Richmond Journal of Law and Technology

By: Daniel Eggleston,

Most news about UAVs discusses their use as a military weapon, or is presented in the context of privacy concerns of citizens, or debates about the FAA’s regulation of civilian drones.[1] What isn’t talked about nearly as often is how drones are being implemented in the agricultural industry.[2] Farmers are finding ways to use drones to help increase yields and reduce crop damage.[3] “Worldwide, agriculture is the largest commercial market for unmanned aerial vehicles.”[4]

Unmanned aerial vehicles (UAVs) are replacing small aircraft as a practical and efficient way to monitor crops and collect data to optimize crop yield.[5] Crop imaging with UAVs is “. . . also much cheaper than crop imaging with a manned aircraft, which can run $1,000 an hour.”[6] Because FAA regulations require commercial drones to fly at an altitude of 400 feet or less,[7] they aren’t inhibited by clouds like a manned aircraft might be.[8]

Due to recent technological advances, drones have become much more prevalent in non-military settings.[9] This is in part because of the smartphone industry – many components used in smartphones are also used in drones.[10] For example, both contain GPS modules and powerful processors, and both utilize compact cameras.[11] Because of the demand for affordable components in the smartphone industry, drones have also become more affordable.[12] Farmers can buy drones for less than $1,000 apiece.[13]

Software organizes and interprets the information agriculture drones collect.[14] One platform, called DroneDeploy, “provides a suite of mobile and desktop tools that allow drone operators to plan and execute their automated flights, upload imagery collected from the drone’s camera to cloud-based servers to be processed into large area maps, and to analyze the 2D and 3D models.”[15] Maps can then be used to monitor weed locations, yield production, crop canopy closure, and plant population.[16]

“Drones can provide farmers with three types of detailed views.”[17] First, farmers can use aerial images of their crops to detect problems with irrigation, soil variation, and other issues that may not be visible at ground level.[18] Second, drones can utilize infrared and multispectral imagery to capture data that help farmers monitor the health of their crops.[19] Third, drones can survey crops constantly, providing data on demand farmers can use to optimize production.[20]

What’s more, FAA regulations released in August of 2016 make it substantially easier for the general public to use commercial drones.[21] “Previously, drone operators had to apply for special waivers from the FAA – a time-consuming and pricey process – to use UAVs for business.”[22] Now, to operate a commercial drone, one need only be 16 years old and qualify for a flying certificate.[23] As for the drone itself, in order to comply with the FAA it must weigh less than 55 pounds, fly no more than 400 feet in altitude, and not reach speeds exceeding 100 miles per hour.[24] Additionally, drones must be operated during the day and only 30 minutes before sunrise and after sunset, but operators can apply for waivers if they want to fly UAVs in circumstances that do not comply with the above regulations.[25]

The loosening of drone regulations coupled with the availability of affordable UAVs allows farmers to benefit from this emerging technology. [26] And, as the demand for food continues to grow along with the world’s population, the agricultural industry is a ready market for technological innovation. [27] With production yields in mind, “. . . the next revolution in agriculture will almost certainly be driven by the introduction of new precision farming techniques . . ..”[28] Drones are just one way farmers are using tech to better understand how to manage their crops and lower input costs.[29]

 

 

[1] See Chris Anderson, Agricultural Drones, MIT Tech. Rev. (Apr. 23, 2014), https://www.technologyreview.com/s/526491/agricultural-drones/.

[2] See id.

[3] See id.

[4] Prachi Patel, Agricultural Drones Are Finally Cleared for Takeoff, IEEE Spectrum (Oct. 19, 2016), http://spectrum.ieee.org/robotics/drones/agriculture-drones-are-finally-cleared-for-takeoff.

[5] See Anderson, supra note 1.

[6] Id.

[7] See id.

[8] See id.

[9] See Anderson, supra note 1.

[10] See Patel, supra note 4.

[11] See id.

[12] See id.

[13] See id.

[14] See Jose Antunes, GeoTiffs and Drone Mapping Data: A Unique Solution for Agriculture, Commercial UAV Expo (Nov. 6, 2016), http://www.expouav.com/news/latest/geotiffs-drone-mapping-data-unique-solution-agriculture/.

[15] Id.

[16] See id.

[17] See Anderson, supra note 1.

[18] See id.

[19] See id.

[20] See id.

[21] See Nyshka Chandran, FAA’s new drone laws go into effect Monday, allowing US companies to innovate, CNBC (Aug. 29, 2016), http://www.cnbc.com/2016/08/29/faas-new-drone-laws-go-into-effect-monday-allowing-us-companies-to-innovate.html.

[22] Id.

[23] See id.

[24] See id.

[25] See id.

[26] See Chandran, supra note 11.

[27] See Anderson, supra note 1.

[28] David Murray, Drones lead way in precision agriculture, Great Falls Tribune (Nov. 3, 2016), http://www.greatfallstribune.com/story/news/local/2016/11/03/drones-lead-way-precision-agriculture/93272348/.

[29] See id.

Photo Source:

http://images.atelier.net/sites/default/files/imagecache/scale_crop_587_310/articles/424650/atelier-drones-agriculture.jpg

By: Courtney Gilmore,

Gone are the days of purchasing CDs at the record store. Thanks to convenient music streaming services, we have our favorite tunes right at our fingertips. There’s a catch, though. While the online streaming models are favorable to the consumer, they exacerbate the plummeting profit margins for the music industry.[1] First it was vinyl records, then it was cassette tapes, then came CDs, and iTunes followed thereafter. Regrettably, artists are no longer seeing the same returns that they once did with each CD purchase or each iTunes song purchase.[2] Keeping in mind that before an artist can ever see any of that cash flow from a song sale or even a song stream the record label takes its substantial cut, it follows that online streaming puts an even bigger dent in each composer or singer’s revenue.

Spotify is one of these widely used streaming services. To avoid copyright violations, Spotify and similar services are legally obligated to obtain each artist’s permission to stream their songs in addition to agreeing on a royalty fee payment.[3] Under this model, artists are expected to receive a royalty payout per stream (i.e. each time a listener hits the play button on a song).[4] In light of this requirement, Section 115 of the Copyright Act sets out the procedures for coming up with a set rate royalty fee.[5] Spotify obtains this information by filing a formal “notice of intent” form with the Copyright Office.[6] This is meant to avoid the hassle of individually negotiating with each and every artist whose work is available on Spotify. These rates are determined by a board of Copyright Royalty Judges, or CRJs, to which they are commonly referred.[7] When setting these rates, the CRJs must adhere to the following objectives, which are to: (1) maximize the availability of creative works to the public; (2) afford the copyright owner a fair return for his or her creative work and the copyright user a fair income under existing economic conditions; (3) reflect the relative roles of the copyright owner and the copyright user in the product made available to the public with respect to relative creative contribution, technological contribution, capital investment, cost, risk, and contribution to the opening of new markets for creative expression and media for their communication; and (4) minimize any disruptive impact on the structure of the industries involved and on generally prevailing industry practices.[8]

The set rate system sounds like an equitable, easy-to-manage system, right? Wrong. Within the last few years, various complaints have arisen from artists alleging that they are not being adequately compensated for each of their songs being streamed on Spotify.[9] Take David Lowery, for example. He is the lead singer and guitarist for the bands Cracker and Camper Van Beethoven.[10] Specifically, Lowery claims that Spotify is failing to identify and locate the owners of these works to provide them with proper notice and payment.[11] While Spotify complains that the company has difficulty identifying who wrote certain songs and how to find those people, others find this difficult to believe.[12] Stephen Carlisle has been an entertainment attorney for more than twenty-six years and has never heard of a record company that has trouble locating artists.[13] Carlisle explains that record companies specifically have employees devoted to just musical licensing on each recording.[14] Thus, the record companies are well aware of who the songwriters are, what the percentage splits of the copyright are, and where to send the royalty payments.[15] It is therefore impossible that Spotify would be unable to track down these artists when all it would take is one phone call to the record company.

Notably, songs that are streamed through a Spotify Free account garner even less royalty payouts per stream than songs that are streamed through a paid subscription Spotify Premium account.[16] Consumers can either elect to have a free subscription or to have a Spotify Premium account, which costs ten dollars per month.[17] The former includes advertisements, while the latter is advertisement free. Depending on which subscription the listener chooses, the artist will see more or less return per stream.[18] To illustrate, in 2014 Spotify’s royalty range was between $0.006 and $0.0084 per stream.[19] Once labels receive their share of the royalties, artists received an estimated $0.001128 per stream on occasions when they were actually paid.[20]

I recently reached out to Spotify to inquire about their policy on royalty fees. This is the response I received:

When we first launched the Spotify Artists website three years ago, the goal of it was to introduce artists to all the facets of streaming, including the royalties model. As we’ve grown, the focus for the site has changed and our new site serves as a resource center for artists, providing practical information and tools to help them grow their fanbases around the world. Nothing has changed with regard to payouts. Our goal is and always has been to pay for every single stream and we pay the vast majority of every dollar we earn to our rights holders.[21]

Spotify’s total streams throughout the entire site and its yearly revenue are both unavailable to the public.[22] Since its inception in 2008, Spotify claims to have paid out more than $2 billion to record labels and publishers.[23] Spotify further claims that seventy percent of its annual gross revenue is paid out in royalties to artists.[24] The mystery remains though whether those royalty fees are actually getting to the individual artists or if they remain in the hands of the record labels, if anything. In light of this suspicion, there are allegations that recording companies, including Sony, Warner, and Universal, reportedly own as much as a twenty percent stake in the Spotify.[25] In particular, this concern has given rise to Sony being sued for breach of good faith and fair dealing.[26]

While Spotify offers quick and easy access to the consumer, the Swedish company seems to ultimately put a damper on the music industry. It is an efficient tool for those up-and-coming artists who are striving to be discovered by the general public; however, when interest turns into profit, artists’ rates of return are scant. The meager attempt by Congress to achieve a fair system through blanket licensing requirements is treated like a suggestion rather than a requirement.[27] The fact of the matter is that royalties and streaming do not match up.[28] Artists are therefore left with the decision of whether to allow their music to be streamed for extremely low profitability rates (if any), or to pull their music from Spotify, thus sacrificing their marketability.

 

 

[1] See Stuart Dredge, Here’s How Much Musicians Make Online from Spotify, iTunes and YouTube, The Guardian (Apr. 3, 2015), http://www.businessinsider.com/heres-how-much-musicians-make-online-from-spotify-itunes-and-youtube-2015-4.

[2] See id. (depicting that an unsigned artist made $0.69 for each iTunes single track download in 2015, which is a 70% cut of the profit; while an unsigned artists made $0.007 per stream on Spotify).

[3] See 17 U.S.C. § 115(a)(1).

[4] See id.

[5] See id.

[6] See id. (“Any person who wishes to obtain a compulsory license under this section shall, before or within thirty days after making, and before distributing any phonorecords of the work, serve notice of intention to do so on the copyright owner.”).

[7] See Caitlin Kowalke, How Spotify Killed the Radio Star: An Analysis on How the Songwriter Equity Act Could Aid the Current Online Music Distribution Market in Failing Artists, 6 Cybaris An Intell. Prop. L. Rev. 193, 203 (Spring 2015).

[8] See 17 U.S.C. § 801(b)(1)(A)-(D).

[9] See Y. Peter Kang, Spotify Hit With $150M Copyright Infringement Suit, Law360 (Jan. 4, 2016), http://www.law360.com/articles/742167; see also Bill Donahue, Tidal, Jay Z Sued Over Unpaid Songwriter Royalties, Law360 (Feb. 29, 2016), http://www.law360.com/articles/764815/tidal-jay-z-sued-over-unpaid-songwriter-royalties.

[10] See Kang, supra note 9.

[11] See id. (Spotify responded, “We are committed to paying songwriters and publishers every penny. Unfortunately, especially in the United States, the data necessary to confirm the appropriate rights-holders is often missing, wrong or incomplete.”).

[12] See Stephen Carlisle, How Spotify Pays (or Doesn’t Pay) Songwriters, NSU (Dec. 18, 2015), http://copyright.nova.edu/spotify/.

[13] See id.

[14] See id.

[15] See id.

[16] See Claire Zillman, Here’s How Much Artists Really Make on Spotify, Fortune (June 4, 2015), http://fortune.com/2015/06/04/heres-how-much-artists-really-make-on-spotify/.

[17] See Spotify, Go Premium. Be Happy. (2016), https://www.spotify.com/us/premium/.

[18] See David Johnson, See How Much Every Top Artist Makes on Spotify, Time (Nov. 18, 2014), http://time.com/3590670/spotify-calculator/.

[19] See id.; see also Dredge, supra note 1.

[20] See Dredge, supra note 1.

[21] Email from The Spotify Team, Spotify, to author (Nov. 3, 2016, 11:27 AM) (on file with author).

[22] See Johnson, supra note 18.

[23] See id.

[24] See Jim Edwards, Here Is the Fantastically Tiny Amount of Money Artists Get When Spotify Plays Their Songs, Business Insider (Dec. 5, 2013), http://www.businessinsider.com/what-spotify-pays-artists-for-songs-in-royalties-2013-12.

[25] See Eriq Gardner, Sony’s Equity Stake in Spotify Challenged in Lawsuit Claiming Artists Are Robbed, Billboard (June 24, 2015), http://www.billboard.com/articles/business/6605841/sonys-spotify-equity-artist-royalties-lawsuit-breakage (“Together, and individually, Sony and the other major record labels therefore have significant power to exert control over Spotify in order to not only dictate how revenue will be paid, but wrongfully and in bad faith divert money from royalties that msut be shared to other forms of revenue that they can keep for themselves.”).

[26] See id.

[27] See Kang, supra note 9.

[28] See Holly Ellyatt, Spotify Reaches ‘Landmark’ Royalties Deal with NMPA, CNBC (Mar. 18, 2016), http://www.cnbc.com/2016/03/18/spotify-reaches-landmark-royalties-deal-with-nmpa.html (“Spotify denies purposefully copying artists’ songs for distribution without their permission but also admits that it sometimes plays songs without knowing who to pay for them, blaming the issue one the lack of accurate data”).

Photo Source:

https://www.theguardian.com/technology/2015/dec/29/spotify-lawsuit-musicians-cracker-alleged-unpaid-royalties

 

By: Abby Johansen,

Who owns the rights to tattooed skin? This summer the United States District Court for the Southern District of New York was confronted with this question, but, under circumstances that had never been addressed by a court before. The suit asked not only who owns the rights over a tattoo, but who owns the rights over a tattoo when it is featured in a popular video game? This question still looms unanswered, as the District Court relied on a statutory ban from recovery when deciding to dismiss the case.

In February 1, 2016, Solid Oakes Sketches filed a complaint against 2K Games and Take-Two Interactive Software, Inc. for alleged infringement over the popular video game, NBA 2K16, for featuring eight tattoos on their digital depictions of professional basketball players. Solid Oakes entered into copyright license agreements with the individual artists of the eight tattoos in question.[1] The tattoos were based off of actual tattoos on NBA stars including: Lebron James, Kobe Bryant, Eric Bledsoe, DeAndre Jordan, and Kenyon Martin.[2] Solid Oaks registered copyrights over the tattoos in June and July of 2015.[3] Before filing their suit, Solid Oaks Sketches attempted to notify and meet with 2K Games to discuss the alleged infringement with the hope of entering into an agreement giving 2K Games permission to use the tattoos in the video game for a price of approximately one million dollars.[4] 2K Games refused such an agreement and continued to produce the video games, with better graphics, more recognizable characters, and featured the newly copyrighted tattoos in a much individualized manner.[5] Take-Two Software, Inc., claims that NBA 2K16 sold more than four million copies within the first week of the game’s release in September 2015.[6]

Copyright law protects original works of authorship that are fixed in a tangible medium of expression[7]. It is easy to claim that tattoos, at least, require some amount of originality, as copyright law merely requires a minimal level of creativity to be deemed as original.[8] But, challenges arise with the ‘fixed in a tangible medium of expression’ requirement. Specifically, whether or not a person’s skin is a tangible medium of expression.[9] Generally, an original tattoo fixed on an individual’s skin is considered to be copyrightable material, and, as a result, entitled to the Copyright Act’s enumerated exclusive rights.[10] The Copyright Act grants copyright owners the exclusive rights to reproduce, prepare derivative works, distribute copies, perform the work publicly, and display the work publicly.[11]

When tattoos, professional athletes, and media come together all of the exclusive rights associated with copyrights are at risk. Traditionally, major tattoo copyright suits involving celebrities or professional athletes have ended in confidential out of court settlements. In 1998, a tattoo artist in Oregon sued Nike and Rasheed Wallace, a NBA basketball player, over Wallace’s involvement in a Nike advertisement.[12] The ad featured two of Wallace’s tattoos and he explained the meaning and creative process behind each one.[13] The artist claimed that Nike and Wallace had infringed upon his copyrights without his permission and without even notifying him of the advertisement.[14] The case, Reed v. Nike, was dismissed and settle outside of court approximately eight month’s after it was filed.[15]

Another noteworthy, and perhaps the most well know, case is Whitmill v. Warner Brothers Entertainment, Inc., which focuses on Mike Tyson’s signature face tattoo. The issue arose after Warner Brothers began marketing for the release of their new film The Hangover: Part II, which featured a reproduction of Tyson’s face tattoo in both the trailer and the official movie poster.[16] The tattoo artist claimed that “both the trailer and the poster constituted unauthorized copying, distributing, and publicly displaying of the copyrighted work, and the version of the tattoo used in the film qualified as an unauthorized derivative work.”[17] In his complaint, the tattoo artist sought injunctive and monetary relief for the alleged infringement. Much like the prior Nike case, this case settled outside of court as well.

The Nike case is often considered to be the first case to allege copyright infringement over a tattoo and many worried that it would cause a mass influx of similar cases.^[18] But, this proved not to be true, as there have only been a few other notable copyright infringement suits over tattoos and they have ended in confidential out of court settlements. Most tattoo artists expect for their rights to be infringed based on the individual they are tattooing, they understand that their tattoo will be on TV or in a picture, but when the tattoo is specifically featured or commercialized, the incentive to sue increases. Although their rights may have been infringed, artists generally agree that the process of going to court and litigating over the copyrights associated with a tattoo is not worth the associated costs of litigation.[19] This sentiment is strengthened by the fact that there is a lack of actual precedent on this specific issue because the limited amount of prior cases over copyrights of tattoos have all settled out of court.[20]

The question over individual tattoos featured in video games potentially presents a new incentive for artists to litigate over the copyrights to their works. Professional athletes have their own individual rights of publicity, for instance, where they choose to go to make appearances or who they allow to use their likeness (magazines, advertisements, etc.).[21] Similarly, tattoo artists deserve rights over their original works of authorship fixed on the athletes’ body.[22] Also, the video game industry should not be improperly held back from improving and enhancing their technology. As increased realism in video games leads to increased profits and popularity.[23] The intersection and competition between the rights of artists, athletes, and video game developers creates major issues for copyright law, as athletes continue to consistently grab public attention, video games improve their graphics, and tattoos remain to be original and recognizable.

It is important to note that the artists who licensed their tattoo works to Solid Oaks Sketches are not attempting to control the specific athletes featured in the NBA 2K16 video game, they are claiming rights over the commercialization of their works.[24] It would be unreasonable to suggest that professional athletes should have to cover up their tattoos to prevent them from being broadcasted or captured in a picture.[25] Similarly it would be against the nature of Intellectual Property law to limit the technological development of video games. But, an artist’s exclusive copyrights are severely impacted in this scenario. For instance, an artist’s right to reproduce is affected by the digital reproduction of their tattoo featured in the game.[26] On the same note, the digital recreation of the tattoo could be considered a derivative work in violation of an artist’s right to prepare derivative works.[27] By selling the video game, like in the Solid Oak case by the millions in just one week, an artist’s right to distribute is impacted.[28] And, perhaps the most controversial, when the athlete appears in public with the tattoo visible, he may violate an artist’s right to publicly display their work.[29] There is a serious issue over balancing rights at play here, and this question is exacerbated by the influence of large scale profit potential, fame, and the constant improvement and development of technology.

One potential defense for the video game industry is an implied license. An implied license may arise when there is no written agreement between the copyright owner and the infringer, it would give the infringer some rights over a tattoo, but these rights would be limited the extent of what the tattoo artist would have agreed to if there was a formal written agreement in place.[30] It has been said that an implied license defense would be weak when applied to the Solid Oaks Sketches case, because “while this defense seems solid in protecting the NBA from infringement suits every time Lebron appears on television for games, it is much weaker when LeBron’s lion head [tattoo] appears on its own, independent from his body, and even weaker still when this unique tattoo appears on another NBA star’s avatar.”[31] In addition, the tattoo artists knew that they were tattooing professional athletes, who are featured in many types of pictures and videos, and because of this, their tattoos could be included and reproduced in various types of media and technology as the tattoo is physically a part of their bodies.[32] The potential downfall of an implied license defense for video game developers is that an implied license is designed to protect noncommercial displays of an author’s work, which is clearly not the case here.[33]

The Solid Oaks Sketches case was dismissed because the District Court held that the alleged infringement occurred before the tattoos were actually registered with the Copyright Office.[34] The tattoos were registered in the summer of 2015, but they were previously featured in earlier versions of the NBA 2K game (released in 2013 and 2014). So, the initial alleged infringement occurred years before the tattoos were registered and the suit was not file in time to be considered.[35] Despite the recent dismissal, Solid Oak Sketches can still continue to attempt to recover actual damages from Take-Two Software, Inc. (the other defendant in their initial suit) from their incorporation into the NBA 2K16 game that was released in 2015. [36] As a result, the question of who owns the copyrights over tattoos featured in video games remains unanswered by courts and the profit potential for all potential parties involved continues to rise.

 

 

[1] See Solid Oak Sketches, LLC v. 2K Games, Inc., No. 16CV724-LTS, 2016 U.S. Dist. LEXIS 101119, at *3 (S.D.N.Y. Aug. 2, 2016).

[2] See Johnathan Stempel, NBA 2K Videogame Maker Wins Dismissal of Big Tattoo Damages Claim, Reuters (Aug. 2, 2016), http://www.reuters.com/article/us-take-two-interac-lawsuit-nba-tattoos-idUSKCN10D28X.

[3] See Solid Oak, 2016 U.S. Dist. LEXIS 101119, at 3.

[4] See Bill Donahue, Novel Suit over Tattoos in Video Games Likely to Fade, Law360 (Feb. 8, 2016), http://www.law360.com/articles/755607/novel-suit-over-tattoos-in-video-games-likely-to-fade.

[5] See Solid Oak, 2016 U.S. Dist. LEXIS 101119, at *3-4.

[6] See Stempel, supra note 2.

[7] See 17 U.S.C.S. § 102(a) (LEXIS through Pub. L. No. 114-244).

[8] See Jennifer Commander, The Player, the Video Game, and the Tattoo Artist: Who Has the Most Skin in the Game?, 72 Wash. & lee L. Rev. 1947, 1954 (2015).

[9] See Id.

[10] See Id.

[11] See 17 U.S.C.S. § 106 (LEXIS through Pub. L. No. 114-244).

[12] See Commander, supra note 8, at 1957.

[13] See id at 1958.

[14] See id.

[15] See id at 1959.

[16] See id at 1961.

[17] See Commander, supra note 8, at 1961.

[18] See id at 1960.

[19] See id at 1964.

[20] See id at 1965.

[21] See id at 1977.

[22] See Commander, supra note 8, at 1978.

[23] See id at 1978.

[24] See Samantha Elie, Whose Tattoos? Body Art and Copyright (Part I), Center for Art Law (Mar. 16, 2016), https://itsartlaw.com/2016/03/16/whose-tattoos-tattoos-and-copyright/comment-page-1/.

[25] See id.

[26] See Commander, supra note 8, at 1955.

[27] See id at 1955.

[28] See id.

[29] See id at 1956.

[30] See Elie, supra note 24.

[31] See id.

[32] See Donahue, supra note 4.

[33] See Commander, supra note 8, at 1975.

[34] See Joyce Hanson, Tattoo Co. Loses Some Damages Claims Over ‘NBA 2K’ Games, Law360 (Aug. 2, 2016), https://www.law360.com/articles/824247/tattoo-co-loses-some-damages-claims-over-nba-2k-games?article_related_content=1.

[35] See Solid Oak Sketches, LLC v. 2K Games, Inc., No. 16CV724-LTS, 2016 U.S. Dist. LEXIS 101119, at *6 (S.D.N.Y. Aug. 2, 2016).

[36] See Hanson, supra note 34.

Photo Source:

http://clutchpoints.com/wp-content/uploads/2016/02/CaN4AjfWAAEYgLR.jpg

By: Daniel Eggleston

Since 1999, online piracy has caused a lot of problems for the music industry.[1]  While online streaming services like Pandora and Spotify have helped to curb illegal music downloads, they haven’t made it any easier for artists to get paid for their work.[2]  What’s more, streaming services and music companies often disagree when divvying up the money, leaving artists stuck somewhere in the middle. [3]

Traditionally, songwriters and recording artists assign their rights (to a work) to a third party known as a performance rights organization (PRO).[4]  PRO’s keep track of how many times a song is used, and determine the amount of royalties paid to the copyright holder.[5]  Copyrights to a song are usually assigned to a music publisher, while copyrights to a recording of a song are assigned to a record label.[6]

From the artist’s standpoint, how a PRO or record company tracks a song’s use is an opaque process.  Despite the advent of online streaming sites giving artists more exposure than ever, these artists are nevertheless having difficulty translating that exposure into profit.  For example, “a major music service . . . pays an average of $0.000035 per stream,” equating to approximately $35 for a million streams.[7]  For most artists, this means streaming revenue isn’t much of an income source.

The blockchain could be the answer artists have been looking for.[8]  The blockchain is “a way to structure data, and the foundation of cryptocurrencies like Bitcoin,” allowing parties to share a digital ledger across a network of computers.[9]  Anything of value can be tracked and traded on this ledger, and it doesn’t require a control center.[10]  This emerging technology will likely be used for many different business applications,[11] and it is already being applied to the music industry.[12]

Unlike the traditional method of assigning rights to a PRO or record label, artists can track the number of plays and purchases of a work through the digital ledger.[13]  This method offers greater transparency for the artists;[14] as “there would be no opacity in accounting, no delay in payment, and no confusion over who owned or controlled which rights to the work.”[15]

The music startup Revelator has already found success utilizing this new platform. On September 12, 2016, Revelator raised $2.5 million dollars in funding for its blockchain-based platform.[16]  Revelator will enable an artist to monitor his or her song rights and receive royalty distributions directly, eliminating the traditional role of a performance rights organization.[17]

This startup—along with others like it—will address some of the problems that have plagued the music industry since its inception, and will do so in a number of key ways.  First, these startups will resolve the long history of distrust between artists and the companies who handle their royalties because of the transparent nature of blockchain transactions.[18]  Second, these startups are highly efficient.  Unlike the traditional methods of royalty distribution and licensing, an artist can directly transfer or assign rights “per territory, per licensor, and per product,” and receive mass and micro-payments at fractional costs.[19]  Third, the blockchain creates a new business model allowing artists more control over the rights and distribution of their work.[20]  Finally, the digital ledger inherent in blockchain technology allows for the “global registry of rights information and distribution of assets with complete tracking, transparency, and trust.”[21]

Revelator is just one example of an emerging trend; many other startups are experimenting with the blockchain’s applicability to the music industry.[22]  However, big record companies and online streaming services still control how the majority of the market accesses music. As such, if these blockchain-based companies gain traction it will be interesting to see whether the bigger companies push back or begin to incorporate the blockchain technology into their business models.[23]

 

 

[1] https://techcrunch.com/2016/10/08/how-blockchain-can-change-the-music-industry/

[2] See id.

[3] See id.

[4] Music Royalties, Royalty Exchange, http://www.royaltyexchange.com/learn/music-royalties.

[5] See id.

[6] See id.

[7] Imogen Heap, Don Tapscott, Blockchain Could Be Music’s Next Disruptor, Fortune (Sep. 22, 2016 3:59 PM) http://fortune.com/2016/09/22/blockchain-music-disruption/.

[8] See id.

[9] Robert Hackett, Wait, What is Blockchain?, Fortune (May 23, 2016, 9:00 AM), http://fortune.com/2016/05/23/blockchain-definition/

[10] What is Blockchain?, IBM http://www.ibm.com/blockchain/what_is_blockchain.html.

[11] See id.

[12] See Heap & Tapscott, supra note 7.

[13] See id.

[14] See id.

[15] See id.

[16] Jacob Timp, Music Platform Raises $2.5 Million For Blockchain-Based Music Rights Technology, Coin Telegraph (Sep. 12, 2016, 12:49 PM), https://cointelegraph.com/news/music-platform-raises-25-million-for-blockchain-based-music-rights-technology.

[17] See Gideon Gottfried, Blockchain Platform Colu Partners With Revelator in Push to Fix Music’s Data, Billboard (Aug. 18, 2015, 10:40 AM), http://www.billboard.com/articles/business/6664006/colu-revelator-blockchain.

[18] See id.

[19] See id.

[20] See id.

[21] Id.

[22] See Jonathan Chester, How Blockchain Startups Are Disrupting The $15 Billion Music Industry, Forbes (Sep. 16, 2016, 11:07 AM), http://www.forbes.com/sites/jonathanchester/2016/09/16/how-blockchain-startups-are-disrupting-the-15-billion-music-industry/#77f4d29d652c.

[23] See id.

Photo Source:

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By: Madison Jennings,

Airbnb is a home-sharing service modeled after the same ‘sharing economy’ principles as ride-sharing services such as Uber. ‘Hosts’ list their residences on Airbnb as available for a nightly fee to travellers who would rather not spend the money to stay at a hotel.[1] Together, platforms like Airbnb and Uber make up the budding ‘sharing economy’, which allows individuals to utilize services they may not have had access to otherwise.[2]

At it’s inception, Air Bed and Breakfast (as it was called then) consisted of a few air mattresses on the floor of a San Francisco loft.[3] Today, owners, tenants, and property managers all promote their properties on Airbnb. Some offer just a room, others just a couch, and still others the entire property for the duration of the stay.[4] As Airbnb has grown and it’s base of users diversified, several legal issues have made themselves readily apparent.

While Airbnb is without a doubt a massive boon to young people looking to travel to faraway places but who lack the financial resources to stay at traditional hotels, not everyone has a favorable impression of the home-sharing service. In places like New York and even San Francisco (Airbnb’s city of origin) there has been significant push back against the application.[5]

Conceptually, Airbnb’s services are not inherently illegal, but many of the available properties do run afoul of local housing regulations. For example, New York homeowners cannot rent their homes out for fewer than thirty days, unless they themselves are also living on the property during the rental period.[6] While this has little significance for the owner who rents out their spare bedroom, both the individual who rents out their apartment while they themselves travel and the property manager who rents short-term using Airbnb are technically in violation. For many, this is a problem. One New York man, who rented out his bedroom while on vacation, returned home to a potential $40,000 fine from the city, despite his roommate being in the apartment the entire time.[7] Because the host who advertised the space was not there, it violated the law. Had the roommate advertised the room instead, there would have been no issue.

Despite legalizing Airbnb in 2014, the service’s home city of San Francisco has grown steadily more cold towards the home-sharing market. In 2015, the city put forth a proposition to impose hotel taxes and housing codes upon Airbnb hosts.[8] Though the proposition was ultimately defeated, Airbnb had to invest $8.5 million to do so, showing that support for Airbnb isn’t quite as universal as you might think.[9]

Generally, the main complaint that cities level against Airbnb is that it enables illegal hotel operations not only to function, but to flourish, depriving the city of tax revenues.[10]

The hotel industry is, of course, not as taken with the Airbnb service as the rest of the world seems to be. This should be obvious: the existence of a cheaper alternative eats away at the profits for traditional hotels. Not as obviously, the prevalence of Airbnb as an alternative to long-term tenancy of rental properties may have serious consequences for residents of cities with already high costs of living.

By having a revolving door of short-term tenants cycle through a property, landlords can maximize the property’s income potential. While the effects of this are difficult to clearly observe, there have been several instances of long-time tenants having their leases terminated, only for the same property to appear on Airbnb as a short-term rental within a few weeks.[11]

On top of that, there’s little in the way of real protection for hosts who welcome Airbnb users into their homes. Visitors have often caused damage or become troublesome towards neighbors.[12] Less frequently, however, visitors have overstayed their welcome. There has been at least one instance of an Airbnb tenant scheduling a temporary stay, and then refusing to leave for just long enough to acquire tenant’s rights, forcing the host to go to the court system in order to evict him.[13]

Then, an issue arises when hosts who are themselves renters are either ignorant of or choose to deliberately ignore their own lease obligations to the owner of their home. Many leases have specific requirements for subletting, as well as rules about how many consecutive days a guest can stay. Renters who run afoul of these lease provisions while playing host on Airbnb can face eviction themselves.[14]

All of these issues stem from one core problem with Airbnb: the people who use it are typically not familiar enough with the applicable fields of regulatory law to make informed decisions. Additionally, it’s hard to imagine your average young adult considering potential legal ramifications for something as seemingly-innocuous as allowing someone to crash on their couch for a few days or even a few weeks. Only law students and lawyers seem to be so unyieldingly cynical.

Some users who have faced unexpected legal consequences of hosting on Airbnb have called for more accountability from the service.[15] While the website currently states clearly that hosts need to check their own local laws to assure their compliance, many users think that the burden should be on Airbnb to effectively warn individuals of potential problems related to their geographic area.[16]

The question becomes: should Airbnb be culpable for ensuring that no one uses their platform in a way that violates local laws?

The answer, I’d say, is likely to be ‘no’. Airbnb is a tool, and it is ultimately the responsibility of the user to ensure that their use is compliant with the law.

 

 

[1] See Biz Carson, How 3 Guys Turned Renting an Air Mattress in Their Apartment into a $25 Billion Company, Business Insider, Feb. 23, 2016, http://www.businessinsider.com/how-airbnb-was-founded-a-visual-history-2016-2/#in-2007-the-two-roommates-living-in-san-francisco-couldnt-afford-to-pay-rent-the-pair-decided-to-turn-their-loft-into-an-area-that-could-fit-three-air-mattresses-along-with-the-mattress-and-a-nights-sleep-came-the-promise-of-a-breakfast-too-2.

[2] See id.

[3] See id.

[4] See id.

[5] See Elie Mystal, Airbnb Lawsuit Pits Poor New Yorkers Against Middle-Class New Yorkers As Hotels Laugh And Count Money, Above The Law, Oct. 26, 2016, http://abovethelaw.com/2016/10/airbnb-lawsuit-pits-poor-new-yorkers-against-middle-class-new-yorkers-as-hotels-laugh-and-count-money/?rf=1.

[6] See Ron Lieber, A Warning for Hosts of Airbnb Travellers, The New York Times, Nov. 30, 2012, http://www.nytimes.com/2012/12/01/your-money/a-warning-for-airbnb-hosts-who-may-be-breaking-the-law.html.

[7] See id.

[8] See Alejandro Lazo and Douglas Macmillan, San Francisco Voters Reject ‘Airbnb Initiative’, The Wall Street Journal, Nov. 4, 2015, http://www.wsj.com/articles/san-francisco-voters-reject-airbnb-initiative-1446622854.

[9] See id. 

[10] See Will Coldwell, Airbnb’s Legal Troubles: What Are The Issues?, The Guardian, July 8, 2014, https://www.theguardian.com/travel/2014/jul/08/airbnb-legal-troubles-what-are-the-issues.

[11] See Steven Hill, Evictions and Conversions: The Unsavory Side of Airbnb, The American Prospect, Oct. 19, 2015, http://prospect.org/article/evictions-and-conversions-dark-side-airbnb.

[12] See supra note 6.

[13] See Julie Bort, Airbnb Host: A Guest is Squatting In My Condo and I Can’t Get Him to Leave, Business Insider, July 21, 2014, http://www.businessinsider.com/airbnb-host-cant-get-squatter-to-leave-2014-7.

[14] See Stephen Fishman, Tenants: How to Make Airbnb Work for You and Your Landlord, Nolo, http://www.nolo.com/legal-encyclopedia/tenants-how-make-airbnb-work-you-your-landlord.html.

[15] See Will Coldwell, Airbnb’s Legal Troubles: What Are The Issues?, The Guardian, July 8, 2014, https://www.theguardian.com/travel/2014/jul/08/airbnb-legal-troubles-what-are-the-issues.

[16] See id.

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By: Sarah Wenrich,

Each state is able to create its own laws regarding cellphone use for drivers of motor vehicles, but 46 out of the 50 states plus Washington D.C. have prohibited the act of “texting while driving” for all drivers other than those in emergency vehicles. [1] As texting while driving has been shown to slow a driver’s reaction time as much as drinking four beers [2] and is also the cause of one out of every four accidents[3], this ban should come as no surprise.

In New York (as well as fourteen other states and the District of Columbia), there is also a statute that bans using hand held phone while driving, including talking on a hand held device. [4] This law extends to the use of a cell phone while stopped at a red light or in a tollbooth.[5] However, this behavior is still difficult for officers to observe, leaving the law enforced less often then it should be. [6] To combat this, a bill has been introduced in the New York Senate that would allow for the use of a device, currently being referred to as a “textalyzer,” to analyze a driver’s phone either when the driver is pulled over and suspected of using a phone while driving or after an accident occurs. [7] In pushing for this law, New York legislators are pursuing a theory of implied consent such that when you receive your driver’s license, you are implicitly giving consent to be subjected to a future textalyzer examination. [8]

The textalyzer would connect to the cell phone and relay to officers whether the cell phone was in use at the time in question. [9] Advocates for the use of the textalyzer address privacy concerns with this type of technology by arguing that it would not give the officers any access to personal data from the phone.[10] On the other side of the argument, people opposed to this technological probe into a person’s device express concern over the fact that a driver may not be able to recognize when more information is being passed onto law enforcement officers without their knowledge.[11] While it has not yet been voted on in legislative session, it could have effects that reach far beyond the borders of New York.

The state of Virginia is another state that prohibits texting while driving for drivers of any age.[12] The current law in Virginia prohibits drivers from “manually [entering] multiple letters or text in the device as a means of communicating with another person” [13] and from “[reading] any email or text message transmitted to the device or stored within the device.” [14] However, this law does not apply when the vehicle is legally stopped, allowing people at stoplights to text and email behind the wheel without penalty. [15] Additionally, because this law allows the use of a hand held phone for talking or GPS purposes, enforcement of this law is incredibly difficult. [16] If a police officer sees someone texting while driving, the driver can avoid a citation by either telling the officer he was not on the phone at all or that he was using it for a legal purpose.[17] If New York passes the use of the textalyzer technology, it could be an appealing option for police officers in Virginia to effectively enforce the ban on texting and driving.

While it is very challenging to enact new highway safety laws in Virginia,[18] this technology would not ban any new act by a driver; it would simply allow for the enforcement of the Virginia law already in place that bans texting and driving. The final textalyzer device has not yet been produced, but the CEO of Cellebrite Technology (the company that would produce the textalyzer) says that it will not be technologically challenging to produce.[19] Because the textalyzer technology could have the ability to analyze different applications and the activity in any or all of those applications,[20] slightly different versions could be adopted on a state-to-state basis in order to accommodate each state’s law.

The textalyzer may seem like a crazy and potentially invasive tactic for cracking down on law-breakers, but when texting and driving causes 11 teen deaths per day,[21] it may be what it takes to make people second guess grabbing their phone from behind the wheel. Unfortunately, if knowing that texting while driving causes 1.6 million accidents and 330,000 injuries per year[22] doesn’t stop a driver from texting, it’s unlikely that increased enforcement of the current law will do the trick.

 

 

[1] See Distracted Driving Laws, Governors Highway Safety Association, http://www.ghsa.org/html/stateinfo/laws/cellphone_laws.html (last visited October 30, 2016).

[2] See Texting and Driving Statistics, Texting and Driving Safety, http://www.textinganddrivingsafety.com/texting-and-driving-stats (last visited Nov. 3, 2016).

[3] See Cell Phone Use While Driving, Edgar Snyder & Associates, https://www.edgarsnyder.com/car-accident/cause-of-accident/cell-phone/cell-phone-statistics.html (last visited Nov. 2, 2016).

[4] See Distracted Driving Laws, supra note 1.

[5] See Matt Richtel, Texting and Driving? Watch Out for the Textalyzer, The New York Times (Apr. 27, 2016), http://www.nytimes.com/2016/04/28/science/driving-texting-safety-textalyzer.html?_r=0.

[6] See NEW YORK STATE’S MOBILE PHONE and PORTABLE ELECTRONIC DEVICE LAWS, Governor’s Traffic Safety Committee, http://safeny.ny.gov/phon-ndx.htm (last visited Oct. 30, 2016).

[7] See Karen Turner, A proposed ‘textalyzer’ bill might give cops the right to access your cellphone, The Washington Post (Apr. 13, 2016), https://www.washingtonpost.com/news/the-switch/wp/2016/04/13/a-proposed-textalyzer-bill-might-give-cops-the-right-to-access-your-cellphone/.

[8] See Richtel, supra note 5.

[9] Id.

[10] See Bruce Brown, Using your phone while driving may be stupider than ever, Digital Trends (Apr. 12, 2016, 5:38 AM), http://www.digitaltrends.com/mobile/cellebrite-textalyzer-driving-mobile-test-news/.

[11] See Turner, supra note 7.

[12] See Distracted Driving Laws, supra note 1.

[13] See Va. Code Ann. § 46.2-1078.1(A)(1) (2016).

[14] See Id at (A)(2).

[15] See What is the law on Texting While Driving in Virginia and What Does it Really Mean?, McGlone Law Firm, P.C., http://www.mcglonelaw.com/faqs/what-is-the-driving-while-texting-dwt-law-in-virginia-.cfm (last visited Oct. 30, 2016).

[16] Id.

[17] See Ashley Halsey III, Virginia’s new texting-while-driving law contains loophole, The Washington Post (Apr. 11, 2013), https://www.washingtonpost.com/local/trafficandcommuting/virginias-new-texting-while-driving-law-contains-loophole/2013/04/10/63bb64a2-a05a-11e2-82bc-511538ae90a4_story.html.

[18] Id.

[19] See Richtel, supra note 5.

[20] See Brown, supra note 10.

[21] See Texting and Driving Statistics, supra note 2.

[22] Id.

 

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By: Kathleen Pulver,

Ask any trial attorney what the most important part of a trial is and they will likely tell you it is jury selection.[1] In both criminal and civil trials, attorneys on both sides of the case are given the opportunity to question potential jurors through the process of voir dire.[2] Voir dire allows counsel to expose any potential bias and prior knowledge a juror may have about a case.[3] Based on their responses to these questions, an unlimited number of jurors may be removed “for cause.”[4] “For cause” removal allows attorneys to request that a juror be removed from consideration for things such as a close personal relationship to one of the parties or attorneys involved in the case.[5] Attorneys are also typically allowed a small number of preemptory challenges to jury selection, and this is where the “art” of jury selection comes in.[6]

In an effort to achieve the best results for their clients, many attorneys have begun to hire jury consultants.[7] Rising in prevalence since the 1980s, jury consultants are typically highly educated in the social sciences and occasionally the law, although a law school education is not required.[8] The first time jury consultants received major attention in the press was the O.J. Simpson trial.[9] Since the O.J. Simpson trial, jury consultants have been hired by defense counsel to assist in jury selection and trial strategy preparation in many cases, with some of the most notable being the Scott Peterson and Martha Stewart trials.[10] Now, the art of jury selection is also being broadcast into people’s homes with CBS’ new show, “Bull.”[11] Although not an entirely accurate depiction of the day-to-day workings of a jury consultant, “Bull” demonstrates how far jury selection has come since the 1980s, and presents some important legal questions for the future of jury consultants.[12]

In the 1995 trial of O.J. Simpson, Jo-Ellan Dimitrius, a relatively unknown trial strategist, was hired by Simpson’s defense team to help select the jury and prepare a trial strategy.[13] Dimitrius’ main job in 1995 was to design a questionnaire for voir dire which would help the defense select a jury that would be most sympathetic to Simpson’s side of the story.[14] Dimitrius studied the jurors’ body language, background, and comments during questioning, and then made recommendations to defense counsel.[15] In making her recommendations, Dimitrius was limited to the responses given by the jurors in voir dire.[16] Almost 10 years later, Dimitrius was hired by Scott Peterson’s defense team to help select a jury that would be most favorable to him.[17]

Unlike the O.J. Simpson trial where Dimitrius described the perfect juror as “a female African American with a high school education or less,” Dimitrius was looking for strong-willed people who were skeptical of authority and might believe that Laci Peterson, Scott Peterson’s wife, had died differently than the authorities were suggesting when selecting jurors for the Scott Peterson trial.[18] Once again, it was Dimitrius’ job to focus on the appearance of jurors and the way they answered questions during voir dire.[19] Juror responses to seemingly innocuous questions about favorite books, bumper stickers on their cars, religious affiliations, and which newspapers they read were turned in determinations about their personalities, their ability to keep an open mind during the trial, any bias they may hold towards either side, and ultimately the way they would rule at the end of the case.[20] Now, as “Bull” makes clear, jury selection doesn’t have to remain limited to the juror responses in court or their demeanor while they answer questions.[21]

The emergence of social media has greatly changed the process of juror selection.[22] Now instead of reviewing the information that jurors make available to attorneys in court, jury consultants and attorneys can access piles of additional information on a juror by conducting a simple internet search.[23] This presents a wealth of questions about the privacy to be afforded jurors and to the privacy of the jury process as a whole.[24] Ethically, the American Bar Association model rules say attorneys can conduct “passive” searches of social media profiles and the internet when researching jurors, as long as they do not “friend” the jurors on any social media sites to access additional information or act fraudulently.[25] Although ethically permissible, some courts have started to limit attorneys’ use of social media for the jury selection process.[26]

In Oracle Am., Inc. v. Google Inc., the court published an opinion regarding the use of social media in jury selection citing three main concerns: first, if jurors learn the attorneys are conducting internet searches into their lives, they will ignore the court’s instructions to not conduct searches into the attorneys and parties of the cases; second, allowing such in-depth searches of the potential jurors will allow attorneys to make inappropriate personal appeals to the jurors later in trial; and third, jurors are not the ones on trial during a case, and investigating them so heavily could be a breach of their right to privacy.[27] In this case, the court gave the attorneys two options: one) they could mutually consent to an outright ban on the use of the internet when conducting voir dire, and therefore have an extended period of time to ask the potential jurors additional questions; or two) they could use the internet, but they had to notify the jurors that they would be searching their social media sites, and the jurors will then be given an opportunity to adjust their privacy settings from their phones if they wish.[28] Either of these options has the potential to limit attorney’s access to information regarding the potential jurors, but may be the only way in which to protect the privacy rights that people have come to expect in today’s age.

Although unclear just how much of effect jury selection actually holds on the outcome of a case, it is unlikely that the use of jury consultants will slow down anytime soon. What is clear is that courts have started to take notice of the potential privacy problems which arise with the use of jury consultants and social media. [29] Only time will tell how courts decide to handle these issues as they arise.

 

 

[1] See generally Diana Walsh, The Peterson Trial / The art of high-stakes jury picking / 2 seasoned consultants compete in courtroom, SFGATE (Apr. 4, 2004) http://www.sfgate.com/bayarea/article/THEPETERSONTRIALTheartofhighstakesjury2397588.php

[2] See American Bar Association, https://www.americanbar.org/groups/public_education/resources/law_related_education_network/how_courts_work/juryselect.html.

[3] See id.

[4] See id.

[5] See id.

[6] See id.

[7] See Sally Kane, Jury Consultant, The Balance (July 25, 2016), https://www.thebalance.com/jury-consultant-2164304.

[8] See id.

[9] See Simpson Defense Team Hires Jury Consultant, N.Y. Times (Aug. 11, 1994), http://www.nytimes.com/1994/08/11/us/simpson-defense-team-hires-jury-consultant.html.

[10] See Diana Walsh, supra note 1; Leslie Eaton, Working Women Dominate the Jury for Stewart’s Trial, N.Y. Times (Jan. 27, 2004), http://www.nytimes.com/2004/01/27/business/working-women-dominate-the-jury-for-stewart-s-trial.html.

[11] See Roy Futterman, Talking ‘Bull’: Episode 5, Just Tell The Truth, Law 360 (Oct. 26, 2016), http://www.law360.com/articles/855908/print?section=legalindustry

[12] See id.

[13] Marc Davis & Kevin Davis, Jury consultants are changing with the times 20 years after the OJ verdict, Aba Journal (Jan. 1, 2015).

[14] See Simpson Defense Team Hires Jury Consultant supra note 9.

[15] See id.

[16] See Meet the ‘Secret Weapon’ Who Told O.J. Simpson’s Attorneys How To Pick a Jury, Inside Edition (Mar. 15, 2016), http://www.insideedition.com/headlines/15265meetthesecretweaponwhotoldojsimpsonsattorneyshowtopickajury.

[17] See Diana Walsh supra note 1.

[18] See id.; Simpson Defense Team Hires Jury Consultant supra note 9.

[19] See Diana Walsh supra note 1.

[20] See id.

[21] See Roy Futterman supra note 11; Marc Davis supra note 13.

[22] Marc Davis supra note 13.

[23] See id.

[24] Oracle Am., Inc. v. Google Inc., No. C 10-03561 WHA, 2016 U.S. Dist. LEXIS 39675, at *6-10, (N.D. Cal. Mar. 25, 2016).

[25] Model Rules of Prof’l Conduct r. 3.5(b) (Am. Bar Ass’n 1983). Each state has the opportunity to create their own rules, however, so this is not necessarily the standard everywhere.

[26] See e.g., Oracle, supra note 24; Omni Healthcare Inc. et al. v. Health First Inc. et al., 6:13-cv-0150, ECF No. 330 (M.D. Fla. August 19, 2016).

[27] See Oracle, supra note 24.

[28] See id.

[29] See id.

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By: Chresanthe Staurulakis,

Halloween 2016 marks the eighth anniversary of the release of Bitcoin, a decentralized, convertible, digital form of cryptocurrency.[1] Bitcoin was introduced by an anonymous creator, working under the pseudonym Satoshi Nakamoto.[2] Today, bitcoins function as a type of virtual currency.[3] Bitcoins can be traded, held or used to make online purchases on websites that accept it as a proper form of payment.[4] The system works as a computer protocol that lets users send money directly to anybody in the world over the internet.[5] While the technologies underlying Bitcoin are extremely complex, the process of trading bitcoins is fairly simple.[6]

First, one must download the Bitcoin “wallet” application onto one’s computer or phone.[7] This digital “wallet” functions the same way as a normal wallet but, instead of holding dollars, it holds bitcoins. This “wallet” also serves as a virtual bank account that allows the user to send or receive bitcoins or pay for items using bitcoins.[8] Once you have downloaded the “wallet,” you will receive a private key and a public key.[9] These two keys are what allows users to transfer bitcoins while keeping their identities anonymous.[10] Your private key is what you sign any transaction with to prove that you are the owner of the bitcoin you want to spend.[11] It is the key that allows you to send bitcoins to other users.[12] Only the owner of the “wallet” should know their private key.[13] Conversely, your public key serves as the address that you can share with other users in order to receive bitcoins from them.[14] To send bitcoins, you would enter the recipient’s Bitcoin address into the “wallet” app, enter the number of bitcoins you wish to send, authorize the transaction with your private key and hit “send” button.[15] The transferred bitcoins will immediately appear in the recipient’s wallet no matter where they are in the world.[16]

The way in which bitcoins may be transferred instantaneously and anonymously is part of their appeal and is the result of a completely trustless, peer-to-peer system.[17] There is no middleman or centralized server that may delay the money transfer.[18] There is nothing akin to a bank or PayPal system working to handle the transaction or verify the parties participating in the transaction.[19] Therefore, users are not required to pay any sort of transaction fee.[20] However, despite these advantages, there is still a lot of uncertainty surrounding bitcoins. Bitcoins are difficult to account for, report and value.[21] Moreover, Bitcoin makes it easy to participate in illegal activities such as money laundering or purchasing and selling goods on the black market.[22] Therefore, since its inception, Bitcoin has been the target of much regulation at both the federal and state level.

Many U.S. federal agencies have yet to draft completely new regulations pertaining specifically to virtual currency, like Bitcoin.[23] Instead, federal agencies have decided to oversee virtual currencies through pre-existing regulations.[24] The federal agencies that have been at the forefront of regulating bitcoins include the Commodity Futures Trading Commission (CFTC), the Financial Crimes Enforcement Network (FinCEN), the Securities and Exchange Commission (SEC), and the Internal Revenue Service (IRS).[25] On September 17, 2015, the CFTC announced that it was going to treat bitcoins as “commodities” for regulatory purposes.[26] Businesses dealing with bitcoins would be required to register with the CFTC and be subject to its regulation.[27] FinCEN has chosen to treat and regulate companies working with bitcoins as “money service businesses” (MSB), specifically “money transmitters.”[28] In 2011, FinCEN expanded its definition of “money transmitters” to include businesses that, on behalf of a third party, mine virtual currencies, use virtual currency to purchase goods and services, convert virtual currency to other forms of currency, invest in virtual currency, or rent out systems and software for the purpose of mining virtual currency.[29] If one is simply a “user” who uses bitcoins to purchase goods and services for themselves, they are not considered a MSB.[30] In 2013, FinCEN issued a guide to further clarify what activities count as “virtual currency activities” and distinguish among “users,” “exchangers” and “administrators.”[31] If one is simply a “user” who uses bitcoins to purchase goods and services for themselves, they are not considered a MSB.[32] However, businesses that issue virtual currency or provide for the exchange of virtual currency for real currency or other forms of currency are considered MSB’s and will be forced to register with FinCEN and be subject to its regulations.[33] Failing to register with FinCEN is a federal crime.[34]

In addition, the SEC declared that it will reserve the right to police virtual currency companies and prosecute them if they are found to be involved in any fraudulent schemes.[35] The SEC exercised this right in September 2014 when the District Court for the Eastern District of Texas entered a judgment against Bitcoin Savings & Trust for conducting a Ponzi scheme soliciting investments in bitcoin-related investment opportunities.[36] Finally, the IRS stated that it will treat bitcoins as “property” and tax any transfers of bitcoins among users.[37]

There has been less uniformity among states when it comes to regulating bitcoins. At the state level, a money transmitter is either a company that accepts value from one person and gives it to another or accepts value from one person and gives it back to that same person at a later date and time.[38] Unlike at the federal level, state money transmitters must be licensed.[39] However, businesses working with virtual currency may have difficulty determining whether they qualify as money transmitters within their state since each state has its own definition of “money” and “transmission.”[40]

In July 2014, New York was the first state to propose and implement a regulatory system governing bitcoins, called BitLicense.[41] Under BitLicense, “virtual currency” is considered “money” and companies dealing with bitcoins are considered money transmitters.[42] The five activities that BitLicense considers to be “virtual currency business activities” include transmitting virtual currency for third parties, maintaining control over virtual currency for others, buying or selling virtual currency as a customer business, exchanging or converting virtual currency and controlling, administering or issuing virtual currency.[43] Any business that participates in any of these activities must go through an extensive application process to obtain a license.[44] Once the business has obtained a license, it must abide by the compliance requirements set forth by BitLicense and be audited annually.[45] Other states have followed in New York’s footsteps. In June 2015, California passed a bill providing for similar licensing and regulation requirements as New York’s BitLicense.[46] Washington has ruled that virtual currency is considered in the definition of “money transmission.”[47] However, Kansas, Texas and Florida have all ruled that virtual currency is not “money” and is not included under its money transmission laws.[48] Finally, states like New Jersey, Connecticut, Pennsylvania, North Carolina, Utah, and New Hampshire have all taken efforts to follow in New York and California’s footsteps but the proposals have yet to been made official.[49]

It is clear that regulating Bitcoin remains unchartered territory for most. While it may have numerous advantages, businesses and everyday users should continue to exercise caution when using Bitcoin. While it is not illegal, the use of bitcoins is being monitored closely by federal agencies and states, as they continue to grapple with this new technology and determine how it should be regulated.

 

[1]^. See Beyond Bitcoin: Blockchain – The Essential Building Block in Designing the Future, Reed Smith LLP 1 (2016), https://www.reedsmith.com/files/Publication/9ac2cd3f-efdf-48a1-959d-bcf79f8f0d71/Presentation/PublicationAttachment/34219750-39fe-4f37-881c-9e4abf86e2fd/Beyond%20Bitcoin%20Whitepaper%20US.pdf [hereinafter Beyond Bitcoin].

[2]^. See Tal Yellin & Dominic Aratari, What is Bitcoin?, CNN Money (last visited Oct. 26, 2016), http://money.cnn.com/infographic/technology/what-is-bitcoin/.

[3]^. See Beyond Bitcoin, supra note 1, at 7.

[4]^. See Marco Santori, Bitcoin, Digital Currency and the Law, LawLine 1, 11 (2013), https://www.lawline.com/course-center/bitcoin-digital-currency-and-the-law.

[5]^. See id. at 4.

[6]^. See Beyond Bitcoin, supra note 1, at 2.

[7]^. See Santori, supra note 4, at 6.

[8]^. See Yellin & Aratari, supra note 2.

[9]^. See Beyond Bitcoin, supra note 1, at 2.

[10]^. See Yellin & Aratari, supra note 2.

[11]^. See id.

[12]^. See id.

[13]^. See id.

[14]^. See id.

[15]^. See Santori, supra note 4, at 7.

[16]^. See id.

[17]^, See Beyond Bitcoin, supra note 1, at 1.

[18]^. See Santori, supra note 4, at 6.

[19]^. See Beyond Bitcoin, supra note 1, at 2.

[20]^. See id.

[21]^. See Santori, supra note 4, at 18.

[22]^. See Don He Et Al., Virtual Currencies and Beyond: Initial Considerations, IMF 1, 27 (2016), https://www.imf.org/external/pubs/ft/sdn/2016/sdn1603.pdf.

[23]^. See Beyond Bitcoin, supra note 1, at 9.

[24]^. See id.

[25]^. See id.

[26]^. See Bitcoin Theft Highlights Cryptocurrency Regulatory Uncertainty, Allen & Overy (Aug. 11, 2016), http://www.allenovery.com/publications/en-gb/Pages/Bitcoin-theft-highlights-cryptocurrency-regulatory-uncertainty.aspx [hereinafter Bitcoin Theft].

[27]^. See id.

[28]^. See Santori, supra note 4, at 21.

[29]^. See Beyond Bitcoin, supra note 1, at 10.

[30]^. See id.

[31]^. See id.

[32]^. See id.

[33]^. See id.

[34]^. See id.

[35]^. See Don He Et Al., supra note 22, at 29.

[36]^. See Beyond Bitcoin, supra note 1, at 11.

[37]^. See Don He Et Al., supra note 22, at 24.

[38]^. See Santori, supra note 4, at 28.

[39]^. See id. at 29.

[40]^. See id.

[41]^. See Beyond Bitcoin, supra note 1, at 7.

[42]^. See id.

[43]^. See id.

[44]^. See id.

[45]^. See id.

[46]^.See Beyond Bitcoin, supra note 1, at 7.

[47]^. See id.

[48]^. See Stan Higgins, Federal Judge Rules Bitcoin is Money in US Trial, Coin Desk (Sept. 20, 2016), http://www.coindesk.com/us-judge-bitcoin-money-coin-mx/.

[49]^. See Beyond Bitcoin, supra note 1, at 7.

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By: Hannah Newman,

There’s an app for that. The influx of mobile apps has changed the way people do banking, connect over social media, and even buy groceries. They have changed industries; they have altered the way businesses advertise to customers and how they provide their services. The healthcare industry is no different.

Constant technological innovations combined with a health-conscious population has created an explosion of mobile health (mHealth) apps.[1] In 2015, more than 3 billion mHealth apps were downloaded from major app stores, according to “The 2015 mHealth App Developer Economics Study.”[2] Some apps help individuals count calories or track exercise, while others play a more substantial role in medical treatment.[3] Through laws like Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009, the federal government has incentivized the healthcare industry to promote patient engagement and the access to personal health data.[4] These apps are designed for sophisticated diagnostic use and aim to facilitate physician and patient interaction and decision-making.[5] Some of the more advanced apps also “collect, store, analyze, and transfer individual health information and data previously available only through face-to-face consultations with a health care professional.”[6]

Patients and the overall health care system have benefited from the adoption of mHealth apps. These apps have provided convenient and fun ways to focus on dietary habits and fitness goals, and in return have created a more health-conscious population overall.[7] Mobile health apps improve patient engagement with their physician by promoting shared health management and chronic condition monitoring. They assist patients and caretakers in adhering to post-treatment care instructions that are essential to a successful recovery. They also allow patients to connect with support communities online that can aid in the emotional aspect of treatment and recovery. [8]

However, the health care industry has not seen widespread usage of mHealth apps due to some significant issues that concern governing regulations and privacy and security uncertainties.

Governing Regulations:

There is no single federal agency or law that governs the vast realm of mHealth apps.[9] There are two types of health apps, and this distinction affects how they are regulated. The first type is used by health care providers and is integrated with existing medical technologies.[10] They are used to assist in the delivery of care, for example to monitor and store lab or test results. The second type is used outside of the health care facility and is referred to as private apps. These include fitness apps, weight loss apps, and chronic condition monitoring apps.[11]

The FDA regulates medical devices through section 201(h) of the Food, Drug, and Cosmetic Act of 1938 and the Medical Device Amendments of 1976 to that act.[12] However, the FDA regulates only mHealth apps “whose functionality could pose a risk to a patient’s safety if the mobile app were to not function as intended.”[13] Therefore, the FDA regulation covers all of the first type of apps used by health care providers and also private apps that are intended for use in “diagnosis of diseases or other conditions in the cure, mitigation, treatment, or prevention of disease.”[14] This leaves a vast majority of health care apps that are not regulated by the FDA, thus creating valid concerns among providers.[15]

Privacy and Security:

Protection of health information has been a primary concern with the adoption of mHealth apps. Enacted in 1996, the Health Insurance Portability and Accountability Act (HIPAA) governs health care privacy laws.[16] HIPAA governs the transmission of electronic health records and applies to all “covered entities,” such as health care providers, health insurers, health care clearinghouses, and the business associates of such entities.[17] The Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH) extends HIPAA protections to those who “create, receive, or transmit” health information.[18] Therefore, health apps that are used within a hospital, or by another covered entity, are protected under HIPAA.[19] The private apps that are used by an individual consumer are not subject to HIPAA, thus leaving an immense amount of health care information unprotected.[20]

As many of these apps are unregulated or unprotected, patients and providers may be subject to serious security threats. Forbes discovered through a recent study that 84% of all cyber attacks occurred at the application level.[21] The health care industry is no different. In the past two years, 81% of health care organizations have been breached.[22] A study conducted by security vendor Arxan found that of 19 FDA approved mobile health apps tested for security, 84% of them did not address at least two of the top ten security risks—application code tampering and reverse engineering.[23] Open Web Application Security Project (OWASP) identifies the top ten most critical security risks facing organizations.[24] The security issues that can result from such risks are “theft of personal health data and tampering with data.”[25] Through reverse engineering, an app can be reprogrammed to seriously alter treatment directions or dosage.[26] Information accessed through a security breach can include sensitive health information, but also other identifiable user information. Developers often sell this material to data aggregation companies, who then sell it to other third party parties such as credit card companies and life insurance companies.[27]

In order to prevent such privacy and security issues—and ultimate liability—the governing system of laws and regulations must stay current with the quickly developing world of mobile health apps.

 

 

[1] Kevin M. Henley, Tracking the Likelihood of Liability From Health Apps, Law360 (Mar. 11, 2015, 2:58 PM), http://www.law360.com/articles/629313/tracking-the-likelihood-of-liability-from-health-apps.

[2] Patrick Kehoe, 2016 State of Application Security: Top Health Care Apps in Critical Condition, Security Intelligence (Jan. 12, 2016), https://securityintelligence.com/2016-state-of-application-security-top-health-care-apps-in-critical-condition/.

[3] See supra note 1.

[4] See Sandeep S. Mangalmurti et. al., Medical Malpractice Liability in the Age of Health Records, New Eng. J. Med., 2060, 2060 (Nov. 18, 2010) http://www.nejm.org/doi/pdf/10.1056/NEJMhle1005210.

[5] Id.

[6] Supra note 1.

[7] Id.

[8] David L. Scher, The Big Problem with Mobile Health Apps, Medscape (Mar. 4, 2015), http://www.medscape.com/viewarticle/840335.

[9] David Pittman, 5 Problems with Mobile Health App Security, Medpage Today (Feb. 5, 2014), http://www.medpagetoday.com/practicemanagement/informationtechnology/44161.

[10] Y. Tony Yang & Ross D. Silverman, Mobile Health Applications: The Patchwork of Legal and Liability Issues Suggests Strategies to Improve Oversight, Health Affairs, 222, 222 (2014), http://content.healthaffairs.org/content/33/2/222.full.pdf.

[11] Id.

[12] Id. at 223.

[13] Id.

[14] Id.

[15] See supra note 8.

[16] See supra note 9.

[17] Jordan Cohen & Joanne Hawana, Mobile Health Apps Continue to Make Headlines, Mintz Levin (Mar. 16, 2016), https://www.healthlawpolicymatters.com/2016/03/16/mobile-health-apps-continues-to-face-privacy-security-and-consumer-protection-issues/.

[18] Supra note 9.

[19] See supra note 10, at 224.

[20] Id.

[21] See supra note 2.

[22] Id.

[23] Judy Mottl, Report: FDA-Approved Mobile Health Apps Pose Security Risks, FierceHealthcare (Jan. 10, 2016, 4:27 PM), http://www.fiercehealthcare.com/mobile/report-fda-approved-mobile-health-apps-pose-security-risks.

[24] See supra note 2.

[25] Supra note 23.

[26] Id.

[27] See supra note 17.

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