There's not much left of Zango anymore, but it was continuing to sue security software vendor Kaspersky for interfering with the way Zango's downloaded software operated on people's computers.

Kaspersky treated Zango's software as malware and "protected" users from it, prompting a lengthy lawsuit from Zango that appears to have ended with a ruling this morning by the U.S. Court of Appeals for the Ninth Circuit.

The court sided with Kaspersky, rejecting Zango's appeal of an earlier U.S. District Court decision.

A key issue was the leeway Kaspersky could use to categorize Zango's software as malware and block it from users' computers.

The court decided that Kaspersky could claim protection under the 1996 Communications Decency Act, which provides immunity for computer services that help restrict access to objectionable materials.

But one judge said the case raises questions about vague language in the act that could enable computer security and filtering companies to abuse their immunity, blocking competititors without informing users, for instance.

Zango had argued that Kaspersky Internet Security (KIS) disabled the Zango toolbar that displays ads related to a user's Web searches. Whenever Zango's software tried to access the Internet, KIS would display a warning and ask users if they wanted to block the program.

The case circled around the character of Zango's software and business practices, an issue that dogged Zango and led to FTC charges alleging that it was pushing adware on consumers. Zango paid $3.1 million to settle the charges in 2006, contributing to financial problems that resulted in the company's bankrutpcy and sale earlier this year. (See "Zango goes Bango" for more).

From the court's decision today:

The degree of threat posed to users by Zango's software is in dispute. Kaspersky contends that Zango's software is adware, and possibly spyware. Spyware, which is often installed on a computer without the user's knowledge or consent, covertly monitors the user's activities and exposes the user to the risk that his or her passwords and confidential information may be stolen. Zango maintains that it installs its software only upon receiving user consent, and that it provides easy means of uninstalling Zango software from a user's computer.

Later, the court noted that immunity protection extends to companies that " 'enable or make available to ... others' the technical means to restrict access to material that either the user or the provider deems objectionable."

Kaspersky, at least, found Zango's material objectionable and it prevailed.

Yet a concurring opinion by Circuit Judge Raymond Fisher suggests Zango v. Kaspersky won't be the final word on the question of immunity and how far security and filtering companies can go.

Fisher said the Communications Decency Act does immunize Kaspersky but suggested Congress or another lawsuit may be needed to clarify the Act:

Nonetheless, extending immunity beyond the facts of this case could pose serious problems if providers of blocking software were to be given free license to nilaterally block the dissemination of material by content providers under the literal terms (of the Act). The risk inheres in the disjunctive language of the statute -- which permits blocking of "material that the provider or user considers to be obscene, lewd, lascivious,
filthy, excessively violent, harassing, or otherwise objectionable,whether or not such material is constitutionally protected" -- and the unbounded catchall phrase, "otherwise
objectionable."

Fisher continued:

Congress plainly intended to give computer users the tools to filter the Internet's deluge of material users would find objectionable, in part by immunizing the
providers of blocking software from liability .... But under the generous coverage of (the Act's) immunity language, a blocking software provider might abuse that immunity to block content for anticompetitive purposes or merely at its malicious whim, under the cover of considering such material "otherwise objectionable."

He cites an example that could affect far more people than Zango:

Consider, for example, a Web browser configured by its provider to filter third-party search engine results so they would never yield Websites critical of the browser company or favorable to its competitors. Such covert, anti-competitive blocking arguably fits into the statuatory category of immune actions -- those taken by an access software provider to provide the technical means to block content the provider deems objectionable.

It could do wonders for Zango's legacy if this case ends up helping to close this disturbing loophole.

Despite that open question, the act has done a "marvelous job" of endorsing the notion that the marketplace could provide useful software and Web tools to help people manage what happens on their computers with a minimum of government interference or liability, said Kurt Opsahl, an attorney for the Electronic Frontier Foundation, a San Francisco-based advocacy group that filed an amicus brief in the case.