Friday, March 24, 2006

Digital Gospel and Section 230

In a world where digital is gospel, blogging, online news, and wikis have become the prophets of a country that worships its broadband. The reality is that when a wiki says it's so, then so it is, that when a bully calls his classmate names on MySpace they are deserved, and that the fate of a presidential election hinges on the favor of a blogger. But what if the information posted is less than accurate, or even honest? In this climate, one should really scratch their heads over the logic of the 1996 Communications Decency Act--the reason why MySpace, Wikipedia, will all escape the wrath of a defamation action.

Under the Act, most "interactive" sites cannot be held liable for the defamatory statements of their users.
The Act was borne of the Clinton administration's desire to protect a fledgling online industry that was making economic superstars out of the likes of AOL. The logic was that an entire growth sector should not be penalized for the acts of a few wayward users and that AOL should retain the flexibility to monitor its users, without assuming affirmative liability. As such, a clear distinction was made between print publication and online publications through section 230 of the Act. Section 230 provides that "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider." And if that language does not seem concrete enough, the Act preempts state law stating "[n]o cause of action may be brought and no liability may be imposed under any State or local law that is inconsistent with this section." The courts have been remarkably e-friendly on the basis of this section and have almost universally applied Section 230 beyond "traditional" Internet service providers, including a broad swath of sites. Hence along with AOL, bloggers, wikis, forums, boards, and a host of other services are shielded by its aegis.

But wait there's more!—Section 230 has even been construed to guard against non defamation actions.
These include breach of contract, negligent misrepresentation, business interference, and emotional distress (consider the infamous Star Trek Actress Case, that's a wiki entry unto itself). In one case (Lars Gentry, et al. v. eBay, Inc.) it single handedly blew out two state statutory causes of action and general negligence, sparing Ebay, where autographed sports items dealers misrepresented the authenticity of their wares (California actually has a statute that speaks directly to that issue—how's that for lawyering?). Section 230 came to the rescue of a library on the hook for enabling access to porn, even in the face of the classic public funds doctrine. Kathleen R. v. City of Livermore, 87 Cal.App.4th 684, 692 (2001). Not a bad deal for the e-frontier, provided of course you thought everybody with a keyboard, broadband, and a dream had everyone else's best intentions at heart.

When I was an associate I dealt with one of the first cases invoking the Anti Cyber Squatting Act.
At that time, the Internet was the wild west, white hats, black hats, bad guys, good guys, and all. In our excitement over the new possibilities, we somehow accepted the notion that people were genuine and that defamation laws were so 20th century. And so the cyber squatting act was a hard won acknowledgement that the Internet needed boundaries just like your driveway and backyard fence.

Indeed seven years later, the Net's not a child anymore and the days of white hats and black hats are long gone.
My next blog entry will focus on some high profile and not so high profile instances where Section 230 clearly overextends itself. If it is left unchecked in the spirit of laissez faire policy, it may actually jeopardize the meaningful development of the net.

The electronic Frontier Foundation's Section 230 Blogging FAQ


Kaiser Wahab


Tuesday, March 14, 2006

Small Firm Life

I usually post about developments in the law and rarely about the lawyers that are often responsible for them. Contrary to popular belief supported by Ally McBeal and LA Law, large firms do not alone shape the legal landscape. Boutique attorneys and a host of others often have significant impact (In fact NY's notoriously difficult right of publicity law was extended in a critical fashion by a NY firm specializing in personal injury). The point to this is that one studying the law might also want to study the practitioner. You want a window into the mind of the law?--start with the mind of the lawyer. To begin with, I recommend the blog Small Firm Life by Ray Dowd of Dowd & Marotta. Revel in the everyday, the workaday, and the sometimes extraordinary that sits on our desk.

Kaiser Wahab

Sunday, March 12, 2006

NY LLC Publication Law Grows Teeth

I see it pretty often – that dazed and bewildered stare, those glassy eyes, a politely suppressed sight (or worse, yawn). Yes, those are the reactions of my clients when I try to explain New Yorkstate’s LLC publication requirement. As a business owner, you may find it difficult to justify spending about a thousand dollars to publish a minuscule advertisement that nobody will read. It is, however, within your best interest to understand the impact of New York state’s LLC publication requirement, especially when New York is just about to crack its whip on delinquent business owners.

On February 3, 2006, Governor George E. Pataki signed New York Senate Bill 85-A which alters publication requirements for limited liability companies, limited partnerships and limited liability partnerships (I will collectively refer to them as “LLCs”). The law will come into effect on June 1, 2006. So what does it all mean? Under the current law, LLCs have to fulfill their publication requirements within 120 days of filing their LLC papers (i.e. articles or organization). If the LLC fails to do so, then the LLC cannot maintain an action or proceeding in New York State.

The new law has a lot more teeth – as of June 1, 2006, any LLC that fails to fulfill its publication requirement will face suspension of its authority to conduct or transact any business in New York State. To make matters worse, this suspension could potentially leave LLC members without any limited liability (read – your personal bank account is at risk) until the publication requirement has been fulfilled.

So next time we warn you that you should spend that extra thousand dollars for publication – just listen to us, it is a sound investment for your company’s future.

Olivera Medenica

Sunday, March 05, 2006

"Preferred Series A" - Small Venture Financing Round Basics--101

Founding a company and evaluating funding options seem like a mathematical challenge best left for the Einstein’s of our generation. This is definitely not so. Everyone interested in founding a company which is likely to seek venture capital should understand the basic math underlying the process.

For the rest of this article, please click here.

Friday, March 03, 2006

Funding Tinseltown: The Next Generation of Tax-Incentivized Indie Financing

For those of you who would like to more about the securities and tax aspects of film finance, we have a free treat for you, the film panel below. Also, for those of you indie film types who have cracked his books open, Mark Litwak, well known indie film attorney will also speak. So it's a great opportunity to get an overview from the source.

The New York County Lawyers Association Presents -

A Forum Discussion on Film Law

Funding Tinseltown: The Next Generation of Tax-Incentivized Indie Financing

When: March 22nd, 2006

6:15 – 8pm

Where: New York County LawyersR17; Association

The Lounge

14 Vesey Street

RSVP To: dlamb@nycla.org, Subject: Tinseltown

Cost: FREE

What are the current financing models for feature films in Hollywood? How are funding deals made? Panelists will discuss the current state of the film industry in the United States and abroad as well as traditional and alternative U.S. and international financing models for feature films (Germany, U.K., Australia, Ireland, Luxembourg, Canada, among others). The discussion will also focus on current U.S. federal Section 181 financing models (e.g. note structure, product placement), current state tax credits, future of federal and state audiovisual tax incentives, soft funding qualifications and common pitfalls of U.S. film fund structures.

An absolute must-attend event for those interested in Film industry finance.

Panel Speakers:

Bianca Bezdek, Warren Goz and Stewart McMichael,

Partners at Bezdek Goz & McMichael LLC –

Bezdek Goz & McMichael LLC was founded in 2003 and focuses solely on feature film and television production, financing, distribution and intellectual property matters. The panelists' clients have included Paramount, New Line Cinema, Universal Pictures, Miramax and Warner Bros. Studios.

Mark Litwak,

Law Office of Mark Litwak & Associates

Anton Mel, >

Global Media Rights Fund

Moderator

Olivera Medenica,

Wahab & Medenica LLC