Archive | May, 2012

Mobile Phone Data Seizing…by the Met Police

20 May

The Met Police and Mobile Phones (Total Access = Total Violation of Civil Liberties)

Another day, another intrusion into our civil liberties by the Met Police.  The Metropolitan Police has implemented a system to extract mobile phone data from suspects held in custody. The data includes call history, texts and contacts, and the BBC has learned that it will be retained regardless of whether any charges are brought.

http://www.bbc.co.uk/news/technology-18102793

It is terrifying and frightening that a police force can remove all the data from a suspect in custody without a warrant, and without any charges. There is the obligatory disclaimer that “data extraction can happen only if there is sufficient suspicion the mobile phone was used for criminal activity”.  But who decides this?

I would suggest that if you are in a suspect in a police station, then you are already under sufficient suspicion.  If the crime one is suspected is directly related to one’s mobile phone – say like organizing a riot against Topshop or a sit-in at a Vodafone shop, then your phone would can be seized and analysed.

The point here is this: the “sufficient suspicion” test will without a doubt be abused. Is there any basis for the legal profession to argue that they Police should destroy the data if charges are not pressed or the person arrested is later on found innocent? Of course there should be. For people that routinely protest and call themselves activists, a mobile phone carries significant more weight than any Facebook relation or “follower” through Twitter.

What will happen next is that the machines will be implemented in the mobile police stations and the phones will be seized on the spot. A case brought to court would easily be winnable.

How does the Law work here?

What is the law now? Proper forensic investigation of a phone would normally require a PACE warrant. One doesn’t get to seize one’s phone just because there has been an arrest. Forensic investigation of a phone would normally require a warrant. Normally police forces carry a “designated person” that has to sign off on not just obtaining communications data NOT CONTENT.  Even if just obtaining communications data (not content) there has to be the signing off by the Designated Person in each police force – I’m struggling to see how this scheme can possibly be both legal and yet deliver any significant cost-savings on sending a phone to forensics.

I don’t know about you, but there is a limited argument here that this is going to bring around any significant savings, yet be within the confines of the law at the same time.

I know what you are thinking! Someone will just create a market for encrypted phones! All the suspect has to do is park an encryption key or secret parked outside of the UK and away from everyone else from the prying hands of the Met Police. This doesn’t really APPLY, because s49 RIPA makes it an offence to refuse to give up a password used to encrypt a device holding evidence. Jullian Assange  has argued in the past alongside others that there was a need for mobile telephone deniability encryption. Ben Goldacre was suggesting the need for mobile telephone deniability encryption, like Rubberhose (written by Julian Assange and others). I don’t really see how you can plausibly deny sending a mail with encrypted stuff in it might have some meaningful content. On the other hand, Assange suggested TrueCrypt, which is a disk encryption thing along the lines of Rubberhose – now, either of those should work just fine on a phone. The problem that then remains is entropy – there’s far too little in whatever most people use to unlock their phones, so none of this will help.

What does the law say?

RIPA only applies, however to Communications Service Providers.  There is no way that a mobile phone in a standard operating mode could reasonably be treated as a communications provider so I struggle to see why RIPA would be in the least bit applicable. The only exception to this would be PART III which covers asking for an unlock code. Yet the thrust of the article is that the technology available to the Met bypasses the access code and removes the data regardless.  The only way I can see RIPA applying is on the basis of voicemails stored on a CSP server. With regard to communications data & RIPA – would it not matter if the search was just taking what was on the phone, or whether it involved connecting that phone to the network (Ie retrieving data from the Communications Service Provider)?

The opinion that voice-mail hacking might be a Computer Misuse Act offence was premised on the idea that the voicemail was not retrieved from the handset but from the CSP servers. Is that not likely to be true for these sorts of searches as well? This is why I wonder if RIPA might apply here, whereas it wouldn’t in the seizure of computers from premises (per ss18 and 20 of PACE).  With regard to communications data & RIPA – would it not matter if the search was just taking what was on the phone, or whether it involved connecting that phone to the network (ie retrieving data from the Communications Service Provider)? . Is that not likely to be true for these sorts of searches as well?

It’s been a big issue in the US (as to whether a warrant is needed or whether officers can “go fishing” on arrest on electronic devices). The latest word is that data retention from phones will be indefinite, irrespective of the charging decision. However, the data retrieval will be confined to what is stored on the handset, with no retrieval of data from CSP servers (so that would exclude voicemails).

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Rangers in Crisis: The Hunt for Whyte October and a Pretty “Poison Pill” Woman

18 May

WEB3dLAW is back with a significantly shorter blog post today.  I have been waxing lyrical lately about popular films. One of my favourite of all time is The Hunt for Red October – the film adaptation of the Tom Clancy novel about Cold War era submarine warfare between the Yanks and the Russians. In one of the latter scenes, former US senator Fred Thompson asks the protagonist Dr Ryan, played by Alex Baldwin, “What’s his plan?” To which Dr Ryan retorts, “His plan?”  The Captain points out that “a Russian submarine captain doesn’t take a dump without a plan”.

One of my partner’s favourite films is the Richard Gere/Julia Roberts RomCom, Pretty Woman.  Do you remember this scene from Pretty Woman when Gere takes Roberts to a dinner meeting with the father and son owners of one of Gere’s takeover targets?

http://www.youtube.com/watch?v=mkKviMfi24s

Gere wanted to buy a large family owned ship building business and in what is commonly referred to as a “hostile takeover”, the duo had come along to the meeting to persuade Gere’s character to end his bid for their family business.

I mention these because both films lead into my nice little transition into a discussion about the business concept called “poison pills”, something I mentioned yesterday.

Poison Pills” and “Shark Repellents” sound like they belong in a James Bond film, but they are actually generic terms for business strategies to repel or reduce the attractiveness of a business to hostile takeovers.  I often wonder, “What was Craig Whyte’s plan?” He doesn’t look like a man that takes a dump very often, or without a plan. I have been thinking about this for a long time. Something doesn’t sit right in this whole thing, so I will give this idea a whirl. It is an idea, but would love to hear your input on its feasibility or accuracy. If I have missed anything out, let me know.

A “poison pill” is a generic term used to describe shareholder rights plan, and is a type of defensive tactic used by a corporation’s board of directors against a takeover. Shareholder rights plans, or poison pills, are controversial because they hinder an active market for corporate control. They also devalue the company and benefit the directors.  A poison pill also has other meanings:

It is sometimes used more broadly to describe other types of takeover defences that involve the target taking some action. The broad category of takeover defences (more commonly known as “shark repellents”) includes the poison pill.

Other anti-takeover protections include:

  • The target business adds to its charter a provision which gives the current shareholders the right to sell their shares to the acquirer at an increased price (usually 100% above recent average share price), if the acquirer’s share of the company reaches a critical limit (usually one third).
  • The target takes on large debts in an effort to make the debt load too high to be attractive—the acquirer would eventually have to pay the debts.[1]

Let’s look at the facts.

  • CW bought Rangers from Sir David Murray’s company for £18,000,001.00. There was a £1 transaction between the two men.  Craig Whyte then paid off Lloyds TSB debt at HBOS by wiring £18,000,000 from Collyer Bristow to an account at Lloyds.
  • CW then had Lloyds assign all relevant securities over to him or his company Wavetower, now “Rangers Group FC”.  Although it is widely accepted that Craig Whyte used Ticketus money to fund the purchase, what is important to remember is that Craig Whyte and Sir David Murray valued the company at £18Million + £1 or £18,000,001.00.
  • Ticketus becomes an unsecured creditor after Rangers enters into administration and is owed £26.7 Million.
  • Rangers cannot raise money from season ticket holders for the next few seasons.
  • Charles Greene and his “20-man consortium” buy Rangers from CW for the nominal charge of £2.  There is no agreed £18M paid into a lawyers account to pay off a debt to HBOS this time. The £8.4M is set aside for the creditors’ pot IF a CVA can be agreed to.  If the CVA can’t be agreed to, is there any contractual obligation to put the £8.4M into the club’s coffers? NO.
  • A new only comes in and cancels the Ticketus deal altogether. They sue the old owner – Craig Whyte. The Ticketus deal is null and void, and CW only pledges his shares and debenture if a CVA goes through.
  • I may be wrong, but I have seen no-one from the MSM ask this question. If the CVA is not agreed, then what happens to the £8.4M held for the creditors? If the answer is nothing, and it doesn’t go into the CVA pot, then it means…

Charles Green bought the club, Ibrox, Murray Park, and the car parks for £2.00. If a CVA cannot be agreed to, and the club has been sold to a 20 man consortium in equal shares that RFC have been bought for 10p each share! Any new owner could come in and buy these shares in a newco company – a debt free football club playing in the SPL with a TV contract with Sky and ESPN. A rights issue WOULD make the original owners a tidy profit on the stock exchange. 

I want to be clear this is me hypothesising. However, it is very suspicious to me that a company that was sold a year ago for £18,000,001.00 has been sold again in less than a year for £2.00. It is worth knowing if the Ticketus deal was a double poison pill– not only did it fund the purchase of the club, but it effectively ensured that “the target company takes on large debts in an effort to make the debt load too high to be attractive. It would be so unattractive that no acquirer would want to pay the debts.”

Here is a classic anti-shark repellent move! This strategy also assumes that the club pays their debts in the long-run. However, under today’s company laws, in particular the Enterprise Act, struggling businesses can continue in new forms as government would rather see businesses keeping jobs going at the expense of toxic debt – which keeps far less in employment.

A plan to shed my business debts in a morally ambiguous, but legal way might look like this:

Run up massive debts and get served with massive bill from more creditors including, hopefully HMRC! Be unable to service those debts. Limit the ways the company can gain access to working capital. Then bankrupt your own business by putting it into administration. Make the company unattractive to legitimate parties of interest by taking on massive amounts of debt. Hire the same people who advised you on this strategy to run the company during the administration process. Offer to sell to a buyer (outside of the circle) to make the whole thing seem legitimate, but as soon as he sees the financial picture, he walks and walks away. Make it as unattractive as possible to any other potential buyers by having an element of your customer base threaten any potential buyers, but at the same time pay for the Old Guard (fine gentleman like Sandy Jardine, Andy Kerr and Mark Dingwall) to wax lyrical about how great Rangers is to anyone eager to lap it up. 

Forego your debts to the tax man other legitimate creditors and form a “newco”… Get a slap on your wrist from the regulatory organizations.  Cancel all of your debts. Buy your partners in consortium out. Return to the glory days of the past.

Smell a rat now?

Laters,

WED3DLAW

[1] Fundamentals of Corporate Finance (6th ed.), Editions McGraw-Hill Ryerson, §23: Mergers and Acquisitions

Rangers in Crisis: Some Legal Explanations and Questions for the Mainstream Media

17 May

Having listened to several mainstream media outlets struggle to explain to its listeners how the law operates in situations like the one Rangers find themselves in, I decided to spell it out for our less legally inclined.   One of the most common claim listeners make is, “How can Rangers be punished for the acts of an individual like Craig Whyte?”

Another one is,  “Why are the SFA making the rules as they go along?”

Thirdly Graham Spiers claimed last night on Clyde Sports Scoreboard that “he had seen no evidence to suggest John Mclelland or John Greig has done anything wrong”.

The balance of this blog post will debunk these 3 claims and whether you love Rangers or loathe Rangers, the laws have operated clearly and predictably.  These are the laws of the land and in part, govern how businesses and corporations operate.

The second part of this blog asks some real questions that the media are not asking.

Thirdly, I wrap up by laying out where Rangers are now and where Rangers will likely be at the start of next season.

For the avoidance of doubt, Rangers Football Club is a company, subject to the Companies Act 2006 and several other legal instruments that govern how the laws treat companies and businesses. In a legal sense, there is no such things as a ‘club’…

Some lawyers may cringe at the simplicity that follows, but this is for the layman, not you…

Point 1:

In the late 1800’s the House of Lords ruled in the case of Salomon v Salomon that a company is a separate legal entity from a person. This is one of the founding principles of our economic and company policy over the 20th Century. If I am worth a £1billion and I setup a business, specifically a limited company, and I fund it to the amount of £10,000, then I am only liable for £10,000 if it goes bust. Yours truly, me myself, and I do not own the assets of the company, the company does. Accordingly, this also means the company owns its own debts and liabilities. This is commonly referred to as separate legal personality and encourages entrepreneurship and risk taking. By creating a separate legal entity, one of the legal effects is commonly referred to as limited liability. This means, except in rare circumstances, if my business goes bust, my company’s creditors cannot hold yours truly, me myself and I accountable for the company debt – even if I am personally worth £1 trillion by the time my business goes bankrupt.  This is almost absolute – with a few exceptions, but importantly even when my business is in debt up to £120M.  I get to keep my £1 trillion and the creditors are doomed to accept their cruel fates.

What this also means in practice is that a person who makes decisions on behalf of a company is not liable, barring a few exceptions, for the dealings of the company. If a person makes a decision to the gain of the business, it is the business that is meant to gain the benefit. Likewise, if a person in charge makes a poor decision it is the business that suffers the consequences.

In football terms, let’s look at this way. Say a Rangers Chairman buys 2 talented schoolboys for £10K. One turns out to be a dud 5 years later. The other turns out to be the next Messi seven years later. When Chairman A leaves the company in year 6, knowing that he cost the business 5K for the dud player. Rangers own the loss. The chairman doesn’t have to take it with him. The same rule applies when the 2nd boy goes on to be sold for £50M. The club gets to keep the money. The ex-owner can’t come back demanding money for his hit purchase. This works great in practice and ensures a level of certainty. However, like any legal principle when things go bad, the same rule applies and this is where most Rangers supporters and the media are going wrong.

When someone suffers a loss as a result of the actions of a company, either a creditor or a party litigant or a shareholder, they often sue the business. They don’t sue the CEO or the senior manager or the call centre operative. They sue the corporation.

In reality, most CEOs or Chairmen have very little contact with customers about the day-to-day operations of the business. There is no point in suing Bill Gates if Windows 7 crashes. Bill Gates is separate from Microsoft.  You’re unhappy with your contract with Microsoft, you sue them.  When a manager doesn’t clean up aisle 6 at Tesco’s, and little Sally slips in the puddle, Sally sues Tesco’s, not the manager of the Silverburn Store.

The courts have developed a test to determine when a company and its representatives are acting out-with their official role, and when they are acting as a representative of the company. There is a very important distinction.

The SFA disciplinary panel made reference to this in the case of Tesco’s v Nattrass [1972] AC 153 – 9 times. This is the law. This is relevant law today and this case is the basis for the decision and the appeal.  The disciplinary panel make reference to this case throughout their reasoning.

Here are the facts of the case:

Tesco was offering a discount on washing powder which was advertised on posters displayed in stores. Once they ran out of the lower priced product the stores began to replace it with the regularly priced stock. The manager failed to take the signs down and a customer was charged at the higher price. Tesco was charged under the Trade Descriptions Act 1968 for falsely advertising the price of washing powder. In its defence Tesco argued that the company had taken all reasonable precautions and all due diligence, and that the conduct of the manager could not attach liability to the corporation.

The House of Lords accepted the defence and found that the manager was not a part of the “directing mind” of the corporation and therefore his conduct was not attributable to the corporation. The corporation had done all it could to enforce the rules regarding advertising.

In the House of Lords Tesco were successful with their defence showing that,

  • a store manager was classed as ‘another person’, and,
  • a system of delegating responsibility to that person was performance of due diligence, not avoidance of it
  • The store manager was not the directing mind and will of the company – the company had done all it could to avoid committing an offence and the offence were the fault of another person (an employee). The company was acquitted.

Lord Reid held that, in order for liability to attach to the actions of a person, it must be the case that “The person who acts is not speaking or acting for the company. He is acting as the company and his mind which directs his acts is the mind of the company. If it is a guilty mind then that guilt is the guilt of the company.”

Let’s look at that again. A person who is acting as the company and his mind which directs his acts is the mind of the company. In other words, according to the law of the land, if Craig Whyte is guilty then Rangers MUST be guilty. Every time a Rangers supporter screams, “its CW that guilty not us”, they are effectively reinforcing Rangers own guilt under the Tesco’s v Nattrass doctrine!

Point 3

This brings us to the Board of Directors and John McLelland and John Greig.  This section might sit uncomfortable with some of the Rangers support, especially Graham Spiers…

If a football club fans are going to insist that a person the fans can relate to is sitting on board level, they need to be aware that the law doesn’t recognize symbolism.  It recognizes statutes, regulations and case precedent.  When Mr McLelland and Mr Greig take the position on the Board as Non-Executive Directors (NEDs), they are under legal obligations to act in a certain way.

Both men sat on the Board during Mr Whyte’s tenure as NEDs.  If one is to sit at board level as a NED, then several legal obligations fall upon them.  NEDs are differentiated from inside directors, who are members of the board who also serve or previously served as executive managers of the company (most often as corporate officers). Sometimes NEDs are often confused with Independent directors who are people who do not own shares in the company. NEDs can also hold shares in the company.

After several high profile business collapses in the late 1990’s the British government commissioned the Higgs Report which was published in 2003. The recommended obligations placed on people who serve as a NON-EXECUTIVE DIRECTOR is as follows:

  • Strategy: Non-executive directors should constructively challenge and contribute to the development of strategy.
  • Performance: Non-executive directors should scrutinise the performance of management in meeting agreed goals and objectives and monitoring, and where necessary removing, senior management and in succession planning.
  • Risk: Non-executive directors should satisfy themselves that financial information is accurate and that financial controls and systems of risk management are robust and defensible.
  • People: Non-executive directors are responsible for determining appropriate levels of remuneration of executive directors and have a prime role in appointing, and where necessary removing, senior management and in succession planning.

It is not enough to give Mr Greig the title of “greatest ever Ranger” and call his appointment symbolic. At the moment he takes the legal title of non-executive director he loses the defence that he doesn’t know anything about corporate governance. When Mr Greig and Mr McLelland take the title of Non-Executive Director, they are considered the legal custodians of the governance process.  Anyone known as an NED at Rangers was under a legal obligation to provide an independent view on Rangers resources, appointments, and standards of conduct.

The failure to oblige to these legal obligations also put Mr Dave King, Mr Alastair Johnson, Mr Paul Murray, and Mr Martin Bain, who all have served as non-executive directors in one capacity or another during the Murray/Whyte reign, on notice.

As you can see, the Disciplinary Panel and the Judicial Appeal Board all were correct to hold Rangers and Craig Whyte together. Therefore, it is a fallacy to argue that Craig Whyte operated as a “rogue” when so many other people in the company failed to live up to their legal obligations to proper corporate governance.

Point 2:

The rules are quite clear. The SFA is not making them up as they go along.

The tribunal’s published determination makes reference to articles 94.1 and 95 of the Scottish FA’s Articles of Association, which relate to the permitted penalties for any infringement of the rules:

Rule 94.1 refers to the powers of the judicial panel, stating it “shall be the sole judge” when a club “in any way brings the game into disrepute or any other grounds it considers sufficient”.

And then they add:

Rule 95 then provides a mechanism for an independent tribunal to impose any sanction it wishes out-with the guidelines set down by the Judicial Panel Protocol, leading to the decision to hit Rangers with a registration embargo.

The Judicial Panel shall have the jurisdiction, subject to the terms of the Judicial Panel Protocol, to deal with any alleged infringement of any provision of these articles.

A… club… if found to have infringed the articles shall be liable to censure or to a fine or to a suspension or to an expulsion from the Challenge Cup [Scottish Cup] Competition, to any combination of these penalties or such other penalty, condition or sanction as the Judicial Panel considers appropriate, including such other sanctions as are contained within the Judicial Panel Protocol, in order to deal justly with the case in question.”

This should answer the first two questions.

 

Hopefully this will clarify some of the finer legal points that the mainstream media are struggling to get their heads around. In turn, I hope they help me answer the following questions that need answering…

  • Was the Ticketus deal a double whammy poison pill? I’ll address this in a future blog post, but Ill pose the following question – what if Ticketus deal was done to ensure the club doesn’t have a buyer and does go into liquidation? This is why it is important to make public the people buying into the Green consortium.
  • Did Craig Whyte give up his floating charge over the fixed assets of the club? Giving up his shares doesn’t really mean anything if he still owns a floating charge. I have it on good authority that an examination of the Rangers books will shows how Whyte was operating his floating charge to the tune of a charge of 2%-3% a month in interest. That is likely a premium RFC are paying to Rangers FC Group for the £18M loan facility allowing Whyte as a secured creditor to get cash out of RFC with impunity. Is he still doing this?
  • Thirdly, Dunfermline Athletic, Dundee, Hearts and Rapid Vienna are all due funds. They must be paid in their entirety in order for Rangers to satisfy the football authorities. However in a CVA, one cannot discriminate between creditors. If DAFC, Dundee, Hearts, and Rapid Vienna are to be paid in full, then so are Craig Whyte, Ticketus, and HMRC. How does Rangers (IA) satisfy their football debts without compromising the rules around non-discrimination of unsecured creditors?

Please let us know, MSM…

Where does this leave RFC (IA)? Here is what I see as the potential outcomes in no particular order…

Option 1 – Sell assets, namely players raising cash for a CVA pot. Ticketus and HMRC will have to agree.. Right now, either of them could block a CVA on the 75% Creditors rule. Ticketus has about a £26M claim as an unsecured creditor. HMRC has a claim of approximately £42M claim. (25M +9M PAYE +4M VAT on Ticketus deal, and 4M “wee tax case”). As the judgement from the ‘big tax case’ is not in yet, I’ll leave that out.  I still see HMRC and Ticketus having to agree to any CVA and the only way they will agree is for a fire sale of all Rangers assets to raise the value of the CVA pot.

Rangers stay in the SPL, and with the transfer embargo in place, have to field a team of youngsters for a season.

Option 2: Rangers sell Ibrox and all the other fixed assets to keep the players. I know this is an unlikely outcome. While Ally’s rallying cry “we don’t do walking away” made for good fodder for rallying the troops, when a players livelihood is on the line, he will be hard pressed not to walk away to the bank to collect a pay check from a club on much stronger foundations. Without any working capital and no legal right to buy players, the only way RFC can stay competitive is to sell their fixed assets – Ibrox, Murray Park, and the two car parks.  Take the proceeds from the asset sale and stick it in the CVA pot and hope all the unsecured creditors agree.

Rent Ibrox back from its new owners. Or play in Hampden and rent it from the SFA. Ouch. That would be a sore one. All the big name players go, with the exception of people like Lee McCulloch and one or two of the rising stars like Andy Little.  This gives the club some working capital. They can’t rely on Ticket sales to raise funds anymore because of the Ticketus deal and the season ticket deals.

Option 3: The big tax case comes back against Rangers and holds up the levy already placed on Rangers. HMRC moves for liquidation. All hell breaks loose and all the assets are sold off – players and fixed and creditors repaid pennies on the pound.  Rangers are killed off by two decades of financial mismanagement. The blame lies at Sir David Murray’s door as much as it is Craig Whyte’s.

Option 4: This is the ‘NewCo’ option and would involve literally start all over again by applying to get back into the SFA. Sell all players and sell all fixed assets. A possibility would be to rent Ibrox and Murray Park back from its new owners. The transfer embargo has ensured those 40 players on RFC rosters have a place to play. It just means that they can’t buy anyone for 12 months over the age of 18.

The competence of the panel and the reasoning behind the decision has now been explained. Let’s say we see, either an oldco RFC in the SPL next season, or a “NewCo” RFC next year.

Under the ‘oldco’ outcome, we will see a club with no stadium, no players, under an effective transfer embargo, and either playing at Ibrox rented from its new owners or Hampden, if Ibrox is sold off to developers. It will likely have been punished a further points reduction for still being in administration. It will likely be a shell club, well shy of its former glory.  It will be Rangers though, and that will be what a lot of the fans will want to see.

Under the ‘newco’ option, it will not be Rangers and that will be a sore pill to take for a lot of supporters.

All of this gets settled and then the double contract announcement comes home to roost. The former RFC as a “newco” can’t be punished anymore, because it is, well new. The “oldco” can be.  I think it will be appropriate  that the football community start to think of the totality of Craig Whyte’s actions as misdemeanours. There will be a wholesalfe shift in how the football community starts to view Sir David Murray. If the double contract judgement comes back against Rangers, it will likely be referred to as a series of felonies – systematic long-term cheating and we will have to have a serious of conversations about how to deal with this.  Do we invalidate all of the results over a year when EBTs and double contracts were in use? If that’s the case, I think we need to look at how much money clubs lost out on after amending  all of the tainted results. Should compensatory damages be paid to all of those clubs that lost out on a second, 3rd or 4th place finish because of a financially doped team? How much did clubs lose out on from not being able to play in Europe? What would be the difference in the amount each club would have received from the commercial fund?  What would attendance have been if the playing field had been levelled?

There will be a lot of questions to be answered. Hopefully, you and I will get there together.

Laters.

Web3dLaw

A quick look at the Trans-Pacific Strategic Economic Partnership or Trans-Pacific Partnership (TPP)

13 May

The Trans-Pacific Strategic Economic Partnership or Trans-Pacific Partnership (TPP) is a secretive, multi-nation trade agreement that threatens to extend restrictive intellectual property laws across the globe. The nine nations currently negotiating the TPP are the U.S., Australia, Peru, Malaysia, Vietnam, New Zealand, Chile, Singapore, and Brunei Darussalam. Like ACTA, the TPP is being negotiated in secret, and on a fast timetable. We don’t know what’s in the TPP IP chapter, or even what the U.S. trade representative is pushing for in this agreement. There is mounting criticism of the U.S. role in pushing the negotiations forward in secrecy, despite the public’s overwhelming disagreement with TPP goals.

“The TPP has been branded as a trade ‘negotiation’ by its corporate proponents, but in reality it’s a place for big business to get its way behind closed doors,” said Pete Rokicki of Occupy Dallas. “This anti-democratic maneuver can be stopped if the public gets active—just look at the movement that killed the ill-advised SOPA (Stop Online Piracy Act) law a few months ago. That’s why Obama’s trade officials lock the public, the press and even members of Congress from the trade negotiation process.”

One of the major criticisms is the lack of transparency. Trade agreements are often negotiated in secret, but it is the inclusion of a chapter on copyright and other IP measures that has people focusing on the TPP, much in the same way as people protested the discarded IP legislation SOPA/PIPA, other trade agreements like ACTA, and the provisions on IP legislation that were subsequently removed from CISPA.

There has been criticism of some provisions relating to the enforcement of patents and copyrights alleged to be present in leaked copies of the US proposal for the agreement. Overall, the USTR proposal for the TPP intellectual property chapter would:

  • Include a number of features that would lock-in as a global norm many controversial features of U.S. law, such as endless copyright terms.
  • Create new global norms that are contrary to US legal traditions, such as those proposed to damages for infringement, the enforcement of patents against surgeons and other medical professional, rules concerning patents on biologic medicines etc.
  • Undermine many proposed reforms of the patent and copyright system, such as, for example, proposed legislation to increase access to orphaned copyrighted works by limiting damages for infringement, or statutory exclusions of “non-industrial” patents such as those issued for business methods.
  • Would eliminate any possibility of parallel trade in copyrighted books, journals, sheet music, sound recordings, computer programs, and audio and visual works.
  • Requires criminal enforcement for technological measures beyond WIPO Internet Treaties, even when there is not copyright infringement, impose a legal regime of ISP liability beyond the DMCA standards.
  • Requires legal incentives for service providers to cooperate with copyright owners in deterring the unauthorized storage and transmission of copyrighted materials.
  • Requires identifying internet users for any ISP, going beyond U.S. case law, includes the text of the controversial US/KOREA side letter on shutting down web sites.
  • Requires adopting compensation for infringement without actual damages.
  • For copyright and trademark, criminal punishment would apply even to non-for-profit infringement.

The proposals have been accused of being excessively restrictive, providing intellectual property restraints beyond those in the Korea-U.S. Free Trade Agreement and ACTA.

The US trade representative is clamping down on public participation to minimize the spread of information which challenges their hard-line IP maximalist agenda that seeks to empower corporations at the expense of public health and knowledge. In addition to increasing reliance on intersessionals, like this week’s Santiago meeting, where stakeholders are not given a forum to participate, USTR has now effectively reduced stakeholder participation in the official negotiating rounds by eliminating their opportunity to give presentations to negotiators in an official forum.

SOPA’s defeat proved that the netroots can beat IP maximalism and rulemakings from Washington designed to curb Internet freedom, while the populist response to ACTA has shown that policy laundering attempts by industry and their allies in government will face serious resistance. Ambitious, secret economic agreements have been defeated before through public awareness and organizing.

Sharing On Social Networks Triggers The Same Part Of Our Brains As Sex… Sorta

11 May

From Techdirt…

A recent study (pdf) by Diana Tamir and Jason Mitchell at Harvard is getting some press for pointing out that sharing information about yourself is “intrinsically rewarding.” In other words, the reason people use Twitter to tell you about what they’re eating for lunch, is because it feels good to do so. I don’t think that’s a particularly surprising finding, but it might counteract some of the claims about how using such sites are making everyone lonely. Of course, the attention getting line is the part about triggering the same parts of the brain as sex — though the details suggest it’s really the same kind of thing as getting a brief glimpse of attractive members of the opposite sex. In other words, science has proved that talking about yourself to lots of people and seeing attractive people make your brain happy. Case closed.

Humans devote 30–40%of speech output solely to informing others of their own subjective experiences. What drives this propensity for disclosure? Here, they tested recent theories that individuals place high subjective value on opportunities to communicate their thoughts and feelings to others and that doing so engages neural and cognitive mechanisms associated with reward. Five studies provided support for their hypothesis. Self-disclosure was strongly associated with increased activation in brain regions that form the mesolimbic dopamine system. Moreover, individuals were willing to forgo money to disclose about the self. Two additional studies demonstrated that these effects stemmed from the independent value that individuals placed on self-referential thought and on simply sharing information with others. Together, these findings suggest that the human tendency to convey information about personal experience may arise from the intrinsic value associated with self-disclosure….

Anonymous, Decentralised And Uncensored File-Sharing Is Booming

7 May

The file-sharing landscape is slowly adjusting in response to the continued push for more anti-piracy tools, the final Pirate Bay verdict, and the raids and arrests in the Megaupload case. Faced with uncertainty and drastic changes at file-sharing sites, many users are searching for secure, private and uncensored file-sharing clients. Despite the image its name suggests, RetroShare is one such future-proof client.

The avalanche of negative file-sharing news over the past weeks hasn’t gone unnoticed to users and site operators.

From SOPA to Megaupload, there is a growing uncertainly about the future of sharing.

While many BitTorrent sites and cyberlockers continue to operate as usual, there is a growing group of users who are expanding their horizons to see what other means of sharing are available if the worst case scenario becomes reality.

Anonymous, decentralised and uncensored are the key and most sought-after features. For some this means signing up with a VPN to make their BitTorrent sharing more private, but new clients are also generating interest.

Earlier this month we wrote about Tribler, a decentralised (not anonymous) BitTorrent client that makes torrent sites obsolete. We’ve covered Tribler for more than half a decade, but it was only after our most recent post that it really took off with more than a hundred thousand downloads in a few days.

But there are more file-sharing tools that are specifically built to withstand outside attacks. Some even add anonymity into the mix. RetroShare is such a private and uncensored file-sharing client, and the developers have also noticed a significant boom in users recently.

The RetroShare network allows people to create a private and encrypted file-sharing network. Users add friends by exchanging PGP certificates with people they trust. All the communication is encrypted using OpenSSL and files that are downloaded from strangers always go through a trusted friend.

In other words, it’s a true Darknet and virtually impossible to monitor by outsiders.

RetroShare founder DrBob told us that while the software has been around since 2006, all of a sudden there’s been a surge in downloads. “The interest in RetroShare has massively shot up over the last two months,” he said.

“In January our downloads tripled when interest in SOPA was at its peak. It more than doubled again in February, when cyberlockers disabled sharing or shut down entirely. At the moment we are getting 10 times more downloads than in December 2011.”

RetroShare’s downloads at Sourceforge.

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RetroShare’s founder believes that there is an increased need for security, privacy and freedom among file-sharers, features that are at the core of his application.

“RetroShare is about creating a private space on the Internet. A social collaboration network where you can share anything you want. A space that is free from the prying eyes of governments, corporations and advertisers. This is vitally important as our freedom on the Internet is under increasing threat,” DrBob told TorrentFreak.

“RetroShare is free from censorship: like Facebook banning ‘obscene’ breast-feeding photographs. A network that allows you to use any pseudonym, without insisting on knowing your real name. A network where you will not face the threat of jail, or being banned from entry into a country for an innocent tweet.”

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It’s impossible to accurately predict what file-sharing will look like 5 years from now. But, a safe assumption is that anonymity will play a more central role than it ever has.

Recent crackdowns have made operators of central file-sharing sites and services more cautious of copyright infringement. Some even went as far as shutting down voluntarily, like BTjunkie.

In the long run this might drive more casual downloaders to legitimate alternatives, if these are available. Those who keep on sharing could move to smaller communities, darknets and anonymous connections.