Net Neutrality — Privacy Silver Bullet, or Can of Worms?

When FCC Chairman Ajit Pai announced last week that he would eliminate the “fair play” rules known as Net neutrality, he took a step that some economists and technologists worry will eventually lead to the monopolization of Internet services in America. What, if any, impact would the elimination of Net neutrality rules have on consumer privacy? The answer, in short, is that consumers would simply be forced to pay more for it. Before I explain why, let’s get on the same page about what Net neutrality means.

Net neutrality rules currently require Internet service providers to treat all content equally, with regard to quality and throughput, regardless of its size, shape, origin, or destination. In economic terms, the rules prohibit ISPs from creating premium classes of service, or “fast lanes.” In so doing, they treat ISPs as publicly regulated utilities.

They also benefit fledgling innovation. If a startup providing a service like end-to-end encryption needed to pay a “fast lane” premium to adequately serve its customers, it might not be able to adequately invest in its product-or reach any customers. But with Net neutrality rules, a nascent business faces the same barriers to reaching potential customers as those of entrenched technology titans such as Google and Facebook.

With Net neutrality’s one-size-fits-all approach, companies ostensibly requiring more bandwidth for more complex content aren’t able to pay more for preferential ISP treatment. That doesn’t directly impact privacy. But in the long term, it could. Profits otherwise available to ISP providers, but unavailable under Net neutrality, would not be reinvested to create more effective, and potentially less expensive, encryption methods. The benefits of such research and development can be seen in other industries, including pharmaceuticals.

One stipulation of the Net neutrality rules is that carriers must “protect the confidentiality of [consumers’] proprietary information” from unauthorized use and disclosure. Whether ISPs would uphold such privacy standards absent a legal requirement would likely correspond with their competitive landscape: More competition for a certain level of service might mean more consumer pressure to provide privacy protections, and vice versa.

With less competition, ISPs likely need more regulation to ensure that they adequately protect consumer privacy. Deregulation would result in privacy becoming more of a luxury than a right. Consumers, for example, might need to pay a premium for a level of Internet access that doesn’t throttle high-speed encrypted communications. At a cheaper, throttled level, they would have fewer and lower-quality choices for apps and services.

Whether Net neutrality’s privacy benefits are outweighed by its concomitant privacy costs is another question.

The Open Internet Order from 2015 requires compliance by ISPs with the Communications Assistance for Law Enforcement Act. Under CALE, telecommunications carriers must construct their network in such a way that they can give the government a backdoor into the network for surveillance purposes when presented with a warrant.

This law coupling enables courts under the Foreign Intelligence Surveillance Act to issue warrants to tap U.S. citizens’ communications devices, all without counsel to speak on citizens’ behalf. In the first 33 years of the FISA court’s existence, judges denied only 11 requests, resulting in a staggering 99.97 percent rate of approval, according to the Stanford Law Review.

There is also nothing in CALE, nor any Net neutrality law, that mandates the use of specific technology to protect consumer information, such as encryption. A $33 million judgment levied against Comcast for unintentionally listing phone numbers it had promised to keep private wasn’t the result of breaching any specific provisions of federal law mandating specific encryption methods.

Backdoor-access provisions already neutralize the consumer privacy benefits of Net neutrality laws. To think otherwise is to naively exchange the potentially prying private eyes of corporate America, which can’t imprison you, with those that can.

Sticks and stones may break your bones, but Charlie Hebdo cartoons will never hurt you.

Sticks and stones may break your bones, but Charlie Hebdo cartoons will never hurt you.

Don’t insult the Pope’s mother, or he’ll punch you in the face! In response to questioning about the Charlie Hebdo killings, the Pope stated: “If [you] say[] a curse word against my mother, [you] can expect a punch.” Not only does the Pope mischaracterize the Charlie Hebdo speech as consisting of naked insults, but well educated thinkers also have tried to paint the speech as “brazenly racist.” No matter how distasteful, such speech is clearly parody and is protected under U.S. law. Even if such speech was “brazenly racist,” U.S. law would still protect it under certain circumstances. French law should follow suit — if it already doesn’t.

In the Pope’s view, “[t]’s normal. You cannot provoke. You cannot insult the faith of others. You cannot make fun of the faith of others.” In a recent article by Oxford educated Mr. Mehdi Hasan entitled, As a Muslim, I’m fed up with the hypocrisy of free speech fundamentalists, he says: “[l]ampooning racism by reproducing brazenly racist imagery is a pretty dubious satirical tactic.” Not only that, but he thinks liberalism is hypocritical in that it, in his view, allows mockery of Muslims but not Jews: “Has your publication [The NewStatesmen], for example, run cartoons mocking the Holocaust? No.” Mr. David Brooks, a writer for The New York Times, chimed in, calling Charlie Hebdo’s speech “puerile” and “deliberately offensive humor” in I am not Charlie Hebdo.

Regardless if the Pope, Mr. Hasan, or Mr. Brooks are offended by or simply dislike Charlie Hebdo cartoons, such content would be parody under U.S. law. As stated by the Stanford Copyright and Fair Use Center, “[a] parody is a work that ridicules another, usually well-known work, by imitating it in a comic way . . . Unlike other forms of fair use, a fairly extensive use of the original work is permitted in a parody in order to ‘conjure up’ the original.” This means that the alleged fair use need not be “transformative” of the original work — either a physical transformation as was the case in the Barbara Kruger litigation, or application to a new efficient technological use as the book indexes in the recent Google book scanning case — when parody is involved. Similarly, under the First Amendment, parody is a protected form of speech under cases such as Hustler Magazine, Inc. v. Falwell, 485 U.S. 46 (1988) regardless of the transformative nature of the speech.

Charlie Hebdo’s very existence is “broadly anti-religion and anti-establishment” and, as such, the publication has shot powerful parody bullets at Catholics, Muslims, Jews, and the French government. In fact, the Vatican has sued Charlie Hebdo 12 more times than Muslims. When viewed in light of the overall purpose of the paper to mock and challenge religion in general, none of the Charlie Hebdo cartoons are per se naked insults, an analogy to per se illegal price fixing restraints in antitrust law, of the Prophet. Instead, the cartoons are meant to ridicule the self-rightious nature of Islam, which often is characterized as not having a sense of humor. Similar humor can be found in movies like Mel Brook’s History of the World Part I, which pokes fun at Jesus and the last supper, both of which are sacred to Catholics. Notably missing from Mr. Hasan’s article — and Mr. David Brook’s — is mention of Arabs who stand in solidarity with Charlie Hebdo, as summarized in Arab Editorial Cartoonists Respond to “Charlie Hebdo.”Obviously, making fun of the Holocaust without an appurtenant message would be a naked insult, not a parody. Not an apt analogy by Mr. Hasan.

But let’s assume that Charlie Hebdo’s speech was “brazenly racist.” This does not necessarily mean it should be per se banned. In National Socialist Party of America v. Village of Skokie, 432 U.S. 43 (1977), the U.S. Supreme Court upheld the right of the National Socialist Party of America, otherwise known in the Blues Brothers movie as the “[t]he fucking [Illinois] Nazi party,” to obtain a permit to march through predominately Jewish Skokie Illinois. As an illustration of the alleged hypocrisy of the current liberal establishment, Mr. Hasan posits a hypo from an Oxford philosopher, “if a man had joined the ‘unity rally’ in Paris on 11 January ‘wearing a badge that said Je suis Chérif‘ – the first name of one of the Charlie Hebdo gunmen” he would have been murdered. Perhaps, but the Nazis in Skokie would likely have been stoned — or worse — if they tried to march without a license, which would have given them police protection. Under U.S. law, even though the man in Mr. Hasan’s hypo would have the right to voice his thoughts, such right would not be unfettered. He would have needed protection. Regardless, an offensive parody cartoon in a widely circulated newspaper has less of a propensity to directly incite violence than one individual entering a marching group and voicing his or her opposition speech in the face of others, which is why this hypo by Mr. Hasan’s Oxford philosopher isn’t relevant either.

The images in Charlie Hebdo aren’t defamatory, don’t falsely shout “fire” in a crowded room, or even insult the Pope’s mother. It is unfortunate that the Pope and his cohorts don’t heed the elementary school saying: “sticks and stones may hurt my bones, but words never will.” For them to think otherwise is to turn Western liberalism on its head.

Are you going to bark all day little doggie? Sony’s attempt to muzzle media has no legal basis.

Are you going to bark all day little doggie? Sony’s attempt to muzzle media has no legal basis.

Is David Boies going to bark all day by sending cease and desist letters to media on behalf of Sony, warning them not to use leaked Sony e-mails and other documents in their reporting, or is he going to bite by seeking an injunction?

The WSJ reported in Sony Tells Media Not To Use Leaked Documents that Mr. Boies sent a letter to media outlets barking: “If you do not comply with this request and the Stolen Information is used or disseminated by you in any manner,” then, “[Sony pictures] will have no choice but to hold you responsible for any damage or loss arising from such use or dissemination by you.”

The U.S. Supreme Court, in Bartnicki v. Vopper, 532 U.S. 514 (2001), held that the a radio station could not be liable for broadcasting a story using stolen information so long as the station did not partake in the theft. This is not to say that the hack wasn’t a horrible invasion and breach of an American company’s privacy and security, respectively. It is to say that a dangerous precedent would be set if media was muzzled by the law — or put in fear by frivolous lawsuits — under such circumstances.

In Reservoir Dogs, the noir movie directed by Quentin Tarantino, Mr. White, played by Harvey Keitel, says to Mr. Blonde, played by Michael Madsen: “You almost killed me! Asshole! If I knew what kind of a guy you were I never would’ve agreed to work with you!” Mr. Blonde’s response: “Are you gonna bark all day little doggie? Or are you gonna bite?” Mr. White doesn’t bite. Nor will Mr. Boies.

That’s because the law is not on Sony’s side.

Naked economic protectionism — constitutional?

Naked economic protectionism — constitutional?

Many of us like certainty. Death and taxes are two things we can be certain about. But should our choice of who we buy our casket from, if we buy one, when we die be dictated by the state? No, says the New Orleans based Fifth Circuit Court of Appeals in its March, 20, 2013 decision in St. Joseph Abbey v. Paul Wes Castille, et. al. This is a good thing. It means the state cannot protect an industry from competition without justification. What implications, if any, the decision on has on similar federal laws remains to be seen.

A group of Louisiana priests brought suit against members of the Louisiana State Board of Embalmers and Funeral Directors because of a law that prohibited the priests from making, and selling, caskets. According to the law, the priests needed to be funeral directors to do that. But becoming a licensed funeral director in Louisiana is expensive and time consuming. The priests claimed that the law violated the equal protection clause because it had no rational basis to a legitimate government interest, and that it was an unconstitutional taking of property without due process.

The Fifth Circuit agreed. Louisiana, after all, allows anyone to build their own casket for personal use, and doesn’t even require a citizen to be buried in a casket at all. The state also allows its citizens to buy caskets out of state. In any event, the Court reasoned, the requirements to become a funeral director have nothing to do with casket making. Thus, there was no rational relationship between the law and a legitimate government interest.

The most important part of the Court’s ruling is its rejection of naked economic protectionism. Under this view, the state has a legitimate government interest in the protection of a particular industry from competition even when there is no corresponding benefit to the public interest or general welfare. The Court said Louisiana could not protect funeral directors from competition by the priests merely because, say, they have a stronger lobby in Baton Rouge.

It remains to be seen whether the case goes to the Supreme Court. If it does and is affirmed, some federal laws and regulations may be in greater danger of being invalidated as naked wealth transfers to a special interest with strong ties in Washington D.C.

Don’t put the regulatory cart before the entrepreneurial horse.

Don’t put the regulatory cart before the entrepreneurial horse.

“We cannot regulate our way out of this.” Mr. Charles Schwab makes this great point about the futility of using regulation as the silver bullet for our recession woes in Every Job Requires an Entrepreneur. And yet the WSJ reports in As Federal Crime List Grows, Threshold of Guilt Declines (“Threshold”), that criminal laws are burgeoning at break neck speed and that many teeter on strict liability. This means you can go to jail for violating an obscure law even if you didn’t know about it. Congress needs to regulate less, more clearly when it does, and with the need of a lot more mens rea.

As the Threshold article points out, mens rea is a Latin term that refers to “guilty mind,” which in the law means that you know what you are doing is against the law, like when you rob a bank. But when you kill an obscure fish in the middle of Maine and cook it for dinner, you may have no idea that the fish is on the federal list of endangered species. Unbeknownst to you, your dinner may subject you to criminal penalties and/or jail time.

The problem in discarding the mens rea requirement is that it makes it too easy for the government to make any one of us criminally liable for being an unintentional contributor to the demise of an endangered fish. We live in an increasing regulatory state that is saturated with statutes, regulations, and judicial decisions. The meaning of these sources of law is sometimes ambiguous to even the most well trained lawyers. As a result, entrepreneurs are operating in more uncertain regulatory times, which exacerbates the financial crisis.

That’s why Mr. Schwab’s statement is so apt. It seems many in Washington think that Washington is the answer. It is not. As Mr. Schwab points out, American entrepreneurs are the answer to our problems. To the extent we seek refuge in the labrynth of laws and regulations coming out of Washington, we are putting the regulatory cart before the entrepreneurial horse.

Jake couldn’t trademark his black suit, nor should Louboutin have a monopoly over his red sole.

Jake couldn’t trademark his black suit, nor should Louboutin have a monopoly over his red sole.

Recently, the WSJ reported in Color Wars: Luxury Makers Battle Over Red-Soled Shoe that the Southern District of New York denied a preliminary injunction that fashion house Christian Louboutin (“CL”) sought against Yves Saint Laurent (“YSL”) for making high heeled shoes with a red sole. CL has a trademark over a “lacquered red sole” on “women’s high fashion designer footwear.” The Court ruled that the color in this context served a functional purpose and was therefore not protectable subject matter.  At first blush, the Court’s decision may seem far reaching.  It is not.

Color is generally not something you can trademark. There is an exception to this rule. I could trademark the pantone process blue used by my firm so long as I show that consumers associate the particular shade of blue with my firm, and as long as the color is not “functional.” Camouflage, for example, serves such a functional purpose by concealing the person from view. Black, as another example, by conveys a feeling of melancholy and formality, among other things, when used for a suit.

Surprisingly, the Court ruled in CL v. YSL that CL’s red bottomed trademark could not be protected even if CL were able to show secondary meaning: that consumers associated the red with CL’s brand, and not just as some fad in the fashion industry. In so proclaiming, the Court seemingly fan afoul of well established trademark principles.

However, the Court was right to rule the way it did given: (1) CL’s trademark application didn’t claim a particular shade of red, bur red in general; (2) the application also sought to protect the red sole not only for high heels, but for “high fashion footwear,” which covers a broad spectrum of shoes, including flats; and (3) color, especially red, plays a big role in the fashion industry, unlike in other industries. There is no arguable functional purpose to the color pink in the fiberglass industry, and so courts have allowed a fiberglass company to trademark the color for fiberglass. There is, however, such a purpose in the case of black for Jake and Elwood’s bluesy suits. The same is true of red soled sexy heels.