Internet

Lawyers in Flame Wars: The ABA Says Be Nice Online

February 13, 2021
Ethics, Internet, Legal Ethics, Social Media

Parker von Sternberg, MJLST Staffer

The advent of Web 2.0 around the turn of the millennium brought with it an absolute tidal wave of new social interactions. To this day we are in the throes of figuring out how to best engage with one another online, particularly when things get heated or otherwise out of hand. In this new wild west, lawyers sit at a perhaps unfortunate junction. Lawyers are indelibly linked to problems and moments of breakdown—precisely the events that lead to lashing out online. At the same time a lawyer, more so than many professions, relies upon their personal reputation to drive their business. When these factors collide, it creates pressure on the lawyer to defend themselves, but doing so properly can be a tricky thing.

When it comes to questions of ethics for lawyers, the first step is generally to crack open the Model Rules of Professional Conduct (MRPC), given that they have been adopted in 49 states and are kept up to date by the American Bar Association (ABA). While these model rules are customized to some extent from state to state, by and large the language used in the MRPC is an effective starting point for professional ethics issues across the country. Recently, the ABA has stepped into the fray with Formal Opinion 496, which lays out the official interpretation of MRPC 1.6 and how it comes into play in these situations.

MRPC 1.6 protects confidentiality of client information. For our purposes, the pertinent sections are

(a) A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted by paragraph (b) and . . .

(b)(5) to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client, to establish a defense to a criminal charge or civil claim against the lawyer based upon conduct in which the client was involved, or to respond to allegations in any proceeding concerning the lawyer’s representation of the client.

So, when someone goes on Google Maps and excoriates your practice, a review that will pop up to everyone who even looks for directions to the office, what can be done? The first question is whether or not they are in fact a former client. If not, feel free to engage! Just wade in there and start publicly fighting with a stranger (really though, don’t do this. Even the ABA knows what the Streisand Effect is). However, if they are a former client, MRPC 1.6 or the local equivalent applies.

In Minnesota we have the MNRPC, with 1.6(b)(8) mirroring MRPC 1.6(b)(5). At its core, the ABA’s interpretation turns on the fact that an online review, on its own, does not qualify as a “controversy” or “proceeding.” That is not to say that it cannot give rise to one though! In 2016 an attorney in Florida took home $350,000 after former clients repeatedly defamed her because their divorce didn’t go how they wanted. But short of the outright lies in that case, lawyers suffering from online hit pieces are more limited in their options. The ABA lays out four possible responses to poor online reviews:

1) do not respond to the negative post or review at all, because as was brought up above, you tempt the Streisand Effect at your peril;

2) request that the website or search engine remove the review;

3) post an invitation to contact the lawyer privately to resolve the matter; and

4) indicate that professional considerations preclude a response.

While none of these options exactly inspire images of righteous fury, defending your besmirched professional honor or righting the wrongs done to your name, it appears unlikely that they will get you in trouble with the ethics board either. The ABA’s formal opinion lays out an impressive list of authorities from nearly a dozen states establishing that lawyers can and will face consequences for public review-related dust ups. The only option for an attorney really looking to have it out online it seems is to move to Washington D.C., where the local rules allow for disclosure “to the extent reasonably necessary to respond to specific allegations by the client concerning the lawyer’s representation of the client.”

Google it: Justice Department files Antitrust Case Against Google

November 21, 2020
Antitrust, Internet, Litigation

Amanda Erickson, MJLST Staffer

Technology giants, such as Google, have the ability to influence the data and information that flows through our day to day lives by tailoring what each user sees on its platform. Big Tech companies have been under scrutiny for years, but they continue to become more powerful and have access to more user data even as the global economy tanks. As Google’s influence broadens, the concern over monopolization of the market grows. This concern peaked on October 20, 2020 when the Justice Department filed an antitrust lawsuit against Google for abusing its dominance in general search services, search advertising, and general search text advertising markets through anticompetitive and exclusionary practices.

The Department of Justice, along with eleven state attorney generals, raised three claims in their lawsuit, all of which are under Section 2 of the Sherman Antitrust Act. The Department of Justice claims that, because of Google’s contracts with companies like Apple and Samsung, and its multiple products and services, such as search, video, photo, map, and email, competitors in search will not stand a chance. The complaint is rather broad, but it details the cause of action well, even including several graphs and figures for additional support. For instance, the complaint states Google has a market value of $1 trillion and annual revenue that exceeds $160 billion. This allows Google to pay “billions of dollars each year to distributors . . . to secure default status for its general search engine.” Actions like these have the potential to curb competitive action and harm consumers according to the government.

The complaint states that “between its exclusionary contracts and owned-and-operated properties, Google effectively owns or controls search distribution channels accounting for roughly 80 percent of the general search queries in the United States.” It further mentions that “Google” is not only a noun meaning the company, but a verb that is now used when talking about general searches on the internet. It has become a common practice for people to say, “Google it,” even if they complete an internet search with a different search engine. If Google is considered to be a monopoly, who is harmed by Google’s market power? The complaint addresses the harm to both advertisers and consumers. Advertisers have very little choice but to pay the fee to Google’s search advertising and general search text monopolies and consumers are forced to accept all of Google’s policies, including privacy, security and use of personal data policies. This is also a barrier to entry for new companies emerging into the market that are struggling to gain market share.

Google claims that it is not dominant in the industry, but rather just the preferred platform by users. Google argues that its competitors are simply a click away and Google users are free to switch to other search engines if they prefer. Google points out that its deals with companies such as Apple and Microsoft are completely legal deals and these deals only violate antitrust law if they exclude competition. Since switching to another search engine is only a few clicks away, Google claims it is not excluding competition. As for Google’s next steps, it is “confident that a court will conclude that this suit doesn’t square with either the facts or the law” and it will “remain focused on delivering the free services that help Americans every day.”

Antitrust laws are in place to protect the free market economy and to allow competitive practices. Attorney General William Barr stated “[t]oday, millions of Americans rely on the Internet and online platforms for their daily lives. Competition in this industry is vitally important, which is why today’s challenge against Google—the gatekeeper of the Internet—for violating antitrust laws is a monumental case.” This is just the beginning of a potentially historic case as it aims to protect competition and innovation in the technology markets. Consumers should consider the impacts of their daily searches and the implications a monopoly could have on the future structure of internet searching.

Watching an APA Case Gestate Live!

October 25, 2020
Administrative Law, Internet, Social Media

Parker von Sternberg, MJLST Staffer

On October 15^th the FCC published an official Statement of Chairman Pai on Section 230. Few particular statutes have come under greater fire in recent memory than the Protection for “Good Samaritan” Blocking and Screening of Offensive Material and the FCC’s decision to wade into the fray is almost certain to end up causing someone to bring suit regardless of which side of the issue the Commission comes down on.

As a brief introduction, 47 U.S. Code § 230 provides protections from civil suits for providers of Interactive Computer Services, which for our purposes can simply be considered websites. The statute was drafted and passed as a direct response by Congress to a pair of cases, namely Cubby, Inc. v. CompuServe Inc. and Stratton Oakmont, Inc. v. Prodigy Services Co.Cubby, Inc. v. CompuServe Inc., 776 F.Supp. 135 (S.D.N.Y. 1991) and Stratton Oakmont, Inc. v. Prodigy Services Co., 1995 WL 323710 (N.Y. Sup. Ct. 1995). Cubby held that the defendant, CompuServe, was not responsible for third-party posted content on its message board. The decisive reasoning by the court was that CompuServe was a distributor, not a publisher, and thus “must have knowledge of the contents of a publication before liability can be imposed.”Cubby, Inc. v. CompuServe Inc., 776 F.Supp. 135, 139 (S.D.N.Y. 1991). On the other hand, in Stratton Oakmont, the defendant’s exertion of “editorial control” over a message board otherwise identical to the one in Cubby “opened [them] up to a greater liability than CompuServe and other computer networks that make no such choice.” Stratton Oakmont, 1995 WL 323710 at *5.

Congress thus faced an issue: active moderation of online content, which is generally going to be a good idea, created civil liability where leaving message boards open as a completely lawless zone protects the owner of the board. The answer to this conundrum was § 230 which states, in part:

(c) Protection for “Good Samaritan” blocking and screening of offensive material

(1) Treatment of publisher or speaker

No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.

(2) Civil liability – No provider or user of an interactive computer service shall be held liable on account of—

(A) any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected . . . .

Judicial application of the statute has so far largely read the language expansively. Zeran v. AOL held that “[b]y its plain language, § 230 creates a federal immunity to any cause of action that would make service providers liable for information originating with a third-party user of the service.”Zeran v. Am. Online, Inc., 129 F.3d 327, 330 (4th Cir. 1997). The court also declined to recognize a difference between a defendant acting as a publisher versus a distributor. Speaking to Congress’s legislative intent, the court charted a course that aimed to both immunize service providers as well as encourage self-regulation. Id. at 331-334. Zeran has proved immensely influential, having been cited over a hundred times in the ensuing thirteen years.

Today however, the functioning of § 230 has become a lightning rod for the complaints of many on social media. Rather than encouraging interactive computer services to self-regulate, the story goes that it instead protects them despite their “engaging in selective censorship that is harming our national discourse.” Republicans in the Senate have introduced a bill to amend the Communications Decency Act specifically to reestablish liability for website owners in a variety of ways that § 230 currently protects them from. The Supreme Court has also dipped its toes in the turbulent waters of online censorship fights, with Justice Thomas saying that “courts have relied on policy and purpose arguments to grant sweeping protection to Internet platforms” and that “[p]aring back the sweeping immunity courts have read into §230 would not necessarily render defendants liable for online misconduct.”

On the other hand, numerous private entities and individuals hold that § 230 forms part of the backbone of the internet as we know it today. Congress and the courts, up until a couple of years ago, stood in agreement that it was vitally important to draw a bright line between the provider of an online service and those that used it. It goes without saying that some of the largest tech companies in the world directly benefit from the protections offered by this law, and it can be argued that the economic impact is not limited to those larger players alone.

What all of this hopefully goes to show is that, no matter what happens to this statute, someone somewhere will be willing to spend the time and the money necessary to litigate over it. The question is what shape that litigation will take. As it currently stands, the new bill in the Senate has little chance of getting through the House of Representatives to the President’s desk. The Supreme Court just recently denied cert to yet another § 230 case, upholding existing precedent. Enter Ajit Pai and the FCC, with their legal authority to interpret 47 U.S. Code § 230. Under the cover of Chevron deference protecting administrative action with regard to interpreting statutes the legislature has empowered them to enforce, the FCC wields massive influence with regard to the meaning of § 230. Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).

While the FCC’s engagement is currently limited to a statement that it intends to “move forward with rulemaking to clarify [§ 230’s] meaning,” there are points to discuss. What limits are there on the power to alter the statute’s meaning? Based on the Commissioner’s statement, can we tell generally what side they are going to come down on? With regard to the former, as was said above, the limit is set largely by Chevron deference and by § 706 of the APA. The key words here are going to be if whoever ends up unhappy with the FCC’s interpretation can prove that it is “arbitrary and capricious” or goes beyond a “permissible construction of the statute.” Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).

The FCC Chairman’s statement lays out that issues exist surrounding §230 and establishes that the FCC believes the legal authority exists for it to interpret the statute. It finishes by saying “[s]ocial media companies have a First Amendment right to free speech. But they do not have a First Amendment right to a special immunity denied to other media outlets, such as newspapers and broadcasters.” Based on this statement alone, it certainly sounds like the FCC intends to narrow the protections for interactive computer services providers in some fashion. At the same time, it raises questions. For example, does § 230 provide websites with special forms of free speech that other individuals and groups do not have? The statute does not on its face make anything legal that without it would not be. Rather, it ensures that legal responsibility for speech lies with the speaker, rather than the digital venue in which it is said.

The current divide on liability for speech and content moderation on the internet draws our attention to issues of power as the internet continues to pervade all aspects of life. When the President of the United States is being publicly fact-checked, people will sit up and take notice. The current Administration, parts of the Supreme Court, some Senators, and now the FCC all appear to feel that legal proceedings are a necessary response to this happening. At the same time, alternative views do exist outside of Washington D.C., and at many points they may be more democratic than those proposed within our own government.

There is a chance that if the FCC takes too long to produce a “clarification” of §230 that Chairman Pai will be replaced after the upcoming Presidential election. Even if this does happen, I feel that the outlining of the basic positions surrounding this statute is nonetheless worthwhile. A change in administrations simply means that the fight will occur via proposed statutory amendments or in the Supreme Court, rather than via the FCC.

The EARN IT Act has Earned Sex Workers’ Criticism: How a Bill Regulating Internet Speech will Harm an Under-resourced Community Often Overlooked by Policymakers

October 3, 2020
Cyber Security, Human Rights Law, Internet

Ingrid Hofeldt, MJLST Staffer

In March of 2020, as the COVID-19 pandemic swept across the nation, Senator Lindsey Graham introduced the EARN IT Act (EIA), a bill that would allow Congress to coerce internet providers into decreasing the security of communications on their platforms or risk a potential deluge of legal battles. In addition to violating the freedom and security many U.S. citizens enjoy online, this bill will particularly harm sex workers, who already face instability, housing insecurity, and the threat of poverty as the COVID-19 pandemic has made their work nearly impossible. Many human rights groups, including the American Civil Liberties Union, Human Rights Watch, and the Stanford Center for Internet and Society strongly oppose this bill.

With the aim to protect children from sexual exploitation online, the EIA would amend Section 230 of the Communications Decency Act of 1996 (CDA). The CDA protects internet platforms from legal liability for the content shared by their users. Because of the CDA, the government cannot currently prosecute Facebook for its users’ decisions to upload child pornography onto their accounts. However, the EIA strips platforms of this protection. Additionally, the EIA establishes a National Commission on the Prevention of Online Child Sexual Exploitation. This commission will develop best practices for internet platforms to “prevent, reduce, and respond” to the online sexual exploitation of children. Though not legally binding, these guidelines could influence courts’ decision making as they interpret the EIA.

While preventing the sexual exploitation of children is a worthy aim, this act will provide victimized children with little protection they don’t already have, while opening sex workers and child victims of sexual exploitation up to greater violence at the hands of sex traffickers. Officials at the National Center for Missing and Exploited Children (NCMEC) are overburdened by the existing reports of online child sexual exploitation. The center has reached “a breaking point where NCMEC’s manual review capabilities and law enforcement investigations are no longer doable.” Sex traffickers also don’t necessarily use the platforms that the EIA would target or use internet platforms at all. As one sex worker explained, “[i]t’s interesting to note that Jeffrey Epstein didn’t use a website to traffic young women and neither do the pimps I have met in my 17 years as a sex worker.”

The EIA will impact internet providers’ ability to offer end-to-end encryption, the software that allows internet users to anonymously and securely message each other. Sex workers rely on end-to-end encryption to connect, share information relating to health and safety, and build their businesses. An anonymous sex worker explains that websites with end-to-end encryption allow them to “safely schedule and screen their clients before meeting them in person,” while making them “less dependent on exploitative third parties like pimps.” If enacted, the EIA will likely harm sex workers immensely, because (1) sex workers will likely make less money without online platforms to secure clients; (2) sex workers will have to resort to less safe, offline means of finding clients; and (3) sex workers who continue using these platforms that have become unencrypted will face the risk of prosecution if law enforcement or website monitors discover they are engaging illegal activity. The EIA will affect internet providers’ ability to offer end-to-end encryption in primarily two ways.

Firstly, strong evidence exists that the commission the EIA creates will establish anti-encryption guidelines. This commission will include 19 unelected officials, some of whom must have experience in law enforcement. Unsurprisingly, this commission has no mandated representation of sex workers or sex worker advocates. The EIA will not require this commission to conduct human rights impact assessments, write transparency reports, or establish metrics of success. Given that the commission is headed by Attorney General Barr, who has strongly opposed encryption in the past, it is likely that the commission will recommend that internet platforms either (1) not employ end-to-end encryption, the practice that allows for private, secure internet communications or (2) allow law enforcement agencies a “backdoor” around end-to-end encryption so they can monitor otherwise secure internet communications. The commission also has the power to create whatever recommended standards for internet platforms that it desires, which could a recommendation ban end-to-end encryption. While these guidelines do not have the force of law, courts could look at them persuasively when ruling on whether an internet provider has violated the EIA.

Additionally, the EIA has the potential to open internet providers up to crushing liability from state governments or private individuals based on whether these providers offer encrypted messaging. Regardless of how courts ultimately rule, lengthy and costly court battles between internet providers and state governments will likely ensue. Some internet providers will probably choose to stop offering encrypted messaging services or allow law enforcement agencies a “backdoor” into their messaging services so law enforcement agents can view private Facebook messages or videos. The “voluntary” policies offered by the commission could become essentially mandatory if providers wish to save money.

Senator Patrick Leahy responded to the concerns around encryption by adding an amendment to the EIA that stipulates that “no action will be brought against the provider for utilizing [encryption];” however, Senator Leahy did not address the issue of a law enforcement “backdoor.” Additionally, state governments could still use the EIA hold internet platforms accountable under their state laws, for recklessly or negligently failing to moderate encrypted and report it to NCMEC. Mike Lemon, the senior director and federal government affairs counsel reasons that “the new version of the [EIA] replaces one set of problems with another by opening the door to an unpredictable and inconsistent set of standards under state laws that pose many of the same risks to strong encryption.”

Sex workers are already vulnerable to food insecurity, housing insecurity, and the threat of poverty because of the COVID-19 pandemic and the recent passage of FOSTA/SESTA, a law that resulted in the extermination of websites such as Backpage that sex workers commonly used. As one sex worker explains, “my work is all contact work… a pandemic with a transmittal virus means… [my work has] moved completely online.” Based on survey results conducted by Hacking/Hustling, 78.5% of sex workers secure the majority of their income through sex work. Following the passage of FOSTA/SESTA, 73.5% of sex workers reported that their financial situations had changed. In the words of these anonymous respondents: “I’m homeless and can’t pay the bills.” “My income decreased by 58% following FOSTA/SESTA.” “I used to make enough to feel comfortable. Now I’m barely scraping by.” “I feel totally erased.”

The EIA will narrow the amount of websites that sex workers can safely use, if a backdoor for encryption is allowed to law enforcement. Additionally, if internet platforms are liable under state laws, these platforms will more heavily police their content, resulting in the removal or prosecution of sex workers. Many sex workers will likely leave platforms that don’t provide encryption given safety and privacy concerns. While “sex workers were pioneers of the digital realm . . . [they] are now being kicked off the same online platforms . . .[they] built and inspired.”

Sex workers and sex worker advocacy organizations have come out in strong opposition against the EIA; however, given the lack of political sway sex workers hold due to societal biases, their outcry has fallen largely on deaf ears. In response to the EIA, several prominent sex workers organized a live, virtual art exhibit to protest the EIA. In the words left behind on this page: “[t]hey can try to keep on killing us, to put their hands over our mouths, but they can never keep us away. We’ll be back.”

Nineteen Eighty Fortnite

October 3, 2020
Antitrust, Corporate Ethics, Internet, Litigation, Video Games

Valerie Eliasen, MJLST Staffer

The Sixth and Seventh Amendments affords people the right to a trial by jury. Impartiality is an essential element of a jury in both criminal and civil cases. That impartiality is lost if a juror’s decision is “likely to be influenced by self-interest, prejudice, or information obtained extrajudicially.” There are many ways by which a juror’s impartiality may become questionable. Media attention, for example, has influenced the jury’s impartiality in high-profile criminal cases.

In cases involving large companies, advertising is another way to appeal to jurors. It is easy to understand why: humans are emotional. Because both advertisement perception and jury decisions are influenced by emotions, it comes as no surprise that some parties have been “accused of launching image advertising campaigns just before jury selection began.” Others have been accused of advertising heavily in litigation “hot spots,” where many cases of a certain type, like patent law, are brought and heard.

A recent example of advertising launched by a party to a lawsuit comes from the emerging dispute between Apple Inc. and Epic Games Inc. Epic is responsible for the game Fortnite, an online “Battle-Royale” game, which some call the “biggest game in the world.” Epic sued Apple in August for violation of the Sherman Antitrust Act of 1980 and several other laws in reference to Apple’s practice of collecting 30 percent of every App and in-App purchase made on Apple products. When Epic began allowing Fortnite users to pay Epic directly on Apple products, Apple responded by removing Fortnite from the App Store. The App Store is the only platform where users can purchase and download applications, such as Fortnite, for their Apple products. In conjunction with the lawsuit, Epic released a video titled Nineteen Eighty Fortnite – #FreeFortnite. The video portrays Apple as the all-knowing, all-controlling “Big Brother” figure from George Orwell’s 1984. The ad was a play on Apple’s nearly identical commercial introducing the Macintosh computer in 1984. This was an interesting tactic given the majority of Fortnite users were born after 1994.

Most companies that have been accused of using advertisements to influence jurors have used advertisements to help improve the company image. With Epic, the advertisement blatantly points a finger at Apple, the defendant. Should an issue arise, a court will have an easy time finding that the purpose of the ad was to bolster support for Epic’s claims. But, opponents will most likely not raise a case regarding jury impartiality because this advertisement was released so far in advance of jury selection and the trial. Problems could arise, however, if Epic Games continues its public assault on Apple.

Epic’s ad also reminds us of large tech companies’ power to influence users. The explosion of social media and the development of machine learning over the past 10 years have yielded a powerful creature: personalization. Social media and web platforms are constantly adjusting content and advertisements to account for the location and the behavior of users. These tech giants have the means to control and tailor the content that every user sees. Many of these tech giants, like Google and Facebook, have often been and currently are involved in major litigation.

The impartial jury essential to our legal system cannot exist when their decisions are influenced by outside sources. Advertisements exist for the purpose of influencing decisions. For this reason, Courts should be wary the advertising abilities and propensities of parties and must take action to prevent and control advertisements that specifically relate to or may influence a jury. A threat to the impartial jury is a threat we must take seriously.

A Data Privacy Snapshot: Big Changes, Uncertain Future

February 19, 2019
Business Law, Cyber Security, Data, Internet

Holm Belsheim, MJLST Staffer

When Minnesota Senator Amy Klobuchar announced her candidacy for the Presidency, she stressed the need for new and improved digital data regulation in the United States. It is perhaps telling that Klobuchar, no stranger to internet legislation, labelled data privacy and net neutrality as cornerstones of her campaign. While data bills have been frequently proposed in Washington, D.C., few members of Congress have been as consistently engaged in this area as Klobuchar. Beyond expressing her longtime commitment to the idea, the announcement may also be a savvy method to tap into recent sentiments. Over the past several years citizens have experienced increasingly intrusive breaches of their information. Target, Experian and other major breaches exposed the information of hundreds of millions of people, including a shocking 773 million records in a recent report. See if you were among them. (Disclaimer: neither I nor MJLST are affiliated with these sites, nor can we guarantee accuracy.)

Data privacy has been big news in recent years. Internationally, Brazil, India and China are have recently put forth new legislation, but the big story was the European Union’s General Data Privacy Regulation, or GDPR, which began enforcement last year. This massive regulatory scheme codifies the European presumption that an individual’s data is not available for business purposes without the individual’s explicit consent, and even then only in certain circumstances. While the scheme has been criticized as both vague and overly broad, one crystal clear element is the seriousness of its enforcement capabilities. Facebook and Google each received large fines soon after the GDPR’s official commencement, and other companies have partially withdrawn from the EU in the face of compliance requirements. No clear challenge has emerged, and it looks like the GDPR is here to stay.

Domestically, the United States has nothing like the GDPR. The existing patchwork of federal and state laws leave much to be desired. Members of Congress propose new laws regularly, most of which then die in committee or are shelved. California has perhaps taken the boldest step in recent years, with its expansive California Consumer Protection Act (CCPA) scheduled to begin enforcement in 2020. While different from the GDPR, the CCPA similarly proposes heightened standards for companies to comply with, more remedies and transparency for consumers, and specific enforcement regimes to ensure requirements are met.

The consumer-friendly CCPA has drawn enormous scrutiny and criticism. While evincing modest support, or perhaps just lip service, tech titans like Facebook and Google are none too pleased with the Act’s potential infringement upon their access to Americans’ data. Since 2018, affected companies have lobbied Washington, D.C. for expansive and modernized federal data privacy laws. One common, though less publicized, element in these proposals is an explicit federal preemption provision, which would nullify the CCPA and other state privacy policies. While nothing has yet emerged, this issue isn’t going anywhere soon.

Corporate Cheat Codes: When Does Video Game Hype Become Securities Fraud?

February 6, 2019
Corporate Ethics, Internet, Securities Law

By: Alex Karnopp

As production consolidates around a few key players, larger economic growth in the video game industry masks underlying corporate concerns of securities fraud. Last year, the video game industry reached an important milestone, earning the title of “world’s favorite form of entertainment.” In 2017, the video game industry generated $108.1 billion, more than TV, movies, and music. While other entertainment industries saw revenue decline, the game industry increased 10.7%. This drastic jump in revenue has made investors happy. In 2017, most companies producing hardware or software for the industry easily beat the broader market. NVIDIA, a popular graphic card producer, jumped up 80% over the year. Nintendo, similarly, saw an 86% increase. Even more drastically, Take-Two Interactive shot up 117%.

Red flags in the industry, however, indicate changes are needed to sustain growth. For one, production costs and technological innovations hinder profitability as games take longer and cost more to bring to market. Making matters worse, game fatigue remains high, meaning an audience remains focused on a game only for a small window. High development risk has led to a pattern of mergers and acquisitions – large, publicly traded companies either acquire publishing rights or development teams altogether to diversify holdings and increase profitability.

This consolidation has had interesting impacts on video game development. Publicly traded companies face tremendous pressure from investors to uphold profitability – to the frustration of developers. Developers are constantly faced with unrealistic deadlines from executives looking to maximize profit, ultimately leading to the release of low-quality games. As large game publishers learn to deal with the interplay between profit and content, they may also face legal consequences.

What may seem like “corporate optimism” to some, looks more like fraudulent misstatements to investors. In 2014, the “disastrous launch” of Battlefield 4 (which was rushed to hit the release of the PS4 and Xbox One) sent Electronic Art’s stock plummeting. As both executives and producers claimed the title would be a success, investors brought lawsuits, claiming they relied on these false statements. Similarly, the recent split between developer Bungie and Activision has led to rumors of lawsuits. Constant frustrations over sales and content finally led to a split, dropping Activision stock by more than 10%. Investors claim Activision committed federal securities law by failing to “disclose that the termination of Activision-Blizzard and Bungie Inc.’s partnership … was imminent.” As large, publicly traded publishers begin dealing with the effects of a consolidated market on content and profits, it will be interesting how courts interpret executive actions trying to mitigate missteps.

Lime and Bird Have Tough Legal Challenges Ahead

September 26, 2018
Internet, New Technology, Public Safety

Nick Hankins, MJLST Staffer

The hottest trend in on-demand transportation is the emergence of electric scooters. Two of the biggest suppliers of on demand scooters, Lime and Bird, have invaded cities across the country. Scooters are a quick, easy, and cheap way to travel short distances; riders can simply find a scooter, sign into the app, and go. They also have the added benefit of servicing gaps within a city’s public transportation system. Despite the benefits that these companies can bring to a community, Lime and Bird have significant legal hurdles to overcome.

Problematically for cities, pedestrians, and probably the scooter companies, is that unlike bike sharing platforms, once a rider is done with a scooter it is simply left discarded. Both Lime and Bird encourage their users to park their scooters close to the curb, away from walkways, driveways, ramps, and fire hydrants. However, in practice, scooters tend to be left strewn across the middle of sidewalks and other undesirable places. Aside from being a public nuisance, unaware pedestrians have been injured after tripping over misplaced scooters.

These features have caused a big headache for cities especially since companies like Bird and Lime generally install their scooters in cities without seeking prior approval. However, the do-first-and-ask-forgiveness-later approach has begun to haunt companies that attempt to cut cities entirely out of the process. For example after Milwaukee tried to ban Bird’s scooters (and Bird’s subsequent refusal to remove its scooters), Milwaukee moved to seek a temporary injunction to immediately have the scooters removed. Additionally, after failing to secure the proper business licensure and vendor permitting, Bird had to settle a dispute with the City of Santa Monica for $300,000 and an agreement to run a weeklong public safety campaign on public buses. Other cities like Saint Paul, San Francisco, and Indianapolis required scooter companies to temporarily remove their scooters until regulations could be firmly decided upon.

Aside from legal complications stemming from municipal regulation, scooter companies may soon have to defend their products in court. As the electric scooter craze is gaining traction, riders are increasingly ending up in the emergency room in horrific scooter-related accidents. The types of injuries involved in these accidents are varied. Some accidents have to do with the laissez-faire storage practice as pedestrians trip over discarded scooters. Other injuries involve user error. In one case, for example, a rider crashed into a 2 year-old who was walking out onto a sidewalk. Likely the most problematic injuries for scooter companies, involve technical malfunctions (especially those involving the breaks). Accordingly, it’s unsurprising that personal injury lawyers are beginning to chase scooters in hopes of getting their next big payday.

In short, Lime and Bird offer a unique solution for people who need to travel short distances. However, both companies will soon have to figure out ways to work with cities and how to avoid tort exposure.

As an aside, both companies will also have to deal with whatever fall-out comes from having teens charge their scooters.

Counterfeit Products: A Growing Issue for Online Retailers

September 26, 2018
Intellectual Property, Internet, New Technology

Caleb Holtz, MJLST Staffer

Two years ago, my girlfriend gave me an Amazon receipt showing she had ordered a really cool jersey from the German national soccer team. I was very excited. Not only had my girlfriend purchased for me a great jersey, but she had also found a reputable, accessible retailer for buying soccer jerseys in the United States. My excitement soon faded however. The jersey was delayed and delayed, and eventually Amazon cancelled the order and issued a refund. It turned out the jersey was sold by a popular counterfeiter hosting products on Amazon’s site through Amazon’s popular “Fulfilled by Amazon” program. Unaware that this existed prior to this experience, my girlfriend had been lured into a false sense of security that she was purchasing something from the world’s largest retailer, rather than from an obscure counterfeiter.

As it turns out, we were far from the only consumers to fall prey to counterfeit goods being sold on Amazon. Per a recent Engadget article discussing the issue, “the Counterfeit Report, an advocacy group that works with brands to detect fake goods, has found around 58,000 counterfeit products on Amazon since May 2016.” Amazon, recognizing that customers are more likely to trust counterfeits sold on its website, set a goal in 2017 to fight counterfeits.

Amazon is hardly the only retailer dealing with counterfeiting issues. The International Trademark Association said that trade in pirated and counterfeited intellectual property accounted for $461 billion in 2013. The Chinese retail giant Alibaba was at one point put on a U.S. anti-counterfeiting blacklist because of the large quantities of counterfeit goods sold on its website. Ebay, Walmart, Sears, and Newegg have also faced allegations of hosting counterfeited products. Importantly, however, for each of the retailers, there are few legal repercussions for merely hosting counterfeit goods. With the exception of a 2008 case against eBay, the aforementioned retailers have largely avoided being found liable for the counterfeit products they aided in selling.

Amazon provides the best blueprint for avoiding liability. Amazon has avoided liability by arguing that while it may host sellers, it is not a seller itself. Fortunately for Amazon, the Federal Circuit agrees that it is not a seller of the counterfeit goods, and therefore cannot be liable for copyright infringement, even if Amazon stored and shipped the products from its own warehouses. Milo & Gabby LLC v. Amazon.com, Inc., 693 Fed.Appx. 879 (Fed. Cir. 2017). As it is merely a marketplace, Amazon can continue avoiding liability so long as it appropriately responds to complaints of intellectual property infringement.

It will be interesting to see how the parties involved handle this counterfeiting issue going forward, especially as the government anticipates counterfeiting business to continue to grow. Online retailers are taking proactive steps to limit the sale of counterfeits on their websites, although those have been far from effective. Some have suggested artificial intelligence holds the key to solving this problem. Wronged intellectual property owners have not given up on forcing a remedy through the judicial system, as can be seen by the lawsuit filed by Daimler against Amazon recently. Finally, some, such as the judge in the Milo & Gabby case, see a legislative approach such as closing the marketplace loophole that allows online retailers to skate by relatively untouched. Unfortunately for consumers, it does not appear like there is an imminent solution to this problem, so it is best to be aware of how to avoid accidentally purchasing a counterfeit.

Controversial Anti-Sex Trafficking Bill Eliminates Safe-Harbor for Tech Companies

March 28, 2018
Internet, Social Media

Maya Digre, MJLST Staffer

Last week the U.S. Senate voted to approve the Stop Enabling Sex Traffickers Act. The U.S. House of Representatives also passed a similar bill earlier this year. The bill creates an exception to Section 230 of the Communications Decency Act that allows victims of sex trafficking to sue websites that enabled their abuse. The bill was overwhelmingly approved in both the U.S. House and Senate, receiving 388-25 and 97-2 votes respectively. President Trump has indicated that he is likely to sign the bill.

Section 230 of the Communications Decency Act shields websites from liability stemming from content posted by third parties on their sites. Many tech companies argue that this provision has allowed them to become successful without a constant threat of liability. However, websites like Facebook, Google, and Twitter have recently received criticism for the role they played in unintentionally meddling in the 2016 presidential election. Seemingly the “hands off” approach of many websites has become a problem that Congress now seeks to address, at least with respect to sex trafficking.

The proposed exception would expose websites to liability if they “knowingly” assist, support, or facilitate sex trafficking. The bill seeks to make websites more accountable for posts on their site, discouraging a “hands off” approach.

While the proposed legislation has received bipartisan support from congress, it has been quite controversial in many communities. Tech companies, free-speech advocates, and consensual sex workers all argue that the bill will have unintended adverse consequences. The tech companies and free-speech advocates argue that the bill will stifle speech on the internet, and force smaller tech companies out of business for fear of liability. Consensual sex workers argue that this bill will shut down their online presence, forcing them to engage in high-risk street work. Other debates center on how the “knowingly” standard will affect how websites are run. Critics argue that, in response to this standard, “[s]ites will either censor more content to lower risk of knowing about sex trafficking, or they will dial down moderation in an effort not to know.” At least one website has altered their behavior in the wake of this bill. In response to this legislation Craigslist has remove the “personal ad” platform from their website.

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