The federal government is poised to implement new, stricter consumer consent rules designed to “further reduce the opportunities for telemarketers to place unwanted or unexpected calls to consumers.” The rules will apply to all companies in the U.S. who contact their customers through short-messaging service (“SMS” also known as “text messaging”). The new text consent rules go into effect October of 2013 and will be enforced through the federal court system, both by class-action attorneys, the Federal Trade Commission (FTC), and state attorneys general.
The new rules will have a considerable impact on any individual, company, or industry engaged in commercial SMS marketing. Under the original consent rules, established in 1992, text message recipients implied consent to receive commercial message simply by volunteering a phone number at the point of sale. The new rules will soon require companies and individuals to establish a paper trail that shows SMS recipients provided prior express written consent to receive text messages. Other important changes include time-of-day restrictions and opt-out requirements.
The decision leaves numerous legal questions unresolved. Courts in California are considering a “common carrier” exception to the prior express written consent rule, and companies have petitioned the Federal Communications Commission to make the exception official. The outcome on a major class-action lawsuit will turn on this exception, which should also have an impact on compliance requirements for companies across the U.S.
If your company is considering compliance strategies, considering how best to adjust to the new SMS spam rules or has been sued in a TCPA SMS spam class action lawsuit, please contact us or review a summary of our TCPA practice area.
***Update*** On March 13, 2013 Plaintiffs filed a First Amended Complaint in their class action lawsuit against Wise Media. The First Amended Complaint added additional victims of Wise Media’s misconduct as plaintiffs to the lawsuit. Moreover, the First Amended Complaint also added multiple mobile service aggregators as defendants to the lawsuit. The First Amended Complaint alleges that Wise Media used these aggregators to assist Wise Media in imposing unauthorized charges on consumers’ phone bills. Specifically, even though these aggregators were aware of Wise Media’s unlawful conduct, they provided material assistance to Wise Media. The case has been reassigned to the Honorable William Alsup of the United States District Court for the Northern District of California (San Francisco). ***Update***
The law firm of Kronenberger Rosenfeld, LLP filed a class action lawsuit against Wise Media, LLC and Mobile Messenger on October 4th 2012. John Roddy of the law firm of Bailey & Glasser also represents plaintiffs.
The class action complaint alleges that Wise Media, a limited liability company operating out of Grayson, Georgia, and Mobile Messenger Americas, Inc., a globally-prominent aggregator, mobile enabler and content messaging supplier, violated federal telephone consumer protection laws with a scheme to send unsolicited commercial texts to consumers’ cell phones, without the consumers’ knowledge or consent. The complaint further alleges that Wise Media and Mobile Messenger then committed theft by enrolling consumers in a variety of different monthly subscription plans for “flirting tips” and “horoscope updates,” and charging the consumers $9.99 per month through their cell phone carriers. Finally, the complaint alleges that Wise Media and Mobile Messenger violated California laws by engaging in unlawful, unfair, and fraudulent business practices. All of this conduct, the complaint alleges, was undertaken without the consumers’ knowledge or consent.
The complaint was filed in the Northern District of California on October 4, 2012 and has been assigned to the Honorable Laurel Beeler. The lawsuit includes claims for violation of the Telephone Consumer Protection Act, conversion, California Business and Professions Code section 17200, and intentional interference with contracts.
Specifically, the complaint alleges that Wise Media and Mobile Messenger enroll consumers in subscription plans with titles such as “Love Genie Tips,” “Horoscope Genie,” “Long Life Love Tips,” “Gossip Rage,” “Diet Tipz,” and “Love Tips 4 Life.” Plaintiffs believe that the unsolicited texts sent by Wise Media and Mobile Messenger are associated with the following “short codes” (the number from which the texts are sent): 83660, 27140, 84930, 72139, 56614, 42639, and 78149. If you have received text messages from these numbers and believe that you may be a victim of unlawful text spamming, please contact us.
New spam case law in California is reshaping how many advertisers and publishers do business. Specifically, new case law has allowed spam plaintiff’s lawyers to argue that senders need to disclose their identities within the “from line” of emails, and that the use of “WHOIS privacy” services can violate California statute.
The court in the recent California appellate decision Balsam v. Trancos, 203 Cal. App. 4th 1083 (2012), generally ruled that email header information can be “misrepresented” under the California spam law due to a publisher’s failure to identify itself in the email, in the WHOIS record or in any source easily used by a recipient. Trancos references the reasoning of the California Supreme Court in Kleffman v. Vonage Holdings Corp. 49 Cal. 4th 334 (2010), by pointing out that in Kleffman all of the sending emails were related to domain names that “actually exist and are technically accurate, literally correct, and fully “traceable” to the advertiser’s marketing agents in Nevada—thus, in Kleffman, the header information was not “misrepresented” under the California spam law statute. While the court in Trancos also pointed out that, under Kleffman, the actual name of the sender need not appear in the “From” line of the email, under the statute, the court still held that the email must be “traceable” to the sender in order to comply with the statute.
The court in Trancos continued its analysis of this niche of California’s spam law by citing Gordon v. Virtumundo, Inc., 575 F.3d 1040 (9th Cir.2009), for the principle that senders with domain names with WHOIS records that accurately identify the sender, its physical address, and other contact information, do not violate the Washington spam law. The Trancos court partially adopted the Gordon standard by stating that a domain name is “traceable” to a sender if the WHOIS database contains the “identity and physical address” of the sender. While the Trancos court makes no reference about requiring email, phone or fax information in the WHOIS database, the court did create a standard that privately registered domain names used to send unsolicited commercial emails can support an argument that such emails violated the California spam law.
To summarize, under Trancos, which is the most recent California state court appellate decision addressing what contact information a publisher must disclose under California’s spam law, a publisher must send from an “accurate and traceable domain”; –i.e. a domain name with a WHOIS record that contains the business name and a business postal address.
The law firm, Kronenberger Rosenfeld, filed a class action lawsuit against Wise Media, LLC, and Mobile Messenger Americas, Inc. alleging unlawful text spamming.
The class action complaint alleges that Wise Media, a limited liability company operating out of Grayson, Georgia, and Mobile Messenger Americas, Inc., a globally-prominent aggregator, mobile enabler and content messaging supplier, violated federal telephone consumer protection laws with a scheme to send unsolicited commercial texts to consumers’ cell phones, without the consumers’ knowledge or consent. The complaint further alleges that Wise Media and Mobile Messenger then committed theft by enrolling consumers in a variety of different monthly subscription plans for “flirting tips” and “horoscope updates,” and charging the consumers $9.99 per month through their cell phone carriers. Finally, the complaint alleges that Wise Media and Mobile Messenger violated California laws by engaging in unlawful, unfair, and fraudulent business practices. All of this conduct, the complaint alleges, was undertaken without the consumers’ knowledge or consent.
The complaint was filed in the Northern District of California on October 4, 2012 and has been assigned to the Honorable Laurel Beeler. The lawsuit includes claims for violation of the Telephone Consumer Protection Act, conversion, California Business and Professions Code section 17200, and intentional interference with contracts.
Specifically, the complaint alleges that Wise Media and Mobile Messenger enroll consumers in subscription plans with titles such as “Love Genie Tips,” “Horoscope Genie,” “Long Life Love Tips,” “Gossip Rage,” “Diet Tipz,” and “Love Tips 4 Life.” Plaintiffs believe that the unsolicited texts sent by Wise Media and Mobile Messenger are associated with the following “short codes” (the number from which the texts are sent): 83660, 27140, 84930, 72139, 56614, 42639, and 78149. If you have received text messages from these numbers and believe that you may be a victim of unlawful text spamming, please contact us.
In a recent internet law case, a company recently brought a defamation claim against two business school professors for defamation based on statements published on the professors’ blogs. The professors moved to dismiss the defamation claim, arguing that their blogs contained opinions and not statements of fact. The court denied the defendants’ motion to dismiss, finding that the statements on the blogs were capable of defamatory meaning and were not protected as opinions.
The plaintiff, Zagg, Inc., is a publicly traded company that specializes in the production, marketing, and distribution of consumer electronic accessories. Defendants are business school professors and co-authors of a blog about business and accounting. Defendants published an article on their blog called “Don’t Gag on Zag, “ which contained the following statements, among others, which the defendants alleged were false and defamatory:
“The numbers are giving off so much smoke that we think management may have blinded both the auditors and investors.”
“At worst, management may be ‘cooking the books.’ “
“Still not convinced that ZAGG management is massaging the numbers? Maybe the following will make the hairs on the back of your neck stand up.”
“This is a financial reporting debacle in the making.”
Based on these statements, Zagg filed a complaint alleging claims against the Defendants for defamation.
The court first found that the statements at issue were not merely nettlesome or embarrassing, but rather were capable of damaging Zagg’s reputation. The statements directly impeached Zagg’s honesty and even implied criminality. The court next noted that even statements of opinion are actionable when the underlying facts implied by the opinions are not protected. Thus, the court found that the statements at issue were not protected opinion because they implied false numbers, fraudulent activity, and criminality. Thus, the court denied the defendants’ motion to dismiss.
ZAGG, Inc. v. Catanach, No. CIV.A. 12-4399 (E.D. Pa. Sept. 27, 2012)
Most people know about Google’s Street View project, and many people have even seen Google’s cars, with large cameras mounted onto their roofs, driving around their neighborhoods. Google uses those cars to snap images of the street, which are then used in Google Maps to provide panoramic views of streets around the world in Google Maps. What many people never realized was that Google’s cars were also equipped with software, which according to the official FCC report released April 30, 2012, collected “names, addresses, telephone numbers, URLs, passwords, e-mail, text messages, medical records, video and audio files, and other information” from “open” (i.e., non-encrypted and non-password protected) WiFi networks. Google’s data collection practices have become a source of concern for the FCC and present a new frontier of debate in Internet Law.
Upon learning about this data collection, the FCC began investigating Google’s conduct. However, the investigation answered few questions, and ultimately, the FCC declined to take any enforcement action against Google for violations of Section 705(a) of the Communications Act of 1934, which prohibits a person from using an intercepted radio transmissions and communications, due to a lack of evidence.
In large part, this lack of evidence resulted from Google’s refusal to produce requested documents and information. Among other things, the Google engineer in charge of the project, cited his Fifth Amendment right and declined to respond to the FCC. Google also failed to respond to inquiries about its knowledge of the data collection. As a result of Google’s conduct in connection with the investigation, the FCC fined Google $25,000, saying the online search leader impeded the investigation.
Based on this lack of evidence, the FCC turned to investigations conducted in foreign countries, including Canada, France, and the Netherlands. Those investigations confirmed that the Wi-Fi data Google had collected sensitive personal information.
Despite these findings, the FCC determined that because Google collected and accessed unencrypted data as opposed to encrypted data, there was no violation of section 705(a). Any encrypted data collected was neither reviewed nor accessed, according to the evidence Google provided. Because Google failed to provide sufficient evidence, the FCC could not find a violation of section 705(a).
In a recent case in Texas state court, an online lending company, American Heritage Capital (AHC), asserted an Internet defamation claim against a loan applicant. The applicant, Dinah Gonzalez, had posted several critical reviews about AHC on various websites after Gonzalez was informed that she was eligible for a loan, but then suddenly rejected. Gonzalez took her dissatisfaction to several online review sites and described her frustration with AHC and its loan application process. Soon after, AHC discovered these reviews and began harassing Gonzalez to remove the posts. When Gonzalez refused to remove the posts, AHC filed a lawsuit against her, asserting claims for defamation and tortious interference with prospective business relationships.
Gozalez sought to dismiss the action as a SLAPP suit and to recover her attorneys’ fees. The court found that a Strategic Lawsuit against Public Participation (SLAPP) is a lawsuit that intimidates or bullies dissenters or critics from voicing opinions or complaints. Businesses or law firms that lodge such tenuous suits do not expect to follow through with usual case proceedings, but to bury their opposition with legal costs and obligations until they abandon or discontinue their dissent. Filing a lawsuit like this represents an immaterial expense on big business, but can quickly become a tremendous burden for an individual, and they are common Internet lawsuits.
The Court further found that Dinah Gonzalez took to writing negative reviews on the Internet as a way to express her displeasure with AHC. Her reviews described her poor experience with the company and sought to expose its deceptive business practices. AHC threatened Gonzalez in an effort to remove the critical reviews including by emailing her menacing notes, such as “You started this. You can end it. Otherwise I will end it for you, and it won’t be pretty.”
The Texas court found that when AHC’s threats failed, it abused the legal system to force Gonzalez to remove her posts. AHC’s efforts ultimately backfired. The presiding judge ruled in favor of the Gonzalez’s motion to dismiss and ordered the AHC to pay all attorneys’ fees and court costs incurred, relying on the Texas anti-SLAPP law.
The law firm of Kronenberger Rosenfeld, LLP filed a class action lawsuit against U-Haul International, Inc. on May 11, 2012. The case is entitled, Mary Bottorff v. Americo and U-Haul International, Inc., District Court for the Eastern District of California, Case No. 2:12-at-00701. This new class action lawsuit is filed in the wake of an FTC action filed against U-Haul, entitled, In the Matter of U-Haul Int’l Inc. and AMERCO, FTC File No. 081-0157. The FTC alleged that between approximately September 2006 and September 2008 U-Haul engaged in an unlawful effort to conspire with their competitors regarding the price of one-way truck rentals.
The new California class action complaint alleges that U-Haul’s unlawful efforts to collude, as detailed previously by the FTC, substantially increased the price of one-way truck rentals nationwide, including in the State of California, thus causing damages to California plaintiff Mary Borttorff and the members of the class, in violation of California law. The new class action lawsuit defines the “Class” as, “all persons who purchased one-way truck rentals from Defendants for transportation to, from or within the State of California between September 2006 and September 2008. A copy of the new class action complaint is available here.
The firm is still actively investigating U-Haul in other states and encourages victims of U-Haul’s unfair pricing policies to contact the firm through our online contact form available here, or by calling the firm at (415) 955-1155, ext. 120.
Along with friending, liking, Digging and tweeting, many social media users have now added “pinning” to their daily to-do lists. According to a recent publication by Experian Marketing Services entitled “The 2012 Digital Marketer: Benchmark and Trend Report,” during the past several months, Pinterest has traveled an incredible path from niche-market obscurity to the third-most visited social networking site in the United States. Pinterest allows users to express themselves through a virtual bulletin board of images and articles that they have collected, “pinned,” and shared with their followers, who can then “re-pin” the same content, thereby expressing approval of the original pinner’s tastes in music, fashion, literature, food, and so forth.
As Pinterest gains momentum, however, many questions on the legality of pinning content have surfaced, particularly with respect to copyright infringement. These questions have incited rampant fear among pinners and concern among Internet lawyers, about the possible repercussions of their use of Pinterest, causing even The Wall Street Journal to ask “Is Pinterest the Next Napster?” The most prevalent legal concerns are divisible into two camps: (1) concerns about inadvertently committing copyright infringement on Pinterest, and (2) concerns about having one’s own copyrights infringed through Pinterest.
Avoiding Copyright Infringement on Pinterest
It is important to note that Pinterest is not the first website that allows users to upload content and, therefore, copyright infringement concerns are not unique to Pinterest. Internet users should know that anytime they upload content to a website—or, even more importantly, copy content from one Internet location to another—that they may expose themselves to a copyright lawsuit. Our experienced Internet attorneys recommend just a few examples of simple precautions that, if taken, can help avoid the risk of inadvertent copyright infringement.
1) Determine the content’s source. An image taken or created by the user is the safest thing to upload (although even then it may contain trademarked, copyrighted, or other material that make it unsuitable for pinning). If the content is not the user’s own, it should be traced back to its source to determine whether the source permits pinning, such as with a “Pin it” button.
2) Ask permission. If the content’s source does not have a “Pin it” button or other clear indication on its website that pinning or reposting is allowed, then permission should be asked before pinning. Such permission can be obtained through a casual email exchange with the source through the contact information displayed on its website.
3) Remember that there is no “safety in numbers” on the Internet. The lasting lesson of Napster is that Mom’s advice that “just because everyone else is doing it, doesn’t mean you have to” is well-heeded on the Internet. A meme or pin that has been liked or re-pinned numerous times is not infringement-free by virtue of its popularity. Internet users should not rely on the statements of other pinners that a particular item is pinnable, but should conduct their own investigation into the content’s source.
Protecting Copyrights on Pinterest
Pinterest can serve as a valuable and low- or no-cost marketing tool for artists, crafters, writers, and other businesses of any size. The alacrity with which large retailers have added “Pin it” buttons to their websites is a testament to this fact. However, many small businesses and sole proprietors have expressed concern that, by permitting images of their work to be pinned on Pinterest, they are permitting Pinterest or its users to reproduce their work.
The primary cause of this concern is Pinterest’s website Terms of Service, which provide, among other things, that by uploading content to Pinterest, the user grants Pinterest “a non-exclusive, royalty-free, transferable, sublicensable, worldwide license to use, display, reproduce, re-pin, modify (e.g., re-format), re-arrange, and distribute” the content. Some users have interpreted this provision as permitting Pinterest or its users to produce a hard copy of the content—for example, a photographer might worry that, by pinning a photograph, other users will be able to print out that photograph for display without purchasing it from the photographer.
Importantly, such a provision is not unique to Pinterest and, from a legal perspective, is necessary in order to protect Pinterest against copyright infringement claims from its own users. A review of the terms of any website that allows users to upload content—such as Facebook, Flickr/Yahoo, and Craigslist— will turn up a similar clause.
That said, Pinterest users have available several tools to protect against infringement. The most obvious is that the user can disable re-pinning for a particular image, with the downside being that doing so could reduce the image’s exposure on Pinterest. Another option is to ensure that all images are uploaded with a resolution of 72 dpi—which reads fine on a computer monitor but is heavily pixilated when printed out as most printed materials have, at a minimum, 300 dpi. Similarly, watermarks on the image discourage both printing and copying for use elsewhere on the Internet. And, of course, the best protection against copyright infringement, whether on Pinterest or not, is the registration of the copyright through the United States Copyright Office, which is necessary in order to file suit against an infringer.
California’s Silicon Valley is the hub of the world’s technology industry. Every facet of the hardware and software industries finds its roots in the Bay Area. Lately, however, information management and data storage services have come to the forefront of the tech industry, making it possible for users to operate anywhere in the world while their data – and often the applications that use it – to be based in the “cloud,” accessible from anywhere, rather than residing on a user’s computer.
Like the more traditional areas of the tech industry, cloud computing and data storage find their home in the Bay Area as well. Silicon Valley is home to some of the online storage industry’s largest players. Even a number of domain registrars – the nerve centers of the Internet itself – are located in the Bay Area. A substantial portion of the Internet’s data thus resides in or flows through a server or other storage facility in the Bay Area at some point or another.
With that data, of course, comes a steady stream of parties interested in obtaining it for litigation purposes. Given the truly ubiquitous nature of the Internet, discovery requests can come from literally anywhere. The requests can involve something as weighty as a foreign government seeking to track down the ill-gotten gains of a corrupt ruler, or as mundane as a litigant in a foreign court pressing a defamation claim arising out of an online forum hosted on a local server. Since the Bay Area is the location of many of the world’s hosting and domain registry services, foreign litigants are winding up on our Northern California doorstep more and more in their search for evidence.
Typically, foreign litigants resort to a federal discovery statute, 28 U.S.C. § 1782, to gain access to information located in the United States. The statute is labeled, “Assistance to Foreign and International Tribunals and to Litigants before such Tribunals.” That statute allows a party involved in a foreign proceeding to petition a federal court for a subpoena for information or the testimony of witnesses located in the court’s district. As the federal court covering the Bay Area, the U.S. District Court for the Northern District of California sees a constant stream of requests for subpoenas to web hosting services, web-based email services and social networking services.
The statute provides some protection for evidence that is privileged, and also allows the federal court to implement procedures and protections that would be applicable in the courts of the jurisdiction where the proceeding is pending. However, in practice, those discretionary protections are not usually applied by the local courts. Instead, foreign litigants are typically granted a wide degree of latitude in seeking and obtaining information hosted locally, notwithstanding the fact that the laws and procedures of their own courts would not have allowed access to the information.
Whether you’re looking to use 28 U.S.C. § 1782 to get documents for a foreign case, or you’re trying to keep your own information out of the hands of an overseas litigant, it is essential that you retain counsel familiar with the tools available under U.S. and foreign law to protect your interests. As leaders in the Internet litigation and privacy arena, the Internet attorneys at Kronenberger Rosenfeld, LLP are uniquely prepared to provide you with the best possible representation in this arena. The firm has handled these international discovery issues under 28 U.S.C. § 1782 in the past, at both the trial court and appellate level, and we’d be happy to bring that experience to bear for you.
For more information about how Kronenberger Rosenfeld can assist you with 28 U.S.C. § 1782, contact Jim Weixel at jim@KRInternetLaw.com or at (415) 955-1155, extension 119.
