Federal Trade Commission Grants Approval of Imperium's "ChildGuardOnline" As A COPPA Verifiable Consent Method

Based on an application submitted by Connecticut-based Imperium, the FTC has approved the use of knowledge-based authentication as a method to verify that the person providing consent for a child to use an online service is in fact the child’s parent.

Under the COPPA Rule, online sites and services directed at children must obtain permission from a child’s parents before collecting personal information from that child. The rule lays out a number of acceptable methods for gaining parental consent, but also includes a provision allowing interested parties to submit new verifiable parental consent methods to the Commission for approval.

Knowledge-based identification is a way to verify the identity of a user by asking a series of challenge questions, typically that rely on so-called “out-of-wallet” information; that is, information that cannot be determined by looking at an individual’s wallet and are difficult for someone other than the individual to answer. This authentication method has been used by financial institutions and credit bureaus for a number of years, and has been acknowledged by the Commission and other government agencies as effective for that purpose.

http://www.ftc.gov/news-events/press-releases/2013/12/ftc-grants-approval-new-coppa-verifiable-parental-consent-method

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Hulu Loses Motion To Dismiss in Lawsuit Against re Alleged Video Privacy Protection Act (VPPA) Violations

A  US, Magistrate Judge  has turned down a request by ad-supported video content platform Hulu to dismiss a lawsuit which accused it of illegally sharing users’ viewing history with Facebook and comScore.

Hulu has argued that viewers need to demonstrate ‘actual injury’ in order to receive damages under the Video Privacy Protection Act (VPPA). However, the Court ruled that this act requires only injury in the form of a wrongful disclosure before damages might be available. 

http://www.mrweb.com/drno/news18412.htm

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The End of Law Libraries?

Or at least the end of law libraries as we have historically known them. The basic premise that law schools, now in secular contraction mode, will need to continue to find ways to cut expenses.  Moving to pure online research is a logical next step for most law schools. Think in terms of law firms, these days. How many of the attorneys do their legal research in the traditional law firm library? Not many, is my sense.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2370567

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A Moving Target: Meetings with State Attorney Generals Ongoing; Number of Civil Lawsuits Close to 20

Not much holiday cheer in the GC and CPO offices at Target this year. This is a major legal and public relations disaster for Target. Almost certainly, they will make it through this mess but not without a lot of pain along the way.

http://finance.yahoo.com/news/target-meets-state-attorneys-lawsuits-063050278.html

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Shocker: Law School Enrollments For Entering Classes Nationwide at 1977 Levels

Well, maybe not so shocking. The job market for junior lawyers remains horrible and more commoditized, cookie-cutter legal work (setting up LLCs, basic agreements, etc.) are being overtaken by legal information/service providers such as Legal Zoom. Indeed, it has been reported that over 50% of the LLC's set up in California in 2012 were through Legal Zoom. This has a real impact on the bar and on the future of many existing law practices.

http://muckrack.com/link/MT4p/first-year-law-school-enrollment-at-1977-levels

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3 Paradoxes of Big Data

The good, the bad and the ugly.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2325537&download=yes

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New Jersey AG Settles WIth Maker of "Dokobots" App RE Alleged COPPA Violations

http://nj.gov/oag/newsreleases13/pr20131122a.html

Acting Attorney General John J. Hoffman, the Division of Law and the Division of Consumer Affairs announced today that Dokogeo, Inc., a California-based company that makes mobile device applications, has entered into a settlement agreement with the State that resolves allegations it violated the federal Children’s Online Privacy Act (COPPA) and the New Jersey Consumer Fraud Act by collecting personal information about children who used its animation-based “Dokobots” mobile app.

Under terms of the settlement, Dokogeo must clearly and conspicuously disclose – in its apps and on the homepage of its Web sites – the types of personal information it collects, the manner in which it uses such information, and whether it discloses information to third parties. The company also is required to refrain from collecting the personal information of children age 13 and under until it makes the required disclosures, and otherwise complies with COPPA. Dokogeo already has removed all photographs and files containing children’s images from its Dokobots Web site, and has removed geolocation information of children since July 1, 2013.

Dokogeo also agrees to a suspended payout of $25,000. The payout will be due immediately if the company fails to comply with other restraints and conditions included in the settlement agreement. Dokogeo’s $25,000 payout obligation will be vacated after 10 years if it meets all settlement terms, and avoids violating consumer fraud and child online privacy laws.

Almost always , failure to have "clear and conspicuous" disclosure creates problems.

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Black, Black Friday: Melee At Walmart... Over A Television

This 90 second video kind of speaks for itself. A very sad statement.

http://www.youtube.com/watch?v=n_adgG8Ba2Q

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Disgraced Journalist, Stephen Glass Seeks Admission to California Bar; Appeals to California Supreme Court

http://www.calbarjournal.com/November2013/TopHeadlines/TH7.aspx

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Swiss Proposal to Cap CEO Salaries

Swiss voters will decide whether to cap the highest wages in a company at 12 times the lowest pay. Swiss corporations and the government have joined forces to oppose the so-called 1:12 initiative, which is forecast to be rejected.

http://www.bloomberg.com/news/2013-11-19/ceo-salaries-spark-passions-as-swiss-split-ahead-of-vote.html

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Yahoo! Proposes Encryption Of All Consumer Data

Perhaps a differentiator in the marketplace for Yahoo!? This could be a good test of what importance consumers place on privacy.

http://hosted.ap.org/dynamic/stories/U/US_YAHOO_DATA_SECURITY?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2013-11-18-17-45-08

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DC: The highest concentration of "rich people"?

Highest concentration of "One Percenters"  in the U.S. are in the DC metro-area (surpassing NY, Los Angeles, Silicon Valley).

http://www.stltoday.com/news/national/govt-and-politics/d-c-awash-in-contracts-lobbying-wealth/article_53336d9b-a75f-5a1a-bb19-d46d3186a960.html

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Judge Chin Dismisses Author Copyright Digital Book Scanning Suit Against Google

A great victory for Google...The lawsuit dates to 2005, when groups representing authors and publishers sued Google for scanning print copies of books in huge numbers. Years later, they agreed to a $125 million settlement, but Judge Chin in 2011 rejected the settlement. The publishers’ group later split from the authors and reached its own agreement with Google that was not subject to court approval.

http://www.nytimes.com/2013/11/15/business/media/judge-sides-with-google-on-book-scanning-suit.html?_r=0

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Law Firms Adding Cybersecurity Practice Groups

http://www.post-gazette.com/business/legal/2013/11/04/VENTURING-INTO-THE-DATA-BREACH-Law-firms-adding-cybersecurity-fields/stories/201311040006?goback=%2Egde_2083215_member_5806592802565419012#%21

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Google Must Wipe Out Compromising Photos of Max Mosley From Its Search Database, French Court says.

Consistent with EU's principle of the "right to be forgotten", can one require search giant Google to wipe out troubling photos or other information? This goes to the heart of the tension of free speech/free flows of information vs. rights to privacy. While Max Mosley does not cut a very sympathetic figure, this is a fascinating test case. We'll see if this decision holds in France (my guess is "yes"). How long will it be before these trends/impulses find their way across the pond?

http://www.dailymail.co.uk/news/article-2488600/Google-banned-linking-Max-Mosely-S-M-video.html

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Six Good Things About the 2013 Innovation Act

https://www.eff.org/deeplinks/2013/11/six-good-things-about-innovation-act-part-three-ending-discovery-abuse

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Sunkist Nailed for Diverting Retiree Employment Funds for Operating Expenses

Major ERISA violations, not to mention major ethical lapses.

http://sfvbj.com/news/2013/nov/01/sunkist-ordered-repay-retirement-funds/

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Adobe Security Breach Worse Than Originally Thought

Up to 38 million and counting.

And it looks like Source Code from flagship products like Reader and Flash were breached too.

http://www.pcworld.com/article/2059002/adobe-security-breach-worse-than-originally-thought.html

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Ixia CEO Resigns Over Falsifying Resume

Remember Scott Thompson at Yahoo!?  Just as in that case, the CEO of another publicly-traded tech company (here locally in the Los Angeles area) was terminated for representing that he had degrees that  in fact he did not have.

http://sfvbj.com/news/2013/oct/28/ixia-ceo-resigns-over-resume-flap/

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He's Baaaccck! Carl Icahn Buys More Apple, Shares Rise

Activist shareholder Carl Icahn who announced he was starting to take large positions in Apple, has just purchased some more. Icahn says Apple is very undervalued and that the company should commence a large share re-purchase program, which if adopted, claims Icahn, would increase Apple's EPS by 33 1/3%. The downside: The buyback plan would require Apple taking on significant debt.


http://www.forbes.com/sites/genemarcial/2013/10/28/plaudits-to-carl-icahn-for-reigniting-apples-weary-stock/

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Talk about Creepy: Aaron's Settles with FTC re Charges That It Secretly Monitored Consumers Including by Taking Webcam Pictures of Them in Their Home

Aaron’s, Inc., a national, Atlanta-based rent-to-own retailer, has agreed to settle FTC charges that it knowingly played a direct and vital role in its franchisees’ installation and use of software on rental computers that secretly monitored consumers including by taking webcam pictures of them in their homes.

Under the terms of the proposed consent agreement with the FTC, Aaron’s will be prohibited from using monitoring technology that captures keystrokes or screenshots, or activates the camera or microphone on a consumer’s computer, except to provide technical support requested by the consumer.

In addition, Aaron’s will be required to give clear notice and obtain express consent from consumers at the time of rental in order to install technology that allows location tracking of a rented product. For computer rentals, the company will have to give notice to consumers not only when it initially rents the product, but also at the time the tracking technology is activated, unless the product has been reported by the consumer as lost or stolen. The settlement also prohibits Aaron’s from deceptively gathering consumer information.

The agreement will also prevent Aaron’s from using any information it obtained through improper means in connection with the collection of any debt, money or property as part of a rent-to-own transaction. The company must delete or destroy any information it has improperly collected and transmit in an encrypted format any location or tracking data it collects properly.

http://www.ftc.gov/opa/2013/10/aarons.shtm

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3 Years in Prison Recommended for Scott London, Probation Office Report Reveals

Former KPMG audit partner, Scott London who engaged in insider trading is facing up to 3 years in prison. According to this news article he apparently was prepared to a settlement which would still require 12-18 months of jail time.

http://sfvbj.com/news/2013/oct/24/three-years-prison-sought-former-kpmg-auditor/

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Innovation Act of 2013 -- Going After the Patent Trolls

Another new bill in Congress sponsored by Bob Goodlatte (R-VA), but enjoying broad bi-partisan support from such members as Reps. Zoe Lofgren (D-CA), Spencer Bachus (R-AL), Jason Chaffetz (R-UT), Howard Coble (R-NC), Peter Defazio (D-OR), Anna Eshoo (D-CA), and Blake Farenthold (R-TX). An earlier version of the bill was co-sponsored by Congressman Farenthold and Rep. Hakeem Jeffries from D-NY.

The following summary (courtesy of our friends at the EFF) of the bills key features include:

• Heightened Pleading: Requiring a patent holder to provide basic details (such as which patents and claims are at issue, as well as exactly what products allegedly infringe and how) when it files a lawsuit.
• Fee shifting: Requiring the loser in a patent case to pay attorney’s fees and costs. This would make it harder for trolls to use the extraordinary expense of patent litigation to force a settlement.
• Transparency: The draft includes strong language requiring patent trolls to reveal the parties that would actually benefit from the litigation (called the real party in interest).
• Joinder: If the plaintiff is a shell-company patent troll, the defendant could require the real party in interest to join the litigation. Even better, a prevailing defendant could collect attorney’s fees from the real party in interest if the patent troll can’t or won’t pay.   
• Staying customer suits: Requiring courts to stay patent litigation against customerswhen there is parallel litigation against the manufacturer.
• Discovery reform: Shutting down expensive and often harassing discovery until the court has interpreted the patent. This should make it easier for defendants to dispose offrivolous cases early before the legal fees and court costs really add up.
• Post-grant review: The bill expands an important avenue to challenge a patent's validity at the Patent Office (known as the transitional program for covered business method patents). While this procedure is still too expensive for many of the trolls’ smaller targets, we support efforts to make it easier to knock out bad patents.

https://www.eff.org/deeplinks/2013/10/eff-thanks-patent-trolls

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Bill, Baby, Bill

An Iowa contract attorney for the Public Defender's office was found to have billed more than 24 hours in a day for 80 separate days between 2007 and 2011.

Appropriately, felony charges have been brought.

http://www.abajournal.com/news/article/contract_attorney_faces_felony_overbilling_case_allegedly_claimed_over_24/?sc_cid=131016AA&utm_campaign=weekly_email&utm_medium=email&utm_source=maestro

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Twitter Discloses That Data Mining Is A Significant Revenue Source

Not terribly surprising and still a relatively small percentage of Twitter's revenue, but I suspect this will only grow.

http://www.bizjournals.com/washington/blog/techflash/2013/10/twitters-data-mining-business-proves.html

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Law School 2013 Enrollments Are Down Dramatically

The numbers on the attached chart are quite shocking. One is left with the inescapable conclusion that except for the Top 5 or 10 Law Schools, legal education has to change and change dramatically. Several will simply disappear.

http://taxprof.typepad.com/taxprof_blog/2013/10/1l-enrollment-.html

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New Notice Requirement in California Re Do Not Track

In California, the Online Privacy Protection Act, requires a Web site or online service that collects Personally Identifiable Information (“PII”) about California residents to, among other things, state in its privacy policy, not only the types of PII that are collected but also the categories of third parties with whom such PII is shared.

A new amendment, AB 370, was signed into law by Governor Jerry Brown and takes effect on January 1, 2014.  The new law requires that all such Web sites or online services must disclose how they respond to “do not track” features or other mechanisms on Web browsers that provide consumers the ability to exercise choice regarding the collection of PII about an individual consumer’s online activities.

Compliance with this disclosure requirement may be achieved by “providing a clear and conspicuous hyperlink” contained in the privacy policy that links to a description “of any protocol the operator follows that offers the consumer” the choice to opt-out of internet tracking. 

As always, a fundamental consideration is: What is the consequence for non-compliance? Here, it seems the answer is "not much". My sources tell me the privacy advocates feel shafted on this one, getting "only" a notice requirement out of the state legislature and violators receiving a 30 day "cure" period following receipt of notice of non-compliance.

http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140AB370

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Big Data and the Law

The mass media is now discovering that the ubiquity of "Big Data" is now impacting how lawyers assess cases. Lex Machina, founded by Stanford Law Professor, Mark Lemley, has assembled a wide database of litigation outcomes which purports to provide some directional and even predictive attributes to attorneys (and clients) assessing case values.

Given the availability of similar analytics (predictive pricing) in other verticals (for example, IRI in the retail grocery space and Power Information Network for retail automotive, services offered by the likes of Lex Machina are long overdue in the legal industry which have instead long relied on "horse sense" and "gut instinct".

http://blogs.wsj.com/law/2013/09/24/should-lawyers-fear-big-data-or-embrace-it/

See, as well, Michigan State University, Professor Daniel Katz's formulation of General Counsel's as "Supply Chain Managers".

http://reinventlaw.com/main.html

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Court Shuts Down Massive Sweepstakes Scam

The defendants sent more than 3.7 million letters during the past two years telling "winners" all they had to do was send in $20, $50, whatever, to collect their $1 million or more in winnings.   The scammers allegedly sent out nearly 800,000 letters to people in 156 countries in the first half of 2013. They have collected more than $11 million from consumers since 2009.  The vast majority of the victims of this scam appear to be over 65.

http://www.ftc.gov/opa/2013/09/universal.shtm

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HIPAA Omnibus Compliance Rule Takes Effect Today

In particular, some important new requirements for Business Associates (and those that are subcontractors to Business Associates). See a good bullet point summary from Hunton Privacy Blog.

http://www.huntonprivacyblog.com/2013/09/articles/hipaa-omnibus-rule-compliance-deadline-has-arrived/

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SEC Issues New Proposed Regs on Pay Disclosure Ratio

The Securities and Exchange Commission today voted 3-2 to propose a new rule that would require public companies to disclose the ratio of the compensation of its chief executive officer (CEO) to the median compensation of its employees. 

The new rule, required under the Dodd-Frank Act, would not prescribe a specific methodology for companies to use in calculating a “pay ratio.”  Instead, companies would have the flexibility to determine the median annual total compensation of its employees in a way that best suits its particular circumstances.

The worry, however, is that it may be hard to draw inferences or comparisons across industries or even among competitors. There are also opportunities to distort the numbers by firms hiring more highly paid employees and outsourcing to contractors lower-paid, lower skilled activities. I see lots of work on the horizon for lawyers, regulators, HR/comp consultants and others. 

Ah, the magic of unintended consequences!

http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370539817895#.Uj-KtM1znbA

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Google Considers Abandoning Cookies

It has been reported (initially in USA Today) that Google is considering abandoning cookies for AD-ID, a system which might be sold as something more appealing to advertisers, market researchers and consumers alike. Already of course,  Microsoft has made "do not track" the default setting for Internet Explorer. Apple Safari already blocks third party cookies as will new versions of Firefox.

Hard to tell if this is a "if you can't beat them, join them" situation or something much deeper/more nuanced. Somehow though, if I were forced to beat, I know where I would put my money.

http://www.businessinsider.com/google-may-ditch-cookies-for-adid-2013-9

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Pew Poll Regarding Online Anonymity: The Findings Stink

A new survey finds that most internet users would like to be anonymous online, but many think it is not possible to be completely anonymous online. See details contained in link below.

http://pewinternet.org/Reports/2013/Anonymity-online.aspx

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Bill, Baby, Bill: Lawyer Bills 29 Hours In a Day

Above the Law reports on a court-appointed attorney who billed 29 hours in a day. Now, like me, I know that most lawyers entered the profession because they are mathematically challenged. That may be the case here. And I think this is where he is probably going with the "sloppy book-keeping" argument, anyway.

Here is another thought: What about travel across time-zones? That is a great way to rack up hours in excess of 24 per day.

All of this of course tarnishes our collective legal reputations. Absurd outcomes like this act as a sort of tragicomic reference point for all that is wrong with the legal profession.

http://abovethelaw.com/2013/09/lawyer-billed-29-hour-day-to-the-same-client-and-didnt-expect-to-get-caught/

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CSUN Grad At Center of KPMG Insider Trading Scandal

According to the Wall Street Journal, former KPMG audit partner, Scott London, received "on a couple of occasions" cash of $1,000-$2,000, some meals, and a discount on a watch from a unnamed golfing buddy. For this relatively modest consideration, Mr. London shared confidential and proprietary information of his audit clients, Herbalife and Sketchers USA, Inc. that was used by said golfing buddy to make some stock trades. Apparently a lot of stock trades. In so doing, London breached his fiduciary duties as the company auditor, violated virtually every material canon of professional ethics and committed criminal violations of the Securities Act, including breaches of insider trading laws. I suspect there is a lot more to the story, including, I suspect, a lot more in the way of additional payments or other consideration to London. It pains me every time I read of these major breakdowns of trust. The fact that he is an alumnus of CSUN's otherwise very excellent accounting program (and where I also teach) makes it all the more disappointing.

http://www.zerohedge.com/news/2013-04-09/meet-kpmg-partner-who-leaked-secret-client-data-highest-bidder

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SEC Rules on Social Media

The Securities and Exchange Commission on Tuesday saidcompanies may use social media to disseminate key information, so long as investors have been alerted about where to look for it.

http://blogs.wsj.com/law/2013/04/02/size-of-social-media-following-doesnt-matter-to-sec/

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K&L Gates Posts Detailed Reporting of Financial Performance

In a highly detailed public disclosure, K&L Gates reports 2012 financial performance. Zero debt, but year over year top-line and bottom-line look very flat.

http://www.klgates.com/files/Upload/2012_Firm_Financials.pdf

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