Upcoming Talk: Legal Issues for Online Publishers

December 3, 2012

Update: The article on my talk “Legal Issues for Online Publishers” is now available on my law firm website.

My next talk is on Legal Issues for Online Publishers.  It is this Wednesday December 5. I am doing something a little different this time. It is a private talk for a single company. I am writing an article on the subject which I will be posting on my website soon.

 


Upcoming Talk: Legal Issues for Online Sellers

September 27, 2012

Update: The article from the talk is now available on my law firm website here.

My next scheduled talk is on Legal Issues for Online Sellers,  at the Sellers’ Conference for Online Entrepreneurs (SCOE) 2012 this Sunday, September 30, 2012 here in Seattle.

I am going to provide an overview of the legal issues you need to be aware of as an on-line seller. I will start with the basics, including what form of business entity you should be and why and where to register that entity, and a review of the Amazon and eBay seller agreements. Then I will cover a number of other important legal issues facing the on-line seller. These businesses touch upon many different areas of law. Most of them are technology related. The law is constantly changing as it tries to keep up with the changes in technology.

I hope to turn that talk into an article available for download on my law firm website and into a series of blog entries.


Electronic Rights and the Writer

July 31, 2012

I recently gave a talk on Electronic Rights and the Writer at the Pacific Northwest Writers Association 2012 Writers Conference. My handout from that talk is available as a free download on the resources page of my law firm website.

This handout provides a guide to the ever changing world of electronic rights for writers. Like many other businesses, the publishing market is moving away from physical distribution and increasingly towards electronic distribution through the Internet to computers, e-Book Readers, cell phones, iPads and other types of mobile electronic devices. In a way, this is the new wild west for writers. Because it is a market that is expanding rapidly and changing all the time, the rules regarding electronic rights are also changing all the time.


Sources of Venture Capital (VC) equity financing documents and information

April 5, 2012

As a follow-up to my previous blog, there are many sources of Venture Capital (VC) equity financing documents and information available on-line. Here are my favorites.  

1. TechStars Model Seed Funding Documents (Techstars.org)

TechStars and Cooley Godward Kronish, LLP put together a set of “Model Seed Funding Documents” that anyone can use.

There are five primary documents in the set:

2. Wilson Sonsini Term Sheet Generator

The Wilson Sonsini law firm has a term sheet generator. The website describes itself as: 

“This tool will generate a venture financing term sheet based on your responses to an online questionnaire. It also has an informational component, with basic tutorials and annotations on financing terms. This term sheet generator is a modified version of a tool that we use internally, which comprises one part of a suite of document automation tools that we use to generate start-up and venture-financing-related documents.” 

You need to go through the exercise to generate the forms.  

3. Wilson Sonsini Series AA equity financing documents 

Wilson Sonsini Series also offers a series of AA equity financing documents on ycombinator 

4. Veri course on Understanding Term Sheets 

Veri offers an on-line course called Understanding Term Sheets.   

 

I welcome comments and additions to this list.  

If you are going to obtain VC financing, I strongly recommend that you use an attorney experienced in this area. I do not recommend that people use legal forms in lieu of legal counsel. Legal forms are good for giving you a sense of how the documents might look and what language is typical. And they can be a good starting point for drafting purposes. But they should not be used as is. Every situation is different and only a good attorney can assess how well a particular legal form will work for you, what language might need to be changed, and what additional language should be added.  

And consider using two attorneys, one for the company and another for the founders. In some cases it would be best if each founder had their own attorney. The interests of the founders are closely aligned with the interests of the company, but they are not always the same. Often the VC will direct the company to use a law firm that has worked with the VC on funding many other startups. This law firm may not keep the best interests of the founders in mind.


Some Very Useful Advice for Startups from Guy Kawasaki

April 4, 2012

In case you missed it, Guy Kawasaki, a former Apple success story and now a successful venture capitalist, has posted a three-part series of excellent articles for entrepreneurs on his blog http://blog.guykawasaki.com. They are very informative, and come with downloadable templates for Microsoft Office. They are

 1. How to Create an Enchanting Pitch (includes a sample PowerPoint presentation)

 2. How to Create an Enchanting Business Plan (includes an outline of a business plan in Word)

 3. How to Create an Enchanting Financial Forecast (includes sample Excel files)

 I also really like two of his earlier blog articles:  

 The Top Ten Lies of Venture Capitalists

 The Top Ten Lies of Entrepreneurs

 There are many other excellent articles on his blog that are worth checking out.


Death by Internet? (Tyler Clementi’s suicide)

March 12, 2012

In the news this week, Dharun Ravi is on trial for several crimes in connection with college freshman Tyler Clementi’s suicide. The news reports originally claimed that Ravi secretly taped Clementi making out with another young man and broadcast the video live on the Internet and that this act drove Clementi to commit suicide. Should there be a specific law to cover harassment over the Internet that results in suicide?

Because Ravi used the Internet to broadcast his harassment and because the victim of his harassment later committed suicide, it seems like what he did was worse than other thoughtless school pranks.

Should we make a distinction between youthful pranks that harass but do not involve the Internet and those that do? Both are bad, and both should be punished. But should the fact that the prank is broadcast on the Internet mean it should be treated more severely than other pranks? This case raises these issues. Ravi is not actually being charged with causing Clementi’s suicide, but I do not believe that he would have been charged at all if Clementi had not committed suicide.

The Clementi case is actually more complex than it at first seems. Let me make this clear. What Clementi’s roommate Ravi did was wrong. But how wrong was it from a legal point of view?

There is very little law concerning Internet harassment and its consequences. So the police and prosecutors in this case had to turn to existing law and apply it to the Internet. Ravi is being charged with two counts of criminal invasion of privacy, one for making the sex tape, and the other for distributing it. The prosecution has added a charge of bias intimidation as a hate crime, along with hindering apprehension and witness tampering.

Is Ravi guilty of any of that? Even Clementi said on his on-line posts that the video of him did not really show anything. Is it a crime to attempt to show sexual conduct, or does one have to actually succeed to be guilty?

The invasion of privacy claim seems weak. Did Ravi invade Clementi’s privacy by showing him in a gay encounter on the Internet? Maybe, maybe not. Apparently the video did not show any nudity or other private matter other than that Clementi was gay. Clementi did not hide his sexual orientation from his roommate. He had openly talked about being gay on JustUsBoys.com. Somehow his roommate had seen his posts there and on August 22, a month before the video incident, tweeted “Found out my roommate is gay,” and linked to the JustUsBoys.com thread.

On the nights in question, Clementi told Ravi that he wanted to use the room that night to make out with another man. (From his entries on JustUsBoys.com: “so the other night I had a guy over. I had talked to my roommate that afternoon and he had said it w/ be fine with him.”) How much privacy can one expect in a dorm room that he shares with another person? His roommate did in fact walk in on him during one such encounter. That was to be expected.

Is there a difference between being open about your sexual orientation to your roommate and having your roommate announce it to the entire world on the Internet? Is a secret still a secret if it gets out to one person, knowing he might tell other people in your dorm, but no longer a secret when that person then turns around and uses the power of the Internet to tell a million other people on the Internet? I don’t think that Clementi’s sexual orientation can be considered a private matter. Therefore there can not be any invasion of his privacy by the mere announcement to the world that he is gay.

The bias intimidation claim is a little stronger. Ravi apparently invited his friends to view his gay roommate making out. But how intimidating could it have been to Clementi for Ravi to openly accuse him of being gay when Clementi publicly acknowledged that he was gay?

I have come to the conclusion that the Internet does not introduce new concepts to the law. But it does magnify existing legal issues. There is a concept that lawyers call the slippery slope. An act which may seem reasonable when done to a small degree, becomes less and less reasonable when done to a larger degree, until at the other extreme, it seems totally unreasonable. When an activity takes place on the Internet, you can go very quickly from a slippery slope to jumping off a cliff. This is a theme that I expect to be talking about a lot on this Blog.

In this case, if Ravi had just told some people in the dorm that Clementi was gay, we probably would not be talking about the incident. He would not even get in trouble. If he had handed out leaflets on school grounds announcing that his roommate is gay, he might have gotten in trouble with his school, but it would probably not be a crime. The fact that he broadcast the information on the Internet where it was viewable by millions seems to make it worse. But is it that different?

Of course, if he had succeeded in video taping anything revealing and had broadcast that on the Internet, it might have been different. I suspect that it has always been quite common for college kids to photograph each other in compromising situations. In the old days when a single copy of a photo, often a low resolution blurry image, was handed around a school or a dorm, this seemed like no big deal to most people. The fact that that photo or video now gets recorded in high definition with automatic focusing and then is sent to hundreds or thousands or millions of people by telephone texting or on the Internet makes the consequences much more serious. The actual act is still the same – it is still just a stupid thoughtless school prank. Such acts should be punished, not condoned. But should the same act be punished more severely because it is seen by more people? Maybe or maybe not.

I suspect that prosecutors will have a hard time proving invasion of privacy. They are not even trying to prove that Ravi contributed to Clementi’s suicide. Should they try? Since what Ravi did was reprehensible, it is likely the jury will find him guilty of some of the charges. But should they?

I have not heard of any school action against Ravi. Why was there no school punishment? If there had been school punishment, should that have been enough? Would it have been enough if Clementi had not committed suicide? Would it have been enough if Ravi had not tried to broadcast his video on the Internet? Should these factors be taken into account?

This is the fourth case in recent years that I am aware of where a young person committed suicide after being harassed on the Internet.

In 2007, 13-year old Megan Meier thought she had made a new friend when a cute teenage boy named Josh contacted her on MySpace and began exchanging messages with her. When he abruptly ended their on-line friendship a month later she committed suicide. It turns out she had been corresponding with several members of the same family that included a so-called friend of hers, and her mother, all pretending to be Josh. The mother was charged with violating various federal laws related to computer fraud and abuse, and was convicted. Her convictions were reversed on appeal. http://en.wikipedia.org/wiki/Suicide_of_Megan_Meier

In May 2008, high school student Jessica Logan broke up with her boyfriend. She had previously sent him nude photos by telephone. After the break-up he sent her nude photos to hundreds of students at their school. Logan faced harassment, abuse, humiliation, and stereotyping as a bad girl. Two months later in July 2008, Logan committed suicide. No one was charged.

In 2009, the story repeated itself. In June Hope Whitsell, just 13 years old, sent a semi-nude photo of herself to a boy she liked. He or possibly a friend of his forwarded it to his friends and the photo ended up being widely distributed at her middle school and the local high school. She was also harassed by school mates and committed suicide in October. Again no one was charged.

What distinguishes these cases from other teenage suicides is that the harassment took place over the Internet. Does that require an entirely new legal paradigm? I think we are fascinated by these case because the Internet is still relatively new and we are amazed by the power of the Internet.

Unfortunately teenage suicide is not uncommon. The Centers for Disease control report that approximately 4,400 teenagers commit suicide each year. Suicide is the third leading cause of death, behind accidents and homicide, of people aged 15 to 24, and the fourth leading cause of death for children between the ages of 10 and 14. http://www.cdc.gov/violenceprevention/pub/youth_suicide.html

I am sure that every one of those suicides has a story to tell. But we do not hear most of them.

Do we really need a new set of laws to deal with four cases of teenage suicide over a four year period? What are we doing in the meantime to prevent the other 3,399 teenage suicides each year?

Will we stop being shocked by youthful pranks that go viral on the Internet once the Internet has been around for a while, or will we hold this generation’s youth to a higher standard than their parents, because they have more technological power to publicize their pranks? Most stupid school pranks are best handled as a minor criminal matter in very serious cases, and subject to school discipline in less serious cases. Should the fact that Ravi used the Internet mean that he should be charged with multiple felonies and up to ten years in jail? Should we take into account that Clementi committed suicide, when Ravi is not actually charged with that?

I have some thoughts, but will save them for a later post.

I wish people would start discussing these issues on my blog. What do you think?

 

Update March 9, 2012: The prosecution has rested its case. Commentators said they put on a stronger case against Ravi than was expected. The Defense starts today.

Update March 12, 2012. The defense has rested. It does not sound to me like they put on a good defense. Every case has good facts and bad facts. You need to embrace the bad facts and convince the fact finder that you deserve to win despite the bad facts. Ravi’s actions were reprehensible. His attorney should have admitted that and then tried to explain why they did not rise to the level of a serious crime. Instead the attorney tried to convince the jury that Ravi did not do anything wrong – he was merely trying to protect his expensive equipment that was in the dorm room. No one is gong to buy that.


Why the MegaUpload Arrests Bother Me

January 31, 2012

Last week a consortium of U.S. federal agencies, working with police forces from around the world, shut down a series of file sharing/file storage sites best known as MegaUpload. They also arrested the senior executives of the companies behind the sites — including the flamboyant apparent leader of the group Kim Dotcom — and seized various assets of the company and the individuals. MegaUpload and its senior executives are not particularly sympathetic characters. But the arrests bothered me. I did not initially know why.

Many sites have been shut down for offering illegal goods, whether it be counterfeit goods meant to look like the original (fake Rolex watches for example), or illegal copies of software, But this one felt different. So I decided to write a blog piece about it. While writing this piece, I figured it out.

There are people who use technology to steal. Whether it is bank account balances, credit card numbers, knock-off copies of famous brand products, or digital content, it is clearly stealing. The technology is just the means to an end. I have no problem with arresting these types of people.

Then there are people who try to push the limits of the law using current technology. Sometimes these efforts lead to new uses of the Internet. For example, in the early days of the Internet I remember that the very first commercial Internet spam came from a law firm. The law firm got blasted for what was at that time seen as an outrageous attempt to commercialize the Internet. Ah the good old days when there was only one spammer. Yet commercial email advertising has become a major part of the Internet experience.

I do not see people who push the limits as criminals. Some of them may be bad people, and they often get sued, and they often lose, and I am fine with that. But I would leave it to the civil courts to define what appropriate technology behavior is. I would not make it a criminal issue.

The concepts of file sharing and on-line file storage on the Internet are still fairly new, and the law around what is allowed and what is not is still in flux. Several early cases, particularly A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (2001) and MGM Studios, Inc. v. Grokster, Ltd. 545 U.S. 913 (2005), established that if the file sharing company encouraged people to share copyright protected files through its site, then the site itself was liable for contributing to the infringement.

The current area of uncertainty involves the 1998 Digital Millennium Copyright Act (DMCA). Under the DMCA, service providers are protected from copyright infringement liability if they follow certain procedures. When they are notified by copyright owners of infringing material on their site (called a take down notice), they must promptly take down the copyright infringing material.

So far, courts have held that service providers do not lose the protection of the DMCA simply because they are aware that their site is being used to store copyright infringing material. See Viacom International, Inc. v. YouTube, Inc., No. 07 Civ. 2103 (currently on appeal although likely to settle) where the court found:

“[I]f a service provider knows (from notice from the owner, or a “red flag”) of specific instances of infringement, the provider must promptly remove the infringing material. If not, the burden is on the owner to identify the infringement. General knowledge that infringement is “ubiquitous” does not impose a duty on the service provider to monitor or search its service for infringements.”

The heart of the government’s case against MegaUpload seems to be that the owners of MegaUpload were aware that its site was being used for the exchange of copyright infringing material. Case law suggests that this knowledge is not sufficient for civil liability. It is hard to imagine that it would then be sufficient for criminal liability.

The government then seems to admit that MegaUpload removed offending files when it received a DMCA takedown notice. But the government also seems to be saying that MegaUpload was slow to remove files and did not do a very good job. Again, this does not appear to constitute criminal liability.

I have already discussed the problem that the sheer size of today’s major file sharing and file storage sites makes it impossible for companies to be in 100% compliance with the DMCA. See Copyright Enforcement on the Internet – Where should we draw the line? Even Apple does not maintain 100% compliance.

MegaUpload made some effort to remove infringing materials after it received take down notices. MegaUpload is a huge site. MegaUpload itself claimed that it had 50 million daily visitors and traffic on its sites accounted for 4% of all Internet traffic. The site could not possibly maintain 100% compliance with the DMCA. Does that make the owners of the site civilly liable for copyright infringement? Does it make them criminals? Those are tough question and ones where I do not think there has been any case law yet.

It is important for technology innovation that we let people push and test the limits. One of the founders of Napster, Sean Parker, took what he learned from Napster and became one of the key people in developing Facebook. If Parker had been branded a criminal instead, I would not say that social media would not exist, but social media might have developed much more slowly than it has.

By attacking MegaUpload before the limits of the DMCA have been established, theU.S.government is likely to scare off companies and new products and services that would otherwise provide legitimate technological innovation in on-line data storage (cloud storage) and file transfer services. TheU.S.government should have waited until case law was settled on this issue before using its full force to arrest and detain the MegaUpload individuals and seize their assets all over the world.

The criminal indictment quotes from many emails that suggest that the individuals who were arrested did participate in uploading some individual copyright infringing files to their own sites. Although these charges are minor, they may be the strongest part of the government’s case.

Even though the government’s case appears weak overall (and I say appears because we really do not know all the facts yet), I predict that the U.S. government will attempt to save face by putting so much legal pressure on MegaUpload that the executives will be forced to plead guilty to some minor charges and to forfeit their sites, seized property and money.