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December 29, 2009, Alert No. 2,029.
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WTO Appellate Body Affirms in Movie and Music Case

12/21. The Appellate Body of the World Trade Organization (WTO) issued its report [195 pages in PDF], upholding the findings and conclusions of the Dispute Settlement Panel's report in the WTO's proceeding titled "China -- Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products".

This affirms the panel's conclusions that the PRC's access barriers for US content distributors violate its WTO commitments. The US had also complained about deficiencies in the PRC's legal regime for protecting and enforcing copyrights and trademarks. However, the panel did not rule in favor of the US on that issue. Also, the US complaint could have, but did not, encompass any PRC violations of its WTO obligations that harm US software makers.

Japan, Taiwan, Korea, the European Communities, and Australia also joined in this proceeding.

This Appellate Body affirmance is a victory for the movie and music industries.

Ron Kirk, the head of the Office of the U.S. Trade Representative (OUSTR), stated in a release that "Today America got a big win. We are very pleased that the WTO has found against China's import and distribution restrictions on U.S. movies, music, DVDs and publications".

Ron KirkKirk (at right) continued that "The Appellate Body's findings are key to ensuring full market access in China for legitimate, high-quality entertainment products and the exporters and distributors of those products. U.S. companies and workers are at the cutting edge of these industries, and they deserve a full chance to compete under agreed WTO rules. We expect China to respond promptly to these findings and bring its measures into compliance."

"This case is also an important part of our efforts to combat intellectual property piracy", said Kirk. "The panel and Appellate Body findings ensure that legitimate American products are granted market access so that they can get to market and beat out the pirates."

The US filed its complaint (nominally a request for consultations) with the WTO on April 10, 2007. See, story titled "US to Complain to WTO Regarding PR China's Failure to Protect IPR" in TLJ Daily E-Mail Alert No. 1,562, April 9, 2007.

The US requested the establishment of a Dispute Settlement Panel (DSP) on August 13, 2007. See, story titled "US Requests WTO Dispute Settlement Panel Re PRC Failure to Protect IPR" in TLJ Daily E-Mail Alert No. 1,623, August 15, 2007.

A WTO panel issued its report [147 pages in PDF] on January 26, 2009, with findings and conclusions in favor of the U.S. See, story titled "WTO Panel Rules in PRC IPR Case" in TLJ Daily E-Mail Alert No. 1,889, February 2, 2009.

The PRC appealed. And now, it has lost.

The WTO has no authority to enforce this decision. The Appellate Body report merely advises the PRC to come into compliance with its WTO obligations. However, if the PRC does not come into compliance, then the WTO may authorize the US and other aggrieved WTO members to impose trade sanctions.

Neil Turkowitz of the Recording Industry Association of America (RIAA) stated in a release that "We greet today's important and unequivocal decision upholding the earlier Panel Report on the incompatibility of certain Chinese measures with great optimism. China maintains a variety of restrictions on the ability of U.S. record companies to do business in China, thereby undermining the potential for growth in the world's most populous country. Today's decision is a reminder of the importance of international trade rules that govern the behavior of states, and which generally ban overtly discriminatory measures. Ultimately, liberalization of China's market will serve the interests of U.S. and Chinese creators alike by providing a more robust and competitive infrastructure for the distribution of creative materials."

Dan Glickman, head of the Motion Picture Association of America (MPAA), stated in a release that "With today's rejection of China’s appeal, the WTO has taken a major step forward in leveling the playing field for America’s creative industries seeking to do business in China."

Glickman added that "This ruling will complement our strategy to fight movie piracy in China. In spite of all the restrictions we face, there is no shortage of U.S. filmed entertainment in China. Unfortunately, far too much of it is pirated. This ruling represents a positive step in promoting the growth of legitimate U.S. movies in a market that is growing rapidly, and with great potential."

State and Local Government Groups Seek Revision of FCC Tower Citing Application Shot Clock

12/17. The National Association of Telecommunications Officers and Advisors (NATOA), U.S. Conference of Mayors, National League of Cities, National Association of Counties, and American Planning Association filed with the Federal Communications Commission (FCC) a Petition for Reconsideration or Clarification [16 pages in PDF] of the FCC's recent Declaratory Ruling (DR) regarding cell towers citing requests.

The FCC adopted and released its DR on November 18, 2009, interpreting 47 U.S.C. § 332(c)(7)(B), and setting the time frames for state and local action on wireless facilities siting requests.

The statute provides, in part, that "A State or local government or instrumentality thereof shall act on any request for authorization to place, construct, or modify personal wireless service facilities within a reasonable period of time ..." The statute does not define "reasonable period of time".

This DR addresses, among other things, the meaning of "a reasonable period of time". It states that "we find 90 days to be a generally reasonable timeframe for processing collocation applications and 150 days to be a generally reasonable timeframe for processing applications other than collocations. Thus, a lack of a decision within these timeframes presumptively constitutes a failure to act under Section 332(c)(7)(B)(v)."

The DR further states that "we conclude that the time it takes for an applicant to respond to a request for additional information will not count toward the 90 or 150 days only if that State or local government notifies the applicant within the first 30 days that its application is incomplete". (The statute provides that an action for judicial relief must be brought "within 30 days" after a State or local government action or failure to act.)

See also, story titled "FCC Adopts Declaratory Ruling Regarding State and Local Tower Siting Procedures" in TLJ Daily E-Mail Alert No. 2,017, November 23, 2009. This DR is FCC 09-99 in WT Docket No. 08-165.

The NATOA and other interest groups that represent state and local governments filed their petition on December 17, 2009. They seek a revised DR that would allow state and local licensing authorities greater power to drag out the application process by asserting that tower citing applications are incomplete.

They request that the FCC amend its DR to provide that at any time before the expiration of the 90 or 150 day deadline a state or local government may ask for more information, and that the time it takes the applicant to provide this information does not count for the purpose of calculating expiration of the 90 or 150 days.

Under this proposal a state or local government could hypothetically issue a series of requests for information to indefinitely drag out the process, and thereby frustrate the intent of the DR.

The NATOA also stated in a release on December 18, 2009, that while its petition does not raise the issue of the FCC's authority to issue this DR, "we believe that this larger legal argument is more suited to a judicial appeal".

It added that "NATOA supports appeal efforts on the part of local governments; however, NATOA is not currently participating in an appeal at this time. NATOA does have the ability to join an appeal at a later date if it is determined that such action is in the strategic best interest of our members."

Initial comments are due by January 22, 2009. Reply comments are due by February 8, 2010. See, the FCC's December 23, 2009, Public Notice [3 pages in PDF]. It is DA 09-2629 in WT Docket No. 08-165.

More News

12/28. December 28, 2009, is the effective date for the Federal Communications Commission's (FCC) rules changes regarding the filing and delivery of paper documents. See, December 3, 2009, Public Notice (DA 09-2529), and notice in the Federal Register, December 28, 2009, Vol. 74, No. 247, at Pages 68543-68544.

12/28. The Department of Homeland Security (DHS) published a notice in the Federal Register that announces, describes, and recites its rules changes that delay indefinitely the January 1, 2010, effective date of certain mandates imposed by the DHS upon states pursuant to the REAL ID Act. See, Federal Register, December 28, 2009, Vol. 74, No. 247, at Pages 68477-68478. The DHS previously announced this delay by release on December 18, 2009. See, story titled "DHS Extends REAL ID Deadline" in TLJ Daily E-Mail Alert No. 2,026, December 22, 2009.

12/24. The Internet Corporation for Assigned Names and Numbers (ICANN) released its 2009 annual report [45 pages in PDF].

12/23. The Federal Communications Commission (FCC) issued an order suspending the January 11, 2010, deadline to submit Form 323, the broadcast ownership report. See, notice of extension. The FCC will not set a new deadline until it has rewritten Form 323. This order is DA 09-2618 in MB Docket Nos. 07-294, 06-121, 02-277, and 04-228, and MM Docket Nos. 01-235, 01-317, and 00-244.

In This Issue
This issue contains the following items:
 • WTO Appellate Body Affirms in Movie and Music Case
 • State and Local Government Groups Seek Revision of FCC Tower Citing Application Shot Clock
 • Groups Urge FTC to Block Google AdMob Merger
 • More News
Groups Urge FTC to Block Google AdMob Merger

12/28. The Consumer Watchdog (CW) and Center for Digital Democracy (CDD) sent a letter [4 pages in PDF] to the Federal Trade Commission (FTC) urging it "to block the acquisition by Google of its direct competitor AdMob" and both harm to competition and privacy grounds.

AdMob states in its web site that it is "one of the world's largest mobile advertising networks, offering solutions for discovery, branding and monetization on the mobile web", and that it serves "billions of targeted and personalized ads on the mobile web each month".

The CW and CDD state in their letter that "The proposed deal would substantially lessen competition in the increasingly important mobile advertising market. The acquisition as proposed is harmful to consumers, advertisers and application developers, among others."

John Simpson of the CW stated in a release that "The mobile sector is the next frontier of the digital revolution. Without vigorous competition and strong privacy guarantees this vital and growing segment of the online economy will be stifled".

Google stated in a release on December 23, 2009, that "we don't see any regulatory issues with this deal, because the rapidly growing mobile advertising space is highly competitive with more than a dozen mobile ad networks."

Although, it disclosed that it had just received a second request for information from the FTC.

Privacy. While the federal antitrust statutes do not address protection of consumer privacy, the CW and CDD also wrote that "substantial privacy concerns that must be addressed by the" FTC.

The letter argues that "Both AdMob and Google gather tremendous amounts of data about consumers' online behavior, including in the key mobile sector. AdMob, for example, targets consumers using a wide range of methods, including behavioral, demographic, geographical and contextual. Google’s mobile marketing services are part of its extensive ad serving and data analysis system." (Footnotes omitted.)

While antitrust laws address questions such as market share of the merged entity, and resulting ability to engage in anticompetitive practices, the CW and CDD ask the FTC to address concentration of personal data in the merged entity, and the resulting ability to engage in practices that harm individuals' interests in privacy. That is, they analogize privacy to competition.

They explain that "Google also provides extensive mobile advertising and data driven analytical services through its DoubleClick subsidiary. AdMob says it ``stores and analyzes the data from every ad request, impression, and click and uses this to optimize ad matching in its network.´´ It targets users by ethnicity, age, gender and other targeting variables. Google offers a range of mobile targeting as part of the Google Content Network. Both companies engage in location based targeting. The consolidation of AdMob into Google would provide significant amounts of data for targeting advertising." (Footnotes omitted.)

They argue that "Permitting the expansion of mobile advertising through the combination of these two market leaders without requiring privacy guarantees poses a serious threat to consumers."

The FTC declined the requests of some interest groups in 2007 to consider privacy implications when it reviewed the proposed Google DoubleClick transaction. It declined to block the merger, applying Section 7 of the Clayton Act, which is codified at 15 U.S.C. § 18, and prohibits acquisitions or mergers, the effect of which "may be substantially to lessen competition, or to tend to create a monopoly."

The FTC wrote then that "the sole purpose of federal antitrust review of mergers and acquisitions is to identify and remedy transactions that harm competition." It concluded that "privacy considerations, as such, do not provide a basis to challenge this transaction."

See, story titled "FTC Will Not Block Google DoubleClick Merger" in TLJ Daily E-Mail Alert No. 1,691, December 19, 2007.

On the other hand, the FTC announced earlier this month that it would proceed in its administrative antitrust action against Intel under Section 5 of the FTC Act, which is codified at 15 U.S.C. § 45. This section broadly covers "unfair" conduct.

Section 5 provides, in part, that "Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful." It is also the section invoked by the FTC, for example, when it takes action against web site operators for violating the terms of their privacy policies.

See, stories titled "FTC Files Antitrust Charges Against Intel by Administrative Complaint Under FTC Act" and "Commentary: FTC Antitrust Procedure" in TLJ Daily E-Mail Alert No. 2,024, December 17, 2009.

Perhaps it should also be noted that the Federal Communications Commission (FCC), which conducts antitrust merger reviews (without a statute or rules), regularly considers matters, and imposes conditions, that are unrelated to harm to competition.

Antitrust. The CW and CDD also make more traditional competition based arguments. They note that Google intends to offer a smartphone, and argue that "Data about competing smartphone users and applications, gathered through the Google/AdMob advertising network, could give Google information about its competitors that would be advantageous in marketing its new smartphone, as well models using its Android operating system". (Footnote omitted.)

They continue that "instead of acquiring dominance in this increasingly important market through legitimate competition and innovation, Google is buying its way to a preeminent position in the mobile advertising sector, diminishing competition to the detriment of consumers."

And, as a result, they argue that Google will become "even more dominant one-stop shop for advertisers", and be able to raise prices for these advertisers.

Also, "Many mobile applications are monetized with in-applications ads. If Google is allowed to monopolize the mobile ad market, these applications developers' earnings will depend completely on Google’s whim. In an uncompetitive market Google would likely take a larger share of the revenues, hurting applications developers."

Washington Tech Calendar
New items are highlighted in red.
Tuesday, December 29

The House will not meet the week of December 28 through January 1. See, Rep. Hoyer's release and release. See also, Section 11 of HRes 976 and HConRes 223.

The Senate will not meet the week of December 28 through January 1. It will next meet on January 5, 2010, at 12:00 NOON in pro forma session.

Wednesday, December 30

No events listed.

Thursday, December 31

Deadline to submit comments to the National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) regarding its draft SP 800-37 Rev. 1 [88 pages in PDF] titled "Guide for Applying the Risk Management Framework to Federal Information Systems: A Security Life Cycle Approach".

Friday, January 1

New Year's Day. This is a federal holiday. See, Office of Personnel Management's (OPM) web page titled "2010 Federal Holidays".

Saturday, January 2

Deadline to submit comments to the Department of Justice's (DOJ) Antitrust Division regarding the complaint, proposed final judgment, and Competitive Impact Statement in U.S. v. AT&T. See, notice in the Federal Register, November 3, 2009, Vol. 74, No. 211, at Pages 56869-56881. In this proceeding, the DOJ approved the merger of AT&T and Centennial Communications, subject to divestitures in eight local markets. See, story titled "DOJ Approves AT&T Acquisition of Centennial" in TLJ Daily E-Mail Alert No. 2,004, October 16, 2009. The Federal Register notice does not specify the comment deadline. Rather, it states that comments are due "within 60 days of the date of this notice".

Monday, January 4

The House will not meet the week of January 4-8. See, Rep. Hoyer's release and release. See also, Section 11 of HRes 976 and HConRes 223.

Deadline to submit proposals to be designated database administrator in the Federal Communications Commission's (FCC) white space proceeding. See, Public Notice [4 pages in PDF]. It is DA 09-2479 in ET Docket No. 04-186. See also, story titled "FCC Requests Proposals to Be Designated White Spaces Database Administrator" in TLJ Daily E-Mail Alert No. 2,018, November 30, 2009.

Tuesday, January 5

No events listed.

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