“Darkness cannot drive out darkness: only light can do that. Hate cannot drive out hate: only love can do that.”
Which animal swallows rocks and stones that some believed were used as ballast?
(Photo is a pretty obvious hint, don’t you think?)
Kool-Aid was originally marketed as “Fruit Smack.”
The Implosion Heard Around the (Financial Markets) World
What Can We Expect from the Regulators?
Archegos Capital Management’s collapse last week, and the resulting losses for several global banks, has and will impact financial markets for the foreseeable future. Regulatory efforts will likely focus on the ever-expanding shadow banking sector and shed light on its transparency (or lack thereof) and the risks. Shadow banking is a blanket term to describe financial activities that take place among non-bank financial institutions outside the scope of federal regulators and generally is defined to include family offices. *
Scrutiny of nonbanks was already a priority for Treasury Secretary Janet Yellen after last year’s Treasury market turmoil surrounding hedge funds, dislocations in the repurchase agreement market in 2019, and of course, the GameStop story earlier this year.
The current regulatory examination follows on the heels of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111-203) (commonly referred to as Dodd-Frank) which overhauled financial regulation in the aftermath of the 2009 financial crisis. Under the Dodd-Frank legislation, family offices won a special carve-out from Congress that allows them to avoid SEC registration if they serve a single family and don’t give investment advice. Family offices made the case to Congress at the time that they only make conservative investments to preserve family wealth and they do not try to beat the markets. And so, despite managing around $10 billion, Archegos is not directly regulated by the SEC because it manages Hwang’s wealth as a single-family office.
CFTC Commissioner Dan Berkovitz said, “The collapse of Archegos Capital Management and the billions of dollars in losses to investors and other market participants is a vivid demonstration of the havoc that errant large investment vehicles called ‘family offices’ can wreak on our financial markets.” He added, “A ‘family office’ has nothing to do with ordinary families. Rather, it is an investment vehicle used by centimillionaires and billionaires to grow their wealth, reduce their taxes, and plan their estates.”
On March 31st U.S. Treasury Secretary Janet L. Yellen led the first meeting of the Financial Stability Oversight Council (FSOC) under the new Biden administration. The FSOC was scheduled to discuss hedge fund activity and analysts expect it also addressed Archegos.
As calls for closer scrutiny of the shadow banking sector grow louder, we can expect policymakers to revisit systemically important financial institution designations for nonbank financial entities. Being designated as systemically important would allow for tougher regulation and oversight from the Federal Reserve.
Want to know more. You can always contact me, Joe Rosenbaum, about any posting on Legal Bytes, but if you want to know more about the content of this post or you need assistance, feel free to reach out to Robin Powers directly or any of the Rimon professionals with whom you regularly work.
* Over 10,000 family offices globally manage an estimated $5-15 trillion in assets – larger than the entire hedge fund industry. The largest family offices operate like sophisticated investment firms, but they don’t have the same oversight. Unlike hedge funds, family offices do not have to disclose their assets, bank relationships, and other operational information.
“But the fact that some geniuses were laughed at does not imply that all who are laughed at are geniuses. They laughed at Columbus, they laughed at Fulton, they laughed at the Wright Brothers. But they also laughed at Bozo the Clown.”
Google’s Copying of Oracle’s JAVA Code is a Non-Infringing Fair Use
– Eric C. Cohen, Special Counsel, Rimon, P.C.
In a decision ending almost 10 years of litigation, the U.S. Supreme Court held today that the incorporation of about 11,500 lines of Oracle’s Java Application Programming Interface (“API”) code into Google’s Android operating system is a fair use, and thus does not infringe Oracle’s copyright in its Java operating system. It did not decide the issue of whether the API code is copyrightable.
The facts in the case are fairly straightforward. To create the Android platform, Google programmers wrote millions of lines of new code, but because Google wanted all other programmers, already familiar with Java, to be able to work with its new Android platform, it copied roughly 11,500 lines of code from the Java SE program.” (Slip opinion at 3) The Court noted “Google copied that portion of the Sun Java API that allowed programmers expert in the Java programing language to use the “task calling” system that they had already learned,” (Slip opinion at 8) including code that labels and organizes tasks within the program.
The Court considered the fair use provision of the Copyright Act (17 U.S.C. § 107), and although questions of fair use necessarily involves findings of fact—the province of a jury—the ultimate question of whether those facts constitute fair use is a legal question for judges to decide de novo.* Application of the fair use doctrine includes consideration of four factors: (1) the purpose and character of the use; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use on the potential market for and or value of the copyrighted work.
Considering the nature of the copyrighted work first, the Court held that the declaring code was “inextricably bound” with the idea of organizing tasks and with the use of specific commands that Oracle did not claim violated its copyright. The Court concluded this factor “points in the direction of fair use.” (Slip opinion at 24) Turning to the purpose and character of the use, the Court found Google’s use of the Java API sought to create new products – also favoring fair use. As to the amount and substantiality of the portion used, the Court noted that Google copied 11,500 lines of code out of about 2.86 million lines in the Sun Java API code, or about 0.4%. “The ‘substantiality’ factor will generally weigh in favor of fair use where, as here, the amount of copying was tethered to a valid, and transformative, purpose.” (Slip opinion at 29)
With respect to the “market effects” of Google’s use of the Java API, the Court noted the market for Java was primarily laptops and desktops and previous efforts to adapt Java for use in mobile phones had largely been unsuccessful. Google’s economic expert testified that Android was not a market substitute for Java’s software because the products operate on very different devices – presumably because Android was developed in order to operate efficiently on mobile devices, with far less processing speed and memory than desktop and laptop computers on which Java was designed to function. Considering the effect of programmers widespread knowledge of Java, the Court concluded that if they allowed enforcement of Oracle’s copyright claim it would effectively limit future creativity of new programs, a principle inconsistent with the basic creativity objectives of the Copyright Act.
You can read and/or download the entire Supreme Court decision right here: 2021.04.05 Oracle v Google SCOTUS Opinion Decision No. 18-956.
Need to know more about this decision and its implication. Need help, feel free to contact Eric C. Cohen directly. As always you can contact me, Joe Rosenbaum or any of the lawyers at Rimon Law with whom your regularly work.
* The Court cited its own decision in Markman v. Westview Instruments, Inc., 517 U.S. 370, 376 (1996)—a patent case—for the proposition that the Seventh Amendment does not include the right to have a jury resolve a fair use defense. This holding may become fairly significant for its potential application to the issue of obviousness in patent cases.
Kool-Aid was originally marketed under what brand name?
‘Neither shaken nor stirred‘ is the title of Sean Connery’s biography. The drink named Vesper originated with Ian Fleming’s first Bond novel, Casino Royale, when it is ordered by James Bond in the midst of a high-stakes poker game in a casino in Montenegro. That scene was played out visually by Daniel Craig, staring as Bond, in the 2008 motion picture of the same name. In Fleming’s original work, a Vesper consists of “Three measures of Gordon’s, one of vodka, half a measure of Kina Lillet.”
“If you don’t like something, change it. If you can’t change it, change your attitude.”
Whose biography is titled ‘Neither shaken nor stirred‘?