Guest Post: Richard Cohen, Special counsel in the corporate department of Kelley Drye’s New York office.
This article was originally published by Metropolitan Corporate Counsel on November 30, 2015.
Richard Cohen has extensive experience working with technology companies on domestic and international transactional matters, including IT and outsourcing agreements, strategic alliances, research agreements, consulting agreements, software licensing and development, cloud services, and other commercial and corporate matters. Below he discusses the current startup environment, big data, accelerators and a variety of other topics. His remarks have been edited for length and style.
MCC: You have been working with technology companies and dealing with big data and analytics for many years. What do you see emerging in terms of e-commerce and mobile and with all of the data that companies are collecting? Where is the value in it? What are some of the issues surrounding this area?
Cohen: Big data, of course, is everywhere. It’s in every field, and it is constantly changing. A growing area of interest is the need to balance the use of big data for public good while respecting privacy and individual rights. For example, what could, or should, be the role of big data in emergency situations? Whether you think of the Ebola crisis, the refugee crisis in Europe or the recent attacks in Paris, the question is to what extent can we better harness big data in those kinds of emergency situations while at the same time being sensitive to the protection of individual privacy. When, and to what degree, does the public good outweigh that sensitivity?
I was recently speaking with an official from the New York City IT Department. According to him, they use big data to develop smart-city initiatives. Some examples he mentioned included areas like traffic, sanitation, healthcare and education. Whatever the area is, this balance between the public good and individual rights is an area that is affecting both the private and public sectors in a deep way. As the lines get blurred between these sectors, the rules that are going to be developed in one area are going to bleed into the other area. And whatever the private sector is doing with this big data, of course, the government, through subpoenas and warrants, may be able to get a hold of it. The blurred lines surrounding the issues will continue to be important.
The issues of transparency versus obfuscation are also interesting. To what extent are the data brokers, e-commerce providers and other companies legally required to be transparent with the data they collect and retain? On one hand, there’s the discussion around transparency, and then there are also recent movements whereby consumers are taking things into their own hands and deliberately obfuscating the data they provide, for example, by clicking on every single ad that ever comes up, so basically the value that an advertiser can associate with the clicking of ads becomes less valuable. Professor Helene Nissenbaum from NYU recently explored this obfuscation movement in some detail and in an interesting and provocative way in her recent book called Obfuscation. I think it’s important for e-commerce providers and other companies not only to be aware of their strict legal requirements but also to be aware of some of the discussions and movements in this area so that they can stay ahead of the curve. This is something with which I try to help them.
Cohen: I think there’s a great deal of innovation in the fashion and retail tech space. There are many startups engaged in this area. The merger of the two is happening in New York. It’s the fashion capital of the world. It’s also a sophisticated technology center. The fashion industry embraces innovation, so in addition to tools for optimizing operations, they are looking to new automated platforms that help personalize the shopping experience or offer advice from a stylist. Big data helps make all of that possible.
And then there is all of the wearable technology where tech and fashion converge in a new way. Whether consumers are brand conscious or beauty conscious, they now have the opportunity to integrate their technology needs in a way that dovetails with their everyday fashion consciousness.
MCC: Speaking of startups, you’re an advisor with Springboard, an accelerator that’s dedicated to building high-growth tech companies led by women. Tell our readers about your experience working with so many mature companies predominantly run by men and the Springboard experience.
Cohen: Springboard is a great accelerator. It’s been fun to be involved. There’s a great spirit there and a desire among the women leaders to help one another. Occasionally they let a man or two in, so I’ve been very fortunate that their ecosystem is not discriminatory in that sense, and they are welcoming people like me in. You’re right that some of the bigger tech companies that I’ve come from and represent have traditionally been quite male-dominated.
I hope that’s changing with this and the next generation. For example, I recently accompanied a large tech client of mine to a charitable event relating to encouraging girls to seek careers in technology. I was leading a group of 10 fourth-grade girls. It was a blast. To understand certain scientific concepts, we built a tower out of spaghetti, marshmallows and gumdrops. I went around the room and asked the girls what they want to be when they grow up. One fourth grader’s answer was “biochemical engineer.” That was nice to hear.
MCC: IPOs are the exception to the rule these days. Most startups are looking to an acquisition for their exit. From a legal standpoint, what can they do to prepare themselves for successful acquisition?
Cohen: They need to get their ducks in a row in terms of their intellectual property. In addition, the relationships they build over the course of their business life cycle are quite important because the companies that they are aligning themselves with during the growth phase can be the very same companies that may want to acquire them. Some of the big industry players do that. So the relationships that a young company builds with industry leaders and key customers and protecting their IP are probably three key areas for young companies to look at.
Cohen: Maybe I’m biased because of my work with Springboard, but I think what I’ve seen is that a good accelerator really could be a useful part of the startup growth strategy. There are thousands of accelerators out there. They should be researched in terms of making sure that it’s a good match and that you’re picking an accelerator that has a record of success in whatever you’re trying to do, maybe a record that they’ve helped raise a certain amount of capital for their companies or helped with their go-to-market strategy. Some are specializing in certain spaces and certain geographies. I think it’s a two-way street, and therefore the match must be good for both the accelerator and the startup. The accelerators are useful to the investor community because they’re doing some of the screening up front, nurturing these companies and really accelerating them forward at a fairly fast pace, then connecting them with the industry.
My advice to young companies would be to think about getting involved with accelerators, but do your homework on them.
MCC: What are some interesting cases or trends that you’ve been following?
Cohen: I currently co-chair the American Bar Association Cyber-law Subcommittee that covers data analytics, which is part of what’s driving me to keep abreast of some of the key issues implicating the balance of risk and rewards in the whole area of big data and how it impacts specific sectors, like e-commerce, retail, fashion or government services.
There are two areas I’ve been following. The first is the Spokeo case, in which there recently was an argument in the Supreme Court. That’s a Federal Credit Reporting Act case that I believe may have important implications for the data economy. It deals with the issues surrounding the accuracy of data, among others. In following the case, I was struck by one of Chief Justice Roberts’ questions during oral arguments. He poses a hypothetical situation that went something like this, and I’m paraphrasing: Say, for example, you have an unlisted phone number, and you don’t want people calling you, and the company publishes a false number about you, how should that be addressed? In other words, how should we address the situation where the law may say that in the event of inaccurate information about you, you are entitled to damages, but the inaccurate information, in this case, a false phone number, doesn’t harm you but instead actually helps you not to receive unwanted phone calls. I think that question gets to the heart of some of the questions our clients need to consider in working with their data. To what extent are we going to, as a society, regulate inaccurate information itself and hold companies and governments strictly liable for collecting, storing, using and sharing inaccurate information versus regulating behavior – for example by failing to use reasonable care or follow reasonable procedures in ensuring accuracy. I believe this case will have an important impact on some of those issues and how regulators may look at regulating the big-data economy in the future.
I’ve also been closely following the recent decision out of Europe that struck down the safe harbor agreement between U.S. and the EU. This decision will force companies big and small to figure out alternative ways to deal with cross-border transmissions of personal data from the EU and develop different solutions, both legal and technical, to those challenges. Those are some of the issues occupying my mind in recent days and weeks.