Rocky Mountain National Park

Because of an extended working vacation away from Houston’s heat in Colorado, I’ve been away from the blog.  Like my kids gearing up to go back to school, I’m getting back to the normal work mode back in the office while recovering from a separated shoulder from a mountain biking incident (riding across on overpass in Houston is apparently different than actual mountain biking).  As a warm-up, here are a few quick links to interesting stories from the last couple of weeks.

Another Adwords Trademark Dismissal

From Professor Goldman’s Technology and Marketing Law Blog — another unsuccessful keyword advertising lawsuit.  The plaintiff was a collection agency and the defendant was a law firm that bid on the plaintiff’s name that triggered the following ad:

a link titled “Stop Collection Calls—Is Allied Interstate Calling You?” Below the link are two lines of text, the first listing Defendants’ URL, www.creditlaw.com, and the second bearing the slogan “Stop the calls for free!”

Under most circumstances, I would advise clients to avoid using the competitor’s name in the ad copy.  But, this is one of those easy exceptions.  It is clear the law firm is not trying to confuse consumers into thinking the law firm is the same as the collection agency.  It is a pretty easy decision, but a good reminder of how trademark law plays into search engine advertising.

An Eraser Button for Minors on Social Media

Charlie bags his first 14’er — sort of because it was Mt. Evans and we drove most of the way.

We previously mentioned an eraser button for minors on social media.  It appears the California Legislature is also back from vacation which, according to Edwards Wildman’s Digilaw Blog, means the law may be a reality soon.

Hi-Jacked Sites

One of the most difficult things to do is help clients deal with IP theft from pirates outside of the U.S.  Seyfarth Shaw’s Trade Secret Blog provides some tips on how to deal with these issues–assuming you have enough clout to get your state attorney general involved.

Cascade Falls

Don’t let your independent contractor use your email.

Evan Brown’s Internet Cases blog discusses a recent Texas opinion regarding the dangers of letting an independent contractor use the company email.  An independent contractor cannot usually bind a company to an agreement because they don’t usually have the authority.  The company, however, can clothe the independent contractor with the indicia of authority and lead the other party to believe they are dealing with the right person.  One way to do that — have the independent contractor send emails from the company account.

Understanding the law and the government’s 

Sunrise in Grand County, Colorado

To get a good baseline understanding of the law underlying the government’s ability to (store, monitor, read, index, search – you choose the verb) / (phone records/meta data/emails/cell location information — you choose the object of the verb), NPR’s Morning Edition has a good story explaining the 1978 Supreme Court decision that may say all of this is perfectly legal.

Of all the topics we discuss here, email seems to be one that applies to every business no matter how much of a traditional bricks and mortar business it may be.  According to this timeline, email has been around since 1971,* but it seems like companies are finding new ways to get in trouble with it. 

The typical situation goes like this.  An employee leaves and begins competing.  Someone searches their computers to discover what confidential information they may have taken or what they have been doing to begin the competing business.  After all, your employee policy says the company email is not be used for personal business and there is no expectation of privacy.  Lo and behold, your investigation gets you access to the former employee’s Hotmail account.  Can you search it? 

Smart lawyers are making claims under the Stored Communications Act and the Electronic Communications Privacy Act Act for such investigations (or as defensive tactics to deflect the bad acts of the departing employees).  Venkat in the Marketing and Technology Law Blog reports on a case that shows how these cases work.  In Pure Power Boot Camp v. Warrior Fitness Boot Camp, the former employees made such claims against their former employer when the former employer printed emails from Hotmail and Gmail accounts.  The emails showed the former employees were scheming to open the competing gym while still employed.  The former employer claimed one of the former employees left his username and password stored in the company computers (want Windows Explorer to remember your Hotmail password?)  

The court prevented the company from using any of the personal emails and ordered the company to return them.  In doing so, the court ruled the company violated the Stored Communications Act.   Even though the former employees could not show any actual damages, the court left open the possibility of statutory damages-per instance of access and not per email netting a paltry $4,000.  The lesson:  if you are going to access a private account, do it once and download everything although there is a split of authority on this rule.

The Electronic Communications Privacy Act applies when someone “intercepts” a communication — think tapping a phone line.  Because the email messages were already delivered, the company did not intercept them.   As a side note, certain tracking software captures messages in transmission from other servers so they can be in violation of the ECPA.

In addition to my tongue-in-cheek about only doing it once, it is always a best practice to have a policy that says not only are company emails not private, but that any information accessed on company computers is subject to review.  As Venkat explains, even having a policy does not give you a safe harbor if it is not clear.  You also need to be certain exactly how emails are accessed in light of your policy before deciding whether to pull the trigger. 

There are other related stories like the criminal prosecution of the man who accessed his wife’s email to show she was an unfit mother; and a recent ruling that says attorney-client communications over a company email account are not privileged

Emails are now the old guard in the online world, but they still make for interesting cases requiring informed decisions before a mistake makes the smoking gun inadmissible and costing you money.

*According to the timeline, the first email was from one computer to another computer right beside it and the message was “QWERTYUIOP .”  I am guessing the person who send wishes he could recall that message and come up with something a little more profound.  At least it was not an emoticon, a forwarded email predicting President Nixon has a criminal predilection.

My Spring 2010 Visibility Magazine legal corner column focuses on CAN-SPAM and federal pre-emption. 

I wish I could have the e-trade baby jump out and say “pre-empta what?” but Lindsay Lohan might sue me for $100,000,000. 

The issue is whether you have to abide by CAN-SPAM or the laws of the more than thirty separate state email marketing laws.  For those that don’t have time to read the whole column, there is a simple rule. 

CAN-SPAM is the floor–abide by it.  Best practices would dictate you satisfy California’s more stingent email marketing law.  

 http://www.youtube.com/watch?v=lEXZ2hfD3bU

Earlier this week, a California judge dismissed a $45 million false advertising lawsuit against ValueClick.  If you do email marketing, you care because the judge ruled the federal CAN-SPAM act preempted California’s more stringent email marketing law that more than likely applies to you wherever you are.

Background 

Internet service provider Hypertouch filed suit against ValueClick and others under California’s law barring false and misleading commercial emails.  Here is a copy of the original lawsuit.  Here is the link to the text of California’s law.  Here is more in the story from Reuters.  Hypertouch claimed its customers were harassed by almost 50,000 emails containing false claims.  

The Ruling 

The judge found Hypertouch failed to show actual fraud or deception by the defendants in any of the emails so the federal CAN-SPAM act applied.  California’s law would only apply if the plaintiffs could show each element of fraud which includes the intent to defraud the recipient. 

What it Means

Cases dealing with the preemption of state email laws have come down on both sides, but this case gives more support for the applicability of CAN-SPAM rather than the various state laws.  California’s law applies to anyone who “initiate[s] or advertise[s] in an unsolicited commercial e-mail advertisement to a California electronic mail address, or advertise in an unsolicited commercial e-mail advertisement sent to a California electronic mail address.”

If you are in Texas and your email advertisement goes to a California email address, you could be subject to one of the more aggressive state laws around–one of the reasons plaintiffs like to sue for this in California.

According the National Conference of State Legislatures, 37 states have an anti-spam law. Many of them are likely preempted by CAN-SPAM. Of course, just because CAN-SPAM preempts the state law does not mean CAN-SPAM does not have bite of its own.

Before engaging in an email marketing campaign, CAN-SPAM compliance is the minimum. You may also need to review the various state laws as well.

It is no secret the law has trouble keeping up with technology.  Although emails have become a mainstay of business communications, the law is struggling to apply traditional contract law to the now standard method of communication.  Although email facilitates communications in a much less formal manner, the suggestion that “it was just an email” does not cut it in the business world.  Previously, we have discussed email disclaimers (here and here).  Today, we are going to talk about being proactive during the initial contract stage.

A lesson

The importance of being careful with email communication is exemplified by a recent case out of the State of New York.  Two parties had an employment contract with a standard provision stating all changes to the agreement had to be made in writing and had to be signed by both parties.  The CEO of the company was removed and initially was given the option of leaving or accepting a demotion.  The new CEO and the former CEO communicated several times via email discussing various proposals on continued employment of the former CEO different from the initial two choices.  The new CEO wrote in an email:  “This option, it would seem, is in your best interest because it offers the best opportunity for you to achieve your stated goal…” The former CEO responded the following day: “I accept your proposal with total enthusiasm and excitement…”  The new CEO then replied that day:  “I am thrilled with your decision. You have my personal assurance that all of us will continue to work in the spirit of partnership…”  

The former CEO also sent an email to the COO stating his acceptance of the proposal.  The terms of the new status were never confirmed or signed in a separate and distinct document.  The former CEO filed suit seeking to enforce the email agreement.  The court determined the emails constituted signed writings sufficient to modify the employment contract.  Specifically, the court determined the inclusion of the author’s name at the end of their emails “signified [their] intent to authenticate the contents.”

Be proactive in the initial contract

As more and more courts move in this direction, companies can protect themselves by proactively limiting the damage that could be caused by a casual email when it comes to amending or changing detailed contracts.  In addition to the standard language that all amendments to the contract must be signed in writing to be effective, you can add a simple sentence that prohibits any modifications by email or other electronic communications. 

While the recent focus of this blog has been on email, the Ninth Circuit handed down a ruling last week dealing with whether or not a government employee has a privacy interest in the text messages sent through work networks and equipment in Quon v. Arch Wireless.  The short answer is yes.  The more detailed answer is that I would still not text anything you don’t want your mama to see.  The full text of the opinion is here.  The Wall Street Journal Law Blog discussed the opinion here.

The City of Ontario, California limited the number of text messages for its employees. Once the limit was exceeded, the police chief ordered the transcripts from the provider to see if the messages were work related. The court first determined the service provider violated the Stored Communications Act by giving the transcript to the city which was the subscriber without the sender’s permission.  This determination is based on the court’s ruling that the service provider, Arch Wireless, was an “electronic computer service” rather than a “remote computer service.”  For those interested in that distinction, you just have to read the opinion.

Next, the court turned to the liability of the City.  The court found the senders of the texts had a reasonable expectation of privacy regarding the texts’ contents and the review of them constituted an unreasonable search in violation of the Fourth Amendment. 

Before you start texting sweet nothings to your wife, or more likely someone else, take pause.   First is the obvious, this case involved a governmental employer.  Second, the court looked at the policy in place by the police department.  Specifically, there was an informal policy that the texts would not be reviewed if the police officers paid for the overages.   This was the “operational reality” despite the fact the police officer signed the formal policy prohibiting personal use on department computer equipment and that users should have no expectation of privacy.  Third, the court left open the possibility that the texts could have been requested pursuant to California’s open records laws.  Finally, the opinion suggests the length, date, time and receiver are all types of information that could have been searched, as opposed to the actual content, without any violation of the law.

The bottom line is the law on text messages appears to be no different than the law on emails or telephone calls.  Certain industries, like energy traders, record and archive every text or IM at big costs.  Otherwise, the documentary on Enron’s collapse “The Smartest Guys in the Room” would not have been as entertaining.  Many employers require employees to sign acknowledgments that there is no expectation of privacy regarding emails or IM’s.  Because the Fourth Amendment does not necessarily apply to private employers, the standards are not as high.  However, there may be certain state privacy laws at stake.  The gross overgeneralization: for users of email and IM at work, don’t expect privacy.  For employers, tell your employees not to expect privacy and stick to your acceptable use policies.

Outside of the employment context, retrieving IM’s often comes up in family law cases.  The philandering spouse is texting or IM’ing the paramour and the divorcing spouse wants to see those.  Board certified family lawyer and colleague Kyle Sanders says, “Text messaging is becoming a more important aspect of family law investigations as philandering spouses believe the medium is private. However, pracitically every provider supplies detailed call logs which show the time, date and the phone number to which the text was sent or the phone number from which the text originated. This information is typically sufficient to establish the frequency of communication and the party with whom the philanderer is communicating.  If a party believes the content is critical, this information can be acquired by subpoena but at a significant cost, a cost not typically warranted in a family law case.  Most providers deny their ability to retrieve the actual texts, but the recent case law suggests they do in fact maintian records of the text messages on theri servers at least for a short time.” Although already throwing up other roadblocks, the service providers are likely to point to the Quon decision that will make it even more difficult to obtain the contents of those messages. 

While not one of the sexiest topics covered here, my previous post on email disclosures (here) generated a lot of feedback.  Emails appear to be a hot topic.  Here is a link to week long series from NPR’s Morning Edition on emails on everything from management, to emerging technologies to legal issues and invitations to include humorous email gaffes. A week long series? OK, I am enough of a nerd to listen, but will others?

While I would rather offer stories of humorous email forwards, I have chosen law and not comedy (the world and my family’s financial security thank me).  Therefore, to follow-up on the prior post about email disclosures, I have uncovered three cases dealing with email disclaimers.  To save you time, none of the questions was based solely on the inclusion of an email disclaimer although the courts cited to the disclaimer as one of many factors to support the courts’ decisions.  For those whose inboxes aren’t overflowing, here is a more detailed analysis of the three cases.

The most recent case is Blackwater Technologies, Inc. v. Synesi Group, Inc., 2008 WL 141781, *2 (D.Minn. January 14, 2008). In that case, the plaintiff attempted to suggest the defendant fraudulently misrepresented whether certain technologies being acquired were patented or infringed on others’ patents. An email from the seller/defendant to the buyer/plaintiff contained a disclaimer in bold letters stating:

[t]his is a confidential draft and is not for use by any party for any reason. It cannot be copied or distributed.

Rather than relying on the email disclaimer, the court focused on the content of the email to determine the seller had no reliance as a matter of law necessary for the fraud claim. The court held the email should have put the buyer on notice that a formal patent had not yet issued. The email stated: “[a]ll of the potential insurance partners have been aware of the pending PORTOGO process patent since early 2002 but formal conversations were delayed until we received notice of allowance for the claims made in the patent. This happened in mid August this year.” On these facts, the court found the buyer could not have acted in reasonable reliance on assurances the technology was “fully patented.”

The defendant/seller also moved for summary judgment on the plaintiff/buyer’s breach of contract claim arguing the “disclaimers” in the referenced email show that the alleged oral agreement was merely an agreement to agree, which is unenforceable under Minnesota law. Id. at *6. It was not clear whether the court was referencing the email disclaimer itself or the more substantive contents of the email. Nevertheless, the court held the email did not conclusively preclude the possibility that an enforceable oral agreement had been reached. Thus, the summary judgment was denied and the plaintiff was able to proceed.

In Employer Reinsurance Corp. v. Laurier Indem. Co., 2007 WL 1831775 (M.D.Fla. June 25, 2007), the insured made the argument the insurer denied coverage therefore waiving any defense the insurance company had regarding the plaintiff waiting too long to provide notice to the insurance company. The substance of the email from the insurance company said, “any reasonable insurer would agree that this exposure absolutely arises from the latter policy years” and “demands” that the case be settled. Id. at *5. The court also noted the following email disclaimer: “this letter is not intended to contain a full analysis of coverage with regard to this claim. ERC hereby reserves all legal rights and those contained within the certificate of reinsurance.” Id. It was not clear whether this disclaimer was on every outgoing email or only this specific one. The court denied ruling on a summary judgment basis and decided it would let the jury decide as to whether the email was a denial of coverage sufficient to waive the insurance company’s notice requirements. Id.

Finally, the court discussed email disclaimers in the case ofAngelo, Gordon & Co., L.P. v. Dycom Industries, Inc., 2006 WL 870453 *7 (S.D.N.Y. March 31, 2006). This case involved another dispute as to whether or not there was an agreement or merely an agreement to agree. The relevant email from the seller’s agent to the buyer had the following disclaimer:

This is not an offer (or solicitation of an offer) to buy/sell the securities/instruments mentioned or an official confirmation…. You should not use email to request, authorize or effect the purchase or sale of any security or instrument, to send transfer instructions, or to effect any other transactions.

The substance of the email confirmed the sale subject to execution of further documentation. Specifically, the email stated:

As we discussed, this will confirm Dycom’s sale of approximately $39,543,000.00 of claims against Adelphia at a net price to Dycom of 75% (Dycom to receive 76.5% and remit a fee of 1.5% to MS), subject to execution of customary documentation for the sale of trade claims of debtors in bankruptcy, including the following (the exact wording to be agreed by counsel):

Id.at *3 (then listing a handful of specific terms in bulletpoint form).The plaintiff argued the email provided sufficient “acceptance” to form the contract and that the disclaimer was merely boilerplate and did “not provide an excuse to frustrate the parties’ contractual intent.” The defendant countered that the emails expressed an intent to enter into a subsequent formal contract subject to final approval.The court first analyzed the substance of the emails before addressing the disclaimer about which it wrote:Plaintiff’s contention that the Disclaimer Language is boilerplate is unpersuasive in light of, among other things, its admission that it understood the Disclaimer Language to mean “don’t bind us based on anything in the e-mail.”Id. at *7-8 (noting both parties engaged in further negotiations, drafts of agreements and that plaintiff’s draft included language that its obligations to pay was conditioned upon the defendant’s execution of the draft final agreements that never got signed). While not a ringing endorsement of the disclaimer, it further supports the notion that it does not hurt to include such disclaimers.

DISCLAIMER:  I am not liable for anything on here and no one can sue me EVER for ANYTHING.  And, if you have decided to read this far, you need a life or were forced to research email disclaimers.  And you have agreed to a binding contract that requires you to pay me $100. 

I was asked this week by a licensed professional engineer whether he needed to have email disclaimers on his outgoing emails. I was not able to find anything specifically that applied to engineers licensed in Texas, so I looked at the need and effect of general email disclaimers (a.k.a. the fine print at the bottom of emails that clutters up the email chain).

My search led me to an article sent to me by my colleague Aaron Ball from the February 2008 Illinois Bar Journal by Helen Gunnarsson entitled: “Are e-mail disclaimers really necessary? They really are, some lawyers say. In fact, you should put them at the beginning, not the end, of your messages, other lawyers say.” While the title appears to say it all and the article is geared to issues particular to attorneys, it did raise some interesting point. (Members of the Illinois State Bar Association can link to the article here).

First, the article cites to the Arborlaw blog by Michigan lawyer Carol Ruth where she suggests it is important to remind the receiver the email should not be forwarded to anyone should the attorney-client privilege be waived. While such a warning may not apply to the general business public, any professional service provider should consider including a disclaimer that the content of the email is intended solely for the receiver and that it is not intended to be forwarded or relied upon by anyone other than the original receiver.

To the extent you really feel the need to enforce your disclaimers, such as an attorney preserving attorney-client communications privileges, the article suggests you should include your email at the top of the list. The article also suggests that you should be judicious with the disclaimers on emails and only include them on emails that really need it and not include them on the emails that include the grocery list or dinner plans for the evening.

Quite frankly, these suggestions, in my opinion, are overkill. Simply because communication takes place over email does not change the rules that apply communications generally. For example, every time I speak with a client over the phone or in person, I do not have to inform them that the communications between the two of us are privileged. If it is a privileged attorney client communication, it is a privileged communication regardless of whether it is over email, the phone or in person. If a client forwards a letter, a voicemail or repeats a confirmation (all equivalent to forwarding an email) to someone outside of the attorney-client relationship, the attorney client communication privilege could be waived. While it never hurts to include email disclaimers, I would recommend some discretion lest I am forced to read six paragraphs of disclaimers before I get to the joke sent to me by a friend (or my uncle’s forwarding of his 12th email chain letter from God that will kill our troops or cause us to lose the War on Terror if not forwarded to 250 of my closest friends).

While that was a long tangent specifically targeted to attorney emails, I think the same balance needs to be applied to other professions. In fact, a Westlaw query of all state and federal cases of “email /p disclaim!” failed to provide any cases where any court has discussed the effect of email disclaimers. While I would not argue that is conclusive to the Supreme Court, I think it means that the disclaimers rarely, if ever, come into play.

Therefore, for licensed professionals, I think it is important to provide whatever may be required by your profession. With nothing specifically required for engineers, I would think the following disclaimer would be adequate:

Confidentiality Note: This message and any attachments may contain legally privileged and/or confidential information. Any unauthorized disclosure, use or dissemination of this e-mail message or its contents, either in whole or in part, is prohibited. The contents of this email or for the intended recipient and are not meant to be relied upon anyone else. If you are not the intended recipient of this e-mail message, kindly notify the sender and then destroy it.

If the company is big enough, it would not hurt to provide a contact for any email abuse (employees sending out mass spam emails for their side business or inappropriate behavior that may cause liability), so that a recipient can report it. Something like: “If you believe the sender is engaged in abusive or inappropriate conduct through this email, please notify us at [fill in the email of the person that needs to be notified].”

Anything further would simply be overkill. Arguably, you could disclaim the truth, veracity, accuracy of any information of the email and suggest that the recipient has waived all rights to sue me and that they must testify that I am the best and brightest at everything to prevent any risk. Then, your disclaimer would run seven paragraphs and likely not hold up. I will leave my friends over at Tilting the Scales to provide the longest possible humorous email disclaimer.

I have included several examples of emails from various professionals with the identification of the sender taken out for your reference.

From a financial advisor:

“Securities and investment advisory services offered through XXXXXXXXXXX, member FINRA, SIPC. Annuity and insurance products offered through XXXXXXXXXXXXXX and its subsidiaries.  XXXXXXXXXXX is licensed to sell insurance in the following states: Texas, Louisiana, Oklahoma, and Connecticut is registered to offer securities in the following states: Texas,  Oklahoma, Louisiana, Connecticut, and Hawaii and is registered to offer investment advisory services in the following states: Texas, Oklahoma, and Louisiana.”

Financial advisor’s staff:

“The information contained in this email message is being transmitted to and is intended for the use of only the individual(s) to whom it is addressed. If the reader of this message is not the intended recipient, you are hereby advised that any dissemination, distribution or copying of this message is strictly prohibited. If you have received this message in error, please immediately delete.”Member FINRA/SIPC

From a professional Engineer:Confidentiality Note: This message and any attachments may contain legally privileged and/or confidential information. Any unauthorized disclosure, use or dissemination of this e-mail message or its contents, either in whole or in part, is prohibited. If you are not the intended recipient of this e-mail message, kindly notify the sender and then destroy it.

From a CPA:To comply with U.S. Treasury Regulations, you are hereby informed that, unless expressly stated otherwise, this communication ( including any attachments) is not intended or written to be used, and cannot be used as or considered a “covered opinion” or other written tax advise and cannot be used by any taxpayer to avoid penalties under the Internal Revenue Code; to promote, market, or recommend to another party any transaction or tax-related matter(s) addressed herein; or for IRS audit, tax dispute, or other purposes.This message contains information that may be confidential and privileged. Unless your are the addressee (or authorized to receive for the addressee), you may not use, copy, print or disclose to anyone the message or any other information contained in the message. If you have received this e-mail in error, please advise the sender by reply and delete the message. Thank you.

My own email disclaimer:CONFIDENTIAL NOTICE: This electronic transmission and any attachments constitute confidential information which is intended only for the named recipient(s) and may be legally privileged. If you have received this communication in error, please contact the sender immediately. Any disclosure, copying, distribution or the taking of any action concerning the contents of this communication by anyone other than the named recipient (s) is strictly prohibited. IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the U.S. Internal Revenue Service, we inform you that any tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding tax-related penalties under the U.S. Internal Revenue Code or (2) promoting, marketing or recommending to another party any tax-related matters addressed herein.