Grant Update Governance & Legal Review

Julian Fletcher-Taylor

DBGrow
Exchange Working Group
Legal Working Group
This thread will be used as an experiment on having a central place to update the progress of a grant over time. I believe that having a single thread to post the most important updates from a grant or project will be beneficial to the entire community. I hope this will bring transparency to grants and can be used as a central, factomized, audit trail for grant progress.

I also believe that such a system will better engage the community in endeavors within this ecosystem. We should all be engaged and excited with how this ecosystem is progressing, and I hope such a system will help facilitate that. I hope that a system like this becomes the standard in the future for all grants.

I would appreciate any and all feedback on the usefulness of this thread, the optimal amount of updates, what information should be posted here, and any ways I can make this process better. I ask that this update thread be used only for updates from the project managers, Legal & Governance Review Group, law firms, and any sponsors that may be brought on. I will create a second thread in the Grant forum for all discussion on this project and our updates. Thank you.
 

Julian Fletcher-Taylor

DBGrow
Exchange Working Group
Legal Working Group
Governance & Legal Review General Update

We are fully onboarded with the main law firm we are working with, Huang-Sigle & Leng LLP, and have been making great progress with them for the past few weeks. We are working on a comprehensive review of decentralization in Factom, and in parallel have been tackling individual processes within the Factom Governance.

We have finished onboarding, have gone through the information “discovery” process, and have finished defining the scope of work with Sheridans, the second law firm with which we are working. The first item we are prioritizing is the creation of a research document outlining the establishment of a Factom Protocol foundation. The second priority item with Sheridans is reviewing GDPR and confidentiality practices within the ecosystem, as well as how they relate to usage of the Factom blockchain.

Timeline:

Original estimated grant schedule from the grant application:
August 6th - Oct1st
The above schedule is provisional, and subject to change in accordance with the established committee’s judgement.


As many are aware, there were extensive delays in grant payouts, which carried over into the implementation of this grant. Projects within the legal space move slowly, and having to pause communication with law firms and private buyers during the couple months of uncertainty regarding grant payouts was a major roadblock. We had previously planned on ramping up, doing information “discovery”, and getting onboarded in the time before the payouts, but the delays and uncertainty necessitated holding off on much of the onboarding, discovery, private placement arrangements, and various other processes until the grants were actually distributed. In all, these things delayed the project an additional couple of weeks after the August 6th date.

Moving forward, we are working very hard to complete this important work as quickly as possible while maintaining the highest degree of quality and efficiency with the ecosystems limited resources. We believe that by the Sept 1st estimate date we will have much of the original defined work completed. Additionally, we will have completed objectives not originally defined in the grant application that became priority items since the inception of this grant.

Ultimately, we are set to overdeliver on this grant and will be defining additional items for us to take on under the scope of this grant. We are excited by what we will continue to be able to provide for the Factom Ecosystem with this project. I would like to especially thank @MattO and @SL for their continuous hard work throughout this grant.
 

Julian Fletcher-Taylor

DBGrow
Exchange Working Group
Legal Working Group
ANO Removal Process
We have completed working with HL on the process of removal of entities within the ecosystem, which is an important and sensitive matter given the potential for lawsuits.

The two original posts from HL’s recommendations:
https://factomize.com/forums/threads/guide-removal-process.652/
https://factomize.com/forums/threads/ano-removal-process-working-group-update.651/

The ANO Removal Document created in collaboration with the ANO Contributions Committee:
https://factomize.com/forums/threads/ano-removal-process.790/#post-4470
 

Julian Fletcher-Taylor

DBGrow
Exchange Working Group
Legal Working Group
Foundation Review Information

Below you will find some initial notes, both general and cryptocurrency related, from Matt and my work with HL and Sheridans law firms regarding a nonprofit for the Factom ecosystem. We continue to believe that some structure to house some key elements of the ecosystem such as managing the soon to be protocol website, managing certain pieces of IP, and fulfilling certain roles like hiring core protocol developers will strengthen the Factom ecosystem. We will continue to release more findings on this over the coming days and weeks. We hope to have a soft recommendation for the creation of such an entity soon, and to begin a conversation as a community about what we want out of such a structure.

Grid of foundation jurisdiction comparison: https://docs.google.com/spreadsheets/d/1ZHiiU7t513jFRLf-dQGYTsJswvuHwAWSRWDn5XkC7zk/edit?usp=sharing
 

Attachments

Matt Osborne

Go Immutable
Exchange Working Group
Legal Working Group
Hi everyone,
We wanted to provide a report on where legal matters regarding the Factom protocol stand. Please let us know if you have any questions.

HIGH LEVEL

1. Released "Decentralization Review" document
https://factomize.com/forums/threads/factom-decentralization-review.1001/#post-6211

*Decentralization topics, excluding the below "Immediate Action Items," have been tabled at this point in time in order to focus on more pressing issues

2. Released "Foundation Jurisdiction Comparison" grid as well as "Foundation Discussion Notes"
https://factomize.com/forums/threads/governance-legal-review.669/#post-6045

*These documents were released prior to the summit. As Summit attendees know, the ANOs discussed the foundation/non-profit organization with Factom Inc. Assuming proper foundation/non-Profit role and structure, their appears to be support. More on this later.

*Due to the grant round consuming so much of people's time, we will restart this conversation after the grant round has concluded

3. Direct conversations with Factom Inc
*Decentralization
*Protocol Licensing/MIT licensing
*Trademarks and branding
*Neutral website

IMMEDIATE ACTION ITEMS

1. Involvement of Non-Factom Inc Core Developers Pending CLA issues.

*Non-Factom Inc developers are now able to contribute to the code base.

*Per the minutes from the ANO Summit, Factom Inc CFO Zack Lynde will be conducting "research if we can keep the CLA as is, plus add a statement to the governance to determine consensus for license agreements."
Note: Similar to pretty much all ANO Summit and Texas Bitcoin Conference attendees, a lot of time last week was spent digging out work-wise. Zack plans to begin this process with Factom Inc's lawyer early this week.

2. Trademarks/Branding
*Factom Inc will be releasing trademark legalese and guidelines when their new website is launched. Timeline is one week-ish.

*From the summit minutes, “Jay Smith and I [Zack] will take action to create some information about what can be used by the ANOs and the community, and how it can be used. We will also create a Q/A regarding licensing and Factom logos.”

*The "Factom" trademark itself will be staying with Inc, at least for the very foreseeable future

*The word "Factom" cannot be used as a "standalone." It should be combined into something like, "The Factom Protocol"

*Various ways of branding were discussed. We think it's best if Factom Inc outlines their thoughts for the community directly so as to make sure nothing gets lost in translation.

In order to be efficient with everyone's time, we would recommend that the community hold off on discussing trademark/branding until Factom Inc has released legalese/guidelines.

3. Neutral Website
*This ties into the trademark/branding. We'll provide a deeper dive on this topic when Factom Inc releases the trademark info.
*Factom.org: There were discussions at the summit about this. Factom Inc will provide an update.

FINAL NOTE
Sorting through these issues is a priority for both Factom Inc and the wider community. We are all navigating uncharted waters right now. There is not a roadmap to follow. Everyone agrees that the goal is to work towards a win-win scenario for all parties involved.

Thanks,
Matt
 
@MattO I just want to clarify the action points from the post you made; I believe they are:

1. CLA Clarification
- Zach to update the community after speaking with legal RE: standing party sign-off required to change code licence.
- Timeline TBC (discussions early this week, response???)

2. General trademark use by ANOs
- Inc to update the Factom.com website including legalese and guidelines for using the trademark Factom
- Timeline 1 week (note: max 2 weeks???)

3. Factom.org usage clarification
- Inc to update the community RE: can Inc release Factom.org for the protocol website?
- Timeline TBC; dependent on #2

4. To sign off on the neutral website so we can launch it
- Inc to update the community RE: can the community launch the Factomprotocol.org website as built by DBGrow
- Timeline TBC; dependent on #2

It's still a little grating to see that there are no agreed delivery dates against these action items, but it looks like we may have some clear answers in two weeks.

There are many tasks that the marketing committee would love to be getting on with, but we are held up by #4. We really need the neutral website up as soon as possible!!!
 

Tor Paulsen

The Factoid Authority
Two Housekeeping Notes:
1. We have a second lawyer that has joined the team, Nikola, from Factomatic! He is experienced in securities law.
2. "Legal" will now be technically known as the "Legal Research Working Group"

Thanks!
Hey!

Good stuff. I know Nikola will bring some good stuff to the table! :)

Also; which people are now involved with the Working group?
 

Matt Osborne

Go Immutable
Exchange Working Group
Legal Working Group
The above looks correct @BennyJ. Unfortunatelly, not much we can do until Factom Inc provides clarity.

And yes, I am frustrated that we can't launch the website also.
 

Keith Pincombe

Marketing Working Group
Governance Working Group
So from how i see this, we've got to wait for Inc to update their website before we can find out what the trademark rules are? If this is the case can't they provide us with the terms now? Otherwise, we will be further delayed amending the site to comply with their rules?

I do think that the legal has to be respected to an extent but when a bunch of ANOs can't launch a site promoting Factom then I kinda feel like legal control is stretching too far. What's to stop us from launching now and amending the site once the trademark rules have been published?

Is there any word on us being able to use the factom.org domain? I mean surely this is the case of either we're allowed to have it or we're not?

Sorry if this is a bit ranty, I did read the transcript of the ANO retreat and understand that legally if Factom doesn't defend their trademarks then they lose them and there is a lot of old stuff that is making this way more complicated than it would otherwise be but at some point common sense has to kick in to get us through this.
 

Matt Osborne

Go Immutable
Exchange Working Group
Legal Working Group
HI @maxlambda , Thanks for the questions.

So from how i see this, we've got to wait for Inc to update their website before we can find out what the trademark rules are?
We reached out asking for the TM legalese and received a draft. This was last week. So to answer your question, yes, it appears we are waiting for Inc to launch their website.

If this is the case can't they provide us with the terms now? Otherwise, we will be further delayed amending the site to comply with their rules?
Agree. However, they are still working some things out. I couldn't tell you what though.

Is there any word on us being able to use the factom.org domain? I mean surely this is the case of either we're allowed to have it or we're not?
Factom Inc will hopefully be providing an update on this as well.
 

Matt Osborne

Go Immutable
Exchange Working Group
Legal Working Group
Hi Everyone,
It's been extremely busy several months. Thanks to everyone who participated in all of the conversations/votes on Factomize! We've accomplished a ton in 2018, and 2019 is shaping up to be no different. Our biggest challenge has not been the execution of work, but instead has been not overwhelming the community with too many discussion at one time. To somewhat alleviate this issue, we began working with the Guides to ensure that all community discussions (be it "legal" related or "non-legal") are properly prioritized as opposed to all discussions being released at once. We'll continue to do our best to not overwhelm the community.

Here's the latest on all things Legal:

NON-PROFIT CREATION
*The community voted to establish a non-profit in the state of Wyoming
*The Legal Research Working Group will be providing a framework of the bylaws from which the standing parties can shape and mold as they see fit. More on this soon.
*Assuming the price of FCT does not crater, the Legal research Working Group is planning on using our grant money to pay for the costs associated with the construction of the non-profit.

GDPR
*We hope to have a plan of action publicly announced in next several weeks. More on this soon.

DECENTRALIZATION OF FACTOM (R) PROTOCOL ECOSYSTEM
1. CLA Clarification from Inc per their comments at the ANO Summit: Awaiting response.

2. Trademark: Factom Inc has released Guidelines on TM usage. It's suggested the community explore the pros and cons of this deeper. More on this in the coming month(s).

3. FIP System: Niels has been hard at work on this. Our understanding is that he should have something for the community in the next several weeks.

4. Standing Party Buildout: Continuing to provide legal assistance when needed

5. Committees/Working Groups: In order to avoid the appearance of centralization (as well as avoiding actual centralization), we'll be providing suggestions on how the terms "committees" and "working groups" should be used, if they should be alluded to in the Governance, etc. More on this soon.

GOVERNANCE CLEANUP

Goal: The Governance document is the bedrock of our project. Therefore, it's suggested that we make it as airtight as possible by enhancing it with the appropriate legalese. This is a pretty big endeavor, @Julian Fletcher-Taylor has been working hard on this. Timeline - Month(s).

GRANT ROUND STRUCTURE
Researched alternative grant round structures. For example, allowing ANOs to control their own pool of FCT and allocate to grants individually. The Legal Research Working Group, especially @Nikola , helped the community avoid going down a path that would have opened up all types of problems with the IRS.

MISCELLANEOUS PROJECTS ASSISTED ON:
*ANO Expectations Document
*ANO Removal Documents
*Document Management Processes
*Guide Election and Removal Documents
*Exchange Listings: Provided suggestion (token comparison grid) of how to circumvent the issue of exchanges wanting a letter from a lawyer saying "Factom is decentralized."

Thanks to @Shuang Leng and @Nikola for all their hard work! Several years from now, when we all look back on the rollout of the Factom (R) Protocol project, I think we'll all realize the tremendous advantage we had by having two passionate and skillful attorneys intimately involved with our project. Let's make sure we never take that for granted!
 

CryptoLogic

Crypto Logic
Thank you for your hard work!

We are looking forward to hear about the GDPR framework. Will it be valid for all comunity platforms including the comunity drive, or for factomize/factomprotocol only? What about the process that requires us to write down personal information? We mean the processes like grant/ano/guide-applications?
 

Matt Osborne

Go Immutable
Exchange Working Group
Legal Working Group
@CryptoVikings We're still working through everything, so I am hesitant to say anything. I will take your questions though and share them with the working group to ensure they are taken into account. Thank you for the feedback! Feel free to DM me if you have more to add regarding GDPR.

Thanks
 

Matthias Fortin

HashnStore
Thank you @Matt Osborne for this update.
Do you have more info on the plan for GDPR?

Also really interested in GDPR issues. I am trying to work on this on my side (for our solution). I will do 2 free legal advice in a Paris Law Faculty in March and April and moreover I will meet a Professor in Digital Law to see whether she is intered or not in collaborating in a way or another with us.
If I have some valuable insights I will let you know.
 

Matthias Fortin

HashnStore
Sure I can do that.
We have been discussing that issues with Alex some time ago.
I have some material from the French authority (CNIL). It gives us just guidelines but can still be interesting. I have maybe some other relevant materials but it would then be more public articles giving personal interpretation by professional.
I already hope to be able to collaborate with this professor as she is a specialist of that kind of questions (she is a bit more around IA now).
 

Matt Osborne

Go Immutable
Exchange Working Group
Legal Working Group
Hi everyone,
The Legal Research Working Group has been very busy the last several months. Here is a high-level recap:

BYLAWS
  • @Shuang Leng and @Nikola Nikolov worked very hard creating a bylaws structure that could be controlled via the Governance. As an example, they poured through hundreds of pages of Wyoming non-profit legislation. Our bylaws/Governance structure is the first of its kind and both @Nikola Nikolov and @Shuang Leng should be commended for their accomplishments and hard work!
  • The community recently voted 23-0 that the bylaws are ready to be brought to the law firm/lawyer that will be creating the non-profit.
  • For a more complete breakdown of the history of the bylaws, please click the above link. @Nikola Nikolov provides a great timeline.
  • We will now engage with a law firm/lawyer licensed in Wyoming who can set-up the non-profit. This will be done in phases:
1. Have the Wyoming-licensed lawyer review the bylaws and provide feedback
2. Have the community review the lawyer's suggested changes. If more changes are made, we will go back to the lawyer to make sure they approve of the changes. We will do this as many times as necessary.
3. Standing party vote to ratify the bylaws document
4. Reach out to insurance companies in regards to obtaining insurance for the non-profit/its Directors
5. Hold vote on who the initial Directors of the non-profit will be
6. Have the lawyer/law firm create the non-profit

GDPR
  • As you all know, @Matthias Fortin has stepped-up and is leading the GDPR project. Once again, a huge thanks. His leadership has enabled the LRWG to take on another project sooner than we otherwise anticipated (more on that below).
  • For a complete breakdown of the GDPR project, please read this
  • A very high-level overview: We have defined the scope of the project and are working with a lawyer
  • Thanks to @Nikola Nikolov and @Shuang Leng for for providing assistance on defining the scope, etc.
  • Thanks to other contributing members @Alex @Valentin Ganev

DECENTRALIZATION GRID
  • Keeping this brief: The SEC stated that both Bitcoin and Ethereum are sufficiently decentralized (they are no longer securities). While the SEC's public statement is not legally binding, it does give us a target for which to shoot. @Shuang Leng has begun creating a Factom/Bitcoin/Ethereum grid comparison in regards to decentralization. If Factom can get on the same level as these two projects, then we should be in great shape. We have talked with a lawyer at a very well-respected global law firm and *tentatively* plan on engaging with him in order to get an outside review of FCT's decentralization status. Ideally, we will be able to obtain a letter from him that we can then use with exchanges, as the vast majority of exchanges want a letter stating that the token applying for listing is sufficiently decentralized. More on this over the coming months. The legal environment is extremely fluid, so this could be subject to change.

OTHER TASKS
  • We helped @Anton Ilzheev in creating the Open API license agreement
  • The LRWG has reviewed almost every document that has gone up for ratification. Due to time constraints, LRWG may not be able to provide comprehensive feedback for every single document before it goes up for vote. @Shuang Leng and @Nikola Nikolov try their best though even if it means working late nights and weekends. The LRWG strives to make sure that all documents that are ratified are the best version that they could be within our capacity.
 

Mike Buckingham

Cube3
Website Committee
Governance Working Group
I'd like to thank Matt and everyone else who has contributed to the significant achievements of the Legal Research Working Group.
It would be easy to underestimate the significance of this. It would probably be even easier to underestimate the effort required to understand and make substantive progress with these complex and novel issues.
I look forward to the non-profit becoming a reality.This will help with the decentralization grid seems a great way of assessing our status as a decentralized organisation.
On a final note I appreciate the work done to asses documents that go up for ratification (and think that this should be part of our methodology for governance development).
Keep up the good work.(y)
 
This is excellent to hear! I've very recently joined the Factom community, and the deeper I dive the more impressed I am at how seriously and professionally everything is handled on all fronts. There's a dedication here I don't often see in other communities.
If more changes are made, we will go back to the lawyer to make sure they approve of the changes. We will do this as many times as necessary.
^ This. I love that "doing it right" is considered a fundamental standard. It'll be great to see all this hard work pay off when the non-profit status is granted. (y)
 
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