“MINNEAPOLIS, MN — In vetoing the Republican-controlled Legislature’s property tax bill, Gov. Mark Dayton ended up rejecting many other measures supported by the economic development community.

An angel tax credit extension, a sales tax break on business equipment purchases and expanded tax breaks for new data centers were among the casualties.”

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With $60m budgeted over 5 years, the  “Angel Investor Tax Credit” (AITC) allocated up to $11 million in credits for 2010, with $12 million in annual credits for 2011 through 2014, and a sunset scheduled Jan 1, 2015.

“We’ve passed the baton onto you,” Sen. Kathy Saltzman (D-Woodbury) said at the time, referring to the entrepreneurs and investors who rallied for the cause.  And use it they did.

In the following 18 months, over 100 startups from across Minnesota, mostly tech [2], ran the well dry before 2011 was over. Many startups seeking to benefit were left waiting in line for 2012 calendar year to being.

“Looking at the run-rate from last year it seems like we’ll run out again by this summer,” said Twin Cities Angels Chairman John Alexander, an instrumental voice on the matter — both then and now. “If $12m annually yields $48m of investment, why not go to $20m / $80m,” he posits.

Based on the demand — and other takeaways gleaned so far — Rep. Keith Downey (R-Edina), introduced HF 1823 (Senate SF1774) in January, essentially a modification to the initial statute, addressing four key areas:

1. Increase the tax credit allotment from $12m annually to $20m annually.

2. Disclose more information about qualified companies, such as primary contacts.

3. Remove employee wage requirements currently mandated for startups to qualify

4. Address loopholes that could be designed to game the system

“The AITC has been favorably received by the investment and entrepreneurial community so far.  Based on the data, I’d call it a success,” Downey said speaking towards the potential $8m annual increase in credits.

As of yesterday, Minnesota’s Department of Economic Development (DEED) reports that 22%, or $2.6m of this years $12m has been accounted for.

“Considering that approximately $5m was carried over from 2010 into 2011 and that the full $12m was used in 2011, the $20m annual  mark is not overreaching,” securities attorney Michael Schley commented. “But there are skeptics to whether or not this proposed funding increase will clear,” he added.

Schley has been intimately involved with the tax credit, working with the state to craft the final legalese that is codified into statute; he also sat down with Downey last week to discuss the potential modifications of HF 1823.

“Expanding the annual allotment to $20m would be nice, but also require a budget amendment,” Downey explained.  The bill was referred back to the tax committee in mid February and will be addressed over the coming weeks.

“If there’s anything that those entrepreneurs and investors in tech can do right now, it’s contact their local representative. Specifically, let those on the tax committee know what you think,” Downey concluded.

“As you may know, Senate Majority Leader Harry Reid has decided not to bring the PROTECT IP Act (the Senate’s version of SOPA) up for a vote next week.

And since I’ve heard from many of you about this issue, I wanted to take a moment to share why I support copyright protection legislation — as well as why I believe holding off on this bill is the right thing to do.”

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A House equivalent, “Stop Online Piracy Act” (SOPA) (HR. 3261) was introduced in October, since which the House Judiciary Committee have examined surrounding issues of SOPA in mid November and subsequently debated changes last week.

PIPA is targeting domain name system providers, financial companies, and ad networks — not companies that provide Internet connectivity — like SOPA. That basic idea here is to make new sets of intermediaries the checkpoints at which authorities can police for websites dealing in infringing content.  While SOPA has been garnering most of the headlines, for all intents and purposes, these are two peas of the same pod.

Financially motivated by interests who see a future based less on innovation and more on political protection, this legislation is paid for by organizations and corporations like MPAA, Dell, Microsoft, Sony, RIAA, IIPA and the US Chamber of Commerce, amongst others.

The MPAA suggests “more than $58 billion is lost to the U.S. economy annually due to content theft, including more than 373,000 lost American jobs, $16 million in lost employees earnings, plus $3 billion in badly needed federal, state and local governments’ tax revenue.”

Opponents see this as a redux of the controversial Combating Online Infringement and Counterfeits Act (COICA) that narrowly failed to become law in late 2010, and many are viewing it as no less problematic than its predecessor.  Since the introduction of SOPA and its Senate twin PIPA, staunch opposition has been snowballing.

Human rights supporters and grassroots Internet freedom fighters consider the legislation, as proposed, a threat to the freedom for expression that the web was designed to provide, and take particular issue with the potential for abuse in the form of online censorship.

Entrepreneurs and investors have their own reasons for concern. A Booz & Company report released in November a study shows that that 80% of venture capitalists and angel investors interviewed said they would rather invest in a risky, weak economy with the current laws than a strong economy with the proposed law in effect.  Over 50 prominent tech angel investors believe “PIPA will ultimately put American innovators and investors at a clear disadvantage in the global economy.”

Google and other tech behemoths — AOL, eBay, Facebook, LinkedIn, Mozilla, Twitter, Yahoo and Zynga — also lodged a formal complaint mid November the form of a letter sent to key Senate and House lawmakers. “We support the bills’ stated goals,” the letter reads. “Unfortunately, the bills as drafted would expose law-abiding U.S. Internet and technology companies to new uncertain liabilities [and] mandates that would require monitoring of web sites.”

A New York Times op-ed called it “The Great Firewall” , echoed by “Serious problems that must be fixed.”  A division of the U.S. Department of energy warned that SOPA wold “negatively impact U.S. and global cybersecurity and Internet functionality,” and 100 law professors from 31 states are openly opposed on the grounds of “violating our [U.S.] core tenets of due process.”

Two days ago, a group of prominent Internet and security engineers who played major roles in birthing the web sent ‘An Open Letter From Internet Engineers to the U.S. Congress’. “…these bills will create an environment of tremendous fear and uncertainty for technological innovation, and seriously harm the credibility of the United States in its role as a steward of key Internet infrastructure,” says the document, signed by 83 — including legends such as Vint Cerf, Jim Gettys, Tony Lee and Robert W. Taylor.

“When we designed the Internet the first time, our priorities were reliability, robustness and minimizing central points of failure or control. We are alarmed that Congress is so close to mandating censorship-compliance as a design requirement for new Internet innovations. This can only damage the security of the network, and give authoritarian governments more power over what their citizens can read and publish. The US government has regularly claimed that it supports a free and open Internet, both domestically and abroad. We cannot have a free and open Internet unless its naming and routing systems sit above the political concerns and objectives of any one government or industry.”

The core of the constitutional concerns over freedom of speech can be found in the uncertainty of the legalese — void of precedent and clear definition, it leaves the Internets future for many open to interpretation by few.   For example, the current version of SOPA would allow copyright holders to apply for court orders and the Attorney General to, in turn, have sites blocked or de-listed without a proper hearing. PIPA, on the on the hand, also involves similar questionable tactics around DNS and other components of online commerce.

The greater collective takes pains in regulatory consequences, international jurisdiction, and lack of technological understanding. In sum, a large part of the problem here is that the text of each bill, as put forward, doesn’t carefully distinguish enough of the ambiguities in all of these areas.

Both Minnesota Senators have been active around technology and innovation related issues as of late, whether collectively or independently.

Franken has a history of siding with the concept of ‘Net Neutrality’. In February, he was elected to Chairmain of the Senate Subcommittee on Privacy, Technology and the Law and has since proactively pursued an active consumer protection agenda. He now finds himself embattled between big business and the same gray areas of Internet privacy which he purports to defend.

Klobuchar, a perceived political champion of Minnesota’s innovation initiatives, held an “Innovation Summit” in January and subsequently introduced the “Innovate America” Act in February to “help revitalize America’s innovative edge and ability to compete in the global economy.”

“The Innovate America Act will create jobs and foster innovation by establishing a more favorable environment for small businesses and entrepreneurs everywhere,” counterpart Sam Brown (R-MA) added.  Yet copyright and intellectual property laws hang in a delicate policy balance between the monopoly and relinquishment of ideas.   It’s difficult to imagine how PIPA will be beneficial towards startups and entrepreneurs.

It remains to be seen where things go from here. PIPA was approved by committee and appears headed for a Senate vote at some point.   Friday’s SOPA markup saw the introduction of some 50 amendments, but was cut short as time ran out. Security experts may be called in for the next hearing, which appears to be on Wednesday, but may be delayed until next year given the timing.

What is your perspective? Leave a note below or contact U.S. Senator Al Franken at (202) 224-5641 & U.S. Senator Klobuchar at (202) 224-3244 to let their offices know where you stand.

*Neither Senator was available for comment at the time of publishing, but were sent a copy of this article for any follow-up.  Peter Fleck contributed to research.

“As the privacy backlash against phone-tracking firm Carrier IQ has snowballed over the last several days, the firm has largely stopped answering reporters’ barrage of questions. Now it’s Washington‘s turn.

…So on Thursday, Senator Al Franken sent an open letter to Carrier IQ’s president and chief executive Larry Lenhart with a list of pointed questions about what exactly Carrier IQ does.”

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“MINNEAPOLIS – The Dolan Company, owner of the Minnesota Lawyer magazine, sent a cease and desist letter to Aaron Hall, a Minnesota lawyer, claiming that Hall’s use of MinnesotaLawyer.com was infringing the magazine’s “Minnesota Lawyer” trademark.

Dolan stated that Hall’s legal blog infringed the publishing giant’s trademark because Hall was publishing legal articles on his blog at MinnesotaLawyer.com under the name “Minnesota Lawyer.” Hall responded, “As a Minnesota lawyer, I have a right to call my blog ‘Minnesota Lawyer.’

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Last month I wrote about Senator Franken’s work to protect consumers’ geolocation information.  On June 15, just over a month after chairing hearings that questioned Apple and Google on their data collection practices, Senator Franken introduced a co-sponsored bill that seeks to protect smartphone location privacy.

The Location Privacy Protection Act of 2011 (S.1223) supplements current federal law and requires companies that obtain a customer’s mobile device location to get that customer’s prior express consent and get that customer’s permission before sharing location data with third parties. Furthermore, the bill requires a company who obtains the location information for more than 5,000 mobile devices to take reasonable steps to protect that information.  The bill also contains provisions that require disclosure of information collected on customer request and deletion of the information in some circumstances.

Senator Franken’s office referenced, in support of the bill, a Wall Street Journal article from December 2010 that revealed that more than 45% of top 101 Apple and Android apps disclosed user location to third parties without consent. The bill was co-sponsored by Senator Blumenthal and also is supported by the Minnesota Public Interest Research Group among others.

The bill is instructive for every developer architecting or updating a mobile app.  Key takeaways include that:

1) every app must prominently disclose the collection of location information

2) an app should only share location information when necessary, and if the app shares location information it must be disclosed

3) any repository of app location information must be protected

It’s a long road from bill to a law and the Location Privacy Protection Act may not be a legislative priority.  Regardless, Senator Franken is right “geolocation technology gives us incredible benefits, but … is not necessarily information all of us want to share” — at least not unknowingly.

In 2011, both of Minnesota’s Senators have called for change in mobile device practices. Following is a recap of their efforts along with best practices for Minnesota companies operating in the space.

The Timeline:

On February 8, Senator Amy Klobuchar sent a letter to the FTC, urging greater scrutiny of “in-app sales” where she called for transparency in the “billing practice that holds the potential for consumer confusion.” Her letter was on the heels of several critical media reports, including a notable Washington Post article. The issue was that Apple did not require reentry of a user password for fifteen minutes after an application was downloaded; in those fifteen minutes kids were making multiple in-app purchases, reportedly in some instances totaling as much as $1,400.

On March 9, Apple released an update to its mobile operating system that required password reentry after download for in-app purchases (but it maintained the 15 minute window). Thus, users can make purchases prior to a requirement of password reentry. In response, Senator Klobuchar released a statement on March 11, commending “this common sense safeguard” though she caveated her statement by saying “we can still do more to eliminate outrageous charges.”

More recently, on May 12, Senator Al Franken, chaired a senatorial hearing that questioned Apple and Google on user location tracking. Apple and Google made public statements in advance denying individual user tracking, but they implicitly acknowledged that data was stored in unencrypted format; the result of several bugs. Although, Senator Franken and the committee acknowledged the benefits of fast-evolving mobile telephone technologies, they expressed concerns about guardianship of user personal data.

Furthermore, Senator Franken and the committee made clear that they did not intend to stop innovation and there was consensus that legislation could not overreach and stifle a growing industry that provides many benefits to its users, and relies on location- based data.

Ironically, Apple and Android had released fixes to their respective operating systems approximately one week before the subcommittee hearing, arguably in some ways rendering it moot. It did however, provide an opportunity for the FTC to reiterate its positions stated on May 10, in a hearing that garnered a lot less media attention.

Without knowing precisely what to expect next, the Senators respective efforts highlight the key issues facing any developer — large or small — in the fast-evolving app ecosystem: billing and privacy.

The takeaways:

1. Disclose “in-app” purchase functionality prominently in your application description.

2. Develop clear and concise terms of use too and provide details of your application’s “in-app” purchase functionality therein.

3. Use a reasonable, balanced and defensible “in-app” purchase pricing strategy.

4. Customer service is important, be prepared to tell your users how to obtain refunds for “in-app” purchases.

5. Consider “in-app” repeat purchase time limits.

6. An app should only collect information which is absolutely necessary.

7. Every app needs a privacy policy.

8. Encrypt sensitive user information.

9. Encrypt third-party data transfers.

10. Avoid combining application data with information from other sources, and if you must, be sure to disclose that you will to users.

“The U.S. Patent and Trademark Office is looking into opening regional patent offices across the country, and U.S. Senator Amy Klobuchar wants the Twin Cities to be considered as a site for one of them. U.S. Senator Amy Klobuchar is urging the U.S. Patent and Trademark Office to establish a regional patent office in Minnesota.

There is now just one U.S. Patent and Trademark Office (USPTO) that’s located in Alexandria, Virginia—but the agency is in the process of opening a regional office in Detroit and is considering other locations across the country. Klobuchar argued in a letter to U.S. Secretary of Commerce Gary Locke that the Twin Cities would be a perfect area for such an office.”

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“You don’t see total betrayals like this every day. But if the facts that TechForward are alleging in their lawsuit against Best Buy are true, this is some truly sleazy stuff.

TechForward says that the way they do the buybacks is important – price, exercise rates, etc. BestBuy allegedly held out the promise of a partnership and got TechForward to give them highly proprietary data under a confidentiality agreement.”

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