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Virtual currencies have become a popular tool for allowing direct peer-to-peer online transactions using electronic payments that eliminate the need for conversion between currencies. Over the past few years, Bitcoin has enjoyed a considerable amount of praise as the virtual currency of choice. This hype carried with it significant funding from hopeful investors, who hailed its potential to offer a number of benefits, not the least of which being its unregulated and decentralized nature.

However, despite the initial investor optimism, recent price crashes have prompted declarations of the “death” of Bitcoin, and this is not the first time. These price crashes can be attributed, at least in part, to wavering consumer and retailer support in the face of complex technologies underlying the system. Moreover, even assuming the virtual currency can still be considered economically alive, Bitcoin is certainly a volatile investment today.

What Should Bitcoin Investors Think?

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In general, online privacy falls under two categories. First, is personal privacy.  Second, is corporate privacy.  For example, corporate privacy concerns the protection of corporate data (e.g., electronic communications) from retrieval or interception by unauthorized parties. Security is important for the protection of trade secrets, proprietary information, and privileged communications. The failure to maintain confidentiality can result in a loss of “trade secret” status. The relevant law is 18 U.S.C. §§ 1831 et seq. (e.g., economic espionage and theft of trade secrets). Also, the waiver of the attorney-client privilege and work-product protection come into play during litigation.

The Economic Espionage Act was the first federal criminal law protecting trade secrets. It provides penalties such as prison terms of up to 15 years and fines of up to $5,000,000. It expands the trade secret definition by including all types of business and financial information.

Trade secret owners face an unfair position when it comes to online publication of their trade secrets. One option is to obtain preliminary injunctions. However, the Supreme Court has cautioned against using the Prior Restraint Doctrine where its effectiveness would be questionable (e.g., jurisdictional enforceability concerns). The other option are registering patents, trademarks, copyrights or implementing preventive technologies.

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The Internet of Things (“IoT”) is the next evolution and is making a remarkable impact on technology and our way of life. In fact, the availability of an omnipresent network connectivity has fostered the widespread use of smart devices.

Devices are now able to communicate with each other through embedded sensors that are linked by wired and wireless networks. For example, they include thermostats, automobiles, or pills that permit a physician to monitor the patient’s health.

Technology has allowed us to detect and monitor changes in the physical status of connected devices (e.g., RFID, sensors) in real-time. Technology advancements allow networks and objects they connect to become more intelligent. The factors that are currently driving growth, include, development of smart cities, smart cars, and smart homes, enhanced connectivity infrastructures, and a connected cultures.

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Electronic discovery (a/k/a “eDiscovery”) is the process of identifying, locating, preserving, collecting, preparing, reviewing, and producing electronically stored information in the context of the legal process. Electronically stored information (“ESI”) includes anything that can be stored in electronic form on a computer or other media device. A computer is defined as “an electronic, magnetic, optical, electrochemical, or other high speed data processing device performing logical, arithmetic, or storage functions (e.g., desktop, laptop, smart phones, tablets, CDs, DVDs, flash drives, backup tapes, voice mail, servers, and access control systems).

What Are the Issues That Arise During Electronic Discovery?

The following issues may arise during the course of electronic discovery:  First, the attorney-client privilege and work-product doctrine play a key role.  The attorney-client privilege protects the confidentiality of communications between an attorney and his/her client.  The work-product doctrine prevents a party from discovering documents that are prepared in anticipation of litigation.

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In these days, many people spend time on their electronic devices to become members of internet dating services. Many companies are now providing online dating services to their members. In general, the online dating services require their members to submit a profile, which may include personal information (e.g., name, email address, date-of-birth, and photos). As a result, the internet dating service may be sued by its members or third parties for various legal claims.

What Are the Typical Legal Claims Against Internet Dating Services?

In recent years, the internet dating services have been targets of lawsuits.  In some cases, the internet dating service may facilitate sexual encounters between its members, which can lead to its member being arrested for having sex with a minor.  In other cases, the members defame, harass, stalk, or bully each other.  In these cases, the courts have enforced or dismissed the civil claims against the internet dating service for various reasons.  The typical claims against the internet dating service may be for breach of contract, negligence, deceptive trade practice, Lanham Act violation, failure to warn, invasion of privacy, defamation, or fraud.  It is important to note that each of the aforesaid claims requires specific elements and supporting evidence to pass muster in court.  See The Perils and Pitfalls of Online Dating for more information.

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Online banking is an electronic payment system that enables customers of a financial institution to conduct financial transactions on the web.   In today’s high-tech world, online banking fraud is committed on a daily basis.  As such, sometimes customers may not be liable for certain unauthorized online transactions, subject to the terms and conditions of the bank’s service agreement.  Online banking fraud is to defraud a financial institution or obtain money or other property under the custody of a financial institution by false pretenses.  A related issue includes financial identity theft.   So, financial institutions use encryption technology (e.g., secure socket layer – a/k/a “SSL”) to prevent unauthorized access to data.

In general, the customer must notify bank within 60 days after receiving a periodic statement pursuant to 15 U.SC. § 1693f.  Under 15 U.S.C. § 1693g(b), the burden of proof of consumer liability is on the bank.  So, in order to establish a customer’s liability, the bank must prove the transfer was authorized.  In case of a violation, the bank may be subject to civil liability under 15 U.S.C. § 1693m.

What Are the Common Methods Used to Defraud Customers?

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Pay-per-click (“PPC”) advertising is a profitable online service that search engines, such as Google, Yahoo, or Microsoft, provide their customers. Now recently, PPC fraud has developed and caused loss of revenues for businesses and advertisers.   PPC fraud occurs when someone or a program clicks on a company’s advertisement without intending to view the website or buy anything.

Many companies have filed lawsuits against search engines, claiming that they have breached the terms and conditions of their contracts. These companies have alleged that the search engines, acting as the intermediaries, that published their online advertisements improperly charged them for fraudulent clicks. Two questions can be raised by these implications. First, how should a chargeable click be defined within the advertising contract? Second, does a search engine have any duty to protect advertisers from fraudulent clicks?

What is PPC Advertising?

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In recent years, global positioning system (“GPS”) technology has increased in usage on various GPS-enabled devices (e.g., cars, smartcards, handheld computers, and cell phones).  This technology brings value to its users, however, it has caused a significant decrease in privacy. Private and public organizations are able to collect and use the information for different purposes. For example, private organizations may collect data for marketing. Naturally, there are proponents who argue for governmental or non-governmental collection and use of information for different reasons (e.g., national security, emergencies). There are also proponents who argue that the collection and use of information leads to abuse (e.g., unauthorized access, invasion of privacy). Therefore, we need clear and uniform legal standards to control when anyone can collect and use information about an individual.

At this time, there is no law that restricts the government’s collection or use of GPS tracking information against individuals. However, some states have enacted legislation that restricts the commercial use of GPS. The Fourth Amendment limits the use of GPS technology, but its protection from unreasonable search and seizure is less effective due to recent technology advancements.

The main issue is privacy.  In today’s highly-technological world, most individuals carry their cell phones all the time. So, wireless network providers (a/k/a cell phone carriers) are able to track the individual’s movements. On a side note, GPS technology has been used to save lives in emergencies. The Federal Communications Commission (“FCC”) mandates wireless network providers to submit the cell phone location for emergency 911 calls (“E911”) that have been made from cell phones. The law on this issue is relatively clear. It permits cell phone carriers to provide information to third parties (e.g., FBI, NSA, or Police) for E911 emergency calls only. However, they need the cell phone owner’s consent in any other situation.

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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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In general, the interested parties in litigation engage in some sort of “alternative dispute resolution,” or ADR, in order to resolve disputes. In fact, ADR may be used to settle cases that are still pending in court. Both the judicial and legislative branches of government have established new programs in order to promote judicial economy. There are both general and specific applications of the alternative dispute resolution. For example, the United States District Court for the Central District of California offers three options. First, a settlement conference with the district judge or magistrate who is assigned to the case. Second, a mediation with a neutral selected from the Court Mediation Panel. Third, a private mediation.

The courts can use various sanctions to urge the interested parties to engage in ADR. For example, sanctions may include imposing court costs, awarding legal fees, contempt, denial of trial de novo (amounting to confirmation of an arbitrator’s award), and dismissal of the pending litigation. However, they can only use these methods in limited circumstances and pursuant to applicable guidelines.

The trial courts have been allowed to use sanctions to force participation in alternative dispute resolution (e.g., arbitration or mediation). The sanctions that were used, included, contempt, denial of trial de novo, striking of pleadings, and dismissal. Yet, sanctions for failure to attend mediation cannot be imposed without notice and hearing. For example, in Rizk v Millard, 810 S.W. 2d 318 (Tex. App. Houston, 14th Dist., 1991), the Court of Appeals held that a trial court judge’s order striking the pleadings of a defendant, after a hearing in which it was determined that defendant violated a compromise agreement, when there was no pending motion to strike, no notice to defendant, and no hearing, violated due process. Although, it is rare, but in some case, the court may consider the argument that opposing counsel should be sanctioned for the failure to attend mediation or arbitration.  The dismissal of a case is rare as the court has the option to impose additional costs and attorney’s fees on the recalcitrant party or his/her attorney for their failure to participate in such proceedings.

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