Source: http://www.techlawjournal.com/alert/2003/05/12.asp
Timestamp: 2019-04-20 15:16:10+00:00

Document:
TLJ Daily E-Mail Alert No. 659, May 12, 2003.
May 12, 2003, 9:00 AM ET, Alert No. 659.
5/9. The U.S. Court of Appeals (1stCir) issued its opinion in In Re Pharmatrak Privacy Litigation, reversing a District Court summary judgment in a case brought under the Electronic Communications Privacy Act (ECPA) involving web site monitoring.
The opinion contains detailed explanations of the technology involved, included access logs, cookies, web forms, and get and post methods. And, its conclusions are based on the specific technological details of this case. Moreover, the holding appears to be limited to a narrow set of facts not present in most situations involving web site monitoring.
In this case, the web site operators contracted with a third party to conduct monitoring, and did not disclose this third party involvement to users. More importantly, this third party exceeded the usual techniques of web site monitoring (involving access logs and cookies, which are anonymous), and also accessed some personally identifying information of web site visitors who filled out web forms, the data of which was sent to the web site operators by the "get" method. This means that the data was appended to the uniform resource locator (URL) of the web page receiving the form. And since it was a part of the URL, it was available to this third party.
Parties. Pharmatrak sold a web site traffic monitoring service named NETcompare to pharmaceutical companies. NETcompare collected information about the web users in the course of their accessing the web sites of pharmaceutical companies that used the NETcompare service. Its parent company is Glocal Communications.
Pfizer, Pharmacia (which was recently acquired by Pfizer), Smithkline Beecham (which merged with Glaxco Wellcome to form GlaxSmithKline), American Home Products (now Wyeth), and Novartis were five pharmaceutical companies that purchased the NETcompare service, from June 1998 through November 2000, for the purpose of obtaining information that would enable them to do intra-industry comparisons of web site traffic and usage. The pharmaceutical companies did not seek personal or identifying data.
The plaintiffs are individuals who visited the web sites of these pharmaceutical companies.
The Appeals Court continued that "A cookie is a piece of information sent by a web server to a web browser that the browser software is expected to save and to send back whenever the browser makes additional requests of the server (such as when the user visits additional webpages at the same or related sites). A persistent cookie is one that does not expire at the end of an online session. Cookies are widely used on the internet by reputable websites to promote convenience and customization. Cookies often store user preferences, login and registration information, or information related to an online ``shopping cart.´´ Cookies may also contain unique identifiers that allow a website to differentiate among users."
"Pharmatrak sent monthly reports to its clients juxtaposing the data collected by NETcompare about all pharmaceutical clients. These reports covered topics such as the most heavily used parts of a particular site; which site was receiving the most hits in particular areas such as investor or media relations; and the most important links to a site." Finally, the Court noted that "The monthly reports did not contain any personally identifiable information about users."
Personally Identifying Information. The pharmaceutical companies did not seek personally identifying information, and Pharmatrak did not provide any to them. However, the Appeals Court wrote that "Pharmatrak nevertheless collected some personal information on a small number of users. Pharmatrak distributed approximately 18.7 million persistent cookies through NETcompare. The number of unique cookies provides a rough estimate of the number of users Pharmatrak monitored. Plaintiffs' expert was able to develop individual profiles for just 232 users."
This personally identifying information was collected via web site forms that used the "get" rather than the "post" method to transmit data. For example, one company had a form in its web site for obtaining a rebate. It used the "get" method to send the form data, meaning that it was appended to the URL. The Court elaborated that "Web servers use two methods to transmit information entered into online forms: the get method and the post method. The get method is generally used for short forms such as the ``Search´´ box at Yahoo! and other online search engines. The post method is normally used for longer forms and forms soliciting private information. When a server uses the get method, the information entered into the online form becomes appended to the next URL."
"By contrast, if a website transmits information via the post method, then that information does not appear in the URL. Since NETcompare was designed to record the full URLs of the webpages a user viewed immediately before and during a visit to a client's site, Pharmatrak recorded personal information transmitted using the get method", wrote the Court.
Statute. 18 U.S.C. § 2511(1) provides, in part, that "any person who (a) intentionally intercepts, endeavors to intercept, or procures any other person to intercept or endeavor to intercept, any wire, oral, or electronic communication ... shall be punished as provided in subsection (4) or shall be subject to suit as provided in subsection (5)."
Also, 18 U.S.C. § 2510 provides, in part, that "any person whose wire, oral, or electronic communication is intercepted, disclosed, or intentionally used in violation of this chapter may in a civil action recover from the person or entity, other than the United States, which engaged in that violation such relief as may be appropriate."
District Court. In August 2000, the Plaintiffs filed a complaint in U.S. District Court (DMass) against Pharmatrak, Glocal, and the five pharmaceutical companies alleging violation of Title I of the ECPA (18 U.S.C. § 2510 et seq.), violation of Title II of the ECPA (18 U.S.C. 2701 et seq.), violation of the Computer Fraud and Abuse Act (18 U.S.C. § 1030), violation of various Massachusetts state statutes, as well as invasion of privacy, trespass to chattels and conversion, and unjust enrichment. Plaintiffs also sought, and obtained, class action status.
Defendants moved for summary judgment. The District Court granted this summary judgment motion as to the ECPA claims on the grounds that Pharmatrak's activities fell within an exception to the statute where one party consents to an interception. It also granted summary judgment on the other federal law claim. Having held for defendants on all of the federal questions, the District Court declined to retain jurisdiction over the state law claims, and dismissed the action, without prejudice as to the state law claims.
Appeals Court. The Appeals Court reversed and remanded. The opinion only addresses the ECPA issues.
The Court began its analysis by stating that the "plaintiffs must show five elements to make their claim under Title I of the ECPA: that a defendant (1) intentionally (2) intercepted, endeavored to intercept or procured another person to intercept or endeavor to intercept (3) the contents of (4) an electronic communication (5) using a device. This showing is subject to certain statutory exceptions, such as consent."
It then noted that "Pharmatrak has not contested whether it used a device or obtained the contents of an electronic communication." The only issues raised by Pharmatrak was whether there was consent to the interception, and whether there was an interception.
The Court wrote, in dicta, that "This is appropriate. ... Transmissions of completed online forms, such as the one at Pharmacia's Detrol website, to the pharmaceutical defendants constitute electronic communications. ... The ECPA also says that ``'contents,' when used with respect to any wire, oral, or electronic communication, includes any information concerning the substance, purport, or meaning of that communication." 18 U.S.C. § 2510(8). This definition encompasses personally identifiable information such as a party's name, date of birth, and medical condition.´´"
The analysis of the Appeals Court was that the communications were between the web site visitors and the pharmaceutical companies that maintained web sites. The interception was done by Pharmatrak. The communications that were intercepted were the limited number of transmissions of personally identifying information contained in such things as the "get" method sending of web form data.
Pharmatrak had asserted that there was consent to the interception, because the pharmaceutical companies consented. The District Court agreed, but not the Appeals Court. It found that Pharmatrak had not met the standard for consent under 1st Circuit law. In particular, it noted that there could not be consent when the pharmaceutical companies had told Pharmatrak that they did not want personally identifying information.
The Court also held that the web site users did not consent. Pharmatrak's involvement was not known to web surfers. And the "pharmaceutical companies' websites gave no indication that use meant consent to collection of personal information by a third party".
The Court also found that there was an "interception" within the meaning of the Wiretap Act. The Court reviewed the different opinions regarding whether an interception must be an interception of transit, as opposed to an acquisition from storage. However, the Court concluded that it need not address the transit versus storage debate because in this case, the personally identifying information collected by Pharmatrak was obtained in transit.
The Appeals Court added some significant comments in dicta. It wrote that "We share the concern of the Ninth and Eleventh Circuits about the judicial interpretation of a statute written prior to the widespread usage of the internet and the World Wide Web in a case involving purported interceptions of online communications. See Steiger, 318 F.3d at 1047 (quoting Konop, 302 F.3d at 874). In particular, the storage-transit dichotomy adopted by earlier courts may be less than apt to address current problems. As one court recently observed, "[T]echnology has, to some extent, overtaken language. Traveling the internet, electronic communications are often -- perhaps constantly -- both 'in transit' and 'in storage' simultaneously, a linguistic but not a technological paradox." United States v. Councilman, 245 F. Supp. 2d 319, 321 (D. Mass. 2003)."
Editor's Note. Readers may want to assess the objectivity of Tech Law Journal in writing a news story about web site monitoring. See, for example, TLJ Memorandum regarding "E-Mail Monitoring" by TLJ, dated January 1, 2003.
5/8. The House Judiciary Committee held an oversight hearing titled "Direct Broadcast Satellite Service in the Multichannel Video Distribution Market". It focused on News Corporation's proposed acquisition of a 34% interest in Hughes Electronics Corporation. Direct broadcast satellite service provider DirecTV is a unit of Hughes.
Rupert Murdoch, the Ch/CEO of News Corporation, asserted in his prepared testimony that the transaction will be "to the ultimate benefit of all pay-TV customers, whether they are direct-to-home satellite or cable subscribers". He cited "improvements in local-into-local service, new and improved interactive services, and the many new diversity programs". He also noted "the absence of any horizontal or vertical merger concerns about this transaction".
He elaborated that "News Corp. will work aggressively to build on the services already provided by Hughes to make broadband available throughout the U.S., particularly in rural areas. Broadband solutions for all Americans could come from partnering with other satellite broadband providers, DSL providers, or new potential broadband providers using broadband over power line systems, or from other emerging technologies. News Corp. believes it is critical that consumers have vibrant broadband choices that compete with cable’s video and broadband services on capability, quality and price."
He also addressed antitrust issues. He asserted that there are no horizontal merger concerns: "Because this transaction involves an investment in DIRECTV, a multichannel video programming distributor with no programming interests, by News Corp., a programmer with no multichannel distribution interests, no ``horizontal´´ competition issues arise. There will be no decrease in the number of U.S. competitors in either the multichannel video distribution market or the programming market. To the contrary, because of News Corp.'s plans to bring ``best practices´´ and innovations to DIRECTV, competition in these markets will intensify and consumers will be presented with more and better choices."
He also addressed vertical integration: "The transaction does result in a ``vertical´´ integration of assets because of the association of DIRECTV’s distribution platform and News Corp.'s programming assets. But this “vertical” integration is not anti-competitive for two reasons. First, neither News Corp. nor DIRECTV has sufficient power in its relevant market to be able to act in an anti-competitive manner. DIRECTV has a modest 12 percent of the national multichannel market, compared to as much as 29 percent of the market held by the largest cable operator. News Corp. has a modest 3.9 percent of the national programming channels, compared to the largest cable programmer at 15.2 percent of the channels."
See also, opening statement of Rep. James Sensenbrenner (R-WI), Chairman of the Committee; prepared testimony of Kevin Arquit, a former Director of Competition at the Federal Trade Commission (FTC), who argued that there is no reason to oppose the transaction on antitrust grounds; prepared testimony of Neal Schnog, President of Uvision and Vice Chairman of the American Cable Association (ACA), who testified in opposition to the transaction; and prepared testimony [13 pages in PDF] of Gene Kimmelman, Director of the Consumers Union, who argued that antitrust officials should impose conditions upon the proposed transaction.
5/9. Siebel Systems issued a release in which it stated that "On May 6, 2003, the SEC contacted the company and indicated that a May 1, 2003 article on CBS MarketWatch had raised questions regarding the company's compliance with Regulation FD. The article stated that the company's stock had risen by $0.63 during the course of the day after a dinner attended by certain financial analysts, investors, and executives of the company." Siebel also announced that it is conducting its own internal review. See also, the Securities and Exchange Commission's (SEC) Regulation FD page.
5/9. The National Telecommunications and Information Administration (NTIA) belatedly published in its web site a copy of the speech delivered by Mike Gallagher on spectrum issues. He is Deputy Assistant Secretary for Communications and Information at the NTIA.
5/9. The Federal Election Commission (FEC) made seven recommendations to the Congress for changes in federal election law. The FEC is required by 2 U.S.C. § 438(a)(9) to make to make legislative recommendations annually. The list includes one item pertaining to publishing copies of electronically filed items on the internet. The FEC stated in a release that it would "Require mandatory electronic filing, at a date to be determined by Congress, for those persons and political committees filing designations, statements, reports or notifications pertaining only to Senate elections if they have, or have reason to expect to have, aggregate contributions or expenditures in excess of $50,000 in a calendar year. Also, require that electronically filed designations, statements, reports or notifications pertaining only to Senate elections be forwarded to the Commission within 24 hours of receipt and to be made accessible to the public on the Internet, if Congress does not change the point of entry for filings pertaining only to Senate elections."
5/8. The Senate amended and passed S 113, an untitled bill to amend the Foreign Intelligence Surveillance Act of 1978 (FISA), by a vote of 90-4. See, Roll Call No. 146.
Sen. Jon Kyl (R-AZ), the sponsor of the bill, stated in the Senate that "FISA allows us to get warrants, among other things, and allows us to surveil people we suspect of committing acts of terrorism against us; for example, to get a warrant to search their computer or their home. There are two instances where the law currently applies. The underlying predicate is that there has to be probable cause that somebody is committing, about to commit, or planning to commit some kind of criminal act, a terrorism kind of act. It applies to two kinds of people: somebody who is either working for a foreign government or somebody who is working for a foreign terrorist organization."
Sen. Kyl (at right) elaborated that "That leaves a little loophole because there are some terrorists who are not on the membership list, shall we say, or who are not card-carrying members of a foreign terrorist organization or a foreign government; people such as Zacarias Moussaoui, for example, whom we now believe to have been loosely involved in the al-Qaida attack of September 11."
The FISA applies to surveillance of agents of foreign powers. The bill, as amended, would add to the definition "agent of a foreign power", which is codified at 15 U.S.C. § 1801, "any person other than a United States person, who ... engages in international terrorism or activities in preparation therefor".
Sen. Charles Schumer (D-NY), a cosponsor of the bill, also spoke in the Senate in support of the bill.
The Senate approved an amendment to the bill offered by Sen. Russ Feingold (D-WI) that expands the reporting requirements imposed upon the Department of Justice for its annual report to the Congress on FISA activities. The requirements are currently minimal. One of the new requirements is reporting the aggregate number of pen register orders pertaining to non U.S. persons.
The Senate rejected an amendment in the nature of a substitute offered by Sen. Dianne Feinstein (D-CA) by a vote of 35-59. See, Roll Call No. 145. It would have provided that "Upon application by the Federal official applying for an order under this Act, the court may presume that a non-United States person who is knowingly engaged in sabotage or international terrorism, or activities that are in preparation therefor, is an agent of a foreign power under section 101(b)(2)(C)."
Sen. Feinstein argued that the Kyl Schumer bill "drops a primary requirement for FISA warrants; that is, the individual or the target be agents of a foreign power." She further argued that her proposal "grants the court a presumption. So the FISA court may presume that a target is an agent of a foreign power, or the court may choose not to invoke that presumption. The bottom line is the court is given some discretion."
5/8. Securities and Exchange Commission (SEC) Chairman William Donaldson gave a speech in which he criticized internet media and cable networks for covering market activity "with all the shameful components more typical of the tabloids". Donaldson spoke in New York City to the Economic Club of New York.
He stated that "As the market boom intensified throughout the 1990's, the appetite for real-time reports of market activity and breathless stock analysis throughout the day grew beyond Wall Street and its professional observers. Savvy media entrepreneurs saw a golden opportunity and developed new information sources to augment the traditional business pages of newspapers around the country, delivering viewers the latest corporate news via the Internet and multiple 24-hour cable networks."
Donaldson (at right) continued that "When the news of scandals broke, these outlets reported them not only as business stories, but also as human interest stories with all the shameful components more typical of the tabloids: glamorous lifestyles, big bank accounts, intrigue, power and victimization. This only fueled the fire of broad-based American outrage with the business community."
He added that "Out of that outrage, a general disillusionment with Wall Street and corporate America developed and has continued to grow. In my view, such cynicism is a major threat to the long-term health and growth of our economy. Without the confidence and participation of mainstream America, our markets cannot resume their rightful and necessary place as the engine of American prosperity."
5/8. Rep. John Dingell (D-MI), Rep. Ed Markey (D-MA), Rep. Jose Serrano (D-NY), and Rep. David Obey (D-WI) wrote a letter to Federal Communications Commission (FCC) Chairman Michael Powell regarding its media ownership proceeding.
They asserted that the FCC's new rules will "substantially affect not only the degree of competition in the broadcast marketplace but also the level and quality of political discourse in our democratic society". The urged the FCC to "afford the public an opportunity to comment on a specific set of proposed changes to its present rules before it promulgates a final set of rules".
The letter also contains numerous written questions to be answered by the FCC. One series of questions pertains to the role of internet and cable news sources.
They wrote, "Your often stated rationale for eliminating or weakening the media ownership rules is the emergence of new communications media -- primarily cable and the Internet -- as sources of news and information. As you know, however, several non-FCC related studies indicate that the most watched network news broadcasts, the most popular cable channels and the most visited websites for news and information are all owned by the same handful of companies."
They then inquired, "(1) Is there an FCC-commissioned study that disputes that contention? (2) Does your analysis supporting any proposed changes treat the NBC broadcast network, the CNBC cable channel, the MSNBC cable channel, the CNBC website and the MSNBC website as five different sources of information or as one source with five different distribution outlets? (3) How does your analysis take into account the extent to which a source has local news coverage?"
The House will not meet. The Senate will meet at 2:00 PM, and will begin consideration of S 2, the Jobs and Growth Tax Act of 2003.
1:30 PM. The Consumer Federation of America (DFA) and the Consumers Union (CU) will hold a press conference regarding testimony that they will submit to the Senate Commerce Committee on May 13 regarding media ownership. See, notice. Location: 1424 16th Street, NW, Suite 604.
The House will meet at 12:30 PM for morning hour and at 2:00 PM for legislative business. It will consider several non tech related items under suspension of the rules. Votes will be postponed until 6:30 PM.
9:30 AM. The Senate Commerce Committee will hold another hearing on media ownership. The scheduled witnesses are Mel Karmazin (P/COO of Viacom), Jim Goodmon (P/CEO of Capitol Broadcasting Company), Frank Blethen (Publisher of the Seattle Times), William Singleton (VCh/CEO of Media News Group and Publisher of the Denver Post and Salt Lake Tribune), Victor Miller (Bear Sterns), Gene Kimmelman (Consumers Union). See, notice. Press contact: Rebecca Hanks at 202 224-2670 or Andy Davis at 202 224-6654. Location: Room 253, Russell Building.
10:00 AM. The Senate Banking Committee will hold a hearing on several pending nominations, including that of Greg Mankiw to be a Member of the President's Council of Economic Advisors. Location: Room 538, Dirksen Building.
The House will meet at 10:00 AM for legislative business. It will consider several non tech related items under suspension of the rules.
TIME? The House Science Committee will hold a hearing on cybersecurity research and development. The witnesses will include Arden Bement, Director of the National Institute of Standards and Technology (NIST).
Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its Notice of Proposed Rulemaking (NPRM) [MS Word] titled "In the Matter of Second Periodic Review of the Commission’s Rules and Policies Affecting the Conversion To Digital Television". This is MB Docket No. 03-15, RM 9832, and MM Docket Nos. 99-360, 00-167, and 00-168. See also, FCC release and notice in the Federal Register, February 18, 2003, Vol. 68, No. 32, at Pages 7737-7747.
The House will meet at 9:00 AM. It will consider HR 1527, the National Transportation Safety Board Reauthorization.
10:00 AM. The Senate Banking Committee will hold a hearing to examine the Fair Credit Reporting Act (FCRA) and issues presented by the re-authorization of the expiring preemption provisions. Location: Room 538, Dirksen Building.
10:00 AM. The House Judiciary Committee will hold a hearing on HR 1115, the Class Action Fairness Act of 2003. The hearing will be webcast. Press contact: Jeff Lungren or Terry Shawn at 202 225-2492. Location: Room 2141, Rayburn Building.
12:00 NOON. Stratton Sclavos, Ch/CEO of VeriSign, will speak at a Congressional Internet Caucus luncheon. RSVP to rsvp@netcaucus.org or 202 638-4370. Lunch will be served. Location: Mansfield Room (S-207), Capitol Building.
12:00 NOON. The Federal Communications Bar Association's (FCBA) Diversity Committee will host a brown bag lunch. The speakers will be Bill Bailey and Toni Cook Bush. RSVP to Harry Wingo at 202 418-1783 or hwingo@fcc.gov. Location: Room 253, Russell Building.
Extended deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its Notice of Inquiry (NOI) [MS Word] regarding "Additional Spectrum for Unlicensed Devices Below 900 MHz and in the 3 GHz Band". Unlicensed devices would include, among other things, 802.11. See, notice in Federal Register, January 21, 2003, Vol. 68, No. 13, at Pages 2730-2733. See also, story titled "FCC Announces Notice of Inquiry Re More Spectrum for Unlicensed Use" in TLJ Daily E-Mail Alert No. 566, December 12, 2002. For more information, contact Hugh Van Tuyl in the FCC's Office of Engineering & Technology at hvantuyl@fcc.gov or 202 418-7506. This is OET Docket No. 02-380. See, notice of extension [PDF].
5/8. The Senate confirmed John Roberts to be a Judge of the U.S. Court of Appeals for the District of Columbia Circuit. President Bush first nominated Roberts in 2001. However, the Democratic controlled Senate took no action. Bush reappointed Roberts in January of 2003. He is currently a partner in the Washington DC office of the law firm of Hogan & Hartson. See, HH bio and DOJ bio.
5/9. The Senate confirmed William Emil Moschella to be an Assistant Attorney General in charge of legislative affairs.

References: § 2511
 § 2510
 § 2510
 § 1030
 § 2510
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 § 438
 § 1801