Mobile Apps and Consumer Privacy: California is Setting a New Standard for App Developers

California Attorney General Kamala Harris

Do your mobile apps run afoul of California’s privacy laws?  About one hundred mobile application developers are discovering that their products might be “illegal,” and many others now have to worry.  California Attorney General Kamala Harris, consistent with her commitment to consumer privacy interests, has begun to send non-compliance letters to companies like United Airlines and OpenTable, whose applications not only offer consumers the convenience of tracking their flights or making dinner reservations, but also collect information about their preferences through their smartphones.  The letters, which the AG’s office started sending in November, warn of a $2,500 fine for each copy of a non-compliant app downloaded by a California consumer.  Developers were given thirty days to respond. 

This is yet one more battleground as the law tries to catch up with the pace of technology (and vice versa).  At issue is whether the privacy policies these companies must post are conspicuous and reasonably accessible for consumers.  The California Online Privacy Protection Act (“CalOPPA”) requires that mobile application providers (“online service providers” within the language of the Act) post privacy policies describing the “personally identifiable information” (“PII”) their products gather, how that information will be used or shared, and the processes in place for a user to review and edit their PII.

 

The CalOPPA also requires this disclosure to be “reasonably accessible” to consumers.  For companies developing mobile applications, providing a privacy policy website, accessible only outside of the app, may not be enough.  Mobile developers must either post the policy or include a link to the policy within the app itself.

Harris’ action follows an agreement reached in February with Amazon, Apple, Google, Hewlett-Packard, Microsoft and Research In Motion, which together comprise the bulk of the mobile application market and are the industry’s largest accumulators of consumer data.  These six developers agreed not only to formulate privacy policies compliant with the CalOPPA’s requirements, but also to make these policies available to consumers before they download the application.

    

LinkedIn's in-app privacy policy

Going forward, entities developing applications that capture Californians’ personally identifiable information must carefully examine their privacy practices to avoid enforcement action by the California Attorney General.  Best practices include a carefully drafted privacy policy that clearly articulates what information an app will gather, how it will be used, whether and when it will be shared, and the consumer’s right to review and edit their collected data.  The policy should be accessible within the application, either on a separate screen or through a link.  A company may also choose to make the policy automatically available to consumers, in advance, on the platform from which the application is purchased (e.g., Apple’s App Store or GooglePlay) in order to bring itself in line with standards now being set by the large corporations that have already worked through the particulars with the AG’s Office.

There is a further caveat for app developers and providers.  Don’t forget that privacy policies create their own teeth and can bite back.  That is, a policy may be held to constitute a contractual obligation between the company and the consumer who agrees to it.  Thus, failing to provide the protections that a policy promises may subject a provider not only to an enforcement action from the Attorney General’s office (when, for example, the CalOPPA has been violated), but also to claims by consumers (perhaps many thousands of them in the case of a popular app) that a contract has been breached.  For example, in Claridge v. RockYou (2011), a judge in the Northern District of California allowed a class action to go forward where RockYou represented their servers as “secure” in its privacy policy despite its knowledge of security issues with its database.  RockYou later settled the action.

Although the Los Angeles Times reports that the state will “give app makers time to craft a privacy policy and fall into line with California law,” Harris has sent a clear message: her newly created Privacy Enforcement and Protection Unit will enforce the Golden State’s privacy laws.  A barrage of warning letters may sound relatively benign, but this is an opening salvo to what appears to be a vigorous litigation strategy.  On December 6, the Attorney General sued Delta Airlines in a San Francisco Superior Court for its failure to respond to a thirty-day warning letter concerning its Fly Delta app for mobile devices.  The complaint alleges that Delta’s application stores users’ credit and debit card information, geo-location information and photographs, and that Delta has “knowingly and willfully” or “negligently and materially” failed to disclose how it collects, manages, or shares this information.  The lawsuit seeks $2,500 in damages for each violation of the CalOPPA, which could quickly add up to given the fact that the Fly Delta app has been downloaded by millions of users already.  With the swiftness of the Attorney General’s action and the extent of relief that CalOPPA affords, any business seeking to reach California consumers through a mobile app must take heed.  And as we know, especially in the technology world, as California goes, so goes the country …  

The Lively Jurisprudence of Dead Celebrities: Albert Einstein, New Jersey, and the Post-Mortem Right of Publicity

Will your image live longer than you do?  Artists, celebrities, and other creatives often invest substantial time and effort cultivating a personal brand image, and most likely anticipate its longevity.  The law recognizes a person’s right to profit from this investment by preventing third parties from “free riding” on a famous individual’s name or likeness.  A majority of states recognize this “right of publicity,” but vary as to whether this right should outlast its initial rightsholder and for how long.  In some, like New York, the right is extinguished with the death of the individual.  But in others, including California, the right of publicity constitutes personal property that can be passed on to ones’ heirs.

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Big News for Small Copyright Claims?

Copyright Office considers new proposals for a copyright small claims court, but specifics are still lacking.

The story is familiar to many artists.  A freelance photographer is surprised to find that an online service has reproduced a number of copyrighted images from her website.  She reaches out to the organization with phone calls, offers to license her work for what she considers a reasonable fee, and drafts her own “cease and desist” letter.  These all go unanswered.  Realizing that her only remedy may be to sue, she seeks out an attorney who will file her case in federal court.  But the case is too small; attorneys’ fees are high; it would take at least a year to litigate; and the recovery, if she wins, is uncertain.  In the end, she simply gives up.

In 2006, the United States Copyright Office brought stories like these to the attention of Congress.  In a statement before the subcommittee on intellectual property, the Office noted the costs associated with the federal court system, which has exclusive jurisdiction over copyright cases, and concluded that “[it] is reasonable to ask whether federal courts are hospitable to most small claims.”  Two years later, Congress directed the Office to study the creation of a special network of courts that would hear low-value copyright claims.  As part of its research, the Copyright Office asked for input from interested parties in the creative community.  That commenting period just ended on October 19, and the opinions of artists’ rights organizations, corporations, and intellectual property scholars are ready for review.

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Copyright owners, such as the photographer in our example, would generally like to see an inexpensive, easily accessible forum with robust powers to grant and enforce judgments.  Reduced cost and ease of access, they argue, will lead to meaningful enforcement of intellectual property rights.  On the other hand, some worry about the potential danger to small-scale defendants who often settle rather than engage in expensive, lengthy litigation, even if they have valid defenses.  They suggest that a copyright small claims court may end up a mechanism for powerful interests to extract settlements from unsophisticated defendants.

Proposals submitted thus far address these concerns and others.  Foremost among them are the questions of how independent a court of small claims would be, whether it would limit the role of attorneys and the discovery process, whether it would be a voluntary option or mandatory, and where the cap on monetary damages would be placed.

Although the debate continues, a consensus has emerged with respect to at least some of these issues.  For example, a majority of commentators agree that such a court should be instituted outside the federal court system, either at the Copyright Office, or as an independent administrative agency.  State courts do not present a viable alternative since their dockets are already crowded and state court judges have relatively little experience with copyright law.  However, the field is far less unified when it comes to the questions of attorneys, attorneys’ fees, the permissible amount of claims, and the right of appeal.

Recently, the United Kingdom instituted its own “small claims track” in the Patents County Court, which may offer some insight.  The “small claims track” provides a venue for suits under £5,000 where neither lawyers nor experts are required and the rules of evidence are less strict.  Further, judges may grant either monetary damages or permanent injunctions, but are prohibited from entering preliminary injunctions or awarding attorneys’ fees in excess of £200.

While copyright holders laud the UK’s new “small claims track,” it is unlikely that a comparable court will be established in the United States any time soon.  As a next step, panels in New York and Los Angeles will meet next month to consider specific aspects of the many proposals offered.  As the discussion progresses, the many questions raised are sure to receive a hard look from interested parties, and the debate is bound to intensify.

Update: the Copyright Office is extending the time to submit requests to participate in the public meeting to consider remedies for small copyright claims in Los Angeles on November 26 and 27, 2012. Requests to participate are now due by November 9, 2012.

For more information, see www.copyright.gov/docs/smallclaims

Color Trademarks and Fashion: Branding That “Pops"

Color trademarks are those which use a color alone as the brand for a product, what trademark experts call a “source indicator.” Color marks are considered non-traditional trademarks, and they are generally disfavored by the U.S. Patent and Trademark Office.  Nonetheless, some color marks have achieved “distinctiveness,” that is, the degree of public recognition as a source indicator compels the USPTO to allow owners to register the color as a mark in their field of commerce.

For example, United Parcel Service holds a registration [Reg. No. 2901090] for “the color chocolate brown” [Pantone 462C] as applied to the entire surface of vehicles and uniforms” for the service of delivering personal property. Yellow is registered by the USPTO [Reg. No. 78706568] to the Lance Armstrong Foundation as a single color for wristbands for use in charitable fundraising.

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An Expanded Scope for the Copyright Misuse Defense?

We are often reminded that the basis for U.S. copyright law is the short provision of the Constitution giving Congress the “Power…To Promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” [Art. 1, Section 8] 

This constitutional source says that the “monopoly” granted must be temporary, and that the restraints (under copyright and patent law) should serve a particular purpose, the promotion of knowledge and art. Still, over the years, the duration of those “temporary restraints” (exclusive rights) has been increasing. 

It is also not apparent that the constitutional purpose is a consistently observed guiding principle. Some argue there is too fierce a trend currently toward expanding copyright and its enforcement. At the same time, increased copyright vigilance has been regarded by others as a necessity given the ready distribution and easy duplication afforded by digital technology.

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[1] Other invocations of the copyright misuse defense served a similar purpose. In Alcatel U.S.A., Inc. v. DGI Technologies, Inc., 166 F.3d 772 (1999), the Fifth Circuit allowed a copyright misuse defense when the holder of a copyright in software licensed its use only on the condition that the licensee use the software only on the copyright holder's hardware. In DSC Communications Corp. v. DGI Technologies, 81 F.3d 597 (1996), another Fifth Circuit case, a license prohibiting the development of a competing microprocessor card was found to be copyright misuse.

Expanding the Internet: What do ICANN’s New gTLD Applications Mean for Trademark Owners?

One year ago, as part of a plan to expand the capacity of the Internet’s domain name system, the Internet Corporation for Assigned Names and Numbers (ICANN) began accepting applications for more generic top-level domain names (gTLDs). Currently, the well-known gTLDs include .com, .org, and .net, as well as some of the country indicators that have been repurposed, such as .tv and .es. Adding gTLDs will allow for exponentially more domain names. During the new gTLD application period, ICANN opened the door to any combination of three or more letters in most major alphabets: .blue, .school, .mcdonalds, .law or .商城. The possibilities might seem almost endless, but, on “Reveal Day,” ICANN disclosed a list of 1,930 applications for new gTLDs.  

What does this mean for trademark owners and businesses? Some procedures have been set up; some are still vague and in development. At this stage trademark owners can review the list of proposed gTLDs to determine whether their brands, products or industry names are impacted, and then decide the next step to take with ICANN or otherwise. 

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President or Pirate? The DMCA Takedown War of the Presidential Campaigns

In what has been described by some as over-zealous enforcement of copyright, BMG (the large German publisher) forced YouTube to take down a Mitt Romney campaign video because it included footage of President Obama singing Al Green’s “Let’s Stay Together.”

The Romney video followed the Obama campaign’s release of a political ad featuring Mitt Romney’s off-key rendition of “America the Beautiful" as underscored to images of off-shore employment out-sourcing. Romney’s campaign used the Al Green song to attack Obama for his relationship with lobbyists and campaign fundraisers. YouTube pulled down the Romney ad after BMG, the music publisher that owns the copyright in the “Let’s Stay Together” composition, filed a copyright takedown notice under the Digital Millennium Copyright Act (DMCA). Not wanting to look like it was playing politics and only targeting the Romney ads, BMG also sent notices to YouTube to take down the original news footage clips of Obama singing the song.[1] The Obama campaign met no similar copyright opposition to its attack ad because the copyright to “America the Beautiful,” first released in 1910, has expired and that musical composition is now in the public domain.

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Louboutin Loses: The Red-Soled Plot Continues

Footwear designer Christian Louboutin, has just suffered another set-back in the company’s ongoing effort to own the red sole, this time in Louboutin’s native France. In 2008, Louboutin filed a lawsuit in Paris against Spanish clothing manufacturer and retailer Zara, after Zara sold a red-soled shoe.  This May, the French Cour de Cassation (the French appeals court) irrevocably invalidated Louboutin’s trademark to the red sole in France. 

The decision appeared to rest on what some might consider a technicality, with the Cour de Cassation noting that Louboutin’s France trademark registration lacked a specific Pantone color reference, a standardized color reproduction code used universally in a variety of industries and in trademark registration[1]. Accordingly, the Cour de Cassation faulted the registration for its lack of precision and distinctiveness.

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CBS is Finally Off the Hook for the 8 year-old “Wardrobe Malfunction,” But Next Time will be Different

8 years later and it’s still hot news. This summer session, the Supreme Court, finally, officially, put the CBS Super Bowl “wardrobe malfunction” matter to rest. It let stand a 3^rd Circuit Court of Appeals ruling that, in 2008,  threw out the FCC’s $550,000 fine against CBS for its 2004 broadcast of a fleeting view of singer Janet Jackson’s breast.

That 2008 Appellate Ruling deemed the FCC’s fine for the network’s unplanned glimpse to be "arbitrary and capricious," an unexplained departure from what the Appellate Court described as a 30-year FCC policy of exempting “fleeting” moments of indecency from the scope of the indecency broadcast ban [18 U.S.C. § 1464, prohibits the broadcasting of “any obscene, indecent, or profane language”].

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Linsanity: From the Basketball Courts to the Trademark Office

“Linsanity” began in February when Knicks benchwarmer Jeremy Lin unexpectedly took the basketball world by storm. Lin had received no athletic scholarship offers out of high school, wasn’t drafted out of college, and was assigned to the Warrior’s D-league three times in his first season with the NBA. 

A soaring basketball career was not generally expected from this 2010 Harvard University graduate, but, after suddenly leading the Knicks to five victories in a row, Lin was promoted to the Knicks’ starting lineup. Lin even impressed veteran Lakers player, Metta World Peace (born Ron Artest), who ran by reporters shouting “Linsanity! Linsanity!” after, with less than a second remaining, Lin scored a game-winning three-pointer against the Toronto Raptors. 

So, on the Monday after the last game of his five-game winning streak, Lin did what any good manager would advise a rising star with a catchy moniker to do: he had his lawyers file a trademark application to register LINSANITY with the United States Patent and Trademark Office (USPTO).

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Stealing Valor is Not Yet a Federal Crime

With all the clamor recently about some high-profile Supreme Court rulings– especially, those addressing immigration and healthcare legislation – one case about the exercise of First Amendment free speech rights received little public attention outside of the military communities. On June 28th, the Supreme Court ruled that the government does not have the power to punish individuals for lying about their receipt of military awards. Such a law, the majority said in a 6 to 3 decision, is an unconstitutional infringement of free speech.

The Stolen Valor Act of 2005 made it a crime for a person to falsely claim, orally or in writing, “to have been awarded any decoration or medal authorized by Congress for the Armed Forces of the United States.” 

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The Power of One: Some Issues in the Application of Complex Copyright Transfer Termination Rights

Authors – even the more successful composers, painters, writers, and other creatives – are familiar with the early career financial struggles that come with devoting oneself to creative work before that “big break.”  

An author’s initial negotiations with publishers, producers and distributers often have a “David & Goliath” character, with the author concerned not to overplay his or her hand, or just truly lacking bargaining power. 

I wrote more about this here on my company blog.

2nd Circuit’s Safe Harbor Ruling Influences 9th Circuit to Reconsider: What’s an ISP to do?

Many Internet Service Providers (ISP) assume that take-down requirements with respect to copyright claims are fairly standard and that they can readily avoid copyright liability for posts by users by following some simple rules. The activity in the Courts on the Circuit Courts on this issue shows otherwise.

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Art Imitates Art: “Pictures Generation” Artist Richard Prince and Fair Use

The Fair Use doctrine allows others to use copyrighted material without the copyright holder’s permission under certain circumstances. It sets limits on the exclusive rights copyright law grants copyright owners: the rights to reproduce, distribute, perform, display and make derivative works. Originally a judicially created exception[1], Congress incorporated the fair use exception as a defense into the Copyright Act of 1976 under section 107. 

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France Gives the "Feu Vert" to Google Books

The United States has yet to reach an agreement over the Google digital books project, but France, a literary haven and copyright devotee, has forged ahead. With what its supporters have praised as a tool for bringing out-of-print books into the hands of new readers, the Google digital books project has sought to digitally scan collections of current and out-of-print books to create a massive digital collection on Google’s database.

Similar to the Author’s Guild class action lawsuit against Google for the alleged infringement of thousands of copyrights, the French Publishers Association and the Société des Gens de Lettres, an authors’ group, filed a lawsuit charging that Google’s digital book scanning infringed French copyright laws. However, the French publishers and authors’ group have recently dropped their six-year lawsuit and reached an agreement that would allow Google to scan books and offer digital copies for sale. This agreement will make France the first country to have an industry-wide standard for digitizing books.

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Universities and Professors Consider Possible Shifts in the IP Interest “Balance”

Who controls intellectual property that is the product of grant-funded faculty research and work in a university environment? Are the "inventions" of professors essentially the result of their positions and participation in a research environment and, as such, like those of an employee produced in the course of employment with a private company? Should written works of authorship – articles, scholarship, books, and textbooks – be treated differently from medical, biotech, or software advances that professors create or contribute to? What about the input from students, especially specialized graduate students, in the process? Should the contributions of third-party industry funds to research and development in the university setting be acknowledged with intellectual property interests? Are the creative products of professors ever “works for hire” for their universities? The American Association of University Professors (AAUP) doesn’t think so.

Two weeks ago the AAUP released a draft version of its report, “Recommended Principles & Practices to Guide Academy-Industry Relationships,” with 21 new guidelines for governing the relationship between academia and industry. Much of the 300-page report recommends already familiar principles for maintaining the integrity of academic research, but it also contains new recommendations with the controversial (for some) aim of giving faculty members more ownership interests in the products of their research than many universities currently allow.

The section entitled, “General Principles to Guide Management of Intellectual Property (IP)”, contains 11 principles that would gird up a structure where the intellectual-property interests of faculty “extend to decisions involving the management, intellectual property (IP), licensing, commercialization, dissemination, and public use” of their inventions.  It also calls for faculty senates or equivalent faculty-governing bodies to play a key role in setting policies dealing with faculty inventions. And, it suggests a process for effecting the enhancement of faculty rights: universities “should not undertake intellectual property or legal actions directly or indirectly affecting a faculty member’s research, inventions, instruction, or public service without the faculty member’s and/or the inventor’s express consent.”

It’s not surprising that the AAUP decided to draft new guidelines governing IP at this time. Before this week, many of AAUP’s most-recent documents had been criticized as archaic in light of increasing commercial sponsorship of university research. Further, a U.S. Supreme Court decision about intellectual-property rights published a year ago focused attention on the issues. Board of Trustees of Leland Stanford Junior Univ. v. Roche Molecular Systems, Inc., 131 S.Ct. 2188 (2011), held that neither universities that receive federal research grants nor the government itself has an automatic right to patents or inventions that may result from federally financed research. The ruling was initially praised by many as providing stronger support to the intellectual-property claims of individual university faculty members. Still, it didn’t offer a practical solution and, in some instances, may have back-fired on faculty stakeholders. As the AAUP reports, many “universities have responded by announcing, or weaving into faculty contracts, policies declaring they have the rights to faculty members' inventions.”

The AAUP and the report explain that because faculty have little bargaining power at the time of hiring, for instance when Ph.D. candidates are offered tenure-track jobs, they are susceptible to institutional pressures. New faculty typically sign away their invention rights without objection or much foresight about the issues, sometimes for their entire careers.

While the AAUP contends that the new changes are proposed to promote the long term interests of both universities and private industry, as well as to protect faculty interests, the report faces opposition from other important academic organizations that say they, too, are balancing the needs of universities, industry and other stakeholders which may have been overlooked.  The Association of American Universities (AAU), which represents leading public and private research universities, and the Association of University Technology Managers (AUTM) were extremely critical of the draft version of the AAUP report, especially its recommendations regarding intellectual property rights. AAU and AUTM argue that laws currently in place, like the Bayh-Dole Act of 1980 (which governs IP issues arising from federally sponsored research; permitting universities, instead of the government, to hold title to inventions), adequately address the IP issues that arise between researchers, universities and private industry.

AUTM’s vice president for advocacy opposes the recommendations because they "oversimplify the incredibly complex, nuanced process of academic technology transfer.” In addition, many believe that the recommendations overlook the fact that most university research is the product of more than one professor or department, usually involves a team of faculty and students and, sometimes, even more than one university.  AUTM also said that the report "assumes that faculty alone are the most qualified to make decisions about how and to whom technologies are licensed." AAU and AUTM believe that license negotiations should be handled by those trained and experienced in balancing all stakeholder interests, those of universities, faculty, funders, students and the larger society. Of course, bringing in experts to manage negotiations does not mean that enhanced interests or participation cannot be given to certain constituents.

The debate surrounding assignment and ownership of inventions by employees or employers is nothing new. There are state statutes and a large body of case law on the matter.[1] The AAUP draft report is part of the intense legal activity concerning IP ownership and scope of employment. It’s not surprising that there’s a lot of talk about this report and its IP issues, and it’s not surprising there are no easy or uniform answers. There will be intense discussions about any kind of rule proposed to structure academic relationships and faculty interests. And a lot of proposed exceptions are to be expected in a sometimes rarefied world where relationships are defined in contrast to the “standard” of employee-employer, and where “academic freedom” and the unfettered exchange of knowledge and ideas are paramount values.  

In addition to the new guidelines concerning IP management, the report has sections devoted to strategic corporate alliances and mechanisms for addressing potential conflicts of interest that can undermine research integrity. The report recommends a number of measures to encourage transparent public reporting of professors' industry ties and discourages certain kinds of relationships that may distort professors’ public-knowledge functions.[2]

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[1]  As one of many examples, the California Labor Code § 2870 bars the assignment to an employer of inventions developed on an employee's own time, unless (1) the employee used the employer's materials or information; (2) the invention relates at the time of conception or practice to the employer's business, or actual or demonstrably anticipated research or development of the employer; or (3) the invention results from work performed by the employee for the employer. See also Mattel, Inc. v. MGA Entertainment, Inc., C.A.9 (Cal.)2010, 616 F.3d 904, 96 U.S.P.Q.2d 1012 (where employment agreement did not unambiguously require assignment of employee's idea for a new line of fashion dolls; contract specified that “inventions” included all discoveries, improvements, processes, developments, designs, know-how, data computer programs and formulae, but did not mention “ideas”).  

[2] The report cites the BP oil spill in 2010 where BP’s contract with academic scientists imposed a three year confidentiality restriction that later put scientists in a bind when the federal government sought them out as expert witnesses; BP imposed gag orders based on its contract. See “BP Buys Up Gulf Scientists for Legal Defense, Roiling Academic Community,” Mobile PressRegister, July 16, 2010; “BP Accused of ‘Buying Academic Silence,” BBC News, July 22, 2010; “BP Tries to Limit Release of Oil Spill Research,” Associated Press, July 23,2010. It also address concerns such as faculty or institutions promising or implying to deliver predetermined research results; masquerading "marketing projects” as scientifically driven clinical trial research;" and undertaking "seeding studies" from pharmaceutical companies mainly to introduce doctors and their patients to new drugs.

“Here’s Looking at You, Kid”: That’s Not London Fog in the Moroccan Mist

Burberry has made extensive social media efforts this year to tell the public how its iconic look and status developed over time. Companies, like Burberry, with a visual history to promote, are especially attracted to Facebook’s Timeline. 

Timeline lets users post stories and pictures in chronological order. Visitors scroll down on a Facebook page and go back in time to the initial creation of a product. 

The company can create a nostalgic connection between the visitor and the brand. The Facebook Timeline for this “156 year-old global brand with a distinctly British attitude” includes photos of Burberry’s first store opening in 1856, images of pilots wearing Burberry aviator suits, and pictures of its classic trench coat through the years. 

Then Burberry posted a photo of Humphrey Bogart (Rick) wearing an actual Burberry trench coat in that sublime final scene of the film Casablanca, where Rick stands on the foggy runway, one of “three little people” whose problems “don't amount to a hill of beans in this crazy world…” The Burberry caption underneath the photo reads: “Humphrey Bogart wearing a trench coat in the final scene of Casablanca (1942).”

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