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

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Speaker 1: With dueling opinions from two liberal justices, the Supreme Court

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Speaker 1: ruled that Andy Warhol violated the copyright of photographer Lynn

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Speaker 1: Goldsmith by using her work to create sixteen images of Prince.

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Speaker 1: In a seven to two vote. The Justice has rejected

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Speaker 1: the arguments that the late artists transformed the photograph of Prince,

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Speaker 1: making it fair use under federal copyright law. In the

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Speaker 1: majority opinion, Justice Sonya Sotomayor pointed to the commercial use

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Speaker 1: as a key factor in determining that Warhol hadn't engaged

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Speaker 1: in fair use, something that echoed her questions in the

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Speaker 1: oral arguments.

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Speaker 2: That's up to what was made, What use was made

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Speaker 2: of Orange Prince. It was a highly commercial use. Goldsmith's

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Speaker 2: also licensed her photographs to magaz means just as warholtz

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Speaker 2: a state did so, how is it that your two

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Speaker 2: thousand and six license and Goldsmith's photographs do not share

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Speaker 2: the same commercial purpose.

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Speaker 1: In dissent, Justice Elena Kagan, joined by Chief Justice John Roberts, said, quote,

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Speaker 1: if Warhol doesn't get credit for transformative copying, who will?

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Speaker 1: Something the Chief had expressed during the arguments.

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Speaker 3: It's not just that Warhol has a different style, is it.

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Speaker 1: Unlike Goldsmith's photograph, warl sends a message about the depersonalization

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Speaker 1: of modern culture and celebrity status. Joining me is intellectual

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Speaker 1: property litigator Terrence Ross, a partner at Caton Much and Rosenman.

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Speaker 1: We've talked about this case many times, and I have

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Speaker 1: to say that I was surprised by the verdict. Were

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Speaker 1: you surprised?

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Speaker 4: I was not surprised by the outcome. I was surprised

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Speaker 4: by the seven to two vote. During oral argument, you

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Speaker 4: knew exactly how the Chief Justice was going to vote.

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Speaker 4: He on a couple occasions made statements in the form

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Speaker 4: of the question, but they weren't questions. They were simply

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Speaker 4: expressing his views. How could you possibly not think this

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Speaker 4: is a fair use? And I'm paraphrasing. And after each

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Speaker 4: of those instances you could hear crickets. The rest of

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Speaker 4: the court was dead sign it. Several of the justices

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Speaker 4: looked at their papers and shuffled their papers like they

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Speaker 4: were embarrassed that their old uncle had said something. And

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Speaker 4: one of the justices pointedly leaned over looked down the

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Speaker 4: panel with that look on his faces, what is it

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Speaker 4: that you're smoking? So you sort of got a sense

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Speaker 4: that you knew exactly what the Chief Justice was going

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Speaker 4: to do, and you also sort of knew that his

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Speaker 4: view was not going to prevail. He had a very

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Speaker 4: very deferential view, which is expressed in part Justice Kagan's dissent,

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Speaker 4: essentially that if an artist says I'm doing something different,

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Speaker 4: then fair use applies, which is of course nonsense. So

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Speaker 4: I wasn't surprised by the outcome, but I was surprised

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Speaker 4: that the majority cobbled together seven votes, which makes this

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Speaker 4: opinion all the more significant because it was not a

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Speaker 4: close call.

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Speaker 1: So Terry for the majority, was the key factor in

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Speaker 1: determining fair use, the purpose of the works, the commercial

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Speaker 1: use of Warhol's image, and the fact that both were

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Speaker 1: used as magazine illustrations.

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Speaker 4: That is certainly what the majority decision says. If you

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Speaker 4: read a little bit more closely, there's this very interesting

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Speaker 4: discussion of derivative works. One of the rights that copyright

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Speaker 4: gives an artist is the exclusive right to prepare derivative

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Speaker 4: works based on the original work, And what Justice Somayor

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Speaker 4: said was that the way that the law transformative use

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Speaker 4: has evolved, it has virtually swallowed up the concept and

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Speaker 4: the exclusive right to prepare derivative works. And indeed, at

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Speaker 4: one point she says, we have to protect this exclusive

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Speaker 4: right to prepare derivative works and prevent this transformative use

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Speaker 4: test from swallowing this exclusive right to derivative works. So

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Speaker 4: I think there was an element of concern about that,

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Speaker 4: and that clearly comes through in several places. But the

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Speaker 4: way it's expressed in the most part in the decision

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Speaker 4: is through this notion of the textual words. Is there

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Speaker 4: a different purpose or character to the secondary use?

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Speaker 1: So what's the test?

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Speaker 4: Now, that's a great question. So keep in mind that

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Speaker 4: we're talking about batcheatory language, the fair use Statute, which

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Speaker 4: has a four factor test. The only part of that

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Speaker 4: test that is at issue in this case is the

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Speaker 4: first factor. Although the courts toss off these words that

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Speaker 4: all factors have to be considered, no one factor is

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Speaker 4: more important than the other, the reality is that the

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Speaker 4: first factor is always the most important factor. The first

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Speaker 4: factor says, you know, in considering whether there's a fair use,

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Speaker 4: you have to consider, and I'm quoting here the purpose

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Speaker 4: and character of the use, including whether such use is

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Speaker 4: of a commercial nature or is for nonprofit educational purposes.

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Speaker 4: And so the battleground has been on this purpose and

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Speaker 4: character of the use. And I see this case really

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Speaker 4: as not a radical shift, but as a clarification of

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Speaker 4: what that purpose and character of the secondary use means.

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Speaker 4: And just so to major starts a trope that will

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Speaker 4: continue throughout the decision. She talks about the matter of degree.

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Speaker 4: She says, specifically, the larger the difference, you know, the

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Speaker 4: greater the degree, the more likely the first factor weighs

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Speaker 4: in fair use. So the greater the change in purpose

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Speaker 4: or character of use, the more likely it is going

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Speaker 4: to be a fair use, and the smaller the difference

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Speaker 4: in purpose or character, the less likely. And so what

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Speaker 4: she has done, in my view, is set up a

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Speaker 4: balancing test of sorts. First, you look at what is

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Speaker 4: the difference in purpose, what is the difference in use?

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Speaker 4: You consider how much of a difference that is from

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Speaker 4: the original work, and then you have to do another thing.

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Speaker 4: She says, if it's a commercial use, then you have

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Speaker 4: to have even more significant of a difference than if

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Speaker 4: it's a nonprofit educational used. To our criticism, something the

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Speaker 4: other you don't have to have as great a difference

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Speaker 4: in purpose or character of the secondary use. And so

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Speaker 4: I think that's what the test on the first factor is.

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Speaker 4: And again she says this, I'm not pausing out this

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Speaker 4: transformative use concept, but and she says transformativeness is a

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Speaker 4: matter of degree. She again keeps coming back to this

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Speaker 4: notion that it's not all or nothing. A district court

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Speaker 4: judge has to look at the degree to which the

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Speaker 4: purported difference and whether that is significant to overcome what

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Speaker 4: is a straightforward commercial usage. Was what was going on here.

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Speaker 1: Justices Sotomayor and Kagan are both liberals, usually allies, but

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Speaker 1: there was an unusually sharp tone in their opinions here.

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Speaker 1: Justice Elena Kagan, joined by the Chief Justice, wrote the dissent.

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Speaker 1: Justice Kagan wrote, the majority does not see it, and

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Speaker 1: I mean that literally, And she gave this example. If

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Speaker 1: a magazine editor publishing an article about Prince and an

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Speaker 1: employee asks whether you want to use the Goldsmith photo

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Speaker 1: or the Warhol portrait, and she says, quote, would you

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Speaker 1: say that you don't really care that the employee is

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Speaker 1: free to flip a coin? In the majority's view, you

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Speaker 1: apparently would. What do you think of her analysis?

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Speaker 4: Oh, I've always thought, as a practicing lawyer advising clients

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Speaker 4: with serious and significant mondary issues here that it's a

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Speaker 4: challenging role for us to decide what's fair use and

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Speaker 4: what is not. It's just the nature of the concept

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Speaker 4: has to be somewhat flexible, somewhat plastic to allow the

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Speaker 4: cover odd situations that come up. And so yes, there

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Speaker 4: are a handful of black letter cases where you can

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Speaker 4: say one way or the other, you know that this

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Speaker 4: is fair use is not fair use. But the vast

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Speaker 4: majority fall in the middle ground. And it's a very

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Speaker 4: nuanced analysis. So that's always been true. And again you

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Speaker 4: have here Justice Kagan never practiced law in any real sense.

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Speaker 4: She wes Solicitor General and she's only peering court as

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Speaker 4: a practier six times, all of them in the Supring Court.

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Speaker 4: I might add, for which you want, but prior to

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Speaker 4: becoming a solicity to general, it never been at court room.

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Speaker 4: It was an academic and I think that is something

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Speaker 4: that's missing often from the court, this real world practice component.

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Speaker 4: And this is hard. Ears you said it's unfair to

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Speaker 4: say there's a flip of the coin. I mean, it's

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Speaker 4: just not right. More to the point, I think her

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Speaker 4: decision in many ways very intemperate and unfortunately draws them

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Speaker 4: and in temperate responds backs from the majority decision. I mean,

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Speaker 4: sort of unheard of, And I think you make a

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Speaker 4: very good point, Jennie Bryant. They're usually allies and from

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Speaker 4: the liberal wing of the court. You and I have

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Speaker 4: discussed this in past copyright cases. Copyright doesn't seem to

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Speaker 4: break down on some sort of partisan division lawns. Here

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Speaker 4: you have the Chief Justice who's a moderate Republican appointee,

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Speaker 4: and Justice Kagan perceived to be a liberal vote the

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Speaker 4: other and just so to major writing majority supported by

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Speaker 4: all of the other conservatives on the Court, including arguably

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Speaker 4: the most liberal Judge Jackson. I mean, for years, copyright

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Speaker 4: case or are dominated by Justice Ginsberg and Justice Bryer,

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Speaker 4: who are opposite ends of the spectrum on copyright law.

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Speaker 4: Justice Briar believing in a very robust fair use and

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Speaker 4: Justice Ginsburg believing in very robust protection for copyright. Yeah,

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Speaker 4: arguably they were kindred cousins on most other cases. So

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Speaker 4: copyright really you can't analyze in sort of a liberal

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Speaker 4: versus conservative way. But what is interesting here is you

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Speaker 4: have two of the justices who arguably are a slightly

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Speaker 4: different socioeconomic situation throughout their lives versus all the others

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Speaker 4: who are different, and some of the tone of Justice

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Speaker 4: Kaigan reflects that I think this knee jerk reaction that

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Speaker 4: Chief Justice had, and then Justice Kagan reflects that we've

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Speaker 4: got to protect artists, we've got to protect creativity without

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Speaker 4: actually thinking about what's going on in in this case.

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Speaker 4: You know, you saw this with Justice Ginsberg often and

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Speaker 4: Justice Bryer, who were clearly too wealthiest of the justices

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Speaker 4: went to the opera or patrons of the art, And

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Speaker 4: here you have a distinct group of justices who did

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Speaker 4: not grow up that way and did not live their

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Speaker 4: lives that way and taking a different approach, which is,

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Speaker 4: you know, you've got a photographer here trying to earn

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Speaker 4: a living, and you're cheating her out of that. And

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Speaker 4: there's even a line where she says, you could have

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Speaker 4: taken a few dollars and sent it to Lynn Goldsmith's

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Speaker 4: Planet photographer out of all the money you're making off

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Speaker 4: of publishing these Warhol prints. And I thought that one

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Speaker 4: was very revealing of sort of behind the scenes the

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Speaker 4: way they were thinking of it. And I think that's

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Speaker 4: really important subrosa narrative that's going on here.

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Speaker 1: Well, do you agree with Justice Kagan and the Chief

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Speaker 1: that this decision will stifle creativity of every sort?

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Speaker 4: Now, absolutely not, it won't. I think this is a

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Speaker 4: decision that's well ground it in fair use principles, exactly

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Speaker 4: the opposite of what Justice Kagan says. I sort of

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Speaker 4: expected it to come out this way. I didn't think

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Speaker 4: there would be as strong as support for it. But

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Speaker 4: we have seen this fair use first factor analysis run

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Speaker 4: amock the Carew case in the Second Circuit where a

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Speaker 4: photographer took some very creative photographs of Rastafarians in Jamaica

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Speaker 4: and so called artists done up putting air quotes around.

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Speaker 4: Artists came along, doodled on them, You drew sunglasses on

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Speaker 4: one hand and drew guitar and the other and sold them.

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Speaker 4: And the Second Circuits that those doodles were transformative and

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Speaker 4: that was an abomination of a fairy And that case

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Speaker 4: is dead. Now you want to know what the Warhol

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Speaker 4: case does. That case is dead. That whole type of

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Speaker 4: approach is dead. What we've done is get back to

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Speaker 4: the textual analysis of what the words say which is

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Speaker 4: very important and most important to what we haven't talked

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Speaker 4: about yet is this reasserted objective test with respect to

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Speaker 4: purpose of use, which just rings so clearly here. It

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Speaker 4: is the part that I think district quot judges have

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Speaker 4: to pay most attention to. What Justice Soda Mayor says

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Speaker 4: is quote here, a court should not attempt to evaluate

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Speaker 4: the artistic significance of a particular work, which is exactly

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Speaker 4: what Justice Kane does. She goes on and on and

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Speaker 4: on about how great Andy Warhol is, and I would

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Speaker 4: have loved to see the first draft majority opinion because

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Speaker 4: Justice Soda Myyer, I'm convinced in a subseqan draft goes

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Speaker 4: in and rewrites the beginning of her decision to talk

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Speaker 4: about how great Lynn Goldsmith is photographer, and from a

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Speaker 4: feminist approach, there were no women's photographers doing rock and

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Speaker 4: roll back in the sixties and seventies. She created a

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Speaker 4: whole new genre of rock and roll photography and deserves

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Speaker 4: credit for that. And it was an interesting, again dueling

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Speaker 4: approach to this case. But to get back to the

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Speaker 4: subjective test, Justice Soda Myer goes on to say, nor

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Speaker 4: does the subjective intent of the user the artist determine

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Speaker 4: the purpose of the use. And this is the critical

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Speaker 4: sentence that will get quoted over and over again in

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Speaker 4: district of poor opinions whether the purpose and character of

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Speaker 4: a use ways in favor of fair uses, an objective

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Speaker 4: inquiry into what use was made, and what she's saying

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Speaker 4: there is I don't care what the artist says. I

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Speaker 4: don't care that the artist says that it is transformed.

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Speaker 4: I don't care what the judge thinks. Judges shouldn't be

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Speaker 4: art critics in the first place. That goes back to

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Speaker 4: the nineteen twenties that doctorate and what we had seen

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Speaker 4: in the Crew case was reflective of This is artists

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Speaker 4: coming in after the fact and concocting some story as

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Speaker 4: to how they were trying to do something different and

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Speaker 4: therefore was a transformative use. And what just as Sodoma

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Speaker 4: are in the overwhelming majority say, here's no, that's not

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Speaker 4: the way. Let's look at this from a reasonable person

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Speaker 4: perspective and what is the objective purpose here? And in

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Speaker 4: this case they said, the objective purpose of Lynn Goldsmith's

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Speaker 4: photograph was to illustrate a magazine article about Prince's life.

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Speaker 4: What was the objective purpose of the Warhol print. It

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Speaker 4: was to illustrate a magazine article about Prince's life. Therefore

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Speaker 4: the purpose was the same, and therefore you lose on

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Speaker 4: factor one. And if there's anything that makes fair use

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Speaker 4: analysis simpler here in this decision, that's it, because now

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Speaker 4: we know exactly how to perform the analysis of what

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Speaker 4: is the secondary purpose? What is the secondary use? What's

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Speaker 4: the purpose of the secondary use? We now know how

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Speaker 4: to do that. And once we have that, the test

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Speaker 4: really kicks in just the same as it always has

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Speaker 4: in past cases. Is that the same purpose and character

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Speaker 4: of use as the original And if so, you lose

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Speaker 4: no fair use. So I think that's really really important here.

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Speaker 1: So in a concurring opinion by Justice Neil Gorsich joined

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Speaker 1: by Justice Katanji Brown Jackson, again an unusual duo left

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Speaker 1: open the possibility that the princes images could claim fair

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Speaker 1: use protection in other contexts.

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Speaker 4: It's absolutely true. I mean, what happened here, end of

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Speaker 4: the day. You know, the client always does where do

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Speaker 4: I stand? And the answer for the Warhol Foundation is

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Speaker 4: you lost this case on appeal. They waived any challenge

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Speaker 4: to factor two, three and four, which they lost below

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Speaker 4: and had bet the farm on factor one, they've now

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Speaker 4: lost factor one. And oh, by the way, they early

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Speaker 4: on conceded substantial similarity. So in the majority opinion says,

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Speaker 4: we affirmed the decision by the second Circuit, the Court

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Speaker 4: of Appeals. Here the way the second Circuit it approached

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Speaker 4: this was we're gring a grands summary judgment to Lynn Goldsmith.

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Speaker 4: The plane of it still has to go back to

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Speaker 4: the district court for determination of damages and attorney's fees

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Speaker 4: and the like, but the Andy Warhol Foundation has now lost.

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Speaker 4: What the concurring decision by Justice Gorswitz says, is this

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Speaker 4: all the hyperbole in the descent by Justice Kagan can

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Speaker 4: be ignored. At one point in her descent, Justice Kagan,

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Speaker 4: and she puts in illustrations of various artists through history

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Speaker 4: painting reclining nude women. They're all in the public domain,

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Speaker 4: so it's not a copyright issue. And she says, so

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Speaker 4: going forward, is no one allowed to paint a woman

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Speaker 4: in a reclining position because of this decision? And that's

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Speaker 4: pure hyperbole. In a justice corsition, Justice Jackson call her

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Speaker 4: out and they say a quote worried about the fate

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Speaker 4: of artists seeking to portray reclining nudes or papal authorities

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Speaker 4: or authors hoping to build on classic literary themes. Worry not,

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Speaker 4: the case does not call us on us to strike

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Speaker 4: a balance between rewarding creators and enabling others to build

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Speaker 4: on their work. And again, this is just a reiteration

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Speaker 4: that the decision is in line with pre existing fair

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Speaker 4: use analysis. It simply clarifies how we make the determination

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Speaker 4: as to what the purpose and character of the secondary

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Speaker 4: use is and make it very hard for an artist

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Speaker 4: whoever is creating the secondary work to make up some

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Speaker 4: theory that they claim that is it transformed its use. Instead,

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Speaker 4: we look at taking an objective approach. And therefore that's

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Speaker 4: why I think this is not a radical change, but

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Speaker 4: it is a very significant clarification, and I would go

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Speaker 4: so far as say this is arguably the most important

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Speaker 4: copyright case of the twenty first century. Keeping mind that

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Speaker 4: Supreme Court has not looked at fair use now since

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Speaker 4: nineteen ninety four, almost going on thirty years.

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Speaker 1: What happens next in this case, So.

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Speaker 4: We'll go back to the district court and the district

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Speaker 4: court will have to determine how much Lynn Goldsmith should

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Speaker 4: get by way of the infringement and whether or not

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Speaker 4: she should get attorney's fees, which could be very significant.

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Speaker 4: My guess is that because this is a really important

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Speaker 4: case and there was a lot of confusion as to

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Speaker 4: what the law is, the district court was saying, now

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Speaker 4: you don't get attorney's fees. This wasn't that sort of case.

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Speaker 4: There were real doubts. Now we've got those doubts clarified,

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Speaker 4: and so that the Andy Warhol Foundation actually did all

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Speaker 4: of us a favor by forcing us to litigate this through.

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Speaker 4: And I'll also say that based on the evidence I

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Speaker 4: saw in the record on damages, I don't think she's

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Speaker 4: going to get a lot of money either. I mean

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Speaker 4: in the neighborhood between one and ten thousand dollars. Really, yeah,

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Speaker 4: because that's what these licenses were going for. There's a

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Speaker 4: lot of evidence of record here. I mean, that's one

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Speaker 4: of the points Justice Soda Mayor was making is why

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Speaker 4: didn't you just toss her a few bucks to get

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Speaker 4: the rights to this when you're making all this money

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Speaker 4: on it. It's a fair point. And you know what,

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Speaker 4: you talk about creativity. Justice Kagan talks about creativity and

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Speaker 4: the damage to creativity The real damage has been this

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Speaker 4: overbroad interpretation of fair use, which is preventing photographers and

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Speaker 4: other original artists from getting their fair due and having

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Speaker 4: that money siphoned off by secondary uses. This being a

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Speaker 4: classic example of this. And I think this was necessary,

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Speaker 4: and I think remedies the flaw of the types of

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Speaker 4: cases like crew that had gone overboard.

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Speaker 1: We'll see how the district courts do with the test

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Speaker 1: Thanks so much, Terry. That's Terrence Ross of Catain, Mutchen Rosenman.

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Speaker 3: Thank tot ver remain a place for free expression and

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Speaker 3: we're not be manipulated by government.

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Speaker 1: And TikTok backed up the testimony of its CEO So

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Speaker 1: Shoe by suing Montana, the first state to ban the

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Speaker 1: popular app. The company says it doesn't share US user

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Speaker 1: data with the Chinese government and has taken substantial steps

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Speaker 1: to protect the privacy and security of TikTok users.

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Speaker 3: That's what we've been doing for the last two years,

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Speaker 3: building what amounts to a firewall this use of protected

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Speaker 3: US user data from unauthorized foreign access.

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Speaker 1: TikTok has been here before, and one federal courts bloc.

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Speaker 1: Former President Donald Trump's executive order banning TikTok and the

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Speaker 1: Chinese app we chat back in twenty twenty. Joining me

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Speaker 1: is Jorge Marquez of the Warren Law Group. So one

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Speaker 1: of the arguments that TikTok is making is that the

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Speaker 1: ban violates free speech rights.

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Speaker 5: So basically, the argument goes that the ban goes to

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Speaker 5: not just the users, because you're eliminating TikTok at a

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Speaker 5: medium for the users to be able to post and

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Speaker 5: express themselves pursuant to the First Amendment, but also TikTok.

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Speaker 5: TikTok even makes the argument that they themselves have their

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Speaker 5: own account, So you're removing TikTok as a forum, but

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Speaker 5: you're also removing TikTok as a content provider. And because

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Speaker 5: you're actually focusing on the speaker, and because you're focusing

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Speaker 5: on the content, you get to these questions of is

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Speaker 5: strict scrutiny going to apply.

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Speaker 1: Strict scrutiny being the toughest form of judicial review, and

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Speaker 1: does it sound like a prior restraint.

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Speaker 5: Absolutely, there's definitely prior restraint with the way in which

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Speaker 5: the ban is taking effect. So the ban is trying

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Speaker 5: to definitely make sure that none of this content can

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Speaker 5: even be provided and you have a chilling effect from

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Speaker 5: the Montana law.

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Speaker 1: Another argument is that the ban is preempted by federal law.

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Speaker 5: Now, in terms of the preemption, the federal government has

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Speaker 5: the Department of Homeland Security and it has its own

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Speaker 5: cyber agencies. Right now, I think that Montana does not

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Speaker 5: have the winning side of that question. However, is they

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Speaker 5: are able to articulate a much more specific argument to

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Speaker 5: their own state needs. They may be able to craft

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Speaker 5: an argument as to how they may be able to

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Speaker 5: be involved in that. Now, that still segues into the

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Speaker 5: commerce clause issue and those state laws that are directed

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Speaker 5: to legitimate local concerns such as the cyber security of

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Speaker 5: your residence, but have incidental effects on interstate commerce. You're

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Speaker 5: trying to apply a local solution. But at the end

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Speaker 5: of the day, TikTok has a national exposure. It is

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Speaker 5: broad based. If someone is in Montana, they can cross

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Speaker 5: state lines and what happens with the APPS usage, so

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Speaker 5: both of those issues are there. I do think that

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Speaker 5: the preemption argument TikTok makes us very valid points.

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Speaker 1: There's a really interesting argument around the prohibition of a

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Speaker 1: bill of attainder, not something that often comes up in

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Speaker 1: ordinary conversation. But where a law punishes a party without

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Speaker 1: a trial. So here there's been no proof, no proceeding

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Speaker 1: showing that TikTok violates the privacy of Montana residents.

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Speaker 5: So what you're raising is a very valid point. So

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Speaker 5: number one, this bill of attainer, it is not that common.

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Speaker 5: I think there's a reason why TikTok put that. At

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Speaker 5: the fourth point, TikTok makes the point of and even

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Speaker 5: cites to language from the governor about how there was

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Speaker 5: an initial interest of including other social media companies and

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Speaker 5: however they got singled out and a lot of the

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Speaker 5: concerns that the law brings. So for example, the law

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Speaker 5: mentions issues on the contents of the video and they

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Speaker 5: promulgate violence. Well that's not just on TikTok. You could

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Speaker 5: say that about many other social media platforms. So it

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Speaker 5: still goes to the First Amendment issue. But TikTok does

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Speaker 5: have a point. Why are you focusing on my platform

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Speaker 5: when all these other social media platforms have many the

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Speaker 5: same issues, And TikTok in the complaint makes the point.

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Speaker 5: And by the way, even if you included these other

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Speaker 5: social media companies, you would still run into problems. I

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Speaker 5: tend to agree with that unless the state can articulate

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Speaker 5: why TikTok is so different. And this brings up a

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Speaker 5: very crucial point. Right now, there is no evidence that

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Speaker 5: TikTok is actually providing data and any information to the

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Speaker 5: Chinese Communist Party, but that doesn't eliminate the concern that TikTok,

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Speaker 5: if push comes to shove, may have to eventually give

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Speaker 5: any data to the CCP. It is not enough for

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Speaker 5: Montana to have a suspicion. The US has a system

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Speaker 5: of independent judicial courts that must take into account the

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Speaker 5: evidence and standards, and that is a fundamental difference between

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Speaker 5: the Chinese system and the US system. There's a reason

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Speaker 5: why Spacebook and other companies cannot rate China. But nevertheless,

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Speaker 5: you have a Chinese company taking advantage of the legal

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Speaker 5: framework in the US to basically argue for the system

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Speaker 5: in the US. It's an underlying theme as to what's

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Speaker 5: happening with respect to this band.

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Speaker 1: How would Montana enforce the ban? Would they have people

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Speaker 1: monitoring TikTok so Jun?

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Speaker 5: As you know, I'm a lawyer, I'm not a technician

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Speaker 5: or an engineer, right, but from what I understand, the

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Speaker 5: app store is able to look at the IP address

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Speaker 5: and basically limit the download from the state. Another in theory,

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Speaker 5: you could have someone that goes to the telecommunication towers

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Speaker 5: in Montana and they're able to limit the access to

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00:24:41,520 --> 00:24:44,119
Speaker 5: those towers, so you don't have to be policing the

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00:24:44,200 --> 00:24:47,240
Speaker 5: individuals on TikTok. Of course, you get to questions about

436
00:24:47,400 --> 00:24:51,320
Speaker 5: VPN right, and those are services that allow someone to

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00:24:51,400 --> 00:24:55,760
Speaker 5: bypass some of the restrictions that are in place. But again,

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00:24:56,160 --> 00:25:00,360
Speaker 5: is it practical can they actually coordinate all all these

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00:25:00,400 --> 00:25:03,359
Speaker 5: different pieces together? Law is only as good as your

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00:25:03,440 --> 00:25:07,760
Speaker 5: enforcement mechanism. Does Montana have the infrastructure the personnel to

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00:25:07,880 --> 00:25:10,919
Speaker 5: actually follow through with that? And the answer you know

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00:25:10,960 --> 00:25:15,600
Speaker 5: from minus standing is no. You require a coordinated effort

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00:25:15,680 --> 00:25:19,800
Speaker 5: among multiple parties, particularly at the federal level, to really

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00:25:20,040 --> 00:25:22,200
Speaker 5: be able to achieve those objectives.

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Speaker 1: Senate Intelligence Committee Chair Mark Warners talked about the likelihood

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00:25:26,720 --> 00:25:30,320
Speaker 1: of federal courts overturning Montana's ban and that's why it

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00:25:30,359 --> 00:25:33,560
Speaker 1: was essential for Congress to pass legislation. So what do

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00:25:33,640 --> 00:25:37,400
Speaker 1: you think about the likelihood of Montana's ban actually going

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Speaker 1: into effect in January?

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00:25:39,840 --> 00:25:42,399
Speaker 5: The fact that the affected data is January one, twenty

451
00:25:42,440 --> 00:25:45,800
Speaker 5: twenty four sort of indicates that they can see the

452
00:25:45,840 --> 00:25:48,399
Speaker 5: writing on the wall that this will most likely be

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00:25:48,480 --> 00:25:51,280
Speaker 5: struck down. So I do think that there was definitely

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00:25:51,320 --> 00:25:55,879
Speaker 5: some political posturing because of the acceptance that this was

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00:25:55,960 --> 00:25:59,520
Speaker 5: preempted by the federal government. You know, the state wants

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00:25:59,600 --> 00:26:03,280
Speaker 5: to make it seen. State politicians, they want their constituents

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00:26:03,280 --> 00:26:05,640
Speaker 5: to see that they're trying to do something about it.

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Speaker 5: You know. Right now, from what I'm seeing, I do

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00:26:08,520 --> 00:26:11,720
Speaker 5: think that the First Amendment issue by itself is sufficient.

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Speaker 5: They talks to prevail on this lawsuit.

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00:26:14,440 --> 00:26:17,119
Speaker 1: As long as the parent of a data company like

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Speaker 1: this is Chinese, isn't there always going to.

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00:26:20,320 --> 00:26:23,919
Speaker 5: Be a problem in the US, And let's not be naive.

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00:26:24,200 --> 00:26:27,440
Speaker 5: Companies work alongside the US government, and sometimes the US

465
00:26:27,560 --> 00:26:32,119
Speaker 5: government is on top of companies, knowing full well what's happening. However,

466
00:26:32,280 --> 00:26:34,800
Speaker 5: the government has a limited role that is part of

467
00:26:34,840 --> 00:26:38,840
Speaker 5: the US culture. You go to China, the Chinese government,

468
00:26:38,920 --> 00:26:43,440
Speaker 5: the CCP is in control, the military response to the CCP,

469
00:26:43,640 --> 00:26:46,720
Speaker 5: not to the country, and you have a fundamental problem

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00:26:46,920 --> 00:26:50,600
Speaker 5: of what data sharing with the country is. With China,

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00:26:50,880 --> 00:26:52,840
Speaker 5: you have a law that says that if you are

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00:26:52,880 --> 00:26:56,919
Speaker 5: a Chinese company you must share information. And there is

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00:26:57,160 --> 00:27:03,200
Speaker 5: a fundamental problem that manisfests itself in this TikTok issue

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00:27:03,280 --> 00:27:07,800
Speaker 5: that is just pervasive throughout the relationships. And when you

475
00:27:07,840 --> 00:27:10,919
Speaker 5: have a US company saying I am limited in the

476
00:27:10,960 --> 00:27:14,439
Speaker 5: way that I can interact in China, I don't have

477
00:27:14,560 --> 00:27:17,600
Speaker 5: the backing of the US government to the same level

478
00:27:17,600 --> 00:27:20,679
Speaker 5: that this Chinese company does. And by the way, not

479
00:27:20,800 --> 00:27:24,240
Speaker 5: only that the Chinese company actually has tools to go

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00:27:24,400 --> 00:27:27,199
Speaker 5: against the governments in the US that I would not

481
00:27:27,440 --> 00:27:31,000
Speaker 5: have within China, and that I think is the crucial

482
00:27:31,520 --> 00:27:36,199
Speaker 5: problem at the origin the fundamental distinction of having a

483
00:27:36,280 --> 00:27:40,879
Speaker 5: communist party force companies doing multiple things, including providing data

484
00:27:41,359 --> 00:27:44,679
Speaker 5: as it is built into the system, versus the US system,

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00:27:44,720 --> 00:27:48,040
Speaker 5: which is much more apprehensive towards government's involvement. At the

486
00:27:48,160 --> 00:27:50,280
Speaker 5: end of the day, it does seem to be a

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00:27:50,480 --> 00:27:54,280
Speaker 5: problem that may not have any solution that's reconcilable.

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Speaker 1: Thanks Orge. That's Hore Marquez of the Warren Law Group,

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00:27:58,240 --> 00:28:01,200
Speaker 1: and that's it for this edition of The Bloomberg Remember

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00:28:01,280 --> 00:28:03,399
Speaker 1: you can always get the latest legal news on our

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00:28:03,400 --> 00:28:07,560
Speaker 1: Bloomberg Law podcasts. You can find them on Apple Podcasts, Spotify,

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00:28:07,720 --> 00:28:12,760
Speaker 1: and at www Dot Bloomberg dot com, slash podcast Slash Law,

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00:28:13,160 --> 00:28:15,760
Speaker 1: and remember to tune into The Bloomberg Law Show every

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00:28:15,800 --> 00:28:19,720
Speaker 1: weeknight at ten pm Wall Street Time. I'm June Grosso

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Speaker 1: and you're listening to Bloomberg