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).

Curiosity

Curiosity requires a sense of inquisitiveness.

Not all inquiries reflect curiosity, curiosity is inquisitive by nature.

Curiosity is the desire to learn by asking questions, dissecting, examining, exploring and investigating.

Curiosity is at the heart of most experimentation, and to be truly satisfying requires the ability to avoid preconceived ideas or foregone conclusions, but not necessarily ignoring them.

Stephen Hawking once said that “The greatest enemy of knowledge is not ignorance, it is the illusion of knowledge.”

Curiosity is a recognition of what we don’t know and the hope that by exploring the unknown, we may learn and discover new questions to ask.

It is the paradox of illumination – but more on that next time.

Thought Leadership

Thought leadership is a state of being in which one or more individuals articulate innovative ideas – ideas that stimulate thought and are futuristic or leading-edge.

Thought leadership requires confidence and a willingness to share ideas in the form of insights and principles that inform and guide future considerations.

Thought leadership is often controversial. New or different ideas, like innovative technology, can cause evolutionary change, but can also create disruptive or revolutionary change.

Although not all thought leadership must be actionable, it is often the basis for a re-evaluation of existing pathways, and a guidepost for new roads ahead.

2016 Metamorphosis *

Legal Bytes will soon morph** and undergo a transformation***

Watch For It

*    Metamorphosis: A noticeable change in character, appearance, function or condition.

**    Morph: To undergo dramatic change in a seamless and barely noticeable fashion.

*** Transformation: A marked change in appearance or character, especially for the better.

Thank You for 2015 – Best Wishes for 2016

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This is the time of year when many of you are celebrating holidays; spending time with family, friends and loved ones; bidding farewell to 2015; and looking forward to the New Year – 2016. A time when many of us pause to reflect on what has happened in the past year and wonder what the new year will bring. There are people who have touched us and some with whom we’ve gotten closer; some we have missed and many with whom we resolve to try and be better in the new year; and perhaps a few we might like to forget. We pause to remember those who are no longer with us and appreciate that by remembering them, we keep their spirit – all we have learned from them and all they have meant to us – alive. As 2015 comes to an end, we reflect on friendships and relationships, events and experiences. Many will use the opportunity to thank those who have helped us in tough times and those with whom we cherish sharing the good times.

For me it has always been a time to resolve to keep doing the good things I’ve done and to be better about trying to do those things I should have done. This time of year gives me an excuse to say thank you and express appreciation to everyone who has enriched my life. If you are reading this, you are part of my audience – part of the fabric of my professional life and, like the threads of that fabric, you have helped me weave the patterns and textures you read in these digital pages and the thoughts and sensitivities that become imprinted in my mind. I am grateful for your readership and in some cases, your friendship. I am always appreciative when you take a moment to read and perhaps gain some insight, while also being a little entertained.

So let me take this the opportunity to wish each of you, your families, friends, loved ones and yes, even an enemy or two, a beautiful and joyous holiday season and a healthy, happy new year, filled with wonder and magic, health and joy, challenge and opportunity, and prosperity and success. I especially want to thank a few people at Rimon like Kaitlin Southron, Lois Thomson and Rebecca Blaw who make this blog happen. These are the people you don’t see, but I do! They make Legal Bytes come alive. They are always amazing, consistently awesome and unbelievable under pressure. There are insufficient words to express my gratitude and appreciation – especially when they get my email that says “can we please post this ASAP.” Thank you. You make it look easy, you make me look good. I could not do this without you!

Continue reading “Thank You for 2015 – Best Wishes for 2016”

An AHAA Moment! The Voice of Hispanic Marketing

On April 27, I had the distinct privilege of presenting a session devoted to the legal implications of social media and mobile technology to the leadership of AHAA, The Voice of Hispanic Marketing at their 2015 Annual Conference.

You can read or download a copy of my presentation, “The Legal Implications of Social Media and Mobile Technology,” which focuses on some traditional advertising basics and some current issues that are “hot” in the brave new world of digital advertising and marketing. Of course, there are so many implications in this dynamic and evolving arena, that no presentation could ever hope to cover them all – or even remain current and timely for very long.

So if you are in the business and need guidance, counsel, and support from a legal team with broad and deep experience in virtually every aspect of advertising and marketing – traditional or digital, anywhere in the Universe – don’t hesitate to contact me, Joe Rosenbaum or any of the lawyers with whom you regularly work at Rimon.

Monitor Postings in Europe or Face Liability

So you operate a website or have a blog in Europe. You allow others to post comments and interact with your website or blog postings. There is, after all, freedom of expression in Europe, isn’t there? Well on October 10 (2013), the European Court of Human Rights (ECHR) ruled that if you don’t monitor, censor or moderate postings by others on your website or blog, you may well have legal liability and responsibility – especially if the visitors post offensive comments.

In the case of Delfi AS v. Estonia, the Estonian news website (Delfi) ran a story about a ferry that provoked heated controversy in the nation. Many posts and comments contained threatening and offensive language, and many were anonymous. The ferry operator sued Delfi for failing to prevent these comments from becoming public and for protecting the identity of the individuals who posted such threats and abusive language. The Estonian court agreed with the ferry operator and ordered Delfi to pay damages.

Delfi appealed and the ECHR upheld the decision, noting: "The comments were highly offensive; the portal failed to prevent them from becoming public, profited from their existence, but allowed their authors to remain anonymous; and, the fine imposed by the Estonian courts was not excessive." In case you are wondering, Delfi’s terms of use state that individuals who comment were liable for the content they posted. The court stated that since Delfi allowed many anonymous postings, it was reasonable to hold Delfi responsible.

What should you do? Call us and we’ll advise you. As always, if you want to know more about the information in this post, how to address the legal risks, or any other matters that could benefit from experienced legal counsel and representation, please contact me, Joe Rosenbaum, or any of the Rimon attorneys with whom you regularly work.

Is Your Currency Current . . . Virtual, Digital, Crypto?

In recent months, “virtual currency” has been making headlines. Most of us don’t really think about what “virtual” currency means and often confuse it with other forms of money. That said, there is good reason for confusion and concern. Like many other technology-driven innovations, lines are blurring and we know blurring lines means opportunity and danger. So Legal Bytes will tackle this in two parts. The first (below) attempts to describe what all these new terms mean and how they are used. Legal Bytes part two (later this week) will summarize current events – the confusion and concern over exactly what all this means to our economy and why you should care.

Virtual currencies got their start in virtual economies that exist in virtual worlds. For example, in massively multi-player online role-playing games (MMORPGs) such as World of Warcraft, players “earn” credits and have the ability to exchange, use or “spend” this virtual “value” in the game environment, to acquire virtual tools, weapons, skills and game items that may be recreationally fun and integral to game play; but virtual currency never bought you food to eat or housing to shelter you in the real world. HOWEVER, what happens when real people start buying, selling and exchanging virtual currency, and create markets that interact with the real world?

First, let’s get our terms straight. Digital currency is not “virtual.” Digital currency represents a real alternative to government-issued currency. It originated with accounts or promises to pay that were used primarily online. One of the most familiar paper-based examples of a non-government promise to pay is the American Express® Travelers Cheque. More than 100 years old, these payment instruments are backed purely by the full faith and credit of American Express – and not the government of any nation. They aren’t backed by gold or silver or precious jewels or even bananas – just a corporate obligation to repay you, based on a contract (the purchase application form) you sign when they are purchased! As you might have noticed, there are multiple forms of these types of digital promises – one, like its paper-based cousin, is simply a digital promise to pay: numbers representing value backed by the issuer – electronic gift cards, a promotional advertisement that can initiate or enhance a digital music subscription, are examples. In other instances, digital money may be based on some real “deposit” (e.g., using a traditional debit or credit or checking account) in which the transferred funds are held in an electronic account, uniquely identified to the user and more closely resembling a “bank account,” with which most consumers are familiar.

In most jurisdictions, companies that issue digital versions of payment instruments (e.g., Travelers Cheques) or that hold digital financial accounts (e.g., PayPal®) often fall within some banking or financial regulation. For example, in the United States, PayPal is considered a payment intermediary, regulated as a money transmitter under the U.S. Federal Code of Regulation and the various state laws that apply to money transmitters. That said, PayPal is not technically regulated by the Truth-in-Lending Act (TILA) or its implementing Regulation Z, nor by the Electronic Funds Transfer Act, implemented by Regulation E; and although PayPal takes great pains to protect against fraud, in the United States, unless you use a credit card (or debit card) to fund a PayPal transaction, consumers have no technical legal or regulatory protection from fraud by a seller. In Europe, PayPal (Europe) Ltd., was licensed by the Financial Services Authority (FSA) as an Electronic Money Issuer, and in 2007 transferred all of its European accounts to Luxembourg to a new entity PayPal (Europe) Sàrl et Cie SC, which is regulated by the Commission de Surveillance du Secteur Financier.

Some of you history buffs will remember DigiCash (originated by David Chaum in 1990), which sought to anonymize financial transactions using cryptography. Well over the past few years, a company named BitCoin (and others such as Litecoin and PPCoin, which are to a greater or lesser extent based on, inspired by, or technically comparable to BitCoin), have launched and popularized a form of digital currency that is often confused with and referred to as “virtual.” This form of digital currency is referred to by financial and security experts as “cryptocurrency.” Cryptocurrency is a digital currency that uses encryption technology to create and manage the digital currency. They are peer-to-peer and decentralized in nature and, at least for now, all are pseudonymous.

As you can guess, all of these confusing terms and the fact that virtual currency in games, gaming, online social media and networking platforms, and virtual world environments began interacting with the real world, has become not merely confusing but alarming. Look at Second Life, a virtual world that allows the purchase and sale of “Linden Dollars,” the in-world official currency, in exchange for real money through third-party websites. Second Life accords both virtual “real estate” and intellectual property real value in its virtual environment; enables “residents” (avatars) to creatively enhance and customize the resources available in-world; allows some property rights to be exclusive or limited (think supply and demand); and permits the exchange and purchase and sale of virtual property rights in-world; and one’s property remains one’s property (and one retains Linden Dollars until spent or given away or used) throughout the life of one’s avatar – at least as long as Linden Laboratories continues to maintain the Second Life virtual world environment.

These are many of the same conditions that affect real financial systems. No wonder that what started as a curiosity – online digital playgrounds with no real money or value being exchanged – have become complex economic environments that financially interact with real world economic systems and are causing concern among legislators, regulators and courts around the world. In part two, Legal Bytes will review recent developments and try to describe the challenges facing legal, financial, security and business professionals.

“No taxation without representation”

In the mid-1700s, British colonists in the 13 Colonies, which eventually became the original United States of America, began to summarize their primary grievance against British rule with the slogan, "No taxation without representation." Although certainly not the only cause, many historians agree this was one of the primary grievances that led to the American Revolution. Well this year – 2013 – marks a Centennial which I suspect not a single citizen of the United States will hail as worthy of celebration. This is the 100th anniversary of the tax law.

Tax laws in the United States did exist before 1913. In fact, Congress passed the Revenue Act of 1861 during the Civil War to help pay for the expense of war, but this tax was repealed 10 years later. Then in 1894, Congress enacted a "flat rate" income tax, but the U.S. Supreme Court ruled that law unconstitutional the very next year since it constituted a direct tax that was not allocated on a pro rata basis by each state’s population.

The modern day income tax on individuals arises from the 16th Amendment to the U.S. Constitution that was passed by Congress in 1909, and that legislated the state apportionment requirement out of existence, giving Congress the authority to enact what has become the individual income tax we all know and love today. Since any amendment to the U.S. Constitution requires ratification by at least three-fourths of the states, the Congressional legislation did not actually become the 16th Amendment to the United States Constitution until February 1913, when it was ratified by the state of Wyoming.

Until World War II, income tax applied to less than 10 percent of the U.S. population, and since the tax brackets were graduated, tax historian Joseph Thorndike has noted that in 1935, when the threshold for reaching the top tax bracket was income of $5 million, the top bracket applied to only one person in the United States – John D. Rockefeller, Jr. One last bit of IRS trivia – the filing date for income tax in the United States used to be March 15, but the date was pushed to April 15 when Congress overhauled the income tax statutes in 1954.

I’m sure every U.S. citizen now believes that one of the results of the American Revolution remains that each of us feel absolutely represented by our federal government and therefore we don’t mind paying taxes. Right? Just in case you did want to have your own personal celebration of the 100th anniversary, please feel free to print your own copy of the original 1913 IRS Form 1040 and do with it what you wish. I might just fill it out and send it in today!

MasterCard & Visa to Merchants: Let’s Settle This the Old Fashioned Way!

Whether you are a payment instrument (think credit, debit, gift, stored value, prepaid cards and more) expert or a retail merchant, a corporate purchasing manager or, like the rest of us, a consumer, you cannot have escaped the news, announced this past Friday (Friday the 13th), that Visa and MasterCard have agreed to settle a lawsuit brought by some merchants in connection with the fees merchants pay to be permitted to "accept" credit cards. I certainly couldn’t escape it. In fact, Joe Rosenbaum (that’s me) is quoted in yesterday’s American Banker article "‘We Won’ vs. ‘You Lost’: Reactions to Credit Card Settlement" written by Maria Aspan and Victoria Finkle.

While the settlement must still be approved by the court and provides billions of dollars in payments to merchants, the most contentious piece of this settlement relates to the so-called "interchange fees" (sometimes referred to as a "discount rate" – no pun intended) that refers to the charge imposed on merchants by the credit card associations and owners for their right to accept their branded credit cards from consumers.

When a merchant accepts a credit card, that merchant must have a relationship with the "brand" on the card (e.g., American Express®, Discover®, JCB®, MasterCard®, Visa®, Diners Club®, etc.), either directly or through a member institution. Because the brand owners operate vast settlement and transaction processing networks that allow you to use your card to buy a suit in Hong Kong or King Kong at a toy store, they charge merchants an interchange fee for the privilege of riding their networks – card acceptance translates into more business, say the brand owners.

If the settlement is approved, it will see MasterCard and Visa modify their operating rules to permit merchants to charge the consumer more to pay with a card. Merchants will have the right to "surcharge" the use of a card, rather than if you use cash or another payment method.

Where will this lead – it’s complicated. Stay tuned. The National Association of Convenience Stores has announced it has already retained counsel to challenge approval of the proposed settlement. The association says the settlement doesn’t go far enough and, for example, doesn’t put a limit on how high the brand associations can raise the interchange fees charged to merchants. Whether approved or whether the law suit goes forward, or some other settlement is reached – it’s complicated.

So, if you need lawyers to help you navigate the charted and uncharted waters of the financial seas ahead, talk to us. It’s what we do. Contact me, Joseph I. ("Joe") Rosenbaum, or any of the lawyers at Rimon you routinely work with. Our FIG (Financial Industry Group) lawyers are experienced in virtually every aspect of the law or finance, financial institutions and payment systems – from privacy and GLB, to chargebacks and B2B. Call us, you’ll like us.