Enacted With R&D Tax Credit Extension
12/16. The Senate passed HR 4853
WW], the vehicle for
extending certain expiring tax provisions, including the research and development tax credit,
on December 15, 2010. The House passed this bill without amendment on December 16, 2010.
President Obama signed it on December 17.
This bill includes temporary extensions for the research and development (R&D) tax
credit, small business expensing of computer software, the charitable deduction for corporate
contributions of computer inventory, and the special expensing rules for certain film and
It also includes extensions of Bush administration tax cuts.
Section 731 of this huge bill extends the R&D tax credit
for two years. This credit, which expired on December 31, 2009, is codified at
26 U.S.C. § 41. For decades the Congress has not enacted a permanent R&D tax
credit. Rather, it has enacted a series of short term credits, often after the
expiration of the previous credit provision.
The bill states that "Subparagraph (B) of section 41(h)(1) is amended by
striking `December 31, 2009´ and inserting `December 31, 2011´."
The bill also states that "The amendments made by this section shall apply to
amounts paid or incurred after December 31, 2009." It applies retroactively.
This bill does nothing to revise or expand the R&D credit.
Section 402 of this bill extends the provision allowing for small business
expensing of computer software for one year. This provision is codified at
26 U.S.C. § 179. The bill states that
"Computer Software--Section 179(d)(1)(A)(ii) is amended by striking `2012´
and inserting `2013´."
Section 742 of this bill extends the special provisions for contributions of
computer technology and equipment for educational purposes for one year, to
December 31, 2010. These provisions are codified at
U.S.C. § 170(e)(6). The bill states that "Subparagraph (G) of section 170(e)(6) is
amended by striking `December 31, 2009´ and inserting `December 31, 2011´."
Section 744 of this bill extends the special expensing provisions for certain film and
television productions for one year, to December 31, 2010. This provision is codified at
26 U.S.C. § 181. The bill states that "Subsection (f) of section 181 is
amended by striking `December 31, 2009´ and inserting `December 31, 2011´."
Walter McCormick, head of the US Telecom, stated in a
release that "We congratulate Congress and the White House on passing tax legislation
that will help to maintain the predictable environment necessary for economic growth. We are
particularly pleased that the final legislation maintains the linkage between dividends and
capital gains at low rates, which will help attract the capital needed to sustain continued
deployment of broadband infrastructure throughout the nation. The bill will also encourage
broadband investment and preserve jobs through its provisions for capital expensing and
extension of the R&D tax credit, and its protection of small, family-owned businesses
from unreasonable estate taxes."
The National Association of Manufacturers
(NAM) stated in a
release that "Manufacturers are pleased ... The NAM has been a leader in
advocating for these tax extensions, including the R&D credit ..."
|House Republicans Urge Genachowski to Put
His Unseen BIAS Rules Out for Comment
12/16. Rep. Fred Upton (R-MI),
Rep. Greg Walden (R-OR), and
Rep. Lee Terry (R-IA) sent a
letter to Federal Communications Commission (FCC) Chairman
urging him to release his proposed rules for broadband internet access service (BIAS),
and solicit public comments, before adopting them. See also, Rep. Upton's
The three have been selected to be the Chairman of the
House Commerce Committee (HCC), Chairman of
the HCC's Subcommittee on Communications and Technology (SCT), and Vice Chairman of the HCC's
SCT, respectively, in the 112th Congress.
They wrote to "ask that you release the full text of your draft order regulating the
Internet". They stated that "the public has not had a realistic and fulsome chance
to analyze and comment on the proposal as it now stands".
The three also described the proposed rules as "a moving target", and "likely
the most controversial item the FCC has had before it in at least a decade."
They concluded that "The best course of action would be to put the item out for a
short comment cycle or to at least give parties an opportunity to meet with the agency and
submit feedback on the text of the draft through the ex parte process."
|FCC Shuts Down Its Web Site Just Before BIAS
12/17. The Federal Communications Commission (FCC) shut down its web site on
Friday, December 17, 2010. It announced in a
release that it will reopen on
Monday, December 20.
The FCC is scheduled to adopt a yet to be released order that contains
regulations for broadband internet access service (BIAS) on Tuesday, December
The FCC's web site shut down prevents the FCC from making available during the shutdown
period the recently filed notice of ex parte communications in its BIAS regulation proceeding.
The shut down also prevents interested persons from accessing any comments or notice of ex
parte communications in this or other proceedings.
|9th Circuit Affirms Dismissal of Data
Breach Case Where Data Had Not Been Misused
12/14. The U.S. Court of Appeals
(9thCir) issued a for publication
opinion [9 pages in PDF] and a not for publication
[5 pages in PDF] in Krottner v. Starbucks, a case regarding data breaches.
The two opinions, taken together, hold that in an action for negligence and breach of
implied contract (state law claims) based upon a data breach, when the complaint alleges no
misuse of the data, but increased risk of identity theft, the plaintiffs have standing under
Article III of the Constitution, but have not pled a cognizable claim under Washington state
Starbucks lost a laptop computer that contained the unencrypted names, addresses, and
social security numbers of approximately 97,000 Starbucks employees. However, none of that
data has been misused. Krottner and other plaintiffs are current or former employees of
Starbucks. Nevertheless, the plaintiffs asserted that they face increased risk of identity
They filed complaints in the U.S. District Court
(WDWash) against Starbucks alleging negligence and breach of implied contract. The District
Court dismissed. It held that the plaintiffs have standing under Article III but had failed to
allege a cognizable injury under Washington law. The plaintiffs appealed.
The published opinion only addresses the issue of standing. The Court of Appeals affirmed
on that issue. It held that plaintiffs whose personal information has been stolen but not
misused have suffered an injury sufficient to confer standing under Article III, Section 2
of the U.S. Constitution.
The unpublished opinion affirmed the dismissal of the state law claims of negligence and
breach of implied contract for failure to state a cognizable claim. Under Washington law, a
negligence cause of action includes actual loss or damage, and not the mere danger of future
harm. Also, the plaintiffs did not adequately plead the existence of an implied contract
under Washington law.
This case is Laura Krottner, et al. v. Starbucks Corporation, U.S. Court of Appeals
for the 9th Circuit, App. Ct. No. No. 09-35823, an appeal from the U.S. District Court for
the Western District of Washington, Judge Richard Jones presiding, D.C. No. 2:09-cv-00216-RAJ.
Judge Milan Smith wrote the opinion of the Court of Appeals, in which Judges Alex Kozinski
and Sidney Thomas joined.
|Copyright Royalty Judges Release Webcasting
12/14. The Library of Congress's (LOC) Copyright Royalty
Judges (CRJ) issued their
Initial Determination of Rates and Fees [137 pages in PDF] in their
proceeding titled "In the Matter of Digital Performance Right in Sound
Recordings and Ephemeral Recordings".
This is the CRJ's Webcasting III order, setting the sound
recordings compulsory license rates for commercial and non-commercial webcasters
for the term January 1, 2011, through December 31, 2015.
The CRJ initiated this proceeding on January 5, 2010. See,
notice in the
Federal Register, January 5, 2009, Vol. 74, No. 2, at Pages 318-319.
For commercial webcasters, this order sets an upfront annual minimum fee of $500 per
station or channel. Also, "For the five-year period beginning 2011, the per play rate
applicable to each year of the license for Commercial Webcasters is: $0.0019 for 2011,
$0.0021 for 2012, $0.0021 for 2013, $0.0023 for 2014 and $0.0023 for 2015."
The SoundExchange is a performance
rights organization that collects statutory royalties from satellite radio,
internet radio, cable TV music channels and other platforms for streaming sound
recordings. See, its
summary of the
Lee Knife, is head of the Digital Media Association
(DiMA), whose members include Amazon, Apple, Live365, Microsoft, RealNetworks,
Rhapsody, Slacker, YouTube, and others.
He stated in a
release that "DiMA and our
member companies are pleased that the Copyright Royalty Board did not adopt the
extremely high rates proposed by SoundExchange. Over the past 10 years,
webcasters have experienced a near three-fold increase in the rate they pay
SoundExchange for use of sound recordings. These dramatic increases have made it
difficult for many webcasters to continue delivering the innovative services
that millions of Internet radio fans have come to rely on."
However, he continued that "We remain dissatisfied with the process used for setting
Internet radio royalty rates, which are by law based on marketplace deals. Under current rules,
SoundExchange was able to unilaterally prevent the Board from considering numerous agreements
-- negotiated by SoundExchange itself -- that contained rates that more fairly reflected the
needs of both RIAA member companies and webcasters to operate in a reasonable business
He added that "We are hopeful that in 2011 Congress will address problems in the
rate-setting structure, and ultimately develop a system that enables all music radio
services -- internet, cable and satellite to operate and pay royalties according to the
same standard, applied under a fair set of rules."
|Republicans Assigned to House
12/15. Nine additional Republicans were assigned to the
House Judiciary Committee (HJC) for
the 112th Congress. Most are new members.
- Rep. elect Sandy Adams (R-FL).
- Rep. elect Steve Chabot (R-OH). Rep. Chabot previously served on the HJC.
He was defeated in the 2008 election, but won his seat back in the November 2,
- Rep. elect Tim Griffin (R-AR).
- Rep. elect Trey Gowdy (R-SC).
- Rep. elect Tom Marino (R-PA).
- Rep. Mike Pence (R-IN). Rep.
Pence previously served on the HJC. He is also a former journalist. Moreover,
he has been active in sponsoring legislation to protect journalists, and
promote the free flow of information. He is likely to be involved in efforts
to revise the Espionage Act, to address internet based dissemination, such as
- Rep. elect Ben Quayle (R-AZ), son of former Representative, Senator, and
Vice President Dan Quayle, was elected to the seat currently held by the
retiring Rep. John Shadegg (R-AZ).
- Rep. Tom Reed (R-NY). He was first
elected on November 2, and promptly sworn to office, because his was a special
election to fill the seat of former Rep. Eric Massa (D-NY), who had resigned.
Rep. Reed stated in a
release that "Protection of intellectual property being developed by
various manufacturing companies in the district is an additional area of focus
for Reed on Judiciary". Rep. Reed represents the seat long held by former Rep.
Ammo Houghton (R-NY).
- Rep. elect Dennis Ross (R-FL).
See, HJC release
of December 15. Rep. Lamar Smith (R-TX), who will
be the Chairman of the HJC, stated in this release that the HJC "will focus on efforts
to strengthen national security, protect intellectual property, prevent frivolous lawsuits
and keep children safe from Internet sex predators".
The HJC may consider legislation in the 112th Congress on numerous technology
related topics, such as:
- extending the sunsets on expiring provisions of surveillance law
- reforming the Electronic Communications Privacy Act (ECPA)
- revising the Patent Act, either with a comprehensive bill, or by
- revising the fee and funding mechanisms for the U.S. Patent and Trademark
- revising the Espionage Act to address activities of entities such as
- revising copyright law to give the Department of Justice (DOJ) increased
authority to seize domain names and obtain injunctive relief against financial
and other intermediaries of online businesses dedicated to infringing
- revising copyright law with a performance rights act
The HJC may also be involved in oversight of federal agencies in numerous
technology related areas, such as:
- overseeing the surveillance activities of the Federal Bureau of
- overseeing the activities and operations of the USPTO and Copyright
Office, and the intellectual property enforcement activities of the DOJ,
Department of Homeland Security, and other agencies
- overseeing the antitrust merger review activities of the Department of
Justice's (DOJ) Antitrust Division and the Federal Trade Commission (FTC) in
information and communications technology (ICT) related transactions
- overseeing the DOJ's implementation of the Americans with Disabilities Act
(ADA) in the context of ICT (the DOJ is currently writing rules)
|This issue contains the following items:
• Tax Bill Enacted With R&D Tax Credit Extension
• House Republicans Urge Genachowski to Put His Unseen BIAS Rules Out for Comment
• FCC Shuts Down Its Web Site Just Before BIAS Rules Meeting
• 9th Circuit Affirms Dismissal of Data Breach Case Where Data Had Not Been Misused
• Copyright Royalty Judges Release Webcasting III Order
• Republicans Assigned to House Judiciary Committee
• Republicans Assigned to House Intelligence Committee
• Republicans Assigned to House Ways and Means Committee
• Republicans Assigned to House Oversight and Government Reform Committee
• More Capitol Hill Appointments
• Senate Confirms Four Judicial Nominees
New items are highlighted in
|Saturday, December 18
The House will not meet.
The Senate will meet at 9:00 AM.
|Monday, December 20
The House will not meet.
EXTENDED TO JANUARY 31.
Deadline to submit initial
comments to the Library of Congress's (LOC) Copyright
Office (CO) in response to its Notice of Inquiry (NOI) regarding federal coverage of
sound recordings fixed before February 15, 1972.
See, notice in the Federal
Register, November 3, 2010, Vol. 75, No. 212, at Pages 67777-67781. This proceeding is LOC
Docket No. 2010-4. See also, story titled "Library of Congress Issues NOI on Extending
Copyright Act to Pre 1972 Sound Recordings" in
TLJ Daily E-Mail Alert No. 2,150,
November 8, 2010. See also,
extension notice in the
Federal Register, December 1, 2010, Vol. 75, No. 230, at Pages 74749-74750.
|Tuesday, December 21
The House will meet at 10:00 AM for
legislative business. The House might take up HR 5116
the "America COMPETES Reauthorization Act of 2010" and/or HR 3082
an omnibus appropriations bill.
10:30 AM. The Federal Communications Commission
(FCC) will hold an event titled "open meeting". The
includes adoption of two items: broadband internet access service (BIAS) rules and a 911
notice of inquiry (NOI). See, story titled "FCC Releases Agenda for December 21
Meeting" in TLJ Daily E-Mail Alert No. 2,179, December 15, 2010. Location:
FCC, Commission Meeting Room, 445 12th St., SW.
12:00 NOON - 2:00 PM. The DC Bar
Association will host an event titled "False Patent Marking: Now What?".
The speakers will be Elizabeth Winston
(Catholic University law school), Robert
Shaffer (Finnegan), Maureen Browne (Covington
& Burling). See,
U.S.C. § 292, regarding false marking. See also, the December 28, 2009,
[16 pages in PDF] of the U.S. Court of Appeals
(FedCir) in The Forest Group, Inc. v. Bon Tool Company construing Section 292. See
also, HR 4954 [LOC
an untitled bill, and HR 6352
WW], the "Patent
Lawsuit Reform Act of 2010"; both would amend Section 292; the House has passed
neither. And see, story titled "Representatives Introduce Bill to Amend Patent Act
Regarding Remedies for False Markings" in
TLJ Daily E-Mail Alert No.
2,067, March 30, 2010. The price to attend ranges from $40 to $55. For more information,
contact 202-626-3463. See,
notice. Location: DC Bar Conference Center, B-1 Level, 1250 H St., NW.
|Wednesday, December 22
No events listed.
|Thursday, December 23
No events listed.
|Friday, December 24
Christmas Day (observed). This is a federal holiday. See,
Office of Personnel Management's (OPM)
page titled "2010 Federal Holidays".
|Monday, December 27
Deadline to submit initial comments to the Federal
Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM)
regarding regulating the billing and notice practices of mobile service providers.
The FCC adopted and released this NPRM on October 14, 2010. It is FCC 10-180 in CG Docket
Nos. 10-207 and 09-158. See,
notice in the Federal Register, November 26, 2010, Vol. 75, No. 227, at Pages 72773-72777.
See also, story titled "FCC Adopts Bill Shock NPRM" in
TLJ Daily E-Mail
Alert No. 2,142, October 19, 2010.
Deadline to submit comments to the
Copyright Office (CO) in response to
its notice of proposed rulemaking (NPRM) regarding notices of termination of
certain grants of transfers and licenses of copyright under
17 U.S.C. § 203.
See, notice in
the Federal Register, November 26, 2010, Vol. 75, No. 227, at Pages
Deadline to submit comments to the Department of Transportation's (DOT)
Intelligent Transportation Systems Program Advisory Committee (ITSPAC) in
advance of its meeting on January 6-7, 2011, in Oakland, California. See,
notice in the
Federal Register, December 14, 2010, Vol. 75, No. 239, at Page 77955.
|Republicans Assigned to House Intelligence
12/17. Six additional Republicans were assigned to the
House Intelligence Committee (HIC) for the 112th
Congress. See, Rep. Boehner's
returning Republican members will be:
- Rep. Mike Rogers (R-MI),
- Rep. Mac Thornberry (R-TX).
- Rep. Sue Myrick (R-NC).
- Rep. Jeff Miller (R-FL).
- Rep. Mike Conaway (R-TX).
- Rep. Peter King (R-NY).
The new Republican members will be:
The HIC has jurisdiction over intelligence authorization bills and amendments
to the Foreign Intelligence Surveillance Act (FISA), including matters relating
to wiretaps, seizure of e-mail and stored data, and other technology related issues.
Three surveillance provisions of the FISA expire on February 28, 2011: (1) roving wiretap
order authority, (2) FISA surveillance of individuals, and (3) easy access under FISA to business
records, including library, phone, ISP and other business records. Hence, the Congress is
likely to take up extension legislation as soon as the 112th Congress meets in January.
See also, HR 6429 [
LOC | WW], a bill
that would simply extend the three sunsets for one more year. And see, story titled "Rep.
Hoekstra Introduces Bill to Extend Sunset Date for Three FISA Surveillance Provisions" in
TLJ Daily E-Mail Alert No.
2,160, November 19, 2010.
The HIC also oversees the intelligence activities and operations of numerous federal agencies,
including the National Security Agency (NSA), as well as the Foreign Intelligence Surveillance
Court and the Foreign Intelligence Surveillance Court of Review.
Rep. Rogers, the incoming Chairman, is a former FBI agent. The members of the HIC and Senate
Intelligence Committee (SIC) are more focused than the members of the Judiciary Committees on
providing the intelligence agencies with authority and tools to conduct their activities. In
contrast, the member of the Judiciary Committees are more focused than the members of the
Intelligence Committees on defending the Constitution and protecting privacy and liberty
interests in the context of government surveillance.
The members of both sets of committees become involved in surveillance related debates.
Rep. Rogers stated in a
release on December 15 that he
will "provide our nation's intelligence professionals with the tools and support they need.
It is a great honor to serve with the brave men and women of the intelligence community who work
every day around the globe to keep America safe from terrorists and foreign nations who seek to
harm America and her interests."
|Republicans Assigned to House Oversight and
Government Reform Committee
12/17. Rep. Darrell Issa (R-CA), who
will be the Chairman for the House
Oversight and Government Reform Committee (HOGRC) in the 112th Congress,
named Rep. Jason Chaffetz (R-UT)
Chairman of the Subcommittee on National Security, Homeland Defense and Foreign
Operations, Rep. Jim Jordan (R-OH)
Chairman of the Subcommittee on Regulatory Affairs, Stimulus Oversight and
Government Spending, and Rep. Patrick
McHenry (R-NC) Chairman of the Subcommittee TARP, Financial Services and
Bailouts of Public and Private Programs. See,
Rep. Issa has yet to name the Chairman of the Subcommittee on Information
Policy, Census and National Archives, which has responsibilities with respect to
federal information technology and cyber security.
It is inherent in the nature of an oversight committee that it becomes more active and
assertive when the President is a member of a different political party than the majority of
the members of the oversight committee. For this reason, the HOGRC may take on added significance
with the transition to the 112th Congress.
On December 16, Rep. Issa announced the new Republican member of the HOGRC
for the 112th Congress. See,
|More Capitol Hill
12/17. Rep. Eddie Johnson (D-TX)
was selected to be the ranking Democrat on the
House Science Committee (HSC) for
the 112th Congress. She represents a District in Dallas, Texas.
Rep. Bart Gordon
(D-TN), the outgoing Chairman of the HSC, did not run for re-election to the
12/17. The House Democratic Caucus selected
Rep. Elijah Cummings (D-MD) to be
the ranking Democrat on the House
Oversight and Government Reform Committee (HOGRC).
Rep. Carolyn Maloney (D-NY) and
Rep. Dennis Kucinich (D-OH) had
also sought the spot. The Chairman in the 111th Congress has been
Rep. Ed Towns (D-NY), who now has a
troubled relationship with Rep. Nancy
Pelosi (D-CA). Rep. Towns did not seek the position in the 112th
Congress, and has demanded
back his old seat, and seniority, on the
House Commerce Committee (HCC).
President Obama and Rep. Pelosi will expect Rep. Cummings to defend the Obama
administration as the incoming Chairman,
Rep. Darrell Issa (R-CA), launches investigations, conducts hearings,
and issues subpoenas.
12/15. Rep. Hal Rogers (R-KY), who
will be the Chairman of the House
Appropriations Committee in the 112th Congress, announced several HAC
Republican staff hires. See,
|Senate Confirms Four Judicial
12/16. The Senate confirmed four persons to be U.S. District Court Judges. See,
Congressional Record, December 16, 2010, at Page S10419.
The nominations of 34 other persons to be federal judges will lapse at the end of the 111th
Congress. However, President Obama may renominate many of them.
The key judicial nominees who have been approved by the
Senate Judiciary Committee (SJC), and
who are on the Senate's
Executive Calendar, as of December 18, 2010, and awaiting Senate
- Susan Carney, U.S. Court of Appeals
- Raymond Lohier, U.S. Court of Appeals (2ndCir).
- Albert Diaz, U.S. Court of Appeals
- Goodwin Liu, U.S. Court of Appeals
- Mary Murguia, U.S. Court of Appeals (9thCir).
- Scott Matheson, U.S. Court of Appeals
- Kathleen O'Malley, U.S. Court of Appeals
- Beryl Howell, U.S. District Court
- Robert Wilkins, U.S. District Court (DC).
- James Boasberg, U.S. District Court (DC).
- Edward Chen, U.S. District Court
- Edward Davila, U.S. District Court (NDcal).
See also, Sen. Patrick Leahy's (D-VT)
speech in the Senate on December 17 complaining about the failure to confirm
more judicial nominees.
|About Tech Law
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