On February 23, 2012 President Obama’s administration (“the Administration”) released an important new report entitled “Consumer Data Privacy In A Networked World: A Framework For Protecting Privacy And Promoting Innovation In The Global Digital Economy.” President Obama situates the new report as a mechanism that encourages the further development of online enterprises by protecting, enlightening, and enabling consumers’ privacy choices. “For businesses to succeed online,” President Obama asserts, “consumers must feel secure.”
The report announced the Administration’s new four-element online privacy framework, which is designed to augment already existing privacy protection laws. The first, and perhaps most critical, element of the new framework is a Consumer Privacy Bill of Rights (“CPBR”). The framework also consists of a multistakeholder process “to specify how the principles in the [CPBR] apply in particular business contexts, recommendations for effective enforcement, and a commitment to increase interoperability with international privacy protections.”
This post includes a dissection of each of the four elements of the Administration’s new framework, followed by a discussion of initial reactions to the framework.
On January 23, 2012, the United States Supreme Court handed down its decision on United States v. Jones, No. 10-1259, 2012 BL 14420 (U.S. Jan. 23, 2012), regarding the warrantless use of a GPS tracking device by law enforcement to track the actions of a suspected criminal. This author previously covered the D.C. Circuit’s decision and the oral arguments heard by the Supreme Court last November. After oral argument, this author predicted that the Court would find that GPS tracking without a warrant violates the Fourth Amendment. While the Court found that in this case the Government had violated Jones’s Fourth Amendment rights, the ambiguous majority opinion and concurrences have left the public questioning the implications of the decision beyond the facts of this case.
The Opinion: Justice Scalia
Delivering the opinion of the court, Scalia holds that the law enforcement’s placement of a GPS device on a vehicle and then using that device to track the vehicle’s movements constituted a “search.” Id. at *3. Notably, Scalia — joined by Chief Justice Roberts and Justices Kennedy and Thomas as well as Justice Sotomayor in part through her concurrence — found that by using the GPS tracking device, the Government had “physically occupied private property for the purpose of obtaining information” such that the “physical intrusion would have been considered a ‘search’ within the meaning of the Fourth Amendment when it was adopted.” Id. at *4. Scalia’s majority focuses its analysis on the jurisprudence of common-law trespass and takes an originalism approach to the Fourth Amendment — focusing on what the authors of the Amendment intended to protect against. Id. Continue reading
On October 26, 2011, House Representative Lamar Smith (R-TX) introduced H.R. 3261, the Stop Online Piracy Act (SOPA). The bill was the House’s version of Senate Bill S.968, also known as the PROTECT IP Act, which was introduced on May 12, 2011 by Senator Patrick Leahy (D-VT). The stated purpose behind both bills was to provide increased protection for U.S. copyright owners against foreign websites that broadcast infringing content. Both bills were supported in large part by the recording and motion picture associations, but received harsh criticism from dozens of digital rights advocacy groups, technology companies, and media commentators. This criticism eventually lead to a worldwide day of protest on the Internet, with sites such as Wikipedia and Reddit shut-down operations and called upon users to contact their representatives to voice their opposition towards the bills. After receiving an unprecedented amount of calls and emails from their constituents, numerous supporters of the bills dropped their endorsements. As a result, both bills have subsequently been permanently stalled. The blackout campaign and the ensuing activist effort by Internet users may represent a key turning point in debates of the future of copyright legislation and reform. Commentators have noted that the very strong showing of public support suggests that while copyright law “was historically seen a technical system of rules” whose reach “only influenc[ed] the content industry,” the permeation of technology into the everyday lives of citizens has thrust the issue to the forefront of public consciousness.
Background Analysis of the Acts
Overview of the PROTECT IP Act (“PIPA”)
Following an earlier stalled attempt at passing similar legislation, on May 12, 2011, Senator Leahy introduced the Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act (the PROTECT IP Act or “PIPA”).
The Act contained language that would authorize the Attorney General to initiate a civil forfeiture proceeding against a nondomestic domain name that is used in the U.S. and is associated with an Internet website “dedicated to infringing activities.” Continue reading
The District of Colorado recently handed down an order in United States v. Fricosu requiring the defendant to decrypt the contents on her laptop so the government could access it. According to the Court, compelled decryption did not violate the Fifth Amendment’s bar against compelled self-incrimination.
In reaching this decision, the Court relied upon In re Grand Jury Subpoena to Boucher, 2007 WL 4246473 (D. Vt. Nov. 29, 2007) (Boucher I) and In re Grand Jury Subpoena to Boucher, 2009 WL 424718 (D. Vt. Feb. 19, 2009) (Boucher II). The Boucher decisions, in turn, relied upon the Supreme Court’s decision in United States v. Doe, 487 U.S. 201 (1984).
Doe distinguished between compelling the testimony of new information to the government (not permitted under the Fifth Amendment) and compelling giving access to existing information (permitted so long as the act of production results in no new facts). Thus, a defendant may be compelled to provide a key to a wall safe. In contrast, a defendant may not be compelled to provide a combination since the combination itself would constitute new information. Therefore, the government may compel a defendant to provide access to a computer’s contents once it knows the defendant has the ability to access the computer. But it may not compel production of a password. Continue reading
The European Court of Justice in Luxemburg ruled on October 18, 2011 in a landmark decision in the case C-34/10 Oliver Bruestle v Greenpeace e.V. and barred embryonic stem cell patents in Europe.
In its ruling, the Court said that “a process which involves removal of a stem cell from a human embryo at the blastocyst stage, entailing the destruction of that embryo, cannot be patented. The use of human embryos for therapeutic or diagnostic purposes which are applied to the human embryo and are useful to it is patentable, but their use for purposes of scientific research is not patentable.”
Professor Bruestle, a German neurology professor and one of the leading stem cell research pioneers, is the holder of the disputed German patent. The patent, filed on December 19th 1997, concerns isolated and purified neural precursor cells, methods for the production of such neural precursor cells from embryonic stem cells, and the use of such neural precursor cells for the treatment of neural defects such as Parkinson or Alzheimer. The patent seeks to resolve the technical problem of using embryonic stem cells to produce an almost unlimited quantity of isolated and purified precursor cells having neural or glial properties. Professor Brustle’s patent was issued in Germany as DE 19756864 in 1999. Continue reading
Google’s market dominance has attracted the attention of the press, competitors, and now the federal government. Recent articles, cases, and hearings seem to point toward an inevitable collision between the industry giant and the Sherman Act, the federal statute governing antitrust issues. Complaints from competitors have thus far yielded little, but what happens if the government decides to turn its discussion into litigation? Recent history might provide some clues as to what lies ahead.
A Tale of Two Venues
Two recent courtroom victories for Google highlight the importance of proper pleading, especially when leveling antitrust accusations against one of the most recognized brands on the web. In the first case, TradeComet v. Google, the Second Circuit affirmed the Southern District of New York’s grant of Google’s motion for summary judgment based on a forum selection clause in Google’s contract with the operator of a business-to-business search engine. Citing Rules 12(b)(1) and 12(b)(3) of the Federal Rules of Civil Procedure, Google argued that a clause in the contract specifying that all lawsuits between the parties must be brought in Santa Clara County called for dismissal of the case. After considering the option of transferring the case to California, the Southern District of New York granted Google’s motion and dismissed the case.
The Court of Appeals held that the trial court was not required to convert a Rule 12(b) motion to dismiss into a § 1404(a) motion to transfer, and upheld dismissal of the complaint. This meant that Google was never forced to address the merits of the case itself, which alleged that Google AdWords violated the Sherman Act through its monopolistic business practices. In this instance, poor venue choice by the plaintiff and solid lawyering by Google further validated a forum selection clause aimed at avoiding a proliferation of suits in multiple fora.
The second case, Google v. MyTriggers, saw Google venture outside of its home court in California to sue a client for nonpayment, only to be waylaid by antitrust counterclaims. Continue reading
On November 8, 2011, the United States Supreme Court heard oral arguments in United States v. Jones, a case involving the warrantless placement of a GPS device on Antoine Jones’ vehicle by law enforcement and the subsequent tracking of Jones’ movements in his vehicle. While the Court has not yet delivered a ruling, the arguments brought up both by counsel and the justices provide insight into the critical issues of privacy at stake. These issues include the fear of giving law enforcement too much leniency in their tracking procedures and the question of whether GPS reveals any information that is not normally exposed to the public.
United States v. Maynard (United States v. Jones): D.C. Circuit Decision
The case currently before the Supreme Court arose out the D.C. Circuit’s decision in United States v. Maynard, 615 F.3d 544 (D.C. Cir. 2010) cert. denied, 131 S. Ct. 671, 178 L. Ed. 2d 500 (U.S. 2010) and cert. granted, 131 S. Ct. 3064 (U.S. 2011). Maynard addressed the appeal of Antoine Jones and Lawrence Maynard regarding their convictions for conspiracy to distribute cocaine, and possession with intent to distribute. Id. The D.C. Circuit held that the lower court had erred in admitting evidence obtained by law enforcement agents through the use of a GPS device placed on Jones’s vehicle and thus reversed Jones’s conviction while separately affirming Maynard’s conviction. Id. at 568.
In its analysis of whether or not to admit the evidence obtained from the GPS device, the D.C. Circuit set the stage for the case currently before the Supreme Court. Jones argued that the police had violated the Fourth Amendment’s prohibition of “unreasonable searches” when they installed a GPS device on his vehicle without a valid warrant and tracked his movements for four full weeks. Id. at 555. Specifically the court questioned (1) whether the use of GPS indeed constituted a search against Jones’s “reasonable expectation of privacy,” (2) whether Jones’s locations recorded by the GPS constituted private information, and (3) whether Jones could have properly held a reasonable expectation of privacy for his movements in the four weeks police tracked him. Id. at 555-565. Continue reading
The Supreme Court’s recent declination to hear an appeal from the American Society of Composers, Authors and Publishers (“ASCAP”) regarding the Second Circuit’s decision in United States v. American Society of Composers, Authors and Publishers, 627 F.3d 64 (2d Cir. 2010), has provided the digital music industry with a steadfast digital adaption to the definition of what constitutes a “public performance” — a definition within which song downloads to do not fall. Moreover, the Second Circuit’s decision, untouched by the Supreme Court, provides some guidance for how the district court should properly calculate the royalties that ASCAP should receive from companies that stream music from ASCAP’s musical repertory.
Licensing Music and Public Performance
ASCAP protects the rights of its over 420,000 members by controlling the licensing of the use of its members’ copyright-protected music and helping to collect and distribute the appropriate royalties for public performances of the music. Potential licensees can either license the use of specific musical works or they can negotiate a blanket license fee for the use of ASCAP’s full musical repertory, as was the situation in the instant case. Under copyright law, ASCAP and its largest competitor Broadcast Music, Inc. (“BMI”) have the exclusive right to play their members’ music publicly and to permit others to do the same.
Traditionally, a public performance of a musical work meant a performance for “a substantial number of persons outside of a normal circle of a family and its social acquaintances.” 17 U.S.C. §101. In the present age of technology, a public performance is understood to mean the transmittance or communication of a musical work “to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.” Id. Thus, the broadcast of ASCAP or BMI copyright-protected music on a television show, over the radio, or streaming online requires the broadcaster to construct a licensing agreement with the respective organization. In the instant case, ASCAP argued that digital downloads should fall within the second definition of a public performance that generally covers electronic broadcasting. Continue reading
On March 16, 2011, the Southern District of New York denied former Goldman Sachs programmer Sergey Aleynikov’s motion to dismiss his conviction for theft of trade secrets under the Economic Espionage Act (“EEA”). The court held that the evidence was sufficient to show that Aleynikov had stolen trade secrets and transported them across state lines, and further held that the stolen source code from Goldman Sachs’ high frequency stock trading system was a “good, ware or merchandise” under the National Stolen Property Act (“NSPA”). Aleynikov’s trial was one of two recent cases involving theft of source code for high frequency trading systems, both of which were tried in New York’s Southern District under the Economic Espionage Act.
High Frequency Trading
High frequency trading involves the use of computerized algorithms and highly sophisticated programs to trade securities. Firms that engage in such trading hold onto positions for seconds at a time, and generally end a trading day with no net positions. Decisions are made through high-speed mathematical analysis of market data, taking advantage of trading opportunities that open up for fractions of a second. The field is technologically complex, highly competitive, and very lucrative. High frequency trading systems require significant time and resources to develop and maintain. Court documents in the Aleynikov case estimate that it would cost roughly $10 million and two years to build a high frequency trading system from scratch.
Aleynikov – Theft, Subversion, and Espionage
Goldman Sachs employed Sergey Aleynikov as a programmer from May of 2007 to June of 2009, when he accepted an offer from a Chicago-based startup called Teza. About two months prior to his last day at Goldman Sachs, Aleynikov began uploading proprietary data to a subversion site on a German server. He went out of his way to avoid detection, deleting his encryption key and attempting to clear his bash history. The files he stole included, in the court’s words, components “connecting to the various securities exchanges; reading the incoming price data; pricing algorithms; trading strategies; the infrastructure for routing the trading decisions back to the exchanges; and applications for monitoring the performance of all of these intricate parts of the trading system.” Continue reading
The Stent Wars
The Court of Appeals for the Federal Circuit (“CAFC”) decision in Cordis Corp v. Boston Scientific Corp., 2011 (“Cordis”), is the latest episode in the ongoing Stent Wars, and provides an example of CAFC review of JMOL verdicts and review of the intent prong of inequitable conduct under the new standard in Therasense.
The Stent Wars involve four major players: Abbott Labs, Boston Scientific, Medtronic, and Johnson & Johnson. These manufacturers have been engaged in bitter patent lawsuits against each other since the mid 1990s. A stent is a small tubular expanding scaffold that is inserted into a blocked artery during balloon angioplasty surgery. The stent expands with the balloon and then prevents the artery from collapsing after the surgery is complete. However, many question the medical efficacy of stents in relation to their high cost. The most recent development in the Stent Wars is that J&J’s stent-manufacturing subsidiary, Cordis, announced it will exit the stent market by the end of this year.
Cordis is the latest ruling in a 14 year lawsuit of Cordis Corp. (“Cordis”) against Boston Scientific Corp and Boston Scientific Scimed, Inc (“BSC”). In Cordis, the CAFC held that, first, the BSC NIR stent did not literally infringe claim 25 of the Cordis ‘370 patent, and, second, that the Cordis U.S. Patent No. 5,879,370 (‘370) was not unenforceable due to inequitable conduct.