Articles Posted in Business Law

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This is a current update on the principle of net neutrality that is worthy of a discussion. So, how or why is an update necessary?  The answer is that net neutrality rules may be changing soon, and various organizations are currently lobbying for their positions.  Why does net neutrality matter to businesses or consumers?  Is there a way or reason for removing net neutrality? What may you need to consider as a business or consumer after the demise of net neutrality?

Historical Background

For those that have not been following the idea of net neutrality, the idea is simple. No one packet of data can be favored or disfavored by a company that provides internet access. Previous rules would forbid this, and allow entities to sue if there was an intentional slowdown of their service. Indeed, this has allegedly occurred in the past as described in a lawsuit between Time Warner Cable (now Spectrum) and the State of New York.  Essentially, Spectrum was intentionally slowing down service, and only improving the service after payment was received by it.  Under the Open Internet Rules, this process was prohibited.

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In general, internet commerce transpires on the national and international levels. Naturally, data protection is an important concern for private and public agencies.  The European Union’s remaining members are currently in the process of another process to protect data with the “General Data Protection Regulation” (GDPR) set to take effect next year. This differs from the previous Privacy Shield in some respects, as it is broader, and expands beyond the European Union and deals with any individual that may have a shred of a connection to the European Union. So, what is GDPR? What does it require? Also, what are the consequences for non-compliance?

What is the GDPR?

The GDPR grants the following as rights to a data subject (i.e., a user): breach notification; right to access a copy of personal data free of charge in electronic format; right to be forgotten; data portability, allowing transmission to another provider; privacy by design for systems; and data protection officers in cases where constant monitoring of data subjects on a large scale may occur, or for special categories of data regarding criminal convictions.

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Now, by closing out this month and a deep dive into the future of copyright law comes a slightly more obscure reference to a recent change we’ve covered previously. Namely, what is, and what is not, protected under copyright when it comes to clothing? We now know that cheerleading uniforms are protected. However, what about bananas? An odd question, but one that the courts will be looking at as a recent case has been filed regarding the design and sale of banana costumes and has prompted questions in a Post-Star Athletica world. Is this the limit to Star Athletica? Has Justice Sotomayor’s comment about killing knockoffs come true already? Is it possible that the follow-up question to Star Athletica may be a banana battle?

The Now-Settled Case

The now-settled case was between Rasta Imposta, and Kmart, which is a subsidiary of Sears. Rasta Imposta had sold a banana costume and had good business relations with Kmart until Kmart notified Rasta Imposta that it would not be purchasing its costumes any longer.

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In general, parody is a well-tested defense to copyright infringement claims. For example, legal cases involving Barbie Girls and Pretty Women have hammered in the points quite definitively, though the question of what exactly is parody has persisted throughout the years.  Generally, it would be seen as something that ridicules the original work.  So, using the comical characters from the Game of Thrones to ridicule the current state of politics is probably fair use.

Recently, the question has popped up with a new and stranger answer that makes the situation complex. What is this potential new parody standard? How has it changed with time? Does this new standard go where it has never gone before?

The lawsuit

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Following in the theme of “advances in copyright law,” there is an additional snag that seems to occur every now and then. Who owns a picture of you? Naturally, a person may say: “Well, that is a picture of me, and if someone is selling it, or making money from it, then I own it and should be profiting as well.” We can extend this abstraction even further. A tattoo artist creates a design for a famous person, and with that person’s appearance on a film, or a video game, the tattoo artist demands payment. The famous person may say: “But it was a tattoo on my body. Why should I be forced to pay?” Ultimately, it comes to a two-fold situation: First, who is the author? Second, was there a license granted to make it acceptable?

What is authorship?

The first item to determine is authorship. In copyright, one does not necessarily have to be the one who “creates” the work to own the copyright. There are contracts known as “works-for-hire” agreements that can infuse ownership and authorship towards a legal entity. This would mean the legal entity (e.g., corporation, LLC) would be the author and able to file suit under the Copyright Act.

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Now, aside from Bitcoin and other digital currencies spawning from video games and consumer-oriented companies, it’s important to be aware that there are other types of digital currencies or so-called “cryptocurrencies.” These operate more similarly to Bitcoin in how they generally lack a centralized system that assigns value (compared to other digital currencies like virtual item trading where the items are managed by a company) and has a similar mining protocol allowing individuals to mine the currency.  Indeed, even Bitcoin had a “split” changing from one cryptocurrency to two. Why are there even alternatives? What features does one cryptocurrency have on the other? How should one evaluate the choice to enter a cryptocurrency market?

Bitcoin’s Split

In order to make Bitcoin more accessible, the system administrators for Bitcoin and other individuals prominent in the community underwent a “split” of the currency, as well as other changes to increase the speed of transaction verification. Due to the limits put in place to make Bitcoins scarce and limit the supply, the effective limit had placed a curb on growth. In response, some users chose to take a split after starting in August of this year to create a new cryptocurrency working mainly on the same system as Bitcoin, but with the ability to convert it to “bitcoin cash” and a faster mining and verification process. This would mean that Bitcoin cash would have a lower face value than Bitcoins, as they would be more plentiful. However, this would also make it potentially less secure as the blocks would grow in maximum size, and it would have a shorter history compared to Bitcoin.

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The legality of certain virtual currencies can be murky.  While some currencies, like Bitcoin, can be readily traded for goods and services, however, other virtual currencies remain where regulation is more questionable. To that point, the curators of digital economies have hired economists to better model the value of these digital commodities, creating a sort of virtual currency by accident.  However, the ecosystem behind these virtual currencies has exploded and led to new questions regarding their use and potentially illicit activities. So, what are these virtual commodities? How did they gain value? What is being done to curtail the murkier aspects?

What are these virtual currencies?

A good example of these virtual currencies comes courtesy of Valve, a company that both creates and distributes video games. For the purpose of creating more income for some of their “free-to-play” games, random prizes are given out, and can be earned in-game, and later resold via its platform. These items generally have no in-game function, and merely provide an aesthetic value. For a select few Valve games, these items can then be exchanged between players, or for currency in Valve’s store. In essence, the items can function much like tickets in an arcade, or more concerning, poker chips in a casino. Other games have similarly created digital currencies that can be shifted easily from a “real” currency to something that can be used (though not necessarily benefit) the person in game.

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Bitcoin is a cryptocurrency that has been in the news and in conversations recently for various reasons. While not all retailers will take Bitcoin, and there are fairly good reasons not to, but the cryptocurrency has really taken off.  However, despite how much the word “Bitcoin” is used, the nature of the virtual currency provokes a sort of air of mystery. Unless one researches how to find or buy it, it remains a type of investment that is more exotic than what is commonly available to consumers. Why is Bitcoin so expensive? How does one find and buy a Bitcoin?

Why is Bitcoin expensive?

To properly explain Bitcoin, it’s important to restate one of the fundamentals of economics. The value of a commodity is determined by supply and demand. When it comes to currency specifically, this translates to “the more common and easily- obtainable the currency is in the market, the price will become less in the market.” This is what’s referred to as “inflation.” The purchasing power of a currency goes down because there is more of that currency.

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Due to the rising costs in litigation, there has been a large increase in the use of alternative dispute resolution. By utilizing the methods of alternative dispute resolution, parties are able to often save time and money when resolving their disputes. Arbitration is one method of alternative dispute resolution that is the most frequently used by the litigants.

Is Arbitration Binding?

Arbitration can be binding or nonbinding. A binding arbitration means that the participants to the arbitration must follow the arbitrator’s decision and that the court can enforce the decision. A nonbinding arbitration means that either party may decide not to follow the arbitrator’s decision and instead take the dispute to court. Although, both types of arbitration do exist, binding arbitration is much more common in the judicial system.

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In July 2017’s newsletter, we discussed how you can enforce an international arbitration award in the United States. Although, there are people who may want to enforce a foreign arbitration award, there are others who seek to defend themselves against it.

In general, the domestic courts can decide not to enforce a foreign arbitration award for a number of reasons. For example, these reasons can include: (i) if the arbitrator exceeds his/her power or authority; (ii) if the arbitrator was not neutral; (iii) if there were any instances of fraud; or (iv) if the arbitrator is found to be guilty of misconduct.

The New York Convention has outlined the other reasons for avoiding the enforcement of foreign arbitration awards. Additionally, some types of arbitration awards cannot be enforced under the New York Convention. For example, if someone tried to enforce a custody agreement, then they would be unable. The United States has stated that it only applies to matters that are considered commercial transactions under the federal law. This means that certain awards are excluded from being enforced in the United States, including, but not limited to, labor disputes, custody disputes, matrimonial disputes, succession of property disputes, or boundary disputes.