A Bipartisan Plan for Job Creation

Senators Jerry Moran (R-KS) and Mark Warner (D-VA) tout their new bill S. 1965 STARTUP Act in today's Wall Street Journal.

Honeywell, Nest, and the Next Wave of IP Protection

Intellectual property is vitally important to innovation, but there comes a point where patents are so broad that they stifle new products and technologies.  So seems the case when large, long running companies can quash younger innovators with costly, time-consuming patent lawsuits.

There’s been quite a little buzz over startup company Nest’s Learning Thermostat. Designed by former Apple engineers, it features sleek, minimalist styling with a track wheel control, like the original iPod. It operates a self-programming system based on an interview-style interface, and learns your habits in order to predict when to change the temperature and save you up to 30% on your energy bill. It can also be remotely controlled from your computer or smartphone. It’s been receiving accolades as a nifty, attractive and innovative design and has been sold out since early November.

Thermostat giant Honeywell has taken a rather sour grapes attitude to all of this and has filed a patent infringement lawsuit accusing Nest of seven separate instances of infringement.  

These alleged infringements cover the sleek, minimalist styling, or at least the rotatable ring control. The interview style interface. The energy saving features. And the feature to control remotely via the Internet. Honeywell claims that the core design and functionality of Nest’s thermostat are the direct result of years of research and development carried out by Honeywell. The 2008 Honeywell thermostat, the Prestige, does appear to offer many of the features Nest’s does.

But can you really patent the shape of a device?  Or something as ubiquitous as WiFi connectivity now is?  And if you can, should you?

Honeywell’s crusade to “protect its intellectual property” is, for the moment at least, exclusively targeted towards Nest (and Best Buy, who is selling Nest’s products) -- which seems to suggest Honeywell is more interested in keeping innovative startup competitors from entering the market than IP.  But Nest’s thermostat is not the only competitive device on the market right now.  General Electric also offers the ability to manage a “GE smart thermostat” via the internet.  When asked to comment on GE’s system, Honeywell told  All Things D: “I don’t know. I’m not familiar with that product.” Honeywell also told GigaOm last week that it had shelved plans for a “learning” thermostat 20 years ago because they “found that consumers prefer to control the thermostat, rather than being controlled by the thermostat”, and decided to focus on other innovations.

So Honeywell doesn’t (or didn’t) want to pursue this particular innovation. But it doesn’t want a slick little startup like Nest to have it either. The problem is, an industry behemoth like Honeywell has a lot more financial clout and could sink Nest with a lengthy and costly litigation process -- even if it doesn’t win the patent lawsuit, it could at least deliver a critical hit. Which is discouraging for innovation all around.  Because lets face it: Nest’s thermostat is a hot-ticket item because it fuses design with functionality in a way that’s innovative, much like Apple’s recent products have -- not just for its WiFi capability or interview-style interface.

Protection of intellectual property is important, and we must take active steps as a community to find the best solutions to issues which arise out of our new technologies with regard to those protections. But we should not stifle innovation and improvement through overly broad restrictions on the creation of products and ideas.

Google Fiber comes to Kansas City

We’re very excited to see Google announce the commencement of their Google Fiber project in Kansas City today. Google Fiber will be putting down thousands of miles of cables to create a new broadband infrastructure which will eventually see data speeds of more than 100 times faster than the average speed most Americans currently enjoy.   

The project is enabled by the Gigabit Challenge -- a competition sponsored by the Kauffman Foundation seeking entrepreneurial ideas to create innovative and forward-thinking businesses to work alongside Google Fiber. Senator Jerry Moran has been a major proponent of the Gigabit Challenge, which goes hand in hand with the core initiatives he co-authored for the Startup Act -- which we strongly support -- a bipartisan agenda for invigorating the economy through innovation.

We look forward Kansas City’s continued growth as an entrepreneurial hub, and we also look forward to further expansion of high-speed broadband to every corner the country as we look towards building the future of the tech driven economy.

70 Groups Ask Congress to Halt Work On SOPA and PIPA

In the wake of all successful protest movements, once the dust settles, the time comes to take positive action. With SOPA and PIPA dead in the water, thanks to the sustained and comprehensive efforts of the internet community; the thousands of phone calls we made, the millions of us that signed Google’s petition, it’s time for our community to come up with alternative legislation - a solution that addresses online copyright infringement without compromising free speech and innovation. 

A letter sent today to Congress and signed by 70+ companies, including Engine, Mozilla, and Public Knowledge, urged Congress to “to take a breath, step back, and approach the issues from a fresh perspective.” 

The letter warned against repeating the mistakes of SOPA and PIPA, and requested that legislative debate surrounding the issue be “open, transparent, and sufficiently deliberative to allow the full range of interested parties to offer input and to evaluate specific proposals.” That means taking into account the views from tech companies and media companies. It means seeking out information and statistics from unbiased sources.

It means keeping the users of the internet in the loop, because our input matters, and we have shown that we can and will make ourselves heard.

Read the letter, in full, here from Public Knowledge.

#censorship? Not So Much.

The well-publicized January 18th blackout was so effective for SOPA and PIPA opposition that legions of Twitter users refused to Tweet last Saturday, January 28th, organizing their go dark movement via #TwitterBlackout. The protest was over a change in Twitter’s censorship policy, and, perhaps still rabid over the (very real) threat to open internet, Twitter users flew their freedom of speech flags defiantly.  Given a few days to meditate on the issues at hand, though, it seems clear that the righteous indignation of these protesters may have been a little hasty.

Twitter will indeed be censoring tweets - on a country by country basis according to the laws of the country being tweeted in. So, if a country’s government outlaws certain content, offending tweets will be taken down - but only in that country. Olivier Basille, from Reporters Without Borders, drafted a letter urging Twitter to reconsider a policy that from his point of view, kowtows to localized censorship and could therefore potentially contravene international free speech standards.  Basille posits that the change will stifle online dissidents who have previously used Twitter to great effect to stay informed and organize protests, such as last year’s social media fuelled revolution in Egypt.

But there are plenty of arguments to suggest that this won’t be the case.  For starters, the new policy differs from their previous one in only one respect: until now, these tweets would have had to be blocked worldwide. This means that instead of completely censoring any content deemed illegal by any government, all content will be available everywhere, with limitations only in effect for the country with the legality issue. And for those worried that localized censorship will hinder activism, John Castone over at Mashable makes a good point when he says that activists are smart enough to tweet in code if need be.  Twitter explicitly says they can’t block a user unless there is “valid and applicable legal order”.

Furthermore, Twitter will be posting all its take downs on watchdog site ChillingEffects.org. It’s also worth noting that all sites have to censor content to stay within the bounds of the law (in order to avoid being shut down) -- including eBay, Google, and Facebook. Most of them just don’t tweet about it.

On balance, it appears there will actually be less censorship than before - and more transparency when censorship does occur. As effective an activism tool as it has proven to be, even Twitter can’t operate outside of the bounds of the law. By complying with government regulations, despite any questions as to the morality of these laws, the platform can remain in countries where activism might be needed most.  

Happy Birthday, Startup America

Today marks the first year anniversary of the White House Startup America Initiative, and of the
Startup America Partnership, a private sector organization led by AOL founder Steve Case. To mark the occasion, The White House announced a legislative agenda to harness the job-creating power of small start-up businesses. Over the past year, the two have partnered to pledge over $2 billion in initiatives to assist with small business growth. The year also saw the creation of Kauffman Foundation’s Start-Up Act, a list of proposals that lay out a “comprehensive agenda for start-ups”. Many of these proposals have made it into the State of the Union last week, including some already part of Start-Up Act:

Tax cuts for small businesses:
In order to encourage entrepreneurs to keep starting the new businesses that are the lifeblood of our economy, the legislation is looking to institute a series of tax breaks for small businesses, including:

- making permanent the zero capital gains tax for small businesses in order to encourage investment in start-ups

- a 10% income payroll tax on new jobs added or raises (with a $500K cap to focus the benefits on small businesses)

- an increase in claimable deductions for start-up expenses

Access to markets and capital:
Startups need access to investors in order to make the business grow and thrive.  The legislation agenda follows on from the initiatives the White House championed in conjunction with the Startup America Partnership, including:

- changing the limit on simplified Regulation A “mini-offerings” from $5 million to $50 million, meaning start-ups will have greater access to investment capital with simplified SEC filing.

- a national framework for crowdfunding, allowing start-ups to raise high numbers of small investments through an online platform - the way Kickstarter does.

- making the expensive and time-consuming process of “going public” less difficult for new companies by creating an IPO “on-ramp” - giving “Emerging Growth Companies” a larger window of time to reach full compliance with requirements for becoming public

Skilled Worker Immigration:
The National Venture Capital Association conducted research which shows that foreign-born entrepreneurs are responsible for creating thousands of jobs for American workers and generating billions of dollars in sales.  As the President made clear in his State of the Union address, we need to facilitate the hiring of skilled workers from foreign countries.  One very simple way to do this (without increasing the overall number of visas) is by reorganizing the current distribution of visas, by lifting per-country caps to ease the huge backlogs for certain countries. Rep. Chaffetz’s legislation to do this has passed the House already, and should be moved quickly through the rest of the legislative process.

The Kauffman Foundation has stated definitively that startups are responsible for almost all new net growth in jobs (you can watch their short video explaining their research findings here).  And the White House is taking action in the form of this legislative agenda that addresses some of the immediate needs of startups that organizations like the Kauffman Foundation, and Startup America and our own, have been raising awareness.  We hope that this great anniversary for Startup America can serve as a catalyst for Congressional action, and not simply another date on the calendar.

How the Internet Beat SOPA and PIPA: Advocacy in a Networked World (Part 1)

From our friend, Tina Lee, at ZeroDivide. Read more here.

The Sky is Rising

We’ve all heard how peer to peer music sharing sites are keeping dollars out of artist’s bank accounts. Or maybe we know someone who works in publishing who is throwing up their hands at how sites like Amazon are choking the industry, making it impossible for them to compete. Hollywood would like you to know that downloading pirated movies is pretty much the same as snatching a handbag or stealing a car.  So everyone is agreement. Something has to be done, before our creative industries are submerged completely by cut-rate imitations. Right?

Wrong.

What if we told you the obliteration of these industries is not nigh? That actually, our creative industries are steadily growing, and that far from being a death knell, the internet is proving to be a bastion of opportunity for artists and those who enable them?

A report published by Floor64 (and proudly sponsored by us here at Engine) highlights some pretty fascinating research which shows that our entertainment industries have not only been thriving over the last few years despite the biggest recession since the Great Depression - they have been expanding.  

Take the music industry, for example.  Ok, true, the era of the rock star might be over. Big music execs no longer have the last word on who is meteorically risen to the ranks of the famous, and when.  On the other hand, what we have now, is more.  More artists producing more quality product, more platforms for those artists to market themselves on, more opportunities to create business models that are innovative and successful. More successful than you might think.  From lowering production costs, using crowdfunding, or offering up a “pay what you think is fair” payment structure, there are several non-traditional methods which have garnered incredible success, and which co-authors Masnick and Ho have found very interesting case studies for.

So yes, there is reason for people in traditional businesses in these industries to be feeling the pinch.  But by protecting the interests of these players, we’d be jeopardizing the prospects of the industry itself, of the artist, and of the consumer.  

This report is worth your time.  Read it, share it, comment.

Engine Advocacy Turns Tech Nerds Into Political Experts

In case you missed it over the weekend, Alex Fitzpatrick at Mashable talks about Engine and tech advocacy’s future.

Read more at Mashable.

Mobile Commons Powers 200,000 Congressional Phone Calls

Using Mobile Commons’ technology, Tumblr, Reddit and Engine Advocacy enabled more than 200,000 visitors in a single day to launch calls to their Congressional representatives directly from their websites. Those were among the more than 500,000 calls launched through Mobile Commons during the anti-SOPA campaigns of the past month.

Read more: http://www.digitaljournal.com/pr/559713#ixzz1kUk7ZTeT

#SOTU and the Innovation Agenda

As ordained by the Constitution, President Obama made the short trip up Pennsylvania Avenue to the Capitol last evening to give to the Congress and the Nation remarks on the State of the Union. Americans tuned in on television as in decades past but also online and took to Twitter with the hashtag #SOTU to provide quick reaction to the speech as well. The buzz? Obama’s “spilt milk” groaner got some attention, and there’s plenty of speculation about his re-election campaign this year.  Word clouds abound.  But what caught our attention was a reiteration of many of the issues that we have been talking about for quite some time.

In the economic section of the address, President Obama began by railing against the economic waste of outsourcing manufacturing to foreign countries, and tasking business leaders to commit to bringing jobs back to the US.  “
It is time to stop rewarding businesses that ship jobs overseas, and start rewarding companies that create jobs right here in America”, he said - and by rewards, we’re talking tax breaks.  Obama suggested a tax cut for American manufacturers, and said that high-tech manufacturers that make their products on home turf should be awarded double the tax deduction.  That would be nice, but hard to take advantage of if say, your skilled workers are overwhelmingly foreign born - as is the case with science and technology industries.  

But the President acknowledged that and then went on to outline his solution - a two pronged approach of investing in training and education, and reforming skilled immigration.  Noting that election year politics might stymie his hopes of comprehensive immigration reform, he suggested a stop-gap measure of awarding citizenship to “responsible young people who want to staff our labs, start new businesses, defend this country”. As for the many more responsible young people who get a US education and then go home to their own countries to start businesses and work in skilled professions? Obama counselled against letting them slip through our fingers, too.  This particular facet of the innovation agenda is on most presidential hopefuls’s
lists of talking points. When Newt Gingrich advocated for an automatic green card upon graduation for math, science, and engineering students, the other candidates quickly reiterated the point.  This isn’t Obama’s first pass at the issue, though -he has already championed a
Startup visa to encourage skilled worker immigration from overseas.

Also on the innovation agenda at the State of the Union were many of the initiatives the Obama Administration has championed with the Startup America Partnership - a public/private sector partnership created to encourage investment in startups. Specifically mentioned last night - deregulating how entrepreneurs get financing for their start-ups, tax breaks for job-creating start-ups, and investment in research and development.  When we wrote about the Administration’s commitment to these policy points a month ago, there were plenty of critics who saw the whole thing as a publicity stunt. Whether or not this is the case, it seems as if Obama is holding tight to innovation as a core peg of his economic policy leading up to his campaign.

With all these points in mind, we hope that the state of the Innovation Agenda, as well as the Union, continue, as the President said, get stronger.

Pride and Purpose

This morning, Senate Majority Leader Harry Reid posted a statement to his website announcing he would not be holding a cloture vote on the PROTECT-IP Act (PIPA) this coming Tuesday as previously planned. Less than an hour later, House Judiciary Committee Chairman Lamar Smith announced he would postpone markup of the controversial Stop Online Piracy Act in the House until “wider agreement can be reached.” 

This constitutes a stunning and major victory for Internet voices from all across America that came together in the last few weeks and months in opposition to this bill. Across the internet more than 13 million people stood up and took action against SOPA and PIPA and were able to achieve substantial change on the movement of these bills.

But the fight has only just begun. As Senator Reid said, the Senate Leadership is hoping to achieve compromise from all parties over the next several weeks. Stay tuned at

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EngineAdvocacy.org for more details on how to continue the fight as we’ll be posting new tools very shortly.

Above all, thank you all so much for your hard work, for your phone calls, for taking action online and offline. Make no mistake, today is a truly inspiring victory for the power of activism and engagement. But to find a better way forward, we’ll need more victories over the next several weeks and months. And together, we can achieve that victory.

Thank you for all that you do.

Artists against SOPA/PIPA

We’re excited to be part of a letter put together by a handful of individuals within the creative community to highlight the harms of PIPA and SOPA, and their belief in continued openness of the Internet. These are musicians, actors, and authors that the vast majority of Americans have welcomed into their lives and by virtue, into their homes.

Like all of us, these artists are keenly aware of the harms posed by copyright infringement, but wish to highlight for lawmakers that this legislation -- which is being moved through Congress at an alarming pace -- goes too far, threatening an ecosystem they rely on to reach their current fans and find new ones.

At a time when music sales are at an all time high due to distribution methods that rely on the Internet, and entertainment spending across the board is up 15% over the last decade, it is important to remember that the web continues to open up new markets and new possibilities every day. And that our favorite content creators have been able to harness that power in ways that would never have been imaginable 20 years ago.

We all must urge the Senate and House to carefully consider the ramifications of their actions and engage everyone impacted by this legislation to ensure we are protecting rightsholders’ creations
and
the platforms they (and we) rely on.

Read their letter. Call your Senator.

Our Internet

We’re excited to post a video today that we put together late last week with some great entrepreneurs in NYC. We asked them to talk to the amazing team at m ss ng p eces about why they started the business they have built, what motivates them every day, and the promise they see going forward. Each of them also spoke about why they fear legislation like PIPA and SOPA and the threats posed by legislation and regulation that have not been carefully thought through.

Now, when startups are the sole drivers of US job growth, accounting for practically all net new jobs in this country -- and the tech sector is the fastest growing among those -- is a good time to remember that protecting our Internet means letting our economy grow, and why our leaders need to ask important questions before passing legislation. And at the same time, to remember that the promise of tomorrow remains, as always, bright and innovative.

We’re grateful to the entrepreneurs who took time out of their busy day to participate in this video and the many others who volunteered to appear.

In alphabetical order:

Scott Belsky, Behance

Cindy Gallop, Consultant

Aaron Harris, Tutorspree

Chris Henry, Behance

Harry Heymann, Foursquare

Chris Mirabile, Hotlist

The New Politics of Silicon Valley - Revenge of the Nerds

Engine among others are profiled as leading the new wave of political activism in the entrepreneurial economy.

Read more at CNET.

Censorship Around the World

While we’ve been fighting SOPA and PIPA, other countries around the world are also waging battles against the dire consequences of internet censorship.

The oppressive regime in Belarus set a new law into effect today which tightens the already strict regulation of internet use by making it illegal for Belarussians to visit foreign websites.  The Eastern European country established an extreme level of control over internet use last year when it issued Presidential Decree No. 60 , under which ISPs are required to block access to certain types of content and specific URLs – which are so far not disclosed to the public.  A similar, US version of this legislation – the Communications Decency Act of 1996 -   sparked controversy in the mid-90’s and was eventually overturned for violating First Amendment rights.

The new law is ostensibly to regulate online commerce – that is, making sure only domestic domains are used to provide online services – and violating it will result in a misdemeanor with a fine not to exceed the equivalent of about $125.  However, the implications could be much more serious than a slap on the wrist and a small fine.  The law requires that internet cafes and individuals providing internet access to other parties be responsible for any illegal browsing or e-commerce, and failure to report illegal usage of foreign sites could result in the business being shut down.   This kind of excessive punishment essentially discourages public internet use.  The government also has authorization to change and add to the list of banned sites – a level of governmental control that civil rights groups are distressed by ( Freedom House rates Belarus’ press freedom “not free” with “substantial political censorship”).

Meanwhile, Spain has passed anti-piracy legislation remarkably similar to the SOPA bill. Under the new Sinde law , a special commission will be formed to react to copyright infringement complaints made by rightsholders.  Slightly less draconian than SOPA, the websites will have ten days to remove the infringing material before being shut down. However, the bill has generated major opposition in Spain to what people see as a misleading law enacted for the benefit of Hollywood.

These battles mark crucial junctions for the future of open internet.  Just as the rejection of the Communications Decency Act was a pivotal moment in the creation of an unrestricted and dynamic internet landscape back in 1996, laws like Decree No. 60, Sinde, and SOPA/PIPA could set the tone for a more closed, stifled, and creatively impoverished world wide web.  

Has Politics Trumped Truth?

The Consumer Electronics Association's Gary Shapiro on Truth, Politics and the American Way...

Read more at Forbes.

Verizon, Google Wallet and the LTE Network Agreement

Verizon Wireless has come under fire for blocking the mobile payment app, Google Wallet, from the keystone of its newly-released product line. Samsung’s Galaxy Nexus, which was developed in partnership with Google, was released last week after delays and speculation over whether or not Verizon would ship the phone with Google Wallet functionality.  Ship it did, absent the app - and it seems that in doing so Verizon may have violated its open-devices and open-applications conditions in its legal licenses for the 700MHz spectrum - the spectrum that operates its LTE network.  An open letter to the FCC was promptly dispatched by Barbara van Schewick, a professor at Stanford Law School and Director of the Center for Internet & Society.

The letter urges the FCC to investigate Verizon’s blocking of the app, as it appears to contravene FCC Service Rules which prohibit standards that block specific devices or applications or “
other services that compete with wireless service providers’ own offerings”.  For example, Verizon and AT&T’s new mobile payment application slated for launch next year ISIS, which will be in direct competition with Google Wallet.  

Van Schewick’s letter added that such a violation will have serious ramifications for all innovation in mobile technology -- not just mobile payment technology -- because investors will shy away from a business that is entirely at the mercy of wireless providers; companies that may have a stake in stifling competitive technologies.

Verizon already has a big piece of C-Block Spectrum- they recently signed a deal with Comcast and Time Warner to acquire 122 Advanced Wireless Spectrum licenses from SpectrumCo, which means they control a pretty significant chunk of the bandwidth -- a pretty hot commodity in the toll-road style spectrum system we currently have, and the very same type of license AT&T will now transfer to T-Mobile in the wake of their failed merger attempt.  So if the wireless companies can claim this much control over spectrum, do we really want to give them a monopoly over which companies and products they allow to use it?  The FCC still has to approve the Comcast/Time Warner deal. Only time will tell if Verizon’s move will play into their decision - and how similar deals are structured going forward.

Obama’s $2 Billion Early Innovation Fund - And What it Really Means for Startups

The Obama Administration recently
committed $2 billion

for small business growth as part of Startup America, a new initiative to encourage investment in startups.  The funding includes $1 billion in public funds to be put towards early stage investment by matching the investments of VC firms into small business startups.  The
Startup America Partnership

, led by Steve Case,
also announced over $1 billion in the form of services and resources for startups coming from private companies, including free legal and consulting services.  

On paper, this appears to be a positive boon for startups - but what are the real implications for the innovation economy? We’ve taken a closer look at some of the commitments:

• Regulation A “miniofferings:”  
  Regulation A currently stipulates that offerings of investment capital can be made under an SEC simplified registration process if they are $5 million or less – a number that was arrived at in 1992.  This legislation would change the dollar threshold for exempt offerings to $50 million.  The Administration is touting this as a way to assist small companies in raising capital at a crucial stage in their growth.
  A
  Kauffman study
  
  revealed that new companies are responsible for
  all
  the job growth in the US since 1977, so it makes sense to make it easier for startups to raise funds early on to go public – the point in a company’s life span during which Case says 90% of new jobs are added.  There are those in the tech community that say
  government regulation and the startup community are always going to be at odds
  
  but given that this provision simply updates the existing regulation, it seems the least controversial way of moving the needle on this issue.

• Crowdfunding:
  The most controversial of the Partnership’s provisions is the bill to legalize Crowdfunding –
  small-dollar investments that use online fundraising and social media platforms to solicit investors.  The point of giving startups access to crowdfunding as a fundraising tool is to provide them with more opportunities to raise capital and thus create jobs.  This one comes with its own set of regulations to protect investors, including limits on contributions and
  measures against fraudulent companies
  
  soliciting capital.  Crowdfunding sites for startups, like
  IndieGoGo
  
  and
  Kickstarter
  
  , already exist, but until this bill is signed into law, companies that raise funds from investors that are not registered broker dealers are
  at risk of being in violation of federal and state securities laws
  
  .

• Investment in an Innovation Economy:
  Obama’s Early Stage Innovation Fund, coupled with the Startup America Partnership’s commitments from private-sector companies, are both steps on the road to an economy that is predicated on entrepreneurship and production rather than consumption.  
  The provisions basically make it easier for individual investors to fund startups and to offer more capital.  While this arguably increases inherent risk for investors, no one is forcing any individual to invest.  It’s an individual decision, and one that happens to have the added bonus of growing our economy and job market. It’s not just monetary investment, though.  The Department of Education, as part of Obama’s commitment to the innovation economy, will launch a
  National Education Startup Challenge
  
  , for which students will create a business plan for a new company - encouraging entrepreneurship by getting them in at the ground floor, so to speak.

Critics on Capitol Hill
dismiss
the announcement as little more than a White House PR stunt

, and while the immediate and tangible impact for startups is not completely apparent, it is at least a nod of support from the government and a commitment to the promotion of innovation and entrepreneurship.  Bottom line?  It’s more than a nice gesture, it could be a significant resource for startups. To truly create an economy based on innovation, education and growing government support are key.  These measures are, if nothing else, a positive indication of a turning tide of governmental support for entrepreneurship and the creation of a solid production based economy.

Don't Cut the Power to Innovation in America

Congress: Don't Cut the Power to Innovation in America.