Alleged Corruption Casts Doubt on Silk Road Trial

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Screen Shot 2015-04-08 at 12.02.43 PMBy Juliya Ziskina

The Department of Justice has charged two of the law enforcement agents involved in the complex multi-agency investigation into the Silk Road for stealing hundreds of thousands of dollars (at the very least) in bitcoins.

When charges were announced against Ross Ulbricht in October 2013 and the website was shut down, the authorities called Silk Road “the most sophisticated and extensive criminal marketplace on the internet.” Several thousand drug dealers and other vendors used the site from January 2011 through its closing to sell hundreds of kilograms of illegal drugs and other illicit goods to more than 100,000 buyers, according to charges filed in Manhattan. The site generated over $213 million in revenue during that period, and Mr. Ulbricht, operating under the pseudonym “Dread Pirate Roberts,” took millions of dollars in commissions, federal prosecutors in Manhattan charged. (We previously covered takeaways from the trial here.) Continue reading →

RadioShack tries to sell customer data, in direct violation of their corporate policies

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Screen Shot 2015-04-06 at 1.39.56 PMBy Robin Hammond

RadioShack declared bankruptcy and the internet erupted. Some people who saw this as inevitable argued that their products were obsolete—for example, every single product advertised in a 1991 RadioShack flyer can be replicated by a smartphone. Some argued that their business model was unviable, and pointed to their managerial and labor practices. Others have decried the joyful nature with which the internet is reacting to the death of a 94-year-old business. One only needs to peruse the catalogues from 1939 through 2011 to see how the business has changed. As part of the bankruptcy, RadioShack is attempting to auction off customer data from 117 million customers, including “consumer names, phone numbers, mailing addresses, e-mail addresses, and, where allowed, activity data.”

RadioShack is incorporated in Delaware and has its headquarters in Texas. The Texas Attorney General filed a limited objection to the sale of Personal Identifying Information (PII), and outlined RadioShack’s stated privacy policies. RadioShack has separate privacy policies for their web-platform and in-store locations. All versions of the privacy policy contain an unequivocal provision that consumer PII will not be sold. “We will not sell or rent your personally identifiable information to anyone at any time.” The online privacy policy gives further assurances that “[i]nformation about you specifically will not be used for any purpose other than to carry out the services you requested from RadioShack and its affiliates. All of our affiliates have agreed to maintain the security and confidentiality of the information we provide to them. . . .” and “[w]e will not use any personal information beyond what is necessary to assist us in delivering to you the services you have requested.” Furthermore, in-store signage stated similar information, including the statement “We Respect Your Privacy. We Do Not Sell Our Mailing List. The information you give us is treated with discretion and respect. We pride ourselves on not selling our private mailing list.” Continue reading →

Blackphone 2 − The Panacea for Smartphone Confidentiality Concerns?

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Screen Shot 2015-03-25 at 11.17.05 AMBy Yayi Ding

The use of smartphones has proliferated in the past couple of years. Not surprisingly, many of the users of such technology are lawyers! However, even given their immense benefits, the widespread use of smartphones in the practice of law can raise ethical risks for lawyers, particularly when confidential client information is on the line (no pun intended). The newest “Blackphone 2,” a collaboration project between phone-maker Blackphone and security communications company Silent Circle, just might provide the answer that lawyers have been searching for.

As background, Rule 1.6 of the Model Rules of Professional Conduct requires that lawyers hold private client information confidential. It states, in part: “A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent.” Rule 1.6 has been interpreted as having a negligence standard. In other words, as long as a lawyer takes reasonable steps to insure client confidentiality, he/she is in compliance with Rule 1.6. Conversely, a failure to take such reasonable steps may result in liability to the lawyer. Continue reading →

Lessons from the Silk Road

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Screen Shot 2015-03-11 at 9.17.42 AMBy Juliya Ziskina

After a several weeks-long trial, a federal jury found Ross Ulbricht guilty of running and operating the online black market known as Silk Road on February 4, 2015. (We previously covered opening statements in the case here.) The jury deliberated for only three and a half hours before convicting him on all counts, including conspiring to sell narcotics, hacking software and counterfeit documents, and a “Continuing Criminal Enterprise” charge, commonly known as the “kingpin” charge usually reserved for organized crime bosses. He faces a maximum penalty of life in prison. Ulbricht was accused of being the “Dread Pirate Roberts,” the “ringleader” of Silk Road, which he started in 2010 in order to sell hallucinogenic mushrooms. It then grew into a digital marketplace for narcotics and other illegal items like fake passports. Silk Road was cloaked in the Tor anonymity network to hide it from view and used Bitcoin as its currency of choice due its difficulty to track. The site was eventually shut down in 2013 when the FBI seized its servers and arrested Ulbricht.

The FBI claims that it was able to uncover the Silk Road servers via a software flaw on the site’s login page that revealed an IP address. That IP address then led to a location in Iceland where the Silk Road server was hosted. However, some members of the security community surmise that the FBI hacked the login page to force the IP address instead, which is illegal and could set a problematic legal precedent. Continue reading →

Has Spiderman’s monopoly of webs gone too far? – Supreme Court to hear Patent Antitrust case

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Screen Shot 2015-03-06 at 12.57.11 PMBy Vijay Kumar

Later this month, the Court will hear oral arguments for the patent licensing case Kimble v. Marvel Enterprises, Inc. to decide whether it should overrule Brulotte v. Thys Co. The 1964 Brulotte decision, which has since been widely criticized, held that “a patentee’s use of a royalty agreement that projects beyond the expiration date of the patent is unlawful per se.”

The Kimble case arose from a dispute between inventor Stephen Kimble and Marvel Enterprises over a gloved Spider-Man toy that gives its superhero users the power to shoot webs (foam string) at Green Goblin, Doctor Octopus, and associated villains. Kimble, who developed the gloved toy, alleged that Marvel Enterprises had developed a similar toy that incorporated his patented ideas, as well as other ideas that Kimble had disclosed to Marvel previously. After Kimble filed suit against Marvel alleging patent infringement and breach of contract, the parties eventually agreed to a settlement in which Marvel would purchase the patent for $500,000, plus 3% of net product sales. Importantly, though, the agreement contained no end date or “step down provision” for the 3% royalty payments. This created a conflict with Brulotte because the agreement, in essence, extended the term of Kimble’s patent indefinitely. Accordingly, as soon as the patent term expired, Marvel ceased making payments and Kimble sued for breach of the settlement agreement. Continue reading →