Monthly Archives: September 2011
Lawsuit Filed over New FCC Internet Rules
Free Press, a non-profit media reform advocacy group, has filed a lawsuit in Federal Court over what they consider an arbitrary distinction between wired and wireless internet access contained in the Federal Communications Commissions new Open Internet regulations (also known as “Net Neutrality). This may seem like an arbitrary distinctions, but its purpose is primarily to open the door to challenge several other aspects, namely whether or not the FCC itself has the authority, under the 1934 Communications Act, to regulate how Internet Service Providers manage their assets and transactions.
The “Open Internet” Regulations, which go into affect on November 20, is outlined in the 155 page document “Preserving the Open Internet“. Here is its synopsis:
I. PRESERVING THE FREE AND OPEN INTERNET
In this Order the Commission takes an important step to preserve the Internet as an open
platform for innovation, investment, job creation, economic growth, competition, and free
expression. To provide greater clarity and certainty regarding the continued freedom and
openness of the Internet, we adopt three basic rules that are grounded in broadly accepted
Internet norms, as well as our own prior decisions:i. Transparency. Fixed and mobile broadband providers must disclose the network
management practices, performance characteristics, and terms and conditions of their
broadband services;
ii. No blocking. Fixed broadband providers may not block lawful content, applications,
services, or non-harmful devices; mobile broadband providers may not block lawful
websites, or block applications that compete with their voice or video telephony
services; and
iii. No unreasonable discrimination. Fixed broadband providers may not unreasonably
discriminate in transmitting lawful network traffic.
We believe these rules, applied with the complementary principle of reasonable network
management, will empower and protect consumers and innovators while helping ensure that the
Internet continues to flourish, with robust private investment and rapid innovation at both the
core and the edge of the network. This is consistent with the National Broadband Plan goal of
broadband access that is ubiquitous and fast, promoting the global competitiveness of the United
States.
Sounds good right? These are a set of principled goals created with the intention of allowing everyone equal access to the internet if they sign up for a service. Opponents of “Open Internet”argue that the government does should not regulate what corporations, businesses, and individuals etc., do lawfully on the internet. They argue that this is a first step encroachment by Big Government into the free market aspect of both internet access and internet activity. Legally their argument questions whether or not the FCC is authorized under the Act to regulate how Businesses providing Internet access, conduct their business activities. Why? Because Congress never amended the Act to give the FCC the authority to regulate business practices.
In an attempt to avoid political fallout over the volatile issue of Net Neutrality, Congress punted the question to the FCC and had them try to figure it out for themselves. In 2010, Comcast successfully used that argument in Federal Court when the FCC issued a cease and desist order attempting to force Comcast to limit bandwidth to users downloading possibly copyrighted video using BitTorrent. It could be argued that the law in this case is a double edged sword; if the FCC cannot force a privately owned internet service provider to limit bandwidth, it then cannot force a privately owned internet service provider to “not” limit ban bandwidth.
The Issues addressed in the lawsuit are contained on Page 32 of the document, where it draws a distinction between broadband or “wired” internet access and mobile, or “wireless” internet access. Free Presses Petition for review can be viewed here.
Illinois “Amazon Tax” Not Producing Revenue “Results”
My home state of Illinois is in a debt crisis. This past May they passed the “Amazon Tax”, in an effort to increase revenue. It did not have the desired results, revenue has not increased nearly to the $150,000,000 that was forecast by those in favor of the legistlation. In fact it had the opposite result, businesses are leaving Illinois because of the Tax. From Crain’s Chicago Business:
Getting Internet retailers to collect sales taxes from customers doesn’t look any more promising. A pair of local websites that channel orders from Amazon.com Inc. and Overstock.com Inc. recently left the state, circumventing a new Illinois law that would have used them as a conduit to tax sales by the giant online retailers. Without Amazon, Overstock and others on board, it’s going to be tough to make a dent in the uncollected taxes….
CouponCabin and its employees departed River North for Whiting, Ind. Rockton-based FatWallet moved a few miles north to Beloit, Wis., in April, a spokesman says. Each employs fewer than 100 people.
“We don’t get much from affiliates, less than 10% of our business,” says Jonathan Johnson, president of Salt Lake City, Utah-based Overstock.com, which sells excess merchandise at a discount. “But it would have meant all of our sales in Illinois would have been subject to tax. We don’t want to be the sales tax collector, so we just terminate the affiliates.”
“If the goal is to increase revenue, it fails,” Mr. Johnson adds. “We don’t pay the tax, and good businesses employing people in Illinois and paying income tax leave for neighboring states.”
California Compromises on Amazon Tax Law
Mercury News is reporting that the California Legislature has passed a compromise concerning the “Amazon.com Tax”. To summarize, the “Amazon.com tax” was an attempt by California and other state legislatures to collect sales tax on purchases on the internet. The problem is that it is unconstitutional for states to collect taxes on a business that doesn’t have a “presence” in that state. States have attempted to side step this issue by stating that a company has “presence” if they contract with “affiliates”. In California, Amazon cut ties with some 10,000, affiliates, potentially costing thousands of jobs, due to the tax. I have written extensively about the constitutional issues here on Ask A Cyber Lawyer, in the post “Texas Amazon Law, and the Dubious Click-thru Nexus“
Amazon.com has also decided to take legal action by both calling for a referendum on the Amazon Tax, and attacking the law’s constitutional status. Now it seems, California is backing off, by agreeing to not collect taxes vis-a-vis the Amazon.com Tax, for a one year, while they wait-and-see if and how Congress will address the issue. From the Mercury News:
The bill gives Amazon at least a year before it has to begin collecting sales taxes from its customers and paying the state roughly $200 million a year. In return, Amazon backed down from its threat to place a referendum on the ballot to repeal a law that required the online retailer to pay taxes.
Traditional retailers were jubilant that Amazon would be held to the same taxation standards as them.
“Passage of e-fairness legislation in California should send a message to every other state in America and the federal government that we must stand by our small businesses as they are the engines for job creation and economic growth in our communities,” the California Retailers Association said in a statement.
The group has maintained that by refusing to collect sales taxes, Amazon had an unfair advantage over California businesses that do.
The agreement will bring thousands of jobs and hundreds of millions of investment dollars to California, and “tens of thousands of California-based advertising affiliates” will be welcomed back, said Paul Misener, Amazon vice president for global public policy….
Amazon has until July 31, 2012, to see if it can spur congressional action for a federal fix — to avoid having to deal separately with all 50 states. If Congress passes an Internet taxation law, it would supersede Amazon’s agreement with California. But if there is no congressional action, Amazon would begin paying California taxes on Sept. 15, 2012.
The wait and see approach is a start, but since other states have passed the “Amazon.com Tax” the constitutional issues still remain.
QUESTION: Three Questions on Illegal Downloading
A Reader from Colorado writes via email:
Dear Ask a Cyber Lawyer:
I have three questions on illegal downloading.
Q1: How do prosecutors prove illegally downloaded files are actually what their name says they are? For example, couldn’t BEATLESSONGNAME.MP3 be a garbage file? In which case no infringement occurred…
Q2: HOW do they know you downloaded? If they share to you, aren’t they also sharing?
Q3: If you only have part of a file, is it still illegal? If so, why?
Q1) Digital forensics rarely uses filenames as far as evidence is concerned aside of making it “human readable” for consumption by juries. If they have access to the file, they can simply play it. In file sharing cases, there is nothing preventing law enforcement or the RIAA (and friends) from accessing what you offer for download and playing it themselves.What is typical done with digital evidence is creating what is called a “cryptographic hash” of the file. This basically uses a complex mathematical formula to create a unique string of letters and numbers that shows the content of the file is unchanged. The mathematical formula is designed so that very small changes create very big differences in the hash value. Using this method, you can have a high-degree of confidence of what contents of a file (assuming you have a table) without having to worry about the filename. For instance, child pornography is usually archived by hash values by federal law enforcement and authorities can usually pinpoint a given picture to not only the victim, but the time and place of the assault.
Q2) The typical pattern of file sharing prosecutions or civil litigation is not to do “entrapment” (i.e. setting up a sharing site of their own and nailing everyone who downloads), but to find a hub of file sharing and see who is using it. This can be done a variety of ways from standard discovery or a wiretap order. If they have a wiretap order, they can simply see who connects to the fileshare, identify them, and go after them. If I worked for the RIAA (and I never will), wiretapping would be the primary tool I would use. (Under the provisions of the Patriot Act, a wiretap order is fairly easy to obtain)
Q3) That depends. It’s analogous to having “part” of a book. There is no bright-line between how much of a book you can use where fair-use becomes copyright infringement. I would imagine if you created 20-30 second cuts of a music file to distribute as ring tones (especially if you charged), then you could be liable for infringement. If you download a couple of random “blocks” of a music file that is unusable, I’m not sure that’s infringement. The two biggest things that get someone into trouble with copyright infringement is distribution and trying to “sell” content. If you aren’t doing one of those two things, you are “probably” ok. (I concur with this generally as a rule of thumb, that this would fall under fair use, just make sure that the clip is only a small portion of the entire song, especially if the track is short. The Beatles “Her Majesty” is only 23 seconds, so a 30 second clip would be the whole song and then some. This would not fall under fair use. However, no matter how long the song is, don’t use more than 30 seconds)
Disclaimer: It is difficult to dispense comprehensive legal advice on the internet. If you find the information on this site interesting and insightful, great. But before you rely on any of this advice, please consult a legal professional with the specific details of your case or controversy.
QUESTION: Can I be sued for what I post on Yelp?
A Reader asks via email:
Dear Ask a Cyber Lawyer:
I recently had a routine checkup by a local dentist whom I will not name. During the cleaning, the dentist cut up the gum on a molar causing pain and an exposed nerve. I want to tell everyone about my experience on Yelp.com, and give a negative review. If I give a negative review I be sued by the dentist?
Amazingly enough, if you post a negative review on Yelp, you can get sued. It is pretty easy to construct a lawsuit for defamation or for interference with business. However, a better question is “Will I get sued?”, and the answer to that is almost clearly a resounding “No”. Why? Because the person suing you is likely to lose, and in most states, they are likely to lose even before it is heard by a judge. In those states, the Plaintiff will then have to pay the defendant’s legal fees.
I actually wrote a blog post about this very subject a few months ago, and in that post, the plaintiff was a dentist.
Here is the situation. The type of suit the Dentists office would attempt to file is called a Strategic Limitation Against Public Participation or SLAPP suit. These are usually in the form a a claim of defamation, invasion of privacy, or unfair business practices. What happens is the defendant will legitimately criticize the plaintiff in the public forum. The plaintiff will then sue the defendant, knowing full well they will probably lose in the long run. If they are going to lose, why sue? They sue to shut up the defendant. Lawsuits are expensive to defend, so they know that the mere filing of a lawsuit will induce a settlement by which the defendant will sign a non-disclosure or non-disparagement settlement just to avoid the cost of defending the lawsuit.
To combat this, a majority of states have enacted an Anti-SLAPP legislation which are designed to make SLAPP suits, easy and cheap to defend, and costly to pursue. The way this is done is the defendant files a motion stating that the speech was constitutionally protected. If the judge accepts the motion, the burden shifts to the plaintiff to prove that the speech was somehow NOT constitutionally protected. If the plaintiff cannot do this, then the case is dismissed immediately and the plaintiff has to pay the defendants legal fees.
So far 30 states have enacted anti-SLAPP legislation, and a majority of the remainder have some sort of proposed anti-SLAPP legislation.
James Skyles
