Vogel Internet, Information Technology, and e-Discovery Blog : Texas Internet, Information Technology, eCommerce, & E-Discovery Lawyer & Attorney Peter S. Vogel : Gardere Wynne Sewell Law Firm : Dallas TX

There is an epidemic of violent crime when stealing cells and tablets since the manufacturers apparently do little to protect these devices if stolen.  On May 10, 2013 the New York Attorney General Eric T. Schneiderman sent letters to Apple, Google/Motorola, Microsoft, and Samsung “seeking information about their efforts to protect customers from the rise in violent street crimes known as Apple Picking.”

The AG Schneiderman’s press released stated that “recent study found that lost and stolen cell phones cost consumers over $30 billion last year” and went to say that these vendors:

…have a responsibility to their customers to fulfill their promises to ensure safety and security. This is a multi-billion dollar industry that produces some of the most popular and technologically advanced consumer electronic products in the world. Surely we can work together to find solutions that lead to a reduction in violent street crime targeting consumers.

Here are some examples cited in the letter to Tim Cook CEO of Apple:

• On April 19, 2012, a 26-year-old chef at the Museum of Modern Art was killed for his iPhone on his way home to the Bronx.
• In April 2012, twenty-year-old Alex Herald was stabbed during an iPhone theft.
• In September 2012, in three separate incidents, women were violently attacked for Apple and Samsung devices.
• In February 2013, three people were stabbed on a subway platform in Queens in a fight over an iPhone.
• Earlier this month, a woman was mugged at gunpoint in Crown Heights for her Android device.

This alarming information from New York hopefully this will help get public attention to improve the technology for when cells and tablets are stolen. We all need to stay tuned.
 

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LinkedIn reports that the wealthiest investors have adopted Social Media regularly with about 50% using LinkedIn, and “72% use Facebook and 27% use Twitter.” Forrester Research describes about “40 million” individual investors as Mass Affluent who have assets of $100,000 to $1 million excluding the value of their homes and these “Mass Affluent use social media as an educational resource for financial information and are greatly influenced by what they learn.”

The LinkedIn report explains how the Mass Affluent use Social Media for professional purposes:

• 1 in 2 use social to CONNECT with professionals.
• 1 in 3 use social to CONSUME professional content.
• 1 in 4 use social to CREATE professional content.

This LinkedIn Report should be a message to all professionals that the use of Social Media will assist in communicating with the wealthiest among us.

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Pew Research has reported that since 2002 about 92% of adults in the US use email everyday but how many people include in their wills what happens to the email and Social Media accounts? The answer is - not many.

Dallas lawyer Ira Silverman, who specializes in wills, trusts and probate, offers this advice:

• Include language in your will to authorize access to and to transfer ownership of all your digital assets, data, media and information.
• Also, keep a list of all such information for your survivors -- and include applicable passwords for -- social media, email accounts... any site where you have to log in with a user ID and password."

To read more about these issues please read my May column in eCommerce Times entitled “Where Your Social Media Accounts Go When You Die?”
 

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The Pentagon’s annual report to Congress explicitly accuses China of cyberwarfare activities directed against the US military. The New York Times reported that it “was unclear why the administration chose the Pentagon report to make assertions that it has long declined to make at the White House” and went on to state that:

China’s primary goal as stealing industrial technology, but said many intrusions also seemed aimed at obtaining insights into American policy makers’ thinking.

Among other things the Pentagon report stated that China’s cyberwarfare “could serve Chinese military operations in three key areas:”

• First and foremost, they allow data collection for intelligence and computer network attack purposes.
• Second, they can be employed to constrain an adversary’s actions or slow response time by targeting network-based logistics, communications, and commercial activities.
• Third, they can serve as a force multiplier when coupled with kinetic attacks during times of crisis or conflict.

It will be import to follow what Congress does in response of this Chinese cyberwarfare report.
 

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A juror was held in contempt of court for texting during a trial in violation of standard jury instructions requiring the jury “to pay close attention to all of the witnesses.” On April 16, 2013 Marion County Oregon Judge Dennis Graves sentenced 26 year old Benjamin Kohler to jail for contempt for 2 days for texting while a witness was testifying about the armed robbery defendant.

The Salem Statesman Journal reported that Mr. Kohler was caught texting when the courtroom lights were dimmed to allow a witness to show a video interview with the defendant. With the lights dimmed the glow from Mr. Kohler’s cell phone was apparent so the Judge immediately dismissed all the jurors from the courtroom except Mr. Kohler whom the Judge declared in contempt.

The Court Report included Judge Graves’ courtroom statement to Mr. Kohler that included his message to other jurors to pay attention:

The duty to serve as a juror must be taken very seriously. Every juror has the responsibility to devote his entire attention to the witnesses and evidence being presented. In this case, Mr. Kohler failed to meet his obligations and failed to honor the direction of this court. My hope is that he will use his time in jail to reflect upon his behavior.

The content of Mr. Kohler texting was not made public so it likely irrelevant since the Judge’s admonish was only paying attention not texting about the defendant or facts in the trial. Ultimately Mr. Kohler only spent only one day in jail for contempt, and the defendant was convicted.

Surely we will see more headlines about juror texting given its volume and prevalence, but this case may be different since Mr. Kohler was in contempt for not paying attention to a witness which is extreme. How can Judges know if any other juror is paying attention?

 

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A group of Chicago Police are suing for overtime pay since the City allegedly expected the officers “to be available twenty-four [hours] per day via Blackberry.” In their lawsuit the officers “felt obligated to respond to these email communications and telephone call while off duty.”

Huffingtonpost reported that the officers claimed:

…police brass pressured subordinates in the department's organized crime bureau to answer work-related calls and emails on their BlackBerrys, and then also dissuaded the officers from filing for overtime.

On January 14, 2013 US Magistrate Judge Sidney Schenkier issued an Order that included his opinion that the officers’ Blackberry “responses might constitute work.”

This lawsuit may help clear up employee use of employer issued devices and establish some legal boundaries between work and personal content that may apply to employee owned devices (e.g., BYOD). 
 

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Apple users' privacy may be at risk, as Apple finally revealed to Wired that Siri data is kept for 2 years even though that is not mentioned on Apple’s FAQs about Siri. In March 2012 the American Civil Liberties Union raised the issue about Siri privacy and claimed that the Apple Privacy Policy was unclear but Siri did collect “User Data” including the following:

• The names of your address book contacts, their nicknames, and their relationship with you (for example, “my dad”, or “work”)
• Your first name and nickname
• Labels you assign to your email accounts (for example, “My Home Email”)
• Names of songs and playlists in your collection

More than a year later, on April 19, 2013 an Apple spokesperson responded to Wired that Apple “may keep anonymized Siri data for up to two years,” but Apple:

…takes steps to ensure that the data is anonymized and only collects the Siri voice clips in order to improve Siri itself.
…If a user turns Siri off, both identifiers are deleted immediately along with any associated data.”

Wired went to explain:

Here’s what happens. Whenever you speak into Apple’s voice activated personal digital assistant, it ships it off to Apple’s data farm for analysis. Apple generates a random numbers to represent the user and it associates the voice files with that number. This number — not your Apple user ID or email address — represents you as far as Siri’s back-end voice analysis system is concerned.

Once the voice recording is six months old, Apple “disassociates” your user number from the clip, deleting the number from the voice file. But it keeps these disassociated files for up to 18 more months for testing and product improvement purposes.

Since the Apple Siri privacy policy is unclear about how Apple maintains and uses Siri data this information about keeping data for 2 years is likely a surprise to everyone. Apple’s lack of candor about privacy should concern everyone given the scope of Apple’s products.
 

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Ownership of Social Media content and contacts got a little clearer by a court ruling. But in the case of LinkedIn users, they give LinkedIn an irrevocable and perpetual license to everything posted. That means LinkedIn has an ownership claim to everything posted, as a result LinkedIn really has an ownership claim to all content and connections.

Nevertheless on March 12, 2013 US District Judge Ronald L. Buckwalter ( Eastern District of Pennsylvania) ruled that Dr. Linda Eagle’s former employer Edcomm did not own Dr. Eagle’s LinkedIn content and connections rather they “belonged to Eagle alone and she was individually bound by the User Agreement.”

Although Dr. Eagle won the case, but she got no damages. To learn more about Dr. Eagle’s lawsuit and Judge Buckwalter’s ruling please read my eCommerce Times April 2013 column entitled “Who Gets LinkedIn When an Employee Is Kicked Out?”

Based on Dr. Eagle’s case we will likely see contracts between employers and employees that spell who owns Social Media content and connections, which contracts will likely be tested in courts.
 

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FairSearch.org filed a complaint with the EU asserting that Google’s use of the Android operating system dominates the mobile marketplace and is anticompetitive. FairSearch states that it “is an international coalition of 17 specialized search and technology companies whose members include Expedia, Microsoft, Nokia, Oracle, and TripAdvisor.” In the complaint FairSearch states:

Google is using its Android mobile operating system as a ‘Trojan Horse’ to deceive partners, monopolize the mobile marketplace, and control consumer data,… Failure to act will only embolden Google to repeat its desktop abuses of dominance as consumers increasingly turn to a mobile platform dominated by Google’s Android operating system.

Google clearly dominates the search market as Forbes reported that according to eMarketer “that Google controls 56% of the mobile ad market and 96% of its search ad segment,” and Strategy Analytics reported that Android’s share of the global smartphone market has surged from 51% to 70% by the end of 2012.

So given the fact that the EU already investigating antitrust charges against Google this may make things worse for Google, so stay tuned to see how Google fares.

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Secret offshore banks accounts and shell companies were disclosed with a data leak of an estimated value of TRILLIONS of dollars. The 2.5 million files were released by the International Consortium of Investigative Journalists (ICIJ) which is “an active global network of 160 reporters in more than 60 countries who collaborate on in-depth investigative stories.” The key findings from ICIJ were as follows:

• Government officials and their families and associates in Azerbaijan, Russia, Canada, Pakistan, the Philippines, Thailand, Mongolia and other countries have embraced the use of covert companies and bank accounts.
• The mega-rich use complex offshore structures to own mansions, yachts, art masterpieces and other assets, gaining tax advantages and anonymity not available to average people.
• Many of the world’s top’s banks – including UBS, Clariden and Deutsche Bank – have aggressively worked to provide their customers with secrecy-cloaked companies in the British Virgin Islands and other offshore hideaways.
• A well-paid industry of accountants, middlemen and other operatives has helped offshore patrons shroud their identities and business interests, providing shelter in many cases to money laundering or other misconduct.
• Ponzi schemers and other large-scale fraudsters routinely use offshore havens to pull off their shell games and move their ill-gotten gains.

The NY Times reported that the data was:

...mainly from the British Virgin Islands, the Cook Islands and Singapore, disclose proprietary information about more than 120,000 offshore companies and trusts and nearly 130,000 individuals and agents, including the wealthiest people in more than 170 countries.

The secrecy of the ownership of these monies is not illegal in those countries, but now that this information has been leaked it is possible that government tax authorities around the world may start investigations for tax fraud. Stay Tuned!
 

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The supreme court in NY ruled that Internet businesses should be taxed on an equal footing with brick-and-mortar businesses, which likely lead to a US Supreme Court challenge. Accounting Today reported that the NY Court of Appeals, ruled 4-1 on March 28, 2013 that Chief Judge Jonathan Lippman wrote for the majority against Amazon and Overstock's appeals:

If a vendor is paying New York residents to actively solicit business in this state, there is no reason why that vendor should not shoulder the appropriate tax burden.

The lone vote in favor of Amazon and Overstock came from Judge Robert Smith who wrote:

The websites are not soliciting customers for Overstock and Amazon in the fashion of a local sales agent,… Of course the website owners solicit business for themselves; they encourage people to visit their websites, just as a newspaper owner would seek to boost circulation. But there is no basis for inferring that they are actively soliciting for the out-of-state retailers.

The New York State Commissioner of Taxation and Finance Thomas H. Mattox issued the following statement:

Today's Court of Appeals Decision affirms New York State's approach to ensure fair tax administration for both brick-and-mortar and Internet-based businesses. We commend the Court for recognizing the logical application of existing precedent to the 21st century economy.

Since being implemented, this law has resulted in the collection of roughly $500 million in State and local sales tax. This is equivalent to approximately $6.0 billion of taxable retail sales into New York that were previously made without the sales tax being collected.

Of course local governments are losing tax revenue from the Internet businesses, but the nexus of where the taxable transactions occur are critical. So if a NY resident purchases a book from Amazon where was the taxable transaction? Washington state where Amazon is headquartered? Or where the server is located in Georgia? Or where the book is shipped from in Texas?

There are no easy answer to these Internet tax issues, and it will be interesting to see how the Supreme Court reacts.
 

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World-wide law enforcement agencies requested information regarding 137,424 Microsoft and Skype accounts in 2012 based 75,378 requests for customer information. Microsoft’s General Counsel Brad Smith blogged that the Microsoft’s first Law Enforcement Report includes customer requests for:

 Skype, Hotmail, Outlook.com, SkyDrive, Xbox LIVE, Microsoft Account, and Office 365.

In an effort of transparency the Report disclosed that approximately 79.8% of requests to Microsoft resulted in the disclosure of only non-content information and Microsoft requires “…a valid subpoena or equivalent document before we will consider releasing non-content data…” Microsoft describes non-content data as:

…basic subscriber information, such as the e-mail address, name, location and IP address captured at the time of registration.

Otherwise Microsoft reported that “only 2.1 percent, or 1,558 requests, resulted in the disclosure of customer content.  Microsoft defined customer content as:

…what our customers create, communicate, and store on or through our services such as the words in an e-mail exchanged between friends or business colleagues or the photographs and documents stored on SkyDrive or in other cloud offerings such as O365 and Azure. We require an order or warrant from law enforcement before we will consider disclosing content to law enforcement.

So it seems that the privacy laws are doing a lot to protect Internet users, and it will be interesting to see if reports from other Internet companies regarding how they react to requests from law enforcement agencies.
 

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Privacy of GPS data location in the US may improve if Congress passes the proposed bill that would require court-order search warrants before law enforcement can obtain GPS data. Although a similar bill was introduced in 2011 it failed to become law, however the pervasive use of GPS by law enforcement has created a higher level of interest for the public.

IDG News Service reported that Oregon Senator Ron Wyden who sponsored the bill in the Senate and made these comments:

The GPS Act provides law enforcement with a clear mandate for when to obtain a warrant for the geolocation information of an American. It also provides much-needed legal clarity for commercial service providers who often struggle to balance the privacy of their customers with requests for information from law enforcement.

IDG News Service also reported that the following groups endorsed the GPS Act:

• American Civil Liberties Union,
• Americans for Tax Reform's DigitalLiberty.net,
• Competitive Enterprise Institute, Electronic Frontier Foundation, and
• Computer and Communications Industry Association (CCIA)

It will be interesting to see the debate in Congress and what happens to these bills which potentially would improve uniformity of GPS data which is currently controlled by state law, and various states are considering similar legislation.

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Given all the cyber attacks of late the security of credit card information is more critical than ever, and with a greater use cloud computing the Payment Card Industry (PCI) Security Standards Council recently issued Cloud Computing Guidelines.

PCI initially established its Data Security Standards (DSS) which among other things “provides an actionable framework for developing a robust payment card data security process -- including prevention, detection and appropriate reaction to security incidents.” PCI DSS is not law, but rather a group of IT standards created in 2006 by “the five founding global payment brands -- American Express, Discover Financial Services, JCB International, MasterCard Worldwide, and Visa.” PCI “enforcement of compliance with the PCI DSS and determination of any non-compliance penalties are carried out by the individual payment brands.”

However now that more cloud service providers (CSP) take payment card payments, the PCI concluded that it was time to create its Cloud Computing Guidelines which established around four different cloud models – private, community, public, and hybrid. Some of the PCI DSS challenges in the cloud include following issues:

• Clients may have little or no visibility into the CSP’s underlying infrastructure and the related security controls.
• Clients may have limited or no oversight or control over cardholder data storage. Organizations might not know where cardholder data is physically stored, or the location(s) can regularly change. For redundancy or high availability reasons, data could be stored in multiple locations at any given time.
• It can be challenging to verify who has access to cardholder data processed, transmitted, or stored in the cloud environment.
• Many large providers might not support right-to-audit for their clients.

Assuming cyber attacks it is all the more important that cloud providers adhere to the new PCI DSS standards.
 

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The Pentagon revealed a plan to create 13 offensive teams to use cyber weapons to defend the US from major cyber attacks from foreign countries. The Washington Post reported that on March 11, 2013 General Keith Alexander testified before the Senate Armed Services Committee. For the past 8 years General Alexander has served as director of the National Security Agency and 3 years as head of the Cyber Command.  At the hearing the General testified  “that strategic-threat picture is worsening”: 

We’ve seen the attacks on Wall Street over the last six months grow significantly,… there were more than 160 disruptive attacks on banks in that period. 

Last summer, in August, we saw a destructive attack on Saudi Aramco, where the data on over 30,000 systems were destroyed. And if you look at industry, especially the anti-virus community and others, they believe it’s going to grow more in 2013. And there’s a lot that we need to do to prepare for this. 

Given all the recent press about claims that China is to blame for many of the cyber attacks, it will be interesting to learn more about what caused these problems, and how the cyber weapon offensive will work to protect the US government and businesses.
 

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The EU Competition Commission concluded that Microsoft failed to comply with its 2009 agreement to offer browser choices to 15 million Windows customers so rather the customers were stuck with Internet Explorer. Under the terms of the 2009 settlement agreement between the EU and Microsoft when Microsoft Windows customers bought a new version they would have browser options including Google (Chrome), Apple (Safari), Mozilla (Firefox), Opera, and Internet Explorer.
The EU Commission made the following finding:

…that Microsoft failed to roll out the browser choice screen with its Windows 7 Service Pack 1 from May 2011 until July 2012. 15 million Windows users in the EU therefore did not see the choice screen during this period. Microsoft has acknowledged that the choice screen was not displayed during that time.

When Microsoft fired Steven Sinofky (President of Windows and a 23 year veteran of Micosoft) in November 2012 there was some speculation he was to blame for Microsoft's failure to comply with the 2009 EU agreement. But at this point blame does not help Microsoft!

The $732 million (€561 million) fine represents 1% of Microsoft’s annual world-wide revenue of $ 73 billion. Clearly the EU has now sent a strong message to Google concerning it anticompetitive behavior in the EU search market, and other companies, that the EU is serious about competition!
 

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Given the recent disclosures of cyber attacks by Facebook, Google, and Apple, businesses need to establish policies about what their employees can do with Social Media whether on the job or just making comments about their employers. Each business needs to consider their employees, customers, and market places to decide what is best to protect against cyber attacks.

To learn more, please watch my recent video entitled “"Protecting Your Business: From Social Media to Cyber Threats." The video interview by Financial Management Network (& parent SmartPros Ltd.) is part of a series of educational videos provided for accounting, finance, and IT professionals. So please check out the programs on Financial Management Network.
 

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The FTC settled its claims that HTC sold millions of mobile devices using the Droid and Microsoft software because the devices were not secure. The FTC’s Complaint specifically identified “potential exposure of sensitive information and sensitive device functionality through the security vulnerabilities in HTC mobile devices, consumers are at risk of financial and physical injury and other harm,” and among other things:

…malware placed on consumers’ devices without their permission could be used to record and transmit information entered into or stored on the device, including financial account numbers and related access codes or personal identification numbers, medical information, and personal information such as text messages and photos.

Sensitive information exposed on the devices could be used, for example, to target spear-phishing campaigns, physically track or stalk individuals, and perpetrate fraud, resulting in costly bills to the consumer.

Misuse of sensitive device functionality such as the device’s audio recording feature would allow hackers to capture private details of an individual’s life.

The NY Times reported that this was “first attempt by the commission to police a manufacturer of mobile devices.”

The FTC has invited interested parties to submit comments about the settlement through March 22, 2013, so it remains to be seen if HTC is out of the woods on the security problems.
 

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Recently the NY Times admitted that it had been the victim of Cyber attacks, and then the NY Times reported that the Chinese Army may be behind the online attacks based on a report by Mandiant security firm which:

…has tied more than a hundred cyber attacks on U.S. corporations to China’s military, including several involved with critical U.S. infrastructure such as pipelines and power grids.

…collected from 147 attacks during seven years it traced back to a single group it designated “APT1,” a group Mandiant has now identified as a military unit within the 2nd bureau of China’s People’s Liberation Army General Staff Department’s 3rd Department, going by the designation “Unit 61398.”

Recently many high activity Internet sites have reported being victims of cyber attacks including: Twitter, Facebook, Apple, and Google to name a few.

Cybersecurity is critical to the US as it is the focus of a recent Executive Order from the President, and with the reports of Chinese Army actions highlights how critical it is for our government to act ASAP.
 

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The FTC reminded consumers to protect against identity theft during tax filing season, and provided a laundry list of precautions to insure that tax information does not fall into the wrong hands including:

• Make sure that anyone helping you prepare your taxes is trustworthy.
• File taxes early in the tax season to reduce the window of time in which a thief could fraudulently file under your Social Security number.
• If filing electronically, only submit forms through a secure Internet connection.
• If filing by mail, go to the post office directly to mail the envelope.
• Do not respond to email messages asking for your personal information that purport to be from the IRS. If the IRS needs to contact you, it will do so by mail.

More Tax Related Identity Theft advice is available at OnGuardOnline.gov which is a website managed by the FTC, and many other agencies including: IRS, SEC, Homeland Security, FCC, FDIC, and Departments of Commerce, Education, State, and Justice.

To learn more about what the FTC is doing to protect the public I welcome you to read my eCommerce Times February 2013 column entitled “Of Apps and Antitrust: FTC Monitoring Kicks Into High Gear.”
 

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A new Executive Order from the White House entitled “Improving Critical Infrastructure Cybersecurity” was noted in the State of the Union with these comments:

…will strengthen our cyber defenses by increasing information sharing, and developing standards to protect our national security, our jobs, and our privacy. Now, Congress must act as well, by passing legislation to give our government a greater capacity to secure our networks and deter attacks.

Unfortunately there is little room for optimism since the White House’s 2009 Cyberspace Policy Review which included a thorough analysis concluding that the world’s economy is dependence on the Internet, and yet Congress has been unable to create cybersecurity laws. As a matter of fact the Senate filibuster in August 2012 abruptly ended proposed cybersecurity laws which had been passed in the House.

The Wall Street Journal reported that the EU proposed new cybersecurity rules that requires “search engines, energy providers, banks and other companies to report disruptions to government authorities.”

Cybersecurity is critical to all governments and businesses given the world’s dependence on the Internet.
 

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Just as Google proposed a settlement with the EU, on January 30, 2013 i-Comp filed a new complaint of antitrust charges about which Bloomberg reported that Google’s “search results discriminate against competitors.” I-Comp is led by Microsoft and posted on its website: 

By creating an illegal network of exclusive relationships with these important partners, Google achieved its key objective: gaining scale for itself while preventing its rivals from doing the same,…

 

MSN News (published by Microsoft) reported: 

• If the commission accepts the proposals under its settlement procedure, it would mean no fine and no finding of wrongdoing against Google. 

• Companies found to be in breach of EU rules can be fined as much as 10 percent of global turnover, which could mean up to $4 billion if there is no satisfactory resolution in Google's case.

It is significant that comScore estimates that Google accounts for about 82% of all EU searches and about 67% of all US searches.

Since the FTC concluded that Google did not violate US antitrust laws in early January 2013 the new EU antitrust claims do not allow for a swift settlement as apparently Google hoped. 

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Gender statistics on the Internet are thought provoking, including Pew Research’s report that 75% of women and 63% of men use Social Media. Also Pew reported 67% of “online American adults are Facebook users, making Facebook the dominant social networking site” in the US. Likely no surprise to anyone.

Even though women predominate in Social Media, in 2012 Wikipedia estimated that about 10% of postings were made by women. It seems odd that only 10% of posting on Wikipedia are made by women considering the size and scope of Wikipedia, which as of February 2013 “accounts for 24 million articles, over 4.1 million in the English Wikipedia, …written collaboratively by volunteers around the world.”

After conducting a survey in 2011 about Wikipedia posting, Wikipedia express a desire to have more women to post:

Our editing community continues to suffer from a lack of women editors… It is a strategic priority to address this imbalance. The survey did find that the total percent of women Wikipedia editors has increased somewhat in the last few years, but we still have a lot of ground to over. We can attract women editors partly by introducing tools and features that make editing simple for everyone.

There must be a reason that only 10% of women post on Wikipedia, and determining why will likely provide interesting social information.
 

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In 2008 a major flaw was discovered in the Domain Name System (DNS) which regulates traffic on the Internet. Network World reported that as a result it is “possible for hackers to launch cache poisoning attacks, where traffic is redirected from a legitimate website to a fake one without the website operator or end user knowing.” 

Dan Kaminsky discovered this DNS vulnerability as a security researcher in 2008 and reported his discovery widely, and although apparently most of the Internet security world including the US government and CERTagreed with the DNS vulnerability apparently 5 years later few major companies have deployed DNS Security Extensions (DNSSEC ) to alleviate this threat including: 

• Apple,
• Cisco,
• Google,
• IBM,
• Symantec,
• Fifth Third Bancorp,
• Bank of America,
• Cardinal Health,
• Charles Schwab,
• Delta Air Lines,
• Disney,
• eBay,
• Target,
• WellPoint, and
• Wells Fargo 

A recent survey conducted weekly by the National Institute of Standards and Technology indicates that only 10 out of more than 1,000 U.S. industry websites have fully deployed DNSSEC including: 

• Comcast,
• Data Mountain Solutions,
• Infoblox,                                                                                            
• PayPal, and
• Sprint.

Other companies have partial DNSSEC deployments including:

• Dyncorp,
• Simon Property Group, and
• Juniper Networks 

So maybe this is not a big problem since the major companies have failed to deploy DNSSEC, but if we have a cyber disaster with the DNS perhaps those companies will think otherwise.

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FTC Chair Jon Liebowitz is resigning after 4 years during which he “pushed for online privacy protections and sought to restrain unfair competition,” but as the New York Times reported he “stumbled in an attempt to rein in the Internet search practices of Google”:

Competitors, advertisers and some consumer advocates had complained that Google manipulated the results of its Internet searches to give top priority to results that featured companies in which it held an interest, while punishing those that were a competitive threat.

The Washington Post speculates that the new Chair could be “other Democrats on the commission, Julie Brill and Edith Ramirez,” but Chair's departure:

...will create at least a temporary partisan split, with two Democrats, two Republicans and one seat empty until President Obama can gain confirmation for a nominee. Such 2-2 divides on the five-member commission are not uncommon during transitions, but they can make it difficult to chart a forceful path for the FTC.

No one knows about the future of the FTC, but given its role to manage privacy on the Internet in the US it will be interesting to see who is selected, and also to watch the confirmation process to see what the Senate is concerned about.
 

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RIM was renamed to Blackberry when announcing Blackberry 10, but the big question is whether the new Blackberry 10 can make it. The New York Times offer these comments:

The BlackBerry music, movie and app stores are just getting under way.
If you choose BlackBerry over iPhone or Android, you give up some very attractive ecosystems, like the way Apple synchronizes your calendar, messages, and photos on all your gadgets. Or, for Android, the similar conveniences of Google Voice and Google Maps.

Since there are a kazillion apps for the Apple and Droid devices, the Blackberry 10 does not key apps. The New York Times also noted that following apps do not exist at this time:

• Netflix,
• Draw Something,
• Pinterest,
• Hipstamatic,
• Instagram, and
• most airline and bank apps

Of course before the iPhone and Droid devices existed RIM's  Blackberry was king but consumers bought their own devices (BYOD) and changed the world, but it may too late for Blackberry. Time will tell.
 

 

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The National Labor Relations Board (NLRB) has issued a number of rulings that protect employees’ right to express their opinions on Social Media. The New York Times reported that NLRB Chair Mark Pearce noted that "federal law has long protected the right of employees to discuss work-related matters":

Many view social media as the new water cooler,…All we’re doing is applying traditional rules to a new technology.

The NLRB relies on the 1935 National Labor Relations Act which protects "the rights of employees and employers, to encourage collective bargaining, and to curtail certain private sector labor and management practices, which can harm the general welfare of workers, businesses and the U.S. economy."

NLRB rulings:

…apply to virtually all private sector employers, generally tell companies that it is illegal to adopt broad social media policies — like bans on "disrespectful" comments or posts that criticize the employer — if those policies discourage workers from exercising their right to communicate with one another with the aim of improving wages, benefits or working conditions. 

Recently NLRB ruling have led major companies to rewrite their Social Media policies including General Motor, Target, and Costco. It will be interesting to see how Social Media policies are interpreted by courts in the future given the NLRB rulings.

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The EU is considering a plan to require Internet companies to report loss or theft of personal information. The New York Times reported that the new EU laws will apply to “enablers of Internet services, e-commerce platforms, Internet payment gateways, social networks, search engines, cloud computing services, application stores.” The report went on to describe the reason for considering the new laws:

Cybercrime has risen sharply in Europe. A series of high-profile hacking attacks on governments and businesses has galvanized European lawmakers to focus on the need to strengthen and harmonize existing laws, which vary widely across the Union and differ on the levels of disclosure required.

This news about the EU tackling Internet crime comes on the heels of my January 2013 eCommerce Times column entitled "2012's Most Notable Computer Crimes" which I encourage you to read.
 

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With the recent death of accused Aaron Swartz there will be no trial to determine whether Mr. Swartz violated federal wire laws by downloading 4.8 million articles and documents from JSTOR at the Massachusetts Institute of Technology. In the meantime the National Law Journal is questioning whether the government’s actions were prosecutorial overreach brought by U.S. Attorney Carmen Ortiz. They quote Ms. Ortiz:

Stealing is stealing whether you use a computer command or a crowbar, and whether you take documents, data, or dollars,…It is equally harmful to the victim whether you sell what you have stolen or give it away.

In the meantime Harvard Law Professor Larry Lessig, one of Swartz’s friends and attorney referred to the "Prosecutor as bully" and added these comments: 

The government, ...worked as hard as it could to characterize what Aaron did in the most extreme and absurd way….our government continued to push as if it had caught the 9/11 terrorists red-handed.

Notwithstanding how the government pursued Mr. Swartz we will now never know how a jury would have responded, my question remains, why were charges never filed for Copyright Infringement?
 

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Since we get phishing emails all day long most of us recognize them immediately and delete them, but apparently phishing fraud continues to be a major problem. One great resource is the federal government website OnGuardOnline.gov which offers advice about Phishing and how consumers can protect themselves:

When internet fraudsters impersonate a business to trick you into giving out your personal information, it’s called phishing. Don't reply to email, text, or pop-up messages that ask for your personal or financial information. Don’t click on links within them either – even if the message seems to be from an organization you trust. It isn’t. Legitimate businesses don’t ask you to send sensitive information through insecure channels.

Recently I noticed a message on the American Airlines website with this headline “FRAUDULENT EMAILS, FAXES AND POSTAL MAILINGS.” American claims that it will never ask customers:

to perform security-related changes to your account in this fashion or send emails to collect user names, passwords, email addresses or other personal information. If you receive an email claiming to be from American Airlines, that asks for account information, it should be considered fraudulent and an attempt to obtain personal information that may be used to commit fraud.

American wants its customers to understand phishing, so they provide specific detailed examples and advice:

• Examples of Phishing Emails, Faxes and Postal Mailings
• Example of Phishing Email with our partner carrier British Airways
• What To Do If You Receive a Phishing Email, Fax, or Postal Mailing
• Additional Characteristics of a Phishing Email

Since phishing does not seem to be abating, obviously consumers must be vigilant to protect themselves.
 

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The US government now claims that Iran was behind the recent cyber attacks against US banks that impacted millions of customers. The New York Times reported that these “hackers chose to pursue disruption, not money: another earmark of state-sponsored attacks.“ Apparently Iran has retaliated from economic sanctions:

Since September, intruders have caused major disruptions to the online banking sites of Bank of America, Citigroup, Wells Fargo, U.S. Bancorp, PNC, Capital One, Fifth Third Bank, BB&T and HSBC.

The New York Times report ended with this ominous message that the hackers have no intention of halting :

Officials of American banks must expect our massive attacks,…From now on, none of the U.S. banks will be safe.

This news should be a wake-up call to the US government and Congress to improve cybersecurity in the US.
 

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The FTC and Google reached a landmark agreement regarding allegations of antitrust behavior by Google regarding Google search engine. But also the settlement allows competitors of Google’s “on fair, reasonable, and non-discriminatory terms – to patents on critical standardized technologies needed to make popular devices such as smart phones, laptop and tablet computers, and gaming consoles.”

The FTC included the following statement about Google’s search engine:

The evidence the FTC uncovered through this intensive investigation prompted us to require significant changes in Google’s business practices. However, regarding the specific allegations that the company biased its search results to hurt competition, the evidence collected to date did not justify legal action by the Commission.

Undoubtedly, Google took aggressive actions to gain advantage over rival search providers. However, the FTC’s mission is to protect competition, and not individual competitors. The evidence did not demonstrate that Google’s actions in this area stifled competition in violation of U.S. law.

Not everyone is happy with the FTC settlement as the Washington Post reported:

Consumer groups, Google’s rivals and some legal analysts say the company now will be emboldened to enhance the visibility of its own products for travel, shopping and other lucrative services in ways that will make it harder for people to find other offerings and will lead to higher prices.

After almost 2 years of investigation by the FTC surely Google is pleased. Comscore’s latest rankings indicate 67% of all US searches on conducted on Google, so this FTC resolution remains to be seen how this will impact the search engine market.
 

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Although in mid-December the Washington Post reported that there was an apparent antitrust settlement with Google and the FTC, Google reached out to me to let me know otherwise. Google sent me an email  with a link to former FTC Commissioner Orson Swindle's article and a Forbes article which I reference below.  Google wanted me to know among other things said:

The FTC, though it looked like it was very soon to announce resolution of its Google investigations, may be putting this off a little longer, at least, presumably due to competitor push back. But, from what has been reported in the media to date, it seems like a solution is very close which not only protects consumers but also protects innovation.

Commission Swindle wrote in the Washington Post regarding the FTC investigation:

Google’s competitors, led by Microsoft and the FairSearch coalition, have been clamoring for government action against the company for years. To the FTC’s credit, it appears this extraordinarily well-funded public relations and lobbying ploy will not bear fruit for FairSearch and its accusation of search bias by Google.

In a recent report Forbes including this summary regarding the FTC investigation:

The final chapter in this investigation clearly has yet to be written, and much may change over the coming weeks and months. If the rumors prove true, the FTC’s actions will send a signal to all tech companies that they must act responsibly, but also that they can continue innovating and growing without constant fear of a potentially damaging enforcement action.

So I guess we all need to stay tuned for the FTC’s action regarding Google’s search engine business.
 

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After an 11 day jury trial in Denver, the executives at Executive Recycling were convicted of illegal disposal of e-waste overseas, mail and wire fraud, and smuggling and obstruction of justice. Computerworld reported that Executive Recycling falsely advertised customers that old computers, PDAs, TVs and other electronic waste would disposed of electronic waste in compliance with all local, state and federal laws and regulations. 

But after CBS 60 Minutes reporters followed shipments from Denver to Hong Kong they broadcast their report in 2009. The illegal content sent to Hong Kong ultimately made its way to southern China - a sort of Chernobyl of electronic waste - the town of Guiyu. 60 minutes reported:

Greenpeace has been filming around Guiyu and caught the recycling work. Women were heating circuit boards over a coal fire, pulling out chips and pouring off the lead solder. Men were using what is literally a medieval acid recipe to extract gold. Pollution has ruined the town. Drinking water is trucked in. Scientists have studied the area and discovered that Guiyu has the highest levels of cancer-causing dioxins in the world. They found pregnancies are six times more likely to end in miscarriage, and that seven out of ten kids have too much lead in their blood.

The evidence at trial from the Department of Justice was that Executive Recycling exported more than 300 exports from the U.S. between 2005 and 2008, and approximately 160 of these exported cargo containers contained CRTs. Sentencing is scheduled for April, 2013.

One may wonder if this is just the tip of the iceberg of toxic IT waste purportedly being recycled?
 

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IDG reported that the Federal Communication Commission (FCC) issued guidelines for smartphone users which for the most part are common sense. But apparently many smartphone uses need this advice. The FCC report is entitled “Ten Steps to Smartphone Security” which includes the following:

1. Set PINs and passwords.
2. Do not modify your smartphone’s security settings.
3. Backup and secure your data.
4. Only install apps from trusted sources.
5. Understand app permissions before accepting them.
6. Install security apps that enable remote location and wiping.
7. Accept updates and patches to your smartphone’s software.
8. Be smart on open Wi-Fi networks.
9. Wipe data on your old phone before you donate, resell, or recycle it.
10. Report a stolen smartphone.

It would be interesting to see current smartphone security statistics that led the FCC to issues these guidelines.
 

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There have news reports aplenty about Instragram’s about face regarding sharing users’ data that led Instragram to revert back to its 2010 Terms of Service (TOS). However a blog on the New York Times indicates that maybe all is not over with Instragram because: 

It was unclear whether reverting its terms of service would be enough to satisfy high-profile users like National Geographic, which stopped using its Instagram account in light of the moves, or other users who have aired their grievances on Twitter and Facebook.

A Mashable.com’s Op-Ed had an interesting list of 5 lessons that Instragram, and other Social Media sites should learn:

1. Turns Out, There Is Some Scrutiny of Your TOS
2. Don't Take Your Users Where They're Not Ready to Go
3. Don't Be Arrogant
4. When You're Wrong, Make a Real Apology
5. Keep Your Power Users Sweet

Interesting developments since my experience is that about only 1% of users ever read TOS. Here Instragram's attempted change to its TOS created a Social Media frenzy which rarely happens. Stay tuned since this appears far from over.
 

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The Washington Post reported that the FTC and Google have reached a deal in the 2 year investigation about monopoly practices where Google “would agree to new limits on its ability to use snippets of content from other Web sites and would agree to make it easier for marketers to transfer their online ads to other services.” However the five FTC Commissioners still have to ratify this agreement.

Assuming the US resolves its antitrust claims against Google, don’t forget that the EU continues to press its antitrust claims against Google. In a report earlier this year the Washington Post indicated that the threat to Google was a:

…$4 billion fine and a formal ruling that it has abused its dominance in the search market to hurt rivals across a range of industries.

Since Google accounts for about 90% of the searches in the EU a negative antitrust ruling will surely impact Google’s business.
 

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Every business wants to pay the least taxes possible, even the US Supreme Court’s first opinion about the IRS code encouraged tax payers to figure out how to minimize their taxes. But since the Internet has eliminated the boundaries of time and geography, taxes on the Internet have become more complicated.

Of course at the heart of the tax is where did the taxable event occur?

• At the purchaser’s Internet connection?
• Seller’s business location?
• Seller’s server location?  or,
• Warehouse/shipping location? 

To learn more on Internet tax creativity I welcome you to read my column in eCommerce Times entitled “Taxing Authorities' Internet Cat-and-Mouse Game.”

How does this Internet taxes impact your business?
 

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Yahoo recently reported stated that French President Francois Hollande wants a tax on Google, and other search engines each time they use French media content. Google has threatened to exclude French media websites from search results to avoid paying this new tax. Apparently the goal of the new tax would be to “reward French media content.” Yahoo also noted that Germany is considering a similar tax. How taxing Google and others for showing French media in results helps French media, may be confusing. Perhaps over time we will learn more about that.

Legally any such tax plan, to the extent it taxes searches, is not so simple. Each user on Google agrees to the Terms of Service and Privacy Policy that controls the use of the information search and privacy. So the contract is entered between Google and the user, and the local governments are not a party to those contractual terms unless some valid local law so prescribes. 

What legal right does a government have to require any search engine to report search results where no money changes hands between Google and the user? In plain English, there does not appear to be a taxable event. So what tax law could apply to obligate Google to pay a search tax?
 

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Recent reports indicate that the US and EU antitrust regulators are considering filing suits against Google, but not for control over the search engine market, which clearly Google controls. Rather the antitrust claims will be directed at Google's unfair competition by unfairly manipulating search results. Computerworld recently reported:

…the suit might charge that Google manipulates search results to direct consumers to Google Places rather than Yelp or to Google Shopping rather than Pricegrabber or Shopzilla. Another potential issue is whether Google's AdWords marketplace discriminates against ads from services that compete with Google's services.

Given all the antitrust problems Microsoft has had with Internet Explorer in the US and EU, one would think that Google would understand that they had antitrust risk by their business practices.
 

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The New York Times reported details about Google and Bing’s automatic completion tools for their search engines that show “precise questions that are most frequently asked, giving everyone a chance to peer virtually over one another’s shoulders at private curiosities.” Google call its feature “autocomplete” and Bing calls its feature “autosuggest.” The New York Times went on to report:

People who study online behavior also say the autocomplete feature reveals broader patterns, including indications that the questions people ask of search engines often veer into the sensitive and politically incorrect.

Actually automatic completion services exist in part since search engine users want speedy but like the guidance. Google and Microsoft have spent billions of dollars to return faster search based in part on a Google experiment about search engine speed a few years ago which found:

…that people reported more happiness with search even when the results were delivered a few milliseconds faster, at a rate below what the conscious mind can actually perceive.

However if search engine results from Google and Microsoft also reflect popular and frequent inquiries it sure seems that a thoughtful business or crook could game the search engines to drive traffic to their sites.
 

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The New York Times reported that “Google reported sales of more than $4 billion in Britain last year…” but “paid less than $10 million in taxes.” Google VP for North and Central Europe Matt Brittin told a UK parliamentary panel that “We pay the tax we are required to pay in every country in which we operate.”

Where taxable transaction occur on the Internet is always a challenge since the Internet business may be in California, the server in another state or country, and the purchaser an a different location. The New York Times added this complexity:

Google says that most of the economic value it creates is generated in Silicon Valley, where its engineers toil away at the computer algorithms behind its search engine and other services. So the company says it is fair that most of what it pays in taxes goes to the United States Treasury, not its foreign counterparts.

In the past eBay, Amazon, and many other Internet business have been fighting Internet taxes, so surely we will continue to see more headlines about taxes
 

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BYOD continues to be very hot topic for IT and lawyers which impacts email, data security, and eDiscovery. Of course BYOD is growing in scope as Apple, Microsoft, and Droid based products are released. To learn more, please watch my recent video interview entitled "BYOD: When You Are Left to Your Own Devices." The interview by Financial Management Network (& parent SmartPros Ltd.) is part of a series of educational videos provided for accounting, finance, and IT professionals. So please check out the programs on Financial Management Network.

Also you can watch ALM’s Virtual LegalTech BYOD online webcast that I spoke on with Antoinette Duffy (Director of Information Management at Commvault, Canada) which is entitled “The Risks of BYOD and What You Can Do About Them.”

I welcome your thoughts and comments about BYOD and how BYOD impacts you and your business.
 

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What is meant by email backup was determined in a recent ruling that decided once the email had been read that it was not in backup storage and therefore the protection of the 1986 Stored Communications Act (SCA) no longer applies. The South Carolina Supreme Court recently ruled in Jennings v. Jennings that after emails were read, the husband could no longer use the SCA to limit access. The majority of the Court ruled:

After opening them, Jennings left the single copies of his e-mails on the Yahoo! server and apparently did not download them or save another copy of them in any other location. We decline to hold that retaining an opened e-mail constitutes storing it for backup protection under the Act. The ordinary meaning of the word "backup" is "one that serves as a substitute or support." Merriam-Webster Dictionary, http://www.merriamwebster.com/dictionary/backup. Thus, Congress's use of "backup" necessarily presupposes the existence of another copy to which this e-mail would serve as a substitute or support. We see no reason to deviate from the plain, everyday meaning of the word "backup," and conclude that as the single copy of the communication, Jennings' e-mails could not have been stored for backup protection.

Under the SCA there are two types of records “electronic communication service” (ECS) which are controlled internally within a business like on company owned computers and servers. The other “remote computing service” (RCS) which are stored remotely like at gmail, Facebook, and telephone records at AT&T.

Even though the SCA was designed for telephone records in 1986 Internet Service Providers (ISPs), and under the SCA, ISPs provide RCS as a result ISPs have relied on the SCA to limit providing postings and emails unless the owner of that data approves. As well, the SCA only allows a civil suit if the emails accessed were in “electronic storage.” Electronic storage is defined in the SCA as:

(A) any temporary, intermediate storage of a wire or electronic communication incidental to the electronic transmission thereof; and (B) any storage of such communication by an electronic communication service for the purposes of backup protection of such communication.

This South Carolina Supreme Court ruling may impact other Courts around the US, and as a result change the use of the SCA, so stay tuned.
 

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The FBI arrested Paul Geglia for alleged criminal violations regarding fabricating evidence that Mark Zuckerberg and he signed a contract in 2004 for web design for Facebook. The Complaint filed for mail and wire fraud by the US Postal Service includes these allegations against Ceglia that he:

• filed a federal lawsuit falsely claiming that he was entitled to at least a 50% interest in Facebook.
• has deliberately engaged in a systematic effort to defraud Facebook and Zuckerberg and to corrupt the federal judicial process.
• manufactured and destroyed evidence, for instance replacing a page of the original contract with a fraudulent one that made it look like Zuckerberg had offered Ceglia interest in the company.

Computerworld reported that attorneys for Zuckerberg and Facebook "…commend the United States Attorney for charging Ceglia with federal crimes in connection with his fraudulent lawsuit against Facebook…Ceglia used the federal court system to perpetuate his fraud and will now be held accountable for his criminal scheme."

The criminal charges should not be much of a surprise since in 2010 when Ceglia sued Zuckerberg that Wall Street Journal reported that about Ceglia:

In 2009, New York's Attorney General Andrew M. Cuomo accused Mr. Ceglia of defrauding customers of his wood-pellet fuel company, according to a news release from the Attorney General's office. The state claimed that he took more than $200,000 from consumers and then failed to deliver any products or refunds. The wood-pellet case is ongoing.

This makes an interesting development in this Facebook ownership case.
 

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A class action suit filed in New Mexico alleges Facebook violates unfair competition laws by promoting the sale of counterfeit goods from China which are purportedly officially licensed by the National Football League (NFL). On October 22, 2012 Inkies Sports, Inc (dba Krystal’s NFL Shoppe) sued Facebook, Adsage, DHgate, and Doe Defendants 1-100 in US District Court in Albuquerque, New Mexico on behalf of retailers and wholesalers of officially licensed NFL apparel. These counterfeit ads encourage consumers to believe “that they can order a genuine, NFL licensed jersey for $22, as opposed to the MSRP (Manufacturer’s Suggested Retail Price) of $100 to $300.”

Krystal’s Complaint includes these allegations:

• Ad for counterfeit goods are regularly displayed on Krystal’s Facebook page, leading even loyal customers to question whether these ads are supported, or even sponsored by Krystal’s.
• Indeed Krystal’s has received numerous comments and complaints from its customers regarding the advertisements, with consumers relating that because the advertisement was on Krystal’s Facebook page, they were led to believe that Krystal’s was somehow responsible for, or in league with, the counterfeiters.
• As such, Krystal’s has inadvertently been placed in the untenable position of actually lending credence to the counterfeit ads, by virtue of Facebook’s display of those advertisements on Krystal’s page.
• Krystal’s has lodged public and private complaints with Facebook, but has received no meaningful reply or response.

Facebook’s need to generate ad revenue should not encourage counterfeiters, but based on Krystal’s lawsuit one would conclude otherwise.
 

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Since the advent of the iPhone, iPad, and Droid devices employees have demanded that they use whatever devices they like, (e.g. BYOD) which has led IT leaders to change the way they do business regarding emails and company data. Clearly BYOD has had an impact on all businesses and as a result eDiscovery, and ALM is hosting a free CLE on October 18, 2012 at 8am CDT as part of the Virtual Corporate Counsel Forum and I welcome you to attend.

The title of this ALM webcast speech is “The Risks of BYOD and What You Can Do About Them” and my co-presenter is Antoinette Duffy who is the Director of Information Management at Commvault, Canada. Here’s the description of the presentation:

BYOD or Bring Your Own Device, is an unstoppable force in today's corporate environment, where recent statistics have suggested that the number of employees bringing their own devices to the workplace have reached 78% of the workforce. From an eDiscovery perspective is, who owns the data? Is it the corporation or the individual? Does discovery include everything from the device, the contacts, text messages, call logs, geo tagging, etc.? What data can be captured for an eDiscovery collection without infringing on the privacy rights of the individual? What data can be left behind without exposing a corporation to allegations of spoliation? Companies must be proactive in managing BYO devices in the workplace environment and ensuring data is preserved and collected in a defensible manner without compromising and organizations ability to be successful in litigation while maintaining a balance to preserve employee privacy rights.

Please let me know what you think about BYOD and how it impacts your life.
 

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Virtually all Internet users rely on some wiki since they are so prevalent, but did you ever wonder who owns the content? As a matter of fact as of October 2012 Wikipedia claims to have 23 million articles contributed by individuals around the world in 285 languages, and an "estimated 2.7 billion monthly page views in the U.S. alone."

Since wiki content is often controlled by open source licenses (which is generally free), the ownership of any wiki content is not entirely clear. But we may learn more about ownership based on a recent lawsuit filed by Wikitravel filed in August 2012 in a California state court against William Holliday, Holliday IT Services, James Heilman, and Does 1-10 for trademark infringement, violations of the Lanham Act (palming off trademarks), and unfair business practices. Although not a named defendant, the case is directed against Wikipedia's parent Wikimedia who allegedly want to take over Wikitravel.

If you want to learn more about wiki content ownership please read my eCommerce Times column entitled “The Mysterious Workings of Wikis: Who Owns What?"
 

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Increased demand for higher speed 4G networks brought on by increased use of cells & tablets may lead to a new security threat from China. The New York Times reported that the US House Intelligence Committee issued its report after a yearlong investigation which concluded:

…that the Chinese businesses, Huawei Technologies and ZTE Inc., were a national security threat because of their attempts to extract sensitive information from American companies and their loyalties to the Chinese government.

Huawei and ZTE “sell telecommunications equipment needed to create and operate wireless networks, like the ones used by Verizon Wireless and AT&T. Many of the major suppliers of the equipment are based outside the United States, creating concerns here about the security of communications.”

On October 7, 2012 Steve Kroft reported about a “60 Minutes” investigation concerning Huawei:

Their overriding concern is this: that the Chinese government could exploit Huawei's presence on U.S. networks to intercept high level communications, gather intelligence, wage cyber war, and shut down or disrupt critical services in times of national emergency.

Clearly these reports should help the US government focus on establishing cybersecurity laws, and somehow get past the August 2012 Senate filibuster which blocked the creation of a cybersecurity bill.
 

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The New York Times reported that a number of governments have banded together to combat Internet con artists. The Federal Trade Commission (FTC) was joined by “the Australian Communications and Media Authority, the Canadian Radio-Television and Telecommunications Commission, and Britain’s Serious Organized Crime Agency. This multinational crackdown on so-called tech support scams, in which:

...a caller fools a consumer into believing Microsoft or a computer security company has discovered that a PC is infected with harmful software. The caller then offers to fix the computer on the spot for a price. The target would sometimes let the ostensible tech support company gain remote access to his computer, allowing the company to download software to it. 

Sometimes it is hard to believe people can be so gullible...hopefully this international effort will help reduce this form of Internet crime.

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The federal plan was that the use of EHRs would reduce health care costs, improve efficiency, and patient safety, however after spending more than $19 billion dollars on EHRs apparently health care costs have increased. Not everyone thought the increased use of EHRs would help, in 2009 a report in the New York Times indicated that:

...two experts in health information technology at Children’s Hospital Boston assert that spending billions of dollars of federal funds to stimulate the adoption of existing forms of health record software would be a costly policy mistake

Now in September 2012 an updated story on EHRs in the  New York Times report indicates:

…in reality, the move to electronic health records may be contributing to billions of dollars in higher costs for Medicare, private insurers and patients by making it easier for hospitals and physicians to bill more for their services, whether or not they provide additional care.

It seems likely health care costs will only continue, so increased investment in EHR has not been the panacea that was predicted by the federal government.
 

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After trials, retrials, and years of appeal two defendants are now liable for fines of $675,000 and $222,000 for pirating 30 and 24 songs respectively. Joel Tenenbaum’s copyright infringement cost him $22,500 for each of the 30 songs, while Jamie Thomas-Rasset’s copyright infringement cost her $9,250 for each of 24 songs.

Computerworld reported about a blog by the Electronic Frontier Foundation (EFF) (which submitted a brief on behalf of Thomas-Rasset’s):

Frighteningly, the court suggested that statutory damages awarded by a judge or jury don't need to have ANY connection to the harm actually suffered by a copyright owner,…

Obviously these two verdicts are significant victories for the Recording Industry Association of America (RIAA), and perhaps the 6 strike Copyright Alert System proposed by the Center for Copyright Infringement may be a better means to prevent copyright infringement from the Internet.
 

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The Center for Copyright Information (CCI) claims that content theft cost America 373,000+ jobs, $16+ billion in lost wages, and $2.6+ billion in lost taxes, so the CCI proposes a new Copyright Alert System (CAS) with 6 alerts. CCI Member companies include:

• Motion Picture Association of America, Inc. (“MPAA”) and its members,
• Recording Industry Association of America (“RIAA”) and its members,
• 5 major ISPs - AT&T, Cablevision, Comcast, Time Warner Cable, and Verizon,
• Independent Film and Television Alliance, and
• American Association of Independent Music

CCI’s website includes the following example of the Alerts of the CAS:

First Alert: In response to a notice from a copyright owner, an ISP will send an online alert to a subscriber, such as an email, notifying the subscriber that his/her account may have been misused or involved in copyright infringement. This first alert will also direct the subscriber to educational resources which will (i) help him/her to check the security of his/her computer and network, (ii) provide explanatory steps which will help to avoid copyright infringement in the future and (iii) provide information about the abundant legal sources of music, film and TV content. 

Second Alert: If the alleged activity persists despite the receipt of the first alert, the subscriber will get a second similar alert that will underscore the educational messages.

Third Alert: If the subscriber’s account again appears to have been used for copyright infringement, he/she will receive another alert, much like the initial alerts. However, this alert will provide a conspicuous mechanism (a click-through pop-up notice, landing page, or similar mechanism) requiring the subscriber to acknowledge receipt of this alert. This is designed to ensure that the subscriber is aware of the third copyright alert as well as the previous educational alerts.

Fourth Alert: If the subscriber’s account again appears to have been used for copyright infringement, the subscriber will receive yet another alert that again requires the subscriber to acknowledge receipt.

Fifth Alert: At this time, the ISP may take one of several steps, specified in its published policies and the alert itself, reasonably calculated to stop future copyright infringement. These steps, referred to as “Mitigation Measures,” may include, for example: temporary reductions of Internet speeds, redirection to a landing page until the subscriber contacts the ISP to discuss the matter or reviews and responds to some educational information about copyright, or other measures that the ISP may deem necessary to help resolve the matter. The ISP may decide to waive the Mitigation Measure at this point – but it would be applied if a further notice of copyright infringement associated with the same subscriber’s account is received.

Sixth Alert: If the subscriber’s account again appears to have been used for copyright infringement, the ISP will send another alert and will implement a Mitigation Measure as described above. As described above, it’s likely that very few subscribers who after having received multiple alerts, will persist (or allow others to persist) in the copyright infringement.

To get more perspective on CAS please read my good friend Erika Morphy’s recent eCommerce Times column entitled “6-Strike Copyright Warning System: Can You Hear Us Now?”

Given the RIAA and MPAA’s apparent failure to stem copyright infringement in the past it will be interesting to see if the new CAS will control infringement.
 

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The Federal CIO Council (CIOC) recently released a BYOD Toolkit which is part of a plan “to develop government-wide BYOD guidance based on lessons learned from successful BYOD programs.” The Toolkit is “not meant to be comprehensive, but rather provides key areas for consideration” and the Toolkit includes these Sample Policies:

#1: Policy and Guidelines for Government-Provided Mobile Device Usage
#2: Bring Your Own Device – Policy and Rules of Behavior
#3: Mobile Information Technology Device Policy
#4: Wireless Communication Reimbursement Program
#5: Portable Wireless Network Access Device Policy

The recent Pew Research Report that88% of US adults have cell devices highlights the spread of BYOD, which an essential technology modern life, and clearly impacts government or private business. As a result, BYOD will continue to create complicated legal issues regarding ownership of email and Intellectual Property.
 

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The Secretary of Defense is considering a proposal “that military cyber-specialists be given permission to take action outside its computer networks to defend critical U.S. computer systems.” The Washington Post reported that anonymous sources stated:

It would account for changes in technology that will give more flexibility in defending the nation from cyberattack.

Probably this military proposal is a direct result that the Senate filibuster killed a new cybersecurity bill in early August, 2012 that “…would have established optional standards for the computer systems that oversee the country’s critical infrastructure, like power grids, dams and transportation.”

Clearly the US needs cybersecurity and perhaps the Pentagon’s approach will make up for Congress’ failure to create new laws.
 

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At time when cybersecurity is headline news around the world, partisan politics in the U.S. Senate got in the way of new a cybersecurity bill which was different than a bill passed in the U.S. House last April. The New York Times reported that the most vocal opponent of the new cybersecurity bill was the U.S. Chamber of Commerce who argued that the law would have been too burdensome. The report went on to describe that the bill:

…would have established optional standards for the computer systems that oversee the country’s critical infrastructure, like power grids, dams and transportation.

The Los Angeles Times headline about the story was “U.S. Chamber of Commerce leads defeat of cyber-security bill,” and reported:

Gen. Keith Alexander, head of the National Security Agency, and Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, were among those who pressed for a White House-backed cyber-security bill to regulate privately owned crucial infrastructure, such as electric utilities, chemical plants and water systems.

Perhaps it will take a major cybersecurity disaster to force the U.S. Congress to come together, like the way the U.S. Patriot Act (“Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism”) was created within one day following 9/11 in 2001.
 

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A law professor concluded that Justices on the Supreme Court regularly use Google since apparently Opinions issued by the Supreme Court cite facts never offered by the lawyers’ briefs. Professor Allison Orr Larsen (William & Mary Law School) studied 15 years of Supreme Court decisions and concluded that the Justices simply rely on Google.

Professor’s Larson’s conclusions are hardly a surprise given two Pew Research reports with these statistics:

92% of adults use search engines every day
86% of search engine users lean something new and important

What makes the Supreme Court Justices' reliance on Google more interesting is the prospect that search results are manipulated to generate more money for the search engines as alleged by the Texas Attorney General.
 

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In 2009 Microsoft agreed to offer EU customers a browser choice of 12 options until 2014, but apparently Windows 7 released in February 2011 did not contain that option. As result Joaquin Almunia (Vice President of the European Commission responsible for Competition Policy) announced on July 17, 2012 that and investigation is underway because: 

Although Microsoft submitted in a report to the Commission in December last year (2011) that the choice screen was still present, we have received indications from third parties that Microsoft has not complied with its commitments in the period from February 2011 until today.

Under the terms of the 2009 settlement agreement between the EU and Microsoft when Microsoft Windows customers bought a new version they would have browser options including Google (Chrome), Apple (Safari), Mozilla (Firefox), Opera, and Internet Explorer.

It will be interesting to see how the EU deals with this settlement breach, and what penalties that may be assessed against Microsoft.
 

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The cloud is hot, and headline news around the world! The legal risks for businesses can be substantial and impact all cloud customers. To learn more, please watch my recent video interview entitled “Cloud Computing: New Buzzword, Longstanding Concerns.” The interview by Financial Management Network (& parent SmartPros Ltd.) is part of a series of educational videos provided for accounting, finance, and IT professionals. So please check out the programs on Financial Management Network.

No surprise that attorney/client privilege may be at risk on the cloud. So you may be interested to see a TexasBarCLE webcast entitled “What Using the Cloud Does to Attorney/Client Privilege” (available on the TexasBarCLE webcast archive). I was honored to serve on the panel  with Chris Kirby (PCT Solutions, Inc.) and Jeff Blake (Splunk), and the webcast was an interesting and in depth discussion about the impact of the cloud on lawyers and clients.

Of course I welcome any comments or thoughts about cloud legal issues.
 

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Needless to say that lawyers rely on Social Media to investigate potential or sitting jurors, but a new ethics opinion warns against direct communications. The New York City Bar Association issued Formal Opinion 2012-2 entitled “Jury Research and Social Media” which posed the following question:

What ethical restrictions, if any, apply to an attorney’s use of social media websites to research potential or sitting jurors?

In summary the Opinion concluded:

• Attorneys may not research jurors if the result of the research is that the juror will receive a communication.
• If an attorney unknowingly or inadvertently causes a communication with a juror, such conduct may run afoul of the Rules of Professional Conduct.
• The attorney must not use deception to gain access to a juror’s website or to obtain information, and third parties working for the benefit of or on behalf of an attorney must comport with all the same restrictions as the attorney.

The Opinion is significant since lawyers reliance on Social Media will increase in the future, and the New York City Bar Association’s work should be a model for other Bar Associations.

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When employees use their personal cell, tablet, laptop, or PC it’s not so simple to determine who owns the content of their email and intellectual property. Notwithstanding the 2010 US Supreme Court 9-0 ruling (in the City of Ontario v Quon) that an employee who uses a company issued device is not entitled to constitutional privacy, when an employee conducts company business using their own personally owned device the question of ownership is much more complex.

I encourage you to read my June 2012 column in eCommerce Times entitled “The BYOD Maelstrom: Legal, Technical Issues Abound.”

Let me know what you think about the complex legal issues surrounding BYOD and how BYOD impacts your business.
 

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After losing a $13.78 jury verdict in April, 2012 the defendants persuaded the judge that the plaintiffs failed to prove that the defendants actually posted the anonymous libel. The plaintiffs, Mark and Rhonda Lesher, did get IP (Internet Protocol) addresses for the anonymous posters, but failed to convince District Judge Dana Womack (in Fort Worth, Texas) that there was sufficient evidence to prove the defendants posted the statements.

After a jury verdict, a Judge always has the right to overturn a verdict if the Judge concludes there was insufficient efficient evidence to support that verdict. In this case the defendants Shannon and Gerald Coyel, and Charlie Doescher, apparently convinced the Judge, so Judge Womack set-aside the $13.78 million verdict without explanation.

Notwithstanding this change of events in this libel case, it seems to me that we will see more cybersmear cases for anonymous postings and this is just the beginning of a wave of change to impact individuals who are maligned by anonymous posters.
 

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For 1 week ending June 8^th Facebook is asking its users to vote on a new proposed privacy policy which is the second time Facebook has asked users to vote.  Just like April 2009 vote, Facebook stated that if 30% of users vote for the new privacy policy then Facebook will accept that mandate.  Facebook adopted the privacy policy in 2009, however the April 2009 vote was far less than 1% (a whopping .00332827%!) of Facebook users bothered to vote.  Only 665,654 Facebook users cast ballots in 2009. 

So it’s no surprise that the June 2012 vote on the privacy policy (which Facebook calls its “Statement of Rights and Responsibilities (SRR) and Data Use Policy) Facebook says :

… if more than 30% of all active registered users vote, the results will be binding. If turnout is less than 30%, the vote will be advisory.

It will be interesting to see how many Facebook users will take the time to vote for, or against, Facebook’s new privacy policy.  I do not expect many to cast ballots!

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After more than two months of trial, last December a Dallas, Texas jury convicted a group of defendants of a massive cybercrime conspiracy to defraud telecommunications companies, and related charges. The Dallas Morning News reported that in May 2012 that US District Judge Sidney Fitzwater sentenced:

• Matthew Norman Simpson to 40 years in jail and ordered restitution of about $17.6 million,
• Nathan Todd Shafer to 9 year in jail and ordered restitution of $3.3 million, and
• Michael Blaine Faulkner to 30 years in jail and ordered restitution of $18.2 million.

The 2009 indictment of 19 individuals allege that among other things from March 2003 through July 2009, the defendants conspired to defraud:

• various telecommunications companies, including AT&T; Verizon; XO Communications; SMARTnet VOIP; Waymark Communications;
• leasing companies and creditors, including Wells Fargo, AT&T Capital Services, and the credit reporting agencies; and
• various other service providers, such as power companies, insurance companies, air-conditioning companies, web site developers, and others for goods and services amounting to more than $15 million.

Judge Fitzwater called the conspiracy “a massive, complicated, multiyear scheme to defraud a large number of victims.”

Unfortunately the scale of cybercrime is actually unknown, but hopefully the news of these massive sentences and restitutions will help assure the public that the US government can find and punish cybercriminals.

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Google is getting high marks for its May 2012 Transparency Report that when copyright owners complain about website infringement, that Google takes down those website urls (universal resource locators) 97% of the time. Google claims the other 3% are not taken down because of inaccurate or incomplete information.

In April 2012 1,255,402 url removal requests were made to Google search alone, not YouTube or Blogger. Top request for April 2012 were: Microsoft made 466,732 requests, NBCUniversal made 180,564 requests, BPI (British Recorded Music Industry) Ltd made 147,977 requests, Elegant Angel made 43,828, and RIAA members made 25,540 requests. Computerworld added the following observation:

…the organization associated with the most copyright removal requests was not a music label but Microsoft Corp. More than 530,000 of the URLs that were the subject of removal requests linked to Microsoft content. Between July 2011 and now, Microsoft or its representatives have asked Google to remove over 2.5 million URLs from its search engine results at a median of 48,700 URLs per week.

The Electronic Frontier Foundation (EFF) has praised Google for the Transparency Report that 97% of url takedowns were complied with however the EFF went on to say:

This transparency report gives Google a chance to highlight some of its good citizenship as an online service provider. Although the burden of liability is supposed to be on the organization that sends the takedown notice — it is required to claim under penalty of perjury to have a good-faith belief of copyright infringement — in practice many groups are willing to skirt those rules, sending takedown notices to silence unfavorable speech or even without human review.

Google’s Transparency Report provides interesting insight about who makes url takedown requests, and given Microsoft competitive search engine Bing it would be interesting to see what transparency reports Microsoft issues.
 

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Law professor Eugene Volokh wrote a paper describing why he believes that search engines have a constitutional right to speak to their users without government intervention. Although the 27 page paper was commissioned by Google, Professor Volokh (UCLA Law School) made the following conclusions about the leading search engines:

Google, Microsoft’s Bing, and Yahoo! Search exercise editorial judgment about what constitutes useful information and convey that information—which is to say, they speak—to their users. In this respect, they are analogous to newspapers and book publishers that convey a wide range of information from news stories and selected columns by outside contributors to stock listings, movie listings, bestseller lists, and restaurant guides. And all of these speakers are shielded by the First Amendment, which blocks the government from dictating what is presented by the speakers or the manner in which it is presented.

The New York Times reported that Google hired Professor Volokh to help validate Google’s immunity from antitrust claims which are front page news in the US and EU. As a matter of fact, the EU recently demanded that Google change its search engine practices or suffer antitrust fines.  My good friend Erika Morphy wrote an interesting article for eCommerce Times on the EU claims entitled "Is Google Stuck in EU Antitrust Locomotive's Headlight? "

If the Google can sustain its claim that as a publisher relying on free speech and that Google has the right to produce whatever search results it chooses, then perhaps Google can avoid antitrust charges.
 

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Even if employers provide cell devices/tablets to employees, many employees now insist on using their own iPhones, Droids, Blackberries, and tablets. However many privacy and data ownership legal issues are unresolved. At InnoTech on May 17, 2012 I had the honor to serve on a panel entitled “BYOD - Consumerization of IT & Policy Management” with these IT leaders:

Brian Bonner, Vice President and Chief Information Officer, Texas Instruments Incorporated
Richard Dorough, Chief Information Security Officer, Textron Information Services, Textron, Inc.
Gerry Mecca, Vice President of IT - Packaged Beverages, Dr Pepper Snapple Group (DPS)
Jake Sagehorn, Managing Director, SCA, Inc. (Moderator)

Many thanks to Jake Sagehorn for moderating the Panel’s discussion since it was clear that the audience of IT professionals wanted to learn more about our topics:

• Eligibility & Reimbursement Guidelines
• Enterprise Applications
• Security Guidelines
• ROI: The Cost Justification, and
• Legal Issues

Every business is impacted by BYOD, however the complex legal and business issues are not crystal clear.  How does BYOD impact you and your business?

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edX is a new Internet distance learning site that promises to transform education to “enhance campus-based teaching and learning, and build a global community of online learners.” The joint partnership announcement promised that edX will:

...offer online learning to millions of people around the world. EdX will offer Harvard and MIT classes online for free.

The Atlantic calls edX the “The Single Biggest Change in Education Since the Printing Press.” 

Does this really make sense, what's so new about Internet distance learning? Or is it just free Harvard and MIT education for millions around the world? 

Actually Khan Academy claims it has already delivered more than +149 million lessons to date.  I guess distance learning is already well-developed, and perhaps Harvard and MIT finally figured out they need to get with it!
 

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Google finally won a cloud war against Microsoft after years of battle and the US Department of Interior (DOI) will now deploy Google Apps for 90,000 employees instead of Microsoft Office 365. On January 3, 2011 US District Judge Susan Braden issued a temporary injunction enjoining the DOI from awarding a contract to Microsoft because apparently the DOI did not comply with federal procurement laws. Computerworld reported that Google was the successful vendor:

The contract is worth about US$35 million over seven years, the Interior Department said. It estimated that by replacing its current systems with Google Apps for Government, it will save up to $500 million by 2020.

Google’s success is a major victory for Google Apps in the highly competitive cloud wars.
 

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Freedom of speech under the First Amendment of the Constitution does not protect anonymous libel and slander posted on the Internet. ABC News reported that on April 20, 2012 a jury in Fort Worth, Texas gave a verdict in favor for Mark and Rhonda Lesher whose 2009 lawsuit was filed against “anonymous commenters who accused them of being sexual deviants, molesters, and drug dealers on Topix, once self-described as ‘the country's largest local forum site.’" Following the trial Mark Lesher said:

This vindicates us. This is vindication for all the scurrilous, vile, defamatory statements that caused us to be indicted, to be tried, that caused us to move out of town and my wife to lose her business,…You can't post anonymous lies on the Internet without suffering the consequences.

The Fort Worth Star Telegram reported that the Leshers filed their 2009 lawsuit following their acquittal of sexual assault, but the defendants at the Fort Worth trial posted thousands of anonymous statements on Topix which the jury concluded were slanderous.

The ruling in the Lesher case should be a warning to anonymous posters that they cannot hide behind the First Amendment if they slander others, and a jury may award significant damages for the slander.

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Many noted Judges rely on Wikipedia as authority including defining “Blazing Saddles” and “happy hour,” but the US Supreme Court has not yet accepted Wikipedia as authority. The New York Times reported in 2007 that Judge Richard A. Posner of the United States Court of Appeals for the Seventh Circuit and well-known blogger, in Chicago claimed that “Wikipedia is a terrific resource.” Judge Posner went to say:

Partly because it so convenient, it often has been updated recently and is very accurate…It wouldn’t be right to use it in a critical issue. If the safety of a product is at issue, you wouldn’t look it up in Wikipedia.

However in a recent ruling of US v Larson, US 4th Circuit Court of Appeals Judge Barbara Milano Keenan overturned a jury conviction for violating, and conspiring to violate, the animal fighting prohibition of the Animal Welfare Act, 7 U.S.C. § 2156(a) (the animal fighting statute) because Juror 177 searched Wikipedia for the definition of "sponsor," one of the elements of the offense under the animal fighting statute. The Wikipedia search was determined to be juror misconduct since Juror 177 relied on definitions not provided in court, but Judge Keenan also pointed out that definitions on Wikipedia are subject to change by public edits and therefore Wikipedia is not reliable. Which is an interesting position since Judge Posner feels the opposite.

It seems to me that Wikipedia is a reliable authority for many lawsuits and will be more widely accepted in the future. What do you think?

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Greenpeace reported that cloud computing may be popular, but generally it’s not very clean and gave Apple Ds and Amazon Fs, while Google got the best grades. The Greenpeace report entitled “How Clean is Your Cloud?” made these observations about electrical consumption:

• The electricity consumption of data centers may be as much as 70% higher than previously predicted.
• If the cloud were a country, it would have the fifth largest electricity demand in the world.

The Report had these findings regarding some of the largest IT/Internet businesses:

1. Three of the largest IT companies building their business around the cloud – Amazon, Apple and Microsoft – are all rapidly expanding without adequate regard to source of electricity, and rely heavily on dirty energy to power their clouds.

2. Yahoo and Google both continue to lead the sector in prioritizing access to renewable energy in their cloud expansion, and both have become more active in supporting policies to drive greater renewable energy investment.

3. Facebook, one of the largest online destinations with over 800 million users around the world, has now committed to power its platform with renewable energy. Facebook took the first major step in that direction with the construction of its latest data center in Sweden, which can be fully powered by renewable energy.

The Greenpeace Report is not surprising, but most cloud computing consumers do not take environmental concerns into consideration. Is this important to you and your business?

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“Fair use” of copyrighted works includes criticism, comment, news reporting, teaching, scholarship, or research, so what about use of public documents? The recent class action copyright infringement suit brought against West and LexisNexis (White v. West) will likely turn on the “fair use” doctrine. The Copyright Office describes “fair use” in Section 107 of the Copyright Act:

Section 107 also sets out four factors to be considered in determining whether or not a particular use is fair: 

1. The purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes

2. The nature of the copyrighted work

3. The amount and substantiality of the portion used in relation to the copyrighted work as a whole

4. The effect of the use upon the potential market for, or value of, the copyrighted work 

To learn more about the copyright issues in the White v. West case please read my eCommerce Times legal column on entitled “Copyright Law vs. Public Court Documents.” 

What do you think about “fair use” of public documents?
 

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Allegedly MIT’s computer systems were breached by Aaron Swartz who then downloaded millions of scholarly articles, but there are no claims of copyrights infringement. The New York Times reported that in July 2011 Aaron Swartz was indicted on charges that he:

…broke into the computer networks at the Massachusetts Institute of Technology to gain access to JSTOR, a nonprofit online service for distributing scholarly articles online, and downloaded 4.8 million articles and other documents — nearly the entire library.

Mr. Swartz was charged with charges of federal wire fraud and unlawfully obtaining information from a secure computer. Also he was charged with Massachusetts state crimes of breaking and entering, and unauthorized access to a computer system. However MIT recently reported that the state charges have been dropped.

The way JSTOR works is that colleges and libraries pay for access and then provide the materials free to their users. So even though the materials on JSTOR are free to users, subscribers to JSTOR must pay. The charges against Mr. Swartz are that he breached the computer security to do the download. No claims of copyright infringement, but a serious criminal charges nonetheless.

What about the JSTOR Copyrights?

When you take the time to read the Terms of Services (ToS) on JSTOR you will see that the original authors of the materials on JSTOR retain all intellectual property rights, including copyrights. Further JSTOR warrants that it is not a copyright infringer. 

So one might wonder, if Mr. Swartz infringed the copyrights of the authors on JSTOR why there have been no copyright infringement claims brought? That may change after the criminal trial however.

FOOTNOTE OF THANKS: To my friend Jonathan Thalheimer (McGuire, Craddock & Strother, P.C.) for passing along links about this JSTOR download.
 

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Few of the +150 million users realize that since LinkedIn began its operations that everyone gives an unrestricted license to everything posted. This may be a surprise since so few people ever bother to read Terms of Service (ToS) on any website or click agreement. Here is the license in LinkedIn’s User Agreement that all LinkedIn users must agree to before using LinkedIn which has not changed much since 2003 when LinkedIn began its operations:

…you grant LinkedIn a nonexclusive, irrevocable, worldwide, perpetual, unlimited, assignable, sublicenseable, fully paid up and royalty-free right to us to copy, prepare derivative works of, improve, distribute, publish, remove, retain, add, process, analyze, use and commercialize, …, any information you provide, directly or indirectly to LinkedIn, including,..

Just for clarity sake - “irrevocable” means the license cannot be terminated and “perpetual” means forever. So users should be mindful of what they post and messages they send using LinkedIn since LinkedIn has a license to all:

• email messages
• pictures
• messages to and from Connections
• recommendations
• PowerPoints posted
• EVERYTHING !!

Were you ready for the details of LinkedIn’s license? Most people are shocked to learn that LinkedIn has this license, so maybe people should take more time to read the ToS on websites so they would not be surprised.
.
 

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Pew Research recently reported that amazingly 86% of search engine users “learned something new or important that really helped them or increased their knowledge.” In the same report Pew also stated that:

91% of search engine users say they always or most of the time find the information they are seeking when they use search engines

Interesting enough however, only “73% of search engine users say that most or all the information they find as they use search engines is accurate and trustworthy.” So what does this say?

However invasion of privacy of search engine information is critical and:

…73% of search users say they would NOT BE OKAY with a search engine keeping track of your searches and using that information to personalize your future search results…

 

Do you agree with the results of this Pew Report?

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My recent blog about the copyright class action suit about the ownership of pleadings filed in federal and state courts around the US has intrigued many. In the aftermath of the Watergate scandal in the 1970’s state and federal governments have become more open.  Anyone can get information whether posted on government websites, or by requests to a federal agency under the Freedom of Information Act (FOIA) or to state under open records laws (like the Texas Public Information Act).

Today lawyers file documents electronically in most federal court using a system known as PACER, and in many state courts using a variety of systems (like the Texas eFiling System which Texas Supreme Court Judicial Committee on Information Technology started years ago, and which I was founding Chair for 12 years). As a result, the federal and state courts (and clerks of courts) maintain electronic copies of those pleadings. Under our open government anyone can get a copy, if not filed under seal for confidential reasons, for some nominal fee or free.

Under the Copyright Act the moment the author creates a work it is copyrighted and unless assigned to another, the author retains the copyright. So when lawyers draft pleadings they appear to clearly be the author under the Copyright Act and there is nothing that changes that when the lawyers file those pleadings with courts.

So in the White vs. West case that was the subject of my recent blog, Edward White and Kenneth Elan White allege:

West and LexisNexis have engaged in wholesale unlawful copying of attorneys’ copyrighted work, bundled those works into searchable databases, and sold access to those works in the form of digitized text and images for huge profits....

In doing so, West and LexisNexis are infringing the rights of the very clients they purport to serve.

What do you think about White and Elan’s claims?
 

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Two lawyers filed a class action suit against West and LexisNexis for violating the copyrights of court filings around the country. The lawsuit filed in Federal Court in New York City on February 22, 2012 by Edward White (of Oklahoma City) and Kenneth Elan (of New York) starts with a description of the case:

This is a copyright infringement action against West and LexisNexis based upon their unabashed wholesale copying of thousands of copyright-protected works, created by, and owned by, the attorneys and law firms who authored them.

The first step in this lawsuit will be for the Federal Court to establish whether is White and Elan properly claimed a proper class of plaintiffs for this case. White and Elan claim that the class in this lawsuit is:

…all attorneys and law firms…that authored works…that are contained in the Defendants searchable databases.

Then only if the US District Court certifies the class will this lawsuit proceed.

Since filings in courthouses are public documents, the documents are available to the public and the basis of While and Elan’s claims relies on the fact that under the Copyright Act the author has a monopoly on making copies. West and LexisNexis are clearly making and selling copies of court filings, and it will be interesting to see how this dispute is resolved.
 

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In 1994 Roger Fidler created a tablet with most of the features of the iPad a federal Judge ruled in Apple’s patent infringement case against Samsung. US District Judge Lucy Koh denied Apple’s motion for an injunction against Samsung for its Galaxy and Droid phone because Fidler’s 1994 tablet design created “basically the same visual image” as Apple’s iPad Design Patent (D504,889).

The Washington Post reported that in 1994 Fidler was doing research in Colorado for Knight-Rider and came up with the idea for what we now call an iPad. Interestingly enough Fidler’s next door neighbor in 1994 was Apple who developing the ill-fated Newton, an early PDA.

Check out Fidler’s video from 1994 on YouTube (which has gone viral) to see what how he described the iPad.

Of course the tablet computer is an old concept, and originally with a pen, so it’s no wonder that Fidler’s design in 1994 predated the 2010 Apple iPad.
 

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The Court of Justice of the European Union (CJEU) refused to order a Social Media site to prevent the unlawful use of copyrighted works. In 2010 SABAM (Société Belge des Auteurs, Compositeurs et Editeurs), the Belgian collecting society for music royalties, lost a lawsuit to force Netlog (a Social Media site) to add a filter to block copyrighted works from its 2 million users.

On February 16, 2012 the European Digital Rights (EDRI) announced the result of an appeal of the 2010 decision and that the CJEU ruled that Netlog:

…cannot be obliged to install a general filtering system, covering all its users, in order to prevent the unlawful use of musical and audio-visual work.

This is an important ruling for copyright owners and Social Media sites.
 

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Google recently announced revised Terms of Service (ToS) and Privacy Policy which go into effect on March 1, 2012. Google claims that the ToS were rewritten “to make them more readable and to reduce the repetition and legalese.” And with regards to the Privacy Policy Google stated:

We’re getting rid of over 60 different privacy policies across Google and replacing them with one that’s a lot shorter and easier to read. Our new policy covers multiple products and features, reflecting our desire to create one beautifully simple and intuitive experience across Google. 

I encourage you to read Google’s new ToS and Privacy Policies, but my personal experience is that about 1% of users actually ever bother. Please read my eCommerce Times legal columns about ToS and Privacy Policies to get a better idea how important the legal terms are.
 

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After getting a new iPhone that had test pictures inside the Chinese factory where is was made, Mike Daisey was intrigued to learn more about the individuals who actually make the Apple products (and Dell, and many others). Daisey recently told his story on This American Life radio about his trip to China to see the Foxconn plant in Shenzhen that had about 400,000 workers. He discovered that children, no more than 12 years old work on the assembly lines, slept in Foxconn dorms, and there were many suicides. Students and Scholars Against Corporate Misbehavior (SACOM) have challenged Apple, and other computer companies, for abusing workers for working too many hours and using toxic chemicals among many abuses.

Daisey’s story probably helps explain why so many cell devices and computers are made in China where the laws do not protect children as SACOM claims. So it seems that modern technology is not so clean and has an uglier side that we don’t hear much about.

 

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Phonedog.com sued a former employee for theft of their customer list when his 17,000 Twitter followers went to his new Twitter name after he quit. The New York Times reported that Noah Kravitz was a writer for Phonedog.com which "is a highly interactive mobile news and reviews resource that attracts a community of more than 2.5 million unique visitors each month." Until Kravitz quit in October 2010 he had 17,000 Twitter followers for his Twitter name Phonedog_Noah, and when he left Phonedog agreed to let Kravitz keep the Twitter name in exchange for his agreement that he would post Tweets for Phonedog from time to time.

Kravitz change his Twitter name to NoahKravitz and the 17,000 followers went with him. 8 months later Phonedog.com sued Kravitz “saying the Twitter list was a customer list, and seeking damages of $2.50 a month per follower for eight months, for a total of $340,000.”

How can Phonedog.com claim that followers of Twitter is a customer list which can be protected under trade secret laws? In order to be a trade secret in the US a company must be able to prove that the secret gives a company a particular business advantage and the owner has properly protected the trade secret.

Here Phonedog.com is asserting that Twitter followers are customer list (a trade secret), however the details about Twitter followers identity are stored on Twitter. Twitter’s Terms of Service do not obligate Twitter to keep any information secret. As a matter of fact, if you search the Twitter Terms of Service the word “secret” is nowhere to be found.

This will be an interesting case to watch, but since 95% of all lawsuits settle without trial it is most likely the parties will settle the dispute and the Courts will not rule on this novel trade secret claim.

How could the facts in this lawsuit affect you and your Social Media activity?
 

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Although Google's Android smartphone operating system has been associated with Carrier IQ, Eric Schmidt (Google's Executive Chairman) told an Internet freedom conference in the Dutch city of The Hague about Carrier IQ that "It's a key-logger, and it actually does keep your keystrokes, and we certainly don't work with them and we certainly don't support it." Reuters reported that Schmidt also said "Android is an open platform, so it's possible for people to build software that's actually not very good for you, and this appears to be one."

You might want to look at Carrier IQ’s website since it has a running log of the number of handsets currently deployed at the moment this blog is written was “141,422,528” and increasing at a rate of 67 handsets per minute (based on my iPhone stop watch). That translates to an amazing increase of 96,480 handsets per day!  Can that really be true?

Carrier IQ’s front page still states that:

Carrier IQ is the leading provider of Mobile Service Intelligent Solution to the Wireless Industry. As the only embedded analytics company to support millions of devices simultaneously, we give Wireless Carriers and Handset Manufacturers unprecedented insight into their customers’ mobile experience.

Seems like status quo for Carrier IQ, but the number of handset appears to be growing very quickly, and Carrier IQ’s response to Senator Franken will be interesting.

What do you think about Carrier IQ?
 

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Pew Research recently reported that 92% of adults use search engines daily and comScore recently reported that 65.6% of all US searches are conducted on Google. So I thought I would pass along Hack College’s recommendations about how to “Get More Out of Google.” Here are some search pointers that may improve your use of Google:

Try these searches on Bing and Yahoo!, but you’ll see that they don’t work the same.

Please let me know if pointers help your use of Google.

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Since the Wikimedia Foundation (home of Wikipedia) is a not-for-profit, it survives by annual fundraisers. Google co-founder Sergey Brin and his wife Anne Wojcicki (23andMe co-founder) used their Brin Wojcicki Foundation to grant $500,000 to the Wikimedia Foundation. The Wikimedia Foundation kicked off its 8th annual fundraiser on November 16, 2011 and raised $1.2 million the first day.

Most people don’t realize that unlike most other Social Media sites, the Wikimedia Foundation is not generating profits rather it relies on contributions.  The Wikimedia Foundation is a 501(c)(3) for tax purposes. That means the Wikimedia Foundation does not operate to make a profit and does not pay taxes, and contributions to the Wikimedia Foundation are tax deductible.

According to a Wikimedia Foundation press release from Sue Gardner (the Executive Director) announcing the Brin Wojcicki Foundation grant:

The Wikimedia projects currently reach more than 477 million unique visitors around the world every month (comScore, October 2011), making Wikipedia the fifth most-popular web site in the world.

This is how Wikipedia works: people use it, they like it, and so they help pay for it, to keep it freely available for themselves and for everyone around the world. I am very grateful to Sergey Brin and Anne Wojcicki for supporting what we do.

Interesting blog on the New York Times included this comment:

Google and Wikipedia haven’t always been friends. In 2007 Google introduced a service called Knol, which was seen by many as a Wikipedia competitor. There were concerns at the time that Google would highlight Knol rankings in its search results, pushing Wikipedia aside. But Knol didn’t fare well online and has grown slowly.

The Wikimedia Foundation and Wikipedia expanded credibility with by its alignment with the Smithsonian Institution, and other contributions from mainstream business.
 

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Pew’s recent report came as no surprise that 95% of teens (12-17) are on the Internet. But why are only 80% using Social Media? Amazingly 55% of online teens “have decided not to post something online because they were concerned that it might reflect badly on them in the future.”

Hopefully the reason for teenagers' concern about their future is that parents are really taking the time to educate their children. Pew reported the following statistics:

• 94% of parents of online teens say they have talked with their teen about what kinds of things should and should not be shared online.
• 93% have talked with their child about ways to use the internet and cell phones safely.
• 87% have suggested ways to behave toward other people online.
• 87% of parents have talked with their child about what he or she does on the internet.

Since Pew recently reported that 65% of adults are using Social Media daily (up from 5% in 2005) the new Pew report that 80% of teens use Social Media certain means the age gap on Social Media is closing.

The 80% of teens using Social Media seems to reinforce the Consumer Reports article that 7.5 million children under 13 are on Facebook (in violation of the 1998 Children’s Online Privacy Protection Act).

As Social Media evolves it will be interesting to watch these trends for teens and adults.
 

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Many readers agreed with my recent blog that the Cloud is a new label for old technology – “think connecting to a mainframe over telephone lines,” and I encourage you to read my November eCommerce Times column about some important Cloud computing legal issues.

More Cloud History

Wikipedia’s historical description of Cloud computing includes:

The term "cloud" is used as a metaphor for the Internet, based on the cloud drawing used in the past to represent the telephone network, and later to depict the Internet in computer network diagrams as an abstraction of the underlying infrastructure it represents.

The underlying concept of cloud computing dates back to the 1960s, when John McCarthy (computer scientist who coined the term artificial intelligence) opined that "computation may someday be organised as a public utility."

So it should come as no surprise that in 1972 before I studied law and was working as mainframe programmer that I took a graduate course - “The Computer as a Public Utility.” The University of Texas at Austin course was cross listed between the Graduate School of Business, Computer Science Department, and School of Law. 

For marketing purposes I’m sure at some point there will be a new buzz word to replace the Cloud, even if there’s nothing new technically!
 

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US intelligence agencies just reported to Congress that China and Russia have national policies to steal technology from US companies over the Internet. The Congressional report was compiled by the Office of the National Counterintelligence Executive which included this alarming information:

Many companies are unaware when their sensitive data is pilfered, and those that find out are often reluctant to report the loss, fearing potential damage to their reputation with investors, customers and employees.

Unfortunately pinpointing the culprits has been difficult as reported by the NY Times:

Both China and Russia hide behind the anonymity of proxy computers and dispersed routers in third countries to pilfer proprietary corporate information to accelerate their own economic development, according to the new intelligence assessment.

This report should be a wake-up call to US businesses!
 

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GUEST BLOG FROM JIM BRASHEAR

I welcome Jim Brashear as a Guest Blogger with his blog concerning cyber security risks. Jim is Vice President, General Counsel and Corporate Secretary of Nasdaq-traded Zix Corporation, the market leader in email encryption services. He frequently appears as a public speaker on corporate governance, data security and information technology legal topics. You may want to follow him on Twitter. I’m sure we will see more Guest Blogs from him in the future. 

New SEC disclosure guidance about cyber security risks

The SEC recently issued new disclosure guidance about cyber security risks. In summary, the SEC is directing public companies to review, on an ongoing basis, the adequacy of their disclosure relating to cyber security risks and cyber incidents. The disclosure guidance does not create new standards, but reminds public companies of existing disclosure requirements that may apply to cyber security risks and cyber incidents.

The bottom line is that this guidance should cause public companies, including their senior management and boards of directors, to give more attention to assessing cyber security as part of their enterprise risk assessments, because a discussion of cyber security risks and cyber incidents may become expected in public company financial disclosure. It should also prompt public companies to include these issues in their disclosure controls processes.

The SEC provides more specific guidance about disclosure in six areas of public company financial reports: Risk Factors, Management’s Discussion and Analysis (MD&A), Business Description, Legal Proceedings, Financial Statement Disclosure, and Disclosure Controls and Procedures.

On the latter point, public companies will need to assess and disclose conclusions about the impact of cyber security risks and cyber security incidents on the effectiveness of the organization's controls over financial disclosure, including whether there are any deficiencies that would render those controls ineffective. Additionally, public companies should supplement their disclosure controls checklists, so that their disclosure controls processes will include consideration of possible disclosure about cyber risks and cyber incidents.

Companies are not required to disclose any or all of the issues that are identified for consideration and discussion by their disclosure controls committees. In fact, the SEC recognizes that detailed disclosures of these issues could increase the cyber risks. The organization may have concerns about what personnel can be involved in IT security discussions or receive any report about those issues, based on individual security clearances, etc. The process might, therefore, require that those discussions occur in a smaller group.

The list of questions below is intended to (a) prompt a discussion in the disclosure committee of any meaningful changes in the company’s cyber risk profile and whether additional disclosure (or other action) is warranted, and (b) create a written record that management thoughtfully considered the principal data security and privacy risks facing the company in order to determine whether additional disclosure (or other action) is warranted.

1.         Any significant change to the nature or level of cyber security risks facing the company or affecting the company’s services to customers [such as any meaningful increase in actual or threatened penetration attempts, spear phishing or other advanced persistent threats (APT), or denial of service (DOS) attacks]

2.         Any significant cyber incident [such as malware embedded in any company system which may have exposed or compromised any of the company’s confidential or proprietary information, or the transmission or other exposure via the internet of unencrypted personal information of any customer, employee or other individual]

3.         Any significant cyber security risk deficiency that was identified in any review or audit of the company’s information security or data privacy practices

4.         Any significant change to the company’s expenses or capital costs of mitigating cyber security risks, such as an increase in cyber risk insurance premiums or services purchased to avoid system penetration

5.         Any significant change in the company’s ability to promptly respond to, and promptly resume operations after, a cyber incident or damage or loss of power to the company’s principal data center or any other systems important to maintaining operations

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Use of remote computers has been around since at least 1964, but the current marketing buzz called Cloud Computing might make you think there’s something new. However Cloud Computing is merely the newest label for the 1964 remote computing service called "Time-Sharing" at Dartmouth College using a General Electric 235 computers (and dumb terminals -Teletype 33/34). Since 1964 the same idea of using remote computing as "Time-Sharing" has a number of labels including:

ASP -Application Service Provider
SaaS – Software as a Service
PaaS –Platform as a Service

A recent legal conference included a panel discussion about Cloud legal issues, however not once did the panel ever refer to any of these prior names, and in fact the panel members acted as if the technology and legal issues included in the Cloud Computing were something new. In fact the technology and legal issues are really very old news!

What is different about Cloud Computing is that all the Internet powerhouse players offer Cloud Computing services including IBM, Microsoft, Amazon, Google, Salesforce, and many more.
 

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The FCC plans to spend $8 billion to expand broadband service to more than 18 million citizens in rural America who lack high speed Internet access. In a speech, Julius Genachowski (FCC chairman) called access to broadband “a necessity”:

“Broadband has gone from being a luxury to being a necessity for full participation in our economy and society,” Mr. Genachowski said. “This plan will bring enormous benefits to individual consumers, our national economy and our global competitiveness.”

Walter B. McCormick Jr., (President and Chief Executive of USTelecom) a broadband industry trade association said: “We applaud Chairman Genachowski for his commitment to connecting all Americans to high-speed broadband”

When more details are revealed we will learn if this new plan will truly help citizens in rural America. Since the National Broadband Plan has been under way for many years it is not entirely clear why more Americans do not already have high speed Internet access.

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New Scientist reports that HP may use the Autonomy pattern-recognition eDiscovery tool to develop a new search engine which would work in tandem with HP’s text-based search. The report includes this example:

…the ability to point your phone at an image and having it return web links, documents, and other information. Other applications might be more robust internal database search for e-discovery or for scientific analysis of large datasets.

Bloomberg reported that HP paid $10 billion to acquire Autonomy so this certainly extends the search engine wars!

Of course from Microsoft’s perspective the prospect that HP will have a new search engine could not have come at a worse time since Bing loses $1 billion a quarter, and CNNMoney reports that Bing has lost $5.5 billion since its launch in June 2009.
 

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Trademark owners must act to avoid adult brands creating .xxx domains and can take advantage of the sunrise phase from September 7 through October 28, 2011.

I welcome you to read the Gardere Intellectual Property Alert entitled “Prevent the XXX Industry from Using Your Trademark” written by my partner Kay Schwartz and associate Jason Fulmer including these quick facts:

.XXX is reserved exclusively for the online adult entertainment industry.

The .XXX launch begins with the "Sunrise" phase, which is a limited period for trademark owners to protect brands before wider availability of domain names. The Sunrise phase is open September 7 - October 28, 2011.

Sunrise has two registration programs: Sunrise A and Sunrise B. Those wishing to register domains for adult brands use Sunrise A, while those wishing to proactively protect non-adult brands from non-legitimate use employ Sunrise B.

Beginning in December, any domain name not protected will be available for use by the adult entertainment industry.

ICM Registry administers this new top-level domain, and registrations are performed through many of the usual registrars (such as GoDaddy.com and Network Solutions).

All trademark owners need to give some thought to protecting their trademarks so they can avoid adult sites from hijacking valuable domain names.
 

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All Social Media and Internet businesses rely on TOS and Click Agreements to protect their legal rights, but few businesses take the time to make sure that the TOS and Click Agreements actually protect their business operations. I welcome you to read my eCommerce Times column entitled “Your Customers May Not Review Your ToS and Click Agreements, but You Should!”

Early this fall in my Law of eCommerce class at the SMU Dedman School of Law the class reviewed the TOS for the major search engines – Google, Bing, Yahoo!, and AOL. Even though these search engines compete head to head, no surprise the legal terms varied widely. But it was a surprise to my students, none of whom had had taken the time to review TOS before.

So take some time and review your TOS and Click Agreements to see if they actually protect your business.
 

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After filing more than 275 copyright infringement lawsuits, it now turns out that Righthaven was not the owner of the copyrights asserted in the lawsuit, and as a result is now on the verge of bankruptcy. The copyright infringement claims were made for reposting pictures and stories previously published by the Las Vegas Review-Journal, owned by Stephens Media. A Nevada federal judge recently unsealed an internal agreement between Righthaven and Stephen Media which disclosed the lack of Righthaven’s ownership. According to Kurt Opshal of the Electronic Frontier Foundation:

Righthaven does not own the rights to reproduce, distribute, display or prepare derivative works of the articles it is suing over, even though it makes those claims in its lawsuits...Copyright law does not permit a person to sue for infringement unless that person owns “the rights to reproduce and distribute the work.

Apparently Righthaven was trying to pattern its business after patent trolls, but since Righthaven does not have an ownership claim made in the lawsuit that model failed.

This is an interesting evolution of Internet copyright infringement claims.

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Google paid an estimated $100-200 million to expand its reach by purchasing Zagat Survey that potentially increases Google’s Social Media power. Pew Research recently report that 92% of adults on the Internet use search engines every day, so couple that information with Google’s “estimates that about 20 percent of its daily searches are for things that are nearby.”

Marissa Mayer (Google’s vice president for local, maps and location services) said:

All of these are users wondering where they should go, where they should spend their time, so to be able to offer accurate information is important, and that’s why we’ve been getting focused on reviews. 

As Google gets the corner on more valuable information, the net result is that Google's purchase of Zagat Survey appears to be brilliant.
 

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LinkedIn boasts +120 million members who all agree to be bound to their User Agreement, but few LinkedIn members noticed that on June 16, 2011 the LinkedIn User Agreement changed. LinkedIn’s new User Agreement is not radically different from previous versions. However since the LinkedIn User Agreement binds +120 million members world-wide it seems that these members would want to know that members expressly agree that they will comply with Section 10 B “Don’t Undertake the following” including (without limitation):

1. Act dishonestly or unprofessionally by engaging in unprofessional behavior by posting inappropriate, inaccurate, or objectionable content to LinkedIn;

2. Publish inaccurate information in the designated fields on the profile form (e.g., do not include a link or an email address in the name field). Please also protect sensitive personal information such as your email address, phone number, street address, or other information that is confidential in nature;

5. Invite people you do not know to join your network;

6. Upload a profile image that is not your likeness or a head-shot photo;

How many people violate LinkedIn’s User Agreement every day? If LinkedIn terminates members for violating the User Agreement they run the risk they become ostracized from an important Social Media network, so one would think it important to read the User Agreement!

What does your business do to protect itself from bad behavior on your website? Do your terms of service comport with your business and the visitors to your website?

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Only 5% of all adults used Social Media in 2005 when Pew Research first asked, and as ofAugust 2011 Pew now reports more than 65% of all adults use Social Media. To be more precise about what going on with online adults here’s the daily breakdown from another Pew report:

92% use search engines
92% send or read email
76% get news online
71% buy a product online
65% use Social Media

So even though 65% of users are active with Social Media, 92% are busy with search engines and email, here are even more interesting details about the demographics of Social Media users:

As of May 2011, there are no significant differences in use of social networking sites based on race and ethnicity, household income, education level, or whether the internet user lives in an urban, suburban, or rural environment.

In many ways it’s not a surprise about this evolution of Social Media and Internet activity, but clearly we recognize there are more radical cultural and legal changes are in our future.

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Copyright protection extends to cloud music lockers based on a new federal court ruling. US District Judge William H. Pauley III in New York granted judgments in favor of MP3tunes and Michael Robertson on August 22, 2011 under the Digital Millennium Copyright Act (DMCA) since MP3tunes complied with the DMCA safe harbor provision by taking down music that violated the Copyrights of others. EMI and 14 record and music companies brought a Copyright infringement claim against MP3tunes and Robertson and won on certain claims regarding infringement, but lost on the music locker claims.

My friend Rob Spiegel wrote an interesting eCommerce Times article about this case.

With the advent of Apple’s iCloud and the music lockers of Google and Amazon Judge Pauley’s ruling is significant.
 

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In 2009 Google started offering legal research and eDiscovery services (Postini), and now Google announced that it invested $18.5 million in RocketLawyer.com which bills itself as the “fastest growing online legal service.” Forbes reported that RocketLawyer.com founder Charley Moore:

…the firm has 70,000 users a day and has doubled revenue for four years straight to more than $10 million this year.Rocket Lawyer provides online legal forms, from wills to Delaware certificates of incorporation, that non-lawyers can fill out and store and share on the Web. For $19.95 a month, consumers can also have their documents reviewed by a real lawyer and even get legal advice at no additional cost.

Obviously Google sees the legal business as the place to be, and likely portends changes in how legal services are provided.
 

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Within 10 days of the riots in the UK a judge sentenced two young men, 20 and 22, to 4 years in jail for using Facebook. Without question Social Media has transformed communications and impacted the UK riots, but one might wonder if the courts may have acted too swiftly. Here’s what the Guardian reported:

Jordan Blackshaw, 20, set up an "event" called Smash Down in Northwich Town for the night of 8 August on the social networking site but no one apart from the police, who were monitoring the page, turned up at the pre-arranged meeting point outside a McDonalds restaurant. Blackshaw was promptly arrested.

Perry Sutcliffe-Keenan, 22, of Latchford, Warrington, used his Facebook account in the early hours of 9 August to design a web page entitled The Warrington Riots. The court was told it caused a wave of panic in the town. When he woke up the following morning with a hangover, he removed the page and apologised, saying it had been a joke. His message was distributed to 400 Facebook contacts, but no rioting broke out as a result.

The Judge told the two at sentencing that their use of Facebook were “evil acts,” but many are questioning how disproportionate these sentences seem to be given all the bad players in the UK riots..

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A NY Times stock market report for August 8, 2011 highlighed the fact that Apple’s stock was the most valuable company in the world ahead of Exxon Mobil, but by the close of the day Exxon Mobil was still number one. Many stock analysts “expect Apple and Exxon Mobil to continue jockeying for the top slot while the markets remain volatile.”

I welcome you to read my August Technology Law Column at eCommerce Times entitled “Apple Mounting Trademark Challenges.”  

Given the headlines of Apple’s great market value my column was very timely to explain Apple’s legal risks at a time of great success.

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Apparently eBay wants to spread the word that it opposes an Internet sales tax. I wrote my eCommerce Times Legal Column recently about Internet sales taxes entitled “Sales Taxes on the Internet: Is This the Year We'll Pay?” I suspect that as a result of my Column, eBay's PR firm sent me the following email with a list of quotes in opposition to an Internet sales tax:

eBay Opposes Legislation Imposing New Taxes and Regulatory Burdens on Small Online Businesses

Brian Bieron, Senior Director, Federal Government Relations and Global Public Policy at eBay Inc., made the following statement upon the introduction of 'Main Street Fairness Act' bills by Senator Durbin (D-IL) and Representative Conyers (D-MI).

"A collection of state tax commissioners have again been able to get an outdated Internet sales tax bill introduced in Congress, but we are confident that it will be rejected because it would harm small Internet retailers. Better policy is reflected by H.Res. 95 from Congressman Dan Lungren (R-CA) and Congresswoman Zoe Lofgren (D-CA) with 27 bipartisan co-sponsors, which says that Congress won't give states 'the authority to impose unfair tax collecting requirements on small online businesses.'

"The giant retailers jockeying for new Internet sales taxes have national store networks that they combine with their major online sales platforms, a business model they know brings some tax collection duties. Forcing small businesses to take on the same costs and tax burdens as national retail businesses is unrealistic, unfair and will unbalance the playing field between giant retailers and small business retailers on the Internet."

The heat is on, so stay tuned for a hot summer and war against the Internet sales tax.

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GUEST BLOG FROM BARRY BARNETT

Barry Barnett has been a Guest Blogger in the past, his Blawgletter provides great thoughts, and insights. I read his blogs regularly. Over the years Barry and I have had a number of cases together and he is an outstanding lawyer. Barry is a partner at Susman Godfrey and I’m sure we will see more Guest Blogs from him in the future.

Firm Can Sue for Email Barrage, Sixth Circuit Holds

Do you wonder what you could do if someone targets your company with a torrent of calls and emails? Wonder no more. You can sue under the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, which creates both criminal penalties and a civil cause of action.

So held the Sixth Circuit in Pulte Homes, Inc. v. Laborers' Int'l Union of N. Am., No. 09-2245 (6th Cir. Aug. 2, 2011).

Due to a dispute over firings by Pulte, a home-builder, a union complained to the National Labor Relations Board. It also got members to make lots of calls to Pulte and send a great many emails to some of its execs:

LIUNA . . . bombarded Pulte's sales offices and three of its executives with thousands of phone calls and e-mails. To generate a high volume of calls, LIUNA both hired an auto-dialing service and requested its members to call Pulte. It also encouraged its members, through postings on its website, to "fight back" by using LIUNA's server to send e-mails to specific Pulte executives. Most of the calls and e-mails concerned Pulte's purported unfair labor practices, though some communications included threats and obscene language.

Yet it was the volume of the communications, and not their content, that injured Pulte. The calls clogged access to Pulte's voicemail system, prevented its customers from reaching its sales offices and representatives, and even forced one Pulte employee to turn off her business cell phone. The e-mails wreaked more havoc: they overloaded Pulte's system, which limits the number of e-mails in an inbox; and this, in turn, stalled normal business operations because Pulte's employees could not access business-related e-mails of send e-mails to customers and vendors.

Pulte Homes, slip op. at 2-3.

The district court tossed Pulte's "transmission" claim under section 1030(a)(5)(A) of CFAA on the ground that the union didn't "intentionally cause damage" to a "protected computer". The Sixth Circuit begged to differ, ruling that "a transmission that weakens a sound computer system -- or, similarly, one that diminishes a plaintiff's ability to use data or a system -- causes damage." Id. at 7.

You may not think of tying up phone lines or a computer network as "damage", but CFAA defines it that way. See 18 U.S.C. § 1030(e)(8) (providing that "any impairment to the integrity or availability of data, a program, a system, or information" counts as "damage").

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Apple did not prove that App Store was famous and not descriptive, therefore Apple failed to establish a likelihood of success at trial. On July 6, 2011 US District Judge Phyllis Hamilton denied Apple’s request to enjoin Amazon from using “App Store” as she ruled that it was unlikely that there would be any confusion between customers of Apple and Amazon.

Actually the standard to obtain a temporary injunction is so high they are rarely granted. 

Apple needed to prove that it had irreparable harm, money damages would not suffice, and it would ultimately win at trial. Which meant that at the trial Apple would have to prove “trademark infringement, Apple must show ownership of a legally protectable mark and a likelihood of confusion arising from Amazon’s use.” Amazon’s defense was that App Store is a generic mark “because Apple’s App Store is simply an online store where consumers can search for, choose, and download apps.” 

Apple reported it 10 billion apps had been downloaded since Apple started the app business.  However the truly amazing statistic is that Apple announced six months later that another 5 billion apps have been downloaded, for a total of 15 billion apps!  We can all watch to see if Judge Hamilton’s ruling has an impact on the future for Apple and the app world!
 

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As a retailer Apple appears to be second to no one, but since imitation is the sincerest form of flattery is it any wonder that a blogger visiting China recently discovered more than one counterfeit “Apple Store” selling Apple products and employees of the counterfeit “Apple Store” even believed they work for Apple! It is not clear exactly what Apple will do about this blatant trademark infringement. Actually the four real Apple outlets in Beijing and Shanghai are now the four most heavily trafficked Apple stores in the world and also generate the most revenue, outselling even the Fifth Avenue Apple Store in Manhattan (New York) open 24 hours a day.

Apple products are unbelievably popular in China as reported by the NY Times. In the last quarter alone Apple had revenue of $3.8 billion in revenue in China and:

For the first three quarters of Apple’s fiscal year, revenue in greater China was $8.8 billion — six times that of a year earlier. Last quarter, Apple may have even generated more revenue in China than Lenovo — the Chinese PC maker that seven years ago acquired I.B.M.’s personal computer business, according to a survey by Bloomberg News.

It may be better for Apple to allow the counterfeit Apple Store to operate to sell more Apple product and worry about the trademark infringement by some licensing agreement rather than trying shut down these counterfeit "Apple Stores."

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China’s dominant search engine Baidu announced a new licensing that will permit legal downloads and streaming music to millions of Chinese users. A recent NY Times report described the new deal that will change China’s image for providing illegal downloads:

The agreement between Baidu and One-Stop China, a joint venture between the Universal Music Group, the Warner Music Group and Sony BMG, will shut down access to a vast amount of pirated music and promises to broadly reshape the way China’s 450 million Web users gain access to online music. The country has long been a haven for pirated content. Baidu has been one of the chief conduits to it, much to the consternation of record labels, publishers and artists both here and abroad.

Although Baidu will pay the costs to provide legally free music the “International Federation of the Phonographic Industry, which represents global music companies, estimates that 99 percent of the music found online in China is illegal, much of it available through Baidu.”

So it remains to be seen how the new Baidu music deal with affect illegal music and international Copyright laws
 

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Google’s newest Social Media adventure Google+ is getting rave reviews with millions of users yet not launched to the public. Keep in mind that the Federal Trade Commission’s (FTC) 20 year oversight of Google’s privacy policy because of Google’s disastrous Buzz – the 2010 failed Social Media attempt by Google. One might assume that the FTC has approved the Google+ Privacy Policy, but who knows.

Google has a myriad of legal issues going on right now and Google+ is just the latest so you might be interested to read my eCommerce Times July column entitled “More Legal Woes for Google.”

Stay tuned for more Google legal issues.
 

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Google faces antitrust allegations by the Federal Trade Commission (FTC), the European Union(EU), and in Texas that Google’s search engine favors its own services in search results and charges rivals higher ad rates. So when asked to testify before a US Senate Judiciary antitrust subcommittee Google initially refused, but now Eric Schmidt, Google’s executive chairman has agreed to testify.

Even though the US antitrust laws were created to deal with the oil and banking industries, and not eCommerce and the Internet, the US Department of Justice (DOJ) and FTC are scrutinizing Google. Claims against Google are far different that the antitrust trial and judgment against Microsoft more than decade ago for Microsoft's monopolist behavior regarding Internet Explorer and APIs (Application Program Interfaces).  Finally the DOJ monitoring of Microsoft ended in April, 2011.

The Senate hearing and investigations of the FTC, EU, and Texas will be interest to monitor.

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Microsoft recently paid $8.5 billion for Skype and even though Facebook and Google lost in the bidding wars offering a measly $3-4 billion, nonetheless nowFacebook announces that Skype will be available for video calling! Mark Zuckerberg said:

Users will be able to click a button in Facebook to call a friend. If the friend does not already have the plugin required for video chat, the friend will see a pop-up to download the plugin. That download should just take 10 or 20 seconds.

Facebook now claims to have 750+ million active users who spend over 700 billion minutes per month on Facebook. Surely the addition of Skype portends great things for the future of Social Media and Facebook, but probably not Google since beta testing of Google+ (latest Social Media project) has privacy bugs which must be fixed before its public launch.

What’s next for Facebook? Google? Social Media?

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Apparently not every service offered by Google is a success as Google found that its Google Health did not catch on as expected. So Google Health will be retired January 1, 2012 with data available through January 1, 2013. Google Health’s goal was “to create a service that would give people access to their personal health and wellness information, “ but Google announced:

Google Health is not having the broad impact that we hoped it would. There has been adoption among certain groups of users like tech-savvy patients and their caregivers, and more recently fitness and wellness enthusiasts. But we haven’t found a way to translate that limited usage into widespread adoption in the daily health routines of millions of people.

Google announced the means by which users could retrieve their Health data:

If you’re a Google Health user, we’ve made it easy for you to retrieve your data from Google Health any time before January 1, 2013. Just go to the site to download your information in any of several formats: you can print and save it, or transfer it to other services that support industry-standard data formats. Available formats include:

Printable PDF including all the records in your Google Health profile

Industry-standard Continuity of Care Record (CCR) XML that can be imported into other personal health tools such as Microsoft® HealthVault™

Comma-separated value (CSV) files that can be imported into spreadsheets and database programs for ongoing tracking and graphing

HTML and XML versions of the original “data notices” sent to your Google Health profile by linked data providers

A unified ZIP archive that includes all files you’ve uploaded to your profile, plus all of the formats above

Given the federal government $19+ billion investment to automate health records it’s interesting to see that Google Health was not a winner in this space.

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Google was the most valuable brand name in the world for 4 years, and now Apple has finally surpassed Google as the most valuable brand.  Rounding out the top 10 are very familar names:

1. Apple
2. Google
3. IBM
4. McDonald’s
5. Microsoft
6. Coca-Cola
7. AT&T
8. Marlboro
9. China Mobile
10. GE

Of course one reason for Apple’s value has been its great success in retail. No wonder J.C. Penny hired Ron Johnson to be their new CEO (Johnson was Apple’s senior vice president of retail).

Since so much of the world is dependent on eCommerce, including J.C. Penny, it will be interesting to see how Apple and J.C. Penny fare. I wonder what this portends for the future of eCommerce?

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Steve Jobs’ predicts that Apple’s freeiCloud will allow everyone store all of their music, video, photos, and documents on the Web, which is no surprise in today’s hot cloud world. But many alarms went off around the world with the FBI’s announcement that the hacker group LulzSec breached a FBI’s Internet and stole 180 passwords and users names which were posted on the Internet.

So maybe the Internet is still not secure enough for all users to rely on iCloud, but the iCloud announcement was unique for many reasons. Not the least of which was that Apple pre-announced the iCloud in advance of the Apple WWDC (World Wide Developers’ Conference), highly unusual for Apple.

The cloud is unbelievably hot today, and the iCloud is obviously one more way that Microsoft and PC manufacturers will have to re-invent themselves. That is, if iCloud is a success which may seem automatic given Apple great on successful innovation. But it’s possible that Internet users will prefer to keep their own computers and not rely on the cloud. Of course many folks are worried about security, maybe the FBI’s recent break-in will be a wake-up call. Stay tuned.
 

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Senator Ron Wyden blocked a change to the Copyright Act which would have allowed the Department of Justice (DOJ) to order search engines and ISP to stop sending traffic of websites accused of infringing copyrights. The proposed law is called “Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act” (PROTECT IP Act). This Act would allow the DOJ “…to seek court orders requiring search engines and ISPs to stop sending traffic to websites accused of infringing copyright. The bill would also allow copyright holders to seek court orders requiring payment processors and online ad networks to stop doing business with allegedly infringing websites.”

Critics of the proposed law said:

...it would lead to hundreds of court cases brought by copyright owners against online businesses. The legislation would lead to a blacklist of Internet sites and compromise the Internet's Domain Name System,…

Senator Wyden called the Internet the "shipping lane" of the 21st century and felt the PROTECT IP Act would impede eCommerce.

What do you think?

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With 2010 revenue of about $240 million LinkedIn’s IPO $9.1 billion foreshadows an unbelievable value for Facebook when it has an IPO. Particularly since Facebook had 2010 revenue of about $2 billion, and that Hitwise most recent report of the Top Ten Social Networking Sites listed Facebook #1 with a whopping 64.22% and LinkedIn was merely #9 with 0.41%. It doesn’t take rocket science to see that Facebook’s IPO will be astronomical! Bloomberg reports that the Facebook IPO is still on track for April 2012.

These numbers make me dizzy and remind me of the Internet (doc.com) bubble of the late 1990s…what do you think?

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Current US Congressional debate will impact the future of the Internet with Net Neutrality opponents claiming that the FCC has overstepped its bounds of regulation and should rely on the antitrust laws. My recent eCommerce Times column entitled “Net Neutrality in a Nutshell” helps put the debate in perspective:

What is Net neutrality?

"Net neutrality" is short for "network neutrality" or "Internet neutrality." The concept addresses user access to the Internet, and the debate around Net neutrality centers on whether ISPs (Internet service providers) can limit, tier, block or otherwise affect Internet performance.

Without Net neutrality, ISPs can even charge higher fees for more bandwidth and higher-speed access to one vendor and not others, thus establishing tiers of service. For instance, without Net neutrality, an ISP could sign a lucrative contract with Netflix, then charge lower rates for its customers who use Netflix rather than Blockbuster.

Or, if an ISP preferred (e.g. had a financial interest in) one search engine over another, that ISP could force its customers to the preferred search engine by charging customers more each time they used any other search engine.

What do you think? Should the FCC regulate the Internet or not?
 

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VOIP is likely headed in a new direction now that Microsoft agreed to pay $8.5 billion for Skype. It was reported that Facebook and Google’s offers were in the $3 to 4 billion range, while at the same time Skype was still considering an IPO later this year. As a result of this purchase, Microsoft may end up the Internet leader of communications, information, and entertainment. Clearly Facebook’s play for Skype would have extended the reach of the 600+ million friends and Google’s plan would have enlarged the Google Talk and Voice offerings. 

Skype was founded in 2005 in Luxemburg, and purchased by eBay for $3.1 billion in 2005. But in 2009 eBay sold a majority to an investor group.

Without question VOIP is the future of communications and it will be interesting to follow Skype in the future. What do you think about Microsoft winning this competition over Facebook and Google?

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By the fall of 2011 BlackBerry mobile devices will use Microsoft’s Bing as the default search engine (with Bing maps) in direct competition with Google and to try to capture location based marketing opportunities. This should not be a surprise to anyone since Microsoft’s reported a 4% decline in sales of the Windows operating system in the wake of the sales of Apple’s iPad 2 and a many other tablets including the BlackBerry Playbook. No one should really feel sorry for Microsoft however since their overall profits were up 31%, but clearly Microsoft and BlackBerry teaming up against Google sends interesting messages to the location based marketers.

Needless to say there are a myriad of competitors to BlackBerry, including the Google's Driod which of course defaults to Google for search and maps. Of course on the iPad/iPhone default to Safari so neither Microsoft nor Google benefit. As location based marketing evolves which mobile browser is default on your device may be a game changer.

Do you think the default browser on the BlackBerry will help Bing?

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Steve Jobs admitted that Apple made mistakes in how it handled location data on the iPad and iPhone, but claims the data was not used to keep tabs on the whereabouts of customer. In the meantime Google announced that it used Android phone location data anonymously and with user consent to provide services to its users and did not announce any changes. On the other hand, Apple will shortly provide a software update to limit the location cache to no more that 7 days.

Marc Rotenberg (executive director of the Electronic Privacy Information Center) was pleased that “Apple acknowledged a mistake and they fixed it.”

It’s unlikely this is the end of the controversy as surely some bad event will force governments do re-think location data privacy issues.

Do you like the notion that Apple and/or Google are tracking your location?

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Researchers reported that Apple iOS4 operating system secretly logs unencrypted location data for iPhones, iPads, and those computers on which the devices synch to iTunes. Apparently the data resides on these devices only, so the largest problem will occur if the devices are lost, stolen, or hacked into. As a result of this revelation Senator Al Franken sent Steve Jobs a letter in which he raised a number of questions including:

Why does Apple collect and compile this location data?
How is this data generated (GPS, cell tower triangulation, WiFi triangulation, etc.)
Why is this data not encrypted?
Does Apple believe that this conduct is permissible under the terms of its privacy policy?

We all know that cell phone contain GPS devices so our location hardly a secret, and Google even uses GPS movement to help display Traffic on Google Maps.  However Apple’s collection of this data creates a new level of public awareness.

What do you think?

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Q1 revenue increased $8.6 Billion which is 27% higher than a year earlier, however there are a number of critical legal issues facing Google which I included in my recent eCommerce Times column. Those legal challenges include the recent rejection of the long-running Google book settlement by US Circuit Judge Denny Chin regarding Google’s plan to digitize millions of books from libraries around the world. As a result of Google's unfavorable  launch of Buzz now the FTC will have oversight over Google’s privacy policy for the next 20 years. Also Google has antitrust issues in the EU and US. In spite of these challenges it appears that Google is economically success and doing well. However it’s difficult to predict how long Google can succeed with these complex legal issues to contend with.

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Although Social Media users rely on information posted on Wikipedia, a recent ruling in a US Federal Court is a reminder that US Federal Courts refuse to accept Wikipedia as a credible source. U.S. District Judge Charles Simpson of Louisville, Kentucky recently denied a new trial for Karen Sypher who was convicted of trying to extort money from University of Louisville basketball coach Rick Pitino. In his order Judge Simpson wrote:

…defense counsel appears to have cobbled much of his statement of the law governing ineffective assistance of counsel claims by cutting and pasting, without citation, from the Wikipedia web site

… The court reminds counsel that such cutting and pasting, without attribution, is plagiarism.

… Finally, the court reminds counsel that Wikipedia is not an acceptable source of legal authority in the United States District Courts.

Even though the Smithsonian Institution is now teaming up with Wikipedia that does not validate Wikipedia postings for the Courts. As time moves on Wikipedia may be a reliable source for the Courts, but when is still unpredictable.

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The NY Times is now charging for its content except for bloggers and Social Media users (including Facebook & Twitter) who are not charged for NY Times content at all. Under the new system for charging, visitors to the NY Times enjoy 20 free articles each month and otherwise the NY Times has a charging scheme that allows paper subscribers to not pay extra.  Other payment options include iPad and/or BlackBerry users who will be charged beyond the 20 free articles. As a matter of fact if a Facebook user wants to sign up on the NY Times website they have to allow the NY Times access to their Facebook profile.

Here’s what Arthur Sulzberger Jr., Publisher of NY Times had to say:

Readers who come to Times articles through links from search engines, blogs and social media will be able to read those articles, even if they have reached their monthly reading limit. This allows new and casual readers to continue to discover our content on the open Web. On all major search engines, users will have a daily limit on free links to Times articles.

The big question is really how the NY Times will use Social Media user data, and what an interesting evolution of news and Social Media! 

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Not only was Google’s roll out of Buzz in 2010 badly received by the user community, the Federal Trade Commission (FTC) filed a Complaint for Google’s violation of its own Privacy Policies:

 ...Google launched its Buzz social network through its Gmail web-based email product. Although Google led Gmail users to believe that they could choose whether or not they wanted to join the network, the options for declining or leaving the social network were ineffective. For users who joined the Buzz network, the controls for limiting the sharing of their personal information were confusing and difficult to find, the agency alleged.

The FTC Complaint alleged that Buzz violate US privacy laws, and also violate the US – EU Safe Harbor Framework to allow personal data to be lawfully transferred from the EU to the US. Ultimately Google settled this dispute with the FTC and the FTC announced:

The proposed settlement bars the company from future privacy misrepresentations, requires it to implement a comprehensive privacy program, and calls for regular, independent privacy audits for the next 20 years.

Clearly the FTC settlement with Google sends a huge wake up message to everyone to review their Privacy Policies to avoid FTC actions!

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The US Supreme Court will hear argument on April 18 in the patent infringement case in which Microsoft has been enjoined from selling Word with XML features.  The US Solicitor General filed an amicus brief with the Supreme Court against Microsoft and endorsing the US Patent & Trademark Office who issued the 5,787,449 patent that protected i4i’s metacode technology.  More than 100 companies have filed amicus briefs supporting i4i including the military and venture capitalists.  On the other hand Microsoft has “20 amicus briefs, which represent about 60 companies and individuals, including Google, Apple, Cisco, Intel, Red Hat, the Electronic Frontier Foundation, and 37 law and economics professors.”  The Supreme Court ruling in the i4i case will have a significant impact on patent law in the US, but many thought the Supreme Court would clarify software patents in the Bilski case, but unfortunately that did not happen.  In the meantime Congress is once again considering legislation reforming patent laws.  Stay tuned for changes to patent laws in the US.

2009 Patent Judgment

Before the case got to the Supreme Court, Microsoft lost its appeal to the US Federal Circuit which sustained the trial court decision from 2009 where US District Judge Leonard Davis (Eastern District of Texas in Tyler) enjoined Microsoft from selling XML components of Word.  Also Judge Davis ordered Microsoft to pay $40 million for willful infringement and $37 million in prejudgment interest. This injunction and award of willful damages follows a May, 2009 jury verdict that ordered Microsoft to pay i4i $200 million for infringing the 5,787,449 patent.

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My March column for eCommerceTimes discusses how Social Media has become a gold mine for eDiscovery since the volume of ESI (Electronically Stored Information) in Social Media is staggering. Today every lawsuit has ESI which is obvious to everyone, but the unprecedented proliferation of Social Media has expanded the sources of ESI so that lawyers and judges are now being confronted with larger volumes of ESI.

American College of e-Neutrals (ACESIN)

I pleased to announce that in early 2011, Allison O. Skinner, my good friend (full time neutral in Birmingham, Alabama, and Adjunct Professor of eDiscovery at the University of Alabama School of Law), invited me to co-found the American College of e-Neutrals, an organization dedicated to the education, training, credentialing and use of e-Neutrals. E-Neutrals are third party referees -- mediators, arbitrators, masters, judges, liaisons and magistrates -- committed to resolving disputes arising from ESI. Just a reminder that Allison had the brilliant idea to use the mediation process to resolve eDiscovery disputes - which she calls eMediation.

Joining Allison and me on the founding Board of ACESIN are the following individuals:

Richard Best
ADR Services, Inc.
San Francisco, California

John DeGroote
John DeGroote Services, LLC
Dallas, Texas

Michael Geigerman
United States Arbitration & Mediation
St. Louis, Missouri

Richard Lettieri
Lettieri Law Firm, LLC
Pittsburgh, Pennsylvania

Timothy M. Opsitnick
Senior Partner and General Counsel
Jurinnov Ltd.
Cleveland, Ohio

Jonathan Redgrave
Redgrave LLP
Washington, D.C.

Allison and I hope that ACESIN will help Judges and lawyers throughout the US better deal with ESI to help litigants.

 

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Forbes released its annual list of billionaires and 6 were people involved with Facebook including Mark Zuckerberg ($13.5 billion), and Facebook co-founders Dustin Moskovitz, Eduardo Saverin and Sean Parker. Hardly a surprise rather just a confirmation of the value of Social Media innovation as portrayed in the Social Network movie. Unfortunately for Tyler and Cameron Winklevoss who had to settle for a measly $31 million and now challenging the settlement as they claimed to be the inventors of Facebook. One might wonder where the next billionaire idea will develop and change the direction of Social Media.

Facebook Reaches Top 10 in US Ad Rankings

ComScore recent US Ad Rankings showed that “Facebook was viewed by 153.0 million unique visitors in January, or 72.2% of the overall U.S. Internet audience that month, putting the site in 10th place in ComScore's Ad Focus survey of U.S. sites and advertising networks. The top spot went to Google Ad Network, with 197.1 million unique visitors, or 93.1% of Americans online.” Facebook was ranked a measly 26th by ComScore in June 2010 so their rise in popularity helps explain why there are 6 billionaires at Facebook!

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My February 2011 Social Media video is now available so you can get my 30 minute legal perspective without having to take my Law of eCommerce class at the Dedman School of Law (which I have taught since 2000). Since 2001 I have been creating IT legal videos to training IT professionals with WatchIT (now merged with SmartPros). Looking back to 2010 I was amazed to discover that I gave more than 35 speeches and webcasts, about Social Media and eDiscovery, including 10 in October alone! 

SMU 5 Billionaire Grads

Speaking of SMU Dedman School of Law, I was pleasantly surprised that Forbes recently reported that there are more billionaire graduates than any other law school! Quite a remarkable feat not to mention what Dean John Attanasio proudly announced:

When I first became dean in 1998, four of the five justices on the Texas Supreme Court and two of the justices on the Japanese supreme court were graduates of the law school. Currently, the chief justices of Thailand and the Philippines, and the former chief justice of Indonesia are among our graduates.

As a matter of fact the first semester I taught at SMU in 1986 the student who made the highest grade in the class was the Chief Justice in Thailand. Bravo to the SMU Dedman School of Law!

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Microsoft’s Bing search engine is trying desperately to keep up with Google and its approximate 70% of the US search market. Bing recently added links to Facebook and Twitter from search results with the hope that these Social Media links will impact search traffic. Since Microsoft does not have its own Social Media presence Microsoft hopes that the alignment with Facebook and Twitter will change Bing’s success in the future. Interestingly enough Yahoo! uses the Bing search engine but does not offer the new Facebook and Twitter links. The likely ultimate result is more traffic on Facebook and Twitter, but whether that really helps Bing in the search engine wars is uncertain.

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President Obama privately met to discuss eCommerce, entrepreneurship, job creation, the economy with Mark Zuckerberg (Facebook), Eric Schmidt (Google), Steve Jobs (Apple), Carol Bartz (Yahoo), Dick Costolo (Twitter), Reed Hastings (Netflix), Larry Elison (Oracle), John Chambers (Cisco), among others unidentified. IDG reported that role of Social Media in recent protests across Egypt, Algeria and other countries was discussed. The only White House photo released from the meeting was that of the President with Zuckerberg, Bartz, and Schmidt. Of course we will not get all the details since this was a closed meeting, but clearly demonstrates the immense power of the Internet leaders to have a private audience with the President.

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After devoting my February column in eCommerceTimes to Internet sales tax issues there was an interesting turn of events over the dispute between Amazon.com and the Texas Comptroller over a $269 million Internet sales tax bill. Amazon.com announced it was shutting down its Texas operations on April 12, 2011. In January Amazon.com filed a lawsuit against the Texas Comptroller to get the Internet sales tax audit which was the basis of the Texas Comptroller’s a $269 million Internet sales tax, but the Texas Comptroller claims the Internet sales tax audit cannot be released because of attorney client privilege. Texas Governor Perry announced that the Texas Comptroller was wrong and running off Amazon.com was bad for business in Texas. When the US Congress created the ban on Internet sales taxes back in 1998 (Internet Tax Freedom Act) the main purpose was to encourage the growth to the Internet, and now that it’s clear that the eCommerce is here to stay. Although collecting Internet sales taxes sounds great to help states find new revenue sources, it’s actually you and I who will be paying the Internet sales taxes. So it seems to me allowing more Internet sales taxes will not help consumers at all.

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GUEST BLOG FROM BARRY BARNETT

I welcome Barry Barnett as a Guest Blogger with his blog concerning a law firm that fell for a email that sounded too good to be true and which was really Phishing.  Barry’s Blawgletter provides great thoughts, and insights. I read his blogs regularly. Over the years Barry and I have had a number of cases together and he is an outstanding lawyer. Barry is a partner at Susman Godfrey and I’m sure we will see more Guest Blogs from him in the future.

GUEST BLOG: Sucker Law Firm Loses Claim to Undo Wire Transfers

Have you gotten one of those emails that says a non-U.S. outfit has big money coming to it but somehow no one there knows any U.S. lawyers and that the sender wants you to help it get the big money? Perhaps you could advance a small sum -- $10,000 perhaps -- to grease the skids?
 

How about one of those emails that promises an up-front retainer and lots of work to bill against it?
 

Or one that gives your firm the privilege of holding the new client's big money with no strings other than that you'll receive a fee of X percent for your fabulous help?
 

Believe it or not, some folks fall for that sort of thing. And Blawgletter today feels a perverse joy in knowing that, per the Second Circuit, the law will not rescue them from their folly.
 

The case involved a firm that for some reason received and deposited into its account a check for $225,351, which the firm seemed to regard as partial payment of a debt to a "new client" of the firm. Shockingly, before the check officially cleared, the new client asked for almost all of the funds.

The firm's bank reported the funds as "available". And, per the new client's requests, the firm wired $182,780 and $27,895 to, er, South Korea and Canada.
 

On the day of the second wire, the Federal Reserve Bank returned the check for $225,351, deeming it a fake. The bank charged the firm for the total plus -- and we think this hurt the most -- a $10 fee for handling the return of the bad check.
 

The law firm sued the bank for breach of contract. It alleged that the bank should not have called the proceeds of the fake check "available" before the check had in fact cleared. But the district court granted summary judgment to the bank. The Second Circuit affirmed, noting:
 

The obvious flaw with [the firm's] argument is that Citibank did not advise F&M that the funds were "available for withdrawal as of right." Rather, CItibank advised only that the funds were "available," without representing that the Check had cleared or that the funds had been collected or that settlement had become final. "Available" is different from "available as of right."
 

Fisher & Mandell LLP v. Citibank, N.A., No. 10-2155-cv, slip op. at 15 (2d Cir. Feb. 3, 2011).
 

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Wikipedia turned 10 years old in January 2011 with more than 3.5 million English articles and in more than 250 languages, but only about 15% of the articles have been posted by women. Actually based on a joint study in 2010 of Wikipedia of the contributor base by the United Nations University, Maastricht University, and Wikipedia ...“discovered that it was barely 13 percent women; the average age of a contributor was in the mid-20s.” The New York Times reported that Sue Gardner, the executive director of the Wikipedia foundation,:

has set a goal to raise the share of female contributors to 25 percent by 2015, but she is running up against the traditions of the computer world and an obsessive fact-loving realm that is dominated by men and, some say, uncomfortable for women.

At the same time the Pew Institute also issued the results of a study about Wikipedia indicates among other things Wikipedia is relied upon more widely by individuals with higher levels of education.

These reports make for an interesting evolution of Wikipedia and sharing Social Media information, particularly since Wikipedia’s Vision Statement in the Terms of Use is “Imagine a world in which every single human being can freely share in the sum of all knowledge. That's our commitment.”

So what about gender? Do men know more than women? Or are men just willing to express themselves on Wikipedia?

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LinkedIn now has 90 million users and the IPO information about the Social Media site is most interesting, including revenue over $161 million for the first 9 months of 2010 which was twice the total revenue for 2009. The current estimated IPO value of $2.51 billion is pretty astonishing with only 3 products:

1. hiring solutions (job listings),
2. marketing solutions (advertising), and
3. premium subscriptions.

Those of us who are active on LinkedIn see the great value for networking, and it’s amazing that LinkedIn could have such a market value. Clearly this is an interesting message about the value of Social Media sites like Facebook which has +600 million friends and an estimate $2 billion in revenue in 2010!
 

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Apple claims 160 million iPhone, iPod, and iPad users world-wide and given the popularity of Apple apps- it’s no surprise at Apple's announcement of 10 billion apps downloaded. The 10 billion apps comes on the heels of Steve Jobs’ announcement of his departure for medical leave, once again. Which is not good news for Apple. Before the iPod apps got started Apple’s market share was on the decline, and after the 2001 Napster ruling Jobs decided that Apple should offer apps at a small fee for each download, even though Napster music was free. How ironic that paying a minimal fee has been such a roaring success, but without Jobs at the helm it’s possible that Apple may not have a great future!

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Amazon filed a lawsuit in Texas state court as part of its challenge of a $269 million claim for uncollected Internet sales taxes dating back to 2005 when Amazon opened operations in Texas. In September 2010 the Texas Comptroller of Public Accounts demanded the $269 million of Internet sales taxes, but refused to provide Amazon with the audit claiming that the audit was protected by attorney client privilege since the audit was prepared by an attorney. In December 2010 the Texas Attorney General agreed with the Comptroller’s claim of attorney client privilege leaving Amazon little choice but to file suit. It makes little sense to me why any company should not be able to see a sales tax audit whether the claim is $100 or $269 million, but the claim of attorney client privilege seems wrong since tax payers should be able to see tax audits. This will be an interesting case to watch as this appears to be a misuse of the attorney privilege. What do you think?

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The Department of Interior (DOI) was enjoined from awarding Microsoft a contract to provide a Cloud email service following Google's bid protest. US Judge Susan Braden issued a temporary injunction because the DOI failed to comply with federal procurement laws. Google and Microsoft both offer Cloud email services, but apparently the DOI’s Request for Quotation (RFQ) described Microsoft federally based Cloud email system as the only qualified vendor. After Microsoft was awarded the Cloud email service contract with DOI, Google filed a protest and ask the US Court of Federal Claims to enjoin DOI. Without finding any bad faith by the DOI, on January 3, 2011 Judge Braden issued a preliminary injunction against the DOI going forward with the Microsoft Cloud email system. Competition in the Cloud continues to heat up and this battle between Google and Microsoft will the first of many headline stories, so stay tuned.

Continue Reading...

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All indicators were headed to this new headline that as 2010 ends Facebook overtook Google as the most popular Internet site. Experian Hitwise reported that “8.9 percent of unique online visits were to Facebook this year, compared with Google's 7.2 percent,” and ComScore estimates that Facebook would “surpass Google for the first time in number of pages viewed.” Of course these details are not much of surprise given that Facebook collected more than $200 billion in revenue in 2010 which was more than double its 2009 revenue. But other measures such as top Buzzed Sites lists YouTube as #1 and Facebook as #6…. So I guess this reinforces my father’s view of statistics…. Which is there are three types of liars – #1 Liars, #2 Damn Liars, and #3 Statisticians!

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After digitizing 5.2 million books Google now offers new tools that permit a fascinating view of language, culture, and evolution of thought unlike anything known before. Now anyone can analyze “500 billion words contained in books published between 1500 and 2008 in English, French, Spanish, German, Chinese and Russian.” Although the intended audience is for scholars, without question everyone can learn about more about our cultural evolution with Google’s new tools. One might wonder if these new Google tools could be applied to legal research to help the courts deal with social change. Without question Social Media is changing way people communicate and this new Google service will provide new insight about the future.

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As 2010 comes to an end Facebook now reports about $2B in revenue which is amazing for a number of reasons, not the least of which is that Facebook estimated revenue of closer to $1.5B (which was double the 2009 revenue) and not all that long ago Facebook was criticized for not being about to monetize at all. Now with 500+ active users it’s no wonder that Time recognized Mark Zuckerberg “Person of the Year 2010,” however one might wonder if Zuckerberg’s promise to give a sizable portion of his enormous wealth to charitable causes wasn’t a result of trying to improve the image of Facebook after the Social Network movie which portrayed Zuckerberg as not so nice. However without question mark Zuckerberg’s efforts to develop Facebook have had a significant influence on the evolution of Social Media.

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Mashable reports that Zeta Interactive released its Top 10 most buzzed Social Network list and Craigslist, Friendster, MySpace all dropped out of the Top 10 from 2009! This is a fascinating list:

As Social Media evolves this list will change, but it’s interesting that Google Buzz in #10 given its privacy litigation and settlement where it paid $8.5 million to organizations focused on Internet privacy education and policy.
 

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Please join the webcast about Social Media Use with my good friends Michelle Cheng, Yvonne Gierczyk-Skasko, and me sponsor by the ALI-ABA (American Law Institute – American Bar Association) which be live on December 7, 2010 at 12:30pm CST. Michelle, Yvonne, and I will discuss our experiences with Facebook, LinkedIn, Yelp, and many other Social Media sites. We will discuss the Coca Cola Social Media Principles, a recommended Law Firm Social Media Policy, and this top ten list of the legal risks associated with employee use of Social Media:

1. Copyright Infringement – posting content without permission from the owner
2. Trademark Infringement – showing third party logos/TMs without permission
3. Right of Publicity/Privacy – showing a person’s image/likeness without permission
4. Defamation, Libel and Slander – making false claims about a person
5. False Advertising/Unfair Competition – making false claims about a product or service
6. FTC Guides on Endorsements & Testimonials in Advertising – truth in advertising principles apply in digital media and word of mouth marketing. Bloggers or Social Media influencers that are compensated to blog/post/tweet about the Company must disclose the fact that they were compensated. Employees should disclose the connection to their employer when blogging/tweeting/posting about the Company’s products or services in Social Media.
7. Disclosure of Proprietary/Confidential Information –disclosure of material information
8. Labor – FLSA issues - e.g. non-bargained for employees engaging in Social Media during off-hours.
9. Employee/HR issues – employee conduct on Social Media
10. Collection and Retention of Personally Identifiable Information (PII)

Please join us on December 7th AT 12:30pm CST and of course we welcome your comments and feedback.

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Hitwise recently reported that 1 in every 4 pageviews in the US is on Facebook, and also incredible is Facebook’s claim that people spend over 700 billion minutes per month on Facebook. Astonishing growth made even more amazing by realizing that the second place, and far behind Facebook, is YouTube with 6.39% of US pageviews and third place Google at 5.32% of US pageviews! To make Facebook’s 25% of US pageviews even more significant is that comScore reported that Facebook’s growth in the past year was 55% over the preceeding year. Pretty heady stuff, but the biggest questiona of all are- where are we headed with Social Media and will the growth continue at this kind of pace?

Get Ready for Interesting Litigation

It’s not hard to conclude that the more Social Media activity, the more likely that communications between individuals will be evidence in lawsuits. Just one more reason that individuals who participate in Social Media should be thoughtful about what they post of Social Media sites, since items posted on the Internet have a way of surviving forever as Google CEO Eric Schmidt and some people may decide they need to change their identifies because of what they’ve said and on Social Media sites. Otherwise I recommend this advice – Don’t say anything on a Social Media site that you wouldn’t want a jury to see. If jury hears something once they may believe, if a jury hears something said twice they start believing it’s true, but if a jury sees a posting on a Facebook they will believe it’s true!

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Google settled a dispute about rejecting ads with the French Competition Authority including a 3 month notification period for the future when rejecting ads. Navx bought ads from Google to help drivers avoid speeding tickets by providing “online maps pinpointing the location of radar and camera systems the authorities use to crack down on speeding on French roads.” Because radar detectors are illegal in France Google rejected Navx's ads, and Navx filed a lawsuit in court for 7 million euros ($9.7 million) alleging damages. As part of the settlement Google “pledged to overhaul its rules and procedures for blocking certain advertisers from buying “sponsored links.” This good news since Google is adopting these new ad policies worldwide.

Google Accounts for 90% French Searches

Even better news for Google was that even though Google accounts for 90% of all online searches in France the French Competition Authority made “no finding of dominance or monopoly abuse.” However this could change and Google should be mindful of abusing its success. If Google accounted for 90% of the searches in the US it’s doubtful that the US government (FTC or Justice Department) would find no dominance or monopoly abuse. After all, the Justice Department pursued antitrust claims against Microsoft in the 1990s because of Microsoft’s market power and tying Internet Explorer to the Windows operating system (my 4th Big Bang of the Internet). There have been rumblings about Google’s potential anti competitive behavior since President Obama took office.

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Let’s see a show of hands- do you read Terms of Service? Privacy Policies? Or Click Agreements? I routinely ask audiences this question and rarely do I ever get any hands raised. My recent Technology Law column in eCommerce Times entitled “Who Reads Terms of Service, Privacy Policies or Click Agreements?” identifies many legal issues concerning website contracts. Every fall since 2000 I’ve taught a course on theLaw of eCommerce at the SMU Dedman School of Law and every fall I find that virtually none of my students have ever considered reviewing Terms of Service, Privacy Policies, or Click Agreements. But by the end of the semester they routinely review these contract terms. I was pleased to see a former student from 2004 recently who told me that he regularly reviews these contract provisions. The irony of not reviewing these contract provisions is that people have no idea what legal rights and privacy they may be giving up.

FTC and Privacy

TheFederal Trade Commission regulates privacy in the US and if a website does not have a Privacy Policy that’s okay but if there is a Privacy Policy the website must follow its promises to website visitors. Since so few people review Terms of Use, Privacy Policies, and Click Agreements the FTC is considering making changes to US privacy laws particularly regarding the Children’s Online Privacy Protection Act. However in the meantime until the US privacy laws are changed, websites have pretty much a free hand since no seems care.

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The US Constitution protects the disclosure of what reading and video materials citizens read and view, in spite of the North Carolina Department of Revenue’s best efforts. US District Judge Marsha Pechman granted Amazon’s summary judgment that precludes disclosure of Amazon’s “customers’ names, addresses or any other personal information.” The order states that “Amazon has conducted nearly 50 million transactions with North Carolina residents from August 1, 2003 to February 28, 2010, apparently without collecting or remitting North Carolina sales and use taxes.” As result of these sales transactions there was a sales tax dispute and Amazon has already provided “order ID number, seller, ship-to city, county, postal code, the non-taxable amount of the purchase, and the tax audit record identification.” Amazon filed its lawsuit in Washington State to avoid disclosing the customer personal information, and the American Civil Liberties Union joined Amazon. Luckily the Constitution protects the information that we read and view, however we will clearly see more challenges of this sort to learn about personal information.

Texas Bills Amazon $269 Million for Unpaid Sales Taxes

Amazon started operations in Texas in 2005 and not paid any sales taxes, so the Texas Comptroller of Public Accounts recently demanded that Amazon pay Texas $269 million. It’s easy to understand why state and local governments want sales tax revenue, but whether there’s a taxable transaction is not that easy to figure out. Amazon is a big target since 2009 sales were $25 billion. Recently I bought a book from Amazon, but where the taxable transaction took place is what’s hard to determine. Amazon is in Washington State, but the server could be in California, and the book shipped from Kansas to me in Texas. What difference does it make that Amazon has any business operations in Texas since it was not part of my purchase? Surely we can count on Internet sales tax issues to continue for some time.
 

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Google will not be accused of copyright infringement by posting the Dead Sea Scrolls unlike the current litigation about Google’s Books Library Project where Google is scanning millions of books to be freely available. Although the litigation continues, settlement looms on the horizon but the date for claims to be filed has been extended to March 31, 2011. The library partners include: Austrian National Library, Columbia University, Harvard University, New York Public Library, Oxford University, Princeton University, University Library of Lausanne, and many other famous institutions. Many notable scholars have weighed in that Google’s Library Project is great including Harvard Law Professor Lawrence Lessig "[Google Books] could be the most important contribution to the spread of knowledge since Jefferson dreamed of national libraries. It is an astonishing opportunity to revive our cultural past, and make it accessible." On the other hand many authors believe the value of their copyrights will be lost or diminished if Google makes their writings available for free.

Dead Sea Scrolls

Computerworld announcement about the Dead Sea Scrolls is a monumental event in history:
 

Google is working with the Israel Antiquities Authority (IAA) to digitize the Dead Sea Scrolls and make them available online. The collection of documents consists of about 30,000 fragments of the scrolls, which are approximately 2,000 years old…. This is the first time that the collection has been photographed in its entirety since the 1950's, according to the Israel Antiquities Authority, an Israeli governmental authority tasked with regulating excavation and promoting research.

The publication on Google of the Dead Sea Scrolls seems to fit into Wikipedia’s Vision Statement included in its Terms of Use: “Imagine a world in which every single human being can freely share in the sum of all knowledge. That's our commitment.” What an exciting time in the evolution of the Internet!
 

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A recent report of a WikiProject Smithsonian Institution should add credence to Wikipedia, since there are more than 3.4 million articles in English of the +17 million total Wikipedia article. Of course there must be a reason to believe Wikipedia, after all the 16 US intelligence agencies rely on Wikipedia’s version called Intellipedia. Since many search engine results include high rankings for Wikipedia, most people rely on Wikipedia on a day to day basis. The endorsement of more and more institutions like the Smithsonian Institution will improve Wikipedia’s credibility.

When Will Judges Rely on Wikipedia?

As more people participate in Social Media it’s likely that Judges will use Wikipedia for their personal day to day use of information on the Internet. So at some point Judges will begin to accept Wikipedia citations as authority. The Courts will change since Social Media is changing communications and information around the world. Why should Wikipedia be considered less reliable than Law Review articles, or newspaper articles, or editorial comments?
 

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Allowing Google to access your cell GPS will permit Google to make suggestions about things to do or restaurants to try wherever you happen to be. Although Google’s CEO Eric Schmidt recently said these autonomous search features were on the horizon, we’re pretty close to that point already with the location based apps like Facebook’s Places, Foursquare, and Shopkick. However Schmidt’s comments about the autonomous search does raise new privacy issues that everyone should be concerned about. Do people really want Google be know so much about us that Google tells us what to do, where to go, and what to eat?

What about Google’s Instant Search?

Google’s promoting of its new Instant Search includes a video of an old Bob Dylan song which may be cute, but the new search raises other new concerns about privacy and data that Google has about us. Now when we type in a letter in a Google search Instant Search immediately starts offering search results which in a way allows Google to complete our thoughts for us. But also Google can direct search results for paid advertisers if they have reason to want higher search rankings. In the meantime the Texas Attorney General recently announced that it was investigating Google’s search engine, and we may all learn whether Instant Search is driven by advertising or algorithms for the optimum results. However, most people are surprised to learn that Google saves all of our searches for 18 months (at in the US). What do you think about Google?
 

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No surprise that Facebook developed Credits using a team of former PayPal folks that shows a clear path to allow micropayments on Facebook and compete directly with PayPal. The New York Times recently reported that “Facebook began testing its virtual currency, called Credits, more than a year ago with some popular games on Facebook. This month, Credits passed a milestone when it became the exclusive payment method for most of the games created by Zynga, the No. 1 developer of Facebook applications.” Facebook enlarging its payment services is an interesting development that seems a likely evolution for Social Media.

Facebook – The Movie

A recent article in the New Yorker described Mark Zuckerberg, and not surprisingly, he is not very happy about the pending October 1st release of movie “The Social Network.” Facebook is still trying to decide whether fight back or not. Of course, whether the movie’s an actual portrayal of the history of Facebook is beside the point, now that Hollywood is involved. Social Media is unlikely to entirely change the stripes of Hollywood.

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My first lecture this fall was my “5 Big Bang Theory of the Internet” for Law of eCommerce class at the SMU Dedman School of Law which I have taught since 2000. You are welcome to see my WatchIT video about my “5 Big Bang Theory of the Internet.”  WatchIT has great programming for the IT community as well. It has been fascinating to observe the evolution and changes brought about by the Internet, and now Social Media is on the forefront. I was honored to give the keynote address on the Impact of Social Media to the Texas Retailers Association 50th Annual Meeting in San Antonio last week.  I got some great feedback at the Annual Meeting about how different retail is today, and it only seems like yesterday that we had the first Internet Christmas in 1999!

$1.28 Billion - Facebook Ad Revenue for 2010

eMarketer recently reported that Facebook will increase its ad revenue from $665 million in 2009 to a whopping $1.28 billion in 2010! As well, estimates for 2011 ad revenue for Facebook are $1.76 billion which is an increase of 165% from 2009-2011!!! Unbelievable numbers and yet not a big surprise given how Social Media is changing communications and our lives.

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276 domain names maliciously used by Waledac botnets were transferred to Microsoft, even though Waledac never participated in the suit. Waledac sent more than 1.5 billion daily spam messages in 2009. US District Judge Leonie Brinkema issued the Order transferring the 276 domain names which in one recent seven-day period counted 58,000 PCs attempting 14.6 million connections. This is a very creative way to try to block botnets, but unfortunately cyber criminals will find new paths to commit cyber crimes.

Millions of Daily Cyberattacks

A former CIO at the US Department of Energy recently reported that DOE has at least 10 million cyberattacks per day. Not complicated to multiple these millions of cyberattacks to the entire US government, and you can easily image that there are billions of cyberattacks per day. Unfortunately Microsoft’s success with these 276 domain names is a merely a dent in a huge wave of cyberattacks. Doubtful cyberattacks will abate anytime in the future.

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My recent Technology Law column in eCommerce Times describes why the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) has merely driven Internet Gambling off-shore and as result the US is losing billions of dollars of tax revenue. Generally the UIGEA resulted from four major policy concerns of the federal government:

First, the Internet was too easy a venue for compulsive gamblers.

Second, the age of Internet gamblers could not easily be determined, and underage gambling could not be controlled as with a brick-and-mortar casino.

Third, a lack of regulation of Internet gambling made it easy to defraud gamblers and rig the odds.

Fourth, the anonymity of the Internet made online gambling a medium for potential money laundering.

Since the US economy is doing so poorly Congress is considering legislation to regulate Internet Gambling which would result in an estimated $42 billion in tax revenues over the next ten years. Outlawing Internet Gambling failed much like Prohibition did in the 1920s. It’s high time Congress rescinded UIGEA, to help the economy and regulate Internet Gambling which clearly we cannot stop.

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A number of allegations that Google manipulates search engine results has led to an investigation of possible antitrust violations. Google has now responded about its search engine fairness about why some websites get higher rankings than others: “The important thing to remember is that we built Google to provide the most useful, relevant search results and ads for users. In other words, our focus is on users, not websites. Given that not every website can be at the top of the results, or even appear on the first page of our results, it’s unsurprising that some less relevant, lower quality websites will be unhappy with their ranking.” Since search engines do not disclose how they operate, this investigation by the Texas AG may result in making public, for the first time, how Google’s search engine actually operates.

Craigslist Blocks Access to ‘Adult Services’ Pages

Although the courts have endorsed Craigslist’s right to run ‘Adult Services’ under the Communications Decency Act of 1996, public pressure by states’ attorneys general finally forced Craigslist to drop ‘Adult Services.’ Even though Craigslist is privately held, the Advanced Media Group estimates that Craigslist will generate about $45 million in revenue this year. Probably Craigslist finally got the message that public opinion of facilitating prostitution and selling women against their will was unacceptable, and ultimately would damage the rest of its business.

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A proposed law in Germany will restrict employers from using Facebook, and other truly social Social Media sites, when recruiting. However the law would allow employers to search business Social Media sites such as LinkedIn. Since there are no current guidelines in Germany about employer’s use of Social Media content these new laws will help establish guidelines. Of course there are no specific guidelines in the US where about 30% of the estimated 500 million Facebook users reside. Currently most employers review Social Media postings to make hiring decisions and until judicial reviews and statutes are enacted this will continue. However what people post of Facebook, and other Social Media sites, is often quite amazing which is why Eric Schmidt (Google CEO) recently opined that “people will one day change their name and reinvent themselves in order to escape their digital past.”

Most People Don’t Want to be Located

Facebook’s new location based Places has sparked new privacy issues about disclosing one’s whereabouts from the GPS cell devices that we carry. However according to Forrester Research only about 4% of Americans have adopted these location based services notwithstanding a recent report indicated that venture “capitalists have poured $115 million into location start-ups since last year, … and companies like Starbucks and Gap have offered special deals to users of such services who visited their stores… Shopkick, which became available this month, offers coupons to people when they walk into stores like Best Buy and Macy’s.” Nonetheless many people feel that their privacy is compromised by disclosing their location, so location based Social Media will be an interesting social evolution to watch.

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Google CEO Eric Schmidt “fears that too much information is shared online, and predicts that people will one day change their name and reinvent themselves in order to escape their digital past.” Not a very surprising observation given the explosive growth of Social Media, and proliferation of information helps and hurts trial lawyers. There were an estimated 1.5 trillion text messages in 2009 and estimated 210 billion emails each day… but how many in 2010 and thereafter? If people change their identities our ability to find evidence and witnesses will change, but finding meaningful evidence may be the greater challenge given the volume of electronic information which continues to grow a phenomenal pace.

Google Expands its Retail Presence

Google recently acquired like.com which increases its Products engine to sell retail products whether its clothing, computers, or snacks. Like.com founded in 2004 provides a “visual search engine focused on shoes, clothes, jewelry and décor,” and also owns covet.com which is a personal shopper from hundreds of online stores. Covet.com offers Stylyzer to learn about the shopper’s preferences. Since Google retains all search engine queries for 18 months one might wonder how Google will marry retail shopping preferences into search engine results.
 

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Plagiarism is alive and well on college campuses however it is no wonder since the Internet and Social Media have changed communications. Without question Wikipedia has become a reliable source for students and at least 16 US intelligence agencies. Many question the authenticity of Wikipedia, but if the US intelligence community can rely on Wikipedia I guess the information’s reliable. But plagiarizing Internet information is part of a larger social issue that college students today believe that any information on the Internet is free game to include in their course assignments. Perhaps this is not a new phenomenon, rather professors can use Internet search tools to determine if students are plagiarizing which was not available when information only available in books when I was a college student.

Who Needs eMail or a Watch?

As Social Media morphs it’s no wonder that college students rely on cell phones for knowing the time and sending text messages in lieu of email. Remember that in 2009 there were 1.5 billion text messages sent, and with Facebook’s estimated 500 million friends the shift of communications probably indicates more postings on Facebook and that eMail will to decline from the estimated 210 billion sent each day….of course 70% are probably SPAM.  Interesting to see how Social Media evolves.

Where’s the Evidence?

Without question courthouses in the US have changed forever as a result of Social Media and the increase in text messages and eMail. However for more than 30 years my clients’ litigation has been limited to disputes about computer technology and Internet services which means that every lawsuit has had eEvidence. Recently I participated in a webcast with US Magistrate Judge Paul Grimm who wrote the well respected opinion in Lorraine v Markel (about the admissibility of eEvidence) and Judge Grimm pointed out how much more education is necessary to raise the water level for Judges and lawyers. Courthouses will never be the same, so Judges and lawyers have to understand more about Social Media communications.

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A court recently ruled that the use of GPS tracking data in a drug distribution case violated the defendant's constitutional rights and the police needed a warrant. The Electronic Frontier Foundation filed a brief in support of Antoine Jones that his expectation of privacy was violated by the GPS device placed on his vehicle. The US Court of Appeals for the District of Columbia overturned Jones conviction in the case of US v. Maynard. One may wonder if the GPS was tracked from a cell phone if the outcome would have been different. Since our cell phones have GPS data, it is any wonder that police might use the GPS cell data to track us? This court decision apparently protects us, at least for the time being.

Facebook About to Release Geolocation Features

A recent report indicates that Facebook will provide “location-aware data to become a part of existing platform applications,” which will compete with Foursquare and Twitter Places. Facebook already owns Hot Potato which is a check-in service and offered to buy Foursquare for $120 million which was rejected. Clearly Social Media is using geolocation data, and this will definitely grow! How courts rule about the use of GPS and geolocation data in Social Media in the wake of the the Maynard case will be interesting to monitor.

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Why Congress banned Internet gambling in the US in 2006 is a great mystery particularly since one major result of the ban was Internet gambling went offshore as did the possible tax revenues to the US. By lifting the ban Congress will have a new source of revenue. The Congress is considering legislation would direct the Treasury Department to license and regulate Internet gambling operations and allow the Internal Revenue Service to tax Internet gambling. Since my home state Texas cannot figure what to do about gambling the neighboring states (New Mexico, Oklahoma, and Louisiana) have all created havens for gambling, and a result gambling revenues from Texas are sent offshore to web-based gambling and our neighbors. Surely the Internet gambling tax revenue could help the economy, and I hope our elected representatives get this message.

Is an Internet Sales Tax coming?

Where a taxable transaction takes place on the Internet has always been a challenge. In 1992 the US Supreme Court ruled that retailers only had to collect sales tax in states where they have a physical presence. Congress is now considering Internet sales taxes as local government have lost significant tax revenues from Internet transactions. However, if I buy a book from Amazon which is in Washington state, the book may ship from Kansas, and the server on which I purchased the book could be in California. How can anyone figure out where the taxable event took place?

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A new report shows that customers are not that happy with Facebook and MySpace also showed that social media was ranked lower than property & casualty insurance. Also not a surprise that airlines were lower in customer satisfaction than social media. The 2010 American Customer Satisfaction Index (ACSI) was produced in partnership with ForeSee Results is described in the Annual E-Business Report. ACSI scores for Wikipedia topped the Social Media score with a 77, followed by YouTube (Google) 73, Facebook 64, and MySpace 63. IRS scored a 65. Not a surprise that the primary reasons for low rankings for Facebook were: “privacy and security concerns, the technology that controls the news feeds, advertising, the constant and unpredictable interface changes, spam, navigation troubles, annoying applications with constant notifications, and functionality, to name a few.” Interesting customer results at a time with Facebook announced that it had 500 million users and Mark Zuckerberg is sued over an ownership claim!

Facebook a Utility?

In a recent interview on National Public Radio (NPR) Facebook CEO and founder Mark Zuckerberg described his company as a utility for its subscribers “….When I say utility, I mean we are trying to provide people with utility,...Our goal was never to build something cool. It was to build something useful." As part of this interview it was pointed out that Facebook has the largest private database of personal information in the world. When pressed about why Facebook wouldn’t disclose the contents of the database, Zuckberg responded that people would no longer trust Facebook if the database was disclosed. So if Facebook is a utility used by 500 million people, why is it not regulated?
 

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Growth at Facebook has been unbelievable and not a surprise that its user rolls will get to 500 million, but last fall a childhood friend died, and a few months later I was taken aback after Facebook asked me to post on his wall. Since so many new Facebook users are grandparents and over 60 more and more Facebook members will be dying sooner rather than later. A recent article questioned how Facebook determines that some members have died so they can be removed from Facebook, or whether pages should be saved as a memorial. Interesting issue, but then again, if members are never deleted how can one be sure that there are really 500 million members… once someone joins Facebook maybe they stay forever.

On Facebook, Telling Teachers How Much They Meant

One nice benefit of Facebook and Social Media is the ability to find old friends, and a recent article in the New York Times told the story of a 49 year woman who found her high school teacher on Facebook. This teacher apparently had a significant impact on the student’s life and former student spent years searching the Internet to find the old teacher. Social Media allowed this connection to take place.

Do You Have a Phone Book?

A couple of years ago an older woman was lost in my neighborhood, so she stopped me to ask for directions. Unfortunately she did not have an address, only a name so she asked me to look in my white pages. She seemed amazed that I didn’t have any white pages, let alone yellow pages. The Internet has changed so much, it seems like not all that long ago people looked in phone books to find people, and now most of us rely on the Internet and don’t have white pages or yellow pages. Without question Social Media is transforming communications even more…stay tuned for more change.

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Purportedly Facebook CEO Mark Zuckerberg gave the original web designer 84% of the company and a New York Judge issued the designer’s TRO (Temporary Restraining Order) which has been challenged by Zuckerberg and Facebook. Paul Ceglia’s lawsuit alleges that he was paid $1,000 by Zuckerberg for 50% of the company, plus 1% per business day from January 1, 2004 until till the website was completed. Although New York Judge Thomas Brown issued the TRO, Facebook requested that the case be moved to federal court. Why Ceglia waited this long is unclear since he and his lawyer are not responding to the media, but now that Facebook has an estimated 500 million users and is worth more than $11.5 billion I guess claims of ownership are not a big surprise. However, in New York the statute of limitations on contract breaches are 6 years so Ceglia probably will lose on that issue alone.

What’s The Standard for Issuing Injunctive Relief?

It does seem strange that a TRO was issued because in order to prove to a Judge that a TRO should be issued there needs to be evidence of imminent and irreparable harm to the moving party, and it seems strange that Ceglia could have carried that burden. Also to get an injunction one must prove that money damages won’t suffice and there is no other remedy available, and in this instance it seems that money damages would suffice and there are other remedies. Of course an interesting wrinkle to this case is that the Wall Street Journal reported that about Ceglia:

In 2009, New York's Attorney General Andrew M. Cuomo accused Mr. Ceglia of defrauding customers of his wood-pellet fuel company, according to a news release from the Attorney General's office. The state claimed that he took more than $200,000 from consumers and then failed to deliver any products or refunds. The wood-pellet case is ongoing.

This will be interesting litigation to follow. Stay tuned

Continue Reading...

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At the same time Lady Gaga takes over the Social Media spotlight from the President, Prince announces that the Internet is nowhere and his next album will only be a CD. No surprise what Lady Gaga is doing since “Gaga’s Facebook fans organized “National Lady Gaga Day.” The accompanying Event had more than 100,000 attendees.” So I guess Prince has missed this big picture altogether since Prince proclaimed “all these computers and digital gadgets are no good. They just fill your head with numbers and that can't be good for you." Hard to imagine that the formerly known music star can be so far off base. Given all the negative impact from the proposed Presidential “Internet Kill Switch” it seems to me that the economy of the world would suffer by shutting down the Internet. Culture today depends on a vibrant Internet, and I guess it makes more sense to follow Lady Gaga rather than Prince….not too hard to figure out!

Music Infringement Verdicts Reduced

At the same time Lady Gaga sets the gold standard and Prince doesn’t get it, Judges are reducing jury verdicts for music Copyright infringements significantly. After a second Recording Industry Association of American (RIAA) trial against Jammie Thomas-Rasset’s for Copyright infringement, a jury ruled that the damages were $1.92 million for distributing 24 songs. US District Judge Michael Davis reduced the verdict to $54,000 ($2,250 per song) in January, 2010. Earlier this month US District Judge Nancy Gertner reduced the jury verdict against Joel Tennebaum by 90% ruling that $22,500 per song infringement that there “is no question that this reduced award is still severe, even harsh.” In the trial against Tennebaum, a Ph.D. student at Boston University, the RIAA proved that he downloaded 30 online songs. Judge Gertner wrote:

It not only adequately compensates the plaintiffs for the relatively minor harm that [Joel] Tenenbaum caused them; it sends a strong message that those who exploit peer-to-peer networks to unlawfully download and distribute copyrighted works run the risk of incurring substantial damages awards.

My experience in copyright infringement litigation is that proving damages is not simple. Each case is unique, so the jury must make a determination how willful the infringement is, and then can penalize an infringer up to $150,000 per infringement. Courts will continue to grapple with Copyright infringement constitutional size of damages.  The Tennebaum and Thomas-Rasset cases are important to help understand how juries and judges value online music. Perhaps Prince should spend more time with Social Media so he can get with it, because otherwise he may disappear entirely!

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Google plans to buy ITA Software who provides airline travel utilities to American, Continental, Hotwire, Kayak, Orbitz, Microsoft's Bing, among other companies. Of course this purchase for $700 million will require federal scrutiny given the antitrust implications, but as my friend Erika Morphy reports “Google says it plans to honor all the agreements the firm has with its customers and does not intend to sell airline tickets. Instead, CEO Eric Schmidt said, the company plans to build new flight and fare search tools for travelers.” Google’s attempt to take control over the travel industry is an interesting evolution, but one must wonder if the acquisition of ITA Software will give monopoly power in the travel space to Google.

Google Reviewing My Final Exam Questions?

Since 2000 I have taught courses on the Law of eCommerce at the SMU Dedman School of Law and Google must have gotten the idea about taking over the travel industry from my 2008 Final Exam:

Google hired you to give e-Commerce business advice immediately after announcing that Google bought Microsoft, Oracle, SAP, IBM, Symantec, Adobe, AOL, Amazon, Yahoo!, American Airlines, Delta Airlines, United Airlines, US Air, Southwest Airlines, British Air, Cathay Pacific Air, China Air, Korean Air, Japan Airlines, Airbus, Boeing, Hilton Hotels, Marriott, Starwood, Hyatt Hotels, Hotels.com, Orbitz, and Travelocity. The combined company plans to operate from one main website located at www.google.com.

The government agencies that regulate each of these companies have not approved these mergers, regardless Google intends to begin the new website located at www.google.com  on January 1, 2009.

Assume that each of the acquired entities will continue conducting business in their current field of business.

(1) TERMS OF SERVICE. Write one set of terms of service that will apply to www.google.com.
(2) PRIVACY POLICY. Write one privacy policy that will apply to www.google.com.
(3) ASSUMPTIONS: State all assumptions.

Google got the idea from me. Right? What do you think?
 

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Tweets a plenty were posted announcing that Wikipedia and LinkedIn were down, but one tweet wondered what would happen if Twitter also went down! We are so dependent on these Social Media tools that when these sites go down the communications also disappears….except probably text messages, phone calls, or even face-to-face conversations. If Social Media sites going down for a short time cause shock waves just image what would happened if the President flipped the “Internet Kill Switch?” Or if a Cyber War totally disabled the Internet and Social Media? These events only re-enforce how vulnerable the Internet is and how critical it is that our government does everything possible to protect the Internet.

We All Know that Computers Will Fail

After working with computers for more than 40 years one thing is absolutely clear to me, every computer will fail since that is the inherent design…that is, every component will fail at some point since each component has a mean time between failure. So Internet system designers take into account system failures to avoid Internet down time, or at least minimize down time. Because of the nature of computer technology and its inherent design that they will fail it’s not really much of a surprise that Wikipedia, LinkedIn, and other Social Media sites are reported down from time to time. However we have become so dependent upon Social Media that we are all at a loss about how to communicate during down times!

Good News - More US Broadband

Recent reports announced “that $795 million in grants and loans for broadband deployment projects across the US in all 50 states from the National Telecommunications and Information Administration (NTIA) and the US Department of Agriculture's Rural Utilities Service (RUS). The Texas Department of Agriculture recently announced that “More than 96 percent of Texas households have access to home broadband service; however, a quarter of a million households in the Lone Star State - more than all of the households in Vermont - lack access to this critical service.” However if that were really true then it’s unlikely that the NTIA and RUS would be spending so much money. Rural Texas and US do not have broadband services as I know my own personal experience in central Texas, just check the ConnectedTexas.org website to see. We will have 100% broadband coverage in the US someday, and it’s great that the federal government is helping expand broadband.

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Without much public fanfare recently a Senate Committee unanimously approved the bill dubbed “Internet Kill Switch,” which among other things would allow the President to take over civilian networks in case of an emergency. The Homeland Security and Governmental Affairs Committee unanimously approved the Protecting Cyberspace as a National Asset Act of 2010 (S. 3480) and now moves to the Senate floor for a full vote. Given our economic dependence on the Internet and the amount of energy devoted defending major cyber attacks one might wonder if a more public debate would be wise. Many Internet based companies I represent would simply cease to exist if the President hit the “Internet Kill Switch”!

Who Supports the “Internet Kill Switch”?

Microsoft, Verizon, EMC, Symantec, and others support the proposed law, so there must be something to the proposed Act.  You can be your own judge by reviewing the Senate Committee’s report entitled “Myth v. Reality of Cybersecurity Legislation.” Whether the proposed Act is best for the US is still in debate, however given threats of Cyber War to the Internet something must be done to protect the Internet.

Senator's Interview about the “Internet Kill Switch”

Sponsor of the proposed Act Senator Lieberman recently told CNN’s Candy Crowley about the whether the proposed Act was an “Internet Kill Switch”:

… total misinformation. I don't know whether people are intentionally pedalling misinformation. Here is the fact. Cyber war is going on in some sense right now. Our civilian infrastructure, the Internet that runs the electric grid, the telecommunications grid, transportation, all the rest is constantly being probed by nation states, by some terrorist groups, by organized criminal gangs.

And we need this capacity in a time of war. We need the capacity for the president to say, Internet service provider, we've got to disconnect the American Internet from all traffic coming in from another foreign country, or we've got to put a patch on this part of it.

The president will never take over -- the government should never take over the Internet. Listen, we've consulted, Senator Collins and I, who are proposing this bill, with civil liberties and privacy experts. This is a matter of national security. A cyber attack on America can do as much or more damage today by incapacitating our banks, our communications, our finance, our transportation, as a conventional war attack.

And the president, in catastrophic cases -- not going to do it every day, not going to take it over. So I say to my friends on the Internet, relax... take a look at the bill. And this is something that we need to protect our country. Right now, China, the government, can disconnect parts of its Internet in a case of war. We need to have that here, too.

Seems pretty clear to me that we need public debate and scrutiny of Cyber protection since our culture has become so dependent on the Internet.

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President-Elect Obama’s Twitter account was hacked “offering his more than 150,000 followers a chance to win $500 in free gas.” Twitter settled the FTC’s charges that “that it deceived consumers and put their privacy at risk by failing to safeguard their personal information, marking the agency’s first such case against a social networking service.” In my recent testimony before the Texas Senate I highlighted the problem with violating FTC privacy laws, and obviously this is just the beginning of Social Media claims that we will all deal with about Internet privacy.

FTC Settlement Terms

Here’s what Twitter agreed to as part of its settlement:

Twitter will be barred for 20 years from misleading consumers about the extent to which it protects the security, privacy, and confidentiality of nonpublic consumer information, including the measures it takes to prevent unauthorized access to nonpublic information and honor the privacy choices made by consumers. The company also must establish and maintain a comprehensive information security program, which will be assessed by an independent auditor every other year for 10 years.

Twitter Adds Location to Messages

Recently Twitter announced that it would allow “users tag their messages with their location.” So given the FTC settlement it seems that adding location would seriously impact privacy if one can easily learn when the tweets are originating.

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Viacom lost its $1 billion lawsuit against Google and YouTube for alleged copyright infringement when a judge granted summary judgment. YouTube’s defense was that it used the “safe harbor” protection of the Digital Millennium Copyright Act (DMCA) where YouTube would remove allegedly infringing videos after being notified, and after three offenses a poster would be banned from YouTube. On June 23, 2010 US District Judge Louis Stanton granted YouTube and Google’s motions in defense of claims brought by Via and other plaintiffs. In the 30 page Opinion Judge Stanton pointed out that “over 24 hours of new video-viewing time is uploaded to the YouTube website every minute.”  I know that YouTube is responsive to the DCMA takedown requests because YouTube has removed videos which have infringed copyrights of my clients.  The DCMA takedown procedures rules are part of YouTube's Terms of Service.

Viacom to Appeal

Viacom plans an appeal, but at this moment this appears to be a monumental ruling for Google and YouTube which helps define Copyright law on the Internet. As a trial lawyer my experience is that Judges rarely grant summary judgment (there are no facts in dispute, and the moving party wins on the law without a trial).  It is more likely than not that Google and YouTube will prevail on the appeal since the trial Judge granted summary judgment.  This case is important given size of YouTube and its role in changing Social Media.

YouTube Turns 5

When YouTube celebrated its fifth birthday in May, 2010 it announced that it passed “two billion video views a day.” YouTube has perennially lost money so there were many analysts who criticized Google’s $1.65 billion purchase of YouTube in 2006, which was made worse when Viacom brought its Copyright infringement lawsuit in 2007. YouTube has been developing partnerships with music labels to compete with "Hulu.com, the joint venture of Fox, NBC and ABC." So Judge Stanton’s Order should help clear Google and YouTube’s path for success and bring clarify about the DMCA.

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On Tuesday, June 15th I will speak on the “Social Media Impact on Law” at the Dallas Bar Association Franchise & Distribution Section meeting at noon at Belo Mansion. My speech will include the following topics:

• How Businesses Use Social Media – LinkedIn, Facebook, MySpace, Twitter, Yelp, Blogs
• Search Engines – Google, Yahoo!, Bing, WolframAlpha
• Privacy and Anonymity
• Terms of Service Jurisdiction
• Protecting Domain Names and Trademarks

Please join me at Belo and I welcome comments about my talk.

Kevin O’Keefe Addressed the State Bar of Texas (SBOT) Annual Meeting

Lexblog founder/CEO and good friend Kevin O’Keefe spoke on Thursday, June 10 in Fort Worth at the SBOT Annual Meeting about his favorite topic – “You Online Presence: Getting it Right, Ethically, with Twitter and Other Social Media.” Also my friend and SBOT web manager John Sirman spoke, and you can read more on Kevin’s blog “Real Lawyers Have Blogs.” Kevin has been an outstanding Social Media leader and I greatly appreciate his enthasiam and sage advice.

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On June 8th I attended Mashable and CNN’s conference about the intersection of digital media, news, and entertainment. Among other notable presentations was CNN’s medical correspondent Dr. Sanjay Guptap’s (renowned neurosurgeon) interview of Mashable’s founder Pete Cashmore and CNN.com’s general manager KC Estenson. You can watch the video of the interview about the how CNN collects citizen journalist news from Social Media in addition to its world-wide news professionals, and the merger of Social Media with 24/7 TV. Another fascinating presentation about the “Science of Social Media” was given by Duncan Watts (Yahoo!’s Principal Research Scientist). Clearly the merger of Social Media, TV, and news has happened, but predicting the future is the next challenge.

NEAT BADGE FROM THE EVENT!

Former eBay and HP’s CEOs Win Primaries

Also on June 8th Meg Whitman (former eBay CEO) and Carly Fiorina (former HP CEO) won primary elections for the fall’s election for California governor and US Senator. Of course having high-tech leaders in the US Congress is not entirely new since New Jersey Senator Frank Lautenberg founded ADP (the payroll processing giant) and was first elected in 1982. But with the advent and growth to Social Media these primary wins are not a surprise.

High-Tech Politics

OpenSecrets.org reported that individuals and political action committees in high-tech businesses increased their donations “43% between election cycles in the last decade” to $41.4 million in 2008. Last year Google increased its lobby expenditures to $4 million. One can only expect more Social Media leaders to pursue elected offices since clearly President Obama proved that Social Media is the most powerful communications tool available today. Be assured that Google, Yahoo!, Microsoft, and other major Internet and IT companies are involved in future of politics!

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Google demonstrated its new entertainment hub for TV with a browser which includes a joint effort with Sony, Intel and Logitech. As part of the announcement Google explained that “Google TV is a new experience made for television that combines the TV you know and love with the freedom and power of the Internet.” No surprise since it seemed inevitable that the Internet and television would merge a some point and it’s little wonder that Google a first mover!

IT Teams Up with Dairy Farmers

A recent report indicated that manure “from 10,000 cows could provide the power for a small computing center at a bank,” so Google, Microsoft, and HP are building more data centers in more rural areas to capitalize on dairy farmers’ use of cattle waste. “Information technology and manure have a symbiotic relationship,” said Chandrakant D. Patel, the director of H.P.’s sustainable information technology laboratory. How refreshing to see that IT can really be GREEN!

Google’s Woes Continue in the EU About WiFi Data

Things seem to be getting worse in the EU as Spain, France, and the Czech Republic announced plans to investigate collection of WiFi network data which raise the likelihood of EU sanctions. Of course Google takes the position that unsecure WiFi network data is not private and that other companies collect this data in the EU including Skyhook and organizations like the German Fraunhofer Institute. This will be interesting to follow and may have world-wide implications!

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Please join me for a Social Media webcast which will be an update about Facebook, LinkedIn, YouTube, Twitter, Yelp, Google, and much more on Wednesday, May 26, 2010 from 12:30-1:30pm CDT. You can sign up for the webcast at TexasBarCLE.

Google Update: Wi-Fi snooping earns it a class-action lawsuit

As a follow-up to my recent blog about Google's Street View Cars captured WiFi network information it is no surprise that many people are mad, but for folks who do not have secure WiFi networks….what should they expect? Stay tuned to see how this develops.
 

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I was honored to be asked by the Texas Senate to testify how Social Media impacts Open Government at a hearing on May 11, 2010 and you are welcome to read my Statement concerning Charge #13 for the Senate Affairs Committee:

Study the Public Information (Open Records) Act and the Open Meetings Act to ensure that government continues to operate in a way that is open and transparent. The study should consider how advances in technology and the emergence of various forms of social media (e.g. Facebook, MySpace, Twitter) have affected communications by and within governmental bodies.

The questions from the Texas Senators were very interesting since the first question was whether governments should do anything to regulate Social Media at all or just let things happen. You can listen to the hearing on the Texas Senate website and the testimony and questions begin about Charge #13 at about 2 hours and 3 minutes into the hearing.

Social Media Activity by Texas Senate Affairs Committee

It seemed like a good exercise to see what the Committee members were doing with Social Media so I prepared this chart as part of my Statement:

Ironically enough the Committee Chair Senator Robert Duncan was unaware that he was on Twitter until his staff advised him during the hearing. This only proves that elected officials have to be active with Social Media because it’s part of deal today and also why 430 Members of Congress have YouTube pages. Social Media is the way the world communicates and elected officials are participants.

Should Blogs and Social Media be Public Meetings?

The Texas Senate hearing was very timely since it was on the heels of the April 7, 2010 White House Memo declaring that posting blogs and Social Media are public meetings. This Memo is interesting and perplexing in that few people who post on Facebook, MySpace, Twitter, etc really think that everything about the public consequences. However when government employees post items on Social Media using government computers or during the workday they are not private citizens and there are consequences to what they say. Legislators in the US Congress and in the States need to be mindful about Social Media, however Social Media changes is not static nor can any laws to attempt to regulate Social Media.

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No surprise that Google’s search engine continues to grow at the expense of Yahoo! and Microsoft’s Bing. Hitwise now reports April 2010: Google at 71.4%, Yahoo! down 1% to to 14.96%, Bing down 2% to 9.43%, Ask down 37% to 2.18%, and the remaining 78 search engines accounted for 2.03%. As these search engine wars continue it seems pretty clear where we are headed. However antitrust issues are on the horizon!

EU confirms Google antitrust probe

The EU Commission confirmed that 3 complaints were filed and Google’s blog indicated that:

The complaints filed with the Commission came from U.K. price comparison site Foundem, a French legal search engine called eJustice.fr, and a German search site called Ciao that was recently acquired by Microsoft Corp. Google pointed out in its blog that Foundem is a member of a trade group called iComp, which is largely funded by Microsoft.

Given Bing decline it’s no wonder that Microsoft is pushing the EU to try to reduce Google’s control over the search engine market.

New Look: Google Search Engine Reults

To make Google even more user-friendly Google has evolved and morphed into a new look again. Check out Google’s new search engine results:

However, look closely since Google is now asking if users want Google to access to their location...privacy redflag if ever there be one!  Stay tuned for more Google in the market as Google dominates the search engine market and much more!

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Is HP’s purchase of Palm for $1.2 billion seems too little too late for HP to compete in the smart phone market? As the largest manufacturer of computers in the world it does seem like HP should be in the smart phone market, and yet few people realize that HP already sells the iPaq which isn’t even in the top 20 in the smart phone market and falling rapidly. The iPaq is primarily sold to businesses and relies on the Microsoft operating system. Which is not where the market appears headed. So HP’s purchase of Palm may have saved the brand for a while, but the odds are not great for success against the power of Apple and RIM (iPhone and BlackBerry) to name a few. However, it’s definitely worth watching given HP’s market power. Remember HP acquired Compaq and EDS  and Dell acquired Perot Systems to grow hardware and services markets, and the smart phone is critical.

Apple Purchases Fast Chip Manufacturer

While HP purchased Palm, Apple announced its purchase of Intrinsity “known for making zippy versions of a computer chip often found in mobile devices.” Surely this gives Apple more power for its future while making HP’s seem even later to this dance.

No Surprise – Now a Degree in Video Game Design

George Mason University now offers a video game design. Given the size of this market it’s no wonder that such a degree is now offered. It’s a marvel that video game design degrees are just getting started and surely more schools will offers degrees in this space. No doubt HP and Apple will have a role in the video game future, and between smart phones, iPads, and computers this evolution is interesting to observe.

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Facebook CEO Mark Zuckerman recently announced significant changes to Facebook expanding 100’s of websites with "open graph" and  “like” which may revolutionize the Internet. At the annual f8 Facebook outside developers’ conference on April 21, 2010 Zuckerman demonstrated "open graph" and how the use of “like” on hundreds of websites (including Yelp, CNN, Pandora, ESPN, and IMDb) will allow the 400+ million friends to share their likes which in turn will be posted to their Facebook pages. According to Mashable.com Facebook “has created a platform that allows sites and apps to share information about users in order to tailor offers, features and services to each one’s interests and tastes — even if that individual has never visited the site before.” Zuckerman explained how most information on the Internet is lost in time once posted, referring to a tweets, text messages, and the like, but the new Facebook "open graph" and "like" will permit information to live forever on the Internet.

Microsoft Docs on Facebook

In conjunction with the f8 conference Microsoft announced a new beta for Docs on Facebook to facilitate access to Microsoft apps through Facebook that “allows users to create, edit and share Word, Excel and PowerPoint documents via the new Docs.com Website. Users can then share those documents with their Facebook friends, as well as give them editing privileges.” Microsoft’s collaboration with Microsoft is clearly competition for Google, Google apps, and the new Google Buzz.

Senator Doesn’t “Like” Facebook’s Instant Personalization Features

Under the new "open graph" and "like" Facebook automatically changed the privacy features, so within days of Facebook’s announcement Senator Charles Schumer of New York wrote a letter to the FTC “urging them to create privacy guidelines for Facebook and other social networking sites.” We need to watch closely to see what, if anything, the FTC may do. My blog on January 14, 2010 included a link to an interview with Zuckerman where he commented that the age of privacy is over. So perhaps he was referring to the new "open graph" and "like" features may be part of his plan to actually make that happen

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On Thursday, April 22, 2010 the TexasBarCLE will present my webcast from 12:30-1:30pm CDT about Internet Intellectual Property (IP) issues. Actually these topics are also found in the syllabus and PowerPoints from my Law of eCommerce class at SMU Dedman School of Law which I will teach again in the fall of 2010. Interesting how much the Internet and the law have changed since I first taught the class in 2000. Certainly we can expect more change in Internet IP law since we are awaiting the US Supreme Court’s ruling about software patent in a case heard in November 2009 -in re Bilski.

Please join me on Thursday for the Internet IP webcast.

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A Chinese graduate student’s “paper on how to attack a small U.S. power grid sub-network in a way that would cause a cascading failure of the entire U.S.” was recently reported to the US House Foreign Affairs Committee. The paper entitled “Cascade-Based Attack Vulnerability on the U.S. Power Grid” was published in Safety Science a year ago. American scientists who read the paper agreed that there was no way that the power grid could be taken down as explained in the paper. Famous last words! The US is barely managing Cybersecurity and this paper should give us all pause to consider the implications.

Google Set to Depart

China is demanding that Google obey Chinese law as it departs which seem imminent now. Since Google entered China in 2006 it has been censoring content just as “China routinely blocks Internet content, shutting off access to sites such as Facebook, YouTube and Twitter.” The dominant search engine in China, Baidu continues to be successful albeit with Chinese censorship. Time will tell about other US based Internet companies such as Microsoft and whether they will stay in China and participate in Chinese censorship.

Chinese Media Furor

A recent report about a Chinese provincial Governor’s response to a scandal led to “rare display of unity, journalists, lawyers, academics and activists posted a letter of protest on the Internet demanding the Governor’s resignation.” Li Hongzhong, the Governor of Hubei Province, was incensed that a reporter had the gall to question him about a waitress at a karaoke bar killed a government official in self-defense. The waitress was later released and the Governor got a lot of heat on the Internet. Given the economic power and population, the Internet will continue to impact China whether the Chinese government wants the Internet impact or not.

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Hitwise reports that Facebook became the most visited website in the US for the first time. Kind of takes your breath away that a social media site is getting more traffic than the largest search engine in the US. Since Facebook just went over 400 million users this was probably inevitable, but since Facebook is also starting its own email system, Titan, it’s likely Facebook traffic will continue to expand.

Internet Jurisdiction Makes Life Interesting

My friend Victoria Van Buren blogged about my Texas Bar Journal Article for March about Internet Jurisdiction, but the March 2010 issue is entitled “The Attorney and Social Media” and here are other articles of interest:

My friend John Browning organized these articles which I think are most timely and interesting.

3rd Circuit Bars Child Porn Prosecution of Teen in Sexting Photo

Some headline in the ABA Journal that “upheld an injunction that bars the child pornography prosecution of a teen girl in Pennsylvania who appeared topless in a photo that ended up on high school students’ cell phones.” The court did reach the question whether sexting photos are free speech protected under the First Amendment because the prosecutor over-reacted and threatened the teenager. Unfortunately we will continue to see more sexting cases as Web 2.0 grows whether we like it or not.

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The recent conviction of 3 Google executives in Italy for a video posted on Google which showed the bullying of a disable teenager captured many headlines. No question that the video was in poor taste and Google took the video down within 24 hours of its posting after Google got 2 complaints. The conviction of the Google’s global privacy counsel, Peter Fleischer and two other executives raises significant issues. A fourth Google executive was acquitted, and Google plans to appeal these convictions. Does it make sense that Google, or any other ISP (Internet Service Provider), be liable for content posted over which the ISP has no control? The US Communications Decency Act of 1996 protects ISPs from liability since they have no control over content posted. How Google fares with these convictions may have an interesting impact on ISPs around the world.

Google Street View May Breach EU Law

Only to make things more complicated recent reports that the Google’s Street View violates EU Data Protection laws since they retain the images for too long. As well it was reported that “Switzerland’s data-protection agency in November sued Google for allegedly failing to comply with proposals to make it harder to identify people and cars on Street View.” Of course disputes regarding Street View are not new since claims of breach of privacy have been under way since at least 2008 in Japan.

Google has More EU Antitrust Problems

ComScore recently reported that Google has about 79% of the searches in the EU and the EU renewed its investigation about Google anticompetitive behavior. Google claims that Microsoft may be the source of the investigation since Microsoft owns one of the companies that complained. It seems reasonable to assume that the search engine wars will continue, but how the EU ultimately rules may have a far reaching impact.

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The Robert S. Mueller III's (FBI Director) warning is not a surprise but how the IT community deals with these threats impact us all. Homeland Security Secretary Janet Napolitano “admitted there is an urgent need to step up efforts to protect Americans from cyber attacks.” Also Ms. Napolitano’s predecessor Michael Chertoff, former DHS secretary, under President George W Bush, agreed. "We are seeing in the intervening time the adversaries, whether they be criminals or nation states or terrorists, are not taking time off. So with each passing year, the need to move faster becomes greater." So far new the Cyber Czar as been low profile, but based on these presentations at the recent RSA Conference that low profile cannot continue.

Cyber Crime: A Clear and Present Danger

Deloitte’s recent white paper is the result of the 2010 CSO (Chief Security Officer) CyberSecurity Watch Survey in conjunction with the CSO Magazine, the US Secret Service, and the CERT Coordination Center at Carnegie Mellon. The white paper concludes that:

Data is more valuable than money. Once spent, money is gone, but data can be used and reused to produce more money. The ability to reuse data to access on-line banking applications, authorize and activate credit cards, or access organization networks has enable cyber criminals to create an extensive archive of data for ongoing illicit activities.

There is a clear message about how vulnerable businesses are and how every business must be vigilant or risk great damages.

Tweet this: Social Network Security is Risky Business

With the recent report of 50 million tweets a day it’s no wonder that a panel at the RSA Conference devoted a great deal of discussion to how vulnerable social networks are. Cybercrime is so easy because users of Facebook, Twitter, and MySpace are easy marks since the feel at ease communicating with their “friends.” However cybercriminals can more easily Web 2.0 commit cyber crime because most “…users are willing to click if they think, 'It's my friend. I'm OK, because I'm inside my network and that's Fred. Only it's not Fred, it's Fred's hijacked account." So all in all, things are becoming more dangerous and apparently businesses and web 2.0 social networkers are still not getting the scope of their risk!
 

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Computerworld reported that 600 tweets are sent per second - 50 million per day which is significant for many reasons. Not the least of which is that 3 years ago Twitter handled 5,000 tweets per day! As well, in early 2009 Twitter raised $35 Million in its third round of financing with no business plan. What’s not clear if 10% of those sending tweets account for 80% of the total volume. Obviously something is happening to cause Twitter’s amazing growth, and it bears watching.

Yahoo, Twitter in deal to share content

A report from the LA Times states that Jim Stoneham, vice president of communities for Yahoo! described the Yahoo! deal with Twitter:

…will enable users to take material from both sites without having to leave either one. Specifically, users will be able to access their Twitter feed on Yahoo's sites. They will also be able to update their Twitter status and share content from Yahoo. And Yahoo search and media properties will include Twitter updates.

Hopefully this will help revive Yahoo!’s fortunes and expand Twitter’s reach.

Doonesbury Character Roland Hedley Tweets with 14,000 Followers

Followers of tweets was made a little more interesting in a recent National Public Radio story of “Roland Hedley, a fictional Fox News correspondent created by cartoonist Garry Trudeau, has attracted more than 14,000 followers since he began "tweeting."” As a matter of fact, Garry Trudeau wrote a book about tweets from Roland Hedley entitled My Shorts R Bunching. Thoughts?: The Tweets of Roland Hedley. So maybe all 50 Million tweets a day are not all that serious if a cartoon character tweets regularly! Nonetheless this is worth watching given these astonishing numbers.

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After the news reports about the cyber attacks in China it’s no wonder that that more than “75,000 computer systems at nearly 2,500 companies in the United States and around the world have been hacked in what appears to be one of the largest and most sophisticated attacks by cyber criminals discovered to date.” Unfortunately those computer systems hacked included the US government, “educational institutions, energy firms, financial companies, and Internet service providers. “ Included were access to “e-mail systems, online banking accounts, Facebook, Yahoo, Hotmail and other social network credentials, along with more than 2,000 digital security certificates and a significant cache of personal identity information.” Doesn’t sound much security given these facts, and this is pretty scary since we now have a Cyber Czar to protect us.

Kneber bot

Amit Yoran, NetWitness's chief executive reported how the Kneber bot was launched in this attack on the +75,000 computer systems:

The hackers lured unsuspecting employees at targeted firms to download infected software from sites controlled by the hackers, or baited them into opening e-mails containing the infected attachments, Yoran said. The malicious software, or "bots," enabled the attackers to commandeer users' computers, scrape them for log-in credentials and passwords -- including to online banking and social networking sites -- and then exploit that data to hack into the systems of other users, Yoran said. The number of penetrated systems grew exponentially.

Clearly educating employees is critical to avoid such attacks in the future, but what’s the likelihood of avoiding these kind of disasters? Not good!

Privacy at Home? - School Official Defended in Webcam Spy Case

The Lower Merion School District (in suburban Philadelphia) acknowledged that the District remotely activated webcams inside students’ homes, but the District claimed it was only to find missing, lost or stolen laptops. However a student and his parents filed a federal civil rights suit alleging violation of wiretap laws and violation of privacy. Among other problems created was that allegedly the District thought a piece of candy was a pill and that the student was selling drugs. This reminds me of Big Brother from George Orwell’s 1984. he just missed the year!

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EPIC (Electronic Privacy Information Center) filed a complaint with the FTC that Google’s new Buzz significantly breached “consumers' expectations of privacy.” Many complaints were made after Google’s recent launch of Buzz, because Buzz automatically created “public circles of friends for users based on their most frequent Gmail contacts.” EPIC wants the FTC to order Google to make Buzz “opt-in.” What this means to Google’s social media evolution will be interesting to watch.

HEADLINE: “Facebook directs more online users than Google”

At the same time that Google’s social media is taking center stage a report was released that indicates that Search Engine Optimization (SEO) is being replaced with Social Media Optimization (SMO):

“According to Web measurement firm Compete Inc., Facebook has passed search-engine giant Google to become the top source for traffic to major portals like Yahoo and MSN, and is among the leaders for other types of sites.”

There’s no rocket science to understand that Facebook’s 400 million friends have changed communications forever and SMO’s impact of search engines and SEO cannot be ignored. As Facebook rolls out its Titan email system SMO is certain to expand.

Aardvark joins Google!

At the same time of this Buzz controversy Google purchased Aardvark which is interesting since Vark.com “has defined a new kind of social search: sometimes you want a person, not a web page, to answer your question.” SMO and SEO are in the middle of Google’s evolution. This is a lot to digest at one time. Stay tuned.

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Hard to believe that Facebook turned 6 with another milestone- 400 million friends! According to Facebook 50% logon on any given day and 35 million update their status each day. Since it took Facebook 4 ½ years to reach 100 million friends in August 2008, the current growth rate is pretty incredible. What this portends is hard to image, but growth sure seem likely.  Just look at these statistics from Facebook:

Facebook’s Project Titan – Gmail Killer?

In the meantime reports came out that “Facebook is completely rewriting their messaging product and is preparing to launch a fully featured webmail product in its place… unofficially and perhaps over-enthusiastically, the Gmail killer.” Whether Titan is the Gmail killer is probably beside the point as the critical issue here is that Facebook is expanding into webmail to help its 400 million friends communicate more efficiently.

Gmail Adds New Features

Not so fast for Titan being a Gmail killer as reports also came out that “Google Inc. is taking a swipe at Facebook Inc. and Twitter Inc. with a new feature that makes it easier for users of Gmail to view media and status updates shared online by their friends.” One might wonder if Google was watching Facebook’s Titan and needed to offer new Gmail services to compete. Interesting dynamics for Web 2.0 which this blog will continue to monitor!

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