There hasn't been much talk lately over the fact that PayPal, MasterCard and Visa all cut off Wikileaks late last year, after the US government freaked out about the release of some State Department Cables. None of the firms has done a very good job explaining why this makes sense (or why they continue to allow other groups, such as the KKK to receive funding, while singling out Wikileaks). I'm sure those three firms, which took quite a public bashing when the news originally dropped, would prefer that there not be any more talk about it. However, Wikileaks and the payment firm they used, DataCell, are apparently planning to file a legal complaint this week against all three firms in Europe. A draft of the complaint, which was obtained by Andy Greenberg at Forbes (linked above and embedded below), claims that the three firms violated Articles 101 and 102 of the EU Treaty, effectively a form of antitrust law. While I tend to think many antitrust claims are merely attacks on successful companies, this seems like a case where they could make sense. Here you have basically the only three ways for most people to transfer money easily, all agreeing to block a single (small) client from receiving money, despite no legal ruling against the operation (hell, charges haven't even been filed). It certainly would make for an interesting case.

On the day Google announced its big mobile payment system, PayPal announced that it's suing Google and two former PayPal execs who went to Google and were apparently heavily involved in this effort. The focus is apparently on Osama Bedier, who apparently had spent the last couple of years at PayPal trying to do a deal with Google to power Google's offering... before jumping ship to lead Google's own effort (which does not apparently use PayPal). Of course, as we've discussed many times, non-compete agreements are unenforceable in California, because California believes that you can't take away someone's right to work.

What this really does is highlight the fuzzy line between "right to work" concepts and trade secrets. That's because California does have strong trade secret protections. But if an employee has a right to work... how do you remove any "trade secrets" from their previous job from their brain? There are some details -- including accusations of transferring confidential documents to a computer right before making the job switch -- that certainly look bad. But, on the whole, I tend to think these kinds of lawsuits are a waste of time. Focus on actually competing in the market, rather than suing competitors. Frankly, the world needs more payment solutions, and if there's some competition, then it should force all players to improve their game.

A couple years ago, we wrote about how Amazon, holder of the extremely infamous "one-click patent," had been sued by another firm, Cordance, claiming to hold a one-click patent. About a year and a half ago, Amazon apparently won that case. Unfortunately, a judge effectively overruled the jury, saying that some of the claims the jury insisted were invalid were actually valid. Thanks to that, it appears that Cordance is back, and is suing Apple, PayPal and Victoria's Secret, claiming they all violate its one-click patent (6,757,710). The patent seems to be crazy vague. It's still stunning that anyone -- let alone two people -- can hold a patent for letting someone buy something with one click. Separately, the article notes that Victoria's Secret is currently dealing with five separate active patent lawsuits, all based in East Texas (of course). Kind of makes you wonder if someone thinks that the models will actually show up to defend the company...

Sony's ridiculous and over-aggressive lawsuit against George Hotz (Geohot) for jailbreaking the PS3 keeps reaching new absurd levels. The latest is that the magistrate judge, who seems to be rubber stamping most of Sony's requests, is allowing the company to subpoena Paypal for Geohot's account records. We've already discussed how she's allowing subpoenas for visitors to Geohot's website, as well as for whoever watched the YouTube video he put up about the jailbreak. Sony claims it needs access to his Paypal records to prove that people in California may have donated. They want that so that they can establish California as the proper jurisdiction for hearing the case. Frankly, this is ridiculous. First, who donated to Geohot should not be even remotely meaningful in determining the proper jurisdiction for the case. Where Hotz is located should outweigh any donor locations. Second, shouldn't the judge be somewhat concerned with the privacy aspects here? In giving up Geohot's Paypal info, isn't this exposing the info of anyone who might have donated, without them having the ability to stop it?

PayPal's decision to cut off the account of an organization that was collecting funds to help with Bradley Manning's defense got a lot of attention -- so much that PayPal came out with a blog post explaining that it was just a paperwork problem on the part of the organization, Courage to Resist. Because of this, they've reinstated the account:

We recently placed a temporary limitation of the Courage to Resist organization’s PayPal account as they had not complied to our stated policy requiring non profits to associate a bank account with their PayPal account (for the vast majority of non-profits, this is not an issue).

In a press release issued today, the Courage to Resist organization claimed that their resistance to follow our policy is because PayPal sought to withdraw funds from their checking account.  To be clear: PayPal cannot take such action without the authorization of an account holder, nor does it ever take such unauthorized actions.

Upon review, and as part of our normal business procedures, we have decided to lift the temporary restriction placed on their account because we have sufficient information to meet our statutory 'Know Your Customer' obligations. The Courage to Resist PayPal account is now fully operational.

While it's good that they've done this, not all of this makes sense. Courage to Resist claims that they repeatedly asked for an explanation and for the specific policy that they had violated. If it was just a matter of associating an account with a bank account, why didn't PayPal just tell them that in the first place?

It's old news by this point that PayPal decided to cut off Wikileaks donations, following pressure from members of the US government (even if the State Department denies any official pressure, Joe Lieberman's public brow beating of companies shows that there was serious pressure at least from some in the government). However, Glyn Moody now points us to the news that PayPal has also decided to cut off the group "Courage to Resist," which was handling funds for Bradley Manning's defense effort. PayPal admits there's no legal basis for this. Apparently, the company just doesn't believe that some people should be allowed a fair trial:

The online payment provider PayPal has frozen the account of Courage to Resist, which in collaboration with the Bradley Manning Support Network is currently raising funds in support of U.S. Army Pfc. Bradley Manning. PayPal was one way people--especially international residents--were able to contribute to the grassroots effort supporting the accused WikiLeaks whistleblower. "We've been in discussions with PayPal for weeks, and by their own admission there’s no legal obligation for them to close down our account," noted Loraine Reitman of the Bradley Manning Support Network (Support Network). "This was an internal policy decision by PayPal."

[....] The Support Network repeatedly requested and was refused formal documentation from PayPal describing their policies in this matter.

The report also notes that they've had a PayPal account in good standing since 2006, with no problems at all. It's only once they were taking funds for Bradley Manning that PayPal shut them down. This is somewhat horrifying, frankly, and raises serious questions about PayPal as a business worth trusting.

We've seen, lately, that the entertainment industry has been targeting third parties for liability. For years, they've talked about making ISPs more "liable" for infringement, but now they're extending that web in potentially problematic ways. Of course, this is a lot of what the whole COICA debate is about. Part of the way COICA works is by extending liability to third parties -- ISPs, advertising partners, domain registrars, payment processors -- if they don't cut off all services to those accused of infringement (often without any adversarial hearing). But in some cases, they're already targeting those third parties, and two separate stories on TorrentFreak demonstrate that.

The first involves Liberty Media suing Paypal along with Hotfile (and 1,000 John Does) for alleged infringement. Hotfile is a cyberlocker, which has plenty of perfectly legitimate uses, but is also frequently used for infringement. Liberty Media walks through a complex set of relationships, which it seems to interpret in the most nefarious way possible. For example:

"Demonstrating that Defendant Hotfile.com is aware of the illegality of its conduct, it offers two methods for download services. For its first option, Defendant Hotfile.com permits its partners to download a stolen movie at a very slow transfer speed for no charge. The other option allows users to pay a premium to download the movie ten times faster."

It certainly sounds bad when you put it like that, but of course, plenty of file storage/file transfer sites offer tiered packages that involve paying for faster transfer rates. That, in no way, demonstrates awareness of illegal content. I'm not saying Hotfile isn't potentially liable, but claiming the tiered pricing is evidence of that seems strange.

But it seems even worse that Liberty is suing PayPal as well -- and I would bet that PayPal will quickly file to be dismissed from the case, as an unrelated third party, or one protected by safe harbors. It's going to be quite a stretch for Liberty to prove that Paypal is somehow liable for the actions not just of a company that uses Paypal, but the users of that company. It's fourth or fifth party liability, rather than third party liability.

The other story involves a case that's a bit further along, where a judge has ordered a preliminary injunction against two ad providers and a domain registrar over a website that allegedly hosts infringing scans of various books. Since the holder of the domain is kept private via eNom's Whois Privacy Protection Service, the court ordered eNom to reveal the identity of the domain owner and to "disable the website." The judge also ordered the two ad networks -- Clicksor and Chitika -- to stop working with the site.

While I could see suing the John Does behind the site, and then working to get a subpoena to identify the real parties behind the alleged infringement, directly suing these three companies seems like a huge stretch, and it's disappointing that the judge rushed to issue the injunction so quickly. The original complaint (pointed out by Eric Goldman, makes some ridiculously broad claims about third party liability.

This is unfortunate, but not a surprise. We've been warning for the better part of a decade the problems with third party liability. Those who benefit from it will always push to stretch it to dump liability on third parties who had absolutely nothing to do with the actual infringement, and often had no idea that any infringement was going on. These payment companies, ad networks and registrars are quite far removed from any actual infringement. As noted above, they're barely "third parties" at all, as they're really fourth or fifth parties, so far removed from the actual infringement as to make these legal actions really quite questionable. It's hard to see how anyone can reasonably argue that a registrar or a payment processor or an ad network should somehow be liable for actions done by the users of a site that they work with. If this continues it will severely stifle many of these activities, as payment providers and ad networks won't do business with all sorts of perfectly legitimate sites, just to avoid the liability of being blamed for the actions of someone two steps removed.

Glenn Greenwald has a post highlighting how a NY Times' investigative report on US military action in Pakistan appears to reveal key military secrets concerning plans that have not yet been put in place, and which could certainly put Americans and others in danger:

Indeed, the NYT reporters several times acknowledge that public awareness of these operations could trigger serious harm ("inside Pakistan, [] the movement of American forces has been largely prohibited because of fears of provoking a backlash"). Note, too, that Mazzetti and Filkins did not acquire these government secrets by just passively sitting around and having them delivered out of the blue. To the contrary: they interviewed multiple officials both in Washington and in Afghanistan, offered several of them anonymity to induce them to reveal secrets, and even provoked officials to provide detailed accounts of past secret actions in Pakistan, including CIA-directed attacks by Afghans inside that country.

As he notes, all of this seems a lot more revealing than anything that Wikileaks has done, and a lot more likely to put people in danger. Yet, there's been almost no response, and certainly nothing like the attention paid to Wikileaks -- with calls for trials or even killing the head of Wikileaks. Seems odd, doesn't it?

But, an even bigger point is buried towards the end in an update, where Greenwald asks:

Why aren't Visa, MasterCard, Paypal, their web hosting company and various banks terminating their relationships with The New York Times, the way they all did with WikiLeaks: not only for the NYT's publication of many of the same diplomatic and war cables published by WikiLeaks, but also for this much more serious leak today in which WikiLeaks was completely uninvolved?

And, I think, we can add Apple to that list. After all, if these companies keep claiming that Wikileaks "broke the law" (as most of the companies listed here are saying), why do they not feel the same way about the NY Times?

Earlier this year, we noted that the US IP Czar, Victoria Espinel, had been making the rounds to ISPs, registrars, payment processors and others to get them to agree to voluntarily start shutting off certain "infringing" sites. Now we see the results of those talks. Espinel has announced that a variety of companies -- including Google, Visa, Mastercard, Paypal and Network Solutions -- have apparently agreed to effectively disappear and cut off certain websites. The focus, for now, is on "unlicensed web pharmacies," with the idea being that these companies will effectively kill off those sites:

Together, the firms hope to tackle every link in the chain that keeps unlicensed pharmacies operating by stopping them showing up in search results, taking their websites offline, delisting the domains they use and stopping payments reaching them.

Think COICA without COICA -- but just with government pressure on companies. Seeing Visa, Mastercard and Paypal on the list certainly isn't surprising, after those three already did the same thing in cutting off Wikileaks. However, it's a bit surprising to see Google agree to this (Update: Google says that it's only agreed to cut off advertising that violates its policies). If there's a trial and these sites are found guilty of violating the law, then I can see cutting them off -- but once again, it appears that this is the government trying to kill off websites, without a trial.

And, yes, it's for "unlicensed web pharmacies," and everyone plays up the spam and the fake (potentially dangerous) drugs. Those are a serious problem. But they also lump in the (quite common) grey market pharmacies as well -- which often allow people to get drugs from outside the country at much more affordable rates. Shutting down fake drug sellers is fine. Shutting down the grey market drug sellers is a bit of a bigger issue.

On top of that, given the recent ICE domain seizures and the whole COICA law -- both of which Espinel has spoken out in favor of -- it's not hard to see how the mandate behind this particular program is quite likely to grow well beyond "unauthorized web pharmacies" to other sites as well. In fact, MasterCard has apparently already agreed to cut off websites deemed "pirate" sites.

This should hardly comes as a surprise, but Senator Joe Lieberman has apparently put out a statement, along with Senator Sue Collins, praising companies for following through on their political pressure to try to censor Wikileaks, calling them "good corporate citizens," and saying that people should support those companies for their willingness to bow down to government pressure. Yeah, okay. Even the press reporting on this seem to think Lieberman is simply making stuff up. Witness this paragraph from Wired:

"The WikiLeaks data dump has jeopardized U.S. national interests and the lives of intelligence sources around the world," Lieberman said, though there is no proof or even detailed allegations that the release has endangered any intelligence source.

Lieberman apparently wants the world to believe that censorship is okay because "this is no time for business as usual." It appears that Lieberman really wants to go down in history as the Senator who favors censorship of the press and US companies. Quite a legacy.