4/3. The House Judiciary Committee's Subcommittee on Courts, the Internet and Intellectual Property (CIIP) held a hearing on HR 1561, the "United States Patent and Trademark Fee Modernization Act of 2003".

This bill would raise patent and trademark fees. It is cosponsored by Rep. Lamar Smith (R-TX) and Rep. Howard Berman (D-CA), the Chairman and ranking Democrat on the CIIP Subcommittee. The hearing also focused on the diversion of U.S. Patent and Trademark Office (USPTO) fees to subsidize other government programs, patent pendency, patent quality, the proposed outsourcing of patent searches, and the USPTO's 21st Century Strategic Plan.

Rep. Smith (at right) read a prepared statement. He said that "The fee schedule has been developed in large part based on funding shortfalls at the agency that have resulted from revenue diversion. Everyone in this room is aware of the ongoing appropriations practice of using a portion of PTO fee revenue to subsidize other programs unconnected to the agency. None of us like it, but progress has been made in the past two or three years in curtailing fee diversion. We all want an efficient and productive PTO that has the resources it needs to serve the inventors and trademark holders of the United States."

Rep. Berman argued that "before we consider the issue of fee increases, it seems to me, without taking a look at the issue of fee diversion, and to understand where we all stand in terms of our commitment to end this practice. Without a willingness from all of us, Members, interested parties, and the PTO, to put in a sincere effort to end the diversion of PTO funds, I don't see the logic of raising the fees. I have in the past, I am willing to now, to work for this goal. But, I wouldn't expect my colleagues to champion a cause ... without having the active participation and a firm commitment from all the influential industry groups that want us to deal with this backlog, that are willing to support a reasonable fee increase to increase the productivity, but don't prioritize the goal of stopping the diversion."

"If you want to put in a freeze on the top tax bracket, I am fine with you. If you want to increase the gas tax, I am fine with you. There are other ways to find appropriation revenues for the federal government to spend on the problems of the American people", said Rep. Berman. "But the notion that we are going to take this foolish method, which is, we are going to tax innovation through a substantial increase in fees, in order to actually divert it into more general fund appropriations is the dumbest way to do it. And, I don't see why we should be part of that process. I think we have to address the issue of diversion. And, at least I am not persuaded that the administration at its highest level is a partner in that effort."

Rep. Zoe Lofgren (D-CA), who represents a Silicon Valley district, spoke in opposition to HR 1561. She said that every year there are proposals to end the fee diversion, but it never ends. She said that it is time to "follow the First Lady's advice -- just say no".

Rep. Lofgren (at right), continued that "I don't think I am going to vote to increase any fees until we get this stopped. I think the fee increase for a diversion is simply a tax on innovation. And the technology sector, the inventors, are willing to pay their income tax, and they are willing to pay the increased fees for the patent office. I just don't think it is appropriate to pass them on".

"At a time when the tech sector is flat on it back is not the time to continue to short the patent office", said Rep. Lofgren. "I am not going to vote for this until we get a solution for it."

Rep. Berman and Rep. Lofgren also argued that the Congress and interested parties have not gotten serious about this issue. Rep. Lofgren said that "We have never really gotten serious", while Rep. Berman said that "I don't think that there has been a serious attempt" to end fee diversion. He characterized prior efforts as "rhetorical flourishes" and bill introductions. Rep. Lofgren said that support for ending fee diversion is bipartisan. Rep. Berman added that Republicans can be supportive because they do not like tax increases, while Democrats can be supportive because of they want to assist technology development.

James Rogan, Director of the U.S. Patent and Trademark Office's (USPTO), testified regarding the USPTO's 21st Century Strategic Plan and advocated enactment of a new fee bill. He described the introduction of HR 1561 as "a critical step".

He warned that "The consequences of failing to enact the fee bill and giving the USPTO access to those fees will mean quality and pendency will continue to significantly suffer. We will be unable to hire needed examiners, and over 140,000 patents will not issue over the next five years. The inventory of unexamined patent applications will skyrocket to a backlog of over one million applications by 2008 -- more than double the current amount -- and pendency (as measured from the time of filing) will jump to over 40 months average in the next few years." See, prepared testimony.

He also opposed putting a sunset provision in the fee increase bill.

Michael Kirk, Executive Director of the American Intellectual Property Law Association (AIPLA), stated that the USPTO is "in crisis". He elaborated that "To date, over $650,000,000 in patent and trademark fees paid by PTO users have been diverted from, rescinded, or made unavailable to the Office. Quality has suffered. Large and small companies are increasingly being subjected to litigation (or its threat) on the basis of questionable patents. Patent applicants are encountering longer delays in obtaining protection for valuable new technologies." See, prepared testimony [PDF].

He said he supports the fee increase bill. "Failure to enact an appropriate fee bill to fund a sound Strategic Plan is not an option." However, he said that he also supports a sunset provision. "Should there be no progress in eliminating diversion in the next three fiscal years, then the higher fees would end on September 30, 2006, and applications filed after that date would be assessed fees at the rates set in the current fee schedule."

He also said that "we believe that separating search and examination makes no sense. This requires two individuals to familiarize themselves with the details of the invention -- one to search and the other to examine. That is not as efficient as having one person responsible for both search and examination."

John Williamson testified on behalf of the Intellectual Property Owners Association (IPO). He said that the IPO supports "paying for the plan by raising patent and trademark fees to the level proposed in the draft legislation if Congress appropriates an amount to the PTO for fiscal year 2004 equal to projected fee collections, and provided certain technical changes are made." See, prepared testimony,

He also advocated outsourcing of patent searching. He said that "outsourcing could have benefits, for example, by enabling faster elimination of PTO backlogs and encouraging development of private search companies with high levels of expertise in specific technologies. We support the outsourcing initiative provided there is adequate testing and evaluation."

Ronald Stern, President of the Patent Office Professionals Association (POPA), opposed the outsourcing of patent searching. See, prepared testimony.

4/3. The House Financial Services Committee's Subcommittee on Financial Institutions and Consumer Credit and Subcommittee on Oversight and Investigations held a joint hearing titled "Fighting Fraud: Improving Information Security".

Kevin Mitnick, a convicted hacker, testified regarding thieves who gain unauthorized access to computer networks and their databases containing credit card information. He stated in his prepared testimony [6 pages in PDF] that "these types of attacks happen quite frequently" and "will continue to be attractive to electronic criminals as long as credit-card details are stored by businesses connected to the Internet."

He added that many "attacks on networks containing financial information are not detected by the owner or operator. It is important to realize that many of these security incidents remain undetected because of poor security and auditing practices."

He recommended that "attempting to solve the complex problem by micro-managing every online site that accepts credit card transactions would turn out to be a wasteful, inefficient, and not very successful exercise. Instead, I recommend that the committee look in a different direction. I recommend that you explore mitigation strategies which focus on improving the authentication of the credit card user."

James Farnan, Deputy Assistant Director of the Federal Bureau of Investigation's (FBI) Cyber Division addressed investigation and prosecution of internet fraud and online identity theft in his prepared testimony [PDF]. He also addressed "cyber terrorism, terrorist threats, foreign intelligence operations, and criminal activity precipitated by illegal computer intrusions into U.S. computer networks, including the disruption of computer supported operations and the theft of sensitive data via the Internet. The FBI assesses the cyber-threat to the U.S. to be rapidly expanding, as the number of actors with the ability to utilize computers for illegal, harmful, and possibly devastating purposes is on the rise."

Rep. Mike Oxley (R-OH), the Chairman of the full Committee, wrote in his opening statement [PDF] that "consumers will quickly lose confidence in our nationwide credit system if we don’t do everything practical to improve security and protect sensitive data. ... Improving information security has to be one of our top priorities in protecting the confidentiality and integrity of our financial system."

See also, prepared testimony [19 pages in PDF] of Howard Beales, Director of the Bureau of Consumer Protection of the Federal Trade Commission (FTC). And see, web page with hyperlinks to opening statements of Representatives and prepared testimony of other witnesses.

4/3. Federal Reserve Board (FRB) Chairman Alan Greenspan gave a speech titled "Financial Education" at the JumpStart Coalition's annual meeting in Washington DC. He discussed the role of information technologies.

He stated that "as technological advances have contributed significantly to the dramatic changes within the financial services market, consumers more generally must be familiar with the role that computers play in the conduct of every traditional financial transaction, from withdrawing funds to gaining access to credit."

He continued that "just as universities provide remote learning options to allow students to pursue continuing education via the Internet, consumers can use software to create customized budgets to develop long-term savings strategies for retirement or for their children's college education. In both scenarios, technological advances represent the opportunity for achieving efficiencies and exercising preferences, but only when the end users possess the knowledge necessary to access pertinent information and to capitalize on it."

He concluded that "Building bridges between community organizations, our educational institutions, and private businesses will be an essential aspect of our efforts to increase familiarity with new technological and financial tools that are fundamental to improving individual economic well-being. And the success of such efforts will bear significantly on how well prepared our society is to meet the challenges of an increasingly knowledge based economy."

4/3. The U.S. Court of Appeals (4thCir) heard oral argument in Sun Microsystems v. Microsoft, No. 03-1116. The U.S. District Court (Maryland) issued a preliminary injunction against Microsoft in this antitrust action. The District Court held in its December 23, 2002 opinion [42 pages in PDF] that Microsoft must carry the latest Java runtime environment on any product carrying Microsoft's .NET, including Windows XP. Microsoft appealed. The Court of Appeals has stayed the preliminary injunction. See, Corrected Order [2 pages in PDF].

4/3. The Federal Communications Commission's (FCC) Wireline Competition Bureau (WCB) announced that it has implemented its new Electronic ARMIS Filing System (EAFS). See, FCC release [MS Word].

4/3. Deputy U.S. Trade Representative (USTR) Peter Allgeier announced that the U.S. will contribute $1 Million to a voluntary World Trade Organization (WTO) Global Trust Fund to provide technical assistance for developing country trade capacity building efforts. See, USTR release.

4/2. The Federal Communications Commission (FCC) issued an Order [PDF] dismissing a request for a declaratory ruling that all emissions associated with digital circuitry used to generate ultrawideband (UWB) emissions are required to meet the radiated emission limits provided in Subpart F of Part 15 of the FCC's rules for UWB transmitters. The FCC wrote that "the Commission has been clear in its recent decisions that the standard specified in Section 15.521(c) applies to emissions from all digital circuitry contained within UWB transmitters. As long as these emissions are not intended to be radiated from the antenna, they are subject to the limits specified in Section 15.209.

4/3. The Office of the U.S. Trade Representative (USTR) released a draft text of the U.S. Chile free trade agreement (FTA). It is a large document. Several chapters pertain specifically to technology and communications. See especially, Chapter 15 [3 pages in PDF] pertaining to electronic commerce, and Chapter 17 [32 pages in PDF] regarding intellectual property rights, Chapter 13 [16 pages in PDF] regarding telecommunications, and Chapter 20  [3 pages in PDF] regarding transparency.

Intellectual Property. The FTA contains detailed provisions pertaining to a wide range of intellectual property rights (IPR) issues, including domain name disputes, domain name databases, trademark protection, copyright, anticircumvention, rights management information, patents, enforcement of intellectual property rights, and limitations on liability of internet service providers.

With respect to domain names, the FTA provides that "Each Party shall require that the management of its country-code top level domain (ccTLD) provide an appropriate procedure for the settlement of disputes, based on the principles established in the Uniform Domain-Name Dispute-Resolution Policy (UDRP), in order to address the problem of trademark cyber-piracy." It also provides that "Each Party shall, in addition, require that the management of its respective ccTLD provide online public access to a reliable and accurate database of contact information for domain-name registrants, in accordance with each Party’s law regarding protection of personal data."

The FTA also addresses anticircumvention in detail. It begins by stating that "In order to provide adequate legal protection and effective legal remedies against the circumvention of effective technological measures that are used by authors, performers, and producers of phonograms in connection with the exercise of their rights and that restrict unauthorized acts in respect of their works, performances and phonograms, protected by copyright and related rights: (a) each Party shall provide that any person who knowingly circumvents without authorization of the right holder or law consistent with this Agreement any effective technological measure that controls access to a protected work, performance, or phonogram shall be civilly liable and, in appropriate circumstances, shall be criminally liable, or said conduct shall be considered an aggravating circumstance of another offense." The FTA then goes on to address procedures and remedies, permissible exceptions, accidental circumvention, and other anticircumvention issues.

Electronic Commerce. The FTA contains a brief section on electronic commerce. It provides that "Neither Party may apply customs duties on digital products of the other Party transmitted electronically." It also provides that neither party may accord less favorable treatment to the digital products of the other in certain enumerated circumstances.

For example, the FTA provides that "A Party shall not accord less favorable treatment to a digital product than it accords to other like digital products, on the basis that: (a) the digital product receiving less favorable treatment is created, produced, published, stored, transmitted, contracted for, commissioned, or first made available on commercial terms in the territory of the other Party; or (b) the author, performer, producer, developer, or distributor of such digital products is a person of the other Party."

Telecommunications. The chapter on telecommunications addresses access to public telecommunications networks and services under reasonable and non-discriminatory terms, interconnection, unbundled network elements, colocation, and resale.

The telecommunications chapter also addresses information services. It provides that "Neither Party may require an enterprise in its territory that it classifies as a supplier of information services (which supplies such services over facilities that it does not own) to: (a) supply those services to the public generally; (b) cost-justify its rates for such services; (c) file a tariff for such services; (d) interconnect its networks with any particular customer for the supply of such services; or (e) conform with any particular standard or technical regulation for interconnection for the supply of such services other than for interconnection to a public telecommunications network." However, the FTA provides a competition law exception.

This chapter also addresses independent telecommunications regulators, dispute resolution, judicial review, and universal service. It only briefly touches upon spectrum management and rights of way management.

4/3. The Federal Communications Commission (FCC) issued a Notice of Apparent Liability (NAL) to Infinity Broadcasting Operations, the licensee of WKRK-FM in Detroit, Michigan, for broadcasting indecent material. (A transcript is in the NAL.) The FCC proposed a forfeiture of $27,500. See also, FCC release.

The NAL also concluded with the statement that "We take this opportunity to note that given the egregiousness of this violation, additional serious violations by Infinity may well lead to the initiation of a revocation proceeding.  Moreover, other broadcasters are on notice that the Commission will not hesitate to adopt strong enforcement actions in the future, including the potential initiation of revocation proceedings."

18 U.S.C. § 1464 provides that "Whoever utters any obscene, indecent, or profane language by means of radio communication shall be fined under this title or imprisoned not more than two years, or both."

Commissioner Michael Copps dissented. He wanted a license revocation hearing in this proceeding. He wrote, "The extreme nature of this broadcast -- among the worst we have faced in the Commission's history -- and the fact that it was broadcast in the middle of the day, gives the FCC the responsibility to take serious action. I dissent from the majority's decision because I believe that a financial slap on the wrist does not adequately reflect the seriousness of the station's actions. To fulfill our duty under the law, we should initiate a hearing to determine whether the WKRK-FM license should be revoked. I am deeply disappointed that the majority proposes a mere $27,500 fine against this station. Such a fine will easily be absorbed by the station as a ``cost of doing business.´´"

Day one of a two day conference hosted by the University of Maryland's Center for Intellectual Property titled "Copyright in the Digital Age: Challenges Facing the Academy". The agenda includes sessions on the TEACH Act, peer to peer file copying, and the DMCA. Location: Greenbelt Marriott, Maryland.

8:00 AM. Phil Bond, Under Secretary of Commerce for the Technology Administration (TA), will deliver a speech titled "Growth and Policy Implications of Nanotechnology" at the National Nanotechnology Initiative 2003 Conference. See, notice. For more information, contact Connie Correll at connie.correll@ta.doc.gov or 202 482-1065. Location: Omni Shoreham Hotel, 2500 Calvert St, NW.

9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in Sprint Corp v. FCC, No. 02-1129. Judges Sentelle, Rogers and Garland will preside. Location: 333 Constitution Ave., NW.

12:15 - 1:30 PM. The Federal Communications Bar Association's (FCBA) Wireless Telecommunications Committee will host a luncheon. The speaker will be John Muleta, Chief of the Federal Communications Commission's (FCC) Wireless Telecommunications Bureau. The price to attend is $15. Cancellations and/or RSVPs are due by 5:00 PM on Tuesday, April 1. RSVP to Wendy Parish at wendy@fcba.org. Location: Sidley Austin, 1501 K Street, NW, Conference Room 6E.

6:00 PM. Deadline to submit applications to the National Telecommunications and Information Administration (NTIA) for planning and construction grants for public radio and nonbroadcast facilities under the Public Telecommunications Facilities Program (PTFP). See, notice in the Federal Register, March 5, 2003, Vol. 68, No. 43, at Pages 10609 - 10615.

Daylight savings time begins.

The Intellectual Property Owners Association (IPO) will hold a Committee Leadership Meeting. For more information, call 202 466-2396. Location: Ronald Reagan International Trade Center.

DEADLINE EXTENDED TO APRIL 17. Deadline to submit comments to the Federal Communications Commission (FCC) in response to its Notice of Inquiry (NOI) [MS Word] regarding "Additional Spectrum for Unlicensed Devices Below 900 MHz and in the 3 GHz Band". Unlicensed devices would include, among other things, 802.11. See, notice in Federal Register, January 21, 2003, Vol. 68, No. 13, at Pages 2730-2733. See also, story titled "FCC Announces Notice of Inquiry Re More Spectrum for Unlicensed Use" in TLJ Daily E-Mail Alert No. 566, December 12, 2002. For more information, contact Hugh Van Tuyl in the FCC's Office of Engineering & Technology at hvantuyl@fcc.gov or 202 418-7506. This is OET Docket No. 02-380. See, notice of extension [PDF].

Deadline to submit comments to the Office of the U.S. Trade Representative (USTR) regarding the establishment of a petition process to review eligibility of countries for the benefits of the Andean Trade Preference Act. See, notice in Federal Register, February 4, 2003, Vol. 68, No. 23, at Pages 5542-5545.

9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in Public Service Commission of Colorado v. FCC, No. 02-1163. Judges Rogers, Garland and Silberman will preside. Location: 333 Constitution Ave., NW.

9:30 AM. The Senate Rules and Administration Committee will hold an oversight hearing on the Library of Congress and the Congressional Research Service. Location: Room 301, Russell Building.

12:30 PM. Ted Turner will give a luncheon speech. Location: Ballroom, National Press Club, 529 14th St. NW, 13th Floor.

4:00 PM. Ellen Goodman will present a draft paper titled "Spectrum Rights in the Telecosm to Come". For more information, contact Robert Brauneis at 202 994-6138 or rbraun@main.nlc.gwu.edu. Location: George Washington University Law School, Faculty Conference Center, Burns Building, 5th Floor, 720 20th Street, NW.

10:00 AM. The House Commerce Committee's Subcommittee on Telecommunications and the Internet will meet to mark up HR 1320, the Commercial Spectrum Enhancement Act. Webcast. Location: Room 2123, Rayburn Building.

10:00 AM. The U.S. Court of Appeals (FedCir) will hold oral argument in First Graphics v. M.E.P. CAD, No. 02-1469, an appeal from the U.S. District Court (NDIll). Location: Courtroom 402, 717 Madison Place, NW.

The Progress & Freedom Foundation (PFF), a Washington based think tank that focuses on technology and communications issues, will hold its 10th anniversary celebration. Mitch Daniels, Director of the Office of Management and Budget (OMB), will be the after dinner speaker. For more information, contact Jane Creel at 202 289-8928 or jcreel@pff.org. See, PFF notice. Location: Renaissance Mayflower Hotel.

Day one of a two day conference hosted by the American Association for the Advancement of Science (AAAS) titled "Colloquium on Science and Technology Policy". See, notice and agenda [PDF]. Location: Washington Plaza Hotel, 10 Thomas Circle, 14th and M Streets, NW.

9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in Unity Broadcasting v. FCC, No. 02-1101. Judges Edwards, Randolph and Tatel will preside. Location: 333 Constitution Ave., NW.

Day long meeting of the Federal Communications Commission's (FCC) Consumer Advisory Committee.

Day two of a two day conference hosted by the American Association for the Advancement of Science (AAAS) titled "Colloquium on Science and Technology Policy". See, notice and agenda [PDF]. Location: Washington Plaza Hotel, 10 Thomas Circle, 14th and M Streets, NW.