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Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.

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Speaker 2: It was a spectacular fall from grace. Just last year,

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Speaker 2: Sam Bankman Fried was running a crypto empire estimated to

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Speaker 2: be worth tens of billions of dollars, with the lifestyle

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Speaker 2: of a celebrity. Now he's a convicted felon for what

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Speaker 2: federal prosecutors described as one of the biggest financial frauds

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Speaker 2: in American history. A jury found him guilty on Thursday

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Speaker 2: night of all seven criminal charges against him. Bloomberg Legal

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Speaker 2: reporter Ava Benny Morrison says Bankman freed was stoic as

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Speaker 2: the verdicts were read out, them very still.

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Speaker 3: He had his eyes cast down. The jury walked in,

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Speaker 3: took their places in the jury box. The judge asked

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Speaker 3: Sam to stand up and face the jury. He had

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Speaker 3: his hands clasped in front of him, kept these eyes

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Speaker 3: towards the floor or the desk in front of him.

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Speaker 3: As the guilty verdicts were read out. He was very

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Speaker 3: feel emotionless that his parents looked like they were quite

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Speaker 3: overwhelmed that was sitting in the public gallery. He made

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Speaker 3: his way from Sam, date held each other. He fathered

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Speaker 3: almost doubled over as his mother put a company hand

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Speaker 3: on his back.

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Speaker 2: Manhattan US attorney Damian Williams called the verdict a warning.

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Speaker 4: This is what relentless looks like. This case moved at

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Speaker 4: lightning speed. That was not a coincidence, that was a choice.

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Speaker 4: And it's also a message. It's a warning this case

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Speaker 4: to every single fraudster out there who thinks that they're untouchable.

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Speaker 2: My guest is former federal prosecutor Michael Weinstein of Coal Shots. Michael,

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Speaker 2: the jury deliberated for only about four hours. What's your

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Speaker 2: reaction to such a quick verdict?

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Speaker 5: Not surprised? The evidence was insurmountable for the defense, and

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Speaker 5: the jury obviously agreed. The government made this case almost simplistic.

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Speaker 5: They did not get into the issue of cryptocurrency and

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Speaker 5: all the nuances of cryptocurrency. They brought it as a simplified,

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Speaker 5: straight out broadcase, and that's pretty easily digestible for a jury,

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Speaker 5: and their witnesses were prepped to foster that kind of

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Speaker 5: criminal activity. And so when it goes to the jury

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Speaker 5: and there's overwhelming documentary evidence, there's overwhelming testimony, and the

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Speaker 5: defense takes the stand and he's just not credible, or

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Speaker 5: if he is, it's pretty watered down. That leads to

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Speaker 5: a quick verdict.

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Speaker 2: When the defendant takes the stand, it's all about his credibility,

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Speaker 2: and we've talked about how risky it is, but I

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Speaker 2: don't see that he had much choice here but to

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Speaker 2: take the stand. Do you think, looking back, the defense

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Speaker 2: is regretting that now.

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Speaker 5: I don't think so. I think, as you said, they

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Speaker 5: had very little, if any choice. If he did not

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Speaker 5: take the stand, his narrative, his story would never have

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Speaker 5: come out, and his perspective and his denials would never

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Speaker 5: have been entered into evidence. It didn't work. I still

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Speaker 5: think the defense had no choice.

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Speaker 2: The three witnesses who flipped were the heart of the

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Speaker 2: prosecution's case, the star witnesses, and the defense tried to

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Speaker 2: cast doubt on their credibility, But prosecutors make their cases

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Speaker 2: on these kinds of witnesses, and it seemed that the

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Speaker 2: jurors believe them. Was there anything the defense could have

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Speaker 2: done to hurt their credibility?

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Speaker 5: Certainly the defense could have been more aggressive with them

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Speaker 5: and tried to chip away, if not take them out

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Speaker 5: in some ways and articulate perhaps that they were doing

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Speaker 5: this in order to get a better sentence, or they

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Speaker 5: were doing this because they were vindictive, or they were

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Speaker 5: a jilted lover in miss Ellison's case, things of that nature.

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Speaker 5: But the downside of doing that is, you know, the

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Speaker 5: jury turns on you as the defendant, and so the

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Speaker 5: defense has a delicate balance. You know, they want to

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Speaker 5: be aggressive, they want to make sure they undermine the

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Speaker 5: testimony of the cooperating witnesses, but they don't want to

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Speaker 5: go so much overboard that the jury turns off to that.

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Speaker 2: Do you see anything else that the defense could have

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Speaker 2: done in this case?

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Speaker 5: I think they were in a very, very uphill battle.

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Speaker 5: It was kind of doomed from the start. Could they

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Speaker 5: have been more aggressive, perhaps, Could they have prepared their

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Speaker 5: client a little bit longer and a little bit more precisely, perhaps,

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Speaker 5: But you know, he had said a lot of things

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Speaker 5: for months and years prior, so it didn't really matter

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Speaker 5: how much they prepped him because he had already said

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Speaker 5: things on the record and through spack messages and through

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Speaker 5: emails and through congressional testimony which came back and haunted him.

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Speaker 5: So there really was not much more they could have

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Speaker 5: done other than try to get some of the witnesses

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Speaker 5: in that were rejected by the judge, and that might

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Speaker 5: have changed the dynamics of the case.

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Speaker 2: And Michael, if you add up all the possible sentence

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Speaker 2: as it comes to something like a one hundred and

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Speaker 2: ten years or more, what's a more likely sentence for

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Speaker 2: Sam Bankman.

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Speaker 5: Freed, He's looking at decades in prison, no doubt he

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Speaker 5: will not see the light of day, whether it's the

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Speaker 5: Bahamian light of day or the US light of day.

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Speaker 5: For well, when he's an older man.

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Speaker 2: That seems like a lot of time for a white

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Speaker 2: collar crime. Elizabeth Holmes only got eleven years time.

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Speaker 5: But you know this is the generation X, you know

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Speaker 5: madeoff and you have to really look at the cryptocurrency

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Speaker 5: space and it's the wild left. And you know, in

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Speaker 5: almost no scenario is it ever appropriate to use customer

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Speaker 5: funds for your own benefit. And that's simply what happened,

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Speaker 5: and there was just no justification for that.

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Speaker 2: And what about the three witnesses who turned on him

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Speaker 2: and flipped. I mean, cooperators often get good deals. My

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Speaker 2: mind always goes to Sammy the Bull Gravano, who got

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Speaker 2: only five years in prison despite confessing to nineteen murders,

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Speaker 2: and Gary Wang said on the stand he's hoping for

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Speaker 2: ideally no time in prison.

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Speaker 5: Right, he may hope that, but that may not be realistic.

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Speaker 5: I'm not so sure that they're going to get no

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Speaker 5: time in prison. I think their involvement and the types

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Speaker 5: of charge that they pled guilty to larrence, specifically jail time. Yes,

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Speaker 5: they were cooperating witnesses, and yes, they gave testimony which

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Speaker 5: ultimately was a huge, tremendous fact or in the defendant's conviction.

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Speaker 5: And that's something that their defense attorneys will draw out

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Speaker 5: before the judge and will argue with the government that

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Speaker 5: they should warrant a downward departure and they should warrant

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Speaker 5: a variance in any kind of potential sentence. I think

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Speaker 5: the three of them were really the three nails in

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Speaker 5: the coffin for dam Bankman free, and at the end

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Speaker 5: of the day, their testimony was just too insurmountable. Do

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Speaker 5: I think they're going to go to jail?

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Speaker 2: Yes? And is the government likely to try to force

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Speaker 2: the three cooperators to pay restitution.

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Speaker 5: I believe so. The government's going to look and see

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Speaker 5: how they benefited from their criminal activity, and often is

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Speaker 5: any condition of a criminal sentence, the government will require

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Speaker 5: restitution back to the victims. So if the three cooperating

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Speaker 5: defendants benefited from the criminal activity, the government will try

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Speaker 5: to recoup some of that money that's from other fights.

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Speaker 5: You know, what is the extent of the money that

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Speaker 5: the government wants paid back? The defense lawyers are going

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Speaker 5: to say, well, there's very little money or no money.

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Speaker 5: They didn't benefit and look at you know how much

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Speaker 5: they cooperated with the trial and the benefits that the

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Speaker 5: government received from them providing testimony. The government's going to say,

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Speaker 5: all that is true, and yes they did cooperate, and

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Speaker 5: yes they provided helpful testimony, but that still doesn't mean

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Speaker 5: that they shouldn't pay back the money that came from

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Speaker 5: the criminal activity.

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Speaker 2: These cooperators made a lot of money. Caroline Ellison testified

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Speaker 2: that one year she made twenty million dollars as a bonus.

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Speaker 2: Nisad Singh has already agreed to surrender a three point

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Speaker 2: seven million dollar house he bought and shares in an

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Speaker 2: artificial intelligence startup that he paid forty million dollars for.

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Speaker 2: Does the government know where the money is to be

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Speaker 2: able to force restitution?

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Speaker 5: Yeah, and that's a lot of money. And that's excessive.

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Speaker 5: But again, that is just monopoly money for these three

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Speaker 5: or four people running the business at the time. It's

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Speaker 5: no different if they were twenty years old and out

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Speaker 5: of college or in college, didn't around drinking beers on

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Speaker 5: a Friday night playing monopoly. To them, twenty million dollars

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Speaker 5: was just a Friday night. And so do I think

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Speaker 5: the government has tracked that money? Yes? Do I think

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Speaker 5: the government knows where the money went? I think a

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Speaker 5: majority of it. And that's the problem that the defendants

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Speaker 5: that played guilty that are going to have, is that

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Speaker 5: the government knows how much they had at their disposal,

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Speaker 5: how much was given or taken by them, and the

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Speaker 5: government's going to go after it and try to take it.

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Speaker 2: Let's talk about the possibilities on appeal. For example, the

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Speaker 2: judge ruled against bankman freed on several pretrial motions, holding

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Speaker 2: he couldn't call seven I think it was expert witnesses

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Speaker 2: to testify, and then during the trial he held that

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Speaker 2: mini testimony and decide he couldn't use the advice of

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Speaker 2: council defense. Do any of those seem like winning appellate arguments?

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Speaker 5: I think they're interesting. Do I think that they're going

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Speaker 5: to carry the day on appeal at the Second Circuit.

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Speaker 5: I think the answer is no. Certainly, his defense lawyers

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Speaker 5: are going to make a robust attempt, but you know

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Speaker 5: the government's going to have arguments and opposition. The judge's

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Speaker 5: given some latitude and discretion under the federal rules of

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Speaker 5: evidence to make a decision based on those types of issues.

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Speaker 5: So I do not foresee the Second Circuit overturning the conviction.

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Speaker 2: The US Attorney Damian Williams gave a little press conference

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Speaker 2: last night and said that the case was a warning

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Speaker 2: to fraudsters. We've heard similar warnings from other US attorneys.

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Speaker 2: Do these kinds of statements have any impact on white

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Speaker 2: collar crime?

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Speaker 5: No, it sounds great, it's wonderful before the media. It's

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Speaker 5: something that a federal prosecutor, especially leading the US Attorney's

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Speaker 5: Office for the Southern District of New York, should say

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Speaker 5: and must say. He has to let it be known

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Speaker 5: that there's a sheriff in town and he's going to

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Speaker 5: patrol and make sure that the public's protected. But if

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Speaker 5: you look back on the history of you know, frauds

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Speaker 5: in the last forty years, starting with Michael Milkin, going

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Speaker 5: to the Enron scandal, then going to Bertie Madoff, and

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Speaker 5: now ending up with Sam Bankment freed. There's a pattern

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Speaker 5: here in every ten or twelve years, you know, there's

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Speaker 5: another big prosecution that's brought by the US Attorney's officers,

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Speaker 5: and it re emphasizes the point that there's fraud and

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Speaker 5: there's people that commit crimes, and the government is there

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Speaker 5: to regulate and to be the sheriff and to say no,

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Speaker 5: that's not appropriate.

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Speaker 2: And the judge will sentence Sam Bankman freed in March.

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Speaker 2: Thanks so much, Michael. That's Michael Weinstein of Coal Shots.

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Speaker 2: Coming up next. Should public officials be allowed to block

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Speaker 2: you on social media? I'm June Grosso and you're listening

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Speaker 2: to Bloomberg.

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Speaker 6: That's what makes these cases hard is that they are

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Speaker 6: First Amendment interests all over the place.

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Speaker 2: And not only are their First Amendment issues all over

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Speaker 2: the place, as Justice Elena Kagan put it, but the

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Speaker 2: justices questions seemed to be all over the place as well.

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Speaker 2: As they considered whether two school board members in San

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Speaker 2: Diego and a city manager in Michigan could block followers

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Speaker 2: who are criticizing them from their social media accounts. The

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Speaker 2: central question is whether the social media activity constitutes state action,

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Speaker 2: making it subject to the First Amendment, and the Justices

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Speaker 2: presented a host of scenarios to the attorneys. Here are

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Speaker 2: Justices Sonya Sotomayor and Brett Kavanaugh.

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Speaker 7: So let's assume a mayor says I'm setting up a

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Speaker 7: hotline for emergencies on my Facebook or Twitter, and if

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Speaker 7: you have an emergency, call that hotline and I will

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Speaker 7: use the power of my office to set in motion

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Speaker 7: government response for your emergency. Seems to me that that's

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Speaker 7: government faction, isn't it.

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Speaker 8: But suppose the city manager on the personal site says,

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Speaker 8: we have new recycling rules. You have to use a

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Speaker 8: blue bin, has to be at the curb, will be

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Speaker 8: picked up on Wednesdays. If you have any questions, contact me.

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Speaker 8: That's only on the personal site, not on the official site.

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Speaker 8: That's state action.

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Speaker 2: Joining me is Professor Eric Golman, co director of the

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Speaker 2: High Tech Law Institute at Santa Clara University Law School.

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Speaker 2: Eric explained the main issue in these cases.

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Speaker 9: The quir issue is what should happen when government officials

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Speaker 9: maintain social media accounts. Can they treat it as if

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Speaker 9: they're ordinary citizens or are they governed by the rules

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Speaker 9: that apply to government generally, and are the issues in

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Speaker 9: the two cases before the court basically the same. They're

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Speaker 9: basically the same. There are little details about exactly how

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Speaker 9: the particular government officials were using their social medi accounts

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Speaker 9: that might matter to the final conclusion, but the core

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Speaker 9: questions the court's asking and the legal test it's likely

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Speaker 9: to adopt are probably going to be the same.

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Speaker 2: So let's talk about the concerns of some of the justices,

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Speaker 2: and Justice Elena Kagan said there are First Amendment interests

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Speaker 2: all over the place.

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Speaker 9: I thought that was a really great line, honestly, just

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Speaker 9: as Kaigan has just such a great way of turning phrases,

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Speaker 9: and she's absolutely right their First Amendment considerations on all sides.

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Speaker 9: It's not like there's an easy path forward that balances

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Speaker 9: all the respective interests. On the one hand, people who

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Speaker 9: work for the government should be free to engage their

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Speaker 9: communities and express themselves publicly as private citizens. That's the

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Speaker 9: constitutionally protected right. They don't give up that right by

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Speaker 9: going to work for the government. On the other hand,

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Speaker 9: when the government controls online discourse spaces where people are

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Speaker 9: talking to each other, there's a really real and significant

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Speaker 9: risk of censorship. And so the concern is that if

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Speaker 9: the government officials can act like private individuals, they can

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Speaker 9: functionally censor conversations. Now, if they're acting in the private

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Speaker 9: individual they're allowed to do that, but it's acting the government,

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Speaker 9: they're not. And so, either we're going to circumscribe the

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Speaker 9: free speech rights of government employees, or we're going to

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Speaker 9: allow government eployees to circumvent the free speech rights of

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Speaker 9: the people who want to engage with them. Somebody is

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Speaker 9: going to lose something here.

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Speaker 2: So to me, it seems like, you know, if you're

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Speaker 2: posting public information on a website, on a Facebook page,

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Speaker 2: that that should be open to the public and the

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Speaker 2: public able to comment, and if you want not to

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Speaker 2: do that, then have a private page as well.

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Speaker 9: Certainly those ideas came out. In fact, there are three

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Speaker 9: different categories of pages that a government official might have.

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Speaker 9: They may have an official government page, they may have

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Speaker 9: a campaign page, which is not part of their official

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Speaker 9: government duties but still is an important place for them

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Speaker 9: to evangelize the work they're doing. And they may have

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Speaker 9: a personal page that has nothing to do with their

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Speaker 9: role in government and figuring out which account is in

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Speaker 9: which category is something that is baffling to us as

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Speaker 9: citizens when we see our government officials online. And it's

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Speaker 9: also vexxing to the government officials because so often they

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Speaker 9: want to take their victory labs, they want to tout

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Speaker 9: their successes, and we aren't sure are they telling them

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Speaker 9: as official government policy, as a campaign promise, or just

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Speaker 9: because they're touting their own work as a private individual.

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Speaker 9: And the court didn't know how to approach that issue.

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Speaker 9: They understood the trade offs, but there was no clear

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Speaker 9: way to move forward that was going to satisfy everybody.

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Speaker 2: Do you think that they can come up with a

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Speaker 2: clear legal test here?

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Speaker 9: Honestly, no, there is no clear legal test. And I

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Speaker 9: think we can be a little bit more emphatic that

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Speaker 9: the different considerations include things like what's the employee's job

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Speaker 9: and what tools are available in social media to be

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Speaker 9: able to cold control conversations and which of those tools

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Speaker 9: was wielded, and how did the person describe or characterize

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Speaker 9: their account, and how much of the account was used

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Speaker 9: with official related postings versus personal postings, Like we need

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Speaker 9: a multi dimensional matrix to try to figure out where

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Speaker 9: to place all the different nodes in those questions. And

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Speaker 9: that's why, even with two cases in front of the

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Speaker 9: Supreme Court that they can use to compare and contrast,

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Speaker 9: they still don't have enough cases to cover the full

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Speaker 9: range of facts that are going to be implicated by

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Speaker 9: their ruling.

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Speaker 2: There were three hours, I believe, of oral arguments. Did

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Speaker 2: you see blocks of justices sort of coming to some

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Speaker 2: conclusions or.

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Speaker 9: Did you see any pad The short answer is no, Really,

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Speaker 9: the oral arguments were quite opaque about where the judges

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Speaker 9: are likely to end up, which is unusual. One would

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Speaker 9: have hoped that we would have been able to get

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Speaker 9: a clearer line from the oral arguments. Having said that,

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Speaker 9: there are two things that stood out to me. First

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Speaker 9: is that some justices seem to be gravittained around the test.

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Speaker 9: It was advocated by the Department of Justice and was

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Speaker 9: endorsed by the lawyers for the government employees about looking

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Speaker 9: at the duties of the government official and their authority

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Speaker 9: to speak on behalf of the government. And so Justice

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Speaker 9: Gore Such for example, at one point said it sounds

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Speaker 9: like we got consensus that's the right test. I don't

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Speaker 9: know if there was consensus, but it wouldn't surprise me

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Speaker 9: if the test looked something like that. At the end

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Speaker 9: of the oral arguments, Justice Kagan once again had a

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Speaker 9: really powerful turn of the phrase. She came and basically

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Speaker 9: blasted the government lawyers, saying that the government lawyers proposed

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Speaker 9: test was really out of sync with the importance of

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Speaker 9: social media to the government function and would limit the

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Speaker 9: ability of us as constituents or to be able to

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Speaker 9: defend our own interests when the government keeps embracing social media.

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Speaker 9: So I saw kind of two opposite approaches there, Justine

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Speaker 9: score Such saying, you know, sounds good to me, let's

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Speaker 9: go with the test that you proposed, and Justine Keagen

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Speaker 9: saying that test is actually really harmful to the future.

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Speaker 2: At times when we've had these oral arguments at the

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Speaker 2: Supreme Court involving you know, the Internet, texting, social media,

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Speaker 2: the justices have seemed to be a step behind, maybe

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Speaker 2: more than one step. Did they get all the social

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Speaker 2: media implications in these cases?

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Speaker 9: They really didn't. This was yet another example of how

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Speaker 9: the Internet baffles Supreme Court justices. And just to be clear,

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Speaker 9: we don't know how many Supreme Court justices spend time

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Speaker 9: on social media, but it's not like they do it publicly.

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Speaker 9: So they're just not familiar with social media at the

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Speaker 9: same degree that most of us, as everyday users are,

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Speaker 9: so it's not surprising that it's a little bit baffling

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Speaker 9: to them that they're not immersed in that is part

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Speaker 9: of their daily functions. There was a really awkward line

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Speaker 9: that came from Chief Justice Roberts where he talked about

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Speaker 9: social media described it as the gathering of protons, and

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Speaker 9: it was such a reductionist approach that social media is

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Speaker 9: just about the movement of electronic pulses on the Internet.

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Speaker 9: That's all it is. And it's kind of like saying

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Speaker 9: that Supreme Court opinions are just inc on a piece

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Speaker 9: of paper. It's a reductionist conclusion that isn't inherently wrong,

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Speaker 9: but it completely misunderstands the scope and the stakes at

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Speaker 9: issue in this case.

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Speaker 2: And this is the first of several social media clashes

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Speaker 2: that coming up this term involving the First Amendment and

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Speaker 2: how it applies to social media companies.

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Speaker 9: So, just to be clear, there's going to be a

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Speaker 9: steady stream of internet law cases going to the Supreme

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Speaker 9: Court and likely to be decided by the Supreme Court

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Speaker 9: over the next few years. We've had just this upswell

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Speaker 9: of legislation trying to regulate the Internet. Many of those

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Speaker 9: laws are going to end up before the Supreme Court.

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Speaker 9: So we're just kind of at the beginning of the

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Speaker 9: multi year cycle where the Supreme Court is going to

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Speaker 9: be regularly deciding the future of the Internet.

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Speaker 2: They might have to actually get on social media. Thanks Eric,

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Speaker 2: that's Eric Goleman, a professor at Santa Clara University School

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Speaker 2: of Law. Coming up, The Justices considered Trump too small

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Speaker 2: as a trademark.

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Speaker 10: This is Bloomberg, which hands hit my hands?

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Speaker 7: I've never heard of this one.

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Speaker 8: Look at those hands?

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Speaker 5: Are they small hands?

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Speaker 2: You may remember seven years ago when Donald Trump and

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Speaker 2: Senator Marco Rubio were engaged in locker room talk over

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Speaker 2: the size of Trump's hands. Now it's part of the

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Speaker 2: case before the Supreme Court. Attorney Steve Elster says he

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Speaker 2: has a free speech right to trademark the phrase Trump

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Speaker 2: too small to use on T shirts. The US Patent

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Speaker 2: and Trademark Office disagreed, and it appears that the Supreme

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Speaker 2: Court also disagrees. At oral arguments on Wednesday, Justice is

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Speaker 2: across the ideological divide suggested that denying Elster a trademark

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Speaker 2: for the phrase does not violate his free speech rights

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Speaker 2: for a host of reasons. Justice Katanji Brown Jackson discussed

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Speaker 2: the point of trademark.

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Speaker 6: Law and trademark is not about expression. Trademark is not

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Speaker 6: about the First Amendment in your and people's ability to speak.

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Speaker 6: Trademark is about source identifying and preventing consumer confusion.

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Speaker 2: Justice Sonya Sotomayor said that not getting a trademark does

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Speaker 2: not infringe on his speech.

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Speaker 7: As you're not talking about stopping the speech. You're talking

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Speaker 7: about not receiving government protection for activity that you would

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Speaker 7: like to heighten protection for. Doesn't stop you from selling.

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Speaker 7: It doesn't stop you from selling anywhere as much as

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Speaker 7: you want.

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Speaker 2: Justice Neil Gorsich pointed to history.

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Speaker 11: But at the end of the day, it's pretty hard

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Speaker 11: to argue that a tradition that's been around a long

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Speaker 11: long time since the founding, you know, common law type stuff,

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Speaker 11: is inconsistent with the First Amendment.

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Speaker 2: And the Chief Justice said that giving him a trademark

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Speaker 2: would have the effect of restricting the speech of other people.

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Speaker 8: Because the whole point of the trademark, of course, is

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Speaker 8: to prevent other people from doing the same thing.

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Speaker 10: So if you win the slogan trump too small or whatever.

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Speaker 11: Other people can't.

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Speaker 5: Use it right.

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Speaker 2: The case revolves around a section of the LANIMAC that

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Speaker 2: requires written consent to use the name of a living

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Speaker 2: person in a trademark. Joining me to help explain it

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Speaker 2: all is intellectual property. Litigator Terrence Ross, a partner at

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Speaker 2: Katon Mutchen Rosenmann Terry tell us about the procedural background

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Speaker 2: of this case.

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Speaker 12: Mister Elsert thought trademark registration from the United States Trademark Office,

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Speaker 12: and the trademark examiner handling the application denied it as

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Speaker 12: a violation of the landam Act, which is the trademark laws.

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Speaker 12: Mister Elster then appealed within the Trademark Office, which confirmed

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Speaker 12: the denial, and mister Elster took it to the United

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Speaker 12: States Court of Appeals for the Federal Circuit here in DC.

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Speaker 12: The Federal Circuit unanimously reversed the decision of the Trademark

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Speaker 12: Office on constitutional grounds, had found that, at least as

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Speaker 12: applied in this case, section ten point fifty two SEA

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Speaker 12: of the Landham Act was unconstitutional in light of the

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Speaker 12: First Amendment, and the Trademark Office decided that this was

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Speaker 12: important enough to appeal to the Supreme Court of United States.

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Speaker 2: Elster's lawyer told the court that the government's sole interest

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Speaker 2: in denying the trademark is protecting the feelings of famous people,

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Speaker 2: but that's not a legitimate reason to burden protected speech.

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Speaker 2: How did his arguments strike you of me as being weak?

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Speaker 2: In many ways?

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Speaker 12: I thought it was extraordinarily weak. My reaction was that

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Speaker 12: mister Alistair's counsel did not do a very good job.

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Speaker 12: It was pointed out in the press that this was

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Speaker 12: his very first argument to the Supreme Court, but quite frankly,

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Speaker 12: he came across as as a first a pallot argument

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Speaker 12: in a sword. And indeed his response to this question

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Speaker 12: was really a hail mary, because he was unable to

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Speaker 12: answer a previous question from Justice Kagan. Justice Kagan had

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Speaker 12: asked him for any case that he could think of

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Speaker 12: in which the conveying of a government benefit in a

439
00:23:39,720 --> 00:23:44,240
Speaker 12: position neutral viewpoint had been held to be unconstitutional. You know,

440
00:23:44,280 --> 00:23:45,280
Speaker 12: it was crickets in the room.

441
00:23:45,440 --> 00:23:48,800
Speaker 2: He had nothing, nothing except maybe a sinking feeling.

442
00:23:49,119 --> 00:23:51,560
Speaker 12: Yeah, when just so might work asked this, he went

443
00:23:51,720 --> 00:23:55,600
Speaker 12: for his press conference SoundBite, which was, Oh, we can't

444
00:23:55,600 --> 00:23:58,119
Speaker 12: be protecting the feelings of famous people. Oh, you know,

445
00:23:58,240 --> 00:24:01,480
Speaker 12: that's actually not what the stat is about. And it

446
00:24:01,600 --> 00:24:06,240
Speaker 12: helps sometimes to read the actual wording of a statute

447
00:24:06,320 --> 00:24:10,359
Speaker 12: here fifteen Usc. Ten fifty two to see essentially bars

448
00:24:10,400 --> 00:24:14,439
Speaker 12: registration of a trademark. That quote consists of, or comprises

449
00:24:14,600 --> 00:24:19,640
Speaker 12: a name, portrait, or signature identifying a particular living individual

450
00:24:19,720 --> 00:24:22,679
Speaker 12: except by his written consent. This applies to everybody, applies

451
00:24:22,720 --> 00:24:25,240
Speaker 12: to you, applies to me, applies to listeners. A living

452
00:24:25,359 --> 00:24:30,240
Speaker 12: person's name and lateness can't be used to promote another product,

453
00:24:30,280 --> 00:24:33,640
Speaker 12: and this is fundamental to trademark lok. Going back into

454
00:24:33,640 --> 00:24:36,119
Speaker 12: the common law is known as passing off. You know,

455
00:24:36,280 --> 00:24:39,080
Speaker 12: it's claiming that some famous person had blessed this product

456
00:24:39,160 --> 00:24:42,120
Speaker 12: or was associated with it. And so it was very

457
00:24:42,160 --> 00:24:45,879
Speaker 12: much sort of an absurd response to Justice so too,

458
00:24:45,960 --> 00:24:51,520
Speaker 12: my org and really reflected a core problem with their argument,

459
00:24:51,720 --> 00:24:56,160
Speaker 12: which Justice Thomas identified quickly. He asked just straight out

460
00:24:56,200 --> 00:25:00,440
Speaker 12: what's the burden on free speech here, and really didn't

461
00:25:00,520 --> 00:25:03,920
Speaker 12: get an answer because simple fact that, as you said,

462
00:25:04,359 --> 00:25:07,240
Speaker 12: people are already using this slogan everywhere. The fact that

463
00:25:07,280 --> 00:25:10,320
Speaker 12: you don't get registration does not mean you can't use

464
00:25:10,760 --> 00:25:13,920
Speaker 12: the slogan. And mister Elster himself has already been using it.

465
00:25:14,000 --> 00:25:16,520
Speaker 12: All it means is that he's been denied the benefit

466
00:25:16,600 --> 00:25:20,879
Speaker 12: of registration, which is the ability to exclude, in certain circumstances,

467
00:25:20,960 --> 00:25:22,640
Speaker 12: third parties from using his slogan.

468
00:25:22,960 --> 00:25:26,760
Speaker 2: And the Chief Justice John Roberts pointed out that giving

469
00:25:26,840 --> 00:25:30,760
Speaker 2: him a trademark would have the effect of restricting speech

470
00:25:31,200 --> 00:25:34,120
Speaker 2: by other people who want to use that slogan.

471
00:25:34,240 --> 00:25:36,919
Speaker 12: And I think it's a fair point to make that.

472
00:25:37,040 --> 00:25:42,439
Speaker 12: In effect, by granting the trademark registration here, because of

473
00:25:42,560 --> 00:25:47,320
Speaker 12: the unique category in which it fought, it really does

474
00:25:47,680 --> 00:25:52,560
Speaker 12: limit other people's free speech because this slogan Trump too

475
00:25:52,560 --> 00:25:56,640
Speaker 12: Small is apparently commonly used by folks who are opposing

476
00:25:56,720 --> 00:25:58,480
Speaker 12: former President Trump's candidacy.

477
00:25:58,880 --> 00:25:59,600
Speaker 10: So, Jerry, we.

478
00:25:59,520 --> 00:26:02,400
Speaker 2: Always say you can't tell from their oral arguments how

479
00:26:02,480 --> 00:26:04,879
Speaker 2: the Court is going to rule, but it seemed to

480
00:26:04,920 --> 00:26:10,679
Speaker 2: me that justices across the ideological spectrum we're against giving

481
00:26:10,720 --> 00:26:12,720
Speaker 2: this phrase trademark protection.

482
00:26:13,160 --> 00:26:16,159
Speaker 12: I agree with that. My count was that there was

483
00:26:16,200 --> 00:26:20,800
Speaker 12: a clear majority skeptical of granting registration, and I agree

484
00:26:20,800 --> 00:26:23,640
Speaker 12: with your comment. It's hard to always read or arguments,

485
00:26:23,880 --> 00:26:28,920
Speaker 12: but in this case, particularly, the tonalities of the justice's

486
00:26:29,040 --> 00:26:35,760
Speaker 12: questions really reflect it pretty hardened positions antagonistic to any

487
00:26:35,800 --> 00:26:39,639
Speaker 12: type of register this my count had Justice Thomas, Justice

488
00:26:39,680 --> 00:26:45,480
Speaker 12: Sodomi or Justice Kagan, and Chief Justice roberts As all skeptical,

489
00:26:45,680 --> 00:26:48,840
Speaker 12: if not outright saying they were opposed to registration here.

490
00:26:49,000 --> 00:26:53,399
Speaker 12: In addition, I had Justice Gorsich and Alito disagreeing with

491
00:26:53,640 --> 00:26:58,440
Speaker 12: mister Elster's council on different grounds. They historically are opposed

492
00:26:58,440 --> 00:27:02,240
Speaker 12: to this notion that trademark confers a government benefit. So

493
00:27:02,440 --> 00:27:06,200
Speaker 12: by my account, that's six justices who seem pretty firmly

494
00:27:06,440 --> 00:27:10,600
Speaker 12: opposed to registration of this trademark. And I really couldn't

495
00:27:10,720 --> 00:27:13,119
Speaker 12: count that maybe the other justices as being in favor.

496
00:27:13,280 --> 00:27:15,760
Speaker 12: They just seem to not express an opinion one way

497
00:27:15,840 --> 00:27:18,920
Speaker 12: or the other. So sick zippy is a pretty good

498
00:27:18,920 --> 00:27:20,320
Speaker 12: starting point for the government here.

499
00:27:20,800 --> 00:27:23,800
Speaker 2: So that leads me to the question, how did a

500
00:27:24,000 --> 00:27:28,640
Speaker 2: unanimous panel of the Federal Circuit allow this trademark?

501
00:27:28,960 --> 00:27:32,720
Speaker 12: Jude, We could spend a lot of time on decisions

502
00:27:32,760 --> 00:27:35,000
Speaker 12: by the Federal Circuit where I practice a lot, by

503
00:27:35,040 --> 00:27:38,240
Speaker 12: the way, and the level of disrespect according to those

504
00:27:38,240 --> 00:27:40,640
Speaker 12: decisions by the Spring Court in the United States, true,

505
00:27:40,680 --> 00:27:43,680
Speaker 12: I mean the mere fact that this decision came out

506
00:27:43,680 --> 00:27:47,359
Speaker 12: of the Federal Circuit probably starts off with, you know,

507
00:27:47,440 --> 00:27:50,480
Speaker 12: points in the government's favor here, because the Supreme Court

508
00:27:50,640 --> 00:27:55,000
Speaker 12: just doesn't respect decisions, most significant decisions coming out of

509
00:27:55,080 --> 00:27:59,280
Speaker 12: Federal Circuit. The history of reversal is just phenomenal. And

510
00:27:59,320 --> 00:28:01,720
Speaker 12: so those of us who priss the Federal Circuit regular

511
00:28:01,760 --> 00:28:05,200
Speaker 12: basis say, Okay, you get granted search the ri out

512
00:28:05,240 --> 00:28:07,720
Speaker 12: of the Federal Circuit, you got a good chance of winning.

513
00:28:08,119 --> 00:28:11,040
Speaker 12: This is another great example. But the Federal Circuit was

514
00:28:11,160 --> 00:28:16,200
Speaker 12: three zero in favor of mister Elster, and their views

515
00:28:16,280 --> 00:28:21,200
Speaker 12: were in large part based on an attempt to accord

516
00:28:21,359 --> 00:28:24,639
Speaker 12: their decision with what they perceived the Supreme Court wanted

517
00:28:24,960 --> 00:28:28,720
Speaker 12: based on prior cases involving the First Amendment trademark. And

518
00:28:28,800 --> 00:28:30,960
Speaker 12: it looks like once again they just plane got it wrong.

519
00:28:31,440 --> 00:28:34,399
Speaker 2: And in two of those prior cases, the court struck

520
00:28:34,480 --> 00:28:38,400
Speaker 2: down parts of the trademark law in favor of free speech,

521
00:28:39,000 --> 00:28:42,480
Speaker 2: one trademark involving an Asian rock band called the Slants

522
00:28:42,800 --> 00:28:47,200
Speaker 2: and another involving a clothing brand called fuct.

523
00:28:47,480 --> 00:28:49,600
Speaker 12: So if you look at those two cases, you would

524
00:28:49,600 --> 00:28:52,400
Speaker 12: have come away, as the Federal Circuit did, thinking that

525
00:28:52,440 --> 00:28:57,680
Speaker 12: the Supreme Court dislikes limits on trademark relating to some

526
00:28:57,880 --> 00:29:01,600
Speaker 12: form of speech, even if that's speed, which is really distasteful,

527
00:29:01,720 --> 00:29:04,520
Speaker 12: and in both those cases it was very distasteful. And

528
00:29:04,600 --> 00:29:09,320
Speaker 12: yet the Federal Circuit clearly misread what had happened before

529
00:29:09,440 --> 00:29:11,160
Speaker 12: and they just plane got it wrong. Here.

530
00:29:11,280 --> 00:29:13,880
Speaker 2: We'll see just how wrong when the decision comes out.

531
00:29:14,120 --> 00:29:17,120
Speaker 2: Thanks so much, Terry. That's Terence Ross of Catain Euchen

532
00:29:17,200 --> 00:29:20,840
Speaker 2: Rosenmann coming up. Jet Blue goes to trial with the government.

533
00:29:21,000 --> 00:29:21,840
Speaker 2: This is Bloomberg.

534
00:29:22,000 --> 00:29:25,080
Speaker 1: If not blocked, the merger of Jet Blue and Spirit

535
00:29:25,520 --> 00:29:29,760
Speaker 1: would result in higher fares and fewer choices for tens

536
00:29:29,800 --> 00:29:34,200
Speaker 1: of millions of travelers across the country. The Justice Department

537
00:29:34,280 --> 00:29:37,160
Speaker 1: is suing to prevent that from happening.

538
00:29:37,560 --> 00:29:41,280
Speaker 2: Attorney General Merrick Garland announced in March that the government

539
00:29:41,400 --> 00:29:44,640
Speaker 2: was suing to stop Jet Blue's three point eight billion

540
00:29:44,680 --> 00:29:49,200
Speaker 2: dollar takeover of Spirit Airlines, and on Tuesday, the trial

541
00:29:49,280 --> 00:29:52,440
Speaker 2: began before a federal judge in Boston. It will be

542
00:29:52,480 --> 00:29:56,240
Speaker 2: a test of the crackdown on airline consolidation at a

543
00:29:56,280 --> 00:30:00,280
Speaker 2: critical time for the industry, when domestic low cost care

544
00:30:00,520 --> 00:30:05,000
Speaker 2: have cut services as fair slide and travel slows joining

545
00:30:05,040 --> 00:30:09,560
Speaker 2: me from Boston is Bloomberg Intelligence senior litigation analyst Jenniferree,

546
00:30:09,640 --> 00:30:13,440
Speaker 2: who's covering the trial. Jen this isn't Jet Blue's first

547
00:30:13,560 --> 00:30:17,280
Speaker 2: run in with antitrust regulators. Why is the government trying

548
00:30:17,280 --> 00:30:18,440
Speaker 2: to stop this merger?

549
00:30:18,760 --> 00:30:22,040
Speaker 13: Well, you know, the government really sees this as reducing

550
00:30:22,200 --> 00:30:24,920
Speaker 13: output and increasing prices, or at least a deal that

551
00:30:24,960 --> 00:30:27,200
Speaker 13: would have the potential to do that in the industry

552
00:30:27,320 --> 00:30:31,240
Speaker 13: because Spirit is what's considered an ultra low cost airline

553
00:30:31,560 --> 00:30:34,080
Speaker 13: that offers a la carte options, and so if a

554
00:30:34,120 --> 00:30:36,800
Speaker 13: consumer wants to fly and really get the very lowest

555
00:30:36,800 --> 00:30:39,040
Speaker 13: price they can, they have the option of doing that

556
00:30:39,160 --> 00:30:41,600
Speaker 13: on Spirit and not buying the extras, the food or

557
00:30:41,640 --> 00:30:44,440
Speaker 13: the infight entertainment. Whereas Jet Blue has a different kind

558
00:30:44,440 --> 00:30:47,360
Speaker 13: of a model, and so jet Blue, if it takes

559
00:30:47,360 --> 00:30:51,440
Speaker 13: over Spirit, intends to change everything over to its own model.

560
00:30:51,680 --> 00:30:54,920
Speaker 13: All the airplanes would be retrofitted, so there'd be fewer seats,

561
00:30:55,080 --> 00:30:57,600
Speaker 13: so that means reduced output, and it would likely mean

562
00:30:57,760 --> 00:31:01,600
Speaker 13: increase fairs because Jet Blue's average tend to be over Spirits.

563
00:31:01,720 --> 00:31:05,479
Speaker 13: So overall, the Department of Justice is concerned about the

564
00:31:05,520 --> 00:31:08,560
Speaker 13: removal of this a la carte ultra low cost option.

565
00:31:08,960 --> 00:31:12,520
Speaker 2: Jet Blues lawyers said the companies account for just eight

566
00:31:12,560 --> 00:31:16,640
Speaker 2: percent of industry revenue. Even after the merger, Jet Blues

567
00:31:16,720 --> 00:31:20,720
Speaker 2: market share would rise to just seven percent from five percent.

568
00:31:21,000 --> 00:31:23,320
Speaker 2: I mean, is the government going after them because of

569
00:31:23,360 --> 00:31:27,960
Speaker 2: the decades of lax enforcement that have left four airlines

570
00:31:28,000 --> 00:31:29,520
Speaker 2: with eighty percent of the market.

571
00:31:29,760 --> 00:31:32,360
Speaker 13: Look, that's a good argument by Jet Blue, but I

572
00:31:32,360 --> 00:31:34,720
Speaker 13: think it's sort of a red herring because at the

573
00:31:34,800 --> 00:31:38,360
Speaker 13: end of the day, that national competition, that combined national

574
00:31:38,400 --> 00:31:42,200
Speaker 13: share isn't really relevant to the anti trust inquiry because

575
00:31:42,200 --> 00:31:46,000
Speaker 13: the anti trust inquiry looks at options for consumers, and

576
00:31:46,120 --> 00:31:49,080
Speaker 13: consumers that are trying to fly from let's say Boston

577
00:31:49,280 --> 00:31:52,560
Speaker 13: to Santa Fe don't care about the fact that combine

578
00:31:52,560 --> 00:31:55,280
Speaker 13: they're small nationally. If when they're shopping for their flights

579
00:31:55,520 --> 00:31:58,240
Speaker 13: they have fewer options and now the prices have gone up,

580
00:31:58,520 --> 00:32:03,200
Speaker 13: those consumers care about. So really, with airline deals, they

581
00:32:03,200 --> 00:32:05,280
Speaker 13: have to be looked at from city to city and

582
00:32:05,440 --> 00:32:08,400
Speaker 13: which airlines are competing on each of those routes. So

583
00:32:08,440 --> 00:32:10,440
Speaker 13: it's kind of like a lot of mini mergers.

584
00:32:10,680 --> 00:32:13,760
Speaker 2: Well what do you think Jet Blue's best argument was

585
00:32:14,200 --> 00:32:15,040
Speaker 2: in the openings?

586
00:32:15,320 --> 00:32:17,440
Speaker 13: Well, I think that their best argument is, and they've

587
00:32:17,440 --> 00:32:19,840
Speaker 13: done a good job with it that Look, at the

588
00:32:19,920 --> 00:32:22,719
Speaker 13: end of the day, we are going to increase competition

589
00:32:22,880 --> 00:32:25,920
Speaker 13: because we have a really tough time fighting against the

590
00:32:25,960 --> 00:32:29,800
Speaker 13: big legacy carriers Delta America and United and you can

591
00:32:29,840 --> 00:32:33,040
Speaker 13: throw Southwest in there too, that actually combined account for

592
00:32:33,080 --> 00:32:35,440
Speaker 13: about eighty percent of air travel and cost a lot

593
00:32:35,440 --> 00:32:37,959
Speaker 13: of money. We have lower fares than they do. And

594
00:32:38,000 --> 00:32:40,680
Speaker 13: by increasing Jet Blue, by making Jet Blue a bigger,

595
00:32:40,720 --> 00:32:43,880
Speaker 13: more viable competitor, we can exert more competitive pressure on

596
00:32:43,920 --> 00:32:47,040
Speaker 13: those legacy airlines and it pulls down their prices. It's

597
00:32:47,040 --> 00:32:49,680
Speaker 13: something that the Department of Justice has acknowledged called the

598
00:32:49,760 --> 00:32:52,400
Speaker 13: Jet Blue effect, and I think that the lawyers have

599
00:32:52,520 --> 00:32:55,600
Speaker 13: so far we're just at the beginning, effectively laid that

600
00:32:55,680 --> 00:32:57,360
Speaker 13: out and made that argument. And I think it's a

601
00:32:57,400 --> 00:33:00,520
Speaker 13: good argument because what it does is forces the judge

602
00:33:00,560 --> 00:33:03,000
Speaker 13: to kind of say, which is the better side, you know,

603
00:33:03,040 --> 00:33:05,360
Speaker 13: which is the bigger harm or the lesser harm? Is

604
00:33:05,400 --> 00:33:08,600
Speaker 13: it better to remove this ultra low cost option for

605
00:33:08,680 --> 00:33:12,320
Speaker 13: some real bargain conscious consumers, but end up, you know,

606
00:33:12,440 --> 00:33:15,680
Speaker 13: exerting more of a competitive influence on the legacy carriers.

607
00:33:15,720 --> 00:33:16,840
Speaker 13: Which side is stronger.

608
00:33:17,320 --> 00:33:20,400
Speaker 2: So if an airline could have a persecution complex, it

609
00:33:20,480 --> 00:33:24,160
Speaker 2: seems like Jet Blue would have one. It's the second

610
00:33:24,160 --> 00:33:28,360
Speaker 2: time that antitrust enforcers have stepped into a Jet Blue deal.

611
00:33:28,840 --> 00:33:29,040
Speaker 12: You know.

612
00:33:29,160 --> 00:33:32,200
Speaker 13: I think that it's the types of deals essentially that

613
00:33:32,320 --> 00:33:35,360
Speaker 13: Jet Blue has entered into. So, you know, if you

614
00:33:35,440 --> 00:33:38,280
Speaker 13: looked at the deal with American, I think that the

615
00:33:38,320 --> 00:33:41,040
Speaker 13: partnership went a little bit too far. They were also

616
00:33:41,200 --> 00:33:45,000
Speaker 13: collaborating on capacity, and they were collaborating on revenue rather

617
00:33:45,080 --> 00:33:47,920
Speaker 13: than just code sharing, and I think that that was

618
00:33:48,040 --> 00:33:48,560
Speaker 13: kind of what.

619
00:33:48,600 --> 00:33:51,880
Speaker 2: Doomed that, And the judge will decide whether this merger

620
00:33:51,960 --> 00:33:55,040
Speaker 2: is doomed as well. Thanks so much, Jen. That's Bloomberg

621
00:33:55,120 --> 00:33:58,920
Speaker 2: Intelligence Senior Litigation analyst Jenniferree. And that's it for this

622
00:33:59,080 --> 00:34:02,000
Speaker 2: edition of The Bloomberger. Remember you can always get the

623
00:34:02,080 --> 00:34:05,320
Speaker 2: latest legal news on our Bloomberg Law podcasts. You can

624
00:34:05,360 --> 00:34:09,520
Speaker 2: find them on Apple Podcasts, Spotify, and at www dot

625
00:34:09,600 --> 00:34:13,759
Speaker 2: Bloomberg dot com, Slash podcast Slash Law, And remember to

626
00:34:13,800 --> 00:34:16,879
Speaker 2: tune into The Bloomberg Law Show every weeknight at ten

627
00:34:16,920 --> 00:34:20,680
Speaker 2: pm Wall Street Time. I'm June Grosso, and you're listening

628
00:34:20,800 --> 00:34:21,440
Speaker 2: to Bloomberg