E-Commerce Law Week, Issue 441

Court Cures New Jersey’s Identity Crisis

If states could have identity crises, surely New Jersey would.  It’s the butt of constant jokes about Turnpike odors (and exits) and is probably best known nowadays as the home of a fictional (and conflicted) mobster.  Its two resident NFL teams even pretend they’re from New York.  But Garden State Internet users may feel a bit more secure in their own identities now that a state appellate court has found that they have a right to informational privacy in their identity under the New Jersey constitution -- even if that information is disclosed to a third party, such as an Internet service provider.  As a result, the court upheld the suppression of evidence that the police had improperly obtained from the defendant’s ISP.  Even if upheld on appeal, the decision will probably have only limited impact, since it applies only to actions by New Jersey  officials -- and not to actions by the feds, other states, or private parties.  Still, by recognizing a constitutional right to privacy in information that has been disclosed to a third party, New Jersey may eventually be seen as a pioneer in protecting individuals’ last few vestiges of privacy.  That, or it will be regarded as a mere speed bump on the Turnpike to privacy perdition.

Parents Prevail Over Big Brother In Fight Over Kids’ Identities

Meanwhile, not to be outdone in the privacy department, a federal court in Connecticut recently held that parents have a constitutionally protected privacy interest in their children’s identity.  In Securities Industry and Financial Markets Association v. Garfield, the court granted the plaintiff Association’s motion for a preliminary injunction barring the Connecticut State Elections Enforcement Commission (SEEC) from posting the names of state contractors’ dependent children to a public website, as required under a Connecticut campaign finance reform law.  The court reasoned that the Association was likely to succeed in showing that the required posting of children’s names violated parents’ “fundamental right to privacy” under the U.S. Constitution.  While the decision does not directly affect web site operators or e-commerce companies, it does reflect a growing desire by courts to establish some limit to the widespread disclosure of personal information over the Internet.  And though limited to the identity of children, the court’s reasoning could be used to justify protection of other information courts deem to be “personal” based on the risk of harm, embarrassment, or just plain “discomfort” that disclosure might cause someone.

Antigua Wins Interim Ruling Against United States in WTO Gambling Dispute

Over the past several months, U.S. authorities have racked up some tactical wins in their campaign against Internet gambling operations -- Congress passed a law intended to cut off gambling sites’ funds, while law enforcement has made three sets of arrests (relating to BETonSPORTS, Sportingbet, and Neteller) and subpoenaed several Wall Street investment banks, signaling that it may be hoping to cast its net still wider.  But a recent interim ruling by the World Trade Organization in the long running dispute between the United States and Antigua and Barbuda over American gambling restrictions went against the U.S.  The WTO panel reportedly found that, by failing to treat online wagering on certain types of horse races in a manner consistent with its obligations under the General Agreement on Trade in Services (GATS), the U.S. has failed to comply with an earlier panel ruling.  Still, gambling operators should not read too much into this ruling, since the WTO decision is unlikely to have much effect on the U.S. government’s crackdown on Internet gambling.

Israel Joins the Party in Cracking Down on Extraterritorial Internet Gambling

Also on the international front, Israel appears ready to join the anti-gambling charge.  In a recent ruling, the Israeli Rishon Le Zion Magistrate’s Court reportedly found that Gibraltar-based online gambling company Victor Chandler could not evade Israeli law by basing its operations in a location where gambling is legal.  Citing Israeli law’s prohibition on gambling activities, and noting that the gambling website was in Hebrew, was aimed at Israeli users, and accepted bets from gamblers using Israeli credit cards, the court reportedly found that since at least part of the gambling activity had taken place Israel, the operation of the website should be considered a local criminal offence.  The court also reportedly ruled that advertising the gambling website to Israeli residents was illegal under Israeli law.  The ruling could mean more trouble for online betting services, which may now have to abandon another potentially lucrative market.

States Consider  “Do-Not-Email” Lists, Despite FTC’s Misgivings

As the 2007 legislative session gets underway, two states -- South Carolina and New York -- are considering bills that would create “do-not-email” lists. Other states have already considered -- and in two cases, adopted -- similar measures.  Lawmakers in Connecticut, Iowa, Hawaii, Georgia, Illinois, and Wisconsin introduced (but did not pass) similar legislation in 2006, while Utah and Michigan both instituted “do-not-email” registries for minors in 2005.  Despite the widespread interest in such legislation, the Federal Trade Commission has expressed serious misgivings about “do-not-email” lists, stating that they could make the spam problem worse and create additional privacy and security problems.   Also, a suit in Utah federal court has challenged the legality of that state’s registry on preemption and constitutional grounds.  E-businesses may also have reason to object:  since states usually charge marketers a fee to access their “do-not-email” lists, compliance with such laws can be costly as well as burdensome.

Howard Stern Isn’t XM’s Only Problem

At least one competitor to the iPod-iTunes juggernaut took a hit recently, when a federal court in New York allowed a copyright suit by major record companies to proceed against XM Satellite Radio concerning its “XM+MP3” players.  The suit alleges that XM violates federal and state copyright and unfair competition laws by allowing XM subscribers with XM+MP3 players to not merely receive songs broadcast by XM (which XM is licensed to do), but also “to record, retain and library individually disaggregated and indexed audio files from XM broadcast performances.”  XM moved to dismiss on the ground that it was immunized from liability by section 1008 of the Audio Home Recording Act of 1992 (AHRA), which provides that “[n]o action may be brought ... alleging infringement of copyright based on the manufacture, importation, or distribution of a digital audio recording device.”  The court denied the motion, finding that while the AHRA protects XM “from suit based on actions taken in its capacity as a distributor of audio recording devices,” it does not immunize it “from suit based on its conduct as a satellite radio broadcaster, or ... on its actions as an XM + MP3 content delivery provider.”  As technology convergence leads to digital content being delivered through many different media, hardware manufacturers and content providers will want to follow this litigation to make sure their products and services fall on the right side of the legal line.

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