TLJ News from March 1-5, 2011

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3/3. The U.S. Attorneys Office (USAO) for the Southern District of New York announced the arrest of Brian McCarthy on charges of criminal copyright infringement. The USAO stated in a release that he "illegally streamed live, copyrighted sporting event telecasts, Pay-Per-View events, and other television programming through, a website he operated." On February 1, 2011, the U.S. District Court (SDNY) issued a seizure warrant for the domain name.

Chris Dodd to Lead MPAA

3/1. The Motion Picture Association of America (MPAA) announced that former Sen. Chris Dodd (D-CT) will become its Chairman and CEO, effective March 17, 2011.

Sen. Dodd served five terms in the Senate. He will replace Bob Pisano, interim head of the MPAA. Jack Valenti was head of the MPAA from 1966 through 2004. Former Rep. Dan Glickman (D-KS) led the MPAA from 2004 through 2010.

Dodd stated in an MPAA release that "The major motion picture studios consistently produce and distribute the most sought after and enjoyable entertainment on earth. Protecting this great American export will be my highest priority."

House Subcommittee to Mark Up Resolution Disapproving FCC's BIAS Rules

3/1. On February 16, 2011, Rep. Greg Walden (R-OR) and others introduced HJRes 37, a resolution disapproving of the Federal Communications Commission's (FCC) rules that regulate broadband internet access service (BIAS) providers.

HJRes 37 resolves "That Congress disapproves the rule submitted by the Federal Communications Commission relating to the matter of preserving the open Internet and broadband industry practices (Report and Order FCC 10-201, adopted by the Commission on December 21, 2010), and such rule shall have no force or effect." (Parentheses in original.)

See, FCC's Report and Order (R&O) [194 pages in PDF] adopted on December 21, 2010, and released on December 23, 2010. This R&O is FCC 10-201 in GN Docket No. 09-191 and WC Docket No. 07-52. See also, stories in TLJ Daily E-Mail Alert No. 2,186, December 22, 2010, and TLJ Daily E-Mail Alert No. 2,188, December 24, 2010.

Rep. Walden is the Chairman of the House Commerce Committee's (HCC) Subcommittee on Communications and Technology (SCT). On Monday, February 28, 2011, the HCC announced that the SCT would meet to mark up HJRes 37 on Wednesday, March 2. See, notice.

On Tuesday, March 1, Rep. Henry Waxman (D-CA), the ranking Democrat on the HCC, and Rep. Anna Eshoo (D-CA), the ranking Democrat on the SCT, sent a letter to Rep. Fred Upton (R-MI), the Chairman of the full Committee, and Rep. Walden seeking delay. They argued that a hearing should be held before any mark up.

They wrote that there are many companies and groups that favor the FCC's rules, and they should be heard before the SCT acts.

The two Democrats also wrote that "We are not aware of any time constraints or deadlines that require us to act tomorrow. The FCC's rules will not go into effect for some time, giving us plenty of opportunity to hear views that have been excluded from the process."

Almost all of the 37 cosponsors are Republicans.

Rep. Marsha Blackburn (R-TN), a member of the HCC and Vice Chair of the SCT, spoke at an event on Capitol Hill on March 1 hosted by the Tech Freedom. She stated that "there is bipartisan opposition" to the FCC's rules.

The mark up is scheduled for 9:30 AM in Room 2123 of the Rayburn Building.

Senate Continues Consideration of Patent Reform Bill

3/1. The Senate continued its consideration of S 23 [LOC | WW], the "Patent Reform Act of 2011", or "America Invents Act", on Tuesday, March 1, 2011. The Senate approved a managers' amendment [PDF] that makes numerous changes to the bill.

This amendment, offered by Sen. Patrick Leahy (D-VT), Sen. Charles Grassley (R-IA), and Sen. Jon Kyl (R-AZ), changes the name of the bill to the "America Invents Act", and addresses fee diversion, reduction of fees for small entity patents, business method patents, and other matters.

Sen. Kyl stated in the Senate that "The big fight, once again, is over first to file, with battle lines drawn that run extremely deep. Senator Diane Feinstein (D-CA) is expected to file an Amendment stripping the first to file provisions, which could be supported by Senate Majority Leader Harry Reid (D-NV)." See, Congressional Record, March 1, 2011, at Page S1042.

Sen. Leahy said that "I will be offering a managers' amendment along with Senator Grassley that incorporates additional improvements being made at the suggestion of Senator Coburn, Senator Coons, Senator Bennet and our House counterparts, Chairman Smith and Mr. Conyers of the House Judiciary Committee. When we adopt this managers’ amendment, I believe we will have moved very close to a consensus bill that the Senate can and should pass to help create good jobs, encourage innovation and strengthen our recovering economy." See, Sen. Leahy's transcript. See also, Congressional Record, March 1, 2011, at Page S1036.

The Senate approved this amendment by a vote of 97-2. See, Roll Call No. 27.

The Coalition for Patent Fairness, a group that represents Adobe, Apple, Cisco, Dell, Google, Intel, Intuit, Micron, Oracle, RIM, SAP, Symantec, and Verizon, stated in a release on March 1 that it supports the just adopted amendment. It wrote, "Thanks to the manager's amendment, the bill is moving in a promising direction".

However, it added that "The high tech community still supports additional changes." For example, "We will be supporting the Risch amendment to strike the inter parties provisions. Inter partes reexams should not be made more burdensome with controversial changes, and these provisions should be removed unless we have real consensus."

Fee Diversion. Sen. Leahy said that "I appreciate the efforts of the Senator from Oklahoma to end patent fee diversion. This is a reform that Senator Hatch and I have long supported. I appreciated his working with me and withholding this amendment during Committee consideration. We are incorporating his amendment in the managers’ amendment."

Sen. Tom Coburn (R-OK) explained that "Unfortunately, over the last 10, 15 years, $800 million of those fees have not been left at the Patent Office. They have been taken and used somewhere else. So when you pay a fee for a patent, that money isn't going to pay for the examination of the patent. Right now, we find ourselves with 718,000 patents waiting for first action. If I file a patent today, what we will see is that 26 months from now my patent will have first action -- the first reading by an examiner."

Sen. Tom CoburnSen. Coburn (at right) added that "If we want to create jobs and stay on top of the world in terms of innovation, we cannot allow that process to continue. So what the amendment does is say we are not going to take the money people use to pay for a patent application and spend it somewhere else; we are actually going to spend it on patent applications. That is what it was set up for."

The amendment would create a revolving fund at the Department of the Treasury. Both patent and trademark fees that are paid to the U.S. Patent and Trademark Office (USPTO) would be directly allocated back to the USPTO.

Sen. Grassley, Sen. Sheldon Whitehouse (D-RI) and others also argued at length for ending fee diversion at the USPTO. Sen. Charles Schumer (D-NY) said that the Congress should end fee diversion, not only at the USPTO, but at the Securities and Exchange Commission (SEC).

Business Method Patents. The amendment also adds a new Section 18 to the bill that pertains to business method patents. This new section would require the USPTO to establish "a transitional post-grant review proceeding for review of the validity of covered business-method patents."

It further provides that "A person may not file a petition for a transitional proceeding with respect to a covered business-method patent unless the person or his real party in interest has been sued for infringement of the patent or has been charged with infringement under that patent."  It also addresses the circumstances in which the District Court shall grant a stay of civil litigation.

This transitional program would sunset after four years.

The amendment defines "covered business-method patent" as "a patent that claims a method or corresponding apparatus for performing data processing operations utilized in the practice, administration, or management of a financial product or service, except that the term shall not include patents for technological inventions."

Sen. Leahy stated that "We also incorporate in the managers' amendment an amendment from Senator Schumer that concerns business method patents. We provide a process for their reexamination by the Patent and Trademark Office. This should also help improve patent quality."

Sen. Schumer stated that his amendment addresses "the scourge of business method patents currently plaguing the financial sector. Business method patents are anathema to the protection the patent system provides because they apply not to novel products or services but to abstract and common concepts of how to do business."

Sen. Charles SchumerSen. Schumer (at right) continued that "Often, business method patents are issued for practices that have been in widespread use in the financial industry for years, such as check imaging or one-click checkout. Because of the nature of the financial services industry, those practices aren't identifiable by the PTO as prior art and bad patents are issued. The holders of business method patents then attempt to extract settlements from the banks by suing them in plaintiff-friendly courts and tying them up in years of extremely costly litigation."

He said that the amendment "will allow companies that are the target of one of these frivolous business method patent lawsuits to go back to the PTO and demonstrate, with the appropriate prior art, that the patent shouldn't have been issued in the first place. That way bad patents can be knocked out in an efficient administrative proceeding, avoiding costly litigation."

And, he said that "One of the most critical elements of this amendment has to do with the stay of litigation while review of the patent is pending at the PTO. The amendment includes a four-factor test for the granting of a stay that places a very heavy thumb on the scale in favor of the stay."

Enforcement Abroad. This bill reforms U.S. patent law. It does not pertain to enforcement of patents by other countries, or efforts by the Office of the U.S. Trade Representative (OUSTR) and other entities to obtain greater protection of patents abroad.

However, Senators discussed enforcement. For example, Sen. Coburn said that "It is amazing how much of our intellectual property is being stolen by China today. I wish to relate a conversation I had with their Secretary of Commerce -- their equivalent to ours -- in China 3 years ago. I asked him about intellectual property rights. He was bold in his statement to say: We are not going to honor them. We are a developing nation and you would not have honored them either -- even though they are a signatory to the World Trade Organization."

Sen. Coburn continued that "It is important we understand whom we are dealing with -- people who will cheat and steal intellectual property from America. Fixing the patent apparatus will help us get there, but it is just as important to have tough laws on our books that create sanctions on nations that do not honor intellectual property."

Other Patent Related Provisions. Sen. Leahy also added that "We incorporate suggestions from the House about the removal of certain damages and venue provisions that are no longer necessary in light of recent court decisions, such as the so-called gatekeeper provision."

Federal Spending. This patent reform bill is also operating as a vehicle for Senate Republicans, Sen. David Vitter (R-LA) and Sen. Pat Toomey (R-PA), to pursue legislation to limit federal spending and address the federal debt.

Sen. Leahy stated that "What we should not do is delay or sacrifice the job creating potential of this bill to a side debate about the debt limit or whether to amend the Constitution of the United States.  The bipartisan America Invents Act is too important to be turned into a mere vehicle to launch speeches and debates about pet causes.  This is not the bill to have debates about whether if the U.S. were to reach its debt ceiling the Government should favor paying creditors like the Chinese before meeting its other obligations to the American people. That theoretical debate has nothing to do with the patent reform in this bill."

Computer Scientist Advocates More Technical Competency at FCC

3/1. David Farber, a computer scientist, and former Chief Technologist at the Federal Communications Commission (FCC), stated that "the FCC needs technical competency".

He spoke on a panel discussion in Washington DC on March 1, 2011, hosted by the Tech Freedom (TF), titled "Decoding the FCC's Net Neutrality Order".

Farber said that "I would feel much more comfortable about a lot of these things, if the FCC had a technical competency."

After some audience laughter, he said, "Seriously, if you look at the FCC, I could probably identify under a hand full of people who really understand the internet. The current Chief Technologist does. A few of the staff do. But, very few do. So, you have basically an organization that doesn't understand the technical aspects of the internet attempting at times to somehow control this thing that they really don't understand."

He continued, "the FCC needs technical competency. It had it in the wireless space -- still has it in the wireless space. It does not have it in the internet space. And, by the way, it did have it in the telephone space. But, we are no longer in that space."

Harold Feld, an attorney with the Public Knowledge, spoke at the same event. He said that "every engineer that I have ever talked to feels that it is a terrible thing that the FCC is run by lawyers, and it ought to be run by engineers."

"Every economist I have ever talked to thinks that it is terrible that the FCC is run by lawyers, and ought to be run by economists."

"And, every lawyer I have ever talked to thinks that the FCC has it just right."

Feld concluded that "you have got to have all of them".

See also, TF web page with video from the event.

See also, related story in this issue titled "Senators Introduce Bill to Address FCC's Lack of Technical Expertise".

IP News

3/1. The U.S. Patent and Trademark Office (USPTO) published a notice in the Federal Register requesting comments regarding its online employment application process for patent examiners. The deadline to submit comments is May 2, 2011. See, Federal Register, March 1, 2011, Vol. 76, No. 40, at Pages 11206-11208.

3/1. The U.S. Patent and Trademark Office (USPTO) published a notice in the Federal Register requesting comments regarding substantive submissions made during prosecution of a trademark application. The deadline to submit comments is May 2, 2011. See, Federal Register, March 1, 2011, Vol. 76, No. 40, at Pages 11208-11210.

3/1. The Copyright Royalty Judges published a notice in the Federal Register requesting comments regarding the motion filed by the Broadcast Music, Inc. (BMI), American Society of Composers, Authors and Publishers (ASCAP), SESAC, and Harry Fox Agency (HFA) for partial distribution of the digital audio recording technology (DART) musical works funds for 2005 through 2008. Comments are due by March 31, 2011. See, Federal Register, March 1, 2011, Vol. 76, No. 40, at Pages 11287-11288.

More News

3/1. The Phoenix Center for Advanced Legal and Economic Public Policy Studies released a paper [15 pages in PDF] titled "Public Safety or Commercial Use? A Cost/Benefit Framework for the D Block". The co-authors are the Phoenix Center's Lawrence Spiwak and Geroge Ford. This paper states that "The assignment of the D Block spectrum to public safety or commercial use requires an assessment of the relative benefits and costs of these two alternatives." This paper offers such an assessment, and concludes that "D Block assignment to public safety has a higher value, producing no less than $3.4 billion more in social benefits than commercial use. Much of this difference is attributable to the unique opportunity to create a contiguous 20 MHz block of spectrum, and the fact that this opportunity exists only for the public safety community." Also, "the economics seems to lean strongly in the direction of an assignment of the license to public safety."

Go to News from February 26-28, 2011.