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The State of Cloud Computing Can Be Taxing – Want to Understand Why?

Back in June 2010 – more than a year ago – we announced the launch of a new Rimon initiative focusing on Cloud Computing (see ‘Transcending the Cloud’ – Rimon Announces White Paper Series & Legal Initiative on Cloud Computing),showcased with a series of individual and topical white papers, in time being compiled into a comprehensive work entitled, “Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing.” As most of you know, this brave new world, with new providers, new economic models, new access plans, and broadened capabilities, has grown, and over the past year we have released nine individual white papers, with more on the horizon and updates to existing papers as the legal and technology environments evolve. One of the first in our series was a paper on the state tax implications of cloud computing entitled: “Pennies From Heaven.”

Just letting you know our State Tax Practice is hosting a Rimon teleseminar on recent developments in state taxation on the subject, and you can view the invitation and sign up through the registration link on the invitation. Just head to: “Clouds, Codes and Crunching Numbers: An Update on Current State Multi-State Tax Development and Trends in the Taxation of Electronic Goods and Services” and sign up today!

Of course, make sure you subscribe via email or get the Legal Bytes RSS Feed so you are always in touch with our latest information; and if you have any questions about our Cloud Computing initiative or need help, feel free to contact me, Joe Rosenbaum, or the Rimon attorney with whom you regularly work. We are happy to help.

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Let’s be Frank! Actually, Let’s Be Dodd-Frank. Can You Hear Me Now?

Financial institutions need to worry about Dodd-Frank (the Dodd-Frank Wall Street Reform and Consumer Protection Act). After all, “Wall Street,” “Reform” and “Consumer Protection” don’t exactly conjure up images of phone, gas and electric lines being inspected and regulated by auditors wearing suits and carrying briefcases.

If you have been a loyal Legal Bytes reader, you probably know the next line:

Well guess what?

A section of the Dodd-Frank Act amended a section of the Fair Credit Reporting Act (the “FCRA”). The amendment, which becomes effective today, July 21, 2011, requires that anyone who issues a risk-based pricing notice to a consumer (a notice required when a credit report and credit score are used in connection with the extension of credit to a consumer) must now include the applicant’s credit score directly in or with the notice. So when a company sends you a notice under the FCRA in order to comply with the requirements of the Equal Credit Opportunity Act (“ECOA”), it needs to tell consumers it has used a credit report, “a record of your credit history” and “information about whether you pay your bills on time and how much you owe creditors.”

Public utilities, telecommunications companies and many others use credit scoring models, and even though these may not be based on your general credit history, the FTC is now taking the position that these companies are subject to the provisions of Dodd-Frank, and credit scores must be disclosed to the consumer.

Hey, don’t take my word for it. Read the entire Rimon Client Alert [PDF] authored by our experts: Roberta G. Torian in Philadelphia, Robert M. Jaworski in Princeton and Mark F. Oesterle in Washington, D.C. Then you will see how really complicated it is and can call them for help.

Of course, you can always contact me or the Rimon attorney with whom you regularly work, if you have any questions or require legal counsel or assistance.

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ICANN. You Can. We All Can: Own Your Own gTLD, Of Course!

A few days ago, Legal Bytes announced that the International Corporation for Assigned Names and Numbers (ICANN) approved a plan to allow virtually unlimited new top level Internet domain names – each is referred to as a gTLD (Nightmare on Brand Street: ICANN Adopts Unlimited gTLDs).

In response to numerous questions and requests for more information, here is some additional material for your consideration.

First, you can download a copy of the current gTLD Applicant Guidebook.

Second, you can read or download a copy of a brief, executive-level presentation entitled, “The New gTLDs: What Does It Mean for Brand Owners?” describing the changes, the implications and some additional information that may be relevant to brand owners in evaluating the implications of the new scheme.

As always, if you have further questions, you can contact me directly or any member of our gTLD team: Douglas J. Wood, John L. Hines, Joseph I. Rosenbaum, Cynthia O’Donoghue, Dr. Alexander R. Klett, LL.M., Steven J. Birt and Brad R. Newberg.

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Payment Card Industry Takes a Swipe at Virtual Security

Someone in the payment instrument, payment processing, or payment systems environment must be living under a rock if he or she has not heard of or been affected by the Data Security Standards (DSS), or “PCI-DSS” as it has been referred to in the industry, promulgated and released by the Security Standards Council of the Payment Card Industry Association (PCI). Although the original impetus for the credit-card-driven security standards was combating identity theft and credit card fraud in the wake of the data breaches and compromised (or potentially compromised) databases containing sensitive consumer payment account information, the standards have become the de facto starting point for any compliance security standard in the payment industry.

Last week, the PCI Security Standards Council released new comprehensive guidelines for PCI compliance in virtual card holder data environments dealing with consumer payment system and payment transaction security in a virtual environment. Rimon lawyers who work in this area consistently and who have a wealth of experience with information security and financial services, have put together a client alert entitled: "Is the PCI Security Standards Counsel Preparing for Cloudy Weather?"

Credit, debit and prepaid cards; smart cards and chip cards; gift cards and stored value cards; co-branded cards and loyalty rewards programs; corporate cards, fleet cards and purchasing cards; data protection and privacy; information security, identity theft and data breaches; micro, digital and virtual payment systems – E Commerce; The Fair Credit Reporting Act; Regulation E; Regulation Z; Credit Card Act of 2009 (see Credit Card Act of 2009: Act I, Scene 1 or just search the Legal Bytes blog)! Do any of these terms apply to you? Talk to us. It’s what we do. Contact any of the lawyers listed in the Alert, contact me, or contact the lawyer at Rimon with whom you routinely work, and we will make sure we help you or connect you to someone at Rimon who will be happy to do so.

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Nightmare on Brand Street: ICANN Adopts Unlimited gTLDs

The International Corporation for Assigned Names and Numbers (ICANN) has approved the plan for unlimited new gTLDs (i.e., top level Internet domain names) and will soon start taking applications. Brand owners dreading the adoption of a system permitting unlimited gTLDs now face the reality of this dramatic change to the domain name system.

While the domain name system is currently limited to 22 “generic” gTLDs (.com, .org, .net, .info, .biz, etc.), country codes (e.g., .us, .uk, .cn), and certain special community-sponsored domains (e.g., the .xxx for adult entertainment), the new rules permit entities anywhere in the world to apply for and, if granted rights by ICANN, to operate a gTLD for virtually any term, word or phrase, including your names, trade names, trademark terms, brand and product names.

My partner, John L. Hines, has been following this occurrence and is about as close to these developments and their implications as any legal advisor can be; but we have a global team of lawyers – Douglas J. Wood, Cynthia O’Donoghue, Dr. Alexander R. Klett, LL.M., Steven J. Birt and Brad R. Newberg – who, with John, have put together a Client Alert entitled “.anything On Its Way: New Generic Top Level Domains Will Launch January 12”.

Of course, if you need additional information or guidance, or both, please contact any of them. They will be happy to help.

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Transcending the Cloud – Advertising & Marketing Make Rain

This post was written by Joseph I. Rosenbaum and Keri S. Bruce.

As part of our ongoing commitment to keeping abreast of legal issues, concerns and considerations in the legal world of cloud computing, most of you know we have been publishing regular topical updates to our Cloud Computing initiative – new chapters and white papers intended to provoke thought, stimulate ideas and, most of all, demonstrate the thought leadership Rimon attorneys bring to bear when new and important trends and initiatives in the commercial world give rise to new and interesting legal issues. If you didn’t know, re-read the previous run-on sentence!

So here, from Joe Rosenbaum and Keri Bruce, is a glimpse at some issues that apply to the world of advertising and marketing arising from Cloud Computing. This next chapter in Rimon’s on-going series, “Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing,” is titled “Cloud Computing in Advertising & Marketing: Looking for the Silver Lining, Making Rain.” This white paper tries to examine the considerations and concerns that arise within the advertising and marketing industries in the wake of complex and evolving regulation and scrutiny. We hope it provides some insight into the issues and the factors that apply, even as the industry and the regulatory landscape continue to evolve.

As we do each time, we have updated the entire work so that, in addition to the single "Advertising & Marketing" services’ white paper, you can access and download a PDF of the entire “Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing” compendium, up to date and including all the previous chapters in one document.

Of course, feel free to contact Joe Rosenbaum or Keri Bruce directly if you have any questions or require legal counsel or assistance related to advertising and marketing. Make sure you subscribe via email or get the Legal Bytes RSS Feed so you are always in touch with our latest information. And if you ever have questions, you can always contact any Rimon attorney with whom you regularly work.

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China Announces State Internet Information Office

This post was written by Joseph I. Rosenbaum, Frederick H. Lah, Zack Dong and Amy S. Mushahwar.

On May 4, 2011, the Chinese government announced it was establishing the State Internet Information Office, an office dedicated to managing Internet information. According to the announcement, this office will be responsible for directing, coordinating, and supervising online content management. The office will also have enforcement authority over those in violation of China’s laws and regulations (see, for example, China sets up office for Internet information management). While there are reports that many believe the purpose of the new office will be to censor political and social dissidents (see, China Creates New Agency for Patrolling the Internet, the office may also have a key role in thwarting illegal spamming and other dubious data practices.

Further, many see the establishment of this office as another step forward for the Chinese in terms of establishing their own data-protection regime. China has long been considered as lagging behind other countries in terms of their data-protection standards (quite possibly by design), and with no comprehensive data privacy law, businesses have had little guidance concerning the handling of personal data. China published the draft Personal Information Protection Measures in 2005, but those Measures have not yet been adopted and little progress seems to have been made since then. However, in February 2011, China issued a draft of the “Information Security Technology – Guide of Personal Information Protection” (“Guidelines”) to address the lack of guidance and standards surrounding online information practices in China. The Guidelines include standards with respect to collecting, processing, and using data, and there are provisions related to the transfer of data to third parties. While the Guidelines are technically non-binding, they still provide important guidance for businesses in China on how to protect the online information of China’s citizens. With the Guidelines still under review, Rimon lawyers will continue to monitor developments to see what form the Guidelines will take in the future.

If you have or are considering a presence in China, you need to know and be attentive to many things, if you are to succeed in the Chinese marketplace. That’s why you should contact Frederick H. Lah in our Princeton office, Zack Dong in our Beijing office, Amy S. Mushahwar in our Washington, D.C., office, me, or the Rimon lawyer with whom you regularly work. When you need legal guidance or have questions about regulations that apply online, on the Web, and across the Internet, in almost any part of the world, let us know. We are here to help.

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Free Speech on the Internet – India Goes Schizophrenic

Unreasonable restraints on free speech? India? Well, you decide. According to an article published today in the Pittsburgh Post-Gazette, storm clouds are brewing over just how far the government should and can go in restricting free speech on the Internet. Indeed—just how ambiguous the regulations can be such that interpretation becomes a subjective problem, enforceable at the discretion of regulators.

Unfortunately, the new rules (referred to as “Information Technology (Intermediaries Guidelines) Rules, 2011”) stem from a 2008 amendment, widely supported by Internet service providers (I.T. Act 2008) to an Indian information technology statute first enacted in 2000. For a history of the Indian legislation, see Information Technology Act 2000 (ITA-2000).

The Amendment removed intermediary liability of Internet service providers, many of whom are represented by the Internet and Mobile Association of India, for any content created by third parties and for which the ISP played no active role in creating. While the removal of passive ISP intermediary liability is one of growing consistency in the international community, the regulations broadly empowering officials to curtail free speech on the web are not.

Growing trend, justified by security? Aberration spawned by immediate and local concerns? Abuse of power? Reasonable trade-off for protection of society? Ahh, but whose society? Where is the balance? Who decides?

Take a look at the regulations, then you decide. But if you need legal guidance or have questions about regulations that apply to the Internet—internationally, multi-nationally or domestically, in almost any part of the world—let us know. We are here to help.

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Cloud Computing – Clouds Can Sometimes Be Storm Clouds

This post was written by Joe Rosenbaum and Adam Snukal.

Among others news publications, CNN Money just recently reported that Amazon.com’s cloud-based Web service EC2 suffered a “rare and major outage” this past Wednesday that affected several online sites it supports, including Reddit, HootSuite, Foursquare and Quora. Amazon.com hosts many major websites on its servers through its cloud-based service and, in total, “[t]housands of customers hitch a ride on Amazon’s cloud, renting space on its servers.” The recent outage crashed several customer sites and created glitches of varying degrees on others.

As cloud-based Web services have proliferated, the risks associated with major outages for companies dependent on cloud-based services have become a reality. This recent outage, and potentially others like it, could create reputational risk not only to the cloud providers, but also to those who use the cloud computing services of those providers for their technology infrastructure – processing, applications and data – exposing them to contractual liabilities for failure to meet promised service levels, breaches of performance representations and warranties, and even potential security and data breaches. All these and more, possible legal and contractual problems arising from the use of and reliance on cloud computing. These potential risks should be eliminated or mitigated, and while contracts cannot always guarantee operational integrity or performance, they can provide indemnities and remedies that offer a measure of protection or mitigation in many circumstances.

Rimon has been at the forefront of cloud computing legal thought-leadership and risk-mitigation strategy for our clients. Our lawyers have significant U.S., international and multinational experience in implementing strategies, such as service level agreements and risk-mitigating tools that help limit risks associated with cloud-based computing and cloud service outages. Indeed, to appreciate the risks, one need only look to one of the very first articles by Rauer Meyer, entitled When the Cloud Bursts – SLAs and Other Umbrellas, drawn from Rimon’s on-going series – one that you can view or download entirely in up-to-date form – entitled “Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing.” You can access and download a PDF of the individual article or the entire “Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing” compendium, up to date and including all of the previous chapters in one document.

Of course, feel free to contact Christopher G. Cwalina or Daniel Z. Herbst or Joe Rosenbaum or Adam Snukal (or the Rimon lawyer with whom you normally work) if you have any questions or require legal counsel or assistance. Make sure you subscribe via email or get the Legal Bytes RSS Feed so you are always in touch with our latest information.

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Transcending the Cloud – Financial Services: Show Me the Money!

This post was written by Joseph Rosenbaum, Adam Snukal and Leonard Bernstein.

Welcome to the New Year. As they do each year, clouds, together with some sunshine (and a cold winter blast periodically in our Northern Hemisphere), roll in, too.

Last year we published a number of topical updates to our Cloud Computing initiative – new chapters and white papers intended to provoke thought, stimulate ideas and, most of all, demonstrate the thought leadership Rimon attorneys bring to bear when innovative and important trends and initiatives in the commercial world give rise to new and interesting legal issues.

So here, from Adam Snukal, Len Bernstein, and Joe Rosenbaum, is a glimpse at some issues that apply to the world of financial services arising from Cloud Computing. This next chapter in Rimon’s on-going series, “Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing,” is titled “Look, Up in the Cloud, It’s a Bird, It’s a Plane, It’s a Bank.” This white paper examines the issues that arise within financial services institutions in the wake of complex and evolving regulation and scrutiny, and we hope it provides some insight into the considerations and concerns that apply, even while the industry and the regulatory landscape are still evolving. A special note of thanks to Anthony S. Traymore, an Advertising Technology & Media associate and a good friend and colleague, who has now joined the legal department of a Rimon client. Anthony was instrumental in helping put the initial topical white paper draft together while at Rimon, and we like to give credit where credit is due – both here and in the white paper itself. Thanks Anthony.

As we do each time, we have updated the entire work so that, in addition to the single “financial services” white paper, you can access and download a PDF of the entire “Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing” compendium, up to date and including all of the previous chapters in one document.

Of course, feel free to contact Adam Snukal, Len Bernstein or Joe Rosenbaum directly if you have any questions or require legal counsel or assistance related to financial services. Make sure you subscribe via email or get the Legal Bytes RSS Feed so you are always in touch with our latest information. And if you ever have questions, you can always contact any Rimon attorney with whom you regularly work.