The MTTLR Blog

Microsoft’s long awaited cloud computing platform, Azure, opened for business this week.  Now available in 21 countries, the platform comes with a flexible and transparent payment schedule.  This might not sound as nifty as the iPad, but startups with small budgets are sure to take notice, particularly with the free trial options Microsoft is offering.  Azure represents a major step in the development and dissemination of cloud computing, as Microsoft associates its stable, business-oriented brand appeal with the cloud.

In December, MTTLR reported on the regulatory problems posed by cloud computing.  Weighing in on this ongoing debate two weeks ago at the Brookings Institution, Microsoft’s General Counsel Brad Smith suggested the role the United States government should take in regulating cloud computing.  A recent survey, commissioned by Microsoft, concluded a majority of Americans use cloud computing services despite being unfamiliar or only vaguely familiar with the concept of cloud computing.  These survey results could be misleading, as even industry leaders seem to disagree on the proper definition for cloud computing, but the survey does highlight the significant knowledge gap that presents one of cloud computing’s biggest challenges:  What happens when most Americans store their emails, financial files, photographs, and other personal information in something as nebulous as (appropriately) the cloud?

Several indicators point strongly toward regulation:  Transaction costs of public action on this matter are extremely high, the knowledge gap between users and providers is severe, and the chance of getting caught misusing information obtained over the internet is… well, certainly not a sufficient deterrent.  Microsoft suggests a federal regulatory scheme that takes a three pronged approach, addressing issues of privacy, security, and international sovereignty. 

Microsoft’s statement about the privacy and security of consumers and businesses is obviously well-timed and serves to strengthen reliance on Azure.  It also raises questions about whether or not it is desirable to impose comprehensive regulation on the internet.  Nonetheless, their proposal for regulation is persuasive, and contributes significantly to an ongoing debate that is sure to ramp up in 2010.

On December 24, 2009, the Senate passed a landmark health care reform bill. Included within the Patient Protection and Affordable Care Act is the Biologics Price Competition and Innovation Act, which contains provisions for the regulation of cheaper versions of biologic drugs. While an abbreviated pathway already exists for generic chemical drugs to gain FDA approval, similar regulations are not in place to bring less expensive versions of biologic pharmaceuticals, known as biosimilars, to the market. However, differences in the structure and function of biologic as compared to chemical drugs preclude the simple extension of current legislative provisions for generics to also apply to biosimilars.

Chemical drugs are the traditional small-molecule pharmaceuticals, often compounded into tablets and capsules, that the public is most familiar with. Biologic drugs are relatively new, having only entered the market in the 1980s, and have revolutionized treatment for many serious diseases, including cancer and HIV. The two drug types follow separate pathways towards FDA approval. The approval of new chemical drugs is regulated under the Federal Food, Drug and Cosmetic Act (FDCA), while biologics fall under the Public Health Services Act (PHSA). Biologics are a fast-growing area of drug research, with over 250 biologic drugs already approved by the FDA, and hundreds currently in development.

Traditional pharmaceuticals are created from combining chemicals and reagents in inert reaction vessels, whereas biologics are made from proteins produced within living cells, plants, and animals. An important difference between chemical drugs and biologics is that biologics have the ability to elicit an immune response. Chemical drugs are not recognized as foreign by the body’s immune system, but biologics can stimulate the production of antibodies. An immune response can cause an allergic reaction and more seriously, deplete naturally occurring proteins in the body, causing serious and sometimes fatal conditions. For some patients, biologic drugs have provided therapeutic relief beyond what chemical drugs are able to achieve, but at a steep price. Biologics are on average over twenty times more expensive than chemical drugs per day and can cost up to hundreds of thousands of dollars per year for a patient. The cost can be attributed in part to the higher expenses associated with research and development. Raw materials for biologics cost 20-100 times more than for chemical drugs, and manufacturing facilities take years to establish and hundreds of millions of dollars for building and maintenance. The high price for biologics also results from a lack of competitor products on the market, which has contributed to the growing push for less expensive versions of branded biologic drugs.

In the 1980s, public concern grew over the rising cost of pharmaceuticals. In response, the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Act (HWA), created two abbreviated pathways for the approval of generic pharmaceuticals. The HWA explicitly amended the FDCA only and not the PHSA, leaving no clear route for the approval of generic biologic products. The HWA has been successful in encouraging the entry of generics to the market and reducing drug prices. The Generic Pharmaceutical Association (GPhA) reports that generics comprise 69% of the total prescriptions dispensed in the US, but only 16% of dollars spent. However, even if similar provisions for biosimilars are created, they are not expected to yield the same cost savings as generic chemical drugs.

Differences between chemical and biologic drugs affect the ability of generic manufacturers to create similar products that can be sold more cheaply. For chemical drugs, innovator and generic companies can use different processes to synthesize identical molecules. For biologics, innovators maintain that “the product is the process” and since generic firms do not have access to proprietary information regarding manufacturing, they cannot produce an identical product. Adding to the difficulty in creating generic versions of biologic products is that biologic drugs are typically 100-1000 times larger than chemical drugs and unlike chemical drugs, the structure of biologic drugs cannot be fully characterized with current technology. Under the HWA, generic firms do not need to provide their own clinical data, which can result in significant cost savings that can then be passed on to consumers, but given the potential for biologic drugs to produce immune responses, biosimilars may need additional clinical testing to ensure safety. According to GPhA, generic versions of chemical drugs cost 30-80% less than brand-names, but the group predicts savings for biosimilars will be 10-25%. The Congressional Budget Office estimated that during the first year of competition, the discount on biosimilars would be 20-25% and increase to 40% by the fourth year.

The first bill for biosimilars was introduced in Congress in 2006. Since then, multiple bills have been introduced in both the House and Senate. Other nations, including the European Union and Canada, have already implemented regulation of biosimilars. The recently passed Senate bill allows for the approval of biosimilars that show no clinically meaningful differences in safety and efficacy from the innovator product, which must be established using analytical testing, animal data, and clinical trials. A biosimilar may be declared interchangeable with the innovator after it has been shown that the biosimilar drug produces the same clinical effects and there are no adverse effects from switching the products. Similar to the HWA, the Senate bill provides an accelerated route for litigation between innovator and generic firms to expedite the identification of patents that are potentially infringed. While the HWA provides 5 years of market exclusivity to innovator products, the Senate bill grants 12 years of market exclusivity to innovator biologic drugs. The Senate bill must be merged with the House bill passed in November to create a final health reform bill, but the key provisions for biosimilars are similar under both bills, so it appears that the US may soon have a pathway in place for the approval of cheaper biologic drugs.

PC World wrote a story that people arrested for DWI during holidays in Montgomery County, Texas will have their names put up on Twitter by the local district attorney.  So far Brett Ligon’s tweets haven’t included any names although there sure is a lot of information about DWI activity in his county.

Although it’s apparently not an uncommon practice for newspapers to put up this kind of information, Twitter obviously distributes this information far further than any local papers.  A Google search of a persons name will reveal tweets although it’s not clear how recent the post would have to be.  It’s also not clear that names would be removed if people were exonerated.  The prosecutor’s office has said they will only post arrests that are “strong enough to prosecute.”  Despite the fact that conviction rates for DWIs are quite high, charged and convicted are still not the same thing.

One place where this information could be quite harmful is if someone were to look for a job.  A DWI arrest could be enough to keep somebody from being hired irregardless if the charge was dropped, the person was exonerated or if the record was sealed or purged.

Owners of famous trademarks are often faced with making the difficult decision that arises when their mark becomes the subject of a parody.  Spend a lot of money in court with the goal of obtaining an injunction to stop the potentially infringing use, or do nothing and hope that the parodist goes out of business.  Both choices can carry significant negative repercussions.  However, the negative side-effects can be significantly magnified in the age of web 2.0’s user created content and the unlimited potential of viral marketing.

A recent example is the suit filed on December 10 by the popular clothing company, The North Face (TNF).  See the complaint here. TNF became the subject of a parody created by a Missouri college student who began marketing and selling clothes under the name The South Butt.  The South Butt (TSB) argues that they are poking fun at those who will never set foot on a mountain, but every morning don $600 worth of outdoor gear on their way to class.

Along with the similar name, what has TNF crying infringement and dilution is that TSB sells a jacket that looks very similar to TNF’s “iconic” Denali jacket and adorns it with an upside down version of TNF’s famous “Half Dome” trademark.  (See an example of TSB’s jacket here).  Based on this activity TNF has sued to enjoin the TSB’s use of its name, symbol and the overall appearance of the jacket.  But in the wake of this suit internet media has made thousands aware of upstart TSB.  A recent check of The South Butt’s Facebook page shows that there are now more than 7,000 fans of the company.   A Google search yields almost 300 news articles related to TSB, and a YouTube advertisement for TSB has over 14,000 views.  TSB has also reported massive increases in sales and hits to its website.  The founder and owner of TSB, Jimmy Winkelmann, has even been dubbed “Little Jimmy” by those who have embraced his role as David, in a David versus Goliath showdown against the multi-billion dollar TNF.

Although it is unlikely that all the negative attention directed at TNF and the exposure TSB has gained will cause TNF to have second thoughts about suing Little Jimmy, it exemplifies the ability of the internet to significantly change the game for companies like TSB. In the age of viral media and social networking, plaintiffs must take into account the ability of “the little guy” to use a lawsuit to gather significant support.  This free exposure can generate revenue to fund the defense and create ill will towards the plaintiff.

With a legitimate parody defense to TNF’s claims and more money in the bank from increased sales caused by TNF’s suit, the battle between TNF and TSB could prove to be much more expensive and challenging than TNF initially anticipated.

It is a fair guess that just about anyone uses the Internet regularly has run some kind of search on themselves, a future employer, their co-workers, etc. Reviewing a Facebook profile or Googling a name are two common techniques. Capitalizing on this sleuthing, several companies now offer or are developing cell phone applications that will deliver far more detailed reports on prospective romantic partners. Stud or Dud promises bankruptcies, stable address histories, marriages and divorces, property ownership, criminal/sex offender records, business licenses, evictions, and “other useful facts.” Are They Really Single, an application from the same developer, will provide marriage and divorce records. Similarly, DateCheck will provide criminal offenses, home details including square footage and taxes, educational background, the names and ages of all persons living at their address, horoscopes, and much more.

In an interview with CNN, Bryce Lane, president of PeopleFinders Network, said that all information was publicly available and had just been combined into one database in order to facilitate accessibility. But the increased accessibility raises many areas of concern. For instance, a man who learns a woman’s name – and nothing but her name – at a bar can use one of the above sites to identify current or previous roommates and pressure them for information regarding that woman. The comments on one blog suggest that such concerns are not likely to weigh heavily on the target audience: readers of Rosa Golijan’s post on the applications commented far more frequently on her musings about which boyfriend took her stockings than on her reference to “creepy” stalkers taking advantage of the applications. To take another example, an employer might not be able to resist the ability to easily access this information when making employment decisions, even if they may not be able to legally rely upon the information.

The potential for misuse of the information is only compounded by the potential for confusing one person with another, especially since the misidentified person has no way of knowing that someone has accessed inaccurate information regarding them. A search on Stud or Dud for the author’s full name disclosed her correct age, place of birth, and the full names of her parents. But searching for the author’s phone number turned up a 107-year-old Georgia women with a very large family. A potential date or employer might not confuse those two, but what about the potential for confusing one of the more than fifty John Smith’s in Ann Arbor, Michigan? Let us say that there are two John Smith’s in the same Ann Arbor zip code who are between 45 and 55; we’ll call them JS1 and JS2. JS1 has a mortgage on one residential property at which he has lived for the past twelve years, has always filed his taxes on time, and is married. JS2 filed bankruptcy at least once in the past, has moved frequently throughout the midwest region in the past six years, and rents an apartment with two roommates. A potential employer wishes to hire someone for a position that requires allocating and tracking financial resources, and the employer hopes that the new hire will remain in the position for at least three years. The employer would likely prefer someone with JS1’s profile, but the employer running a search on one of the above sites might confuse JS2’s profile with JS1’s and deny JS1 the position. JS1 would never know the employer’s search and so would not be able to correct the error.

Paul Stevens of the Privacy Rights Clearinghouse argues that that the above problems could be mitigated if information brokers were subject to the same or similar regulations as the Fair Credit Reporting Act. In particular, Mr. Stevens wants free annual disclosures to individuals, the right to dispute inaccurate information, and time limits on reporting adverse information. See also Online and Offline Collection of Consumer Information: Hearing Before the Subcomm. on Commerce, Trade, and Consumer Protection, 111th Cong. (2009) (testimony of Pam Dixon, Executive Director, World Privacy Forum). Lane does point out in his CNN interview that individuals can have their information removed from his sites, although he suggests that only “criminals” would do so.

Other concerns are rooted in a more visceral feeling that most people do not need the information that is now at their fingertips. A bank considering whether to finance a loan has good reason to know how many properties the applicant has. The promoters of DateCheck (“look up before you hook up”) would likely argue that a woman at the bar has a strong interest in the martial status of the man who just bought her a drink. But an idly curious co-worker or classmate? The undeniably correct assertion that this information is publicly available does not necessarily justify the ease with which it can be accessed. In the past, it took some effort to obtain the information: a call to the relevant records departments, maybe a delay before delivery. Though it was not the goal of the systems by which information could be obtained, the inconveniences may have limited access to those with a strong motivation to know. Perhaps, as Lane suggest, in an age where we meet new people at a rapid pace without any means of confirming their backgrounds, we do need some means of confirming the information they provide about themselves. Or maybe we should slow down a little and establish some relationships the old-fashioned way? If the latter, consumers will require at least some greater control over the information made available through information brokers, whether that information is packaged as a dating tool or in some other format.

The Supreme Court granted certiorari to City of Ontario v. Quon on December 14, 2009 (No. 08-1332).

Quon was a SWAT member who had sent and received text messages on his work-issued pager. While the city’s written policy was that employees should have no expectation of privacy when using their work network, the supervising lieutenant who had issued the pagers had an informal policy that employees could use them for personal communications and their messages would not be inspected as long as they personally paid for any overage fees. However, when the higher-ups decided to audit the texts to determine if they should increase the texting allotments with the outside service provider, they read transcripts of Quon’s sexually explicit messages to his wife and someone it appeared he was having an affair with.

Quon, his wife, his alleged girlfriend, and another employee sued the city, claiming Fourth Amendment violations. The Ninth Circuit found that the employees had a reasonable expectation of privacy in the content of their text messages because the formal policy was in effect overridden by the supervisor’s informal one. It also determined that the search was unreasonable because there were less intrusive ways to investigate the employees’ personal usage levels.

The main issue is whether Quon, as a public employee operating under this informal policy, is protected by the Fourth Amendment against warrantless searches of the content of his text messages because of a reasonable expectation of privacy. The other issue is whether the sender of a message to a government employee on the employee’s work device (i.e., Quon’s wife) has an a reasonable expectation of privacy from employer review.

In O’Connor v. Ortega, 480 U.S. 709 (1987), the Supreme Court dealt with similar issues of employees’ right to privacy in the workplace. The plurality opinion, written by Justice O’Connor, found that there was a reasonable expectation of privacy in the public workplace, but also that a balancing test of “the employee’s legitimate expectation of privacy again the government’s need for supervision, control, and the efficient operation of the workplace” should be applied to determine whether a search is reasonable. Scalia concurred with a broader take on privacy. While the justices couldn’t all agree on whether the employee had a reasonable expectation of privacy in his office, all of them agreed that he had a reasonable expectation of privacy in his desk and file cabinets.

How to apply O’Connor’s holding to electronic communications is one of many questions courts face with our evolving use of technology in the Internet age. Some courts still try to analogize this to wire-taps on phones; anyone with a BlackBerry would disagree. Laptops, cellphones, pagers, and other digital devices are used so ubiquitously that today the line between personal and non-personal communications is blurred.

Will the Court be as divided as in O’Connor? The Court has changed since then, and of the five for public employee right to privacy, only Scalia remains. It’s expected that Sotomayor will side with the employer in Quon. She previously ruled in a 2001 case that a workplace search of an employee’s computer was reasonable, balancing the “modest intrusion” with the “need to investigate allegations of improper conduct.”

While whatever the Court decides here will only be binding on government employers (who would be subject to Fourth Amendment restrictions), it is very likely that lower courts will be applying this to private employers as well.

[ Washington Post: Supreme Court will decide whether employees' text messages are private ]

[ Wall Street Journal: Supreme Court to Review Employer Access to Text Messages ]

[ Double X: No more Sexting with Sotomayor on the Court ]

[ Oyez case summary of O'Connor v. Ortega ]

As biotechnology continues to expand the boundaries of medical treatment, it is important to protect the traditional medicines used and developed over hundreds of years by communities around the world. To that end, the Indian and U.S. government have recently taken steps to ensure the protection of intellectual property of traditional knowledge and medicines.

The goal of both actions is to limit the misappropriation of traditional knowledge through mistaken issuance of patents, also known as “biopiracy.” In a press release, Sharon Barner, Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the USPTO, said “The USPTO has long been concerned about attempts to patent traditional knowledge, not only because it may result in an incorrectly granted patent, but also because it removes knowledge from the public domain.”

In a Memorandum of Understanding between India’s Department of Industrial Policy and Promotion and the U.S. Patent and Trademark Office, the countries agreed to bilateral cooperation on protecting intellectual property rights of traditional medicines.

In addition to the Memorandum, India provided access to their newly developed Traditional Knowledge Digital Library (TKDL) a research tool containing 2000,000 traditional medical formulations. Developed by India’s Council of Scientific & Industrial Research and the Department of Ayurveda, Yoga & Naturopath, Unani, Sidda and Homeopathy, the database currently comprises 30 million pages and has been translated into English, French, German, Japanese, and Spanish. TKDL could provide U.S. patent examiners with the needed evidence to deny a patent application claiming a new invention for what is in fact traditional knowledge, something they have failed to do in the past.

After the US and European Union granted of patents for the wound-healing properties of turmeric and pesticidial uses of seeds of the neem tree, Indian scientists argued the patents were biopiracy. Both turmeric and the neem tree (which is native to India) have been used in India for thousands of years. Through protracted legal battles, India successfully had both patents revoked.

Continued steps by both developed and developing countries, such as the ones recently taken by the Indian and U.S. government, are vital to ensure that traditional knowledge will continue to be available in the public domain. The TDKL is one of numerous databases and other tools that U.S. patent examiners will now have at their disposal deciding to accept or reject patent application that might conflict with traditional knowledge and medicine.  As the economy grows increasingly more global, it is imperative that traditional medicine and knowledge is safeguarded from biopiracy. Collaboration between countries on the issue is certainly a step in the right direction.

When AT&T sued Verizon Wireless for its “There’s A Map for That” advertising campaign,

AT&T could have brought a dilution claim against Verizon’s use of the slogan, “There’s a map for that,” which is very similar to AT&T’s slogan, “There’s an app for that,” featured in its own iPhone commercials.

In bringing a dilution claim, AT&T could have argued that Verizon’s use of “There’s a map for that” weakened the effect of AT&T’s slogan because consumers would no longer think exclusively of AT&T when hearing the phrase. It seems like AT&T would have had a good argument for dilution, but instead, it sued Verizon for false advertisement under the Lanham Act, federal trademark law.

The ads themselves feature two maps comparing AT&T’s 3G network coverage area to Verizon’s superior 3G coverage area. AT&T asked the court to stop Verizon from running the ads because they could mislead customers into thinking AT&T doesn’t offer any coverage in areas where its 3G network isn’t available. (In reality, customers can still make calls and access the Internet using AT&T’s slower EDGE or GPR networks, even where there isn’t 3G network coverage.) Verizon, on the other hand, argued that the ads simply point out that AT&T hasn’t invested enough in upgrading its network to handle new smartphone activity from the popular Apple iPhone.

In its response to AT&T’s complaint, Verizon wrote: “AT&T did not file this lawsuit because Verizon’s ‘There’s a Map for That’ advertisements are untrue; AT&T sued because Verizon’s ads are true and the truth hurts.” Verizon also pointed out that the Lanham Act requires AT&T to show actual proof that the ads are misleading consumers because First Amendment free speech is at stake in the suit. Verizon continues:

As to four of the five challenged ads, AT&T has presented no evidence of consumer deception. This alone is a sufficient basis to deny AT&T’s motion as to these ads. As to the one ad . . . AT&T commissioned a consumer survey . . . . But this survey is riddled with errors.

Apparently the court agreed. Judge Timothy C. Batton, a federal judge in Atlanta, declined to grant AT&T a preliminary inunction that would temporarily stop Verizon from running the ads. He stated that he didn’t believe AT&T would succeed in its claim based on the evidence submitted. The judge said:

I think that a person with a skeptical bent of mind might call Verizon’s ads sneaky . . . . I think a more sanguine view is that they are simply clever. Either way, however, they are literally true. And the Court holds that AT&T has failed to carry its burden of showing that they are nevertheless misleading.

Immediately following the court’s ruling, AT&T indicated that it would continue with the suit despite the initial loss, but it has since decided to drop the claim.

Perhaps AT&T realized that after its own expansive advertising campaign touting its network as the “fastest 3G network” (implicitly comparing it to Verizon’s coverage and other secondary competitors’ — such as Sprint and T-Mobile), it isn’t likely to garner much sympathy in its claims against Verizon. The bottom line is that Verizon’s maps of AT&T’s 3G network are accurate. If AT&T wants to say its 3G network is faster than Verizon’s, why shouldn’t Verizon be able to say its own coverage is more expansive than AT&T’s? Maybe AT&T realized that it should stop sinking its money into law suits and instead use it to fill those gaps in its coverage. Federal trademark law is meant to protect against false advertising, but this should promote fair competition, not hinder it. Therefore, Verizon’s ads, if accurate, should encourage AT&T to improve its service. This type of competition, in a free market, will hopefully produce the best quality products at the lowest prices for consumers.

New Jersey senators Joseph Vitale and Sean Kean have proposed legislation that would impose heavy fines on entities that sent unsolicited text message advertisements. Though the Telephone Consumer Protection Act was enacted prior to the advent of text messaging, such unsolicited text message ads have recently been found to fall under the TCPA. The 9^th Circuit has declared this interpretation of the FCC to be reasonable and other circuits are likely to follow. The FCC prohibitions, however, do not include all text messages; rather, they only prohibit those sent from an internet domain name. Messages sent from cell phone to cell phone are exempt.

Vitale and Kean’s bill provides that fines will only be levied in two instances: if the text message causes the recipient to incur a fee or decreases the number of text message the recipient is allocated by his cell phone provider. The fines, only imposed if the advertiser sends more than one per year, are very steep; $10,000 for the first offense, $20,000 for subsequent offenses, and $30,000 if the advertiser knew or should have known the recipient was disabled or elderly. The bill also contains a provision requiring all phone companies to offer New Jersey consumers the option of blocking all incoming and outgoing text messages. Senator Vitale explains the motivation of the legislation, “We have to do a much better job in New Jersey to protect consumers from unsolicited text advertisements which can drive their cell phone bills through the roof.”

Certainly the New Jersey bill correctly recognizes the need to close the loopholes in the FCC’s regulation; however, it is still deficient. Firstly, in many cases it would be impossible to determine whether an advertiser knew or should have known if the recipient was disabled or elderly. The bill contains no guidance on what type of inquiry, if any, the advertiser should undertake to determine if the recipient falls into one of those categories. In many cases, it seems unlikely the advertiser would have enough information to know the recipient’s status. If the bill’s intent is to protect these groups, the additional fee should be levied regardless of the advertiser’s knowledge; otherwise, it is unlikely they will ever be subject to this additional fine.

More importantly, under the terms of the bill, unsolicited text messages to a recipient who had an unlimited text messaging plan would be permitted; a consumer with an unlimited plan would not incur a fee or a decreased number of available messages. Thus, the bill does not properly deal with the nuisance of unsolicited texts, rather it only recognizes the monetary cost. Such a stance is unreasonable; a consumer would have to receive a massive amount of unsolicited ads for any real cost to be incurred. Sprint, AT&T and T-mobile charge only twenty cents per text message. Most consumers would not be aggravated by this minimal charge, but rather at the annoyance of unsolicited contact. The bill should be amended to prohibit all unsolicited text ads, even if the consumer suffers no monetary loss. With this alteration, the bill would operate as an effective deterrent.

Cloud computing, though its definition can be expressed in a more detailed manner, is basically the next generation of IT systems organization, where data and applications are centrally accessible through individual portals such as laptops or desktops.  Many popular sites operate on a cloud computing model, including Facebook and Google Docs.   Earlier this year, the announcement that the U.S. government would be moving toward cloud computing raised the profile of this rapidly developing phenomenon.  By adopting a cloud computing model, the government highlighted the increased efficiency that cloud computing can produce, but also brought to the forefront some of its problems, including security and privacy risks and the difficulties posed by questions of how, or whether, to regulate this form of systems organization.

In Security in the Ether, David Talbot examines the expected expansion of cloud computing and the potential security risks posed by such computing.  Major security risks are implicated by storing data on remote servers also used by third parties, who may be able to access the data.  Providers of cloud computing services are working to increase security with more sophisticated methods of encryption.  Because cloud computing will most likely grow in popularity, and become popular amongst entities such as banks and health care providers that deal with sensitive information, cloud computing represents an area in which the government may wish to regulate the storage, protection, and use of information.

The aggregation of more and more data into fewer and fewer places provides an environment for government regulation that the internet thus far, with its seemingly infinite reach and scope, has not.  Most government regulation of information use, such as the Red Flags Rule requiring businesses to track their own information for signs of identity theft, has involved a particular provider of services monitoring its own information for potential misuse.  Large scale cloud services providers, whose servers will provide data processing and storage for numerous entities, could present an easier method of regulation of information.  In addition, because of the large amounts of data involved and the security risks posed by data centralization, the government has a strong incentive to regulate cloud computing providers.

Government involvement in cloud computing could prove problematic.  The incentive to regulate also invites the risk of over regulation.   Government regulation regarding the use and dissemination of information, though intended to increase security for individuals, could stunt technological innovation and decrease the efficiency of cloud computing.  Jonathan Zittrain, co-director of Harvard’s Berkman Center for Internet and Society, points out that the freedom and experimental nature of the internet are at risk with the rise of cloud computing.   In addition to risks posed by over regulation, cloud computing poses significant Fourth Amendment concerns.  Legal precedent for privacy rights of information stored in clouds is murky at best because of the sophisticated technology involved.  As cloud computing continues to increase in popularity, policy makers will need to balance the interests of individuals in the privacy of their data with the interests of the government in having access to that data, the interests of these same consumers in a more efficient, free, and innovative internet, and the interests of businesses that provide and utilize cloud computing services.  Any government action that does not balance these competing interests will work to the detriment of developing the next generation of systems organization that further realizes the potential of the internet.