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SXSW South by Southwest Conference

As some of you already know, South by Southwest ®(SXSW) is one of the world’s premier events showcasing music, film and interactive media. This internationally-recognized event has live panels, special events, cinema and combines entertainment and educational activities in a conference and festival atmosphere.  The event takes place annually in Austin, Texas in the United States – this year between March 8th and 16th, 2024.

I have made a proposal to participate by making a presentation entitled “Legal Implications of AI: The Good, the Bad and the Ugly” and voting by the online community is now live!  That allows the public to help the organizers decide on ideas that are the most creative, innovative, and relevant for 2024.  Starting today and until August 20th (11:59 PM PT), you can see my proposal and vote using this link: Legal Implications of AI: The Good, the Bad and the Ugly.  I hope you will vote to include my presentation in the event.

My objective is to make the presentation interactive and entertaining, including some potentially innovative uses of AI to make the point. What do I want to talk about? First, how does current law deal with the film, television, music, art, literary industries – what are the challenges and the opportunities. Second, how can celebrities, sports figures, creative artists and talented professionals protect themselves while also exploiting the evolving technology. Of course, last but not least, is it too soon to start regulating AI? If so, what are we waiting for? If not, how do we even suggest regulation when we can’t predict where we are going?

I won’t pretend to have all the answers, but I will try to provide an enlightening, stimulating and thought provoking presentation – and yes, entertaining!  Again, I would appreciate your vote:  Legal Implications of AI: The Good, the Bad and the Ugly.

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Unsung Cyber Hero Adventures

On June 4, 2020, Steven Teppler and I (Joe Rosenbaum) were guests of Gary Berman, host of “Unsung Cyber Hero Adventures”.  You can watch the entire interview “The Judicial System & Cybersecurity” and many more on his “Unsung Cyber Hero Adventures” TV Network!

There is also a comic series and you can find out more by looking at  The CyberHero Adventures: Defenders of the Digital Universe.  The comic series, the streaming interview series and much more are all the brainchild of Gary L. Berman, a career marketing consultant and entrepreneur whose company – and the families it supported – fell victim to a prolonged series of insider cyber attacks.  Feeling powerless, Gary decided to educate himself about cybersecurity, attending conferences, listening to podcasts and learning from the real heroes, the cybersecurity experts in law enforcement, government, education, and business.

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Now That the FCC Has Acted . . . .

In case you missed it (see my previous Legal Bytes post Inter Net Neutrality), the International Law Office was kind enough to post an adapted version of the article in its IT & Internet Newsletter.   If you are not already a subscriber to ILO, you can read a PDF version of my post, Internet Neutrality, right here.  Now that the FCC has rolled back the Obama-era regulations, the battle continues to rage over whether that is good or bad for the Internet, the economy, innovation and each of the groups aligned on one side or the other of this fray.

Note for you historical buffs – the Internet was made available to commercial enterprises in 1981.  By 1984, “.com” had overtaken .gov, .mil and .edu as the largest URL suffix and it wasn’t until recently, during the FCC’s tenure under President Obama, that new regulations regarding neutrality were implemented.  I know, I know, times have changed – but be mindful that someone far wiser than I noted: “Those who cannot remember the past are condemned to repeat it.“

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Inter Net Neutrality

What an interesting play on words.  According to the Merriam-Webster dictionary, “inter” is a verb that means “to deposit (a dead body) in the earth or in a tomb.”

Earlier this week, the Chairman of the U.S. Federal Communications Commission (FCC) outlined plans to bury the Internet rules promulgated under the Obama administration that required providers of Internet services to treat all web traffic equally.  Those rules, among other things, limit the ability of ISPs to favor content or customers, to block or slow down the online services they provide.  Under the proposed changes, ISPs (wired and wireless) would be allowed to offer web-based services at different speeds and differing quality of service.  In addition, they could enable more favorable speed or quality, or both, for websites that paid a fee – as long as that relationship was disclosed.

Over the years, a lively and heated debate over the nature and extent of regulation needed to protect consumers without stifling innovation has continued.  Proponents of eliminating the rules claim that allowing the market to create different financial and performance models will spur investment and the development of technology, while critics argue that consumer prices would increase and so would barriers to entry and start-up costs for new companies.  Critics point to the airline industry (where the FCC net neutrality rules have never been applicable) as an example of the potential for harm – one U.S. air carrier provides easy access to one online video service which has paid the airline for such priority status, while others are not enabled with the same speed or quality.

Under the previous administration, the Internet and ISPs (both wired and wireless) were treated as utilities, virtually excluding them from regulatory oversight by the Federal Trade Commission (FTC), whose fact-based, case-by-case, analytical approach to regulation is generally perceived as more suitable (and friendly) for emerging technology and evolving markets.  Based on Chairman Ajit Pai’s remarks, in another reversal of the prior administration’s approach, it appears the FCC is now willing to share oversight with the FTC and have the FTC be responsible for monitoring ISP disclosures, determining if consumers are being harmed and determining whether these firms are engaging in anti-competitive or unfair trade practices.  The FCC indicated it plans to enact the new rules early in the new year.  Stay tuned.

If you have any questions or want more information about this or any Legal Bytes’ post, don’t hesitate to contact me, Joe Rosenbaum, a New York based partner at Rimon, P.C., or any of the other lawyers at Rimon with whom you regularly work.

 

 

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For Want of a Nail: The AT&T – Time Warner Merger

– By Stephen Díaz Gavin

In Poor Richard’s Almanack, Benjamin Franklin included his own version of an old proverb : “For the want of a nail the shoe was lost, For the want of a shoe the horse was lost, For the want of a horse the rider was lost, For the want of a rider the battle was lost, For the want of a battle the kingdom was lost, And all for the want of a horseshoe-nail.” In the case of AT&T’s proposed $85.4 billion purchase of Time Warner Communications, for want of the Federal Communications Commission (“FCC”), the battle might now be lost.

When the merger was announced, AT&T confidently predicted that the deal would get the regulatory “green light”, from the FCC and the Antitrust Division of the U.S. Department of Justice (“DOJ”) portraying the deal as a classic “vertical” merger that removed no competitors from any market. Mindful that AT&T was still smarting from its 2011 failure to convince the FCC to permit its acquisition of T-Mobile in a horizontal merger, AT&T wanted to avoid FCC review, if at all possible.  AT&T and Time Warner maintained this situation was different.  They pointed to the fact that both DOJ and FCC had allowed a large vertical merger to proceed in 2011 when Comcast was permitted to acquire NBC Universal from General Electric.  Just this past February, Time Warner reported to the Securities and Exchange Commission (“SEC”) that it did not plan to transfer any of its licenses to AT&T, so FCC approval would not be necessary. Curiously, few questioned AT&T’s suggestion that there was no role for the FCC because the licenses did not themselves provide service to the public, even though the Communications Act applies to all radio licenses, not just those intended to provide direct service to the public. Apparently a sure thing only weeks ago, the acquisition has  run into significant regulatory difficulties and the DOJ has now raised the prospect that AT&T will have to divest either the Turner Broadcasting unit, which includes CNN and other popular channels, or its DirecTV business.

So what is happening now and why? Consider the political landscape for one. There has been considerable bipartisan political opposition to AT&T’s acquisition of Time Warner. Both leading Republican and Democratic members of Congress have spoken skeptically of the merger. Indeed, despite some relatively benign requirements (not including any divestitures), the DOJ approved the Comcast/NBC Universal merger with no divestiture obligations on Comcast. It is no coincidence that opposition to the Comcast acquisition was largely from programmers and public interest groups, but not, as is the case here, politicians as well.

Comcast and AT&T already control 62.3% of U.S. high-speed internet broadband capacity – significant market power and the capability, as internet service providers, to engage in strategies intended to block competitors. Public interest groups and content providers have again raised the concern that like Comcast before it, AT&T will now itself be a programmer with an incentive for anti-competitive behavior. On the programming side, “competitors” like Google, Amazon.com Video, Facebook and others are dependent on ISPs like Comcast and AT&T to reach users. Some officials at DOJ are also apparently frustrated with AT&T trying to circumvent the regulatory process by creating a sense of “inevitability” around approvals and although behavioral safeguards were imposed in the Comcast/NBC approval, there has been growing concern these have not been successful in preventing abuses.

If the AT&T/Time Warner merger fails, it may well be for want of the FCC’s involvement at the very outset. For many reasons, this entire situation might well have been avoided if AT&T had bit the bullet and sought review by the FCC, along with DOJ. Not doing so, bypasses the public notice and comment procedures and disregards the “safety valve” provided by same public airing of the issues. Although impossible to know at this point, perhaps the public interest emphasis of the FCC might even had taken some pressure off the DOJ to look at more drastic alternatives, such as divestitures of key assets. Instead of the FCC that would have considered imposing “public interest” conditions on the merger, AT&T must now deal with a DOJ Antitrust Division head who believes only in structural remedies, such as divestitures.  We may never know if want of the FCC, like the want of a nail, will cause the battle to be lost, but it increasingly looks that way.

This posting was adapted and extracted from a more detailed Client Alert written by Stephen Díaz Gavin, a Partner in Rimon’s Washington, D.C. office and coordinator of Rimon’s Affiliation with Studio Legale Palmieri in Rome, Italy. You can read the entire alert, entitled “AT&T’s Multibillion Dollar Purchase of Time Warner Might Fail for Not Involving FCC,” and if you need more information, feel free to contact Stephen Díaz Gavin directly. As always, if you need any assistance you can always contact me, Joe Rosenbaum, a Partner at Rimon in New York or any of the lawyers at Rimon with whom you regularly work.

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First Joint Consultations May Foreshadow Effectiveness of Privacy Shield

–  Stephen Díaz, Partner, Rimon, P.C. &  Claudio Palmieri, Of  Counsel Rimon, P.C. (Principal, Studio Legale Palmieri –Rimôn Italia)

On October 6, 2015, the Court of Justice of the European Union invalidated the so-called “Safe Harbor” that previously governed data transfers between the U.S. and the EU (Case C-362/14 – Maximillian Schrems v. Data Protection Commissioner, 6 October 2015).

As you already know if you read our Legal Bytes’ posting in May concerning the US-EU Data Transfer Privacy Shield, personal data cannot be transferred to from the EU to a non-European Union/European Economic Area country, unless that country can ensure “adequate levels of protection” for such personal data. While the European Commission had identified a number of countries that met the ‘adequate protection’ test, the United States was not one of them and without the Safe Harbor understandings, transatlantic exchanges of data – both for commercial and national security reasons – were at risk of being non-compliant with EU regulations!  In an attempt to temporarily address the data transfer issues, the EU and the U.S. proposed a new framework for exchanges of personal data for commercial purposes, known as the EU-U.S. Privacy Shield (“Privacy Shield”) which was formally launched on July 12, 2016.

Further complicating matters, a new EU General Data Protection Regulation (GDPR) comes into effect on May 25, 2018.    In furtherance of a formal and more permanent agreement under the Privacy Shield and in contemplation of the new regulations, representatives of the U.S. and the EU have announced they will meet in Washington, DC during the week of September 18, 2017, for the first Annual Review of the Privacy Shield.  In advance of the meeting, the EU’s official Working Group (WP 29) sent the European Commission their recommendations and consistent with previous pronouncements, they believe the meeting should focus on enforcement of rights and obligations, as well as changes in U.S. law since the adoption of the Privacy Shield.  WP29 recommended discussions focus on these issue and that any formal agreement must deal with both commercial, as well as law enforcement and national security access.

These concerns and considerations are explored in more detail in our full Client Alert: No Certainty in Future of Privacy Shield as Transatlantic Consultations Set to Begin and it is clear that the September consultations may well be an indication of whether the Privacy Shield will prove an adequate regulatory regime for the transatlantic transfer of personal data and whether meaningful progress is likely in the current environment.

If you would like more information, a better understanding or need guidance regarding compliance with these regulations, contact Stephen Díaz Gavin, a Rimon Law Partner based in Washington, DC or Claudio Palmieri is of counsel to Rimon, P.C. and the principal of Studio Legale Palmieri –Rimôn Italia in Rome, Italy. Of course you can always contact me, Joe Rosenbaum, or any of the lawyers at Rimon with whom you regularly work.

 

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FCC Opens Radio and Television Broadcasting to Foreign Entities

by Stephen Díaz Gavin

For more than 80 years, Section 310(b) of the Communications Act of 1934 has been interpreted as prohibiting direct foreign ownership of more than 20% and indirect ownership of 25% or more of US radio and television broadcast stations.  Effective January 31, 2017, this will change as the Federal Communications Commission (“FCC”) has removed longstanding prohibitions against these limitations on foreign ownership, although it has preserved the right, on a case-by-case basis, to block a foreign acquisition of a broadcast license in excess of 25% (e.g., for reasons of national security).

Foreign entities, for quite some time, have already been permitted to acquire control over non-broadcast licenses (e.g., nationwide cell carrier T-Mobile is majority owned by Deutsche Telekom). But the FCC has steadfastly enforced its longstanding foreign ownership control policies over broadcast station licenses.  Most famously, Rupert Murdoch had to become a U.S. citizen before being able to acquire control over what we know today as Fox Broadcasting.

Changes adopted to the rules of the FCC will enable approval of up to and including 100% aggregate foreign beneficial ownership (voting and/or equity) by foreign investors in the controlling U.S. parent of a broadcast licensee, subject to certain conditions.  The revised rules, which newly define and in certain respects create different rules for “named” and “un-named” investors, they will allow a named foreign investor that acquires less than 100% to increase its controlling interest to 100% at some time in the future.  If a named foreign investor acquires a “noncontrolling” interest, that investor will now be permitted to increase its voting and/or equity interest up to and including a “noncontrolling” interest of 49.99% in the future, if it chooses to do so.

Although the FCC’s expansive “public interest standard” in approving sales and investments in broadcast licenses, coupled with input from other Executive government agencies, could significantly delay or block investments from some countries, the strong support of this initiative by the remaining Republican members of the FCC would tend to indicate the FCC will be disposed to allow most transactions to proceed to closing.  Indeed, the FCC has already signaled its willingness to do so, by approving just such a foreign ownership acquisition in a recent declaratory ruling issued even before the new rules take effect, ending a decades long back-and-forth haggling over Mexican ownership of Univision.

For more information regarding the new FCC rules or assistance in handling the regulatory and transactional aspects of such an investment, contact the author, Stephen Díaz Gavin, or Phil Quatrini or Sandy Sterrett, all partners at Rimon, P.C.

Of course, you can always contact me, Joe Rosenbaum, the Editor!

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The Paradox of Illumination

I first heard about the paradox of illumination from Lee Loevinger, an extraordinary gentleman I was privileged to know professionally.  Lee was a multi-faceted, multi-talented, thought-provoking lawyer whose sage advice and stimulating ideas continue to resonate with those honored to have known him, and everyone else wise enough to read his work and the words he left behind.

In a nutshell, the paradox of illumination is extraordinarily complex, but simple to describe.  Much like Albert Einstein who, when asked about his theory of relativity and the notion that time is not constant, described it in personal terms: if a man is at dinner for 10 minutes with a beautiful woman, it seems like a fleeting instant; but sit on a burning hot stove for 10 minutes and it seems like an eternity :).

The paradox of illumination can similarly be described on a personal level.  Sit in completely dark room.  Really.  Completely dark.  What can you see?  Nothing.  You know little about your surroundings and can only sense your own body – in fact, you don’t even know how far your surroundings extend beyond your immediate sensations.

Now light a match.  The circle of illumination allows you to see a little of what is around you – but the perimeter and beyond are still dark.  Now light a candle.  The circle of what you can see illuminated by the light is larger than before, but the size of the perimeter beyond which you cannot see is also a lot larger than before.  The larger the light, the larger the area of illumination, but larger by far is the perimeter beyond which we know nothing.

The more we can see and the more we know and understand about the world around us, the larger the amount becomes that we don’t know.  In other words, as the circle of our knowledge grows, so does the amount of knowledge we cannot see and don’t know.  The paradox of illumination is the paradox of knowledge.  Perhaps that is why Michelangelo, when he was more than 87 years old, still said, “Ancora Imparo” (I am still learning).

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The New Robocop in Town: TCPA, When ‘ALL’ Really Means ALL

This post was written by Judith L. Harris, James M. Duchesne, and Joseph I. Rosenbaum.

It’s Election Night 2010 in Maryland, where a high-profile gubernatorial race is coming to a close. The telephone rings once again, but this time, the message is not “go out and vote before the polls close.” Instead, a recorded message tells the voter, “Relax. Everything is fine. The only thing left is to watch [election results] on TV tonight.” The automated call with a recorded message (a “robocall“) ends with no indication as to who made it or where it came from. This was what actually happened to more than 112,000 African-American voters in Maryland on November 2, 2010. While these “robocalls” may have violated Maryland election laws (criminal charges were recently issued), they may also have violated the TCPA – the Telephone Consumer Protection Act of 1991 (47 U.S.C. 227).

The TCPA amended the Communications Act of 1934 and is the primary law regulating telemarketing in the United States. Subsection (d) of the TCPA, entitled “Technical and procedural standards,” requires the Federal Communications Commission to create minimum technical and procedural standards for making calls using an artificial or prerecorded voice system (a “robocall”) and makes it a violation of the law if an individual ignores those standards. As part of those minimum standards, one must, at the beginning of the robocall, clearly disclose the identity of whoever initiated the call and at some point during the call, disclose the telephone number or address of that business, individual or entity.

The TCPA allows each state attorney general to enforce the law in federal court, and Maryland brought an action against the company that initiated the offending calls, as well as one of its owners, and one of its employees, claiming they violated the TCPA’s disclosure requirements in an effort to confuse voters and suppress voter turnout (Maryland v. Universal Elections). In response, Universal filed a motion to dismiss the suit, and just a few weeks ago (May 25, 2011), in its opinion dismissing that motion and allowing the suit to proceed, the U.S. District Court for the District of Maryland made some noteworthy observations regarding TCPA liability:

Purpose Doesn’t Matter. The defendants claimed that making “political robocalls” exempted them from the requirements of the TCPA. Nope. While the FCC may have exempted political robocalls from the requirement of obtaining prior consent, neither Congress nor the FCC exempted political robocalls from the minimum disclosure standards of the TCPA – the plain language of the rule states: “all artificial or prerecorded telephone messages.” Any robocall, for any purpose – commercial, political, or charitable – must contain a disclosure regarding who initiated the call and where that entity or individual can be contacted.

Individuals Can Be Liable. The plain language of the statute, cited in the court’s opinion, states: “It shall be unlawful for any person . . .” to violate the robocall disclosure requirement. Whether an owner of the company or an employee acting on behalf of the company, the court noted several instances in which individuals acting on behalf of corporations could be held personally liable for violating the TCPA (e.g., if they, “had direct, personal participation in or personally authorized the conduct found to have violated the statute”). The owner and employee here could be found liable not because they worked for Universal Elections, but because they were directly involved in initiating the calls that may have violated the TCPA. In other words, if an individual causes a corporation to act in a way that violates the TCPA, that individual can be found liable for the corporate action. Corporate, political campaign and nonprofit decision makers should be aware of this personal liability when they plan their calling campaigns.

One Who Initiates the Call, Not Just Makes It, Can Be Liable. In its motion, Universal argued that because it did not physically make the robocalls, it was not subject to the procedural disclosure standards of the TCPA. It hired a third party to place the robocalls and only recorded the message and uploaded it, and the 112,000 telephone numbers to be called, into the vendor’s system. Guess what the court said? “As the persons and entity responsible for recording the message, the defendants,” and not the conduit that distributed the message, “were in a position to ensure that the content of the message complied with the TCPA.”

If you are making pre-recorded calls, compliance is cheaper than the risk of damages. Maryland is seeking not just to enjoin the defendants from ever violating the TCPA again, but is also seeking monetary damages of $500 per TCPA violation (i.e., each call); and since the state alleges the violations were made willfully and knowingly, it claims the defendants were trying to deceive voters by failing to disclose who made the call, and is also asking the court to triple the damages and require the defendants pay the state’s attorneys’ fees.

A special thank you to James M. Duchesne, a legal intern at Rimon and one of the primary authors of this post. His contribution is greatly appreciated. If you need legal advice and representation on issues related to telemarketing, look no farther than Judith L. Harris and her team, working with our Advertising Technology & Media law practice group. Experienced. Knowledgeable. Seamless. Responsive. Cost Effective. We are happy to help.