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Tech Tuesday: Litigation, Legislation and Regulatory Protectionism

Tuesday was a big day in the world of tech-powered disruptive innovation. What the news of April 22nd shows, however, is expanding use of the legal process by incumbent industries to thwart change — and the unfortunately all too frequent concurrence of regulators and courts with that ancient mantra of obsolescent businesses, namely “consumer protection.” Old, entrenched industries frequently lean on their political connections and get the government to come up with some new justification (or recycle an old one) for shutting down upstart rivals or, at the very least, undermining their competitive advantages.

Tuesday witnessed two potentially landmark events, ones that may in time change this familiar paradigm. The first was the morning hearing before the U.S. Supreme Court in ABC v. Aereo, the broadcast networks’ copyright law challenge to the now well-known streaming IPTV start-up. The second, just slightly later in the day, were oral arguments at a New York state court in Albany over whether Airbnb will be permitted to offer its peer-to-peer apartment rental services in New York City, where a 2010 measure meant to curb unregulated hotels prohibits renting out an apartment for less than a month.

Tech Tuesday

The DisCo Project has devoted a series of posts to the Aereo case. Like a Sony Betamax for the 21st century, the Supreme Court is being asked to decide whether moving technology that is lawful for an individual to use on his or her own becomes a copyright violation if offered over the Internet. But the major broadcast networks (like the movie studios who opposed VCR recording in the 1980s) are convinced their entire business model will collapse if Aereo is sanctioned, threatening the nuclear option of stopping over-the-air transmission in favor of all-cable distribution should Aereo prevail.

Airbnb, in contrast, is fighting an effort by New York regulators to collect the names of Airbnb hosts who are breaking the law by renting out multiple properties for short periods. The company, which is now estimated to be worth $10 billion, is framing the dispute as a case of government scooping up more data than it needs for purposes that are vague. What the tussle is really about, of course, is whether the renting public actually needs protection from “unregulated hotels” and, even if true, why Airbnb’s efforts to make a market for DIY rentals is at all harmful. Continue reading Tech Tuesday: Litigation, Legislation and Regulatory Protectionism

Mims’ The Word

Duane Morris Techlaw Blog

Almost everyone realizes there is a federally managed “Do Not Call List” governing telephone marketers (or “telemarketers”). Less well known is that a 1991 law, the Telelephone Consumer Protection Act, 47 U.S.C. § 227, prohibits telemarketing calls using autoidialers without consent, unsolicited fax advertisements and telemarketing calls to cell phones. Combining this statute with class action procedures has resulted in some substantial damages judgments over the years.

The story of TCPA this year, though, is how the Supreme Court can sometimes see a legal issue so clearly despite confusion and conflicts among the lower federal courts. Earlier this term, the Court handed down a decision in Mims v. Arrow Financial Services LLC, in which it held that TCPA lawsuits can be brought in federal court pursuant to “federal question” jurisdiction. Although that same question had been answered in the negative by several courts of appeals — based on statutory language granting TCPA jurisdiction to state courts “if [such an action is] otherwise permitted by the laws or rules ofcourt of [that] state” — the Supreme Court’s decision was unanimous, 9-0, to the contrary. According to the Court’s opinion, since Congress had not divested federl courts of jurisdiction in the TCPA, state courts did not have excluisive jurisdiction over TCPA litigation because “the grant of jurisdiction to one court does not, of itself, imply that the jurisdiction is to be exclusive.”

There are some interesting themes of judicial temperment implicit in this holding, including a tendency (regardless of conservatism or political affiliation) for the federal judiciary to aggrandize its power despite constant reiteration of the concept of limited federal jurisdiction. What is remarkable about Mims, however, is more pragmatic. Even with the class action reforms of the past decade, federal courts still do a better job, especially for defendants, of administering nationwide class action cases. The Supreme Court has now given a green light to bringing these cases in federal district court. So the back-and-forth between federal and state court that has bedeviled TCPA litigants for years is now a thing of the past. Like the old Smith Barney commercials featuring John Houseman, when the Supreme Court talks, people listen.

Cross-posted from the Duane Morris Techlaw Blog.


The Future of Red Lion

CFA brief

This is the brief I just prepared for the Consumer Federation of America to the U.S. Supreme Court on the issue of whether the so-called Red Lion doctrine of First Amendment regulation of broadcasters should be re-examined. My favorite passage is:

[T]he presumption of invalidity inherent in petitioners’ argument is flawed. Broadcasters do not remain “singularly constrained,” Pet. at 16, on the ground that there were few speakers 45 years ago. When Red Lion was decided there were hundreds more newspapers in America, half a dozen or more in major cities like New York, national, weekly news and cultural magazines (Life, Look, etc.) and many other sources of information and entertainment that are no longer available in today’s marketplace. Therefore, the “undeniably large increase in the number of broadcast stations and other media outlets” on which the D.C. Circuit and petitioners rely, id. at 18, is immaterial to the economic regulation of broadcast licensees unless — as petitioners dare not suggest, because it is untrue — the increase has lessened the technical need for governmental entry and interference regulation.

Whether there are three or six or ten television stations in a local market, however, does not at all mean there is enough spectrum to accommodate everyone who would like to use the airwaves. What some judges have called “the indefensible notion of spectrum scarcity,” Action For Children?’s Television v. FCC, 105 F.3d 723, 724 n.2 (D.C. Cir. 1997) (Edwards, J., dissenting), is therefore totally true and completely defensible.

[slideshare id=11925599&doc=11-696cfaopp-brief-120308132113-phpapp02&type=d]

Technology and the Supreme Court

It is rare that the justices of the Supreme Court of the United States actually write or speak about technology. But as connectivity and user-generated content become more ubiquitous and pervasive, sometimes the Court — despite its inherent judicial conservatism — just can’t avoid touching on issues related to the use, importance and legal status of modern communications technologies.

In that respect, the just-completed 2009-10 and 2010-11 Supreme Court terms witnessed two rather impressive developments.  First, while more than a year ago most of the justices, and especially Antonin Scalia, said they had never even heard of Twitter, 2010 saw the first-ever mention of blogs and “social media” in a Supreme Court opinion, namely the controversial Citizens United decision on corporate campaign spending.

Rapid changes in technology — and the creative dynamic inherent in the concept of free expression — counsel against upholding a law that restricts political speech in certain media or by certain speakers. Today, 30-second television ads may be the most effective way to convey a political message. Soon, however, it may be that Internet sources, such as blogs and social networking Web sites, will provide citizens with significant information about political candidates and issues. Yet, §441b would seem to ban a blog post expressly advocating the election or defeat of a candidate if that blog were created with corporate funds. The First Amendment does not permit Congress to make these categorical distinctions based on the corporate identity of the speaker and the content of the political speech.

Citizens United v. FEC, 130 S. Ct. 876, slip op. at 49 (2010) (emphasis added; citations omitted).

Second, in this spring’s ruling overturning California’s regulation of violent video game sales to minor children — a/k/a teenage gamers — a sharply divided Court grappled not with the previously undecided question of whether video games merit First Amendment protection (on which there was unanimity), but instead the far narrower one of how to show a “compelling state interest” in restricting speech directed to children. That led to a remarkable passage, from Scalia himself, which as is typical was relegated to a footnote (where the “good stuff” is often found):

Justice Alito accuses us of pronouncing that playing violent video games “is not different in ‘kind’” from reading violent literature. Well of course it is different in kind, but not in a way that causes the provision and viewing of violent video games, unlike the provision and reading of books, not to be expressive activity and hence not to enjoy First Amendment protection. Reading Dante is unquestionably more cultured and intellectually edifying than playing Mortal Kombat. But these cultural and intellectual differences are not constitutional ones. Crudely violent video games, tawdry TV shows, and cheap novels and magazines are no less forms of speech than The Divine Comedy, and restrictions upon them must survive strict scrutiny—a question to which we devote our attention in Part III, infra. Even if we can see in them “nothing of any possible value to society . . ., they are as much entitled to the protection of free speech as the best of literature.” Winters v. New York, 333 U. S. 507, 510 (1948).

Brown v. Entertainment Merchants Assn., slip op. at 9 n.4 (2011) (emphasis added).

So the lesson is that although Justice Scalia may not know how to Tweet, but he can spell perfectly the name of a classic martial arts videogame, while still believing that The Divine Comedy is of greater value to society. What would the modern, technophile generation think about that? We’ll probably never know, because those facile with the means for mobile and rapid communications have short attention spans and thus probably lack have the patience (interest aside) to read Dante, even the Cliff Notes version, and tell us!


Judges & “Judicial Restraint”

You may not agree with the Supreme Court’s denial of standing to plaintiffs challenging an Arizona law giving tax credits for parochial schools, but the sentiment of limited judicial powers articulated by Justice Kennedy should resonate with folks from Tea Party members to liberal activists. Supreme Court Upholds Tax Break for Arizona Religious Schools | L.A. Times.

Few exercises of the judicial power are more likely to undermine public confidence in the neutrality and integrity of the Judiciary than one which casts the Court in the role of a Council of Revision, conferring on itself the power to invalidate laws at the behest of anyone who disagrees with them. In an era of frequent litigation, class actions, sweeping injunctions with prospective effect, and continuing jurisdiction to enforce judicial remedies, courts must be more careful to insist on the formal rules of standing, not less so. Making the Article III standing inquiry all the more necessary are the significant implications of constitutional litigation, which can result in rules of wide applicability that are beyond Congress’ power to change. The present suit serves as an illustration of these principles.

Opinion at supremecourt.gov.

The Constitution In Action

The outcry over federal judge Vaughn Walker’s decision overturning California’s Proposition 8 — which declared same-sex marriages unlawful — is hardly atypical where the Constitution is concerned. Why should a single judge, or nine (Supreme Court) judges, have the power to override the legitimate majority vote of citizens in a democracy?

The answer is that this is how it has always been in America. The constitutional checks and balances established by the Founding Fathers were intended to make the United States a republic; a political union in which the rights of those who are NOT in the majority are protected. That is why the Bill of Rights was added almost immediately after ratification of the Constitution. That is why the First Amendment protects the “free exercise” of religion from government control. Because in America, civil rights include the right not to be oppressed by the majority when essential liberties are concerned.

This is exactly how our constitutional democracy is supposed to work. Don’t blame federal judges for doing their jobs. The concept of judicial review has been at the core of our checks-and-balances democracy since the landmark Marbury vs. Madison ruling in 1803.

The Pro9 8 Decision—One Judge vs. 7 Million Voters? | SF Chronicle.

One can disagree with whether morality is a valid basis for legislation outlawing certain behavior. Constitutional law is split, with some decisions, like the 2003 case in which the Supreme Court overturned criminalization of consensual sodomy, indicating that moral values cannot trump individual rights. That rationale, of course, could also be extended to a variety of issues — from abortion to alcohol to public sex or nudity — in which only the sensibilities of others are affected.

The difference here is that, under the law as it stands now, legislation must have a secular purpose to survive constitutional challenge. The proponents of Prop 8 argued only that the initiative was intended to further society’s interest in procreation, that is child-bearing. But if that were the case, Judge Walker cogently explained, then fertility should be a precondition to traditional marriage, and couples unable to conceive or not wanting children would be barred from marrying. Not so long ago, interracial marriages were also unlawful. The outcry against the 1967 Supreme Court decision striking down such laws subsided rather quickly, and in my view that’s a good thing.

As if to prove Walker’s point, Los Angeles Cardinal Roger Mahony released a statement on Wednesday that said, “Those of us who supported Prop 8 and worked for its passage did so for one reason: We truly believe that marriage was instituted by God for the specific purpose of carrying out God’s plan for the world and human society. Period.”

Why the Prop 8 Rung Scares Religious Conservatives | NewsOK

200 years ago slavery was accepted and written into the Constitution. The Fourteenth Amendment changed all that after the Dred Scott decision declared that slaves were property and not citizens. It took a long and brutal civil war to make the leap, but America was and is better off. Whether or not you agree that gay marriage should be constitutionally protected, the system of judicial review is quintessentially American and something to be celebrated.

A Court of Technophobes?

This is an ongoing issue with the American judiciary system. Judges are by institution isolated and by tradition older than the general population. Increasingly, however, they are called upon to rule on technologies with which they have no experience at all.

It does’t look like we’ll be seeing much Tweeting-from-the-bench on the Supreme Court any time soon, but the Hillicon Valley blog highlights an amusing moment at a recent House Judiciary subcommittee meeting, attended by two Supreme Court Justices — Antonin Scalia and Stephen Breyer in which they’re asked if they plan on using Twitter any time soon. Scalia says he doesn’t even know anything about it — and notes that his wife refers to him as “Mr. Clueless.” Reassuring to know that of a Supreme Court Justice. Breyer, however, seems to indicate a realization that Twitter, as a communication platform, really could be quite powerful.

Subcommittee Chair Steve Cohen: Have either of y’all ever consider tweeting or twitting?

Justice Scalia:
I don’t even know what it is. To tell you the truth, I have heard it talked about. But, you know, my wife calls me Mr. Clueless — I don’t know about tweeting.

Justice Breyer: Well, I have no personal experience with that. I don’t even know how it works. But, remember when we had that disturbance in Iran? My son said, ‘Go look at this.’ And oh, my goodness. I mean, there were some Twitters, I called them, there were people there with photographs as it went on. And I sat there for two hours absolutely hypnotized. And I thought, ‘My goodness, this is now, for better or for worse, I think maybe for many respects for better, in that instance certainly, it’s not the same world. It’s instant and people react instantly… and there we are. It’s quite a difference there and it’s not something that’s going to go away.

Posted via web from glenn’s posterous

Social Media Make the Supreme Court

The U.S. Supreme Court, for the first time, took note of social media today, observing that “soon … it may be that Internet sources, such as blogs and social networking Web sites, will provide citizens with significant information about political candidates and issues.”

This landmark event occurred in Citizens United v. FEC, a case overturning the McCain-Feingold 2002 campaign reform legislation which required corporations to fund “electioneering communications” through PACs. Supreme Court Removes Limits on Corporate, Labor Donations to Campaigns [Fox]. So get ready to see explicit corporate-funded movies, TV spots, Twitter campaigns and Facebook fan pages furthering their political views every November.


Whether that is good or bad for American democracy I will leave to readers’ own judgments.

Rapid changes in technology—and the creative dynamic inherent in the concept of free expression—counsel against upholding a law that restricts political speech in certain media or by certain speakers. See Part II–C, supra. Today, 30-second television ads may be the most effective way to convey a political message. See McConnell, supra, at 261 (opinion of SCALIA, J.). Soon, however, it may be that Internet sources, such as blogs and social networking Web sites, will provide citizens with significant informa- tion about political candidates and issues. Yet, §441b would seem to ban a blog post expressly advocating the election or defeat of a candidate if that blog were created with corporate funds. See 2 U. S. C. §441b(a); MCFL, supra, at 249. The First Amendment does not permit Congress to make these categorical distinctions based on the corporate identity of the speaker and the content of the political speech.

Free Speech, Now That Speech is Free

Speech is indeed effectively free in the age of YouTube. So that does undermine the scarcity argument traditionally used for the (now-defunct) “fairness doctrine” and the like. But some conservative pundits, like Gordon Crovitz in the Wall Street Journal today, argue this makes political campaign contribution limits both obsolete and unconstitutional. Why Campaign Political Speech Restrictions on Unions and Corporations Make No Sense [WSJ.com].

The problem is that while speech is free, campaign $$ is not. Crovitz equates money with political speech, something the Supreme Court did (erroneously in my view) way back in the 1970s in upholding some, but not all, Watergate-era campaign spending and contribution limits. That does not mean, as he implies, that restricting corporate political contributions is “silly,” because Cravitz’s own analysis shows that it is communication where technology has leveled the playing field, not political campaigns, with all their expensive pre-Web 2.0 trappings like air travel, rally planing and event staging.

In his defense, what Crovitz appears to be saying is that bans on pure corporate political speech, rather than monetary contributions, are problematic:

Whatever the arguments for blocking direct contributions by corporations and unions, McCain-Feingold goes beyond this and directly limits First Amendment speech. The Constitution doesn’t promise “equal” speech, just the freedom to speak.

I agree with that. But the premise that “direct contributions” are different should be the start, not a footnote, to this debate.

The Supreme Court’s Cyberlaw Influence — Not Much, Thankfully

Tom O’Toole at BNA TechLaw writes that Supreme Court nominee Sonya Sotamayor is unlikely to have any substantial influence on the Court’s cyberlaw jurisprudence because there basically is none:

The Supreme Court has never reviewed a case involving the Computer Fraud and Abuse Act.

The Supreme Court has never reviewed a case involving the Electronic Communications Privacy Act.

The Supreme Court has never reviewed a case involving Section 230 of the Communications Decency Act (which gives interactive computer services immunity from most claims arising from the publication of third-party content), though it did consider, and strike down, the prohibitions against indecent online speech contained in another part of the CDA in Reno v. American Civil Liberties Union, 521 U.S. 844 (1997).

The Supreme Court has never reviewed a case involving the CAN-SPAM Act or the Digital Millennium Copyright Act.

The Supreme Court has never reviewed a case involving electronic contracting, jurisdiction arising from online activities, cybersquatting or any other domain name-related dispute.

Aside from Doe v. Chao, a case involving standing to sue the federal government under the Privacy Act, the Supreme Court has never taken a case involving online privacy or security (GLB, COPPA, FTC Act, you name it). If you want to count Bartnicki v. Vopper, go ahead, though I don’t think that obscure decision in any way undermines the point I am trying to make here.

He’s right, but I find that a plus, not a minus. The evolution of this rapidly changing medium really does not need the glacial pace at which the Supreme Court decides issues, and certainly benefits from the pull-and-tug among lower courts to strike the appropriate balances among regulation, civil rights, legislative power, law enforcement and the other technology policy matters affecting the Internet. When the Supreme Court speaks on tech issues — witness the Sony Betamax case from nearly 25 years ago or the Brand X decision from 2005 — it often leaves the law in a more polarized and confused state than before. So IMHO, we don’t need no stinkin’ badges from the Supremes.