Further legal problems for Phorm

RELEASE: 25 November 2008

The November 2008 issue of "Computers and Law", the highly respected publication of the Society for Computers and Law, carries an article by Nicholas Bohm, General Counsel for the Foundation for Information Policy Research (FIPR), and Joel Harrison, an associate at Milbank, Tweed, Hadley & McCloy LLP.

The article considers a new set of legal issues that arise from the deployment of "behavioural advertising" systems that provide targeted advertising by snooping on Internet users' web browsing. In particular, it considers whether the system from Phorm Inc that is currently being tested in the UK by BT under the "Webwise" brand name will infringe the legal rights of intellectual property holders.

Earlier legal analysis by Nicholas Bohm has shown that deployment of the Phorm system amounts to illegal interception of web traffic, contrary to s1 of the Regulation of Investigatory Powers Act 2000.

The new article explains how the Phorm system will also infringe the database right for some website owners. It further shows that the Phorm system will infringe almost all website owners' copyright. The way that the Phorm system works means that it will make an infringing copy of the website content; and none of the statutory exceptions in the Copyright Designs and Patents Act 1988 are applicable.

Website owners can take action through the courts to defend their rights. The article explains that this is not mere legal quibbling, since some website owners will suffer actual harm from the Phorm business model. The authors point out that although damages could be awarded for the infringements, an alternative remedy would be for the claimant to go after the profits made from the infringing acts, preventing the ISPs who deploy Phorm from making any money from their illegal systems.

RELATED DOCUMENTS

"Profiling Web Users -- Some Intellectual Property Problems", Nicholas Bohm and Joel Harrison, Computers and Law 19(4), November 2008

http://www.fipr.org/0811SCLarticle.pdf

Nicholas Bohm's earlier legal analysis, concentrating on criminal law infringements such as illegal interception:

http://www.fipr.org/080423phormlegal.pdf

Richard Clayton's technical analysis of the Phorm system:

http://www.cl.cam.ac.uk/~rnc1/080518-phorm.pdf

QUOTES

Said Nicholas Bohm, General Counsel, FIPR:

"My earlier legal analysis shows that the operation of Phorm's system involves illegal interception, fraud and breach of the data protection principles. Now, with the help of my co-author Joel Harrison, I've explained how the system infringes the copyright and database rights of many Internet content providers. These companies have the option to take court action to ensure that Phorm, and the ISPs that use their system, are unable to profit from their illegal actions -- Phorm and the ISPs have only one sensible option: to abandon their plans altogether."

CONTACTS

Nicholas Bohm
General Counsel, FIPR
01279 870285
07715 419728
nbohm AT ernest.net

NOTES FOR EDITORS

1. The Foundation for Information Policy Research (http://www.fipr.org) is an independent body that studies the interaction between information technology and society. Its goal is to identify technical developments with significant social impact, commission and undertaken research into public policy alternatives, and promote public understanding and dialogue between technologists and policy- makers in the UK and Europe.
2. The Society for Computers and Law (http://www.scl.org) is the UK's leading organisation concentrating on the development of the law and practice regulating IT. It has over 1,500 members, drawn from private practice and industry.
3. Phorm (http://www.phorm.com/) claims that their "proprietary, patent-pending technology revolutionises both audience segmenting techniques and online user data privacy" and has recently announced that it has signed agreements with UK Internet service providers BT, TalkTalk and Virgin Media to offer its new online advertising platform Open Internet Exchange (OIX) and free consumer Internet feature Webwise.
4. A further public trial of the technology by BT started on the 30th September 2008.

   http://www2.bt.com/static/i/btretail/webwise/bt-webwise-trial.html