JOLT Digest

By Kassity Liu

Amazon Files Lawsuit to Protect Consumer Privacy

On April 19, 2010, online retailer Amazon.com filed a lawsuit against the North Carolina Department of Revenue (DOR), asking a federal judge to preempt the DOR’s request for detailed information on consumers’ purchases from the company’s website. CNET and Ars Technica reported that Amazon is pushing back because it believes the DOR’s request violates consumers’ rights under the First Amendment and the Video Privacy Protection Act. In its complaint, Amazon argues that there is “no discernible need” for state tax collectors to know the specific items consumers purchase on its website, stating that the information that Amazon has already handed over — a list of items and “the ZIP code to which the item[s] were shipped” — is sufficient to determine whether the company is in compliance with the state’s tax laws. Amazon fears that full disclosure of consumers’ purchase options would “chill the exercise of customers’ expressive choices” and reduce the company’s overall sales. However, the DOR may consider this information necessary for identifying “residents [who] are skirting paying their sales taxes” on Amazon items, which are subject to state use taxes.

Google Introduces the Government Requests Tool, Paving the Way for Increased Transparency

On April 20, 2010, Wired and the Electronic Frontier Foundation reported the launch of Google’s new feature, the Government Requests Tool. The tool discloses the number of times that individual governments around the world have asked Google to remove content from its websites for reasons other than copyright violations, as well as the number of user information requests. Though far from complete — it does not report some user information requests such as those tied to national security investigations and lacks information on “the number of people named in the requests, whether Google fought the request, or which products the requests apply to” — Google suggests the tool “will add to the long-running debate about how much power law enforcement and governments should have to see what citizens do online.”

First Draft of ACTA Released, Revealing Measures Intended to Curb Online Piracy

On April 21, 2010, Ars Technica reported the release of the first official draft of the Anti-Counterfeiting Trade Agreement (ACTA). The Electronic Frontier Foundation notes that ACTA, which originally had been portrayed as an effort to prevent the circulation of physical counterfeit goods, now extends more broadly to cover copyright and the Internet. The ACTA draft contains a number of provisions that extend “beyond those agreed in the 1994 Agreement on Trade Related Aspects of Intellectual Property and the 1996 WIPO Copyright Treaty and Performances and Phonograms Treaty.” First, Internet service providers or Internet intermediaries around the world would be obligated to adopt policies that “address the unauthorized storage or transmission of materials protected by copyright.” This would encourage countries to require that ISPs engage in measures such as Internet disconnection and website blocking to address piracy. Second, the United States’ DMCA technical protection measures (TPM) legal framework would apply globally. This would impose a ban on TPM circumvention and circumvention devices, criminalizing even some otherwise fair uses. Third, criminal sanctions may extend to cover a wide range of non-commercial activities under the ACTA’s “broad definition of ‘commercial scale’.” Previous leaks of the ACTA and bracketed areas in the draft indicate that a number of disagreements still exist between the negotiating countries, thus the treaty terms are likely to change in the upcoming months.

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 Jyoti Uppuluri

Public Battle Between Google and China Continues

On March 12, Wired reported that the friction between Google and China over the censorship of search results and issues of cybersecurity is ongoing as Google keeps pushing for greater Internet freedom for users. China’s Minister of Information and Technology, Li Yizhong, told the press “Google has made its case, both publicly and privately,” and explained “[i]f you don’t respect Chinese laws, you are unfriendly and irresponsible, and the consequences will be on you.” Eric Schmidt, CEO of Google, stated that he hopes that talks with the Chinese government will yield a result soon.

Netflix Cancels Prize Contest Over Privacy Concerns

On March 12, Ars Technica reported that Netflix has cancelled its second Netflix Prize contest in order settle a lawsuit and alleviate concerns by the Federal Trade Commission. In December, a user sued Netflix, alleging that the data provided by the company to contest participants was insufficiently anonymized. According to Ars Technica, the suit claims that Netflix “violated fair-trade laws and a federal privacy law designed to protect video rental records.” Neil Hunt, Netflix’s chief product officer, stated that company has “reached an understanding with the FTC and ha[s] settled the lawsuit with plaintiffs,” noting that the agreement “involves certain parameters for how [the company] use[s] Netflix data in any future research programs.”

More Freedom for Social Media Services to Operate in Iran, Cuba, and Sudan

On March 10, the Electronic Frontier Foundation reported that the United States Treasury Department’s Office of Foreign Assets Control (“OFAC”) has announced “key amendments” regarding export controls on social media software. The new rules clarify that the export of certain personal communication services and software over the Internet, including “instant messaging, chat and email, [and] social networking,” is now permitted in Iran, Cuba, and Sudan. Prior to these amendments, OFAC’s regulations had been a source of legal ambiguity for companies such as Google and Microsoft, causing them to block some personal communication services in these nations.

By Tyler Lacey

RealNetworks Won’t Appeal Decision Declaring Its DVD Copying Software in Violation of DMCA

On March 4, Wired reported that RealNetworks plans to cease litigation of a lawsuit filed by the Motion Picture Association of America (“MPAA”) alleging that its DVD copying software, RealDVD, violates the Digital Millennium Copyright Act (“DMCA”).  RealNetworks had initially planned to appeal a California district court’s decision that the software illegally circumvented the DVD encryption technology, Content Scramble System. However, after two years of litigation, RealNetworks has decided not to appeal in an effort to cut its losses, which according to Wired amount to “millions of dollars, including $4.5 million to reimburse the MPAA for its legal costs.”  Wired argues that “RealNetworks’ admitted defeat solidifies the DMCA’s power.”

Google Obtains Patent on Location-Targeted Advertising Method

Mashable reports that Google obtained a patent for “determining and/or using location information in an ad system” on February 23. The patent, which Mashable characterizes as “broad,” was filed on April 12, 2004.  Mashable also reports that since the patent’s filing date, several companies have started practicing a method of targeting advertisements based on an individual’s location, with AdMob and Quattro Wireless “leading the charge.”  Quattro Wireless has been acquired by Apple, which Mashable notes is “quickly becoming [Google’s] primary rival” in mobile advertising.  The patent abstract states in part that the patented method “may be used in a relevancy determination of an ad” and that “[a]d performance information may be tracked on the basis of location information.”

Canadian Government to Allow Increased Foreign Investment in Telecommunications Industry

On March 4, CBC News reported that the Canadian government is planning to loosen foreign ownership restrictions on telecommunications companies as a part of its new budget proposal.  The new rules will initially allow foreign startups and acquisitions of small companies, and will allow foreign takeovers of larger companies within five years. According to the article, there are currently restrictions in place designed to ensure Canadians are in control of any telecommunications carriers that operate in Canada, including minimum levels of Canadian board membership and ownership of voting shares. Industry experts argue that the old rules are “archaic and anti-competitive,” and are the reason “prices have been high and service levels low.” According to Canada’s Governor General Michaëlle Jean, the new rules will give “Canadian firms access to the funds and expertise they need.”

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.