The New Wave of Privacy Lawsuits: How Your Private Information—And Your Company's Information—Is Being Mined for Profit and Fraud

The New Wave of Privacy Lawsuits: How Your Private Information—And Your Company’s Information—Is Being Mined for Profit and Fraud

By Jeffrey H. Albright

The headline was sobering: “Race is On to Fingerprint Phones, PCs.” Published by The Wall Street Journal on December 1, 2010, the article described how a young entrepreneur, David Norris, planned to collect the digital equivalent of fingerprints from every computer and cellphone. Mr. Norris is taking the unique clock settings, different fonts, and the hundreds of details that each computer has with other computers to develop a computer fingerprint database of information to build profiles of people who use them—and to sell that information to advertisers. To date, Mr. Norris has identified and catalogued 200 million devices—and expects to have one billion devices of stored information by the end of 2011.

It did not take long for the Federal Communications Commission to strike back. Four hours after The Wall Street Journal article was published, Grant Gross of IDG News reported that the FCC was recommending that a “do not track list” (similar to the telecommunications “do not call list”) should be implemented. Unfortunately, such action would have to be implemented by the Internet industry or by Congress. As FTC Chairman Jon Liebowitz stated during a recent press conference, “Despite some good actors, self regulation of privacy has not worked adequately and is not working adequately for American consumers.”

In the face of these warnings, the privacy onslaught continues. Facebook provided applications access to addresses and phone numbers until a change was made in January 2011 to change privacy policies. As recently as March 10, 2011, Joel Stein, in an article written for Time, reported that three hours after he gave his name and e-mail address to Michael Fertik, the CEO of, Mr. Fertik called him back and read Mr. Stein’s social security number back to him. Similarly, Google Ads Preferences shows an individual’s interest in politics, foods, sports, purchases and any number of other individualized likes and dislikes. As Mr. Stein reported, Alliance Data (an enormous data-marketing firm in Texas) knew that Mr. Stein was, “a 39 year-old college-educated Jewish male who takes in at least $125,000 a year, makes most of his purchases online and spends an average of only $25 per item. Specifically, it knows that on January 24, 2004, I spent $46 on ‘low-ticket gifts and merchandise’ and ‘that on October 10, 2010, I spent $180 on intimate apparel. It knows about more than 100 purchases in between.’” Each of those pieces of information—rightly or wrongly—is sold for less than a penny to advertisers, which then deliver ads to the individual user.

So how can you guard against these invasions of privacy, whether you are a company or an individual? It takes a combination of computer discipline and knowledge of laws and regulations. For example, you (and your employees) can decide not to check “preferred” subjects offered by online search engines. Avoid placing personal private information and company-related information on social networking sites. Read—and perhaps opt out of—security agreements
and licenses that include provisions that allow companies to share your information with affiliates or advertisers. Change passwords frequently, and increase the level of security of your passwords by simply using upper and lower case letters.

Equally important, be familiar with both state and local laws. In most states, consumer protection rules by state commissions mirror federal law and prohibit the disclosure of CPNI (Customer Proprietary Network Information). For example, an end user’s name and phone number cannot be disclosed without consumer consent, a court order or an adjudicated decision. In California, federal lawsuits have recently been filed against companies that request zip codes at the time of in-store purchases. While technology has placed more pressure on maintaining personal information (or company proprietary information), common sense, good computer practices, and knowledge of your legal rights can help you or your company protect your identity and proprietary information.

False Patent Marking
By Ken D’Alessandro and N.J. Thompson

United States patent law specifically provides for patent owners to “mark” patented goods to provide constructive notice to the public that their goods are patented. Constructive notice comes into play in patent infringement lawsuits as it relieves the patent owner of the requirement to prove that it notified the defendant of the alleged infringement. Clearly it is advantageous for patent owners to use marking to indicate their goods are patented, so attorneys routinely advise clients to appropriately mark their products according to the marking provisions of patent law. As a result, patent marking is virtually ubiquitous and most people are exposed to patent marking in their daily lives. However, patent owners can also be fined “not more than $500 for every such offense” for falsely marking goods as patented “for the purpose of deceiving the public.” The action is called a “Qui Tam” action, and any person, even though not personally injured by a defendant’s conduct, may assert claims on behalf of the U.S. government. Of note, Congress has introduced patent reform legislation that includes a provision that would change this law to require that false marking actions may be brought only by an entity that has suffered a competitive injury as a result of a violation of the false marking statute. The prospect for passage of these changes is, at present, uncertain.

In 2009, an appellate court decision (Forest Group Inc. v. Bon Tool Co.) made false marking a hot topic for patent owners by interpreting the statutory language “for every such offense” to mean every article sold rather than every decision to falsely mark. Since this decision, more than 800 false marking complaints have been filed in federal courts. The Bon Tool ruling has, in effect, spawned a new industry, although most of the suits having been filed by “marking trolls”— persons or organizations that simply search for instances of improperly marked articles and then file suit against that manufacturer. In some instances, the manufacturer marking the goods has never owned a patent relating to the goods. In these cases, liability based on an intent to deceive the public may be relatively easy to establish. In other circumstances, which are much more likely to occur in the normal course of business, a valid patent expires, but the patent owner does not remove the marking from subsequently-sold articles. Inappropriately marking articles after a patent has expired, combined with knowledge of the circumstances, creates a presumption of intent to deceive. The presumption is rebuttable, but the presence or absence of intent in any individual case depends on the particular facts surrounding the false marking. Critically, even if intent is not proved and liability is not established, the cost to a business accused of false marking, both in lost time and legal fees, can be substantial.

In Pequignot v. Solo Cup Co., for example, the unpatented articles were plastic cups. It was alleged that Solo had manufactured over 21 billion cups after the patent marked on the cups had expired. Solo’s policy was to remove the expired patent numbers when the molds had to be repaired or replaced and, moreover, it relied on opinion of counsel that it did not have to affirmatively remove the expired patent numbers until that time. Fortunately for Solo, the court found no intent to deceive the public even though Solo had become aware of the expired patent two years after it had expired. From this case alone, it is clear that there is a potential for disaster for business owners resulting from their failure to police their patent marking programs. Accordingly, business owners should provide internal controls and work with their patent counsel in order to take advantage of the marking provisions of the patent law and to avoid the pitfalls of false marking.

One on One with Alexa Horne

What is your most important possession?
My health

Favorite part of your job?
I know it’s a cliché, but my favorite part of my job is working with people I really like and look forward to seeing every day.

Who are your real-life heroes?
Gloria Steinem; Greg Mortensen; anyone and everyone who works to benefit the lives of animals.

Most amazing place you’ve been?
Angkor Wat

Who have been your mentors?
Laura Terlizzi. Laura was a dear friend, mentor and patent partner at my original firm, Skjerven Morrill MacPherson Franklin & Friel. She passed away twelve years ago at age 51 from breast cancer.

What is your most marked characteristic?
My positive attitude

What one word or phrase do you wish people would say more often?
“Thank you”

How would your friends describe you?

What would you like to do as a follow-up career once you retire from the practice of law?
Do volunteer work with animals

Favorite sport to play?
I’ve never met a sport I didn’t like.

What is your favorite free-time activity?

What is the last book you read?
“Life” by Keith Richards

If your life was a movie, what actress would you cast to play you?
I would choose Reese Witherspoon to play the Young Alexa and Julie Christie for my older years.

Who would you most like to meet?
Not sure if this is who I would most like to meet, but I think it would be interesting to meet Zainab Salbi, the founder and CEO of Women for Women International, or Warren Buffet (or Jimmy Buffet, for that matter) or— guilty secret—the cast of “Mad Men”!

This Newsletter has been prepared by Lewis Roca Rothgerber Christie for informational purposes only and is not legal advice.
Readers should seek professional legal advice on matters involving these issues.