There are so many “hot button” issues, it is hard to decide which ones to mention. So I’ll just mention the three that I find extremely interesting:

1. Network neutrality. The FCC issued regulations to prevent telcos and other ISPs from engaging in what supporters would call unfair and anticompetitive activities. On November 10, 2011, those regulations came up for a vote in the Senate. Republicans were attempting to overrule the regulations, but the Democrats were able to defeat the bill. Of course, that is only a temporary victory, since the regulations are also being challenged by Verizon in court, and if the Republicans take over the White House in the next election those regulations are likely to be thrown out.

2. Online sales tax. For many years, Amazon, and other online retailers have been able to avoid collecting sales taxes for their online sales. However, political pressure is mounting for Congress to change the law to compel these vendors to collect sales taxes. Much of this pressure is coming from states that are suffering with sagging tax revenues. If such a law passes, of course, there are bound to be constitutional challenges, eventually winding up in the U.S. Supreme Court.

3. Privacy and GPS devices. The U.S. Supreme Court recently heard oral arguments on whether the police can install a GPS device on a suspect’s car and “follow” him around by monitoring the device. Surprisingly, at least to me, the Supremes seemed receptive to the argument that such activities violated the Fourth Amendment. Next year’s decision will be interesting reading, particular if the Court upholds a right of privacy in these circumstances.

Let me know what your hot button issues for 2012.

The FTC previously reviewed the COPPA Rule in 2005 and retained it without change. In light of rapidly evolving technology and changes in the way children use and access the Internet, in 2010 the FTC initiated another review of the Rule on an accelerated schedule. On April 5, 2010, the FTC sought public comment on every aspect of the COPPA Rule, posing numerous questions for the public’s consideration. In addition, the FTC held a public roundtable and reviewed 70 comments received from industry representatives, advocacy groups, academics, technologists, and individual members of the public.

The Internet has clearly changed considerably since 2000 and it is clear that an updated Rule (if done properly) would be of enormous benefit both to parents (whose children are increasingly interacting with Internet on a daily basis) and website operators (who still seem to be unclear on how to comply with COPPA).

One of the most troublesome areas in complying with COPPA is the “verifiable parental consent” requirement. I am pleased to see that this is one area that the FTC is specifically looking at. Unfortunately, the FTC proposals appear to be increasing the burden on websites, not streamlining them as the proposal claims. The promulgation of the original Rule, with its “verifiable parental consent” requirement resulted in many child-oriented sites moving away from efforts by sites to “customize” the experience for each child-visitor, since the information required to do so fell within the strictures of COPPA. Instead, sites changed to provide the same “experience” to every child that came to them, which turned off a lot of kids.

As the number of interactive child-oriented sites decreased, many children starting exploring more adult-oriented sites that did not need to get “verifiable parental consent” as long as the site was not directed to children and the site operator did not ask for the age of the visitor. Under many lawyers’ reading of the COPPA, a Disney-sponsored site would be required to get consent to gather information from an eight year-old, but playboy.com would not. Certainly a perverse result!!

It will be interesting to see whether changes are actually made this time to the Rule, and whether those changes help or hurt websites that are directed at children.

What many people do not realize is that many newer cars (particularly those manufactured by GM and Ford) contain an “event data recorder” (a so-called “black box”) that is similar to those on airplanes. These devices generally are triggered by electronically-sensed problems in the engine (often called faults), a sudden change in wheel speed or airbag deployment, and store a variety of data, such as which seat belts were being worn at the time of the event and the vehicle’s speed, direction and location. The information contained in the black box can be invaluable in determining the cause of an accident.

The question is whether a driver (or car owner) has a legitimate expectation of privacy in the information stored in the black box or whether the police can download that information without a search warrant.

In a New York case, the court held that no search warrant was required for the recovery of black box data. In People v. Christmann, 3 Misc.3d 309, 776 N.Y.S.2d 437 (2004), the defendant was involved in a motor vehicle accident with a pedestrian. The police at the scene downloaded the data from the car’s black box without a warrant. The court held that exigent circumstances (“[e]vidence regarding the pre-accident conditions within Defendant’s automobile could easily be destroyed, either purposely or accidently, if the automobile was moved from the scene under its own power.” 3 Misc.3d at 315, 776 N.Y.S.2d at 441.) justified the data download at the scene without a warrant.

However, a recent California case, People v. Xinos, 192 Cal. App. 4th 637, 121 Cal. Rptr. 3d 496 (2011), review filed (Mar. 21, 2011), the court came to the opposite conclusion. In Xinos, the defendant was convicted of vehicular manslaughter, based in significant part on the data contained in an event data recorder (also called a “sensing and diagnostic module” or “SDM”) in his car. The defendant had filed a suppression motion regarding the SDM data, claiming that the downloading of the data without a warrant violated his Fourth Amendment rights. The lower court had rejected the motion. On appeal, however, the court reversed.

After an accident in which a pedestrian was killed, the defendant’s car was towed to a police impound lot. A year after the accident, at the request of the District Attorney’s Office, and without obtaining a warrant, police went to the impound lot and:

downloaded the data contained in the vehicle’s SDM. They accomplished the download using a cable connected to the diagnostic link connector (DLC), which was located underneath the vehicle’s dash area on the driver’s side. An SDM receives data from various inputs related to the vehicle’s restraint systems, seat belt pretensioners and airbags. The data includes information regarding engine speed, vehicle speed and deceleration, throttle percentage, braking, airbag deployment, and the restraint system. . . .
Using software, [the police] produced a crash data retrieval (CDR) report. It showed information captured during the five seconds before defendant’s vehicle experienced a change in velocity. It disclosed the vehicle’s speed during the five seconds before the incident. The data indicated that there had been brake activation but the braking “could just be covering the pedal” and was not necessarily hard braking.

Id. at 647, 121 Cal. Rptr. at 502-03.

In the trial court, the prosecutor argued that “no search warrant was required because defendant had no reasonable expectation of privacy in the SDM’s data, analogizing to electronic beepers and emphasizing the diminished expectation of privacy in vehicles. The People maintained that the year delay in conducting the download was immaterial.” Id. at 651, 121 Cal. Rptr. at 505. The trial court held that there was no Fourth Amendment violation:

In this matter the Court is satisfied that the police were permitted to conduct tests and discover data because the vehicle was an instrumentality of the crime of vehicular manslaughter as well as hit-and-run. Therefore, the retrieval of the data in the SDM was not a search within the meaning of the Fourth Amendment. Id.

It further stated that, even if downloading the information was “not a test or a diagnostic event” and it was a search, the search fell “within the automobile exception to the warrant requirement because the police officers had probable cause to believe that evidence pertaining to the crime was contained in the SDM.” Id. at 651, 121 Cal. Rptr. at 505.

The appellate court disagreed:

This case is fundamentally distinguishable from the cases where technology is used to allow law enforcement to capture information that a person is knowingly exposing to the public. . . .
[I]n this case, defendant could not have claimed any reasonable expectation of privacy with respect to governmental observations, including those using enhanced technology, of his driving on public roads. We are more familiar with the examples of law enforcement measuring vehicular speed with radar guns or recording failures to stop at red lights with automated cameras. But in this case, the government was not making any observations of conduct exposed to the public view. Here, defendant’s own vehicle was internally producing data for its safe operation. That exceedingly precise data was not being exposed to the public or being conveyed to any other person.

Id. at 654, 121 Cal. Rptr. at 508. The appellate court found no probable cause for the download:

[T]he scope of a legitimate warrantless search of a vehicle under the automobile exception “is defined by the object of the search and the places in which there is probable cause to believe that it may be found.” The scope of a warrantless search authorized by the automobile exception is “no broader and no narrower than a magistrate could legitimately authorize by warrant.” Moreover, probable cause to conduct a warrantless search must exist at the time the warrantless search is executed.
[I]n this case, the prosecution failed to show that the objective facts known to the police officers at the time of the download constituted probable cause to search the SDM for evidence of crime. The download occurred long after the collision and criminal investigation. The officers who conducted the download were merely complying with an unexplained request of the D.A.’s Office and believed no relevant data would be found. The download of the data was not supported by probable cause.

Id. at 661, 121 Cal. Rptr. at 513. Nor did the court find the SDM data to be lawfully seized evidence of a crime:

The Attorney General has not cited any Fourth Amendment authority permitting new intrusions into any internal part or component of a vehicle simply because the vehicle was seized as evidence. . . . The retrieval of raw data from a vehicle’s SDM not believed by police to hold any evidence of crime is not a reexamination or closer look at areas of a vehicle already reasonably believed to be or contain evidence of a crime; it is a new and different intrusion. The prosecution failed to show in this case that the download of data was justified by the circumstances warranting seizure of the vehicle and examination of its condition. Further, the download of raw data from a SDM does not qualify as a scientific test, similar to DNA or ballistics testing since downloading is merely the copying or retrieval of electronic data or information.

Id. at 663, 121 Cal. Rptr. at 515.

Clearly, the two cases can be factually distinguished. The New York case involved a download of data immediately after the accident versus the year delay in Xinos. The more important issue, however, is whether a driver has a legitimate expectation of privacy in the black box data at all, and if so, when a warrant based on probably cause should be required. As black boxes become ubiquitous in new cars, this issue is bound to be before the courts again.

Those early days in the growth of the Internet saw Congress passing several laws that freed the Internet from potential liability – the DMCA “safe harbors” provisions, Section 230 of the Communications Decency Act, and the Internet Tax Freedom Act of 1998 – to name just a few. And the Internet responded to this light touch by growing exponentially both within the U.S. and around the world – with almost two billion users today!

Unfortunately, during the last decade, the Internet has lost its luster – at least as far as politicians and the courts are concerned – and is being subjected to ever-increasing regulation and liability. Many politicians blame all of society’s ills on the Internet. (See here and here for just two examples.) As a result, they are openly hostile to the idea of an open, global forum for the exchange of information and ideas, as well as for global commercial activity, and seem intent on killing the “goose that laid the golden egg.” Just a look at today’s online news sites will confirm that the Internet is under increasing attack worldwide.

Fortunately, the Internet is extremely resilient – both from a technical, as well as a social and economic, perspective. So far the Internet (and those who dwell within it) have been able to “work around” many of these new laws and regulations or adapt to them without significant damage to the “business as usual” nature of the system. But it’s difficult to tell from our vantage point whether real, permanent damage is being done to the Internet – as both a communications medium and a platform for e-commerce. A decade from now analysts may look back at the Internet as a failed experiment – killed off by politicians, judges and self-serving business interests, who thought the Internet had to be “tamed,” and in doing so destroyed its ultimate potential.

Only time will tell….

However, after pressure from my friends and family (all of whom are devoted iPad users), I purchased an iPad for myself last Christmas. While I don’t use it as much as my kids do, or as some of my students do, I have warmed up to the device and have become a regular purchaser from the iPad app store. I use it mainly to do email and read ebooks. That is why I was very distressed to read about an emerging battle between Apple and the e-reader companies (Sony, Amazon and Google) over the nature of the e-reader apps they will be allowed to distribute through the app store in the future. See, e.g., Yukari Iwatani Kane and Stu Woo, “Apple Rejects Sony E-Book App,” Wall. St. j. (Feb. 2 2011).

In general, e-reader apps have been just that. They can be used to read e-books, but if you want to purchase an e-book, you need to go to the applicable website and pay for the e-book there. While it is somewhat inconvenient to have to leave the e-book app to buy a new e-book, it hasn’t been a major issue. At least for e-book readers. Apparently it has been a major issue for Apple, since Apple does not get a cut of the revenues generated by those e-book sales. As Apple stated in a recent press release:

We are now requiring that if an app offers customers the ability to purchase books outside of the app, that the same option is also available to customers from within the app with in-app purchase.

It is reported that Apple has rejected an e-reader app from Sony, demanding that Sony provide the means to purchase their e-books through the iTunes store – and pay Apple 30% of the revenues generated from such sales. Considering that many e-book sales are made with little or no profit already (various stories assert that Amazon loses money on the e-books it sells for $9.99 or less), having to give Apple 30% of revenues would make most e-book sales unprofitable – which might require e-book sellers to jack up the price of their titles across the board to cover Apple’s cut.

And there is no reason that Apple won’t expand that policy to other e-commerce areas. As one commentator recently stated:

Now that Apple has changed the business arrangement for e-books, you can bet it’s thinking about the terms for video-streaming apps like Netflix and Hulu Plus and music apps like Pandora, or even more general e-commerce apps like Amazon’s Windowshop. If Apple wants a 30 percent cut of my Kindle book today, I assume it will want a 30 percent cut when I try to buy an actual Kindle tomorrow.

Farhad Manjoo, “Ditch the App Store,” Slate.com (Feb. 1, 2011).

It will be interesting to see what Sony, Amazon and others do in response to Apple’s changing policies. And whether the FTC or various state attorneys general may get involved as well.

But Negroponte saw those technological impediments as transitory speed bumps in the transformation of the computer to the center of our world. At the time it seemed unlikely, but over the last 15 years the Internet, smart phones, the iPad, myriad software apps, and high-speed phone lines have proven Negroponte right on so many of his predictions.

When I read the book for the first time in 1995 it made me think about how the law, business and society would need to change if his predictions came true. Much of my research over the last decade and a half has focused on the impact of what I call “transformative media” on the law. Ever five years I reread Negroponte’s book. It is always fresh and generates lots of new ideas. I just finished reading the book for the fourth time and am still amazed by how many of his predictions have come true just over the last five years (since I last read his book) – particularly with regard to the demise of newspapers, the emergence of e-books, broadband technologies driving Blockbuster into bankruptcy and DVD rentals replaced with Netflix downloads, while CDs (“atoms”) continue to lose ground to iTunes and other digital downloads (“bits”).

Although the book is now 15 years old, it is still a compelling read, and I would highly recommend it. (Ironically, the book is NOT available as an e-book. Portions of the book are available online, but to get the whole book, you still must buy the “atoms.”) What’s up with that?

This year I thought I would add a second skills-based course in drafting license agreements. Fortunately, there are a number of good casebooks that have appeared over the last couple of years that focus on licensing law. I thought that using one of those texts, supplemented by some of the licensing materials from my multimedia law treatise, would provide a good foundation for the course. Like my previous course, I thought I could create a series of exercises that could teach students how to draft contract clauses for various licensing situations. However, unlike my prior course, where everyone seemed to be working in the same direction from Day 1, I have found the licensing law class to be a much greater challenge.

Why? Because many of the students have worked at law firms and in legal departments of various entertainment industry companies, either as summer clerks or as externs, and have been exposed to licensing agreement actually used in their particular industry – all of which are radically different from license agreements used in other industries. The result is that perhaps a third of the class thinks they know what a license agreement looks like, and are shocked, and often offended, when I tell them that the license clauses they are drafting are not acceptable.

The problem is that every sub-industry within the entertainment field has their own unique way of writing license agreements, and the clauses used have been honed for very specific types of transactions. While the technology industry generally has a style of contract drafting that does not differ significantly with the subject matter – patent license for semiconductors look a lot like patent license for biotech (with some obvious differences in terminology), license agreements in the music industry may look very different depending on whether you are working for a composer, music publisher, record company, recording artist, etc. And that’s just the music industry. The same Tower of Babel exists in the movie industry, television industry, sports industry, etc.

What I have found is that I must ask the students to look beyond the very specific clauses unique to a particular player in a particular entertainment field, and try to see those aspects of licensing that are common to all (or at least most) of the IP fields. That’s turned out to be easier said than done. I need to constantly talk about the important underpinnings of licensing law in general, and how those general principles are then “customized” for each industry. I have to tell the students to see beyond the industry they have some (generally fairly superficial) familiarity with, and understand what sets licenses apart from other forms of agreements.

We are just entering Week 4 of the class, and I think I have around 80% of the students on board to that broader way of thinking about licensing. Unfortunately, that still leaves about 20% of the students thinking that the way they learned to write licenses in their first and only “job” in the field is the only way to write such contracts. The positive results of this ongoing debate is that it gives me a lot of examples to use in class to highlight the fact that licenses are very malleable things that can be modified to meet the needs of a particular industry or sub-industry, but that underlying those differences are certain principles that are (almost) universal in application.

Fortunately, in a couple of weeks the materials we have been covering that focus on the general principles of licensing, will give way to more industry-specific contracts. That will give the students an opportunity to draft clauses that are more particular to specific areas of entertainment law – music, motion pictures, professional sports, etc. I am hoping that this will solve some of the problems I have faced thus far. I’ll let you know.

It’s advice that also applies in the technology field. Just because we can develop certain technologies, doesn’t mean we should do so. Think of chemical weapons. World leaders have decided that such weapons should not be produced or deployed, even though we have the ability to do so.

It also should be applied in the tech law field. Particularly where we are dealing with technology that can invade people’s privacy. Two lines of cases come to mind. The first line of cases, including United States v. Arnold, 533 F.3d 1003 (9th Cir. 2008), cert. denied, __ U.S. __, 129 S. Ct. 1312 (2009), have held that the government has the right to search a computer or any other electronic device possessed by a person at the border – without a warrant or probable cause. The cases have held that warrantless border searches are permissible because the government has an absolute right to regulate what crosses its borders. The fact that the government can conduct such warrantless border searches, however, does not mean that it should.

A second example are the recent cases upholding the warrantless use of GPS devices on cars. In United States v. Pineda-Moreno, 591 F.3d 1212 (9th Cir. 2010) and Foltz v. Commonwealth (Va. App. Ct. Sept. 7, 2010), the courts held that because there is no reasonable expectation of privacy in where a car is driven (since it can be observed by anyone on the street), there is no Fourth Amendment violation in attaching a GPS device to the vehicle and remotely monitoring the location and route taken by the vehicle without a warrant based on probable cause. Despite the fact that:

“The police had no policy regarding the use of GPS devices, in part because the devices were not used particularly often. The police did not predetermine how long they would track appellant. The police also did not develop a policy to avoid following the van into private areas.”

the Virginia court found no violation of the defendant’s rights.

In both of these examples, the courts have found that the government can engage in the conduct at issue without violating the Fourth Amendment. But the more important question is whether our government should be engaging in such conduct. While the Fourth Amendment provides a baseline for government conduct, it should be viewed as a minimum standard for individual rights, and not a maximum.

Congress has the right to require a higher standard from the government if it believes that our society requires the government to be held to such higher standard. We saw that happen in the passage of the Electronic Communications Privacy Act of 1986 (ECPA). The Act continued the federal law that regulated law enforcement’s use of wiretapping technology, despite the fact that the U.S. Supreme Court had previously held that warrantless wiretapping was not a violation of the Fourth Amendment as long as law enforcement did not physically trespass on the suspect’s property. See Olmstead v. United States, 277 U.S. 438 (1928).

The ECPA updated the prior wiretapping statute by adding electronic communications (e.g., e-mails) to the class of protected communications. Despite the fact that courts have held that there is no reasonable expectation of privacy under the Fourth Amendment in e-mails (since the recipient can disclose the contents of the e-mail to others), courts have recognized that the ECPA establishes a higher standard that law enforcement must meet before intercepting e-mails in transit or retrieving them from storage.

In enacting the ECPA, Congress decided that even though the government can wiretap telephone conversations and e-mails with impunity under the Fourth Amendment, it should not be allowed to do so unless it meets the ECPA’s higher standard.

Congress could and should do the same thing with warrantless border searches of electronic devices and the use of GPS devices. Unfortunately, in this political climate it is unlikely to happen.

It’s too bad they won’t take my father’s advice.

• With cell phones to tell them the time, there is no need for a wristwatch.
• Email is just too slow….
• They never twisted the coiled handset wire aimlessly around their wrists while chatting on the phone.
• Unless they found one in their grandparents’ closet, they have never seen a carousel of Kodachrome slides.
• Computers have never lacked a CD-ROM disk drive.
• The first computer they probably touched was an Apple II; it is now in a museum.
• They first met Michelangelo when he was just a computer virus.

We all know that technology is evolving at breakneck speed. But it’s always interesting to see just what impact these changes are having on our next generation of workers, inventors and policy makers. It’s amazing how developments in technology have fundamentally affected their worldview.

The difficulty of predicting what technology is going to catch on, and the impact such technology will have on society, is obvious. However, another interesting issue is what impact technology will have on the law. The traditional mantra is that technology changes too fast for the law to keep up. Legislatures are hard-pressed to anticipate technological changes and deal with the legal issues that such changes create. However, in some cases legislatures have attempted to anticipate technological developments – often with interesting results.

I have been developing lectures for an online LLM course I will be teaching this fall in Internet and E-Commerce Law. I was reminded of two pieces of legislation that were enacted in the 1990s to deal with “emerging” technologies that can be seen as somewhat anachronistic in light of later developments.

The first is the Audio Home Recording Act of 1992. The Act was Congress’s response to a controversy between the music industry and the consumer electronics industry regarding the introduction of digital audio recording technology into the domestic consumer market. Everyone thought digital tape recording was going to be the “next big thing” and the music industry was concerned about the ability of these recording devices for piracy. Exempted from the Act were computers, which were viewed in 1992 as an unlikely device for music copying. Well, we know how well that prediction panned out. Portable music players, like the iPod, were not covered by the Act, while digital audio tape recorders (what are they, you might ask?) were. Neither the music industry nor Congress foresaw such technologies as the Internet, broadband, or audio compression (MP3) that would make the copying and transmission of music files over the Internet quick and easy. Oops.

Another interesting, but somewhat irrelevant law, is the DMCA provisions on copyright management information. In 1998, pundits saw a day when digital content files would contain “copyright management information” (CMI) that would be “read” by software and hardware devices and would control the uses that could be made of a digital work. For example, futurists foresaw a time when Internet users could download or share content files and the computer would read the CMI from the file and, depending on what the user wanted to do with the file, would automatically transmit a micropayment from the user’s bank account to the copyright owner’s bank account for an appropriate license. Photocopiers would “read” microscopic barcodes printed on each page of a book or magazine, which would determine whether a particular page could be copied at all, and if so, whether a micropayment should be made to the copyright owner for that copy.

Twelve years later, CMI technology is little used and certainly not a hot topic in legal circles or the courts.. The “problem” that proponents of the CMI legislation identified has never materialized. Oops.

That is not to say that legislatures should never legislate in anticipation of new technologies, only that they should be careful in determining which issues are ripe for legislation and which are not.

Perhaps they should ask an entering college student?

The Internet has become so embedded in most people’s daily lives that they find it noteworthy that they will be “offline” for even a few days. They often post their concerns on Facebook, not knowing what problems being unplugged may cause them.

On a more macro scale, many industries are finding it increasingly difficult to survive in this ever-more-connected world. While the copyright industries blame piracy for their falling revenues, the real culprit is the fact that the Internet has changed the way in which people consume content. If online piracy ended tomorrow, that would give only a temporary blip in revenues for the movie and music industries. However, over the long term, traditional entertainment will see a continuing decline in revenues simply because people have many new ways in which to spend their free-time and disposable income.

If we are looking for a “canary in a mineshaft” warning, just look at the publishing industry. The industry is in a free-fall. Borders UK has gone bankrupt, Barnes & Noble has put itself up for sale, independent bookstores are being shuttered at an enormous rate, and newspapers are closing their doors daily. The Federal Communications Commission is even talking about federal subsidizes for newspapers. Absurd, but true.

The fact is, if we haven’t reached the tipping point yet, we soon will. And when that happens, all the lawsuits in the world and all the government bailouts will do little to stem the tide of inevitable change. Those companies (and industries) that don’t adopt quickly will be swept aside to be replaced by new companies and industries that meet the needs of today’s (and tomorrow’s) consumers.

What those companies will look like, and how they will differ from existing organizations, no one can envision. Just like someone in 1980 would have been unable to even imagine companies like Facebook and Google, sitting here today, even the most savvy pundits are unlikely to be able to see what will take place over the next decade.

And as businesses and industries change, they will need lawyers who can help them chart a course through these massive changes. And that’s the good news for all of this.