Laws of .com

Volume IV, Issue 12: June 15, 2006

Survey Finds Many Employers Monitor Outbound Messages

Online Protest Held Not To Violate German Penal Code

British Television Regulator Asserts Authority Over Online Transmitted TV

US Veterans File Class Action Lawsuit Over Stolen Data

State Of Minnesota Sued Over Video Game Law

City of Philadelphia's Lawsuit against Internet Travel Agents Dismissed

Virtual Land Deal in Online Game Leads to Real World Lawsuit

U.S. Federal Appeals Court Upholds Extension of CALEA to Internet Phone Calls

Survey Finds Many Employers Monitor Outbound Messages

A recent Forrester Consulting survey concludes that upwards of 35% of US and UK businesses with more than 1000 employees hire staff to read outbound email and other electronic messages.

Proofpoint, a California-based email security firm, commissioned the study that also found that the rate of reviewing increased to 44% for companies having 20,000 employees and above. Employers are concerned about information exiting the company that may give rise to legal, regulatory or other liabilities. Proofpoint cites a growing body of external regulations as a driver behind the trend. However, firms are also concerned with general company policy enforcement and reducing exposure to leaks of confidential or embarrassing information.

About 7% of companies had let go of employees for abuse of blog or message policy violations, while almost one third of the survey’s respondents said they had terminated an employee in the preceding 12 months for email violations.

For a copy of Proofpoint's report, visit:
http://www.proofpoint.com/id/outbound/index.php?id

For additional information, visit:
www.theregister.co.uk/2004/07/27/corporate_snooping_survey/

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Online Protest Held Not To Violate German Penal Code

A German appellate court has ruled that coordinated efforts by two human rights groups to overload websites operated by Lufthansa with automatically generated calls were merely intended to influence public opinion and, as such, were not in violation of the German Penal Code. The court overruled a lower court's earlier finding that the actions constituted coercion by use of force in violation of section 240 of the Code.

On June 21, 2001, the groups "Libertad" and "Kein Mensch ist Illegal" ("No one is illegal") called for an online demonstration against Lufthansa to protest against the airline's participation in deportations. The Groups' sympathizers were encouraged to bombard Lufthansa websites with calls generated by specially designed software. Although the effort generated huge publicity and allegedly involved some 13,000 protestors, it is unclear whether it had any significant impact on the websites themselves (Lufthansa had rented additional line capacity in anticipation of the protest).

At first instance, the lower court agreed with Lufthansa and the state prosecutor that the campaign was an illegal act of coercion and that the groups had incited others to break the law. However, the Higher Regional Court has ruled that the protest did not constitute a show of force and that its initiators cannot therefore be charged with coercion.

In response to the ruling, a Libertad spokesperson was quoted as saying: "Although it is virtual in nature, the Internet is still a real public space. Wherever dirty deals go down, protests also have to be possible."

For additional information, visit:
http://www.heise.de/english/newsticker/news/73827

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British Television Regulator Asserts Authority Over Online Transmitted TV

The British television licensing authority has indicated that they will make no distinction between individuals watching television through their PC, TV, broadband, or any other way. In their view, if you are viewing television at the same time it is being broadcast in the United Kingdom, then you need to be covered by a valid licence. Indeed, the legal definition of “television receiver “is, in British law, broad enough to capture a PC.

The immediate implication that emerges is employees using their computers at work to view television programming. If a workplace does not have a broadcast licence then, theoretically, the company could be faced with court proceedings.

The licence authority in Britain monitors both equipment sales and licence holders which allows them to cross-reference and thereby determine specifically which businesses are receiving broadcast without a licence. Critics have argued that the regulator will have a very difficult time prosecuting these cases because no records are currently kept about purchases of PC equipment. It does not, however, take a crystal ball for regulators to see that major businesses operating in financial centres might have one or two computers on their premises.

For additional information, visit:
http://www.out-law.com/page-6993

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US Veterans File Class Action Lawsuit Over Stolen Data

In May, the US Department of Veterans Affairs disclosed that a major information security breach had occurred. A Veterans Affairs data analyst took home a laptop and external hard drive with the personal information (mostly name, birth date, and SSN) of about 26.5 million individuals, including veterans and active-duty military personnel. The analyst’s home was subsequently robbed, and the laptop and hard drive were stolen.

Understandably, this event has caused great concern. The laptop has not been recovered. Authorities suspect that the computer, not the data, was the target of the robbery, and that the thieves may not know of the personal information or its significance. There has been no indication yet that any of the personal information has been used for identity theft purposes. However, the potential consequences are wide-ranging and serious.

A coalition of veterans’ groups has now filed a class-action lawsuit against the US federal government, claiming that their privacy rights were violated by the theft. The suit demands that the VA fully disclose which military personnel are affected by the theft (information about the incident has been incomplete and sporadic), and seeks $1,000 in damages for each person affected. The plaintiffs also want the court to bar VA employees from using sensitive personal information until better information security safeguards are in place. The VA has stated that the employee’s actions were against VA policies, but the organization is still receiving harsh criticisms for its data security practices.

For additional information, visit:
http://www.siliconvalley.com/mld/siliconvalley/news/editorial/14753252.htm

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State Of Minnesota Sued Over Video Game Law

The Entertainment Software Association (ESA), a trade group representing the video game industry, sued the state of Minnesota on Tuesday to overturn a new law that would fine children for buying or renting mature or adults-only games. The suit filed in Minnesota Federal District Court, argues that the bill attempts to substitute governmental judgment for parental supervision. Under the terms of the law, a $25 fine is imposed on anyone under the age of 17 who buys or rents a videogame rated “M” (Mature) or “AO” (Adults Only).

ESA president Doug Lowenstein stated their position, "The state is attempting to impose liability on children because they know that courts have consistently held that they cannot penalize retailers. We believe that the courts will agree that fining children violates the First Amendment as well." The ESA is seeking a preliminary injunction to prevent the statute from taking effect on August 1, 2006.

The ESA has successfully convinced courts to strike down six similar bills in the past five years, usually by arguing that the prohibitions on certain video games were unconstitutional and violated the First Amendment, most recently in Michigan (see the April 20, 2006 edition of LOC for additional information).

For additional information, visit:
http://news.com.com/2100-1043_3-6080805.html

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City of Philadelphia's Lawsuit against Internet Travel Agents Dismissed

A lawsuit filed by the City of Philadelphia against 17 online travel services was thrown out by a Common Pleas Judge. The city alleged that the services had short-changed the city on its 7 percent hotel occupancy tax. The travel services pay the tax on the wholesale prices they pay to hotels, rather than the retail prices they charge to consumers. While not addressing the merits of the case, Judge Howland W. Abramson stated that his court was not the appropriate forum. There was no evidence that the city had ever performed an audit, provided notice or attempted to collect the tax from the online services before commencing the lawsuit. Abramson ruled that if the city believes the online travel brokers owe more money they should seek assistance from their Tax Review Board, and that it was the Tax Review Board, rather than the court, that had sole jurisdiction to determine whether taxes were owing.

For additional information, visit:
http://www.siliconvalley.com/mld/siliconvalley/news/editorial/14753253.htm

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Virtual Land Deal in Online Game Leads to Real World Lawsuit

A Pennsylvania lawyer is suing the publisher of the online world Second Life for a breach of a virtual land auction contract as well as for violation of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law. The suit may be a first-of-its-kind, in that the land at the centre of the dispute does not actually exist.

The lawsuit was started after the lawyer had his account frozen after a (virtual) land deal went bad. The lawyer claims he found a legitimate way to use the online auction of Second Life to purchase land far below market prices, and that by freezing his account and thereby cutting off his access to his portfolio of real estate and currency in the online world, the game developer, Linden Lab, has “breached an auction contract by allowing the land to auction, accepting online payment, and then suspending the plaintiff’s account.” He is seeking $8,000 in restitution.

The suit has piqued the interest of those who follow the legal and economic issues of virtual worlds, who have been awaiting a real world lawsuit over “in-game” property for some time. Second Life is one of the few virtual worlds in which its members legally own the content they create, including real estate and vehicles, as well as clothing. However, since the ejection of the lawyer from Second Life might be permissible under the Terms of Service, the case is unlikely to answer one of the most fundamental questions: whether or not such virtual items are real property.

For additional information, visit:
http://www.wired.com/news/culture/0,70909-0.html

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U.S. Federal Appeals Court Upholds Extension of CALEA to Internet Phone Calls

A U.S. federal appeals court has ruled in favour of the Federal Communications Commission (FCC), concluding that equipment used for Internet phone calls and broadband transmission must be able to accommodate police wiretaps under the 1994 Communications Assistance for Law Enforcement Act (CALEA). Opponents to the decision argue that Internet and broadband fall within an exemption under CALEA. Others argue that the decision of the court is contrary to congressional intent, as CALEA was written for the telephone system of 1994, rather than the Internet. The court did rule, however, that the application of CALEA does not extend to private networks.

For additional information, visit:
http://www.siliconvalley.com/mld/siliconvalley/news/editorial/14781477.htm

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