We’re happy to announce that the New Jersey Attorney General has dropped its investigation of Tidbit as detailed in a consent order filed yesterday in Essex County Superior Court in New Jersey.
Tidbit was a project of four Massachusetts Institute of Technology (MIT) students who developed the software for a hackathon in November 2013. The software was envisioned as a substitute for website advertisements, allowing sites to instead monetize visits by using visitors’ computers to mine for Bitcoins. The Bitcoin mining function of the Tidbit code was never operable, however, and no Bitcoins were ever mined.
In December 2013, the state of New Jersey’s Division of Consumer Affairs issued a detailed subpoena and information request to Jeremy Rubin, one of Tidbit’s developers, seeking extensive data from Tidbit, including its source code. Over the next eleven months, Tidbit challenged the subpoena in New Jersey state court, arguing that the state could not subpoena Rubin, who is a Massachusetts resident.
Ultimately, Judge Gary Furnari of the Essex County Superior Court upheld the subpoena but noted he had “serious concerns” that the state “may be acting to discourage creative and ‘cutting edge’ new technology” and that it appeared “the Tidbit program and other similar creative endeavors serve a useful and legitimate purpose” and had no “inherently improper or malicious intent or design.”
Tidbit declined to appeal and after lengthy negotiations with the state, entered into a written agreement resolving the investigation. Under the consent order, Tidbit would be subject to a $25,000 fine that will not be collected as long as it doesn’t violate New Jersey’s consumer or computer fraud laws over the next two years.
As the settlement makes clear, the students have not admitted to any wrongdoing or legal liability. And the state itself echoed the comments of Judge Furnari, noting in its press release “we do not believe Tidbit was created for the purpose of invading privacy.”
While we’re glad the case is resolved and these students can move on to other pursuits, we are nonetheless disappointed that the state of New Jersey pursued this case so vigorously when no Bitcoins were mined, no one’s privacy was invaded and no harm was done.
Instead, we think this subpoena was a clear overreach by the Attorney General that extracted to no meaningful benefit to the state. While the settlement agreement binds the students to comply with the law under the threat of severe monetary punishment, the students are of course already obliged to follow the law. Yet the cost of this agreement for these four young college students was great: Subjected to the threat of litigation, they ultimately abandoned their project before they had a chance to pursue and develop it. And as the MIT community warned the Attorney General, this misguided investigation will do nothing but deter others developers and innovators from pursuing their projects.
While we wish the Attorney General had not wasted taxpayer money that could and should have been better spent elsewhere, we are grateful that the investigation has concluded and the students are no longer faced with the burden of responding to the subpoena or the threat of time consuming and expensive litigation.
We thank our local counsel Frank L. Corrado of Barry Corrado & Grassi, P.C. in Wildwood, New Jersey for his invaluable service in this case.