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!

What’s in a (Domain) Name? ICANN by any other name would still…

On June 13, the Internet Corporation for Assigned Names and Numbers (ICANN) revealed the list of applications for new gTLDs to be launched as part of its proposed expansion of the top-level domain space. A total of 1,930 applications were filed for strings, including brand names, generic words and abbreviations, geographic terms, and non-ASCII strings (such as Chinese or Arabic). If this is allowed to move forward as it is currently envisaged, it will be a striking change to the domain name system, with dramatic new risks and evolving threats, as well as opportunities. Brand owners – applicants or not – need to strategize and prepare now, to protect their marks and brands. Some may also need to decide whether or not to challenge any pending applications. 

Rimon has assembled a global team of thought-leaders to counsel and guide you. Experienced lawyers who have been following and assisting for years – ever since the proposal was first announced. Rimon is now offering a teleseminar intended to cover:

  • How to develop a strategy to protect your rights – marks and brands
  • What brand owners should be thinking about now
  • Commenting on and objecting to applications
  • The Trademark Clearinghouse and other supposed protections in the new system
  • Updates on industry, governmental and regulatory efforts to provide more protection for brands and trademark owners

You can register through the link here: The gTLD Applications Have Been Revealed: What Brand Owners Must Know Going Forward.

As always, if you need legal or regulatory counsel, call me, Joseph I. (“Joe”) Rosenbaum, or any of the lawyers highlighted in the full Client Alert or, of course, the Rimon lawyer with whom you regularly work.

China Announces State Internet Information Office

This post was written by Joseph I. Rosenbaum, Frederick H. Lah, Zack Dong and Amy S. Mushahwar.

On May 4, 2011, the Chinese government announced it was establishing the State Internet Information Office, an office dedicated to managing Internet information. According to the announcement, this office will be responsible for directing, coordinating, and supervising online content management. The office will also have enforcement authority over those in violation of China’s laws and regulations (see, for example, China sets up office for Internet information management). While there are reports that many believe the purpose of the new office will be to censor political and social dissidents (see, China Creates New Agency for Patrolling the Internet, the office may also have a key role in thwarting illegal spamming and other dubious data practices.

Further, many see the establishment of this office as another step forward for the Chinese in terms of establishing their own data-protection regime. China has long been considered as lagging behind other countries in terms of their data-protection standards (quite possibly by design), and with no comprehensive data privacy law, businesses have had little guidance concerning the handling of personal data. China published the draft Personal Information Protection Measures in 2005, but those Measures have not yet been adopted and little progress seems to have been made since then. However, in February 2011, China issued a draft of the “Information Security Technology – Guide of Personal Information Protection” (“Guidelines”) to address the lack of guidance and standards surrounding online information practices in China. The Guidelines include standards with respect to collecting, processing, and using data, and there are provisions related to the transfer of data to third parties. While the Guidelines are technically non-binding, they still provide important guidance for businesses in China on how to protect the online information of China’s citizens. With the Guidelines still under review, Rimon lawyers will continue to monitor developments to see what form the Guidelines will take in the future.

If you have or are considering a presence in China, you need to know and be attentive to many things, if you are to succeed in the Chinese marketplace. That’s why you should contact Frederick H. Lah in our Princeton office, Zack Dong in our Beijing office, Amy S. Mushahwar in our Washington, D.C., office, me, or the Rimon lawyer with whom you regularly work. When you need legal guidance or have questions about regulations that apply online, on the Web, and across the Internet, in almost any part of the world, let us know. We are here to help.

UK ICO Issues Guidelines for Online Compliance – C is for Cookie

The Information Commissioner’s Office in the United Kingdom, in furtherance of the European Union’s “browser cookie” laws (EU Privacy and Communications Directive), has just published a set of guidelines that commercial enterprises will need to comply with when the new law goes into effect May 26. Because the laws’ requirements relate to technology and marketing, the intention of the new guidelines is to provide guidance on compliance for businesses.

For background, in case you haven’t been following this closely, in November 2009, the European Parliament amended the Directive of Privacy and Electronic Communications 2002/58/EC (sometimes referred to as the e-Privacy Directive) that mandated that websites give consumers the right to opt out of receiving cookies (in most cases by changing settings on their web browsers). The 2009 amendments reversed the requirement, setting the default as “opt in.” Consumers will have to give permission (informed consent) to a website in advance, to allow a cookie to be placed on their computer.

The UK ICO’s guidance makes it clear that all businesses, private and public, will be required to get consent from the user, in advance of having a browser cookie downloaded and installed on the consumer’s computer. In addition, the ICO has amended the UK Privacy and Electronic Communications Regulations to mandate that clear and thorough information – to ensure informed consent – is provided to end users, explaining why their information is being stored and how it will be used by the commercial enterprise. Expect to see consumer-directed information soon, alerting consumers as to what their rights are and what to expect as businesses comply with the new law and regulations.

As you probably know if you are a loyal and longstanding reader, Legal Bytes in 2009 reported that the major players in the online advertising industry had issued self-regulatory principles concerning online behavioral advertising (Advertising Industry Collaboration Releases Self-Regulatory Online Behavioral Advertising Principles), and intended to create an industry self-policing mechanism, as well as disclosures to consumers concerning the use of their personal information. The self-regulatory mechanisms in the United States – these being similar – have followed an “opt out” approach to consumer privacy and the control of personal information. For multinational and international businesses worried about compliance (and that includes all you web browser publishers) – well, it’s complicated.

As always, if you need guidance for your advertising, marketing, privacy or data protection efforts, call me, Joseph I. (“Joe”) Rosenbaum, or any of the Rimon attorneys with whom you regularly work. Our lawyers deal with these issues every day.

Free Speech on the Internet – India Goes Schizophrenic

Unreasonable restraints on free speech? India? Well, you decide. According to an article published today in the Pittsburgh Post-Gazette, storm clouds are brewing over just how far the government should and can go in restricting free speech on the Internet. Indeed—just how ambiguous the regulations can be such that interpretation becomes a subjective problem, enforceable at the discretion of regulators.

Unfortunately, the new rules (referred to as “Information Technology (Intermediaries Guidelines) Rules, 2011”) stem from a 2008 amendment, widely supported by Internet service providers (I.T. Act 2008) to an Indian information technology statute first enacted in 2000. For a history of the Indian legislation, see Information Technology Act 2000 (ITA-2000).

The Amendment removed intermediary liability of Internet service providers, many of whom are represented by the Internet and Mobile Association of India, for any content created by third parties and for which the ISP played no active role in creating. While the removal of passive ISP intermediary liability is one of growing consistency in the international community, the regulations broadly empowering officials to curtail free speech on the web are not.

Growing trend, justified by security? Aberration spawned by immediate and local concerns? Abuse of power? Reasonable trade-off for protection of society? Ahh, but whose society? Where is the balance? Who decides?

Take a look at the regulations, then you decide. But if you need legal guidance or have questions about regulations that apply to the Internet—internationally, multi-nationally or domestically, in almost any part of the world—let us know. We are here to help.

Cloud Computing – Clouds Can Sometimes Be Storm Clouds

This post was written by Joe Rosenbaum and Adam Snukal.

Among others news publications, CNN Money just recently reported that Amazon.com’s cloud-based Web service EC2 suffered a “rare and major outage” this past Wednesday that affected several online sites it supports, including Reddit, HootSuite, Foursquare and Quora. Amazon.com hosts many major websites on its servers through its cloud-based service and, in total, “[t]housands of customers hitch a ride on Amazon’s cloud, renting space on its servers.” The recent outage crashed several customer sites and created glitches of varying degrees on others.

As cloud-based Web services have proliferated, the risks associated with major outages for companies dependent on cloud-based services have become a reality. This recent outage, and potentially others like it, could create reputational risk not only to the cloud providers, but also to those who use the cloud computing services of those providers for their technology infrastructure – processing, applications and data – exposing them to contractual liabilities for failure to meet promised service levels, breaches of performance representations and warranties, and even potential security and data breaches. All these and more, possible legal and contractual problems arising from the use of and reliance on cloud computing. These potential risks should be eliminated or mitigated, and while contracts cannot always guarantee operational integrity or performance, they can provide indemnities and remedies that offer a measure of protection or mitigation in many circumstances.

Rimon has been at the forefront of cloud computing legal thought-leadership and risk-mitigation strategy for our clients. Our lawyers have significant U.S., international and multinational experience in implementing strategies, such as service level agreements and risk-mitigating tools that help limit risks associated with cloud-based computing and cloud service outages. Indeed, to appreciate the risks, one need only look to one of the very first articles by Rauer Meyer, entitled When the Cloud Bursts – SLAs and Other Umbrellas, drawn from Rimon’s on-going series – one that you can view or download entirely in up-to-date form – entitled “Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing.” You can access and download a PDF of the individual article or the entire “Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing” compendium, up to date and including all of the previous chapters in one document.

Of course, feel free to contact Christopher G. Cwalina or Daniel Z. Herbst or Joe Rosenbaum or Adam Snukal (or the Rimon lawyer with whom you normally work) if you have any questions or require legal counsel or assistance. Make sure you subscribe via email or get the Legal Bytes RSS Feed so you are always in touch with our latest information.

Spanish Court Dismisses Copyright Action Against YouTube

In June, Legal Bytes reported [Federal Court Awards YouTube Summary Judgment in Viacom Copyright Infringement Case]that a United States federal court ruled in favor of YouTube and Google in the billion-dollar case brought by Viacom on a summary judgment motion. Just last month, we again reported that Viacom had filed notice of its intention to appeal that ruling [Viacom Appeals Google/YouTube Ruling], and a companion article written by Joseph I. (“Joe”) Rosenbaum [Viacom Appeals YouTube Copyright Ruling] has been posted on the Media & Entertainment Newsletter of the International Law Office.

Now in Spain, the Spanish Federal Court sitting in Madrid has dismissed charges brought by the Spanish broadcasting company Telecinco (Gestevision Telecinco SA), alleging that YouTube was liable for copyright infringement resulting from users uploading content and material that infringed the copyright of others. Mediaset, the Italian company that is the majority shareholder of Telecinco, is also involved in a copyright infringement action involving such video uploads, although no ruling has yet issued in that case. The ruling from the Spanish Federal Court comes on the heels of a ruling at the end of last year in France that found Google guilty of copyright infringement, but in that case, books were being scanned and excerpts put online without first obtaining permission or consent from the copyright owner. That said, earlier this month, a court in Germany ruled against Google, holding it liable for videos that were subject to the copyright of others and uploaded on YouTube.

The Spanish court essentially agreed with YouTube’s argument that it is a content-hosting platform, not directly responsible for content uploaded or posted by others. Without appearing flippant, Legal Bytes notes that, similar to Viacom’s decision to appeal the ruling in the United States, everyone who is on the losing side of these battles is (or has indicated an intention of) appealing the ruling against them.

Need to understand user-generated content, uploading videos or other content, rights of authors, and creators of content, and understand them in multiple jurisdictions around the world?  Contact Joseph I. (“Joe”) Rosenbaum, or the Rimon attorney with whom you regularly work. We can help.

Transcending the Cloud – The German Perspective

As part of our Cloud Computing initiative entitled, we take a step over to Europe and proudly present our next chapter in Rimon’s on-going series “Cloud Computing – A German Perspective.” This white paper and chapter, takes a look at cloud computing from a German and, to some extent, potentially representative European perspective. It’s a refreshing look at both some legislative and regulatory implications, as well as a view from outside the United States.

We would like to thank Thomas Fischl and Katharina A. Weimer in our Rimon Munich office for their insight and effort. Feel free to contact them directly if any questions arise or if you need help or more information. As we continue to do, we updated the entire work so that when you access the .PDF of our “Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing” compendium, you will receive all of the sections, now updated with this chapter from Germany.

Make sure you subscribe via email or get the Legal Bytes RSS Feed so you are always in touch with our latest information. Of course, if you ever have questions, you can always contact me Joseph I. (“Joe”) Rosenbaum, Adam Snukal, or any Rimon attorney with whom you regularly work.

Political Advertising

An article, written by Marina Palomba, former Legal Director of the Institute of Practitioners in Advertising, and now a partner in the London office of Rimon focusing on advertising law and regulation, has just been published and makes both informative and great reading. First published in Media Lawyer April 13, 2010, the article reviews just how far political ads can go. Read the entire article entitled, Political Advertising – Legal, Decent, Honest and Truthful?, and if you need legal guidance or representation, don’t hesitate to contact Marina Palomba in our London office.

French Connection: Google’s AdWords Clipped by Louis Vuitton

Over five years ago, in early 2004, luxury fashion designer Louis Vuitton sued Google in connection with the sale of search-related advertising.  You will recall the company behind the Louis Vuitton brands and many others (LVMH Moët Hennessy • Louis Vuitton S.A., usually shortened to LVMH) has been very aggressive in policing and protecting its marks on eBay and other Internet sites.  The Paris District Court held that Google was engaged in trademark infringement, unfair competition and misleading advertising.  The Paris Court of Appeals subsequently ordered Google (and its French subsidiary) to pay €300,000 in damages. When those rulings were announced, a spokesperson for Louis Vuitton, praising the Court’s decision, said, “It was absolutely unthinkable that a company like Google be authorized, in the scope of its advertising business, to sell the Louis Vuitton trademark to third parties, specifically to Web sites selling counterfeits.”  The remarks went on to state, “This milestone ruling grants protection for the first time to both consumers and brand owners” adding that Louis Vuitton believed the Court’s finding meant that Google’s services were “misleading advertising services.”

Google appealed, and today the European Court of Justice (ECJ) released its ruling on appeal of that decision.  For you purists in the audience, procedurally within the ECJ, the decision is one in respect of the Joined Cases C-236/08 to C-238/08, in the proceedings captioned Google France SARL, Google Inc. v. Louis Vuitton Malletier SA (C-236/08), Google France SARL v. Viaticum SA, Luteciel SARL (C-237/08), and Google France SARL v. Centre national de recherche en relations humaines (CNRRH) SARL, Pierre-Alexis Thonet, Bruno Raboin, Tiger SARL (C-238/08).

The case essentially asks whether Internet search providers can be liable for trademark infringement when selling ‘keywords’ that are based upon the trademarks of another.  The ECJ ruling doesn’t completely immunize or exonerate Google, nor does it leave advertisers defenseless either, but it does in effect give the green light to Google and other search providers to continue to offer keywords to bidders; there had been concern in Europe that a negative judgment from the ECJ would have brought all such services to a halt.  The decision takes a now familiar, “let’s examine if you do more than just sell the trademark as a keyword at the request of the advertiser” approach.

So, if all an Internet search company such as Google is doing is selling keywords, the decision appears to allow Google to do so, despite a showing of confusion by consumers.  But – as those of you advertisers and marketing professionals who are tuned in to AdWords’ algorithmically driven ‘suggestions’ will know – Google’s program actually suggests keywords derived from previous selections. So Google’s AdWords code might suggest “British Airways” as related to “Virgin Atlantic” or “Ryanair” or, as in this case, “imitation” or “fake” coupled with “handbags” as a keyword related to “Louis Vuitton.” Not merely passively selling an existing word or mark and more actively engaging in the ‘suggestion’ process, in the Court’s view, consequently attaches liability.

By analogy, one can rationalize such a decision with similar rulings in the United States under the Digital Millennium Copyright Act (DMCA) or more directly under Section 230 of the Communications Decency Act (CDA).  In the case of the DMCA, if one has no notice of infringement and innocently publishes infringing content, until knowledge is shown – by ‘take down’ notice or otherwise – a passive distributor would generally not be held liable for intellectual property infringement.  Similarly, the CDA distinguishes between those who participate in the content creation process and those who merely distribute (the traditional news media distinction between editor/publishers and newsstand/distributors).

Under the instant ruling by the ECJ, although simply purchasing a keyword would not seem to constitute a per se legal violation in the EU, some rather arcane wording by the ECJ seems to suggest that advertisers (not necessarily the search provider) could now be held liable for trademark infringement resulting from their keyword purchase if their advertising can be shown to be confusing to consumers.  Thus, courts in the EU will now be examining both the appearance of the advertising and its demonstrable or likely effect on consumers.  One of our Associates, Drew Boortz, who follows these developments, notes that we are not aware of any U.S. case that has delved this deeply into keyword sales.  While there are trademark and advertising cases that deal with “use in commerce,” the eight or nine recent cases against Google directly involving keywords are yet to come up for trial (e.g., Rosetta Stone Ltd. v. Google, Inc., U.S. federal complaint filed on July 10, 2009 in the Eastern District of Virginia; scheduled for trial in May).

Chris Hackford in our London office notes that trademark owners will no doubt be a little disgruntled after this ECJ judgment, as they will have to continue to bid on their own registered trademarks in order to ensure that they remain at the top of the listings.

If you want to form your own view of the ECJ decision, you can read it right here: Louis Vuitton v. Google; or you can call Rimon for help.  Our offices in Paris, as well as London, Munich and Piraeus in the EU, stand ready to assist; and, of course, you can contact me, Joe Rosenbaum, in New York; Chris Hackford in London; Drew Boortz in our Washington, D.C. office; or the Rimon attorney with whom you regularly work.