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California Supreme Court Holds that ZIP Codes are “Personal Identification Information”

In a broadly-worded unanimous ruling, the California Supreme Court recently overruled lower court decisions to hold that businesses cannot request and record ZIP codes as a condition to credit card transactions, because ZIP codes are “personal identification information” under the Song-Beverly Credit Card Act of 1971 (the “Credit Card Act”). Pineda v. Williams-Sonoma Stores, Inc., S178241 (Cal. Supreme Court, Feb. 10, 2011). More generally, the Court implicitly recognized the impact on consumers of aggregating and matching their personal data from vast databases.

To read more go to: http://twitter.com/calbarsections

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Apple (NASDAQ:AAPL) and the companies that sell software for the iPhone and iPod touch at the App Store have lost over $450 million to piracy since the store opened in July 2008 according to an analysis by 24/7 Wall St. There have been over 3 billion applications downloaded since the App program began. Bernstein analyst, Toni Sacconaghi, estimated that between 13% and 21% of those downloads are from paid applications. According to this analysis, the average price of an application purchased at the App Store is $3. Sacconaghi estimated that Apple’s revenue from the App Store is between $60 million and $110 million per quarter. That amount has certainly increased since this research report was published because of the rapid growth of the number of applications.

However, behind all this success lies an insidious force that has plagued the music, software, and movie industry for decades. Developers of iPhone applications have reported alarming piracy rates for their software, and the ease with which users may obtain pirated versions of paid applications for free is only increasing. The total number of applications available at the store, including those which are free and those which require payment, is in excess of 100,000.

Anyone who is familiar with the iPhone is likely to know that these phones can be “jailbroken” or, to use the more common term “unlocked”. Jailbreaking an iPhone modifies the OEM Apple iPhone OS. This allows the user to circumvent the limitations put on the phone by Apple. Apart from the ability to modify the OS itself to allow for customizing of icons, backgrounds, functionality and processes, a jailbroken iPhone permits the installation of applications from sources other than the iTunes store. It is even possible to use an unlocked phone for access to carrier services other than AT&T (NYSE:T) and the Apple-assigned retailers outside the US. The great majority of iPhones sold in China are unlocked and Apple partner, China Unicom (NYSE:CHU), have only begun to sell locked phones in the last three months.

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Introduction

On December 1, 2010, the Federal Trade Commission (“FTC”) released its highly anticipated consumer privacy protection framework titled “Protecting Consumer Privacy in an Era of Rapid Change” (“Privacy Report”).  A copy of the Privacy Report may be obtained on the FTC website: http://www.ftc.gov/os/2010/12/101201privacyreport.pdf.  The FTC seeks public comment on the proposed privacy framework by January 31, 2011.

The proposed privacy framework has three major components: (1) privacy by design; (2) expansion of consumer choices about how companies collect and use consumer information; and (3) increased transparency of data collection practices.  All three components have already ignited a lively debate among consumer advocates, businesses, advertisers and policy makers.  Although, stated as tasks that a company “should do,” there is worry the FTC could take steps to use its enforcement powers against a non-compliant company.

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For over a year, the news media has reported extensively on proposed rules from the Federal Communications Commission (“FCC”) concerning “net neutrality.”  Today, the FCC released its anticipated order placing “network neutrality” requirements on broadband internet access providers.  In this e-bulletin we provide a background on developments leading up to the FCC’s action, and a brief overview of the order.

Background

The term “network neutrality” refers to the general principle that all content available on the Internet should receive equal precedence, such that Internet Service Providers (“ISPs”) do not discriminate between different types or sources of traffic.

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NEW YORK (AP) – Google Inc., the top Web search provider, said Tuesday it will allocate about $8.5 million to Internet privacy and policy organizations as part of a class action settlement involving its Buzz social hub.

The lawsuit had been filed by users of Google’s free e-mail service, Gmail. In February, Google added a new social hub called Buzz, which let Gmail users track their frequently e-mailed contacts’ status updates and other information shared online. But frequent e-mails don’t necessarily mean people are actually “friends.” The class action suit said Google violated privacy rights by automatically adding Buzz to Gmail without making it clear what information would be shared and with whom.

The settlement acknowledges that Google has made many changes to Buzz to ease privacy concerns. Google is creating an $8.5 million fund, mainly to go to Internet privacy and policy organizations. The company said it will also make additional efforts to teach users about privacy on Buzz.

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NEW YORK (AP) – If you use Facebook to “check in” to your favorite restaurants or shops, you can now expect to see rewards and discounts from companies looking to drum up business and lure in loyal customers.

Facebook is looking to bridge online advertising with people’s offline behavior as it announced a service called “Deals.” It’s an extension of Places, the check-in feature the company unveiled this year. Rising with the explosive growth of smart phones, services based on people’s location help them find coupons, earn quirky merit badges or simply share with friends where they are.

The number of people using such services is still small – just 4 percent of the U.S. Internet population have ever used it and just 1 percent on any given day, according to a survey released Thursday by the Pew Internet and American Life Project.

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Jammie Thomas-Rasset has been dealt another setback in her long-running court battle over sharing 24 songs illegally online. CNet reports that she has lost her latest court battle, with a Minneapolis jury decided that Thomas-Rasset is liable for $1.5 million in copyright infringement damages to Capitol Records. This breaks down to $62,500 per song.

The RIAA was pleased with the decision and said in a statement, “We are again thankful to the jury for its service in this matter and that they recognized the severity of the defendant’s misconduct. Now with three jury decisions behind us along with a clear affirmation of Ms. Thomas-Rasset’s willful liability, it is our hope that she finally accepts responsibility for her actions.”

Thomas-Rasset is expected to appeal the decision. One of her attorneys told CNet, “The fight continues.”

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The Data Security and Breach Notification Act of 2010

To help protect personal information on the Internet and elsewhere, California enacted seminal legislation in 2000, which was significantly strengthened with the passage of SB 1386 in 2002. Since then, other states have enacted similar legislation.

State activity, however, may be preempted by proposed federal legislation. On August 5, 2010, S. 3742, the Data Security and Breach Notification Act of 2010 (the “Act”), the most recent federal effort to preempt state laws on the subject, was introduced by Sen. Mark Pryor (D,AeeArk), chairman of the Subcommittee on Consumer Protection, Product Safety, and Insurance, and co-sponsored by Sen. John D. Rockefeller IV (D,AeeW.Va.), Chairman of the Senate Commerce Committee. Less protective of consumers than California law, among other things, the Act:

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Earlier, a post on this blog noted the jurors in the corruption trial of former Governor Rod Blagojevich had informed the judge they had only reached a decision on two of the 24 charges in the case. Now, the news comes that the jurors have reached a final verdict: on one count only. Jurors have found Rod Blagojevich guilty on one count of lying to federal agents. The judge has decided to declare a mistrial on the remaining 23 counts.

Prosecutors have wasted no time in announcing that they intend to retry Blagojevich and his brother Robert on the other charges. As the Associated Press reported, one of the main charges as yet undecided is whether or not Blagojevich attempted to sell the senate seat vacated by President Obama. The presiding judge in the trial, James Zagel, has set a hearing for Aug. 26 to decide issues regarding the retrial.

The AP reported that the jurors looked wearier than they had during the trial. The single count verdict came after 14 days of deliberations. At one point, the jurors had informed Judge Zagel that they were deadlocked on as many as 11 of the charges. They had also informed the judge that they had reached agreement on two charges, but seemed to have lost their consensus along the way to the jury verdict.

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The Internet has made life easier in so many ways, including the ability to shop and conduct financial transactions online. Of course, just like in the world of bricks and mortar, criminals also lurk in Cyberspace, seeking to steal identities, data and money. While Cyber criminals, of course, are responsible as a matter of criminal and civil law for their own wrongdoing, the question arises as to whether others also can be deemed responsible for the harm suffered as a result of this illegal conduct.

The recent case of Patco Construction Company, Inc. v. People’s United Bank d/b/a Ocean Bank, filed in state court in Maine, tees up this very question for resolution.

Patco alleges that it has been a customer of Ocean Bank. Patco asserts that Ocean Bank failed to fulfill “ones of its most basic obligations, namely, to protect its customers’ funds against theft.”

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