A Supreme Court case is on the docket that may be a landmark event for users of cell phones, instant messaging, social networking sites, e-mail and Web searches. The result of this case may go a long way to deciding privacy rights for new media in the 21^st century.

The case, City of Ontario vs. Quon, involves the Ontario, CA, police department giving pagers to its SWAT team officers. The officers were told that while the devices were intended for official business, they could use them for private purposes, as long as they paid for any overcharges on their accounts. The department would consider those added messages as private.

At a later point, the department suddenly shifted policy, and had the pager company deliver the records of pager use, including the messages sent. They found that one officer had exchanged hundreds of sexually explicit messages with several women. When he was reprimanded, he and three of the women he was in touch with (two outside the police force) sued for violation of privacy.

The case hinges on Fourth Amendment rights against unreasonable searches. An appeals court determined that the police officer and his (ahem) correspondents had their privacy rights violated. The city of Ontario appealed to the Supreme Court.

This case may be settled narrowly, but the issues may be significant since the whole area of electronic privacy is still not firmly decided. While the employee using an employer-supplied device may not have an expectation of privacy, what about the people he is in contact with who were not employees? What rights do employees have if any? To what extent are any online communications subject to government review, without warrant? This case could have repercussions far beyond police department internal affairs.

The great irony, as pointed out in this NPR article, is that the Supreme Court is barely past the era of quill pens and typewriters, yet is about to decide on the direction of 21^st-century technology.

In recent years, cell phones (including iPhone and Blackberries) have become as big a business tool as the laptop and the copier, but such devices are even more vulnerable to industrial espionage.

A recent UK survey of companies and institutions revealed that 79% of employees conduct confidential conversations by cell phone, and 51% do so on a daily basis. However, only 18% had security software in place.

Even businesses that carefully encrypt emails and build secure server architectures may be unaware of the issue. Most people are used to making calls from standard, wired telephone, where security is not that big an issue (unless the police or the FBI are wiretapping you). But cell phone signals can be picked up far more easily.

Yes , the phone service companies provide some encryption with their services. But it highly vulnerable. In fact, this summer, German hackers announced they had managed to crack the encryption of mobile calls using GSM, a standard that makes up 80% of the world’s cell phone calls. Furthermore, their code logic will be released to hackers in the near future.

What this means for your business is that such critical details as sales discounts, planned bids and sales leads, subjects often discussed via cell phone, might fall into your rivals or your potential customers.

You may want to take a look at the growing number of hardware and software products that are being developed to give users a higher, harder-to-break level of encryption. These include companies like:

• CallCrypt –http://www.cellcrypt.com/
• Snapcom — http://www.snapshield.com/news.asp?cat=101&id=37
• SecurStar –http://www.securstar.com/products_phonecrypt.php

They heard loud and clear: The IRS recently announced a proposal to start collecting taxes on employees’ personal use of work-issued cell phones. After people complained, the agency had a change of heart.

As we reported last week, the IRS proposed a plan to start enforcing a 20-year-old law that classifies personal use of a business phone as a taxable benefit. In other words, employees are required to track their calls, text messages, and downloads, and pay taxes on the value of anything not work-related.

The law just hasn’t been enforced lately. It was passed when cell phones were a rare commodity. Once they were issued to everyone from mail room staff to CFOs, the IRS didn’t bother collecting the money.

That changed earlier this month, seemingly because the feds need the revenue. The agency proposed several methods for calculating the taxes owed and announced it would take public comments on the proposals until Sept. 4.

But it looks like they got enough already.

The plan generated an outcry of protest from businesses worried about having to track and report how their devices are used, as well as anyone with a work-issued phone who doesn’t want to pay more taxes.

In response, the agency reversed its position. In a statement released last week, IRS chairman Doug Shulman asked Congress to make it clear there will be no taxes owed by employees who use company-owned devices for personal reasons.

He said the purpose of the original proposal was not to “crack down” on collecting the taxes, but rather to simplify the rules. However, Shulman said in the statement, “the passage of time, advances in technology, and the nature of communication in the modern workplace have rendered this law obsolete,” and keeping it on the books will “inevitably leave widespread confusion among employees and businesses.”

Bills that would repeal the old law have been introduced into both houses of Congress this year. We’ll keep you posted.