A class action lawsuit filed June 30th in a federal court in New York accuses Netscape and its parent company America Online Inc. (NYSE:AOL) of electronically eavesdropping on communications between website operators and the visitors who download files from them.

At issue is SmartDownload, a file transfer utility bundled with the Netscape Navigator browser that gives users the ability to pause and resume downloads, among other features.

The complaint was filed on behalf of lead plaintiff Christopher Specht, a photographer who operates the lawphoto.com web site. It alleges that SmartDownload transmits back to Netscape the name and location of any filed transferred using Smartdownload, along with a unique identifier. It does all this, according to attorneys representing the class, without knowledge or permission of the webmaster or browser user, and that constitutes a violation of both the Computer Fraud and Misuse Act and the Electronic Communications Privacy Act.

"His electronic communications are being intercepted surreptitiously, and it's an invasion of his privacy. It may be incremental, and it may not be as egregious as others, but it's an invasion of his right to have his information held private," said Joshua Rubin, an attorney with Abbey Gardy and Squitieri in New York which is handling the case.

Rubin said members of the proposed class consist of any U.S. web site that offers .zip files or .exe files for download, a number he estimated to be in the tens of thousands. End-users of SmartDownload, which potentially number in the millions, are not part of the class.

Netscape officials were not available for comment. But according to a list of frequently asked questions at the Netscape site, the back-channel information transmission appears to be part of a feature the company calls SmartDownload Profiling and is designed to enable Netscape to send customized information about a file the user is downloading. According to the FAQ, not only is the uploaded information not saved, but the feature can also be disabled through the advanced set-up button on the SmartDownload program.

Recently, RealNetworks (NASDAQ:RNWK) faced similar criticism although not a lawsuit for a utility called Download Demon. The program comes bundled with the full versions of the RealPlayer 7 and Real Player Plus 7 and sends data about file transfers back to RealNetworks. The company has denied the information gathering is a violation of users' privacy.

Netscape's SmartDownload is not on the list of "Known Spyware" maintained by Steve Gibson, developer of a tool called OptOut.

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Plaintiff's attorneys want a jury trial, an injunction against AOL-Netscape, as well as statutory damages of $100 per day or $10,000 per user, whichever is greater.