During the 2016 election, certain Russian operatives used fake social media profiles to influence voters and also created bot accounts to add likes to and share posts across the internet.  And more recently, in January 2019, the New York Attorney General and Office of the Florida Attorney General announced settlements with certain entities that sold fake social media engagement, such as followers, likes and views.  Moreover, many of the social media platforms have had recent purges of millions of fake accounts.  Thus, it’s clear that bots and automated activity on social media platforms has been on everyone’s radar…including state legislators’ too.

Indeed, California passed a chatbot disclosure law (SB-1001) last September that makes it unlawful for persons to mislead users about their artificial bot identity in certain circumstances, and it is only now coming into effect on July 1st.  In essence, the purpose of law was to inform users when they are interacting with a virtual assistant or chatbot or automated social media account so that users could change their behavior or expectations accordingly.  Entities that may interact online or via mobile applications with their customers regarding commercial transactions via a chatbot on their own website or automated account on another platform should certainly take note of the new California law’s disclosure requirements.

Fair use can be one of the most difficult issues that copyright lawyers have to address due to decades of varying court rulings applying the multi-factor balancing test, particularly in the face of new technologies that use, modify, and aggregate data in ways not envisioned under the Copyright Act. The Second Circuit’s February 2018 fair use decision in the dispute between Fox News Network, LLC (“Fox”) and TVEyes, Inc. (“TVEyes”) added yet another wrinkle to fair use jurisprudence when the court emphasized market effect over transformative use, seemingly a departure from recent trends in the application of the balancing test. (See Fox News Network, LLC v. TVEyes, Inc., 883 F.3d 169 (2d Cir. 2018)).  In recent weeks, the Supreme Court denied TVEyes’ petition for certiorari, leaving in place the appeals court’s decision; and Fox and TVEyes settled the case, stipulating that TVEyes may no longer make available, distribute, or publicly perform or display Fox’s copyrighted video content.

TVEyes is likely to be an important decision for future fair use cases within the Second Circuit.

Yes, it’s time for the end-of-year blog post – a look back at interesting issues of 2018 and a look forward to what we see coming down the pike in the new year.

The Look Back

  • In the past year, blockchain buzz was everywhere. Although still early, blockchain has in fact began to show promise as a technology bringing efficiency and cost reduction to many business operations. In 2018, many industries tested the technology and started pilot programs with an eye to replacing or supplementing traditional client-server systems with a distributed ledger-based system. 2019 promises much more in the adoption of blockchain. For continuing coverage of some of the more novel issues that blockchain presents, subscribe to our Blockchain and the Law blog.
  • “Web scraping” (also known as spidering and crawling) remained at the forefront in 2018 as companies used scraping for purposes such as consumer-facing data aggregation, real-time e-commerce analytics (e.g., dynamic pricing strategies), competitive intelligence, user sentiment analysis, etc. 2018 produced many important scraping decisions in the courts, including those about CFAA liability and the intersection of scraping and software licensing, and we await the Ninth Circuit’s decision in the closely-watched hiQ appeal, which will hopefully address a number of important open issues presented by the practice.
  • Privacy and data security continued to be a hot-button boardroom issue this year. The GDPR became effective, and California passed major privacy legislation which will take effect in 2020. The almost daily announcement of data security breaches continues to spawn class action litigation, testing the principles of standing after Spokeo. The federal government has pushed multiple initiatives to improve the nation’s cyber defenses. The wave of litigation under the Illinois biometric privacy law (BIPA) against Illinois employers and businesses persisted in 2018, and the continued viability of such suits may hinge on an upcoming ruling by the Illinois Supreme Court, as well as the outcome in California courts regarding the BIPA actions against social media entities.  See our Privacy Law Blog for more discussion on 2018 privacy and data security developments.

Last week the WSJ published an article detailing how companies are monetizing smartphone location data by selling it to hedge fund clients.  The data vendor featured in the WSJ article obtains geolocation data from about 1,000 apps that fund managers use to predict trends involving public companies.  However, as we’ve

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.

In his remarks at a recent Practicing Law Institute program on securities regulation, Securities and Exchange Commission Chairman Jay Clayton once again addressed Initial Coin Offerings, or ICOs.  Mr. Clayton highlighted several issues in particular, including that in his view there is a lack of information about many online platforms that list and trade virtual coins or tokens offered and sold in ICOs, and that trading of tokens on these platforms is susceptible to price manipulation and other fraudulent trading practices.

This week’s Apple X announcement was not more than a few hours old, and the questions began to come in. Apple’s introduction of Face ID facial recognition on its new phone – although already available in some form on several Android phones – generated curiosity, concerns and creativity.  Unfortunately, the details about specifically how the recognition feature will really work are yet unknown.  All the public knows right now is that the phone’s facial “capture” function, powered by an updated camera and sensor array, will direct 30,000 infrared dots around a user’s face and create a hashed value that will presumably be matched against a user’s face during the unlocking procedure.

The questions and issues this raises are too numerous and varied to address in a single blog post. I will simply point out that the concerns over Face ID range from spoofing (e.g., Can the phone be unlocked by a picture? [Apple says no, explaining that the system will map the depth of faces]) to security (e.g., Is the “face map” or hashed value stored in a database which can be breached? [Apple, says no, like fingerprints in Apple’s current Touch ID feature, the face map will be securely stored locally on the device]).

One issue that I thought was particularly interesting, however, relates to the ability of apps residing on a phone to interact with facial captures. Unless disabled, Face ID could potentially be “always on,” ready to capture facial images to authenticate the unlocking of the phone, and possibly capturing facial images as the user interacts with the unlocked phone.  So, clients have asked: Will the apps on the phone be able to access and use those facial captures?

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.