The fight between the Trump administration and popular video-sharing social network TikTok continues on multiple fronts. TikTok and some of its most prominent users are now litigating against the Trump administration in at least three different forums, all stemming from two executive orders issued by President Trump on August 6 and August 14, 2020, where he labeled TikTok a threat to the national security of the United States. Those orders, along with rules issued by the Department of Commerce soon thereafter, sought to limit Chinese government influence over TikTok and its Chinese parent company ByteDance in two ways: (1) by prohibiting the use of TikTok anywhere in the United States, (the "Prohibition Order")1 and (2) forcing ByteDance's divestment from TikTok, effectively requiring that TikTok be sold to an American company (the "Divestment Order"). 2 Both Orders have had a rough time in the courts thus far.
The latest case, filed by TikTok itself on November 10, 2020 in the U.S. Court of Appeals for the D.C. Circuit, attacks the Trump administration's Divestment Order.3 President Trump claimed to be exercising his authority under Section 721 of the Defense Production Act of 1950, 50 U.S.C. § 4565, to intervene to block a "covered transaction" when that transaction presents national security concerns. In a petition for review directed to the D.C. Circuit's original jurisdiction, TikTok has alleged that the Order is unlawful because the specified transaction has nothing to do with the TikTok app, and therefore it cannot be used as the hook to force TikTok into the hands of an American company, as Section 721 can only reach the "covered transaction" itself. TikTok further alleges violations of due process and the Administrative Procedure Act, along with an unlawful taking under the Fifth Amendment. The federal government has yet to respond to the petition for review.
This new lawsuit comes after two other cases were filed in other federal courts, each of which has resulted in preliminary injunctions against various aspects of the Prohibition Order. In the first, filed in the U.S. District Court for the District of Columbia, Judge Carl J. Nichols issued a preliminary injunction against the part of the Prohibition Order that prohibited "any provision of services . . . to distribute or maintain the TikTok mobile application, constituent code, or application updates through an online mobile application store."4 Judge Nichols granted the injunction on the basis that the International Emergency Economic Powers Act ("IEEPA"), which allows the President to regulate transactions that involve national security, explicitly excludes the authority to regulate the importation or exportation of "information or informational materials," or "personal communication[s], which do not involve a transfer of anything of value."5 Because the TikTok ban would have prevented any U.S. user from sharing or receiving any TikTok content, Judge Nichols held, TikTok had shown it was likely to succeed with its claim that the order violated this "informational materials" exception. President Trump and the Commerce Department have appealed the issuance of the injunction to the D.C. Circuit; expedited briefing concluded on November 12, 2020. Oral argument will be held in December.
A second, nationwide preliminary injunction has also been issued by the U.S. District Court for the Eastern District of Pennsylvania.6 In a case filed by prominent users of the TikTok app, rather than TikTok itself, Judge Wendy Beetlestone issued an order on October 30, 2020, enjoining the entirety of the Prohibition Order.7 Judge Beetlestone agreed with Judge Nichols with respect to the "informational materials" exception of the IEEPA, and because an injunction was warranted on this ground, Judge Beetlestone declined to reach the TikTok users' arguments under the First and Fifth Amendments or the Administrative Procedure Act. On November 12, 2020, the federal government appealed this injunction to the U.S. Court of Appeals for the Third Circuit.
In light of these rulings, Secretary of Commerce Wilbur Ross has issued guidance that acknowledges the two injunctions and delays the effective date of any of the executive orders at issue, pending the government's appeals.8 Whether those orders survive further review, or the upcoming change in administration, is very much an open question.
All three cases-the petition for review in the D.C. Circuit, and the two appeals proceeding through the D.C. and Third Circuits-present important issues not only for TikTok, but also for any company that deals in the international exchange of information, whether through a social media app or otherwise. Montgomery McCracken's E-Commerce, Social Media and Web-Based Businesses practice group will continue to follow these important cases and provide updates as they develop.
1. Executive Order on Addressing the Threat Posed by TikTok, accessible at https://www.whitehouse.gov/presidential-actions/executive-order-addressing-threat-posed-tiktok/ (issued Aug. 6, 2020). The Commerce Department subsequently issued a list of specific, enumerated prohibitions pursuant to President Trump's order. See Identification of Prohibited Transactions to Implement Executive Order 13942 and Address the Threat Posed by TikTok and the National Emergency with Respect to the Information and Communications Technology and Supply Chain, 85 Fed. Reg. 60,061 (Sept. 24, 2020).
2. Regarding the Acquisition of Musical.ly by ByteDance Ltd., accessible at https://home.treasury.gov/system/files/136/EO-on-TikTok-8-14-20.pdf (issued Aug. 14, 2020).
3. TikTok Inc., et al. v. Committee on Foreign Investment et al., Docket No. 20-01444 (D.C. Cir. Nov. 10, 2020).
4. TikTok Inc., et al. v. Trump et al., Docket No. 1:20-cv-02658-CJN, at docket no. 29 (D.D.C. Sept. 27, 2020).
5. 50 U.S.C. § 1702(b)(1), (3).
6. Marland et al. v. Trump et al., Docket No. 2:20-cv-04597-WB, at docket no. 36 (E.D. Pa. Oct. 30, 2020).
7. Parts two through five of the order, which were not enjoined in the District of D.C. action, prohibited the following:
(2) Any provision of internet hosting services, occurring on or after 11:59 p.m. eastern standard time on November 12, 2020, enabling the functioning or optimization of the TikTok mobile application[;]
(3) Any provision of content delivery network services, occurring on or after 11:59 p.m. eastern standard time on November 12, 2020, enabling the functioning or optimization of the TikTok mobile application[;]
(4) Any provision of directly contracted or arranged internet transit or peering services, occurring on or after 11:59 p.m. eastern standard time on November 12, 2020, enabling the functioning or optimization of the TikTok mobile application[; and]
(5) Any utilization, occurring on or after 11:59 p.m. eastern standard time on November 12, 2020, of the TikTok mobile application's constituent code, functions, or services in the functioning of software or services developed and/or accessible within the land and maritime borders of the United States and its territories.
85 Fed. Reg. 60,061.
8. This guidance is accessible here: https://public-inspection.federalregister.gov/2020-25360.pdf (issued Nov. 9, 2020).
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