One of the difficult things to predict with regard to the use of social media in the employment setting continues to be the extent to which traditional legal claims apply equally to new social media outlets.   We continue to advise employers that it is imperative to ensure that care is also taken to create policies and train employees on the use of social media in and out of the office setting, and not to let the informality and ease of the Internet lull employers into a false sense of security.   On July 22, 2010, a New York Supreme Court Judge applied the tort of defamation to statements on Facebook in a case that offers an important message to employers.

The case of Finkel v. Dauber (New York Supreme Court, Nassau County) centered on statements posted by a Facebook group known as “90 Cents Short of a Dollar.” Plaintiff alleged that she was defamed by the group’s postings that stated “unbeknownst to many, [plaintiff] acquired AIDS while on a cruise to Africa” and then “persisted to screw a baboon which caused the epidemic to spread.”   The postings further defamed plaintiff, she alleged, by stating “[w]hile in Africa she was seen fucking a horse.”   And other intelligent banter.

Read the rest of this entry »

On July 23, 2010, the United States Court of Appeals for the Eighth Circuit issued an important decision in Eyeblaster, Inc. v. Federal Ins. Co., 2010, U.S. App. LEXIS 15152, No. Civ. A. 08-3640, finding concurrent coverage under both a General Liability (“CGL”) insurance policy and a separate Information and Network Technology Errors and Omissions Liability (“E&O”) policy in circumstances where an online marketing company installed software on a consumer’s computer system, allegedly corrupting the computer’s software operating system.

Eyeblaster Inc. (“Eyeblaster”), the policyholder, is a company that creates, delivers and manages online interactive advertising. For the period December 5, 2006, to December 5, 2007, it was insured under two concurrent policies issued by Federal Insurance Company (“Federal”): (1) a CGL policy covering occurrences which cause damage to tangible property, and (2) an E&O policy which covered claims for financial loss caused by a wrongful act in connection with a product’s failure to perform its intended function or serve its intended purpose, resulting in damage to intangible property. As to the latter policy, intangible property included software, data and other electronic information. Both policies were “duty to defend” forms.

Read the rest of this entry »

“A lawyer is never entirely comfortable with a friendly divorce, anymore than a good mortician wants to finish his job and then have the patient sit up on the table.”  Jean Kerr

A new company out of Dallas, DivorceApps.com, is selling applications aimed at helping people navigate the legal waters of divorce. A Texas family lawyer, Michelle May O’Neil, started the company in March of this year. Two apps currently are for sale on iphones at a cost of $9.99 USD.  Applications that are currently available online are described as follows:

(1) Cost and Prep Application: A system that 1) tracks the information that will be required either by legal counsel or the other side of the case and 2) helps the user track the costs of divorce. For example, the “Divorce Cost” portion of the application provides a scroll down list of categories that enables the user to gain a better understanding of the costs of divorce. The “Scroll Down” component of the application allows the user to scroll through the categories of information to determine the documents and information that will be applicable to their case.

(2) Estate Divider Application: The “Estate Divider” is a system that purports to allow a user to work through the overall division of their Estate. The user can:

Read the rest of this entry »

Apparently feeling that they’ve resolved the longstanding issue of illegal immigration and can move on to the next crisis, Immigration and Customs Enforcement (“ICE”) and the U.S. Justice Department have identified a new enemy in their ongoing stuggle to protect truth, justice and the American way: Internet sites that sell counterfeit goods and pirated movies.

Indeed, just this month, government officials announced that they have shut down nine websites as part of their newly announced initiative, “Operation In Our Sites,” which is intended to protect Hollywood’s intellectual property. Officials estimated that nearly 7 million pirated movies and shows per month were downloaded from the offending websites.

The announcement was held on a soundstage at The Walt Disney Studios in Burbank, CA. Neither Johnny Depp nor Captain Hook reportedly was present.

Read the rest of this entry »

I was recently introduced to a great new Scrabble word: “meme”. According to wikipedia, my source for all things “e-”, a meme, in reference to the Internet, is ‘the propagation of a digital file or hyperlink’ that contains content consisting of a saying or joke, a rumor, an altered or original image, a complete website, a video clip or animation, or an offbeat news story, among many other possibilities. In other words, an Internet meme is an inside joke that is shared between a large number of Internet users.

Internet memes have a tendency to evolve and spread extremely swiftly, sometimes going in and out of popularity in just days. They are spread organically, voluntarily, and peer to peer, rather than by compulsion, predetermined path, or completely automated means. The term ‘meme’ can refer to the content that spreads from user to user, the idea behind the content, or the phenomenon of its spread.

Ally McBeal fans may now appreciate the reference to the dancing ‘oogachucka’  baby. In an effort to be a bit more up-to-date in my meme references, I’ve embedded some of them, below.  If you’re seeing them for the first time, you may experience the ‘lightbulb effect’ – that is, you’ll actually get the joke behind certain late night comedy skits that just didn’t seem all that funny.

Read the rest of this entry »

His name is Ghyslain Raza, but you may know of him as “Star Wars Kid”, a portly 15-year-old student at a Quebec private high school who had filmed himself wielding a mock light saber, pretending to be a Star Wars character in combat. The two-minute video was supposed to be private, but he left it lying around at his school where three students, who did not know the teenager, came across the video, posted it on the Internet on April 14, 2003, adding a message inviting people to make insulting remarks about the clip.

Unfortunately for him, it wasn’t just his friends who found the footage so amusing. The video went ‘viral’. One Web log that posted the video was allegedly downloaded 1.1 million times, and by October 2004 one Internet site dedicated to the video had recorded 76 million visits. According to UK marketing firm The Viral Factory, it became the most downloaded video of 2006. So mortified was the teenager that he dropped out of school and finished the semester at a psychiatric ward. According to the student, “It was simply unbearable, totally. It was impossible to attend class.”  More than 35 other revised versions of the video clip, created by other people, have found their way to the Internet, with additional sound and visual effects.

This is an extreme but far from unique example of the devastation wrought by cyber-bullying, the term given to internet conduct in which students harass other students by e-mail and on the internet. Given the potentially devastating consequences of cyberbullying, should schools have the power to discipline their students engaging in this form of harmful conduct?

A major issue confronting school boards is that cyberbullying usually does not take place at school, although its effects can later reverberate among students during school hours. Students may post offensive material from home, or other times outside of school hours, but the targets are fellow classmates. Is it appropriate for a school board to discipline a student for posting such material simply because the postings are being accessed by other students at school or target other students?  At the same time, with power comes responsibility – if school boards have the power to discipline students for their behavior outside of school, are schools then to be mandated with the responsibility to essentially monitor and censor the world-wide web? Just how far should a school board’s jurisdiction extend regarding inappropriate off-school student e-conduct?

Read the rest of this entry »

So, you think that a corporate cyberattack has nothing to do with you? If so, think again. Indeed, to the extent you own stock or securities, the value of your holdings could be at risk in the event of a cyberattack. I’ve said it before and I’ll say it again: Cybersecurity is an economic issue. See here.

Take, for example, Intel (INTC). In its 2009 10-K, released in late February, the company disclosed in a tersely worded statement that its networks had been the victims of “sophisticated” attacks. This revelation, contained in the “risk” section of Intel’s 10-K was intended to comply with U.S. Securities and Exchange Commission mandates which require public companies to disclose risks which could cause them to fall short of their profitability projections.

While Intel listed several such risks, the most intriguing was the one which stated that “We may be subject to intellectual property theft or misuse, which could result in third-party claims and harm our business and results of operations.” Intel’s disclosure continued that “[w]e regularly face attempts by others to gain unauthorized access through the Internet to our information technology systems by, for example, masquerading as authorized users or surreptitious introduction of software….These attempts, which might be the result of industrial or other espionage, or actions by hackers seeking to harm the company, its products, or end users, are sometimes successful. One recent and sophisticated incident occurred in January 2010 around the same time as the recently publicized security incident reported by Google.”

While such disclosed risks may or may not have an impact on a stock’s trading price, the potential impact can not be ignored. Google (GOOG) is a perfect example. As previously discussed here, Google has been the subject of cyberattacks which it claims were precipitated by the Chinese government. The import of this development can not be understated, as it created tensions between the U.S. and Chinese governments and even made it into Intel’s SEC filing. For private citizens, however, perhaps the greatest implication of the the Google cyberintrusions is the arguable effect that they had on Google’s price per share. On January 12, 2010, when the intrusion was publicly disclosed, Google shares fell 1.7% to $590.48. As of the date of this publication, April 25, Google’s shares are trading at $544.99, another roughly 8% price drop. Can these losses be directly linked to the breach of Google’s security systems? Put differently, can a possible link be dismissed? That’s for shareholders and others to decide.

So, what does this all mean? At a minimum, it suggests that the economic implications of a cyberbreach can be wide ranging, from the simple cost of fixing a security gap to a major hit to a brands’ reputation all the way to claims arising from the theft of consumer’s personal and financial information. Such an intrusion into the systems of retailer T.J. Maxx (TJX) lead TJX to settle with regulators, states, consumers and others and set a settlement/remediation reserve of over $100 million. At the same time, other well-known companies like Adobe, Juniper Networks and Rackspace have been hacked and had their information and technology compromised.

In the end, it is clear that just as consumers need to be vigilant about monitoring their personal and financial information to protect themselves from identity theft and the like, investors too must regularly track their holdings to protect their portfolios and assets. As to the companies whose information and systems are at risk, the need for both D&O and cyber insurance is patently obvious, and is as important as the protection of their intellectual property, consumer information and other non-public data. Risk management, information protection and insurance go hand in hand. And we’re here to make sure everyone recognizes the correlation.

Odd as it may seem to those of us who live and breathe cyber, tech and privacy insurance, I have heard anecdotally of municipal authorities who profess that their cities and towns do not need to incur the expense of buying these products. “Why do we need them? We don’t operate on the internet,” they reportedly have said.

Well, my response is “why don’t you think you need them?” Do you maintain a bank account? Do you store personally identifiable information about private citizens, whether in your property records, police files, tax databases or otherwise? Are your employees able to access your municipality’s computer systems remotely? Is it really possible that every single piece of information you maintain is recorded on paper and nothing is stored on a mainframe, whether located on- or off-site? Come on. Its 2010. That’s virtually impossible, isn’t it? Haven’t you read my December 23, 2009 post “No One is Immune. Even Government Entities Need Cyber/Tech Insurance?”

Since that posting, additional municipalities have suffered cyber attacks and been the subject of cyber lawsuits.

Read the rest of this entry »

This topic angers me.  Fines for infringement under the Copyright Act range from $750 to $150,000 per infringement.  That’s a wide spectrum!  More disturbing is that the Act leaves the pricing decision in the hands of the judge, without any real guidelines for them to follow.

This week, a judge ordered Whitney Harper to pay $27,500 for illegally downloading 37 songs…I’ll do the math for you – that’s $750 a song, i.e., the minimum allowed.  Earlier this year, Joel Tenenbaum was held liable for $675,000 for file sharing 30 songs – that’s $22,500 per song.  It gets better.  Nearly a year ago, Jammie Thomas-Rasset was ordered to pay $1.92 million by a jury for downloading 24 songs…$80,000 per download!  How does the court conclude how much to, for lack of a better word, charge per song?  Is it based on the popularity of the song?  Does Lady Gaga or Jay-Z rank higher than Skid Row or Journey because the former are currently more mainstream?

Read the rest of this entry »

Lawyers, academics, politicians, students and of course litigants are naturally concerned, often vitally concerned, to know how the final appellate court of the land will decide a given matter. Depending on the outcome, the law might be changed in new and radical ways; legislation might be struck down; government policy might fall.

The wait to discover what is going to happen can be very long because, as we all know, it can be a year or more between the hearing of an appeal and the delivery of judgment in a given case. There is, however, a vital source of clues to the possible outcome of a case, to the thinking of the court and the arguments which they find persuasive, or not, that is often overlooked. I mean of course the transcripts of argument made during the oral hearing, which includes questions and comments from the bench.

As an example of the usefulness of these, take the case of Abbott v. Abbott, recently heard by the US Supreme Court. The Court heard argument about the meaning of “habitual residence” in the Hague Child Abduction Convention. The phrase is not defined, and counsel took the Court to decisions of courts of other countries, also signatory to the Convention. Have a look at the following extract, which includes submissions by counsel and exchanges with the bench, noting that in this instance at least, Justice Scalia seems quite willing to consider the application of foreign court decisions:

Read the rest of this entry »