Archive for the ‘MTTLR Journal’ Category

Regulate High Frequency Trading?

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The recent financial crisis has led to heightened scrutiny across the financial markets.  After the markets collapsed in 2008 there were calls for increased regulation of the financial markets, which led to the passage of the Dodd Frank Act.  Despite the increased scrutiny and regulation, not every aspect of the financial markets is sufficiently covered and grey areas exist where it is unclear how the law will affect certain practices. One such practice is that of high-frequency trading.

High-frequency trading is the use of sophisticated technological tools and computer algorithms to rapidly trade securities.  High-frequency trading uses proprietary trading strategies carried out by computers to move in and out of positions in seconds or fractions of a second.  It is said that this form of trading benefits the markets by moving supply and demand among long-term investors quickly and efficiently thereby reducing volatility and increasing liquidity.

However, opponents of high-frequency trading have identified numerous perceived problems associated with the practice.  One such problem is that securities exchanges have been selling access to market data to high-frequency traders in such a way that they have access to the information a very short period of time before other investors.  Opponents claim that high-frequency traders then use this information to improperly influence the financial markets – at the expense of other investors that lack this “earlier” access to the market data provided by the exchanges.

The trouble in attempting to root out any potential violations associated with these problems lies in the current regulatory scheme governing the financial markets.  For example, the SEC has the power under §11A(c) of the Securities and Exchange Act of 1934 to adopt rules relating to “distribution or publication” of financial information applicable to exchanges.  However, in order to prove fraud on the part of the high-frequency traders the government must prove intent to artificially affect stock prices or to defraud others.  Further, exchanges enjoy special regulatory status that shields them from certain legal challenges – they are self-regulators, which means they are protected from liability for damages that clients suffer as a result of their actions.

Thus, the current regulatory state governing high-frequency trading poses potential difficulties in rooting out “real” violations of the law in this domain, but too much regulation will likely serve to deter investors from partaking in high-frequency trading, and thus destroy the value added by this practice.  It will be interesting to see how the law is shaped and/or adapts to these challenges in the future.

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December 8th, 2014 at 7:10 pm

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Is Electronic Dance Music Illegal?

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Bad news for music fans: Girl Talk is illegal[1], according to language put forward by the Sixth Circuit. This language applies to all “mash-up” artists and “sample artists” that use clips from other artist’s songs without permission. According to a 2008 New York Times, “Girl Talk’s music is a lawsuit waiting to happen.” Yet, to this date, not even one of the hundreds of artists sampled by Girl Talk has brought a lawsuit against him. Meanwhile, Girl Talk is paid handsomely to tour all around the world and even has his own day named after him in Pittsburgh.

Girl Talk takes different elements from many diverse styles and decades of music—for example, a Rolling Stones guitar riff, an 80’s electronic drum beat, and an early 2000’s rap verse—and mashes them all into his own modern symphony. A four-minute Girl Talk track may have over thirty different artists on it. Girl Talk has released six albums, all of which you can download for free off of http://illegal-art.net/girltalk/. As one site put it “Girl Talk’s album Feed the Animals, which uses over 300 samples, would have never been made if he felt the need to do it legally.” Requiring that mash-up acquire licenses for all of his sound clips would eliminate mash-ups as a style of music.

This all begs the question—is Girl Talk legally obligated to pay for licensing fees for all of the artists he samples? Or morally obligated? The answer may be different for each of these questions, according to some legal scholars. Some agree that the law, as it currently stands, bans mash-ups, but advocate for an alternative system of licensing for sampling due to the harshness of the Bridgeport decision. Girl Talk himself has always cited Fair Use as a protection for his art, which is a four-factored test which comes from the 1976 Copyright Act. Weighing in on this idea, law professor Peter Friedman states, “I would advise that client not to sue Girl Talk; [Girl Talk]’s argument that he has transformed the copyrighted materials sufficiently that his work constitutes non-infringing fair use is just too good.” Forbes notes that “it is telling that no artist that has been sampled by Girl Talk has ever complained.”

Having seen “Girl Talk” live, my sincere hope is that he is allowed to continue to produce music and that sampling and DJ-ing are allowed to continue as musical styles. Given that all mash-up artists currently operate in a “legal purgatory,” it would be helpful if current laws were updated so that these artists could continue to produce music without the persistent fear of an industry-ending lawsuit.

 


[1] According to the case of Bridgeport Music, Inc. v. Dimension Films, 410 F.3d 792, 801 (6th Cir. 2005), the rule could not be any clearer: “Get a license or do not sample.”

 

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November 11th, 2014 at 9:02 pm

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Harnessing Deeper Relationships in South Korea

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Korea has opened its legal market to foreign law firms under Free Trade Agreements about one and a half years ago.  According to the Ministry of Justice, 16 foreign firms have opened shop and are currently operating in South Korea:

• 13 US-based firms: Cleary Gottlieb Steen & Hamilton; Sheppard Mullin Richter & Hampton; Simpson Thatcher & Bartlett; Paul Hastings; Ropes & Gray; Covington & Burling; O’Melveny & Myers; K&L Gates; Cohen & Gresser; Square Sanders; Greenberg Traurig; McKenna Long & Aldridge; McDermott Will & Emer

• 3 UK-based firms: DLA Piper; Clifford Chance; Herbert Smith Freehills

Why Korea?  South Korea is ranked 15th in the world by nominal GDP and 12th by purchasing power parity, and is considered one of the fastest growing economies in the world.  The combined outbound M&A market for last year was $8.8 billion, an increase of 13% from 2011.  The country also ranks 4th in the number of patents issued by the World Intellectual Property Organization in 2011.  Korea’s largest companies are technology companies, such as Samsung, LG, and Hyundai.  Law firms are drawn to the corporate and IP opportunities and Korean companies are similarly drawn to their service.  Korean companies and government have spent close to $1.1 billion in 2011 for foreign legal services in 2011.

Law firms are integrating in 3 stages.  For the first two years, firms can open representative offices and provide legal counseling on non-Korean law, which has already attracted a long list of interested corporations.  For the following three years, firms can enter into co-operative agreements with Korean firms, which include advising on legal issues involving a mixture of domestic and foreign law, and entering into fee-share agreements with their Korean counterparts.  The final stage is to allow firms to invest in the local market, recruit Korean lawyers, and enter into partnerships with Korean firms.

Some say that heightened competition for legal work will impact fees, and predict that a restructuring period will soon begin.  Others focus on the fierce competition that will emerge from local players that have nurtured deep relationships with Korean companies.  Another consideration is to understand the deeply rooted Confusionistic culture that is pervasive in the business culture, such as the top-down management style whereby decisions are made by committees rising up the hierarchy.

But on a whole, foreign firms will have better access to the dynamic global market of Korea and enhance bilateral investment opportunities,  in turn making it easier for Korean companies to navigate investments abroad.

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December 21st, 2013 at 7:31 pm

Fair Use in an Educational Setting

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The University of Michigan just recently won a lawsuit in which the University was alleged of copyright infringement in its effort to digitize its library contents. On September 12, 2011, the Authors Guild, the Australian Society of Authors, the Union Des Écrivaines et des Écrivains Québécois (UNEQ), and eight individual authors filed a lawsuit against HathiTrust, the University of Michigan, the University of California, the University of Wisconsin, Indiana University, and Cornell University for copyright infringement. On October 10, 2012, a Federal District Court in the Southern District of New York dismissed the suit finding that the University of Michigan’s use of books fit within “fair use” of the Copyright Act.

HathiTrust was created through a collaboration of universities in order to establish a repository for those universities to archive and share their digitized collections. The Authors Guild argued that the access HathiTrust provided to the scanned materials was in violation of their members’ copyrights, claiming that the universities had pooled the unauthorized scans of an estimated 7 million copyright-protected books. The Authors Guild also claimed that while many U.S. universities had allowed the scanning of books that were in the public domain, only the defendant universities had allowed copyright-protected books to be scanned.

One of the major issues with the HathiTrust digitalization plan was a project called Orphan Works. Orphan Works are books that are subject to copyright but whose copyright holders cannot be identified or located. As a consequence, users cannot seek permission to use these works in ways that might involve copying or distributing the work. The Authors Guild claimed that the procedures for determining whether a work should be deemed an “orphan” were deficient, as “within days of the suit’s filing on September 12th, the Authors Guild, its members, and others commenting on its blog had developed strong leads to dozens of authors and estates,” while in other cases “simple Google searches turned up most of the leads in minutes.”

HathiTrust has repeatedly claimed that the primary motive driving the digitalization effort was preservation for a scholarly purpose, as the sharing was limited to online reading by faculty and students of participating universities. The scholarly purpose of the digitalization would make the sharing legal under Section 107 of U.S. copyright law, which allows for fair use of a copyrighted work without infringing the copyright. HathiTrust argued that educational, non-profit uses of copyrighted works, falls within previous interpretations of what qualifies as “fair use.”

Federal District Judge Harold Baer Jr. of the Southern District of New York ruled in favor of HathiTrust, stating, “Although I recognize that the facts here may on some levels be without precedent, I am convinced that they fall safely within the protection of fair use … I cannot imagine a definition of fair use that would not encompass the transformative uses made by Defendants’ [Mass Digitalization Project] and would require that I terminate this invaluable contribution to the progress of science and cultivation of the arts.” With this ruling, Judge Baer has “reaffirmed the role of libraries as promoting knowledge creation and equality of access.”

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February 4th, 2013 at 12:00 am

MTTLR Publishes Volume 18 Issue 2

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On behalf of the Michigan Telecommunications and Technology Law Review, I am pleased to announce the publication of our Spring 2012 issue. It has been a pleasure serving as Editor-in-Chief, and I look forward to reading the great pieces that Cliff Helm and the Volume 19 Editorial Board will publish next year.

Printed copies of the Spring 2012 issue will be delivered to subscribers in May. Many thanks to our authors, and congratulations to our hard-working editors who graduate this semester!

All the best,

Nathan J. Francis
Editor-in-Chief

Articles

Property as Control: The Case of Information
Jane B. Baron
Patents vs. Statutory Exclusivities in Biological Pharmaceuticals—Do We Really Need Both?
Yaniv Heled
Res or Rules? Patents and the (Uncertain) Rules of the Game
Emily Michiko Morris

Essay

Improving Patent Notice and Remedies: A Critique of the FTC’s 2011 Report
Alan Devlin

Notes

No Cause of Action: Video Surveillance in New York City
Olivia J. Greer
Viewer Discretion Is Advised: Disconnects Between the Marketplace of Ideas and Social Media Used to Communicate Information During Emergencies and Public Health Crises
Peter Maggiore
Fighting the First Sale Doctrine: Strategies for a Struggling Film Industry
Sage Vanden Heuvel

 

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April 20th, 2012 at 10:48 am

Posted in MTTLR Journal

MTTLR Publishes Volume 18 Issue 1

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On behalf of the Michigan Telecommunications and Technology Law Review, I am pleased to announce the publication of our Fall 2011 issue. Inside, you will find scholarship on the creativity effect in IP transactions, copyright reform, e-discovery, energy regulation, green technology in Michigan, government trade secrets, Internet regulation, and pharmaceutical patents.

Printed copies will be delivered to subscribers during the first week of January. Thanks to our authors for their fine scholarship and to our editors for their many hours of diligent editing.

Articles

Spoliation of Electronic Evidence:
Sanctions Versus Advocacy

Charles W. Adams
The People’s Trade Secrets?
David S. Levine
The Endowment Effect in IP Transactions:
The Case Against Debiasing

Ofer Tur-Sinai

Essays

Hatch-Waxmanizing Copyright
Michal Shur-Ofry
Governments, Privatization, and “Privatization”: ICANN and the GAC
Jonathan Weinberg

Notes

Toward Legitimacy Through Collaborative Governance: An Analysis of the Effect of South Carolina’s Office of Regulatory Staff on Public Utility Regulation
William H. Ellerbe
TEVA v. EISAI : What’s the Real “Controversy”?
Grace Wang

Symposium: Green Technology and
Economic Revitalization in Michigan

 

Creating a Plug-In Electric Vehicle Industry Cluster in Michigan:
Prospects and Policy Options

Thomas P. Lyon
Russell A. Baruffi, Jr.
The Case for Clean Energy Technology Manufacturing: Ten Steps Business and Industry Must Take to Optimize Opportunities in the Emerging Clean Energy Economy
Stanley “Skip” Pruss

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December 16th, 2011 at 1:27 pm

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MTTLR Vol. 17.1 Available!

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On behalf of MTTLR, I am pleased to announce the publication of our latest issue. MTTLR Volume 17.1 features a wide range of scholarship, from pharmaceutical patenting practices to online music pricing to the First Amendment rights of telecommunications providers. The table of contents is as follows, with links to PDF versions of each piece.

Articles

Everything in Its Right Place: Social Cooperation and Artist Compensation, Leah Belsky, Byron Kahr, Max Berkelhammer, and Yochai Benkler

Ill Telecommunications: How Internet Infrastructure Providers Lose First Amendment Protection, Nicholas Bramble

Patenting by Entrepreneurs: An Empirical Study, Ted Sichelman and Stuart J.H. Graham

Essays

Optimal Fines for False Patent Marking, Thomas F. Cotter

Media-Rich Input Application Liability, David Pekarek Krohn

Notes

Not So Technical: An Analysis of Federal Circuit Patent Decisions from the ITC, Holly Lance

How Many Patents Does it Take To Make a Drug? Follow-on Pharmaceutical Patents and University Licensing, Lisa Larrimore Ouellette

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January 7th, 2011 at 9:28 am

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Copyright and Religion

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If Jesus told you to sue for copyright infringement to protect the purity of your religion, would you?  At least one person has answered “yes.”  If someone stole your “secret” religious text and criticized it on the internet, would you sue them for copyright infringement?  Scientologists certainly have.  These are not isolated incidents: different religious organizations are bringing claims of copyright infringement.  In one sense, there’s nothing extraordinary about these lawsuits—after all, religious organizations are entitled to use the protections of the law just like any other individual or entity.  But in another sense, there’s something unique about these lawsuits: the religious organizations’ motivations for suing aren’t typically economic.

My Article, In Search of (Maintaining) The Truth: The Use of Copyright Law by Religious Organizations, explains why and in what context religious organizations sue others who use their religious works.  It shows that religious organizations frequently sue for copyright infringement to further their own religious goals, such as preventing negative publicity and squelching dissent or criticism.  The Article argues that these motivations (and others explained in the Article) are antithetical to copyright law’s underlying purpose.  It also demonstrates that current copyright doctrines stifle, rather than facilitate, religious claims.  The conclusion reached from this analysis should not be surprising: religious organizations should not use copyright law to achieve their religious objectives.

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April 21st, 2010 at 2:34 pm

Tweaking the Regulatory Compliance Defense

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Last year, Professor Catherine Sharkey wrote that preemption is the “is the fiercest battle in products liability litigation today.” Catherine M. Sharkey, Products Liability Preemption: An Institutional Approach,76 Geo. Wash. L. Rev. 449, 450 (2008) . Earlier this year, the Supreme Court stepped in and changed, or possibly ended entirely, that debate. In Wyeth, the Supreme Court rejected the drug maker’s claim that it would impossible for its drug Phergan to comply with the FDA’s warning label requirements and the implicit requirements of state failure to warn laws. See Wyeth v. Levine, 129 S. Ct. 1187, 1198 (2009) (“But absent clear evidence that the FDA would not have approved a change to Phergan’s label, we will not conclude that it was impossible for Wyeth to comply with both federal and state requirements. Wyeth has offered no such evidence.”).

With future preemption claims likely to fail, drug makers and their allies may turn once again to state law to protect themselves against liability and allegedly frivolous lawsuits. Michigan is the model example because it is the only state that provides that compliance with FDA regulations is a complete defense to state tort suits. In Michigan, “a product that is a drug is not defective or unreasonably dangerous, and the manufacturer or seller is not liable, if the drug was approved for safety and efficacy by the United States food and drug administration . . . .” Mich. Comp. Laws § 600.2946(5) (2008). This statute, though, is under attack. An attempt to repeal the provision has passed the Democratic-controlled state house but stalled in the Republican-controlled state senate, and gridlock appears likely to continue. Rather than accepting either side’s all or nothing approach, my note, When and How to Defer to the FDA: Learning from Michigan’s Regulatory Compliance Defense, advocates a middle of the road approach. Drugs that comply with the FDA’s regulations should still have a defense against liability, but a back-up in the form of state attorney general-lead litigation should be there to provide deterrence in situations where the FDA has failed to act and to provide compensation to legitimate victims. Hopefully legislators in Michigan, and other states considering a regulatory compliance defense, will read this paper.

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August 6th, 2009 at 9:51 am

New Legislation to Regulate Automated Political Calls

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You may think of robocalls as those annoying automated calls about warrantees that the FCC is cracking down on. But if you have a land line and regularly vote in elections, you probably receive political robocalls as well. These robocalls are subject to fewer regulations than commercial calls, although unsolicited calls may still annoy voters. As a result, states have passed a confusing array of laws that make it difficult for national campaigns and vendors to comply with. Legislators in a variety of states are considering further complicating the patch-work of state laws (see here here and here).

I have editorialized against legislation that has passed the Michigan House and is pending in the state senate in the Lansing State Journal because I believe that the regulation of political robocalls is best done at the federal level. The reasons why, the history of robocalls, the existing state and federal laws, and my specific proposal are set out in a forthcoming Note, Regulating Robocalls: Are Automated Calls the Sound of, or a Threat to, Democracy?.

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