Inside the Beltway : April 2012
Senate to vote on postal reform bill
On April 24 the U.S. Senate will begin deliberations on more than 25 amendments to postal reform legislation. The U.S. Postal Service has announced that thousands of post offices and hundreds of mail processing facilities would shut down unless Congress provides more help.
As the amendments could threaten the deal ABM negotiated in October regarding an “underwater product” surcharge as well as introduce across-the-board rate increases, ABM has been working hard in Washington with fellow members of the Coalition for a 21st Century Postal Service to protect members’ interests.
Stay tuned, as ABM will continue to update you as developments warrant.
Court tightens website copyright safe harbors
The federal law that attempts to strike a balance between preventing copyright infringement and encouraging Internet growth became slightly less clear-cut, and slightly more favorable to copyright owners, through a key appellate court ruling earlier this month. But the court’s rulings are unlikely to directly affect customary website copyright activities involving most ABM members.
In the case, Viacom v. YouTube, Viacom challenged YouTube’s invocation of “safe harbor” protection under the Digital Millennium Copyright Act (DMCA). That act’s notice-and-takedown procedure essentially immunizes Internet intermediaries from liability for their users’ copyright infringement, so long as they expeditiously take down alleged infringing material upon notice from the copyright owner. Viacom claimed, however, that YouTube shouldn’t get the “safe harbor” protection, because it knowingly tolerated infringement on its site.
The ruling of the U.S. Court of Appeals for the Second Circuit is technical and tied to very specific provisions of the complex DMCA statute. It doesn’t affect the basic DMCA notice-and-takedown procedure—a procedure that ABM members may have utilized in seeking takedown of their own copyrighted materials, or in responding to others’ requests for takedown of user-posted materials on their own sites.
The ruling, rather, deals primarily with the relatively unusual, but important, situation of sites like YouTube where significant volumes of infringing materials are posted. YouTube had contended that regardless of the number or frequency of infringing posts on its site, its only real obligation was to respond to specific takedown demands when they were received. Absent knowledge of specific instances of infringement, YouTube contended, it had no obligations to takedown user materials.
The court disagreed, although it stopped far short of the positions Viacom had advocated. The court agreed that, by and large, the DMCA (including its “red flag” knowledge provision) does require that a website operator have knowledge or awareness of “specific infringing activity” before it must act. But the court went on to find a triable issue on such knowledge based on emails in which YouTube’s founders and employees expressed some awareness of infringement occurring on the site. To oversimplify somewhat, the court agreed that knowledge of specific infringing activity was the standard, but held that a jury could find such knowledge even from evidence not tied to specific instances.
The court also found that operators of sites like YouTube could potentially lose their safe harbor protection if they were willfully blind to infringement occurring on their sites, or if they had the right and ability to control infringement, and received a financial benefit from it.
While the Second Circuit’s decision deservedly received much media attention, and is likely to be influential, its significance mostly relates to large-scale user-upload websites like YouTube, not to the sites most familiar to ABM members, where user uploads represent a relatively small part of the website content. In those situations, whether you are the complaining copyright owner, or the website host accused of harboring infringing content, the DMCA notice-and-takedown procedure will apply as before:
The website operator must register an agent with the Copyright Office to qualify for DMCA safe harbor protection.
The copyright owner must give specific statutory notice of the infringement of its work on the site.
The website owner must then take down the alleged infringing material and notify the original poster of the complaint.
If the original poster fights the takedown, the copyright owner will be given the opportunity to bring suit against him or her.
For more information on the DMCA procedures, see the article “Internet Publishing” by ABM Information Policy Counsel Mark Sableman.
USPS wants real-time tracking by 2013
In an exclusive ABM webinar hosted on April 11, USPS VP of Product Information Jim Cochrane discussed the Postal Service’s plan to sunset its use of the POSTNET barcode in January 2013 and begin requiring use of Full Service Intelligent Mail barcode (IMb) to qualify for automation discounts.
The use of IMb, plus investment in real-time scanners and other processing equipment, puts the USPS on the path to offering customers real-time tracking data and allowing for corrective action before problems occur, according to Cochrane. “Tracking now stops at the processing plants,” he said. “We want real-time tracking at every level.”
By 2013, USPS will have real-time scanners installed and begin tracking delivery events based on GPS, including notice when periodicals have been delivered to mail boxes, said Cochrane. “This is one of biggest databases in the world, tracking millions of events.”
Moving to Full Service will be mandatory to qualify for automation discounts. Between October 2011 and February 2012, 1.5 million, or 52.4 percent of total commercial periodicals volume, featured IMb (Cochrane also said that more than 70 percent of periodicals were on time in March 2012, compared to less than 50 percent in October 2011).
Financially, the USPS posted a net loss of $8.5 billion in 2010 and $5.1 billion in 2011. A recent report from the U.S. Government Accountability Office said that the USPS has 461 centers but only needs 238, and out of 154,000 employees, there is work for just 119,000.
News aggregation litigation and licensing picks up
News aggregation websites and services have recently received special attention from general news publishers, with the Associated Press (AP) leading the charge on both litigation and licensing fronts.
AP has sued a major aggregator, Meltwater Group, in what could be a major test case of unauthorized aggregation. And a group of publishers led by AP has opened up a new organization, NewsRight, dedicated to licensing news aggregation rights—and possibly eventually litigating against aggregators who refuse to join.
The Litigation Front
The AP suit against Meltwater appears to have been strategically chosen as a potentially precedent-setting test case. Meltwater Group advertises itself as “more than a traditional media monitoring service” because it “delivers the business critical information that executives in organizations worldwide require to gain, and maintain, their competitive edge.”
AP’s lawsuit, filed in federal court in Manhattan, however, claims that Meltwater does no original reporting of its own, but “merely distributes electronically for a fee news content created at the expense and through the labor of others.” Moreover, it provides news to its clients through a “closed system” that does not even drive traffic to the original publishers’ websites.
In the suit, AP drew a sharp contrast between its own newsgathering efforts – costly in terms of money, efforts and even risk of reporters’ lives – with Meltwater’s actions in copying its articles, without payment and without authorization, and forwarding them to clients and storing them for subscription fees. The suit also draws a distinction between Meltwater and the more typical website news aggregators which provide headlines or short article excerpts, and then refer readers, through hyperlinks, to the original articles on the original publishers’ websites.
The Meltwater case raises a “hot news” claim, but primarily relies on copyright infringement theories—theories that are feasible because Meltwater, unlike typical website aggregators, is alleged to have copied and saved the totality of AP articles, and distributed them to subscribers through Meltwater’s own servers rather than through links to AP’s or its members’ sites. Meltwater has already had a judgment entered against it in the United Kingdom.
The Licensing Front
On the licensing side, an AP-led coalition of 28 other major publishers, including the New York Times, the Washington Post, Hearst, Advance and McClatchy, in January opened a new organization, NewsRight, as a licensor of news content on the Internet.
NewsRight is designed to provide a platform for news organizations to license and distribute fees of their content to third parties. It is headed by David Westin, a lawyer and former president of ABC News.
NewsRight announced its first licensing deal in March, with Moreover Technologies, a company that sells electronic news summaries and analysis. Financial terms were not released, but NewsRight’s news release hailed the agreement as “a new model for conveniently licensing intellectual property rights of hundreds of publishers and resolving uncertainty about past use.”
Among other things, NewsRight will have the ability to use tracking technology developed by AP, which traces use of the publishers’ news content. When and if NewsRight moves from offering licenses to threatening or bringing lawsuits, that tracking technology could trace and document allegedly infringing uses.
FTC releases final report on consumer privacy
Last month the Federal Trade Commission released its final report on protecting consumer privacy, including a series of recommended best practices and amended proposals from the preliminary report released in December 2010, which ABM submitted extensive comments to.
ABM has been heavily engaged in the privacy arena over the last several years, advocating for a business capacity exemption. Such an exemption would ensure that laws aimed at protecting consumer privacy do not limit the ability of b-to-b companies to collect and use information about an individual in a business capacity.
In the report, called “Protecting Consumer Privacy in an Era of Rapid Change: A Proposed Framework for Businesses and Policymakers,” the FTC recommends that Congress consider enacting general privacy legislation, data security and breach notification legislation, and data broker legislation. The FTC says it received more than 450 comments on its preliminary recommendations that helped shape the final report.
Other recommendations for companies handling consumer data include:
Privacy by Design: The FTC says companies should build in privacy protections at every stage in product development, including “reasonable security” for consumer data, limited collection and retention of such data, and reasonable procedures to promote data accuracy.
Simplified Choice for Businesses and Consumers: Companies should give consumers the option to decide what information is shared and with whom. The FTC says this should include a Do-Not-Track Mechanism for consumers to control tracking of their online activities.
Greater Transparency: Companies should disclose details about their data collection and use of consumers’ information, including providing consumers access to the data collected about them.
While the preliminary privacy protection report recommended that the proposed framework apply to all commercial entities that collect or use consumer data that can be linked to a specific consumer, computer or other device, the new report excludes companies that collect and do not transfer only non-sensitive data from fewer than 5,000 consumers a year.
Over the next year, the FTC says it will focus on five main action items, including:
Do-Not-Track: The Commission says it recognizes work in this area including browser vendors developing tools to allow consumers to limit data collection about them; the Digital Advertising Alliance developing its own icon-based system and committed to honor browser tools; and the World Wide Web Consortium developing standards.
Mobile: The FTC is encouraging companies to work toward privacy protections and disclosures. On May 30, the FTC will host a workshop addressing how mobile privacy disclosures can work on small screens.
Data Brokers: The FTC calls for data brokers to make their operations more transparent by creating a centralized website to identify themselves and disclose how they collect and use consumer data.
Large Platform Providers: The report cites privacy concerns about the extent that Internet Service Providers, operating systems, browsers and social media companies track consumers’ online activities. The FTC will host a public workshop in the second half of 2012 dedicated to the issues surrounding comprehensive tracking.
Promoting Enforceable Self-Regulatory Codes: The FTC says it will work with the Department of Commerce and industry stakeholders to develop industry-specific codes of conduct.
“We’re glad to see the FTC finalizing its report and we look forward to continuing to engage with the FTC, the Commerce Department, the White House and Congress to make sure that they understand the difference between a business user and a consumer in regard to consumer privacy protection,” said ABM’s Washington lobbyist Tom Carpenter. “At the end of the day, we still prefer self-regulation to government regulation in this matter, but we want to work with policymakers to ensure ABM members are protected from any overly broad regulation in this area.”
FCC announces new telemarketing rules
Earlier this year, when the Federal Communications Commission announced new telemarketing rules for “robocalls,” the general media treated the announcement as a significant tightening of telemarketing rules. In fact, the FCC, which regulates a small segment of the business community, had simply conformed its telemarketing rules to the already existing rules of the Federal Trade Commission, which governs most businesses.
While the FCC rules should not change anything for most ABM members, they have prompted several members to revisit their telemarketing procedures. Members are always encouraged to ensure that their telemarketing procedures comply with the law; click here for a recap.
Congress and courts focus on database protection
A key statute that helps businesses protect their private databases is under scrutiny by both Congress and the courts. Database owners like ABM members are carefully watching the battle between law enforcement authorities seeking to expand the law’s coverage, and employee advocates seeking to narrow its coverage.
The Computer Fraud and Abuse Act (CFAA) is an anti-hacking law passed by Congress in the wake of computer hacking scares in the 1990s. It prohibits copying or use of data by anyone who accessed a computer system through “unauthorized access” or “access beyond the scope of authorization.”
The CFAA carries civil as well as criminal provisions, and it has long been considered an effective tool for protecting business databases. For example, if your business maintains its databases on a secure computer network, and a competitor hacks into your system, that is “unauthorized access” and it gives rise to civil CFAA claims. Similarly, if you have given someone limited access to your computer system, and that person (say, a franchisee, a customer or a business partner) pries into your system beyond the areas he or she was allowed to access, that too gives rise to CFAA claims. Although the United States doesn’t have specific legal protection for databases, the CFAA affords businesses fairly good protection against database misappropriation by outsiders.
The recent controversies have arisen because of expansive interpretations of the CFAA’s “beyond the scope of authorization” coverage. In cases where employees have harvested trade secrets and customer lists from company computers, and then used that information in their subsequent employment, the original employers have brought CFAA claims. Their theory has been that while the employees were authorized to use the company’s computers, the use they made, gathering secrets for use against the company, was beyond the scope of authorization. Under this interpretation, “beyond the scope of authorization” covers unauthorized purposes, not just unauthorized areas of the computer system.
Lobbyists for employees have sought to narrow the CFAA to prevent its use against employees. But their proposed narrowing of the statute could also diminish its usefulness in protecting private databases, and ABM has joined other database companies in opposing the amendment.
Meanwhile, earlier this month the U.S. Court of Appeals for the Ninth Circuit, in a major case, United States v. Nosal, rejected a broad interpretation of the act (including the purpose-based interpretation of “beyond the scope of authorization”) advocated by the Justice Department. The court ruled that the CFAA’s “beyond the scope of authorization” language refers to unauthorized areas, not unauthorized purposes. This en banc ruling by Chief Judge Alex Kozinski is likely to be influential, and, if followed, could well remove the impetus for the proposed statutory amendment, and thereby preserve the CFAA’s protections against database misappropriation by outsiders.
You’re Invited: USPS Webinar for ABM Members
The Postal Service and its customers have been working together to revise postal regulations to better support periodical mailers in these fast-changing times. On May 15 at 2pm ET, ABM will host an exclusive webinar for members on the latest, as well as upcoming, changes.
The USPS’ Chuck Tricamo will discuss updates on “Supplement to” changes, using e-publications to qualify for and maintain periodical mailing privileges, acquiring subscriptions via websites, and more.
Please contact Kate Patton (firstname.lastname@example.org) by May 11 if you plan on attending. Log-in information will be sent directly to you.
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