The “right to be for­got­ten” and other cy­ber­law cases go to court

▶ From copy­right to pri­vacy, courts have be­come the front line of cy­ber­law ▶ “We’re en­ter­ing a phase where there’s so much more un­ease”

Bloomberg Businessweek (North America) - - Contents - -Robert Levine

“The law can’t be right if it’s 50 years old. Like, it’s be­fore the in­ter­net.” The quote is from a speech Larry Page made at a Google devel­op­ers con­fer­ence in 2013, and it’s a fair sum­mary of how tech­nol­ogy com­pa­nies have tra­di­tion­ally viewed the le­gal sys­tem. Reg­u­la­tions can’t keep pace with tech­no­log­i­cal change, so opt for for­give­ness over per­mis­sion. If your idea is suc­cess­ful, you’ll be able to de­fend it by the time au­thor­i­ties tell you to stop.

“If you look at the re­la­tion­ship be­tween in­no­va­tion and how so­ci­ety in­ter­acts with it, the em­pha­sis has been on ‘code as law,’ ” says Urs Gasser, the ex­ec­u­tive di­rec­tor for Har­vard’s Berk­man Cen­ter for In­ter­net & So­ci­ety. That means re­ly­ing mostly on soft­ware to gov­ern on­line in­ter­ac­tions—block­ing spam or Twit­ter trolls, even try­ing to iden­tify copy­right in­fringe­ment. Grad­u­ally, that ap­proach is start­ing to change. “Post-snow­den,” Gasser says, “there’s a re­newed em­pha­sis on ‘law as law,’ to reg­u­late code.”

The change has come partly be­cause tech com­pa­nies in­creas­ingly have their own turf to pro­tect—and the money to seek help from Wash­ing­ton. On June 13, band­width-hun­gry in­ter­net com­pa­nies in­clud­ing Net­flix won a sweep­ing vic­tory against the likes of Ver­i­zon and AT&T. A broad 2-1 de­ci­sion by the U.S. Court of Ap­peals for the D.C. Cir­cuit up­held the Fed­eral Com­mu­ni­ca­tions Com­mis­sion’s au­thor­ity to set rules on net neu­tral­ity, pre­vent­ing broad­band providers from fa­vor­ing data traf­fic from cer­tain sources—or squeez­ing those sources at out­size rates. (The ca­ble com­pa­nies say they’ll ap­peal to the U.S. Supreme Court.)

Of­ten as not, Sil­i­con Val­ley is fight­ing one gov­ern­ment or an­other, too. Some com­pa­nies are seek­ing looser pro­tec­tions for la­bor or copy­right; oth­ers want to con­firm the lim­its of U.S. law en­force­ment’s au­thor­ity abroad. “I think we’ve moved out of the time when peo­ple were ei­ther tri­umphal­ists or pre­dict­ing catas­tro­phe,” says James Grim­mel­mann, a law pro­fes­sor at the Univer­sity of Mary­land who spe­cial­izes in dig­i­tal is­sues. “But we’re en­ter­ing a phase where there’s so much more un­ease. There are so many prob­lems … which are hard to fix with­out mess­ing other things up.”

For now, with Congress paralyzed, changes are most likely to come through patch­works of court prece­dents. Here are four other ques­tions courts have been grap­pling with that could re­shape the dig­i­tal world:

1. Do gig-econ­omy com­pa­nies have to hire work­ers as em­ploy­ees?

Tan v. Grub­hub

The only thing grow­ing faster than gig-econ­omy com­pa­nies may be the num­ber of po­ten­tial la­bor class ac­tions be­ing filed against them. More than a dozen such cases in­volve star­tups, and most al­lege “em­ployee mis­clas­si­fi­ca­tion”—that the com­pa­nies treat work­ers as con­trac­tors when they should be em­ploy­ees en­ti­tled to a min­i­mum wage and over­time.

In April, Uber set­tled a class-ac­tion case in Cal­i­for­nia for $84 mil­lion. The set­tle­ment al­lows the com­pany to keep pay­ing driv­ers as con­trac­tors and didn’t re­solve the un­der­ly­ing is­sue. “The Val­ley wants clar­ity,” says Shan­non Liss-Rior­dan, the lawyer at Lichten & Liss-Rior­dan who rep­re­sented the driv­ers. She’s also filed law­suits that might make for stronger cases. One in­volves food de­liv­ery ser­vice Grub­hub, which treats work­ers who sign up for de­liv­ery shifts as con­trac­tors.

A month be­fore the Uber set­tle­ment, a fed­eral judge dis­missed most of Liss-rior­dan’s class-ac­tion com­plaint against Grub­hub, which has since been amended for re­con­sid­er­a­tion, but ruled that the part of the case con­cern­ing the com­pany’s al­leged fail­ure to re­im­burse busi­ness ex­penses could pro­ceed. The com­pany has said the case doesn’t have suf­fi­cient facts to go for­ward. (Liss-Rior­dan’s firm also rep­re­sents in­di­vid­ual Grub­hub work­ers in sep­a­rate ar­bi­tra­tion pro­ceed­ings.)

The ques­tion of who’s a con­trac­tor de­pends on facts that vary from com­pany to com­pany, such as how much con­trol the em­ployer has or who sup­plies work­ers’ equip­ment. The stakes are high, says Daniel Rockey, a part­ner at law firm Bryan Cave who rep­re­sents Lyft: “Po­ten­tially, the whole gig-econ­omy model is at stake.”

Law­suits may have al­ready started to change the gig econ­omy: Star­tups such as In­stacart, Shyp, and home-care provider Honor Health­care have hired work­ers as full-time em­ploy­ees with ben­e­fits in the past cou­ple of months. “The case against Uber seems to have had a tremen­dous de­ter­rent ef­fect,” Liss-rior­dan says. “I’m proud of that.”

2. What does copy­right cover?

Star Ath­let­ica v. Var­sity Brands

A case the U.S. Supreme Court has agreed to hear in its 2016-17 term could dra­mat­i­cally af­fect the busi­ness of 3D print­ing. At is­sue is the el­i­gi­bil­ity of cheer­leader uni­forms for copy­right pro­tec­tion. Give me a ©!

In the U.S., you can’t copy­right “use­ful ar­ti­cles,” like a ta­ble, but you can copy­right artis­tic cre­ations, like a de­sign on its sur­face. Var­sity Brands, the $300 mil­lion-a-year queen bee of cheer­lead­ing uni­form mak­ers, is su­ing up­start Star Ath­let­ica for sell­ing uni­forms Var­sity says in­fringe on its copy­rights. Var­sity’s po­si­tion is that its uni­forms’ stripes and other pat­terns can be copy­righted; Star says those pat­terns are es­sen­tially func­tional.

Since the pas­sage of the 1976 Copy­right Act, courts and schol­ars have de­vised sev­eral tests to sep­a­rate an item’s de­sign from its func­tion. A district court held that Var­sity’s uni­forms couldn’t be copy­righted, but the ap­pel­late court ruled for Var­sity, con­clud­ing that the de­signs were dis­tinc­tive enough for pro­tec­tion.

A clear Supreme Court rul­ing on the line be­tween use­ful ar­ti­cles and artis­tic cre­ations would help 3D-print­ing busi­nesses whose cus­tomers are con­cerned that in the ab­sence of clear rules they could vi­o­late some­one’s copy­right (page 56). Print­ing com­pany Shape­ways and printer maker Form­labs joined an am­i­cus brief urg­ing the court to take the case. “Right now, ev­ery­one is in a su­per­cau­tious

Changes are most likely to come through patch­works of court prece­dents

de­fen­sive mode,” says Shape­ways gen­eral coun­sel Michael Wein­berg. Mar­tin Galese, gen­eral coun­sel of Form­labs, says: “Un­cer­tainty has priced peo­ple out of the busi­ness who can’t af­ford le­gal rep­re­sen­ta­tion.”

3. How much power does the U.S. have to ac­cess data abroad?

Mi­crosoft v. United States Mi­crosoft’s case against the fed­eral gov­ern­ment, ar­gued be­fore an ap­pel­late court last Septem­ber, is ex­pected to de­ter­mine how eas­ily the feds can ac­cess data stored in other coun­tries. It could also de­ter­mine whether the U.S. will be able to main­tain its lead in the cloud-com­put­ing busi­ness, worth $100 bil­lion a year and grow­ing fast.

The case be­gan when a judge is­sued a war­rant for in­for­ma­tion rel­e­vant to a nar­cotics in­ves­ti­ga­tion, stored in a Mi­crosoft data cen­ter in Ire­land. Mi­crosoft, which is also lob­by­ing for cloud-era up­dates to U.S. pri­vacy laws, chal­lenged the war­rant, ar­gu­ing the Depart­ment of Jus­tice doesn’t au­to­mat­i­cally have ju­ris­dic­tion over data held abroad. The Jus­tice Depart­ment says Mi­crosoft has enough con­trol over its for­eign data cen­ter for a war­rant to ap­ply. Mi­crosoft sued and lost in district court, then ap­pealed to the U.S. Court of Ap­peals for the Sec­ond Cir­cuit.

Mi­crosoft’s stand for pri­vacy dove­tails with its fi­nan­cial in­ter­ests. If it loses, ri­val cloud com­pa­nies abroad will have a much bet­ter sales pitch. “A num­ber of gov­ern­ments have told us that they will trust Amer­i­can tech­nol­ogy only if we win,” says Brad Smith, the com­pany’s pres­i­dent and chief le­gal of­fi­cer. “They won’t be com­fort­able putting in­for­ma­tion in Amer­i­can­run data cen­ters if the U.S. gov­ern­ment can reach into their coun­try with a uni­lat­eral search war­rant.”

Even worse for the in­dus­try and con­sumers, other coun­tries would al­most cer­tainly fol­low the U.S.’S lead, says Marc Zwill­inger, founder of Zwill­gen, a law firm that fo­cuses on tech­nol­ogy, who wrote the am­i­cus brief Ap­ple filed on Mi­crosoft’s be­half. “If the stan­dard set here is that for­eign law is given no weight,” Zwill­inger says, “for­eign gov­ern­ments will im­pose sim­i­lar or­ders that U.S. law can be dis­re­garded.” Mi­crosoft has al­ready got­ten a taste. Last year a com­pany ex­ec­u­tive in Brazil was de­tained by po­lice de­mand­ing ac­cess to a lo­cal user’s Skype data, which was stored in the U.S. Un­der U.S. law, Mi­crosoft was for­bid­den to share it.

4. Can France ex­pand Europe’s “right to be for­got­ten” world­wide?

Google v. CNIL In 2014, Europe’s high court af­firmed a “right to be for­got­ten,” al­low­ing peo­ple in the EU to for­mally re­quest that search en­gines re­move links to out­dated or ir­rel­e­vant ma­te­rial about them. It’s not an ab­so­lute right: The web pages them­selves re­main on­line; search com­pa­nies don’t have to grant every re­quest; and public fig­ures merit less pro­tec­tion than oth­ers. But the rul­ing was a bless­ing for peo­ple whose top Google re­sult was a dumb quote they gave their col­lege news­pa­pers.

Ini­tially, how­ever, Google delisted search re­sults only on Euro­pean do­mains, such as France’s .fr or Ger­many’s .de. Then it tried delist­ing re­sults on all do­mains, but only for searches made in the coun­try where the re­quest orig­i­nated. In March, CNIL, France’s data pro­tec­tion reg­u­la­tor, fined the com­pany €100,000 ($113,000) for fail­ing to com­ply with its in­ter­pre­ta­tion of the 2014 rul­ing. “The ter­ri­to­rial scope of the delist­ing is just a point of in­ter­pret­ing and ap­ply­ing the law,” says Mathias Moulin, the agency’s deputy di­rec­tor in charge of en­force­ment.

In May, Google ap­pealed CNIL’S de­ci­sion to France’s high­est ad­min­is­tra­tive court, the Con­seil d’état, which can take the case or re­fer it back to the EU high court. While the case will rest on tech­ni­cal de­tails of Euro­pean data pro­tec­tion law, it has broader im­pli­ca­tions. “If French law ap­plies glob­ally,” wrote Google’s gen­eral coun­sel, Kent Walker, in a Le Monde op-ed fol­low­ing the ap­peal, “how long will it be un­til other coun­tries— per­haps less open and demo­cratic—start de­mand­ing that their laws reg­u­lat­ing in­for­ma­tion like­wise have global reach?”

That’s an ar­gu­ment un­likely to win over a French court, though. “We have this re­ally in­ter­est­ing con­flict emerg­ing be­tween the de­sire of multi­na­tion­als to cre­ate the most global in­ter­net pos­si­ble and the ju­ris­dic­tional de­mands of other coun­tries,” says Trevor Hughes, head of the In­ter­na­tional As­so­ci­a­tion of Pri­vacy Pro­fes­sion­als. “That ten­sion is only go­ing to in­crease.”

The bot­tom line Cases now work­ing their way through U.S. and Euro­pean courts could do a lot to up­date laws to keep pace with tech­nol­ogy.

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