TLJ News from March 21-25, 2011

ICANN Comments on NTIA IANA Contract

3/25. The Internet Corporation for Assigned Names and Numbers (ICANN) submitted a comment [14 pages in PDF] to the Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA) in response to its Notice of Inquiry (NOI) regarding Internet Assigned Numbers Authority (IANA) functions.

See, notice in the Federal Register, February 25, 2011, Vol. 76, No. 38, at Pages 10569-10571, and story titled "NTIA Seeks Comments on IANA Functions" in TLJ Daily E-Mail Alert No. 2,198, February 25, 2011.

The deadline to submit comments is March 31, 2011. The current one year contract expires on September 30, 2011.

The ICANN wants longer term contracts.

The ICANN also states that "The next framework should impose transparency obligations on all parties to the agreement. The default expectation should be that ICANN and NTIA can and should be transparent about the performance of the IANA functions except in those limited circumstance in which confidentiality is required."

The ICANN also wants the scope of the contract to be reduced. "Under the current agreement, ICANN: (a) coordinates management of root zone; (b) allocates Internet Numbering Resources; (c) coordinates assignment of technical protocol parameters; and (d) coordinates management of the .ARPA and .INT top-level domains."

"Going forward, ICANN should continue to perform all of these functions but the scope of the framework with the DOC should be reduced as follows: (a) port and protocol parameter registry functions should be performed under separate agreement between ICANN and the Internet Architecture Board (IAB) / Internet Engineering Task Force (IETF); (b) management of .ARPA should be performed under a separate agreement between ICANN and IAB/IETF; and (c) no new technical functions (e.g., RPKI/signing of numbering resources) should be added to the scope of the agreement. ICANN would continue to perform these functions under separate agreements with the relevant international technical bodies such as the IAB/IETF and Number Resources Organization (NRO)." (Parentheses in original.)

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3/25. The U.S. District Court (NDCal) sentenced Srinivasa Chennupati to serve six months in prison following his plea of guilty to eleven counts of making false statements in violation of 18 U.S.C. § 1001 in connection with his applications for H1B visas for high tech workers. See, Department of Justice (DOJ) release. This case is U.S. v. Srinivasa Chennupati, U.S. District Court for the Northern District of California, D.C. No. CR 10-00712 DLJ.

More Criticism of ATT T-Mobile Deal

3/24. Companies and groups expressed opposition to, or concerns about, AT&T's proposed acquisition of T-Mobile USA.

Sprint spokesman John Taylor stated in a release on March 20 that "The combination of AT&T and T-Mobile USA, if approved by the Department of Justice (DOJ) and Federal Communications Commission (FCC), would alter dramatically the structure of the communications industry."

Taylor continued that "AT&T and Verizon are already by far the largest wireless providers. A combined AT&T and T-Mobile would be almost three times the size of Sprint, the third largest wireless competitor. If approved, the merger would result in a wireless industry dominated overwhelmingly by two vertically-integrated companies that control almost 80% of the US wireless post-paid market, as well as the availability and price of key inputs such as backhaul and access needed by other wireless companies to compete."

Sprint's Taylor concluded that "The DOJ and the FCC must decide if this transaction is in the best interest of consumers and the US economy overall, and determine if innovation and robust competition would be impacted adversely and by this dramatic change in the structure of the industry."

The Computer and Communications Industry Association (CCIA) released a statement condemning AT&T's proposed acquisition of T-Mobile USA. The CCIA stated that "Consumers, industry and innovation will all lose if AT&T is allowed to amass even more power and control over our communications and Internet infrastructure."

"The tremendous advances in technology and price constraint over recent decades have come because of competition following the original AT&T breakup." It added that "The proposed merger between AT&T and the 4th largest wireless carrier would leave the wireless market with two big carriers followed by Sprint."

The CCIA elaborated that "Subtracting a maverick, competitive wireless carrier, would leave the average consumer facing very limited choices for wireless service in a particular region. Since there are only two competing technologies that all wireless carriers use, all the small regional carriers have to negotiate roaming deals with either Verizon or AT&T -- if they want to offer full coverage to their customers. The deal would further entrench the playing field with one CDMA giant and one GSM giant and fair negotiations would be even harder."

The CCIA's Ed Black added that "AT&T believes it has enough power and control over the political branches of federal government to ram it through -- in spite of its many anti-competitive aspects".

The Public Knowledge (PK) urged individuals to sign an electronic form letter to President Obama opposing AT&T's proposed acquisition of T-Mobile USA.

The letter urges the President to "publicly stand up for consumer choice in the wireless market by asking the FCC and Department of Justice to OPPOSE the AT&T and T-Mobile merger".

Comodo Reports Hacking Activity By Iran

3/24. Comodo released a document titled "Report of incident on 15-MAR-2011". It describes a thwarted cyber attack involving the fraudulent issuance of digital certificates for domains held by Google, Yahoo, Skype, and others. Comodo concludes that Iran was behind the attack.

Comodo is an internet security company that sells digital certificates. That is, it is a certificate authority, also known as certification authority, or CA. Its founder and CEO is Melih Abdulhayoglu.

Comodo disclosed that it issued, but promptly revoked, nine certificates for domains to some person or entity which Comodo believes to be in Iran. This person or entity does not represent the holders of these domains.

Here is the gist of the scheme. For online purchases, and any online transactions that involve financial, account, or other confidential information, web users need to know that the web site with which they are dealing is in fact the web site that they understand it to be, and not a fraudulent imposter web site. Web users rely upon trusted third party CAs that issue certificates that enable their web browsers to ascertain that the web site is what it purports to be. The system is based upon public key cryptography. The system fails, however, if the operator of an imposter web site can obtain certificates for the real web sites. This is what occurred in the present matter.

For more technical explanations, see Wikipedia entries for Certificate Authority (CA), Public Key Certificate, and Online Certificate Status Protocol (OCSP).

Comodo stated that "The attacker was well prepared and knew in advance what he was to try to achieve. He seemed to have a list of targets that he knew he wanted to obtain certificates for, was able quickly to generate the CSRs for these certificates and submit the orders to our system so that the certificates would be produced and made available to him." (CSR is certificate signing request.)

Comodo continued that "We know that they definitely received one of the certificates. All certificates were revoked immediately on discovery. Our systems indicate that when this one certificate was first tested it received a 'revoked' response from our OCSP responders."

Comodo offered this conclusion: "The circumstantial evidence suggests that the attack originated in Iran. The perpetrator has focussed simply on the communication infrastructure (not the financial infrastructure as a typical cyber-criminal might). The perpetrator can only make use of these certificates if it had control of the DNS infrastructure. The perpetrator has executed its attacks with clinical accuracy. The Iranian government has recently attacked other encrypted methods of communication. All of the above leads us to one conclusion only: -- that this was likely to be a state-driven attack." (Parentheses in original.)

Genachowski Discusses Cloud Computing

3/24. Federal Communications Commission (FCC) Chairman Julius Genachowski gave a speech [8 pages in PDF] in Brussels, Belgium titled "The Cloud: Unleashing Global Opportunities" in which he addressed some of the policy issues associated with the advent of cloud computing.

He touched on allocating more spectrum for mobile broadband, incentive auctions, regulation of broadband internet access service providers, promoting privacy and security in an environment in which there is both the "motive and the means for thieves to steal identities and intellectual property", data flows across international borders, "inconsistent laws and policies in different countries, as well as legal uncertainty", and other topics.

He also mentioned the 1997 World Trade Organization (WTO) telecommunications agreement. He urged governments not to adopt "unduly restrictive and protectionist policies that limit market entry".

Also, he asked rhetorically, "To what degree do rigid, in-country data center requirements undercut the efficiency and cost savings offered by cloud computing?"

He said that there is a "role for government to play in facilitating global information flows, including by cooperating on baseline policies and reducing barriers to the full deployment of cloud computing".

He did not address the affect of government surveillance, and search and seizure of stored data, on the development and adoption of cloud computing.

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3/24. The Federal Communications Commission (FCC) filed its brief [70 pages in PDF] with the U.S. Court of Appeals (DCCir) in Feature Group IP West v. FCC, App. Ct. No. 10-1257, a petition for review of orders of the Federal Communications Commission (FCC) denying a petition for forbearance from applying certain FCC rules regarding intercarrier compensation. The Court of Appeals will hear oral argument on May 10, 2011.

3/24. The U.S. District Court (SDNY) awarded a civil judgment of just over $4 Million under the False Claims Act against D.B. Karron for using Department of Commerce (DOC) research grant funding for personal expenses. The Department of Justice (DOJ) stated in a release that Karron, "who holds a Ph.D. in mathematics, obtained research funding for a project involving the application of computer technology and advanced mathematics to medical uses", but used the grant funding "to pay rent and for apartment-related expenses, including a cleaning service" and for "psychotherapy, dental work and electrolysis".

3/24. Anne Small was named Deputy General Counsel of the Securities and Exchange Commission (SEC), effective "next week". See, SEC release. She will replace Mark Cahn, who was named SEC General Counsel in February. Small previously worked in the New York City office of the law firm of Wilmer Hale.

3/24. A grand jury of the U.S. District Court (DCD) returned an indictment that charges Douglas Hampton, a former administrative assistant to Sen. John Ensign (R-NV), a member of the Senate Commerce Committee (SCC), with seven counts of violating the conflict of interest laws in connection with his alleging lobbying within one year of leaving Sen. Ensign's employment in 2008. See, Department of Justice (DOJ) release. This case is being handled by the DOJ's Criminal Division's Public Integrity Section, a unit with a checkered record of adherence to federal law.

Schapiro Addresses Hacking Threat to Automated Securities Trading

3/23. Mary Schapiro, Chairman of the Securities and Exchange Commission (SEC), gave a speech in which she addressed, among other things, automated trading technology, the flash crash of May 6, 2010, and hackers.

She said that one source of risk is "systems and technology that may break down when volume surges, or which may be vulnerable to intrusion from outside."

Mary SchapiroSchapiro (at right) also said that "with risks including algorithm-generated volume surges and malevolent hackers still very much with us, I believe the SEC should consider making ARP compliance mandatory." (ARP is automation review policy.)

She added that "Such a regulation would require market participants to meet adequate standards for the capacity, resiliency, and security of their automated systems. These rules could apply to exchanges, alternative trading systems handling appreciable volume, clearing agencies, depositories and securities information processors."

Orphan Works and the Court's Rejection of the Google Book Deal

3/23. On March 22, 2011, the U.S. District Court (SDNY) denied the motion to approve the class action settlement in the Google Books litigation. See, opinion [48 pages in PDF] and story titled "District Court Rejects Google Books Class Action Settlement" in TLJ Daily E-Mail Alert No. 2,206, March 22, 2011.

The District Court denied the motion without prejudice, and urged the parties to revise the proposed settlement and seek court approval of that.

Another alternative, particularly on the orphan works issues, would be for the Congress to legislate.

The proposed settlement would not only settle the controversy between the parties to the lawsuits: it would also determine rights of non-parties, and in effect substitute a court settlement for policy making by the Congress. To the extent that the parties are attempting to impose a private deal as a universally applicable legal regime, legislative action would be the more appropriate avenue.

One of the objections to the proposed settlement agreement pertained to orphan works. The District Court wrote that "The questions of who should be entrusted with guardianship over orphan books, under what terms, and with what safeguards are matters more appropriately decided by Congress than through an agreement among private, self-interested parties." (See, opinion at page 23.)

The District Court continued that the settlement "would grant Google control over the digital commercialization of millions of books, including orphan books and other unclaimed works. And it would do so even though Google engaged in wholesale, blatant copying, without first obtaining copyright permissions. While its competitors went through the ``painstaking´´ and ``costly´´ process of obtaining permissions before scanning copyrighted books, ``Google by comparison took a shortcut by copying anything and everything regardless of copyright status.´´ ... As one objector put it: ``Google pursued its copyright project in calculated disregard of authors' rights. Its business plan was: 'So, sue me.'´´" (See, opinion at pages 26-27. Footnotes and citations to Professor Pamela Samuelson, Microsoft, and others omitted.)

John Bergmayer, a staff attorney at the Public Knowledge (PK), wrote in an untitled piece for the PK web site that "It's great the the Judge recognized that Google and the Authors Guild (and the rest of the plaintiffs) were trying to use his court to set public policy, rather than to settle a dispute between parties." (Parentheses in original.)

"Hundreds of authors, academics, librarians, companies, and even foreign governments filed objections to the settlement," wrote Bergmayer, that "if approved, would give Google monopoly control of orphan works. The public deserves access to these works, but it should come through a change to the law, rather than a private agreement that locks in just one supplier."

"There were a lot of problems with the deal. It purported to settle the claims any authors might have against Google --even ones who didn't sue Google, or belong to any groups who did. The effect of this was that the agreement essentially rewrote copyright law for Google and Google only. It would give Google the right to sell copies books it didn’t have the rights to -- ``orphan works´´ that are still under copyright, but where the copyright owner can’t be found."

Bergmayer concluded, "As for orphan works, Congress needs to act. The law needs to be fixed to allow orphan works to be used in reasonable ways while respecting that they’re still under copyright."

Similarly, Ryan Radia of the Competitive Enterprise Institute (CEI) stated in a release that the District Court's order "should serve as a wake-up call that orphan works legislation should also be a top priority for lawmakers".

Radia continued that "millions of expressive works cannot be enjoyed by the general public because their copyright owners cannot be found. This amounts to a massive black hole in copyright, severely undermining the public interest."

Actually, Representatives worked diligently in the 109th and 110th Congresses to pass orphan works legislation. And, many interest groups, including the PK, advocated passage of such legislation.

However, the bills were overbroad. These bills not only would have addressed copying of old, out of print, and abandoned works. These bills would also have had the effect of substantially removing the enforceability of copyrights, particularly in certain visual works, that are recently created, commercially valuable, and the licensing of which is relied upon by the creators for their livelihood.

That is, orphan works legislation to date has not only addressed enabling the use of old and unclaimed works: it has also proposed to undermine copyright protection, and incentives for creation, of certain new and claimed works.

The introduction of legislation followed the Copyright Office's (CO) release of its report [133 pages in PDF] titled "Report on Orphan Works" in January of 2006. See, story titled "Copyright Office Recommends Orphan Works Legislation" in TLJ Daily E-Mail Alert No. 1,302, February 2, 2006. The primary author of the report, Jule Sigall, subsequently went to work for Microsoft. See, story titled "Jule Sigall Joins Microsoft" in TLJ Daily E-Mail Alert No. 1,510, December 27, 2006. Maria Pallante, then employed by the Guggenheim Museum, and now the acting Register of Copyright, also advocated passage of orphan works legislation.

For the 109th Congress, see HR 5439, the "Orphan Works Act of 2006". Another version of it was made a part of HR 6052, the "Copyright Modernization Act of 2006". However, neither bill became law. See also, stories titled "House CIIP Subcommittee Holds Hearing on Orphan Works" in TLJ Daily E-Mail Alert No. 1,326, March 9, 2006, "Rep. Smith Introduces Orphan Works Act of 2006" in TLJ Daily E-Mail Alert No. 1,377, May 24, 2006, and "House CIIP Subcommittee Approves Orphan Works Act of 2006" in TLJ Daily E-Mail Alert No. 1,378, May 25, 2006.

For the 110th Congress, see HR 5889 [LOC | WW], the "Orphan Works Act of 2008", and S 2913 [LOC | WW], the "Shawn Bentley Orphan Works Act Of 2008". Neither bill became law. See also, story titled "House IP Subcommittee Approves Orphan Works Bill" in TLJ Daily E-Mail Alert No. 1,762, May 7, 2008, "Senate Judiciary Committee Amends and Approves Orphan Works Bill" in TLJ Daily E-Mail Alert No. 1,767, May 15, 2008, and "Orphan Works Bills Discussed" in TLJ Daily E-Mail Alert No. 1,798, July 23, 2008.

People and Appointments

3/23. Joe Waz will retire from Comcast. See also, statement by Kyle McSlarrow (NCTA) and statement by Gigi Sohn (Public Knowledge).

3/23. Bertrand Serlet, Apple’s SVP Mac Software Engineering, will leave Apple after 22 years. He will be replaced by Craig Federighi. See, Apple release.

3/23. Marvin Ammori joined the New America Foundation (NAF) as a Legal Fellow. See, NAF release. On March 23, 2011 he published two pieces in his personal web site on the denial by the U.S. District Court (SDNY) on March 22 of the motion to approve the class action settlement in the Google Books litigation. See, piece titled "Google Books Settlement: Copyright, Congress, and Information Monopolies" and piece titled "Google Book Settlement Rejected: Initial Summary".

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3/23. Ben Bernanke, Chairman of the Federal Reserve Board (FRB), gave a speech in San Diego, California, about community banking. He said that "The IBM computer program Watson may play a mean game of Jeopardy, but I would not trust it to judge the creditworthiness of a fledgling local business or to build longstanding personal relationships with customers and borrowers."

Congressional Committees Interested in AT&T T-Mobile USA Deal

3/22. Several Representatives and Senators have stated that various committees will hold hearings on AT&T's proposed acquisition of T-Mobile. Although, no committees have yet announced hearings.

Also, some Democrats tend to express more interest in investigating large carriers and broadband internet access service providers, such at AT&T, while some Republican tend to express more interest in investigating large edge companies, such as Google.

Rep. Lamar Smith (R-TX), Chairman of the House Judiciary Committee (HJC), stated in a March 21, 2011, release that "The proposed AT&T and T-Mobile merger raises important questions about competition in the telecom industry and the effect on American consumers. Congress must take a close look at the plan to ensure that the proposed merger promotes a healthy and competitive telecommunications market."

He said that the HJC "will hold a hearing to examine the merger and its likely impact on the American economy and the future of wireless communications."

Rep. Fred Upton (R-MI), Chairman of the House Commerce Committee (HCC), and Rep. Greg Walden (R-OR), Chairman of the HCC's Subcommittee on Communications and Technology, commented on AT&T's proposed acquisition of T-Mobile USA, but focused their comments on the Federal Communications Commission's (FCC) antitrust merger review process.

The two stated in a joint release on March 21 that "We look forward to the ensuing discussion about what this transaction means for consumers, job creation, competition and our evolving communications marketplace."

They added that the HCC "has already expressed interest in examining the Federal Communications Commission’s transaction review process, in light of its dual -- and often times conflicting -- role to provide both transaction approvals and industry regulations. A proposed transaction of this scale also underscores the importance of an objective review process at the FCC."

They also stated that "A key question for this committee is whether the FCC is conducting thorough market analysis and how that influences the agency's decision-making. We believe such analysis is essential to this and other transactions, and we intend to determine how Congress should reform the FCC's process going forward."

Sen. John Rockefeller (D-WV), the Chairman of the Senate Commerce Committee (SCC), stated in a release on March 20 that "As always in a transaction this large, the Commerce Committee will review the details of the acquisition."

Sen. Herb Kohl (D-WI), the Chairman of the Senate Judiciary Committee's (SJC) Subcommittee on Antitrust, Competition Policy and Consumer Rights, stated in a March 20 release that "Consumers have borne the brunt of the increasingly concentrated market for mobile phone service. The explosion of cell phone usage -- especially smart phones -- makes competition in this market more important than ever as a check on prices, consumer choice, and service."

Sen. Herb KohlSen. Kohl (at right) stated "That's why the Antitrust Subcommittee will take a close look at what this loss of competition will mean for people who increasingly rely on wireless phone service to connect to friends, family and the Internet."

Sen. Mike Lee (R-UT) is the ranking Republican on this Subcommittee. While he has issued no statement calling for a hearing on AT&T, he has recently called for an antitrust hearing on Google. See, related story in this issue titled "Sen. Lee Calls for Antitrust Hearing on Google".

AT&T stated in a release on March 22 that "We are confident that the facts will demonstrate that the deal is in the public interest (FCC focus) and that competition (DOJ focus) will continue to flourish. For example, a large majority of Americans today can choose from at least five wireless providers offering nationwide service. Also, the transaction will allow us to expand the next generation of mobile broadband to 95% of the U.S. population -- up from 80% as previously planned -- covering an additional 46.5 million Americans, a key objective of the Administration." (Parentheses in original. Hyperlinks removed.)

FCC Files Brief with 10th Circuit in Qwest Phoenix Forbearance Case

3/22. The Federal Communications Commission (FCC) filed its brief [79 pages in PDF] with the U.S. Court of Appeals (10thCir) in Qwest Corporation v. FCC, App. Ct. No. 10-9543, a petition for review of an order of the FCC denying Qwest's petition for forbearance from applying certain dominant carrier regulations imposed on incumbent local exchange carriers (ILECs) and certain statutory requirements that require ILECs to unbundle network elements.

The order under review is the FCC's Memorandum Opinion and Order (MOO) [67 pages in PDF], adopted on June 15, 2010, and released on June 22, 2010. It is FCC 10-113 in WC Docket No. 09-135. See also, story titled "FCC Denies Qwest's Petition for Forbearance in Phoenix" in TLJ Daily E-Mail Alert No. 2,100, June 23, 2010.

The FCC argued in its just filed brief that "Qwest had failed to carry its burden under section 10 of the Communications Act by showing that: (1) the requirements from which it sought forbearance were not necessary to ensure just, reasonable and nondiscriminatory rates and practices; (2) those requirements were not necessary to protect consumers; and (3) forbearance would serve the public interest."

FCC Commissioner Robert McDowell wrote in his statement last June that this order sets "a test so stringent that no requesting carrier will ever satisfy it".

Commissioner Merideth Baker wrote in her statement that "I hope that the application of the statutory test using the analytic framework in this Order will not become an insurmountable hurdle for petitioners, which in turn would undermine the will of Congress to relieve regulatory burdens where competition can better regulate the market."

Section 10 of the Communications Act, which is codified at 47 U.S.C. § 160(c),  provides in part that "Any telecommunications carrier, or class of telecommunications carriers, may submit a petition to the Commission requesting that the Commission exercise the authority granted under this section with respect to that carrier or those carriers, or any service offered by that carrier or carriers. ..."

District Court Rejects Google Books Class Action Settlement

3/22. The U.S. District Court (SDNY) issued its opinion [48 pages in PDF] in Authors Guild v. Google, denying, without prejudice, the motion for approval of the proposed class action settlement.

The District Court concluded the Amended Settlement Agreement (ASA) [173 pages in PDF] under review "is not fair, adequate, and reasonable", as required by Rule 23, Federal Rules of Civil Procedure.

Rule 23(e)(2) provides that "If the proposal would bind class members, the court may approve it only after a hearing and on finding that it is fair, reasonable, and adequate."

The District Court elaborated that "As the United States and other objectors have noted, many of the concerns raised in the objections would be ameliorated if the ASA were converted from an ``opt-out´´ settlement to an ``opt-in´´ settlement. ... I urge the parties to consider revising the ASA accordingly."

The District Court explained that "While the digitization of books and the creation of a universal digital library would benefit many, the ASA would simply go too far. It would permit this class action -- which was brought against defendant Google ... to challenge its scanning of books and display of "snippets" for on-line searching -- to implement a forward-looking business arrangement that would grant Google significant rights to exploit entire books, without permission of the copyright owners."

"Indeed," the Court wrote, "the ASA would give Google a significant advantage over competitors, rewarding it for engaging in wholesale copying of copyrighted works without permission, while releasing claims well beyond those presented in the case."

See, full story.

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3/22. The U.S. Patent and Trademark Office (USPTO) published a notice in the Federal Register requesting comments to assist it in preparing a "preliminary plan to review its existing significant regulations in response to the President Obama's Executive Order 13563 titled "Improving Regulation and Regulatory Review". The USPTO added that the purpose "is to determine whether any of these regulations should be modified, streamlined, expanded, or repealed in order to make the Office's regulatory program more effective and less burdensome." The deadline to submit comments is April 21, 2011. The just published request for comments is at Federal Register, March 22, 2011, Vol. 76, No. 55, at Pages 15891-15892. The Executive Order is at Federal Register, January 21, 2011, Vol. 76, No. 14, at Pages 3821-3823.

3/22. Federal Communications Commission (FCC) Chairman Julius Genachowski gave a speech at the CTIA convention in Orlando, Florida, on March 22, 2011. He stated that the "explosion in demand for spectrum is putting strain on the limited supply available for mobile broadband, leading to a spectrum crunch", and that the FCC is moving forward aggressively. He referenced "freeing up" and "unleashing" spectrum, dynamic spectrum sharing, secondary markets for spectrum, white space spectrum, and the potential for voluntary spectrum auctions. Spectrum, Genachowski asserted, "is at the top of my agenda".

3/22. The Federal Communications Commission's (FCC) Enforcement Bureau (EB) issued a document [2 pages in PDF] titled "FCC Enforcement Advisory" regarding FCC regulation of broadcasters' advertising contracts. It states again that "Licensees of commercial broadcast stations must certify that their advertising sales agreements do not discriminate on the basis of race or ethnicity and that all such agreements contain nondiscrimination clauses." The documents notes reports that some contracts contain "no urban/no Spanish" clauses.

Varney Discusses Antitrust and Newspapers and Online Media

3/21. Christine Varney, Assistant Attorney General in charge of the Department of Justice's (DOJ) Antitrust Division, gave a speech titled "Dynamic Competition in the Newspaper Industry".

She said that the internet has "undermined the business model of many daily newspapers". She cited the "migration of both readers and advertisers to Internet sources" and readers "shifting from paid subscriptions to free online news sources".

Christine VarneyVarney (at right) continued that "Online revenue has not offset these losses. Many newspaper owners offer their online content for free, having reasoned that they could attract more readers and thereby sell more advertising. Although online advertising dollars have grown steadily, online advertising rates are just a fraction of print advertising rates for several reasons, including the transient nature of online readership, the multitude of websites offering advertising opportunities, and the huge inventory of potential online advertising space."

She added that "publishers are proposing or implementing a variety of models for charging for access to online content, working to license their content for distribution on e-readers, cell phones, and other devices, exploring ways to monetize their online content better and to make online advertising more effective".

She reviewed the history of antitrust enforcement in the newspaper industry, and recent business review letters issued by the Antitrust Division on collaboration. See, February 24, 2010 letter to MyWire, and March 31, 2010 letter to the Associated Press.

See also, story titled "DOJ Will Not Challenge MyWire Online News Aggregation Service" in TLJ Daily E-Mail Alert No. 2,053, March 2, 2010, and story titled "DOJ Will Not Challenge AP's Internet News Registry" in TLJ Daily E-Mail Alert No. 2,070, April 2, 2010.

She said that proposals for "antitrust immunity for news organizations" are "misguided".

She also said that the Antitrust Division continues proceed as though newspapers, radio stations, television stations, and internet media are not in the same market for the purposes of antitrust analysis.

However, she added that "Whether changes in technology and consumer preferences may lead to the conclusion that a relevant market should include sales of advertisements (or content) by both newspapers and other media remains something that should be analyzed on a case-by-case basis." (Parentheses in original.)

2nd Circuit Reinstates Challenge to FISA Powers

3/21. The U.S. Court of Appeals (2ndCir) issued its opinion [63 pages in PDF] in Amnesty International v. Clapper, holding that the plaintiffs have standing to challenge provisions of the FISA Amendments Act of 2008 that expanded government authority, and loosened standards, for targeting non-U.S. persons believed to be outside of the U.S.

Amnesty International and other groups and individuals filed a complaint in the U.S. District Court (SDNY) against the predecessor of James Clapper, the Director of National Intelligence (DNI), and government officials, alleging that Section 101(a)(2) of the FISA Amendments Act of 2008, or FAA, which is codified at 50 U.S.C. § 1881a, is unconstitutional under the 1st and 4th Amendments.

The District Court dismissed the complaint for lack of standing. It reasoned that since the plaintiffs did not establish that they were the targets of surveillance under the challenged section, they have not suffered the requisite injury in fact to confer standing to sue.

The plaintiffs appealed. The Court of Appeals "reversed" and "vacated and remanded" the judgment of the District Court. The case now goes back to the District Court for resolution on the merits of the claims stated in the complaint.

The Court of Appeals wrote "The plaintiffs' uncontroverted testimony that they fear their sensitive international electronic communications being monitored and that they have taken costly measures to avoid being monitored -- because we deem that fear and those actions to be reasonable in the circumstances of this case -- establishes injuries in fact that we find are causally linked to the allegedly unconstitutional FAA. We therefore find that plaintiffs have standing to challenge the constitutionality of the FAA in federal court."

Background on the Challenged Provisions. The House passed HR 6304 [LOC | WW], the "Foreign Intelligence Surveillance Act of 1978 Amendments Act of 2008", on June 20, 2008. The Senate passed it on July 9, 2008. Former President Bush signed it on July 10, 2008. It is Public Law No. 110-261.

See, stories titled "House Approves FISA Reform Bill" and "Attorney General and DNI Praise FISA Reform Bill" in TLJ Daily E-Mail Alert No. 1,783, June 19, 2008, and "House and Senate Leaders Release Draft FISA Reform Bill" in TLJ Daily E-Mail Alert No. 1,782, June 18, 2008.

At issue in this litigation is Section 101(a)(2) of the FAA, which adds a huge new Section 702 to the FISA. It pertains to "the targeting of persons reasonably believed to be located outside the United States to acquire foreign intelligence information". It adds that under this section the government "may not intentionally target a United States person reasonably believed to be located outside the United States".

The Court of Appeals summarized some of the changes instituted by the new Section 702. "The FAA, in contrast to the preexisting FISA scheme, does not require the government to submit an individualized application to the FISC identifying the particular targets or facilities to be monitored." (FISC is Foreign Intelligence Surveillance Court.)

That is, "whereas under the preexisting FISA scheme the government had to submit an individualized application for surveillance identifying the particular target, facility, type of information sought, and procedures to be used, under the FAA, the government need not submit a similarly individualized application -- it need not identify the particular target or facility to be monitored.

Also, "Under the FAA, in contrast to the preexisting FISA scheme, the FISC may not monitor compliance with the targeting and minimization procedures on an ongoing basis. Instead, that duty falls to the AG and DNI". (AG is Attorney General.)

The Court also wrote that "whereas under the preexisting FISA scheme the FISC had to find probable cause to believe both that the surveillance target is a ``foreign power´´ or agent thereof and that the facilities to be monitored were being used or about to be used by a foreign power or its agent, under the FAA the FISC no longer needs to make any probable-cause determination at all. Instead, the FISC simply verifies that the government has made the proper certifications."

"In practice," the Court of Appeals concluded, "these new authorization procedures mean that surveillance orders can
be significantly broader under the FAA than they previously could have been."

Jameel Jaffer, Deputy Legal Director of the ACLU, argued the case before the Court of Appeals. He stated in an ACLU release that "The law we've challenged permits the government to conduct dragnet surveillance of Americans' international communications, and it has none of the safeguards that the Constitution requires."

The House Judiciary Committee's (HJC) Subcommittee on Crime, Terrorism and Homeland Security will hold a hearing on March 30, 2011, titled "The Permanent Provisions of the PATRIOT Act". The witnesses will be Todd Hinnen, acting Assistant Attorney General (AAG) in charge of the DOJ's National Security Division (NSD), Kenneth Wainstein, an attorney at O'Melveny & Myers and former NSD/AAG, and Mike German of the ACLU. See, notice.

This case is Amnesty International USA, et al. v. James Clapper, et al., U.S. Court of Appeals for the 2nd Circuit, App. Ct. No. 09-4112-cv, Judges Calabresis, Sack and Lynch presiding. The Court of Appeals heard an appeal from the U.S. District Court for the Southern District of New York, Judge John Koeltl presiding.

Microsoft Files Patent Infringement Complaints Against Barnes & Noble Over E-Readers

3/21. Microsoft filed complaints in the U.S. District Court (WDWash) alleging patent infringement, and the U.S. International Trade Commission (USITC) alleging violation of Section 337, against Barnes & Noble, Inc. (BNI), Foxconn International Holdings Ltd., Inventec Corporation (IC), and others.

Microsoft alleges in its District Court complaint [9 pages in PDF] that Barnes & Noble's Android based e-reader, named Nook, and tablet named Nook Color, manufactured by Foxconn, Inventec and others, infringe five U.S. patents held by Microsoft.

See, full story.

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3/21. Secretary of Commerce Gary Locke gave a speech in Brazil in which he discussed intellectual property, STEM education, and other topics. He stated that "Companies also continue to have questions about Brazil’s commitment to supporting innovation, particularly when it comes to intellectual property rights protection." He also said that there is "a recognition that to spur this innovation we all support, we'll need a renewed emphasis on education in the science, technology, engineering, and math fields by sharing best practices and expanding research partnerships".

Go to News from March 16-20, 2011.