Monthly Archives: November 2013

November 26, 2013 | Op-Eds

Help Virginia Businesses – Stop Patent Trolls

Times Dispatch
Help Virginia businesses – stop patent trolls
Posted: 11/26/2013

The Internet has become the backbone of our economy — powering big technology companies, local stores and restaurants alike. Businesses across Virginia rely on the Internet to connect to their customers, whether through online advertising, e-commerce or simply providing maps to help potential customers reach them. These common tools, traditionally confined to the technology sector, have opened Virginia businesses to a new threat: patent trolls.

Patent trolls are companies that abuse our patent system to extract from productive businesses licensing fees and settlements — which often cost hundreds of thousands or even millions of dollars — under threat of litigation. Their claims are often unfounded, based on vague and overly broad patents on common business practices that are associated with web activity like using online shopping carts, providing shipping notifications or web-based store locators. Even though these claims are weak and frivolous, it’s often in a targeted business’s interest to settle because the average cost of defending against a patent suit in court easily runs into the millions.

Trolls target every type of business, from Fortune 500 companies and major retail and restaurant brands to coffee shops, mom-and-pop stores and technology startups. Major Virginia employers such as Lab Corp., AT&T and GEICO have been sued for using basic Internet-based business tools such as online store locators, live chat services and automated replies involved in marketing. In 2011-2012, 7,000 businesses were sued by patent trolls — four times as many as were sued in 2006. And in 2012, trolls sent out approximately 100,000 demand letters.

Counting direct payments to trolls, legal fees and other associated costs, troll litigation and intimidation costs productive companies $80 billion a year. And it causes real harm for Virginia businesses, from fewer workers hired to reduced investment in research and development.

As the scope and scale of the problem have grown, policymakers have taken action. The House Judiciary Committee, led by Chairman Bob Goodlatte of Virginia, has advanced legislation that would bring much needed transparency to the patent litigation system. It also would require losers to pay legal fees, so trolls think twice before bringing weak or frivolous lawsuits to court. These are important reforms that would stop much of the worst abuses, and we strongly support it.

Through Chairman Goodlatte’s hard work and leadership, the Innovation Act makes many needed improvements to the patent system that will help businesses in Virginia. Small businesses and entrepreneurs also want to see the root cause of troll abuse, bad patents, addressed. A disproportionate number of troll lawsuits are over patents on business methods. Troll suits involving business-method patents have increased on an average of 28 percent per year since 2004, and are nine times more likely to be litigated than other patents. That’s because many of these patents are low quality and should not have been granted in the first place.

To encourage companies to fight back against trolls and get these bad patents out of the system, businesses need a cheaper and quicker alternative to litigation. The Covered Business Method program provides such an alternative by allowing companies targeted by trolls to challenge the validity of business-method patents related to financial services at the U.S. Patent and Trademark Office rather than in court. We encourage lawmakers to add this provision before it reaches the president’s desk.

The fight against patent abuse is one of the few issues in Congress with bipartisan support. Goodlatte’s bill received strong support from both Republicans and Democrats, as well as the White House. The Senate appears poised to act on patent trolls as well. And President Obama has also voiced his support for stopping the trolls, making it likely that a bill will become law next year.

As businesses of all types in Virginia and across the country are burdened by the growing threat of patent trolls, relief cannot come soon enough. Congress must act to stop the trolls and weed out the bad patents that make their abusive practices possible.

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November 21, 2013 | News, Press Releases, Statements

The Internet Association Applauds Innovation Act Passage

Strong bipartisan passage of H.R. 3309 is an important step towards meaningful reforms

 

WASHINGTON, D.C. — Today, Michael Beckerman, President and CEO of The Internet Association issued the following statement on the House Judiciary Committee’s passage of The Innovation Act (H.R. 3309):

“The Internet Association welcomes the bipartisan passage of The Innovation Act as we fight to protect legitimate businesses from patent trolls engaged in abusive litigation practices. Leveling the playing field and making the process more transparent will discourage patent trolls from exploiting low quality patents to sue innocent businesses of all sizes and sectors, draining jobs and $80 billion per year from our economy. The extortion practices of patent trolls need to stop.

“The hard work today from Chairman Goodlatte, Congresswoman Lofgren, and overwhelming support from both Republicans and Democrats will go a long way to ensure this legislation makes it to the President’s desk. Signing patent reform into law will protect innovation, help our economy, and protect jobs. We will continue to build on this proposal as the process moves forward to ensure the strongest bill possible becomes law.

“Protections for innocent hard-working American businesses are needed now, more than ever. As this bill moves to the House floor and companion legislation is considered in the Senate, we will work with Republicans and Democrats in Congress and the White House to make the necessary improvements to ensure abusive litigation fueled by bad patents ends.”

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November 18, 2013 | News, Press Releases, Statements

The Internet Association Welcomes Chairman Leahy and Senator Lee’s Introduction of Legislation to Protect Innovators Against Abusive Patent Litigation

Washington, D.C. — Today, Michael Beckerman, President and CEO of The Internet Association issued the following statement welcoming the introduction of The Patent Transparency and Improvements Act of 2013:

“The Internet Association welcomes Chairman Leahy and Senator Lee’s bill to the patent reform conversation. Because patent trolls have many tools at their disposal, more will need to be done to both improve patent quality and reduce abusive patent litigation. This piece of legislation is an important contribution to that overall effort. We look forward to working with Chairman Leahy and the Senate Judiciary Committee as this process moves forward.”

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November 17, 2013 | News, Op-Eds

Michael Beckerman and Steve Voigt: Vermont Leads War Against Patent Trolls — The Valley News

Column: Vermont Leads War Against Patent Trolls
Steve Voigt and Michael Beckerman
To the Valley News
Sunday, November 17, 2013
(Published in print: Sunday, November 17, 2013)

There’s a silent drain on businesses across the country: patent trolls. These companies do not make or create anything. They exist solely to prey on legitimate and productive businesses through the threat of litigation. And they’re doing real harm to our economy, to the tune of $80 billion every year.

Trolls thrive off a simple business model. They buy up overly broad patents that purport to cover common practices such as scanning documents to email or providing Wi-Fi for customers. Then they send letters to businesses that use these practices demanding that they pay a licensing fee or face a lawsuit. Because of the high cost of going to court, it’s easier for most companies to just pay up and make the trolls go away than fighting them on the merits of the case.

Vermont has led the way in the fight against patent trolls. In May, state Attorney General William Sorrell filed the first lawsuit against a patent troll by an attorney general in the country. That same month, the Legislature passed, and Gov. Peter Shumlin signed, the first-in-the-nation law allowing victims of trolls to counter-sue. The new law defines what constitutes a “bad-faith assertion of patent infringement” and allows victims to seek relief, damages, legal fees and punitive awards of $50,000, or three times the total of damages, costs and fees, if that sum is greater. While these significant changes have knocked the trolls on their heels in Vermont, the federal government now needs to step in to end this practice once and for all.

Technology companies, including members of The Internet Association such as Amazon.com, Facebook, Google and Yahoo, have been targeted by patent trolls for years. But the trolls recently have expanded their targets to include grocery stores, restaurants, mom-and-pop retailers and even charities.

Growing consumer-brand companies, including King Arthur Flour of Norwich, have been targeted by trolls over and over. The business model for trolls is so attractive to those looking for an easy way to coerce payments from businesses, without consideration of whether they infringe a patent, that King Arthur even received a threat from a newly formed subsidiary of one of its existing vendors — a threat that demanded simply a litigation-avoidance payment. King Arthur refused, as is its practice, to pay the demand. Company officials have witnessed an increasing amount of time at conferences and CEO gatherings spent discussing trolls, their threats and available responses. In other words, the cost of dealing with trolls is not limited merely to the billions spent in responding to their threats, but also in the time demanded of executives to deal with the problem — time that would otherwise be devoted to growing their companies and creating jobs.

This same story has played out with businesses large and small, in every sector of the economy, all across the country with increasing frequency. According to the White House, patent trolls issued approximately 100,000 of these letters last year. But by expanding their universe of targets beyond software and technology companies, the trolls have inadvertently built momentum for reform that will put a stop to their practice of legalized extortion.

State-level efforts — particularly those in Vermont — have helped to spur action at the federal level. In June, President Obama issued a series of executive orders cracking down on trolls and called on Congress to act. Since then, a number of bills have been introduced in both the House and the Senate, some with bipartisan support. Sen. Patrick Leahy, D-Vt., has been a leader in taking on the trolls and is working with his colleagues to craft bipartisan legislation to stop these abusive practices.

The momentum for reform can also be seen here as Vermont’s business leaders urge Congress to act. Champlain College recently hosted a forum on patent abuse in which we both participated. The forum, featuring Rep. Peter Welch, D-Vt., leading patent scholars and Vermont business leaders, focused on both the consequences of the troll problem as well as proposed reforms.

While there are a number of proposed solutions being considered, two stand out as critical. The first is to change the incentives in the litigation process, to discourage frivolous lawsuits by ensuring that the trolls have something at stake. One way to do this would be to make the losing party pay the court fees of the winner, so that trolls have some skin in the game. The second is to give victims of patent trolls a way to challenge the validity of the patent used in a patent-holder’s claim at the Patent and Trademark Office rather than in court. This would give businesses targeted by trolls a cheaper and more efficient way to fight back, and would help weed out the bad patents that trolls rely on.

Businesses in Vermont and across the country can’t afford to keep paying off patent trolls. Vermont has led the way in fighting back. But the only way to stop them once and for all is for Congress to act now.

Steve Voigt is president and CEO of King Arthur Flour. Michael Beckerman is the president and CEO of The Internet Association

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November 17, 2013 | Op-Eds

Column: Vermont Leads War Against Patent Trolls

Valley News
Column: Vermont Leads War Against Patent Trolls
Posted: 11/17/2013

There’s a silent drain on businesses across the country: patent trolls. These companies do not make or create anything. They exist solely to prey on legitimate and productive businesses through the threat of litigation. And they’re doing real harm to our economy, to the tune of $80 billion every year.

Trolls thrive off a simple business model. They buy up overly broad patents that purport to cover common practices such as scanning documents to email or providing Wi-Fi for customers. Then they send letters to businesses that use these practices demanding that they pay a licensing fee or face a lawsuit. Because of the high cost of going to court, it’s easier for most companies to just pay up and make the trolls go away than fighting them on the merits of the case.

Vermont has led the way in the fight against patent trolls. In May, state Attorney General William Sorrell filed the first lawsuit against a patent troll by an attorney general in the country. That same month, the Legislature passed, and Gov. Peter Shumlin signed, the first-in-the-nation law allowing victims of trolls to counter-sue. The new law defines what constitutes a “bad-faith assertion of patent infringement” and allows victims to seek relief, damages, legal fees and punitive awards of $50,000, or three times the total of damages, costs and fees, if that sum is greater. While these significant changes have knocked the trolls on their heels in Vermont, the federal government now needs to step in to end this practice once and for all.

Technology companies, including members of The Internet Association such as Amazon.com, Facebook, Google and Yahoo, have been targeted by patent trolls for years. But the trolls recently have expanded their targets to include grocery stores, restaurants, mom-and-pop retailers and even charities.

Growing consumer-brand companies, including King Arthur Flour of Norwich, have been targeted by trolls over and over. The business model for trolls is so attractive to those looking for an easy way to coerce payments from businesses, without consideration of whether they infringe a patent, that King Arthur even received a threat from a newly formed subsidiary of one of its existing vendors — a threat that demanded simply a litigation-avoidance payment. King Arthur refused, as is its practice, to pay the demand. Company officials have witnessed an increasing amount of time at conferences and CEO gatherings spent discussing trolls, their threats and available responses. In other words, the cost of dealing with trolls is not limited merely to the billions spent in responding to their threats, but also in the time demanded of executives to deal with the problem — time that would otherwise be devoted to growing their companies and creating jobs.

This same story has played out with businesses large and small, in every sector of the economy, all across the country with increasing frequency. According to the White House, patent trolls issued approximately 100,000 of these letters last year. But by expanding their universe of targets beyond software and technology companies, the trolls have inadvertently built momentum for reform that will put a stop to their practice of legalized extortion.

State-level efforts — particularly those in Vermont — have helped to spur action at the federal level. In June, President Obama issued a series of executive orders cracking down on trolls and called on Congress to act. Since then, a number of bills have been introduced in both the House and the Senate, some with bipartisan support. Sen. Patrick Leahy, D-Vt., has been a leader in taking on the trolls and is working with his colleagues to craft bipartisan legislation to stop these abusive practices.

The momentum for reform can also be seen here as Vermont’s business leaders urge Congress to act. Champlain College recently hosted a forum on patent abuse in which we both participated. The forum, featuring Rep. Peter Welch, D-Vt., leading patent scholars and Vermont business leaders, focused on both the consequences of the troll problem as well as proposed reforms.

While there are a number of proposed solutions being considered, two stand out as critical. The first is to change the incentives in the litigation process, to discourage frivolous lawsuits by ensuring that the trolls have something at stake. One way to do this would be to make the losing party pay the court fees of the winner, so that trolls have some skin in the game. The second is to give victims of patent trolls a way to challenge the validity of the patent used in a patent-holder’s claim at the Patent and Trademark Office rather than in court. This would give businesses targeted by trolls a cheaper and more efficient way to fight back, and would help weed out the bad patents that trolls rely on.

Businesses in Vermont and across the country can’t afford to keep paying off patent trolls. Vermont has led the way in fighting back. But the only way to stop them once and for all is for Congress to act now.

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November 13, 2013 | ICYMI, News

ICYMI- Attorney General’s NYC Battle with Airbnb Targets Widowed Grandma

New York Post
Attorney general’s NYC battle with Airbnb targets widowed grandma
Posted 11/13/13 @ 02:06

New York Attorney General Eric Schneiderman to a Manhattan granny: Gimme all your records.

Airbnb, the Web service that pairs vacationers and homes with rooms to rent, amped up its battle Tuesday against Schneiderman’s effort to have it hand over hosts’ financial records — a Manhattan widow who rents out rooms because she had grown lonely after her husband died.

A video of “Judith” is one of several sentimental examples unveiled Tuesday on Airbnb’s website.  The message was clear: By going after Airbnb’s hosts, Schneiderman is going after everyday folks like “Judith.”  

On Oct. 4, Schneiderman subpoenaed Airbnb, seeking data on as many as 225,000 New Yorkers who have rented out rooms through Airbnb since 2010.  Airbnb has asked an Albany state judge to quash the subpoena, saying it’s part of a fishing expedition.  At issue is a 2010 state law forbidding people from renting their homes for under 30 days unless the owner is also present.

Schneiderman is also worried that some Airbnb hosts are avoiding a 14.75 percent state occupancy tax, his office has said.  Airbnb’s new video series was not made in response to the AG’s subpoena, according to a company official.

But Tama Richardson, an artist from Hamilton Heights and a featured Airbnb host, told The Post that Schneiderman’s crackdown was one the reasons she agreed be profiled.  “I can’t help but feel that it’s short-sighted on the side of the [state] because we function like ambassadors for our neighborhoods and bring money into our neighborhoods,” Richardson told The Post. “They’re stepping over dimes to pick up nickels,” she said of the probe.

Richardson, in a video posted on Airbnb’s website, credits the San Francisco company with helping her avoid bankruptcy after the financial crisis, and for helping her pay for costly medication.  She said she’s always present when she rents out a room.  The AG’s office said it is not out to put a fright into any grandmas — or other average New Yorker.

Schneiderman’s subpoena targets Airbnb’s “illegal, highly lucrative hotel operators who make up a huge chunk of Airbnb’s corporate profit — not the [person] who rents out their apartment from time to time,” AG spokeswoman Melissa Grace told The Post.  But Airbnb has argued in court papers that it doesn’t have any way of knowing which hosts were present when renting.  The videos are just the latest counterattack in an increasingly heated battle that has also rallied the larger Internet community.

On Monday, two groups focused on Internet freedoms, the Electronic Frontier Foundation and the Center for Democracy & Technology, filed a friend-of-the-court brief supporting Airbnb.

Last week, nonprofit trade group The Internet Association, which represents tech giants like Facebook, Yahoo!, Netflix and Amazon, also came to Airbnb’s defense.

“Complying with this subpoena would impose an enormous cost and burden on Airbnb. And it would permit the government to intrude without justification on the privacy of Airbnb’s users,” The Internet Association argued.

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November 12, 2013 | ICYMI, News

ICYMI- Patent Trolls Demand ‘Infringement’ Fees

USA Today
Patent trolls demand ‘infringement’ fees
Posted 8:34 p.m. EST November 12, 2013

Jerry Tarrant, co-founder and chief operating officer of MyWebGrocer in Winooski, Vt., says he has spent more than $100,000 in attorney’s fees fending off letters from companies claiming MyWebGrocer was infringing on their patents. “That doesn’t include the time we’ve had to spend in-house trying to understand what their claim is,” Tarrant said.

The letters have come from what’s known as patent trolls — more formally designated in a White House report as “patent assertion entities.”

These entities scour the legal landscape for vaguely worded, broadly defined patents, often buying them from bankrupt companies or small inventors. They set up shell companies whose only asset is a single patent. Then the letter-writing begins.

MyWebGrocer provides websites and online marketing services for major grocery chains, including Kroger, ShopRite and Albertsons, employing around 200 people at its Winooski headquarters.

The letters, often densely worded documents full of legalese, boil down to a simple demand: You are infringing on our patent. We will give you a license for a certain fee. If you don’t pay, we’ll sue you — implying that it will cost a lot more to defend that lawsuit than the troll is demanding.

Until recently, patent trolls have operated mostly under the radar. But the level they’ve reached has drawn the attention of Congress, the White House, the Federal Trade Commission and the U.S. Supreme Court. The court agreed to take two cases that could make it easier for troll victims to recover legal fees. Congress is considering seven bills on the issue.

Vermont leads the nation in taking on patent trolls, passing the first law intended to put some legal obstacles in their way by giving targeted businesses the right to counter-sue.

Vermont Attorney General Bill Sorrell also filed the first lawsuit in the nation against an alleged troll that attempted to shake down small- and medium-size businesses across the state, Sorrell says. MPHJ Technology Investments sent out at least 75 letters to businesses and non-profits in Vermont, claiming they were infringing its patent every time they scanned a document and attached it to an e-mail, among other claims, Sorrell said. “We’ve delivered a big message to patent trolls: If you come into Vermont, you’ll have a fight on your hands,” Sorrell said.

Bryan Farney of the Farney Daniels law firm, which is representing MPHJ, said in an e-mail: “Non-practicing entities, sometimes pejoratively referred to as ‘trolls,’ serve a valuable role in the nation’s innovation economy. … Individuals and companies of all sizes buy and sell patents to get a proper return on their research and development activities. The use of a letter to a business that may be infringing on a patent, prior to seeking a license agreement or bringing suit, is sometimes misconstrued or misunderstood. However, this practice is usually required by the federal courts to comply with patent law, and sometimes provides evidence that no infringement exists.”

Michael Beckerman, president and chief executive officer of The Internet Association, a coalition of companies that includes Facebook, Google and Amazon.com — all targets of trolls — says trolls adjust the amount they demand for a license to the size of the business they are approaching. “I call it extortion,” Beckerman said. “The amount is less than what it would cost to defend themselves in court. They can do the math.”

The cost of defending a patent suit through trial is easily more than $1 million, attorney Peter Kunin of Downs Rachlin Martin in Burlington, Vt., said.

A report released in June by the White House asserts that suits brought by patent trolls have tripled in the last two years, rising from 29% of all infringement suits to 62%.

James Bessen, an economist and lecturer at the Boston University School of Law, put the cost of patent trolls to the U.S. economy in 2011 at $29 billion. The number has been criticized as being inflated, but Bessen says it’s based on a survey of companies that have had to fight off trolls. “Right now, patent trolls are squelching innovation,” Bessen said. “The more R&D you perform, the more likely you are to be sued. A company like Apple, they’re clobbered.” Bessen said Apple had 44 lawsuits filed against it by patent trolls last year.

In Congress, House Judiciary Committee Chairman Bob Good-latte, R-Va., was first out of the gate with legislation aimed at trolls with the Innovation Act. Key provisions include heightened pleading standards and provisions for transparency.

Sen. Patrick Leahy, D-Vt., is working on Senate legislation, and is cautiously optimistic that a fractious Congress will be able to come together on the patent troll issue, despite the recent government shutdown.

“I want innovation; I want people who invent something to be able to gain legitimate benefit from the invention,” Leahy said, “but I don’t believe in somebody who’s bought a bunch of paper sitting in an office and using it for blackmail.”

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November 12, 2013 | ICYMI, News

ICYMI- Civil Liberties Groups Flock to Airbnb’s Defense

The Real Deal
Civil liberties groups flock to Airbnb’s defense
Posted November 12, 2013 04:15PM

Airbnb has garnered new soldiers in the fight against New York State Attorney General Eric Schneiderman’s subpoena demanding information about the site’s users: civil liberties groups.

Tapping into a wave of public sentiment wary of government overreach in to citizens’ private information, the Electronic Frontier Foundation and the Center for Democracy & Technology, two groups focused on tech-related civil liberties, have filed friend-of-the-court briefs stating their support for Airbnb’s petition to block the subpoena. Tech trade group the Internet Association had already done the same, Bloomberg News reported.

The subpoena, the groups argued, was part of an unwarranted dig into personal freedom in a case without immediate evidence of wrongdoing.

“Just because the technology collects the data and makes it easy to disclose doesn’t mean the government is entitled to it all,” Gregory Nojeim, director of CDT’s Project on Freedom, Security and Technology, told Bloomberg in a statement.

State Senator Liz Krueger, who sponsored New York State’s illegal hotel bill, followed up the briefs by sending around an analysis of Airbnb’s business that claims 56 percent of listings for entire apartments on Airbnb violate the state law.

“This shows what we’ve been saying all along — illegal hotels aren’t an aberration in Airbnb’s business model, they are Airbnb’s New York business model,” Krueger said in a statement. [Bloomberg News] — Julie Strickland

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November 11, 2013 | ICYMI, News

ICYMI- Digital Rights Groups Say NY Has No Right To Snoop On Airbnb Users

Media Post Publications
Digital Rights Groups Say NY Has No Right To Snoop On Airbnb Users
Posted: Nov 11, 2013, 7:51 PM

Airbnb’s New York users have the right to keep the records of their activity “shielded from unauthorized snooping,” the advocacy groups Electronic Frontier Foundation and Center for Democracy & Technology argue in new court papers.

The organizations say that even though law enforcement officials are empowered to investigate crime, they can’t simply issue a broad subpoena in hopes of uncovering evidence. “If courts readily allow such overbroad subpoenas, a chilling effect would be cast over users who know that their privacy interests can be compromised at the whim of an overambitious attorney general,” the groups argue in a proposed friend-of-the-court brief urging a state judge to nix the Attorney General’s subpoena for information about Airbnb users.

The organizations’ attempt to weigh in on the case marks the latest development in what’s shaping up to be a major battle between law enforcement authorities and Airbnb, which is probably the best-known example of the so-called “sharing economy.”

Airbnb allows people to rent out their homes to tourists. The service is popular in New York, where visitors seek alternatives to pricey hotels, and residents look for ways to offset the high price of real estate.

But a 2010 law makes it illegal for people to rent out their homes for less than 30 days, unless they’re also present. That law’s supporters say the measure discourages landlords from illegally converting residential apartments into short-term hotels. Backers of the measure also argue that short-term visitors present a security risk to residential tenants. Separately, there are questions about whether Airbnb hosts are violating a tax law by failing to collect hotel use taxes from guests.

The Attorney General recently served Airbnb with a subpoena demanding information about the names of state residents who have hosted guests through the service since 2010. Schneiderman also is seeking information about the length of stays, rates charged, and communications between the users and Airbnb about tax issues. The Attorney General says he is only seeking data about people who didn’t remain at home when the renters were present — but Airbnb says it has no way of knowing which users remained in their apartments when visitors were present.

Last month, Airbnb asked a court to quash the subpoena. On Friday, Schneiderman’s office opposed that motion. The Attorney General says that law enforcement officials have no other realistic way to investigate the “illegal activities” of New York users.

AirBnb should not be allowed to effectively close an investigation before it even starts, or otherwise shield its hosts from illegal conduct,” the Attorney General argues.

The government adds that a search for a “non-shared” apartment available for rent between Dec. 2 and 7 in New York resulted in more than 1,000 listings. “On their face, these listings violate the short-term zoning laws because they are rentals for under 30 days in New York City in non-shared spaces,” the government argues. “Absent a subpoena to Airbnb, the (New York Attorney General) would have to enter into undercover transactions with each host in order to merely identify them.”

Airbnb has been arguing that it benefits the city economically. The company recently unveiled a study it commissioned by HR&A Advisors, which concluded that the 416,000 Airbnb users who visited in the last year had a total economic impact on the city of $632 million.

The dispute hasn’t just drawn the attention of rights groups. The Internet Association — a coalition of tech companies — also sided with Airbnb late last week. That group filed friend-of-the-court papers arguing that online businesses shouldn’t be required to disclose data about their customers to the government.

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November 8, 2013 | ICYMI, News

ICYMI- Internet Association Sides With Airbnb In NY Privacy Battle

Media Post Publications
Internet Association Sides With Airbnb In NY Privacy Battle
Posted  Nov 8, 2013, 5:38 PM

An attempt by New York’s Attorney General to obtain data about Airbnb’s New York users could harm a vast array of online businesses, a coalition of Web companies warns in new court papers.

“Internet companies’ ability to provide innovative services is based on user trust,” the Internet Association says in papers filed with a New York court on Thursday. “The prospect of law enforcement authorities, regulators, and other government personnel being able to obtain broad swaths of information about consumers under no articulated suspicion of wrongdoing would unduly discourage participation in these online services.”

The Internet Association argues that online platforms like Airbnb need to keep data confidential or risk defections by customers. Internet Association CEO and President Michael Beckerman adds that New York’s attempt to glean customer data could “set a harmful and dangerous precedent about the power that law enforcement agencies have in going after Internet companies and their users.”

Members of the group include established Web companies like Amazon, eBay, Google, Facebook and Netflix as well as newer businesses like Uber and Path. The Internet Association is seeking to appear as a friend-of-the-court in a dispute between New York State Attorney General Eric Schneiderman and room rental company Airbnb.

Schneiderman is attempting to subpoena information from Airbnb for approximately 15,000 state residents who have hosted guests through the service since 2010. Among other data. Schneiderman is asking for state residents’ names and contact information, dates of guest stays, rates charged, and communications between the users and Airbnb about tax issues. The Attorney General says he is only seeking data about people who didn’t remain in their homes when the renters were present — but Airbnb points out that it has no way of knowing whether or not homeowners were present during the visit.

Airbnb is asking a court to quash the subpoena on the grounds that it is too broad, and that complying will compromise users’ privacy.

The subpoena battle marks an escalation of the conflict between Airbnb and the authorities in New York, where a 2010 law prohibits people from renting out their homes for less than 30 days, unless they are also present. Supporters of that law say that it discourages landlords from illegally converting residential apartments into short-term hotels. They also argue that short-term visitors can present a security risk to residential tenants. There are also questions about whether Airbnb hosts are violating a tax law by failing to collect hotel use taxes from guests.

For its part, Airbnb says that it benefits the city in numerous ways. The company commissioned a study by HR&A Advisors, which concluded that the 416,000 Airbnb users who visited in the last year had a total economic impact on the city of $632 million. That report says that 82% of the rentals in areas outside of mid-Manhattan, and that average visitors spend $740 in the neighborhoods where they stay. The report also found that 87% of New York hosts rent the place they live in, and that 50% of them earn less than $72,000 a year.

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