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November 16, 2011, Alert No. 2,311.
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Sen. Rockefeller Announces Intent to Hold Hearing on Facebook and User Tracking

11/16. Sen. John Rockefeller (D-WV), Chairman of the Senate Commerce Committee (SCC), stated in a release that he intends to hold a hearing on online tracking. He wrote in response to a USA Today story on November 15, 2011, by Byron Acohido, titled "How Facebook tracks you across the Web".

That story states that "Facebook officials are now acknowledging that the social media giant has been able to create a running log of the web pages that each of its 800 million or so members has visited during the previous 90 days. Facebook also keeps close track of where millions more non-members of the social network go on the Web, after they visit a Facebook web page for any reason."

Sen. Rockefeller stated that "The USA Today story is disturbing. No company should track customers without their knowledge or consent, especially a company with 800 million users and a trove of unique personal data on its users."

Sen. John RockefellerSen. Rockefeller (at left) continued that "If Facebook or any other company is falsely leading people to believe that they can log out of the site and not be tracked, that is alarming. I take a hard line on protecting consumer privacy and intend to have a hearing on this subject where we will invite Facebook and others to explain how they are using personal information."

On November 10, Rep. Joe Barton (R-TX) and Rep. Ed Markey (D-MA) sent letter to Facebook in which they inquired about Facebook's patent application filed on February 8, 2011 for a method of "tracking information about activities of users of social networking system while on another domain".

They asked Facebook to explain "why it applied for this patent". They also asked "Is it the intention of Facebook to track users on other websites regardless of login status?" and "What actions is Facebook currently taking to ensure that its users are not tracked when the visit other websites?".

The two asked for answers by December 1, 2011.

Rep. Ed MarkeyRep. Markey (at right) also stated in a release that "Tracking users' online behavior without their permission is wrong".

Also, on October 28, 2011, Rep. Barton, Rep. Markey, Rep. Carolyn Maloney (D-NY) and Rep. Marsha Blackburn (R-TN) sent a letter to Facebook in which they expressed their concern about Facebook's "consumer data collection and storage practices". They also propounded numerous interrogatories, and requested answers by November 21, 2011.

US China Commission Releases Annual Report

11/16. The U.S. China Economic and Security Review Commission released its 2011 annual report [414 pages in PDF] to the Congress.

This report finds that the People's Republic of China (PRC) fails to live up to its World Trade Organization (WTO) commitments to protect intellectual property, and that its set of policies named "indigenous innovation" continues to seek to force U.S. companies to transfer technology to PRC firms despite President Hu Jintao's assurances earlier this year to the contrary.

The report also finds that the PRC government has expanded restrictions on internet freedom, and supported network exploitations to facilitate industrial espionage.

Indigenous Innovation and IP Rights. William Reinsch, Chairman of the Commission, stated at an event for the release of this report that "China has yet to create a system that effectively protects intellectual property; something that is required of all WTO members. But U.S. business software companies still report that China is the world's largest source of pirated software. About 8 of 10 computers in China still run counterfeit operating system software."

William ReinschReinsch (at left) continued that "Even more disturbing, China has stepped backward from its original promise to lower trade barriers and to treat foreign products and services fairly. In 2009, China began adopting a series of policies to ban foreign goods and services from government procurement contracts. These policies, known as ``indigenous innovation,´´ are intended to discriminate against foreign goods and services and to substitute domestic goods, apparently as a device to force the transfer of technology to Chinese firms. These policies, along with China’s failure to provide adequate IP protection, strike at the heart of America’s greatest economic strength -- its ability to innovate."

"In addition", said Reinsch, "the Chinese government in the past several years has returned to relying on a system of state ownership and control of major sectors of its economy. The government directs a vast array of subsidies to favored industries and seeks to nurture particular technologies behind protective barriers. This is contrary to the spirit, and in many cases the letter, of China's WTO commitments."

This report addresses the status PRC indigenous innovation and intellectual property policies in detail. It states that "China's indigenous innovation plans that limit government procurement to Chinese companies and China's continuing lack of enforcement of intellectual property rights are both problematic. In addition, China maintains policies of forced technology transfer in violation of international trade agreements and requires the creation of joint venture companies as a condition of obtaining access to the Chinese market."

"While the publication of national indigenous innovation product catalogues that favor procurement of Chinese goods over foreign competitors appears to have slowed, local level catalogues are still in circulation."

The report elaborates that "China's program for encouraging ``indigenous innovation´´ has its origin in the central government’s decades-old policy of favoring domestic goods and services over imports. A new element was added to the policy with the publication in 2009 of government procurement catalogues at the national, provincial, and local levels. The catalogues were written to exclude the services and products of foreign-based corporations, including those with foreign affiliates operating in China that have not transferred their technology. The move represented an escalation in China’s longstanding efforts to substitute domestic goods and services for imports."

The report also states that "Despite such assurances by President Hu Jintao during his trip to Washington in January 2011, there are few signs that China intends to rescind its overall indigenous innovation policy and only inconclusive signs that the use of procurement catalogues will be abandoned."

The January 19, 2011, document titled "U.S. China Joint Statement" provides that "China will continue to strengthen its efforts to protect IPR, including by conducting audits to ensure that government agencies at all levels use legitimate software and by publishing the auditing results as required by China’s law.  China will not link its innovation policies to the provision of government procurement preferences.  The United States welcomed China’s agreement to submit a robust, second revised offer to the WTO Government Procurement Committee before the Committee’s final meeting in 2011, which will include sub-central entities."

The just released report states that "China has a history of making promises and delivering little, particularly when doing as little as possible benefits the Chinese economy, as has been the case with China’s promises to bring its intellectual property protections up to international standards and to cease requiring technology transfers from foreign firms."

The report continues that "Foreign-invested enterprises seeking to be considered for government procurement contracts or public works projects are expected to file for patents and copyrights within China in order to qualify for preferential treatment in government contracting. Foreign affiliates risk the unintended transfer of their technology to Chinese firms if they do so, because of the nature of the Chinese intellectual property system and the lax enforcement of intellectual property laws and regulations in China."

The report also finds that "China continues to be one of the largest sources of counterfeit and pirated goods in the world. The Chinese government itself estimates that counterfeits constitute between 15 and 20 percent of all products made in China and are equivalent to about 8 percent of China's gross domestic product (GDP). Chinese goods accounted for 53 percent of seizures of counterfeits at U.S. ports of entry in 2010, and the U.S. International Trade Commission estimates that employment in the United States would increase by up to 2.1 million jobs if China were to adopt an intellectual property system equivalent to that of the United States."

Internet Freedom. The report states that in 2011 "The Chinese government expanded restrictions on online information and access to communication services, reported government propaganda in domestic news outlets, restricted the freedom of foreign journalists, and arrested dissidents with little or no cause."

It explains that "China's central government has reacted strongly to perceived challenges to its authority. It detains and imprisons dissidents. It censors the news and punishes journalists for infractions of its unwritten and arbitrary rules. China also attempts to control and censor the Internet and has had more success than most other authoritarian regimes in suppressing the flow of information among the public."

The Congressional Executive Commission on China will hold a hearing on Capitol Hill on Thursday, November 17, 2011, titled "China's Censorship of the Internet and Social Media: The Human Toll and Trade Impact". See, notice.

Cyber Espionage and Attacks. The report addresses both cyber industrial espionage, and military related cyber strategies.

It states that "In continuation of previous practice, China in 2011 conducted and supported a range of malicious cyber activities. These included network exploitations to facilitate industrial espionage and the compromise of U.S. and foreign government computer systems. Evidence also surfaced that suggests Chinese state-level involvement in targeted cyber attacks."

It also states that "China's government or military appeared to sponsor numerous computer network intrusions throughout 2011. Additional evidence also surfaced over the past year that the Chinese military engages in computer network attacks. "

Moreover, "China's military strategy envisions the use of computer network exploitation and attack against adversaries, including the United States. These efforts are likely to focus on operational systems, such as command, control, communications, computers, intelligence, surveillance, and reconnaissance assets. This could critically disrupt the U.S. military’s ability to deploy and operate during a military contingency. Chinese cyber attacks against strategic targets, such as critical infrastructure, are also possible."

SEC Brings Administrative Action Against China Based Software and Consulting Firm

11/10. The Securities and Exchange Commission (SEC) issued an order that initiates an administrative proceeding against Longtop Financial Technologies Limited for failure to comply with the reporting requirements of Section 13(a) of the Exchange Act, and Rule 13a-1 thereunder.

Longtop is a company registered with that SEC that is based in Hong Kong and Xiamen, People's Republic of China (PRC), that provides software, consulting and support services for the financial services industry in the PRC.

The SEC alleges that Longtop failed to file its required annual report for the year ending on March 31, 2011.

On September 8, 2011, the SEC filed a complaint in the U.S. District Court (DC) against Deloitte Touche Tohmatsu CPA Ltd. seeking enforcement of an administrative subpoena. That complaint states that the SEC is investigating "possible fraud" by Longtop.

In This Issue
This issue contains the following items:
 • Sen. Rockefeller Announces Intent to Hold Hearing on Facebook and User Tracking
 • US China Commission Releases Annual Report
 • SEC Brings Administrative Action Against China Based Software and Consulting Firm
Washington Tech Calendar
New items are highlighted in red.
Wednesday, November 16

The House will meet at 10:00 AM for morning hour, and at 12:00 NOON for legislative business. See, Rep. Cantor's schedule for the week.

10:00 AM. The U.S.-China Economic and Security Review Commission will hold a news conference to release its 2011 Annual Report to Congress. See, notice in the Federal Register, Vol. 76, No. 167, Monday, August 29, 2011, at Pages 53717-53718. Location: Room 216, Hart Building, Capitol Hill.

7:30 AM - 2:00 PM. Red Hat will host an event titled "Red Hat's Annual Government Symposium". The speakers will include Chris Vein (Executive Office of the President). See, notice. Location: Newseum, 555 Pennsylvania Ave., NW.

8:30 AM - 5:30 PM. Day three of a five day closed meeting of the Department of Commerce's (DOC) National Institute of Standards and Technology's (NIST) Malcolm Baldrige National Quality Award Panel of Judges. See, notice in the Federal Register, Vol. 76, No. 190, Friday, September 30, 2011, at Page 60806. Location: NIST, Administration Building, Lecture Room E, Gaithersburg, MD.

10:00 AM. The House Judiciary Committee (HJC) will hold a hearing on HR 3261 [LOC | WW], the "Stop Online Piracy Act". See, notice. Location: Room 2141, Rayburn Building.

2:30 PM. The Senate Judiciary Committee (SJC) will hold a hearing titled "Nominations". The witnesses will be Kathryn Keneally (nominee to be Assistant Attorney General in charge of the Tax Division) and Brian Wimes (nominee to be a Judge of the U.S. District Court for the Eastern and Western Districts of Missouri). See, notice. Location: Room 226, Dirksen Building.

Thursday, November 17

The House will meet at 10:00 AM for morning hour, and at 12:00 NOON for legislative business. See, Rep. Cantor's schedule for the week.

The Senate will meet at 10:00 AM.

8:00 AM - 5:00 PM. The American Bar Association's (ABA) Section of Antitrust Law will host a one day event titled "2011 Antitrust Fall Forum". At 8:15 - 8:45 AM, Sharis Pozen (acting Assistant Attorney General in charge of the DOJ's Antitrust Division) will speak. See, conference web site. Location: National Press Club, 14th & F Streets, NW.

8:30 AM - 5:30 PM. Day four of a five day closed meeting of the Department of Commerce's (DOC) National Institute of Standards and Technology's (NIST) Malcolm Baldrige National Quality Award Panel of Judges. See, notice in the Federal Register, Vol. 76, No. 190, Friday, September 30, 2011, at Page 60806. Location: NIST, Administration Building, Lecture Room E, Gaithersburg, MD.

10:00 AM. The House Judiciary Committee (HJC) will meet to mark up several bills. The second item on the agenda is HR 1864 [LOC | WW], the "Mobile Workforce State Income Tax Simplification Act of 2011", a bill that would limit the authority of states to impose income taxes on out of state workers. See, notice. Location: Room 2141, Rayburn Building.

10:00 AM. The House Foreign Affairs Committee will meet to mark up HR 2918 [LOC | WW] and HR 2992 [LOC | WW], both of which pertains to U.S. Taiwan relations. See, notice. Location: Room 2172, Rayburn Building.

10:00 AM. The House Intelligence Committee (HIC) will hold a closed hearing titled "Ongoing Intelligence Activities". Location: Room HVC-304, Capitol Visitor Center.

10:00 AM. The House Ways and Means Committee's (HWMC) Subcommittee on Select Revenue Measures will hold a hearing on taxation of foreign income. See, notice and discussion draft of legislation. Location: Room 1100, Longworth Building.

10:00 - 11:30 AM. The Congressional Executive Commission on China will hold a hearing titled "China's Censorship of the Internet and Social Media: The Human Toll and Trade Impact". The witnesses will be Alex Li, John Zhang, Xiao Qiang (UC Berkeley), Gil Kaplan (King & Spalding;), and Ed Black (Computer & Communications Industry Association). See, notice. Location: Room 2226, Rayburn Building.

10:00 AM. The Senate Judiciary Committee (SJC) will hold an executive business meeting. The agenda lists consideration of three judicial nominees: Jacqueline Nguyen (to be a Judge of the U.S. Court of Appeals for the 9th Circuit), Gregg Costa (U.S. District Court for the Southern District of Texas), and David Guaderrama (USDC, Western District of Texas). The SJC will webcast this event. Location: Room 226, Dirksen Building.

10:00 AM. The Department of Commerce's (DOC) Bureau of Industry and Security's (BIS) Materials Technical Advisory Committee will hold a partially closed meeting. See, notice in the Federal Register, Vol. 76, No. 213, Thursday, November 3, 2011, Page 68128. Location: DOC, Hoover Building, Room 3884, 14th Street between Constitution & Pennsylvania Avenues, NW.

2:00 PM. The House Homeland Security Committee's (HHSC) Subcommittee on Emergency Preparedness, Response and Communications will hold a hearing titled "Ensuring Coordination and Cooperation: A Review of the Emergency Communications Offices Within the Department of Homeland Security". See, notice. Location: Room 311, Cannon Building.

2:30 PM. The Senate Intelligence Committee (SIC) will hold a closed meeting. See, notice. Location: Room 219, Hart Building.

Friday, November 18

The House will meet at 9:00 AM for legislative business. See, Rep. Cantor's schedule for the week.

8:30 AM - 5:30 PM. Day five of a five day closed meeting of the Department of Commerce's (DOC) National Institute of Standards and Technology's (NIST) Malcolm Baldrige National Quality Award Panel of Judges. See, notice in the Federal Register, Vol. 76, No. 190, Friday, September 30, 2011, at Page 60806. Location: NIST, Administration Building, Lecture Room E, Gaithersburg, MD.

9:00 AM. The House Commerce Committee's (HCC) Subcommittee on Commerce, Manufacturing, and Trade will hold a hearing titled "Internet Gaming: Regulating in an Online World". The witnesses will be Rep. John Campbell (R-CA), Rep. Frank Wolf (R-VA), Rep. Barney Frank (D-MA), Mark Lipparelli (Nevada Gaming Control Board), Charles McIntyre (New Hampshire Lottery Commission), Frank Fahrenkopf (American Gaming Association), and Rachel Volberg (University of Chicago). See, notice. Location: Room 2123, Rayburn Building.

9:00 AM - 5:00 PM. The U.S. Patent and Trademark Office's (USPTO) National Medal of Technology and Innovation Nomination Evaluation Committee will hold a closed meeting. See, notice in the Federal Register, Vol. 76, No. 213, Thursday, November 3, 2011, at Page 68167. Location: USPTO, 600 Dulany Street, Alexandria, VA.

Deadline to submit applications to the Department of Homeland Security (DHS) for membership on its Homeland Security Information Network Advisory Committee. See, notice in the Federal Register, Vol. 76, No. 212, Wednesday, November 2, 2011, at Pages 67750-67751.

Monday, November 21

Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its Notice of Proposed Rule Making (NPRM) [48 pages in PDF] regarding phone bill cramming. The FCC adopted and released this item on July 12, 2011. It is FCC 11-106 in CG Docket Nos. 11-116 and 09-158, and CC Docket No. 98-170. See, notice in the Federal Register, Vol. 76, No. 163, Tuesday, August 23, 2011, a Pages 52625-52632. See also, stories titled "Senate Commerce Committee Holds Hearing on Phone Bill Cramming" and "FCC Adopts Cramming NPRM" in TLJ Daily E-Mail Alert No. 2,258, July 14, 2011.

Tuesday, November 22

12:30 - 2:00 PM. The New America Foundation (NAF) will host an event titled "Context: Further Selected Essays on Productivity, Creativity, Parenting, and Politics in the 21st Century". The speaker will be Cory Doctorow. The NAF notice states that Doctorow is an "technology activist" whose speech has something to do with "lambasting the corporations that profit by limiting inherent intellectual freedoms". Location: NAF, Suite 400, 1899 L St., NW.

Wednesday, November 23

No events listed.

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