Partridge Snow & Hahn LLP Firm News Feed Jan 2018 00:00:00 -0800firmwise Mount Against FCC After Repeal of Net Neutrality Rules<p>The Federal Communications Commission&rsquo;s (&ldquo;FCC&rdquo;) repeal of net neutrality in December was certainly not the final word on the matter. The FCC&rsquo;s decision to roll back Obama-era rules prohibiting paid preferences, throttling and blocking in the order captioned <i>Restoring Internet Freedom</i> (the &ldquo;Order&rdquo;), which became final on January 4, is currently under attack on multiple fronts and others are sure to come.</p> <p>Massachusetts is one of the many states joining the fight to restore the rules on net neutrality reversed by the FCC last month.&nbsp; On January 16, 2018, Massachusetts Attorney General Maura Healey tweeted breaking news that Massachusetts would be suing the FCC to restore net neutrality and protect equal and open access to the internet.&nbsp; AG Healey was referring to a recently filed suit wherein Massachusetts, along with twenty-two other states, is petitioning the United States Court of Appeals for the District of Columbia Circuit to review the FCC&rsquo;s recent Order.&nbsp; Specifically, the states filed a &ldquo;protective petition for review,&rdquo; which essentially reserves them a spot in court challenges against the FCC.&nbsp;</p> <p>Back in December when the FCC issued the proposed order that was ultimately adopted, AG Healey joined a coalition of AGs from other states in sending a letter to the FCC urging it to obtain a full and accurate picture of the impact of the changes to the net neutrality policy before making any changes.&nbsp; After the FCC voted to implement the Order, AG Healey indicated that Massachusetts would be joining in such a lawsuit.&nbsp;</p> <p>AG Healey further tweeted that &ldquo;[Massachusetts is] challenging the FCC&rsquo;s Order not only because it&rsquo;s bad for consumers, students and small businesses &ndash; but because it is illegal.&rdquo;&nbsp; Questions concerning the legality and consequences of rolling back net neutrality have dominated the news recently, and PS&amp;H has analyzed these issues in previous <a href=";an=71907&amp;anc=868&amp;format=xml">blog</a>&nbsp;<a href=";an=70459&amp;anc=868&amp;format=xml">posts</a>.&nbsp;</p> <p>The lawsuit seeks a determination that the FCC&rsquo;s Order is &ldquo;arbitrary, capricious, and an abuse of discretion&rdquo; within the meaning of federal law and FCC regulations. &nbsp;As such, the lawsuit requests that the Court hold the FCC&rsquo;s Order as unlawful.&nbsp;</p> <p>The states&rsquo; lawsuit is only one line of attack.&nbsp; Some states have taken matters into their own hands by attempting to pass their own net neutrality laws.&nbsp; In the final version of the Order, the FCC not only repealed its own net neutrality rules, but it also claims the authority to prevent state and local governments from enacting their own similar net neutrality rules.&nbsp; However, Nebraska, California and New York are proposing to do just that.</p> <p>Senator Adam Morefled proposed a Nebraska bill to prohibit internet service providers (&ldquo;ISPs&rdquo;) from &ldquo;impair[ing] or degrad[ing] lawful Internet traffic on the basis of content, application or service or use of a nonharmful device, subject to reasonable network management.&rdquo; The proposed Nebraska bill also bans paid prioritization except for in circumstances where the ISP can demonstrate that it benefits the public and &ldquo;would not harm the open nature&rdquo; of its Internet service.</p> <p>Senator Scott Wiener introduced a California bill that would indirectly enforce net neutrality.&nbsp; That proposal requires that net neutrality be part of cable franchise agreements, as a condition to using the public right-of-way for Internet infrastructure.&nbsp; The proposed California bill would also strengthen the consumer protection laws and laws against unfair business practices in ways that support net neutrality.&nbsp; Another California senator, Senator Kevin de Leon, took a more aggressive approach and introduced a bill simply banning blocking, throttling and paid prioritization.&nbsp;</p> <p>In New York, there is proposed legislation requiring state agencies and local governments to only do business with ISPs that adhere to net neutrality principles.&nbsp; There is a similar bill being considered in the Washington state legislature as well.&nbsp;</p> <p>This state-by-state approach is far less effective than reinstating the federal requirements but could force the larger ISPs that do business in some of these states to follow to net neutrality principles.&nbsp;</p> <p>Attacks continue to mount on other fronts as well.&nbsp; Several nonprofit public interest groups like the Free Press and Public Knowledge and the Mozilla Foundation, the group behind the Firefox web browser, filed lawsuits against the FCC.&nbsp; Additional suits are sure to come from the giant internet content providers like Netflix, Google and Apple.</p> <p>The lawsuit filed by the states is joined by every state with a democratic attorney general.&nbsp; Moreover, Senate Democrats are doing what they can, employing a little known tool in the Senate called the Congressional Review Act to try and overturn the FCC&rsquo;s Order.&nbsp;&nbsp; The Congressional Review Act requires a majority of the Senate&rsquo;s support (51 votes) as a first step.&nbsp; The vote to overturn the FCC&rsquo;s Order would then go to the House and the chance of it passing there is slim.&nbsp; Finally, President Trump would need to sign onto any action to overturn the FCC&rsquo;s Order&mdash;an unlikely possibility considering the White House has expressed its support for the repeal of net neutrality.&nbsp; Although this process will ultimately be futile, the Democrats are seizing on the widespread public disagreement with the FCC&rsquo;s decision to build political capital.&nbsp; Senator Markey of Massachusetts has stated that &ldquo;[t]here will be a political price to pay for those on the wrong side of history.&nbsp; Momentum is on our side.&rdquo;&nbsp;</p>Blog19 Jan 2018 00:00:00 -0800 Brewery Licensing in Rhode Island Rhode Island State Licensing Standards.pdf&format=xml<p><b>Overview &ndash; A Three-Part Process</b></p> <p>Opening a craft beer brewery in Rhode Island requires interactions with three separate regulatory bodies; local towns and cities issue building, zoning and other local permits and retail liquor licenses, the Federal Alcohol and Tobacco Tax Trade Bureau (&ldquo;TTB&rdquo;) issues the federal brewery &ldquo;basic permit&rdquo;, and the Rhode Island Department of Business Regulation (&ldquo;DBR&rdquo;) issues manufacturer&rsquo;s licenses.</p> <p>Although obtaining the manufacturer&rsquo;s license with the DBR is the last step a brewer must complete before opening, the requirements of all three major licensing hurdles need to be considered together before a prospective brewer begins the application process. For example, the state requirements that a licensee be a Rhode Island resident, or that the proposed facilities be located more than 200 feet from a school or place of worship, should be considered as threshold issues, especially considering typical brewery investment and start-up costs. In any event, making sure the proposed brewery is adequately funded to cover a long permitting process should factor into planning.</p> <p><b>Local Licenses and Permits &ndash; City or Town</b></p> <p>Obtaining local approval and community buy-in is the most critical part of obtaining a license to brew in Rhode Island. Towns and cities in Rhode Island indirectly regulate manufacturing licenses by setting local health, fire, police, building permit, and zoning variance standards, and are directly responsible for the discretionary issuance of retail alcohol licenses. As smaller micro and nano breweries rely increasingly on on-premises sales to generate buzz and lock in better margins, the importance of developing a plan to obtain local approval cannot be underestimated.&nbsp;</p> <p>The first steps for any prospective brewer are to identify an appropriate site and to establish a detailed business plan that includes all projected brewing equipment, capacity needs, legal structure, and financing. The planning process should include a discussion with local liquor control boards to determine if they are open to the type of business proposed, and should include a dialogue with neighboring landowners to make sure there are no objections to the proposed use of the premises. This approach can reduce the chance of surprise when the actual completed retail application is filed with local authorities.</p> <p>Breweries should exercise caution in selecting sites. Frequently, new breweries are drawn to older mill spaces and industrial properties for cost and aesthetic purposes. These types of locations can create problems for breweries operating with taproom models from a zoning perspective. Industrial spaces must also have adequate facilities to accommodate the public and may carry extra development costs related to infrastructure issues concerning plumbing, electricity, water quality, and environmental compliance.</p> <p>After obtaining all necessary zoning variances and building permits, applicants should finalize any leasing and financing terms and begin building out the facilities. Applicants need to complete the build out and be ready to open in order to obtain a certificate of occupancy. A certificate of occupancy is required for both the retail alcohol licenses and the manufacturer&rsquo;s license from the DBR.</p> <p><b>Federal Basic Permit &ndash; TTB</b></p> <p>After completing the build-out process, prospective brewers should submit a &ldquo;Brewer&rsquo;s Notice&rdquo; application for a basic permit with the TTB. The basic permit allows the holder to brew beer commercially under federal law and is a prerequisite to obtaining manufacturing licensure with the DBR.</p> <p>Applicants should apply for their basic permit with the TTB as soon as possible, but not before they are able to provide complete and accurate information about their layout, equipment, and facilities. Although a certificate of occupancy is not required to obtain a basic permit, the layout of the brewing and ancillary premises has to be set. Data released by the TTB indicates that average basic permit application wait times averaged approximately 60 days in 2017, although the waiting period may be longer if the TTB has questions on the materials submitted. Despite the wait time, brewers need to resist the temptation to file too early, as the TTB reserves the right to question the proposed layout and perform an on-site inspection.</p> <p>A significant part of obtaining brewery approval from the TTB involves documenting the proposed brewery&rsquo;s business plan and legal structure. The basic permit application requires applicants submit complete diagrams and descriptions of the brewery premises, information on equipment leasing, trade name registration information, a disclosure of the source of funds, a description of the brewery&rsquo;s security procedures, and disclosures regarding ownership structure. Documentation on water quality and environmental planning is also required, as is registration with the IRS for tax purposes. Generally, the TTB does not need to approve particular beer formulas. Other trademark work and approval of proposed labeling is in addition to these procedures.</p> <p>Beginning in 2017, breweries that anticipate owing less than $50,000 in annual federal excise taxes are no longer required to post bond as a condition of establishing a brewery. For startup breweries, this can be a significant cost savings. Breweries manufacturing less than 60,000 barrels per year are entitled to a reduced federal excise tax rate of $7.00 per barrel of beer, and as of January 1, 2018, the rate has been temporarily reduced even further to $3.50 per barrel.</p> <p><b>RI Manufacturer&rsquo;s License &ndash; Rhode Island Department of Business Regulation </b></p> <p>Rhode Island technically has two types of manufacturer&rsquo;s licenses that are available for craft brewers: a general manufacturer&rsquo;s license and a brewpub manufacturer&rsquo;s license. Both permits allow breweries to manufacture beer, sell to distributors, and make retail sales to consumers for on and off-premises consumption. Due to legislative changes made in 2016, though, the distinction between the two types of licenses has become less relevant. Most new breweries should probably obtain a general manufacturer&rsquo;s license unless they want to offer food other than basic snacks.</p> <p>Prior to July 2016, breweries intending to rely on a taproom model to promote their products were limited to using a brewpub manufacturer&rsquo;s license, as the general manufacturer designation did not permit sales for on-site consumption and severely restricted sales for off-site consumption. These limitations made it difficult for general manufacturers to operate functional taprooms. Breweries hoping to generate local buzz instead would be inclined to apply for a brewpub manufacturer&rsquo;s license, which permits unrestricted sales for on-site consumption, but limits sales for off-site consumption to half-gallon &ldquo;growler-style&rdquo; containers.</p> <p>Thanks to the new laws, general manufacturers may now sell up to 36 oz. of beer or malt beverages to visitors for on-site consumption in a single day, as well as 288 oz. of beer (four six-packs) for off-site consumption. These new changes make it significantly more advantageous for craft breweries with taprooms to operate under a general manufacturer&rsquo;s license as opposed to applying for a brewpub designation, especially considering the annual fees for both types of licenses are roughly the same.</p> <p>In applying for a manufacturer&rsquo;s permit, breweries must establish that they have sufficient security for the storage of beverages, record-keeping systems in place, suitable transportation for deliveries, and commitments from suppliers. The DBR will also request a certificate of occupancy and other local approvals before accepting an application, and require applicants to post a $5,000 bond to cover future state excise taxes, which is in addition to the annual licensing fee.</p> <p>After a complete application is submitted, the DBR is required to hold a hearing in two weeks time and give both public notice in print media and provide specific notice to all owners within 200 feet of the proposed premises. Neighboring landowners may object to the proposed manufacturing license, which could cause complications at this stage if not already considered. This DBR hearing process is in addition to the local hearing required for applicants applying for retail licensing. The DBR in some cases may also require proof of retail licenses from the city or town prior to issuing a state manufacturing license. &nbsp;</p> <p><b>Other Licensing Considerations</b></p> <p>The DBR and most localities have not provided complete guidance as to what craft breweries need to do in order to obtain local retail licenses. Currently, the only available information provided in the DBR&rsquo;s regulations applies to Class B-M retailers &ndash; operators of brewpubs &ndash; that serve food. Presumably, a general manufacturer only selling beer will be required to obtain a Class C saloon retail permit, which only permits the sale of limited snack foods.&nbsp;</p> <p>Retailing brings other compliance issues as well. Tap lines need to be cleaned periodically under Rhode Island law and serving alcohol to patrons requires that servers and management complete a state-mandated alcohol server training course (TIPS training). Completing the TIPS currently costs $40 per person.</p> <p><b>Concluding Thoughts</b></p> <p>Altogether, the federal, state, and local authority licensing requirements for craft breweries are similar. However, managing the application process to minimize idle time and delays can be challenging, especially as final approval requires the facilities be constructed and a certificate of occupancy issued. Applicants can reduce the risk that they will encounter problems by ensuring that adequate financing is in place and by establishing a dialogue with local authorities at the earliest possible opportunity.<br /> <br /> <a href="">Summary of Rhode Island State Licensing Standards</a><br /> <br /> <template include="DocumentEmbed"></template></p>Client Alerts17 Jan 2018 00:00:00 -0800 Rhode Island State Licensing Standards.pdf&format=xmlCyber Insurance - Some Questions to Ask<p style="text-align: left;">Reports of large-scale data breaches, hacking and cyber attacks appear in the media almost daily. The recent Equifax breach alone has exposed sensitive personal information of over 143 million Americans.&nbsp; Phishing and ransomware attacks are also on the rise.&nbsp; Phishing attacks are used to steal user data, such as bank account or social security numbers or log-in credentials.&nbsp; In a ransomware attack, the attacker encrypts a company&rsquo;s data and makes it unavailable to the company until a &ldquo;ransom&rdquo; of some amount is paid.</p> <p style="text-align: left;">One common misconception is that these cyber attacks only happen to large companies.&nbsp; In reality, attackers also frequently target medium and small businesses, but you are less likely to hear about them on the news.&nbsp; A recent study by the security firm Symantek reports that 31 percent of all breaches occur at businesses with 100 or fewer employees.&nbsp; Small businesses are particularly at risk because they typically do not have access to the same level of resources as a large business to protect themselves.</p> <p>Cyber attacks can cause harm to a business in a number of different ways.&nbsp; A company will incur costs to investigate the cause of the attack and to recover data and systems, not to mention the potential ransom fee to &ldquo;unlock&rdquo; a company&rsquo;s data.&nbsp; In addition, after a cyber attack occurs, the target business also may incur costs to investigate the breach, to notify customers and other third parties (such as regulators and attorneys general) if sensitive information is involved, and to defend and settle lawsuits involving claims that the company did not act properly in protecting the data.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p> <p>One recent survey estimates the average cost to a United States business for each lost or stolen record containing sensitive information is $225, and the average total cost of a data breach or cyber attack to be about $7.35 million.&nbsp; Few businesses can absorb such costs without crippling, adverse effects.</p> <p>Many companies are surprised to discover that their general commercial liability policies do not cover most types of cyber risks. Commercial general liability policies typically only cover bodily injury and property damage, not monetary losses, ransom costs, or regulatory fees and expenses.&nbsp; In addition, coverage is often limited to losses caused by &ldquo;tangible&rdquo; means.&nbsp; Insurance companies typically consider data breaches to be &ldquo;intangible&rdquo; causes not covered by the policy.&nbsp; Most commercial general liability policies also include an exclusion for access to or disclosure of confidential information, and the resulting liability.</p> <p>Cyber insurance is still an emerging product.&nbsp; There are differences in services and coverages, as well as in the services for which the policy will pay.&nbsp; When reviewing policies for clients, insurance advisers should take the time to understand the client&rsquo;s business, as well as to understand the coverages and services provided by each carrier under its policies.</p> <p>Here are some questions to ask when you are investigating cyber insurance policies for clients:</p> <p>&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; What data does the client have, and where is the client at risk for a cyber attack?&nbsp; Most businesses have some data, such as credit card data or employee information, that can be compromised.</p> <p>&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Does this policy have first party and third party coverage?&nbsp; If so, what risks are covered and what risks are not covered?&nbsp; Are these risks for which the client&rsquo;s business needs coverage?</p> <p>&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Does the client need a computer fraud endorsement to a fidelity bond or crime prevention policy?&nbsp; Some cyber liability policies only cover losses caused by unauthorized access to a company&rsquo;s system by a third party, and do not cover the situation where a transfer is made by a business&rsquo;s employee after receiving fraudulent instructions to do so.&nbsp; Endorsements to the client&rsquo;s other policies may be needed to cover the gap.</p> <p>&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; What are the policy limits and sublimits?&nbsp; All policies will have limits on coverage and many will have sublimits on certain payments (for example, the costs of forensic investigations).&nbsp; Are the sublimits reasonable in light of the likely average cost to the business if a cyber attack occurs?</p> <p>&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; What are the policy retention and subretention amounts?&nbsp; If the retention amount is very high, the insurance may not be of much benefit to the business except in extreme cases.</p> <p>&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Does the policy contain clauses that limit the insured&rsquo;s ability to use self-help to mitigate damages following a breach or potential breach, or subrogation clauses that allow the insurance company to seek reimbursement from the insured&rsquo;s clients or customers or vendors for claims paid under a policy that might have been caused by such parties?&nbsp; Can these clauses be removed or modified?</p> <p>Defending against cyber attacks has become a cost of doing business for all businesses, not just large companies.&nbsp; The first defense is to have consistent policies and procedures in place that are followed by all employees and others who have access to confidential data.&nbsp; As a backstop, cyber insurance can be an important part of that defense for many businesses.&nbsp; However, businesses need to understand that not all cyber insurance policies are created equal, and need proper advice to understand and properly protect against their risks.&nbsp;</p> <p><i>John E. Ottaviani (</i><a href=""><i></i></a><i>), Colin A. Coleman (</i><a href=""><i></i></a><i>) and David J. Pellegrino (</i><a href=""><i></i></a><i>) are partners at Partridge Snow &amp; Hahn </i><i>LLP</i><i>, a New England business and litigation law firm based in Providence, Rhode Island. &nbsp;</i></p>Articles15 Jan 2018 00:00:00 -0800 Snow & Hahn to Provide Legal and Economic Updates to Chamber Members<p>When Partridge Snow &amp; Hahn LLP first opened our doors in New Bedford in 2003, our lawyers had a vested-interest in helping to build an economic and cultural renaissance in the Southcoast region. The area was only just starting to recover from the 1990-1991 recession, where unemployment rates in some of our cities were reported in excess of 20 percent. I have lived and worked in Southcoast nearly all of my life, and vividly remember this time in our region&rsquo;s history when the future of the area looked bleak. But, even in those dark days, there was promise, a newfound energy and a commitment from residents, businesses and community leaders who had great ideas and the determination to return Southcoast to the thriving and prosperous community it once was. I believe that today&rsquo;s Southcoast looks very much like the picture these visionaries painted for the area all those years ago.</p> <p>The New Bedford Economic Development Council recently reported that from November of 2015 to November of 2016 the unemployment rate in New Bedford dropped to 3.7 percent, resulting in the greatest unemployment decrease in the nation. In the last few years, we&rsquo;ve seen dozens of businesses establish a presence in the region, including banks, manufacturing, marine technology, alternate energy, hotels and restaurants, casting a positive spotlight on our corner of the Commonwealth as a result.</p> <p>The downtown historic district of New Bedford is almost unrecognizable compared to what it was a decade and a half ago. New restaurants, galleries and artist studios are making this city an exciting and lively place that attracts not only tourists, but new business prospects and potential investors as well. Developments such as the Killburn Mill Project, New Bedford Business Park, and the New Bedford Wind Energy Center have unlimited potential, and the long anticipated arrival of the South Coast Rail will continue to generate more opportunity for economic development.</p> <p>There is an enthusiasm in Southcoast that is stirred by all of these projects, and the dozens more I don&rsquo;t have the space to mention. The work we are doing as members of this business community is creating a buzz that reaches far beyond our vibrant and diverse Southcoast Region. Our economy is thriving, and the future of Southcoast looks more promising than it ever has before. In 2017, the SouthCoast Chamber welcomed more than 163 new members, due to the extraordinary efforts of Rick Kidder and his team, but also because businesses continue to recognize the potential of our community, and the power of working together through the Chamber to help ensure that progress remains constant.</p> <p>As a 2018 sponsor of the SouthCoast Chamber, my colleagues and I at Partridge Snow &amp; Hahn will be writing a monthly column for the <i>Chamber</i>. It is our goal to highlight issues that impact our region in an effort to help Chamber members navigate this growing economic landscape. We want our columns to be of value to you, so please let us know if there is a topic you are interested in learning about. We also want to partner with you, and if you are interested in co-authoring a column, we&rsquo;d love to hear from you. It certainly is an exciting time to be in Southcoast, and the role each of you are playing in helping our community realize this success is applauded. Thank you.</p> <p>I wish you all happiness, good health, prosperity and continued success in 2018.</p> <p>Happy New Year.</p> <p>Randy Weeks<br /> Partner in Charge,<br /> Partridge Snow &amp; Hahn LLP<br /> SouthCoast Office</p>Articles11 Jan 2018 00:00:00 -0800 Neutrality Rollback Raises Significant Questions<p>By now, almost all Americans are aware that, as expected, the Federal Communications Commission&nbsp;(FCC) rolled back the net neutrality rules put in place in 2015. On Thursday, after almost a year of debate that escalated into heated exchanges, protests and the alleged hacking and manipulation of the public comment process, the FCC adopted a declaratory ruling, report and order in the proceeding Restoring Internet Freedom, WC Docket No. 17-108, FCC-CIR1712-04 (Dec. 14, 2017) (&ldquo;Internet Freedom order&rdquo;). The Internet Freedom order repeals key regulations governing providers offering broadband internet access services and has frequently been referred to as the &ldquo;death&rdquo; of net neutrality. This issue has infiltrated every news and social media outlet for the last few weeks, including a controversial&nbsp;YouTube&nbsp;parody video of FCC Chairman Ajit Pai dancing in a Santa Claus hat wielding a lightsaber. However, now that the Internet Freedom Order has been issued, there are considerable legal questions to be addressed. None of these questions is more important than who is going to protect businesses and consumers under this new regulatory framework.<br /> <br /> The net neutrality laws in place for the last two years classified internet providers as Title II carriers, placing broadband under the auspices of the FCC. Those measures provided the FCC with the legal teeth to protect consumers from discrimination by their internet service providers (&ldquo;ISPs&rdquo;). The Internet Freedom order reclassifies ISPs as information providers under Title I, divesting the FCC of primary jurisdiction over broadband internet access service. This leaves the FCC with little power to regulate ISPs and protect consumers and small businesses going forward.<br /> <br /> The Internet Freedom order also eliminates the three so-called &ldquo;bright line&rdquo; rules (no blocking, no throttling, no paid prioritization), issues that have been the focus of much public attention. The FCC also erased the &ldquo;catch-all&rdquo; general conduct standard as only a modified version of the transparency rule adopted by the commission in 2010 remains. Without these &ldquo;bright line&rdquo; rules and other provisions, there is concern that companies may arbitrarily block websites, reduce service speed or charge more for access to internet &ldquo;fast lanes.&rdquo;<br /> <br /> So what is left and who is in charge? The Internet Freedom order focuses on the disclosure of certain practices rather than prohibiting them. Under the &ldquo;recalibrated&rdquo; transparency rule, ISPs are now required to &ldquo;publicly disclose accurate information regarding their network management practices and the performance and commercial terms of their services sufficient to enable consumers to make informed choices regarding the purchase and use of such services and entrepreneurs and other small businesses to develop, market, and maintain Internet offerings.&rdquo;[1] These disclosures need to be made via a publicly available, easily accessible website or through transmittal to the FCC (who would then make them available to the public).[2] The Internet Freedom order also contains a list of the eight specific network management practices that must be disclosed (not prohibited), including blocking, throttling, paid/affiliated prioritization and security practices.[3] ISPs must also disclose two performance characteristics and three commercial terms: price, privacy policy and redress options.[4]<br /> <br /> What happens when these disclosures are not made? Or, when the inevitable happens and the ISPs do not play nice, even though they promised to with a cherry on top? We already know that&nbsp;Comcast&nbsp;seemingly dropped the promise of &ldquo;no paid prioritization&rdquo; when it knew the tides were changing under Chairman Pai. Well, now the FCC says it is the&nbsp;Federal Trade Commission&rsquo;s (FTC) problem.<br /> <br /> Under the Internet Freedom order, in the &ldquo;unlikely event that ISPs engage in conduct that harms Internet openness,&rdquo; the FCC gives consumer protection authority to the FTC. Specifically, the Internet Freedom order declares that antitrust law and the FTC&rsquo;s authority under Section 5 of the FTC Act[5] to prohibit unfair and deceptive practices will provide enough protection for consumers.[6] The FCC believes that antitrust and consumer protection laws are well suited to address any openness concerns because they apply to the entire internet ecosystem, including edge providers. In theory, Chairman Pai and his compatriots believe this avoids tilting the playing field against ISPs and causing economic distortions by regulating only one side of business transactions on the internet. However, there are only a handful of paragraphs in the entire 200-page order that address this issue.<br /> <br /> Lucky for us though, the FCC and FTC issued a joint Memorandum of Understanding (MOU) to further muddy the waters on this issue.[7] The MOU, also issued last Thursday, finalized, in vague terms, the allocation of oversight and enforcement authority related to broadband internet access service. A draft of the MOU was first announced three days before the FCC&rsquo;s vote to roll back the net neutrality rules. It appeared to be a response to the public outcry against the looming reversal of the net neutrality rules and issued to provide some public guidance on which agency will be taking the lead on oversight and enforcement going forward. The MOU, which is also short on specifics, divvies up a few general categories of responsibilities. The FCC is now tasked with simply monitoring the broadband market and identifying market entry barriers, by among other activities, reviewing information complaints filed by consumers. The FCC may also take enforcement actions against ISPs that fail to comply with the new transparency rule&rsquo;s posting requirements. Notably, however, the FCC will not address the adequacy of the disclosure. Instead, the MOU tasks the FTC with the authority to investigate and take enforcement action against ISPs for unfair, deceptive or otherwise unlawful acts or practices, including but not limited to, actions pertaining to the accuracy of the disclosures required under the transparency rule, as well as their marketing, advertising and promotional activities.<br /> <br /> The Internet Freedom order and the MOU have been widely criticized by many Democrats and public interest groups and as they are not without substantial problems. In a dissenting statement, Commissioner Mignon Clyburn called the Free Internet order an &ldquo;ironic comfort&rdquo; to consumers.[8] Commissioner Clyburn also called the MOU &ldquo;a confusing, lackluster, reactionary afterthought: an attempt to paper over weaknesses in the Chairman&rsquo;s draft proposal repealing the FCC&rsquo;s 2015 net neutrality rules.&rdquo;[9] Commissioner Jessica Rosenworcel, the other dissenting Democrat on the FCC, correctly noted that the FTC is not the expert agency for communications. Moreover, her dissenting comments pointed out that ISPs can easily evade FTC scrutiny by adding its new transparency provisions to the fine print in its terms of service.[10]<br /> <br /> Commissioner Rosenworcel also emphasized the fact that &ldquo;it is both costly and impractical to report difficulties to FTC.&rdquo;[11] By the time the FTC gets around to addressing discriminatory treatment in court proceedings or enforcement actions, it is fair to assume that the startups and small entities harmed by such practices could be long gone. This also hurts consumers without the resources to pursue such claims. Although this problem persisted at the FCC, by erasing the rules prohibiting such conduct, the stakes are much higher.<br /> <br /> The extent to which the MOU and the FCC&rsquo;s new empowerment of the FTC takes effect will depend upon, among other things, the pending case interpreting Section 5 of the FTC Act that is before the Ninth Circuit Court of Appeals, Fed. Trade Comm'n v.&nbsp;AT&amp;T Mobility LLC, 864 F.3d 995 (9th Cir. 2017).<br /> <br /> On Aug. 26, 2016, a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit dismissed an FTC case against AT&amp;T Mobility over allegedly &ldquo;unfair and deceptive&rdquo; throttling practices in connection with wireless data services provided to AT&amp;T Mobility&rsquo;s customers with unlimited data plans.[12] The Ninth Circuit ruled that the regulatory exemption that prevents the FTC from regulating common carriers is not confined to common carrier &ldquo;activity&rdquo; by an entity that has the status of a common carrier, but rather to any activity of that common carrier, including noncarrier activities, such as providing broadband internet service. In other words, the Ninth Circuit ruled that AT&amp;T Mobility&rsquo;s conduct in providing broadband internet access services was exempt from FTC&rsquo;s oversight pursuant to Section 5. The court&rsquo;s ruling was based on the fact that AT&amp;T Mobility is a common carrier, even though at the time the suit was brought (pre-net neutrality rules), broadband internet access service was a Title I service and not a common carrier service or activity. Effectively, the Ninth Circuit&rsquo;s ruling meant that, if a common carrier bought&nbsp;Yahoo&nbsp;or&nbsp;Google, who are both edge providers, the FTC could not enforce their privacy policies, and neither could the FCC because it does not regulate edge providers. Thus, the decision left a huge gap in oversight of these providers &mdash; any common carrier providing broadband internet service escaped FCC and FTC oversight.<br /> <br /> Now that broadband internet access services have been relegated back to a Title I service, this gap persists. The FCC says the FTC is in charge, but the AT&amp;T Mobility case disagrees. Some clarity could be given by the Ninth Circuit in the near future, as on May 9, 2017, the U.S. Court of Appeals for the Ninth Circuit issued an order granting the FTC&rsquo;s request for rehearing en banc of the court&rsquo;s earlier decision.[13] In a brief order, Chief Judge Sydney Thomas noted that &ldquo;[t]he three-judge panel disposition in this case shall not be cited as precedent.&rdquo;[14] However, unless and until the Ninth Circuit decides to set aside its decision, the standard articulated in the AT&amp;T Mobility case is squarely against the spirit of the MOU, leaving it as nothing more than aspirational.<br /> <br /> Besides the substantial jurisdictional question left open by the MOU and the FCC&rsquo;s new grant of responsibility on the FTC, there are practical problems. Congress formed the FCC to regulate communications networks, whereas the FTC has authority over unfair methods of competition and deceptive trade practices. The FTC&rsquo;s regulatory and enforcement capabilities do not translate to managing complex network traffic, like the internet. Also, the FTC&rsquo;s expertise is focused on the punishment after the harm occurs. Accordingly, the FTC hammer is no substitute for the FCC&rsquo;s rules when it comes to preventing blocking, throttling and discrimination online before they harm innovative startups and internet users. Rules that just last year were upheld by the United States Court of Appeals for the D.C. Circuit, when it affirmed the FCC&rsquo;s authority to promulgate net neutrality rules with respect to broadband internet.[15]<br /> <br /> As FTC Commissioner Terrell McSweeney stated before the Judiciary Committee on this same issue when the net neutrality rules were being discussed in 2015, trying to enforce discrimination against internet traffic using antitrust rules after the problem has already occurred requires multiple steps and a longer time table.[16] This is especially problematic for investors, small businesses, start-ups and the general public.<br /> <br /> Questions will continue to remain unanswered as there is also other congressional and judicial action on the horizon. Last Friday, New York Senator Charles Schumer said he would force a vote on the FCC action under the Congressional Review Act (CRA). Massachusetts Senator Ed Markey and Pennsylvania Congressman Mike Doyle, both Democrats, have also said they plan to bring a CRA petition to challenging the FCC&rsquo;s ruling. If such a petition passed and received President Donald Trump&rsquo;s signature, the FCC&rsquo;s ruling would be reversed. In addition, shortly after the FCC&rsquo;s vote last week,&nbsp;New York Attorney General Eric Schneiderman announced that he would bring suit to stop the Internet Freedom order based, in part, on the controversy concerning over two million alleged fake public comments that may have corrupted the FCC&rsquo;s proceedings.<br /> <br /> It is clear that Internet Freedom order and the MOU leave much to be desired in terms of clarity, particularly in presenting sound legal principles that govern claims against ISPs. As such, net neutrality will remain a hot news topic and the subject of an ongoing dialogue in 2018.</p> <p><em>To view this article in Law360, </em><a href=""><em>please click here</em></a><em>.</em></p> <div align="center"><hr size="1" width="100%" align="center" /> </div> <p><em><a href="" target="_blank">Lauren J. Coppola</a>&nbsp;is a partner with&nbsp;<a href="" target="_blank">Partridge Snow &amp; Hahn LLP</a>&nbsp;in Boston, MA.</em><br /> <br /> [1] Internet Freedom Order, &para; 211<br /> <br /> [2] Id.<br /> <br /> [3] Id. at &para; 216.<br /> <br /> [4] Id. at &para; 219.<br /> <br /> [5] 15 U.S.C. Sec. 45(a)(1).<br /> <br /> [6] Internet Freedom Order, &para; 140.<br /> <br /> [7] Restoring Internet Freedom, FCC-FTC Memorandum of Understanding, available at&nbsp;<a href="" target="_blank"></a>.<br /> <br /> [8] Oral Dissenting Statement of Commissioner Mignon Clyburn Re: Restoring Internet Freedom, WC Docket No. 17-108, available at&nbsp;<a href="" target="_blank"></a>(Dec. 14, 2017).<br /> <br /> [9] Statement of Commissioner Clyburn on FCC/FTC Agreement, available at&nbsp;<a href="" target="_blank"></a>(Dec. 11, 2017).<br /> <br /> [10] Oral Dissenting Statement of Commissioner Jessica Rosenworcel Re: Restoring Internet Freedom, WC Docket No. 17-108, available at&nbsp;<a href="" target="_blank"></a>(Dec. 14, 2017).<br /> <br /> [11] Id.<br /> <br /> [12] Id.<br /> <br /> [13] Fed. Trade Comm'n v. AT&amp;T Mobility LLC, 864 F.3d 995 (9th Cir. 2017).<br /> <br /> [14] Id.<br /> <br /> [15] United States Telecom Ass'n v. Fed. Commc'ns Comm'n, 855 F.3d 381, 390 (D.C. Cir. 2017).<br /> <br /> [16] Prepared Statement of Commissioner Terrell P. McSweeney, Federal Trade Commission, Before the&nbsp;<a href="" target="_blank">United States House of Representatives</a>, Committee on the Judiciary, available at&nbsp;<a href="" target="_blank"></a>&nbsp;(March 25, 2015).</p> <div> <div id="edn16">&nbsp;</div> </div>Articles20 Dec 2017 00:00:00 -0800 Review Of Massachusetts' Marijuana Industry In 2017<p>It has been a very exciting year for the marijuana industry in Massachusetts. A voter referendum in November 2016 approving the recreational use of marijuana culminated in legislation in July 2017. Various cities and towns are now determining whether to embrace the new economic development opportunities that are presented by the expansion of recreational marijuana in the commonwealth. Employees who use medical marijuana received protection from the courts. However, because the cultivation, use, sale and possession of marijuana still is a crime under federal law, and enforcement policies by the federal government are uncertain, investment in the industry remains risky.</p> <h3><b>Massachusetts Approves Recreational Use of Marijuana</b></h3> <p><br /> The approval process began on Nov. 8, 2016, when Massachusetts voters cast their ballots in favor of Question 4, allowing businesses and individuals to grow, sell, use and possess marijuana for recreational purposes in Massachusetts.<br /> <br /> The law passed by the legislature in July 2017 made a number of changes to the law that voters approved in November 2016, as well as to the medical marijuana law enacted in 2012. Some of the more important features of the new law are:</p> <ul> <li>Recreational marijuana use is legal now in one&rsquo;s own home (but perhaps not in a rented apartment or federally subsidized housing), and possession of up to one ounce of marijuana in public, up to 10 ounces in one&rsquo;s home, or cultivation of up to six plants (12 per household) for personal use is no longer a crime under Massachusetts law.</li> <li>Retail sales of marijuana can take place on or after July 1, 2018.</li> <li>Retail sales of marijuana will be taxed at a maximum 20 percent, which currently is the second-lowest tax rate in the country. The tax breaks down as the state&rsquo;s 6.25 percent sales tax, a 10.75 percent excise tax and an optional 3 percent that cities and towns can charge if they wish to do so. Cities and towns may also tax retailers up to an additional 3 percent on gross sales. Medical marijuana remains untaxed.</li> <li>Licensed medical marijuana dispensaries (RMD&rsquo;s) may now operate as for-profit Massachusetts business corporations. Previously, Massachusetts law required medical marijuana dispensaries to operate as nonprofit corporations. In November, the&nbsp;<a href="" target="_blank">Massachusetts Department of Public Health</a>&nbsp;(DPH) issued guidance to entities that desire to operate RMD&rsquo;s as for-profit corporations. RMD&rsquo;s considering conversion must still consider various other issues not addressed by the guidance, including tax, contract and employee benefit issues.</li> <li>The new law also creates a 5-member, full-time Cannabis Control Commission to oversee the marijuana industry, with members appointed by the governor, the attorney general and the treasurer. The law also moves oversight of the medical marijuana operations to the new board.</li> <li>Marijuana products, including edibles, will have to be sold in child-resistant packaging with the concentration of THC listed. There will also be stringent requirements for packaging and labeling.</li> </ul> <p>The legalization of recreational marijuana under Massachusetts law creates unique opportunities and risks for newly formed and existing businesses as rules and regulations are established and in light of marijuana still being an illegal controlled substance under federal law. There will be a myriad of challenges for those looking to invest in and operate companies that will grow, process and sell marijuana, as well as for existing businesses that must now consider how the new law and regulations will affect them.</p> <h3><br /> <b>Cannabis Control Commission Moves Quickly</b></h3> <p><br /> The five commissioners of the Cannabis Control Commission were appointed in September 2017. After a search, the commission appointed Shawn Collins, a top aide to Treasurer Deborah Goldberg, as the executive director of the commission. The commission has requested a $7.5 million budget for its activities for the remainder of the fiscal year.<br /> <br /> The new commissioners are operating under very tight deadlines. Under the law, the commission must, in collaboration with a 25 member Cannabis Advisory Board, write regulations by March 15, 2018, and start accepting applications for retail sales beginning April 1, 2018. The commissioners already have conducted eight &ldquo;listening sessions&rdquo; around the commonwealth during October to hear concerns and feedback from residents interested in the marijuana industry. The commission expects to release a first draft of the regulations by the end of December.</p> <h3><b>Communities Divided Over Recreational Marijuana Establishments</b></h3> <p><br /> Under the new law, the power to ban retail sales will depend on how the city or town voted in the November 2016 referendum. If a majority of the voters in the community voted to approve the referendum, then the community must hold a referendum to ban or limit retail sales. If a majority of voters in the community voted to reject the referendum, then local officials can limit or ban retail sales.<br /> <br /> Since January, over 100 Massachusetts cities and towns have voted to ban or put constraints on marijuana-related businesses. Proponents for the bans generally cite safety concerns with respect to edibles and children.<br /> <br /> However, enough towns and cities have approved the sale of recreational marijuana that there will be no significant areas where one will not be able to purchase marijuana at retail. For example, voters in Amesbury, Dracut, Marshfield and Brewster have all endorsed retail sales within their borders. Boston&rsquo;s Mayor Marty Walsh, who opposed legalization, has said that the city will accommodate retail marijuana establishments. Holyoke&rsquo;s Mayor Alex Morse is also a strong proponent of retail sales, and has been actively enticing marijuana businesses to locate there as part of his economic development efforts.</p> <h3><b>Massachusetts High Court Rules that State Anti-Discrimination Laws Protect Medical Marijuana Users</b></h3> <p><br /> Massachusetts employers can no longer fire employees solely because they use medical marijuana outside the workplace. In July, in Barbuto v.&nbsp;<a href="" target="_blank">Advantage Sales and Marketing LLC</a>, the Massachusetts Supreme Judicial Court concluded that the commonwealth&rsquo;s general anti-discrimination law, M.G.L. ch. 151B, requires Massachusetts employers to reasonably accommodate their employees&rsquo; off-duty use of medically-prescribed marijuana. The rulings contained in the decision impact all Massachusetts employers.<br /> <br /> To reduce litigation exposure, Massachusetts employers need to re-evaluate their drug-testing policies, and carefully consider employee accommodation requests related to medical marijuana use.</p> <h3><br /> <b>Federal Law Makes It Difficult for Operators to Develop Brands</b></h3> <p><br /> Like other industries, businesses selling marijuana-related products are turning to branding and marketing to help distinguish their products and services from those of their competitors, and to build brand loyalty and credibility. However, marijuana businesses face a problem that most other retail businesses do not encounter. Federal trademark law prohibits them from registering their brands as trademarks and obtaining the benefits that a U.S. trademark registration confers on its owner.<br /> <br /> This does not mean that all hopes for obtaining brand protection are lost. There are strategies that companies providing marijuana products and services can utilize in order to get some protection for their brands. These strategies include obtaining protection within a particular state under state trademark laws, and obtaining federal protection for related products and services that federal law does not ban.</p> <h3><b>Marijuana Growth By the Numbers</b></h3> <p><br /> The medical marijuana industry in Massachusetts grew significantly in 2017. According to statistics published by the DPH, as of Oct. 30, 2017, there were 46,814 certified medical marijuana patients in Massachusetts, a 22 percent increase over the 38,302 patients certified as of Oct. 31, 2016. For the fiscal year ended June 30, 2017, registered marijuana dispensaries (RMD&rsquo;s) sold 203,401 ounces (more than 6 1/3 tons) of medical marijuana. There were also 12 approved RMD&rsquo;s as of Oct. 31, 2017, with another 110 RMD&rsquo;s in various stages of the application and approval process.<br /> <br /> With the introduction of recreational marijuana sales, the industry is projected to have a significant impact on the Massachusetts economy. Analysts forecast $450 million in marijuana sales in Massachusetts in 2018. Under this projection, marijuana sales would generate $90 million in taxes. Total annual sales are projected to grow to as much as $1.7 billion in Massachusetts by 2021 and combined state and local tax collections are projected to be approximately $240 million in fiscal 2021. More than 17,000 full and part-time jobs are expected to be created by the marijuana industry in Massachusetts.</p> <h3><b>Impact of Federal Law Still Uncertain</b></h3> <p><br /> Despite the progress made in Massachusetts and other states in legalizing marijuana, the use of marijuana for recreational and medical purposes is still illegal under federal law. This creates a great deal of uncertainty for cultivators, dispensaries, investors, lenders and others involved in the marijuana industry. Whether changes will be implemented at the federal level remains unclear. While Attorney General Jeff Sessions has been sending signals that indicate a possible federal crackdown against the industry, Congress and President Trump have been sending conflicting messages.<br /> <br /> Since 2013, the&nbsp;<a href="" target="_blank">U.S. Department of Justice</a>&nbsp;(DOJ) has issued guidelines that discourage federal prosecution of state-authorized marijuana activities. The guidelines suggest that U.S. attorneys and other federal agencies defer civil enforcement and criminal investigations and prosecutions of state-legal marijuana business activity where there are &ldquo;strong and effective regulatory and enforcement systems that control the cultivation, distribution, sale, and possession of marijuana.&rdquo;<br /> <br /> Congress and the courts have also limited federal enforcement activities. Every year since 2014, Congress has adopted a budget amendment, known as the Rohrabacher-Farr amendment, which prevents the DOJ from using any funds to undermine state medical marijuana laws. The DOJ failed in an attempt to circumvent the amendment in California, with federal courts upholding the prohibition in 2016, and again in 2017, so long as the medical marijuana purveyors strictly complied with state law. The amendment does not protect those engaged in the recreational marijuana industry and it remains uncertain whether Congress will enact any protective legislation in that area.<br /> <br /> In May 2017, Attorney General Sessions delivered a letter to Congress requesting that leaders reject an extension of the Rohrabacher-Farr amendment. Despite the letter, in July, the Senate Appropriations Committee approved the extension of the amendment with strong bipartisan support. The Republican-led Rules Committee in the&nbsp;<a href="" target="_blank">U.S. House of Representatives</a>&nbsp;tried to thwart the extension by refusing to allow a vote to extend the amendment in September. However, last-minute budget deals approved by President Trump and passed by Congress included extensions of the amendment until Dec. 22, 2017.<br /> <br /> More recently, Attorney General Sessions sent letters to the governors and attorneys general of Colorado, Oregon and Washington. According to published reports, in the letters, the attorney general affirmed that the DOJ &ldquo;remains committed to enforcing&rdquo; the federal ban on marijuana, a &ldquo;dangerous drug.&rdquo; He also attacked state-specific federal reports that, he alleged, &ldquo;[raise] serious questions about the efficacy of marijuana regulatory structures in your state.&rdquo;<br /> <br /> Representative Dana Rohrabacher, the Republican Congressman who cosponsored the amendment, continues to push hard to make the amendment permanent. As he told the&nbsp;<a href="" target="_blank">Los Angeles Times</a>, &ldquo;Marijuana got more votes than Trump. There are millions of Republicans and independents who voted for it. There are 20 million people a month who use it.&rdquo;<br /> <br /> A DOJ attempt to enforce the federal ban in a state that has legalized marijuana would have a chilling effect on the legal marijuana industry throughout the country, including Massachusetts. Investors and entrepreneurs may hesitate to commit financial resources to new businesses if the threat of federal enforcement returns. However, proponents of medical marijuana use remain optimistic that lawmakers will reach some accommodation soon.</p> <div align="center"><hr size="1" width="100%" align="center" /> </div> <p><i><a href="" target="_blank">William R. Moorman Jr.</a>&nbsp;concentrates his practice in general business law, mergers and acquisitions, corporate and finance transactions, real estate, commercial litigation and insolvency matters. He is also the chair of Partridge Snow &amp; Hahn LLP&rsquo;s marijuana advisory practice, specializing in the intersection between marijuana laws and other areas of law, including commercial and residential real estate, capital raising, financing and other business matters.<br /> <br /> <a href="" target="_blank">John E. Ottaviani</a>, chair of the firm&rsquo;s intellectual property and technology group, concentrates his practice in protecting and enforcing trademarks and copyrights, in advising businesses on intellectual property, brand protection, domain name, data security and contract issues that arise in the physical world and on the Internet, and in advising clients on contracts and general business matters.</i><br /> <br /> <i>To view this article in Law360, <a href="">please click here</a>. </i></p>Articles15 Dec 2017 00:00:00 -0800 Grower Announces Plans to Purchase Providence Cultivation Space<p>Future Farm Technologies, Inc., a Vancouver based marijuana cultivator, has announced that it plans to purchase a 15,000 sq. ft. building in Providence for $750,000. The closing is set for January 15, 2018.&nbsp; The location of the building has not been disclosed.</p> <p>According to Future Farm&rsquo;s press release, the building is zoned for marijuana cultivation.&nbsp; Once licensed, Future Farm will use the building to grow marijuana for sale to state-licensed medical marijuana dispensaries.</p> <p>Future Farm&rsquo;s website discloses that the Company has projects throughout North America including California, Florida and Maryland. The Company&rsquo;s business model includes developing and acquiring technologies that will position it as a leader in the evolution of Controlled Environment Agriculture (CEA) for the global production of various types of plants, with a focus on marijuana.</p>Blog14 Dec 2017 00:00:00 -0800 Over Impact of Massachusetts Recreational Marijuana Sales on Rhode Island Medical Marijuana Industry<p>Will next summer&rsquo;s opening of the recreational marijuana market in Massachusetts impact Rhode Island&rsquo;s medical marijuana demand? An industry leader and a government regulator recently expressed different views to committees of the Rhode Island General Assembly.</p> <p>Earlier this month, Norman Birenbaum, the Principal Policy and Economic Analyst for the Rhode Island Department of Business Regulation was quoted in the <a href="">Providence Journal</a> as telling a legislative committee that the recreational marijuana establishments in Massachusetts will not kill off Rhode Island&rsquo;s medical marijuana program.&nbsp; Birenbaum did state, however, that the effect on the Rhode Island medical marijuana market is a &ldquo;moving target.&rdquo;&nbsp; Birenbaum noted that recreational stores would not offer some medical applications of marijuana, such as certain topical products.</p> <p>Seth Bock, the CEO of the Greenleaf Compassion Care Center in Portsmouth, RI, presented a less promising view to a different legislative committee.&nbsp; To Bock, the CEO of one of only three medical marijuana dispensaries in the state, the opening of recreational stores in Massachusetts is his biggest business concern.&nbsp; Rhode Island medical marijuana patients must renew their patient cards annually, pay a $50 fee, and pay for an annual doctor visit.&nbsp; Bock suggested to the committee that patients would rather cross the state lines and buy from the recreational stores in Massachusetts than deal with the Rhode Island costs and red tape.&nbsp; Bock also suggested that the General Assembly consider changing the length of the patient registration to three years.</p> <p>The new stores in Massachusetts may also have an impact on the Rhode Island budget.&nbsp; In fiscal 2017, the three medical marijuana dispensaries collected approximately <a href="">$3.1 million in taxes from the $28.2 million in sales</a>.&nbsp; If patients purchase their marijuana in Massachusetts, those taxes will go to Massachusetts instead of Rhode Island.</p>Blog28 Nov 2017 00:00:00 -0800 End of the Open Internet? Chairman Pai Proposes Net Neutrality Rollback<p>The FCC&rsquo;s Commission Chairman, Ajit Pai, released a statement concerning net neutrality on Tuesday, announcing a plan to stop the federal government's &ldquo;micromanaging&rdquo; of the internet. Chairman Pai stated that, under his proposal &ldquo;the FCC would simply require internet service providers to be transparent about their practices so that consumers can buy the service plan that&rsquo;s best for them and entrepreneurs and other small businesses can have the technical information they need to innovate.&rdquo; The proposal, which was released Wednesday, would essentially allow internet service providers to create fast and slow lanes for subscribers.&nbsp; This would permit them to choose whether to block or slow certain websites and to charge more for better quality.&nbsp; However, internet service providers would have to publically disclose whether they engage in slowing down a site, blocking, or other forms of paid prioritization.&nbsp;</p> <p>The proposal has received both criticism and support from internet providers and companies, telecom giants, and consumers.&nbsp; Internet companies like Google and Amazon have voiced their concerns over rolling back the net neutrality provisions put in place by the Obama administration because it would allow telecom companies to act as the gatekeepers of information and entertainment.&nbsp; There is concern that the proposal would allow telecom companies to play favorites, limiting or slowing access to certain sites unless consumers pay additional amounts.&nbsp; Smaller business worry they will not be able to compete if they have to pay for faster connections.&nbsp; However, telecom companies believe the current regulations prevent them offering a boarder array of products to consumers at higher and lower price points, ultimately benefitting the consumer.&nbsp; Chairman Pai has stated that he believes the current industries stifle innovation and that deregulation of the industry will allow greater investment in networks and infrastructure.&nbsp;</p> There was a significant online protest this summer when the FCC solicited comments on this issue, and all sides are expected to lobby hard in advance of the FCC&rsquo;s vote on the proposal on December 14, 2017.&nbsp; However, the five-seat FCC Commission is comprised of a Republican majority, Chairman Pai and two others, who generally vote with Chairman Pai. &nbsp;Thus, the age of the open internet is likely at its end.Blog22 Nov 2017 00:00:00 -0800 Your Online Terms of Service "Uber" Enforceable<p>Are your online Terms of Service enforceable? Businesses should review their account registration process in light of a recent court decision.&nbsp; In <i>Meyer v. Uber Technologies, Inc.</i>, the U.S. Court of Appeals for the Second Circuit upheld Uber&rsquo;s Terms of Service and arbitration provision in the face of a challenge by an Uber user. The facts of the case are straightforward.&nbsp;</p> <p>In 2014, Spencer Meyer registered for an Uber account.&nbsp; As part of the registration process, he was required to click a button labeled &ldquo;REGISTER.&rdquo;&nbsp; Below this button was the phrase, &ldquo;[b]y creating an Uber account, you agree to the TERMS OF SERVICE &amp; PRIVACY POLICY.&rdquo;&nbsp; This was followed by a hyperlink to Uber&rsquo;s Terms of Service.&nbsp;</p> <p>Meyer subsequently brought a lawsuit against Uber alleging price fixing, and Uber filed a motion to compel arbitration.&nbsp; Uber argued that by creating an account, Meyer had agreed to Uber&rsquo;s Terms of Service, which included a binding arbitration provision.&nbsp; Meyer argued that he was not aware of the Terms of Service and had never seen, read, or accepted it.</p> <p>The district court held in Meyer&rsquo;s favor, but on appeal, the Second Circuit held that by registering an account with Uber, Meyer had &ldquo;unambiguously manifested his assent to Uber&rsquo;s Terms of Service as a matter of California law.&rdquo;&nbsp; The court came to this conclusion based on a few factors.</p> <p>Of particular importance to the court was the fact that the phrase, &ldquo;[b]y creating an Uber account, you agree to the TERMS OF SERVICE &amp; PRIVACY POLICY&rdquo; and the hyperlink to the Terms of Service were coupled with the &ldquo;REGISTER&rdquo; button both spatially and temporally.&nbsp; In other words, the relevant language appeared directly below the &ldquo;REGISTER&rdquo; button, was fully visible on an uncluttered screen, and was provided simultaneously with creating an account.&nbsp; The court therefore stated that &ldquo;a reasonably prudent smartphone user would understand that the terms were connected to the creation of a user account.&rdquo;&nbsp; The court further concluded that because the heading and relevant language of the arbitration provision in the Terms of Service were in bold, the arbitration provision was reasonably conspicuous and the user had made an unambiguous manifestation of assent by registering an account.</p> <p>Why does this matter?&nbsp; Courts have routinely upheld &ldquo;clickwrap agreements,&rdquo; in which users are required to click a box affirmatively consenting to the company&rsquo;s terms and conditions.&nbsp; However, Terms of Service that do not require a user&rsquo;s affirmative consent (like Uber&rsquo;s), are generally more susceptible to challenge.&nbsp; By holding that the facts of this case met the standards both for consenting to be bound by the Terms of Service and agreeing to the arbitration provision, the court has seemingly made it easier for other companies to bind users to Terms of Service and compel arbitration under similar circumstances.&nbsp;</p> <p>Although Uber was ultimately victorious on appeal, it is likely Uber could have limited its exposure and possibly avoided litigation by requiring users&rsquo; affirmative consent (i.e., clickwrap agreements) to the Terms of Service at the time of registering an account.&nbsp; In light of this decision, companies should consider revising their registration pages to ensure that their terms and conditions are reasonably conspicuous and that all relevant information is closely coupled to the registration, both temporally and spatially. &nbsp;For an extra layer of protection, companies should require their users&rsquo; affirmative consent to the company&rsquo;s Terms of Service.</p>Client Alerts16 Nov 2017 00:00:00 -0800