A recent order by the SEC relating to an initial coin offering (ICO) by Munchee Inc. dealt a blow to the common practice of making a distinction between “utility tokens” and “security tokens.” In doing so, the SEC seems to also reject what our colleagues Daniel N. Budofsky and Robert B. Robbins refer to as the “magic frog” approach, the belief that a token can begin life as a security token (i.e., a magic frog) but at the point that the application and ecosystem go “live,” the token will be transformed into a utility token (i.e., the magic frog becomes a prince) and any securities law restrictions will no longer apply. In their recent client alert, “The SEC’s Shutdown of the Munchee ICO,” they examine this issue in greater detail and explore ways in which it is still possible to carry out an ICO that’s in compliance with the Securities Act.
The Algorithm Did It: The Evolving Legal Landscape of the Internet’s Favorite Tool
In a time where “fake news” is common parlance and tensions rise in response to the smallest media slight, is it time for algorithms to take the place of humans in moderating news? This New York Times article seems to think so. What role, and to what extent, should algorithms be used in regulating and implementing everyday business ventures, government agency routine processes, health care management, etc.? Who should take responsibility in the event of a problem or negative consequence, if it is all verified by an algorithm? And, importantly, what will enhanced monitoring of algorithms do to the progress and profitability of companies whose bottom line depends on the very algorithms that can cause unforeseen, sometimes very harmful, problems?
Can a Software Developer Copyright the Output of Its Software?
As technology becomes increasingly advanced and complex, it seems that a new software emerges every day to perform some novel function. Whether it is computer generated imagery (CGI) or deciphering a code in a bible, software developers are helping the users of their software make great strides in all types of industries. In these situations, it’s commonly accepted that the developer owns the software and the user can use the benefits of the software through a license. However, a less clear issue has arisen in recent years—does the software developer own the output generated when using the software?
News of Note for the Internet-Minded – 11/9/17 – Harry Potter Go?, Chatbot, Esq. and DARPA
Can Cloned Video Games Survive the Battle Royale?
Cloning is the process of creating a video game that is significantly motivated or inspired by an existing popular video game or series. Developers have been cloning popular video games since the 1980s, including Tetris, Doom, Minecraft, Bejeweled and Flappy Bird. Often, game developers create clones in an attempt to confuse users and cash in on a game’s popularity.
Framing It Another Way: Tweets, Copyright and the De Minimis Doctrine
When it comes to finding ways of making money, no corner of a capitalistic society shall go unmined. This applies to obvious goods and services but also comes into play with our very thoughts and how we express them. In the age of social media, not even the framed needlepoint proverb is safe from “disruption”: behold, the framed tweet.
Taking It Personally: One Lawsuit Tries to Hold Individuals Accountable for the Equifax Data Breach
As we discussed recently, the Equifax data breach has inevitably brought a great deal of scrutiny and legal action against the credit reporting agency. Amidst the numerous brewing class actions and other reactions from government agencies and state AGs, it’s worth pointing out another front on which the company—and more importantly, individuals within the company—may face legal consequences.
When Ripples Become Waves: The Equifax Cybersecurity Incident
Since September 7, 2017, Equifax, one of three credit rating agencies in the United States, has been dealing with the fallout from one of the largest (known) data breaches of personal information, putting 143 million Americans at risk from fraud and identity theft (roughly 44% of the U.S. population).
Disclose or Else: FTC Steps Up Prosecution of Social Media Influencers
Last week, the FTC brought its first action against a social media influencer for failing to make appropriate disclosures on sponsored posts. While it had previously prosecuted companies who pay influencers for posts such as Lord & Taylor and Warner Brothers, this marks the first time the FTC has pursued an influencer.
The Internet Stole My Face: New Advances in Technology Could Make Everyone a Digital Video Puppet
“Believe nothing you hear, and only one half that you see.” Edgar Alan Poe wrote those words over a century ago, yet if he were alive today he may opt for the darker: “Believe nothing you hear and nothing you see.” Over the past decade, advances in graphics technology have provided visual effects artists the ability to create fantastical new worlds on film and to populate those worlds with people, all with an astounding amount of realism. Of particular interest in this post is the ability of this technology to create realistic digital replicas of actors that can be manipulated like puppets to deliver new cinematic performances without the need for any further input from the actor—such as when the late Peter Cushing was digitally recreated in order to reprise the character of Grand Moff Tarkin in Rogue One: A Star Wars Story.