Articles Posted in Internet Law

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The Federal Trade Commission proposed a revision to the federal Children’s Online Privacy Protection Act (“COPPA”), which became effective as of July 1, 2013. As the FTC and state attorneys become increasingly stricter with online child protection standards, this rule will mean that online activity will be monitored more closely for inappropriate material. Indeed, this new rule has expanded what inappropriate material entails. Do you have a child with access to the internet? Are you a business entity that collects user information over the internet for marketing purposes? In both cases, this new rule may apply to your activities.

What Does the New Rule Add to COPPA?

First, the new rule substantially expands the meaning of “personal information.” Prior to this revision, personal information applied to an online user’s name, physical address, email address, telephone number, and social security number. However, the revision expands this category to include significantly more information. Online contact information will now include identifiers for instant messaging, Voice over Internet Protocol (VoIP), and video chat users. Additionally, online screen names will now be considered “contact information” because such information may be used to locate minors on the web. To this same effect, any online information that can help locate the physical address of a minor will constitute “personal information.” This information will include photographs, videos, and audio files that contain a child’s picture or voice. It will also include information such as an Internet Protocol address (“IP address”) or mobile device identification names, since they can help locate users as well. Indeed, any information that configures with geographic locations, such as street names and cities, will constitute “personal information.” The rule also limits the extent to which companies that gather “personal information” from minors can share this information with third parties.

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The Internet has become an expansive worldwide network and users have the freedom to access this network from multiple devices and locations. In light of this growing network, many forms of commerce have also moved to the Internet. E-commerce or commercial transactions that take place over the Internet, have become a growing part of international markets and businesses. However, this growing market has also led to the proliferation of online fraud. In addition, by gaining access to this worldwide network, also referred to as the Internet, online fraud is able to harm users and markets on a larger scale.

What Factors Indicate Online Fraud?

In order to begin to prevent online fraud with e-commerce, it is important to be able to recognize online fraud. There are certain indicators that can help online consumers recognize fraudulent activity. First, multiple orders within the same day, hour, or minute from the same user, address, or credit card will generally point to fraudulent activity. Also, shipping addresses to suspicious locations, such as abandoned buildings or P.O. boxes, may be indicators of fraudulent activity. Anonymous email accounts associated with online users placing purchases indicate a higher likelihood of online fraud. These indicators do not necessarily suggest that the online activity is absolutely fraud. Instead, these indicators help protect online consumers by arming them with early signs that can help prevent future harm.

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The U.S. Copyright Act, codified under 17 U.S.C. § 101 et seq., protects copyrighted works from infringement from wrongful users. This federal law aims to protect unique works while still allowing for creativity and future creations. To that end, individuals charged with copyright infringement can avoid liability entirely under a valid fair use defense. The fair use exception, which is codified under 17 U.S.C. § 107, provides that instances of work that fall within this exception do not constitute infringement.

How Do Courts Apply the Fair Use Exception?

Since courts have not adopted a test or set of factors to determine when the fair use defense applies, judges will look to the totality of circumstances on a case-by-case basis to determine whether the defense is appropriate. This exception allows the courts to avoid applying the statute so strictly that it prevents creativity. In Religious Technology Center v. Netcom On-Line Communication Services, Inc., the United States District Court for the Northern District of California found the fair use exception applies when a work is used for “criticism, comment, news reporting, teaching, scholarship or research.” Under the fair use exception, courts must consider the following factors: (1) purpose and character of the use; (2) nature of the work; (3) amount of the work used in comparison to the entire work; and (4) effect of the use on the potential value of the work. However, this is not a total list of considerations and courts will often look to any unique factors that affect the outcome of the case.

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What is personal jurisdiction? It is the court’s authority to determine a claim affecting a specific person. Generally, providing any type of data or information on the world-wide-web (i.e., Internet) is insufficient to subject a person to personal jurisdiction in each state wherein the date or information is accessed. However, a nonresident’s online activity, must be expressly targeted at, or directed to, the forum state in order to establish minimum contacts necessary to support the exercise of personal jurisdiction. In general, personal jurisdiction may not be exercised against a nonresident whose website was not directed toward any state.

If a non-resident defendant publishes statements that fall under the category of defamatory comments concerning the plaintiff on a website, the effects of which were clearly directed at the forum state, result in sufficient contact with the forum to warrant the assertion of jurisdiction over the nonresident defendant. On the other hand, the publication of defamatory comments concerning the plaintiff on a website is not, by itself enough to support the exercise of jurisdiction over a nonresident defendant (e.g., when an article was not specifically directed to residents in the forum state, or was not primarily directed at the plaintiff in that state).

Our readers must keep in mind that the tort of defamation can be committed in the jurisdiction (i.e., the state), even if the message was not directed there, if it has effects in that state.

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In the recent years, numerous Internet forums (aka “online message boards”) have provided a place for Internet users to discuss issues, entities/companies, and persons or individuals, who are often disguised in some form of anonymity. Sometimes, the targets of disparaging comments react by filing lawsuits in state or federal courts against unidentified (“John Doe”) defendants for claims such as violation of securities laws, breach of confidentiality agreement, and libel. Generally, in such disputes subpoenas are submitted to the message board hosts so to identify the authors. Notwithstanding the various challenges, the courts differ in their treatment of such subpoenas.

For example, see Jon Hart & Michael Rothberg, Anonymous Internet Postings Pit Free Speech Against Accountability, WSJ.com (March 6, 2002).

In Mobilisa, Inc. v. Doe, 170 P.3d 712 (Ariz. Ct. App. 2007) Mobilisa, a communications company, filed a complaint against numerous “John Doe” defendants who had submitted an anonymous e-mail to Mobilisa’s management team about the company’s founder and CFO’s conducts. Thereafter, Mobilisa attempted to compel The Suggestion Box, which was the service provider through which the e-mail was submitted, so to obtain the person’s identity who had submitted the e-mail. The trial court granted Mobilisa’s request and ordered The Suggestion Box to reveal the identities of the anonymous senders. Thereafter, The Suggestion Box and the senders of the e-mail appealed the trial court’s decision.

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Pursuant to Section 230 of the Communications Decency Act, no provider of an interactive computer service may be treated as the publisher of information provided by another information content provider. See 47 U.S.C. § 230(c)(1). The term “interactive computer service” means any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server, including specifically a service or system that provides access to the Internet and such systems operated or services offered by libraries or educational institutions.

Generally, holding a website operator as the publisher of an allegedly libelous statement by a third party violates the Act. See Zeran v. America Online, Inc., 129 F.3d 327 (4th Cir. 1997), cert. denied, 524 U.S. 937 (1998). Accordingly, the standard pursuant to Zeran is that when an online service provider receives a retraction demand regarding statements the service provider did not write, the demanding party should be re-directed to the third-party originator (i.e., the person who originally wrote the defamatory statement).

California’s Retraction Statute under Cal. Civ. Code § 48a states that:

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A defamatory statement is one that injures the reputation of another. The common-law torts of libel and slander punish the publication of statements that are both defamatory and false. Generally, a libelous statement is a false and defamatory statement published in writing. A slanderous statement is a false and defamatory statement expressed orally. False and defamatory oral statements broadcasted over the radio or television are now widely considered libel, rather than slander. In some cases, money damages may be awarded to compensate the victim of libel or slander for the reputational injury caused by publication of the false and defamatory statement.

However, in recent years there has been significant tension between the common-law protections of reputation and the mandate of the First Amendment to the Constitution that “Congress shall make no law . . . abridging the freedom of speech, or of the press. . . .”

To ensure that debate on public issues remains “uninhibited, robust and wide-open,” New York Times v. Sullivan, 376 U.S. 254, 270 (1964), the United States Supreme Court has found that the First Amendment limits the circumstances under which a speaker or publisher may be punished for making false and defamatory statements: “Neither lies nor false communications serve the ends of the First Amendment . . . [b]ut to insure the ascertainment and publication of the truth about public affairs, it is essential that the First Amendment protect some erroneous publications as well as true ones.” St. Amant v. Thompson, 390 U.S. 727, 732 (1968).

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The issue of online service provider liability comes up often in today’s high-tech world. In order to promote free discussion and private investment in the Internet, the United States Congress immunized providers of “interactive computer service[s]” against liability arising out of content provided for publication by any other “information content provider.” See Section 230 of the Communications Decency Act of 1996, 47 U.S.C. § 230. This section does not limit the application of intellectual property laws or criminal laws, but it protects Internet service providers and website operators against a broad range of tort, contract, and other claims arising out of content created by third parties.

Section 230(c)(2)(A) states that “[n]o provider or user of an interactive computer service shall be held liable on account of…any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected.”

Section 230(c)(2)(B), provides immunity for “any action taken to enable or make available to information content providers or others the technical means to restrict access to [such material].” The immunity offered under Section 230(c)(2) is also referred to as the “Good Samaritan” protection.

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In New York Times Co. v. Sullivan, 376 U.S. 254 (1964), the United States Supreme Court ruled that the First Amendment limits common-law defamation claims brought by public officials. The Court held that to recover for publication of a defamatory falsehood, a public official must prove that the challenged statement was “of and concerning” the public official plaintiff, that the statement was false, and that the defendant acted with “actual malice.” The Court defined “actual malice” as publication with knowledge that the statement was false or with reckless disregard of whether the statement was false or not.

Later, the Supreme Court extended the standard announced in New York Times Co. v. Sullivan to defamation cases brought by “public figures.” Public figures include individuals who voluntarily inject themselves into public controversy, as well as those who are involuntarily thrust into the limelight, even if only with respect to a particular activity or incident.

A private-figure defamation plaintiff can recover damages based on the defendant’s negligence (or a more speech-protective standard, under the law of some states). In no instance, however, can a private-figure plaintiff recover damages for defamation without a showing of fault amounting to, at least, negligence. Any lesser standard, the Supreme Court concluded, would unduly burden free speech. Gertz v. Robert Welch, Inc., 418 U.S. 323, 347 (1974). And, at least when the speech relates to an issue of public concern, a private-figure plaintiff must bear the burden of proving falsity; the defendant speaker is not obligated to prove the truth of the challenged statements. Philadelphia Newspapers, Inc. v. Hepps, 475 U.S. 767, 768 (1986).

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The Securities and Exchange Commission stated that publicly-traded companies should disclose the threat and potential impact of cyber attacks that pose a risk to their investors.

The commission made its comments in a letter to Senator Jay Rockefeller, chairman of the Senate Commerce Committee, that was released on June 8, 2011. Last month, Senator Rockefeller and four other Democratic senators wrote a letter to SEC Chairman Mary Schapiro, urging the agency to issue guidance on disclosure of data- security risk, including “material network breaches,” attacks that may result in the theft of intellectual property or trade secrets.