The state of New York has gone on the attack against spyware and adware by suing an LA-based marketing company that it claims installed "invasive" software onto consumers' computers without proper notice.

New York consumers received about 3.7 million downloads of free software from the Intermix Media's websites, which offer screensavers, games, cursors and other small programs. But the lawsuit alleges that consumers were not adequately notified that the software also contained invasive spyware and adware applications that would create pop-up windows, redirect Web browsers to other sites and obstruct their online experiences.

"Spyware and adware are more than an annoyance," Attorney General Eliot Spitzer said in a statement. "These fraudulent programs foul machines, undermine productivity and in many cases frustrate consumers' efforts to remove them from their computers. These issues can serve to be a hindrance to the growth of e-commerce."

An Intermix spokesman could not be reached for comment today, but the company issued a statement saying spyware and adware distributions were in its past.

"Intermix does not promote or condone spyware, and remains committed to putting this legacy issue behind it as soon as practicable," said Christopher Lipp, general counsel at Intermix. "Many of the practices being challenged were instituted under prior leadership, and Intermix has been voluntarily and proactively improving these applications and related consumer disclosure and functionality for some time. In an abundance of caution, we voluntarily ceased distribution of the applications at issue earlier this month."

Lipp said Intermix "has always been committed to protecting consumer privacy."

"We expect to continue our discussions with the New York Attorney General's Office and are still hopeful of reaching an appropriate and amicable resolution," he said.

The lawsuit alleges that Intermix's actions violated the state's deceptive practices statutes, which allow $500 fines for each violation. That could lead to fines of up to $1.85 billion in the case.

The lawsuit follows a six-month investigation that included undercover computers set up to download software from Intermix' sites. The machines were used to determine what the downloads included and to view the disclosures Intermix made about the free software, he said.

The case is believed to be one of the first in which a state has taken an adware and spyware company to court to halt the practice, he said.

Intermix owns and operates more than 40 websites, including mycoolscreen.com, cursorzone.com and flowgo.com, which advertise free software available for download. The programs include spyware and adware such as "KeenValue," which delivers pop-up ads, "IncrediFind," which redirects Web addresses to Intermix's proprietary search engine, and other programs that add advertising toolbars to users' machines.