Startup News Digest: 6/10/2016

Our weekly take on some of the biggest stories in startup and tech policy.

Chances for Email Privacy Reform Dwindling. The debate over ECPA reform has come to a standstill in the Senate, with the Judiciary Committee delaying consideration of the Email Privacy Act again this week. The bill, which would require law enforcement to obtain a warrant before accessing digital communications, such as emails, found unanimous support in the House. But a number of Senators have attempted to add controversial amendments that would undermine support for the bill in the Senate. One particularly concerning amendment from Senator John Cornyn (R-TX) would significantly expand government surveillance of American communications by giving the FBI access to electronic communications transactional records (ECTRs) without a court order. This proposed expansion of power is problematic for privacy advocates and the tech community, and Engine joined a letter on Monday opposing Sen. Cornyn’s amendment. With just a few weeks left before Congress shuts down for the election, we hope to see ECPA reform move soon, but things aren’t looking promising.  

Net Neutrality in the EU. On Monday, the EU telecom regulator, BEREC, released draft rules implementing net neutrality legislation passed by the European Parliament last October. According to BEREC’s chair, Europe’s rules are stronger than those in the U.S. because the U.S. regulation could change depending on the administration. Still, net neutrality advocates have raised concerns that the EU’s draft guidelines include a number of ambiguities and potential loopholes around zero rating, traffic management, and ‘specialised services’ that could undermine the principles of net neutrality.

...and in the U.S. Back in the U.S., the House of Representatives moved forward legislation that would roll back the FCC’s net neutrality rules. On Thursday, the House Appropriations Committee passed the 2017 Financial Services and General Government Appropriations bill, which included a policy rider that would significantly limit the FCC’s ability to enforce its 2015 Open Internet Order. The bill also included concerning provisions that would block broadband rate regulation and pause the FCC’s set-top box proceeding until an impact study is done. Similar anti-net neutrality riders were removed from the final budget deal last year, and we’re hopeful that these provisions will not make it into the final appropriations package.

Parties Developing New Tech Agendas. National party leaders are starting to shore up their tech policy agendas for this election year and beyond. Politico reported this week that the Clinton team is "quietly assembling a roster of high-powered tech and telecom advisers..." that will focus on protecting the open internet and modernizing government. It appears the presumptive Democratic nominee hopes to build on the tech legacy of President Obama, who has been a strong supporter of net neutrality and led efforts, such as the U.S. Digital Service, to update government for the digital age. Meanwhile, Speaker of the House Paul Ryan offered a preview of his new plan for Congress under a Republican president, though it's not clear whether the GOP's nominee, Donald Trump, will support the platform. A new website lists several policy priorities and according to The Hill, a section on investment and innovation is coming soon.

More Privacy Shield Roadblocks. The proposed EU-U.S. Privacy Shield agreement is still facing a significant challenge in being formally approved. As the June 20th deadline for a vote by EU member states approaches, details are still being hammered out by the European Commission. The proposed agreement has received widespread criticism (from the Article 29 Working Group, the European Data Protection Supervisor, and others), and concerns still exist around the independence of a U.S. ombudsperson to oversee European complaints, company data retention practices, and rules around transfers to third-party countries. The commission has been working with the U.S. to resolve some of these issues and get the agreement over the finish line. Meanwhile, a German regulator fined three U.S. companies this week for failing to establish alternative data transfer methods after the original Safe Harbor agreement was struck down last year. While the fines were relatively small, they highlight the enormous problems that companies face without a catch-all agreement covering data flows.

Apple v. Samsung: Engine Weighs In. This week, Engine, in conjunction with leading 3D printing startup Shapeways, filed an amicus brief in the Supreme Court’s consideration of the longstanding Apple v. Samsung litigation. The court will consider the type of damages an accused patent infringer must pay if found liable for infringing a design patent. Unlike utility patents, which relate to the functioning of an item, design patents cover the look and feel of an object. An appellate court held that Apple, which claims design patents on things as simple as a rectangle with rounded corners, can seek the “total profits” that Samsung made from its smartphone, which was found to infringe three of Apple’s design patents, even though the designs at issue contributed marginally to the sales of Samsung’s phones. For utility patents, the amount of money a patent holder can seek is proportional to the value of the patent itself, but under the appellate court’s rules, a single design patent infringement can justify an award of all the damages attributable to a product that may be covered by as many as 250,000 different patents. Our brief argues that such exorbitant damages awards would have a disastrous impact on innovation, encouraging patent trolls to start collecting and asserting design patents as a new weapon in their efforts to extort settlements from startups.