Crowdsourcing and the law

With the development and proliferation of new social and connective technologies, crowdsourcing is becoming a viable method for conducting many types of work. At the same time, however, these developments are progressing more quickly than the law and raising new legal questions that often do not have definite answers yet. This thesis address some of these legal issues that crowdsourcing raises.

In this thesis, we begin by addressing four areas that might lead to legal problems in the near future. First, we look at the labor and employment law issues that might arise from online crowdlabor markets like Amazon Mechanical Turk (www.mturk.com) and oDesk (www.odesk.com). Then we discuss inventorship issues under patent law that services like InnoCentive might experience. Next, we consider how data security laws could be problematic for open innovation projects like the Netflix challenge. Finally, we explore potential intellectual property ownership problems under copyright law.

After discussing these topics, this thesis then turns to examine in detail the area of crowdfunding. As the name suggests, crowdfunding refers to process of raising money through crowdsourcing. Until recently, one type of crowdfunding known as crowdfinance was largely illegal under federal securities laws.

However, the law in this area is starting to change. In this chapter, we look at four different models for crowdfunding: donation, lending, reward/prepurchase, and equity investment. Following that, we consider how federal securities regulation might apply to crowdfunding, particularly the equity investment model. Finally we conduct a content analysis of three legislative proposals to create a limited exemption for crowdfunding in securities law that the U.S. Congress recently considered.

Finally, we assess how crowdsourcing platforms use private contracts to bind their users to certain terms and conditions. This chapter begins with a primer on contract law. Then we examine the enforceability of standardized online agreements. Following that, we review several provisions that are common to nearly all crowdsourcing platforms. Finally, we conduct a content analysis of the specific Terms of Use contracts of several crowdsourcing platforms.