WebProNews - Legal

Revised Google Books Settlement Still Has Critics

Doug Caverly — Mon, 16 Nov 2009 14:58:49 +0000

Another milestone in a significant legal dispute has passed; a revised version of the Google Books settlement was submitted to U.S. District Court late Friday. It looks like the book-scanning clash isn't nearly over, however, since some powerful groups still have qualms about Google's proposed resolution.

Google tried to dial back both the scope of the agreement and the degree to which it would represent a be-all, end-all decree. The settlement would now just cover books published in Australia, Canada, the U.K., and the U.S., and more of an effort would be made to find and pay the creators of so-called orphan works.

Also, Google promised that it would price its out-of-print books so that they're in line with a competitive market, and repeated an older pledge to allow book retailers to sell online access.

But here's what Peter Brantley, co-chair of the Open Book Alliance, had to say in a statement emailed to WebProNews. "Our initial review of the new proposal tells us that Google and its partners are performing a sleight of hand; fundamentally, this settlement remains a set-piece designed to serve the private commercial interests of Google and its partners."

Brantley later continued, "By performing surgical nip and tuck, Google, [the Association of American Publishers], and [the Authors Guild] are attempting to distract people from their continued efforts to establish a monopoly over digital content access and distribution; usurp Congress's role in setting copyright policy; lock writers into their unsought registry, stripping them of their individual contract rights; put library budgets and patron privacy at risk; and establish a dangerous precedent by abusing the class action process."

Jessica E. Vascellaro and Jeffrey A. Trachtenberg reported that the Department of Justice is unhappy, too.

This promises to stay interesting, then, or at least get interesting again following a lull. The next hearing on the matter should be held sometime early next year.

Related Articles:

> (Another) New Google Books Deadline Set

> Google Books Gets A Little More Organized

> November 9th Target Set In Google Books Case

Google Headed To Swiss Court Over Street View

Doug Caverly — Fri, 13 Nov 2009 16:05:37 +0000

The Federal Data Protection and Information Commissioner of Switzerland, Hanspeter Thür , still isn't happy with Google. Thür has argued that the Street View program doesn't do enough to protect individuals' identities, and despite receiving a concession or two, is now taking Google to court.

Street View was introduced in Switzerland about three months ago. Roughly one week later, Thür complained that certain faces and license plates weren't indistinct enough. He met with Peter Fleischer, Google's Global Privacy Counsel, Google agreed to make portions of its photos blurrier, and the problem was resolved. Or so we thought.

It turns out that Thür also objected to the height from which images had been taken, arguing that a normal person wouldn't have the same vantage point. He felt that people in more rural areas could be identified even if their faces weren't visible, too.

So, as announced in a formal statement, Thür "has decided to take the matter further and to take legal action before the Federal Administrative Court." According to the BBC, Thür wants a tribunal to make Google immediately take down all Swiss Street View images, as well (since the case won't start or end soon).

This situation could have a big impact on how other countries respond to Street View in the future.

Related Articles:

> Google Street View Hits Hawaii, Mexico

> Street View Coverage Of Two More Countries Goes Live

> Street View: Soon With More Blurriness

Intel Pays AMD $1.25 Billion, Following That $1.5 Billion Fine

Chris Crum — Thu, 12 Nov 2009 15:27:42 +0000

Update: Intel has now updated its Fourth-quarter financial expectations:

As a result of the legal settlement announced today with Advanced Micro Devices (AMD), Intel Corporation adjusted its fourth-quarter financial expectations to reflect the impact of the $1.25 billion settlement payment. Intel now expects spending (R&D plus MG&A) in the fourth quarter to be approximately $4.2 billion, up from $2.9 billion. In addition, the effective tax rate is expected to be approximately 20 percent, down from 26 percent. All other expectations are unchanged.

Original Article: According to reports, technology giant Intel has agreed to pay $1.25 billion to settle multiple disputes with rival chip manufacturer Advanced Micro Devices or AMD. These two companies have been feuding for years. Actually, decades. The Wall Street Journal notes that the two companies have had disputes as far back as the 1980s.

In 2005, AMD filed a suit against Intel, claiming that Intel was engaging in unfair competition by offering rebates to Japanese PC makers, who in turn would eliminate or limit purchases of microprocessors made by AMD or Transmeta. Here's a little more history about the current dispute (via Wikipedia):

The complaint was filed in the U.S. District Court in Delaware in June 2005. The court date, originally scheduled for April 2009, has been pushed back to February 2010. One delay was due to the Korea Fair Trade Commission issuing Intel a fine of US$25.4 million. Some of the manufacturers involved in the case are Dell, HP, Gateway, Acer, Fujitsu, Sony, Toshiba, and Hitachi.

In February 2009 it was reported that Intel had spent at least US$116 million to date on legal representation on the antitrust suit. This was inferred from a US$50 million lawsuit filed by Intel against one of its insurers; the lawsuit disclosed that Intel had already exhausted US$66 million in coverage from two other insurers while fighting the antitrust lawsuit.

It appears that everything is now square between Intel and AMD, at least financially. The New York Times reports that the $1.25 billion settlement will resolve all of AMD's regulatory complaints worldwide as well as suits in Delaware and Japan. In addition to the hefty sum of money, Intel has also agreed to abide by certain terms with regards to business practices.

Earlier this year, the EU fined Intel a record $1.5 billion. According to the NYT, the EU's commissioner says the company's settlement with AMD will not affect the EU's decision on that fine.

Ouch.

Related Articles:

> EU Fines Intel A Record $1.45 Billion

> NY AG Hits Intel With Antitrust Suit

> Intel Apparently A Google Chrome OS Partner, Too

Hacking Ring Indicted For $9 Million Fraud

Mike Sachoff — Tue, 10 Nov 2009 22:10:14 +0000

A federal grand jury in Atlanta has indicted eight East Europeans on charges of hacking into a computer network operated by the credit card processing company RBS WorldPay, the U.S. Department of Justice said today.

The 16-count indictment alleges the group used sophisticated hacking techniques to compromise data encryption used by RBS WorldPay to protect customer data on payroll debit cards. Payroll debit cards are used by some companies to pay their employees.

The hacking ring allegedly raised the account limits on compromised accounts, and then provided a network of "cashers" with 44 counterfeit payroll debit cards, which were used to withdraw more than $9 million from more than 2,100 ATMs in at least 289 cites worldwide, including cities in the U.S., Russia, Ukraine, Estonia, Italy, Hong Kong, Japan and Canada. The $9 million loss occurred within less than 12 hours.

The hackers then attempted to destroy data on the card processing network to hide their hacking activity. The indictment alleges that the "cashers" were allowed to keep 30 to 50 percent of the money, but sent the rest back to the leaders of the hacking ring.

"The charges brought against this highly sophisticated international hacking ring were possible only because of unprecedented international cooperation with our law enforcement partners, particularly between the United States and Estonia," said Assistant Attorney General of the Criminal Division Lanny A. Breuer.

"Through our close cooperation, both nations have demonstrated our commitment to identifying sophisticated attacks on U.S. financial networks that are directed and operated from overseas and our commitment to bringing the perpetrators to justice."

Some of the hackers if convicted in the U.S. could be sentenced to up to 20 years in prison.

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(Another) New Google Books Deadline Set

Doug Caverly — Mon, 09 Nov 2009 21:10:46 +0000

It could be said that the Google Books case is becoming the new Microsoft-Yahoo deal, having created all sorts of controversy and dragged on and on. And on some more, as it turns out, since the involved parties are pushing a target date back again.

A revised proposal concerning how Google and its critics could settle their differences was originally supposed to be submitted to Judge Denny Chin in Manhattan federal court a little more than a month ago. Obviously, that didn't happen, and Chin picked today (Monday, November 9th) as an alternate goal.

Now, Motoko Rich has reported, "The parties to the Google book settlement, which would legalize the creation of a vast library of digital books, have asked the judge overseeing a revision of the agreement for an extension to this Friday, Nov. 13."

It sounds like the lines of communication are still very much open, though, as Rich also wrote, "[T]he group indicated that it had met with the Justice Department before and after the October status hearing and had met as recently as Friday, Nov. 6." And (hopefully) Friday the 13th isn't far enough away for this delay to signal serious trouble.

So as before, stay tuned, and maybe this whole thing will be resolved before the "early 2010" deadline Microsoft and Yahoo have set for their partnership.

Related Articles:

> November 9th Target Set In Google Books Case

> Google Books Gets A Little More Organized

> Google Books Opens Door To On-Demand Printing

Tagged.com Reaches Settlement With NY AG

Mike Sachoff — Mon, 09 Nov 2009 17:27:36 +0000

New York Attorney General Andrew Cuomo said Monday that his office has stopped social networking site Tagged.com from misappropriating the contacts lists and identities of its members and from sending out millions of deceptive and unsolicited emails.

Through an agreement with Cuomo's office, Tagged will pay $500,000 in penalties to the state and take measures regarding the access and use of its members' personal information.

"Unsuspecting users had no idea that Tagged had hijacked the email addresses of their colleagues, families and friends for the purpose of blasting them with spam," said Attorney General Cuomo.

Andrew Cuomo

"This agreement holds the company accountable for its invasion of privacy and puts the proper safeguards in place to keep it from happening again."

In June, Cuomo announced his intent to sue Tagged for deceptive acts after his office became aware that the company had sent more than 60 million misleading emails to people stating that Tagged members had posted private photos online for their friends to view.

In reality, the photos did not exist and the email was not from their friends. When people tried to access the photos, they were required to become a new member of Tagged. The company would then gain access to their email contacts and send more fake invitations.

As part of the settlement, Tagged will now provide clear disclosures when asking for access to a new user's email contacts and will no longer access those contacts or send messages without the member's permission.

Related Articles:

>Tagged.com Sued By NY AG

>NY AG Hits Intel With Antitrust Suit

>Dell Settles New York Fraud Case For $4 Million

FTC Guidelines Raise Big Blogging Questions

Chris Crum — Sun, 08 Nov 2009 10:25:04 +0000

Update 2: Now Cleland says, "If people think that the FTC is going to issue them a citation for $11,000 because they failed to disclose that they got a free box of Pampers, that's not true. That's not going to happen today, not ever." (via)

Update: The FTC is now saying that the $11,000 fine is not accurate, at least for the first violation. Fast company got some responses from Richard Cleland, assistant director, division of advertising practices at the FTC, who says:

“That $11,000 fine is not true. Worst-case scenario, someone receives a warning, refuses to comply, followed by a serious product defect; we would institute a proceeding with a cease-and-desist order and mandate compliance with the law. To the extent that I have seen and heard, people are not objecting to the disclosure requirements but to the fear of penalty if they inadvertently make a mistake. That’s the thing I don’t think people need to be concerned about. There’s no monetary penalty, in terms of the first violation, even in the worst case. Our approach is going to be educational, particularly with bloggers. We’re focusing on the advertisers: What kind of education are you providing them, are you monitoring the bloggers and whether what they’re saying is true?” [empahsis added]

Cleland addresses more of the concerns here.

Original Article: The Federal Trade Commission has released its revised guidelines concerning the use of endorsements and testimonials in advertising. The revisions include a focus on "bloggers" and social media users, requiring them to properly disclose when they have received payment in the form of either money or product from a company or organization and produce content regarding said company or organization. The word is that bloggers can be fined up to $11,000 per post for not disclosing.

Have you ever mentioned a free product you received online and not disclosed it? Comment here.

The reasoning behind the guidelines seems noble enough - provide transparency and keep consumers safe from hokey information. However, the concept of the government dictating how this happens does not sit well with a lot of people. The revisions (which can be found in this 81 page document [pdf], should you care to peruse them [they start around page 55]) have ruffled quite a few feathers and the conversation has become one about free speech.

Well-known author/editor/publisher Jeff Jarvis makes a really good point. He says the FTC assumes that the Internet is a medium. "It’s not. It’s a place where people talk. Most people who blog, as Pew found in a survey a few years ago, don’t think they are doing anything remotely connected to journalism. I imagine that virtually no one on Facebook thinks they’re making media. They’re connecting. They’re talking," he says. "So for the FTC to go after bloggers and social media – as they explicitly do – is the same as sending a government goon into Denny’s to listen to the conversations in the corner booth and demand that you disclose that your Uncle Vinnie owns the pizzeria whose product you just endorsed."

It's not hard to find echoes of Jarvis's sentiment all over the web. Although, I don't believe I've seen it as eloquently put as with the Denny's analogy. Still, not everyone sees the FTC regulations as a bad thing. In fact, Google's Matt Cutts stepped into the conversation with Jeff Jarvis, expressing a bit more enthusiasm for the guidelines.

"As a Google engineer who has seen the damage done by fake blogs, sock puppets, and endless scams on the internet, I’m happy to take the opposite position: I think the FTC guidelines will make the web more useful and more trustworthy for consumers," he says. "Consumers don’t want to be shilled and they don’t want payola; they want a web that they can trust. The FTC guidelines just say that material connections should be disclosed. From having dealt with these issues over several years, I believe that will be a good thing for the web."

Commenters essentially tell Matt the whole thing would smell a lot better if he were the one regulating it. The reasoning for this is that Matt is involved with the industry. He is not a government worker that has been one his whole life. He's been in the field. He knows the score. The argument coming from most of the opposition is not about the fundamental principle of making content more trustworthy for consumers. At the root of it, it appears that people are much more concerned about a government body of regulators who aren't necessarily involved with online content production telling them how it is, when there are many, many questions about what falls under the criteria.

A number of these questions are nicely placed in an "open letter to the FTC" from Ron Hogan at MediaBistro's GalleyCat. Here are a few of them:

- If an unpaid blogger at the Huffington Post "endorses" a consumer product without meeting the FTC guidelines for disclosure of "material connections" to the makers of that consumer product, who's liable: the blogger or the Huffington Post?

- If a blogger prints out a series of blog posts and distributes those printed copies, is he now the publisher of a newspaper or magazine? If so, the Village Voice is distributed for free, so can a blogger/publisher distribute his newspaper or magazine for free, too?

- What if a blogger confines herself to stating demonstrably proven facts about a book, its author, its contents, and the matter of its publication? Does the FTC consider that an endorsement? What if she confines herself to stating such facts and includes links to an ecommerce site? Has her writing somehow been transformed from a statement of fact to an endorsement?

There are plenty more where that came from. The list goes on. You can probably think of a few yourself. It may be hard for the guidelines to be enforced. The FTC does acknowledge that its guidelines aren't exactly the law themselves. The FTC says:

The Guides are administrative interpretations of the law intended to help advertisers comply with the Federal Trade Commission Act; they are not binding law themselves. In any law enforcement action challenging the allegedly deceptive use of testimonials or endorsements, the Commission would have the burden of proving that the challenged conduct violates the FTC Act.

It should also be noted that the rules presumably apply to publications beyond bloggers and social media users, but for some reason it appears that "bloggers" are the ones with whom the FTC had on its collective mind when drafting these guidelines. You have to wonder if they are able to come up with a definition for "blogging" (others have had trouble in the past. Even those directly involved in the online content industry). The rules are scheduled to take effect on December 1st.

What questions do you have about the FTC's guidelines? Share them here.

eBay And Skype Settle Litigation

Mike Sachoff — Fri, 06 Nov 2009 17:21:01 +0000

eBay said Friday that the investor group led by Silver Lake has reached a settlement agreement with Joltid Limited and Joost N.V. that gives Skype ownership over all software licensed from Joltid and ends all litigation against the investor group and eBay at the closing of the acquisition.

As part of the settlement agreement, Joltid and Skype founders Niklas Zennstrm and Janus Friis will join the investor group, contributing Joltid software and making a significant capital investment in exchange for a 14 percent stake in Skype. As a result, Silver Lake and other investors including Andreessen Horowitz and the Canada Pension Plan Investment Board (CPPIB), will together hold 56 percent of Skype and eBay will retain 30 percent.

eBay will receive $1.9 billion in cash when the sale is complete and a note from the buyer worth $125 million. The deal, which values Skype at $2.75 billion, is set to close in the fourth quarter of 2009.

"Skype will be well positioned to move forward under new owners with ownership and control over its core technology," said eBay Inc. President and CEO John Donahoe.

"At the same time, eBay continues to retain a significant stake in Skype and will benefit from its continued growth. We look forward to closing the deal and focusing on growing our core ecommerce and payments businesses."

The investor group will no longer include Index Ventures. The Skype founders had filed a lawsuit charging Index and its partner Michelangelo Volpi of using confidential information in their bid to purchase a 65 percent stake in Skype.

Related Articles:

>Skype Founders Reportedly Close To Settlement With eBay

>eBay's Q4 Earnings Not Apocalyptic

>eBay Sells Skype, Which Is Worth $2.75 Billion

Yahoo Settles Mary Kay Trademark Infringement Suit

Doug Caverly — Fri, 06 Nov 2009 14:42:38 +0000

It looks like some lawyers representing cosmetics giant Mary Kay have removed their figurative war paint. In early July, Mary Kay sued Yahoo, alleging trademark infringement, but not long ago, Yahoo was able to settle the case.

Mary Kay originally objected to Yahoo's practice of adding links of its own choosing to certain emails. The links appeared in popups when people would position their cursors over the text, potentially creating confusion about the extra ads' origin.

"Emails that advertise Mary Kay products are hijacked and manipulated by Yahoo and provide an unfair advantage for the unauthorized re-sellers and other competitors," claimed Mary Kay's suit, which was filed in the Northern District of Dallas.

Now - although the terms of the settlement haven't been disclosed - Yahoo's presumably apologized, promised to never repeat the offending behavior, and provided at least a little in the way of cash compensation. Such is the way these things go.

Anyway, a big hat tip also goes to Erik Larson, who noted that this settlement may have some interesting ramifications. He wrote, "The dispute was similar to trademark lawsuits against Google Inc. in which the world's most popular search firm was accused of wrongfully selling ad rights to keyword searches."

Related Articles:

> Skype Founders Reportedly Close To Settlement With eBay

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> Turkey Asks Google For $47 Million In Taxes

Legalized Online Gambling Would Bring In Billions

Mike Sachoff — Fri, 06 Nov 2009 02:38:35 +0000

A Joint Committee on Taxation report released today by Rep. Jim McDermott (D-WA) found that regulating Internet gambling would generate roughly $42 billion over 10 years.

The report is based on the requirement of a federal license for operators that would allow them to offer online gambling throughout the United States, while keeping the federal prohibition on any form of sports betting.

"This analysis further reinforces the fact that a regulated environment will generate billions in new revenue to offset the costs of health care reform or other vital government programs," said Michael Waxman, spokesperson for the Safe and Secure Internet Gambling Initiative.

"With the completed analysis, and support for Internet gambling regulation growing daily, it's only a matter of time before Congress acts and begins allocating the billions in new revenue sitting on the table to one program or another."

Representative Barney Frank (D-MA) has introduced legislation that would legalize Internet gambling and McDermott has a companion bill that would collect tax revenues on online gambling.

"We believe this tax revenue analysis will encourage immediate discussions and consideration of pending legislation to regulate Internet gambling," said Waxman.

"With everyone acknowledging that attempts to prohibit the activity have failed, this provides even more incentive for Congress to act."

Currently the amount of revenue that remains uncollected while Americans gamble online is more than $100 billion annually.

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NY AG Hits Intel With Antitrust Suit

Mike Sachoff — Wed, 04 Nov 2009 20:01:45 +0000

New York Attorney General Andrew Cuomo filed a federal antitrust lawsuit Wednesday, against Intel, the world's largest maker of computer chips.

The suit says Intel violated state and federal anti-monopoly laws by engaging in a global campaign of illegal conduct revealed in emails, in order to maintain its monopoly power and prices in the market for chips.

Over the last several years, Intel has landed exclusive agreements from large computer makers in which they agreed to use Intel's chips in exchange for payments totaling billions of dollars. Intel also threatened and punished computer makers that they thought were working too closely with Intel competitors. Threats included cutting off payments the computer maker was receiving from Intel, directly funding a computer maker's rivals, and ending joint development ventures.

"Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market," said Attorney General Cuomo.

Andrew Cuomo

"Intel's actions not only unfairly restricted potential competitors, but also hurt average consumers who were robbed of better products and lower prices. These illegal tactics must stop and competition must be restored to this vital marketplace."

To secure exclusive agreements, Intel paid hundreds of million dollars in "rebates" to individual computer makers. The payments for exclusivity that Intel provided could make the difference between profit and loss for a computer maker.

The suit alleges Intel's behavior was detrimental to consumers and to the entire marketplace for computers. Intel repeatedly pressured computer makers to guarantee it specified market share of their sales, which prevent computer makers from responding to consumer demand. With more competition, consumers would have had more choices, lower prices and better products.

The suit seeks to bar further anticompetitive acts by Intel, restore lost competition, recover monetary damagessuffered by consumers and the government, and collect penalties.

In May, the European Commission fined Intel a record $1.45 billion for violating antitrust rules and other practices used to exclude competitor AMD from the computer chip market. Intel is planning to appeal the fine.

Related Articles:

> EU Fines Intel A Record $1.45 Billion

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Florida Sues Expedia And Orbitz Over Taxes

Mike Sachoff — Tue, 03 Nov 2009 22:10:36 +0000

Florida Attorney General Bill McCollum said today his office has sued online travel companies Expedia and Orbitz for failing to pay the right amount of taxes on hotel room rentals.

The lawsuit states that while the companies have been collecting these taxes from consumers all along, they have only been paying a portion of the taxes to the state and keeping the rest as profit. Florida says the practice denies it of millions of dollars every year in tax revenue.

"Consumers are already paying 'taxes and fees' when purchasing a Florida hotel room online, yet the online travel companies have been keeping too much of those taxes as profit," said Attorney General McCollum.

"If these taxes are due to the State, the companies should pay them for the benefit of the people of Florida."

For transactions not completed via an online travel company, Florida hotels pay the "transient rentals tax" similar to a sales tax on the rate they charge the consumer for the room. The hotel which receives the consumer's payment for the hotel room owes the tax and is responsible for paying it to the Florida Department of Revenue.

According to the lawsuit, online travel companies purchase hotel rooms at a lower, wholesale rate they negotiate directly with hotels. The companies than resell the rooms to consumers at a higher retail rate and keep the difference as profit. The online travel companies are the merchant of record in these transactions and are responsible for paying the taxes to the state.

The Attorney General's lawsuit claims Orbitz and Expedia have admitted they do not pay taxes to the state of Florida based on the amount a consumer is charged for the hotel room. Consumers are unaware that taxes have not been paid to the state on the rate they paid for the room.

Florida is the first state to file this kind of lawsuit, which will help clarify the application of state tax laws to online travel companies.

You can read the lawsuit here.

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Turkey Asks Google For $47 Million In Taxes

Doug Caverly — Tue, 03 Nov 2009 19:08:53 +0000

It seems that Google's accounting practices may not be quite in line with accepted Turkish procedures. In fact, Turkey's government has determined that the search giant owes it a little over $47 million in unpaid taxes.

Robin Wauters wrote earlier today, "Local media reports (links in Turkish) teach us that the Turkish government claims it is entitled to additional taxes because of the fact Google operates its online advertising in the country and even boasts offices and a registered subsidiary there while bills and payments originate from Ireland."

Wauters later continued, "Google, which is [the] market leader in search and online advertising in Turkey, has unsurprisingly countered these claims saying that it runs its ad network operations from Ireland . . . . Google said it is acting in accordance with the tax laws of every country in which it operates, including Turkish laws, and that its negotiations with the government on this issue are ongoing."

Still, whether Google is or isn't obeying the letter of the law, the odds aren't exactly in its favor. After all, YouTube's been blocked in Turkey for almost a year and a half just because a few user-generated videos claimed that the country's founder was gay, so the Turkish authorities have demonstrated a real ability to misplace blame and hold a grudge.

Google's market cap, by the way, is $170 billion, so $47 million at least wouldn't represent any sort of deathblow.

Related Articles:

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Feds Charge Cable Modem Hacker

Mike Sachoff — Tue, 03 Nov 2009 17:44:37 +0000

The U.S. Department of Justice has charged an Oregon man and the company he founded, TCNISO, alleging they developed and distributed products that allowed users to modify their cable modems and get free Internet access.

Acting United States Attorney Michael K. Loucks, announced that Ryan Harris, 26 of San Diego, and Redmond, Oregon, was charged in a six-count indictment with conspiracy, computer intrusion, and wire fraud.

The indictment alleges, from 2003 through 2009, TCNISO, under Harris's direction, developed and distributed hardware and software tools that allowed its customer to modify their cable modems so they could disguise themselves as legitimate paying subscribers, in order to get high speed Internet access without paying for it.

The indictment also charges that TCNISO and Harris offered on going customer support, mainly via forums that it hosted on the company website, to help customers with their cable modem hacking.

According to the indictment, one of the customers who used the company's products and assistance to steal Internet access, was a male juvenile from Massachusetts, known online as "Dshocker." In November 2008, "Dshocker," whose name is being withheld to protect his identity, was charged in federal court with computer intrusion, interstate threats and wire fraud.

If convicted, Harris faces a maximum sentence of 20 years in prison and a $250,000 fine.

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Skype Founders Reportedly Close to Settlement with eBay

Chris Crum — Tue, 03 Nov 2009 00:12:45 +0000

Update 3: Skype and eBay may be close to resolving their issues. Om Malik reports:

The ongoing legal scuffle between Skype, a division of eBay, and its founders, Janus Friis and Niklas Zennstrom, may soon see a resolution, according to someone familiar with the situation. The parties are in discussions to resolve the various issues. The talks are described to be at a sensitive stage and can break down without any conclusion.

Update 2: At the Shop.org Summit this week, eBay John Donahoe said that despite lawsuits, the $1.9 Billion deal will still close.

Update: The Skype founders filed another lawsuit today, complicating matters even more. Reuters reports:

The founders of Skype on Friday filed a new lawsuit against Index Ventures and one of its partners, Michelangelo Volpi, accusing him of misappropriating trade secrets to help broker the sale of the Internet phone service owned by eBay Inc.

Original Article: eBay is being sued by the founders of Skype for no less than $75 million per day. Skype founders Janus Friis and Niklas Zennstrom now own a company called Joltid. They have asked for an injunction to stop Skype from using a piece of software it owns in a filing in a US district court in San Francisco, according to Bloomberg.

Joltid alleges that eBay has been showing the source code for the software to third-party developers without their permission. Joltid claims that peer-to-peer technology of the software is being used in Skype, although they demanded to retain the rights to it back when eBay purchased Skype in 2005. Now, they want $75 million for every day the source code continues to be shown.

eBay says the Skype founders' claims are "without merit," but according to Bloomberg, eBay says it may shut down Skype if the dispute is not resolved, although they claim to be developing an "alternative technology."

The companies that are planning to buy Skype have also been named in the lawsuit.

eBay recently signed a deal to sell most of Skype, while retaining a 35% stake. The deal valued Skype at $2.75 billion. According to the deal, an investor group led by Silver Lake, which also includes Index Ventures, Andreessen Horowitz and the Canada Pension Plan (CPP) Investment Board would control about a 65% stake. eBay is supposed to receive approximately $1.9 billion in cash upon the completion of the sale.

You have to wonder if the acquisition will go through at all after this mess. This was probably a little more than these investors bargained for.

Related Articles:

> The eBay-Skype Deal Hits Roadblock

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Facebook Awarded $711 Million In Spam Case

Doug Caverly — Fri, 30 Oct 2009 13:41:52 +0000

Spammers may want to steer clear of Facebook in the future. Late yesterday, a representative of the social network's legal team announced that it was awarded $711 million in damages as a result of a case against Sanford "Spamford" Wallace.

As Sam O'Rourke explained on the Facebook Blog, Wallace is "one of the spammers who accessed people's accounts without their permission and sent phony Wall posts and messages." And he's harassed folks in other ways over the years to the point that a 725-word Wikipedia article is tied to his name.

Now, a sort of downside of this development is that Wallace probably doesn't have $711 million to give Facebook. He may try to get away without paying anything, in fact.

Still, O'Rourke wrote, "[W]e hope that this will act as a continued deterrent against these criminals. Most notably, the judge referred Wallace to the U.S. Attorney's Office with a request that Wallace be prosecuted for criminal contempt, which means that in addition to the judgment, he now faces possible jail time. This is another important victory in our fight against spam. We will continue to pursue damages against other spammers."

So if you're spammed on Facebook - and it's looking less likely that you will be - take comfort in the fact that the person responsible may get in quite a lot of trouble.

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YouTube Faces Formal Complaints In Germany

Doug Caverly — Mon, 26 Oct 2009 19:20:22 +0000

In about two weeks' time, the two-year anniversary of YouTube Germany's launch will roll around. The site's set to receive more legal documents than birthday presents, however, as it's facing some formal complaints.

The distribution of copyrighted material is at issue, of course, and so is the (lack of) distribution of royalties. What sets this situation a little bit apart from other ones is that a number of individuals -rather than just a money-grubbing organization or two - are involved.

Wolfgang Spahr reported, "Those filing the complaints include: U.K. soprano Sarah Brightman and her German producer Frank Peterson; German producers Jon Caffery (Die Toten Hosen) and Toni Cottura (Backstreet Boys, Twenty Four Seven, Scatman); independent publishers Gerig Musikverlage, Bishop Songs and Musikverlag Progressive; plus independent labels Highball Music and Coconut Music."

Then here's the other odd thing about the situation: the claimants have asked for both the uploaders and downloaders of copyrighted material to be identified.

Still, it seems that German authorities will get to say a few things before the case even makes it to court. And it's almost hard to guess what sort of outcome YouTube really wants, considering that it might appreciate having a global stage to promote Content ID and point out some of the music industry's quirks.

Related Articles:

> YouTube Strikes Deal With UK Broadcaster

> Report: Emails May Make Viacom's Case In YouTube Suit

> Germany Gives Street View Go-Ahead

Power.com Suit Against Facebook Tossed

Doug Caverly — Mon, 26 Oct 2009 12:04:33 +0000

Facebook appears to have won at least part of yet another legal fight. Yesterday, United States District Judge Jeremy Fogel dismissed a complaint that Power.com brought against the social networking company in early July.

Facebook actually sued Power.com way back in January, alleging that Power.com had collected data about its users, and, in the course of doing so, violated the CAN-SPAM act and a couple of other regulations. Facebook raised the issues of copyright and trademark infringement, too.

Power.com filed a counterclaim in response. Unfortunately for Power.com, Judge Fogel felt its complaints were a little vague and unsupported by any obvious evidence. He wrote, "[T]he Court need not accept as true allegations that are conclusory, unwarranted deductions of fact, or unreasonable inferences." Hence the dismissal.

Power.com_Dismissal

The catch is that Power.com has 30 days to amend its claim and try again, so Facebook isn't completely in the clear just yet.

Also, while dismissing Power.com's complaint, Judge Fogel gave little indication of how Facebook's original suit against Power.com is going (not that he should have), so Mark Zuckerberg and his lawyers can't declare a compete victory over the other company at this point.

Related Articles:

> Facebook Gets Double Dose of Legal Issues

> Facebook Dealing With a Click Fraud and Data Access Lawsuit

> Facebook Caught In Another Patent Infringement Suit

Kentucky Supreme Court Hears Online Gambling Case

Mike Sachoff — Fri, 23 Oct 2009 15:32:18 +0000

The Kentucky Supreme Court heard arguments on Thursday on whether the Common Wealth of Kentucky has the power to seize 141 domains belonging to online gambling sites.

Previously a Franklin Circuit Court Judge ruled for the state saying it was allowed to seize the domain names, but the Court of Appeals overturned that decision. The case was then appealed to the Supreme Court.

Jon L. Fleischaker, attorney for the Interactive Media Entertainment &Gaming Association (iMEGA) called the efforts by Kentucky Governor Steve Beshear to block the state residents' use of Internet gambling websites "intellectually dishonest."

"They made up a process that is totally lacking in due process," Fleischaker said during arguments before the Supreme Court.

Fleischaker, along with attorneys representing Sportsbook.com and the Interactive Gaming Council, asked the Supreme Court to uphold an earlier decision by the Kentucky Court of Appeals, blocking the seizure of 141 domain names belonging to online gambling sites.

In a 2-to-1 decision, the Appeals Court in January rejected the governor's claim that Kentucky players and the Internet gambling sites had violated state law. The decision also held that a lower court had erred when it applied the state's "gambling devices" statute to justify the seizure of the Internet domain names.

"[I]t stretches credulity to conclude that a series of numbers, or Internet address, can be said to constitute a "machine or any mechanical or other devicedesigned and manufactured primarily for use in connection with gambling," Judge Michelle M. Keller wrote in her majority opinion.

A decision is not expected before the end of the year.

Internet OK for Some Courts (In Some Cases)

Chris Crum — Tue, 20 Oct 2009 14:02:02 +0000

Update: According to FOX News, the Federal Court in Australia will leave it up to individual judges to decide if court cases can be covered live on Twitter.

Original Article: A California court is making jurors sign a declaration that they will not use the Internet to look up details about facts related to cases. This comes apparently at the request of a San Diego lawyer.

According to Greg Moran of the San Diego Union Tribune, "In the latest sign of the collision between the courts and new communication technologies, jurors will have to sign declarations attesting that they will not use 'personal electronic and media devices' to research or communicate about any aspect of the case. That includes computers, cell phones and laptops. Jurors will have to sign the declarations, made under penalty of perjury, both before and after they serve."

Though this is reportedly the first time such a thing has happened in California, this is certainly not the first time that such an issue has been brought up. Not too long ago, we were hearing tales of Twitter (and social media in general) causing mistrials. The talk has mostly been related to discussing the case, however, which has always been a no-no.

This latest example appears to be more about doing research though. The question is, can this really be enforced?

"My guess is that many will ignore the signed promise as well -- in fact, as some behavioral research has shown, just telling them not to do it, may make them even more likely to do so," says Michael Mansick at TechDirt. "At some point, the courts are going to have to realize that you simply can't prevent people from looking up more info, and will have to come up with ways to adapt."

It is interesting to see that practices of the American Judicial system are still being affected by something as simple as using the Internet, or Google to look things up. It will also be interesting to see if this becomes more of a common practice across the country.

Google, Facebook and Twitter Address Net Neutrality

Chris Crum — Mon, 19 Oct 2009 14:32:55 +0000

The Open Internet Coalition , which is a group of consumers, grassroots organizations, and businesses "promoting consumer choice and economic growth through an open Internet," has sent an open letter to FCC chairman Julius Genachowski, supporting open Internet rules.

The coalition itself includes a large list of well-known web companies and sites. Companies with founders and CEOs signing the letter include:

- Amazon
- Digg
- Facebook
- LinkedIn
- Twitter
- eBay
- Flickr
- Skype
- Craigslist
- Google
- Mozilla
- Sony
- Expedia
- YouTube
- OpenDNS
- Zynga
- Cbeyond
- Meetup
- Vuze
- EchoStar
- XO Communications
- IAC
- One Communications
- Tivo

The letter reads, "We write to express our support for your announcement that the Federal Communications Commission will begin a process to adopt rules that preserve an open Internet. We believe a process that results in common sense baseline rules is critical to ensuring that the Internet remains a key engine of economic growth, innovation, and global competitiveness." The full text of the letter can be found here.

The announcement, discussed here, was released complimentary to a new FCC site called OpenInternet.gov. Last week, the site began publishing a blog to keep visitors updates on happenings involving net neutrality.

The FCC is supposed to be releasing details of its proposed net neutrality rules this Thursday.

Massive Click Fraud Ring Shut Down

Mike Sachoff — Fri, 16 Oct 2009 17:47:34 +0000

One of the largest click fraud rings ever detected, originating from China, has been shut down by click fraud monitoring firm Anchor Intelligence.

"This is really the first time anyone has ever been able to catch click fraudsters 'in the act.' Anchor has identified fraudsters down to the publisher site, IPs used (likely via botnets), and even the names and address of some perpetrators," an Anchor spokesperson told WebProNews.

"We have an ongoing collaboration with the San Francisco Division of the FBI as well as the National Cyber-Forensics & Training Alliance (NCFTA) to share insights about the tactics used by these and other click fraud perpetrators."

The Chinese fraud ring consisted of thousands of publishers who created websites and generated fake ad traffic on these sites with the purpose of defrauding ad networks and advertisers.

Anchor says the click fraud hit the ads of nearly 2,000 advertisers across multiple ad networks. The clicks originated from 200,000 IPs, and if undetected would have cost the affected advertisers over $3 million over the course of a year.

The fraudsters dubbed "DormRing1" by Anchor because many of the people involved were students operating out of dormitories at Shanghai Technology Institute and other Chinese technical universities. Working with one of its ad network customers, Anchor tracked the operations of DormRing1 by gaining access to exclusive bulletin boards on various Chinese social networking sites.

"Click fraud rings are active across the Internet and constantly evolving their tactics while trolling for vulnerable networks and advertisers," said Ken Miller, CEO of Anchor Intelligence.

Grooveshark Signs Deal With EMI

Mike Sachoff — Wed, 14 Oct 2009 16:33:18 +0000

Major music label EMI has dropped its copyright infringement lawsuit against music streaming service Grooveshark, reaching a deal to license its recording and publishing catalogs to the site.

"We think services like Grooveshark offer great music discovery options for fans," said Mark Piibe, EMI Music's Global Head of Digital Business Development.

Sam Tarantino,
Grooveshark CEO

"In turn, Grooveshark offers a new revenue stream for our artists and will help us learn more about how we can better connect different types of fans with artists."

Grooveshark allows music fans to stream music without having to download software or register. The basic service is available for free and is supported by advertising. Users of the site can pay $3 per month for access to Grooveshark's premium service, which offers unlimited ad-free streaming music.

Grooveshark still hopes to strike deals with the remaining major record labels including Sony, Warner, and Universal. Those deals could be reached within the next six months.

"EMI Music and EMI Music Publishing have collaborated with us to create a mutually sustainable deal which represents the future of digital music," says Grooveshark CEO Sam Tarantino.

"We will continue to deliver the best music service on the Internet to our users, and we will expand our capacity to strengthen fan-to-artist connections through our technology."

Terms of the deal between Grooveshark and EMI were not disclosed.

Unemployment and AdSense May Cause Headaches

Chris Crum — Tue, 13 Oct 2009 13:18:48 +0000

Unemployed bloggers are apparently at risk of losing their unemployment checks (or at least having them drastically reduced) if they include ads on their blogs. That is exactly what happened to a woman named Karin, from New York, according to a recent Forbes piece.

A graduate from the University of Virginia School of Law was laid off by a law firm in New York, but was able to receive $405 a week in unemployment benefits from the state. To make a little extra money to help pay the bills, she started a blog and used Google AdSense. To make a long story short, her benefits were cut to $300 a week. It had taken her 3 months to earn $100 with AdSense.

She was sent a form to fill out and send to her "employer," and when she called the Department of Labor to get some answers about that, she was told that she shouldn't have claimed the AdSense payment to begin with because it was considered "residual," which would not make her ineligible for benefits. Fair enough. Unfortunatley for Karin, it only got more complicated from there.

"The call prompted Karin to file another claim with the state and to attach a letter stating she was running a blog and that the Google AdSense revenue it generated was her only source of income," explains David K. Randall of Forbes.com. "A few days later, she received a letter from the DOL informing her that it had launched an investigation of her "business" to determine whether she remained eligible for benefits."

"Karin called the DOL again and says this time she was told that the state considered her self-employed, which would require her to claim earnings each time she received an AdSense check," continues Randall. "She called back to get another opinion, and Karin says this time she was informed by yet another state official that she needed to declare that she was working every time that she updated her blog."

Karin is apparently not getting benefits as long as the investigation is going on, and she hasn't even made $250 from AdSense.

The situation would likely vary from state to state, but at least in New York, unemployment and AdSense blogs seem to equal nothing but headaches for everybody involved. Mike Masnick at TechDirt does a pretty good job of assessing the situation. "It's really stunning how various labor departments are simply ill-equipped to handle a modern labor force," he says.

Masnick has his own horror story about out of state labor departments seeking money for an employee that his company hasn't employed in years. They money sought after is apparently for time that this person wasn't working there.

Bidding On Keywords Related To Trademarks

Mike Sachoff — Thu, 08 Oct 2009 15:25:44 +0000

Bidding on keywords that are related to brands that are trademarked is a legally murky issue when it comes to infringement.

(Coverage of the SMX Eastconference will continue at WebProNews Videos. Keep an eye on WebProNews for more notes and videos from the event this week.)

In the session "Trademarks & Paid Search: How Thing Have Changed?" the panel discussed the issue of keywords, trademarks and infringement.

Deborah Wilcox
Baker & Hostetler, LLP

Deborah Wilcox, Partner, Baker & Hostetler, LLP, said, "Trademarks are all about brands." Just because a word is in a dictionary does not mean that the word is free to use.

A generic keyword is not trademarked. Descriptive keywords are not yet strong enough for a trademark.

Establishing trademarks right is usually associated with who is using the mark first.

Infringement occurs when someone is using another's mark that is likely to cause consumers confusion or to cause a mistake or to deceive as to source.

Is the sale or purchase of a trademarked keyword constitute use in commerce? If the ad that is triggered has the actual keyword in the title or text, then yes.

Trademark law is established to protect consumers from being misled in purchasing decisions.

Courts apply multi factor test

strength of the trademark.
Similarities in goods and services
wrongful intent to trade off of goodwill
actual consumer confusion

With keyword triggered ads, how might there be confusion?

- Are all the users typing in a search term, looking for the trademark owner's site?

- Are users able to distinguish among all the different ads they are served within the results, or are they duped into thinking all the sponsored links are official links.

Permitted use of trademark:
- Descriptive fair use of mark in ordinary dictionary sense... (talking about apple the fruit)

- to identify the authorized product (resellers and making things that are compatible with the brand)

- providing information (writing or blogging about a brand)

- comparative advertising (can be very subjective -- for example when you compare your product by name to your competitors name/brand) -- very tricky and subjective..

Laura Covington, Associate General Counsel, Global Brand and Trademarks, Yahoo, said Yahoo's trademark policy is premised on fair use. Competitors cannot bid on trademarked terms.

4 ways to raise trademark related questions from yahoo with search marketing:

Trademark complaint
Counterfeit complaint
False and misleading complaint
Copyright DMCA

Microsoft Trademark policy:

Limited range of advertisers that can bid on trademarked terms:
Resellers, information sites and dictionary terms.

Google's Trademark Policy:

Google will launch a limited investigation. If the investigation fids infringement, they will take the trademark out of the ad, but leave the ad up.

WebProNews reporter Mike McDonald contributed to this article from SMX East.

FBI Nets 100 People In Phishing Ring

Mike Sachoff — Thu, 08 Oct 2009 13:40:45 +0000

The FBI has charged nearly 100 people in the U.S. and Egypt as part of "Operation Phish Phry," one of the largest cyber fraud phishing investigations ever.

The people charged in Operation Phish Phry targeted U.S. banks and victimized hundreds of account holders by stealing their financial information and using it to transfer around $1.5 million to bogus accounts they controlled.

More than 50 people in California, Nevada, and North Carolina, nearly 50 Egyptian people have been charged with crimes including computer fraud, conspiracy to commit bank fraud, money laundering and aggravated identity theft.

Robert Mueller, FBI Director

"The FBI is both a law enforcement and national security agency, which means we can and must address every angle of a cyber case," said Robert Mueller, FBI Director.

"This is critical, because what may start as a criminal investigation may lead to a national security threat. At the start of a cyber investigation, we do not know whether we are dealing with a spy, a company insider, or an organized criminal group."

Mueller described the current environment as a "cyber arms race," where law enforcement and criminals compete to stay one step ahead of each other.

In the case of Operation Phish Phry, money appears to be the driving motive, which on the surface seems obvious. But Mueller pointed out," Something that looks like an ordinary phishing scam may be an attempt by a terrorist group to raise funding for an operation."

"Cyber crime might not seem real until it hits you," Mueller said. "But every personal, academic, corporate, and government network plays a role in national security."

November 9th Target Set In Google Books Case

Doug Caverly — Wed, 07 Oct 2009 20:59:36 +0000

An end to the long-running argument over the Google Books settlement may be in sight. A federal judge has asked both sides to return to court and submit a new agreement by November 9th, with the idea of completely wrapping things up a month or two later.

Originally, a Fairness Hearing was supposed to be held today. But opposition to a proposed settlement mounted - and mounted and mounted, with everybody from the U.S. Copyright Office to some French publishers piling on - until it became obvious that Google and the Authors Guild needed to revisit the agreement.

So Reuters reported this afternoon, "Judge Denny Chin, of Manhattan federal court, said he hoped the parties would file a motion for preliminary approval of the amended deal by Nov. 9 so a hearing could be held in late December or early January for final approval."

What's more, the November 9th target doesn't appear to be a product of wishful thinking, as lawyers have stated they think the goal is achievable.

So hang in there and, whether we wind up with a massive digital library or a ruling that Google's too close to becoming a monopoly, hopefully this mess will be resolved before long.

Microsoft And EU Close To Agreement On Browser Choice

Mike Sachoff — Wed, 07 Oct 2009 16:10:24 +0000

The European Commission said Wednesday it will invite comments from consumers and software companies about an improved proposal by Microsoft to allow users to choose other Web browsers.

The improved proposal by Microsoft comes after the Commission expressed concerns that the company may have infringed EC Treaty rules on abuse of a dominant position by tying its web browser to its Windows operating system.

Competition Commissioner
Neelie Kroes

"The Commission's preliminary view is that Microsoft's commitments would indeed address our competition concerns," Competition Commissioner Neelie Kroes told a news conference.

"The important thing is that the user would have a meaningful choice between Internet Explorer and its competitors," she said

Microsoft's improved proposal includes presenting users with a first screen explaining what web browsers are. "Tell me more" buttons for each browser would allow users to learn more about the browser they want to install.

"We welcome today's announcement by the European Commission to move forward with formal market testing of Microsoft's proposal relating to web browser choice in Europe," Microsoft said in a statement.

"For Microsoft, today's decision is a significant step toward closing a decade-long chapter of competition law concerns in Europe."

YouTube Forms New Content ID Partnerships

Chris Crum — Wed, 07 Oct 2009 15:53:37 +0000

YouTube has announced several new partnerships with broadcast video delivery and management companies - Harmonic, Telestream, and Digital Rapids. YouTube says these partnerships will make it possible for many media companies to provide them with reference files for their content at about the same time it is being produced.

The idea is that this will improve YouTube's ability to work with major content producers so that they don't find their content on YouTube without getting paid.

"Think about it this way: when media companies -- like the BBC, HBO, and Time Warner -- record big news or sporting events live, they use technology from Harmonic, Telestream, and Digital Rapids to quickly convert that high quality video and audio content into the files they use to broadcast on cable, the Internet, mobile phones, and other platforms," explains YouTube Product Manager George Salem. "By integrating Content ID with this technology, YouTube is effectively inside broadcast headquarters, helping to convert footage into reference files almost instantaneously. This is a direct integration of YouTube into how these companies' create and broadcast content: much less custom work dealing with YouTube."

A couple years ago YouTube launched Content ID, and has made a number of improvements to the system since then. It scans over 100 years worth of video each day, according to YouTube, and the company says that the more its partners use it, the more money they (both parties) make. YouTube says over 33% of its monetized views come from videos that have been claimed by rights holders using Content ID.

YouTube is currently involved with a billion dollar lawsuit from Viacom that has been going on for 31 months. New evidence has reportedly come to light that doesn't bode to well for YouTube's defense.

Bloggers Can (Not?) Be Fined Up to 11K Per Post for Non-Disclosure

Chris Crum — Tue, 06 Oct 2009 19:39:51 +0000

Update 2: The FTC is now saying that the $11,000 fine is not accurate, at least for the first violation. Fast company got some responses from Richard Cleland, assistant director, division of advertising practices at the FTC, who says:

“That $11,000 fine is not true. Worst-case scenario, someone receives a warning, refuses to comply, followed by a serious product defect; we would institute a proceeding with a cease-and-desist order and mandate compliance with the law. To the extent that I have seen and heard, people are not objecting to the disclosure requirements but to the fear of penalty if they inadvertently make a mistake. That’s the thing I don’t think people need to be concerned about. There’s no monetary penalty, in terms of the first violation, even in the worst case. Our approach is going to be educational, particularly with bloggers. We’re focusing on the advertisers: What kind of education are you providing them, are you monitoring the bloggers and whether what they’re saying is true?” [empahsis added]

Cleland addresses more of the concerns here.

Update: The new FTC guidelines have come out today. The FTC says:

The revised Guides also add new examples to illustrate the long standing principle that “material connections” (sometimes payments or free products) between advertisers and endorsers – connections that consumers would not expect – must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other “word-of-mouth” marketers. The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service. Likewise, if a company refers in an advertisement to the findings of a research organization that conducted research sponsored by the company, the advertisement must disclose the connection between the advertiser and the research organization. And a paid endorsement – like any other advertisement – is deceptive if it makes false or misleading claims.

Bloggers can be fined up to 11,000 per post for not disclosing when they receive payment or free products from a company they're writing about.

Original Article (05/20): We've known for some time that the Federal Trade Commission (FTC) intends to start regulating blogs and social media with regards to word-of-mouth marketing (aka blogs and social media). An article from BusinessWeek this week looks at the FTC's intentions to regulate advertisers who are paying bloggers to write glowing reviews (whether that be in the form of cash or free stuff).

"The world's more ambitious bloggers like to call themselves 'citizen journalists.' The government is trying to make sure these heralds don't turn into citizen advertisers," writes BW's Douglas MacMillan.

Some bloggers are of course taking issue with the idea of such regulation. But there are more than a few points to consider. Carlo Longino at TechDirt writes:

"It's as if the FTC is trying to mandate credibility, and this raises a couple of interesting points. First, audiences generally seem pretty adept at rooting out when people are being paid to talk nice about a company or product, and there are plenty of examples of company's payola schemes getting found out and causing a backlash against them. Second, why do bloggers get singled out for special treatment? Plenty of old-media reporters get freebies tossed their way, but the FTC doesn't seem to think they deserve the same level of attention."

A post from Susan Getgood at Marketing Roadmaps actually looks at official documentation (pdf) from the FTC. It's quite a lengthy document, and published in 2007, it's the most recent document from the FTC on the issue. She sums up three main points from the document related to bloggers:

1. Liability for false statements in a sponsored post

2. Disclosure of receipt of free product

3. Anti-astroturfing. Requires disclosure of material interest when making an endorsement.

For each of these, she pulls quotes from the official documentation. Keep in mind, this document is a request for public comment. Getgood takes the stance that bloggers are perhaps blowing the effects of such regulation out of proportion.

"So what’s the big deal? Doesn’t this all make sense?" she asks. "It will come as no surprise to readers of this blog, but apparently to some: businesses do not always act in the best interests of consumers. Sometimes they even lie. That’s why we’re in a recession."

So I ask you, what do you think of the FTC's intentions? Do you think regulation is in order? Comment.