INTERNET, TECHNOLOGY, AND SOCIAL MEDIA LAW AND NEWS

Ice Miller LLP Official Site


Ice Miller on Linked In Subscribe to The Ice Loop by Email    

Ice Miller attorney  TJ Johnson was recently featured on Fox Business News for being the co- creator of ‘The Pocket Drone.’

TJ and his partner Timothy Reuter created a personal drone that makes high definition action photography accessible and convenient for consumers.  The Pocket Drone is the first ever drone that folds to the size of a 7-inch tablet, but still has the ability to carry a high-quality camera. The $495 retail price includes everything a consumer needs to fly the drone, except the camera.  In the three months since The Pocket Drone was introduced, Reuter and Johnson have booked orders of nearly  $1 million.

TJ asserts that “Designing and building products like ‘The Pocket Drone’ helps ensure that I am up to date with current technology and have some fun in my free time.  Personally experiencing the same challenges as our clients helps me understand their process and be better prepared to assist them throughout their business and product development.”

As an engineer with a background in designing and building electronic control solutions for motion control systems, Johnson has always been involved in projects such as this one.  Before pursuing a legal career, he started his own business designing and building embedded systems in his hometown of Reno, Nevada.

To see the interview, please follow this link: http://bit.ly/1n8oUHY, or visit www.airdroids.com for more information on The Pocket Drone.

Ice Miller Proudly Supports Junior Achievement

Posted by L. Marcum On March 31, 2014ADD COMMENTS

Ice Miller was the proud VIP sponsor of Junior Achievement’s 26th Annual Central Indiana Business Hall of Fame event on February 20, 2014 at the Indiana Roof Ballroom. Close to 600 business leaders and their guests gathered to honor outstanding men and women who epitomize success in the business world, high moral and ethical standards, and dedication to important civic causes, thereby improving the quality of life in our community. Congratulations to our clients who were named 2014 Laureats:

  • Billie Dragoo – Founder, President and CEO, RepuCare
  • Dave P. Lindsey – Founder, President and CEO, DEFENDER Direct
  • David E. Simon – Chairman and CEO, Simon Property Group, Inc.
  • Michael Smith, Retired EVP/CFO, Anthem

The evening began with an exclusive VIP reception where Ice Miller Chief Managing Partner Phil Bayt spoke about Ice Miller’s appreciation of Junior Achievement. The mission of Junior Achievement aligns with Ice Miller’s efforts in the community, and our firm is grateful to past and present Laureates.

Junior Achievement students participated in the evening’s events, which included stories about the advancements made by the organization. Many Ice Miller attorneys attended the event to support the work  Junior Achievement and the Laureates do for the community.

2014 Laureates enjoyed meeting and listening to Junior Achievement students at the 26th Annual Central Indiana Business Hall of Fame event.

(left to right: Michael Smith, Phil Bayt, Andre Lacy)

Chief Managing Partner of Ice Miller, Phil Bayt, with 2014 Laureate Michael Smith and Chairman of the Board of LDI, Lt. Andre B. Lacy.

(left to right: T.J. Cole, Jason McNiel, Holiday Banta, Jessica McNiel, Joshua Christie, Julie Gasper, Andrew Vento, George Gasper)

Ice Miller attorneys and their guests attended the black tie affair to support Junior Achievement and the 2014 Laureates.

Chief Managing Partner of Ice Miller, Phil Bayt, speaking at the VIP reception in front of distinguished guests and the 2014 Laureates discussing his appreciation for Junior Achievement, what it contributes to the community and how Junior Achievement aligns with Ice Miller’s goals for civic involvement.

Ice Miller attorney Melissa Proffitt Reese and Eric Bedel of the Greater Indianapolis Chamber of Commerce at the Junior Achievement 26th Annual Central Indiana Business Hall of Fame event.

Ice Miller Supports TechColumbus Entrepreneurs

Posted by S. Rector On March 27, 2014ADD COMMENTS

Technology-focused entrepreneurs in Columbus, Ohio, have a great resource in TechColumbus. Each year, more than 500 emerging technology companies reach out to TechColumbus for services and funding to grow into sustainable, profitable businesses.

Ice Miller is proud to support TechColumbus through the TechColumbus Expert Network (EN). EN is made up of like-minded professional service firms who understand the importance of helping emerging technology companies in Central Ohio grow into the economic drivers of tomorrow.

As part of EN, Ice Miller offers pro-bono and specially priced legal services to TechColumbus’ startup clients. Our firm helps entrepreneurs with a full range of services, including intellectual property protection, labor law advice, business structure and capital formation.

When we meet with TechColumbus clients, we begin with a discussion about the business itself—where the company is with its business plan and the entrepreneurs’ near-term and long-term goals. From there, we work closely with the client to develop a strategic plan to accomplish legal goals in an efficient and effective way.

To learn more about resources available to your business through TechColumbus, contact Susan Rector at susan.rector@icemiller.com.

The U.S. Supreme Court agreed to hear arguments in American Broadcasting Companies, Inc. v. Aereo, Inc. sometime in April 2014. The online streaming copyright infringement case has been watched closely by many in the entertainment and technology industries, as the Supreme Court’s ruling may change the way broadcast companies do business.

Background

Originally filed in New York in 2012, several broadcasters, including ABC, NBC, CBS and Fox, sued Aereo for copyright infringement. Aereo is an online streaming subscription service that functions much like the infrastructure in the landmark Cablevision decision. Aereo owns thousands of standard television antennas, just like the ones an average person would use to receive broadcast stations. Aereo then assigns customers an individual antenna for a fee of $8-$12 a month. Customers can record and stream live broadcasts through the internet and view on his or her computer, tablet or smartphone.

Although a customer could use an antenna the same way as Aereo without legal implications, the plaintiff broadcast companies argue Aereo is guilty of copyright infringement because it is retransmitting performances in violation of the plaintiffs’ public performance rights. The plaintiffs sought a preliminary injunction two weeks before Aereo was set to launch in the New York area. The district court denied the injunction, holding that while the broadcasters would likely suffer irreparable harm if Aereo was allowed to launch, they did not show a likelihood of success on the merits of their copyright claims. The court relied on its prior decision in Cablevision, which held that a system where customers could record television broadcasts on a remote hard drive assigned to each individual customer was not a retransmission because the potential viewing audience was limited to that specific customer. The 2nd Circuit Court of Appeals upheld the district court’s decision in April 2013.

While Aereo was being appealed in New York, two other cases involving nearly identical subscription streaming services reached the courts in Los Angeles and Washington, D.C. The broadcasters were successful in both of those cases, and the courts held the streaming companies violated the broadcasters’ public performance rights when they did not pay to retransmit the broadcasts. As a result of these conflicting opinions among the circuits, Aereo was ripe for the Supreme Court.

Impacts of Supreme Court’s decision

The road to the Supreme Court was unusual because typically, the party who won in the appellate court fights a petition for certiorari. Here though, Aereo joined the petition so that the case could be resolved on the merits and Aereo would know once and for all if other suits could be brought against it in other jurisdictions. Other parties are more concerned by the underlying issues of the case and filed briefs in support of the petition for certiorari. Some of the parties that filed amicus curie briefs in support of the broadcasters include the National Football League and National Baseball League; the American Society of Composers, Authors and Publishers (ASCAP); Broadcast Music Inc. (BMI); Time Warner; Metro-Goldwyn-Mayer; and the Screen Actors Guild. While no briefs have been filed yet in support of Aereo, the Computer Communications Industry Association, which includes members Yahoo, Google, Facebook and Amazon, initially filed a brief supporting Aereo with the Court of Appeals.

The broadcasters believe a verdict upholding the 2nd Circuit decision will destroy the business models of all broadcasting companies. Fox went so far as to threaten that the company would convert to a cable pay-tv channel if Aereo was not forced to shut down. The underlying problem for the broadcasters is that a significant portion of their revenue comes from retransmission fees paid by cable and satellite providers to rerun shows. The 2nd Circuit’s ruling opens the floodgates for other services to use an Aereo-like infrastructure to avoid paying the broadcasters. Therefore, the broadcasters fear that soon, no one will pay to retransmit copyrighted shows and the broadcasters will lose a significant portion of their revenue.

Aereo argues that the case is about the right of every American to use a television antenna. In so doing, it frames the issue around putting the control and choice back into customers’ hands as to what television programming the customer wishes to watch. Significantly, Aereo also raises the argument that customers have a right to use new technology, which includes the cloud, to access broadcasts through an antenna and DVR.

The Court’s decision will likely have far reaching implications. If the Court upholds the 2nd Circuit’s ruling that the broadcasters are unlikely to prevail on their infringement claims, broadcasting companies will have a strong incentive to abandon their free-to-customer business model in favor of pay-tv stations, just to recapture the lost retransmission fee revenue. While this will reduce the free content available to the public, a Forbes article reporting a recent SNL Kagen statistic shows that of the 114 million homes with a television in the United States, 103 million already pay for cable or satellite services. Therefore, a very small percentage of TV’s would be affected.

From the other side, companies that rely on cloud technology are following the case closely as a decision overturning the Second Circuit may impact how companies can offer cloud-based services to customers. Specifically, the Court has the opportunity to overrule Cablevision, which may alter a company’s ability to use the cloud without violating copyright laws.

The Court will hear arguments in April and is expected to reach a decision this year.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.

Trademark Owners’ Options as New gTLDs Launch

Posted by S. Rector On January 2, 2014ADD COMMENTS

New domain name endings began being launched Nov. 26, 2013, and are expected to be released in batches of roughly 20 new gTLDs each week or 50 gTLDs each month thereafter during 2014.  Trademark owners should be attentive to this now to not miss the launch of a new domain ending for which they intend to file a new domain name.  The English language domain names with the first of seven new endings –  .bike, .clothing, .guru, .holdings, plumbing, .singles, .ventures — is expected to issue by the end of January 2014.

This post highlights considerations for trademark owners in connection with the launch of 1,400 new generic top level domains (gTLDs), i.e., the suffix of domain names to the right of the dot (for example: .com and .hotel).  Here is a link to an alphabetical link of all proposed domain names: http://www.newgtldsite.com/new-gtld-list/.  Due to potential abuse in this new domain name real estate, special provisions have been put in place for trademark owners.  This post provides background, describes the risks and opportunities and articulates a high-level conceptual approach to analyze how this development affects your business and how to proceed.

Background.  The April 16, 2013, post contained an overview of the new gTLD launch program and an explanation of the Trademark Clearinghouse.  In short, in order to record a domain name within the first 60 days that a new gTLD launches (the Sunrise Period), a trademark owner must first register its mark(s) in the Trademark Clearinghouse and provide validation of use of the mark prior to registering the domain name.  For the most up-to-date information regarding the launch of the new gTLDs and their respective Sunrise Periods and trademark claim periods, see http://www.trademark-clearinghouse.com/sunrise that is updated periodically.

Why should I care?  There are clearly two camps each with a school of thought on the new gTLDs.  One camp believes trademark owners should offensively register domain names useful to their business and defensively file domain names such as .gripe, .suck and .porn to block others from doing so.  They believe the costs incurred up front and on an annual basis to register and maintain the domain names are less expensive in the long run than pursuing infringers to stop use of a domain name in bad faith or that causes confusion with the brand.  The other camp views the launch of these thousands of gTLDs as another land grab by large domain name registrars solely to create demand for their registration services and to profit from provision of the new Trademark Clearinghouse services.

Analysis of how to proceed.  Before you make a determination as to which camp you are in and how to proceed, think through each of the steps below.  Like all business decisions, this decision necessitates ascertaining the degree to which benefits to your business outweigh the costs.  By reviewing each of these considerations in light of your existing trademark portfolio, your current and future marketing plans and your current and future search engine optimization (SEO) plans, you can determine whether and to what extent to register new domain names and whether to record a trademark or trademarks in the Trademark Clearinghouse.

  1. Identify new gTLDs among the 1,400 names to launch in the next two to three years in which one or more domain names should be filed.
  2. Identify new gTLDs within which defensive, blocking domain names should be filed to preclude others from filing, such as .gripe, .sucks or .porn.
  3. Develop a budget for recording marks in the Trademark Clearinghouse.  The filing fees per mark to record are as follows:
    • $150 for 1 year
    • $435 for 3 years ($15 savings)
    • $725 for 5 years ($25 savings)
  4. Because the new gTLDs are expected to take over two years to roll out, we suggest registering marks in the Trademark Clearinghouse for at least three years.
  5. Record marks to be used for filing and blocking in the Trademark Clearinghouse.
  6. Prepare and file evidence of use with the Trademark Clearinghouse (must be submitted prior to beginning of the Sunrise Period).
  7. Consider engaging a trademark watching service to monitor all domain names registered in the new gTLDs, because trademark owners will only receive Trademark Claims Notices for exact matches of trademarks registered in the Trademark Clearinghouse.
  8. As gTLDs of interest launch, promptly register your desired domain names during the relevant Sunrise Period.
  9. During the first 90 days after each gTLD launches, be prepared to promptly respond to each Claims Notice sent by the Trademark Clearinghouse giving you notice of domain names filed that contain your mark(s) registered in the Trademark Clearinghouse.

Please note that the only domain names that may be recorded and reserved during a Sunrise Period are those that (1) are an exact match for the trademark registered in the Trademark Clearinghouse or (2) were the subject of a successful Uniform Domain Name Dispute Resolution Proceeding (UDRP) and registered in the Trademark Clearinghouse.  Special rules exist for domain names that contain characters that are not permitted domain name characters, such as commas, spaces, apostrophes and some periods.  Rules permit up to 10 variations per mark for domain names containing these characters.  We can assist you to determine whether to register trademarks and which variations make the most sense.

Please contact Susan Rector at Susan.Rector@icemiller.com with any questions.  We are prepared to help you determine the best way to proceed to protect your marks and register new domain names that are most beneficial for your business.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.

Ice Miller LLP’s client InfoMotion Sports Technologies d/b/a 94Fifty has developed a smart basketball that hit the online retail market and Apple Stores nationwide in late November. It is a unique regulation basketball with embedded sensors that precisely track the movement of the ball in real time for use in training, recreation and competition.

Sports Illustrated featured the product in the Dec. 9, 2013, issue titled “Ball Coach, A sensor-filled rock can polish your game.”

Sports Illustrated writers called the 94Fifty basketball “a training tool that’s both useful and, frankly, really cool.”

In the article, Founder and CEO Mike Crowley explained how the technology works: “There’s the equivalent of a missile-guidance system in there,” says InfoMotion CEO Mike Crowley. “The sensors are processing what’s happening and spitting out the results in a hundred milliseconds. . . .Not only can the sensors count the number of times something is happening, but the algorithms and software will discern how well you’re doing it against a standard of statistics we’ve collected over years.”

The article also announced that 94Fifty is working on a “live game experience in which the ball is used in competition, allowing coaches, broadcasters and fans to track data via second-screen.” 

Click here for more information on InfoMotion Sports Technologies Inc. and 94Fifty’s smart basketball.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.

On Sept. 10, 2013, the 9th Circuit Court of Appeals affirmed the district court’s refusal to dismiss claims brought against it under the Federal Wiretap Act, 18 U.S.C. § 2511 (the “Wiretap Act”) in Joffe, et al v. Google, Inc.  The claims arose out of Google’s collection of data from unencrypted Wi-Fi networks in the course of capturing photographs for Google’s Street View. 

Street View, launched in 2007, allows Google Map users to  see street-level photographs of the area being viewed.  The photographs are captured by cameras mounted on vehicles owned by Google that photograph their surroundings when driving on public roads.   Between 2007 and 2010, in an effort to improve its location-based services (like driving directions), Google equipped these cars with Wi-Fi antennas and software able to collect data transmitted by nearby Wi-Fi networks. The software was intended to collect only basic information about the Wi-Fi networks, such as the network’s name, the signal strength, and whether the network was encrypted.

However, the software and antennas collected much more information than its original purpose, including data sent and received over unencrypted Wi-Fi networks. Specifically, the cars collected “payload data,” or anything transmitted by a device connected to a Wi-Fi network. The information included personal emails, usernames, passwords, videos, and documents from anyone who was using an unencrypted Wi-Fi network when the car drove past. The cars collected payload data in more than 30 countries.

In 2010, Google acknowledged that its vehicles had been collecting fragments of payload data, publicly apologized, and rendered inaccessible the personal data that had been acquired.  Shortly thereafter, several putative class-action lawsuits were filed, each of which was transferred by the Judicial Panel on Multidistrict Litigation to the Northern District of California.  The plaintiffs alleged that Google violated several state privacy law claims and the Federal Wiretap Act, which makes it unlawful to intercept certain communications and serves to protect wire, oral, and electronic communications.

 Appealing the district court’s denial of its motion to dismiss the Wiretap Act claims, Google argued that the data transmitted over the unencrypted Wi-Fi networks were “electronic communications…readily accessible to the general public,” and therefore its actions were exempt from Wiretap Act liability pursuant to 18 U.S.C. § 2511(2)(g)(i). Specifically, Google argued that 1) Wi-Fi is a type of radio communication, which under the Act is by definition readily accessible to the public and 2) if Wi-Fi is not a radio communication, it is still readily accessible to the public under the general meaning of the phrase. The 9th Circuit disagreed with both arguments. In rejecting the second argument, the court specifically explained that data transmitted via Wi-Fi is not “readily accessible” as it has a small range (less than 330 feet), can only be intercepted and interpreted with sophisticated hardware, software, and expertise that the general public lacks.  While recognizing that the hardware and software required could be purchased at many electronics stores, the court reasoned that if a person of the public were to somehow receive such data, that person would only interpret it as white noise.

As explained this New York Times article, the next step is for the  plaintiffs to seek class certification.  If the plaintiffs are successful, the class could include millions of people, exposing Google to significant damages.  Privacy and consumer watch groups are also pleased with the 9th Circuit’s ruling.  The executive director of the Electronic Privacy Information Center, Marc Rotenberg was quoted in this CBS/AP article, calling the ruling “a landmark decision for Internet privacy.”  John M. Simpson, Consumer Watchdog’s privacy project director, called it a “tremendous victory for privacy rights.” 

While Google has claimed that a “rogue engineer” was at fault, a Federal Communications Commission investigation concluded that the engineer was merely acting without supervision. As explained in this CNET article, Google has already reached a $7 million settlement with 37 states and the District of Columbia over this collection of data from unsecured wireless networks.  Google also agreed to destroy the collected data, create a new employee training program on protecting consumers’ privacy, and launch a national ad campaign educating consumers on how to protect their privacy online.  With regard to that settlement, Google released this statement:  “We work hard to get privacy right at Google.  But in this case we didn’t, which is why we quickly tightened up our systems to address the issue.  The project leaders never wanted this data, and didn’t use it or even look at it.”  It is yet unclear how Google’s settlement with these states may impact the Joffe putative class action.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.

The National Security Agency (“NSA”) has been under fire since The Guardian and the Washington Post revealed that it has been gathering information on individual users from the central servers of nine leading U.S. internet companies.  The revelation came after government whistleblower Edward Snowden leaked a 41-slide PowerPoint presentation, classified as top secret, which was apparently used in training on the program’s capabilities.  While many details of the program are still unknown, the PowerPoint states that PRISM enables “collecting directly from the services” of Microsoft, Yahoo, Google, Facebook and other online companies.  Such access is governed by Section 702 of the Foreign Intelligence Surveillance Act (FISA), enacted in 2008, which (according to this Statement from the Director of National Intelligence) is designed to facilitate the acquisition of foreign intelligence information concerning non-U.S. persons located outside the United States.   The same statement points out that Section 702 was recently reauthorized by Congress after extensive hearings and debates.

According to this Washington Post article, Google, Yahoo, Facebook, and Microsoft have all released statements flatly denying any participation in the NSA’s data collection program.  Whether or not the companies willfully provided information to the NSA, the current data sharing controversy – combined with recent increases in litigation regarding the sharing of private information by large technology-based companies – raises the question of how much privacy individuals can expect to have when communicating online.

The  Electronic Communications Privacy Act of 1986 (ECPA) is intended to address such privacy concerns regarding email, telephone conversations and electronically stored data.  However, the protections afforded to consumers under the ECPA are limited. For example, the ECPA’s prohibition on the interception, use, disclosure or procurement of any other person to “intercept or endeavor to intercept any wire, oral, or electronic communication” does not apply to any person authorized to conduct electronic surveillance under FISA.  Given the vast changes in the use of the internet as a medium for communication and commerce most commentators (the ACLU, for example) agree significant revisions are necessary for the ECPA to provide any real protection to internet users.

While the NSA scandal has brought heightened attention to the government’s use of individual’s internet data, general concerns over internet privacy have long been a hot legal topic.  In recent years, lawsuits involving data collection and privacy issues (often in the form of class actions) have been brought against almost every major corporation with a significant internet business.  For example, a 2012 lawsuit alleged that Apple collected and reported iPhone users’ geographic locations-  even after the geo-location feature of the devices had been turned off – without the users’ knowledge or consent.  Similarly, Netflix  recently faced allegations that it illegally retained and shared the viewing history and personal information of former customers after the individuals had canceled their Netflix subscriptions. Recently, a federal district court allowed a massive class action against internet traffic and web advertising measurement company comScore to proceed past the class certification stage.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.

In a much-anticipated and long-awaited decision,  on June 13, 2013, the Supreme Court ruled in Assoc. for Molecular Pathology v. Myriad Genetics, Inc. that isolated DNA sequences are not patent eligible.  Specifically, the Court held that a naturally occurring DNA segment is a product of nature, and therefore not patent eligible under Section 101 of the Patent Act.  It also held, however, that laboratory-created complimentary DNA (cDNA) is patent eligible.

As explained by the Court, Myriad Genetics made a medical breakthrough when it discovered the precise location and nucleotide sequences of the BRCA1 and BRCA2 genes.  Mutations of these genes have been linked to an increased risk of developing breast and ovarian cancer.  Isolation of these genes allowed Myriad to test and screen women for the mutations that would indicate a genetic predisposition to developing cancer. Through aggressive patent protection, Myriad has remained the exclusive provider BRCA1 and BRCA2 gene testing – according to a posting on its website, Myriad still has 24 different patents conferring protection for its BRACAnalysis test.   As set forth in this SCOTUSblog post, testing for the BRACA genes [AD1] recently gained widespread media attention after actress Angelina Jolie voluntary underwent a preventive double mastectomy after she was found to have the dangerous gene mutations.  Unfortunately, prior to the Court’s decision, women of lesser means were often unable to pay the high costs of the test.

Two of Myriad’s patents were at issue: the isolated sequence of the BRCA1 and BRCA2 genes and a synthetic DNA molecule (known as cDNA) that contains most of the underlying DNA code, but lacks certain non-coding elements known as introns, and is therefore not naturally occurring.  The Supreme Court drew a sharp distinction between the former naturally occurring products of nature and the latter creations that start from nature but have been altered in some way.   The Court explained: “It is undisputed that Myriad did not create or alter any of the genetic information encoded in the BRCA1 and BRCA2 genes”[1] but “the lab technician unquestionably created something new when cDNA is made.”[2]

The Court went out of its way to emphasize the narrowness of its holding, and stressed that it made no determination as to “whether cDNA satisfies the other statutory requirements of patentability. . . . We merely hold that genes and the information they encode are not patent eligible under §101.”[3] The Court also left the door open for other types of gene patents and provided some insight into the types of claims that may still be patented despite their relation to naturally occurring DNA. For example, a company could patent a new method of extracting or isolating the genes, or it could patent a new application of the knowledge obtained from isolating the genes.

This impact of the Myriad Genetics decision on patent law remains to be seen. Some, including the U.S. Patent and Trademark Office, stated that is a significant change from the status quo.  Interestingly, the United States may be diverging from other countries in its stance on gene patents.  For example,  European Biotechnology Directive 98/44/EC states affirmatively  that biological material isolated from its natural environment is patentable, even if it is identical to its natural form

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.

In a June 11, 2013, ruling issued without opinion,  the U. S. Court of Appeals for the 7th Circuit declined to review a district court ruling certifying a plaintiff class alleging privacy violations against defendant comScore Inc.

As set forth in the opinion issued by the U. S. District Court for the Northern District of Illinois, comScore gathers data about the activities of consumers on the internet through its program OSSProxy, analyzes the data and sells the data to comScore’s clients.   OSSProxy is often distributed in cooperation with “bundlers” who provide free digital products, such as screen savers and games, to consumers on the internet.  During the installation of the free digital product, consumers are presented with a short statement regarding OSSProxy (presented under one of several brand names), offered a link to a “Privacy Statement and User License Agreement” and must either accept or decline before he or she may continue downloading the digital product.   OSSProxy downloads only if the user checks “accept.”  While the free digital product will download and install regardless of the user’s choice regarding OSSProxy; this fact is not readily apparent to the consumer.

The plaintiffs allege that comScore exceeded the scope of the consumer’s consent to monitoring, thereby violating the federal Stored Communications Act (18 U.S.C. § 2701(a)(1), (2)); the Electronic Communications Privacy Act (18 U.S.C. § 2511(a), (d)); and the Computer Fraud and Abuse Act (18 U.S.C. § 1030(a)(2)(C)).  The plaintiffs also asserted a claim for common law unjust enrichment and sought certification of a class of “All individuals who have had, at any time since 2005, downloaded and installed comScore’s tracking software onto their computers via one of comScore’s third party bundling partners.”

In a statement posted on its website, comScore responded to the allegations, claiming that the “suit is filled with factual inaccuracies” and maintaining its position that the lawsuit is without merit.  According to the statement, comScore “prides itself on its privacy and recruitment practices, which have been rigorously reviewed in annual privacy audits conducted by independent third party auditors for the last 10+ years” and plans to defend itself against the allegations.

The district court declined to certify a class with regard to the unjust enrichment claims, holding that substantial variations in state laws would make it too difficult to determine the merits of each class member’s claim in a single action.  Nevertheless, the court determined that the matter could proceed as a class action with regard to each of the federal statutory claims asserted.   As the district court explained, hundreds of thousands of computers have reported data to comScore through OSSProxy each year since 2008.  Accordingly, comScore must now defend against a class likely to total well over a million members.

As explained in this New York Law Journal article, plaintiffs in putative privacy class actions have typically struggled to demonstrate damages resulting from alleged privacy violations.  In comScore, however, the plaintiffs based their claims on statutory damages and therefore were found to have standing and were certifiable as a class. This could signal a new trend of massive class-action lawsuits based on privacy violations.  The district court opinion at least provides a roadmap for how privacy plaintiffs can meet Rule 23 requirements.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.

Copyright Ice Miller LLP 2009, 2010, 2011
Commments or Question? Email Us