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TOP STORY Changes in Law, Technology Mean its Time for A CheckUp
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Last fall, California Governor Brown signed the Do Not Track disclosure bill and the Privacy Rights for Minors in a Digital World Act, along with a bill amending the state data breach law. If you sell on the web in California, these apply to you. The Privacy Rights for Minors in a Digital World Act does not go into effect until 2015, but the Do Not Track provisions went into effect January 1 and require that websites disclose how they respond to Web browser do not track requests and other parties collect personally identifiable information about a user over time and across different websites. The amendments to the state data breach law change the notification requirements to expand expand the scope of personal information" to include a user name or email address acquired in combination with a password or security question and answer that permits access to an online account. You should check over your privacy and other policies to see if they are up to date. While the Denver Broncos may have won a trip to the Super Bowl on Sunday, they are also one of three NFL teams to win a consent decree with the Federal Trade Commission since their policies were outdated and falsely stated that they were compliant with the EU Safe Harbor. Don't let this happen to you (the FTC, not the Super Bowl part). In addition, with the increasing importance of social media and increase in BYOD work environments, you should ensure that your policies and procedures reflect your current activities. We did a short PowerPoint on what are some things to think about in doing your yearly assessment.
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IN THIS ISSUE
Big Data Steps Into Spotlight White House Appoints Big Data Working Group FTC Lifeguard is Watching Big Data, Report Expected This Year New Jersey Consent Decree BBB Issues Enforcement Warning on Online Behavioral Advertising Principles DMA Releases Value of Data Study
FTC Watch 2014 Priorities Enforcement Update Battle Over Cyber Security
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growth in emerging markets, instead reported a 12 percent loss with major drop offs in overseas markets.
Target and Data Security Debate of Disclosure Requirements Implementing Data Breach Plan 2013 Worst Passwords 2014 Threats
Technology industry analyst Rob Enderle claims that the National Security Agency will kill the U.S. technology industry single-handedly as these companies may be just dealing with the difficulty in meeting our numbers through the end of the decade. (Read More) This may continue as the general reaction to the President's speech in which he adopted some of the reforms proposed by his special commission has been tepid. For example, the Computer & Communications Industry Association said, The president's speech
Washington Watch Net Neutrality Tech Lobbying Crowdfunding Regs Waxman Retiring
was empathetic, balanced and thoughtful, but insufficient to meet the real needs of our globally connected world and a free Internet. (Read More)
Sacramento Watch
Patent Trolls Feeling the Heat State AGs Congress FTC Supreme Court Reputation
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Yelp Litigation Crystal Cox Appeal Courtney Love Wins Unwelcome Internet
In The Courts
Ted's Tubes Click Fraud TRUSTe Study Broadband Speed LA a Gig City? Top Domain Auctions Dynamic Dolphins Demise Canada Flexing Muscles on Google, Spam and ICANN Canadian Government Spied on WiFi
President Obama has tasked John Podesta, President Clinton's former Chief of Staff, to lead a working group to conduct a 90day review of Big Data which may be a launching point for privacy legislation or regulation.
International
We are undergoing a revolution in the way that information about our purchases, our conversations, our social networks, our movements, and even our physical identities are collected, stored, analyzed and used. The immense volume, diversity and potential value of data will have profound implications for
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privacy, the economy, and public policy. The working group will consider all those issues, and specifically how the present and future state of these technologies might motivate changes in our policies across a range of sectors. (Read More)
ABOUT US
In a summer 2013 address to the Aspen Institute, FTC Chair Edith Ramirez stated:
Addressing the privacy challenges of big data is first and foremost the responsibility of those collecting and using consumer information. The time has >come for businesses to move their data collection and use practices out of the shadows and into the sunlight . . . With big data, the FTC's job is to get out of the way of innovation while making sure that consumer privacy is respected.
The InternetLawCenter is a law firm dedicated to helping businesses navigate the evolving legal standards for today's digital economy.
Today the firm serves a diverse client base that includes startups and public companies both online and offline across four continents on issues ranging from online marketing, ecommerce, privacy, domain names to cyber harassment, as well as entertainment, general transactional and litigation matters.
The FTC will be releasing a report on data brokers later this year.
BBB/DMA Issue Warning on Compliance with Online Behavioral Advertising Principles The BBB which monitors compliance with the Online Behavioral Advertising Principles, is warning the industry that they need to do a better job in terms of disclosing not just their own behavioral targeting practices but of that of third parties that collect information on the site. (Read More)
The firm was founded by Bennet Kelley, the past cochair of the California Bar Cyberspace Committee and host of Cyber Law and Business Report.
Cyber Report is for information purposes only and is not meant to express any legal opinion or advice nor is it an advertisement for any legal services (not even if read backwards). The occasionally snarky views expressed herein do not necessarily reflect the views of the firm nor any ILC client.
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The Data-Driven Marketing Institute (DDMI), an initiative of the Direct Marketing Association (DMA), released a ground-breaking study quantifying the value of the Data-Driven Marketing Economy (DDME).
The DDME added $156 billion in revenue to the U.S. economy and fueled more than 675,000 jobs in 2012. In California alone, the DDME fueled more than 90,000 jobs and provided more than $21 billion in revenue to the states economy in 2012.
(Read More)
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Target Data Breach Triggers Debate About Disclosure Requirements; SEC Steps Up Emphasis on Cyber Security While Target disclosed the potential consequences of a theoretical data breach in their past filings, they will not be filing an SEC report on the actual ramifications of their massive data breach until March. Senate Commerce Committee Chairman Jay Rockefeller (DWV) was "puzzled" by this decision given that the breach involves 110 million records and believes Target's position is inconsistent with SEC disclosure rules.
UPCOMING SHOWS
This comes at a time when the SEC has said that Cyber Security would be a priority in 2014.
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Target Data Breach Highlights Importance of Cyber Security and Data Breach Planning Targets data breach highlights the danger that data breaches pose to businesses, especially small businesses since a large percentage of small businesses close within six months of an announced data breach. If have not done a recent security review or do not have a data breach plan, you should contact your lawyer and security consultant. Fortysix states have data breach laws, in fact California just updated theirs effective January 1 to expand the class of information covered. THIS WED AT 10AM PACIFIC TOM NORA, THE START UP CEO
If you are subject to the FTC's Red Flags Rules you are required to adopt an identity theft program. In addition, since Bring Your Own Device (BYOD) offices are listed as one of the major vulnerabilities of 2014, you may want to ensure you have a policy that addresses BYOD. Of course, if you prefer taking your chances, you want to try this handy fashion accessory.
When Tom Nora, the StartUp CEO, answered a question on Quora that "almost everything startup leaders say is either a guess, untrue or conjecture, hope or made up on the spot" he created quite a buzz in Silicon Beach. He'll share his insights from working with startups and others that make up the new Silicon Beach culture.
2013WorstPasswords
Top 20 of the most common passwords used: 15: 123456; password; 12345678; qwerty; abc123
610: 123456789; 111111; 1234567; iloveyou; adobe123
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1620: 1234; monkey; shadow; sunshine; 12345 Using passwords like these are inexcusable and an invitation to hackers and merit the fashion accessory above. If you want to check how secure your password, try a site like passwordmeter.com or howsecureismypassword.net. Is The Clock Ticking on the Essociates Affiliate Marketing Patent
(With Ben Davidson of Davidson Law Group)
2014 Threats
In terms of what to expect for 2014, ZDNets Charles McLellan does a great job summarizing what the major security firms are prediction for 2014 here. Some of the scariest predictions are below. Increased in Ransonware infections (i.e., infections designed to render a computer or its files unusable until the computer user pays the demanded amount of money to the attacker) More crimeware will destroy the operating systems (OSs) of targeted systems as a last step of an attack
A foreign power or organized cybercrime group will have breached a midsized or municipal utility for a long period The Internet of Things becomes the Internet of Vulnerabilities A major datadestruction attack will happen Attackers will increasingly lure executives and
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compromise organizations via professional social networks BYOD Represents the Weakest Link.
Making Los Angeles a Gig City; Giganomics and the State of the Gig Union
(With Steve Reneker City of Los Angeles, David Sandel Sandel & Associates)
FTC WATCH
2014 Priorities, Enforcement Update and the Battle over Cyber Security
When FTC Chair Ramirez tapped Jessica Rich to head the Consumer Protection Bureau, AdWee k noted that her appointment signals that the agency likely will be "aggressive in shaping privacy policy and bringing enforcement actions." Rich told Ad Week that her 2014 priorities include native advertising and mobile privacy and security.
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Recent FTC enforcement actions include (i) a $32.5 million ding to Apple for violating COPPA with its mobile apps; (ii) Operation Failed Resolution tagged several companies for making false weight loss claims; and (iii) a settlement with 12 businesses including 3 NFL teams (including Super Bowl bound Denver) for falsely claiming compliance with the E.U. Safe Harbor framework.
Finally, the legal battle over whether the FTC has the authority to regulate cyber security continues as the judge in the Wydham Hotels case appears near a decision. The judge, however, has asked the parties to brief recent statement before Congress by one of the Commissioners that may have inadvertently helped Wydham''s challenge.
(Read More)
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WASHINGTON WATCH Net Neutrality, Crowd Funding, Tech Lobbying and Farewell to a Tiny Giant
The D.C. Circuit Court of Appeals' decision reversing the Federal Communications Commission's Open Internet Order is more about how the rules were adopted than the substance of the rules.
In a nutshell, under President Bush, the FCC decided to classify broadband services as information services that were not subject to common carrier obligations under the Communications Act. The Open Internet Order punted on the question of whether broadband services should be reclassified and instead sought to justify the order based on the FCC's general authority. The DC Circuit rejected this approach.
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Given that the Commission has chosen to classify broadband providers in a manner that exempts them from treatment as common carriers, the Communications Act expressly prohibits the Commission from nonetheless regulating them as such.
Net neutrality advocates were disheartened but not surprised by the decision (myself included) and criticized former FCC Chairman Genochowski for not getting it right ("Net Neutrality lost this week not because of the strength of the FCC's arguments, but rather because of the weakness of their stomach"). One analyst expressed concern that:
This decision if it remains unchallenged raises the possibility that large internet service providers could charge certain companies extra for delivering their content to subscribers, and give preference to the content coming from those who are willing pay them a fee, or have cut some other kind of deal. In effect, the democratized nature of the internet would be replaced by a feudal system in which the ability to reach a consumer would be auctioned off to the highest bidder.
Tech Industry Washington Spending Up 16 Percent with Google Leading the Pack
An industry that once viewed Washington with great skepticism is now investing beaucoup bucks in getting results. Google, which has been among the top 10 total spenders in Washington the past two years according to OpenSecret.org leads the way with $14.06 million in spending, but Apple and Facebook have major major adjustments increasing spending 71.7 and 61.2 percent respectively.
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days, with drafting of the final rule to follow thereafter. Some speculate that the final rules will not be in place until late 2014. In July, the SEC lifted the ban on general solicitation of nonpublic offerings so long as all purchasers are accredited investors and the issuing company takes steps to verify this status. An accredited investor includes a natural person who earned income that exceeded $200,000 (or $300,000.
SACRAMENTO WATCH
2/3/2014
Attorney General Harris Preparing Compliance Guidance Statement for New Privacy Laws Last fall California passed two amendments to its privacy laws one concerning how a website treats Do Not Track Requests and the other providing a "right to be forgotten" to minors. See Browns Signs 1 Data Breach and 2 Privacy Bills Into Law, along with an update expanding the reach of the state's data breach disclosure bill. The laws go into effect on January 1, 2014 except for the "right to be forgotten" legislation which goes into effect in 2015.
Privacy is a priority issue for California Attorney General Kamala Harris, who created a special privacy enforcement unit in 2012. Harris is preparing a compliance guide which is expected to be released shortly. Attorney General Harris Sues Kaiser For Delayed Data Breach California's data breach law requires that disclosure to the consumer be made "in the most expedient time possible". Although the law does not define "most expedient time possible and without unreasonable delay, Californias Office of Privacy Protection recommends that notice be provided within ten (10) business days of an organizations determination that personal information was, or is reasonably believed to have been, acquired by an unauthorized person. Kaiser Health learned in September 2011 that an external hard drive with personal information had been inadvertently released to the public, it retrieved the hard drive in December 2011, inventoried it through February 2012 and provided notice in March 2012. The Attorney General has filed suit alleging that should have begun providing notice on a rolling basis while it was still completing its analysis of the hard drive rather than waiting several months to complete. Kaiser faces a civil penalty of up to $2,500 per record or $51.3 million. (Read More)
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California Senate Seeks to Reverse Apple Credit Card Privacy Decision Last February, in Apple Inc. v. Superior Court, 56 Cal. 4th 128 (2013), the California Supreme Court interpreted the privacy provisions of the Song Beverly Credit Card Act as not applying to online transactions for downloadable products. Last week, the California Senate passed a bill (SB 383) to reverse this holding and provide that an online merchant may only require address, zip code or other personal information in connection with a credit card transaction for a downloadable product to the extent needed for fraud prevention and then it may only hold such information for as long as it is needed for this purpose and may not use it for marketing.
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government, having paid off media and politicians and hiring a hit man to kill the defendant. In what has been hailed as a victory for bloggers, the Ninth Circuit reversed noting that the blogs extreme language and wild accusations immunize it from liability since it dispel[s] any reasonable expectation that the statements assert facts. The Berkman Center, however, does not see this as a victory for bloggers.
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IN THE COURTS
SupremeCourtKicksAmazonTaxOvertoCongress The U.S. Supreme Court has denied the petition of Amazon.com and Overstock.com to review the New York high courts decision to uphold its Amazontax statute. The statute, the first of many in the nation, defined an instate retailer for purposes of collecting sales tax to include a retailer who paid over $10,000 to instate affiliates during the previous four quarters. Amazon and Overstock argued that the decision went beyond the brightline test established by the Supreme Court in Quill Corp. v. North Dakota, when it stated that under the Due Process and Commerce Clauses of the Constitution, a state can only require retailers with an instate presence to collect taxes. In denying the petition, the Supreme Court may be deferring to Congress authority to regulate interstate commerce particularly since it is currently considering legislation to address this issue. The Senate passed the Marketplace Fairness Act. The bill passed the Senate 6927 in May, but has received a chilly reception in the House of Representatives where conservative Republican opposition to the bill is growing. This is an issue that may resolve itself without court intervention and the court has historically been reluctant to intervene in an issue prematurely. Should Congress fail to act, there is no doubt it will receive petitions to review other state Amazon laws and it will have the opportunity to intervene then should it do so. (Read More) Overstock Hit With $6.42 Million Fine From California Court Over Boosted Comparison
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Pricing Overstock was hit with a $6.42 million fine for overstating the differences in comparing prices with its competitors in violation of Californias unfair competition and false advertising laws. The suit, which goes back to 2010 was brought by the District Attorneys of six Northern Californian counties and who had to force Overstock to turn over crucial documents. The district attorneys cite one example in which Overstock listed a patio set at $449.99 claiming a savings of over $500 off list price when the item was actually available at $247.00 a markup of 82% rather than a 55% savings. The court chided Overstock for its obstructionist tactics and found that they had
consistently overstated the list price.
(Read More)
Facebook Rant Barred Terminated Employee From Recovering UI Benefits A hospital employee who was terminated as a result of a threatening rant in which she referred to her boss as an effed up spawn of satan that she wishes she could pound . . to unconsciousness was found to be not entitled to Unemployment Insurance since the rant violated company policy against threatening, intimidating, coercing, harassing, [and] using abusive language or behavior. Kleargear.coms Amazing SelfInflicted Wound In 2008, Jen Palmer ordered gifts online from KlearGear only to have the order cancelled when she called customer service. When Palmer posted a negative review online, KlearGer invoked a nondisparagement clause with a penalty of $3,500 from it terms and conditions and reported Palmer to credit reporting agencies when she did not pay the penalty. One minor detail they overlooked the term was not in place when Palmer made this order. Palmer has since sued the site for $75,000, Kleargears overreach has become a lesson in how to ruin your online reputation in the age of social media. As reported by Popehat: From this point forward, due to nothing but its own arrogance, vanity, pettiness and manifest corporate stupidity, KlearGear is synonymous with
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PATENT TROLLS FEELING THE HEAT: Washington and State AGs On the Attack
Wikipedia defines a patent troll as a person or company "who enforces patent rights against accused infringers in an attempt to collect licensing fees, but does not manufacturer products or supply services based upon the patents in question." The posterchild for patent trolldom is an entity known as MPHJ Technology Investments, which has sent thousands of demand letters to small businesses seeking $1,000 per employee for their claimed patent on the process for scanning documents into an email. Addressing the problem of patent trolls has been a priority for the tech community and a number of recent developments are making patent trolls a potentially endangered species.
AGs on the Attack State Attorney Generals in Minnesota, Nebraska, New York and Vermont have gone after patent trolls and, in some cases, even succeeded in getting consent decrees in which they agree not to troll in their state going forward.
Patent Reform Passes the House In Congress, the House passed patent reform legislation that would rein in patent trolls and require that judges award attorneys fees to their victims. The bill is now before the Senate and passage is likely.
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The FTC launched an investigation into MPHJ. Fearing an action by the FTC, MPHJ took the unusual step of suing the FTC, Commissioners Ramirez, Brill and Ohlhausen as well as Jessica Rich, the Director of the Bureau of Consumer Protection first.
while the patent reform bill addresses certain bottom feeder practices, there remains the problem of very broad low-quality patents used by patent trolls. The Supreme Court recently announced that it will review Nautilus v. Biosig Instruments to consider the Patent Acts requirement that patent claims must be clear and distinct which would prevent patent trolls from exploiting broad, vague patents.
(Read More)
TED'S TUBES
US BROADBAND'S SLOW RIDE, LA ENTRY INTO GIGABYTE CONTENTION, MILLION DOLLAR DOMAINS AND DAY OF THE DOLPHIN
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TRUSTe - Consumer Privacy Confidence Declining - and its Not All NSA
=TRUSTe released its latest U.S. Consumer Confidence Index, which shows that a high proportion of U.S. adults aged 18 and older are worried about their privacy online, online trust is declining and the potential impact on business remains high. 74 percent of U.S. internet users are more concerned about privacy than a year ago
Instead for American consumers, their only choice will be a local cable monopoly with little incentive to fund nationwide fiber-optic upgrades. (Read More)
HIZZONER 2.0: Mayor Garcetti Is Using Technology to Redefine His Office and the City
Newly elected Los Angeles Mayor Eric Garcetti has stressed that one of his top priorities is to bring city government into the digital age. Garcetti has launched an mobile app for citizens to report pot
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holes and other service needs and a Cyber Command Center to coordinate the computer networks for the city which, with the nations busiest port, largest municipal utility and one of its busiest airport, is a prime target for a terrorist strike..
The Mayors biggest tech initiative, is to make Los Angeles a Gigabit City in what Ars Technica calls one of the most ambitious city-led broadband projects to date. The Mayor and City Council have agreed to move forward on a Request for Proposal to develop a citywide broadband network for residential and business use that would provide free broadband up to 5Mbp and then tiered pricing for higher speeds up to a Gigabit. If implemented, it would make Los Angeles equal to the ultra-broadband deployed in cities such as Chattanooga and Kansas City which are the fastest in the nation. As currently discussed, the cost of the build out would be borne by the vendor. (Read More)
Domain Auctions - Four $1M+ Sales in 2013 With Domain Journals final year end data in, there were four sales in excess of $1 million bringing the total to 12 for the decade. The million dollar domains were: IG.com ($4.7MM) KK.com ($2.4MM) 114.com ($2.1MM) eBet.com ($1.35MM) ScottRichtersDynamicDolphinRegistrarShutDownByICANN Dynamic Dolphin, the rogue registrar owned by Scott Richters CPA Empire (a subsidiary of Media Breakaway) has been stripped of its registrar status as of November 22, 2013 due to its failure to disclose Richters ownership interest and prior felony conviction for grand larceny. All domains registered with the onetime Spam King were transferred to BigRock Solutions Ltd. As reported in Performance Marketing Insider: Dynamic Dolphin had a serious issue in that more than 10 percent of the companys 45,000 plus domains have false WHOIS data, and more than 17 percent of the domains registered
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through the company have been observed being advertised through spam. (Read More)
CanadianPrivacyCommissionerTags GoogleforMedicalBehavioralTargeting
In only her second month on the job, Interim Privacy Commissioner Chantal Bernier took on one of the giants of the Internet Google. Bernier cited Google for sending targeted ads for medical conditions based on consumer searches which violates Canadas Privacy and Online Behavioural Advertising Guidelines which prohibit targeting based on sensitive information. Google has agreed to take corrective action. FTC Consumer Protection Bureau Director Jessica Rich congratulated Bernier. Privacy issues are increasingly global. Working in partnership with other enforcement bodies is critical to protecting privacy rights domestically and around the world. (Read More)
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Canadas Competition Bureau Investigating ICANN and Google for Possible Antitrust Violations
The Canadian Competition Bureau has confirmed that it is investigating whether the manner in which Google operates its search engine and searchadvertising platforms amount to an abuse of a dominant position. It also is investigating the use of exclusive rights in ICANNs expansion of the gTLDs. (Read
More)
CONTACT US
INTERNET LAW CENTER 100 WILSHIRE BLVD, SUITE 940, SANTA MONICA, CA 90401 www.Internet Law Center.net
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EmailMarketingby
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