Week in review: Privacy in peril

Wal-Mart unexpectedly canceled testing for the system, ending one of the first and most closely watched efforts to bring controversial radio frequency identification technology to store shelves in the United States. A Wal-Mart representative said the retail giant would not conduct a planned trial of a so-called smart-shelf system with partner Gillette that was scheduled to begin last month at an outlet in a Boston suburb.

Radio frequency identification (RFID) technology uses microchips to wirelessly transmit product serial numbers to a scanner without the need for human intervention. The technology is seen as an eventual successor to bar-code inventory tracking systems, promising to cut distribution costs for manufacturers and improve retailing margins.

Backers of the technology foresee billions of packaged goods tracked using in-store RFID systems that might one day help prevent shoplifting and speed shoppers through automated checkout lines. But the technology has drawn attacks from consumer privacy groups that worry about potential abuses if product-tracking tags are allowed to follow people from stores into their homes.

The news isn't so good for file swappers. Those hoping to share music and other works online without exposing their identity to the prying eyes of copyright enforcers face a tough choice.

Hiding on a file-sharing system is hard for a very simple reason: Peer-to-peer networks are designed for efficiency, not anonymity. They rely on a straightforward mechanism that is ruthlessly efficient at trading files. But, by broadcasting the contents of shared folders, the system leaves people vulnerable to identification and, therefore, to possible legal action.

On a peer-to-peer network, files are directly swapped between computers, each of which has a unique Internet Protocol (IP) address that can be traced back to the Internet service provider, corporation or university to which it belongs. Because computers on a peer-to-peer network transfer files without going through an intermediary, the IP address of one person on the network is generally available to everyone else.

Runaround suin'
The Recording Industry Association of America (RIAA) sued the parent company of Puretunes, a Spanish site that briefly offered inexpensive music downloads. Puretunes emerged in May, claiming that it had won rights from several Spanish licensing agencies that gave it the ability to distribute major-label music legally online.

Label representatives said the site was operating illegally because Puretunes had not acquired the permission of labels, artists or song publishers.

However, the service went offline last month. The RIAA suit comes after several weeks of complaints from angry Puretunes customers. Puretunes' plan was to give visitors all-you-can-download access to a vast music library for time periods such as one night, one weekend or one week.

On the other side of the copyright fight, a group representing small Webcasters is threatening to sue the RIAA on antitrust grounds, fearful that hundreds or thousands of stations will be pushed offline.

The Webcaster Alliance, a group representing about 300 Net radio stations, says royalty agreements negotiated last year at the behest of Congress and the Library of Congress threaten to put a number of small stations out of business. The group's members have not paid royalties to copyright owners under any of several possible payment schemes, one of which was passed last year by Congress in an attempt to protect the economic viability of small Net radio stations.

In another corner of the copyright battle, a federal appeals court ruled that search engines' display of miniature images is fair use under copyright law, but the legality of presenting full-size renditions of visual works has yet to be determined.

The court ruled that use of thumbnail images in search engines is legal, confirming an earlier ruling by the same court from February 2002. But the court withdrew a previous decision on the display of full-size images, which it had deemed beyond the bounds of fair use because it was likely to harm the market for a photographer's work.

Chip push
Intel laid the groundwork for an all-out push later this year, with details leaking about its upcoming desktop, server and mobile processors. Prescott, the next big desktop chip from Intel, is slated to come out at 3.4GHz, while Dothan, an energy-efficient chip for slim notebooks, will have a server-size cache and is expected to debut at 1.8GHz, according to computer industry sources.

Prescott, which will come out in the fourth quarter, will contain a number of enhancements over the current Pentium 4, including new instructions for multimedia processing and a 1MB cache, a pool of memory on the chip for fast data access. Current Pentium 4s have a 512KB cache. The chip is slated to come out at 3.4GHz, according to the sources, and then speed up to 3.6GHz in the first quarter of 2004.

Intel is also working on an energy-efficient Itanium 2 chip for blade servers and workstations called Deerfield. The chip is scheduled to debut in the third quarter at $744, according to Intel product plans seen by CNET News.com. That's substantially below the price of Intel's other Itanium 2 chips, which range from $1,338 to $4,226.

The Deerfield pricing seems deliberately calculated to attack one of the chronic problems associated with the Itanium line: slow sales. Since it came out in May 2001, the Itanium family has barely made a dent in the server market in terms of unit shipments. However, Intel has steadily increased performance and has funded application development, which could begin to change the picture.

Also of note
Microsoft said it plans to start giving employees grants of stock rather than options to buy shares as part of a shift in the way the software maker compensates its employees...Microsoft also plans to restate earnings for the past two years as part of the shift...Unknown attackers downed the largest recorder of Web site defacements on the same day that vandals had been thought to be planning an online graffiti contest...Companies that provide high-speed Internet access over telephone lines are raising the stakes in their battle with cable rivals, turning summer into a season of discounts for many first-time broadband customers .