SAN FRANCISCO (Legal Newsline) – New developments in a legal dispute between the Federal Trade Commission and the company D-Link Systems has the data security community intrigued.

The FTC filed a lawsuit against the Taiwanese tech company in January alleging its routers and Internet protocol cameras were unreasonably susceptible to security risks, catching the eye of many in the realm of security law.

“Any court decision in this area garners significant attention,” Adam Cooke, a data security lawyer with the Washington, D.C., firm Hogan Lovells, told Legal Newsline in a phone interview.

The initial complaint stated one count of unfairness and five counts of misrepresentation.

However, the U.S. Court for the Northern District of California dismissed three of the six claims with a leave to amend in a Sept. 19 decision. The dismissed claims include the unfairness claim and two of the claims of misrepresentation.

Judge James Donato dismissed the claims because the FTC failed to show that the D-Link System products caused “substantial harm to consumers.”

Although an obvious setback for the government, Donato is giving the FTC a chance to amend its complaint. More specifically, the court suggested the complaint might be cured through tying “the unfairness claim to the representations underlying the deception claims.” 

This could be a way of demonstrating a substantial injury suffered by consumers.

However, it’s not a given that the FTC will seize this opportunity.

“I’m curious to see if the government files an amended complaint and whether the government will try to cure the pleading deficiencies the court found, or if it just moves on,” Cooke said.

If the FTC does choose to amend, the ramifications of the case could be considerable.

“It does have implications for the FTC’s ability to bring an unfairness claim that isn’t tethered to a present, concrete injury,” Cooke said.

The FTC has until Oct. 20 to amend the complaint.

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U.S. District Court for the Northern District of California U.S. Federal Trade Commission

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