News from March 6-10, 2005

FCC Adopts Order Regarding Wireless Broadband in the 3650-3700 MHz Band

3/10. The Federal Communications Commission (FCC) adopted, but did not release, a Report and Order and Memorandum Opinion and Order regarding non-exclusive licensing of use of the 3650-3700 MHz band by wireless internet service providers (WISPs).

First, this item protects incumbents in this band, existing satellite earth stations and grandfathered federal radar stations. Then, this item requires licensing, without auctions, and provides for multiple, non-exclusive licenses, for technologies using contention based protocols. The FCC calls this a "hybrid approach", adopting characteristics of both licensed and unlicensed models.

The FCC issued a short release [PDF] describing this item, and three Commissioners wrote brief statements.

FCC Chairman Michael Powell wrote in his statement [PDF] that with these new rules, this band "should be attractive to entrepreneurial WISPs, community-based networks, and others interested in providing broadband in rural communities. With our flexible technical rules, this spectrum is also a potential home for new innovative technologies, such as WiMAX."

FCC Commissioner Michael Copps wrote in a statement [PDF] praising this item that "Entrepreneurial, municipal and mesh networks can begin operation without the heavy financial burden of an auction and competition will not be limited by the use of exclusive licenses. Auctions and exclusive licenses are powerful tools that have given us great success in other bands and we should not retreat in our use of these tools."

FCC Commissioner Jonathan Adelstein wrote in a his statement [PDF] that this approach is "bold" and "novel", and "should make it much easier for this spectrum to get in the hands of people who are ready and willing to use it."

The FCC's release states that "there is no limit on the number of licenses that can be granted, and each licensee will be authorized to operate on a shared basis with other licensees on all 50 megahertz of the band, subject to restrictions in geographic areas occupied by grandfathered Fixed Satellite Service (FSS) and Federal Government stations." Also, "Licensees will also be required to register all system base stations electronically with the Commission."

The FCC's release also states that "The Commission gave all licensees the mutual obligation to cooperate and avoid harmful interference to one another. Mobile stations also will be required to positively receive and decode an enabling signal transmitted by a base station."

This item is FCC 05-56 in ET Docket Nos. 04-151, 02-380, and 98-237, and WT Docket No. 05-96.

On April 15, 2004, the FCC adopted its Notice of Proposed Rulemaking (NPRM) [43 pages in PDF] regarding use of the 3650-3700 MHz band. The FCC released this NPRM on April 26, 2004. See also, stories titled "FCC Announces NPRM Regarding Unlicensed Use in the 3650-3700 MHz Band" in TLJ Daily E-Mail Alert No. 878, April 16, 2004, and "FCC Releases NPRM on Unlicensed Use of the 3650-3700 MHz Band" in TLJ Daily E-Mail Alert No. 886, April 28, 2004.

FCC Extends Truth in Billing Requirements to CMRS Carriers

3/10. The Federal Communications Commission (FCC) announced, but did not release, a Second Report and Order, Declaratory Ruling, and Second Further Notice of Proposed Rulemaking that extends truth in billing requirements to consumers' wireless phone bills.

The FCC issued a short release [PDF], and four Commissioners wrote statements. The FCC release states that the order removes "the existing exemption for Commercial Mobile Radio Service (CMRS) carriers from the rules requiring that billing descriptions be brief, clear, non-misleading and in plain language".

The FCC release also states that the order preempts certain types of state regulation, and asks for comments on related subjects.

FCC Chairman Michael Powell wrote in a separate statement [PDF] that "wireless service is inherently an interstate service", and hence, "it is simply not sustainable to have a multitude of divergent, and at times intrusive, state-by-state billing regulations." He wrote that this item "limits states' authority to enforce their own generally applicable consumer protection laws, to the extent such laws do not require or prohibit use of line items. Indeed, like our approach to voice over Internet protocol, we envision an active state partnership in enforcing whatever further rules and guidelines are adopted in this proceeding."

FCC Commissioner Kathleen Abernathy wrote in a separate statement [PDF] that "We also narrowly define our preemption to address only those state regulations that either require or prohibit the use of line items."

FCC Commissioner Michael Copps wrote in a separate statement [PDF] that he dissents to the preemption of state regulatory authority. Similarly, FCC Commissioner Jonathan Adelstein wrote in his dissenting statement [PDF] that because of preemption, "the most tangible result of this Order will likely be less oversight of consumers' bills, not more."

This item is FCC 05-55 in CC Docket No. 98-170 and CG Docket No. 04-208.

Senate Banking Committee Holds Hearing on Data Security

3/10. Senate Banking Committee held the first part of a hearing titled "Identity Theft: Recent Developments Involving the Security of Sensitive Consumer Information"

Sen. Richard Shelby (R-AL), the Chairman of the Committee, wrote in his prepared statement that "technology has profoundly changed our economy. Automation, depersonalized transactions and the electronic storage, manipulation and transfer of massive amounts of sensitive information are entirely routine. While there are significant benefits associated with these developments, we must also recognize that there are some significant risks associated with them as well."

He added that "our rapid fire, credit in a moment economy, provides tremendous opportunities for fraud and identity theft. If a crook gets hold of someone's personal information such as their  name, date of birth, and Social Security number, they can steal millions of dollars and wreak havoc on that person's life and credit history in only a matter of moments. For this reason, it is paramount that this kind of sensitive information is properly protected."

He said that one of the purposes of the hearing is "to learn whether the current legal framework provides adequate protections and has kept pace with changes in the marketplace".

Sen. Jon Corzine (D-NJ) stated in his prepared statement that "Technological innovation has brought about a data revolution that most consumers have benefited from through efficiency, expanding access, product marketing and lowered costs. And it's spurred the creation on an entire industry of data collectors and brokers who profit from the packaging and commoditization of one's personal and financial information. But regrettably, this technology has also provided identity thieves with an attractive target, and relative anonymity, with which to ply their sinister trade."

He added that "It's ironic that we’re holding this hearing today -- the same day that the full Senate is likely to pass a Bankruptcy bill intended to protect credit card companies and other financial entities from consumers -- but we’ve yet to act on comprehensive legislation aimed at protecting consumers from having their personal and financial information lost or stolen from those very same credit card companies and financial institutions."

Sen. Corzine stated that he will introduce a bill next week that will establish "the Federal Trade Commission as the primary regulator of non-financial third party data collectors", and require "all companies that maintain sensitive personal information to establish security systems that safeguard that information", pursuant to regulations promulgated by the FTC.

He said that his bill would also require companies to "immediately notify affected customers, federal regulators, credit reporting agencies and law enforcement when the breach or loss of sensitive customer information has occurred in a manner that could lead to identity theft".

Sen. Patrick Leahy (D-VT) wrote in his prepared testimony [PDF] that "The susceptibility of our most personal data to relatively unsophisticated scams and logistical mishaps is greatly disturbing. And this is before we consider the dangers posed by insiders, hackers, organized crime and terrorists."

Sen. Leahy too proposed legislation. He said that "Congress needs to act, but we need to do it right. Many of us have been examining the information-brokering industry and considering various legislative options. Consumers should know who has their data, what it is being used for and how they can correct mistakes. They should also have notice, consistent with law enforcement considerations, so that they can protect themselves. These all are matters of basic fairness."

He also said that "Congress needs to look closely at ensuring a standard of care consistent with the high value of this data, including penalty options when companies fall short of meeting those standards. Data brokers are increasingly partnering with the government in law enforcement and homeland security efforts. It might prove useful for Congress to consider the extent to which a company's privacy and security practices are qualifying factors in securing federal contracts, including appropriate penalties in the contract procurement process for any failures."

See also, prepared statement of Sen. Elizabeth Dole (R-NC).

FTC Chairman Deborah Majoras wrote in her prepared testimony [21 pages in PDF] that various activities of data aggregators are already regulated by numerous statutes and regulations, including the Fair Credit Reporting Act, Title V of the Gramm Leach Bliley Act, and Section 5 of the FTC Act.

See also, prepared testimony [5 pages in PDF] of Larry Johnson of the U.S. Secret Service, and prepared testimony [13 pages in PDF] of Amy Friend, Assistant Chief Counsel of the Comptroller of the Currency.

When the Senate Banking Committee continues this hearing next week, it will hear testimony from Don McGuffey (VP of ChoicePoint Services, Inc.), Evan Hendricks (Editor of Privacy Times), and Barbara Desoer (Bank of America).

More Capitol Hill News

3/10. The Senate approved S 256, the "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005", by a vote of 74-25. See, Roll Call No. 254. The House has not yet passed this, or a similar, bill.

3/10. The Senate Commerce Committee amended and approved S 268, the "Training for Realtime Writers Act of 2005". This bill, which is sponsored by Sen. Tom Harkin (D-IA) and others, provides competitive grants for training court reporters and closed captioners to meet requirements for realtime writers under the Telecommunications Act of 1996. See, S 268 as amended [11 pages in PDF], and Committee release. The Committee's original agenda for its March 10 meeting also included mark up of S __, a bill to reauthorize the National Telecommunications and Information Administration (NTIA). This item was removed from the agenda.

3/10. The Senate Commerce Committee amended and approved S 268, by voice vote, the "Training for Realtime Writers Act of 2005", a bill to provide competitive grants for training court reporters and closed captioners to meet requirements for realtime writers under the Telecommunications Act of 1996. This bill, which is sponsored by Sen. Tom Harkin (D-IA), authorizes the appropriation of $20 Million per year for FY 2006 through FY 2009. Under FCC rules, all English language television broadcasts must be captioned by 2006, and all Spanish language broadcasts must be captioned by 2010. The Committee approved an amendment offered by Sen. John Sununu (R-NH) that establishes a firm sunset date of 2009 for the program, and sets an administrative cost cap of 5%.

People and Appointments

3/10. The March 10 meeting of the Federal Communications Commission (FCC) was the last for outgoing Chairman Michael Powell. See, statement by Commissioner Kevin Martin.

More News

3/10. Alan Greenspan, Chairman of the Federal Reserve Board, gave a speech titled "Globalization", to the Council on Foreign Relations in New York, New York.

3/10. Michael Gallagher, head of the Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA), gave a speech in San Jose, California, titled "VoIP: The Catalyst for Universal, Affordable Broadband Access by 2007". See, presentation slides [PDF].

3/10. The government of Guatemala approved the Central American Free Trade Agreement (CAFTA). The U.S. Congress has yet to vote on the CAFTA. See, USTR release.

3/10. The U.S. Court of Appeals (10thCir) issued its opinion in Atlas Telephone Company v. Oklahoma Corporations Commission, an interconnection case involving rural telephone companies in the state of Oklahoma and commercial mobile radio service (CMRS) providers. The Court of Appeals affirmed the District Court's judgment, which affirmed the final orders of the Oklahoma Corporations Commission (OCC). This case is Atlas Telephone Company, et al. v. Oklahoma Corporations Commission, et al., and consolidated cases, U.S. Court of Appeals for the 10th Circuit, Nos. 04-6096 and 04-6101, appeals from the U.S. District Court for the Western District of Oklahoma, D.C. No. 03-CV-347-F.

Reed Elsevier Reveals Fraudulent Access to Databases of Personal Information

3/9. Reed Elsevier announced that its Seisint unit, which aggregates data on individuals, may have provided personal information on 32,000 individuals to unnamed persons or entities that may use the data for identity theft.

This announcement follows ChoicePoint's statement on February 21, 2005 that "organized criminals posing as legitimate companies gained access to personal information" about 145,000 individuals. See, story titled "ChoicePoint Describes Its Sale of Data to Identity Thieves" in TLJ Daily E-Mail Alert No. 1,081, February 23, 2005.

While data aggregators develop these electronic databases of information to enable commercial and law enforcement customers to authenticate identities and reduce theft and fraud, criminals have successfully accessed the databases of these data aggregates to steal identities and engage in theft and fraud.

Also, on February 25, 2005, Bank of America announced that it lost "computer data tapes" during "shipment to a backup data center". It stated in its release that "The missing tapes contained U.S. federal government charge card program customer and account information".

Reed Elsevier stated that "Information on approximately 32,000 individuals may have been fraudulently accessed", and that "The information accessed includes names, addresses, social security and drivers' license numbers, but not credit history, medical records or financial information."

Reed Elsevier did not identify who accessed the information. It did state that the information was accessed by "misappropriation by third parties of IDs and passwords from legitimate customers". Reed Elsevier did not identity, or characterize, the customers whose IDs and passwords were used. Nor did it disclose how the IDs and passwords were obtained.

Reed Elsevier also stated that its data products "provide critical fraud detection and identity authentication solutions to law enforcement, homeland security, commercial and legal customers that help to safeguard citizens and reduce consumers' financial losses, such as credit card and insurance fraud".

Reed Elsevier stated in a September 1, 2004 release that LexisNexis U.S. "closed on its acquisition of Seisint, Inc., a U.S.-based provider of information management products and services, for $775 million. LexisNexis is a member of Reed Elsevier Group plc".

Reed Elsevier added that "Seisint will become part of the LexisNexis U.S. Risk Management business of the Corporate and Federal Markets division. The LexisNexis Risk Management business includes flagship products such as RiskWise®, PeopleWise® and Banko®. Risk Management products and services are used by lawyers, financial services, insurance, telecommunications and retail businesses, the Federal Government and law enforcement agencies. Those products and services are used to authenticate identity, predict fraud, control credit and fraud losses, to improve risk assessment and communicate with customers during the customer-management cycle. LexisNexis PeopleWise services help companies create better, more productive workplaces through pre-employment screening and background checking."

This announcement also came just prior to Congressional hearings on the nature and extent of security of electronic databases that aggregate personal information. On Thursday, March 10 the Senate Banking Committee held the first part of a hearing titled "Identity Theft: Recent Developments Involving the Security of Sensitive Consumer Information". See, story titled "Senate Banking Committee Holds Hearing on Data Security" in TLJ Daily E-Mail Alert No. 1,093, March 11, 2005.

Then, on Tuesday, March 15 at 10:00 AM the House Commerce Committee's Subcommittee on Commerce, Trade and Consumer Protection will hold a hearing titled "Protecting Consumer's Data: Policy Issues Raised by Choice Point".

Also, Sen. Arlen Specter (R-PA), the Chairman of the Senate Judiciary Committee, announced on February 24 that his Committee could hold hearings on this subject. See, story titled "Senate Judiciary Committee Could Hold Hearings on ChoicePoint, Technology, Privacy and Security" in TLJ Daily E-Mail Alert No. 1,083, February 25, 2005.

Reps. Boucher, Doolittle and Barton Reintroduce Digital Media Consumers' Rights Act

3/9. On March 9, 2005, Rep. Rick Boucher (D-VA), Rep. John Doolittle (R-CA), and Rep. Joe Barton (R-TX) introduced HR 1201, the "Digital Media Consumers' Rights Act of 2005".

This is a reintroduction of HR 107 from the 108th Congress. HR 107 (108th), in turn, was based upon a bill introduced in the 107th Congress. For a summary of this legislation, see stories titled "Reps. Boucher and Doolittle Introduce Digital Media Consumer Rights Act" and "Summary of the Digital Media Consumer Rights Act" in TLJ Daily E-Mail Alert No. 532, October 4, 2002; and story titled "Reps. Boucher and Doolittle Introduce Digital Fair Use Bill" in TLJ Daily E-Mail Alert No. 582, January 14, 2003.

See also, stories titled "Chairman Barton Says Commerce Committee Will Mark Up Boucher Doolittle Bill in July", "House Commerce Committee's Primary Jurisdiction Over HR 107", and "Judiciary Committee Leaders Condemn Jurisdictional Power Grab" in TLJ Daily E-Mail Alert No. 924, June 23, 2004.

Rep. Barton is the Chairman of the House Commerce Committee (HCC). Rep. Boucher is a senior member of both the HCC and the House Judiciary Committee.

Rep. Boucher obtained the bill number 107 in the 108th Congress because 17 U.S.C. § 107 is the codification of the fair use exception to the exclusive rights of copyright. In the present Congress, Rep. Boucher waited to reintroduce his bill in order to obtain bill number 1201. 17 U.S.C. § 1201 is the anti-circumvention provisions of the DMCA.

House Commerce Committee Approves Spyware Bill

3/9. The House Commerce Committee amended and approved HR 29, the "Securely Protect Yourself Against Cyber Trespass Act", or SPY ACT, by unanimous votes. This is Rep. Mary Bono's (R-CA) spyware bill. The Committee approved one amendment [5 pages in PDF], offered by Rep. Cliff Stearns (R-FL), by unanimous voice vote. It then approved the bill, as amended, on a roll call vote of 43-0. See, full story.

House Judiciary Committee Approves Copyright Bill

3/9. The House Judiciary Committee approved S 167, the "Family Entertainment and Copyright Act of 2005", a large copyright bill, by voice vote.

This bill contains four separate copyright related parts. It includes the ART Act, which includes a provision that criminalizes certain uses of camcorders in movie theaters. It includes the Family Movie Act, which pertains to ClearPlay type content skipping technology. It also contains the Film Preservation Act and the Orphan Works Act.

The Senate approved this bill on February 1, 2005. See, story titled "Senate Approves Copyright Bill" in TLJ Daily E-Mail Alert No. 1,069, February 3, 2005. That story contains a more detailed summary of the contents of this bill.

The House Judiciary Committee's Subcommittee on Courts, the Internet and Intellectual Property (CIIP) approved the bill on March 3, 2005. See, story titled "House CIIP Subcommittee Approves Family Entertainment and Copyright Act" in TLJ Daily E-Mail Alert No. 1,088, March 4, 2005.

The Committee did not amend the bill at the March 9 meeting. It was approved, along with four other bills, en bloc, on a voice vote. There was only one audible vote against the package. However, Rep. Mel Watt (D-NC) explained that he opposed an unrelated bill in the en bloc package, HR 1038.

Rep. Howard Berman (D-CA), the ranking Democrat on the CIIP Subcommittee, expressed his concern about one component of the bill, the Family Movie Act. Rep. Bobby Scott (D-VA) also stated he does not approve of the Family Movie Act.

Rep. Howard BermanRep. Berman (at right) also engaged in a colloquy with Rep. James Sensenbrenner (R-WI), the Chairman of the full Committee, for the purpose of clarifying the legislative history of the Family Movie Act with respect to ad skipping.

He said that "We had a conversation last year about whether the bill might be read to provide a defense to manufacturers of ad skipping devices. You at that time argued that it could not, but promised to work with me to make that clear. We did that, and that resulted in the explicit language of HR 4077, from which this provision comes, which was in the bill last year, that passed the House. That specific language did not come over to us in the Senate bill. And, I was wondering if you would be willing to commit, as you did last year, to make sure that the Committee's report on the bill underscores the removal of the language in HR 4077 in no way renders the bill applicable in litigation over ad skipping."

Rep. Sensenbrenner responded that "I am happy to make sure that that will be in the Committee report, and instruct the staff on both sides of the aisle to make sure that the observations of the Gentlemen from California are contained in the Committee's report before it is final."

That is, Title II of S 167 is the Family Movie Act. It amends 17 U.S.C. § 110, which lists several exceptions to the exclusive rights of copyright. S 167 provides that the following is not an infringement of copyright: "the making imperceptible, by or at the direction of a member of a private household, of limited portions of audio or video content of a motion picture, during a performance in or transmitted to that household for private home viewing, from an authorized copy of the motion picture, or the creation or provision of a computer program or other technology that enables such making imperceptible and that is designed and marketed to be used, at the direction of a member of a private household, for such making imperceptible, if no fixed copy of the altered version of the motion picture is created by such computer program or other technology".

HR 4077 (108th Congress), which was approved by the House, but not the Senate, last year, further provided that this exception only applies if "no changes, deletions or additions are made by such computer program or other technology to commercial advertisements, or to network or station promotional announcements, that would otherwise be performed or displayed before, during or after the performance of the motion picture".

This qualification, which was in HR 4077, is not in the bill just approved by House Judiciary Committee.

Of course, the effect, if any, of this statement in the Committee report upon any interpretation of the statute by the judiciary remains to be seen.

House Judiciary Committee Approves Trademark Dilution Bill

3/9. The House Judiciary Committee amended and approved HR 683, the "Trademark Dilution Revision Act of 2005", on voice votes.

This bill is a reaction to the Supreme Court's March 4, 2003 opinion [21 pages in PDF] in Moseley v. V Secret. See, story titled "Supreme Court Rules in Trademark Dilution Case" in TLJ Daily E-Mail Alert No. 618, March 6, 2003.

The House Judiciary Committee's Subcommittee on Courts, the Internet and Intellectual Property (CIIP) held a hearing on February 17. See, story titled "CIIP Subcommittee Holds Hearing On Trademark Dilution Revision Act" in TLJ Daily E-Mail Alert No. 1,081, February 23, 2005.

The CIIP Subcommittee amended and approved this bill on March 3, 2005. See, story titled "House CIIP Subcommittee Amends and Approves Trademark Dilution Revision Act" in TLJ Daily E-Mail Alert No. 1,088, March 4, 2005.

Rep. Lamar Smith (R-TX), the sponsor of the bill, described it in a few brief sentences at the March 9 meeting. There was no further discussion or debate. The Committee approved an amendment in the nature of a substitute, and then the bill as amended, by voice votes.

House Science Committee Holds Hearing on FY 2006 R&D Budget

3/9. The House Science Committee's Subcommittee on Research held a hearing titled "National Science Foundation Budget and Management Challenges". Subcommittee members expressed support for increased funding of government research.

President Bush's FY 2006 budget request for the National Science Foundation (NSF) is $5.61 Billion. This is a 2.4 percent increase over the FY 2005 level. However, the FY 2005 level was 3.1 percent below the FY 2004 level.

The primary witnesses were Arden Bement (NSF Director), Mark Wrighton (Chairman of the Audit and Oversight Committee of the National Science Board), and Christine Boesz (Inspector General of the NSF). Others assisted in responding to questions.

Rep. Bob Inglis (R-SC), the Chairman of the Subcommittee, wrote in his opening statement [PDF] "Basic research is the lifeblood of innovation. It used to be that our large companies did the basic research -- companies like Bell Labs, IBM, and Xerox. They were supplemented by the work of the DOE, DOD, and NSF. Now, market pressures and shifting government priorities have pushed the burden almost entirely to the federal government, and, increasingly, NSF. Without NSF supporting basic research, our edge in science will slip away and an innovation gap will grow."

He added that "That's why I'm so concerned about the current NSF budget. Although there is a slight increase this year, it doesn’t make up for last year's cuts, and is still below the FY04 level."

Rep. Gil Gutknecht (R-MN) said that "We are going to ask you to do more with less, and we apologize for that."

Arden BementBement (at right) stated in his prepared testimony that "Investments in science and technology -- both public and private -- have driven economic growth and improved the quality of life in America for the last 200 years. They have generated new knowledge and new industries, created new jobs, ensured economic and national security, reduced pollution and increased energy efficiency, provided better and safer transportation, improved medical care, and increased living standards for the American people."

He added that "Investments in research and development are among the highest-payback investments a nation can make. Over the past 50 years technological innovation has been responsible for as much as half of the nation’s growth in productivity."

See also, prepared testimony [PDF] of Mark Wrighton and prepared testimony [PDF] of Christine Boesz.

Rep.Mike Sodrel (R-IN), whose district includes the University of Indiana, used the hearing to question Bement about the release and commercialization of government funded innovation, and intellectual property rights. Bement briefly explained the Bayh Dole Act, and stated that research results are disseminated, and that public sector resources are being used wisely to support the private sector.

The Bay Dole Act of 1980 is codified at 35 U.S.C. §§ 200, et seq. See also, Government Accountability Office (GAO) report [39 pages in PDF] titled "University Research: Most Federal Agencies Need to Better Protect against Financial Conflicts of Interest". This November 2003 report found that "The Bayh-Dole Act of 1980 has facilitated commercialization of university technology by giving universities, among others, the right to own their federally funded inventions and license them to businesses. As the importance of university research to technological innovation has increased, partnerships between universities and businesses have also grown, giving rise to concerns that financial conflicts of interest might restrict the dissemination of research results or bias the conduct or results of federally funded research."

One of the problems that the report identifies is that university researchers do not always make public their research findings or data. The report recommends the "development of uniform federal requirements for universities and other funding recipients to identify and resolve financial conflicts of interest that might bias the design, conduct, or reporting of federally funded research."

Rep. Sodrel also asked what is being do to prevent publicly funded research from being exported to foreign competitors. Bement said that much of the NDF funded research is being conducted by foreign graduate students, many of whom return to their countries. Bement added that researchers, and the fruits of research, tend to move globally.

More Capitol Hill News

3/9. The House Judiciary Committee approved, without amendment, HR 1036, a bill to amend Title 17 to make technical corrections relating to copyright royalty judges.

3/9. The House Judiciary Committee approved, without amendment, HR 1037, a bill to make technical corrections to the statutory license for satellite carriers under 17 U.S.C. § 119.

3/9. The House Judiciary Committee approved, without amendment, HR 1038, the "Multidistrict Litigation Restoration Act of 2005". This bill, which is sponsored by Rep. James Sensenbrenner (R-WI), makes several changes to 28 U.S.C. § 1407. This bill was approved by voice vote as part of an en bloc package of five bills.

3/9. The House Judiciary Committee approved, without amendment, HConRes 53, expressing the sense of Congress regarding the issuance of the 500,000th design patent by the U.S. Patent and Trademark Office (USPTO).

3/9. The House Judiciary Committee approved, without amendment, by unanimous voice vote, minority subcommittee assignments. Rep. John Conyers (D-MI), the ranking Democrat on the full Committee, also quipped that Democrats are beating on the doors to get onto the Committee.

More News

3/9. Lenovo Group Ltd announced in a release that the Committee on Foreign Investment in the U.S. (CFIUS) has completed its review of Lenovo's acquisition of IBM's personal computer division.

3/9. The Federal Communications Commission's (FCC) Wireless Broadband Access Task Force (WBATF) released a report [113 pages in PDF] titled "Wireless Broadband Access Task Force Report". The FCC also issued a Public Notice [2 pages in PDF] requesting comments on this report. Initial comments are due by April 22, 2005. Reply comments are due by May 23, 2005. This Public Notice is numbered DA 05-610. This proceeding is numbered GN Docket No. 04-163.

3/9. Kyle Sampson was named Deputy Chief of Staff and Counselor to the Attorney General Alberto Gonzales, and Chairman of the Department of Justice's (DOJ) Task Force on Intellectual Property. Sampson was Counselor to former Attorney General John Ashcroft. Before that, he was Associate Counsel to the President, where he worked for Gonzales. He previously was Counsel to Sen. Orrin Hatch (R-UT), a former Chairman of the Senate Judiciary Committee. Gonzales stated in a release that the Task Force on IP "is an important component in the Department of Justice's effort to protect the creativity, resourcefulness, and innovation of Americans and to curb the threat that intellectual property crimes pose to the nation's economic security ... The prosecution of intellectual property offenses remains a high priority, and this effort will ensure that the Department of Justice remains committed to the evolving challenges of intellectual property crime in the digital age." David Israelite was the previous Chairman of the Task Force on IP. He left the DOJ to become P/CEO of the National Music Publishers' Association (NMPA). See, NMPA release [PDF].

3/9. Arif Alikhan was named Vice Chairman and Executive Director of the Department of Justice's (DOJ) Task Force on Intellectual Property. He was an Assistant U.S. Attorney in the Central District of California (which includes the Los Angeles area), where he was the Chief of the Cyber and Intellectual Property Crimes Section. In his new position, he will be responsible for overseeing the implementation of the Task Force's recommendations and directing the DOJ's Computer Hacking and Intellectual Property (CHIP) program.

3/9. Viviane Reding, the European Commission for Information Society and Media, gave a speech titled "Stimulating Innovation and Enterprise in Europe's ICT Sector". She advocated more government spending on research and development, more private R&D spending, more collaborative research, and more public private partnerships. She also discussed regulation. She said that "the goal is to continue to create an internal market in information goods and services in Europe, in particular through simpler and better regulation". She also said that the EU is "developing and reinforcing an open and competitive internal market for such networks and services -- through more focused and better adapted regulation." Finally, she discussed intellectual property. She said that "We need to emphasise the leverage of our research results. We need to be setting the agendas internationally, not least through measures for instance for intellectual property protection, industrial consensus building and standards setting."

11th Circuit Overturns FTC Conclusion that Schering's Settlements of Patent Infringement Cases Violated Antitrust Law

3/8. The U.S. Court of Appeals (11thCir) issued its opinion [48 pages in PDF] in Schering-Plough v. FTC, a case involving the intersection of antitrust and patent law. The Appeals Court vacated an order of the Federal Trade Commission (FTC) in which the FTC concluded that Schering-Plough's settlement of two patent infringement actions violated the Sherman Act and the FTC Act.

Schering-Plough is a pharmaceutical company. The FTC is a federal regulatory agency with authority to enforce federal antitrust laws.

Ten years ago Schering filed two complaints in U.S. District Courts against two other drug companies, Upsher and ESI, alleging patent infringement in connection with their efforts to bring to market generic versions of a drug sold by Schering. The parties reached settlements in both cases before trial. Schering agreed to accelerate the dates at which the generic drugs could be sold, and also agreed to make payments to Upsher and ESI.

In 2001, the FTC filed an administrative complaint [12 pages in PDF] against Schering, Upsher, and ESI's parent corporation, alleging that Schering's settlements with Upsher and ESI were illegal agreements in restraint of trade, in violation of § 5 of the Federal Trade Commission Act (15 U.S.C. § 45), and in violation of § 1 of the Sherman Act (15 U.S.C. § 1). The complaint also charged that Schering monopolized and conspired to monopolize the potassium supplement market.

The FTC's administrative law judge (ALJ) held for Schering, and dismissed the complaint.

However, the full Commission reversed its ALJ. The FTC issued its Final Order [9 pages in PDF] on December 8, 2003, holding that Schering’s settlements with Upsher and ESI violated the FTC Act and the Sherman Act. It refrained from ruling that Schering's payments to Upsher and ESI made the settlements per se illegal. However, it concluded that the quid pro quo for the payment was an agreement to defer the entry dates, and that such delay would injure competition and consumers.

Schering filed a petition for review of this final order with the Court of Appeals. The Court of Appeals vacated the FTC's final order.

The Court of Appeals concluded that "Simply because a brand-name pharmaceutical company holding a patent paid its generic competitor money cannot be the sole basis for a violation of antitrust law. This alone underscores the need to evaluate the strength of the patent. Our conclusion, to a degree, and we hope that the FTC is mindful of this, reflects policy."

The Court continued that "Given the costs of lawsuits to the parties, the public problems associated with overcrowded court dockets, and the correlative public and private benefits of settlements, we fear and reject a rule of law that would automatically invalidate any agreement where a patent-holding pharmaceutical manufacturer settles an infringement case by negotiating the generic's entry date, and, in an ancillary transaction, pays for other products licensed by the generic. Such a result does not represent the confluence of patent and antitrust law. Therefore, this Court grants the petition for review."

And, the Court wrote, "Accordingly, we SET ASIDE the decision of the Federal Trade Commission and VACATE its cease and desist order."

This case is Schering-Plough Corporation v. Upsher-Smith Laboratories, Inc., U.S. Court of Appeals for the 11th Circuit, No. 04-10688, a petition for review of an order of the Federal Trade Commission.

Patent Law Reform

3/8. Patent law is much on the minds of many legislators and policy advocates in Washington DC. For example, Rep. Lamar Smith (R-TX) and Rep. Howard Berman (D-CA) stated last week that the House Judiciary Committee's Subcommittee on Courts, the Internet and Intellectual Property (CIIP) will hold hearings on patent law reform in April.

See, TLJ story titled "House CIIP Subcommittee to Take Up Patent Reform" in TLJ Daily E-Mail Alert No. 1,088, March 4, 2005. See also, story in the National Journal by Sarah Stirland titled "Will Congress Stop High-Tech Trolls?". It reviews various proposals for patent law reform.

On Monday, March 14 the Intellectual Property Owners Association (IPO) will host a day long conference titled "Patent Trolls and Patent Property Rights". See, conference brochure [PDF].

Also, on Thursday, March 10, the American Enterprise Institute (AEI) will host a panel discussion titled "The Patent System and the New Economy". The presenter will be Brad Smith, General Counsel of Microsoft. On March 2, 2005 the U.S. Court of Appeals (FedCir) issued its opinion [29 pages in PDF] in Eolas v. Microsoft, vacating in part, and affirming in part, the judgment of the District Court, and remanding. This ruling was a victory for Microsoft. See also, story titled "Federal Circuit Vacates in Eolas Patent Case" in TLJ Daily E-Mail Alert No. 1,087, March 3, 2004.

The other speakers at the AEI patent event will be Todd Dickinson (former head of the USPTO), John Duffy (George Washington University Law School), James DeLong (Progress and Freedom Foundation), and Andre Carter (Imiri Incorporated).

Bush Discusses Freedom and Creativity

3/8. President Bush gave a speech at the National Defense University at Ft. NcNair in Washington DC in which he discussed freedom and democracy in the Middle East.

He has spoken on this subject many times. However, in this speech he also stated that "It should be clear that free nations escape stagnation, and grow stronger with time, because they encourage the creativity and enterprise of their people."

Bush has spoken infrequently about the relation between individual freedom and creativity and innovation. He gave a more detailed exposition of his views on this subject in a speech on November 6, 2003 at the National Endowment for Democracy.

He stated then that "the prosperity, and social vitality and technological progress of a people are directly determined by extent of their liberty. Freedom honors and unleashes human creativity -- and creativity determines the strength and wealth of nations. Liberty is both the plan of Heaven for humanity, and the best hope for progress here on Earth."

See also, TLJ story titled "Bush Says Liberty Creates Innovation Which Creates Wealth", November 18, 2003. It summarizes President Bush's 2003 speech, and reviews the speeches and writings of others who either support, or refute, his argument.

President Bush does not frequently get analytical or philosophical about the nature and origins of technological innovation and creativity. His statements in speeches, such as those quoted above, are rare instances. They are also out of sync with what many others are saying on the subject in Washington DC.

There is wide consensus that innovation and creativity are good. Hence, on a wide range of legislative and regulatory proposals, proponents of one position or another often argue that their proposals will promote innovation and creativity. However, while there is wide consensus that innovation is good, the arguments regarding the source of innovation are varied, and often conflicting.

In one line of argument, the supporters of the government agencies that conduct research, such as the National Science Foundation (NSF), the National Institute of Standards and Technology (NIST) and the Department of Energy, argue that government agencies can plan and produce innovation. All they need is billions of dollars of taxpayer's money to fund them. Likewise, the large research universities and their supporters argue that they can can produce innovation, provided that the government gives them funding and grants.

See, for example, story titled "University and Industry Representatives Urge More R&D Funding" in TLJ Daily E-Mail Alert No. 1,079, February 17, 2005.

Similarly, many large corporations that conduct research argue that the government should give them tax breaks, such as the research and development tax credit, to incent them to produce innovation.

Also, some large corporations and universities argue that innovation comes from what they call the "innovation ecosystem". These views have been supported by some current and former government officials, particularly in the Department of Commerce. See for example, the Council on Competitiveness' (CC) report [68 pages in PDF] titled "National Innovation Initiative Report". Innovation comes from planned, government supported, innovation ecosystems.

In these views, there is little attention to the role of individuals, let alone President Bush's concept of individual freedom.

As another example, TechNet released its policy agenda [PDF] for 2005 at almost the same time that President Bush was delivering his latest speech. The TechNet report contains 40 pages of single spaced discussion of how innovation and creativity can be promoted. See, following story titled "TechNet Releases 2005 Policy Agenda".

However, the words "individual" and "people" appear in the report, but only in the context of patients, consumers, and technology users -- not in the context of innovators or creators. Moreover, neither the word "liberty" nor "freedom" appears once in the report.

Another line of argument is that innovation and creativity are incented by providing a property rights regime in conceptual creations. This theory is widely supported by one element of the Department of Commerce -- the U.S. Patent and Trademark Office (USPTO) -- and by companies and individuals that come up with the valuable and marketable innovations.

Yet another line of argument is advanced by companies and individuals that tend to consume, rather than create, conceptual products. They argue for less intellectual property rights (IPR) based restraints on their use of conceptual products.

Both the proponents and opponents of IPR sometimes speak in terms of individual freedom, but not always in the same context as President Bush. For example, proponents of peer to peer systems often speak of the individual's freedom to copy music, and the electronic device makers' and software developers' freedom to create new and innovative products.

TechNet Releases 2005 Policy Agenda

3/8. Tech Net released a report [30 pages in PDF] titled "The TechNet Innovation Initiative and 2005 Innovation Policy Agenda". See also, release summarizing this report.

The report states that "innovation drives economic growth, job creation and a better quality of life". It provides a list of policy recommendations for promoting innovation.

The report argues that the U.S. should strengthen education and develop a skilled technology workforce. The report states that this includes "Making science, math, engineering and technology education a national priority by increasing funding for math and science partnerships".

The report opposes the mandatory expensing of broad based employee stock options.

The report urges the U.S. to continue to negotiate free trade agreements that "safeguard intellectual property through trademark, copyright and patent protections as well as enhanced enforcement provisions".

The report urges the federal government to promote broadband deployment, by continuing to "reduce regulatory burdens and uncertainty that impede or delay the deployment of broadband networks through technology-neutral reforms", and by exercising "regulatory restraint with respect to emerging broadband applications and services including Voice over Internet Protocol communications".

The report urges the Congress to increase funding for basic research functions of the National Science Foundation (NSF).

The report supports legislation that would permanently extend the research and development tax credit.

The report also advocates creation of the position of Assistant Secretary for Cyber Security at the Department of Homeland Security (DHS). It also urges passage of HR 285, the "Department of Homeland Security Cybersecurity Enhancement Act". This bill is sponsored by Rep. Mac Thornberry (R-TX) and Rep. Zoe Lofgren (D-CA).

The report gives brief suupport to patent and copyright protections, but only in the context of negotiating trade agreements.

Former Rep. Rick White (R-WA) is the President and CEO of TechNet.

FTC Sues Fraudulent Anti-Spyware Software Seller

3/8. The Federal Trade Commission (FTC) filed a complaint [18 pages in PDF] in U.S. District Court (EDWash) against MaxTheatre and Thomas Delanoy alleging violation of Section 5 of the FTC Act in connection with their false and deception representatives in the marketing of purported anti-spyware products. On March 8, 2005, the District Court issued a Temporary Restraining Order and Order to Show Cause [PDF]. See also, FTC release.

The complaint alleges that the "defendants have marketed, sold, and distributed via the Internet various purported “anti-spyware” computer software products".

The complaint further alleges that "In an effort to induce consumers to purchase and download the defendants’ “anti-spyware” software from their web site, the defendants make numerous material deceptive representations in their marketing media."

"First, after describing the various dangers of spyware surreptitiously installed on a computer, the defendants represent that they have “scanned” or otherwise examined the consumer’s computer and have detected that spyware already resides on it. In numerous instances, the defendants make these spyware detection claims when the computer has no spyware residing on it."

"Second, the defendants represent that their “anti-spyware” software, which they sell for approximately $29.95, removes all or substantially all of the spyware that resides on a computer. In numerous instances, the defendants make these spyware removal claims when the defendants’ “anti-spyware” software fails to remove significant amounts of spyware that resides on a computer."

The complaint alleges that this violates Section 5(a) of the FTC Act, which is codified at 15 U.S.C. § 45(a). This 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."

The District Court issued an ex parte temporary restraining (TRO) order that orders the defendants to stop making false and deceptive representations. The TRO also compels the defendants to provide the FTC with information about their finances and sales.

This case is FTC v. MaxTheater, Inc. and Thomas L. Delanoy, U.S. District Court for the Eastern District of Washington, D.C. No. 05 -CV-0069-LRS, Judge Lonny Suko presiding.

FTC Releases Report on Spyware

3/8. The Federal Trade Commission (FTC) released a staff report [62 pages in PDF] titled "Monitoring Software on Your PC: Spyware, Adware, and Other Software". This comes just before the House Commerce Committee's March 9 markup of HR 29, the "Securely Protect Yourself Against Cyber Trespass Act". The House Judiciary Committee is likely to later mark up its own bill, with criminal penalties.

The FTC report states that spyware is a problem. However, it contains no recommendation that the Congress enact new legislation. In contrast, it suggests that the FTC and Department of Justice (DOJ) currently have sufficient statutory authority in this area.

The report reviews the one day workshop that the FTC held on April 19, 2004 titled "Monitoring Software on Your PC: Spyware, Adware, and Other Software". See also, transcript [298 pages in PDF] of the workshop, and the FTC's web page for this workshop, which contains hyperlinks to some of the prepared statements of participants.

The report states that "FTC staff and Department of Justice staff stated that their current statutory authority was sufficient to prosecute spyware distributors."

It elaborates that the DOJ "has statutory authority to prosecute distributors of software products, such as spyware, in cases where consumers’ privacy or security is compromised. The Computer Fraud and Abuse Act of 1984, for example, prohibits the unauthorized acquisition of data from a protected computer that results in damage." It adds that the "Section 5 of the FTC Act gives the agency the authority to challenge acts and practices in or affecting commerce that are ``deceptive´´ or ``unfair.´´", and this can include spyware related practices.

The report further states that "DOJ and FTC staff panelists explained that their law enforcement efforts had not been stymied by a lack of federal legislation but rather by the inherent difficulties in investigating and prosecuting spyware cases."

The report also identifies several problems associated with writing legislation on this topic. For example, it states that "Because of the challenges of developing a workable definition of spyware, nearly all panelists expressed the concern that legislation or regulations tied to a definition of the term ``spyware´´ might define the term so broadly that it would inadvertently cover some types of beneficial or benign software."

More News

3/8. The Senate Judiciary Committee held a hearing on the nomination of Thomas Griffith to be a Judge of the U.S. Court of Appeals for the District of Columbia. He is General Counsel to Brigham Young University in Utah. He was Counsel to the U.S. Senate from 1995 through 1999. Sen. Orrin Hatch (R-UT) praised him. See, release. Sen. Patrick Leahy (D-VT) criticized him in a prepared statement. The People for the American Way, a group that has criticized many of President Bush's judicial nominees, also criticized Griffith. See, release and letter [10 pages in PDF] to Senators.

3/8. Rachel Jagoda was named Staff Assistant to the House Science Committee. She previously worked for the Federation of American Scientists. Also, Zachary Kurz was named Staff Assistant to the Committee. He was previously an intern on the personal staff of Rep. Sherwood Boehlert (R-NY), the Chairman of the Committee.

3/8. The House Judiciary Committee's Subcommittee on Courts, the Internet and Intellectual Property (CIIP) held a hearing titled "Digital Music Licensing and Section 115 of the Copyright Act". See, 17 U.S.C. § 115. See also, prepared testimony of Wood Newton (songwriter), prepared testimony of David Israelite (P/CEO of the National Music Publishers' Association), prepared testimony of Larry Kenswil (President, eLabs/Universal Music Group), and prepared testimony of Jonathan Potter (Executive Director of the Digital Media Association).

Supreme Court Denies Certiorari in Covad v. BellSouth

3/7. The Supreme Court denied certiorari in Covad v. BellSouth. See, Order List [14 pages in PDF] at page 7. This is a case with a long history. It involves the Communications Act, the Sherman Antitrust Act, and the Supreme Court's January 13, 2004 opinion [22 pages in PDF] in Verizon v. Trinko.

This denial of certiorari lets stand the judgment of the U.S. Court of Appeals (11thCir). The Court of Appeals issued its opinion [18 pages in PDF] on June 25, 2004. It held that most, but not all, of Covad's claims are barred by the holding in the Trinko case. See, full story.

9th Circuit Rules in Wireless Communications Tower Case

3/7. The U.S. Court of Appeals (9thCir) issued its opinion [42 pages in PDF] in MetroPCS v. San Francisco, a case involving a local government's refusal to permit the construction and operation of a wireless telecommunications tower.

MetroPCS, a wireless service provider, sought license to build and operate a communications tower. It merely sought permission to put six antennas on an existing light pole on the top of a parking garage. But, San Francisco refused.

MetroPCS filed a complaint in U.S. District Court (NDCal) against San Francisco alleging several separate violations of 47 U.S.C. § 332(c)(7). MetroPCS alleged that San Francisco failed to issue a written denial, that its denial was not supported by substantial evidence, that its denial constituted unreasonable discrimination among providers of functionally equivalent wireless services, that its denial was based upon environmental concerns about radio frequency emission, and the it denial prohibited or had the effect of prohibiting the provision of wireless services.

The District Court granted summary judgment to San Francisco on all issues except MetroPCS's claim that San Francisco's denial violated Section 332(c)(7)(B)(i)(II). This provides that "The regulation of the placement, construction, and modification of personal wireless service facilities by any State or local government or instrumentality thereof ... shall not prohibit or have the effect of prohibiting the provision of personal wireless services." The District Court held that there were material facts in dispute on this claim, and denied San Francisco's motion for summary judgment. Both sides appealed.

The Court of Appeals affirmed the District Court on all items except the granting of summary judgment on the claim that San Francisco's denial constituted unreasonable discrimination among providers of functionally equivalent wireless services. Hence, the case is remanded, and there will be two issues for trial, unreasonable discrimination among providers, and prohibiting the provision of wireless services.

This case is MetroPCS, Inc. v. City and County of San Francisco, et al., U.S. Court of Appeals for the Ninth Circuit, App. Ct. Nos. 03-16759 and 03-16760, appeals from the U.S. District Court for the Northern District of California, D.C. No. CV-02-3442 PJH, Judge Phyllis Hamilton presiding.

FCC Adopts and Releases NPRM Implementing § 207 of SHVERA

3/7. The Federal Communications Commission (FCC) released a notice of proposed rule making (NPRM) [19 pages in PDF] in a proceeding titled "In the Matter of: Implementation of Section 207 of the Satellite Home Viewer Extension and Reauthorization Act of 2004 Reciprocal Bargaining Obligations".

This NPRM is FCC 05-49 in MB Docket No. 05-89. The FCC adopted this NPRM on March 2, 2005.

The SHREVA was enacted late last year as a part of the huge omnibus appropriations bill. Section 207 extends 47 U.S.C. § 325(b)(3)(C) of the Communications Act until 2010 and amends that section to impose reciprocal good faith retransmission consent bargaining obligations on multichannel video programming distributors (MVPDs). This section alters the bargaining obligations created by the Satellite Home Viewer Improvement Act of 1999 (SHVIA) which imposed a good faith bargaining obligation only on broadcasters. See, Section 207 of Public Law No. 108-447.

Initial comments will be due 30 after publication of a notice in the Federal Register. Reply comments will be due 45 days after publication.

People and Appointments

3/7. Gardner Foster was named Legal Advisor to the Chief of the Federal Communications Commission's (FCC) International Bureau (IB). He will provide legal and policy counsel for all Satellite Division matters. Foster has worked in the IB for three years as an Attorney Advisor in the Policy Division. See, FCC release.

3/7. Brad Lerner was named Legal Advisor to the Chief of the Federal Communications Commission's (FCC) International Bureau (IB). He will provide legal and policy counsel for all Policy Division matters. He was previously an Attorney Advisor in the IB's Multilateral Negotiations and Industry Analysis Branch. Before that, he was an Attorney Advisor in the FCC's Media Bureau's (MB) Video Division. Before going to work for the FCC, he worked for the Reporters Committee for Freedom of the Press. See, FCC release.

More News

3/7. The Supreme Court issued three opinions, none of which are technology related. See, Wilkinson v. Dotson [PDF], Ballard v. Commissioner [PDF], and Shepard v. United States [PDF].

3/7. The Supreme Court issued an order in MGM Studios v. Grokster, granting the acting Solicitor General's motion for leave to participate in oral argument, and for divided argument. See, Order List [14 pages in PDF] at pages 6-7. This is Sup. Ct. No. 04-480. The Supreme Court will hear oral argument on Tuesday, March 29. See also, Solicitor General's amicus curiae brief and story titled "Supreme Court Grants Certiorari in P2P Case" in TLJ Daily E-Mail Alert No. 1,036, December 13, 2004.

Go to News from March 1-5, 2005.