E-Commerce Law Week, Issue 449

Court Takes COPA to the Cabaña (Para Leña)

Late last month, a federal court in Pennsylvania held that the Child Online Protection Act (COPA) is facially unconstitutional and issued a permanent injunction against its enforcement.  COPA creates criminal and civil penalties for anyone who knowingly uses "the World Wide Web" to "make[] any communication for commercial purposes that is available to any minor and that includes any material that is harmful to minors."  In American Civil Liberties Union v. Gonzales, the court concluded that, while COPA serves a "compelling interest in protecting children from sexually explicit material on the web," the Act "is not narrowly tailored to [this] interest," is not "the least restrictive, most effective alternative in achieving [this] interest," and is "impermissibly vague and overbroad."  (It was to defend against this lawsuit that the Justice Department had subpoenaed Yahoo!, Google, AOL, and Microsoft for search records and URLs in order to show the purported ineffectiveness of filters in protecting children from pornography.)  If upheld, the ruling would eliminate a significant liability risk for websites with sexual content.  But we doubt that Congress will give up its attempt to restrict the availability of sexual content on the Web.

Are You Contracting Liability from Spam Transmissions?

Contractors are an essential part of many businesses.  But, for all their advantages, they can also create new liabilities for the companies that hired them.  Whether it's using pretexting to carry out an internal investigation or allowing personal data to be breached, a contractor's misdeeds or omissions can often land a company in hot water.  In March, a federal court in Arizona held that a company may be vicariously liable for contractors' emails that violate the Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act of 2003.  Although the court suggested that the "duty of care" to police sexually explicit spam might be greater than for non-sexual spam, its general holding regarding the potential for vicarious liability even where a company does not intend that its contractors violate the Act could affect any business that uses contractors to send commercial emails.  The lesson for companies, again:  you are your contractors' keeper.

Sixth Circuit Rejects Good-Faith Exception to Exclusionary Rule for Wiretap Orders

In United States v. Rice, the Sixth Circuit found that the good-faith exception to the exclusionary rule for evidence obtained pursuant to defective search warrants does not apply to Title III wiretap orders.  While the Supreme Court in United States v. Leon ruled that evidence "seized in reasonable, good-faith reliance on a search warrant that is subsequently held to be defective" may still be admissible, the Sixth Circuit refused to extend this rule to Title III orders, since Congress had legislated no such exception.  The court acknowledged that the Eighth and Eleventh Circuits have held (and the Fourth Circuit has suggested in dictum) that the good-faith exception does apply to Title III orders.  But the court expressly rejected its sister courts' reasoning.  So this case has a better-than-average chance of being reviewed by the Supreme Court.  More broadly, this case -- which involved a Title III order that was predicated on an FBI agent's misleading affidavit -- further tarnishes the reputation of the FBI.  With recent press reports indicating that FBI agents repeatedly provided inaccurate information in applications for Foreign Intelligence Surveillance Act (FISA) surveillance orders, and the Inspector General report on FBI misuse of National Security Letters, courts -- and the recipients of FISA orders and NSLs -- may begin to view the Bureau's factual assertions more skeptically than in the past.

France Legislation Targets Internet Gambling

The last few months have seen well-publicized efforts by the U.S. Congress and U.S. federal and state prosecutors to crack down on foreign-based Internet gambling operations, often accompanied by rhetoric regarding the dangers of gambling.  Meanwhile, U.S. casinos and other gambling operations (the main beneficiaries of these enforcement efforts) continue to thrive, and many U.S. gamblers have reportedly moved their business to illegal (but difficult to restrain) offshore payment service providers.  Now the same sort of thing is happening in France.  In September 2006, France detained two officials from Austrian online gambling site bwin.com, which competed with the French government monopoly on sports betting.  And more recently, on March 5, the French Parliament adopted a detailed Law on the Prevention of Crime which includes in its fight against social evil a "battle against prohibited lotteries, games and wagers."  Internet gambling companies are increasing caught between the rock of national interests in regulating and protecting their domestic gambling industries, and the hard fact that their services involve a vice that is all too easy to target from a policy perspective.  Accordingly, we do not expect the rising tide of global anti-gambling legislation to end in France.  This indicates that running an Internet gambling operation is likely to remain a risky bet for some time to come.

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