COVID-19 and Rule 10B-5

COVID-19 and Rule 10B-5

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COVID-19 and Rule 10B-5

The COVID-19 pandemic presented wide-ranging challenges for businesses. Not the least of these is compliance with federal securities laws, including the prohibition—most notably under SEC Rule 10b-5—on materially deceptive statements made to the public. Both the SEC, in its role as enforcer of the law, and private parties, seeking to represent classes of aggrieved investors, have filed complaints asserting that corporations and others have engaged in deception of investors regarding matters pertaining to COVID-19. Some of these claims relate to disclosures regarding testing kits for the virus as well as development of vaccines. Other complaints allege faulty disclosure on the effect of the pandemic on the market for a company’s products and services that are not themselves related to the pandemic, such as claims against cruise lines that suspended operations.

This article presents the legal framework for claims based on Rule 10b-5, SEC guidance on how COVID-19 affects compliance with disclosure requirements for public companies, and the issues that have emerged in the claims already filed. This analysis demonstrates that almost any public reporting company faces the risk of inadequate disclosure and the temptation to withhold or misstate material facts in a time of financial stress.

*Allan Horwich

*Professor of Practice, Northwestern Pritzker School of Law (a-horwich@law.northweste rn.edu) and partner of Schiff Hardin LLP (ahorwich@schiffhardin.com). The views expressed in this article should not be attributed to any client of Schiff Hardin LLP. This article speaks as of February 18, 2021.

 

Rethinking Music Copyright Infringement in the Digital World: Proposing a Streamlined Test After the Demise of the Inverse Ratio Rule

Rethinking Music Copyright Infringement in the Digital World: Proposing a Streamlined Test After the Demise of the Inverse Ratio Rule

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Introduction

I simply cannot copy your song if I have never heard it before. In a hypothetical world in which I truly had no exposure to your musical composition, any eerie similarities between our two songs must necessarily be the product of our own individual imaginations. Indeed, copyright law protects such independent creation. Determining that one song was copied from another, therefore, requires two things: that the songs be “too” similar, whatever that means, and that the second author have had some kind of access to the first author’s work. In reality, however, songs can only be so similar before a rational person will start to suspect that one songwriter must have had access to the other songwriter’s work—even if that access cannot be proven. When the similarity between two songs is high enough, we begin to infer access even in the absence of evidence. On the other hand, however, if the songs are only mildly similar, we typically demand more proof of access before we are willing to chastise the second author for copying.

This inference gives rise to the now largely defunct inverse ratio rule—a three-word phrase that struck fear into the hearts of musicians within the jurisdiction of the United States Court of Appeals for the Ninth Circuit. While seemingly logical, the inverse ratio rule created three untenable situations; each resulted in deeming a song “copied,” which, most artists would likely agree, is a badge of shame. In the first, one songwriter could be found liable for copying—even in a song which bore little similarity to the supposed original—when a high amount of access to that supposed original could be shown. In the second, a song could be slapped with the “copied” stamp when it shared significant similarity with another, despite the songwriter having little access to the supposed original, because of the satisfaction of the inverse ratio rule—a conclusion that seems to fly in the face of copyright’s supposed protection of independent creation. This scenario is often referred to as “subconscious copying.” Finally, the rule deemed “copied” songs that innocently drew on the inspiration of, or paid overt homage to, the work of another musician—an incredibly common phenomenon that artists have described as paying tribute to the “legacy” of influential musicians.

In the face of such a bewildering rule, I might stop publishing songs altogether. After all, if I face a copyright lawsuit every time I compose—given that I have heard a wide array of songs in my lifetime—I may very well decide the risk is not worth the reward. I may derive my deepest joy from songwriting, but since I do not have $5 million to pay your damages award, prudence dictates I remain silent.

This is the landscape song composers faced after a surprise 2015 verdict, in which a California jury found that Robin Thicke and Pharrell Williams had infringed the copyright of Marvin Gaye’s Got to Give It Up with their smash hit, Blurred Lines—the bestselling single in the world in 2013. Despite the fact that the two songs share little musical similarity—at least in the opinion of the music industry—the courts hit Thicke and Williams with a $5.3 million payout, along with fifty percent of royalties generated by their song.

On appeal, when two members of a three-judge Ninth Circuit panel did not find enough reason to overturn the jury’s verdict, panic set in. The music community shared the opinion of Judge Jacqueline Nguyen, who in a spirited dissent argued that the majority had allowed for copyrighting of a musical style. “[B]y refusing to compare the two works,” Judge Nguyen wrote, “the majority establishes a dangerous precedent that strikes a devastating blow to future musicians and composers everywhere.”

This Comment will discuss the devastating blow to musicians inflicted by the Blurred Lines verdict’s embrace of the inverse ratio rule. Then, I will examine the Stairway to Heaven decision, in which the Ninth Circuit sharply changed course and decided to abrogate the inverse ratio rule. This welcome policy change nevertheless leaves questions as to how the Ninth Circuit will balance considerations of access with substantial similarity as it assesses copying in future cases. More importantly, the explosion of access in the digital world has fatally weakened—across all circuits—the role of access within the infringement test. In that light, I will conclude with a modified standard by which music copyright infringement cases should be judged. 

*Christina Dimeo

*J.D. Candidate 2022, University of Richmond School of Law; B.A. with Distinction, 2004, University of Virginia. I would like to thank the members of the University of Richmond Law Review for their tireless efforts in preparing this Comment for publication, and Professor Chris Cotropia for his spot-on suggestions pushing me to dig deeper. I am also grateful to Dave Schmidle for hours of enthusiastic discussion that allowed me to sharpen and refine my proposed music copyright infringement test, and for his invaluable assistance in creating electronic versions of my diagrams. Most of all, I would like to thank my children, Anthony, Sammy, and Anneliese, for their love, support, and continued patience as I “do my homework.”

 

Drones and Data: A Limited Impact on Privacy

Drones and Data: A Limited Impact on Privacy

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Introduction

Concerns about drones and their impact on privacy are misplaced. Most of the scenarios discussed in the academic literature and policy commentary simply assume that drones operate in a unique way. These discussions of drones and privacy have left the antecedent question unexamined—precisely how do drones impact privacy? This Article is the first to clearly define the operational parameters of drones that impact privacy in a unique way. From this precise definition, we learn that drones operate in very few spaces that allow them to capture data inaccessible to other technologies. In short, how drones operate has a limited impact on privacy.

*David Sella-Villa

 *Interim Chief Privacy Officer, South Carolina Department of Administration, focusing on technology, privacy, and security issues; CIPP/US, CIPP/E, CIPM, and GLEG certifications; Adjunct Professor, William & Mary Law School, aviation law class. J.D., William & Mary Law School; Editor-in-Chief, Environmental Law and Policy Review; M.S., London School of Economics; B.S. & B.A., West Virginia University.

 

The Veil (or Helmet) of Ignorance: A Rawlsian Thought Experiment About a Military’s Criminal Law

The Veil (or Helmet) of Ignorance: A Rawlsian Thought Experiment About a Military’s Criminal Law

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THE VEIL (OR HELMET) OF IGNORANCE: A RAWLSIAN THOUGHT EXPERIMENT ABOUT A MILITARY’S CRIMINAL LAW

This Article loosely adapts political philosopher John Rawls’s famous social contract thought experiment to interrogate a corner of law that receives too little theoretical attention: the separate federal code at the intersection of criminal law and national security that regulates both martial and non-martial conduct of millions of citizens, invests judicial responsibility and prosecutorial authority in nonlawyer commanding officers, operates with no territorial limitations, and pulls even certain retirees within its jurisdiction: the Uniform Code of Military Justice. Employing the perspectives of four “idealized” actors—Congress, a president, a Chairman of the Joint Chiefs of Staff, and a potential recruit—this “experiment” reconsiders the fundamental and necessary qualities of a specialized system of criminal law. Such qualities must render the system acceptable to civilian political leadership in a representative democracy exercising ultimate command and control over a professional military, but also accepted by those over whom its penal jurisdiction will rest. When considering the reasonable inferences and deductions each of these four actors will likely make from a hypothetical “original position,” four common principles emerge. Principles of nonrepulsion, retention, mission risk reduction, and compliance operate as four prescriptive corners bounding and framing a sensible set of answers to the following questions: (1) what conduct is to be proscribed and subjected to punishment? (2) what punishments, forms of discipline, or administrative censure are available for violations? (3) what processes shall organize the steps from investigating to punishing violations? (4) who shall have discretionary agency within the ranks to administer these processes with investigative, prosecutorial, and judicial authority? and (5) what constraints, limits, or individual rights and liberties shall operate to ensure due process, justice, and protection from that authority’s abuses? Answering these questions in light of the four principles goes some way toward articulating a “normative theory of criminal law”—a prospect that military justice currently lacks.

Dan Maurer*

*Assistant Professor of Law, United States Military Academy at West Point; Fellow, Modern War Institute; Lieutenant Colonel, Judge Advocate, United States Army. The author has served as a platoon leader in combat, as well as judge advocate prosecutor and appellate counsel, and as chief of military justice for a large Midwestern Army installation. 

Other assignments include Strategy Fellow for the Army Chief of Staff and Chief of Operational Law serving in Italy. The opinions and analysis in this Article are the author’s personal, academic views, and are not representative of the official positions of the U.S. Government or, specifically, the Army Judge Advocate General’s Corps or the U.S. Military Academy.

Special thanks to Professors Brenner Fissell, Eugene Fidell, Geoffrey Corn, my colleagues in the Department of Law at West Point, and the astute editors of the University of Richmond Law Review for their assistance. All errors are mine alone.

How to Do Things with Signs: Semiotics in Legal Theory, Practice, and Education

How to Do Things with Signs: Semiotics in Legal Theory, Practice, and Education

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Introduction

Discussing federal statutes, Justice Scalia tells us that “[t]he stark reality is that the only thing that one can say for sure was agreed to by both houses and the president (on signing the bill) is the text of the statute. The rest is legal fiction.” 

How should we take this claim? If we take “text” to mean the printed text, that text without more is just a series of marks. Agreement on a series of marks without more has no meaning in itself. In struggling with Justice Scalia’s remarks, we thus must ask whether on the face of these remarks he has committed the fallacy of conflating signifiers of meaning with meaning itself. Legislators do not agree simply on certain ink marks but on what they believe those ink marks signify. Their duty is to legislate, not to produce mere marks of ink.

If we instead take “text” to embody something off the page, such as the “meaning” of the series of marks at issue, what is that meaning and how do we know that all the legislators “agreed” on that “meaning”? The series of marks itself cannot prove such unanimity, much less any specific meaning. Even if we take such off-the-page text as referring to words with standard or dictionary meanings, we know that words have multiple such meanings (“left,” for example, can mean, among other things, a direction or the past tense of “leave”). A series of marks referring to a series of words in itself thus does not tell us which standard meanings were in the heads of legislators when they read (if they did) drafts of the bill.

This Article therefore broadly explores semiotics through a lawyer’s lens, hopefully simplifying as much as possible much of the complex, divergent, and, frankly, sometimes baffling terminology used by those who explore semiotics. This Article will first continue below with a general definition of signs and the related notion of intentionality. It will then address the structure and concomitants of signs, the nature of speech acts that are of interest to lawyers, the sign classifications used in legal analysis and rhetoric, the role of signs in careful legal thought and good legal rhetoric, the unfolding of the signified and the fixation of mean- ing debate, the semiotics of speaker vs. reader meaning, and some brief reflections on semiotics and the First Amendment. Finally, this Article also provides an Appendix with further terms and concepts helpful to lawyers exploring semiotics.

I hope this Article’s broad overview of semiotics underscores the vital importance of semiotics in law and in legal education reform. I also hope this Article inspires readers and legal education reformers to explore the vast worlds of semiotics that elude the page constraints of a general overview.

 

*Harold Lloyd

*Professor of Law, Wake Forest University School of Law

How the Conflict Between Anti-Boycott Legislation and the Expressive Rights of Business Endangers Civil Rights and Antidiscrimination Laws

How the Conflict Between Anti-Boycott Legislation and the Expressive Rights of Business Endangers Civil Rights and Antidiscrimination Laws

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Introduction

More so perhaps than at any time in recent American history, social and political activists are calling for boycotts of people, products, and even states and nations as a way to bring about change. The tactic has been particularly visible during the years of polarization following the 2016 presidential election and has continued during the time of the COVID-19 pandemic. As in the past, the promoters of boycotts span the political spectrum. Among the most prominent boycotts during the last several years has been the attempt to isolate Israel through the Boycott, Divestment, and Sanctions movement (commonly known as “BDS”). This movement—and the attempts to combat it—have created a near-perfect storm of competing rights and values that encapsulates one of the great contradictions in contemporary American society: the conflict between personal freedoms and efforts to end bigoted and discriminatory behavior by commercial businesses.

This Article examines how opponents of anti-BDS laws may extend First Amendment rights in the business context to a point at which they actually threaten the validity of much antidiscrimination legislation. Part I discusses the BDS movement and state-based initiatives that attempt to penalize businesses that actively engage in a boycott of Israel. It examines the handful of cases in which federal courts have addressed the constitutionality of laws that require state contractors to affirm that they are not actively boycotting that country. Part II transitions to a discussion of the ways the Supreme Court has historically resolved conflicts between antidiscrimination laws and the constitutional rights of freedom of association and expression, and notes a transition from deference to enforcement of such laws to a recognition of the expressive rights of individuals and groups in both noncommercial and commercial contexts. The Article concludes in Part III with an application of the existing jurisprudence to state anti-BDS laws and highlights the dangers that successful opposition to such laws might present to the continued viability of antidiscrimination laws.
It concludes that affirmation of the expressive rights of pro-BDS businesses could lead to serious challenges to the constitutionality of laws designed to prevent bigotry in the conduct of commercial
affairs—including the landmark civil rights laws of the 1960s.

*Debbie Kaminer

**David Rosenberg

 *Professor of Law, Zicklin School of Business, Baruch College (CUNY). J.D., Columbia
University School of Law; B.A., University of Pennsylvania. This Article greatly benefitted
from discussion with colleagues at the 2019 Annual Academy of Legal Studies in Business Conference and with participants on the panel “Anti-Boycott Legislation and the Expressive Rights of Businesses: The Ethics and Legality of State Laws that Combat the BDS Movement,” hosted by the Robert Zicklin Center for Corporate Integrity in April 2020. All errors are our own.

**Associate Professor of Law and Director of the Robert Zicklin Center for Corporate
Integrity, Zicklin School of Business, Baruch College (CUNY).