Cloud Law

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= refers

1) to a new legal format in Vermont that allows a cloud of online collaborators to act as a legal company

2) a new vision of legal services linked to the Cloud Computing model


John Clippinger:

"In order for cloud computing to achieve its promise, it will need to evolve a new service layer, what we call Cloud Law — principally, identity, authentication, dispute resolution, reputation, accreditation and governance services. As forms of digital enterprises evolve in the cloud, they will experiment with new legal mechanisms for contracting, governance, dispute resolution, and enforcement. Some of these mechanisms can be a developed within the context of traditional private law, but others will require new kinds of public and international law to sustain them. By encoding principles of transparency, accountability, recourse, self-healing, and non-coercion into the design of digital institutions, there is the prospect of bringing the rule of law to countries and situations where it has been absent." (


"imagine if a group of self-organized individuals could come together on the Internet to create valuable products and services – and to establish their own “operating agreement” among themselves, according to their specific goals — and yet still receive the benefits of “legal personhood” that corporations enjoy."

This is now possible thanks to a new law in the U.S. state of Vermont, as reported by On the Commons.

Excerpts from David Bollier:

“It is one thing to talk about the “virtual corporation” and online commons as new organizational forms. It’s quite another to have those forms be legally recognized. Yet in a little-noticed law enacted in June 2008, the State of Vermont has formally conferred “legal personhood” on online communities that wish to form limited-liability partnerships.

The law was tucked into a bill called “Miscellaneous Tax Documents,” but the new virtual corporation law has enormous implications. It enables people to come together as virtual businesses, with dispersed partners who may live anywhere, and avoid the usual requirements that the company host in-person board meetings, maintain a physical office and file paper documents with the state.”

And why is this so important?

David Bollier concludes:

“Right now, any group of individuals that wishes to collaborate on a shared project and maintain some measure of control over the value generated – a software project, a wiki-based archive, a database – must incorporate as a company or nonprofit, or forge a partnership agreement. The law more or less forces a collective to operate under a traditional organizational form, and to spend lots of money satisfying various legal requirements of sometimes-dubious relevance.

Besides dictating organizational forms, current law privileges the interests of investors and boards of directors, and has no recognition for co-creators who wish to collaborate to create shared value in virtual spaces, and who wish to make decisions as a group.

So imagine if a group of self-organized individuals could come together on the Internet to create valuable products and services – and to establish their own “operating agreement” among themselves, according to their specific goals — and yet still receive the benefits of “legal personhood” that corporations enjoy.

The participants in such enterprises would not necessarily have to adopt the traditional corporate form, which vests supreme power with a board of directors, who oversee the CEO, who in turn hires and fires employees. The participants could instead forge a collective agreement on how the “virtual corporation” would govern itself and its digital assets. The operating agreement might stipulate that certain company decisions would be made through software-based systems, or that disputes would be resolved through online ADR (alternative dispute resolution). And all of this would have standing in the law.

The Vermont law strikes me as an ambitious next stage in the evolution of tech and legal infrastructure that started with free software and Creative Commons. The General Public License (for free software) and CC licenses authorize new forms of sharing and collaboration, and have the force of law. We’ve seen the explosion of new online creativity and collaboration that has resulted. The new Vermont law has the potential to authorize all sorts of interesting new collaborative organizations that would have the full legal standing to “compete” with conventional corporations.

My friend John Clippinger of the Berkman Center has described the virtual corporations law as the first step toward imagining a new type of “cloud law.” (He is referring to “cloud computing,)

So Vermont’s first step toward developing “cloud law” is a welcome development. It will make it easier for online enterprises to be highly flexible in their operations; to leverage digital technologies as they evolve; and to scale effectively while creating the usual benefits of new businesses – jobs, tax revenues, innovation. Already a few other states — New Hampshire and Washington — have expressed an interest in possibly emulating the Vermont law.

Cloud law is a departure from existing law in that it enables online communities and corporations to legally name and protect certain collective, indivisible resources in online collaboration. The participant-members of a community or corporation can specify how those shared assets – a database of scientific research, for example – will be managed. Some might be accessible only to member-participants, while others might be treated as pure public goods, available to anyone: two different tiers of commons, as it were. The terms by which a shared virtual resource could be monetized could also be stipulated in the operating agreement, along with the specific membership rights of participants. ” (