On December 19, 2019, the Staff of the U.S. Securities and Exchange Commission’s Division of Corporation Finance issued guidance outlining the Staff’s views about disclosure obligations that companies should consider with respect to technology, data and intellectual property risks that could arise when operations take place outside the United States. Companies should consider this guidance when preparing risk factor and other disclosures included in upcoming periodic reports and registration statements.

Background

The Staff notes that the SEC’s principles-based disclosure regime recognizes that new risks may arise over time, affecting different companies in different ways. For those companies that conduct business operations outside the United States, risks can arise for technology and intellectual property, particularly when operations take place in jurisdictions that do not provide protection that is comparable to the United States. The Staff observes that companies may be exposed to material risks of “theft of proprietary technology and other intellectual property, including technical data, business processes, data sets or other sensitive information.” Exposure to such risks can be heightened when companies conduct business in some foreign jurisdictions, house technology, data and intellectual property abroad, or license technology to joint ventures with foreign partners. Continue Reading SEC Staff Issues Guidance on Technology, Data & IP Risks in International Operations

In a move that might be part of a settlement that YouTube has entered into with the Federal Trade Commission, the video-sharing site said it will ban “targeted” advertisements on videos likely to be watched by children. Because targeted ads rely on information collected about the platform’s users, displaying such ads to children younger than 13 without parental permission violates the Children’s Online Privacy Act (COPPA). Until now, YouTube has avoided banning targeted ads on its primary site, arguing that children should only be using YouTube Kids, a site that is free of targeted ads.

Twitter announced plans to change several aspects of its platform. One of the new features that the company is researching would allow users to control who—if anyone—may respond to their tweets. Inspired by Twitter’s desire to give users control over how far their tweets spread, the feature should be available later this year. Read about other plans that the platform has in store.

In anticipation of the 2020 election, Facebook said it will remove from its platform deep fakes, heavily altered content likely to mislead Facebook’s users.

Supporters of Section 230 of the Communications Decency Act, which protects online platforms from liability for user-generated content, are playing defense again, this time from House Speaker Nancy Pelosi, who wants the statute’s language sheltering web companies from liability stripped from the United States’ trade pact with Mexico and Canada. Find out why.

New York State Governor Andrew Cuomo proposed legislation that would make it a crime for convicted sex offenders to misrepresent themselves online. It also would require sex offenders to disclose to the Division of Criminal Justice Services the screen names they use for each of their social media accounts, dating apps and gaming apps.

Tesla chief executive Elon Musk’s tweet using the phrase “pedo guy” to refer to a man who had insulted Musk during a television interview did not amount to defamation, a California federal court jury found. Learn the basis of their decision.

As we reported late last year, in an effort to protect users’ mental health, the social media platform Instagram is phasing out popularity metrics such as “likes.” With such popularity metrics invisible to users, follower engagement—which brands use to determine an influencer’s value—will be demonstrated mostly in the form of comments. Because, on Instagram, comments are largely driven by captions, the quality of captions will be a major factor in determining which influencers continue to be successful on that platform despite the fact that it is primarily visual, one columnist argues.

Speaking of influencers, eight-year-old Ryan of Ryan’s World makes earning a living as an influencer look easy, having raked in $26 million in 2019 by posting videos like the one of him running around his garden to scoop up plastic eggs with toys inside them. But, the BBC reports, Ryan is something of an “outlier,” and “96.5% of YouTubers don’t make enough from advertising revenue alone to break the US poverty line.” Find out the names of the other top-ten highest earning influencers.

Here at Socially Aware we covered a wide range of issues in 2019. We reviewed an opinion reminding us that user-generated content posted on social media platforms is not necessarily freely available for use in other contexts, and a rare instance of a federal district court holding that a browsewrap agreement was enforceable.

We also examined some aspects of Internet law in Europe, including the legality of using “cookie walls” in the European Union, and the EU Copyright Directive’s impact on content-sharing service providers’ liability for copyright-infringing content.

And, as we’ve done in past years, we revisited the scope of the “safe harbor” that Section 230 of the Communications Decency Act provides again, again, and again.

But none of those topics—except the CDA’s Section 230—are on our list of the top-ten most read articles of 2019. Here are the pieces that made the cut:

  1. The Company Who Cried “General Audience”: Google and YouTube to Pay $170 Million for Alleged COPPA Violations
  2. How to Comply with the Revised Ephemeral-Messaging Provision in the DOJ’s Corporate Enforcement Policy
  3. By Winning Motion to Dismiss, Supermodel Loses Chance to Clarify Whether She Can Lawfully Post Photos of Herself to Social Media
  4. Will the Music Industry Continue To Win Its Copyright Battle Against ISPs?
  5. Time to Hit Pause: Copyright Infringement on User-Generated Platforms – When Is the Platform Provider Liable for Damages?
  6. The Meme Generation: Social Media Platforms Address Content Curation
  7. Court Holds That Arbitration Clause in “Hybridwrap” Terms Is Unenforceable
  8. Insta-Mural Infringement: Public Art in Instagram Ad Leads to Copyright Claim
  9. California Court Finds Section 230 Protects Decision to Suspend and Ban Twitter Account
  10. Ninth Circuit’s LinkedIn Decision Does Not Greenlight the Unauthorized Web Scraping of Public Websites

A random Twitter account tags a Japanese company and badmouths it in a series of tweets. Because the tweets are tagged, a search of the company’s name on Twitter will display the tweets with the negative comments among the search results. Upset over the tweets, the Japanese company wants to sue the tweeter in Japan. But how can it? The tweeter has not used his real name.

This is where discovery under 28 U.S.C. § 1782 can help. Section 1782 provides a vehicle for companies or individuals seeking U.S. discovery in aid of foreign litigation—even if the litigation is merely contemplated and not yet commenced. Specifically, Section 1782 provides that a federal district court may grant an applicant the authority to issue subpoenas in the United States to obtain documents or testimony, including documents or testimony seeking to unmask an anonymous Internet poster to pursue defamation claims abroad.

To pursue Section 1782 discovery, an applicant needs to establish:

  • that the requested discovery is for use in an actual or contemplated proceeding in a foreign or international tribunal;
  • that the applicant is an “interested person” in that proceeding; and
  • that the person from whom the discovery is sought resides or is found in the district of the court where the applicant is making the application.

Continue Reading Foreign Companies Can Use 28 U.S.C. § 1782 to Unmask Anonymous Internet Posters

The high-end skincare brand Sunday Riley has settled lawsuits filed by the Federal Trade Commission claiming that the brand’s founder encouraged employees of her eponymous company to set up accounts “under different identities” on the cosmetics retail site Sephora.com and leave positive reviews for Sunday Riley’s products. The FTC filed the complaints after the agency conducted an investigation that was prompted by a whistle blower’s post on REDDIT last year. Read about the settlement’s lenient terms, which two of the FTC’s five commissioners don’t believe are severe enough to deter other companies from attempting to post fraudulent reviews online.

Last month four senators—three Democrats and one Republican—introduced a bipartisan bill to require communications platforms to provide their users with a means of exporting the data that their users have accumulated on the platforms, such as friends lists. The rationale behind the legislation: making it easier for smaller platforms to compete with the likes of social media giants like Facebook and YouTube. Legislation like this is intended to benefit consumers and would require “operability standards to be revised” as interfaces evolve, writes Forbes columnist Robert Seamans. The real challenge, he argues, would be determining the types of data covered by the legislation.

Twitter announced it will extend to all of its users around the world the “Hide Replies” feature that it first tested in Canada in July and then rolled out in the United States and Japan in September. The feature allows users to “hide” any replies to their tweets. However, other Twitter users may view and respond to hidden replies by clicking a grey icon that appears on the tweets. Twitter’s blog reports that the platform’s test runs of the Hide Replies feature revealed that “27% of people who had their Tweets hidden said they would reconsider how they interact with others in the future,” and Twitter posters who hid replies “may want to take further action after [they] hide a reply, so now [Twitter will] check to see if you want to also block the replier.” This isn’t the first action that Twitter has taken to control trolls, and the platform’s blog promises that it won’t be the last.

Influencer culture has infiltrated the world of cybersecurity, with the Twitter accounts of several popular experts in that increasingly prominent field running ads for Lenovo’s “ThinkShield” line of products and services. VizSense, an influencer marker, reached out to the influencers, who included journalists, a former intelligence operative, and experts in areas like artificial intelligence, each with more than 10,000 Twitter followers apiece. Find out why the campaign sparked controversy in the cybersecurity community.

Speaking of influencers, guess what Bloomberg reports is now the number one career aspiration of the “overwhelming majority” of young Americans? Sigh.

The Federal Trade Commission is trying yet another approach to convey the message that the relationship between a social media “influencer” and the brand he or she is endorsing must be disclosed. This new guidance from FTC staff takes the form of a brochure (with accompanying video) aimed directly at influencers. It bluntly states that influencers “must comply with the law” when working with brands to recommend or endorse products and provides “tips on when and how to make good disclosures.”

The brochure is a distillation of the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising (the “Endorsement Guides”), as well as subsequent FAQs, guidance, and related materials. Arising out of the prohibition under Section 5 of the FTC Act on unfair and deceptive acts or practices, the Endorsement Guides require advertisers and endorsers (i.e., influencers) to, among other things, clearly and conspicuously disclose when the advertiser has provided an endorser with any type of compensation in exchange for an endorsement. This type of arrangement is what the Endorsement Guides describe as a “material connection,” meaning “a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience).” The new brochure delivers this message as follows: “Telling your followers about these kinds of relationships [i.e., material connections] is important because it helps keep your recommendations honest and truthful, and it allows people to weigh the value of your endorsements.” Continue Reading Influencing the Influencers: FTC Staff Release “Disclosures 101” Guidance for Online Endorsers

A recent decision from a federal court in New York highlights the limits social media users enjoy under Section 230 of the Communications Decency Act (CDA). The case involves Joy Reid, the popular host of MSNBC’s AM Joy who has more than two million Twitter and Instagram followers, and the interaction between a young Hispanic boy and a “Make America Great Again” (MAGA)–hat wearing woman named Roslyn La Liberte at a Simi Valley, California, City Council meeting.

The case centers on a single re-tweet by Reid and two of her Instagram posts.

Here is Reid’s re-tweet.

It says: “You are going to be the first deported” “dirty Mexican” Were some of the things they yelled at this 14 year old boy. He was defending immigrants at a rally and was shouted down.   

Spread this far and wide this woman needs to be put on blast.

 
 

Here is Reid’s first Instagram post from the same day.

 

It says: joyannreid He showed up to a rally to defend immigrants. … She showed up too, in her MAGA hat, and screamed, “You are going to be the first deported” … “dirty Mexican!” He is 14 years old. She is an adult. Make the picture black and white and it could be the 1950s and the desegregation of a school. Hate is real, y’all. It hasn’t even really gone away. Continue Reading The Joys and Dangers of Tweeting: A CDA Immunity Update

For the last twenty years, the music industry has been in a pitched battle to combat unauthorized downloading of music. Initially, the industry focused on filing lawsuits to shut down services that offered peer-to-peer or similar platforms, such as Napster, Aimster and Grokster. For a time, the industry started filing claims against individual infringers to dissuade others from engaging in similar conduct. Recently, the industry has shifted gears and has begun to focus on Internet Service Providers (ISPs), which provide Internet connectivity to their users.

The industry’s opening salvo against ISPs was launched in 2014 when BMG sued Cox Communications, an ISP with over three million subscribers. BMG’s allegations were relatively straightforward. BMG alleged that Cox’s subscribers are engaged in rampant unauthorized copying of musical works using Cox’s internet service, and Cox did not do enough to stop it. While the DMCA provides safe harbors if an ISP takes appropriate action against “repeat infringers,” BMG alleged that Cox could not avail itself of this safe harbor based on its failure to police its subscribers. Continue Reading Will the Music Industry Continue To Win Its Copyright Battle Against ISPs?

Courts continue to grapple with the enforceability of online agreements. While courts generally enforce clickwrap agreements—online agreements where users affirmatively show their acceptance after being presented with the terms, usually by clicking “I agree”—browsewrap agreements have stood on shakier enforceability grounds. Browsewrap agreements are online terms that, unlike a clickwrap agreement, do not require any affirmative indication of consent. Indeed, users can often continue using a website without ever viewing the terms of a browsewrap agreement, or possibly even knowing they exist. As the Northern District of California’s decision in Alejandro Gutierrez v. FriendFinder Networks Inc. demonstrates, browsewrap agreements are not always unenforceable, but reaching such a determination can be a highly fact-specific inquiry requiring significant discovery—including discovery of offline activities, such as phonecalls between the user and the online service provider.

AdultFriendFinder.com (AFF) is an online dating website. The website is generally free, although users can pay for particular upgrades and services. Users must register to use the site, and AFF collects users’ personal information as part of the registration process. Use of AFF is governed by the site’s Terms of Use (the Terms). Users don’t have to explicitly agree to the Terms in order to register or use AFF, but the Terms are readily available on the site, and they state that continued use of AFF constitutes acceptance. The Terms also include an arbitration provision. Continue Reading Just Browsing: District Court Finds Browsewrap Agreement Enforceable

In a move likely welcomed by publishers seeking a solution to honoring “sale” opt-outs in the interest-based advertising space, the Interactive Advertising Bureau last week released the IAB California Consumer Privacy Act Compliance Framework for Publishers and Technology Companies. The IAB is the trade association for the digital media and marketing industries, and it developed the Framework to help publishers (i.e., websites) and the online advertising supply chain comply with the CCPA—and particularly with the CCPA’s right to consumer opt-outs of “sales” of personal information.

The Framework sets up a system in which a consumer opt-out has the result that the parties in the digital advertising supply chain become limited service providers to the publisher, such that there is no longer a “sale” with respect to those consumers’ personal information. A limited service provider may still serve ads on behalf of the publisher, but those ads cannot involve any “sale” of personal information under the CCPA.

IAB is accepting public comments to the Framework until Tuesday, November 5, 2019. Comments should be emailed to privacy@iab.com. The draft Framework and draft technical specifications for the Framework can be accessed here. Continue Reading We’re Sorry, Your Service (Provider) Is Limited: The IAB CCPA Compliance Framework