Tag Archives: Company Legal & Law Matters

Texas court blocks the FTC’s ban on noncompete agreements

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The Federal Trade Commission's (FTC) ban on noncompete agreements was supposed to take effect on September 4, but a Texan court has postponed its implementation by siding with the plaintiffs in a lawsuit that seeks to block the rule. Back in April, the FTC banned noncompetes, which have been widely used in the tech industry for years, to drive innovation and protect workers' rights and wages. A lot of companies are unsurprisingly unhappy with the agency's rule — as NPR notes, Dallas tax services firm Ryan LLC sued the FTC hours after its announcement. The US Chamber of Commerce and other groups of American businesses eventually joined the lawsuit. 

"Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism," FTC Chair Lina M. Khan said when the rule was announced. They prevent employees from moving to another company or from building businesses of their own in the same industry, so they may be stuck working in a job with lower pay or in an environment they don't like. But the Chamber of Commerce’s chief counsel Daryl Joseffer called the ban an attempt by the government to micromanage business decisions in a statement sent to Bloomberg. 

"The FTC’s blanket ban on noncompetes is an unlawful power grab that defies the agency’s constitutional and statutory authority and sets a dangerous precedent where the government knows better than the markets," Joseffer said. The FTC disagrees and told NPR that its "authority is supported by both statute and precedent."

US District Judge Ada Brown, an appointee of former President Donald Trump, wrote in her decision that "the text, structure, and history of the FTC Act reveal that the FTC lacks substantive rulemaking authority with respect to unfair methods of competition." Brown also said that the plaintiffs are "likely to succeed" in getting the rule struck down and that it's in the public's best interest to grant the plaintiff's motion for preliminary injunction. The judge added that the court will make a decision "on the ultimate merits of this action on or before August 30."

This article originally appeared on Engadget at https://www.engadget.com/texas-court-blocks-the-ftcs-ban-on-noncompete-agreements-150020601.html?src=rss

Supreme Court remands social media moderation cases over First Amendment issues

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Two state laws that could upend the way social media companies handle content moderation are still in limbo after a Supreme Court ruling sent the challenges back to lower courts, vacating previous rulings. In a 9 - 0 decision in Moody v. NetChoice and NetChoice v. Paxton, the Supreme Court said that earlier rulings in lower courts had not properly evaluated the laws’ impact on the First Amendment.

The cases stem from two state laws, from Texas and Florida, which tried to impose restrictions on social media companies’ ability to moderate content. The Texas law, passed in 2021, allows users to sue large social media companies over alleged “censorship” of their political views. The Supreme Court suspended the law in 2022 following a legal challenge. Meanwhile, the Florida measure, also passed in 2021, attempted to impose fines on social media companies for banning politicians. That law has also been on hold pending legal challenges.

Both laws were challenged by NetChoice, an industry group that represents Meta, Google, X and other large tech companies. NetChoice argued that the laws were unconstitutional and would essentially prevent large platforms from performing any kind of content moderation. The Biden Administration also opposed both laws. In a statement, NetChoice called the decision “a victory for First Amendment rights online.”

In a decision authored by Justice Elena Kagan, the court said that lower court rulings in both cases “concentrated” on the issue of “whether a state law can regulate the content-moderation practices used in Facebook’s News Feed (or near equivalents).” But, she writes, “they did not address the full range of activities the laws cover, and measure the constitutional against the unconstitutional applications.”

Essentially, the usually-divided court agreed that the First Amendment implications of the laws could have broad impacts on parts of these sites unaffected by algorithmic sorting or content moderation (like direct messages, for instance) as well as on speech in general. Analysis of those externalities, Kagan wrote, simply never occurred in the lower court proceedings. The decision to remand means that analysis should take place, and the case may come back before SCOTUS in the future.

“In sum, there is much work to do below on both these cases … But that work must be done consistent with the First Amendment, which does not go on leave when social media are involved,” Kagan wrote. 

This article originally appeared on Engadget at https://www.engadget.com/supreme-court-remands-social-media-moderation-cases-over-first-amendment-issues-154001257.html?src=rss

Detroit police can no longer use facial recognition results as the sole basis for arrests

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The Detroit Police Department has to adopt new rules curbing its reliance on facial recognition technology after the city reached a settlement this week with Robert Williams, a Black man who was wrongfully arrested in 2020 due to a false face match. It’s not an all-out ban on the technology, though, and the court’s jurisdiction to enforce the agreement only extends four years. Under the new restrictions, which the ACLU is calling the strongest such policies for law enforcement in the country, police cannot make arrests based solely on facial recognition results or conduct a lineup based only on facial recognition leads.

Williams was arrested after facial recognition technology flagged his expired driver’s license photo as a possible match for the identity of an alleged shoplifter, which police then used to construct a photo lineup. He was arrested at his home, in front of his family, which he says “completely upended my life.” Detroit PD is known to have made at least two other wrongful arrests based on the results of facial recognition technology (FRT), and in both cases, the victims were Black, the ACLU noted in its announcement of the settlement. Studies have shown that facial recognition is more likely to misidentify people of color.

The new rules stipulate that “[a]n FRT lead, combined with a lineup identification, may never be a sufficient basis for seeking an arrest warrant,” according to a summary of the agreement. There must also be “further independent and reliable evidence linking a suspect to a crime.” Police in Detroit will have to undergo training on the technology that addresses the racial bias in its accuracy rates, and all cases going back to 2017 in which facial recognition was used to obtain an arrest warrant will be audited.

In an op-ed for TIME published today, Williams wrote that the agreement means, essentially, that “DPD can no longer substitute facial recognition for basic investigative police work.”

This article originally appeared on Engadget at https://www.engadget.com/detroit-police-can-no-longer-use-facial-recognition-results-as-the-sole-basis-for-arrests-204454537.html?src=rss

EU competition chief jabs at Apple from both sides over AI delay

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It's safe to say Apple and the European Commission aren't exactly bosom buddies. The two sides have been at loggerheads over Apple's compliance — or alleged lack thereof — with the European Union's Digital Markets Act (DMA), a law designed to rein in the power of major tech companies.

Apple said last week it would delay the rollout of certain features in the European Union, including Apple Intelligence AI tools, over concerns "that the interoperability requirements of the DMA could force us to compromise the integrity of our products in ways that risk user privacy and data security." As it turns out, the EU is not exactly happy about that decision.

The call to push back the rollout of Apple Intelligence in the EU is a "stunning, open declaration that they know 100 percent that this is another way of disabling competition where they have a stronghold already,” EU competition commissioner Margrethe Vestager said at a Forum Europa event, according to Euractiv. Vestager added that the “short version of the DMA” means companies have to be open for competition to keep operating in the region.

Not to leap to the defense of Apple here, but these comments are sure to raise an eyebrow or two, especially after Vestager also said she "was personally quite relieved that I would not get an AI-updated service on my iPhone." Apple does intend to bring Apple Intelligence to Europe more broadly, but it's taking a cautious approach with the tech in that region due to "regulatory uncertainties" and ensuring it won't have to compromise on user safety.

As it stands, the European Commission is carrying out multiple investigations into the company over possible violations of the DMA. This week, it accused Apple of violating the law's anti-steering provisions by blocking app developers from freely informing users about alternate payment options outside of the company's ecosystem. If it's found guilty, Apple could be on the hook for a fine of up to 10 percent of its global annual revenue. Based on its 2023 sales, that could be a penalty of up to $38 billion. The percentage of the fine can double for repeated violations.

Earlier this year, before the DMA came into force, the European Commission fined Apple €1.8 billion ($1.95 billion) over a violation of previous anti-steering rules. According to the Commission, Apple prevented rival music streaming apps from telling users that they could pay less for subscriptions if they sign up outside of iOS apps. Apple has challenged the fine.

This article originally appeared on Engadget at https://www.engadget.com/eu-competition-chief-jabs-at-apple-from-both-sides-over-ai-delay-140022585.html?src=rss

The nation’s oldest nonprofit newsroom is suing OpenAI and Microsoft

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The Center for Investigative Reporting, the nation’s oldest nonprofit newsroom that produces Mother Jones and Reveal sued OpenAI and Microsoft in federal court on Thursday for allegedly using its content to train AI models without consent or compensation. This is the latest in a long line of lawsuits filed by publishers and creators accusing generative AI companies of violating copyright.

“OpenAI and Microsoft started vacuuming up our stories to make their product more powerful, but they never asked for permission or offered compensation, unlike other organizations that license our material,” said Monika Bauerlein, CEO of the Center for Investigative Reporting, in a statement. “This free rider behavior is not only unfair, it is a violation of copyright. The work of journalists, at CIR and everywhere, is valuable, and OpenAI and Microsoft know it.” Bauerlein said that OpenAI and Microsoft treat the work of nonprofit and independent publishers “as free raw material for their products," and added that such moves by generative AI companies hurt the public’s access to truthful information in a “disappearing news landscape.”

OpenAI and Microsoft did not respond to a request for comment by Engadget.

The CIR’s lawsuit, which was filed in Manhattan’s federal court, accuses OpenAI and Microsoft, which owns nearly half of the company, of violating the Copyright Act and the Digital Millennium Copyright Act multiple times.

News organizations find themselves at an inflection point with generative AI. While the CIR is joining publishers like The New York Times, New York Daily News, The Intercept, AlterNet and Chicago Tribune in suing OpenAI, others publishers have chosen to strike licensing deals with the company. These deals will allow OpenAI to train its models on archives and ongoing content published by these publishers and cite information from them in responses offered by ChatGPT.

On the same day as the CIR sued OpenAI, for instance, TIME magazine announced a deal with the company that would grant it access to 101 years of archives. Last month, OpenAI signed a $250 million multi-year deal with News Corp, the owner of The Wall Street Journal, to train its models on more than a dozen brands owned by the publisher. The Financial Times, Axel Springer (the owner of Politico and Business Insider), The Associated Press and Dotdash Meredith have also signed deals with OpenAI.

This article originally appeared on Engadget at https://www.engadget.com/the-nations-oldest-nonprofit-newsroom-is-suing-openai-and-microsoft-174748454.html?src=rss

Supreme Court ruling may allow officials to coordinate with social platforms again

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The US Supreme Court has ruled on controversial attempt by two states, Missouri and Louisiana, to limit Biden Administration officials and other government agencies from engaging with workers at social media companies about misinformation, election interference and other policies. Rather than set new guidelines on acceptable communication between these parties, the Court held that the plaintiffs lacked standing to bring the issue at all. 

In Murthy, the states (as well as five individual social media users) alleged that, in the midst of the COVID pandemic and the 2020 election, officials at the CDC, FBI and other government agencies "pressured" Meta, Twitter and Google "to censor their speech in violation of the First Amendment."

The Court wrote, in an opinion authored by Justice Barrett, that "the plaintiffs must show a substantial risk that, in the near future, at least one platform will restrict the speech of at least one plaintiff in response to the actions of at least one Government defendant. Here, at the preliminary injunction stage, they must show that they are likely to succeed in carrying that burden." She went on to describe this as "a tall order." 

Though a Louisiana District Court order blocking contact between social media companies and Biden Administration officials has been on hold, the case has still had a significant impact on relationships between these parties. Last year, Meta revealed that its security researchers were no longer receiving their usual briefings from the FBI or CISA (Cybersecurity and Infrastructure Security Agency) regarding foreign election interference. FBI officials had also warned that there were instances in which they discovered election interference attempts but didn’t warn social media companies due to additional layers of legal scrutiny implemented following the lawsuit. With today's ruling it seems possible such contact might now be allowed to continue. 

In part, it seems the Court was reluctant to rule on the case because of the potential for far-reaching First Amendment implications. Among the arguments made by the Plaintiffs was an assertion of a "right to listen" theory, that social media users have a Constitutional right to engage with content. "This theory is startlingly broad," Barrett wrote, "as it would grant all social-media users the right to sue over someone else’s censorship." The opinion was joined by Justices Roberts, Sotomayor, Kagan, Kavanaugh and Jackson. Justice Alito dissented, and was joined by Justices Thomas and Gorsuch. 

The case was one of a handful involving free speech and social media to come before the Supreme Court this term. The court is also set to rule on two linked cases involving state laws from Texas and Florida that could upend the way social media companies handle content moderation.

This article originally appeared on Engadget at https://www.engadget.com/supreme-court-ruling-may-allow-officials-to-coordinate-with-social-platforms-again-144045052.html?src=rss

Verizon will pay a $1 million fine to settle a 911 outage investigation

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Verizon has agreed to pay a $1.05 million penalty to settle a Federal Communications Commission investigation into whether the company broke the agency's rules after a 911 outage. Over a period of one hour and 44 minutes in December 2022, the outage prevented hundreds of emergency calls from going through in Alabama, Florida, Georgia, North Carolina, South Carolina and Tennessee, the FCC said.

The agency added that the outage was akin to one that occurred two months earlier. Although Verizon carried out mitigation efforts to help prevent similar outages to the one in October 2022, "certain failures recurred," according to the FCC. As part of the settlement, Verizon has committed to implementing a compliance plan to make sure it abides by the FCC's 911 rules and to adhere to best practices, which include risk assessments and security-related measures.

“When you call 911 in an emergency, it’s critical that your call goes through,” FCC Chairwoman Jessica Rosenworcel said in a statement. “Today’s action is part of the FCC’s ongoing effort to ensure that the public has reliable communications, including access to 911.”

This article originally appeared on Engadget at https://www.engadget.com/verizon-will-pay-a-1-million-fine-to-settle-a-911-outage-investigation-123052358.html?src=rss

Record labels sue AI music generators for ‘massive infringement of recorded music’

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Major music labels are taking on AI startups that they believe trained on their songs without paying. Universal Music Group, Warner Music Group and Sony Music Group sued the music generators Suno and Udio for allegedly infringing on copyrighted works on a “massive scale.”

The Recording Industry Association of America (RIAA) initiated the lawsuits and wants to establish that “nothing that exempts AI technology from copyright law or that excuses AI companies from playing by the rules.”

The music labels’ lawsuits in US federal court accuse Suno and Udio of scraping their copyrighted tracks from the internet. The filings against the AI companies reportedly demand injunctions against future use and damages of up to $150,000 per infringed work. (That sounds like it could add up to a monumental sum if the court finds them liable.) The suits appear aimed at establishing licensed training as the only acceptable industry framework for AI moving forward — while instilling fear in companies that train their models without consent.

Screenshot of the Udio AI music generator homescreen.
Udio

Suno AI and Udio AI (Uncharted Labs run the latter) are startups with software that generates music based on text inputs. The former is a partner of Microsoft for its CoPilot music generation tool. The RIAA claims the services’ reproduced tracks are uncannily similar to existing works to the degree that they must have been trained on copyrighted songs. It also claims the companies didn’t deny that they trained on copyright works, instead shielding themselves behind their training being “confidential business information” and standard industry practices.

According to The Wall Street Journal, the lawsuits accuse the AI generators of creating songs that sounded remarkably similar to The Temptations’ “My Girl,” Green Day’s “American Idiot,” and Mariah Carey’s “All I Want for Christmas Is You,” among others. They also claim the AI services produced indistinguishable vocals from artists like Lin-Manuel Miranda, Bruce Springsteen, Michael Jackson and ABBA.

Wired reports that one example cited in the lawsuit details how one of the AI tools reproduced a song that sounded nearly identical to Chuck Berry’s pioneering classic “Johnny B. Goode,” using the prompt, “1950s rock and roll, rhythm & blues, 12 bar blues, rockabilly, energetic male vocalist, singer guitarist,” along with some of Berry’s lyrics. The suit claims the generator almost perfectly generated the original track’s “Go, Johnny, go, go” chorus.

Screenshot for the Suno AI webpage.
Suno

To be clear, the RIAA isn’t advocating based on the principle that all AI training on copyrighted works is wrong. Instead, it’s saying it’s illegal to do so without licensing and consent, i.e., when the labels (and, likely to a lesser degree, the artists) don’t make any money off of it.

The recording industry is working on AI deals of its own that license music in a way that it believes is fair for its bottom line. These include an agreement between Universal and SoundLabs, which allows the latter to create vocal models for artists while still allowing the singers to control ownership and output. The label also partnered with YouTube on an AI licensing and royalties deal. Universal also represents Drake, whose diss track against Kendrick Lamar from earlier this year used AI-generated copies of Tupac Shakur and Snoop Dogg’s voices.

“There is room for AI and human creators to forge a sustainable, complementary relationship,” the filing against Suno reads. “This can and should be achieved through the well-established mechanism of free-market licensing that ensures proper respect for copyright owners.”

According to Bloomberg, Suno co-founder Mikey Shulman said in April that the company’s practices are “legal” and “fairly in line with what other people are doing.” The AI industry at large appears to be attempting to race towards a threshold where its tools are considered too ubiquitous to be held accountable before anyone can do anything about how it trained its models.

“We work very closely with lawyers to make sure that what we’re doing is legal and industry standard,” Suno’s founder said in April. “If the law changes, obviously we would change our business one way or the other.”

This article originally appeared on Engadget at https://www.engadget.com/record-labels-sue-ai-music-generators-for-massive-infringement-of-recorded-music-172915925.html?src=rss

Five men face jail time for running the illegal streaming service Jetflicks

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The illegal streaming service Jetflicks once boasted on its website that visitors could watch just about any TV show or movie “Anytime. Anywhere.” Now the five people behind the bootleg streaming service are facing some serious jail time.

A jury found Kristopher Dallman, Douglas Courson, Felipe Garcia, Jared Jaurequi and Peter Huber guilty in a Las Vegas federal court on Friday for conspiracy to commit criminal copyright infringement. Dallmann was also found guilty on two counts of money laundering and three counts of misdemeanor criminal copyright infringement for leading the Jetflicks operation, according to court documents and a US Department of Justice press release.

Jetflicks used computer scripts and software to scour the internet for illegal copies of movies and television shows and posted hundreds of thousands of illegal copies as far back as 2007 from torrent and Usenet sites. The defendants created a catalog of bootleg shows and movies bigger than the combined collections of streaming services including Netflix, Hulu, Vudu and Amazon Prime, according to the Department of Justice.

Users could pay a subscription fee to access the site on pretty much any media streaming device with a web browser. Jetflicks claimed to “offer more than 183,200 television episodes and have more than 37,000 subscribers,” according to the initial indictment filed in the Eastern District of Virginia in 2019.

Dallmann, the leader of the group, and his co-conspirators “made millions of dollars streaming and distributing this catalog of stolen content,” according to the press release.

At one point, operators and employees of Jetflicks were making hundreds of thousands of dollars a year from its subscription service. Dallman wrote in an online chat that his site made $750,000 in one year, according to the indictment.

The Motion Picture Association of America (MPAA) took notice of Jetflicks in 2012 and sent cease and desist letters to the site’s operators. Four years later, the Federal Bureau of Investigation (FBI) started its undercover operation of the site by paying for a six-month subscription. Undercover agents recorded multiple instances of illegal uploads of shows like Shameless, Ray Donovan, The OA and SyFy’s 12 Monkeys alongside charges for accessing them. Then the agents traced those charges back to the defendants’ bank accounts, according to court records.

A sentencing hearing has yet to be scheduled. The Department of Justice says Dallman could face up to 48 years in prison and the four remaining defendants could each face five years in prison.

This article originally appeared on Engadget at https://www.engadget.com/five-men-face-jail-time-for-running-the-illegal-streaming-service-jetflicks-202758485.html?src=rss

Apple will reportedly withhold new AI features in Europe due to regulations

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Apple reportedly said on Friday that it would delay iOS 18’s marquee AI features in the European Union, conveniently blaming Digital Markets Act (DMA) regulations. The company claimed it would block the launch of Apple Intelligence, iPhone Mirroring on the Mac and SharePlay Screen Sharing in the EU this year, according to Bloomberg, which reported the news.

“We are concerned that the interoperability requirements of the DMA could force us to compromise the integrity of our products in ways that risk user privacy and data security,” the company said in a statement to Bloomberg. Apple didn’t expand on how DMA regulations could force it to compromise user privacy and security.

The DMA, which passed in 2022, tries to usher in fair competition by reining in what Big Tech companies can do to stifle competition. It blocks them from pushing out smaller competitors, favoring their own services over those of rivals, locking customers’ data into their platform and limiting transparency about their use of advertising data.

This isn’t the first time Apple has pinned blame on regulations — without offering much in the way of specifics — for blocking EU users from having nice things. Earlier this year, the company said it would remove the ability to add home screen web apps in Europe due to DMA rules. It later reversed course, citing “requests” it received. Google did something similar when it removed third-party apps and watch faces from European devices, blaming “new regulatory requirements.”

Apple’s delay comes when EU regulations present a thorn in the company’s side. The European Commission formally opened an investigation into the company in March and reportedly plans to charge it in the coming weeks for DMA violations. The company was already fined €1.8 billion ($1.95 billion) earlier this year for preventing app developers from informing iOS users about cheaper music subscription plans outside of the company’s ecosystem.

This article originally appeared on Engadget at https://www.engadget.com/apple-will-reportedly-withhold-new-ai-features-in-europe-due-to-regulations-183313640.html?src=rss