The Federal Trade Commission accused Walter Rines of Stratham, N.H., and his company, Odysseus Marketing, of luring computer users with the promise of free software that would make peer-to-peer file sharing anonymous. The claim was bogus, the agency said, and the software was bundled with spyware that was secretly downloaded onto computers.

Spyware describes a broad category of software that can be installed through unsafe e-mails or Web pages, or can be bundled with software that consumers download to their computers.

"There was nothing secretly installed anywhere," he said. "In fact, the users had to click a box that said they read the end-user license agreement."

Odysseus allegedly used a spyware program called Clientman that spawned downloads of dozens of other programs _ slowing computers down, bombarding them with pop-up ads and redirecting them to fake search engines that were rigged to show Rines' clients first, according to the FTC complaint.

The agency also said the spyware was nearly impossible to remove. Rines, the FTC said, offered his own "uninstall" tool, but it didn't work and actually installed additional software.

The commission accused Rines and his company of unfair and deceptive practices that violate federal law. It asked a federal judge in New Hampshire for a temporary restraining order, but planned to seek a permanent halt to Rines' operation.

The lawsuit is an encouraging step because it can be difficult to track down the distributors of spyware, said Ari Schwartz, associate director at the Center for Democracy and Technology, a privacy-advocacy group that researches and investigates spyware.

The FTC filed its first federal anti-spyware case last fall against Sanford Wallace, a New Hampshire man known as the "Spam King." It accused him of using spyware programs to infect computers and then selling $30 remedies that the agency said didn't work.

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