In Re Pharmatrak, Inc. Privacy Litigation

329 F.3d 9, 29 Communications Reg. (P&F) 136, 2003 U.S. App. LEXIS 8758, 2003 WL 21038761
CourtCourt of Appeals for the First Circuit
DecidedMay 9, 2003
Docket02-2138
StatusPublished
Cited by1 cases

This text of 329 F.3d 9 (In Re Pharmatrak, Inc. Privacy Litigation) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Pharmatrak, Inc. Privacy Litigation, 329 F.3d 9, 29 Communications Reg. (P&F) 136, 2003 U.S. App. LEXIS 8758, 2003 WL 21038761 (1st Cir. 2003).

Opinion

LYNCH, Circuit Judge.

This case raises important questions about the scope of privacy protection afforded internet users under the Electronic Communications Privacy Act of 1986 (ECPA), 18 U.S.C. §§ 2511, 2520 (2000).

In sum, pharmaceutical companies invited users to visit their websites to learn about their drugs and to obtain rebates. An enterprising company, Pharmatrak, sold a service, called “NETcompare,” to these pharmaceutical companies. That service accessed information about the internet users and collected certain information meant to permit the pharmaceutical companies to do intra-industry comparisons of website traffic and usage. Most of the pharmaceutical companies were emphatic that they did not want personal or identifying data about their web site users to be collected. In connection with their contracting to use NETcompare, they sought and received assurances from Pharmatrak that such data collection would not occur. As it turned out, some such personal and identifying data was found, using easily customized search programs, on Pharmatrak’s computers. Plaintiffs, on behalf of the purported class of internet users whose data Pharmatrak collected, sued both Pharmatrak and the pharmaceutical companies asserting, inter alia, that they intercepted electronic communications without consent, in violation of the ECPA.

*13 The district court entered summary judgment for defendants on the basis that Pharmatrak’s activities fell within an exception to the statute where one party consents to an interception. The court found the client pharmaceutical companies had consented by contracting with Pharmatrak and so this protected Pharmatrak. See In re Pharmatrak, Inc. Privacy Litig., 220 F.Supp.2d 4, 12 (D.Mass.2002). The plaintiffs dismissed all ECPA claims as to the pharmaceutical companies. This appeal concerns only the claim that Pharmatrak violated Title I of the ECPA.

We hold that the district court incorrectly interpreted the “consent” exception to the ECPA; we also hold that Pharmatrak “intercepted” the communication under the statute. We reverse and remand for further proceedings. This does not mean that plaintiffs’ case will prevail: there remain issues which should be addressed on remand, particularly as to whether defendant’s conduct was intentional within the meaning of the ECPA.

I.

Pharmatrak provided its NETcompare service to pharmaceutical companies including American Home Products, Phar-macia, SmithKline Beecham, Pfizer, and Novartis from approximately June 1998 to November 2000. The pharmaceutical clients terminated their contracts with Pharmatrak shortly after this lawsuit was filed in August 2000. As a result, Phar-matrak was forced to cease its operations by December 1, 2000.

NETcompare was marketed as a tool that would allow a company to compare traffic on and usage of different parts of its website with the same information from its competitors’ websites. The key advantage of NETcompare over off-the-shelf software was its capacity to allow each client to compare its performance with that of other clients from the same industry.

NETcompare was designed to record the webpages a user viewed at clients’ websites; how long the user spent on each webpage; the visitor’s path through the site (including her points of entry and exit); the visitor’s IP address; 1 and, for later versions, the webpage the user viewed immediately before arriving at the client’s site (i.e., the “referrer URL”). 2 This information-gathering was not visible to users of the pharmaceutical clients’ websites. According to Wes Sonnenreich, former Chief Technology Officer of Pharmat-rak, and Timothy W. Macinta, former Managing Director for Technology of Pharmatrak, NETcompare was not designed to collect any personal information whatsoever.

NETcompare operated as follows. A pharmaceutical client installed NETcom-pare by adding five to ten lines of HTML 3 code to each webpage it wished to track and configuring the pages to interface with Pharmatrak’s technology. When a user visited the website of a Pharmatrak client, Pharmatrak’s HTML code instructed the user’s computer to contact Pharmatrak’s *14 web server and retrieve from it a tiny, invisible graphic image known as a “clear GIF” (or a “web bug”). The purpose of the clear GIF was to cause the user’s computer to communicate directly with Pharmatrak’s web server. When the user’s computer requested the clear GIF, Pharmatrak’s web servers responded by either placing or accessing a “persistent cookie” on the user’s computer. On a user’s first visit to a webpage monitored by NETcompare, Pharmatrak’s servers would plant a cookie on the user’s computer. If the user had already visited a NET-compare webpage, then Pharmatrak’s servers would access the information on the existing cookie.

A cookie fe a piece of information sent by a web server to a web browser that the browser software is expected to save and to send back whenever the browser makes additional requests of the server 4 (such as when the user visits additional webpages at the same or related sites). A persistent cookie is one that does not expire at the end of an online session. Cookies are widely used on the internet by reputable websites to promote convenience and customization. Cookies often store user preferences, login and registration information, or information related to an online “shopping cart.” Cookies may also contain unique identifiers that allow a website to differentiate among users.

Each Pharmatrak cookie contained a unique alphanumeric identifier that allowed Pharmatrak to track a user as she navigated through a client’s site and to identify a repeat user each time she visited clients’ sites. If a person visited www.pfizer.com in June 2000 and www.pharmacia.com in July 2000, for example, then the persistent cookie on her computer would indicate to Pharmatrak that the same computer had been used to visit both sites. 5 As NETcompare tracked a user through a website, it used JavaScript and a JavaApplet to record information such as the URLs the user visited. This data was recorded on the access logs of Pharmatrak’s web servers.

Pharmatrak sent monthly reports to its clients juxtaposing the data collected by NETcompare about all pharmaceutical clients. 6 These reports covered topics such as the most heavily’used parts of a particular site; which site was receiving the most hits in particular areas such as investor or media relations; and the most important links to a site.

The monthly reports did not contain any personally identifiable information about users. The only information provided by Pharmatrak to clients about their users and traffic was contained in the reports (and executive summaries thereof). Slides from a Pharmatrak marketing presentation did say the company would break data out into categories and provide “user profiles.” 7

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Related

In Re Pharmatrak, Inc. Privacy Litigation
292 F. Supp. 2d 263 (D. Massachusetts, 2003)

Cite This Page — Counsel Stack

Bluebook (online)
329 F.3d 9, 29 Communications Reg. (P&F) 136, 2003 U.S. App. LEXIS 8758, 2003 WL 21038761, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-pharmatrak-inc-privacy-litigation-ca1-2003.