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HBO's Silicon Valley: a Legal Critique - (Part Two)

Similarly, COPPA’s purpose and consequences are muddied a bit for comic effect. For example, it’s repeatedly suggested that PiperChat is exposing children to sexual predators. That may be so, but it doesn’t have much to do with COPPA. PiperChat’s wrongdoing stems from collecting and storing minors’ data without parental consent, not from facilitating pedophiles.

Likewise, the $21 billion fine, while grounded in truth, is probably a touch steep. The calculation comes from COPPA’s then-current statutory penalty of $16,000, multiplied by the number of individual PiperChat sessions initiated by underage users. It’s not clear whether, in such circumstances, a court would interpret every single chat session as a fresh “violation” of the FTC Act, but, regardless, the statutory maximum is rarely awarded. For example, even assuming Path’s non-compliance was limited to a single use of the app by each of the 3,000 users identified by the FTC, its maximum penalty would have been $48 million, many multiples over the $800,000 deal it struck. A recent survey indicated that the average COPPA penalty per child was $2.28. That would put PiperChat’s liability at a more manageable $3 million. Whether it’s $3 million or $21 billion, though, the latest legal travails of HBO’s fictional start-up are a teachable moment in regulatory compliance for real-life digital entrepreneurs. Despite the quibbles raised above, the show’s accuracy and attention to detail when it comes to cyberlaw are impressive. Check back with the Knowmad Law Blog next week for the final installment of our series on Silicon Valley, when we’ll take a look at tech’s favorite boogeyman: the patent troll.

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