Incredimail 2012 Annual Report Download - page 35

United States
The U.S. CAN-
SPAM Act of 2003 is intended to regulate spam and create criminal penalties for unmarked and unsolicited email
advertisements, sexually-
oriented material and emails containing fraudulent headers. The U.S. Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, or the Patriot Act, is intended to give the government greater
ability to conduct surveillance on the Internet by allowing it in certain cases to intercept communications regarding terrorism and compromises
to national security. The U.S. Digital Millennium Copyright Act ("DMCA") is intended to reduce or shield the liability of online service
providers for displaying content posted and created by third parties that contain copyright infringing materials, if the provider complies with
certain policies, registers a DMCA agent with the U.S Copyright Office and adopts a "take-
down" policy that is enforced. We offer such online
provider services where our users can share images and other user-
generated content. While the DMCA has provided relatively strong protection
to providers from claims of copyright infringement based upon user-
generated content, there have been some recent cases and actions that
attempt to erode these protections. Therefore, to the extent that the immunity provided by the DMCA weakens, we could face the potential for
claims of copyright infringement based upon such content.
The Children’
s Online Privacy Protection Act of 1998, and the Prosecutorial Remedies and Other Tools to End Exploitation of Children
Today Act of 2003 (“COPPA”),
are intended to restrict the distribution of certain materials deemed harmful to children and impose additional
restrictions on the ability of online services to collect user information from minors without verifiable parental or guardianship consent. In
December 2012, the FTC issued new rules under COPPA that strengthen existing restrictions on the online collection and use of personal
information about children under the age of 13. The new regulations will have a significant impact on the operation of websites, applications,
plug-
ins, and other online services and may make it more difficult to provide online content directed toward children. Because of the nature of
our business includes, among other things, the placement of cartoon “emoticons”
in emails, we anticipate that our services could attract a
significant number of users who would fall into the regulated class. Accordingly, our business could be adversely affected by the new rules. In
addition, the Protection of Children from Sexual Predators Act of 1998 requires electronic communication service and remote computing service
providers to report to law enforcement agencies any knowledge of facts or circumstances from which a violation of specified offenses involving
child pornography is apparent Because our services enable users to upload photographs to the internet and share them with others, we could be
subject to liability unless our procedures adequately identify and report such violations of the law.
Almost all the states in the United States have data security breach laws that impose various requirements on service providers to report
to state attorneys general and send notices to affected consumers in the event of a breach of security of network and computer systems that
compromise a user’s personal financial and other information, such as social security numbers and financial information.
In addition, some state laws govern internet activity generally. For example, the California Online Privacy Protection Act which applies
to any Internet website and mobile application that can be accessed or downloaded by California residents regulates information collected about
users.
The Massachusetts Office of Consumer Affairs and Business Regulation established data security regulations (201 CMR 17.00 et seq.)
which became effective on March 1, 2010. They require any company which possesses the personal information of a Massachusetts resident to
adopt and implement a comprehensive written information security program. The program must include technical, physical, and administrative
safeguards for the protection of personal information owned, licensed, received, stored, maintained, processed, or otherwise accessed by the
company. State legislation could require us to modify our business practices and could potentially subject us to liability.
The Stop Online Piracy Act (SOPA) was introduced in Congress in 2012 to expand the ability of U.S. law enforcement officials to fight
online trafficking in copyrighted intellectual property and counterfeit goods. Provisions include the requesting of court orders to bar advertising
networks and payment facilities from conducting business with infringing websites, and search engines from linking to the websites, and court
orders requiring Internet service providers
to block access to the websites. While SOPA was not passed by Congress due to overwhelming public
opposition, substitute legislation is being proposed, and if passed, could impact content sharing on our products and increase administrative costs
that would be incurred to comply with the law.
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