February 2020

Impact on IP: What Effect Will the US-China “Phase 1” Trade Deal Have

Ian Sannes, MJLST Staffer

After 18 months of intense negotiations, the US and China finally reached an agreement with many provisions covering a wide variety of topics. Although the agreement has a focus on tariffs, it also addresses intellectual property (IP) rights both in China and the US. This deal is referred to as “Phase 1” and went into effect last week. In part, the deal is meant to increase and facilitate the ability of US businesses to operate in China.

From the US point of view, this deal strengthens IP rights of US patents in China. In fact, this strengthening of IP rights is arguably the most significant part of the entire deal. However, China also benefits from this because, as the previous deputy director of the National Economic Council Clete Willems said, “better intellectual property protection means more investment in China.” This makes sense, if US products are protected in China, then US companies will want to invest heavily to develop those products in a country that has more purchasing power than any other country in the world.

So, what changes to IP protections have been made?

The cornerstones of the IP protections implemented in the deal are wide-ranging. They include increasing trade secret protections, increasing pharmaceutical IP protections, extending patent terms, combating counterfeits, reforming trademark provisions, and improving judicial enforcement in IP cases. Some of these changes are discussed in more detail below.

The deal also put a stop to “forced technology transfers” that require US firms to share technology with Chinese companies to compete in their market. However, some are concerned that since this provision requires a wronged company to file a complaint with the Office of the US Trade Representative that may depend on other Chinese government approvals, this provision may be hard to enforce in practice.

Many US companies believe certain judicial proceedings in China are a pretext to force them to disclose valuable trade secrets. Phase 1 prohibits any proceeding from forcing such unauthorized disclosure of information. The deal also shifts the burden to the defendant in a trade secret case to prove their innocence after the plaintiff survives dismissal of the case. The deal brings the Chinese definition of trade secret more in line with the definition used in the US by expanding it to include “electronic intrusion and breach of confidentiality.”

The deal also increases patent terms for pharmaceuticals “to compensate for unreasonable delays” made in granting the pharmaceutical patents. This makes it easier for US drugs that took many years to make it through the Chinese patent system to recoup the development costs and to turn a profit. The deal allows for up to five years of extension to patent terms. Furthermore, the deal includes provisions for “effective and expeditious” actions against “counterfeit medicines and biologics, including active pharmaceutical ingredients, bulk chemicals, and biological substances.”

Finally, the deal also increases the severity of punishments for stealing or infringing IP rights. Besides improvements to detect and stop infringing counterfeits, audits may also be used to show that the Chinese government itself only uses licensed software.

These are just some of the many provisions included in Phase 1. The deal helps to make the US and Chinese IP systems “further aligned” and this can create efficiencies in standardization, improve clarity, and promote cooperation. This deal strengthens both the US and China economies and promotes trade and investment in each country while protecting IP. Furthermore, a Phase 2 trade deal is likely in the future. Hopefully, this new deal will include more IP protections for both countries and strengthen the economic bond between the countries even more.


Zoinks! Can the FTC Unmask Advertisements Disguised by Social Media Influencers?

Jennifer Satterfield, MJLST Staffer

Social media sites like Instagram and YouTube are filled with people known as “influencers.” Influencers are people with a following on social media that use their online fame to promote products and services of a brand. But, with all that power comes great responsibility, and influencers, as a whole, are not being responsible. One huge example of irresponsible influencer activity is the epic failure and fraudulent music festival known as Fyre Festival. Although Fyre Festival promised a luxury, VIP experience on a remote Bahamian island, it was a true nightmare where “attendees were stranded with half-built huts to sleep in and cold cheese sandwiches to eat.” The most prominent legal action was against Fyre’s founders and organizers, Billy McFarland and Ja Rule, including a six-year criminal sentence for wire fraud against McFarland. Nonetheless, a class action lawsuit also targeted the influencers. According to the lawsuit, the influencers did not comply with Federal Trade Commission (“FTC”) guidelines and disclose they were being paid to advertise the festival. Instead, “influencers gave the impression that the guest list was full of the Social Elite and other celebrities.” Yet, the blowback against influencers since the Fyre Festival fiasco appears to be minimal.

According to a Mediakix report, “[i]n one year, a top celebrity will post an average of 58 sponsored posts and only 3 may be FTC compliant.” The endorsement guidelines specify that if there is a “material connection” between the influencer and the seller of an advertised product, this connection must be fully disclosed. The FTC even created a nifty guide for influencers to ensure compliance. While disclosure is a small burden and there are several resources informing influencers of their duty to disclose, these guidelines are still largely ignored.

Evens so, the FTC has sent several warning letters to individual influencers over the years, which indicates it is monitoring top influencers’ posts. However, a mere letter is not doing much to stop the ongoing, flippant, and ignorant disregard toward the FTC guidelines. Besides the letters, the FTC rarely takes action against individual influencers. Instead, if the FTC goes after a bad actor, “it’s usually a brand that[] [has] failed to issue firm disclosure guidelines to paid influencers.” Consequently, even though it appears as if the FTC is cracking down on influencers, it is really only going after the companies. Without actual penalties, it is no wonder most influencers are either unaware of the FTC guidelines or continue to blatantly ignore them.

Considering this problem, there is a question of what the FTC can really do about it. One solution is for the FTC to dig in and actually enforce its guidelines against influencers like it did in 2017 with CSGO Lotto and two individual influencers, Trevor Martin and Thomas Cassell. CSGO Lotto was a website in which users could gamble virtual items called “skins” from the game Counter-Strike: Global Offensive. According to the FTC’s complaint, Martin and Thomas endorsed CSGO Lotto but failed to disclose they were both the owners and officers of the company. CSGO Lotto also paid other influencers to promote the website. The complaint notes that numerous YouTube videos by these influencers either failed to include a sponsorship disclosure in the videos or inconspicuously placed such disclosures “below the fold” in the description box. While the CSGO Lotto action was a huge scandal in the video game industry, it was not widely publicized to the general population. Moreover, Martin and Cassell got away with a mere slap on the wrist—“[t]he [FTC] order settling the charges requires Martin and Cassell to clearly and conspicuously disclose any material connections with an endorser or between an endorser and any promoted product or service.” Thus, it was not enough to compel other influencers into compliance. Instead, if the FTC started enforcement actions against big-name influencers, other influencers may also fear retribution and comply.

On the other hand, the FTC could continue its enforcement against the companies themselves, but this time with more teeth. Currently, the FTC is preparing to take further steps to ensure consumer protection in the world of social media influencers. Recently, FTC Commissioner Rohit Chopra acknowledged in a public statement that “it is not clear whether our actions are deterring misconduct in the marketplace, due to the limited sanctions we have pursued.” Although Chopra is not interested in pursuing small influencers, but rather the advertisers that pay them, it is possible that enforcement against the companies will cause influencers to comply as well.

Accordingly, Chopra’s next steps include: (1) “[d]eveloping requirements for technology platforms (e.g. Instagram, YouTube, and TikTok) that facilitate and either directly or indirectly profit from influencer marketing;” (2) “[c]odifying elements of the existing endorsement guides into formal rules so that violators can be liable for civil penalties under Section 5(m)(1)(A) and liable for damages under Section 19; 7;” and (3) “[s]pecifying the requirements that companies must adhere to in their contractual arrangements with influencers, including through sample terms that companies can include in contracts.” By pushing some of the enforcement duties onto social media platforms themselves, the FTC gains more monitoring and enforcement capabilities. Furthermore, codifying the guidelines into formal rules gives the FTC teeth to impose civil penalties and creates tangible consequences for those who previously ignored the guidelines. Finally, by actually requiring companies to adhere to these rules via their contract with influencers, influencers will be compelled to follow the guidelines as well. Therefore, under these next steps, paid advertising disclosures on social media can become commonplace. But only time will really tell if the FTC will achieve these steps.


Hacking the Circuit Split: Case Asks Supreme Court to Clarify the CFAA

Kate Averwater, MJLST Staffer

How far would you go to make sure your friend’s love interest isn’t an undercover cop? Would you run an easy search on your work computer? Unfortunately for Nathan Van Buren, his friend was part of an FBI sting operation and his conduct earned him a felony conviction under the Computer Fraud and Abuse Act (CFAA), 18 USC § 1030.

Van Buren, formerly a police sergeant in Georgia, was convicted of violating the CFAA. His acquaintance turned informant for the FBI and recorded their interactions. Van Buren knew Andrew Albo from Albo’s previous brushes with law enforcement. He asked Van Buren to run the license plate number of a dancer. Albo claimed he was interested in her and wanted to make sure she wasn’t an undercover cop. Trying to better his financial situation, Van Buren told Albo he needed money. Albo gave Van Buren a fake license plate number and $6,000. Van Buren then ran the fake number in the Georgia Crime Information Center (GCIC) database. Albo recorded their interactions and the trial court convicted Van Buren of honest-services wire fraud (18 USC §§ 1343, 1346) and felony computer fraud under the CFAA.

Van Buren appealed and the Eleventh Circuit vacated and remanded the honest-services wire fraud conviction but upheld the felony computer fraud conviction. His case is currently on petition for review before the Supreme Court.

The relevant portion of the CFAA criminalizes obtaining “information from any protected computer” by “intentionally access[ing] a computer without authorization or exceed[ing] authorized access.” Van Buren’s defense was that he had authorized access to the information. However, he admitted that he used it for an improper purpose. This disagreement over access restrictions versus use restrictions is the crux of the circuit split.  Van Buren’s petition emphasizes the need for the Supreme Court to resolve these discrepancies.

Most favorable to Van Buren is the Ninth Circuit’s reading of the CFAA. The court previously held that the CFAA did not criminalize abusing authorized access for impermissible purposes. Recently, the Ninth Circuit reaffirmed this interpretation. The Second and Fourth Circuits align with the Ninth in interpreting the CFAA narrowly, declining to criminalize conduct similar to Van Buren’s.

In affirming his conviction, the Eleventh Circuit rested on their previous decision in Rodriguez, a much broader reading of the CFAA. The First, Fifth, and Seventh Circuits join the Eleventh in interpreting the CFAA to include inappropriate use.

Van Buren’s case has sparked a bit of controversy and prompted multiple organizations to file amicus briefs. They are pushing the Supreme Court to interpret the CFAA in a narrow way that does not criminalize common activities. Broad readings of the CFAA lead to criticism of the law as “a tool ripe for abuse.”

Whether or not the Supreme Court agrees to hear the case, next time someone offers you $6,000 to do a quick search on your work computer, say no.


Electric Scooter Regulations in Winter: Why the “Brake” in Service?

Warren Cormack, MJLST Staffer

In the summer of 2018, the city of Minneapolis began a pilot project to introduce 600 electric rental scooters, primarily to the downtown area. The city approved operations for Jump, Lyft, Spin, and Lime in 2019. Two thousand scooters were slated to hit the Minneapolis streets, but the companies deployed less than one thousand to Minneapolis for much of the 2019 season. Still, half a year ago, ride-share scooters from the 2019 authorization could be found all over the streets of Minneapolis and users “racked up about 225,000 rides.”

Minneapolis is a city with a strong winter biking tradition. Yet in February, with winter in full swing, electric scooters are nowhere to be seen. What happened?

The short answer is that Minneapolis’ second pilot program for electric scooters ended in November 2019. When we dig deeper, though, some interesting dynamics affect the use of electric scooters in winter.

Though scooter companies initially targeted warm-weather cities, now colder cities like MilwaukeeBoston, and Minneapolis face challenges associated with operating electric scooters in colder weather. For example, when snow emergencies hit, cities may have to ask companies to remove scooters from the roads.

An important concern for cities is safety. This was a major reason why Minneapolis ended the 2019 scooter pilot in late November. Minneapolis scooter companies agreed that 6 to 10 inches of snow was too much to operate safely. Scooter companies are already being sued for the injuries that they cause, and the odds that someone might injure themselves while riding on snowy ground is higher than when the streets are clear. Still, scooter companies have shown a desire to keep their scooters running unless a winter storm hits.

Though Denver’s weather is not as cold as Minneapolis, it does snow there. Denver’s scooters arrived in May 2018 and the city regulated their numbers within two months. Still, the city did not regulate the months within which the scooters would be available for use. A spokeswoman for Denver Public Works reportedly said: “I think riders are going to have to make their own choices if they want to ride an electric scooter in the winter months.” Denver’s comparable warmth may affect how the city balances safety concerns.

The cold weather is not only an issue for riders. “Scooter companies are still learning how their vehicles perform in various weather conditions and from regular use.” Scooters generally either operate on bike lanes or sidewalks. In either location, the small wheels and limited batteries of scooters can negatively impact their winter-weather suitability. The major scooter models currently in use have minimum operating temperatures of fourteen degrees Fahrenheit. Possibly in response to the limits of popular scooters, Bird (one of the major scooter companies) designed a scooter with more battery and pronounced tire treads. Tier is another company developing scooters that can handle cold weather. The effects of winter may be over-hyped, however. According to a scooter expert, scooters may become slower during the winter, but the cold does not damage their battery.

A final winter issue is simply a lack of riders. Even for European scooter companies that operate throughout the year, about half of the riders stop riding during the winter. Minneapolis data also reflect a roughly 50% decrease from summer’s peak to November. College riders leave home for winter break, prompting companies to reduce the number of deployed scooters. A lack of winter riders caused Lime to ramp down operations in Milwaukee. Though riders in relatively snowy cities like Denver have found that people use scooters through the winter, scooter companies facing higher maintenance costs and lower ridership may be wise to reduce their fleet size.

Scooters may leave for the winter due to safety, maintenance, or lower ridership. This may be caused by city policy or by the companies themselves. If the companies continue to make their scooters more capable of enduring the winter, cities may begin to find themselves at odds with electric scooter companies’ desire to stay open for business.


Timing Trouble: To What Extent Should We Assume People Will Break the Law?

Jack Brooksbank, MJLST Staffer

City planners and civil engineers across the country face a little-known, yet extremely important, question when designing road systems: how long should the green lights last? Anyone who has ever had a regular commute probably wishes the answer was simply “longer,” but this seemingly minor detail can get quite complex. Traffic light timing decisions are made by both government officials and specialist consulting firms, based on extensive studies, and supported by academic papers. The practice of traffic light timing is so established that it has its own lingo.

Perhaps the most important part of traffic light timing is coordination. Engineers try to set the cycles of lights on a given route in concert, so that a car passing through one green light finds the next light turning green in time for it to continue. “The intent of coordinating traffic signals is to provide smooth flow of traffic along streets and highways in order to reduce travel times, stops and delay.” When done well, it leads to a phenomenon known in the industry as a “green wave,” where a car hits every green light in a row and never needs to come to a stop.

It’s not just a minor detail, either. Coordination can have some serious benefits for a city. One town revamping its timing scheme estimated it would reduce travel times by as much as 10%. And although making the morning commute go more smoothly is a worthy goal in itself, proper light timing can create other benefits too. Efficient traffic light timing can even help the environment: by reducing the number of stops, and the total time spent driving, coordinated traffic signals reduce the amount of fuel burned, and greenhouse gasses produced, by commuters.

However, timing traffic lights relies in large part on one central assumption: that a car leaving one green light takes a certain amount of time to get to the next one. This raises a potential problem: drivers don’t follow the speed limit. Indeed, one study found that nearly 70% of all drivers regularly speed! When timing traffic lights, then, designers must make a choice: do they time the lights based on the legal speed limit, or based on the speed drivers actually go?

If timing is based on the speed limit, many cars will still arrive at the next light before it has turned green. The coordination of signals won’t have mattered, and the cars will still have to come to a stop. By basing the timing on the wrong speed, the designers have negated the benefit of their careful work, and might as well have saved the time and money needed for figuring out how to coordinate the signals in the first place. But, if instead timing is based on the speed drivers really travel, designers are essentially rewarding illegal behavior—and punishing those drivers who do actually follow the law with extra stops and delays!

Most major cities now rely on actuated controllers, or devices that detect when cars are approaching in order to trigger light changes without human input. Some cities are even experimenting with AI-based systems that take the design out of human hands completely. Advances in technology have thus heavily favored the “actual speed” approach, but is this because a decision was made to accommodate speeding drivers? Or have cities, in their enthusiasm to reduce congestion, simply adopted the latest in technology without considering the policy choice that it entails?

Also, if traffic lights should be timed for the actual speed cars travel, it may raise further implications for other areas of law that rely on questionable assumptions of human behavior. Perhaps most notable is the law of contracts, which generally relies heavily on the assumption that people read contracts before signing them. But as electronic devices, apps, and online content proliferate, this assumption gets farther from the truth. And people can hardly be blamed for agreeing without reading: one investigation in Norway found that people have an average of 33 apps on their smartphones, and that reading the terms and conditions of that many apps would take an average of 31 hours. Another investigation found that simply reading all the website privacy policies an average internet user encounters in a year would require 76 eight-hour days of reading! If we should time traffic lights to account for people being too impatient to follow the legal speed limit, surely we should update the laws of contract to account for such a crushing reading load. Perhaps it is time to reform many areas of law, so that they are no longer grounded on unrealistic expectations of human behavior.

 


E-Bikes: Protections, Safety and Liability on the Road

Alex Wolf, MJLST Staffer

E-bikes, or electronic bikes, are kind of a hybrid between an electric scooter and a regular bicycle. In appearance, they’re no different than your normal two-wheeled bike, but e-bikes have a motor that lets the rider reach brisk speeds without much pedaling effort. There are two classes of motors, hub motors and mid-drive motors. Hub motors are installed in the hub gear and mid-drive motors are installed between the pedals at the bottom bracket of the bike. The usual advice for e-bike newbies is to start with a hub motor; it is simpler to install and it has fewer working parts (creating less risk of a slip/accident and lasting longer). However, the mid-drives have now outpaced the hubs in popularity; for biking enthusiasts, the gear shifts feel more natural and the extra power is great for terrain or mountain biking.

E-bikes are on the streets, so states and localities need to decide how to regulate them. Wisconsin Governor Tony Evers recently signed a law that incorporates e-bikes into an existing law governing safety regulations for bicycles. The law creates a three-tiered “e-bike class” system, based on the maximum speed the e-bike can reach with its motor. Although e-bike riders don’t need any license or permit to operate, riders must be 16 years or older to ride e-bikes that can reach 28 mph. These regulations are similar to those previously enacted in Illinois and Michigan.

Like electronic scooters, e-bikes pose more safety issues than non-mechanized transportation. Reliable data is very hard to find (as e-bikes are new on the scene), but news reports indicate that older bikers are getting injured at higher rates than others. New York Governor Andrew Cuomo vetoed a bill that would’ve reauthorized electronic scooters and e-bikes on paths and bike lanes. He said that he believed the bill lacked important safety requirements, namely helmet use. However, Governor Phil Murphy of neighboring New Jersey eagerly signed a bill permitting scooters and e-bikes, hoping that “By bringing our motor vehicle laws into the 21st century, we will enable the rollout of e-bikes in Jersey City’s bike share program and expand the transportation options available to New Jerseyans.”

What can we expect for e-bikes in the near future? The annual e-bike market has surpassed $1.5 billion, with recognizable brands like BMW and Harley-Davidson jumping headfirst into this exciting commercial domain. We might soon see the statistic of the number of Americans who bike to work, currently about 1%, tick upwards. Minneapolis’ Nice Ride is leading the way for e-bikes in Minnesota, working with Lyft to bring 2,000 e-bikes to the city sometime in 2020. Minnesota law does not require either a license or a special motorized bicycle permit, but it does have other safety precautions like headlight use and an adult riding along if a minor is operating. So, if you’ve got the means, let it ride!


Elections? There’s an App for That.

Jacob Hauschild, MJLST Staffer

Clay Aiken won. We true believers don’t care what FOX had to say about it. When the phone systems were allegedly logjammed on that 2003 day, millions of American Idolaters had their faith in the democratic vote shattered. As one author wrote, “Technology is thwarting democracy. . .”

Yet, even as our democracy has been so thwarted by encroaching technology, one Washington district believes there Ain’t No Need to Worry. Instead of protecting voters from technology’s perils, the King Conservation District of Washington is embracing technology in the democratic process, allowing roughly 1.2 million Seattle area voters to vote online, via a smartphone, tablet, or computer, in an election for a board of supervisor position. Last year, the King Conservation District had only a 0.2% participation rate in its Board of Supervisors’ election. By allowing voters to vote this year from their couches, administrators hope more residents will participate, strengthening the district’s democratic capacity.

Of course, such an expansion to voter accessibility is no laughing matter. On one hand, voter turnout in the United States is concerningly low. Of no help are the 24 states who have introduced heightened voting restrictions over the last decade. On the other hand, these kinds of restrictions are, in theory, meant to make our elections more secure, as recent elections have quite notoriously resulted in claims of voter fraud and international interference. And experts have major concerns about the effects of online voting, which include challenges in voter authentication, risks to ballots in transit (i.e. ballots that are manipulated while transferred between the voter and the election office), and the threat of malware infiltrating electoral systems.

Online voting advocates are responsive to these issues. Many believe that blockchain, the technology behind bitcoin, may be the magic key to these security concerns. Others are far more cautious. Plus, in addition to security risks, there is the ever-present possibility that the voting technology fails to function as expected. For its part, the King Conservation District is utilizing a mobile voting platform through Democracy Live, which has FedRAMP certification, providing a government standardized approach to security assessment, authorization, and monitoring of cloud services.

For now, other voting districts aren’t exactly lining up to make similar changes to voting accessibility. Washington Secretary of State Kim Wyman recently indicated after consultation with cyber experts from the FBI and Department of Homeland Security that “electronic transmission [is] far too risky for voting and could leave voter information and election infrastructure impaired.” Even Julie King, the Elections Director for King County itself, announced that mobile voting is “not technology [she’ll] be rolling out for King County in upcoming elections.”

Will this technology grow more widespread in the future? And if so, how does that affect the legitimacy of our democracy? For a glimpse of that future, we need only wait until February 16. Or, if you don’t intend to tune into the American Idol premiere, you can opt instead to observe mobile voting’s impact as early as February 11, when the King Conservation District polls close. That election’s success—or failure—could fundamentally change how Americans vote in coming elections.


Foodborne Illness Law: E. Coli, Salmonella, and More

Katherine Nixon, MJLST Staffer

Sometime in the fall of 2018, I walked into Chipotle hoping for a nice savory burrito bowl. The best burrito bowl—at least in my opinion—is made up of the following: brown rice, chicken, cheese, lettuce, hot salsa, sour cream, and guacamole. One ingredient missing can throw off the whole experience. Well, I walked into Chipotle only to find a printed sign on the glass in front of the various ingredients. Let’s be honest, that never means anything good. The sign notified customers that Chipotle would not currently be offering romaine lettuce due to an E. coli outbreak. At first, all I could think was “Noooo, not my beloved burrito bowl. What will it be like without the crunchy lettuce?”

In looking past my immediate concern over the negative effect that a lettuceless burrito bowl would have on my taste buds, I was ultimately thankful I had not eaten the romaine lettuce. Big picture things. It was discovered that the romaine lettuce came from a farm in Santa Barbara County, California. It was distributed through many avenues and not just to food establishments like Chipotle. Unfortunately, people became very sick. According to the Center for Disease Control and Prevention (CDC), 62 people were infected from 16 states and the District of Columbia. Further, 25 people were hospitalized and 2 people developed a form of kidney failure. This ended up being a big deal. That particular outbreak began in October 2018 and wasn’t declared over until January 9, 2019.

Believe it or not, E. coli outbreaks occur with some frequency. A massive outbreak that began in September 2019 was just declared over by the CDC on January 15, 2020. Again, the source of that outbreak was romaine lettuce. Other outbreaks in 2019 came from ground bison, flour, and ground beef. Aside from E. coli, there are other types of outbreaks as well. For instance, in 2019, there were several Salmonella outbreaks related to food items such as papayas and frozen raw tuna. Many people fell sick.

At this point, you might be wondering—what does this all have to do with law? It turns out there is a whole body of law generally referred to as “foodborne illness law.” I know—you definitely don’t learn about that in your normal law school curriculum. Yet, the name is somewhat self-explanatory. As succinctly put by the Public Health Law Center at Mitchell Hamline School of Law, “[A] person who is injured as a result of a foodborne illness may bring a civil cause of action against another by claiming that the other individual is legally liable for the harm caused by the foodborne illness.” Sometimes, there is even strict liability.

Overall, this type of law can be highly technical and usually involves the help of experts. It also can be quite difficult. Including the difficulty that often comes in discovering the source of a certain outbreak as well as the manufacturer of that source. It can be like piecing a giant puzzle together. However, once the pieces start to fit together, it all begins to make sense. If you have a science background, especially biology, this may be an area of law for you to consider. Next time you are at a family gathering and Uncle Eddy asks what you want to do, tell him you want to specialize in foodborne illness law. That will surely grab his attention.