United States: 2017: Predictions From Socially Aware's Editors And Contributors

The beginning of a new year is a time for resolutions and predictions. We won't bother Socially Aware readers with our resolutions for 2017, but we thought that we would share some predictions for the new year from our editors and contributors. As our predictions below indicate, 2017 promises to be an eventful year for social media and other emerging technologies. Here we go:

From John Delaney, Co-Founder and Co-Editor, Socially Aware, and Partner at Morrison & Foerster:

As we enter 2017, one of the greatest question marks for the social media and content marketing industries is what impact will Donald Trump have on the legal landscape. He's been dubbed the country's first social media president, and there is no doubt that his use of social media platforms such as Twitter and Facebook played a key role in his upset election victory. At the same time, he's had an often antagonistic relationship with Silicon Valley, and one can imagine tech giants such as Google and Facebook having a far less prominent voice within the Trump administration than was the case for the Obama administration. And although Trump's promised focus on reducing business regulations may benefit the U.S. technology companies, his apparent skepticism toward globalism and free trade could prove a challenge to the country's social media industry, perhaps the most global of all U.S. industries.

My other prediction for the coming year is that we're going to see a number of disruptive new technologies emerging from the hype phase to having a real impact on businesses and consumers—perhaps more likely with respect to the latter than the former, at least initially. For example, blockchain technology generated a big buzz in 2016, but look for companies to actually begin embracing and implementing this technology in a B2B context in the never-ending drive to reduce transaction fees. By eliminating the need for trusted middlemen, the transitioning of traditional payment and recordation platforms to blockchain-based platforms holds the promise of generating significant cost savings for companies. We're also going to see the pace of disruption accelerate as each of these new technologies—such as artificial intelligence, big data analytics, cloud computing, blockchain, the Internet of Things and so forth—combine and mutate in expected and unexpected ways.

From Aaron Rubin, Co-Editor, Socially Aware, and Partner at Morrison & Foerster:

Section 230 of the federal Communications Decency Act provides immunity to website operators for liability arising from user-generated content and has been hailed as the law that gave us the modern Internet. In the social media space in particular, Section 230 has helped fuel the remarkable success of companies such as Facebook, Twitter and YouTube by providing broad protection against claims arising from content posted by these platforms' users. But in 2016, we saw a string of court decisions reining in the historically broad scope of Section 230. To be fair, 2016 also saw a few victories for website operators asserting Section 230 defenses, but with the increased media focus on "fake news" and online trolling, my prediction is that the trend towards narrowing the scope of Section 230 will continue in 2017.

From Christine Lyon, Privacy Desk, Socially Aware, and Partner at Morrison & Foerster:

In 2017 we will watch courts, legislators and the tech industry grapple with the privacy-related implications of the Internet of Things. Our homes, cars and workplaces are filling with connected devices designed cater to our personalized needs. They respond to our instructions, whether delivered through a mobile app or a spoken command, and they collect data about our activities in order to better anticipate our needs. All of this data collection creates a digital trail of our lives, which will become richer and more detailed as multiple sources of data are combined. Big data analytics offers seemingly endless opportunities to use and commercialize this data in new ways. Yet unanticipated uses and disclosures of user data may compromise consumer privacy and even undermine consumer trust. We can expect to see expanding definitions of what types of data are considered personal information, legal battles over when and how law enforcement agencies can access user data and industry self-regulatory initiatives to try to strike an appropriate balance between privacy and innovation.

From Julie O'Neill, Online Marketing Desk, Socially Aware, and Partner at Morrison & Foerster:

One of the biggest privacy developments of 2017 will be the Eleventh Circuit's decision in the FTC's long-running battle with LabMD. In July 2016, the Commission overturned the decision of the FTC's own administrative law judge, holding that LabMD's failure to use basic security measures led to the unauthorized disclosure of sensitive medical data and was thus "unfair," in violation of Section 5 of the FTC Act. According to the Commission, the data security failure was unfair because it caused, or was likely to cause, substantial consumer injury. The Commissioners reached this decision without evidence of any actual injury to consumers. LabMD promptly appealed.

The Eleventh Circuit's decision will have ramifications for how the FTC wields its unfairness authority. A decision against the FTC would curtail its ability to bring enforcement on an unfairness theory where there is no actual harm to consumers. Couple that with the fact that President-elect Trump's appointments to fill the Commission's two vacancies will almost surely not be aggressive enforcers, and we will see less enforcement from the FTC—not just with respect to privacy and data security matters, but with respect to consumer protection issues more generally.

From J. Alexander Lawrence, Litigation Desk, Socially Aware, and Partner at Morrison & Foerster:

2017 may bring greater clarity to the Digital Millennium Copyright Act (DMCA) Section 512 safe harbors' "repeat infringer policy" requirement under U.S. copyright law. In late 2016, the Second Circuit, in the MP3Tunes decision, took a broad view of what constitutes a repeat infringer under the DMCA. This is important because a service provider's failure to terminate repeat infringers can result in loss of safe harbor protections from copyright damages. A further appeal to the Supreme Court in that case is possible. The Fourth Circuit will be considering the issue of what constitutes a repeat infringer in a dispute between BMG and Cox and will likely issue a decision sometime in 2017. Companies that rely on the DMCA safe harbor will be paying close attention to these developments.

From Michael Jacobs, Co-Chair, Intellectual Property Group, Morrison & Foerster:

My prediction for 2017 is that the patent litigation world will settle down a bit—now that we all have had time to adjust to the new ground rules. Section 101 decisions against patentees will be fewer. IPR institution and invalidation rates will decline. Damages expert testimony will more often survive judicial scrutiny. Injunctions will be sought in the right cases and granted. The only major change on the horizon is venue (and that will be big)—likely as the result of a Supreme Court decision in TC Heartland.

From Paul Goldstein, Stella W. and Ira S. Lillick Professor of Law, Stanford Law School, and Of Counsel to Morrison & Foerster:

The trends toward nationalism and protectionism that emerged around the globe in 2016 are unlikely to produce corresponding fractures in international copyright norms in 2017 or after. From the first bilateral copyright treaty in 1854, on through the Berne Convention to the present, it has not been the nation-state but, rather, the alignment of industry forces that has controlled the outcome of debate. In contests over the scope of the public performance right, an American music publisher has far more in common with a British music publisher than it does with an American Internet company, and will act accordingly in advancing its interests worldwide. States may sit at the negotiating table and sign the resulting agreements, but they do so principally as brokers and agents of their preferred domestic industries. (It will for this reason be important to watch whether Silicon Valley continues to enjoy the preferred status it received from the Obama administration.)

From Obrea Poindexter, Co-Chair, FinTech Group, Morrison & Foerster:

We expect 2017 to bring significant legal developments impacting the FinTech industry. With respect to lending, we expect to see the resolution of important cases, including the Madden case, which could impact marketplace lenders and traditional lenders alike. We also expect significant regulatory developments, including with respect to the OCC's proposal for special purpose FinTech charter, which has the potential to facilitate regulatory compliance for start-ups launching innovative financial products and services. Of course, the changing political climate has the potential to dramatically change the regulatory outlook early in 2017, including for the FinTech industry.

From Stephanie Sharron, Partner, Technology Transactions Group, Morrison & Foerster:

In 2017 companies will continue to explore ways to provide deeper interoperability and more security for the Internet of Things (IoT). In addition, data governance both from a rights and a regulatory perspective will take on increasing importance as companies sort out how they can best leverage and monetize the data collected from IoT products and services. Companies across industries will look for ways to transform their traditional businesses through adoption of IoT and big data applications that leverage the IoT's power.

In the FinTech area, I predict continued interest and investment as companies look for new monetization models and ways to cut costs. Banks are likely to continue to explore whether and how they can reduce costs through implementation of new technologies such as blockchain. As with the IoT, data governance and regulatory issues will continue to be a challenge for early adopters of cutting edge FinTech technologies and business models.

From Katie Thomson, Chair, Transportation Group, Morrison & Foerster

On the infrastructure front, there is a bipartisan consensus that a safe, reliable and sustainable transportation system is critical to the economic prosperity of the United States and the well-being of everyone who lives here. There is also bipartisan recognition that our infrastructure is aging, public investment is shrinking and congestion on the roads and rails and in the air continues to increase. But over the past two decades, members of Congress—on both sides of the aisle—have lacked the political courage to develop and pass a long-term, adequate and viable funding solution that meets the needs of the transportation system today and into the future. President-elect Trump has pledged to invest approximately one trillion dollars in infrastructure support over the course of the next decade. That is a good start, but I predict that Congress will not take any meaningful action to resolve the long-standing infrastructure deficit in 2017. Instead, federal, state and local governments, along with private investors, will have to continue to find creative solutions to leverage scarce public funds and bring private funds to bear to support investments in transportation infrastructure.

On the technology front, automated vehicles, drones, intelligent transportation systems, and performance-based design standards hold tremendous promise to enhance safety, efficiency and mobility in all modes of transportation. The federal government has an important role to play in eliminating regulatory barriers while ensuring the safety and security of these new technologies. Federal resources, however, are limited. To ensure that innovation continues and that we reap the benefits of these emerging technologies in real time, I predict that interested stakeholders will have to join forces to push the federal government to act responsibly and in a timely manner. The "push" may involve, among other creative measures, offering consensus recommendations to the government with respect to key issues such as safety and cybersecurity standards.

From Joshua Ashley Klayman, Chair, Blockchain + Smart Contracts Group, Morrison & Foerster:

In 2016 the potential for blockchain and smart contracts technologies to disrupt and transform entire industries captured the attention of the world's financial markets and financial services industries.

My prediction for 2017 is that the attention and excitement about blockchain will continue to grow and that the governments and laws of the United States and other nations will continue to adapt to embrace—or at least acknowledge—blockchain and smart contracts technologies. At the same time, I predict that we will see many failures with respect to start-ups and investments, as well as well-hyped product and service offerings that stall at or prior to the proof of concept stage. That is natural and to be expected as distributed ledger technology grows and develops and as individuals and companies work to identify and refine use cases that will benefit most from blockchain and smart contracts (vs. those for which traditional spreadsheets or databases will suffice). Finally, I predict that in 2017 we will see the launch of more sophisticated smart contracts (i.e., beyond buying and selling digital currency) that are market-ready and not merely proof of concepts or demos, including in the finance space.

From Kristina Ehle, Partner, and Jannis Werner, Associate, in Morrison & Foerster's Berlin Office

In Europe, 2017 begins amidst fears of so-called "fake news" distributed through social media, the implications for democratic processes and discussions about the right approach to tackle this issue going forward. EU Commission president Jean-Claude Juncker recently made it known that he expects companies like Facebook and Google to combat fake news on their platforms, and that the Commission will be watching. Meanwhile, discussions of fake news in Europe's largest economy, Germany, may progress past such posturing and lead to concrete legal measures, with calls for regulation of social media and criminal sanctions for offending users being made by large parts of the political spectrum, and only few voices warning of the chilling effects of such measures on free speech. Considering how seamlessly these discussions seem to follow one of Germany's best-known social media controversies of 2016—the perceived resurgence of hate speech in the times of migration crises—it's safe to expect that U.S.-based social media platforms will remain a favorite target of both political rhetoric and regulatory ambition. This year, of course, German leadership has plenty of motivation for its preoccupation with fake news and the political effects of social media in general: 2017 will be an election year in Germany and France.

From Susan McLean, Europe Desk, Socially Aware, and Of Counsel at Morrison & Foerster's London Office:

The implications of the decision to leave the European Union will continue to loom large for the UK tech sector during 2017. Subject to court cases impacting the timetable announced by the UK Prime Minister, the official Article 50 declaration is expected to be made by the end of March 2017. However, until we know more about the shape of the UK's relationship with the EU going forward, there will remain uncertainty as to what impact Brexit will have on existing and planned UK law (much of which is derived from EU legislation). In the meantime, I anticipate that the UK tech sector will continue to highlight to the UK government their key priorities for any Brexit deal—including continued access to recruitment and investment—to ensure that the UK tech sector continues to flourish post-Brexit.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

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