O Canada. O No?
If you missed it, I wrote up an explainer (with context! and analysis!) of the ongoing diplomatic row between Canada and India. You can read it here or listen to it (via The Noisecutter Podcast) here.
Oh-Zempic. Oh No.
If there’s a drug that’s dominated the headlines recently (for better or for worse), it’s Ozempic. Over at The New York Times, Gina Kolata put together a riveting feature on the drug’s origin. Nevertheless, reports of horrific side effects continue to roll in. As drug scandals go, OxyContin set the bar high, and Ozempic isn’t that. Nevertheless, should the FDA take a harder step in? Probably.
MoCRA Frappuccino.
You can’t order a Modernization of Cosmetics Regulation Act at Starbucks yet, unfortunately. The 2022 act, signed into law by President Biden in December of last year, puts new regulation onto the relatively unmonitored area of beauty and cosmetics products. On one hand, with the advent of “TikTok brands” popping up left, right and center, this seems like a good idea. On the other, regulation creates barriers to entry, which indirectly benefit larger, more established companies. Now, this doesn’t mean cosmetics will require FDA approval prior to going to market. It’s more an effort to require recordkeeping and safety testing on the part of manufacturers. MoCRA will also create further visibility into supply chains, with the requirement to register off-shore manufacturing labs and third-party logistics (“3PL”) providers. There’s a pretty good article on BoF for those who want to know more. Enforcement begins in December of this year, and we’ll just have to wait and see what sort of pace it takes.
Is Shein A Mafia?
In July, Shein got hit with a RICO lawsuit. Yes, that’s right; the same RICO used to prosecute the “Five Families” of New York City in the 1990s and early 2000s. It’s important to distinguish here, though, that those were criminal RICO cases, and what Shein is facing here is civil RICO. (The tl;dr is that this is about money damages, not jail time.) Now, RICO cases work on the basis of attributing culpability for specific offenses across an entire organization, or “enterprise.” In criminal RICO, these underlying offenses are typically things like murder, extortion, corruption, etc. In the Shein case, what’s interesting is that the offending conduct is copyright violation. Is Shein’s violation of copyrights so egregious that it constitutes a racket? Maybe.
Ultimately, Shein’s got pockets. Deep ones. And if I had to guess, I’d say this case will settle. The use of RICO is great for headlines (i.e., painting Shein in the same color as John Gotti), but unless their clothes start actually taking out hits on people, Shein won’t be brought down by RICO. But that doesn’t put Shein in the clear, either, as Congress is starting to take a harder look at Shein and other Chinese e-tailers operating in the US. There’ll be more to say here; of that much I’m sure.
Daily Harvesting Gall Bladders.
One of my main gripes over the last, say, decade is that people / companies keep trying to make food weird. Why? At risk of sounding like my dad, “just…be normal.” Trying to ram-fist more protein into a vegan food product? Sounds like a bargain with the devil to me. And for Daily Harvest, that’s sort of what it became. Here’s the tl;dr: Daily Harvest released a product called “French Lentil & Leek Crumbles.” It made a lot of people sick. A lot of those people ended up in the ER. Some of them had to have their gall bladders removed. The cause was initially a mystery, and eventually identified as “baikiain,” a non-protein amino acid. The Wikipedia article for baikiain is thin. Suffice it to say, don’t order it at a restaurant. But how did it get into the Daily Harvest product? Tara flour. (For the nerds, here’s a study.) Now, the tara plant does have food uses that don’t send people to the hospital. So what happened here? Was it a bad batch (i.e., sourcing / supply chain issue)? Or was this specific use (i.e., raw tara flour) not being fit for human consumption? At this point, we’ve got more questions than answers. And that, to me, is the problem.
Daily Harvest seems to have put out a product that it didn’t fully understand, didn’t fully test, and wasn’t sure was safe. Now, what’re their product development protocols and were any of those violated in the process of developing / manufacturing the offending Crumbles? Who knows! In the deluge of litigation that’s already begun, I’m sure we’ll get some more clarity. At the end of the day, innovation can be tricky. But when it comes to things we put into our bodies, it’s essential that innovation be done responsibly.
Friendly Fire In The Green Revolution.
For the left (and even for some of the right), fighting climate change is a big deal. Electric vehicles are a big part of that fight, and Elon Musk’s politics aside, it’s the left that’s really behind the push to change over to electric vehicles (“EVs”). But it’s also the left (i.e., Democrats) that’re the party of unions. And it’s the unions, now, who have a lot to fear from the rise of EVs. That’s a big part of what’s behind the current United Auto Workers (“UAW”) strike. EVs are easier to manufacture than internal combustion engine (“ICE”) cars. There’s a lot fewer parts. Which means a lot less labor’s required. Less labor? Less power to the unions. And the unions…yeah they don’t like that one bit. So this is all kind of awkward.
To summarize greatly: the UAW wants big raises for auto workers; the automakers say that to fund that, they’d have to scale back planned investments into new EV plants. But it’s not so simple as “auto workers versus EVs.” There’s also competition to think about: the current UAW strikes are against US automakers Ford, GM and Stellantis (the latter being the US manufacturer for Dodge, Ram, Jeep, etc.). They’re not applicable to companies like Tesla, Toyota and Hyundai, which run / are planning to run non-union factories in the US. As the EV battle continues to ramp up, this is going to become an even bigger problem for the “Detroit 3,” and there’s all sorts of implications for America if none of the American brands can be competitive in the electric vehicles market. (Hint: none of those implications are good.)
Can Helping Dumb People Do Dumb Stuff And Harm Themselves In The Process Give Rise To A Cause Of Action?
If you’re in your third year of law school right now, I fully give you permission to use that as the title of your Note (ideally, a very important piece of legal scholarship).1 Once you’ve graduated, you’ll be relegated to writing droll little Substacks like me, but I digress. What we’re here to talk about today is digital assets. When someone first told me what an NFT was, I stuck my head through a plate glass window in disbelief. Okay, fine, that’s not actually true, but it’s certainly my emotional truth.
I’ll admit, I laughed a full belly laugh at Seth Green getting his Bored Ape stolen, because what, someone stole his cartoon drawing? But the thing was his property, and was illegally removed from his possession, and that’s wrongful. Silly-wrongful. But still wrongful. What I’m not so sure is wrongful is what’s at stake in a recent lawsuit brought by a group of NFT purchasers against Sotheby’s and 29 other defendants (including Paris Hilton and Justin Bieber) alleging collusion and improper disclosure in connection with the sale of NFTs to the plaintiffs. Of course, NFT prices have skyrocketed just as everyone said they would, so where’s the harm, right? Oh…wait. NFT prices have actually bottomed. Like “meltdown” bottomed. Sheesh. Who could ever have seen that one coming? So the plaintiffs have lost a lot of money on their silly little cartoon monkeys, and now they’re mad about it. Mad. Mad enough to sue the people that sold them to them. Because…*sputters*…they lied!! Liars! Making us think these things were worth real money!!! (I could go on for days.)
But what’s actually interesting about this lawsuit, all schadenfreude aside, is as follows: In September 2021, an undisclosed single purchaser purchased over 100 NFTs via a Sotheby’s online auction for a purchase price of over $24 million. The plaintiffs allege that, in connection with their purchases, Sotheby’s represented to them that the undisclosed purchaser of the 100 NFTs was a “traditional” collector. Now here’s directly from the Complaint:
“Sotheby’s representations that the undisclosed buyer was a ‘traditional’ collector had misleadingly created the impression that the market for (Bored Ape Yacht Club) NFTs had crossed over to a mainstream audience.”
So let me get this straight: the reliable mark for whether or not a thing is “mainstream” is when a guy who buys “mainstream” things buys that thing? It’s…hard to see. Like ok, Levi’s jeans are mainstream, because a lot of people buy Levi’s. Picassos are mainstream art, but not a lot of people own Picassos. (For the record, I own Levi’s, but I only wish I owned some Picassos.) So, based on the potential availability of the thing, there’s a sliding scale as to how many people need to own it before it becomes “mainstream?” Sure, Levi’s jeans are far more numerous than Picasso paintings, so that makes sense. But what about Takeda chef’s knives? Haven’t heard of them? Weird. A lot of people (like thousands) own them, but there’s not a lot of them in existence (like that same number of thousands, because they’re typically sold out globally at any given time), and when they do come into existence (i.e., are made available for purchase), they sell out faster than Taylor Swift tickets. (Seriously.) So why aren’t they “mainstream?” If you ask me, there’s another factor here, and that’s notoriety. Something being “mainstream” has less to do with who owns it, or how many people own it; it’s about how many people know about it. Everyone knows Levi’s. Everyone knows Picasso. But unless you’re a nerd like me (or my friend Ian who put me onto them), nobody really knows about Takeda. (Well, now you do, and you’re welcome.)
Back to NFTs, does it really matter, for the purposes of determining whether or not they’re mainstream, that a guy who may own a Picasso or two bought a bunch of them? No. Or at least, not nearly as much as, say, how many relevant results come up on a Google search for them,2 or how often they’re mentioned in mainstream media coverage. (I won’t bother to get into an analysis of what is or is not “mainstream” media here. Plenty of other folks doing that on *other* websites.)
Aside from whatever it is that Sotheby’s did or did not do, I think a successful claim here has as much to do with the relative knowledge and experience of the plaintiffs. See, if I bought a Takeda knife and it wasn’t what I thought it was, that’s a wholly different thing than if you bought a Takeda knife and it wasn’t what you thought it was. I’m a blacksmithing nerd (thanks, pandemic); you’re probably not. And while I haven’t bothered to do a deep dive on the plaintiffs, I’m guessing they’re more likely to be, and importantly, to have been at their time of purchasing the NFTs from Sotheby’s, more informed about NFTs than the average joe. The question then becomes whether these folks had sufficient knowledge of, and experience with, NFTs to be able to determine, for themselves, just how mainstream NFTs were or were not at the time, instead of merely relying on representations regarding the same from Sotheby’s.
But hey, this is America, right? People will sue for anything.
Interesting Reads From Around The Net
The Canada-India row is rowing right along. Here’s another reason to hate ticks. Over at Microsoft, there’s a hole in the cloud. Over in Kazakhstan, the earth is farting. Here’s a free tip I have for billionaires: you’re already rich, so don’t do dumb crimes. Pot calls kettle black. Luxury fashion is full of deals right now, just not the ones you have in mind. WeWork blorp. The next Ocean’s movie is going to just be Jonah Hill, Seth Rogen and Ken Jeong sitting around in sweatpants covered in Cheetos dust (i.e., hackers hacking). A win for Goldman’s compliance department. When hacking meets AI.
