Archive for the 'Business' Category

Bieber and Usher “Usher” Out Copyright Claims

Many of the most famous musicians have faced high-profile copyright cases accusing them of stealing their music from another artist. From Led Zeppelin to the Beatles to Skrillex to the guy who wrote the Ghostbusters theme song, the list of musicians who’ve stared down a copyright infringement claim is a long on indeed,  In the last few years, Usher and Justin Bieber have been dealing with their own copyright infringement lawsuit.  The two were accused of stealing parts of their collaborative song “Somebody to Love” from an identically titled song written by two Virginia artists–Devin Copeland and Mareio Overton.

Understanding the Claim

Mr. Copeland and Mr. Overton wrote their own “Somebody to Love” back in 2008, two years before Usher and Bieber came out with their song in 2010 which then went on to peak at No. 15 on the Billboard Hot 100.  Copeland and Overton argued that Bieber’s song’s chorus
was incredibly similar to their own work and demanded $10M from the two artists.  However, the courts disagreed.  The case was dismissed, sent back down for reconsideration after appeal and Bieber and Usher finally succeeded in having the copyright lawsuit against them dismissed once and for all just a few weeks ago. 

The court’s decision revolved around the inability of the plaintiffs to show that Justin Bieber had access to their song before he wrote his own version–a fundamental element of proving copying in a copyright infringement case.  However, in order to truly understand the ruling it is necessary to understand exactly how copying is shown when somebody is accused of infringement.

Justin Bieber Copyright Claims

How to Put the “Copy” in Copyright Infringement

In order to succeed in a copyright infringement case you have to establish that the person you’ve accused of infringement, lo and behold, copied your protected work.  This makes sense, if you can’t show that a defendant copied from you, then why are you in court?  However, the evidence required to show copying has two parts.  First, you need to show that the accused work is similar to yours.  If it isn’t, that’s not exactly a copy is it?  Second, you need to show that your defendant had access to your work.  Once again, if they never saw your work how could they have ripped you off?

So we have our two elements but, like most things in law, it’s more complicated than that.  The two elements, similarity and access, are analyzed on a sliding scale.  The more proof of similarity, the less evidence you need of access and vice versa.  To add one more wrinkle, it was established in a case against the late Michael Jackson (and reaffirmed when the Isley Boys later sued Michael Bolton) that if the two works are similar enough you don’t actually need any evidence of access because the court is willing to presume that a defendant copied your work if it’s similar enough to what you made originally.  This is a concept known in law as striking similarity, courts look to a number of things to decide if two works are this similar but common examples would be where your work had particularly unique qualities that were copied nearly verbatim or that you messed something up in your work and they were dumb enough to copy your error.

In Bieber’s case, Mr. Copeland and Mr. Overton tried to establish striking similarity–arguing that the chorus of their version of “Somebody to Love” had a near identical chorus to the one put out by Bieber and Usher.  Unfortunately for them, their judge didn’t agree.  Thus, while they could show some level of similarity, they were required to produce evidence that Bieber or Usher had actually listened to or been exposed to their 2008 song before they wrote their own version in 2010.

Access Hollywood: A Star-Studded History of How to Prove Access

Unlike similarity, no matter how evidence of access you have you always need to show at least a little bit of similarity.  Otherwise if enough people see your work, anything they made would be copyright infringement.  However, just like in the Bieber case, it is frequently a crucial sticking point in copyright cases as it can be hard to prove at times.  Over time, exactly what is acceptable as evidence of access has been refined–often in cases featuring some particularly famous names.

First and foremost, the evidence required is a sliding scale.  The more similar the works, the weaker the evidence of access that is required.  For instance, there have been cases where evidence as weak as the fact that a work was published to the internet–and the defendant had internet access–was enough.  Where a work is particularly famous and widely distributed, that can also be evidence enough to show access.  However, just a few years ago a case dealing with the script to the Matt Damon’s Sci-Fi movie Elysium established that, just because something is posted to the internet once, that doesn’t by itself show that a work was widely distributed and won’t always be enough evidence to establish access.  This served as a counter point to a lawsuit brought by the developers of Angry Birds, where being posted online and subsequently downloaded approximately a billion times was enough to show widespread distribution.

In the internet age, availability online is often central to establishing access.  However, the cases above leave you with the helpful understanding that a single post is generally not enough to show access but content posted and then downloaded a billion times is.  Just to fill in the small gaps in the middle there, a couple factors to think about are how often something is viewed or shared, how publicly available the internet content is, how popular the site the content was posted on is, and how high the content appears in search results.

Also important in understanding access is the fact that copying does not need to be done consciously.  This was established in a case brought against George Harrison of Beatles fame.  His song “My Sweet Lord” led to a lawsuit as it was nearly identical to another song called “He’s So Fine.”  Harrison admitted that he knew of the song and had heard of it, but said he just wasn’t thinking about it when he wrote his own song.  The court, in a nearly apologetic ruling against the rock star, said that just because you weren’t intentionally copying or thinking about the work at the time, the subconscious knowledge of the work through previous access is sufficient to show copying.  This was highlighted more recently when Marvin Gaye’s children sued Robin Thicke.  Thicke testified that he was so high while the song was written that he could not have possibly recalled Gaye’s work–although he did admit Gaye was an inspiration to him.  This was irrelevant to access. however, as the actual access itself was all the evidence needed. 

Finally, a particularly common type of confusion in access cases dealing with music deals with cases where an artist gave their song to music industry executive who works with an artist who later makes a similar song.  Unless there is actual evidence that the executive showed that song to the artist accused of infringement, a devilishly tricky thing to find, there’s generally not enough there to establish access.

Ultimately, Why the Case Failed

Mr. Overton and Mr. Copeland were trying to argue just that, saying that they had given their songs to music executives working alongside Bieber and Usher.  However, they couldn’t produce any evidence of those executives passing on anything to Usher or Bieber.  What’s more, their song wasn’t particularly widely distributed–either over radio, the internet, or other methods.  They were left in a situation where they couldn’t show that either singer had ever even heard of their work–and that killed their case.  Bieber and Usher claimed that their song was based on a November 2009 song by a woman named Heather Bright with which they had previously reached an agreement to use her work.  Overton and Copeland simply couldn’t prove otherwise.

Can Marijuana Businesses Survive the Trump Administration?

One of the most notable trends of the most recent election was the explosion of laws legalizing recreational and medical marijuana across the nation. In fact, while only 8 states currently allow recreational use, the majority of states have legalized the use of marijuana in one form or another. This explosion has caused a chain reaction, a matching eruption of businesses prepared to sell marijuana products wherever it is legal.

One of the largest of these companies is Dixie Brands, an enormous Colorado-based business. Dixie Brands, founded in 2010, currently has branches operating in Arizona, Colorado, California in Nevada. They have in the news recently for their desire to spread nationwide with planned expansions to Maryland, Oregon, and Washington.

Marijuana Business

However, operating and expanding as an operation in the business of selling a product that is federally illegal is understandably extremely complicated. Not only does each state have its own notably different set of laws on how a business must operate but federal law bars marijuana companies from a number of things most businesses would consider necessary to operate. In fact, the majority of the growth of the industry is predicated off the hands off approach of the federal government under the Obama administration.

Marijuana Businesses Under President Obama

In August of 2013, the Obama administration issued a memo stating that it would not interfere with legal cannabis business so long as they operated in states with fully fleshed out regulatory regimes for such businesses such as Colorado. In December 2014, President Obama signed a bill into effect which limited how the Justice Department could stop states from putting their own rules into effect when it comes to marijuana.  In a recent interview, President Obama went so far as to say that he believes that marijuana should be treated as a health issue in same vein as cigarettes and alcohol. He went out of his way in the same interview to note that polls show that the majority of people who voted for President-elect Trump feel the same way.

What They Might Face Under President Trump

These comments come after Trump has picked Sen. Jeff Sessions as his top choice for U.S. Attorney General–a particularly controversial pick.  Senator Sessions was nominated for a position as a federal judge by President Reagan in 1986. However, a Republican led Senate Judiciary Committee refused to appoint him after a number of racist comments and opinions came to light. Senator Sessions referred to the NAACP as “un-American,” repeatedly called the African-American Assistant United States Attorney Thomas Figures “boy,” and–perhaps most relevant for the state of marijuana law across the country–said that he thought the KKK were good people “until I learned they smoked pot.” While President-elect Trump has previously supported a hands-off approach to marijuana, his pick of Senator Sessions for U.S. Attorney General certainly points in a different direction–much to the chagrin of companies like Dixie Brands.  Senator Sessions is, as you can probably tell from his statements about the KKK, extremely outspoken in his opposition towards marijuana as a whole. Senator Sessions has stated that “one of [President Obama’s] great failures …is his lax treatment and comments around marijuana.”  He has been quoted as saying “We need grownups in Washington to say, ‘Marijuana is not the kind of thing to be legalized, it ought not to be minimized, and that it’s a real danger.'” He has even gone so far as to say “good people don’t smoke marijuana.”

All of this points to a potential change in stance from the incoming administration; the kind of change in stance that could be catastrophic for a business like Dixie Brands and the entire industry they belong to. So what exactly are the legal obstacles currently facing businesses based around marijuana products and how can a firmer line on marijuana make things even worse for these businesses?

The Legal Roadblocks of Selling Legalized Marijuana

First and foremost, the obvious elephant in the room.  Marijuana is federally illegal. Federal law supersedes state law when the two conflict. Thus, so long as marijuana remains criminal at the federal level the entire business could come crashing down in a matter of months or weeks with just a few changes to enforcement and federal laws. Supreme Court cases have shown that even personal use or cultivation of marijuana within a single state has sufficient impact on the nation as a whole to allow for enforcement of federal laws despite contrary state law. The bill signed by President Obama protecting such state laws from interference could be easily overturned by a conservative Congress with the mind to do it. If the choice of Senator Sessions as U.S. Attorney General signals an administration in line with his way of thinking, action such as this may well be in our future.

So, to say that the marijuana business is on shaky ground is a bit of an understatement. However, businesses such as Dixie Brands are used to operating on shaky grounds. The nature of their business has always involved some level of legal headaches in areas such as intellectual property, forming binding contracts and advertising. However, there are some legal issues that are even more fundamentally problematic for companies selling marijuana products.

Legal Transportation of Marijuana

One of the biggest of these headaches is that federal law makes it illegal to transport marijuana across state lines–interstate commerce is generally the realm of the federal government and the federal government says marijuana is illegal. The federal government can even prosecute people transporting marijuana from one legal state to another. The penalties for a violation of these rules are hefty–up to five years in prison or fines of up to $250,000.

This is especially relevant now that the entire block of states along the west coast all have legalized marijuana. In a normal franchise, standardizing providers and shipping equivalent quality goods to all your branches is standard practice.  However, this is illegal for marijuana companies and requires these companies to find a different legal provider of marijuana in every state they operate in. While some states have made it clear that enforcing these laws at their borders is not high on their priority list for single persons, this doesn’t necessarily apply for a larger business shipping large quantities and doesn’t prevent federal operatives from intervening.

What About Banking for Marijuana Businesses?

Another common issue facing businesses selling marijuana products is banking.  The fact that marijuana is, once again, illegal at a federal level has made most banks very hesitant to accept any money from a marijuana-related business. The problem is that this money is essentially earned through committing a federal crime and banks are fearful they may lose their required FDIC and NCUA insurance as both of these are provided by the federal government. Even worse, by working with a business like Dixie Brands a bank could face a lawsuit brought by the federal government.

Back in February of 2014, a division of the U.S. Department of the Treasury known as the Financial Crimes Enforcement Network (FinCEN) has created guidelines under which a bank may safely work with a marijuana-related company. These rules made it so that banks could work with companies selling marijuana so long as they file frequent Suspicious Activity Reports proving that the people they work with aren’t committing fraud or laundering money. However, while the rules made it technically legal to work with a company marijuana products, they also make it so expensive and time consuming to do so that no bank actually chooses to take FinCEN up on the offer. What’s more, these guidelines are not actually binding law but merely recommendations. This means that a change in position from the federal government, such as the one that looks to be on the horizon, would leave any bank following the FinCEN guidelines hung out to dry in a potential legal crackdown.

This issue has led to two things.  First, the marijuana industry is primarily a cash industry with all the problems that brings with it.  The interstate nature of credit cards, electronic payments, electronic transfers, PayPal and similar services tender all these payment methods unavailable to marijuana-related businesses. There are stories of owners of marijuana-related businesses coming to pay their taxes with sacks and sacks of cash like a Scrooge McDuck cartoon.  Second,  states have been forced to try and design their own internal banking services to help regulate the businesses they seek to tax.  Some of these, such as the newest regulations out of California, will only be taking effect later this year.

Is This the End of Expanding Marijuana-Related Businesses?

There is, unquestionably, an enormous amount of tax revenue to be made and jobs that could be created through legalized and regulated marijuana in the U.S.  However, the stance of those the incoming administration has chosen to represent them is not a friendly one to legalization.  There are certainly arguments in favor of this side of the argument as well–difficulty of enforcement, difficulty in proving current intoxication, etc.  However, as it stands the public opinions of the incoming Trump administration are incongruent.  President-elect Trump himself has been publically supportive of the growing marijuana industry.  The man he has chosen to weigh in most influentially on the current laws of the federal government, however, has a diametrically opposed position.   The marijuana industry is, and has been, an incredibly profitable house of cards–we’ll have to wait and see if the Trump administration chooses to blow it over.

Overtime Law Changes: How to Protect Your Business and Rights

Early in 2016, at the direction of President Obama, the Department of Labor (DoL) issued long awaited reforms to how overtime would be handled across the country.  The new rule, inventively called the Overtime Final Rule, is only the seventh time the Department of Labor has adjusted its rules for the changing times since nearly 80 years ago in 1938.  It would also be the first such adjustment in twelve years.  However, while the rule was initially set to take effect at the beginning of last month, the it’s looking more and more like the Overtime Final Rule may be even more long awaited than expected.  A ruling out of a Texas district court, temporarily preventing the Overtime Final Rule from moving forward, was recently upheld on appeal. 

Overtime Law Changes Department of Labor

What Does the Rule Cover?

So first things first, what exactly would the Overtime Final Rule do and why would anybody try to stop it?  The Overtime Final Rule was designed to update the salary exemptions to overtime.  Basically, if you make more than a certain amount–and your job requires a fairly high level of independent judgment and discretion on your part–an employer doesn’t need to pay you for overtime hours worked.  Overtime generally includes any hours in excess of 40 in a week, 8 hours in a day, or being required to work more than 6 consecutive workdays.  The Overtime Final Rule would have nearly doubled the cutoff point in pay before you are exempt from overtime.  The new cutoff would have jumped from exempting anybody making more than $455 per week all the way up to only excluding employees making $913 per week.  This amount would rise every year for the next three years to allow employers more time to adjust to the changes.  The DoL expected this change to make around 4.2M employees eligible for overtime pay around the country.   The new rule also sought to clarify the fairly murky area of the exact kind of jobs that can be overtime exempt.  However, it was the fact that it would require employers to make such huge changes in how they pay their employees that led to it being challenged as vigorously as it has been.  While rule may leave many employees excited about the prospect of a potential raise or overtime pay, the same prospect filled many employers with dread at having to budget in those changes as the DoL predicted that 4.2M new non-exempt employees would cost employers over $295M.

The response to the rule when it was first announced in May of 2016 was swift–a barrel of lawsuits against the DoL, its divisions, and its agents.   21 states, the Plano Chamber of Commerce and over 50 different businesses all sued in Texas District Court to try and put a stop to the new changes by arguing that the changes overstepped the DoL’s authority.  This led to Judge Amos Mazzant out of Texas issuing an unexpected emergency motion, days before the Overtime Final Rule was set to take effect, which prevented rule from moving forward anywhere in the country.  The federal government has appealed the ruling but until that case sees light–it’s currently in briefing until at least January 31st of this year–the Overtime Final Rule is stalled.

Is This the End of the Overtime Final Rule?

To call the Texas District Court’s ruling a setback to the DoL would be a dramatic understatement.  The case is still ongoing, upcoming decisions in the case include a request to stop the rule permanently.  However, as it stands the rule is stalled not dead–although the changing political climate may see the DoL abandon the case entirely.

With President-Elect Trump set to take office in a few weeks, there will be a changing of the guard at the DoL and until that changing of the guard it’s very unlikely there will be much action on the case.  Once the changing of the guard does occur, President-Elect Trump has appointed Andrew Puzder as his Labor Secretary–an outspoken critic of the Overtime Final Rule.  With this in mind, it seems unlikely that the case will be a high priority for the new administration and it may even be dropped–ending any chance of the DoL’s overtime changes taking effect.  Even if the case moves forward and the rules end up taking effect, a conservative majority in Congress would allow Republicans to kill the rules using a joint resolution under the Congressional Review Act.   

However, while things aren’t looking particularly good for the DoL’s rules, the case is far from over.  The Texas AFI-CIO–a prominent labor union–is currently seeking to join the case as a defendant in order to take over the case should the DoL end up walking away from it.  What’s more, the Congressional Review Act is an option that is very rarely used.  There may be life in the Overtime Final Rule yet.  So how do you plan for a future where the legal environment is totally up in the air?

What Do You Do Now?

So how do you move forward as a business?  Many have been busily preparing to adjust for the changes, however that in and of itself presents a challenge to employers.  What’s more, failure to properly classify an employee when it comes to overtime exemption can lead to costly lawsuits and fees.

The two options to deal with the changes is to either provide raises or reclassify employees.  Raises hit the bottom line while reclassification hits employee morale through the perceived loss of prestige and can require removing autonomy from an employee–sometimes even necessitating barring that employee from activities such as accessing emails while off duty.

As it stands, the Overtime Final Rule is simply not in effect and thus employers do not need to currently comply with its rules.  However, the injunction did not block all amendments the rules proposed–keeping sections increasing the cap on overtime exemption for particularly highly paid employees from $100,000 per year to $134,000 per year.  Thus, it’s important as an employer to be certain that employees exempted on this basis are properly classified. 

As to the remainder of the rules, there are basically two camps–employers who have already made changes to address the Overtime Final Rule and those who have not.  If you’ve made no changes, it makes sense to stay the course for now while preparing a plan to quickly move yourself in line witht he rules should they end up taking effect.

If you have made changes, the situation is a bit more complicated.  Rescinding raises and employment changes can be a tricky business, beyond the fact that it’s a painful HR move, it can give rise to legal claims against your business depending on how salaries or pay were agreed to.

As an employee it is important to keep an eye on where this law goes and make sure you are being compensated properly according to the law.  If you have been reclassified or given a raise, look to your employment agreements and figure out whether your employee can take back what they’ve given you.  What’s more, remember that an employer can rarely take back wages already paid under a restructured compensation plan.  Generally they will be limited to reducing future pay.

Surprisingly, businesses have by and large moved forward as it the ruling from Texas never happened.  Studies show the majority of small businesses–84% of them–have simply moved forward with raises, reclassifications, and employment agreements as if the rules had taken effect.  This is good news for employees.  However, many small businesses can ill afford the costs of such changes if they don’t have to.  For employees and employers alike, keep an eye on this case in the coming months–it has to come out of legal limbo sometime.

Uber Puts the Brakes on Their Self-Driving Cars

A few months back, Uber announced it was going to test something potentially groundbreaking–they announced tests of self-driving rideshare services in San Francisco.  Unfortunately for Uber, the tests turned out to be more premature than groundbreaking.  The California DMV condemned the tests as illegal and demanded that Uber not roll out their self-driving cars.  In the face of the disapproval of the California DMV, Uber decided to totally ignore the DMV and move forward with the tests anyway–for a week.  After moving forward, the California DMV revoked the registrations on every single one of Uber’s self-driving cars and Uber was forced to abandon their tests.

What’s the Problem with Uber’s Self-Driving Cars?

The problem California had with Uber’s self-driving test cars was a simple one, Uber simply didn’t bother to get the permits necessary to use an autonomous car in California.  Uber objected to the requirement of permits in the first place, arguing that because their self-driving cars needed human supervision they were not actually autonomous under California’s definition as California currently defines an autonomous car as one that drives “without the active physical control or monitoring of a natural person.”  The vice-president of Uber’s advanced technologies division made an announcement stating that “this rule just doesn’t apply to us, you don’t need to wear a belt and suspenders and whatever else if you’re wearing a dress.”
Uber Puts Brakes on Self-Driving Cars

The California DMV, as you can tell from how they responded, didn’t agree.  They’ve already issued hundreds permits to test autonomous cars on the roads of California.  They consider this permitting necessary for public safety when it comes to such new technology, and they demanded that Uber follow their rules.  Perhaps this was a wise precaution, in the one week Uber’s cars were running one was caught on tape running a red light.

This isn’t the first time Uber has chosen to ignore state laws in testing automation or had trouble with the law.  In fact, their very business model has occasionally been challenged as illegal.  Earlier this year, Uber went forward with testing self-driving trucks in Nevada despite explicit warnings from the state’s DMV that doing so would violate Nevada law.  Luckily for Uber, while Nevada has similar permitting requirements to California, the laws were so new as to not yet have any penalties set up for failure to comply.

Despite these setbacks, Uber’s self-driving plans have been making strides around the nation.  In Pittsburgh they have been given essentially free reign with a similar program testing autonomous ridesharing.  They have announced they will be moving the San Francisco test cars to Arizona and moving forward there.

Part of Uber’s problem, and how they caught a break in Nevada, is that self-driving cars are so new that very little law has actually sprung up to regulate how and when they can be used.  However, this has been slowly changing as states recognize that autonomous cars are here to stay.

Self-Driving Car Laws Around the Nation

Self-driving cars are coming and it’s not a matter of if, it’s a matter of when.  Just recently, Ohio announced it was investing $15M in self driving trucks going forward.  In the same week, Michigan became the first state to pass comprehensive laws on using, testing, developing and selling self-driving cars.

However, luckily for companies like Uber, Michigan’s laws have not focused on restricting the use and testing of self-driving cars–quite the opposite.  Michigans bills, 995 through 998, provide clear rules for how an autonomous car may be used on public roads and freeways.  The laws are set up to make clear rules for testing.  Once testing is complete, the new laws even allow for properly tested automated vehicles to be sold to the public.  The laws also require the Michigan Department of Transportation to recommend standards that will ultimately regulate the connected networks of autonomous cars and how the data collected from such a network–collisions, traffic data, etc.–will be allowed to shared with others.

What is less fortunate for Uber is that the laws also serve to outright lock them out of any self-driving rideshare services.  The new laws only allow specific most eligible automakers from creating a network of self-driving taxis.  While the law is very new, it certainly seems like this would keep Uber from spreading their new programs into Michigan.

Uber seems to think so, they’ve heartily condemned this part of the law in the media–calling the rules anti-tech and protectionist.  They have a point to a degree, creating a state made monopoly on a service or product does not seem like the best idea.   However, for the most part, Michigan’s rules will serve to open doors and ease the way as self-driving vehicles make their way into the marketplace.

While Michigan’s laws are the most sweeping, and likely the most lenient, laws passed on the subject they are far from the only laws regulating self-driving cars.  California, Arizona, Nevada, Utah, North Dakota, Louisiana, Tennessee, Florida, Massachusetts, Washington D.C., and Virginia all have laws in place regulating the use of autonomous vehicles.  In September of 2016, even the federal government–through the National Highway and Transportation Safety Administration–released an updated set of suggestions providing guidance for states in making laws.

It hasn’t all been forward progress, 16 states had self-driving car legislation that either stalled out or failed to pass in 2016.  However, Michigan–perhaps because it is a state so embroiled in car manufacturing–has taken the next steps in a trend towards fully preparing for self-driving vehicles to hit the market in earnest.  It’s only a matter of time until autonomous cars become as common as hybrids have become.  Uber may be flouting laws right now, but what they’re doing is going to become so common as to need clear regulation nationwide.

Fake News, Real Damage

Fake news has been in the news—the real news—as the recent election saw both the number of fake news articles and how frequently these articles were spread skyrocket.  The problem was so bad that in the last months leading up to the election engagement (shares, likes, comments, etc.) with fake news on Facebook outstripped engagement with news from major news outlets.  This has led both Facebook and Google to announce that they’ll be taking affirmative steps to address the flood of fake news on their websites.

Entire fake news companies, such as National Report, Huzlers, World News Daily Report, and the News Nerds have sprung up over the last three years.  These companies all have the same basic business model, creating fake news to spread on Facebook with the goal of generating ad revenue.  The fake news business is booming too, with a single author can make over $10,000 a month.

The idea of fake news sites isn’t new, the Onion has been making satirical fake news stories since 1988.  However, while the new fake news companies mostly claim to be satire in the vein of the Onion their model has changed.  Fake news sites have realized that funny news satire pieces, such as those from the Onion, are less profitable than outright hoax news—no comedy, no message, just provocative lies.

These types of falsehoods can be dangerous, and not just because of misinformation.  Earlier this month a man from North Carolina assaulted a pizzeria in Washington D.C. with an assault rifle after reading a fake article saying that Hillary Clinton was running a child sex ring out of the shop.  The man currently faces criminal charges.

But there is more than the danger of people acting on these fake stories and believing them to be true.  There’s also the potential to ruin a person’s reputation with lies repeated frequently enough to be considered true by many.  This brings up the question, can the people who write these fake stories be sued for defamation by the people they write stories about?

How Does Written Defamation Work?

At the most basic level, a person can be liable for defamation where they communicate a false statement about somebody that damages their reputation, exposes them to ridicule, etc. This is a communication, so it has to be something that reaches the ears or eyes of at least one person who isn’t the person making the defamatory statement or the person the statement is about.  Those third parties must understand what the defamatory statement means and who or what group the statement is about.  Finally, the statement must be made with—at a minimum—disregard for the truth beyond that of a reasonable person.

Where defamation is spoken, it is called slander, where it is written it is called libel.  So if somebody was suing one of these fake news companies over news they produced, they’d be suing for libel.  Looking at the initial elements, a person off the street who had defamatory statements written about them would have a pretty dang strong case.  The companies are literally making up news, so they have actual knowledge of the falsehood of what they write and publish.  The news is also seen by millions and, unlike more clearly satirical articles like those from the Onion, is designed to look as much as possible like real news communicating a true message that those reading it would believe.

Satire vs. Defamation

Speaking of satire, most fake news companies would take issue with distinguishing them from satirical news such as the Onion.  Instead, they would argue that they are taking the idea of satirical news to the absolute edge by juxtaposing how ridiculous reality is—or by fooling people into believing their news.  There’s certainly a legal advantage to drive fake news companies to seek such classification—true satire cannot be defamatory as a matter of law.

This was determined in a case between well-known pornographic magazine Hustler and Jerry Faldwell after Hustler wrote about Faldwell in some particularly unflattering and salacious situations.  The courts felt that the words were satire and as satire were so outrageous that no reasonable reader could consider them to be an assertion of true facts.  Thus, true satire can’t be defamation because it doesn’t damage reputation because readers don’t believe it to be true.

This leaves the obvious question, what exactly constitutes satire?  To call this a complicated query would be an understatement.  Courts have struggled with this very question for years, many coming to different conclusions as to where the line is drawn.  However, it is generally agreed that satire is a work targeting an entity or entities—often but not always a government figure—for exaggerated commentary blurring the line between truth and the ridiculous.  The ultimate definition is a bit circular to the reason why satire is protected.  A true satire, for legal purposes, must blur the lines between truth and the outrageous in such a way as to make a reasonable person recognize that the satire does not express actual facts.

In determining this a number of factors come into play.  With something like the Onion, the history of the site as a source of exclusively satirical news would be considered in determining whether a reasonable person would consider them to be expressing actual facts.  Onion stories also aim to be over the top and include particularly ridiculous titles; both of which contribute to them being considered satire.  On the other hand, the new fake news sites that have cropped up have none or little of the reputation garnered by the Onion over its decades of existence.  What’s more, while their content is often ridiculous to a degree, their aim to appear as close as possible to real news makes them less likely to be true satire.

While each article would have to be considered on its own merits, these new fake news companies certainly don’t seem to be producing satire.  While they would certainly strenuously object to the opinion, they seem more interested in deception for profit than entertainment and commentary.

Public Figures and Privileged Defamatory Statements

Without the protections of satire, an article expressing false defamatory statements about a private person would almost certainly leave these fake news companies vulnerable to a lawsuit.  However, their most common choice of targets isn’t a person off the street—indeed when a person off the street is mentioned the person themselves is generally made up.  Instead, these fake news sources choose public figures as their primary targets.  This is likely mostly driven by the fact that these types of articles are the most profitable.  However, as a fringe benefit, it renders the fake news articles much less vulnerable to a defamation lawsuit.

As opposed to private parties, public officials and figures can only sue for defamation when they can show that the person making the defamatory statements actually knew or should have known that their statements were false.  Where this is the case, the statements are considered to be made with something called “actual malice.”

The reason for this requirement is simple, people should be free to criticize public officials and parties.  We are especially conscious of protecting the First Amendment rights of speech criticizing those in power.  For these reason, new outlets also are protected when they publish inaccurate events where those events are of public interest—once again so long as they do not do so with actual malice.

This means that when a fake news site publishes a made a story about a politician, such as their most frequent targets Hillary Clinton and Donald Trump, in order to sue them there would have to be a showing of actual malice.  This is generally quite hard to produce actual evidence of, generally requiring either a smoking gun email or evidence of a near total lack of fact checking.  However, these fake news sites are intentionally making up stories so they absolutely know their articles have no basis.

While fake news can be incredibly dangerous, their ultimate protection from defamation lawsuits is the same as what tabloids have employed for years.  First, actual malice can be difficult to prove even when it seems intellectually obvious.  Second, public figures often conclude that the exposure from a lawsuit will do far more damage than a one-off story.  However, fake news is achieving a reach that it has rarely had before.  As these stories become more widespread, or make the mistake of targeting an informed private party, fake news companies may well find themselves on their heels in a courtroom.



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