Articles Posted in Government

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In recent times, e-residencies (a/k/a “electronic residency”) have become a trend in some European societies. For example, the Republic of Estonia implemented this concept into its banking systems in order to permit people to manage their funds in an electronic environment. According to the Information System Authority, in 2001, the first nation-wide ID-card was introduced as the primary identity document for Estonian citizens both in the real and digital world. It is possible to attach a digital signature to the ID-card that constitutes a handwritten signature.

The Republic of Estonia is operating on the cutting-edge of technology. It has created an electronic state (“e-State”) where almost all transactions are completed by using technology. For example, Estonians developed Skype. The government permits its citizens to start a business online, pay taxes online, administer schools online, and pay their car park fees by mobile phone. It seems that their logistics transcend most societies. However, their achievements have not been without problems. In 2007, a cyberattack took place against its government’s websites and data communication networks.

What are the legal ramifications?

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Since the 1930s, the act of publicly raising money for a startup business has been outlawed. Now, with the implementation of the Jumpstart Our Business Startups Act (“JOBS Act”), in 2012, public crowdfunding is legal and encouraged. Startup companies are no longer confined in the resources and opportunities available to raise capital. Private companies can now publicly advertise that they are raising capital and collect investment funds through online crowdfunding services. The JOBS Act allows for two different ways in which a company can utilize this new crowdfunding opportunity. Is your startup looking for an infusion of capital? Are you considering crowdfunding as an option? If so, then you must understand how Title II and Title III of the JOBS Act apply to your startup.

What is Title II?

Title II of the JOBS Act now allows a private company to solicit and advertise investment opportunities to the general public. But, Congress left it up to the Securities and Exchange Commission (“SEC”) to regulate the rules. The SEC has changed Rule 506 of the Securities Act of 1933 to allow for this new public advertising provided that, “the issuer takes reasonable steps to verify that the investors are accredited investors.” Rule 501 defines accredited investor in three different ways: (1) an individual whose net worth or joint net worth with a spouse exceeds $1 million; (2) an individual with an annual income more than $200,000; or (3) a joint annual income with a spouse over $300,000. In addition, issuers must previously file with the SEC that they are claiming this new public solicitation exemption. The penalty for not following these requirements is being banned from fundraising for a year.

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It seems that entrepreneurs do not simply want to capitalize on local markets anymore.  An international impact is achievable with the connections available through internet and technology (e.g., e-commerce).  A startup company can now achieve that international presence by utilizing cryptocurrencies and crypto-crowdfunding.  Using cryptocurrencies allows a company to do business in any country without worrying about foreign exchange fees or limitations.  Crypto-crowdfunding can help a new company raise capital by creating its own currency in exchange for real money or other cryptocurrency. Are you starting an online business and want an international presence? Do you want to raise money fast for your new company? If so, then cryptocurrencies and crypto-crowdfunding may be helpful.

What is Cryptocurrency?

Cryptocurrency is digital or virtual currency that uses cryptography as its security. These currencies are not issued by central banks, and therefore, immune from government intervention and manipulation. Because there is no government intervention into these crypto-markets, many national cyrptocurrencies are beginning to emerge. European countries with struggling central banks and economies are experiencing the emergence of national cryptcurrencies, such as Spaincoin in Spain and Aphroditecoin in Cyprus. These currencies are easily traded and provide entrepreneurs with the ability to circumvent foreign exchange controls. Whether these currencies are privately started or nationally motivated, they can connect people anywhere in the world while keeping governments out of the picture.

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Where you visit online seems to say a lot about you. Online privacy has been in the spotlight recently, as consumers come to terms with the reality that their online tracks define who they are to marketers and government agencies.  By studying this data, third parties can paint a picture about consumers—i.e., where they go, what they do, their preferences, and even any illegal conduct.  Now, data brokers can also compile and study large bodies of data to find patterns in behavior. While this carries huge potential for technological advancement, it also comes with greater threats to consumer privacy.

What Is Data Mining?

Data mining is the intricate process whereby data brokers collect, store, and study large sets of data for patterns.  The data includes everything from shopping habits, healthcare records, online practices, and public records (e.g., court and property records). This data is then used in a variety of fields, including intelligence gathering, statistics, database systems, and machine learning. Usually, data mining is used to compile lists for targeted marketing purposes—such as lists of diabetics, smokers, and political affiliations. However, recent reports indicate that data mining has been used to compile more personal lists—rape victims, addicts, and AIDS victims. The U.S. government has used data mining in various surveillance projects. These projects were ultimately terminated because of rising concerns that they violate the Fourth Amendment protection against unreasonable searches and seizures. It is most shocking that the subjects never know they are victims to data mining. At a glance, most of these categories seem harmless. However, the underlying threat is that data brokers conduct mining projects without notifying consumers and without obtaining consent.

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In a decision released June 25, 2014, the United States Supreme Court held that law enforcement officials could not search a suspect’s cell phone or electronic devices as part of an arrest. In Riley v. California, the Supreme Court maintained that the officials would need to secure a warrant to look through those devices. This holding is especially monumental because it establishes the country’s highest court’s position that electronic devices enjoy privacy protection under the Constitution. Indeed, the Court notes several times throughout the decision that since electronic devices contain so much of users’ most private data, these devices must enjoy a heightened level of privacy.

At the Law Offices of Salar Atrizadeh, we are fully knowledgeable and experienced in the practice of electronic privacy protection for individuals and businesses. Our office handles all civil matters dealing with violations of cyber privacy. Indeed, by speaking to an attorney, you can take precautionary steps to help protect your privacy and personal data.

How Will Riley v. California Impact Individual Privacy Rights?

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A corporation’s trade secrets are its lifeblood. Indeed, it is through this information that a company generates a profit and maintains its reputation in the industry. A trade secret includes any unique information that carries value. There are both state and federal laws which pertain to trade secrets. Unfortunately, federal laws do not provide strong protections. This has weakened U.S. companies that have fallen victim to international trade secret misappropriation.  In response, since April 2014 the U.S. Senate has been considering the Defend Trade Secrets Act to provide stronger national protection for domestic corporations.  Nonetheless, companies can take steps to establish internal protections for their trade secrets.

A. Trade Secrets Status

A corporation cannot claim a trade secret if it is publicly known information. Most importantly, it must be information that is not available to competitors. For example, the recipe for Coca Cola is a trade secret. In fact, this recipe is arguably the most expensive trade secret in the world. Coca Cola could not claim its recipe as a trade secret if it was readily available to Pepsi.  Any information that a corporation freely provides to customers, trade associations, outside parties, or the general public cannot constitute a trade secret.

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When a person harms another, the harmed party has the option of filing a lawsuit to seek damages. However, certain harms affect large groups of people, sometimes reaching into the thousands. In these cases, state and federal civil procedure rules provide for class action lawsuits. A class action lawsuit is brought by a group of parties who have all suffered a similar harm from a defendant’s actions. The defendants can also make up a class where several defendants contributed to the harms at issue. In 2005, in an effort to provide greater protection for harmed plaintiffs, Congress passed the Class Action Fairness Act (“CAFA”) revolutionizing class action procedures.

What Are the Terms of the Class Action Fairness Act?

First, CAFA dramatically expands federal jurisdiction to include a larger body of class action claims. There are two federal class action jurisdiction requirements. First, the case must be for more than $5 million. Second, at least one plaintiff must be from a different state than one defendant. There are exceptions to the second requirement. For example, if at least two-thirds of the plaintiffs are from the same state as the main defendant, federal courts may not have jurisdiction. By expanding jurisdiction, CAFA changed the class action landscape. In turn, this led to several ambiguities in the case law. This also meant that attorneys skilled in traditional class action procedures had to reinvent their practices to comply with CAFA’s new requirements. The American Bar Association provides resources to demonstrate the applications of CAFA.

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The European community has been making great strides to establish and protect individual privacy in the globalized cyber community. On May 13, 2014, the European Court of Justice (“ECJ”) issued a decision that European Union (“EU”) citizens had a right to ask search engines to remove search results about themselves.  The ECJ defined this as a “right to be forgotten.”  Google, which is upset about this holding, has set up a form for users to request information removal. American counterparts, and officials within Google, have expressed concern about the implications of this ruling—both for the search engine and the threat to the flow of information.  Ultimately, the ECJ has established that the right to privacy supersedes the right to information.

What Are the Terms of the 2014 Ruling?

In issuing the decision, the ECJ was enforcing a 1995 EU directive on privacy that defines and regulates search engines as data collectors. European regulators have historically been more concerned with personal privacy than the United States. Accordingly, European government agencies have taken greater steps to enforce protections. Both the EU and members states have adopted provisions to protect privacy and family life. For instance, in 2010, the European Commission declared the right to be forgotten as a foundational aspect of its Data Protection Regulation.

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Early in 2012, the European Commission proposed a reformation of the European Union’s data protection rules.  The European Commission sought to strengthen online privacy rights and improve Europe’s digital economy. The European Commission pointed to expansive globalization and different levels of implementation by the EU’s 27 member states as reasons to seek uniform online privacy rights. Indeed, each member state has different standards of enforcement for the rules. This leads to expensive administrative costs in maintaining and continuing to implement the different standards. The European Commission predicated that a uniform law across the European Union would lead to savings of approximately 2.3 billion Euros a year. In addition, with a clearer set of regulations to govern data protection, the European Commission hoped to instill more confidence in consumers in online services, leading to a growth in jobs and innovations.

What Were the Terms of the 1995 Data Protection Directive?

The 1995 Data Protection Directive was adopted to regulate the processing of personal data among European Union member states. This Directive has a broad definition for “personal data,” including “any information relating to an identified or identifiable natural person.” Also, the standards within the Directive apply only if the entity controlling personal data is established within the European Union or uses equipment located therein. The standards prohibit the processing of personal data without transparency of purpose, a legitimate purpose, and proportionality. In terms of the requirement for proportionality, a controller can process personal data only to an extent necessary to its purpose—it cannot store that data for a potential future purpose.  However, the 1995 Directive fails to take into account the implications of social networks and cloud computing on online privacy.

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Gambling has been an entertaining pastime in casinos for several years. The expansion of the Internet now makes it possible to play casino games online. However, this raises the question of whether online gambling is a legal activity. While federal law criminalizes “betting or wagering” over “a wire communication,” courts have interpreted this differently than the Department of Justice.

What Laws Apply To Online Gambling?

The federal government regulates online gambling activity.  There are several laws that apply to betting and gambling over the Internet. Most importantly, the Federal Wire Act of 1961, does not allow businesses to engage in certain online betting activity in the United States. It is important to note that federal laws can only regulate online gambling activity that takes place in the United States. They do not have the authority to regulate online gambling that takes place entirely in other jurisdictions. Among other laws, Congress also enacted the Illegal Gambling Business Act of 1970, as part of the Organized Crime Control Act of 1970. This Act was meant to target large-scale illegal gambling operations that funded organized crime.

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