Who should win in the People vs. Apple?

Consumers bite back


Korean users of Apple’s iPhone have filed a class action suit, arguing Apple had violated its customers’ right to privacy by tracking their locations, causing distress.

A lawyer successfully used the same argument in June, with the court awarding him 1 million won. His firm, Miraelaw, then created a website calling for users who felt they had been mistreated to sign up for a class-action lawsuit. Each of the 27,612 who signed up stands to gain the same amount of compensation ― for a 16,900 won legal fee.

Apple denies collecting users’ data. It says the information it has gathered relates not to location of users but to use of signal towers and its network. Others siding with Apple argue that the case brought is cynical, and that not many cases of genuine distress are likely to result from the company’s actions.

The Korean Communications Commission has ruled against Apple, however. It fined the company 3 million won for tracking users’ locations, the maximum allowable by law.


APPLE : Reason should prevail over passion


By Sean Hayes

More than 27,000 iPhone users have filed a lawsuit against Apple over the collection of location data of users of the iPhone and iPad in Korea. The plaintiffs’ attorney claims their right to privacy was violated and that they suffered “emotional distress.”

The potential damage to Apple is $25 million, damage to reputation and the possibility of other countries’ courts looking to the Korean case as persuasive precedent.

Since Apple never responded to a Demand for Payment, a form of default judgment was granted early this year. The default judgment granted 1 million won ($950) to the plaintiff for damages caused by “emotional distress.” The Korean Communications Commission fined Apple a token 3,000,000 won.

The law firm representing the plaintiffs may earn legal fees of over $5 million. Likely, few plaintiffs would have signed on to this lawsuit without the firm’s aggressive marketing and coverage by local and international news sources.

It is great to see that Korean law firms are becoming creative and aggressive and that firms are, also, focusing on the needs of non-business clients, however, the merits of the cases are peculiar at best and the passive action by Apple is even more peculiar.

What damages? Apple admitted tracking users’ location. Apple claims that they did this in order to use the data to improve the users’ experience. Potentially, this is a violation of Korean law. However, if it is a violation ― what are the damages for the violation? In order to recover in any civil lawsuit, at least two factors need to be present. The defendant, in most cases, including this case, needs to be liable for the harm to the plaintiff and the plaintiff must have actual quantifiable damage.

Apple and anyone with access to my phone may know that I was in the vicinity of Johnny Rockets Burgers in Shinsegae Department Store’s basement.

Ok, maybe my doctor or my law firm’s partner (always concerned about my health) would love to know that I was in the vicinity of the largest culprit to my diet’s failure, but they will never know, since they do not have access to my phone and Apple and I will not be giving it to them.

Even if they did know, only in the most unique of cases would we imagine “emotional distress.”

How many of these plaintiffs’ phones’ data was accessed by a third party? If Apple wishes to explore this in trial, they will likely find that the answer is very few. How many feared that this data could be accessed by another person? The answer is probably also few, since after the discovery of Apple’s actions, the company promptly changed its practices.

Therefore, what caused this “emotional distress” leading to 1 million won in damages ― yes you got it ― a very creative attorney.

What Right to Privacy? The attorney for the plaintiff and my colleague’s main grounds for arguing that Apple should be held liable is Article 17 of the Korean Constitution.

Article 17 declares that “The privacy of no citizen shall be infringed.” The clause, as interpreted by some of the less mainstream Korean lawyers and scholars, means that all are guaranteed the right to privacy against actions by the government, citizens and companies.

A mainstream interpretation of the clause it protects the people only against actions by the government, since a constitution is a contract between the people and their government that creates and limits the powers of the government and details the rights and responsibilities of citizenship. With few exceptions (such as the U.S. Constitutional prohibition of slavery), constitutions are instruments between only the governed and government.

For protections to be afforded against non-government actions, the people through their elected representative would need to have laws passed protecting the right to privacy against these non-government actors. This is the very heart of democracy and why we do not entrust plenary powers to judges.

We should, hopefully, want it no other way. Would we want to give unfettered power over what the citizens can do to a group of unelected judges? I sure hope not. These judges are unaccountable to the people, their decisions are final, they are unelected and they are often much less experienced than our politicians.

Apple, if it chooses to respond to the complaints will likely be, at a minimum, able to limit its damages to a token sum. If I am proven wrong, passion may have again won over reason at the Korean courts.

Sean Hayes is team leader of J & S Law Firm’s International Practice Group. He is the only foreigner to work for the Korean court system as an attorney and one of the first to be a regular member of a Korean law faculty. SeanHayes@ipglegal.com ― Ed.


THE PEOPLE : The right to privacy must be protected


By John Nolan

The iPhone has been collecting location information of users from around the world without prior consent. They have stored the information in some cases for over one year on users phones and on their internal servers. After discovery of the privacy violations, individuals sued Apple and the South Korean government levied a fine against the company.

As a result, Apple has (1) updated software on the iPhone; (2) promised not to store location information beyond a seven day period; and (3) promised to encrypt all location data. However, even though Apple made the changes it still faces thousands of individual lawsuits in South Korea and ongoing lawsuits and investigations in other countries. Even though the amount recovered in Korea is likely to be negligible, a negative precedent will hurt Apple because ongoing cases in other countries where larger damages are recoverable may use the holding as persuasive evidence of liability.

The Korean lawsuit against Apple’s tracking of customers location data is quite simple. Plaintiffs are claiming that the intentional collection of their personal data through tracking software on Apple’s iPhone violated their right to privacy protected under the South Korean Constitution and that this violation inflicted emotional distress for which they should be compensated. The Korean plaintiffs will have a strong claim because of the earlier precedent set in the Changwon District Court and the fine imposed by the Korean Communications Commission.

This is a simple case, despite what the media and my boss Sean Hayes contend. The South Korean Constitution guarantees the right to privacy and Apple violated that right by selling products that tracked and stored location data of iPhone users. The iPhone tracking software violated consumers’ constitutional right to privacy and therefore Apple should pay damages to the plaintiffs for the emotional distress they inflicted based on their violation.

In Korea, the right to privacy is constitutionally protected. Therefore, this claim is framed as a right to privacy tort claim and in Korea there are numerous case precedents, statutes and treatises that bolster the plaintiffs’ tort claim. The infringement of privacy was so serious that a South Korean District Court and the Korean Communications Commission already imposed judgments or fines against Apple for violation of the right to privacy.

Furthermore, this is not nominal harm, as alleged by many including Hayes. The data collected by the iPhone is extremely private information that in the wrong hands could cause extreme harm to individuals, think of a snooping wife or a police officer interrogating a suspect.

Additionally, this information may be used to the gain of Apple by transmitting the data to third parties for analysis. For example, coffee shops in Korea, through data collection tools, have found that they are most successful when they are located near banks. Was Apple using the data for personal gain? It is not difficult to think of many situations where location data could be used to the detriment of an individual. Moreover, before Apple changed the tracking storage policy location data of people were stored for one year and was accessible by Apple. If the police tapped your phone or searched your house they must first seek court permission. It seems strange that a private company would be permitted to collect such data without seeking any permission and be allowed to store that data for an extended period of time.

Finally, there was no liability limiting mechanism in place that would allow an argument in support of Apple. Even though there were cursory warnings at the iPhone store these likely will not suffice since there has already been precedent in South Korea that held Apple liable for violation of the constitutional right to privacy.

If Apple had acknowledged that there was a potential for this type of information to be collected and warned consumers then Apple would have a stronger case. However, that did not occur and, in fact, Apple even falsely claimed that only cellphone towers and Wi-Fi hotspots were storing data, only to later acknowledge that there was a software bug that sent location data to the company’s servers. Therefore, based on the above reasons, it seems that Apple will have a difficult time arguing against liability for the location tracking due to the already established precedents in South Korea.

John Nolan is an associate at J & S Law Firm. He formerly worked for the Oklahoma City Attorney General’s Office as a prosecutor. JohnNolan@ipglegal.com ― Ed.