TLJ News from January 26-31, 2008

NTIA Report Praises Progress on Broadband Deployment

1/31. The Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA) released a report [60 pages in PDF] titled "Networked Nation: Broadband in America: 2007". The report praises broadband services in the U.S. and the Bush administration's policies. Others criticized the report.

The NTIA report states that "four years ago President Bush articulated a national vision: universal, affordable access to broadband technology. From its first days, the Administration has implemented a comprehensive and integrated package of technology, regulatory, and fiscal policies designed to lower barriers and create an environment in which broadband innovation and competition can flourish."

President Bush gave a speech that focused on broadband policy in Albuquerque, New Mexico on March 26, 2004. He said that "We ought to have a universal, affordable access for broadband technology by the year 2007, and then we ought to make sure as soon as possible thereafter, consumers have got plenty of choices when it comes to purchasing the broadband carrier." See also, story titled "Bush Calls for Universal Broadband Access by 2007" in TLJ Daily E-Mail Alert No. 865, March 29, 2004.

Bush stated in a speech on April 21, 2004, that "I believe there ought to be broadband in every community, and available to every house by the year 2007, in order to make sure America has lasting prosperity. And that's just the beginning. I think not only should broadband be accessible, but there ought to be ample providers available to every house and every community in America." See also, story titled "Bush Addresses Broadband Policy, Free Trade and the PATRIOT Act" in TLJ Daily E-Mail Alert No. 882, April 22, 2004.

The report concludes that "Americans today enjoy an increasing array of broadband services, available from a growing number of service providers, using a variety of technologies. Penetration continues to grow, and prices continue to fall."

It states that various government agencies "executed a combination of initiatives to develop and rapidly deploy new technologies, eliminate regulatory underbrush, and remove economic disincentives for investment".

Carlos Gutierrez, Secretary of Commerce, stated in a release that this report "shows the nation's broadband success story. The President’s policies have made a significant impact on the availability and affordability of broadband in the United States ... The broadband policies put in place by the President have created a competitive environment to foster innovation and provide effective technologies, services and cost-effective solutions to revolutionize health care delivery, education, society and the economy.  We look forward to continuing our progress on this issue."

The report elaborates that these policies include making more spectrum available for advanced wireless services, promoting "technology neutrality", supporting for the "FCC's efforts to modify legacy regulation in order to expand incentives for local telephone companies to invest in network upgrades and to stimulate facilities-based investments by other providers", and various tax policies.

It states that FCC data shows that "DSL was available as of year end 2006 to 79 percent of households in areas where companies also offered local telephone". It states that cable industry data "suggests that high-speed cable service is now available to some 92 percent of all U.S. households by the end of 2007."

It also states that the "wireless industry is currently the fastest growing segment of America’s broadband economy. The FCC’s most recent data reveal that the number of broadband lines provided by wireless operators increased from approximately 380,000 in June 2005 to almost 22 million at year end 2006 -- a growth rate that dwarfs that of other broadband platforms."

Finally, the report covers progress in fiber optic cable, fixed wireless, satellite, and broadband over powerline.

Steve Largent, head of the CTIA stated in a release that "This report is yet further evidence that more and more Americans are choosing mobile wireless as their high-speed on-ramp to the internet. Thanks to a light-touch regulatory approach in an intensely competitive marketplace, rapid deployment of wireless broadband services has become an affordable reality for millions of consumers across the nation."

Largent added that "The statistics speak for themselves. According to the latest FCC broadband data, mobile wireless high-speed subscribership increased more than 600% from 2005 to 2006 alone."

However, others criticized the report. FCC Commissioner Michael Copps released a statement.

"Networked Nation? If the United States were a networked nation consumers would be paying half as much for broadband connections 20 times as fast", wrote Copps.

He said the the report "slices and dices bad data (full disclosure: much of it from the FCC) in ever more outlandish ways to reach the conclusion that all is well". (Parentheses in original.)

Copps argued that the "NTIA is swimming upstream against the tide of independent reports that seem to come out daily finding that when it comes to broadband, we are falling further and further behind. Whether it is the OECD ranking of 15th in the world or the countless other rankings showing even worse results, this is not where the United States needs to be."

FCC Commissioner Jonathan Adelstein also released a statement in which he joked that "this report appears to be missing some key chapters".

He wrote that "Noticeably absent is any coherent strategy going forward. This report relies on widely-discredited data in a strained effort that only distracts us from the real work ahead. Rather than bragging about dubious accomplishments, we need to quickly implement a new agenda for expanding our broadband capabilities."

Gigi Sohn, head of the Public Knowledge, stated in a release that "The NTIA report presents a distorted view of the state of broadband in the U.S. The Administration should not be boasting about our success at a time when consumers here pay more money for slower service with have fewer choices than do consumers in other parts of the world."

She added that "Almost 97 percent of U.S. consumers have a choice only between their cable company and their telephone company. The Administration wiped out the policies that once upon a time allowed competition to flourish here and which now sustain the competition in other countries that consumers enjoy."

Bush Advocates FISA Reform, Signs 15 Day Extension Bill

1/31. President Bush gave a long speech in Las Vegas, Nevada, regarding the war on terror. He discussed reform of the Foreign Intelligence Surveillance Act (FISA).

He said that "I hope you take heart in knowing there are a lot of really fine people working long, long hours to get the best information possible to protect the homeland." He said that they are "unbelievably dedicated folks" and "professionals" who should be given "the tools necessary to protect the American people".

He elaborated that "one such tool in this different kind of war is to fully understand the intentions, the motives, the plans of people who use suicide and bombs to kill the innocent. If these terrorists and extremists are making phone calls into our country, we need to know why they're calling, what they're thinking, and what they're planning. In order to protect the American people, our professionals need to have the tools necessary to do their job you expect them to do. And one such tool is a surveillance program that guarantees the rights of our citizens, but doesn't extend those same guarantees to those who would do us harm."

Bush said that "Congress passed such a bill last year."

The Congress enacted a FISA reform bill in August that contains a six month sunset. This bill is S 1927 [LOC | WW], the "Protect America Act 0f 2007" or "PAA". It is now Public Law No. 110-55. See also, story titled "Summary of Protect America Act" in TLJ Daily E-Mail Alert No. 1,638, September 11, 2007.

Bush continued that the Congress "recognized that this tool was important to protect America. And yet, unfortunately, the bill they passed is set to expire tomorrow -- or was set to expire tomorrow."

He added that "I will sign today, here in Las Vegas, an extension, 15-day extension to the Protect America Act."

Later in the day, Bush signed HR 5104 [LOC | WW], a bill to extend the effective term of the Protect America Act of 2007 (PAA) for 15 days, through February 16, 2008. See, White House release. That is, the PAA as enacted in August of 2007, was effective for 180 days. HR 5104 replaces "180 days" with "195 days".

Bush said that "This will give people and Congress time to pass a good piece of legislation that makes sure that our professionals have the tools necessary to do their job, and provides liability protection to carriers who it is assumed helped us in protecting the American people. This Protect America Act and its strengthening is essential to the security of the United States of America."

Paper Argues PAA Presents Threat to Network Security

1/31. A group of academic and corporation persons who work in computer security fields published a paper [10 pages in PDF] titled "Risking Communications Security: Potential Hazards of the Protect America Act".

They argue that the powers given to the government by the Protect America Act may lead to "serious security risks: danger of exploitation of the system by unauthorized users, danger of criminal misuse by trusted insiders, and danger of misuse by government agents."

They distinguish the concern of privacy and civil liberties advocates, whose concern is invasive surveillance by the government, from their security concern, which is "whether the new law puts Americans at risk of illegitimate surveillance by others".

The authors are Steven Bellovin (Columbia University), Matt Blaze (University of Pennsylvania), Whitfield Diffie (VP, Sun Microsystems), Susan Landau (Sun Microsystems), Peter Neumann (SRI International), and Jennifer Rexford (Princeton University).

This is a technical paper about communications architectures, and how surveillance capabilities are build into communications networks. The gist of the paper is that these capabilities can be used, not only by the U.S. government under legal authority, but by third parties without authority.

The paper cites two recent examples, in Greece and Italy, where this occurred.

The paper argues that the PAA authorizes surveillance when just one party is believed to be located outside the U.S. This means collection of information inside the U.S., and inserting surveillance capabilities inside the U.S. And this puts all communications by Americans at risk.

The paper states that "building surveillance technology into a communications infrastructure creates risk of penetration by trusted insiders, foreign powers, and non-state actors (with trusted insiders being the greatest threat)." (Parentheses in original.)

It adds that "Disrupting attacks by non-state actors could be a short-term gain, but surveillance architectures rarely go away. The dangers created by the Protect America Act present a long-term risk."

It argues that "It is critical that the new surveillance system neither enable exploitation of US communications by unauthorized parties nor permit abuse by authorized ones." It then offers some suggestions for minimizing risks.

First, it suggests that "Traffic should be collected at international cable heads rather than at tandem switches or backbone routers, which also carry purely domestic traffic."

Second, "Robust auditing and logging systems must be part of the system design." Also, "communications providers ... should have an active role in both design and operation."

Third, "There should be appropriate oversight by publicly accountable bodies", and "the overseeing authority should be as far removed from the intercepting authority as practical" and in "a branch of government different from the one conducting the surveillance".

People and Appointments

1/31. "After nine years of publication, National Journal's Technology Daily bids farewell this Thursday", wrote Lou Peck, Editor In Chief, in a letter to readers. Tech Daily's Andrew Noyes will continue at the National Journal's CongressDaily, where he will cover intellectual property, privacy, courts/litigation, internet governance, and cybersecurity. Tech Daily's David Hatch will also move to CongressDaily, where he will cover telecom, television and media convergence. Peck also wrote that beginning on Monday, February 4, "the online edition of CongressDaily will contain a new, continuously updated section that will include stories of interest to the technology sector in one convenient place. This section will also be home to several of the weekly features that have appeared regularly in Technology Daily over the years."

1/31. Rep. Steny Hoyer (D-MD), the House Majority Leader, named Alejandro Perez to be the new Floor Director, replacing Rob Cogorno, who has announced his retirement. Perez was Deputy Floor Leader. Alexis Covey-Brandt, who is currently the Deputy Director of Member Services and Floor Assistant in the Majority Leader's Office, will become Deputy Floor Director.

1/31. Yahoo named Roy Bostock its new non-executive Chairman, replacing Terry Semel, effective January 31, 2008. Jerry Yang remains CEO. See, Yahoo release.

1/31. Solveig Singleton joined the Institute for Policy Innovation (IPI) as Adjunct Fellow specializing in intellectual property and communications policy. She previously worked at the Progress & Freedom Foundation (PFF).

1/31. The Senate Judiciary Committee (SJC) approved the nomination of Mark Filip to be the Deputy Attorney General. See, Congressional Record, January 31, 2008, at Page S542.

More News

1/31. The Department of Justice's (DOJ) Antitrust Division submitted a comment to the Department of the Treasury (DOT) in its proceeding titled "Review of the Regulatory Structure Associated With Financial Institutions". The DOJ wrote that it "believes that certain regulatory policies governing financial futures may have inhibited competition among financial futures exchanges, potentially discouraging innovation and perpetuating high prices for exchange services".

USTR Discusses Doha, Bilateral FTAs, TPA, and Russia

1/30. Susan Schwab, the head of the Office of the U.S. Trade Representative (OUSTR), held a news conference on January 29 at which she discussed Doha round negotiations, trade promotion authority (TPA), free trade agreements (FTAs) with Korea and other nations, and Russian accession to the World Trade Organization (WTO). See, transcript [10 pages in PDF].

President Bush stated in his January 28 state of the union speech that "We're working for a successful Doha Round of trade talks, and we must complete a good agreement this year." Also, on January 30, President Bush gave a speech in California in which he focused on urging the Congress to approve FTAs with Korea, Columbia, and Panama. He also advocated, in one sentence, a Doha round trade agreement.

Susan SchwabSchwab (at right) said on January 29 that "The President said it all last night. The President was very clear in his intent and ambition when it comes to the trade agenda. We know we have a lot we need to get done in 2008. He talked about the Doha Round".

She was asked by a reporter from an Australian publication, "What are real prospects for the Doha Round? I noticed the President made just a one-line reference, it seemed almost a glancing reference."

Schwab responded, "You've got to be kidding."

She later added that "the President's reference last night was very substantive and very significant and a signal, designed as a signal not just to the Congress and to the American people but also to our trading partners. So I hope they picked it up." She also reiterated that the U.S. wants an agreement in 2008.

Schwab also discussed TPA, under which the Congress can approve or reject, but not amend, FTAs negotiated by the President and his representatives.

She said that "no one on the Hill is going to be willing to have a serious conversation with me about TPA unless and until we get a modalities breakthrough. At that point if we get a successful outcome on modalities the Chairman of the Finance Committee and the Chairman of the Ways and Means Committee have both indicated their willingness to work with us on Trade Promotion Authority. Therefore, as soon as we have a breakthrough, if we have a breakthrough, I would intend to go up to the Hill and actively pursue Trade Promotion Authority. Recognizing at that point any vote on Trade Promotion Authority becomes de facto a proxy for the Doha development agenda."

Schwab also discussed the possibility of Russia joining the WTO. She said that she met with Russian Finance Minister Kudrin in Davos, Switzerland, earlier this month.

She also said that "Now the pace of Russia’s accession is almost entirely within Russia’s hands because there are certain decisions that have to be made and legislation and regulatory changes that need to be made, just like any other country that’s acceding to the WTO. But we are, have been and will continue to use both energy and capital to help Russia move ahead with its plans to come into the WTO. And when the time comes, we will go to the Congress and do what we need to do in terms of Jackson-Vanik."

She added that Russia is "not there yet in terms of the accession negotiations".

Schwab did not talk about trade related aspects of intellectual property rights. Nor did she discuss any telecommunications, e-commerce, or antitrust issues.

Treasury's McCormick Discusses US-PRC Relations

1/30. David McCormick, the Department of the Treasury's (DOT) Under Secretary for International Affairs, gave a lengthy speech to the Council on Foreign Relations on U.S. relations with the People's Republic of China (PRC). He did not mention intellectual property rights enforcement in the PRC.

However, he did say that "I understand and share the frustration of those who believe the Chinese are moving too slowly on many issues. On those, we must push. We must both cajole and support. We have been -- and must continue to be -- firm and clear when engaging with China that accelerated reform is as much in their interests as in ours."

David McCormickMcCormick (at right) added that "when we are unsuccessful through dialogue in resolving key differences, we will not hesitate to take cases to the WTO or to make full use of WTO-sanctioned trade remedies established under U.S. law."

The U.S. complained to the World Trade Organization (WTO) last April that the PRC does not engage in adequate criminal enforcement, does not provide US content providers with adequate civil remedies, and precludes US content providers from competing with their pirates. See, story titled "US to Complain to WTO Regarding PR China's Failure to Protect IPR" in TLJ Daily E-Mail Alert No. 1,562, April 9, 2007.

Finally, he said that "we must also take care not to vent our frustration in the form of punitive legislation or elevated rhetoric that could ultimately cost the American economy and set back the process of reform in China."

He also said that "Ensuring markets remain open to investment is every bit as important as ensuring that they remain open to trade".

Copyright Royalty Board News

1/30. The Copyright Royalty Judges published a notice in the Federal Register that announces, describes, recites, and sets the comment deadline for, it proposed rules that set the rates and terms for the making of an ephemeral recording of a sound recording by a business establishment service for the period 2009-2013. Comments or objections are due by February 29, 2008. See, Federal Register, January 30, 2008, Vol. 73, No. 20, at Pages 5466-5470.

1/30. The Copyright Royalty Judges published a notice in the Federal Register that announces the commencement of a proceeding to determine the Phase II distribution of 1998 and 1999 royalties collected under the cable statutory license. Petitions to participate and the filing fee are due by February 29, 2008. See, Federal Register, January 30, 2008, Vol. 73, No. 20, at Page 5596-5597.

1/30. The Copyright Royalty Judges published a notice in the Federal Register that requests comments regarding controversies at Phase I and Phase II for distribution of the 1999 through 2005 royalty funds collected under the satellite carrier statutory license. The deadline to submit comments is February 29, 2008. See, Federal Register, January 30, 2008, Vol. 73, No. 20, at Page 5597.

1/30. The Copyright Royalty Judges published a notice in the Federal Register that announces a partial Phase I
settlement in connection with the 2004 and 2005 cable royalty funds. The notice also requests comments on a motion for partial distribution in connection with those funds. Comments are due by February 29, 2008. See, Federal Register, January 30, 2008, Vol. 73, No. 20, at Pages 5597-5598.

People and Appointments

Rep. Tom Davis1/30. Rep. Tom Davis (R-VA) (at right) announced that he will not seek re-election. He said that he will serve out the remainder of his term, and then return to the private sector. He is a long time member of the House Government Reform Committee, and its former Chairman. He has been active on a wide range of technology related issues, especially regarding adoption and use of information technologies by federal government agencies. See, release.

1/30. President Bush nominated Elisebeth Cook to be an Assistant Attorney General (AAG) in charge of the Department of Justice's (DOJ) Office of Legal Policy (OLP). If confirmed, she will replace Rachel Brand, who resigned last summer. See, White House release and release. Bush announced his intent to designate Cook as acting AAG last week. Before joining the DOJ, she worked for the Washington DC law firm of Cooper & Kirk.

1/30. President Bush withdrew his nomination of Dennis Carlton to be a Member of the Council of Economic Advisers. He made the original nomination on August 2, 2007. See, White House release.

District Court Again Denies EFF's FOIA Request for DOJ Records on NSA Wiretapping

1/29. The U.S. District Court (DC) issued a Memorandum Opinion [PDF] in EFF v. DOJ, denying the Electronic Frontier Foundation's (EFF) motion for reconsideration of the District Court's previous ruling against the EFF on its request from records from the Department of Justice (DOJ) regarding the National Security Agency's (NSA) wiretapping.

The District Court rejected the EFF's assertion that a subsequent article in the Washington Post supports the EFF's contention that the requested records are legal analysis rather than operational details.

The EFF requested records, brought this action, pursuant to the Federal Freedom of Information Act (FOIA), which is codified a 5 U.S.C. § 552.

This case is Electronic Frontier Foundation v. Department of Justice, U.S. District Court for the District of Columbia, D.C. No. 07-00403 (TFH), Judge Thomas Hogan presiding.

FCC Releases Three NPRMs Regarding Universal Service Subsidies

1/29. The Federal Communications Commission (FCC) announced and released three Notices of Proposed Rulemaking (NPRMs) relating to reforming its subsidy program know as the universal service high cost support program. See, full story.

DHS Announces Minimal REAL ID Act Grants

1/29. The Department of Homeland Security (DHS) announced an increase in the total amount of federal grant funding available for states' implementation of the identification systems mandates of the federal REAL ID Act.

The DHS stated in a release that it "is making an additional $48.5 million available to assist states with REAL ID implementation. Previously funded at $31.3 million, the additional grants funding was authorized on Dec. 26, 2007 with the signing of the Omnibus appropriations bill."

The deadline for states to submit REAL ID grant applications is March 7, 2008.

The REAL ID Act imposes mandates upon the states that critics have estimated to run into the billions of dollars. For example, the National Conference of State Legislatures (NCSL) and the National Governor's Association (NGA) have estimated that the program will cost states over $11 Billion in the first five years. See, NCSL/NGA report [60 pages in PDF] titled "The Real ID Act: National Impact Analysis".

Thus, even with the just announced federal funding increases, the REAL ID Act remains a largely unfunded mandate.

The DHS released its REAL ID Act rules on January 11, 2008. See, story titled "DHS Releases REAL ID Regulations" in TLJ Daily E-Mail Alert No. 1,699, January 14, 2008. The DHS published its notice in the Federal Register announcing, describing, and reciting these rules on January 29, 2008. The effective date of these rules is March 31, 2008. See, Federal Register, January 29, 2008, Vol. 73, No. 19, at Pages 5271-5340.

The REAL ID Act was enacted as Division B of HR 1268 (109th Congress), which was a large appropriations bill. This Title B contains many provisions. Those related to the federalization of state identification systems are found at Title II of Title B, titled "Improved Security for Drivers' Licenses and Personal Identification Cards. That is, the relevant portions of the REAL ID Act are found at Sections 201-207 of Title B of HR 1268 (109th).

District Court Extends Expiring Provisions of Final Judgments in Microsoft Antitrust Case

1/29. The U.S. District Court (DC) released a Memorandum Opinion [78 pages in PDF] in State of New York v. Microsoft, the state antitrust action filed at the same time as the Department of Justice's (DOJ) 1998 action.

This opinion grants in part, and denies in part, the New York plaintiffs' and the California plaintiffs' motion to extend the final judgments against Microsoft. This opinion extends the expiring provisions of the final judgments, with the exception of Section III.B, until November 12, 2009. The states had requested an extension through 2012.

The District Court added that this extension "should not be viewed as a sanction against Microsoft; to the contrary, the Court commends Microsoft for its willingness to cooperate with the Plaintiffs in this action and in United States v. Microsoft in negotiating solutions to issues as they have arisen throughout the past five years".

The District Court also wrote that it "has never been asked to find Microsoft out of compliance with the Final Judgments".

rightBrad Smith (at right), General Counsel of Microsoft, stated in a release that "We will continue to comply fully with the consent decree. We are gratified that the court recognized our extensive efforts to work cooperatively with the large number of government agencies involved. We built Windows Vista in compliance with these rules, and we will continue to adhere to the decree’s requirements."

This case is State of New York, et al. v. Microsoft Corporation, U.S. District Court for the District of Columbia, D.C. No. 98-1233, Judge Colleen Kotelly presiding.

House Votes for 15 Day Extension of FISA Bill

1/29. The House approved by voice vote HR 5104 [LOC | WW], a bill to extend the effective term of the Protect America Act of 2007 for 15 days.

The PAA, which was enacted in August of 2007, temporarily expanded federal authority under the Foreign Intelligence Surveillance Act (FISA).

Rep. Steny Hoyer (D-MD), the House Majority Leader, stated that "even if we were unable to do this extension, and February 1 were to come and go without any new FISA legislation, no one should fall victim to those fear mongers who suggest that our intelligence community could `go dark.´"

He added that ""Even the Administration’s own Assistant Attorney General for National Security, Kenneth Wainstein, acknowledged this, saying that if the PAA were allowed to expire, intelligence officials would still be able to continue eavesdropping on already approved targets for another year."

However, expiration of the PAA would affect surveillance of new threats that develop after February 1.

The PAA is Public Law No. 110-55 and S 1927 [LOC | WW]. The PAA expires on February 1, 2008.

More News

1/29. The Senate approved, without objection, HR 5104 [LOC | WW], a bill to extend the effective term of the Protect America Act of 2007 for 15 days. See, Congressional Record, January 29, 2008, at Page S457.

1/29. The Federal Trade Commission (FTC) published a notice in the Federal Register that announces revised thresholds for Section 7A of the Clayton Act (regarding Hart Scott Rodino merger reviews). See, Federal Register, January 29, 2008, Vol. 73, No. 19, at Pages 5191-5192.

1/29. The Federal Trade Commission (FTC) published a notice in the Federal Register that announces revised thresholds for Section 8 of the Clayton Act (regarding interlocking directorates). See, Federal Register, January 29, 2008, Vol. 73, No. 19, at Page 5192.

Bush Delivers State of the Union Address

1/28. President Bush gave a speech titled "State of the Union Address" in the chamber of the House of Representatives. He advocated passage of surveillance related legislation, including liability protection for companies. He called for more federal spending on research, but said nothing about the just lapsed research and development tax credit. He advocated free trade agreements, and a Doha round agreement.

President Bush discussed government surveillance authority in very broad and vague terms. He did not reference any pending bills, or even the Foreign Intelligence Surveillance Act.

He said that "Dedicated men and women in our government toil day and night to stop the terrorists from carrying out their plans. These good citizens are saving American lives, and everyone in this chamber owes them our thanks. And we owe them something more: We owe them the tools they need to keep our people safe. And one of the most important tools we can give them is the ability to monitor terrorist communications. To protect America, we need to know who the terrorists are talking to, what they are saying, and what they're planning. Last year, Congress passed legislation to help us do that. Unfortunately, Congress set the legislation to expire on February the 1st. That means if you don't act by Friday, our ability to track terrorist threats would be weakened and our citizens will be in greater danger. Congress must ensure the flow of vital intelligence is not disrupted."

Bush also discussed immunity for telecommunications companies. Although, he used the broader term of "liability protection". Also, he advocated protection, not for carriers, but more broadly for "companies believed to have assisted". Specifically, he said that "Congress must pass liability protection for companies believed to have assisted in the efforts to defend America. We've had ample time for debate. The time to act is now."

He had nothing to say about broadband deployment, communications services, or spectrum issues, other than with respect to surveillance.

He discussed research and development. He said that "To keep America competitive into the future, we must trust in the skill of our scientists and engineers and empower them to pursue the breakthroughs of tomorrow. Last year, Congress passed legislation supporting the American Competitiveness Initiative, but never followed through with the funding. This funding is essential to keeping our scientific edge. So I ask Congress to double federal support for critical basic research in the physical sciences and ensure America remains the most dynamic nation on Earth."

However, he said nothing about extending the research and development (R&D) tax credit, which expired at the end of 2007.

He did say that "last week, my administration reached agreement with Speaker Pelosi and Republican Leader Boehner on a robust growth package that includes tax relief for individuals and families and incentives for business investment." However, this does not include extension of the R&D tax credit. See, Rep. John Boehner's (R-OH) summary of the agreement, and White House press office summary.

There are bills pending that would permanently extend the R&D tax credit. See, HR 2138 [LOC | WW], the "Investment in America Act of 2007", and S 2209 [LOC | WW], the "Research Credit Improvement Act of 2007". However, when, or if, the Congress extends the R&D credit, it is not likely to be in a stand alone bill, but rather as part of a larger legislative package.

He discussed trade. He said that "our economic growth increasingly depends on our ability to sell American goods and crops and services all over the world. So we're working to break down barriers to trade and investment wherever we can. We're working for a successful Doha Round of trade talks, and we must complete a good agreement this year. At the same time, we're pursuing opportunities to open up new markets by passing free trade agreements."

Bush did not discuss reform of patent or other intellectual property laws, except to say that he opposes patents on human life. He said that "I call on Congress to pass legislation that bans unethical practices such as the buying, selling, patenting, or cloning of human life."

He discussed health care, but not the digitization or electronic storage of medical records, or the protection of medical privacy.

He discussed secondary education, but not with respect to science, technology, engineering and mathematics.

10th Circuit Addresses Personal Jurisdiction in Copyright DJ Actions Following DMCA Take Down Notices

1/28. The U.S. Court of Appeals (10thCir) issued its opinion [36 pages in PDF] in Dudnikov v. Chalk & Vermilion Fine Arts, a copyright declaratory judgment action. The Court of Appeals reversed the judgment of the District Court, which had dismissed the complaint for lack of personal jurisdiction.

Introduction. The defendants invoked eBay's DMCA take down procedure to terminate the plaintiffs' auction of fabrics with the image of the cartoon character Betty Boop. These cartoons parody copyrighted posters of the artist known as Erté. These take down demands can damage an internet based business. When the plaintiffs brought an action in their District Court seeking a declaration that they violated no copyright, the defendants asserted, and the District Court agreed, that the defendants' take down demands were insufficient to confer personal jurisdiction upon the District Court.

The Court of Appeals reversed in this case of first impression. When a copyright claimant invokes an auction site's take down procedure to terminate an auction, that is purposefully directed at the auction seller's state, and hence, supports a finding of personal jurisdiction in the seller's state.

Affirmance would have contributed to the ability of unscrupulous copyright claimants to make frivolous and disparaging take down demands for the purpose of damaging legitimate transactions and businesses. Infringing music, software, goods, and other infringing items are frequently sold through auction web sites, or otherwise published, distributed or sold through interactive computer services. However, copyright claimants also frequently make frivolous claims regarding non-infringing items. This includes attempts to suppress parodies, to block other fair uses protected by 17 U.S.C. § 107, to censor criticism, and to preclude secondary markets in items protected by the first sale doctrine.

(The first sale doctrine, which is codified at 17 U.S.C. § 109, provides that "the owner of a particular copy ... lawfully made under this title" can , "sell or otherwise dispose of the possession of that copy ...". Some copyright owners issue take down notices asserting that the terms of licensing contracts restrict secondary sales. However, such a claim sounds in contract, and the safe harbor provisions of the Copyright Act, which give copyright claimants leverage to induce service providers to terminate auctions, apply only to "infringement of copyright". See, 17 U.S.C. § 512(c). But, development of the law on that issue will have to wait for future opinions.)

The courts in the present action have not yet addressed the issue of infringement. Nevertheless, it is likely that if this case, on remand, proceeds to judgment on the merits, the District Court would find that the Betty Boop auction items are lawful parodies, rather than infringing products, and that the defendants' take down demands lacked merit.

The Court of Appeals wrote that the minimum contacts test for personal jurisdiction is "one that has long eluded a definitive legal test and proven fertile ground for debate by law students, lawyers, and judges alike", and that the standards set in judicial opinions are "more aspirational than self-defining". This opinion, combined with related opinions, demonstrate that this elusiveness persists in the context of online activity.

For example, the courts are still developing clarity as to when the online activities of a defendant who resides in one district confer jurisdiction upon a court in a distant plaintiff's district when that distant plaintiff alleges a cause of action related to the plaintiff's online activities, such as defamation or infringement. Although, that is not the subject of this case.

This case concerns whether the district court where the plaintiff resides has personal jurisdiction when it is the plaintiff who is engaged in the online activity, and the distant defendant has engaged in some allegedly actionable conduct that is directed at harming or limiting the online activities of the plaintiff.

In this case the Court of Appeals held that there is personal jurisdiction in the plaintiffs' district when the distant defendants invoked eBay's take down process to terminate plaintiffs' auction, and potentially their ability to conduct their online business.

It should be noted that the U.S. Court of Appeals (5thCir) recently held in its opinion [19 pages in PDF] in Stroman Realty v. Wercinski, that there is no personal jurisdiction where the plaintiff files an action in its district against a distant state regulator alleging tortious efforts to prevent the plaintiff from doing business online. See, story titled "5th Circuit Rules No Personal Jurisdiction Over Out of State Regulator of Online Commerce" in TLJ Daily E-Mail Alert No. 1,700, January 15, 2008. Moreover, both the present case, and the 5th Circuit case, involve application of the Calder effects test.

Even if the two opinions can be distinguished or reconciled, they leave the law in a state of uncertainty. The meaning of phrases such as "minimum contacts", "purposely directed", and "aimed at the forum state" are as unclear as ever.

See, full story.

FTC Sues Operator of Children's Web Site for Privacy Violations

1/28. The Department of Justice (DOJ) filed a civil complaint [18 pages in PDF] in U.S. District Court (NDCal), on behalf of the Federal Trade Commission (FTC), against Industrious Kids, Inc. and Jeanette Symons, alleging violation of the Children's Online Privacy Protection Act (COPPA), the FTC's Children's Online Privacy Protection Rule (COPPR), and the Federal Trade Commission Act (FTCA) in connection with their operation of, a web site and blog hosting service directed at children. The parties simultaneously settled the case.

The COPPA requires that any web site operator or online service that is directed to children obtain parental consent before collecting information from children under the age of 13.

The COPPA was S 2326 in the 105th Congress. It was enacted into law as part of a large omnibus appropriations bill in October of 1998. It is now codified at 15 U.S.C. §§ 6501-6506. See also, TLJ web page titled "Children's Online Privacy Protection Act" (1998).

The FTC subsequently promulgated its Children's Online Privacy Protection Rule (COPPR).

The complaint alleges that the defendants' web site and service are directed at children as young as 8, and that they collected personal information from children with a "kid registration" form. The complaint further states that they collected first and last names, birthdates, e-mail addresses, and parents' e-mail addresses, among other information.

The complaint continues that defendants' sent e-mail notices to parents requesting that they complete the registration process. However, it alleges that these notices failed to satisfy the requirements of the COPPA and COPPR in several ways.

For example, the complaint states that the e-mail notices did not disclose that information had already been collected, or that parents had the right to have the information deleted. Moreover, the defendants retained the personal information even if the parents did not respond.

The complaint seeks civil monetary penalties and injunctive relief.

The FTC simultaneously announced it has agreed to settle the case. Under the proposed consent decree [PDF], the defendants will pay a $130,000 civil penalty, maintain conspicuous hyperlinks to privacy related information, delete all wrongfully obtained information, and engage in specified compliance reporting and record keeping requirements. See also, FTC release.

This case is U.S.A. v. Industrious Kids, Inc. and Jeanette Symons, U.S. District Court for the Northern District of California, Oakland Division, D.C. No. CV-08-0639.

FTC Brings Action for Fraudulent Spam Advertising

1/28. The Department of Justice (DOJ) filed a civil complaint [13 pages in PDF] in U.S. District Court (NDCal), on behalf of the Federal Trade Commission (FTC), against Member Source Media LLC and others, alleging violation of the FTC Act and the CAN SPAM Act in connection with their falsely advertising in spam e-mail and web ads that they offered free products or rewards to lure consumers to click on links, provide personal information, and make payments.

Section 5(a) of the FTCA, which is codified at 15 U.S.C. § 45, 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 CAN SPAM Act is codified at 15 U.S.C. § 7701, et seq.

The parties simultaneously agreed to a stipulated final judgment [18 pages in PDF], which imposes a civil penalty of $200,000, enjoins defendants from further violations, and imposes compliance monitoring and reporting requirements on the defendants. See also, FTC release.

This case is Member Source Media LLC, doing business as,,, and, and Chris Sommer, individually and as Manager of Member Source Media LLC, U.S. District Court for the Northern District of California, D.C. No. CV-08 0642.

More News

1/28. The Federal Communications Commission (FCC) published a notice in the Federal Register that announces, describes, and sets comment deadlines for, its public notice regarding the Petition for Declaratory Ruling [33 pages in PDF] filed by the Public Knowledge (PK) and other groups on December 11, 2007, pertaining to the regulatory status of text messaging services, including short code based services sent from and received by mobile phones. The PK, Consumer Federation of America (CFA), Consumers Union (CU), Educause, Free Press, Media Access Project (MAP), New America Foundation (NAF) and USPIRG request that the FCC declare that these services are governed by the anti-discrimination provisions of Title II of the Communications Act. This petition addresses Verizon Wireless's September 2007 action with respect to messages of the National Abortion Rights Action League (NARAL). See, story titled "Verizon Wireless and Net Neutrality Advocates Clash Over Text Messaging" in TLJ Daily E-Mail Alert No. 1,647, September 27, 2007. See also, letter from Verizon Wireless to NARAL dated September 27, 2007, and NARAL's web page titled "NARAL Pro-Choice America Wins Fight over Corporate Censorship". See also, story titled "Public Knowledge Asks FCC to Declare that Blocking and Refusing to Carry Text Messages Violates Title II" in TLJ Daily E-Mail Alert No. 1,686, December 11, 2007. Initial comments are due by February 13, 2008. Reply comments are due by March 14, 2008. This proceeding is WT Docket No. 08-7. The FCC released its public notice, numbered DA 08-78, on January 14, 2008. See, Federal Register, January 28, 2008, Vol. 73, No. 18, at Pages 4866-4867.

1/28. The U.S. Patent and Trademark Office (USPTO) announced in a release that it has instituted pilot fast track patent examination projects with the Canadian Intellectual Property Office (CIPO) and the Korean Intellectual Property Office (KIPO). The USPTO stated that this will "allow applicants to obtain corresponding patents faster and more efficiently in each country. It also will permit each office to benefit from work previously done by the other office, in turn reducing examination workload and improving patent quality."

Go to News from January 21-25, 2008.