CROWDFUND Act & Securities Law
SEC Seeks Feedback On JOBS Act
The SEC announced on Wednesday that it is seeking feedback on the changes that will be forthcoming under the JOBS Act. The JOBS Act makes it easier for companies, smaller companies in particular, to raise money through the sale of equity. In the JOBS Act, Congress left much of the heavy lifting to the SEC. For example, the portion of the bill that requires crowd funding websites to protect consumers states “intermediareies shall take such measures to reduce the risk of fraud with respect to such transactions, as established by the Commission (the SEC), by Rule.” Because important aspects of this bill have been left to the SEC, it will be particularly interesting to see what the SEC does here. This first act of announcing that it is seeking input is an unusual step that indicates the SEC is aware of the particular importance of this legislation. Traditionally the SEC proposes rules and then solicits public comment. However, in this case the SEC is seeking public comment before proposing rules. If you want to make a comment on the JOBS Act for the SEC you can do so on the SEC website.
Technology, Copyright, & the DMCA
Viacom v. Youtube: Viacom wins appeal that may result in $1Billion liability for Youtube
In 2007, Viacom, the Premier League and a handful of other plaintiffs filed suit against Youtube for violating the Digital Millenium Copyright Act (the DMCA). Basically, Youtube users put copyright infringing content on Youtube, and Youtube got sued. Youtube had originally won on summary judgment, as the trial court found that Youtube complied with the stored content safe harbor provisions of the DMCA. But this week the 2nd Circuit court of appeals overturned the trial court, ruling that, “Although the District Court correctly held that the § 512(c) safe harbor requires knowledge or awareness of specific infringing activity, we vacate the order granting summary judgment because a reasonable jury could find that YouTube had actual knowledge or awareness of specific infringing activity on its website.” The DMCA is a hugely important law, as it’s safe harbors protect content providers from copyright infringement liability if the content providers abide by certain rules. The 2nd Circuit opinion restates well-established law, but more importantly, it would appear to make it easier for plaintiffs to clear the crucial summary judgment hurdle.
Mergers and Acquisitions
Facebook Acquires Instagram for $1Billion
Facebook acquired the 18 month old Instagram for $1 billion in cash and stock. Instagram, for those of you that are not among the company’s 30 million users, is a mobile photo-sharing application. The acquisiton is notable for Facebook because it marks a shift from an established pattern of acquisitions: all previous acquisitions by Facebook had been in the $100 million or less range. The acquisition is a huge payday for investors. Last week Instagram closed a financing round worth $50 million, which valued the company at $500 million. Those investors just doubled their money in a week and will likely have liquid assets thanks to Facebook’s going public. While investors made a bunch of money in the deal, the real winners are the 12 employees of the company, who now have stacks of cash and a pretty impressive resume.