Month: September 2005

September 28, 2005 Electronic Discovery, Privacy

Florida appellate court issues ruling on electronic discovery

Administrative law judge’s discovery order permitting “access to literally everything” on petitioner’s computer did not adequately protect against disclosure of confidential and privileged information.

After being suspended from his job as a school teacher, petitioner Menke was placed under investigation for alleged misconduct. In a formal proceeding against Menke before Florida’s Division of Administrative Hearings, the school board sought discovery of all of the computers in Menke’s household. The board requested that its retained computer expert be allowed to inspect Menke’s computers in a laboratory, so that it could search for improper instant messages.

Menke objected to the discovery request on the grounds that such a wholesale inspection of his computers would violate his Fifth Amendment right and his right of privacy, and would reveal privileged communications with his wife, attorneys, accountants, clergy, or doctors.

Over Menke’s objections, the administrative law judge granted the motion to compel production of the computers for inspection. Menke sought review with the Florida appellate court, which quashed the discovery order.

The appellate court looked to the only other Florida appellate court decision relating to electronic discovery, Strasser v. Yalamanchi, 669 So.2d 1142 (Fla.App.1996), noting that the relevant rules of procedure were broad enough to encompass requests to examine computer hard drives, but only in limited and strictly controlled circumstances. The court concluded that permitting unlimited access to everything on a computer would constitute irreparable harm, because it would expose confidential and privileged information to the opposing party.

The court continued by noting that in cases where there is a need for access to electronically stored information, searching for such data should first be done by the party responding to the discovery request, unless there is evidence of data destruction designed to prevent the discovery of relevant evidence.

In this case, there was no evidence of any destruction of evidence or thwarting of discovery. The court sent the matter back to the administrative body, allowing the school board to request that Menke produce relevant, non-privileged, information. In the court’s words, Menke was not required to provide unfettered access to the entire “electronic filing cabinet” that was his computers.

Menke v. Broward County School Bd., — So.2d —-, 2005 WL 2373923 (Fla.App., Sep 28, 2005).

September 23, 2005 Litigation

Footnote to Councilman: no action for malicious prosecution

Court dismisses civil suit brought by defendant in high-profile ECPA case

If you track court cases dealing with the Internet, you may be familiar with last month’s First Circuit decision in the case of U.S. v. Councilman, 418 F.3d 67 (1st Cir. 2005), which held that interception of e-mail messages in temporary storage is a criminal violation of the Electronic Communications Privacy Act. [More on U.S. v. Councilman]

The defendant in that case, Bradford Councilman, filed a separate civil lawsuit against two of his former employees, claiming that they made false statements to the police which led to Councilman’s arrest and indictment for unlawfully intercepting e-mail messages. Councilman alleged causes of action for malicious prosecution, abuse of process, and intentional infliction of emotional distress. The case had been proceeding in federal court, but was dismissed last week.

The court held that Councilman’s malicious prosecution claim failed because the police had already initiated a criminal investigation before contacting the defendant former employees. The defendants, by providing information about Councilman (whether accurate or not) did not initiate the prosecution. Their statements to the police were therefore privileged under Massachusetts law, and they could not be liable for any of the tort claims Councilman had brought against them.

It is important to note that a necessary element in a civil action for malicious prosecution is that the underlying criminal action, wrongly initiated, ended in a favorable disposition for the accused. Had the court found that the former employees did “initiate” the prosecution, the matter would have been thrown into a problematic situation, given last month’s First Circuit decision which reversed the dismissal of the indictment against Councilman. The court briefly commented on this notion, observing that “it cannot be said at this time that the prosecution has terminated in favor of the plaintiff.”

Councilman v. Alibris, Inc., — F.Supp.2d —, 2005 WL 2225802 (D.Mass., September 13, 2005).

September 22, 2005 Fraud/Misrepresentation

Earthlink off the hook in phishing-alert case

The well-known Internet service provider Earthlink offered its customers a free service to protect from “phishing” scams by alerting users to potentially fraudulent websites. The service redirected users who are attempting to visit a suspicious site to a Scam Alert page, asking the user to “not continue to this potentially risky site.”

Plaintiff Associated Bank-Corp operated an online banking site which mistakenly ended up on Earthlink’s list of potentially fraudulent sites. Although Associated Bank’s site was legitimate, visitors using Earthlink were presented with the Scam Alert page. Associated Bank filed suit in federal court against Earthlink alleging various tort and fraud claims.

Earthlink filed a motion for summary judgment, arguing that Section 230(c)(1) of the Communications Decency Act shielded it from liability. This portion of the Act provides immunity for interactive computer services that publish information received from third party information providers. The court granted Earthlink’s motion for summary judgment.

It held that a reasonable trier of fact could not infer that Earthlink, by providing the alert service, was an information content provider. Instead, the evidence before the court demonstrated that third-party vendors identified potentially fraudulent sites, and that such information was directly input into a database without any alteration by Earthlink. Accordingly, because the information came from another provider, Earthlink could not be liable for the republication of untrue statements about Associated bank.

Associated Bank-Corp. v. Earthlink, Inc., 2005 WL 2240952 (W.D. Wis., September 13, 2005)(Not selected for official publication).

More coverage at Professor Goldman’s blog.

September 21, 2005 Copyright

Ninth Circuit affirms $35 million judgment against semiconductor manufacturer

Case is rare appellate decision under Semiconductor Chip Protection Act of 1984

Altera Corporation filed suit in the U.S. District Court for the Northern District of California against Clear Logic, Inc., a competitor in the semiconductor industry. Altera alleged that Clear Logic had violated the Semiconductor Chip Protection Act of 1984, 17 U.S.C. §901 et seq. (“SCPA”), by using the bitstream generated when programming Altera programmable logic devices to create application-specific integrated circuits. A jury found in favor of Altera, and awarded more than $30 million in damages, plus an additional $5 million in interest and costs.

Clear Logic appealed to the Ninth Circuit, arguing that the trial court improperly instructed the jury regarding the affirmative defense of legitimate reverse engineering, which is provided for under the SCPA. The court affirmed, however, holding that certain misstatements of the law in the jury instructions were harmless error.

The trial court’s instructions initially defined “legitimate reverse engineering” to allow copying and analyzing only “non-protectible concepts or techniques” embodied in a mask work. This was an incorrect statement of the law, but the court concluded that further instructions adequately provided correction. The later instructions explained that “it is permissible [under the SCPA] to reproduce ‘a registered mask work’ as a step in the process of creating an original chip, so long as the purpose of reproducing the chip is appropriate.”

Accordingly, the court held that the jury was able to properly conclude that the Clear Logic mask works incorporated into the application-specific integrated circuits were not original, but were copies prohibited under the SCPA.

Altera Corporation v. Clear Logic, Inc., — F.3d —, 2005 WL 2233252 (9th Cir., September 15, 2005).

September 20, 2005 Cybersquatting

WIPO Panel splits on descriptiveness of bocaresorts.com

An arbitration panel of the World Intellectual Property Organization has decided 2-1 in favor of Complainant Boca Raton Resort & Club in an action under the Uniform Domain Name Dispute Resolution Policy over the domain name bocaresorts.com.

In 1995, the Complainant registered the domain name bocaresort.com for use in connection with resort facilities it maintains in Boca Raton, Florida. In 2002, Respondent GNO, Inc. registered bocaresorts.com to develop a website providing links for media, travel, fishing, events and real estate which are “under development”. Complainant asserted that Respondent’s use of the similar domain name was likely to cause confusion, that Respondent had no legitimate rights in the domain name, and that the domain name had been registered in bad faith.

Respondent argued that it did not register the domain name in bad faith because it believed the domain name to be descriptive of resorts in a resort city. Given such descriptiveness, Respondent argued, it had no predatory intent in registering the domain name. In analyzing the element of bad faith, the majority of the Panel concluded that the Respondent “knew, or should have known, about Complainant’s ‘www.bocaresort.com’ website and that he pluralized that name to benefit from web traffic generated by unsuspecting potential users of Complainant’s website.”

The Presiding Panelist, Dennis Foster, disagreed with the majority’s conclusion, and issued a dissent that addressed the issue of bad faith. Foster asserted that the Respondent was “entitled to believe that the phrase ‘Boca Resorts’ is geographically descriptive and means resorts in the city of Boca Raton, Florida, which is primarily a city full of resorts catering to a public seeking leisure.” He compared it to other activities of well-known cities:

“It is comparable to trying to claim to have become ‘the Vegas casino’ in Las Vegas or ‘the Washington, D.C. lobbyist’. These are all common geographically descriptive terms that the public, in good faith, is entitled to believe are free for all to use because they describe goods or services found in abundance from many providers in the named city.”

Panthers BRHC L.L.C. v. Gregg Ostrick/GNO, Inc., Case No. D2005-0681 (September 1, 2005).

September 19, 2005 Privacy

Personal e-mail sent by government employees at work protected from disclosure under Colorado Open Records Act

Decision maintains privacy of communications between alleged philandering boss and employee.

In 2002, the Board of Commissioners of Arapahoe County, Colorado hired a private investigator to prepare a report on alleged misconduct of Tracy Baker, the Arapahoe County Clerk and Recorder. The investigator’s report contained, among other things, copies of numerous e-mail messages between Baker and one of his employees. Many of the messages contained “sexually explicit and/or romantic content.”

The Denver Publishing Company, owner of the Rocky Mountain News, requested a copy of the report containing the e-mail messages. Instead of complying with the newspaper’s request, the Board of Commissioners filed a legal action, asking the court to determine whether the requested items could be released. The newspaper intervened, claiming that the e-mail messages had to be released to the public under the Colorado Open Records Act, C.R.S. §24-72-201 et seq. (“CORA”). The district court agreed, and ordered disclosure of the full report, including the salacious e-mail messages.

Baker and the employee sought review of the district court’s decision. The appellate court reversed, holding that although the e-mail messages were “public records” as defined under CORA, they should not be released because of their authors’ constitutional right to privacy. The Denver Publishing Company appealed the decision to the Colorado Supreme Court, which affirmed in part and reversed in part.

The Supreme Court held that the appellate court had properly concluded the e-mail messages should not be disclosed, but arrived at that conclusion on different grounds. Instead of invoking a constitutional privacy concern to bar disclosure, the court held that the definition of “public records” under CORA does not include private e-mail correspondence like the messages at issue in the case.

Under the statute, “public records” include “writings made, maintained or kept . . . [by the government] . . . for use in the exercise of functions required or authorized by law or administrative rule or involving the receipt or expenditure of public funds.”

The court noted that the inquiry in the case was content-driven: “The content of the messages must address the performance of public functions or the receipt of and expenditure of public funds. Insofar as the messages do not, they remain non-public and outside the scope of CORA.” In this case, the messages at issue were made, maintained or kept by the governmental agency. However, given the content, it was clear that they were not made in connection with official public business. Accordingly, the records were protected from public disclosure.

The Denver Publishing Co. v. Board of County Comm., — P.3d —, 2005 WL 2203157 (Colo., September 12, 2005).

September 8, 2005 Contracts

Cell phone contract not unconscionable

Florida case provides good example of why one should actually read a contract before filing a lawsuit

Appellant Briceno took her camera phone to a Sprint store to have it worked on. She claimed that employees of the store, using her phone, accessed and distributed “personal photographs of her body to third persons by the internet.” Briceno filed suit against Sprint in Florida state court alleging various privacy-related causes of action.

The court never got to the merits of the case, however, because Sprint successfully moved to compel arbitration, pursuant to a clause found in Sprint’s “Terms and Conditions of Service.”

Briceno sought review of the trial court’s order compelling arbitration. The appellate court affirmed.

Unlike the recent Illinois case of Hubbert v. Dell Corp., this case did not involve the question of whether the terms and conditions containing the arbitration clause were part of the contract between the customer and the provider. The main issue in this case was whether the arbitration clause was unconscionable. The court held that it was not.

Because of a choice of law provision in the terms and conditions, the Florida court found itself in the unusual position of applying Kansas law to determine the question of whether the arbitration clause was unconscionable. It held that the agreement did not unfairly exploit any disadvantaged position of Briceno. On the contrary, the court noted that she was “college educated . . . certainly not illiterate, uneducated, or unsophisticated.” She simply ignored the terms and conditions because “she did not care about reading them and . . . did not like to read.”

The court then concluded that Sprint had not unfairly concealed amendments to the terms and conditions containing the arbitration clause. It noted that alerts to changes in the terms and conditions had been provided on an invoice sent to Briceno. She could have looked online to read them, or could have requested a paper copy by telephone. It was also customary for Sprint to include the terms and conditions with new telephones, and Briceno had exchanged her telephone for a new one four times within the course of three years.

Given these factors, the court held that the arbitration clause was not unconscionable. It was therefore enforceable, and the trial court properly ordered the parties to arbitrate the dispute.

Briceno v. Sprint Spectrum, L.P., — So.2d —, 2005 WL 2093681 (Fla.App. 3 Dist., August 31, 2005).

[Link to opinion]

September 1, 2005 Contracts, Litigation

“Terms and Conditions of Sale” provided by hyperlink created binding contract

[Thanks to the Technology & Marketing Law Blog and the ContractsProf Blog for alerting me to this case.]

Several purchasers of Dell computers filed a class action lawsuit against Dell in an Illinois court. Dell moved to dismiss the action, or to compel arbitration, based on an arbitration clause found in the “Terms and Conditions of Sale” that were available for viewing by clicking on a blue hyperlink found on each of the pages that website visitors saw during the purchasing process.

Although the plaintiffs admitted that by purchasing computers online they entered into contracts with Dell, they claimed that the Terms and Conditions of Sale containing the arbitration clause were not a part of the contracts. They argued that merely making a link to the Terms and Conditions of Sale available was insufficient, and that Dell should have required purchasers to affirmatively manifest their assent by clicking an “I Accept” box.

Dell argued that it had done enough to make purchasers aware of the Terms and Conditions of Sale. It had provided the link by means of a contrasting blue hyperlink. It had also stated on numerous pages on its website, used for marketing and for purchase, that all sales were subject to the Terms and Conditions of Sale.

The trial court determined that the online terms and conditions had not been “adequately communicated” to the plaintiffs, because Dell did not “provide a display text on the Web site that manifested a clear assent to the terms and conditions,” and because the terms and conditions themselves were not visible on the pages viewed while placing the orders. Accordingly, the trial court denied Dell’s motion to dismiss or to compel arbitration. Dell sought review. The appellate court reversed.

On appeal, the court held that the plaintiffs were properly made aware of the terms and conditions. The hyperlinks appearing on the web pages made the pages “the same as a multipage written paper contract. The blue hyperlink simply takes a person to another page of the contract, similar to turning the page of a written paper contract.” The contrasting blue color of the hyperlink served to make it conspicuous. Finally, the court noted that because the plaintiffs were purchasing computers online, they were not novices, and should have known that more information would have been available by clicking on the link.

Because the Terms and Conditions of Sale were part of the online contract, the court held that the arbitration clause applied. It reversed the decision of the trial court and remanded it with directions to either stay or dismiss the action so that the parties could arbitrate their disputes.

Hubbert v. Dell Corp., — N.E.2d —, 2005 WL 1968774 (Ill.App. 5th Dist., August 12, 2005).

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