• by Wendy Davis  @wendyndavis, October 6, 2004

A federal appeals court in Boston this week agreed to rehear a case involving whether Internet service providers may read their customers' e-mail messages for marketing purposes.

The case appears to be the first reported case of criminal prosecution of an Internet service provider for prying into clients' e-mail messages, and it has drawn the attention of Internet watchdogs.

A June decision by a three-judge panel of the First Circuit Court of Appeals went in favor of the defendant, Bradford Councilman, a dealer of rare books who provided Internet service and e-mail accounts to his clients. Councilman allegedly directed his employees to create a computer code to read all incoming messages to his subscribers from Amazon.com. He was accused of violating federal wiretap laws making it illegal to intercept e-mail messages. Andrew Good, Councilman's lawyer, didn't return a phone call for this article.

The June ruling upheld a trial judge's dismissal of the charges based on an interpretation of the word "intercept." The judges reasoned that Councilman never intercepted his customers' e-mail because the e-mail messages were stored on Councilman's server, if only for a split second, before going to the customer's in-boxes.

Attorney Peter Swire, who filed a brief in the case on behalf of the Center for Democracy and Technology, the Electronic Frontier Foundation, The Electronic Privacy Information Center, and The American Library Association, criticized that reasoning, saying that it could gut privacy laws. "Any device where there is a nanosecond of storage would get around wiretap laws," said Swire, a professor at Ohio State University's Moritz College of Law and, from 1999 to 2001, the Clinton Administration's chief counselor for privacy in the United States Office of Management and Budget.

Some observers say the underlying problem is that the technology has changed faster than the privacy statutes. "The law has not caught up to the technology, even at this late a date," said Jerry Spiegel, who heads the e-commerce practice at the New York-based law firm Frankfurt Kurnit Klein & Selz.

Privacy advocates also fear that if the dismissal is upheld, any Internet service provider could read clients' e-mail without the threat of criminal charges. "It would certainly open the way to that kind of misconduct," said attorney Orin Kerr, a professor at George Washington University Law School, who also represents the advocacy groups. The government could also theoretically peek at e-mail with impunity under this decision.

But whether online merchants actually will start scouring their clients' e-mails remains to be seen. Spiegel, for one, doubts that such actions would be productive. "E-commerce merchants who respect their customers' privacy are the ones who will survive."