Sports Analytics: Should They be Protected?

POSTED BY Jared Bishop

The process of constructing a Major League Baseball (MLB) team took a drastic turn after Oakland Athletics’ General Manager, Billy Beane, decided to concentrate on advanced statistics known as “sabermetrics” to construct his team. Beane was so successful that his grossly underpaid team made the playoffs and ultimately inspired a motion picture, Moneyball.

Sabermetrics has been around for decades thanks to Bill James, a baseball statistician, but was not made famous until Beane bought into the system. Sabermetrics deals with a wide range of advanced statistics that are calculated based on virtually every detail of a play in baseball.

While theses statistics are available to the public at websites such as ESPN, the question becomes whether these statistics, or strategies should be protected to some extent. If Beane’s theories and strategies were further protected, perhaps Beane Athletics’ would have won multiple World Series. If organizations can use these statistics to develop a strategy on how they develop their respective team, shouldn’t their strategies be protected as a trade secret? After all, the goal of any sports organization is to win, and to do that, they need to find the best form of a competitive advantage they can get both on and off the field.

In depth sports analysis on statistics should be protected in the manner of trade secrets. Trade secrets are designed to give companies a competitive advantage over their competition. When companies come up with a strategy or pattern of information, they do not want to share that information with their competition or make it public for obvious reasons. Trade secrets, like other intellectual property, gives businesses incentives to develop their own strategies and better promote innovation.

What Beane did as far as using sabermetrics to develop his own strategy of creating a winning team was not based on the fact that his information would be collected, but it was because the Athletics’ were on a stricter budget than almost all of the other teams in the MLB. The lack of a deep pocket was the reason Beane changed the game, not because he knew this information would be protected. Beane forever changed how MLB teams look at players, but because other teams are able to use Beane’s strategies, the Athletics are not able to fully use the competitive advantage Beane developed. The question remains open on the possibilities of innovation in sports if these sorts of analysis could be protected. Teams such as the New York Yankees, Los Angeles Dodgers, and Boston Red Sox would have an incentive to not only use their money to form the best team, but they would have an incentive of creating a well-thought out, and economical strategy to put a better product on the field.

Netflix’s Use of Pirating Websites

POSTED by Stephanie Surette

Does it make sense for media giants to monitor pirating websites for their own profit? In a New York Times article, the author discusses how Netflix has admitted to reviewing piracy websites to gauge consumer interest in shows before committing to purchase them. The company reviews pirating websites to see what programs are being downloaded by consumers and whether or not there is enough interest in the show to warrant them purchasing the license. By monitoring pirating websites, is Netflix undermining laws that were put in place to protect them? These laws are designed to deter consumers from illegally downloading content and instead by using the data provided from these sites, are they legitimating consumers’ use of these sites?

For some consumers, the small monthly charge that Netflix charges is worth the convenience of having an array of TV shows and movies at their fingertips. However, even though Netflix has options to suit any taste, they don’t have everything and they don’t always have the most recently released movies available for streaming. The copyright laws in the United States are strict, and can result in a fine of $250,000 and up to five years in prison for a first offense. While there are steep penalties for offenders, it’s not enough of a deterrent for some. As described in another New York Times article, “[stopping] online piracy is like playing the world’s largest game of Whac-A-Mole.” Almost half of the adults in the United States are estimated to have engaged in some form of piracy (see page 3 of this study).

Where there’s a will, there’s a way – and there’s obviously a will for many people to avoid paying for content when it’s readily available on pirating websites. Even though Netflix is monitoring the pirating websites, they’re not just sitting idly on the sidelines. In 2012, Netflix established FLIXPAC, which is a political action committee (“PAC”) aimed to promote anti-piracy laws and their other interests. While Netflix has an interest in stopping or creating more obstacles for consumers to download content illegally, they might as well monitor it for their own uses while it’s still happening. The piracy battle isn’t close to being over and Netflix may as well get something out it while it’s still going on. If the harsh penalties for piracy haven’t stopped consumers from illegally downloading content, it’s unlikely that Netflix’s use of data from pirating websites will influence their decision regarding whether or not to download content.

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.

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[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.

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.

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.

3D Printing: A New Challenge To Intellectual Property Law

POSTED BY Nicholas Hasenfus

3D printers can be used to created objects out of materials such as metal, plastic, and nylon.  With a 3D scanner or 3D blueprints and a 3D printer, homeowners are able to create common household objects.  3D printers work differently than traditional machining techniques because printing is achieved using an additive process, adding layers of material, while traditional machining works by removing material.  Although the first working 3D printer was manufactured in 1984, recently prices have dropped for 3D printers and could be a nightmare to existing intellectual property (IP) laws as an Inside Counsel story has reported.

Traditionally, manufactures have been able to protect their products by copyrights, trade protection, and patents.  3D scanners and 3D printers have the potential to make this protection irrelevant especially to smaller companies who are unlikely to have all of these protections in place.  Even if they did have protection, if a person only infringed on one or two items at a time, it will make little economic sense.   3D printers may also pose a threat to the public.  Plans were developed by a United Stated group to provide a 3D blueprint of a working plastic firearm.  After they were posted online, the U.S. State department forced the group to take them down.  3D printing of firearms would allow unauthorized possessors of firearms across the United States and in countries where all firearms are illegal.

There are several ways IP owners may still be able to find protection.  Some of these include keeping the innovation cycle far ahead of the time it would take to develop 3D blueprints, therefore making consumers eager to have the newest items.  Another way to find protection is to offer an authorized blueprint so owners of 3D printers can created the end product and the IP owner would still be receiving revenue.   Copyright owners may also be able to use the Digital Millennium Copyright Act (DMCA) against people offering to 3D print goods.

It seems like these solutions would still not protect the public from unauthorized use of 3D plans.  People who were unable to legally obtain a firearm could likely go online and illegally find 3D blueprints of firearms just as easily as they can download music of videos illegally.  Congress will need to be extremely forward thinking and try to come up with a solution to these issues before they become a massive problem.

It’s a Name, It’s a Domain, It’s a…Contract For Services?

POSTED BY Alexander D. Schultheis

There are a number of legal scholars who take the position that intellectual property (IP) is not that much different from real property.  Thus, many of the same ownership rights that exist in property law are advocated for in the realm of IP.  It seems reasonable from an objective viewpoint that a domain name is the property of the firm that owns it.  Thus, much like property sold at a bankruptcy auction to pay off creditors of the firm, it seemed reasonable that IP assets, too, should be sold if necessary to relinquish debts a firm might owe, including a domain name.  But a United States District Court recently reasoned otherwise in Alexandria Surveys, LLC v. Alexandria Consulting Group, LLC, U.S. Dist. LEXIS 160595 (E.D. Va. 2013), holding that domain names are not in fact the property of a judgment debtor under Virginia state law, and are thus not part of the debtor’s bankruptcy estate.

The decision reversed an order of the Bankruptcy Court for the Eastern District of Virginia, which ordered the domain name of Alexandria Surveys, LLC (“Surveys”) to be sold at auction to pay off its creditors.  At the auction, Alexandria Consulting Group, LLC (“ACG”) purchased the domain name, as well as Surveys’ phone numbers. Surveys appealed this decision to the District Court for the Eastern District of Virginia, arguing that the domain name and phone numbers sold to ACG were not property of the debtor, and therefore could not be sold by the bankruptcy trustee as part of its bankruptcy estate.

Federal bankruptcy law defines property of a debtor’s estate as “all legal and equitable interest of the debtor in property as of the commencement of the estate.”  11 U.S.C. § 541(a)(1).  However, with no specific provisions in the Bankruptcy Code addressing telephone numbers or web domain names, it has largely been left to the courts to define the boundaries of whether or not these items may be sold by a trustee as debtor property to satisfy its judgment creditors.  Confounding the debate further, the circuits have split as to whether telephone numbers are property of a debtor’s estate.  The Fourth Circuit has not addressed this issue on its own yet.  However, the Supreme Court has weighed in on this question, and stated that state law determines the boundaries for property interests that a trustee may distribute to creditors in a bankruptcy proceeding. Butner v. United States, 440 U.S. 48, 49 (1979).

With this law in mind, Surveys cited the Virginia Supreme Court’s decision in Network Solutions, Inc. v. Umbro International, Inc., 529 S.E.2d 80 (Sup. Ct. Va. 2001), which held that a judgment debtor has no property right in its telephone numbers and web addresses. In that case, the Virginia Supreme Court reasoned that “a domain name registrant acquires the contractual right to use a unique domain name for a specified period of time” and is thus “the product of a contract for services” because neither the telephone numbers nor web addresses exist separately from the services which created them.  Network Solutions, 529 S.E.2d 86-87.  ACG rebutted this argument by distinguishing Network Solutions as a garnishment proceeding, not a bankruptcy proceeding.  But the District Court rejected this argument, following the Virginia Supreme Court’s reasoning that telephone numbers and web addresses are not separate from the contracts that service providers offer to make them functional.  Additionally, the trustee did not assume the executory contracts that Surveys had with Cox Communications, so even if Surveys had an IP interest in the domain address and the telephone numbers, it was rejected by the trustee.

The District Court’s ruling highlights an important philosophical underpinning to certain types of IP: those which are contracted for are treated no differently than executory contracts, should a bankruptcy arise and the debtor not list said contracts on their bankruptcy schedule (something Surveys did not do in this case). While some IP scholars may disagree with this ruling on the grounds that the web address and the telephone numbers should be sold to ACG as “property” of the estate, irrespective of whether it is listed on the schedule, web addresses and telephone numbers are not the same as owning other types of IP, such as a copyright or a patent.  For these forms of IP, the individual holder normally obtains ownership of the property without having to contract for its use with another party.  Instead, it is granted by the federal government through an application process whereby the applicant demonstrates they have met the statutory requirements to receive protection for their work.  In this case, however, the District Court, and more appropriately the Virginia Supreme Court (on whom it relied) correctly noted the contractual nature of providing web domain services and telephone numbers.

This one key difference marks the outcome of this case, one which the U.S. District Court for the Eastern District of Virginia properly arrived at in its reasoning. It remains to be seen what happens with IP assets in bankruptcy proceedings in the 21^st century, as this is still a developing area of law. But the lesson is clear: For bankruptcy purposes, IP that is contracted for, in a non-assigning manner, is not property of a debtor’s estate, if state law says it is not, and the trustee is bound by such a determination.

Call Me Maybe: The FCC Proposes to Lift Ban on In-Flight Cell Phone Use

POSTED BY Meghan T. Bonk

The Federal Communications Commission (“FCC”) has recently made a proposal to allow the use of cell phones on airline flights. The Wall Street Journal reported that cell phone use would still be restricted during takeoff and landing, but once the plane reaches 10,000 feet, “airborne calls” and “cellular data” use would be permitted. In 1991, the FCC created a restriction that banned the use of in-flight cell phone use. It proposed to lift the restriction in 2004 and received more than 8,000 public comments. In 2007, the commission decided against lifting the restriction after flight attendants and other groups argued that “in flight calls would be a nuisance.” The iPhone was created by Apple in 2007, and since then, cell-phone related activity has increased making it more reasonable to lift the ban on in-flight cell phone use today.

The FCC chairman, Tom Wheeler, stated that the agency wishes to do away with outdated rules and restrictions. He also stated that the airlines themselves are in the best position to decide what is in the best positions of the passengers, but he wanted to confirm that in-flight cell phone use is safe. According to The Washington Post, airline consultant, Robert Mann, also commented on the matter and explained that previously, the FCC was the main excuse airlines had for not allowing in-flight cell phone use and that now, the FCC wants to take itself “out of the equation.”

Ultimately, the FCC plans to invite public comment on the issue of permitting airborne calls and cellular data usage by airline passengers. One of the issues that could come about because of this proposed rulemaking is that while the FCC will allow public comment, will the airlines themselves be given enough of a voice in the matter? Airline passengers themselves will most likely have noise concerns about the lifted ban on cell phone use. However, airlines will pay the ultimate price because once one airline decides to allow in-flight cell phone use, other competing airlines will feel the need to follow suit. This means that thousands, perhaps even millions of dollars will be spent to install equipment on planes that connects to cell phone towers on the ground.  Even though Chairman Wheeler reassured that in-flight cell phone is safe, other safety concerns arise. Monitoring passengers who appear to pose a terrorist risk to the flight and are using a cell phone, cell phone use during an emergency situation and the ability of flight attendants to give direction to passengers all pose a security risk if cell phone use was permitted.

Another effect of lifting the restriction on in-flight cell phone use could be that the unions associated with airlines could go on strike, causing mass cancellation of flights due to lack of essential personnel. A spokesman for the Association of Flight Attendants stated that the union objects to this proposed rulemaking and that it goes against its employees’ goal of creating a calm, secure environment. If the rule is adopted, surely other unions will have similar concerns.

While the FCC has ambitions to reevaluate rules that do not appear to be up to date with modern technology, there seems to be underlying motives within its proposed rulemaking. Cell phone companies could be lobbying for this rule to be put into place, or perhaps the new FCC chairman wants to use this proposed rulemaking as a stepping stone for his own political career. Either way, safety concerns as well as the concerns of airline personnel should be considered to a higher standard than that of the public. A more stringent proceeding that includes airline personnel representatives as a party to the action would be ideal in this case to ensure that all concerns are addressed thoroughly and completely.

IBM Alleges Twitter Violated Three of Its Patents

BY Nick Hasenfus

Although Twitter is very popular, it has not yet been profitable.  Because of this, Twitter wants to go public to raise money much like Facebook and Google have.  In the first six months of 2013, Twitter has lost over $69 Million although revenue has more than doubled from 2012 to $253 million with a yearly estimated earning of $650 million.  In Twitter’s statement to the SEC they acknowledged another financial problem they may run into, IBM has alleged that Twitter has infringed on three of its patents.

As reported in a recent CNET story, Twitter has revealed that IMB has alleged three patent infringements by Twitter.  The three patents in question are: U.S. Patent No. 6,957,224: Efficient retrieval of uniform resource locators; U.S. Patent No. 7,072,849: Method for presenting advertising in an interactive service; and U.S. Patent No. 7,099,862: Programmatic discovery of common contacts.   IBM has invited Twitter to try and settle these issues out of court before Twitter goes public.

In Twitter’s SEC filing, which can be read here, Twitter reveals that they are, “involved in a number of intellectual property lawsuits” and that they expect they will continue to be involved in more.  Twitter also states that it is hard for them to tell which intellectual property claims they are violating, but any claims, settled or not, may be expensive and will take time, as well as resources, away from managers.  Furthermore, Twitter cannot say what kind of impact any intellectual property lawsuit rulings may have.

It is going to be difficult for Twitter regardless of their decision to settle or go to court with Microsoft.  Twitter does not have as much money to pay attorneys like Microsoft would.  Further, if Twitter decided to settle with Microsoft, they may have to pay a lot of money in licensing agreements.  It may be best for Twitter to try and settle out of court, and if Microsoft still believes they have infringed on their patents taking Microsoft to court may be less expensive in the long run for Twitter than a hefty licensing agreement especially because Twitter claims in their SEC filing that they have defenses to Microsoft’s claim.