Ownership disclosure law creates burdens for startups
José Padilla has an established track record of providing efficient, low-cost legal services. With LegalMente AI, he’s able to provide that same quality of work to those in need, including early-stage startups. We sat down with him to talk about what policymakers need to know about the uses of AI, how to keep the U.S. innovation ecosystem the most competitive globally, and his motivation to provide the most efficient work possible.
After overcoming childhood shyness in the warmth of his local Caribbean-owned barbershop, Royon Jeffrey knows the power of the beauty industry firsthand. He set out to create ListedB, an online marketplace for beauty industry professionals. We spoke to him about the financial opportunity within the industry, navigating capital access and investors, and his desire to empower small businesses owners.
Foreign nations are saddling U.S. companies — including startups — with discriminatory burdens.
MegaMinds was created out of a need to make learning more creative, fun, and hands-on for students. In our conversation with Co-Founder and CEO Eric Tao, we learned about the growing popularity of immersive learning, the tricky regulatory landscape for a product like MegaMinds, and what it’s like for many first-time entrepreneurs to build businesses.
The Big Story: Senate CDA 230 Fight. We’ve spent much of the last few weeks warning about the unintended and potentially dangerous consequences of a well-intentioned bill called the Stop Enabling Sex Trafficking Act (S. 1693). The bill will be the focus of a Senate Commerce Committee hearing next week.
The Big Story: Trump Rescinds DACA. President Donald Trump’s administration announced this week that it will phase out Deferred Action for Childhood Arrivals (DACA), an Obama-era policy that let 800,000 law-abiding undocumented immigrants stay and work in the U.S. without fear of deportation for renewable two-year periods. The administration’s decision gives Congress six months to pass immigration legislation before DACA protections are phased out.
Continuing to Make the Net Neutrality for Startups Case. This week, we filed our reply comments to the FCC on proposal to roll back the net neutrality rules put in place in 2015, a docket that has now seen more than 21 million comments.
Last Day to Vote for SXSW Tech Policy Panels. Voting on SXSW panels ends today, so it’s your last chance to vote for tech policy panels at next year’s SXSW. Get caught up on the offerings with our guide, which includes panels on everything from patent trolls, to Section 230 of the Communications Decency Act, to artificial intelligence.
Trade Talks Should Keep Startups in Mind. Representatives from the U.S., Canada, and Mexico met in D.C. this week to kick off talks to renegotiate the North American Free Trade Agreement. You may think of things like auto manufacturing and government contracts when you hear NAFTA, but it has major implications for U.S. startups that do business abroad or plan to do business abroad.
Tech Community Comes to Section 230’s Defense. Thousands of Internet companies rely on Section 230 of the Communications Decency Act, which protects platforms from being held legally responsible for what their users say online. That’s why we and more than 30 companies, groups, and organizations—including Copia, Automattic, Cloudflare, GitHub, Medium, Patreon, and Reddit—wrote to two lawmakers looking to narrow Section 230’s protections in the name of curbing sex trafficking. In a letter this week, we reiterated the tech community’s demonstrated commitment to the laudable fight against sex trafficking but explained that the new bill from Sens. Rob Portman and Richard Blumenthal would have unintended devastating consequences for the Internet.
Startups Oppose Senate Bill Creating Exceptions to Bedrock Internet Law. A bipartisan group of Senators introduced legislation this week that would undermine Section 230 of the Communications Decency Act (CDA), the fundamental intermediary liability law that protects Internet companies from being held legally responsible for what their users say on their platform. The Stop Enabling Sex Traffickers Act has the admirable goal of cracking down on sex trafficking online, however, injecting an exception like this in to CDA 230 would create a huge litigation risk for early stage companies that could drastically diminish investment in the sector. While we continue to work with legislators and victims groups to curb the horrific practice of sex trafficking, Engine has opposed this legislation. If you are a startup, sign onto our letter and tell Congress not to undermine the protections that created the Internet. Also, check out our op-ed with the Charles Koch Institute on the importance of CDA 230 to the success and growth of the Internet.
Alexa Accelerator Names Nine Startups for Inaugural Amazon and Techstars Program. Amazon, in partnership with Techstars, welcomed the first class of its new Alexa Accelerator. Amazon will incubate nine startups for three months, providing seed money, mentorship opportunities, and access to University of Washington researchers. The Alexa Accelerator is an initiative spun out of the Alexa Fund, and is specifically geared toward incubating startups that work on applying machine learning and artificial intelligence to voice platforms. Amazon’s Alexa product line utilizes voice recognition to allow people to interact with a robot personal assistant, and the company has been heavily investing in technology to help bolster the products.
The First Comment Period for the FCC NPRM on Net Neutrality Closes. Monday was the deadline for the first round of comments to be filed with the Federal Communications Commission (FCC) regarding its notice of proposed rulemaking (NPRM) that addresses the 2015 Open Internet Order. Engine was one of over 10 million groups and individuals to file comments with the Commission. The deadline for reply comments extends to August 16. In its submission, Engine explained the need for clear regulations to protect startups from threatening behavior by ISPs and incumbents. “The NPRM’s indifference to the ISP abuse of their terminating access monopoly power is incredibly dangerous to entrepreneurship. Without bright line rules banning anti-competitive ISP practices, startups will be put at a structural disadvantage in competing with well-heeled incumbents, causing venture investment to dry up and innovation to suffer,” Executive Director, Evan Engstrom, wrote. The White House, which has been mostly mum on the topic, also weighed in on the debate this week. “The best way to get fair rules for everyone is for Congress to take action and create regulatory and economic certainty,” deputy White House Press Secretary, Sarah Huckabee Sanders, said in a statement.
Engine Testifies Against Bad Patents at House Judiciary Committee Hearing. On Thursday, Engine’s President, Julie Samuels, testified in front of the House Judiciary Committee’s Subcommittee on Courts, Intellectual Property and the Internet on the impact of bad patents on American businesses. Julie spoke to the weaknesses in the patent system and the progress that has been made to weed out low quality patents by Congress, the courts and the United States Patent and Trademark Office. Patent trolls, armed with low-quality patents, are able to extract settlements from startups and small businesses, adversely impacting the companies that can least afford these threats. Since startups and small businesses are key drivers of innovation and job growth, troll threats against them are particularly stifling to American economic growth and prosperity.
Watch the hearing here. And read Julie’s full testimony here.
Engine Welcomes Reintroduction of Stock Options Bill. On Tuesday, Sens. Mark R. Warner (D-VA) and Dean Heller (R-NV), along with Reps. Erik Paulsen (R-MN) and Joseph Crowley (D-NY) reintroduced the Empowering Employees through Stock Ownership (EESO) Act, bipartisan legislation that will make it easier for startup employees to exercise their stock options. Engine was joined by more than 70 companies and organizations in sending a letter supporting the legislation. In response to the reintroduction, Engine Executive Director, Evan Engstrom, noted that “The Empowering Employees through Stock Ownership Act will allow more employees to obtain a stake in the companies that they help to build and grow. This policy change is a no-brainer and a win-win for both startups and their employees.” Read more here.
President Trump hosted “Tech Week” this week at the White House. Events held earlier in the week included a meeting with tech company CEOs to discuss a number of policy issues including cybersecurity, tax reform, and updating the government’s technology. CEOs from 18 leading tech companies attended including Apple, Amazon, Google, Microsoft, IBM, Oracle, and Intel. Later in the week, the White House held meetings with investors and executives to discuss emerging technologies like drones, 5G wireless expansion, and artificial intelligence.
The Venue Debate isn’t Over Yet. The House Judiciary Committee held a hearing on the Supreme Court’s decision in TC Heartland v. Kraft Foods LLC. In his opening statement, Chairman Goodlatte stated that he hoped the decision will close the loophole that has allowed patent trolls to haul startups and innovators to the Eastern District of Texas. Several Members of Congress were extremely supportive of the Court’s decision and stated that they hoped startups would see relief from abusive patent litigation. Several of the witnesses testified that the decision will see a substantial curb in forum shopping and will restore order to a broken patent system.
Tech Stages Internet Day of Action for Net Neutrality. In response to the Federal Communications Commission’s (FCC) recent announcement that it intends to roll back Obama-era open internet protections, a number of the tech industry’s biggest names, including Etsy, Amazon, Mozilla, and Kickstarter, have publicly announced that they will hold a national day of action in protest. On July 12, the companies, along with numerous other organizations (including Engine), will change their websites to bring awareness to the FCC’s attempts to undermine the free and open internet. At stake are the rules implemented under a Tom Wheeler-led FCC in 2015 that prohibit internet service providers (ISPs) from blocking or throttling internet users. The effort is reminiscent of the wide-scale internet blackout orchestrated by tech companies in protest against SOPA and PIPA in January of 2012, which would have resulted in significant censorship on the internet. If you or your company are interested in participating, you can sign up here.
Trump Asks Supreme Court to Revive Travel Ban. The Trump Administration has petitioned the Supreme Court to revive his immigration travel ban after yet another court blocked the effort last week. In a 10-3 ruling, a federal appeals court in Richmond, VA upheld an earlier Maryland ruling that suspended key parts of the Executive Order, which would would prevent entry for immigrants from six Muslim-majority countries and ban refugees from around the world. In response, President Trump has filed an appeal and asked the high court to temporarily lift the freeze. Trump will need the votes of five of the nine justices to stay the lower court orders and just four votes to add the case to the court’s docket. The startup community has pushed back against the President’s ban, with more than 300 startups and investors calling the it “morally and economically misguided” in a February letter to the President. We’re tracking.
Supreme Court Delivers Blow to Patent Trolls. The Supreme Court delivered a blow to patent trolls this week by unanimously reversing the Federal Circuit’s decision in TC Heartland v. Kraft Foods Group Brands LLC. The high court ruled that defendants in patent cases can only be sued where they are incorporated or have a regular and established place of business. The decision will make it significantly harder for patent trolls to file lawsuits in jurisdictions that patent-friendly but otherwise unrelated to the claims at issue—most notably the Eastern District of Texas, where almost forty percent of patent cases were filed last year. In a statement reacting to the ruling, Engine Policy Director, Rachel Wolbers, noted, “The Supreme Court’s decision in TC Heartland is another important step to preventing abusive patent litigation tactics that disproportionately impact startups...While this ruling is a significant victory in the in the fight against patent trolls, Congress must continue to work to protect startups from abusive patent litigation...We are thankful for today’s ruling, but know there is much more work to be done.”
The Federal Communications Commission (FCC) took the first official step in eliminating existing net neutrality protections this week. In a 2-1 party-line vote, the Commission adopted Chairman Ajit Pai’s Notice of Proposed Rulemaking (NPRM), which would reverse the 2015 Open Internet Order and the agency’s Title II classification of Internet Service Providers (ISPs). In a statement reacting to the vote, Engine Executive Director Evan Engstrom noted that “Any effort to undermine existing net neutrality rules would greatly harm the startup ecosystem...We must not remain silent. Now is the time for the startup community to galvanize around meaningful protections.” Y Combinator founder Sam Altman echoed this sentiment in a Wired op-ed published the same day as the vote, arguing that startup founders have a duty to fight for net neutrality. “Without strong net neutrality rules...the cable and wireless companies that control internet access will have outsized power to pick winners and losers in the market,” he writes. The FCC’s vote initiates a public comment period of 90 days.
On Tuesday, President Trump shocked the country by firing FBI director James Comey. The broader population probably knows Comey best as a result of his decision to reopen an investigation into Hillary Clinton’s private email server just days before the general election. But Comey was an especially contentious figure within the tech community due to his broader pro-surveillance and anti-encryption stances and last year’s very public confrontation with Apple over the unlocking of an iPhone used during the San Bernardino terrorist attack. And while Director Comey’s relationship with tech companies during his time in leadership could best be described as tumultuous, it is unlikely that the President will appoint someone with a friendlier approach. During his time on the campaign trail, President Trump blasted tech giant Apple over its unwillingness to enable a backdoor for government on encrypted devices in the wake of the San Bernardino shooting.
On Tuesday, Chairman of the House Judiciary Committee, Congressman Bob Goodlatte (R-VA) revealed the committee’s top tech priorities for this Congress. Among the issues he hopes to address are encryption and surveillance, as well as high skilled immigration. On immigration, he suggested that too many green cards were being given to family members of current U.S. residents, instead of going to skilled laborers. He told reporters that his goal was to “find a balanced solution to increase the high-skilled talent pool to promote job growth through visa and green card reforms,” and to protect “job opportunities for similarly qualified Americans.”
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