The genius of the federal system of government is that
states can serve as a check on the unfettered powers of a central government.
From time to time, as history has shown, it also can
Several issues making the rounds in or around the state
Capitol illustrate how that federal-state balancing act can affect the business
community, for better or worse.
Read this commentary in the Milwaukee Journal Sentinel here.
Patent troll legislation: A public hearing was
held recently on a bill to crack down on misleading demand letters from
so-called “trolls.” These are companies or people who build their
businesses around accusing alleged patent infringers, often with no or little
evidence, to collect licensing fees. Formally known as “nonpracticing entities,”
trolls buy up groups of patents with no intent to market or develop a product.
Representatives of Quad/Graphics spoke strongly in favor of
the bill because the Sussex-based company, which employs about 20,000 people in
56 facilities worldwide, has been a target of “trolling” by entities
that vaguely assert patent rights and demand a quick agreement to pay licensing
Some companies would rather pay fees than go through the
hassle of defending a claim that most likely isn’t valid.
At the Assembly hearing, lawmakers seemed genuinely concerned
— but were cautioned there is a flip side. One expert noted that technology
companies often communicate with larger companies in hopes of getting them
interested in buying or licensing their intellectual property. Such letters
don’t come with a threat, but with a suggestion that similar technologies might
align in collaborative ways. Under the bill as proposed, however, that would be
a banned “assertion” of patent rights.
Others have noted that patent law has been a federal province
since 1790, and that states should tread carefully before defining who is a
“troll” and who isn’t.
Wisconsin isn’t alone, however, in pursuing a state remedy.
That’s because many companies are tired of waiting for Congress to act. Many
states, including Virginia, Oregon, Kentucky and Maine, have either passed
“troll” laws or are debating them. Perhaps a state nudge will move
the federal dial.
Equity crowdfunding: Wisconsin was among a
handful of states that rewrote its securities laws last year to allow for
equity crowdfunding. Through a number of online portals, small companies may
eventually be able to sell small pieces of their company in return for the cash
needed to move it from start-up to success.
The state passed its own law because federal implementation
of crowdfunding rules first laid out in the 2011 JOBS Act had been painfully
slow. Unfortunately, state agency adoption of the complex rules needed to make
crowdfunding work hasn’t moved at lightning speed, either. That’s largely
because the state law sets different standards than the federal law. For
example, a qualified crowdfunding investor in Wisconsin may not be the same as
one under federal law.
There’s also a lingering concern that a proliferation of
state rules could create a patchwork quilt of laws that might hamper commerce
rather than encourage it.
Educational standards: Many in the business
community seem legitimately confused by the debate over the “Common
Core” standards, which are part of a nationwide effort to address uneven
academic expectations across the spectrum of subjects taught through K-12
Wisconsin has been working on its “Common Core”
standards since 2009, but some lawmakers want to call a timeout before
embracing a plan that could dramatically change education over time.
The irony is that some of the same general goals of Common
Core can be found in a concept most business people embrace — improved STEM
education. That’s an acronym for science, technology, engineering and math
courses. The goals of both concepts include learning to think critically at an
earlier age, being better prepared to pursue college or career training, and
being better equipped to compete globally.
The difference is that STEM has been largely an organic
movement, pushed by public and private advocates alike, while Common Core is
perceived as being a federal top-down strategy.
Business leaders want workers who can think, work in a team,
create and innovate. If building that kind of workforce means upgrading state
standards to meet global competition, a combined state and federal push may
Tensions between state and federal governments aren’t
necessarily bad. States can be laboratories of innovation; the federal
government can provide uniform rules of commerce. The trick in Wisconsin these
days is navigating between the two.