The Looming Liability of ISPs

Internet service providers (ISPs) are traditionally protected under the Digital Millennium Copyright Act’s (DMCA) section 230 safe harbor for most copyright infringements committed by a user of their service. There are several stipulations that ISPs have to follow in order to get the safe harbor, one of which is to have a “repeat infringer” policy. This policy encourages ISPs to terminate services to users who use the services to repeatedly infringe another’s copyright. The statute lacks a definition of “repeat infringer,” and it is unclear exactly who decides when services should be terminated. BMG v. Cox Communications, decided in November 2014, dealt with this issue. BMG, through their third party RightsCorp, sent millions of notifications to Cox informing it that users were using its service to illegally download BMG’s music. Cox ignored the notifications and did not terminate its users’ Internet services. The judge found this was enough to push Cox out of the safe harbor, and a federal jury found Cox liable for $25 million in damages. Cox’s appeal is currently up in front of the 4th Circuit, and its decision could have a major impact on the way ISPs and rights holders interact. Cox (and supporters like the Electronic Frontier Foundation) are arguing that the decision is an unprecedented shift of power to rights holders like BMG. Not only can BMG charge a user individually for copyright infringement, but it can also force an ISP to terminate the user’s Internet connection. With the ever growing importance of the Internet, termination is a very serious consequence, one that should not be taking lightly. ISPs will have to work...

Big Data and the Fall of Personally Identifiable Information

There has been no shortage of “Big Data” based start-ups in the last decade, and that trend shows no sign of slowing down. As computing power and sophistication continues to increase, the ability to process large sets of information has led to increasingly pointed insights about the sources of this data. Take Target for example. When you pay for something at Target using a credit card, not only do you exchange your credit for physical goods, you also open a file. Target records your credit card number, sticks it to a virtual file and begins to fill that file with all sorts of information. Your purchase history is recorded: what you buy, when you bought it, how much you bought. Every time you respond to a survey, or call the customer help line or send them an email, Target is aware. Anytime you interact with Target, the data and meta-data that characterize that interaction are parsed carefully and stored as Target’s institutional knowledge. But it doesn’t end there. As diligent as Target may be in monitoring your interactions, there will inevitably be holes. But fear not! Instead of settling for an inadequate picture of who you are, Target can just buy the rest of it from the other people you do business with. “Target can buy data about your ethnicity, job history, the magazines you read, if you’ve ever declared bankruptcy or got divorced, the year you bought (or lost) your house, where you went to college, what kinds of topics you talk about online, whether you prefer certain brands of coffee, paper towels, cereal or applesauce, your political leanings,...

FCC Aims to Flex Muscle to Remove State Barriers to Municipal Internet

On June 10, 2014, FCC Chairman Tom Wheeler published an op-ed championing municipality-funded broadband. Noting Chattanooga, Tennessee’s past as a 19th century railroad boom town, he juxtaposed the city’s history with its recent decision to fund its own gigabit-per-second infrastructure: “Chattanooga’s investment has not only helped ensure that all its citizens have Internet access, it’s made this mid-size city in the Tennessee Valley a hub for the high-tech jobs people usually associate with Silicon Valley. Amazon has cited Chattanooga’s world-leading networks as a reason for locating a distribution center in the area, as has Volkswagen when it chose Chattanooga as its headquarters for North American manufacturing. Chattanooga is also emerging as an incubator for tech start-ups. Mayor Berke told me people have begun calling Chattanooga “Gig City” – a big change for a city famous for its choo-choos.” Mr. Wheeler then delivered his punchline: “I believe it is in the best interests of consumers and competition that the FCC exercises its power to preempt state laws that ban or restrict competition from community broadband. Given the opportunity, we will do so.” Fast-forwarding to the present, Chairman Wheeler just announced on Monday that he is circulating a proposed Order to his fellow FCC commissioners encouraging FCC preemption of state laws that stymie municipality-sponsored broadband projects via its granted authority under Section 706 of the Communications Act. The announcement comes a few weeks after President Obama himself pushed for increased support of community internet, with the White House publishing a detailed policy report extolling its virtues. Proponents applaud the move as facilitating the growth of high-speed internet in communities where major...

Will federal legislation make consumers’ private information safer?

After JP Morgan’s computers were penetrated in the early summer of 2014 by hackers, exposing the personal information of the firm’s customers, the firm did not disclose the breach until late in the summer.[1] Over 76 million customers’ contact information—phone numbers and email addresses—were stolen.[2] The Connecticut and Illinois Attorney Generals started scrutinizing JP Morgan’s delayed notification to their customers that their contact information was obtained by hackers, taking issue with the fact that JP Morgan “only revealed…limited details” about the extent of the breach.[3] Both attorneys general are assessing whether JP Morgan complied with their state privacy laws—mainly their state’s data breach notification laws. With the size of JP Morgan and with 76 million customer information breached, it is safe to assume that residents of Connecticut and Illinois were not the only ones whose personal information was compromised. Data breach has become a big issue not only for JP Morgan, but for many other companies. The same hackers who breached JP Morgan’s security wall attempted to get customer data from Deutsche Bank, Bank of America, Fidelity and other financial institutions.[4] Hackers breached Target and Home Depot’s customer credit information, taking 40 million of Targets’ customer credit card information and 56 million of Home Depot’s customer credit card information.[5] Data breach and data lost seem to be inevitable, whether it is through someone working internally for an organization—à la Edward Snowden—or through hackers— like in the case of JP Morgan, Home Depot and Target. Regardless of how data is lost, there is a need to evaluate the best approach in notify a consumer when someone else obtain a consumer’s...

Gas, Electric, Water, and…Internet?

In the midst of the battle for the future of the Internet, President Barack Obama has made his allegiance clear. Obama released a statement on November 10th urging the FCC to adopt new regulations that would treat the Internet like a utility in order to preserve a “free and open internet.” The President’s plan endorses an idea that has become popularly known as “net neutrality.” Proponents of net neutrality claim that it would prevent Internet service providers (ISPs) from picking winners and losers online, which they claim would effectively destroy the open Internet. In his recent statement, Obama outlined several bright line rules which would prevent ISPs from blocking content from customer access, prohibit throttling, increase transparency, and forbid paid prioritization. In order for the FCC to accomplish these goals, President Obama advised that the Commission must adopt the strictest rules possible, which would require broadband service to be treated as a public utility. Opponents of President Obama’s plan argue that treating the Internet like a utility would slow innovation and raise costs, equating the potential FCC regulations to “micromanagement.” Many who oppose the plan argue that the move would increase bureaucracy and cause inefficiency; rather than add it to the list of government-controlled infrastructure, they believe that the open market is the best method of meeting consumer needs. Classifying the Internet as a utility would entail treating ISPs as common carriers, which are governed by Title II of the 1934 Telecommunications Act. Currently, ISPs are classified as information services. Section 706 of the 1996 Telecommunications Act, which governs the FCC’s oversight of broadband services provided by ISPs, grants...

The Broader Benefit of Benefit Corporations

Ello, an ad-free social network, recently closed another round of venture funding, raising $5.5M. Exciting right? Another social media start-up getting some Series A funding. While $5.5M is surely nothing to sneeze at, perhaps the more interesting feature of this next stage of Ello’s life is that it’s registered itself as a public benefit corporation, enshrining in its corporate charter as a “public benefit” that it will never show ads or sell user data. To date, 27 states have enacted legislation recognizing “Benefit corporations,” entities that give directors legal protection to pursue social and environmental goals over maximizing investor returns. According to benefitcorp.net, a defining characteristic of benefit corporations is that “they are required to create a material positive impact on society and the environment.” One of the largest early adopters of the benefit corporation form was outdoor clothing and gear company Patagonia. In doing so, Patagonia sought a structure that would prevent shareholders from suing it in the pursuit of costly environment initiatives, such as donations to environmental organizations and support of renewable energy sources, that allowed it to serve the welfare of the global community. Warby Parker, with its initiatives ranging from staying carbon neutral, to providing lost cost eyewear to those in need, and even sponsoring a local Little League team, similarly sought the insulation of its directors through the benefit corporation structure. In both examples, the benefit corporation produces a direct, measurable and concrete positive impact on their communities and the environment. Ello’s election to benefit corporation status brings with it a tweak to what we’ve seen so far. Even though Ello has registered as...