony] had woken up and smelled the coffee when we told them there was a problem, they could have avoided this trouble,” says Mikko H. Hypponen, F-Secure’s director of antivirus research.

Sony BMG officials insist that they acted as quickly as they could, and that they expected to be able to go public and offer a software patch at the same time. However, Russinovich posted his blog item first, forcing Sony BMG to scramble to contain the crisis.

Indeed, I think it fair to say Sony BMG’s response was scrambled. To make matters even worse, the Attorney General in New York very recently found the rootkit still being sold on music shelves in his state. More from BusinessWeek:

Spitzer’s office dispatched investigators who, disguised as customers, were able to purchase affected CDs in New York music retail outlets — and to do so more than a week after Sony BMG recalled the disks. The investigators bought CDs at stores including Wal-Mart (WMT), BestBuy (BBY), Sam Goody, Circuit City (CC), FYE, and Virgin Megastore, according to a Nov. 23 statement from Spitzer’s office.

This is not only a “cautionary tale for other entertainment companies hoping to make use of copyright-protection software” but a horrifying lesson in how NOT to handle incident response.

My question is why Wal-Mart, BestBuy, SamGoody, Circuit City, FYE and Virgin Megastore are not taking action. Are they liable for selling known malware from their shelves? I mean if you are a retailer and you get a notice (or read the news, for pete’s sake) that something is harmful to consumers, are you at fault if you keep selling it?

“It is unacceptable that more than three weeks after this serious vulnerability was revealed, these same CDs are still on shelves, during the busiest shopping days of the year,” Spitzer said in a written statement. “I strongly urge all retailers to heed the warnings issued about these products, pull them from distribution immediately, and ship them back to Sony.”