This post is one in a series of reports on significant issues for startups in 2016. In the past year, the startup community's voice helped drive notable debates in tech and entrepreneurship policy, but many of the startup world's policy goals in 2016, such as immigration and patent reform, remain unfulfilled. Watch this space for more year-end updates and continue to watch this space in 2017 as we follow policy issues affecting the startup community
The Copyright Office’s announcement on New Year’s Eve 2015 that it was launching a public review of the Digital Millennium Copyright Act (DMCA) set the tone for a varied and busy year in intellectual property policy. While there was no “Next Great Copyright Act” or comprehensive patent reform bill in 2016, courts, agencies, and elected officials addressed a wide range of IP issues, setting the stage for even more significant developments in 2017.
Considering how many startups and tech companies depend on the DMCA’s protections, the industry’s strong response to the Copyright Office inquiry was no surprise. As the fight over the ill-fated Stop Online Piracy Act showed, any attempt to undermine the smooth functioning of the internet through new copyright rules will energize the tech community. Though the Copyright Office’s study was framed as an objective inquiry into the continued effectiveness of a law passed at the dawn of the internet era, the Office’s history of favoring the interests of copyright content industries put the tech world on alert. Indeed, in the public roundtables held as part of the inquiry, the Copyright Office’s representatives seemed to err on the side of copyright maximalism, dismissing concerns about abusive takedown notices and tacitly endorsing dangerous policies like “notice and staydown.” Engine helped push back against these positions in our written comments submitted in conjunction with GitHub, Kickstarter, Medium, and Redbubble, and in our presentation at the San Francisco roundtable, arguing that while the DMCA has worked incredibly well to facilitate the growth of innumerable online portals, the statute fails to protect users and companies from abusive or fraudulent takedown notices.
Engine also weighed in this year in a different Copyright Office inquiry, focusing on the legal rules surrounding embedded software. In our comments, we stressed the importance of rules that promote interoperability between different devices and systems, which promote the ultimate goal of copyright law to spur creative production by allowing startups to create technologies that work with more established protocols and products.
The drama at the Copyright Office did not end with the controversial DMCA study, as newly-appointed Librarian of Congress Carla Hayden unexpectedly removed Register of Copyrights Maria Pallante shortly after taking over at the Library. Pallante’s dismissal prompted preposterous conspiracy theories and much consternation amongst copyright industries that enjoyed favorable treatment from the Copyright Office under Pallante’s leadership. While Pallante’s permanent successor has not yet been named, the tech community is optimistic that under new stewardship, the new Copyright Office may take a more balanced approach to IP policy.
Ultimately, concerns about the Copyright Office’s approach to IP law are relatively inconsequential compared to the terrible copyright reform effort underway in Europe. As the European Union continues to execute its Digital Single Market strategy to unify electronic commerce across the continent, it has undertaken a review of its own copyright laws and has come to some dangerous conclusions about how to “fix” the system. Most problematically, the European Commission is proposing a new rule that would require all sites hosting user-generated content to implement filtering technologies to pre-screen allegedly infringing content. As Engine noted in a recent letter to U.S. trade and commerce representatives, this proposal is a serious threat to the viability of any startups that host user-posted content, since it would force startups to spend scarce resources on costly and ineffective filtering systems, shifting the burden to police content away from the copyright holders that are best positioned to know what activities infringe their copyrights. The proposed rules have not yet been enacted, and Engine will continue to fight them in the new year.
The effort to pass comprehensive patent litigation reform that dominated the IP conversation in 2014 and 2015 was not as prominent in 2016 after previous efforts fell short of full congressional approval. A more modest bill that would have made it harder for patent trolls to abuse the litigation process by filing nearly half of all patent cases in the troll-friendly Eastern District of Texas garnered support from many voices in the tech industry but similarly stalled out.
With little progress on reform legislation, patent reform advocates were nevertheless able to take solace in significant legal victories. The Supreme Court, not known for a patent-heavy docket, considered several critical patent cases this year. In Cuozzo Speed Technologies v. Lee, the Court upheld the USPTO’s rules for its inter partes review process, which allows petitioners to challenge the validity of bad patents outside of formal litigation. The Court also scored a victory for sensible damages principles in the highly-publicized Apple v. Samsung case, which will make it much harder for trolls to abuse design patents to extort large settlements from victims. And just recently, the Court announced that it will look into the legality of patent troll venue shopping in TC Heartland v. Kraft, which could limit the ability of trolls to file lawsuits in states inconvenient for defendants. Though comprehensive reform looks unlikely in 2017, patent reform advocates will have plenty of opportunity to craft better patent policy through these and other prominent cases.
Though it’s not entirely clear at this point how the new Administration and Congress will approach IP issues, all indications suggest that 2017 will feature significant IP policy activity. The Copyright Office’s 512 study is ongoing, the EC has yet to finalize its dangerous copyright reform proposal, and there are several high-profile IP cases pending in the courts. There is some reason to believe that copyright reform legislation may pick up speed in the coming year, as House Judiciary Committee Chairman Bob Goodlatte (R-VA) and Ranking Member John Conyers (D-MI) recently released what may be the first in a series of copyright reform proposals after several years of fact finding. The initial proposal is somewhat vague but suggests that advocates for sensible IP policy will have much work ahead to restore balance to our nation’s IP laws.