TLJ News from May 21-25, 2005

State Department Official Hopes That When China Moves Up Tech Value Added Ladder It Will Then Enforce IPR

5/25. Anthony Wayne, Assistant Secretary of State for Economic and Business Affairs, gave a speech in Chicago, Illinois in which he discussed the theft of intellectual property in the People's Republic of China.

He said that this "is a struggle that may take years to win". He said that China should enforce IPR "for its own future growth. China would like its industries to move up the technological value-added ladder". He added that for "this industrial transformation will face barriers if Chinese holders of patents, trademarks and copyrights cannot count on their intellectual property being protected". He did not offer any explanation for why the Chinese government would then enforce the IPR of both domestic and foreign holders.

Anthony WayneWayne (at right) said that "My job is to help manage the Trade and Economic Issues portion of the U.S.-China relationship, working with my colleagues in USTR, Commerce, and Treasury."

He said that "Big problems remain in areas that affect products and services where the U.S. has a competitive advantage -- IPR, services, agriculture, government procurement of software, transparency, direct selling and distribution, standards, and industrial policies. This Administration is working vigorously to address these problems, using the most effective tools at our disposal, including our trade remedy laws."

He continued that China agreed to protect IPR in its 2001 World Trade Organization (WTO) accession agreement, but that China began "a slowdown in WTO implementation in 2003".

He identified two successes of U.S. diplomacy, first, in getting the Chinese government to back down on wireless encryption standards, and second, in the semiconductor value added tax (VAT) proceeding at the WTO.

He asserted that "This Administration ... places the highest priority on stemming the tide of intellectual property rights (IPR) infringement in China. Counterfeiting and piracy in China is out of control". He added that "We will achieve measurable progress on IPR, make no mistake about it. At the same time, we understand this is a struggle that may take years to win."

He then made the argument that China should eventually find that it is in its own interest to protect IPR. He said that "We believe that China should begin to take IP seriously not only to mollify foreign critics, like us, but for its own future growth. China would like its industries to move up the technological value-added ladder, and they are beginning to do so in computer technology, biotechnology and other fields. But this industrial transformation will face barriers if Chinese holders of patents, trademarks and copyrights cannot count on their intellectual property being protected. This trend is growing and is serious."

He cited a recent example of a Chinese phone manufacturer whose products were counterfeited in China. However, Wayne went on to state that many Chinese government practices discriminate in favor of domestic companies, and against foreign companies. He offered explanation for why, if the Chinese government were to protect the IPR of its domestic companies, it would also equally extend this protection to foreign companies.

Standards Setting and Extraction of IPR. Wayne said that "We have also seen a potentially troubling trend as some Chinese ministries have begun to promulgate Standards Policies that intentionally limit market access and aim to extract technology and intellectual property from foreign rights-holders. Many in U.S. industry see the objective of these policies as the support for development of Chinese industries that are higher up the economic value chain."

He said that "The so-called ``WAPI´´ (Wireless Authentication and Privacy Infrastructure) wireless encryption standard being promoted by China, along with the Chinese-specific wireless mobile handheld telephone ``3rd Generation´´ standard are perhaps the most well-known standards issues. But there are a range of such concerns related to standards, China's draft anti-competition law and worrying moves to require patent-holders to 'pool' their patents to conform with future Chinese standards."

Government Procurement of Software. Wayne described recent actions by the Chinese government. He said that "In November, 2004, China's Ministry of Information Industry and Ministry of Finance released an outline of the draft software regulations that would define ``domestic software´´ very narrowly -- to qualify, a product would have to be made in China, the IPR would have to be held by a PRC person, and China-based development costs would have to comprise at least 50 percent of total development costs. If domestic products or services are not available under reasonable terms, the draft regulations would permit foreign software to be considered, but preference would be given to foreign firms that conduct yet-to-be defined levels of China-based research and development, investment, subcontracting, or taxable transactions. In March 2005, China released a more complete draft of the measures, which maintains many of these restrictive conditions."

Wayne said that these proposed regulations "would put U.S. firms at a significant disadvantage in the Chinese market. In a country where piracy of computer software is rampant, government ministries together comprise, by far, the largest market for legitimate software."

He said that "We continue to raise this issue with Chinese officials".

Doha. Wayne said that "We expect China to take a leadership role in ensuring the Doha trade round moves forward on key topics, such as agriculture and non-agricultural market access issues, especially in trade among developing world countries."

Transparency. Wayne also discussed transparency in China. He said that "one overarching problem concerns Transparency. China's opaque regulatory process, overly burdensome licensing and operating requirements allow Chinese regulatory authorities to continue to frustrate efforts of U.S. providers of insurance, express delivery, telecommunications and other services to achieve their full market potential in China. While China's Ministry of Commerce has made laudable moves toward adopting WTO transparency norms, other ministries and agencies have lagged behind. The Administration remains committed to seeking improvements in this area, and we have specific suggestions concerning transparency that we believe will help foreign firms understand the Chinese market and work with the Chinese regulatory system."

While Wayne complained about the Chinese government's lack of transparency, the day before, Sen. Ted Stevens (R-AK), the Chairman of the Senate Commerce Committee (SCC), gave a speech to the National Spectrum Managers' Association in which advocated less transparency at the SCC and the Federal Communications Commission (FCC). He said of "the Sunshine Law", for example, "I really don't like certain aspects of that law".

FCC Reports Continuing Decline in Telephone Subscribership

5/25. The Federal Communications Commission's (FCC) Wireline Competition Bureau's (WCB) Industry Analysis and Technology Division (IATD) released its latest report [50 pages in PDF] titled "Telephone Subscribership in the United States".

In March 2005 the telephone penetration rate in the U.S. was 92.4%. It was 93.5% in November of 2004. This is a drop of over 1% in four months. The penetration rate was 95.5% in March of 2003. The FCC's figure has decreased in each of the last six reports. The report does not explain the cause of this trend. Nor does the FCC staff have an understanding of the cause. See also, FCC release [1 page in PDF].

See, full story.

Adelstein Angles for More FCC Regulation of Speech

5/25. Federal Communications Commission (FCC) Commissioner Jonathan Adelstein gave a speech to the Media Institute in Washington DC in which he made the case that the "increasing commercialization of American media", including news media, warrants renewed enforcement of existing FCC rules that regulate speech, as well as new rules.

Jonathan AdelsteinAdelstein (at right) decried what he described as "fake news". However, he made no reference in the prepared text of his speech to items that have literally been both "fake" and "news", such as recent news reporting by Jack Kelley and Jayson Blair. See for example, story in USA Today titled "Ex-USA TODAY reporter faked major stories", March 19, 2004, and story in CNN titled "New York Times: Ex-reporter faces fraud inquiry", May 13, 2003.

Rather, Adelstein began with the example of a celebrity TV gourmet who once said of frozen shrimp, "Fresh is not as fresh as frozen". Indeed, this was the title of the speech. Adelstein continued that there is "trend by TV chefs", and it "will undercut public trust" in TV cooking commentary. The state of TV shrimp commentary has the Commissioner steamed.

But, the problem is deeper than fish and shellfish. Adelstein said that TV "soap operas have woven cosmetic lines into their tales" and Coke is displayed on the TV program American Idol.

Adelstein lamented a bygone era when viewers could obtain "real news coverage" and "accurate information". There was once an "era of integrity" in American television. He mentioned Julia Child, who provided TV viewers with accurate information about cooking shrimp?

(Adelstein's source on the declining quality of TV cooking commentary is a Wall Street Journal story titled "The Sponsored Chef", April 22, 2005.)

Adelstein is outraged and wants the FCC to do something about it.

He discussed regulation of the content of broadcast speech. He said that "careful regulations to ensure that American broadcasters also serve the public interest have been wiped off the books over the last couple of decades."

He wants the FCC to enforce existing regulations regarding disclosure of "who is behind sponsored programming". Moreover, he argued that "where disclosure itself is not adequate for the audience to form such an understanding, stricter measures are needed." He cited one such example. "We need to move forward with an outright ban on interactive advertising to children through TV."

He complained about fake news and the state of the media. However, whenever he provided either specific or general examples, it was almost always in reference to radio, television, and cable television. He offered little criticism of the state of other media, including daily newspapers, periodical magazines, book publishing, or internet publications.

He did not state the reason for this. Nor did he assert his descriptions regarding the state of the media are limited to radio, TV and cable.

He complained about the "increasing commercialization of American media". He said that there is "a bottomless pit of commercialism in today’s media into which even icons we hold sacred are sinking and becoming sullied". He identified that culprits as corporation, their "PR agents" and their "shills".

He identified the practices of "video news releases" and "product placements".

"We see reports of video news releases masquerading as independent, legitimate news; PR agents pushing political and commercial agendas that squeeze out real news coverage and local community concerns; product placements turning news and entertainment shows alike into undisclosed commercials; and well-trained marketers preying on the unsuspecting minds of our young children."

He added that no good "comes from marinating children's brains in advertising".

Adelstein also asserted that compelling "disclosure of the source or sponsor of the information does not amount to government compelled speech, nor does it infringe First Amendment rights of broadcasters."

He continued that "Undisclosed promotions are not just wrong -- they are payola, and they are illegal. That applies to product placements, paid VNRs, or anything for which payment is made but not disclosed. It is high time to employ some lessons about the law so this does not continue happening."

He added that "We have a right to know that people who present themselves to be independent, unbiased experts and reporters are not shills hired to promote a corporate -- or governmental -- agenda."

Adelstein also condemned "media consolidation" at length in this speech, as he has done many times in the past. But, he added that media consolidation was not the topic of this speech.

Senate IP Subcommittee Holds Hearing on International IP Piracy

5/25. The Senate Judiciary Committee's Intellectual Property Subcommittee held a hearing titled "Piracy of Intellectual Property". The hearing focused on piracy of intellectual property in other countries, and measures related to the protection of intellectual rights, including the TRIPS agreement, Section 301 reviews and classifications by the Office of the U.S. Trade Representative (USTR), and the Generalized System of Preferences (GSP) program and other tariff preference programs.

Sen. Orrin Hatch (R-UT), the Chairman of the Subcommittee, wrote in his opening statement that "during the Cold War, it was said that the Soviet Union’s style of negotiation could be summed up as follows: What’s mine is mine ... and what’s yours is negotiable. If Russia, China, or any other government attempts to adopt this view with respect to their responsibilities to protect intellectual property under international trade law and agreements, I can assure you that public support for U.S. trade agreements will be undermined and there will be strong resistance from -- and appropriate action taken by -- members of Congress. To put a fine point on it, before the Congress votes in favor of Russia joining the WTO, many of us will have to be convinced that the Russian government is serious about cracking down on theft of U.S. intellectual property."

See also, prepared testimony of Marybeth Peters (Register of Copyrights), prepared testimony of Stephen Pinkos (Deputy Director of the U.S. Patent and Trademark Office), prepared testimony of James Mendenhall (acting General Counsel of the Office of the USTR), prepared testimony of Eric Smith (President of the International Intellectual Property Alliance), and prepared testimony of Robert Holleyman (P/CEO of the Business Software Alliance).

See also, stories titled "House Subcommittee Holds Hearings on IP Theft in China and Russia" and "Bush Says New USTR Will Stop IPR Piracy in China" in TLJ Daily E-Mail Alert No. 1,138, May 18, 2005.

People and Appointments

5/25. The Senate confirmed Priscilla Owen to be a Judge of the U.S. Court of Appeals for the 5th Circuit by a vote of 55-43. See, Roll Call No. 128.

5/25. President Bush nominated William Alan Jeffrey to be Director of the National Institute of Standards and Technology (NIST). Bush announced his intent to make this nomination on May 24. See, White House release.

5/25. President Bush nominated Kathie Olsen to be Deputy Director of the National Science Foundation (NSF). Bush announced his intent to make this nomination on May 24. See, White House release.

More News

5/25. The Government Accountability Office (GAO) released a report [PDF] titled "Electronic Government: Funding of the Office of Management and Budget’s Initiatives".

Court of Appeals Upholds § 514 of Uruguay Round Agreements Act

5/24. The U.S. Court of Appeals (DCCir) issued its opinion [9 pages in PDF] in Luck's Music Library v. Gonzales, affirming the judgment of the District Court. The Court of Appeals, like the District Court, held that § 514 of the Uruguay Round Agreements Act (URAA) does not violate the Constitution.

This case, like the earlier challenge to the Copyright Term Extension Act (CTEA) in the Eldred case, is essentially an attempt by activist attorneys to have the courts substitute their policy judgments for those of the Congress. In both cases, the litigants may have had weighty policy arguments, but the Courts declined to engage in policy judgments, and deferred to Congressional statute writing authority.

See, January 15, 2003 opinion [89 pages in PDF] of the Supreme Court issued in Eldred v. Ashcroft. See also, story titled "Supreme Court Upholds CTEA in Eldred v. Ashcroft" in TLJ Daily E-Mail Alert No. 584, January 16, 2003.

The URAA was HR 5110 in the 103rd Congress. President Clinton signed it into law on December 8, 2004. It became Public Law No. 103-465. It is now codified at 17 U.S.C. §§ 104A and 109. This act implements in the U.S. Article 18 of the Berne Convention for the Protection of Literary and Artistic Works.

The URAA restores copyright protection for certain foreign holders whose works entered the public domain in the U.S. for certain reasons.

The plaintiffs below, and the appellants before the Court of Appeals, are Luck's Music Library and Moviecraft. Luck's rents and sells classical orchestral sheet music. Moviecraft is a commercial film archive that preserves, restores, and sells old footage and films. Both assert that because of the URAA they may no longer freely distribute certain works in their portfolios.

They argued that the URAA violates Article I, § 8, Clause 8 of the Constitution, which provides that "The Congress shall have the Power ... to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."

On June 10, 2004, the U.S. District Court (DC) issued its Memorandum Opinion [21 pages in PDF] rejecting their argument. See also, story titled "District Court Upholds Constitutionality of § 514 of Uruguay Round Agreements Act" in TLJ Daily E-Mail Alert No. 920, June 17, 2004.

The Court of Appeals affirmed. It held that the plaintiffs "are wrong that the Clause creates any categorical ban on Congress's removing works from the public domain".

The plaintiffs argued that the purpose of the Authors and Inventors clause is to incent creation, and that copyright statutes must incent creation. But, they argued, a law that removes works from the public domain does not provide significant incentives for new creations because rewarding prior works will not provide any significant incentive because they have already been created.

The Court noted that "It is true, of course, that changes in the law of copyright cannot affect the structure of incentives for works already created. But the knowledge that Congress may pass laws like the URAA in the future does affect the returns from investing time and effort in producing works."

Moreover, the Court wrote that perhaps there need not be any incentive in the statute anyway. It reviewed the precedent on this issue, the Eldred case, and concluded that "It is by no means clear that Eldred requires a direct incentive at all."

The Court also wrote that the plaintiffs' arguments are not supported by history. "evidence from the First Congress points toward constitutionality. The Copyright Act of 1790 granted copyright protection to certain books already printed in the United States at the time of the statute’s enactment. ... If such works were unprotected by common law copyright, that statute would necessarily have granted protection to works previously unprotected -- that is, works in the public domain. The historical evidence on this point is contested, but as early as 1834 the Supreme Court was of the view that the Act of 1790 created new copyright protection rather than simply recognizing existing protections ..."

The plaintiffs' counsel include several veterans of the Eldred case, including Geoffrey Stewart and Jonathan Zittrain.

This case is Luck Music Library, Inc. and Moviecraft, Inc. v. Alberto Gonzales, et al., No. 04-5240, an appeal from the U.S. District Court for the District of Columbia, D.C. No. 01-2220 (RMU), Judge Ricardo Urbina presiding. Judge Williams wrote the opinion of the Court of Appeals, in which Judges Randolph and Roberts joined.

FTC Announces Effort to Educate ISPs About Spam Zombies

5/24. The Federal Trade Commission (FTC) issued a release that announces and describes a program titled "Operation Spam Zombies". The FTC describes this as "an international campaign to educate Internet Service Providers and other Internet connectivity providers about hijacked, or ``zombie´´ computers that spammers use to flood in-boxes here and abroad."

The release states that the "FTC, Department of Commerce, Department of Homeland Security and 33 agencies from Albania, Argentina, Australia, Belgium, Bulgaria, Canada, Colombia, Cyprus, Denmark, Germany, Greece, Ireland, Japan, Korea, Lithuania, Malaysia, Netherlands, Norway, Panama, Peru, Poland, Spain, Switzerland, Taiwan, and the United Kingdom have joined in this project."

The participating government entities "will send letters to more than 3,000 ISPs around the world, urging them to employ protective measures to prevent their customers’ computers from being hijacked by spammers."

The FTC did not announce or threaten any enforcement actions, or initiate any rule making proceeding. See also, the FTC's web page for "Operation Spam Zombies".

House Approves Business Checking Freedom Act

5/24. The House approved HR 1224, the "Business Checking Freedom Act of 2005", by a vote of 424-1. See, Roll Call No. 206.

This bill amends the Federal Reserve Act, the Home Owners' Loan Act, and the Federal Deposit Insurance Act to repeal the prohibition against the payment of interest on demand deposits. This bill also allows the Federal Reserve to pay interest on reserves that banks keep within the Federal Reserve system.

Rep. Sue Kelly (R-NY) and others introduced this bill on March 10, 2005. The House Financial Services Committee approved the bill on April 27. See also, House Report No. 109-81.

Rep. Kelly stated in the House on May 23 that "for the fifth time in three Congresses, we are here to pass legislation to bring our banking system into the 21st century. Five times this House has passed this legislation to help our small businesses, only for it to fall in the other body."

People and Appointments

5/24. President Bush announced his intent to nominate Timothy Flanigan to be Deputy Attorney General, the number two position in the Department of Justice (DOJ). He is currently SVP and General Counsel of Tyco International., the company previously run by Dennis Kozlowski. Flanigan previously worked for President Bush as Deputy Assistant to the President and Deputy Counsel. That is, he was an assistant to then White House Counsel, Alberto Gonzales, who is now the Attorney General. If confirmed by the Senate, Flanigan would once again be an assistant to Gonzales. During the administration of the elder President Bush, Flanigan worked in the DOJ's Office of Legal Counsel (OLC), including briefly as the Assistant Attorney General in charge of the OLC. He has been involved in selecting judicial nominees, and in the political contests over their confirmations, including that of Justice Clarence Thomas. President Bush will likely make at least one appointment to the Supreme Court this summer. Flanigan would be able to provide leadership of DOJ efforts to win confirmation of any nominees. But first, the process of Senate confirmation of Flanigan could be eventful. Flanigan has also worked for the law firm of White & Case. See, White House release.

Kathie Olsen

5/24. President Bush announced his intent to nominate Kathie Olsen (at right) to be Deputy Director of the National Science Foundation (NSF). She is currently Associate Director of Science in the President's Office of Science and Technology Policy (OSTP). She was previously Chief Scientist at the National Aeronautics and Space Administration (NASA). See, White House release.

5/24. President Bush announced his intent to nominate William Alan Jeffrey to be Director of the National Institute of Standards and Technology (NIST). He is currently Senior Director for Homeland and National Security and Assistant Director for Space and Aeronautics in the President's Office of Science and Technology Policy (OSTP). That is, he works for John Marburger. Previously, he was Deputy Director of the Department of Defense's (DOD) Defense Advanced Research Projects Office Agency's (DARPA) Advanced Technology Office (ATO). The ATO works on many communications and information technology related projects, including Next Generation Communications (XG). See, White House release.

5/24. Motorola's Board of Directors appointed Samuel Scott Lead Director for a one-year term. He has been a member of the board since 1993. He is also the Ch/P/CEO of Corn Products International. See, Motorola release.

5/24. Rambus name Mark Horowitz Chief Scientist. See, Rambus release.

5/24. 3Com named Marc Willebeek-LeMair Chief Technology Officer. He was previously the CTO and Chief Strategy Officer of TippingPoint, 3Com's security division. See, 3Com release.

More News

5/24. The Government Accountability Office (GAO) released a report titled "Internet Protocol Version 6: Federal Agencies Need to Plan for Transition and Manage Security Risks".

5/24. The House Judiciary Committee's Subcommittee on the Constitution and Subcommittee on Commercial and Administrative Law held a joint hearing titled "Economic Development and the Dormant Commerce Clause: the Lessons of Cuno v. Daimler Chrysler and Its Effect on State Taxation Affecting Interstate Commerce". See, prepared testimony of Bruce Johnson (Ohio Lieutenant Governor), prepared testimony [PDF] of Michele Kuhrt (Director of Taxes and Financial Administration, Lincoln Electric), prepared testimony [PDF] of Walter Hellerstein (University of Georgia School of Law), and prepared testimony [PDF] of Edward Zelinsky (Cardozo School of Law).

5/24. Reuters announced in a release that "it has received clearance from the European Commission for its pending acquisition of Moneyline Telerate, a global provider of real-time financial information, and it anticipates it will shortly receive early termination of the mandatory waiting period under United States antitrust laws. All other regulatory clearances necessary to complete the acquisition have been granted." The U.S. Department of Justice's (DOJ) Antitrust Division announced in a release that Reuters and Moneyline Telerate "will restructure Reuters' planned acquisition of Telerate in order to alleviate the Department's antitrust concerns. Under the restructuring, Telerate will license to HyperFeed Technologies Inc. its TRS software platform, which is used by companies to distribute and analyze a broad range of financial information, and Active8, which users need to interact with the TRS software platform."

5/24. Jon Dudas, the head of the U.S. Patent and Trademark Office (USPTO), gave a speech to 6th grade students at an elementary school in the state of Utah. He said that "Copying and downloading Star Wars video games and movies is not okay -- it's breaking the law because it is stealing someone else's property." See, USPTO release.

5/24. The Internal Revenue Service (IRS) published a notice in the Federal Register that recites and describes its temporary regulations relating to the computation and allocation of the credit for increasing research activities for members of a controlled group of corporations or a group of trades or businesses under common control. See, Federal Register, May 24, 2005, Vol. 70, No. 99, at Pages 29596-29607.

5/24. Michael Gallagher, head of the National Telecommunications and Information Administration (NTIA), gave a speech titled "Wireless Innovation: Driving U.S. Economic Growth". See, presentation slides [20 pages in PDF].

5/24. The U.S. Court of Appeals (DCCir) issued a per curiam order [1 page in PDF] in  denying Core Communications' petition for writ of mandamus. This proceeding is In re: Core Communications, Inc., Petitioner, U.S. Court of Appeals for the District of Columbia Circuit, No. 04-1179.

5/24. Sen. Ted Stevens (R-AK), the Chairman of the Senate Commerce Committee (SCC), gave a speech to the National Spectrum Managers' Association. He discussed how the Spectrum Relocation Bill was enacted by the Senate in December of 2004, the history of spectrum auctions, forthcoming legislation related to commercial use of spectrum, government use of spectrum, and digital television transition legislation. He also discussed the progress of his closed hearings, which he identifies as "listening sessions". He also again made a plea for greater secrecy and less transparency at both the SCC and the Federal Communications Commission (FCC).

House Approves Two Spyware Bills

5/23. The House approved HR 744, the "Internet Spyware (I-SPY) Prevention Act of 2005", by a vote of 395-1. See, Roll Call No. 200. The House also approved HR 29, the "Securely Protect Yourself Against Cyber Trespass Act", by a vote of 393-4. See, Roll Call No. 201. The Senate has yet to approve either bill.

House Approves Bill Regarding Trafficking in Counterfeit Marks

5/23. The House approved HR 32, the "Stop Counterfeiting in Manufactured Goods Act", by a voice vote. This bill amends the Criminal Code with respect to trafficking in counterfeit marks, including wrappers, boxes and stickers.

Rep. Joe Knollenberg (R-MI) and others introduced this bill on January 4, 2005. The House Judiciary Committee's (HJC) Subcommittee on Crime approved the bill on March 17. The full HJC approved the bill on April 13. See also, House Report No. 109-68.

The bill makes numerous changes to 18 U.S.C. § 2320, which pertains to "Trafficking in counterfeit goods or services"

For example, the bill amends § 2320(a) to impose criminal liability upon anyone who "intentionally traffics or attempts to traffic in labels, patches, stickers, wrappers, badges, emblems, medallions, charms, boxes, containers, cans, cases, hangtags, documentation, or packaging of any type or nature, knowing that a counterfeit mark has been applied thereto, the use of which is likely to cause confusion, to cause mistake, or to deceive".

Rep. Zoe Lofgren (D-CA), who represents a Silicon Valley district, explained during the floor debate that "Many counterfeit products are labeled with brand names or trademarks that consumers know and trust. However, under current law, trafficking in counterfeit labels is not illegal if the labels are not affixed to the counterfeit products. Counterfeiters have exploited this by importing the counterfeit labels and products separately, and then affixing the labels in the United States. This bill expands criminal penalties to include those who traffic in counterfeit labels and packaging. It also requires forfeiture of any property derived from the proceeds of the violation and requires restitution to the trademark owner."

The bill also provides that "Nothing in this section shall entitle the United States to bring a criminal cause of action under this section for the repackaging of genuine goods or services not intended to deceive or confuse." Rep. Lofgren commented that the bill "now includes language that will ensure that criminal sanctions do not reach legitimate businesses that repackage goods or services with no intent to deceive or cause confusion. The original bill left open the question of whether someone other than the manufacturer could affix marks to goods that could correctly identify the source. This confusion struck at the very heart of the parallel market in which third parties lawfully obtain goods and make them available in discount stores. Not only has this practice been upheld by the Supreme Court, but it also saves consumers billions of dollars each year."

This bill also provides for the forefeiture of "Any article bearing or consisting of a counterfeit mark used in committing a violation of subsection (a)" and "Any property used, in any manner or part, to commit or to facilitate the commission of a violation of subsection (a)".

Mike Zaneis of the U.S. Chamber of Commerce stated in a release that "Lawmakers have taken the essential step of ensuring that federal laws keep pace with the growing sophistication of counterfeiting activities in this country ... These criminal acts have significant personal, economic and social consequences and we must stop the trade in fake products from expanding."

The Senate has not approved this bill.

House Commerce Subcommittee to Hold Hearing On Discussion Draft of DTV Transition Bill

5/23. The House Commerce Committee's (HCC) Subcommittee on on Telecommunications and the Internet has scheduled a hearing for Thursday, May 26 at 11:30 AM on its discussion draft titled "DTV Transition Act of 2005".

This is a discussion draft. The bill has not yet been introduced. However, the HCC issued a release that describes the contents of this discussion draft.

The release states that the draft will "Require television broadcasters to cease transmitting programs in analog format by December 31, 2008."

The release also states that the draft imposes several requirements on the Federal Communications Commission (FCC). First, it states that the FCC would be required to "issue a report and order by December 31, 2006 on the final digital channel assignments for broadcasters, complete any reconsideration by July 31, 2007, and submit status reports to Congress every six months starting February 1, 2006 on the international coordination of the digital channel assignments with Canada and Mexico."

Second, it states that the FCC would be required to "educate consumers on the hard deadline and the options they will have to continue using analog televisions after the digital television transition."

Third, it states that the FCC would be required to "maintain the FCC's existing digital tuner-mandate deadlines for integrated television receivers that have 25-inch screens or larger, and to accelerate, to July 1, 2006, the deadline for televisions with 13- to 24-inch screens."

See, the FCC's Second Report and Order and Second Memorandum Opinion and Order [49 pages in PDF] in its proceeding titled "In the Matter of Review of the Commission's Rules and Policies Affecting the Conversion To Digital Television". It requires that 100% of units with screen sizes over 36 inches must include DTV tuners by July 1, 2005; 100% of units with screen sizes of 25 to 36 inches must include DTV tuners by July 1, 2006; and, 100% of units with screen sizes of 13 to 25 inches must include DTV tuners by July 1, 2007.

This FCC adopted this item on August 8, 2002. It is FCC No. 02-230 in Media Bureau Docket No. 00-39. See also, stories titled "FCC Mandates DTV Standards and Deadlines" and "CEA Will Appeal FCC DTV Order" in TLJ Daily E-Mail Alert No. 488, August 9, 2002; and story titled "DC Circuit Upholds FCC DTV Tuner Mandates Order" in TLJ Daily E-Mail Alert No. 768, October 29, 2003.

The HCC release also states that the discussion draft would "Require manufacturers to place labels on, and retailers to place signs adjacent to, analog-only televisions indicating that those televisions will need to be attached to a digital receiver, digital-to-analog converter box, or multichannel video service to continue receiving broadcast programming after December 31, 2008."

Finally, the release state that the draft would "Require cable operators to carry the primary video signal of digital must-carry broadcasters in the format broadcast. In addition to, but not in lieu of, such carriage, cable operators may convert a digital must-carry signal to analog anywhere between the head-end and the subscribers' premises so that the signal can be viewed on analog televisions. If cable operators do such conversion for any must-carry broadcaster in a market, they must do such conversion for all must-carry broadcasters in the market. The FCC may sunset the ``carry-one, carry all´´ obligation beginning Dec. 31, 2013. The FCC is authorized to create comparable regulations regarding satellite providers."

The release says nothing about broadcast flags or FCC authority to promulgate broadcast flag rules.

Rep. Fred Upton (R-MI), the Chairman of the Subcommittee on Telecommunications and the Internet, stated that "I am confident that at the end of the day, we will have a DTV bill that will deliver something of real value to American consumers as we approach the digital age. For nearly two months we have negotiated in absolute good faith with our Democrat counterparts and our hearing this week on the draft bill ensures that the process continues to move forward. We will continue to work on a bipartisan bill that I hope will enjoy widespread support on both sides of the aisle."

Supreme Court Denies Certiorari in Portland v. Qwest

5/23. The Supreme Court denied certiorari in Portland v. Qwest Corporation, Sup. Ct. 04-1260. See, Order List [9 pages in PDF] at page 3. This is a case involving 47 U.S.C. § 253 and local franchise fees on telecommunications carriers.

The District Court ruled that 7% municipal rights of way fees in Oregon do not violate Section 253. The Court of Appeals reversed in part, and remanded. This lets stand the opinion [19 pages in PDF] of the U.S. Court of Appeals (9thCir).

47 U.S.C. § 253(a) provides that "No State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service."

However, 47 U.S.C. § 253(c) provides that "Nothing in this section affects the authority of a State or local government to manage the public rights-of-way or to require fair and reasonable compensation from telecommunications providers, on a competitively neutral and nondiscriminatory basis, for use of public rights-of-way on a nondiscriminatory basis, if the compensation required is publicly disclosed by such government."

The Court of Appeals remanded to the District Court because it "failed to conduct an individualized § 253 preemption analysis for each city's ordinances, and misapplied our holding in City of Auburn v. Qwest, 260 F.3d 1160 (9th Cir. 2001)".

The City of Portland declared victory when the Court of Appeals ruled. Its counsel stated in a release [PDF] that "This decision represents a significant legal victory for cities in Oregon ... Although the court has ordered the lower court to make more detailed findings concerning some aspects of local ordinances to determine whether or not they comply with requirements of federal law, the court has left intact the right to impose revenue-based fees. The scope of the upcoming review by the lower court has also been narrowed significantly."

See also, story titled "9th Circuit Rules in Qwest v. Portland" in TLJ Daily E-Mail Alert No. 996, October 14, 2004.

Supreme Court Rules in Compelled Speech Case

5/23. The Supreme Court issued its opinion [PDF] in Johanns v. Livestock Marketing Association, a case involving the issue of compelled speech. Although, the compelled speech issue in this case is much different from the compelled speech issues associated with the Communications Act and Federal Communications Commission (FCC) regulation. The Supreme Court vacated the judgment of the Court of Appeals.

In the present case, the U.S. Department of Agriculture (USDA) taxes the sale and importation of beef, and then uses tax revenues to advertise beef products, pursuant to the Beef Promotion and Research Act of 1985. Several cattlemen, and two associations, challenged the constitutionality of this tax under the free speech clause of the Constitution.

The U.S. District Court held that the statute unconstitutionally compels the cattlemen to subsidize speech to which they object. The Court rejected the USDA's argument that the tax survives First Amendment scrutiny because it funds only government speech.

The U.S. Court of Appeals (8thCir) affirmed. However, it held that government speech status is relevant only to First Amendment challenges to the speech's content, not to challenges to its compelled funding. It further held that compelled funding of speech may violate the First Amendment even if the speech in question is the government's.

The Supreme Court vacated the judgment of the Court of Appeals. It held that since the speech involved in this case is speech by the government, it is exempt from First Amendment scrutiny.

The concept of compelled speech is also present in various debates over communications and technology related issues, such as forced access to cable facilities, must carry, equal time, free time for candidates, election campaign advertising disclosures, and truth in billing.

Groups Oppose Administrative Subpoenas in National Security Investigations

5/23. The Center for Democracy and Technology (CDT), and twenty-four other groups, wrote a letter [PDF] to Sen. Pat Roberts (R-KS) and Sen. Jay Rockefeller (D-WV), and the other members of the Senate Intelligence Committee, urging the Congress not to enact legislation that would give the Federal Bureau of Investigation (FBI) administrative subpoena power in national security investigations. The letter states that this "would allow the FBI to write its own search and disclosure orders with no judicial approval".

The letter states that "At the very time when there seems to be an emerging consensus around adding meaningful checks and balances to PATRIOT Act powers to protect against government abuse, ``administrative subpoenas´´ would represent a new, unchecked power. At the very time when the Attorney General is supporting amendments to strengthen judicial oversight of orders under Section 215 of the PATRIOT Act, authorization of  ``administrative subpoenas´´ would move radically in the opposite direction."

The Senate Intelligence Committee (SIC) will hold an open hearing on the USA PATRIOT Act on Tuesday, May 24 at 9:30 AM in Room 106 of the Dirksen Building. (The SIC has also scheduled a closed executive business meeting for Thursday, May 26 at 9:00 AM.)

James Dempsey of the CDT released his prepared testimony for the SIC in advance. He elaborates that "Intelligence investigations are special, in ways that make them preferable to the government, but also in ways that make them more dangerous to liberty than criminal investigations. First, intelligence investigations are broader. They are not limited by the criminal code. They can investigate legal activity. In the case of foreign nationals in the United States, they can focus solely on First Amendment activities. Even in the case of U.S. persons, they can collect information about First Amendment activities. In this context, the concept of ``relevance´´ has little meaning."

He adds that "intelligence investigations are conducted in much greater secret than criminal cases, even perpetual secret." Finally, he states that intelligence investigations do no culminate with criminal trials or administrative actions, which tend to expose abusive uses of investigatory powers.

Dempsey argues too that this is all important because new information technologies have resulted in a "storage revolution".

He writes that "a storage revolution is sweeping the field of information and communications technology. ISPs, websites and other online service providers are offering very large quantities of online storage, for email, calendars, photographs and even voicemail. Increasingly, ordinary citizens are storing information not in their homes or even on portable devices but on networks, under the control of service providers who can be served with compulsory process and never have to tell the subscribers that their privacy has been invaded."

More Supreme Court News

5/23. The Supreme Court issued five opinions, none of which involve technology.

5/23. The Supreme Court denied certiorari in Metronet Services Corp. v. Qwest Corporation, Sup. Ct. No. 04-1259. See, Order List [9 pages in PDF] at page 3.

5/23. The Supreme Court announced that it "will take a recess from Monday, May 23, 2005, until Tuesday, May 31, 2005." See, Order List [9 pages in PDF] at page 9.

More News

5/23. The Internal Revenue Service (IRS) published a notice in the Federal Register that recites and describes its temporary regulations relating to the filing of information returns by donees relating to qualified intellectual property contributions. See, Federal Register, May 23, 2005, Vol. 70, No. 98, at Pages 29450 - 29452. The IRS published a separate notice in the Federal Register that describes and sets the comment deadline (August 22, 2005) for its notice of proposed rulemaking (NPRM) regarding the filing of information returns by donees relating to qualified intellectual property contributions. See, Federal Register, May 23, 2005, Vol. 70, No. 98, at Pages 29460 - 29461.

5/23. The National Telecommunications and Information Administration (NTIA) released a report [53 pages in PDF] titled "World Radiocommunication Conferences: Recommendations for Improvement in the United States Preparatory Process". See also, NTIA release.

5/23. The House considered HR 1224, the "Business Checking Freedom Act of 2005", under suspension of the rules, on Monday afternoon, May 23. However, it postponed its roll call vote until Tuesday, May 24.

5/23. The Government Accountability Office (GAO) released a report [39 pages in PDF] titled "Information Security: Improving Oversight of Access to Federal Systems and Data by Contractors Can Reduce Risk". The report states that "the federal government relies extensively on contractors to provide IT services and systems" and that this reliance creates information security risks. For example, "malicious code can be inserted into agency software and systems". The report describes the information security risks, and identifies some things that federal agencies can do to mitigate the risks.

House to Vote on Spyware Bills

5/23. The House is scheduled to consider two spyware bills under suspension of the rules on Monday, May 23. See, Republican Whip Notice.

The House will consider HR 744, the "Internet Spyware (I-SPY) Prevention Act of 2005", sponsored by Rep. Bob Goodlatte (R-VA), Rep. Zoe Lofgren (D-CA), and others. This is the bill reported by the House Judiciary Committee that amends Title 18 to criminalize some of the more egregious uses of spyware.

The House will also consider HR 29, the "Securely Protect Yourself Against Cyber Trespass Act", sponsored by Rep. Mary Bono (R-CA) and others. This is the bill reported by the House Commerce Committee (HCC) that prohibits a broad range of conduct with respect to spyware, and gives the Federal Trade Commission (FTC) civil enforcement authority.

Both bills are likely to be debated on Monday afternoon, with votes postponed until 6:30 PM. Consideration under suspension of the rules means that no amendments can be offered, and that a two thirds majority is required for approval.

Earlier version of both of these bills were approved by the House late in the 108th Congress by overwhelming margins.

HR 744 (109th) is a re-introduction of HR 4661 (108th Congress), titled the "Internet Spyware (I-SPY) Prevention Act of 2004". The House approved HR 4661 by a vote of 415-0 on October 6, 2004. See, Roll Call No. 503. See also, story titled "House Approves Second Spyware Bill" in TLJ Daily E-Mail Alert No. 993, October 8, 2004.

HR 29 (109th), as reported by the HCC, is a much revised version of HR 2929 (108th), also titled the SPY ACT, which the House approved by a vote of 399-1 on October 5, 2004. See, Roll Call No. 495. See also, story titled "House Passes First Spyware Bill" and story titled "Summary of House Commerce Committee Spyware Bill" in TLJ Daily E-Mail Alert No. 991, October 6, 2004.

The HJC approved HR 744 by voice vote, without amendment, at its mark up session of Wednesday, May 18. The HJC held no hearings in the 109th Congress on the subject of spyware.

The HCC approved HR 29 on March 9. It held a hearing, and mark ups at the subcommittee and full committee levels. For more on the content and legislative history of HR 29, see story titled "House Commerce Committee Approves Spyware Bill" in TLJ Daily E-Mail Alert No. 1,092, March 10, 2005; story titled "House Subcommittee Marks Up Spyware Bill" in TLJ Daily E-Mail Alert No. 1,080, February 22, 2004; and story titled "House Commerce Committee Holds Hearing on Spyware Bill" in TLJ Daily E-Mail Alert No. 1,064, January 27, 2005.

The Senate has not taken any action on either HR 744 or HR 29. However, on March 20, 2005, Sen. Conrad Burns (R-MT), Sen. Ron Wyden (D-OR), Sen. Barbara Boxer (D-CA), and Sen. Bill Nelson (D-FL) introduced S 687, titled "The Spy Block Act". The Senate Commerce Committee held a hearing on May 11, 2005. See, story titled "Senate Commerce Committee Holds Hearing on Spyware" in TLJ Daily E-Mail Alert No. 1,136, May 16, 2005.

More News

5/21. Michael Gallagher, head of the National Telecommunications and Information Administration (NTIA), gave a speech in San Diego, California, titled "The Bush Administration's Commitment to Implementing New Technologies". See, presentation slides [13 pages in PDF].

Go to News from May 16-20, 2005.