Transcript RECENT AND PENDING FEDERAL REGULATION AND LEGISLATION: SPAM, ONLINE PRIVACY AND COPYRIGHTS Denis T.

RECENT AND PENDING
FEDERAL REGULATION AND
LEGISLATION: SPAM, ONLINE
PRIVACY AND COPYRIGHTS
Denis T. Rice
The Power of Emarketing
San Francisco
March 9, 2004
WHERE ARE WE
WITH SPAM?
• UN Estimate: Half of all email is spam
• Cost: $20 Billion per Year
• Costs to U.S. Business Estimated at over
$10 Billion in 2003
• $4 Billion in Lost Production
• $6 Billion from upgrading, lost data,
personnel
THE LANDSCAPE BEFORE
CAN-SPAM
• 36 States with different anti-spam laws
• California’s S.B. 186, enacted 2003:
The
first “opt in” legislation
• California broad definition of spam and
sharp penalties
WHAT DOES
CAN-SPAM DO?
• CAN-SPAM preempts state laws
• CAN-SPAM does not outlaw unsolicited
mail generally
• Marketers/businesses can send unsolicited
email to anyone if
 Identify themselves clearly
 No fraudulent headers
 Honor requests to unsubscribe
KEY CAN-SPAM
DEFINITIONS
• A “commercial electronic mail message”:
“Any electronic mail message the primary
purpose of which is the commercial advertisement
or promotion of a commercial product or service
(including content on an Internet website operated
for a commercial purpose)”
KEY CAN-SPAM
DEFINITIONS
• “Primary purpose” must be commercial
advertisement or promotion
• Compare California law, which would apply
to incidental incursion of advertising in
automated greetings or brief reference to
new products in otherwise non-advertising
message.
WHAT CAN-SPAM
PROHIBITS
• Gaining unauthorized access to another
computer to initiate or retransmit multiple
messages
• Falsifying header information
• Registering for multiple email accounts using
false identifying information
• Fraudulent use of Internet Protocol addresses
to send multiple commercial emails
OPT-OUTS AFTER
CAN-SPAM
Senders must provide easily accessible,
legitimate means for consumers to opt-out of
receiving future messages. After an opt-out,
cannot transmit spam or customer’s email
address.
OTHER KEY
CAN-SPAM RULES
• Honest Subject Lines: can’t use misleading
or bogus subject lines to trick consumer into
opening message
• Labeling: unsolicited emails must be
clearly identified as solicitations or ads for
products/services
• Emails with sexually explicit content must
be labeled as to contents
MORE KEY PROVISIONS
• Opt-outs: must be easily done
• Sender’s Address: must be on all
unsolicited email; no false or misleading
transmission information
• Honest subject lines
• “Do-Not-Mail Registry”: To be set up
under FTC plan
BULK SOLICITATION
PROHIBITED
• Cannot use automated means to establish
multiple email accounts for spam
• This bans “harvesting” email addresses by
crawling websites and automated guessing
of email addresses
• Felony for too many transmissions
CAN-SPAM MAJOR
EXEMPTIONS
• Pre-Existing Business Relationship
• “Transactional or Relationship Message”
• Even if does not meet these criteria, will not
automatically be deemed “commercial
electronic mail message”
WHAT IS A “TRANSACTIONAL
OR RELATIONSHIP MESSAGE”?
• Electronic message whose “primary
purpose” is
 to facilitate, complete or confirm a commercial
transaction the recipient has already agreed
to; or
 to provide warranty information, product recall
information or safety/security information
regarding product or service already purchased
by recipient; or
“TRANSACTIONAL OR
RELATIONSHIP MESSAGE”
 to provide notice of change in various commercial
relationships already existing (loan, subscription,
etc.); or
 to provide notice of change in recipient’s standing
or status in existing relationship; or
 to provide periodic account information; or
 to provide information on employment or benefit
relationship; or
 to deliver goods or services (including upgrades/
updates) that recipient is already entitled to receive.
WHAT LIES AHEAD?
• FTC to adopt rules
• Limitations imposed on civil actions and
state laws except for fraudulent and
deceptive practices
• Only 10% of emails in compliance at start
of 2004
“PHISHING”
INTERNET PRIVACY
• Federal level: FTC and various federal statutes
• State level: Various different statutes
FEDERAL LAWS USED
FOR PRIVACY PROTECTION
• FTC Act
• Children’s Online Privacy Protection Act
(“COPPA”)
• Gram-Leach-Bliley Act (Financial
Institutions)
FTC AND FTC ACT
• Not required to have a privacy policy
• If you have a policy, you must adhere to it
• Example of toysmart.com
CHILDREN’S ONLINE
PRIVACY PROTECTION ACT
• Applies to operator of website “directed” to
children under 13 that collects information
from them
• Requires notice to parents, parental consent,
parental access to information, security and
confidentiality
GRAM-LEACH-BLILEY ACT
(GLBA)
• Applies to “financial institutions” providing
“financial products or services” to consumers
• Terms broadly defined, could apply to
lawyers, accountants, headhunters
WHO ENFORCES GLBA?
• Relevant functional regulator (SEC, FDIC, etc.)
• For accountants, lawyers, headhunters: FTC
CONSUMER’S “NONPUBLIC
PERSONAL INFORMATION”
• Defined as “personally identifiable financial
information” the financial institution
 obtains from a consumer or
 results from transactions or services with consumer
WHAT’S NOT COVERED BY
GLBA?
• Non-segmented customer lists not sorted by
personally identifiable financial information
• Sharing nonpublic information with affiliates
• Sharing nonpublic information with
nonaffiliates if two conditions are satisfied
SHARING INFORMATION
WITH NONAFFILIATES
• Financial institution must provide a clear
and conspicuous notice to consumer and
inception and annually thereafter of its
disclosure practice
• Consumer must have opportunity to opt-out
before information is shared
LEGAL REMEDIES FOR
VIOLATING PRIVACY RULES
• FTC Act, Section 5
• State Unfair and Deceptive Trade Practice
Laws (can involve private and class actions)
• Breach of contract (can involve class actions)
STATE PRIVACY LAWS
• Most states have constitutional and/or
statutory protections (e.g., California
Constitution Article I, Section 1)
• California Financial Information Privacy
Act (“S.B. 1”): Requires posting of privacy
policies on website by July 1, 2004
• Another California “first”!
COPYRIGHT ISSUES
ONLINE
• What is copyright infringement?
• What are the defenses against infringement?
INFRINGEMENT
• Direct Infringement
• Contributory Infringement
• Vicarious Liability
DEFENSES TO
INFRINGEMENT
• “Fair Use”
• ISP immunities
DIRECT INFRINGEMENT
• Active, knowing involvement by an ISP
INGREDIENTS OF
CONTRIBUTORY INFRINGEMENT
• Knowledge
• Inducing, causing, or materially
contributing to, or substantially assisting in,
the infringing activity
INGREDIENTS OF
VICARIOUS LIABILITY
• Party has the ability to control infringing
conduct
• Party fails to control the conduct
• Party receives a “direct financial benefit”
from the conduct
WHAT IS “DIRECT
FINANCIAL BENEFIT”?
Napster case found direct financial benefit
where Napster was not charging users at all
but the infringing material “acts as a draw for
customers”
WHAT IS “FAIR USE”?
A complete defense to infringement claim if
copyrighted work used for purposes like:
• research/scholarship
• criticism
• comment
• news reporting
• teaching
• parody
WHY IS FAIR USE IMPORTANT
IN E-MARKETING?
• May want to use snippets of copyrighted
material in parody, criticism, comment
• May have concern over whether ISP will be
liable for infringing material on its website
IMMUNITIES FOR ISP
• Communications Decency Act of 1996
(“CDA”)
• Digital Millennium Copyright Act of 1998
(“DMCA”)
CDA
• CDA immunizes ISP from liability for acting
as the medium through which third parties
transmit offensive or obscene material
• ISPs are not “publishers”
DMCA
• The On-Line Copyright Liability Limitation
provisions protect ISPs from all monetary
relief for direct, vicarious and contributory
infringement
• Various conditions must be met to obtain
the immunity
IMMUNITY UNDER DMCA
WHERE MATERIAL IS
• Initiated by or at direction of third party
• Automatic process without selection of ISP
• ISP does not select recipients except as
automatic response
• Copies not retained on system longer than
needed for transmission
• ISP removes or disables if notified of
infringement
RECENT AND PENDING
FEDERAL REGULATION AND
LEGISLATION: SPAM, ONLINE
PRIVACY AND COPYRIGHTS
Denis T. Rice
The Power of Emarketing
San Francisco
March 9, 2004