Engine Files Comments on Embedded Software and Copyright Law

Copyright law has always had a complicated relationship with software. Supreme Court Justice Stephen Breyer presaged the difficulties in applying copyright law to software in a seminal law review article in 1970, and despite a few legislative revisions of copyright law since then, many of those same inherent difficulties persist. In the past year, these problems received public attention in a few high profile news stories, including John Deere’s claim that tractor purchasers don’t actually “own” the tractors they buy. Instead, purchasers merely receive an implied license to operate the vehicle and the software it contains. To just about any rational person, this seems like a Kafka-esque absurdity that only the most creative lawyer could dream up. But as more and more of our everyday products become computerized and connected, it’s likely that we’ll see many more examples of how copyright laws meant to encourage creative production can produce bizarre outcomes when applied to products containing embedded software.

Spurred in large part by the John Deere story, the Copyright Office opened a public inquiry seeking commentary on the legal and policy challenges related to copyright’s application to software embedded in everyday products. Last week, Engine filed comments with the Copyright Office identifying the many challenges to startup innovation that arise from this application. Written by a crack team of legal students at Stanford Law School’s Juelsgaard Intellectual Property and Innovation Clinic under the guidance of Phil Malone and Jef Pearlman, the comments examine difficult questions surrounding the appropriate scope of software copyrights, focusing on how granting copyright protection to essentially functional code can hurt startup competition by undermining interoperability between platforms and services, and how limiting a user’s right to modify software in devices they own poses a range of threats to innovation and security.

The innovation-stifling threat of overbroad copyright protection for software is perhaps best encapsulated in the ongoing litigation between Google and Oracle over the copyrightability of Application Programming Interfaces (APIs) that facilitate communication between computer programs. As the comments explain, “APIs have been and are indispensable to interoperability in standalone software platforms and products and will be equally indispensable to software-enabled consumer devices,” such that allowing companies to assert copyrights over APIs to will create “incentives for incumbents in almost any industry to misuse copyright law to try to exclude new entrants and emerging competition.” Particularly in the emerging Internet of Things, where startups will be well-positioned to build apps and services that interact with the innumerable connected devices that will soon be a part of everyday life, protecting interoperability is paramount to encouraging innovation and competition. This competition will foster both enormous economic growth and consumer value, so it’s critical that we rein in rules that give incumbents the power to use ill-fitting copyright laws to exclude competitors.

The comments make a compelling case for sensible copyright rules in the age of embedded software, and we at Engine are incredibly grateful for the fantastic work of the Stanford team. Read the full submission here.

Startup News Digest: 2/19/2016

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

Apple, Encryption, and the Future of Digital Security. This week’s federal court order that would require Apple to unlock an iPhone linked to last year’s San Bernardino attack has catapulted the debate over privacy, security, and encryption into the headlines of nearly every major news outlet in the U.S. and beyond. Evan takes a look at the ramifications of this case for startups and the tech industry, highlighting the complexity of the situation: “though the FBI’s request is tailored to investigating a specific terrorist activity, it will ultimately weaken security standards and may lead to serious vulnerabilities that will put countless consumers at risk.” Read the full post here.

MOBILE NOW Act. The battle between Democrats and Republicans over a Supreme Court nominee will not thwart Senate Commerce Committee plans to move the MOBILE NOW Act this year. The bipartisan bill, which was introduced last week by committee leaders, Sens. John Thune (R-SD) and Bill Nelson (D-FL), aims to free up additional spectrum for commercial use and improve mobile infrastructure. “I see no reason that any nomination would affect consideration of the bill,” said a staffer for Sen. Thune. While this statement should be taken with a grain of salt (things haven’t exactly been moving quickly in Congress lately, even absent the escalating clash over Justice Scalia’s replacement), it is positive news for the startup community, which supports the bill. More broadly, the Chairman’s reaction signals that lawmakers aren’t ready to give up on 2016 quite yet. We’re hopeful…

Evaluating Startup Accelerators. Startup accelerators are on the rise: today over 170 accelerators support thousands of startups throughout the country. But are they effective? The results are inconclusive, explains researcher Ian Hathaway in a report for Brookings. The top accelerators do help early-stage companies hit key milestones at an accelerated rate. And those top programs even count some unicorns among their alumni. But not all accelerators are created equal. "Much research needs to be done to better understand the effectiveness of these programs and the broader impact they have on startup communities," writes Hathway, "particularly as national and regional authorities look to them as tools for economic growth."

Unlocking the Set-Top Box. In a move aimed at promoting innovation and consumer choice, the FCC voted on Thursday to propose rules that could increase competition in the set-top box market. Did you know that pay-TV subscribers spend an average of $231 per year to rent set-top boxes from their cable provider—something that arguably could be purchased outright from a third-party for much cheaper? The problem is that there are very few meaningful alternatives on the market. The FCC’s proposal aims to change this by establishing an open platform that would allow any set-top box to work on any cable network. So a startup could develop a new set-top box that allows consumers to watch live TV, binge on Netflix, and watch reruns of their favorite shows all on that one device that they paid for once. "Let's have the cable company say, 'You want to pay me for my interface, because it does all of these things nobody else does,' rather than, 'You must pay me,' " FCC Chairman Wheeler said. "We're just trying to get to that basic American concept of competition."

Casting Doubt on Bootcamp Placement Rates. In 2015, coding bootcamps graduated over 16 thousand students with newly minted, on-demand skills. That's a 138 percent increase from the previous year and enrollment rates continue to rise. These accelerated learning programs have become an increasingly popular pathway to tech jobs, or at least so they say: many bootcamps boast job placement rates above 90 percent. However, after a closer examination of those claims, the International Business Times is skeptical of these alluring figures: "Those claims are largely un-audited by third parties and based on differing standards." As the government explores offering federal student loans to cover these new programs, this news should be taken as "more evidence that giving these schools access to federal Title IV dollars is premature and will likely lead to waste and abuse," writes an education policy analyst at New America in a follow-up post. But even that conclusion seems hasty. Instead of interpreting these inconsistencies as harbingers of abuse and exploitation, policymakers should recognize more work needs to be done in order to develop reasonable standards and promote transparency as this market matures.

NYC University Welcomes Immigrant Entrepreneurs. The City University of New York is the latest academic institution welcoming immigrant entrepreneurs to campus. In a new program called IN2NYC, 80 foreign entrepreneurs will be selected to advise professors and students at the school while working to build their own startups. And they'll do this on H1-B visas sponsored by the university. While H1-B visas are capped at 65,000, leaving companies with foreign employees to compete in an annual lottery, academic institutions are exempt from that cap. The program will begin accepting applications from entrepreneurs this spring and begin in late fall.

Principles for Europe’s Digital Ambitions. Have you visited our new Medium publication yet? We’ve been exploring Europe’s efforts to remove regulatory barriers and better integrate the U.S. and EU digital economies through its Digital Single Market (DSM) strategy. Check out perspectives on the issue from the Internet Association, Re:Create, the Application Developers Alliance, the Information Technology Industry Council, and the Computer and Communications Industry Association, and check back for posts from more stakeholders over the coming weeks!

Apple, Encryption, and the Future of Digital Security

This week, a U.S. District Court judge ruled that Apple must assist the Federal Bureau of Investigation (FBI) by providing technical assistance to help the Bureau unlock the iPhone used by one of the San Bernardino shooters. While a resolution to this litigation is far off (due to likely appeals), the case has suddenly catapulted the debate over privacy, security, and encryption into the headlines of nearly every major news outlet in the United States and beyond. And though this case is specific to Apple—the manufacturer and licensor of the hardware and embedded software—the ramifications of the final decision in the case may have a profound impact, both in the technology industry and beyond.

While this isn’t the first time that policymakers have grappled with serious questions related to encryption and digital security—just last year, the White House backed away from a proposal seeking “backdoors” into encrypted devices after a multitude of stakeholders spoke out about the dangers of such anti-security measures—it is likely the most difficult case yet involving such issues. Certainly, the FBI has a strong interest in thoroughly investigating terrorist activity and preventing such acts in the future. Technology companies also care deeply about stopping criminal activity, which is why this is such a difficult problem: though the FBI’s request is tailored to investigating a specific terrorist activity, it will ultimately weaken security standards and may lead to serious vulnerabilities that will put countless consumers at risk.

In the past, Apple has cooperated with law enforcement to unlock phones in order to gain access to information, at least when doing so was technologically feasible. This situation is slightly different, as the court order requires Apple to create an entirely new version of Apple’s operating system (OS) to allow the government to circumvent security features that Apple built into its OS to prevent brute force attacks. This software will effectively make brute force attacks on encrypted devices possible—whether it’s the FBI attempting to brute force the phone or anyone else that has access to the software. Though the FBI says it intends to use this modified OS in this situation only, the spate of high-profile hacks and data breaches over the past year (including a breach of sensitive government information) should cast doubt on any such guarantees.

And, while some may argue that Apple’s strong opposition to the FBI’s request in this case demonstrates that any future requests for similar security circumvention activities will be limited to only the most extreme circumstances, that only holds true if the company being tasked with providing access to encrypted information has the resources to mount such a robust legal challenge. The startups that are responsible for so much of the tech sector’s growth have nowhere near the legal resources needed to fight spurious requests for dangerous encryption backdoors. Establishing a precedent that obligates companies to undermine the security measures that keep millions of consumers and their data safe from criminals will only increase the chances that these security circumvention technologies are employed in spurious cases or, worse, fall into the wrong hands.

Law enforcement is fully justified in attempting to do everything possible to prevent future terrorist attacks, just as Apple is fully justified in arguing that what the FBI wants could have serious negative repercussions for the security of its users. But, the security vulnerabilities that could arise by forcing Apple to undermine the strong encryption technologies it has built into its products should make anyone think twice about establishing such a dangerous precedent.