It's a heady lineup this week on What's Next. A lawyer pitches new IP rules and taxes for artificial intelligence, Zuckerberg gets grilled—again—on the other side of the Atlantic, and the Supreme Court gives gig-economy companies a powerful arbitration defense. Also, I really think you should be investing in some HoweyCoins…

Something I should be covering? Reach me over email or on Twitter. And make sure to check out my colleagues' news briefings on topics like IP, legal cannabis, and employment law.

 

 

Watch This Space: The Future Will Be Regulated

It should be said: Litigators don't usually draft legislation. But that isn't stopping Bradford Newman, a Paul Hastings partner focusing on employment and trade secrets law, from putting forward a proposal to regulate artificial intelligence by taxing companies that benefit from AI and granting legal protections to machine-generated IP. For someone far outside the Beltway, Newman speaks with a confident determination about getting his “Artificial Intelligence Data Protection Act,” or AIDPA, enacted into law. His message to clients in Silicon Valley is simple: Regulation is coming, and it will be better if industry gets ahead of the curve.

I caught up with Newman after he published an article about his ideas on TechCrunch to ask him more about why a litigator who usually defends tech companies in court is pushing this issue. He told me this is his own project, and isn't being paid for it by a client or trade association. “I am an anti-regulation person,” Newman said. “But this is an area where I believe the government, for society's benefit, should regulate it.”
He starts with a couple basic assumptions. One, AI is going to create massive labor displacement on a scale not seen before. “If you look at the assembly line or cotton gin, you still needed a workhorse to operate it,” Newman said. AI is different. Imagine, he posited, a warehouse with 1,000 employees that invests in AI-powered machines that will reduce its roster to just 50 employees. “You're going to have 950 people with training in warehouse [work] that have no prospect of getting rehired because this technology is going to be coming to all warehouses,” he said. That's a recipe for societal unrest—and a political backlash.

Newman's proposed solution is to tax companies that reap huge financial rewards from AIand funnel the money toward retraining programs. He's not the only one with this idea. Bill Gates suggested the same thing in an interview with Quartz last year.

The other component of his proposal—and the potential sweetener for industry—assumes that machines are going to generate intellectual property on their own. Newman proposes that there be a framework for ownership of AI-generated IP, and to “limit the liability of corporations and humans for infringement to cases where there is knowledge of and/or active participation in the infringement.” There are even more elements to his proposed legislation, although he hasn't released a draft text yet, but you can read his full article for details.

When I told Newman I was skeptical about all this, having previously seen the legislative machine operate at close range as a reporter in Washington, Newman stressed he has a plan. He's assembling a working group of industry and thought leaders over the next six monthsand has also been speaking with a member of Congress (who he wouldn't name).

But Newman also said he's a “contrarian,” someone going against the greater crosscurrent of politics and legislative process. “I've got kids, I have a vested interest in society. I think this really matters,” he said. “Stranger things have happened, and we live in strange times.”

>> Think Ahead: Newman is probably right that regulation of some kind is coming to the world of AI—sooner or later. He's betting industry will want to get ahead of the curve and avoid a knee-jerk reaction. “We don't just want, 'AI bad,'” he says.

Photo: Jason Doiy/ALM

Being Social: Zuck Does Europe

If you got out the popcorn for Mark Zuckerberg's two days of interrogation testimony in front of the U.S. Congress, then you probably will want to check out the coverage of the Facebook CEO's appearance before members of the European Parliament in Brussels today. The Guardian live-blogged the exchanges here. The meeting was live-streamed after a backlash over initial plans to hold a closed door meeting, Politico Europe reported.

While you would expect some anger from the Greens party and the Social Democrats, Zuck even took some whacks from MEPs on the conservative end of the spectrum—underscoring how this has become a multi-partisan political issue.

“I know that by having my own Facebook account, I take some responsibility,” said Syed Kamall, the British leader of the European Conservatives and Reformists group. “[B]ut if I don't have a Facebook account, is the only way to stop Facebook collecting my data by staying off the internet altogether? Is it morally acceptable to collect non-Facebook users' data without them knowing what you do with it?”

We've already got the GDPR in Europe, of course. But could more regulation be in the offing for the tech giant? Guy Verhofstadt, a Belgian politician, told Zuckerberg: “I think this is your 14th, 15th apology… this year you've apologised three times already. Are you capable to fix it? There has to be clearly a problem. The only way I can see to fix it is to have public regulation. It's a bit like the banks in 07, 08: they said 'oh, we'll regulate ourselves,' but they didn't.”

Meanwhile, in back in the good ol' US of A, Facebook is facing a petition at the Federal Trade Commission to break it up, reports Bleeping Computer. The “Freedom from Facebook” campaign specifically wants the FTC to force Facebook to “spin off Instagram, WhatsApp, and Messenger into competing networks,” as well as “impose strong privacy rules that empower and protect us.”

Facebook responds that there's plenty of competition in the digital app market.“The average person uses eight different apps to communicate and stay connected,” the company said in a statement. “People use Facebook, Instagram, WhatsApp and Messenger because they find them valuable, and we've been able to better fight spam and abuse and build new features much faster by working under one roof.”

A Wall Street Journal article earlier this year posited that there may be a growing antitrust case against Facebook as well as other Silicon Valley giants. “The monopolies of old and of today were built on proprietary technology and physical networks that drove down costs while locking in customers, erecting formidable barriers to entry,” commentator Greg Ip wrote. “Just as Standard Oil and AT&T were once critical to the nation's economic infrastructure, today's tech giants are gatekeepers to the internet economy.”

The End of Gig Economy Litigation?

Private arbitration is a tool that companies young and old have used to keep disputes out of the public courts. But arbitration contracts have been an especially potent tool for gig economy companies to crush massive worker misclassification class actions. And this week, they got stronger with the U.S. Supreme Court's divisive decision holding that workers can sign away their right to sue as part of a group.

One case that decision will likely have a direct impact on is a California class action against Uber that's been tied up with multiple appeals. Today, the parties in that case filed a motion at the Ninth Circuit to let them have more time to argue over how things should move forward.

>>Takeaway: A recent California Supreme Court ruling seemed to open the door to more liability over worker misclassification for gig economy companies and others. But that seems like it might as well be a moot point if workers can only litigate one-by-one.

Protocol: Invest in HoweyCoins Now!

Guys, have you heard of HoweyCoin? No!? Well, it's this amazing investment opportunity for the new cryptocurrency standard in the travel industry… just click right here and pony up some Bitcoin or Ethereum. The returns will be BANANAS.

Psych!

In what has to probably be the most ingenious public education campaign by a regulator, the Securities and Exchange Commission created a fake initial coin offering website for “HoweyCoins,” an homage to the landmark SEC v. W. J. Howey Co. case that set out the legal test for what is a security under the law.

It even created a bogus “white paper” replete with crypto-anarcho edginess.“By undercutting the monopoly role of the national governments in creating currency, savings that you may not realize are being kept by the elite and the government will flow to you—the consumer.”

But click through to actually buy the tokens, and the user gets a warning that they've been suckered. It also spells out what the red flags are that consumers should watch for. “Our bogus site is a mash-up of a number of different things we've seen—any particular fraud may be harder to spot than the red flags here,” the SEC's website explains.

>> Takeaway: I've said it before and I'll say it again, the SEC is paying a lot of attention to the crypto space. This is a brave new online world we're living in, and regulators are finding novel ways of getting their message across.

Thanks for reading and see you next week!