Attorney Evan Brown

November 7, 2013 Cryptocurrency, Uncategorized

Tomcar sales using Bitcoin reveal some new norms

The Australian off-road utility vehicle manufacturer Tomcar has begun accepting Bitcoin as a form of payment for its direct sales to customers. This example of Bitcoin’s expansion into the marketplace sends a few interesting messages, among them:

Sellers and buyers will be motivated to use the cryptocurrency for reasons other than anonymity: Tomcar’s stated reason for liking Bitcoin is to avoid credit card transaction fees and unfavorable international currency exchange rates.
Bitcoin plays a role in the supply chain, not just in transactions with the end user. Tomcar is paying some of its suppliers using Bitcoin. The Winklevoss twins say Bitcoin could become the currency for an entire country.
Payment gateway CoinJar (which Tomcar uses) is an interesting specimen. It’s not just the Brothers Winklevii who are investing in the Bitcoin marketplace.
The Silk Road shutdown was a good thing. Cryptocurrency lends itself well to a seedy marketplace. And those seeds, watered with unscrupulousness, will bear fruit of bad reputation. Tomcar’s founder hails Silk Road’s demise, since a lack of association with the unlawful will do the currency some PR good.

One can’t help but wonder whether there are some opportunities to reinforce some stereotypes when thinking about Tomcar and the people who would buy them. The off-road utility of the vehicles would come in handy in the post-apocalyptic world occasioned by the collapse of modern governments – the very entities running a monetary system that the Bitcoin enthusiast gladly wishes to circumvent.

October 24, 2013 Uncategorized

How will we handle the legal issues of self-driving cars?

The technology to support self-driving cars is a reality. At this point the challenge is largely economic — it costs around $100,000 to equip a self-driving car with the sensors and other hardware to push it toward autonomy. Another challenge is social. We tie a lot of our identity to our cars and the freedom they afford. This freedom might as well be in our human DNA. There’s no one still living on the planet who knew a time before the automobile.

A third challenge is legal. And it’s much easier to ask the questions than to answer them.

How will we set the standards for hardware and software performance?
Should we adjust the speed limit?
How will we allocate fault when there is an accident?
Will the cost of insurance go down if there is less risk on the road?
Are we willing to give over so much information when our self-driving cars join the “internet of things”?
What protections will we give to automobile makers and the manufacturers of autonomous systems?

On that last question, legislative protection of entire industries is not unprecedented. Gun makers and internet service providers find protection from the unfortunate choices made by the users of their products.

In any event, the self-driving norm is emerging, and is bolstered by new data about how safe and cost-effective it is. There are big savings in terms of dollars and lives. The legal and social issues will have to sort themselves out.

September 25, 2013 Copyright, DMCA, Litigation

Court refuses to help author who was victim of alleged bogus DMCA takedown notices

Author and her publisher disagreed on the content of two of the author’s new books. (As an aside, this author is very prolific — she alleges that she publishes a new book every two weeks!) So rather than deal with publisher, author self-published the works on Amazon. Publisher sent DMCA takedown notices to Amazon, with which Amazon complied. Author sued publisher under Section 512(f) of the DMCA, which provides penalties against senders of DMCA takedown notices that knowingly materially misrepresent claims of infringement. She sought a temporary restraining order (TRO), asking the court to instruct publisher to tell Amazon to make the works available.

The court denied the TRO motion. It found that author had failed to show she would suffer irreparable harm if the works were not put back on the market. In the court’s view, author failed to show how a temporary delay in sales would affect her reputation or goodwill.

The case presents an interesting issue concerning a party’s right to send a DMCA takedown notice. Author alleges that her agreement with publisher provided she owns the copyright in her works, and that publisher merely has a right of first refusal to publish any “sequels” to her previous works. So if what author is saying is true, that publisher does not have a copyright interest in the books but merely a contract interest, she stands a good chance, ultimately, on her 512(f) claim.

Flynn v. Siren-BookStrand, Inc., 2013 WL 5315959 (September 20, 2013)

August 24, 2013 Defamation

Lawyer’s tweet about case was not defamatory

Plaintiff sued an attorney and his law firm for defamation over a tweet the attorney posted about one of his cases that read as follows:

[Plaintiff] runs an organization for the benefit of its officers and directors, not shareholders and employees. The RICO suit was not frivolous. The 500K lawsuit is frivolous, however, so buyer be wary.

(Defenant used Twitlonger to account for the number of characters over 140.) The trial court dismissed the defamation lawsuit on an anti-SLAPP motion. Plaintiff sought review with the Court of Appeal of California. The court affirmed the dismissal.

It found that the tweet was nonactionable opinion, holding that “deprecatory statements regarding the merits of litigation are ‘nothing more than the predictable opinion of one side to the lawsuit’ and cannot be the basis for a defamation claim.” Further, insofar as the tweet asserted “[plaintiff] runs an organization for the benefit of its officers and directors, not shareholders and employees,” the attorney was stating his subjective opinion with respect to corporate governance at the plaintiff company. Accordingly, the tweet was not actionable.

Getfugu, Inc. v. Patton Boggs LLP, 2013 WL 4494952 (Cal.App. 2 Dist. August 21, 2013)

August 18, 2013 Copyright, Licensing

When the “entire agreement” isn’t the entire agreement

EULA Software licenses are often complex documents comprised of multiple exhibits, schedules, and terms and conditions, co-authored by lawyers, sales people and engineers. And when disputes over the use of software arise, it is, accordingly, often not simple to sort out what the agreement says. I have written a post over at my law firm’s blog about a recent software copyright infringement case where although software’s end user license agreement (“EULA”) said it was the entire agreement, the court held that it could consider evidence outside the agreement about the term of the license (how long it was for). It’s a noteworthy read to remind us that clear drafting in software and technology agreements (and any kind of agreement for that matter) is crucial.

Read the post here.

And while you’re at it, follow me on Twitter, and follow my law firm InfoLawGroup as well.

August 5, 2013 Computer Crime, Privacy

Can the government violate the Computer Fraud and Abuse Act?

Short answer: Pretty much no.

The Computer Fraud and Abuse Act is found at 18 U.S.C. 1030. Subpart (f) reads as follows:

This section [i.e., the Computer Fraud and Abuse Act] does not prohibit any lawfully authorized investigative, protective, or intelligence activity of a law enforcement agency of the United States, a State, or a political subdivision of a State, or of an intelligence agency of the United States.

The recent controversy over whether the FBI and/or the NSA is behind the recent Tor anonymity compromising brings this question up. So we can cut right to the question of whether that conduct is outside this exception to the CFAA, in that it is not a “lawfully authorized” law enforcement activity. Given the nuance and complexity of these issues, we should not expect easy answers.

August 3, 2013 Miscellaneous

Independent contractor’s email was key factor in finding he had apparent authority to bind principal

Defendant petroleum producer hired an independent contractor to negotiate oil and gas leases on its behalf. One such lease was with plaintiff, which the independent contractor negotiated in large part using the email account defendant issued to him. After the price of oil dropped, defendant would not pay on the lease. When plaintiff sued, defendant claimed its independent contractor did not have the authority to bind defendant to the lease in the first place.

The trial court disagreed with defendant’s argument that its independent contractor did not have apparent authority to bind the principal-defendant. Defendant sought review. On appeal, the Court of Appeals of Texas affirmed.

It held that a reasonably prudent person would have believed the independent contractor possessed the authority to contract on defendant’s behalf because defendant acted with such a lack of ordinary care as to clothe the independent contractor with indicia of authority.

Among the most important evidence concerning these indicia of authority was the fact that the independent contractor communicated using the email account under defendant’s domain name. The court noted that another court had held that giving someone a company email address does not, in and of itself cloak that user with carte blanche authority to act on behalf the company. “Were this so, every subordinate employee with a company e-mail address—down to the night watchman—could bind a company to the same contracts as the president.” CSX Transp., Inc. v. Recovery Express, Inc., 415 F.Supp.2d 6, 11 (D.Mass.2006)

But in this case, defendant knew of the independent contractor’s negotiations by email, and did nothing to disclaim that he lacked authority to bind defendant to the lease.

PanAmerican Operating, Inc. v. Maud Smith Estate, — S.W.3d —, 2013 WL 3943091 (Tex.App.-El Paso, July 24, 2013)

July 25, 2013 Copyright, Litigation

Court slaps Prenda client with more than $20,000 in defendant’s costs and attorney’s fees

AF Holdings, represented by infamous copyright trolls Prenda Law, voluntarily withdrew its copyright infringement claims against the defendant, an alleged BitTorrent infringer. Defendant sought to recover his costs and attorney’s fees pursuant to the Copyright Act, which provides that:

In any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party other than the United States or an officer thereof. Except as otherwise provided by this title, the court may also award a reasonable attorney’s fee to the prevailing party as part of the costs.

The court found that all factors for an award of costs and attorney’s fees weighed in defendant’s favor:

Degree of success: There was no dispute that defendant completely prevailed in the case.
Frivolousness/Objective Unreasonableness: Plaintiff’s case was frivolous and objectively unreasonable in that it never presented any evidence (although it had the opportunity to do so) to support its claim that it had standing to assert a claim for copyright infringement. Moreover, the court found that plaintiff did not do a proper investigation to determine defendant was the one in the household who committed the alleged infringement. Instead, it simply alleged that he fit the best demographic of one who would infringe.
Motivation: The court found that it did not appear plaintiff was motivated to protect the copyright at issue, but merely to coerce settlements.
Compensation/Deterrence: The court awarded fees as a deterrent to copyright trolls everywhere: other persons or entities that might contemplate a similar business model that is not intended to protect copyrighted work but instead designed to generate revenues through suits and coerced settlements.
Furthering the Purpose of the Copyright Act: The primary objective of the Copyright Act is to encourage the production of original literary, artistic, and musical expression for the good of the public. But here, the court found, plaintiff had not acted to protect original expression but rather to capitalize on coerced settlements.

Based on these factors, and after considering the number of hours spent and the hourly rate of defendant’s counsel, the court ordered plaintiff to pay $19,420.38 in attorney’s fees and $3,111.55 in costs (mainly for electronic discovery and deposition costs). Copyright trolls be warned.

AF Holdings LLC v. Navasca, 2013 WL 3815677 (N.D.Cal. July 22, 2013)

Fair use questions defeat class certification in Google Book Search case

Last year, the district court judge overseeing the Google Book Search case certified the plaintiff-authors as a class in the action the Authors Guild filed against Google in 2005. Google opposed the motion for class certification, and sought review of the issue with the Second Circuit. On appeal, the court vacated the class certification, holding that such certification was premature, given Google’s anticipated fair use arguments. The per curiam opinion provided that:

we believe that the resolution of Google’s fair use defense in the first instance will necessarily inform and perhaps moot our analysis of many class certification issues, including those regarding the commonality of plaintiffs’ injuries, the typicality of their claims, and the predominance of common questions of law or fact

Given that fair use is a fact-specific analysis, this decision seems sensible. And the decision gives Google a powerful new lever in settlement talks — litigation of the copyright claims on the merits just got a lot more expensive for the Authors Guild plaintiffs.

Authors Guild, Inc. v. Google Inc., — F.3d —, 2013 WL 3286232 (2nd Cir. July 1, 2013)

Court sides with Apple in copyright dispute over photo in iPhone commercial

Plaintiff photographer took a photo that Apple used in an April 2010 TV commercial for the iPhone 3GS. The 30-second commercial showed the photo for about 5 seconds. Plaintiff sued for copyright infringement, claiming Apple did not have the proper license to use the photo. She sought to recover Apple’s “indirect profits” on iPhone sales attributed to the infringement. Apple moved for partial summary judgment on the issue of damages, arguing such damages were “impermissibly speculative.” The court granted the motion.

Apple made four arguments showing a lack of a causal nexus between the use of the photo and plaintiff’s claim for profits. First, Apple contended that plaintiff proffered no evidence to support her claim that the photo itself caused any sales. Second, Apple argued that the iPhone was “well established in the consumer marketplace” at the time of the commercial which made it impossible to ascribe iPhone 3GS sales to the use of a single commercial, let alone one image in a single commercial. Third, two additional commercials ran during the time period that the commercial ran, each featuring different applications that can be used on an iPhone. Fourth, overall sales of the iPhone decreased during the relevant time period, February 28, 2010 to May 29, 2010, which is the time during which the commercial aired and the month immediately preceding and following that period.

The court found that plaintiff proffered no evidence that the use of the photo caused any iPhone 3GS sales, nor that the commercial did itself. The photo was integrated into no more than five seconds of a 30–second commercial where numerous images and various product functions were displayed. There was no evidence showing that sales resulted from the mere use of the photo. The court noted that as a threshold matter, it was plaintiff’s burden to establish a causal connection to some portion of profits before Apple would have to carry the burden of apportioning profits that were not the result of infringement. The court found that plaintiff did not proffer any evidence directly related to causation or even a method for showing that the alleged infringement actually influenced customers.

It’s important to note that this decision does not mean Apple has gotten away with copyright infringement. The decision is on the measure of damages, not liability (which remains an open question). Moreover, this case deals just with the question of actual damages under the Copyright Act. Plaintiff may yet assert an entitlement to statutory damages, which could range anywhere from $750 to $150,000.

Thale v. Apple Inc., 2013 WL 3245170 (N.D.Cal. June 26, 2013)

[Updated 7/2/13 to add last paragraph.]