New Media and Technology Law Blog

Delaware Authorizes Stocks on Blockchain

On July 21st, Delaware Governor John Carney Jr. signed SB 69 into law. SB 69 amends the Delaware General Corporation Law (“DGCL”) to explicitly authorize the use of distributed ledger technology in the administration of Delaware corporate records, including stock ledgers.

Distributed ledger (or “blockchain”) technology-based platforms enable peer-to-peer transactions and eliminate the need for a trusted intermediary to verify and process the transactions. The potential applications of such technology in the administration of corporate records, and stock ledgers in particular, are tremendous. Continue Reading

SEC on Initial Coin Offerings: Tokens May Be Securities

No blockchain phenomenon has garnered more attention lately than Initial Coin Offerings (“ICOs”), which have exploded in value and raised more than $1.2 billion thus far this year.

In a typical ICO, a blockchain-based product or service provider offers proprietary digital assets (“tokens”) – rather than traditional forms of debt or equity – in exchange for working capital, usually provided in the form of a cryptocurrency such as Bitcoin or Ether (“ETH”).

One of the first truly significant ICOs was carried out by a platform called The DAO, an attempt by an entity known as Slock.it to build a “decentralized autonomous organization.” Over the span of about a month in May 2016, The DAO’s ICO raised about 12 million ETH — the equivalent of approximately $150 million.

Last week, the Securities and Exchange Commission released a report of investigation regarding potential federal securities law violations involving The DAO and related entities. Although it determined not to pursue enforcement action, its report stated that the digital tokens issued by The DAO in its ICO qualify as securities under the Securities Act of 1933 and the Securities Exchange Act of 1934. The SEC found that the DAO Tokens are securities because they constitute an “investment contract” under the federal securities laws.

Read the full Client Alert on our website.

Google Escapes Genericide Claim in Ninth Circuit Decision

On May 16, 2017, the Ninth Circuit rejected a petition for cancellation of the GOOGLE trademark based on a “genericide” theory that claimed Google should lose its trademark protection because the word “google” has become synonymous to the public with the term “search the internet.” (See Elliott v. Google, Inc., 2017 WL 2112311 (9th Cir. May 16, 2017)).

Genericide, or a claim of genericness that would allow for cancellation of a trademark, occurs when the public appropriates a trademark and uses it as a generic name for particular types of goods or services irrespective of source. The accusation of genericide is ironic: that because brands have become so popular, consumers simply use their names generically for a type of product, and thus brands should no longer be trademarked.  Such genericide can occur due to a trademark owner’s failure to police the mark, resulting in widespread usage by competitors leading to a perception of genericness among the public. Continue Reading

New York Attorney General Unveils Latest Ticket Bot Enforcement Actions against Ticket Vendors and Software Developer

With summer concerts and music festivals in full swing, many fans will be surprised to find $145 face value tickets reselling online for $3,000 to $11,000.

On May 11, 2017, New York Attorney General Eric Schneiderman took the most recent step in dealing with this problem, and announced seven settlements in “ticket bot” enforcement actions, calling for settlement payments totaling $4.19 million. This development represents the latest step in Schneiderman’s longstanding and highly publicized efforts to combat unfair ticket resale practices occurring in New York.  The enforcement also highlights the technological methods that ticket brokers use to evade the protective measures of well-known ticket marketplaces or otherwise conceal their online activities. Continue Reading

Washington Enacts a Biometric Privacy Statute in a Departure from the Existing Standard

We have been writing about the biometric privacy legal landscape, which has thus far been dominated by the Illinois Biometric Information Privacy Act (BIPA).  While there are a number of states that are considering bills modeled after BIPA, Washington has enacted a bill that takes a dramatically different approach.   On May 16, 2017, HB 1493 (the “Washington Statute,” or the “Statute”) was signed into law by Governor Jay Inslee and will become effective on July 23, 2017.

The stated purpose of the Statute is to require a business that collects and can attribute biometric data to a specific individual to disclose how it uses that biometric data and provide notice to and obtain consent from an individual before enrolling or changing the use of that individual’s biometric identifiers in a database. Unlike BIPA, the Statute does not provide a private cause of action; it may be enforced solely by the state attorney general under the Washington consumer protection act.  It should be noted, however, that Washington has traditionally been one of the leading states with regard to the enforcement of consumer privacy. Continue Reading

Employees Assert Illinois Biometric Privacy Claims against Supermarket over Fingerprint Collection Practices

Even though Washington passed its own biometric privacy law last month (HB 1493), and other states are currently debating their own bills, Illinois’s Biometric Information Privacy Act (BIPA) is still the crux of biometric and facial recognition privacy-related litigation.  Such suits have typically involved social media services, video game makers or businesses that collect biometric data to authenticate customers.  In a slight twist, on May 11, 2017, a putative class of employees filed suit against Roundy’s Supermarkets alleging violations of BIPA surrounding the collection and retention of employees’ fingerprints – as opposed to using last century’s analog time cards, Roundy’s requires employees to scan their fingers each time they clock “in” and “out” of their work shifts to verify their identities.  In the suit, plaintiffs claim that Roundy’s failed to offer notice and obtain written consent prior to capturing employees’ fingerprints, or post a retention policy about how long the company stores the biometric data. (See Baron v. Roundy’s Supermarkets, Inc., No. 17-03588 (N.D. Ill. filed May 11, 2017)). Continue Reading

Auction House Accused of Scraping Competitor’s Web Listings

Screen scraping is a problem that has vexed website owners since the early days of e-commerce – how to make valuable content available to users and customers, but prevent competitors from accessing such content for commercial purposes.  Even in the advent of social media, mobile commerce, and advanced software, the issue remains relevant to today’s companies, as evidenced by the craigslist’s victory this past week against an aggregator that had formerly scraped its user postings.

An ongoing dispute from this past winter that we have been watching has raised these long-standing issues anew.

Heritage Auctions, a major auction house that specializes in rare coins, entertainment memorabilia and natural historical items, has brought a multi-count suit against Christie’s, alleging that its competitor scraped millions of proprietary and copyrighted photos and listings from Heritage’s website and reposted them on its own subscriber-only auction site Collectrium. (Heritage Capital Corp. v. Christie’s, Inc., No. 16-03404 (N.D. Tex. filed Dec. 9, 2016)).  Plaintiffs claim that Collectrium removed copyright notices from the original listings and photos and ported the data onto its own site, thereby saving significant costs from producing similar listings or paying licensing fees and allegedly causing harm to Heritage in additional IT-related costs and diverted or lost business. Continue Reading

Arizona Passes Groundbreaking Blockchain and Smart Contract Law – State Blockchain Laws on the Rise

The blockchain or “distributed ledger network” was originally conceived as the peer-to-peer technology platform that allows for the transfer of Bitcoin without the need for a trusted intermediary.  However, the blockchain protocol is being implemented across many industries and in many applications beyond digital currencies. Of course, there are questions about the enforceability of blockchain-based transactions and related, self-executing “smart contracts.”

Late last month, Arizona Governor Doug Ducey signed HB 2417 into law. This law clarifies some of the enforceability issues associated with the use of blockchain and smart contracts under Arizona law, in particular with respect to transactions relating to the sale of goods, leases, and documents of title governed respectively under UCC Articles 2, 2A and 7. Continue Reading

Craigslist Garners $60 Million Judgment against Radpad in Scraping Dispute

For years, craigslist has aggressively used technological and legal methods to prevent unauthorized parties from violating its terms of use by scraping, linking to or accessing user postings for their own commercial purposes.  In its latest judicial victory, on April 13, 2017, craigslist obtained a $60.5 million judgment against Radpad on various claims relating to harvesting content from craigslist’s site and sending unsolicited commercial emails to craigslist users. (Craigslist, Inc. v. RadPad, Inc., No. 16-01856 (N.D. Cal. Apr. 13, 2017)). Continue Reading

The Cross-Industry Promise of Blockchain

The blockchain protocol (a form of a ‘distributed ledger system’) was originally designed as a platform to process Bitcoin transactions.  The protocol enables peer-to-peer transactions and eliminates the need for a trusted intermediary to verify and process the transactions.

The blockchain protocol as a platform is actually independent of Bitcoin, and is therefore transferable to other applications. Naturally, because blockchain was conceived of as supporting a specific digital payment system, the initial and most obvious use of the blockchain outside of Bitcoin is “fintech” – technology-based payment and financial transaction systems.  The goal of recent experimentation and development in fintech is to reduce inefficiencies in the existing payments, clearance and settlement systems. Conceivably, many of these functions could be conducted through a “smart contract” – a completely automated process, executed via a software application that runs “on chain.”  In pursuit of these goals, many in the financial services area have made significant investments in research, development, and pilot programs, in many cases through coalitions or in partnership with large technology companies as well as with blockchain-focused startup companies.

Beyond fintech, however, blockchain offers many other opportunities. The digital values that are tracked and processed through a blockchain implementation can represent any other type of information or assets.  This capability has evoked the early development of new applications and technological developments involving many industries beyond financial services.  Continue Reading

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