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In denying a motion for summary judgment of invalidity under Section 101, the court stated: “An inability to articulate an abstract idea to which claims are directed may be a clue that those claims satisfy Section 101.” The patent claims at issue related to management of online poker. Defendant challenged the validity based on lack of patentable subject matter under Section 101 in light of the recent Alice decision,
alleging the claims related to the abstract idea of a “customer loyalty program direct to poker, ” (i.e. a player rewards system within a poker room), without adding significantly more. The court refused to buy this argument because the independent claims did not even include a customer loyalty or compensation system.

It is always easy to say that a claim relates to an abstract idea, but that is not the proper legal test. The focused is on what is actually claimed. As stated in Alice, a claim that recites an abstract idea must include “additional features” to ensure “that the [claim] is more than a drafting effort designed to monopolize the [abstract idea].” To the extent the claims do recite an abstract the question is whether there are other ways to use the abstract idea.

Despite the furor over the Alice
decision, properly drafted software and game patents are still patent eligible.

Too many companies/lawyers treat website Terms of Service (TOS) as boilerplate agreements that no one reads. Many companies simply put a link at the bottom of the homepage. This approach continues to prove ineffective, as courts are more frequently refusing to enforce TOS absent properly drafted terms and a requirement that the user read and/or affirmatively accept the terms. In a recent 9^th
Circuit Appeal, the court ruled against Barnes&Noble stating that “where the link to a website’s terms of use is buried at the bottom of the page or tucked away in obscure corners of the website where users are unlikely to see it, courts have refused to enforce the browse-wrap agreement.”

The Court further held: “where a website makes its terms of use available via a conspicuous hyperlink on every page of the website but otherwise provides no notice to users nor prompts them to take any affirmative action to demonstrate assent, even close proximity of the hyperlink to relevant buttons users must click on–without more–is insufficient…”

The result in this case was that the court decided there was no binding agreement,
and therefore B&N could not enforce the arbitration clause contained in the TOS. However, in other cases, even more significant problems can arise. Similar problems can cause modifications to a TOS to be ineffective.

The bottom line is that if properly drafted and implemented, a TOS can provide significant protection for companies and can minimize legal liability to customers. If not, courts will likely not enforce those terms.

If you have not recently reviewed your TOS, you should have a lawyer do so soon.

More and more federal and state agencies are weighing in on virtual currency.  Here’s what they are saying:

Financial Crimes Enforcement Network (FinCEN):

• FinCEN Statement on Providing Banking Services to Money Services Businesses (Nov. 10, 2014)
• Request for Administrative Ruling on the Application of FinCEN’s Regulations to a Virtual Currency Payment System, FIN-2014 (Oct. 27, 2014)
• Request for Administrative Ruling on the Application of FinCEN’s Regulations to a Virtual Currency Trading Platform, FIN-2014-R011 (Oct. 27, 2014)
• Application of Money Services Business regulations to rental of computer systems for mining virtual currency, FIN-2014-R007 (Apr. 29, 2014)
• Whether a Company that Offers Secured Transaction Services to a Buyer and Seller in a Given Sale of Goods or Services is a Money Transmitter, FIN-2014-R005 (Apr. 29, 2014)
• Application of FinCEN’s Regulations to Virtual Currency Mining, FIN-2014-R001 (Jan. 30, 2014)
• Application of FinCEN’s Regulations to Virtual Currency Software Development and Certain Investment Activity, FIN-2014-R002 (Jan. 30, 2014)
• Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies (Mar. 18, 2013)

Jennifer Shasky Calvery, Director FinCEN:

• Prepared Remarks of Jennifer Shasky Calvery, Director FinCEN, Association of Certified Anti-Money Laundering Specialists (ACAMS) 19th Annual International AML and Financial Crime Conference (Mar. 1, 2014)
• Remarks of Jennifer Shasky Calvery, Director FinCEN, Florida International Bankers Association Anti-Money Laundering Conference (Feb. 20, 2014)
• Statement of Jennifer Shasky Calvery, Director FinCEN, Before the United States Senate Committee on Homeland Security and Government Affairs (Nov. 18, 2013)

U.S. Securities and Exchange Commission (SEC):

• Investor Alert: Bitcoin and Other Virtual Currency-Related Investments (May 7)
• Investor Alert Ponzi Schemes Using Virtual Currencies (Jul. 2013)

Internal Revenue Service (IRS):

• IRS Virtual Currency Guidance: Virtual Currency Is Treated as Property for U.S. Federal Tax Purposes; General Rules for Property Transactions Apply (Mar. 25, 2014)
• Internal Revenue Service, Notice 2014-21

David S. Cohen, Under Secretary of Terrorism and Financial Intelligence:

• Remarks From Under Secretary of Terrorism and Financial Intelligence David S. Cohen on “Addressing the Illicit Finance Risks of Virtual Currency” (Mar. 18, 2014)

U.S. Immigration and Customs Enforcement:

• ICE statement for the Record for a Senate Committee on Homeland Security and Governmental Affairs hearing titled “Beyond Silk Road: Potential Risks, Threats, and Promises of Virtual Currencies” (Nov. 18, 2013)

U.S. Department of Homeland Security:

• Written testimony of USSS Criminal Investigative Division Special Agent in Charge Edward Lowery III for a Senate Committee on Homeland Security and Governmental Affairs hearing titled “Beyond Silk Road: Potential Risks, Threats, and Promises of Virtual Currencies” (Nov. 18, 2013)

United States Senate, Committee on Homeland Security and Governmental Affairs:

• Letter to Honorable Janet Napolitano, Secretary of Homeland Security, U.S. Department of Homeland Security (Aug. 12, 2013)

U.S. Government Accountability Office (GAO):

• Report to the Committee on Finance, U.S. Senate, Virtual Economies and Currencies, Additional IRS Guidance Could Reduce Tax Compliance Risks (May 2013)

Conference of State Bank Supervisors:

• Model State Consumer and Investor Guidance on Virtual Currency April 23, 2014

Financial Action Task Force (FATF):

• Virtual currencies: key definitions and potential AML/CTF risks

Here’s is what the states are saying:

Alabama Securities Commission

• Alabama Securities Commission Issues Investor Advisory on Virtual Currency (Apr. 29, 2014)
• INVESTOR ALERT – Understanding high-risk investments, What you don’t know CAN hurt you! (Mar. 12, 2014)
• Investor Alert – Use of Bitcoins are HIGH RISK with Minimal Protection for Consumers – Largest Bitcoin Exchange Experiences Significant Rise in Complaints (Feb. 25, 2014)

California Department of Business Oversight:

• What You Should Know About Virtual Currencies (Apr. 2014)

California Assembly:

• Assembly Bill 129 (Introduced Jan. 15, 2013 and Enrolled Jun. 24, 2014)

Connecticut Department of Banking, Securities and Business Investments Division:

• Connecticut H.B. 6800 (Signed by Governor June 19, 2015)
• Are You An Informed Investor? What’s In your e-Wallet? (May 2014)

Florida Office of Financial Regulation:

• Consumer Alert: Virtual Currencies, The Florida Office of Financial Regulation raises awareness about the risks of purchasing, investing in, and exchanging virtual currencies (Mar. 18, 2014)

Kansas Office of the State Bank Commissioner:

• Regulatory Treatment of Virtual Currencies Under the Kansas Money Transmitter Act (Jun. 6, 2014)

Illinois General Assembly:

• House Bill 5886 — Bill would amend the Transmitters of Money Act to define “virtual currency” as a medium of exchange that operates like currency in some environments, but does not  have all the attributes of real currency.

Maryland Commissioner of Financial Regulation:

• Advisory Notice, Virtual Currencies: Risks for Buying, Selling, Transacting, and Investing (Apr. 24, 2014)

Massachusetts Consumer Affairs and Business Regulation

• National Study Finds Consumers Aware of Virtual Currency, but Have Concerns (Aug. 27, 2014)

State of Nevada Department of Business & Industry:

• Nevada Financial Institutions Division issues consumer and investor guidance on virtual currency (Apr. 25, 2014)

New York State Department of Financial Services:

• Excerpts From Superintendent Lawsky’s Remarks On Virtual Currency and Bitcoin Regulation in New York City (Oct. 14, 2014)
• Proposed New York Codes, Rules and Regulations, Department of Financial Services, Virtual Currencies (Jul. 2014)
• In the Matter of Virtual Currency Exchanges, Order Pursuant to New York Banking Law §§ 2-b, 24, 32, 102-a, and 4001-b and Financial Services Law §§ 301(c) and 302(a) (Mar. 11, 2014)

Texas Department of Banking:

• Supervisory Memorandum ¾ 1037 (Apr. 3, 2014)

Washington State Department of Financial Institutions:

• Virtual Currency Regulation
• Washington State Department of Financial Institutions, The Risks of Buying, Investing in and Trading Virtual Currencies (Mar. 11, 2014)

State Wisconsin, Department of Financial Institutions:

• State agency warns consumers to be cautious with virtual currencies (Apr. 30, 2014)

Others:

Isle of Man, Department of Economic Development:

• Isle of Man to control digital currencies (Jun. 10, 2014)

Here’s is what other countries are saying:

Canada’s Federal Government:

• Bill C-31 (Feb. 11, 2014)

Isle of Man:

• Isle of Man to control digital currencies (Jun. 10, 2014)

Swiss Financial Market Supervisory Authority (FINMA):

• FINMA Fact Sheet (Jun. 25, 2014)

On February 12, 2014, the National Institute of Standards and Technology (NIST) released the final version of its Framework for Improving Critical Infrastructure Cybersecurity (the “Cybersecurity Framework” or “Framework“) and the companion NIST Roadmap for Improving Critical Infrastructure Cybersecurity (Roadmap). The final version is the result of a year-long development process which included the release of multiple iterations for public comment and working sessions with the private sector and security stakeholders. The most significant change from previous working versions is the removal of a separate privacy appendix criticized as being overly prescriptive and costly to implement in favor of a more general set of recommended privacy practices that should be “considered” by companies.

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Joe Jensen, general manager of Intel’s Retail Solutions Division, at the National Retail Federation Convention & Expo, New York, Jan. 13, 2014, confirmed that “Intel has been actively working with leading retailers and the industry for several years to enable retailers to use the Internet of Things to deliver more entertaining brand experiences while also reducing operational costs.” Intel is “taking those efforts a step further by delivering more intelligent solutions and enabling retailers to make better use of big data to deliver a more personalized shopping experience.”

Avid shoppers may be excited to learn that, as reported by Intel, “[w]ith Intel-based Shopping Anywhere, consumers can intuitively shop the looks from their favorite television programs right from their couch.”  Or, “[I]f a consumer prefers to bring the ease of online shopping with them in-store, the Intel® Core™ i7-based MemoryMirror* full-length, digital ‘mirror,’ allows store shoppers to virtually try on multiple outfits, and view and compare previous looks on the mirror or via smartphone or tablet.”  The mirror will use “Intel integrated graphics technology to create avatars of the shopper wearing various clothing that can be shared with friends to solicit feedback or viewed instantly to make an immediate in-store purchase.”  This approaches is expected to provide shoppers with “an engaging and seamless buying experience, regardless of where they are or what device they are using.”

Additional Sources, Intel Newsroom, Intel Personalizes Shopping with Internet of Things, Big Data Technologies (Jan. 13, 2014)

Connecticut is another state to join in a recent trend to amend the state’s money transmitter law to remove an explicit exemption from licensure previously afforded to agents of entities exempt from license under the state’s money transmitter laws. In Connecticut, under the amended law, “money transmission” means “engaging in the business of issuing or selling payment instruments or stored value, receiving money or monetary value for current or future transmission or the business of transmitting money or monetary value within the United States or to locations outside the United States by any and all means including, but not limited to, payment instrument, wire, facsimile or electronic transfer.” Conn. Gen. Stat. § 36a-596(6), as amended. A person shall be deemed to be engaged in the business of money transmission in Connecticut if such person: (1) has a place of business in Connecticut, (2) receives money or monetary value in Connecticut or from a person located in Connecticut, (3) transmits money or monetary value from a location in Connecticut or to a person located in Connecticut, (4) issues stored value or payment instruments that are sold in Connecticut, or (5) sells stored value or payment instruments in Connecticut. Conn. Gen. Stat. § 36a-597(a), as amended. Kansas’ amended law was effective July 1, 2013, and Connecticut’s amended law was effective October 1. For more information, read our client alerts entitled Starting July 1, Kansas Money Transmitter Act Requires Licensure for Certain Agents and Effective Oct. 1, Connecticut’s Money Transmission Law Requires Certain Agents Be Licensed.

Pillsbury attorney, Sean Kane, serves on the Governing Committee of the ABA as the Licensing, Merchandising and Branding Division Chair. Sean is participating in the 2013 Annual Meeting of the American Bar Association Forum on the Entertainment and Sports Industries as the moderator for a discussion titled, “PLENARY: Rights of Publicity for Entertainers and Athletes.”

The mission of this Forum is to educate attorneys about the legal issues that pertain to practices in the entertainment, arts and sports industries, and to foster excellence in the practice of law in these fields.

This year the division leadership and planning committee have designed a program of topics and mentoring workshops that provide high level discussion and discourse on hot topics in entertainment and sports as well as seminars on basic principles and mentoring for younger lawyers or lawyers new to these industries. The Annual Meeting is another high level opportunity to present to the membership excellent speakers on cutting-edge issues; you will not be disappointed. We have a number of plenaries on topics that run across all platforms. In addition, panels will explore such hot topic issues as Unpaid Internships in the Sports and Entertainment Industries; A Litigation Update for 2013: Applying Old Law to New Media and Technologies; Moving Money Across Borders: International Tax Considerations for Sports, Media, Talent and Production and the Impact on Net Profit and Cash Flow; and the Impact of Digital Media and Distribution on Film, TV, Music and Other Content.

In June, Pillsbury welcomed Riaz Karamali to the Corporate & Securities – Technology practice in the firm’s Silicon Valley and San Francisco offices. He has vast experience with start-ups and in the the videogame space is a strong fit with Pillsbury’s capabilities in the San Francisco Bay Area. Mr. Karamali has acted as outside general counsel to many privately-held companies across a range of industries including the video game, cloud computing, mobile, biotechnology, semiconductor and medical device sectors. He frequently represents clients in Europe, Asia, and the Middle East on cross-border transactions.

Riaz is a great addition to the firm’s Social Media & Games team. Pillsbury’s multidisciplinary Social Media & Games team includes over 70 attorneys around the world working at the forefront of emerging business and legal issues relating to Virtual Goods & Currency, Gamification, Gamblification, Mobile Apps and Location Based Services, Augmented Reality, Online & Video Games, Social TV and much more.

The team’s unique capability to provide comprehensive, proactive advice on these cutting-edge issues results, in part, from our attorneys’ commitment to be involved and stay abreast of rapidly evolving business, legal and technical trends. Through this investment, our team obtains valuable knowledge and insights that enable us to provide significant strategic advice and resources to clients, well beyond just “doing legal work.”

It took just two weeks for the first online poker site located and operated completely inside the United States to deal its one millionth hand of poker. While UltimatePoker.com is only available to Nevada residents located in Nevada at this point, it has set the stage for what is likely to be a rapidly expanding market.

For more information, check out Ultimate Poker’s legal online betting foray could be a game changer in the U.S.

The parent company of online poker site PokerStars has put in a bid to buy the brick & mortar based The Atlantic Club Casino in Atlantic City, New Jersey. This appears to be the first time an online-only gambling site operator has attempted to buy a land-based operation. It remains to be seen whether the bid will be accepted, as it is already being challenged by the American Gaming Association (which represents land-based casinos). http://news.yahoo.com/pokerstars-ac-bid-sparks-battle-153442498.html