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?

(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

 

 

 

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:

• Amazon Prime Wardrobe – Amazon
• “Amazon Prime Wardrobe Officially Launches to All U.S. Prime Members” – TechCrunch
• “Amazon Prime Wardrobe is Now Available to All Customers” – HuffPost
• “Amazon’s Try-Before-You-Buy Wardrobe Service Is Ready for Prime Time” – Fortune
• “Amazon to Whole Foods Online Delivery Customers: We’re Out of Celery, how’s Kale?” – WSJ

 

Instagram Sources:

• “Instagram’s New Shopping Feature Makes it a Digital Mall” – WIRED
• “Instagram Encroaches on Amazon With New Shopping Feature” – WSJ

 

Author and reviewer Armond White has definite opinions about theater versus other art forms. And about Spielberg. Your thoughts???

 

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.

 

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?

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?

In a New York Times Magazine article, “The Rise of the WeWorking Class,” Gideon Lewis-Kraus extols the virtues of the relatively young company WeWork, arguing that it is the company’s culture that has driven its success. WeWork (as far as I understand it) functions as a commercial subleaser, providing office-share space for –– you guessed it –– entrepreneurs, as well as small startups and (at least some) traditional companies looking to save costs on renting office space.

Most recently, corporations such Liberty Mutual, IBM, and Sprint have even begun to take up shop within WeWork-owned space. As Lewis-Kraus paints a picture of what a work-day in the life is like for those who make one of WeWork’s 425 locations their office home, it’s not hard to see why. Perks such as top-shelf coffee, modern furnishings, and kombucha are part of the appeal but these amenities are not WeWork’s true value-added. That particular distinction belongs to its ability to (literally) bring people together.

WeWork designs its spaces to force more human interaction. Not only are there multiple common spaces and centralized water coolers, but even the hallways are constructed to generate conversation through their sheer narrowness. Together with WeWork’s intentional weekly social activities (Taco Tuesdays, yoga classes, happy hours, etc.), there is a cultivated sense of belonging among a group of individual workers that would otherwise be isolated. Sole practitioner CPAs mingle with novelists and wedding planners in WeWork’s shared space, and as consequence their work takes on new meaning.

Miguel McKelvey, WeWork’s founder, explains to his team, “You’re not building work space. You’re here building a new infrastructure to rebuild social fabric and rebuild up the potential for human connection.” In a world where isolating work continues to drive job dissatisfaction perhaps WeWork provides a solution.

Questions to Consider:

1. WeWork can be understood both as the work of entrepreneurship (a disrupter to the modern commercial leasing market) as well as a facilitator of new entrepreneurs. Can it really provide “Values” (as Christensen would understand them) to a company if that is what is supposed to be the most ingrained?
2. Duhigg’s article on job dissatisfaction suggests that taking a stable job may lead to misery because the individual doesn’t get an opportunity to learn from many setbacks. Does this fit logically within one’s own idea of what one should look for in the job market? Should we seek hardship that we might garner “meaningful work” along the way?
3. Taken together, the two articles suggests that finding meaning in one’s work may be facilitated (perhaps most) by working with people that one enjoys and respects. If this is true, has WeWork just gotten lucky or is there something about a group of individual entrepreneurs working in the same place that inevitably leads to higher rates of social positivity?

Links to Articles and Images:

“The Rise of the WeWorking Class,” by Gideon Lewis-Kraus. Published by The New York Times Magazine.

“America’s Professional Elite: Wealthy, Successful and Miserable,” by Charles Duhigg. Published by The New York Times Magazine.

https://www.wework.com

You know you’ve hit the big time when your lawsuit makes it into Vanity Fair. A slightly different take on the dispute than that described in Game Informer magazine. Definitely worth a read.

For you gamers in the class, here’s a link to a fascinating article about the dispute between Call of Duty game designers Jason West and Vince Zampella, and their former boss, Bobby Kotick at Activision.

https://www.gameinformer.com/b/features/archive/2012/05/24/respawn-39-s-west-and-zampella-sound-off-on-upcoming-activision-lawsuit.aspx