The Big Story: Congress working to clarify small business loan program. The U.S. Senate this week tried to double the amount of time that recipients of Paycheck Protection Program loans have to spend the emergency funding, even as House Democrats plan to advance legislation next week that would change accessibility requirements and allow PPP loans to be used over an even longer 24-week timeframe.
Under the current legislation, PPP borrowers can have their loans forgiven, but only for expenses incurred during the first eight weeks after the loan was issued. For many businesses, eight weeks is not enough time. The Senate tried and failed to pass a deal by unanimous consent yesterday that would have extended the timeframe for PPP recipients to use their loans for up to 16 weeks. PPP loans are designed to help small businesses keep employees on their payrolls during the coronavirus pandemic, but the program has been hamstrung by concerns about accessibility and loan forgiveness requirements. The House next week will consider bipartisan legislation, drafted by Reps. Dean Phillips (D-Minn.) and Chip Roy (R-Texas), that would provide small businesses with greater flexibility in the use of PPP loans while still maintaining the opportunity to have their loans forgiven.
While clarifying the program’s loan forgiveness requirements and extending the timeframe to use the funding will benefit many small businesses, startups are still in need of more targeted support to survive the pandemic’s economic downturn. As lawmakers continue looking at how to best support small businesses during this uncertain time, it’s critical that they consider alternative relief solutions that work for startups. Engine has drafted a series of startup-oriented COVID-19 relief proposals—including ideas about government equity investments, more targeted forgivable loan programs, tax credits, and grant opportunities— for Hill offices to use in further legislative negotiations. Hill staff are welcome to reach out to info@engine.is for more information.
Policy Roundup:
Abusive patent litigation on the rise during COVID-19 outbreak. In an op-ed for Morning Consult, Engine IP Counsel Abby Rives discusses how patent assertion entities are targeting startups and small businesses even more during the current pandemic, and highlights how the increase in abusive litigation “hammers home the importance of patent quality and balance in the law.”
Lawmakers want to use encryption to secure congressional calls. A bipartisan group of 20 House and Senate lawmakers, led by Sen. Ron Wyden (D-Ore.), signed a letter calling for the House Sergeant at Arms and the Chief Administrative Officer of the House to “take immediate action” to allow for securely encrypted calls between the two chambers of Congress. The letter comes after Attorney General William Barr earlier this week called for tech companies to build intentional vulnerabilities into their encrypted products and services so law enforcement officials can access them as part of sanctioned investigations—a move that would undermine the security of all users.
Narrowing the nation’s digital divide. Microsoft President Brad Smith urged Congress to immediately address broadband access concerns as part of the next stimulus package, saying in a blog post that the pandemic has exacerbated the nation’s digital divide. Reliable Internet access has become a critical necessity for startups and consumers, particularly with so many Americans depending on digital services as a result of the coronavirus outbreak.
Copyright Office says DMCA’s safe harbor provisions need clarification. The U.S. Copyright Office released its multi-year study on Section 512 of the Digital Millennium Copyright Act. This portion of the DMCA, which established the notice-and-takedown system for resolving claims of online infringement, includes a critical safe harbor framework so that Internet startups who comply with the laws requirements are not automatically liable for their users’ alleged infringement. The Copyright Office’s report largely addressed the concerns of a narrow set of rightsholders, favoring changes to the law that would create more uncertainty for startups and disregard the interests of many Internet users and creators. Were Congress to adopt these changes, it would potentially upend the carefully-balanced framework that has benefited startups and other online firms that share user-uploaded content.
EU officials seek feedback ahead of new tech directive. European Union regulators are reportedly preparing to circulate a 43-page questionnaire to gather feedback from online users, digital service providers, and other EU government officials as the bloc readies to draft new rules for reigning in tech companies. According to a document reviewed by reporters, EU regulators are seeking in part to determine whether all online platforms should be subjected to takedown notices, as well as how proactive Internet companies should be in removing illegal and harmful content.
White House advisory board calls for tech collaboration to support job growth. The White House's American Workforce Policy Advisory Board—a panel that includes Trump administration officials and executives from tech firms—called for an increase in public-private partnerships to support the development of a new technological infrastructure to promote job growth post-pandemic. Among the advisory board’s recommendations for boosting the digital skills of displaced workers are efforts to “streamline occupational licensing, education requirements, reduce the cost of licensing, and increase reciprocity.”
Supreme Court rejects lawsuit over terrorist content on Facebook. The U.S. Supreme Court rejected a lawsuit against Facebook that claimed the social media company provided “material support” to terrorist organization Hamas by hosting their content. While the court did not comment on the decision to reject the case—Force v. Facebook—the move upholds the Second Circuit appeals court’s ruling last year that there was “no basis” to hold Facebook liable for user-generated content on its platforms.
Startup Roundup:
#StartupsEverywhere: New York City, New York. HotelsByDay wants to make the hotel experience more hospitable by offering guests the opportunity to book hotel amenities and rooms for personal- and business-related uses during the day. We recently spoke with Yannis Moati, HotelsByDay’s CEO, to learn more about his idea for the startup, how the coronavirus pandemic has affected his business, and how crowdfunding allows startups to diversify their investment sources.
COVID-related layoffs could spur startup surge. While many startups are struggling right now as a result of the pandemic, accelerators and incubators across the country have seen a sharp increase in the number of tech entrepreneurs interested in launching new companies. Some Silicon Valley insiders are cautiously optimistic that the number of laid off tech workers interested in launching their own firms will lead to a post-pandemic startup surge.
