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Couldn't this be used to watch peoples movements in a house from the street?

In any case with the NSA's ubiquitous tracking and ability to compromise networked systems at will... this scares me and the privacy risks absolutely outweigh any potential benefit

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Yes, but it would be covered by the same precedents as e.g. thermal imaging tools, which is that a warrant is necessary for evidence gathered to be admissible.

Time to switch all your wireless devices to 802.11a to prevent signal leakage outside your home.

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