Hey there What’s Next readers! Law.com senior technology editor Ian Lopez here again filling in for your usual host, Ben Hancock. This week, we’ll be dissecting a monumental SCOTUS decision and touring overseas legal tech hotbeds. Plus more on the potentially far-reaching effects of the crytocurrency class action against Ripple Labs.
We’ll be on break next week for the 4th of July (cue the fireworks). I’ll be back the following week to deliver the latest and greatest at the intersection of law and technology. Until then, send your comments, suggestions and story ideas to email@example.com or find me on Twitter: @IanMichaelLopez.
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1 Big Thing: Privacy, Technology and the Supreme Court
We’ve all had a bit of time by now to digest the Supreme Court’s 5-4 privacy decision in Carpenter v. U.S. On the one hand, it’s a law enforcement case with little impact outside the sphere of criminal investigations. On the other, the majority decision and four dissents reveal quite a lot about the justices’ views on where law meets technology, making the 119 pages particularly fascinating for readers of this briefing.
Following on its rulings related to cellphone searches and GPS tracking, the court held that police generally need a warrant to obtain more than six days of historical cell-site location information as it provides a record of cellphone user’s physical movements that is “detailed, encyclopedic, and effortlessly.”
Notably, we witness several justices addressing the relationship between technology and legal precedent and examining whether technological advancements call for modification of long held principles. As Chief Justice John Roberts Jr. writes in the majority opinion, “When confronting new concerns wrought by digital technology, this Court has been careful not to uncritically extend existing precedents.”
I checked in with Nathan Wessler, the ACLU attorney who argued on behalf of Carpenter, and asked what he thinks the decision says about each justice’s view on the Fourth Amendment and their respective relationships with technology.
“The majority opinion is the latest in a series of opinions that strongly recognizes that the Fourth Amendment has to be interpreted in ways that keep up with developments in technology. So the Chief Justice’s opinion in this case looks a little bit like his opinion in Riley—the case about searching the content of cell phones from a couple of years ago. And in both decisions, the Court and Justice Roberts had recognized we can’t just rotely extend pre-digital judicial precedents to digital age surveillance and search techniques. The language on that theme in the Carpenterdecision just couldn’t be stronger. And I think in Justice Alito’s dissent, we can see some real anxiety and disagreement about how to make those changes without throwing out entire sets of Fourth Amendment doctrine. He would stick with the old rules and is apparently willing to accept the consequences for privacy.
Justice Gorsuch’s opinion is really interesting, too. It’s styled as a dissent, but really it’s a dissent in name only. Because he goes into great depth into his view of why the government investing in techniques raise concerns and how he thinks we could appropriately address those not through privacy principles but through more of a property based approach. He doesn’t totally flesh out how that will look in future case, but he provides a lot of guidance going forward that I think will see a great number of legal challenges from defense attorneys and others that include sections that take Justice Gorsuch up on his invitation to raise that theory as well.”
A Greater Threat? Alito’s dissent included a passage about modern technology that struck me. The justice wrote that some of today’s “greatest threats to individual privacy” could stem from “powerful private companies that collect and sometimes misuse” personal data. “If today’s decision encourages the public to think that this Court can protect them from this looming threat to their privacy, the decision will mislead as well as disrupt.”
Here’s more from my interview with Wessler:
“The Carpenter decision holds that the police need a warrant to get someone’s historical cell phone location data. But in doing so the court has created space for future cases to address what protections are necessary for all the other kinds of highly sensitive digital age data that’s held by third party companies. That’s everything from the content of our emails to information generated by GPS on our phones, whether its medical information or a record of everything we read on newspaper apps or fertility tracking data or so much more. Information about the state of our bodies being collected by a smartwatch or another wearable medical device, information about the interior of our home from internet of things devices, like a smart thermostat that knows when you’re home and maybe what room you’re in.
The Carpenter decision doesn’t directly answer the question of when a warrant is going to be required for which of those other kinds of data, but it is the first time in four decades the Supreme Court has revisited the third party doctrine, and the court did so in a way that creates real momentum toward protecting a wider array of highly sensitive digital age data going forward, and that is extraordinarily important.”
➤ Want to really nerd out? Read this insta-analysis from USC law professor Orin Kerr. The Fourth Amendment guru lost his argument that the third-party doctrine should hold but collected even more fodder for his theory that the Supreme Court’s privacy rulings are based on equilibrium adjustment.
More Carpenter coverage:
In Futuro: Legal Tech’s Global Heat Map
Innovation is a doer’s game, and the U.S. legal industry isn’t exactly known for leading the way in advanced technology. You could say that leaves an opening …
A number of international entrants have arisen on the legal tech scene, and not in your usual tech hot spots. Fear not, San Francisco—as headquarters to big players like Atrium LTS, Lex Machina and Y Combinator, you made the list of 10 legal tech hot spots I recently compiled for Legaltech News. But most of the hubs on that list—eight to be exact—are overseas, blossoming in locations as disparate as Belfast, Kuala Lumpur and Tel Aviv.
So what’s the secret sauce binding these far-reaching locales into a cohesive scene? One common thread is Legal Hackers, a grassroots group of lawyers, techies and students bringing new tech solutions to classic legal problems that boasts chapters across six continents. Another is participation in the first Global Legal Hackathon competition in April, winners from which hailed from Budapest, Hong Kong and Denver, while interesting access to justice technologies came out of Brazil, Nigeria and Ottawa.
Each city has its own reason for leaving its footprint. Singapore, for example, is largely driven by a statutory body’s “Legal Technology Vision” road map. Madrid, meanwhile, boasts innovation activity at both the law firm and law school levels.
And in Hong Kong, a movement is beginning via both international and home grown tech efforts. So what makes the city’s legal tech scene tick? As David Lam, co-founder of Hong Kong Legal Hackers chapter, told my colleague Rhys Dipshan, it boils down to two factors:
1. The Law Society of Hong Kong’s encouragement for legal professionals to be “more open-minded” about technology and innovation
2. Competitive pressure from the financial sector, which is dominant in Hong Kong and far ahead of the technology curve.
Eastern Europe is also home to several flourishing legal tech scenes. Speaking about Kyiv, Ukraine’s growing presence, Valentyn Pivavarov, executive managing director of PatentBot, identified “strong community and lack of justice” as the main influencers for the city’s growing scene. “In Ukraine, we have a lot of problems with justice, and at the same time, Kyiv Legal Hackers has strong community and developers,” he said. Unlike Moscow’s chapter, which focuses on “legal tech for law firms,” or Belgium, where “people mostly don’t feel the lack of justice like in Eastern Europe,” Kyiv’s group has developed “dozens of chatbots” and other customer-based solutions.
>> Takeaway. The scene for legal innovation is growing, and largely outside of the U.S. New players are emerging in areas not traditionally known as technology hubs and where innovation is largely shaped by economic and legal realities on the ground.
Protocol: The Ripple Effect
Cryptocurrencies are no stranger to legal scrutiny, but a class action facing Ripple Labs could upend the way cryptocurrencies are regulated. We’ve written about the suit before in this briefing. Filed in May, it essentially argues that Ripple’s XRP coin is managed like a security, and, because it isn’t registered as such, violates federal securities laws. In a sign of how high the stakes are, Ripple has hired a super-charged defense team.
My colleague Rhys Dipshan has a deep dive into the case that’s well worth reading.
He writes: “The lawsuit is unique in the cryptocurrency scene, where the most cases revolve around fraud allegations or the legality of certain initial coin offering (ICO) “token-presales.” A favorable ruling for the plaintiffs in the class action could likely have repercussions for how other cryptocurrencies operate in markets for years to come. Ripple Labs has much on the line. If its XRP cryptocurrency is found to be both a security and in violation of Section 5 of the Securities Act of 1933, which mandates that securities must register with the SEC and be offered on a registered exchange, all purchases of XRP would come to a halt.”
Rhys points out that could lead to greater legal troubles for the company and that a freeze of XRP’s exchange would open the question of whether purchasers can argue they purchased XRP under false pretenses and seek a refund.
The suit also raises the specter of criminal consequences for cryptocurrency creators who operate outside the bounds of securities laws. Sara Crovitz, partner at Stradley Ronon and former SEC associate director and deputy chief counsel, noted, “The ramifications for acting as an unregistered broker-dealer can be severe; they can even be criminal.”
And putting the brakes on XRP, which CoinmarketCap lists as the third-largest cryptocurrency, could shake the overall crypto marketplace. Fenwick & West’s Michael Dicke, a former SEC enforcement official, told Ben Hancock, “The Ripple class action lawsuit creates a danger to the continued development of innovative blockchain-based currencies, given the potential of such private litigation to create uncertainty within the developing cryptocurrency markets.”
>> Look Ahead: The Ripple suit is one to follow (and we’ll be following it here). While regulators have yet to take a firm stance on some of the issues arising around cryptocurrencies, plaintiffs lawyers could force the issue. Plaintiffs powerhouse Robbins Arroyo got in on the action earlier this month with a suit alleging XRP is a security under California law.
That’s all for this week. Happy International Asteroids Day. And keep reading for What’s Next!