TLJ News from January 21-25, 2013

Court of Appeals Affirms Lobbying Conviction of Abramoff Associate

1/25. The U.S. Court of Appeals (DCCir) issued its opinion [24 pages in PDF] in US v. Ring, affirming the criminal conviction of Kevin Ring, for lobbying related activities.

The Court of Appeals affirmed Ring's conviction for honest services fraud (in violation of 18 U.S.C. § 1346), paying an illegal gratuity (18 U.S.C. § 201(c)), and conspiracy (18 U.S.C. § 371) relating to his provision of meals, tickets, and other gifts to public officials.

The Court wrote that "this case probes the boundary between legal lobbying and criminal conduct".

Lobbying law is not strictly a technology related area of law. However, those who seek to influence the development of technology related law and policy engage in lobbying. Hence, this opinion may be of interest to those who make federal campaign contributions, lobby, interact with member of Congress and their staff, and/or attempt to influence public officials.

Also, the historical origins of this case, which go back over a dozen years, are related to the making of technology related law. Ring was a member of Jack Abramoff's team, which lobbied on internet related issues, among other things.

The 109th Congress passed HR 4411, the "Unlawful Internet Gambling Enforcement Act of 2006", or UIGEA. (More specifically, it was enacted as part of a large bill, HR 4954 (109th), the "Port Security Improvement Act of 2006".)

Rep. Bob Goodlatte (R-VA), the long time leading proponent of such legislation in the House, credited Abramoff with delaying the passage of legislation for years. See, story titled "House Financial Services Committee Approves Internet Gambling Bill" in TLJ Daily E-Mail Alert No. 1,330, March 16, 2006.

The Congress passed the UIGEA just after the prosecution of Abramoff. See also, story titled "House Approves Unlawful Internet Gambling Enforcement Act" in TLJ Daily E-Mail Alert No. 1,408, July 11, 2006,

On January 3, 2006, Abramoff pled guilty in U.S. District Court (DC) to a three count information charging him with conspiracy (in violation of 18 U.S.C. § 371), aiding and abetting honest services mail fraud (18 U.S.C. §§ 1341 and 1346), and tax evasion (26 U.S.C. § 7201). See, DOJ release.

Numerous other associates of Abramoff, as well as Congressional staff, and former Rep. Bob Ney (R-OH), pled guilty years ago. However, Ring exercised his rights to trial by jury. Ultimately, after two trials, he was convicted.

One of the key areas of activity by Abramoff that led to the criminal charges was the representation of Indian tribes. They all had an interest in offering gambling services, as well an in limiting competition from others.

This case is U.S.A. v. Kevin A. Ring, U.S. Court of Appeals for the District of Columbia Circuit, App. Ct. No. 11-3100, an appeal from the U.S. District Court for the District of Columbia, D.C. No. 1:08-cr-00274-1. Judge Tatel wrote the opinion of the Court of Appeals, in which Judges Brown and Griffith joined.

See also, related story in this issue titled "WTO Authorizes Antigua and Barbuda to Infringe US IP Rights".

4th Circuit Upholds Secrecy of Court Surveillance Orders

1/25. The U.S. Court of Appeals (4thCir) issued its opinion [22 pages in PDF] in US v. Appelbaum, regarding public access to court orders issued pursuant to 18 U.S.C. § 2703(d) compelling service providers, such as Twitter, to provide the government with transactional information, or the contents of electronic communications.

The basic principle is that courts and judicial proceedings are open to the parties and the public. The 6th Amendment guarantees defendants a "public trial" in criminal cases. In both criminal and civil cases, trials, hearings and other events are open to the public. Pleadings, orders, opinions and other judicial records are available for inspection by the public.

There are exceptions, and this cases addresses one -- whether the public has a right of access to these Section 2701(d) orders and related pleadings.

The Court of Appeals held that there is no First Amendment right to access such documents, and in this case, the common law right to access such documents is outweighed by countervailing interests.

See, full story.

People and Appointments

1/25. President Obama announced changes to his White House staff. Lisa Monaco will be Assistant to the President for Homeland Security and Counterterrorism and Deputy National Security Advisor. She was previously Assistant Attorney General in charge of the Department of Justice's (DOJ) National Security Division. See, White House news office release.

9th Circuit Vacates $160 Million Verdict in Theft of Bratz Trade Secrets Case

1/24. The U.S. Court of Appeals (9thCir) issued its opinion [9 pages in PDF] in Mattel v. MGA Entertainment, yet another opinion in the long running epic legal saga involving proprietary rights in Bratz dolls [Amazon sales page].

The present opinion deals with MGA's state law misappropriation of trade secrets claim (for which the trial jury awarded MGA $80 Million in damages, and another $80 Million in exemplary damages), and the award of attorneys fees to MGA on Mattel's failed copyright infringement claim.

The Court of Appeals vacated the trade secrets verdict, and ordered the District Court to dismiss the claim with prejudice. It upheld the attorneys fees award. The Court of Appeals added this: "While this may not be the last word on the subject, perhaps Mattel and MGA can take a lesson from their target demographic: Play nice."

This case is Mattel, Inc., et al. v. MGA Entertainment, Inc., et al., U.S. Court of Appeals for the 9th Circuit, App. Ct. No. 11-56357, an appeal from the U.S. District Court for the Central District of California, D.C. No. 2:04-cv-09049-DOC-RNB, Judge David Carter presiding. Chief Judge Alex Kozinski wrote the opinion of the Court of Appeals, in which Judges Stephen Trott and Kim Wardlaw joined.

More News

1/24. The following are some of the technology companies that recently released their latest quarterly financial results:

7th Circuit Holds Unconstitutional State Statute Prohibiting Sex Offenders from Using Social Media

1/23. The U.S. Court of Appeals (7thCir) issued its opinion [20 pages in PDF] in Doe v. Marion County, holding unconstitutional under the 1st Amendment an Indiana state criminal statute that prohibits persons who have been convicted in Indiana or elsewhere of certain sex related crimes from using social networking web sites, instant messaging services, and chat programs.

The statute is a criminal prohibition. Its reach includes persons who have served their sentences, and who are no longer subject to supervision.

The statute applies to persons convicted under Indiana criminal statutes, or similar statutes of "another jurisdiction", for certain enumerated sex related offenses in which the victims are children. However, the list also includes offenses for which the victims are adults, including rape and "deviant conduct" crimes. It also lists viewing of child pornography.

The statute applies to social networking web sites that allow access to persons under 18. It thus prohibits covered persons from using social media to communicate with adults, and for legal purposes.

The plaintiff, named only as John Doe, was convicted of a crime covered by the statute. He filed a complaint in the U.S. District Court (SDInd) against the Prosecutor of Marion County, Indiana, seeking a declaratory judgment that the statute is unconstitutional for violating 1st Amendment free speech rights.

The District Court upheld the statute. It concluded that the statute does implicate 1st Amendment rights, but that it is narrowly tailored to serve a significant state interest and leaves open ample alternative channels of communication.

Doe brought the present appeal. The Court of Appeals reversed, and ordered the District Court to enter an injunction against enforcement of the statute.

The Court of Appeals wrote that the "statute clearly implicates Doe's First Amendment rights as incorporated through the Fourteenth Amendment". Moreover, the statute not only precludes expression through the medium of social media, it also limits his right to receive information and ideas.

The statute is "content neutral because it restricts speech without reference to the expression's content". Hence, the state may impose reasonable time, place and manner restrictions, provided that the statute satisfies the Supreme Court's applicable intermediate scrutiny standard, set forth in Ward v. Rock Against Racism, 491 U.S. 781, 791 (1989). That is, it must be narrowly tailored to serve a significant governmental interest and leave open ample alternative channels for communication of the information.

The Court of Appeals found that the statute does not meet the narrowly tailored requirement. It did not proceed to the alternative channels prong.

The Court of Appeals wrote that "the Indiana law targets substantially more activity than the evil it seeks to redress". It also wrote that "Indiana has other methods to combat unwanted and inappropriate communication between minors and sex offenders," and in fact, has statutes that do so. For example, another criminal prohibition makes it a felony in Indiana for persons over 21 to solicit children under 16 to engage in certain enumerated sexual activities.

The Court concluded that the statute is unjustifiably over-inclusive, because "With little difficulty, the state could more precisely target illicit communication".

The opinion adds that "The state also makes the conclusory assertion that ``the State need not wait until a child is solicited by a sex offender on Facebook.´´ Of course this statement is correct, but the goal of deterrence does not license the state to restrict far more speech than necessary to target the prospective harm. Moreover, the state never explains how the social network law allows them to avoid ``waiting.´´"

The Court of Appeals opinion also includes dicta that speculates about arguments that may come up in future Constitutional challenges to similar statutes. It wrote that "Despite the infirmity of the statute in this case, we do not foreclose the possibility that keeping certain sex offenders off social networks advances the state's interest in ways distinct from the existing justifications. For example, perpetrators may take time to seek out minors they will later solicit. This initial step requires time spent on social networking websites before the solicitation occurs. In the future, the state may argue that prohibiting the use of social networking allows law enforcement to swoop in and arrest perpetrators before they have the opportunity to send an actual solicitation. This argument remains speculative. And it is uncertain whether such a law could advance this interest without burdening a ``substantially broader´´ than necessary group of sex offenders who will not use the Internet in illicit ways. ... But perhaps such a law could apply to certain persons that present an acute risk -- those individuals whose presence on social media impels them to solicit children. Currently, the state presents no evidence that covered individuals present this sort of risk. We speculate only to make clear that this decision should not be read to limit the legislature's ability to craft constitutional solutions to this modern-day challenge."

This case is John Doe v. Prosecutor, Marion County, Indiana, U.S. Court of Appeals for the 7th Circuit, App. Ct. No. 12-2512, an appeal from the U.S. District Court for the Southern District of Indiana, Indianapolis Division, D.C. No. 1:12-cv-00062-TWP-MJD, Judge Tanya Pratt presiding. Judge Joel Flaum wrote the opinion of the Court of Appeals, in which Judges John Tinder and John Tharp (USDC/NDIll sitting by designation) joined.

House Judiciary Committee Announces Subcommittee Members

1/23. The House Judiciary Committee (HJC) held its organizational meeting for the 113th Congress, at which it announced subcommittee assignments.

IP Subcommittee. The Chairman of the Subcommittee on Courts, Intellectual Property and the Internet will be Rep. Howard Coble (R-NC). He also served as Chairman of this Subcommittee for three terms back in the 1990s. He has been a reliable advocate of intellectual property based industries, as has been the full Committee Chairman, Rep. Bob Goodlatte (R-VA).

This subcommittee is responsible for patent, copyright and trademark law. The Congress passed major patent reform legislation in the 112th Congress. Major patent bills tend to be long in the making. Hence, while the Subcommittee may begin work on some patent issues, the Congress is not likely to pass another major patent bill in the 113th Congress.

There are, however, numerous copyright issues that the HJC and this Subcommittee may tackle in the 113th Congress, such as many music royalty issues, limitation of rights in "orphan works", and creation of a copyright small claims process.

Copyright based industries would like new laws that would result in less infringement in the US and abroad. However, there are also well organized interests that oppose such proposals. Hence, major legislation is unlikely. Similarly, there are groups that would like to expand fair use, limit Section 512 notice and takedown, and scale back Section 1201 anti-circumvent laws. But, these proposals all have their well organized opponents. Hence, major legislation is unlikely.

The Vice Chairman of the IP Subcommittee will be Rep. Tom Marino (R-PA). The other Republican members will be Rep. Jim Sensenbrenner (R-WI), Rep. Lamar Smith (R-TX), Rep. Steve Chabot (R-IN), Rep. Darrell Issa (R-CA), Rep. Ted Poe (R-TX), Rep. Jason Chaffetz (R-UT), Rep. Mark Amodei (R-NV), Rep. Blake Farenthold (R-TX), Rep. George Holding (R-NC), Rep. Doug Collins (R-GA), Rep. Ron DeSantis (R-FL), Rep. Keith Rothfus (R-PA).

Reps. Holding, Collins, DeSantis and Rothfus are all newly elected freshmen. Rep. Farenthold is a member of the class of 2010, but new to the HJC.

The Democratic members of the IP Subcommittee will be Rep. Mel Watt (D-NC), Rep. John Conyers (D-MI), Rep. Hank Johnson (D-GA), Rep. Judy Chu (D-CA), Rep. Ted Deutch (D-FL), Rep. Karen Bass (D-CA), Rep. Suzane DelBene (D-WA), Rep. Hakeem Jeffries (D-NY), Rep. Jerrold Nadler (D-NY), Rep. Zoe Lofgren (D-CA), and Rep. Sheila Lee (D-TX).

Rep. DelBene (a former Microsoft executive) and Rep. Jeffries (a former New York state legislator) are newly elected. Rep. Bass is a member of the class of 2010, but was just named to the HJC.

Historically, the IP Subcommittee has attended to the interests of major copyright and patent based industries. However, a core group of veteran members who have actively opposed copyright legislation advanced by the movie and music have all be assigned to this Subcommittee for the 113th Congress -- Reps. Sensenbrenner, Issa, Chaffetz, and Lofgren.

On the other hand, Rep. Jared Polis (D-CO), who was the HJC's most informed critic of the SOPA and PIPA in the 112th Congress, will not a member of the HJC in the 113th Congress. He is now a member of the House Rules Committee (HRC).

Rep. Hakeem JeffriesThose who admired Rep. Polis' work on the HJC are likely to be disappointed by his replacements, and particularly by Rep. Jeffries (at right). He graduated from law school in 1997. He worked at the law firm of Paul Weiss for several years. He also worked for CBS/Viacom. Federal Election Commission (FEC) records show that he raised over $1 Million for his election campaign. Many of his contributors are attorneys at Paul Weiss and other New York law firms. Many represent music, movie, television, and other media companies and groups. Many are CBS/Viacom employees.

His contributors include the Chairman of Paul Weiss's Media and Entertainment Group, and the lead attorney in the Associated Press's copyright infringement case against Meltwater. See, story titled "PK & EFF Argue Fair Use in AP v. Meltwater" in TLJ Daily E-Mail Alert No. 2,514, January 22, 2013.

Crime Subcommittee. Rep. Sensenbrenner will be Chairman of the Subcommittee on Crime, Terrorism, Homeland Security, and Investigations. This subcommittee has jurisdiction over Electronic Communications Privacy Act (ECPA) reform, data retention mandates, other wiretap and surveillance issues, and Section 1030, including likely amendments to be associated with the late Aaron Schwartz.

Rep. Louie Gohmert (R-TX) will be Vice Chairman. The other Republican members will be Rep. Coble, Rep. Spencer Bachus (R-AL), Rep. Randy Forbes (R-VA), Rep. Trent Franks (R-AZ), Rep. Chaffetz, Rep. Trey Gowdy (R-SC), and Rep. Raul Labrador (R-ID). Rep. Labrador is in his second term, but new to the HJC.

The Democratic members will be Rep. Bobby Scott (D-VA), Pedro Pierluisi (PR), Rep. Chu, Rep. Luis Gutierrez (D-IL), Rep. Bass, and Rep. Cedric Richmond (D-LA). Rep. Richmond is in his second term, but new to the HJC.

Tax Issues. The HJC also has jurisdiction over bills that would allow states to impose sales taxes, and other taxes, on distant business, as well as bills that would affect state taxation of internet access or wireless service. See for example, story titled " House Judiciary Committee Holds Hearing on Internet Sales Tax Bill" in TLJ Daily E-Mail Alert No. 2,410, July 24, 2012.

New HJC member Rep. DelBene was most recently the state of Washington's chief tax collector.

Sen. Rockefeller Introduces Preamble to a Cyber Security Bill

1/23. Sen. John Rockefeller (D-WV) and other Senate Democrats introduced S 21 [LOC | WW], the "Cybersecurity and American Cyber Competitiveness Act of 2013".

This is not a reintroduction of the bill that Sen. Rockefeller cosponsored in the 112th Congress, S 3414 [LOC | WW]. Instead, its is only a short preamble to a bill. It contains only a short list of findings, and a sense of the Congress section. It contains no substantive provisions.

Sen. Rockefeller issued a release that contains statements of the sponsors regarding the need for cyber security legislation, but discloses nothing about what the substantive provisions of the bill will be.

Sen. Tom Carper (D-DE) stated in this release that this bill "underscores our ongoing commitment to working to address cybersecurity and it will help lay the groundwork for a framework that can balance the needs and concerns of both government and the private sector -- and keep Americans safe. Our nation cannot afford more delay on this issue. That's why I am committed to working with my colleagues on both sides of the aisle, the Administration and stakeholders to reach a solution as soon as possible."

The Senate Commerce Committee (SCC), which Sen. Rockefeller chairs, has yet to schedule a hearing on this bill.

More News

1/23. Time Warner Cable (TWC) announced "changes to its organizational structure". TWC stated in a release that its "management structure will no longer be defined by geographic regions; instead, the company will be organized by reference to the customer served (residential, business or media clients) and the functions necessary to serve those customers". (Parentheses in original.)

1/23. The U.S. Court of Appeals (3rdCir) issued its opinion in Ethypharm v. Abbott Laboratories, an antitrust case involving pharmaceuticals. French drug maker filed a complaint in the U.S. District Court (DDel) against Abbott alleging violation of Sections 1 and 2 of the Sherman Act, which are codified at 15 U.S.C. §§ 1 & 2. The Court of Appeals held that Ethypharm lacked antitrust standing. This case is Ethypharm S.A. France v. Abbott Laboratories, U.S. Court of Appeals for the 3rd Circuit, App. Ct. No. 11-3602, an appeal from the U.S. District Court for the District of Delaware, D.C No. 08-cv-00126, Judge Sue Robinson presiding. Judge Jordan wrote the opinion of the Court of Appeals, in which Judges McKee and Vanaskie joined.

Sen. Leahy and Sen. Grassley Introduce Bill to Provide Protection for Antitrust Whistleblowers

1/22. Sen. Patrick Leahy (D-VT) and Sen. Charles Grassley (R-IA) introduced S 42 [LOC | WW], the "Criminal Antitrust Anti-Retaliation Act of 2013", a bill provide anti-retaliation protections for antitrust whistleblowers.

Back in 2004, the 108th Congress enacted HR 1086, a large bill that included the "Antitrust Criminal Penalty Enhancement and Reform Act" or ACPECA. President Bush signed that bill on June 22, 2004. It is Public Law No. 108-237. See, story titled "Bush Signs Standards Development Organization Advancement Act" in TLJ Daily E-Mail Alert No. 927, June 28, 2004.

Title I of HR 1086 pertains to standards development organizations. Title II is the ACPECA. Title II raised penalties for violations of 15 U.S.C. § 1 (combinations in restraint of trade, including cartels, and price fixing), 15 U.S.C. § 2 (monopolies), and 15 U.S.C. § 3.

The just introduced bill would add a new Section 215 to the ACPECA.

It provides, in part, that "No person, or any officer, employee, contractor, subcontractor, or agent of such person, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against a whistleblower in the terms and conditions of employment because", for example, "the whistleblower provided or caused to be provided to the person or the Federal Government information relating to ... any violation of, or any act or omission the whistleblower reasonably believes to be a violation of the antitrust laws ..."

Sen. Leahy stated in the Senate that "Congress should encourage employees with information about criminal antitrust activity, such as price fixing, to report that information by offering meaningful protection to those who blow the whistle rather than leaving them vulnerable to reprisals." See, Congressional Record, January 22, 2013, at Page S156.

He added that "Throughout our history, whistleblowers have been instrumental in alerting the public, Congress, and law enforcement to wrongdoing in a variety of areas. These individuals take risks in stepping forward, and many times their actions result in important reforms and have even saved lives."

This bill is substantially identical to S 3462 [LOC | WW], the "Criminal Antitrust Anti-Retaliation Act" which Sen. Leahy, Sen. Grassley, and former Sen. Herb Kohl (D-WI) introduced in the 112th Congress. They introduced that bill on July 31, 2012, just before the August recess. There were no hearings or mark ups.

GAO 2011 Recommendation. On July 25, 2011, the Government Accountability Office (GAO) released a report [76 pages in PDF] titled "Criminal Cartel Enforcement: Stakeholder Views on Impact of 2004 Antitrust Reform Are Mixed, but Support Whistleblower Protection".

That report concluded (at page 50) that the Department of Justice (DOJ), which prosecutes criminal violators of antitrust laws, "has relied heavily on its corporate and individual leniency programs to encourage wrongdoers to self-report such activity. However, innocent third parties may also report illegalities and in so doing may expose themselves to risk of retaliation. Without a civil remedy for those who are retaliated against as a result of reporting criminal antitrust violations, whistleblowers are currently unprotected and may therefore be hesitant to report wrongdoing to DOJ."

The GAO report continued that "It is widely accepted as good public policy to protect those who take risks to report crime and Congress has passed numerous laws providing protection for whistleblowers reporting various types of illegalities in various industries. By considering a civil remedy for whistleblowers who are retaliated against for reporting criminal antitrust violations, Congress could provide existing whistleblowers an assurance of protection for their efforts and, further, could motivate additional individuals to come forward with evidence of criminal cartel activity."

Fed Circuit Reverses EDTex In E-Commerce Patent Infringement Case Involving Obviousness

1/22. The U.S. Court of Appeals (FedCir) issued its opinion in Soverain Software v. Newegg, reversing the District Court's judgment of patent infringement. This opinion focuses on the issue of obviousness.

Newegg is an online retailer of computer equipment and software. Soverain Software (SS) acquired in bankruptcy the patents of another company that relate to e-commerce. SS then filed a complaint in the U.S. District Court (EDTex) against Newegg alleging patent infringement. SS also sued other companies, which agreed to pay to license.

The patents in suit describe buying stuff online. See, U.S. Patent No. 5,715,314, continuation Patent No. 5,909,492, and Patent No. 7,272,639.

The District Court held that the claims are not invalid on the ground of obviousness. The jury returned a verdict of infringement as to two patents. The District Court granted judgment as a matter of law as to a third.

This appeal followed. The Court of Appeals held that the claims on all three patents are invalid for obviousness. It therefore reversed the judgments of infringement.

Most of the opinion addresses obviousness. The Court of Appeals held that the District Court did not err in depriving Newegg trial by jury on obviousness. It is a question of law. However, the Court of Appeals held, in a de novo review, that the District Court erred in its rulings on obviousness.

35 U.S.C. § 103 addresses "Conditions for patentability; non-obvious subject matter". Subsection (a) references obviousness. It provides that "A patent may not be obtained though the invention is not identically disclosed or described as set forth in section 102, if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains."

The Court of Appeals wrote, citing Graham v. John Deere, 383 U.S. 1 (1966), that the four factors to be applied are "(1) the scope and content of the prior art, (2) the difference between the prior art and the claimed invention, (3) the level of ordinary skill in the field of the invention, and (4) any relevant objective considerations."

It also relied upon the Supreme Court's 2007 opinion in KSR International v. Teleflex, 550 U.S. 398. See also, story titled "Supreme Court Rules on Patent Obviousness in KSR v. Teleflex" in TLJ Daily E-Mail Alert No. 1,576, May 7, 2007.

This case is Sovereign Software LLC v. Newegg, Inc., U.S. Court of Appeals for the Federal Circuit, App. Ct. No. 2011-1009, an appeal from the U.S. District Court for the Eastern District of Texas, D.C. No. 07-CV-0511, Judge Leonard Davis presiding. Judge Pauline Newman wrote the opinion of the Court of Appeals, in which Judges Sharon Prost and Jimmie Reyna joined.

DOJ Files Brief in Drug Patent Reverse Payments Case

1/22. The Department of Justice (DOJ) filed its merits brief [131 pages in PDF] in FTC v. Watson Pharmaceuticals, a pharmaceutical patent case in which the issue is whether reverse payment settlement agreements are per se unlawful. These are also sometimes referred to as pay for delay settlements.

That is, the holder of a name brand drug files a patent infringement action against a generic competitor, but settles by agreeing to pay the generic competitor, while the generic competitor agrees not sell for a term of years.

The DOJ brief states that the question is "Whether reverse-payment agreements are per se lawful unless the underlying patent litigation was a sham or the patent was obtained by fraud, or instead are presumptively anticompetitive and unlawful."

While this case is commonly understood as an antitrust case, and the briefs contain much discussion of the Sherman Act, the FTC pled violation of Section 5 of the FTC Act, not Section 1 of the Sherman Act.

The Federal Trade Commission (FTC) filed its complaint [45 pages in PDF] in the U.S. District Court (NDGa). The District Court dismissed for failure to state a claim. The FTC appealed. The U.S. Court of Appeals (11thCir) issued its opinion on April 25, 2012, affirming the dismissal of the FTC's complaint.

The DOJ's Office of the Solicitor General (OSG) filed a petition for writ of certiorari on October 4, 2012. See, story titled "Solicitor General Files Cert Petition in FTC v. Watson" in TLJ Daily E-Mail Alert No. 2,459, October 5, 2012.

The DOJ urges reversal. It wrote that "Reverse-payment agreements exist at the intersection of competition law, patent law, and the Hatch-Waxman Amendments' framework for regulating generic drugs."

It explained that "Because reverse-payment agreements closely resemble other horizontal agreements between competitors that this Court has categorically condemned, respondents’ defense of the practice necessarily depends on the contention that either the Patent Act or the Hatch-Waxman Amendments implicitly legitimize conduct that would ordinarily be viewed as a paradigmatic antitrust violation. That argument is misconceived. Absent unusual circumstances, reverse-payment agreements disserve rather than further the purposes of patent law and the Hatch-Waxman Amendments, and they should accordingly be treated as presumptively unlawful."

This case is FTC v. Watson Pharmaceuticals, Inc., et al., Supreme Court of the U.S., Sup. Ct. No. 12-416, a petition for writ of certiorari to the U.S. Court of Appeals for the 11th Circuit, App. Ct. No. 10-12729-DD. The Court of Appeals heard an appeal from the U.S. District Court for the Northern District of Georgia, D.C. No. 1:09-CV-00955-TWT.

See also, Supreme Court docket, and FTC web page with hyperlinks to pleadings.

USTR Ron Kirk to Leave

1/22. Ron Kirk, head of the Office of the U.S. Trade Representative (USTR), announced in a release that he "intends to depart the position in late February".

Ron KirkKirk (at right) and the Obama administration generally demonstrated a reduced commitment to free trade, compared to recent administrations. However, Kirk's OUSTR and other federal agencies developed some new trade related policies to advance the interests intellectual property based industries, and especially movie and music companies.

During his four year tenure, the Obama administration delayed implementation of three bilateral free trade agreements concluded during the Bush administration, with Korea, Columbia and Panama. Moreover, the OUSTR commenced no new bilateral FTA negotiations.

The already stalled multilateral Doha round negotiations became moribund during his tenure. Basic rules of international trade have not been expanded or updated in almost 20 years.

The OUSTR commenced the negotiation of the Anti-Counterfeiting Trade Agreement (ACTA) during the Bush administration. However, the ACTA was concluded during Kirk's tenure. See, stories titled "ACTA Signing Set for October 1 in Tokyo" in TLJ Daily E-Mail Alert No. 2,305, September 28, 2011, and stories titled "ACTA Draft Released", "Summary of ACTA", and "Reaction to ACTA" in TLJ Daily E-Mail Alert No. 2,140, October 11, 2010.

During his tenure, the OUSTR continued to prepare annual and out of cycle Special 301 reports, as required by statute. However, during his tenure, the OUSTR began the practice of preparing stand alone notorious markets reports, identifying web sites and physical markets with extensive infringing activity. See, story titled "OUSTR Announces Separate Notorious Markets Process" in TLJ Daily E-Mail Alert No. 2,138, October 4, 2010.

Section 301 is the statutory means by which the U.S. asserts its international trade rights, including its rights under World Trade Organization (WTO) agreements. In particular, under the "Special 301" provisions of the Trade Act of 1974, the OUSTR identifies trading partners that deny adequate and effective protection of intellectual property or deny fair and equitable market access to U.S. artists and industries that rely upon intellectual property protection. See, 19 U.S.C. § 2242.

During his tenure, the OUSTR pursued the US complaint against the People's Republic of China (ORC) in the World Trade Organization (WTO), filed during the Bush administration, regarding access barriers for U.S. movie, record, and other content industries, and other issues.

See, TLJ stories on this proceeding:

President Obama praised Kirk, but did not announce a replacement. See, White House news office release.

Kappos Addresses Quality of Business Method Patents

1/22. David Kappos, head of the U.S. Patent and Trademark Office (USPTO), wrote a short piece titled "Using a Data-Driven Approach for Quality Improvements".

He wrote that a USPTO "management team focused on three technology centers in our Patents organization", including the "business methods area of TC 3600".

He continued that in TC 3600 "a concern was expressed that examination practices were not consistent with the principles of compact prosecution, citing instances of multiple non-final rejections, reopening of prosecution after final rejections, and more reversals at the Patent Trial and Appeal Board (PTAB) compared to other art areas. Concerns were also expressed that examiners were unduly strict in allowing claims in this area."

rightKappos (at right) concluded that "After a careful look at the data, we discovered these concerns were not well founded."

He elaborated that the data for FY 2012 show that "only 2.4 percent of the total actions in the business methods area were second or subsequent non-final actions. The data also show that only 2.2 percent of final rejections made in FY12 in this area were reopened, compared to 2.8 percent across the entire patent corps. As far as the performance at the PTAB, the business methods area had an affirmed and affirmed-in-part rate of 70 percent compared to a corps average rate of 64 percent."

"So the data showed that compliant prosecutions as well as affirmance rates at the PTAB are actually above corps averages, suggesting that those applications with allowable subject matter are being allowed. And those that should be rejected are being rejected."

Kappos also discussed the pharmaceutical composition area of TC 1600, and the medical device areas of TC 3700.

More People and Appointments

1/22. Joe Keeley was named Chief Counsel of the House Judiciary Committee's (HJC) Subcommittee on Courts, Intellectual Property, and the Internet, two weeks ago. During the 112th Congress, he worked for the House Science Committee (HSC). During the 111th Congress, he worked for Pennsylvania Avenue Connection. Before that, he worked at the law firm of Arent Fox, for the Copyright Office (CO), and for the HJC. Before that, he spent four years working for the Business Software Alliance (BSA). And before that, he worked for former Sen. Frank Murkowski (R-AK). Rep. Howard Coble (R-NC) is the Chairman of this Subcommittee for the 113th Congress.

1/22. Athena Polydorou was named Executive Director of the CTIA's Wireless Foundation. She was previously Director of the CTIA's Wireless Internet Development Department. Jackie McCarthy was named Director of CTIA Wireless Internet Development. She was previously the CTIA's Director of State Regulatory Affairs. And, Matthew Gerst was promoted from Counsel to Director of the External and State Affairs Department. See, CTIA release.

1/22. The Department of the Treasury's (DOT) Financial Crimes Enforcement Network, also known as FinCEN, published a notice in the Federal Register (FR) requesting nominations of financial institutions and trade groups for membership on the Bank Secrecy Act Advisory Group. Members designate one person to represent them at meetings. New members will serve for three years. There is no pay, or remuneration for travel. The deadline to submit nominations is February 15, 2013. See, FR, Vol. 78, No. 14, January 22, 2013, at Page 4591.

1/22. Vincente Martinez was named Chief of the Securities and Exchange Commission's (SEC) Enforcement Division's (ED) Office of Market Intelligence. See, SEC release.

More News

1/22. AT&T announced in a release that "it has signed an agreement with Atlantic Tele-Network, Inc. (ATNI) to acquire the company’s U.S. retail wireless operations, operated under the Alltel brand, for $780 million in cash. Under terms of the agreement, AT&T will acquire wireless properties, including licenses, network assets, retail stores and approximately 585,000 subscribers." See also, Atlantic Tele Network release.

1/22. The Government Accountability Office (GAO) released a report [25 pages in PDF] titled "Information Technology: OMB and Agencies Need to Fully Implement Major Initiatives to Save Billions of Dollars".

1/22. The Consumer Electronics Association (CEA) announced in a release that its Index of Consumer Expectations (ICE) decreased in January. The CEA states that this index, which it reports monthly, uses survey of consumers to measure consumer expectations about the broader economy. The CEA also announced that its monthly Index of Consumer Technology Expectations (ICTE) decreased in January.

1/22. Rep. Steve Lynch (D-MA) introduced HR 344 [LOC | WW], the "Competitive Health Insurance Act", on January 22, 2013. Rep. John Conyers (D-MI) introduced HR 99 [LOC | WW], the "Health Insurance Industry Antitrust Enforcement Act of 2013", on January 3, 2013. Both bills would amend the McCarran Ferguson Act to provide that the business of health insurance is subject to federal antitrust law. These bills further provide that antitrust law also includes Section 5 of the Federal Trade Commission Act, which is codified at 15 U.S.C. § 45, "to the extent that such section 5 applies to unfair methods of competition". Moreover, the bills provide that the Federal Trade Commission (FTC) could bring an action under Section 5 against non-profits. These bills were referred to the House Judiciary Committee (HJC).

Obama and STEM Visas

1/21. President Obama gave a speech in Washington DC on January 21, 2013 in which he stated that "Our journey is not complete until we find a better way to welcome the striving, hopeful immigrants who still see America as a land of opportunity, until bright young students and engineers are enlisted in our workforce rather than expelled from our country."

On November 30, 2012, the House passed HR 6429 [LOC | WW], the "STEM Jobs Act of 2012", by a vote of 245-139. See, story titled "House Passes STEM Visas Bill" in TLJ Daily E-Mail Alert No. 2,480, December 1, 2012.

This bill would enable aliens who obtain advanced degrees in STEM fields from US universities to obtain visas, and therefore remain in the US, and contribute to innovation and economic development.

However, two days before the House voted on this bill, President Obama's Office of Management and Budget (OMB) released a statement announcing that "the Administration opposes House passage of H.R. 6429". See also, story titled "Obama Opposes STEM Visas Bill" in TLJ Daily E-Mail Alert No. 2,478, November 29, 2012.

Also, the Democratic controlled Senate did not allow a vote on HR 6429.

Otherwise, it was a political speech, in which the President advocated many of his policy objectives. However, he said very little about technology related policy areas.

Go to News from January 16-20, 2013.