TLJ News from November 11-15, 2005

Rep. Pelosi Announces House Democratic Innovation Initiative

11/15. Rep. Nancy Pelosi (D-CA), the House Minority Leader, announced a House Democratic initiative titled "Innovation Agenda: A Commitment to Competitiveness to Keep America #1". This initiative, like previous announcements from both Democrats and Republicans over the years, contains many vague statements, but lacks specificity on many issues, and is silent on other issues.

Rep. Nancy Pelosi

Rep. Pelosi (at right) stated at an event in Washington DC that "over the past several months, weíve sought out the best possible thinking on how to secure Americaís place as the world leader in innovation. We went outside of Washington, and met with leaders and CEOs from many fields: academia, venture capital, and entrepreneurs from the high-tech, biotech, and telecommunications sectors who are creating the jobs of tomorrow."

She added that "We held forums with these leaders in Silicon Valley, Washington state, Chicago, Boston, Northern New Jersey, North Carolinaís Research Triangle, and we will hold more."

The initiatives proposes to "ensure that ... every American has access to affordable broadband Internet service and communications technology". To accomplish this, it advocates implementing "a national broadband policy that doubles federal funding to promote broadband for all Americans, especially in rural and underserved communities; create new avenues of Internet access including wireless broadband technologies, broadband over power lines, and affordable community-based options".

The initiative addresses federal spending on research and development. It proposes to "Double overall funding for the National Science Foundation, basic research in the physical sciences across all agencies, and collaborative research partnerships; restore the basic, long-term research agenda at the Defense Advanced Research Projects Agency (DARPA) to conduct long-range, high-risk, and high-reward research."

The initiative also proposes to "Modernize and permanently extend a globally competitive R&D tax credit". Republicans and Democrats have long advocated making permanent the research and development tax credit. However, for decades, the Congress has merely enacted a series of short temporary extensions.

The initiative proposes "promoting broad-based stock options for rank-and-file employees". However, it is silent regarding the expensing of employee stock options.

The initiative proposes to "Protect the intellectual property of American innovators worldwide, strengthen the patent system, and end the diversion of patent fees". It is notable that this initiative advocates ending the diversion of U.S. Patent and Trademark Office (USPTO) user fees to fund other government programs. However, the proposal is silent on a host of copyright and patent bills pending in the House and Senate.

The initiative proposes "doubling funding for the Manufacturing Extension Partnership (MEP) and the Advanced Technology Program (ATP)".

The initiative advocates training more math and science teachers. It advocates "tuition assistance to talented undergraduates and by paying competitive salaries to established teachers working in the fields of math and science". It advocates creating "a special visa for the best and brightest international doctoral and postdoctoral scholars in science, technology, engineering and mathematics". And, it proposes to "make college tuition tax-deductible for students studying math, science, technology, and engineering".

The initiative also advocates making "college tuition tax-deductible for students studying math, science, technology, and engineering."

The initiative is silent on promoting free trade. It does not address free trade agreements, protection of intellectual property rights in other countries, market access issues, international e-commerce, or the Doha Development Agenda.

The initiative is silent on a range of tax issues. For example, it does not address the excise tax on communications.

The initiative is also silent on support for preserving freedom of speech online, and particularly in the context of Federal Election Commission (FEC) regulation of bloggers.

Reaction. Robert Holleyman, P/CEO of the Business Software Alliance (BSA), stated in a release that "We support any effort in Congress -- by either political party -- to ensure continued investment in innovation for the future."

William Archey, P/CEO of the American Electronics Association (AEA) stated in a release that "We are impressed with both the content and the nonpartisan tone of this initiative".

Walter McCormick, P/CEO of the USTA, stated in a release that "The House Democratsí innovation agenda outlines several important issues that must be addressed to restore American leadership in the global economy. We appreciate Leader Pelosiís interest in these issues and believe that the best way to spur job creation, investment and innovation is to update the nationís telecom laws. We look forward to working with all House members to enact legislation this Congress that reflects the realities of todayís competitive marketplace."

Bush Announces Plans for Zero Tariffs on Multi-chip Integrated Circuits

11/15. President Bush sent a message to the U.S. Congress in which he stated that he intends to enter into an agreement with the Japan, Korean, Taiwan and the EU to apply zero tariffs to multi-chip integrated circuits.

He wrote that it is his intent "to enter into an agreement with the European Union, Japan, the Republic of Korea, and Taiwan on tariff treatment for multi-chip integrated circuits. Multi-chip integrated circuits are semiconductor devices used in computers, cell phones, and other high-technology products."

Bush continued that the US, Korea, Taiwan and the EU "will apply zero duties on these products as of an agreed date. The target date for entry into force of the Agreement is January 1, 2006. Japan already applies zero duties on these products and expects to ratify the Agreement formally in 2006."

He added that "although all major producers of multi-chip integrated circuits will be parties to the Agreement, we will seek to build on this Agreement by joining together to work in the World Trade Organization to increase the number of countries granting duty-free treatment to these products."

The message, which is dated November 14, was released in the White House web site on November 15.

Bush traveled to Japan on November 15. He will also visit Korea, the People's Republic of China, but not Taiwan, on this trip. See, transcript of statements by Bush and Japanese Prime Minister Koizumi in Kyoto, Japan, on November 15.

Bush also released a statement in Anchorage, Alaska, while en route to Japan, on November 14, regarding Doha round negotiations. He stated that "Prime Minister Blair has challenged World Trade Organization members to ensure that the Doha Development Agenda fulfills its market-opening potential that would help lift hundreds of millions of people out of poverty. I welcome and endorse his call for action to ensure a successful outcome to the Doha Round. ..."

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11/15. The Senate Homeland Security and Governmental Affairs Committee announced that it will hold a hearing titled "Ensuring Protection of American Intellectual Property Rights for American Industries in China" on Monday, November 21, 2005, in Beverly Hills, California. See, notice.

USTR Discusses IPR and Market Access in China

11/14. U.S. Trade Representative (USTR) Rob Portman traveled to the People's Republic of China to discuss intellectual property rights, market access, and other topics, with Chinese officials. He made the argument, as he and other U.S. officials have in the past, that protecting intellectual property rights is in China's self interest. See, speech [PDF] and transcript of news conference in Beijing, China.

Robert PortmanPortman (at right) said in his speech that "China must open up its economy further to US products, it must address limitations in market access that continue to hamper US companies seeking to participate in the Chinese market. And it must act vigorously to address intellectual property infringement that not only deprives US companies of their ability to participate in the Chinese market, but also damages them worldwide. In short, the benefits of economic opportunity and market access must flow more evenly in both directions."

"China must open up more to our exports and investment. It must address limitation and market access that continue to hamper US companies seeking to participate in the Chinese market", said Portman at his news conference. "China must also act vigorously to address intellectual property infringement. This was raised at every one of my meetings today."

Intellectual Property Rights. Portman said in his speech that "It is hard to develop a full and thorough system for the protection of IPR. But China is not building this system from scratch, and Chinese companies seem to understand these concepts pretty well when they invest in other countries. We have been working intensely with China on intellectual property protection for more than a decade -- beginning in the early 1990s. We have had several agreements and there has been significant improvement in some areas -- in the development of IP laws. We remain eager to work with the Chinese to help them improve their system. Just last week, for example, we had excellent meetings here in Beijing with representatives from both of our governments to discuss this problem and practical solutions. To date, though, the problem of intellectual property protection is not being solved quickly enough. There are obvious areas in which China can and should act immediately.

He singled out as easy targets for enforcement the "illegal distribution networks that are known to bring millions of fake DVDs and CDs to market" and the use of "fake software" by "government offices and government-controlled firms".

Portman argued that enforcing IPR is in China's self interest. He said that "the Chinese government has good reason to crack down on piracy themselves. While U.S. firms suffer huge losses from IP piracy and counterfeiting and while this is a disproportionate impact on US knowledge based exports, the losses faced by Chinese firms and by Chinese entrepreneurs and the Chinese economy are even greater. Well-known Chinese marks such as Haier, for example, suffer from copycat productions of their goods. Chinese musicians, movie studios, and authors lose profits from their own efforts because they cannot enforce their own legal rights throughout the country."

He added at his news conference that "The bigger loser is not the US. It is actually the Chinese economy and Chinese innovators, entrepreneurs, artists, authors, singers."

He elaborated that "I think itís in the interest of Chinese innovators and entrepreneurs and authors, and anybody who wants to protect their knowledge-based property would benefit. Itís also a sign of a mature economy though. Itís very difficult to see China taking the next step in terms of its economic development without providing more protection for intellectual property. Weíve seen this around the world in countries where there has been an evolution of protection of property that tends to go hand in hand with economic development. So, I do think that itís in their interest. Have they acknowledged that? Yes, they have."

Market Access. Portman said in his speech that "China makes it difficult for foreigners to fully own their investments. ... Beyond the limits on investment, there are also increasing numbers of technical barriers to trade that interfere with U.S. companies' access to the China market. Cumbersome, opaque, and unequally-applied rules in telecommunications, insurance, financial services and other sectors continue to stymie foreign firms."

He also said that "Despite clear WTO commitments, direct sales companies still cannot import U.S. products into China and sell them freely to their customers in accordance with their generally accepted business practices around the world. Nor can those companies pay their employees according to the same rules that those companies operate under in almost every other country in the world."

Doha Talks. Portman said at his news conference that "there are very few areas I can identify where China and the United States have a disagreement over Doha. We agree on the overall goal of a successful round because it will reduce barriers to trade, make our economies more efficient, and increase global economic growth.

But he added, "I want China to be more engaged, not less engaged, in Doha."

Bush to Discuss IPR with Asian Leaders

11/14. On November 14, 2005, President Bush will begin a trip to Japan, South Korea, People's Republic of China and Mongolia. Steve Hadley, the President's National Security Advisor, stated that Bush "is traveling to Asia to advance the interests of American workers, businesses and entrepreneurs by seeking expanded trade and economic opportunity, energy security and international property rights protection." See, transcript of news conference by Hadley.

In China, which systematically violates its treaty obligations with respect to intellectual property rights, the President will be joined by other administration officials, including Attorney General Alberto Gonzales and U.S. Trade Representative Rob Portman.

Bush will first travel to Japan, where he will meet with Prime Minister Koizumi, and visit the city of Kyoto.

Bush will then travel to Korea, to meet with Korea President Roh, and to attend the Asia-Pacific Economic Cooperation (APEC) meeting. See also, APEC 2005 Korea web site. While in Korea, Bush will also meet with the Prime Minister of Malaysia, the President of Indonesia, and ASEAN leaders.

Hadley stated that "The APEC nations are strong proponents of expanding trade. And the President will discuss the upcoming Doha Round of global trade negotiations at the APEC ministerial, but he will also be addressing bilateral trade issues as he visits with the individual leaders in the region."

Bush will then travel to China on Saturday. Hadley stated that Bush will meet with both President Hu and Premier Wen to discuss, among other topics, intellectual property rights protection. Hadley added that "Progress on intellectual property rights, currency reform and market opening are good for our companies, but they are equally good and important for China's own future prosperity, and that is the message that the President will take."

Then, on Monday, November 21, Bush will travel to Mongolia.

In addition, U.S. Trade Representative (USTR) Rob Portman will travel to China and Korea this week. Portman will meet with Chinese Minister of Commerce Bo Xilai and the National People's Congress Economy and Finance Committee Chairman Shi Guangsheng. He will also go to Busan, Korea, for the APEC meeting. See, USTR release.

Portman was in Geneva, Switzerland, last week for Doha talks. He traveled to Africa and India before his scheduled trips to China and Korea.

In addition, Attorney General Alberto Gonzales will travel to China to meet with law enforcement officials regarding IPR enforcement. Gonzales stated in a speech on November 10 that "I am traveling to China next week to seek new opportunities for better cooperation and coordination among our respective law enforcement agencies. I will be meeting with senior law enforcement ministers in China, and I plan to call on them for increased criminal enforcement of China's laws protecting the intellectual property rights of businesses in the U.S. and around the world."

NARA Requests Comments on Archiving Internet and Other Electronic Records

11/14. The National Archives and Records Administration (NARA) published a notice in the Federal Register that announces, and sets the comment deadline for, its draft NARA guidance for implementing Section 207(e) of the E-Government Act of 2002.

This statute, which is now Public Law 107-347, required an interagency committee to prepare a report within two years. It then required the NARA to adopt "policies and procedures", within one more year, that provide that federal statutes regarding archiving of government records "are applied effectively and comprehensively to Government information on the Internet and to other electronic records".

See, the Interagency Committee on Government Information's (ICGI) report [29 pages in PDF] titled "Recommendations for the Effective Management of Government Information on the Internet and other Electronic Records", and dated December 16, 2004.

Comments are due by December 29, 2005. See, Federal Register, November 14, 2005, Vol. 70, No. 218, at Pages 69165 - 69168.

People and Appointments

11/14. Scott Taub was named acting Chief Accountant at the Securities and Exchange Commission (SEC). He was previously the SEC's Deputy Chief Accountant, since September 2002. Prior to that, he worked for Arthur Andersen. See, SEC release.

11/14. The Senate announced that the Senate Intelligence Committee will hold a closed hearing on the nomination of Dale Meyerrose to be the Chief Information Officer (CIO) of the Office of the Director of National Intelligence on Thursday, November 17.

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11/14. The Supreme Court released two opinions, neither of which is technology related. It also released a relatively short order list. It denied certiorari in Six West Retail Acquisition, Inc. v. Sony Theatre Management Corp., a petition for writ of certiorari to the U.S. Court of Appeals (2ndCir). This is Sup. Ct. No. 05-332. See, Order List [9 pages in PDF] at page 2.

11/14. The Government Accountability Office (GAO) released a report [PDF] titled "Taxpayer Information: Options Exist to Enable Data Sharing Between IRS and USCIS but Each Presents Challenges". This is a study of just one government data disclosure program. It examines the transfer of data between the Internal Revenue Service (IRS) and the Department of Homeland Security's (DHS) U.S. Citizenship and Immigration Services (USCIS) Bureau. The report concludes that disclosing taxpayer data to the USCIS can assist the USCIS in making immigration eligibility decisions, and that disclosing immigration data to the IRS can enable the IRS to collect more taxes. It also makes recommendations for making these data transfer programs more effective in accomplishing these goals. This report is not about the consequences of this program, or other government data dissemination programs, for personal privacy. Although, the report does acknowledge several times that there are privacy issues, and that there is a federal Privacy Act. The report also references the use of data obtained from third party sources.

11/14. The Progress and Freedom Foundation (PFF) released a short paper titled "Networks and Copyrights: A False Analogy". The author is Richard Epstein, a law professor at the University of Chicago. This paper concludes that Google's new project involving the scanning and digitizing library books "is not protected by the standard account of fair use". This paper also addresses Google's arguments regarding opt outs, the nature of property rights, and takings of property. This paper also discusses Supreme Court Justice William Douglas's 1946 opinion in United States v. Causby (reported at 328 U.S. 256). This was a dispute between a chicken farmer, and the U.S. military, whose bombers' runway approach went "over this property at 83 feet, which is 67 feet above the house, 63 feet above the barn". This case attained some fame following Lawrence Lessig's use, or misuse, of this case in his recent book, Free Culture: How Big Media Uses Technology and the Law to Lock Down Culture and Control Creativity [Amazon]. Epstein wrote that "Lessig's plea for Google gains no strength from the analogies to the redefinition of property rights in the upper airspace. Google is not putting together a network. Its library will be valuable even if it is not complete, just like all other libraries that hold hard copies. The whole case here turns on the ease or difficulty of getting permissions from single owners who happen to be difficult to track down. The very fact that he and Google would allow opt outs from their system shows the vast difference in the cases." See also, story titled "Google, Publishers and Authors Debate Google's Print for Libraries Program" in TLJ Daily E-Mail Alert No. 1,239, October 25, 2005.

11/14. The U.S. District Court (DAriz) issued its Final Judgment and Order for Permanent Injunction and Other Equitable Relief [14 pages in PDF] in FTC v. Wealth Systems, holding that the defenants violated the Federal Trade Commission Act (FTCA) in connection with their marketing and selling internet based business opportunities via direct mail and telemarketing. See also, FTC release. This case is FTC v. Wealth Systems, Inc., Ecommerce, LLC, Martin Q. Wilson, and Shane Roach, U.S. District Court for the District of Arizona, D.C. No. CV-05-0394 PHX JAT, Judge James Teilborg presiding.

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11/14. The AEI Brookings Joint Center for Regulatory Studies published a paper [29 pages in PDF] titled "Universal Telecommunications Service in India". The authors are Roger Noll and Scott Wallsten. The paper focuses on India's attempts to promote universal access to telecommunications services. It finds that "Indiaís universal service policies may unfortunately have the unintended consequences of deterring investment in precisely the areas it hopes to target." While India's approach includes policies not employed in the United States, such as distributing universal service taxes through an auction process, much of this paper's criticism of the Indian government's policies could also be applied to the U.S. regime. The paper concludes that subsidies discourage competition, and that competition is the best way to increase access to services.

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11/11. Chris Cox, Chairman of the Securities and Exchange Commission (SEC), gave another speech on the use of interactive data. See also, story titled "SEC Chairman Cox Discusses Use of Interactive Data in Corporate Reporting" Alert No. 1,250, November 9, 2005. Cox stated in his Veterans' Day speech in Boca Ratan, Florida, that "With interactive data, the information in SEC reports could be made instantly searchable by anyone with an Internet hookup. Not just the disclosure documents, but the data within them will be searchable and retrievable. Interactive data will dramatically improve the usefulness of the entire disclosure exercise." He continued that "Right now, in countries around the world, companies, software designers, the accounting profession, and regulators are teaming up in an unprecedented global effort. In much the same way that Linux has developed an open source operating system for computers worldwide, a computer language for financial reporting called XBRL is being developed as a global open standard." He added that data "will not only be instantly searchable and retrievable, but you'll also be able to immediately download them into spreadsheets and an unlimited number of software applications." Cox also explained the nature of XBRL, and reviewed the SEC's February 2005 rule changes that initiated the SEC's XBRL Voluntary Program.

Go to News from November 6-10, 2005.