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Protecting Data Privacy in the Post-Dobbs Era

By Taylor M. Sorrells

Since the recent U.S. Supreme Court decision in Dobbs v. Jackson Women’s Health Organization, ending the federal constitutional protection of abortion rights,[1] there has been legal uncertainty surrounding how to protect personal data held by third-party apps and software.[2] Specifically, some commentators are concerned that prosecutors in states that have criminalized abortion will access electronic data such as healthcare records, geolocation data, phone call,  text message records, and financial statements to prosecute those suspected of obtaining abortions.[3]

The U.S. Constitution provides very limited protection for data privacy. While the Fourth Amendment offers general protections against unreasonable searches and seizures by government officials,[4] most seizures of data in the abortion context will not be barred by the Fourth Amendment, so long as the prosecutor seeking to access the data obtains a search warrant.[5] Further, the Supreme Court has recognized that, in some cases, law enforcement can subpoena data from third parties without triggering the requirements of the Fourth Amendmentthus requiring no warrant.[6]

While the constitutional protections for data privacy are rather weak, several federal privacy statutes may offer some protection for those seeking reproductive healthcare.[7] However, there is only limited potential for current federal privacy laws to protect the majority of individuals seeking abortions in states that have criminalized the procedure because most of these laws include law enforcement exceptions, which enable third parties to disclose data to law enforcement officials without consumer consent.[8]

In an executive order dated July 8, 2022, the Biden administration, seeking to strengthen federal protections for abortions, ordered the Federal Trade Commission (FTC) chair to “consider actions, as appropriate and consistent with applicable law . . . to protect consumers’ privacy when seeking information about and provision of reproductive healthcare services.”[9] Under the FTC Act, the FTC has broad authority to address consumer privacy violations by diverse entities.[10] Similarly, President Biden instructed the Secretary of the Department of Health and Human Services (HHS) to strengthen existing privacy protections for individuals seeking reproductive healthcare.[11]

While the order signals the Biden administration’s interest in preserving data privacy rights within the reproductive healthcare context, for abortion advocates, it will not likely provide sufficient protection because of the law enforcement exceptions that are written into most of the statutes from which these executive agencies derive their authority.[12] Further, the Health Information Portability and Accountability Act (HIPAA), which HHS administers, has a privacy rule which specifically allows abortion providers to share information with law enforcement, and some state laws require sharing under certain circumstances.[13] Because of these weaknesses in current federal law, commentators believe that absent a change in law or a new rulemaking, patients’ sensitive data will remain at risk.[14]

Post-Dobbs, members of Congress have proposed several bills intended to preserve reproductive health data rights.[15] One of the strongest bills proposed so far is the My Body, My Data Act, which would require the FTC to enforce a national privacy standard for reproductive health data collected by third-party apps, cell phones, and search engines.[16] The bill has been introduced in both the House and Senate, but with the Senate deeply divided on the issue of abortion, its future remains uncertain.[17]

Without stronger federal privacy laws, in most cases, prosecutors in states that have criminalized the procedure will be able to use suspected abortion-seekers’ electronically stored data as evidence against them in criminal prosecutions. For many commentators, new federal laws governing data protection have been long overdue.[18] However, in the post-Dobbs era, abortion advocates’ calls for increased data privacy protection have taken on a new urgency.

Keep an eye on this evolving area of the law.

 

[1] 142 S. Ct. 2228 (2022) (overruling Roe v. Wade, 410 U.S. 113 (1973), and Planned Parenthood v. Casey, 505 U.S. 833 (1992)).

[2] Abby Vesoulis, How a Digital Abortion Footprint Could Lead to Criminal Charges—And What Congress can do About it, Time (May 10, 2022, 4:20 PM), https://time.com/6175194/digital-data-abortion-congress.

[3] Id.

[4] U.S. Const. amend. IV.

[5] Riley v. California, 573 U.S. 373, 377 (2014) (holding that police must obtain a warrant before searching a seized cell phone).

[6] United States v. Miller, 425 U.S. 435, 446 (1976) (upholding the warrantless subpoena of bank records); Smith v. Maryland, 442 U.S. 735, 745–46 (1979) (ruling that law enforcement did not need a warrant to access phone records).

[7] See, e.g., Health Information Portability and Accountability Act of 1996, Pub. L. No. 104-191, 110 Stat. 1936 (imposing federal privacy requirements upon entities within the healthcare industry); Gramm-Leach-Bliley Act, Pub. L. No. 106-102, 113 Stat. 1338 (1999) (requiring entities within the banking industry to protect customer data); Stored Communications Act, 18 U.S.C. 121 §§ 2701–12 (1986) (addressing data privacy within electronic communications); Privacy Act of 1974, 5 U.S.C. § 552a (safeguarding data privacy within federal agencies).

[8] Chris D. Linebaugh, Cong. Rsch. Serv., LSB10786, Abortion, Data Privacy, and Law Enforcement Access: A Legal Overview, at 3 (2022).

[9] Exec. Order No. 14076, 87 FR 42053 (2022).

[10] See Federal Trade Commission Act of 1914, 15 U.S.C. §§ 41-58.

[11] Exec. Order No. 14076.

[12] Linebaugh, supra note 8.

[13] Allie Reed & Christopher Brown, Abortion Privacy Push Pits Biden Against Criminal Laws in States, Bloomberg Law (Aug. 3, 2022, 5:45 AM), https://www.bloomberglaw.com/bloomberglawnews/health-law-and-business/XEHPIBOK000000?bna_news_filter=health-law-and-business#jcite.

[14] Id.

[15] E.g., Stop Anti-Abortion Disinformation Act, S. 4469, 117th Cong. (2022) (directing the FTC to prescribe rules prohibiting disinformation in advertisements for abortion services); Health and Location Data Protection Act, S. 4408, 117th Cong. (2022) (prohibiting data brokers from selling and transferring certain sensitive data).

[16] H.R. 8111, 117th Cong. (2022).

[17] Nik Popli & Vera Bergengruen, Lawmakers Scramble to Reform Digital Privacy After Roe Reversal, Time (July 1, 2022, 12:44 PM), https://time.com/6193224/abortion-privacy-data-reform.

[18] See, e.g., Cameron F. Kerry, Why Protecting Privacy is a Losing Game Today—and how to Change the Game, Brookings (July 12, 2018), https://www.brookings.edu/research/why-protecting-privacy-is-a-losing-game-today-and-how-to-change-the-game.

 

Image Source: https://www.nbcnews.com/tech/security/abortion-clinics-providers-digital-privacy-roe-overturn-rcna30654

 

AI: Artificial or Artistic Intelligence?

AI: Artificial or Artistic Intelligence?

By Austin Wade-Vicente

“We see this technology as an engine for the imagination,” emphatically stated David Holz, creator of the popular online AI art generation program Midjourney.[1] The same program table-top games creator James Allen used this past month to win first-place in digital art at the Colorado State Fair ahead of 20 other artists.[2] Allen’s above pictured “Théâtre D’opéra Spatial” is undoubtedly an appealing work of art, but, in the era of these AI-generated masterpieces, who can legally claim ownership of this blue-ribbon piece?

Growing Pains: Sales Tax on Retail Transactions Involving Cryptocurrency in Virginia

By Owen Giordano

 

In just over a decade, cryptocurrency has radically altered our society’s notion of currency.[1] With a growing number of United States (US) citizens holding onto cryptocurrency, many states are at an impasse as to how they should collect tax on the transactions made with the medium.[2] However, under Virginia’s sales tax statute, the state is allowed to levy a tax on transactions.[3] The scope of this tax is broad and allows taxation on transactions done with currency or through bartering (i.e., property for property).[4] As such, retail sales transactions involving cryptocurrency are likely taxable in the state of Virginia, and that retailer would be obligated to collect the tax on Virginia’s behalf.[5] This development would lead to multiple issues for retailers in Virginia.

Foundational knowledge of this topic is necessary before discussion. To start, cryptocurrency refers broadly to a decentralized, digital currency.[6] This medium lacks any sort of centralized oversight that traditional currencies have, with cryptocurrency transactions recorded on a digital register known as a blockchain.[7] A blockchain is best described as a “ledger” that records and tracks the transactions of all assets (tangible and intangible) done with a specific cryptocurrency. Further, a cash equivalent refers to any form of investment security that can be readily liquidated (turned into cash), such as checks.[9] Put bluntly, a cash equivalent is any medium that works like cash in a transactional setting. Finally, and importantly, this blog assumes that, because cryptocurrency is a medium that can be readily liquidated and is ultimately designed as a substitute for cash, Virginia designates cryptocurrency as a cash equivalent.[10]

Through both the relevant sales tax statute and the choice to label cryptocurrency as a cash equivalent, transactions conducted with cryptocurrency would assuredly be taxable, and retailers would be obligated to collect the associated sales tax.[11] While this creates various possibilities, the decision is not without issues.

To begin, cryptocurrency on paper seems more portable than tangible currency due to the medium’s digital (and thus intangible) nature.[12] The closest analogy would be making a purchase via check or card payment for an expensive transaction, in that those mediums save consumers from the hassle of carrying thousands and thousands of coins or dollars. However, the ability to “carry” cryptocurrency has higher barriers to access than carrying cryptocurrency. As a digital currency, the use of cryptocurrency requires some sort of digital device with internet access to engage in a transaction.[13] Conversely, access to such devices and services is not needed for all-cash transactions because of cash’s tangible nature. While over ninety percent of US adults have access to the internet, adding such hurdles makes cryptocurrency a less efficient medium than tangible currencies.[14] One could argue that this issue applies to check or card payments as well. Yes, but the tangible nature of check payments does not require the additional requirements of constant access to digital devices or the internet. Simply put, the current business infrastructure in Virginia (and the country at large) remains lacking for transactions involving cryptocurrency. Therefore, to fully benefit from the use of cryptocurrency, investment in blockchain technology, as well as the ability to access said platforms more readily and freely, is needed.

Secondly, there is the question of cryptocurrency’s acceptability as a form of payment. Cryptocurrency is notable for its oscillating value.[15] This is partly due to the medium’s decentralized, where there is no regulatory body helping to stabilize the medium.[16] The unstable value contributes to businesses’ apprehension towards accepting cryptocurrency, as a profit could turn into a loss within the span of a day.[17] In the realm of sales tax collection obligations, the oscillating values raise concerns as to when the tax should be collected and what a retailer should do about their tax collection obligation when there is swift and dramatic change in the value of a cryptocurrency.[18] As such, Virginia would need to develop policy to address this key issue.

To conclude, cryptocurrency offers potential as a cash equivalent. Its promise of decentralization and minimal regulatory interference offers many valid reasons for its adoption and use in transactions. However, due to the medium’s novel nature, there is still much planning and development needed to support its use. As such, should cryptocurrency qualify as a cash equivalent, investment in the appropriate technological infrastructure would be necessary for Virginia to reap the benefits this medium offers.

 

[1] “Cryptocurrency” is used this blog post to the broad concept of cryptocurrency, rather than a particular type of cryptocurrency.

[2] Eswar S. Prasad, Are Cryptocurrencies the Future of Money?, EconoFact (Oct. 19, 2021), https://econofact.org/are-cryptocurrencies-the-future-of-money#:~:text=Cryptocurrencies%20have%20captured%20the%20public,end%20from%20a%20societal%20perspective; Cryptocurrency Sales and Use Tax by State, The Bureau of National Affairs, Inc. https://pro.bloombergtax.com/brief/cryptocurrency-tax-laws-by-state/  (last updated: Nov. 22, 2021).

[3] For the purposes of this paper, a “transaction” concerns the retail sale of a taxable good or service. Other types of transactions, such as exchanges for cash equivalents or non-tangible goods, exist, with different states adopting different views on the taxability of such transactions. See Casey W. Baker et al., U.S. State Taxation of Cryptocurrency-Involved Transactions: Trends & Considerations for Policy Makers, 75 Tax Law. 601, 625-26 (2022); Va. Code §§ 58.1-603 (authorizing sales tax)

[4] Va. Code §§ 58.1-602, 58.1-603 (definitions, authorization of a sales tax for both transactions using currency or property).

[5] Va. Code § 58.1-612.

[6] Kate Ashford, What Is Cryptocurrency?, Forbes, https://www.forbes.com/advisor/investing/cryptocurrency/what-is-cryptocurrency/ (Jun. 6, 2022).

[7] Id.

[8] What is Blockchain Technology?, International Business Management, https://www.ibm.com/topics/what-is-blockchain#:~:text=Blockchain%20for%20Dummies%22-,Blockchain%20overview,patents%2C%20copyrights%2C%20branding (last visited: Aug. 18, 2022).

[9] James Chen et al., Cash Equivalents¸ Dotdash Meredith, https://www.investopedia.com/terms/c/cashequivalents.asp#:~:text=Cash%20equivalents%20are%20the%20total,are%20the%20most%20liquid%20assets (last updated: Nov. 27, 2020).

[10] See Eswar S. Prasad, Are Cryptocurrencies the Future of Money?, EconoFact (Oct. 19, 2021), https://econofact.org/are-cryptocurrencies-the-future-of-money#:~:text=Cryptocurrencies%20have%20captured%20the%20public,end%20from%20a%20societal%20perspective (contemplating the effects of using cryptocurrency in a transaction setting, in a manner similar to most cash equivalents); Paulina Likos & Coryanne Hicks, The History of Bitcoin, the First Cryptocurrency, U.S. News & Report, L.P. (Feb. 4, 2022), https://money.usnews.com/investing/articles/the-history-of-bitcoin (mentioning Bitcoin’s, a cryptocurrency, use in transactional settings in a manner similar to cash equivalents); Nathaniel Popper, Bitcoin Has Lost Steam. But Criminals Still Love It, N.Y. Times (Jan. 28, 2020), https://www.nytimes.com/2020/01/28/technology/bitcoin-black-market.html (criminals using cryptocurrencies in transactional settings, further comparison of the medium to cash equivalents).

[11] Va. Code §§ 58.1-602, 58.1-603, 58.1-612.

[12] Kate Ashford, What Is Cryptocurrency?, Forbes, https://www.forbes.com/advisor/investing/cryptocurrency/what-is-cryptocurrency/ (Jun. 6, 2022).

[13] The Basics about Cryptocurrency, State University of New York at Oswego, https://www.oswego.edu/cts/basics-about-cryptocurrency (last visited: Aug. 28, 2022).

[14] https://www.pewresearch.org/internet/fact-sheet/internet-broadband/

[15] Eswar S. Prasad, Are Cryptocurrencies the Future of Money?, EconoFact (Oct. 19, 2021), https://econofact.org/are-cryptocurrencies-the-future-of-money#:~:text=Cryptocurrencies%20have%20captured%20the%20public,end%20from%20a%20societal%20perspective

[16] Id.

[17] Ryan Haar, You Can Buy More Things Than Ever With Crypto. Here’s Why You Shouldn’t, NextAdvisor, LLC, (May 3, 2022) https://time.com/nextadvisor/investing/cryptocurrency/should-you-use-crypto-like-cash/ (citing only 20% of people will use cryptocurrency as a cash substitute).

[18] Va. Code § 58.1-612.

 

Image source: https://time.com/nextadvisor/investing/cryptocurrency/should-you-use-crypto-like-cash/

AI Cannot Get Patents…Yet

AI Cannot Get Patents…Yet

By Grayson Walloga

The recent decision in Thaler v. Vidal held that an artificial intelligence (“AI”) could not obtain a patent for its creations.[1] Thaler’s AI, DABUS, generated patentable inventions without any direct contribution from Thaler himself. He attempted to secure patent protection on his AI’s behalf for two such inventions in 17 jurisdictions all across the world.[2] The United States Patent and Trademark Office (PTO) denied these patents and claimed that a machine does not qualify as an inventor.[3] Thaler brought his case to court, but the court ended up siding with the PTO. He appealed his case, but the Court of Appeals for the Federal Circuit affirmed the lower court’s decision.[4]

In its analysis, the court noted the specific language used in both the Patent Act and the Dictionary Act. The Patent Act defines an inventor as “the individual or, if a joint invention, the individuals collectively who invented or discovered the subject matter of the invention.”[5] Since this act failed to provide a definition for “individual,” the court looked to the Dictionary Act, which observed a distinction between individuals and non-human entities such as corporations, associations, and societies.[6] Additionally, the Supreme Court had defined “individual” in prior cases as something that “ordinarily means a human being, a person.”[7]

Thaler attempted several different arguments for why his AI should be allowed to get a patent. He pointed out that DABUS already had a patent in another country.[8] The South African Patent Office granted the AI a patent for its application relating to a “food container based on fractal geometry.” [9] This shocking action by South Africa, however, had little effect in the United States apart from serving as a conversation starter. The Court of Appeals for the Federal Circuit explained that this did nothing for DABUS’s patent application in the United States because “[t]his foreign patent office was not interpreting our Patent Act.”[10] Australia went in a different direction following the South African patent grant.[11] Justice Jonathan Beach of the Federal Court of Australia ruled that AI fell within the scope of “inventor,” but it could not be an applicant or a grantee of a patent.[12]

Thaler tried to convince the skeptical American court that “inventor” should include AI because it would encourage innovation and public disclosure.[13] The court once again dismissed his claim as mere speculation that lacked a basis in any relevant text.[14] Thaler’s contention may be irrelevant in deciding what the Patent Act says, but it remains a good policy question for possible legislative change. The promise of a patent may have little effect on an AI’s motivation to create new things, but the same cannot be said of the person who created that AI.[15] Inventors could create something like DABUS and use it to help them invent new and useful technologies – resulting in more innovation for society.[16] The court did not completely stamp out Thaler’s hope for more innovation. Its decision was only meant to clarify the definition of inventor under the Patent Act. It did not suggest that inventions made by human beings with the assistance of AI are not eligible for patent protection.[17]

But, of course, most people have a fearful outlook towards AI.[18] Many believe that AI could replace them in their jobs or that AI will be relied upon too much in the future. The world would hardly have need of a Thomas Edison toiling away in some lab running experiments all day. An AI could handle all the calculations and simulations so long as its creator properly sets the parameters. The main obstacle for the inventor who wants a patent but uses an AI’s assistance would be the standard for obviousness under the Patent Act. Perhaps an AI generates some formula for success after analyzing scores of data. Would that still be considered obvious even though it might be impractical for an expert in that field to do the very same?[19] If more inventors all start using AI, would the obviousness standards be relative to AI or still just to normal human experts? Businesses continue to accelerate their AI adoption plans which indicates that these questions will not go away anytime soon.[20] But those of us who did not miss the point of the Terminator franchise can at least take solace in knowing that the decision in Thaler v. Vidal means AI cannot get patents…yet.

 

 

 

[1] Thaler v. Vidal, Appeal No. 2021-2347 (Fed. Cir. Aug. 5, 2022).

[2] Utkarsh Patil, India: South Africa Grants A Patent With An Artificial Intelligence (AI) System As The Inventor – World’s First!!, Mondaq (Oct. 19, 2021), https://www.mondaq.com/india/patent/1122790/south-africa-grants-a-patent-with-an-artificial-intelligence-ai-system-as-the-inventor-world.

[3] Thaler v. Vidal.

[4] Id.

[5] 35 U.S.C. § 100(f) (2012).

[6] Thaler v. Vidal.

[7] Mohamad v. Palestinian Auth., 566 U.S. 449, 454 (2012).

[8] Thaler v. Vidal.

[9] Patil supra note 2.

[10] Thaler v. Vidal.

[11] Patil supra note 2.

[12] Id.

[13] Thaler v. Vidal.

[14] Id.

[15] See Ryan Abbott, The Artificial Inventor Project, Wipo Magazine (Dec. 2019), https://www.wipo.int/wipo_magazine/en/2019/06/article_0002.html.

[16] Id.

[17] Thaler v. Vidal.

[18] How Americans think about artificial intelligence, Pew Research Center (Mar. 17, 2022), https://www.pewresearch.org/internet/2022/03/17/how-americans-think-about-artificial-intelligence/.

[19] See Derek Lowe, AI, and the Patent System, Science (June 8, 2022), https://www.science.org/content/blog-post/ai-and-patent-system.

[20] Joe McKendrick, AI Adoption Skyrocketed Over the Last 18 Months, Harvard Business Review (Sept. 27, 2021), https://hbr.org/2021/09/ai-adoption-skyrocketed-over-the-last-18-months.

Image source: https://thenextweb.com/news/why-ai-systems-should-be-recognized-as-inventors

The Future of Fuel: An Electric Vehicle Problem Turned Solution

By Austin Wade-Vicente

 

Fossil fuels have changed the course of human history.[1] The 1500s and 1600s used trees to supply warmth to thousands, but reliance on wood deforested entire countries for fuel consumption. In the 1900s, horse-drawn carts and buses expedited transportation, yet the beasts’ dung brought flies that spread a miasma of disease.[2] Today, our transportation, heat, and other energy needs are predominantly satisfied through the use of fossil fuels, but they greatly impact our atmosphere and environment.[3] However, engineers at the University of Delaware have discovered a new technological breakthrough that may build the bridge to a post-fossil fuel age.[4]

The University of Delaware’s research team accidentally created an effective carbon-capturing solution when it was experimenting with “hydroxide exchange membrane (HEM) fuel cells, a more affordable and environmentally friendly alternative to traditional acid-based fuel cells.[5] These fuel cells would function to change chemical energy into electric energy in hybrid or zero-emission vehicles, but they were kept off the road because they are incredibly sensitive to carbon dioxide input.[6] Carbon dioxide caused these fuel cells to lose 20% efficiency, making them no better than a regular gasoline engine.[7] It took the team nearly decades of research, but soon, that hindrance became a leverageable strength. Using hydrogen to control the short-circuiting fuel cells created a mechanism that can capture 98% of all carbon dioxide running through them at a rate of 10 liters per minute.[8] Effectively, electric vehicles equipped with this technology could continuously remove carbon emissions from the air while driving.[9]

There are two notable drawbacks to this system, however. First, this fuel cell system is only stable with added hydrogen. Hydrogen consumption in the U.S. alone is predominantly used by industry for refining petroleum, treating metals, producing fertilizer, and processing foods.[10] There are a few hydrogen-based electric vehicles for sale, but the market is in its infancy.[11] Regardless, two head engineers from the University of Delaware HEM project have created the spinoff company Versogen to further research towards sustainable green hydrogen and bringing these environmentally friendly fuel cells to market.[12] Second, environmentalists see carbon capture as a dangerous distraction from ceasing reliance on fossil fuels. Carbon dioxide transportation is normally done through pipelines that can leak or rupture and can result in the asphyxiation of humans and animals. It can even taint freshwater sources.[13] Regardless, carbon capture is not propagated as a silver bullet solution, and neither is immediately dropping fossil fuel usage either. The pandemic dropped global carbon emissions in 2020 by 4%–7% but damaged the world’s economy at the same time.[14] Even worse is that current electric vehicle batteries are not feasible for any kind of substantial shipping, further underscoring the need for technological innovation before renouncing fossil fuels.[15]

Despite risks espoused by environmentalists, lawmakers have begun to see carbon capture as a viable solution to mitigating our carbon emissions.[16] Senator Joe Manchin of West Virginia introduced bipartisan legislation to give tax credits to and encourage those undergoing carbon capture projects.[17] Manchin’s Carbon Capture, Utilization, and Sequestration (CCSU) Amendments Act also would allow for direct payment of carbon credits and increase commercialization/support for direct air capture of CO2.[18] Legislation such as this could be the legal mechanism that fuels carbon capture technology like Delaware’s HEM fuel cell project. If fully operational, this venture could begin to greatly impact transportation emissions, which make up the majority of greenhouse gas emissions in the U.S.[19] Legislative support for further research into carbon capture and hydrogen vehicles may be the bridge needed to finally begin the transition from fossil fuels and create the green age of travel by land, sea, air, and even to the stars.[20]

 

[1] Samantha Gross, Why are Fossil Fuels so Hard to Quit?, Brookings Inst. (June, 2020), https://www.brookings.edu/essay/why-are-fossil-fuels-so-hard-to-quit/.

[2] Id.

[3] See Sources of Greenhouse Gas Emission, EPA (last visited Feb. 27, 2022), https://www.epa.gov/ghgemissions/sources-greenhouse-gas-emissions#transportation.

[4] See generally Chris Young, New ‘Game-Changing’ Technology Removes 99% of Carbon Dioxide from the Air, Interesting Engineering (Feb. 4, 2022), https://interestingengineering.com/new-game-changing-technology-removes-99-of-carbon-dioxide-from-the-air.

[5] Id.

[6] 99% of CO2 Could Be Removed from Air by Game-Changing Technology, Technology Networks (Feb. 4, 2022), https://www.technologynetworks.com/applied-sciences/news/99-of-co2-could-be-removed-from-air-by-game-changing-technology-358214.

[7] Id.

[8] Id.

[9] Id.

[10] Hydrogen Explained, Energy Info. Admin. (Jan. 20, 2022), https://www.eia.gov/energyexplained/hydrogen/use-of-hydrogen.php#:~:text=Nearly%20all%20of%20the%20hydrogen,the%20sulfur%20content%20of%20fuels.

[11] See Id.

[12] Karen B. Roberts, Researchers Report Game-Changing Technology to Remove 99% of Carbon Dioxide from Air, Tech Xplore (Feb. 3, 2022), https://techxplore.com/news/2022-02-game-changing-technology-carbon-dioxide-air.html.

[13] Carbon Capture ‘A Dangerous Distraction’, 500 Organizations Warn Canada, U.S., The Energy Mix (July 22, 2021), https://www.theenergymix.com/2021/07/22/carbon-capture-a-dangerous-distraction-500-organizations-warn-canada-u-s/.

[14] Gross, supra note 1.

[15] Id.

[16] See Manchin Introduces Carbon Capture Legislation, Senate Comm. on Energy & Nat. Res. (Mar. 25, 2021), https://www.energy.senate.gov/2021/3/manchin-introduces-carbon-capture-legislation#:~:text=Washington%2C%20DC%20%E2%80%93%20Today%2C%20U.S.,available%20and%20easier%20to%20use.

[17] Id.

[18] Id.

[19]  Sources of Greenhouse Gas Emissions, EPA (last visited Feb. 27, 2022), https://www.epa.gov/ghgemissions/sources-greenhouse-gas-emissions#transportation.

[20] See generally Young, supra note 4.

Image Source: https://www.leopardsystems.com.au/cleaner-greener-how-to-drive-down-fleet-emissions-reduce-your-carbon-footprint/

You’ve Gotta Fight for Your Right to… Repair Cars

By: Nate Gilmore

 

In early February, U.S. Representative Bobby L. Rush (D-ILL) introduced a bill “[t]o ensure customers have access to data relating to their motor vehicles, critical repair information, and tools, and to provide them choices for the maintenance, service, and repair of their motor vehicles, and for other purposes.”[1] The Right to Equitable and Professional Auto Industry Repair (REPAIR) Act is a response to the growing difficulties consumers face when choosing whoever they want to fix their cars.[2]

70% of all registered vehicles in the United States choose independent auto repair shops over car dealerships.[3] As car technology advances, however, automakers have been restricting access to vehicle data relating to repairs and maintenance for consumers and independent repair shops.[4] But why restrict customers from going to independent repair shops? These restrictions allow automakers to monopolize and charge more money for repairs! Consumers spend an average of 36% more on repairs at dealerships than at independent shops.[5] With 95% of new cars having wireless data by 2030, a cause for concern arises with dealerships hogging the ability to work on high-tech cars.[6]

The REPAIR Act will update a 2014 “Memorandum of Understanding” between automakers and technicians, which required the former to make data available through a physical connection to the vehicle.[7] This agreement, however, left open a loophole for automakers to restrict access to wirelessly transmitted digital data.[8] This wireless data is growing increasingly popular and standard in almost all cars.[9] The REPAIR Act is aimed, in part, to fill this gap and require automakers to share this crucial and valuable information with independent repair shops to allow them to access diagnostic and wireless data systems needed to make proper repairs and adjustments to vehicles.[10] The REPAIR Act will also provide consumers the transparency required to have full freedom of choice when selecting an auto repair shop.[11]

A similar bill passed last year in Massachusetts but has been tied up in litigation ever since its creation.[12] The Massachusetts “Right to Repair” bill requires cars with wireless data systems to install a standardized platform that consumers and independent repair shops can access.[13] While 74% of Massachusetts voters sided with the bill, automakers acted quickly to block the bill.[14] The suit, brought by a group of 20 automakers entitled the “Alliance for Automotive Innovation,” states that allowing consumers and independent repair shops access to this wireless data exposes everyone to cybersecurity concerns.[15] Whether automakers’ concerns fall within cyber security or losing profits from their repair services, it is clear that consumers and independent repair shops are ready for change.

Fair competition has long been a linchpin in the United States economy. The REPAIR Act, if passed, would provide car owners and independent repair shops the opportunity to partake in this idea of a fair marketplace and require automakers to share this wireless data.

 

[1] H.R. 6570, 117th Cong. (2022).

[2] See Press Release, Rush Introduces REPAIR Act to Ensure Equal Access to Auto Repair Data for Independent Repair Shops and Preserve Consumer Choice (Feb. 3, 2022), https://rush.house.gov/media-center/press-releases/rush-introduces-repair-act-ensure-equal-access-auto-repair-data.

[3] Id.

[4] H.R. 6570.

[5] Press Release, Rush Introduces REPAIR Act to Ensure Equal Access to Auto Repair Data for Independent Repair Shops and Preserve Consumer Choice (Feb. 3, 2022), https://rush.house.gov/media-center/press-releases/rush-introduces-repair-act-ensure-equal-access-auto-repair-data.

[6] Id.

[7] Hiawatha Bray, Bill in Congress Echoes Mass. Automotive Right-to-Repair Plan, Boston Globe (Feb. 4, 2022, 12:50 PM), https://www.bostonglobe.com/2022/02/04/business/bill-congress-echoes-mass-automotive-right-to-repair-plan/.

[8] Id.

[9] Id.

[10] H.R. 6570.

[11] Id.

[12] Kathryn M. Rattigan, Litigation Over Massachusetts “Right to Repair” Law Continues, Nat’l L. Rev. (Feb. 10, 2022), https://www.natlawreview.com/article/litigation-over-massachusetts-right-to-repair-law-continues.

[13] Id.

[14] Matt O’Brien, Subaru Buyers Caught in Right-to-Repair Fight Over its Cars in Massachusetts, WBUR (Feb. 23, 2022), https://www.wbur.org/news/2022/02/23/subaru-right-to-repair-fight-cars.

[15] Kandra Hill, Automakers Fight Against ‘Right to Repair’ Law, TireReview (June 24, 2021), https://www.tirereview.com/automakers-fight-against-massachusetts-right-to-repair-law/.

Image source: https://www.mecum.com/lots/FL0120-405882/1967-ford-mustang-gt-fastback/

 

 

Innovating A Monopoly: A Dish Soft Served Cold

By Austin Wade-Vicente

 

“‘Just call the guy.’” The verbatim managerial command to call a Taylor Company approved technician to fix the infamously broken McDonald’s ice cream machine.[1] In 2017, A former employee of the fast-food giant told The Wall Street Journal that routine maintenance and timing is the source of this sweet treat trouble. “‘Customers who come in during [maintenance] may encounter a longer wait time or soft-serve dessert unavailability.’”[2] However, while franchisees were vocal that the machines were “temperamental and expensive to repair,” their creator, Taylor Company (Taylor), declined to comment on the matter.[3] Today, it is precisely Taylor’s repair practices and intriguing response to innovative solutions solving their blatant dairy dilemma that has now landed the company in the middle of a Federal Trade Commission (FTC) investigation.[4]

       I.   Taylor’s C602 McDonald’s ice cream machines are built to maintain a maintenance monopoly.

Until 2017, McDonald’s restricted its franchisees to the C602 ice cream machine because it was, and is, “manufactured exclusively for McDonald’s.”[5] However, this agreement benefits Taylor more than the McDonald’s franchisees purchasing the machines. Though failure is infamously frequent, McDonald’s franchisees are contracted to rely on Taylor to perform recurring parts and maintenance requests, which generates nearly 25% of Taylor’s total annual profits.[6] To maintain the revenue stream, Taylor produced one service manual for McDonald’s employees and one exclusive to Taylor authorized technicians. The latter withholds “critical operating parameters for the machine” from the former.[7]

Nearly every page of the McDonald’s employee troubleshooting guide section features the phrase “call a service technician.”[8] Meanwhile, the service technician guide reveals a secret access code, 5231, and the sequence of cryptic icon inputs used to access an exclusive service menu.[9] The code 5231 empowers only the Taylor authorized technician to accurately diagnose and solve even the most mundane hitches—keeping machines ‘broken’ and Taylor paid.[10] This secret service menu, not mentioned one singular time in the McDonald’s employee guide, effectively forces employees, managers, and franchise owners to “just call the guy” as their only hope for machine repair.[11]

       II.   McDonald’s corporate is nearly unaffected by Taylor’s maintenance monopoly.

The website, McBroken, tracks and collects data on all malfunctioning McDonald’s ice cream machines across the U.S., U.K., and Germany in real-time.[12] I personally purchased a vanilla cone from a designated green restaurant and failed at a marked red location using this application. McBroken appears to hover at an average 10% failure rate for McDonald’s ice cream machines around the world yet has U.S. States that sometimes double or even triple that number.[13] “What widespread industrial machine has a failure rate of 30%? Or even 11%? That is an absurd rate of failure,” remarked video journalist Johnny Harris from NPR’s The Indicator from Planet Money podcast.[14] If McBroken is correct that Taylor’s C602s have an average 10% failure rate, why does McDonald’s put up with it?[15]

Firstly, McDonald’s wants to maintain its long-running good relationship with Taylor, who supplies McDonald’s restaurants with their vital grills.[16] Secondly, the 93% franchisee-owned restaurants bear the cost of thousands of dollars a year in Taylor maintenance contracts, not McDonald’s corporate.[17] According to franchisees, the bulk of maintenance comes from “[l]eaving the machine with a bit too much or too little ingredient mixture in its hoppers, accidentally turn[ing] it off or unplug[ging] it at the wrong moment or fall[ing] victim to myriad other trivial errors or acts of God,” causing the machine to shut down with no hope outside of “just call the guy.”[18] The result is years of lost profits, especially in March when people go gaga for the Shamrock Shake.[19]

Regardless, with repairs in 2017 costing franchisees $80 million in the U.S. alone, and years of public outcry, McDonald’s chose a perfect public relations solution that same year.[20] Since 2017, McDonald’s now permits franchisees to purchase Italian Carpigiani FDM 312 machines, which McDonald’s claims, “require less downtime to clean and dispense[s] more flavors.”[21] However, this permission was simply a PR bandage on Taylor’s monopolistic wounds plaguing McDonald’s franchises.

The FDM 312 is more user-friendly and better designed, both mechanically and in its manual. However, it is still an expensive replacement for franchisees that requires up to a week to get Italian replacement parts.[22] Essentially, franchisees have the option to scrape together thousands of dollars to move from the devil they know to the devil they do not. Though the switch from Taylor machines is slow, a startling solution arrived in 2020 to save McDonald’s Taylor C602 franchisees and threatened to end Taylor’s maintenance monopoly.

        III.   As Taylor’s maintenance monopoly slips, so too does its dedicated repairman facade.

Taylor employs 1,700 technicians in the U.S. under an ethos of “what can I do to help either the customer or somebody that is helping the customer.”[23] Taylor Vice President of Operations Balaji Suresh proclaims the company does, “whatever it takes to get the job done.”[24] Yet it was Jeremy O’Sullivan, founder of startup Kytch, that delivered on this proclamation in 2020. O’Sullivan argued Taylor was committing “nothing short of a milkshake shakedown,” so his company responded with the eponymous device Kytch.[25]

Install the small, paperback book-sized, Wi-Fi connected device directly into your Taylor machine, and it would soon display the ice cream machine’s once hidden diagnostics and troubleshooting solutions through a user-friendly phone app.[26] It would even learn your store’s schedule to find the best downtimes to start the necessary and lengthy dairy pasteurization process.[27] After selling many units to McDonald’s franchisees, Taylor unveiled its competing device alongside McDonald’s corporate emails stating Kytch is a breach of “confidential information” that threatens “serious human injury.”[28] Despite many franchisees abandoning Kytch, the cat was out of the bag for the public that Taylor was not exactly doing “whatever it takes to get the job done.”

        IV.   Amid an FTC investigation after a damaging lawsuit, the innovative Kytch device could spell trouble for Taylor and McDonald’s corporate.

O’Sullivan sued Taylor, alleging “corporate espionage and the extreme steps one manufacturer has taken to conceal and protect a multi-million-dollar racket.” The complaint further claimed that Taylor had attempted to reverse engineer Kytch out of millions of dollars.[29] Despite Taylor arguing it only analyzed Kytch to assess whether “the radio frequency of the Kytch device would interfere with our software signal,” the Superior Court of the State of California for the County of Alameda ordered Taylor to turn over all ill-gotten Kytch devices within 24-hours.[30]

Even worse, subpoenaed emails reveal that McDonald’s may have orchestrated Taylor’s unsavory attempts to reverse engineer and mimic Kytch.[31] A 2020 email from Taylor president Jeremy Dobrowolski stated, “‘McDonald’s is all hot and heavy’ about Kytch’s growing presence at their franchises.” The FTC has also taken notice of its new presidential-approved crusade against anti-competitive repair schemes.[32] Biden’s Executive Order on Promoting Competition in the American Economy has spurred the FTC to both scrutinize manufacturer repairs and push for “the right of consumers to repair devices like smartphones, home appliances, cars, and even farm equipment.”[33]

The FTC has reportedly sent franchisees letters inquiring about the machines and their repair.[34] Though the commission has declined to comment, this investigation demonstrates the FTC takes the evidence against Taylor seriously and is “looking harder into franchising issues or right-to-repair concerns or both.”[35] Kytch Co-founder Melissa Nelson argues, “‘it’s past time to end shady business practices that create hundreds of millions of dollars of unnecessary repair fees from ‘certified’ technicians.’”[36] It is unclear where the case will go from here, how McDonald’s will be impacted, or if Taylor and McDonald’s will face further legal trouble. What is certain, however, is that the Kytch innovation, and others inspired from it, could soon allow us all to enjoy a McFlurry much more consistently without requiring franchisees to defeatedly spend millions a year to “just call the guy.”

 

[1] The Indicator from Planet Money, Why Are McDonald’s Ice Cream Machines Always Broken?, NPR, at 4:05, (Jan. 11, 2022), https://www.npr.org/2022/01/11/1072164745/why-are-mcdonalds-ice-cream-machines-always-broken.

[2] Julie Jargon, Why Is The McFlurry Machine Down Again?, The Wall St. J. (Jan. 19, 2017), https://www.wsj.com/articles/six-horrifying-words-the-mcflurry-machine-is-down-again-1484840520?mod=article_inline.

[3] Id.

[4] Heather Haddon, McDonald’s McFlurry Machine Is Broken (Again). Now the FTC Is On It., The Wall St. J. (Sept. 1, 2021), https://www.wsj.com/articles/mcdonalds-mcflurry-machine-is-broken-again-now-the-ftc-is-on-it-11630522266.

[5] Julie Jargon, McDonald’s Customers Scream, and Get New Ice Cream Machines, The Wall St. J. (Mar. 2, 2017), https://www.wsj.com/articles/mcdonalds-customers-scream-and-get-new-ice-cream-machines-1488476862; see Soft Serve/Shake Combination Freezer Taylor Model C602, TCMCD.co, https://www.tcmcd.co/MANUALS/C602op0.pdf (last visited Feb. 4, 2022).

[6] Taylor Acquisition Overview, MiddlebyCorporation.gcs, at page 2, https://middlebycorporation.gcs-web.com/static-files/5bd70207-96b1-48bd-a4a2-70dce00a247a (last visited Feb. 4, 2022).

[7]See generally Service Manual 057888-S, static-pt.com, https://static-pt.com/modelManual/TAF-C602_spm.pdf?v=1562905832341 (last visited Feb. 4, 2022); Soft Serve, supra note 5.

[8] Soft Serve, supra note 5.

[9] Service Manual, supra note 7.

[10] See Andy Greenberg, They Hacked McDonald’s Ice Cream Machines—And Started A Cold War, Wired (Apr. 20, 2021), https://www.wired.com/story/they-hacked-mcdonalds-ice-cream-makers-started-cold-war/.

[11] See Id.; The Indicator, supra note 1.

[12] Is The McDonald’s Ice Cream Machine Broken?, McBroken.com, https://mcbroken.com/ (last visited Feb. 4, 2022).

[13] See generally Id.

[14] The Indicator, supra note 1 at 3:23.

[15] See generally Id.

[16] Greenberg, supra note 10.

[17] Id.; How McDonald’s Makes Money, Investopedia.com, https://www.investopedia.com/articles/markets/032015/how-mcdonalds-makes-its-money-mcd.asp#:~:text=As%20reported%20in%20their%202019,%2Dterm%20goal%20of%2095%25 (Sept. 6, 2021).

[18] Greenberg, supra note 10; The Indicator, supra note 1.

[19] Greenberg, supra note 10.

[20] Jonathan Maze, McDonald’s Operators Get An Ice Cream Headache, Rest. Bus. Online (Sept. 2, 2021), https://www.restaurantbusinessonline.com/financing/mcdonalds-operators-get-ice-cream-headache.

[21] Jargon, supra note 5.

[22] See Greenberg, supra note 10; see generally FDM 312 US Shake/Ice Cream Combined Machine User’s Manual, carpiserve.net, http://www.carpiserve.net/uploads/1/2/3/9/123940898/um_fdm_312_us_v08_en.pdf. (last visited Feb. 4, 2022).

[23] Taylor Company, Built to Serve, YouTube, at 1:50-2:10, (Oct. 23, 2019), https://www.youtube.com/watch?v=jOEDEq3bS6U.

[24] Id.

[25] Greenberg, supra note 10.

[26] Id.

[27] Kytch, https://kytch.com/landing (last visited Feb. 4, 2021).

[28] Greenberg, supra note 10.

[29] Compl. for Damages, Injunctive Relief and Demand for Jury Trial at 1, 23–25, Kych, Inc. v. Jonathan Tyler Gamble, et. al., 2021 Cal. Super. LEXIS 10047 (No. RG21099155).

[30] Matthew Gault, Why the McFlurry Machine Company Just Got Hit with a Restraining Order, Vice (Aug. 9, 2021), https://www.vice.com/en/article/93ymbp/why-the-mcflurry-machine-company-just-got-hit-with-a-restraining-order.

[31] Gillie Houston, What Newly Revealed Emails Mean For McDonald’s Ice Cream Machine Lawsuit, Mashed (Jan. 12, 2022), https://www.mashed.com/673599/what-newly-revealed-emails-mean-for-mcdonalds-ice-cream-machine-lawsuit/?utm_campaign=clip.

[32] Exec. Order No. 14,036, 86 Fed. Reg. 36987 (2021); Emily Matchar, The Fight for the “Right to Repair,” Smithsonian (July 13, 2016), https://www.smithsonianmag.com/innovation/fight-right-repair-180959764/.

[33] Aishvarya Kavi, The F.T.C. Votes to Use Its Leverage to Make it Easier for Consumers to Repair Their Phones, N.Y. Times (July 21, 2021) https://www.nytimes.com/2021/07/21/us/politics/phones-right-to-repair-FTC.html.

[34] Maze, supra note 20.

[35] Id.

[36] Gault, supra note 30.

Image Source: https://www.eatthis.com/mcdonalds-new-soft-serve/

iSued? – The Legal Complexities Regarding Online Fitness Platforms

By Michael Millstein

 

Throughout the pandemic, only the rise of participating in online fitness platforms has rivaled the spike in adhering to health-safety precautions. With gyms closed, leaving limited options for staying in shape, many across the world have turned to platforms such as Peloton, iFit, and many more. In spite of the simplistic nature of merely hopping on an exercise bike to attend an online class, many legal complexities have begun to bombard this rapidly growing industry.[1] In fact, some of these risks are even greater for online trainers than for in-person trainers.[2]

One of the primary concerns for online platforms is the exposure to further personal jurisdiction reaches.[3] By providing paid memberships for those wishing to participate, Peloton (for example), may subject itself to facing a lawsuit for an injury to a rider in Seattle, Washington despite having its headquarters in New York.[4] Furthermore, the trainer who led the class in which the injury occurred may be sued jointly and severally along with the employer.[5] Although Peloton, a massive corporation with the means necessary to defend itself, could make defending itself across the country feasible, its trainers may not have such fortune.[6] Part of what makes this such an interesting shift in the realm of law and technology is that previously, if one were to merely enter a bike studio in New York and suffer an injury there, then that is where personal jurisdiction would be appropriate barring an exception.[7] Therefore, this new online now exposes companies to further global liability. Nevertheless, the economic benefits of pursuing this business model do not cause enough trepidation to inhibit its expansion.[8]

On that note, prior to the pandemic, the online fitness industry was valued at $6bn.[9] For comparison purposes, the in-person fitness industry was valued at $96.7bn prior to the pandemic.[10] Despite this vast divergence in success, the online fitness industry is currently projected to reach a valuation of approximately $59bn by 2027.[11] Given the abundance of greater legal complexities in the online fitness realm than with the in-person realm, an increase in legal issues may run parallel with the expansion of the online fitness industry. Consequently, as our world shifts even more virtual, so too may the legal industry – and with it, job opportunities.

In addition to the personal jurisdiction concerns, non-compete agreements complicate online fitness.[12] One common element included in non-compete agreements is a restriction on geographic proximity for competition.[13] For example, if a gym in Virginia opted to remain open throughout the pandemic and had a non-compete with a former trainer, barring this individual from providing training services for clients in the region, online training may violate the agreement.[14] However, acquiring knowledge of the breach of this restrictive covenant is highly unlikely, thus generating two legal problems. The first is whether or not this constitutes a breach.[15] Second, and perhaps more complicated, is whether or not a failure to report a breach violates a statute of limitations, assuming the statute does not begin to run until notice of the breach.[16]

Despite the exciting leap towards a brave new world, the emergence of technology, and our societal immersion in it, invites a plethora of legal issues not previously considered. Although some positives may come from this, such as more job opportunities, there is also a significant danger associated with it. If the creation of new law cannot keep up with the growth of technologically based industries, thus leaving an abundance of gray area, this may leave both consumers and businesses extremely unprotected.[17] With little to no guidance on what may cause legal liability, we may start to witness more risk-conscious behavior – perhaps subsequently stunting progress.

 

[1] See generally Anna Rabe, LEGAL RISKS AND ISSUES TO CONSIDER FOR FITNESS TRAINERS WORKING ONLINE, Fit Legally, https://fitlegally.com/legal-risks-issues-consider-fitness-trainers-working-online/ (last visited Jan. 22, 2022) (discussing a myriad of legal issues arising from the online fitness world).

[2] See Id.

[3] Id.

[4] Id.; Betsy Kim, Peloton. Moves HQ, Expanding Six Times in Size to 312,000 SF, Globest (Nov. 19, 2018, 5:59pm), https://www.globest.com/2018/11/19/peloton-moves-hq-expanding-six-times-in-size-to-312000-sf/.

[5] Vicarious Liability, Corporate Financial Institute, https://corporatefinanceinstitute.com/resources/knowledge/other/vicarious-liability/ (last visited Jan. 22, 2022).

[6] See generally Peloton, Craft, https://craft.co/peloton-interactive (presenting key numbers in assessing Peloton’s market reach such as revenue (last visited Jan. 22, 2022).

[7] What is personal jurisdiction? Why is it important?, Womens Law, https://www.womenslaw.org/laws/preparing-court-yourself/court-system-basics/personal-jurisdiction/basic-info-and-definitions-1 (last visited Jan. 22, 2022).

[8] Fitness Industry Statistics 2022, Wellness Creative Co (Jan. 5, 2022), https://www.wellnesscreatives.com/fitness-industry-statistics-growth/.

[9] Id.

[10] Smiljanic Stasha, 19+ Statistics and Facts About the Fitness Industry, Policy Advice (Feb. 14, 2021), https://policyadvice.net/insurance/insights/fitness-industry-statistics/#:~:text=The%20global%20gym%20industry%20is,184%20gym%20members%20in%20total.

[11] Fitness Industry Statistics, supra note 7.

[12] Rabe, supra note 1.

[13] Adam Hayes, Non-Compete Agreement, Investopedia (June 29, 2021), https://www.investopedia.com/terms/n/noncompete-agreement.asp.

[14] Id.

[15] Id.

[16] Christina Majaski et al., Statute of Limitations, Investopedia (Mar. 29, 2021), https://www.investopedia.com/terms/s/statute-of-limitations.asp.

[17] Rabe, supra note 1.

 

Image source: https://www.nbcnews.com/business/business-news/peloton-recalls-pedals-27-000-bikes-after-reports-injuries-n1243564

Banning For-Profit Prisons is not Enough

By Seely Kaufmann

 

The Brennan Center recently released a one-year review of President Biden’s criminal justice reform, noting that little to no progress has been made.[1] While mass incarceration broadly continues to be at the forefront of the conversation, there are several other areas that are in desperate need of reform. Capitalism perniciously pervades the criminal justice system from statutes that criminalize poverty to private companies that continue to make money off incarcerated individuals.[2]  Although Biden issued an executive order directing the Justice Department not to renew any contracts with for-profit firms that operate prisons within weeks of taking office, for-profit companies continue to make money in other ways.[3]

Electronic monitoring is an established alternative to detention, used in various stages of the criminal justice system, including at pre-trial, at sentencing, and following a period of incarceration.[4] Using either radio frequency or GPS technology, the courts have increased their reliance on these systems since the beginning of the COVID pandemic.[5] The market value for North America alone reached $823 million in 2020.[6] For example, in Baltimore, MD, the majority of home detention services were provided by for-profit private companies, charging individuals $11 to $17 a day to be electronically monitored.[7] Even worse, if individuals are being subjected to electronic monitoring pre-trial and are found not guilty or the charges are dropped, these individuals don’t get their money back, leaving many indebted to private companies. This business model ties a citizen’s freedom to their financial status, which further exacerbates the criminalization of poverty.

Another alternative to prison, many jurisdictions rely on diversion programs for low-level drug offenses, traffic violations, etc.[8] In theory, they sound like a win-win: the individual avoids prison, and the state reduces the fiscal burden of incarceration.[9] However, many of the programs are pay-to-participate programs, meaning that these programs are financially dependent on revenue from fines and fees imposed on program participants.[10] For example, in Maricopa County, AZ, a felony possession of marijuana can be dismissed altogether for those who complete a diversion program through the Treatment Assessment Screening Center.[11] To complete the program in 90 days, offenders must pay a $1,000 fee, $650 of that goes to Maricopa County Attorney’s Office.[12] Individuals who cannot pay the total fee at once must linger in the program, paying $15 to $20 fees for urine testing; if they cannot afford the urine testing, they fail and can be prosecuted for the felony.[13] Essentially, wealthy individuals buy their way out of diversion quickly, while poor individuals risk program expulsion and prosecution solely because they cannot afford to pay.[14] Of note, Maricopa County Attorney’s Office collected nearly $15 million from the diversion program from 2006 to 2016.[15]

Individuals in the criminal justice system often are subjected to risk assessments using algorithms to rate an individual’s risk of future crime; these assessments are used in a variety of ways, from assigning bond amounts to determining sentence lengths.[16] One of the most widely used assessment tools in the country is an algorithm created by a for-profit company, Northpointe.[17] In a study of 7,000 people arrested in Broward County, Florida, in 2013 and 2014, where Northpointe’s product is used, only 20 percent of the people predicted to commit violent crimes actually went on to do so.[18] Furthermore, black defendants were 77 percent more likely to be labeled as being at higher risk of committing a future violent crime.[19]

These three examples show that banning for-profit prisons is merely the tip of the iceberg for reducing profiteering off incarcerated individuals. In addition to continuing federal reform efforts, state and local governments must also contribute to criminal justice reform campaigns. There is much more work to be done.

 

[1] Ames Grawert et al., Criminal Legal Reform One Year into the Biden Administration, Brennan Center for Justice (Jan. 24, 2022), https://www.brennancenter.org/our-work/research-reports/criminal-legal-reform-one-year-biden-administration.

[2] Peter Edelman, Criminalization of Poverty: Much More to Do, 69 Duke Law Journal Online 114, 117 (2020).

[3] Grawert et al., supra note 1.

[4] Electronic Offender Monitoring Solutions Market Trends and Drivers 2021: Stronger Focus On Software and Analytics Within Offender Monitoring, Businesswire (December 14, 2021), https://www.businesswire.com/news/home/20211214005999/en/Electronic-Offender-Monitoring-Solutions-Market-Trends-and-Drivers-2021-Stronger-Focus-On-Software-and-Analytics-Within-Offender-Monitoring—ResearchAndMarkets.com.

[5] Id.

[6] Id.

[7] Marilyn Mosby & Priya Sarathy Jones, It’s Time to Hit Pause on Home Detention Fees, The Crime Report (Feb. 3, 2021) https://thecrimereport.org/2021/02/03/its-time-to-hit-pause-on-home-detention-fees/.

[8] Roman Gressier, Who Profits From Pay-for-Treatment Diversion?, The Crime Report (Mar. 11, 2019), https://thecrimereport.org/2019/03/11/who-profits-from-pay-for-treatment-diversion-programs/.

[9] Id.

[10] Id.

[11] Michael Kiefer, Maricopa County attorney sued over marijuana diversion program, AZ Central (Aug. 24, 2018), https://www.azcentral.com/story/news/local/phoenix/2018/08/24/maricopa-county-attorney-sued-over-marijuana-diversion-program/1089031002/.

[12] Id.

[13] Id.

[14] Id.

[15] Id.

[16] Julia Angwin et al., Machine Bias, ProPublica (May 23, 2016), https://www.propublica.org/article/machine-bias-risk-assessments-in-criminal-sentencing.

[17] Id.

[18] Id.

[19] Id.

 

Image source: https://www.aclu.org/sites/default/files/field_document/bankingonbondage_20111102.pdf

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