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Heightened interest in consumers’ online privacy rights has made the process of formulating and implementing a privacy policy an increasingly complex exercise. Recent developments in the dot-com economic landscape have raised the stakes for management caught between an existing policy promising confidentiality and a pressing need to make use of what may be (one of) its only marketable assets: its customer data. The drafter of a privacy statement can attempt to minimize the tensions associated with a conflict between privacy rights and economic necessity before such a conflict materializes by anticipating changes in a business model or legal and industry standards. Drafting from a proactive posture can help a client avoid getting caught between a rock and a hard place and from becoming the next toysmart.com. As previously reported in Privacy Matters, in the January issue, the failed company attempted to sell its customer database to satisfy its creditors after filing for bankruptcy, contrary to a promise in its privacy policy that it would not share such information with a third party. Toysmart.com was then sued by the Federal Trade Commission for deceptive trade practices for reneging on its published “no-share” policy. Whether developing or revising an online privacy policy, consider the inclusion of the following provision in an effort to provide a client with flexibility should it unexpectedly find it necessary to market its customer database in a manner not consistent with the company’s ordinary business practices, for example, in connection with a fundamental organizational change or a bankruptcy. [Company] may transfer, sell or assign information concerning your use of this Site, including without limitation, personally identifiable information that you provide and other information concerning your use of the Site, to third parties, as a result of the sale, merger, consolidation, change in control, transfer of substantial assets, reorganization or liquidation of [Company]. Ultimately, the degree of flexibility created by adopting this approach is a function of its breadth: A client’s options regarding the use of its customer database increase with the number of exemptions to its privacy policy that allow it to convert customer data into a marketable asset. Susan Kent is an attorney at Brown Raysman Millstein Felder & Steiner LLPin New York. This sample clause is intended to serve solely as an exemplar and may need to be modified to conform to the legal requirements of your jurisdiction. It in no way constitutes legal advice.

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