Chamber of Commerce Intrigued by Spying TVs and "Highly Important" Class Action

DVR Ratings Fiasco - H 2013
Ben Wiseman

DVR Ratings Fiasco - H 2013

The Chamber of Commerce is interjecting itself in a lawsuit over the alleged way that Vizio's Smart TVs collect and report users' content viewing histories. On Friday, the nation's largest business federation sought permission to file an amicus brief urging immediate appellate review of a "highly important" case.

What's concerning to the business community is not executives potentially being spied upon, but rather how interpretation of privacy law may "radically affect business models for developers of Internet-enabled devices and other technologies."

In California, the plaintiffs in the Vizio lawsuit are testing various state and federal privacy laws to challenge televisions that until a recent settlement with the FTC were automatically set up to collect data on its users. One of the laws at issue is the Video Privacy Protection Act of 1988, which was enacted in the wake of a Washington Post report disclosing then Supreme Court nominee Robert Bork's video rental history. A wide range of entertainment companies including Hulu, Disney Interactive and Viacom have been in court over the statute, and while plaintiffs have largely struggled to use the VPPA to redress privacy concerns in the digital age, at least two decisions from the past year have caused anxiety from the business community. One was a May 2016 appellate ruling from the 1st Circuit concerning those who used USA Today's app. The other decision was how U.S. District Court Judge Josephine Staton in March allowed the Vizio lawsuit to move forward.

Vizio attempted to have Staton reject the plaintiffs' claim by arguing that if it could be deemed a "video tape service provider" under the VPPA, it would mean that other manufacturers of products including Blu-ray players, smartphones, app stores, cable boxes, wireless routers, personal computers, video game consoles and even cars would qualify.

Staton replied, "Most of these products or services are far too peripherally or passively involved in the delivery of video content to reasonably constitute 'the business' of delivering video content... By contrast, Plaintiffs allege that Vizio has developed a product intimately involved in the delivery of video content to consumers, has created a supporting ecosystem to seamlessly deliver video content to consumers (including entering into agreements with content providers such as Netflix and Hulu) and has marketed its product to consumers as a 'passport' to this video content."

The Chamber of Commerce isn't soothed.

In its amicus brief (read here), the group says the VPPA "fits a video store's disclosure of video rentals like a glove," but expresses panic should the law be taken outside of the brick-and-mortar context. 

"Plaintiffs’ arguments have implications far beyond this case," writes lawyers at Jenner & Block, representing the Chamber. "Plaintiffs’ core theory is that Vizio violates the VPPA because it shares electronic information so as to facilitate the delivery of targeted advertising. Yet the business model of sharing information for purposes of targeted advertising is the business model underlying many of the Internet’s most widely used services. That business model is ubiquitous in the 'Internet of things' — the network of physical devices, connected to the Internet, that collect data — and the Court’s decision may have major ramifications to such technologies."

Besides disputing the statutory application of a "video tape service provider," the Chamber also disagrees with Staton's conclusions about what's "personally identifiable information" of "consumers." The group echoes Vizio's arguments that all it's disclosing are "MAC addresses, which are unintelligible strings of numbers," rather than specific names, ages, physical addresses, and so forth of Vizio's users. Essentially, the contention is that by disguising identities, companies should be given latitude to share what makes the public responsive.

"Whether such advertising-based business models improperly impinge on users’ privacy is a difficult and nuanced policy debate," states the amicus brief. "But that debate should occur in Congress, not in litigation under a statute enacted before those technologies existed. Congress is better positioned to undertake the extensive fact-finding that would be necessary in weighing the benefits of advertising-based business models against concerns about privacy. And given that advertising-based business models vary considerably — content providers like YouTube, cell phone providers like Apple, and Smart TV providers like Vizio, all rely on advertising in different ways — Congress is in the best position to analyze these disparate services and decide what privacy regulation is appropriate for each one."

Staton must decide whether to permit an interlocutory appeal, that is, one before a trial and final judgment. Even if she refuses, Vizio can attempt to get permission from the 9th Circuit Court of Appeals. The Chamber asserts that questions about the scope of the VPPA need to be answered as quickly as possible as technology is continually evolving.