Internet Lawyer Blog

Facebook Inc., which is currently considered the world's largest social network, plans more acquisitions so to improve its site design, keep services more reliable and advance its mobile features to compete with Twitter and Google which are active in the same arenas.

Facebook's director of corporate development, Vaughan Smith stated that, the company aims to make approximately 20 purchases in year 2011 which is up from 10 last year and one in 2009.

It is important for our blog readers to know that Facebook obtains income from advertising and takes certain commission when software developers sell virtual goods on its website. As we know, Facebook is a closely-held company and it does not disclose its financials. Based on my research, the company is seeking to generate $2 billion or more in earnings before interest, taxes, depreciation and amortization in 2011.

Also, Facebook was able to raise more than $2 billion from investors, including $1.5 billion from an investment led by Goldman Sachs Group, Inc. sometime on or about January 2011.

Experts in the field believe that the future of all computing is mobile. Hence, it is probably high-tech company's (e.g., facebook, google, twitter) top priority. For example, Snaptu, which is a mobile startup Facebook acquired earlier this year, was purchased for approximately $60 million.

I believe that mobile computing will be changing applicable technology and certain state and federal laws. Issues such as privacy, security, intellectual property, e-commerce, and constitutional law will arise in the near future. I also believe that Facebook's future is promising due to the substantial financial backings by optimistic investors. However, the future of technology is uncertain and as we know, the legal system must catch up with the rapid changes.

In April 2010, David Kernell faced trial for "hacking" into then-Alaskan Governor Sarah Palin's personal email account.

In November 12, 2010, David Kernell was indicted (i.e., a grand jury believed there was sufficient evidence to place him on trial on federal charges). Thereafter, a jury convicted him of two charges. First, computer fraud. Second, obstruction of justice. David Kernell's defense was that his conduct was a prank. However, the jury was not pursuaded and he was sentenced to one year and one day in federal prison with a recommendation to spend his time in a halfway house.

This case is illustrative of the types of crimes an email hacker may face including: (1) Wire Fraud; (2) Computer Fraud; (3) Identity Theft; and (4) Obstruction of Justice.

Wire fraud involves the use of a computer, television, telephone, or radio to obtain property or money from another person by and through deception or trickery. Even though taking money is common through Internet scams, however, stealing personal and confidential information also constitutes wire fraud. One important requirement for wire fraud is that the emails, telephone calls, or wire transmissions have to go between two or more states or countries.

Computer fraud is similar to wire fraud but it only applies to computers. In addition, it requires some kind of "interstate" connection. The law applies only to computers used:

(i) By or for financial institutions (e.g., banks, credit unions); and/or
(ii) In a manner that has an effect on interstate or foreign commerce, or communications in the United States.

Identity theft happens when a person uses fraud, deception, or trickery to obtain and utilize someone else's personal data or information. Generally, such information is used by the culprit (i.e., thief) to obtain funds, but it may not be the case at all times.

Obstruction of justice includes numerous actions. Generally, it happens when there is interference with a legal process or an official investigation. For example, David Kernell was charged with this crime since he allegedly attempted to delete evidence from his computer related to his hacking activities prior to federal investigators were able to obtain it.

Related Links:

1. Identity Theft, Privacy & Security Information and Resources from the U.S. Federal Trade Commission (See http://www.ftc.gov/bcp/menus/consumer/data/idt.shtm)

2. Fight Back Against Identity Theft (See http://www.ftc.gov/bcp/edu/pubs/articles/naps03.pdf)

3. KnoxNews: See http://www.knoxnews.com/news/2010/nov/12/prosecutors-palin-hacking-push-prison-time

A rise in attacks by hackers in 2011 is showing limits of an older generation of security software from Symantec Corp. (www.symantec.com) and McAfee Inc. (www.mcafee.com) and is placing pressure on these high-tech companies to upgrade products.

These and similar companies are seeking to keep up with cloud computing and the growth of workers plugging mobile devices into networks. According to Johannes Ullrich, a researcher at the SANS Technology Institute (www.sans.edu), none of the recent attacks tied to hacker groups such as Anonymous and Lulz Security could have been repelled by traditional antivirus programs or firewall software.

George Kurtz, who is the current chief technology officer at McAfee, now part of Intel Corp. (www.intel.com), expressed his concern by comparing the current predicament to a "security Armageddon" which is also of great concern for end users and customers.

Mall owners are harnessing digital technology to stem an erosion in their tenant base by online retailing and to promote shopper attendance to their centers.

Hammerson which is a leading European real estate company in London, United Kingdom (http://www.hammerson.com) plans to use a system which tracks shoppers to its malls by using signals from their mobile phones. Australia's Westfield Group, Ltd. (http://www.westfield.com) plans to set up a virtual mall. Also, the Simon Property Group, Inc. (SPG) of Indianapolis (http://www.simon.com) and Paris-based Unibail-Rodamco SE (UL), are seeking to encourage consumers to add new smartphone applications.

On July 20, 2011, according to the leaders of the Senate Armed Services Committee, the Defense Department has failed to deliver to Congress a report on cyber warfare policies which may clarify the legal authorities and rules of engagement to be used in the event of a cyber attack.

Senators Carl Levin, a Michigan Democrat, and John McCain, an Arizona Republican, in a letter to Defense Secretary Leon Panetta wrote as follows:

"The continued failure to address and define the policies and legal authorities necessary for the Pentagon to operate in the cyberspace domain remains a significant gap in our national security that must be addressed."

The aforesaid senators stated that by law, the Pentagon was to report to Congress by March 1, 2011 on its cyber warfare policies, outlining a number of "critical questions" that must be addressed in the new battlefield of cyberspace.

To read the letter click here.

Google, Inc., which is currently the world's largest Internet search company, lost its bid to seal legal documents in a patent-infringement lawsuit filed sometime in 2010 by Oracle, Corp. (ORCL). Google's attempt to seek protection of portions of a transcript related to expert witnesses under the attorney-client privilege was futile.

The United States District Court stated that:

The document is "an incomplete draft of an e-mail message" and "never was sent to anyone." Thus, the document is not a communication of any type, much less a communication protected by the attorney-client privilege."

Case Name: Oracle America, Inc. v. Google, Inc.
Case Number: 3:10-cv- 03561
Court Location: U.S. District Court, Northern District of California (San Francisco)

Apple, Inc. (AAPL)'s patent complaint which seeks to block imports of Samsung Electronics Co.'s Galaxy S mobile phone and Galaxy Tab computer will be reviewed by the International Trade Commission (ITC). See also http://www.usitc.gov

The ITC, which is a quasi-judicial agency in Washington, D.C., arbitrates such trade disputes and announced on August 1, 2011 that it has instituted an investigation. The commission, which may take between 15-18 months to complete the review, has the authority to block imports of products which infringe upon United States patents.

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