JOLT Digest

By Tyler Lacey

Bank Programmer Pleads Guilty to ATM Hacking

On April 13, 2010, Wired reported that Bank of America employee Rodney Reed Cavelry pleaded guilty to one count of unauthorized computer access, after installing software on more than 100 ATMs that allowed him to steal more than $304,000 over a seven-month period last year. Bank of America identified Caverly’s theft internally, and was able to recover at least $167,000 in cooperation with the United States Secret Service. Bank of America had employed Cavelry since 2007 to write “application software and troubleshooting programs.” Cavelry will face up to five years in prison and a fine of up to $250,000 when he is sentenced this summer.

Canadian Regulator Warns Against Foreign Ownership of Telecommunications Companies

On April 13, 2010, The Toronto Star reported that the Canadian Radio-television and Telecommunications Commission (CRTC) warned against allowing majority foreign ownership of Canadian telecommunications companies. Konrad von Finckenstein, CRTC’s chairman, argued that a proposed law allowing additional foreign investment in telecommunications companies would create a “branch plant communications industry” in Canada. Complicating the matter is the fact that Canada’s leading telecommunications companies are also broadcasting companies, which are subjected to additional cultural regulations on minimum levels of Canadian content. von Finckenstein believes that “there is no way to separate telecoms from broadcasters,” and that the best strategy is to “to create uniform rules that would apply to both industries, and to keep control firmly in Canadian hands.”

Italian Judge Explains Rationale for Guilty Verdicts in Illegal Video Case

On April 13 CNET reported on Italian Judge Oscar Magi’s 111 page explanation for the guilty verdict that he entered against three Google employees on February 24. Judge Magi believed that “commercial exploitation” was Google’s motive for allowing a video, depicting an autistic teenager being harassed and attacked, to remain online for two months. In response, Google argued that the “conviction attacks the very principles of freedom on which the Internet is built” and indicated that it would appeal the verdicts.

By Chinh Vo

Moviemakers Sue Tens of Thousands of BitTorrent Users

A coalition of independent filmmakers has sued more than 20,000 individual movie torrent downloaders for copyright infringement in federal court in Washington D.C., the Hollywood Reporter, Esq. blog reports. The series of lawsuits marks the first major move in the U.S. by the movie industry to target individual torrent downloaders, rather than the torrent sites themselves, and is preceded by similar actions in Germany and the U.K. According to the Hollywood Reporter blog, these suits may signal the beginning of a wave of “massive litigation” against movie torrent downloaders, as 30,000 new lawsuits are allegedly forthcoming.

UK Journalist Wins Libel Appeal

The Guardian and Ars Technica report that on April 1, UK science journalist Simon Singh won an important appeal in a libel suit brought against him by the British Chiropractic Association (“BCA”). Singh is accused of libel based on an article he wrote, which described some of the BCA’s treatment practices as “bogus.” In reversing an earlier decision that had required Singh to meet the difficult standard of showing that the BCA was knowingly engaged in false claims, the court accepted Singh’s statements to be a matter of opinion, noting that it was not in the position to settle scientific claims. Singh no longer has to show that his comments were factual and can instead use a “fair comment” defense.

Major Online Service Providers Push Privacy Law Reforms

Wired reports major online service providers, including Google and Microsoft, have combined forces with internet rights organizations such as the Electronic Frontier Foundation to form Digital Due Process, a coalition pushing for modernization of U.S. privacy laws. The group says that current electronic privacy legislation, particularly the 1986 Electronic Communications Protection Act, needs to be updated to reflect changing technology. Specifically, Digital Due Process advocates the adoption of several principles, such as requiring judicial approval for government access to information about email and phone usage. None of the internet companies that are part of the coalition, however, have announced changes to their own practices.

By Davis Doherty

Google Executives Answer for the Sins of Their Users in Italy

PCWorld reports that on Feburary 24, an Italian court convicted three Google executives for violating privacy laws, handing down six-month suspended sentences to each. The ruling arose after a video depicting the bullying of a boy with Down Syndrome was posted to Google Video Italia; Google removed the clip within hours of receiving a complaint from the Italian police, two months after it was first uploaded. Under Italian law, Internet content providers, but not Internet service providers, may be held liable as publishers of user-generated content.

Ars Technica reports on criticism that the decision strikes a blow to Internet freedom. As the New York Times explains, some observers connect the conviction to Italian Prime Minister Silvio Berlusconi’s interest in seeing a potential competitor to his media monopoly hindered. The executives plan on appealing the decision.

Businesses Give Yelp a Negative Review, File Class Action

Two class action law firms filed a lawsuit against Yelp Inc. on February 23 on behalf of a nationwide class of small businesses. The plaintiffs allege that Yelp, whose website allows users to post reviews of local businesses, “runs an extortion scheme in which the company’s employees call businesses demanding monthly payments, in the guise of ’advertising contracts,’ in exchange for removing or modifying negative reviews appearing on the website.” The WSJ Law Blog discusses the complaint, and the Bits Blog at the New York Times provides a response from Yelp. The case, Cats and Dogs Animal Hospital Inc. v. Yelp Inc., is currently pending in the U.S. District Court for the Central District of California.

Strike One for ACTA?

On February 21, BoingBoing and Computerworld reported on the alleged leak of a draft chapter from the secretive negotiations surrounding the Anti-Counterfeiting Trade Agreement (“ACTA”). Included in the alleged draft is a call for ACTA signatories to establish third party liability for infringement of intellectual property rights, which would allow rights-holders to bring suit against an Internet service provider who “knowingly and materially” aids infringement. The document calls for a requirement that ISPs implement user policies along the lines of a “three strikes rule,” which allows a provider to terminate a user’s Internet access after sending two warning letters. The European Commission expressed opposition to any agreement that would create an obligation to disconnect users.

By Kassity Liu

India’s Stringent Patentability Standards Cause Corporate Dissatisfaction

On February 12, the WSJ Law Blog reported that India’s standards for patentability may be leading to a lack of significant patent protection for important pharmaceutical drugs. Before 2005, India offered patent protection to processes for making pharmaceutical drugs, but no protection to the products themselves. After the patent system was extended to cover the products, a large number of multinational drug companies began to market their products in India. However, as time passed, many companies became dissatisfied as they found that the new laws were not as protective as the U.S. and Europe. The WSJ post notes several examples of inadequate protection, including the recent Deli High Court’s refusal to ban a competitor’s copy of Bayer’s cancer drug Nexovar. However, one executive of an Indian generic drug manufacturer favors India’s high standard for patentability, claiming that “[t]he U.S. would grant a patent to a piece of toilet paper.”

FBI Challenges Probable Cause Standard for Cell-Phone Data

On February 11, the WSJ Law Blog reported that Third Circuit panel in Philadelphia was set to hear an appeal on February 12 of a lower court decision denying the government’s request to access cell phone records without probable cause. Newsweek’s Michael Isikoff reports that the FBI has increasingly been obtaining cell-phone records for criminal investigations without a showing of probable cause. Advocacy organizations such as the Electronic Frontier Foundation and ACLU support the probable cause standard, and argue that Fourth Amendment requires the government to “show that it has good reason to think such tracking will turn up evidence of a crime” before it can pull private cell-phone data. However, the government believes that the Fourth Amendment does not protect cell-phone data which they consider to be “routine business records.”

P2P File-Swapper Thomas-Rasset Set to Face Third Jury Trial

On February 9, Ars Technica reported that Jammie Thomas-Rasset is set to face a third trial on the issue of damages. In her last trial, a jury returned a $1.92 million verdict against Thomas-Rasset, which the judge reduced to $54,000 on remittitur. The RIAA refused to accept the new award out of concern that the judgment would effectively cap statutory damages for individuals who illegally download and upload music to $2,250 per song. The new trial comes as a surprise to many, since the amount of damages is the only issue at stake, and the judge has already held that anything over $54,000 would be excessive.

By Harry Zhou

Harvard Law Professor Criticizes Google Book Settlement

On January 26, TechCrunch reported that Lawrence Lessig, a Harvard Law School professor and “free-culture advocate,” criticized Google’s settlement with the Authors Guild as a “path to insanity.” Lessig writes that the settlement extended the copyright law’s regulation on physical copies into the digital world, resulting in “a world in which every bit, every published word, could be licensed.” According to Lessig, providing copyright protection at the level of pages instead of at the level of books could make accessing digital books a complicated and “legally regulated event.” To prevent this outcome, Lessig argues that the “solution is a re-crafting of [the] law” that would favor protection of a work as a whole rather than protection of its constituent parts.

FCC Continues Probe of Wireless Carriers’ Early Termination Fees

MocoNews reported on January 26 that the Federal Communications Commission formalized its inquiries into how wireless carriers handle early termination fees by sending letters to Google, AT&T, Sprint, T-Mobile, and Verizon. The FCC states that the letters are intended to gather “facts and data on the consumer experience with wireless early termination fees.” Google, while not a carrier, charges an “Equipment Recovery Fee in connection with its offering of the Nexus One to customers who agree to a two-year contract with T-Mobile.” Industry trade group CTIA-The Wireless Association responded to the FCC’s inquiry by emphasizing that the fees “are part of the rate and rate structure that allows wireless carriers to, among other things, subsidize phone purchases.”

Chinese Search Engine Cleared of Music Piracy Charges

Wired.com reported on January 26 that Baidu, the leading search engine in China, was cleared of music piracy charges. Universal, Sony BMG, and Warner filed suit in a Beijing Court in early 2008, accusing Baidu of providing links directly to a large number of allegedly infringing song tracks hosted by third-party websites. The International Federation of the Phonographic Industry expressed disappointment over the court’s ruling, stating that “the verdicts do not reflect the reality that both operators have built their music search businesses on the basis of facilitating mass copyright infringement, to the detriment of artists, producers and all those involved in China’s legitimate music market.”