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T-Mobile-Sprint: Pro-competitive results despite a facially anticompetitive merger?

Written By: Chase Westin Laurent

With more than two-thirds of American households accessing the internet on mobile devices, wireless service providers are constantly looking for ways to remain competitive. [1] This has created a battle between major cell phone carriers to acquire competitors when feasible. Courts have blocked some of these previous merger attempts on the grounds that they violated Section 7 of the Clayton Act and decreased competition. [2] In contrast with previous rulings, on February 10, 2020, the United States District Court for the Southern District of New York approved the merger between two of the nation’s largest wireless carriers: T-Mobile and Sprint. [3]

Section 7 of the Clayton Act deems a merger anticompetitive and unlawful when it substantially lessens competition in “any line of commerce . . . in any section of the country.” [4] A prior case found a merger anticompetitive when it led to a market share exceeding thirty percent or when using an alternate measure of market concentration, a Herfindahl-Hirschman Index (“HHI”) increase of 200 points amounting to over 2,500 points. [5] Accordingly, thirteen states and the District of Columbia were able to establish a prima facie case, with T-Mobile expected to hold 37.8 percent of the market’s subscribers and increase its national HHI by 679 points to a total of 3186 points. [6] However, Sprint’s demise as a competitor, T-Mobile’s branding as the “disruptive Un-Carrier,” and DISH’s entry into the market led the court to rule in favor of the T-Mobile-Sprint combination. [6]

As a direct competitor, Sprint’s merger with T-Mobile would on its face decrease competition. [7] But, T-Mobile and Sprint’s management team, presented evidence that Sprint’s standing as a national competitor was soon to be gone. [8] Wireless carriers are constantly challenged with not only maintaining but also improving their network quality by way of either investments or cost-cutting. [9] Sprint’s history of eleven straight years of losses until 2017 and its current $37 billion dollars in debt disabled it from funding improvements by way of investments. [10] Thus, Sprint has turned to cost-cutting, leading to increased complaints regarding network quality, while AT&T, Verizon, and T-Mobile have shifted towards innovation and 5G. [11] This left Sprint with little chance at financial success in the future as customers  move towards the companies on top. [12]

In contrast, T-Mobile has seen almost a decade of successful rebranding and strategizing, which has attracted customers from its competitors. [13] Chief Executive Officer, John Legere, and his team implemented an innovative strategy: identifying and excluding features consumers disliked, such as two-year service contracts, fees for international roaming, and limits on data usage. [14] At prices lower than its competitors, T-Mobile began offering service plans without these undesirable features, greatly challenging AT&T and Verizon to similarly provide “pro-consumer packages.” [15] T-Mobile used the strategy as evidence that it seeks to further its image as the “Un-Carrier” with the merger and not to raise prices or curtail further innovation. [16]

Finally, T-Mobile argued that DISH’s entry into the market of wireless carriers, with nationwide 5G coverage expected by 2023, diminishes any effects of the 4-to-3 merger. [17] Merger Guidelines, though not binding upon the courts, require that a competitor’s entry into the market be timely, or “rapid enough to make unprofitable overall” anticompetitive practices, such as a merger. [18] The court ultimately found DISH’s entry into the market by 2023 timely when considering T-Mobile’s interest in remaining competitive during these three years by not raising prices for the sake of its brand and its consumers. [19]

As a result of the T-Mobile-Sprint merger, the “New T-Mobile” is set to compete with AT&T and Verizon. Whether consumers see the benefits of this merger in the coming years will likely depend on competitors enacting pro-consumer changes, DISH successfully entering the market, and T-Mobile continuing its successful brand strategy. Presuming these all take place, cell phone users will see increased network speeds and quality, more advanced technology, and ultimately lower prices in the near future. The merger’s approval, despite previous contentious rulings, might just work to benefit consumers and increase competition in contrast to its seemingly anticompetitive nature.

 

[1] Kurt Bauman, New Survey Questions Do a Better Job Capturing Mobile Use, UNITED STATES CENSUS (Aug. 8, 2018), https://www.census.gov/library/stories/2018/08/internet-access.html [https://perma.cc/DS43-DLNK].

[2] See, e.g., United States v. AT&T Inc., 541 F. Supp. 2d 2 (D.D.C. 2008); United States v. Phila. Nat’l Bank, 374 U.S. 321(1963).

[3] New York v. Deutsche Telekom AG, 2020 U.S. Dist. LEXIS 23716 (S.D.N.Y. Feb. 10, 2020).

[4] 15 U.S.C.S. § 18 (2019).

[5] Phila. Nat’l Bank, 374 U.S. at 364-66. See also Consol. Gold Fields PLC v. Minorco, S.A., 871 F.2d 252, 260 (2d Cir. 1989).

[6] Deutsche Telekom AG, 2020 U.S. Dist. LEXIS 23716 at *16-17.

[7] Id. at *60-61.

[8] Id. at *174.

[9] Id. at *99.

[10] Id. at *101-02.

[11] Id. at *99.

[12] Id. at *102.

[13] Id. at *29.

[14] Id. at *146.

[15] Id.

[16] Id. at *172-73.

[17] Id. at *145.

[18] Federal Trade Commission, Horizontal Merger Guidelines § 9.1 (Aug. 19, 2010).

[19] Deutsche Telekom AG, 2020 U.S. Dist. LEXIS 23716, at *136.

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Who is responsible for fixing the e-commerce problem surrounding counterfeit products?

Written By: Laura Odujinrin

The Rise of E-commerce

E-commerce sites, like Amazon, eBay, and Etsy, provide huge opportunities for small and medium business (“SMB”) owners to reach customers and grow business in a way that would be nearly impossible with traditional brick and mortar. These e-commerce sites also allow consumers to choose from a much larger pool of products and producers to find exactly the product they are looking for.

In 2018, Amazon, the world’s largest e-commerce platform, [1] had nearly two million SMBs using its e-commerce marketplace platform to reach and sell to customers. [2] Those SMBs sold nearly 4,000 products per minute, [3] totaling $160 billion dollars in sales. [4] The e-commerce industry is only continuing to grow, with sales expected to reach nearly 15 percent of total retail spending and more than $4 trillion dollars in spending in 2020.” [5] But, with increased access, growth, and opportunity for business owners and consumers alike, comes a challenge: counterfeit products.

The Rise of Counterfeit Products

A counterfeit product is a product “made in imitation of something else with intent to deceive.” [6] In 2018, U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement seized 33,810 counterfeit products that violated intellectual property rights and were worth an estimated $1.4 billion dollars. [7] The number of seized counterfeit products has more than doubled since 2009, and the retail price of seized products has continued to increase year after year. [8]

Many counterfeiters advertise their counterfeit products using language [9] and images copied directly from the original product’s page, [10] leading to many consumers unknowingly purchasing counterfeit goods. To make matters worse, counterfeit goods, unlike authentic goods, often do not adhere to any health or safety regulations, which can lead to the purchase of potentially dangerous and life-threatening products. [11] For example, a CNN investigation found that a counterfeit version of a popular car seat sold on Amazon “broke into pieces in a 30-mph crash test …, failing to meet the basic standards set by U.S. regulators.” [12]

To make matters worse, the burden of finding and reporting counterfeit products currently falls on the small business owners themselves, costing them precious time and money. [13] While a few of the e-commerce sites, like Amazon, offer services to help manage counterfeit products, fighting the counterfeit problem is akin to a never-ending game of “Whack-a-Mole” for many business owners, who successfully get one counterfeit product taken down only to find a new one pop up days or weeks later. [14]

Government Action

E-commerce sites have largely avoided legal liability by claiming that because the copyright products are sold by third party sellers and not by the site itself, the site is protected because it is not the seller of the counterfeit product, but merely a marketplace provider. [15]

In early March of 2020, the House proposed a bi-partisan bill, the Shop Safe Act, which aimed at “address[ing] the problem of the sale of unsafe counterfeit goods by incentivizing [e-commerce] platforms to engage in a set of best practices for screening and vetting sellers and goods, penalizing repeat offenders, and ensuring that consumers have the best (and most accurate) information available to them when they make their online purchases.” [16] The statute would provide clarity where case law has remained obscure, namely addressing the question of “when a platform can be held contributorily liable,” [17] by ensuring that e-commerce platforms who follow the Shop Safe Act’s best practices will not be held legally liable.

Problem Solved?

The Shop Safe Act is a great step in fighting the counterfeit products problem, but since it only pertains to “goods that have a health or safety impact … on consumers,” [18] it leaves many SMB owners, like  artists, creators, and designers whose products do not pose a threat to consumer health or safety, left to grapple with the problem on their own. Whether the Shop Safe Act or other programs developed by the e-commerce sites themselves will help is left to be seen. If all the stakeholders, like the government, e-commerce platforms, business owners, and consumers, can work together to combat the problem, a solution to this ever-growing problem can hopefully be found.

 

[1] Pamela Boykoff & Clare Sebastian, Fake and dangerous kids products are turning up for sale on Amazon, CNN BUSINESS (Dec. 23, 2019, 8:25 AM), https://cnn.com/2019/12/20/tech/amazon-fake-kids-products/index.html [https://perma.cc/B2DY-9N9P].

[2] 2019 Amazon SMB Impact Report, AMAZON at 2, https://d39w7f4ix9f5s9.cloudfront.net/61/3b/1f0c2cd24f37bd0e3794c284cd2f/2019-amazon-smb-impact-report.pdf [https://perma.cc/F6Y9-VD33] (last visited Mar. 17, 2020).

[3] 2019 Amazon SMB Impact Report, supra note 2, at 7.

[4] Id. at 3.

[5] SHOP SAFE Act of 2020, 116th Cong., 2d Sess. (proposed Mar. 2, 2020).

[6] Counterfeit, MERRIAM-WEBSTER, https://merriam-webster.com/dictionary/counterfeit [https://perma.cc/KDU9-KVPC] (last visited Mar. 17, 2020).

[7] U.S. Customs and Border Protection Office of Trade, Intellectual Property Rights Fiscal Year 2018 Seizure Statistics, U.S. CUSTOMS AND BORDER PROTECTION at 6, https://www.cbp.gov/sites/default/files/assets/documents/2019-Aug/IPR_Annual-Report-FY-2018.pdf [https://perma.cc/N4J5-QVHW] (last visited Mar. 17, 2020).

[8] 2019 Amazon SMB Impact Report, supra note 2, at 7.

[9] SHOP SAFE Act of 2020, 116th Cong., 2d Sess. (proposed Mar. 2, 2020).

[10] Nicole Nguyen, Stolen Artwork Is All Over Amazon – And Creators Want The Company To Do Something About It, Buzzfeed News (Jan. 23, 2019, 12:02 PM), https://www.buzzfeednews.com/article/nicolenguyen/amazon-counterfeit-art-sellers-fakes-copyright-infringement [https://perma.cc/9FA7-G5P6].

[11] Boykoff & Sebastian, supra note 1.

[12] Id.

[13] Id.

[14] Id.

[15] Alan Rappeport, Lawmakers Propose Making E-Commerce Companies Liable for Counterfeits, The New York Times (Mar. 2, 2020), www.nytimes.com/2020/03/02/us/politics/counterfeits-bill-china-amazon.html [https://perma.cc/RWH6-7LXH].

[16] SHOP SAFE Act of 2020, 116th Cong., 2d Sess. (proposed Mar. 2, 2020).

[17] Id.

[18] Id.

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Nothing is Truly Original: When does a pop star’s use of artists’ work cross the line?

Written By: Brienne Johnson

In an age where social media is prevalent, artists’ works are more easily dispersed and accessible to the public. Pop stars’ album art and links to music videos are displayed on various platforms, such as Instagram, Snap Chat, and Twitter. Many artists use these same platforms to share their art and gain a following. Artists, due to the crucial role of social media in society, are faced with the problem of choosing between protecting their intellectual property and posting their work online to stay active and relevant within the art community. [1] While creative industries take inspiration from life, the line between inspiration is a fine one. At what point do the concepts and ideas of others taken from the internet and social media cross the line from inspiration to theft?

Recently, many pop stars have been called out for using concepts of other artists’ work in their videos and album art without permission or credit. [2]For example, Chris Brown imitated multiple artists’ works in his recent music video, Wobble Up; Ariana Grande imitated  another artist’s image for her God is Woman video; and Kendrick Lamar imitated another artist’s work in his All the Stars video. [3] Both Kendrick Lamar and Ariana Grande settled with the artists over their claims where their imagery was used without permission. [4]

Tim Maxwell, a recognized lawyer in the field of art law, cites ignorance as the main cause. Music video directors and the pop stars’ creative teams assume once art is placed in the public domain, everyone is able to use it without any objections from the original artist. [5] However, young artists who publish their art on Instagram do not have the resources to hire a lawyer and pay the legal costs associated with copyright protections. [6] For an artist to bring an infringement claim, there must be copying that satisfies the requirement of “substantial similarity.” [7] Unfortunately, as long as the artists remain silent, nothing will be done to further the protection of their intellectual property.

[1] Sydney Gore, Artists Speak Out Against Chris Brown Over Copyright Allegations in “Wobble Up”, HIGHSNOBIETY (May 22, 2019), https://www.highsnobiety.com/p/chris-brown-wobble-up-video-copyright-allegations/.

[2] Lanre Bakare, ‘Not Again’: the online artists accusing pop stars of stealing work, THE GUARDIAN (June 6, 2019, 07:43 AM), https://www.theguardian.com/music/2019/jun/06/not-again-the-online-artists-accusing-pop-stars-chris-brown-of-stealing-their-work.

[3] Id.

[4] Sarah Cascone, Kendrick Lamar Denies Ripping Off the Artist Who’s Suing Him Over His ‘Black Panther’ Music Video, ART WORLD (May 22, 2018), https://news.artnet.com/art-world/artists-accuse-chris-brown-of-copying-1554196.

[5] Bakare, supra note 2.

[6] Id.

[7] Ringgold v. Black Entertainment TV, Inc., 126 F.3d 70, 75 (2d Cir. 1997).

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How an Indie Band Outsmarted Spotify

Written By: Nick Lavkulik

What if I could give you an unlimited supply of any coffee in the world at a rate of one coffee per hour for $10 per month? Next, what if I told you all of the coffee you were drinking was made by full-time baristas earning only $2.50 per hour at most?

This is the relationship between Spotify and artists. Here is how it translates.

Spotify pays roughly $0.006 to $0.0084 per stream to each track’s music rights-holder(s). [1] The holder can be split between many parties, including the record label, producers, songwriters, and performing artists. [2] A 5-minute song streamed twelve times within an hour amounts to approximately 10 cents.

A barista can make a maximum of 25 cups of coffee an hour. [3] Now, what if I told you four of these baristas figured out a way to make more coffee? An avant-garde flavoured coffee.

That’s Vulfpeck.

Vulfpeck, an independent funk band, uploaded an album receiving 3.72 million streams, amounting to approximately $18,000. [4] The album was complete silence. This album is very similar to John Cage’s completely silent piece, 4’33”, which can currently be found on Spotify. [5]

Why did people listen to this album? Vulfpeck told their fans to listen to their album, Sleepify, on repeat as they slept to fund an admission-free tour for their fans. [6] Each track lasted about 30 seconds and was titled with varying amounts of the letter “Z”. [7] Vulfpeck accompanied its release with promotional materials, including tweets, such as, “please don’t ‘shuffle’ sleepify. i know this might come of snobbish, but we spent a lot of time on track order.” [8]

Initially, Spotify thought Vulfpeck’s actions were nothing more than a “clever stunt.” [9] However, after the album generated revenue, Spotify requested its removal for violating the terms and conditions [10] as “artificially increasing play counts.” [11]

After the album was pulled from Spotify, Jack Stratton, one of the members of Vulfpeck, made a recommendation for Spotify’s payment model. [12] Instead of splitting up the revenue based on the percentage of total streams on the platform, it should be per subscriber. [13] Each subscriber pays the same fee, despite how one subscriber may stream more than the next. This technically means each stream from subscribers who stream more, is worth less.

Do you think Vulpeck should have had Sleepify removed from Spotify, and applying the   barista hypothetical, go back to making its equivalent of only $2.50 an hour? Should recorded music only exist as a promotional tool? Should Spotify’s ability to cut out the intermediate hoops to access music be considered? Is Spotify’s role even what we should be concerned about, since Spotify pays music holders 70% of the revenue it generates from the platform’s streams? [14] If not, is there something more fundamental but still practical to change for ensuring artists are properly compensated?

 

[1] Kabir Sehgal, Spotify and Apple Music should become record labels so musicians can make a fair living, CNBC (Jan. 26, 2018, 11:04 AM), https://www.cnbc.com/2018/01/26/how-spotify-apple-music-can-pay-musicians-more-commentary.html#targetText=Here’s%20the%20math%3A%20Spotify%20pays,producers%2C%20artists%2C%20and%20songwriters.

[2] Id.

[3] Peter Holley, Baristas beware: A robot that makes gourmet cups of coffee has arrived, WASH. POST (Nov, 11, 2019), https://www.washingtonpost.com/technology/2019/03/22/baristas-beware-robot-that-makes-gourmet-cups-coffee-has-arrived/#targetText=The%20machine%20can%20make%20100,four%20baristas%2C%20the%20company%20says.

[4] Harley Brown, Spotify Removes Vulfpeck’s ‘Sleepify’, BILBOARD (April 26, 2014), https://www.billboard.com/articles/business/6070030/spotify-removes-vulfpecks-sleepify.

[5] John Cage, 4’33” (The Sound Corporation 1991).

[6] Brown, supra note 4.

[7] Steve Knopper, ‘Silent Spotify Album’ Creator Talks Strategy Behind Unique Plan, ROLLINGSTONE (Mar. 21, 2014 2:45 PM), https://www.rollingstone.com/music/music-news/silent-spotify-album-creator-talks-strategy-behind-unique-plan-244404/.

[8] Vulfpeck (@vulfpeck), TWITTER (Mar. 13, 2014, 1:00 PM), https://twitter.com/vulfpeck/status/443838924587155456.

[9] Brown, supra note 4.

[10] Id.

[11] Jack Stratton, Why Spotify Pays So Little, LIT.VULF (Mar. 15, 2015), http://lit.vulf.de/spotify-so-little/.

[12] Spotify Terms & Conditions of Use, SPOTIFY https://www.spotify.com/us/legal/end-user-agreement/#s8 (last visited Oct. 10, 2019).

[13] Stratton, supra note 11.

[14] Id.

 

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Elected Officials Blocking Constituents on Twitter

Written By: William C. Besl Jr.

In high school, it was always a huge deal when someone “subtweeted” about a friend or even blocked their frenemy of the week. High school only lasts four years, but some people never grow out of it as seen in a case brought against an elected official in February. Missouri state representative Cheri Reisch blocked her constituent Mike Campbell after he retweeted a post condemning Reisch for accusing her opponent of being unpatriotic when the opponent put her hand behind her back during the national anthem.[1]

Most twitter disagreements are settled in the school halls, but the Western District of Missouri court will settle this issue. In Campbell v. Reisch, the court is less concerned with drama and more focused on the constitutional issues raised when an elected official essentially refuses to hear the opinion of a constituent. The case is still pending after Reisch’s motion to dismiss was denied in early February.[2]

The case primarily raises First Amendment freedom of speech concerns, but also addresses whether Representative Reisch acted under her elected authority when tweeting.[3] In response to these concerns, some have asked Twitter to step in and make a special verification symbol for elected officials and make it impossible to block individuals from that account.[4] Another suggestion is that Twitter should simply ban all politicians from its website.[5] Many may agree with this rather drastic measure after having to watch President Trump’s disaster of a Twitter feed for the past three years.

Last year, Knight First Amendment Institute at Columbia University sued President Donald Trump in the Southern District of New York.[6] This case raised the same First Amendment concerns as in Campbell.[7] The court awarded declaratory judgment ordering President Trump to unblock the plaintiffs, and it is now on appeal at the Second Circuit.[8] It is likely that Representative Reisch’s case will turn out the same.

With social media becoming ever more engrained in the political process, the heads of these networking platforms need to address these First Amendment concerns before the 2020 election cycle.

 

[1] Campbell v. Reisch, No. 2:18-CV-04129-BCW, 2019 WL 57433 (W.D. Mo. Feb. 8, 2019).

[2] Id. at 7.

[3] Id. at 2.

[4] Eric Goldman, Another Politician Probably Violated the First Amendment By Blocking a Constituent on Twitter, Technology & Marketing Law Blog (Feb. 16, 2019), https://blog.ericgoldman.org/archives/2019/02/another-politician-probably-violated-the-first-amendment-by-blocking-a-constituent-on-twitter-campbell-v-reisch.htm.

[5] Id.

[6] See Knight First Amendment Institute at Columbia University v. Trump, 302 F.Supp.3d 541 (S.D.N.Y. 2018).

[7] Id. at 549.

[8] Id. at 579.

Merging Man and Machine

Written By: Sachin Patel

The intersection of man and machine is a reoccurring theme in sci-fi films, but one may wonder if these stories are tales written to entice curious minds about the great unknown, or is it actually futuristic foreshadowing? Tesla CEO Elon Musk is a believer in the latter. Over the past few years Musk has discussed the idea of humans “merging” with machines in the near future as a way to ensure that humans are not rendered obsolete.[1] Unlike the creative minds of Hollywood whose scientific feat stops at their pen, Musk has been devising ways to make his idea reality. To do this, Musk plans to use a “neural lace” which integrates AI in the human brain. This would allow users to communicate their thoughts to computers at incredibly fast speeds.[2] If this can in fact be achieved, it would lead humans farther along the spectrum of innovation and advancement to a place where we can compete with AI on a more leveled plane. Continue Reading

What’s Really Being Watched When You Turn on Your TV

Written By: Jennifer V. Nguyen

In 2015, ProPublica, an independent newsroom that produces investigative journalism in the public’s interest, published an article regarding TV manufacturer Vizio’s data collecting practices. [1] The Federal Trade Commission (“FTC”) brought a suit against Vizio, which settled last week (February 6, 2017) for $3.7 million ($1.5 to the FTC and $2.2 million to New Jersey). [2] Continue Reading

A Gene-Editing Patent Dispute – What Does It Mean?

Written By: Charles Cheng

Is this just another ordinary patent dispute? Time will tell. A high profile patent dispute between the University of California, Berkeley and the Broad Institute of MIT and Harvard has just concluded a year-long proceeding called interference proceeding at US Patent and Trademark Office (USPTO) Patent Trial and Appeal Board (PTAB).[1] On February 15, 2017, PTAB announced its decision after both parties presented their oral arguments before a three-judge panel in December 2016.[2] The proceeding was to determine which party has actually “invented” a gene-editing technology called CRISPR-cas9.[3] Continue Reading

Earth: A Pit Stop to Mars?

Written by: Irram Khan

On September 27, 2016, Elon Musk, inventor and founder of SpaceX, revealed details on his plan to colonize Mars.[1] This endeavor is more than just a savvy actualization of a 1960s sci-fi novel—it’s  a significant advancement in human development and technology. The concept, however, is not new. According to National Geographic, the plan to conquer Mars has been in motion since at least the 1970s.[2] Musk’s latest move is reviving mainstream interest in space.  Even the Boeing CEO, Dennis Muilenburg, confidently declared at the most recent “What’s Next” innovation conference in Chicago, that Boeing will land the first person on Mars.[3] Although the journey to Mars sounds exciting, space travel faces some very real developmental issues here on earth, from a legal standpoint. For young lawyers and law students, however, this may be good news. Continue Reading

Not Merely an Exit: Brexit’s Effects on European IP Law

Written by: Michael Choi

Breaking away when a situation becomes unfavorable, while not the smoothest option, is an appropriate option to consider. However, failing to consider the ramifications of turning away may complicate the situation further.

Enter: Brexit.

Brexit, a portmanteau of the words “British” and “exit,” describes the controversial referendum held on June 23, 2016, where voting-age citizens of the United Kingdom (UK) voted on whether to remain in or leave the European Union (EU).[1] A 51.9% majority voted for the UK to exit the EU.[2] Because of its international economic presence, the UK’s severance will leave the EU in a precarious position. The severance will even challenge the United States, since many of its companies continue to conduct business in the UK. Continue Reading