E-Commerce Law Week, Issue 391

Knowin' When to Hold 'Em, and When to Fold 'Em
New York Mayor Mike Bloomberg recently fired a city employee who was dumb enough to have a game of computer solitaire on his computer screen when the Mayor walked by.  But at least the guy wasn't betting money on the game. If he had been, he might have drawn the attention of the feds, too, who have been going after Internet gambling with a mild vengeance.  Unable to shut down Internet gambling companies themselves – which are now almost exclusively based beyond US borders – the US Department of Justice ("DOJ") has been targeting companies that "aid or abet" them by providing advertising and other services that support Internet gambling. The most recent development in this long-running campaign came in late-January, when the US Attorney’s Office for the Eastern District of Missouri announced that it had reached a settlement with Vulcan Media (doing business as The Sporting News) resolving charges that the company had accepted fees in exchange for advertising "illegal Internet and telephonic gambling enterprises" to its print, Internet, and radio audiences.  As part of the settlement, The Sporting News paid $4.2 million to the United States and will – at its own expense – conduct a three-year campaign of public service advertising designed to inform the public of the "illegality in the United States of commercial internet and telephonic gambling." Though DOJ thus far has targeted mainly media companies and one online payment service, others who do business with Internet gambling companies may be equally at risk – including commercial banks, credit card companies, investors, and Internet service providers.

FTC, ChoicePoint Settle Security Breach Charges
My, how time flies when you’re fending off bad press and a Federal Trade Commission (FTC) enforcement action. It’s been a year since ChoicePoint disclosed that it mistakenly sold the personal financial records of more than 163,000 consumers to possible identity thieves, thereby helping to push "data security" back onto the front burner of the nation’s legislators and regulators. As if to punctuate the end of its year on the hot seat, ChoicePoint recently settled FTC charges that the company’s security and record-handling procedures violated both the Fair Credit Reporting Act (FCRA) and the FTC Act. As part of this settlement, ChoicePoint will pay a $10 million fine – the largest civil penalty in FTC history – and create a $5 million fund for "consumer redress." The settlement requires ChoicePoint to implement additional procedures to ensure that it provides consumer reports only to entities that have a "permissible purpose" under the FCRA to receive them, to establish a "comprehensive" information security program, and to obtain third-party audits every other year until 2026.  The settlement does not address, however, the broader privacy issues surrounding data brokers’ collection of information about consumers, leaving that issue to Congress and perhaps the states.

Google Caches In on Copyrights
If you do, say, a Yahoo! search on "Google" and "copyright," you’ll get over 200 million hits.  And that number will only grow, as Google is facing copyright challenges on several fronts. But the Internet search behemoth started off what will be a busy year in court with a resounding victory in Field v. Google, Inc., when the U.S. District Court for the District of Nevada ruled that Google’s practice of temporarily archiving – or "caching" – web pages does not constitute direct copyright infringement. Applying the old belt-and-suspenders (and belt-and-suspenders-and-one-more-pair-of-suspenders) approach, the court went on to find that Google had also established four affirmative defenses, including implied license, estoppel, fair use, and the applicability of the Digital Millennium Copyright Act safe harbor for system caches, 17 USC § 512(b). While much of the court’s decision is based on the curious facts of this case, in which the plaintiff apparently intended to cause Google to infringe his copyright so he could sue it, the court’s reasoning on some of the broader issues, including fair use, could have important repercussions for Google’s other pending copyright infringement lawsuits, such those involving Google Book Search (formerly known as Google Print) and Google News.

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