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Abby, 1-19-22, Medium, “Copyright Law & Startup Innovation: Policies That Matter and Where They May be Headed,” https://engineadvocacyfoundation.medium.com/copyright-law-startup-innovation-policies-that-matter-and-where-they-may-be-headed-dea034904e25, accessed 7-9-24, CT]

Fair use and interoperability: Some big companies would like to expand the universe of what software is protected by copyright and which development activities constitute infringement. If that happened, it would prevent startups from using fundamental software development tools, expose them to new litigation risks, and make it harder to launch and compete. But after a decade of litigation, the Supreme Court recently confirmed that developers can use software interfaces — known as application programming interfaces (APIs) — without infringing copyright. The Court held that reimplementing APIs, which creates interoperability and compatibility between computer programs, is a fair use under copyright law.

Abby, 1-19-22, Medium, “Copyright Law & Startup Innovation: Policies That Matter and Where They May be Headed,” https://engineadvocacyfoundation.medium.com/copyright-law-startup-innovation-policies-that-matter-and-where-they-may-be-headed-dea034904e25, accessed 7-9-24, CT]

This week we are reflecting on copyright policy — where it has been, where it might go, and what that means for high-tech, high-growth startups and the Internet users, entrepreneurs, and creators that depend on them. Copyright law, which is supposed to encourage creation and innovation, can also be used as a weapon against progress. And what better time to take stock of that? This week marks Copyright Week, sponsored by the Electronic Frontier Foundation, and the 10 year anniversary of a high-profile protest that stopped two deeply-flawed copyright bills that would have fundamentally changed the way the Internet works. The direction copyright policy takes can have an outsized influence on what startups can (and cannot) do, and policymakers eager to support innovation should keep that in mind.

[Feng Chen, Yu Hou, Jiaping Qui, Gordon Richardson, Feng and Gordon are from the Rotman school of management, Yu is from the smith school of business, and Jiaping is from the Degroote school of business, April 2023, Science Direct, “Chilling effects of patent trolls,” , accessed: 7-11-24, ES]

Our results reveal significant market value losses for at-risk technology peers around the filing of NPE-initiated material cases. The equally weighted average CARs for all at-risk technology peer firms are −1.49 % in the three-day window around the litigation announcements. In terms of dollar values, we estimate that at-risk technology peers incur an average market value loss of $29.8 million per firm when NPEs sue their technologically related defendants. We further show that market value losses of technology peer firms surrounding the lawsuit filing date are significantly associated with their probabilities of being sued, suggesting that investors react to sequential lawsuit strategies of NPEs. We also show that the negative market reactions around the filings of patent lawsuits are much more pronounced if the lawsuits are initiated by NPEs rather than by PEs. The average market value loss for each technology peer involved in PE litigations is only $9.2 million on the filing days, consistent with the findings that the likelihood of being sued for at-risk technology peers is significantly higher for NPE patent litigation but not for PE patent litigations. Taken together, the results show that the uniqueness of sequential litigation strategies of NPEs causes significantly higher market value losses for at-risk technology peer firms.

[Feng Chen, Yu Hou, Jiaping Qui, Gordon Richardson, Feng and Gordon are from the Rotman school of management, Yu is from the smith school of business, and Jiaping is from the Degroote school of business, April 2023, Science Direct, “Chilling effects of patent trolls,” , accessed: 7-11-24, ES]

We argue that NPEs tend to aggressively and sequentially pursue targets for the following reasons: (1) NPEs often take advantage of patents with “fuzzy boundaries”, especially in the IT sector; (2) defendants may settle what they consider frivolous suits with NPEs due to high cost of patent litigation; (3) the business model of NPEs rests solely on patent litigation; (4) NPEs strategically time the lawsuit and put maximum pressure on the alleged infringing firm for outsized damage awards; and (5) the non-manufacturing status of an NPE has a strategic advantage in that the target defendant cannot file counterclaims of patent infringement. Furthermore, instead of suing all potential target firms in a “one-time deal”, it is strategically more effective for NPEs to first target the most vulnerable defendant firms to increase the odds of winning (Hu, 2014; Love, 2014; Cohen et al., 2016, Cohen et al., 2019). As such, defendants' technology peers would expect a higher likelihood of being sequentially sued by NPEs after the litigation announcement, despite the fact that NPEs might select multiple firms to initiate litigations.

[Feng Chen, Yu Hou, Jiaping Qui, Gordon Richardson, Feng and Gordon are from the Rotman school of management, Yu is from the smith school of business, and Jiaping is from the Degroote school of business, April 2023, Science Direct, “Chilling effects of patent trolls,” , accessed: 7-11-24, ES]

We find that non-practicing entities (NPEs) exhibit a unique legal strategy of sequential rounds: (1) subject to the same patent, NPE plaintiffs file approximately seven follow-on lawsuits after the initial lawsuit; and (2) when a firm is sued by NPEs, the likelihood of its technology peers being sued increases by 14 % in the subsequent year. Defendants' technology peers experience significant market value losses around the lawsuit filing date. Moreover, defendants' technology peers respond to NPE litigation risk by increasing R&D investments to develop workaround technologies. However, the increase in R&D incrementally generates fewer patent citations or patents with lower values. Thus, our results highlight broader wealth effects and corresponding real effects of NPE-initiated litigation on defendants' technology peers. These results provide sharp contrasts to the insignificant wealth and real impacts on defendants' technology peers if litigations are initiated by practicing entities (PEs). The new evidence informs the current regulatory and policy debates pertaining to NPEs.

[Nick Skillicorn, ideatovalue.com chief editor and founder, 8-31-16, Inc., “How the Current Patent System Actually Hurts Inventorsm,” , accessed: 7-11-24, ES]

If you want to prove that the patent was not valid, then the only way to prove that the lawsuit should not have happened in the first place is to have the legal system decide, analyse all the patents and claims, and determine once and for all whether the patent is valid.

[Nick Skillicorn, ideatovalue.com chief editor and founder, 8-31-16, Inc., “How the Current Patent System Actually Hurts Inventorsm,” , accessed: 7-11-24, ES]

I want to get this out of the way right now.

[Small Business Technology Council (SBTC), January 2015, SBTC, “Patent Reform Threatens Small Business Innovation,” , accessed: 7-11-24, ES]

Disclosure of All Plaintiff Interested Parties requires both investors and licensors to be disclosed. This will discourage commerce in two ways. First, in the early stages of company formation, it will require Angel investors to break one of their major priorities: anonymity. This provision will discourage Angels from investing in the smallest companies, when outside funding is hardest to obtain. Secondly, it will dampen licensing activities. When a licensee needs time to incorporate the licensed invention into their product, they normally do not want to alert their competition as to where they are moving in the market. This will disclose the fact that the licensee is adding a new feature or an entirely new product line.

[Small Business Technology Council (SBTC), January 2015, SBTC, “Patent Reform Threatens Small Business Innovation,” , accessed: 7-11-24, ES]

Pay to Play provisions require the inventor plaintiff to post a bond or certify that they can pay the alleged infringers legal fees should they not prevail. This puts enforcing a patent beyond the financial capability of all but the largest and wealthiest of small businesses. Pay to Play would result in most of the over 5,000 active SBIR being unable to enforce their patents unless they give up the majority of their equity to a larger company (which would then put them out of the SBIR program).

[Small Business Technology Council (SBTC), January 2015, SBTC, “Patent Reform Threatens Small Business Innovation,” , accessed: 7-11-24, ES]

Loser Pays: American laws do not apply “loser pays” provisions to consumers, corporations, protected groups, or any other class of private litigants. This would induce these groups to tend to decline to enforce their legal rights. Why should inventors be singled out as the only class that should bear this burden? The result will be that small inventors will be deterred from exercising their rights and that invention and resulting jobs will dwindle. More perniciously, the smaller firms will be further deterred from investing to develop such rights, as they will need a $5‐10 million legal war‐ chest before they try to exercise any patents. The large multi‐national companies know that smaller companies cannot afford to pay the larger business’s legal costs if they lose, and so small businesses will not take the chance.

[Small Business Technology Council (SBTC), January 2015, SBTC, “Patent Reform Threatens Small Business Innovation,” , accessed: 7-11-24, ES]

Patent protections are particularly important for innovative small businesses, which operate on much smaller margins, and often rely much more heavily on their intellectual property for revenue than large firms. According to the SBA: “Of high patenting firms (15 or more in a four‐year period), small businesses produced 16 times more patents per employee than large patenting firms. Research also shows that increasing the number of employees correlates with increased innovation while increasing sales does not.”1

Inflation — which has proven to be stubborn based on the most recent data even as significant progress has been made in bringing prices down from a peak level — continues to weigh on owners, with nearly a third saying it is currently the biggest risk to business. That is more than double the amount who cite consumer demand, interest rates, labor shortages and supply chain disruptions as key issues.

“Inflation is still top of mind,” Gutierrez said. “But we’re seeing this cautious optimism on inflation, and costs in general.”

The U.S. economy is having what some experts are calling a "Goldilocks" moment.

A panel of economists expect this year to be characterized by faster growth, shrinking inflation and healthy job creation — a far cry from the widespread fears of a recession that marked 2023. The National Association for Business Economics (NABE) on Monday predicted that gross domestic product — a measure of the value of goods and services — will rise 2.2% in 2024, a significantly more bullish forecast than what the group projected only two months ago.

When more entrepreneurs can start and grow their businesses, it drives economic opportunity, creates local jobs, strengthens the middle class, and diversifies our economy. Democrats in Congress passed vital investments in the economic recovery and key infrastructure that laid the groundwork for a record-breaking 16 million new business applications from 2021 through 2023. This increase far outpaces business growth under the former president, or under any past Republican. Democrats’ policies are working for American small business owners across the country and the next chapter in economic opportunity is underway.

Small business entrepreneurship is thriving

Even in the face of stubborn inflation, small business owners are striking a more positive tone. Optimism surrounding the economy is rising and the CNBC|SurveyMonkey Small Business Confidence Index reached its highest level since President Joe Biden took office, according to the latest quarterly data released on Thursday morning.

Twenty-eight percent of small business owners describe the current state of the economy as “excellent” or “good,” up five percentage points from the prior quarter and up from 18% year over year, according to the CNBC|SurveyMonkey Small Business Survey for Q1 2024. It’s the most optimistic respondents to the survey have been since CNBC and SurveyMonkey began asking this question in Q2 of 2022.

Small business owners are feeling better about the U.S. economy as inflation cools and recession fears subside, according to a new survey. Indeed, economic optimism among smaller employers is at a 22-year high, PNC Financial Services Group found in polling small and midsize business owners.

A majority of respondents – 55% – said they are "highly optimistic" about the national economy this year. That's up sharply from 34% last fall and 26% a year ago, according to the Pittsburgh-based bank. Roughly eight in 10 owners also expressed confidence about their own businesses' financial prospects. Over the next six months, just over half of the business owners who were surveyed think their profits will rise, while only 5% expect earnings to fall.

Small business growth drives a strong U.S. economy and provides jobs people can raise a family on

In 2023, small businesses made up 99.9% of all businesses in the United States and drove nearly 44% of all U.S. output.

Most U.S. adults (86%) say small businesses have a positive effect on the way things are going in the country these days, according to a recent Pew Research Center survey. Small businesses, in fact, receive by far the most positive reviews of any of the nine U.S. institutions we asked about, outranking even the military and churches.

Despite their name, small businesses loom large in the United States. These businesses – defined here as those with 500 employees or fewer – account for 99.9% of U.S. firms, according to the Small Business Administration. While most of these 33 million firms don’t have paid employees, about 6 million of them do. They account for just under half of total private sector employment (46%).

Recent reports show a surge in confidence among small business owners and consumers as inflation falls, recession fears subside, and consumer spending rises. The growth in optimism coincides with an unprecedented Small Business Boom, which has seen more than 16.5 million new small business applications filed since President Biden took office – a record level. Thanks in part to this historic surge, economic optimism among small businesses has hit a 22-year high, with a majority of business owners saying they are “highly optimistic” about the national economy.

Other key indicators include:

[Oren, 7-21-24, Politico Magazine, “15 Experts Predict What Biden’s Dropout Means for the 2024 Election”, , Accessed 7-21-24, AMH]

The Republican Party’s transformation into one focused on workers and their families, skeptical of Wall Street and free trade, and committed to rebuilding American industry has received more attention, but the Democratic Party’s agenda has been in flux as well. The Biden administration’s embrace of industrial policy, for instance, remains deeply unpopular with the economic advisers of the Obama era like Larry Summers and Jason Furman. Even within the administration, long-running battles have raged between free traders like Janet Yellen who sought closer ties with China and economic realists like Katherine Tai who recognized globalization’s failures. Are Democrats prepared to take seriously the importance of immigration enforcement to tight labor markets that raise wages at the low end? Is Big Tech the keystone in their coalition or do they agree with FTC Chair Lina Khan’s indictment of it?