By Michael Hoven

LulzSec Hackers Arrested after Leader Turns Informant

Five hackers associated with LulzSec, a splinter group of the hacktivist network Anonymous, were arrested in Europe and the United States with the help of an informant, reports the New York Times. Unsealed records revealed that Hector Xavier Monsegur, an outspoken LulzSec leader known as “Sabu” online, had been working with the FBI since his arrest last June. The arrested hackers are suspected to have been involved with LulzSec’s attacks on Fox, HBGary, and Stratfor. While the arrests, and Sabu’s collaboration with authorities, could damage LulzSec, Wired reports that some of Sabu’s fellow hackers had suspected that he had become an informant after a period of silence after his June arrest.

Court Says No Warrant Needed for Historical Cell-Site Records

In United States v. Graham, the District Court of Maryland ruled that the government did not need a warrant to access cell phone location records held by cellular providers, reports Orin Kerr at The Volokh Conspiracy. The court concluded that such records were covered by the third-party doctrine; customers voluntarily convey the information to the service provider, who creates and keeps the records, so the records fall outside the protection of the Fourth Amendment. The court noted that United States v. Jones (previously covered by the Digest) held that an surveillance over time could violate a privacy interest, but stopped short of creating a general principle that aggregated surveillance records run afoul of the Fourth Amendment.

In Hotfile Lawsuit, MPAA Takes Advantage of Megaupload Indictment

The MPAA is building on the Megaupload indictment (previously covered by the Digest) to argue that the file-sharing site Hotfile is liable for copyright infringement, Ars Technica reports. In their brief for summary judgment, the MPAA said that “Hotfile’s business model is indistinguishable” from Megaupload’s, and suggested that Hotfile’s stated attempt to compete with Megaupload was evidence in favor of Hotfile’s liability. Though the MPAA initiated the lawsuit in February 2011, the recent Megaupload indictment offers an additional rhetorical device to the film studios’ litigation.

By Heejin Choi

Google’s New Privacy Policy Takes Effect

In January, Google announced that it will implement a new privacy policy, effective as of March 1st, which consolidates all its guidelines into one that applies universally to its services, including Gmail and Youtube. Under the new policy, Google can pool and merge user data from all of its services, which allows it to “better tailor search results and improve service.” Users cannot opt out of this new policy. Even though the new policy does not technically permit Google to collect more user information than under its previous policy, many experts on privacy have expressed concerns about it, the Huffington Post reports. Meanwhile, NPR has outlined some ways users can increase their privacy protections.

Internet TV Provider Aereo Faces Lawsuits

Aereo, an Internet TV provider scheduled to launch on March 14 in New York City and whose services will allow customers to watch broadcast television online using a remote antenna and a digital video recorder, said in a blog post that it was facing two federal lawsuits from a group of broadcasters, Reuters reports. The lawsuits allege violations of copyright laws, because Aereo gets broadcast channels without paying retransmission fees that cable firms are required to pay. Fox, PBS, CW, ABC, NBC, and CBS have all joined in the suit.

Yelp’s Soaring Stocks in IPO

Yelp, a popular online review site where users can search and rate local businesses, saw its stock soar in value during its initial public offering (IPO) last Friday. Yelp’s IPO was priced at $15 per share, but soon rose $9.58 to close at $24.58. Yelp has yet to generate a profit but grossed $83.3 million in ad revenue in 2011, a 74% increase from 2010. Yelp estimates that it will raise about $96 million from the IPO after expenses. This stock offering is the latest in a series of tech IPOs leading up to Facebook’s much anticipated offering this spring.

Seventh Circuit Wrestles with Constitutionality of Warrantless Cell Phone Searches
By Brittany Horth – Edited by Charlie Stiernberg

United States v. Flores-Lopez, No. 10-3803 (7th Cir. 2012)
Slip opinion

The Seventh Circuit affirmed the United States District Court for the Southern District of Indiana, which had held that a warrantless search of a cell phone in order to obtain its phone number is permitted under the Fourth Amendment. Judge Posner acknowledged that the issue had implications for computers and other electronics that hold personal data because the “modern cell phone is a computer.” Slip Op. at 1. He described the extensive capabilities of modern-day cell phones but ultimately refused to define the precise boundaries of cell phone searches beyond the immediate issue of the phone number of the cell phone.

FindLaw and The Wall Street Journal Law Blog provide brief overviews of the case.  Forbes provides a more detailed summary of Judge Posner’s reasoning.  Orin Kerr at The Volokh Conspiracy questions some of Judge Posner’s analogies and finds that Posner’s new approach to the problem may result in Supreme Court review in the future. Westlaw Insider criticizes Judge Posner’s analogies as confusing and incomparable and expresses concern over the continued potential for abuse in cell phone and computer searches. (more…)

Federal Circuit Invalidates Real Estate Investment Claims Following Bilski Precedent
By Elettra Bietti – Edited by Charlie Stiernberg

Fort Props., Inc. v. Am. Master Lease LLC, No. 2009-1242 (Fed. Cir. Feb. 27, 2012)
Slip Opinion

The Federal Circuit affirmed the District Court for the Central District of California, which had granted summary judgment in favor of Fort Properties. In a pre-Bilski decision, the district court had invalidated all 41 claims in American Master Lease’s (“AML”) real estate investment patent for failing to meet the subject matter eligibility requirements of 35 U.S.C. § 101 by applying the machine-or-transformation test.

Judge Prost, writing for the court, held that claims 1–31, which describe a real estate investment tool “tied to the physical world,” disclose an unpatentably abstract concept. Slip op. at 10. Following the Supreme Court’s decision in Bilski, Judge Prost held that an “abstract concept cannot be transformed into patentable subject matter merely because of connections to the physical world through deeds, contracts, and real property.” Id. at 10 (citing Bilski v. Kappos, 130 S.Ct. 3218 (2010)). Claims 32–41 contain the same ties, with an additional limitation requiring a computer to “generate a plurality of deedshares.” Id. at 11. Nevertheless, the court held that the added computer limitation did not save claims covering an abstract concept from invalidity, where such a limitation “is simply insignificant post-solution activity.” Id. at 13.

Bloomberg BNA provides a summary of the case and notes that the court identified “intricate and complex computer programming” as a distinguishing characteristic for patent eligibility. Patently-O criticizes the court for not defining “unpatentably abstract” and relying excessively on the similarities between AML’s patent and the invention in Bilski to reach its conclusion. (more…)

By Geng Chen

Violent Video Game Fight Ends Not With a Bang, But With an Invoice

The Sacramento Bee had the last word in the California violent video games saga. California taxpayers will end up bearing the $1.8 million bill for legal services related to defending the controversial state statute, struck down by a 7-2 vote in the Supreme Court last year in Brown v. Entertainment Merchants Ass’n. It would have prevented retailers from selling video games depicting killing, maiming, dismembering, or sexual assault to minors. No child was ever prohibited from purchasing these games, however, as lower courts had blocked implementation of the law since the initial preemptive challenge by industry representatives. The $1.8 million includes the legal fees borne by the video game industry, totaling $1.3 million. The remaining $500,000 represents the hours spent by the state attorney general’s office in defending the case.

FCC Tightens Regulations on Telemarketing Robocalls

The LA Times describes the Federal Communications Commission’s newly revised telemarketing regulations on robo-calls. These automated, pre-recorded marketing messages will be prohibited unless the telemarketer obtains prior written consent. The exemption for companies with an “established business relationship” with consumers will be eliminated. According to the FCC, such a relationship can form when the consumer contacts the business to ask a question or makes a purchase. Furthermore, ABC News reports that a consumer will also have the power to opt out from future calls within the first two seconds of the message. According to the Wall Street Journal, the telemarketer would then have to hang up and add that number to the company’s do-not-call list. However, certain organizations, including nonprofits such as local schools and churches, or political groups and pollsters, may still make these calls. The new rules are expected to take effect after review by the Office of Management and Budget.

European Right to Be Forgotten Raises Questions About Free Speech

The European Commission’s proposed online privacy rules create a new “right to be forgotten,” reports Time. An individual would be able to demand that online companies delete information about him or her, unless the company can demonstrate a legitimate reason not to. The stated intent behind the new rules is to protect the future employment prospects of young people from the consequences of damaging photos or information on social network sites. However, some commentators have expressed concern over the potential impacts on free speech. In the Stanford Law Review Online, George Washington Law Professor Jeffrey Rosen cautioned against a broad application of the new rules, in particular applying the right to be forgotten to truthful information posted by third parties. Even though the new regulations allow companies to retain the information if the need to do so is legitimate, shifting this legal burden of proof to the company may cause it to take a conservative approach and comply with all complaints. Although the European Commissioner Viviane Reding has made reassurances that the right to be forgotten will not “take precedence over freedom of expression or freedom of the media” (as reported by the Wall Street Journal), Rosen contends that the law, currently written to include “any information related to a data subject,” is uncomfortably broad.