By: Lezlee Zapatka

Picture this: you’re about to close on your dream home, and instead of a mountain of paperwork, the whole process is handled by code. No more waiting on signatures or hunting down missing forms, just a seamless, automated transaction. Welcome to the world of smart contracts in real estate, where blockchain is giving your real estate lawyer a run for their money, and the only thing standing between you and your new keys is a bit of code. But before we kick real estate lawyers out of the deal, let’s unpack how smart contracts work—and where the legal fine print still matters.

Contracts: The Basics

Contracts are a crucial part of many legal agreements, whether you’re buying a house or entering a business deal. A contract is a legally binding agreement between parties that establishes mutual obligations. For a contract to be enforceable by law, it must include these key elements: a valid offer and acceptance; mutual consent; sufficient consideration; capacity; and legality. 

Contracts: The Smart Ones 

Smart contracts are self-executing agreements coded on a blockchain. A blockchain is a virtual immutable ledger shared amongst network participants that records transactions, made up of digital “blocks”. Smart contracts are designed to automate the execution of a contract so that all participants can be instantly certain of the outcome, without the need for intermediaries or delays, which can be costly and time consuming. A smart contract has three main parts: the signatories, or the parties who approve or reject the contract using digital signatures; the contract’s subject; and the specific terms, outlining the agreed-upon conditions and obligations. 

Similar to traditional contracts, the parties involved agree to terms and conditions. The smart contract is then created (coded) and deployed to a blockchain. These contracts operate based on “if/when…then…” conditions. When the specified criteria or “triggers” are met and verified on the blockchain, actions such as transferring funds, registering assets, or issuing notifications are triggered automatically in a smart contract automation. The triggers that start the smart contract automation are “on-chain”, meaning they are programmed into the code of the contract and can be something such as receiving a payment or a specified date and time. Once executed, the transaction is permanently recorded on the blockchain, ensuring immutability and visibility only to authorized parties.

The Legal Fine Print

While smart contracts can automate agreements by initiating subsequent actions when predetermined conditions are satisfied, participants must still agree on the terms, how data is represented, and a framework for handling exceptions and resolving disputes. This is where your lawyer comes in. Contract lawyers are hired by parties for their expertise in  specifying terms and anticipating what can go wrong if one side does not fulfill their obligations. 

One of the crucial elements of contracts mentioned above is legality. Contracts must adhere to the law in the jurisdiction in which they are operating, which can become very nuanced when there are federal, state, and local law and ordinances at work, especially in real estate deals. 

Benefits of Smart Contracts

Smart contracts allow for automated transactions in the form of instantaneous secure transfers. This allows parties to streamline the process by getting rid of intermediaries such as brokers and notaries. While a lawyer may still be needed to draft the terms of the agreement, smart contracts can alleviate future legal issues that arise in contract law. 

Offers and acceptance can create issues that lead to litigation in contract agreements. If an offer is not unambiguously accepted, a dispute may arise. Smart contracts help alleviate this due to the nature of acceptance being a coded trigger that was previously agreed upon by the parties. 

Another issue that arises in contract law is failing to deliver on the agreed upon terms or “breach of contract”. Because smart contracts contain predetermined conditions that must be met before the transaction will go through, both parties must meet these conditions in order for the automation to take place. 

In real estate transactions, blockchain platforms tokenize properties by creating digital copies of the properties on the blockchain, allowing for them to be bought and sold on the secure blockchain ledger. Transactions on the blockchain ledger are done in cryptocurrency. Thus, when someone transfers the required cryptocurrency, the smart contract will automatically transfer the corresponding real estate tokens to them. This not only eliminates the risk of failure to deliver, but also the risk of fraud, by ensuring a valid transaction history and verified ownership records that have been logged on the blockchain, which is viewable to all network participants. 

Smart contracts are likely the future of many deals, both in real estate and beyond. While they can help mitigate the risk of contract breaches and alleviate the need for many intermediaries, they will not completely necessitate the elimination of lawyers from contract deals as terms must be negotiated and legality established. 

# WJLTA #smartcontracts #realestate #blockchain

By: William H. Kronblat

A family member sends you a video featuring a prominent political figure saying some rather crazy things. Your family member is in disbelief over what the political figure said. You are also shocked at the contents of the video, but something seems off. You are not sure, but you think the video has been edited or altered with artificial intelligence. You check the video’s comments and it turns out other people were also shocked by the video’s contents, but others also suspected the video may have been edited. Turns out the video was not a real speech at all, but a deepfake.

What are Deepfakes? What’s the Concern?

As social media usage increases and as social media becomes a predominant news source for many individuals, a new problem arises. That problem is deepfakes. Deepfakes are  “online imagery that can make anybody appear to do or say anything within the limits of one’s imagination, cruelty, or cunning.” Deepfake technology has continued to advance, and the proliferation of deepfakes is growing at an alarming rate. The World Economic Forum reported that in 2020, the number of online deepfake videos was approximately  145,277; a sizable jump from the 14,678 deepfake videos reported the previous year. 

United States agencies are feeling uneasy over the  rapid increase in online deepfakes. For instance, the NSA, FBI, and CISA, have expressed concerns on the proliferation of deepfake technology, noting that malicious actors may use deepfake technology to perpetuate “disinformation operations.” Similarly, the Department of Homeland Security identified deepfakes as a potential national security concern and as a threat to “individuals and industries.”

State Action on Deepfakes:

Given the growing concerns surrounding deepfake technology, you may be asking, what is being done to address this issue? What are government agencies or elected officials doing to stop deepfake misinformation and election disinformation? 

California has been a leader amongst U.S. states in terms of regulating AI and deceptive AI campaign ads. California has passed various pieces of legislation aimed at deterring deceptive campaign ads including a law that requires political action committees to disclose the use of artificial intelligence to create or alter ads. California Governor, Gavin Newsome, has mentioned deepfakes relating to election disinformation as a particular area of state concern. 

Ahead of the 2024 election, Gavin Newsom signed three bills aimed at addressing AI generated false images or videos in political ads. One of the bills, Assembly Bill 2839, particularly focused on deepfakes. Assembly Bill 2839 would have “made it illegal to distribute ‘materially deceptive audio or visual media of a candidate’ 120 days before an election and, in some cases, 60 days after.” 

Current State of Assembly Bill 2839:

Assembly Bill 2839 was set to take effect immediately, but it has run into a legal hurdle.   Federal U.S District Judge John A. Mendez granted a preliminary injunction enjoined Assembly Bill 2839 following a lawsuit to block the legislation. In his decision, Judge Mendez found that Assembly Bill 2839 likely violates the First Amendment and is unconstitutional because it did not pass the strict scrutiny standard for regulating speech content. Judge Mendez gave substantial weight to California’s interest in protecting fair elections, but noted that “this interest must be served by narrowly tailored ends.”  Judge Mendez cited to the US Supreme Court’s decision in New York Times v. Sullivan, where the Supreme Court affirmed that even “lies with malice” were protected speech under the First Amendment. Judge Mendez further clarified that the concerns surrounding deepfakes “do not give legislators unbridled licenses to bulldoze over the longstanding tradition of critique, parody, and satire protected by the First Amendment.”

Christopher Kohls, a conservative commentator, brought the lawsuit to block the legislation. Kohls is responsible for numerous deepfake videos satirizing Democrats, including Presidential nominee Vice President Kamala Harris. Governor Gavin Newsome cited one of Kohls’ videos when he signed Assembly Bill 2839, but the Bill was introduced in the California Legislature well before Kohls published the video Newsome referred to. Kohls drew support from Elon Musk, the owner of X, who boosted Kohls’ video and criticized Assembly Bill 2839 claiming that Gavin Newsom was trying to “make parody illegal.” 

What’s Next?

It is important to note that Judge Mendez only issued a preliminary injunction, which is merely temporary. In other words, this injunction does not permanently get rid of Assembly Bill 2839. The preliminary injunction simply blocks the law from going into effect until Christopher Kohls’  lawsuit is completed.  However, Judge Mendez said that Kohls is likely to succeed in his lawsuit and get Assembly Bill 2839 struck down as unconstitutional because the Bill is too broad and runs afoul of First Amendment free speech protections. Judge Mendez suggested that Assembly Bill 2839 was excessive and that a less restrictive approach like “counter speech” would be more permissive. However, Judge Mendez did not address this concept in detail.

While California’s legislation on deepfakes is facing an uphill battle, federal legislation aimed at addressing election deepfakes has been proposed in Congress by a bipartisan of lawmakers. This Bill would allow the Federal Trade Commission to regulate AI generated election content similarly to how it has regulated other political misrepresentations for decades. 

The Federal Election Commission has also started to consider potential regulations aimed at curbing AI and deepfake election-related misrepresentations. The FEC has already taken some steps at addressing AI generated content when they outlawed AI-generated robocalls that were meant to discourage voters. 

These proposed regulations still have to be approved and also clear the First Amendment hurdles that Assembly Bill 2839 has run into. Nonetheless, it is clear that Assembly Bill 2839 will not be the only attempt to regulate deepfakes and misinformation, at least in the election setting.  The concerns surrounding deepfakes do not appear to be trivial, but finding a solution that respects the fundamental protection of the first protection is easier said than done. 

 #Deepfakes, #First Amendment, #Misinformation

By: Miranda Glisson

Equestrian sports stretch back thousands of years, to the Olympic Games of 680 BC, where chariot racing was popular. In recent years, the equine industry has experienced significant growth, resulting in a convergence with technology, making utility patents of use across various equine sectors. Utility patents are often seen in equine equipment and breeding practices, as well as in veterinary medicine, and horse management operations.

Utility Patents

In the United States, utility patents can be obtained by individuals who invent or discover new and useful processes, machines, manufactures, or compositions of matter. These are commonly referred to as the four categories of subject matter appropriate for a patent. 

To qualify for a patent, United States law stipulates an invention be novel, useful, non-obvious, and of patentable subject matter. Novelty ensures the invention is entirely original and distinct from anything that currently exists, and usefulness requires the invention serve a practical purpose. Among the criteria, the non-obviousness requirement can pose the biggest challenge as it demands the invention be something not readily apparent. Utility patents protect innovators by granting them the legal right to exclude others from making, using, or selling the patented invention for 20 years from the application date.

Technological Improvements in Tack 

Traditionally, horse equipment, or “tack,” has been crafted from leather, textiles, and hardware. Over centuries, these materials have evolved to prioritize the fit and performance of both the horse and rider. Today, innovative technologies are being integrated into tack and rider accessories to provide data on training, rider biomechanics, and horse performance.    

An exciting example of emerging technology in the equestrian industry is a smart saddle prototype that utilizes self-rebound cambered triboelectric nanogenerator technology (SRC-TENG) to measure pressure points created by the rider and felt by the horse. This technology provides real-time, valuable data on the rider’s position and sends out an alarm in the event of a fall. The incorporation of SRC-TENG sensors on the saddle is significant, as it allows the rider to monitor pressure changes when they shift positions. This saddle prototype could benefit from a utility patent to prevent other manufacturers from using this technology without the inventor’s permission. 

Additionally, Vert, a new technology that currently has a patent pending, is a multifunctional sensor and display designed to attach to the head piece of a bridle, or the headgear used to control a horse. It measures a horse’s head angle in relation to the vertical (when a horse’s head, neck, and body are positioned for optimal balance and movement) as well as pace, distance, and heart rate. 

There are a wide array of tack innovations that focus on leveraging technology to enhance the comfort and performance of both horse and rider, that may qualify and benefit from utility patent protection.

Equine Breeding 

Breeding is another sector of the equine industry which utilizes patent protections. Prior to 1980, living subject matter was ineligible for patent protection, because it did not fall within one of the four statutory categories. However, in Diamond v. Chakrabarty, the Supreme Court explained that Congress intended for patent laws to have a broad scope. The Court held genetically engineered bacteria to be patentable, reasoning that they fall under the categories of “manufacture” and/or as “compositions of matter.” 

The United States Patent and Trademark Office has further clarified, “non-naturally occurring, nonhuman, multicellular living organisms, including animals,” are patentable subject matter under 35 U.S.C. §101. The office explained further that a bacterium does not fall under the product of nature exception—a judicial exception to the four statutory categories of patentable subject matter which excludes the laws of nature and natural phenomena—as “it is not excluded from patent protection merely because it is alive.” 

Genetically engineered bacteria are being utilized in equine breeding. A notable example is the creation of genetically modified horses with the myostatin gene removed, resulting in enhanced muscle growth. 

There is a large financial incentive to breed top competition horses and the equine industry has a significant impact on the U.S. economy, contributing $177 billion overall. In 2018, the horse breeding sector alone was valued at $39 billion. One thoroughbred colt, sired by Triple Crown winner Justify, sold in March 2024 for $700,000 demonstrating how lucrative breeding top performance horses can be. However, only genetically modified, and not naturally occurring, animals are eligible for patent protection. For instance, the United States Court of Appeals for the Federal Circuit found that a hybrid between a domestic cat and a bobcat is a product of nature, and therefore cannot be patented as the breed results “from matings known to occur in the wild.” Additionally, animals produced through traditional selective breeding, like selectively bred dogs with desirable traits for particular environments or tasks, are not patentable, as patent eligibility is restricted to those animals genetically engineered by humans.  

On the flipside, if a horse is genetically modified it may be prohibited from competing. Genetically modifying horses to gain a competitive edge threatens the sustainability of horse breeding and the integrity of equine athletes. In response to this threat, governing bodies of equestrian sports, including the Fédération Equestre Internationale and the International Federation of Horseracing Authorities, prohibit genetically modifying horses for enhancements.

Nonetheless, breeding systems, devices, or procedures, like artificial insemination, may be patentable. For example, a lavage system designed for mares (female horses) experiencing difficulties conceiving after giving birth has successfully secured a patent. 

Even though genetically modified horses are banned from most equestrian competitions, resulting in the reduction of financial incentives to genetically modify a horse, different technological devices, systems, or procedures are still available to be patented.  

International Patent Importance

Equestrian sports demonstrate a considerable international presence, with over 335 million equestrian riders. This makes the Patent Cooperation Treaty (PCT), which protects patentable subjects internationally, highly important for equine-related innovators. The PCT simplifies the process of seeking patent protection across contracting countries by allowing inventors to file a single international patent application. This enables inventors to safeguard their inventions on a global scale in sectors that are highly international, like the equestrian industry. 

Conclusion 

The equestrian industry stands at the intersection of tradition and innovation. Utility patents offer protection for innovators in the equine world by providing them global protection for their invention. 

As the equestrian sector grows, the integration of technologies into both tack and breeding practices affect the comfort, performance, and safety of both horses and riders. Utility patents offer a potential framework for protecting these innovations, ensuring inventors can safeguard their contributions to the equine industry. International patent applications enable inventors to reach a wider market and streamline the process. As the equine industry continues to grow, patent protection is a valuable asset that will foster new innovations and a safer sport in the world of equestrianism. 

#WJLTA #UtilityPatents #EquestrianSports #Horses