Archive for the ‘personal information’ tag

What Does Sale of Borders Intellectual Property to Barnes & Noble Mean?

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According to Bloomberg Businessweek, Borders has gained final court approval for its $13.9 million intellectual property sale to former competitor Barnes & Noble.

Borders was once the second-largest bookstore chain after Barnes & Noble. So after being the first to pioneer the concept of a megastore, why did they fail? Quite simply, lack of technological curiosity killed the cat. With digital sales of books and music on the rise, and CD and DVD sales falling, Borders chose not to invest resources in developing digital sales. Instead, they outsourced digital operation to Amazon, while concentrating on improving brick and mortar stores.

Apparently, customers were not as enamored with the bookstore experience as Borders thought. Convenience and prices trumped cozy chairs and coffee, and many customers would instead use Borders to read a book excerpt, then go home and buy it on the cheap from Amazon. Then came e-readers. While Barnes & Noble produced the Nook as an answer to Amazon’s Kindle, Borders was struggling with insolvency, and unable to keep up with the changing marketplace and filed for Chapter 11 Bankruptcy last spring.

So what does this mean for Borders intellectual property? Barnes & Noble now hold the key to their trademarks, which includes Waldenbooks and Brentano. A quick visit to the Borders website reveals that Barnes & Noble is using the Borders name and e-commerce website, while proclaiming that Barnes & Noble will fulfill all orders. Upon research, Barnes & Noble lacks a physical presence in several large cities including San Francisco. It’s possible that they could use the Borders name to expand, but the future is still uncertain.

The biggest controversy surrounds the sale of approximately 48 million customers‘ information. Many Borders customers had signed on to an earlier agreement that their data would not be shared without their approval. The bankruptcy judge refused to approve the deal without giving the prior customers an opt-out option and Barnes & Noble fought it every step of the way.

On one hand, coming from an advertising background, I know that receiving a gargantuan list of people who are already known to buy books is an invaluable tool for Barnes & Noble’s marketing team. But with the now required opt-out option, one has to wonder if the information was worth the $13.9 million that was paid. It equals roughly $0.28 paid per customer, which is a steal in the marketing world. However, if a significant portion of customers opt-out to be included in Barnes & Noble’s e-mail list, that per customer number could go a lot higher.

The main issue is that the information could be sold without permission in the first place. For the average internet consumer, buying goods online doesn’t mean reading the fine print. I myself click accept without ever reading what I’m accepting. As a law student I should know better, but in today’s world it’s just not feasible to read a list that has a size 8 font, and goes on for 10 pages. Most companies say that they will never sell your information to a third-party, including Borders. So what do you do when it happens anyways?

Internet and privacy are areas of law that are still in infancy. It seems that this case is bringing to light how little control we actually have over our personal information once we transmit it to a company. The U.S. Federal Trade Commission submitted concerns to the court, as have 25 attorney generals. With more and more personal information being store by e-commerce companies, this controversy can only get bigger. How far can the sales of private consumer information go?

How do you feel about your personal information being bought and sold?




Protecting Online Consumers from “Orwellian” Tracking?

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Consumers’ money isn’t the only thing that needs protecting, at least if you ask the new head of the Bureau of Consumer Protection at the Federal Trade Commission. David Vladeck, former Georgetown law professor and attorney with the Public Citizen Litigation Group, thinks the FTC should protect consumers’ dignity, not just their money, and he may have a good point.

In an article for the ABA Journal, Debra Cassens Weiss discusses the FTC’s complaint against Sears Holding Management Company.  In the complaint, the FTC alleges that Sears disseminated software to consumers that ran in the background on the consumers’ computers and transmitted tracked information to Sears.  The software, which was purported to “confidentially track [the consumers’] online browsing,” went much further than what the consumers were led to believe (at least according to the FTC).

By downloading the software, the consumers allowed Sears to collect information on the configuration of their computer hardware and software, as well as on internet browsing activity.  That’s where the problem arises.  The FTC says that Sears did not do a good enough job of disclosing the types of information it would be gathering, and I agree.

Sears was not just tracking which store websites consumers were choosing, or which advertisements they were clicking–it was observing “both . . . normal web browsing and the activity . . . undertake[n] during secure sessions, such as filling a shopping basket, completing an application form or checking . . . online accounts, which may include personal financial or health information.”

To be fair, consumers sign long, complicated contracts all the time, often without reading them (or at least reading them very carefully).  Sears could argue that it is not doing anything new here.  Courts have long considered how far companies must go in disclosing contractual provisions, and what is expected of consumers in reading and understanding them.  There are many cases in which the consumers were expected to honor the contracts they signed.  But I think there is a pretty big difference between adequate disclosure regarding something that might happen in the future (e.g., having to arbitrate a disagreement in Florida), which a consumer can (perhaps unhappily) choose to avoid, vs. disclosure regarding gathering private information which the consumer believes is protected.

I can imagine the arguments against the FTC action.  If you don’t ever let consumers get burned by the contracts they sign without reading, they’ll never learn to be more careful.  But that’s assuming consumers will ever decide that it’s in their interests to read contracts carefully before accepting them.  I don’t think that’s likely, and I think to a certain degree that’s ok.  Customers expect low prices, and companies continue to look for ways to provide them, and if consumers are willing to give a little on the back end to save some money on the front end then who’s to say we should stop them?

But I think this is different.  My first thought upon seeing Weiss’s article was, “Is that even legal?”  I consider myself pretty Internet-savvy and, though I probably wouldn’t have accepted Sears’ agreement in the first place, if I did I certainly wouldn’t have thought that Sears could gather private information from my secure browsing.  I think most consumers would feel the same way, and I’m glad Vladeck is keeping an eye out for us.

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November 29th, 2009 at 11:43 am