Online marketing has moved many firms toward a publishing model to generate market awareness and engagement.

This has spawned a broader range of public exchanges with both customers and the public as they share ideas on company sites, and as company staff participate on others’ sites in official or quasi-official roles.

There may fewer customers slipping an falling on visits to stores or offices. However a new array of liabilities come with life online, which which larger firms may seek to mitigate with insurance.

• Online Defamation – even “private” online conversation can be construed to be public if they take place on social platforms, consider Finkel v. Facebook. Further, Staples suffered a ruling for defamation for making a truthful but harmful statement in a mass email.
• Data Privacy – the firm, or vendors doing work on their behalf, may lead to the breach of personally identifiable information (PPI) or company confidential information. If you’re doing business in the EU, or conducting credit card transactions additional laws may increase your liability.
• E-media and Internet Liability – new opportunities for false advertising, libel and slander are harbored in causual comments by staff or fast moving blog posts.
• Negligent Network Security – for failure of security measures to prevent a denial of service, unauthorized access, theft of electronic data, inadvertent transmission of a virus or other malicious code using your firm’s infrastructure.
• Infringement of Intellectual Property (IP) Rights –recent  copyright law and trademark law rulings are replete with unexpected outcomes.
• Cyber Extortion – for threats to disrupt your businesses online operation as a threat of extortion.

How to know if your firm needs cyber insurance
If your firm is going heavy into the digital realm, you absolutely need processes to mitigate these risks. But what factors make ponying-up cyber liability insurance more necessary?

• Deep pockets and high visibility.  (reward for litigants)
• Aspirations to use emerging technology on a wide scale. (entry to untested legal ground)
• Audiences for which error can be extremely costly. (risk of client certainty)

Next up: liability coverage for personal online use
In considering this I’ve also found resources on ways to cover your personal liability of non-professional blogging and use of social media. Remember, doing something without pay doesn’t insulate anyone from liability for their own actions. Continue reading the next post.

The InformationWeek cover story had two elements. First was the illustration, which featured a compass with Windows 7 at true North, the headline “Winevitable,” and the question of how you will get there.

That’s the kind of positioning money just can’t buy. Imagine producing software whose inevitability is proclaimed on the editorial cover of magazines.

The second feature I noticed was the listing of the Government CIO 50. This made me think of Massachusetts’ then-CIO, Peter Quinn, who didn’t think Windows was inevitable.

Back in 2005, he set a course to take take the state off most licensed software.

• Step 1: Firefox, not IE.
• Step 2: Any software built for the state is made so it can be released as open source and traded or built on by other states.
• Step 3: Use standard open-source applications instead of the Miscrosoft Office suite.

Things were proceeding well.  Massachusetts was forward-looking, saving money, and leveraging the efforts of others.

Then two things happened.

1. His boss, Governor Mitt Romney decided to run for President. Imagine what funding Microsoft would put forward to prevent the first open-source-state elected President. After all, if government could stop paying for licensed software, what business or personal users would follow?
2. A story was planted in the Boston Globe. It reported concerns that Mr. Quinn had improperly accepted travel to open source conferences. The story was later proven to be untrue, but it was enough to show that the pressure to resign as CIO would be intense.

It was the shot heard ’round the e-government world. CIOs got the message loud and clear. Your boss doesn’t want Microsoft as an enemy, and neither do you. Microsoft will claim that open source reduces compatibility, and makes government more expensive. And they’ll fight fiercely to weed such initiatives out, by weeding you out.

And so Microsoft’s winevitability grew unchecked.

This week, Microsoft issued its largest patch ever for 34 new vulnerabilities. The inevitable apparently still needs some work.

Recently we’ve seen an employer charged with defamation for making true disclosures that would hurt a former employee, and Medical Justice which seeks to prevent online defamation by prohibiting patients from participating in social media.

Now, a New York teenager has sued Facebook and a handful of its users for discussing her in a private Facebook group. Harvard’s Citizen Media Law Project and Eric Goldman provide details on the case, Finkel v. Facebook, 102578-09 (N.Y. Supreme Ct. complaint filed Feb. 24, 2009).

The idea that Facebook should be liable for four teens trash-talking another is dismissable. However, the individual teens are charged with defamation as well.  Further, the complaint also alleges that the students’ parents are liable for negligently failing to supervise their children.

There are several hurdles, including how to measure the harm caused by this private correspondence between four people, and whether this discussion was discovered through means which would violate the privacy of the participants. Social media participants are figuring out what the limits of speech are in this medium, and the courts will eventually be asked to determine where legal penalties begin.

Various bullying statutes would potentially criminalize this conduct, which seems to approximate private speech. It doesn’t seem likely that such a case would gain steam. Then again we live in a time where truth may fail as a defense to defamation in Massachusetts, which is to say…anything can happen.

Imagine if everything you discussed with your physician was required to be kept private. Not just information about you, the patient, but that information about your treatment by the physician had to be kept private too.

The blog e-patients describes how the firm Medical Justice is helping doctors avoid consumer ratings, and the prospect of defamatory statements, by getting patients to sign an agreement saying all their conversations are the doctor’s property, trade secrets, which the patient isn’t allowed to tell anyone.

A closer read of Medical Justice’s website suggests their agreement restricts patients from publishing reviews and accounts of treatment, though they can still tell relatives and health care officials about any concerns they may have.  The site objects to this arrangement being called a gag order instead of a “mutual privacy agreement.”

What’s the Real Benefit?
There are lots of ways around the agreement. Patients can still tell relatives, who can post under their own names, or they can post anonymously.  However, this thin claim of IP rights is enough to file a take-down notice, and many services will comply.  The logic getting an anonymous post taken down could go “all my patients have given me full rights to public information about our case, so either I own the IP in the post, or this is a defamatory post from a non-patient.”

Medical Justice watches social media sites for the names of doctors who have contracted to use these agreements, and then files take-down notices.

Considering how many insurance claims are in part paid for with public dollars, requiring patients to give up speech rights for publically subsidized medical treatment approaches absurdity.

Indeed, social media can be biased, and certainly non-representative.  But this attempt to bully social media away is foolish. Asking patients to sign over their rights to discuss their treatment publicly as a condition for treatment just seems desperate at best, and repulsively unfair at worst.

The US Court of Appeals for the First Circuit has denied a petition to rehear the case that found that truthful statements in email can constitute defamation if they are made with malice. See our earlier post on Noonan v. Staples.

The appeals court held that Staples failed to adequately raise the constitutional issue:

Staples now contends that it raised the issue in its initial brief. But that brief simply acknowledged that the statute was not constitutional as applied to a matter of public concern.  Staples did not timely argue that the present matter was a matter of public concern or that the statute was unconstitutional as applied to matters of private concern.  That Staples did not timely raise the issue is also made clear by the fact that it has not, until now, filed the notice required for a challenge to the constitutionality of a state statute. See Fed. R. App. P. 44(b). The issue is waived, and the fact that the issue raises constitutional concerns does not save the waiver.

The court also indicated that the constitutional issue is “not so clear that the panel should have acted sua sponte to strike down a state statute.”  In this most ominous section of the order, the First Circuit pointed out that Staples “still does not cite a case for the proposition that the First Amendment does not permit liability for true statements concerning matters of private concern.”

The court appears to discount this possibility, relying on language from two Supreme Court cases — Philadelphia Newspapers v. Hepps and Dun & Bradstreet v. Greenmoss Builders — to suggest that speech on matters of private concern does not enjoy full First Amendment protection. Importantly, however, the court refused to take any position on the constitutionality of the Massachusetts statute (of necessity, given that the whole thrust of the order is that Staples waived the issue).

“The truth is an absolute defense to a claim of defamation.” But perhaps not always in Massachusetts, and that’s a problem.

Judge Juan Torruella of the US Court of Appeals for the First Circuit has allowed Alan Noonan, a sales director fired by Staples, to pursue his libel claim against the company.

Staples’s executive vice president, Jay Baitler, sent an email to some 1,500 employees stating that Noonan had been terminated for violating the company’s travel and expense policies. Noonan sued for defamation, and his case was initially dismissed because the defamation was a true statement.

However on appeal, Judge Torruella relied on a 1902 Massachusetts law.

“The defendant in an action for writing or for publishing a libel may introduce in evidence the truth of the matter contained in the publication charged as libellous; and the truth shall be a justification unless actual malice is proved”

Mass. Generals Laws, Chapter 231, Section 92

Continued

Can you be sued for leaving negative seller feedback on eBay? Chris Read, a 42-year-old mechanic from the UK, purchased a mobile phone on eBay for £155 (about $246). When it arrived, he discovered it was not the model that was advertised and that it was not in very good condition. Read followed standard eBay procedure by providing what he felt was appropriate feedback on the seller, Joel Jones, also from the UK.  Read noted: “Item was scratched, chipped and not the model advertised on Mr Jones’s eBay account.”

Jones responded by sending Read an email that claimed such a negative feedback was detrimental to his business and threatened to sue Read unless he removed his comments. Despite being given a full refund, Read refused. Jones refers to Read’s comments as “unfair, unreasonable and damaging.”

Continued