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Further to the early 2014 policy that relaxed the restrictions on the foreign equity ratio in value-added telecommunications business in the Shanghai Free Trade Zone (“Shanghai FTZ”),
on January 15, 2015, the Ministry of Industry and Information Technology (“MIIT”) promulgated a new policy, i.e., the Opinions on Lifting Restrictions on the Foreign Equity Ratio for Online Data Processing and Transaction Processing Business in the China (Shanghai) Free Trade Zone (the “New Policy”), according to which, any foreign equity ratio restriction on foreign investment in e-commerce operations (under the category of online data processing and transaction processing businesses) was removed in the Shanghai FTZ. As such, foreign investors are now allowed to establish a 100 percent wholly foreign owned enterprise (a  “WFOE”) in the territory of Shanghai FTZ to operate e-commerce business. In the New Policy,
MIIT authorized the Shanghai Municipal Telecommunication Administrative Bureau to implement the New Policy, review foreign investors’ applications and issue the relevant qualification/operation licenses to foreign-invested e-commerce companies.

For more information, please see our Client Alert.

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Unlike New York, Kansas, and Texas, which have either published proposed regulations or formal guidance, some states, such as California, have indicated that they are still trying to determine whether Bitcoin and other virtual currency activities are subject to licensure and regulation under their money transmitter laws.  On January 27th, the Commissioner of the California Department of Business Oversight, the state agency that licenses and oversees California money transmitters, issued a statement that it “has not decided whether to regulate virtual currency transactions, or the businesses that arrange such transactions, under the state’s Money Transmission Act.”  This statement was issued in response to Coinbase’s January 26th announcement that it has launched Coinbase Exchange, the first regulated bitcoin exchange based in the U.S.  The Department of Business Oversight warned that California consumers should be aware that Coinbase Exchange is not regulated or licensed by California.

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Seven months after releasing its BitLicense proposal, the State of New York has today published substantial revisions. Like the original version, the revised regulations apply more broadly than federal regulations and require many virtual currency businesses that “involve” the State of New York or customers located or operating within New York to obtain a license.

To read the full article, click here.

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The founder of Silk Road, the black market website where illegal goods were bought with bitcoin, was found guilty on all 7 counts, including money laundering, drug trafficking and computer hacking. While this is an unfortunate result for Ross Ulbricht, who faces life in prison, the enforcement against illegal uses tied to bitcoin will only help the crypto-currency in the long run. The early adopters of many new technologies are the bad guys. Bitcoin is no exception.

Bitcoin and other crypto-currencies are enabling and will continue to enable transformational change in financial payments and public ledger transactions,
but it is imperative for anyone operating in the space to understand the legal issues that go along with this.

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On January 8, 2015, New Hampshire House Bill 356 was introduced, proposing to exempt persons using private virtual currencies for internet commerce from the licensing requirements for money transmitters.  H.B. 356 would define “virtual currency” to mean ” any type of digital unit that is used as a medium of exchange or a form of digitally stored value or that is incorporated into payment system technology.”  H.B. 356 further provides that “[v]irtual currency shall be broadly construed to include digital units of exchange that:  (1) Have a centralized repository or administrator; (2) Are decentralized and have no centralized repository or administrator; or (3) May be created or obtained by computing or manufacturing effort.”  However, virtual currency would not include “digital units that are used solely within online gaming platforms with no market or application outside of those gaming platforms, nor shall virtual currency be construed to include digital units that are used exclusively as part of a customer affinity or rewards program, or can be applied solely as payment for purchases with the insurer or other designated merchants, but cannot be converted into, or redeemed of, fiat currency.” 

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According to a recent study, more than 100,000 mHealth apps have already been published on Apple’s iOS and Google’s Android platforms. Market revenue is expected to skyrocket to $26 billion by 2017.
mHealth app providers and all of the players in the mHealth ecosystem must be aware of the potential legal risks and liabilities. Join Pillsbury’s Social Media & Games team and Health Care practice lawyers for three events addressing emerging legal issues with mHealth applications. Topics will include:

  • Privacy and security, including HIPAA issues
  • Regulatory oversight by the FDA, FTC, and FCC, including recent enforcement actions
  • Intellectual property issues with mHealth apps
  • Issues with gamification of health care, including reward and incentive programs
  • Issues with leveraging Apple’s health kit
  • Unauthorized practice of medicine
  • And much more

Tuesday, February 10, 2015 – Overview of Legal Issues with mHealth
Speaker: James G. Gatto, Partner, Pillsbury

Wednesday, March 11, 2015 – Privacy and Security
Speaker: Kristi V. Kung, Senior Associate, Pillsbury

Tuesday, April 7, 2015 – IP Issues with Mobile Applications
Speaker: Bradford C. Blaise, Partner, Pillsbury

 

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Events are 8:00 – 10:00am ET
8:00 – 8:30am Breakfast and registration
8:30 – 10:00am Program

Pillsbury’s Northern Virginia Office
1650 Tysons Boulevard, 14th Floor
McLean, VA 22102-4856
All events will also be available as webinars.

For questions regarding these events, please contact Mahalet Asrat.

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Coinbase, the self-proclaimed world’s most popular bitcoin wallet provider, announced on January 20th that it raised $75 million in a Series C financing, which brings Coinbase’s total capital raised to $106 million.  The round was led by DFJ Growth, but also included three mainstream financial institutions: The New York Stock Exchange,
a subsidiary of USAA, and BBVA.  Existing investors, including Andreessen Horowitz, Union Square Ventures, and Ribbit Capital, also participated in the financing.  This significant investment is a positive development for Bitcoin and Bitcoin-related companies after the value of Bitcoin has taken a big hit over the past several months.  This investment may be a sign that major financial and venture institutions are willing to bet on the future of Bitcoin and other digital currencies.

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FinCEN issued an alert indicating that certain organizations and individuals have been circumventing various laws related to sports betting, including by permitting “third-party betting” and reminding the industry about the importance of applying a risk-based approach with respect to this issue and the need to implement reasonably designed AML programs to address among other risks, the risks associated with third-party betting.

FinCEN further noted that criminals are making bets with legally operating sports books, including by using intermediaries to place bets on behalf of unidentified third parties (third-party betting). In these cases, the intermediaries rarely voluntarily disclose to the casino that a transaction is being conducted on behalf of a third party, thereby disguising the third party’s role in the transaction and obscuring the source of funds used to place the bet. This poses distinct money laundering risks for casinos. In addition to concealing the owner and the origin of funds, third-party betting poses distinct money laundering risks for casinos because it allows criminal organizations, illegal sports books, and others located in any state, where gambling may be illegal,
to place bets within states where sports betting is legal.

Casinos should be aware that failure to identify a third party on whose behalf a transaction is conducted may constitute a violation of the casinos’ recordkeeping and reporting obligations under the BSA.

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Yesterday, we published our client advisory titled Stop Calling Me:  Can Consumers Waive the right to Revoke Consent Under the TCPA?  If you call or text your customers using an automated telephone dialing system or prerecorded messages, it might be worth a read.

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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.