Category Archives: guest posts

“Holy Secret Recipe, Batman!”: Superheroes, the Misappropriation of Trade Secrets, and Economic Espionage

Posted on June 27, 2013 by | 10 comments

(This guest post was written by T. Stephen Jenkins, an associate in the Commercial Litigation Practice Group of Pepper Hamilton LLP.)

While Law and the Multiverse has featured several posts on various forms of intellectual property law (e.g. patent, copyright, and trademark), it has yet to discuss trade secrets . . . until now.  Trade secrets commonly appear in comic books, and given the recent concern with computer security and the alleged theft of trade secrets by domestic and international hackers, theft of trade secrets is a worthwhile topic to discuss.  (Warning:  minor spoilers ahead)

 

I. What IS a Trade Secret?

A person or company holding a trade secret, as its name suggests, seeks to safeguard information that is known by the person or company that is not readily known by anyone in the public.  Trade secrets can overlap with other forms of intellectual property, such as non-patentable inventions, trade dress, and “know-how.”  However, unlike many other forms of intellectual property where recovery of damages might be limited by lack of federal registration (disclosure) of the intellectual property (e.g. copyrights and patents), generally speaking, a trade secret holder may be able to recover damages if he or she maintained a reasonable level of protection to prevent non-disclosure of the trade secret.  The Uniform Trade Secrets Act (“UTSA”), which 48 of 50 states have adopted (or introduced) in some form, defines a trade secret as

(1) information, including a formula, pattern, compilation, program, device, method, technique, or process, that (2) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (3) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Uniform Trade Secrets Act §1, ¶ 4.

Trade secrets are common—and even famous—in the real world.  One of the most famous examples is the Coca-Cola secret recipe, which, for years has been guarded and has been the subject of threats of economic espionage.  Other examples of famous trade secrets include KFC’s “11 herbs and spices” and Google’s search algorithm.  Even less apparent examples of trade secrets have gained fame including the methodology for creating the New York Times Best Sellers’ list and Starwood Hotels’ (the owner of Westin hotel chain) luxury ambience.  Each of the above satisfies the three elements of the UTSA definition of a trade secret.

First, each example easily satisfies the information prong.  See  1-1 Milgrim on Trade Secrets § 1.01 (“The classic definition of trade secrets is stated at § 757, comment b, of the 1939 Restatement of Torts. . . . It covers any information (which can be embodied in a physical thing . . .”).  Second, because some have attempted to either unlawfully misappropriate and/or reverse-engineer the above trade secrets, it is probably safe to assume each trade secret has independent economic value in not being generally known.  Third, all are highly protected (though safeguarding all the details that create a Starwood Hotel’s luxury ambience is undoubtedly challenging).

Given the broad definition of a trade secret under UTSA, one can see how patterns, formulas, or devices in the Multiverse likely qualify as trade secrets.  The challenge is demonstrating whether these secrets have economic value.

The most famous comic book trade secret may be the Super Soldier Serum that created Captain America (and other characters), which many have tried to misappropriate (e.g. the Red Skull) and reverse engineer (e.g. the Green Goblin).  Though the Super Solider Serum was the product of government military research, there is a strong case that is has economic value.  Many villains and fictional enemies of the United States have tried to misappropriate the secret formula and use it either to gain a military advantage or to create a steady supply of mercenaries for hire.  Therefore, it is reasonable to assume that the Super Soldier Serum could meet the trade secret requirements.

Other examples might include:

  • Devices:  Spider-Man’s webshooters and Batman’s gadgets;
  • Programs/Patterns:  X-men Danger Room (depending on whether or not it is sentient) and Cerebro/Cerebra;
  • Methods/Techniques/Processes:  The method to access the Speed Force and the process of joining adamantium to Wolverine’s skeleton;
  • Formula: Vibranium and its derivative uses including Captain America’s shield, the Super Solider Serum, and the Anti-Life Equation;
  • Information/Compilations:  S.H.I.E.L.D.’s database on superheroes and villains and Justice League’s/X-Men’s/Avengers team-up database.

A superhero’s secret identity (within the Multiverse) may also be a trade secret, though not as easily established as the above.  See the Law and the Multiverse’s post on secret identities and privacy for an analogous argument.  For public superheroes such as those registered under the Marvel Universe’s Superhuman Registration Act, their secret identities may not enjoy trade secret protection.  However, other superheroes have had to protect their secret identities against those trying to kill them or sell their secret (e.g. Spider-Man).  They have also obtained benefits in their non-superhero professions from keeping their superhero identities secret (e.g. Peter Parker (photographer) / Spider-Man, Clark Kent (journalist) / Superman, and Matt Murdock (attorney) / Daredevil)).  Thus, for these superheroes, a secret identify might qualify as a trade secret.

 

II. What Laws Protect Trade Secrets?

In contrast to patents, copyrights, and trademarks, which federal law either establishes and/or strongly protects, trade secrets’ protection mostly arises from state law, though recently, international and federal protection of trade secrets has increased.  Most states have adopted UTSA in some form, which provides for civil actions for injunctive relief and damages within three years after misappropriation is discovered.  Two U.S.-signed treaties, the Agreement on Trade Related Aspects of Intellectual Property Rights (“TRIPS”) and the North American Free Trade Agreement (“NAFTA”) also provide some protection.

Recently, the federal Economic Espionage Act (“EEA”), 18 U.S.C. §§ 1831 et seq.,  and the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. § 1030 et seq., have become enforcement tools against criminal misfeasors.  Both the EEA and the CFAA provide harsh civil and criminal penalties for the trade secret theft. See 18 U.S.C. §§ 1831 et seq. (providing for fines up to $10 million and/or 15 years imprisonment for economic espionage or trade secret theft); 18 U.S.C. § 1030 et seq. providing for unspecified fines and/or up  to 20 years imprisonment).

 

III. Who in the Multiverse Has Violated the EEA or the CFAA?

Though there are several examples of potential violations of the EEA and the CFAA in the Multiverse, a favorite comes from Marvel Entertainment’s popular Iron Man “Armor Wars” storyline (for a DC Comics example, see the mini-series aptly named The Hacker Files).

 

A. The Facts

“Armor Wars” is an Iron Man story arc that has appeared in many of Marvel’s comic book series.  In addition, it was featured in the second season of the Iron Man:  Armored Adventures televised cartoon.  In the Iron Man:  Armored Adventures version, Tony Stark is a teenager balancing being a superhero and a high school student.  Tony’s main antagonist is Obadiah Stane, who ousted Tony from the family company Stark International.

Stane, then Chair of the Board of Stark International, enlists Ghost to steal the Iron Man armor specifications.  Ghost goes to Tony’s hideout to steal the specs from Tony’s computer.  Stane also makes a deal with Doctor Doom, handing over the armor specs to Dr. Doom in exchange for help with creating a version of the armor for Stane.  Using Tony’s armor specs, Stane creates his own version of the Iron Man armor, becoming Iron Monger but is exposed as being involved with Ghost.  Ghost also sells the Iron Man armor specs to Justin Hammer (in this version a 21-year old spoiled rich kid), who creates his own version of the Iron Man armor, becoming Titanium Man.

 

B. Is There a Cause of Action Under the EEA or the CFAA?

While the cartoon takes a different approach to resolve the problem, consider whether a prosecutor or Tony could bring a claim under the EEA or the CFAA against (1) Ghost, (2) Stane, (3) Dr. Doom, and (4) Hammer (collectively, the “Misfeasors”).

 

1. Economic Espionage Act

Under the EEA, a prosecutor or Tony could bring claims of both theft of trade secrets (42 U.S.C. § 1832) and economic espionage (42 U.S.C.§ 1831).  The EEA makes it unlawful for a person to steal a trade secret and transmit it to a person who knows he or she is not authorized to possess it.  The EEA also makes it unlawful for a person to steal a trade secret with the purpose or knowledge that the delivery of the trade secret will benefit a foreign government (economic espionage).

The Misfeasors are all potentially liable for theft of trade secrets.  The EEA provides that “[w]hoever, with intent to convert a trade secret . . . steals, or without authorization,” or “appropriates . . . information” or “receives, buys, or possesses such information” or “attempts . . . or conspires . . . to commit any offense” described above shall be subjected to fines and/or imprisonment.  First, the Iron Man armor specs, at least in this storyline, are trade secrets  because they meet all the requirements under UTSA (see above Captain America/Super Soldier Serum analysis).  Moreover, the reason Stane and Hammer pay Ghost to steal the specs is because they want to derive economic value.  Second, the Misfeasors were involved in a conspiracy to misappropriate the specs:  Ghost stole the specs; Stane and Hammer bought the stolen specs, and Dr. Doom received the stolen specs.

However, not all of the Misfeasors are clearly liable for economic espionage under the EEA.  The EEA’s economic espionage provision is conceptually the same as its theft of trade secret provision, but requires that a misfeasor transmit a trade secret “intending or knowing that the offense will benefit” a foreign government or agent.  Here, the foreign government or agent is Latveria or Dr. Doom, respectively.

Hammer is likely not liable for economic espionage because it would be difficult to prove that he intended or knew that Dr. Doom would gain the armor specs.  In contrast, Stane and Dr. Doom are likely liable because they conspired for Dr. Doom to obtain the specs.  But the trickier case is Ghost who was happy to sell the specs to highest bidder.  Because it was Stane and not Ghost who gave the specs to Dr. Doom, Ghost can argue that he did not intend or know that his theft would benefit Dr. Doom.  However, given that “a conspiracy can exist even if each participant does not know the identity of the others or does not participate in all the events,” cf. United States v. Monroe, 73 F.3d 129, 131 (7th Cir. 1995) (internal citations omitted), Ghost’s argument may fail.

 

2. Computer Fraud and Abuse Act

The Misfeasors are also likely liable under the CFAA, which provides that “[w]hoever . . . knowingly accessed a computer without authorization or exceeding authorization . . . obtain[s] information that has been determined by [U.S. law] to require protection against unauthorized disclosure . . . [and] transmits . . . or conspires [to transmit]. . . to any person not entitled to receive it” will be subject to fines and/or imprisonment.  18 U.S.C. § 1030 (a)–(c).  The analysis under the CFAA is similar to the theft of trade secret analysis but requires that the information be obtained from a “protected computer.”  Under the CFAA a protected computer is either (1) a computer “exclusively for the use of a financial institution or the United States Government, ”18 U.S.C. § 1030(e)(2)(A), or (2) a computer used in “interstate or foreign commerce or communication,” 18 U.S.C. § 1030(e)(2)(B).  The latter requirement is a low standard to meet

Tony’s computer is a protected computer because it was used in interstate communication.  Thus, the Misfeasors could be facing years of imprisonment or at least hefty fines.  Dr. Doom may escape penalty given that, as the sovereign of his own country, he will likely not extradite himself for prosecution.  And if the U.S. government came after Dr. Doom or any of the Misfeasors, it would likely take years to reach a resolution, which is probably why the story arc’s writers resolved the issue in a much swifter way.

Using the EEA and the CFAA to pursue real-world misfeasors may increase in the coming years.  The EEA and the CFAA give federal prosecutors—and to a lesser extent civil litigants—broad power to prosecute alleged misfeasors, making even attempts to misappropriate trade secrets actionable.  “The Department of Justice has made the investigation and prosecution of corporate and state sponsored trade secret theft a top priority. . . . The FBI is also expanding its efforts to fight computer intrusions that involve the theft of trade secrets by individual, corporate, and nation-state cyber hackers.”  See Office of the President, Admin. Strategy on Mitigating the Theft of U.S. Trade Secrets at 7.

While there are many proponents and opponents of their use, there is no doubt that the Economic Espionage Act and the Computer Fraud and Abuse Act have had profound effects.  Of course, you can always come to Law and the Multiverse to see how the EEA and the CFAA continue to affect super powered individuals—and Pepper Hamilton LLP if you ever need real-world advice.

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Posted in criminal law, guest posts, intellectual property, Iron Man

Mutant Discrimination: GINA, Genetics and How Professor Xavier is Breaking the Law

Posted on March 29, 2013 by | 72 comments

This guest column was contributed by Dan Vorhaus, an attorney at Robinson, Bradshaw & Hinson, P.A. and Editor of the Genomics Law Report.

Previous posts here at Law and the Multiverse have discussed the status of mutants under several of our nation’s anti-discrimination laws, including the applicability of constitutional protections afforded by the Equal Protection and Due Process clauses of the 14th amendment and statutory protections afforded by the Americans with Disabilities Act (ADA).

There remains, however, one key piece of important anti-discrimination legislation that has yet to be considered in evaluating the legal protections afforded mutants under the law: the Genetic Information Nondiscrimination Act, or GINA.

I. GINA and Mutant Genetics: A Primer.

GINA represents a historic achievement. Enacted in 2008 after 13 years of debate, many have called it the “first civil rights bill of the 21st century.” Five years later it remains the first and only piece of federal legislation to specifically address the use and effects of genetic information.

Broadly speaking, GINA is divided into two parts. Title I of GINA prohibits health insurers from using genetic information to deny coverage or to set premiums or payment rates. Title II prohibits employers from requesting genetic information or using genetic information in hiring, firing and other employment-related decisions.

GINA’s unique focus on genetic information makes the law of particular relevance to mutants. “Mutants,” as we now know thanks to decades of research by devoted and largely off-panel comic book scientists, are individuals who possess at least one mutated copy of the so-called “X-Gene.” The gene appears to promote the development of superhuman powers and abilities, typically post-puberty.

While much remains unknown about the X-Gene’s structure and function, scientists specializing in mutant genetics have isolated its protein product(s) as evidenced by the deployment of mutant suppression drugs in X-Men: The Last Stand (the drug in question is derived from the mutant Leech). From this we can extrapolate that the location of the X-Gene in the Homo sapiens genome is known and, importantly, that mutations within the gene can be identified through genotyping or even targeted sequencing of the X-Gene itself.

With the identification of the X-Gene and the subsequent decline in cost of genomic sequencing technology, there are a number of scenarios in which a genetic test to “diagnose” a mutant at an early stage, particularly before he or she has developed any superhuman (and frequently super-destructive) abilities, might be desirable. But in light of GINA’s passage, are such genetic tests legal?

II. Mutant Discrimination in a Post-GINA World.

We start with a pair of scenarios in which genetic testing for the X-Gene might be of interest.

First, a health insurer could require applicants to submit to testing in an attempt to screen in individuals with beneficial mutations (e.g., those resulting in unique healing abilities) or screen out individuals with X-Gene mutations capable of generating catastrophic levels of claims exposure (e.g., as a result of an at-times-uncontrollable ability to rearrange matter), thereby helping to more accurately project the insurer’s exposure.

Second, an employer might use the X-Gene test to gain valuable insight about a prospective hire. For instance, a research laboratory might use the X-Gene diagnostic test to double-check that the reserved but well-qualified physicist it is considering for an open position won’t demolish the lab – and everyone and everything within it – if an experiment goes awry.

Prior to GINA’s passage, testing in either scenario would have at least been arguably permissible, although various other anti-discrimination laws, including those discussed in previous posts, might have served as the basis for an effective challenge. Post-GINA, however, the analysis is crystal clear: both of the above examples of X-Gene screening are illegal.

The text of the statute itself offers no ambiguity:

  • A health insurer “...shall not request, require, or purchase genetic information for underwriting purposes.” (§ 101)
  • It is unlawful for an employer “to fail or refuse to hire, or to discharge, any employee, or otherwise to discriminate against any employee with respect to the compensation, terms, conditions or privileges of employment of the employee, because of genetic information with respect to the employee.” (§ 202)

 Although Congress did provide limited exceptions to the general prohibition on requesting and using genetic information in the insurance and employment contexts, none of the exceptions are targeted at mutants, tests specifically designed to test for X-Gene mutations or are otherwise applicable to the scenarios discussed above.

III. Professor Xavier and Pro-Mutant Genetic Discrimination

While GINA may operate to protect mutants from certain forms of genetic discrimination, we should not forget that the statute is crafted broadly and protects against the misuse of any individual’s genetic information. In other words, just as mutants are protected by GINA, so too are they bound by it.

Consider the case of Professor Xavier’s world-renowned school, variously referred to as “Xavier’s School for Gifted Youngsters” and the “Xavier Institute for Higher Learning.”

While little is known of Xavier’s closely-guarded school, it appears to satisfy the definition of an employer subject to Title II of GINA. (GINA applies to all private employers with 15 or more employees. With roughly a dozen identified faculty members, and likely additional faculty members and administrative and support staff on the payroll, Xavier’s school likely crosses the 15-person threshold.)

Xavier’s school also has an unbroken track record of employing mutants as faculty. While it may seem logical and even desirable to employ mutants in a school dedicated to the education and training of mutants, GINA prohibits the use of genetic information in hiring and other job-related decisions without exception. Even in situations where genetic information might appear to be a legitimate criterion for assessing fitness to perform a particular job, GINA forbids its use by an employer.

Of course, it is highly unlikely that Xavier requires prospective faculty members to submit to a traditional genetic test as a condition of their application and/or hiring. In addition to his well-known psionic powers which allow him to identify mutants using only his mind, many or all of the individuals applying to work at the school have manifest mutant powers. Nevertheless, GINA is clear that genetic information, however acquired, may not be used “in regard to hiring, discharge, compensation, terms, conditions, or privileges of employment.” 29 CFR § 1635.4. No matter how he comes by the information, if Xavier is indeed using genetic information in employment-related decisions, this would be a clear violation of GINA.

Since none of Xavier’s existing faculty members are likely to bring a discrimination claim, how might one arise? The most likely scenario: a gifted but non-mutant individual, perhaps one even possessed of other superpowers derived from, for example, an alien genesis or technological enhancements, seeks a position at Xavier’s school as an instructor but is turned away. Such an individual would be well-positioned to bring a successful genetic discrimination claim under GINA against Professor Xavier and his school. The Equal Employment Opportunity Commission (EEOC), the federal agency responsible for enforcing Title II of GINA, provides detailed instructions for filing just such a charge.

As with any new piece of legislation, it will take some time before GINA’s full implications for both mutants and humans become clear. Final regulations for Title II of GINA were published in 2010, but public examples of GINA-in-action remain few and far between, and illustrate the many uncertainties and difficulties of enforcement.  For example, given the EEOC’s difficulty subpoenaing documents from Nestle in a recent enforcement action, one can only imagine the considerable challenges that would await the Commission in attempting to gather the evidence needed to successfully establish a claim of discrimination under GINA.

Nonetheless, the law of GINA is clear, and the coming years may require the Commission and other regulatory bodies to overcome those challenges in order to appropriately enforce GINA both for and against the mutant population. Count on Law and the Multiverse and the Genomics Law Report to continue to keep you apprised of all the latest in GINA, mutants and genetic discrimination law.

72 Comments

Posted in civil rights, guest posts, insurance, labor law, X-Men

Pirate Cinema by Cory Doctorow

Posted on March 15, 2013 by | 8 comments

This guest post was written by Stuart Langley, an intellectual property attorney.  Thanks to Stuart for this fantastic post!  If you are a legal professional (e.g. an attorney, judge, or law professor) or a comic book professional (e.g. an author, editor, or illustrator) and  you have an idea for a post that would be a good fit for Law and the Multiverse, feel free to contact us!  

Cory Doctorow’s novel Pirate Cinema is a 2012 young adult speculative fiction novel set in near-future England that follows roughly a year in the life of a band of footloose youths living in, around, and outside traditional London society.  The story is told from the perspective of 16-year old filmmaker Trent McCauley (a.k.a. Cecil B. deVille) who’s obsession is creating mashups using images from the net.  Guided by his vagabond friends Jem, Dodger and a young woman named “26”, Trent matures from filmmaker to copyright activist.  

If you haven’t read Pirate Cinema, as always with Doctorow’s books you can download it for free, or you can do as I did and buy a copy.

Cory Doctorow is well-known for both his fiction and his informed, thoughtful copyright activism.  Pirate Cinema takes clear positions on copyright issues, but what is exceptionally fun about Pirate Cinema is the energy Doctorow puts forth to set out the whole cornucopia of property issues so we may consider law and theory.  Rather than steadfastly advocating a position, Pirate Cinema advocates advocacy itself; advocacy informed by human needs, respectful of human institutions created to meet those needs, and appreciative that these systems are changeable to satisfy our needs.  I will focus not on copyright issues per se, but the much more interesting context Pirate Cinema creates for understanding copyrights in the scheme of property law.  Pirate Cinema asks us to wonder about whether the way we treat intellectual property follows how we treat other kinds of property.

But first, Trent’s adventure begins when his family’s internet access is disconnected because of his downloading activity.  Is internet access a public utility subject to a higher “obligation to serve” standard, or merely a contractual service that can be denied for violation of any agreed upon term of service?

I. Is Internet Access a Public Utility?

Trent’s home has received a series of notices telling them their IP address has been associated with illegal downloading.  These notices go unheeded because Trent has intercepted them.  The third notice is accompanied by an appealable, but immediate one-year suspension of the family’s internet access.  The appeal process is portrayed as too burdensome and slow to pursue.

The McCauley’s internet access has been disconnected consistently with what appears to be an implementation of the United Kingdom Digital Economy Act 2010.  Implementation of this act has been slow, but is expected to lead to notices and service disruption as early as 2014.  The implementing code of this act obligates ISPs to respond to copyright infringement reports by notice to subscribers, maintain a list of subscribers that have received notices which can be disclosed to copyright owners under court order, and degrade or deny service to repeat offenders.  The technical measures imposed by the law will be appealable; on paper the appeal processes appear designed to protect subscribers, however, the regulations on the appeal process have not yet been published.  This foundational scenario in Pirate Cinema is plausible.

But whether it is acceptable to cut off internet access as punishment for violating how that service is used is another question.  Because of the disconnection Trent’s father cannot find work, his mother cannot find medical care, and his sister’s schooling suffers.  Is internet access is a public utility that should be more difficult to disconnect than summary and unilateral administrative action?  As explained in Jim Rossi’s article Universal Service in Competitive Retail Electric Power Markets: Whither the Duty to Serve? 21 Energy L.J. 27 (2000), common law principles express a public utility having a higher obligation to provide service—to provide extraordinary levels of service, especially to small residential customers.  These obligations include the duty to extend service, provide continuing reliable service, provide advanced notice of disconnection and to continue service even though a customer cannot make full payment.  Public utilities can have terms of service and can terminate service for violations, commonly payment and safety related transgressions.  One U.S. city proposed to cut off utility service for failure to pay speeding tickets, although using utility service as a tool to enforce other regulations seems very unusual and inconsistent with the common law “duty to serve”.  The question posed by Pirate Cinema is timely as governments try to regulate internet access, they do so by treating it as a public utility.  This will be a double edged sword in that one treated as a utility, society should, perhaps, have a higher duty to provide internet access and similarly higher barriers before disconnecting service, including greater due process and evidentiary protections for subscribers.

II. Property Rights in Pirate Cinema

Trent learns quickly how to live without money.  He needs food, he needs shelter, he needs comforts of water and electricity and, significantly, he needs to create films.  Without money the satisfaction of these needs brings Trent face-to-face with all types of property theory and practice.

The origin of property rights–the question of how something moves out of “the commons” to become the exclusive property of an individual is found in variations of “first possession theory” and the more thorough Natural Rights theory advocated by John Locke.  According to these theories property rights arise from the human ability to take something from nature, or the commons, and improve it and put it to use.  This act of taking from the commons gives the taker ownership in the thing taken.

Laws and social institutions have evolved to manage property rights, how they are granted and retained, and what privileges are granted to those that possess them.  These institutions and laws are the creation of man as well, and in spite of the strength of our belief that they are immutable, these institutions change over time to meet the needs of society.  Pirate Cinema asserts that property rights are enforced by political entities and powerful corporations and asks us to think about whether our existing institutions and laws are adequate with the reminder that we can change them to better meet society’s needs.  Paramount of those societal needs is the efficient and effective distribution of resources in our quest to satisfy human needs such as the need to eat, the need for shelter, and the more abstract needs to be comfortable, to share knowledge, and to be creative.

A. Tangible Property: Discarded Goods

Pirate Cinema’s society is characterized by great poverty and apparent abundance of resources being wasted.  At Waitrose, an upmarket grocer in London, Trent has a sinking feeling they might be about to shoplift.  Shoplifting is a crime and Trent is no thief.  Instead, his guide Jem teaches him to gather discarded food from the skips (dumpsters) behind the grocery which provide such abundance that they share this bounty with the less fortunate.  Similarly, they acquire all manner of computer and audiovisual equipment, all discarded.  This contrast—the repulsion of stealing against the acceptance of taking discarded goods—lets us think about when tangible property rights make sense and when they do not.  But is this a difference recognized in law?

Trent is right, people found guilty of shoplifting in the UK are charged with theft under the Theft Act 1968 and repeat offenders risk jail time.  However, can he take those same goods from a skip when discarded?  In the UK, no.  Dumpster diving in England and Wales may qualify as theft within the Theft Act 1968 as well.  However, there is little enforcement in practice.  In England, unless aggravated, theft from a skip will only be a civil wrong.  This non-uniform enforcement suggest that society, like Trent, views these acts differently, with a higher regard for personal property in some circumstances (e.g., when it is inside a store, while the owner is exercising dominion, and when taking property would cause loss to the property owner) than in other circumstances (e.g., once the owner has abandoned the property and would no longer suffer loss by the property being taken).

B. Real Property: Adverse Possession

Later, Trent and Jem take up residence in an abandoned pub they name Zeroday and claim it as their own under adverse possession laws.  Can they hope to own the pub where they take up residence?  Their actions to improve the property and put it to better use appeal to the natural law theory of property.  Acquiring real property by “adverse possession” is the process by which a person who is not the legal owner of real property can become its owner after having occupied it for a specified period of time.  The Land Registration Act 2002 provides a legal scheme by which a person wishing to claim adverse possession of registered land would need to continuously occupy the land for ten years, or for a period of twelve years if the land is unregistered.  Pirate Cinema accurately describes the adverse possession law, although the youth’s rigid interpretation of notice provisions and continuous occupation are likely overstated.  Just as importantly, when the pub’s new owner appears, destroying the adverse possession claim, Trent readily yields to the new owner, apparently acknowledging both the new owner’s claim in law and the natural rights principle that although he could claim property from the commons, he could not claim property owned by another.  Once again, the contrast presented suggests our laws and culture give high regard to real property rights in some circumstances and less regard in other circumstances such as when the property is abandoned and can be put to better use.

C. Abstraction of Electricity

In a third property-like scenario, the pub’s power is originally restored by Dodger, Jem’s friend who bypasses the meter.  Not long after, the authorities forcibly remove the residents of Zeroday for “abstraction electricity”.  Electricity is not property in the UK and cannot therefore be stolen.  See the Crown Prosecution Service citing Low v. Blease Crim L.R. 513 (1975).  However, under section 13 of the Theft Act 1968, electricity used without due authority, or dishonestly wasted or diverted is charged with the offense of abstracting electricity.  Trent and the inhabitants of Zeroday unwillingly recognize this authority, vacating Zeroday as punishment for this crime.  Later, when they wish to re-habit the pub, the youths avoid this problem by installing a pay as you go service.  Consistent with the “duty to serve” notion, so long as the youths pay for their service the utility did not deny them service even though they do not own the property.  The contrast presented here is not in conflicting views of the law, but in that Trent does reluctantly but willingly commit the crime, and then agrees with the terms of service and his obligation to pay for services.  Trent acknowledges his needs alone do not justify theft, or abstraction, of what is rightfully “owned” by another.

III. Conclusion

So now our table is set; we have before us examples of when property rights systems work, and when they don’t.  We have examples of when it is right to acknowledge the rights of an owner and when we should question the scope of the powers conferred by those property rights.  Is internet access more like electricity we should be hesitant to withhold, or is it more like tangible or real property where theft laws are rigorously enforced?  Are downloaded clips more like real and tangible property in which we consistently recognize broad rights of owners, or discards from the skips where society implicitly or explicitly accepts that in spite of laws to the contrary, we restrain our enforcement of owner rights in favor of more effective ways of meeting human needs?

Pirate Cinema does not answer these questions for us.  It urges us to appreciate our own responsibility in defining property rights and systems of crime and punishment that meet human needs, including and most dearly the human need to create.  More than anything, the tale urges us to decide, and to learn about the law and regulation being created to regulate society, and take an active part in how those laws are made.

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Posted in books, copyright, guest posts, intellectual property

Futurama: Future Stock

Posted on March 13, 2013 by | 9 comments

This guest post was written by Craig Messing, an attorney from New York, who contacted us with this excellent idea for a post.  If you are a legal professional (e.g. an attorney, judge, or law professor) or a comic book professional (e.g. an author, editor, or illustrator) and  you have an idea for a post that would be a good fit for Law and the Multiverse, feel free to contact us!  

Introduction

“Future Stock“ is the 21st episode of the third season of Futurama.  While somewhat outside this blog’s normal purview of comic-related media (even if there are Futurama comics), the episode touches on some unique, obscure, and even speculative issues of corporate governance and probate law.  As most of the series takes place in “New New York,” we will assume New York law applies, albeit 1000 years into the future.  It should go without saying, but spoilers to follow.

I. Background

In the episode, a shareholder meeting of Planet Express leads to an “80’s guy” (referred to throughout the episode only as “That Guy”) being named chairman of the corporation.  This eventually leads to That Guy trying to sell the company and gut it for profit, and a shareholder vote over the sale.  That Guy wins the shareholder vote, but then dies (fairly gruesomely) before the transaction is concluded.  Control of his shares passes to Fry, as vice-chairman of Planet Express, who votes down the sale.  (This ignores the fact that the vote had already been cast and approved by both companies, and thus should be binding, even after That Guy’s death.)  The issues here are multiple, but we will look at two.  First, we will examine what recourse the other shareholders of Planet Express might have had to block the sale, and the likelihood of success of those efforts.  Second, we will look at whether control of That Guy’s shares should have passed to Fry, and the potential consequences if they had not.

II. Oppressed Shareholders

In the episode, That Guy purchases 51 percent of the voting rights from Zoidberg (“The shares were worthless, and he kept asking for toilet paper!”), and imposes his will on the other shareholders, all of whom vote against the sale.  The remaining shareholders are outraged, but are powerless to affect the situation.  At face value, this would seem to be textbook shareholder oppression, in which the majority shareholder(s) imposes his will, to the detriment of the other minority shareholders.  Oppression can be especially prevalent in close corporations, where there are only a limited number of shareholders – as appears to be the case with Planet Express.  (Note: after the sale is completed, all outstanding shares of Planet Express are said to be purchased “at the current market price.”  But as a close corporation, there would not be a “market” price.  This is likely an oversight of convenience by the writers, however.) 

Oppressed minority shareholders may sue to prevent the oppressive actions of majority shareholder(s).  However, New York courts have defined “oppression” as “conduct that substantially defeats the reasonable expectations held by minority shareholders in committing their capital to the particular enterprise,” and held that oppression exists “only when the majority conduct substantially defeats expectations that, objectively viewed, were both reasonable under the circumstances and were central to the petitioner’s decision to join the venture.”  In re Matter of Kemp & Beatley, Inc., 473 N.E.2d 1173, 1179 (N.Y. 1984) (internal quotations omitted).   In other words, shareholder oppression will be found only if a “reasonable person” in the shareholders’ situation would be unhappy.

In this case, a “reasonable” Planet Express shareholder would likely be ecstatic at the results of the sale.  In the initial shareholder meeting, where That Guy is named chairman of Planet Express, the company’s dismal financial state is firmly established: a pie chart is shown, illustrating the company’s revenues; a minority of the pie accounts for revenue from business operations, while the majority is made up by “an eight-dollar bank error in our favor.”  After the vote on the sale is finalized, however, the market (“purchase”) price of Planet Express is given as $107.  It would be very difficult to argue that a “reasonable” minority shareholder would disapprove of a transaction that so drastically increased shareholder value, and thus the oppression argument would likely fail.

III. Descendability, Intestacy, and Escheat

Almost immediately after the vote approving the sale, That Guy dies, Fry takes control of his voting shares as vice-chairman, and negates the sale.  However, the corporation could only assert control of these shares if there was some sort of repurchase agreement with Planet Express, under which it could buy back the shares upon That Guy’s death.  Further, even if such an agreement did exist, That Guy’s shares would be either retired or turned into treasury stock; in either case, the shares would no longer have any voting rights, and if the sale of Planet Express had not already been finalized, the minority shareholder votes against the deal would carry the day without Fry’s last-minute heroics.  However, there is no mention of such an agreement in the episode, and thus there is no reason why That Guy’s shares couldn’t pass under his will, or failing that, under the law of intestacy … except that, again, there is no mention of That Guy having a will, nor any heirs, – nor is there any indication of That Guy having a family in the 1980s that might have propagated and survived into the year 3000.

More importantly, New York law might not allow for such distant relations to inherit through intestacy, even if they did exist.  Article 4 of the New York Estates, Powers and Trusts Law (EPT) governs intestate estates, and section 4-1.1 of the EPT enumerates the various classes of individuals who can take under New York law, allowing only for the decedent’s spouse, issue, parents, “issue of parents” (i.e. brothers and sisters of the decedent), grandparents (as well as “the issue of grandparents,” i.e. aunts and uncles), and “great-grandchildren of grandparents” (i.e. nieces and nephews) to take.  There is no provision for an individual outside of that closed list to take under intestacy, and as such, even if an heir does exist, it would be a very distant relation, well outside the purview of the EPT.  Apparently, New York has yet to account for time-travel and cryogenics (both of which appear to be fairly common in the future) in its probate code.  Quite the oversight.

Presuming that New New York law has not yet corrected this oversight, then That Guy’s apparent lack of both a will and eligible intestate heirs would cause the doctrine of escheat to come into effect.  Under escheat, a state acts as a sort of heir of last resort, and may take property if no other heir can be ascertained, or if property is abandoned.  See, e.g. N.Y. ABP § 102 (“It is hereby declared to be the policy of the state … to utilize escheated lands and unclaimed property for the benefit of all the people of the state, and this chapter shall be liberally construed to accomplish such purpose”).  It is not unheard of for a state to take corporate stock under escheat; in fact, such an action was expressly upheld in Standard Oil Co. v. New Jersey, 341 U.S. 428 (1951).

Escheat in New York is governed by the New York Abandoned Property Law; escheat of securities is specifically addressed in Article 5.  However, for a security to be “abandoned” – which was an implicit requirement under the Standard Oil case –  payments due to the security holder have been unclaimed by, and no written communication received from, the rightful holder, for a period of three years.  N.Y. ABP § 501(2)(a).  Only after the security has been found to be abandoned is it to be delivered to the state.  N.Y. ABP § 502.  Therefore, for purposes of the sale of Planet Express, it would seem that the 51 percent shares owned by That Guy would be in limbo for a three year period, while eligible heirs were searched for (likely in vain).  During this time, as they could not be voted, the minority shareholders would have been able to defeat the merger of their own accord.

IV. Escheat of a Majority Stake, and the Public Policy of the Future

Unfortunately, even THIS is not the end of the matter, because if escheat is exercised in this case, it would effectively transfer a majority interest in a private corporation to the state of New New York, as That Guy controlled 51 percent of Planet Express’s stock.  While seizure and nationalization of private businesses by the federal government is not unheard of, seizure is usually predicated on great turmoil, such as a World War – though even war is not always sufficient cause for nationalization, see Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579 (1952), which held that President Truman’s attempted nationalization of the steel industry during the Korean War, by executive order, was authorized neither by the Constitution, nor by Congress, and was thus illegal – but no such circumstance is present here.  There is precedent of the nationalization of a private business due to severe financial hardship (most recently General Motors), and it is undisputed that there were severe hardships facing Planet Express; however, it would be very difficult to argue (despite the many dealings the company has had with the President of Earth), that Planet Express was such a vital cog in the economy as compared with GM.

For fairly obvious reasons – it is rare for any individual to die both intestate and without any heirs to take under intestacy, and it is borderline inconceivable that an individual who is intellectually capable of obtaining majority control of a company would also die intestate – there is no precedent for a state obtaining a majority share of a company via escheat.  As such, any analysis here will be speculative.  However, I believe that the guidance of the Supreme Court in Youngstown Sheet & Tube, and Standard Oil v. New Jersey, allows us a fairly clear indication as to the public policy rationale that might guide a New New York court in rendering a decision in this matter.  Youngstown provides that nationalization (or, in a more general sense, public takeover of a private business) can occur only when expressly provided for, either by the Constitution or under the law, and Standard Oil allows for corporate stock to be taken by the state under escheat, but provides only for the delivery of the securities, and for the payment of moneys due the holder of the securities.  Similarly, Article 5 of the ABP appears more concerned with obtaining payments due under the securities than with voting rights, and in fact no mention is made in the law of the state’s exercise of voting rights.  Moreover, much like the federal government under Youngstown, it would appear that a state can only take control of a private company under specific conditions provided for under the law, such as a state banking regulator taking control of a struggling bank.  Therefore, I believe that New New York would be able to take possession of That Guy’s 51 percent stake in Planet Express under escheat, but only for purposes of taking any dividends due (or, in the event the sale did go through, its share of the proceeds from the sale).  However, as no law expressly allows the exercise of voting control on securities taken under escheat, an attempt to do so would be illegal.

V. Conclusion

While “Future Stock” does not address the option of minority shareholders to enjoin a majority action, the episode does address the reasonableness standard fairly well.  When the minority shareholders realize how much their shares have appreciated due to the impending sale, each of them (except Fry) immediately voice happiness over their being overruled, thus acting “reasonably” and defeating any notion of an oppression suit.  The episode handles the issue of That Guy’s estate (namely his 51 percent stake in Planet Express) less well.  The episode ignores both the securities and estates law on point, instead assuming that control of the shares would pass from chairman to vice-chairman.  Even if the shares were repurchased by Planet Express, regardless of how the corporation chose to treat them, they would not be voting shares unless and until they were re-issued by the corporation.  And if they passed into That Guy’s estate … as discussed at length above, that opens up a considerable can of worms, to say the least.

That said, while this particular episode might not have handled the law exceptionally well, there are at least two instances from Futurama’s current run where the show has addressed novel legal implications of its futuristic setting, in a serious, thought-provoking manner.  And besides, Futurama is a spectacular show.  You should watch it.  The hypnotoad commands you.  All glory to the hypnotoad.

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Posted in corporations, estate law, guest posts, television

Cerebro and Privacy Laws

Posted on June 25, 2012 by | 29 comments

The X-Men movies feature Professor X’s Cerebro device, which amplifies the power of telepathic mutants, allowing them to find other mutants anywhere in the world.  In X-Men: First Class, Professor X and Magneto collaborate with the US government to assemble a team of mutants.  Although the movie is set in the early 1960s, Cerebro (nowadays called Cerebra) is also used in stories set in the modern day.  What’s more, it’s used to collect information on mutants around the world.  This caught the attention of Law and the Multiverse reader Mathias Ullrich, who wrote a great guest post on the subject using First Class as an example:

A data-protection consideration of Prof. Xavier’s recruiting methods according to German law

When reading the article about the responsibility of Prof. Xavier as the principal of a full time school some weeks ago, I started wondering about Prof. Xavier’s way of recruiting. As a data protection officer in Germany, my attention turns to data protection concerns.

As I’m not so familiar with the X-Men, I’ll stick to the movie X-Men: First Class. To analyze the whole process, I divide it into the different relevant steps:

1) data acquisition by telepathy

2) merging the data with another database (e.g. the CIA database) in order to get real addresses

3) offering specific services

4) deletion / blocking of the personal data

Some basics about the German data protection law: The German implementation of the European Data Protection Directive (“Directive 95/46/EC”) is one of the strictest implementations in Europe and is probably the strictest data protection law in the world. It’s called the “Bundesdatenschutzgesetz” or BDSG in short. In general it says that data processing of personal data is forbidden, unless there is an authorization of it in either the BDSG or other laws. So every data acquisition and processing needs an authorization.

Is German law applicable?

The first question we need to answer is if German law applies, when somebody in the world is acquiring customer data. The answer is quite simple: if there is an acquisition of personal data from German citizens, then German law can be used. This is similar to the discussions regarding Google Analytics or Facebook.

What kind of organization are the X-Men?

As stated in a recent blog post, Xavier’s School is a private school.

Step 1: the acquisition

When Professor Xavier searches for mutants, he is gathering data about the health status and some other information about potential students. Health status is one of the so-called “special kinds” or sensitive kinds of personal data according to §3 Abs. 9 BDSG, alongside racial and ethnic origin, political or religious belief and some more.

Acquiring and processing these kinds of personal data has some special rules. As said before, the German data protection law forbids unauthorized data processing, so we need to find permission.

From the reaction of the mutants visited by Magneto and Professor X, I assume none of them gave permission for acquiring the data. So I would also say that Professor X did not inform the people concerned about the concrete use of the data. This is mandatory. It is illegal to acquire data without the knowledge of the person concerned (§33 Abs. 1 BDSG).

Let’s go back to the acquisition. In §28 Abs. 6f and 9 BDSG we find the exceptions.

It’s possible to acquire these data without an explicit permission, if

– it is vital to the person concerned and he / she is not able to give the permission (§28 Abs 6, Nr. 1 BDSG)

– the data is has been made public by the person concerned (§28 Abs 6, Nr. 2 BDSG)

– the data is necessary for a legal transaction (§28 Abs 6, Nr. 3 BDSG)

– the data is necessary for medical research, if this research cannot be done without (§28 Abs 6, Nr. 4 BDSG)

– the data is necessary for medical care, if the acquisition is made by a doctor or somebody else with an obligationtoconfidentiality (§28 Abs 7 BDSG)

– the acquisition is made by a political, philosophic or religious organization without financial interest, but only for their members or associated people.

I do not think any of these exceptions apply. That means that the acquisition of the health status of the possible new students is illegal according to German law.

Step 2: the merging

After acquiring the data, I assume Professor X needs to get information about the new students, he wants to visit. Therefore, he merges the data with some database, according to the movie, it might be a CIA database. Here we have the exact same circumstance as in step 1. With just one exception more.

§28 Abs. 8 BDSG says, that the proceeding or transmitting sensitive data is allowed, if it is needed for defense of public safety.

Of course, thinking about maniacs who try to take over the world, the merging sounds legit, but the merging did not fight a concrete danger. It is more a “long term” investment. Unfortunately the acquisition of the data is still illegal and where did the CIA get data about European citizens? But that is another question, which will not be answered here 😉

So, the merging might be legal, because of the exception for defense of public safety.

Quick note: §28 Abs. 8 BDSG only allows the processing or transmitting of data, not its acquisition.

Step 3: the offering

The last step is the personal visit to the possible new student in order to offer a personal service, in this case a place in Professor X’s private school.

As this is just again data processing, the same legislation applies as in step 2. So, maybe it’s legal because of the defense exception, but that need be discussed.

Step 4: blocking and / or deletion of data?

 In German data protection law, no data should be stored forever. As soon as the purpose of the data has expired, the data needs to be deleted (§35 Abs. 2 BDSG) or at least blocked.

When looking at the reaction by Wolverine, visited by Magneto and Professor X, one can assume that the purpose is expired, as Wolverine seems not to be interested in the offer. As we know, since Wolverine joins the X-Men later, the data may be blocked and not deleted.

Let’s check the terms for blocking instead of deleting, which are stated in §35 Abs 3 BDSG. Blocking data is allowed,

– if there are any laws or other legal issues that prohibit the deletion

– if it can be assumed that a deletion would affect the interests of the person concerned

– if the deletion is not possible or only possible with high effort because of the special way of storing the data

Again I do not think any of the exceptions apply. The data must be deleted, not blocked, at least as far as we are talking about a real database (e.g. the CIA one). If Professor X keeps the information in his mind, this is not affected by German data protection law.

Conclusion

Of course, there are a lot of unanswered questions, which make a final analysis quite difficult. Is telepathy acquisition of personal data and does German law apply here at all? Where is the data stored and how?

Besides that, the conclusion is quite simple. The acquisition was not legal, so every step beyond the first one, such as the uses the data from step 1, was illegal as well. According to §43, Abs. 2 Nr. 1 this is an administrative offense, with a penalty of up to 300,000 Euro in each case.

Translation guide

 Using §1 BDSG as an example:

– ‘§’ or Paragraf means paragraph in English, in this context it is translated to ‘section’.

– ‘Abs.’ is the abbreviation for ‘Absatz’. In this context it is ‘subsection’. In the example an ‘Absatz’ is marked by the brackets.

– The next one is Nr. (‘Nummer’), which means number. It is the next subsection, and in the example it is marked by the normal ‘1.’

– ‘Satz’ means sentence, if referring to a concrete sentence of the text, one uses ‘Satz’.

 

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Posted in guest posts, movies, privacy law, X-Men

The Avengers and Illegal Orders

Posted on June 22, 2012 by | 40 comments

We have one more Avengers post for you.  Be warned: there are spoilers!  Today’s post was inspired by a question from John, who writes:

I was interested in the bit near the end where Fury first disobeys a direct order (to nuke Manhattan) and then shoots down one of his own planes (his team building skills must be great because nobody seems all that upset) to prevent someone else from carrying out orders.

1) under what circumstances is an order illegal?
2) when are you expected to simply refuse to co-operate and when do you take active steps to attack your own side?
3) what are those around him supposed to do about this?

And there is an additional question of whether or not military law (i.e. the UCMJ) applies at all.

Here at Law and the Multiverse we often deal with subjects that we aren’t experts in.  In fact, given that our day jobs involve insurance and intellectual property, that’s usually the case.  So in order to write posts we first do research, usually beginning with higher-level secondary sources (e.g. legal encyclopedias, treatises, law review articles) and then moving on to primary sources (e.g. cases, statutes).  With a military law question like this, however, we were a bit stuck, so we turned to our readers for help, and you came through in spades.  We received offers of assistance from multiple current or former military lawyers, and we’re excited to put them together here.

Before we get to that, though, first a disclaimer:  These lawyers are speaking only for themselves; they are not speaking for the military or the Department of Defense.  This is not legal advice, nor does it constitute the formation of an attorney-client relationship.  With that out of the way, on to the show!

I. The Military Law Approach

Nick, a military lawyer, responds:

“So, obviously UCMJ jurisdiction (as you pointed out) is questionable, but perusing the wikipedia article on SHIELD, it appears it might be military (Nick Fury was once identified as a Colonel, plus they have that flying aircraft carrier, so we’ll go with that).

(1) I pulled the Military Judge’s benchbook, which says: “A command is lawful if reasonably necessary to safeguard and protect the morale, discipline, and usefulness of the members of a command and is directly connected with the maintenance of good order in the service” (which is interestingly enough a question of law, not of fact). It’s an accepted proposition that a order to commit a war crime would be illegal.

Now the question is was Fury ordered to commit a war crime? This isn’t clear. The basic Law of Armed Conflict rules are proportionality, discrimination, and military necessity. Now, the law of armed conflict hasn’t really been tested by alien armies, but I think we can easily dispatch with military necessity and discrimination. But proportionality? Fury gets a little closer here, but I still think he fails. Proportionality looks at whether the military objective is proportional to the civilian damage caused. Here we’re looking at the destruction of New York (by seemingly two nuclear bombs, unless Fury blew up the guy taking their mail to shore), with a huge loss of civilian life. However, even when you balance this against the alien army that is setting out to conquer the earth, you probably get there on that point (and I’m not just saying that because I’m a Red Sox fan).

The other piece of analysis would be whether there is a less destructive way to accomplish the military goals. This is probably where Fury could get to “war crime.” His argument would be that the Avengers were the less destructive way to end the threat, and could probably get there.

(2) What is Fury’s duty? This is interesting. He seems to believe that the order is illegal. There isn’t a lot of case law on this that I’m aware of, but some secondary sources (the Medina court martial, primarily) suggest that a commander who has knowledge of one of his own people committing a war crime has a duty to act to stop it. Current regulations that I pulled today only reference a duty to report war crimes, so I think we would call this a customary duty. Under this idea, and under a ‘defense of others’ type defense, it seems like Fury would both have a duty and a legal defense to shooting down his guys.

(3) What should everyone else do? THIS is an interesting question. To a certain point, I guess it depends on how they see this. If they’re in agreement that he is trying to prevent a war crime, I suppose they don’t have to do anything. If they think he is committing murder and/or violating a lawful order, they obviously have a duty to report the crimes, and they most likely would have a duty to try to prevent him from killing people and stopping the mission, though my knowledge for this portion is admittedly a bit thin.”

Jason, Former Captain, U.S. Army JAG Corps, responded:

“Assuming that the S.H.I.E.L.D. members are subject to the UCMJ, the bottom line analysis revolves around [UCMJ] Article 92 – “Failure to obey a lawful order or regulation.”  The central question there revolves around the “lawful” nature of the order itself.  Here is an interesting short essay regarding Article 92 that I found online, while not credited to any one source, it appears to have been written from a military perspective.  There is a difference between a simple illegal order and a patently illegal order. An illegal order can be in violation of general legality, such as orders to commit hazing on troops, orders to abuse trainees, an order to go beyond the speed limit in a military vehicle. A patently or manifestly illegal order applies generally, but not exclusively to the protection of persons (civilians, prisoners, medical personnel and clergy), medical facilities, places of prayer, monuments, etc. The US distinguishes a patently illegal order as one which orders someone to commit a crime.

Some of the most famous cases dealing with someone who should have disobeyed an order because it was illegal are that of Lieutenant William Calley at the My Lai massacre in Vietnam (dramatically interpreted by the movie Platoon) and the case of United States v. Keenan, where the accused (Keenan) was found guilty of murder after he obeyed in order to shoot and kill an elderly Vietnamese citizen. The Court of Military Appeals held that “the justification for acts done pursuant to orders does not exist if the order was of such a nature that a man of ordinary sense and understanding would know it to be illegal.” (Interestingly, the soldier who gave Keenan the order, Corporal Luczko, was acquitted by reason of insanity).

However, soldiers have to be careful what orders they choose to disobey, lest they suffer the fate of Specialist Michael New – In 1995, Spec-4 Michael New was serving in Schweinfurt, Germany. When assigned as part of a multi-national peacekeeping mission about to be deployed to Macedonia, Specialist New and the other soldiers in his unit were ordered to wear United Nations (U.N.) Helmets and arm bands. New refused the order, contending that it was an illegal order. New’s superiors disagreed. Ultimately, so did the court-martial panel. New was found guilty of disobeying a lawful order and sentenced to a bad conduct discharge. The Army Court of Criminal Appeals upheld the conviction, as did the Court of Appeals of the Armed Forces.

My gut reaction in this situation would be that Nick Fury acted appropriately in disobeying the Council’s directive as his actions were taken to protect the millions of innocent civilians.  I hope this helps!”

So both of our guest authors concluded that, assuming the UCMJ applies, Fury was probably in the right when he acted to prevent the nuclear strike on Manhattan, despite the order being given from higher up.

II. Civilian Law

If the UCMJ didn’t apply, then the situation would probably fall under regular civilian law, and Fury could invoke a defense of others argument.  You might wonder how Fury could justify that, since in theory the Council was likewise acting in defense of others by ordering the strike in the first place.  The problem is the risk to innocent bystanders.  A person acting in self-defense (or defense of others) who accidentally injures or kills a third party is ordinarily not liable.  However, if the person acts recklessly then he or she would be liable.

Of course, the situation may be such that A ought not to shoot at B in self-defense, etc., because of the presence of bystanders like C whom A might hit instead. If there is a high degree of risk to people like C involved in A’s shooting at B, A’s killing of C will amount to manslaughter, Henwood v. People, 54 Colo. 188, 129 P. 1010 (1913); Annot., 18 A.L.R. 917, 928 (1922); if a substantial certainty, to murder.

Wayne R. LaFave & Austin W. Scott, Jr., Substantive Criminal Law § 3.12, at 402 n. 53 (1986); see also Reyes v. State, 783 So.2d 1129 (Fla. App. 2001).  An intentional killing of an innocent third person in order to save oneself (or, presumably, another) may negate the defense completely. State v. Soine, 348 N.W.2d 824 (Minn. App. 1984).

The Council could argue necessity, but necessity is a “lesser of two evils” defense, and letting the Avengers handle the situation was even less of an evil than the nuclear strike.  Although the Avengers were not certain to stop the Chitauri, neither was the nuclear strike (and indeed it would not have worked, as the bulk of the Chitauri forces had not even arrived yet).

Thus, under civilian law, there’s a strong argument that Fury was acting to defend innocent bystanders from the unjustified actions of the Council.

III. Conclusion

No matter how you slice it, Fury’s actions were probably justified.  Thanks again to Nick and Jason for their help with this post!

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Posted in guest posts, mailbag, military law, movies

Death and Taxes and Zombies

Posted on May 21, 2012 by | 38 comments

Today we are excited to bring you a guest post from Professor Adam Chodorow of the Arizona State University’s Sandra Day O’Connor College of Law.  This post is excerpted from Professor Chodorow’s forthcoming article in the Iowa Law Review entitled Death and Taxes and Zombies.  You can view the full version of the article free online.  Thanks to Chris for tipping us off to the law review article and thanks to Professor Chodorow for preparing this excerpt.

The U.S. stands on the brink of financial disaster, and Congress has done nothing but bicker.  Of course, I refer to the coming day when the undead walk the earth, feasting on the living.  A zombie apocalypse will create an urgent need for significant government revenues to protect the living, while at the same time rendering a large portion of the taxpaying public dead or undead.  The government’s failure to anticipate or plan for this eventuality could cripple its ability to respond effectively.  The time to prepare is now, before panic sets in, and it is too late.  This post begins this critical task by considering whether someone who becomes a zombie should be considered dead for estate tax purposes.

I. A Zombie Taxonomy

Because the tax consequences of a zombie apocalypse may depend on the type of zombie encountered, I begin with a brief taxonomy of zombies.  While the word “zombie” originates in Haitian voodoo, the term has been applied to a variety of creatures over the years, such that there is now no generally accepted definition.  Congress has not seen fit to include a definition in the tax code, and, indeed, has not deigned to use the term.  Thus, developing a tight definition is not strictly necessary.

What follows are some of the key distinctions that may—or may not—have legal significance.  Some zombies are controlled by others (traditional Haitian zombies and the armies of Inferi raised by Lord Voldemort), while others are self-motivating (the zombies from George Romero’s ground-breaking documentary, Night of the Living Dead; the hit reality television program, The Walking Dead; and the classic work of putative fiction, Pride and Prejudice and Zombies).

Within the category of self-motivated zombies, distinctions may be made based on volition, abilities, and personality.  Some zombies slowly stumble along in search of brains upon which to feed, exhibiting little personality or ability to think (Night of the Living Dead).  Others move quickly, organize, and learn (Dawn of the Dead).  Still others retain some of the memories or personalities of the original person (American Zombie and Pet Sematary).

Another way to distinguish among zombies is the method by which people become zombies.  Controlled zombies are typically created through some form of dark magic.  Zombies can also be created by viruses (either naturally occurring (Zombieland and Zone One) or man-made (28 Days Later and I am Legend)), radiation (Night of the Living Dead), biochemical agents (Planet Terror), and even a mysterious meteor (The Zombies of Lake Woebegotton).  In some cases, one must be infected by a zombie to become a zombie (World War Z); in others, no prior zombie contact is necessary (Lake Woebegotton).  In some cases it is unclear how zombies are created.  Take, for example, Michael Jackson’s classic thriller, Thriller.  We simply don’t know what caused the first person to go zombie, and unless Michael comes back, we likely never will.

Finally, some people must die before becoming zombies, while others appear to make a seamless transition from living to undead.  There is often a connection between cause and the type of zombie created.  For instance, zombies arising from viruses often retain some vestige of their former personalities.  Controlled zombies are typically dead and retain none of the original person’s personality or memories.  Zombies of those who don’t die first are typically fast, while those whose progenitors died are typically slow.  However, it is possible to find zombies in each category that do not fit the typical pattern.  The Venn diagram is so confusing that I have opted to omit it in the interests of clarity.  This chart from Yahoo! Movies gives some sense of the complexity involved.

II. The Dead, the Undead, and the Death Tax

The most pressing tax issue raised by a zombie apocalypse is the application of the so-called “death tax,” which imposes a tax on the transfer of the estate of a “decedent.”  Zombies have been described variously as the “walking dead,” the “undead,” and the “living dead,” raising the question whether the estate tax should apply when a taxpayer becomes a zombie or, in the alternative, after a person’s zombie has been dispatched.

The definition of death, and therefore of a decedent, has generally been left to the states, each of which has its own definition.  That said, there has been a recent trend away from a definition that focuses on heart function to one that focuses on brain function.  Whether people who become zombies would be considered dead for state law purposes depends both on the definition used and the type of zombie involved.

It seems a stretch to conclude that those who transform seamlessly into zombies should be considered dead.  They never lose heart or brain function, though they now function quite differently from before.  While it might be tempting to declare them dead, significant line-drawing problems would arise as one tried to distinguish between zombies and those who have suffered some mental or physical breakdown.  Declaring such zombies dead would open the door to declaring dead a wide range of people currently considered to be alive.

The more interesting question is whether someone who has clearly died under state law and then been reanimated as a zombie should be considered dead.  For those whose dead bodies are simply under the control of a sorcerer, it would seem that the answer is yes.  A corpse magically manipulated by another is nothing more than a puppet with no heart or brain function and should qualify as dead under state law.

In contrast, most self-motivated zombies likely would be considered alive under most state law definitions.  They must have a biological mechanism by which they think and move, which typically requires brain function and some means of keeping the body nourished.  Indeed, in The Walking Dead, tests reveal that the brain function ceases and then restarts sometime later, though at a far lower level than before.  The normal way to dispatch a zombie is by destroying the brain, strongly suggesting that they would pass most brain-function definitions of death.

However, the question isn’t whether zombies can be considered alive, but rather whether, if someone’s zombie is alive, the original person can still be considered dead.  This hints at the far larger questions of how the law should treat resurrection generally and whether different types of resurrection should be treated differently.  For instance, some, like Lazarus, return intact.  Others may return as flesh-eating monsters.  Shockingly, the tax code is silent on this issue, a silence that is even more surprising when one considers that most of our legislators purport to be devout Christians, for whom resurrection is a core belief.

Those who come back fully intact would seem to be still alive, much as people legally presumed dead are still alive when they turn up years later (See, e.g., Castaway).  Those who return in altered state present a more difficult question.  A flesh-eating automaton is just not the same person the Nobel laureate he used to be.  In some real sense, the laureate has died, even if his body and some part of his brain live on.  Thus, it seems possible that the law could deem the zombie alive, without necessarily affecting the status of the original as dead.

Of course, the question we are trying to answer is not whether a person who becomes a zombie should be considered dead under state law.  Our goal is to determine whether such a person should be considered a decedent for federal estate tax purposes.  Tax law typically piggybacks on top of state law, meaning that someone considered dead for state law purposes would normally be considered dead for federal tax purposes as well.  However, federal tax law deviates from state law in a number of situations, including the question of what constitutes a devise, bequest or inheritance.  Thus, it is not unreasonable to think that a person could be dead under state law, but not a decedent for federal tax purposes.  Conversely, someone alive under state law definitions could be deemed dead for federal tax purposes.

The key justification for allowing federal tax law to deviate from state law is uniformity.  It would be unseemly if tax law deviated from state to state because of differences in state law.  Administrability is also a chief concern.  Imagine trying to determine whether people are dead under 50 different state laws while in the middle of a zombie apocalypse.  These concerns strongly suggest the need for a uniform federal standard, detached from the myriad state laws.  However, they do not suggest what the standard should be.  As with the state laws defining death, federal tax laws are surprisingly silent on the legal consequences of becoming a zombie, creating a dire need for clear guidance.

III. Conclusion

The application of the death tax to zombies only scratches the surface of the legal issues the undead present.  For instance, it is necessary to determine whether one remains married under state law to someone who becomes a zombie, and, if so, whether the Defense of Marriage Act, bars Federal recognition of said marriage.  And, then there are vampires.  But such issues must await another day, assuming it is not already too late.

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