TLJ News: April April 16-20, 2005.

News from April 16-20, 2005

House Subcommittee Approves Cybersecurity Bill

4/20. The House Homeland Security Committee's (HHSC) Subcommittee on Economic Security, Infrastructure Protection, and Cybersecurity approved HR 285, the "Department of Homeland Security Cybersecurity Enhancement Act of 2005".

This bill would create the position of Assistant Secretary for Cybersecurity in the Department of Homeland Security's (DHS) Directorate for Information Analysis and Infrastructure Protection. The bill would also create a National Cybersecurity Office, to be headed by this Assistant Secretary.

The bill would increase the rank of the top cybersecurity officer at the DHS, and define and expand the responsibilities of this officer. However, there is nothing in the bill that would increase governmental authority over the private sector.

The bill defines cybersecurity as "the prevention of damage to, the protection of, and the restoration of computers, electronic communications systems, electronic communication services, wire communication, and electronic communication, including information contained therein, to ensure its availability, integrity, authentication, confidentiality, and nonrepudiation".

Rep. Zoe Lofgren Rep. Lofgren (at right) stated that "The Assistant Secretary for Cybersecurity position, at this higher level, will be better able to coordinate with other assistant secretaries within the Directorate, as well as officials throughout the Department, other federal agencies, and the private sector ... The Department needs to be advancing on cybersecurity and I am pleased that this bill will help ensure that cybersecurity is a priority in our nation's homeland security."

HR 285 is the reintroduction in the 109th Congress of HR 5068 (108th), the "Department of Homeland Security Cybersecurity Enhancement Act of 2004". Rep. Mac Thornberry (R-TX) and Rep. Zoe Lofgren (D-CA) introduced HR 5068 (108th) on September 13, 2004. They introduced HR 285 on February 18, 2005. See also, story titled "Representatives Introduce Bill to Increase Authority of DHS's Top Cyber Security Officer" in TLJ Daily E-Mail Alert No. 977, September 15, 2004.

An intelligence bill approved by the House late last year included a provision to create a new Assistant Secretary position. However, this provision was not in the final version of the bill that became law.

Summary of the Committee Print of the Patent Act of 2005

4/20. The House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property held a hearing titled "Oversight Hearing on Committee Print Regarding Patent Quality Improvement". The Subcommittee discussed, and heard testimony on, the Committee Print of HR __ [52 pages in PDF], the "Patent Act of 2005".

The Committee Print would, among other things, provide a first inventor to file rule, create a duty of candor, and create an administrative post grant opposition process. It would eliminate the best mode requirement, and make it harder to recover treble damages and obtain injunctive relief. It would also require the publication of almost all patent applications after 18 months. See, full story.

What is Not in the Committee Print of the Patent Act of 2005

4/20. The House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property (CIIP) held a hearing on the Committee Print of HR __ [52 pages in PDF], the "Patent Act of 2005". While the Committee Print is 52 pages, and includes numerous proposals for changes to patent law and procedure, it also does not address many other proposals for change, including items that have been in recent bills. The following is an overview of some of the items that are not in the Committee Print.

Research Exemption to Infringement. The Committee Print does not address a research exemption to patent infringement.

The Patent Act, at 35 U.S.C. Ї 271(e) contains a narrowly worded exemption from liability for patent infringement for certain research related to certain drugs. The scope of this exemption is the subject of Merck KGaA v. Integra LifeSciences I. On January 7, 2005, the Supreme Court granted certiorari. See, Order List [2 pages in PDF], at page 1. See also, story titled "Supreme Court Takes Case Involving Research Exemption to Patent Infringement" in TLJ Daily E-Mail Alert No. 1.053, January 11, 2005.

The National Academies' Board on Science, Technology, and Economic Policy (STEP) issued a report titled "A Patent System for the 21st Century". It contains numerous recommendations, including one to expand the range of protection from liability for infringement for research activities.

USPTO Funding and Fee Diversion. There have been many recommendations regarding providing the USPTO adequate funding, especially for hiring and training more examiners, and reducing workloads, to enable it to issue better patents and reduce patent pendency. There are also proposals to eliminate the Congress' practice of diverting USPTO user fees to subsidize other government programs, thereby depriving the USPTO of funding. This would also end a de facto tax on innovators.

The membership of the House Judiciary Committee has worked diligently, though largely without success, to pass legislation to address these problems. However, the Committee Print does not address these funding issues.

11th Amendment Immunity of State University Systems. Members of Congress have attempted, unsuccessfully, in prior Congresses to pass legislation that would undo the consequences the Supreme Court's opinion in Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank. In addition, private universities have advocated, with little sympathy outside of academic circles, that they should have the same sort of immunity as state universities. The Committee Print does not address 11th Amendment immunity.

That is, pursuant the the Supreme Court's strained interpretation of sovereign immunity and 11th Amendment immunity, states have sovereign immunity in state and federal courts against money damages suits for intellectual property infringements. Of course, states remain free to sue for damages for infringement of their patents and copyrights. See, the opinions of the Supreme Court in Seminole Tribe of Florida v. Florida, holding that the Congress lacks authority under Article I of the Constitution to abrogate the States' 11th Amendment immunity from suit in federal courts, Florida Prepaid, invalidating the Patent and Plant Variety Protection Remedy Clarification Act, and College Savings Bank v. Florida Prepaid Postsecondary Education Expense Board, invalidating the Trademark Remedy Clarification Act.

The Congress cannot by legislation overturn a Supreme Court decision interpreting the Constitution. Hence, one of the approaches of proposed legislation is to give states an incentive to waive 11th Amendment immunity, for example, by eliminating any damages remedy for infringement of state owned intellectual property unless the state has waived its immunity in federal suits for infringement of privately owned intellectual property.

See for example, stories titled "Legislators Introduce Bills to Address Infringement by States" in TLJ Daily E-Mail Alert No. 302, November 6, 2001; "Sen. Leahy Reintroduces Bill to Close 11th Amendment Loophole to IPR" in TLJ Daily E-Mail Alert No. 394, March 22, 2002; "Senate Judiciary Committee Considers Federalism and Intellectual Property" in TLJ Daily E-Mail Alert No. 522, October 3, 2002; and "Legislators Re-Introduce Bills to Address State IPR Sovereign Immunity" in TLJ Daily E-Mail Alert No. 680, June 13, 2003.

Federal Circuit. There have been various proposals regarding the Federal Circuit's practices, procedures, use of scholarly works and amicus briefs, and appointments. See for example, recommendation number 1 of the NAS report and recommendation number 10 of the FTC report. However, the Committee Print does not address any of these topics.

House Subcommittee Holds Hearing on Video Over Internet Protocol

4/20. The House Commerce Committee's Subcommittee on Telecommunications and the Internet held a hearing titled "How Internet Protocol-Enabled Services Are Changing the Face of Communications: A Look at Video and Data Services".

Representatives of regional Bells discussed their plans to provide video programming over broadband, internet protocol (IP), fiber optic networks. A representative of broadcasters asked that legacy business models and providers be protected, and that legacy regulatory regimes be preserved and extended to their soon to be competitors. Representatives of cable companies asked that the Bell's video over IP be regulated the same as the cable company's video programming.

Lea Ann Champion (SBC) wrote in her prepared testimony [5 pages in PDF] that "Through Project Lightspeed, we plan to invest $4 billion over the next three years in our network, operations, customer care and IT infrastructure. Working with companies such as Alcatel and Scientific-Atlanta, we will deploy a two-way, interactive, switched IP video network and extend approximately 40,000 miles of new fiber optics."

"Our plan is to deliver a single IP network connection providing high-quality TV viewing, super high-speed Internet access and integrated digital voice services", said Champion. "SBC will be a new entrant in the video space, providing a competitive alternative to incumbent cable operators".

Robert Ingalls (Verizon) wrote in his prepared testimony [5 pages in PDF] about Verizon forthcoming fiber optic network naned FiOS. He wrote that "FiOS is the first broadband network to use a fiber-to-the-premises architecture. FiOS is capable of delivering 100 megabits downstream and up to 15 megabits upstream television and video on demand."

He also discussed regulation. "First, current law does not serve innovation well. The law was written for a world where telecom and cable were different technologies and distinct services. In the converged world we're in today, those distinctions make less and less sense."

"We need a national broadband policy that does not shoe-horn new technologies into old categories", said Ingalls.

He also stated that "as a local telephone company, Verizon has a franchise to deploy and operate networks. Yet we're being asked to obtain a second franchise to use those same networks to offer consumers a choice in video. We believe this redundant franchise process is unnecessary and will delay effective video competition for years unless a federal solution is enacted soon." He advocated "a streamlined, national franchise process".

Greg Schmidt (LIN Television Corporation, testifying on behalf of the National Association of Broadcasters) wrote in his prepared testimony [13 pages in PDF] that "existing policies designed to promote competition, diversity and intellectual property rights must extend to all multi-channel platforms."

He also stated that "To preserve this public access to free-over-the air television, policy-makers must continue to support the principles of localism and of local station program exclusivity. These are the principles that underlie the policies of syndicated exclusivity, network nonduplication, must-carry and retransmission consent."

David Cohen (Comcast) wrote in his prepared testimony [3 pages in PDF] that "we believe Congress should consider how all multichannel video services should be regulated in the future. Congress should consider the current state of competition and the additional competition that IP video could bring -- and, if the rules are to be changed, they should be changed for all providers."

He added that "Now that the phone companies plan to offer video, we say ``... you should be treated like cable companies, because that is what you are.ДД And whatever rules apply to one should apply to all."

James Gleason (New Wave Communications, testifying on behalf of the American Cable Association) wrote in his prepared testimony [PDF] his group wants the Congress to "treat video services alike as much as possible, regardless of the means of delivery".

His group, which represents small cable operators, also wants the Congress to "update and change the current retransmission consent rules to help remedy the imbalance of power caused by media consolidation", "make access to quality local-into-local television signals available", and "correct rules that allow for abusive behavior because of media consolidation and control of content".

Paul Mitchell (Microsoft TV Division) wrote in his prepared testimony [10 pages in PDF] that "Internet services, that is, those services and products that ride atop or connect to the underlying broadband transport services, should remain largely unregulated and not be subject to the Communications Act."

However, he endorsed former Federal Communications Commission (FCC) Chairman Michael Powell's concept of four network freedoms.

On February 8, 2004 Powell gave a speech [PDF] titled "Preserving Internet Freedom: Guiding Principles for the Industry" at the Silicon Flatirons Symposium at the University of Colorado School of Law in Boulder, Colorado. He discussed his concept of "network freedom". See, story titled "Powell Opposes Regulations to Impose Broadband Network Neutrality" in TLJ Daily E-Mail Alert No. 833, February 10, 2004.

Powell argued in that speech for a concept that he called "Net Freedom" -- the concept that consumers should be able to use their broadband connections to "use the content, applications and devices they want", without restrictions imposed by their broadband service providers. He also argued that at this time "the case for government imposed regulations regarding the use or provision of broadband content, applications and devices is unconvincing and speculative".

On October 19, 2004 Powell gave a speech [5 pages in PDF] at the Voice on the Net Conference in Boston, Massachusetts in which he enumerated four internet freedoms. See, story titled "Powell Discusses VOIP Regulation" in TLJ Daily E-Mail Alert No. 1,000, October 20, 2004.

Powell's four freedoms, which Mitchell quoted, are:

"Freedom to Access Content. First, consumers should have access to their choice of legal content.
Freedom to Use Applications. Second, consumers should be able to run applications of their choice.
Freedom to Attach Personal Devices. Third, consumers should be permitted to attach any devices they choose to the connection in their homes.
Freedom to Obtain Service Plan Information. Fourth, consumers should receive meaningful information regarding their service plans."

Neither Powell, nor Mitchell, advocated enacting these four items into law.

Mitchell continued that "the system that finances the universal service fund is under strain today, because it is funded by interstate telecom revenues, and demand for subsidy payments is growing at the same time that those revenues are shrinking. Thus, we encourage the Subcommittee to consider alternative means, such as assessing a universal service fee on telephone numbers if you want to fund the telephone service or assessing it based on connections if you want to fund the underlying infrastructure. In addition, the existing system for compensating telecommunications carriers that exchange traffic is deeply flawed and has been the subject of reform efforts for years. Those efforts should come to conclusion and the system should be fixed before it is applied to IP services, or else innovation will suffer."

Finally, Mitchell argued that to the extent that there is regulation of IP services, it should be a light regulatory touch, and "Congress should protect IP services from conflicting and overlapping State regulation."

See also, prepared testimony [PDF] of Jack Perry (Decisionmaker Corp.).

New Bills

4/20. Rep. Melissa Hart (R-PA) and Rep. Tim Murphy (R-PA) introduced HR 1733, a bill to suspend temporarily the duty on electron guns for high definition cathode ray tubes. The bill was referred to the House Ways and Means Committee. On April 14, 2005, Sen. Rick Santorum (R-PA) introduced S 790, the Senate version of this bill.

4/20. Rep. Melissa Hart (R-PA) and Rep. Tim Murphy (R-PA) introduced HR 1734, a bill to suspend temporarily the duty on liquid crystal device (LCD) panel assemblies for use in LCD direct view televisions. The bill was referred to the House Ways and Means Committee. On April 14, 2005, Sen. Rick Santorum (R-PA) introduced S 788, the Senate version of this bill.

4/20. Rep. Barney Frank (D-MA) introduced HR 1730, the "Cable Consumer Rights Act of 2005". The bill would repeal Subsection (b) of Section 301 of the Telecommunications Act of 1996. That is, it would reinstate the authority of the Federal Communications Commission (FCC) and local franchising authorities to regulate the rates for cable TV service. The bill was referred to the House Commerce Committee, where it is unlikely to see any action. Rep. Frank reintroduces this bill every two years at around this time. On June 16, 2003, Rep. Frank introduced HR 2478 (108th Congress), titled the "Cable Consumer Rights Act of 2003". On May 15, 2001, Rep. Frank introduced HR 1842 (107th Congress), titled the "Cable Consumer Rights Act of 2001".

More Capitol Hill News

4/20. The House International Relations Committee's Subcommittee on Asia and the Pacific held a hearing titled "Focus on a Changing Japan". See, opening statement [2 pages in PDF] of Rep. James Leach (R-IA), the Chairman of the Subcommittee. See also, prepared testimony [7 pages in PDF] of Thomas Berger (Boston University), prepared testimony [5 pages in PDF] of Leonard Schoppa, and prepared testimony [16 pages in PDF] of Richard Katz (Editor of the Oriental Economist).

4/20. The House Science Committee's Subcommittee on Space and Aeronautics held a hearing titled "Future Market for Commercial Space". See, prepared testimony [PDF] of Burt Rutan (Scaled Composites), prepared testimony [PDF] of Will Whitehorn (Virgin Galactic), prepared testimony [PDF] of Elon Musk (Space Exploration Technologies), prepared testimony [PDF] of John Vinter (International Space Brokers Group), prepared testimony [PDF] of Molly Macauley (Resources for the Future), and prepared testimony [PDF] of Wolfgang Demisch (Demisch Associates). See also, opening statement [PDF] of Rep. Ken Calvert (R-CA), and hearing charter [PDF].

Federal Circuit Reverses in Loral v. Lockheed

4/20. The U.S. Court of Appeals (FedCir) issued an opinion [8 pages in PDF] in Space Systems/Loral v. Lockheed Martin, a patent case involving the written description requirement.

Loral is the owner of U.S. Patent No. 4,537,375 titled "Method and apparatus for thruster transient control". It discloses a method of maintaining the orientation and attitude of a satellite in space.

Loral filed a complaint in U.S. District Court (NDCal) against Lockheed alleging patent infringement. The District Court held that claim 1 is invalid for violating the written description requirement.

35 U.S.C. Ї 112 begins with the provision that "The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention."

The Court of Appeals reversed. It wrote that "The written description is the technologic disclosure of the invention. It serves the fundamental patent purpose of making known what has been invented, including any variations and alternatives contemplated by the inventor. The descriptive text shows that the inventor possessed the technologic information for which exclusivity is claimed, and discloses the invention to the public."

The Court of Appeals reviewed the claim, and the testimony regarding this claim, and concluded that the content of the claim contains a sufficient written description.

This case is Space Systems/Loral, Inc. v. Lockheed Martin Corporation, U.S. Court of Appeals for the Federal Circuit, No. 04-1501, an appeal from the U.S. District Court for the Northern District of California, D.C. No. C-96-3418 SI.

More News

4/20. President Bush gave a speech in Washington DC to the U.S. Hispanic Chamber of Commerce Conference. "We have the most innovative economy in the world", said Bush. And, America has "innovative spirit". He also said that "History has shown us the American innovative spirit is never in short supply. And I know we can harness this spirit in this new century." He was speaking in the context of innovation in the energy sector. These brief references are consistent with other comments that Bush has made regarding innovation, creativity, and invention. That is, he tends to associate these with human ideals and virtues, rather than with government created incentives of limited property rights, or with government funding and planning.

4/20. President Bush signed S 256, the "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005". See, White House release and statement by President Bush.

House Approves Copyright Bill

4/19. The House approved, by voice vote, S 167, the "Family Entertainment and Copyright Act of 2005". The Senate approved this bill on February 1, 2005. It now goes to President Bush for his signature.

S 167, which is also known as the FECA, contains four separate copyright related parts. It includes the ART Act, which includes a provision that criminalizes certain uses of camcorders in movie theaters. It includes the Family Movie Act, which pertains to ClearPlay type content skipping technology. It also contains the Film Preservation Act and the Orphan Works Act.

The ART Act includes, among other provisions, criminalization of certain unauthorized recording of motion pictures in a motion picture exhibition facility. That is, it criminalizes using camcorders to copy movies in motion picture exhibition facilities, such as movie theaters. It also gives movie theater owners limited immunity for detaining violators.

Another provision of the ART Act requires the Register of Copyrights to "establish procedures for preregistration of a work that is being prepared for commercial distribution and has not been published ... for any work that is in a class of works that the Register determines has had a history of infringement prior to authorized commercial distribution". It also provides that infringement actions may be based upon these preregistrations.

Rep. Howard Berman (D-CA), the ranking Democrat on the Subcommittee on Courts, the Internet and Intellectual Property, stated in floor debate that "It has become clear that pirates are most harmful when a creator delivers a new or highly anticipated product. Title I of S. 167 is designed to prevent the pirates from obtaining an initial copy of a motion picture through camcording or distributing by computer network a work being prepared for commercial distribution. Section 102 clarifies that it is a felony to surreptitiously record a movie in a theater. This section deals with the growing phenomenon of copyright thieves who use portable digital video recorders to record movies of theater screens during public exhibitions. Organized piracy rings then distribute copies of these surreptitious recordings both online and on the streets."

Rep. Howard Berman Rep. Berman (at right) continued that "Even more detrimental to copyright owners than camcording a movie in the theaters is the effect of distributing an unauthorized copy of a movie or sound recording as it is prepared for commercial distribution. Distributing a film before final edits are made can undermine artistic integrity and can also harm the film's commercial prospects because the release is typically coordinated with a marketing effort. Sections 103 and 104 provide for enhanced penalties for prerelease of a work being prepared for commercial distribution. Furthermore, it requires the Copyright Office to establish rules for preregistration of works."

The Family Movie Act addresses technology, such as that of ClearPlay, that skips content in copyrighted works.

The Family Movie Act adds a new Ж 11 to 17 U.S.C. Ї 110 (which provides exceptions to the exclusive rights of copyright).

It contains a content skipping exception: "the making imperceptible, by or at the direction of a member of a private household, of limited portions of audio or video content of a motion picture, during a performance in or transmitted to that household for private home viewing, from an authorized copy of the motion picture, or the creation or provision of a computer program or other technology that enables such making imperceptible and that is designed and marketed to be used, at the direction of a member of a private household, for such making imperceptible, if no fixed copy of the altered version of the motion picture is created by such computer program or other technology".

The bill also contains related language amending trademark law.

However, it does not include language regarding ad skipping. That is, ClearPlay and other companies can market products that skip violent or obscene content, and ads, in movies.

Rep. James Sensenbrenner (R-WI), the Chairman of the House Judiciary Committee, stated during floor debate that "this legislation addresses the growing desire of parents to be able to control what their children see in the privacy of their own homes. One component of this legislation, the Family Movie Act, clarifies that existing copyright and trademark law cannot be used to prevent a parent from utilizing available technology to skip over portions of a movie they may find objectionable."

In contrast, Rep. Dianne Watson (D-CA) stated in the House that "I disagree with title II of the legislation, which shields companies that make movie-filtering systems from liability for copyrighting infringements. The intent of the movie-filtering technology is to sanitize movies to protect children. While I support a family-friendly entertainment, I believe this method is not only a violation of film makers' copyright protections but also an infringement of their artistic vision."

Rep. Berman also opposes the content skipping provisions of the Family Movie Act. He said that "What some of us do debate is the right of a commercial enterprise to peddle a technology which fundamentally alters the creator's work any more than some publisher has the right to take an unabridged version of a book that is under copyright, in order to excerpt and take out objectionable patches of that book, and then make a commercial profit without the permission of the copyright owner in peddling that book. That is the issue underlying our opposition to the Family Movie Act."

The House Judiciary Committee approved S 167 on March 9, 2005. See, story titled "House Judiciary Committee Approves Copyright Bill" in TLJ Daily E-Mail Alert No. 1,093, March 11, 2005.

The Senate approved this bill on February 1, 2005. See, story titled "Senate Approves Copyright Bill" in TLJ Daily E-Mail Alert No. 1,069, February 3, 2005. That story contains a more detailed summary of its contents.

House Approves Trademark Dilution Bill

4/19. The House approved HR 683, the "Trademark Dilution Revision Act of 2005" by a vote of 411-8. See, Roll Call No. 109. The Senate has yet to approve this bill.

HR 683 is a reaction to the Supreme Court's March 4, 2003 opinion [21 pages in PDF] in Moseley v. V Secret. See, story titled "Supreme Court Rules in Trademark Dilution Case" in TLJ Daily E-Mail Alert No. 618, March 6, 2003.

The Congress amended the Trademark Act in 1995 with the enactment of the Federal Trademark Dilution Act (FTDA). The FTDA bars uses of another's mark that blur or otherwise interfere with the ability of that mark to identify the source of goods. The FTDA is codified at 15 U.S.C. Ї 1125(c). It is also known as Section 43(c) of the Lanham Act.

The issue in the Mosely case, and the most important issue with this bill, is whether the plaintiff in a lawsuit for violation of the FTDA must show actual economic loss. The Sixth Circuit held that economic harm may be inferred. The Supreme Court reversed. The present bill rewrites the statute to undo the opinion of the Supreme Court

The Supreme Court wrote that "The relevant text of the FTDA ... provides that ``the owner of a famous markДД is entitled to injunctive relief against another person's commercial use of a mark or trade name if that use ``causes dilution of the distinctive qualityДД of the famous mark. 15 U. S. C. Ї1125(c)(1) (emphasis added). This text unambiguously requires a showing of actual dilution, rather than a likelihood of dilution."

HR 683 would replace the current language of 15 U.S.C. Ї 1125(c).

Subsection (c)(1) currently provides that "The owner of a famous mark shall be entitled, subject to the principles of equity and upon such terms as the court deems reasonable, to an injunction against another persons commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark, and to obtain such other relief as is provided in this subsection." It then enumerates several factors that the court may consider in determining whether a mark is distinctive and famous.

Under HR 683, subsection (c)(1) would provide that "Subject to the principles of equity, the owner of a famous mark that is distinctive, inherently or through acquired distinctiveness, shall be entitled to an injunction against another person who, at any time after the owner's mark has become famous, commences use of a mark or trade name in commerce that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark, regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury."

The bill also provides that "a mark is famous if it is widely recognized by the general consuming public of the United States as a designation of source of the goods or services of the mark's owner. In determining whether a mark possesses the requisite degree of recognition, the court may consider all relevant factors, including the following:
(i) The duration, extent, and geographic reach of advertising and publicity of the mark, whether advertised or publicized by the owner or third parties.
(ii) The amount, volume, and geographic extent of sales of goods or services offered under the mark.
(iii) The extent of actual recognition of the mark."

The bill also defines, and enumerates factors to be considered by the court regarding, dilution by blurring. It also defines dilution by tarnishment.

The bill also contains a list of exemptions. These modify the exemptions in the current statute. The bill provides that "The following shall not be actionable as dilution by blurring or dilution by tarnishment under this subsection:
(A) Fair use of a famous mark by another person in comparative commercial advertising or promotion to identify the competing goods or services of the owner of the famous mark.
(B) Fair use of a famous mark by another person, other than as a designation of source for the person's goods or services, including for purposes of identifying and parodying, criticizing, or commenting upon the famous mark owner or the goods or services of the famous mark owner.
(C) All forms of news reporting and news commentary."

Rep. James Sensenbrenner (R-WI), the Chairman of the House Judiciary Committee, stated during floor debate that "H.R. 683 does not establish new precedent or break new ground. Rather, the bill represents a clarification of what Congress meant when it passed the dilution statute a decade ago."

Rep. Lamar Smith (R-TX), the Chairman of the Subcommittee on Courts, the Internet and Intellectual Property, stated in the House that "the Federal dilution statute is being amended for two main reasons. First, a 2003 Supreme Court decision involving Victoria's Secret ruled that the standard of harm in dilution cases is actual harm. Based on testimony taken at our two Intellectual Property Subcommittee hearings, this is contrary to what Congress intended when it passed the dilution statute and is at odds with the concept of dilution. Diluting needs to be stopped at the outset because actual damage can only be proven over time, after which the good will of a mark cannot be restored."

Rep. Lamar Smith "Second," said Smith (at right), "the regional circuits have split as to the meaning of what constitutes a famous mark, distinctiveness, blurring and tarnishment. The bill more distinctly defines these terms. This will clarify rights and eliminate unnecessary litigation, an outcome that especially benefits small businesses that cannot afford to have a misunderstanding of what is permissible under the Federal dilution statute."

Rep. Smith added that "amendments developed at the subcommittee level will more clearly protect traditional first amendment uses, such as parody and criticism. These amendments provide balance to the law by strengthening traditional fair-use defenses."

The House Judiciary Committee's Subcommittee on Courts, the Internet and Intellectual Property (CIIP) held a hearing on February 17, 2005. See, story titled "CIIP Subcommittee Holds Hearing On Trademark Dilution Revision Act" in TLJ Daily E-Mail Alert No. 1,081, February 23, 2005. The CIIP Subcommittee amended and approved this bill on March 3, 2005. See, story titled "House CIIP Subcommittee Amends and Approves Trademark Dilution Revision Act" in TLJ Daily E-Mail Alert No. 1,088, March 4, 2005. The House Judiciary Committee approved HR 683 on March 9, 2005. See, story titled "House Judiciary Committee Approves Trademark Dilution Bill" in TLJ Daily E-Mail Alert No. 1,093, March 11, 2005.

New Bills

4/19. Rep. Tom Feeney (R-FL) and others introduced HR 1689, a bill pertaining to certain trademarks and Fidel Castro. On April 4, 2005, Sen. Pete Domenici (R-NM) and others introduced S 691, the Senate version of this bill. These bills are a response to the ruling by the World Trade Organization (WTO) regarding protection of holders of trademarks of businesses confiscated by Castro's communist regime in Cuba.

More Capitol Hill News

4/19. The House approved by voice vote HR 1038, the "Multidistrict Litigation Restoration Act of 2005". This bill amends 28 U.S.C. Ї 1407, which pertains to multidistrict litigation, to allow a designated U.S. district court, known in the statute as the "transferee" court, to retain jurisdiction over referred cases arising from the same fact scenario for purposes of determining liability and punitive damages, or to send them back to the respective courts from which they were transferred. This bill responds to the 1998 opinion of the Supreme Court in Lexecon v. Milberg Weiss, which is also reported at 523 U.S. 26. See also, House Report 109-024.

4/19. The House approved by voice vote HConRes 53. This is a non-controversial resolution expressing the sense of the Congress regarding the issuance of the 500,000th design patent by the U.S. Patent and Trademark Office (USPTO) to DaimlerChrysler Corporation.

4/19. The House Judiciary Committee's Subcommittee on Crime, Terrorism, and Homeland Security held a hearing titled "Oversight Hearing on Implementation of the USA PATRIOT Act: Effect of Sections 203 (b) and (d) on Information Sharing". Both of these sections are scheduled to sunset at the end of this year. See, prepared testimony of Rep. Michael McCaul (R-TX), prepared testimony [8 pages in PDF] of Barry Sabin (Chief of the Counterterrorism Section, Criminal Division, Department of Justice), and prepared testimony of Maureen Baginski (Executive Assistant Director for the Office of Intelligence, FBI), in support of these provisions. See also, prepared testimony [8 pages in PDF] of Tim Edgar (ACLU), who argued that "uncontrolled sharing of criminal investigative information with intelligence agencies poses real risks to civil liberties. The most acute danger is that federal prosecutors and law enforcement agents will be transformed from law enforcement officials concerned with preventing and punishing criminal activities into a domestic spy network directed at unpopular religious and political organizations." See also, prepared statement of Rep. Howard Coble (R-NC), the Chairman of the Crime Subcommittee.

4/19. The Senate Intelligence Committee held a hearing on the USA PATRIOT Act. See, prepared testimony [PDF] of Greg Nojeim (ACLU), prepared testimony [PDF] of James Dempsey (Center for Democracy & Technology), and prepared testimony [PDF] of Heather MacDonald (Manhattan Institute). See also, statement [PDF] of former Rep. Bob Barr (R-GA) (Patriots to Restore Checks and Balances), statement [PDF] of former Attorney General Ed Meese (Heritage), statement of Kate Martin (Center for National Security Studies), and statement of Orin Kerr (George Washington University Law School).

Supreme Court Reverses in Dura Pharmaceuticals

4/19. The Supreme Court issued its opinion [PDF] in Dura Pharmaceuticals v. Broudo, a class action securities fraud case involving whether a plaintiff in a 10b-5 action who invokes the fraud on the market theory must demonstrate loss causation by pleading and proving a causal connection between the alleged fraud and the investment's subsequent decline in price.

The U.S. Court of Appeals (9thCir), contrary to other circuits, held not. It concluded that the plaintiff can satisfy the loss causation requirement simply by alleging in his complaint and subsequently establishing that the price of the security "on the date of purchase was inflated because of the misrepresentation."

The opinion of the Supreme Court was short and to the point. Justice Breyer, writing for a unanimous court, announced at the outset that "the Ninth Circuit is wrong".

He wrote that "we find the Ninth Circuits approach inconsistent with the law's requirement that a plaintiff prove that the defendants misrepresentation (or other fraudulent conduct) proximately caused the plaintiffs economic loss. We need not, and do not, consider other proximate cause or loss-related questions."

The Solicitor General filed a brief urging the Court to grant certiorari, and a brief on the merits urging the Court to reverse the 9th Circuit. The Supreme Court heard oral argument on January 12, 2005. See, transcript [56 pages in PDF].

This case is Dura Pharmaceuticals, Inc., et al. v. Michael Broudo, No. 03-932.

More News

4/19. The Securities and Exchange Commission (SEC) announced that it has settled its claims against KPMG arising out of its audits of of Xerox from 1997 through 2000. The SEC stated that "As part of the settlement, KPMG consented to the entry of a final judgment in the SEC's civil litigation against it pending in the U.S. District Court for the Southern District of New York. The final judgment, which is subject to approval by the Honorable Denise L. Cote, orders KPMG to pay disgorgement of $9,800,000 (representing its audit fees for the 1997-2000 Xerox audits), prejudgment interest thereon in the amount of $2,675,000, and a $10,000,000 civil penalty, for a total payment of $22.475 million." (Parentheses in original.) See, SEC release.

4/19. The Internal Revenue Service (IRS) announced that it is seeking applications to fill seven vacancies on its Electronic Tax Administration Advisory Committee. The deadline to submit applications is April 29, 2005. See, IRS release. See also, notice in the Federal Register, February 28, 2005, Vol. 70, No. 38, at Page 9701-9702.

Seidenberg Condemns Local Franchising Requirements as Barrier to Video Programming Over Fiber

4/18. Ivan Seidenberg, Ch/CEO of Verizon, gave a speech to the National Association of Broadcasters (NAB) in Las Vegas, Nevada. He described Verizon's plans to provide video programming, and other things, over fiber optic lines. He also said that the local franchising process presents an "unnecessary impediment to consumer choice in video" and a "barrier to video competition". He called for a "federal solution".

Seidenberg said that Verizon is "the first communications company to make a major commitment to taking fiber all the way to homes and businesses. This network, which we call FiOS, delivers super-fast data and Internet access at speeds of up to 30 megabits downstream and 5 megabits upstream. Our system will deliver 100 megabits downstream and up to 15 megabits upstream". See, Verizon's FiOS web page.

He said that FiOS will enable voice over internet protocol (VOIP), video messaging, multi-player games, shopping, and television and entertainment.

He continued that "we are laying the groundwork to launch FiOS-TV later this year. ... We're signing deals with broadcasters, programmers, software and hardware companies to assemble a video package that will deliver the best possible customer experience."

He also said that "we're working to get the franchises we need to enter the market".

He argued that "we need to find a way to break down the biggest barrier to our entry into video, and that's the franchising process. As a local telephone company, we have always had a franchise to deploy and operate our networks. Now, we're being asked to obtain a second franchise to use those networks to compete in video. We are currently applying for franchises in towns, cities and counties across the country, and we are also pursuing statewide solutions in some jurisdictions."

"This is, at best, a slow process that presents an unnecessary impediment to consumer choice in video. Therefore, we are also seeking a federal solution to this issue. We ask you to lend your persuasive voice in support of clearing away this barrier to video competition and speeding the day when Americas communications companies can use our fantastic resources to offer your content and provide a true and compelling competitive alternative to cable."

He also touched briefly on two other issues, must carry and intellectual property protection. He said that "we recognize the importance of protecting the value of intellectual content in a digital universe. The creators and carriers of content share a common interest in this issue ... after all, if we dont adequately protect the value of content, we won't have any content to provide."

See also, April 18, 2005 speech by Eddie Fritts, P/CEO of the NAB.

7th Circuit Affirms Broad Reach of Section 1030

4/18. The U.S. Court of Appeals (7thCir) issued its opinion [9 pages in PDF] in USA v. Mitra, affirming the District Court's conviction of Rajib Mitra on two counts of violating 18 U.S.C. Ї 1030.

Mitra, a graduate student at the University of Wisconsin, transmitted a radio signal that prevented the communications system for police, fire, ambulance, and other emergency communications in Madison, Wisconsin, from operating. He was prosecuted for violation of Section 1030, which is titled "Fraud and related activity in connection with computers". It is generally known as the criminal ban on computer hacking.

Mitra argued unsuccessfully in the District Court, and before the Court of Appeals, that his actions were in the nature of unauthorized broadcasts, or interference, and that Section 1030 is intended only to cover those who hack into computer servers to steal or alter information.

This opinion demonstrates that, as computer chips become more ubiquitous in products ranging from police communications equipment, to cell phones and iPods, to automobiles, the scope of malicious conduct that will fall under Ї 1030 will continue to grow.

See, full story.

Supreme Court Denies Certiorari in Nissan Motor v. Nissan Computer

4/18. The Supreme Court denied certiorari in Nissan Motor v. Nissan Computer, a dispute over the operation of a web site with a domain name that includes a trademarked name. This lets stand the August 6, 2004, opinion [30 pages in PDF] of the U.S. Court of Appeals (9thCir). See, Order List [24 pages in PDF] at page 11.

Uzi Nissan is an individual who owns a computer store in the state of North Carolina. He formed a corporation named Nissan Computer Corp. He registered the domain name nissan.com in 1994. He maintained a web site at this domain name that also included automobile related advertising.

Nissan Motor Co. is an automobile manufacturer based in Japan, with operations and sales in the U.S. It registered the trademark "Nissan" in 1959. Nissan Motor unsuccessfully sought to obtain the domain name from Uzi Nissan.

Nissan Motor filed a complaint in U.S. District Court (CDCal) against Nissan Computer alleging, among other things, that the domain name "nissan.com" diluted the "NISSAN" trademark in violation of the Federal Trademark Dilution Act (FTDA), which is codified at 15 U.S.C. Ї 1125(c), and that the domain name registration infringed the trademark under the Lanham Act, which is codified at 15 U.S.C. Ї 1114.

The District Court held that Nissan Computer's automobile related advertising constituted trademark infringement on the basis of initial interest confusion, but that non-automobile related advertising did not. The Appeals Court affirmed on this issue.

The District Court held that Nissan Computer's use of the domain name dilutes the quality of Nissan Motors mark, and issued an injunction. The Appeals Court reversed on the trademark dilution issue.

The Appeals Court also reversed the injunction. It concluded that "to enjoin Nissan Computer from providing visitors to nissan.com a link to sites with disparaging or negative commentary about Nissan Motor is a content-based restriction on non-commercial speech that is inconsistent with the First Amendment."

Nissan Motor petitioned the Supreme Court for writ of certiorari.

See, story titled "9th Circuit Rules in Trademark Dilution and Infringement Case Involving Domain Name Registration" in TLJ Daily E-Mail Alert No. 958, August 12, 2004.

This case is Nissan Motor Co., Ltd., et al. v. Nissan Computer Corp., et al., Sup. Ct. No. 04-869. The Appeals Court case numbers are 02-57148, 03-55017, 03-55144, and 03-55236.

More Supreme Court News

4/18. The Supreme Court denied certiorari in Tony Colida v. Qualcomm, Inc., No. 04-8643. The is one of a series of Colida's petitions for writ of certiorari to the U.S. Court of Appeals (FedCir) in patent cases. See, Order List [24 pages in PDF] at page 15.

4/18. The Supreme Court announced that "The Court will take a recess from Monday, May 2, 2005, until Monday, May 16, 2005." See, Order List [24 pages in PDF] at page 24.

GAO Reports on Prospects for FTAA

4/18. The Government Accountability Office (GAO) released a report [53 pages in PDF] titled "Free Trade Area of the Americas: Missed Deadline Prompts Efforts to Restart Stalled Hemispheric Trade Negotiations". The report states that one of the obstacles is that the U.S. insists on greater IPR protections, and Brazil, which does not protect U.S. IPR, opposes this.

Western hemisphere nations launched negotiations for a Free Trade Area of the Americas (FTAA) in 1998. These nations set a target date for conclusion of negotiations of January 2005. The negotiations have not concluded. This report reviews the progress of these negotiations, and the prospects for a future FTAA.

The report states that "Progress on the FTAA has slowed since mid-2003, and came to a standstill in 2004". It offers three reasons for this.

"First, the United States and Brazil have made little progress in resolving basic differences on key negotiation issues. Notably, Brazil insists it must be assured that its concerns over agricultural subsidies and trade remedies will be addressed and that an FTAA will result in meaningful new market access, especially for its highly competitive agricultural goods. However, the United States is seeking more stringent enforcement of intellectual property rights (IPR), greater opportunities for U.S. services providers, and new rules on government procurement and investment protection before it will commit to fully liberalize access to its markets. FTAA talks were halted in the absence of satisfactory responses to these and other demands."

"Second, participants turned to bilateral and multilateral trade agreements where progress appeared more immediate. Notably, until August 2004, FTAA countries had expended considerable effort seeking to break the deadlock in negotiations at the WTO on agriculture, a key concern of all FTAA nations."

"Third, mechanisms intended to facilitate progress -- such as the new negotiating structure and co-chairmanship by U.S. and Brazil of FTAA talks -- have thus far failed to do so."

With respect to the future prospects for an FTAA, the report concludes that "participants and experts were pessimistic about near-term prospects". However, it adds that "many believe that integrating the hemisphere -- by lowering barriers to goods, services, and investment and strengthening trade rules -- is still worth pursuing, and they remain hopeful about reviving the FTAA in 2005."

The report states that "The lead U.S. negotiator explained that a broader agenda, including services, investment, government procurement, and intellectual property, is extremely important to fostering real integration in the hemisphere." The report also notes that the U.S. "enjoys a decisive competitive advantage in terms of high-tech, knowledge-based industries that depend on strong IPR protection".

House to Take Up Intellectual Property Bills

4/18. The House of Representatives is scheduled to consider two intellectual property bills on Tuesday, April 19, under suspension of the rules. The House will consider S 167, the "Family Entertainment and Copyright Act of 2005", and HR 683, the "Trademark Dilution Revision Act of 2005". See, Republican Whip Notice.

The House Judiciary Committee approved S 167 on March 9, 2005. See, story titled "House Judiciary Committee Approves Copyright Bill" in TLJ Daily E-Mail Alert No. 1,093, March 11, 2005.

The Senate has not taken action on this bill.

S 167 and HR 683 are listed as the 2nd and 4th items on the agenda, respectively. The House will meet at 12:30 PM for morning hour, and at 2:00 PM for legislative business. Votes will be postponed until 6:30 PM. Items considered under suspension of the rules cannot be amended. However, these items also require a two-thirds majority. Almost all items considered under suspension of the rules have widespread support.

There is a third intellectual property related item on the agenda, HConRes 53. This is a non-controversial resolution expressing the sense of the Congress regarding the issuance of the 500,000th design patent by the U.S. Patent and Trademark Office (USPTO) to DaimlerChrysler Corporation, which has operations in the state of Michigan. The sponsor is Rep. John Conyers (D-MI). The new Secretary of Commerce, Carlos Gutierrez is also from Michigan.

The agenda for April 19 also includes HR 1038, the "Multidistrict Litigation Restoration Act of 2005". This bill would amend 28 U.S.C. Ї 1407, which pertains to multidistrict litigation, to allow a designated U.S. district court, known in the statute as the "transferee" court, to retain jurisdiction over referred cases arising from the same fact scenario for purposes of determining liability and punitive damages, or to send them back to the respective courts from which they were transferred.

This bill responds to the 1998 opinion of the Supreme Court in Lexecon v. Milberg Weiss, which is also reported at 523 U.S. 26. See also, House Report 109-024.

In addition, both the House and Senate will hold hearings this week on patent issues. On Wednesday, April 20, the House Judiciary Committee's CIIP Subcommittee will hold a hearing titled "Oversight Hearing on Committee Print Regarding Patent Quality Improvement". On Thursday, April 21, the Senate Judiciary Committee's Subcommittee on Intellectual Property will hold a hearing titled "The Patent System Today and Tomorrow".

More News

4/18. The Progress and Freedom Foundation (PFF) released a paper [14 pages in PDF] titled "Chinese Telecommunications Policy Examined: The Case for Reform". This paper, which was written by the PFF's Richard Zielinski, urges the PR China not to protect national telecommunications champions. It states that "One concept that the Chinese government must grasp is that the creation of an advanced communications network is vital for economic growth overall, regardless of whether that network is indigenously owned or not. The government should be careful not to sacrifice long-term quality and efficiency for the short-term exploitation of telecom service charges. The value of a countrys network lies not in the ownership of the cables and wires, but in how that nations citizens use those tools to contribute to overall productivity growth and commercial activity."

Allgeier Addresses Trade Agreements and Internet Gambling

4/16. Peter Allgeier, the acting U.S. Trade Representative (USTR), gave a speech [PDF] titled "Trade Agreements and the States" to the National Conference of State Legislatures.

He argued that "Trade agreements do not restrict a state's right to regulate and do not automatically preempt, invalidate or overturn state laws. Nothing in any trade agreement prevents the United States or any state from enacting, modifying, or fully enforcing domestic laws. And international panels set up to look at disputes over trade agreements have no authority to change U.S. law or to require any state or local government to change its laws or decisions. Only the federal or state governments can change a federal or state law."

He also discussed the World Trade Organization (WTO) proceeding regarding whether various state and federal laws affecting internet gambling violate the treaty obligations of the U.S. On November 10, 2004, a Dispute Resolution Panel of the WTO released its report [287 pages in PDF] on Antigua and Barbuda's complaint that U.S. laws affecting internet gambling violate U.S. treaty obligations. The panel held that various federal laws, including the Wire Act, and various state laws, violate the General Agreement on Trade in Services (GATS). See, story titled "WTO Panel Instructs Congress to Amend Wire Act to Legalize Internet Gambling" in TLJ Daily E-Mail Alert 1,016, November 11, 2004.

However, on April 7, 2005, the WTO's Appellate Body issued its report [146 pages in PDF] that reverses key parts of the Dispute Resolution Panel's findings. The report of the Appellate Body "finds that the Wire Act, the Travel Act, and the Illegal Gambling Business Act are ``measures ... necessary to protect public morals or to maintain public orderДД" and therefore do not violate treaty obligations. The report of the Appellate Body also reversed the panel's findings regarding the state gambling laws. See also, story titled "WTO Appellate Body Upholds U.S. Laws Affecting Internet Gambling" in TLJ Daily E-Mail Alert No. 1,111, April 8, 2005.

Allgeier stated in his April 16 speech that "in the recent WTO case involving internet gambling, we conducted regular conference calls with any interested state official, and we received very helpful advice in preparing our legal briefs. And we won an important victory. The WTO sided with the US on key issues -- US internet gambling restrictions can stand because U.S. federal gambling laws protect public order and public morals. And the WTO completely threw out the challenge to U.S. state laws on internet gambling."

On April 5, 2005, just prior to the release of the Appellate Body's report, Rep. John Duncan (R-TN) spoke in the House about the WTO and state sovereignty. He stated that the WTO "has now ruled the State of Utah cannot ban Internet gambling within its own borders. The WTO said if the ban was enforced, Utah would be impeding the rights of the small nations of Antigua and Barbados. Who would have ever thought that Antigua and Barbados would have more control over what goes on in Utah than the people of Utah themselves do? This is ridiculous. What have we come to? ... The States are losing their authority in a lot of areas. Where are those people now who told us that membership in the WTO would not cause any loss of U.S. sovereignty?" See, Congressional Record, April 5, 2005, at Page H1739.

Go to News from April 11-15, 2005.