Tech Law Journal Daily E-Mail Alert
March 28, 2002, 9:00 AM ET, Alert No. 398.
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Online Survey Shows Decrease in Collection of Information by Web Sites
3/27. The Progress and Freedom Foundation (PFF) released a report [92 pages in PDF] titled "Privacy Online: A Report on the Information Practices and Policies of Commercial Websites." It presents the results of a survey of web sites similar in methodology to previous surveys conducted by the Federal Trade Commission (FTC). The report found that compared to the year 2000, when the FTC last conducted a survey, web site operators are now collecting less personally identifying information, fewer are using third party cookies, and their privacy policies provide more information and are more accessible.
Collection of Personally Identifying Information. The PFF report found that "commercial Web sites are collecting less information than they were two years ago. Among the most popular domains, for example, the proportion collecting Personally Identifying Information ("PII") other than email fell from 96 percent to 84 percent; it fell from 87 percent to 74 percent for sites in the Random Sample."
3rd Party Cookies. The report also found that "the use of third party cookies to track surfing behavior across multiple Web sites, is also down significantly. The proportion of Web sites that utilize third party cookies fell from 78 percent to 48 percent for the most popular group and from 57 percent to 25 percent for the Random Sample."
P3P. The report found that "Although P3P enabled browsers were only available in late summer, and the adoption of the standard is not yet final, one quarter of the most popular domains and five percent of the random sample domains have already implemented this technology.
Seal Programs. The report found that "Privacy seal programs ... do not appear to be making major strides: the proportion of random sample sites displaying seals increased from eight percent to 12 percent, while the proportion in the most popular group was essentially unchanged."
Sharing of Information. The report found that "the percentage of the most popular sites that offer choice over sharing consumer information with third parties -- a key consumer concern -- jumped from 77 percent to 93 percent."
The FTC last issued a report to Congress on online privacy on May 22, 2000. Its report was titled "Privacy Online: Fair Information Practices in the Electronic Marketplace: A Federal Trade Commission Report to Congress." That report also recommended that Congress pass legislation to empower the FTC to pass rules requiring web sites to give notice of their information practices, to allow individuals to control how their data is used, to allow individuals to access and correct their data, and to require security measures.
Jeffrey Eisenach, of the PFF, suggested "that the market is responding to consumer concerns". However, he also pointed out that the FTC conducted its survey in 2000 at the peak of the technology boom, when companies tended to think that a database of personally identifying information had more value they they now believe that it does.
The report was written by William Adkinson, Jeffrey Eisenach, and Thomas Lenard. Ernst & Young conducted the survey upon which the report is based.
FTC Officials Comment on PFF Privacy ReportNews
3/27. Several Federal Trade Commission (FTC) officials spoke at the Progress and Freedom Foundation (PFF) event to release its report [PDF] titled "Privacy Online: A Report on the Information Practices and Policies of Commercial Websites." Chairman Timothy Muris, Commissioners Orson Swindle and Thomas Leary, and Consumer Protection Bureau Director Howard Beales all commended the report.
Muris stated that "these think tanks also are an important source of data for developing public policy." He said that he has yet to read the full results of the study, but "from the preliminary results that I see, it appears that there is continued progress towards the goal of protecting consumer privacy. These are real results that should have real benefits for consumers. These improvement are both good news for consumers, and exactly the type of market driven costs you would expect from a dynamic economy like ours."
However, he said that "despite these gains, industry should continue to improve". He also stated that "I hope to see the gains documented in the survey translated into marketing over privacy and information collection." Muris also cautioned that "having made these promises, industry must be sure they comply with them. Unfulfilled privacy promises will remain a top priority at the FTC."
FTC Bureau of Consumer Protection Director Howard Beales called the PFF report a "valuable perspective." He continued that "I think it is really kind of interesting to think about what you found here in the online world, compared to what we are seeing in the offline world of financial privacy notices. We still only have one round of Gramm Leach Bliley notices. But, round two is beginning. And, what we are looking at, in a sense, is a market driven privacy notice policy in the online world, and a regulation driven privacy policy approach in the offline world of financial privacy."
"It is online versus offline, and that may make some difference. Notice is somewhat easier. But, it will be very interesting to see whether in fact there is comparable levels of change in the notices and the privacy practices that we see in the financial sector, where it is regulated, rather than market," said Beales.
He also said that "we are seeing trends that are encouraging. But what is making the most encouraging thing about them, and again, we are seeing this a little offline as well, is what they indicate is that marketing based on privacy to try to convey information to consumers about what privacy practices really are. And if notices, whether online or offline are going to have a real impact, that is where it is going to have to come from, is from marketing based on what that notice has to say".
FCC Commissioner Orson Swindle said that "industry is competing with its competition based on good privacy practices." FCC Commissioner Thomas Leary stated that "I am content with our current posture ... we are in the mode now of retreating  somewhat from telling law makers what they ought to do."
Commissioners Swindle and Leary dissented from the FTC's recommendation in 2000 that Congress pass legislation to regulate online privacy. Commissioners Mozelle Thompson and Sheila Anthony, who were in the majority in 2000, did not speak at the PFF event on March 27.
Kolasky Addresses International Antitrust
3/22. William Kolasky, a Deputy Assistant Attorney General in the Antitrust Division of the Department of Justice, gave a speech titled "International Convergence Efforts: A U.S. Perspective" to the International Dimensions of Competition Law Conference in Toronto, Canada.
He discussed the International Competition Network (ICN), a framework for interaction and cooperation among government officials, private firms and non-governmental organizations that was begun last October.
He also addressed the relationship between the EU and the US. He stated that "In merger review and cartel enforcement, Washington and Brussels have, over the years, developed an excellent working relationship. This relationship has helped foster a considerable degree of substantive convergence, especially in how we define markets and how we evaluate the likely competitive effects of horizontal mergers. As a result, we have tended to reach similar conclusions on matters when we become fully engaged with one another on the analysis and we are working from a common set of facts." He added that "until last year in the GE/Honeywell case, neither of us had prohibited a merger over the other's objection."
He stated that "As cross border trade and investment grows, and as markets become increasingly global, there is real value in seeking to have competition authorities worldwide develop a common approach to common problems." He advocated the adoption of six principles: "Protect competition, not competitors. Recognize central role of efficiencies in antitrust analysis. Base decisions on sound economics and hard evidence. Acknowledge the limits to our predictive capabilities. Be flexible and forward looking. Impose no unnecessary bureaucratic costs."
He concluded that "one thing we have learned in the wake of GE/Honeywell is that ... there is a considerable gap in how we understand and apply these principles in practice, not just on mergers, but in the nonmerger area as well. We have, for example, identified at least five key areas where the EC approach seems to be significantly different from our approach: treatment of efficiencies, predatory pricing, fidelity rebates and bundled discounts, essential facilities, and monopoly leveraging."
FTC Official Addresses Spam and Online Fraud
3/27. Howard Beales, Director of the Federal Trade Commission's Bureau of Consumer Protection, spoke at a Cato Institute panel discussion on spam. He addressed the FTC's recent actions, and views, related to spam and online fraud.
Fraudulent and Deceptive E-Mail. He stated that the FTC is bringing civil enforcement actions where the e-mail itself is fraudulent and deceptive. He said that "As we surveyed the landscape on privacy, and tried to figure out what areas and what actions were most appropriate for the Federal Trade Commission, we focused most heavily on consequences. And one of the consequences of invasions of privacy is simply annoying intrusions -- the telemarketing call at dinner is one example, and unwanted spam is clearly another. In trying to think of what is the FTC's role in addressing that particular problem, we decided that we should focus on the cases that involve spam that is itself worthless. It doesn't raise any of the difficulties that legislation or regulatory proposals may raise. We are looking at spam where the message itself is fraudulent and deceptive."
He continued that "In those kinds of cases, it is fairly clear that nobody would like to get that kind of spam. It is fairly clear that it is illegal to send that kind of spam in the first place. But, there has never been any systematic attempt to go after it, until this program. The Commission has had in place for years a spam database. We are actually probably the only people in town who want spam. ... We use that flow to look for cases where the spam itself is deceptive, where the message itself has no value to anybody, as best we can tell, and to bring prosecutions in those cases."
Beales reviewed several cases recently brought by the FTC, and touched on some cases yet to be filed. For example, he said that "there are others that are in the pipeline that will be announced very shortly. ... One case involves a product very attractive to teen age boys. The spam says ``get one of these free by clicking here创. Four clicks latter, and you are on a pormo site. And it isn't free."
Removal from Spam Lists. Beales also stated that the FTC is currently studying claims by some spammers regarding removal from their spam lists. "We have also been very interested in looking at removal claims. One of the solutions for consumers, in some ways, is to ask to unsubscribe to lists that are out there. But, there is this myth, or report -- we don't know if it is a myth -- that is what we are trying to find out -- that if you click on ``remove me创 or ``unsubscribe创 what you actually do is confirm that the spammer has a valid email address, and that rather than being removed, what you get is more spam. Well, we went through a process of setting up ... hundreds of e-mail accounts ... to see what we get, and then unsubscribing to whatever we got, and seeing what happened. And we will have the results of that to announce fairly shortly. But, claims to remove me, when in fact either you don't get removed, or when in fact you get more spam, are very clearly deceptive. There is no question about that. And, cases that we would very much like to bring."
Spamming Tools. Beales also stated that "we are looking at cases that involve the sale of the tools of the spamming trade, if you will, involving bulk spammers -- people who sell e-mail lists with deceptive claims about how much everybody on that list would really like to get email from you, or that sell software to automate the process of sending spam with deceptive claims. But, we are looking at sort of the tools of the spamming trade, and trying to interrupt the commerce there, wherein that commerce is dependent on a deceptive claim."
Domain Blacklisting. Beales was asked about the FTC's views on blacklisting, or blocking, of e-mail domains. He responded that the FTC has no concerns about blacklists, unless someone is marketing such a list, and making fraudulent statements about the list.
Spam Related Legislative Proposals. Beales was also asked about legislative proposals that address spam. He said that one problem with legislating e-mail standards is that the fraudsters would not comply with the legislative requirements.
He said that "The biggest part of the spam problem in terms of the consequences it creates is the fraudsters. And, sadly, our experience is that this is a group of people that is pretty poor about playing by the rules. That leads -- a large chunk of the problem, that in many ways is the most objectionable chunk of the problem, unaffected because they simply won't comply. Partly, that is what we are trying to do, is to figure out whether we could enforce, whether it's that, or the underlying fraud prohibition in the first place. And I guess the second part of that problem is what we have seen about ``remove me创 of people thinking they can't click because if they do, they will get more spam. I don't know that the legislative solution of the required ``remove me创 really would address that."
The other speakers at the event were Rebecca Richards (TRUSTe), Chris Hoofnagle (Electronic Privacy Information Center), and Jerry Cerasale (Direct Marketing Association). Wayne Crew (Cato) moderated.
Campaign Act Challenged in Court
3/27. President Bush signed HR 2356, the "Bipartisan Campaign Reform Act of 2002" (BCRA), in Washington DC. He then flew to South Carolina and Georgia to raise money for Republican Senate candidates. See, White House release.
Later in the day, Sen. Mitch McConnell (R-KY) filed a complaint in U.S. District Court (DC) against the Federal Election Commission (FEC) and the Federal Communications Commission (FCC) challenging the constitutionality of the act. See, McConnell release.
The complaint states that "The BCRA limits and criminalizes speech and related activities touching on the widest range of public issues. In doing so, it dramatically extends the scope of the Federal Election Campaign Act of 1971 (FECA) and the Federal Communications Act of 1934 (FCA) in a manner that violates several provisions of the Constitution."
The complaint continues that "Central to the BCRA is its effort to regulate core political speech. When such speech, long and correctly viewed as entitled to the highest degree of First Amendment protection, is broadcast in the form of an issue advertisement on television or radio and merely mentions a federal officeholder or candidate in the months leading up to an election, it can be a crime, with penalties of up to five years in prison. If the BCRA had been in effect in 2000, criminal punishments could have been meted out simply for the sponsorship of ads urging a Member of Congress to vote yes or no on pending proposals to ... regulate speech on the Internet ... Not since the Alien and Sedition Acts, enacted in the earliest days of our Republic, could criminal sanctions be so easily incurred simply by engaging in such core political speech."
The attorneys who signed the complaint are Ken Starr (Kirkland & Ellis), Floyd Abrams (Cahill Gordon & Reindel), Kathleen Sullivan (Dean of the Stanford University Law School), Jan Baran (Wiley Rein & Fielding), and James Bopp (Bopp Coleson & Bostrom).
Bush Addresses Selection of Judges
3/27. President Bush gave a speech at a fundraising dinner in Atlanta, Georgia, for Rep. Saxby Chambliss (R-GA), who is running against Sen. Max Cleland (D-GA) for the Senate. One of the topics that President Bush addressed was judicial selection.
He stated that "There is no more fundamental issue than to making sure we have a judiciary of people that do not interpret the law from the bench; people who do not try to write law from the bench. People who interpret the law and not try to write it. And I put up a good man from Mississippi the other day. And I don't remember the senior senator from Georgia defending this man's honor. And we're going to have more fights when it comes to the judiciary. And I'm going to put strict constructionists on the bench. And I expect people in the United States Senate from a great state like Georgia to do what Zell Miller did, and stood up and defended the honor and integrity of Judge Pickering. And that's what Saxby Chambliss is going to do."
People and Appointments
3/27. Paul Jackson was named Deputy Director of the Federal Communications Commission's (FCC) Office of Legislative Affairs (OLA). He has been Acting Director and Acting Deputy Director of the Office of Legislative and Intergovernmental Affairs. Jackson has worked for Michael Powell since 1997. Before that, he worked in the Washington DC office of the law firm of O'Melveny & Myers. See, FCC release.
FCC Refunds Down Payments Made by NextWave Spectrum Reauction Winners
3/27. The Federal Communications Commission (FCC) issued an Order [PDF] in which it announced that it will refund a substantial portion of the down payments made by winning bidders in Auction No. 35 for licenses previously issued to NextWave and Urban Comm. See also, FCC release.
The 15 page order states that "This Order grants in part, and denies in part, a Joint Request for refund of down payments made by certain winning bidders ("Petitioners") in Auction No. 35. Petitioners seek a full refund of the down payments made for spectrum associated with licenses that had previously been issued to NextWave Personal Communications Inc., NextWave Power Partners Inc. (collectively "NextWave") and Urban Comm-North Carolina, Inc. ("Urban Comm")."
The order continues that the FCC "will refund to the payors of record a substantial portion of the monies on deposit for spectrum formerly licensed to NextWave and Urban Comm, but will retain an amount equal to three percent of the net winning bids for these licenses."
The order also states that the FCC "will maintain the pending status of the applications for these licenses. As discussed below, neither the Commission's determination to refund, in part, certain deposits nor the continued litigation associated with particular licenses relieves winning bidders of the obligation to pay their full bid amounts for licenses won in Auction No. 35. Should the Commission prevail in its ongoing litigation with NextWave, winning bidders in the auction will be required to either pay their full bid amounts or be subject to default payments."
NextWave obtained spectrum licenses at FCC auctions in 1996. The FCC permitted NextWave to obtain the licenses, and make payments under an installment plan, thus creating a debtor creditor relationship between NextWave and the FCC. NextWave did not make payments required by the plan, and filed a Chapter 11 bankruptcy petition. The FCC cancelled the licenses. It then proceeding to re-auction the disputed spectrum. The U.S. Court of Appeals (DCCir) ruled in its June 22, 2001, opinion that the FCC is prevented from canceling the spectrum licenses by  525 of the Bankruptcy Code. The Supreme Court has granted the FCC's petition for writ of certiorari.
Thursday, March 28
Passover begins.
The House and Senate are both in recess for the Spring District Work Period. Both bodies will return on Monday, April 8.
12:15 PM. The FCBA's Young Lawyers Committee will host a brown bag luncheon. The topic will be "Putting the ``Mass创 Back in Media -- A First Amendment Right to Bulk Up." The speaker will be Paul Gallant, Special Advisor to Kenneth Ferree, Bureau Chief of the Cable Services Bureau, and a member of the Media Ownership Working Group. RSVP to rwallach @willkie.com. Location: Willkie Farr & Gallagher, 1155 21st Street, NW (between L & M), 6th Floor.
4:00 PM. John Duffy (Marshall Wythe School of Law) will give a lecture titled "The Puzzling Persistence of the Ideal of Marginal Cost Pricing in the Economic Analysis of Patents". For more information, contact Robert Brauneis at rbraun @main.nlc.gwu.edu or 202 994-6138. Location: George Washington University Law School, 2000 H Street, NW.
Deadline to submit comments to the FCC regarding ways to improve its electronic licensing systems. See, FCC notice [PDF].
Friday, March 29
Good Friday.
The Library of Congress's THOMAS web site will be unavailable from 6:00 AM to 1:00 PM due to system testing.
Extended deadline to submit public comments to the FTC regarding the use of disgorgement as a remedy for competition violations, including those involving the Hart Scott Rodino (HSR) Premerger Notification Act, FTC Act, and Clayton Act. See, original FTC release and Federal Register notice, and FTC release and Federal Register notice extending deadline from March 1 to March 29.
Deadline to submit comments to the FTC regarding proposed new Privacy Act system of records. This system, if adopted, would include telephone numbers and other information pertaining to individuals who have informed the Commission that they do not wish to receive telemarketing calls. See, notice to be published in the Federal Register.
Monday, April 1
The Supreme Court of the U.S. will go on recess until Monday, April 15.
The USTR will hold a hearing regarding negotiation of a U.S. Singapore Free Trade Agreement. The USTR stated in its notice in the Federal Register that the agreement is "expected to include provisions on trade in services, investment, trade related aspects of intellectual property rights, competition, government procurement, electronic commerce, trade related environmental and labor matters, and other issues." See, Federal Register, Vol. 67, No. 40, at pages 9349 - 9351.
10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Philip Jackson v. Casio PhoneMate, No. 01-1456, a patent infringement case involving telephone answering machines. The U.S. District Court (NDIll) granted summary judgment to Casio. Location: Courtroom 201, LaFayette Square, 717 Madison Place, NW.
EXTENDED TO APRIL 22. Deadline to file reply comments with the FCC in response to its notice of proposed rulemaking (NPRM) regarding the appropriate regulatory requirements for incumbent local exchange carriers' (ILECs') provision of broadband telecommunications services. The FCC adopted this NPRM at its December 12 meeting. This is CC Docket No. 01-337. See, notice in the Federal Register. See, Order [PDF] extending deadline to April 22.
Deadline to submit written requests to participate as a panelist in the workshop to be hosted by the FTC on May 16 and 17 to explore issues relating to the security of consumers' computers and the personal information stored in them or in company databases. See, notice in Federal Register.
Tuesday, April 2
10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Netscape Communications v. Allen Konrad, No. 01-1455. Location: Courtroom 201, LaFayette Square, 717 Madison Place, NW.
Wednesday, April 3
12:15 PM. The FCBA's International Practice Committee will host a brown bag lunch. The speakers will be Tom Tycz (Chief of the FCC's International Bureau's Satellite Division), James Ball (Chief of the FCC's International Bureau's Policy Division), and Kathryn O'Brien (Chief of the FCC's International Bureau's Strategic Analysis and Negotiations Division). RSVP to Laurie Sherman at 202 223-7365 or Patricia Paoletta at 202 719-7532. Location: FCC, 445 12th Street, SW, Conference Room 6-B516.
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