In a recent ruling, a California district court held that Apple, as operator of that App Store, was protected from liability for losses resulting from that type of fraudulent activity. (Diep v. Apple Inc., No. 21-10063 (N.D. Cal. Sept. 2, 2022)). This case is important in that, in
On March 9, 2022, the President issued an Executive Order (the “E.O.”) that articulates a high-level, wide-ranging national strategy for regulating and fostering innovation in the burgeoning digital assets space. The strategy is intended to encourage innovation yet still provide adequate oversight to control systemic risks and the attendant investor,…
The concept of the “metaverse” has garnered much press coverage of late, addressing such topics as the new appetite for metaverse investment opportunities, a recent virtual land boom, or just the promise of it all, where “crypto, gaming and capitalism collide.” The term “metaverse,” which comes from Neal Stephenson’s 1992 science fiction novel “Snow Crash,” is generally used to refer to the development of virtual reality (VR) and augmented reality (AR) technologies, featuring a mashup of massive multiplayer gaming, virtual worlds, virtual workspaces, and remote education to create a decentralized wonderland and collaborative space. The grand concept is that the metaverse will be the next iteration of the mobile internet and a major part of both digital and real life.
Don’t feel like going out tonight in the real world? Why not stay “in” and catch a show or meet people/avatars/smart bots in the metaverse?
As currently conceived, the metaverse, “Web 3.0,” would feature a synchronous environment giving users a seamless experience across different realms, even if such discrete areas of the virtual world are operated by different developers. It would boast its own economy where users and their avatars interact socially and use digital assets based in both virtual and actual reality, a place where commerce would presumably be heavily based in decentralized finance, DeFi. No single company or platform would operate the metaverse, but rather, it would be administered by many entities in a decentralized manner (presumably on some open source metaverse OS) and work across multiple computing platforms. At the outset, the metaverse would look like a virtual world featuring enhanced experiences interfaced via VR headsets, mobile devices, gaming consoles and haptic gear that makes you “feel” virtual things. Later, the contours of the metaverse would be shaped by user preferences, monetary opportunities and incremental innovations by developers building on what came before.
In short, the vision is that multiple companies, developers and creators will come together to create one metaverse (as opposed to proprietary, closed platforms) and have it evolve into an embodied mobile internet, one that is open and interoperable and would include many facets of life (i.e., work, social interactions, entertainment) in one hybrid space.
In order for the metaverse to become a reality – that is, successfully link current gaming and communications platforms with other new technologies into a massive new online destination – many obstacles will have to be overcome, even beyond the hardware, software and integration issues. The legal issues stand out, front and center. Indeed, the concept of the metaverse presents a law school final exam’s worth of legal questions to sort out. Meanwhile, we are still trying to resolve the myriad of legal issues presented by “Web 2.0,” the Internet we know it today. Adding the metaverse to the picture will certainly make things even more complicated.
On January 7, 2019, the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) announced its 2020 examination priorities. In doing so, OCIE identified certain areas of technology-related concern, and in particular, on the issue of alternative data and cybersecurity. [For a more detailed review of OCIE’s…
In a recent blog post, we wrote about how the Second Circuit found the arbitration clause in a web service’s terms and conditions unenforceable because the user did not have reasonable notice of the terms that were communicated via a hyperlink in a post-sale email. In contrast, a New York district court recently upheld an arbitration clause in Coinbase’s account registration process and granted its motion to compel arbitration concerning claims brought by a user (Sultan v. Coinbase, Inc., No. 18-934 (E.D.N.Y. Jan. 24, 2019)).
This case sheds further light on the do’s and don’ts of online electronic contracting and the enforceability of app-based terms and conditions. The decision reinforces the point that for purposes of establishing a binding agreement with a user – particularly in the context of a mobile app – simplicity and clarity of the user interface is desired. And, in particular, this case reinforces the point that has been illustrated in many cases before that the design of user registration pages should be done with the input of legal analysis as to likely enforceability.
As we approach the end of 2017, it is a time to reflect on the dizzying pace of technology evolution this year, and the amazing array of legal issues it presented. Similarly, it is a time to look forward and anticipate what technology-related issues we will be thinking about in the coming year.
For 2017, the list is long and varied.
This year, the true potential of blockchain was recognized by many in the commercial sector. While recent blockchain-related headlines have focused on the rise (and regulation) of cryptocurrencies, a great deal of the blockchain action has been in back office applications in financial services, supply chain and other areas. Industry wide consortia have been formed, trials and proof of concepts have been run, and, as evidenced by the recent announcement by the Australian Stock Exchange to replace its clearing and settlement system with a blockchain based system, we are moving into full production implementations of blockchain systems.
Cybersecurity garnered major attention in 2017. Unfortunately, data breaches continued to be a constant headline item, as were related class action litigation. As a result, cybersecurity was a “top of the agenda” item for state and federal agencies, state legislatures, regulators, corporate boards, GCs and plaintiffs’ lawyers.
As a related matter, privacy issues were also front and center this year. In particular, we saw increased activity in some of the cutting edge areas of privacy law, including biometrics-related litigation (particularly under the Illinois Biometric Information Privacy Act (known as BIPA)), video streaming privacy (particularly under the Video Privacy Protection Act, or the VPPA)) and mobile-related privacy issues.
There are many other issues that occupied our minds this year, including artificial intelligence, virtual and augmented reality, online copyright liability (including application of the DMCA in online contexts), and publisher/distributor liability for third party content online (under Section 230 of the Communications Decency Act). Additionally, parties involved in agreements of all types have been increasingly focused on technology-related legal risk, and were more intent on addressing and shifting technology-related risks with very specific contractual provisions.
A U.S. federal district court judge on Tuesday, November 29 ordered Coinbase Inc., the largest cryptocurrency exchange and storage platform in the world, to provide information about certain of its account holders to the U.S. Internal Revenue Services (IRS). Information pertaining to as many as 14,355 account holders and 8.9 million transactions could be covered in this order, according to estimates provided by Coinbase. The full order by Judge Jacqueline Scott Corley of the U.S. District Court for the Northern District of California can be found here.
While a significant milestone in a protracted legal battle between Coinbase and the IRS, the order handed down by Judge Corley is considerably narrower than what the IRS had originally requested. The information Coinbase must provide is limited to the holder’s name, date of birth, taxpayer identification number (TIN), and address; the date, amount, type of transaction, post-transaction balance, and names of counterparties to any transaction covered by the order; and periodic account statements for the covered accounts. Significantly, only account holders that have bought, sold, sent, or received cryptocurrency worth $20,000 or more in any tax year from 2013 to 2015 are covered by the order.
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.
In an important ruling for digital currency service providers, EU’s top court, the Court of Justice of the European Union (CJEU), ruled that transactions to exchange a traditional currency for bitcoin virtual currency, or vice versa, were not subject to value added tax (VAT), effectively treating such transactions like an…
Readers of this blog will know that we have been following the recent legal developments relating to bitcoin and other virtual currency systems [also here and here]. Yesterday, in a significant development reflecting the general maturation of virtual currencies as a recognized payment system, Benjamin M. Lawsky, Superintendent of…