Aspiring Media Creators and a Basic Contractual Pitfall

POSTED BY Micah Kesselman

One of the most important steps, and one where the footing is never as solid as would be hoped, a content creator makes along the journey to putting a product to market is signing with a publisher. Be it game development, music, video, or any other sort of media product, it has to be published. What binds the creator and the publisher will of course be the contract the two entities create—be it verbal, written, or some mixture of the two. Unfortunately, this is also where many content creators, especially independent creators, tend to be weakest.

All too often, creators’ instincts are to look at a contract as a framework outlining fairly intuitive common sense scenarios. One side creates content and the other side (for a split of the pie) will bring it to the attention of the relevant consumers; however, the role of contract as risk allocator is, more often than not, overlooked by content creators—which publishers are keen to take advantage of (as you would expect any self-interested actor to do).

Howard Tsao, CEO and Founder of game developer Muse Game, posted an overview of the contracting issues his company faced when originally signing with a publisher. In his conclusion, he writes that one of “the lessons that we learned through it all [is]: Have an acceptable exit strategy if you are unable to do what you promised to do or if you are not getting what you were asking for.” Another way of saying this is, have a way of folding your hand when it becomes necessary. It is easy to become so infatuated with your own ideas and ambitions that the very thought of them not coming to light as planned is painful to even consider. But it does need to be considered. Contracts are more than simply memorializing an agreement—they are mapping out the geography of risk, benefit, and probability that is about to be traversed and demand a practical and impartial eye.

Even big players fall victim to underestimating the importance of every contractual clause. In a recent (as of the time of this writing) unpublished opinion by the 4th Circuit Court of Appeals, the court held in favor of defendants Epic Games in a suit filed by Silicon Knights claiming, among many other things, fraud.[1] A standard and relatively boilerplate warranty disclaimer proved to be fairly robust protection against a claim of fraud. Had Silicon Knights more thoroughly considered the prospect of Epic Games’ product not being capable of Silicon Knights’ ambitions and that Epic Games might not be inherently interested in remedying the issues of a single, possibly one-off, client, closer attention may have been paid to the disclaimers in the contract.[2]

At the end of the day, in an environment where it is becoming increasingly common to quickly glance over a contract before agreeing to it, it behooves small and upcoming content creators to pay particularly close attention to agreements they enter into. Of course, new situations may arise, but more importantly the central role of contracts in allocating risk in clear and favorable ways merits a central focus when artists, developers, or other content creators sit down and take what is hopefully more than a cursory glance at publishing (or any other, for that matter) contracts they are considering entering into.

---

[1] Silicon Knights, Inc. v. Epic Games, Inc., No. 12-2489 (4th Cir. 2014).

[2] To be fair, fraud was one of a very long list of allegations of the plaintiffs in this case. Furthermore, the case itself was fairly controversial. Epic Games’ infringement counterclaims required considering how much modification of the licensed engine is allowed and how those modified components may be used—a discussion worth its own entry.

3D Printing Begins a New Chapter in Gun Control

POSTED BY Yuen Yi Chung

A few days after Defense Distributed successfully fired the world’s first 3D printed gun, the United States Government moved to block its distribution of the gun blueprints. The Bureau of Alcohol, Tobacco and Firearms subsequently released the results form tests it conducted on another downloadable 3D printed weapon in its November report. The ATP referred to the printed weapon as “dangerous” and found that it often failed to function properly. In the same month, Philadelphia became the first city in the United States to officially ban the unlicensed manufacturing of firearm, or any parts of a firearm by 3D printers.

Were these actions too late? In the two days since the Texas based company uploaded the files, more than 100,000 copies have been downloaded. Defense Distributed raises issues of freedom of the web and continued to host the blueprints on a website based in New Zealand. The files have also been uploaded to the Pirate Bay file-sharing site. A reporter who downloaded the file shared that he was unsuccessful in finding a US company with sufficient 3D printing capability to produce the firearm because they either cited laws against the production of such weapons or asked for prices that were substantially higher than an actual high quality rifle.

Legislators have already foreseen that plastic guns pose two significant types of danger to the public. First, a plastic gun cannot be detected by metal detectors, which are traditionally used as security control in airports, schools and courthouses. Secondly, 3D printing increases the accessibility of firearms, which will inevitably encourage those who initially have no interested in obtaining firearms to try to print firearms.

For many decades, the gun debate in the United States has focused on who should have access to firearms and how they can purchase them. The new element that 3D printing added to the ongoing gun debate, however, is consumer safety. The metal gun that Defense Distributed fired was printed on an extremely expensive industrial-grade printer. But the real danger lies with the 3D printed plastic guns. Experts in ballistics and 3D printing warned that building a gun from 3D printed parts could be lethal to the user. Such physics involved firing a bullet with pressures in the gun chamber of more than 1,000 atmospheres and temperatures of over 200 Celsius, which could potentially put catastrophic stresses on the plastics or thin metal used for construction. Such homemade weapons may even successfully fire a couple of rounds before behaving in a completely unpredictable way.

The Excuse: “I’m Only Stealing a Trade Secret to Enhance My Career”

POSTED BY Nicole Cocozza

Everyone knows the purpose of a secret.  A secret is something that is meant to be private and not shared with others.  A promise is made between two or more people to keep a secret and not to share it with others.  However, promises to keep a secret are broken everyday.  In the real world, when a trade secret is shared with people who are not part of the pact, criminal consequences will result.

In United States of America v. Jin[1], the defendant was charged with theft of trade secrets and economic espionage, which are both offenses under the Economic Espionage Act.[2]  Jin, the defendant, is a naturalized American citizen of Chinese origin.  Jin worked for Motorola as a software engineer from 1998-2007.  As a software engineer, her primary focus was on a cellular telecommunications system manufactured and sold by Motorola called iDEN, an acronym for Integrated Digital Enhanced Network.

From 2006-2007, Jin took a medical leave from Motorola.  During this period she was living in China, where she acquired a job with Sun Kaisens.  Sun Kaisens develops telecommunications technology for the Chinese armed forces.  After a year, Jin returned to the United States and bought a one-way ticket to China.  Days before her departure to China, she downloaded thousands of internal Motorola documents, which all disclosed details on iDEN. On February 28, 2013, airport personnel stopped Jin, where they discovered the iDEN documents and $31,252 dollars in cash.  Jin’s excuse was that she planned to refresh her knowledge of the work she had done over the years for Motorola in order to prepare herself for continuing to build her career.

The excuse that Jin uses is clearly not believable.  The seventh circuit’s decision in affirming the four-year sentence imposed by a federal jury in Illinois proved that her excuse was flawed.   Anyone who takes a leave of absence from their job and then decides to return to the United States only to purchase a one-way ticket and steal thousands of documents clearly intends to use these top-secret documents as an economic advantage.  In order to find a criminal trade secret misappropriation, one must prove beyond a reasonable doubt that an individual (1) used or intended to use the trade secret for the economic benefit of anyone other than the owner, and (2) knew or intended that use of the trade secret would injure the trade secret’s owner.[3]

By applying 18 U.S.C. 1832(a) to Jin’s excuse, one can conclude that Jen purposefully intended to use the iDEN documents for more than refreshing her knowledge.   These documents would have allowed her to gain an economic advantage in China by introducing the iDEN systems and allowing Chinese companies to create a new iDEN system to compete with Motorola.  Jin had ties to the Chinese military and more likely than not was going to hand over these iDEN documents to the government to hack the system.  The exploitation of Motorola’s iDEN documents would have had a negative impact on the future of the company.  Therefore, Jin clearly committed theft of trade secrets by stealing Motorola’s iDEN documents.  All in all, I can only hope Jin learned a valuable lesson, which is a secret is meant to stay a secret.

---

[1] See Jin, No. 12-3013, 2013 U.S. App. LEXIS 19767 (7th Cir. 2013) (charging the defendant with theft of trade secrets and economic espionage).

[2] See 18 U.S.C. §§ 1831, 1832 (explaining the theft of trade secrets).

[3] See id. (stating that a finding of criminal trade secret misappropriation attaches only if one can prove beyond  a reasonable doubt).

Survival of the Fittest: The Doctrine of Hearsay Under The Federal Rules of Evidence v. Social Media and Networking Technology

POSTED BY Veronica C. LaClair

It is a concept as foundational and intuitive as science itself:  survival of the fittest.  In order to survive one must learn to adapt and evolve within a changing world.  Darwin’s principle does not just hold true for the evolution of species, but has a strong correlation to the evolution of society as well.  Today’s society, more so than ever, is highly dependent on technology; specifically social media and social networking technologies.  Therefore, those who cannot—or choose not to—keep up with the advances in technology and communications will surly go extinct.  This principle expands across numerous parts of society including the legal profession.  Within the legal profession the Federal Rules of Evidence are a species all their own, and if their writers do not adapt and evolve them in accordance with societal changes, such as the rapid dependence and use of social media and networking technology, they will never survive.

Almost as intricate and mystifying as Darwin’s theory of evolution is the doctrine of hearsay.  As many students and legal professionals have come to know, and not always love, the doctrine of hearsay plays an important role in the context of the courtroom and comprises a lengthy article within the Federal Rules of Evidence.  The basic principle of the hearsay doctrine holds:  A statement made by a declarant, outside of the courtroom, intending to prove the truth of the matter asserted by the statement is hearsay and is not admissible evidence (Federal Rules of Evidence—Article VIII. Hearsay).  Hearsay is not admissible unless allowed: by exception under the Federal Rules of Evidence, by ruling of the Supreme Court, or by federal statute.[1] Examples of statements that fall within the hearsay exceptions under the Federal Rules of Evidence are: present sense impressions, excited utterances, business records, statements in ancient documents, statements made for medical diagnosis or treatment, etc.[2]

A present sense impression is “a statement describing or explaining an event or condition, made while or immediately after the declarant perceived it”  (Federal Rules of Evidence—Rule 803).  An excited utterance is “a statement relating to a startling event or condition, made while the declarant was under the stress of excitement that it caused.”[3].  The Advisory Committee notes that these two exceptions overlap considerably, with their most significant difference being the time lapse each permits between event and statement.[4]  When the present sense impression and the excited utterance exceptions to the hearsay doctrine were crafted it was under the basic principle that such statements would be asserted either verbally or through ones physical conduct.  However, in today’s society with the advent and prevalence of social media and networking technologies and their readily accessible nature through smart phones and personal media devices individuals can produce statements that fit within these two exceptions through solely electronic means.  A person can for example make a present sense impression by posting a status update to Facebook or tweeting to Twitter, such statuses and tweets can be made instantly, in real-time, and while a person is perceiving an event.  Moreover, a person can make an excited utterance through similar means or by phone call while they are still impacted by the stress or excitement of the event.  Therefore, the question becomes: Are courts going to adapt and evolve to include such social medial and networking technology statements to be incorporated within the doctrine of hearsay under the Federal Rules of Evidence?

The answer to this question is yes.  The general trend of courts and commentaries has been towards adaptation and evolution.  The legal profession has made a survival plan and it includes incorporating social media and networking technology statements into civil and criminal trials.  Courts seem willing to allow statements made though social media and networking technologies to be admissible under the doctrine of hearsay, as long as such statements meet the qualifications of the specific hearsay exception in which they are applying.  In fact present sense impression statements made through Facebook and Twitter have already had their day in court.  Furthermore, in many cases statements made through social media and networking technologies means are treated no differently than traditionally admissible statements, and are allowed into evidence as statements of present sense impressions, business records, etc.

However, in some cases social media and networking statements face a tougher struggle in gaining admissibility at trial under the doctrine of hearsay.  For example, excited utterances are statements made while the declarant is under the stress or excitement of an event.  In such a case an attorney may argue that the time and though it takes to formulate, type out, and post a statement will effectively remove the declarant from a stressed or excited state of mind back into a rational state of being.  However, the counter argument can be made a declarant who updates their status or tweets multiple times a day, every day, could make such a statement while still remaining under the stress or excitement of the situation.

In either case the outcome of admissibility seems dependent on the particular facts of the case, the assertions being made, and the presiding judge, as to whether or not social media and networking statements will be admissible in court.  Moreover, there appears to be a present trend towards the admissibility of such social media and networking statements rather than simply allowing them in isolated, case-by-case occurrences.  This trend of admissibility, where it is applicable, is evidence of change, of an evolution within the legal profession, of an attempt at survival during a turbulent and rapid cycle of technological

---

[1] See The Federal Rules of Evidence, http://www.law.cornell.edu/rules/fre.

[2] Id.

[3] See Federal Rules of Evidence: Rule 803, http://www.law.cornell.edu/rules/fre/rule_803.

[4] Id. 

Can You Hear Me Now? FCC Considers Allowing Use of Cell Phones in Flight

POSTED BY Andrew Clark

Airline passengers may soon be able to make phone calls and receive text messages in air if the Federal Communications Commission (FCC) adopts a new proposal. The FCC is considering raising the ban on the use of cellular phones during flight. At the December 12, FCC meeting, they will address the current proposal. As many know cellular phone use is prohibited while in flight, unless the cell phone is in airplane mode, which prevents any cellular connectivity.

The proposal would allow airline passengers to make phone calls, receive emails and even send text messages while in the air. The FCC would allow cell use, once a plane has reached an altitude of 10,000 feet. The proposed change comes after the Federal Aviation Administration (FAA) decided to allow use of mobile phones in airplane mode, tablets, e-readers, and other handheld electronic devices from “gate to gate.” Airlines such as, Jet Blue, Delta, US Airways and American Airlines have created new policies to allow the use of such electronic devices in compliance with FAA regulations.

A similar proposal for cell phone use has been previously discussed in 2004. However, flight attendants and others lobbied against the rule change resulting in the rule change being dropped three years later, in 2007.

This proposed change, presents more societal issue than it does a safety or technology issues. A recent CNET piece quoted FCC chairman Tom Wheeler saying “modern technologies can deliver mobile services in the air safely and reliably, and the time is right to review our outdated and restrictive rules.” An obvious problem that will occur is the increased disruption from passengers carrying on phone conversations. It seems apparent that passengers will not want to listen as someone talks on a phone for the entire duration of a flight. However, these problems can be combated by specific airline policies rather than preventing cell phone use in general. It seems reasonable for an airline to allow users to stay connected through cell phone use, but limit the ways in which passengers may use their phones. If the FCC allows cell phone use, the true test will be how airlines and passengers respond to the new freedom.

Retailers Track Customers via Wi-Fi

POSTED BY Lloyd Chebaclo

Although the growing awareness of the NSA’s expansive domestic and international surveillance program may inure you to any further notions of invasions of electronic privacy, whenever you take advantage of the free Wi-Fi perks at your local brick and mortar stores, consider that you may be awash in retailers tracking you too.  Most consumers are savvy at this point about being tracked with respect to online purchases on Amazon, for example, but they may be surprised to learn that merely using the internet on their smartphones in a store may subject them to the watchful eye of the likes of Nordstrom, and Home Depot for example.  RT.com looked at this phenomenon in its July 15 article, as did the New York Times.

Nordstrom has apparently stopped using this tracking system, which utilizes sensors, namely a product by Euclid Analytics used to “measure and optimize foot-traffic, visit duration, and repeat shopping.”  According to Euclid’s website, they market to clients ranging from fast food restaurants (so-called “QSRs” or Quick Service Restaurants), coffee shops, specialty retail stores, and department stores.  The sensors themselves are the size of a deck of cards and cover up to 24,000 square feet.  The data on the customer is generated by the pings smartphones send, including the phone’s unique media access control or MAC address, as they search for Wi-Fi networks nearby.  The site goes on to say that the company scrambles each MAC address using a one-way hashing algorithm for privacy purposes.

Stores who take advantage of this tool gather information about how long an individual shopper lingers in their establishment, track their number of visits to the store, and purchase history, among other details.

It’s not unusual for a cashier to request your email address at stores these days, and in that case the customer cannot be terribly surprised that not only do they get coupons and advertisements from the retailer who collects the address, but solicitations other third party sellers as well.  With smartphone tracking in stores, retailers are being even more proactive, trying to capitalize even on the seemingly passive customer that walks in their doors without making a purchase.

Is there a privacy issue here?  Does the consumer, for example have a reasonable expectation of privacy in their data, their internet surfing, their purchase history at the store, their locational data, after they join the store’s Wi-Fi network?  A consumer might have a subjective expectation that they have some privacy in these activities, but legally there is likely no reasonable expectation of privacy there as the consumer is using a third party’s server to access the internet.

Is this practice something that is also implicit in the privacy policies that some stores may have on their page when you access their Wi-Fi that the carefree consumer does not peruse before enjoying the Wi-Fi?   If the consumer knowingly consents, there would no longer be an expectation of privacy, though perhaps there is some argument that an average consumer will log on and glaze over the legalese that might bear the language forming the basis of their consent, bound by a sort of contract of adhesion in the terms of use and privacy policy they skirt as they access the network.  Looking at Euclid Analytics’ website, it seems that a person can opt-out of this tracking by entering their MAC address on their website—so by default if you are using the Wi-Fi in one of their clients’ stores, you’re on their radar.

Android Wi-Fi has faced a class action lawsuit from similar practices involving the use of its customers’ data when they use locational services, which the company supposedly went ahead and sent to Google. Perhaps the outcome of that type of case will help determine in part whether or not retailers could face losing battles in court for Wi-Fi tracking in stores.  Customers could probably feel better about this sort of tracking provided some clear notice, such as a clear display in retail store windows where such sensors are in use, and a friendly alert on your smartphone triggered by joining that retailer’s Wi-Fi network with an opt-out option as that arises.  Some simply argue that the cleanest way to opt-out is to shut off your phone and take the battery out when you frequent these stores—which, incidentally, I don’t imagine is the most attractive option for the average consumer.

YOU, ME, and the LECs

POSTED BY Alexander D. Schultheis

The Telecommunications Act of 1996 (TCA), codified at 47 U.S.C. § 222, was a major step forward in improving competition for Competitive Local Exchange Carriers (CLECs) in their respective marketplaces.  A recent ruling by the SecondCircuit in Southern New England Telephone Co. v. Comcast Phone of Connecticut, Inc., 718 F.3d 53, (2^nd Cir. 2013), made sure the TCA’s purpose was not undermined. The Second Circuit held that “former” monopolist ILECs, such as AT&T, are still required to provide indirect transit service access to CLECs at regulated rates, despite no longer holding exclusive monopolies under state law.

Section 251(a) of Title 47 of the United States Code requires all telecommunications carriers to “interconnect” their networks with one another for the sharing and mutual exchange of traffic. Specifically, § 251(c)(2) and § 252(d)(1) require ILECs, like AT&T, to connect all other carriers (including CLECs) at what is known as Total Element Long-Run Incremental Cost (TELRIC). This is a regulated rate by the TCA, and uses a complex formula to determine a price range for what ILECs may charge. The policy in requiring ILECs to connect all other carriers into their network, and in some cases their physical facilities, is to ensure that they do not exploit their previous monopoly status prior to the TCA’s passage.

There are two kinds of interconnection: Direct and indirect. Direct interconnection occurs where the carriers link or attach their equipment to the actual network infrastructure of another ILEC. Indirect interconnection occurs where the carriers attach their equipment to the physical facilities or equipment of the ILEC, thus gaining access to the network in a “round-a-bout” manner. The main difference between the two methods of interconnection boils down to financials. When carriers are directly connected to one another, there is a free-flow of exchanging traffic between them. However, new market entrants (the CLECs) do not possess the balance sheet to directly connect to the network infrastructure of the ILEC, and thus choose to attach their equipment to the ILEC’s equipment and facilities. Naturally, the ILECs charge a rate of use for this service, which routes traffic transit service between the ILEC and the CLEC.

In the particular case at issue, a small communications company known as Pocket Communication (Pocket), a CLEC based in Connecticut, negotiated a transit service agreement with AT&T. Pocket originally petitioned the Connecticut Department of Public Utility Control (DPUC) to review the terms of the agreement. Pocket alleged AT&T violated Connecticut state law and the DPUC’s prior 2003 decision in a proceeding under the auspices of the TCA involving Cox Communication, both which required AT&T to charge the TELRIC regulated rates for transit service. Specifically, Pocket alleged AT&T engaged in price discrimination by charging Connecticut carriers higher rates than carriers in other states, and requested the DPUC to lower them. AT&T argued that its service did not constitute interconnection under § 251, thus allowing them to charge higher negotiated rates. The DPUC ultimately sided with Pocket, and ordered the rates lowered not only to Pocket but to other carriers who provided transit service through AT&T as well.

On first appeal, the District Court rejected AT&T’s argument that the DPUC was “preempted” by the FCC into adjudicating this matter. The District Court held that “interconnection” under § 251 of the TCA included indirect interconnection through transit service with other CLECs because the goal of the TCA was to promote competition, and it would be very difficult for CLECs to compete without at least minimal, indirect interconnection. Thus, the DPUC’s order to lower rates to Pocket was affirmed. However, the District Court reversed the mandatory lowering of rates, especially to carriers in other states who were not parties to the litigation. This is because the TCA’s preferred rate-setting method is still private contract negotiations, with the TELRIC rates serving as a guide of sorts in determining what to charge.

On a second appeal, the Second Circuit had to answer the classification question: Does AT&T’s status fall under § 251(a), which addresses the general duties of all telecommunications carriers, thus allowing them to charge higher negotiated rates, or are they under § 251(c), which addresses the obligations of “former” monopolists, who must provide service at the lower regulated rates? The Second Circuit held that AT&T’s obligation to provide indirect interconnection transit service is an obligation under § 251(c), because it ensures that indirect interconnection will facilitate mutual transit service between new CLECs in the market. The Court reasoned that while AT&T may argue they fall under § 251(a), this section only provides a broad policy goal that all carriers interconnect, but does not specify how, whether direct or indirect. Whereas, under § 251(c), ILECs are required to provide at least indirect interconnection to any CLEC who asks to be connected to their network.

Given the importance of disseminating information in today’s marketplace, there is an increasing importance to ensure competition in the telecommunications industry. It is important to ensure that industries like this do not contain a high degree of concentration, for such concentration may act as a barrier to communicating salient and valuable information between consumers and businesses alike. By strengthening the TCA’s primary goal of increasing competition, the Second Circuit has taken a step towards ensuring that consumers are not left with a limited number of choices from which to access information, or having to pay higher rates to access this information. This public benefit far outweighs any private commercial gain that ILECs may experience through charging higher negotiated rates CLECs.

In particular, it is persuasive that the Second Circuit pointed out that while ILEC “giants,” like AT&T, no longer possess state-sanctioned monopolies because of the TCA’s implementation, they still do possess leverage by controlling access to their network. If “former” ILECs were permitted to still charge higher negotiated rates for access to their transit services, despite no longer possessing a state-sanctioned monopoly, they could effectively continue their dominance of the industry, preventing its de-concentration, and thus limiting competition. Given how important Local Exchange Carriers are today in providing a means of communication across the nation, the Second Circuit’s ruling is consistent with ensuring the TCA’s primary goal of increasing competition, and, as a secondary matter, ensuring the public’s benefit to accessing information from a carrier of their choice.

Unweaving the Silk Road: The Deep Web and the [Almost] Perfect Virtual Escape

POSTED BY Rebecca Rubin

Far below the all-seeing eye of the Internet lies the almost impenetrable and vast Deep Web. A relatively hidden virtual surface, out of reach of most standard search engines, technologically-savvy criminals have been able to set up Ebay-like platforms to make a quick buck. However, a recent October 2013 bust on a website called Silk Road has penetrated the anonymity many users thought they had, further contributing to the death of electronic privacy.

The creation of Silk Road by Ross William Ulbricht, a.k.a. “Dread Pirate Roberts,” in early 2011 launched a virtual black market listing over 10,000 products, 70% of which consisted of drugs, most of which are illegal. By using a free software called TOR, originally created by the U.S. Naval Research Laboratory to protect government communications from being accessed by just anyone, Ulbricht was able to protect his internet identity and allow over 900,000 registered users to remain anonymous while they engaged in illegal sales. In just over 2 years, from the creation of Silk Road in February 2011 until its eventual recent shut down, Ulbricht’s enterprise earned roughly $1.2 billion in revenue.

The TOR software, otherwise known as the “Onion Router” enables anonymity through the multi-layer encryption of internet traffic, where communications bounce around within the TOR network of relays, allowing for thorough secrecy. TOR makes it simple to evade internet surveillance since the user’s location remains concealed during any type of traffic analysis performed by the government. While it is resilient software, it does have minor imperfections where communications entering and exiting the network could be intercepted.

Silk Road was only one of many black markets available to users. Websites selling weapons, porn, and hit-men are still rampant. Users purchase Bitcoin, a virtual currency, to conduct secure purchases within the Deep Web. The Bitcoin is also subject to a virtual market, where its value can go up or down, and while it is used for legitimate and legal purchases, within the Deep Web it further ensures purchasing anonymity.

TOR can be downloaded by any privacy conspiracy loving, fear-driven internet user who wants to hide from government surveillance and eliminate their data-trails. While it was created for the sole benefit of government, it seems government cannot even control its own design, never mind the ever-increasing world of technology, and hackers or cybercriminals are sure to multiply. TOR is downloadable with the click of a button, just as simple as downloading a simple web browser like Firefox. To get around the inescapable grasp of government tracking, more average individuals may find themselves downloading TOR, or going to even greater lengths to protect their privacy, just like Ulbricht.

The government, in creating these types of technologies, may seemingly be doing more harm than good. Ulbricht was eventually detained because of a lazy slip-up; he accessed his website on an unencrypted network in a San Francisco café. Yet, any determined, vigorous, surveillance-fighting individual could have allowed Silk Road to live on, all the while laughing at the government’s attempts to bring it down. With the creation of impressive anonymous-inducing software like TOR, just what other mediums will be available to evade surveillance in the near future? This could be the future of a ruthless War on Privacy, a war which the government just might not win.

Battling Over Bottles: Jack Daniel’s Recent Trade Dress Suit

POSTED BY Scott Chappell

Recently, the owner of the trademark for Jack Daniel’s Tennessee whiskey filed suit against another Tennessee based distillery, Popcorn Sutton Distilling, claiming Popcorn Sutton copied Jack Daniel’s legendary bottle and label design. The complaint filed claims the new bottle for Popcorn Sutton’s Tennessee White Whiskey is “confusingly similar” to the legendary packaging for Jack Daniel’s whiskey. As a result, the plaintiffs are requesting all profits from the whiskey sold in Popcorn Sutton’s new bottles, damages and the discontinuance of the new Popcorn Sutton bottles.

How “confusingly similar” are the two bottles?  Popcorn Sutton’s new bottle for their white whiskey includes angled shoulders, beveled corners and a white-on-black label that is eerily similar to the label seen on Jack Daniel’s famous whiskey, despite Popcorn Sutton’s bottle being pitch black versus Jack Daniel’s signature clear bottle.  Popcorn Sutton switched their bottled from the previous Mason jar they used to sell their whiskey in to the new design at the end of 2012. Jack Daniel’s representatives contend that the font and design used on Popcorn Sutton’s label combined with the similar bottle would cause public confusion.

The signature Jack Daniels bottle and label design is covered by a number of registered trademarks and copyrights, and the company has been selling the whiskey since 1866. Jack Daniel’s alleges that Defendants’ product “is likely to cause purchasers and prospective purchasers of the product to believe mistakenly that it is a new Tennessee white whiskey product in the Jack Daniel’s line, that it is licensed or authorized by [Jack Daniel’s], and/or that there is a business relationship, affiliation, connection, or association between Defendants and [Jack Daniel’s].”   Jack Daniel’s Properties Inc. v. J&M Concepts LLC et al., No. 13-1156, complaint filed (M.D. Tenn. Oct. 18, 2013).  This allegation provides the basis for the complaint claiming trademark infringement, unfair competition and deceptive trade practices.

At first glance, it seems reasonable for Jack Daniel’s to want to protect their trade dress against a surprising similar bottle design such as the new Popcorn Sutton bottle. Offering a Tennessee based whiskey in such a similar bottle would certainly provoke some kind of association with Jack Daniels, and a reasonable customer may mistakenly associate the new Popcorn Sutton bottle with the Jack Daniel’s brand. On the other hand, the “blacked-out” nature of the bottle combined with the label reading Popcorn Sutton may be adequate rebuttal to the “confusingly similar” allegation. While a court may deem the new bottle to be different enough to deny Jack Daniel’s any recourse, it seems very likely that the whiskey behemoth will be successful in stopping the new Popcorn Sutton bottle from hitting the shelves in the future.

Bad Breakups: First Refusal Provisions in Endorsement Contracts

POSTED BY Meghan Bonk

No one can sell a brand quite like a superstar athlete. Most of these athletes aren’t born superstars, however, and many of them partake in some lower-tier endorsement deals before they hit the peak and sign with companies like Nike or Under Armour. Unfortunately, when athletes sign enter into endorsement contracts, the fine print and pesky provisions often get overlooked. One provision that makes its way into most high level endorsement deals is a first refusal provision which gives a brand the upper hand over its athlete when that athlete’s contract expires. The provision essentially allows for the brand whose contract has just expired to match any terms offered by a third party involving the endorsement of products, so long as the products are substantially similar in nature. Issues arise when the athletes supposedly breaches the contract with its original sponsor to sign with a bigger company who offers an endorsement deal that makes the athlete’s eyes turn into dollar signs. The smaller company sues, but it seems unfair to sue when it couldn’t match the new contract in the first place.

Popular athletic brand Oakley launched a lawsuit against golfer, Rory McIlroy as well as his new sponsor, Nike in the spring of 2013. A recent Forbes article reports that although McIlroy’s contract with Oakley expired in December 2012, the company claims to have had a first refusal provision in which “granted Oakley the right, but not the obligation, to match any terms offered to McIlroy by a third party regarding the endorsement of products the same as or substantially similar to the products in his agreement with Oakley.” To sum it up, December 2012 came around the corner, Oakley’s contract expired, and Nike clearly made McIlroy an offer he couldn’t refuse. Nike’s contract with McIlroy is rumored to be worth between $200-250 million, and with McIlroy rising to the top of the world’s golf rankings, most sports fanatics wouldn’t be shocked by that number.

As this case goes to trial, several issues are being brought up, and important facts are coming out of the wood work. It seems that Nike may be banking on e-mail conversations between a marketing manager at Oakley named Pat McIlvian and McIlroy’s agent, Conor Ridge to make its case. Nike will mostly likely argue that although Oakley did, in fact, have a first refusal provision in its contract with McIlroy, Oakley waived its right when Pat McIlvian e-mailed Conor Ridge stating, “Understood. We are out of the mix. No contract for 2013. Pat Mac.” Should Oakley win at trial, it not only seeks an injunction that would prevent McIlroy from keeping his contract with Nike, but it also alleges that it has suffered  irreparable damages which include $300,000 spent on a photo shoot that would have been endorsed by McIlroy in 2013. The question that looms throughout these proceedings is: Could Oakley even match Nike’s $200-250 million contract with McIlroy? If European golf publications are correct, then Oakley was planning on offering McIlroy around $60 million to continue his contract through 2013. There’s a big difference between $250 million and $60 million, and the Oakley contract’s provision required Oakley to match any terms offered by a third party.

Even though Pat McIlvian’s emails to Rory McIlroy’s agent seem to seal the deal in Nike’s case, there’s always the chance that the judge does find that there was a breach of contract and that Oakley is entitled to damages. Specific performance is not an option in this case because forcing McIlroy to participate in a contract with Oakley would look like involuntary servitude, and McIlroy has a thirteenth amendment right which prohibits slavery. Oakley seeks monetary damages; however, the amount has not been released yet. It seems as though Oakley is the quintessential, teenage ex-girlfriend in this case.  It doesn’t want McIlroy (more like it can’t afford McIlroy), but it definitely doesn’t want the more successful, good looking, and popular Nike to have him. If the judge rules in Oakley’s favor in this case and does grant monetary damages, what kind of policy is it enforcing if Oakley couldn’t afford to match Nike’s deal in the first place? It will create a trend of brands that sponsor up-and-coming athletes and continue to make first refusal provisions a primary section of their contracts. Then, when their contracts expire, they’ll sue the larger, more powerful companies like Nike for violating this provision, when in fact, they couldn’t match the new contract’s value in the first place. So, companies like Oakley will continue to play the victim and receive monetary damages when their athletes find a better deal, and companies like Nike will be punished for a breach that didn’t really happen on top of funding a larger-than-life contract with an athlete that better be worth their weight in gold.