IntelliVision Technologies Corp.; Analysis of Proposed Consent Order To Aid Public Comment, 96984-96986 [2024-28716]
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96984
Federal Register / Vol. 89, No. 235 / Friday, December 6, 2024 / Notices
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here, the restraint is ancillary to an
otherwise lawful and primarily vertical
agreement.14 Under the rule of reason, a
restraint violates section 1 if the
anticompetitive effects of the restraint
outweigh its procompetitive effects.15
Put slightly differently, the rule of
reason forbids restraints for which the
procompetitive justifications for the
restraint could have been achieved
through ‘‘less anticompetitive means’’
than those imposed by the restraint.16
Here, the Complaint alleges that
‘‘[a]ny legitimate objectives of
Guardian’s’’ use of the no-hire
provisions ‘‘could have been achieved
through significantly less restrictive
means.’’ 17 This certainly may be true of
some no-hire agreements. And no-hire
clauses undoubtedly can have
anticompetitive effects.18 In some
circumstances, those anticompetitive
effects will outweigh the procompetitive
justifications for a no-hire clause.19
se prohibition a restraint must have ‘manifestly
anticompetitive’ effects and ‘lack . . . any
redeeming virtue.’ ’’ (cleaned up)).
14 See, e.g., Aya Healthcare Servs., Inc. v. AMN
Healthcare, Inc., 9 F.4th 1102, 1109 (9th Cir. 2021)
(citing Rothery Storage & Van Co. v. Atlas Van
Lines, Inc., 792 F.2d 210, 224 (D.C. Cir. 1986)). The
Chair invokes Deslandes v. McDonald’s USA, LLC
as ‘‘affirm[ing]’’ that ‘‘some no-poach or no-hire
provisions may be analyzed as per se restraints
under section 1 of the Sherman Act.’’ Chair’s
Statement at 2 n.6. That is not quite right.
Deslandes held only that a properly pleaded per se
claim challenging no-hire clauses could survive a
motion to dismiss because ‘‘the classification of a
restraint as ancillary,’’ and therefore not subject to
the per se standard, ‘‘is a defense, and complaints
need not anticipate and plead around defenses.’’ 81
F.4th 699, 705 (7th Cir. 2023), cert. denied, 144 S.
Ct. 1057 (2024). Whether a restraint is ancillary, and
therefore subject to the rule of reason, ‘‘requires
discovery, economic analysis, and potentially a
trial.’’ Ibid.
15 See, e.g., GTE Sylvania Inc., 433 U.S. at 49 &
n.15 (citing Chi. Bd. of Trade v. United States, 246
U.S. 231, 238 (1918) (Brandeis, J.)); Atl. Richfield
Co. v. USA Petroleum Co., 495 U.S. 328, 342 (1990);
Ohio v. Am. Express Co., 585 U.S. 529, 541–42
(2018).
16 Am. Express Co., 585 U.S. at 542; Alston, 594
U.S. at 100 (‘‘[A]nticompetitive restraints of trade
may wind up flunking the rule of reason to the
extent the evidence shows that substantially less
restrictive means exist to achieve any proven
procompetitive benefits.’’).
17 Compl. ¶ 14. Potential procompetitive
justifications, i.e., legitimate objectives, in these
circumstances could include Guardian seeking to
recoup any costs for the training of and investment
in its workers or for screening and background
checks to employ these workers, or to protect any
relevant trade secrets.
18 Matthew Gibson, Employer Market Power in
Silicon Valley, IZA Discussion Paper No. 14843
(Nov. 2021), https://docs.iza.org/dp14843.pdf
(comparing workers’ salaries at Silicon Valley firms
subject to DOJ’s no-poach investigation to worker
salaries at other information-technology firms and
concluding that the challenged no-poach
agreements reduced salaries at colluding firms by
4.8%).
19 Cf. Eichorn v. AT&T Corp., 248 F.3d 131 (3d
Cir. 2001) (challenged no-hire agreement ‘‘not an
antitrust violation under the rule of reason’’ where
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When those facts obtain, the no-hire
provision violates the Sherman Act.
But we cannot issue a Complaint
against a company based solely on a
theory about hypothetical effects of nohire agreements. To lawfully invoke our
enforcement authority, we must have a
‘‘reason to believe’’ that Guardian’s nohire provisions violate section 5, not
that no-hire provisions generally could
violate section 5.20 The Commission has
a ‘‘reason to believe’’ the law has been
violated only if it has evidence
sufficient to make the ‘‘threshold
determination that further inquiry is
warranted.’’ 21 That reason must be
‘‘well-grounded’’ in evidence that the
Commission gleaned from its pre-filing
investigation.22
Had the Complaint plausibly alleged
anticompetitive effects outweighing
procompetitive justifications, I would
have voted for it. But the Complaint
alleges nothing about the no-hire
provisions’ effects. It does not allege
direct evidence of anticompetitive
effects, or of indirect, economic
evidence of anticompetitive effects, like
market power and harm to competition.
It does not even allege that Guardian has
ever tried to enforce any of these
agreements, nor does it allege that a
single Guardian customer or worker
believed Guardian would enforce any of
these provisions.23 Nor have I seen any
the particular provision at issue ‘‘did not have a
significant anti-competitive effect on the plaintiffs’
ability to seek employment’’); Aya Healthcare
Servs., 9 F.4th at 1110 (challenged non-solicitation
agreement, involving employee outsourcing
arrangement between healthcare staffing agencies
collaborating to supply traveling nurses, not
unlawful under rule of reason where restraint was
reasonably necessary to ensure neither would lose
personnel during collaboration); Giordano v. Saks
Inc., 654 F. Supp. 3d 174, 201 (E.D.N.Y. 2023)
(challenged no-poach agreement involving
collaborative business arrangement not unlawful
under rule of reason where luxury brands agreed
not to poach Saks employees who were trained to
sell brand products unless current managers
consented or the employee had left Saks at least six
months prior).
20 15 U.S.C. 45(b).
21 FTC v. Standard Oil of Cal., 449 U.S. 232, 241
(1980); Boise Cascade Corp. v. FTC, 498 F. Supp.
772, 779 (D. Del. 1980).
22 Standard Oil, 449 U.S. at 246 n.14; see also
AMREP Corp. v. FTC, 768 F.2d 1171, 1177 (10th
Cir. 1985).
23 The Chair presents this case as a choice
between Guardian’s no-hire provisions ‘‘remain[ing]
in place,’’ ostensibly presuming anticompetitive
effects from their very existence, or continuing the
investigation. Chair’s Statement at 2. That is not
correct. I have seen no evidence of actual or
threatened enforcement of these clauses. And even
if Guardian did threaten or attempt to enforce such
provisions, I have seen no evidence that such
threatened or actual enforcement would violate the
antitrust laws—the question before the Commission
when deciding whether to issue a Complaint. The
Chair’s citation of public comments submitted in
response to the Commission’s separate, unrelated
Non-Compete Clause Rule, id. at 2 n.9, does not
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such evidence that goes unmentioned in
the Complaint. Indeed, I am at a loss
about how my colleagues have formed
their reason to believe that Guardian is
violating the antitrust laws.
The Commission ought to protect
competition in the labor markets, but it
cannot bend the law to do so. We must
form a ‘‘well-grounded reason to
believe’’ that the law has been violated
before issuing an administrative
complaint. Because we have no
evidence of the effects of the no-hire
agreements in this case, the Commission
should not have issued this Complaint.
I respectfully dissent.
[FR Doc. 2024–28720 Filed 12–5–24; 8:45 am]
BILLING CODE 6750–01–P
FEDERAL TRADE COMMISSION
[File No. 232 3023]
IntelliVision Technologies Corp.;
Analysis of Proposed Consent Order
To Aid Public Comment
Federal Trade Commission.
Proposed consent agreement;
request for comment.
AGENCY:
ACTION:
The consent agreement in this
matter settles alleged violations of
Federal law prohibiting unfair or
deceptive acts or practices. The attached
Analysis of Proposed Consent Order to
Aid Public Comment describes both the
allegations in the complaint and the
terms of the consent order—embodied
in the consent agreement—that would
settle these allegations.
DATES: Comments must be received on
or before January 6, 2025.
ADDRESSES: Interested parties may file
comments online or on paper by
following the instructions in the
Request for Comment part of the
SUPPLEMENTARY INFORMATION section
below. Please write ‘‘IntelliVision; File
No. 232 3023’’ on your comment and
file your comment online at https://
www.regulations.gov by following the
instructions on the web-based form. If
you prefer to file your comment on
paper, please mail your comment to the
following address: Federal Trade
Commission, Office of the Secretary,
600 Pennsylvania Avenue NW, Mail
Stop H–144 (Annex F), Washington, DC
20580.
SUMMARY:
change the facts, or lack thereof, in this matter.
Moreover, I have no objection to the Commission
agreeing not to bring an enforcement action so long
as Guardian agrees not to enforce its no-hire
provisions—akin to a non-prosecution agreement.
But if the Commission invokes its power to issue
a complaint, it must comply with the statute giving
it that power—including the requirement that we
have ‘‘reason to believe’’ that section 5 has been
violated.
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FOR FURTHER INFORMATION CONTACT:
Robin Rosen Spector (202–326–3740),
Attorney, Division of Privacy and
Identity Protection, Bureau of Consumer
Protection, Federal Trade Commission,
600 Pennsylvania Avenue NW,
Washington, DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant
to section 6(f) of the Federal Trade
Commission Act, 15 U.S.C. 46(f), and
FTC Rule § 2.34, 16 CFR 2.34, notice is
hereby given that the above-captioned
consent agreement containing a consent
order to cease and desist, having been
filed with and accepted, subject to final
approval, by the Commission, has been
placed on the public record for a period
of 30 days. The following Analysis to
Aid Public Comment describes the
terms of the consent agreement and the
allegations in the complaint. An
electronic copy of the full text of the
consent agreement package can be
obtained at https://www.ftc.gov/newsevents/commission-actions.
You can file a comment online or on
paper. For the Commission to consider
your comment, we must receive it on or
before January 6, 2025. Write
‘‘IntelliVision; File No. 232 3023’’ on
your comment. Your comment—
including your name and your State—
will be placed on the public record of
this proceeding, including, to the extent
practicable, on the https://
www.regulations.gov website.
Because of heightened security
screening, postal mail addressed to the
Commission will be subject to delay. We
strongly encourage you to submit your
comments online through the https://
www.regulations.gov website. If you
prefer to file your comment on paper,
write ‘‘IntelliVision; File No. 232 3023’’
on your comment and on the envelope,
and mail your comment to the following
address: Federal Trade Commission,
Office of the Secretary, 600
Pennsylvania Avenue NW, Mail Stop
H–144 (Annex F), Washington, DC
20580.
Because your comment will be placed
on the publicly accessible website at
https://www.regulations.gov, you are
solely responsible for making sure your
comment does not include any sensitive
or confidential information. In
particular, your comment should not
include sensitive personal information,
such as your or anyone else’s Social
Security number; date of birth; driver’s
license number or other State
identification number, or foreign
country equivalent; passport number;
financial account number; or credit or
debit card number. You are also solely
responsible for making sure your
comment does not include sensitive
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health information, such as medical
records or other individually
identifiable health information. In
addition, your comment should not
include any ‘‘trade secret or any
commercial or financial information
which . . . is privileged or
confidential’’—as provided by section
6(f) of the FTC Act, 15 U.S.C. 46(f), and
FTC Rule § 4.10(a)(2), 16 CFR
4.10(a)(2)—including competitively
sensitive information such as costs,
sales statistics, inventories, formulas,
patterns, devices, manufacturing
processes, or customer names.
Comments containing material for
which confidential treatment is
requested must be filed in paper form,
must be clearly labeled ‘‘Confidential,’’
and must comply with FTC Rule
§ 4.9(c). In particular, the written
request for confidential treatment that
accompanies the comment must include
the factual and legal basis for the
request and must identify the specific
portions of the comment to be withheld
from the public record. See FTC Rule
§ 4.9(c). Your comment will be kept
confidential only if the General Counsel
grants your request in accordance with
the law and the public interest. Once
your comment has been posted on the
https://www.regulations.gov website—as
legally required by FTC Rule § 4.9(b)—
we cannot redact or remove your
comment from that website, unless you
submit a confidentiality request that
meets the requirements for such
treatment under FTC Rule § 4.9(c), and
the General Counsel grants that request.
Visit the FTC website at https://
www.ftc.gov to read this document and
the news release describing the
proposed settlement. The FTC Act and
other laws the Commission administers
permit the collection of public
comments to consider and use in this
proceeding, as appropriate. The
Commission will consider all timely
and responsive public comments it
receives on or before January 6, 2025.
For information on the Commission’s
privacy policy, including routine uses
permitted by the Privacy Act, see
https://www.ftc.gov/site-information/
privacy-policy.
Analysis of Proposed Consent Order To
Aid Public Comment
The Federal Trade Commission
(‘‘Commission’’) has accepted, subject to
final approval, an agreement containing
a consent order from IntelliVision
Technologies Corp. (‘‘IntelliVision’’ or
‘‘Respondent’’). The proposed consent
order (‘‘Proposed Order’’) has been
placed on the public record for 30 days
for receipt of public comments from
interested persons. Comments received
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96985
during this period will become part of
the public record. After 30 days, the
Commission will again review the
agreement, along with the comments
received, and will decide whether it
should make final the Proposed Order
or withdraw from the agreement and
take appropriate action.
IntelliVision is a Delaware
corporation with its principal place of
business in San Jose, California.
Respondent advertises and sells an
artificial intelligence-based facial
recognition software product to original
equipment manufacturers, large
integrators, and large end users.
Respondent’s facial recognition software
has been incorporated into two
consumer products sold by its parent
corporation Nice North America, LLC:
the 2GIG Edge, a home security system;
and the Elan Intelligent Touch Panel, a
smart home touch panel. The software
allows consumers to register their face
and then scan their face to gain access
to the 2GIG Edge home security system.
Similarly, the software allows
consumers to register their face and then
scan their face to gain access to the
smart home features of the Elan
Intelligent Touch Panel.
The Commission’s proposed threecount complaint alleges that
Respondent represented that
IntelliVision’s facial recognition
software has one of the highest accuracy
rates on the market and has been trained
on millions of faces. The proposed
complaint further alleges that
Respondent represented that
IntelliVision’s facial recognition
software can detect faces of all
ethnicities without racial bias, was
developed with multi-ethnic and gender
datasets to ensure no built-in bias and
performs with zero gender or racial bias.
In addition, the proposed complaint
alleges that IntelliVision claimed its
anti-spoofing technology ensures the
system cannot be fooled by photo or
video images. According to the
proposed complaint, these claims are
false or misleading or were not
substantiated at the time the
representations were made, in violation
of section 5 of the FTC Act.
The Proposed Order contains
injunctive relief designed to prevent
Respondent from engaging in the same
or similar acts or practices in the future.
Provision I prohibits Respondent from
making any misrepresentation (1) about
the accuracy or efficacy of its Facial
Recognition Technology; (2) about the
comparative performance of its Facial
Recognition Technology with respect to
individuals of different genders,
ethnicities, and skin tones, or reducing
or eliminating differential performance
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based on such factors; or (3) about the
accuracy or efficacy of its Facial
Recognition Technology with respect to
detecting spoofing or otherwise
determining Liveness. (Facial
Recognition Technology and Liveness
are defined in the Proposed Order.)
Provision II prohibits Respondent
from making any representation about
the effectiveness, accuracy, or lack of
bias of Facial Recognition Technology,
or about the effectiveness of such Facial
Recognition Technology at detecting
spoofing, unless Respondent possesses
and relies upon competent and reliable
testing that substantiates the
representation at the time the
representation is made. For the
purposes of this Provision, competent
and reliable testing means testing that is
based on the expertise of professionals
in the relevant area, and that (1) has
been conducted and evaluated in an
objective manner by qualified persons
and (2) is generally accepted by experts
in the profession to yield accurate and
reliable results. Respondent also must
document all such testing including: the
dates and results of all tests; the method
and methodology used; the source and
number of images used; the source and
number of different people in the
images; whether such testing includes
Liveness tests; any technique(s) used to
modify the images to create different
angles, different lighting conditions or
other modifications; demographic
information collected on images used in
testing if applicable; information about
the skin tone collected on images used
in testing if applicable; and any
information that supports, explains,
qualifies, calls into question or
contradicts the results. Provision III
requires Respondent to obtain and
submit acknowledgments of receipt of
the Order.
Provisions IV–VI are reporting and
compliance provisions, which include
recordkeeping requirements and
provisions requiring Respondent to
provide information or documents
necessary for the Commission to
monitor compliance. Provision VII
states the Proposed Order will remain in
effect for 20 years, with certain
exceptions.
The purpose of this analysis is to
facilitate public comment on the
Proposed Order, and it is not intended
to constitute an official interpretation of
the complaint or Proposed Order, or to
modify the Proposed Order’s terms in
any way.
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By direction of the Commission.
April J. Tabor,
Secretary.
Concurring Statement of Commissioner
Andrew N. Ferguson
Today, the Commission approves a
complaint and settlement against
IntelliVision, a developer of facial
recognition software.1 Count I charges
IntelliVision with misrepresenting the
efficacy of its software. IntelliVision
claimed that its software had one of the
highest accuracy rates in the world, but
in reality it was not even among the top
hundred best performing algorithms
tested by the National Institute of
Standards and Technology.2 Count I
further accuses IntelliVision of claiming
that its software was trained on
‘‘millions’’ of faces, when the software
was in fact trained on only 100,000
faces.3 Count III accuses IntelliVision of
claiming that its software could not be
fooled by photo or video images even
though it had insufficient evidence to
support that categorical claim.4 I
support these counts without
reservation.
I write briefly to explain why I also
support Count II, which accuses
IntelliVision of misrepresenting that its
software performs with ‘‘zero gender or
racial bias’’ when in fact its software
exhibits substantially different falsenegative and false-positive rates across
sex and racial lines.5 Treating
IntelliVision as having committed a
deceptive act or practice in these
circumstances could lead one to believe
that the Commission is taking the
position that to be ‘‘unbiased,’’ a
software system must produce equal
false-negative and false-positive rates
across race and sex groups.
I do not read the complaint that way,
and I today do not vote to fix the
meaning of ‘‘bias.’’ Statistical disparity
in false-positive and false-negative rates
is not necessarily the only or best
definition of what it means for an
automated system to be ‘‘biased.’’ The
question is open to philosophical and
political dispute. Other definitions
might consider the discriminatory
intentions of the developers, the
developers’ diligence in avoiding
artificial disparities while training the
automated system, or whether any
statistical disparities reflect the
underlying realities the system is
designed to reflect or epistemological
1 Complaint, In re IntelliVision Technologies
Corp.
2 Id. ¶ 11.
3 Id. ¶ 14.
4 Id. ¶ 13.
5 Id. ¶ 11.
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limitations in that underlying reality
that are impossible or uneconomical to
overcome. This complaint does not
choose from among these competing
definitions and considerations.
But IntelliVision used the word
‘‘bias.’’ If it intended to invoke a specific
definition of ‘‘bias,’’ it needed to say so.
But it did not say so; it instead left the
resolution of this ambiguity up to
consumers. IntelliVision must therefore
bear the burden of substantiating all
reasonable interpretations that
consumers may have given its claim that
its software had ‘‘zero gender or racial
bias.’’ 6 A reasonable consumer could
interpret ‘‘zero gender or racial bias’’ in
this context to mean equal rates of false
positives and false negatives across
those lines. I therefore have reason to
believe that IntelliVision’s claims were
false or unsubstantiated because its
software did not have equal falsepositive and false-negative rates across
those lines.
Pursuant to that understanding, I
concur in the filing of the complaint and
settlement.
[FR Doc. 2024–28716 Filed 12–5–24; 8:45 am]
BILLING CODE 6750–01–P
FEDERAL TRADE COMMISSION
[File No. 212 3035]
Gravy Analytics, Inc.; Analysis of
Proposed Consent Order to Aid Public
Comment
Federal Trade Commission.
Proposed consent agreement;
request for comment.
AGENCY:
ACTION:
The consent agreement in this
matter settles alleged violations of
Federal law prohibiting unfair or
deceptive acts or practices. The attached
Analysis of Proposed Consent Order to
Aid Public Comment describes both the
allegations in the complaint and the
terms of the consent order—embodied
in the consent agreement—that would
settle these allegations.
DATES: Comments must be received on
or before January 6, 2025.
SUMMARY:
6 FTC Policy Statement on Deception, 103 F.T.C.
174, 178 (1984) (‘‘When a seller’s representation
conveys more than one meaning to reasonable
consumers, one of which is false, the seller is liable
for the misleading interpretation’’); FTC Policy
Statement Regarding Advertising Substantiation,
104 F.T.C. 839, 840 (1984) (‘‘Although firms are
unlikely to possess substantiation for implied
claims they do not believe the ad makes, they
should generally be aware of reasonable
interpretations and will be expected to have prior
substantiation for such claims. The Commission
will take care to assure that it only challenges
reasonable interpretations of advertising claims.’’).
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Agencies
[Federal Register Volume 89, Number 235 (Friday, December 6, 2024)]
[Notices]
[Pages 96984-96986]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-28716]
-----------------------------------------------------------------------
FEDERAL TRADE COMMISSION
[File No. 232 3023]
IntelliVision Technologies Corp.; Analysis of Proposed Consent
Order To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement; request for comment.
-----------------------------------------------------------------------
SUMMARY: The consent agreement in this matter settles alleged
violations of Federal law prohibiting unfair or deceptive acts or
practices. The attached Analysis of Proposed Consent Order to Aid
Public Comment describes both the allegations in the complaint and the
terms of the consent order--embodied in the consent agreement--that
would settle these allegations.
DATES: Comments must be received on or before January 6, 2025.
ADDRESSES: Interested parties may file comments online or on paper by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Please write ``IntelliVision;
File No. 232 3023'' on your comment and file your comment online at
https://www.regulations.gov by following the instructions on the web-
based form. If you prefer to file your comment on paper, please mail
your comment to the following address: Federal Trade Commission, Office
of the Secretary, 600 Pennsylvania Avenue NW, Mail Stop H-144 (Annex
F), Washington, DC 20580.
[[Page 96985]]
FOR FURTHER INFORMATION CONTACT: Robin Rosen Spector (202-326-3740),
Attorney, Division of Privacy and Identity Protection, Bureau of
Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue
NW, Washington, DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule Sec. 2.34, 16 CFR
2.34, notice is hereby given that the above-captioned consent agreement
containing a consent order to cease and desist, having been filed with
and accepted, subject to final approval, by the Commission, has been
placed on the public record for a period of 30 days. The following
Analysis to Aid Public Comment describes the terms of the consent
agreement and the allegations in the complaint. An electronic copy of
the full text of the consent agreement package can be obtained at
https://www.ftc.gov/news-events/commission-actions.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before January 6, 2025.
Write ``IntelliVision; File No. 232 3023'' on your comment. Your
comment--including your name and your State--will be placed on the
public record of this proceeding, including, to the extent practicable,
on the https://www.regulations.gov website.
Because of heightened security screening, postal mail addressed to
the Commission will be subject to delay. We strongly encourage you to
submit your comments online through the https://www.regulations.gov
website. If you prefer to file your comment on paper, write
``IntelliVision; File No. 232 3023'' on your comment and on the
envelope, and mail your comment to the following address: Federal Trade
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Mail
Stop H-144 (Annex F), Washington, DC 20580.
Because your comment will be placed on the publicly accessible
website at https://www.regulations.gov, you are solely responsible for
making sure your comment does not include any sensitive or confidential
information. In particular, your comment should not include sensitive
personal information, such as your or anyone else's Social Security
number; date of birth; driver's license number or other State
identification number, or foreign country equivalent; passport number;
financial account number; or credit or debit card number. You are also
solely responsible for making sure your comment does not include
sensitive health information, such as medical records or other
individually identifiable health information. In addition, your comment
should not include any ``trade secret or any commercial or financial
information which . . . is privileged or confidential''--as provided by
section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule Sec.
4.10(a)(2), 16 CFR 4.10(a)(2)--including competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with FTC Rule Sec. 4.9(c). In
particular, the written request for confidential treatment that
accompanies the comment must include the factual and legal basis for
the request and must identify the specific portions of the comment to
be withheld from the public record. See FTC Rule Sec. 4.9(c). Your
comment will be kept confidential only if the General Counsel grants
your request in accordance with the law and the public interest. Once
your comment has been posted on the https://www.regulations.gov
website--as legally required by FTC Rule Sec. 4.9(b)--we cannot redact
or remove your comment from that website, unless you submit a
confidentiality request that meets the requirements for such treatment
under FTC Rule Sec. 4.9(c), and the General Counsel grants that
request.
Visit the FTC website at https://www.ftc.gov to read this document
and the news release describing the proposed settlement. The FTC Act
and other laws the Commission administers permit the collection of
public comments to consider and use in this proceeding, as appropriate.
The Commission will consider all timely and responsive public comments
it receives on or before January 6, 2025. For information on the
Commission's privacy policy, including routine uses permitted by the
Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission (``Commission'') has accepted, subject
to final approval, an agreement containing a consent order from
IntelliVision Technologies Corp. (``IntelliVision'' or ``Respondent'').
The proposed consent order (``Proposed Order'') has been placed on the
public record for 30 days for receipt of public comments from
interested persons. Comments received during this period will become
part of the public record. After 30 days, the Commission will again
review the agreement, along with the comments received, and will decide
whether it should make final the Proposed Order or withdraw from the
agreement and take appropriate action.
IntelliVision is a Delaware corporation with its principal place of
business in San Jose, California. Respondent advertises and sells an
artificial intelligence-based facial recognition software product to
original equipment manufacturers, large integrators, and large end
users. Respondent's facial recognition software has been incorporated
into two consumer products sold by its parent corporation Nice North
America, LLC: the 2GIG Edge, a home security system; and the Elan
Intelligent Touch Panel, a smart home touch panel. The software allows
consumers to register their face and then scan their face to gain
access to the 2GIG Edge home security system. Similarly, the software
allows consumers to register their face and then scan their face to
gain access to the smart home features of the Elan Intelligent Touch
Panel.
The Commission's proposed three-count complaint alleges that
Respondent represented that IntelliVision's facial recognition software
has one of the highest accuracy rates on the market and has been
trained on millions of faces. The proposed complaint further alleges
that Respondent represented that IntelliVision's facial recognition
software can detect faces of all ethnicities without racial bias, was
developed with multi-ethnic and gender datasets to ensure no built-in
bias and performs with zero gender or racial bias. In addition, the
proposed complaint alleges that IntelliVision claimed its anti-spoofing
technology ensures the system cannot be fooled by photo or video
images. According to the proposed complaint, these claims are false or
misleading or were not substantiated at the time the representations
were made, in violation of section 5 of the FTC Act.
The Proposed Order contains injunctive relief designed to prevent
Respondent from engaging in the same or similar acts or practices in
the future. Provision I prohibits Respondent from making any
misrepresentation (1) about the accuracy or efficacy of its Facial
Recognition Technology; (2) about the comparative performance of its
Facial Recognition Technology with respect to individuals of different
genders, ethnicities, and skin tones, or reducing or eliminating
differential performance
[[Page 96986]]
based on such factors; or (3) about the accuracy or efficacy of its
Facial Recognition Technology with respect to detecting spoofing or
otherwise determining Liveness. (Facial Recognition Technology and
Liveness are defined in the Proposed Order.)
Provision II prohibits Respondent from making any representation
about the effectiveness, accuracy, or lack of bias of Facial
Recognition Technology, or about the effectiveness of such Facial
Recognition Technology at detecting spoofing, unless Respondent
possesses and relies upon competent and reliable testing that
substantiates the representation at the time the representation is
made. For the purposes of this Provision, competent and reliable
testing means testing that is based on the expertise of professionals
in the relevant area, and that (1) has been conducted and evaluated in
an objective manner by qualified persons and (2) is generally accepted
by experts in the profession to yield accurate and reliable results.
Respondent also must document all such testing including: the dates and
results of all tests; the method and methodology used; the source and
number of images used; the source and number of different people in the
images; whether such testing includes Liveness tests; any technique(s)
used to modify the images to create different angles, different
lighting conditions or other modifications; demographic information
collected on images used in testing if applicable; information about
the skin tone collected on images used in testing if applicable; and
any information that supports, explains, qualifies, calls into question
or contradicts the results. Provision III requires Respondent to obtain
and submit acknowledgments of receipt of the Order.
Provisions IV-VI are reporting and compliance provisions, which
include recordkeeping requirements and provisions requiring Respondent
to provide information or documents necessary for the Commission to
monitor compliance. Provision VII states the Proposed Order will remain
in effect for 20 years, with certain exceptions.
The purpose of this analysis is to facilitate public comment on the
Proposed Order, and it is not intended to constitute an official
interpretation of the complaint or Proposed Order, or to modify the
Proposed Order's terms in any way.
By direction of the Commission.
April J. Tabor,
Secretary.
Concurring Statement of Commissioner Andrew N. Ferguson
Today, the Commission approves a complaint and settlement against
IntelliVision, a developer of facial recognition software.\1\ Count I
charges IntelliVision with misrepresenting the efficacy of its
software. IntelliVision claimed that its software had one of the
highest accuracy rates in the world, but in reality it was not even
among the top hundred best performing algorithms tested by the National
Institute of Standards and Technology.\2\ Count I further accuses
IntelliVision of claiming that its software was trained on ``millions''
of faces, when the software was in fact trained on only 100,000
faces.\3\ Count III accuses IntelliVision of claiming that its software
could not be fooled by photo or video images even though it had
insufficient evidence to support that categorical claim.\4\ I support
these counts without reservation.
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\1\ Complaint, In re IntelliVision Technologies Corp.
\2\ Id. ] 11.
\3\ Id. ] 14.
\4\ Id. ] 13.
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I write briefly to explain why I also support Count II, which
accuses IntelliVision of misrepresenting that its software performs
with ``zero gender or racial bias'' when in fact its software exhibits
substantially different false-negative and false-positive rates across
sex and racial lines.\5\ Treating IntelliVision as having committed a
deceptive act or practice in these circumstances could lead one to
believe that the Commission is taking the position that to be
``unbiased,'' a software system must produce equal false-negative and
false-positive rates across race and sex groups.
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\5\ Id. ] 11.
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I do not read the complaint that way, and I today do not vote to
fix the meaning of ``bias.'' Statistical disparity in false-positive
and false-negative rates is not necessarily the only or best definition
of what it means for an automated system to be ``biased.'' The question
is open to philosophical and political dispute. Other definitions might
consider the discriminatory intentions of the developers, the
developers' diligence in avoiding artificial disparities while training
the automated system, or whether any statistical disparities reflect
the underlying realities the system is designed to reflect or
epistemological limitations in that underlying reality that are
impossible or uneconomical to overcome. This complaint does not choose
from among these competing definitions and considerations.
But IntelliVision used the word ``bias.'' If it intended to invoke
a specific definition of ``bias,'' it needed to say so. But it did not
say so; it instead left the resolution of this ambiguity up to
consumers. IntelliVision must therefore bear the burden of
substantiating all reasonable interpretations that consumers may have
given its claim that its software had ``zero gender or racial bias.''
\6\ A reasonable consumer could interpret ``zero gender or racial
bias'' in this context to mean equal rates of false positives and false
negatives across those lines. I therefore have reason to believe that
IntelliVision's claims were false or unsubstantiated because its
software did not have equal false-positive and false-negative rates
across those lines.
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\6\ FTC Policy Statement on Deception, 103 F.T.C. 174, 178
(1984) (``When a seller's representation conveys more than one
meaning to reasonable consumers, one of which is false, the seller
is liable for the misleading interpretation''); FTC Policy Statement
Regarding Advertising Substantiation, 104 F.T.C. 839, 840 (1984)
(``Although firms are unlikely to possess substantiation for implied
claims they do not believe the ad makes, they should generally be
aware of reasonable interpretations and will be expected to have
prior substantiation for such claims. The Commission will take care
to assure that it only challenges reasonable interpretations of
advertising claims.'').
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Pursuant to that understanding, I concur in the filing of the
complaint and settlement.
[FR Doc. 2024-28716 Filed 12-5-24; 8:45 am]
BILLING CODE 6750-01-P