TLJ News from February 11-15, 2012 |
Senate Confirms Jordan for 11th Circuit
2/15. The Senate confirmed Judge Adalberto Jordan to be a Judge of the U.S. Court of Appeals (11thCir) by a vote of 94-5. See, Roll Call No. 19.
This is not one of President Obama's more controversial nominations. Sen. Mark Rubio (R-FL) supported this nomination. The 11th Circuit includes the state of Florida.
However, Senate Republicans delayed consideration of this nomination, forced Democrats to invoke cloture, and then subjected the Senate to three days of consideration. This suggests that President Obama may face increased difficulty in obtaining confirmation of some other judicial nominees in the remaining months of the 112th Congress.
Republicans cited President Obama's assertion of authority to make recess appointments not during a "Recess of the Senate" as a cause for heightened scrutiny of judicial nominees. On January 4, 2012, President Obama appointed, without the advice and consent of the Senate, several persons, including Richard Cordray to be Director of the Consumer Financial Protection Bureau.
There is also the matter that this is a Presidential election year, and a year in which the party with a majority in the Senate might switch. Republicans have an incentive to delay on President Obama's judicial nominees because any nominations pending at the end of the 112th Congress will lapse. And, the more judgeships that remain open, the more judgeships an incoming Republican would be able to fill. Also, if Republicans gain a majority in the Senate, and on the SJC, it will become easier for Republicans to reject or block nominations of President Obama, if he is re-elected.
Senate Republicans do not now hold a majority. On the other hand. Senate Democrats do not have a large enough majority to overcome a filibuster without Republican votes.
Moreover, a disproportionate number of Senate Democrats are up for election in November of this year. Many do not wish to cast recorded votes in favor of controversial judicial nominees. This works to the advantage of opponents of these nominees.
The Jordan nomination has not been particularly controversial, nor significant for information or communications technology. Jordan is a sitting U.S. District Court judge with no tech related background, and the 11th Circuit hears few tech related cases.
However, there are other pending nominations for circuits and districts that do hear many tech related cases. For example, the Senate Executive Calendar for February 16 lists Jacqueline Nguyen (9th Circuit), Stephanie Thacker (4th Circuit), Rudolph Contreras (for the U.S. District Court for the District of Columbia), and Jesse Furman and Ronnie Abrams (Southern District of New York). That is, these nominees have been approved by the SJC, and could be considered by the full Senate. There are also pending nominees who have not yet been approved by the SJC, such as Andrew Hurwitz (9thCircuit).
It should also be noted that there are two pending Federal Communications Commission (FCC) nominations: Ajit Pai and Jessica Rosenworcel. See, story titled "Obama Nominates Pai and Rosenworcel to Be FCC Commissioners" in TLJ Daily E-Mail Alert No. 2,309, November 3, 2011. There are also two pending Federal Trade Commission (FTC) nominations: Jon Leibowitz and Maureen Ohlhausen. See, story titled "Obama Picks Ohlhausen for FTC Commissioner" in TLJ Daily E-Mail Alert No. 2,264, July 20, 2011.
On February 13, the Senate debated and passed a motion to invoke cloture on the Jordan nomination by a vote of 89-5. See, Roll Call No. 18.
Sen. Patrick Leahy (D-VT) stated in the Senate on February 13 that "The needless delay in Judge Jordan's confirmation is the latest example of the tactics that have all but paralyzed the Senate confirmation process". He criticized Republican tactics, and argued that they are harming the federal judiciary. See, transcript.
Although, Senate Republicans' current delaying and obstructing tactics closely resemble those of Senate Democrats during the Bush administration.
The Senate continued its consideration on February 14, and concluded on February 15. Sen. Leahy complained on February 16 that "The Senate was forced to spend the better part of this week ending a filibuster against the nomination of Judge Adalberto Jordan". See, transcript.
Sen. Charles Grassley (R-IA), the ranking Republican on the Senate Judiciary Committee (SJC), spoke in the Senate about Jordan, and the effect upon judicial nominees of President Obama's assertion of authority to make recess appointments not during a Recess of the Senate.
Sen. Grassley stated that "We could have confirmed more nominees, had the President indicated that he would respect the practice and precedent on recess appointments. He would not give the Senate that assurance, so a number of nominations could not be confirmed and remain on the Executive Calendar. As it turned out, the President went on to violate the practice and precedent."
He added, "Generally, I am willing to give the President's nominees the benefit of the doubt when the nominee on the surface meets the requirements I have previously outlined. But as I indicated over the past few weeks, we are not operating under normal circumstances. The atmosphere the President has created with his disregard for constitutional principles has made it difficult to give his nominees any benefit of the doubt."
Representatives Question Apple About iOS Apps that Seize Address Book Data
2/15. Rep. Henry Waxman (D-CA) and Rep. G. K. Butterfield (D-NC) sent a letter [PDF] to Apple regarding the social networking app named "Path", and which accessed and collected the contents of iPhone address books without obtaining the consent of the owner.
The two Representatives wrote that "This incident raises questions about whether Apple's iOS app developer policies and practices may fall short when it comes to protecting the information of iPhone users and their contacts."
They also suggested that it may be common practice for iOS developers to copy and store entire iPhone address books without the permission of the owners, or interference from Apple.
They also propounded numerous interrogatories to be answered by Apple by February 29, 2012.
For example, they asked Apple to "describe all iOS App Guidelines that concern criteria related to the privacy and security of data that will be accessed or transmit1ed by an app", and "describe how you determine whether an app meets those criteria".
They also asked Apple to disclose the number of iOS apps in the U.S. iTunes Store that transmit data about a user, and the number that transmit information from the address book.
Rep. Waxman is the ranking Democrat on the House Commerce Committee (HCC). Rep. Butterfield is a member of the HCC. If the House were to pass legislation regarding the privacy related practices of companies like Apple, it would derive from the HCC.
See also, Rep. Butterfield's release.
The Association for Competitive Technology (ACT) stated in a release that "Apple has taken the appropriate steps to ensure that users have full control over their contact lists and address book. What is most important to app developers is the customers' confidence that the apps they use won’t mislead them or abuse their trust. We depend on the trust of our users and the whole app industry suffers when bad actors are allowed to misuse consumers’ private information."
FCC Backtracks on LightSquared
2/15. The Federal Communications Commission promptly acted upon the National Telecommunications and Information Administration's (NTIA) February 14 letter [PDF] to the FCC regarding LightsSquared.
Tammy Sun, the FCC's Director of Communications, stated in a release that as a result of the NTIA's conclusion, the FCC "will not lift the prohibition on LightSquared", the FCC's IB "is proposing to (1) vacate the Conditional Waiver Order, and (2) suspend indefinitely LightSquared's Ancillary Terrestrial Component authority to an extent consistent with the NTIA letter", and "A Public Notice seeking comment on NTIA's conclusions and on these proposals will be released tomorrow."
Sun added that "This proceeding has revealed challenges to maximizing the opportunities of mobile broadband for our economy. In particular, it has revealed challenges to removing regulatory barriers on spectrum that restrict use of that spectrum for mobile broadband. This includes receivers that pick up signals from spectrum uses in neighboring bands."
She concluded that "There are very substantial costs to our economy and to consumers of preventing the use of this and other spectrum for mobile broadband. Congress, the FCC, other federal agencies, and private sector stakeholders must work together in a concerted effort to reduce regulatory barriers and free up spectrum for mobile broadband. Part of this effort should address receiver performance to help ensure the most efficient use of all spectrum to drive our economy and best serve American consumers."
The FCC's IB released a Public Notice (PN) on February 15 that proposes to vacate the Conditional Waiver Order, and modify LightSquared's license authority. The FCC seeks comments on the NTIA letter and these proposals. Comments are due by March 1, 2012. This PN is DA 12-214.
This PN states that "The Interference Resolution Process has not been successfully completed and harmful interference concerns have not been resolved."
The PN continues that the "NTIA states that it has monitored the testing done through the Interference Resolution Process and has coordinated additional testing of LightSquared’s equipment by other federal agencies, to assess the interference effects of such equipment on GPS receivers and devices. Based on this testing, NTIA has concluded that LightSquared’s proposed mobile broadband network will impact GPS services and there currently is no practical way to mitigate the potential harmful interference from LightSquared’s planned terrestrial operations in the 1525-1559 MHz band." (Footnotes omitted.)
Moreover, the FCC's record, including the NTIA letter, "indicate that it is highly unlikely that LightSquared will, in any reasonable period of time, be able to satisfy the requirements of the Conditional Waiver Order for providing commercial ATC service in the 1525-1559 MHz band".
Hence, this PN notice announces that the FCC proposes, first, "Vacatur of the Conditional Waiver Order, which is currently the subject of petitions for reconsideration, due to LightSquared’s inability to address satisfactorily the legitimate interference concerns surrounding its planned terrestrial operations, and the appearance that the Interference Resolution Process has no realistic prospect of being successfully completed by LightSquared in a reasonable period of time".
Second, the FCC proposes "Modification of LightSquared’s satellite license pursuant to Section 316 of the Communications Act to suspend indefinitely LightSquared’s underlying ATC authorization, first granted in 2004, to an extent consistent with the NTIA Letter". (Footnote omitted.)
Sen. Charles Grassley (R-IA), stated in a release that "The FCC's action seems to acknowledge the point I’ve been making since April. Prematurely granting a conditional waiver in a rushed process is not the way to get the right result."
Sen. Grassley continued that "Now that the interference issue is settled, we need to find out more than ever why the FCC did what it did. The agency put this project on a fast track for approval with what appears to have been completely inadequate technical research. After all of this time and expense, still, no one outside of the agency knows why. That’s not the way the people's government should work. The public's business ought to be public. Now that the FCC has backtracked on LightSquared, I'd like to see my Senate colleagues join my document request, especially the chairman of the only Senate committee that the FCC is willing to answer. If we don’t find out how and why the FCC failed to avoid this controversy, then it will keep operating as a closed shop instead of the open, publicly accountable agency it should be."
The FCC's proceeding is IB Docket No. 11-109 and ET Docket No. 10-142.
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2/15. Secretary of Commerce John Bryson gave a speech in Washington DC in which he stated that "The U.S. and China will succeed by working together to deliver strong, sustainable and balanced growth. We can achieve that through: expanded trade based on adherence to global rules and respect for intellectual property; open investment in each other’s economies; and policies that support global innovation, fair competition, and a sound balance between consumption and savings. We have our differences. But I believe we can find common ground and forge a future that will benefit China, America and the entire world."
NTIA Concludes There is No Practical Way to Mitigate LightSquared's Proposed Broadband Network's Interference to GPS
2/14. Lawrence Strickling, head of the Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA), sent a letter [PDF] to Julius Genachowski, Chairman of the Federal Communications Commission (FCC), regarding LightsSquared.
Strickling (at right) wrote the NTIA has conducted tests and analyses, and now concludes that "LightSquared's proposed mobile broadband network will impact GPS services and that there is no practical way to mitigate the potential interference at this time".
He added that "while GPS developers may be able to mitigate these issue via new technology in the future, the time and money required for federal, commercial, and private sector users to replace technology in the field and the marketplace, on aircraft, and in integrated national security systems cannot support the scheduled deployment of terrestrial services proposed by LightSquared".
Background. LightSquared wants to build a wholesale 4G LTE wireless broadband network. It must obtain authorization from the FCC. The GPS industry has raised interference concerns. LightSquared's prospective wholesale customers, regional service providers and device makers, have advocated LightSquared's cause.
Incumbent wireless broadband providers would benefit from the absence of additional competition. See also, Verizon's comment of August 1, 2011, and AT&T's comment of August 1, 2011.
The FCC's International Bureau (IB) released an Order and Authorization [23 pages in PDF], also known as the "Conditional Waiver Order", on January 26, 2011. That order is DA 11-133.
LightSquared filed a Petition for Declaratory Ruling with the FCC December 20, 2011. LightSquared seeks a declaratory ruling that, provided that its ancillary terrestrial component (ATC) operations are conducted in accordance within the FCC's technical parameters, commercially available GPS devices are not protected against harmful interference caused by those ATC operations.
On January 20 LightSquared submitted a filing [119 pages in PDF] to the FCC that contains the results of tests performed by Alcatel Lucent Bell Labs. It concludes that "This testing demonstrated the ability of high precision GPS devices to be appropriately filtered so as to be able to fully reject LightSquared authorized transmissions in the adjacent spectrum band."
On January 27, 2012, the FCC released a Public Notice (PN) that sets deadlines to submit comments regarding LightSquared's Petition for Declaratory Ruling. Initial comments are due by February 27. Reply comments are due by March 13. See also, correction to this PN.
The FCC's proceeding is IB Docket No. 11-109 and ET Docket No. 10-142.
House Financial Services Committee to Mark Up Bill to Provide Regulatory Relief to Emerging Growth Companies
2/13. The House Financial Services Committee (HFSC) announced that it will meet to mark HR 3606 [LOC | WW], the "Reopening American Capital Markets to Emerging Growth Companies Act of 2011" on Thursday, February 16, 2012. See, notice.
This is one of many bills pending in the House and Senate that would provide regulatory relief for new companies from the burdens imposed by Congressional acts passed in the last decade, starting with the Sarbanes Oxley Act of 2002.
For start up technology companies, these bills would lower the cost of going public, and increase access to capital. Although, sponsors of these regulatory relief bills emphasize the bills' likely positive effects upon economic growth and jobs.
Rep. Stephen Fincher (R-TN), Rep. John Carney (R-DE) and others introduced HR 3606 on December 8, 2011.
The Senate version of this bill is S 1933 [LOC | WW], also titled "Reopening American Capital Markets to Emerging Growth Companies Act of 2011". Sen. Charles Schumer (D-NY), Sen. Pat Toomey (R-PA) and others introduced it on December 1, 2011. See also, Sen. Toomey's bill summary.
Rep. Fincher wrote in a statement that "Since 2010, the Asian markets have had nearly 700 new IPOs compared to less than 300 in the United States during the same time-frame. Unfortunately, federal regulatory burdens are a major contributing factor in the steep drop of IPOs in the United States." See, Congressional Record, December 8, 2011, at Pages E2210-1.
He continued that "This decline is of concern because going public provides opportunities for companies to raise badly needed capital in order to expand, reinvest, and create jobs. From 2008-2010, 21 percent of the United States GDP was generated by venture capital-backed start-up companies. In addition, an August 2011 survey of CEOs conducted by the IPO Task Force found that over 90 percent of job growth occurs after a company goes public."
Rep. Carney (at right) stated in a release that "This legislation will encourage more entrepreneurs to start businesses and allow more start-ups to become public companies."
This bill would create a new category of securities issuer, "emerging growth company" or EGC. It defines an EGC as "an issuer that had total annual gross revenues of less than $1,000,000,000 during its most recently completed fiscal year", and after its initial public offering (IPO), less than $700 Million in publicly traded shares. Then, an EGC would remain an EMG until its annual gross revenues reach $1 Billion, its publicly traded shares reach $700 Million, or five years after the first sale of common equity securities as an EMG.
Smaller tech companies have long complained that Section 404 of Sarbanes Oxley imposes onerous burdens on them, while providing little benefit to investors. (That act was HR 3763 in the 107th Congress. It is now Public Law No. 107-204.) Section 404, which is codified at 15 U.S.C. § 7262, created the infamous and onerous "Management assessment of internal controls".
The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in 2010, at Section 989G(a), added a new subsection 404(c) that has the effect of exempting companies with sub $75 Million market caps from the reporting requirements of subsections 404(a) and (b). HR 3606 would provide further 404 relief.
This bill would also require EGCs to provide audited financial statements for the two years before registration, rather than the three year requirement for other issuers.
This bill would also facilitate the "publication or distribution by a broker or dealer of a research report about an emerging growth company that is the subject of a proposed public offering". Rep. Carney explained that "The legislation will make it easier for potential investors to get access to research and company information in advance of an IPO. This is critical for small and medium-sized companies trying to raise capital that have less visibility in the marketplace. Currently, there are regulations in place that make it difficult for investors to find the detailed research reports they need to make an informed decision about new companies."
Rep. Fincher is also the sponsor of HR 3213 [LOC | WW], the "Small Company Job Growth and Regulatory Relief Act".
DOJ Closes Investigations of Transactions Involving Communications Patents
2/13. The US Department of Justice's (DOJ) Antitrust Division announced in a release that it has closed its investigations of Google's acquisition of Motorola Mobility, the acquisitions by Apple, Microsoft. and Research in Motion of certain Nortel Networks patents, and the acquisition by Apple of certain Novell patents.
The DOJ stated in this release that it "has determined that each acquisition is unlikely to substantially lessen competition and has closed these three investigations. In all of the transactions, the division conducted an in-depth analysis into the potential ability and incentives of the acquiring firms to use the patents they proposed acquiring to foreclose competitors. In particular, the division focused on standard essential patents (SEPs) that Motorola Mobility and Nortel had committed to license to industry participants through their participation in standard-setting organizations (SSOs). The division's investigations focused on whether the acquiring firms could use these patents to raise rivals' costs or foreclose competition", and it "concluded that the specific transactions at issue are not likely to significantly change existing market dynamics".
The DOJ added that its "concerns about the potential anticompetitive use of SEPs was lessened by the clear commitments by Apple and Microsoft to license SEPs on fair, reasonable and non-discriminatory terms, as well as their commitments not to seek injunctions in disputes involving SEPs."
In contrast, "Google's commitments were more ambiguous and do not provide the same direct confirmation of its SEP licensing policies."
The DOJ cautioned that it will continue "to monitor the use of SEPs in the wireless device industry, particularly in the smartphone and computer tablet markets. The division will not hesitate to take appropriate enforcement action to stop any anticompetitive use of SEP rights."
See, related stories:
EC Approves Google Acquisition of Motorola Mobility
2/13. The European Commission (EC) announced in a release that it "has cleared under the EU Merger Regulation the proposed acquisition of Motorola Mobility, a developer of smartphones and tablets, by Google, the world's largest internet search and search advertising company and developer of Android, one of the most popular mobile operating systems".
The US Department of Justice's (DOJ) Antitrust Division also approved this transaction on February 13. See, related story in this issue titled "DOJ Closes Investigations of Transactions Involving Communications Patents".
The EC explained that it "considered whether Google would be likely to prevent Motorola's competitors from using Google's Android operating system. The Commission's investigation showed Android helps to drive the spread of Google's other services. Consequently, given that Google's core business model is to push its online and mobile services and software to the widest possible audience, it is unlikely that Google would restrict the use of Android solely to Motorola, a minor player in the European Economic Area (EEA), as compared to operators such as Samsung and HTC." (Footnote omitted.)
The EC continued that "All smartphones also need to adhere to certain telecommunications standards such as 3G or 4G/LTE. Motorola, as some other market participants, holds patents that are essential for these standards to operate. Access to such "standard essential" patents is therefore crucial for players on the smartphone market. However, the Commission concluded that the proposed transaction would not significantly change the existing market situation in this respect."
The EC wrote that it "examined whether Google would be in a position to use Motorola's standard essential patents to obtain preferential treatment for its services, including search and advertising. The Commission found that Google already had many ways in which to incentivise customers to take up its services and that the acquisition of Motorola would not materially change this."
The EC also cautioned Google that this "decision is without prejudice to potential antitrust problems related to the use of standard essential patents in the market in general".
This release also states that "Access to standard essential patents is crucial for all market players. It is for this reason that standard setting organisations require the holders of standard essential patents to license these patents to any interested third parties on fair reasonable and non-discriminatory ("FRAND") terms. The absence of such licences would hinder competitors or indeed the entire industry to the detriment of consumers and innovation."
See also, related story in this issue titled "EC's Alumnia Addresses Patents and Communications Standards".
House Homeland Security Committee to Mark Up IPAWS Bill
2/13. The House Homeland Security Committee (HHSC) announced that it will meet to mark up HR 3563 [LOC | WW], the "Integrated Public Alert Warning System Modernization Act of 2012", on Wednesday, February 15, 2012.
The HHSC is scheduled to consider an amendment in the nature of a substitute (AINS) [14 pages in PDF]. See, notice.
Rep. Gus Bilrakis (R-FL) introduced this bill on December 6, 2012. The HHSC's Subcommittee on on Emergency Preparedness, Response and Communications amended and approved this bill on December 8, 2011.
Rep. Jeff Dunham (R-CA) introduced a similar bill, HR 2904 [LOC | WW], earlier in the 112th Congress.
Background. The Integrated Public Alert and Warning System (IPAWS) is a term used to describe all alert and warning systems. See, the Department of Homeland Security's (DHS) Federal Emergency Management Agency's (FEMA) IPAWS web page.
One component is the Emergency Alert System (EAS). It is an old system that began with broadcasting. Until 1994, it was named the Emergency Broadcast System (EBS). It now also encompasses cable television systems, wireless cable systems, satellite digital audio radio service (SDARS) providers and, and direct broadcast satellite (DBS) service. The Federal Communications Commission (FCC) writes EAS rules.
Another component is the Commercial Mobile Alert System (CMAS), a new system required by the "Warning, Alert, and Response Network Act", or "WARN Act", which the Congress enacted as part of a larger port security bill in 2006. It applies to cell phones and other mobile devices. It is a voluntary program in which carriers can choose whether or not to participate. The FCC writes CMAS rules. See also, the FCC's CMAS web page.
There is also the National Alert and Warnings System (NAWS), a term used all alert and warning systems, and associated with Executive Order 13407, signed by former President Bush on June 26, 2006.
Bill Summary. This AINS to be considered on February 15 provides that the DHS/FEMA "shall modernize and implement the national integrated public alert and warning system". The DHS/FEMA shall, among other things, "establish or adapt, as appropriate, common alerting and warning protocols, standards, terminology, and operating procedures for the public alert and warning system".
The DHS/FEMA shall also "include in the public alert and warning system the capability to adapt the dissemination of homeland security information and other information and the content of communications on the basis of geographic location, risks, or personal user preferences, as appropriate".
The DHS/FEMA "shall ensure that the system ... incorporates redundant and diverse modes to disseminate homeland security information and other information in warning messages to the public so as to reach the greatest number of individuals; ... can be adapted to incorporate future technologies; ... is resilient, secure, and can withstand acts of terrorism and other external attacks; ..." and "is designed to provide alerts that are accessible to the largest portion of the affected population feasible".
It would also require the DHS/FEMA to create an IPAWS Advisory Committee, and task it with writing a report within one year of enactment that assesses the "accomplishments and deficiencies of the system" and makes "recommendations for improvements".
This advisory committee would include one representative of the FCC, representatives of other governmental agencies, representatives of "communications service providers", representatives of "vendors, developers, and manufacturers of systems, facilities equipment, and capabilities for the provision of communications services", and representatives of the broadcasting, cellular, cable, and satellite industries.
The bill would also authorize the appropriation of $13.4 Million per year for five years.
Rep. Smith and Sen. Brown Urge PRC to Observe Its WTO Commitments
2/13. Rep. Christopher Smith (R-NJ) and Sen. Sherrod Brown (D-OH), the Chairman and Co-Chairman of the Congressional Executive Commission on China (CECC), issued a joint release regarding the People's Republic of China (PRC), and Vice President Xi Jinping's visit to the US on February 13-17, 2012.
The release references "troubling signs that call into question China's commitment to commercial rule of law and worker rights". It also states that the World Trade Organization (WTO) "recently decided that Chinese restrictions on raw material exports violate WTO rules."
Rep. Smith stated that "The WTO decision on raw materials is just further evidence of the Chinese government's willingness to cheat and game the system at the expense of our companies and our workers".
The release also references "high-profile reports about the Foxconn manufacturing company detailing horrific conditions at Chinese factories, including dangerous work environments, long hours, and low wages".
Sen. Brown stated that "The reports underscore the need for China to allow workers effective and independent labor representation, and for the Chinese government, domestic Chinese companies, and multinational companies to do much more to improve China's poor worker safety record".
Sen. Brown also stated that "As China's likely next leader, Vice President Xi has a unique opportunity to improve relations with the United States ... But in order to win the respect of the American people, Vice President Xi must make every effort to ensure China plays by the rules, abides by its international obligations, and guarantees the fundamental rights of all its citizens."
The two urged VP Xi to "End unfair trading practices, such as currency manipulation, industrial policies, and the use of quotas and subsidies, that are inconsistent with China's commitments to the World Trade Organization and incompatible with the rule of law".
However, they did not mention intellectual property.
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2/13. Apple announced in a release that the Fair Labor Association (FLA) "will conduct special voluntary audits of Apple's final assembly suppliers, including Foxconn factories in Shenzhen and Chengdu, China, at Apple's request." See also, FLA release. Apple's iPhones and iPads are made in these factories. These announcements follow publication of news stories by the New York Times See, for example, January 25, 2012, article titled "In China, Human Costs are Built Into an iPad" by Charles Duhigg and David Barboza.