Originally published November 17, 2005
Welcome to Vibes, Duane Morris' periodic update on legal developments in information technology, e-commerce and telecommunications.
Recent Developments
House Introduces the Financial Data Protection Act of 2005
On October 6, 2005, five members of the U.S. House of Representatives Financial Services Committee introduced the Financial Data Protection Act of 2005. This legislation is aimed at protecting personal information, preventing identity theft and providing a standard for informing consumers of data breaches. The proposed bill would, among other things, require companies to investigate possible breaches involving sensitive personal information and establish guidelines for notifying consumers about data breaches through the use of a standardized e-mail or envelope. The Act becomes one of several bills introduced this year in response to data breaches involving the personal information of up to 50 million people.
The House Committee on Financial Services' press release discussing the provisions of the Financial Data Protection Act of 2005, including a link to the proposed legislation, may be found at http://financialservices.house.gov/news.asp?FormMode=release&id=720
Sales of Digital Music Rise as Overall Music Sales Decline
The International Federation of the Phonographic Industry (IFPI) recently reported that sales of digital music tripled during the first half of 2005. Digital music sales increased from $220 million in the first half of 2004 to approximately $790 million, or roughly 6% of total record industry sales, for the same period in 2005. The rise in sales was prompted by an increase in sales of digital ring tones and broadband services. Despite the increase in digital music sales, the global music market declined 1.9% overall. The IFPI attributed the drop in sales to several factors, including lower retail prices, which affected CD revenues, and illegal downloading.
The IFPI's press release is available at http://www.ifpi.org/site-content/press/20051003.html
Mergers of Telecom Giants Approved by the DOJ
On October 27, 2005, CNET News.com reported that the U.S. Department of Justice approved the mergers of Verizon and MCI, and SBC and AT&T. The Verizon-MCI merger was approved with the caveat that Verizon and MCI must lease unused fiber-optic connections to competitors in buildings in Verizon's East Coast territory. Similarly, SBC and AT&T had to agree to provide access to competitors within SBC's territory where AT&T and SBC are the only providers with service to certain buildings. Both mergers are expected to close either later this year or in early 2006. Both transactions must still gain approval from the Federal Communications Commission.
The CNET News article is available at http://news.com.com/DOJ+approves+telecom+megamergers/2100-1033_3-5918010.html?tag=nefd.top
Venue Requirement in Georgia Identity Fraud Statute Unconstitutional
On October 3, 2005, the Georgia Supreme Court ruled, in State v. Mayze, that the venue portion of the Georgia Identity Fraud Statute is unconstitutional. The Court held that the Identity Fraud Statute is unconstitutional "to the limited extent that it provides that venue for identity fraud is proper in the county where the victim resides or is found, irrespective of whether the defendant obtains or records identifying information of the victim or accesses or attempts to access the resources of the victim in the county of the victim's residence." The Court found that the venue portion of the statute violated Article VI, Sec. 2, Part VI of the Georgia Constitution, which mandates that "all criminal cases shall be tried in the county where the crime was committed...."
The complete Georgia Supreme Court decision in State v. Mayze may be found at http://www.gasupreme.us/pdf/s05a1225.pdf
Credit Reporting Agencies Team Up to Develop Encryption Standards
MSNBC.com reported that the three leading credit reporting agencies, Equifax, Experian and TransUnion, would work together to develop encryption standards aimed to protect the personal and financial information each distributes electronically. The companies stated that they believed that a single industry standard would "further assure the protection of sensitive consumer data when transmitted between data furnishers and credit reporting companies."
The complete MSNBC.com article is available at http://msnbc.msn.com/id/9443982/
Are Junk Faxes Back?
Since 1991, the Telephone Consumer Protection Act and Federal Communications Commission rules have made most junk faxes illegal. Recently, Congress enacted the Junk Fax Prevention Act, which permits businesses to send unsolicited advertisements by facsimile to businesses or consumers with whom they have "an established business relationship," an exemption that already exists in the Telemarketing Sales Rule and the CAN-SPAM Act. The Act does provide, however, that the sender must include its contact information and notice of how the recipient may opt-out of receiving future faxes.
The complete Junk Fax Prevention Act is available at http://www.govtrack.us/data/us/bills.text/109/s714.pdf
Valid Contract Created When Consumer Opens Package Labeled with Use Restrictions
In Arizona Cartridge Remanufacturers Association v. Lexmark International Inc., the U.S. Court of Appeals for the Ninth Circuit held that the consumer's act of opening the packaging of a computer printer cartridge, where Lexmark had placed usage restrictions on the outside of the box, created a valid contract. The Court reasoned that the consumer had sufficient notice of the restrictions and could reject their terms by refusing to purchase the printer cartridge. Additionally, the court determined that consumers received consideration for agreeing to the restrictions in the form of a price discount for agreeing to return the spent cartridges.
http://www.eff.org/legal/cases/ACRA_v_Lexmark/ACRA_v_Lexmark_9th_circuit_ruling.pdf
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