A lawsuit is alleging Amazon was so desperate to keep up with the competition in generative AI it was willing to breach its own copyright rules. From a report: The allegation emerges from a complaint accusing the tech and retail mega-corp of demoting, and then dismissing, a former high-flying AI scientist after it discovered she was pregnant. The lawsuit was filed last week in a Los Angeles state court by Dr Viviane Ghaderi, an AI researcher who says she worked successfully in Amazon's Alexa and LLM teams, and achieved a string of promotions, but claims she was later suddenly demoted and fired following her return to work after giving birth. She is alleging discrimination, retaliation, harassment and wrongful termination, among other claims.

The Federal Trade Commission is set to vote Tuesday afternoon on a proposal to ban noncompete agreements, which prevent workers from taking positions at competitors for a period of time after they leave a job. From a report: The ban could be a win for workers -- particularly at the low end of the income scale. Critics of these agreements say they stifle innovation and wage growth by restricting workers' ability to take new jobs that pay higher wages or offer some other opportunity. They also make it tougher for employers to hire strong talent, lessening competition.

Some states have laws limiting noncompetes to higher-income folks or banning them altogether -- but most don't. Experts told Axios that the final rule will likely look similar to the draft proposal, which was a broad prohibition on all noncompetes, even for executives. Any final rule is unlikely to take effect for many years -- if ever, as it will surely get tied up in court. The Chamber of Commerce, which opposes the ban, has already said it's ready and willing to file a lawsuit.

A military court in Moscow on Monday sentenced Meta spokesperson Andy Stone to six years in prison for "publicly defending terrorism," a verdict handed down in absentia, RIA news agency reported. Reuters: Meta itself is designated an extremist organisation in Russia and its Facebook and Instagram social media platforms have been banned in the country since 2022 when Russia invaded Ukraine.

[...] Russia's interior ministry opened a criminal investigation into Stone late last year, without disclosing specific charges. RIA cited state investigators as saying Stone had published online comments that defended "aggressive, hostile and violent actions" towards Russian soldiers involved in what Moscow calls its "special military operation" in Ukraine.

The co-founder of Silicon Valley-based software testing startup HeadSpin was sentenced Friday to 18 months in prison and a $1 million fine, reports SFGate — for defrauding investors. Lachwani pleaded guilty to two counts of wire fraud and a count of securities fraud in April 2023, after federal prosecutors accused him of, for years, lying to investors about HeadSpin's finances to raise more money. HeadSpin, founded in 2015, grew to a $1.1 billion valuation by 2020 with over $115 million in funding from investors including Google Ventures and Iconiq Capital... He had personally altered invoices, lied to the company accountant and sent slide decks with fraudulent information to investors, [according to the government's 2021 criminal complaint]...

Breyer, per the New York Times, rejected Lachwani's lawyer's argument that because HeadSpin investors didn't end up losing money, he should receive a light sentence. The judge, who often oversees tech industry cases, reportedly said: "If you win, there are no serious consequences — that simply can't be the law." Still, the sentencing was far lighter than it could have been. The government's prosecuting attorneys had asked for a five-year prison term.
The New York Times reported in December that HeadSpin's financial statements had "often arrived months late, if at all, investors said in legal declarations," while the company's financial department "consisted of one external accountant who worked mostly from home using QuickBooks." And the comnpany also had no human resources department or organizational chart... After Manish Lachwani founded the Silicon Valley software start-up HeadSpin in 2015, he inflated the company's revenue numbers by nearly fourfold and falsely claimed that firms including Apple and American Express were customers. He showed a profit where there were losses. He used HeadSpin's cash to make risky trades on tech stocks. And he created fake invoices to cover it all up.

What was especially breathtaking was how easily Mr. Lachwani, now 48, pulled all that off... [HeadSpin] had no chief financial officer, had no human resources department and was never audited. Mr. Lachwani used that lack of oversight to paint a rosier picture of HeadSpin's growth. Even though its main investors knew the start-up's financials were not accurate, according to Mr. Lachwani's lawyers, they chose to invest anyway, eventually propelling HeadSpin to a $1.1 billion valuation in 2020. When the investors pushed Mr. Lachwani to add a chief financial officer and share more details about the company's finances, he simply brushed them off. These details emerged this month in filings in U.S. District Court for the Northern District of California after Mr. Lachwani had pleaded guilty to three counts of fraud in April...

The absence of controls at HeadSpin is part of an increasingly noticeable pattern at Silicon Valley start-ups that have run into trouble. Over the past decade, investors in tech start-ups were so eager to back hot companies that many often overlooked reckless behavior and gave up key controls like board seats, all in the service of fast growth and disruption. Then when founders took the ethos of "fake it till you make it" too far, their investors were often unaware or helpless...

Now, amid a start-up shakeout, more frauds have started coming to light. The founder of the college aid company Frank has been charged, the internet connectivity start-up Cloudbrink has been sued, and the social media app IRL has been investigated and sued. Last month, Mike Rothenberg, a Silicon Valley investor, was found guilty on 21 counts of fraud and money laundering. On Monday, Trevor Milton, founder of the electric vehicle company Nikola, was sentenced to four years in prison for lying about Nikola's technological capabilities.
The Times points out that similarly, FTX only had a three-person board "with barely any influence over the company, tracked its finances on QuickBooks and used a small, little-known accounting firm." And that Theranos had no financial audits for six years.

An anonymous reader shared this report from the Washington Post: U.S. government officials were scrambling Friday night to prevent what they fear could be a significant loss of access to critical national security information, after two major U.S. communications providers said they would stop complying with orders under a controversial surveillance law that is set to expire at midnight, according to five people familiar with the matter.

One communications provider informed the National Security Agency that it would stop complying on Monday with orders under Section 702 of the Foreign Intelligence Surveillance Act, which enables U.S. intelligence agencies to gather without a warrant the digital communications of foreigners overseas — including when they text or email people inside the United States. Another provider suggested that it would cease complying at midnight Friday unless the law is reauthorized, according to the people familiar with the matter, who spoke on the condition of anonymity to discuss sensitive negotiations.

The companies' decisions, which were conveyed privately and have not previously been reported, have alarmed national security officials, who strongly disagree with their position and argue that the law requires the providers to continue complying with the government's surveillance orders even after the statute expires. That's because a federal court this month granted the government a one-year extension to continue intelligence collection.
UPDATE (4/20/2024): US Passes Bill Reauthorizing 'FISA' Surveillance for Two More Years.

An anonymous reader quotes a report from Ars Technica: The US Constitution's Fifth Amendment protection against self-incrimination does not prohibit police officers from forcing a suspect to unlock a phone with a thumbprint scan, a federal appeals court ruled yesterday. The ruling does not apply to all cases in which biometrics are used to unlock an electronic device but is a significant decision in an unsettled area of the law. The US Court of Appeals for the 9th Circuit had to grapple with the question of "whether the compelled use of Payne's thumb to unlock his phone was testimonial," the ruling (PDF) in United States v. Jeremy Travis Payne said. "To date, neither the Supreme Court nor any of our sister circuits have addressed whether the compelled use of a biometric to unlock an electronic device is testimonial."

A three-judge panel at the 9th Circuit ruled unanimously against Payne, affirming a US District Court's denial of Payne's motion to suppress evidence. Payne was a California parolee who was arrested by California Highway Patrol (CHP) after a 2021 traffic stop and charged with possession with intent to distribute fentanyl, fluorofentanyl, and cocaine. There was a dispute in District Court over whether a CHP officer "forcibly used Payne's thumb to unlock the phone." But for the purposes of Payne's appeal, the government "accepted the defendant's version of the facts, i.e., 'that defendant's thumbprint was compelled.'" Payne's Fifth Amendment claim "rests entirely on whether the use of his thumb implicitly related certain facts to officers such that he can avail himself of the privilege against self-incrimination," the ruling said. Judges rejected his claim, holding "that the compelled use of Payne's thumb to unlock his phone (which he had already identified for the officers) required no cognitive exertion, placing it firmly in the same category as a blood draw or fingerprint taken at booking." "When Officer Coddington used Payne's thumb to unlock his phone -- which he could have accomplished even if Payne had been unconscious -- he did not intrude on the contents of Payne's mind," the court also said.

A jury found Avraham "Avi" Eisenberg guilty on all three counts of fraud and manipulation in a $110 million crypto trade scheme using the Mango Markets platform. Axios: The case was the first known test for a jury to decide whether existing U.S. laws governing fraud and market manipulation apply to the world of decentralized finance (DeFi). The 28-year-old Eisenberg will be held to account for his actions on Oct. 11, 2022, when a series of trades he made intentionally boosted the price of Mango Markets' native token, MNGO, as well as the price of futures contracts.

He used the inflated futures holdings as collateral to borrow other cryptocurrencies on the platform, then quickly withdrew those assets and walked away from his collateral. Eisenberg never disputed the facts of the strategy but contended that what he did was legal and permitted by the DeFi protocol, a principle in the industry known as "code is law." U.S. laws apply to DeFi: "Avraham Eisenberg ran a con," prosecutors said Wednesday, during closing arguments, continuing its momentum from last week. The word "con" was used at least six more times in those remarks.

Pablo Escobar, the name of the late Colombian drug kingpin, can't be registered as a trademark in the European Union after judges said that approving his brother's bid would go against "principles of morality." From a report: The public "associate that name with drug trafficking and narco-terrorism and with the crimes and suffering resulting therefrom, rather than with his possible good deeds in favor of the poor in Colombia," the EU's General Court in Luxembourg said on Wednesday. Trademarking the name is "counter to the fundamental values and moral standards prevailing within Spanish society," the court said.

Richard Currie reports via The Register: A simple misclick at a London law firm led to a surprise divorce for an unsuspecting couple. An employee at Vardags, self-described specialists in high-net-worth marital breakdowns, opened the wrong file when applying for a divorce in His Majesty's Courts and Tribunals Service (HMCTS) online portal. With a click more potent than Cupid's arrow, the solicitor "issued a final order of divorce in proceedings between Mrs Williams, the applicant wife, and Mr Williams," court papers [PDF] say.

The digital slip occurred on October 3, and thanks to the system's "now customary speed," as described by Judge Sir Andrew McFarlane, President of the Family Division, marital bonds were finally and totally severed in a mere 21 minutes, less time than most couples spend arguing over what to watch on Netflix. When Vardags realized the blunder two days later, it scrambled to reverse the order. The application was made "without notice to the Husband's solicitors -- the Wife's solicitors considered at the time that this was the correct approach given that the Final Order itself had been made without notice."

In the ensuing legal melee, Mr Williams, previously unaware of his sudden single status, received a letter sent by HMCTS the same day as the accidental divorce, stating that he was no longer married. But it was not until October 11, a week later, that he was formally informed of his bachelorhood by his ex-wife's solicitors. Meanwhile, his solicitors entered the fray, demanding that the case be brought before the President of the Family Division to sort out this matrimonial muddle.

The United States Senate is poised to vote on legislation this week that, for the next two years at least, could dramatically expand the number of businesses that the US government can force to eavesdrop on Americans without a warrant. From a report: Some of the nation's top legal experts on a controversial US spy program argue that the legislation, known as the Reforming Intelligence and Securing America Act (RISAA), would enhance the US government's spy powers, forcing a variety of new businesses to secretly eavesdrop on Americans' overseas calls, texts, and email messages. Those experts include a handful of attorneys who've had the rare opportunity to appear before the US government's secret surveillance court.

The Section 702 program, authorized under the Foreign Intelligence Surveillance Act, or FISA, was established more than a decade ago to legalize the government's practice of forcing major telecommunications companies to eavesdrop on overseas calls in the wake of the September 11, 2001, terrorist attacks. On the one hand, the government claims that the program is designed to exclusively target foreign citizens who are physically located abroad; on the other, the government has fiercely defended its ability to access wiretaps of Americans' emails and phone conversations, often years after the fact and in cases unrelated to the reasons the wiretaps were ordered in the first place.

The 702 program works by compelling the cooperation of US businesses defined by the government as "electronic communications service providers" -- traditionally phone and email providers such as AT&T and Google. Members of the House Intelligence Committee, whose leaders today largely serve as lobbyists for the US intelligence community in Congress, have been working to expand the definition of that term, enabling the government to force new categories of businesses to eavesdrop on the government's behalf.

The Justice Department is preparing to sue Live Nation as soon as next month [non-paywalled link], an antitrust challenge that could spur major changes at the biggest name in concert promotion and ticketing. WSJ: The agency is preparing to file an antitrust lawsuit against the Ticketmaster parent in the coming weeks that would allege the nation's biggest concert promoter has leveraged its dominance in a way that undermined competition for ticketing live events, according to people familiar with the matter.

The specific claims the department would allege couldn't be learned. The federal government opted out of trying to block Live Nation and Ticketmaster's 2010 tie up. Since then, the company has faced accusations of exorbitant ticket fees, flawed customer service and anticompetitive practices from lawmakers, regulators and state attorneys general. Critics of the merger say it has stifled competition in ticketing and that the company should be broken up. Live Nation's size and power in concert promotion, ticketing and venues are at the heart of a Justice Department investigation that began in 2022. The investigation gained momentum in November 2022 after Ticketmaster crashed during a fan presale to Taylor Swift's "Eras Tour."

An anonymous reader quotes a report from Ars Technica: Federal prosecutors indicted a Nebraska man on charges he perpetrated a cryptojacking scheme that defrauded two cloud providers -- one based in Seattle and the other in Redmond, Washington -- out of $3.5 million. The indictment, filed in US District Court for the Eastern District of New York and unsealed on Monday, charges Charles O. Parks III -- 45 of Omaha, Nebraska -- with wire fraud, money laundering, and engaging in unlawful monetary transactions in connection with the scheme. Parks has yet to enter a plea and is scheduled to make an initial appearance in federal court in Omaha on Tuesday. Parks was arrested last Friday. Prosecutors allege that Parks defrauded "two well-known providers of cloud computing services" of more than $3.5 million in computing resources to mine cryptocurrency. The indictment says the activity was in furtherance of a cryptojacking scheme, a term for crimes that generate digital coin through the acquisition of computing resources and electricity of others through fraud, hacking, or other illegal means.

Details laid out in the indictment underscore the failed economics involved in the mining of most cryptocurrencies. The $3.5 million of computing resources yielded roughly $1 million worth of cryptocurrency. In the process, massive amounts of energy were consumed. [...] Prosecutors didn't say precisely how Parks was able to trick the providers into giving him elevated services, deferring unpaid payments, or failing to discover the allegedly fraudulent behavior. They also didn't identify either of the cloud providers by name. Based on the details, however, they are almost certainly Amazon Web Services and Microsoft Azure. If convicted on all charges, Parks faces as much as 30 years in prison.

A business columnist at the Los Angeles Times notes Sam Bankman-Fried's judge issued another ruling "that may have a more far-reaching effect on the crypto business.

U.S. Judge Failla "cleared the Securities and Exchange Commission to proceed with its lawsuit alleging that the giant crypto broker and exchange Coinbase has been dealing in securities without a license." What's important about Failla's ruling is that she dismissed out of hand Coinbase's argument, which is that cryptocurrencies are novel assets that don't fall within the SEC's jurisdiction — in short, they're not "securities." Crypto promoters have been making the same argument in court and the halls of Congress, where they're urging that the lawmakers craft an entirely new regulatory structure for crypto — preferably one less rigorous than the existing rules and regulations promulgated by the SEC and the Commodity Futures Trading Commission...

Failla saw through that argument without breaking a sweat. "The 'crypto' nomenclature may be of recent vintage," she wrote, "but the challenged transactions fall comfortably within the framework that courts have used to identify securities for nearly eighty years...." Since Congress hasn't enacted regulations specifically aimed at crypto, Coinbase said, the SEC's lawsuit should be dismissed. The judge's opinion of that argument was withering. "While certainly sizable and important," she wrote, "the cryptocurrency industry 'falls far short of being a "portion of the American economy" bearing vast economic and political significance....'"

Failla's ruling followed another in New York federal court in which a judge deemed crypto to be securities. In that case, Judge Edgardo Ramos refused to dismiss SEC charges against Gemini Trust Co., a crypto trading outfit run by Cameron and Tyler Winkelvoss, and the crypto lender Genesis Global Capital. The SEC charged that a scheme in which Gemini pooled customers' crypto assets and lent them to Genesis while promising the customers high interest returns is an unregistered security. The SEC case, like that against Coinbase, will proceed....

The hangover from March continued into this month. On April 5, a federal jury in New York found Terraform Labs and its chief executive and major shareholder, Do Kwon, liable in what the SEC termed "a massive crypto fraud...." The value of UST fell in effect to zero, the SEC said, "wiping out over $40 billion of total market value ... and sending shock waves through the crypto asset community."

An anonymous reader quotes a report from Wired: A controversial US wiretap program days from expiration cleared a major hurdle on its way to being reauthorized. After months of delays, false starts, and interventions by lawmakers working to preserve and expand the US intelligence community's spy powers, the House of Representatives voted on Friday to extend Section 702 (PDF) of the Foreign Intelligence Surveillance Act (FISA) for two years. Legislation extending the program -- controversial for being abused by the government -- passed in the House in a 273-147 vote. The Senate has yet to pass its own bill.

Section 702 permits the US government to wiretap communications between Americans and foreigners overseas. Hundreds of millions of calls, texts, and emails are intercepted by government spies each with the "compelled assistance" of US communications providers. The government may strictly target foreigners believed to possess "foreign intelligence information," but it also eavesdrops on the conversations of an untold number of Americans each year. (The government claims it is impossible to determine how many Americans get swept up by the program.) The government argues that Americans are not themselves being targeted and thus the wiretaps are legal. Nevertheless, their calls, texts, and emails may be stored by the government for years, and can later be accessed by law enforcement without a judge's permission. The House bill also dramatically expands the statutory definition for communication service providers, something FISA experts, including Marc Zwillinger -- one of the few people to advise the Foreign Intelligence Surveillance Court (FISC) -- have publicly warned against.

The FBI's track record of abusing the program kicked off a rare detente last fall between progressive Democrats and pro-Trump Republicans -- both bothered equally by the FBI's targeting of activists, journalists, anda sitting member of Congress. But in a major victory for the Biden administration, House members voted down an amendment earlier in the day that would've imposed new warrant requirements on federal agencies accessing Americans' 702 data. The warrant amendment was passed earlier this year by the House Judiciary Committee, whose long-held jurisdiction over FISA has been challenged by friends of the intelligence community. Analysis by the Brennan Center this week found that 80 percent of the base text of the FISA reauthorization bill had been authored by intelligence committee members.

Discord has shut down the Discord servers for the Nintendo Switch emulators Suyu and Sudachi and has completely disabled their lead developers' accounts. The Verge: Both Suyu and Sudachi began as forks of Yuzu, the emulator that Nintendo sued out of existence on March 4th. "Discord responds to and complies with all legal and valid Digital Millennium Copyright Act requests. In this instance, there was also a court ordered injunction for the takedown of these materials, and we took action in a manner consistent with the court order," reads part of a statement from Discord director of product communications Kellyn Slone to The Verge.

The developers of Suyu and Sudachi only received vague messages about how they were sharing content that allegedly violates intellectual property rights, according to images shared with The Verge. Meanwhile, Discord tells us that it's following its normal process for DMCA takedown requests -- but it's not at all clear there was a valid DMCA takedown request or that those communities were actually violating IP rights, and it's quite possible Discord isn't following its own policy by kicking them out.

Remember, Nintendo got Yuzu to settle rather than proving its case in court, and the settlement did not give Nintendo the rights to Yuzu's freely copyable GPL v3 code. Developers of Yuzu's forks also claimed they were changing the code further, among other practices, in an effort to avoid pissing Nintendo off. And that code wasn't hosted on Discord in any case.

Epic Games, the maker of the popular "Fortnite" video game, has urged a U.S. judge to compel Google to open up its Play Store to more competition following a jury verdict that found the tech giant had abused its power over Android app distribution.

In a court filing on Thursday [PDF], Epic proposed requiring Google to allow the distribution of competing third-party app stores on its platform for six years and limiting its ability to restrict preloading of competing app stores on devices. The move follows a December antitrust trial in which a jury found Google guilty of impeding developers' ability to distribute apps outside the Play Store and maintaining an overly tight grip on in-app transaction payments.

HP "sought to take advantage of customers' sunk costs," printer owners claimed this week in a class action lawsuit against the hardware giant. The Register: Lawyers representing the aggrieved were responding in an Illinois court to an earlier HP motion to dismiss a January lawsuit. Among other things, the plaintiffs' filing stated that the printer buyers "never entered into any contractual agreement to buy only HP-branded ink prior to receiving the firmware updates." They allege HP broke several anti-competitive statutes, which they claim: "bar tying schemes, and certain uses of software to accomplish that without permission, that would monopolize an aftermarket for replacement ink cartridges, when these results are achieved in a way that 'take[s] advantage of customers' sunk costs.'"

In the case, which began in January, the plaintiffs are arguing that HP issued a firmware update between late 2022 and early 2023 that they allege disabled their printers if they installed a replacement cartridge that was not HP-branded. They are asking for damages that include the cost of now-useless third-party cartridges and an injunction to disable the part of the firmware updates that prevent the use of third-party ink.

A federal jury in Illinois on Wednesday said Amazon Web Services owes tech company Kove $525 million for violating three patents relating to its data-storage technology. From the report: The jury determined (PDF) that AWS infringed three Kove patents covering technology that Kove said had become "essential" to the ability of Amazon's cloud-computing arm to "store and retrieve massive amounts of data." An Amazon spokesperson said the company disagrees with the verdict and intends to appeal. Kove's lead attorney Courtland Reichman called the verdict "a testament to the power of innovation and the importance of protecting IP (intellectual property) rights for start-up companies against tech giants." Kove also sued Google last year for infringing the same three patents in a separate Illinois lawsuit that is still ongoing.

President Joe Biden said he is "considering" a request from Australia to drop the prosecution of WikiLeaks founder Julian Assange. The BBC reports: The country's parliament recently passed a measure -- backed by PM Anthony Albanese -- calling for the return of Mr Assange to his native Australia. The US wants to extradite the 52-year-old from the UK on criminal charges over the leaking of military records. Mr Assange denies the charges, saying the leaks were an act of journalism. The president was asked about Australia's request on Wednesday and said: "We're considering it."

Mr Assange, 52, is fighting extradition in the UK courts. The extradition was put on hold in March after London's High Court said the United States must provide assurances he would not face the death penalty. The High Court is due to evaluate any responses from the US authorities at the end of May. The measure passed the Australian parliament in February. Mr Albanese told MPs: "People will have a range of views about Mr Assange's conduct... But regardless of where people stand, this thing cannot just go on and on and on indefinitely."

An anonymous reader quotes a report from TorrentFreak: Cox Communications doesn't believe that ISPs should be held liable for the activities of their pirating subscribers. After a disappointing verdict from a Virginia jury and an unsatisfactory outcome at the Court of Appeals, the internet provider now intends to escalate the matter to the Supreme Court. If the present verdict stands, innocent people risk losing their Internet access, the ISP notes. [...] That's notable, as it would be the first time that a "repeat infringer" case ends up at the highest court United States. Cox asked the court of appeals to also stay its mandate pending its Supreme Court application, as this could steer the legal battle in yet another direction.

According to Cox, the Supreme Court has substantial reasons to take on the case. For one, there are currently conflicting court of appeals rulings on the "material contribution" aspect of copyright infringement. The Supreme Court could give more clarity on when a service, with a myriad of lawful uses, can be held liable for infringers. In addition, Cox also cites the recent 'Twitter vs. Taamneh' Supreme Court ruling, which held that social media platforms aren't liable for terrorists who use their network. While that's not a copyright case, it's relevant for the secondary liability question, the ISP argues. "Though Twitter was not a copyright case, it confronted a directly analogous theory of secondary liability: that social-media platforms, including Twitter and YouTube, could be liable for continuing to provide services to those they knew were using them for illegal purposes," Cox writes.

Finally, Cox notes that the Supreme Court should hear the case because it deals with an issue that's 'exceptionally important' to ISPs as well as the public. If the present verdict stands, Internet providers may be much more likely to terminate Internet access, even if the subscriber is innocent. "This Court's material-contribution standard provides powerful incentives for ISPs of all stripes to swiftly terminate internet services that have been used to infringe -- no matter the universe of lawful uses to which those services are put, or the consequences to innocent, non-infringing people who also use those services. "That is why a chorus of amici urged this Court not to adopt this standard at the panel and en banc stages, and will likely urge the Supreme Court to grant review as well," Cox adds, referring to the support it received from third-parties previously. "Cox hasn't filed a writ of certiorari yet and still has time, as it's due June 17, 2024," notes TorrentFreak. "The intention to go to the Supreme Court would be another reason to halt the new damages trial, according to Cox, but the court of appeals rejected the request."

"This means that the new damages trial can start, even if the case is still pending at the Supreme Court. However, it's clear that this legal battle is far from over yet."