Categories
Real Estate Law

The Lasting Impact of Covid-19 on Commercial Lease Negotiations

The Lasting Impact of Covid-19 on Commercial Lease Negotiations

Madison Shaner

Share Post:

When COVID-19 struck businesses in March of 2020, many assumed the impact would be short-lived, that after a few weeks of shutdowns and lock-ins, business and life would return to normal. Now, well over a year later, and with new variants and surges emerging despite vaccines, the question is: when, how, or even if, a return to offices will occur. Employees are increasingly likely to seek other opportunities if their employers press a return to full-time, in-person work. Job seekers have also begun prioritizing remote work options when looking for new jobs. 

Facing this rising desire to stay remote or move to a hybrid work model, employers must now determine what their physical workspace needs are in the post-pandemic world. A recent McKinsey study forecasts that roughly 38% of businesses will implement some sort of hybrid work arrangement in industries where remote work is feasible. This will likely result in a dramatic shift in the commercial real estate space, particularly where office spaces are concerned, as employers find they don’t want to be locked into a long-term lease, want more flexibility in their leased spaces, or that they need significantly less space than they previously required for their workforce. In a post-COVID world, many lease provisions will play a key role in future lease negotiations, and this shift may see tenants wielding more negotiating power than ever before.

1. Term

While negotiating the term of a lease is nothing new, we may see a trend toward shorter lease terms in the future. Previously, landlords were reluctant to grant leases for commercial spaces in less than five-year terms, particularly where there was build-out performed as part of a landlord’s lease obligations. However, given the shift in the real estate market, and the increases in vacant commercial space, landlords may have to accept shorter-term leasing arrangements from potential tenants who don’t want to get locked into leases given the uncertainty of the world and the shift toward hybrid work models.

2. Expansion/Contraction

Tenants may be seeking options that will allow them to adjust their space needs as they change in post-pandemic leases. Tenants may seek to expand their space as more employees come in for workdays, or to accommodate necessary physical distancing requirements. Conversely, as many employees continue to work remotely, tenants may only need a fraction of the space previously required because there are simply fewer bodies in the building at any given time. Landlords may have limited flexibility here but may also want to leave the door open depending on what their vacant space looks like, and whether trades can be made between tenants who are seeking more space with tenants who are seeking less space. Landlords may even elect to keep certain spaces open as short-term (e.g., daily, or weekly) rental options for tenants who only need more space for brief stretches of time.

3. Force Majeure.

Force majeure provisions were often the first contract provision everyone looked to when COVID hit to determine their liability and ability to avoid consequences for a lack of performance under the terms of the lease or contract. Pre-pandemic, force majeure clauses typically did not offer tenants relief from their obligation to pay rent, even if they may have offered protection from breaching their leases for failure to continuously operate their businesses out of the leased premises. Moving forward, landlords and tenants should expect force majeure provisions to be a more heavily negotiated lease provision, including specific language relating to government shutdowns, public health orders, and crises.

4. Subleasing and assignment.

When lessees become unable to meet their obligations under their leases due to either reduced business or shutdowns and government mandates, they may try to either sublease their spaces or transfer their leases to a third party by assigning the lease. Prior to the pandemic, many landlords, particularly in commercial leases, were reluctant to allow tenants to sublease or assign their leases. Lessees who could sublet or assign their spaces under the terms of their leases were able to defray their overhead costs by finding sublessees or assignees for spaces they either no longer needed or were no longer able to use during the pandemic. As such, assignment and sublease provisions became valuable focal points in existing leases and will likely be heavily negotiated in new leases.

Beyond the shift in lease provisions, it is likely that more and more tenants will seek flexible working spaces that allow people to work in person when desired or necessary. To capitalize on the new hybrid work models, landlords and owners must consider how to best transition their spaces and lease agreements to give tenants flexibility, or risk being stuck with empty commercial spaces.

The real estate team at Milgrom & Daskam is skilled at drafting and negotiating commercial leases, and whether you’re a landlord or a tenant, we would love to help craft the solutions that work best for you. Reach out to our team for a consultation if you’re looking for assistance in your upcoming commercial real estate transactions.

ABOUT THE AUTHOR

ASSOCIATE

Madison (Maddie) Shaner joined Milgrom & Daskam as an Associate in 2019. Her practice focuses on corporate and real estate transactions. Prior to joining Milgrom & Daskam, Maddie was an associate at Tyson, Gurney & Hovey, LLC where she conducted oil and gas title examination and assisted in drafting drilling and division order title opinions for upstream oil and gas clients.

More Articles

Real Estate Law

FinCEN and Real Estate: Additional Disclosure Requirements May Be On the Horizon for Real Estate Transactions

As part of the anti-money laundering regime under the Bank Secrecy Act of 1970 (the “BSA”), in late 2021, the Financial Crimes Enforcement Network (“FinCEN”) division of the Department of the Treasury issued an advanced notice of proposed rulemaking (“ANPRM”) seeking to address potential money laundering through real estate transactions. The comment period for the ANPRM closed on February 21, 2022. This ANPRM comes closely after the notice of proposed rulemaking related to the implementation of the Corporate Transparency Act (the “CTA”), which you can read more about here. Both the CTA and the proposed regulations under the ANPRM would require significant levels of disclosure regarding the beneficial ownership of companies and real estate in non-financed real estate transactions. These measures aim to reduce money laundering, and assets held by undisclosed foreign investors. It is estimated that between 2015 and 2020, at least $2.3 billion was laundered through U.S. real estate, though the actual figure is likely much higher Accordingly, both FinCEN and Congress are trying to limit the number of real estate transactions used to launder money.

Read More »
Work-Life Balance

Not All Who Wander are Lost

When I joined Milgrom & Daskam at the height of COVID, I wasn’t sure what the future would look like for me or this relatively young firm. We were giving up our physical office space in downtown Denver and embarking on a new vision for remote workers. Up until then, much of my professional work life was spent in an office environment, surrounded by colleagues My days were punctuate by in-person meetings–formal, over coffee or meals.in the hallways–and bookended by my daily commute between Denver and Los Angeles which ranged anywhere from just under 30 minutes to more than an hour.

Read More »
Categories
Employment Law

Colorado’s Equal Pay for Equal Work Act: What Employers Should Know

Colorado’s Equal Pay for Equal Work Act: What Employers Should Know

Jason Fisher

Share Post:

Colorado’s Equal Pay for Equal Work ACT (“EPEWA”) became effective January 1, 2021, and all companies that employ Coloradans should be aware of its provision—which may require an update to employer practices and policies—to avoid liability.

By enacting EPEWA, the Colorado legislature seeks to prohibit wage discrimination on the basis of sex, which includes gender identity, or on the basis of sex combined with another protected trait such as disability, race, creed, color, national origin, sexual orientation, religion, age, or ancestry. However, EPEWA also contains provisions regulating (1) what information is required in job listings, (2) who is notified of promotional opportunities, and (3) how interviews are conducted regarding wages.

JOB LISTINGS

All job listings open to Colorada applicants must include the following:

  • The hourly or salary compensation offered (a reasonable range is acceptable);
  • A description of all benefits offered such as health, retirement, and paid time off;
  • A description of any other compensation offered such as bonus or equity incentives.

PROMOTIONAL OPPORTUNITIES

Employers must further make a “reasonable effort” to notify current employees of promotional opportunities. Such notice must be in writing and made available on the same day to all employees for whom the opportunity would be a promotion. It must also be given far enough in advance of having the position filled to allow employees a reasonable time to apply.

INTERVIEW QUESTIONS REGARDING PAY

When performing interviews with applicants for new positions or promotional opportunities, employers are prohibited from asking how much the applicant made in their previous position or any other questions regarding the applicant’s wage rate history. Further, if an employer learns of an applicant’s wage rate history, the employer is prohibited from using that information in determining the applicant’s new compensation.

COSTS OF VIOLATIONS

Employers who fail to comply with the provisions of EPEWA leave themselves open to complaints filed by employees with the Colorado Department of Labor and Employment (“CDLE”). CDLE will conduct investigations into alleged violations, and employers will be required to turn over any documentation requested that has bearing on the complaint. If a violation is found, employers can face fines between $500.00 and $10,000.00 for each violation. They may also be required to provide back pay and other damages to employees who were subject to the violating conduct.

The legal ins and outs of employment are constantly changing. Employers should regularly revisit their internal policies and procedures to ensure compliance and update those practices as required. If you are an employer concerned about compliance with EPEWA, please reach out to Milgrom & Daskam for a free consultation.

ABOUT THE AUTHOR

ASSOCIATE

Jason focuses his practice on corporate governance, commercial finance, commercial contracts, and employment law. He advises clients on all aspects of general corporate matters and strategic business decisions including organization structure, operating/shareholder agreements, and private debt and equity offerings.

More Articles

Estate Planning

Estate Planning for Women: Helping with Control

Let me get it out of the way…the elephant in the room after such a polarizing title. Estate planning is for everyone. Period. Regardless of your age, your marital status, your perceived wealth, or your family size, everyone benefits from preparing for the unexpected, covering essentials, ensuring a lifestyle, and ultimately leaving a legacy with minimal probate and family disputes.

Read More »
Miscellaneous

Dude, Diligence?

The due diligence process in the purchase and sale of a business can seem daunting and cumbersome. Any attorney or financial professional worth his or her salt will tell you that conducting adequate diligence is paramount and, despite what will almost certainly feel like an unnecessarily lengthy and intrusive process, serves to mitigate risks for buyers and sellers alike.
This post is meant to provide a very basic framework of the due diligence process in asset deals to assist buyers and sellers in understanding (a) what they are looking at, (b) what they should be looking for, and (c) setting expectations about how the process looks, and where it can go awry. This post should not be relied on as legal advice, and you should always engage counsel and other financial and tax professionals if you are considering buying or selling a business.

Read More »
Uncategorized

DON’T GET NFTEASED

It’s 2022, and everyone from Snoop Dogg to the cashier at your local supermarket is creating or sponsoring their own NFT project, including many of our Firm’s clients. NFTs (non-fungible tokens) might be a revolutionary way for artists and collectors to control their work, but they are currently a Wild West. Before you get rich quick on this “21st Century Gold Rush”, consider some of the lessons we have learned through our practice.

Read More »
Categories
Entrepreneur & Startup

Setting your Startup on the Path to Success: Four Tips for Choosing Your Company Brand Name and Logo

Setting your Startup on the Path to Success: Four Tips for Choosing Your Company Brand Name and Logo

Jonathan Milgrom

Share Post:

How can set yourself and your business up for success? It all starts with the name, and I will provide you with four key takeaways that can help.

  • Pick a name that is unique from others in the space
  • Pick a name that is not descriptive of your goods and services
  • Secure rights in the art/logo via assignment
  • Work with an attorney to file trademark applications in countries where you intend to use the mark.

I remember when the graphic designer I hired came up with the initial logo for our law firm. Seeing it on mockups for a website and for business cards was a surreal experience. It reduced the months of planning and research into something tangible and real. It hit me so quickly—this is really happening—and I was filled with pride in what was to come.

I know many entrepreneurs feel this same sense of excitement when engaging with initial branding and logos. One entrepreneur told me he would rather change the name of his first-born child than his company. While some are very pragmatic in choosing business name and logos, most of us are so excited to get moving that we can miss the forest through the trees and create unforeseen problems down the road. Because choosing a name and logo is an integral part of your company’s identity, it is important to set yourself up for success. It is the embodiment of the classic saying, “a stitch in time saves nine.” Here are four tips to consider when choosing your name and logo to make sure you are starting on the road to success.

1. Prior Use?

This is the most basic—and, if not completed, often tragic—of the tips. Prior to deciding on a name and investing time and money into branding, you should absolutely determine if others operating in the space are using your name or something confusingly similar to it.  Google search your list of potential names to ensure no one else is using them. While a Google search is certainly not exhaustive, it is a great start to mitigating the potential for problems down the road.

You can also use the Patent and Trademark Office’s Trademark Electronic Search System (TESS) to see what trademark applications and registrations may be at the Patent and Trademark Office (PTO). Note, TESS is highly nuanced, so while you can likely perform a basic search competently, we recommend a more robust search conducted by a trademark attorney prior to filing a trademark application. This will help to eliminate issues with your application and name down the road.

When you are contemplating your initial searches, it is important to understand that trademark rights are made to prevent consumer confusion. This means that:

  1. Rights are limited in scope of goods and services; and
  2. Small derivations will not prevent a finding of infringement.

In relation to item (i) above, a consumer is not likely to confuse McDonald’s Burgers with McDonald’s Hardware; however, if someone started selling McDonald’s Tacos, this likely would constitute infringement as the goods are closely related. Do not view this too liberally when conducting your search or choosing a name—the similarity need not be as close as tacos and hamburgers to constitute a likelihood of consumer confusion. The analysis is highly subjective so if the names are similar and the goods are similar, do not talk yourself into differentiation—consider a different name.

In relation to item (ii) above, a small derivation from a prior name will not prevent consumer confusion. Nike shoes will be confusingly similar with Nyke shoes. Pickle juice will be confusingly similar with pickle juze. You would be astonished at how often I get asked these sorts of questions.

Do your best to find something truly unique. It will prevent potentially expensive conflict further down the road and will also provide your company with its own unique identity.

2. Descriptive?

Not all trademarks are created equal. There is a spectrum of distinctiveness. The most distinctive marks, which are fanciful or arbitrary, are afforded greater protection while less distinctive marks, which are descriptive or generic, may be afforded little or no protection.

When choosing your name, ask yourself: does this describe exactly what I am providing? If so, consider another more distinctive name that may be more protectable. Generally, software companies and drug companies employ strong trademark strategy. Amazon does not mean online marketplace for buying anything. Lipitor does not mean cholesterol pill (although the root Lipo may be related to fat, potentially pulling this mark into the suggestive but still protectable realm).

There was once a restaurant in Boulder, since closed, called Café Food. That is a trademark attorney’s nightmare as this type of name rides the descriptive/generic line. Of late, The Kitchen, a restaurant group owned by the Musk empire, has been in a trademark battle with Wolfgang Puck’s Kitchen. Both names are at least descriptive, and the founders set themselves up for a fight by not choosing something unique and distinctive. Try to avoid this situation by choosing something unique and distinctive for your business.

3. Rights in the Art?

Many founders ask a friend to draw their initial logo. Friends are great because they are likely to be honest with you as to appearance and often do the work as a favor or on the cheap end, which is always important for a startup. However, it is important to get an executed assignment of rights to ownership in the work. Creative works fixed in a tangible medium are governed by copyright law. Absent a signed writing conveying ownership to your entity, you most likely have only an implied license to use the logo and do not own the logo to your own business. This license can be revoked at any time for any reason.

We have run into multiple founders who, once their company gets off the ground, are hamstrung by the original artist by either revocation of the license or a demand for some significant payment to continue using the logo. This is all easily avoided by getting an assignment of rights in the art at the onset of creation. Don’t be afraid to ask for this—it can mean the difference between the success or failure of your company.

4. Get a Trademark Registration and Consider Filing Internationally.

Lastly, while trademark rights begin to accrue at the time of use of the mark, these rights are limited in scope and geography, may be subject to rights of senior users, and are very hard to enforce. Getting a federal trademark registration in the United States affords protection in the entire United States for the goods and services specified in the application and for the “natural zone of expansion” (think burgers and tacos) and provides a presumption of seniority. This is incredibly valuable.

Note, trademark registrations are limited by country and will not afford you rights in other jurisdictions. Look no further than Budweiser, which is unable to brand its product as such in the Czech Republic as they were not the first to secure trademark rights. https://www.usatoday.com/story/money/business/2012/12/18/budweiser-budvar-dispute/1777097/

Filing trademark applications both in the US and internationally is a nuanced process that is best accommodated by a trademark professional. However, the value in securing the registration almost always significantly exceeds the costs down the line of foregoing the submission.

Choosing a name and logo is one of the first steps in creating your company. By following the guidance above, you will be much better positioned for success in the future.

ABOUT THE AUTHOR

MANAGING PARTNER

The founder of Milgrom & Daskam, Jonathan (Jon) Milgrom advises businesses of all sizes and works across a variety of sectors. His diverse client-base includes companies in tech, software, fintech, health insurance, brewing and distilling, retail, graphic design, and other creative industries. He also advises a number of family-owned businesses.

More Articles

Miscellaneous

Running a Business – Remotely

About three years ago, I spent a year living and working remotely from Europe. My experience was unique and interesting enough that I was featured in a series called Digital Nomad Life in Croatia. Of course, many people had been working remotely for years, but it hadn’t really become mainstream. Then came the major disrupter of all life as we knew it – Covid-19. Almost immediately, everyone the world over got a taste of working remotely, or at least of realizing that the world of work could look very different from how we always thought it had to be.

Read More »
Real Estate Law

Giving Back to the Community: Getting to Know Sharing Connexion

In January 2017, I joined the board of Sharing Connexion, Inc. (“SCI”), a non-profit organization founded by Ed Anderson, a real estate professional with 30+ years’ experience in acquisition, management, finance, and joint venture. SCI is devoted to sharing its collective real estate expertise with other non-profits and affordable housing organizations to empower their ability and capacity to support their missions. We aid our community partners by maximizing their real estate portfolios through funding assistance for existing facilities ensuring long term sustainability Additionally, we educate on the structure of donated real estate gifts to obtain the most favorable outcomes. SCI is committed to the long-term viability of affordable housing, and has created an impact fund which is used when “at-risk” projects are identified (those where displacement may occur based upon the loss or expiration of an affordable component (e.g. land use or rent restrictions)) to provide options to achieve long-term affordability.

Read More »
Copyright Law

Trademark Symbols and When to Use Them

Given their constant presence in our daily lives, the symbols ® and TM are very familiar to most of us. But what do they actually mean? And as a business owner, how do you know when to use them?
Both symbols refer to U.S. federal protection granted to the logo or phrase. The United States Patent and Trademark Office catalogues all registrations and applications in its database and reviews the database for potentially confusing marks when processing new applications. Registering your mark through their office is the best way to defend your brand from competitors.

Read More »
Categories
Family Law

Can I Write A Last Will and Testament On My Own?

Can I Write A Last Will and Testament On My Own?

Kim Raemdonck

Share Post:

While you can technically write a will without the help of a lawyer, a notary, and witnesses, it is a dangerous option with the potential to fail entirely.

There are several formal requirements for a will. Formally, wills must be signed by their author (also referred to as the testator), and must be either (a) signed by two witnesses who witnessed the testator’s signature, or (b) notarized by a notary public (though to be safe, most lawyers will make sure that both (a) and (b) happen). However, these requirements are not absolute. Their purpose is to ensure that the will accurately and completely reflects the testator’s intention, and when that intention can be otherwise guaranteed, a will you write without the help of a lawyer may still be valid.

There are several ways to write your own will. One possibility is to write a holographic will, or a handwritten will. A holographic will is valid as a will so long as:

  1. It is in the testator’s own handwriting;
  2. It is clear from the language of the document that the testator intends the document to serve as his or her will;
  3. It is signed by the testator.

Therefore, if you handwrite your will, call it your will within the document itself, and sign it at the end, you can technically write a will in this way without the aid of a lawyer.

Another possibility is to simply write your own will in any format, sign it, and leave sufficient evidence that you intended the document to be your will. Again, where the purpose of the formal will requirements is otherwise fulfilled—that is, where it is clear that the will contains the testator’s true testamentary intentions—the probate court will not enforce the formal requirements of the will.

However, if you choose to write your own will, you run some serious risks. Though it is technically possible to avoid the formal will requirements, it is rather dangerous. A will that meets the formal requirements is consider self-proving—that is, the page the contains the witness signatures and the notary stamp is considered sufficient proof, within the will itself, that the will is valid. Lacking these formalities, a probate court must examine external evidence to determine whether the will is valid. For example, if you write a holographic will, your beneficiaries must prove in court that the will is in your handwriting. This can be a time-consuming and expensive process, and it is not even guaranteed to work! It is entirely possible that your beneficiaries could fail to prove that you wrote the will, or that you intended it to be a will at all, in which case all of your wishes would become invalid.

ABOUT THE AUTHOR

OF COUNSEL

Kim Raemdonck was born in Galveston, Texas, and raised in Fort Worth, Texas. She graduated magna cum laude from Texas A&M University with honors. Kim went on to attend the University of Denver Sturm College of Law where she obtained a J.D. and an L.L.M. in taxation. She is admitted to practice law in Colorado and Texas and before the United States District Court for the District of Colorado and the United States Tax Court.

More Articles

Intellectual Property

Hurdles To Obtaining Patent Protection

A patent is an intellectual property right that grants the owner the right to exclude others from making, using, importing, offering for sale, or selling the patented invention in the United States for a limited period of years. A patent does not grant the owner the right to make, use, import, offer for sale, or sell the patented invention.

Read More »
Copyright Law

Copyright Infringement at the 2022 Olympics Illustrates the Broad Scope of Potential Defenders

Businesses, beware! Copyright infringement can happen anywhere, even on the biggest sports stage: the 2022 Beijing Olympics. Two U.S. Olympic figure skaters, Alexa Knierim and Brandon Frazier, were sued last week for copyright infringement by the musical artist, Heavy Young Heathens, for using their song without permission. The lawsuit also names as defendants Comcast Corporation, NBCUniversal Media, LLC, Peacock, USA Network, and U.S. Figure Skating. The lawsuit was filed in California for the skaters’ use of the song, “House of the Rising Sun,” which the musicians allege was used without their permission for the skaters’ short program in the Olympics. Heavy Young Heathens state they have not received any payment for use of the song, causing them “substantial, immediate, and irreparable injury.” Interestingly, one of the damages alleged was that the song’s use in figure skating has forever linked it to that sport, which limits its future use.

Read More »
Contracts

LLC Member Bankruptcy and Automatic Buy-Out Provisions

When an LLC member claims bankruptcy, or otherwise becomes insolvent, it can pose problems for the LLC and other members. Many operating agreements contain provisions addressing this scenario, which often allow for the other members to immediately purchase the membership interests of the bankrupt or insolvent member. The buy-out process is often automatic, meaning the insolvent member has no choice in the selling of their membership interests. This is a harsh remedy, appropriately reserved for situations where the bankrupt or insolvent member is in serious financial peril.

Read More »
Categories
Miscellaneous

What COVID-19 Shows About Facebook’s Oversight Board

What COVID-19 Shows About Facebook’s Oversight Board

Milgrom Team

Share Post:

As the COVID-19 Delta variant has increased infection rates worldwide and has threatened to triple the death toll related to COVID, Facebook has again been put in the crosshairs for health misinformation on its platform. Multiple commenters and reports have noted the prevalence of COVID-19 and vaccination misinformation on Facebook and the high rate at which this misinformation has been viewed.  This recently culminated in a dispute with the White House where President Biden accused Facebook of “killing people” with its COVID-19 misinformation. While President Biden eventually clarified that his statements were more directly aimed at those posting misinformation on Facebook than Facebook itself, the whole affair has again underscored the difficulty that Facebook has had monitoring controversial speech, especially speech that could affect the general health and welfare of its users. 

Non-profits, politicians, and policy advocates have often argued for amended moderation standards for Facebook.  Republicans and conservative non-profits have often stated that Facebook’s moderation of content, especially conservative content, amounts to censorship, whereas Democrats have often asked for significantly more content moderation.  In fact, Democrats have now discussed removing Facebook’s Section 230 safe harbor if Facebook refuses to enact significant protections against health misinformation.    

In an effort to help mitigate these controversies and make difficult decisions, Facebook created an independent Oversight Board in 2020 which was made up of independent members who had the authority to review cases and make final decisions on content moderation.  Originally met with significant fanfare,  commentators argued that the Oversight Board offers an independent redress system which will provide due process and fair judgement on difficult speech issues.

In January 2021, the Oversight Board announced its first six decisions based off of cases recommended to the Oversight Board by Facebook.  One of the decisions included an October 2020 case in which Facebook removed a post which advocated that the French government permit the prescription of hydroxychloroquine combined with azithromycin to be used against COVID-19. In its reversal, the Oversight Board noted that the post did not rise to the level of imminent harm required by its Community Standards of Facebook and that the decision did not comply with international human rights standards on limiting freedom of expression. The Oversight Board recommended that Facebook adopt less intrusive means of enforcing its health misinformation policies where the content does not reach Facebook’s threshold of imminent physical harm.  The Oversight Board also recommended that Facebook increase the transparency around how it moderates health misinformation, including by publishing a transparency report on how Community Standards are enforced.

However, the COVID-19 case is emblematic of the difficulties that arise when introducing quasi-legal processes into the corporate context.  First and foremost, like any legal system, cases introduced to the Oversight Board take time to adjudicate.  In the case above, the incident occurred in October of 2020 and a decision was not rendered until January 2021.  With important life altering decisions like this, three or four months is a significant time that could theoretically affect the life of many users (especially in light of reports that people have died for ingestion of hydroxychloroquine). If the situation had been reversed, and Facebook had left dangerous content up where it should have been taken down, one could hypothesize the great harm that could have been caused.  Whereas private companies usually have the flexibility to be nimble and quickly respond to new policy and regulatory challenges they face, introducing a quasi-legal system will slow the ability for Facebook to timely finalize its decisions. 

Secondly, and perhaps most important to Facebook’s PR perspective, the quasi-judicial system has not inoculated Facebook from criticism.  It is telling that Facebook has not used the Oversight Board as a shield in responding to criticism over its regulation of misinformation – especially because the Oversight Board actually recommended less content moderation in certain situations — because such an explanation would likely be unpalatable to most of its critics.  In fact, Facebook specifically noted in its response to the Oversight Board’s recommendations that it publicly disagreed with the recommendation that it adopt less intrusive means, and would continue to remove misinformation based on consultation with the CDC and WHO.  Therefore, Facebook had to push back against its own Oversight Board to defend itself from further public criticism.

Finally, and most importantly for those who care about COVID-19 and the safety of the community, it is not clear that the Oversight Board’s decision was the right one. While hindsight is 20/20, the influence of misinformation on Facebook’s platform, the reluctance of some people to take COVID-19 precautions such as masks and vaccines, and the increasing prevalence of the COVID-19 Delta variant highlight how important appropriately dealing with this problem is.  For example, a popular theory propagated on Facebook alleges that the COVID-19 vaccine is being used by the U.S. government to microchip the population.  In a recent YouGov poll, one in five Americans said they believe that theory.

As Facebook and the public are finding out, making a process more independent does not guarantee that the process will achieve the correct answer.  The Supreme Court is littered with decisions that have been shown to be inherently problematic (e.g., Plessy v. Ferguson, Citizens United v. FEC, Korematsu v. United States).  Similarly, just because the Oversight Board is stocked with global experts in a variety of different fields does not prevent it from codifying decisions that may incorrectly weigh harms versus freedoms.  The Oversight Board’s recommendation that misinformation content be corrected instead of removed looks foolhardy during the current deteriorating situation.  It’s other recommendation that misinformation guidelines be clarified may also prove unworkable.  Much like Justice Potter Stewart’s infamous quote regarding obscenity, misinformation is hard to define but easy to recognize – providing clear regulation on what counts as misinformation is difficult to define and implement. Moreover, it’s not clear if the Oversight Board will revisit the health information issue or what, if any, appetite they have to reverse their own opinions.  Therefore, it is quite possible that this decision will stand and influence further Facebook decisions as the pandemic gets worse.

In sum, while the Oversight Board once held significant promise, and while it still might prove itself to be a useful tool that forever changes policy implementation for private companies, the COVID-19 situation has shown it may not be the panacea it was heralded to be.

For additional information, please contact us.

More Articles

Business & Corporate Law

The Corporate Transparency Act: What It Is and What It Means for Your Small Business

On January 1, 2021, as part of the federal Anti-Money Laundering Act (the “AMLA”), Congress enacted the Corporate Transparency Act (the “CTA”) in an effort to increase corporate transparency. The CTA requires certain companies to file information on their businesses, including “beneficial ownership” information, with the Financial Crimes Enforcement Network (“FinCEN”). The impact of the CTA on companies and those who would be required to report information has not been clear. However, on December 7, 2021, FinCEN issued a Notice of Proposed Rulemaking to establish the regulations that would implement the CTA, and provide additional clarity on which businesses would be considered “reporting companies” under the CTA.

Read More »
Copyright Law

Important Legal Issues for Buyers and Sellers of NFTs

The rapid spread of interest in non-fungible tokens (“NFTs”) has created a billion-dollar industry as buyers bid to own the latest digital artwork and sellers cash in on the craze. However, for many buyers and sellers the intellectual property laws implicated by NFTs go unnoticed which could have costly repercussions.

Read More »
Estate Planning

Estate Planning FAQs

No one wants to think about the end of life. It’s a difficult, grief-stricken conversation that can be made tougher by uncertainty. This is why one of the most important ways we can show our loved ones how much we care about them is by making plans ahead of time. You may not see the need for estate planning now – you’re young and healthy, or don’t consider yourself wealthy, or aren’t sure what you want. But the best time to start is now, if not for you, for your loved ones.

Read More »