Critics say privacy bills could mean frivolous lawsuits

A leading US IT vendor organization Tuesday warned its members against supporting proposed federal online privacy legislation containing private right of legal action clauses. Such provisions could result in the filing of frivolous lawsuits that could cripple Net companies, according to the Information Technology Association of America (ITAA).

A private right of action clause within a piece of legislation enables any individual who has an interest in a case or feels they have suffered harm to bring their own civil action against the offending company. If such clauses form part of US federal online privacy legislation, Internet companies could find themselves paying way beyond the actual damages set for privacy violations, as they would be forced to shell out money to individuals as well.

"We oppose legislation that allows trial lawyers to be set loose on high-tech and e-commerce companies," ITAA Vice President and Counsel Mark Uncapher said in a statement issued Tuesday. He added that if private right of action clauses within federal online privacy legislation are applied, it will "gravely harm Internet companies" financially.

The ITAA isn't singling out any particular pending US federal legislation, according to Bob Cohen, an ITAA spokesman, but the organization is monitoring all the bills currently before the US Congress.

What the vendor group is concerned about is that its members may rush to embrace federal online privacy legislation over state legislation. "The notion of federal pre-emption is attractive, companies don't want to have to contend with 50 different state laws," Cohen said. However, "the ITAA doesn't want them to make a quid pro quo on the private right of action," he said.

Trying to legislate privacy online is like trying to "nail jelly to the wall," Cohen said. "It's much better to let technology companies provide the tools to allow the creation of privacy preferences to let you (the individual) be in charge."

ITAA does support federal online privacy legislation in relation to special issues, such as the protection of children and sensitive Internet data such as medical records, Cohen stressed. But when it comes to online privacy regarding general transactions and visiting Web sites, the US government "runs the risk of creating an incredibly cumbersome and unattractive experience for users," Cohen said.

The ITAA claims to represent 26,000 direct and affiliate members; they include Internet giant such as Amazon.com and Yahoo, and traditional IT vendors like Intel and Compaq.

Based in Arlington, Virginia, the trade association can be reached via the Internet at http://www.itaa.org/.