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Miscellaneous

The Diverging Paths of AI Regulation

The Diverging Paths of AI Regulation

Milgrom Team

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The Google Pixel 6 launched recently.  Among its many most anticipated features are new artificial intelligence and machine learning features (“AI”), including its speech translation and recognition, and its AI photo editing software.  Indeed, although the phone has significant hardware advancements, most commentators recognized that AI advancements were the driving factor behind its success.

This focus on the benefits of AI follows a longer societal trend where there is increasing recognition that AI has countless untapped benefits.  Whether it was Alphazero demonstrating new playing styles in chess,  dramatically improving efficiency in insurance writing and claims processing, or countries using facial recognition to monitor their citizens, AI is and will continue to fundamentally change the world.

However, countries’ recognition and reaction to AI has not been consistent.  Europe, as expected because of its strong stance on individual data rights and privacy, has launched the most aggressive and restrictive stance against the use of AI.  Back in 2018, the European Economic Area passed the General Data Protection Regulation, restricting the use of some automated decision making.  Additionally, in April 21, 2021, the European Union released a draft of the EU Artificial Intelligence Act, which further attempted to regulate AI through harmonized rules within the European Union.  The breadth of the proposed rules is broad – it applies to those outside of the EU that market or provide AI systems to the EU – and the definition of AI is broadly defined, encompassing processes which could reasonably be considered AI. 

The proposed rules separate AI into three different tiers of risk: unacceptable risk AI systems, high risk systems, and limited and minimal risk AI systems. Unacceptable risk AI systems such as social scoring or real time remote biometric identification systems are fully banned under the proposed laws.  High risk AI systems, including systems that evaluate a consumer’s creditworthiness or use biometric identification in non-public spaces require company oversight, including conducting audits that are similar to Data Protection Impact Assessments to ensure that the systems perform as intended and are secured. Low risk systems continue to have little oversight as the authorities are less concerned about potential abuses with this AI.

On the other end of the spectrum, China has fully embraced the use of AI.  Instead of worrying about any negative privacy implications, China has leaned on AI as a tool to build its society and government.   Among the uses getting most coverage are China’s use of facial recognition and other AI methods to keep tabs on its citizens, such as the use of AI emotion-detection software on Uyghurs. More generally however, China has woven AI into its social fabric by using it for everyday operations including its social credit system which monitors its citizens and rewards them or punishes them for things they do, its payment and communications systems, or even its defense systems.  This general acceptance for AI has been backed by formal legislation such as the ”Made in China 2025” plan or “Next Generation Artificial Intelligence Development Plan”.  The effect has been a boom in the research, use, and acceptance of AI (e.g., where as China previously lagged behind in AI research, China has now become the frontrunner.)  

Meanwhile, the United States stands in the middle of these two extremes.  Like the EU, the United States has agreed that AI should be used in ways that are “based on shared democratic values, including respect for human rights”.  Significantly, the U.S. and EU agreed that AI should not be used for social credit scoring.   However, the U.S. does not seem to share the EU’s concern over the other potentially invasive and threatening ways that AI could be used and has not publicly committed to a robust federal framework that addresses these AI issues. Instead, the U.S. appears to be concerned over the strategic and geopolitical issues that advanced AI will present, especially if other actors like China become world leaders.

Thus, because of the significant developments in AI and what those developments mean, all countries have been forced reckon with AI regulation.  However, geopolitical, historical, and other regulatory forces have created responses that dramatically differ throughout the world.  These responses have not only changed the trajectory of AI development in various parts of the world but also increasingly left out the possibility of harmonious AI regulation.  

For additional information, please contact us.

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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.

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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.

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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.

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Categories
Miscellaneous

Homelessness in Colorado: Denver Ballot Issue 303

Homelessness in Colorado: Denver Ballot Issue 303

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Just a few weeks ago, Denver residents were asked to vote on Denver Ballot Issue 303. A YES vote on the ballot measure would have required the city to perform enforcement sweeps of unauthorized camping sites within 72 hours of a complaint being filed, while also creating a process for individuals to bring a civil action against the city if they failed to do so. The ordinance would also have limited camping on public property to four designated areas which the city would have been responsible for servicing with utilities.

While Denver residents ultimately voted NO on Ballot Issue 303, even if it had succeeded at the polls, the 72-hour requirement would have violated a federal order issued this past January, which requires seven days’ notice prior to performing a sweep of camping sites within the city.

Regardless of the political motivations and ultimate outcome of Ballot Issue 303, Denver, along with many cities within the United States, is facing a severe homelessness crisis. Every year, the Metro Denver Homeless Initiative (the “MDHI”) conducts a “Point in Time Count” to estimate how many individuals are experiencing homelessness within the city. The 2021 data shows a 40% increase in the number of individuals staying in a shelter on a single night, while the number of people experiencing homelessness for the first time doubled. According to the Denver Rescue Mission, more than 1,561 individuals are unsheltered, living on the streets or camping in open areas.

Finding an effective solution for reducing homelessness has proven to be a complicated and enduring issue. Over the past decade, Denver has seen rent and home values rise while the number of people moving to the city continues to increase. This has led to a dramatic decrease in the availability of affordable housing within Denver, and Colorado as a whole. According to the National Low Income Housing Coalition, for every 100 of Colorado’s lowest income households, there are only 30 affordable rental units available. 

One promising solution the city has implemented has been the construction of Safe Outdoor Spaces, which consist of authorized camping sites serving around 50 people. The sites feature heated tents, staff members, and utilities such as hot water, laundry, and trash removal. While many residents support the city-run sites, conversations often turn on where the sites should be placed, and who should qualify for the program. Many of these conversations are difficult and uncomfortable, as people attempt to balance an empathetic response with an effective and long-lasting solution.

Despite the challenges, these difficult conversations must continue if we are to reduce the number of people experiencing homelessness within Denver. While we may not all agree on the best solutions, there is no question that homelessness is a heartbreaking condition that we must all work together to alleviate. More funding will likely be needed for healthcare services, particularly in respect to mental health, and ensuring that residents have access to affordable housing will continue to be a paramount issue moving forward. While the Safe Outdoor Spaces may be one potential option, constructing a few sites that can hold 50 people each won’t be enough to dramatically decrease the number of people experiencing homelessness. Together, we can work towards a pragmatic and compassionate response to ensure that the most vulnerable members of our community are provided with a chance to succeed.

For additional information, please contact us.

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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.

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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.

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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.

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Categories
B Corp

Steps Small Businesses Can Take to Combat Climate Change

Steps Small Businesses Can Take to Combat Climate Change

Milgrom Team

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The science is clear, and when we look outside and see smoke-ridden skies, experience unprecedented flooding, or suffer the consequences of historic droughts, it’s in our face: climate change is here. Our climate and environment are changing–and how we interact with it should change.

As the recent and somewhat terrifying UN Report informed us, we are well past the point of stopping climate change. But we can slow it down. And we need to slow it down.

According to the UN Report, we need to halve greenhouse emissions by 2030 and achieve net zero emissions no later than 2050 to avoid the worst effects of climate change.

How can small businesses help achieve these goals?

Much climate news has focused on the emissions and energy outputs of large, international corporations. And for good reason: their business decisions are expansive and have a significant climate impact in many sectors of the economy, government, and environment. These industry titans must change their behavior if we want to achieve the UN’s goals, but small businesses should as well.

Small businesses make up the majority of businesses in the United States. Despite their diminutive qualifier, small businesses have a big impact. Both in how they affect the climate and how they shape the fabric of our society and economy. Thus, any changes small businesses can make to reduce their carbon footprints are essential to meeting the UN’s goals.

Studies have shown that such climate action is also desirable to potential employees, who are increasingly drawn to employers with environmental initiatives. There are also branding benefits for certificates and labels associated with businesses that meet certain environmental standards that may draw in environmentally conscious consumers and/or clients.

Steps for small businesses to combat climate change.

1. Set Goals

Some goals may include reducing the company’s energy consumption or greenhouse gas emissions. But most of us don’t have the expertise to meaningfully and quantifiably reduce our carbon footprint. Luckily, there are certification standards and organizations that help. For example, you can join the SME Climate Hub, sponsored by the UN which teamed up with Oxford University to create a library of tools and resources for small and medium enterprises for how to reduce their carbon footprints. These resources include but are not limited to: tools from the B Lab, Landlord-Tenant energy agreements, supply chain tools, guidebooks on reducing the environmental impact of freight logistics, company transportation toolkits, and many more.

The Climate Neutral Certified stamp is another popular certification that you can put on your business’ brand and marketing materials. This certification measures and directly addresses a brand’s commitment to stopping climate change. Some businesses that are Climate Neutral Certified include REI, Allbirds, Numi Tea, and Klean Canteen. The certification imposes a fee for every ton of carbon produced by the company, but that fee is used to invest in carbon reduction and sequestration projects around the globe and accomplishes carbon pricing.

Finally, if a business’ goal is to partner with environmental nonprofits, 1% For the Planet is an organization that pairs businesses, individuals, and nonprofits and commits 1% of the committed business’ profits to environmental nonprofits and organizations. Milgrom & Daskam is a proud 1% member.

2. Measure your climate impact

In addition to setting goals and potentially joining organizations and initiatives that direct small business leaders, it’s important for small businesses to measure their climate impacts. There are plenty of climate calculators for businesses to measure the impact of their brands, products, and services. These calculators take into account business’ energy consumption, emissions, and overall carbon footprints, and can be useful resources for informing businesses about how they can best reduce their environmental impacts.

3. Offset your emissions

Carbon offset programs are not perfect, but they have been found to be a powerful decarbonization tool. Furthermore, they provide small businesses opportunities for creativity. For example, companies can engage in tree-planting days to offset their carbon emissions. Companies can also purchase carbon credits that offset their emissions, which on average equal ~0.4% of a company’s revenue.

Some other ideas for business owners include encouraging employees to work from home to reduce commute-based emissions, incentivizing and paying for employees to use public transit and other climate-friendly travel options when commuting to work, reducing emissions produced by your business’ online activity and energy demands, using more sustainable packaging, or switching to natural resource energy for your business.

In conclusion, although climate change is daunting, all hope is not lost, and we as individuals, businesses, and communities can make meaningful changes to actualize the UN’s 2030 and 2050 goals to preserve our planet and everything it offers us.

For additional information, please contact us.

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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.

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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.

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Categories
Miscellaneous

What COVID-19 Shows About Facebook’s Oversight Board

What COVID-19 Shows About Facebook’s Oversight Board

Milgrom Team

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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.

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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.

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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.

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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.

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Categories
Copyright Law

Tattoos, Copyright Law, and the Doctrine of Fair Use

Tattoos, Copyright Law, and the Doctrine of Fair Use

Milgrom Team

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The murmuring conversation surrounding tattoos as copyrightable art is growing increasingly loud. Tattoos, once stereotyped as a heart surrounding “mom” on a nostalgic sailor’s shoulder, are now coveted artworks which can shape an individual’s identity and how one is seen by the world. Would Mike Tyson’s persona be the same without the face tattoo surrounding his left eye? And, speaking of face tattoos, would we recognize Post Malone without the sixty-plus tattoos on his face?

The subject of “famous” tattoos—those that adorn celebrities—and their re-creation in instances where the celebrities are depicted, has become controversial. The tattoos are inextricably linked to how we perceive celebrities themselves. As such, the many re-creations of celebrities in cartoons, drawings, SNL skits, video games, and even Coachella holograms feature the famous person with tattoos identical to those the person has in real life—sometimes to the chagrin of tattoo artists.

Some tattoo artists are taking legal action by claiming copyright infringement and seeking damages for the un-permitted re-creation of their art on imitations of celebrities. This brings to the surface several legal questions: (1) Is a tattoo on a famous person entitled to copyright protection enforceable by the tattoo artist? and (2) Does depicting a celebrity with tattoos fall under the doctrine of Fair Use?

1. Copyright Protection

Under Section 102 of the Copyright Act, copyright protection begins at the moment of creation for (1) original works of authorship (2) fixed in any tangible medium of expression from which they can be (3) perceived, reproduced, or otherwise communicated.

Under this statute, tattoos are copyrightable works. Tattoos certainly fall under original works of authorship, specifically pictorial works. And, as my grandmother will tell you, tattoos are permanent marks on a body and therefore “fixed” in a tangible medium. Depending on the subject’s decision of where to place the tattoo, a tattoo is also perceivable to the public. Thus, tattoos are entitled to copyright protection and all the rights connected thereto. Under copyright law, the tattoo artist is able to protect his/her/their art (even if it is on someone else’s body) and to prevent others from using or copying it without the artist’s permission.

2. The Doctrine of Fair Use

What if the tattoo is publicly decorating Scarlett Johansson’s shoulders—or any other famous person’s shoulders? Can tattoo artists enforce their copyrights for the re-creation of a celebrity with their tattoos?

Tattoo artists can protect their copyrights, with one caveat (and a very amorphous caveat at that): the doctrine of Fair Use under Copyright Law. Under Fair Use, it is permissible to use another’s copyrightable work without the original author’s permission but only under certain circumstances, such as criticism, comment, news reporting, teaching, parody, scholarship, and research.

Fair Use is a notoriously gray area of law, and courts have landed on four factors for evaluating a question of Fair Use:

  1. The purpose and character of the use: Courts consider whether the use is for commercial or nonprofit purposes and whether the use is “transformative,” meaning that it adds something new, with a further purpose or different character than the original work’s purpose.
  2. The nature of the copyrighted work
  3. The amount and substantiality of the portion used in relation to the copyrighted work as a whole
  4. The effect of the use upon the potential market for or value of the copyrighted work

When applied, these four factors lead to highly inconsistent results across the country’s circuits, frustrating tattoo artists and unlicensed users all over the world.

So, is the depiction of a celebrity with precise tattoos protected by the Doctrine of Fair Use? As is the answer with most Fair Use questions: it’s unclear. Two recent district court cases had opposite conclusions.

Solid Oak Sketches, LLC v. 2K Games, Inc., 449 F.Supp.3d 333 (S.D.N.Y. 2020)

In the Solid Oak Sketches, LLC v. 2K Games, Inc. 449 F.Supp.3d 333 (S.D.N.Y. 2020), the federal district court in New York considered whether the defendant 2K Games, a video game developer owned by Take-Two Interactive Software, was guilty of copyright infringement for its highly realistic rendering of the tattoos of NBA stars LeBron James, Eric Bledsoe, and Kenyon Martin in its NBA 2K basketball game featuring various NBA athletes. The athletes had each granted permission to the NBA, who then granted the defendant permission to use the athletes’ likenesses in the game.

The plaintiff in the case, Solid Oak Sketches, an entity consisting of tattoo artists, held exclusive licenses to five of the tattoos featured on the athletes. Each tattoo was determined to be highly recognizable and essential to any depiction of the athletes themselves. Solid Oak Sketches alleged that 2K Games infringed on its copyrights (which were federally registered after the game was developed) by depicting these players’ tattoos without a license from Solid Oak Sketches. 2K Games claimed that its used was de minimus and, further, was protected under Fair Use. The Court agreed with 2K Games.

When applying the four factors of Fair Use, the Court found that 2K Games’s use of the tattoos was negligible and only constituted 0.000286%—0.000431% of the entire game’s data; that the use was transformative because they were necessary to render a realistic image of the players’ likenesses; and that the tattoos did not play a significant role in marketing NBA 2K, nor did it hurt Solid Oak Sketches’ market. The court further held that the tattoo artists had granted the athletes an implied, nonexclusive license to use the tattoos as part of their likenesses and personas since the tattoo artists knowingly tattooed public figures, and the players had, in turn, licensed the use of their likenesses for use in the NBA 2K game. Thus, the Solid Oak Sketches court held in favor of 2K Games: the depiction of the players’ tattoos in the NBA 2K game constituted Fair Use.

Catherine Alexander v. Take-Two Interactive Software, Inc, 489 F.Supp.3d 812 (S.D. Ill. 2020)

Solid Oak Sketches’ holding that (a) tattoo artists who ink celebrities grant those celebrities implied, nonexclusive licenses to their copyrightable tattoos and (b) the unpermitted depiction of a celebrity’s tattoos in a video game is protectable under Fair Use contrasts the holding in a recent district court case with nearly identical facts, Catherine Alexander v. Take-Two Interactive Software, Inc. 489 F.Supp.3d 812 (S.D. Ill. 2020). In Alexander, plaintiff  tattoo artist Alexander brought suit against Take Two, the maker of WWE 2K (yes, the same 2K), alleging that Take Two infringed on Alexander’s six copyrighted tattoos which she had rendered on wrestler Randy Orton’s body when WWE2K recreated those tattoos in its realistic depiction of Randy Orton in its WWE 2K video game series. Take Two adopted the same argument as in Solid Oak Sketches, claiming that its use was de minimus and permissible under the doctrine of Fair Use.  In contrast to Solid Oak Sketches, the Alexander court ruled that Take Two was guilty of copyright infringement and that it unlawfully infringed on tattoo artist’s Catherine Alexander’s copyrights in its realistic depiction of wrestler Randy Orton’s six tattoos in its WWE-2K video game series. Take Two admitted to copying the tattoos to create a realistic avatar.

The court in Alexander did not determine whether Alexander granted Orton an implied license when she rendered his tattoos and concluded that the use was not de minimis since Alexander’s tattoos were copied onto Orton’s avatar in their entirety. The court held that, although Take Two had a license from Orton to use his likeness in the game and although copying Orton’s tattoos were necessary to render a realistic game experience, Take Two’s use of the artists’ tattoos was not protected under the doctrine of Fair Use. The court found that the use was not transformative because it served the same purpose as Alexander’s: to decorate Orton’s body, and that Take Two did not use any creativity when it fully copied the copyrighted tattoos in Orton’s avatar. These factors weighed against a finding of Fair Use. Thus, the Alexander court ruled in favor of the tattoo artist and the protection of her copyrights.

Both of these decisions may be appealed to the 2nd and 7th circuits, respectively. However, we may still not have a clear answer for Fair Use as it relates to tattoos and to artists’ ability to enforce their copyrights. In other words, while tattoos are permanent, the extent of the copyrights of the artists who design them may still be in flux.

For additional information, please contact us.

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Miscellaneous

The Diverging Paths of AI Regulation

This focus on the benefits of AI follows a longer societal trend where there is increasing recognition that AI has countless untapped benefits. Whether it was Alphazero demonstrating new playing styles in chess, dramatically improving efficiency in insurance writing and claims processing, or countries using facial recognition to monitor their citizens, AI is and will continue to fundamentally change the world.

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Miscellaneous

Homelessness in Colorado: Denver Ballot Issue 303

Just a few weeks ago, Denver residents were asked to vote on Denver Ballot Issue 303. A YES vote on the ballot measure would have required the city to perform enforcement sweeps of unauthorized camping sites within 72 hours of a complaint being filed, while also creating a process for individuals to bring a civil action against the city if they failed to do so. The ordinance would also have limited camping on public property to four designated areas which the city would have been responsible for servicing with utilities.

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We are a law firm. We are not an organization working hard to legislate, educate, and raise money for environmental causes. Yet, we live on this planet, too. It is our home. And just like mom shouldn’t be the only one responsible for cleaning the kitchen, we all have a responsibility to care for our home. We can all do our part to reduce our carbon footprints, drive less, recycle more, waste less, etc., but how can we make an even greater impact?

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Categories
Homebuying

6 Tips for Purchasing a Used Tiny Home on Wheels

6 Tips for Purchasing a Used Tiny Home on Wheels

MILGROM TEAM
MILGROM TEAM

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Home is where the heart is, even if it’s tiny.

The tiny home market is massive and continuing to grow, and many buyers opt to purchase used instead of new. While this is a great option, there are a few items that we encourage purchasers of used tiny homes on wheels to be mindful of before taking the plunge.

1. Remember that this is not a typical home sale.

This point may seem obvious but is important enough that it needs to be stated. Typically, the purchase of a home, condo, townhome, or other real property is a long process. There is bidding followed by inspections, earnest money deposits, appraisals, title searches, and many other steps that make the whole thing seem like a never-ending exercise in decision-making.

By contrast, the process of purchasing a used tiny home can be as simple as an exchange of cash. This means that the steps put in place to protect buyers of traditional homes are absent from the purchase and sale of a tiny home. Because of this, there is more risk involved with the purchase, and buyers must take a more active approach to avoid as many unwanted surprises as possible.

2. Get an inspection.

If at all possible, hire a licensed inspector or knowledgeable contractor (preferably with tiny home experience) to inspect the home prior to purchase. Inspections are standard during the buying process for conventional homes, so it only makes sense to insist for one when purchasing a tiny home. A knowledgeable inspector can point out possible issues with the roof, plumbing, chassis, electrical, insulation, and other issues that may not be immediately obvious.

3. Research your tiny home’s title and registration.

Tiny homes on wheels are titled in much the same way as your car, truck, or motorcycle. Buyers need to make sure prior to purchasing the home that the seller can transfer its title. One of the biggest issues to watch out for is liens. These are placed on property by lenders who weren’t repaid on the loan they provided or on individuals who are owed money for services provided to the property’s owner.

In addition to titling your tiny home, many states and local governments require that your home be registered. Registration requirements are specific to where you live and, additionally, may be dependent on how your home was made and whether it received any recognized certification. Be sure to research your town and state’s requirements so that you know what to look for while shopping for a tiny home.

4. Formalize the purchase agreement.

Selling a tiny home on wheels often resembles a used car sale more than it does the sale of a home. In such cases, the buyer and seller meet and agree on a price. The buyer gives the seller money, and, in exchange, the seller provides the buyer with the home’s title.

However, we encourage buyers to enter into a more formal, written agreement with the seller. This will provide you recourse if the tiny home doesn’t live up to expectations. The agreement should include representations and warranties from the seller as to its condition, any promises the seller must keep as a condition of the sale (as discussed in number 5 on our list), and what damages the seller will owe to the buyer if these conditions are not met.

tiny home kitchen

5. Protect your new home between purchase and delivery.

Often the tiny home won’t be moved to the buyer’s location the moment the deal is completed. Maybe there are scheduling issues with its shipment, or perhaps the buyer hasn’t yet relocated to the land on which the home will ultimately sit. Buyers in this situation should make sure that the seller will not cause any damage to the tiny home between the time it is sold and when it is ultimately moved.

Buyers should include language in their purchase agreement obligating the seller to keep the home in its current condition during this transition period. For instance, sellers should agree that they won’t move the home anywhere else, won’t remove any items from it, won’t live in it (unless they are paying rent to its new owners), and won’t make any changes to its structure or appearance after the final sale. The agreement should also specify which party is responsible for any damage incurred by the home during shipment.

Additionally, buyers may want an escrow agent to hold the purchase funds until the tiny home is safely delivered to its final destination. Unfortunately, there aren’t many escrow companies that handle smaller amounts of money, but escrow.com may be an option.

6. Make sure you know how to get in touch with the seller after the sale.

Finally, make sure you know how to contact the seller after you’ve completed the purchase. Maybe the chassis has some rust that you didn’t notice until two months after you moved in; the stovetop doesn’t actually work; or you just need to know how the previous owner completed a DIY project in the bathroom. No matter what, odds are you may want to get in touch with the seller again at some point in the future. We always recommend including an address, email, and phone number for the parties in the written purchase agreement.

Purchasing your tiny home is a big and exciting step. Milgrom & Daskam are well versed in representing buyers in precisely these situations, so feel free to get in touch for a free consultation.

For additional information, please contact us.

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Categories
Data Privacy

Privacy Wars: Will Apple’s App Tracking Transparency Disrupt the Tech Industry?

Privacy Wars: Will Apple’s App Tracking Transparency Disrupt the Tech Industry?

Milgrom Team

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Earlier this month, The Washington Post revealed that in 2016, Australian firm Azimuth Security unlocked the iPhone of the San Bernadino terrorist. The hack followed a public battle between Apple and the FBI over privacy versus national security interests, with Apple arguing that permitting the FBI to unlock the iPhone would be a breach of Apple’s privacy policy.

Increasingly, Apple’s position on customer privacy has become central to its brand.

“Privacy is a fundamental human right,” declares Apple on its website. “At Apple, it’s also one of our core values.”

Underscoring this stance, Apple has rolled out sweeping privacy measures for the iOS 14.5 update, which introduces a feature called App Tracking Transparency (ATT) that promises to change the way apps handle privacy. While Apple customers may appreciate these measures to protect personal data, tech giants whose business models depend on data-tracking advertisements find the features disruptive.

As described by Apple, “App Tracking Transparency will require apps to get the user’s permission before tracking their data across apps or websites owned by other companies. Under Settings, users will be able to see which apps have requested permission to track, and make changes as they see fit.”

In practical terms, this means that users will now have an opt-out choice to limit an app’s ability to track the user across other apps and websites. If the app would like to track a user, the user will receive a pop-up notification that reads, “X would like permission to track you across apps and websites owned by other companies. Your data will be used to deliver personalized ads to you.” A user will then be able to choose between “Allow Tracking” or “Ask App Not To Track.” As privacy is becoming more of a concern to customers, most privacy advocates expect the feature to be embraced by users, which could impact not only the advertising platforms but also the advertisers’ bottom lines. 

This promised change by Apple has already led to pushback. Google announced that it will stop using tracking tools that trigger the pop-up. Mail Online stated it may have to delete its Apple app and force readers to access content via its website. Facebook has bickered with Apple publicly and framed the decision as an attempt to undercut the business model used by Facebook and other free, ad-supported apps. 

While it’s easy to paint the complaints of pro-advertising companies as self-serving, it is certainly true that Apple’s privacy emphasis may help its bottom line as well. Apple is angling to be a one-stop tech company for everything. Whether it’s helping its users get in shape, collecting financial data, or mining other sensitive information, Apple wants its users to trust its hardware and ecosystem. Having such data requires strong privacy assurances to ensure customers are not creeped out. (Just ask the Amazon Halo what can happen if users don’t fully trust its privacy fundamentals.) In addition, this privacy move may increase Apple’s power over its app store and generate more money for Apple by funneling users to download applications through its app store, rather than through in-app ads.  

In a larger context, this fight heightens the drastically different privacy principles among tech companies. On one hand, companies such as Apple have argued that users’ control over their data is a fundamental principle and that the more the user controls, the better the experience will be for the customer. Other companies such as Facebook have argued that their advertisement model allows companies to better target ads at customers, thus giving customers a better experience by offering ads they might want to see, as opposed to ads that are irrelevant to the user. They have also further argued that this model ensures that users will always be able to use the platform for free, whereas, without ad-supported products, Facebook users would have to pay to access the platform.

The effect of Apple’s new privacy features on the ad-supported platform model may be the most interesting outcome. If this update affects this model as much as Facebook or other SaaS providers expect it to, it may jeopardize the effectiveness of the model in general. If users are not “paying” with their data, the platforms may become less attractive to advertisers, who leverage this data to create more effectively targeted ads. In the absence of this advantage over traditional advertising, the utility of the platforms for advertisers may decline. This impact could force ad-supported providers to rethink their business models.

Then again, innovation is the bread and butter of tech. As Apple and other providers start to implement more stringent privacy measures, ad-supported platforms and advertisers may simply create new technology to evade privacy regulations in a never-ending arms race. To wit: Proctor & Gamble may have already found a way around Apple’s privacy changes.

For additional information, please contact us.

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