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Internet Law and Practice in California

The only resource on Internet law and practice designed especially for California lawyers, this guide will help you advise your clients doing business online.

The only resource on Internet law and practice designed especially for California lawyers, this guide will help you advise your clients doing business online.

  • Intellectual property rights in cyberspace
  • Launching and operating a website
  • Electronic contracting; privacy issues
  • Licenses and development agreements
  • Advertising on the Internet
  • Cybersecurity
  • Tort and criminal liability, First Amendment issues
  • Jurisdiction; litigation issues; e-discovery
  • Sample attorney-drafted forms to save you time
Print BU33580

Package includes single user online access, 2 looseleaf print volumes (approx. 1000 pages), and Forms CD, updated July 2022

$ 605.00

The only resource on Internet law and practice designed especially for California lawyers, this guide will help you advise your clients doing business online.

  • Intellectual property rights in cyberspace
  • Launching and operating a website
  • Electronic contracting; privacy issues
  • Licenses and development agreements
  • Advertising on the Internet
  • Cybersecurity
  • Tort and criminal liability, First Amendment issues
  • Jurisdiction; litigation issues; e-discovery
  • Sample attorney-drafted forms to save you time

1

Copyright and the DMCA

  • I.  COPYRIGHTS
    • A.  Introduction  1.1
    • B.  Subject Matter of Copyright Law
      • 1.  Generally  1.2
      • 2.  Special Subject Matter: Compilations  1.2A
      • 3.  Special Subject Matter: Music  1.3
      • 4.  Special Subject Matter: Characters  1.4
      • 5.  Special Subject Matter: Websites  1.4A
      • 6.  Special Subject Matter: Databases  1.4B
      • 7.  Special Subject Matter: Output of Computer Programs  1.4C
      • 8.  Special Subject Matter: Governmental Works  1.4D
    • C.  Creation and Term of Copyright  1.5
    • D.  Ownership of Copyrighted Work, Joint Works, and Works Made for Hire
      • 1.  Joint Works  1.6
      • 2.  Works Made for Hire  1.7
    • E.  Rights of Copyright Holder  1.8
      • 1.  Reproduction Rights  1.9
      • 2.  Distribution Rights  1.10
      • 3.  Performance Rights  1.11
        • a.  Who “Performs” the Work?  1.11A
        • b.  Pre-1972 Sound Recordings  1.11B
      • 4.  Display Rights  1.12
    • F.  Copyright Notice  1.13
    • G.  FBI Anti-Piracy Warning Seal  1.14
    • H.  Copyright Registration
      • 1.  Advantages of Registration  1.15
      • 2.  Registration Procedures; Standing to Sue  1.16
      • 3.  When to Register  1.17
    • I.  Preregistration  1.18
    • J.  Transfer of Copyrights
      • 1.  Generally  1.19
      • 2.  Form: Copyright Assignment  1.20
      • 3.  Form: U.S. Copyright Office Form DCS (Document Cover Sheet)  1.21
    • K.  Infringement
      • 1.  Generally  1.22
      • 2.  Direct, Contributory, and Vicarious Liability
        • a.  Generally  1.23
        • b.  Direct Infringement; Volitional Act Requirement  1.24
        • c.  Contributory Infringement  1.25
          • (1)  Inducement  1.26
          • (2)  Material Contribution  1.27
            • (a)  Online Service Providers  1.27A
            • (b)  Payment Processors  1.27B
          • (3)  Site and Facilities Test  1.28
        • d.  Vicarious Infringement  1.29
      • 3.  Bootlegging  1.29A
      • 4.  Selected Defenses
        • a.  Statute of Limitations  1.30
        • b.  Laches  1.31
        • c.  Express License  1.31A
        • d.  Implied License  1.32
        • e.  Estoppel  1.33
        • f.  De Minimis Use  1.33A
        • g.  Fraud on the Copyright Office  1.33B
        • h.  Abandonment  1.33C
      • 5.  Safe Harbor for Certain Copies of Computer Programs  1.34
      • 6.  Remedies  1.35
      • 7.  Copyright Small Claims  1.35A
      • 8.  Sovereign Immunity  1.36
      • 9.  Compulsory Licenses
        • a.  Broadcast Television  1.37
        • b.  Sound Recordings; Digital Music Rights  1.38
    • L.  Fair Use
      • 1.  Introduction  1.39
      • 2.  Purpose and Character of Use  1.40
        • a.  Transformative Use  1.41
          • (1)  Human-Made Uses
            • (a)  Parody/Satire   1.42
            • (b)  Appropriation Art  1.43
            • (c)  Digital Music Sampling  1.44
            • (d)  News Reporting  1.45
            • (e)  Reaction Videos  1.45A
            • (f)  Thumbnails to Sell Legal Copies  1.45B
            • (g)  Memes  1.45C
            • (h)  Video Games  1.45D
            • (i)  Video Re-Edits  1.45E
          • (2)  Technological Fair Use
            • (a)  Time- and Space-Shifting  1.46
            • (b)  Search Engines  1.47
            • (c)  Conversion of Text for Data Mining  1.48
            • (d)  Reverse Engineering  1.49
            • (e)  Software User Interfaces  1.49A
        • b.  Commercial Use  1.50
      • 3.  Bad Faith  1.50A
      • 4.  Nature of Copyrighted Work  1.51
        • a.  Informational Versus Creative Inquiry  1.52
        • b.   Published or Unpublished  1.53
      • 5.  Amount and Substantiality of Portion of Work Used  1.54
      • 6.  Effect of Use on Market  1.55
      • 7.  Fair Use as a Bar to Foreign Judgments  1.55A
    • M.  First Sale  1.56
    • N.  Family Entertainment and Copyright Act  1.56A
  • II.  DIGITAL MILLENNIUM COPYRIGHT ACT
    • A.  Introduction  1.57
    • B.  Status of Pre-1972 Sound Recordings  1.58
    • C.  Anti-Circumvention of Technological Protection Measures
      • 1.  Anti-Circumvention Prohibitions (17 USC §1201)  1.59
      • 2.  Copyright Management Information (17 USC §1202)  1.60
      • 3.  Exceptions to Anti-Circumvention Prohibitions  1.61
      • 4.  Remedies  1.62
    • D.  Limitations of Liability for Online Service Providers—Infringement Safe Harbors  1.63
      • 1.  General Conditions for Safe Harbors
        • a.  Service Provider  1.64
        • b.  Repeat Infringer Policy  1.65
          • (1)  Adoption of Policy  1.66
          • (2)  Informing Users of Policy  1.67
          • (3)  Reasonably Implement the Policy  1.68
        • c.  Interference With Standard Technical Measures  1.69
        • d.  Designating Agent to Receive Notifications  1.70
        • e.  No Duty to Police or Monitor  1.71
      • 2.  Transitory Digital Network Communications Safe Harbor (17 USC §512(a))  1.72
      • 3.  System Caching Safe Harbor (17 USC §512(b))  1.73
      • 4.  Safe Harbor for Information Residing on Systems or Networks at Direction of Users (17 USC §512(c))
        • a.  Generally  1.74
        • b.  Storage at Direction of User  1.75
        • c.  Lack of Knowledge (17 USC §512(c)(1)(A))  1.76
          • (1)  Actual Knowledge  1.77
          • (2)  “Red Flag” Knowledge  1.78
          • (3)  Willful Blindness  1.79
        • d.  Right and Ability to Control (17 USC §512(c)(1)(B))
          • (1)  Right and Ability to Control  1.80
          • (2)  Direct Financial Benefit  1.81
        • e.  Expeditious Removal or Disabling Access to Infringing Material (17 USC §512(c)(1)(C))  1.82
        • f.  Notification of Claimed Infringement (17 USC §512(c)(3))
          • (1)  Requirements for Notifications; “Good Faith Belief”  1.83
          • (2)  Safeguards Against Fraudulent Infringement Claims  1.83A
        • g.  Counter-Notification by Subscriber; Restoration of Material  1.84
        • h.  Checklist: Notice and Take-Down Checklist  1.85
      • 5.  Information Location Tools Safe Harbor (17 USC §512(d))  1.86
    • E.  Subpoena Power (17 USC §512(h))  1.87
    • F.  Impact on Internet Service Providers  1.88
    • G.  Checklist: Company DMCA Compliance Policy  1.89

2

Patents and Trade Secrets

  • I.  PATENTS
    • A.  Introduction  2.1
    • B.  What Is a Patent?  2.2
    • C.  What Is Patentable; Types of Patents  2.3
    • D.  Term of Patents  2.4
    • E.  Additional Requirements for Patentability
      • 1.  Overview  2.5
      • 2.  Origination  2.6
      • 3.  Utility  2.7
      • 4.  Novelty  2.8
      • 5.  Nonobviousness  2.9
    • F.  Patent Applications
      • 1.  Overview of Patent Application Procedures  2.10
      • 2.  Specification; Enablement; Best Mode  2.11
      • 3.  Claims  2.12
      • 4.  Statutory Time Bars  2.13
    • G.  “First-to-File” Versus “First-to-Invent”; Other International Issues  2.14
    • H.  Transferring Patents
      • 1.  Introduction  2.15
      • 2.  Form: Patent Assignment  2.16
    • I.  Litigation Issues  2.16A
    • J.  Alternatives to Litigation  2.17
    • K.  Special Topics for Internet Businesses
      • 1.  Business Method Patents
        • a.  What Is a Business Method?  2.18
        • b.  Business Method Patents in the Courts
          • (1)  State Street: Business Methods Subject to Same Patentability Requirements   2.18A
          • (2)  Bilski: Machine-or-Transformation Test  2.18B
          • (3)  Alice-Mayo: Two-Step Test for Patent Eligibility  2.18C
          • (4)  Post-Alice Examples  2.18D
        • c.  USPTO Examiner Instructions re Business Method Patent Applications  2.18E
        • d.  Practical Guidance  2.18F
      • 2.  Software Patents  2.19
      • 3.  The Internet of Things   2.19A
  • II.  TRADE SECRETS
    • A.  Introduction  2.20
    • B.  Definition of Trade Secret
      • 1.  Statutory Definition  2.21
      • 2.  Examples of Trade Secrets  2.22
      • 3.  Computer Source and Object Code  2.22A
      • 4.  Recipes, Manufacturing Processes  2.22B
      • 5.  Customer Lists  2.23
    • C.  Loss of Trade Secret Protection  2.24
    • D.  Protection of Trade Secrets  2.25
      • 1.  Departing Employees  2.26
      • 2.  Practical Safeguards
        • a.  Firewalls and Encryption  2.27
        • b.  Physical Security  2.28
        • c.  Managing Documents and Files  2.29
    • E.  Sample Company Policy on Trade Secret Protection
      • 1.  Introduction  2.30
      • 2.  Form: Company Policy on Trade Secret Protection  2.31
    • F.  Confidentiality Agreement
      • 1.  Introduction  2.32
      • 2.  Form: Confidentiality Agreement  2.33
    • G.  Misappropriation of Trade Secrets
      • 1.  Asserting Claim of Misappropriation Under UTSA  2.34
      • 2.  Defenses  2.35
      • 3.  Damages  2.36
      • 4.  Privilege and Disclosures Due to Litigation  2.37
      • 5.  Economic Espionage Act of 1996  2.38
      • 6.  Defend Trade Secrets Act of 2016  2.39

3

Domain Names and Trademark Issues

  • I.  DOMAIN NAMES
    • A.  Introduction  3.1
    • B.  Selecting Domain Name and Suffix
      • 1.  Domain Name  3.2
      • 2.  Suffix (Top-Level Domain Name)  3.3
      • 3.  ICANN gTLD Trademark Clearinghouse  3.3A
    • C.  Due Diligence
      • 1.  Domain Name as Trademark  3.4
      • 2.  Where to Look? Registered and Unregistered Trademark Searches  3.5
    • D.  Registration of Domain Name
      • 1.  Registration Procedures  3.6
      • 2.  Purchasing Registered Domain Name
        • a.  How to Purchase Registered Domain Name  3.7
        • b.  Form: Domain Name Purchase Agreement  3.8
    • E.  Maintaining and Preventing Loss of Domain Name  3.9
    • F.  Transferring Ownership of Domain Names  3.10
    • G.  Infringing Domain Names
      • 1.  Bringing Claim of Infringement  3.11
      • 2.  Uniform Domain Name Dispute Resolution Policy (UDRP)  3.12
        • a.  Elements of UDRP Claim  3.13
        • b.  Selection of Arbitrators  3.14
        • c.  Procedure Under UDRP  3.15
        • d.  Damages and Fees  3.16
        • e.  Model Form of UDRP Complaint
          • (1)  Introduction  3.17
          • (2)  Form: UDRP Complaint  3.18
        • f.  Model Form of UDRP Response
          • (1)  Introduction  3.19
          • (2)  Form: UDRP Response  3.20
        • g.  Appeals  3.21
      • 3.  Anticybersquatting Consumer Protection Act  3.22
        • a.  Elements of Cause of Action  3.23
        • b.  ACPA Remedies  3.24
      • 4.  Whether to Proceed Under UDRP or ACPA?  3.25
  • II.  TRADEMARKS, SERVICE MARKS, AND TRADE NAMES
    • A.  Introduction  3.26
    • B.  Definitions of Trademarks, Service Marks, Collective Marks, Certification Marks, Trade Dress, and Trade Names  3.27
    • C.  Characterization of Marks  3.28
    • D.  Priority and Limitations to Priority  3.29
    • E.  Registration Procedure
      • 1.  Why Federal Registration?  3.30
      • 2.  Common Law and State Trademark Rights  3.31
      • 3.  Unregistrable Trademarks  3.32
      • 4.  Trademark Searches  3.33
      • 5.  Principal and Supplemental Registers  3.34
      • 6.  Intent-to-Use Applications  3.35
      • 7.  Form of Application  3.36
      • 8.  Application Procedure  3.37
      • 9.  Contents of Application  3.38
        • a.  Applicant Information  3.39
        • b.  Verification  3.40
        • c.  Identification and Classification of Goods and Services; Filing Fees  3.41
        • d.  Bases for Filing  3.42
        • e.  Drawing Requirement  3.43
        • f.  Description of Mark  3.44
      • 10.  Registration of Domain Names as Trademarks
        • a.  Requirements  3.45
        • b.  Reasons for Refusal of Registration of Domain Names  3.46
        • c.  Hashtags  3.46A
      • 11.  Trade Names  3.47
    • F.  Madrid Protocol  3.48
    • G.  Grant or Denial of Registration
      • 1.  Opposition, Cancellation, or Registration  3.49
      • 2.  Appeals From Denials of Registration  3.50
    • H.  Use of Trademark Symbol  3.51
    • I.  Duration and Renewal  3.52
    • J.  Preservation of Trademark Rights  3.53
    • K.  Trademark Licensing  3.54
      • 1.  Form: Trademark Guidelines  3.55
      • 2.  Form: Trademark License Agreement  3.56
    • L.  Assignments of Trademarks
      • 1.  Generally  3.57
      • 2.  Form: Trademark Assignment  3.58
      • 3.  Form: U.S. Patent and Trademark Office Cover Sheet (Trademarks Only)  3.59
    • M.  Violations of Trademark Rights
      • 1.  Trademark Infringement  3.60
      • 2.  Contributory Trademark Infringement  3.60A
      • 3.  False Designation or Description  3.61
      • 4.  ACPA  3.62
      • 5.  Remedies for Trademark Infringement  3.63
      • 6.  Defenses to Trademark Infringement  3.64
      • 7.  Dilution of Famous Mark  3.65
        • a.  Factors Bearing on Whether Mark Is Famous  3.66
        • b.  Cybersquatting and Dilution  3.67
      • 8.  Remedies and Defenses to Anti-Dilution Claims  3.68
      • 9.  Sample Cease and Desist Letter
        • a.  Introduction  3.69
        • b.  Form: Sample Cease and Desist Letter  3.70
  • III.  METATAGS AND SEARCH TERMS
    • A.  Introduction  3.71
    • B.  Nominative Fair Use  3.72
    • C.  Initial Interest Confusion Test  3.73
    • D.  Protection of Fanciful Marks  3.74
    • E.  Misspellings of Trademarks and Direct Competitors  3.75
    • F.  “English Words”  3.76
  • IV.  TRADE DRESS
    • A.  Introduction  3.77
    • B.  Website User Interfaces  3.78
    • C.  Trade Dress Infringement  3.79
      • 1.  Nonfunctionality
        • a.  Overview of the Doctrine  3.80
        • b.  Functionality and Nonfunctionality in the Courts
          • (1)  Outside the Ninth Circuit  3.80A
          • (2)  Ninth Circuit  3.81
        • c.  Doctrine of Aesthetic Functionality  3.82
        • d.  Functionality and Website User Interfaces  3.83
      • 2.  Inherent Distinctiveness or Secondary Meaning
        • a.  Inherent Distinctiveness Test  3.84
        • b.  Product Designs and Product Packaging  3.85
        • c.  Website User Interfaces: Product Design or Product Packaging?  3.86
      • 3.  Likelihood of Confusion in Trade Dress  3.87

4

Human Resources

  • I.  EMPLOYEES AND EMPLOYMENT ISSUES
    • A.  Introduction  4.1
    • B.  Ethical Considerations  4.2
    • C.  “At Will” Employment  4.3
    • D.  Offer Letter to Prospective Employee
      • 1.  Introduction  4.4
      • 2.  Form: Offer Letter to Prospective Employee  4.5
    • E.  Confidentiality and Invention Assignment Agreements
      • 1.  Employee Confidentiality Agreements  4.6
      • 2.  DTSA Notice  4.6A
      • 3.  Employee Inventions  4.7
        • a.  Federal “Work for Hire” Doctrine  4.8
        • b.  Employer Ownership of Employee Inventions Under State Law  4.9
      • 4.  Invention Assignment Agreements  4.10
      • 5.  Form: Confidentiality and Invention Assignment Agreement  4.11
    • F.  Employee Overtime—Special Rules for Computer Programmers  4.12
  • II.  INDEPENDENT CONTRACTORS
    • A.  Overview of Independent Contractor Issues  4.13
    • B.  Classification of Independent Contractors
      • 1.  Exempt Versus Nonexempt Employees  4.14
      • 2.  Dynamex and Statutory Enactments: The ABC Test  4.14A
      • 3.  Borello Right-to-Control Test  4.15
      • 4.  Dynamex ABC Test  4.16
      • 5.  Independent Contractor Classification Analysis; Penalties for Violation  4.17
    • C.  Intellectual Property Issues in Independent Contractor Relationships  4.18
    • D.  Form: Independent Contractor Consulting Agreement  4.19
    • E.  Independent Contractor Nondisclosure Agreement
      • 1.  Introduction  4.20
      • 2.  Form: Nondisclosure Agreement  4.21
  • III.  ADVISORY BOARDS
    • A.  Introduction  4.22
    • B.  Form: Advisory Board Letter Agreement  4.23

5

Website and App Development; Disability Accommodation Issues

  • I.  ACQUISITION OF INTELLECTUAL PROPERTY
    • A.  Introduction  5.1
    • B.  Assignment of Intellectual Property by Company Founder  5.2
    • C.  Form: Agreement for Transfer and Assignment of Intellectual Property  5.3
  • II.  WEBSITE AND MOBILE APP DEVELOPMENT AGREEMENTS
    • A.  Introduction  5.4
    • B.  Ethical Considerations  5.5
    • C.  Preparing for Negotiations  5.6
    • D.  Types of Website and App Developers  5.7
      • 1.  Freelancers  5.8
      • 2.  Website and Mobile App Development Specialists  5.9
      • 3.  General Technology Companies  5.10
    • E.  Understanding Issues of Ownership
      • 1.  Conflicting Ownership Interests  5.11
      • 2.  Why a Website or App Probably Is Not a “Work Made for Hire”  5.12
      • 3.  Domain Name Registration and Ownership  5.13
    • F.  Drafting Website and Mobile App Development Agreement  5.14
      • 1.  Responsibilities of Parties  5.15
      • 2.  Deliverables and Timelines for Delivery  5.16
      • 3.  Ownership and License Grants  5.17
        • a.  Ownership  5.18
        • b.  License Rights  5.19
        • c.  Confidentiality  5.20
      • 4.  Representations and Warranties of Developer  5.21
      • 5.  Ongoing Obligations of Developer  5.22
    • G.  Website and Mobile App Development Agreements
      • 1.  Independent Contractor Agreements  5.23
      • 2.  Form of Website Development Agreement
        • a.  Introduction  5.24
        • b.  Form: Website Development Agreement  5.25
  • III.  WEBSITE AND MOBILE APP UPGRADES  5.26
  • IV.  DISABILITY ACCOMMODATION ISSUES
    • A.  Federal and California Statutes  5.27
    • B.  Website Accessibility Case Law  5.28
    • C.  DOJ Rulemaking and Enforcement Efforts  5.29
    • D.  Web Content Accessibility Guidelines (WCAG)  5.30
  • V.  PRIVACY LAW REQUIREMENTS  5.31

6

Hosting and Related Services; Cloud Computing

  • I.  HOSTING AGREEMENTS
    • A.  Introduction  6.1
    • B.  Negotiating Hosting Agreement  6.2
    • C.  Key Hosting Agreement Terms
      • 1.  Responsibilities of Host  6.3
        • a.  Website Hosting  6.4
        • b.  Monitoring  6.5
        • c.  Access to Software  6.6
        • d.  Content Uploading and Maintenance  6.7
        • e.  Data Collection and Reporting  6.8
      • 2.  Responsibilities of Customer  6.9
    • D.  Warranties  6.10
    • E.  Form of Hosting Services Agreement
      • 1.  Introduction  6.11
      • 2.  Form: Hosting Services Agreement  6.12
  • II.  CO-LOCATION AGREEMENTS
    • A.  Introduction  6.13
    • B.  Decision to Co-Locate  6.14
    • C.  Co-Location Services and Customer Responsibilities
      • 1.  Overview  6.15
      • 2.  Customer Responsibilities  6.16
      • 3.  Provider Warranties  6.17
    • D.  Form of Co-Location Agreement
      • 1.  Introduction  6.18
      • 2.  Form: Co-Location Agreement  6.19
    • E.  Equipment Considerations  6.20
  • III.  SERVICE LEVEL AGREEMENTS
    • A.  Introduction  6.21
    • B.  Use of Service Level Agreements Generally
      • 1.  Content  6.22
      • 2.  When to Request Service Level Agreement  6.23
      • 3.  Monitoring and Enforcement of Service Level Agreement Terms  6.24
    • C.  Standard Service Level Agreement Terms
      • 1.  Availability; Uptime  6.25
      • 2.  Service Levels  6.26
        • a.  Low-Priority Requests  6.27
        • b.  Medium-Priority Requests  6.28
        • c.  High-Priority Requests  6.29
      • 3.  Response Times and Response Actions  6.30
      • 4.  Service Credits and Chronic Problems  6.31
      • 5.  Additional Terms  6.32
        • a.  Customer Support  6.33
        • b.  Performance Measurement  6.34
        • c.  Reporting  6.35
    • D.  Service Level Agreement Forms
      • 1.  Sample Short Form Service Level Agreement
        • a.  Introduction  6.36
        • b.  Form: Short Form Service Level Agreement  6.37
      • 2.  Sample Website Hosting Service Level Agreement
        • a.  Introduction  6.38
        • b.  Form: Website Hosting Service Level Agreement  6.39
  • IV.  TECHNICAL SUPPORT
    • A.  Introduction  6.40
    • B.  Obtaining Technical Support from Vendors  6.41
    • C.  Key Issues in Obtaining Support From Vendors
      • 1.  Upgrades and New Versions  6.42
      • 2.  Support Services  6.43
      • 3.  Training and Help Desk Support  6.44
    • D.  Technical Support and Maintenance Agreement
      • 1.  Introduction  6.45
      • 2.  Form: Technical Support and Maintenance Agreement  6.46
    • E.  Providing Technical Support to Customers  6.47
    • F.  Basic Technical Support Exhibit
      • 1.  Introduction  6.48
      • 2.  Form: Basic Technical Support Exhibit  6.49
  • V.  Cloud Computing
    • A.  Introduction  6.50
    • B.  Statutory Limitations  6.51
    • C.  Data Security, Privacy, and Confidentiality
      • 1.  Overview  6.52
      • 2.  Access to Data  6.53
      • 3.  Voluntary or Compelled Disclosure
        • a.  General Considerations  6.54
        • b.  National Security Letters  6.55
      • 4.  Data Security  6.56
      • 5.  Duty of Confidentiality  6.57
    • D.  Service Levels  6.58
    • E.  Indemnification, Warranty, and Liability  6.59
    • F.  Data Portability and Deletion  6.60
    • G.  Guidance for Specific Industries  6.61
    • H.  Variations on Cloud Computing  6.62
    • I.  Sample Cloud Services Agreement  6.63
    • J.  Security Addendum  6.64
    • K.  Form: Security Addendum  6.65

7

Electronic Contracting

  • I.  INTRODUCTION  7.1
  • II.  ENFORCEABILITY OF INTERNET AGREEMENTS
    • A.  Shrink-Wrap Software Licenses  7.2
    • B.  Click-Wrap Agreements  7.3
    • C.  Browse-Wrap Agreements  7.4
    • D.  Scroll-Wrap Agreements and Sign-in-Wrap Agreements  7.4A
    • E.  Embedded Links  7.4B
  • III.  E-SIGN
    • A.  Introduction  7.5
    • B.  Electronic Signatures  7.6
    • C.  Consumer Protection Features  7.7
    • D.  Electronic Record Retention  7.8
  • IV.  UNIFORM ELECTRONIC TRANSACTIONS ACT (UETA)
    • A.  Overview; Federal Preemption Issue  7.9
    • B.  Consent to Conduct Transactions Electronically Required  7.10
    • C.  Authentication of Electronic Signatures  7.10A
  • V.  UNIFORM COMPUTER INFORMATION TRANSACTIONS ACT (UCITA)  7.11
  • VI.  ALI SOFTWARE CONTRACT PRINCIPLES  7.12
  • VII.  EUROPEAN UNION DIRECTIVES  7.13
  • VIII.  CREATING ENFORCEABLE ELECTRONIC AGREEMENTS
    • A.  Six Basic Principles  7.14
    • B.  Additional Practical Considerations  7.15
    • C.  Amendments  7.16

8

Terms of Use; Online Agreements; Linking; Downloading; Social Networking

  • I.  INTRODUCTION  8.1
  • II.  TERMS OF USE
    • A.  Drafting Considerations  8.2
    • B.  Form: Website Terms of Use  8.3
  • III.  ONLINE SOFTWARE LICENSE AGREEMENTS
    • A.  Introduction  8.4
    • B.  Form: Online End-User Software License Agreement  8.5
    • C.  Online Beta User Evaluation Agreement
      • 1.  Introduction  8.6
      • 2.  Form: Online Beta User Evaluation Agreement  8.7
    • D.  Open Source Licensing
      • 1.  Introduction  8.8
      • 2.  Form: Open Source Software License Agreement  8.9
    • E.  Software Evaluation License Agreement
      • 1.  Introduction  8.10
      • 2.  Form: Evaluation License Agreement  8.11
    • F.  Online Software Developer Toolkit License Agreement
      • 1.  Introduction  8.12
      • 2.  Form: Online Software Developer Toolkit License Agreement  8.13
  • IV.  LINKING ARRANGEMENTS
    • A.  Introduction  8.14
    • B.  Linking and Framing
      • 1.  Generally  8.15
      • 2.  Copyright Infringement Issues  8.16
      • 3.  Potential Liability for Trespass to Chattels  8.17
    • C.  Form: Linking Agreement  8.18
  • V.  DOWNLOADING AND UPLOADING CONTENT
    • A.  Generally  8.19
    • B.  Copyright Infringement Issues  8.20
    • C.  Music on the Internet
      • 1.  Introduction  8.21
      • 2.  Technologies  8.22
      • 3.  Federal Statutes  8.23
        • a.  Audio Home Recording Act of 1992 (AHRA)  8.24
        • b.  Digital Performance Right in Sound Recordings Act of 1995 (DPRA)  8.25
        • c.  No Electronic Theft Law  8.26
        • d.  Internet Piracy (Pen C §653aa)  8.26A
        • e.  The Family Entertainment and Copyright Act  8.26B
      • 4.  Case Law  8.27
      • 5.  RIAA Litigation Strategy  8.28
  • VI.  SOCIAL NETWORKING
    • A.  Overview  8.29
    • B.  Social Networking and the Law
      • 1.  Federal Safe Harbors  8.30
      • 2.  State Regulatory Efforts  8.30A
    • C.  Copyright Issues
      • 1.  Infringement; Fair Use  8.31
      • 2.  Practice Guidelines  8.31A
    • D.  Privacy Issues
      • 1.  Generally  8.32
      • 2.  FTC Actions Concerning Privacy of User Information on Social Networks  8.32A
      • 3.  California Privacy Laws Protecting Social Media Users’ Privacy  8.32B
    • E.  Need for Valid End-User License Agreements (EULAs)  8.33
    • F.  Social Media in the Workplace  8.34
    • G.  Violation of Nonsolicitation Agreements  8.35

9

Privacy Law and Privacy Policies

  • I.  INTRODUCTION  9.1
  • II.  PRIVACY LAWS AFFECTING ONLINE BUSINESS  9.2
    • A.  How Businesses Obtain Consumer Information Online
      • 1.  Direct and Indirect Disclosure  9.3
      • 2.  Cookies  9.4
      • 3.  Pixels  9.5
      • 4.  Other Tracking Technologies  9.6
      • 5.  Adware  9.6A
      • 6.  Spyware  9.6B
      • 7.  Phishing  9.6C
    • B.  Federal Privacy Laws
      • 1.  United States Constitution  9.7
      • 2.  Federal Legislation and FTC Initiatives  9.8
        • a.  Federal Trade Commission Initiatives  9.8A
          • (1)  FTC Actions Concerning Privacy Policies  9.9
          • (2)  FTC Actions Concerning Data Security  9.9A
          • (3)  The FTC’s “Red Flags Rule”  9.9B
          • (4)  FTC Actions Concerning Unwanted Adware  9.9C
          • (5)  The Internet of Things  9.9D
          • (6)   FTC Guidelines  9.9E
        • b.  Health Insurance Portability and Accountability Act (HIPAA)
          • (1)  Privacy Aspects of HIPAA and Supporting Regulations  9.10
          • (2)  Protected Health Information, Contract Requirements  9.11
        • c.  Gramm-Leach-Bliley Act  9.12
        • d.  Right to Financial Privacy Act  9.13
        • e.  Computer Fraud and Abuse Act  9.14
        • f.  Electronic Communications Privacy Act  9.15
        • g.  Video Privacy Protection Act  9.15A
        • h.  Fair Credit Reporting Act  9.15B
        • i.  Consumer Privacy Bill of Rights   9.15C
    • C.  California Privacy Laws
      • 1.  California Constitution
        • a.  Constitutional Right of Privacy  9.16
        • b.  Standing Issue in Privacy Litigation  9.16A
      • 2.  Common Law Right of Privacy  9.17
      • 3.  California Legislation  9.18
        • a.  California Consumer Privacy Act (CCPA) (CC §§1798.100–1798.199.100)  9.18A
        • b.  Proposition 24: California Privacy Rights Act (CPRA)   9.18B
        • c.  Online Privacy Protection Act (OPPA) (Bus & P C §§22575–22579)
          • (1)  Privacy Policy Posting Requirement  9.19
          • (2)  Required Contents of Privacy Policy  9.20
          • (3)  Failure to Comply With Act  9.21
        • d.  California Attorney General’s Recommended Best Practices for Mobile App Developers  9.21A
        • e.  “Anti-Paparazzi” Statute  9.21B
        • f.  California Financial Information Privacy Act  9.22
        • g.  California Right to Financial Privacy Act (Govt C §§7460–7493)  9.23
        • h.  Song-Beverly Credit Card Act  9.23A
        • i.  Required Notice of Security Breaches
          • (1)  Civil Code Provisions  9.24
          • (2)  Potential Safe Harbor  9.25
          • (3)  Obligation to Maintain Security  9.25A
        • j.  Civil Code §1798.83  9.26
        • k.  Consumer Protection Against Computer Spyware Act (Bus & P C §§22947–22947.6)  9.26A
        • l.  California Electronic Communications Privacy Act  9.26B
        • m.  Student Online Personal Information Protection Act  9.26C
        • n.  Unfair Competition Law  9.27
        • o.  “Revenge Porn”  9.27A
        • p.  Genetic Information Privacy Act  9.27B
    • D.  Other States’ Data Protection Programs  9.27C
    • E.  Special Legal Protections for Children  9.28
      • 1.  Children’s Online Privacy Protection Act (COPPA)  9.29
        • a.  Application of COPPA  9.30
        • b.  Requirements for Online Collection of Information From Children  9.31
        • c.  Parental Consent  9.32
        • d.  FTC Enforcement Actions Under COPPA  9.33
        • e.  State Enforcement Actions Under COPPA  9.33A
        • f.  Safe Harbor Under COPPA  9.34
      • 2.   Final FTC Children’s Online Protection Act Rule  9.34A
      • 3.  Dot-Kids Act [Deleted]  9.35
      • 4.  FTC’s Children’s Privacy Website  9.36
      • 5.  California Legislation  9.36A
        • a.  Prohibition on Certain Advertising to Minors (Bus & P C §22580)  9.36B
        • b.  “Eraser Button” Law  9.36C
    • F.  European Union Rules and Regulation
      • 1.  EU Data Protection Directive [Deleted]  9.37
      • 2.  EU General Data Protection Regulation (GDPR)  9.37A
      • 3.  Data Transfers  9.38
  • III.  WEBSITE PRIVACY POLICIES
    • A.  Need for Privacy Policies  9.39
    • B.  Content of Privacy Policies  9.40
    • C.  Enforceability of Privacy Policies  9.41
    • D.  Additional Resources  9.42
    • E.  Privacy Policy
      • 1.  Introduction  9.43
      • 2.  Form: Privacy Policy  9.44
  • IV.  PRIVACY AND WEBSITE DESIGN  9.45

10

E-Commerce Transactions; Tax and Insurance Issues

  • I.  E-COMMERCE TRANSACTIONS
    • A.  Introduction  10.1
    • B.  Electronic Contracting  10.2
    • C.  Electronic Payment Services
      • 1.  Credit Cards  10.3
      • 2.  Debit Cards  10.4
      • 3.  Internet Checks  10.5
      • 4.  Virtual Currency  10.5A
      • 5.  Blockchain Technology  10.5B
      • 6.  Non-Fungible Tokens (NFTs)  10.5C
      • 7.  Initial Coin Offerings and the SEC  10.5D
      • 8.  Other Electronic Payment Services  10.6
    • D.  Additional Payment and Security Issues  10.7
      • 1.  Secure Transaction Processing Software  10.8
      • 2.  Fraud Prevention Tools  10.9
      • 3.  Phone and Fax Orders  10.10
      • 4.  Security Certificates  10.11
      • 5.   Purchases by Children  10.11A
    • E.  Shopping Cart Services
      • 1.  Overview  10.12
      • 2.  Evaluating Shopping Cart Services  10.13
    • F.  Sample Website or App End User Payment Terms
      • 1.  Introduction  10.14
      • 2.  Form: Sample Clauses re Payment of Subscription Fees  10.15
    • G.  FTC’s Mail, Internet, or Telephone Order Merchandise Rule  10.16
    • H.  Restore Online Shoppers’ Confidence Act  10.16A
    • I.  Subscription Offers: Business and Professions Code §17602  10.16B
    • J.  Online Distributors and Products Liability  10.16C
    • K.  Prompt Shipping Requirements  10.16D
  • II.  TAX ISSUES
    • A.  Formulation of E-Commerce Tax Policy  10.17
      • 1.  International Tax Policy  10.18
      • 2.  United States Federal Tax Policy
        • a.  Role of Treasury Department  10.19
        • b.  The Internet Tax Freedom Act  10.20
        • c.  The Streamlined Sales and Use Tax Agreement  10.20A
      • 3.  California Sales and Use Tax Policy  10.21
    • B.  Sales and Use Taxes
      • 1.  General Principles  10.22
      • 2.  Constitutional Restrictions; South Dakota v Wayfair, Inc.  10.23
      • 3.  Sales by California E-Businesses to Out-of-State Residents  10.23A
      • 4.  California Sales and Use Taxes: General Rules  10.24
      • 5.  The “Amazon Tax”: Out-of-State Retailers With In-State Agents  10.24A
      • 6.  Post-Wayfair Sales and Use Tax Obligations of Out-of-State Retailers  10.25
      • 7.  California Sales and Use Tax Treatment of Software Sales and Related Services  10.26
  • III.  INSURANCE ISSUES FOR ONLINE BUSINESSES
    • A.  Introduction  10.27
    • B.  Commercial Form General Liability Insurance  10.28
      • 1.  Loss of Tangible Property: Is Computer Data “Tangible Property?”  10.29
      • 2.  Loss of Tangible Property: Has There Been a “Loss”?  10.30
      • 3.  “Physical Loss or Damage”  10.31
      • 4.  Intellectual Property Infringement  10.32
    • C.  Business Interruption Coverage  10.33
    • D.  Industry Response  10.34
    • E.  Cyberinsurance  10.35
    • F.  Practical Advice  10.36
  • IV.  DECENTRALIZED AUTONOMOUS ORGANIZATIONS (DAOs)  10.37

11

Strategic Alliances

  • I.  INTRODUCTION  11.1
  • II.  TYPES OF ALLIANCES  11.2
  • III.  FORM: SAMPLE LETTER OF INTENT RE STRATEGIC ALLIANCE  11.3
  • IV.  SAMPLE STRATEGIC ALLIANCE AGREEMENT
    • A.  Introduction  11.4
    • B.  Form: Strategic Alliance Agreement  11.5
  • V.  SAMPLE CO-BRANDING AGREEMENT
    • A.  Introduction  11.6
    • B.  Form: Co-Branding Agreement  11.7

12

Software License Agreements

  • I.  INTRODUCTION  12.1
  • II.  KEY ISSUES IN SOFTWARE LICENSING
    • A.  Exclusive Licenses  12.2
    • B.  Nonexclusive Licenses  12.3
    • C.  Scope of License
      • 1.  Scope of Rights Granted  12.4
      • 2.  Number of End Users  12.4A
    • D.  Payment Structures  12.5
  • III.  SAMPLE SOFTWARE LICENSE AGREEMENT
    • A.  Introduction  12.6
    • B.  Form: Software License Agreement  12.7
  • IV.  DRAFTING EXCLUSIVE LICENSES
    • A.  General Considerations
      • 1.  Restrictions on Scope or Field of Use  12.8
      • 2.  Performance Milestones; Minimum Royalties  12.9
    • B.  Form: Exclusivity Clause  12.10
  • V.  BANKRUPTCY CONSIDERATIONS
    • A.  Introduction  12.11
    • B.  Executory Contracts and Bankruptcy Code §365(n)  12.12
    • C.  Drafting Considerations  12.13

13

Software Development Agreements

  • I.  INTRODUCTION  13.1
  • II.  OWNERSHIP ISSUES  13.2
  • III.  FORM: SOFTWARE DEVELOPMENT AGREEMENT  13.3
  • IV.  SOFTWARE EVALUATION
    • A.  Introduction  13.4
    • B.  Form: Software Test and Evaluation Agreement  13.5

14

Content Clearances, Licensing, and Fair Use

  • I.  INTRODUCTION  14.1
  • II.  STEP 1: IDENTIFY THIRD PARTY ELEMENTS  14.2
  • III.  STEP 2: DETERMINE IF THIRD PARTY ELEMENTS ARE PROTECTED BY COPYRIGHT OR OTHER INTELLECTUAL PROPERTY LAWS  14.3
  • IV.  STEP 3: FOR PROTECTED ELEMENTS, DETERMINE WHICH OF OWNER’S EXCLUSIVE RIGHTS ARE IMPLICATED  14.4
  • V.  STEP 4: DETERMINE IF USE IS EXEMPT FROM INFRINGEMENT LIABILITY
    • A.  Public Domain  14.5
    • B.  Fair Use  14.6
  • VI.  STEP 5: IDENTIFY OWNERS OF WORK  14.7
  • VII.  STEP 6: OBTAIN RIGHTS NECESSARY TO USE WORK  14.8
    • A.  Individual Release (Videotape of Testimonial)
      • 1.  Introduction  14.9
      • 2.  Form: Endorsement Agreement  14.10
    • B.  Still Photograph License
      • 1.  Introduction  14.11
      • 2.  Form: Still Photograph License  14.12
    • C.  Reprint Rights License
      • 1.  Introduction  14.13
      • 2.  Form: Digital Reprint Rights License  14.14
    • D.  Streaming Video License
      • 1.  Introduction  14.15
      • 2.  Form: Streaming Video License  14.16
    • E.  Special Issues in Music Licensing  14.17
    • F.  Creative Commons and Other Innovative Licensing Solutions  14.18

15

Source Code Escrows

  • I.  INTRODUCTION  15.1
  • II.  FORM: SOURCE CODE ESCROW AGREEMENT  15.2

16

Financing an Online Business

  • I.  EARLY-STAGE EQUITY FINANCING
    • A.  Introduction  16.1
    • B.  Equity Versus Debt
      • 1.  Equity  16.2
      • 2.  Debt  16.3
    • C.  Sources of Equity Funding  16.4
      • 1.  Founders, Friends, and Family  16.5
      • 2.  “Angel” Investors  16.6
      • 3.  Venture Capital and Other Institutional Investors  16.7
    • D.  Structure of Venture Capital Financings  16.8
    • E.  Venture Capital Financing Term Sheet
      • 1.  Introduction  16.9
      • 2.  Form: Term Sheet for Preferred Stock Financing  16.10
  • II.  DEBT FINANCING
    • A.  Introduction  16.11
    • B.  Types of Debt Financing  16.12
      • 1.  Working Capital Loans  16.13
      • 2.  Term Loans  16.14
      • 3.  SBA Loans  16.15
      • 4.  Lease Financings  16.16
      • 5.  Corporate Credit Cards  16.17
      • 6.  Convertible Debt  16.18
      • 7.  Customer Advances  16.19
    • C.  Qualifying for Loan  16.20
    • D.  Elements of Simple Loan Transaction
      • 1.  Overview  16.21
      • 2.  Usury Issues for Non-Bank Lenders  16.22
    • E.  Loan Agreement and Promissory Note  16.23
      • 1.  Form: Loan Agreement  16.24
      • 2.  Form: Promissory Note  16.25
    • F.  Security Interests in Intellectual Property Collateral
      • 1.  Generally  16.26
      • 2.  Security Interests in Copyrights  16.27
      • 3.  Security Interests in Patents  16.28
      • 4.  Security Interests in Trademarks  16.29
      • 5.  Security Interests in Domain Names  16.30
      • 6.  Security Interests in Trade Secrets  16.31
      • 7.  Form of Security Agreement (Intellectual Property)
        • a.  Introduction  16.32
        • b.  Form: Security Agreement (Intellectual Property)  16.33
    • G.  Convertible Promissory Notes
      • 1.  Generally  16.34
      • 2.  Form: Convertible Promissory Note  16.35

17

Advertising on the Internet

  • I.  INTERNET ADVERTISING REGULATION
    • A.  Introduction  17.1
    • B.  Overview of Applicable Laws  17.2
      • 1.  Lanham Act  17.3
      • 2.  Federal Trade Commission Act  17.4
        • a.  FTC’s Dot Com Disclosure Guidelines  17.5
        • b.  Liability for Deceptive Advertising; FTC Enforcement Actions  17.6
        • c.  Examples of FTC Enforcement Actions  17.7
        • d.  Endorsements and Testimonials  17.7A
        • e.  Native Advertising  17.7B
      • 3.  Restore Online Shoppers’ Confidence Act  17.7C
      • 4.  State Laws  17.8
        • a.  Laws Prohibiting False or Misleading Advertising Generally  17.9
        • b.  Laws Regulating Telephone, Internet, and Catalog Sales  17.10
        • c.  Laws Regulating Online Advertising to Minors  17.10A
        • d.  Laws Regulating Use of Bots  17.10B
    • C.  Attorney Internet Advertising
      • 1.  Overview  17.10C
      • 2.  California Rules of Professional Conduct  17.10D
      • 3.  ABA Model Rules of Professional Conduct  17.10E
    • D.  Unsolicited Email (“Spam”)  17.11
      • 1.  Federal Legislation: CAN-SPAM Act
        • a.  Generally  17.12
        • b.  Email Subject to CAN-SPAM Act  17.13
        • c.  CAN-SPAM Act: Basic Requirements for Commercial Email Messages  17.14
          • (1)  Identification as Advertisement  17.15
          • (2)  Notice and Opt-Out Mechanism  17.16
          • (3)  Postal Address  17.17
          • (4)  Affirmative Consent  17.18
          • (5)  Forwarding Commercial Emails  17.18A
        • d.  Deceptive Email Practices  17.19
        • e.  Sexually Oriented Materials  17.20
        • f.  Attribution Rules  17.21
        • g.  Enforcement of CAN-SPAM  17.22
        • h.  National “Do Not Email” Registry  17.23
        • i.  Commercial Emails Sent to Wireless Devices  17.23A
        • j.  Criminal Liability Under CAN-SPAM  17.23B
      • 2.  State Anti-Spam Laws
        • a.  Generally  17.24
        • b.  California Anti-Spam Laws  17.25
        • c.  Scope of Preemption of California Law by CAN-SPAM Act  17.26
        • d.  Penal Code §502(c)  17.27
      • 3.  Anti-Spam Litigation  17.28
      • 4.  Practical Methods of Blocking Spam Email  17.29
    • E.  Unsolicited Texts and Phone Calls  17.29A
    • F.  Search Engine Optimization
      • 1.  Overview  17.29B
      • 2.  Optimization Tools and Techniques  17.29C
    • G.  Behavioral Advertising  17.29D
  • II.  INTERNET ADVERTISING AGREEMENTS
    • A.  Overview  17.30
    • B.  Banner Advertising  17.31
    • C.  Form: Banner Advertising Agreement  17.32
    • D.  Internet Service Directories or Referral Sites  17.33
    • E.  Form: Internet Advertising Agreement  17.34
    • F.  Portal Agreements  17.35
    • G.  Form: Interactive Marketing Agreement  17.36
    • H.  Social Media Influencer Marketing  17.37
    • I.  Form: Social Media Influencer Independent Contractor Agreement  17.38

18

Cybersecurity

  • I.  RISK OF CYBERATTACKS
    • A.  Overview, Scope of Chapter  18.1
    • B.  Major Types of Threats  18.2
  • II.  CYBERATTACK RISK MANAGEMENT
    • A.  Online Resources  18.3
    • B.  California Risk Management Requirements
      • 1.  Obligation to Maintain Security (CC §1798.81.5)  18.4
      • 2.  Obligation to Report Data Breaches [Deleted]  18.5
      • 3.  Internet of Things (CC §§1798.91.04–1798.91.06)  18.6
      • 4.  Ethical Obligations of Attorneys  18.6A
    • C.  General Cybersecurity Guidance for Companies
      • 1.  NIST Cybersecurity Framework  18.7
        • a.  Cybersecurity and Infrastructure Security Agency (CISA)  18.7A
      • 2.  NIST Internet of Things  18.8
      • 3.  NYSE Guidance for Directors and Officers  18.9
      • 4.  Cal-Secure  18.9A
      • 5.  Checklist for Cybersecurity Preparedness  18.10
  • III.  RESPONSES TO CYBERATTACKS
    • A.  Federal and California Requirements  18.11
      • 1.  Obligation to Report Data Breaches (CC §§1798.80–1798.84)  18.12
      • 2.  California Consumer Privacy Act (CC §§1798.100–1798.199.100)  18.13
    • B.  Other Responses to a Cyberattack
      • 1.  General Considerations  18.14
      • 2.  Checklist for Response to Cyberattack  18.15
  • IV.  AVAILABLE LEGAL REMEDIES  18.16
    • A.  Federal Legislation
      • 1.  Computer Fraud and Abuse Act
        • a.  Overview  18.17
        • b.  As Applied to Conduct Exceeding Terms of Use  18.18
          • (1)  Violations of Terms of Use  18.19
          • (2)  Sharing Passwords  18.20
          • (3)  Access After Cease and Desist Letter  18.21
        • c.  As Applied to Tracking Software  18.22
        • d.  As Applied to Improper Use of Email  18.23
        • e.  As Applied to Spam  18.24
        • f.  As Applied to Wireless Networks  18.25
      • 2.  Electronic Communications Privacy Act
        • a.  Overview of Title I and Title II  18.26
        • b.  Title I, Wiretap Act  18.27
          • (1)  As Applied to Cookies  18.28
          • (2)  As Applied to Tracking Software  18.29
          • (3)  As Applied to Unauthorized Wireless Access  18.30
        • c.  Title II, Stored Communications Act  18.31
          • (1)  Authorized Versus Unauthorized Access  18.32
          • (2)  Emails and “Electronic Storage”  18.33
      • 3.  USA Patriot Act  18.34
      • 4.  Digital Millennium Copyright Act  18.35
      • 5.  Other Federal Statutes  18.36
    • B.  State Legislation
      • 1.  Penal Code §502: Computer Crimes  18.37
      • 2.  Ransomware  18.38
      • 3.  Wireless Devices  18.39
    • C.  Trespass to Chattels
      • 1.  Elements of Claim  18.40
      • 2.  Case Law Developments
        • a.  Interference With Computer System Operations  18.41
        • b.  No Interference With Computer System Operations
          • (1)  WhatsApp Inc. v NSO Grp. Techs. Ltd.  18.41A
          • (2)  Intel Corp. v Hamidi  18.42
          • (3)  Ticketmaster Corp. v Tickets.com, Inc.  18.43
        • c.  Computer Hacking  18.44

19

Jurisdiction; Conflicts of Law

  • I.  INTERNET JURISDICTION
    • A.  Introduction  19.1
    • B.  Personal Jurisdiction  19.2
      • 1.  State Long-Arm Statutes  19.3
      • 2.  Federal Rules of Civil Procedure  19.4
      • 3.  Constitutional Limits on Personal Jurisdiction
        • a.  Due Process Clause  19.5
        • b.  Minimum Contacts Test  19.6
        • c.  Reasonableness  19.7
      • 4.  General and Specific Personal Jurisdiction
        • a.  General Personal Jurisdiction  19.8
        • b.  Specific Personal Jurisdiction  19.9
        • c.  Specific Jurisdiction in Cyberspace  19.10
    • C.  In Rem Jurisdiction; Anticybersquatting Consumer Protection Act  19.11
    • D.  Choice-of-Forum Clauses
      • 1.  Enforceability  19.12
      • 2.  Form: Choice-of-Forum Clause  19.13
  • II.  CONFLICTS OF LAW; CHOICE-OF-LAW CLAUSES
    • A.  Conflicts of Law
      • 1.  Generally  19.14
      • 2.  Constitutional Analysis  19.15
      • 3.  Is There a Choice-of-Law Clause?  19.16
      • 4.  Governmental Interest Analysis  19.17
      • 5.  Conflicts of Law on Internet  19.18
    • B.  Choice-of-Law Clauses
      • 1.  Enforceability
        • a.  California Statutes  19.19
        • b.  Nedlloyd Lines, B.V. v Superior Court and Later Cases  19.20
      • 2.  Drafting Considerations  19.21
      • 3.  Form: Choice-of-Law Clause  19.22

20

Liability Related to Speech and the First Amendment

  • I.  INTRODUCTION
    • A.  Scope of Chapter  20.1
    • B.  Speech-Related Liability Covered in Other Chapters  20.2
    • C.  Internet Jurisdiction  20.3
  • II.  FREEDOM OF SPEECH
    • A.  Introduction  20.4
    • B.  First Amendment
      • 1.  Protection of Speech in Cyberspace  20.5
      • 2.  Prior Restraint  20.6
      • 3.  Commercial Speech  20.7
      • 4.  “Fighting Words” Doctrine  20.8
      • 5.  Incitement; Speech Integral to Criminal Conduct  20.9
      • 6.  True Threats  20.9A
      • 7.  Obscenity  20.10
        • a.  Miller Test for Obscenity  20.11
        • b.  Reliance on Community Standards Problematic in Cyberspace  20.12
        • c.  Transportation via “Interactive Computer Service”  20.13
        • d.  Federal Criminal Laws Regulating Obscenity  20.14
        • e.  Child Pornography  20.15
        • f.  Children’s Internet Protection Act  20.16
      • 8.  Filtering Software and First Amendment  20.17
      • 9.  Free Speech Rights in Anonymous Communications  20.18
      • 10.  Spam  20.19
      • 11.  Public versus Private Forums, Social Media, and Deplatforming  20.19A
      • 12.  Unconstitutional State Action Based on Content or Viewpoint  20.19B
      • 13.  First Amendment Defense to Wiretapping Liability  20.19C
      • 14.  Student Speech  20.19D
  • III.  TORT LIABILITY  20.20
    • A.  Defamation
      • 1.  Overview  20.21
      • 2.  Libel and Slander Distinguished  20.22
      • 3.  Elements of Defamation  20.23
        • a.  Trade Libel Distinguished  20.24
        • b.  Pleading Requirement: Identifying Alleged Defamatory Statement  20.25
        • c.   “Publication” Requirement  20.26
        • d.  “Of And Concerning” Requirement; “Group Libel”  20.27
        • e.  “Falsity” Requirement  20.28
          • (1)  Fact Versus Opinion  20.29
          • (2)  Burden of Proof  20.30
      • 4.  Public Officials, Public Figures, Limited-Purpose Public Figures, Private Figures, and Matters of Public Concern  20.31
      • 5.  Substantial Truth Defense  20.32
      • 6.  Defamatory Meaning Requirement  20.33
      • 7.  “Mental State” Requirement  20.34
        • a.  Private Figures: Negligence  20.35
        • b.  Public Officials, Public Figures, Limited-Purpose Public Figures, Matters of Public Concern: Actual Malice  20.36
      • 8.  Damages  20.37
      • 9.  Privilege  20.38
    • B.  Invasion of Privacy Torts  20.39
      • 1.  False Light  20.40
      • 2.  Public Disclosure of Private Facts  20.41
      • 3.  Right of Publicity; Misappropriation of Name and Likeness
        • a.  Overview  20.42
        • b.  Right of Publicity Survives Death  20.43
        • c.  Misappropriation Elements  20.44
        • d.  Right of Publicity; Elements  20.45
        • e.  Defenses
          • (1)  Use in Certain News Accounts or Political Campaigns  20.46
          • (2)  Transformative Use  20.47
          • (3)  First Amendment and Public Interest  20.48
          • (4)  Federal Copyright Law Preemption  20.49
          • (5)  Use of Deceased Individual in Copyrighted Work  20.50
        • f.  Statutory Remedies  20.51
      • 4.  Intrusion Upon Seclusion  20.52
        • a.   Intrusion Element  20.53
        • b.   Offensiveness Element  20.54
        • c.  Case Law Examples   20.54A
    • C.  Fraud  20.55
      • 1.  Affirmative Misrepresentation  20.56
        • a.  Misrepresentation Element  20.57
        • b.   “Intent” Requirement  20.58
        • c.   “Reliance” Requirement  20.59
      • 2.  Fraudulent Concealment  20.60
      • 3.  Negligent Misrepresentation  20.61
    • D.  Conversion  20.62
    • E.  Products Liability  20.62A
    • F.  Tortious Interference  20.62B
      • 1.  Interference With Contractual Relations  20.62C
      • 2.  Interference With Prospective Economic Relations  20.62D
  • IV.  PRIVILEGES  20.63
    • A.  Official Governmental Duty Privilege  20.64
    • B.  Litigation Privilege  20.65
    • C.  Common Interest Privilege  20.66
    • D.  Fair and True Report Privilege  20.67
  • V.  STATUTES OF LIMITATIONS
    • A.  Generally  20.68
    • B.  Delayed Discovery Rule  20.69
    • C.  Single Publication Rule  20.70
    • D.  Specific Statutes of Limitation
      • 1.  Defamation  20.71
      • 2.  Invasion of Privacy (False Light, Public Disclosure of Private Facts, Misappropriation, Right of Publicity, and Intrusion Upon Seclusion)  20.72
      • 3.  Intentional Fraud (Affirmative Misrepresentation and Fraudulent Concealment)  20.73
      • 4.  Negligent Misrepresentation  20.74
  • VI.  CALIFORNIA’S ANTI-SLAPP STATUTE
    • A.  Overview  20.75
    • B.  Legislative Intent  20.76
    • C.  Procedural Considerations  20.77
    • D.  Two-Pronged Procedure  20.78
      • 1.  Prong One: Defendant’s Burden To Show Cause of Action Arises From Protected Activity
        • a.  Four Categories of Protected Activity  20.79
        • b.  Protected Activity Defined by Statute Only  20.80
        • c.  No Additional Requirements  20.81
        • d.  Causes of Action Subject to Anti-SLAPP Statute  20.82
        • e.  Merits Not Analyzed in Prong One  20.83
        • f.  Exception for Criminal Conduct  20.84
        • g.  “Arises From” Requirement  20.85
        • h.  Written or Oral Statements Made in Governmental Proceedings (CCP §425.16(e)(1))  20.86
        • i.  Written or Oral Statements Made in Connection With Governmental Proceedings (CCP §425.16(e)(2))  20.87
        • j.  Written or Oral Statements Made in Public Forums in Connection With Matters of Public Interest (CCP §425.16(e)(3))  20.88
        • k.  Any Conduct in Furtherance of Right to Petition or Free Speech in Connection With Matter of Public Concern or Public Interest (CCP §425.16(e)(4))  20.89
      • 2.  Prong Two: Plaintiff’s Burden to Show Probability of Prevailing  20.90
        • a.  Legal Standard in State Court  20.91
        • b.  Legal Standards in Federal Court  20.92
        • c.  Anti-SLAPP Motions in Libel Actions  20.93
        • d.  Anti-SLAPP Motions in Cases Involving Confidentiality Agreements  20.93A
    • E.  Exemptions to Anti-SLAPP Statute  20.94
      • 1.  Commercial Speech Exemption  20.95
      • 2.  Public Interest Exemption  20.96
    • F.  Exceptions to Exemptions  20.97
      • 1.  Media Defendants, Book Publishers, and Authors  20.98
      • 2.  Purveyors of Copyrighted Works  20.99
      • 3.  Nonprofit Organizations  20.100
    • G.  Attorney Fees
      • 1.  Prevailing Defendant’s Right to Attorney Fees  20.101
      • 2.  Plaintiff Entitled to Fees Only if Motion Was Frivolous  20.102
      • 3.  Amount of Fees  20.103
  • VII.  COMMUNICATIONS DECENCY ACT §230 IMMUNITY
    • A.  Immunity for Internet Intermediaries  20.104
    • B.  Interactive Computer Service (ICS)  20.105
    • C.  Information Content Provider (ICP)  20.106
    • D.  Preemption; Relation to State Laws  20.107
    • E.  Nature of Immunity  20.108
    • F.  Exceptions to Immunity  20.109
      • 1.  Criminal Activity and Obscene Material  20.110
      • 2.  Intellectual Property  20.111
      • 3.  Sex Trafficking  20.112
      • 4.  Material Contribution to Unlawful Activity  20.112A
    • G.  No Publisher or Speaker Liability  20.113
      • 1.  Common Law Publisher–Distributor Distinction for Defamation Irrelevant  20.114
      • 2.  Traditional and Nontraditional Publisher Functions  20.115
      • 3.  Applies to “Providers” and “Users” of ICSs  20.116
      • 4.  Name of Claim Not Dispositive  20.117
      • 5.  Limits Injunctive Relief  20.118
      • 6.  Defendant “Directly Involved” in Soliciting Unlawful Speech Ineligible for Immunity [Deleted]  20.119
      • 7.  Nature and Structure of Website May Be Sufficient to Show Direct Involvement in Unlawful Speech [Deleted]  20.120
      • 8.  Merely Providing Tools to Create Web Content Insufficient to Strip Immunity  20.121
      • 9.  Use of Nonemployee Moderators  20.122
      • 10.  Advertising Content  20.123
      • 11.  “Fake News” Websites  20.124
      • 12.  Cases Upholding CDA Immunity  20.125
      • 13.  Cases Holding No CDA Immunity  20.126
    • H.  The “Good Samaritan” Exemption
      • 1.  Two-Part Exemption  20.127
      • 2.  Allegedly Improper Blocking  20.128
      • 3.  Alleged Interference With Third Party Downloadable Programs  20.129
      • 4.  Good Faith Finding Not Required When Classified as Editorial Function  20.130
  • VIII.  INTERNET COMPLAINT SITES
    • A.  Overview  20.131
    • B.  Potential Causes of Action  20.132
      • 1.  Defamation  20.133
      • 2.  Trademark Infringement and Dilution  20.134
      • 3.  Cybersquatting: Federal and State Law
        • a.  UDRP  20.135
        • b.  Anticybersquatting Consumer Protection Act  20.136
        • c.  California’s Anticybersquatting Statute  20.137
    • C.  Practical Solutions  20.138
  • IX.  CRIMINAL LIABILITY
    • A.  Generally  20.139
    • B.  Child Pornography
      • 1.  Child Pornography Prevention Act  20.140
      • 2.  Child Online Protection Act  20.141
    • C.  California Penal Code  20.142
  • X.  CALIFORNIA EDUCATION CODE PENALTIES FOR BULLYING  20.143

20A

Discovery of Electronically Stored Information

Alexander H. Lubarsky, LL.M., Esq.

  • I.  INTRODUCTION  20A.1
  • II.  MANAGING ELECTRONICALLY STORED INFORMATION BEFORE LITIGATION
    • A.  Retention of ESI
      • 1.  Regulatory Obligations  20A.2
      • 2.  In Absence of Statute or Regulation  20A.3
    • B.  Document Retention Policies  20A.4
    • C.  Special Problems Concerning E-Mail  20A.5
    • D.  The CLOUD Act: Electronic Information Stored on Foreign Servers  20A.5A
  • III.  FEDERAL RULES ON ELECTRONIC DISCOVERY  20A.6
    • A.  Rule 16: Scheduling Orders; Case Management  20A.7
    • B.  Rule 26: General Discovery Provisions; Duty of Disclosure
      • 1.  Initial Voluntary Disclosure  20A.8
      • 2.  “Clawback” of Privileged Material  20A.9
      • 3.  Meet-and-Confer Requirements  20A.10
      • 4.  Safe Harbor if ESI Not Reasonably Accessible  20A.11
    • C.  Rule 33: Interrogatory Responses  20A.12
    • D.  Rule 34: Production of Documents and Things
      • 1.  Rule 34(a): Inspection, Copying, Testing, and Sampling  20A.13
      • 2.  Rule 34(b): Specifying Format for Production  20A.14
    • E.  Rule 37: Duty to Comply With Court Order; Safe Harbor for Routine Deletion  20A.15
    • F.  Rule 45: Response to Subpoenas  20A.16
    • G.  Federal NIT Warrants  20A.16A
  • IV.  CALIFORNIA LAW
    • A.  Rules of Court  20A.17
    • B.  Electronic Discovery Act  20A.18
      • 1.  ESI From Sources Not Reasonably Accessible  20A.18A
      • 2.  Safe Harbor for Lost Information  20A.18B
      • 3.  Disclosure of Privileged Information  20A.18C
      • 4.  Form of Production  20A.18D
      • 5.  Court-Imposed Limits on Production  20A.18E
  • V.  ADVANCE PREPARATION FOR DISCOVERY OF ESI
    • A.  ESI Survey and Retention Policy  20A.19
    • B.  Identifying Key Personnel  20A.20
  • VI.  RETENTION OF ESI WHEN LITIGATION IS PENDING
    • A.  Notice of Litigation  20A.21
    • B.  Duty to Preserve Evidence  20A.22
    • C.  Legal Hold Letter to Client
      • 1.  Legal Holds  20A.23
      • 2.  Form: Legal Hold Letter to Client  20A.24
    • D.  Litigation Hold Letter to Opponent
      • 1.  Litigation Holds  20A.25
      • 2.  Form: Litigation Hold Letter to Opponent  20A.26
    • E.  Manner of Preservation  20A.27
    • F.  Sanctions for Failure to Preserve  20A.28
  • VII.  DISCOVERY OF ESI
    • A.  Identifying Data for Discovery
      • 1.  Need to Understand ESI Infrastructure  20A.29
      • 2.  Drafting a Request for Production  20A.30
    • B.  Collecting Data
      • 1.  Defensible Collection Strategies  20A.31
      • 2.  Paper-Based Versus Electronic Production  20A.32
      • 3.  Forensic Data Professionals  20A.33
      • 4.  Electronic Data Collection Software  20A.34
      • 5.  Risks in ESI Collection  20A.35
      • 6.  Metadata  20A.36
      • 7.  ESI Seized by Law Enforcement Through Search Warrants   20A.36A
      • 8.  Forensic or Mirror Images  20A.37
      • 9.  Right to On-Site Inspection  20A.38
    • C.  Form of Production  20A.39
      • 1.  Production in Native Format  20A.40
      • 2.  Production of Image Files  20A.41
        • a.  Copying Electronic Files  20A.42
        • b.  Handling Metadata  20A.43
    • D.  Privileged Information  20A.44
    • E.  Federal Rule of Evidence 502  20A.44A
    • F.  Data Processing, Storage, and Review
      • 1.  De-Duplication and Near De-Duplication  20A.45
      • 2.  Litigation Support Platforms  20A.46
      • 3.  Hosting  20A.47
      • 4.  Data Security  20A.48
    • G.  Costs of E-Discovery  20A.49

21

International Issues

  • I.  INTERNATIONAL E-BUSINESS ISSUES
    • A.  Introduction  21.1
    • B.  Hague Conference on Private International Law  21.2
    • C.  Applicable Law in International Disputes  21.3
    • D.  Jurisdiction of Foreign Courts  21.4
    • E.  Comity: Enforcing Foreign Judgments Against U.S. Companies  21.5
    • F.  Content Filtering by Foreign Governments  21.6
    • G.  How to Target or Avoid Certain Countries  21.7
    • H.  International Electronic Contracting  21.8
    • I.  International Intellectual Property Protection  21.9
    • J.  European Union Directives
      • 1.  Introduction  21.10
      • 2.  EU Data Protection Directive and Related Developments
        • a.  EU Data Protection Directive  21.11
        • b.  General Data Protection Regulation (GDPR)  21.11A
        • c.  Right to Be Forgotten  21.11B
        • d.  Prior Framework (EU-U.S. Privacy Shield); “Schrems II” Decision  21.11C
        • e.  Compliance With EU General Data Protection Regulation
          • (1)  Self-Certifying Under the Privacy Shield Framework   21.12
          • (2)  Consequences of Noncompliance [Deleted]  21.12A
          • (3)  Case-by-Case Compliance; Standard Contract Clauses (SCCs)  21.13
      • 3.  Other EU Directives
        • a.  Distance Selling  21.14
        • b.  E-Commerce Directives  21.15
        • c.  VAT Directive  21.16
        • d.  Specific Industry Directives  21.17
        • e.  EU Data Retention Directive  21.18
        • f.  EU Cybersecurity Directive  21.18A
        • g.  EU Database Directive  21.18B
    • K.  Self-Regulation
      • 1.  Trustmarks  21.19
      • 2.  International ADR  21.20
  • II.  CYBERSECURITY LAW OF THE PEOPLE’S REPUBLIC OF CHINA AND OTHER COUNTRIES  21.20A
  • III.  EXPORT AND IMPORT CONTROLS
    • A.  U.S. Export Controls  21.21
      • 1.  Export Administrative Regulations (EAR)  21.22
      • 2.  Scope of EAR; Commerce Control List (CCL)  21.23
      • 3.  Definition of “Export”  21.24
    • B.  Compliance Challenges  21.25
    • C.  Export Control Compliance Programs  21.26
    • D.  Violations   21.27
    • E.  Export Controls of Other Nations  21.28
    • F.  Import Controls  21.29
    • G.  Form: Export Control Compliance Clause  21.30

22

Acquisitions and Sales of Internet-Based Businesses

  • I.  INTRODUCTION  22.1
  • II.  PRELIMINARY ISSUES  22.2
  • III.  INTELLECTUAL PROPERTY DUE DILIGENCE
    • A.  Introduction  22.3
    • B.  Due Diligence Procedures
      • 1.  Confidentiality Agreement  22.4
      • 2.  Due Diligence Checklist  22.5
      • 3.  Seller’s Internal Response Team  22.6
      • 4.  Responding to Request  22.7
      • 5.  Advance Preparation by Seller  22.8
      • 6.  Buyer’s Due Diligence Report  22.9
      • 7.  Analyzing Information  22.10
      • 8.  Disposition of Information  22.11
    • C.  Sample Due Diligence Checklist
      • 1.  Introduction  22.12
      • 2.  Checklist: Due Diligence Information Request  22.13
    • D.  “Open Source” Software
      • 1.  Introduction  22.13A
      • 2.  Checklist: Acquiring Open Source Software  22.13B
    • E.  Sample Due Diligence Report
      • 1.  Introduction  22.14
      • 2.  Form: Due Diligence Report re Intellectual Property Matters  22.15
  • IV.  REPRESENTATIONS AND WARRANTIES RE INTELLECTUAL PROPERTY RIGHTS
    • A.  Introduction  22.16
    • B.  Form: Representations and Warranties re Intellectual Property  22.17
  • V.  CHANGING OWNERSHIP OF DOMAIN NAMES
    • A.  Introduction  22.18
    • B.  Form: Internet Domain Name Assignment Agreement  22.19

INTERNET LAW AND PRACTICE IN CALIFORNIA

(1st Edition)

July 2022

TABLE OF CONTENTS

 

File Name

Book Section

Title

CH01

Chapter 1

Copyright and the DMCA

01-020

§1.20

Copyright Assignment

01-085

§1.85

Checklist: Notice and Take-Down Checklist

01-089

§1.89

Checklist: Company DMCA Compliance Policy

CH02

Chapter 2

Patents and Trade Secrets

02-016

§2.16

Patent Assignment

02-031

§2.31

Company Policy on Trade Secret Protection

02-033

§2.33

Confidentiality Agreement

CH03

Chapter 3

Domain Names and Trademark Issues

03-008

§3.8

Domain Name Purchase Agreement

03-018

§3.18

UDRP Complaint

03-020

§3.20

UDRP Response

03-055

§3.55

Trademark Guidelines

03-056

§3.56

Trademark License Agreement

03-058

§3.58

Trademark Assignment

03-070

§3.70

Sample Cease and Desist Letter

CH04

Chapter 4

Human Resources

04-005

§4.5

Offer Letter to Prospective Employee

04-011

§4.11

Confidentiality and Invention Assignment Agreement

04-019

§4.19

Independent Contractor Consulting Agreement

04-021

§4.21

Nondisclosure Agreement

04-023

§4.23

Advisory Board Letter Agreement

CH05

Chapter 5

Website and App Development; Disability Accommodation Issues

05-003

§5.3

Agreement for Transfer and Assignment of Intellectual Property

05-025

§5.25

Website Development Agreement

CH06

Chapter 6

Hosting and Related Services; Cloud Computing

06-012

§6.12

Hosting Services Agreement

06-019

§6.19

Co-Location Agreement

06-037

§6.37

Short Form Service Level Agreement

06-039

§6.39

Website Hosting Service Level Agreement

06-046

§6.46

Technical Support and Maintenance Agreement

06-049

§6.49

Basic Technical Support Exhibit

06-063

§6.63

Sample Cloud Services Agreement

06-065

§6.65

Security Addendum

CH08

Chapter 8

Terms of Use; Online Agreements; Linking; Downloading; Social Networking

08-003

§8.3

Website Terms of Use

08-005

§8.5

Online End-User Software License Agreement

08-007

§8.7

Online Beta User Evaluation Agreement

08-009

§8.9

Open Source Software License Agreement

08-011

§8.11

Evaluation License Agreement

08-013

§8.13

Online Software Developer Toolkit License Agreement

08-018

§8.18

Linking Agreement

CH09

Chapter 9

Privacy Law and Privacy Policies

09-044

§9.44

Privacy Policy

CH10

Chapter 10

E-Commerce Transactions; Tax and Insurance Issues

10-015

§10.15

Sample Clauses re Payment of Subscription Fees

CH11

Chapter 11

Strategic Alliances

11-003

§11.3

Form: Sample Letter of Intent Re Strategic Alliance

11-005

§11.5

Strategic Alliance Agreement

11-007

§11.7

Co-Branding Agreement

CH12

Chapter 12

Software License Agreements

12-007

§12.7

Software License Agreement

12-010

§12.10

Exclusivity Clause

CH13

Chapter 13

Software Development Agreements

13-003

§13.3

Form: Software Development Agreement

13-005

§13.5

Software Test and Evaluation Agreement

CH14

Chapter 14

Content Clearances, Licensing, and Fair Use

14-010

§14.10

Endorsement Agreement

14-012

§14.12

Still Photograph License

14-014

§14.14

Digital Reprint Rights License

14-016

§14.16

Streaming Video License

CH15

Chapter 15

Source Code Escrows

15-002

§15.2

Form: Source Code Escrow Agreement

CH16

Chapter 16

Financing An Online Business

16-010

§16.10

Term Sheet for Preferred Stock Financing

16-024

§16.24

Loan Agreement

16-025

§16.25

Promissory Note

16-033

§16.33

Security Agreement (Intellectual Property)

16-035

§16.35

Convertible Promissory Note

CH17

Chapter 17

Advertising on the Internet

17-032

§17.32

Banner Advertising Agreement

17-034

§17.34

Internet Advertising Agreement

17-036

§17.36

Interactive Marketing Agreement

17-038

§17.38

Social Media Influencer Independent Contractor Agreement

CH18

Chapter 18

Cybersecurity

18-015

§18.15

Checklist for Response to Cyberattack

CH19

Chapter 19

Jurisdiction; Conflicts of Law

19-013

§19.13

Choice-of-Forum Clause

19-022

§19.22

Choice-of-Law Clause

CH20A

Chapter 20A

Discovery of Electronically Stored Information

20A-024

§20A.24

Legal Hold Letter to Client

20A-026

§20A.26

Litigation Hold Letter to Opponent

CH21

Chapter 21

International Issues

21-030

§21.30

Export Control Compliance Clause

CH22

Chapter 22

Acquisitions and Sales of Internet-Based Businesses

22-013

§22.13

Checklist: Due Diligence Information Request

22-013B

§22.13B

Checklist: Acquiring Open Source Software

22-015

§22.15

Due Diligence Report re Intellectual Property Matters

22-017

§22.17

Representations and Warranties re Intellectual Property

22-019

§22.19

Internet Domain Name Assignment Agreement

 

Selected Developments

July 2022 Update

Copyright

A transmission is public when it occurs in a place open to the public. 17 USC §101. In Bell v Wilmott Storage Servs., LLC (9th Cir 2021) 12 F4th 1065, the Ninth Circuit held that an image that was only accessible through the URL or a reverse Google image search was a display to the public. 12 F4th at 1072–74. Proof that anyone from the public actually viewed the work was unnecessary. Although Bell only addressed the public display right, and not the public performance right, Bell’s holding appears to apply with equal force to the public performance right. See §§1.11, 1.12.

In Unicolors, Inc. v H&M Hennes & Mauritz, L.P. (2022) ___ US ___, 142 S Ct 941, noting that the information on the copyright registration application should be accurate, the Court also noted that the safe harbor of 17 USC §411(b) provides that a registration certificate is valid even though it contains inaccurate information, as long as the copyright holder did not know that it was inaccurate. The Court held that a lack of knowledge of either fact or law can excuse an inaccuracy in a copyright registration. See §1.16.

The focus of the “de minimis” use question is on the amount copied, not the use. In Bell v Wilmott Storage Servs., LLC (9th Cir 2021) 12 F4th 1065, the Ninth Circuit held that the de minimis use defense focuses on the quantity and quality of the copying—not the extensiveness of the use. 12 F4th at 1076–79. In Bell, an image was copied in full onto the defendants’ servers, but the image was only accessible by knowing the URL for the image or through a reverse Google image search; the image was not incorporated into a website or text indexed through Google. In the proceedings below, the defendant successfully argued de minimis use. The Ninth Circuit reversed, holding that these facts were irrelevant; the relevant standard was the quantity and quality of the copying. See §1.33A.

If the work was registered within 3 months of its publication, the copyright holder may recover statutory damages of up to $150,000 for each willful infringement or up to $30,000 per infringement if the infringement was not willful. 17 USC §504(c). Statutory damages are only available per work, not per infringement. 17 USC §504(c). In Desire, LLC v Manna Textiles, Inc. (9th Cir 2021) 986 F3d 1253, the Ninth Circuit held that the plain meaning of 17 USC §504(c) “precludes multiple awards of statutory damages when … there is only one work infringed.” 986 F3d at 1265. The Ninth Circuit also clarified and narrowed its holding from Columbia Pictures Television, Inc. v Krypton Broad. of Birmingham, Inc. (9th Cir 2001) 259 F3d 1186. In Columbia, an individual who owned three separate television stations was liable for 440 statutory damages awards, even though some of the television stations infringed the same work. In Desire, the Ninth Circuit clarified that the multiple infringement awards in Columbia were because one television station was not jointly and severally liable for the infringement of another television station. 986 F3d at 1267–69. See §1.35.

Defendants that are jointly and severally liable for infringement of a work are subject to only one statutory damages award. 17 USC §504(c); Desire, LLC v Manna Textiles, Inc., 986 F3d at 1263–65. In Desire, the Ninth Circuit held that only one statutory damages award is appropriate when “one infringer is jointly and severally liable with all other infringers, but the other infringers are not completely jointly and severally liable with one another.” 986 F3d at 1265. In Desire, an infringing fabric design was distributed and displayed throughout the retail distribution chain. Although different retailers were not working in concert with one another, the infringing fabric design came from a single source. The Ninth Circuit found that every “downstream” infringer of the fabric design that originated from the same source was jointly and severally liable and therefore only one statutory damages award was appropriate. See §1.35.

Patents

With the continuing development of technology, an issue has arisen whether artificial intelligence (AI) can be a named inventor. In the U.S., one district court has ruled that AI cannot be an inventor, finding that it was the intent of Congress to define “inventor” as a natural person. Thaler v Hirshfeld (ED Va, Sept. 2, 2021, No. 1:20-cv-903 (LMB/TCB)) 2021 US Dist Lexis 167393, *25. See §2.6.

On February 1, 2022, the United States Patent and Trademark Office (USPTO) announced a new Patent Public Search tool that provides more convenient, remote, and robust full-text searching of all U.S. patents and published patent applications. See https://ppubs.uspto.gov/pubwebapp/. See §2.8.

The Supreme Court has placed limitations on the doctrine of assignor estoppel, thereby opening up opportunities for an inventor to assert that a patent on which the inventor is a named inventor is invalid, so long as the assertion of invalidity does not conflict with an explicit or implicit representation made in assigning the patent rights. Minerva Surgical, Inc. v Hologic, Inc. (2021) ___ US ___, 141 S Ct 2298, 2311. Specifically, the Supreme Court identified three examples in which assignor estoppel may not apply, and the inventor could challenge the validity of the patent on which the inventor is a named inventor: (1) when an inventor assigns patent rights to a company as part of an employment agreement for a future invention that the inventor develops during the course of employment; (2) when there is a change in the law (e.g., regarding standards of patentability); and (3) when there is a change in the scope of the claims relative to when the assignment was made. 141 S Ct at 2310. See §2.16A.

Under Step 1 of the Alice/Mayo test, in determining whether the claims are directed toward one of the ineligible categories (laws of nature, natural phenomena, or abstract ideas), courts have made the following inquiries: (1) identifying what the claimed advance is over the prior art (Free Stream Media Corp. v Alphonso Inc. (Fed Cir 2021) 996 F3d 1355, 1361); (2) determining whether the claims focus on the specific means or methods that improve the relevant technology (McRO, Inc. v Bandai Namco Games America Inc. (Fed Cir 2016) 837 F3d 1299, 1314); (3) determining whether the claims focus on improvements in computer capabilities (Enfish, LLC v Microsoft Corp. (Fed Cir 2016) 822 F3d 1327, 1336); and (4) determining whether the claims recite a practical way of applying an underlying idea, rather than being result-oriented regardless of how the idea is implemented to achieve the result (Interval Licensing LLC v AOL, Inc. (Fed Cir 2018) 896 F3d 1335, 1343). See §2.18C.

In the past, simply adding the specific structures of an apparatus or machine that performed a recited function was sufficient to avoid a claim being considered an abstract idea. However, patent-ineligible subject matter case law has now evolved such that physical machines have been deemed to be abstract ideas. For example, in Yu v Apple Inc. (Fed Cir 2021) 1 F4th 1040, 1046, the Federal Circuit found that claims directed specifically to a camera, which even recited components of the camera (i.e., sensors, lenses, circuitry, memory, and processor), still constituted an abstract idea and were therefore not eligible for a patent. See §2.18C.

Aspects of a patented invention can be maintained as a trade secret despite the fact that patents are made publicly available, and the fact that trade secrets lose their trade secret status when lawfully publicly disclosed. For example, in Life Spine, Inc. v Aegis Spine, Inc. (7th Cir 2021) 8 F4th 531, 541–542, the Seventh Circuit found that a district court did not err in finding that a trade secret contained in an invention was not publicly disclosed by the patenting, displaying, and selling of the invention. The trade secret consisted of the precise dimensions of a component of the invention, and those dimensions were not disclosed in the patent and were not readily apparent in viewing the device. Rather, discerning the trade secret information required access to the device and sophisticated measurement technology, and those who had access to the device were monitored closely. See §2.24.

In Depuy Synthes v Veterinary Orthopedic Implants (Fed Cir 2021) 990 F3d 1364, 1372, the Federal Circuit found that a district court did not abuse its discretion in ordering an amended complaint to be made publicly available even though the defendant claimed it contained a trade secret (namely, the identification of the defendant’s manufacturer) because the manufacturer’s identity was not the subject of reasonable security measures. Factors the district court considered were that the manufacturer openly and publicly advertised itself as a manufacturer in the technological field at issue, there was no confidentiality agreement between the defendant and the manufacturer, and evidence suggested that the relationship between the defendant and its manufacturer was known in the relevant community. 990 F3d at 1372. See §2.25.

Trademarks

Mere adoption of a trademark without any bona fide use in commerce, in an attempt to reserve rights for the future, is not sufficient to establish rights in the mark. Under the Lanham Act, use in commerce requires use of a genuine character, in a way sufficiently public to identify or distinguish the trademarked goods in the public mind. Social Technols. LLC v Apple Inc. (9th Cir 2021) 4 F4th 811. See §§3.29, 3.35.

The Trademark Modernization Act of 2020 (TMA), effective December 2021, established two new procedures: ex parte expungement and ex parte reexamination proceedings. See Trademark Modernization Act of 2020, Pub L 116–260, §221, 134 Stat 1182, 2200 (Dec. 27, 2020) (to be codified in 15 USC §§1051–72). Before the TMA, the only method by which the USPTO could cancel an existing registration was through an inter partes cancellation proceeding before the TTAB. To attempt to cancel a trademark registration for certain goods or services that were not in use, a party had to file a cancellation petition on the grounds of abandonment or that the registration was void ab initio for failure to use the mark in commerce as of the date of the application or statement of use. The TMA, through new Lanham Act §§16A–16B (15 USC §§1066a–1066b), has created two new ex parte procedures that work outside of the TTAB structure: ex parte expungement and ex parte reexamination. These proceedings may be initiated either by a party or on the USPTO director’s own initiative. See §3.53.

The TMA, effective December 2021, amended §34(a) of the Lanham Act (15 USC §1116(a)) to provide that “[a] plaintiff seeking any such injunction shall be entitled to a rebuttable presumption of irreparable harm upon a finding of a violation identified in this subsection in the case of a motion for a permanent injunction or upon a finding of likelihood of success on the merits for a violation identified in this subsection in the case of a motion for a preliminary injunction or temporary restraining order.” In so doing, Congress expressly considered the First Amendment and, in the committee report, expressed its view that the restoration of the presumption of irreparable harm should not interfere with courts’ application of the test in Rogers v Grimaldi (2d Cir 1989) 875 F2d 994, which is used in cases involving expressive works. H Rep No. 116–645, 116th Cong. 2nd Sess (2019–2020), at 19–20. See §3.63.

Independent Contractors

In November 2020, California voters approved Proposition 22 (Bus & P C §§7448–7467 and Rev & T C §17037), a measure sponsored by Uber, Lyft, and DoorDash, which allows app-based ride-hailing and delivery companies (called “network companies” under the measure; see Bus & P C §7463) to continue treating their workers as independent contractors provided that the companies offer certain benefits to those workers. In Lawson v Grubhub, Inc. (9th Cir 2021) 13 F4th 908, 914, the Ninth Circuit held that Proposition 22 does not apply retroactively. See §4.14A.

Electronic Contracting

As noted by the court in Sellers v JustAnswer LLC (2021) 73 CA5th 444, 464, online agreements are nearly always adhesion contracts, presented on a take-it-or-leave-it basis to a user who has no opportunity to negotiate the contract terms. In Sellers, the court denied a petition to compel arbitration because notices on the defendant’s website were not sufficiently clear and conspicuous. The court explained that for contracts on the internet (73 CA5th at 461),

a manifestation of assent may be inferred from the consumer’s actions on the website—including, for example, checking boxes and clicking buttons—but any such action must indicate the parties’ assent to the same thing, which occurs only when the website puts the consumer on constructive notice of the contractual terms. . . . [T]o establish mutual assent for the valid formation of an internet contract, a provider must first establish the contractual terms were presented to the consumer in a manner that made it apparent the consumer was assenting to those very terms when checking a box or clicking on a button.

See §§7.1, 7.3.

As stated by the Ninth Circuit in Berman v Freedom Fin. Network, LLC (9th Cir, Apr. 5, 2022, No. 20-16900) 2022 US App Lexis 9083, *12, “[c]ourts are more reluctant to enforce browsewrap agreements because consumers are frequently left unaware that contractual terms were even offered, much less that continued use of the website will be deemed to manifest acceptance of those terms.” In Berman, the court held that (2022 US App Lexis 9083, *13)

Unless the website operator can show that a consumer has actual knowledge of the agreement, an enforceable contract will be found based on an inquiry notice theory only if: (1) the website provides reasonably conspicuous notice of the terms to which the consumer will be bound; and (2) the consumer takes some action, such as clicking a button or checking a box, that unambiguously manifests his or her assent to those terms.

See §7.4.

In addition to click-wrap and browse-wrap agreements, two other types of internet contracts by which providers seek to impose contract terms on consumers have been identified by the courts: scroll-wrap agreements and sign-in-wrap agreements. A scroll-wrap agreement is similar to a click-wrap agreement, but the user is presented with the entire text of the agreement, typically in a separate window, and must physically scroll down to the end of the agreement and click on a button labeled “I accept” or “I agree” in order to proceed with the transaction. A sign-in-wrap agreement is one by which a consumer signs up for an internet product or service, and the webpage states that signing up for that product or service constitutes acceptance of a separate agreement with the provider. Although the webpage usually provides a nearby link to the separate agreement, consumers are typically not required to indicate that they have read or agree to the terms of the separate agreement before signing up for the product or service. Sellers v JustAnswer LLC (2021) 73 CA5th 444, 463–464. See also Selden v Airbnb, Inc. (D DC, Nov. 1, 2016, No. 16-cv-00933 (CRC)) 2016 US Dist Lexis 150863. See §7.4A.

Social Networking

In Mahanoy Area Sch. Dist. v B.L. (2021) ___ US ___, 141 S Ct 2038, 2046, the U.S. Supreme Court held that a public high school violated a student’s First Amendment rights by suspending her from a cheerleading team for the reason that outside of school hours and away from campus, the student transmitted vulgar language and gestures criticizing the school and its cheerleading team on Snapchat. The Court held that, although the school’s regulatory interests remained significant in certain off-campus circumstances, in this case the school’s interest in prohibiting students from using vulgar language to criticize the school team or its coaches did not overcome the student’s interest in free expression. The student spoke under circumstances where the school did not stand in loco parentis, and there was no evidence of any substantial disruption of a school activity. See §8.29.

In 2021, in the aftermath of the presidential election, Florida and Texas enacted laws targeted on restricting the efforts of social media sites to moderate inflammatory and extremist content. These laws impact First Amendment rights of tech companies to moderate the content on their platforms and disallow posts that violate the community standards of the specific social media platform. In May 2021, Florida enacted the Stop Social Media Censorship Act, SB 7072. See https://www.flsenate.gov/Session/Bill/2021/7072. The legislation included, among other things, prohibitions against “deplatforming” political candidates running for public office in Florida, defined as “the action or practice by a social media platform to permanently delete or ban a user or to temporarily delete or ban a user from the social media platform for more than 14 days.” The law also compelled social media platforms to accept speech that would not otherwise meet their community standards or policies, and allowed the state to regulate how platforms curate, edit, or comment on that speech. A federal judge enjoined the new law as preempted by federal law and in conflict with 47 USC §230 (see ) and the First Amendment as a content-based restriction. NetChoice, LLC v Moody (ND Fla, June 30, 2021, No. 4:21cv220-RH-MAF) 2021 US Dist Lexis 121951. The court held that “[t]he legislation now at issue was an effort to rein in social-media providers deemed too large and too liberal. Balancing the exchange of ideas among private speakers is not a legitimate governmental interest. And even aside from the actual motivation for this legislation, it is plainly content-based and subject to strict scrutiny.” 2021 US Dist Lexis 121951, *35. See §8.30A.

Similarly, in September 2021 the Texas legislature enacted House Bill 20. See: https://capitol.texas.gov/BillLookup/History.aspx?LegSess=851&Bill=HB20. The Texas law provided that social media companies with more than 50 million monthly active users “may not censor a user, a user’s expression, or a user’s ability to receive the expression of another person based on . . . the viewpoint of the user or another person.” This prohibition applied to users who reside in, do business in, or share or receive expression in Texas. The law also mandates public disclosure of content management and moderation practices of social media platforms, including quarterly transparency reports detailing when company removed or restricted content or users. In NetChoice, LLC v Paxton (WD Tex, Dec. 1, 2021, No. 1:21-CV-840-RP) 2021 US Dist Lexis 233460, the court enjoined the Texas law, holding that privately owned social media companies’ exercise of editorial discretion over their websites and content is protected by the First Amendment. Both the Florida and Texas cases are on appeal. See §8.30A.

Privacy

In December 2021, under a new Democrat-led commission, the Federal Trade Commission announced its intent to use its rulemaking authority under 15 USC §57a to formulate rules intended “to curb lax security practices, limit privacy abuses, and ensure that algorithmic decision-making does not result in unlawful discrimination.” See https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202110&RIN=3084-AB69. As of this writing, it is unclear what those rules may look like and when those rules may be released. See §9.8A.

In 2021, the Supreme Court limited the FTC’s ability to obtain financial redress in federal court actions. In AMG Capital Mgmt., LLC v FTC (2021) ___ US ___, 141 S Ct 1341, the Court held that the “permanent injunction” language of §13(b) of the FTC Act (15 USC §53(b)) has a limited purpose and does not reflect an intent by Congress to allow the FTC to seek, or a court to grant, monetary relief such as disgorgement or restitution. See §9.9A.

The FTC announced an updated Safeguards Rule on October 27, 2021. The updated Safeguards Rule requires that financial institutions consider specific factors as a part of a risk assessment and implement additional safeguards as a part of their information security programs, including, but not limited to, access controls, authentication standards, and encryption of data in transit and at rest. The updated Safeguards Rule also requires that institutions explain their information-sharing practices and designate a qualified individual to oversee their information security program and to report to an organization’s board of directors or senior officer in charge of information security. See https://www.ftc.gov/news-events/press-releases/2021/10/ftc-strengthens-security-safeguards-consumer-financial. At the same time, the FTC sought comments on whether to make an additional change requiring financial institutions to report certain data breaches and other security events to the FTC. The comment period ended on February 2, 2022. See https://www.federalregister.gov/documents/2021/12/09/2021-25064/standards-for-safeguarding-customer-information. See §9.12.

In TransUnion LLC v Ramirez (2021) ___ US ___, 141 S Ct 2190, 2203, a class action involving inaccurate information in credit files, the U.S. Supreme Court reiterated the test for standing in federal courts: The plaintiff must show that (1) the plaintiff suffered an injury in fact that is concrete, particularized, and actual or imminent; (2) the injury was likely caused by the defendant; and (3) the injury would likely be redressed by judicial relief. The Court held that class members whose inaccurate credit files had been reported to third parties did have standing to sue, but class members whose inaccurate credit files had not been reported to third parties did not have standing. In TransUnion, where a damages award was at issue, the Court emphasized the difference in relief sought for purposes of standing. A plaintiff may have standing to seek future-oriented injunctive relief but lack standing to seek retrospective damages. TransUnion, 141 S Ct at 2210. See §9.16A.

Global Privacy Control (GPC) is a browser- or extension-enabled opt-out setting that allows users to opt out of sales of their personal information. In 2021, the Office of the California Attorney General’s CCPA FAQs stated that GPC “is one option for consumers” seeking to opt out of a sale and that an opt-out signal must be honored by a covered business as a valid consumer request. See https://oag.ca.gov/privacy/ccpa. It is expected that the CPRA rulemaking process will shed additional light regarding business’s obligations with respect to GPC because the issue was a primary topic in the CPRA public comments. See https://cppa.ca.gov/regulations/. See §9.18A.

In October 2021, California enacted the Genetic Information Privacy Act (GIPA) (CC §§56.18–56.186). The law requires direct-to-consumer genetic testing companies to obtain informed consent from consumers regarding the collection, use, and disclosure of their genetic testing. Companies providing commercial genetic testing services will be required to destroy a consumer’s genetic data within 30 days if that consumer revokes consent. CC §56.181(c). In addition to the law’s consent and deletion requirements, genetic testing companies will also be required to “implement and maintain reasonable security procedures and practices to protect a consumer’s genetic data against unauthorized access, destruction, use, modification, or disclosure, and develop procedures and practices to enable a consumer to access their genetic data, and to delete their account and genetic data, as specified.” CC §56.181(d). See §9.27B.

In 2021, online advertising platform OpenEx Technologies, Inc. was required to pay $2 million to settle FTC allegations that it violated the Children’s Online Privacy Protection Act (COPPA) by collecting personal information from children under 13 without consent and by collecting geolocation data from users who had specifically asked to opt out of tracking. The FTC’s investigation found that OpenEx failed to flag apps as child-directed despite knowledge that the apps were intended for children under 13 and passed information from children to third parties that used it to target users of the child-directed apps. The order required OpenEx to delete all ad-requested data it collected and implement a privacy program to ensure COPPA compliance. See https://www.ftc.gov/news-events/press-releases/2021/12/advertising-platform-openx-will-pay-2-million-collecting-personal. See §9.33.

The EU Commission issued revised Standard Contract Clauses in the wake of the Schrems II decision in July 2021. See https://ec.europa.eu/info/law/law-topic/data-protection/international-dimension-data-protection/standard-contractual-clauses-scc_en. Companies relying on SCCs as a data transfer mechanism must now use the updated version for all new contracts and execute the appropriate updated version for all old contracts by December 27, 2022. See §§9.38, 21.13.

E-Commerce

On March 9, 2022, President Biden issued an Executive Order titled Executive Order on Ensuring Responsible Development of Digital Assets, available at https://www.whitehouse.gov/briefing-room/presidential-actions/2022/03/09/executive-order-on-ensuring-responsible-development-of-digital-assets/. The Executive Order is another signal that digital currency is going mainstream. It states that the federal government wishes to maintain technical leadership in the area, support innovation, and mitigate risks for consumers, investors, and businesses, and that all federal agencies should coordinate their efforts toward these goals. The Executive Order also directs the U.S. Department of the Treasury to research the possibility of having the Federal Reserve issue its own digital currency. See §10.5A.

On August 9, 2021, the SEC settled charges with Poloniex, the operator of a web-based platform for trading digital assets, for transacting in unregistered securities and acting as an unregistered “exchange” under applicable securities laws. See “SEC Charges Poloniex for Operating Unregistered Digital Asset Exchange,” https://www.sec.gov/news/press-release/2021-147. See §10.5D.

On August 6, 2021, the SEC settled charges against Blockchain Credit Partners and its founders for selling over $30 million of unregistered securities and for misleading investors about the company’s operations and profitability. See “SEC Charges Decentralized Finance Lender and Top Executives for Raising $30 Million Through Fraudulent Offerings,” https://www.sec.gov/news/press-release/2021-145. See §10.5D.

On October 4, 2021, California governor Gavin Newsom signed into law AB 390 (Stats 2021, ch 450), which adds new renewal reminder notice requirements and cancellation requirements effective July 1, 2022, to Bus & P C §17602. See https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220AB390.

  • Businesses selling automatic renewal plans to California consumers with an initial term of 1 year or longer must deliver reminder notices to their California subscribers 15 to 45 days before the renewal date. Bus & P C §17602(b)(2).

  • Businesses offering free trial, gift, or initial discount periods lasting longer than 31 days must provide similar reminder notices to their California subscribers 3 to 21 days before the expiration of the free or discounted period. Bus & P C §17602 (b)(1)(a).

  • Online sellers of automatic renewal plans will have to offer subscribers the ability to cancel automatic renewal features online “immediately” (after account authentication) by clicking on a button or link, or by sending a pre-formatted termination email message. Bus & P C §17602(d).

See §§10.16B, 17.10.

In Loomis v Amazon.com LLC (2021) 63 CA5th 466, the court held that Amazon Marketplace could be strictly liable for plaintiff’s injuries from a defective hoverboard even though the product was shipped directly to the consumer from an overseas third party vendor. Amazon had substantial ability to influence the manufacturing or distribution process through its ability to require safety certification, indemnification, and insurance before it agreed to list any product. See §10.16C.

Decentralized autonomous organizations (DAOs) have been described as “digital flash mobs with money.” Very briefly, DAOs are community-led enterprises, built on blockchain technology and operated via smart contracts, which incorporate built-in treasuries designed to fund community goals or projects. Ideally, DAOs have no centralized management; all decisions are made by the members. To join a DAO, members are given one or more digital tokens in exchange for their contributions to the treasury. Member contributions are generally made with virtual currency such as Bitcoin. See §10.37.

Advertising on the Internet

In In the Matter of Fashion Nova, LLC (Jan. 25, 2022) FTC File No. 192 3138, available at https://www.ftc.gov/enforcement/cases-proceedings/192-3138/fashion-nova-llc-matter, the respondent agreed to pay the Federal Trade Commission $4,200,000 following its investigation into the respondent’s alleged deceptive practices concerning reviews on its website, including respondent’s practice of only posting four- and five-star reviews, but not thousands of lower-starred reviews. See §17.7.

The FTC has warned companies “against deploying illegal dark patterns that trick or trap consumers into subscription services. . . . The FTC’s policy statement puts companies on notice that they will face legal action if their sign-up process fails to provide clear, up-front information, obtain consumers’ informed consent, and make cancellation easy.” See https://www.ftc.gov/news-events/press-releases/2021/10/ftc-ramp-enforcement-against-illegal-dark-patterns-trick-or-trap?utm_source=govdelivery. See §17.7C.

In Greenberg v Digital Media Solutions, LLC (2021) 65 CA5th 909, the court held that a plaintiff states a claim when it alleges that the “from” names on emails consisted of generic words and the domain names failed to identify the actual senders—namely, the advertiser’s marketing partners—or to provide enough information to make them readily traceable using a publicly available online database. See §17.25.

In Facebook, Inc. v Duguid (2021) ___ US ___, 141 S Ct 1163, the U.S. Supreme Court interpreted the meaning of an automatic telephone dialing system (ATDS) in the Telephone Consumer Protection Act (TCPA) (47 USC §227), holding that “[t]o qualify as an ‘automatic telephone dialing system,’ a device must have the capacity either to store a telephone number using a random or sequential generator or to produce a telephone number using a random or sequential number generator.” 141 S Ct at 1167. Based on its interpretation of ATDS, the Court held that Facebook did not violate the TCPA by maintaining a database that stored phone numbers and by sending automated text messages to those numbers each time an account was accessed by an unrecognized device because Facebook’s equipment did not use a random or sequential number generator. As interpreted by some courts, the Supreme Court’s holding in this case narrowed the meaning of ATDS. See §17.29A.

Cybersecurity

In August 2021, the National Institute of Standards and Technology (NIST) published “Getting Started with the NIST Cybersecurity Framework: A Quick Start Guide,” intended to provide direction and guidance to organizations in any sector or community that are seeking to improve cybersecurity risk management through utilization of the NIST Framework. See https://www.nist.gov/publications/getting-started-nist-cybersecurity-framework-quick-start-guide. See §18.7.

Established in 2018, the federal Cybersecurity and Infrastructure Security Agency (CISA) was created to work across public and private sectors, challenging traditional ways of doing business by engaging with government, industry, academic, and international partners. It operates a website at CISA.gov that provides information on its work as well as advice to government and private entities. See https://www.cisa.gov/about-cisa. On January 18, 2022, it published a guide, “Implement Cybersecurity Measures Now to Protect Against Potential Critical Threats,” which provides steps to reduce the likelihood of a cyberattack and steps to detect and respond to such attacks. See https://www.cisa.gov/sites/default/files/publications/CISA_Insights-Implement_Cybersecurity_Measures_Now_to_Protect_Against_Critical_Threats_508C.pdf. See §18.7A.

On October 22, 2021, California released Cal-Secure, the California Executive Branch’s first 5-year information security maturity roadmap. Cal-Secure is intended to outline capabilities the state must adopt to address critical gaps in the state’s information and cybersecurity programs. Although its provisions are directed toward the protection of government agencies and entities, some of its initiatives are likely to impact the private sector. The roadmap can be found here: https://cdt.ca.gov/wp-content/uploads/2021/10/Cybersecurity_Strategy_Plan_FINAL.pdf. See §18.9A.

As of March 2022, there is no federal protocol currently in effect for responding to cyberattacks. However, on March 15, 2022, as part of the Consolidated Appropriations Act, 2022 (Pub Law 117–103, 136 Stat 49), President Biden signed into law new cyberattack reporting obligations for companies with businesses involving critical infrastructure. The new law, titled the Cyber Incident Reporting for Critical Infrastructure Act of 2022 (Division Y of the Consolidated Appropriations Act, 2022, §§101–107), will eventually require certain companies with critical infrastructure to report cyber incidents within 72 hours and ransomware payments within 24 hours. The new requirements do not go into effect immediately. The Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency has 24 months to issue proposed rules to implement the law, although the agency may do so in advance of that deadline. See §18.11.

In February 2021, the Federal Trade Commission (FTC) released an updated helpful guide on data breach response, titled Data Breach Response, A Guide for Business, available at https://www.ftc.gov/tips-advice/business-center/guidance/data-breach-response-guide-business. The guide sets forth a series of steps that a company is advised to take for a quick and appropriate response when the company suspects a data breach has occurred. See §18.14.

On June 3, 2021, the U.S. Supreme Court issued its decision in Van Buren v U.S. (2021) 593 US ___, 141 S Ct 1648. The certified question presented was whether a person who is authorized to access information on a computer for certain purposes violates the CFAA if that person accesses the same information for an unauthorized purpose. In other words, can a defendant be criminally liable for exceeding authorized access? Although the case was intended to resolve a Circuit split between the First, Fifth, Seventh, and Eleventh Circuits (which had answered “yes”) and the Second, Fourth, Sixth, and Ninth Circuits (which had answered “no”), it provided a muddled response to the question. The Court held that “an individual ‘exceeds authorized access’ when he accesses a computer with authorization but then obtains information located in particular areas of the computer—such as files, folders, or databases—that are off limits to him.” Van Buren, 593 US at ___, 141 S Ct at 1662. The Court, however, provided conflicting guidance regarding the meaning of “off limits.” See §18.19.

Jurisdiction

In Rivelli v Hemm (2021) 67 CA5th 380, the court observed that the U.S. Supreme Court in Bristol-Myers Squibb Co. v Superior Court (2017) ___ US ___, 137 S Ct 1773, 1781, had questioned the California sliding-scale approach as stated in Snowney v Harrah’s Entertainment, Inc. (2005) 35 C4th 1054, 1068, as “difficult to square with [its] precedents.” 67 CA5th at 400. The court in Rivelli therefore assumed that the second requirement for minimum contacts (that plaintiff’s claim must arise out of or relate to the defendant’s forum-related activities) would be satisfied only by contacts with the forum that relate to the specific claims at issue. See §19.8.

In the Ninth Circuit, both federal and California courts apply a three-part test to determine whether the exercise of specific jurisdiction over a nonresident defendant is appropriate. See AMA Multimedia, LLC v Wanat (9th Cir 2020) 970 F3d 1201, 1208. “A court may exercise specific jurisdiction over a nonresident defendant only if: (1) the defendant has purposefully availed himself of forum benefits; (2) the controversy relates to, or arises out of, the defendant’s contacts with the forum; and (3) the exercise of jurisdiction comports with fair play and substantial justice.” Yue v Yang (2021) 62 CA5th 539, 547. See also Rivelli v Hemm (2021) 67 CA5th 380, 392 (same). Specific jurisdiction is also known as “case-linked” jurisdiction, and the analysis is “intensely fact-specific.” 67 CA5th at 392. See §19.9.

First Amendment and Other Speech-Related Liability

Merely because the statement is made in a public forum or by someone with a large social media following does not mean that the public interest element is satisfied. In Woodhill Ventures, LLC v Yang (2021) 68 CA5th 624, 633, a social media influencer with 1.5 million followers made various derogatory statements about a bakery on his social media channel. The influencer sought to argue that because he had such a large following and made the statements to a large number of people, the public interest element was satisfied, but the court disagreed, finding that he did not seek public discussion of any issue, but rather “aimed to whip up a crowd for vengeful retribution.” 68 CA5th at 632. See §20.88.

In Sugarman v Benett (2021) 73 CA5th 165, 177, the court held that statements about a public company’s financial projections made in earnings calls and in reports to the Securities and Exchange Commission were public statements relating to the company’s financial position, which could likely impact individual investors and the stock market. They therefore qualified as protected activity under the catchall provision. See §20.89.

In Neurelis, Inc. v Aquestive Therapeutics, Inc. (2021) 71 CA5th 769, the court held that the commercial speech exception applied to statements that the company made to potential investors about development of a drug because the investors were in a position to influence future buyers by investing to bring the drug to market. See also Xu v Huang (2021) 73 CA5th 802 (defamatory statements made by plaintiff’s competitors fell within commercial speech exemption because they were made for purpose of increasing the defendant’s sales). See §20.95.

Title 47 USC §230 will apply to claims arising from extraterritorial conduct if the plaintiff asserts claims in the United States. In Gonzalez v Google LLC (9th Cir 2021) 2 F4th 871, the families of several victims of ISIS terror attacks that occurred abroad sued Google, Twitter, and Facebook because ISIS used social media platforms for recruiting and propaganda purposes. The plaintiffs tried to claim that §230 did not apply because the conduct giving rise to the claims occurred abroad. The Ninth Circuit held that §230 did apply because “the statute’s focus occurs at the location associated with the imposition of liability.” 2 F4th at 888. See §§20.107, 20.110.

When the ISP is responsible for the creation or development of unlawful content, the Communications Decency Act of 1996 (CDA) (47 USC §230) will not apply. An ISP “creates or develops content by making a material contribution to its creation or development.” Gonzalez v Google LLC (9th Cir 2021) 2 F4th 871, 892; Kimzey v Yelp!, Inc. (9th Cir 2016) 836 F3d 1263, 1269. “Merely taking action that is necessary to the display of the allegedly illegal content” is insufficient to prove material contribution; rather, a material contribution requires “being responsible for what makes the displayed content allegedly unlawful.” Gonzalez, 2 F4th at 892. See §20.112A.

E-Discovery

In Nichols v Noom Inc. (SD NY, Sep 13, 2021, No. 20-CV-3677 (LGS) (KHP)) 2021 US Dist Lexis 173412, the Southern District of New York held that a requesting party does not have an absolute right to content that may be hyperlinked within a produced document or email because hyperlinked material may or may not contain relevant information. Some hyperlinks link to the same document and others may link to a phone number or website but not to relevant user-created materials. The producing party is under an obligation to provide information about the nature of such links on request, but is under no affirmative duty to produce them. See §20A.8.

International

The EU has replaced the former Data Protection Directive with the new General Data Protection Regulation (GDPR), which became effective May 25, 2018. See Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016, available at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2016.119.01.0001.01.ENG&toc=OJ:L:2016:119:TOC. Although the United Kingdom left the EU effective January 1, 2021, it has implemented its own version of the GDPR, called the Data Protection Act. See https://www.gov.uk/data-protection. See §21.11A.

The European Data Protection Board adopted guidelines in November 2021, clarifying that a data transfer takes place when personal data moves from an organization subject to the GDPR to a separate organization outside of EU territory. This excludes transfers directly from individuals within the EU to organizations outside the EU. The guidelines were open to public comment through the end of January 2022. See §21.11A.

On December 31, 2021, the French Data Protection Authority (CNIL) imposed financial penalties of €90 million against Google LLC, €60 million against Google Ireland Limited, and €60 million against Facebook Ireland Limited, as well as injunctions ordering the companies to provide Internet users located in France with a means of refusing cookies as simple as the existing means of accepting them, in order to guarantee their freedom of consent. This decision represents a landmark in GDPR enforcement, levying the highest fines issued to date under the GDPR in the European Union. See https://www.cnil.fr/en/cookies-cnil-fines-google-total-150-million-euros-and-facebook-60-million-euros-non-compliance. See §21.11A.

The European Commission has adopted measures setting out standard contract clauses (SCCs) designed to ensure appropriate safeguards for transfers of data from EU member states to countries outside the EU. These clauses are intended to offer an alternative way to obtain sufficient “adequate protection” (see ) to protect the flow of data from EU member states from interruption. On June 4, 2021, the European Commission issued modernized SCCs under the GDPR for data transfers from controllers or processors in the EU (or otherwise subject to the GDPR) to controllers or processors established outside the EU (and not subject to the GDPR). These modernized SCCs replace the three sets of SCCs that were adopted under the previous data protection directive. See https://ec.europa.eu/info/law/law-topic/data-protection/international-dimension-data-protection/standard-contractual-clauses-scc_en. Companies relying on SCCs as a data transfer mechanism must now use the updated version for all new contracts and execute the appropriate updated version for all old contracts by December 27, 2022. See §21.13.

In August 2021, the U.S. State Department’s Directorate of Defense Trade Controls reached a $6.6 million settlement with a California-based electronics testing company, Keysight Technologies, Inc., for alleged illegal exports of software and technology. The settlement agreement stated that, between 2015 and 2018, the company exported its signal generation software to over 15 countries, including China and Russia, totaling 24 instances of alleged violations of the International Traffic in Arms Regulations (ITAR) (22 CFR §§120–130). See §21.21.

About the Authors

CLARA RUYAN MARTIN received her B.A. degree from the University of California, Berkeley, in 1985 and her J.D. degree from the University of Michigan Law School in 1989. She was a founding partner of the Los Angeles law firm Cadence Law Group LLP. She specializes in structuring, drafting, negotiation, and implementation of complex corporate and technology transactions. Her corporate work includes mergers and acquisitions, joint ventures, corporate finance, and venture representation. Her technology practice is broad, ranging from software licensing and development to strategic alliances and e-commerce. Ms. Martin is an adjunct professor at the University of Southern California School of Law. She has served on the Cyberlaw Committee of the State Bar of California and is a frequent lecturer on topics such as software licensing agreements, Internet-related agreements, complex joint ventures, venture finance, and mergers and acquisitions.

DAVID B. OSHINSKY received his B.A. degree from Yale University in 1991 and his J.D. degree from Columbia Law School in 1996, where he was a member of the Columbia Law Review. He is a founding partner of the Los Angeles law firm Cadence Law Group LLP. Mr. Oshinsky works with many start-up and early-stage companies, for which he provides counsel regarding their early operational, financing, and intellectual property requirements. He regularly assists clients with venture capital financing; technology transactions; and mergers, acquisitions, and related corporate transactions. In particular, his practice involves the structuring, drafting, and negotiating of technology licenses, website policies and agreements, software development agreements, and strategic alliances. Mr. Oshinsky has written and lectured on a broad range of technology topics, including website development agreements, strategic alliances, intellectual property issues in mergers and acquisitions, and Internet law in California.

About the 2022 Update Authors

ROM BAR-NISSIM is an associate at the Law Offices of Lincoln Bandlow, P.C. where his practice focuses on the digital, media, and entertainment industries with an emphasis on copyright and First Amendment litigation. Previously, Mr. Bar-Nissim was an associate at a national law firm with a similar practice. Mr. Bar-Nissim has litigated copyright cases throughout the country, including before the Ninth Circuit. He has litigated First Amendment and speech-related cases before the Supreme Court of California and the California Court of Appeal, and at the trial court level. He has co-authored several articles, public comments, and amicus briefs concerning copyright and digital issues. In 2014, he co-authored, with Professor Jack Lerner, a chapter on law enforcement practices for the American Bar Association publication Whistleblowers, Leaks and the Media: National Security and the First Amendment. Mr. Bar-Nissim received his B.F.A. in theater from Florida Atlantic University in 2002 and his J.D. from the University of Southern California Gould School of Law in 2013, where he won the Norma Zarky Award for Excellence in Entertainment Law. Mr. Bar-Nissim is Co-Executive Editor of this update, a 2022 update co-author of chapters 1 and 14, and the 2022 update author of chapter 20.

KIMBERLY CULP is a counsel at Fenwick & West LLP in Mountain View, California, where she works with digital media, videogame, and consumer products companies to help them resolve their intellectual property and advertising issues. Ms. Culp has authored numerous articles on advertising issues, including New Media Affords New Ways to Deliver Advertising and Branded Content—and New Challenges, 31 CEB Cal Bus L Prac 92 (Summer 2016). She also regularly presents at industry conferences on these legal issues. Ms. Culp was a “Super Lawyers Rising Star” from 2012–2019 and has been a “Super Lawyer” since 2020. She is an adjunct Professor of Law at University of California, Hastings College of the Law, where she teaches a course on Emerging Digital Entertainment. She received her undergraduate degree from the University of California, Davis, and her law degree from the University of California, Hastings College of the Law. Ms. Culp is the 2022 update author of chapter 17.

DANIEL M. GOLDBERG is Chair of the Privacy & Data Security Group at Frankfurt Kurnit Klein & Selz. Widely considered one of the top privacy lawyers in the US, he has been consistently recognized by top legal rating organizations including Chambers USA and Global, Law360, The Legal 500, and Super Lawyers. Mr. Goldberg counsels clients on all matters involving data—from collection and monetization to security and incident response. He has special expertise in ad tech and technology transactions, often negotiating sophisticated agreements on behalf of top agencies, brands, and technology providers. Mr. Goldberg regularly advises clients on GDPR and CCPA compliance, and is actively preparing clients for new U.S. privacy laws taking effect in 2023, including the CPRA, VCDPA, and CPA. He is based in Los Angeles and admitted to practice law in California. Mr. Goldberg is a 2022 update co-author of chapter 9.

JACK LERNER is Clinical Professor of Law at the University of California, Irvine, School of Law, and Director of the UCI Intellectual Property, Arts, and Technology Clinic. Professor Lerner received his B.A., with distinction, in English from the University of Kansas and his J.D. from Harvard Law School. He clerked for Judge Fred I. Parker on the U.S. Court of Appeals for the Second Circuit and Judge G. Thomas Van Bebber in the U.S. District Court for the District of Kansas. He practiced intellectual property law with the Palo Alto law firm Wilson Sonsini Goodrich & Rosati, P.C., and has taught at the University of California, Berkeley, School of Law, and the University of Southern California Gould School of Law. In 2016, Professor Lerner was awarded the California Lawyer Attorney of the Year award for his work obtaining exemptions to the copyright laws that affect documentary filmmakers and authors nationwide. Professor Lerner is Co-Executive Editor of this update and a 2022 update co-author of chapters 1 and 14.

ALEXANDER H. LUBARSKY received his B.A. from Lewis and Clark College and his J.D. and LL.M. from Golden Gate University School of Law. Mr. Lubarsky is a practicing litigator, electronic discovery consultant, and author. He has litigated hundreds of cases involving electronic discovery and has received numerous awards in the industry, including the TechnoLawyer @ Award. Mr. Lubarsky has been elected to the Executive Committee of the Law Practice Management and Technology Section of the State Bar of California and is on the editorial boards of several technology publications. He has consulted for numerous companies that provide electronic discovery support services, including Summation Legal Technologies, Inc.; Fios, Inc.; Guidance Software, Inc.; Daticon, LLC; and Zantaz, Inc. Mr. Lubarsky regularly consults with large law firms and Fortune 500 corporations in the area of ESI retention, e-discovery best practices, and litigation holds. Mr. Lubarsky is the author and 2022 update author of chapter 20A.

CLARA RUYAN MARTIN received her B.A. from the University of California, Berkeley, in 1985 and her J.D. from the University of Michigan Law School in 1989. She specializes in the structuring, drafting, negotiation, and implementation of complex corporate and technology transactions. Her corporate work includes mergers and acquisitions, joint ventures, corporate finance, and venture representation. Her technology practice is broad, ranging from software licensing and development to strategic alliances and e-commerce. Ms. Martin is an adjunct professor at the University of Southern California Gould School of Law. She has served on the Cyberlaw Committee of the State Bar of California and is a frequent lecturer on topics such as software licensing agreements, internet-related agreements, complex joint ventures, venture finance, and mergers and acquisitions. Ms. Martin is the author and 2022 update author of chapters 7–8 and 10.

MARIA NAVA is an associate in the Privacy & Data Security Group at Frankfurt Kurnit Klein & Selz. Ms. Nava counsels clients on a wide variety of privacy and data security issues, including compliance with the California Consumer Privacy Act (CCPA), the California Privacy Rights Act (CPRA), the Virginia Consumer Data Protection Act (VCDPA), the European General Data Protection Regulation (GDPR), the Children’s Online Privacy Protection Act (COPPA), and other privacy-related rules and regulations. She also handles transactional matters—including drafting and reviewing client policies and technology agreements—and assists with security incident investigations. Ms. Nava attended the University of California, Los Angeles, for both undergraduate and law school. She is admitted to practice in California. She is a 2022 update co-author of chapter 9.

C. WOOK PAK is a partner with Cislo & Thomas LLP, Los Angeles, where he practices all aspects of intellectual property procurement and enforcement, including preparing and filing U.S. and international patent applications in a variety of technological fields, such as mechanical, pharmaceutical, energy, and business methods. He has publications in law and science, including a commentary published in the Berkeley Technology Law Journal, and has had a number of speaking engagements regarding patent law. Dr. Pak is a litigator and registered patent attorney. He received his B.S. in biophysics and biochemistry from Oregon State University, his Ph.D. in neuroscience from the University of California, Riverside, and his law degree from Loyola Law School in Los Angeles. Dr. Pak is the 2022 update author of chapter 2.

JEFFREY G. SHELDON received his J.D., summa cum laude, from Loyola Law School, Los Angeles; his B.S. in chemical engineering from the Carnegie Institute of Technology; and his M.S. in biomedical engineering from the University of Strathclyde, Glasgow, Scotland. His studies in Scotland followed his receipt of a Marshall Scholarship. Mr. Sheldon is a partner in Cislo & Thomas LLP, Los Angeles, and was the founding partner of Sheldon Mak & Anderson PC, Pasadena. He is past president of the intellectual property section of the State Bar of California, past president of the Los Angeles Intellectual Property Law Association, and past committee chairman for the AIPLA and IP section of the ABA. Mr. Sheldon served as a consultant in 2022 for chapter 2.

ELLIOTT SIEBERS is an associate in the Privacy & Data Security Group at Frankfurt Kurnit Klein & Selz. He represents organizations from start-ups to Fortune 500s, across a range of industries and on a wide array of matters involving consumer protection, data security, and privacy. He has advised international brands, advertising agencies, adtech, media, and interactive entertainment companies, retailers, and telecommunications providers, among others. A former state privacy regulator, he also regularly counsels clients on privacy and security issues, including cybersecurity preparedness, breach response, and regulatory investigations. Mr. Siebers is based in New York City and is admitted to practice in New York and New Jersey. He is a 2022 update co-author of chapter 9.

KENNETH L. WILTON is a partner in the Intellectual Property Practice Group of Seyfarth Shaw LLP, Los Angeles, and chair of the firm’s national trademark practice. Mr. Wilton’s practice focuses primarily on false advertising, trademark, copyright, and patent litigation in the U.S. federal courts and on counseling and prosecution in the areas of trademark and copyright law. He has extensive experience litigating trademark disputes before the Trademark Trial and Appeals Board of the United States Patent and Trademark Office. Mr. Wilton has taught trademark law in practice and Internet law at the University of Southern California Gould School of Law. He is consistently listed in the World Trademark Review’s Top 1000 trademark practitioners worldwide, the International Who’s Who of Trademark Lawyers, and Managing Intellectual Property’s “IP Stars.” In 2019, Mr. Wilton was selected as one of 30 trademark attorneys recognized nationally in Expert Guides’ 2019 edition of Best of the Best USA. Mr. Wilton received his B.A. in history from the University of California, Los Angeles, and his J.D. from the University of California, Hastings College of the Law, where he was editor-in-chief of the Hastings Journal of Communications and Entertainment Law. Mr. Wilton is the 2022 update author of chapter 18.

RAFFI V. ZEROUNIAN is a partner with Hanson Bridgett LLP, Los Angeles, where he has a 360-degree trademark and copyright practice, handling all facets of counseling, clearance, prosecution, enforcement, and litigation domestically and internationally. His practice also includes domain name disputes through the Uniform Domain Name Resolution Policy and lawsuits involving the Anticybersquatting Consumer Protection Act. In addition, Mr. Zerounian has broad experience with litigation involving counterfeit and gray market goods. He serves as a Senior Editor for the International Trademark Association’s Trademark Reporter® and is listed as a top trademark practitioner in the World Trademark Review’s WTR1000 rankings. Mr. Zerounian is the 2022 update author of chapter 3.

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PRACTICE AREA Law Practice Skills
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