Startup Policy Year in Review
TLDR: This year, Engine focused on a number of critical policy issues impacting entrepreneurs and technology startups across the United States. Guided by the startup community’s concerns, we stood up for strong net neutrality rules, highlighted the importance of intermediary liability protections, called for a federal data privacy framework that works for both consumers and startups, and much more.
As the year draws to a close, we wanted to highlight some of the main policy issues that have affected the startup community this year, and what we’ve done to advance the goals of the entrepreneurial community.
Net neutrality: Engine has been actively engaged in the fight to restore strong net neutrality protections that ensure the Internet is a level playing field for companies of all sizes. Despite the U.S. Court of Appeals for the District of Columbia Circuit October ruling that upheld large parts of the FCC’s 2017 decision to repeal its 2015 net neutrality rules, we were encouraged by the court’s rejection of the FCC’s attempt to blanketly preempt state net neutrality laws.
We are continuing to push Congress to pass the Save the Internet Act, legislation that would fully restore the strong net neutrality protections enshrined in the FCC’s 2015 Open Internet Order. The bill passed the House in April, and more than 160 startups have joined Engine in support of the legislation.
CASE Act: Despite overwhelming concern from the startup community, technology companies, and public interest groups, the House in October passed the Copyright Alternative in Small-Claims Enforcement Act (CASE Act). The legislation would create an extra-judicial board within the U.S. Copyright Office to adjudicate copyright infringement claims and the board would be authorized to award up to $30,000 per case in damages.
By contrast, copyright infringement claims can currently be brought in federal court, where everyone benefits from constitutional protections such as the right to a jury trial and appeal. Without similar protections—protections which are lacking in the CASE Act—existing problems of inconsistently applied copyright law, massive predetermined damages, and “copyright trolls” coercing settlements from startups and users will only get worse.
At the time of the bill’s introduction earlier this year, we highlighted concerns that it would “create potential traps for small startups and further incentivize bad faith copyright infringement claims.” We also highlighted major concerns the startup community has with the bill, particularly how it would only increase uncertainty in U.S. copyright law and breed more abusive litigation. Although the full Senate has not yet taken up the legislation, we remain committed to protecting startups and their users from unnecessary—and potentially ruinous—infringement claims moving forward.
Data privacy: As congressional leaders continue to debate the framework of a federal data privacy bill, Engine has been actively advocating on behalf of the startup community. Engine Executive Director Evan Engstrom appeared before the Senate Commerce Subcommittee on Consumer Protection in March to discuss why it’s so important for lawmakers to “ensure that any federal framework balances pro-privacy regulations with feasible requirements for startups on bootstrap budgets.”
While we’re encouraged that Democrats and Republicans in both chambers of Congress are addressing data privacy, we’re continuing to highlight how an overly broad private right of action included in any legislation could open the door for “privacy trolls” to bring abusive lawsuits against startups. Lawmakers have already released draft legislation including private right of action provisions, and we will continue to highlight the dangers a broad private right of action would have on the startup community.
With the California Consumer Privacy Act to go into effect on Jan. 1, local advocates are already pushing to expand existing state privacy laws. As lawmakers continue to discuss federal data privacy legislation in 2020, we encourage them to move forward with legislation that preempts current state privacy laws to avoid the potential for a state-by-state privacy framework.
Intermediary liability: There was an alarming increase this year in the number of lawmakers attacking critical intermediary liability protections for Internet platforms. We have continued to highlight the importance of Section 230 of the Communications Decency Act, which provides online platforms, especially startups, with the ability to moderate third-party content without the threat of ruinous litigation.
Lawmakers have criticized online platforms for a variety of perceived failures when it comes to content moderation: censoring some political speech, allowing hate speech and violent content to spread, and allowing for the spread of misinformation. However, as Engine’s Executive Director Evan Engstrom pointed out in a Morning Consult op-ed in June, “Making this process even more difficult by putting legal liability on websites when they take down too much or too little, as policymakers seem insistent on doing, will not improve anything.”
Trade: This year saw new progress for startups looking to expand their businesses on a global level. We were pleased to see that Section-230 like digital provisions, encryption protections, and a balanced copyright framework were addressed in several important trade agreements, including the the U.S.-Japan Trade Agreement and the U.S.-Mexico-Canada Agreement (USMCA).
The U.S.-Japan trade deal, approved earlier this month, includes a critical digital trade section that prohibits data localization requirements as well as arbitrary government requests for source code. Both the U.S.-Japan Trade Agreement and the U.S.-Mexico-Canada Agreement (USMCA) also include intermediary liability protections that give startups the certainty they need to compete on a global scale. And USMCA includes intellectual property provisions that mirror the balanced copyright framework in U.S. law.
Congressional Startup Day: During the 2019 August recess, Engine helped organize Congressional Startup Day. The nationwide celebration of entrepreneurial communities across the U.S. featured more than 50 meetings between members of Congress, their staff, and startup communities and entrepreneurs. Events, meetings and festivities associated with the celebration took place throughout the month of August.
As Congressional Startup Day co-chairs Reps. Chrissy Houlahan (D-Pa.) and Cathy McMorris Rodgers (R-Wash.) wrote in a Roll Call op-ed, the festivities were important for “advancing smart solutions and supporting programs” for startups.
