TLJ News from June 11-15, 2013

President Obama Issues Memorandum on Spectrum Sharing

6/14. President Obama issued a memorandum for the heads of executive departments and agencies titled "Expanding America's Leadership in Wireless Innovation".

It states that "Expanding the availability of spectrum for innovative and flexible commercial uses, including for broadband services, will further promote our Nation's economic development by providing citizens and businesses with greater speed and availability of coverage, encourage further development of cutting-edge wireless technologies, applications, and services, and help reduce usage charges for households and businesses."

This memorandum creates a "Spectrum Policy Team" that "shall monitor and support advances in spectrum sharing policies and technologies", and release a report within one year "describing how NTIA and FCC are incorporating spectrum sharing into their spectrum management practices".

This memorandum notes that the Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA) "has been facilitating discussions between agencies and nonfederal entities that have produced an unprecedented level of information-sharing and collaboration to identify opportunities for agencies to relinquish or share spectrum, currently focusing on the 1695-1710 MHz band, the 1755-1850 MHz band, and the 5350-5470 and 5850-5925 MHz bands."

The memorandum states that "The NTIA shall continue to facilitate these discussions and the sharing of data to expedite commercial entry into these bands where possible, provided that the mission capabilities of Federal systems designed to operate in these bands are maintained and protected, including through relocation, either to alternative spectrum or non-spectrum dependent systems, or through acceptable sharing arrangements. These discussions shall also be expanded to encompass more spectrum bands that may be candidates for shared access, specifically those in the range below 6 GHz, subject to the protection of the capabilities of Federal systems designed to operate in those bands."

Rep. Fred Upton (R-MI) and Rep. Greg Walden (R-OR) stated in a release that "We welcome today's announcement that the White House intends to focus more attention on the federal government's own use of spectrum. The nearly $80 billion a year that private sector cable, wireline and wireless companies have invested since 1996 spurred the remarkable broadband growth the administration also cataloged today in its report. But as the Internet goes mobile, further growth will require getting carriers more spectrum, an essential economic resource for the 21st century. Continuing its extensive work on spectrum reform and opportunities for job growth, the Energy and Commerce Committee is planning a hearing later this month to further its exploration of mutually beneficial methods to help agencies fulfill their missions while freeing spectrum to drive our country's prosperity."

Rep. Henry Waxman (D-CA) also praised the memorandum in a release. He added that "I will continue to work with my colleagues in Congress to explore whether there may be additional incentives to encourage agencies to relinquish underutilized spectrum."

Sen. John Rockefeller (D-WV) stated in a release that "Spectrum is the lifeblood of our Nation’s wireless economy. It is a scarce public resource that must be used wisely. That's why I applaud today’s Presidential Memorandum: it represents an innovative new strategy to help meet our Nation’s growing spectrum needs. Providing greater transparency; directing federal agencies to be more efficient and to provide data on their actual spectrum use; calling for incentives for federal users to share or relinquish spectrum are all critical to identifying more spectrum."

Federal Communications Commission (FCC) Chairman Mignon Clyburn applauded the memorandum. See, release. FCC Commissioner Jessica Rosenworcel expressed her strong support for the memorandum. She stated that "Our traditional three-step process for reallocating federal spectrum -- clearing federal users, relocating them, and then auctioning the cleared spectrum for new use -- is reaching its limits." See, release.

Steve Largent, head of the CTIA, stated in a release that this memorandum "focuses on the need to make more efficient use of the spectrum currently assigned to federal government users by adopting a range of improvements in the processes that are used to investigate the repurposing of spectrum to commercial mobile broadband use."

AT&T's Jim Cicconi stated in a release that this memorandum "is important not just for the initiatives it lays out, but for the clear policy direction it sets. We commend the White House for recognizing the enormous progress in US broadband deployment, wireless in particular, and for their commitment to meet the need for more spectrum so these investments can continue."

The Public Knowledge's (PK) Harold Feld stated in a release that "Those who have constantly sought to politicize what should be an engineering issue by reflexively balking at the very idea of ``spectrum sharing´´ should consider that we cannot hope to clear more federal spectrum for auction unless we can accomodate more federal users in a smaller number of bands. That requires new sharing technologies. Those who care about supporting our growing wireless economy should recognize that all new spectrum access, whether open to a myriad of innovators and industries or exclusively auction to companies like AT&T and Verizon, is equally valuable. We need more of both."

FCC Again Addresses Closed Captioning Mandates for Video Programming Delivered Using IP

6/14. The Federal Communications Commission (FCC) released an Order on Reconsideration and Further Notice of Proposed Rulemaking [46 pages in PDF] regarding closed captioning mandates for video programming delivered using internet protocol.

This OR & FNPRM pertains to implementation Section 203 of the Twenty-First Century Communications and Video Accessibility Act of 2010, also known as the CVAA. Section 203 is titled "Closed Captioning Decoder and Video Description Capability". The CVAA was enacted by the 111th Congress by S 3828 [LOC | WW], the CVAA, which incorporates the text of S 3304 [LOC | WW], wherein Section 203 is found.

This OR and FNPRM relate to one subset of the many issues that have arisen out of imposition of disability access mandates on new information technologies by the CVAA.

The two major contenders in this present matter are makers of consumer electronic devices and disability groups. Both sides have advanced arguments regarding what is in the consumer interest. However, this OR & FNPRM describes the disability groups as "consumer groups".

That said, there are nevertheless many consumers who are not deaf, and many who are not blind. Moreover, many of the devices at issue are low price now, but would not be so cheap, or may not continue to be produced, if subjected to CVAA mandates. Therefore, imposing mandates on these devices would harm many consumers of these devices.

The Consumer Electronics Association (CEA) represents the companies that make the consumer devices, the design of which is now regulated by the FCC via the CVAA and CVAA rules. CVAA mandates raise the costs of making consumer devices, and hence, the prices charged to consumers.

The CEA was one of the few open critics of this legislation when it was being considered by the 111th Congress in 2010. One of the key issues back in 2010, which is now settled law, was whether the law should require that features that enhance accessibility by persons with various disabilities be readily available in numerous products on the market, or whether the law should require that every covered device be required to be accessible by every disability group. The CEA argued for the former. The Congress incorporated the latter into the CVAA, thereby making compliance particularly costly for producers and consumers of regulated technologies.

The disability access groups now want the FCC to impose mandates upon a broader range of devices. The CEA argues for less burdensome mandates on a narrower range of devices.

There is much room for argument because the CVAA was not a well drafted piece of legislation. The House Commerce Committee (HCC) and Senate Commerce Committee (SCC), and the full House and Senate, spent very little time in hearings, mark ups and debate on this legislation. Moreover, no one from the FCC testified at any public hearing on this legislation in 2010.

The FCC adopted a Report and Order (R&O) [111 pages in PDF] on January 12, 2012 regarding closed captioning of IP delivered video programming. That R&O also listed the devices subject to Section 203 mandates. It listed smart phones, tablets, personal computers, television set top boxes, integrated software in covered devices, all recording devices, and removable media players.

Order on Reconsideration. The FCC received three petitions for reconsideration of that R&O, from the CEA, various interest groups that advocate on behalf of persons with different disabilities, and TVGuardian.

The CEA filed its petition for reconsideration [22 pages in PDF] on April 30, 2012. It requested that the FCC limit the reach of its rules to only those devices intended by the manufacturer to receive, play back, or record video programming, rather than broadly applying these rules to any device with a video player.

It also requested that the FCC exclude removable media players from the apparatus closed captioning rules. Finally, it requested that the FCC clarify that the January 1, 2014 compliance deadline for apparatus closed captioning requirements refers to the date of manufacture, and not the date of importation of apparatus.

Section 203 reaches any "apparatus designed to receive or play back video programming".

The OR portion of this item denies the main request of the CEA regarding what devices are covered, but grants a narrow class of waivers.

The OR also denies the CEA's request that removable media players are not subject to the closed captioning requirements. However, it temporarily extends the compliance deadlines for Blu-ray players as well as for those DVD players that do not currently render or pass through captions, pending consideration of the FNPRM.

The OR grants the CEA's request to modify the January 1, 2014 deadline applicable to apparatus to refer only to the date of manufacture, and not to the date of importation, shipment, or sale.

The disability groups filed a petition asking the FCC to reconsider its decision to exclude video clips from the scope of the IP closed captioning rules.

The OR states that "we defer a final decision on whether to reconsider the issue of whether ``video clips´´ should be covered by the IP closed captioning rules, and we will keep the record open pending the development of additional information regarding the availability of captioned video clips."

The FCC denied TVGuardian's petition.

FNPRM. The FNPRM portion of this item proposes that the FCC's rules regarding "Closed caption decoder requirements for all apparatus", which are codified at 47 C.F.R. § 79.103, add the requirement that "All apparatus that render closed captions must do so consistent with the timing data included with the video programming the apparatus receives."

The FNPRM asks for "comment on whether the Commission should require apparatus manufacturers to ensure that their apparatus synchronize the appearance of closed captions with the display of the corresponding video."

The FNPRM also asks for "comment on the closed captioning requirements that we should impose on DVD players that do not render or pass through closed captions, and on Blu-ray players with regard to Blu-ray discs and DVDs."

The FCC adopted this item on June 13, 2013, and released it on June 14. It is FCC 13-84 in MB Docket No. 11-154. Comments will be due with 60 days of publication of a notice in the Federal Register (FR). Reply comments will be due within 90 days of such publication. This FR notice has not yet been published.

American Cable Association Condemns Gannett Belo Merger Plans

6/14. The American Cable Association (ACA) issued a release condemning Gannett's pending acquisition of Belo. Gannett and Belo announced in a release on June 13 that "they have entered into a definitive merger agreement under which Gannett will acquire all outstanding shares of Belo".

The ACA is concerned about the impact that this merger would have on matters such as retransmission consent negotiations. Another group, the Free Press, published its concerns about the impact that this merger would have upon journalism.

Matthew Polka, head of the ACA, stated that "The Gannett-Belo deal -- yet another example of the massive consolidation now happening in the TV station market -- will create a giant broadcasting unit with even greater ability to leverage outdated federal rules to bilk pay-TV providers and their customers through unseemly business practices, such as wide-scale signal blackouts just before NFL games, the World Series, the Oscars, and other marquee events."

He added that "Gannett and Belo have admitted that they will structure their deal in part by relying on so-called ``virtual duopolies´´ to skirt Federal Communications Commission rules that outright prohibit the ownership of more than one of the top-four rated stations in the same local market. This clear evasion of FCC rules is something ACA has identified in deals this year involving Nexstar Broadcasting Group, Inc. and Sinclair Broadcasting Group, Inc."

He further asserted that "when there is a virtual duopoly, the broadcasters often coordinate their retransmission consent negotiations and engage in other practices that reduce competition. Despite the fact that available evidence shows that coordinating retransmission consent negotiations leads to higher retrans prices passed along to consumers, the FCC continues to permit broadcasters to collude in this manner."

Craig Aaron, head of the Free Press, stated in a release that "We've seen time and again that media consolidation means fewer journalists and less diversity on the public airwaves. Broadcasters are on a shopping spree, using cash from last year's political ad bonanza to buy each other. Very soon just a small handful of companies will control all of the affiliates in major markets and the swing states. This increasing concentration of ownership -- coupled with covert consolidation that combines formerly competing newsrooms -- is failing local communities. And yet the FCC continues to keep its head in the sand. We don’t need yet another media merger; we need strong ownership rules that protect and promote local journalism."

People and Appointments

6/14. The U.S. Patent and Trademark Office (USPTO) has six job listing for information technology specialists. See, list.

More News

6/14. The Department of Commerce's (DOC) National Institute of Standards and Technology (NIST) and National Telecommunications and Information Administration (NTIA) released a document [4 pages in PDF] titled "Memorandum of Understanding" that states that the two entities intend "to cooperate toward the goal of establishing a proposed" Center for Advanced Communications, to be located in Boulder, Colorado. Its goals would include "Promoting interdisciplinary research, development, and testing in advanced communication-related areas such as radiofrequency technology, digital information processing, cybersecurity, interoperability, and useability". See also, NTIA release.

6/14. Ruth Milkman, Chief of the Federal Communications Commission's (FCC) Wireless Telecommunications Bureau (WTB) gave a speech regarding FCC spectrum policy and proceedings at Georgetown University's Georgetown Center for Business & Public Policy (GCBPP) event titled "Optimal Coevolution of Mobile Broadband Technology and Spectrum Policy".

Supreme Court Holds That DNA Segment is Not Patentable But Synthetically Created DNA Is

6/13.The Supreme Court released its opinion [22 pages in PDF] in Association for Molecular Pathology v. Myriad Genetics, holding under 35 U.S.C. § 101 that "a naturally occurring DNA segment is a product of nature and not patent eligible under merely because it has been isolated but that cDNA is patent eligible because it is not naturally occurring".

The Court reversed in part the judgment of the U.S. Court of Appeals (FedCir). The Court of Appeals released its divided opinion [106 pages in PDF] on August 16, 2012. It is also reported at 689 F. 3d 1303.

Justice Clarence Thomas wrote the opinion of the Court. Seven others joined. Justice Antonin Scalia joined in part, and wrote a one paragraph opinion.

Justice Thomas wrote that Myriad "discovered the precise location and sequence of two human genes, mutations of which can substantially increase the risks of breast and ovarian cancer. Myriad obtained a number of patents based upon its discovery. This case involves claims from three of them and requires us to resolve whether a naturally occurring segment of deoxyribonucleic acid (DNA) is patent eligible under 35 U. S. C. §101 by virtue of its isolation from the rest of the human genome."

"We also address the patent eligibility of synthetically created DNA known as complementary DNA (cDNA), which contains the same protein-coding information found in a segment of natural DNA but omits portions within the DNA segment that do not code for proteins."

Justice Thomas concluded that "we hold that a naturally occurring DNA segment is a product of nature and not patent eligible merely because it has been isolated, but that cDNA is patent eligible because it is not naturally occurring."

The Supreme Court adopted the position taken by the Office of the Solicitor General (OSG). See, amicus curiae brief.

Justice Thomas added that "It is important to note what is not implicated by this decision. First, there are no method claims before this Court. Had Myriad created an innovative method of manipulating genes while searching for the BRCA1 and BRCA2 genes, it could possibly have sought a method patent."

Sandra Park of the American Civil Liberties Union (ACLU), which represented the plaintiffs below, and petitioners before the Supreme Court, stated in a release that "the court struck down a major barrier to patient care and medical innovation".

In contrast, Jeffrey Lewis, head of the American Intellectual Property Law Association (AIPLA), stated in a release that "today's opinion may throw into question patent protection for important technology that is critical to improving health for the public, and that has become the cornerstone of the biotech industry". See also, the AIPLA's amicus curiae brief.

Jim Greenwood, head of the Biotechnology Industry Association (BIO), and a former Representative and member of the House Commerce Committee (HCC), stated in a release that the Court "ruled that so-called cDNA remains eligible for patenting. cDNA is the commercially most important form of DNA used in biotechnology. Today's decision offers urgently-needed certainty for research-driven companies that rely on cDNA patents for investment in innovation."

However, he continued that this decision "represents a troubling departure from decades of judicial and Patent and Trademark Office precedent supporting the patentability of DNA molecules that mimic naturally-occurring sequences. In addition, the Court’s decision could unnecessarily create business uncertainty for a broader range of biotechnology inventions."

He added that the U.S. "is now the only developed country to take such a restrictive view of patent eligibility, signaling an unjustified indifference towards our global economic and scientific leadership in the life sciences."

This case is Association for Molecular Pathology, et al. v. Myriad Genetics, Inc., et al., Supreme Court of the U.S., Sup. Ct. No. 12–398, on certiorari to the U.S. Court of Appeals for the Federal Circuit, App. Ct. No. 2010-1406. The Court of Appeals heard an appeal from the U.S. District Court for the Southern District of New York, D.C. No. 09-CV-4515.

Gregory Castanias of the law firm of Jones Day argued the case for Myriad. Christopher Hansen of the ACLU argued the case for the AMP. Donald Verrilli, the Solicitor General, argued the case for the OSG.

Judicial Appointments

6/13. The Senate confirmed Jeffrey Schmehl to be a Judge of the U.S. District Court (EDPenn) by a vote of 100-0. See, Roll Call No. 149.

6/13. The Senate confirmed Nitza Alejandro to be a Judge of the U.S. District Court (EDPenn).

6/13. The Senate Judiciary Committee (SJC) held an executive business meeting at which it approved by voice vote the nomination of Valerie Caproni to be a Judge of the U.S. District Court (SDNY). Sen. Charles Grassley (R-IA), the ranking Republican on the SJC, stated that "while I did not hold Ms. Caproni's nomination in Committee, I reserve my right to do so on the Senate floor". He explained that the Federal Bureau of Investigation (FBI), of which Caproni was General Counsel, has yet to produce records that he requested regarding FBI surveillance by exigent letters during Caproni's tenure. See also, story titled "Obama Nominates Caproni to District Court" in TLJ Daily E-Mail Alert No. 2,474, November 19, 2012.

6/13. The Senate Judiciary Committee (SJC) held an executive business meeting at which it approved by voice vote the nomination of Vernon Broderick to be a Judge of the U.S. District Court (SDNY).

More People and Appointments

6/13. The Senate Judiciary Committee (SJC) held an executive business meeting at which it approved by voice vote the nomination of Tony West to be the Associate Attorney General. See also, story titled "Senate Judiciary Committee Holds Hearing on West" in TLJ Daily E-Mail Alert No. 2,568, May 31, 2013.

6/13. The House of Representatives renamed Room 2123 of the Rayburn Building the John Dingell Room. This is the main hearing room for the House Commerce Committee (HCC). Rep. John Dingell (D-MI) last week became the longest serving member in the history of the House of Representatives. See, HCC release.

More News

6/13. Gannett and Belo announced in a release that "they have entered into a definitive merger agreement under which Gannett will acquire all outstanding shares of Belo for $13.75 per share in cash, or approximately $1.5 billion, plus the assumption of $715 million in existing debt for an enterprise value of approximately $2.2 billion. The transaction, which has been unanimously approved by the boards of directors of both companies, represents a 28.1 percent premium to the closing price of Belo common stock on June 12, 2013."

Rep. Lofgren Reintroduces Wireless Tax Fairness Act

6/12. Rep. Zoe Lofgren (D-CA) and Rep. Trent Franks (R-AZ) introduced HR 2309 [LOC | WW | PDF], the "Wireless Tax Fairness Act".

This bill would provide that "No State or local jurisdiction shall impose a new discriminatory tax on or with respect to mobile services, mobile service providers, or mobile service property, during the 5-year period beginning on the date of enactment of this Act."

Rep. Zoe LofgrenRep. Lofgren (at right) stated in a release that "Wireless connectivity is becoming the simplest and easiest route of choice to the Internet, but instead of encouraging that we're burdening it with taxes ... This bill is needed to hit the pause button and stop these arbitrary taxes from increasing. By doing so, we'll bring needed stability to the wireless marketplace for customers to choose their services based on merit and need so we can see these platforms of innovation and job growth expand."

Rep. Lofgren's release adds that "The average 17.2% in taxes and fees wireless customers now pay is more than twice the average rate of 7.4% on other goods and services. In many localities, this cumulative tax burden is even higher: 26.8% in Baltimore, 19.9% in Omaha, 18.2% in Tallahassee, and 20.4% in New York City."

Rep. Lofgren has been introducing similar bills for a long time. In the 112th Congress she sponsored HR 1002 [LOC | WW], the "Wireless Tax Fairness Act of 2011". The House passed that bill on November 1, 2011. However, the Senate did not pass it. The companion bill in the Senate in the 112th Congress was S 543 [LOC | WW], also titled the "Wireless Tax Fairness Act of 2011". The Senate took no action on either bill.

Rep. Lofgren introduced HR 1521 [LOC | WW], "Cell Tax Fairness Act of 2009" in the 111th Congress.

Rep. Lofgren introduced HR 5793 [LOC | WW], the "Cell Tax Fairness Act", in the 110th Congress.

The bill's prohibition is subject to numerous exemptions. Some are inherent in the clause "new discriminatory tax on or with respect to mobile services ...". Others are found in the definitions contained in the bill.

For example, the bill's definition of the term "tax" excludes several categories of taxes. It excludes taxes that are "used to preserve and advance Federal universal service or similar State programs authorized by" 47 U.S.C. § 254.

It also excludes taxes that are "specifically dedicated by a State or local jurisdiction for the support of E–911 communications systems". It also excludes taxes that are used for federal or state telecommunications relay services.

The bill provides that there is a private right of action in the U.S. District Court to enjoin violations of the prohibition contained in this act. However, this bill does not provide for the recovery of damages, or recovery of taxes collected in violation of the prohibition of this bill. That could run afoul of the 11th Amendment, as interpreted by the Supreme Court.

Sen. Rockefeller Introduces Bill to Limit Third Party Billing by Phone Companies

6/12. Sen. John Rockefeller (D-WV), Sen. Amy Klobuchar (D-MN) and Sen. Richard Blumenthal (D-CT) introduced S 1144 [LOC | WW | PDF], the "Fair Telephone Billing Act of 2013". This is an attempt to limit deception and fraud in third party billing on consumers' local exchange carrier (LEC) and interconnected VOIP phone bills, either by enactment into law, or by prodding companies to take action themselves. Sen. Rockefeller continues to study third party billing via wireless carriers.

This bill is a revised version of S 3291 [LOC | WW], the "Fair Telephone Billing Act of 2012", from the 112th Congress.

This bill was referred to the Senate Commerce Committee (SCC), which Sen. Rockefeller chairs.

This bill would not prohibit the use of either landline, wireless or interconnect VOIP service bills for third party billing. It would, however, impose some limitations on third party billing by wireline and interconnect VOIP service providers. It would give rulemaking and enforcement authority to the Federal Communications Commission (FCC). It provides that no state laws are preempted.

Sen. John RockefellerSen. Rockefeller (at right) and the SCC have been studying this issue for years.

The SCC released a report [50 pages in PDF] on July 12, 2011 titled "Unauthorized Charges on Telephone Bills". That report concluded that "third-party billing is causing extensive financial harm to all types of landline telephone customers". See also, story titled "Senate Commerce Committee Releases Report on Unauthorized Charges on Phone Bills" in TLJ Daily E-Mail Alert No. 2,258, July 14, 2011.

The next day, July 13, 2011, the SCC held a hearing titled "Unauthorized Charges on Telephone Bills: Why Crammers Win and Consumers Lose". Sen. Rockefeller and Sen. Klobuchar both participated in that hearing. See also, story titled "Senate Commerce Committee Holds Hearing on Phone Bill Cramming" in TLJ Daily E-Mail Alert No. 2,258, July 14, 2011.

Sen. Rockefeller did not introduce a bill on this subject in 2011. Late in 112th Congress -- June 13, 2012 -- he introduced S 3291. However, neither the Senate, nor the SCC, took any action on that bill. Although, phone companies did react to his efforts by changing their practices.

Lisa Madigan, then and still the Attorney General of Illinois, advocated enactment of legislation banning all third party charges on phone bills at that 2011 hearing. She said that allowing third party billing is an "open invitation to fraud and deceit" and "should be banned altogether".

Sen. Tom Udall (D-NM) asked Madigan about third party billing on cell phones accounts. Madigan said that "the wireless carriers are much more aggressive and vigilant", so that there are many more complaints about land line phones accounts.

The just introduced bill would amend the Communications Act to provide the following:

Sen. Rockefeller asserted in a statement that "This legislation will put an end to cramming on wireline bills once and for all." See, Congressional Record, June 12, 2013, at Page S4407.

This statement may be overly optimistic. First, phone companies have not been guiltless in putting their own improper charges on phone bills. This bill only addresses improper third party billing.

Second, this bill would not prohibit all third party billing. Phone companies will continue to have an incentive to allow some third party billing, because it provides a revenue stream to the phone companies. An industry representative testified at the 2011 hearing that revenue from third party billing is about "200 million for the entire industry". Moreover, phone companies are no longer required to accept any third party billing, but they continue to do so.

Most consumers either do not scrutinize their bills, or do not understand their bills; moreover, third party charges are usually deceptively listed; so, consumers tend not to find and challenge unauthorized charges.

Third, requiring things such as "affirmative consent" and "clear and conspicuous notice" can be quite effective when regulating established companies, that adhere to rules, and have reputations to zealously defend. But, such requirements would likely have little effect on the perpetrators of deception against whom state consumer protection agencies and the Federal Trade Commission (FTC) have been brining whack a mole anti-cramming enforcement actions for years.

Sen. Rockefeller stated that after the SCC's 2011 report and hearing, "the three largest wireline telephone companies -- AT&T, Verizon, and CenturyLink -- took positive steps to eliminate cramming on wireline telephone bills, including a decision to stop allowing the placement of most third-party charges on wireline telephone bills." He added that his bill would require that "all wireline telephone companies and providers of interconnected VoIP services are required to take the same steps".

He also stated in the Congressional Record that "cramming now extends to wireless bills". But, this bill does not address wireless third party charges. Rather, Sen. Rockefeller stated that "It is important that we examine the extent to which third-party wireless billing practices raise any issues distinct from third-party wireline billing practices, so we can best determine appropriate policies for protecting against consumer abuses in this context."

Hence, Sen. Rockefeller also sent letters to AT&T, Verizon Wireless, Sprint Nextel, and T-Mobile USA asking them about unauthorized third party charges in the wireless billing context. See, letter to AT&T, letter to Verizon Wireless, letter to Sprint Nextel, and letter to T-Mobile USA.

He wrote that "wireless carriers allow third-party vendors to use the wireless phone bill system to charge consumers for their services. There is no question that wireless industry standards state that such vendors must meet double op-in requirements in order to use the wireless phone bill system as a billing mechanism. It remains unclear, however, whether the industry has established an effective system to ensure that these requirements work in practice. In fact, evidence continues to mount that vendors are finding ways to penetrate the purported double opt-in shield."

He asked the companies numerous questions regarding their third party billing procedures, to be answered by June 28, 2013.

Obama Picks Political Appointee for CIA Deputy Director

6/12. President Obama announced his intent to appoint Avril Haines to be Deputy Director of the Central Intelligence Agency (CIA). See, White House news office release. Her appointment is unusual because she is young, because she lacks relevant experience, and because she is political.

Historically, while the Director of the CIA has often been a political appointee, the Deputy Director has been a career intelligence professional.

Federal Election Commission (FEC) records disclose that Haines contributed to the Obama election campaigns, a few days before the 2008 general election, and on election day 2012.

Haines is currently Obama's Deputy Assistant to the President and Deputy Counsel to the President for National Security Affairs. She has worked in Obama administration posts since 2009.

In 2007 and 2008 she worked for former Sen. Joe Biden (D-DE) as a staff member for the Senate Foreign Relations Committee (SFRC), which former Sen. Biden chaired.

Haines will replace the current Deputy Director, Michael Morell, who has worked at the CIA for 33 years. Obama also announced that he intends to appoint Morell to the President’s Intelligence Advisory Board.

The current CIA Director is John Brennan. Before taking office three months ago, he worked in the Obama White House. However, he worked at the CIA from 1980 through 2005.

More People and Appointments

6/12. Debrea Terwilliger rejoined the law firm of Wilkinson Barker Knauer. She will handle energy and communications regulatory matters in the firm's Denver, Colorado office. She is returning after seven years at the Public Utilities Commission of Nevada (PUCN).

6/12. The New America Foundation (NAF) announced that Carolyn Anhalt and Nadim Kobeissi will work as special advisors to its Open Technology Institute. Their work will involve "fighting online surveillance and censorship around the world, particularly in Iran and China". See, NAF release.

6/12. Rep. Jason Smith (R-MO) was appointed to House Judiciary Committee (HJC). He won a special election on June 4, 2013 to fill the seat vacated by the resignation of former Rep. Jo Ann Emerson (R-MO), who resigned to become head of the National Rural Electric Cooperative Association. See, Rep. Smith's releaseand Rep. Bob Goodlatte's (R-MO) release. His background is farmer, lawyer, state legislator, and National Rifle Association (NRA) member.

More News

6/12. The Federal Communications Commission (FCC) set comment deadlines for its Second Notice of Proposed Rulemaking (2ndNPRM) regarding its "2000 Biennial Regulatory Review Separate Affiliate Requirements of Section 64.1903 of the Commission's Rules". The deadline to submit initial comments is July 12, 2013. The deadline to submit reply comments is August 12. The FCC adopted this NPRM on May 10, 2013 as part of its larger item [127 pages in PDF] that granted forbearance from  numerous unnecessary regulatory requirements on phone companies. The FCC released this item on May 17. It is FCC 13-69 in CC Docket No. 00-175. See, notice in the Federal Register, Vol. 78, No. 113, June 12, 2013, at Pages 35191-35195.

6/12. The Government Accountability Office (GAO) released a report [78 pages in PDF] titled "Information Technology: HUD Needs to Improve Key Project Management Practices for Its Modernization Efforts".

Bills Introduced to Provide Grants for Developing STEM Secondary Education

6/11. Sen. Tom Udall (D-NM) and Sen. Martin Heinrich (D-NM) introduced S 1129 [LOC | WW | PDF], the "STEM Support for Teachers in Education and Mentoring (STEM) Act", on June 11, 2013. Rep. Ben Ray Lujan (D-NM) and others introduced HR 2334 [LOC | WW], the companion bill in the House, on June 12.

All five members of the New Mexico delegation (and one other Representative) are sponsors of these two bills. They call these bills STEM Squared.

Sen. Martin HeinrichSen. Heinrich (at right) stated in a release that "This legislation opens up pathways for collaboration between businesses and teachers to ensure that students are getting the skills they need to be successful in tomorrow's job market ... STEM education plays a critical role in America's ability to meet the demands of the 21st Century, like developing new energy technology, advancing national defense strategies, and raising health care quality through computerized advancements."

These bills would authorize the appropriation of unspecified amounts for five years to the Department of Education (DOE) to give in grants to state, tribal, educational and non-profit entities to pay for "curriculum development, assessments, or related activities that would enable States to adopt new mathematics and science academic standards."

The Senate bill was referred to the Senate Health, Education, Labor, and Pensions Committee. The House bill was referred to the House Education Workforce Committee. The original cosponsors of the House bill are Rep. Michell Grisham (D-NM), Rep. Steve Pearce (R-NM), and Rep. Tony Cardenas (D-CA).

Patent Trial and Appeal Board Issues Decision in SAP v. Versata

6/11. The U.S. Patent and Trademark Office's (USPTO) Patent Trial and Appeal Board (PTAB), formerly know as the BPAI, released its Final Written Decision [38 pages in PDF] in SAP v. Versata, holding that certain claims in the business method patent at issue are unpatentable under 35 U.S.C. § 101 as abstract ideas.

This is a victory for SAP, a maker of business management software, which may be able to avoid having to pay a $345 Million jury verdict.

However, the main significance of this opinion is that it is the first of the PTAB under the new interim business methods patent post grant review process. It is the first PTAB opinion to discuss and construe this new process.

This is a post grant review brought under Section 18 of the "Leahy-Smith America Invents Act", or AIA. This act was HR 1249 [LOC | WW] in the 112th Congress. President Obama signed it into law on September 16, 2011. It is Public Law No. 112-29.

Versata is the rights holder of U.S. Patent No. 6,553,350, which is titled "Method and apparatus for pricing products in multi-level product and organizational groups". It is a business method patent that merely states a method of pricing products and services.

Versata brought a patent infringement action in the District Court in 2007. After two trials it largely prevailed. Both sides appealed, the month after enactment of the AIA. Claim construction and patentability are not at issue in the appeals proceeding. Section 18 provides an alternative means for challenging patents. SAP filed a complaint with the PTAB in 2012 on the very day that the Section 18 process became effective.

In this opinion the PTAB holds that the relevant claims of the 350 patent are unpatentable.

However, the opinion also provides a thorough review of the history of, and an analysis of, inter partes reexamination provided by the American Inventors Protection Act of 1999, and Section 18 of the AIA and post grant reviews. It also describes the USPTO's promulgation of Section 18 rules.

This opinion then holds that the broadest reasonable interpretation (BRI) standard is the one correct standard for post grant reviews.

It also holds that the District Court's claim construction is not binding upon the PTAB under the doctrine of stare decisis.

Article III Court Proceedings. Versata filed a complaint in the U.S. District Court (EDTex) against SAP in 2007 alleging infringement of this patent. Following a jury trial, the District Court entered judgment of infringement against SAP, but held a new trial on the issue of damages. Following a second jury trial, the Court entered judgment awarding Versata lost profits and reasonable royalty damages.

Both SAP and Versata filed appeals with the U.S. Court of Appeals (FedCir). However, the District Court's claim construction and judgment of validity of the patent in suit are not issues before the Court of Appeals.

The Court of Appeals issued its opinion [24 pages in PDF] on May 1, 2013, affirming the jury's infringement verdict and damages award but vacating and remanding a permanent injunction as overbroad.

A petition for en banc rehearing is pending. Microsoft, SAS, HTC, Xilinx, Altera, the Application Developers Association, and others filed an amicus curiae brief on June 12, 2013 in support of the petition for rehearing.

That case is Versata Software Inc., et al.  v. SAP America Inc. and SAP AG, U.S. Court of Appeals for the Federal Circuit, App. Ct. Nos. 2012-1029 and 2012-1049, an appeal from the U.S. District Court for the Eastern District of Texas, D.C. No. 07-CV-0153. Judge Randall Rader wrote the opinion of the Court of Appeals, in which Judges Sharon Prost and Kimberly Moore joined.

PTAB Proceedings. SAP filed a complaint with the USPTO's PTAB on September 16, 2012 under Section 18 of the AIA alleging that certain claims in the 350 patent are not patentable under 35 U.S.C. § 101.

This case is SAP America, Inc. v. Versata Development Group, Inc., Case No. CBM2012-00001 (MPT). Administrative Patent Judge Michael Tierney wrote the opinion of the PTAB, in which Judges Sally Medley and Rama Elluru joined.

Section 18 Proceedings. Section 18 of the America Invents Act created a temporary post grant review process at the USPTO for certain business methods patents.

The Act provides that a "covered business method patent" means "a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions".

This program remains in effect for eight years after the promulgation of implementing regulations. The effective date of the program is September 16, 2012. The sunset date is September 16, 2020.

Appeals from the USPTO's PTAB lie in the Federal Circuit.

See also, the USPTO web page for this program.

GAO and Senate Committee Examine Duplicative Government IT Spending

6/11. The Government Accountability Office (GAO) released a report [22 pages in PDF] titled "Information Technology: OMB and Agencies Need to Focus Continued Attention on Eliminating Duplicative Investments".

This report finds that "the reduction or elimination of duplication, overlap, or fragmentation could potentially save billions of tax dollars annually and help agencies provide more efficient and effective services. Many of the government programs or activities with opportunities to reduce duplication and the cost of government operations are related to critical IT areas, including" overlapping and duplicative "federal data centers".

The report also states that "agencies have reported saving millions of dollars from implementing cloud-based solutions".

The GAO prepared this report for a hearing on June 11 of the Senate Homeland Security and Governmental Affairs Committee (SHSGAC) titled "Reducing Duplication and Improving Outcomes in Federal Information Technology". See also, opening statement of Sen. Tom Caper (D-DE), prepared testimony of Steven Van Roekel (Office of Management and Budget), prepared testimony of Simon Szykman (Department of Commerce), and prepared testimony of Frank Baitman (Department of Health and Human Services).

The OMB's VanRoekel wrote that "In shifting to the cloud, organizations no longer need to incur upfront capital costs to stand up new solutions, but can instead procure technology ``as-a-service,´´ only paying for what they need, when they need it."

He also addressed how the Department of Agriculture (DOA) is using cloud based services "to achieve cost reductions, improve agility, reduce energy use, improve security, achieve economies of scale, and reduce overall complexity". He wrote that it will thereby save "$46 million in FY 2013".

HCC Republicans Investigate IRS Violation of Health Records Privacy

6/11. Four Republican members of the House Commerce Committee (HCC) sent at letter [PDF] to the Internal Revenue Service (IRS) regarding the HCC's investigation of whether the Internal Revenue Service (IRS) "improperly seized the personal medical records of millions of American citizens in possible violation of the Fourth Amendment".

The letter states that a health care provider has sued the IRS alleging that IRS "agents stole more than 60 million medical records from more than 10 million American patients". The letter continues that the IRS obtained a warrant that merely authorized it to seize financial records of a former employee of the company, but that it seized confidential electronic records of 10 Million people.

The letter also expresses concern that while the Health Insurance Portability and Accountability Act of 1996 (HIPAA) privacy rules regulate health care providers, they impose no limitations upon what the IRS can do with health care records that it seizes.

The letter asks the IRS what use it plans to make of health care records seized in this manner, and what policies and procedures it has to ensure that such information remains confidential and private.

The letter is signed by Rep. Tim Murphy (R-PA), Chairman of the HCC's Subcommittee on Oversight and Investigations (SOI), Rep. Michael Burgess (R-TX), Vice Chairman of the SOI, Rep. Joe Barton (R-TX), and Rep. Marsha Blackburn (R-TN).

Tech Companies and Groups Seek Greater Disclosure of Surveillance Data

6/11. Technology companies and groups advocated greater transparency in the release of aggregate data regarding surveillance requests from government.

For example, David Drummond, Chief Legal Officer of Google, sent a letter to Attorney General Eric Holder and FBI Director Robert Mueller in which he asked for permission to disclose "aggregate numbers of national security requests".

He wrote that "we have consistently pushed back on overly broad government requests for our users' data", but "We have always made clear that we comply with valid legal requests."

"Assertions in the press that our compliance with these requests gives the U.S. government unfettered access to our users’ data are simply untrue. However, government nondisclosure obligations regarding the number of FISA national security requests that Google receives, as well as the number of accounts covered by those requests, fuel that speculation."

"We therefore ask you to help make it possible for Google to publish in our Transparency Report aggregate numbers of national security requests, including FISA disclosures -- in terms of both the number we receive and their scope. Google's numbers would clearly show that our compliance with these requests falls far short of the claims being made."

Twitter's Alex Macgillivray issued a statement via Twitter that might indicate that Twitter shares these views of Google. He wrote, "Completely agree with @Google, @SenJeffMerkley & others -- we'd like more NSL transparency and @Twitter supports efforts to make that happen".

Ed Black, head of the Computer and Computer Industry Association (CCIA), stated in a release that "We join industry in calling on the US government to enable companies to report aggregate national security data requests it receives from the government. Google issued such a request today in a letter to the attorney general and FBI director and Facebook issued a similar request. In addition to important transparency goals, there are serious First Amendment issues with such gag orders.

He said that "we disagree with the notion that the scope of government surveillance or how frequently these tools are used should be classified". Moreover, "There are broad costs to our nation's diplomatic, economic and trade goals if the millions of people around the world using Internet services to communicate are worried about how their information and data is being used by the US government.”

Google's disclosures, which it calls "Transparency Reports", currently are quite vague, in part because it provides data by ranges, rather than by real numbers. For example, Google disclosed in March that for the year 2012, Google received somewhere between 0 and 999 National Security Letters (NSLs) that pertained to somewhere between 1,000 and 1,999 "Users/Accounts". For the year 2011, the numbers fell within the same ranges. See, story titled "Google Discloses that it Receives FBI NSLs" in TLJ Daily E-Mail Alert No. 2,531, March 6, 2013.

Senate Finance Committee Approves Nomination of Mike Froman for USTR

6/11. The Senate Finance Committee (SFC) approved the nomination of Mike Froman to be the U.S. Trade Representative (USTR). See, SFC release.

Senators overlooked his investment holdings related to Ugland House in the Cayman Islands, which President Obama has condemned. See also, story titled "USTR Nominee Froman Mired in Ugland House Controversy" in TLJ Daily E-Mail Alert No. 2,570, June 4, 2013.

Sen. Orrin Hatch (R-UT), the ranking Republican on the SFC, said in his opening statement to a hearing on Froman on June 6 that "in 2008, while campaigning for President, then-Senator Obama said that the Ugland House was ``either the biggest building in the world or the biggest tax scam in the world.´´ And, throughout the 2012 campaign, President Obama repeatedly attacked Mitt Romney for having funds invested in the Caymans.  In making such investments, Governor Romney was, in the words of the Obama Campaign, betting against America. Yet, the President had no problem nominating someone who made similar investments to be Treasury Secretary. As a result of our vetting process, we have now learned that Mr. Froman has actively invested roughly half a million dollars in the exact same hedge fund located at the Ugland House."

Sen. Hatch explained that he raised this, not to "suggest that Mr. Froman has done something wrong", but rather to point out the hypocrisy of President Obama.

Sen. Charles Grassley (R-IA), a senior member of the SFC, stated in a release on June 11 that "Despite the President's condemnations of offshore tax havens and his characterization of the Ugland House as 'the largest tax scam in the world,' his administration didn't ask a top aide about his investments in the Cayman Islands and the Ugland House. If this were a priority, the White House would have asked a top adviser about these investments. This is an example of the President's having one set of standards for his political opponents and another for his friends and supporters."

Froman, who is currently President Obama's Deputy National Security Advisor for International Economics, used the June 6 hearing to announce that President Obama now supports a Congressional grant of trade promotion authority.

President Obama has not pursued any bilateral free trade agreements (FTAs). Also, he delayed implementation of three FTAs concluded late in the Bush administration (with Korea, Columbia and Panama).

Froman stated at the hearing that "if confirmed, I will engage with you to renew Trade Promotion Authority. TPA is a critical tool. I look forward to working with you to craft a bill that achieves our shared goals".

ACLU Files Complaint Seeking End to NSA Phone Records Surveillance

6/11. The American Civil Liberties Union (ACLU) and others filed a complaint [12 pages in PDF] in the U.S. District Court (SDNY) against James Clapper, in his capacity as Director of National Intelligence (DNI), and other government officials, alleging violation of 50 U.S.C. § 1861, and the 1st and 4th Amendments, in connection with the phone records surveillance program disclosed last week by the publication of an order of the Foreign Intelligence Surveillance Court (FISC).

The ACLU's Jameel Jaffer stated in a release that "This dragnet program is surely one of the largest surveillance efforts ever launched by a democratic government against its own citizens ... It is the equivalent of requiring every American to file a daily report with the government of every location they visited, every person they talked to on the phone, the time of each call, and the length of every conversation. The program goes far beyond even the permissive limits set by the Patriot Act and represents a gross infringement of the freedom of association and the right to privacy."

Previously, the ACLU challenged the constitutionality of Section 702 of the Foreign Intelligence Surveillance Act (FISA), which is codified at 50 U.S.C. § 1881a. It contains the "outside" the US surveillance authority.

The District Court held that the plaintiffs lack standing. The Court of Appeals reversed. On February 26, 2013 the Supreme Court issued its 5-4 opinion [47 pages in PDF], reversing the judgment of the Court of Appeals. It ruled that the plaintiffs lack Article III standing to sue because they cannot show injury because they cannot show that they are targets of Section 702 surveillance.

In the present case, the complaint alleges that the ACLU is a Verizon Business Network Services (VBNS) subscriber "whose communications have already been monitored by the government under the VBNS order and whose communications continue to be monitored under that order now".

The complaint does not address the issue of standing. However, the ACLU release asserts standing based upon the language of the FISC order, which requires production of all call records.

The complaint names as defendants Keith Alexander (in his capacity as Director of the NSA), Charles Hagel (Secretary of Defense), Eric Holder (Attorney General), and Robert Mueller (FBI Director).

This case is American Civil Liberties Union, et al. v. James R. Clapper, et al., U.S. District Court for the Southern District of New York.

Groups Urge Reform of Surveillance Laws

6/11. A collection of groups sent a letter to Senators and Representatives urging them to take action to address the National Security Agency's (NSA) phone records surveillance program disclosed last week by the public disclosure of a Foreign Intelligence Surveillance Court (FISC) order directed at Verizon.

They urge the Congress to "take immediate action to halt this surveillance and provide a full public accounting of the NSA’s and the FBI’s data collection programs".

More specifically, "Enact reform this Congress to Section 215 of the USA PATRIOT Act, the state secrets privilege, and the FISA Amendments Act to make clear that blanket surveillance of the Internet activity and phone records of any person residing in the U.S. is prohibited by law and that violations can be reviewed in adversarial proceedings before a public court".

The 86 groups that joined in this letter include the American Civil Liberties Union (ACLU), American Library Association (ALA), Center for Democracy and Technology (CDT), Competitive Enterprise Institute (CEI), Consumer Watchdog (CW), Electronic Frontier Foundation (EFF), Free Press (FP), Public Knowledge (PK), Tech Freedom (TF), and the World Wide Web Foundation (WWWF).

More News

6/11. The European Commission (EC) adopted a Proposal for a Directive [PDF] regarding antitrust damages. The EC stated in a release it has "has adopted a proposal for a Directive on how citizens and companies can claim damages when they are victims of infringements of the EU antitrust rules, such as cartels and abuses of a dominant market position."

6/11. The European Parliament (EP) adopted rules regarding customs enforcement of intellectual property rights. See, EP release.

6/11. The Federal Communications Commission's (FCC) Public Safety and Homeland Security Bureau (PSHSB) issued a Public Notice (DA 13-1353) that states that FCC has established an e-mail address for Public Safety Answering Points (PSAPs) to provide information on service outages and related issues to the FCC: psapreport at fcc dot gov.

Go to News from June 6-10, 2013.