In re Carrier IQ, Inc.
85 U.C.C. Rep. Serv. 2d (West) 568, 78 F. Supp. 3d 1051, 2015 U.S. Dist. LEXIS 7123 (2015)
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Rule of Law:
The acquisition of an electronic communication's content via software on a user's device while it is in the process of being sent or received constitutes an 'interception' contemporaneous with transmission under the Federal Wiretap Act, even if the communication is in temporary, transient storage on the device as an intrinsic part of that transmission process.
Facts:
- Plaintiffs, 18 individuals, purchased mobile devices manufactured by Defendants, including HTC, Samsung, and LG.
- Carrier IQ, Inc. designed software ('IQ Agent' and 'CIQ Interface') which the Device Manufacturer Defendants pre-installed on Plaintiffs' mobile devices.
- The software operated continuously in the background without the users' knowledge, consent, or ability to disable it.
- The software was designed to capture a host of user data and communications, including the content of SMS text messages and URLs containing search terms, usernames, and passwords.
- This captured information was then transmitted to Carrier IQ's customers, who were typically wireless carriers but could also include device manufacturers.
- Due to a programming error, HTC failed to deactivate 'debug code' on its devices, which caused the sensitive information captured by the software to be written to the device's system logs in an unencrypted, human-readable form.
- This error made the data vulnerable to third-party applications and caused it to be sent to HTC through its 'Tell HTC' error reporting tool.
Procedural Posture:
- Eighteen individual plaintiffs filed a second consolidated amended complaint in a multidistrict litigation in the U.S. District Court for the Northern District of California.
- The complaint was filed against Carrier IQ, Inc. and several mobile device manufacturers, including HTC, Samsung, and LG.
- The complaint alleged violations of the Federal Wiretap Act, as well as various state privacy and consumer protection statutes.
- The Device Manufacturer Defendants filed a joint motion to dismiss the entire complaint for failure to state a claim upon which relief can be granted.
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Issue:
Does software that captures the content of electronic communications on a mobile device as they are being sent or received constitute an 'interception' contemporaneous with transmission under the Federal Wiretap Act, even if the data is in temporary, transient storage on the device during that process?
Opinions:
Majority - Chen, J.
Yes. The acquisition of electronic communications content via software on a user's device while the communication is in the process of being sent or received meets the Wiretap Act's 'contemporaneous with transmission' requirement for an interception. The Ninth Circuit's precedent in Konop v. Hawaiian Airlines, Inc. requires that an interception occur during transmission, not while the communication is in electronic storage. However, Konop and subsequent cases involved communications that had already completed transmission and reached their final destination, such as emails stored on a server. Here, Plaintiffs allege the software intercepted 'incoming' and 'outgoing' communications, implying the acquisition occurred during transmission. The court found persuasive the First Circuit's reasoning in United States v. Councilman, which rejected a rigid 'storage-transit dichotomy' and held that a communication in 'transient electronic storage that is intrinsic to the communication process' is not a 'stored' communication for purposes of the Act. Therefore, Plaintiffs have plausibly alleged that the Carrier IQ Software intercepted communications contemporaneously with their transmission. Despite this finding on the definition of 'interception,' the court ultimately dismissed the Wiretap Act claim against the Device Manufacturers because Plaintiffs failed to allege sufficient facts showing that the manufacturers themselves intentionally acquired the communications' content, a necessary element for liability.
Analysis:
This decision is significant for applying the Federal Wiretap Act's traditional 'contemporaneous with transmission' requirement to the realities of modern mobile communication. By distinguishing between data in its final storage destination and data in transient storage incidental to transmission, the court prevents the creation of a loophole that would exempt on-device spying from the Act's reach. The ruling clarifies that software capturing data 'in flight' on a device can constitute an illegal interception, setting a crucial precedent for data privacy litigation involving embedded software and applications. It signals that courts may adopt a more flexible, technologically-informed interpretation of 'interception' to protect user privacy on smartphones.
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