Friday, May 14, 2021

New Paper by Copyright Law Experts Takes on Copyright Infringements by States

On May 13, the Regulatory Transparency Project published a paper titled "Holding States Accountable for Copyright Piracy." The paper was co-authored by a distinguished group of copyright experts: Alden Abbott, Kevin Madigan, Adam Mossoff, Kristen Osenga, and Zvi Rosen. Professor Mossoff is a member of the Free State Foundation's Board of Academic Advisors. This paragraph from the introduction sets forth the paper's purpose: 

This paper identifies how copyright law and sovereign immunity came into conflict recently, explains why this conflict matters, and proposes a solution: Congress should enact new legislation that holds states accountable for when state officials pirate the fruits of creative labors of citizens by stealing their copyrighted works. 

The conflict alluded to is the result of the Supreme Court's decision in Allen v. Cooper (2020). Along with a discussion of legal principles and copyright case law, the paper profiles some specific cases in which states or state entities infringed on copyrights and inflicted serious harms on copyright owners but escaped legal liability under copyright law. 

For another discussion of Allen v. Cooper and the need for a legislative response to shore up protections for copyright owners, see my July 2020 Perspectives from FSF Scholars paper, "Congress Should Stop States From Infringing Copyrights." States should not be financially responsible for copyright infringement just like everyone else, and Congress should seek ways to ensure that justice is served when states infringe copyrights.

The U.S. Copyright Office is currently undertaking a study of the copyright infringements and state sovereign immunity. The Office's study is expected to produce a report for public release later this year. 

Thursday, May 13, 2021

Privacy Roundup: Federal Data Privacy Legislation Proposed in 2021

In "Inconsistent State Data Privacy Laws Increase Confusion and Costs," a March 2021 Perspectives from FSF Scholars, I explained why a single, nationwide privacy regime – in particular, one that preempts state law and embraces exclusive enforcement by the FTC rather than a private right of action – is far preferable to a collection of inconsistent, state-specific approaches. Already we have seen such laws pass in California (the in-effect CCPA and, more recently, the CPRA) and Virginia.

As such, congressional activity on the privacy front is a topic upon which the Free State Foundation regularly provides updates. This specific discussion focuses on several federal data privacy bills that have been introduced – in many cases, reintroduced – so far this year.

The first such bill, the Information Transparency and Personal Data Control Act, was reintroduced on March 10 by Representative Suzan DelBene (D WA). As I noted in "Congresswoman DelBene Reintroduces Federal Data Privacy Bill," an April 2 blog post, that act, among other things, would preempt state law and would not allow individual consumers to pursue a private right of action.

*    *    *

Less than two weeks later, on March 23, a group of 17 Democrats in the Senate reintroduced the Data Care Act (DCA).

Rather uniquely, the DCA would not create specific consumer rights (for example, the right to know, access, delete, or correct collected personal information).

Instead, it would require online service providers that collect "individual identifying data" to abide by duties of care, loyalty, and confidentiality.

Pursuant to the duty of care, online service providers would have to "reasonably secure individual identifying data from unauthorized access" and promptly notify end users in the event of a breach involving "sensitive data," which the DCA defines to include social security, driver's license, and financial account numbers; fingerprints and other unique biometric data; and "information sufficient to access an account of an individual."

The duty of loyalty would bar the use of individual identifying data "in a way that will benefit the online service provider to the detriment of an end user" and either (a) "will result in reasonably foreseeable and material physical or financial harm" or (b) "would be unexpected and highly offensive to a reasonable end user."

The duty of confidentiality would limit the disclosure or sale of individual identifying data to those uses that are consistent with online service providers' duties of care and loyalty; require the inclusion of contractual provisions that impose the duties of care, loyalty, and confidentiality on third-party recipients of individual identifying data; and require audits and other reasonable steps to ensure that third parties in fact do comply with those obligations.

The FTC would be authorized to enforce a violation of the DCA as "an unfair or deceptive act or practice" pursuant to Section 18(a)(1)(B) of the Federal Trade Commission Act. State attorneys general and consumer protection officers also could bring civil enforcement actions.

The DCA would apply to nonprofit organizations and common carriers.

It explicitly would not "modify, limit, or supersede the operation of any privacy or security provision in any other Federal or State statute or regulation."

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On April 29, Senator Jerry Moran (R KS) reintroduced the Consumer Data Privacy and Security Act (CDPSA).

First and foremost, the CDPSA would preempt state laws in order to establish a federal consumer data privacy protection standard. According to the press release, a recent survey revealed that "an overwhelming majority of Americans believe a national standard for privacy is needed."

In addition, the CDPSA would bestow upon consumers the rights of knowledge, access, portability, correction, and deletion. Small businesses – defined as those that have fewer than 500 employees, generate less than $50 million in annual gross receipts, and collect personal data from no more than a million individuals – would not be required to provide access, or make corrections, to collected data.

With some limited exceptions, covered businesses would have to obtain consent before collecting and processing personal data. The type of consent required would depend on the sensitivity of the data collected and whether it will be transferred to a third party.

Specifically, with respect to non-sensitive information, "an individual shall be deemed to have consented … if the individual fails to decline the request after being provided with [notice] and a reasonable amount of time to respond to the request."

For sensitive information or data that will be transferred to a third party, however, the CDPSA would require "express affirmative consent."

Covered businesses also would be required, among other things, to implement a comprehensive data security program that "contains reasonable administrative, technical, and physical safeguards designed to protect personal data from unauthorized access and related harmful disclosures."

The FTC and state attorneys general would handle enforcement responsibilities. The former would be provided with limited rulemaking responsibilities, the power to impose civil penalties for first-time offenses, authority over nonprofits and common carriers, and the resources necessary to hire 440 new employees.

The CDPSA makes plain that it would not create a private right of action: "There shall be no private right of action under this Act and nothing in this Act may be construed to provide a basis for a private right of action."

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Finally, Senator Rick Scott (R FL) announced on May 4 the introduction of the Data and Algorithm Transparency Agreement (DATA) Act. Although the text of the bill is not yet available, the press release indicates the DATA Act would require that any large Internet platform "that uses algorithms to increase or decrease the availability of content on its platform" obtain express (opt-in) consent before collecting, selling, sharing, or conveying user data.

Users also would have the right at any time to withdraw their consent and/or request that their personal data be deleted.

And they would be empowered by the DATA Act to pursue a private right of action. In addition to actual damages and attorney's fees, aggrieved users would be entitled to minimum monetary damages in the amount of $5,000 per violation.

The DATA Act, which would apply to those Internet platforms with 30 million or more active monthly users in the United States, would mandate that a plain-language explanation of these rights appear each time that a user logs in. However, users could waive this requirement.

Tuesday, May 11, 2021

The Constitutional Foundations of Communications Law and Policy

Today, Free State Foundation President Randolph May and I published the latest installment in our ongoing series - Constitutional Foundations of Communications Law and Policy:

Monday, May 10, 2021

Study: Bad Data Diverting Broadband Subsidies Targeting the Unserved to Already Connected Areas

A Competitive Carriers Association (CCA) study raises serious concerns that, contrary to the FCC's intentions, ratepayer dollars will be used to subsidize the overbuilding of existing broadband networks.

The goal of the $20.4 billion Rural Digital Opportunity Fund (RDOF) is to incentivize the construction of broadband network infrastructure specifically and exclusively in those areas that are, and are likely to remain, unserved.

That, of course, requires a factual appreciation of where "broadband," currently defined by the FCC as delivering download speeds of at least 25 megabits per second (Mbps) and upload speeds of at least 3 Mbps, is – and, more to the point, is not – available.

By all accounts, however, the broadband availability data that currently exists is fraught with problems.

For more information on the Digital Opportunity Data Collection, an in-progress mapping-modernization effort initiated by then-Chairman Ajit Pai in 2017 and funded by Congress at the end of last year, please see "A Primer: The COVID Relief Bill's Broadband Funding Provisions," a December 26, 2020, post to the FSF Blog, and "Congress Should Fund Needed Broadband Maps This Session," a November 2020 Perspectives co-authored by Free State Foundation President Randolph May.

Nevertheless, based upon the belief that existing data does indicate with sufficient accuracy those census blocks completely lacking broadband, the FCC conducted the RDOF Phase I reverse auction at the end of last year. 180 bidders won a total of $9.2 billion in subsidies to connect 5.2 million locations understood to be unserved.

But according to "Missed Opportunity: How the Rural Digital Opportunity Fund Wastefully Subsidizes the Connected," a study the CCA filed with the FCC on May 6, as much as $1 billion of that money – more than 10 percent – instead will go "to wealthy, densely populated areas that already have access to broadband."

High-profile examples include Cupertino, California, the home of Apple Inc.; Fisherman's Wharf in San Francisco; and parts of the downtown Chicago business district.

All told, CCA warns that RDOF Phase I subsidies could be used to overbuild existing, privately funded broadband networks serving nearly 300,000 locations and over 400,000 people.

The CCA therefore urges the FCC to "reaffirm its commitment to closing the digital divide by using its ample authority to prevent scarce, high-cost funds from needlessly subsidizing broadband deployment in areas that already have it."

Friday, May 07, 2021

Latest FSF Critique of Biden Broadband Plan Disproves Claim That Service Is "Too Expensive"

The Free State Foundation today published the third piece in an ongoing series exposing flaws in the broadband-specific elements of President Biden's American Jobs Plan.

In "Biden Broadband Plan: Claims That Broadband Is 'Too Expensive' Are Unfounded," FSF President Randolph May and I tackle head-on the factually incorrect assertion that "Americans pay too much for the Internet." Citing multiple data sources, we demonstrate convincingly that the efficient operation of the competitive marketplace for high-speed Internet access is producing greater consumer choice, lower prices, and higher speeds. Make no mistake, time-tested trends prove that market forces are doing their job.

In "Biden Broadband Plan: Misdirected Broadband Subsidies Hurt Competition and Consumers," published on April 28, 2021, we described the harm that necessarily would result from the use of taxpayer dollars to overbuild existing, privately funded broadband networks: private investment would decrease, competition would suffer, and consumers ultimately would be worse off, not better.

And the first in the series, "'Future Proofing' Subsidized Broadband Would Inflate Consumer Prices," an April 13 post to the FSF Blog, explained how the Biden Administration's stated preference for "gold-plated" funding-eligible networks – that is, infrastructure capable of providing far more capacity than consumers demand, particularly in the upstream direction – inevitably would incentivize subsidy recipients to target areas already served and, more broadly, lead to higher, not lower, prices.

Wednesday, May 05, 2021

New York's Rate Regulation of Broadband Services Is Bad Law

On April 30, broadband Internet service providers in New York filed a lawsuit challenging that state's new law imposing price controls on broadband services. The lawsuit in New York State Telecommunications Association v. James, is straightforward and should result in a court declaring New York's law to be federally preempted. 

The FCC's 2018 Restoring Internet Freedom Order eliminated Title II common carrier regulation of broadband Internet access services and declared them to be Title I information services. Importantly, the Commission's repeal of the old rules and its Title I reclassification decision was upheld by the D.C. Circuit in Mozilla v. FCC (2019). By virtue of Title I reclassification well as precedent such as the D.C. Circuit's decision in Verizon v. FCC (2014), common carrier treatment of broadband Internet access services by a state – including rate regulation – conflicts with federal law. 

A persuasive case also can be made that any rate regulation of broadband Internet access services by a state is subject to field preemption. Broadband network operations transcend state borders and broadband services constitute interstate commerce. 

Included in its 2022 budget law, the State of New York requires broadband Internet service providers to offer ostensibly low-income persons high-speed broadband services for $15 per month. But according to the legal complaint, this requirement could apply to perhaps 35% of households in New York. Moreover, New York's rate regulation requirement appears totally oblivious to other affordability measures already in place, including the temporary $50 Emergency Broadband Benefit subsidy recently established by Congress, as well as Lifeline discounts of $9.25 per month for subscribers of broadband Internet services. Additionally, private market providers such as Comcast and AT&T offer steep discount programs to low-income Americans. 

As already indicated, New York's law is also oblivious to federal law. The case is now pending in the U.S. District Court for the Eastern District of New York. Expect the state's rate regulation law to be preempted.   

MEDIA ADVISORY: The Facebook Oversight Board's Decision and the Cancel Culture


Free State Foundation President Randolph May issued the following statement in response to the decision of the Facebook Oversight Board’s ruling regarding Donald Trump’s Facebook account.

"As someone who has expressed serious concerns regarding the expanding impact of the Cancel Culture, I don’t have a particular problem with the Oversight Board’s decision regarding Donald Trump’s account. Indeed, I think the most important aspect of the Board’s decision is its determination that it was not appropriate for Facebook to impose an indefinite suspension with no criteria for when or whether Trump’s account will be restored. In chastising Facebook for applying a ‘vague, standardless penalty,’ the Board gets to the nub of the problem that creates so much unease with Big Tech’s cancellation power. So, I applaud its decision in this regard.
My primary concern is not whether, or how soon, Trump gets back on Facebook, Twitter, or any other platform. Personally, I’d be happier if he said much less about many things. Rather I’m concerned that any action regarding Trump, regardless of what you think about him, not detract from the larger conversation that, as a society, we need to have regarding the growing impact of the Cancel Culture in shrinking the space for legitimate public debate.”

Tuesday, May 04, 2021

Court Permanently Enjoins Enforcement of Maine's Cable-Only A La Carte Law

Pursuant to a court-approved agreement by the parties to a pending legal challenge, a Maine law that would have forced cable operators to unbundle the programming they offer to customers, but not rival distributors of multichannel programming, will not go into effect.

LD 832 states in its entirety that "[n]otwithstanding any provision in a franchise, a cable system operator shall offer subscribers the option of purchasing access to cable channels, or programs on cable channels, individually."

In the summer of 2019, Comcast of New Hampshire/Maine joined a group of cable programmers (Plaintiffs) to sue the Governor of Maine, the Attorney General, and a number of municipalities (Defendants) in the U.S. District Court of Maine.

Plaintiffs put forth three arguments in support of their request for declaratory and injunctive relief: (1) that LD 832 violates the First Amendment by singling out cable operators for disfavored treatment, (2) that it infringes upon Plaintiffs' constitutionally protected editorial discretion regarding how they choose to package programming, and (3) that it is preempted by Sections 544 and 556 of the Communications Act.

The District Court agreed with the first of these arguments and in December 2019 granted a preliminary injunction.

In "Maine's Cable Unbundling Law Violates the First Amendment," a July 2020 Perspectives from FSF Scholars, Free State Foundation President Randolph J. May and I took issue with the District Court's errant conclusion that cable operators' First Amendment protections, recognized by the Supreme Court in its 1994 Turner I decision, do not extend to the editorial decision to make (1) individual channels available to customers exclusively through tiers, and (2) individual programs available solely as part of channels.

In February 2021, the U.S. Court of Appeals for the First Circuit denied Defendants' appeal of the District Court's decision to grant a preliminary injunction, a development I described in a contemporaneous post to the FSF Blog.

In response, the parties agreed to put an end to their legal dispute, filing with the District Court a Joint Motion for Entry of Stipulated Final Judgment and Order for Declaratory and Permanent Injunctive Relief.

On April 23, the District Court issued an Order (1) declaring that LD 832 violates the First Amendment, and (2) permanently enjoining the Defendants from giving it effect.

Regrettably, the District Court's entry of this Order means that it will not have the opportunity to revisit its incorrect conclusion that the Maine law does not infringe cable operators' constitutionally protected editorial discretion with respect to the packaging of programming. Nor, for that matter, will Plaintiffs have the chance to develop the record more fully on the question of federal preemption.

Nevertheless, it certainly is welcome news that the saga of LD 832 has come to end.