The Civic Trust

Sean McDonald
Aug 4, 2015 · 9 min read

This post was coauthored with Keith Porcaro (@KeithPorcaro).

As our world digitizes, an increasing amount of our day-to-day life is becoming intellectual property. Someone else’s intellectual property. Someone else who can do, mostly, whatever they want with it. Most companies don’t make many promises about what they will (or won’t) do with that intellectual property.

Even those well-intentioned businesses that do, as Keith wrote, have a limited ability to keep their promises — and the way Terms of Service are written today, there’s very little we can do if a company changes its mind. That’s concerning on its own, but it becomes dangerous when those are the agreements that govern the way we access public institutions, representatives, and services.

For all of the incredible progress coming from the digitization of public infrastructure, the underlying organizations have limits — and those limits matter to how our relationships evolve. In business, the limits are financial stability and the fiduciary duty to maximize value for shareholders. In non-profits, they’re the dependence on closed-door decision-making by Boards of Directors and funders. In the open commons, the limit is that technology isn’t free like freedom or like beer — it’s free like kittens — and releasing something into the wild is a lot different than keeping it alive and fed.

Photo Credit: @Sylvar 2007

As much as each of these models does to build our technology ecosystem (and they are all tremendously important), none provide a model for public participation in the ownership of intellectual property. We need an organizational and legal model that protects the public’s interest in digital utilities — at least until we figure out how to define, protect, and evolve our basic rights in digital spaces.

Civic Trusts are that model. They create a trustee organization that owns the underlying code and data generated by a technology and licenses it to a for-profit company that commercializes it. What makes Civic Trusts different from normal trusts is that both Civic Trustees and the licensed commercializing company will have a fiduciary duty to develop participatory governance processes that keep each other in check. This also means that if the trustee or company abuses user trust or acts against their interests, they can be held accountable in court or by having their ownership of the asset removed.

This is where Civic Trusts differ from a number of other (awesome) structures used for similar purposes, like B Corps, social franchises, copyright collectives, and utility consumer participation boards. Civic Trusts are private organizations, meaning that they are able to move with the speed and efficacy of private law, but their purpose is to embed civic values and participation processes into the evolution of digital utilities, while legally protecting the underlying intellectual property.

There are three core ways Civic Trusts are unique: (1) their missions are to define and support the implementation of systems of public participation in decisions about user and contributor rights; (2) the trustee organization itself must develop public participation models for its core governance decisions; and (3) civic trusts can be designed to create reciprocal relationships between the public (the trust), technology companies (the licensee), and technology stakeholders (the users or investors or contributors or public). This structure uses complementary legal tools to embed governance into the organizational architecture of technology companies that aspire to becoming public utilities. Civic Trusts provide the legal and business structure to open source businesses the way that GitHub provides technical structure to open source code.

There are a lot of details to discuss — and we will get into them — but we want to start by explaining the mechanics of a Civic Trust.

How it Works

Grantor

Importantly, once the grantor places an asset in trust, the grantor no longer owns the asset. In many cases, the grantor may continue to contribute to the asset or retain a license — even an exclusive license — but this separation ensures that in the event that the grantor dissolves or gets bought, the asset will continue to be used for the purpose of the trust.

Beneficiary

Civic Trust beneficiaries would be construed broadly, to ensure that the owned technologies — particularly technologies funded or adopted by public institutions — benefit the public equally. Creating a broad beneficiary class means that people who feel that that the technology product or company has damaged their well-being can seek justice. In other words, Civic Trusts recognize that when a public or civic organization adopts a technology, it doesn’t just affect users, it can also affect the rest of the community.

Civic Trusts can create a legal basis for the community to seek redress based on the impact that a technology product has on the public good. This is particularly powerful (and makes particular sense) for technology products that are built with public assets or adopted by public institutions.

Asset

Ownership gives the Civic Trust influence over the companies that it licenses the asset to, and is what it uses to influence the companies that bring the product to market. So, if a Civic Trust owns a code base and the commercializing company doesn’t live up to its promises, the Trust can threaten or revoke that company’s license. If a Civic Trust owns both the underlying code and the user data, it creates a wider range of available actions, such as temporarily removing access to data, limiting access to particular types of data, or delaying the transfer of data before the “nuclear” option of revoking a license entirely. The leverage of ownership is one of the key differences between Civic Trusts and certification programs like B Corps.

Working through private contracts and revocable licensing is significantly easier than trying to work through legislative systems, and is still enforceable in court, if necessary. This is a similar model to franchising and social franchising, which use contracts to establish the governance and financial relationship between two parties, based on the licensing of intellectual property. Civic Trusts add one more layer, and makes it fundamental to the entire relationship: a purpose.

Purpose

The purpose of a Civic Trust is to embed principled, participatory governance systems into the decision-making processes that define user rights within a technology platform. A Civic Trust structure is inherently flexible — but our goal is to create a legal structure that protects the public interest in intellectual property, while we work together to define user rights.

Trusts can use licensing negotiations to design structured participation systems into any part of the relationship between the commercializing company and the beneficiaries. Civic Trusts could also focus on specific issues — like collective bargaining in Terms of Service agreements or product testing to ensure fair treatment in customer service dispute resolution. Creating license-based standards of service delivery and stakeholder engagement — from contributors to users to customers — is a core feature of franchising agreements. Civic Trusts are similar, but in addition to defining the relationship between the owner of the asset and the commercializing company, it makes licensing contingent on a set of participation standards and their effect on the rights of the beneficiary. Civic Trusts can use different licenses to embed different participation structures (direct democracy, elected representation, expert collaboration), as well as norm preferences (equal representation, weighted by participation, weighted by expertise).

Truthfully, when it comes to user (and public) involvement in technological decision-making, we just don’t know what good looks like yet. We’re betting that Civic Trustees can help figure that out.

Trustee

A Civic Trustee is the organization that will start to experiment with, define, and enforce the ways that we participate in the evolution of public and civic technologies. A Civic Trustee has a legal responsibility to protect the beneficiary’s interests in the core technology and data assets, and so it’s also important that they have public accountability and participation structures embedded into their own governance as well.

Civic Trusts require the Trustee to have (or amend) bylaws that ensure that the public or beneficiary votes to elect the leadership of the Trustee. Most non-profits and public trusts have provisions that evolve their governance model — most commonly through closed elections, and then director nominations from other funders or directors. Over time, that skews the selection process away from public and beneficiary representation, toward the interests of the sitting directors and funders. A Civic Trustee could either hard-code or openly experiment with multiple representation models — defining their voting class as the beneficiary of the trust or the licensee companies, or the users of the platforms.

Ultimately, a Civic Trustee is at the epicenter of this experimentation — with the freedom to test different participation models for practicality (will people actually do it?), theory of value (equality v. expertise v. participation), and effectiveness at achieving a public good (and how to define that). It’s our sincere hope that there will be a lot of different models, and that they’ll help us start to meaningfully reconsider how to participate in collective decision-making around public assets. What’s great about the Civic Trust model is that even when they fail, the users or the public can decide what happens next — whether the assets can transferred to a different Civic Trust, a government, a public trust, or even a private company. Regardless of where it goes, we believe that ensuring that the decision is made by election and not auction is the first step toward building a durable digital commons.

The End of the Beginning

As Lawrence Lessig’s famous maxim goes — “code is law.” Today, code has the same effect as law, but it doesn’t share any of the democratic processes that surround the democratic processes of law. The creation, interpretation, dispute resolution, and enforcement of embedded rights in code are all still run through mostly opaque processes, by a small minority of people.

Truthfully, we don’t know exactly what participatory digital systems look like, but we do know that it’s important for us to develop them. And that we’ll need a safe space to experiment with different approaches while we do. Governmental policies and technology companies will rise and fall, but that shouldn’t mean that we have to sell or sacrifice the progress we make along the way. Civic Trusts are a way to protect progress, while we figure out how to ensure a better digital future.

Necessary disclaimer: We both have legal backgrounds (and Keith is licensed in California), but this is definitely not — and shouldn’t be taken as — legal advice. We’re always up for a chat, but please consult with a lawyer before doing anything of legal significance with your assets.

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