The Big Story: Startups, tech groups, and more urge Congress to remove harmful trademark bill from innovation legislation
This week, Engine joined an expansive coalition of industry, civil society, and academic voices in urging Congress to remove a problematic bill that would dramatically shift the landscape for e-commerce startups and small, online businesses from must-pass legislative proposals. A letter from 38 organizations and companies, and a separate letter from 26 professors with expertise in trademark, both laid out significant concerns with the bill and asked Congress to exclude the Stopping Harmful Offers on Platforms by Screening Against Fakes in E-Commerce (SHOP SAFE) Act from final legislation combining the Senate’s United States Innovation and Competition Act (USICA) and the House’s America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength (America COMPETES) Act.
We are among the many groups who have written extensively about SHOP SAFE’s flaws. While it’s purported goal of deterring unsafe counterfeits online is a good one, the bill would generate substantial new barriers to entry and place high compliance burdens on startups with e-commerce related products and services, for example, expecting basically every company to screen all user posts for potential trademark infringement. As resale marketplace Mercari explained: “laws like the SHOP SAFE Act often end up benefiting the largest online marketplaces that cater to established businesses and sellers who already have the resources and procedures in place to comply.” And, as hobbyDB CEO Christian Braun detailed in a blog post, “[i]t will do little to stop sophisticated counterfeiters and will ultimately do collectors more harm than good, by obstructing competition and hindering consumers’ ability to resell their own items.” While several lawmakers raised concerns with the bill last year, and the bill’s sponsors agreed to try and improve it, it re-emerged this year as part of the America COMPETES Act without any improvements. This week’s letters reiterate concerns shared by tech companies of all sizes, by small online sellers, by public interest groups, and more.
As policymakers move forward with the Bipartisan Innovation Act, finalizing the pro-innovation and pro-competition proposals in USICA and America COMPETES, stakeholders from across sectors and across the economy agree Congress must remove SHOP SAFE from consideration and take the time necessary to vet these types of proposals.
Policy Roundup:
Biden releases broad digital assets plan. This week, the Biden administration announced a new executive order outlining a government strategy to develop a regulatory framework for digital assets. As we’ve long argued, members of the cryptocurrency ecosystem, especially startups, need clarity as they innovate in this growing space. The executive order recognizes the opportunities created by digital assets while calling for a policy framework to deal with consumer and investor protections, mitigating economy-wide risks, promoting U.S. leadership, and more. Earlier in the week, Sen. Ron Wyden (D-Ore.) warned against unnecessary and overly burdensome regulation of digital assets that would hamper innovation.
R&D tax credit, small business grants get Hill attention. This week, Senators Todd Young (R-Ind.) and Maggie Hassan (D-N.H.) wrote a letter to Senate leadership urging the restoration of the R&D tax credit for startups. That credit had allowed startups to write-off 100 percent of their R&D expenses in the year they occured, but beginning this year, they must be spread across five years. Also this week, the House Committee on Small Business held a hearing on the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs as policymakers consider their reauthorization. The programs are competitive grants to support startups’ R&D and advance American innovation. Both the SBIR/STTR and the R&D tax credit are critical components of that startup ecosystem that should be preserved and bolstered.
EU orders Internet companies to block Russian state media online, including in user posts. The European Union has called for Internet companies to remove content connected to Russian state media organizations RT and Sputnik from search engine results and social media posts in Europe as part of the Union’s sanctions against the country. The order applies to any search results or posts from “individuals who reproduce content from the two media organizations on any social media platform.” The unusually aggressive move highlights the evolving and complicated challenges around content moderation.
Georgia Senate passes controversial content moderation bill. Georgia has become the latest state to advance a content moderation bill that would make it more difficult for Internet companies to set and enforce rules for user content on their platform. The bill—which passed the state senate this week—would treat large Internet companies as common carriers, restricting their ability to remove harmful content, and it would open up Internet companies to lawsuits if users have been “censored.” Recently passed laws with similar goals in Florida and Texas have been put on hold by federal judges after Internet industry groups sued, claiming the laws violate the companies’ First Amendment rights.
Accredited investor definition should be widened, not narrowed. The SEC is considering possible changes to the “accredited investor” definition, which determines who can participate in certain private securities offerings, like those offered by startups investments. But proposed changes—like increasing the financial thresholds potential investors must meet to qualify as accredited investors—only stand to restrict participation, in particular by investors from underrepresented communities. We highlight in a new blog post that any changes should open up avenues to broader participation.
Justice Thomas re-ups call for reconsidering Section 230. In a solo statement this week, Supreme Court Justice Clarence Thomas repeated his calls for the Court to reconsider the scope of Section 230, a foundational Internet law that allows Internet companies of all sizes—especially startups—to host and moderate user content without having to worry about getting sued over user content. In the statement—that came as the court declined to hear a case against Facebook—Thomas said the broad immunity the courts have provided to Internet companies under Section 230 does not rest on the statute’s text.
Startup Roundup:
#StartupsEverywhere: New York City, New York. Cranberry Queues is a digital music service company that is aiming to revolutionize the way music is shared and discovered through its proprietary music sharing platform. President and Co-Founder Rolf Locher told us about what led him to Cranberry Queues, the challenges he’s faced in building a technology startup, and how he’s navigating the complexities of things like privacy and content moderation given the platform’s unique features.
