Public Services Taken Hostage by Hackers

December 3, 2024 / Washington Journal of Law, Technology & Arts / Leave a comment

By: Jonah Haseley

On November 4^th, 2024, cybercriminals orchestrated an attack against Washington’s Administrative Office of the Courts (AOC) which resulted in the Washington Courts website being unavailable to the public for two weeks. The AOC develops budgets for the courts, runs its computer systems, and performs policy research. The cyberattack was substantial enough that the State Supreme Court issued an emergency order temporarily altering court rules across the state to cope with the outage. The order changed filing deadlines for civil cases, as well as core criminal rules for issues such as arraignment, speedy trial, and sentencing. Dozens of local courts issued corresponding emergency orders. The attack affected different Washington courts differently. It impacted those which rely on the state’s network the most. Others, like King County Superior Court, proceed more normally with their separate case management systems still functioning.

While the cyberattack the website remained down, the state found temporary substitutes to maintain contact with the public. Washington Courts posted updates on its Facebook page and collaborated with the State Bar Association. It also set up email inboxes to substitute for certain electronic filings.

The outage impacted many people in addition to court employees and litigants, including prospective gun owners. Washington presumptively requires background checks for firearm purchases, and the cyberattack disabled this capability. According to Washington State Patrol, although the AOC fixed the system, the attack caused a significant backlog which may result in delays. One gun rights group has publicly threatened to sue, but this seems unlikely now that AOC has resolved the issue. The attack touched other state agencies, like the Washington Department of Children, Youth and Families, which relies on the state’s system to perform background checks for foster families. However, the agency did still have access to related nationwide services. Additionally, the attack delayed the approval process for state gambling licenses.

Although two weeks is a substantial amount of time for state services to be unavailable, evidence suggests that the impact on public services could have been much worse. The AOC stated in a press release that quick action staved off any data breach or ransomware. Other government entities in Washington have not been so lucky. Last May, cybercriminals attacked the Seattle Public Library, and the library was not able to recover fully until September. The attack also leaked personal data for some of its employees.

After the AOC cyberattack court systems like King County Superior Court did not lose access to their operational networks because they had a separate system from the state. At the same time, having many different systems reduces the resources available to each. Fewer resources means fewer defenses, which makes libraries appealing targets. Important public services are more likely to be attacked because they are important. Hackers believe government agencies will pay a ransom to resume service to the public as quickly as possible.

Washington does have a State Office of Cyber Security which receives federal funding from the Department of Homeland Security through the Infrastructure Investment and Jobs Act. The federal funding is not without strings attached – the recipient is required to contribute its own money to cybersecurity projects to get additional federal support. Washington’s legislature has fortunately matched approximately 9 million in federal funds, saving its local jurisdictions from that financial burden. However, the federal government has agreed to contribute 14 million, and how the remaining 5 million will be matched remains unclear. Bob Ferguson will take office in January as Washington’s new governor. He will replace Jay Inslee, the outgoing three-term governor. To protect our public services, he should commit to matching the remaining federal money so that local jurisdictions do not have to decide between fiscal and cybersecurity.

The Art of Deception: Should Art Forgeries Be Met with Litigation or Leniency?

November 27, 2024 / Washington Journal of Law, Technology & Arts / Leave a comment

By: Olivia Bravo

Intro

Art forgery is a crime, but should it be met with such harsh penalties? If some art forgeries are so good that they are never discovered and enjoyed the same as the original work, does this argument deserve a more nuanced approach? More importantly, is the cost of litigation worth the hassle?

Art Forgery Defined

There are many arguments for and against authenticity in art. Is it the artist that creates a work that gives it its value? Or is a work’s value derived from its innate qualities? Because of the subjectivity of the art world, it has long since been a landmine for conmen and fraudsters to exploit. An art “forgery,” or art “fake” is when an artwork is presented by one artist, despite being created by another. Although used interchangeably, an art fake is a copy or replica made and circulated on the market while the original is hanging in a museum or in a private collection, whereas a forgery is made with the intention to deceive an audience.

Art forgeries undermine the integrity of the art world, but in order to understand the full scope of the issue, it is important to recognize that a forger’s motivations are often more nuanced. Similarly, while psychological factors drive forgers to create their works, the allure of counterfeit works is not driven by the forger, but by societal demand. This recognition is crucial for transparency and for enforcing authenticity in the art market.

The Case for Litigation

Art has a universal cultural impact, and as a society, we have placed a high value on the protection and cultivation of art and artists. A harsh reality of today’s art world is that more fakes and forgeries are offered for sale than legitimate works, to the point that 20% of the pieces in the world’s most prestigious museums and galleries could be potential forgeries. Many leading art experts and authenticators are even refusing their services to avoid liability, leaving authentication of works to scientists to use instrumental analysis and imaging to determine age and material composition of works. Art forgeries have had a significant impact on the fine art world: creating an economic burden for private buyers, galleries, and art museums who have the sole responsibility of litigating against forgers.

Art forgeries also create a significant economic deficit when sold to consumers. It is estimated that counterfeit goods cost the US economy between $200- $250 billion per year. The US government suffers significant tax implications from the presence of counterfeit goods in the marketplace. With respect to art forgeries, an individual buyer suffers economic hardship because they are assumed to have purchased an art piece found to be a forgery at an inflated price, which saturates the art market and affects the valuation of other artist’s price point.

The United States does not have any federal art forgery laws. Federal prosecutions have been successful under the Racketeer Influence and Corrupt Organizations Act (RICO), and independent federal charges are authorized by the Federal Trade Commission under the FTC Act. Even so, criminal prosecutions are rarely brought due to the high burden of proof, and only pursued in extreme cases. Many states require a high burden of proof of intent to defraud in order to bring criminal charges, and only protect the victims of forgeries through consumer protection statutes.

An arguably more effective means of litigation, through the application of intellectual property laws, would protect artists rights and fill gaps left by criminal and civil protections due to the lower standard of proof needed to bring an infringement claim. Copyright and trademark law can be advantageous in litigating art forgery, assuming the work is not in the public domain and the copyright has been registered. Both have limited reach due to their specific authorship and publication requirements, but can be attached to federal criminal laws to be more effective. However, overall stricter regulation and harsher punishments in the U.S. and globally might better confront the circulation of fake art and deter future perpetrators.

Is There a Case For Leniency?

Art forgers are the talented creators of their art and own copyright protection to their original works. Should this be considered in the art forgery debate? For example, there is a psychological effect on how we perceive art that is disrupted by the knowledge that a work is a forgery. When the monetary value of a work is assigned according to the art market based on “fair market value,” but that value is tied to the artist and the perceived knowledge of their innate talent, what are we really valuing? Is it the art or the artist?

Substantial resources are being invested into the prevention of art forgeries to the extent that art experts, authenticators, and foundations—dedicated to preserving the legacy of great artists—are becoming extinct for fear of litigation. This burden of authenticity has led to a situation where prosecution is the only recourse once a forger has already been found guilty. But lawsuits are so expensive that there might be room for a nuanced approach that either includes more protections for all parties involved or for a rethinking of art forgery litigation.

So, what is the solution to a problem that clearly has many ethical and theoretical considerations? Should forgers be met with harsh punishments that will further shape the legal landscape of art fraud prosecution? Or is there a case for potential leniency depending on the intent of the artist and the subsequent impact their forgery has on the viewer and the world? Authenticity remains an elusive judicial concept, and as courts evaluate how to assign losses for victims as well as fair sentences for art forgers, a critical rethinking on how we view art and art litigation might be in order.

The Law of the Pocket Monsters: Pokémon vs. Palworld in a Patent Battle

November 26, 2024December 3, 2024 / Washington Journal of Law, Technology & Arts / Leave a comment

By: Tavis McClain

Introduction

On September 18, 2024, Nintendo and the Pokémon Company filed a lawsuit against Pocketpair, the developer of Palworld. For those unfamiliar with either of the games, Pokémon is an iconic franchise that has been around since 1996. The Pokémon video games are a staple of the franchise that allow players to catch, trade, and battle with the over 1,000 different Pokémon the franchise has created. Unlike Pokémon, Palworld is a new video game developed by Pocketpair that was released on January 19, 2024. Similar to Pokémon, Palworld allows players to catch and battle with creatures referred to as “pals” but also contains many other features such as the ability to use weapons and build bases. Soon after Palworld released, the Pokémon company released a statement leading many to believe a lawsuit was imminent. However, contrary to the speculation of most people, the lawsuit filed by Nintendo is for patent infringement rather than copyright infringement Further, Nintendo has filed the lawsuit in Japan rather than the United States.

What’s a Patent and How Do They Work in Video Games?

Patents are a form of intellectual property that is meant to protect the inventions, processes, designs, and more from the general public. The federal rules that govern patents are codified in U.S.C. Title 35. Patents give inventors an incentive to invest in research that either solves issues or improves upon existing solutions. Patents accomplish this by providing exclusive rights to inventors to use their inventions. In the gaming world, developers are constantly searching for new technology, features, and designs that will make their game stand out from the rest.

People are familiar with copyrights in video games. This can range from the code a video game is made with to the game’s presentation or character designs. On the other hand, patents in video games protect new features or designs such as mini games on loading screens or the directional pad on the Nintendo controller. Lawyers in this field are given the difficult task of filing or litigating patents that are broad enough to meaningfully protect the property of the client while also keeping the language narrow enough to prevent the patent from being denied based on prior art. In other words, patents cannot protect inventions that are already in use, they must be original.

What Claims Are Being Asserted by Pokémon?

As previously mentioned, Pokémon has sued Pocketpair in Japan which has different laws for patents than the United States. The primary differences relate to procedure. For example, the time restrictions of filing divisional claims are much more strict in Japan than the United States. A divisional claim builds off a pre-existing claim to protect ideas that strongly relate to the pre-existing claim. While there are different procedural rules for obtaining patents in each country, the idea is the same in that both countries use patents to encourage innovation. At the moment, it is unclear which specific patents Pokémon is claiming that Pocketpair has violated. Based on Japanese patents that Nintendo already has, it is reasonable to believe that their claims are related to different aspects of catching and/or riding Pokémon using player characters. Each of these patents were filed as divisional claims from pre-existent families after the release of Palworld.

What is the Likely Outcome of the Lawsuit

In all likelihood this dispute will end with a settlement between the parties. Pokémon wants Palword to be removed from the market while Pocketpair wants to keep Palworld on the market. To reconcile these differences, the companies will likely arrive at a compromise where Palworld makes some changes in their games that address the patent infringement claims that Pokémon has asserted. Pocketpair, while a large game development company in Japan, does not have the influence and resources of a company like Nintendo. As a result, Nintendo will likely have more leverage in the negotiation and is better equipped to endure a trial than Pocketpair.

Pros and Cons

Assuming a settlement is reached that compels Pocketpair to make changes to Palword or Nintendo wins at trial, this would allow Nintendo to protect their intellectual property that they heavily invested resources into creating. If Nintendo and other companies had no recourse to prevent their competitors from copying and profiting from their ideas, these companies would be disincentivized from researching new technology. Alternatively , the impacts of this lawsuit could have negative impacts on consumers. Many long-time Pokémon fans have complained about the franchise’s neglect to incorporate features in their game that appeal to a more mature audience. Palworld was able to capture many of these features fans had asked for such as the ability to play alongside multiple friends, build bases, and use weapons. If Palworld is removed from the market because of the lawsuit, consumers may interpret the ruling as deterring competition.

Conclusion

The lawsuit may take years to play out, but game development companies will closely monitor the situation. The decision could reshape the landscape of game development, innovation, and the complex world of intellectual property in gaming. Stay tuned as this legal saga continues to develop!

#patents #videogames #IP #entertainment

Throwing the Challenge Flag on Expert Witnesses: How the NFL Successfully Overturned a $4.1 Billion Verdict

November 24, 2024 / Washington Journal of Law, Technology & Arts / Leave a comment

By: Evan Stewart

It is never a good sign when a judge describes your $4.1 billion lawsuit as “25 hours of depositions and gobbledygook.” But this was how a U.S. District Judge described the plaintiff’s expert witness testimony during the In re: National Football League’s Sunday Ticket Antitrust Litigation trial, leading to a rare procedural decision that altered the trajectory of the litigation.

Background of NFL Sunday Ticket Antitrust Litigation

In 2015, Mucky Duck, a San Francisco sports bar, filed a class action lawsuit against the NFL and DirecTV, alleging that the NFL and DirecTV violated antitrust laws by conspiring with network partners to eliminate broadcasting competition and inflate the price of NFL Sunday Ticket. Mucky Duck, acting on behalf of a class of residential and commercial Sunday Ticket customers, brought two claims against the NFL. First, Lucky Duck claimed that the NFL entered into agreements with CBS and Fox to create single telecasts that limited free televised games regionally. Second, Lucky Duck alleged that the NFL and DirecTV agreed to allow the licensing of all CBS and Fox telecasts to DirectTV so they could bundle them into one all-or-nothing package, thereby eliminating the consumer’s ability to watch out-of-market games through other means.

Understanding NFL Broadcasting Rules

NFL broadcasting rules are complicated. There are NFL games broadcasted nationally, or streaming online on Thursday nights (Amazon Prime), Sunday nights (NBC/Peacock), and Monday nights (ESPN/ESPN+), which are available regardless of location. However, on Sunday afternoons, CBS and Fox split the broadcasts for the remaining games (usually between 8-13 games per Sunday) by region. For example, Seahawks games on Sunday afternoons are broadcast in the Pacific Northwest, but rarely in other U.S. regions with NFL teams.

What is NFL Sunday Ticket and Why Is It Controversial?

Sunday Ticket is a yearly subscription that allows NFL fans to bypass regional restrictions and watch any CBS or Fox broadcast. Currently, YouTube TV is the official provider of Sunday Ticket. But from 1994 to 2002, DirecTV was the sole provider, thus implicating them in the litigation.

NFL Sunday Ticket has been controversial among football fans for many years because it only offers one broadcast package. Sunday Ticket consumers are limited to buying a bundle of every regional broadcast, whether they want them or not. This differs significantly from the streaming services for the other major American professional sports leagues. For example, MLB.TV and NBA League Pass offer single-team and league-wide packages. There is also a significant price disparity between Sunday Ticket ($670.96), MLB.TV ($129.99/149.99), and NBA League Pass ($109.99/$159.99).

Verdict and Subsequent Appeal

On June 27, 2024, a jury ruled that the NFL and DirectTV had violated antitrust laws by restricting the availability of NFL broadcasts and allowing DirecTV to inflate the cost of Sunday Ticket. The plaintiffs were awarded $4.7 billion, but because federal antitrust rules allow for trebled damages, the damages exceeded $14.1 billion. The two key pieces of evidence that led to this decision were memos showing that CBS and Fox swayed the NFL not to charge lower prices for Sunday Ticket or to sell a team-by-team package to ESPN.

In response to the jury’s verdict, the NFL filed a motion for judgment as a matter of law, petitioning the judge to reverse the verdict and enter a judgment in their favor. The NFL argued that the damages were nonsensical, specifically taking exception FL specifically with the damage experts presented by the plaintiffs as the basis for their argument.

The two experts called into question by the NFL were Dr. Daniel Rascher and Dr. John Zona. Dr. Rascher’s damage model followed college football’s broadcasting model, where conferences and teams made their own broadcasting contracts. Such situations lead to increasing numbers of telecasts and decreasing costs to watch the broadcasts. Dr. Zona attempted to calculate damages using a multiple distributor model that predicted what consumers would have paid if another service other than DirecTV offered Sunday Ticket.

The NFL argued that these two experts used flawed methodologies to calculate the damages and thus should have been barred from testifying. The NFL added that the jurors did their own unfounded math to award damages by unfairly using the list price for Sunday Ticket and using subscriber discounts as overcharges to arbitrarily come up with the $4.7 billion verdict.

The NFL’s Successful Challenge

U.S. District Court Judge Phillip Gutierrez agreed with the NFL and vacated the $4.7 billion verdict.

In his opinion, Judge Gutierrez focused his rationale for overturning the verdict on the plaintiff’s experts. He wrote that their damage models were “not the product of sound economic methodology,” and used incorrect distribution methodologies. Judge Gutierrez disagreed with Dr. Rascher because his model did not explain how out-of-market telecasts would have been available on cable through different channels without additional subscriptions, like in the college football model. Judge Gutierrez also disagreed with Dr. Zona because he made an unsupported assumption that another distributor could provide a service like Sunday Ticket and predicted consumers would pay more for that other service.

Judge Gutierrez also wrote about his remorse for not barring the plaintiff’s witnesses earlier in the trial for not meeting the Daubert Standard. The Daubert Standard provides a systematic framework for assessing the reliability and relevance of expert witnesses. There are five factors for determining whether an expert’s methodology is valid.

Whether the technique or theory in question can be, and has been tested;
Whether it has been subjected to publication and peer review;
Its known or potential error rate;
The existence and maintenance of standards controlling its operation; and
Whether it has attracted widespread acceptance within a relevant scientific community.

Typically, judges assess expert witnesses before the testimony is presented to the jury, but General Electric Co. v. Joiner clarified that an appellate court may still review if a trial court abused its discretion to admit or exclude expert testimony. This was the mechanism that Judge Gutierrez used to overturn the jury verdict.

Although Judge Gutierrez did not dispute the plaintiff’s antitrust claims, he explained that the experts did not produce coherent, testable models, thereby barring them from testifying. He then finished his opinion by writing “Without the testimonies of [the two experts], no reasonable jury could have found class-wide injury or damages”, essentially retroactively barring the previously admitted expert testimony, and directing a verdict for the NFL.

The Future of In re Sunday Ticket Antitrust Litigation and Daubert Challenges

The plaintiffs immediately appealed this decision, so the future of this case will be interesting to follow. Judge Guiterrez’s opinion seemed to confirm the antitrust violations, but providing scientifically-supported damage calculations will be challenging. It will also be worth monitoring whether this case sets a precedent for more Dauert challenges being raised post-verdict, which could have serious ramifications for judicial efficiency and trial procedures.

#WJLTA #Antitrust #NFL #SportsLaw

Copy, Paste, Profit: How Shein Used AI to Create a Fast Fashion Empire

November 22, 2024 / Washington Journal of Law, Technology & Arts / Leave a comment

By: Hannah Gracedel

Picture this: you’re scrolling through a fast-fashion site, searching for the perfect fit for your upcoming Sabrina Carpenter concert when one of the designs looks eerily familiar. You realize it’s a piece you created, and now it’s being sold without your permission. This is Shein—a global fast-fashion powerhouse that not only keeps up with trends but seems to predict them before they even happen. But how does Shein manage this impossible feat? And at what cost to the original creators behind those trends?

Background: Who Is Shein?

Shein (pronounced “SHE-in”) is a China-based fast-fashion retailer founded in 2008 that’s taken the online shopping world by storm. For those unfamiliar, “fast fashion” is a business model centered on producing trendy, affordable clothing at lightning speed. This approach meets the demand for low-cost, stylish clothing while sacrificing quality, environmental sustainability, and, often, ethical production standards. With a valuation now soaring past $100 billion, Shein is easily among the most valuable private companies in the fashion world. And its popularity is not slowing down. Currently, Shein’s website boasts more than 600,000 items, with a staggering 10,000 new products added every day.

So, how does Shein pull this off? The answer lies in their use of artificial intelligence (AI), a secret weapon that allows Shein to create and upload new designs faster than anyone else. But with AI comes controversy.

Shein’s Recipe for Rapid Production: AI-Powered Design

At first glance, Shein’s ability to churn out designs seems like a stroke of tech genius. Shein’s AI systems scan the internet for emerging art and design trends. Once they spot something popular, the systems whip up new products based on its searches. Here’s the kicker: some of these products are near-identical copies of original art found on the web from independent artists or designers. The process is so automated that there’s doubt that humans are even involved in the design process.

So, where’s the problem? By replicating designs without acknowledging the original creators, Shein often runs into a crucial issue: copyright infringement.

What Is Copyright Infringement?

Copyright infringement occurs when someone uses someone else’s original work without permission. Even if the artist has not registered their work with the copyright office, they can still have grounds for a legal claim. Certain legal elements must be met to prove infringement, including proof that (1) the work is original, (2) the infringer had access to the original work, and (3) the copied work is “substantially similar” to the original. When it comes to Shein, the “substantial similarity” requirement can become painfully obvious—especially if an artist can prove that the design was lifted straight from their work.

How Is Shein Sidestepping Legal Trouble? – The Answer Can Be Found in Their “On-Demand” Model.

Shein’s “on-demand” business model is as ingenious as it is problematic. The company rolls out new designs in small quantities, watching sales data closely to see if they catch on. If a product becomes popular, Shein ramps up production to meet demand. Otherwise, they quietly retire unpopular product lines.

Why is this “small-batch” approach so effective? First, it reduces overproduction—a common problem in the fashion industry, where unsold items often end up as waste. Second, it saves money, which allows Shein to keep its prices rock-bottom. And third, and most importantly, it may even help Shein dodge legal consequences.

The small-batch approach can make it hard for artists to notice if their designs are being copied, especially when Shein drops thousands of new items every day. Even if a creator does catch Shein using their design, Shein can cease production without much financial loss and potentially settle the issue with minimal expense due to the initial small batch sizes. It’s possible that Shein has even built this risk into their business model, as the profits from unnoticed successful designs likely outweigh the costs of occasional small settlements.

What Can Artists Do If Their Work Has Been Stolen?

Artists who find their work copied on Shein’s site do have some options, though these are often uphill battles. Shein provides an intellectual property (IP) complaint portal on its website, where creators can file a claim if they believe their designs have been infringed. Yet, given Shein’s sheer size and daily output, this system is far from reliable. For artists who feel their complaints are ignored or insufficiently addressed, legal action might be their only recourse.

Currently, Shein faces multiple class-action lawsuits, with artists and designers banding together to confront Shein over alleged copyright violations. If successful, these cases could be game-changers for the fast-fashion industry as they may set precedents for how copyright laws are applied to AI-driven, high-volume retailers like Shein.

These lawsuits are more than just isolated legal cases; they could shape the future of fashion retail by holding companies liable for how they use–and sometimes misuse–AI-driven design. If Shein’s legal troubles escalate, it could impact the company’s plans to go public—something the company has hinted at in recent years. Going public with an unresolved history of copyright disputes could complicate Shein’s appeal to investors and invite even more scrutiny.

Conclusion: The High Cost of Fast Fashion

Shein’s business model has enabled it to dominate the fast-fashion industry, but its approach raises important ethical questions. As Shein continues to test legal boundaries, the fashion industry—and the rest of us—must ask ourselves how much we’re willing to compromise for convenience and low prices. In the end, AI may bring us fashion at the speed of light, but without ethical considerations, it’s just as quick to leave artists and creators behind.

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