E-Commerce Law Week, Issue 481

Court Finds that Caching Webpages in Violation of Terms of Use Can Support Copyright Claim

It's not often that a ruling cheers both parents of teenie boppers and online-content providers.  But such was the case in Ticketmaster L.L.C. v. RMG Technologies, Inc., in which a federal court in California issued a preliminary injunction against a company that armed scalpers with automated software, enabling them snatch up large numbers of tickets from ticketmaster.com, in apparent violation of the website's terms of use.  Ticketmaster sued after its tickets for shows by 'tween idol Hannah Montana sold out in seconds, angering parents who had tried to purchase tickets and drawing investigations by state attorneys general.  The court found that Ticketmaster would most likely succeed in its claims against RMG for direct and indirect copyright infringement, breach of contract, and violations of the Digital Millennium Copyright Act (DMCA).  Noting that ticketmaster.com's terms of use prohibited both the use of "automated devices" to access the site and the copying or use of its webpages for "commercial purposes," the court found a strong likelihood that Ticketmaster would succeed in showing that RMG's software automatically downloaded "cached" copies of the webpages while trolling for tickets, in breach of copyright and contract.  This ruling suggests that webmasters may be able to use "browsewrap" licenses as a basis for claims against surfers who view or access webpages in a way that violates license terms.

Financial Industry Regulators Plant  Identity Theft "Red Flags"

Late last month, the Federal Trade Commission and five other financial industry regulators announced a final rule concerning identity theft "red flags" and address discrepancies.  As we previously reported,  the rule is mandated by the Fair and Accurate Credit Transactions Act of 2003 (FACTA), which directed the agencies to work together to draw up guidelines "that identify patterns, practices, and specific forms of activity that indicate the possible existence of identity theft" -- known in the rule as "red flags."  Like the proposed rule, the final rule requires many financial institutions and creditors to "implement a written Identity Theft Prevention Program" built around these red flags, and states that users of credit reports and issuers of credit cards must scrutinize changes of address for evidence of fraud.  But the final rule has also been adjusted to "provide both flexibility and more guidance," including by limiting the scope of Identity Theft Prevention Programs to certain "covered accounts," and by clarifying that red flags should be triggered by the "possible existence" -- rather than the "possible risk" -- of identity theft.  Even with these adjustments, the rule could impose substantial administrative burdens on financial institutions and creditors.

FCC Extends Number Portability Requirements to Interconnected VoIP Providers

The Federal Communications Commission continued its efforts to extend traditional telephone regulations to  "interconnected"  Voice over Internet Protocol providers earlier this month by announcing that number portability requirements already applicable to wireline and wireless operators now apply to interconnected VoIP providers.  As we reported in March, the FCC has already ruled that all VoIP providers that use wholesale carrier partners to interconnect and exchange traffic with incumbent local exchange carriers must provide number portability.  The new Order extends this number portability requirement to all interconnected VoIP providers and to the telecommunications carriers that obtain numbers for such providers.  Under the Order, phone companies must not "obstruct or delay" number porting by demanding more than a telephone number, account number, zip code, and pass code (if applicable) when validating a request for a "simple" number port.  The Order also ensures that customers of "small" wireline carriers are able to port their phone numbers to wireless carriers.  Along with the Order, the FCC approved a Notice of Proposed Rulemaking, which seeks comment on additional VoIP numbering issues and tentatively concludes that the Commission should "adopt rules reducing the porting interval" to 48 hours.

France Continues Crackdown on Internet Gambling

The country that bequeathed us the phrase "laissez-faire" is apparently not so nonchalant when it comes to Internet gambling -- or, perhaps more to the point, when it comes to threats to state monopolies.  On October 31, French authorities arrested Petter Nylander, Swedish CEO of online gaming company Unibet, on charges of violating French laws protecting state-owned lottery and horse betting monopolies.  According to a Unibet press release, Nylander was transferred to French authorities from the Netherlands and then released on bail of €200,000.  Nylander's arrest highlights the conflict between EU law -- which guarantees EU-based gambling operators the freedom to establish and provide betting services in other member states -- and the laws of France, Belgium, Italy, and other member states, which often protect longstanding gaming monopolies and domestic betting houses.  The French action also should serve as a reminder to companies that operate or provide services to Internet gambling businesses that the United States is not the only country that has taken a dim view of online betting.

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