Study Adds To Link Between Venture Capitalist Investment, Legal Certainty On Copyright Liability For U.S. Cloud Computing Companies

BY CCIA Staff
November 4, 2011

A new economic study adds to evidence that more legal certainty about liability can lead to increased venture capitalist investment in a growing industry — cloud computing.

Harvard Business School Professor Josh Lerner, whose research often focuses on venture capital investment and innovation, has examined the impact of the 2008 Cartoon Network v. Cablevision decision, which resolved uncertainty around copyright liability in favor of U.S. cloud computing companies.

Lerner is presenting the results of his study, “The Impact of Copyright Policy Changes on Venture Capital Investment in Cloud Computing Companies,” via webcast Monday in Washington DC. The Computer & Communications Industry Association commissioned the study to find out if venture capitalists actually invested more in US companies once a looming liability risk for cloud computing was resolved.

WHEN: Monday, November 7, 10:30am

WEBCAST LINK: http://event.on24.com/r.htm?e=376143&s=1&k=D76DD379BC29B67C1D436778451916DC

DIAL IN INFORMATION (for audio and Q&A): 877-709-8156

Participant Passcode: 382698

“We have conducted multiple statistical analyses to determine whether investment in venture-backed U.S. cloud companies rose subsequent to the Q3 2008 Cablevision appeals court ruling,” Lerner said. “After controlling for other factors, the numbers show increased venture capitalist investment in the US compared to Europe, which does not have as clear liability protections.”

CCIA President and CEO Ed Black said it’s certainly logical that venture capitalists look at whether profits can be eroded by lawsuits before investing. “But even so, it is important to have statistics to illustrate just how much R&D and investment can be freed in a growing area like cloud computing when companies and their investors are not paralyzed by looming legal clouds on the horizon.”

“While this study tracks the results of one legal case, the research is useful as lawmakers consider policy issues that could increase copyright liability for growing areas of our economy like cloud computing and Internet services that allow user generated content,” Black said.

Lerner’s research is encompassed in the books “The Venture Capital Cycle,” “The Money of Invention” and the recent “Boulevard of Broken Dreams.”

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