Privacy. Highly valued by patriots and scoundrels alike. We sometimes seem torn about whether our society needs more privacy or less.

Although "privacy" is not even mentioned in the Constitution or Bill of Rights, the Supreme Court has long recognized it to be among the rights guaranteed to every citizen by those documents. Like all civil rights, however, privacy has its limits, and it must sometimes bow to the demands of public safety and national security.

Congress tried to strike a balance in 1968 with the passage of the so-called "Wiretap Act," which strictly limited the conditions under which certain communications could be intercepted. In recent years, terrorist threats and advances in technology have altered that balance, forcing lawmakers and others to re-examine the issue.

The scales tipped in June, perhaps dramatically, when the First Circuit Court of Appeals in Boston issued its decision in United States v. Councilman. In that case, the Court concluded that the federal Wiretap Act did not prohibit an Internet service provider (ISP) from surreptitiously diverting and reading its customers' emails.

Although that fact alone should give pause to all email users, the logic driving the decision may portend even broader application. The court's reading of the Act may extend to more traditional modes of communications and greatly ease the government's ability to tap telephone calls.

The defendant in the case, Bradford Councilman, was the vice-president of a company involved in the online sale of rare and out-of-print books. His company, Interloc, had provided email service to its book dealer customers.

Councilman and others at the company devised a scheme to secretly divert emails sent by rival Amazon.com to those customers' Interloc email accounts, so that Interloc employees could examine them for competitive advantage. In July 2001, the government indicted Councilman and others for intercepting those emails in violation of the Wiretap Act. Councilman challenged the indictment, contending the Act did not apply.

The fundamental question for the Court was whether emails qualify as electronic communications, the interception of which is forbidden by the Act.

On its face, the Act's definition of "electronic communications" seems broad enough to cover email. But Councilman argued that it did not apply if the email was obtained from storage—either from the memory or the hard drive of a physical device.

Comparing different provisions of the Act, he noted that the definition pertaining to telephone calls expressly included stored communications (such as voicemails), but the definition pertaining to emails was silent on the issue. So, Councilman reasoned, Congress must have intended to exclude stored communications from "electronic communications" protected under the Act.

In the context of emails, the storage limitation is a severe one. Like all information transmitted over the Internet, emails are split into small packets of data that skip from machine to machine until they reach their target.

At each intermediate stop, each packet is temporarily stored and read before it is forwarded along. Because of this "store and forward" method of transmission, virtually any interception of an email will involve obtaining it from "storage."

The government argued that the Wiretap Act covered any email interception contemporaneous with its transmission, whether it was obtained from storage or not. Because Councilman intercepted customers' emails during the transmission of the messages, the government had no difficulty concluding that he violated the Wiretap Act.

Essentially, the government argued that only the final storage of a completed transmission was beyond the Act's scope, while Councilman argued that communications stored at any point in the process were off limit.

Earlier cases examining the question of stored and transiting communications did not provide the Councilman court with clear guidance. Some courts had already concluded that stored electronic communications were not covered under the Act, but none of the communications they considered were in transit at the time of interception.

Conversely, the First Circuit issued an opinion in 2003 explaining the importance of contemporaneous interception under the Wiretap Act, but it never spoke plainly to the storage issue. In the end, the Councilman court was the first to squarely confront the modern paradox of communications that are simultaneously stored and in transit. Finding itself relatively unconstrained by precedent, the court focused on the Act's definitional language and sided with Councilman.

The import of the Councilman decision extends well beyond the facts of the case presented to the Court.

Changes made to the Wiretap Act after Councilman's indictment may effectively remove most telephone calls from its protection as well. That is because, in the wake of the September 11 terrorist attacks, the President signed the USA PATRIOT Act, which amended the Wiretap Act in a seemingly innocuous but important way.

Among other things, it made the section of the Wiretap Act pertaining to telephone calls more closely mirror the language dealing with email. Consequently, using the logic of Councilman, telephone calls that are stored during their transmission are as legally vulnerable to interception as email messages.

One might think that the risk for telephone calls is more theoretical than real, since the Wiretap Act loophole exists only when communications are "stored" during transmission. It is the Internet's "store and forward" protocol that makes email messages vulnerable, and telephone conversations are not generally conducted over the Internet.

So why would the USA PATRIOT Act changes have any practical impact? The answer is that telephone companies have undergone a transition from analog to digital technology, and modern telephone networks bear more than a passing resemblance to the Internet. Most telephone calls are conveyed using the same "store and forward" process as email messages, and are consequently stored in telephone company routers along their journey.

The dissenting Judge in Councilman understood that very well. Complaining about the new approach adopted by the majority, he worried that the government would be essentially free to dispense with wiretap orders and simply "install taps at telephone company switching stations to monitor phone conversations that are temporarily 'stored' in electronic routers during transmission."

The majority conceded this possibility, stating that "it may well be that the protections of the Wiretap Act have been eviscerated as technology advances." At least in First Circuit states, core Wiretap Act protections may now be rendered all but unenforceable, a quaint reminder of a pre-digital world.

Stored communications are not ignored entirely by the federal statutory framework, however. Their privacy is addressed by the aptly named Stored Communications Act.

But its protections are not nearly as robust as those offered by the Wiretap Act. For example, law enforcement authorities seeking information covered by the Stored Communications Act need only obtain a search warrant, while authorities obtaining an order under the Wiretap Act must satisfy much more extensive procedural requirements and submit to ongoing judicial oversight.

The Stored Communications Act also has exceptions not found in the Wiretap Act. In the circumstances of the Councilman case, the defendant was not charged under the Stored Communications Act because Interloc was entitled to an exception that permits ISPs to examine stored communications on their own systems. Consequently, the shifting of communications from the Wiretap Act to the Stored Communications Act can be truly significant.

One final note.

In April of this year, Google.com was excoriated in the press for introducing an email service in which users knowingly consent to having incoming emails scanned by machine to permit the display of targeted ads. Councilman, which received far less press than Google's "Gmail" service, arguably lets email providers scan their users' emails for almost any purpose, without permission.

While it remains to be seen whether the logic of Councilman will be widely adopted by the other Circuits, and whether the Supreme Court or Congress will ultimately weigh in, there is little doubt that the decision marks a significant point in the jurisprudence of communications privacy.

Technology allowed us to think of telephone calls as a substitute for face-to-face conversations, and email as a substitute for traditional letters. The USA PATRIOT Act and decisions such as Councilman may soon make the postcard a more apt comparison.

As Judge Kermit Lipez wrote in his dissent, "Councilman's approach…would essentially render the Act irrelevant to the protection of wire and electronic privacy. I find it inconceivable that Congress could have intended such a result…."

It is a message Judge Lipez clearly hopes is read widely. Maybe he should put it in an email.

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ABOUT THE AUTHOR

Joe Laferrera is a partner at the Boston firm of Gesmer Updegrove LLP (www.gesmer.com). He is a member of the litigation and employment departments and frequently advises clients on intellectual property and privacy matters. Reach him at joe.laferrera@gesmer.com.