E-Commerce Law Week, Issue 487

Court's Crypto Ruling Would Make Paris Hilton's Great-Great-Great-Great-Great-Great-Great-Great-Granddaddy Proud

Several countries -- including the UK -- have the authority to require companies and individuals to disclose encryption keys.  In the United States, though, the Fifth Amendment limits the government's ability to compel a criminal suspect to enter a password that would provide access to his hard drive, according to a recent ruling by a federal magistrate in Vermont.  In In re: Grand Jury Subpoena to Sebastien Boucher, the magistrate ruled that compelling Boucher to enter his password in order to provide access to suspected child pornography would violate his Fifth Amendment right against self-incrimination.  The jurisprudence on that right, though, is full of confusing distinctions and exceptions, so this ruling may not be the last word on this issue.  It's also not clear that the magistrate's reasoning would apply to a private encryption key generated by an encryption program without relying on a remembered password.  For now, though, chalk one up for George Mason, one of the "fathers" of the right against self-incrimination (and the distant great-grandfather of the aforesaid hotel heiress and serial self-incriminator.)

FTC's Guidelines for Online Advertising Could Eventually Lead to Enforcement Actions

The Federal Trade Commission released a proposal on December 20 setting forth five "self-regulatory" principles that would help counter threats to consumer privacy posed by "online behavioral advertising."  Search engines, social networking sites, online news sources, and other websites increasingly track consumers' online activities and serve them ads that match their interests.  The FTC proposals suggest that websites that use such behavioral advertising should inform consumers that their data is being collected, allow them to opt-out, safeguard any information they collect, retain data no longer than necessary, and obtain consumer consent before making certain changes to privacy policies or collecting certain "sensitive data" from consumers.  The Commission is seeking comment on the proposals, which it says are intended "to encourage more meaningful and enforceable self-regulation."  While the proposals may begin as voluntary guidelines, they could eventually help shape binding Commission rules, and might influence future congressional legislation.  Even without binding rules or legislation, the FTC could also deem a company's failure to abide by the principles to be an unfair or deceptive practice.  So affected companies should examine the proposals carefully and submit comments soon. 

United States Agrees to Compensate EU, Canada, and Japan in Internet Gambling Dispute, While Arbitrator Rules for Antigua  

The United States Trade Representative last month announced that the United States has agreed to compensate the European Union, Canada, and Japan for the United States' planned withdrawal of certain commitments under the General Agreement on Trade in Services (GATS) relating to Internet gambling services. As we previously reported, after the World Trade Organization repeatedly affirmed Antigua and Barbuda's claim that the GATS requires the United States to give foreign websites the same access to Internet gambling on horse races enjoyed by domestic operations, the United States sought to "clarify" that its GATS commitments regarding "recreational services" do not extend to Internet gambling.  Under the terms of the GATS, the United States must compensate any WTO member that demonstrates that it would be harmed by a change in U.S. GATS commitments.  The U.S. has agreed to provide EU, Canadian, and Japanese service suppliers with new opportunities in the U.S. "postal and courier, research and development, storage and warehouse," and "testing and analysis" sectors.  Shortly after this agreement was reached, a WTO arbitrator decided that Antigua could suspend enforcement of its WTO obligations to the United States with regard to intellectual property enforcement, up to a value of $21 million per year in trade.  (More details on the Antigua ruling next week.)

Internet Search Giants Settle with DoJ over Online Gambling Ads

The United States' wide-reaching crackdown on Internet gambling recently netted civil settlements from Yahoo!, Microsoft, and Google.  On November 19, the Department of Justice announced that the three companies had settled charges that they received payment for advertising online gambling in the United States over the past ten years.  The settlements stated that the companies had received payments that were derived from, or promoted, activity that violated several federal and state laws, including the federal Wire Wager Act.  While the companies neither contested nor admitted the charges, they agreed to pay a total of $31.5 million, including amounts forfeited to the United States under 18 U.S.C. § 981, contributions by Microsoft to the International Center for Missing and Exploited Children, and expenditures by Yahoo! and Microsoft on ad campaigns to warn viewers that online gambling is illegal in the United States.  Microsoft is responsible for the lion's share of the settlement, as it agreed to pay $21 million.  Microsoft and Google also agreed to provide the government with any documents or data in their possession that relate to "possible criminal violations" involving online gambling.

Ontario Outlaws Ads Promoting Online Gambling

As a reminder that the United States is not the only jurisdiction cracking down on Internet gambling, effective January 1, 2008, advertising within Ontario of a gambling website that violates the Canadian Criminal Code, or facilitation of such advertising by anyone other than an Internet service provider, may result in fines and/or imprisonment under Ontario's Consumer Protection Act, 2002.  Canada's Criminal Code prohibits most forms of gambling other than state lotteries, licensed casinos, pari-mutuel betting, and private wagers among individuals.  The changes come as a result of Ontario Bill 152, which was approved in December of 2006.  Although the law leaves unclear exactly how it would apply to ISPs, web sites, publishing companies, financial institutions, investors, and others considering involvement with the Internet gaming industry should proceed with caution.

Will Germany Be Next in the Growing Crackdown on Online Gambling?

Companies that provide online gambling services in Germany are probably still getting over their New Years hangover.  That is because of a 2006 Constitutional Court ruling mandating that Germany adopt new legislation on sports betting by January 1, 2008.  In response to this mandate, the German government has prepared a sweeping Interstate Lotteries Treaty (Glucksspielstaatsvertrag), which would reportedly outlaw all online gambling other than horserace betting, extend state gambling monopolies until 2012, and require Internet service providers and financial institutions to take steps to block online betting.  The Treaty, which has already been approved by at least one German state, must be ratified by at least 13 of 16 states before entering into force.  Fines and responsible regulatory authorities will be established on a state-by-state basis.  Although the prime ministers of all 16 states have indicated that they intend to sign the Treaty, some state parliaments have suggested that they may not give their approval.  Moreover, the Treaty will face legal challenges from both online gambling companies and the EU -- Austrian betting house bwin Interactive Entertainment has said that it intends to challenge the law, and the European Commission has reportedly warned the German government that its proposed ban on online gambling would be "disproportionate," in violation of EU law. 

Steptoe & Johnson LLP presents:  "Product Recalls:  Effectively Managing the Process"

With high-profile recalls and product safety in the news, Steptoe & Johnson LLP invites you to a webinar designed to help companies: (1) Identify product hazards; (2) negotiate a corrective action plan with the CPSC; (3) maximize recall effectiveness; and (4) minimize the threat of follow-on consumer litigation. On January 10, 2008, at 1:00 p.m. EST, Steptoe partners Tom Barba, Sandy Chamblee, and Jennifer Quinn-Barabanov, along with Elisha Lawrence, General Counsel, Alltrade Tools, will discuss the steps companies should take to address and effectively manage product safety concerns.  Registration is free, but is on a first-come, first-served basis.

Questions and comments about E-Commerce Law Week are always welcome.  Please send your feedback to Sally Albertazzie.