Month: January 2017

By: Hsiao-Han Wang,

The term “smart contract” refers to “the use of computer code to articulate, verify and execute an agreement between parties.”[1] Unlike traditional contracts, smart contracts are written in codes, stored on distributed ledgers (like a database that can store all sorts of information) and secured by cryptographic keys, which make them immutable and help to avoid malfunction.[2]

The idea of a smart contract is not new, but the development of “blockchain” technology provides a way for this concept to be put into practice.[3] Blockchain is a technology that creates “a decentralized, digital ledger that encrypts, registers, and verifies transactions” through a peer-to-peer system, “essentially making public (or private, if you want) record of transactions, stored on thousands of different computers.”[4] With these characteristics, smart contracts allow the transactions over computer system “be verified, monitored, and enforced without the presence of a trusted third party or central institution.”[5] Smart contract requires no direct human involvement after it has been made a part of the blockchain, and will automatically execute once the pre-set conditions are met.[6] As a result, smart contracts have the potential to avoid risks on implement of contracts, to improve efficiency and to reduce transaction costs in financial or commercial agreements.

As blockchain technology continues to advance, some people have begun to believe that smart contracts will soon become alternatives to traditional contracts.[7] People who embrace technologies are excited about the possibility that smart contract might encode and perform complex agreement automatically.[8] However, there are still some potential practical risks and problems that can arise from the use of smart contracts.

Coding errors and software bugs may be among the key concerns that users have. For example, just like traditional contracts where words and specific terms are used in the agreement, the code base may not perfectly reflect what the parties understand to be their agreement, or the effect of the code base may be misrepresented by a party to be different to what it actually is.[9] Since the execution of smart contracts relies on computer network, cybersecurity is also a potential risk area that should be taken into consideration. A $50 million hack happened to DAO, a decentralized investment fund which was funded by thousands of people raising about $160 million with code based on smart contract protocol, is an example showing the problem of lacking proper programming to secure the system against external attack.[10] Some smart contracts that rely “real-time data feeds” to execute entire or certain parts of the agreement may also face the risk that potential manipulation of underlying data feeds and indices will trigger real-time contract execution.[11]

In addition to the technology, other issues also need to be considered when disputes between parties arise. When parties take legal action, questions such as where to bring suit or what law to apply come into play. There is currently no international internet law. Therefore, negotiation on jurisdiction may need to be set up beforehand when parties involved are from different states or even nations.[12]

The underlying characteristics of blockchain and smart contracts bring up potential legal issues as well. For example, one of the characteristics of blockchain is its transparency, which allows users to gain access to any permanent records on blockchain.[13] While the records are anonymously stored, which does not show the identity of transactions, information regarding the detail of transactions allow others to guess on it.[14] This, therefore, may raise the privacy concerns for contracts and property ownership, after all, some financial and commercial data is highly sensitive.[15] Another example may be deriving from the character of decentralization. Blockchain allows people to create a new type of entity, which is called “decentralized organization.” Such organizations are composed with “autonomous individuals given discrete tasks and rewards,” and operate in the way more like corporations but without formal legal structure.[16] Lack of formation initially does not sound like a big deal in terms of day-to-day operation. It would become a serious problem for participants, however, when this kind of organization gets sued in the court. Since it is a new type of entity, what law or classification should apply to them is still a question up in the air. But without formalized legal structure, courts are likely to hold individuals in the organization personally liable.[17]

The term “smart contract” does not have a settled definition yet, and the concept is apparently still at an early stage of development. However, as the technology progresses, state and federal government may need to develop a set of statutes or regulations to deal with various possible situations in the future to address risks and issues that may result from this new type of contract. It may be fair to say that smart contracts might be able to replace some of the functions of traditional contracts in the future. Nonetheless, it also creates new legal issues which are still waiting for a more definitive and suitable solution to come by.

[1] Josh Stark, How Close Are Smart Contracts to Impacting Real-World Law?, CoinDesk (Apr. 11, 2016, 2:00 PM), http://www.coindesk.com/blockchain-smarts-contracts-real-world-law.

[2] See Kate H. Withers, Smart Contracts: Opportunities and Legal Risks in FinTech, National Law Review (Nov. 8, 2016), http://www.natlawreview.com/article/smart-contracts-opportunities-and-legal-risks-fintech.

[3] See Lee Bacon, Nigel Brook & George Bazinas, “Smart Contracts”: Where Law meets Technology, Clyde & Co (June 22, 2016), http://www.clydeco.com/insight/article/smart-contracts-where-law-meets-technology.

[4]Casey C. Sullivan, What Is Blockchain? A Lawyer’s Guide, FindLaw (Nov. 14, 2016, 10:58 AM), http://blogs.findlaw.com/strategist/2016/11/what-is-blockchain-a-lawyers-guide.html; see also Joe Dewey & Shawn Amuial, What Is A Blockchain, Big Law Business (Sept. 22, 2015), https://bol.bna.com/what-is-a-blockchain.

[5] Benjamin Beck & Dr. Ulrich Worm, Blockchain-Based Applications – Evolving Legal Issues, Mayer Brown (Sept. 8, 2016), https://www.allaboutipblog.com/2016/09/blockchain-based-applications-evolving-legal-issues.

[6] See Joe Dewey & Shawn Amuial, What Is a Smart Contract?, Big Law Business (Sept. 24, 2015), https://bol.bna.com/what-is-a-smart-contract.

[7] See Stark supra note 1.

[8] See Cheng Lim, TJ Saw & Calum Sargeant, Smart Contracts: Bridging the Gap Between Expectation and Reality, Oxford Business Law Blog (July 11, 2016), https://www.law.ox.ac.uk/business-law-blog/blog/2016/07/smart-contracts-bridging-gap-between-expectation-and-reality.

[9] See id.

[10] See Klint Finley, A $50 Million Hack Just Showed That the DAO Was All Too Human, Wired (June 18, 2016, 4:30 PM), https://www.wired.com/2016/06/50-million-hack-just-showed-dao-human; See also Jamie Redman, How Should We Prepare Smart Contracts to Replace Law Firms?, Bitcoin.com (June 26, 2016), https://news.bitcoin.com/smart-contracts-replace-law-firms.

[11] See Withers supra note 2.

[12] See Richard Howlett, A Lawyer’s Perspective: Can Smart Contracts Exist Outside the Legal Structure?, Bitcoin Magazine (July 11, 2016, 6:52 PM), https://bitcoinmagazine.com/articles/a-lawyer-s-perspective-can-smart-contracts-exist-outside-the-legal-structure-1468263134.

[13] See Peter Kirby, Blockchain Transparent Lending: How Accountable Lending Systems Can Prevent A ‘Big Short’ For The Digital Age, Blockchain News (Feb. 24, 2016), http://www.the-blockchain.com/2016/02/24/blockchain-transparent-lending-how-accountable-lending-systems-can-prevent-a-big-short-for-the-digital-age.

[14] See David Cornwell & James Lawrence, Blockchain – emerging legal issues, Lexology (Oct. 12, 2015), http://www.lexology.com/library/detail.aspx?g=6e5a942e-94ea-4891-a07c-a9d96343dc95.

[15] See Id.

[16] Stephen D Palley, How to Sue A Decentralized Autonomous Organization, CoinDesk (Mar. 10, 2016), http://www.coindesk.com/how-to-sue-a-decentralized-autonomous-organization/#; see also Cornwell supra note 14.

[17] See Palley supra note 16.

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By: Kathleen Pulver,

Social media has changed the face of the legal landscape as we know it. As of 2015, nearly two-thirds of American adults were using social media. [1] The percentage is even higher among young adults, reaching an outstanding 90%. [2] It is now commonplace to see warrants appear in cases for access to social media pages and photographs. [3]

In order for evidence to be admitted in court, a four step analysis must be conducted.[4] First, under Rule 401, for any evidence to be admissible in court, it must be relevant.[5] A finding of relevance requires that the evidence have a tendency to make a fact more or less probable than it would be without the evidence, and the fact must be one of consequence in determining the action.[6] Second, after a finding of relevance, the evidence must meet the standard laid out by Rule 901.[7] Federal rule of evidence 901 states: “to satisfy the requirement of authenticating or identifying an item of evidence, the proponent must produce the evidence sufficient to support a finding that the item is what the proponent says it is.”[8] The rule provides several specific examples of the appropriate way to authenticate different kinds of evidence, however the most common way to authenticate is through the testimony of a witness, with knowledge of the evidence, that it is what it claims to be.[9] Third, the evidence may not be hearsay, defined by rule 801 as, an out of court statement made by a declarant offered to prove the truth of the matter asserted.[10] Finally, the admission of the evidence must not be blocked by another rule, such as privilege, or rule 403 which blocks the admission of evidence which has its probative value “substantially outweighed by a danger of one or more of the following: unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence.” [11] Social media and other electronic evidence present unique challenges when conducting this analysis.

Social media evidence can certainly meet the first prong as we can think of numerous reasons why a certain posting or picture could be relevant to a criminal or civil case. Social media postings have been used as evidence of prior intent to harm and to rebut a claim of injury with photos of the person claiming injury doing things they shouldn’t be able to do while injured.[12] It is also clear that certain social media postings could get around the third and fourth prongs by meeting a hearsay exclusion, such as statement made against interest, and being more probative than prejudicial. [13] The difficulty with social media evidence is the second prong, ensuring that there is enough evidence presented to authenticate the posting to be what it claims to be.

When the evidence rules were first created, creating fraudulent documents was nowhere near as simple as it is now. With the evolution of technology, people are now placing more of their trust in the information provided by online sources, however this faith may be misplaced. Evidenced by the recent Facebook fake news scandal, we cannot trust everything we read online.[14] Like fake news stories, it is not difficult to create a fake social networking page.[15] In fact, a simple google search of “creating a fake Facebook” brings up more than 5 sources willing to assist in the creation of a fake Facebook.[16] This constant availability of means to create fraudulent sources brings up difficult authentication questions under the second prong that have yet to be significantly addressed by most courts. Only time will tell how courts adjust to these newly presented problems.

[1] See PEW RESEARCH CENTER, Social Media Usage: 2005-2015 (Oct. 8, 2015), http://www.pewinternet.org/2015/10/08/social-networking-usage-2005-2015/.

[2] See id.

[3] See e.g., Bradley v. State, 359 S.W.3d 912 (2012); Elonis v. United States, 135 S. Ct. 2001 (2015).

[4] This post discusses only the federal rules of evidence. Each state has their own rules of evidence, although many closely follow the same analytical structure as the rules for the federal courts.

[5] See Fed. R. Evid. 401.

[6] See id.

[7] See Fed. R. Evid. 901.

[8] Id.

[9] See id.; See also David I. Schoen, The Authentication of Social Media Postings, ABA Association (May 17, 2011), https://apps.americanbar.org/litigation/committees/trialevidence/articles/051711-authentication-social-media.html.

[10] See Fed. R. Evid. 801.

[11] Fed. R. Evid. 403. See Fed. R. Evid. 502.

[12] See Jessica Velasco, Social Media Can and Will Be Used Against You in Court, Socialnomics (Dec. 30, 2014), http://socialnomics.net/2014/12/30/social-media-can-and-will-be-used-against-you-in-court/.

[13] See Fed. R. Evid. 403; Fed. R. Evid. 801(d)(2).

[14] See Mirren Gidda, Facebook Staff Form ‘Secret Taskforce’ to Deal with Fake News Controversy, Newsweek (Nov. 15, 2016, 6:58 AM), http://www.newsweek.com/2016-election-facebook-google-fake-news-donald-trump-521255.

[15] See, e.g., How Do I Create a Page, Facebook, https://www.facebook.com/help/104002523024878?helpref=faq_content (Last visited Nov. 20, 2016).

[16] Search on Instructions for Creating a Fake Facebook Page, Google, https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=creating%20a%20fake%20facebook.

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By: Genevieve de Guzman,

Wearable technology is not new to the world of action and science fiction movies, but this technology has developed from being mere speculation to having real-world possibilities. As technology becomes an increasingly integral part of people’s daily lives, it seems an inevitability that it also becomes increasingly integrated with our physical beings, and what could be more intimate than an individual’s perception of their world?

Google pioneered “smart” glasses with Google Glass[1] and “smart” contact lenses with glucose-sensing and monitoring contact lenses[2] and solar-powered contact lenses capable of communicating with computers and mobile devices and collecting biological data such as internal body temperature and blood-alcohol content.[3] More recently, Google filed a patent describing a device akin to a bionic eye.[4] This device is described as an intra-ocular implant that features an electronic lens that can be controlled to provide an optical power to focus images alternatively, essentially correcting and enhancing vision.[5] However, this device serves less as a contact lens and more as a surgical implant.

Arguably following Google’s lead, other researchers and companies have reportedly began developing similar “smart” contact lenses. Scientists at the University of Michigan are working on night vision contact lenses that uses thermal imaging to view a full spectrum of light, including ultraviolet light.[6] Researchers at the University of Wisconsin are developing contact lenses that autofocuses within milliseconds without the loss of contrast and sensitivity that come with glasses, conventional contact lenses, and surgery.[7] Johnson & Johnson are collaborating with a subsidiary of HP, Inc. to develop a contact lens that can adapt to the environment to “reduce glare and eyestrain indoors and out[doors],” change the cosmetic coloring of eyes, and treat presbyopia.[8] Swiss start-up company Sensimed recently received approval from the United States Food and Drug Administration (FDA) to start human testing for its contact lenses that promise to cure glaucoma.[9]

Samsung and Sony also join the race to develop “smart” contact lenses but aim to make them smarter and to reach a wider consumer base. Both companies describe contact lenses with built-in cameras, various movement sensors, and antennae that transmit and receive data as well as supply and receive electric power.[10] These contact lenses may be considered a response to the growing use of wearable technology and social media. Samsung filed its patent application in South Korea in 2014 and notes that the lenses would “allow users to view augmented reality” in more natural ways with a small display unit in the center of the lens and can sync up to smartphones wirelessly via the antenna.[11] Motion sensors in the lenses would allow the user to control the lens’ camera feature using blinking, similar to how Google Glass captured photos with winking, and a playback feature.[12] Samsung seems to function like a contact lens version of Google Glass.[13] Sony filed its patent application in the United States. Its lens would use piezoelectric sensor (example of pressure sensor), an infrared sensor, an acceleration sensor, a gyro sensor (example of tilt sensor), or an ocular potential measurement unit that converts eye movement into electrical power to control the smaller versions of part of a modern digital camera embedded in the lens.[14] Unlike the Samsung Lens, the Sony lens can store data without the need for a smartphone as well as contain features such as autofocus, automatic exposure adjustment, aperture controls, adjustable zoom, and playback.[15]

While these advancements in wearable technology are substantial steps toward the future, “smart” contact lenses differ from other wearable products in their covertness. Needless to say, these “smart” contact lenses present many privacy and security concerns. Google Glass raised similar issues, but its design was distinguishable while these lenses would enable clandestine photography that is virtually undetectable. Privacy with these lenses, in public places and even in semi-public places such as restrooms, would be virtually impossible. Covert surveillance of private meetings dealing with sensitive information, unconsented recordings of intimate interactions, violations of stalking laws, and the lenses’ susceptibility to hacking, involuntary use, malfunction, etc. are all necessary considerations, not to mention social harms as technology will be an even more intimate, integral part of daily life. This could also add a new dimension to the discussion of law enforcement body cameras and government surveillance of its citizens. The Sony and Samsung patent applications have not yet been granted, nor would their issuance guarantee that the products would be on the market any time soon. Until then, these “smart” contact lenses will be the subjects of conspiracy theories, hypothetical analyses, and spy movies.

[1] See U.S. Patent No. 9,195,067 (filed Sep. 28, 2012).

[2] See U.S. Patent No. 8,985,763 (filed Sep. 26, 2012).

[3] See U.S. Patent No. 9,158,133 (filed Jul. 26, 2012).

[4] See U.S. Patent Application No. 20160113760 (filed Oct. 24, 2014).

[5] See id.

[6] See Kate McAlpine, New tech could lead to night vision contact lenses, Michigan News (Mar. 16, 2014), http://www.ns.umich.edu/new/releases/22042-thermal-vision-graphene-light-detector-first-to-span-infrared-spectrum (last visited Nov. 17, 2016).

[7] See Fish and insects guide design for future contact lenses, EurekAlert! (Mar. 14, 2016) https://www.eurekalert.org/pub_releases/2016-03/nei-fai031116.php (last visited Nov. 17, 2016).

[8] See Richard Kirkner, J&J’s Plans for Smart & 3D Printable Contact Lenses, OIS News (June 8, 2016) http://ois.net/jjs-plans-for-smart-3d-printable-contact-lenses/ (last visited Nov. 17, 2016).

[9] See Sensimed announces first-of-a-kind product approval for its Contact Lens based sensing device by U.S. FDA, Sensimed (Mar. 15, 2016) http://www.sensimed.ch/images/pdf/PR_2016-03-15_sensimed_FDA_US_E.pdf (last visited Nov. 17, 2016).

[10] See Sony U.S. Patent Application No. 20160097940 (filed Feb. 12, 2014); S. Kor. Patent Application No. (filed Sept. 26, 2014).

[11] See Danielle Muoio, Samsung just patented a contact lens with a built-in camera, Business Insider (Apr. 11, 2016) http://www.businessinsider.com/samsung-filed-a-patent-for-smart-contact-lenses-2016-4 (last visited Nov. 17, 2016).

[12] See Amit Chowdhry, Samsung Patent Unveils Idea For Smart Contact Lenses With A Camera And Display, Forbes (Apr. 11, 2016) http://www.forbes.com/sites/amitchowdhry/2016/04/11/samsung-patent-unveils-smart-contact-lenses-with-a-camera-and-display/#438a947067be (last visited Nov. 17, 2016).

[13] See id.

[14] See Sony U.S. Patent Application No. 20160097940 (filed Feb. 12, 2014).

[15] See Sony Filed a Patent for Video-Recording Contact Lens, Huffington Post (Apr. 28, 2016) http://www.huffingtonpost.com/entry/sony-contact-lens-camera_us_57220fc6e4b0f309baefd3f2 (last visited Nov. 17, 2016).

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By: Ellie Faust,

During Donald Trump’s campaign, he certainly had an opinion regarding cyber security, but his opinions have been pretty inconsistent. While the president-elect vowed to protect the nation’s networks against foreign spies and criminals, he also encouraged Russian hackers to distribute emails stolen from Democratic nominee, Hillary Clinton.[1] While we do not know much about Donald Trump’s stance on technology policies, we do know that the man loves surveillance and hates encryption.

With Trump’s victory and the reelection of Republican Senator Richard Burr, the chairman of the Senate intelligence committee, the battle over encryption could intensify. Last year, Burr led a failed effort to pass legislation that would require companies to build “back doors” into their products in order to allow the government to evade encryption and other data protection.[2] The tech industry is unwavering in adamantly opposing back doors and believes the government has no right to dictate the design of tech products.[3]

It is likely that Burr will soon reintroduce his encryption legislation. This year, with the support of the White House and Republican majorities in both houses of Congress, the passing of legislation is much more likely. Not to say that Democrats and the more libertarian minded Republicans of the House will not put up a fight.[4]

Many believe that a Trump presidency could very well lead to a restoration of the Patriot Act along with increased pressure on Silicon Valley companies to break encryption.[5] It has become apparent throughout the course of his campaign that Trump is supportive of reinstating the dormant portions of the Patriot Act and the collection of bulk cell phone metadata by the National Security Agency.[6]

Trump’s campaign has always been less than tech friendly. From encouraging a boycott of Apple products to a plea to close off parts of the Internet in order to limit Islamist propaganda, the majority of Silicon Valley is certainly not thrilled about the outcome of this election.[7] The battle between the tech world and Donald Trump has begun. While we wait for the action, there are a few things we can do now to ensure some sort of personal security in the future.

If you are one of the many concerned about the possible increased surveillance, there are a few simple steps you can take to protect yourself now. To keep text messages private, you should look to install a service that provides end-to-end encryption. Apple’s iMessage currently offers this service but only between iMessage users.[8] If you do not have an iPhone, the apps Signal and WhatsApp both offer end-to-end encryption but again, both users need to have the app installed in order for the encryption to work.[9] For those with a questionable search history, the Internet browser, Tor, is the way to go. This browser makes your search activity anonymous by routing the data though a variety of destinations before sending it out to the web.[10] While we do not know what is ahead of us, it never hurts to protect yourself just in case.

[1] See Hiawatha Bray, Trump, the digital authoritarian, Boston Globe (Nov. 10, 2016), https://www.bostonglobe.com/business/2016/11/09/trump-digital-authoritarian/77tnj7mF95eZManXFOkZ7N/story.html.

[2] See Dustin Volz and Joseph Menn, Trump election ignites fears over U.S. encryption, surveillance policy, Reuters (Nov. 9, 2016, 7:50 PM), http://www.reuters.com/article/us-usa-election-cyber-idUSKBN13503H.

[3] See id.

[4] See id.

[5] See Phil Muncaster, Trump’s Presidency Raises Encryption and Surveillance Fears, InfoSecurity (Nov. 10, 2016), http://www.infosecurity-magazine.com/news/trumps-presidency-raises/.

[6] See David Gilbert, What a Donald Trump presidency would mean for privacy and security, Comparitech (Sept. 6, 2016), https://www.comparitech.com/blog/vpn-privacy/trump-privacy-cyber-security/.

[7] See Volz, supra note 2.

[8] See id.

[9] See id.

[10] See id.

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