Following The "Silk Road". Where Exactly Was That Supposed To Go?

Originally, the Silk Road was a series of routes over which commerce traveled in Asia beginning over 2,000 years ago.  Silk, gold, technology, religion and diseases (e.g. bubonic plague) were carried and exchanged over the Silk Road.

Fast forward to the present day and the Silk Road was, until recently, a website accessible only in the deep web and only by TOR (The Onion Router), a network and browser designed to preserve your anonymity on the web.  Silk Road was the brainchild of fellow Austinite and former neighbor Ross Ulbricht.  Ross was a 2002 graduate of West Lake High, a school that I pass every day coming to work.  His Facebook page is still up and he seems like a pretty cool guy.  We even have a mutual Facebook friend.

However, when I visited Silk Road before the feds closed it in September and arrested Ross on Oct. 2nd of this year, I found that you could purchase most any kind of drug I had ever heard of and many that I hadn't.  Since I have a background in Pharmacy, that's a wide range of stuff.  Cocaine, Ecstasy, black tar heroin and 'shrooms were in abundance.  Apparently, you could also arrange for murder by hire and Ross is accused of that in regard to one of his clients on Silk Road supposedly threatening to expose everybody unless certain conditions were met.

The medium of exchange on Silk Road was Bitcoin, our favorite virtual currency.  When Ross was arrested, the FBI seized over $3,000,000 in Bitcoins belonging to Silk Road customers.  They were also trying to get an estimated 600,000 Bitcoins from Ross' personal Bitcoin wallet.  That's about five percent of all the Bitcoins presently in existence.

All in all, a very sordid story, including the allegation that Ross went by the pseudonym of the "Dread Pirate Roberts", which comes from my favorite movie "The Princess Bride".

So how does a 20s something, suburban, white bread guy go from wake boarding on Lake Austin to being one of the biggest drug dealers (or at least the facilitator) in the world ?

Apparently Ross is brilliant (degree in physics at the Univ. of Texas, graduate work at Penn State), a libertarian fan of Ron Paul and idealistic and naive.  On his Facebook page he wrote an essay on "Thoughts On Freedom".  On his LinkedIn page, he described an idealized version of Silk Road, when he wrote:   "Now, my goals have shifted. I want to use economic theory as a means to abolish the use of coercion and agression amongst mankind. Just as slavery has been abolished most everywhere, I believe violence, coercion and all forms of force by one person over another can come to an end. The most widespread and systemic use of force is amongst institutions and governments, so this is my current point of effort. The best way to change a government is to change the minds of the governed, however. To that end, I am creating an economic simulation to give people a first-hand experience of what it would be like to live in a world without the systemic use of force."

He apparently viewed Silk Road as beneficial because it was a place where people could obtain illegal drugs without the concomitant hazard of having to deal directly with a drug dealer.  Regardless of your view on drugs and their use, it would seem to be preferable if people didn't have to risk their life to obtain them.

In the end, despite his brilliance and perhaps because of his naivete, he got sloppy and used his real name and address in obtaining fake passports and made other mistakes that enabled his arrest.  This could have been a family member of any of us (assuming any of us has anybody that smart in our gene pool) and we would have been simultaneously amazed at  his drive, ambition and success and aghast at what he has wrought.

The Blog Gods Give Us The Winklevoss Twins Again.

We have devoted an inordinate amount of time and blog space to the exploits of the Winklevoss twins.  I won't take the time to do internal links to our posts but just type in Winklevoss in the search function on the side if you are interested.  However, when our creative (cue air quotes) juices run a little viscous, we can always do a Winklevoss post and for that, we thank the blog gods.

As you will recall, they are the guys that were unsuccessful in taking over Facebook, unsuccessful in suing their own lawyers when they failed and unsuccessful in overturning their unfavorable ruling in the Facebook lawsuits, even after several attempts.

Now they have been scooped again, in that someone else has beat them to the market with a Bitcoin investment vehicle.  They had made a filing to sell interests in a trust but because of the nature of their proposed investors, it has been slower going.  Hence, late to market.  However, in light of the Silk Road debacle (more to come on that soon) and its effect on Bitcoins, maybe that's not a bad thing for them.

So, in spite of the fact that they are excessively attractive, smart, educated, athletic, white, privileged and pampered, they have not reached their full potential.  Here's hoping they keep trying for the sake of the blog gods and us.

Bill Introduced In Texas Legislature To Prohibit Employer From Asking You About Your Social Media Password.

Having solved all the other problems in Texas, including the problem of gun violence (prayer) and the problem of uninsured citizens (cutting Medicaid) the Texas legislature has turned to the burning issue of employers requiring employees to provide access information to employee's private social media accounts.

House Bill 318 has been introduced to make it an "unfair employment practice" if an employer "...requires or requests that an employee or applicant for employment disclose a user name, password, or other means for accessing a personal account of the employee or applicant, including a personal e-mail account or a social networking website account or profile, through an electronic communication device."

This bill still allows "monitoring" employee usage of employer provided media and also allows employer policies prohibiting use of company provided resources for personal use.  It doesn't provide for a specific remedy or a damages cap and it will likely be amended substantially before it passes, if it passes at all.  This would make Texas one of a handful of states that has jumped on this burning issue.  Crisis averted.

UPDATE: Ownership of Company's Twitter Account: Company vs. Employee

Almost a year ago, we mentioned the unusual case of PhoneDog v. Kravitz, where a former employee was sued by his former employer for $340,000, which amounted to $2.50 per Twitter follower that the employee took when he left the company.

We indicated that this was a gray area and developing.  So, how did PhoneDog v. Kravitz enlighten us on the rules for this situation?  Exactly none.  Mashable reports that the parties have settled after months of mediation.  Settlement terms are confidential but apparently Mr. Kravitz retained the Twitter followers and there was no indication of money changing hands.

Where does this leave us?  Back at square one but with some lessons learned.  For example, if ownership and control of Twitter accounts is important to your business, state in the employment contract or the employee manual that such accounts belong to the company.  Eliminate any drama by addressing the issue head on.  #commonsense

In Your Face, Privacy!

I'm lazy. That's the only answer I can come up with. There are coupon, discount, and "my awesome deal" websites cluttering my inbox every morning, and for the life of me I can't seem to remember or care enough to take advantage of all this free money. I'm not a technophobe - far from it. I've used Google deals, Facebook deals, aDealio, and Groupon when I'm getting a massage, sometimes a car wash, or when I'm all out of ideas for lunch. But with all the deals out there part of me has given up and decided it's easier to pay the extra 15% rather than wade through all those sites.

 

Enter my savings savior, Red Pepper and their new facial recognition software, Facedeals. Facedeals, proposes to assist with my Facebook check-ins by performing a facial recognition match by way of their fancy, magic camera box. Through this facial sorcery, I'm automatically checked in and then I'm sent a text with the available deals. Fantastic! Right?!

 

With the exception of the two weeks of SXSW, I can never muster the strength of summoning Foursquare or Facebook to let my friends know where I am or what deals might be around the corner. Finally, I can end the torture that is unlocking my iphone, finding the check-in app, finding the right location, and thinking of something witty to say ... then doing it all over again with my deal app. Yes, this type of laziness falls under the first world problem category, but the thing is, that's probably what it's going to take for me to actually redeem that coupon for 10% off all fish taco appetizers (on every 3rd Tuesday). 

 

My first thought as an attorney was ... hurry up and change your name before Facebook sues you! See other Facebook victims here, here, and here. Fortunately, they recently posted a statement indicating no affiliation with Facebook and that they are changing their product's name. Well done, Red Pepper, well done. I hope that's enough golden fleece to cover the dragon's eyes. 

 

My next thought was  ... isn't there some type of privacy concern here? There's a video camera outside of each bar checking me in? What exactly is that little wizard camera box doing? As I would expect, Facedeals states that it is opt in procedure, meaning permission must be granted before Facedeals blabs about you going into a bar at an inappropriate time and/or with inappropriate frequency. Anyone who has signed up for Spotify can attest to the difficulty in broadcasting their listening habits to their friend circle. 

 

So are they violating our privacy? Ultimately, the Constitution and case law provide us with our basis for privacy law, but each state maintains privacy statutes that fine tune the proper interactions with those rights. For example, think of recording conversations, state laws differ on whether both parties to a recorded conversation must be aware of the recording. Therefore, an overgeneralization is difficult, but the "dangerously close to malpractice" take on this is that if you don't have an expectation of privacy then there is no privacy. When you're in public walking on a public street you can't expect that information to be protected by law, as opposed to being in your house with the shades drawn or in private establishment whispering to your friend.

 

The Facedeals program doesn't seem to record sound and faces the street, so it appears to coincide with the legal expectation of privacy, but how will people react?  My thought would be that the reaction will be predicated on what the program does and how it is used.  The basic premise is great and handy, but will this start the slippery slope to a continued monitoring of our actions? What if someone hacks into the system like some Ocean's 14 plot? I watched the Wire, don't we already have cameras on every block? 

 

Although I'm a bigger fan of privacy than I am a cheap steak bite, I could see myself using the app when walking around a new area ... as long as I can edit my notifications to "Only Me". The lazy guy who wants help checking in is interested to see how well the facial recognition software works and the lawyer in me wants to find out what the program is doing once it scans my face (even if I haven't signed up). 

 

 

Having An Open WiFi Does Not Ipso Facto Make You Liable For Negligent Infringement.

Here's the scenario:  You have an open WiFi (i.e. no password required), someone (maybe you, maybe not), uses that IP address to download a copyright work, someone (probably a copyright troll) sends a subpoena to your internet service provider and finds that this happened, you receive a letter from a copyright troll attorney that says in basic terms:  "You are a horrible person.  A copyright protected work was illegally downloaded using your IP address.  It was entitled something that included "hot", "wet" and a bodily orifice in the title.  You should be ashamed and if you pay me $3,000 now, it will all go away and your wife/girlfriend/scout troop/sunday school class will never know.  Otherwise, we can sue you for negligence because your WiFi was not protected and we don't even have to prove you did the download."

Maybe this comes as a huge surprise to you, maybe it doesn't.  However, will the negligence claim fly and allow the trolls to tag you with liability even if they can't prove you actually did it?  A couple of courts have said no.  Last week the U.S. District Court for Northern California in a case styled AF Holdings LLC v. John Doe and Josh Hatfield held that the mere inaction of not protecting your WiFi was not negligence because the defendant did not owe a duty to the plaintiff to take an affirmative action to protect the plaintiff's intellectual property.  In addition, the court held that this was still a copyright case and state law of negligence was preempted by the federal copyright statute.  And to further make a point, the court found immunity for the defendant under Section 230 of the Communications Decency Act.

So, it seems to be the trending opinion that you aren't strictly liable for contributory infringement for just leaving your WiFi open.  Seems right to me.

New Top Level Domain Names. Coming Soon To A Browser Near You.

We have discussed before the new ICANN Top Level Domain scheme, whereby the initial regimen of .com, .net, .edu, etc. could be supplemented by any word to which an approved registrar gets the rights.  We joked that we were going to apply for the .law domain.  We came up a little short on our aluminum can drive to get the $185,000 necessary for the application but obviously someone is reading our blog because ICANN released a list of the applications today and six entities have applied for the .law domain name.  If that wasn't enough, there were two applications for .lawyer, two for .legal, one for .esq, one for .attorney and one for .abogado.

A review of the proposed strings probably provides a commentary on contemporary society, but you can make that evaluation.  The following are some of the applications and the number of applicants for such strings:

  1. 13 applications for .app
  2. 1 application for .bible, but none for .koran, although there is 1 for .catholic and 1 for .islam
  3. The applications are as divided as the country with 1 application for .democrat and 1 for .republican
  4. In the organized entity arena, there were 10 applications for .inc, 9 for .llc, 4 for .llp, 4 for .gmhd and 7 for .ltd
  5. There were 6 applications for .tech, 7 for .web and 7 for .cloud
  6. On the family front there were 3 applications for .mom and only 1 for .dad.  That sounds about right.
  7. For all the adults, there was 1 application for .porn (there already is a .xxx domain), 2 for .sex and 1 for .sexy
  8. There was 1 application for .gay and no applications for .straight
  9. There were numerous applications by corporations for the corporate extension, like .canon, .dell, .firestone and .csc
  10. And in the "I've got $185,000, I don't need right now" category, there was 1 application for .wtf and 1 for .unicorn.

There now follows a 60 day comment period and a 7 month window for filing an objection to any application.  Anyone want to oppose .cialis?  You can only do that after 4 hours.

Austin Under 40 Awards

The Austin Under 40 Awards  is a great local group that, in addition to raising money for local charities, nominates and awards certain Austinites that exemplify commitment to leadership in business and social awareness.  The nominations period just ended, and we are proud to have our partner Stuart Hiserodt as co-chair of the nominations.  Here he is discussing it on KVUE:

 

 

Who Owns Your Social Media Account? You Or Your Employer?

Here's the situation:  You establish a Twitter, Facebook, LinkedIn, etc. account while you are employed and use the account to tweet, post, blog, etc. about your employer.  Then your employer falls out of love with you and you are no longer employed.  Who owns your followers on Twitter or your Facebook or LinkedIn account?  That's a really good question and one that the courts are dealing with right now.

Rich Sanchez was an anchor on CNN and has a Twitter account with the handle: "richsanchezcnn".  Rich was rendered unemployed because of some ill advised statements he made.  So, does CNN own the account or was Rich popular with the Twitter followers because of his good looks and sex appeal or because he was on CNN?  Should he have to change his handle?  This was settled out of sight, so we don't know what happened there.

On another front, a company called PhoneDog LLC filed a suit against former employee Noah Kravitz.  Noah tweeted while an employee of PhoneDog under the name "PhoneDog_Noah" but then changed it to "noahkravitz" after the break up.  PhoneDog alleges that Noah's 17,000 followers are worth $2.50 per month for 8 months and are asking for a $340,000 judgment against our friend Noah.  PhoneDog has, for the moment, survived a motion for summary judgment with the judge finding enough question of fact about "trade secrets" in the account to let the case go on for a little longer.

Then there's the strange case of Dr. Linda Eagle, who was one of the original founders of Sawabeh Information Services.  As is the case sometimes, all the founders were fired and Sawabeh alleges that it owns Dr. Eagle's LinkedIn account and that she has somehow "misappropriated" her own  account.  As you know, most LinkedIn accounts (as was Dr. Eagle's) are in the employee's name alone and refers to the company in the employment history and in the connections established.

We have explored the issues of who owns clients of an LLC and whether a toxic ex-spouse might have some rights in a patent in a community property state, but this is an area of the law that is developing.

In most instances, this is probably not a huge issue but employers who want to have control over these accounts (and the wisdom of this should be evaluated thoroughly), should provide guidelines in the social media section of their employment rules.  If stated clearly, there seems to be no reason why the employer would not be entitled to control and ownership of such accounts if they fall into the parameters set out in such policy.  Otherwise, it's pretty gray.

Weekend Smorgasbord: Faceporn and Copyright Porn.

Here is a couple of technology law related things that happened this week and they are only marginally connected.

1.  Facebook sued a site called Faceporn in a federal court in California.  They are aggressive about this.  See here and here.  Faceporn is in Norway but uses a .com website.  They also have 250 users in California and 1000 users in the U.S.  Faceporm failed to file an answer and Facebook moved for default judgment.  The Court denied the motion, finding that it did not have personal jurisdiction over Faceporn in that personal jurisdiction requires more than "simply registering someone else's trademark as a domain name and posting a web site on the internet".  Hence, no default judgment.

2.  In a recent  case in Massachusetts involving the claim of copyright infringement for an adult film, the judge wondered aloud in a Footnote 2 whether there was actually any copyright protection available for a pornographic product.  A couple of cases had refused to provide such protection (beginning in the early days of Broadway, see Martinetti v. Maquire, 1867) but basically on the grounds that scant dialog and nude women were not a dramatic composition and therefore not entitled to copyright protection.  A 1979 case allowed for such protection because found that the concept of decency and pornography is constantly changing and "denying copyright protection to works adjudged obscene by the standards of one era would frequently result in lack of copyright protection (and thus lack of financial incentive to create) for works that later generations might consider to be not only non-obscene but even of great literary merit".  It seems incongruous that porn is not entitled to any copyright protection but cases as late as 1998 found that hard core porn that was "bereft of any plot and with very little dialog" was not entitled to injunctive relief against copyright infringement.

So, lack of personal jurisdiction just because you have a .com domain and a question raised about copyright protection for pornography.  How do these affect technology and law?  Well, the internet issue for personal jurisdiction will continue to develop over the years, copyright issues for any medium is a hot item in technology protection and any mention of porn lights up the search engines and gets us more readers.  Reasons enough?

In Cyberspace, No One Can Hear You Scream, But They Can Get Your Identity.

The Securities and Exchange Commission thought that a particular individual was engaged in a
"pump and dump" scheme, which is where bloggers, commentators, anonymous "experts" or others tout a small cap stock on line in forums, chat rooms, etc. and often with false or deceptive material and then when the price gets a bump as a result, the persons doing the touting sell the stock for a profit.

The SEC wanted the identity of the person behind jeffreyhooke@gmail.com and subpoenaed Google to get the information.  Google notified the person and the person (using the clever pseudonym "John Doe") moved to quash the subpoena.  The lower court denied the motion to quash and Mr. Doe appealed. 

The Court found that Mr. Doe had made a prima facie showing that his First Amendment right of free speech was implicated and therefore, the burden shifts to the government to show: (i) the information sought was rationally related to a compelling governmental interest and (ii) the disclosure requirements are the least restrictive means of obtaining the desired information.  The Court found that the government's interest in disclosure (being ancillary to a fraud investigation) trumped Mr. Doe's private interest in anonymity and that the information requested was the least restrictive means available.

Mr. Doe argued that the standard in Anonymous Online Speakers should be applied here instead of the Brock standard.  The Court held that in Anonymous Online Speakers, there was no government interest at issue (i.e. it was between private parties) as there was in Brock and therefore the Brock standard should be applied, i.e. the government did not have to present evidence sufficient to overcome a summary judgment.

The Court overruled the motion to quash and John Doe is anonymous no more.

 

Winklevoss Twins Not Particularly Enamored With Legal System, Lawyers nor Results.

We have chronicled the saga of the Winklevoss twins in these pages before (see here, here, here and here) and frankly, we're a little embarrassed we have spent so much time on this.  As you will remember, the twins succeeded beyond most mere mortals wildest expectations when they settled their claim against mighty Mark for a portion of Facebook now estimated to be worth more than 9 figures.  That definitely made them a member of the one percent.  They then decided that they had been scammed and tried a number of times to set the settlement aside.  As indicated in the posts described above, they have been singularly unsuccessful in that endeavor.

They engaged the firm of Quinn Emanuel to pursue the initial law suit against Facebook.  The arrangement with Quinn Emanuel provided for a contingency fee based on the amount ultimately recovered through suit or settlement.  They signed an engagement letter that they had reviewed by independent counsel.  After the settlement with Facebook, the twins decided not to pay Quinn Emanuel the $13 million in legal fees that Quinn Emanuel claimed under the engagement letter.  Quinn Emanuel instituted arbitration in accordance with the engagement letter.  The twins sought a court order enjoining the arbitration proceeding.  That was denied.  An arbitration panel awarded Quinn Emanuel the $13 million dollars.  The twins appealed again to the New York Supreme Court seeking to set aside the award because of the law firm's alleged malpractice.  Denied again.

The Winklevoss twins entered into a settlement that made them even wealthier than they already were.  They then decided that they didn't like what they had agreed to and have set out to avoid anything relating to that settlement.  They are zero for career in that category.  I wonder if the law firm representing them in the matter against Quinn Emanuel asked for up front payment.  They would be guilty of malpractice on their own behalf if they didn't.

Lawyers Have An Ethical Duty To Inform Clients That Electronic Communications May Not Be Confidential.

Once again we stand at the intersection of Ethics Street and Technology Avenue and notice that the traffic signals are insufficient to avoid multiple mishaps here.  Florid prose aside, attorneys must understand that certain methods of electronic communications may put them in an ethical problem if they don't warn their client that using such method may harm the confidential nature of the communication.

You will recall that we wrote recently on a court holding that using a computer or network provided by your employer to communicate with your attorney about a potential complaint against the employer could waive the attorney-client privilege.  Now the ABA has issued a formal opinion on the subject and the gist is that the attorney has an affirmative duty to warn the client about such an eventuality.  In Formal Opinion 11-459 issued August 4, 2011 the Committee on Ethics and Professional Responsibility states that if a client communicates with an attorney about "substantive" issues and such communications originate from an employer owned computer, device (e.g. smart phone) or network (even if from a private e-mail address), the attorney must assume that the employer has a right to access such communications and therefore, the attorney has a duty to warn the client about the risk.  Also, if the client does not heed the risk, the attorney should refrain from communicating with the client via the suspect method.

This duty arises as soon as the attorney-client relationship arises and the attorney knows or should know that the client is likely to send or receive attorney-client communications where there is a significant risk that the communications will be read by the employer or another third party.  This would appear to be particularly applicable in disputes with the employer and in matrimonial issues where the other spouse may have access to the device used for communications.  It also can arise from the use of public computers like libraries or hotels or the use of borrowed devices.

So, the question then arises: What is sufficient notice/warning to comply with this requirement?  The opinion doesn't specifically state but does mention that "reasonable" efforts must be made.  Would a standard tag line on your e-mail signature such as the following be enough?

"Anyone communicating to or from this office by means of an electronic device (including computers, smart phones, tablets or others) and using electronic communication (including e-mail, text messages, instant messages, chat rooms, comments on blogs or websites or others) are advised that such communications may not be confidential, particularly in instances where you are transmitting personal information using your employer's devices or networks or where you are using you are using public computers (such as libraries or hotels) or using a public wireless internet connection.  The effect of the loss of confidentiality will be the loss of attorney-client privilege and the possibility that such communications may not be protected from disclosure in any legal procedure in which you are involved.  You are cautioned to act accordingly."

Using such language as a part of your common electronic communication signature may be advisable and probably doesn't hurt but good practice would indicate an additional communication (such as the engagement/fee arrangement letter) in which the client acknowledges that they have received and understand the warning.  Also, we run the danger of having our e-mail signatures become documents in and of themselves that require our clients to have other attorneys review (hyperbole alert).

We would be interested in any measures that other attorneys have instituted to address this issue.

Austin Start Up Week - Sept. 6-10. Good Times and Learning Together: What A Concept!

The first Austin Start Up Week will be held September 6 through 10.  The website and more information may be found here.  The organizers have as their stated goals: "...learn, mix and mingle with your peers, meet some new people and make awesome things happen". 

Included in the agenda are kayak rides, pub crawls, Office Space quote-a-longs ("So I was sitting in my cubicle today, and I realized, ever since I started working, every single day of my life has been worse than the day before it. So that means that every single day that you see me, that's on the worst day of my life") and some educational stuff also.

This sounds like a whole lot more fun than working (even if you have a job), so you should check it out.  We hope to see you there.

Winklevosses Lose Again. Massachusetts Court Dismisses New Lawsuit Against Facebook.

We have covered the Winklevoss twins versus Zuckerberg/Facebook legal struggle on way too many occasions (see here, here, here and here).  We rejoiced when we found out that the Winklevosses would not go away as we felt it would make for easy blog posting.  Well, this is one.  About a month after the Winklevosses decided not to take their appeal to the U.S. Supreme Court and instead pursued a suit in District Court in Massachusetts, that court has dismissed their claim on the grounds that other courts had already considered and rejected their substantive claims (res judicata).  The twins' attorney will file a motion for post judgment relief and we can only hope that this continues until we need another easy post.

 

Hallelujah! We Spoke Too Soon. Winklevosses Strike Back. More Easy Blog Posts Ahead.

Yesterday we announced prematurely the cessation of combat operations in the Winklevoss v. Zuckerberg saga/soap opera/high grossing movie plot.  It seems that even though the twins had decided to forgo their appeal to the U.S. Supreme Court, they are pressing the attack in an existing suit in Boston.  Thank you, whatever deity is responsible for providing material for blog posts.  Our faith in you is renewed.

 

Our Long National Nightmare Is Over. Facebook/Winklevoss Lawsuit Comes To An End.

This blog has been in sort of a TMZish mode regarding the unfolding drama of the Winklevoss twins vs. Zuckerberg.  See here, here and here.  Apparently the era of easy blog posts is coming to an end as the twins have announced through a filing that they will not pursue an appeal to the U.S. Supreme Court.

 

Hear All That Screaming and Gnashing Of Teeth? It's World IPv6 Day!

OMG!  It's already World IPv6 Day and you forgot to buy gifts.  What are you doing to celebrate?  Who has the day off?

The Rapture or World IPv6 Day, Which One Is Likely To Cause More People To Disappear?

Well, the Rapture came and went and apparently everyone I know is a dirty, rotten sinner.  Now, we get another chance to be elevated into something greater than ourselves.  You will recall that we warned you that the Internet ran out of numbers a month or so ago and it had about as much impact as last Saturday's event.

Now, the Internet Society is tempting fate by calling for a World IPv6 day on June 8, 2011.  We are less likely to see billboards and covered cars extolling this day than we did for the Rapture and we certainly will see less media coverage although this touches far more people than 144,000.

On June 8, several hundred websites and a few large companies will provide their content in IPv6 compatible mode to remind people of the coming apocalypse when all websites and devices with IPv4 numbers try to switch over.  Talk about your Armageddons!  Just wait until the internet and cell phones don't work.  At that point, not even one of the major deities could save us.

To determine your browser's ability to be screwed up by this change over, you can go here to check now.  To prepare for IPv6 day and the return of Y2K, please fasten your seat belt and return your browser to its full uptight and locked position.  Your pilot has been advised of some choppy air ahead.

(To be clear, this is this Blog's lame attempt at sarcasm.  We believe the IPv6 changeover is beneficial and necessary.  Really, we do.)

Ninth Circuit Denies Winklevoss v. Facebook Motion For Rehearing. Winklevosses Change Status To: "It's Complicated".

You will remember that the Winklevoss twins had tried to get their settlement with Facebook overturned.  The Ninth Circuit had decided that the settlement should stand and that litigation should end at some point.  The Winklevosses did not take the hint and asked for a rehearing en banc (i.e. that all the judges of the Ninth Circuit hear it as a panel rather than the three judge panel that originally sat on the case).  That motion was denied without comment.  The only option left for the twins is to appeal to the U.S. Supreme Court.  In order to decide to grant certiorari (i.e. the decision to put the case on the Supreme Court docket), the Supremes will have to believe there is some constitutional issue to be decided.  That will not be easy in this case as the issues deal primarily with contract law and the allegations of fraud.

We had mentioned before that we hope the Ninth Circuit granted a rehearing for no other reason than it gave us fodder for further posts.  We now wish the same for the Supreme Court.

Winklevosses Ignore Part of Ruling That Says: "...litigation must come to an end..." and Ask For En Banc Rehearing.

Last week we talked about the Ninth Circuit refusing to set aside the Winklevoss/Zuckerberg/Facebook/ConnectU settlement agreement.  Yesterday, the famous twins decided to ignore the part of the opinion that said that now is the time for the litigation to come to an end and filed a Petition For Rehearing En Banc.  This means that they are asking all the judges of the Ninth Circuit to rehear the case rather than the panel that originally heard it. 

From the language of the Petition, the twins seem to take umbrage at some of the snarkier language in the original opinion.  They find issue with: "bested by a competitor", "backing out", "quite favorable", "enough" and allege that "sophistication is no defense".

We can only hope that a rehearing will be granted, if for no other reason than it will give us fodder for several more posts.  Stay tuned.

 

The Social Network II - The Facebook Legal Saga Continues.

We've all seen the movie.  Mark Zuckerberg versus the Winklevoss twins.  Uber-nerd versus uber-jocks.  Outsider versus the privileged and connected.  In the balance rests the right to violate the privacy of virtually everybody in the "civilized" world.

The movie shows some of the discovery proceedings in the lawsuit filed by the Winklevosses in Massachusetts alleging that Zuckerberg stole the Facebook idea.  Zuckerberg filed a countersuit in California (typical Facebook ploy, see here) against the twins and ConnectU, alleging that ConnectU had hacked into Facebook and stolen information and attempted to steal Facebook users by spamming them.  The California dismissed the action against the Winkelvosses, finding that there was no personal jurisdiction over them. The Court then ordered the parties to mediate to attempt to find a settlement to all their issues.

Then things start to get stranger.  With billions of dollars at stake, the parties mediate for one day, reach a settlement and document it with a one and a third pages of hand written notes with the title: "Term Sheet and Settlement Agreement".  This Agreement envisions the transfer of ConnectU to Facebook in exchange for cash and an interest in Facebook.  Facebook lawyers then present 130 pages of documents to flesh out the Agreement (merely 100 times the volume of the Agreement).  The deal then comes off the tracks for a number of reasons including the Winklevosses asserting that the value of the Facebook stock is less that they were lead to believe.  Facebook files a motion to enforce the Agreement.  The twins alleged that the Agreement is not enforceable because it lacks material terms and was procured by fraud.  The Court finds the Agreement enforceable and the Winklevosses appeal.

Then Ninth Circuit, in a decision released yesterday, upheld the enforcement of the Settlement Agreement.  The Winklevosses had alleged that the Agreement violated Rule 10b-5 of the Securities Act and as such was void.  The Ninth Circuit rejected this argument and found: "The Winklevosses are sophisticated parties who were locked in a contentious struggle over ownership rights in one of the world's fastest-growing companies. They engaged in discovery, which gave them access to a good deal of information about their opponents. They brought half-a-dozen lawyers to the mediation. Howard Winklevoss—father of Cameron and Tyler, former accounting professor at Wharton School of Business and an expert in valuation—also participated."

The Court also held: "The Winklevosses are not the first parties bested by a competitor who then seek to gain through litigation what they were unable to achieve in the marketplace. And the courts might have obliged, had the Winklevosses not settled their dispute and signed a release of all claims against Facebook. With the help of a team of lawyers and a financial advisor, they made a deal that appears quite favorable in light of recent market activity. See Geoffrey A. Fowler & Liz Rappaport, Facebook Deal Raises $1 Billion, Wall St. J., Jan. 22, 2011, at B4 (reporting that investors valued Facebook at $50 billion —3.33 times the value the Winklevosses claim they thought Facebook's shares were worth at the mediation). For whatever reason, they now want to back out. Like the district court, we see no basis for allowing them to do so. At some point, litigation must come to an end. That point has now been reached." (Emphasis added)

So, the poor Winklevoss twins are stuck with a deal that is only worth millions and not billions.  In the lessons learned department, we are struck by the fact that you probably couldn't turn around in the mediation room without tripping on a lawyer or a financial advisor and yet, they ended up with slightly over a page long, hand written document.  That either means you don't need lawyers at all or you really need them to do their job. 

Maybe we'll find the answer in the next sequel, "Social Network III, The Legal Grievance Phase".

 

LinkedIn Reaches 100 Million Users. First Million Get Thanked Personally.

Sometimes referred to as the Facebook for the business set, LinkedIn provides a multitude of information and contacts to its members.  Last week, LinkedIn notched its 100 millionth user.  According to the metrics on my LinkedIn page, I'm connected to about 4 percent of them.  That's a lot.  I hope they don't all decide to come over to the house at once.

In a nice touch, the founder of LinkedIn sent a personal letter of thanks to the first 1 million adopters, specifically citing their order of signing up.  I didn't get a letter as I missed being in the first million by a mere 16,915,876.  If you are looking for your letter, you can determine if you are going to get one by looking at your full profile URL.  Your order in the LinkedIn hierarchy is listed after the "id=__" in the URL.

I'm probably not going to get a letter from Mark Zuckerberg either.

Updates: Stuxnet, Bilski, COICA, Arcade Fire (HTML5)

Updates on a few of our earlier posts:

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The Internet Runs Out of Numbers. No Big Deal.

A couple of days ago, the Internet ran out of numbers.  How is that possible, you say?  Aren't numbers infinite? 

The numbers referred to are the internet protocol addresses (IP addresses) that are assigned to every device connected to the internet.  Each device has its unique number and the number is what allows the devices attached to the internet to talk to each other.  We humans deal in domain names like www.austintechnologylawblog.com but the computers convert these names into numbers that look like this: 192.0.2.53.  This numbering convention is called IPv4 and was developed in the early days of the internet and has been adequate until now.  IPv4 has a finite capacity of just over 4 billion addresses. 

IP addresses are administered by a non-profit entity known as ICANN (The Internet Corporation for Assigned Names and Numbers) and they allocate the numbers among 5 Regional Internet Registries (RIR).  What the exhaustion of numbers really means is that all available numbers have been allocated to the RIRs for further distribution and none remain in the ICANN central pool.  The RIRs will continue to distribute such numbers but even the end of that is in sight.

What happens now?  Complete shutdown, anarchy, the end of the Egyptian uprising and the demise of sexting?  Nope, luckily the folks looking after this have anticipated this (like Y2K) and have established IPv6, a new and improved IP address protocol.  IPv6 addresses are written in hexadecimal and have a 128-bit address space, which provides for 340 undecillion addresses.  Suffice it to say, that's a lot and should last into the foreseeable future.

IPv6 addresses will contain colons and will look something like this: 2001:0db8::53.  When you see two colons together it means that the segments between contain only zeros.  In the example above as given by ICANN, it really means: 2001:0db8:0000:0000:0000:0000:0000:0053

So, no need to panic just yet.  Supposedly, most existing devices we use today are compatible with IPv6.  Internet service providers will initiate roll out of the new numbers when needed and (supposedly) users will not have to take any real actions.  That remains to be seen but as of now, we've still got numbers.

 

Senile Musings of the World's Oldest Baby Boomer Lawyer- How Technology Has Changed The Practice of Law.

Indulge me for a moment.  Today is my birthday.  I'm old.  I've been practicing law for a long time (parts of five decades).  I'm slightly nostalgic on this, the occasion of my becoming a ward of the state.  This blog talks generally about technology and the law.  This post will address technology in the law.

I know that most of you assume that the internet has existed forever.  At least since the nineties, which is forever for a lot of you.  Let me describe the technology of law when I first burst on the scene in the 70s: Lawyers dictating to secretaries (no one knew what an administrative assistant was) sitting at the end of the desk while the lawyer paced and talked, secretaries taking the dictation in shorthand on steno pads, secretaries typing on manual typewriters with carbon paper making one copy on onion skin paper, other lawyers dictating on Dictaphones (machines about the size of an old VCR with a circular magnetic tape), which was then given to a secretary for transcribing, no lawyer would have deemed to do his or her own typing even if they could.

Then the advancements starting coming in torrents (at least one or two every three or four years):

  • Electric typewriters, first with an arm and a head for each character and then followed by a rotating ball with all characters (Selectric typewriters)
  • Self correcting electric typewriters (mistakes were corrected not by erasing and retyping but by backing up and typing the incorrect character(s) again, which pounded a white material into the prior indentation.  This didn't do anything for the underlying copy, which still had to be manually corrected)
  • Copiers - big, clunky, expensive, slow moving machines
  • Fax machines - one line for the whole firm and it was used only on special occasions
  • Hand held dictation equipment, first with full sized cassette tapes and then later with mini-cassettes 
  • Mag-card "word processors" - the first "computerized" advance in office technology.  Machines about the size of small refrigerators, which had magnetic media (in the shape of old IBM punch cards) on which you put standard documents with blanks in the text for names, addresses, etc.  These large machines were attached to Selectric typewriters that would operate until it found one of these blanks indicated by a "stop code" at which point the typewriter would stop and the operator would enter the optional text manually.  These machines were hot and noisy and had to be enclosed in a room with sound absorbing material and were run overnight because of the long production time for large documents and the fact that there were only a few machines for the entire firm.
  • The advent of personal computers moved rudimentary word processing to the administrative assistants desk tops and Word Perfect ruled the legal world and only special Word Perfect gurus knew how to use the "codes".
  • Legal research by computer was introduced by Lexis-Nexis.  One large terminal tucked way back in the library with an exorbitant per minute search rate and a per line print rate with a printer as part of the terminal.
  • Desktops, then laptops with Microsoft Word and Westlaw and the internet and mobile phones evolving into pocket held computers, Microsoft 365, Google voice, Google docs, Twitter, LinkedIn, Avvo, social media, the cloud, etc., etc. and the torrent really has begun.

However, the more things change, the more they stay the same.  Even though technology has changed the face of law practice, the same basics remain: Lawyer competence, client contact and trust and good, old fashioned integrity still count.  Maybe now more than ever.

Thanks for indulging me.  I look forward to many more advances over the next five decades.

 

 

 

 

Partner And Business Cards Make The Social Scene

Our esteemed partner, Luke Stanfield, doing his best to further the social scene in Austin was noted and photographed recently in Out And About, a very informative daily feature in The Austin American Statesman.  The online version is cited above and the print version appeared in last Sunday's paper.  He is shown with our good friends Jude Galligan and Amber Gugino, who are the proprietors of the best blog relating to downtown Austin real estate, the Downtown Austin Blog.

Luke is also credited with introducing Michael Barnes, the columnist, to our business cards, which incorporate a QR code.  The code on our cards, shown here,

will take you to our Google page, website and blog when scanned with an appropriate program on a mobile phone.  Try it on screen here with your magic phone.  Just one more indication of our cutting edge approach to practice.

The Empire Strikes Back: Facebook Files Suit Against Lamebook In California Court

It didn't take long.  You will recall that we discussed Lamebook's filing against Facebook here in an Austin court last Friday.  Yesterday Facebook struck back with a suit in the Northern District of California. 

Facebook will hope to get Lamebook's declaratory judgment action dismissed here and then proceed with their suit in California.  There will be much maneuvering and it will rapidly get expensive, particularly for Lamebook. 

As we said before, stay tuned.

Lamebook Proves To Be Anything But Lame, As It Beats Facebook To The Courthouse

We have been chronicling the "cyber-bullying" of Facebook (see here and here) in its quest to dominate western civilization.  Facebook has sued Teachbook and Faceporn and asked for damages and ownership of the domain names. 

Facebook has been making noises about doing the same thing to a local parody site, LamebookAttorneys for Facebook and Lamebook have been discussing the issues for a while and when an apparent impasse was reached, Lamebook adopted the approach of another famous Texan and launced a preemptive strike.  It seemed evident to everyone that Facebook possessed weapons of mass distraction.  (Sorry. Should have, but couldn't resist.) 

Lamebook has filed for a declaratory judgment (a copy of the complaint and a good description in found here on TechCrunch) alleging that Lamebook is not a social site like Facebook and is a parody of Facebook and as such, is not infringing on Facebook's trademark.  For good measure, Lamebook throws in some First Amendment constitutional issues, claiming that it is engaging in protected free speech.  A declaratory judgment action just asks the court to rule (i.e. declare its position) on certain issues without necessarily providing any other remedies.

This seems like a pretty good move on the part of Lamebook.  It keeps the suit in a Texas court, at least for a while, it is great publicity for Lamebook and everybody loves a David vs. Goliath story.

If this works out well for Lamebook, look for Facebook to begin talking less and filing more suits.  Stay tuned.

Cyber Bullying: Facebook Picks On Everybody

You may recall that we recently discussed that Facebook had unleashed the dogs of war on a website called Teachbook, a social network for teachers.  Messing with teachers is one thing, but now Facebook has stepped up their game a notch and has filed a similar action against something called Faceporn.  Until recently, Faceporn unpretentiously called itself "the number one socializing porn and sex network".  Now, it just calls itself down due to "unforeseen circumstances".  Like the suit against Teachbook, Facebook is asking for all of Faceporn's revenue and ownership of its domain name.  Faceporn says it is redesigning its site and will come back with the "best porn site the world has ever seen".  It's nice to know that Faceporn retains its humility through trying times.

Look for more of these suits from Facebook and maybe from others.  YouTube is yet to take on YouPorn, but that may just be a matter of time.   

SXSWi Panel Picks: ATLB Selections (so far)

South by Southwest Interactive is just around the corner, coming March 11-15, 2011, and now it's time for the selection process to begin. For those of you who aren't familiar with the process check this out to get up to speed. There are three groups that vote on what panels will participate in the 2011 SXSWi: public (30%), SXSWi staff (30%), and advisory board (40%). There is a feeling here at ATLB that it's our duty to assist in crafting this year's event. I mean it's for the public, so why shouldn't we have a loud voice. This bog goes out to several different groups that have interest in a variety of things, so in order to provide a broad range of issues here are a couple that seem relevant to our readers: Bootstrapping, Entrepreneurism and Monetization, Funding, Web Apps, and our personal favorite Licensing, Fair Use and Copyright. Please check out these categories and see if a subject of interest pops up.

Additionally, there are a few individual panels this year that we'd like to suggest:

 

Apps vs. Mobile Web: Which to reach consumers?

Copyright Criminals

Download Illegally, It's the Right Thing to Do

Social Network Users' Bill of Rights: You Decide

Legal Frontiers In Social Networks, Blogs and Beyond

I.P. Fearlessly: Copyright, Contracts, and Clients

 

I'm sure there are many more that would do a great job of bring value to next year's event, but these were the ones that caught our eye on first go around. It would be a good idea to get on twitter and find some other good Austin Tech Sources to get a feel for some other good panels.

Enjoy the weekend!

"Wait! I deleted that. You can't see that! "- Computer Privacy and Data Recovery in the Age of Computer Forensics

In talking to our clients, our friends and the public at large, there seems to be a lot of confusion, misinformation, urban myths and lore surrounding the amount and kinds of data and material that is deposited on computer drives and that can be retrieved even though the user thinks that he has deleted it or covered it up. And by computer drives, we mean any electronic storage device including computers, flash drives, cell phones, DVRs, etc.

To attempt to get real live reliable answers to some of these questions, we turned to some local subject matter experts, Flashback Data. Flashback Data’s website is here. They were kind enough to lend us the expertise of Will Ambruzs, an attorney who is charge of the Forensics Division of Flashback Data.

ATLB: Will, please describe the services that Flashback Data can provide, particularly to an attorney involved in litigation.

FBD: Probably the best known aspect of forensics is the storytelling. A man dies mysteriously and the forensic examiners conduct two autopsies – one on the corpse, and one on the home computer. Toxicology confirms the man died of ethylene glycol poisoning (antifreeze). Forensic testing of the computer recovers 76 previously deleted Google searches made by his wife over the course of seven weeks for things like “symptoms of ethylene glycol poisoning,” “ethylene glycol toxicity” and “C2H6O2 ingestion and death.” That’s a compelling story.

Other times our involvement is less about developing evidence and more about logistics. For example, we’re commonly retained by attorneys to help identify all the places relevant information is likely to exist in a complex technical landscape, or to develop evidence collection strategies that minimize the impact on their client’s business.

Candidly, there’s quite an air gap between law and technology. At the end of the day, when it comes to electronic evidence, we’re the guys who fill it. Our case managers are attorneys and our forensic examiners are technologists with deep court room experience. We’re not vendors. We take pride in giving our clients access to the highest caliber forensics testing in the industry, and we’re presently the only private sector laboratory in the world accredited for digital forensics by the American Society of Crime Laboratory Directors under their International standard – same as FBI and DEA.

ATLB: That sounds like a lot more stuff than we can cover in one setting. Let’s discuss some general topics about what kind of data can be recovered and from which devices, and then, hopefully follow up with another session where we delve into some of the more complicated problems of forensic discovery and data retrieval.

FBD: OK

ATLB: I will give you some topics and you tell me how hard it is to recover this data:
• Internet history from a computer
Internet history is one of the most persistent types of data on the computer. It’s not uncommon for us to recover every URL visited on a computer from the time you first took it out of the box.
• Deleted videos from a DVR
It depends. If the DVR entries were manually deleted, the chance of recovery is high if the device can be forensically imaged before the data is overwritten. Many DVRs are set to overwrite data after a period of time, or when the device is near the limit of its full hard drive capacity. Overwritten data is unrecoverable. By anyone.
• Text messages from a cell phone
Candidly, it depends on the make and model of the phone and how the phone is used. That said, we are still seeing a strong trend of users adopting smartphones like the Blackberry or iPhone. One common thing folks do with smartphones is sync them with a computer. This creates backup files on the computer which, depending on when the backup was created, may contain data that is long gone from the phone. Alternatively, smartphones are essentially small computers, and often their data can be recovered in the same way we recover hard drives.
• Instant messages like gmail chat or AIM
These may be recovered from log files saved to the computer. Difficulty is a function of time. Bottom line is if the data you want gets overwritten with new data, it’s gone.
• Facebook messages or postings
One avenue of recovery is to extract these from internet history. Often this gives us multiple clues as to the content and recipients, and we can use the information to go looking for “shadows” of similar activity. Another thing we can do is attempt to recover the confirmation emails Facebook sends when new entries are made on a user’s wall or new messages are received.
• Twitter tweets on a cell phone or computer
This type of data generally fall into the same category as internet history and internet cache. The content itself will be recoverable for some time (until it is overwritten) and we can extract a fair amount of data simply by looking through the internet history.

• Standard files on a computer hard drive
In answering this, assume that the user has used the commonly available delete function available to the standard user.

FBD: Understanding the recovery of deleted files on a hard drive requires some understanding of how files are stored and referenced. A good analogy once provided to me is that of a school library. If we think of the hard drive as the library, then the files are analogous to the books on the library’s shelves. In a library, a book’s location is referenced in the card catalog. In a Windows environment, a file’s location on the hard drive is referenced in the Master File Table. When we delete a file, we’re not destroying the file’s data. Instead, what happens is the file’s location is marked in the Master File Table as being available to use for new data storage. That’s like pulling a card out of the card catalog and throwing it away – the reference to the book is gone, but the book is still sitting on the shelf (at least until someone takes it down and replaces it with a new book).

Having said all that, “recovering” the deleted file is like walking around the library from shelf to shelf and taking inventory of every book. At some point, we’d learn that there is a book sitting on a shelf in a space that’s supposed to be empty. And we’d find and recover the book.

In addition to above, there are multiple other ways to attempt to recover deleted files, such as through backup copies, temporary copies and/or copies embedded in another data file (e.g., a file attached to an email in an Outlook data file). These are all potential recovery routes.

 

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Does Connecting on LinkedIn Violate Noncompete Agreements?

There's an interesting lawsuit out of the federal district court in Minnesota that could have major ramifications on how employees under restrictive covenants use social media sites like Facebook and LinkedIn.  The plaintiff, TEKsystems, Inc., is a company that recruits IT personnel and places them in various companies throughout the country.  Brelyn Hammernick, a defendant, worked as a recruiter for TEKsystems before leaving to go work with Horizontal Integration, Inc.

Hammernick signed a noncompete agreement with TEKsystems which stated that for 18 months after leaving Hammernick could not directly or indirectly "approach, contact, solicit, or induce any individual or corporation" that is a client, regular employee, or contract employee.  While at Horizontal Integration, Hammernick allegedly "connected" with at least 16 TEKsystem employees through the business and professional networking site LinkedIn.  Furthermore, according to the complaint, Hammernick wrote the following LinkedIn message to a TEKsystems employee:

Tom:

Hey! Let me know if you are still looking for opportunities!  I would love to have come visit my new office and hear about some of the stuff we are working on!

Let me know your thoughts!

Brelyn

All of this raises the novel question of whether merely "connecting" with someone on LinkedIn or "friending" someone on Facebook could constitute contact or solicitation.  With the increasing popularity of social networking sites, companies should modify their employee agreements to more specifically deal with these issues.  The need for specificity in the agreements is especially important since noncompetes are notoriously hard to enforce.  In fact, they are generally illegal in California outside of a couple of exceptions. 

Tweeting in the Courtroom: Ex-Governor Edition

The federal corruption trial of Ex-Governor of Illinois Rod Blagojevich is set to start this week, but the judge first had to order Blagojevich not to use Twitter from inside the courtroom.  The shameless flamboyant Blagojevich had stated earlier that he planned to "live-tweet" the trial during the proceedings, but the judge was having none of it.

The judge told him that he is still free to tweet and talk to the media all he wants outside the courtroom, but with the warning that everything he says can be used against him in the trial.  No word yet on whether Blago will try to update his Facebook status or "check-in" on Foursquare in the courtroom.  Stay tuned. 

 

Facebook, Data Privacy, and the EU

Companies that handle or transfer data must be extremely careful that they are abiding by the laws of the jurisdictions that the data passes through.   Data protection issues will only become more prevalent with the increased use of cloud computing, since a company may not even actually know where the data is being stored.  The most contentious arena for this issue is definitely in the EU.  Data passing out of the European Union to other countries creates a headache for companies that must abide by its stringent rules.

Now the EU is cracking down on social sites such as Facebook:

"European regulators are investigating whether the practice of posting photos, videos and other information about people on sites such as Facebook without their consent is a breach of privacy laws

The probes by the German and Swiss privacy watchdogs are still preliminary and would not have immediate consequences elsewhere. However, Weichert said the issue is being discussed with other data protection officials in the 27-nation European Union, which in 2000 declared privacy a fundamental right that companies and governments must respect.

The European stance differs strongly from the self-regulatory, free market approach favored in the United States, where Web companies have flourished by offering users free services if they provide personal information to help advertising target them better, according to Columbia University law professor Eben Moglen."

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