Litigation Alert: The Sixth Circuit Expands Potential Federal Wiretap Act Liability for Developers and Sellers of Cloud-Based Monitoring Software

by Fenwick & West LLP
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Last week, the Sixth Circuit expanded potential liability for violations of the Federal Wiretap Act for manufacturers of devices that can be used for wiretapping, like monitoring software, in reversing the dismissal of a complaint in Luis v. Zang, et. al., No. 14-3601 (Sixth Cir. Aug. 16, 2016). In recognizing a private right of action against manufacturers of wiretap devices, the court held that where a company provides cloud-based services to support and enable wiretapping software it sells, it is sufficiently engaged in the act of interception to expose it to civil claims brought by the individuals whose communications were intercepted.

Federal Wiretap Act

The Federal Wiretap Act makes it a criminal offense, with certain specific exceptions, for any person to “intentionally intercept[], endeavor[] to intercept, or procure[] any other person to intercept or endeavor to intercept, any wire, oral, or written communication,” or to “manufacture[], assemble[], possess[], or sell[] any electronic, mechanical, or other device, knowing or having reason to know that the design of such device renders it primarily useful for the purpose of the surreptitious interception of wire, oral, or electronic communications[.]” 18 U.S.C. § 2511(1)(a) & 2512(1)(b). To fall within the scope of the Federal Wiretap Act, the interception of the communication must be contemporaneous. The Federal Wiretap Act also provides a private right of action for “any person whose … communication is intercepted, disclosed, or intentionally used in violation of [theWiretap Act]” against “the person or entity … which engaged in that violation[.]” 18 U.S.C. 2520(a).

Background And District Court Decision

Awareness Technologies, Inc. (Awareness) manufactured and marketed WebWatcher, a software program that allegedly enabled users to intercept electronic communications, such as emails and instant messages, in real time on any devices on which the program was installed. After intercepting the communications, WebWatcher forwarded those communications to servers owned and operated by Awareness, where the communications were then stored. WebWatcher users could access Awareness’s servers and review the communications any time after the communications were intercepted and stored.

Suspecting that his wife was communicating with other men, Joseph Zang installed WebWatcher on a computer that she used. The program intercepted several emails and instant messages between Zang’s wife and Javier Luis. Zang used the intercepted communications as leverage against his wife in a subsequent divorce proceeding. When Luis discovered that Zang had used the WebWatcher program, he filed a lawsuit against Awareness, Zang, and several other defendants, alleging violations of 18 U.S.C. §§ 2511(1)(a) and 2512(1)(b), as well as various state law claims. The district court dismissed the complaint, finding that Awareness did not “intercept” Luis’ communications because it was Zang, and not Awareness, that had installed the WebWatcher program, and Awareness could not be held liable simply for manufacturing a product that others used to violate the Federal Wiretap Act.

Sixth Circuit Decision

In Luis v. Zang, et. al., No. 14-3601 (Sixth Cir. Aug. 16, 2016), the Sixth Circuit reversed the district court’s dismissal, finding that the complaint had sufficiently alleged that Awareness had intercepted Luis’ communications contemporaneously with their transmission in violation of 18 U.S.C. § 2511.

As an initial matter, the Court found the allegations of contemporaneous interception sufficient, relying upon the marketing materials for WebWatcher, which Luis had referenced in the complaint. See id. at *12-15. Those materials stated that WebWatcher enabled its users to review a person’s electronic communications “in near real-time, even while the person is still using the computer” and that “any deviation from real-time monitoring results not from delays regarding when the communications are acquired but from variations in the ‘Internet connection speed of the computer being monitored.’” Id. at * 14. The marketing materials also stated that “[e]ven if a document is never even saved, WebWatcher still records it.” Id. The Court found that the marketing materials supported the reasonable inference that the WebWatcher program acquired electronic communications as they were being sent and not after they were stored. See id. at *14-15.

The Court then held that the complaint sufficiently alleged that Awareness itself was responsible for the interception, noting that the WebWatcher program automatically acquired communications and transmitted them to Awareness’s servers “without any active input from the user.” Id. at *17. In reaching its conclusion, the Court found “Awareness’s continued operation of the WebWatcher program—even after that program is sold to a user” particularly persuasive. Id. at *18.

In addition, the Sixth Circuit also held that the complaint had sufficiently alleged that Awareness had knowingly manufactured a device designed to intercept communications in violation of 18 U.S.C. § 2512(1)(b) and that Luis had a private cause of action under 18 U.S.C. § 2520 for that violation. See id. at *19-23. The Eleventh and Fifth Circuits and most district courts had previously concluded that § 2520 authorizes a civil suit only against the parties engaged in the interception of communications and did not authorize civil suits against manufacturers or sellers of wiretap devices. See, e.g., DirecTV, Inc. v. Treworgy, 373 F.3d 1124, 1127 (11th Cir. 2004); DirecTV Inc. v. Robson, 420 F.3d 532, 539 & n.31 (5th Cir. 2005). While agreeing with those courts’ interpretation of § 2520, Court went on to find that Awareness could be held civilly liable for the sale of its software, because its cloud services, which hosted the intercepted communications, made it actively engaged in its customer’s acts of interception. The Court found that knowledge that the device was used for wiretapping purposes could be inferred from the Awareness’ advertisements which referenced WebWatcher as a way for suspicious spouses to monitor their partner’s communications without their partner’s knowledge or consent. See id. at *4, 19. The Sixth Circuit distinguished these facts from the simple possession of a wiretapping device, which it stated would not support a cause of action under 18 U.S.C. § 252. Id. at *23.

Takeaways

The implications of the Luis decision are significant, creating the potential risk of liability under the Federal Wiretap Act for companies that manufacture, market, and sell software that monitors electronic communications. Private litigants may now sue (at least in the Sixth Circuit) companies that sell products that can be used for wiretapping and that provide after-sale cloud services and support for those products. In light of the Luis decision, these companies may want to reevaluate the type of after-sale services and support they currently offer. That it continued to be actively involved with the operation of WebWatcher after the program was sold to customers was integral to the Sixth Circuit’s finding that liability could exist against Awareness. The Luis decision may also prompt companies to reassess their advertisements concerning their products. The Sixth Circuit’s decision was based on many of Awareness’ own marketing statements concerning what the WebWatcher program could do and what it should be used for. Companies that sell products that can be used for wiretapping may want to market their products in such a way as to emphasize the legitimate purposes of those products. They may also want to add disclaimers against using their products in ways that violate the law. ​​​​​​

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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