Packets: Vol. 1, No. 4

Second Circuit Rules Identity Theft Techniques Trigger Sentencing Enhancements
by Lauren Gelman, posted on November 4, 2003 - 2:10pm

In an identity theft case, James Rinaldo Jackson pled guilty to 29 counts of criminal activity, including credit card fraud (18 U.S.C. § 1029(a)(2), (b)(1), (c)(1)(B)), mail fraud (18 U.S.C. § 1341), bank fraud (18 U.S.C. § 1344), wire fraud (18 U.S.C. § 1343), and conspiracy (18 U.S.C. § 371). Jackson found his targets by searching for wealthy people on the Internet and then purchasing their personal information from Internet “information brokers.” He impersonated his targets in phone calls to banks, credit card companies, and hotels in order to get his targets’ credit card numbers, card expiration dates, or other private information. Jackson used this information to buy valuable merchandise, which he would have delivered to hotels or courier services. In sentencing Jackson to 96 months imprisonment, the trial judge applied the Sentencing Guidelines’ “sophisticated means” enhancement, under U.S.S.G. 2F1.1(b)(5)(C). Jackson appealed the enhancement, arguing that his crimes did not involve sophisticated means and that the enhancement impermissibly duplicated the enhancements he was also given for leading “extensive” criminal activity.The court held that the “sophisticated means” enhancement was applicable to Jackson’s case. Regarding Jackson’s claim that his scheme was unsophisticated — “no more intricate than ‘a game of Three-Card Monte’” — the court held that even “not elaborate” techniques like phone calls and Internet searches could combine to form a scheme “sophisticated in the way all the steps were linked together.” The court also rejected Jackson’s claim that an Application Note of the Sentencing Guidelines which applies the enhancement to crimes involving “inside information,” “special technology,” “corporate shells,” and “offshore bank accounts” limits the enhancement to crimes involving those and similar techniques. The decision noted that other Application Notes found “sophisticated means” in cases not involving those techniques. The court also rejected Jackson’s argument that the enhancement applies only to sophisticated attempts to evade detection, because the Application Notes explicitly define the enhancement to apply to “conduct pertaining to the execution or concealment of an offense.”

Maryland Court Finds No Personal Jurisdiction over Egyptian “Semi-Interactive” Website
by Lauren Gelman, posted on November 4, 2003 - 1:24pm

Plaintiff, Electronic Broking Services, Limited (“Electronic Broking”), a British company, has brought suit before the U.S. District Court for the District of Maryland against defendants, E-Business Solutions & Services (“E-Business Solutions”), an Egyptian company based in Cairo, and its director of business and CTO, claiming federal trademark infringement in violation of the Lanham Act, 15 U.S.C. §1125(a), and unfair competition under Maryland state law, arising from the defendants’ use of the trademark “Electronic Broking Services, Limited” (“EBS”). Defendants moved to dismissed for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2). On September 30, 2003, the court granted the motion.Both Electronic Broking and E-Business Solutions provide IT products and services to banking and financial services industry. The former conducts this business under the trademark “Electronic Broking Services, Limited” (“EBS”), and the latter through its website under the trademark “eBS”, which it owns in Egypt.

Fourth Circuit Rules Damage Caused by AOL Software did not Constitute Property Damage Under Insurance coverage
by Lauren Gelman, posted on November 4, 2003 - 1:22pm

Within a few months of the release of America Online, Inc. (AOL) Version 5.0 access software in October 1999, consumers began filing class action lawsuits against AOL alleging that the application “altered… existing software, disrupted… network connections, caused the loss of stored data, and caused… operating systems to crash.” Forty-three of the lawsuits were consolidated in a multidistrict litigation (MDL) complaint, and were later settled under a court-approved agreement with AOL for $15.5 million in compensation to the plaintiffs.AOL tendered the defense of the class action suits to its insurers: St. Paul Mercury Insurance Company (St. Paul), its primary insurer, and Underwriters at Lloyd’s of London, its professional liability insurer. St. Paul denied coverage because, in its view, the suits did not allege damages to ‘tangible’ property or for bodily injury or property damage as defined by St. Paul’s commercial general liability coverage. On cross-motions for summary judgment, the district court denied AOL’s motions and granted St. Paul’s motion, concluding that damages to computer data and systems did not allege “physical damage to tangible property.”

Seventh Circuit Rejects ISP Liability in Video Voyeurism Case
by Lauren Gelman, posted on November 4, 2003 - 1:16pm

The plaintiffs in this case were members of several collegiate sports teams who, without their knowledge or consent, were taped by cameras hidden in locker rooms and other facilities. The footage was packaged and sold on video tapes over the web by unknown individuals and organizations, under such titles as “Voyeur Time” and “Between the Lockers.”Plaintiffs’ claims against the sellers failed after these persons could not be located or served; the plaintiffs proceeded, however, with claims against the entities that had provided the sellers with internet access and web-hosting services. Citing two provisions of the Electronic Communications Privacy Act (“ECPA”), 18 U.S.C. §§ 2511 and 2520, providing civil liability for any person who intentionally intercepts any oral communication, the plaintiffs claimed that the defendants had aided and abetted the sellers in their illegal interception of the audio tracks on the tapes. The plaintiffs also raised several other related claims against the defendants.

VOIP Provider Succeeds in Enjoining Minnesota PUC
by Lauren Gelman, posted on November 4, 2003 - 1:13pm

The case rose out of a Minnesota Department of Commerce (“MDOC”) investigation of Vonage, a firm providing voice-over-IP (VoIP) services which allow voice communications over the Internet. The MDOC investigation led to a complaint being filed by the MDOC before the Minnesota Public Utilities Commission (“MPUC”). In the complaint the MDOC alleged that Vonage was subject to regulation as a telecommunications services provider, and had failed to (1) obtain a proper certificate of authority required to provide telephone services in Minnesota, (2) submit a required 911 service plan, (3) pay 911 fees and (4) file a tariff. The MDOC’s complaint ultimately resulted in an MPUC order directing Vonage to comply within 30 days with Minnesota statues and rules regarding the offering of telephone service.Vonage sought injunctive relief in federal district court, arguing, inter alia, that it could not be regulated under the Minnesota laws that regulate telephone companies. Vonage argued that under federal law its VoIP services were “information services”, rather than “telecommunication services”, and that only services falling into the latter category could be regulated by state law.

Court Finds Publication of Filing on Internet by a Party to be Protected Under Fair Reporting Act
by Lauren Gelman, posted on November 4, 2003 - 1:08pm

Amway Corporation (“Amway”) and the Procter and Gamble Company (“P&G”) have a long history of corporate animosity, both publicly and in the court system. Sidney Schwartz (“Schwartz”) is creator and editor of an anti-Amway web site, where he publishes various Amway-related documents. P&G hired Schwartz as a non-testifying consultant, and provided him with a copy of a complaint they had filed against Amway in a Texas federal court (alleging, among other things, that “Amway operates as an illegal pyramid scheme”). Schwartz subsequently posted this complaint to his web site.Amway sued P&G for tortious interference with business relations, claiming that they had conspired with Schwartz to publish the documents. Amway then amended their complaint to include Schwartz and the law firm of Dinsmore & Shohl (“Dinsmore”). The defendants moved for summary judgment, which the district court granted to P&G and Dinsmore, finding that Michigan’s fair reporting privilege protects the dissemination of public court records. In this opinion, the court of appeals addresses the question of whether the posting of such documents by the parties who filed them is actually protected under the statute.

California Court Issues First Anti-Spam Judgment
by Lauren Gelman, posted on November 4, 2003 - 1:07pm

On October 24, 2003, the Superior Court of California for the County of Santa Clara issued a final judgment and injunction in the civil case of People v. Willis, ordering defendants to jointly and severally pay a $2 million fine for violating California's anti-spam, consumer protection, and unfair business practice laws and enjoining them from sending unsolicited commercial e-mail messages and other practices that would violate the law. The judgment -- entered by default because defendants failed to appear in court or defend themselves in a timely way -- marks the end of California's first ever anti-spam lawsuit.The lawsuit, initially filed in September 2002, alleged that Paul Willis, Claudia Griffin, PW Marketing LLC, and one hundred "John Doe" defendants had violated numerous provisions of the California Business & Professions Code in their commercial e-mail advertisements. In its final order, the court dismissed the "John Doe" defendants without prejudice.

Streaming Audio License Fee Requirement Upheld in Bonneville

by Lauren Gelman, posted on November 4, 2003 - 1:05pm

Traditional copyright law granted public performance license fees to songwriters and composers, but not to the copyright owners of the recording itself, the recording industry. The recording industry was satisfied with receiving no royalties for radio airplay until about ten years ago, because it viewed radio airplay as free publicity. It received compensation indirectly from the sale of records, tapes, and compact discs in stores. About ten years ago, the widespread availability of digital recording and distribution techniques raised the possibility that consumers would listen to music through interactive services, thereby cutting out the recording industry as a middleman and lowering prices for consumers.In response, Congress passed the Digital Performance Right in Sound Recordings Act in 1995, which gave copyright owners of sound recordings the exclusive right to perform the work (1) publicly by means of (2) a digital audio transmission. Such a law would impact the radio industry if they ever converted to digital transmission, so Congress carved out three exceptions for “ non-interactive, non-subscription” performances. The idea was to allow a digital version of AM/FM radio stations, but nothing more convenient to consumers would be allowed without licensing fees.