Cyber-activists are mounting a co-ordinated attempt to disrupt the operations of eToys, a leading online toy store, and drive down the company's stock price.

So far the hacker attacks, which began on Wednesday, have been successfully rebuffed and eToys said yesterday it was confident the hackers' activities would have no averse effects on its business. However, the hacking incident appears to be one of the most blatant attempts to date at stock price manipulation using computer hacking techniques. It highlights the threat that co-ordinated hacking attacks may represent to the growing electronic commerce industry.

A group called RTMark is spearheading the attacks and calling upon other hackers to become involved. The self-proclaimed cyber-activists are protesting at eToy's trademark infringement lawsuit against a European artists' group called etoy. In November a US judge issued a preliminary injunction against the art group forcing it to stop using the name for its web site.

The attacks "take the form of an RTMark "mutual fund" or list of sabotage projects," the group said in a statement this week. "All projects in the 'eToy Fund', some of which have already been financed, aim to lower the company's stock market value as much as possible."

Since Wednesday, eToys' share price has dropped from Dollars 45 15/16 to trade in mid-session yesterday at Dollars 39, a 15 per cent decline. However, financial analysts said the drop was related to rising competition in online toy sales, rather than any concerns about hackers.

The hackers were using a sophisticated arsenal of tools to launch attacks on the web site yesterday, according to iDefense, a computer security monitoring service, which predicted that such protests would have a growing impact on e-commerce.

According to iDefense, RTMark gained notoriety during the recent World Trade Organisation meeting in Seattle, when the group created a mock WTO web site that mimicked the WTO's official site. The false site was used to urge protests against the WTO.

The group's activities demonstrate the potential for broad attacks on e-commerce companies that are perceived to have been involved in some sort of "injustice", iDefence said. "Contingency planning needs to incorporate the potential for a rapid onset of diverse attacks from any number of locations," the computer security group warned.

Yesterday there was little evidence to suggest that eToys' website was being affected by the hacker protest. However, access to the site was noticeably slower than in the past few days. The slowdown may have been caused by numerous factors including internet congestion or heavy use of the web site by shoppers.

EToys said its web site had the capacity to handle millions of shoppers and the company remained "one hundred per cent focused" on serving consumers.

* Two professors at the Massachusetts Institute of Technology have sued the online search service Ask Jeeves, claiming the site infringes two patents it holds in natural language question-and-answer technology, Reuters reports from Boston. Professors Patrick Winston and Boris Katz asked a court to stop Ask Jeeves from using the technology, and seeks damages and payment for royalties.

SAN FRANCISCO - Cyber-activists are mounting a co-ordinated attempt to disrupt the operations of eToys, a leading online toy store, and drive down the company's stock price.

So far the hacker attacks, which began on Wednesday, have been successfully rebuffed and eToys said yesterday it was confident the hackers' activities would have no averse effects on its business.

However, the hacking incident appears to be one of the most blatant attempts to date at stock price manipulation using computer hacking techniques. It highlights the threat that co-ordinated hacking attacks may represent to the growing electronic commerce industry.

A group called RTMark is spearheading the attacks and calling upon other hackers to become involved. The self-proclaimed cyber-activists are protesting eToy's trademark infringement lawsuit against a European artists' group called etoy.

In November, a U.S. judge issued a preliminary injunction against the art group forcing it to stop using the name for its Web site.

RTMark said in a statement this week the eToy attacks "aim to lower the company's stock market value as much as possible."

Since Wednesday, eToys' share price has dropped from $45 to close yesterday at $37 9/16, a 16% decline. However, financial analysts said the drop was related to rising competition in online toy sales, rather than any concerns about hackers.

The hackers were using a sophisticated arsenal of tools to launch attacks on the web site yesterday, according to iDefense, a computer security monitoring service, which predicted that such protests would have a growing impact on e-commerce.

According to iDefense, RTMark gained notoriety during the recent World Trade Organization meeting in Seattle, when the group created a mock WTO Web site that mimicked the WTO's official site. The false site was used to urge protests against the WTO.

Yesterday there was little evidence to suggest that eToys' website was being affected by the hacker protest. However, access to the site was noticeably slower than in the past few days. The slowdown may have been caused by numerous factors, including Internet congestion or heavy use of the Web site by shoppers.

EToys said its Web site had the capacity to handle millions of shoppers and the company remained "one hundred per cent focused" on serving consumers.

Replays from my online column, eJournal (weblog.mercurycenter.com/ejournal):

Patrick Naughton, the former Infoseek executive, may have gotten what he deserved in his trial in Los Angeles -- a conviction Thursday on the charge of possessing child pornography but a hung jury on the more serious counts of using the Internet to arrange sexual relations with a minor and then crossing state lines for that purpose. The prosecution should quit while it's ahead.

You may suspect that Naughton was guilty of all three charges. His defense -- that he was only fantasizing with no intention to pursue sex with a minor -- was more than a little hard to swallow.

We're already hearing -- in online conversations, naturally -- that the hung jury is a license for pedophiles to do their vicious stuff. Baloney. Anyone foolish enough to use cyberspace to lure minors into sexual contact is inviting law enforcement's attention.

I'm glad the cops are working hard to keep predators away from our kids. But law enforcement's behavior in this case may have been one reason the jury couldn't make a decision on the harsher chargers. Not only was Naughton's intent unclear, but the government went to amazing lengths to lead their quarry into the snare.

Entrapment is ugly business. The government sometimes helps create criminals out of people who would not take that final step into wrongdoing if they weren't handed the opportunity on a platter.

Juries recognize government misbehavior, and they often find ways not to reward it. They also don't want to reward wrongdoers.

Naughton's life has been turned inside out by this trial and verdict, even without a conviction on the most serious charges. Maybe, in the end, he got a kind of rough justice.

WALL STREET AND YOU: In a conversation with this newspaper a couple of weeks ago, Hewlett-Packard's chief executive, Carly Fiorina, repeatedly used the word "analysts" as she discussed her company's communications with investors. In that context, the analysts were proxies for shareholders generally. Fiorina was reflecting the current situation, where companies kow-tow to Wall Street big investment banks and stock traders.

But the system has become jaded, even corrupt in some cases. Most analysts are not proxies for you and me -- smaller shareholders. They're proxies for the big institutions who get to act early on news told first to the analysts and later, if ever, to the rest of us. Some investment bank analysts, meanwhile, have become little more than shills for their firms, which crave the big commissions they can earn when underwriting public offerings and advising on other deals. Analysts almost never write negative reports on the companies with which their firms do business.

The Securities and Exchange Commission, at long last, has offered the mildest of proposals to make disclosure more fair to all investors. Predictably, as the New York Times reported on Thursday, Wall Street is in a tizzy, trying to block even these slight improvements in making flow of information more fair.

Recently, I declined to attend a press and analyst briefing at Cisco Systems, because it was on the record for the analysts -- who, in a sense, are nothing more than journalists for the rich (even if the analysts seem often to be in bed with the companies they cover) -- and off the record for regular journalists. The analysts' clients traded on information given to the analysts. If you weren't a client you were in the dark. It was a charade. And it should have been illegal.

Wall Street has always liked to rig the game. Let's hope the SEC makes some progress here.

ETOYS, GO HOME: eToys, the online toy store, sued eToy, a site maintained by a bunch of Europe-based artists. The fact that eToy had been around on the Web much longer than eToys didn't bother a U.S. judge, who issued an injunction to shut down the eToy domain. eToys should be ashamed of itself, but shamelessness is a hallmark of many companies, online and off.

Some online activists, while properly incensed at the company's arrogance, are taking their objections a bit far. A site called RTMark, for example, is calling for Netizens to essentially destroy eToys by various means, including an open-ended invitation to hackers. This is a vigilante response, and it won't win any friends for the good guys.

The best response, which RTMark also endorses (as do many other activist sites), is to shop elsewhere and make your feelings known to eToys.

This entire case, incidentally, is part of an emerging disaster area on the Net. The rich and powerful are taking control of "their" names even when other people with equally good claims have already registered the domain names. The law, as so often happens, has been rewritten to favor the rich and powerful.

I'm working on a column on this overall topic. I'd like to hear your ideas on what we can do about it.

IS RED HAT BUYING BE? That's the rumor. If true, this could be interesting -- adding Be's wonderful multimedia capabilities to Linux.

If it's true, however, somebody should go to jail for insider trading. Be's share price shot up almost 50 percent on Thursday.

Dan Gillmor's column appears each Sunday, Tuesday and Friday. Visit Dan's Web page (weblog.mercurycenter.com/ejournal). E-mail: dgillmor(at)sjmercury.com; phone (408) 920-5016; fax (408) 920-5917. PGP fingerprint: FE68 46C9 80C9 BC6E 3DD0 BE57 AD49 1487 CEDC 5C14.

In the run-up to Christmas, one online retailer seems to have suffered from a festive spirit bypass. eToys, which operates from the etoys.com domain, has taken exception to the activities of its close neighbour etoy.com - home to a group of European electronic artists based in Zurich. But rather than banging on the fire wall and asking it to keep the noise down, eToys has taken etoy to court for dilution and infringement of its trademark as well as unfair competition.

eToys was concerned that careless customers were missing the "s" from the end of its name and ending up in the confusing virtual world of etoy, which, it claims, contained "hateful rhetoric and obscene images", and even "hardcore pornography". etoy claims that the only obscenity on its website was an order on one of the pages to "get the fucking Flash plugin" - visible for a number of weeks before being replaced with a censored version.

"They say that we are domain-name squatters and that we try to increase our profit from their increased holiday traffic," says Zai, of etoy. "If people forget the `s' at the end of eToys, that is not our problem. It's their problem that they didn't pay enough attention to this problem before they built up this huge company."

What at first sight looks like a straightforward case of domain-name piracy by a group of art pranksters is, in fact, far more complex. etoy and its supporters are saying that the company existed for three years before the conception of eToys and had an online presence at etoy.com for two years before the arrival of Etoys.com. eToys registered its trademark in the US first, though, etoy doing so only after hearing that a large company was setting up with a similar name.

A California Superior Court judge granted a preliminary injunction against etoy on 29 November and ordered that etoy.com be closed down. One major factor in the decision was the claim by eToys' legal team that etoy was engaged in illegal stock-trading through its website. This is a claim denied by the artists. They acknowledge that they offer "etoy shares" for sale, but say these are merely pieces of art and in no way could be mistaken for real shares.

"It is not illegal," claims Zai. "They speculate on the idea that the judge is sensitive to those topics. So if he hears the words "investment security fraud", they can say that people buy these shares because they think it is [eToys] stock. They try to make us look like criminals."

If etoy is unable to gain the rights to resurrect its domain through the US courts, then it may well bring a case in Europe. Etoys has recently set up an online branch in the UK that may become the focus of any future legal action, etoy claims.

For the outsider it is sometimes difficult to see what etoy's art consists of. This is largely because the group itself is the product. It acts like a cross between a gang, a cult and a corporation and claims to work from cargo containers that can be moved across continents, allowing it to plug in and go at any location with a power supply. Its most famous work to date has been a "digital hijack" in which it claims to have hijacked more than a million Web surfers. By intensive investigation of the workings of search engines, it managed to place its own Web pages high up in results for common search terms and then redirected users to a page that informed them they had been hijacked. But the group does not fit the image of the subversive hacker that eToys is trying to project; it has received awards at the Ars Electronica festival for electronic art. It has also had official backing in Austria, where the first holder of an etoy share was the chancellor, Victor Klima.

EToys did try to avoid adverse publicity by offering to buy etoy.com before the case came to court. But, even after an offer worth Dollars 500,000- plus, etoy still felt that the domain name was essential to the international nature of its work and could not be given up.

eToys, a relative newcomer to the Web, may have bitten off more than it can chew by choosing to pursue etoy. It may seem a small, powerless group of artists but, despite its involvement in fairly harmless media stunts, it can call upon a large community of activists who are willing to take on eToys on the Web. Several new domains such as toywar.com and eviltoy.com have already appeared, to spread the message and garner support for etoy.

Backing has also come from RTMark - another group with a corporate facade, which has made a name by funding sabotage in the workplace for political ends. It recently upset the Republican presidential candidate George Bush Jnr with its gwbush.com site, and the gatt. org site has drawn a broadside from the much-maligned World Trade Organisation. The site was a subversive mirror of the WTO's wto.org website and links led visitors to activists involved in the Seattle protests.

RTMark is now turning its attention to eToys: "We're creating an etoy mutual fund that is very different from our other mutual funds," says a spokesman. "Most of our projects don't target specific companies. But these will all have the purpose of destroying or punishing eToys as a company and making an example of it."

etoy can now be found at http:// 146.228.204.72:8080

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