United States: Vibes - Duane Morris Update on Technology Law

Welcome to Vibes, Duane Morris' periodic update on legal developments in information technology, e-commerce and telecommunications.

On April 10, 2006, Disney announced that they will offer some of their most popular television shows over the Internet. They will be conducting a two-month test of the market in May and June, with shows such as "Lost" and "Desperate Housewives" becoming available over the Internet the day after they air on ABC. The move is expected to create waves with Disney's existing partners because if more people view the shows over the Internet instead of on television, advertising space will be worth less. Disney has tried to assuage concerns by touting the move as only a "test" and a "learning experience."

For more information please go to

http://corporate.disney.go.com/news/corporate/2006/2006_0410_abchitshows.html and

http://www.businessweek.com/technology/content/apr2006/tc20060411_119327.htm?chan=technology_technology+index+page_today%27s+top+stories

On April 9, 2006, United States District Judge Shirley Wohl Kram approved the $2.65 billion settlement of a class action lawsuit against America Online arising from claims that advertising revenue was fraudulently counted. The violations occurred prior to the merger between America Online and Time Warner. Time Warner will be responsible for the majority of the settlement while Ernst & Young LLP, its auditor, will pay $100 million.

For more information regarding the settlement, please go to

http://news.zdnet.com/2100-9588_22-6059264.html and

http://news.com.com/Judge+OKs+2.65+billion+Time+Warner+AOL+settlement/2100-1030_3-6059264.html

A cable-franchising-reform bill which would permit new providers into the market 30 days after application to the state was recently introduced in California. Incumbent cable operators view the bill as an attempt by the phone companies to choose particular neighborhoods in which to provide service and have vowed to oppose the bill unless amended. The bill's authors, however, believe that the bill would create new competition by abolishing the state's policy that requires new providers to serve the same areas as incumbent providers, and that economics will prevent discrimination.

For a more complete discussion regarding the California legislation, please see

http://www.multichannel.com/article/CA6322864.html?display=Breaking+News

On March 16, 2006, the New York Tax Appeals Tribunal ruled in In re Fastnet Corp. (No. 819632) that the purchase of transmission services used for Internet access is exempt from sales tax. The court ruled that it is exempt under New York Tax Law Section 1105(b)(1)(B) as "interstate and international telephony and telegraphy and telephone and telegraph service."

The complete ruling of the New York Tax Appeals tribunal may be found by following

http://www.nysdta.org/Decisions/819632.dec.htm

The Financial Times recently reported that a company in Ohio has embedded silicon chips in two workers in order to limit access to a room which holds security video footage for government agencies and the police. While RFID (Radio Frequency Identification) chips have been used in tracking goods in transit and pets, the use in employees will add to the controversy over RFID technology.

To read the complete Financial Times article, please follow

http://news.ft.com/cms/s/ec414700-9bf4-11da-8baa-0000779e2340.html

Google recently introduced a new search-across-computers feature that some prospective users reportedly claim could create significant privacy risks and could violate federal data-privacy regulations. Google Desktop 3 lets users search across multiple computers for files and stores copies of files on Google's servers. The copies may then be transferred to other users. Google acknowledged that certain risks exist and have introduced Google Desktop 3 for Enterprise, which allows system administrators to disable certain features. They stated that the determination of whether to enable certain features should be made by each enterprise.

To read the CNET articles regarding Google's Desktop 3 please follow

http://news.zdnet.co.uk/software/applications/0,39020384,39252738,00.htm and

http://news.com.com/2100-1002_3-6041338.html

On March 21, 2006, the lower house of French Parliament approved a law that would require firms selling music downloads to make available information about their Digital Rights Management (DRM) systems. DRM systems are the software that companies use to prevent songs from being copied and would permit other parties to request the DRM system so the protected files can be made interoperable. Apple believes that enacting this law would contribute to piracy by permitting people to load their iPods with interoperable music which cannot be effectively protected. The proposed law must still be approved by the French Senate before being enacted.

For more information on the proposed French law and Apple's reaction please go to

http://news.bbc.co.uk/1/hi/technology/4833010.stm and

http://news.com.com/Apple+calls+French+law+state-sponsored+piracy/2100-1025_3-6052754.html

For more information, please contact Michael J. Silverman, head of the firm's Information Technologies and Telecom Practice Group.

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