TechLaw

Takeaways for Social Media Advertisers in the FTC's New Endorsement Guides

Blogging late about a news event is a mixed blessing. The blogger has the benefit of reading everyone else's hastily keyed impressions and thus can seem oh-so-much smarter with several days to think about issues others gave about five minutes' thought to (sort of reminds me of law school, actually). The downside is that after a couple days the news event is essentially played and now the late blogger must try to place something interesting on top of a pile of prior opinion that is already gathering dust. Blogosphere, I make you this deal: I won't poke holes in your snap judgments, and you won't expect me to be smart or interesting.

That said, the Federal Trade Commission's Monday release of its Guides Concerning the Use of Endorsements and Testimonials in Advertising (warning: big PDF) is another example of the government attempting to place old media rules on new social media. These developments throw off the sort of fascinating policy discussions that make my job so enjoyable. Cyberspace exceptionalism. Notice or norms? It's a conversation, it's not "media." Any market failures here? You can't regulate the Internet. Government paternalism.

Early campfire stories from CNET, where the web welkin is always falling, Yes, new FTC guidelines extend to Facebook fan pages, and the Guardian, America's memo to bloggers: don't lie or we'll fine you, conjure up scary images of FTC lawyers hunting down tweeters and Facebook "fans" of Corporate America. Censorship and naivete in Washington are eloquently decried by Jeff Jarvis at BuzzMachine, FTC regulates our speech, and Dan Gillmor at Mediactive, A Dangerous Federal Intervention in Social Media. The most entertaining take I've read on the new endorsement guides is this post from Edward Champion at Reluctant Habits, Interview With FTC's Richard Cleland, in which a dogged interviewer bests an FTC official in a game of reductio ad absurdum.

Bloggers, Tweeters, Fans: Type With Confidence

Since 1980, the FTC has had guidelines in place concerning the use of testimonials and endorsements to sell a product or service. Rules on substantiation, and rules calling for disclaimers on typicality and paid sponsorship, were a part of those guidelines. (For my non-lawyer readers, the endorsement guidelines are detailed descriptions of advertising techniques that FTC staffers believe run afoul of the FTC Act, 15 U.S.C. 45, which forbids unfair and deceptive trade practices.)

The new guidelines extend existing guidance to social media advertising, by setting out several circumstances where FTC staffers believe that disclosures about compensation should be made.

The intended audience for the guidelines is advertisers, not bloggers. The FTC is chasing its traditional nemesis -- marketers -- who have lately taken to social media to hawk products and services. It's no secret that marketers are turning to social media in a big way. That's where the eyeballs are. Moreover, social media is well-suited to advertising, see Robert Cialdini's book Influence (Disclosure: This is not an affiliate link and I am not being compensated by Cialdini, his publisher, or Amazon.com). Social proof is powerful; marketers want to tap into it.

Bloggers, tweeters, fans: The FTC is not targeting you. They are targeting the companies who are impersonating you. Just like the mighty humpback whale that travels north in search of krill and herring off the Alaska coast, the FTC is following advertisers' migration into social media. Bloggers, you're more like the puffins. The FTC is not really interested in you.

The guidelines cover only "endorsements," a category of speech that addresses an infinitesimally small percentage of cyberspace. At least I hope so. The guidelines define an "endorsement" as:

any advertising message (including verbal statements, demonstrations, or depictions of the name, signature, likeness or other identifying personal characteristics of an individual or the name or seal of an organization) that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser.

Presumably, a blogger/tweeter/fan will know whether he or she has received a cash payment or freebie. If the blogger/tweeter/fan writes an "endorsement," he or she must disclose the cash payment or a freebie. This doesn't happen very often, and the burden seems slight. The FTC will not be targeting bloggers who violate the guidelines.

Homework for Lawyers and their Marketer Clients

The flip side of this coin is that the FTC will be looking hard at companies who use social media to advertise their products and services. Which means that lawyers will have new compliance advice to sell to companies using social media for advertising. A cottage industry in compliance/avoidance strategies has been created.

Here are the FTC examples that specifically pertain to  social media marketing. I've (helpfully) bolded the portions that advertisers should linger on.

Example 5:

A skin care products advertiser participates in a blog advertising service. The service matches up advertisers with bloggers who will promote the advertiser’s products on their personal blogs. The advertiser requests that a blogger try a new body lotion and write a review of the product on her blog. Although the advertiser does not make any specific claims about the lotion’s ability to cure skin conditions and the blogger does not ask the advertiser whether there is substantiation for the claim, in her review the blogger writes that the lotion cures eczema and recommends the product to her blog readers who suffer from this condition. The advertiser is subject to liability for misleading or unsubstantiated representations made through the blogger’s endorsement. The blogger also is subject to liability for misleading or unsubstantiated representations made in the course of her endorsement. The blogger is also liable if she fails to disclose clearly and conspicuously that she is being paid for her services.

In order to limit its potential liability, the advertiser should ensure that the advertising service provides guidance and training to its bloggers concerning the need to ensure that statements they make are truthful and substantiated. The advertiser should also monitor bloggers who are being paid to promote its products and take steps necessary to halt the continued publication of deceptive representations when they are discovered.

Example 7:

A college student who has earned a reputation as a video game expert maintains a personal weblog or “blog” where he posts entries about his gaming experiences. Readers of his blog frequently seek his opinions about video game hardware and software. As it has done in the past, the manufacturer of a newly released video game system sends the student a free copy of the system and asks him to write about it on his blog. He tests the new gaming system and writes a favorable review. Because his review is disseminated via a form of consumer-generated media in which his relationship to the advertiser is not inherently obvious, readers are unlikely to know that he has received the video game system free of charge in exchange for his review of the product, and given the value of the video game system, this fact likely would materially affect the credibility they attach to his endorsement. Accordingly, the blogger should clearly and conspicuously disclose that he received the gaming system free of charge. The manufacturer should advise him at the time it provides the gaming system that this connection should be disclosed, and it should have procedures in place to try to monitor his postings for compliance.

Example 8:

An online message board designated for discussions of new music download technology is frequented by MP3 player enthusiasts. They exchange information about new products, utilities, and the functionality of numerous playback devices. Unbeknownst to the message board community, an employee of a leading playback device manufacturer has been posting messages on the discussion board promoting the manufacturer’s product. Knowledge of this poster’s employment likely would affect the weight or credibility of her endorsement. Therefore, the poster should clearly and conspicuously disclose her relationship to the manufacturer to members and readers of the message board.

The foregoing examples suggest at least three new compliance obligations that advertisers need to immediately take on:

• Monitoring: Endorsers who receive payments or freebies must be monitored to ensure that endorsers are making required disclosures and to ensure that endorsers are not making unsubstantiated claims.
• Training: Endorsers who receive payments or freebies must be given training in the new FTC guidelines, to minimize the chance that endorsers will make unsubstantiated claims or will fail to disclose their connection to the advertiser.
• Workplace Social Media Policies: Advertisers must have in place policies for employees that require them to disclose their status as an employee when making endorsements in social media and other online venues.

Beyond these obvious initiatives, there are a lot of other gray areas for lawyers and their advertiser clients to discuss:

• How permissive will the FTC be with promotional messages that fall short of an endorsement of a specific product? Could Coca Cola sponsor social media messages about the benefits of carbonated sugar water without making a disclosure?
• What does "clear and conspicuous" mean? Would "ADV" work for a tweet?
• With a blog, would it be sufficient for the endorser to publish -- much like a privacy policy -- a one-time message indicating that the endorser frequently receives gratis goods in exchange for reviews? Or would the blogger need to make disclosures on a case-by-case basis (e.g., "This review is positive, so it needs a disclaimer," "This review is negative, so I don't have to run a disclaimer.")
• To what extent will endorsers be allowed to downplay the connection to the advertiser? Will a terse "Promotional consideration received" be sufficient? Will an icon be sufficient?

Finally, I wonder if any of this applies to lawyer communications in social media. Would a lawyer who has AT&T as a client be able to post, without disclosing the attorney-client relationship, "I just love my iPhone and I don't mind being locked-in to a two-year contract at all" on a blog or message board? That's just nuts, right? I withdraw the question.

Loose Change

A few other random thinking-out-loud notions that arose while going through the FTC guidelines.

First, the FTC was not impressed with arguments made by several commenters that (1) self-regulation is the best policy route and (2) that regulation would adversely affect the growth of social media. These arguments have prevailed in Washington since the dawn of the commercial internet, particularly in the area of privacy, so it was surprising to see the commission reject them, and pointedly so. "The Commission disagrees ... with those who suggest that there is not yet an adequate basis to provide guidance in this area." Whether or not this kind of thinking translates into other areas where self-regulation is king remains to be seen.

Second, it was disappointing to see the commission draw a line between user-generated media and traditional media. That seems to be an untenable distinction in 2009, and it promises to create mischief. I personally don't agree with the commission's reasons for requiring user-generated endorsements to contain disclosures (the internet has a way of sorting this stuff out on its own), and I certainly don't agree with its reasons for not saddling traditional media with similar disclosure obligations. Does this mean that Engadget.com must run a disclaimer but the Washington Post's tech toy reviewer need not? This may turn out to be unimportant in the long run, however, because traditional media seem to be embracing the idea that transparency is an attribute with commercial significance.

Third, if an when these guidelines are challenged on First Amendment grounds, how will social media speech be categorized? We are already seeing in the FTC's new guidelines how marketers who venture into social media spaces have brought along their federal regulators. Will they also bring the lesser protections that the First Amendment accords to commercial speech?

(Image: Marydoo)

Challenge to Utah Child E-Mail Registry Law Dismissed

A constitutional challenge to Utah's child e-mail protection registry statute passed away quietly in its sleep late last week. A federal district court in Utah dismissed the case Sept. 30, several days after receiving a stipulation from all parties consenting to its dismissal.

The Utah Child Protection Registry Act, Utah Code Section 13-39-101, allows parents to register their children's "contact points" with a state registry. Essentially, the Utah law is a "do not email" statute for kids. It is unlawful to send a commercial message to a contact point that has been on the registry for more than 30 days.

Way back in 2005, a group known as the Free Speech Coalition challenged the law on First Amendment, CAN-SPAM preemption, Supremacy Clause, and dormant Commerce Clause grounds. The district court ruled in 2007 that the plaintiffs were not likely to prevail on their constitutional claims, denying a request for an injunction. The plaintiffs did not appeal to the Tenth Circuit, and the case has not been actively litigated since then.

The particulars of the lawsuit are set out in defendant Unspam Registry Services Inc.'s motion to dismiss the case, filed Sept. 3.

The Communications Decency Act and the Net Neutrality Debate

Telecom analyst Barbara Esbin's paper, The Audacity to Hope Regulatory Restraint Will Prevail, discusses an interesting argument that the Federal Communications Commission is making in support of its 2008 decision that Comcast's covert blocking of peer-to-peer traffic violated the Communications Act. The FCC, in a brief filed Sept. 21 in the D.C. Circuit, is arguing that it has implied authority (known as "ancillary jurisdiction" in telecom-speak) to regulate Internet communications via Section 230(b) of the Communications Decency Act, a subset of the federal government's telecom regulatory structure.

CDA Section 230 is a non-obvious place for find FCC authority to take action in support of net neutrality, and Esbin doesn't think much of the FCC's argument. I found her article and the FCC's brief, read together, to be illuminating reading about the legal issues surrounding net neutrality policy, mercifully free from the hysterical rhetoric that dominates most discussions of this issue.

CDA Section 230(b) is a policy statement rarely been discussed in the many judicial decisions involving the CDA, nearly all of which deal with the civil immunity it provides for interactive computer services in cases involving objectionable third-party content. Section 230(b) reads:

(b) Policy.--It is the policy of the United States--

(1) to promote the continued development of the Internet and other interactive computer services and other interactive media;

(2) to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by Federal or State regulation;

(3) to encourage the development of technologies which maximize user control over what information is received by individuals, families, and schools who use the Internet and other interactive computer services;

(4) to remove disincentives for the development and utilization of blocking and filtering technologies that empower parents to restrict their children's access to objectionable or inappropriate online material; and

(5) to ensure vigorous enforcement of Federal criminal laws to deter and punish trafficking in obscenity, stalking, and harassment by means of computer.

 The FCC, in its brief, contends that Section 230(b) expresses a congressional policy in favor of "maximizing user control over the receipt of Internet content." Building on this point, the FCC argues that its 2008 action against Comcast furthered "those express congressional policies." It will be interesting to see if this argument prevails in court.

Even if this part of Section 230 carried substantive weight, this language fairly supports arguments both in favor of and against federal regulation of Comcast's traffic management decisions. In one ruling I dug up, Vonage Holdings Corp. v. Minnesota Public Util. Comm'n, D. Minn., No. 03-5287 (MJD/JGL), 10/16/03), the court remarked that Section 230(b) expressed a policy against state regulation of the Internet.

Discussions about whether the FCC has authority, or should be given authority, to regulate in the area of net neutrality are now taking place both in Congress and within the FCC via Chairman Genachowski's recently announced rulemaking. Regardless of how the D.C. Circuit proceeding turns out, it appears there will be clarity on the FCC's net neutrality authority soon.

Sen. Durbin Proposes $15 Million in Grants for Open Textbook Creators

Last week Sen. Richard Durbin introduced a bill (S. 1714) that would create a $15 million federal grant program for "open textbooks." The bill is a further example of continuing federal government interest in openness, transparency, and using information-sharing technologies to promote social aims.

Sen. Durbin is promoting his bill as a means to drive down the price of college textbooks, but I think it is going to have more far-reaching consequences than that. If it passes.

The bill defines "open textbook" as "a textbook or set of course materials in electronic format designed for use in a college course at an institution of higher education that is licensed under an open license."

New works and updates to existing works would be eligible for grants.

The bill defines "open license" as "an irrevocable intellectual property license that grants the public the right to access, customize, and distribute a copyrighted material."

Any college, and professor or group of professors, any for-profit or non-profit organization may apply to the Secretary of Education for a grant to produce open textbooks. It will be interesting to see how this all plays out in the legal education market, particularly in the areas of cyberlaw and intellectual property law where feelings about openness run strong. A shot of federal grant money might be all it takes to spur the development of new teaching materials from law clinics at Harvard or Berkeley, or stimulate interest from an established, commercial technology law publisher like MIT Press.

Grant-eligible teaching materials must be both "free as in freedom" and "free as in beer." S. 1714 provides that the "full and complete digital content of each open textbook" must be "made available free of charge to, and may be downloaded, redistributed, changed, revised, or otherwise altered by, any member of the general public."

The message to entrepreneurs is this: If you'd like to take the big textbook publishers down, the federal government might be willing to lend a hand. The hard part will be making a buck in the process.

Minor Win for Bloggers in Fourth Circuit's GHF Ruling

En route to tossing out a $2.9 million jury verdict for invasion of privacy and intentional infliction of emotional distress against the author of a hateful screed at <godhatesfags.com>, the U.S. Court of Appeals for the Fourth Circuit slipped in a goodie for bloggers at footnote 13:

[W]e believe that the First Amendment protects nonmedia speech on matters of public concern that does not contain provably false factual assertions. Any effort to justify a media/nonmedia distinction rests on unstable ground, given the difficulty of defining with precision who belongs to the "media."

Similar statements rejecting a distinction, for First Amendment purposes, between official "media" and non-media speakers were made in Flamm v. Am. Ass'n of Univ. Women, 201 F.3d 144, 149 (2d Cir. 2000), and In re IBP Confidential Bus. Documents Litig., 797 F.2d 632, 642 (8th Cir. 1986), both of which the Fourth Circuit cited.

The case is Snyder v. Phelps, No. 08-1026 (4th Cir., Sept.24, 2009).

Selective Outrage in Rocky Mountain Bank Case

I am a little bit mystified at the expressions of shock and outrage (yes, "outrage") at the news that Judge Ware has granted Rocky Mountain Bank's request for a TRO deactivating a Gmail account to which the bank had carelessly e-mailed detailed financial information on 1,325 bank customers.

Apparently this development alarms the many people out there in cyberspace who have the same attachment to their e-mail accounts as the National Rifle Association does to firearms.

The victims here are the bank customers, whose personal information is now certainly residing on several Google servers and possibly countless other online locations. The reasoning in the bank's motion for a temporary restraining order and the declaration of its president strikes me as unassailable.  The bank has a duty to do what it can to safeguard the personal, financial information of its customers.

The bank's customers are presently at risk of identity theft. The bank's shareholders are at risk of seeing their investment wiped away by a nasty data breach incident. Inaction, not action, is what should provoke "outrage" in these circumstances.

Google is also doing the right thing, following its privacy policy and the Electronic Communications Privacy Act by insisting on a court order before turning over information about its users. Now it has just such an order. Google's lawyer, Al Gidari of Perkins Coie in Seattle, filed an appearance in the case this afternoon. In another case, Google offered only token opposition, see the "Skanks of NYC" ruling, a precedent that may be relevant here.

As for the owner of the Gmail account, who has not yet been identified and who did not respond to the bank's subsequent attempts to contact him or her via the Gmail account, it is very difficult to see what rights might have been infringed by the bank's action against the account. Speculation about whether computer users have First Amendment claims against private computer network operators is interesting but fanciful.

Here are three cases that say computer users have no First Amendment rights against network operators:

• Kinderstart.com v. Google Inc., No. 06-2057 (N.D. Cal., July 13, 2006) (Google has no First Amendment duty to protect free speech rights of websites it indexes);
• Howard v. America Online Inc., 208 F.3d 741 (9th Cir. 2000)(interactive computer network is not a common carrier under Communications Act, not a state actor for First Amendment purposes);
• Estavillo v. Sony Computer Entertainment, No. 09-3007 (N.D. Cal., Sept. 22, 2009)(Sony Playstation 3 Network owed no First Amendment duty to user terminated for allegedly violating terms of use).

I'm not aware of any cases going the other way, or cases remotely suggesting that the owner of the Gmail account at issue in the Rocky Mountain Bank case has been denied due process or any other constitutional or statutory right. Hey, he or she has already gotten more due process than you get at Twitter.

Venkat has more to say here.

The Legal Profession's Stake in Openness

The legal profession took some lumps at the recently concluded the Gov 2.0 Summit held here in Washington earlier this month.

For three days, social media thinkers, Silicon Valley entrepreneurs and yes even Beltway bureaucrats discussed how governments can fulfill their public service mission and provide new opportunities for economic growth by opening up the vast stores of data under their control to free public consumption. Two themes are at work in the Gov 2.0 space, a political theme and an innovation theme. First, there is the "the best disinfectant is the light of day" theme, which posits that public decisionmaking will produce the most democratic and enlightened public policy. See Sunlight Foundation and Gapminder for examples. Second, there is the "government as platform for innovation" theme, which asserts that government data is an untapped source of improved public service and an engine of economic growth. Sites like Apps for Democracy and Data.gov offer a glimpse of what is going on here. Government data on energy, health, and technology (possessed by the U.S. Patent and Trademark Office, for example) are believed to be fertile-yet-untapped sources of commercial exploitation.

Where Are the Lawyers?

Unfortunately, the legal profession was missing from the proceedings, convicted in absentia for being part of the problem instead of part of the solution.

Open records advocate Carl Malamud condemned the federal judiciary for foot-dragging (and worse) when it comes to making legal information available to the public. There was a populist tone to his remarks: the rich have good access to legal information and the poor do not. He's right about that, of course. He's also right to observe, as he did in By The People, that: "The fees for bulk legal data are a significant barrier to free enterprise, but an insurmountable barrier for the public interest." Malamud also dinged judges and lawyers for numerous privacy violations in publicly available PACER data.

Also speaking at the Gov 2.0 event was Stephen Schultze, a fellow at Harvard's Berkman Center for Internet & Society. Schultze spoke about his involvement with the RECAP project, an inspired bit of civil disobedience that liberates "free" court opinions from behind the federal court system's PACER paywall. Schultze is also the author of an illuminating paper on PACER fees and the federal judiciary's fitful implementation of Congress's 2002 command that judicial information be "freely available to the greatest extent possible."

And that was it as far as the legal profession's presence at this event. If Malamud is correct that law is the operating system of democracy, one might have expected to hear about all the great things lawyers and courts are doing to make the law more available and understandable to all.

I wonder: Why has the legal profession been so patient with the status quo? Why has the legal profession been content to pay the government $.08 per page for PDFs, a miserable data format, fit only for printing and consumption by human eyeballs? Or pay even higher prices to download equally crippled Microsoft Word docs from legal information vendors?

Lawyers, It's Time to Tag

The World Wide Web Consortium recently released a draft document, Publishing Open Government Data, setting out what it believes are best practices for the online distribution of government data. The W3C's main point was that government data should be both human-readable and machine-readable. As for machine-readability, the W3C paper recommended:

• enrich your existing (X)HTML resources with semantics, metadata, and identifiers;
• encode the data using open and industry standards - especially XML - or create your own standards based on your vocabulary;
• make your data human-readable by either converting to (X)HTML, or by using real-time transformations through CSS or XSLT;
• use permanent patterned and/or discoverable "Cool URIs";
• allow for electronic citations in the form of standardized (anchor/id links or XLINKs/XPointers) hyperlinks.

Wow. What would happen if every court and legislature released their output in a machine-readable, XML format, tagged with a standard document type declaration (DTD) written by the best minds in the legal profession? What if these documents were tagged with metadata such as legal subject-area, parties, attorneys, rules of law and cases cited, accessible via a public API and a permanent URI for each decision, statute, and regulation?

Sounds good to me.

I wish judges and lawyers and legislators would start attaching metadata (tags) to their work. Today. Computer programmers came though BNA over a decade ago with the news that our lovingly crafted editorial output was, in fact, merely data. That hurt a bit, but we got over it, we started tagging our work so it could be processed by computers, and our editorial work is better today because of it. The legal profession needs to get over it too. The law should be machine-readable.

If these changes came about there would be a veritable Renaissance in the legal profession. The price of legal information would fall, to the benefit of everyone in the system: judges, lawyers and their clients. New value-added information products would come to market, making the practice of law more efficient and effective, making the administration of justice more efficient, making the law more understandable to lawyers and the public, and making legal services affordable to a greater segment of the population. The supposed hegemony of the "Big Three" legal information providers would be shattered. They, along with everyone else, would have the opportunity to compete in a new and vibrant market for legal information services, for a piece of a new, bigger and better and more lucrative pie. My mind is pretty pedestrian, I'm not good at imagining the future. So I'm left with this: Imagine what sorts of products Google might produce if it had under its control a free legal database of the entirety of the world's legal output.

If these changes came about, legal information (raw data) would become simultaneously less expensive and more valuable. Legal knowledge, legal strategy -- the work of lawyers -- would become even more valuable. The work of judges would be more influential and more widely known. In pro football terms, my favorite source for metaphors, the rules of the game, the upcoming schedule, the raw statistics, and the names of the players on each team are easily discoverable for free. Yet, as far as I know, there is no online forum or wiki where football coaches share their favorite plays. This is a better world than the one we're in.

Not only is this the direction the legal profession should be heading, we should be there now.

More food for thought, and a lot of high-minded discussion, are available at the Gov 2.0 Summit website, where event organizers O'Reilly Media Inc. and TechWeb have generously made available many papers and videos.

Shout out to Gov 2.0 Summit organizer Tim O'Reilly, who says he is trying to replace the traditional notion of "government as vending machine" (taxes go in, services come out) with a more enlightened conception of government as platform for innovation. In fact, the federal government is a place where laws go in and money comes out. Hitch your Government 2.0 wagon to that mindset and you can't miss.

Before anybody calls me, these are strictly personal observations.

California Privacy Law Not Preempted by CAN-SPAM Act

In California, the Song-Beverly Credit Card Act forbids merchants from asking for "personal information" when a customer uses a credit card to make a purchase. Addresses and telephone numbers are clearly covered by Song-Beverly. Zip codes are not, per Party City Corp v. Superior Court, 169 Cal.App.4th 497 (Cal. Ct.App. 2008).

How about e-mail addresses? Are they "personal information" forbidden to be collected by Song-Beverly? And if e-mail addresses are regulated by Song-Beverly, then is this aspect of Song-Beverly preempted by the federal CAN-SPAM Act?

Yesterday, in the case of Powers v. Pottery Barn Inc., D054336 (Cal. Ct.App., Sept. 21, 2009), a California intermediate appellate court ruled that the CAN-SPAM Act does not preempt a cause of action alleging that Song-Beverly was violated when a merchant (Pottery Barn, in this case) asked for and received the plaintiff's e-mail address during the course of a credit card transaction. CAN-SPAM does not preempt state laws of general applicability that only incidentally regulate e-mail, the court said. "Because Song-Beverly's regulation of what may be asked of credit card customers is not a regulation of what can be sent in commercial e-mails and is not in any manner specific to e-mail, we conclude Song-Beverly is not pre-empted by CAN-SPAM."

So the plaintiff's lawsuit, which seeks class status, lives on. As for the preliminary question of whether e-mail addresses are in fact "personal information" under Song-Beverly, the court didn't make a conclusive ruling on this point. It said that the record wasn't sufficiently developed to decide the question, adding that the allegations in the complaint were sufficient to avoid summary dismissal of the case. So the parties are free to fight this one out in a future hearing.

This could be a close question. E-mail addresses are generally considered -- see HIPAA, COPPA, GLBA here and PIPEDA in Canada -- to be personal information; but ... one leading federal privacy proposal, H.R. 2221 (the DATA Act), excludes e-mail addresses from its definition of personal information. State-law definitions are all over the map. And of course Song-Beverly does not specifically include e-mail addresses within its definition of personal information because, as the court pointed out, California lawmakers did not have e-mail regulation in mind when they wrote the law.

Finally, the court turned back Pottery Barn's claim that Song-Beverly's restriction on its ability to collect customer e-mail addresses violates the First Amendment. The court acknowledged Pottery Barn's First Amendment right to collect e-mail addresses, but added that this right was overcome by the state's "well-established and substantial" interest in protecting the privacy of its citizens. Marketers have lately been asserting a First Amendment right to access commercially valuable data, though without much success so far. A recent example I blogged about was IMS Health Inc v. Ayotte, in which the First Circuit turned back a First Amendment challenge to a New Hampshire law banning the sale of prescription drug information that identifies doctors' prescribing patterns. The U.S. Supreme Court declined June 29 to review the case.

Googling Juror Prompts Court to Overturn Jury Verdict

A jury trial is a taxing experience for everyone concerned. Almost all of the court's resources are dedicated to a single matter, especially in small jurisdictions where justice is dispensed by a judge, a secretary, a court reporter and a bailiff. Lawyers for each side, who have already invested hundreds of hours of pretrial effort, devote all their time to the case, from sun-up to sundown, for as long as the trial lasts. And then there are the jurors, who put aside their jobs and family obligations in order to hear evidence and reach a decision on a matter they have no prior training or experience in.  It is an exhausting effort all around.

Sometimes these sacrifices are utterly wasted, as they were in a 2007 personal injury case against a seatbelt manufacturer in Rapid City, S.D. (population 60,000 and birthplace of noted cyberlaw thinker Lawrence Lessig, according to Wikipedia). The case was tried for 19 days, eventually leading to a verdict in favor of the manufacturer. Unfortunately, the verdict was overturned when it came to light after the trial that one of the jurors had performed Google searches on the seatbelt manufacturer after he received his jury summons in the mail. This particular juror did not disclose his googling to the attorneys when they asked him, before the trial commenced, in a general sort of way, whether he had any prior knowledge about the case or the parties that would affect his impartiality. This particular juror subsequently compounded his subversion of  the judicial process by revealing the outcome of his Google research to several other jurors during jury deliberations.

The trial judge granted the injury victim's request for a new trial due to the juror's misconduct and due to the fact that the jury was exposed to extrinsic evidence during deliberations. A few days ago, the South Dakota Supreme Court affirmed the trial judge, in Russo v. Takata Corp., No. 2009 S.D. 83 (S.D., Sept. 16, 2009). "Today we announce no hard and fast rule that all such types of internet research by a juror prior to trial without notice to the court and counsel automatically doom a jury's verdict," the court wrote. Nevertheless, it said, the trial judge's conclusion that a new trial was necessary was not an abuse of discretion.

It seems to me that the good people of Rapid City should immediately stop telling prospective jurors the names of the parties involved in the cases they might be asked to decide. Most jurisdictions don't divulge this information; and now Rapid City has learned an expensive lesson why not. It also seems to me that attorneys should voir dire prospective jurors specifically about their online activities. The internet, Google, Facebook (this juror is on Facebook if you want to friend him) et al are the very first places people go for information. Most folks think that information on the Internet is very reliable, though they won't admit it; certainly they think the Internet is more reliable than the courtroom assertions of legal counsel. I don't think the Internet was much on the legal system's radar screen in Rapid City, S.D. I bet it is now.

Ninth Circuit Declines to Read Common Law Loyalty Obligations Into CFAA

No language in the CFAA supports LVRC's argument that authorization to use a computer ceases when an employee resolves to use the computer contrary to the employer's interest.

And with that remark the Ninth Circuit today parted company with International Airport Centers LLC v. Citrin, 440 F.3d 418 (7th Cir. 2006), a Seventh Circuit decision holding that an employee's computer use becomes unauthorized under the Computer Fraud and Abuse Act, 18 U.S.C. 1030, when the employee uses the computer in a manner contrary to the employee's common law duty of loyalty to the employer.

The case involved an ex-employee who e-mailed allegedly confidential information from his work computer to his personal computer shortly before he left the company. A typical scenario. In today's opinion, LVRC Holdings LLC v. Brekka, No. 07-17116 (9th Cir., Sept. 15, 2009), the court firmly rejected Citrin, holding instead that computer access becomes unauthorized when an employee contravenes employer-placed limits on use of a computer. Computer use does not become unauthorized, the court said, at the point when an employee's mental state switches from "loyal employee" to "disloyal competitor."

There is work for lawyers to do in the wake of this opinion. The court specifically noted that the employer did not have an employment agreement with the employee nor did the employer have in place guidelines that prohibited employees from e-mailing company information to their personal computers. So the employer here missed two opportunities to define the scope of authorized computer use by its employees, either of which might have turned the case its way.