August 26, 2009
Recently a client of mine forwarded an email it received from a Twitter user which read in part “I have been told that your company uses the ___________ name in its ordinary course of business. I happen to own the _____ name and would be willing to sell this name to you at a mutually agreeable price.”
It turns out that the Twitter user had registered a Twitter name that was identical to a long standing federally registered trademark of my client.
Such a phenomenon appears to be growing. In May of this year baseball manager Tony LaRussa was forced to file a lawsuit against Twitter and Does 1-25 in order to stop a Twitter user from using the Twitter name “TonyLaRussa”. The case was settled shortly thereafter, however, such a filing highlights the growing issue of name squatting that Twitter, and the public at large will need to confront.
Back in the infancy of the web, domain name squatting was a significant issue. To that end, several major companies paid millions of dollars to retrieve domain names containing either the company name or valuable trademarks. The enactment of anti-cybersquatting laws quickly curtailed this action. It appears that enterprising people have now decided to push the limits of name squatting with Twitter.
To Twitter’s credit, Twitter has a specialized “Name Squatting” page on which instructions exist on how to report a name squatting incident to Twitter – www. twitter.zendesk.com/forums/26257/entries/18370 . Twitter indicates that “Selling free user names is against Twitter Rules. Accounts created in a serial fashion will be suspended, and user names will no longer be available.” Further Twitter indicates that: “Attempts to sell or extort other forms of payment in exchange for user names will result in account suspension.” Laudable intentions by Twitter, but do they really work? In my case, it remains to be seen.
What this means for museums is that some vigilance is required to protect a person from scooping a Twitter name and using the name for less than admirable purposes – i.e. “hate” tweets for your museum, or otherwise using the Twitter name to intentionally, or unintentionally, deceive recipients as to the origin of the “tweets”. Remember that even if you are successful in recovering the Twitter name from a third party, any tweets may remain on the Internet and searchable through any search engine. Thus, the damage may be mitigated but not eliminated.
All museums may want to consider obtaining a Twitter account bearing the museum name. It is free and it may just help prevent unwanted name squatting by a third person.
August 26, 2009
Once again, businesses handling the personal information of a Massachusetts resident have been granted an extension to comply with the Massachusetts Data Security Regulations. The proposed new deadline for compliance is March 1, 2010. Personal information is defined as first name (or initial) and last name, combined with social security number, bank account number, credit card number or other financial account number.
On August 17, 2009, the Office of Consumer Affairs and Business Regulation (OCABR) released revised regulations which Undersecretary Barbara Anthony believes will “feature a fair balance between consumer protection and business realities.” According to OCABR, they listened to the concerns of small business leaders and “understand[s] that there were issues regarding the impact these regulations have on those companies.”
The new regulations adjust the compliance requirements to reflect the size, business scope, amount of stored data maintained by a company, the available resources to a company for compliance, and the need for security and confidentiality of both consumer and employee information. As a result, the new regulations are “risk based in implementation” rather than at the time of enforcement, which is a reversal of the previous regulation mandate. This will allow businesses greater flexibility in tailoring an appropriate program that fits each individual business.
In addition, the regulations are now technology neutral, which is an acknowledgement that technical feasibility will play a role in determining what many businesses must do to protect data. This is a welcome departure from the original regulations and an indication that OCABR recognizes the significant economic and practical issues facing many businesses, large and small, in complying with these regulations.
Despite this temporary reprieve for compliance, businesses handling the personal information of Massachusetts residents should begin the process of evaluating their data security measures and implementing the mandated comprehensive written information security program (“WISP”). Prince Lobel’s Privacy Group is working with clients to provide the necessary guidance for developing and implementing WISPs and documenting compliance with the new regulations.
A public hearing on the proposed regulations will be held on September 22, 2009 at 10:00 AM at the Transportation Building, 10 Park Plaza, Boston, MA.
August 26, 2009
Often, museums are fortunate enough to acquire a piece of artwork or a full collection at a wonderfully low price. Sometimes equally as wonderful, the artwork or collection may suddenly experience a dramatic rise in value, especially in a volatile market environment. Such a confluence of good luck can be extremely beneficial for a museum. However, such bounty can sometimes turn into a fiscal nightmare should a museum wish to sell an appreciated piece of artwork or entire collection. For example, Museum A purchases a piece of work for $500,000.00 in 2005. In 2009 Museum A wishes to sell the artwork and has a buyer willing to pay $2,500,000.00 for the work. Museum A is staring down the barrel of a maximum capital gain tax rate of 28% (which is dramatically higher than 15% rate for other capital assets) on the $2,000,000.00 gain. That is a large tax nut to swallow. Museum A, however, could take advantage of IRC (Internal Revenue Code) Section 1031 to help defer this gain and provide the museum with increased buying power. Like any other interaction with the tax code, the 1031 exchange does come with some threshold requirements. First, the art work being sold must have been held for productive use in trade or business or held for investment purposes. If this initial threshold requirement can be met, you are off and running. Second, and perhaps more complicated in the art arena, is that the taxable gain derived from the sale proceeds of the qualified sold artwork must be rolled into the purchase of a “like-kind” asset. Here comes the rub: the IRS is still slightly unclear as to what is a “like-kind” exchange when dealing with artwork. The quality of the artwork is not taken into account when making the “like-kind” analysis. Rather, the IRS struggles with whether the purchase of an artwork in a different medium would qualify as a “like-kind” exchange for 1031 purposes. For example, can a Monet be exchanged for a Rodin sculpture? Maybe. Unfortunately, such a decision is rather subjective. Third, there are very stringent timing requirements in a 1031 exchange. For instance, the replacement artwork for the sold work must be unambiguously targeted and designated in writing no later than 45 days after the sale of the relinquished artwork. Additionally, you must take possession and ownership of the replacement artwork no later than 180 days after the date of the transfer of the relinquished artwork. Finally, the replacement piece of artwork needs to be of a value equal to or greater than the relinquished artwork (thus allowing you to use all of the taxable gain for the purchase, and thus maximizing your tax savings). The 1031 exchange is becoming more popular in the art world. However, proper planning and advice must be sought prior to initiating such a tax saving maneuver.