Topic: Legal

Legal side of Reputation Management

Delaware Blockchain: State Lawmakers Pass Important Fintech Measure 0

Delaware blockchain lawIn Delaware, it’s now legal to trade stocks over blockchain platforms — so says a new state law.

Delaware Legally Embraces Blockchain Technology

Eager to keep on top of technological advancements, with only one dissenting vote, Delaware legislators passed a series of new amendments to accommodate blockchain technology initiatives.

The law will likely go into effect on August 1st of this year.

Delaware: A Corporate-Friendly State

Delaware notoriously caters to corporations. (Fun Fact: There are more companies registered in Delaware than residents.) As such, the state’s early blockchain embrace isn’t surprising. As Matthew O’Toole, Delaware bar association corporate law chair, explained to CoinDesk.com: Delaware wants to stay “at the forefront of corporate law and in the lead in terms of enabling the use of ‘distributed ledger shares.’”

Private Sector Reps Helped Draft Delaware’s Blockchain Bill

Delaware legislators sought the guidance of a well-known blockchain attorney and fintech executive when drafting the bill.

We’re in the midst of yet another exciting technological time. Blockchain technology is a game-changer that could force some market remodeling. Industry insiders speculate that blockchain platforms could eradicate finance middle men, which would shatter the current banking ecosystem.

Caitlin Long, of blockchain startup Symbiont, helped shape the legislation. She praised the measure, extolling in an interview: “The bill solidifies its leadership in corporate registry services by enabling end-to-end digitization for administration of securities. Banks are eager to use the automated filing procedures it enables for liens on collateral.”

Connect With A Blockchain Lawyer

Kelly / Warner assists startups and established businesses with cryptocurrency and blockchain legal issues. Get in touch today to see how we can help.

Article Sources

Castillo, M. (2017, July 02). Delaware House Passes Historic Blockchain Regulation. Retrieved July 14, 2017, from http://www.coindesk.com/delaware-house-passes-historic-blockchain-regulation/

The post Delaware Blockchain: State Lawmakers Pass Important Fintech Measure appeared first on Kelly / Warner Law | Defamation Law, Internet Law, Business Law.


Source: Kelly Warner Law

Blockchain Is To Kazakhstan As Movie Making Is To Hollywood? 0

Kasakhstan blockchainThe Kazakhstani government wants to do for fintech what Hollywood did for the movie industry. The Eastern European country is going all-in on blockchain technology and creating a market environment where fintech companies can flourish.

Kasakhstan’s (Fintech) Squad Goals

Right now, fintech initiatives are hotter than a field of Carolina Reapers. So, how does Kazakhstan plan to court startups in the space? The nation’s Astana International Financial Center (AIFC) is working with Deloitte, Waves, Kesarev Consulting, and Justcutum (a Ukrainian law firm) to establish “the most favorable business climate” for cryptocurrency and blockchain businesses by developing a “highly progressive regulatory framework.”

Nurlan Kussainov, the AIFC’s CEO, explained:

“AIFC aims to become a most favorable fintech jurisdiction with an open ecosystem and the most progressive regulating framework. We thank our partners for the support given to our blockchain regulatory development initiative. In the next phase of the project, our working team will be looking at widening the participation to include other industry stakeholders.”

Kazakhstan Takes Investment Stand

The partnership isn’t the only way the Eastern European country is luring fintech companies. Recently, the National Bank of Kazakhstan introduced a program that allows investors to buy government bonds backed by “a mobile application for the population to conduct transactions for the purchase and sale of securities on the basis of blockchain.” The setup eliminates middle men — and middle men’s commissions — therein lowering transaction fees and increasing settlements times.

Kelly / Warner works with cryptocurrency and fintech businesses on everything from basic registration to ICO regulatory compliance. Got questions? Get in touch.

Article Sources

Haig, S. (2017, July 18). Kazakhstan Seeks to Become Regional Hub for Cryptocurrency Industry. Retrieved September 03, 2017, from https://news.bitcoin.com/kazakhstan-seeks-to-become-regional-hub-for-cryptocurrency-industry/

The post Blockchain Is To Kazakhstan As Movie Making Is To Hollywood? appeared first on Kelly / Warner Law | Defamation Law, Internet Law, Business Law.


Source: Kelly Warner Law

ICO Hacks: CoinDash Takes $7 Million Hit; Soldiers On 0

ICO hacks CoinDashHere’s an unfortunate truth: ICO hacks are part of the initial coin offering ecosystem. CoinDash learned this lesson the hard way when someone siphoned $7 million from its ICO.

ICO Hacks: Manipulated Email Leads To Breach

A self-described social-trading platform, CoinDash planned a 28-day ICO in the hopes of raising $12 million. But a hacker spoiled the plan by grabbing $7 million from investors in a mid-transaction scam.

How’d they do it? An unauthorized party altered the ETH address the funds were to be sent to. When CoinDash learned of the problem, it immediately halted the sale.

Thankfully, stakeholders will not lose money; CoinDash is honoring all investments, even for individuals who inadvertently funneled coins to the wrong email address. Presumably, though, it may take a little time to sort out.

When asked about the incident, a CoinDash spokesperson persevered:

“This was a damaging event to both our contributors and our company, but it is surely not the end of our project. CoinDash is responsible to all of its contributors and will send coins ‘reflective of each contribution.’”

Contact A Blockchain Attorney

Kelly / Warner works with blockchain based startups. If you’re interested in speaking to an attorney about the ins-and-outs of blockchain or coin offerings get in touch today. We’ll guide you through the process and assess the specifics of your situation to ensure you’re structuring your sale in the best way possible.

Article Sources

Arnold, A. (2017, July 17). CoinDash Says Hacker Stole $7 Million at Initial Coin Offering. Retrieved July 25, 2017, from https://www.bloomberg.com/news/articles/2017-07-17/coindash-says-hacker-stole-7-million-at-initial-coin-offering

The post ICO Hacks: CoinDash Takes $7 Million Hit; Soldiers On appeared first on Kelly / Warner Law | Defamation Law, Internet Law, Business Law.


Source: Kelly Warner Law

Ashley Madison Settles Online Data Breach Class Action 0

online class action lawsuit ashley madisonRemember the Ashley Madison data breach scandal? Well, the website’s parent company may have secured an $11.2 million online class action settlement.

The Infamous Ashley Madison Online Data Breach Scandal

In 2015, hackers unsheathed 36 million accounts on the infamous extra-marital dating site AshleyMadison.com. The fallout was epic — and, at times, tragic; two people took their own lives, divorce proceedings skyrocketed, and the company’s CEO resigned amidst the maelstrom.

Scandal Leads To Online Class Action Lawsuit

The scandal also spawned several legal battles.

Exposed users questioned the platform’s security safeguards. Clients who paid extra for account deletion services took particular umbrage. And beyond the breach, Ashley Madison patrons decried the website’s use of fake profiles to lure clients. Ultimately, the company broke enough proper protocols and client promises to catch an online class action.

A U.S. District Court in Missouri will decide whether or not to affirm the settlement offer — which, by the way, doesn’t include a fault admission on Ashley Madison’s part. If accepted, affected parties can claim up to $3,500, depending on how the breach impacted their lives. For example, people targeted by identity thieves because of the incident will get more than someone who was embarrassed but suffered no material harm as a direct result of the hack. Moreover, amounts will depend on the number of claims submitted.

This class action is not the first legal hurdle AshleyMadison.com has cleared in the wake of the scandal. Thirteen state attorneys general and the Federal Trade Commission also lodged formal complaints against the company.

Connect With An Online Privacy Lawyer

Was your business the target of a data hack? If so, and you’re unsure of subsequent legal obligations, get in touch. Most states require that companies inform affected parties in a particular way. Our team has helped numerous parties navigate the aftermath of a hack. We’ll assist with state and federal notification requirements, plus provide guidance on how to put the incident behind you and continue to grow.

Article Sources

Davis, W. (2017, July 17). Ashley Madison Settles Class-Action Over Data Breach. Retrieved September 03, 2017, from https://www.mediapost.com/publications/article/304409/ashley-madison-settles-class-action-over-data-brea.html

The post Ashley Madison Settles Online Data Breach Class Action appeared first on Kelly / Warner Law | Defamation Law, Internet Law, Business Law.


Source: Kelly Warner Law

Global Content Removals Based on Local Legal Violations (Internet Law Casebook Excerpt) 0

[Eric’s note: I’m sharing an excerpt from my Internet Law casebook discussing transborder content removal orders, including the Equustek case.]

From the Internet’s earliest days, the tension between a global communication network and local geography-based laws has been obvious. One scenario is that every jurisdiction’s local laws apply to the Internet globally, meaning that the country (or sub-national regulator) with the most restrictive law for any content category sets the global standard for that content. If this scenario comes to pass, the Internet will only contain content that is legal in every jurisdiction in the world—a small fraction of the content we as Americans might enjoy, because many countries restrict content that is clearly legal in the U.S.

Perhaps surprisingly, we’ve generally avoided this dystopian scenario—so far. In part, this is because many major Internet services create localized versions of their offerings that conform to local laws, which allows the services to make country-by-country removals of locally impermissible content. Thus, the content on google.de might vary pretty substantially from the content on google.com. This localization undermines the 1990s utopian vision that the Internet would enable a single global content database that everyone in the world could uniformly enjoy. However, service localization has also forestalled more dire regulatory crises. So long as google.de complies with local German laws and google.com complies with local U.S. laws, regulators in the U.S. and Germany should be OK…right?

Increasingly, the answer appears to be “no.” Google’s response to the European RTBF rule has highlighted the impending crisis. In response to the RTBF requirement that search engines to remove certain search results associated with their names, initially Google only de-indexed results from its European indexes, i.e., Google would scrub the results from Google.de but not Google.com. However, European users of Google can easily seek out international versions of Google’s search index. An enterprising European user could go to Google.com and obtain unscrubbed search results—and compare the search results with the localized edition of Google to see which results had been scrubbed.

The French Commission Nationale de l’Informatique et des Libertés (CNIL) has deemed this outcome unacceptable. As a result, it has demanded that Google honor an RTBF de-indexing request across all of its search indexes globally. In other words, if a French resident successfully makes a de-indexing request under European data privacy laws, Google should not display the removed result to anyone in the world, even searchers outside of Europe who are not subject to European law.

The CNIL’s position is not unprecedented; other governmental agencies have made similar demands for the worldwide suppression of content they object to. However, the demand on Google threatens to break the Internet. Either Google must cease all of its French operations to avoid being subject to the CNIL’s interpretation of the law, or it must give a single country the power to decide what content is appropriate for the entire world—which, of course, could produce conflicts with the laws of other countries.

Google proposed a compromise of removing RTBF results from its European indexes, and if a European attempts to log into a non-European version of Google’s search index, Google will dynamically scrub the results it delivers to the European searcher. As a result, if the European searcher tries to get around the European censored results, he or she will still not see the full search results. (Of course, it would be easy to bypass Google’s dynamic scrubbing using VPNs). CNIL has rejected Google’s compromise as still unacceptable.

If CNIL gets its way, other governments with censorious impulses will demand equal treatment. But even Google’s “compromise” solution—walling off certain information from being available in a country that seeks to censor that information—will be helpful to censors. In effect, the RTBF ruling forces Google to build a censorship infrastructure that regulators can coopt for other censorious purposes. Thus, either way, the resolution to the RTBF’s geography conundrum provides a preview of the future of global censorship.

The Equustek Case

The local violation/global removal debate is taking place in other venues as well. In 2017, the Canada Supreme Court ordered Google to globally remove search results based on alleged Canadian legal violations. Google Inc. v. Equustek Solutions Inc., 2017 SCC 34.

In that case, Datalink, a competitor of Equustek, sold products that allegedly infringed Equustek’s intellectual property rights. After Equustek sued Datalink, Datalink relocated to an unknown location outside of Canada, putting it out of the reach of Canadian courts. Equustek asked Google to deindex Datalink’s website. Google partially deindexed the site from google.ca, but Equustek sought more relief. The Canada Supreme Court ordered global deindexing of Datalink’s website:

The problem in this case is occurring online and globally. The Internet has no borders — its natural habitat is global. The only way to ensure that the interlocutory injunction attained its objective was to have it apply where Google operates — globally. As Fenlon J. found, the majority of Datalink’s sales take place outside Canada. If the injunction were restricted to Canada alone or to google.ca, as Google suggests it should have been, the remedy would be deprived of its intended ability to prevent irreparable harm. Purchasers outside Canada could easily continue purchasing from Datalink’s websites, and Canadian purchasers could easily find Datalink’s websites even if those websites were de-indexed on google.ca. Google would still be facilitating Datalink’s breach of the court’s order which had prohibited it from carrying on business on the Internet….

The order does not require that Google take any steps around the world, it requires it to take steps only where its search engine is controlled….

This is not an order to remove speech that, on its face, engages freedom of expression values, it is an order to de-index websites that are in violation of several court orders….

This does not make Google liable for this harm. It does, however, make Google the determinative player in allowing the harm to occur.

The court noted that Google admitted it would be easy to deindex Datalink’s domain name, and the court noted that Google regularly deindexes content for other reasons, such as the DMCA online safe harbor.

The court dismissed the risk of international conflicts-of-laws because everyone apparently accepted that Datalink would violate Equustek’s IP rights under other countries’ laws. However, the court was surprisingly unspecific about the alleged IP violations, which apparently included trademarks and trade secrets. Due to the ambiguities about the alleged IP violations, the court avoided some subtle IP issues, such as the scope of Equustek’s trademark rights (usually trademark rights don’t reach beyond a country’s borders, so a Canadian court could not order a defendant to stop infringing trademark rights in other countries) and the likelihood that Canadian trade secret laws and remedies differ from the laws and remedies of other countries. See Ariel Katz, Google v. Equustek: Unnecessarily Hard Cases Make Unnecessarily Bad Law, ArielKatz.org, June 29, 2017.

Because the court sidestepped the international conflicts-of-laws issue, the Equustek case’s facts do not implicate the more problematic situation where Datalink’s content violates Canadian law but is legal in other countries, yet a Canadian court order under Canadian law prevents the content from being available in countries where it was legal. (The CNIL-demanded rule would reach this outcome, because RTBF-scrubbed content illegal in Europe would be almost certainly legal in the U.S.). The court said that Google could challenge the injunction in Canadian courts if the injunction violates other countries’ laws—but will Google really spend substantial money and time to defend a third party content by going back to a Canadian court to adjudicate the content’s legitimacy?

In response to the opinion, Canadian law professor Michael Geist wrote:

what happens if a Chinese court orders it to remove Taiwanese sites from the index? Or if an Iranian court orders it to remove gay and lesbian sites from the index? Since local content laws differ from country to country, there is a great likelihood of conflicts. That leaves two possible problematic outcomes: local courts deciding what others can access online or companies such as Google selectively deciding which rules they wish to follow. The Supreme Court of Canada did not address the broader implications of the decision, content to limit its reasoning to the need to address the harm being sustained by a Canadian company, the limited harm or burden to Google, and the ease with which potential conflicts could be addressed by adjusting the global takedown order. In doing so, it invites more global takedowns without requiring those seeking takedowns to identify potential conflicts or assess the implications in other countries.

Michael Geist, Global Internet Takedown Orders Come to Canada: Supreme Court Upholds International Removal of Google Search Results, MichaelGeist.ca, June 28, 2017.

Does the Equustek ruling mean that plaintiffs (both Canadian and non-Canadian) will flock to Canadian courts to sue non-Canadian defendants solely to get global deindexing orders?

Note that Equustek ruling (and the CNIL dispute) avoid an underlying jurisdictional issue because Google has substantial physical presence in both Canada and Europe. Would Canada or Europe have jurisdiction over an Internet service that operates exclusively from the United States?

I encourage you to do a thought exercise: project yourself 20 years in the future. What do you think will be the state of the law on global removals based on local violations? Do you think most countries will have embraced the Equustek approach broadly? If so, do you think the Internet (however you define it) will be better or worse as a result?

***

[After I wrote this, Google sought legal relief in US courts from the Equustek ruling. For useful perspective on Google’s move, read Daphne Keller’s analysis.]


Source: Eric Goldman Legal