Monthly Archives: July 2013

The Internet Poker Freedom Act of 2013

Will the Internet Poker Freedom Act of 2013 pass2017 Update: Alas, American poker enthusiasts, the 113th Congress did not pass the Internet Poker Freedom Act. But, for archival purposes, the old article is posted below.

***Original Article***

Alas, American poker enthusiasts, the time is nigh! A bill legalizing online poker has finally found its way to the hopper. Entitled the “Internet Poker Freedom Act of 2013 (HR 2666 ),” Rep. Joe Barton is fronting the act.

If passed, states will have an easier time implementing online poker regulations. The law would also re-categorize poker as a game of skill, exempting it from action under other online gaming laws.

If Poker Is A Game Of Skill, That Makes All The Difference…

Since the Illegal Gambling Business Act only criminalizes “clear games of chance.” So, HR 2666 simply defines online poker as a game of skill. Using case law precedence to support the argument, the veracity of the proposal will be difficult to knock down on legal grounds. (Social grounds are another issue.)

The Internet Poker Freedom Act Could Blow Open A New Market

Proponents of the Internet Poker Freedom Act hope the proposed law will create a profitable new market.

“United States consumers would benefit from a program of Internet poker regulation which recognizes the interstate nature of the Internet,” the bill says, “but nevertheless preserves the prerogatives of States and Federally recognized Indian tribes.”

What Provisions Are Included In Internet Poker Freedom Act?

HR 2666 confers strict licensee operator regulations. Under the draft proposal licensee operators would have to:

  •  Establish age-verification measures;
  • Implement gambling-addiction measures;
  • Ensure cross-state regulatory compliance;
  • Allow players to limit losses.
  • Work to prevent money laundering.

Will This Online Poker Law Finally Pass?

Barton is no stranger to online poker legislation. In 2011, the Texas politician introduced HR 2366, the Online Poker Act of 2011. It didn’t pass. HR 2666, however, may have better luck. After all, the revenue generating possibilities are attractive to reelection-seeking politicians pandering to constituents who’ve become very comfortable with online life.

The Internet Poker Freedom Act of 2013 includes provisions honest business provisions, calls for an Office of Internet Poker Oversight, and features a “fair and honest”clause to thwart the potential for rigged games.

All in all, HR 2666 — a.k.a., “The Internet Poker Freedom act of 2013” — is a comprehensive, long-considered, online gaming bill. Let’s see if our lawmakers bite.

Nuclear Defamation Fracas Going Down In Japan

nuclear defamation lawsuit between two prime ministers

A now defunct Fukushima-Daiichi plant is at the heart of a nuclear defamation lawsuit between Japan’s former Prime Minister, Naoto Kan, and the country’s current (at the time of this writing) Prime Minister, Shinzo Abe.

2011 Japanese Nuclear Disaster

On March 11, 2011 a 9.0 magnitude earthquake rocked Japan. Soon after, a 14-meter tsunami crashed into its shores, and the Fukushima-Daiichi nuclear power plant suffered severe damage.

In the wake of the crisis, public outlets praised then prime minister Naoto Kan for his leadership skills, arguing that his insistence that employees remain on post mitigated the power plant disaster.

Disaster Leads To Nuclear Defamation Lawsuit

Shinzo Abe, however, doesn’t think Kan deserves credit for allaying the Fukushima-Daiichi disaster. In fact, Abe penned and posted a critical essay about the incident – specifically questioning Kan’s leadership during the crisis.

Needless to say, Kan took issue with Abe’s characterization and filed a defamation lawsuit.

Why Is This Considered Defamation? Isn’t Abe Just Exercising Free Speech Rights?

United States defamation laws are very different than Japanese ones.

In the U.S., plaintiffs must prove that defendants purposefully or negligently made false statements of fact to inflict harm.

Under Japanese defamation law, however, honor matters more than truth. In fact, when announcing his nuclear defamation claim, Kan asserted at a news conference, “The article has severely damaged my honor,” he finished.

ISP Operator Refuses To Comply With Administrative Subpoenas; Will He Be Forced To Do So?

administrative subpoenas
Are warrant-less, administrative subpoenas unconstitutional? An ISP in Utah thinks so, and he’s opting not to comply with law enforcement officials. Will he land in legal trouble?

An ISP engaged in a little civil disobedience to protest administrative subpoenas. The case raises the question: Must ISPs hand over user data if requested by police?

The ISP contends the warrants used in such cases are unconstitutional. Is he right? Let’s look at the issue, below.

ISP Provider Says, “No Way” To Warrant-less Subpoenas

When investigating, law enforcement bureaus will ask ISPs for user information. But some companies — for both ethical and public relations reasons –don’t want to give Uncle Sam client data. However, in several states,  if an ISP doesn’t cooperate, officials can use court orders that don’t need a judge’s approval (i.e., warrant-less subpoenas), to force the issue.

Utah is one such state.

Enacted in 2009, the law spawned about 1,200 warrant-less subpoena requests (at the time of this writing). Under the statute, authorized parties can use these types of court orders for names, addresses, phone records, and “other information about suspected child predators.”

Prosecutors can procure basic information via administrative subpoenas, but they cannot get detailed data. For example, AGs can request a phone number from an ISP, but they can’t request the transcript of phone calls made on said number. And though the law punishes noncompliance with fines and jail time, officials have yet to enforce the statute.

ISP: “Administrative Subpoenas Are Unconstitutional”

Enter Mr. Pete Ashdown – founder of Utah-based ISP, Xmission. While Mr. Ashdown is eager to help bring down bad guys, he isn’t keen on unconstitutional laws. And in the opinion of Ashdown, Utah’s warrant-less subpoena system is a clear violation of the Fourth Amendment, which guards against unreasonable search and seizure. As such, he’s chosen not to comply with requests.

Ashdown’s resistance presents a problem for prosecutors. While the law gives them the ability to bring contempt of court charges, in doing so, they also risk a lawsuit. Now, let’s say administrative subpoenas are deemed unconstitutional by this hypothetical lawsuit; prosecutors will lose an arrow from their quiver. And since most ISPs readily adhere to the law, going through with a test case could be a dangerous proposition for officials.

Ashdown says, however, that he is up for a test case and doesn’t seem too concerned about  being jailed for civil subpoena disobedience. As he succinctly pointed out, “When there’s no court involved, I don’t see how they can hold us in contempt of court.”

Administrative Subpoenas Do Help In Catching Seriously Bad Folks

Administrative subpoenas aren’t all bad. To wit, they’re enormously helpful in thwarting child pornographers and kidnappers. Recently, the Utah Internet Crimes Against Children task force explained that administrative subpoenas helped police find a girl just hours before people smuggled her out of the country.

That said, when prosecutors request information via warrant-less subpoenas, they don’t (understandably) provide insight into the investigation. But what if officials used  the data to spy on innocent citizens? That is the slippery slope for many people, including Mr. Ashdown.

Kelly Warner Law represents ISPs, in addition to other tech and online businesses. Contact us today to learn more about our firm.

Trade Libel Basics: The Pink Slime Case

ABC pink slime trade libel basics
The “Pink Slime” lawsuit involving ABC News was a high-profile trade libel lawsuit.

Let’s talk about trade libel basics, using the ABC Pink Slim case as a backdrop.

Trade Libel Basics: A Simple Definition

Healthy competition fuels the U.S. economy. But lying about a product, business, or service isn’t allowed — it’s called trade libel and it’s against the law. Claimants can seek injunctions and financial restitution.

Proving a lie, however, is not enough to win a trade libel lawsuit. Plaintiffs must also prove that the defendants’ actions led to financial loss. In other words, if someone lies about your company, but it has zero effect on your bottom line, you may not win; or, you may win, but not be awarded any damages.

Some plaintiffs must prove that the defendants intended to cause harm.  Other jurisdictions presume ill-intent.  The detail of the law varies depending on the state and case circumstances.

Trade Libel Basics: The “Pink Slime” Case

Beef Products Inc. (BPI) sued ABC News  over that latter’s coverage of a product dubbed “pink slime”.   BPI claimed the network depicted the product as unhealthy and unsafe, which mislead consumers.

To win, the meat processor must prove that the network purposefully broadcasted false information, with the intent to harm.  BPI’s attorney, Dan Webb, is confident in his client’s case.

Veggie Libel Laws

The lawsuit seeks damages under South Dakota’s defamation law, as well as a 1994 state “veggie libel” law that allows businesses to sue anyone who knowingly spreads false information about a perishable food product. BPI is seeking $1.2 billion in damages for roughly 200 “false and misleading and defamatory” statements about their meat.

The 257-page lawsuit names ABC and several correspondents as defendants, in addition to Gerald Zirnstein, the USDA microbiologist who coined the product “pink slime”; Carl Custer, a former federal food scientist; and Kit Foshee, a former BPI quality assurance manager interviewed by ABC.

Each Side’s Stance

ABC News denied BPI’s claims.  “The lawsuit is without merit and we will contest it vigorously,” said Jeffrey W. Schneider, a network vice president.

Filed in a South Dakota, the suit cites phrases used in the segment, like “low grade,” “scraps” and “waste” to make the libel argument. Plus, ABC reported that the product was made from connective tissue; according to the lawsuit, it’s made from muscle.

Need an experienced trade libel attorney? Contact Kelly Warner Law.

New Arizona Tax May Effect Online Retailers

Arizona Seal to accompany post about new Arizona tax code
Is an online tax on the way in Arizona.

A new Arizona tax change is on the way. Some people think the adjustment is linked to the impending Marketplace Fairness Act; other folks say it’s just about simplifying the State’s tax code. Whichever the case, the new system changes how cities collect taxes and process audits. Specifically, it will affect jurisdictions’ ability to collect levies for commercial projects.

Change In How Cities Can Collect Taxes & Audit Businesses

Currently, new construction supplies are taxed  in the city where the structure is built. Under the new system, however, taxes for supplies for re-modelling and home improvement projects will be  charged at the time of purchase.

The League of Arizona Cities and Towns originally opposed the bill, because it only benefited communities with supply stores. But they reached a compromise: New construction projects would still follow the old tax model. The compromise meant that cities without supply stores could still benefit from the economic advantages construction development affords.

In addition, the new Arizona tax code will allow businesses with multiple locations to submit audit records in one city instead of each region in which they have a physical location.

Why The New Arizona Tax Code May Eventually Effect Online Retailers

You may be wondering, “Why is a law firm that focuses on Internet business law talking about general contractors’ taxes?” It’s because of the Marketplace Fairness Act.

In brief, if passed, the Marketplace Fairness Act will allow states to impose online sales taxes. At present, online retailers are only taxed in states where they have a physical presence. If consumers don’t get charged at an online checkout, they are expected to remit payment directly to the state. The Marketplace Fairness Act aims to change this standard. The caveat of the MFA, however, is that only states with “simplified tax systems” can establish an online sales tax.

By changing the way construction supplies are taxed in Arizona, the state is effectively “simplifying” the tax code – which positions AZ to take advantage of the Marketplace Fairness Act.

Potential Effects of the Marketplace Fairness Act on Online Businesses in Arizona

Some experts estimate that Internet business enjoy a 12% “no-tax” advantage over brick-and-mortar stores.

If Arizona is to become a leading technology hub, it’s wise to make the state attractive to online businesses. Simply put, initiating an Internet sales tax may repel them.

If Arizona is to become a leading technology hub, it’s wise to make the state attractive to online businesses. Simply put, initiating an Internet sales tax may repel them.

Guess we’ll have to wait to see how this plays out.

Kelly Warner is an Arizona-based Internet law firm – with clients from all 50 states, Canada, Australia, and the EU — that handles all manners of online business law.