Tech Law Journal Daily E-Mail Alert
November 8, 2001, 9:00 AM ET, Alert No. 304.
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House Subcommittee Holds Hearing on FTC
11/7. The House Commerce Committee's Subcommittee on Commerce, Trade and Consumer Protection held a hearing titled "Challenges Facing the Federal Trade Commission". Timothy Muris, the recently appointed FTC Chairman, was the only witness. He used the occasion to outline his plans for the FTC. Subcommittee members stated their views on various FTC related issues.
Rep. Ed Markey (D-MA) stated that "we must pass online privacy legislation." He elaborated that "The FTC recently announced that it was no longer going to recommend that Congress pass a law to protect the privacy and freedom of Americans on the Internet. Instead, the agency announced that it would attempt, yet again, to get more of the online industry to take voluntary actions to protect personal privacy comprehensively. The Commission also indicated that it would step up its enforcement action."
Rep. Markey continued: "I salute the laudable efforts of certain sectors of the industry in trying to develop so called self regulatory solutions to some of the privacy concerns that many have expressed. These undertakings are critical to increasing consumer confidence and trust in the medium, and will be an important component in any comprehensive set of privacy protections for consumers. Relying solely upon voluntary industry efforts, however, will not suffice"
He concluded that "I do not accept the notion that the Internet is too complex, and technology changing too rapidly to develop enforceable privacy protections for consumers. As technologies change, and business plans for online commerce adjust, consumers' privacy protections remain a constant. Again, consumers can negotiate in the market place for better privacy protection if they can get it, but no consumer should be without basic privacy protection, or without recourse to redress grievances for harms caused by privacy invasions."
Rep. John Dingell (D-MI), the ranking Democrat on the full Committee, also used the hearing to advocate legislation to protect privacy. He argued that it is necessary to protect against identity theft. He stated that "Existing laws and government resources simply cannot restrict broad access to the personal information of consumers. ... Alone, neither industry self regulation nor government can fully protect the public against identity theft. The most effective weapon against identity theft is to empower consumers with control over their personal information, and how that information is collected and disseminated. Armed with effective, enforceable legal rights, the individual consumer would be able to manage access to his or her personally identifiable information more responsibly than government or industry."
Rep. Billy Tauzin (R-LA) submitted a prepared statement in which he addressed privacy. He commended Muris for his "thoughtful examination of this complex issue, as demonstrated by his recent speech in Cleveland, which focused on rededicating the FTC's attention and resources to enforcement issues, specifically actions related to consumer privacy. Chairman Muris' focus on enforcement is right on target." However, Rep. Tauzin continued that "I do see a need to explore additional legislative efforts that will help address an apparent failure in the marketplace to protect consumers' privacy. Perhaps there are some additional tools we can provide that will bring confidence to consumers and the industry without unnecessarily interfering with good business practices."
Rep. John Shimkus (R-IL) used the occasion to discuss European Union's decisions "to deny mergers that, in essence, we have approved here, and, in essence, a competitive disadvantage placed upon the United States and a lot of our fine companies because of the EU application process, and the barriers that they are able to drop without, in essence, a negotiation. We are then at a competitive disadvantage."
Rep. Steve Buyer (R-IN) tied together the antitrust law and cable TV rates. He blamed the professional sports antitrust exemption for high cable rates. "What is occurring today is, with baseball as an example, Congress gives baseball an antitrust exemption. The baseball owners then pay these outrageous salaries to athletes, pay $250 Million to a short stop. And people go, 'how can an owner do that?' An owner can do that because he takes those costs and passes them off to the programmers. And then people don't know why their cable rates are going up. They think cable rates are going up, Mr. Chairman, because of infrastructure upgrades. Cable rates are going up because sports programmers are taking advantage of consumers all across the country. And, that Act is something that really concerns me."
FTC Chairman Muris Testifies Before House Committee
11/7. Muris submitted detailed prepared testimony to the House Commerce Committee's Subcommittee on Commerce, Trade and Consumer Protection which outlined FTC goals in various technology related areas, including competition policy, the relation between antitrust and intellectual property law, online privacy, and online fraud.
Competition Policy. Muris stated that "Our competition mission will continue to reflect the following widely shared consensus: (1) the purpose of antitrust is to protect consumers; (2) the mainstays of antitrust enforcement are horizontal cases - cases involving the business relations and activities of competitors; (3) in light of recent judicial decisions and economic learning, appropriate monopolization and vertical cases are an important part of the antitrust agenda; and (4) case selection should be determined by the impact on consumers, guided by sound economic and legal analysis, and made with careful attention to the facts." He added that "Although there has been much speculation about how the new Commission will regard merger cases, this area is yet another in which continuity, not change, will be the norm."
Intellectual Property. He stated that "In past decades, our economy has become more knowledge based; for some companies, patent portfolios represent far more valuable assets than manufacturing or other physical facilities. Thus, an increasing number of the FTC's competition matters require the application of antitrust law to conduct relating to intellectual property. Both antitrust and intellectual property law share the common purposes of promoting innovation and enhancing consumer welfare. On occasion, however, there have been tensions in how to manage the intersection between the doctrines, as well as questions about how best to spur innovation through competition and intellectual property law and policy. These issues may well merit broader and more in-depth study. In addition, we continue to pursue investigations involving intellectual property."
He also discussed the FTC's recent action against Dell. He stated that "An example of our objectives in this area is to ensure that patent holders do not improperly withhold critical information from industry standard setting groups to delay the creation of a standard or raise the price of admission to its use."
Online Fraud. Muris stated that "The FTC will continue to monitor rapidly evolving technologies used by scam artists. The FTC has brought a number of cases involving scams that depend on the special nature of technology."
Online Privacy. Muris reiterated that "A majority of the Commission does not support online privacy legislation at this time." However, his prepared testimony reviewed existing laws regarding privacy that are being enforced by the FTC, such as the Children's Online Privacy Protection Act.
Trade Promotion Authority News
11/6. Rep. David Bonior (D-MI) spoke in the House against granting the President trade promotion authority, which is also know as fast track. He stated that "fast track is the wrong issue at the wrong time for the American people, and I hope my colleagues will see to it, it never reaches this floor." See, Congressional Record, November 6, 2001, at pages H7782-3.
11/6. Rep. Don Manzullo (R-IL) stated in the House that "renewing Trade Promotion Authority for the President is vitally important for small business exporters." He is Chairman of the House Small Business Committee. See, Congressional Record, November 6, 2001, at page H7728.
11/6. Rep. Sherrod Brown (D-OH) also spoke in the House on trade promotion authority. He stated that "The fact is, Western business investors want to go to China, they want to go to Indonesia; they want to go to countries which are dictatorships, which have docile work forces, authoritarian governments and they are very predictable for Western investors. They do not go to India, they do not go to Taiwan, not to South Korea; they do not want to stay in this country many times because we have strong environmental laws, because labor unions can organize and bargain collectively, because good wages are paid, and because we have free elections. ... Fast track should be defeated again in Congress this year. Congressional Record, November 6, 2001, at page H7783-4.
Senate Judiciary Committee Holds Hearing on Rogan Nomination
11/7. The Senate Judiciary Committee held a hearing on the nomination of James Rogan to be Director of the U.S. Patent and Trademark Office (USPTO).
Sen. Orrin Hatch (R-UT), the ranking Republican on the Committee, praised Rogan, and said he would work for his confirmation. Sen Hatch also criticized the current practice of diverting USPTO user fees. He stated that "The resources that support the Patent and Trademark Office come entirely from user fees. But a large portion of those user fees have been siphoned off to serve other governmental purposes. This is a practice that I have worked against together with Chairman Leahy over the years."
Rogan responded that "I can't tell you how the administration is going to come down on this subject. What I can tell you is that administration is committed to ensuring, one way or another, that the USPTO has the appropriate funds to do the job. So that, as you so rightly say, that the examining members will be able to do their job, and help move us into the 21st Century."
Sen. Dianne Feinstein (D-CA) stated that the number of patent and trademark applications and issues is increasing. She added that it is now taking about 14 months to process a patent applications, and 6 months to process a trademark registration request. She asked, "How do you intend to address that situation, which some have characterized as an impending crisis?"
Rogan responded, "I think that the first thing that the next Director should do is deal with this exactly as you have just said -- an impending crisis. In fact from the information that I have seen from the Commerce Department, and from the Patent and Trademark Office, paints even a more bleaker picture than what you have just described. I think the average pendency right now is about two and a half years, and by 2006 they expect that pendency rate to go to three and one half years. That makes it very very difficult for entrepreneurs, for investors, and for particularly, those that are investing resources in high tech patents, to basically sit and wait and and see if their investment is going to pay off. In a large way we are a victim of our technological successes. Because, as we move to more high tech patents, the examination process becomes far more complex."
Rogan elaborated: "I read that one patent that was sent over to the USPTO with background materials that filled up twelve disks. It would be the equivalent of six million pages of supporting material. These are very very technical issues, and on top of that, we went into the problem of losing a very highly trained examination corps to the private sector. Whoever has the privilege of being confirmed by this body, and to that position, is going to have to work hard first to see that we have the resources to hire to retain qualified examiners, and to find ways that we can give them more flexibility in reviewing the materials that they have to go to, so that we can turn out a quality product."
Tech Law Journal also spoke with Rogan after the hearing about the Administration's position on USPTO funding. He stated that "my understanding is that they are still studying the issue, and the way in which they come down on it is still a matter for discussion. I know that the President and the Secretary of Commerce have committed to making sure that the PTO is appropriately funded, so that the examiners can do their job. My record in Congress was one that felt the way to do that was from ending the diversion, and leaving it as intended -- a fee based institution. I will be having a number of discussions with the administration officials on that if I am confirmed."
Sen. Feinstein suggested that Rogan's experience in the House "would put you in a rather unique position to do the necessary lobbying for the funds you might require." Rogan responded, "Yes and no. Madame Chairwoman, I think, had I never served in the House, I would have perhaps approached the job with the illusion that it would be easy to talk to appropriators, to give up their power."
The hearing on Rogan's nomination was combined with a hearing on several nominees to be U.S. District Court Judges. Sen. Feinstein presided. Sen Hatch was the only other member to participate in the part of the hearing dedicated to the Rogan nomination. Sen. Patrick Leahy (D-VT), the Chairman of the Committee, left before the Committee took up the Rogan nomination. However, he did say in his opening statement for the hearing that "I had a productive meeting with Mr. Rogan a few weeks ago and have spoken with Secretary Evans about this nomination. Senator Feinstein and I both know the importance of intellectual property to our economy and look forward to working with the new Under Secretary in the days and months ahead."
Sen. Feinstein recited the many offices that Rogan has held, including California prosecutor, judge, and Assemblyman, and Majority Leader of the Assembly, as well as Member of the U.S. House of Representatives, and its Judiciary Committee, and Courts and Intellectual Property Subcommittee. Rogan responded, "Of all those qualities that you have articulated, the one that you left out is that I never showed incredibly poor judgment of running for the U.S. Senate against you. As you ponder my nomination, I hope you will keep that in the back of your mind." She "warmly welcome[d]" him to the hearing.
House Passes USPTO Authorization Bill
11/6. The House passed HR 2047, the Patent and Trademark Office Authorization Act of 2002. This bill authorizes, but does not appropriate, funding for the USPTO. Specifically, it provides that "There are authorized to be appropriated to the United States Patent and Trademark Office for salaries and necessary expenses for fiscal year 2002 an amount equal to the fees collected in fiscal year 2002". Hence, it authorizes the ending of the diversion of USPTO user fees to other government programs.
Ever year members of the House and Senate Judiciary Committees, and other pro technology legislators, seek to end the process of diverting USPTO fees. And every year they are opposed by members of the House and Senate Appropriations Committees. The Clinton administration also supported the diversion. The Bush Administration has not yet taken a position on this issue.
Several members of the House Judiciary Committee, and others, used the time for debating HR 2047 to argue against the diversion of USPTO fees. Rep. Lamar Smith (R-TX) said that "This extra funding will speed up the processing of patent applications that now takes an average of nearly 27 months. If these fees continue to be diverted, pendency -- the time from filing to granting of a patent -- may increase to 38 months by 2006. In recent years, the number of technology and biotechnology patents has increased. Now more than ever, it's important to ensure that the PTO has adequate funding through its own fee mechanisms. The PTO must produce high quality patents on a timely basis. It is struggling to keep up with the workload and lacks new technology that is desperately needed to do its job."
Rep. Barney Frank (D-MA) stated that "It should be noted that we raised patent fees a few years ago. When we raised them, the assumption, the implicit promise, was these fees would go to improving the patent process. To take fees from people seeking patents and diverting them to other purposes is a grave error. We ought to be maximizing our ability to service the innovators in this economy, and we do that by allowing these fees to stay here."
Rep. John Conyers (D-MI), the ranking Democrat on the Judiciary Committee, stated that "The PTO cannot hire or retain qualified patent examiners with advanced scientific degrees; they prefer the more lucrative salaries in the private sector. The PTO also cannot update its computer systems to thoroughly search databases of information and determine whether patent applications really disclose new and nonobvious inventions; this makes it that more likely for the PTO to issue a bad patent."
Rep. Howard Coble (R-NC), the Chairman of the House Courts, Internet and Intellectual Property Subcommittee, Rep. James Sensenbrenner (R-WI), the Chairman of the full Committee, and Rep. James Moran (D-VA), also spoke in favor of the bill.
Bills Introduced
11/6. Rep. Sherrod Brown (D-OH) introduced HR 3235, a bill to provide for compulsory licensing of certain patented inventions relating to health care emergencies. It was referred to the House Judiciary Committee.
11/6. Sen. Max Baucus (D-MT) introduced S 1636, Taiwan Free Trade Agreement Act of 2001, a bill to authorize the negotiation of a Free Trade Agreement with Taiwan, and to provide for fast track congressional consideration of such an agreement. The bill was referred to the Senate Finance Committee, or which he is the Chairman.
Thursday, Nov 8
9:30 AM. The Federal Communications Commission (FCC) will hold a meeting to consider five items: (1) a Report and Order concerning reexamination the Commercial Mobile Radio Services (CMRS) spectrum aggregation limits and the cellular cross interest rule (WT Docket No. 01-14); (2) a Notice of Proposed Rule Making (NPRM) concerning whether to undertake a comprehensive examination of its rules and policies of local radio ownership (MM Docket No. 00-244); (3) a Memorandum Opinion and Order on Reconsideration concerning its periodic review of the progress of the conversion to digital television (MM Docket No. 00-39); (4) a NPRM concerning the establishment of national performance measurements and standards for unbundled network elements and interconnection (CC Docket Nos. 98-56, 98-147, 98-147, 96-98, and 98-141); and a Report and Order concerning its policies, rules and requirements for Cable Landing Licenses (IB Docket No. 00-106). See, FCC notice. Location: Commission Meeting Room, FCC, 445 12th Street, SW, Room TWC305, Washington DC.
10:00 AM. The House Financial Services Committee's Oversight and Investigations Subcommittee and the House Ways and Means Committee's Social Security Subcommittee will hold a joint hearing titled Preventing Identity Theft by Terrorists and Criminals. Location: Room 2128, Rayburn Building.
10:00 AM. The Senate Judiciary Committee will hold an executive business meeting. The items on the agenda include consideration of S 986, a bill to allow media coverage of court proceedings, and the nomination of Terry Wooten to be a U.S. District Court judge for South Carolina. Location: Room 226, Dirksen Building.
12:15 PM. The FCBA's Global Telecom Development Committee will host a brown bag luncheon titled Telco Privatization: the Role of International Financial Institutions. The speakers will be David Satola (World Bank Group) and Janet Hernandez (Coudert Bros.). RSVP to Kent Bressie. Location: Wilkinson Barker & Knauer, 2300 N Street, Suite 700, Washington DC.
2:00 PM. The House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property will hold an oversight hearing titled Intellectual Property Litigation. Location: Room 2141, Rayburn Building. 
Friday, Nov 9
8:30 AM - 1:30 PM. The American Enterprise Institute (AEI) and the Brookings Institute will jointly host a conference titled "Practical Steps to Spectrum Markets". See, online registration page. See, agenda at right. Location: Wohlstetter Conference Center, Twelfth Floor, 1150 17th Street, NW, Washington DC.
  8:30 AM. Breakfast address by Sen. Ron Wyden (D-OR).
  9:00 AM. Panel I: "Enabling Bandwidth Markets". The speakers will be Thomas Hazlett (AEI), Gregory Rosston (Stanford), Michelle Farquhar (Hogan & Hartson), Evan Kwerel (FCC), and John Williams (FCC).
  10:45 AM. Panel II: "Unblocking Spectrum Allocation". The speakers will be Mike Chartier (Intel), Joe Mitola (Mitre), DeWayne Hendricks (Dandin Group), and Giancarlo Ibarguen (Francisco Marroquin Univ.).
  12:15 PM. Luncheon address by Nancy Victory (NTIA).
10:00 AM. The House Government Reform Committee's Government Efficiency, Financial Management, and Intergovernmental Relations Subcommittee will hold a hearing titled Have Federal Agencies Failed to Protect Their Computer Systems? Room 2154, Rayburn Building.
Saturday, Nov 10
8:00 AM. There will be a press conference titled Deliberation, Democracy & the Internet. For more information, contact Lorie Slass, Annenberg Public Policy Center of the University of Pennsylvania, 202 879-6701. Location: Murrow Room, National Press Club, Washington DC.
Monday, Nov 12
Veterans' Day.
Day one of a three day meeting of the ICANN titled "Security and Stability of the Internet Naming and Address Allocation Systems". Location: Marina Beach Marriott, Marina del Rey, California.
People and Appointments
11/6. The Senate confirmed Christina Armijo to be a U.S. District Court Judge for New Mexico by a vote of 100 to 0. See, Roll Call No. 325.
11/6. The Senate confirmed Karon Bowdre to be a U.S. District Court Judge for Alabama by a vote of 98 to 0. See, Roll Call No. 326.
11/6. The Senate confirmed Stephen Friot to be a U.S. District Court Judge for Oklahoma by a vote of  98 to 0. See, Roll Call No. 327.
11/6. Nina Shafran was named Deputy Chief of the FCC's Mass Media Bureau's Audio Services Division. She previously worked for the law firm of Dow Lohnes & Albertson. Prior to that, she worked in the Washington DC office of the law firm of O'Melveny & Myers, and in the Washington DC office of the law firm of Weil Gotschal & Manges. See, FCC release [PDF].
House Adopts Anti Dumping & Countervailing Duties Resolution
11/7. The House passed HConRes 262 by a vote of 410 to 4. See, Roll Call No. 262. This is a concurrent resolution expressing the sense of the Congress "that the President, at the WTO round of negotiations to be held at Doha, Qatar, from November 9-13, 2001, and at any subsequent round of negotiations of the WTO, should    (1) preserve the ability of the United States to enforce rigorously its trade laws, including the antidumping and countervailing duty laws, and avoid agreements which lessen the effectiveness of domestic and international disciplines on unfair trade, especially dumping and subsidies, in order to ensure that United States workers, agricultural producers, and firms can compete fully on fair terms and enjoy the benefits of reciprocal trade concessions; and (2) ensure that United States exports are not subject to the abusive use of trade laws, including antidumping and countervailing duty laws, by other countries." The resolution was introduced on November 6 by Rep. Phil English (R-PA) and others.
More News
11/7. Sprint announced in a release that it "plans to convert its existing digital circuit switched network to a packet switched network beginning in January 2003." Rep. Bob Goodlatte (R-VA), a Co-Chair of the Internet Caucus, praised the announcement. He stated that "Sprint LTD currently serves nearly 8.3 million customers, many in my Congressional district. This conversion from the existing switched network to a packet switched network will improve competition and lower prices by giving consumers in rural areas a greater choice of high speed Internet, phone service, and other telecommunications products and services. Sprint's announcement will hasten the delivery of quality high speed telecommunications services to the Shenandoah and Roanoke Valleys."
11/7. The U.S. International Trade Commission (USITC) began its Section 337 evidentiary hearing regarding the importation of certain integrated circuits. The complainants are United Microelectronics Corp., UMC Group (USA), and United Foundry Service, Inc. The respondents are Silicon Integrated Systems Corp. and Silicon Integrated Systems Corp. This investigation pertains to U.S. Patents No. 5,559,352 and 6,117,345. See, Investigation No. 337-TA-450. Administrative Law Judge Sidney Harris is presiding.
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