Source: http://www.stoutlegal.com/blog-1/
Timestamp: 2019-04-19 03:03:26+00:00

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Moreover, to a large extent, the content industry develops its content based on a stable regime of bargained-for contractual terms with cable distribution networks (among others). Disrupting the ability of cable companies to control access to their video streams will undoubtedly alter the underlying assumptions upon which IP companies rely when planning and investing in content development. And, of course, the physical networks and their related equipment have been engineered around the current cable-access regimes. Some non-trivial amount of re-engineeringwill have to take place to make the cable-networks compatible with a more “open” set-top box market.
As the length of a policy discussion involving the Internet increases, the probability of someone claiming a nefarious plot to destroy the Internet approaches 1.
Should there be zero-rated services for underserved populations? NO! It’s just Facebook trying to remake the Internet in its own image. Should broadband operators be able to intelligently optimize their networks and have some manner of allowing smaller players to purchase guaranteed bandwidth? HORRORS! That’s just cable companies creating fast-lanes and data caps in order to extort money out of poor defenseless consumers! Should we perhaps prevent companies from using clever tricks to circumvent our patent system and import laws? YOU CANNOT! Preventing infringing digital articles from entering the U.S. will close the Internet!
And of course, any effort to curb illegal content online can be attributable only to a cabal of content owners trying to give themselves an Internet kill switch.
Only, it’s just not true. There is nothing at all legally necessary — or even reasonable — about a per se protection of one right at the expense of any other right. But that’s just what some would have us believe. Online, the right to expression simply must trump all other values — law enforcement and property owners be damned.
But it’s hardly novel or controversial to understand that rights are balanced against each other and — with very rare exceptions — no right is absolute. Just as in the offline world, any one person’s rights online are circumscribed by the scope of everyone else’s rights. My ability to speak is not limited just by the principles of defamation and public safety, but also by the location where I speak. I am not entitled to limitless speech rights in all manner of private fora. Similarly, my right to travel does not entail my use of your privately owned vehicle – my rights are firmly delineated by at least the harm principle.
Of course even though these PICs sounds eminently reasonable, the free expression absolutists are there to claim that these provisions are just attempted “governance-by-infrastructure.” But, as elsewhere, this view gets the whole situation wrong.
At root, it is exceedingly improbable that DNS providers can avoid having some role in preventing the proliferation of illegal content. After all, ICANN, its registries, and its registrars are creatures of contract and statute, and as such are embedded in a social and legal context that expects certain minimal compliance from its institutions. Like, for instance, not facilitating thievery or the sale of unregulated and dangerous medicines.
That’s why it was particularly heartening to read about the Donuts-MPAA agreement last week: A private arrangement that finds a resolute middle ground that protects both expression rights as well as property rights. Donuts — the largest of the new gTLD registries — announced that it would be regarding the MPAA as a “Trusted Notifier” in its efforts to combat illegal content hosted through any of its TLDs. Essentially, this arrangement gives the MPAA an expedited method for submitting vetted complaints about widespread infringement being conducted through a Donuts-issued domain. Also as part of this arrangement, Donuts will implement a set of procedures, including the ability of affected registrants to protest, before any sanctions (e.g. domain name suspension) are imposed.
“Self-help” mechanisms like Donuts’ “Trusted Notifier” are very important — not just for what they accomplish, but for what they say about the interests of ICANN and its registrars and registries in maintaining credibility by minimizing harmful behaviors. And, the real story here is that this sort of voluntary arrangement is in fact possible between these organizations.
Frequently, rightsholders are vilified for any attempt to introduce reasonable accountability that might result in domain name suspensions because, naturally, only greedy, short-sighted groups like the MPAA and the RIAA would ever think of suspending domains where clear, pervasive property theft or other patently illegal conduct is occurring. This is of course a fantasy, and it is roundly rebutted by the Donuts-MPAA arrangement.
Interested in maintaining its credibility, both with the public, as well as with ICANN stakeholders, Donuts is motivated to ensure that it is a good corporate citizen. And this is where the Donuts-MPAA agreement really breaks new ground. This is a voluntary, arm’s-length arrangement reached through negotiation and mutual assent. This is not a master Internet switch that rights-holders get to flip at their whim, and it’s not a scattershot approach. It seems to be — at least from this early view — a fairly well-balanced, targeted, responsive and moderate approach to combating illicit use of the DNS.
Going forward, I think Congress and ICANN should take a lesson from Donuts’ approach to dealing with illegal content. Continuing to rely on the PIC provisions of the registry agreement is a no-brainer. But more broadly, the PICs should be woven into a larger enforcement “ecosystem” that ideally has ICANN in more of a supervisory role.
ICANN sets up the rules of the road that everyone is expected to follow, and can leave it to the registries to operationalize the basic PICs. If done correctly, the accountability regime could be realized through a simple respect for contracts — which ICANN could then guarantee as one of the few positive commitments for enforcement that it makes.
It is a bedrock principle underlying the First Amendment that the government may not penalize private speech merely because it disapproves of the message it conveys.
[c]onsist of or comprise immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.
The court, sitting en banc, held that the “disparaging” provision is an unconstitutional violation of free expression, and that trademarks will indeed be protected by the First Amendment. Although it declined to decide whether the other prohibitions actually violated the First Amendment, the opinion contained a very strong suggestion to future panels that this opinion likely applies in that context as well.
In many respects the opinion was not all that surprising (particularly if you’ve read my thoughts on the subject here and here ). However given that it was a predecessor Court of Customs and Patent Appeals decision, In Re McGinley, that once held that First Amendment concerns were not implicated at all by § 2(a) because “it is clear that the … refusal to register appellant’s mark does not affect his right to use it” — totally ignoring of course the chilling effects on speech — it was by no means certain that this decision would come out correctly decided.
Thus it was with pleasure that I read the Federal Circuit as it today acknowledged that “[m]ore than thirty years have passed since the decision in McGinley, and in that time both the McGinley decision and our reliance on it have been widely criticized[.]” The core of the First Amendment analysis is fairly straightforward: barring “disparaging” marks from registration is neither content neutral nor viewpoint neutral, and is therefore subject to strict scrutiny (which it fails). The court notes that McGinley’s First Amendment analysis was “cursory” (to put it mildly), and was decided before a fully developed body of commercial speech doctrine had emerged. Overall, the opinion is a good example of subtle, probing First Amendment analysis, wherein the court really grasps that merely labeling speech as “commercial” does not somehow magically strip away any protected expressive content.
In fact, perhaps the most important and interesting material has to do with this commercial speech analysis. The court acknowledges that the government’s policy against “disparaging” marks is targeting the expressive aspects of trademarks and not the more easily regulable “transactional” aspects (such as product information, pricing, etc.)— to look at § 2(a) otherwise would not make sense as the government is rather explicitly trying to stop certain messages because of their noncommercial aspects. And the court importantly acknowledges the Supreme Court’s admonition that “[a] consumer’s concern for the free flow of commercial speech often may be far keener than his concern for urgent political dialogue” ( although I might go so far as to hazard a guess that commercial speech is more important that political speech, most of the time, to most people, but perhaps I am just cynical).
The upshot of the Federal Circuit’s new view of trademarks and “commercial speech” reinforces the notion that regulations and laws that are directed toward “commercial speech” need to be very narrowly focused on the actual “commercial” message — pricing, source, etc. — and cannot veer into controlling the “expressive” aspects without justification under strict scrutiny. Although there is nothing terrible new or shocking here, the opinion ties together a variety of the commercial speech doctrines, gives much needed clarity to trademark registration, and reaffirms a sensible view of commercial speech law.
And, although I may be reading too deeply based on my preferences, I think the opinion is quietly staking out a useful position for commercial speech cases going forward—at least to a speech maximalist like myself. In particular, it explicitly relies upon the “unconstitutional conditions” doctrine for the proposition that the benefits of government programs cannot be granted upon a condition that a party only engage in “good” or “approved” commercial speech. As the world becomes increasingly interested in hate speech regulation, and our college campuses more interested in preparing a generation of”safe spacers” than of critically thinking adults, this will undoubtedly become an important arrow in a speech defender’s quiver.
Last July, the Eastern District of Virginia upheld the cancellation of various trademarks of the Washington Redskins on the grounds that the marks were disparaging to Native Americans. I am neither a fan of football, nor of offensive names for sports teams–what I am is a fan of free speech. Although the Redskins may be well advised to change their team name, interfering with both the team’s right to free speech as well as its property right in the registered mark is the wrong way–both legally and in principle–to achieve socially desirable ends.
Various theories have been advanced, but the really interesting part of the dispute–a topic upon which I published a paper this year–is the likelihood that the Lanham Act’s prohibition of immoral, scandalous, or disparaging marks runs afoul of the First Amendment. I was cheered to see this week that the First Amendment Lawyers Association filed an amicus brief largely along the lines of my paper. However, there were a couple of points that I still feel deserve more attention when thinking about the § 2(a) (the Lanham Act’s so-called “morality clauses”).
The district court tried to sidestep the First Amendment issue by declaring that the trademarks themselves are not at issue, but merely the right to register the trademarks. To reach its result, the court relied on the recent Walker case wherein the Supreme Court declared that Texas was at liberty to prevent Confederate flags from appearing on its license plates, since license plates could be considered the speech of the government.
However, there is an important distinction between license plates and trademarks. License plates are a good totally of government manufacture. One cannot drive a car on a public road without applying to the government for permission and affixing a government registration tag on the vehicle. The plate is not a blank slate upon which one may express one’s self, but is a state-issued information placard used for law enforcement purposes.
Trademarks, arising as they do from actual use, preexist federal recognition. The Lanham Act merely provides a mechanism for registering trademarks that happen to be used in interstate commerce. The federal government then chooses to recognize that trademark when contested or offered for registration.
This is a major distinction: the social field of trademarks already exists – the federal government has chosen to regulate and provide an enforcement mechanism for these property rights and speech acts when used in interstate commerce. Thus it is the market for trademarks that constitutes the forum, and not the physically recorded government register. Given that the government has interfered in a preexisting market in a way in which it protects some state-created trademark property rights, but not others, is it proper to regulate speech by virtue of its content? I think not.
Further, license plates are obviously government property to anyone who looks at them. Plates bear the very name of the state directly on their face. The system of trademark registration is a largely invisible process that only becomes relevant during legal proceedings. When the public looks at a given trademark I would argue that the state’s imprimatur is certainly one of the last things of which they would think.
Trademark registration … is a government benefit program open to a wide array of speakers with little quality judgment. Like other such programs … it should be seen as a form of “limited public forum,” in which the government may impose content-based limits but not viewpoint-based ones. An exclusion of marks that disparage groups while allowing marks that praise those groups strikes me as viewpoint discrimination.
The Lanham Act endows registrants with government-guaranteed legal rights in connection with the words and symbols by which they are recognized in society. Particularly in a globalized, interconnected society, the brand of an entity is a significant component of how it speaks to society. Discriminating against marks as “immoral” or “disparaging” can be nothing short of viewpoint discrimination.
As everyone is well aware, the First Amendment provides broad protection for a wide spectrum of speech. The definition of speech itself is likewise broad, including not only words, but also non-verbal gestures and symbols. Any governmental curtailing of such speech will be “presumptively invalid,” with the burden of rebutting that presumption on the government.
When speech is undertaken as part of commerce it does not magically lose any political, social or religious dimension it had when in a noncommercial context. Cartoons issued bearing the image of the Prophet as part of a commercial magazine are surely a political statement deserving of protection. The situation is the same if an organization adopts a logo that is derisive to a particular political or religious ideology – that publication is making a protected, expressive statement through its branding.
At first glance, one might think that defenders of § 2(a) would attempt to qualify scandalous and immoral trademarks as “obscene” and thereby render them subject to censorship. But, in McGinley the Federal Circuit explicitly refused to apply the obscenity standards from the Supreme Court to §2(a) on the grounds that the Lanham Act does not itself use the word "obscenity." Instead, the Federal Circuit, following the TTAB, was of the opinion that "[w]hat is denied are the benefits provided by the Lanham Act which enhance the value of a mark" and that the appellant still had legal recourse under state common law. Therefore, so the court in McGinley reasoned, since the right to use the mark is not actually abridged, no expression is abridged. And this is the primary basis upon which the district court in Pro-Football built its argument that no First Amendment concerns were implicated in canceling the Redskins trademark.
This of course willfully ignores once again the notion that in intervening in the field of trademarks, and in favoring certain speakers over others, courts effectively allows the Lanham Act to amplify preferred speech and burden disfavored speech. This is true whether or not we classify the trademark right as a bundle of procedural rights (which in turn make speech competitively possible) or as pure speech directly.
That said, it’s much more in keeping with the tradition of the First Amendment to understand trademarks as a protected category of commercial speech. The Supreme Court has noted that otherwise commercial information may at times be more urgent than even political dialog, and that information relating to a financial incentive was not necessarily commercial for First Amendment purposes. "[S]ignificant societal interests are served by such speech." This is so because even entirely commercial speech "may often carry information of import to significant issues of the day."
[S]olicitation is characteristically intertwined with informative and perhaps persuasive speech seeking support for particular causes or for particular views on economic, political, or social issues, and for the reality that without solicitation the flow of such information and advocacy would likely cease.
The analogy to trademarks is rather clear in this context. Although trademarks may refer to a particular product or service, that product or service is not of necessity a purely commercial object. Further, even if the product or service is a commercial object, the trademark itself can be, or can become, a symbolic referent and not a mere sales pitch. Consider, for instance, Mickey Mouse. The iconic mouse ears certainly represent a vast commercial empire generally, and specifically operate as a functional trademark for Mickey Mouse cartoons and merchandise. However, is there not much more of cultural significance to the mark than mere commercial value? The mouse ears represent something culturally – about childhood, about America, and about art – that is much more than merely a piece of pricing or quality information.
The district court (and Federal Circuit, for that matter) have missed a very important dimension in summarily dismissing First Amendment concerns of trademark holders. These courts dismiss owners of “immoral” or “disparaging” trademarks on the belief that no actual harm is done – the mark holders still own the mark, and, as far as the court is concerned, no speech has been suppressed. However, trademark registration, in addition to providing a forum in which to speak, also provides real procedural benefits for the mark holder. For instance, businesses and individuals enjoy a nationwide recognition of their presence and can vindicate their interests in federal courts. Without the federal registration that is presumptively supplied to marks that are not “immoral” or “scandalous,” an individual can find himself attempting to protect his interests in a mark in the courts of every state in which he does business.
However, under the unconstitutional conditions doctrine even though the benefits of trademark registration are not constitutionally guaranteed rights, those benefits cannot be offered in exchange for a trademark owner’s loss of actually guaranteed rights. Thus, the tight link between trademark registration and First Amendment protections that the courts just keep ignoring.
Its also worth noting that this doctrine did not emerge in constitutional jurisprudence until after the period in which the Lanham Act was drafted. Instead, the Lanham Act era was characterized by the rights-privileges distinction–made famous by then Chief Justice of the Massachusetts Supreme Judicial Court Oliver Wendell Holmes. In McAuliffe, a police officer sued for reinstatement after he was dismissed for his participation in a political organization. In dismissing the case, Chief Justice Holmes held that "[t]he petitioner may have a constitutional right to talk politics, but he has no constitutional right to be a policeman." This quote from Holmes captures precisely the sense in which the Federal Circuit dismisses the First Amendment concerns of mark holders.
In contrast to this rather antiquated view, the Supreme Court has recently reaffirmed the proposition that “the government may not deny a benefit to a person because he exercises a constitutional right.” Although this principle contains exceptions, it has been applied to a wide variety of situations including refusal to renew teaching contracts over First Amendment-protected speech acts, and infringement of the right to travel by refusing to adequately extend healthcare benefits to sick persons who had not been residents of a county for at least a year.
Basically, the best defense one can offer for § 2(a) is rooted in an outmoded view of the First Amendment that is, to put it mildly, unconstitutional. We don’t shut down speakers who offend us (at least for the time being), and we should stop attacking trademarks that we find to be immoral.
Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work ... is not an infringement of copyright.
Update: I received from feedback on this piece which pointed out an assumption I was making with respect to the Ninth Circuit's opinion, and which deserves a clarifying note. Essentially, the Lenz court splits the concept of affirmative defenses into two categories: (1) an affirmative defense that is merely a label owing to the procedural posture of a case and (2) an affirmative defense, as it is traditionally understood and that always puts the burden of production on a defendant. By characterizing affirmative defenses in this way, the Lenz court gets to have its cake and eat it too: when an actual proceeding is filed, a defendant will procedurally have the burden of production on the issue, but since fair use is at most a quasi-affirmative defense, the court felt it was fair to shift that same burden onto rightsholders when issuing a takedown letter. So technically the court says that fair use is an affirmative defense (as a labeling matter), but it does not practically treat is as such for the purposes of takedown notices.
Today we filed our brief with a number of leading academics urging the court to overturn the FCC's illegal net neutrality order.
If the 2010 Order was a limited incursion into neighboring territory, the 2015 Order represents the outright colonization of a foreign land, extending FCC control over the Internet far beyond what the Telecommunications Act authorizes." said Geoffrey Manne, Executive Director of the International Center for Law & Economics. “The Commission asserts vast powers — powers that Congress never gave it — not just over broadband but also over the very ‘edge’ providers it claims to be protecting. The court should be very skeptical of the FCC’s claims to pervasive powers over the Internet.
The challenge to the Open Internet Orders presents an important step toward assuring that the Internet continues to remain open for entrepreneurship and investment, as well as for innovators to be able to make important decisions regarding socially beneficial allocations and services.
You can read a summary of the brief here.
I am of two minds when it comes to theannouncement today that the NYC taxi commission will permit companies like Uber and Lyft to update, when the companies wish, the mobile apps that serve as the front end for the ridesharing platforms.
My first instinct is to breathe a sigh of relief that even the NYC taxi commission eventually rejected the patently ridiculous notion that an international technology platform should have its update schedule in anyway dictated by the parochial interests of a local transportation fiefdom.
That said, it’s important to take the world as you find it, not as you wish it to be, and so I want to highlight some items from the decision that deserve approbation.
I love that the commission gets this. The real power in the technology that drives the sharing economy is that it can change quickly in response to consumer demand. Further, regulators can offer value to these markets only when they understand that the nature of work and services are changing, and that their core justification as consumer protection agencies necessarily requires them to adjust when and how they intervene.
Although there is always more work to be done to make room for these entrepreneurial platforms (for instance, the NYC rules appear to require that all on-demand drivers – including the soccer mom down the street driving for Lyft – be licensed through the commission), this is generally forward-thinking. I hope that more municipalities across the country take notice, and that the relevant regulators follow suit in repositioning themselves as partners with these innovative companies.
If you haven’t been following the ongoing developments emerging from the demise ofGrooveshark, the story has only gotten more interesting. As the RIAA and major record labels have struggled to shut down infringing content on Grooveshark’s site (and now its copycats), groups like EFF would have us believe that the entire Internet was at stake — even in the face of a fairly marginal victory by the recording industry. In the most recent episode, the issuance of a TRO against CloudFlare — a CDN service provider for the copycat versions of Grooveshark — has sparked much controversy. Ironically for CloudFlare, however, its efforts to evade compliance with the TRO may well have opened it up to far more significant infringement liability.
In response to Grooveshark’s shutdown in April, copycat sites began springing up. Initially, the record labels played a game of whac-a-mole as the copycats hopped from server to server within the United States. Ultimately the copycats settled on grooveshark.li, using a host and registrar outside of the country, as well as anonymized services that made direct action against the actual parties next to impossible. Instead of continuing the futile chase, the plaintiffs decided to address the problem more strategically.
High volume web sites like Grooveshark frequently depend upon third party providers to optimize their media streaming and related needs. In this case, the copycats relied upon the services of CloudFlare to provide DNS hosting and a content delivery network (“CDN”). Failing to thwart Grooveshark through direct action alone, the plaintiffs sought and were granted a TRO against certain third-parties, eventually served on CloudFlare, hoping to staunch the flow of infringing content by temporarily enjoining the ancillary activities that enabled the pirates to continue operations.
CloudFlare refused to comply with the TRO, claiming the TRO didn’t apply to it (for reasons discussed below). The court disagreed, however, and found that CloudFlare was, in fact, bound by the TRO.
Copyright holders should not be allowed to blanket infrastructure companies with blocking requests, co-opting them into becoming private trademark and copyright police.
Devlin Hartline wrote an excellent analysis of the court’s decision that the TRO was properly applied to CloudFlare, concluding that it was neither improper nor problematic. In sum, as Hartline discusses, the court found that CloudFlare was indeed engaged in “active concert and participation” and was, therefore, properly subject to a TRO under FRCP 65 that would prevent it from further enabling the copycats to run their service.
Hartline’s analysis is spot-on, but we think it important to clarify and amplify his analysis in a way that, we believe, actually provides insight into a much larger problem for CloudFlare.
However, exceptions aside, there remains a much larger issue with the TCPA, one that is also rooted in the outdated technological assumptions underlying the law.
New Jersey has made important investments in its innovation ecosystem over the last decade. However, further establishing the state at the forefront of the nation’s innovative economies requires thinking out along the development curve in order to identify and provide infrastructure for future disruptive technologies. In addition to providing resources for existing entrepreneurs, public and private groups should look to proactively fund the future tech that will push New Jersey forward. A good way to gauge the future of software innovation is to look at where the big investors are putting their money.
If you read what venture capitalists like Fred Wilson, Marc Andreesen, and Sam Altman have to say, there are a handful of important technologies that will be maturing in the next five years and that promise to have a major impact. Among these are "cryptocurrencies," most notably Bitcoin.
Bitcoin - and any system relying on blockchain technology - provides an almost totally anonymous method of conducting business. Cash provides a good analogy for Bitcoin. In just the same way that a cash transaction is anonymous because there is no personally identifying information attached to the money you exchange, a Bitcoin transaction allows you to exchange funds between anonymous alphanumeric addresses. If one takes care not to generally reveal their address, there is no easy way for personal information to be associated with a transaction.
Bitcoin is distributed because there is no central authority. Software running on nodes connected to the network verifies the authenticity of each transaction. Further, each transaction is peer-to-peer in exactly the same way that cash is peer-to-peer. A buyer transfers a certain quantity of the currency to a seller without an intermediary involved.
In contrast to the distributed and anonymous nature of Bitcoin, consider the fragile nature of our traditional payment systems. When you slide your card at a retailer, your information passes through a number of intermediaries. This includes personal information like your name and zip code. Thus, a large amount of personally identifying information is stored in an ever widening circle of systems - each of which you need to trust. Bitcoin has no intermediaries, and requires no personally identifying information in order to work.
Finally, because of the technical implementation of the system, the ledger is essentially not forgeable. This means that every transaction that occurs using Bitcoin is verifiable and trustable because, given the foreseeable state of computing technology, the blockchain’s advanced cryptographic techniques are nearly impossible to crack.
Bitcoin has been steadily gaining credibility with large organizations. Recently Tmobile announced a major initiative in Poland that will accept Bitcoin for mobile minutes. Similarly, Microsoft now accepts Bitcoin as payment for its software and videos. Last summer, Dell joined other majors retailers, like Newegg.com and Overstock.com, in accepting online Bitcoin payments.
Cryptocurrencies are also making strides in the institutional setting. You can now invest in Bitcoin through a publicly offered fund. The Winkelvoss twins have also waded into the Bitcoin world, claiming that their new project will one day be the "Nasdaq of Bitcoin." In Spain, three companies have teamed up to begin offering Bitcoin withdrawals from 10,000 ATMs. Perhaps most interesting, IBM recently announced that it is working with the Federal Reserve to develop a digital currency based on the technology.
Not only has Bitcoin made strides with existing institutions, but also companies that develop with cutting edge implementations of blockchain technology have been raising a lot of money. Andreessen Horowitz recently became a major investor in 21, Inc., a bit coin start up. 21 Inc. has reportedly raised $116M to date, the most ever for a cryptocurrency startup. Coinbase, a major “virtual wallet” provider received the attention of Union Square Ventures. Starting from an initial A series of $5M, Coinbase went on to raise $100M in series B and C funding. All told, cryptocurrency startups received over $347M in funding in 2014 – more than triple from a year previous. And the pace continues to accelerate.
Bitcoin’s first and most obvious implementation is as a digital currency. Last year, Bitcoin transactions surpassed 100,000 per day. One merchant solution alone, reportedly processes over $1M in transactions each day. The financial applications of Bitcoin are manifold as it enables individuals to make anonymous transactions online. Of course there has been buzz around the potential facilitation of illicit purchases, however the legal opportunities are more compelling. Using Bitcoin, individuals could contribute to politicians and causes without fear of political repression or backlash for undesirable speech. More basically, individuals could also retain a sphere of privacy in their purchasing habits and spending preference – much as cash currently provides.
Bitcoin also opens up the opportunity to finally make the world of true micropayments a reality. Typically the overhead in fees associated with using third-party processors have made micropayments impracticable. However, as a peer-to-peer system, the overhead for an individual Bitcoin transaction is nearly nonexistent.
As a software system that is not dependent on central banks, Bitcoin also affords the opportunity for frictionless cross-boundary transactions. Individuals in countries that previously had trouble accessing capital for lack of financial infrastructure, now only need a smart phone with an Internet connection.
However, as compelling as the financial applications of Bitcoin are, blockchain technology promises a host of interesting nonfinancial uses. Simply for the sake of efficiency, the so-called “Internet of Things” will depend upon a decentralized, trustable transaction ledger of the vast quantities of information that connected devices will continuously generate. Blockchain poses one potential solution to this IOT dilemma, and also offers compelling applications in many more areas.
For instance some startups have begun using blockchain technology to enable alternatives to traditional contracting. Relying on publicly verifiable information, a blockchain-based contract can provide for absolutely known conditions, who agreed to them, and when they should be enforced. Taking it a step further, such contracts can also be made to self-execute, thereby reducing the transaction costs of the legal system that frequently disincentivize parties from fully vindicating their rights.
The fully secure audit-trail provided by blockchain technology would empower a whole host of applications for trust-based instruments. Blockchain technology could be used to create financial instruments, property registers, and any other ownership-dependent asset that can be absolutely verified for authenticity. Using such a system, the costs of enforcing owners’ rights would plummet.
There have been suggestions that small Bitcoin payments may have a place in SPAM prevention and also in unlocking the untapped bandwidth on home WiFi routers. There have also been experiments in using the blockchain to create tamper-proof voting systems. This activity isn’t constrained to simple online-polls either – in 2014 a political party in Denmark began using the blockchain as part of its own internal voting. As an absolutely trustable, publicly reviewable system, the blockchain can provide a whole new range of methods for transmitting information that is fraud-proof.
Merely knowing that Bitcoin is a “next big thing” is insufficient – New Jersey need to be, if not the place, at least a major place where hot software startups want to be. With proper foresight, the New Jersey ecosystem can become a home to cutting edge tech like Bitcoin. New Jersey already leads in a number of areas, most-notably biotech, but the value proposition of software-based tech should be seriously considered. First, the overhead to get started, and the cycles of product development require much lower capital resources. A dollar given to a software startup stretches much farther - a $50K investment to a software tech startup can represent a serious infusion of capital that makes the difference between having a prototype and never getting off the ground. If you can seed enough software startups with relatively low amounts of capital, it becomes a numbers game - the investments nurture the entrepreneurial community and it becomes only a matter of time before you have a game changer emerge.
There are two important things that New Jersey can do to cultivate the kind of tech development that will differentiate the state. First, we need to ensure that angel and seed funders see New Jersey as a viable investment environment. The state has already made some strides in this area. For instance the 2013 Angel Investor tax program was used to support 181 investments in 2014. And public-private partnerships, such as that between the EDA and Edison Partners VIII, have allowed more than $40M to flow to innovative companies in the garden state.
The state should continue these efforts, and build on them by specifically identifying and attracting angels to form as a leadership network in the state. Coupled with this, the EDA should actively collect and disseminate metrics that help us understand the strengths of our investment community, and also to work on our weaknesses. Further work should continue to research the possibility of providing financial partnership with angels, including matching grants and conditional loans.
The second major thing to do to encourage software tech startups to take root in New Jersey is to actively focus on developing a close-knit culture of entrepreneurship in the state. Groups like LaunchNJ have begun this work, and the state should look for opportunities to consolidate this culture. To date, much of the EDA’s focus has been distributed throughout the state. This makes political sense as a general policy, but has some subtle problems.
Often the preferred destination for startups is Silicon Valley and a handful of other locales. One advantage that Silicon Valley, NYC, and Philadelphia have over New Jersey is geographic constraint. New Jersey is every bit as convenient as Silicon Valley in terms of access to workforce, transportation, and physical infrastructure. What New Jersey needs is a directed focus on a smaller geographic area in which to cultivate our software tech sector. We need a "scene" where the innovators go to collaborate and socialize. Although not a large state, having our innovation hubs spread out across a number of cities and suburbs is less than ideal. Newark and Jersey City have been making great strides toward revitalization in recent years. Trenton is also an obvious candidate for both a renaissance and a corresponding software tech boom. Since his election, Mayor Jackson has made a number of moves that suggest that economic development is on the forefront of his mind.
The state government also needs to scale up the scope of its economic policies to incentivize a much larger range of startups. Although undeniably positive, programs like the Grow NJ tax credits and the Technology Business Tax Certificate Transfer Program are designed to assist relatively large companies when compared to the kind of startups that operate in the software tech space. In short, our law makers need to design economic policies that make it much more attractive for founders to start work on their ideas in New Jersey.
Software is eating the world – what can be digital will be digital. In the next five years we will witness a host of new technologies that transform important parts of our economy and daily lives. Bitcoin and the blockchain will certainly be a part of that transformation, and now is the time for the right investment to happen. New Jersey, already a leader in many ways, has an opportunity right now to expand its influence.
any other identifiable health information.
It is important to note that the requirements of this law are more stringent than the requirements of the federal Health Insurance Portability and Accountability Act ("HIPAA"). HIPAA merely requires that health insurance carriers merely protect the information - there is nothing specified as to what a minimum level of protection technologically looks like. The New Jersey law, on the other hand, requires basic encryption.
An important point missing from the law is how business associates of insurers who share information will fare. This would include device manufacturers, IT firms, lawyers, and other such service providers. In order to avoid any possible future liability arising from this law, it is advisable that service agreements now contain clauses that explicitly deal with encryption standards for any service provider who handles patient data.
Read more here. Read the original bill here.
Any business that conducts business in California needs to be aware of a new law that just passed. California has adopted an approach to privacy for minors which mirrors, in some respects, the "right to be forgotten" popular in the EU. If you run a web site that conducts business in CA you should consult with a lawyer on this issue.
This one appears to be a no-brainer to me. The Senate reintroduced a bill that would permanently ban taxes on Internet access. From Net Neutrality to SEC regulations on the Internet of Things, we see an ever-increasing push from elected and appointed officials to get their hands around the Internet. Many of these efforts, even if good intentioned, will inevitably slow the innovation engine that has powered so much of the last fifteen years of industry. This bill is a sensible effort to draw at least one line in the sand. Senators Heller and Ayotte should be applauded for taking this position.

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