1/18. Rep. Danny Davis (D-IL) introduced HR 3788 [LOC | WW], the "E911 Surcharge Fairness Act of 2011", a bill that addresses how state and local governments impose fees, taxes or surcharges on prepaid wireless mobile service.

This bill was referred to both the House Commerce Committee (HCC) and House Judiciary Committee (HJC). Rep. Davis (at right) is not a member of either committee. The bill has no original cosponsors.

This bill provides that "no State or local jurisdiction shall impose a new unfair or inequitable E911 fee, tax, or surcharge (`E911 fee') with respect to any prepaid mobile service, prepaid mobile service provider, or prepaid mobile service customer, nor shall it enforce a new or existing E911 fee in an unfair or inequitable manner." (Parentheses in original.)

The bill lists three types of fees or taxes, the imposition of which would be "unfair and inequitable manner" within the meaning of this bill.

First, "(A) the imposition against a prepaid mobile service provider or seller of any E911 fee that the prepaid mobile service provider cannot collect from its end-user customers who are the intended payors of the fees under its existing wireless business model".

Second, "(B) the enforcement of an E911 fee against a prepaid mobile service provider in a manner that creates strict liability for the prepaid mobile service provider or seller for its inability to collect as prescribed in subparagraph (A)".

Third, "(C) the imposition of a E911 fee in a manner that results in the E911 fee being subject to other State or local taxes when such other State or local taxes are not equally imposed on the E911 fees paid by postpaid mobile service customers".

This bill would only limit "new" fees or taxes. Hence, it would grandfather existing fees or taxes that are unfair or inequitable.

This bill would only apply to prepaid wireless mobile services.

Moreover, this bill would do nothing about state and local governments that impose fees, taxes or surcharges, with the stated purpose of supporting 911 or E911 service, but then divert some or all funds so collected to subsidize other government programs. See, story titled "FCC Reports that States Divert 911/E911 Fees to Subsidize other Programs" in TLJ Daily E-Mail Alert No. 2,126, August 19, 2010.

This bill recites in its findings that "Wireless E911 has been typically funded in the postpaid model by a uniform monthly surcharge on customer bills, but prepaid mobile services are purchased by customers at retail on a `pay-as-you-go´ basis, and there are no bills."

It continues that states' methods of imposing taxes on prepaid mobile services "have ranged from imposing and collecting no surcharges from prepaid customers, to shifting the burden to pay the surcharge to providers and sellers of prepaid mobile services."

It adds that "The latter solution has resulted in unfair and inequitable treatment of the prepaid mobile service business model and reduced funding for E911."

The 110th Congress enacted HR 3403 [LOC | WW], the "NET 911 Improvement Act of 2008". It is now Public Law No. 110-283. The committee reports, but not the act, address imposition of E911 fees and taxes for prepaid mobile services.

For example, House Report No. 110-442 states that the HCC "also encourages States and their political subdivisions to apply 911 fees equitably to providers of different types of communications services to the extent possible. In particular, the Committee urges States and their political subdivisions, when adopting 911 and E-911 fees, to examine fee structures that accommodate pre-paid telecommunications services."

1/19. The U.S. District Court (EDVa) unsealed an indictment that charges several individuals and businesses connected to the Megaupload web site with criminal copyright infringement, money laundering, and related crimes.

The business styles itself as a storage locker, but is dedicated to commercially exploiting the uploading and downloading of copyrighted movies, music and other works without authorization.

The grand jury returned the indictment on January 5, 2012. It charges Kim Dotcom, Megaupload Limited, Vestor Limited, Finnbatato, Julius Bencko, Sven Echternach, Mathias Ortmann, Andrus Nomm, and Bramm Van Der Kolk.

Kim Dotcom is also known at Kim Schmitz and Kim Tim Jim Vestor.

The U.S. Department of Justice (DOJ) stated in a release on January 19, 2012, that "Dotcom, Batato, Ortmann and van der Kolk were arrested today in Auckland, New Zealand, by New Zealand authorities, who executed provisional arrest warrants requested by the United States. Bencko, Echternach and Nomm remain at large."

The DOJ added that "law enforcement also executed more than 20 search warrants in the United States and eight countries, seized approximately $50 million in assets and targeted sites where Megaupload has servers in Ashburn, Va., Washington, D.C., the Netherlands and Canada. In addition, the U.S. District Court in Alexandria, Va., ordered the seizure of 18 domain names associated with the alleged Mega conspiracy."

The domain is no longer accessible. If one attempts to use an internet browser to access www.megaupload.com, the web page that is returned states that "This domain name associated with the website Megaupload.com has been seized pursuant to an order issued by a U.S. District Court."

The Office of the U.S. Trade Representative (OUSTR) listed Megaupload in its report [6 pages in PDF] titled "Out-of-Cycle Review of Notorious Markets", released on December 20, 2011. See, story titled "OUSTR Releases Notorious Markets Report" in TLJ Daily E-Mail Alert No. 2,321, December 21, 2011.

The OUSTR classified Megaupload as a "cyberlocker", that enables "users to store files on servers that can be accessed at any time and from any location, which allows widespread sharing among users who obtain the link to these ``lockers.´´"

The OUSTR added that cyberlockers, "while widely used for lawful purposes, can also enable the widespread distribution of unauthorized content by disseminating the link via websites, blogs, forums, etc."

The OUSTR also listed the United Kingdom based Putlocker web site as a notorius cyberlocker. It stated that this "site offers both streaming and downloading of significantly large video files, and includes a reward system for popular uploaders." Putlocker remains online.

The indictment states that megaupload.com is a "commercial website and service operated by the Mega Conspiracy that reproduces and distributes copies of popular copyrighted content over the Internet without authorization. Since at least September 2005, Megaupload.com has been used by the defendants and other members and associates of the Mega Conspiracy to willfully reproduce and distribute many millions of infringing copies of copyrighted works, including motion pictures, television programs, musical recordings, electronic books, images, video games, and other computer software."

The indictment states that the "Mega Conspiracy" collected about $150 Million in subscription fees, and about $25 Million in adverting fees.

It also states that "Mega Conspiracy has offered an ``Uploader Rewards´´ Program, which promised premium subscribers transfers of cash and other financial incentives to upload popular works, including copyrighted works, to computer servers under the Mega Conspiracy's direct control and for the Conspiracy's ultimate financial benefit. The more popular content that was present on Mega Conspiracy servers would increase the number of visitors and premium users that the Conspiracy could monetize".

The indictment explains that while Megaupload.com advertises itself as a "cyberlocker", in fact, the vast majority of its "users do not have significant capabilities to store private content long-term". For example, uploaded files must be downloaded within 21 days, and at least every 90 days thereafter, or Megaupload.com deletes them. Moreover, when users download stored files, advertisements are displayed.

The indictment continues that "The content available from Megaupload.com is not searchable on the website, which allows the Mega Conspiracy to conceal the scope of its infringement. Instead of hosting a search function on its own site, the Mega Conspiracy business model purposefully relies on thousands of third party ``linking´´ sites ..." In addition, the "Mega Conspiracy" provides "financial incentives for premium users to post links on linking sites ..."

The indictment also states that the defendants did not terminate the accounts of known copyright infringers, and only selectively complied with their obligations to take down infringing files.

The indictment also charges conspiracy (18 U.S.C. § 371) to commit criminal copyright infringement (17 U.S.C. § 506 and 18 U.S.C. § 2319), as well as criminal copyright infringement, and aiding and abetting criminal copyright infringement.

It also seeks forfeiture of property, including $175 Million in revenues, bank accounts, PayPal accounts, 18 enumerated domain names, and Mercedes-Benz, Maserati, Lamborghini, Rolls Royce and other cars.

The indictment also includes charges based upon the DOJ's expansive readings of the relevant statutes. For example, the indictment charges conspiracy to commit racketeering in violation of 18 U.S.C. § 1962.

The Congress enacted the Racketeer Influenced and Corrupt Organizations Act (RICO Act) in 1970 to facilitate the criminal prosecution of the organized crime leaders. The persons and organizations targeted by this Act tended to maintain their organizations with violence and corruption of law enforcement, circumstances that are not present in this action. The DOJ has gradually expanded the reach of the RICO Act since 1970, with the acquiescence of the courts.

The indictment also charges conspiracy to commit money laundering, based upon making incentive payments to users. This too goes beyond the purposes for which the statute was enacted.

1/11. The American Antitrust Institute (AAI), Consumers Union (CU), and National Consumers League (NCL) sent a letter to Rep. Hank Johnson (D-GA), the sponsor of HR 3406 [ LOC | WW], the "Discount Pricing Consumer Protection Act", expressing their support for the bill.

The bill has little chance of passage by the current House Judiciary Committee (HJC). Some members of Congress, as well as economists and the American Bar Association, back the Supreme Court's 2007 opinion [55 pages in PDF] in Leegin Creative Leather Products v. PSKS, which this bill would undo.

Leegin, and this bill, pertain to the treatment of resale price maintenance (RPM) under antitrust law. RPM exists when a manufacturer agrees with its distributor(s) to set the minimum price that the distributor(s) can charge for the manufacturer's goods. Leegin did not involve a dispute between tech companies. However, RPM is also employed in the tech sector for consumer electronics and other products.

Prior to 2007, RPM was subject to the antitrust per se rule, rather than the lighter rule of reason standard. Then the Supreme Court of the U.S. (SCUS) held in Leegin that all vertical price restrains are to be judged by the rule of reason, and that the SCUS's 1911 opinion in Dr. Miles Medical Co. v. John D. Park & Sons Co., which is reported at 220 U.S. 373, is overturned.

See, story titled "SCUS Holds That All Vertical Price Restraints Are Subject to Rule of Reason" in TLJ Daily E-Mail Alert No. 1,603, June 28, 2007.

The Leegin opinion changed the law for vertical RPM. Under the lighter rule of reason standard, plaintiffs must show actual or potential harm to competition.

After Leegin, horizontal agreements among competitors to fix prices remain per se violations of the Sherman Act. Group boycotts, and horizontal market division are other examples of per se violations.

The AAI, CU and NCL argued in their letter that "RPM agreements raise consumer prices, prevent efficient retailers from passing on the benefits of their lower costs to consumers, and tend to retard the development of new forms of retailing. At the same time, the purported benefits to consumers of RPM agreements are dubious and even if such benefits exist they can be achieved by less restrictive business practices."

Rep. Johnson introduced HR 3406 on November 14, 2011. It is a short bill that provides that "Any agreement setting a price below which a product or service may not be sold by a retailer, wholesaler, or distributor shall violate section 1 of the Sherman Act (15 U.S.C. 1)."

He also introduced a similar bill in the 111th Congress, HR 3190 [LOC | WW], also titled the "Discount Pricing Consumer Protection Act".

The Senate version of the bill is S 75 [LOC | WW]. It contains a statement of findings and declaration of purposes that is not in the House bill. It them provides that "Any contract, combination, conspiracy or agreement setting a minimum price below which a product or service cannot be sold by a retailer, wholesaler, or distributor shall violate this Act". The Senate Judiciary Committee (SJC) approved it on November 3, 2011.

The House will meet at 12:00 NOON for morning hour, and at 2:00 PM for legislative business. Votes will be postponed until 6:30 PM. No technology related items on are the agenda. See, Rep. Cantor's schedule for the week.

The Senate will meet at 2:00 PM for morning business. Postponed: the Senate may also consider S 968 [LOC | WW], the "Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011" or "PROTECT IP Act".

6:00 - 9:15 PM. The DC Bar Association will host a program titled "Introduction to Export Controls". The speakers will be Carol Kalinoski (solo practitioner) and Thomas Scott (Ladner & Associates). The price to attend this and the companion program on February 8 ranges from $169 to $229. CLE credits. See, notice. For more information, call 202-626-3488. The DC Bar has a history of barring reporters from its events. Location: DC Bar Conference Center, 1101 K St., NW.

The House will meet 10:00 AM for morning hour, and at 12:00 NOON for legislative business. No technology related items on are the agenda. See, Rep. Cantor's schedule for the week.

The Senate will meet.

State of the Union speech.

9:30 - 10:30 AM. The Information Technology and Innovation Foundation (ITIF) will host a discussion of the book [Amazon] titled "Restoring the Innovation Edge". The speakers will include the author, Jerald Hage (University of Maryland). See, notice. Location: ITIF/ITIC, Suite 610A, 1101 K Street, NW.

10:00 AM. Day one of a two day mark up session of the House Judiciary Committee (HJC). The agenda does not include either HR 3261 [LOC | WW], the "Stop Online Piracy Act" or "SOPA", or HR 3782 [LOC | WW], the "Online Protection & Enforcement of Digital Trade Act" or "OPEN Act". Location: Room 2141, Rayburn Building.

2:30 PM. The Senate Intelligence Committee (SIC) will hold a closed meeting. See, notice. Location: Room 219, Hart Building.

The House will meet at 9:00 AM for morning business. No technology related items on are the agenda. See, Rep. Cantor's schedule for the week.

Day one of a three day event titled "House Democratic Issues Conference".

10:00 AM. Day one of a two day mark up session of the House Judiciary Committee (HJC). Location: Room 2141, Rayburn Building.

10:00 AM. The House Homeland Security Committee's (HHSC) Subcommittee on Oversight, Investigations and Management will hold a hearing titled "Is DHS Effectively Implementing a Strategy to Counter Emerging Threats?". See, notice. Location: Room 311, Cannon Building.

12:15 - 1:30 PM. The Federal Communications Bar Association's (FCBA) Homeland Security and Emergency Communications and State and Local Practice Committees will host a brown bag lunch titled "Emergency Communications Policy Issues in the National Capitol Region". The speakers will be interoperability coordinators for the national capital region (NCR), Michele Farquhar (Hogan Lovells), Chris Essid (Director of the DHS's Office of Emergency Communications (OEC), and Trey Forgety (National Emergency Number Association). For entry upon arrival, call Alex Kreilein (DHS/OEC) at 202-603-8702. Location: Bureau of Alcohol, Tobacco, and Firearms, Room 3200, 650 Massachusetts Ave., NW.

5:00 - 7:00 PM. The Net Caucus will host an event titled "15th Annual Kickoff Tech Policy Exhibition & Reception". Free. Open to the public. Location: Room 902, Hart Building.

The House will not meet. See, Rep. Cantor's schedule for the week.

Day two of a three day event titled "House Democratic Issues Conference".

8:40 AM - 3:00 PM. The U.S. China Economic and Security Review Commission will hold a hearing titled "China's Global Quest for Resources and Implications for the United States". In addition to fisheries, oil, gas, and water, this hearing will address rare earth materials, some of which are used in information and communications technology products. At 9:00 - 10:00 AM, David Menzie (U.S. Geological Survey) will testify. At 12:15 - 1:30 PM, there will be a panel titled "Oil, Gas and Minerals". Location: Room 562, Dirksen Building.

10:00 AM. The Senate Judiciary Committee (SJC) will hold an executive business meeting. The agenda includes consideration of the nomination of Paul Watford to be a Judge of the U.S. Court of Appeals (9thCir). The SJC will webcast this event. See, notice. Location: Room 226, Dirksen Building.

2:15 PM. The Senate Judiciary Committee (SJC) will hold a hearing on the nominations of Andrew Hurwitz (to be a Judge of the U.S. Court of Appeals (9thCir)), Kristine Baker (USDC/EDArk), John Lee (USDC/NDIll), John Tharp (USDC/NDIll), and George Russell (USDC/DMd). The SJC will webcast this event. See, notice. Location: Room 226, Dirksen Building.

2:30 PM. The Senate Intelligence Committee (SIC) will hold a closed meeting. See, notice. Location: Room 219, Hart Building.

3:00 PM. The International Intellectual Property Institute (IIPI) and the Organization of American States (OAS) will host a program to discuss a World Intellectual Property Organization (WIPO) report titled "National Studies on Assessing the Economic Contribution of the Copyright-based Industries". Free. Open to the public. See, notice. Location: Hall of the Americas, OAS, 17th St. and Constitution Ave., NW.

The House will not meet. See, Rep. Cantor's schedule for the week.

Day three of a three day event titled "House Democratic Issues Conference".

Deadline to submit comments to the Securities and Exchange Commission's (SEC) Advisory Committee on Small and Emerging Companies in advance of its February 1, 2012, meeting. See, notice in the Federal Register, Vol. 77, No. 9, Friday, January 13, 2012, at Page 2102.

12:15 - 2:00 PM. The Federal Communications Bar Association's (FCBA) Access to Government and Young Lawyers Committees will host a brown bag lunch tilted "Practice before the Federal Trade Commission". The speakers will b Yael Weinman (Attorney Advisor to FTC Commissioner Julie Brill), Charles Kennedy (Wilkinson Barker Knauer), and Scott Delacourt (Wiley Rein). Location: Hogan Lovells, 555 13th St., NW.

Deadline to submit applications to the Department of Homeland Security (DHS) for membership on its Homeland Security Science and Technology Advisory Committee (HSSTAC). See, notice in the Federal Register, Vol. 77, No. 8, Thursday, January 12, 2012, at Page 1942.

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