The Big Story: States push ahead on privacy in lieu of federal action. Virginia officially became the second state in the nation—following California—to implement its own comprehensive data privacy law last week. The passage of Virginia’s privacy law comes as other states—including Minnesota, New York, Oklahoma, Utah, and Washington—consider implementing their own sweeping data privacy measures.
Virginia’s new law goes into effect in 2023 and applies to companies that control or process personal data from at least 100,000 Virginia residents, or derive more than half of their revenue from the sale of personal data and control or process data from at least 25,000 Virginia consumers. California passed the nation’s first data privacy law—known as the California Consumer Privacy Act (CCPA)—in 2018, and California voters in November approved a measure expanding the law. With Virginia following suit and several other states poised to pass their own laws, federal inaction on creating a national data privacy framework has opened the door for a state-by-state patchwork of varying, and even potentially conflicting, privacy rules.
That patchwork could be especially onerous for the startup community. Early-stage companies stand to lose the most on both sides of the privacy debate, since they often lack the resources needed to navigate a complex regulatory landscape and do not have the longstanding relationships with users needed to withstand decreasing consumer trust in the Internet ecosystem. As other states continue to explore their own privacy legislation, we urge Congress to prioritize the creation of a federal privacy law that protects users and provides clarity and certainty for the startup community.
Policy Roundup:
Immigration bill provides chance to address visa backlog. As Congress continues to debate immigration reform legislation backed by the Biden administration, policymakers must remain mindful of the entrepreneurial community’s needs and concerns when it comes to accessing high-skilled talent. Although the immigration bill would eliminate the current backlog in employment-based visas over a 10-year period, policymakers must refrain from pursuing any measures that would squeeze needed foreign-born workers out of the tech industry—such as efforts to prioritize H-1B visa petitions based on the highest salary levels.
PPP rule change gives sole proprietors access to larger loans. The U.S. Small Business Administration issued an interim final rule this week changing how Paycheck Protection Program (PPP) loans are calculated, a move that paves the way for self-employed workers, sole proprietors, and independent contractors to qualify for larger loans. The new formula allows individuals who file an IRS Form 1040, Schedule C to calculate their PPP loan amount using gross income instead of net profit. The changes, however, only apply to new loan applicants and do not allow previous PPP recipients to increase their existing loans. PPP lending is set to expire on March 31st, and policymakers only have a short window of time to tweak the program in order to give previous PPP borrowers access to additional funds.
New legislation would limit use and abuse of non-compete agreements. Recently introduced legislation—known as the Workforce Mobility Act—from Reps. Scott Peters (D-Calif.), Mike Gallagher (R-Wisc.), Anna Eshoo (D-Calif.), and Peter Meijer (R-Mich.) would help increase startup growth and innovation across the nation by allowing entrepreneurs to launch their own competitive companies without being hindered by non-compete agreements. As Engine noted in a recent statement supporting the bill, the proposal “would spur startup formation across the country by removing barriers to entry that serve to stifle innovation and entrepreneurship.”
Supreme Court hears case about patent judges. The U.S. Supreme Court this week heard oral argument in United States v. Arthrex Inc., a case addressing whether or not the appointment of administrative patent judges (APJs) to the Patent Trial and Appeal Board (PTAB) is constitutional. In an amicus brief Engine and the Electronic Frontier Foundation submitted to the Court last year, we argued that the APJs are constitutionally appointed. We explained that if the Court decides otherwise, it would weaken the PTAB—which is permitted to take a “second look” at weak or overbroad patents—and harm overall patent quality. We also argued that an adverse decision could undermine the inter partes review (IPR) system, which “would wreak havoc on the patent system by amplifying the propagation of wrongly granted patents in contravention of Congress’s intent and the public’s interest.”
Startup Roundup:
#StartupsEverywhere: Durham, North Carolina. Courtroom5 is a Durham-based startup that provides automated legal support to users who are representing themselves in civil court without a lawyer. We recently spoke with the Co-Founder and CEO of Courtroom5, Sonja Ebron, to learn more about her startup’s work, how her company is utilizing artificial intelligence, and what policymakers can do to address funding and networking disparities in the tech sector.
