News from October 6-10, 2004

Berman and Boucher Introduce Bill to Provide for Post Grant Review of Patents

10/8. Rep. Howard Berman (D-CA) and Rep. Rick Boucher (D-VA) introduced HR 5299, the "Patent Quality Assistance Act of 2004", a bill to amend the Patent Act to provide for post grant reviews.

The bill would add to Title 35 a new Chapter 32, titled "Post-Grant Opposition Procedures".

Rep. Howard BermanRep. Berman (at right) stated that this bill "contains a number of provisions designed to improve patent quality, deter abusive practices by unscrupulous patent holders, and provide meaningful, low-cost alternatives to litigation for challenging the patent validity."

He continued that "I am a strong believer that the prospect of patent protection promotes innovation. However, I also believe that the patent system is strongest, and incentives for innovation greatest, when patents protect only truly deserving inventions. When functioning properly, the patent system should encourage and enable inventors to push the boundaries of knowledge and possibility.  If the patent system allows questionable patents to issue and does not provide adequate safeguards against patent abuses, the system may stifle innovation and interfere with competitive market forces."

He added that "we introduce this bill at the end of this Congress with the intent of framing the debate going into the 109th Congress, and with every intention of passing legislation in the next two years."

This bill provides that "A person may request that the grant or reissue of a patent be reconsidered by the Patent and Trademark Office by filing an opposition seeking to invalidate 1 or more claims in the patent." This would be a public proceeding, with the contents of the file open to public inspection. However, the bill also provides that "if requested by the opposer, the identity of a real party in interest shall be kept separate from the file ..." This procedure would not be available "if the opposer relies upon factual evidence or expert opinions ... or if the opposer exercises the right to appeal ..."

An opposition request must be made within nine months of the grant (or issuance of a reissue patent), or six months after receiving notice from the patent holder alleging infringement of the patent, unless the patent holder otherwise consents in writing.

The bill further provides that the Director of the U.S. Patent and Trademark Office (USPTO) "may dismiss an opposition request that the Director determines lacks substantial merit." However, such a "dismissal of an opposition request shall not be admissible in any civil action related to the patent against which a dismissed request was filed."

The bill provides that "The Director shall assign the opposition proceeding to a panel of three administrative patent judges ... The panel shall decide the questions of patentability raised in each opposition request for which an opposition proceeding has been instituted. The decision shall be based upon the prosecution record that was the basis for the grant of the patent and the additional submissions by the parties to the opposition proceeding authorized under this chapter."

The bill provides that the patent owner may file responses to opposition requests, and may request amendment of any claims that are the subject of an opposition request. It further provides for limited discovery, hearings, briefs, and written decisions.

And, "The opposer in an opposition proceeding under this chapter shall have the burden to prove the invalidity of a claim by a preponderance of the evidence. The determination of invalidity shall be based upon the broadest reasonable construction of the claim."

Appeals of final determinations of the panel in an opposition proceeding would be made to the U.S. Court of Appeals for the Federal Circuit.

Then, "the determination with respect to an issue of invalidity raised by an opposer shall bar that opposer from raising, in any subsequent proceeding involving that opposer under this title, any issue of fact or law actually decided and necessary to the determination of that issue." But, the bill provides one exception. "If an opposer in an opposition proceeding demonstrates ... that there is additional factual evidence that is material to an issue of fact actually decided in the opposition proceeding, and necessary to the final determination in the opposition proceeding, that could not reasonably have been discovered or presented in the opposition proceeding by that opposer, the opposer may raise, in that subsequent proceeding, that issue of fact and any determined issue of law for which the issue of fact was necessary."

Rep. Berman is the ranking Democrat on the House Judiciary Committee's Courts, the Internet and Intellectual Property Subcommittee (CIIP). Rep. Boucher is the second most senior Democrat on the CIIP Subcommittee. Both were first elected at the same time. Rep. Berman has seniority because his name precedes Rep. Boucher's in alphabetical ordering.

On June 24, 2004, the CIIP Subcommittee held a hearing titled "Patent Quality Improvement: Post-Grant Opposition". See, prepared testimony [6 pages in PDF] of James Toupin (General Counsel of the U.S. Patent and Trademark Office), prepared testimony [PDF] of Jeffrey Kushan (outside counsel for Genentech), prepared testimony of Michael Kirk (Executive Director of the American Intellectual Property Law Association), and prepared testimony [PDF] of Karl Sun (Google).

The Federal Trade Commission (FTC) recommended in its October 2003 report titled "To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy" that the Congress create "an administrative procedure for post-grant review and opposition that allows for meaningful challenges to patent validity short of federal court litigation. To be meaningful, the post-grant review should be allowed to address important patentability issues. The review petitioner should be required to make a suitable threshold showing." See, Executive Summary [18 pages in PDF] and Report [2.28 MB in PDF]. See, story titled "FTC Releases Report on Competition and Patent Law" in TLJ Daily E-Mail Alert No. 768, October 29, 2003.

The American Intellectual Property Law Association (AIPLA) hosted a panel discussion on Friday, October 15, 2004, as a part of its annual convention, that included a discussion of this proposal. There was wide agreement that a post-grant opposition process is necessary. However, there was disagreement over the details.

Movie and Music Industry Entities File Cert Petition in MGM v. Grokster

10/8. Movie and music industry entities filed a petition for writ of certiorari with the Supreme Court in MGM v. Grokster, a case regarding vicarious liability for copyright infringement on peer to peer systems.

The petitioners include Metro Goldwyn Mayer Studios Inc., other movie studios, record companies, and music publishers and songwriters. The respondents are Grokster, Ltd. and StreamCast Networks, Inc.

On August 19, 2004, the U.S. Court of Appeals (9thCir) issued its opinion [26 pages in PDF] affirming the District Court judgment that Grokster's and Streamcast's peer to peer (P2P) file copying networks do not contributorily or vicariously infringe the copyrights of the holders of music and movie copyrights. See also, April 25, 2003, opinion of the U.S. District Court (CDCal), which the Appeals Court followed and praised.

The petitioners (plaintiffs below) are music and movie industry owners of copyright interests. The defendants are companies that distributed P2P software that enables the individual users to infringe the plaintiffs' copyrights. The individual infringers are not defendants in this suit. This opinion pertains only to the legal theories of contributory and vicarious liability.

The petition states that the question presented is "Whether the Ninth Circuit erred in concluding, contrary to long-established principles of secondary liability in copyright law (and in acknowledged conflict with the Seventh Circuit), that the Internet-based ``file sharing´´ services Grokster and StreamCast should be immunized from copyright liability for the millions of daily acts of copyright infringement that occur on their services and that constitute at least 90% of the total use of the services."

The petition asserts that "This is one of the most important copyright cases ever to reach this Court. Resolution of the question presented here will largely determine the value, indeed the very significance, of copyright in the digital era."

It states that "The Ninth Circuit’s refusal to hold Grokster and StreamCast accountable under these circumstances is a radical departure from principles of secondary liability", including the Supreme Court's opinion in Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984). It further states that the 9th Circuit's opinion is "diametrically opposed" to the opinion [23 pages in PDF] of the U.S. Court of Appeals (7thCir) in In Re Aimster Copyright Litigation, 334 F.3d 643. This opinion affirmed the District Court's preliminary injunction affecting the Aimster (aka Madster) file copying system. See, story titled "7th Circuit Affirms Preliminary Injunction in Aimster Case" in TLJ Daily E-Mail Alert No. 691, July 1, 2003.

The petition further asserts that "Review is urgently needed not only to resolve the conflict between the Ninth and Seventh Circuits, but more importantly to clarify the standards for secondary liability applicable to Internet-based services that facilitate copyright infringement. The infringement Grokster and StreamCast foster is inflicting catastrophic, multibillion-dollar harm on petitioners that cannot be redressed through lawsuits against the millions of direct infringers using those services. Left undisturbed, the Ninth Circuit’s decision will effectively insulate Grokster and StreamCast from suit nationwide, leaving these harms unremedied."

The petition portends an apocalypse. "Indeed, the Ninth Circuit’s decision threatens the very foundations of our copyright system in the digital era. The ease with which copyrighted works in digital form can be unlawfully copied and distributed millions of times over on the Internet makes it especially important that traditional principles of secondary copyright liability apply to enterprises that, like respondents, brazenly encourage and profit from infringement. Unless respondents and those like them can be held accountable, copyright will soon mean nothing on the Internet, and the incentives on which our copyright system rests will be imperiled.

Gigi Sohn, President of Public Knowledge, stated in a release that "There is no reason the Supreme Court should review the Grokster decision. That case was based on the principles established in the 1984 Betamax case, which has lead to the largest and most profitable period of technological innovation in this country’s history. Consumers, industry and our country have all benefited as a result."

Related TLJ Stories.

FCC Announces Partial Forbearance From ISP Remand Order

10/8. The Federal Communications Commission (FCC) announced, but did not release, an order that grants in part and denies in part Core Communications' petition for forbearance of enforcement of the FCC's 2001 ISP Remand Order. The FCC grants forbearance from the growth caps and new markets rule, and extends this to all telecommunications carriers.

The FCC issued a short release [PDF] describing this forbearance order. It states that "The FCC finds that Core has not met the statutory criteria for forbearance under section 10 with respect to rate caps and the mirroring rule. These rules remain necessary to prevent regulatory arbitrage and promote efficient investment in telecommunications services and facilities." It further states that "The FCC grants forbearance from growth caps and the new markets rule, finding that these rules are no longer in the public interest."

The FCC further announced in this release that "The FCC extends forbearance from growth caps and the new markets rule to all telecommunications carriers."

This proceeding is WC Docket No. 03-171. See, Core's July 17, 2003 petition [30 pages in PDF]. See also, the FCC's Order on Remand and Report and Order [72 pages in PDF], adopted on April 18, 2001, and released on April 27, 2001. This remand order is FCC 01-131 in CC Dockets Nos. 96-98 and 99-68. And see, May 3, 2002 opinion of the U.S. Court of Appeals (DC) in WorldCom v. FCC, 288 F.3d 429, cert. denied, 538 U.S. 1012 (2003), and story titled "DC Circuit Remands FCC Bill and Keep Order" in TLJ Daily E-Mail Alert No. 425, May 6, 2002.

More News

10/8. Roger Ferguson, Vice Chairman of the Federal Reserve Board (FRB), gave a speech in St. Louis, Missouri on the FRB's monetary policy since 1979 (the year that former President Carter appointed Paul Volker Chairman). One topic that Ferguson addressed was the recent tech bust. He stated that "There is greater disagreement about how well the Federal Reserve responded to the bursting in recent years of the so-called bubble in technology stocks. This topic is broad, but I would like to note that, as many of my colleagues and I have previously argued, prospectively addressing perceived asset-price bubbles is a matter of such great uncertainty that, even with the benefit of hindsight, it is not clear that policy decisions in the late 1990s, for example, should have been any different. In any case, the recession that followed the sharp decline in stock prices was shallow by historical standards." FRB Governor Ben Bernanke also gave a speech at the same conference. FRB Chairman Alan Greenspan also gave a short speech praising Volker and his policies, on October 7, at this conference.

10/8. Microsoft, the Department of Justice (DOJ), and various state plaintiffs filed a Joint Status Report on Microsoft's Compliance with the Final Judgments with the U.S. District Court (DC) in the government antitrust case against Microsoft. This is the latest of the periodic status reports. The Court will hold a status conference on October 19, 2004. This case is D.C. No. 98-1232 (CKK), Judge Colleen Kotelly presiding.

10/8. The U.S. Patent and Trademark Office (USPTO) released a statement about the relocation of trademark operations to the new consolidated USPTO headquarters in Alexandria, Virginia. It announced that "The Trademark Assistance Center, which provides general information about the trademark registration process and status of trademark applications and registrations, will begin moving Friday evening, October 8, and be open for business on Tuesday morning, October 12. The drop point for all hand deliveries and in-person trademark filings is at the Trademark Assistance Center with a direct entrance from the street making it more convenient for the public. The center is open Monday through Friday, from 8:30 a.m. to 5:00 p.m., except holidays, and will be located in Madison East, Concourse Level, Room C 55." The USPTO also announced that trademark examining law offices will begin moving on October 12 and conclude on November 3. Also, the Trademark Trial and Appeal Board (TTAB) employees will move on November 3.

10/8. The Federal Communications Commission (FCC) published a notice in the Federal Register that describes and sets the effective date (November 8, 2004) of its final order amending its rules implementing the Telephone Consumer Protection Act (TCPA) to establish a limited safe harbor period from the prohibition on placing autodialed or prerecorded message calls to wireless numbers that have been recently ported from wireline to wireless service, and to amend the existing safe harbor rules for the national do-not-call registry so that telemarketers are required to access the do-not-call list no more than 31 days prior to making a telemarketing call. The FCC adopted its order on August 25, 2004, and released it on September 21, 2004. This item is FCC 04-204 in CG Docket No. 02-278. See, Federal Register: October 8, 2004, Vol. 69, No. 159, at Pages 60311 - 60316.

FCC Announces Agenda for October 14 Meeting

10/7. The Federal Communications Commission (FCC) released the agenda [PDF] for its meeting of Thursday, October 14, 2004. The agenda includes an NPRM in its broadband over powerline proceeding.

The FCC will consider a Report and Order regarding technical rules for broadband over powerline (BPL) systems. The FCC adopted its notice of proposed rulemaking (NPRM) at its February 12, 2004 meeting. This NPRM is FCC 04-29 in ET Docket No. 04-37. See, story titled "FCC Adopts Broadband Over Powerline NPRM" in TLJ Daily E-Mail Alert No. 836, February 13, 2004. The FCC released the text [38 pages in PDF] of this NPRM on February 23, 2004.

Also, on 9:30 AM on Tuesday, October 12, FCC Chairman Michael Powell and Federal Energy Regulatory Commission (FERC) Chairman Pat Wood will visit the City of Manasas for a tour of its BPL related facilities. This event will take place at Manassas Public Works building, 8500 Public Works Drive, Manassas, Virginia.

The FCC will consider a Seventh Report and Order regarding relocation of federal government users from the 1710-1755 MHz band to make the band available for Advanced Wireless Services (AWS) such as Third Generation (3G) wireless services. This proceeding is ET Docket No. 00-258 and WT Docket No. 02-8.

The FCC will consider a notice of inquiry (NOI) regarding the possible effects of foreign mobile termination rates on U.S. customers and competition in the U.S. telecommunications services market. This is IB Docket Nos. 02-324 and 96-261.

The FCC will consider an Order on Reconsideration regarding requests from BellSouth and SureWest to reconsider and/or clarify various broadband unbundling obligations. This is CC Docket No. 01-338, CC Docket No. 96-98, and CC Docket No. 98-147.

The FCC will consider an Order on Reconsideration regarding its payphone compensation rules. This proceeding is CC Docket No. 96-128.

Finally, the FCC will consider a notice of proposed rulemaking (NPRM) concerning § 251(h)(2). This pertains to Mid-Rivers Telephone Cooperative, Inc.'s petition that it be declared the incumbent local exchange carrier (ILEC) in a town in the state of Montana. This proceeding is WC Docket No. 02-78.

The meeting is scheduled for 9:30 AM at the FCC, in Room TW-C305 (Commission Meeting Room), 445 12th Street, SW. The meeting will be webcast by the FCC.

House Approves Second Spyware Bill

10/7. The House amended and approved HR 4661, the "Internet Spyware (I-SPY) Prevention Act of 2004", by a vote of 415-0. See, Roll Call No. 503.

This is the House Judiciary Committee's spyware bill. It amends Title 18 to provide criminal penalties for three of the most egregious uses of spyware.

The House approved HR 2929, the "Securely Protect Yourself Against Cyber Trespass Act", or SPY ACT, on October 5, by a vote of 399-1. See, Roll Call No. 495. HR 2929 is the House Commerce Committee's spyware bill. It prohibits certain conduct with respect to spyware, and gives the Federal Trade Commission (FTC) civil enforcement authority.

Rep. Bob GoodlatteRep. Bob Goodlatte (R-VA) (at right), the sponsor of the bill, stated on the floor of the House on October 6 that "Spyware is software that provides a tool for criminals to crack into computers to conduct nefarious activities, such as altering a user's security settings, collecting personal information to steal a user's identity, or to commit other crimes. The I-SPY Prevention Act would impose criminal penalties on the most egregious behaviors associated with spyware. Specifically, this legislation would impose up to a 5-year prison sentence on anyone who uses software to intentionally break into a computer and uses that software in furtherance of another Federal crime. In addition, it would impose up to a 2-year prison sentence on anyone who uses spyware to intentionally break into a computer and either alter the computer's security settings or obtain personal information with the intent to defraud or injure a person or with the intent to damage a computer."

Rep. Zoe Lofgren (D-CA), a cosponsor, stated that "Spyware also adversely affects the business community which must spend money to block and remove it from their systems. Microsoft has stated that spyware is ``at least partially responsible for approximately one-half of all application crashes'' reported to them. Experts estimate that as many as 80 to 90 percent of all personal computers contain some form of spyware. Earthlink recently identified more than 29 million spyware programs. In short, spyware is a very real problem that is endangering consumers, damaging businesses, and creating millions of dollars of additional costs."

HR 4661 adds a new Section 1030A to the Criminal Code titled "Illicit indirect use of protected computers". It creates three criminal prohibitions.

First, it prohibits use of spyware in furtherance of other federal crimes. It provides that "Whoever intentionally accesses a protected computer without authorization, or exceeds authorized access to a protected computer, by causing a computer program or code to be copied onto the protected computer, and intentionally uses that program or code in furtherance of another Federal criminal offense shall be fined under this title or imprisoned not more than 5 years, or both."

Second, it prohibits of spyware related theft of personal information with intent to defraud. It provides that "Whoever intentionally accesses a protected computer without authorization, or exceeds authorized access to a protected computer, by causing a computer program or code to be copied onto the protected computer, and by means of that program or code ... intentionally obtains, or transmits to another, personal information with the intent to defraud or injure a person or cause damage to a protected computer ... shall be fined under this title or imprisoned not more than 2 years, or both."

Third, it prohibits spyware related impairment of computer security features. It provides that "Whoever intentionally accesses a protected computer without authorization, or exceeds authorized access to a protected computer, by causing a computer program or code to be copied onto the protected computer, and by means of that program or code ... intentionally impairs the security protection of the protected computer ... shall be fined under this title or imprisoned not more than 2 years, or both."

HR 4661 also precludes certain private civil litigation based upon violation of these new prohibitions. It provides that "No person may bring a civil action under the law of any State if such action is premised in whole or in part upon the defendant's violating this section."

The bill also includes an authorization for the appropriation of $10 Million for each of fiscal years 2005 through 2008 for prosecutions related to spyware and phishing.

The version of the bill just approved by the House adds a new provision that was not in the bill approved by the House Judiciary Committee, that exempts law enforcement, investigative, and intelligence activities of government entities. It provides that "This section does not prohibit any lawfully authorized investigative, protective, or intelligence activity of a law enforcement agency of the United States, a State, or a political subdivision of a State, or of an intelligence agency of the United States." This new provision was requested by the Department of Justice (DOJ).

On June 23, 2004, Rep. Goodlatte, Rep. Lofgren, and Rep. Lamar Smith (R-TX) introduced HR 4661 the "Internet Spyware (I-SPY) Prevention Act of 2004". See, story titled "Judiciary Committee Members Introduce Spyware Bill" in TLJ Daily E-Mail Alert No. 928, June 29, 2004,

The House Judiciary Committee approved its bill on September 8. See, story titled "House Judiciary Committee Approves Spyware Bill" in TLJ Daily E-Mail Alert No. 973, September 9, 2004.

Senate Judiciary Committee Approves Large Collection of Copyright Bills

10/7. The Senate Judiciary Committee approved a package of copyright bills at a meeting late on Thursday, October 9, 2004. This composite bill is titled the "Intellectual Property Protection Act of 2004", or "IPPA". See, text of bill [44 pages in PDF], and text of bill, in HTML, with hyperlinked table of contents, and U.S.Code hyperlinks. See, full story.

IIPA Releases Study of Size of Copyright Industries

10/7. International Intellectual Property Alliance (IIPA) released a study [48 pages in PDF] titled "Copyright Industries in the U.S. Economy: The 2004 Report". Stephen Siwek of Economists Incorporated wrote this study. See also, IIPA release [2 pages in PDF].

The report states that "The U.S. copyright-based industries continue to be one of America’s largest and fastest-growing economic assets." It examines three measurements of core copyright industries', and total copyright industries', contribution to the U.S. economy -- percentage of gross domestic product, percentage of employment, and revenues from foreign sales.

The study finds that the value added to the economy by core copyright industries "reached $626.2 billion or 6% of the U.S. economy in 2002. In the same year, the value added by the total copyright industries was $1.254 trillion or 12% of the U.S. economy."

The study defines "core copyright industries" to include "newspapers, book publishing, recording, music, and periodicals, motion pictures, radio and television broadcasting, and computer software (including business application and entertainment software)" and "book stores, news dealers and newsstands, and commercial photography operations".

The study also finds that "the core copyright industries employ 5,484,000 people or 4.02% of U.S. workers for 20026 total revenue generated from foreign sales of the core copyright industries is estimated to be at least $89.26 billion in 2002".

GAO Reports on PR China's Noncompliance with WTO Obligations

10/7. The Government Accountability Office (GAO) released a report [77 pages in PDF] titled "U.S.-China Trade: Opportunities to Improve U.S. Government Efforts to Ensure China's Compliance with World Trade Organization Commitments".

The report finds that "China has successfully implemented many of its numerous WTO commitments, including rewriting hundreds of trade-related laws and regulations and making required tariff reductions. However, USTR’s reports to Congress identified over 100 individual compliance problems concerning China’s implementation of its WTO commitments, according to our analysis."

The report states that the PR China has "weak intellectual property right enforcement, which may entail industry losses of nearly $2 billion according to some industry estimates, ..."

"China has had mixed success in resolving compliance problems", the GAO report continues. "For example, among the key areas that USTR identified as priorities, China resolved or made progress on well over half of the various problems in agriculture and services, while progress on intellectual property rights was limited to less than a quarter of the individual problems reported as of December 2003."

The report was prepared for the Chairmen of the Senate Finance Committee and the House Ways and Means Committee.

District Court Dismisses Complaint Challenging Senate Filibusters of Judicial Nominees

10/7. The U.S. District Court (DC) issued its opinion [PDF] in Judicial Watch v. U.S. Senate, a case involving a claim that the Senate's rule that allows for the blocking of judicial nominees by filibuster constitutes an unconstitutional supermajority requirement. The District Court dismissed the complaint. The dismissal is based upon a strained application of the concept of standing, rather than an application of the political question or separation of powers doctrines.

Judicial Watch, Inc. is a Washington DC based litigation group that frequently litigates in the federal courts. It filed a complaint in the District Court against the Senate, and several individual employees of the Senate, regarding its practice of blocking judicial nominations by filibusters, which under Senate Rule XXII and Senate Rule V can only be ended by a supermajority of 60%. Judicial Watch alleges that this has resulted in numerous judgeships remaining unfilled, which in turn, has resulted in increased delays in pending cases, including those brought by Judicial Watch.

The Senate moved to dismiss the claim, asserting that Judicial Watch lacks standing, that this is a nonjusticiable political issue, and that the claim is barred by the Speech or Debate clause of the Constitution.

Judge Colleen KotellyThe Court addressed only the standing issue. It held that Judicial Watch lacks standing.

Judge Colleen Kotelly (at left) wrote the opinion. She applied the three prong test set out in Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992). That is, standing requires that there be injury in fact, causation, and redressability.

She concluded that Judicial Watch fails to meet the injury in fact requirement because litigants are not injured by delays and backlogs in the litigation process. Plaintiffs have a right of access to the courts, but not a right to timely resolution of their claims.

Second, Judge Kotelly concluded that Judicial Watch's "claims of injury are simply too attenuated to be considered fairly traceable to the purportedly unconstitutional invocation of the cloture rule", and hence, Judicial Watch fails to meet the causation prong.

There are numerous roll call votes, published in the Congressional Record, which reflect that cloture votes to cut off filibusters of Appeals Court nominees, obtained a majority, but not a supermajority of 60%. The Department of Justice's Office of Legal Policy (OLP) states that there are currently 15 nominees to the Court of Appeals whose nominations are pending; 10 of these have been approved by the Senate Judiciary Committee, but have not received a vote on confirmation in the full Senate. See, OLP's nominations data web page. Moreover, the Judicial Conference of the United States has declared that judicial emergencies exist in several several circuits and many districts.

Third, Judge Kotelly concluded that Judicial Watch's claim lack redressability. That is, she asserted that declaring that the Senate's cloture rule is unconstitutional would not necessarily mean that votes would be held on the blocked judicial nominees.

Judge Kotelly was appointed to the Court by President Clinton, a Democrat. The practice that Judicial Watch challenges is being implemented by Senate Democrats to block President Bush, a Republican, from filling numerous Appeals Court judgeships, including several on the District of Columbia Circuit.

In contrast, the Supreme Court has held unconstitutional other acts involving legislative processes. See for example, Powell v. McCormick, 395 U.S. 486 (1969) and Baker v. Carr, 369 U.S. 186 (1962) and its progeny.

This case is Judicial Watch, Inc. v. U.S. Senate, et al., D.C. No. 1-03-01066 (CKK).

More News

10/7. The House approved the conference report on HR 4520, the "American Jobs Creation Act of 2004", by a vote of 280-141. See, Roll Call No. 509. The Senate is scheduled to consider this conference report on Friday, October 8.

10/7. The Senate Judiciary Committee did not mark up S 2560, the "Inducing Infringement of Copyrights Act of 2004". The most recent of many negotiating sessions was held Wednesday afternoon and evening, October 6, 2004.

10/7. The Department of Homeland Security (DHS) announced that it will create a program "to ensure that electronic and information technology is accessible for employees and consumers with disabilities", pursuant to Section 508 of the Workforce Investment Act of 1998. See, DHS release.

10/7. Rep. Darrell Issa (R-CA) and Rep. Tom Davis (R-VA) introduced HR 5253, the "Plant Breeders Equity Act of 2004", a bill to amend 35 U.S.C. § 162. The bill was referred to the House Judiciary Committee. Rep. Issa and others introduced an earlier version of this bill, HR 242, on January 8, 2003. See, story titled "Rep. Issa Introduces Amendment to Plant Patent Act" in TLJ Daily E-Mail Alert No. 581, January 13, 2003.

10/7. The Recording Industry Association of America (RIAA) announced and commented upon lawsuits brought by record industry entities in European nations against online music infringers. See, RIAA release.

House Approves Satellite Home Viewer Extension Reauthorization Act

10/6. The House approved HR 4518, the "Satellite Home Viewer Extension Reauthorization Act", or SHVERA, by voice vote. The Senate has yet to pass this bill.

The bill just approved by the House combines provisions from HR 4501, the House Commerce Committee bill, and HR 4518, the House Judiciary Committee bill. It allows satellite providers to continue providing local and network broadcasts to viewers otherwise unable to receive local programming in their area. It also allows satellite operators to carry certain out of market signals, to provide parity with cable service providers.

See also, S 2013, the "Satellite Home Viewer Extension Act of 2004 ", sponsored by Sen. Orrin Hatch (R-UT) and others. The Senate Judiciary Committee amended and approved this bill on June 17, 2004.

Rep. Fred Upton (R-MI), the Chairman of the Subcommittee on Telecommunications and the Internet, stated that "by extending expiring provisions, increasing parity between satellite television and cable operators, and promoting competition between satellite television and cable, this bill will significantly enhance consumer choice and service".

Senate Approves Bill Regarding Certification Marks

10/6. The Senate passed S 2796, an untitled bill related to certification marks, collective marks, and service marks.

Sen. Larry Craig (R-ID) and Sen. Richard Durbin (D-IL) introduced this bill on September 13, 2004 to address the July 11, 2003 opinion [26 pages in PDF] of the U.S. Court of Appeals (2ndCir) in Idaho Potato Commission v. M&M Produce Farm and Sales (also reported at 335 F.3d 130.)

In that case the Court held that the defendant could challenge the validity of Idaho's certification mark, even though it had entered into a licensing contract that included a no challenge clause.

See, story titled "Senators Introduce Bill Pertaining to Certification Marks" in TLJ Daily E-Mail Alert No. 980, September 21, 2004.

Sen. Craig is concerned about potatoes grown in Idaho. He stated that "We need to protect our potatoes from rogue distributors trying to sell inferior potatoes as Idaho potatoes -- tarnishing Idaho's long-standing reputation". However, certification marks are also used in other sectors, including the tech sector.

The House has yet to approve the bill.

Bill Summary. S 2796 makes two changes to the Trademark Act of 1946, which is codified at 15 U.S.C. § 1051, et seq. First, it provides that the Trademark Act is amended "in section 3 (15 U.S.C. 1053) in the first sentence, by striking ``protection´´ and inserting ``protections, rights, and privileges´´". Second, it provides that the Trademark Act is amended "in section 4 (15 U.S.C. 1054) in the first sentence, by striking ``protection´´ and inserting ``protections, rights, and privileges´´''.

15 U.S.C. § 1053 currently provides, in full, that "Subject to the provisions relating to the registration of trademarks, so far as they are applicable, service marks shall be registrable, in the same manner and with the same effect as are trademarks, and when registered they shall be entitled to the protection provided in this chapter in the case of trademarks. Applications and procedure under this section shall conform as nearly as practicable to those prescribed for the registration of trademarks". (Emphasis added.)

15 U.S.C. § 1054 currently provides, in part, that "Subject to the provisions relating to the registration of trademarks, so far as they are applicable, collective and certification marks, including indications of regional origin, shall be registrable under this chapter, in the same manner and with the same effect as are trademarks, by persons, and nations, States, municipalities, and the like, exercising legitimate control over the use of the marks sought to be registered, even though not possessing an industrial or commercial establishment, and when registered they shall be entitled to the protection provided in this chapter in the case of trademarks, except in the case of certification marks when used so as to represent falsely that the owner or a user thereof makes or sells the goods or performs the services on or in connection with which such mark is used. ..." (Emphasis added.)

Senate Approves Copyright Royalty and Distribution Reform Act

10/6. The Senate approved HR 1417, the "Copyright Royalty and Distribution Reform Act of 2004". This bill would replace copyright arbitration royalty panels (CARPs) with a Copyright Royalty Judge.

The version just approved by the Senate is a substitute amendment. Hence, it must also be approved by the House before it can go the the President for his signature.

The House approved its version of the bill on March 3, 2004. See, story titled "House Passes Copyright Royalty and Distribution Act" in TLJ Daily E-Mail Alert No. 849, March 4, 2004.

Sen. Orrin Hatch (R-UT) stated on the floor of the Senate that "the Hatch-Leahy substitute to H.R. 1417 retains most of the House-passed bill, but does contain a few important changes that are the product of several months of negotiations and discussions between the Hatch and Leahy offices and various stakeholders. The most significant substantive change involves the scope of available discovery in ratemaking proceedings."

Senate Judiciary Committee to Meet On Thursday

10/6. The Senate Judiciary Committee is scheduled to hold a business meeting on Thursday, October 7. This meeting had been scheduled for 9:30 AM, but late on Wednesday the Committee postponed its start until an unspecified time later in the day. The Committee may meet after the first floor vote in the Senate. The Committee has not announced a location for this rescheduled meeting.

The agenda for the meeting still includes S 2560, the "Inducing Infringement of Copyrights Act of 2004". Whether the Committee will actually consider this bill at this meeting is another question.

Senate staff and interested parties have continued to work on revisions to the bill this week. Also, further drafts of the bill have been prepared, but not publicly released. However, substantial disagreement remains between representatives of certain entertainment industries, and representatives of certain technology companies and consumer electronics companies.

Opponents of the bill have asked Sen. Orrin Hatch (R-UT), the Chairman of the Committee, and Sen. Patrick Leahy (D-VT), the ranking Democrat, not to mark up the bill.

On October 6, 2004, the Consumer Electronics Association (CEA), IEEE-USA, and NetCoalition wrote a letter to the Sen. Hatch and Sen. Leahy in which they stated that "we urge you not to move forward now with S. 2560".

They wrote that "the recording industry continues to propose language that would not solve the piracy problems in the manner you identified, but instead would effectively put at risk all consumer electronics, information technology products, and Internet products and services that aren't designed to the industry's liking. In fact, the most recent draft put forward by the recording industry at 1:00 am this morning is a large step backwards from previous drafts in that it would jeopardize more legitimate products and would create a flood of litigation, and thus would hurt vital sectors of the U.S. economy. In short, the draft is unacceptable."

Also on October 6, the Center for Democracy and Technology (CDT) wrote a letter [PDF] to the Chairman and ranking Democrat. The CDT argued that "the draft circulated by the RIAA early this morning would sweep in a broad range of legitimate consumer technologies, leaving those who simply design and distribute products like TiVo, online collaboration tools, new instant messaging systems, and even web browsers subject to litigation under S.2560."

The CDT added that "We understand that S.2560 is still scheduled for markup by the Judiciary Committee this week. Despite the progress being made, current drafts would chill the development of legitimate consumer technologies, and we urge you not to pass S.2560 out of Committee at this time."

Also on October 6 another set of groups sent a letter to the Committee urging it not to mark up the bill. This letter was signed by representatives of the American Association of Law Libraries, American Library Association, Association of Research Libraries, Consumer Federation of America, Consumers Union, Electronic Frontier Foundation, and Public Knowledge. They wrote that the latest drafts "would do great harm to future technological innovation".

Also on October 6, the Computer and Communications Industry Association (CCIA) sent a letter to the Committee in which it argued that "A bill that dramatically changes copyright law must be thoroughly discussed by all those who affected rather than rushed through the legislative process."

While many opponents of S 2560 have sought public dissemination of their views, and letters, many of the proponents of the bill have not.

Senate Has Yet To Approve Several Major House IP Bills

10/6. The Congress is on the verge of recessing for the November election. Several intellectual property bills that have already been approved by the House have yet to be approved by the Senate. These include HR 4077 (Piracy Deterrence and Education Act), HR 1561 (USPTO fee bill), and HR 2391 (CREATE Act).

The House approved HR 1561, the "United States Patent and Trademark Fee Modernization Act of 2003", on March 3, 2004 by a vote of 379-28. See, Roll Call No. 38. This bill contains increases in user fees that implement the U.S. Patent and Trademark Office's (USPTO) 21st Century Strategic Plan. It also provides for U.S. outsourcing of patent searches, and an end to the diversion of user fees to subsidize other government programs. See, story titled "House Passes USPTO Fee Bill", also published in TLJ Daily E-Mail Alert No. 849, March 4, 2004.

The House approved HR 4077, the "Piracy Deterrence and Education Act of 2004" on September 28, 2004 by voice vote. See, story titled "House Approves Copyright Bill" in TLJ Daily E-Mail Alert No. 986, September 29, 2004. This is a large bill with many provisions. It provides for the creation of a voluntary program at the Department of Justice (DOJ) to provide notices to apparent infringers. It amends 17 U.S.C. § 411 to allow federal prosecutors to take action against early pirates without having to wait for the completion of the registration process. It criminalizes using camcorders to copy movies in movie theatres. It increases criminal penalties. It also includes the "Family Movie Act of 2004", which is also known as the ClearPlay bill; it provides an exemption from copyright infringement for skipping content.

There is also the matter of the CREATE Act, a bill pertaining to collaborative research. The House passed HR 2391, the "Cooperative Research and Technology Enhancement (CREATE) Act", on March 10, by a voice vote. The bill amends Section 103(c) of the Patent Act, which is codified at 35 U.S.C. § 103, to address the August 8, 1997 opinion of the U.S. Court of Appeals for the Federal Circuit in OddzOn Products, Inc. v. Just Toys, Inc., which ruled that derived prior art may serve as evidence of obviousness. See, story titled "House Passes CREATE Act" in TLJ Daily E-Mail Alert No. 854, March 11, 2004. The Senate has already passed an identically worded bill, S 2192. The remaining issue is who gets to claim more credit for the bill. The House bill is on the Senate Judiciary Committee's agenda for its Thursday, October 7 meeting.

If these bills are not approved by the Senate in the next few days, or in a special session following the November election, then they will lapse. The 109th Congress, which will meet in late January of 2005, will start the legislative process anew.

More Capitol Hill News

10/6. The Senate approved S 2845, the "National Intelligence Reform Act of 2004" by a vote of 96-2. See, Roll Call No. 199.

10/6. The House debated and held a voice vote on HR 4661, the "Internet Spyware (I-SPY) Prevention Act of 2004", the House Judiciary Committee's spyware bill, late on Wednesday afternoon, October 6. The House postponed its roll call vote on the bill. At 3:00 AM on October 7, but still during the October 6 legislative day, the House agreed to postpone the roll call vote until October 7.

10/6. The House Committee on Veterans’ Affairs' Subcommittee on Oversight and Investigations held a hearing on smart card usage by federal agencies. See, prepared testimony of Ben Wu (Department of Commerce) and prepared testimony [21 pages in PDF] Linda Koontz (Government Accountability Office).

US Chamber Offers Communications Policy Recommendations

10/6. The U.S. Chamber of Commerce hosted a conference, and released a report [161 pages in PDF], both titled "Sending the Right Signals: Promoting Competition Through Telecommunications". See also, abridged version [16 pages in PDF].

The report states that "regulators have placed an overreliance on network-sharing regulations by dictating the prices entrants pay to use existing facilities. In turn, regulators have placed entirely too little emphasis on policy measures that would enlist new entry."

The report makes the following policy recommendations:

The reports argues that implementing these policies would increase gross domestic product and create jobs.

The report was written by Thomas Hazlett (Manhattan Institute), Coleman Bazelon (Analysis Group), John Rutledge (Rutledge Capital), and Deborah Hewitt (William and Mary).

FTC Files Complaint Against Spyware Con Artists

10/6. The Federal Trade Commission (FTC) filed a civil complaint [14 pages in PDF] in U.S. District Court (DNH) against several defendants alleging unfair and deceptive trade practices in violation of Section 5(a) of the FTC Act, in connection with fraudulent dissemination of spyware.

The defendants are Seismic Entertainment Productions, Inc., Smartbot.net, Inc., and Sanford Wallace.

The complaint alleges deceptive marketing by the defendants of purported anti-spyware software named "Spy Wiper" and "Spy Deleter", that is actually spyware.

The complaint alleges that "Defendants, in numerous instances, have exploited particular vulnerabilities in certain versions of the Microsoft Internet Explorer web browser (“IE web browser”) to reconfigure consumers’ computers by installing software code onto their computers without their knowledge or authorization. The software code, among other things, (a) changes the IE web browser’s home page; (b) modifies the IE web browser’s search engine; and (c) downloads and installs various advertising and other software programs ... ; and (d) causes an incessant stream of pop-up advertisements to be displayed."

The filing of this complaint coincides with Congressional efforts to pass spyware related legislation. On October 5, 2004, the House approved HR 2929, the "Securely Protect Yourself Against Cyber Trespass Act", or SPY ACT, on a roll call vote of 399-1. See, Roll Call No. 495. On October 7, 2004, the House approved HR 4661, the "Internet Spyware (I-SPY) Prevention Act of 2004", by a vote of 415-0. See, Roll Call No. 503.

HR 2929 is the House Commerce Committee's spyware bill. It prohibits certain conduct with respect to spyware, and gives the Federal Trade Commission (FTC) civil enforcement authority. HR 4661 is the House Judiciary Committee's spyware bill. It amends Title 18 to provide criminal penalties for three of the most egregious uses of spyware.

There is currently no spyware specific statute. This complaint alleging violation of Section 5(a) of the Federal Trade Commission Act, which is codified at 15 U.S.C. § 45(a). It provides that "Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful".

See also, the FTC's prepared testimony for an April 29, 2004 hearing of the House Commerce Committee's Subcommittee on Commerce, Trade, and Consumer Protection on spyware.

The complaint seeks injunctive relief, rescission of contracts, restitution, and disgorgement of ill gotten gains.

In addition, the FTC will hold a press conference on Tuesday, October 12 regarding this action. See, notice.

People and Appointments

10/6. Sirius Satellite Radio, Inc. announced that beginning on January 1, 2006, Howard Stern, a talk radio performer, will be provided by Sirius. Stern stated that Sirius is "the future of radio". See, Sirius release. Sirius also filed a Form 8-K with the Securities and Exchange Commission (SEC) regarding its agreement with Stern. This filing states that there will be a Stern channel, created by Stern, and that Stern is expected "to develop and produce one or more additional channels of programming". The 8-K filing also states that "Our aggregate fixed obligations under the agreement are approximately $100 million per year." Neither Sirius' release, nor its 8-K filing, reference the Federal Communications Commission's (FCC) imposition of fines in connection with the content of Stern's past programs provided via terrestrial broadcast. See for example, story titled "FCC Fines Clear Channel $495,000" in TLJ Daily E-Mail Alert No. 874, April 12, 2004.

More News

10/6. The Progressive Policy Institute (PPI) released a paper [12 pages in PDF] titled "Radio Frequency Identification: Little Devices Making Big Waves". See also, executive summary. This paper states that "despite the tremendous potential benefits of RFID technology, privacy advocates worry it could lead to more detailed tracking of the products we buy, maybe even to the level of taking inventory of what is in our homes and what is on our person at any given time. Arguing that stores, corporations, and even libraries will use the technology to spy on people, RFID critics have threatened boycotts to derail the technology's adoption. In response, a number of companies have postponed item-level RFID programs and lawmakers in several states and the U.S. Congress have introduced legislation that, if passed, would curtail the use of RFID technology." It concludes that "the privacy alarms being raised are at best premature and at worst hypothetical and impractical. Because this is such a promising yet nascent technological application, PPI believes that the call for RFID legislation is not yet warranted." This paper was written by Julie Hutto (PPI) and Robert Atkinson (PPI).

10/6. The Office of the U.S. Trade Representative (USTR) announced that the U.S. will file a complaint with the World Trade Organization (WTO) against the European Union (EU) alleging that government subsidies of the Airbus are illegal under the WTO's Agreement on Subsidies and Countervailing Measures. The first step under WTO procedure is for the U.S. to file a Request for Consultations. Then, after 60 days, the U.S. could file a request to establish a WTO panel. See, USTR release and second release [4 pages in PDF].

10/6. Makan Delrahim, Deputy Assistant Attorney General in the Department of Justice's Antitrust Division, gave a speech at George Mason University. It was titled "The Long and Winding Road: Convergence in the Application of Antitrust to Intellectual Property".

Go to News from October 1-5, 2004.