Business

Recent Developments in Automated Vehicles Suggest Broad Effects on Urban Life

January 20, 2016
Autonomous Vehicles, Business, Competition, Intellectual Property

J. Adam Sorenson, MJLST Staffer

In “Climbing Mount Next: The Effects of Autonomous Vehicles on Society” from Volume 16, Issue 2 of the Minnesota Journal of Law, Science & Technology, David Levinson discusses the then current state of automated vehicles and what effects they will have on society in the near and distant future. Levinson evaluates the effect of driverless cars in numerous ways, including the capacity and vehicles-as-a-service (VaaS). Both of these changes are illuminated slightly by a recent announcement by Tesla Motors, a large player in the autonomous vehicle arena.

This week Tesla announced Summon which allows a user to summon their tesla using their phone. As of now, this technology can only be used to summon your car to the end of your drive way and to put it away for the night. Tesla sees a future where this technology can be used to summon your vehicle from anywhere in the city or even in the country. This future technology, or something very similar to it, would play a pivotal role in providing urban areas with VaaS. VaaS would essentially be a taxi service without drivers, allowing for “cloud commuting” which would require fewer vehicles overall for a given area. Ford has also announced what it calls FordPass, which is designed to be used with human-driven cars, but allows for leasing a car among a group of individuals and sharing the vehicle. This technology could easily be transferred to the world of autonomous vehicles and could be expanded to include entire cities and multiple cars.

Beyond VaaS, these new developments bring us closer to the benefits to capacity Levinson mentions in his article. Levinson mentions the benefits to traffic congestion and bottlenecks which could be alleviated by accurate and safe autonomous vehicles. Driverless vehicles would allow for narrower lanes, higher speed limits, and less space between cars on the highway, but Levinson concedes that these cars still need to “go somewhere, so auto-mobility still requires some capacity on city streets as well as freeways, but ubiquitous adoption of autonomous vehicles would save space on parking, and lane width everywhere.” Tesla is seeking to alleviate some of these issues by allowing a vehicle to be summoned from a further distance, alleviating some parking congestion.

Audi, however, is seeking to tackle the problem in a slightly different fashion. Audi is partnering with Boston suburb Somerville to develop a network including self-parking cars. “UCLA urban planning professor Donald Shoup found 30 percent of the traffic in a downtown area is simply people looking for parking” and eliminating this traffic would allow for much higher capacity in these areas. Similarly, these cars will not have people getting in and out of them, allowing for much more compact parking areas and much higher capacity for parking. Audi and Tesla are just some of the companies working to be at the forefront of automated vehicle technology, but there is no denying that whoever the developments are coming from, the effects and changes David Levinson identified are coming, and they’re here to stay.

General Motor’s $500 Million Investment in Lyft: A Reminder to State Legislatures to Quickly Act to Resolve Legal Issues Surrounding Self-Driving Cars

January 20, 2016
Autonomous Vehicles, Business, Competition

Emily Harrison, MJLST Editor-in-Chief

On January 4, 2016, General Motors’ (G.M.) invested $500 million in Lyft, a privately held ridesharing service. G.M. also pledged to collaborate with Lyft in order to create a readily accessible network of self-driving cars. According to the New York Times, G.M.’s investment represents the “single largest direct investment by an auto manufacturer into a ride-hailing company in the United States . . . .” So why exactly did General Motors, one of the world’s largest automakers, contribute such a significant amount of capital to a business that could eventually cause a decrease in the number of cars on the road?

The short answer is that G.M. views its investment in Lyft as a way to situate itself in a competitive position in the changing transportation industry. As John Zimmer, president of Lyft, said in an interview, the future of cars will not be based on individual ownership: “We strongly believe that autonomous vehicle go-to-market strategy is through a network, not through individual car ownership.” In addition, this partnership will allow G.M. to augment its current profits. The president of G.M., Daniel Ammann, explained that G.M.’s ‘core profit’ predominately comes from cars that are sold outside of the types of urban environments in which Lyft conducts its main operations. Therefore, G.M. can capitalize on its investments by aligning itself at the forefront of this burgeoning automated vehicle industry.

A transition to a network of self-driving cars raises a variety of legal implications, particularly with respect to assigning liability. As Minnesota Journal of Law, Science & Technology Volume 16, Issue 2 author Sarah Aue Palodichuk notes in her article, “Driving into the Digital Age: How SDVs Will Change the Law and its Enforcement,”: “[a]utomated vehicles will eliminate traffic offenses, create traffic offenses, and change the implications of everything from who is driving to how violations are defined.” Underlying all of these changes is the question: who or what is responsible for the operation of self-driving cars? In some states, for example, there must be a human operator who is capable of manual control of the vehicle. As additional states begin to adopt legislation with respect to self-driving cars, it is foreseeable that there will be great debate as to who or what is responsible for purposes of liability. Yet, in the meantime, G.M.’s significant investment in Lyft signals to consumers and state legislators that these issues will need to be resolved quickly, as the automotive industry is moving full-speed ahead.

Data Breach and Business Judgment

November 9, 2015
Business, Cyber Security, Data, Internet

Quang Trang, MJLST Staffer

Data breaches are a threat to major corporations. Corporations such as Target Co. and Wyndham Worldwide Co. have been victim of mass data breaches. The damage caused by such breaches have led to derivative lawsuits being filed by shareholders to hold board of directors responsible.

In Palkon v. Holmes, 2014 WL 5341880 (D. N.J. 2014), Wyndham Worldwide Co. shareholder Dennis Palkon filed a lawsuit against the company’s board of directors. The judge granted the board’s motion to dismiss partially because of the Business Judgment Rule. The business judgement rule governs when boards refuse shareholder demands. The principle of the business judgment rule is that “courts presume that the board refused the demand on an informed basis, in good faith and in honest belief that the action taken was in the best interest of the company.” Id. The shareholder who brings the derivative suit has the burden to rebut the presumption that the board acted in good faith or that the board did not base its decision on reasonable investigation.

Cyber security is a developing area. People are still unsure how prevalent the problem is and how damaging it is. It is difficult to determine what a board needs to do with such ambiguous information. In a time when there is no set corporate cyber security standards, it is difficult for a shareholder to show bad faith or lack of reasonable investigation. Until clear standards and procedures for cyber security are widely adopted, derivative suits over data breaches will likely be dismissed such as in Palkon.

Marijuana Industry Continues to Search for Banking Solution

November 9, 2015
Business, Competition, Economics

Neal Rasmussen, MJLST Managing Editor

While the legal marijuana industry continues to rapidly expand in the United States, a major question still looms: Where should the millions of dollars generated by the industry be placed? Up to this point the nation’s banks have refused to take money for fear of federal repercussions. The lack of banking is one of the biggest problems the industry currently has and creates a dangerous all cash environment. While it continues to be an industry dominated by cash vaults and armed guards, change could soon be on the way.

While the provisions of the unlicensed money remitter statute, 18 U.S.C. § 1960, the money laundering statutes, 18 U.S.C. §§ 1956, 1957, and the Bank Secrecy Act (BSA) still remain in effect with respect to marijuana-related business, the marijuana industry had hoped to take advantage of the new rules issued by the U.S. Treasury Department in 2014 which “clarifie[d] how financial institutions can provide services to marijuana-related businesses consistent with their BSA obligations, and aligns the information provided by financial institutions in BSA reports with federal and state law enforcement priorities.” In addition to the new rules, the Justice Department produced a memorandum calling for relaxed enforcement of the relevant federal banking laws so long as they followed the new rules. However, the most recent attempt by a Colorado state-chartered credit union, The Fourth Corner Credit Union, to take advantage of the new rules and memorandum has faced major opposition from the Federal Reserve Bank, who must provide clearance before the credit union can open.

The Federal Reserve Bank refused to grant the permission need to access the national banking system and The Fourth Corner Credit Union has sued in Federal Court demanding equal access to the federal system. While it remains unclear whether the presiding judge, R. Brooke Jackson, will hear the complaint, most view The Fourth Corner Credit Union as fighting a losing battle. Most believe that entering the federal banking system will be nearly impossible until marijuana becomes legal at the federal level. For now it will remain unclear as to where the industry should place its money.

Kirtsaeng’s Parade of [Less]-Horribles

April 17, 2013
Business, Copyrights, Intellectual Property, Trademarks

by Caroline Marsili, UMN Law Student, MJLST Staff

In a 6-3 decision that came down March 25, the Supreme Court held that copyright’s first sale doctrine, which allows the lawful purchaser of a copyrighted product to resell the product without interference from the copyright holder, applies to copyrighted works lawfully made abroad. Kirtsaeng v. John Wiley & Sons marks the resolution of a decades-long uncertainty over the potential international reach of the first sale doctrine. This moment of clarity, however, is sure to be followed by challenges, given the newly-sanctioned threat to some domestic industries.

From a legal standpoint, the case was rightly decided. Briefly, plaintiff publishing company John Wiley & Sons sought relief from Cornell student-turned-professor Supap Kirtsaeng, who paid his way through university by reselling Wiley’s English-language textbooks manufactured abroad. Kirtsaeng’s family bought the books in Thailand and mailed them to Kirtsaeng, who resold them on eBay for a profit. In finding for Kirtsaeng, the majority attempted to reconcile a tension between the language of § 602(a)(1) of the Copyright Act, which gives copyright owners redress for unauthorized importation of their copyrighted work into the U.S., and the first sale doctrine (§ 109(a)), which gives owners of particular copies “lawfully made under this title” the right to sell the copy without the owner’s permission.

As author Benjamin Hamborg astutely foreshadowed in John Wiley & Sons, Inc. v. Kirtsaeng: The Uncertain Future of the First Sale Doctrine (Minnesota Journal of Law, Science & Technology, Vol. 13.2), the Court reasoned that the text of 109(a) contains no geographical limitations, and that Congressional intent and historical context further require an interpretation of first sale unbound by territory. Justice Breyer’s majority opinion further acknowledges the far-reaching policy implications a geographical limitation would have on “[a]ssociations of libraries, used-book dealers, technology companies, consumer-goods retailers, and museums.” In her dissent, Justice Ginsburg criticized the Court’s “parade of horribles” as unfounded, and observed the opinion would frustrate Congress’s intent to permit international market segmentation by copyright owners. Ultimately, in reversing the Second Circuit and criticizing a “purely geographical interpretation” of 109(a), the decision represents a victory for institutions such as libraries and for consumers.

But while the Court dodged the parade of horribles that Justice Breyer adamantly sought to avoid in oral arguments, the international reach of first sale sounds alarms for U.S. companies that will be threatened by unrestricted gray market competition. A recent NYTimes article aptly identifies some of the other horribles waiting in the wings of an international exhaustion doctrine, including the undercutting of domestic software prices, de-segmentation of international publishing markets, threats to a burgeoning secondhand digital marketplace (though first sale may not apply here), and another nail in the coffin of print publications. Further, Kirtsaeng has the potential to set an example for amateur sellers to profit from gray market goods.

So what’s to be done? In “Next Moves For IP Law After SCOTUS First-Sale Ruling,” Lisa Shuchman suggests a number of options for copyright owners to numb the sting of Kirstaeng. Options include pursuing other legal remedies like contract and more expansive trademark protection, digitizing their protected content, raising domestic prices (to off-set losses from sale of imported copies), and pursuing statutory reform. Others suggest first sale is on its way to mootness in an increasingly digital economy. Raustiala and Sprigman’s solution? “Stop selling copies. Start licensing digital files.” Still others argue statutory reform is unavoidable. Andrew Albanese suggests the Court did what was best with a convoluted statute, but that Congress will need to address the outdated Copyright Act.

Though Kirstaeng undoubtedly provides much-needed clarification on the status of first sale, the story isn’t over for domestic copyright owners seeking to prevent unwanted, but now legal, importation of their works. Grab a seat on the curb . . .

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