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Stock X and the 22 billion dollar sneaker Industry

In the United States, the sneaker industry has become an estimated 22 billion dollar market since 2013. One of the major factors for it has become the desire to acquire tenis shoes “sneakers” that are extremely rare. The rarity of a sneaker is either valued by their limited production, desire by sneakerheads, collaboration between big companies and artists or simply because they were worn by our favorite celebrities. With the Nike Air Jordan 1 retro being the most reliable investment, there is no doubt that other big companies such as Adidas, Puma, and Rebook are putting in a lot of effort in order to compete with such historic Icon as the Jordan Retro.

Stock X’s CEO Josh Luber, a MBA grad from Emory University Goizueta College of Business has been one of the most iconic sneakerheads since the late 2000’s. Even though he wasn’t a millionaire back in 2013, there is no doubt that his massive sneakers collection caught the attention of many, either through his social media channels or simply his instagram account. Knowing that Ebay made an estimate of 200 millions dollars in 2013 through selling sneakers, Josh along with his two other partners decided to create what we know now as STOCKX. “Mr. Luber, who, like many sneakerheads, speaks of his footwear collection as if it were an ever-expanding portfolio, started collecting at age 10. In 2012, while an analyst at IBM, he founded Campless, a website he described as the Kelley Blue Book for sneakers.”
What makes StockX a multimillion dollar company is its unique business model and platform. The way it works is very easy: you have a pair of sneakers that you wish to sell and if there is a buyer interested in your sneaker he can either bid or click the buy it now option. But that is not just it, the platform also provides a free service where the sneaker will arrive at the Stock X company where a guru or sneakerhead will examine the product in order to determine if it is 100 authentic. That way buyers can be 100 percent sure that the product they are getting shipped from StockX is authentic.
This specific service is what makes StockX shine against its competitors. Another great attribute that StockX members enjoy is being able to receive all the information pertinent to a specific shoe, such as release date, the demand for it and how the sneaker has performed since its release and the date that the buyer is wanting to buy it. It’s because of innovative companies like StockX that people now can have an informed transaction when buying or selling their products.

https://stockx.com
https://www.businessoffashion.com/articles/video/stockx-is-luxury-next-on-the-stock-market-of-things-josh-luber
https://www.inc.com/zoe-henry/ss/10-sneaker-millionaires-helped-build-22-billion-industry.html

How close to the edge is too close?

Image result for edge of mountainMany industries in the US are highly regulated, often by both the state and federal governments. This can create significant problems when someone tries to do something new in them. When trying to innovate in such environments, one is faced with how to balance charging ahead with the idea and waiting to ensure that no government hammer is about to drop. What one person calls a great innovation can sometimes be dangerously close to what another would call illegal activity. If that other person is a government regulator then the innovator could be in big trouble. However, waiting to determine the legal landscape risks losing valuable time and money to competitors.

A recent example of this tension between pushing ahead and waiting playing out seems to be what the Robinhood investment app has been doing. While I actually couldn’t find a concise statement on why I should invest with them on their website, they seem to position themselves as a new way to operate in finance by offering no trading fees, ease of use on mobile devices, and no account minimums. However, their revenue method has been described as “toeing the line of legality” and there are fears that its main source of revenue will be regulated out of existence. An attempt to offer a new product (a checking account) faced regulatory pushback leading to Robinhood to pull product before its launch. Their website currently has a cash management option labeled as “coming soon” instead. The feasibility of the account, even if not threatened by regulators, is in question anyway,re-raising issues about their business model.  Robinhood appears to be doing more of the pushing and less of the waiting, with results that seem promising and have so far avoided real consequences. However, this risk for serious consequences remains (such as rolling out the checking accounts to customers at the time of announcement).

The Robinhood example brings up the legal issues of not only the company itself, but also of its attorneys. Attorneys are, at some level, responsible for the legal advice that they give to their clients, especially if they are also an employee. Lawyers are already perceived as risk-averse and focusing on what one cannot do, rather than on what one can do, and lawyers, like all other company insiders, face similar risks to others who work in a highly regulated industry like finance such as insider trading. However, lawyers are also subject to the rules of the legal profession, and these rules can give lawyers certain affirmative duties and in some cases the option  doing something that would otherwise violate the duty to the client (such as the Rule 1.6 confidentiality rules). This tension can create difficulties for attorneys seeking to advise clients as the attorney can be conscripted by the regulator to assist with compliance or risk losing the ability to practice. Knowing this, if one wishes to innovate in regulated environments how much distance should one keep from the attorneys? Do such innovators know of such potential problems? Is it just a risk that the attorney assumes when advising clients in such a regulated industry that the attorney could be penalized for bad analysis? In such highly regulated environments, is it better to ask for forgiveness rather than for permission and does that apply to the advice an attorney should give? Are there disincentives for lawyers to work with entrepreneurs in such highly regulated environments for fear of the repercussions? Law itself is a highly regulated industry. Does this dynamic work there as well? More broadly, determine the difference between legal and business risk has come up as one of the key things attorneys have to decide when advising new enterprises. I’m wondering if in some contexts, such as highly regulated industries,  that their is no difference. The Aereo case might be an example from a less regulated context, but does that approach translate well into more highly regulated industries?

 

Boutique Fitness as an Entrepreneur’s Paradise?

Health and fitness in the US is a $30 billion industry. And it is a booming one, with annual growth of at least 3-4% over the past ten years. You can hardly walk down a single city block now in cities such as Boston, New York, and DC without spotting one or two boutique fitness studios.

Boutique fitness is different from your average everyday gym like Planet Fitness and Crunch, with prices below $20 per month, but it also differs from luxury gyms such as Equinox, where members can pay upwards of $200 per month for perks that include Kiehl’s products in the locker room and refreshing eucalyptus towels. Instead, a boutique fitness studio can be identified as a smaller gym (usually between 800 and 3500 square feet) that prioritizes community-focused group exercise of a specific fitness type.

This could include rowing, cycling, yoga, bootcamps and HIIT (high-intensity interval training) workout structures, and boxing, etc. (There are even stretching studios now!) Within a fitness type, it gets even more granular. For example, a rowing studio could offer rowing for kids and rowing for marathon runners, in addition to their regular rowing classes. There are even companies such as ClassPass, which partners with different kinds of studios, allowing members the opportunity to try different types of classes on a flat-rate monthly billing structure.

Although prices seem astronomically high (often coming in between $20-40 per single 50-60 minute class), the argument can be made that the workout is more effective and better than a cheap, but dormant membership to the gym around the corner. One of the popular studios, Barry’s Bootcamp, which combines cardio with weight training, is actually trademarked (!!) as “The Best Workout in the World.” Their website advertises the science behind the class that allows you to burn up to (or over) 1,000 calories in just a 50 or 60-minute class session. Not only is the workout quicker and more efficient, but with draconian cancellation or no-show policies and fees, you are less likely to miss a class.

Boutique studios also offer the chance to get to know the instructors and the regulars around you, which can help you feel comfortable if you’re reentering the fitness scene after an injury, pregnancy, or other extended absence. With a small space and small class size, instructors can correct form and personalize the experience a bit more. It’s almost like having a personal trainer at a reduced price point. Many of these studios offer nice shower products and made-to-order protein shakes, striving to create an environment that will have you never wanting to leave, or at the very least, have you not wanting to return to your regular neighborhood gym. It can offer a refuge from the stress of high-pressure corporate America (here’s looking at you, big law!).

The entrepreneurs in this sector that are driving the “craze” seem to be expert curators or at least, very adept at hiring a marketing team that knows their audience and aims to please. I listened to two episodes of Guy Raz’s “How I Built This” podcast on NPR, to get some more insight on entrepreneurs in this space, and why they founded their own fitness companies.

The first episode I listened to featured Elizabeth Cutler and Julie Rice, founders of the stationary bike studio, SoulCycle. They originally founded the studio because no existing gym classes really appealed to them; they didn’t have a niche that they liked, but they still wanted to work out and stay active. The business grew and scaled from their first studio in New York in 2006 to about 90 studios today in the US and Canada. The popular fitness studio has “cultivated a near-tribal devotion among its clients.” When they sold the business to a larger company, they each made $90 million.

The second episode featured another multimillion dollar company, Barre3. Founded by Sadie Lincoln in 2008, the company is based around a fitness class that blends ballet, pilates, and yoga. The company has since expanded to 33 states. Lincoln was inspired to found a barre studio because she found herself working out every day, running on the treadmill and counting calories, but not really feeling the benefits. Thinking that the current fitness options were failing her and assuming that others felt the same way, she set out to change that.

It seems as if a common motivation amongst these founders and entrepreneurs in the fitness space is to turn exercise classes into something that would be motivational and aspirational for clients. Exercise classes do not always have to feature an instructor who screams and swears like a bootcamp sergeant, but can instead focus more on energy and wellness. These founders also recognize that each class can be made better, focusing on each hour, instead of the flat-rate membership at a regular gym, where you won’t necessarily feel compelled or want to go.

Although many of the predictions are rosy for boutique fitness, one consumer analyst noted another cycling studio’s recent price cuts as a precursor of things to come for the industry. Competition is growing. And not just from the studio two blocks away. Luxury at-home workout options like Peloton (giving you the option to work out in the comfort and convenience of your own home) could also present a significant threat.

Questions to Consider:

  • Is the boutique fitness “craze” a bubble that is going to burst in the next few years or is it truly the workout of the future? In other words, is this still an Entrepreneur’s Paradise or is it already becoming an oversaturated market?
  • Will the studios eventually have to lower margins and modify some of the draconian cancellation policies to compete, both with other studios and with at-home fitness options such as Peloton? Or do these options appeal to different types of consumers entirely?
  • Will boutique fitness affect the healthcare industry, specifically insurance? Should employers be willing to cover or subsidize the costs of boutique fitness classes versus a regular gym?
  • Can we see future partnerships with fitness-tracker companies such as Fitbit and Whoop, etc.?
  • As Courtney mentioned in her post/discussion last week, are some of these companies trying to “do too much” and where is the line?

 

Sources & Additional Interesting Reads:

https://www.npr.org/2018/12/21/679320471/soulcycle-julie-rice-elizabeth-cutler

https://www.npr.org/2018/11/01/663028736/barre3-sadie-lincoln

https://www.vox.com/the-goods/2019/1/11/18176929/flywheel-soulcycle-peloton-spinning-bubble-cycling-class

https://www.bloomberg.com/news/articles/2018-02-28/spinning-craze-nears-peak-as-nyc-price-cuts-signal-oversupply

https://www.winston.com/en/advertising-marketing-privacy-law-news/soulcycle-settles-gift-card-class-action.html

https://www.forbes.com/sites/benmidgley/2018/09/26/the-six-reasons-the-fitness-industry-is-booming/#70333e7f506d

https://www.nasdaq.com/article/what-is-boutique-fitness-and-how-can-investors-profit-cm1014364

https://www.barrysbootcamp.com/best-workout/

 

 

 

 

 

 

 

China’s Entrepreneurs

In the United States there is a wide array of views regarding the rise of China as an economic and military power, and oftentimes there seems to be great concern with the thought that China may one day surpass the United States as the dominant world power. However, closer examination of the People’s Republic of China suggests that the country still has a long road ahead of it in its development. Many of these issues are born out of the fact that the Communist Party of China often stifles opportunities for entrepreneurship and encouraging wealthy Chinese people to invest back into their own communities. One of the biggest challenges that entrepreneurs and new businesses face in China is the fact that the Chinese government is very concerned with ensuring “internal societal stability”, and focusing a tremendous amount of its resources on surveillance and centralized control.

Two examples of this can be seen in the way that the Chinese government monitors internet activity, and recent efforts to implement a “social credit” system within the country. Furthermore, attempting to go into business with foreigners and with foreign companies is further complicated by the “51-49” Rule which mandates that a Chinese company or Chinese national must retain a minimum %51 majority share of the business. A consequence of these policies is the fact that many Chinese entrepreneurs are leaving the country and seeking opportunities in places in the United States and Europe. These policies also work to discourage foreign investment that is independent of working with the Chinese government. Additionally, the attitudes of wealthy Chinese people have become more negative and pessimistic about the future of Chinese economic growth as well as the government’s capacity to change. Many of China’s elite have been more outspoken about their reservations with the direction of the CCP’s policies and have even gone as far to suggest that China runs the risk of becoming like countries in central Asia where the government eats into the profits of businesses while ruling with an iron fist. Ultimately, only time will tell how the aforementioned policies will impact Chinese businesses and foreign investment, and whether or not the CCP will adapt their policies and become more accommodating.

Questions to consider:

  • How can the United States learn from China’s mistakes? What types of policies discourage entrepreneurial momentum/undermine the confidence of investors and entrepreneurs?
  • What drives the current attitudes in the United States about China’s growth and development?

Closer to Federal Laws on Privacy?: Facial Recognition Technology

(Image source: https://www.buzzfeednews.com/article/daveyalba/house-oversight-committee-hearing-facial-recognition)

Technology is based on making tasks we do everyday more convenient. New technology that has been taking companies by storm is the use of Facial Recognition Technology (“FRT”). Right now there is little law on point that directly addresses the dangers that may come with FRT. Many experts state that FRT involves greater dangers than other biometric authentication: the technology and database already exist (e.g. drivers license databases vs. no fingerprint in database unless crimes are committed); faceprints are easier to collect without consent from afar; constitutional issues; racial biases both intentional and unintentional. Because of the lack of federal law, some large tech companies have called the country to take notice and called for federal legislators to take action. Certain members of Congress have asked for a hearing and some have also asked for a GAO report on the technology. It is unclear whether these cries are aware of the 2015 GAO report on the technology or they are asking for an update given how quickly technology changes.

Currently, privacy law protects the public by a means of self-management, meaning consumers are responsible to protect themselves for any contracts that implicate privacy. On top of that, some states have law protecting citizens only from private companies from misusing biometric data: Texas, Washington, Illinois. All of these statutes follow a notice and consent model.

The movement of concern comes likely as a response to Facebook’s suit under Illinois’ BIPA (Biometric Information Protection Act) law. Illinois law is considered the most robust law protecting an individual’s right to his/her own biometric data. Three cases main cases have come under the Act: Rosenbach v. Six Flags Entertainment Corp., 2017 Ill. App. 2d 170317 (2017), rev’d, 2019 IL 123186 (2019), Rivera v. Google Inc., 238 F. Supp. 3d 1088 (N.D. Ill. 2017), and In re Facebook Biometric Information Privacy Litigation, 185 F. Supp. 3d 1155 (N.D. Cal. 2016). In Rosenbach, the court concluded that a BIPA plaintiff is required to do more than allege a technical violation of the Act, and that a defendant’s failure to provide notice or obtain consent before collecting biometric data is not enough to meet BIPA’s “aggrieved by” standard. However, just recently the Supreme Court of Illinois overturned that decision. After lengthy analysis of statutory interpretation, the court ultimately held that suffering actual damage is not necessary for a plaintiff to qualify as aggrieved. Further stating that the appellate court’s prior holding that the violation of the law was merely technical in nature misunderstands the purpose of the legislation and the harm the law seeks to prevent. This brings the case further in line with In re Facebook Biometric Information Privacy Litigation & Gullen v. Facebook Inc. where the court held that BIPA codifies a right of privacy with regard to personal biometric information, and that a violation of that right is sufficient for a cause of action under BIPA. In Rivera, the court held that the BIPA does not dictate how biometric measurements must be obtained and thus defendant’s motion to dismiss was denied.

These cases, especially the reversal of Rosenbach, shows that these privacy matters are being more and more valued. A simple technological violation is sufficient as a harm. However, it is still unclear how the Federal Government aims to resolve privacy law issues in protecting biometric data and if the notice and consent model that states are using is sufficient to protect interests.

Questions to consider:

  1. Is facial recognition truly different from other biometric authentications?
  2. Is federal legislation necessary to protect the public or is state law sufficient?
  3. Does the public truly care about their privacy? There is great debate on how much we care about our privacy given our presence on social media and lack of reading the terms and conditions our uses of these websites is governed by.

 

Relevant links:

“As Concerns Over Facial Recognition Grow, Members Of Congress Are Considering Their Next Move” – https://www.buzzfeednews.com/article/daveyalba/house-oversight-committee-hearing-facial-recognition

“Data Privacy Legislation Is Coming for Big Tech” – http://fortune.com/2019/03/01/data-privacy-legislation-us/

“Facial Recognition Is the Perfect Tool for Oppression” – https://medium.com/s/story/facial-recognition-is-the-perfect-tool-for-oppression-bc2a08f0fe66

Microsoft: “Facial recognition: It’s time for action” – https://blogs.microsoft.com/on-the-issues/2018/12/06/facial-recognition-its-time-for-action/

Amazon: “Some Thoughts on Facial Recognition Legislation” – https://aws.amazon.com/blogs/machine-learning/some-thoughts-on-facial-recognition-legislation/

GAO Report on FRT – https://www.gao.gov/products/GAO-15-621

 

 

Jack of All Trades? Or Master of None?

 

Are companies trying to do too much these days?  Consider Amazon and Instagram.  Both platforms have relatively recently expanded their offerings with new shopping features.

After testing the service on Prime customers, Amazon rolled out Amazon Prime Wardrobe to all of its U.S. customers this year.  Touted as “try before you buy,” the service enables users to choose between three and eight items to test out at home.  A Prime member simply keeps what he or she wishes, sends back the other items, and is charged solely for those items that he or she keeps.  By offering this service, Amazon is competing with the likes of Stitch Fix and Trunk Club. Amazon seemingly aims to differentiate itself by focusing on fit and by appealing to both male and female audiences.

Additionally, post-purchase of Whole Foods, Amazon has also entered the “grocery-shopping and delivery” market.  For interesting insights into Amazon’s most recent offering, see Wall Street Journal article: “Amazon to Whole Foods Online Delivery Customers: We’re Out of Celery, How’s Kale?”  In particular, this article highlights some of the issues Amazon and Whole Foods are facing (i.e. outdated tracking technology and “suitable replacements for out-of-stock items”).

Like Amazon, Instagram has also ventured into the shopping space.  Last week, it launched a new feature: “in-app checkout for its shoppable posts.”  With this new feature, “users will be able to click on an item featured in a post, see the price, and then click again to bring up an order form.”  As noted by the WIRED article, “[b]y streamlining the process of purchasing things within its mobile app, Instagram hopes to become your own personalized digital mall.”  Ultimately, Instagram could collect a pretty penny for this new (and eventual) for-fee service.

 

Questions to Consider:

  1. Are Amazon and Instagram trying to do too much?  Are these additional services/offerings natural expansions that enable companies like Amazon and Instagram to capitalize on their infrastructure? Or should they stick to their bread and butter?
  2. As we have discussed in class, the law tends to follow last. What legal issues could follow from Amazon’s and Instagram’s new offerings?
  3. Though not necessarily in the traditional sense, are Amazon and Instagram entrepreneurs in disguise (i.e. large companies acting entrepreneurially)?
  4. What’s the verdict? Are these new ventures likely to sink or swim?

 

Amazon Sources:

 

Instagram Sources:

 

Onward to Victory

 

The nexus of legal and entrepreneurial considerations is an increasing institutional focus but one that has always been present in the function of society. Dean G. Marcus Cole, the incoming eleventh Dean of Notre Dame Law School, has underscored this concept when describing the origin of his motivation to practice law. As a lawyer, he hoped to assist local entrepreneurs in launching small businesses to further the development of the low-income community in which he was raised. Dean Cole aims for the law school not to rely on antiquated practice but to instill law students with entrepreneurial ingenuity and responsiveness to an evolving legal landscape.

Notre Dame prides itself on cultivating a different kind of lawyer but this philosophy could be construed as an implicit statement about the impression many have with respect to the current practice of law. Perception is largely based on personal experience and countless individuals have had negative interactions with legal counsel in the early stages of formation. However, there are those who have persisted to succeed. Stephen M. Griesemer is a Notre Dame Law School graduate who left his practice at a leading global law firm to help run his family’s business in Missouri. After returning to legal practice, he then left again to form a thriving private equity firm in Chicago. He maintains a close relationship with the university and continues to guide students to think beyond the functional aspects of the challenges they are presented with in corporate representation. Understanding the value of this perspective has the potential to create significant opportunities.

The fortitude required in executing a venture often derives from more than knowledge but a passion to see a vision realized. Michael L. Cioffi, a Notre Dame alum and partner at an international law firm, has specifically cited this desire as the driving force behind the creation of Monteverdi in the Val d’Orcia. More than a boutique hotel and potential revenue stream, he sought to restore a place that would honor the purpose and heritage of the region. It took years to develop but Monteverdi now flourishes with an Artists and Scholars in Residence program and the shining village on a hill he envisioned has come to fruition.

 

Does the Law Do Enough to Protect Innovators?

In this era of innovation, most of us are used to seeing disruptive businesses entering the market. What’s interesting to follow is how quickly after a new model shows some success, a competitor quickly launches a similar model and tries to dominate the space. As a recent example, the latest IPO news coming from Uber and Lyft remind us of how these disruptive companies are often reaching their milestones at a similar pace.

There are two companies with similar business models that are currently in court trying to defend the uniqueness of their brand. Regus and WeWork are two industry innovators that have created alternatives to traditional office space. Regus is the earlier version, and it offers office space that looks more like a typical office. WeWork has developed a collaborative workplace with features not found in conventional offices. Both services provide flexible payment options not available in standard office leases. Clients can choose a package of office essentials based on their individual needs for things like conference rooms, secretarial services, and printing. The companies share the same disruptive model, with WeWork adding a new layer.

Recently, WeWork created a new model of its product geared to midsized companies and called it HQ by WeWork. Regus owned a subsidiary called HQ Global Workplaces and sued WeWork for trademark violations.

The case is primarily a trademark case, but I believe the underlying factor is that WeWork has borrowed Regus’ business model. Regus has no way to stop them from using their idea. They can only interfere if WeWork violates an IP right as they claim happened here. This example might not bother us much considering the trendy WeWork model looks very different than the corporate Regus model, but it got me thinking about whether we offer protection for entrepreneurs who create new business models.

A different example that I came across recently is in eyewear products. Warby Parker was a disruptive idea in an industry which was ripe for innovation. Warby Parker offers customers the option to try on a selection of sample frames before ordering a pair from their site. To do this, they figured out what materials ship well, what type of packaging works and what kind of selection works well with for their system. I discovered recently two sites, Jonas Paul and Pair Eyewear, that sell children’s glasses and have each been described as the “Warby Parker” of kids’ glasses. They are both run by entrepreneurs with interesting and compelling backstories and products. Both are held up as models of entrepreneurialism. They also, both borrow heavily from Warby Parkers model of shipping out sample frames. Pair Eyewear even hired a former Warber Parker exec to help them get their business going. Warby Parker has no legal claim as far as I know, but should they?

Entrepreneurs have been described in the readings as people who continuously tinker with an idea to make it work best.  What should happen when that idea is a product of another entrepreneur’s creative business model? Should the law offer the first entrepreneur ownership of their innovative solution, or should it be free and open for all to use?

Intellectual Property Rights: The Good, The Bad, and China

Safeguarding a company’s intellectual property (IP) can be crucial to developing and maintaining a successful business. In a New York Times Magazine article “Z-Burger Case Shows Value of Trademark Protection,” Payam Tabibian, the original owner and creator of the successful Z-Burger fast-food chain, was able to protect his creation precisely because he had registered his trademarks at the outset of creating his business. IP rights not only help preserve an entrepreneur’s business, however, they are also crucial for encouraging innovation, protecting small businesses, and helping to establish brand trust and awareness. Additionally, IP rights can assist in securing secondary revenue streams and can also be used as leverage if an entrepreneur is in possession of a valuable patent they want to use as collateral when financing their startup.

Although the United States has relatively strong IP rights, the legal landscape may not protect all IP equally. As Forbes article In Today’s Market, Do Patents Even Matter? points out, a patent does not protect your IP rights from being infringed upon; it simply provides the patent holder a means of legal recourse in the event they are infringed. Even if an entrepreneur decides to sue, most litigation lasts between three to five years and costs millions. Novice entrepreneurs and small startups are not financially equipped to fight in the IP battles that routinely occur between heavy-hitters such as Apple and Samsung. Another issue is larger firms using the IP laws to register patents and then never actually use them, consequently stifling innovation.To make matters worse, around 97% of all patents never even recoup the costs of filing, making them an unnecessary expense in many circumstances.

Regardless of the argument whether IP rights are essential for new businesses and entrepreneurs, the facts illustrate that they nevertheless play a vital role in America’s economy. An article in The Economist, America Can’t Control the Global Flow of Ideas, underscores how the desire among businesses for strong IP laws is high because so much is at stake, with American businesses deriving 80% of their market value from intangible assets and own half of the world’s IP. These same businesses rely on selling their products across borders where IP protection is not nearly as a secure, specifically in China. The White House itself published a report accusing China of IP violations, which included accusations of “outright theft and forced transfer of IP to joint-venture partners in China.” As cited in a Forbes article, Feeding the Fire of Genius: Intellectual Property And America’s High-Tech Future, the United States Trade Representative stated that “Chinese theft of American IP currently costs between $225 billion and $600 billion annually.” With China being listed as “the world’s principal IP infringer,” startups and large firms alike are advocating for the Trump administration to tighten its grip over China’s unfair trade practices regarding IP. Whether the current administration will be able to successfully curtail such trade violations is still up for debate, with entrepreneurs waiting on the sidelines hoping that the legal system will prevail in protecting their IP rights.

Question to Consider:

  1. Are the benefits of strong IP protections outweighed by their drawbacks?
  2. Does the legal system help facilitate the benefits of IP protections or enhance its potential issues?
  3. Would the business landscape look different if U.S. Patent and Trademark Office employed some degree of active use to patents in order for them to remain enforceable?
  4. If most small businesses and startups do not have the time or financial resources to defend their IP, is it worth getting a patent? Is the potential value of the IP rights worth the initial costs and potentially drawn-out legal battles?
  5. Is there anything substantial the United States can do to thwart China’s outright theft of IP?