Category: Blog Posts Page 23 of 76

By Adarsh Vijayakumaran[1]

 

Non-Fungible Tokens (“NFTs”) represents assets that are either digital or real property which are encoded in a blockchain.[2] Unlike Fungible Tokens such as Bitcoin, Ethereum, etc. that can be replaced for one another, each NFTs represents a unique non-interchangeable unit of data whose value depends on the end buyer. The idea behind NFTs is that, while anyone can read the article or view the tweet, NFTs would give the owner a representation of “ownership” through that particular NFT.[3]

With increased popularity and evolved use cases for NFTs developing every day, the question of applicability of securities laws to NFTs becomes important. While the general notion is that since buying of most of the NFTs does not qualify as an investment contract under the Howey’s Test,[4] the securities laws do not apply to them.[5] The present article attempts to analyze the latest developments happening in the NFT-verse to re-evaluate if the above notion still holds true.

You selling me memes?

The reason why the applicability of securities laws to NFTs is mostly overseen is because the NFTs that are typically available in the marketplace today are art-based. For example, almost all the NFT platforms known to users sell digital collectibles like minted Jpgs, trading cards, crypto—kitties, monkeys and bears. This being the case, why would anyone even close to assume applicability of securities laws to random pictures of monkeys and kitties that are floating in some NFT website?

The applicability of securities laws to NFTs is not something that has not been pondered before. The common misconception regarding NFTs is that since NFTs derives its value from the underlying instrument (that could be off-chain or on-chain), they can be regarded as a derivative under the securities law.[6] But the problem with this concept is that derivatives by nature are contract for differences.[7] While certain marketplaces like NFT20 allows speculative trading for NFTs,[8] this may not be true for the vast majority of NFTs available. Furthermore, unlike exchange-traded derivatives like futures and options where securities law applies, the NFT derivative contracts are neither standardized nor liquid. This means, even with sufficient contractual freedom an NFT derivative could mean nothing more than a “forward type contract” representing a unique token that are traded over the counter and are not regulated under the securities law.[9] So, when does securities law come into play?

Split It!

The NFTs in the normal scenarios does not come under the securities law framework. But between May 2014, when the first one-off NFT avant la lettre was minted and March 2021,[10] when the Everydays: The First 5000 Days, created by @Beeple was sold for a whopping $69.3 million—[11] a lot of things about NFTs have changed.

The large-scale acceptance of NFTs today have attracted more users to enter into the NFT market places to mint as well as buy and sell NFTs. But the problem is that with the massive flooding of NFT marketplaces with millions of NFTs, not all tokens are well received. Even if a person burns away, let’s say 120 gwei in gas fees in minting an NFT,[12] it is very rare that his NFT is going to have buyers after listing it in the marketplace unless the person has some fame in either the real or virtual world.[13] Because of this, most buyers prefer NFTs that have already got some reputation in the metaverse. However, all the NFTs that have already got some repute in the virtual space are exorbitantly high in price thus discouraging new market participants.

It is in this above background that the concept of fractionalization of NFTs and the introduction of DAO vehicles to buy and sell, and fund NFTs came in.

Fractionalization of NFTs

The fractionalization of NFTs refers to splitting up of ownership in an NFT so that many people can part-own a single NFT.[14] While different blockchain players provide various ways to split ownership in an otherwise unique token, the crux of the process is locking the particular NFT into a vault and issuing fungible tokens on its behalf.[15] Each of these fungible tokens will represent a fractional ownership and has a uniform democratized value just like a price feed for each BTC or any other fungible token.[16]  These fungible tokens can be later listed in a crypto-exchange and traded like listed crypto-currencies or just sold via private placements.[17] The sum total value of these tokens will determine the average price of the original NFT.

But the problem with the fractionalization of NFTs is that it is not always necessary that the fractional NFTs (“F-NFTs”) are diluted at a truly democratic level. With the earlier full owners acting as “promoters” (or managing the vault) for the original NFT or advertising the fraction as a speculative investment, accompanied by the suggestion that the original NFT or the F-NFT will increase in value (view to profit) as a result of the actions of the issuer or the promoter, the F-NFTs might as we be treated as units of a collective investment scheme as defined under section 11AA of the SEBI Act or as an “investment contract” under the Howey’s test.[18]

Nevertheless, the using of ERC20 standards to dictate a number of rules and actions that a token or a smart contract must follow and steps to be able to implement it, for e.g. set parameters for opening the vault; and having reserve prices for deciding buy-outs; and availability of different product builders for fractionalization that uses a variety of methods to split ownership for e.g. “smart contracts that split the original NFT itself”[19] could all significantly mitigate the potential exposure of F-NFTs to securities regulations.

NFT DAOs

Just like how F-NFTs make it possible to distribute ownership, the Decentralised Autonomous Organisations (“DAOs”) in NFTs also came in with a view to democratize buying and selling heavy priced NFTs. However, unlike F-NFTs that are made by fractionalizing a vaulted NFT that was brought by the token issuer, the DAOs in NFTs work a bit differently. In DAOs, the funds are pooled in first and tokens are issued based on the fund contribution, and using the proceeds of the pooling, NFTs are bought and sold.[20]

What makes DAOs better than F-NFTs is that DAOs are what really makes democracy in the metaverse truly possible. In structure, a DAO is like a public limited company but instead of having Articles of Association, a DAO has a self-executing code to govern it.[21] And like the word decentralized indicates, decisions in DAOs are not made by a board of directors but voted by the token holders directly.[22]

However, even though DAOs gives the token holders a better say in the affairs of the organization, DAOs are something that came under the securities law framework as early as in the year 2017 itself with the Securities Exchange Commission (SEC) of United States (US) releasing an investigative report on the offering of tokens by a group known as “the DAO” and concluding that securities law requirements will apply “regardless of whether the issuing entity is a traditional company or a decentralized autonomous organization, regardless whether those securities are purchased using U.S. dollars or virtual currencies, and regardless whether they are distributed in certificated form or through distributed ledger technology.”[23]

Moreover, very recently, the US state of Wyoming passed a law that recognizes DAO as a limited liability company.[24] This means, the law in Wyoming has now clearly recognized a DAO as a legal person, and token holders are protected under the corporate veil as long as the situation doesn’t demand lifting that veil.

The Indian Picture

In terms of global cryptocurrency ownership, India stands at 5th spot with 7.30% of the total population of showing an exponential increase in interest in cryptocurrencies ever since the Reserve Bank of India lifted its ban in March 2020 with Indian exchanges clocking impressive user additions and a sustained surge in daily trading volumes.[25] But unlike the crypto craze that has been happening since last year back, the NFT bandwagon came to India only in 2021 with leading Indian celebrities from the world of Bollywood and cricket launching digital memorabilia through NFTs.[26] While it is true that India still has a long way to go in terms of blockchain-based asset adoption, the massive surge in interest in NFTs since this year and the launching of more and more NFT marketplaces in India hints that NFTs are going to be in India for a very long time.

However, unlike the US, the Indian securities market is yet to see NFT based securities disputes to score regulations. While the concept of fractionalization and DAO-lization has caught Indian media’s attention, India has so far not witnessed actual use cases of these democratizing mediums. It is also very unclear as to how Indian regulators will deal with matters connecting F-NFTs and DAO. For one thing, all the unregulated deposit schemes are required by law under the Unregulated Deposit Schemes Act, 2019 to be banned.[27] Secondly, Indian law does not recognize the unregistered association of persons as a separate “legal entity”.[28] This means, liability in case of any violations knowingly or unknowingly committed under the garb of F-NFTs and DAOs could shift to individual token holders. Moreover, the concept of “Law of Code”[29] is still foreign to India.

Conclusion

The coming of F-NFTs and DAOs in NFT-verse has enabled all the market participants who were otherwise discouraged from buying and selling NFTs to now part-own some of the heavy-priced NFTs. While the legal treatment of each of these new mediums of asset democratization has left regulators perplexed, there is no single formula to decide how to go about any of these instruments. The law should decide matters based on the facts and circumstances of each case. On appearance, it may appear that Indian securities law is not matured to deal with these novel instruments, but with the presence of sandbox schemes that provide certain regulatory exemptions in a controlled environment for most of the new products and businesses, and having perceptive lawmakers who are ambitious to prepare India for the 4th industrial revolution indicates that there is always a space in India for innovation. Moreover, the Securities Exchange Board of India’s recent circular barring registered investment advisors from advising on unregulated financial instruments indicates that the regulators are conscious of the latest developments happening and want the investors to be cautious before they pour their hard-earned money anywhere.[30] Nevertheless, despite whatsoever happens in the short term it’ll be interesting to see how different stakeholders, regulators, lawmakers, and different market participants will come together in taking these crypto-revolutions to the next level.

 

[1] The author is a B.A.LLB (Hons.) Student at the National University of Advanced Legal Studies, India.

[2] See Robyn Conti & John Schmidt, What You Need To Know About Non-Fungible Tokens (NFTs), Forbes (May 14, 2021), https://www.forbes.com/advisor/investing/nft-non-fungible-token.

[3] The empirical constraint of owning an NFT is different from the traditional ownership of assets. This is because owning an NFT by itself doesn’t grant the right to print or distribute the work. The rights that a person will behest as part of owning an NFT would depend on a combination of on-chain contracts and off-chain contracts relating to the particular token. For more information. See Adarsh Vijayakumaran, NFTs & Copyright Quandary, Journal of Intellectual Property, Information Technology, and E-Commerce Law (pending publication).

[4] See generally S.E.C. v. Howey Co., 328 U.S. 293 (1946).

[5] See Media, Entertainment and Technology Litigation Update – Non-Fungible Tokens (NFTs), Gibson Dunn (Apr. 19, 2021), https://www.gibsondunn.com/media-entertainment-and-technology-litigation-update-april-2021.

[6] See, e.g., Abhinav Kaul & Neil Borate, Non-fungible tokens are now in India, but mind the legal pitfalls, Live Mint (Apr. 8, 2021), https://www.livemint.com/money/personal-finance/nonfungible-tokens-are-now-in-india-but-mind-the-legal-pitfalls-11617557315927.html.

[7] Financial Derivatives, SBSC, https://www.sbsc.in/pdf/resources/1587985025_FINANCIAL_DERIVATIVES.pdf (last visited Oct. 20, 2021).

[8] See NFT Liquidity Protocol, NFT20, https://nft20.io (last visited Oct. 25, 2021).

[9] Forward contract vs Futures contract: What’s the difference?, Times of India (Jan. 25, 2019), http://timesofindia.indiatimes.com/articleshow/60461912.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst.

[10] Bo Franklin, Did an avant-garde French artist sell the first NFT?, Economist (Apr. 29, 2021), https://www.economist.com/1843/2021/04/29/did-an-avant-garde-french-artist-sell-the-first-nft.

[11] A digital artist just sold a jpg file for $69 million, Live Mint (Mar. 12, 2021), https://www.livemint.com/news/world/this-digital-collage-of-5-000-individual-images-fetches-rs-500-crore-11615516650126.html.

[12] See Samantha Ayson, What is Gas?, Help Foundation, https://help.foundation.app/en/articles/4743017-what-is-gas (last accessed Oct. 2, 2021) (“‘Gas’ refers to the fee required to successfully conduct a transaction on Ethereum. This fee goes directly to Ethereum miners who provide the computer power that’s necessary to verify transactions and keep the network running; Foundation does not receive a percentage.”).

[13] See What are NFTs and why are some worth millions?, BBC News (Sept. 23, 2021), https://www.bbc.com/news/technology-56371912.

[14] See Mehab Qureshi, Fractionalised NFTs: Know Your NFTs? You Can Own One Too! At Least a Part of It, The Quint (Sept. 21, 2021), https://www.thequint.com/explainers/what-are-fractionalized-nfts-how-do-they-work-who-can-benefit#:~:text=Chandra%20explained%20that%20the%20process,type%20are%20called%20fungible%20tokens.

[15] See id.

[16] See id.

[17] See Prabhjote Gill, Fractionalisation of NFTs — the newest crypto craze explained, Business Insider (Sept. 9, 2021), https://www.businessinsider.in/investment/news/fractionalised-non-fungible-tokens-are-the-newest-craze-of-the-crypto-art-world/articleshow/86062930.cms.

[18] F-NFTs in normal scenarios ticks all the requirements to be classified as a collective investment scheme under §11AA of Securities and Exchange Board of India Act, 1992. See §11AA, Securities and Exchange Board of India Act, 1992, https://www.sebi.gov.in/legal/acts/jan-1992/securities-and-exchange-board-of-india-act-1992-as-amended-by-the-finance-act-2021-13-of-2021-w-e-f-april-1-2021-_3.html (last accessed Oct. 2, 2021); see also Framework for “Investment Contract” Analysis of Digital Assets, SEC, https://www.sec.gov/corpfin/framework-investment-contract-analysis-digital-assets (last accessed Oct. 3, 2021).

[19] See, e.g., Edward Wilson, What are fractionalized NFTs?, Argent (Sept. 3, 2021), https://www.argent.xyz/learn/fractionalized-nfts/#:~:text=Fractionalized%20NFTs%20are%20NFTs%20split,locked%20into%20a%20smart%20contract.

[20] The reverse could also be possible, where tokens are made for a previously bought NFT similar to the fractionalization process. However, with increased use cases for a DAO in comparison to the limited purpose of the normal fractionalization process, the established practice proceeds with pooling of funds first as it allows the DAO to be used for broad purposes not limiting to just fractionalization. See Kam (Exhuman), The Emergence of NFT DAOs – Overview, Niftex (June 9, 2021), https://blog.niftex.com/nft-dao.

[21] Samer Hassan & Primavera De Filippi, Decentralized Autonomous Organization, Policy Review (Apr. 20, 2021), https://policyreview.info/glossary/DAO.

[22] See id.

[23] Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO (Release No. 81207), SEC (July 25, 2017), https://www.sec.gov/litigation/investreport/34-81207.pdf.

[24] SF0038 – Decentralized autonomous organizations, https://www.wyoleg.gov/Legislation/2021/SF0038 (last accessed Oct. 2, 2021).

[25] See India has highest number of crypto owners in the world, Live Mint (Oct. 13, 2021), https://www.livemint.com/market/cryptocurrency/india-has-highest-number-of-crypto-owners-in-the-world-at-10-07-crore-report-11634110396397.html.

[26] See Prasid Banerjee, NFTs, the new craze in cricket and Bollywood, Live Mint (Sept. 23, 2021), https://www.livemint.com/technology/tech-news/film-stars-cricketers-join-nft-bandwagon-11632333214229.html.

[27] The Banning of Unregulated Deposit Schemes Act, 2019, https://egazette.nic.in/WriteReadData/2019/209476.pdf (last accessed Oct. 1, 2021).

[28] See Gorakh Hilal Patil v. Parit Samaj Seva, Civil Revision Application No. 202 Of 2007, High Court of Bombay (India).

[29] Lines of programming codes are to the virtual-world what the laws of physics are to the Real-world; they determine what is possible and, in turn, what can be regulated. See, e.g., Programming Language Converts Laws Into ‘Provably Correct’ Computer Code, Discover Magazine (Mar. 23, 2021), https://www.discovermagazine.com/technology/programming-language-converts-laws-into-provably-correct-computer-code; William Li et al., Law Is Code: A Software Engineering Approach to Analyzing the United States Code, 10 J. Bus. & Tech. L. 297 (2015); Dr. Michael Jünemann & Dr. Udo Milkau, Can Code Be Law?, Bird & Bird (Aug. 2021), https://www.twobirds.com/en/news/articles/2021/germany/can-code-be-law.

[30] See Dealing in unregulated products by SEBI registered Investment Advisers, SEBI (Oct. 21, 2021), https://www.sebi.gov.in/media/press-releases/oct-2021/dealing-in-unregulated-products-by-sebi-registered-investment-advisers_53370.html.

Image Source: https://decrypt.co/66046/the-next-big-thing-in-nfts-breaking-them-apart

By Sophie Thornton

 

With the rise of NFTs, art collectors around the world purchase their own one-of-a-kind piece of artwork without ever having to leave the comfort of their home. Pictured above is an image of artwork created by Beeple which was purchased as an NFT for over $69 million. Anyone can google search this art, download it, view it, and personally use Beeple’s artwork in a seemingly equal way to the purchaser but at no cost. So, what makes this art worth buying?

An NFT is a non-fungible token.[1] A fungible asset is one that is interchangeable without losing any value.[2] For example, a dollar bill can be interchanged with any other dollar bill and the value remains the same. [3] A non-fungible asset has unique qualities that make it impossible to interchange.[4]

NFTs are based on blockchain that is made of software code in the form of “smart contracts.”[5] “Smart contracts are open-sourced blockchain protocols that control the transfer of digital currency under certain terms and conditions.”[6] Once the smart contract is finalized, it is “minted” onto the token on the corresponding blockchain.[7] This is permanent and cannot be modified later.[8] Additionally, the records cannot be forged because the information is stored on thousands of computers internationally.[9]

Many people are concerned that NFTs are the next big bubble, just waiting to burst and hurt people who have spent upwards of millions of dollars on this type of investment.[10] This concern seems to stem from the lack of tangible ownership. A former Christie’s auctioneer stated that the idea of buying something “which isn’t there is just strange.”[11] However, some of the property rights gained upon purchase of an NFT are quite similar to those gained upon purchase of a painting or any other tangible item.

Upon purchase of an NFT, the buyer gains only personal use rights associated with the copyright.[12] The creator retains copyright in the underlying work and the buyer does not gain any rights to the intellectual property associated with the image itself and would have to acquire a specific license to gain those rights.[13] In short, the buyer gains “a non-exclusive license to the underlying intellectual property rights of an asset and only for non-commercial purposes.”[14] This is no different than if someone were to purchase an original Picasso painting. By purchasing the painting, the buyer did not gain the rights to make and sell prints of it. Similarly, the purchaser of an NFT does not possess the rights to reproduce the code associated with the token.[15] These regulations theoretically keep NFTs as exclusive as tangible artwork because they ensure that only one purchaser can have the original.

There are some notable differences, however, between a tangible purchase and an NFT and the regulations that can be placed upon an NFTs use by the purchaser. Smart contracts in the blockchain of the NFT determine the rights that accompany purchase.[16] These smart contracts may limit what type of content your NFT can be displayed adjacent to or may stop you from altering any of the content in the NFT itself.[17] There may also be smart contracts embedded in the block chain of the NFT which contain clauses allowing for the original artist of the NFT to be paid royalties upon each resale of the token.[18] Conversely, the purchaser of an original Picasso retains all proceeds upon sale or may never sell it and instead paint over it (absent outside contract considerations). Smart contracts, which are standard in the world of NFTs, can severely limit ownership rights of the buyer in a non-traditional way.

Copyright infringement issues are some of the biggest legal concerns present with NFTs. There have already been issues of counterfeiting and “individuals fraudulently offering the artists’ works as NFTs without the artist’s permission.”[19] This means that NFT copyright owners have to spend more time and resources policing an ever-growing list of platforms for potentially infringing copies or derivate works. [20] Additionally, many people who are buying NFTs are not familiar with copyright law and more easily risk infringement liability.[21]

NFTs are a burgeoning form of technology. Many people view them as investments and collectors’ items in much the same way that tangible art is viewed. But the law has yet to tackle NFTs and bolster the supposed rights of purchasers or creators. Buyers and creators can assume that traditional copyright law will rule future disputes over NFTs, but they cannot be sure.[22]

Whether NFTs are worth buying depends on one’s perspective. Anyone can have a print of a Picasso painting but only one person can have the original. Someone who values having the original or thinks it has independent value may feel the same about NFTs or they may believe that physicality holds more worth than block chain. Conversely, a vast majority of the world may not care about the original at all and may be contented to have a print or a digital download. The risks and rewards of purchasing NFTs have yet to be seen and will probably inform the public on if they believe NFTs to be worth the investment.

 

[1] E.g., What are NFTs and why are some worth millions?, BBC News (Sept. 23, 2021), https://www.bbc.com/news/technology-56371912 [https://perma.cc/5QQS-5UHH].

[2]  Id.

[3] See Julian Pipolo, NFTs And The Law: What Do I Actually Own?, Law Technology Today (June 21, 2021), https://www.lawtechnologytoday.org/2021/06/nfts-and-the-law-what-do-i-actually-own/ [https://perma.cc/SQ9B-VJTP].

[4] E.g., BBC News, supra note 1.

[5] Pipolo, supra note 3.

[6] Id.

[7] Id.

[8] Id.

[9] See BBC News, supra note 1.

[10] See id.

[11] Id.

[12] See Pratin Vallabhaneni, The Rise of NFTs – Opportunities and Legal Issues, White & Case (Apr. 20, 2021), https://www.whitecase.com/publications/alert/rise-nfts-opportunities-and-legal-issues [https://perma.cc/2NZQ-TGYM].

[13] See Jon Moorhouse, Who owns the intellectual property rights of NFTs?, Lexology (July 12, 2021), https://www.lexology.com/library/detail.aspx?g=c301b33a-9974-4901-a0d8-6936a5b10423 [https://perma.cc/QVA3-UCRY].

[14]  Pipolo, supra note 3.

[15] Moorhouse, supra note 13.

[16] NFTs: Key U.S. Legal Considerations for an Emerging Asset Class, Jones Day (Apr. 2021), https://www.jonesday.com/en/insights/2021/04/nfts-key-us-legal-considerations-for-an-emerging-asset-class [https://perma.cc/34YZ-XYFZ].

[17] See Moorhouse, supra note 13.

[18] Vallabhaneni, supra note 12.

[19] Gregory J. Chinlund & Kelley S. Gordon, What are the copyright implications of NFTs?, Reuters (Oct. 29, 2021), https://www.reuters.com/legal/transactional/what-are-copyright-implications-nfts-2021-10-29/ [https://perma.cc/K93U-XWRG].

[20] Id.

[21] See Vallabhaneni, supra note 12.

[22] See Chinlund et al., supra note 19.

Image source: https://www.theverge.com/2021/3/11/22325054/beeple-christies-nft-sale-cost-everydays-69-million

By Brian Kennedy

 

Tesla announced that it would be relocating its headquarters in California and moving to Austin, Texas.[1] The company is building a factory there with the hope of it being completed by the end of year.[2] According to Elon Musk, Tesla’s CEO, the company’s plant in Fremont, California will remain operational and will continue to expand.[3] However, the company faces a major problem in Texas because Tesla “won’t be able to sell directly to residents in the state.”[4] Due to Texas law Tesla “must sell their vehicles to independently owned car dealerships, which then sell to consumers.”[5]

Additionally, it appears that this barrier isn’t going away anytime soon. Lawmakers made the determination “not to pass legislation that would allow automakers to sell directly to Texans.”[6] The opportunity to change these laws does not seem to be available again until 2023 when lawmakers meet again, but as for now these franchise laws remain the same.[7] This delay is largely due to Texas’ legislature meeting every other year for 140 days.[8]

This is not the first time; however, Tesla has encountered this problem.[9] In 2014, Tesla faced a lawsuit in Massachusetts when two dealers and the Massachusetts State Automobile Association attempted to block the company “from selling luxury electric cars directly to consumers in the state, enabling it to bypass traditional dealerships.”[10] There Tesla Motors MA, a “wholly owned subsidiary,” was essentially conducting a display inside of a mall where individuals could learn about Tesla’s vehicles and actually view them.[11] The court additionally clarified that “[n]either of the defendants is affiliated in any way with the plaintiffs.”[12]

The court ultimately found that the plaintiffs lacked standing on the issue and held that “[t]he law ‘was intended and understood only to prohibit manufacturer-owned dealerships when, unlike Tesla, the manufacturer already had an affiliated dealer or dealers in Massachusetts.’”[13] There the plaintiffs were unaffiliated and therefore not within the coverage of the law.[14] Here Tesla earned a favorable result.

Now as Tesla builds its new factory in Texas, however, residents may be inconvenienced by their purchasing options.[15] They may need to purchase Tesla’s vehicles in a different state, or have it processed in a different state.[16] If paperwork is processed in a different state “[t]he car is then shipped to one of Tesla’s service centers in the state, where the buyer can pick it up.”[17] Tesla facilities in Texas also cannot process or place online orders made by Texans.[18] “One buyer noted his paperwork had been FedExed to and from a Tesla Store in Nevada for completion.”[19] These restrictions will ultimately place residents in a difficult position.

Texas law also impact companies such as General Motors and Toyota.[20] Tesla experiences these difficulties in other states as well such as New Mexico, South Carolina, and Connecticut.[21] There are also several states that “restrict the number of dealerships that Tesla can have in the area.”[22]

Ultimately, Tesla’s decision to move to Texas appears to be beneficial for the state as the company plans to hire approximately 5,000 workers.[23] However, it appears the company will be waiting on a decision from Texas lawmakers as to whether these limitations will change.

 

[1] Niraj Chokshi, Tesla Will Move its Headquarters to Austin, Texas, in Blow to California, N.Y. Times (Oct. 13, 2021), https://www.nytimes.com/2021/10/07/business/tesla-texas-headquarters.html.

[2] Kate Duffy, Tesla has to Ship Texas-Made Cars to Other States Before it Can Sell Them to Texans Because of State Laws, Bus. Insider (June 1, 2021, 8:06 AM), https://www.businessinsider.com/tesla-texas-cars-ship-out-of-state-sell-texans-2021-6.

[3] Jack Dutton, Tesla Moves Headquarters to Texas, Where it’s Allowed to Sell Cars, Newsweek (Oct. 8, 2021, 5:11 AM), https://www.newsweek.com/tesla-moves-headquarters-texas-where-its-not-allowed-sell-cars-1636881.

[4] Id.

[5] Id.

[6] Id.

[7] Id.

[8] Id.

[9] See Jonathan Stempel, Tesla Prevails in Top Massachusetts Court Over Direct Sales, Reuters (Sept. 15, 2014, 5:22 PM), https://www.reuters.com/article/us-tesla-motors-massachusetts-lawsuit/tesla-prevails-in-top-massachusetts-court-over-direct-sales-idUSKBN0HA29620140915.

[10] Id.

[11] Massachusetts State Auto. Ass’n, Inc. v. Tesla Motors MA, Inc., 15 N.E.3d 675, 677 (Mass. 2014).

[12] Id.

[13] Stempel, supra note 9 (quoting Tesla Motors MA, Inc., 15 N.E.3d at 688).

[14] See id.

[15] Duffy, supra note 2.

[16] Id.

[17] Id.

[18] See John Voelcker, Tesla Will Have to Ship its Texas-Built Cars Out of State to Sell Back to Residents, The Drive (May 27, 2021), https://www.thedrive.com/tech/40779/tesla-will-have-to-ship-its-texas-built-cars-out-of-state-to-sell-back-to-residents.

[19] Id.

[20] Id.

[21] Duffy, supra note 2.

[22] Id.

[23] Id.

Image Source: https://www.greencarreports.com/news/1132408_tesla-won-t-be-able-to-directly-sell-the-cars-it-builds-in-texas-to-texans

By Seely Kaufmann

 

In his inaugural episode of “The Problem with Jon Stewart”, Jon Stewart examined the challenge of burn pit exposure for veterans.[1] These pits were a common feature at military bases across the Middle East – a crude answer to a basic logistics problem.[2] Garbage, including paint, medical and human waste, metal cans, unexploded ordnance, and batteries, was doused in jet fuel and set ablaze, spewing toxic fumes and carcinogens into the air.[3] The Department of Defense (DOD) estimates that roughly 3.5 million service members could have been exposed to burn pits.[4] Current and former military members stationed on bases with these burn pits suffer a myriad of conditions possibly due to the exposure to these chemicals; President Biden has even acknowledged that his son Beau’s deployment to Balad Air Base in Iraq may have been associated to his brain cancer diagnosis, noting “because of exposure to burn pits — in my view, I can’t prove it yet — he came back with stage 4 glioblastoma.”[5] However, the Department of Veterans Affairs has denied approximately 75 percent of veterans’ burn pit claims, because conditions like cancer have not been conclusively linked to exposure to the burn pits.[6]

In part to address this issue, the National Defense Authorization Act for Fiscal Year 2020 was passed by Congress in December 2019, which included two provisions that requires the DOD to draft a plan to eliminate all existing burn pits and provide a list of burn pit sites to the VA.[7]  However, no timeline is associated with that plan.[8] The Secretary of Defense is required to record whether service members have been exposed to an open burn pit, through the Airborne Hazards and Open Burn Pit Registry (AHOBPR) and in routine physical examinations and health assessments.[9] This information should develop of a record that links burn pit exposure to particular health consequences, but this bill did not go far enough, especially given the aggressiveness of the cancers being documented.[10] A two pronged approach of quickly funding research to develop these causal links while simultaneously cutting through the red tape that stops veterans suffering severe medical conditions from receiving treatment should be implemented to fully address the problem.

Even with the issue exposure from a celebrity, bills in both the House and Senate implementing similar measures have continued to languish. No actions have been taken on The Veterans Burn Pits Exposure Recognition Act of 2021 in either the Senate or the House since their introduction in February and April respectively.[11]

 

[1] The Problem with Jon Stewart: War (Apple TV broadcast, Sept. 30, 2021).

[2] Kenzi Abou-Sabe & Didi Martinez, Veterans face uphill battle to receive treatment for ‘burn pit’ exposure, NBC News (Apr. 12, 2021, 5:23 PM), https://www.nbcnews.com/news/military/veterans-face-uphill-battle-receive-treatment-burn-pit-exposure-n1263862.

[3] Jim Absher, What Is The Burn Pit Registry?, Military.com (Aug. 5, 2021), https://www.military.com/benefits/veteran-benefits/what-burn-pit-registry.html.

[4] See Abou-Sabe & Didi Martinez, supra note 2.

[5] Id. (noting that Balad Air Base had one of the largest burn pits spanning more than 10 acres).

[6] Id.

[7] Steve Beynon, Burn pit legislation passed by Congress could lead to improved accountability, better care for vets exposed to hazards, Stars and Stripes (Jan. 14, 2020), https://www.stripes.com/news/burn-pit-legislation-passed-by-congress-could-lead-to-improved-accountability-better-care-for-vets-exposed-to-hazards-1.614684.

[8] Id.

[9] VA Airborne Hazards and Open Burn Pit Registry, U.S. Department of Veterans Affairs, https://www.publichealth.va.gov/exposures/burnpits/registry.asp (last visited Oct. 29, 2021).

[10] See, e.g., Kelly Kennedy, The Enemy Is Lurking in Our Bodies”—Women Veterans Say Toxic Exposure Caused Breast Cancer, The War Horse (Oct. 14, 2021), https://thewarhorse.org/military-women-face-higher-breast-cancer-rates-from-exposure (detailing a military veteran’s diagnosis of three types of Stage 4 breast cancer at age 38 following tours in Fallujah and al-Taqqadum).

[11] See S.437 – Veterans Burn Pits Exposure Recognition Act of 2021, Actions Overview, https://www.congress.gov/bill/117th-congress/senate-bill/437/actions (last visited Oct. 29, 2021); H.R.2436 – Veterans Burn Pits Exposure Recognition Act of 2021, Actions Overview, https://www.congress.gov/bill/117th-congress/house-bill/2436/actions (last visited Oct. 29, 2021).

Image Source: https://media.npr.org/assets/img/2015/12/18/080310-f-5957s-113_custom-2a2816cb2f0c6952905f69550d8a8832536054e9-s1600-c85.webp

By Austin Wade-Vicente

 

A decades long war between big tech companies and concerned consumers reached a new milestone on July 9th, 2021, as President Joe Biden signed the “Executive Order on Promoting Competition in the American Economy.”[1] Among other important initiatives, the Executive Order gives significant deference to the Free Trade Commission (FTC) to investigate “[c]ell phone manufacturers and others blocking out independent repair shops.”[2] Many companies intentionally make repairs unjustly more time consuming and costly by  “impos[ing] restrictions on self and third-party repairs,” through “restricting the distribution of parts, diagnostics, and repair tools.”[3] To better understand the significant impact of this Order, and what it means for a variety of American consumers, we first need to briefly explore the source of the controversy.

Right to Repair concerns first began in the late 1990s, but only further exponentially increased in the digital age with more products relying on computer chips year after year.[4] “You bought it, you should own it” is the short and sweet argument from Right to Repair advocates.[5] Essentially, Right to Repair is the assertion that consumers should have the right to fix the product they own without pressure to solely rely on the manufacturer for repairs or resort to purchasing a brand new device. On the flip side, corporations argue that allowing third-party repair is an attack on quality control, protection of intellectual property rights, prevention of injuries, and the company’s reputation.

However, these entities have gone to the extreme to keep customers from entertaining alternative sources of repair. A surprising number of big tech companies have exerted monopoly power by forcing consumers to either pay for the company’s expensive repairs or buy a new machine.[6] A solution that further contributes to the 2.5 million tons of electronic waste generated by the globe each year.[7] Moreover, multinational tech company Apple has gone so far as to hide schematics from the public, threaten third-party repair companies with DMCA suits, and even invent their own “pentalobe screw” in efforts to maintain control from sale to landfill.[8]

The illusion of having this “benevolent monopoly,” valiantly protecting customers from conniving hackers and incompetent repairmen, shatters when a growing number of consumers accuse the company itself of being the single source of harm in the repair industry.[9] CBC news even caught Apple in an undercover investigation quoting repair prices comparable to a brand-new laptop to avoid even the simplest of repairs.[10] This behavior begged an important question. Who owns the purchased product when the manufacturer can unilaterally decide the consumer is done using it?

Again, prior to President Biden’s Executive Order, the status quo of repair was free reign to nearly exhaust of all of the public’s options to fix their property, avoid transparency, and force customers to pay artificially high prices for basic maintenance—­­­if done at all. After the Order, the FTC found that monopolizing repair services, the associated repair information, parts, and their necessary tools is plainly anticompetitive.[11]

Just after the release of President Biden’s Executive Order, the FTC unanimously voted to agree to investigate if tech company repairs are “breaking antitrust or consumer protection laws, and to step up enforcement of the laws against violators.”[12] The goal of this investigation, if successful, is “to push harder for the right of consumers to repair devices like smartphones, home appliances, cars and even farm equipment.”[13] Yes, you read that right. The Executive Order’s mention of “others blocking out independent repair shops” includes those providing farm equipment, going well beyond consumer electronics.[14]

Farmers have an immensely time sensitive job, and therefore, need to be able to get under the hood to fix their machines when in the field.[15] Many farmers already work 80 hours a week during harvest, and some have already faced legal repercussions from John Deere for trying to fix their own machines.[16] While waiting upwards of weeks for certified John Deere repairman to fix their fancy internet-connected tractors, some farmers have actually turned to using 40-year-old models to reliably complete harvest seasons.[17] As a result, Right to Repair not only impacts prices of consumer electronics and maintenance, but, more importantly, our food supply chain as well.

Farmers are not the only professionals that would benefit from robust Right to Repair enforcement either, as service members have run into many of the same issues. United States Marine Corps. Captain Elle Ekman was stunned when one of her Marines gave a warranty excuse for refusing to fix a generator in the field.[18] She had no idea a civilian concept like Right to Repair could affect her military career, but it became abundantly clear every time Marines sent equipment back home that they were “los[ing] the opportunity to practice the skills they might need one day on the battlefield.”[19] “Vendor control over warranty repairs is a completely unworkable scheme in wartime” as prompt maintenance could mean the difference between life and death for service men and women.[20] In response, President Biden gave the Secretary of defense 180 days to make a plan to avoid terms that impede service members from repairing their own equipment, “particularly in the field.”[21]

Despite the numerous reasons why Right to Repair should be adopted, it remains to be seen if measures taken by the FTC will pass into law.[22] If no one takes action on the federal level, 27 states have passed Right to Repair legislation that helps combat many of the previously explored problems.[23] However, much like other state regulations, these Right to Repair laws are not uniform. For example, the state of Washington only enforces Right to Repair laws on consumer devices, while South Carolina only focuses on ag equipment.[24]

“‘It isn’t like we’re asking for something that’s impossible,” remarked Special Assistant to the President for Tech and Competition Policy Tim Wu.[25] “Provide parts, provide information and let people really feel like they own their own devices.”[26] If the FTC finds ample evidence of violation of antitrust or consumer protection laws there may be top-down enforcement from the federal government. Until then, only time will tell if farmers, service members, and the everyday consumer will be free to claim ownership of their respective devices.

 

[1] 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/.

[2] Id.

[3] Id.

[4] See Matchar, supra note 1; Thorin Klosowski, What You Should Know About Right to Repair, N.Y. Times (July 15, 2021), https://www.nytimes.com/wirecutter/blog/what-is-right-to-repair/.

[5] The Repair Association, Repair, https://www.repair.org/.

[6] See Andrew Thompson, The Fix Is Out: Product Repairs Get Tougher in New Age of Obsolescence, NBC News (July 31, 2016, 2:30 PM), https://www.nbcnews.com/news/us-news/fix-out-product-repairs-get-tougher-new-age-obsolescence-n614916.

[7] See Vanessa Forti, Global Electronic Waste Up 21% in Five Years, and Recycling isn’t Keeping Up, The Conversation (July 10, 2020, 10:38 AM), https://theconversation.com/global-electronic-waste-up-21-in-five-years-and-recycling-isnt-keeping-up-141997.

[8] Kyle Wiens, Apple Is Bullying a Security Company with a Dangerous DMCA Lawsuit, iFixit (Jan. 2, 2020), https://www.ifixit.com/News/34892/apple-is-bullying-a-security-company-with-a-dangerous-dmca-lawsuit; Kyle Wiens, Apple’s Diabolical Plan to Screw Your iPhone, iFixit (Jan. 20, 2011), https://www.ifixit.com/News/14279/apples-diabolical-plan-to-screw-your-iphone.

[9] Nathan Protor, Here’s How Manufacturers Argue Against Repair, U.S. PIRG (July 1, 2019), https://uspirg.org/blogs/blog/usp/here%E2%80%99s-how-manufacturers-argue-against-repair.

[10] See CBC News: The International, Apple Under Fire for Allegations of Controversial Business Practices, YouTube, at 1:48–6:00, (Oct. 18, 2018), https://www.youtube.com/watch?v=_XneTBhRPYk.

[11] Michael Kan, FTC Calls Out Tech Companies for Onerous Right-to-Repair Restrictions, PCMag (May 7, 2021), https://www.pcmag.com/news/ftc-calls-out-tech-companies-for-onerous-right-to-repair-restrictions.

[12] 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.

[13] Id.

[14] Exec. Order No. 14,036, supra note 1.

[15] Jonathan Ahl, Right to Repair Mandate From Biden Might Help Farmers Fix Their Own Equipment, Harvest Public Media (Aug. 5, 2021), https://www.harvestpublicmedia.org/post/right-repair-mandate-biden-might-help-farmers-fix-their-own-equipment.

[16] Nicky Ellis, How Many Hours Do Farmers Work?, Farm & Animals (Nov. 25, 2020) https://farmandanimals.com/how-many-hours-do-farmers-work/#:~:text=During%20the%20harvest%2C%20a%20farmer,about%2060%20hours%20a%20week; Jordan Almond, Farmers Across America Are Suing for the Right to Repair Their John Deere Tractors, Motor Biscuit (July 15, 2021), https://www.motorbiscuit.com/farmers-america-right-to-repair-john-deere-tractors/.

[17] Kari Paul, Why Right to Repair Matters – According to a Farmer, a Medical Worker, a Computer Store Owner, The Guardian (Aug. 2, 2021, 6:00 AM), https://www.theguardian.com/technology/2021/aug/02/why-right-to-repair-matters-according-to-a-farmer-a-medical-worker-a-computer-store-owner.

[18] Elle Ekman, Here’s One Reason the U.S. Military Can’t Fix Its Own Equipment, N.Y. Times (Nov. 20, 2019) https://www.nytimes.com/2019/11/20/opinion/military-right-to-repair.html.

[19] Id.

[20] Kyle Mizokami, The U.S. Military Has a ‘Right to Repair’ Problem, Popular Mechanics (Feb. 11, 2020), https://www.popularmechanics.com/military/weapons/a30859791/us-military-right-to-repair/.

[21] Exec. Order No. 14,036, supra note 1.

[22] Nadeem Sarwar, What Biden’s Right-To-Repair Executive Order Means For You, ScreenRant (July 12, 2021), https://screenrant.com/right-to-repair-executive-order-explainer-and-details/.

[23] Nathan Proctor, Half of U.S. states looking to give Americans the Right to Repair, U.S. PIRG (Mar. 10, 2021), https://uspirg.org/blogs/blog/usp/half-us-states-looking-give-americans-right-repair.

[24] Id.

[25] Joanna Stern, How the ‘Right to Repair’ Might Save Your Gadgets—and Save You Money, Wall Street Journal (Aug. 30, 2021), https://www.wsj.com/articles/how-the-right-to-repair-might-save-your-gadgetsand-save-you-money-11630324800.

[26] Id.

Image Source: https://www.cleanwateraction.org/2021/02/01/sb0412hb0084-right-repair-and-why-matters-environment

By Annalisa Gobin

 

In the Spring of this year, Apple released its new AirTags, small tracking devices that emit Bluetooth signals so that users can locate lost items using Apple’s Find My network.[1] While they are advertised to help retrieve misplaced items like keys and wallets, consumers have found that the new product is more versatile than Apple likely anticipated.[2] AirTags are now being attached to cars, bikes, and bags as an efficient form of theft prevention.[3] With consumers finding various ways to utilize the new gadget, there has been a rise in recent discussions on whether AirTags are a nifty product to prevent theft or a dangerous tool that promotes stalking.[4]

Since their April release, there have been several reports of consumers using AirTags to combat several forms of crime.[5] One consumer used his AirTag to help the police locate and retrieve his stolen gaming computer.[6] In Oregon, a lawyer used AirTags to prove that city contractors were immediately dumping the belongings of homeless people after clearing out their campsites, instead of saving the property for a month as required by law.[7] Additionally, parents have been using AirTags to track their children (although Apple warns that the product is not a GPS tracker and that the location updates are too sporadic to track moving objects).[8] This is good news for those wanting to protect personal property, and to some extent, ward off potential kidnappers.

However, there is concern that AirTags and their tracking feature may aid stalkers and domestic abusers in harassing victims.[9]

Apple has made attempts to limit the use of the AirTags as a stalking tool.[10] If an iPhone detects that an AirTag is following it, it will display a notification.[11] In addition, if the tracker is away from its owner’s iPhone for more than three days, it will beep.[12] However, if a tracking victim owns a phone other than an iPhone, there is no way for that user to receive the same notification that they are being tracked.[13] There have also been reports that the 15-second beep is not loud enough to be heard over common household noises.[14] In June, Apple addressed these concerns by releasing an update to the devices to beep randomly between 8 and 24 hours if it is away from its owner’s iPhone.[15] Apple has planned to launch an app that will allow Android users to determine whether an AirTag is traveling with them.[16] Apple has also embedded a serial number into each AirTag, which they argue can be used as evidence in court to identify trackers and prosecute stalking crimes.[17]

Critics warn that these new safety features may not be enough to stop digital tracking, which has been linked to physical abuse and murder.[18] The coin-sized devices are so small that they can easily be buried into a car seat or under a carpet to muffle the sound of the notification beep.[19] Further, the notification beep does nothing for victims who live with their abusers who can prevent the sound from going off by periodically bringing their phone back into proximity with the AirTag. Furthermore, as of the time of this post, Apple has yet to release the app so that android users can be alerted when they are being tracked.[20]

Without implementing additional safety features, it is worth considering if the ability to find your keys in a split-second or recover a stolen bike is worth the risk of the crimes that AirTags may help perpetrators carry out.

 

[1] Heather Kelley, I found my stolen Honda Civic using a Bluetooth tracker. It’s the Latest Controversial Weapon Against Theft, Wash. Post (Oct. 28, 2021, 7:00 AM), https://www.washingtonpost.com/technology/2021/10/28/airtags-theft/.

[2] Id.

[3] Id.

[4] See id.

[5] See id.; Brianna Provenzano, Apple Airtags Used to Prove That Contractor Illegally Trashed Unhoused People’s Property, Gizmodo (Aug. 4, 2021, 11:20 AM), https://gizmodo.com/apple-airtags-used-to-prove-that-contractor-illegally-t-1847421031.

[6] Kelley, supra note 1.

[7] Provenzano, supra note 5.

[8] Morgan Brinlee, No, Apple Doesn’t Want Parents To Track Their Kids With AirTags, Romper (Apr. 22, 2021), https://www.romper.com/life/no-apple-doesnt-want-parents-using-airtags-to-track-their-kids.

[9] Albert Fox Cahn & Eva Galperin, Apple’s AirTags Are a Gift to Stalkers, Wired (May 13, 2021, 9:00 AM), https://www.wired.com/story/opinion-apples-air-tags-are-a-gift-to-stalkers.

[10] See Geoffrey A. Fowler, Apple’s AirTag Trackers Made It Frighteningly Easy to ‘Stalk’ Me in a Test, Wash. Post (May 5, 2021, 8:00 PM), https://www.washingtonpost.com/technology/2021/05/05/apple-airtags-stalking.

[11] See id.

[12] Id.

[13] Id.

[14] Apple Updates AirTags After Stalking Fears, BBC News (June 4, 2021), https://www.bbc.com/news/technology-57351554.

[15] Id.

[16] Id.

[17] Id.

[18] Fowler, supra note 10.

[19] Id.

[20] Id.

Image Source: https://www.macrumors.com/guide/airtags

By Hannah Ceriani

 

In 2019, journalist Kashmir Hill wrote a New York Times article about a company that was quietly aiding in privacy violations.[1] The company Clearview AI has developed a facial recognition app, which is essentially a database of billions of images copied from millions of websites like Facebook, YouTube, and Venmo.[2]

The app can potentially identify anyone since the “computer code underlying [the] app…includes programming language to pair it with augmented-reality glasses.”[3] A person could be anywhere in public doing anything, and the app could reveal that person’s name, home address, career, and any other information that is out there on the Internet.[4]

Six hundred police departments were using the app less than three years after it was released to help solve various types of crimes, including murders and kidnappings.[5] Those law enforcement agencies have since copied 10 billion photographs.[6] They have done so without consent from the individuals who uploaded the photos, without authorization from the companies behind the websites where the photos were originally uploaded, and without the knowledge of the general public.[7]

Obviously, the use of facial recognition technology could quickly become a major violation of First and and Fourth Amendment rights. When used in public, this technology has a high likelihood of halting unabridged free speech and peaceful assembly because it could be seen as a form of surveillance.[8] Viewing facial recognition technology in this light, it is plausible that people will begin to alter their behavior because of the feeling that they are always being watched, particularly by law enforcement.[9]

The Supreme Court addressed Fourth Amendment privacy issues in the case Carpenter v. States.[10] Chief Justice Roberts noted that the ability of police to “secretly monitor and catalogue every single movement” of a person is unconstitutional and violates what society perceives law enforcement’s job to be.[11] The Court suggested that a person’s “privacies of life” should be protected.[12] The Court considered those privacies to include an individual’s “familial, political, professional, religious, and sexual associations,” which could be determined by using such technology.[13]

Large tech companies like Google and IBM have refrained from using similar technology in response to such concerns.[14] Only ten states have taken any sort of action to regulate the use of facial recognition by law enforcement.[15] Some cities, like Detroit, Chicago, and San Francisco have also enacted their own regulations and legislative bans.[16]

However, these statutes and regulations are not doing enough. There are two main issues: loopholes in the current legislation and regulation, and the lack of uniformity to address the violation of Constitutional rights. The most pressing concern with facial recognition technology is the lack of restrictions by the federal government.[17] In fact, many tech companies have advocated for federal regulation of this technology, but Congress has yet to pass any laws regulating police use of facial recognition.[18]

 

[1] Kashmir Hill, The Secretive Company That Might End Privacy as We Know It, N.Y. Times (Jan. 18, 2020) https://www.nytimes.com/2020/01/18/technology/clearview-privacy-facial-recognition.html.

[2] Id.

[3] Id.

[4] Id.

[5] Amanda Levendowski, Resisting Face Surveillance with Copyright Law, 100 N.C.L. (forthcoming 2022) (manuscript at 3).

[6] Id.

[7] Id.

[8] Clare Garvie & Laura M. Moy, America Under Watch: Face Surveillance in the United States, Geo. L. Ctr. for Priv. & Tech. (May 16, 2019), https://www.americaunderwatch.com/.

[9] See id.

[10] Id.

[11] Id.

[12] Id.

[13] Id.

[14] Hill, supra note 1.

[15] Levendowski, supra note 5 (manuscript at 24).

[16] Id. (manuscript at 20).

[17] See Garvie, supra note 8.

[18] Lauren Feiner & Annie Palmer, Rules Around Facial Recognition and Policing Remain Blurry, CNBC (June 12, 2021, 9:30 AM), https://www.cnbc.com/2021/06/12/a-year-later-tech-companies-calls-to-regulate-facial-recognition-met-with-little-progress.html.

Image Source: https://www.nytimes.com/2020/01/18/technology/clearview-privacy-facial-recognition.html

By Jeffrey Phaup

 

Automatic license plate readers are now being marketed to private parties. One example is a company called Flock Safety, which provides such plate readers to homeowners associations with the promise that they will provide peace of mind to residents, even if they already have nothing to be worried about.[1] The cameras give residents access to a wealth of plate and location data that is often shared with local law enforcement.[2]

Flock’s “safety-as-a-service” packages cost $2,500 a year per camera, with the scanners promoted for their crime-fighting powers.[3] The systems initially deployed mostly in gated communities, but recently the systems have now spread to practically all types of neighborhoods across the United States.[4] Flock Safety systems have been installed in more than 1,400 cities across 40 states and capture data from more than a billion cars and trucks each month.[5]

Photos captured by the scanners are placed in a neighborhood’s private Flock database and are made available for homeowners to search and scrutinize.[6] Machine-learning software categorizes each vehicle based on two dozen attributes, including its color, make and model; what state its plates came from; and whether it had bumper stickers or a roof rack.[7] Each scanned vehicle is then pinpointed on a map and is tracked based on how frequently it is scanned by the system.[8] Vehicle plates are compared to law enforcement records in order to check for abducted children, stolen cars, missing people and wanted fugitives.[9]

Flock cameras were installed in Dayton, Ohio, as part of a months-long trial for the local police, with a disproportionate number of the cameras placed in the heart of the city’s Latino community.[10] One camera was even placed outside a church where local immigrant families gathered and attended Mass.[11] These cameras were eventually removed after the community targeted by the surveillance complained.[12]

License plate scanners track individuals’ comings and goings with the data can showing both common and unique travel patterns; and because license plates are required by law, there is no obvious way to effectively remain anonymous.[13] Vendors of license plate scanners market their products using the idea that surveillance will reduce crime by either advertising the presence of surveillance in hopes it will be a deterrent or by using the technology to secure convictions of people that have allegedly committed crimes.[14] However, despite what vendors claim, there is no empirical evidence that shows the scanners actually reduce crime.[15]

 

[1] See generally Tim Cushing, The Newest Growth Market For License Plate Readers Is Those Assholes Running The Local Homeowners Association, TechDirt (July 26, 2021), https://www.techdirt.com/articles/20190724/17315042647/newest-growth-market-license-plate-readers-is-those-assholes-running-local-homeowners-association.shtml [https://perma.cc/6KFC-F5JJ].

[2] See generally Drew Harwell, License plate scanners were supposed to bring peace of mind. Instead they tore the neighborhood apart., Washington Post (Oct. 22, 2021), https://www.washingtonpost.com/technology/2021/10/22/crime-suburbs-license-plate-readers/ [https://perma.cc/LHP5-FTE4].

[3] See generally Introducing a better way to defeat crime., Flock Safety (last visited Oct, 22, 2021) https://www.flocksafety.com/ [https://perma.cc/H666-4MYY].

[4] Harwell, supra note 2.

[5] Id.

[6] Id.

[7] See generally Jason Kelly & Matthew Guariglia, Things to Know Before Your Neighborhood Installs an Automated License Plate Reader, Electronic Frontier Foundation (Sept. 14, 2021), https://www.eff.org/deeplinks/2020/09/flock-license-plate-reader-homeowners-association-safe-problems [https://perma.cc/QU7B-YZUB].

[8] Hartwell, supra note 2.

[9] Id.

[10] Id.

[11] Id.

[12] Id.

[13] Kelly & Guariglia, supra note 7.

[14] Id.

[15] Id.

By Alexis Laundry

 

Last month, Dominion Energy announced a new project to re-develop 1,200 acres of formerly coal-mined land in Southwest Virginia into a 50-megawatt solar farm.[1] The project is in collaboration with the non-profit The Nature Conservancy, a global organization whose mission is “to conserve the lands and water on which all life depends” that owns the land where the project will be built.[2] In 2019, the Conservancy acquired 253,000 acres of Appalachian forest land across Southwest Virginia, Kentucky and Tennessee.[3] Within the parcel, about 13,000 acres is cleared former mine lands, much of which may potentially be used for solar development.[4] Over the past year, the organization has begun getting several projects off the ground by partnering with both independent developers and utility companies. In May, the Conservancy announced a partnership with the development firms SunTribe and Sol Systems to build 75 MW of capacity on around 550 acres of the cleared mine lands, most of which are located in Virginia.[5] Through these and the Dominion project, the Conservancy hopes to showcase the feasibility of re-purposing former coal mines into revenue generating renewable energy projects.[6]

The idea of repurposing coal mined land into renewable energy projects is nothing new, but it has been slow to take off in Virginia, despite the state hosting an estimated 100,000 acres of land impacted by coal mining.[7] In many ways, former mining sites are ideal for solar development. These sites typically suffer from various contamination or safety issues, which make them unsuitable for most industrial or commercial reuse opportunities; as a result, many sit vacant.[8] They have already been cleared and graded, which circumvents many problems that proposed solar sites on farm or forested land run into.[9] There is plenty of access to infrastructure nearby, including transmission lines and roads.[10] And most importantly, Southwest Virginia’s mining region gets ample sunlight. While there are certainly some challenges that accompany development on mine land, such as more extensive permitting processes, contamination control requirements, and potential liability for remediation efforts, these can usually be overcome by good planning processes and technological solutions.[11]

The payoff of supporting these projects is potentially huge. Redevelopment of abandoned mines is accompanied by a host of environmental and economic benefits that would otherwise go unrealized. First, interest in developing these areas will facilitate the cleanup of contaminated sites, which will cause a domino effect of positive ecological effects. In order to make the sites more attractive to developers, local governments will be more motivated to fund and execute cleanups; these remediation efforts in turn lead to removal of contamination sources, improvement of water quality, and restoration of local ecosystems.[12] Second, installing renewable energy projects will contribute to an overall reduction in greenhouse gas emissions in the region and promote the transition away from fossil fuel usage, which is of course vital to curbing the effects of climate change.[13] In terms of economic benefits, these projects will lead to local job creation, increased revenue, and the revitalization of the energy industry in the region.[14] In one of the state’s most economically distressed regions, these opportunities could prove invaluable.[15]

With much to gain and very little to lose, it seems counterintuitive that the mountains of Southwest Virginia aren’t yet covered in solar panels. Historically, a lack of funding was at least partially to blame for the state’s slow pace in implementing mine land solar projects.[16] The good news is that recent developments are making funding less of an issue; there are state and federal grant programs for abandoned mine land remediation[17], COVID-19 relief funding and the new federal infrastructure bill could be used to support development in the region[18], and the Virginia Clean Economy Act requires Dominion to invest in renewable projects on “previously developed sites.”[19] Hopefully, with new funding streams available and organizations like the Nature Conservancy willing to be the first to take the plunge, the next few years will prove promising for solar development in Virginia’s coal country.

 

[1] The Nature Conservancy, Dominion Energy Announce Innovative Collaboration for Solar Development on Former Coal Mine in Southwest Virginia, Dominion Energy (Sept. 13, 2021), https://news.dominionenergy.com/2021-09-13-The-Nature-Conservancy,-Dominion-Energy-Announce-Innovative-Collaboration-for-Solar-Development-on-Former-Coal-Mine-in-Southwest-Virginia [hereinafter Dominion Announcement].

[2] Id.

[3] Adam Bloom, The Cumberland Forest Project: 253,000 Acres of Preserved Land, Nature Conservancy (July 14, 2019), https://www.nature.org/en-us/what-we-do/our-priorities/protect-water-and-land/land-and-water-stories/cumberland-forest-project/.

[4] Elizabeth McGowan, Conservation group plots solar potential for retired Appalachian coal mine land, Energy News Network (May 18, 2020), https://energynews.us/2020/05/18/conservation-group-plots-solar-potential-for-retired-appalachian-coal-mine-land/.

[5] Elizabeth McGowan, Conservancy charts a solar showcase on the coalfields of Central Appalachia, Energy News Network (May 12, 2021), https://energynews.us/2021/05/12/conservancy-charts-a-solar-showcase-on-the-coalfields-of-central-appalachia/.

[6] Dominion Announcement, supra note 1.

[7] Sarah Vogelsong, Can Southwest Virginia remake itself as a laboratory for renewables?, VA Mercury (Sept. 20, 2021, 12:02 AM), https://www.virginiamercury.com/2021/09/20/can-southwest-virginia-remake-itself-as-a-laboratory-for-renewables/.

[8] U.S. EPA, Shining Light on a Bright Opportunity 1 (2011), https://semspub.epa.gov/work/HQ/176032.pdf

[9] Vogelsong, supra note 7.

[10] Id.

[11] See The Solar Foundation, Large-Scale Solar Development: A Playbook For Southwest Virginia

19–20 (2020), https://solsmart.org/wp-content/uploads/Solar_Playbook_SWVA-8c1.pdf; Steve Goodbody, Building Solar Projects on Brownfields Is Hard Work. But There’s Massive Upside to Getting It Right, Greentech Media (July 8, 2016), https://www.greentechmedia.com/articles/read/building-solar-projects-on-brownfields-is-hard-work.

[12] See U.S. EPA, supra note 8, at 9.

[13] Id.

[14] Id. at 9­–10.

[15] See Vogelsong, supra note 7.

[16] See id.

[17] Abandoned Mine Land, VA Dept. of Energy, https://energy.virginia.gov/coal/mined-land-repurposing/Abandoned-Mine-Land.shtml (last visited Oct. 22, 2021); see also The Solar Foundation, supra note 11, at 20.

[18] See Vogelsong, supra note 7.

[19] Elizabeth McGowan, Meet the Virginia conservationist trying to turn old coalfields into solar farms, Energy News Network (Sept. 29, 2021), https://energynews.us/2021/09/29/meet-the-virginia-conservationist-trying-to-turn-old-coalfields-into-solar-farms/.

Image Source: https://mma.prnewswire.com/media/1624172/Dominion_Highlands_Solar.jpg?p=original