Uber Slapped with USD 650 Million Employment Tax Bill; US Supreme Court to Decide Oracle’s Copyright Suit Against Google; US Investigators Uncover USD 6 Million Counterfeit iPhone and iPad Scam; Rolex Sues Custom Watch Company for Selling Counterfeit Products; US DOJ Seeks to Scrap Antitrust Paramount Consent Decrees; Apple and Intel Sue Investment Firm for Stockpiling Patents; Antitrust Suit Filed Against Comcast; UK’s CMA Investigates Hasbro’s Acquisition of EOne; Canadian Court Directs ISPs to Block Piracy Website and more.
Uber Slapped with a USD 650 Million Employment Tax Bill
American ridesharing company Uber has been asked to pay USD 650 million by the New Jersey labour department as a result of Uber’s misclassification of its drivers as independent contractors. The State Department of Labor and Workforce Development decreed that Uber has accrued USD 523 million in past-dues with regard to the unemployment and disability insurance taxes over the last four years. This is because Uber classified its drivers as its employees and not independent contractors. Uber also owes USD 119 million in interest and penalties on the unpaid amount.
An Uber spokesperson said that the company would be challenging this determination, standing behind the company’s classification of its drivers. While the state’s current determination is limited to unemployment and disability insurance, a finding that Uber’s drivers were employees and not independent contractors would have massive ramifications for the company, as well as other gig employers. Uber could then be required to pay drivers minimum wage and overtime under the state law. Reports estimate that such a reclassification would increase Uber’s costs per driver by over 20 per cent.
It is no surprise, therefore, that Uber, as well as Lyft, its primary ridesharing competitor in America, has been fighting a battle against legislation that would require such reclassification. Recently, both companies pledged $30 million each to combat a new California labour law that would adversely affect gig employers, including by requiring reclassification of workers as employees. A similar legislation and opposition is expected in New York. Uber and Lyft, along with other online platforms have already lost a lobbying attempt against a new California law that established a test to distinguish between contractors and employees, which ultimately did not agree with the platforms’ own classifications.
US Supreme Court to Decide Oracle’s Copyright Suit Against Google
The Supreme Court of the United States has agreed to hear Google’s appeal against the decision of the United States Court of appeals for the Federal Circuit, which had directed Google to pay damages to Oracle in the copyright infringement suit. Oracle, the American computer technology company, sought damages worth USD 9 billion in the suit, claiming that Google had wrongfully copied about 11,000 lines of software code in Android, Google’s mobile phone operating system. Oracle claimed that Google relied on certain aspects of Java, an open-source software language, which Oracle had acquired in 2010, and that this use, without permission, amounted to copyright infringement.
Google’s argument was that “free access to the software interfaces in question were crucial to the innovation economy”. A San Francisco jury, in 2016, found that Google had not violated copyright laws and its use fell under the exception of “fair use”. Last year, however, the US Court of Appeals overruled that finding, and sent the case back for a trial to determine the monetary extent of Google’s liability. Google approached the Supreme Court against the same, which has now accepted to hear and rule on the matter.
US Investigators Uncover USD 6 Million Counterfeit iPhone and iPad Scam
The US Department of Justice has charged a China-based group for running a counterfeit iPhone and iPad scam in the United States, which has costed the technology giant Apple an estimated USD 6.1 million. The group would import counterfeit iPhones and iPads from China, intentionally damage them, and then take them to Apple stores to get the same exchanged under warranty for genuine products. These genuine products were then sent back to China to be sold. Two businesses and several homes in California were raided, and officials seized $250,000 in cash and 90 iPhones, which are being checked for fake parts, resulting in a total of 14 people being charged with wire fraud, mail fraud, conspiracy, identity theft, and money laundering.
Rolex Sues Custom Watch Company for Selling Counterfeit Products
Rolex, the world’s most valuable watch company, has filed a trademark infringement and counterfeiting suit against three-year old custom watch company laCalifornienne, for selling “counterfeit” Rolex products. laCalifornienne’s business involves them sourcing authentic watches, customising them, and then selling them to retailers. The customising primarily involves swapping out watches’ wristbands for colourful leather bands—a practice that Rolex does not take issue with.
However, Rolex’s problem lies in the fact that the customisation also extends to swapping of parts such as dials and crystals, which, according to Rolex, pertains to the working of the watches. According to Rolex’s policy, altering its watches and adding non-authentic Rolex parts, automatically transports an authentic watch into a counterfeit. Rolex justifies this by claiming that it can no longer assure the quality or performance of such altered watches.
In its suit, Rolex claims that by using Rolex’s name and trademark on their watches, and advertising them as authentic Rolex watches, laCalifornienne is actively deceiving consumers, who are misled to associate these altered products with the quality and repute associated with Rolex. According to Rolex, this practice is also damaging the value of Rolex’s trademark, through the use of which, laCalifornienne is illegitimately profiting. Interestingly, while Rolex’s suit hinges primarily on its in-house definition of “counterfeit”, a statutory definition of the term exists under the Lanham Act, against which the Court is likely to weigh the legitimacy of Rolex’s definition.
US DOJ Seeks to Scrap Antitrust Paramount Consent Decrees
The US Department of Justice (DOJ) has indicated that it plans to approach a court to scrap antitrust consent decrees signed in 1950s between the DOJ and movie studios. The decrees, commonly referred to as ‘Paramount’ consent decrees, enforce a Supreme Court ruling against the then-prevalent practice of studios selling multiple films to theatres in a single package. Called, ‘block booking’, this practice effectively forced movie theatres to buy the rights to and screen unpopular films to be able to screen blockbuster releases. After the Supreme Court decision, the consent decrees were entered into, protecting movie theatres from increasing studio control.
Now, however, the DOJ is seeking a two-year sunset period on the decrees, presumably considering the vastly different media landscape today. A speech by DOJ Antitrust Division also seems to indicate that the DOJ is looking into PRO decrees that were entered into in the 1940s between the DOJ and the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc. (BMI). These PRO decrees would dictate music licensing rules for a vast range of performance venues and formats, including bars, restaurants, and radio stations.
Apple and Intel Sue Investment Firm for Stockpiling Patents
American technology companies Apple and Intel have filed an antitrust lawsuit against Fortress Investment Group, an investment management firm owned by Japanese conglomerate Softbank. The suit accuses the firm of stockpiling patents in a bid to hold up technology companies by filing lawsuits against them, including over 25 lawsuits that demanded as much as USD 5.1 billion from Apple. One of these lawsuits, according to Apple, claimed damages for violation of a step-counting patent by Apple in its devices with health-tracking apps. In response to a similar lawsuit filed by Intel in October, which has now been withdrawn in favour of the new joint suit with Apple, a Fortress spokesperson expressed confidence in their business practices and legal position.
Antitrust Suit Filed Against Comcast
Comcast, the American telecommunications conglomerate, has been slapped with an antitrust suit by Altitude Sports, a regional sports television channel. The suit pertains to a negotiating impasse between the two that has resulted in Comcast subscribers being unable to view certain matches telecast on Altitude, including most of the matches played by American basketball and ice hockey teams, Denver Nuggets and Colorado Avalanche, respectively. Altitude alleges Comcast of reducing competition in the licensing of sports programming via a series of acquisitions of regional sports networks all over the country and consequently seeking to strengthen its control over multichannel television distribution, especially in Denver. According to the suit, Comcast made extremely unreasonable demands in its negotiations with Altitude, which the television channel contended would drive it out of business.
UK’s CMA Investigates Hasbro’s Acquisition of EOne
The acquisition of Canadian entertainment company Entertainment One by Hasbro, the American toy company is being investigated by the Competition and Markets Authority (CMA) in the United Kingdom. Entertainment One, which owns a wide range of properties, including children’s animated show Peppa Pig and rap label Death Row Records, was acquired in August in a USD 4 billion all-cash deal. However, the CMA is concerned that the deal would result in a “substantial lessening of competition”. While Hasbro is primarily involved in the manufacture of toys and board games, it has a closely related content division called Allspark, which owns properties like the blockbuster movie franchise Transformers.
Canadian Court Directs ISPs to Block Piracy Website
In a first, a Canadian Federal court has ordered internet service providers (ISPs) to block a pirate IPTV service called GoldTV, raising fears of further censorship, potentially of legitimate content. A decision of this nature has been sought by Canada’s major ISPs for a while now, most of whom also function as cable providers, and thus, suffer due to online piracy of their content. They had initially approached Canada’s regulator, the Canadian Radio-television and Telecommunications Commission (CRTC), to create a blacklist of such piracy sites, which ISPs could then block. When the CRTC rejected the same, the ISPs filed a suit. TechSavy, one of the few ISPs opposing the move, has claimed that such blocking would be extremely costly and burdening, and would not even be effective, as it will be easily circumventable via the use of virtual private networks (VPN). The decision has been touted as the start of a “slippery slope”, with critics arguing that it violated the principles of net neutrality and freedom of expression.
Authored and compiled by Neharika Vhatkar (Associate, BananaIP Counsels) and Param Gupta (Legal Intern)
The IP, Privacy and Antitrust Law News Bulletin is brought to you by the Consulting/Strategy Division of BananaIP Counsels, a Top IP Firm in India. If you have any questions, or need any clarifications, please write to [email protected] with the subject: IP, Privacy and Antitrust Law News.
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