TechLaw

First Circuit Severs Connection Between Data Privacy, Free Speech

Yesterday's decision by the First Circuit in IMS Health Inc. v. Ayotte, No. 07-1945, could very well be a turning point in the way courts address data privacy issues. The court rejected a First Amendment challenge to a New Hampshire law that forbids data-mining companies from selling information about a physician's drug-prescribing habits to drug manufacturers. (Apparently this data is powerful when wielded by a skilled prescription drug marketer. New Hampshire legislators believed that brand-name drug marketers, armed with knowledge about a physician's drug-prescribing habits, are partially responsible for millions of dollars in increased state health care costs, which are incurred when physicians depart from medical guidelines and prescribe higher-priced, brand-name drugs in lieu of lower-cost generics.)

Most discussions about privacy assume that, as privacy expands, important First Amendment values (the freedom to discover and distribute truthful information, for example) are diminished. Relevant to marketing communications, the First Amendment has been held to protect pure data (Universal City Studios v. Corley) and even mundane expression such as product prices (Va. Board of Pharmacy v. Va. Consumer Council).

What is important about the IMS Health v. Ayotte decision is not that the court found no First Amendment violation, but its conclusion that the New Hampshire law regulated conduct entirely outside the protection of the First Amendment. A 2-1 majority of the court held that the target of the New Hampshire law -- namely, communications about a physician's drug-prescribing habits -- did not merit First Amendment protection at all. The court said that the information restricted by the New Hampshire law was similar to fighting words, misleading commercial speech, speech in furtherance of a crime, restraints of trade, or promises of benefits in order to influence a union election -- all of which have been held to be outside the protection of the First Amendment. Here are the key passages from Judge Selya's majority opinion:

This case poses the relatively narrow question of whether the Prescription Information Law constitutionally may bar these plaintiffs (data miners) from aggregating, manipulating, and transferring data for one particular purpose only. ...

To be sure, certain information exchanges are foreclosed by the Prescription Information Law. They are not, however, the sorts of exchanges valued by the Supreme Court's First Amendment jurisprudence but, rather, are exchanges undertaken to increase one party's bargaining power in negotiations. We believe that in moving to combat the novel problems presented by detailing in the information age, New Hampshire has adopted a form of conduct-focused economic regulation that does not come within the First Amendment's scope. ...

 We believe that the transfers of prescriber-identifiable information regulated by the Prescription Information Law (transfers that otherwise would flow from pharmacies to data miners to detailers for the purpose of promoting the dispensation of expensive brand-name drugs) fit within this integument. The challenged portions of the statute principally regulate conduct, and to the extent that the challenged portions impinge at all upon speech, that speech is of scant societal value. We say that the challenged elements of the Prescription Information Law principally regulate conduct because those provisions serve only to restrict the ability of data miners to aggregate, compile, and transfer information destined for narrowly defined commercial ends. In our view, this is a restriction on the conduct, not the speech, of the data miners.

I think what the First Circuit has done here is show state legislatures a way to write privacy legislation that can withstand First Amendment objections. (True, the state did not seriously advance the argument that the law was justified as a matter of physician privacy. It was the dramatic increase in health care costs due to brand-name drug prescriptions that caught the state's, and this court's, attention. Nevertheless, the First Amendment point is the same: some kinds of data communications are outside First Amendment protection.) The idea that a restriction on the use of a particular kind of data, in order to serve a clearly defined social purpose, does not implicate the First Amendment at all, is a powerful one that should attract a lot of attention in the next few years.

High Court Declines Review of MySpace CDA 230 Case

The U.S. Supreme Court denied certiorari this morning in Doe v. MySpace Inc., No. 08-340, a case raising the issue whether Section 230 of the Communications Decency Act immunizes MySpace from a claim that it negligently failed to protect an underage user from sexual assault by another MySpace user. The Fifth Circuit held that allegations in the plaintiff's complaint that MySpace had negligently failed to implement reasonable safety measures to protect her daughter--a 14-year-old who misrepresented her age when registering on the site--were, in effect, seeking to hold MySpace liable for the communications between the daughter and her attacker. This is forbidden by CDA Section 230, a federal law that immunizes interactive service providers from state-law claims arising seeking to hold them liable as publishers or third party content, the court said.

The plaintiff did not have a lot to work with here, inasmuch as the Fifth Circuit's take on CDA Section 230 was consistent with the language of the statute and with the overwhelming majority of prior judicial interpretations. In addition to the argument that the Fifth Circuit had read CDA SeCtion 230 too expansively, the plaintiff made a couple other policy arguments: first, that Internet businesses are not the fragile entities they were in 1996, and thus are no longer in need of special treatment; second, that the ruling below undermines the efforts of state attorneys general who are asking social networking sites to do more to prevent criminal activity. Whatever the merits of these arguments as policy matters, they are not the sort of arguments that capture the Supreme Court's attention.

With the court's action today, the Supreme Court does not have a case presenting a CDA Section 230 issue pending on its docket. Since the law was passed in 1996, the high court has declined all seven invitations to review the law: Doe v. MySpace Inc. (2008), Perfect 10 Inc v. CCBill LLC (2007), Batzel v. Smith (2004), Green v. America Online Inc. (2003), Doe v. America Online Inc. (2001), Ben Ezra, Weinstein & Co. v. America Online Inc. (2000), and Zeran v. America Online Inc. (1998).