Tech Law Journal Daily E-Mail Alert
Wednesday, January 18, 2012, Alert No. 2,331.
Home Page | Calendar | Subscribe | Back Issues | Reference
Rep. Issa Introduces Alternative to SOPA

1/18. Rep. Darrell Issa (R-CA) introduced HR 3782 [LOC | WW], the "Online Protection & Enforcement of Digital Trade Act", or "OPEN Act", as an alternative to the SOPA.

Rep. Issa released a draft [18 pages in PDF] of this bill last month, just before the House Judiciary Committee (HJC) began its mark up of HR 3261 [LOC | WW], the "Stop Online Piracy Act" or "SOPA". See, story titled "Rep. Issa and Others Propose USITC Based Approach to Web Sites Dedicated to Infringing Activity" in TLJ Daily E-Mail Alert No. 2,318, December 14, 2011.

The OPEN Act affects trade and intellectual property law. It was referred to the House Ways and Means Committee (HWMC) and HJC.

It would amend the USITC's Section 337 authority, by adding a new subsection titled "Unfair Trade Practices Relating to Infringement of Copyrights and Trademarks by Certain Internet Sites".

It would provide that once the USITC has issued a cease and desist order under this new subsection, "a financial transaction provider shall expeditiously take reasonable measures designed to prevent or prohibit the completion of payment transactions by the provider that involve customers located in the United States and the Internet site subject to the order".

Similarly, "an Internet advertising service shall expeditiously take technically feasible measures intended to cease serving advertisements to the Internet site subject to the order ... in situations in which the service would directly share revenues generated by the advertisements with the operator of the Internet site".

Rep. Issa and others issue a joint release that states that the OPEN Act "delivers stronger intellectual property rights for American artists and innovators while protecting the open, accessible Internet Americans deserve."

The list of original cosponsors includes several other members of the HJC: Rep. Jason Chaffetz (R-UT), Rep. Jared Polis (D-CO), Rep. Dennis Ross (R-FL), Rep. Jim Sensenbrenner (R-WI), and Rep. Zoe Lofgren (D-CA).

Rep. Polis demonstrated during debates in the first phase of the HJC's mark up of the SOPA that he has a deeper understanding than most of his colleagues of the contents of the SOPA, and the technologies and business practices that would be affected by the SOPA.

He stated in the joint release that "Unlike SOPA and PIPA, the OPEN Act will effectively combat piracy from foreign websites while preserving Internet freedom. By using a 'follow-the-money' approach we can shut down foreign sites that steal intellectual property while ensuring that the Internet remains an engine of innovation, information and job creation. Without access to capital, these foreign websites will wither and die while the Internet continues to grow and thrive."

Rep. Chaffetz stated in this joint release that "SOPA threatens our cyber security, undermines freedom of speech, and chills innovation in one of the few sectors of our economy that is actually working. While I understand and appreciate the need to protect intellectual property, SOPA is a massive and inappropriate overreach. Instead, I strongly support the OPEN Act. This bi-partisan legislation addresses the problem of online piracy without causing collateral damage to the Internet as SOPA would."

Comparison of the Key Processes of SOPA and OPEN Act

1/18. HR 3261 [LOC | WW], the "Stop Online Piracy Act" or "SOPA", and HR 3782 [LOC | WW], the "Online Protection & Enforcement of Digital Trade Act", are both directed at reducing the harms caused for foreign web sites dedicated to infringing intellectual property rights.

These are broad bills with many provisions. However, the key component of the SOPA is a Department of Justice (DOJ) brought in the U.S. District Court. The key component of the OPEN Act is a rights holder action before the U.S. International Trade Commission.

The SOPA's main process is to allow content companies to approach ex parte the DOJ with their grievances against foreign infringing web sites. The DOJ in its discretion could then bring an action in any U.S. District Court against a foreign web site owner or operator (an in personam action against persons or entities unlikely to receive actual service of process) and the web site and domain name (nominally an in rem cause of action).

The role of Court would be minimal. Its main function would be to issue an immediate ex parte cease and desist order, and authorize service of that order upon U.S. internet service providers, internet search engines, payment network providers, and internet advertising services.

These entities would then be required by the SOPA to take certain actions. For example, an ISP would be required to prevent access by its subscribers located in the U.S. to the foreign infringing site that is subject to the order. Similarly, a search engine must prevent the serving, in response to a query, of a direct hypertext link to the foreign infringing site that is subject to the order.

Also, under SOPA a payment network provider would be required to prevent its service from completing payment transactions involving its customers located in, and who have accounts in, the U.S., and the payment accounts of an foreign infringing site that is subject to the order.

In contrast, under the OPEN Act, content companies would petition, in an open proceeding, the USITC to launch an investigation into, among other things, the imports of infringing digital products into the U.S.

Then, the USITC would be authorized to initiate an investigation, and issue a cease and desist order against foreign web sites that provide illegal digital imports. A USITC order would compel financial transaction providers and internet advertising services to cease providing financial and advertising services to the foreign web site.

A USITC order, under this bill, would not, however, compel action by search engines to not return hyperlinked search results for web sites covered by the order; nor would it compel internet access service providers to block access to domain names covered by the order.

Obama Hypes Proposal to Consolidate Some Trade Related Agencies

1/13. The White House news office stated in a vaguely worded release that states that President Obama wants to consolidate the "Department of Commerce's core business and trade functions, the Small Business Administration, the Office of the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corporation, and the U.S. Trade and Development Agency".

The White House news office also released a second vaguely worded release that states that "there will be one Department where entrepreneurs can go from the day they come up with an idea and need a patent, to the day they start building a product and need a warehouse, to the day they are ready to export and need help breaking into new markets overseas". It adds that this Department would have one mission -- "helping American businesses succeed".

This announcement bears many attributes of a statement intended for public consumption, made for the purpose of swaying public opinion during a presidential election year, and touted without any realistic expectation of implementation.

Neither release names the Department of Commerce's (DOC) "core business and trade functions". Neither release references either the DOC's National Telecommunications and Information Administration (NTIA), or its responsibilities with respect to the Internet Corporation for Assigned Names and Numbers (ICANN) and internet governance. Nor does either reference the DOC's Bureau of Industry and Security (BIS), which regulates exports.

President Obama did not include within his consolidation proposal numerous other trade related agencies in the federal government. For example, he did not include any of the trade related functions of the Department of State (DOS). Nor did he include the U.S. International Trade Commission (USITC). Nor did he include units of the Department of the Treasury (DOT) involved in regulating trade in financial services and foreign investment, such as the DOT's Financial Crimes Enforcement Network (FinCEN) and the DOT's Committee on Foreign Investment in the US (CFIUS). Nor did he include the functions of the Federal Communications Commission (FCC) related to international telecommunications. Nor did he include the Department of Agriculture's (DOA) Foreign Agricultural Service (FAS).

President Obama spoke about government reform in his January 2011 state of the union speech. His next state of the union speech will be on January 24. The present announcement may have been made without an expectation that government agencies will actually be combined, but rather to substantiate statements in the forthcoming speech that progress is being made on government reform.

Reorganizing government agencies is an immensely difficult task. Major reorganizations usually occur after major crises. For example, the Department of Homeland Security (DHS) was created out of many existing units of other departments after the terrorist attacks of September 11, 2011. The event that precipitated President Obama's government reform proposals was the Republican gains in the 2010 Congressional elections.

Reorganizing government requires the approval of the Congress. Yet, President Obama did not consult with numerous key members of Congress before announcing this proposal. Requisite Congressional support is absent.

One of the stated purposes of this proposal is to promote trade. Yet, to date President Obama has assigned trade promotion a lower priority than other recent Presidents, Republican and Democratic.

Finally, many affected interests, and members of Congress, may conclude that if the government were reorganized pursuant to this proposal, trade and the benefits that flow there from would not be greater than under the status quo.

The DOC is tasked with both promoting commerce and regulating commerce. Often, achieving one regulatory goal comes at the expense of the attaining the other goal, and vice versa. For example, the BIS is tasked with regulating exports. Its main tool is blocking the export of products, software, and technology. Its function is to reduce exports. This reduces revenues of US businesses, and overall employment in the US. In contrast, the International Trade Administration (ITA) has as its goal the promotion of non-agricultural exports and market access. And, it is not a particularly significant entity.

The Office of the U.S. Trade Representative (OUSTR), which is independent of the DOC, and has a trade promotion task, but no regulatory task, is more effective, and has accomplished much more, to promote trade, consumer welfare, and employment. The perception held by many in Congress is that were the OUSTR to be absorbed by the DOC, it would be reduced to the level of government efficiency and effectiveness of the DOC, an already a bloated and unwieldy bureaucracy plagued by inconsistent missions.

It should be noted too that some prior DOC Secretaries have sought, but failed to obtain, control of the OUSTR, in part, for these reasons.

Sen. Max Baucus (D-MT), the Chairman of the Senate Finance Committee (SFC), and Rep. Dave Camp (R-MI), the Chairman of the House Ways and Means Committee (HWMC), promptly criticized the proposal. These two committees have jurisdiction over trade issues.

They wrote in a joint statement that "we are concerned about the impact that the President's proposal could have on the ability of the United States to aggressively open new markets to American-made goods and services and create U.S. jobs".

Sen. Max BaucusSen. Baucus (at right) and Rep. Camp continued that the OUSTR "is nimble, lean and effective -- and time and again it delivers on its mission and creates jobs here at home. Taking USTR, one of the most efficient agencies that is a model of how government can and should work, and making it just another corner of a new bureaucratic behemoth would hurt American exports and hinder American job creation."

Similarly, Sen. Orrin Hatch (R-UT), the ranking Republican on the SFC, wrote in a release that "After three years in the White House presiding over the largest expansion of government in generations, the timing of this announcement and the failure to consult Congress raise questions about the President’s commitment to a real reorganization and reduction in the size of the federal government."

"What's disconcerting is that the President has again chosen not to work with Congress -- even after I specifically asked the Obama Administration to fully brief Congress if it chose to reorganize our trade agencies." Sen. Hatch concluded, "I ... will expect a full accounting by the Administration in short order".

Also, Sen. Charles Grassley (R-IA), another member of the SFC, responded in a release that "The enactment of trade agreements has been a hard slog with the President. Any reorganization that disrupts trade negotiations and expanded markets for U.S. businesses and farmers would cause me serious concern. Consolidation that doesn't hurt export opportunities might make sense. Congress will need to look at this proposal carefully. It's not surprising that the President is focusing on this area for consolidation. Trade is already a lower priority than it should be for this White House."

In This Issue
This issue contains the following items:
 • Rep. Issa Introduces Alternative to SOPA
 • Comparison of the Key Processes of SOPA and OPEN Act
 • Rep. Smith Responds to Critics
 • Obama Hypes Proposal to Consolidate Some Trade Related Agencies
Washington Tech Calendar
New items are highlighted in red.
Thursday, January 19

The House will meet at 10:00 AM. Day one of a three day event titled "House Republican Issues Conference". See, Rep. Cantor's calendar.

The Senate will not meet.

9:00 AM - 3:30 PM. Day one of a three day event hosted by the International Intellectual Property Institute (IIPI) and U.S. Patent and Trademark Office (USPTO) titled "Seminar on Specialized Intellectual Property Rights Courts". The speakers will include David Kappos (head of the USPTO), Shinjiro Ono (former Deputy Commissioner of the Japan Patent Office), and Jorge Amigo (former Director of the Mexican Institute of Industrial Property). The deadline to register is January 13. Free. See, notice. Location: USPTO, 600 Dulany St., Alexandria, VA.

11:45 AM - 1:45 PM. The Tech Freedom (TF), Competitive Enterprise Institute (CEI) and Cato Institute will host a panel discussion titled "Unintended Consequences of Rogue Website Crackdown". The program will address three bills under consideration by the House and Senate: (1) HR 3261 [LOC | WW], the "Stop Online Piracy Act" or "SOPA", (2) draft [18 pages in PDF] of the "Online Protection & Enforcement of Digital Trade Act", or "OPEN Act", and (3) S 968 [LOC | WW], the "Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011" or "PROTECT IP Act". The speakers will be Berin Szoka (TF), Larry Downes (TF), Allan Friedman (Brookings Institution), James Gattuso (Heritage Foundation), Dan Kaminsky, Julian Sanchez (Cato Institute). Lunch will be served. Free and open to the public. The deadline to register is 12:00 NOON on January 18. See, notice and registration page. Location: Reserve Officers Association of the US, One Constitution Ave., NE.

12:30 - 1:45 PM. The Federal Communications Commission's (FCC) Wireless Telecommunications Bureau's (WB) Division Chiefs will hold a meeting. The speakers will include Mary Bucher (Technologies, Systems and Innovation Division), Nese Guendelsberger ( Spectrum and Competition Policy Division), Roger Noel (Mobility Division), Blaise Scinto (Broadband Division), and Margaret Weiner (Auctions and Spectrum Access Division). The price to attend is $17. Registrations and cancellations are due by 12:00 NOON on January 16. See, notice. The Federal Communications Bar Association (FCBA) states that this is an FCBA event. Location: Wiley Rein, 1776 K St., NW.

6:00 - 8:15 PM. The Federal Communications Bar Association's (FCBA) Wireline Committee will host an event titled "Understanding the Connect America Fund Order". CLE credits. Prices vary. See, notice. Location: Dow Lohnes, 1200 New Hampshire Ave., NW.

Friday, January 20

The House will not meet. Day two of a three day event titled "House Republican Issues Conference".  See, Rep. Cantor's calendar.

The Senate will meet at 2:00 PM in pro forma session only.

Supreme Court conference day. See, calendar. Closed.

1:00 - 2:30 PM. American Bar Association's (ABA) Section on Intellectual Property Law will host a webcast panel discussion titled "Prosecution Strategies: Tackling USPTO Obviousness Rejections". The speakers will be Janet Hendrickson (Senniger Powers), Gregory Hillyer (Feldman Gale), Michelle O'Brien (O'Brien Jones), and Zachary Stern (Oblon, Spivak). The price ranges from $70 to $150. CLE credits. See, notice.

Saturday, January 21

Day three of a three day event titled "House Republican Issues Conference".

Monday, January 23

The House will meet. Votes will be postponed until 6:30 PM.

The Senate will meet at 2:00 PM for morning business. The Senate may also consider S 968 [LOC | WW], the "Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011" or "PROTECT IP Act".

6:00 - 9:15 PM. The DC Bar Association will host a program titled "Introduction to Export Controls". The speakers will be Carol Kalinoski (solo practitioner) and Thomas Scott (Ladner & Associates). The price to attend this and the companion program on February 8 ranges from $169 to $229. CLE credits. See, notice. For more information, call 202-626-3488. The DC Bar has a history of barring reporters from its events. Location: DC Bar Conference Center, 1101 K St., NW.

Tuesday, January 24

The House will meet.

The Senate will meet.

State of the Union speech.

9:30 - 10:30 AM. The Information Technology and Innovation Foundation (ITIF) will host a discussion of the book [Amazon] titled "Restoring the Innovation Edge". The speakers will include the author, Jerald Hage (University of Maryland). See, notice. Location: ITIF/ITIC, Suite 610A, 1101 K Street, NW.

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

Wednesday, January 25

The House will meet. Day one of a three day event titled "House Democratic Issues Conference".

10:00 AM. The House Homeland Security Committee's (HHSC) Subcommittee on Oversight, Investigations and Management will hold a hearing titled "Is DHS Effectively Implementing a Strategy to Counter Emerging Threats?". See, notice. Location: Room 311, Cannon Building.

12:15 - 1:30 PM. The Federal Communications Bar Association's (FCBA) Homeland Security and Emergency Communications and State and Local Practice Committees will host a brown bag lunch titled "Emergency Communications Policy Issues in the National Capitol Region". The speakers will be interoperability coordinators for the national capital region (NCR), Michele Farquhar (Hogan Lovells), Chris Essid (Director of the DHS's Office of Emergency Communications (OEC), and Trey Forgety (National Emergency Number Association). For entry upon arrival, call Alex Kreilein (DHS/OEC) at 202-603-8702. Location: Bureau of Alcohol, Tobacco, and Firearms, Room 3200, 650 Massachusetts Ave., NW.

5:00 - 7:00 PM. The Net Caucus will host an event titled "15th Annual Kickoff Tech Policy Exhibition & Reception". Free. Open to the public. Location: Room 902, Hart Building.

Thursday, January 26

The House will not meet. Day two of a three day event titled "House Democratic Issues Conference".

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

Rep. Smith Responds to Critics

1/18. Rep. Lamar Smith (R-TX) responded to recent criticism of HR 3261 [LOC | WW], the "Stop Online Piracy Act" or "SOPA".

He stated in a release that "I realize some people are nervous because of misinformation about this bill, but I am confident that ultimately the facts will overcome fears. We will continue to work with members, outside organizations and stakeholders to reach consensus and produce strong legislation that protects both intellectual property and technology."

"Contrary to critics' claims, SOPA does not censor the Internet. It only targets activity that is already illegal, and only targets foreign websites that steal and sell America’s technology, inventions and products. And it is similar to laws that already govern websites based in the U.S."

He continued that "I am open to constructive suggestions that protect American inventors and intellectual property rights holders. Unfortunately, some critics simply want to maintain the status quo which harms U.S. companies, consumers and innovators. Illegal piracy and counterfeiting cost the U.S. economy $100 billion and thousands of jobs every year. Congress cannot stand by and do nothing while some of America’s most profitable and productive industries are under attack."

He concluded that "We need strong and effective legislation to protect American technology and put foreign thieves out of business.  I will continue to work to address legitimate concerns and encourage members and stakeholders to provide substantive recommendations for how best to address the problem of online theft."

Sen. Charles Grassley (R-IA) stated in a release on January 18 that "It's critical we protect the intellectual property rights of our businesses and fight online infringement, but at the same time, we can't do harm to the internet, the Constitution, or the ability of businesses to grow and innovate. Internet piracy is illegal, and we need to find a way that works for all sides. The current Protect IP Act needs more due diligence, analysis, and substantial changes. As it stands right now, I can't support the bill moving forward next week."

About Tech Law Journal

Tech Law Journal publishes a free access web site and a subscription e-mail alert. The basic rate for a subscription to the TLJ Daily E-Mail Alert is $250 per year for a single recipient. There are discounts for subscribers with multiple recipients.

Free one month trial subscriptions are available. Also, free subscriptions are available for federal elected officials, and employees of the Congress, courts, and executive branch. The TLJ web site is free access. However, copies of the TLJ Daily E-Mail Alert are not published in the web site until two months after writing.

For information about subscriptions, see subscription information page.

Tech Law Journal now accepts credit card payments. See, TLJ credit card payments page.

Solution Graphics

TLJ is published by David Carney
Contact: 202-364-8882.
carney at techlawjournal dot com
3034 Newark St. NW, Washington DC, 20008.

Privacy Policy
Notices & Disclaimers
Copyright 1998-2012 David Carney. All rights reserved.