On Friday November 25, 2011, the Department of Justice (DOJ) working with Immigration and Customs Enforcement (ICE) seized 130 domains operated by alleged counterfeiters. The seizures seem to be a continuation of last year’s “Operation In Our Sites v. 2.0” an initiative designed to crack down on online piracy and counterfeiting by seizing the domain names under which they operate. In last year’s seizures over 82 domains were seized.
The seizure seems to have been timed to anticipate “Cybermonday,” the follow-up to “Black Friday” when consumers are encourage to shop on-line. The domains seized include clothing resellers such as 100jerseys.com, purse and bag resellers such as Louisvuiton-bags-forcheap.com, shoe resellers such as Reeboksite.com and even an auto software cite autocd.com. Attempts to log into to the sites results in a message which states:
Such seizures have been criticized in the past by consumer advocates as excessive and violations of first amendment rights. At least one senator has expressed his displeasure with these tactics in the past. Senator Ron Wyden (D-OR) wrote to ICE and stated:
In contrast to ordinary copyright litigation, the domain name seizure process does not appear to give targeted websites an opportunity to defend themselves before sanctions are imposed. As you know, there is an active and contentious legal debate about when a website may be held liable for infringing activities by its users. I worry that domain name seizures could function as a means for end-running the normal legal process in order to target websites that may prevail in full court. The new enforcement approach used by Operation In Our Sites is alarmingly unprecedented in the breadth of its potential reach…
For the Administration’s efforts to be seen as legitimate, it should be able to defend its use of the forfeiture laws by prosecuting operators of domain names and provide a means to ensure due process. If the federal government is going to take property and risk stifling speech, it must be able to defend those actions not only behind closed doors but also in a court of law.
The Senator’s letter also focused on the scant evidence and investigation required to obtain the seizure warrants and how they resulted in wrongful seizure in at least one case.
Aside from their legality, the effectiveness of such seizures has also been questioned. Also, popular web browser Firefox has a plug-in which allows users to find the website despite the domain seizure. Nevertheless, for the average consumer who is not technically sophisticated, the domain seizures provide an effective means for sending a message against the purchase of counterfeit goods. No press release has been issued by ICE regarding the new seizures.
On Thursday the European Court of Justice (“ECJ”) ruled that an Internet Service Provider (“ISP”) cannot be forced to filter all Internet traffic in order to stop the sharing of copyright infringing content. This opinion is the culmination of a seven year old legal battle in the case of Sabam v. Scarlet.
In 2004 a Belgian royalty collection agency, Sabam, brought legal action against Scarlet, a Belgian ISP, seeking an injunction ordering the ISP to put in place a mechanism to prevent its users from downloading copyrighted works via peer-to-peer (P2P) networks without permission from the copyright owner. In 2007 the Brussels Court of First Instance ordered Scarlet to take measures to stop the downloading of copyrighted works without the authority of the copyright owner or face fines of €2,500 per day. This decision ignored testimony from experts that no reasonable electronic measure existed for adequately stopping the downloading of copyrighted content.
Scarlet appealed the decision. In January of 2010, the Brussels Court of Appeal referred the following two questions to the European Court of Justice:
- [Do European directives on Intellectual Property rights construed in light of personal freedoms guaranteed by law] permit … a national court…to order an [ISP] to install, for all its customers, in abstract and as a preventive measure, exclusively at the cost of that ISP and for an unlimited period, a system for filtering all electronic communications, both incoming and outgoing, passing via its services, in particular those involving the use of peer-to-peer software, in order to identify on its network the movement of electronic files containing a musical, cinematographic or audio-visual work in respect of which the applicant claims to hold rights, and subsequently to block the transfer of such files, either at the point at which they are requested or at which they are sent?
- [If the answer to the first question is yes then can the court] apply the principle of proportionality when deciding on the effectiveness and dissuasive effect of the measure sought?
Effectively what the Court of Appeals was asking was, do we have the authority to order an ISP to engage in broad filtering of all content in order to identify some offending content and, if so, can we apply a proportionality, cost and benefit, analysis in granting or denying such relief? Clearly the Court felt uncomfortable with the scope of relief which Sabam claimed that it was entitled to under the existing Directives.
On Thursday, November 24, 2011, the ECJ ruled that European law precludes an injunction of the kind under review which would require monitoring of all internet user communications as a preventive measure at the ISP’s expense and for an unlimited period of time for the purpose of stopping copyright infringing content.
In its ruling the ECJ focused on the rights to privacy of Internet users. It state dthat that the general monitoring of all communications that would be required to accomplish the requirements of the injunction, would itself violate European privacy directives. The ECJ went on to say that in granting relief to copyright owners, “courts must strike a fair balance between the protection of copyright and the protection of the fundamental rights of individuals who are affected by such measures.” Moreover, the “injunction could potentially undermine freedom of information since that system might not distinguish adequately between unlawful content and lawful content, with the result that its introduction could lead to the blocking of lawful communications.”
The ECJ was also sensitive to the business impact on the ISP. It stated that courts must also “strike a fair balance between the protection of the intellectual property right enjoyed by copyright holders and that of the freedom to conduct a business enjoyed by operators such as ISPs.” The expensive monitoring system requested by Sabam would “result in a serious infringement of the freedom of the ISP concerned to conduct its business since it would require that ISP to install a complicated, costly, permanent computer system at its own expense.”
While this ruling forbids broad monitoring it does not prevent blacklisting of websites, a tactic affirmed by the British High Court last year in a case against British Telecom and currently under consideration in at least one bill pending before Congress. Nevertheless, privacy advocates were pleased with this decision.
I know that this article is a bit off-topic for my blog but so many of my friends have been complaining about the battery life on their iphone since they upgraded to IOS5 that I felt it was worth sharing this trick. There appears to be a bug in IOS 5 which makes the phone constantly check the time zone in the background. As a result your battery rapidly looses charge when you are not using the phone. Here is the trick to turn that off until a fix comes from apple.
Go to settings->location services-> scroll all the way to the bottom to system services->turn off setting time zone. That is it.
I have noticed a substantial increase in my standby time. Hope it does the same for you.
It was big news last month when Dropbox, the popular cloud storage provider, announced that it was offering new multiuser business accounts at a competitive price. The business which initially launched as a consumer service announced that it woiuld now be offering its new service to small and medium size corporate clients. Corporate users would be able to create virtual disk folders on their computers which would be mirrored on the cloud and would be available anywhere.
The promotional information for the new service promoted its high level of security which includes password protection and user side encryption. What Dropbox did not easily disclose in its promotional materials was that the service does not meet the requirements of Payment Card Industry (PCI), the Health Insurance Portability and Accountability Act (HIPAA) or the Sarbanes-Oxley law. Use of the service by a corporation subject to these acts could result in substantial fines and penalties.
Although many similar servies also do not meet these requirements, Dropbox’s new service is directed not at the home user but at corporate customers in industries likely to be governed by these regulations. Dropbox’s explanation for not emphasizing this shortcoming in its promotional literature was that its customers were more concerned with collaborative ease than with regulator compliance.
Ultimately, this is an example of the basic rule of all cloud computing – user beware. A corporation in a regulated industry needs to be proactive in confirming that a service which it intends to use fulfills its regulatory requirements. Furthermore, corporations need to create, promote and enforce internal guidelines to avoid use of cloud based services which could results in regulatory violations. For such guidelines to be effective, the company’s employees need to be educated to avoid using such services for company information without prior company approval.
Three controversial new laws are on the horizon which, if enacted could have a significant impact on the Internet in the United States. Imagine if your business is accused by a competitor of distributing infringing content and your site is taken off the Internet before you have a chance to defend. Imagine search engines refusing to show your site on search results. Imagine being banned from using the Internet. Imagine your music player or laptop searched at the border for infringing content. All of this and more could come true under these pending laws.
Protect IP Act
Sponsors of the “Protect IP Act” (S. 968) claim that the law is intended to fight piracy and copyright infringement. It is a law that is strongly supported by the large media companies who face serious problems with content infringement. However, the bill has attracted broad criticism from small business and civil liberties groups. The bill, if passed into law, would give the Justice Department the ability to seek court orders seizing the sites’ domain names and requiring search engines, payment processing companies and advertising networks to blackball web sites deemed to promote infringing content. The problem is that the bill does not provide a clear definition of what constitutes an infringement-promoting site therefore leaving the door open to commerce chilling threats web site shutdowns. Separately, including a private right of action means that any rights holder can tie up a service provider in costly legal action, even if the claims eventually turns out to not be valid. For a small business or startup this makes them very vulnerable to the well-established media companies. The bill has been put on hold by Senator Ron Wyden (D-OR).
Stop Online Piracy Act
A successor to the Protect IP Act is the “Stop Online Piracy Act” (H.R. 321) which was introduced last month by a bipartisan group of senators. The House Judiciary Committee will hold a hearing on the act November 16, 2011. As with the stalled Protect IP Act, H.R.321 allows copyright owners to required search engines to block accused websites from showing up on search results. Internet service providers such as AT&T or Comcast can be required to block accused websites from their customers. Payment companies such as PayPal, Visa or MasterCard can stop all payment processing for any website that they suspect may be posting copyrighted work without permission. The bill has been criticized for its “shoot first ask questions later” approach and the economic damage that it could cause falsely accused sites.
The Anti-Counterfeiting Trade Agreement
The last of these three new potential laws is part of a new international copyright protection treaty. The Anti-Counterfeiting Trade Agreement (ACTA) is a multilateral agreement which would create a new international network of laws and regulations governing copyrighted content. Several factors have made ACTA controversial. First, it has been negotiated amongst the parties outside of established multinational organizations in order to keep its terms secret. This secrecy has been justified by the US and Japan as matters of national security. Repeated leaks have raised concerns about elements of the treaty that call for border searches of laptops, mandatory banning of users from the Internet, enhanced fines and criminal penalties. Another controversial factor in the treaty is that ACTA negotiations have excluded infringement producing countries such as China, India, Russia and Pakistan. The penalties and rules are therefore targeted at punishing users in content producing countries in order to dry up demand (parallels could be made to the drug war strategy). Finally, numerous concerns have been raised about surveillance and human rights.
A signing ceremony was held on October 1, 2011 in Tokyo, at which the United States, Canada, Australia, Japan, New Zealand, Morocco, Singapore, and South Korea signed the treaty. The European Union, Mexico, and Switzerland did not sign the treaty, but attended the ceremony and indicated their intent to sign the treaty in the near future.
Consistent with the history of the treaty, its ratification into US law is now clouded in controversy. The USTR has claimed that ACTA is consistent with current U.S. copyright, patent, and trademark laws, and therefore it “does not require the enactment of implementing legislation.” The USTR further stated that “The United States may therefore enter into and carry out the requirements of the Agreement under existing legal authority, just as it has done with other trade agreements.” This claim that the Act does not require ratification has not been well received. Critics have voiced concerns that the ACTA is not consistent with U.S. law and that the president does not have the proper authority to bind the U.S. to the agreement without congressional ratification. Senator Ron Wyden (D-Ore.) has stated that “if the USTR ratifies ACTA without Congress’ consent it may be circumventing Congress’s Constitutional authority to regulate international commerce and protect intellectual property.” Time will tell what will happen.
The 9th Circuit has ruled in Suzion Energy Ltd v. Microsoft Corporation, that emails belonging to a non-US national which are hosted on US based servers by a US Cloud providers. The Electronic Communications Privacy Act of 1986 (ECPA) provides that “a person or entity providing an electronic communication service to the public shall not knowingly divulge to any person or entity the contents of a communica- tion while in electronic storage by that service.”
In this case Suzlon sought emails under to use in a civil fraud proceeding pending against Rajogopalan Sridhar and others in the Federal Court of Australia (the “Australian Proceedings”). Although Sridhar is a citizen of India and is imprisoned abroad, the relevant emails are stored on a US server by a domestic corporation, Microsoft. The district court initially granted Suzlon’s petition for production of documents. In response, Microsoft filed objections that the district court deemed to be a motion to quash.
The Court construed the term person as defined in the Act to extend to “any person” regardless of nationality. Thereby the court expands the application of the ECPA to foreign nationals. This reading is consistent with other decisions that have interpreted similar laws such as the Freedom of Information Act.
On June 28, 2011, at the launch of Office 365, the new cloud based version of its well-known office tools, Microsoft stated that data that you store on the cloud is subject to scrutiny by the US government even when it is stored overseas. ZDNet reporter Zack Whittaker reported that, when asked if Microsoft could guarantee that data stored in the European Union would not leave the European Economic Area, Gordon Frazer, managing director of Microsoft UK, explained that it could not. Because Microsoft is a US based company it has to comply with US laws and would be forced to disclose data to the US government if required to do so under the Patriot Act. When asked if customers would be notified of a government ordered disclosure, he said that neither Microsoft nor any other company can provide such a guaranty. Gagging orders, injunctions and U.S. National Security Letters can prohibit disclosure of information requests to the owners of the information.
These public admissions are consistent with similar admissions previously made by Microsoft in a white paper detailing Office 365 security which states:
In a limited number of circumstances, Microsoft may need to disclose data without your prior consent, including as needed to satisfy legal requirements, or to protect the rights or property of Microsoft or others (including the enforcement of agreements or policies governing the use of the service).
Accordingly, if a governmental entity approaches Microsoft Online Services directly for information hosted on behalf of our customers, [Microsoft] will try in the first instance to redirect the entity to the customer to afford it the opportunity to determine how to respond. …and will use commercially reasonable efforts to notify the enterprise customer in advance of any production unless legally prohibited.
In addition to the insecurity that this language creates for European users who, by using the service, may be exposed to US government scrutiny, it also brings into question the legality US run cloud services in the Europe. European data security directives prohibit removal of data from Europe without the data owner’s consent. Microsoft did not explain how it reconciles its obligations under US and European law.
Microsoft’s own white paper increases concern about the extra territorial transfer of data:
As a general rule, customer data will not be transferred to data-centers outside that region. There are, however, some limited circumstances where customer data might be accessed by Microsoft personnel or subcontractors from outside the specified region (e.g., for technical support, troubleshooting, or in response to a valid legal subpoena)
This language not only creates concerns for European customers of the Office 365 service but for US customers concerned with running afoul of export controls which might hold them strictly liable for foreign transfer of certain technical information.
While some readers may shrug off the disclosure requirement assuming that laws such as the Patriot Act are limited in use to terrorist investigations, it is important to understand that nothing restricts the scope of information obtained under the act or the transfer of information gained to other government agencies. In fact, the government has repeatedly refused to disclose how it feels that it can use the Patriot Act and where there has been disclosure, the interpretation has been expansive.
So what do these disclosures suggest for users of cloud services. For one thing, it is likely that European users will shy away from accessing cloud services provided by US companies. We are also likely to eventually see litigation reconciling European Union data rules against compelled disclosure under national security laws such as the Patriot Act. Finally, companies that are subject to export control compliance would be wise to shy away from cloud services and instead opt for restricted hosting services where they can assure no foreign access to their data.