Archive for May, 2012

Shareholder Lawsuits Quickly Follow Facebook’s IPO

Thursday, May 24th, 2012

Nasdaq chart of Facebook stock
Facebook’s falling stock. (Image: Nasdaq)

Facebook and its investment bankers are being sued over an IPO that didn’t “pop” the way so many investors were hoping. After debuting at an issue price of $38, Facebook’s stock has fallen to a low of $30.94. As I write this, it’s trading at a little over $32.

On Friday, I did a post about the law of IPOs. I talked about how much paperwork you have to file with the SEC in order to do a public offering, including a long, boring document called an S-1. So tedious, almost no one will read it. Almost. As I said:

You know who reads S-1s? Other lawyers. In particular, litigators. Lawyers who are looking for some misstatement or some unmentioned fact that will serve as a basis for a lawsuit based on federal securities law. And then it’s off to the courthouse!

Ahem. That didn’t take long. According an Associated Press story published yesterday:

One suit, filed in U.S. District Court in New York, claims Facebook’s IPO documents contained untrue statements and omitted important facts, such as a “severe reduction in revenue growth” that Facebook was experiencing at the time of the offering.

AnnaMaria Andriotis at SmartMoney adds an interesting footnote to this whole story about a trend of declining payouts in securities class-actions. That means the Facebook lawsuits may be just as disappointing to investors as the IPO.

Updating Stories from the Past on Blog Law Blog

Wednesday, May 23rd, 2012

In the coming weeks and months I’m going to try to follow up on some of the many blog lawsuits that I’ve covered on Blog Law Blog.

Yesterday I started this effort with a post on TechnoBuffalo defense of a suit brought by a commercial printer trying to get to the source of a corporate leak.

Do you have a story you want me to follow up on? E-mail me and let me know about it – I’ll do my best.

If you were involved in a dispute covered on Blog Law Blog (and I know my readership includes blogger-litigants!) I’d love to hear from you with updates, postscripts, rants, or reflections.

Your CA Privacy Rights on Pandora

Wednesday, May 23rd, 2012

Pandora logoJust noticed this on Pandora: The page footer contains a link to “Your CA Privacy Rights,” which takes you to this:

California Civil Code Section 1798.83 permits users who are California residents to request and obtain from us once a year, free of charge, a list of the third parties to whom we disclosed their personal information (if any) for direct marketing purposes in the preceding calendar year and the categories of personal information disclosed to those third parties. If you wish to make such a request or have any questions about Pandora’s information sharing practices, you may contact us by sending us an email at pandora-support@pandora.com or write to us at Pandora Media, Inc., 2101 Webster Street, Suite 1650 Oakland, CA 94612, Attn: Listener Support.

As the text discloses, this is the fruit of California Civil Code § 1793.83. It’s an internet era law, dating back to 2005, that puts obligations on businesses who disclose personal customer data to third parties that then use that data for direct marketing.

When I start to read the statute, I get that feeling I so often get when I read California statutes, of wanting to spite my eyeballs for what they are seeing. It’s not only confusing, it’s not even clearly confusing. Which is to say it’s confusing in a confusing way. After I read it, I’m not even clear on how I’m confused. So I really don’t want to try to explain to you what the statute requires because I’m not sure what it requires, and I’m not even sure I could be sure if I spent a lot of time on it.

A business required to comply with this section shall, at its election, do at least one of the following:

(A) Notify all agents and managers who directly supervise employees who regularly have contact with customers of the designated addresses or numbers or the means to obtain those addresses or numbers and instruct those employees that customers who inquire about the business’s privacy practices or the business’s compliance with this section shall be informed of the designated addresses or numbers or the means to obtain the addresses or numbers.

(B) Add to the home page of its Web site a link either to a page titled “Your Privacy Rights” or add the words “Your Privacy Rights” to the home page’s link to the business’s privacy policy. If the business elects to add the words “Your Privacy Rights” to the link to the business’s privacy policy, the words “Your Privacy Rights” shall be in the same style and size as the link to the business’s privacy policy. If the business does not display a link to its privacy policy on the home page of its Web site, or does not have a privacy policy, the words “Your Privacy Rights” shall be written in larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or set off from the surrounding text of the same size by symbols or other marks that call attention to the language. The first page of the link shall describe a customer’s rights pursuant to this section and shall provide the designated mailing address, e-mail address, as required, or toll-free telephone number or facsimile number, as appropriate. If the business elects to add the words “Your California Privacy Rights” to the home page’s link to the business’s privacy policy in a manner that complies with this subdivision, and the first page of the link describes a customer’s rights pursuant to this section, and provides the designated mailing address, electronic mailing address, as required, or toll-free telephone or facsimile number, as appropriate, the business need not respond to requests that are not received at one of the designated addresses or numbers.

(C) Make the designated addresses or numbers, or means to obtain the designated addresses or numbers, readily available upon request of a customer at every place of business in California where the business or its agents regularly have contact with customers.

Really, do they just go with their first draft of these things? Because I’m not sure most people could write such a confusing first draft. They must draft a first draft and then do some undrafting work on it to walk it back.

I know, I keep railing on California statutes over and over and over and over.

At any rate, I note that Pandora is saying “Your CA Privacy Rights” rather than “Your Privacy Rights” or “Your California Privacy Rights.” Risky, I guess. Or not. Hard to tell.

Anyway, I e-mailed Pandora to ask for a disclosure under the law – and I disclosed that I am not a California resident, but I’d appreciate it all the same if they would honor it – and I’ll post a follow-up here.

Update on Johns-Byrne Co. v. TechnoBuffalo

Tuesday, May 22nd, 2012

TechnoBuffalo logo and headshot of CEO Jon Rettinger

In the case of Johns-Bryne Co. v. TechnoBuffalo, a commercial printer is suing a venerable gadget blog to find out who leaked photos of some new cell phone packaging the printer was producing for Motorola. When I last blogged about this in January, an Illinois state trial-level court had just rebuffed TechnoBuffalo’s attempt to use Illinois’s reporter’s privilege law to prevent having to turn over information about the leak. The court said TechnoBuffalo wasn’t a “news medium,” and its bloggers aren’t “reporters.” TechnoBuffalo turned around and asked the court to reconsider the ruling and vowed to appeal if necessary.

I contacted TechnoBuffalo’s CEO Jon Rettinger (heroic Twitter profile pic above left) to ask for an update. We talked on the phone. I was impressed with his sense of conviction – he is working hard to protect the blog’s source.

The motion for reconsideration is, at this point, still pending. On reconsideration, TechnoBuffalo has sought to put more support behind the notion that blogs are real news outlets. To beef-up bloggery bona-fides, TechnoBuffalo pointed out that a blog (HuffPo) recently won a Pulitzer. They also pointed out that TechnoBuffalo is syndicated word-for-word on more traditional news outlets, such as Business Insider, and that TechnoBuffalo bloggers are commonly tapped to make appearances on the cable news channels.

This will continue to be an interesting case to watch as it gets right at the heart of the matter the most salient question of blog law: To what extent the law will blogging inherit the privileged legal status of heritage journalism?

Freedom-to-Connect Conference Now in DC

Monday, May 21st, 2012

Freedom to Connect logo with an anime style person holding cablesThere’s a cool conference going on right now in Washington D.C. It’s called Freedom to Connect.

It’s pricey at $595. But there’s a great line up of big-name speakers, including Vint Cerf, Larry Lessig, Michael Copps, and Rebecca MacKinnon. It’s a more polished affair than the logo at right would lead one to believe.

If you aren’t in D.C. or don’t have that kind of disposable cash, you can follow the action at hashtag #F2C.

Today in Oregon: Blogging Former Church-Goer vs. Pastor with Anti-SLAPP Motion

Monday, May 21st, 2012

Defamation Defendant Julie Anne Smith (Image: Smith via Blogger.com)

A judge in Oregon is set today to hear the anti-SLAPP motion in the case of Pastor Charles O’Neal of the Beaverton Grace Bible Church, who is suing former church member Julie Anne Smith for defamation, seeking $500,000 in damages.

Smith’s blog, Beaverton Grace Bible Church Survivors, documents a cultish, creepy church. One commenter recounts a call for closet-raids to rid female church-goers of skimpy clothing.

An anti-SLAPP motion is a special kind of procedural device that allows the early summary dismissal of a lawsuit that is aimed at shutting down someone’s exercise of their First Amendment rights.

My bet is that Smith will win the anti-SLAPP motion, thus ending the lawsuit.

The best quick rundown of the fact’s is Smith’s own statement on her blog:

I began this blog in Feb. 2012 after noticing that the Google reviews I had posted of my former church were being removed. Days after the commencement of this blog, I received a legal summons suing me and three others for defamation to the tune of $500,000. The story of spiritual abuse needs to be told. People are being hurt emotionally and spiritually by pastors who use bully tactics and we need a place to learn, to talk freely, and to heal. I will not be silenced.

For me, the best evidece of Pastor Charles O’Neal’s sky-high creepster-factor is his own words, quoted by Smith on the blog, as he rails against her in a weird rant with frequent crazy-person use of ALL CAPS.

Nicely put is Smith’s February 25, 2012 response:

I wouldn’t waste my time on defamation – what is there to gain in that? I will, however, sacrifice my time and energy in speaking the truth when there is abuse of power going on and lives are at risk.

More:

Thumbs Up for the Law of IPOs

Friday, May 18th, 2012

Facebook thumbs-up symbol with "cha-ching" and large asterisk

I talk about the lawyering behind Facebook’s IPO on the Stanford CIS blog.

Wanting a Chance to Be Heard in New Trade Negotiations

Friday, May 11th, 2012

The Office of the U.S. Trade Representative is conducting closed-door negotiations for a new trade deal involving intellectual property – the Trans-Pacific Partnership Agreement. Big Hollywood and Big Pharma are involved and are allowed to see negotiation documents. The public is not. Once the deal is concluded, it could bind Congress to change IP law and restrict free-speech, fair-use, and access-to-information rights.

In a brash move snubbing the lobbyist-challenged public, the Office of the U.S. Trade Representative decided to cancel a very limited opportunity for people to voice their concerns at a “stakeholder” meeting.

The following is an abridged version of a letter to the signed by many legal academics to the U.S. Trade Representative, Ambassador Ron Kirk.

The letter was written by law professors David S. Levine of Elon, Christopher Jon Sprigman of UVA, and Sean Flynn of American U.

Dear Ambassador Kirk:

We write as legal academics from the US and current or potential future Trans-Pacific Partnership Agreement (TPP) member countries to express our profound concern and disappointment at the lack of public participation, transparency and open government processes in the negotiation of the intellectual property chapter of the Trans-Pacific Partnership Agreement (TPP). We are particularly and specifically concerned that the United States Trade Representative (USTR) took the opportunity of its hosting of the latest round of negotiations in Dallas, Texas, to begin this week, to further restrict public involvement in the negotiations by eliminating the full-day stakeholder forums that have been hosted at other rounds. We call on the USTR and all TPP negotiating countries to reverse course and work instead to expand, rather than contract, the opportunities for public engagement in the formation of the TPP’s intellectual property chapter.

At a time when the last international intellectual property law to be negotiated under a similar process, the Anti-Counterfeiting Trade Agreement, teeters on the edge of rejection by the European Parliament in large part because of the loss of faith in its secretive process demonstrated by hundreds of thousands of marchers across Europe, the move to scale back participation in the TPP appears highly unwise and counterproductive. The functional and theoretical impact of the lack of transparency and accountability in the TPP and other trade negotiations institutionalizes the kind of process that the late Senator Daniel Patrick Moynihan criticized as policy making through “ignorant armies clash[ing] by night.” This is no way to build support for a broad reaching new international law that will constrain democratic law making over intellectual property matters in the US and abroad, particularly in an era of massive and rapid technological change that is testing the bounds of our current policy framework.

Our first and most important suggestion is to immediately begin a policy of releasing to the public the kind of reports on US positions and proposals on intellectual property matters that are currently given only to Industry Trade Advisory Committee members under confidentiality agreements. The USTR has previously refused to share its own proposals with its own citizenry claiming that, under the Freedom of Information Act (FOIA), to do so would damage the national security of the United States. …

Our concerns flow from the now-established observation that “trade” agreements no longer focus exclusively, or perhaps even predominantly, on the regulation of trade. Rather, the agreements increasingly propose international law standards that bind the legislative branch to change, or lock in place, domestic regulatory decisions. …

Unfortunately, there is little about the TPP negotiating process that is open to the broad range of inputs that would be reflected in domestic policy making. There has been no publicly released text of what USTR is demanding in these negotiations, as there would be in policy making by regulation, in Congress or in multilateral forums. Reviews of leaked proposals show that the US is pushing numerous standards that are beyond those included in any past (i.e. publicly released) agreement and that could require changes in current US statutory law. Reviews also show that the US proposal is manifestly unbalanced – it predominantly proposes increases in proprietor rights, with no effort to expand the limitations and exceptions to such rights that are needed in the US and abroad to serve the public interest. …

The unbalanced product results from an unbalanced process. The only private individuals in the US who have ongoing access to the US proposals on intellectual property matters are on an Industry Trade Advisory Committee (ITAC) which is dominated by brand name pharmaceutical manufacturers and the Hollywood entertainment industry. There is no representation on this committee for consumers, libraries, students, health advocacy or patient groups, or others users of intellectual property, and minimal representation of other affected businesses, such as generic drug manufacturers or internet service providers. …

All of the above makes the most recent further withdrawal from the TPP negotiation of a limited participation venue particularly disturbing. … While far from ideal for all involved, including the USTR and its ITAC advisors, this mechanism at least allowed for some exchange, even if that exchange was fundamentally flawed and artificially limited in value because of the information-disparity problems discussed above. In the place of these full day open forums in Dallas, USTR has channeled stakeholder input into a 4-hour mid-day (10:30am-2:30pm, i.e. over the lunch hour) exhibit hall for stakeholder tables. There will be no opportunity, as in the past, to speak to assembled negotiators through presentations. …

Court Declares Unconstitutional Illinois Law Against Taping of Police

Thursday, May 10th, 2012

The Chicago Federal Center, home to the Seventh Circuit (Photo: EEJ)

From a press release from the Reporters Committee for the Freedom of the Press:

The Seventh U.S. Circuit Court of Appeals stood up for the public’s right to be informed about the actions of public officials Tuesday when it declared unconstitutional provisions in the Illinois wiretapping law that prohibits audio recording of police activity in public places.

The Reporters Committee for Freedom of the Press had argued in a friend-of-the-court brief to the Chicago-based court that the overbroad law was a danger to journalists’ and the public’s First Amendment rights.

“This decision is a First Amendment slam-dunk. The court could not have been clearer about the importance of protecting the public’s right to observe and record the actions of public officials in public places,” said Reporters Committee Executive Director Lucy A. Dalglish. “Although Chicago police had indicated they would not enforce the law during the NATO Summit later this month – which we all expect will be accompanied by protests and police activity – it’s nice to have the force of the court’s decision on the right to record those events.”

“The notion that audio recording police activity in a public place, where there is no expectation of privacy, constitutes a felony is absurd and advances absolutely no government interest,” Dalglish added. “We are delighted that the appeals court agreed.”

One little nit: I don’t understand where they get “Seventh U.S. Circuit Court of Appeals” from. The full name is the United States Court of Appeals for the Seventh Circuit. So you can shorten it to the U.S. Seventh Circuit Court of Appeals, if you like, but it makes no sense to put the “U.S.” between “Seventh” and “Circuit.” It’s kind of like putting something between “United” and “States.” Okay, I guess it’s not that bad. But it’s wrong.

Links:

London Tweeting: The Crown Prosecution Service Talks Twitter

Thursday, May 10th, 2012

Flag of the U.K.A worthwhile article from the U.K.:

Social media and the law – How to stay out of trouble when using Twitter and Facebook

The story points up the many differences between the U.S. and U.K. when it comes to freedom of speech. Tweeting can quite easily constitute a crime in the UK, whereas the First Amendment in the U.S. makes it near to impossible to go to jail for a tweet.

Frank Ferguson, district crown prosecutor from Norfolk County in the East of England, identifies three types of social-media crime cases:

“Firstly, where people have committed an offence through abusing or bullying someone else, so that could be harassment or racism.

“Then we have the types of postings where the message results in an offence, such as someone is having a party, thousands turn up and criminal acts follow at that party.

“Thirdly we have seen many cases where someone has committed and offence and then goes on to social media to brag about what they have done. This is an example where it can help us to track someone down.”

Not that the first category of speech – with more – can’t constitute a crime in the U.S. because of the broad application of the First Amendment.

Also, as discussed in the article, a civil libel case in the U.K. can ruin a defendant - especially if the plaintiff is wealthy and the defendant lacks resources. It’s not just the judgment, it’s the U.K.’s loser-pays-the-attorneys-fees rule. In the U.S., with everyone bearing their own legal costs, plus with the First Amendment hurdles to libel actions, the specter of civil libel liability is much lower.

Likes, Takedowns, and Server Seizures – Great Posts from Goldman’s Blog

Monday, May 7th, 2012

Eric Goldman

Here’s just some of the required reading coming off of Eric Goldman’s Technology and Law Marketing Blog:

Facebook “Likes” Aren’t Speech Protected By the First Amendment–Bland v. Roberts

This is a case where a sheriff fired sheriff’s department workers after they Facebook-liked the sheriff’s opponent in an upcoming bid for re-election. Venkat Balasubramani and Eric G. explain why the court’s wrong that liking someone on FB isn’t protected First Amendment speech. I agree, of course. It’s a baffling decision.

512(f) Plaintiff Can’t Get Discovery to Back Up His Allegations of Bogus Takedowns–Ouellette v. Viacom

This is exactly the kind of thing your civil procedure professor was talking about when they said “procedure is substance.” Big Hollywood is free to machine-gun takedown notices out there, and despite a substantive legal right to get redress for such bogus takedowns, the procedural requirements make the right nearly worthless, turning §512 of the Digital Millennium Copyright Act into something quite different than what you would think it is just by reading it.

As Eric G. notes, “unless the 512(f) plaintiff has smoking-gun evidence of the copyright owner’s bad intent before filing the complaint, the plaintiff has virtually no chance of getting a 512(f) claim into discovery.”

Comments on the Megaupload Prosecution (a Long-Delayed Linkwrap)

The Megaupload case is one of those things that is extremely troubling, but it can be hard to explain exactly why it’s troubling in a pithy way. But here’s a quote from Eric G. that does a pretty good job:

The government is using its enforcement powers to accomplish what most copyright owners haven’t been willing to do in civil court (i.e., sue Megaupload for infringement); and the government is doing so by using its incredibly powerful discovery and enforcement tools that vastly exceed the tools available in civil enforcement; and the government’s bringing the prosecution in part because of the revolving door between government and the content industry (where some of the decision-makers green-lighting the enforcement action probably worked shoulder-to-shoulder with the copyright owners making the request) plus the Obama administration’s desire to curry continued favor and campaign contributions from well-heeled sources.

The resulting prosecution is a depressing display of abuse of government authority. It’s hard to comprehensively catalog all of the lawless aspects of the US government’s prosecution of Megaupload …

Megaupload’s website is analogous to a printing press that constantly published new content. Under our Constitution, the government can’t simply shut down a printing press, but that’s basically what our government did when it turned Megaupload off and seized all of the assets. Not surprisingly, shutting down a printing press suppresses countless legitimate content publications by legitimate users of Megaupload. Surprisingly (shockingly, even), the government apparently doesn’t care about this “collateral,” entirely foreseeable and deeply unconstitutional effect.

What do these three recent developments all have in common? Big guys win, little guys lose. Sometimes law is very dispiriting.

Free Webinar from RCFP on Covering Protests

Saturday, May 5th, 2012

Reporters Committee for Freedom of the Press logoThe good folks at the Reporters Committee for the Freedom of the Press are putting on a free webinar for reporters and photographers who are covering events, such as protests, where they could be blocked from reporting or detained by the police. Examples include the Occupy protests as well as the upcoming political conventions in Charlotte and Tampa. Or, you know, if you are in Los Angeles, your local elementary school science fair.

The one-hour webinar will be held May 9, 2012 from 1:00 p.m. EDT. (That’s 12 noon Central, which is my time zone and the time zone where the next big opportunity for reporter-police interaction will be: Chicago, May 20-21, for the NATO Summit.)

The webinar will be lead by Lucy Dalglish, RCFP Exec Director and Gregg Leslie, Legal Defense Director. It looks like they will be giving both a theoretical perspective on where your journalist rights come from as well as practical advice on what to do when confronted or detained by the police.

Excellent stuff! I am signed up and looking forward to it.

To reserve your own place:

https://www4.gotomeeting.com/register/941031095

ACLU Sues School After Girls Suspended for “Homicidal” FB Posts Blasting “Ugly” People

Tuesday, May 1st, 2012

Griffith Public Schools logoGriffith Public Schools expelled three 8th grade girls for Facebook posts evincing a desire to kill ugly students at school. The ACLU has filed suit against the district.

According to the complaint and the Northwest Indian Times, the Facebook discussion began one eighth girl updated her Facebook status to reflect that she had cut herself while shaving her legs. The status update was after school and was visible to those in the students’ “friends” circle:

[Girl 1 status update:] … I hate when I’m shaving my legs and I get he tinyest, microscopic, little [expletive] cut and it bleeds so much and makes me lose like 1/3 of the blood in my body – _ -

The following are excerpts of the conversation that followed:

[Girl 2:] thee only people that make me mad, are 7th graders who dont move out of thee way. & ugly people liike[name][name][name][name] [name]…etc.

[Girl 1:] I would say kill all the ugly people at school than. But I don’t wanna die.

[Girl 3:] i wanna kill people.

[Girl 2:] ii wiish yu wouldnt get caught, cos shiit, half thee school would be gone by now…

[Girl 1:] I need new best friends. All of mine are homicidal.

In case you’re wondering, the district got the Facebook exchange from a classmate’s mother.

Missing from the mainstream-media write-ups of this is what it says about the ACLU itself to be involved in this case. It sure looks like the ACLU has put itself firmly on the side of the popular, beautiful people. I kind of always thought to ACLU attorneys as recovering junior-high nerds. You know, the kind of kids who were on yearbook and took it really seriously. Maybe that’s just what I wanted to believe …

More: