Tech Law Journal Daily E-Mail Alert
Monday, August 13, 2012, Alert No. 2,427.
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Senate JEC Recommends More IP Enforcement by DHS and Quicker USITC § 337 Decisions

8/8. The U.S. Congress's Joint Economic Committee released a staff report [4 pages in PDF] titled "The Impact of Intellectual Property Theft on the Economy". It finds that "IP theft has increased in recent years" and that this has harmed the U.S. economy.

It focuses on foreign based intellectual property (IP) infringement -- particularly in the People's Republic of China (PRC), enforcement efforts by Department of Homeland Security's (DHS) Customs and Border Protection (CBP), and private Section 337 actions before the U.S. International Trade Commission (USITC).

It recommends that "Strengthening IP enforcement and providing more timely resolution of foreign infringement complaints can help combat IP theft".

Sen. Bob CaseySen. Bob Casey (D-PA) (at right), the Chairman of the JEC, stated in a release that "Counterfeiting and piracy have become increasingly widespread, especially from China, hampering innovation and competitiveness and costing America jobs at a time when far too many are looking for work".

This report states that "Innovation drives economic growth and job creation. Protection of intellectual property (IP), through patents, trademarks and copyrights, is critical to ensuring that firms pursue innovation. Counterfeiting and piracy erode the returns on innovation and slow economic growth because of the negative impacts on companies, consumers and governments."

"IP infringement harms companies through lost revenue, the costs of IP protection, damage to brand, and decreased incentives to innovate because of potential theft. Consumers are harmed when they purchase counterfeit goods of lower quality, some of which, such as counterfeit medicines, may pose health or safety risks. Governments lose tax revenue and bear enforcement costs. Decreased incentives to innovate resulting from IP infringement reduce economic growth, weaken the nation’s competitiveness, and decrease job creation." (Footnote omitted from this and other quotations.)

The report states that the PRC "accounts for the vast majority of pirated goods seized at the U.S. border." Specifically, the DHS/CBP data shows that "Goods from China accounted for more than three-fourths of the value of counterfeit products seized in the United States from 2004-2009."

The report states, regarding actions brought in the USITC pursuant to 19 U.S.C. § 1337, that "Resolution of foreign infringement complaints often take substantial time to resolve" and "some firms are forced out of business before the infringement investigation is completed".

It also states that "Small businesses are unlikely to have the financial resources to protect themselves from IP theft or pursue enforcement actions when facing losses. Data on investigations initiated and completed by the U.S. ITC show that while small businesses represent 79.0 percent of all businesses in the U.S., they comprise only 10.5 percent of firms filing complaints regarding intellectual property infringement."

The MPAA praised the JEC report in a release.

Google Search Results to Take Into Account Takedown Notices

8/10. Amit Singhal, Google's SVP Engineering, wrote a short piece titled "An Update to Our Search Algorithms". It states that "Starting next week, we will begin taking into account a new signal in our rankings: the number of valid copyright removal notices we receive for any given site."

That is, "Sites with high numbers of removal notices may appear lower in our results."

The Digital Millennium Copyright Act (DMCA) provides for limitation on liability for web sites that contain copyright infringing works, provided that they maintain the notice and take down regime specified by the statute.

The provision, which is codified at 17 U.S.C. § 512, states that "A service provider shall not be liable for monetary relief, or, ... for injunctive or other equitable relief, for infringement of copyright", provided that the service provider designates "an agent to receive notifications of claimed infringement", and "upon notification of claimed infringement ... responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity".

Singhal elaborated that "Only copyright holders know if something is authorized, and only courts can decide if a copyright has been infringed; Google cannot determine whether a particular webpage does or does not violate copyright law. So while this new signal will influence the ranking of some search results, we won't be removing any pages from search results unless we receive a valid copyright removal notice from the rights owner. And we’ll continue to provide "counter-notice" tools so that those who believe their content has been wrongly removed can get it reinstated."

Michael O'Leary of the Motion Picture Association of America (MPAA) stated in a release that "We are optimistic that Google’s actions will help steer consumers to the myriad legitimate ways for them to access movies and TV shows online, and away from the rogue cyberlockers, peer-to-peer sites, and other outlaw enterprises that steal the hard work of creators across the globe. We will be watching this development closely -- the devil is always in the details -- and look forward to Google taking further steps to ensure that its services favor legitimate businesses and creators, not thieves."

Cary Sherman, head of the Recording Industry Association of America (RIAA), stated in a release that this is "a potentially significant change" that "should result in improved rankings for the licensed music services".

He added that this "important step in the right direction -- a step we've been urging Google to take for a long time -- and we commend the company for its action." But, "the details of implementation will matter", and "there are many more actions that we hope Google will take".

In contrast, John Bergmeyer of the Public Knowledge (PK) stated in a release that Google's plan "raises many questions".

He stated that "Sites may not know about, or have the ability to easily challenge, notices sent to Google. And Google has set up a system that may be abused by bad faith actors who want to suppress their rivals and competitors. Sites that host a lot of content, or are very popular, may receive a disproportionate number of notices (which are mere accusations of infringement) without being disproportionately infringing. And user-generated content sites could be harmed by this change, even though the DMCA was structured to protect them."

House Small Business Committee Members Write FTC Regarding IT Theft

8/2. Nineteen members of the House Small Business Committee (HSBC) sent a letter [PDF] to Federal Trade Commission (FTC) Chairman Jonathan Liebowitz, and the four other FTC Commissioners, regarding "stolen information technology (IT) in foreign markets and the potential impact to small manufacturers in the United States".

This letter describes the problem of theft of technology. It does not, however, state what the FTC should do about it, or not do. However, the HSBC members want to be involved.

The Department of Justice (DOJ), and not the FTC, has authority to criminally prosecute for theft of trade secrets under 18 U.S.C. § 1831, and for criminal copyright infringement.

The HSBC letter repeatedly refers to "competition" and "unfair competition". The FTC has authority to challenge mergers or acquisitions when "the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly". See, 15 U.S.C. § 18. But, this would not apply to theft of IT.

Sections 1 and 2 of the Sherman Act apply to conspiracies in restraint of trade or commerce, and abuse of market power.

FTC Act, at 15 U.S.C. § 45, gives the FTC civil enforcement authority with respect to an "unfair or deceptive trade practice". The letter does not express reference that possibility that the FTC might bring actions under this section against companies that steal IT.

The only recommendation in the letter is this. "As you consider your current legal authority to pursue international IT theft, we encourage you to carefully consider the possible side effects to ensure that any actions will not cause a burden or disruption to domestic companies and their supply chain. In today's economy, we cannot place another regulatory burden or obstacle on small businesses."

Rep. Sam GravesRep. Sam Graves (R-MO) (at right) is the Chairman of the HSBC. In response to questions from TLJ, his staff provided this explanation: "Stolen information technology is a major problem. It puts U.S. small businesses at a competitive disadvantage and costs American consumers. We're confident the FTC is aware of the need for continued work to reduce this problem. Members of this Committee need to hear the progress of that effort in order to proactively do our oversight work on behalf of small businesses. Any impacts on small businesses must be thoroughly considered."

"Effectively, we're asking the FTC: what’s next? We need more insight into the Commission's process and plan for dealing with this costly drain on our nation's job creators."

People and Appointments

8/10. Scott Wilson was named Inspector General of the Federal Trade Commission (FTC). He will replace John Seeba. See, FTC release.

8/7. Rep. John Conyers (D_MI) won the Democratic primary for the Michigan 13th District. His current district is the 14th. As a result of redistricting, much of his old district is a part of the new district. However, the new 13th District also includes suburban areas not in his old district. He is the ranking Democrat on the House Judiciary Committee (HJC).

In This Issue
This issue contains the following items:
 • Senate JEC Recommends More IP Enforcement by DHS and Quicker USITC § 337 Decisions
 • Google Search Results to Take Into Account Takedown Notices
 • House Small Business Committee Members Write FTC Regarding IT Theft
 • People and Appointments
 • More News
Washington Tech Calendar
New items are highlighted in red.
Monday, August 13

The House will not meet, except for pro forma sessions, until September 10.

The Senate will not meet, except for pro forma sessions, until September 10.

5:00 PM. Deadline to submit initial comments to the Copyright Office (CO) in response to its notice in the Federal Register (FR) regarding its proposed rules that implement the provision of the Satellite Television Extension and Localism Act of 2010 (STELA) that allows copyright owners to audit certain Statements of Account filed with the CO. See, FR, Vol. 77, No. 115, Thursday, June 14, 2012, at Pages 35643-35652. See also, story titled "Copyright Office Issues Proposed STELA Rules Regarding Auditing Statements of Account" in TLJ Daily E-Mail Alert No. 2,398, June 18, 2012.

Tuesday, August 14

The Senate will meet at 2:30 PM in pro forma session.

9:00 AM - 5:00 PM. Day one of a two day meeting of the Department of Energy's (DOE) Advanced Scientific Computing Advisory Committee (ASCAC). See, notice in the Federal Register, Vol. 77, No. 147, Tuesday, July 31, 2012, at Pages 45345-45346. Location: American Geophysical Union (AGU), 2000 Florida Ave., NW.

Wednesday, August 15

9:00 AM - 12:00 NOON. Day two of a two day meeting of the Department of Energy's (DOE) Advanced Scientific Computing Advisory Committee (ASCAC). See, notice in the Federal Register, Vol. 77, No. 147, Tuesday, July 31, 2012, at Pages 45345-45346. Location: American Geophysical Union (AGU), 2000 Florida Ave., NW.

9:00 AM - 3:00 PM. The Department of Health and Human Services' (DHHS) Office of the National Coordinator for Health Information Technology's (ONCHIT) HIT Standards Committee will meet by webcast. See, notice in the Federal Register, Vol. 77, No. 147, Tuesday, July 31, 2012, at Pages 45353-45354.

12:00 NOON. The World Wide Web Consortium's (W3C) Tracking Protection Working Group will meet by teleconference. The call in number is 1-617-761-6200. The passcode is TRACK (87225).

Deadline to submit reply comments to the Copyright Office (CO) in response to its notice in the Federal Register (FR) in which it proposes rules changes regarding the definition of a claimant for purposes of copyright registration. The CO proposes to eliminate the footnote to the definition of a claimant codified at 37 CFR § 202.3(a)(3)(ii), which provides that a claimant includes individuals or entities that have obtained the contractual right to claim legal title to copyright in an application for copyright registration. See, FR, Vol. 77, No. 96, Thursday, May 17, 2012, at Pages 29257-29259. See also, story titled "Copyright Office Proposes to Change Definition of Claimant" in TLJ Daily E-Mail Alert No. 2,386, May 30, 2012.

Thursday, August 16

1:00 - 2:30 PM. The American Bar Association (ABA) will host a webcast and telecast panel discussion titled "A New Beginning in the End: Sound Recording Copyright Terminations -- A Discussion and Debate". The speakers will be Lisa Alter (Alter & Kendrick), Lacy Lodes (Consor Intellectual Asset Management), Lisa Buckley (Pryor Cashman), Marybeth Peters (Oblon Spivak), and Mark Jaffe (Ekeland & Jaffe). Prices vary. CLE credits. See, notice.

2:00 - 3:15 PM. The President's National Security Telecommunications Advisory Committee (NSTAC) will meet via teleconference. The agenda includes discussions of (1) the Nationwide Public Safety Broadband Network (NPSBN), (2) the DHS's National Cybersecurity and Communications Integration Center (NCCIC), and (3) the proposal to develop a separate out of band data network supporting communications among carriers, ISPs, vendors, and additional critical infrastructure owners and operators during a severe cyber incident that renders the internet unusable. This event is open to the public. There will be a period for public comments. The deadline to register to present comments is August 9. The deadline to submit comments in advance of the meeting is August 10. The deadline to submit post meeting comments is August 30. See, notice in the Federal Register, Vol. 77, No. 146, Monday, July 30, 2012, at Pages 44641-44642.

Friday, August 17

The Senate will meet at 11:30 AM in pro forma session.

Deadline to submit comments to the National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) regarding its draft SP 800-124 Rev 1 [29 pages in PDF] titled "Guidelines for Managing and Securing Mobile Devices in the Enterprise".

Monday, August 20

2:00 PM. The U.S. Court of Appeals (FedCir) will hear oral argument in Apple v. Samsung Electronics, App. Ct. No. 2012-1507, an appeal from the U.S. District Court (NDCal) in the patent infringement case involving smart phones and tablet computers. At issue in this oral argument is whether the District Court should have enjoined sale of Samsung's Galaxy Nexus smart phone. Panel I. Location: Courtroom 201.

Deadline to submit to the Copyright Royalty Board (CRB) Petitions to Participate in, and filing fees for, the CRB's proceeding to determine the distribution of the digital audio recording technology royalty fees in the 2005, 2006, 2007 and 2008 Musical Works Funds. See, notice in the Federal Register, Vol. 77, No. 140, July 20, 2012, at Pages 42764-42765.

Deadline to submit comments to the Department of Health and Human Services' (DHHS) Agency for Healthcare Research and Quality (AHRQ) in response to its Request for Information (RFI) regarding current strategies and challenges regarding quality measurement enabled by health information technology (IT). See, notice in the Federal Register, Vol. 77, No. 140, July 20, 2012, Pages 42738-42740.

More News

8/13. The Federal Trade Commission (FTC) released a notice, to be published in the Federal Register, that announces, describes, recites, and sets the comment deadline for, proposed changes to its premerger notification rules that would require companies in the pharmaceutical industry to report proposed acquisitions of exclusive patent rights to the FTC and the Department of Justice (DOJ) for antitrust review. The deadline to submit comments is October 25, 2012.

8/8. The Department of the Treasury's (DOT) Treasury Inspector General for Tax Administration (TIGTA) released a report [51 pages in PDF] titled "Substantial Changes Are Needed to the Individual Taxpayer Identification Number Program to Detect Fraudulent Applications". The Internal Revenue Service (IRS) assigns Individual Taxpayer Identification Numbers (ITIN) to persons not eligible for Social Security Numbers (SSN), such as illegal aliens. This TIGTA report found that IRS management "is interested only in the volume of applications that can be processed, regardless of whether they are fraudulent", thus resulting in fraudulently obtained ITINs, "the creation of fictitious identities", fraudulent tax returns, and the federal government being defrauded of "billions of dollars". Moreover, the report found that the IRS "Created an environment which discourages tax examiners responsible for reviewing ITIN applications from identifying questionable applications" and "Eliminated successful processes used to identify questionable ITIN application fraud patterns and schemes". The report describes a scam based upon the Additional Child Tax Credit. This is a refundable credit that is not limited to the amount of an individual's tax liability. It can result in a tax refund that is larger than federal income tax withholding for that year. Indeed, one can receive a refund even if no income tax was withheld. This report is dated July 16, 2012. The TIGTA did not release it to the public until August 8, 2012.

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