Testimony - Tyler Diers, TechNet Midwest, Opposition to House Bill 5770 (June 9, 2020)

Summary

A June 9, 2020 letter from Tyler Diers, Executive Director, Midwest, TechNet, to the Honorable Mike Mueller of the Michigan House of Representatives, with the subject line Opposition to House Bill 5770. It says HB 5770 creates a new private right of action, bans certain indemnity agreements, and prohibits third-party delivery platforms from using any likeness or intellectual property of a merchant without a written agreement. TechNet states it opposes the bill because it will lead to frivolous litigation, constitutes regulatory overreach by the government, and because federal law already protects the use of a restaurant's likeness or trademark. The letter also opposes any cap on restaurant commissions.

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                                                                              TechNet Midwest | Telephone 630.400.3439
                                                                                      PO Box 9497 Springfield, IL 62791
                                                                                   www.technet.org | @TechNetMidwest




    June 9, 2020

    The Honorable Mike Mueller
    Michigan House of Representatives
    State Capitol
    124 North Capitol Avenue
    Lansing, MI 48933

    Re:      Opposition to House Bill 5770

    Dear Representative Mueller:

    I write on behalf of TechNet respectfully in opposition to HB 5770. TechNet is the
    national, bipartisan network of technology CEOs and senior executives that promotes the
    growth of the innovation economy by advocating a targeted policy agenda at the federal
    and 50-state level. TechNet’s diverse membership includes dynamic American businesses
    ranging from startups to the most iconic companies on the planet and represents more than
    three million employees and countless customers in the fields of information technology, e-
    commerce, the sharing and gig economies, advanced energy, cybersecurity, venture capital,
    and finance.

    HB 5770 creates a new private right of action, bans certain indemnity agreements, and
    prohibits third-party delivery platforms from using any likeness or intellectual property of a
    merchant without a written agreement. We oppose this bill because it will lead to frivolous
    litigation, constitutes regulatory overreach by the government, and federal law already
    protects the use of a restaurant’s likeness or trademark.

    Third-party delivery platforms have become crucial to restaurant and local businesses
    remaining open and continuing to generate much-needed revenue, provide safe earning
    opportunities for workers, and food for homebound and vulnerable residents in the
    community. These are valuable and ongoing partnerships that have enabled restaurants to
    reach new customers and compete in an e-commerce world. In fact, third-party delivery
    platforms were recently designated as Critical Infrastructure under the Administration's
    Department of Homeland Security guidance. Creating a new private right of action targeted
    solely at this industry will inevitably result in frivolous litigation, inhibiting delivery
    platforms’ operations and ability to provide those essential services to feed vulnerable
    populations and offer income-earning opportunities to Michiganders who have recently
    found themselves unemployed.

    Further, it is unnecessary for legislation to regulate business-to-business contracts by
    outlawing certain types of indemnity agreements. Regulating these contract terms is
    tantamount to government intervention. As a rule, TechNet is vigilant against harmful or
    hostile laws and regulations and promotes policies that encourage the development of
    entrepreneurship, mobile commerce, and the next wave of innovation in the new economy.




Washington, D.C. • Silicon Valley • San Francisco • Sacramento • Austin • Boston • Chicago • Olympia • Albany • Tallahassee
Narrowly defining which contractual terms third-party delivery platforms may utilize runs
counter to our desire for innovation-friendly policies.

If a restaurant does not want to be on a delivery platform or needs to make changes to the
information on the platform, it is the policy of our member companies to honor that request
as expeditiously as possible. Michigan restaurants have greatly benefitted from the
interaction with delivery platforms and get added to platforms when there is a local demand
for that restaurant. While a formal partnership may be the right fit for certain restaurants,
other restaurants prefer to be listed on these platforms without having to go through the
time and expense of putting a written agreement in place. Requiring formal written
contracts between each restaurant and platform is an unnecessary administrative burden on
both the restaurant and the platform, and it would result in lost sales for restaurants that do
not have the desire to review and execute a written contract.

In addition, federal law already protects the use of a restaurant’s likeness or trademark. It
is unnecessary to create a separate state-level means of protecting this intellectual
property, especially when doing so involves the creation of a new private right of action
targeted at a growing industry that is feeding and offering work opportunities for countless
Michiganders.

Finally, TechNet is opposed to any cap on restaurant commissions. The introduction of a cap
– regardless of duration – will result in damaging consequences and set a dangerous policy
precedent. A cap would also be clear regulatory overreach. Delivery network companies are
competing for restaurants’ business and offer a wide range of partnership structures and
commission rates to suit restaurants’ needs. Commission fee structures are transparent and
clear when any restaurant enters into a contractual partnership with a delivery network
company. Regulating these contract terms is tantamount to government intervention,
requiring wholesalers to sell their goods at a loss.

For reasons stated above, TechNet respectfully opposes HB 5770. We thank you in advance
for your consideration, and please do not hesitate to reach out with any questions at 630-
400-3439 or at tdiers@technet.org. Thank you for your consideration.

Sincerely,




Tyler Diers
Executive Director, Midwest
TechNet


Cc: Members, House Commerce and Tourism Committee


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