Following a recent U.S. district court’s ruling, foreign companies operating cloud-based services may find themselves subject to federal long-arm jurisdiction under the Federal Rules of Civil Procedure 4(k)(2), even if they have no physical presence in the United States. In reaching its decision, the court noted that the question was ripe for consideration by the court of appeals; thus, it remains to be seen whether the decision will stand if appealed.

In Plixer International, Inc. v. Scrutinizer GMHB, the District Court of Maine ruled that, while jurisdiction would not exist under Maine’s long-arm statute, the court had specific personal jurisdiction over a German company under federal long-arm statute. Rule 4(k)(2), the federal long-arm statute, provides that serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant if the defendant is not subject to jurisdiction in any state’s courts of general jurisdiction as long as exercising jurisdiction is consistent with the U.S. Constitution and laws.


Continue Reading Foreign Cloud-Based Service Providers May Be Subject to Personal Jurisdiction in the United States

The U.S. Supreme Court on Oct. 16, 2017, announced it had granted the government’s petition for certiorari in United States v. Microsoft and will hear a case this Term that could have lasting implications for how technology companies interact with the U.S government and governments overseas. At issue is a consequential Second Circuit decision from last year that held that warrants issued under the Stored Communications Act (SCA) do not reach emails and other user data stored overseas by a U.S. provider.

While no federal appellate court besides the Second Circuit has squarely addressed the issue, multiple district courts outside the Second Circuit have declined to follow the Second Circuit’s reasoning in similar fact patterns involving other technology giants. The result is that U.S. law enforcement has different authority to access foreign-stored user data depending on where in the United States a warrant application is made. Google, for example, has expended significant resources to develop new tools to determine the geographic location of its users’ data so as to be in accord with the Second Circuit’s approach. Yet the company currently faces a hearing on sanctions for its alleged willful noncompliance with law enforcement requests in the Ninth Circuit based on a district court ruling that parted ways with the Second Circuit.


Continue Reading SCOTUS to Resolve Lower-Court Dispute Over U.S. Warrants Seeking Foreign-Stored User Data

Recent challenges to the Federal Trade Commission’s (FTC) authority to police data security practices have criticized the agency’s failure to provide adequate guidance to companies.

In other words, the criticism goes, businesses do not know what they need to do to avoid a charge that their data security programs fall short of the law’s requirements.

A series of blog posts that the FTC began on July 21, 2017, titled “Stick with Security,” follows promises from acting Chair Maureen Ohlhausen to provide more transparency about practices that contribute to reasonable data security. Some of the posts provide insight into specific data security practices that businesses should take, while others merely suggest what, in general, the FTC sees as essential to a comprehensive data security program.
Continue Reading More Insight From the FTC on Data Security—or More of the Same?

Nearly all companies—whether they’re focused on the B2C market or the B2B market—have embraced social media as a way to promote their goods and services and to interact with customers and potential customers. The growing use of social media has, however, created challenges for federal securities regulators who must enforce antifraud rules that were written

On July 21, 2017, following last June’s announcement that the Delaware House of Representatives had passed (with near unanimity) blockchain-related provisions proposing to amend several sections of the Delaware General Corporation Law (DGCL), the Delaware Governor officially signed the legislation into law.

The newly enacted legislation provides, among other things, specific statutory authority for Delaware corporations to use “distributed electronic networks or databases,” aka distributed ledgers or blockchain technology, for the creation and maintenance of corporate records, including the corporations’ stock ledger.[2]

1. The Use of Blockchain Technology for the Creation and Administration of Corporate Records

Section 219(c) of the DGCL provides that a stock ledger of a Delaware corporation is the only evidence of the identity of stockholders of the corporation who are entitled to inspect the list of stockholders and to vote at meetings.

Until now, under current recordkeeping practice, the stock ledger of a corporation could only be created and maintained by a corporate secretary or a corporation’s transfer agent. Often, a stock ledger consists of a capitalization table, i.e., electronically encoded data on a computer program like Microsoft Excel, which is producible in printed form.
Continue Reading Delaware Governor Signs Groundbreaking Blockchain Legislation into Law

MobilWebApps-GettyImages-484543671-600pxBroker-dealers have been reluctant to fully embrace social media due to regulatory concerns. Although the industry regulator, the Financial Industry Regulatory Authority, Inc. (“FINRA”), has issued regulatory notices relating to the use of social media and the application of FINRA Rule 2210 (Communications with the Public), many gray areas have remained, dampening the use of Facebook, LinkedIn and other social media platforms by industry participants.

FINRA’s recent release of Regulatory Notice 17-18 may help to remedy that problem, however. Presented in the form of 12 FAQs commenting on the earlier regulatory notices, this latest notice provides the broker-dealer industry with greater guidance on its use of social media to communicate with customers and potential customers. Specifically, the FAQs expand on the areas of recordkeeping, third-party posts and the use of hyperlinks to third-party sites. FINRA acknowledged that the use of social media and digital communications has expanded in the time since its last regulatory notice on the use of social media by member firms, which was Regulatory Notice 11-29, issued in 2011.

Recordkeeping

The requirement that member firms retain records of communications that relate to their “business as such” under Rule 17a-4(b) of the Securities Exchange Act of 1934 applies to digital communications, including those that are made through text messaging and chat services, if the content of the communication relates to the firm’s business. Before using such services, the firm must first ensure that it can retain those business communications.
Continue Reading FINRA Publishes New Guidance on Social Networking Websites and the Application of Rule 2210

In the most recent edition of his CyberSide Chat series, Socially Aware contributor Andy Serwin discusses emerging cybersecurity issues including:

  • The need to strike a balance between the efficiencies of the Internet of Things and the increased cyberattack vulnerability that usually goes along with using extra devices;
  • The pre- and post-cyber-breach steps a company can

In the wake of a successful social media conference in San Francisco, Socially Aware co-editors John Delaney and Aaron Rubin are revved up and ready to chair (John) and present (Aaron and John) at another Practicing Law Institute (PLI) 2017 Social Media conference! This one will be held in New York City on Wednesday, February

SociallyAware_Vol8Issue1_Thumb2The latest issue of our Socially Aware newsletter is now available here.

In this edition,we examine a spate of court decisions that appear to rein in the historically broad scope of the Communications Decency Act’s Section 230 safe harbor for website operators; we outline ten steps companies can take to be better prepared for

Social media is transforming the way companies interact with consumers. Learn how to make the most of these online opportunities while minimizing your company’s risk at Practicing Law Institute’s (PLI) 2017 Social Media conference, to be held in San Francisco and webcasted on Thursday, February 2nd.  The conference will be chaired by Socially