TLJ News from April 16-20, 2012

US Telecom Reports on Broadband Capital Expenditures

4/20. The US Telecom released a report [4 pages in PDF] titled "Updated Capital Spending Data Show Continued Significant Broadband Investment in Nation's Information Infrastructure". The author is the US Telecom's Patrick Brogan.

It states that "2011 capital expenditures for the industry as a whole -- including wireline, wireless, and cable operators -- were approximately $66 billion, roughly the same as 2010. Furthermore, the data show that broadband providers have made nearly $1.2 trillion in capital investments from 1996 through 2011."

It also reports that total broadband investment was $70 Billion in 2007 and 2008, and $63 Billion in 2009, and that it "shows no signs of letting up in the foreseeable future".

The report also states that 41% of investment in 2011 was in wireless, 40% was in wireline, and 19% in cable.

The US Telecom publishes in its web site various types of broadband industry statistics, including data on broadband capital investment and data on broadband availability.

House to Consider CISPA on April 26-27

4/20. The House Republican leadership announced that on Thursday, April 26, the House will bill begin consideration of HR 3523 [LOC | WW] is the "Cyber Intelligence Sharing and Protection Act of 2011" or "CISPA". And, it will finish consideration on Friday, April 27. See, Rep. Cantor's schedule for the week.

The House Rules Committee (HRC) has announced that 4:30 PM on Tuesday, April 24, is the deadline for members to submit proposed amendments to the bill.

The House Intelligence Committee (HIC) released a statement. It states that the HIC "provided a draft Amendment in the Nature of a Substitute to the House Rules Committee today to serve as base text for potential amendments" to the CISPA. See, base bill [18 pages in PDF].

The HIC added that "This draft amendment is the discussion draft of the bill that was posted on the HPSCI website on April 16, 2012, and is a necessary parliamentary step before proceeding to floor action next week."

This bill is sponsored by Rep. Mike Rogers (R-MI) and Rep. Dutch Ruppersberger (D-MD), the Chairman and ranking Democrat on the HIC.

The HIC release adds that "Chairman Rogers and Ranking Member Ruppersberger remain committed to continuing to work with all interested parties to continue to improve the bill. Any further agreed changes to the bill would be proposed as amendments when the bill reaches the floor next week."

Rep. Upton Report Covers Auctions, FCC Reform, Cyber Security, and Online Privacy

4/20. The House Commerce Committee (HCC) released a report [13 pages in PDF] by Rep. Fred Upton (R-MI), the Chairman of the HCC, to House Republican leaders regarding the work of the HCC during the first quarter of 2012. This report addresses numerous topics, including incentive auctions, FCC procedural reform, cyber security, and online privacy.

Spectrum Auctions. The report states that "our team spent much of the first session holding hearings, listening to stakeholders, and preparing legislation to free up additional spectrum to support the build-out of the next generation of wireless broadband networks. In the first quarter of 2012, we pushed that legislation over the finish line as part of the Middle Class Tax Relief and Job Creation Act."

It adds that "Growing consumer demand and the increasing number of mobile devices are creating a spectrum crunch. To make more airwaves available for wireless broadband, we advanced legislation to authorize the Federal Communications Commission to conduct voluntary incentive auctions, which give a portion of auction proceeds to licensees who return spectrum to be repurposed for wireless broadband. The result is a more efficient use of our airwaves, vast new swaths of spectrum for wireless broadband development, and a major return for taxpayers who benefit from the auctions."

This bill is HR 3630, [LOC | WW]. See, stories titled "House and Senate Negotiators Reach Agreement on Spectrum Legislation", "Summary of Spectrum Bill", and "Reaction to Spectrum Bill" in TLJ Daily E-Mail Alert No. 2,339, February 17, 2012, story titled "House and Senate Pass Spectrum Bill" in TLJ Daily E-Mail Alert No. 2,340, February 18, 2012, and story titled "Obama Signs Spectrum Bill into Law" in TLJ Daily E-Mail Alert No. 2,345, February 23, 2012.

FCC Reform. This report also addresses HR 3309 [LOC | WW], the "Federal Communications Commission Process Reform Act of 2012". The House, but not the Senate, has passed this bill.

It states that "an industry’s ability to thrive is also affected by the fairness and predictability of the regulations -- and regulators -- that govern it. For that reason, we followed enactment of spectrum reform with common-sense FCC process reform."

See, stories titled "House Passes FCC Process Reform Act", "Summary of Amendments to HR 3309 Approved or Rejected by the House", "House Rejects Amendment Regarding Warning Labels for Surveillance Risks", "House Rejects Amendment Regarding Regulation of Political Speech", "House Rejects Motion Pertaining to Employer Demands for Employee Passwords for Social Networking Sites", "Summary of HR 3309 As Passed by the House", and "Commentary: FCC as an Agent of the Congress" in TLJ Daily E-Mail Alert No. 2,361, March 30, 2012.

The report also states that HR 3310 [LOC | WW], the "Federal Communications Commission Consolidated Reporting Act of 2012", "is expected to clear a vote by the full House soon".

Others Issues. This report also reviews the HCC's Subcommittee on Communications and Technologies hearings on cyber security, including data security, and the role of communications networks in securing cyberspace. This report also addresses the HCC's long running review of online privacy.

More News

4/20. The Federal Communications Commission (FCC) released an agenda for its event on Friday, April 27, 2012, titled "Open Meeting". This agenda contains the same five items as the FCC's preliminary agenda. See, story titled "FCC Releases Tentative Agenda for Meeting of April 27" in TLJ Daily E-Mail Alert No. 2,369, April 12, 2012.

4/20. The Securities and Exchange Commission (SEC) filed a civil complaint in the U.S. District Court (SDNY) against Thomas and John Hunter alleging violation of Section 17 of the Securities Act and Section 10b of the Securities Exchange Act in connection with their alleged touting of penny stocks by e-mail. They were paid to tout certain stocks, but falsely alleged to newsletter recipients that they had a "stock picking robot" that was "a highly sophisticated computer trading program and the product of extensive research and development". They made money from stock promoters and from the sale of newsletter subscriptions. See also, SEC release. This case is SEC v. Thomas Edward Hunter and John Alexander Hunter, U.S. District Court for the Southern District of New York, D.C. No. 12-SV-3123, Judge Jesse Furman presiding.

4/20. Daniyar Zhaxalyk pled guilty in the U.S. District Court (SDTex) to one count of money laundering associated with a hack and dump scheme involving stock market accounts. The Department of Justice (DOJ) stated in a release that "The indictment charged that Zhaxalyk's co-conspirators illegally accessed brokerage accounts to engage in a stock fraud scheme in which the compromised accounts were used to purchase borrowed shares of stock at above-market prices from the defendants’ personal brokerage accounts. Zhaxalyk’s co-conspirators then allegedly repurchased the borrowed shares at the considerably lower market price, returned the borrowed shares to the stock lender and claimed as profit the difference between the market price and the inflated price paid by the compromised victim accounts. Zhaxalyk admitted that he received and made wire transfers and withdrawals of the funds generated from the fraudulent stock sales and supervised other Houston-based students recruited into the scheme to launder funds."

House May Consider Cyber Security Information Sharing Bill

4/19. The House may consider HR 3523 [LOC | WW], the "Cyber Intelligence Sharing and Protection Act of 2011" or "CISPA" during the week of April 23, 2012.

Rep. David Dreier (R-CA), Chairman of the House Rules Committee (HRC), wrote in a letter to members of the House that the HRC "may meet the week of April 23rd to grant a rule that could limit the amendment process for floor consideration" of this bill.

Rep. David DreierRep. Dreier (at right) also stated that "Any Member wishing to offer an amendment must submit" copies to the HRC by 4:30 PM on Tuesday, April 24.

HR 3523 is the House Intelligence Committee (HIC) bill sponsored by Rep. Mike Rogers (R-MI) and Rep. Dutch Ruppersberger (D-MD), the Chairman and ranking Democrat on the HIC.

On April 18, the House Homeland Security Committee (HHSC) amended and approved a related bill, HR 3674 [LOC | WW], the "Promoting and Enhancing Cybersecurity and Information Sharing Effectiveness Act of 2011" or "PRECISE Act". See, story titled "House Homeland Security Committee Approves PRECISE Act" in TLJ Daily E-Mail Alert No. 2,375, April 19, 2012.

Ways and Means Subcommittee Hearing May Address Expired R&D Tax Credit

4/19. The House Ways and Means Committee (HWMC) announced that its Subcommittee on Select Revenue Measures will hold a hearing regarding certain expiring tax provisions on April 26, 2012. See, notice.

The research and development (R&D) tax credit, which is codified at 21 U.S.C. § 41, expired on December 31, 2011. It was last extended at the end of 2010. See, story titled "Tax Bill Enacted With R&D Tax Credit Extension" in TLJ Daily E-Mail Alert No. 2,182, December 18, 2010.

The Congress enacted its first research and development (R&D) tax credit bill in 1981 as a temporary measure. Since then the Congress has repeatedly extended it for one or a few years.

As in prior Congresses, there are numerous bills pending in the House and Senate that would make permanent, or revise and make permanent, the R&D tax credit. However, another short extension, retroactive to January 1, 2012, is a more likely outcome.

The pending House bills include:

The pending Senate bills include:

Bill Shock: New York Sues Sprint Nextel to Compel it to Tax Consumers More

4/19. The state of New York filed a complaint [30 pages in PDF] in state court against Sprint Nextel seeking to compel it to collect more taxes for the state of New York on wireless service, and pay the state treble damages, including for "failure to collect and pay more than $100 million in New York sales taxes", as well as redundant sales taxes imposed by counties, cities, and other political subdivisions of New York.

New York does not allege that Sprint Nextel collected any sales taxes from its customers that it failed to forward to the state. Rather, it merely alleges that Sprint Nextel collected taxes on in-state, but not interstate calls. New York does not dispute Sprint Nextel allocation between in-state and interstate. It asserts the Sprint Nextel must tax customers for interstate calls.

This, New York alleges, is a violation of New York tax law, the New York False Claims Act, and a New York ban on "fraudulent and illegal" conduct.

Sprint Nextel stated in a release that "This complaint is without merit and Sprint categorically denies the complaint's allegations. We have collected and paid over to New York every penny of sales taxes on mobile wireless services that we believe our customers owe under New York state law."

Sprint Nextel added that "With this lawsuit, the Attorney General's office is claiming New York consumers, who already pay some of the highest wireless taxes in the country, should pay even more. We intend to stand up for New York consumers' rights and fight this suit."

New York filed this complaint in the Supreme Court for the State of New York, County of New York, which is a state trial court in New York City.

The complaint states that New York wants the court to "require Sprint to collect and pay sales taxes on the full amount of its fixed monthly charges for voice services going forward".

Sprint Nextel offers flat plans for wireless voice communications service. New York imposes a sales tax on wireless voice communications service. Sprint Nextel collected from its customers, via monthly bills, New York state sales taxes, which it then forwarded to the state of New York.

Moreover, Sprint Nextel collected the sales tax on all in-state calls, but not interstate calls. New York, however, insists that Sprint collect taxes from its customers on all calls, including interstate communications.

The complaint states that "New York law treats fixed monthly charges for wireless voice services as a single, irreducible, taxable service that cannot be broken out for sales tax purposes, Sprint violated the law by failing to collect and pay New York state and local sales taxes on the full amount of the charges."

The state of New York also stated in its complaint against Sprint Nextel that "The various counties within the State of New York, along with New York City and certain school districts and other local entities, impose sales taxes on the identical services. The sales tax rate imposed on such services varies by locality, and the taxes in each must be paid in addition to the New York State sales taxes."

Bill Shock: FCC Touts Its New Web Site

4/19. The Federal Communications Commission (FCC) announced in a release that it has launched a web site titled "Bill Shock: Wireless Usage Alerts for Consumers".

The FCC initiated a rulemaking proceeding in October of 2010 in which it proposed to imposes new regulations wireless carriers to reduce consumers' "bill shock". The FCC proposed to require that service providers provide "notification alerts" to consumers when, for example, they are approaching an allotted limit for voice, text, and data usage.

See, story titled "FCC Adopts Bill Shock NPRM" in TLJ Daily E-Mail Alert No. 2,142, October 19, 2010. That NRPM is FCC 10-180 in CG Docket No. 10-207 and CG Docket No. 09-158. See also, stories titled "FCC Starts Bill Shock Proceeding" and "FCC Releases Paper on Consumer Understanding of Cell Phone Billing Practices" in TLJ Daily E-Mail Alert No. 2,088, May 27, 2010.

The FCC has not adopted rules. Wireless service providers have initiated new free notification processes. And, last year the CTIA adopted a document titled "Consumer Code for Wireless Service".

The FCC's NPRM did not propose to address the underlying prices that service provider charge their customers.

Nor did the NPRM address whether or not consumers are shocked by the extent of federal, state and local taxes, fees and mandatory contributions that are collected from them regularly via their monthly bills.

Nor did the NPRM address whether consumers are shocked by the extent of waste, fraud and abuse in the FCC imposed universal service tax and subsidy programs.

The House Judiciary Committee (HJC) wrote in its report on HR 1002 [LOC | WW], the "Wireless Tax Fairness Act", that consumers are subjected to local, state and federal taxes on communications services at an average rate of 16.3%, and that this is twice as high as the average retail sales tax rate. Moreover, these high taxes decrease consumption of wireless services, and harm related activities, such as development of smartphone applications and wireless e-commerce. See, related story in this issue titled "Update on Wireless Tax Fairness Act".

FCC Commissioner Mignon Clyburn released a statement in which she wrote that "I am pleased to see that the Commission has launched its new ``bill shock´´ website to help consumers track implementation of recent commitments by wireless carriers to voluntarily provide usage alerts before and after consumers exceed their plan limits."

Clyburn added that "When CTIA first announced its bill shock guidelines and its members voluntary commitments, I mentioned that the most important aspect of these guidelines is that CTIA's members agreed to allow the FCC staff to track their compliance with these measures. I applaud CTIA for its continuing efforts to push the industry on voluntary efforts to prevent the consumers from experiencing bill shock."

There is also a bill in the Senate, S 732 [LOC | WW], the "Cell Phone Bill Shock Act of 2011", introduced by Sen. Tom Udall (D-NM) on April 5, 2011. The Senate has taken no action on this bill.

Update on Wireless Tax Fairness Act

4/19. On March 10, 2011, Rep. Zoe Lofgren (D-CA), Rep. Trent Franks (R-AZ), and others introduced HR 1002 [LOC | WW], the "Wireless Tax Fairness Act".

Sen. Ron Wyden (D-OR), Sen. Olympia Snowe (R-ME), and others introduced the companion bill in the Senate, S 543 [LOC | WW], also titled the "Wireless Tax Fairness Act of 2011", on March 10, 2011.

The House has passed its bill last November. The Senate has taken no action.

These bills would not roll back existing taxes. They would only prohibit new discriminatory taxes.

They would impose a five year moratorium on any state or local "new discriminatory tax on or with respect to mobile services, mobile service providers, or mobile service property". It would exempt state universal service taxes, and taxes to fund E-911 communications systems. And, they bills would not affect taxes or fees imposed by the federal Congress or by the Federal Communications Commission (FCC).

The House Judiciary Committee's (HJC) Subcommittee on Courts, Commercial and Administrative Law held a hearing on March 15, 2011.

The HJC amended and passed the bill on July 14, 2011. See, story titled "House Judiciary Committee Approves Wireless Tax Fairness Act" in TLJ Daily E-Mail Alert No. 2,258, July 14, 2011.

The House passed its bill on November 1, 2011. However, the bill has stalled in the Senate.

It was referred to the Senate Finance Committee (SFC). Sen. Wyden and Sen. Snowe are both members. However, that Committee has held no hearings, and taken no other action, on either bill. However, the bill has 19 sponsors, including Sen. Kirsten Gillibrand (D-NY).

These bills recite in their findings that there is a "history and pattern of discriminatory taxation faced by providers and consumers of mobile services".

The House Committee Report states that "the combined state and local tax rate on wireless telecommunication service is still significantly higher than the tax rate on other goods and services".

It states that wireless consumers "now face a combined federal, state, and local tax and fee burden of 16.3 percent, a rate two times higher than the average retail sales tax rate".

Moreover, "The proceeds of certain taxes imposed uniquely on wireless services are increasingly being used to fund government programs that have nothing to do with communications services."

The House report continues that "High wireless tax rates artificially alter the demand market for wireless services. Economic studies have shown that wireless services are elastic: as price increases, quantity demanded decreases."

It explains. "The distortionary effects of an ad valorem tax on wireless services vary inversely with the own-price elasticity of demand for wireless services. Although the demand for wireless service has become more elastic over the last decade, wireless taxes have increased. Consequently, the efficiency loss from wireless taxation has also risen during that period. In states that tax wireless services most aggressively, the efficiency loss from an additional dollar of tax revenue raised may be as high as two dollars. Therefore, federal, local, and state governments should carefully scrutinize the tax rates they currently impose on wireless consumers, recognizing that the tax policies in place can produce more harm than good."

"High wireless taxes discourage a percentage of potential customers from subscribing to wireless services, which results in a smaller tax base and consequently less tax revenue to governments. Wireless carriers' inability to attract these potential customers because of high tax rates means they have less capital to invest in and improve telecommunications infrastructure."

The report concludes that "Consumers ultimately pay the price of high discriminatory taxes on wireless services. In other contexts, high taxes on particular goods and services reflect a legislature's measured view that the good or service imposes a harm on society or the environment or causes some other negative externality. For example, taxes on cigarettes discourage decisions that result in poor health; they also fund the health costs borne by the state or locality when a smoker is unable to pay for a tobacco-related illness at the local hospital. Similarly, taxes on gasoline encourage commuters to travel more efficiently and conserve resources. An analogy between these so-called `sin' taxes and taxes on wireless services, however, is inapposite. There is nothing inherently dangerous about using cell phones; their use actually projects a positive externality on society, e.g. more efficient business communications and more intimate social connections. High taxes on wireless subscriptions are akin to taxes on cigarettes and gasoline even though there is no justifiable reason to discourage use of a cell phone."

It also concludes that "tax policies that discourage wireless use also negatively affect secondary markets for smartphone applications, wireless-based Internet service, and digital goods and services delivered over telecommunications networks."

Colorado Representatives Introduce Targeted TV Bill

4/19. Rep. Scott Tipton (R-CO), Rep. Mike Coffman (R-CO) and Rep. Jared Polis (D-CO) introduced HR 4469 [LOC | WW | PDF], the "The Four Corners Television Access Act of 2012".

This bill would amend 17 U.S.C. § 122(a)(4)(C), regarding satellite carriage of certain broadcast signals, and 47 U.S.C. § 341, regarding cable carriage of certain broadcast signals. However, this bill is narrowly targeted to affect only Montezuma County and La Plata County in the southwest corner of the state of Colorado.

Rep. Tipton, who represents these two counties, issued a release that states that this bill would enable "cable operators to offer Colorado-based broadcast television stations to southwestern Colorado residents by allowing ``retransmission of significantly viewed´´ content (as deemed by Nielsen Media Research statistics). The ``significantly viewed´´ status refers to the demand by residents in the area for Colorado broadcasts, and permits broadcasters and entities to retransmit broadcast signals in this region. One-size-fits-all mandates by the Federal Communications Commission (FCC) currently prohibit this occurrence." (Parentheses in original.)

He added that "Allowing ``retransmission to be permitted´´ gives satellite providers the ability to retransmit Colorado-based broadcasts outside of the current Designated Market Area (DMA) to specific affected Colorado counties that meet certain Nielsen Media Research statistics. This is critical as close to 60% of residents in the designated area depend on satellite television because of the region's geography and other factors."

The FCC adopted satellite television significantly viewed rules in November of 2010 to implement Section 203 of the Satellite Television Extension and Localism Act of 2010 (STELA). See, NPRM (FCC 10-130 in MB Docket No. 10-148) and Report and Order (FCC 10-193).

European Parliament Ratifies PNR Agreement

4/19. The European Parliament (EP) ratified the Passenger Name Record (PNR) agreement between the US and European Union (EU) by a vote of 409 to 226.

The EP stated in a release that "A new agreement on the transfer of EU air passengers' personal data to the US authorities was approved by the European Parliament on Thursday. The deal sets legal conditions and covers issues such as storage periods, use, data protection safeguards and administrative and judicial redress."

The agreement replaces a provisional agreement that has been in effect since 2007. See, story titled "US and EU Sign PNR Data Transfer Agreement" in TLJ Daily D-Mail Alert No. 1,618, July 30, 2007.

The EP release states that "Under the new agreement, US authorities will keep PNR data in an active database for up to 5 years. After the first 6 months, all information which could be used to identify a passenger would be ``depersonalized´´, meaning that data such as the passenger's name or her/his contact information would be codified."

It states that "PNR data will be used mainly to prevent, detect, investigate and prosecute terrorism and serious transnational crimes."

Janet NapolitanoJanet Napolitano, US Secretary of Homeland Security, stated in a release that the US and EU "continue to take vital steps to fight terrorism and transnational threats, while protecting privacy and civil rights".

Sophie in 't Veld, an EP member representing the Netherlands who voted against ratification, wrote in her website on April 4 that "The pressure to adopt the Agreement is huge", but that "The urgency to adopt the EU-US Agreement is in stark contrast to the complete absence of any urgency in the case of PNR transfer to other countries".

She argued that "The push for an EU-US agreement seems to be driven mainly by the concern for transatlantic relations. True, Europe and the United States have a special relationship. But diplomatic relations cannot take precedence over the rights of our own EU citizens."

FCC Releases Order on Reconsideration in EAS Proceeding

4/19. The Federal Communications Commission (FCC) adopted and released an Order on Reconsideration [7 pages in PDF] in its rule making proceeding regarding the Emergency Alert System (AES).

On January 10, 2012, the FCC released its Fifth Report and Order [130 pages in PDF] in this long running proceeding. That order continued the FCC's process of revising its EAS rules to specify the manner in which EAS participants must be able to receive alert messages formatted in the Common Alerting Protocol (CAP). The FCC adopted this item on January 9, 2012, and released the text on January 10. It is FCC 12-7 in EB Docket No. 04-296.

The just released order on reconsideration pertains to the applicability of text to speech (TTS) specifications set forth in the EAS-CAP Industry Group (ECIG) Implementation Guide recommendations. It amends the EAS rules to provide that EAS participants may, but are not required, to employ the TTS functions described in the ECIG Implementation Guide.

This order is FCC 12-41 in EB Docket No. 04-296.

People and Appointments

4/19. Alan Behr joined the New York City office of the law firm of Phillips Nizer as a partner. His work includes copyright and  trademark matters for publishing and technology clients. He was previously at Alston & Bird. Before that, he was the chief legal officer at Atari.

4/19. The Senate Judiciary Committee (SJC) held an executive business meeting at which it approved the nominations of William Kayatta to be a Judge of the U.S. Court of Appeals (1stCir), John Fowlkes (USDC/WDTenn), Kevin McNulty (USDC/DNJ), Michael Shipp (USDC/DNJ), and Stephanie Rose (USDC/SDIowa). The SJC held over consideration of Michael Shea (USDC/DConn), Gonzalo Curiel (USDC/SDCal), Robert Shelby (USDC/DUtah). The agenda for the SJC's executive business meeting of April 26, 2012, again lists consideration of these three nominees.

More News

4/19. The Government Accountability Office (GAO) released a report [29 pages in PDF] titled "Federal Telework: Program Measurement Continues to Confront Data Reliability Issues".

4/19. Rep. Barbara Mikulski (D-MD) introduced S 2323 [LOC | WW], a bill to provide appropriations for the Department of Commerce (which includes the U.S. Patent and Trademark Office (USPTO), the National Telecommunications and Information Administration (NTIA), and Bureau of Industry and Security (BIS)), the Department of Justice (DOJ), and science related agencies. Sen. Mikulski is the Chairman of the Senate Appropriations Committee's (SAC) Subcommittee on Commerce, Justice, Science and Related Agencies. See also, Sen. Mikulski's release.

Supreme Court Rules in Kappos v. Hyatt

4/18. The Supreme Court issued its opinion in Kappos v. Hyatt, regarding procedure in the District Court when a patent applicant whose claims have been denied by the U.S. Patent and Trademark Office's (USPTO) examiner files an action under 35 U.S.C. § 145.

The Supreme Court held that the patent applicant may submit evidence to the District Court not submitted to the patent examiner, and that there are no evidentiary restrictions.

See, full story.

Rep. Issa Releases Revised Draft of DATA Bill

4/18. Rep. Darrell Issa (R-CA), Chairman of the House Oversight and Government Reform Committee, released a discussion draft [51 pages in PDF] of a manager's amendment to HR 2146 [LOC | WW], the "Digital Accountability and Transparency Act".

Rep. Darrell IssaRep. Issa (at right) introduced this bill on June 13, 2011.

This bill would provide for the creation of financial data reporting standards for federal agencies and recipients of federal funding.

It would create a five member bipartisan Federal Accountability and Spending Transparency Commission.

This Commission would be "responsible for the collection, storage, and public disclosure of information about Federal spending". It would also be responsible for "Standardizing common data elements and data reporting standards to foster transparency and accountability for Federal spending".

This bill would require this Commission to oversee the online publication of federal spending data in a successor web site to

The purpose of the bill is to increase federal government financial transparency, enable anyone with web access to track federal spending, and facilitate the detection of waste, fraud and abuse.

USPTO and UKIPO Release Report on Search and Examination Collaboration

4/18. The U.S. Patent and Trademark Office (USPTO) and the U.K. Intellectual Property Office (UKIPO) released a joint report titled "Preliminary Progress Report for USPTO-UKIPO Work Sharing Initiative". The two offices recommend that they should continue their work sharing cooperation.

In November of 2010 the USPTO and UKIPO began a program for reutilizing each other's search and examination work products on corresponding patent applications.

The just released report states that this work sharing has a "beneficial impact on efficiency and quality".

It recommends that "further cooperation should be undertaken to explore the differences in practice between the Offices, particularly regarding novelty and inventive step/non-obviousness. Collaboration on these issues could facilitate a deeper understanding among examiners and help to close gaps, in turn leading to more effective reutilization of work products".

Also, "the potential benefits of work sharing may not be fully exploited until there is a better understanding regarding the applicability of prior art. Accordingly, the USPTO and UKIPO should continue their work sharing cooperation, with a focus on increasing examiner understanding of each Office's practice."

David Kappos, Director of the USPTO, stated in a release that "This work-sharing effort represents a major step forward in our ongoing cooperation with the UKIPO, and we are pleased with the results thus far. By making more efficient and effective use of each other’s work, we can reduce the cost of doing business and help innovators move their products to market faster, with more predictability and certainty."

Verizon Announces Plans to Sell 700 MHz A and B Spectrum

4/18. Verizon Wireless (VW) announced in a release that it "plans to conduct an open sale process for all of its 700 MHz A and B spectrum licenses in order to rationalize its spectrum holdings. The licenses cover dozens of major cities across the country, as well as a number of smaller and rural markets."

VW stated that it "obtained the 700 MHz A and B licenses, as well as nationwide 700 MHz upper C licenses (with the exception of Alaska which has since been acquired), in FCC Auction 73 in 2008." (Parentheses in original.) See, story titled "FCC Releases Details of 700 MHz Auction" in TLJ Daily E-Mail Alert No. 1,735, March 24, 2008.

It added that it "is deploying its 4G LTE network, which currently covers more than 200 million people, on its nationwide 700 MHz upper C spectrum. If Verizon Wireless is successful in acquiring additional AWS (Advanced Wireless Services) spectrum licenses, it will use AWS spectrum in conjunction with its 700 MHz upper C band spectrum to deploy additional LTE capacity." (Parentheses in original.)

"Accordingly, the sale of the A and B licenses is contingent on the close of Verizon Wireless’ pending purchases of AWS licenses from SpectrumCo (an entity jointly owned by Comcast, Time Warner Cable, and Bright House Networks), Cox and Leap Wireless. These transactions are at varying stages of review by the Federal Communications Commission (FCC) and the Department of Justice (DOJ) and are expected to close by mid-summer." (Parentheses in original.)

Dennis Wharton, EVP of the National Association of Broadcasters (NAB), stated in a release that "Today's proposal by Verizon to sell reallocated broadcast TV spectrum involves airwaves in the largest urban markets in America that it purchased more than four years ago. The fact that it has warehoused this 'beachfront property' raises the fundamental question of whether a spectrum shortage actually exists. Rather than simply take at face value the specious claims of wireless broadband providers, policymakers should heed the words of Martin Cooper, the inventor of the cellphone, who disputes the notion of a spectrum crisis."

Harold Feld of the Public Knowledge (PK) stated in a release that "There is less than meets the eye to Verizon's spectrum sale. At the end of the day, Verizon and the cable companies will still have created a cartel in which Verizon will rule the air for wireless broadband and cable will offer the only widespread true high-speed landline Internet services."

Feld also asserted that "Verizon is trying to use the mere offer of a spectrum sale tempt the FCC and the Justice Department into approving the deal with the cable companies, and the agencies should resist the temptation. Recent history of such spectrum sell-offs shows that when Verizon and AT&T sell off spectrum, it's Verizon who buys AT&T's, and vice versa."

Derek Turner of the Free Press stated in a release that "Until today's announcement, Verizon denied that it was hoarding spectrum. This sale demonstrates that Verizon has in fact warehoused spectrum and the company will likely profit handsomely from this spectrum speculation strategy."

Turner added that "The undeniable truth is a disproportionate amount of the country's most valuable spectrum is concentrated in the hands of Verizon and AT&T, who enjoy market shares that dwarf other sectors of the American economy."

IAB Reports on Internet Ad Revenues

4/18. The Internet Advertising Bureau (IAB) released a report [29 pages in PDF], prepared for it by Price Waterhouse Coopers (PWC), titled "IAB Internet Advertising Revenue Report".

It states that internet advertising revenues in the US "totaled $31.7 billion for the full year of 2011, with Q3 2011 accounting for approximately $7.8 billion and Q4 2011 totaling approximately $9.0 billion. Internet advertising revenues for the full year of 2011 increased 22 percent over 2010."

It also states that "Mobile advertising in the US totaled $1.60 billion during the full year 2011, a 149% increase from the prior year total of $0.64 billion."

David Silverman of PWC stated in this report that "The year 2011 saw mobile advertising become a meaningful category. By combining some of the best features of the internet, along with portability and location-based technology, mobile advertising is enabling marketers to deliver timely, targeted, relevant, and local advertisements in a manner that was not previously possible. It is for these reasons that we expect strong growth to continue with mobile advertising."

Randall Rothenberg, head of the IAB, stated in a release that "With the proliferation of smartphones and tablets, it is likely that the tremendous growth in mobile will continue as these screens become even more crucial to the marketing mix".

The report also states that "Search remains the largest online advertising revenue format, accounting for 46.5% of 2011 revenues, up from 44.8% in 2010. In 2011, Search revenues totaled $14.8 billion, up almost 27% from $11.7 billion in 2010."

It also states that "Display-related advertising revenues totaled $11.1 billion or 34.8% percent of 2011 revenues, up 15% from the $9.6 billion in 2010. Display-related advertising includes Display Banner Ad (21.5% of 2011 revenues, or $6.8 billion), Rich Media (4.1%, or $1.3 billion), Digital Video (5.7%, or $1.8 billion), and Sponsorship (3.5%, or $1.1 billion)."

The report also measures advertiser categories. Retail is the largest. The next five are financial services, telecom, auto, computing products, and leisure and travel.

The report also states that in 2011 internet advertising ($31.7 Billion) surpassed cable TV advertising ($30.0 Billion), but is still behind broadcast TV advertising ($38.5 Billion). Newspaper advertising ($20.7 Billion) continues to decline. It is at half its level of five years ago.

Senate Judiciary Committee Holds Hearing on PCLOB Nominees

4/18. The Senate Judiciary Committee (SJC) held a hearing on the five nominees to the Privacy and Civil Liberties Oversight Board (PCLOB).

The five nominees -- James Dempsey, David Medine, Patricia Wald, Elisebeth Cook, Rachel Brand -- appeared as witnesses. They submitted no written statements, and made no opening statements.

Three of the nominees are notable for their lack of experience with information or communications technologies, or in legal fields involving privacy or surveillance. Two of the nominees would bring significant expertise and experience to the PCLOB. Dempsey has vast experience, particularly with respect to electronic surveillance issues. Medine also has much experience in privacy related matters. Although, his experience relates to the impact of business practices on consumers' privacy, and particularly financial privacy, rather that the impact of government surveillance and data collection on citizens' privacy, which is the work of the PCLOB.

The two Republican nominees, Cook and Brand, are youthful attorneys whose brief careers have included a series of political and partisan positions, but little that relates to the work of the PCLOB.

The Democratic nominees are Dempsey, Medine and Wald. Wald has little background that relates to the work of the PCLOB. Moreover, Wald retired from the federal bench in 1999, and is now 83.

Three of the nominees are current or recent attorneys at the law firm of Wilmer Hale -- Medine, Cook and Brand.

See, full story.

VAWA Reauthorization Bill Would Revise Section 223's Ban on Annoying People on the Internet

4/18. The Senate is scheduled to resume reconsideration on Wednesday, April 18, of the motion to proceed to S 1925 [LOC | WW], the "Violence Against Women Reauthorization Act of 2011". This long bill has little to do with information or communications technology (ICT). However, Section1003 of the bill would clean up the current poorly drafted language in the Communications Act, enacted in 2006, that makes it a crime to "annoy" someone on the internet. If enacted, it would still be a crime to "abuse, threaten or harass" someone with anonymous internet communications.

In January 2006 former President Bush signed into law a Department of Justice Reauthorization Act. That bill was HR 3402 (109th Congress). It is now Public Law No. 109-162. It included the Violence Against Women Act (VAWA). That VAWA included amendments to 47 U.S.C. § 223, which prohibits obscene or harassing phone calls.

The 2006 VAWA amended Subsection 223(a)(1)(C) to make it a crime to utilize a "telecommunications device" without disclosing one's identity "with intent to annoy, abuse, threaten, or harass".

The 2006 VAWA also added a new Subsection 223(h)(1(C), which provides that for the purposes of the above quoted Subsection 223(a)(1)(C), the term "telecommunications device" also "includes any device or software that can be used to originate telecommunications or other types of communications that are transmitted, in whole or in part, by the Internet (as such term is defined in section 1104 of the Internet Tax Freedom Act (47 U.S.C. 151 note))." (Parentheses in original.)

Thus, "annoying" someone on the internet became a crime. This prohibition has obvious Constitutional infirmities.

During the First Session of the 109th Congress, the House Judiciary Committee (HJC) and its staff produced a cyber stalking bill. That carefully prepared bill did not become law. Rather, a much different version pushed by Rep. Jim McDermott (D-WA) was substituted for the HJC version during last minute negotiations and vote trading over HR 3402 (109th Congress).

For a more detailed explanation of this late amendment, see story titled "Bush Signs DOJ Reauthorization Bill" in TLJ Daily E-Mail Alert No. 1,284, January 6, 2006. See, subsection titled "The Internet as a Telecommunications Device".

The VAWA reauthorization now being considered by the Senate would revise the 2006 amendments to Section 223. It leaves in place the expansion of the meaning of "telecommunications device" to encompass internet communications. It eliminates the use of the word "annoy" in Section 223.

S 1925 would make the following changes to Subsection 223(a)(1)(C). Deletions are shown in strikethrough. Addition are shown in red.

Sen. Patrick Leahy (D-VT) introduced this bill on November 30, 2011. It has 60 cosponsors. The Senate Judiciary Committee (SJC) amended and approved this bill on February 2, 2012.

A related bill in the House, HR 4271 [LOC | WW], the "Violence Against Women Reauthorization Act of 2012", would make identical changes to Section 223. Rep. Gwen Moore (D-WI) introduced it on March 27, 2012. It was referred to the HJC and its Subcommittee on Crime, Terrorism, and Homeland Security, the House Commerce Committee (HCC), House Natural Resources Committee, and House Financial Services Committee.

House Committee Approves FISMA Amendments Bill

4/18. The House Oversight and Government Reform Committee (HOGRC) amended and approved, by unanimous voice vote, HR 4257 [LOC | WW], the "Federal Information Security Amendments Act of 2012". See, amendment in the nature of a substitute [26 pages in PDF] offered by Rep. Darrell Issa (R-CA).

The Congress enacted the Federal Information Security Management Act (FISMA) in 2002. It pertains to cyber security on the information technology systems that support the federal government.

Rep. Issa, the Chairman of the HOGRC, and Rep. Elijah Cummings (D-MD), the ranking Democrat on the HOGRC, introduced HR 4257 on March 26, 2012.

House Homeland Security Committee Approves PRECISE Act

4/18. The House Homeland Security Committee (HHSC) amended and approved HR 3674 [LOC | WW], the "Promoting and Enhancing Cybersecurity and Information Sharing Effectiveness Act of 2011" or "PRECISE Act".

The HHSC approved an amendment in the nature of a substitute (AINS) offered by Rep. Dan Lungren (R-CA), and several amendments to the AINS. See also, HHSC summary of AINS.

The HHSC approved by voice vote an amendment offered by Rep. Michael McCaul (R-TX) that pertains to authority to conduct cyber security operations on federal systems, and federal preemption.

The HHSC approved by voice vote an amendment offered by Rep. McCaul regarding creation of a Cybersecurity Domestic Preparedness Consortium, and one or more Cybersecurity Training Centers.

The HHSC approved by voice vote an amendment offered by Rep. Pete King (R-NY) that inserts references to Title XI of the National Security Act of 1947.

The HHSC approved by voice vote an amendment offered by Rep. Cedric Richmond (D-LA).

The HHSC approved by voice vote an amendment offered by Rep. Janice Hahn (D-CA) regarding oversight by the Privacy Officer of the Department of Homeland Security.

Tech Groups Endorse CISPA and other Cyber Security Bills

4/18. The Software & Information Industry Association (SIIA), Telecommunications Industry Association (TIA), CTIA and other technology groups sent a letter to Rep. John Boehner (R-OH), the Speaker of the House, and Rep. Nancy Pelosi (D-CA), the Minority Leader, regarding cyber security legislation.

They wrote that "We urge you to pass legislation on the following issues that would make substantial improvements to cybersecurity: improved information sharing through H.R. 3523; reform of Federal Information Security Management Act (FISMA) through H.R. 4257; and additional cybersecurity R&D through H.R. 2096 and H.R. 3834."

HR 3523 [LOC | WW] is the "Cyber Intelligence Sharing and Protection Act of 2011" or "CISPA". The House Intelligence Committee (HIC) approved it on November 30, 2011.

HR 4257 [LOC | WW] is the "Federal Information Security Amendments Act of 2012". The House Oversight and Government Reform Committee (HOGRC) amended and approved it on April 18, 2012. See, related story in this issue titled "House Committee Approves FISMA Amendments Bill".

They also expressed their support for "enhanced criminal penalties for cybercrime and to promote a single, federal standard for data breach notification and security".

The other parties to this letter are the Information Technology Industry Council (ITIC), Bay Area Council, Computing Technology Industry Association, Internet Security Alliance, Semiconductor Industry Association (SIA), Silicon Valley Leadership Group, and Technology CEO Council.

More News

4/18. The House Homeland Security Committee's (HHSC) Subcommittee on Transportation Security postponed its hearing titled "Building Secure Partnerships in Travel, Commerce, and Trade with the Asia-Pacific Region", which had been scheduled for April 18. The witnesses will include Mark Koumans (DHS) and John Halinkski (DHS/TSA).

4/18. The Public Knowledge (PK) released a statement in which it complained that Trans-Pacific Partnership (TPP) negotiation "is being done behind doors closed to the general public". Although, international trade negotiations, like almost all international negotiations, are conducted in meetings closed to the public and reporters. The PK underlying complaint is that this trade agreement will, among other things, aid copyright holders in protecting their rights.

4/18. The Government Accountability Office (GAO) released a report [PDF] titled "Intelligent Transportation Systems: Improved DOT Collaboration and Communication Could Enhance the Use of Technology to Manage Congestion".

Supreme Court Reverses in Caraco Pharmaceutical v. Novo Nordisk

4/17. The Supreme Court issued its opinion in Caraco Pharmaceutical v. Novo Nordisk, reversing the Court of Appeals. This case pertains to the Hatch Waxman Act.

The Supreme Court held that "a generic manufacturer may employ" the counterclaim provision of the Hatch Waxman Act "to force correction of a use code that inaccurately describes the brand's patent as covering a particular method of using the drug in question".

Rep. Henry WaxmanRep. Henry Waxman (D-CA) (at right), who had filed an amicus curiae brief, stated in a release that "I welcome the decision by the U.S. Supreme Court on the Caraco v. Novo case. While the issues in the case may seem arcane, the fact of the matter is that allowing brand companies to exaggerate the breadth of their patent protections in their listings with FDA served as a real block to generics. I am pleased that the courts unanimously agreed with that view. This decision is in the interest of American consumers who should have the benefit of competition and lower prices."

See also, April 4, 2010 opinion of the U.S. Court of Appeals (FedCir).

Justice Kagan wrote the opinion for a unanimous court. Justice Sotomayor wrote a concurring opinion.

This case is Caraco Pharmaceutical v. Novo Nordisk, Supreme Court of the U.S., Sup. Ct. No. 10-844, a petition for writ of certiorari to the U.S. Court of Appeals for the Federal Circuit, App. Ct. No. 2010-1001.

Rep. Smith and Rep. Schultz Introduce Bill Pertaining to Tax Return Identity Theft

4/17. Rep. Debbie Schultz (D-FL) and Rep. Lamar Smith (R-TX) introduced HR 4362 [LOC | WW], the "Stopping Tax Offenders and Prosecuting Identity Theft Act".

Rep. Debbie SchultzRep. Smith and Rep. Schultz (at right) issued a release that states that "last year alone more than 850,000 tax returns and $5.8 billion were associated with fraudulent tax refunds involving identity theft".

They tout this bill as a way to fight tax return identity theft, in which criminals file false tax returns using the name and social security number of another person, in order to fraudulently receive a refund owed to that person.

It would make tax fraud (26 U.S.C. § 7206 or 26 U.S.C. §7207) a predicate offense for elevating identity theft (18 U.S.C. § 1028) to aggravated identity theft (18 U.S.C. § 1028A).

It would also amend 18 U.S.C. § 1028, which currently prohibits only the theft of the identity of an individual person, to also prohibit the theft of the identity of a business or other entity.

It would also direct the Department of Justice (DOJ) "to bring more perpetrators of tax return identity theft to justice". It would also direct the DOJ to report on the incidence of tax return identity theft, and the effectiveness of current statutes, and make recommendations for further amendments to statutes to further the prosecution of tax return identity theft.

This bill was referred to the House Judiciary Committee (HJC). Rep. Smith is the Chairman. Rep. Schultz is not a member. However, she was a member until she took leave to serve as Chairman of the Democratic National Committee (DNC).

Barnett to Leave FCC

4/17. James Barnett, Chief of the Federal Communications Commission's (FCC) Public Safety and Homeland Security Bureau (PSHSB) will leave the FCC at the end of April. See, FCC release.

He will return to the Potomac Institute for Policy Studies.

The FCC has not yet announced a replacement. David Furth, the Deputy Chief of the FCC's PSHSB, will be the acting Chief.

Barnett has overseen the FCC's proceedings regarding location surveillance mandates for wireless devices, expanding the FCC's outage reporting mandates to cover interconnected voice over internet protocol (VOIP) service providers and broadband internet access service (BIAS) providers, and reliability and resiliency of communications networks.

He also created the PSHSB's Cybersecurity and Communications Reliability Division, which was involved with service providers in developing "recommendations for voluntary action by Internet service providers (ISPs) to combat three major cyber security threats, including botnets, attacks on the Domain Name System (DNS), and Internet route hijacking". See, story titled "FCC CSRIC Makes Recommendations Regarding ISP Cyber Security" in TLJ Daily E-Mail Alert No. 2,355, March 24, 2012.

More News

4/17. Rep. Blaine Luetkemeyer (R-MO) and Rep. David Scott (D-GA) introduced HR 4367 [LOC | WW]. This bill would amend the Consumer Credit Protection Act, which is also known as the Electronic Fund Transfer Act, to limit the fee disclosure requirement for an automatic teller machine to the screen of that machine. It was referred to the House Financial Services Committee. Rep. Luetkemeyer and Rep. Scott are members.

4/17. The White House news office announced in a release that President Obama will welcome Prime Minister Yoshihiko Noda of Japan to the White House on Monday, April 30, 2012. "The President looks forward to holding discussions with the Prime Minister on a wide range of bilateral, regional and global issues, including the U.S.-Japan Security Alliance, economic and trade issues, and deepening bilateral cooperation. The two leaders will also discuss regional and global security concerns."

4/17. The Federal Communications Commission (FCC) set comment deadlines for its Notice of Proposed Rulemaking and Notice of Inquiry (NPRM and NOI) [84 pages in PDF] regarding use of MSS spectrum for terrestrial broadband. The deadline to submit initial comments is May 17, 2012. The deadline to submit reply comments is June 1, 2012. The deadline to submit comments regarding the proposed information collection requirements is June 18, 2012. The FCC adopted and released this item on March 21, 2012. It is FCC 12-32 in WT Docket No. 12-70, ET Docket No. 10-142, and WT Docket No. 04-356. See, notice in the Federal Register, Vol. 77, No. 74, Tuesday, April 17, 2012, at Pages 22720-22748. See also, story titled "FCC Adopts NPRM Regarding Use of MSS Spectrum for Terrestrial Broadband" in TLJ Daily E-Mail Alert No. 2,353, March 22, 2012.

NAB Chief Discusses Legislative and Regulatory Issues

4/16. Gordon Smith, head of the National Association of Broadcasters (NAB), gave a speech in Las Vegas at the NAB Show. He discussed recent, current and potential legislative and regulatory proceedings.

Gordon SmithPerformance Rights Act. Smith (at right) stated that "When I first arrived at NAB, we were fighting passage of the Performance Rights Act, a bill to levy a fee on local radio that had the momentum of a fast moving freight train. But because of some very smart leaders in both the radio and TV business, NAB was able to thwart this piece of legislation that could have devastated the financial model of free and local radio."

Previous Congresses have considered, but not enacted, such legislation. See, for the 111th Congress, HR 848 [LOC | WW], the "Performance Rights Act", and S 379 [LOC | WW]. There was also related legislation in the 110th Congress. See also, story titled "Performance Rights Act Reintroduced" in TLJ Daily E-Mail Alert No. 1,896, February 10, 2009.

However, the record industry has not forgotten the issue. Moreover, Victoria Espinel, the U.S. Intellectual Property Enforcement Coordinator, offered twenty legislative recommendations to Congress regarding intellectual property law on March 15, 2011. That list includes "creating a right of public performance for copyright owners for sound recordings transmitted by over-the-air broadcast stations". See, story titled "Espinel Offers 20 IP Legislative Recommendations" in TLJ Daily E-Mail Alert No. 2,212, March 30, 2011.

Incentive Auctions. Smith stated that "On the TV front, this year we worked successfully with our friends in Congress to shape a piece of spectrum legislation that allows television stations to participate in a voluntary auction, but ensures that those not participating are held harmless."

He added that "we averted a spectrum grab from misguided friends who would have you believe that broadcasting is yesterday's technology."

"We have demonstrated that through engaging the other side, through our unity and by using all our tools, we can change the course of legislation that threatens the public's access to local radio and TV."

But, he also offered this warning. "Recent press reports quote the telecommunications industry saying the spectrum legislation passed by Congress is only the beginning -- a ``down payment´´ of what they're seeking in terms of access to the airwaves. They want us out of this game. We can't let down our guard."

Retransmission Consent. Smith stated that "We're also fighting to ensure that viewers continue to have dynamic content choices, by retaining a free market retransmission consent process." He said that "Stations deserve to be allowed to negotiate for compensation of their highly valued programming."

He continued that "some cable and satellite companies don't want to pay a fair rate for the signals of local stations. ... The other side says the market is broken, but with nearly all retransmission consent deals being completed successfully, the cable and satellite lobby's notion of ``market failure´´ is simply false."

Julius GenachowskiFederal Communications Commission (FCC) Chairman Julius Genachowski (at left) also spoke at the same event. He said in his speech that "the FCC's approach so far on retrans has generally been to resist calls for agency intervention and encourage private, market-driven agreements between broadcasters and cable and satellite providers. The basic view is that it is both economically sensible and consistent with the statutory scheme for broadcasters that have invested in desirable programming to seek and receive retransmission fees."

Genachowski elaborated that "the calls for agency intervention continue. The cable industry points to historical benefits that broadcasters have received from government, and argues strongly that these give broadcasters an unfair advantage in a marketplace that has changed significantly since the retransmission consent law was adopted. Consumer groups and others are concerned about effects on consumers and on independent cable programmers."

He also noted that "We opened an FCC proceeding because these are important issues, and we continue to watch the marketplace carefully to determine whether further Commission action is warranted."

This proceeding is MB Docket No. 10-71.

The retransmission consent regulatory regime was established by the Cable Act of 1992, and is further implemented by FCC rules. However, the FCC has little statutory authority in this area.

47 U.S.C. § 325 provides that "No cable system or other multichannel video programming distributor shall retransmit the signal of a broadcasting station, or any part thereof, except ... with the express authority of the originating station".

That is, broadcasters can charge cable companies and other MVPDs for retransmission of their programming. The companies have been negotiating retransmission consent contracts for 18 years.

Unlike in 1992, there are now usually multiple MVPDs in each market. When one MVPD has permission to retransmit a particular program, but another does not, consumers can switch providers. However, there are switching costs. Subscribers of a particular MVPDs can experience unexpected disruption of programming that they want to watch if a new retransmission consent agreement is not reached.

SOPA and PIPA. Smith also offered his assessment of the success of Google and other companies in blocking further House and Senate consideration of bills that would address web sites dedicated to infringing activity.

Those bills are HR 3261 [LOC | WW], the "Stop Online Piracy Act" or "SOPA", and S 968 [LOC | WW], the "Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011", "PROTECT IP Act", or "PIPA".

"Earlier this year, we witnessed a debate that pitted the content community against the technology community ... The idea behind SOPA and PIPA was simple and straightforward: Don't steal our creative content."

"But it didn't matter," said Smith, "The technology community -- the Googles and Wikis -- used their medium just as we did -- to create a powerful megaphone to change forever how battles are won, or lost, inside the Beltway.

"They changed the debate. Shockingly, ``Thou shalt not steal,´´ became ``Do not censor the Internet.´´"

Internet TV. Smith also discussed competitive threats to broadcasters. "We must continue to look for ways to integrate the power of broadcasting and broadband to improve the viewer experience. Our adversaries -- your competitors -- are doing this. They're smart. They're ruthless. And they are well-financed."

He said that "The current broadcasting model can be undone by technology ... or government ... or some unintended consequence from either."

"So let me get this straight. Wireless carriers want to roll out a mobile TV service, just like ours. And they are asking the government for more of our spectrum to do it. And their service, most assuredly, would not be free." Smith added that "It seems to me that the government could be in the position of picking the wireless industry as the winner and the consumer as the loser."

He said that "the wireless industry's ``one-to-one´´ architecture could never match our ability to broadcast voice and video to the masses. Broadband can never replicate the lifeline role of the local broadcaster. ... Especially in an emergency."

Radio Tuners in Mobile Phones. "This is a standard feature on cell phones in Europe and Asia", said Smith. "Many phones in the U.S. already have this capability, but the carriers don't make that known and may refuse to activate the chip. Why?

"Some say because they have a vested interest in charging consumers with fees for data streaming."

He continued that "given the certain failure of mobile phones in a lifeline situation, we're hopeful that over time, carriers will come to understand and appreciate the importance of having an activated radio tuner in these devices, and to off load their ever congested airwaves."

He added that "We also need to be on tablets, laptops and game consoles and on mobile devices not yet developed."

Genachowski Picks Gary Epstein for FCC Incentive Auctions Task Force

4/16. Federal Communications Commission (FCC) Chairman Julius Genachowski announced in a speech at the NAB Show in Las Vegas that Gary Epstein "will be joining Ruth Milkman in leading" the FCC incentive auctions task force. See also, FCC release.

See also, story titled "Genachowski Forms Incentive Auction Task Force at FCC" in TLJ Daily E-Mail Alert No. 2,353, March 22, 2012.

Epstein was Chief of the FCC's Common Carrier Bureau from 1981 to 1983. He was a long time partner in the Washington DC office of the law firm of Latham & Watkins, and Chair of its Communications Practice Group. He retired in 2009.

Genachowski said that Epstein is "one of the country's top experts on media and communications law and policy, with decades of experience with broadcasting, wireless and auctions".

He also stated that the FCC "will be assisted by world-leading experts, including some of the world’s most distinguished auction-design experts. This group includes Paul Milgrom, winner of the prestigious Nemmers Prize, as well as Jon Levin, winner of the John Bates Clark medal for the nation’s top economist under 40." See also, story titled "FCC Names Incentive Auction Consultants" in TLJ Daily E-Mail Alert No. 2,358, March 27, 2012.

The FCC Chairman also said that "The work of our Task Force and staff will feed into a robust public process, which will include webinars, workshops, public notices, and rulemaking proceedings."

House Intelligence Committee Releases Statement on CISPA

4/16. The House Intelligence Committee (HIC) released a statement that defends provisions of  HR 3523 [LOC | WW], the "Cyber Intelligence Sharing and Protection Act of 2011" or "CISPA", and announced several forthcoming revisions, including "new proposed amendments that would be considered when the bill reaches the House floor".

This bill is sponsored by Rep. Mike Rogers (R-MI) and Rep. Dutch Ruppersberger (D-MD), the Chairman and ranking Democrat on the HIC. The HIC amended and approved it on November 30, 2011.

Some of the criticism of the CISPA addresses specific language in the bill. Some criticism is hyperbole without basis in the text of the bill.

The just released statement states that "The Rogers-Ruppersberger bill does not provide any authority or levy any requirements to block access to accounts or websites, or to remove content. The bill's authority is limited to the identification, obtaining, and sharing of cyber threat information."

It continues that "The bill is intended to defend against advanced cyber threats, such as threats from advanced nation-state actors like China. The definition has therefore been narrowed to remove the term ``intellectual property´´ from all definitions in the bill. This change was made to avoid any misunderstanding and to clarify that the bill is intended to defend against efforts to gain unauthorized access to systems or networks, including efforts to gain such unauthorized access to steal private or government information. The definitions remain technology-neutral in order to be flexible enough to address the rapidly changing cyber threat spectrum; the definitions also remain limited only to information that directly pertains to threats or vulnerabilities of networks or systems."

This document also states that there will be a new amendment regarding government accountability. "A new provision has been added to permit federal lawsuits against the government for any violation of restrictions placed on the government’s use of voluntarily shared information, including the important privacy and civil liberties protections contained in the bill. Through such a lawsuit, individuals could obtain actual damages, costs, and attorney's fees."

House Committees to Mark Up Cyber Security Bills

4/16. The House Homeland Security Committee (HHSC) announced that it will mark up HR 3674 [LOC | WW], the "Promoting and Enhancing Cybersecurity and Information Sharing Effectiveness Act of 2011" or "PRECISE Act", on Wednesday, April 18, 2012, at 10:00 AM.

Rep. Dan Lungren (R-CA), the sponsor of the bill, will offer an amendment in the nature of a substitute [34 pages in PDF].

The House Oversight and Government Reform Committee (HOGRC) announced that it will meet to mark up HR 4257 [LOC | WW], the "Federal Information Security Amendments Act of 2012", on April 18 at 10:00 AM.

Rep. Darrell Issa (R-CA), the sponsor, will offer an amendment in the nature of a substitute [26 pages in PDF].

The full House has not yet announced a date for consideration of HR 3523 [LOC | WW], the "Cyber Intelligence Sharing and Protection Act of 2011" or "CISPA". The House Intelligence Committee (HIC) approved it on November 30, 2011.

See, story titled "Representatives Introduce Cyber Threat Information Sharing Bill" in TLJ Daily E-Mail Alert No. 2,316, November 30, 2011, and story titled "Update on CISPA and Related Bills" in TLJ Daily E-Mail Alert No. 2,367, April 10, 2012.

Several groups, including the Center for Democracy and Technology (CDT), Electronic Frontier Foundation (EFF) and Free Press are encouraging their members and supporters to contact their Representatives to express opposition to the CISPA.

Greg Nojeim of the CDT stated in a release that his group's "main concerns with CISPA are that it has an almost unlimited description of the information that can be shared with the government; it allows for a large flow of private communications directly to the NSA, an agency with little accountability; and it lacks meaningful use restrictions – it should be made clear that information shared for cybersecurity should be used for cybersecurity purposes, not unrelated national security purposes or criminal investigations".

The CDT release also states that "the PRECISE Act ... has information sharing language that offers a better alternative to CISPA, balancing cybersecurity, industry, and civil liberties concerns."

The EFF stated in a release the the CISPA would "let companies like Google, Facebook, and AT&T snoop on our communications and hand sensitive user data to the government without a court order. Promoted under the guise of protecting America from cybersecurity attacks, the truth is that this legislation would carve out shockingly large exceptions to the bedrock privacy rights of Internet users."

The Free Press stated in a release packed with emotional exaggeration that  the CISPA "could lead all too easily to governmental and corporate violations of our privacy and attacks on our right to speak freely via the Internet".

The Business Software Alliance (BSA) stated in a release that its representatives met with representatives of the CDT on April 16 to discuss cyber security legislation.

Robert Holleyman, head of the BSA, stated that "All of us agree legislation is needed to promote the safety and security of the Internet, and all of us agree it is important to protect privacy".

Regarding the CISPA, he said that "We agreed that the definition of what constitutes cyber threat information could benefit from sharpening. We also discussed clarifying limitations on how threat information will be handled and used by government. We agreed that ideas proposed by Rep. Dan Lungren in recent drafts of his PRECISE Act could be adapted to address civil liberties concerns that CDT and others have raised."

Supreme Court Grants Certiorari in Case Regarding First Sale Doctrine

4/16. The Supreme Court of the U.S. granted certiorari in Kirtsaeng v. John Wiley & Sons, a case regarding whether the first sale doctrine of the Copyright Act applies to goods made abroad. See, April 16, 2012, Orders List [21 pages in PDF] at page 2.

Introduction. The Supreme Court's prior actions indicated that it would likely grant certiorari in this case, and that the Court is divided on this issue. It heard a similar case 2010, and affirmed in a one page order by an evenly divided vote 4 to 4. Justice Kagan recused herself.

That case was Omega v. Costco. See, story titled "Supreme Court Affirms in Costco v. Omega on 4-4 Vote" in TLJ Daily E-Mail Alert No. 2,178, December 14, 2010.

That order affirmed the September 3, 2008, opinion [17 pages in PDF] of the U.S. Court of Appeals (9thCir), which held that the first sale doctrine does not apply to imported goods manufactured abroad. It applies "only where the disputed copies of a copyrighted work were either made or previously sold in the United States with the authority of the copyright owner".

These cases involve construing jointly Sections 109 and 602 of the Copyright Act.

At issue for book publishers is their ability to charge different prices in different national markets. Secondary markets, and particularly online sales sites that enable third party sellers, undermine publishers ability to engage in such price discrimination.

Since publishers tend to charge more in the US market, there is an opportunity for intermediaries, such as Supap Kirtsaeng, to purchase books outside the US at the publishers' lower prices, import them into the US, and then resell them via internet platforms such as eBay's auction web site at a profit to consumers in the US.

At issue for US book consumers is the ability to purchase lower priced foreign printed books online from intermediaries like Kirtsaeng. At issue for companies like eBay is the fees that they collect from online sellers like Kirtsaeng.

There is also perhaps a bigger issue. Sections 109 and 602 apply to works, not merely to hardcopy books. Hence, if Wiley were to prevail, the Supreme Court would write an opinion that applies to works subject to copyright. Other copyright industries might then attempt to avail themselves of the ruling to curtail Section 109 rights by increasing their manufacturing operations outside of the US.

See, full story.

People and Appointments

4/16. The Senate confirmed Stephanie Thacker to be a Judge of the U.S. Court of Appeals (4thCir) by a vote of 91-3. See, Roll Call No. 64.

4/16. Rep. Edolphus Towns (D-NY), a senior member of the House Commerce Committee (HCC), announced that he will not run for re-election in November. See, Rep. Towns' statement and President Obama's statement.

4/16. President Obama again nominated Patricia Wald to be a Member of the Privacy and Civil Liberties Oversight Board for a term expiring January 29, 2019. See, White House news office release. The Senate Judiciary Committee (SJC) will hold a hearing on all five nominees on April 18. The other four are James Dempsey (CDT), Elisebeth Cook, Rachel Brand, and David Medine.

More News

4/16. The American Antitrust Institute (AAI) released a paper titled "Verizon's Deals with Cable Companies Raise Significant Competitive Issues".

4/16. David Kappos, Director of the U.S. Patent and Trademark Office (USPTO), released a short piece regarding "diversity initiatives underway at the USPTO" and "efforts to improve the retention of patent examiners beyond their probationary period".

4/16. The Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA) reissued its Request for Proposal (RFP) SA1301-12-RP-0043 for a new Internet Assigned Numbers Authority (IANA) functions contract. This is for the contract term of October 1, 2012 through September 30, 2015. The deadline to submit proposals is May 31, 2012 at 2:00 PM EDT. The deadline to submit questions regarding the solicitation are due by 2:00 PM EDT on April 23, 2012. See, summary, and RFP and Form 33.

4/16. The Free State Foundation (FSF) announced that it will will host a panel discussion on May 30, 2012, titled "The Multi-Stakeholder Privatized Internet Governance Model: Can It Survive Threats From The UN?". The speakers will include Robert McDowell (FCC Commissioner) and Richard Beaird (Department of State).

4/16. The House Commerce Committee (HCC) reported HR 3310 [LOC | WW], the "Federal Communications Commission Consolidated Reporting Act of 2012". Rep. Steve Scalise (R-LA) introduced this bill on November 2, 2011. The HCC amended and approved it on March 6, 2012. The HCC marked this bill up at the same meeting that it marked up the larger and more partisan HR 3309 [LOC | WW], the "Federal Communications Commission Process Reform Act of 2011". The full House amended and passed HR 3309 on March 27, 2012. HR 3310 is a shorter bill with broader support that would consolidate eight separate reports on the communications marketplace into a single report, eliminate several reporting requirements, and make modifications to reporting requirements. See, story titled "House Commerce Committee Approves FCC Reform Bills" in TLJ Daily E-Mail Alert No. 2,346, March 5, 2012.

4/16. The Government Accountability Office (GAO) released a report [70 pages in PDF] titled "Information Technology: FDA Needs to Fully Implement Key Management Practices to Lessen Modernization Risks".

Go to News from April 11-15, 2012.