Social media sites are transforming not only the daily lives of consumers, but also how companies interact with consumers. Here at Morrison Foerster, across all of our practice groups, we are seeing complex, cutting-edge legal issues arising out of social media. As with the Internet boom during the mid-to-late 1990s, social media is generating new legal questions at a far faster pace than the law’s ability to provide answers to such questions. In an effort to stay on top of these emerging issues, and to keep our clients and friends informed of new developments, Morrison Foerster publishes this blog devoted to the law and business of social media.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Aaron is the chair of the firm’s Technology Transactions Group and co-chair of the Interactive + Digital Media Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals.Aaron’s practice focuses on advising both established and emerging companies in a variety of data- and technology-intensive sectors, including software, SaaS, cloud-based technology, digital media (social media, AR/VR, gaming, streaming media, AdTech), AI, healthcare, consumer electronics, e-commerce, other online business models, and mobile applications. He also maintains an active practice counseling companies on branding and marketing, trademark licensing, and content-related transactions, as well as the intellectual property aspects of mergers, acquisitions, asset spin-offs, and private equity investments.He has represented clients such as Autodesk, Meta, OpenAI, Splunk, Konami, Kaiser Permanente, SoftBank, Visa, and Yahoo, among others.Aaron has been recognized by numerous publications for his work on market-defining technology transactions. He is currently ranked by Chambers USA for “Technology Transactions.”Aaron also serves as co-editor of Socially Aware, the firm’s award-winning newsletter and blog devoted to the law and business of social media, and regularly publishes on various IP and technology-related topics. Aaron is also a sought-after speaker on new and emerging areas of law, and is a frequent presenter and panelist at conferences and legal services programs. In addition to his active practice, Aaron regularly provides pro bono assistance to various nonprofit and charitable organizations such as Common Sense Media and the Starlight Children’s Foundation. He is a member of the board of directors of California Lawyers for the Arts.While in law school at the University of California, Berkeley, Boalt Hall School of Law, Aaron served as executive editor of the California Law Review and was elected to the Order of the Coif. Following law school, Aaron served as law clerk to the Honorable William H. Orrick and the Honorable Martin J. Jenkins, both United States District Judges for the Northern District of California.

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Aaron is the chair of our Technology Transactions Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals. Aaron’s practice focuses on advising both established and emerging companies in a variety of data– and technology–intensive sectors, including software, SaaS, cloud computing, AR/VR, AI, gaming, healthcare, consumer electronics, social media, e–commerce, other online business models, and mobile applications. He also maintains an active practice counseling companies on the intellectual property aspects of mergers, acquisitions, asset spin–offs, and private equity investments.

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Lawrence Gallick is of counsel in the firm’s Austin office and a member of the Technology Transactions Group.Lawrence focuses his practice on technology transactions and licensing matters. His diverse experience includes advising on SaaS agreements, cross-licensing agreements, research and collaboration agreements, development agreements, and distribution agreements. He counsels a broad range of companies across the software, hardware, life sciences, biotech and FinTech spaces, as well as other entities including universities.He advises clients in connection with general corporate matters including contract negotiations, and leasing and technology placement agreements.Lawrence also serves as co-editor of <a href="https://www.sociallyawareblog.com/" target="_blank">Socially Aware</a>, the firm’s award-winning newsletter and blog devoted to the law and business of social media, and regularly publishes on various IP and technology-related topics.Prior to joining the firm, Lawrence was counsel at another major law firm. Before earning his law degree, Lawrence was a web consultant, project manager, and web developer in Portland, Oregon, where he managed and consulted on projects using industry methodologies and performed custom development and integration of content management systems.Lawrence was named a Super Lawyers “Rising Star” in 2015 and 2018–2022, and is licensed in both California and New York. Lawrence earned his J.D. from the University at Buffalo School of Law, where he was the electronic systems editor for the Buffalo Law Review and awarded the ABA-BNA Award for Excellence in the Study of Intellectual Property Law.

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Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster.Anthony advises clients on general commercial and transactional matters. He regularly advises companies on the IP aspects of their M&A transactions. His clients include technology, digital media and content for television and music, financial services, and communications companies with diverse intellectual property assets and issues.His practice focuses on the legal aspects of developing, licensing, and commercializing technology and intellectual property, as well as negotiating general commercial contracts, including outsourcing transactions, as well as content and data licenses. He regularly assists clients with legal issues relating to licensing and commercialization of digital media and content, digital content that is distributed over the Internet or streamed, mobile applications and social media, as well as the licensing of recorded music for distribution via digital platforms. Anthony is also experienced with issues relating to open-source software, software development, artificial intelligence and machine learning, cloud-based technology, and protection of proprietary information.Anthony has extensive experience working on matters involving disruptive technologies, such as blockchain. He has helped fintech clients with general intellectual property issues in connection with terms of service for online financial products and services.Anthony is an integral part of the outside pro bono legal team for nonprofit organizations based in New York, including advising clients on legal issues regarding entertainment, social media, privacy rights, and the negotiation of outsourcing and service agreements. Anthony received his J.D. from the University of Michigan Law School in 2009. He received his B.S. from Cornell University in 2004.

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Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster. He advises clients on general commercial and transactional matters. His clients include technology, media, and communications companies with considerable intellectual property assets. His practice focuses on the legal aspects of licensing and commercializing technology and intellectual property, as well as negotiating general commercial contracts. He also regularly assists clients with legal issues relating to mobile applications and social media.

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All Your Sale Are Belong to Us - Mitigating IP and Payments Risk in In-Game Economies (Part II – User-Generated Content and In-Game Payment Models)

A New California Digital Content Law Establishes New Requirements for Advertisers and Vendors

California’s Assembly Bill 587 Loses Key Provisions After Legal Challenge from X

Social Links: TikTok Tussles, Teen Privacy Push, and the Thumbs-Up That Sealed the Deal

Utah’s New App Store Age Verification Law: What S.B. 142 Means for Kids, Parents, and Tech

In February 2013, we <a href="../2013/02/25/decades-old-japanese-electioneering-law-may-get-a-web-2-0-refresh/">reported</a> on legislative momentum in the Japanese Diet to bring Japan’s sixty-year-old election laws into the brave new world of Web 2.0. On April 19, 2013, that reform effort came to fruition, when a bill permitting the use of the Internet during election campaign periods passed both Houses of the legislature—just in time for the upcoming Upper House poll in July.The debate revolved around Article 142 of the Public Offices Election Law (POEL), which imposes strict regulations on campaign activities during the two- to three-week “official campaign period” leading up to each national, prefectural and municipal election (also known informally as the “blackout” period). Specifically, Article 142 prohibits the dissemination of “documents and drawings” for electioneering purposes during the blackout period (with limited exceptions), a restriction that until now has been consistently interpreted to prohibit Internet-based electioneering activities altogether. Indeed, Article 142 has been understood to prohibit even the general public from participating in online election-related activities, activities synonymous with many popular grassroots campaign efforts in the United States and elsewhere.These somewhat antiquated restrictions are now largely part of the past. The <a href="https://www.jimin.jp/policy/policy_topics/pdf/pdf092_3.pdf">amended</a> Article 142 permits candidates for political office, political parties and members of the general public (both Japanese and non-Japanese) to utilize a range of online tools for electioneering activities during the official campaign period, ushering in a new era of net senkyo (the buzzword for Internet-enabled campaigning). The potential benefits for candidates and political parties include inexpensive, twenty-four hour access to constituents, and the freedom to depart from the narrow range of permissible activities that define the <a href="http://movies.nytimes.com/2008/04/07/movies/07camp.html?_r=0">current mode</a> of electioneering in Japan: train station stump speeches, pamphlet distribution and showering passersby with megaphoned sound bites from officially sanctioned campaign vans. Another purpose of the legislation was, reportedly, to energize Japan’s infamously “apathetic” youth vote.Essentially, the amended law divides the universe of online tools into websites and similar services (including blogs and social networking services (SNS)), on the one hand, and electronic mail, on the other. At least with respect to websites and similar services, the old restrictions have largely been dissolved: candidates, political parties and members of the general public are now permitted to update their websites, blogs and social network profiles with election-related activities during the official campaign period, and to engage in direct advocacy and solicitation of votes over the Web.The specific inclusion of SNS among the types of services for which restrictions have been largely relaxed is crucial, given that SNS carry the greatest potential for political innovation under the net senkyo regime. SNS, of course, have been a major force in American politics for a number of years, and Japanese politicians have themselves <a href="http://politter.com/en/">flocked</a> to services such as Facebook, YouTube and Twitter for conducting non-campaign-related activities outside the blackout period. However, the prospect of engaging in real-time and (theoretically) two-way communications with candidates for political office during the crucial period when voters are most attuned to the issues could represent a breakthrough for Japanese democracy, as Professor Matthew Wilson <a href="http://stlr.stanford.edu/pdf/wilson-e-elections.pdf">forcefully argued</a> in 2011.The relaxation of the POEL’s restrictions on online electioneering has already impacted Internet technologies based in Japan. Naver, developers of the Japanese homegrown messaging app “<a href="http://line.naver.jp/en/">Line</a>”—which has surpassed <a href="http://www.engadget.com/2013/05/01/line-messenger-has-more-than-150-million-users-because-we-all-l/">150 million users</a> worldwide and 45 million users in Japan alone—<a href="http://thenextweb.com/asia/2013/05/13/japans-political-parties-flock-to-line-after-ban-on-internet-election-campaigns-is-lifted/">announced</a> in May 2013 that ten political parties opened official Line accounts in the wake of the POEL amendment. The political parties reportedly hope to use Line to facilitate direct communications with supporters and solicit comments and feedback in real time, in addition to broadcasting news and information to followers using a more traditional one-to-many model.On the other hand, the Diet has maintained much tighter regulation of the general public’s use of electronic mail (as opposed to websites, SNS and similar services). Although the POEL now permits parties and candidates to use electronic mail for electioneering purposes, lawmakers decided to preserve existing restrictions on voters’ use of campaign-related electronic mail, or to at least postpone resolution of the issue to a later date, in an apparent response to fears of “negative campaigning,” defamation, spoofing, identity theft and spam. As a result, the general public is still prohibited from sending electronic mails for election-related purposes during the blackout period—including from mobile phone-associated electronic mail accounts, which are widely used in Japan.This creates an interesting tension: although a member of the general public may be free to use Facebook to express support for his or her favorite candidate, sending an electronic mail message containing the same content would continue to be off limits under the POEL. As many have observed, this leads to counterintuitive results, whereby someone who forwards to his or her friends a candidate’s official campaign electronic mail blast may potentially be liable for a fine (up to JPY500,000) or imprisonment (up to two years) and face disenfranchisement, while someone who simply copies and pastes the same information into a Facebook message would probably not run afoul of the POEL.There is some skepticism amidst the excitement around net senkyo. According to a survey conducted jointly by the <a href="http://sankei.jp/">Sankei Shimbun</a> and <a href="http://www.fnn-news.com/en/">Fuji News Network</a>, 56.8% of respondents said that they would not use online campaign information to inform their voting choices, while only 39.3% said that they would. (On the other hand, among voters in their twenties, the number of respondents expressing affirmative interest jumped to 62.7%. This bodes well for the effort to remobilize Japan’s youth vote, which reportedly was one of the original drivers of POEL reform.)Further, anxiety over the twin threats of narisumashi, or identity theft, and defamation has not abated, and both Internet service providers and law enforcement authorities are already preparing for potential hiccups in the upcoming election cycle. Given the prevalence of Internet-enabled negative campaigning in other countries (for example, in <a href="http://www.koreatimes.co.kr/www/news/nation/2013/05/608_127054.html">Korea</a> during 2012), it may be reasonable to worry about the downsides of the net senkyo revolution. However, as Professor Wilson has pointed out, the threat of fraud and other bad acts is omnipresent even outside any “official campaign period,” and both traditional law, such as the law of defamation, and technology itself—e.g., direct verification of accounts on Facebook and Twitter—can help mitigate these risks. SNS and similar technologies may even empower politicians to respond to false assertions more quickly and effectively.Even though the amended Article 142 has become law in Japan, there is no way to predict the extent of its impact on Japanese political culture. But the surging popularity of SNS platforms and other mobile and online communications platforms makes it clear that net senkyo will impact the way Japanese citizens interact with political actors and political information in a lasting way.

Tomoki Kodama is a partner in Morrison Foerster’s Litigation Department. 

Tomoki Kodama

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The Diet Has Spoken: Japanese Lawmakers Approve Internet-Enabled Campaigning

The Diet Has Spoken: Japanese Lawmakers Approve Internet-Enabled Campaigning

In February 2013, we reported on legislative momentum in the Japanese Diet to bring Japan’s sixty-year-old election laws into the brave new world of Web 2.0. On

Article courtesy of Morrison & Foerster’s MoFo TechAs financial institutions and investors turn to social media to instantly share snippets of news and potential clues about market trends, the FBI and SEC are monitoring such postings for evidence of insider trading and improper investment information. Companies must comply with pre-Internet federal securities laws covering antifraud, advertising, record keeping, and more, even though the use of Facebook and Twitter is far outpacing the development of federal regulations aimed at social media.Late last year, two FBI agents told Reuters that they see social media as a breeding ground for insider trading and securities fraud. “If there is any way to exploit it, these individuals will,” one agent said. The FBI also began a public search for an application that would scan social media for national security threats. “In trying to establish whether a trader who made significant gains in advance of market-moving news got nonpublic information from a company insider, the FBI might be interested in a list of the trader’s friends and contacts on social media sites,” says J. Alexander Lawrence, a Morrison & Foerster partner who works in securities law. “Evidence on Facebook, LinkedIn, or other sites could help the FBI connect the dots.”Government investigators have been pursuing insider traders with growing intensity, according to Morrison & Foerster’s 2012 Insider Trading Annual Review. One reason could be the relative lack of success in bringing cases related to the financial crisis. “While the SEC and DOJ have been criticized, fairly or not, for not bringing more cases arising from the financial crisis—especially against individuals—both agencies have received abundant praise for their crackdown on insider trading,” the report concluded.When communicating information through social media channels, companies have had to carefully consider whether material nonpublic information is being selectively disclosed in violation of Regulation FD. The SEC recently clarified its views regarding the applicability of Regulation FD to social media in a Report of Investigation which concluded that disclosure of material nonpublic information on the personal social media site of an individual corporate officer, without advance notice to investors that the social media site may be used for this purpose, is unlikely to qualify as an acceptable method of disclosure under the securities laws.However, the SEC indicated that companies using social media to communicate information could apply existing guidance on the use of corporate websites in determining if that information is adequately being disseminated through social media channels so that a company won’t run afoul of Regulation FD, which would include taking steps to notify the market that material information about the company can be gleaned from those social media channels.There are legal uncertainties about how far investigators can go in seeking information that is not publicly available on social media. Courts have ruled that certain messages sent on social media are protected under the Stored Communications Act, which limits the government’s power to force Internet service providers to disclose customer information. In addition, “friending” someone for the sole purpose of uncovering evidence may go against Facebook’s terms of service. States differ as to whether investigations led by attorneys can use deception, such as “friending” someone to uncover evidence, says Carl H. Loewenson Jr., a Morrison & Foerster partner and co-chair of the firm’s Securities Litigation, Enforcement, and White-Collar Defense Group. “If a prosecutor directs agents to do that, there is the risk of ethical violations resulting from engaging in misrepresentation under some state bar rules,” he says.

Stop Insider Tweeting!—Feds Eye Social Media for Securities Shenanigans

Article courtesy of Morrison & Foerster’s MoFo Tech As financial institutions and investors turn to social media to instantly share snippets of news and potenti

Stop Insider Tweeting!—Feds Eye Social Media for Securities Shenanigans

On April 12, 2013, the UK’s Office of Fair Trading (OFT), the UK regulator for consumer affairs and competition, announced that it was launching an investigation into children’s web- and app-based games. In particular, the OFT is looking into whether such games comply with the <a href="http://www.legislation.gov.uk/uksi/2008/1277/contents/made">Consumer Protection from Unfair Trading Regulations 2008</a> (“Regulations”), and are not misleading or aggressive (for example, directly encouraging children to buy something or to pester their parents or other adults to buy something on their behalf). The investigation is expected to take six months to complete, and will take into account views from mobile app platform operators and other businesses operating in this market, together with the views of parents and consumer groups.The investigation was launched in response to reports of children racking up substantial bills on so-called “free” online and app-based games. For example, in March 2013, it was reported that a 5-year-old boy amassed a bill of £1,700 in just 15 minutes via <a href="http://www.bbc.co.uk/news/uk-england-bristol-21629210">add-ons</a> while playing the “free” game “Zombies vs Ninja.” There are thousands of games like this that are marketed as being free to download but, once the user starts playing, present advertising encouraging the user to pay to get access to extra levels or to receive in-game extras such as virtual coins, gems or other tokens.The OFT estimates that, as of April 9, 2013, 80 of the 100 top-grossing Android apps were free to download, yet raised revenue through these kinds of in-app purchases. Although platforms will often enable password protection to restrict in-app purchases, such measures will not prevent purchases by children who know their parents’ password or by parents who, at the request of their children, insert their password without appreciation of the risks.The Regulations, which implement the <a href="http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2005:149:0022:0039:en:PDF">Unfair Commercial Practices Directive 2005/29/EC</a>, state that unfair commercial practices are prohibited. A commercial practice is deemed to be unfair if it contravenes the requirements of professional diligence and materially distorts, or is likely to materially distort, the economic behavior of the consumer with regard to the product. Aggressive commercial practices are those that impair the average consumer’s freedom of choice or conduct through the use of harassment, coercion or undue influence, and that thereby cause, or are likely to cause, the consumer “to take a transactional decision he would not have taken otherwise.” Undue influence includes exploiting a position of power in relation to the consumer.The Regulations clearly provide that it is unfair to include in an advertisement a direct exhortation to children to buy advertised products, or persuade their parents or other adults to buy advertised products for them. Breach of the Regulations can lead to criminal penalties such as a fine or imprisonment for up to two years.The OFT has made it clear that no company that is included in its investigation should be assumed to have broken the Regulations. In addition, the OFT has stated that it does not wish to ban in-app purchases, but rather to determine whether they are compliant with the Regulations in order to ensure that children are protected. Nevertheless, the OFT has indicated that it will take enforcement action against offending companies if necessary. The outcome of the OFT’s investigation is expected to be published in October 2013.In the meantime, a number of guides have appeared providing advice to parents on how to block in-app purchases (including guidance published by the UK communications regulator, Ofcom), and at least one major app distributor has added in-app purchase warnings to its app store listings. This could be the key to future settings: allowing users to filter out in-app purchase applications when downloading them.It will be interesting to see what approach the OFT decides to take as a result of its investigation, and where it believes responsibility should lie. Should parents be expected to take more control over their children’s gaming activities or should providers be required to do more, e.g., by providing more information warning users on the nature of these “freemium” apps contained within their stores?Lastly, note that this investigation may have consequences for game providers operating elsewhere in Europe. Because the Regulations are based on EU law, other EU regulators will be watching the progress of the OFT investigation closely to consider whether they, too, need to scrutinize games providers’ compliance with the equivalent laws in their territories.

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Playing Fair? UK’s OFT Investigates Online and App-Based Games

Playing Fair? UK’s OFT Investigates Online and App-Based Games