What Are Third Party Cookies?

2/19. Cookie technology is built into the design of web browsers and servers. A cookie is a text string of code that is generated and deposited on a web connected computer, including a mobile device such as an iPhone or iPad.

Web browsers include Google's Chrome, Microsoft's Internet Explorer, and Apple's Safari.

An individual user with a web connected computer or device accesses a web page by entering the URL of that web page, by clicking on a hyperlink that contains that URL, or by a related procedure. The user's browser sends a request for that web page which is routed to the web server for that web page. The browser and server use the Hypertext Transfer Protocol (HTTP) request response protocol. Then, the web server that serves that web page sends the HTML source code back to the user's browser that the user's computer and browser render as a web page; in other words, the user sees the web page on the monitor or screen.

This web server may also generate and deposit on the user's computer the code that constitutes a cookie. A first party cookie, among other things, contains information identifying that visited web site. Then, when that user's browser makes additional requests of that server (that is, when the user again visits that web page or other web page at that domain) the browser conveys cookie information to the web server. Thus, the web server knows, for example, that the user has returned.

Such first party cookies serve many critical and legitimate purposes, especially in facilitating the operation of e-commerce web sites. For example, cookies facilitate web sites' authentication of users, retention of user preferences, and storage of shopping cart contents.

A third party cookie is one generated by one domain accessed by a user, but which identifies, not that domain, but another, third party domain. When the operator of that third party domain, such as an advertising company, is able to have many web sites place its cookies on users' browsers as those users go from web site to web site, it receives information about those visits. The placement of third party cookies thus enable advertisers to learn and store the browsing history of  users across all the domains, or web sites, upon which the advertiser has footprints.

Browsers facilitate the use of both first party and third party cookies. However, with many browsers users can adjust settings to block either or both. For example, Microsoft's Internet Explorer allows users to choose to block either or both. To do so, select Tools from the menu bar, then select Internet Options from the drop down menu, then click on the tab Privacy, and then select the button Advanced.

Mayer wrote in his paper that the Android browser does not contain a third party cookie blocking option.

See also, Center for Democracy and Technology (CDT) paper titled "Browser Privacy Features: A Work in Progress", released December 9, 2010.

Apple Safari. Apple's Safari sets third party cookie blocking as the default setting. Apple states in its web page titled "Safari Features" that "Some companies track the cookies generated by the websites you visit, so they can gather and sell information about your web activity. Safari is the first browser that blocks these tracking cookies by default, better protecting your privacy. Safari accepts cookies only from the current domain."

Apple states in its privacy policy that "If you want to disable cookies and you're using the Safari web browser, go to Safari preferences and then to the Security pane to disable cookies. On your Apple mobile device, go to Settings, then Safari, and then to the Cookies section."

Google's Statements About Cookies. Mayer's disclosure does not pertain to Google's browser. Rather it is about how a Google ad company circumvents the third party cookie blocking feature of the Safari browser when users with devices running that browser visit web pages on which Google's ad company has a footprint.

Google states in its web page titled "Privacy Policy" that "When you visit Google, we send one or more cookies to your computer or other device. We use cookies to improve the quality of our service, including for storing user preferences, improving search results and ad selection, and tracking user trends, such as how people search. Google also uses cookies in its advertising services to help advertisers and publishers serve and manage ads across the web and on Google services."

Google defines cookies in a web page titled "Privacy FAQ" as "a small file containing a string of characters that is sent to your computer when you visit a website. When you visit the website again, the cookie allows that site to recognize your browser. Cookies may store user preferences and other information. You can reset your browser to refuse all cookies or to indicate when a cookie is being sent."

See also, Google web page titled "Advertising and Privacy".

PR China Belatedly Agrees to Improve Market Access for US Movie Companies

2/17. The White House news office issued a release regarding the long running World Trade Organization (WTO) proceeding commenced in 2007 by the U.S. against the People's Republic of China (PRC) regarding access barriers for U.S. movie, record, and other content industries, and other issues. The release states that the US and PRC have entered into an agreement.

The Office of the U.S. Trade Representative (OUSTR), which filed the complaint on behalf of the U.S., issued a copy of the same release.

The US prevailed before the WTO on this market access issue. The PRC has not yet come into compliance with its treaty obligations, or the WTO ruling.

The White House new office release provides little information. Also, neither the White House news office, nor the OUSTR, released the text of any written agreement.

The release states that the PRC "has agreed to significantly increase market access for U.S. movies in order to resolve outstanding issues".

Vice President Joe Biden stated in this release that "This agreement with China will make it easier than ever before for U.S. studios and independent filmmakers to reach the fast-growing Chinese audience".

USTR Ron Kirk stated in this release that "U.S. studios and independent filmmakers cite China as one of their most important world markets, but barriers imposed by China and challenged by the United States in the WTO have artificially reduced the revenue U.S. film producers received from their movies in the Chinese market".

The release contains only one paragraph that describes the contents of the agreement. "The agreement allows more American exports to China of 3D, IMAX, and similar enhanced format movies on favorable commercial terms, strengthens the opportunities to distribute films through private enterprises rather than the state film monopoly, and ensures fairer compensation levels for U.S. blockbuster films distributed by Chinese state-owned enterprises.  The agreement will be reviewed after 5 years to ensure that it is working as envisioned.  If necessary, the United States can return to the WTO to seek relief."

Chris Dodd, head of the Motion Picture Association of America (MPAA), stated in a release that this is a "major step forward" and a "landmark agreement".

He said that this agreement "will return a much better share of the box office revenues to U.S studios, revising a two-decade-old formula that kept those revenues woefully under normal commercial terms, and it will put into place a mechanism that will allow over 50% more U.S. films into the Chinese market."

Background. The US filed its complaint (nominally a request for consultations) with the WTO on April 10, 2007. It addressed the PRC's failure to protect intellectual property rights in movies, music, books and other content, and the PRC's access barriers for US content distributors. See, story titled "US to Complain to WTO Regarding PR China's Failure to Protect IPR" in TLJ Daily E-Mail Alert No. 1,562, April 9, 2007.

The US requested the establishment of a Dispute Settlement Panel (DSP) on August 13, 2007. See, story titled "US Requests WTO Dispute Settlement Panel Re PRC Failure to Protect IPR" in TLJ Daily E-Mail Alert No. 1,623, August 15, 2007.

On January 26, 2009, the WTO released a panel report [PDF] finding that the PRC's copyright law and customs measures are "inconsistent" with the Trade Related Aspects of Intellectual Property (TRIPS) Agreement. See, story titled "WTO Panel Rules in PRC IPR Case" in TLJ Daily E-Mail Alert No. 1,889, February 2, 2009.

On December 21, 2009, the Appellate Body of the WTO issued its report [195 pages in PDF], upholding the findings and conclusions of the DSP's report. See, story titled "WTO Appellate Body Affirms in Movie and Music Case" in TLJ Daily E-Mail Alert No. 2,029, December 29, 2009.

US VP Biden and PRC VP Xi Address Trade and IP Issues

2/17. U.S. Vice President Joe Biden and People's Republic of China (PRC) Vice President Xi Jinping held meetings, and gave speeches, regarding trade, market access, intellectual property, investment, and other issues. Xi traveled to the US on February 14-17, 2012.

US VP Biden gave a speech at the Department of State's (DOS) main building in Washington DC on February 14. He praised the "international system that enables rapid development grounded in rules that apply with equal measure to all nations"

Biden said that he and Xi "spent a great deal of time discussing the areas of our greatest concern, including the need to rebalance the global economy, to protect intellectual property rights and trade secrets, to address China’s undervalued exchange rate, to level the competitive playing field and to prevent the forced transfer of technology, and to continue a constructive dialogue on policies that would benefit our citizens and the world."

Biden also stated that "Despite our differences, China and the United States are working more closely together on a broader range of issues than ever before. These include ... cyber security ..."

PRC VP Xi stated in his speech at the same event that "The purpose of my visit is to implement the agreement between our two presidents, enhance China-U.S. strategic trust, broaden practical cooperation, deepen people-to-people friendship, and further advance the cooperative partnership between our two countries." (Translated in English by DOS.)

He said that "The growth of China-U.S. relations has brought huge benefits to the two countries and two peoples, and lent a strong impetus to peace, stability, and prosperity in the Asia-Pacific region and the world at large. The China-U.S. relationship has become one of the most important, dynamic, and promising bilateral relationships in the world."

Also, "We should address each other's economic and trade concerns through dialogue and consultation, not protectionism, and uphold the mutually beneficial pattern of China-U.S. economic relations and trade", said Xi.

The two Vice Presidents also spoke at the U.S. Chamber of Commerce in Washington DC. Biden stated there that "China has responded to our concerns about procurement policies and established a high-level body to strengthen enforcement of intellectual property rights as well." See, transcript.

He continued that "we have work to do -- especially on issues like discriminatory subsidies and financing, protecting intellectual property and trade secrets and ending the practice of making the transfer of technology a requirement for doing business. The United States will also work to ensure that all countries play by the international rules. We’ve brought cases that have challenged unfair trade practices".

Biden also said that "the U.S. is working to be responsive to Chinese concerns as well. For example, the United States is expending our visa processing capacity in China to help reduce delays and encourage Chinese travel to the United States."

Xi stated at this event that he met with both Biden and President Obama. "We had an in-depth exchange of views on economic and trade issues".

Xi said that "We agree that China-U.S. economic relationship is highly mutually complimentary and full of dynamism. The two sides should quicken our steps to build a comprehensive and mutually beneficial economic partnership, advance the investment and trade package plan on cooperation, address economic frictions through dialogue and cooperation instead of by protectionist means so as to promote a steady recovery and growth of the two economies and the world economy as a whole."

He also said the "With regard to the U.S. concerns concerning trade imbalance, IPR protection, indigenous innovation and investment environment, the Chinese side has taken steps to address them and will continue to do so."

"We hope that the U.S. side will adopt the same positive attitude and take credible steps as soon as possible to address Chinese concerns on lifting restrictions on high-tech exports to China and providing a level playing field for Chinese companies investing in America", said Xi.

The two Vice President also gave speeches at an event in Los Angeles, California, on February 17.

VP Biden stated in his speech that "seven of our 15 largest export markets -- America's export markets -- are in Asia, with China now the foremost among them. Last year alone, the United States exported to China more than $100 billion worth of goods and services, supporting hundreds of thousands of American jobs. And those jobs that are tied to exports are quality, high-paying jobs, estimated to be worth more than 15 percent more than all other jobs in America."

He stated that "the faster the U.S. economy grows, the more Chinese citizens will benefit as well. So there is a great potential for both of us in working together to increase and solidify this relationship.

Biden said that Xi "indicated that China wants to invest more in the United States. And we're working to make that easier, and there's a whole lot of governors here who are looking forward to that."

He continued that "We very much want to see more of our businesses able to sell their goods and services in China.  And Vice President Xi has committed to help make that possible. In this recent visit, China has opened its market to American auto insurers and has taken concrete steps to enforce intellectual property rights, and it has plans to reform its tax system, which will help increase demand for American goods and services by lowering taxes on so-called luxury goods."

He concluded that "we will continue to work with the Vice President and the Chinese government to make sure that everyone is playing by the same rules on a level playing field."

FTC Files Opposition to EPIC's Motion to Compel FTC to Enforce Google Order

2/17. The Federal Trade Commission (FTC) filed its opposition [12 pages in PDF] to the Electronic Privacy Information Center's (EPIC) Motion for Temporary Restraining Order and Preliminary Injunction [30 pages in PDF] in the EPIC's action to compel the FTC to enforce the final Decision and Order [7 pages in PDF] dated October 13, 2011, which relates to Google's Buzz related privacy practices.

See, story titled "EPIC Sues FTC to Compel Enforcement of Google Privacy Order" in TLJ Daily E-Mail Alert No. 2,338, February 16, 2012.

The FTC filings make no attempt to defend Google's business practices, or to argue that Google is in compliance with the October order.

Nor does the FTC explain or justify why the FTC has not determined that Google is in violation of the order, or why it has not yet sought to compel Google to comply with the order.

Rather, the FTC argues procedure. However, the FTC is on solid ground. It argues that the FTC Act, which Google violated, gives the the FTC enforcement authority, but creates no private right of action for the EPIC or any other third parties. The FTC also argues that third parties to government consent decrees generally cannot enforce those decrees absent an explicit stipulation by the government to that effect.

Tuesday, February 21, is the accelerated deadline for the EPIC to file its reply to the FTC's opposition. TLJ spoke with Marc Rotenberg, head of the EPIC, on Friday, February 17. He stated that he expects the District Court to rule on the motion for a TRO and PI "next week".

This case is EPIC v. FTC, U.S. District Court for the District of Columbia, D.C. No. 12-206-ABJ.

SEC and DOJ File More Complaints Alleging Insider Trading Involving Tech Sector Expert Networks

2/17. The Securities and Exchange Commission (SEC) filed a civil complaint in the U.S. District Court (SDNY) against John Kinnucan.and Broadband Research Corporation alleging insider trading involving technology companies in violation of Section 10b of the Securities Exchange Act of 1934, and rule 10b5 thereunder.

On the same day the Department of Justice (DOJ) charged Kinnucan by criminal complaint in the same court with conspiracy to commit securities fraud, wire fraud, and securities fraud for the same alleged conduct. See, release of the U.S. Attorneys Office for the Southern District of New York.

The SEC complaint alleges "insider trading by Kinnucan and his consulting firm Broadband, which was purportedly in the business of providing to its clients legitimate research about publicly traded technology companies, but which often provided nonpublic information that Kinnucan obtained from sources inside these companies".

It alleges that Kinnucan "obtained material nonpublic information from well-placed employees at a variety of public technology companies", including F5 Networks, for which he paid in cash, meals and vacations.

It alleges that he then sold inside information to "portfolio managers and analysts at prominent hedge funds and other nationally recognized investment advisers".

The SEC stated in a release that it "has charged 22 defendants in enforcement actions arising out of its expert networks investigation, which has uncovered widespread insider trading at several hedge funds and other investment advisory firms. The insider trading has occurred in the securities of 12 technology companies -- including Apple, Dell, Fairchild Semiconductor, Marvell Technology, and Western Digital -- for illicit gains totaling nearly $110 million."

The DOJ stated in its release that Kinnucan also obtained inside information from his sources at Sandisk and Flextronics International.

The SEC case is SEC v. John Kinnucan and Broadband Research Corporation, U.S. District Court for the Southern District of New York, D.C. No. 12 CIV 1230, Judge Nathan presiding.

Google Tracked Users Online by Circumventing Apple Safari Browser's Blocking of Third Party Cookies

2/17. Jonathan Mayer, a graduate student at Stanford University, published a paper on February 17, 2012, that explains how Google and three other companies used surreptitious code to circumvent the block third party cookies feature of Apple's web browser, Safari, thereby enabling these companies to track the web browsing of users of Apple iPhones and iPads, without their permission or knowledge, and contrary to Apple's and users' efforts to protect their privacy.

Google owns DoubleClick, whose cookies are placed on users' browsers when visiting Google AdSense partner web sites.

The Wall Street Journal (WSJ) also published a story on February 17 that that offers a short vernacular version of the disclosures contained Mayer's paper. It is titled "Google's iPhone Tracking: Web Giant, Others Bypassed Apple Browser Settings for Guarding Privacy", and is authored by Julia Angwin and Jennifer DeVries.

The WSJ story states that "Google Inc. and other advertising companies have been bypassing the privacy settings of millions of people using Apple Inc.'s Web browser on their iPhones and computers -- tracking the Web-browsing habits of people who intended for that kind of monitoring to be blocked."

It adds that "The companies used special computer code that tricks Apple's Safari Web-browsing software into letting them monitor many users".

Mayer concluded that "When Apple's developers implemented Safari’s cookie blocking feature, they were balancing several conflicting design priorities. But one decision was clear: it should prevent advertising companies from tracking the user. ... Four advertising companies circumvented Apple's protection."

The Center for Democracy and Technology's (CDT) Justin Brookman stated in a release on February 17 that "technological workarounds to evade browser privacy settings are unacceptable ... We are severely disappointed that Google and others choose to place tracking cookies on Safari browsers using invisible form submission."

Sen. John Rockefeller (D-WV), the Chairman of the Senate Commerce Committee (SCC), promptly issued a release in which he stated that he would look into this matter. See, related story in this issue titled "Sen. Rockefeller to Look Into Google's Safari Circumvention".

Rep. Ed Markey (D-MA), Rep. Joe Barton (R-MA), and Rep. Cliff Stearns (R-FL) promptly sent a letter [PDF] to the FTC urging it to investigate. See, related story in this issue titled "Representatives Urge FTC to Investigate Google's Safari Hack".

See, full story.

EPIC Writes FTC Regarding Google's Safari Circumvention

2/17. The Electronic Privacy Information Center (EPIC) sent a letter to the Federal Trade Commission (FTC) regarding Google's circumvention of the Apple Safari feature that blocks third party cookies.

The EPIC is also the plaintiff in an action against the FTC that seeks to compel the FTC to enforce the October 2011 final Decision and Order [7 pages in PDF] in the FTC's administrative enforcement action against Google related to Google's Buzz.

The EPIC filed a complaint [9 pages in PDF] in the U.S. District Court (DC) against the FTC on February 8, 2012. See, story titled "EPIC Sues FTC to Compel Enforcement of Google Privacy Order" in TLJ Daily E-Mail Alert No. 2,338, February 16, 2012.

Marc Rotenberg, head of the EPIC, wrote to the FTC on February 17 after the Wall Street Journal published a story titled "Google's iPhone Tracking: Web Giant, Others Bypassed Apple Browser Settings for Guarding Privacy".

Rotenberg wrote that "The article describes the specific steps that Google has already taken to circumvent user privacy settings." He then discussed Google's changes to statements in its web site regarding tracking of Safari users. He explained that after "Google became aware that its tracking activities would be revealed", Google removed key language regarding tracking Safari users.

He elaborated that "The original Google statement that users of Safari who have not changed their privacy settings ``accomplishes the same thing as setting the opt-out cookie´´ is a per se misrepresentation. Not only did the company know this not to be true, it took elaborate measures to circumvent the Safari privacy safeguards, and it benefited from the misrepresentations by the commercial value it surreptitiously obtained. The fact that Google removed the evidence and made it no longer available by means of a Google search (think about that for a moment) is an admission by the company as to its malfeasance." (Parentheses in original.)

Back in 2007 when the FTC was reviewing the then pending acquisition by Google of DoubleClick, the subsidiary of Google at the center of this matter, the EPIC filed a complaint with the FTC urging it to block the merger on privacy grounds.

The EPIC later resorted to the extraordinary procedure of requesting the recusal of the then FTC Chairman from the proceeding. See, story titled "EPIC Seeks Recusal of Majoras in Google Doubleclick Merger Review" in TLJ Daily E-Mail Alert No. 1,688, December 13, 2007.

Sen. Rockefeller to Look Into Google's Safari Circumvention

2/17. Sen. John Rockefeller (D-WV), the Chairman of the Senate Commerce Committee (SCC), stated in a release on February 17 that "According to press reports, Google circumvented consumer choice and may have paved the way for third-party ad networks -- including Google's own DoubleClick -- to track consumers against their will."

Sen. Rockefeller (at right) said, "If so, this practice may have violated the company's own stated privacy practices. I fully intend to look into this matter and determine the extent to which this practice was used by Google and other third parties to circumvent consumer choice."

The Federal Trade Commission (FTC) has determined that if a company publishes a privacy policy, and then violates that policy, this can constitute an unfair or deceptive trade practice in violation of Section 5 of the FTC Act, which is codified at 15 U.S.C. § 45. The FTC has brought many such enforcement actions.

This section provides that "Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful."

The Congress has enacted no general privacy statute that governs the practices of web sites, such as Google's, that impact consumers' interests in privacy. However, there are privacy statutes directed at specific institutions, and specific types of web sites, such as the Children's Online Privacy Protection Act, or COPPA. Nor has the FTC promulgated any general privacy rules under Section 5 of the FTC Act. Although, it has statutory authority to write rules implementing Section 5.

Rather, the FTC has, in a series of actions, announced and enforced its understanding that if a web site operator publishes and then violates its privacy policy, that constitutes a violation the FTC Act. See, FTC web page with hyperlinks to pleadings in its Section 5 privacy cases.

For example, last year the FTC brought and settled an enforcement action against Google in connection with its privacy related practices associated with the initial launch of its Buzz social networking service. See, story titled "FTC Issues and Settles Complaint Against Google" in TLJ Daily E-Mail Alert No. 2,213, March 31, 2011. The FTC issued its final Decision and Order [7 pages in PDF] on October 13, 2011.

Representatives Urge FTC to Investigate Google's Safari Circumvention

2/17. Rep. Ed Markey (D-MA), Rep. Joe Barton (R-MA), and Rep. Cliff Stearns (R-FL) sent a letter [PDF] to the Federal Trade Commission (FTC) urging it to "investigate" whether Google's Safari circumvention violates the Decision and Order [7 pages in PDF] in the FTC's administrative enforcement action against Google related to Google's Buzz.

The three Representatives cited and quoted the Wall Street Journal story of February 17 titled "Google's iPhone Tracking: Web Giant, Others Bypassed Apple Browser Settings for Guarding Privacy". See, related story in this issue titled "Google Tracked Users Online by Circumventing Apple Safari Browser's Blocking of Third Party Cookies".

They wrote that "Google's practices could have a wide sweeping impact because Safari is a major web browser used by millions of Americans. Safari, which is used on both iOS and OS X platforms, is installed on all iPhones, iPads, MacBooks, and Macs."

Rep. Markey and Rep. Barton are senior members of the House Commerce Committee (HCC), which oversees the FTC. The two have frequently acted in concert to query technology companies about, and urge the FTC to investigate, business practices that might adversely affect the privacy interests of their users and/or violate federal law. The present letter was also signed by Rep. Stearns (at right), another senior member of the HCC, and Chairman of its Subcommittee on Oversight and Investigations.

The three added the most recent revelations about Google come "as a major concern especially just two weeks after Google announced that the company plans to make changes to its privacy policies and terms of service that will allow sharing of users' personal information across its many products. This new policy and the omission of a consumer opt-out on a product-by-product basis raised a number of privacy concerns."

Back in 2007 when Google had announced its planned acquisition of DoubleClick, the subsidiary of Google at the center of this matter, Rep. Barton (at left) raised his concerns about the merger's impact upon consumer privacy. See, story titled "Rep. Barton Questions Google on Doubleclick Merger and Privacy" in TLJ Daily E-Mail Alert No. 1,688, December 13, 2007.

The letter only asks the FTC to investigate whether Google's just disclosed actions violate last year's FTC order. The letter does not ask the FTC to investigate whether Google's actions also constitute a new violation of the FTC Act, and particularly the ban on unfair or deceptive trade practices codified at 15 U.S.C.§ 45.

Nor does the letter ask the FTC to investigate whether Google's actions violate the ban on unauthorized access to a protected computer system of the Computer Fraud and Abuse Act (Act), which is codified at 18 U.S.C. § 1030. Nor does the letter ask the FTC to investigate whether Google's actions violate any of the bans on surveillance activities of the Electronic Communications Privacy Act (ECPA).

An unfair or deceptive trade practices investigation would lie squarely within the purview of the FTC. A CFAA or ECPA investigation would not. Although, acts that constitute a violation of the CFAA or ECPA might also constitute a violation of the FTC Act.

See also, FTC web page titled "A Brief Overview of the Federal Trade Commission's Investigative and Law Enforcement Authority", and FTC web page titled "Legal Resources -- Statutes Relating to Consumer Protection Mission".

FTC Web Site Hacked

2/17. The Federal Trade Commission (FTC) published a notice in its web site that states that the FTC's Bureau of Consumer Protection's (BCP) Business Center was hacked on February 17.

The notice states, in full, "The Bureau of Consumer Protection's Business Center website, run by the Federal Trade Commission, was hacked on February 17, 2012. The FTC takes this malicious act seriously. The site has been taken down and will be brought back up when we're satisfied that any vulnerability has been addressed."

The Washington Post published an Associate Press story on February 17 titled "US Federal Trade Commission and consumer rights websites hacked by Anonymous". It states that "The hacking group known as Anonymous has claimed a new series of hacks against the U.S. Federal Trade Commission and consumer rights websites."

The FTC Business Center web site had not been restored as of publication of this issue of the TLJ Daily E-Mail Alert on Sunday, February 19.

House and Senate Pass Spectrum Bill

2/17. The House and Senate passed the conference report [270 pages in PDF] on HR 3630 [LOC | WW], the "Middle Class Tax Relief and Job Creation Act of 2012". The House passed the bill by a vote of 293 to 132. See, Roll Call No. 72. The Senate passed the bill by a vote of 60 to 36. See, Roll Call No. 22.

This bill gives the Federal Communications Commission (FCC) authority to conduct incentive auctions. It also reallocates the D Block for an interoperable public safety broadband network, and provides for the creation, governance, and funding of such a public safety network. It also includes the "Next Generation 9-1-1 Advancement Act" and other provisions.

The spectrum and other communications provisions are in Title VI, at pages 118-266.

See, full story.

House Subcommittee Hearing Examines Waste and Duplication in Government IT Spending

2/17. The House Oversight and Government Reform Committee's (HOGRC) Subcommittee on Technology, Information Policy, Intergovernmental Relations and Procurement Reform held a hearing titled "Examining Duplicative IT Investments at DOD and DOE".

The Government Accountability Office (GAO) released a report [57 pages in PDF] titled "Information Technology: Departments of Defense and Energy Need to Address Potentially Duplicative Investments" that finds numerous potentially duplicative programs.

This report states that "we have identified 37 potentially duplicative investments at DOD and DOE. These investments account for about $1.2 billion in total IT spending for fiscal years 2007 through 2012. Given that our review covered 11 percent (810 investments) of the total number of IT investments that agencies report to OMB, it raises questions about how much more potential duplication exists." See also, prepared testimony of the GAO's David Powner for this hearing.

Rep. James Lankford (R-OK), the Chairman of the Subcommittee, presided. He stated in a release that "The private sector has successfully harnessed the power of Information Technology systems to streamline its businesses and maximize output ... But that success has not always translated to the federal government. Instead of letting the power of technology bring our operations into a unified operation, it has only compounded the problems of a massive and unmanageable bureaucracy."

He also said that "Too often, agencies put themselves into individual silos that isolate themselves from the rest of the government and prevent them from sharing information and best practices ... Federal agencies must open the lines of communications, in order to better integrate and work together in preventing waste and duplication. At a time of record budget deficits and strained resources, there is absolutely no reason not to streamline IT systems and cut redundant spending."

Sen. Tom Carper (D-DE), Chairman of the Senate Homeland Security and Governmental Affairs Committee's (SHSGAC) Subcommittee on Federal Financial Management, commented on this GAO report. He stated in a release that "This report is just the latest example of mismanagement and waste within our government's costly information technology portfolio.

He added that "We must continue to transform the government's use of information technology", and touted S 801 [LOC | WW], the "Information Technology Investment Management Act of 2011". He introduced this bill on April 12, 2011. It was referred to the SHSGAC.

Sen. Susan Collins (R-ME), the ranking Republican on the SHSGAC, and a cosponsor of S 801, stated in the same release that "Federal IT programs have been plagued with cost overruns, program failures, and duplication. Taxpayers should not have to pay for federal IT projects twice".

People and Appointments

2/17. President Obama announced his intent to nominate Gary Loveman (Ceasars casinos) and Denise Morrison (Campbell Soup Company) to be members of the President's Export Council. See, White House news office release.

More News

2/17. The U.S. District Court (DC) sentenced Jeng "Jay" Shih to serve 18 months in prison following his October 7, 2011, plea of guilty to conspiracy to illegally export U.S. origin computers from the U.S. to Iran through the United Arab Emirates (UAE). The Department of Justice (DOJ) stated in a release that Shih and his company "caused the illegal export of 368 units of computer-related goods to Dubai, which were later sent to Iran. Later that month, the defendants caused the illegal export of 158 additional units of computer-related goods to Dubai, which were later sent to Iran. The defendants subsequently caused an additional 185 units of computer-related goods to be illegally exported to Iran via Dubai."

2/17. President Obama gave a speech at political fund raising event in the state of Washington at the home of Jeff Brontman, founder of Costco, in which he touched on science, technology, engineering and mathematics (STEM) education. Obama said that "We need more scientists and mathematicians and engineers." He continued that government has "initiated a whole range of programs to start elevating and lifting up the importance of STEM education, and redesigning how it’s taught so that my daughters are starting to get interested in math and science early." He also advocated, in broad terms, federal spending on "basic research".

2/17. The U.S. China Economic and Security Review Commission released a report by David Herbert, a member of its staff, titled "China Media Watch: Chinese State-Run Media Depicts Xi Visit as Victory Lap, Lecture Tour". It states that "Chinese language media coverage of Vice President Xi Jinping’s visit to the United States portrays him as a tough-talking advocate for his native land, able to dress down American lawmakers and business leaders."

Obama Nominates Jill Pryor for 11th Circuit

2/16. President Obama nominated Jill Pryor to be a Judge of the U.S. Court of Appeals (11thCir). See, White House news office release and release.

She has worked as a litigator in the Atlanta, Georgia, office of the law firm of Bondurant Mixson & Elmore since 1989.

Her firm web page states that she has handled "trial and appellate business litigation in the areas of business torts, corporate governance and shareholder disputes, class actions, trade secrets, intellectual property (including patent infringement), fraud, and the Georgia and federal Racketeering and Corrupt Organizations acts (RICO)." (Parentheses in original.)

She is the author of a note published in the Yale Law Journal in 1988, the year of her graduation, titled "The Natural-Born Citizen Clause and Presidential Eligibility: An Approach for Resolving Two Hundred Years of Uncertainty".

House and Senate Negotiators Reach Agreement on Spectrum Legislation

2/16. House and Senate negotiators reached agreement on spectrum legislation that would give the Federal Communications Commission (FCC) authority to conduct incentive auctions. It would also reallocate the D Block for an interoperable public safety broadband network, and provide for the creation, governance, and funding of such a public safety network. It would also include the "Next Generation 9-1-1 Advancement Act" and other provisions.

This compromise spectrum bill will be added to the conference report [270 pages in PDF] on HR 3630 [LOC | WW], the "Temporary Payroll Tax Cut Continuation Act of 2011". The House is scheduled to consider HR 3630 on Friday, February 17.

This huge bill is to be renamed the "Middle Class Tax Relief and Job Creation Act of 2012". The spectrum and other communications provisions are in Title VI, at pages 118-266.

See also, the House Commerce Committee (HCC) Republicans' summary of the bill, and the HCC Democrats' summary of the bill. The Senate Commerce Committee (SCC) Democrats produced a shorter summary.

The spectrum provisions of the conference report borrow from earlier House language (that is, the language in the version of HR 3630 passed by the House in December) for the incentive auction authority, and from the Senate language (that is, S 911 as approved by the SCC in June of 2011) for the D Block and public safety network provisions. However, the conference report increases FCC authority with respect to unlicensed spectrum over what was in the House bill last year, and decreases the limitations on the FCC ability to write auction rules.

Rep. Fred Upton (R-MI), the Chairman of the HCC, and Rep. Greg Walden (R-OR), the Chairman of the HCC's Subcommittee on Communications and Technology stated in a joint release that "As Americans' reliance on wireless devices such as smartphones and tablets increases, so has the demand for additional wireless broadband. After years of discussion, negotiations, and hearings, this legislation provides the FCC the necessary authority to conduct these auctions. We struck a fine balance to make more efficient use of the airwaves while also providing necessary protections for broadcasters".

Sen. Charles Schumer (D-NY) stated in SCC Democrats' release that "This deal is shaping up to be a big win for our first responders ... More than a decade after 9/11, we are going to finally establish the national network that will let emergency workers talk to each other so we can avoid repeating the communication failures of that tragic day. We have come close to getting this done before, and this time we refused to take no for an answer."

Rep. Henry Waxman (D-CA), the ranking Democrat on the HCC, stated in a release that "I will support this conference report -- but with reservations" about the non-spectrum related provisions of the bill.

He praised the spectrum component. He stated that "These negotiations have resulted in legislation that will make new spectrum available for smartphones and tablets, will create a nationwide band of spectrum that can be used for Super WiFi and other unlicensed uses, and will fund the build-out of an interoperable broadband network for first responders. Establishing the public safety network allows us to complete the major piece of unfinished business from the attacks of 9/11. These provisions will promote innovation and economic growth while contributing $15 billion to pay for this legislation."

Legislative History. On June 8, 2011, the SCC approved, over opposition from some Republicans, S 911 [LOC | WW], the "Strengthening Public-safety and Enhancing Communications Through Reform, Utilization, and Modernization Act" or "SPECTRUM Act".

On December 1, 2011, the HCC's Subcommittee on Communications and Technology approved, over opposition from some Democrats, a discussion draft [113 pages in PDF] of the "Jumpstarting Opportunity with Broadband Spectrum Act of 2011" or "JOBS Act of 2011". See, story titled "House Communications Subcommittee Approves Spectrum Bill" in TLJ Daily E-Mail Alert No. 2,317, December 1, 2011, for summaries of, and hyperlinks to, amendments approved at that meeting.

See also, story titled "House Commerce Committee Democrats Seek Delay of Spectrum Bill Mark Up" in TLJ Daily E-Mail Alert No. 2,316, November 30, 2011. In addition, this discussion draft was included as Title IV of HR 3630, an earlier version of which the House passed on December 13, 2011. However, that version of the bill was not enacted into law.

The HCC Democrats introduced a competing spectrum bill, HR 3509 [LOC | WW], the "Wireless Innovation and Public Safety Act of 2011".

Conference Report. On Thursday, February 16, negotiators announced a compromise bill, to be made part of the conference report [270 pages in PDF] on HR 3630 [LOC | WW], the "Temporary Payroll Tax Cut Continuation Act of 2011", which is to be renamed the "Middle Class Tax Relief and Job Creation Act of 2012".

Thursday night, the House Rules Committee (HRC) met to hold a hearing on, and to adopt a rule for consideration of, this conference report. Title VI of the conference report is the spectrum bill. There was no discussion of Title VI at the HRC meeting.

The rule makes consideration by the House of the conference report in order on February 17.

Summary of Spectrum Bill

2/16. Title VI of the conference report [270 pages in PDF] on HR 3630 [LOC | WW], the "Temporary Payroll Tax Cut Continuation Act of 2011", renamed the "Middle Class Tax Relief and Job Creation Act of 2012", contains the bipartisan and bicameral compromise spectrum provisions.

The House is scheduled to consider HR 3630 on Friday, February 17.

Public Safety Network. This bill provides for reallocation of the D Block for an interoperable public safety broadband network. It provides $7 Billion in funding.

The bill provides for the public safety network to be created and run by a new First Responder Network Authority (FRNA), which would be governed by a board largely appointed by Secretary of Commerce. Nominally, it would be a part of the Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA).

The D Block is 10 megahertz of paired spectrum (758-763 MHz and 788-793 MHz). See also, Section 6001 of the bill, at page 118.

The FCC previously attempted but failed to auction the D Block in the 700 MHz auction (the FCC's Auction No. 73) as one nationwide license, subject to a Public/Private Partnership. The plan was for a commercial licensee to build a nationwide broadband interoperable network for use by public safety entities. This licensee would then have had preemptible secondary access to the spectrum. The FCC closed this auction on March 18, 2008. However, no bidder bid the reserve price for the D Block.

Section 6101 (at page 128) provides that the FCC "shall reallocate the 700 MHz D block spectrum for use by public safety".

Section 6201 (at pages 1129-130) provides that the FCC "shall reallocate and grant a license to the First Responder Network Authority for the use of the 700 MHz D block spectrum and existing public safety broadband spectrum".

Section 6204 (at page 136) provides that this First Responder Network Authority (FRNA) is "an independent authority within the NTIA". This FRNA will be charged with creating and governing the public safety broadband network.

Furthermore, the FRNA shall be "headed by a Board, which shall consist of the Secretary of Homeland Security, Attorney General, Director of the OMB, and twelve members appointed by the Secretary of Commerce, including "not fewer than 3 individuals who have served as public safety professionals". Terms are three years.

Section 6203 provides for an FCC "Technical Advisory Board for First Responder Interoperability". The FCC Chairman will appoint its members. Its responsibility is to "develop recommended minimum technical requirements to ensure a nationwide level of interoperability for the nationwide public safety broadband network".

Section 6207 and 6208 provide for funding of the FRNA.

Section 6212 bars the FRNA from providing "commercial telecommunications or information services directly to consumers".

Incentive Auctions. The bill gives the FCC authority to conduct incentive auctions. An incentive auction provides for the sharing of spectrum auction proceeds with the licensees who voluntarily relinquish that spectrum. It provides a financial incentive for television broadcasters and other licensees to relinquish some of their spectrum.

The incentive auction provisions are in Subtitle D, at Sections 6401-6414, and pages 173-214. However, some provisions not related to incentive auctions are also included in this subtitle.

Section 6402 (at pages 178-179) provides in a clause (i) that the FCC "may encourage a licensee to relinquish voluntarily some or all of its licensed spectrum usage rights in order to permit the assignment of new initial licenses subject to flexible-use service rules by sharing with such licensee a portion, based on the value of the relinquished rights as determined in the reverse auction required by clause (ii)(I), of the proceeds (including deposits and upfront payments from successful bidders) from the use of a competitive bidding system under this subsection."

Then a clause (ii)(I) provides that the FCC "may not enter into an agreement for a licensee to relinquish spectrum usage rights in exchange for a share of auction proceeds under clause (i) unless -- (I) the Commission conducts a reverse auction to determine the amount of compensation that licensees would accept in return for voluntarily relinquishing spectrum usage rights".

Section 6404 (at pages 196-197) provides that the FCC "may not prevent a person from participating in a system of competitive bidding under this subsection if such person" meet certain enumerated requirements.

These requirements are that the bidder "complies with all the auction procedures and other requirements to protect the auction process" and "meets the technical, financial, character, and citizenship qualifications". But, this does not prevent the FCC from adopting and enforcing "rules of general applicability, including rules concerning spectrum aggregation that promote competition".

This restriction upon the FCC is not as broad as the one that House Republicans sought last year.

Section 6406 (at pages 197-199) provides that the FCC "shall begin a proceeding to modify part 15 of title 47, Code of Federal Regulations, to allow unlicensed U–NII devices to operate in the 5350–5470 MHz band".

Section 6407 (at pages 199-200) provides that the FCC is not prevented "from using relinquished or other spectrum to implement band plans with guard bands", that the FCC "may permit the use of such guard bands for unlicensed use".

However, "Such guard bands shall be no larger than is technically reasonable to prevent harmful interference between licensed services outside the guard bands", and the FCC "may not permit any use of a guard band that the Commission determines would cause harmful interference to licensed services".

This expands the FCC authority to allocate spectrum for unlicensed use over the House bill last year. However, FCC Chairman Julius Genachowski had sought much wider authority to allocate spectrum for unlicensed use.

Other Provisions. Subtitle E (beginning at page 214) is the "Next Generation 9-1-1 Advancement Act of 2012". See, related stand alone bill, HR 2629 [LOC | WW], the "Next Generation 9-1-1 Advancement Act of 2011".

Subtitle F (beginning at page 235) pertains to the Telecommunications Development Fund.

Subtitled G (beginning at page 236) pertains to federal spectrum relocation.

The bill does not contain language, sought by House Republicans last year, constraining the FCC with respect to network neutrality.

Reaction to Spectrum Bill

2/16. Julius Genachowski, Chairman of the Federal Communications Commission (FCC), stated in a release that "Congress is poised to take an important step in making the U.S. the first country in the world to adopt the incentive auctions concept, an innovative, market-based approach to unleash more spectrum for mobile broadband."

He added that "I'm pleased that Congress has recognized the vital importance of freeing up more spectrum for mobile broadband, both licensed and unlicensed, although the legislation could limit the FCC's ability to maximize the amount and benefits of recovered spectrum."

Genachowski delivered a political and partisan speech at the Consumer Electronics Show (CES) in Las Vegas in January in which he criticized Republican spectrum proposals, and praised Democratic proposals, particularly with respect to FCC authority to allocate spectrum for unlicensed use. See, story titled "Genachowski Addresses Incentive Auctions and Unlicensed Spectrum" in TLJ Daily E-Mail Alert No. 2,326, January 13, 2012.

Genachowski added that "The FCC will continue to study the legislation, and if adopted, we look forward to working with Congress and all stakeholders to implement this important grant of authority."

Steve Largent, head of the CTIA, stated in a release that "Today's action to make repurposed broadcast spectrum available for wireless broadband service is vital to ensuring America's wireless industry remains the world's leader in the deployment of 4G services."

"As the Administration, Members of Congress, the FCC and other policymakers have recognized, making additional spectrum available for wireless broadband services will spur infrastructure investment, encourage job creation and foster innovation. Studies suggest that this process could generate infrastructure investments of up to $53 billion, provide as much as $151 billion in GDP and create as many as 771,000 jobs by 2016. In addition, incentive auctions will generate billions in revenue for the U.S. Treasury."

"This additional spectrum will help CTIA's members meet Americans' voracious appetite for mobile Internet anywhere and anytime", said Largent.

Gordon Smith, head of the National Association of Broadcasters (NAB), stated in a release that the "NAB salutes the tireless efforts of Congress to ensure that local broadcasters have a vibrant and robust future. Special thanks go to Chairmen Upton and Walden for steering this bill to conclusion, and to Reps. Dingell and Bilbray for a critically important amendment guaranteeing continued viewer access to TV station signals along the Canadian and Mexican borders."

He stated that "Tens of millions of Americans rely every day on local TV broadcasters for news, entertainment, sports and life-saving weather warnings. We look forward to working with Congress and the FCC to implement an incentive auction program that does not jeopardize that service.

Walter McCormick, head of the US Telecom, stated in a release that "We applaud Chairmen Upton and Walden for their longstanding commitment to making available much-needed spectrum to consumers, and we commend House-Senate negotiators for crafting legislation that will pave the way for increased investment in both wireless and wireline infrastructure, as well as expanded economic growth and job creation for our nation. As 99% of all wireless calls are transported via wireline networks, the 26-fold growth in mobile traffic that is expected by 2015 will spur robust investment in fiber-based broadband infrastructure. This legislation is a win-win for consumers, for wireless carriers, for wireline carriers, and for the nation – in that it will produce new revenues for the federal government without raising taxes."

Ed Black, head of the Computer and Communications Industry Association (CCIA), stated in a release that "Today's agreement on unlicensed spectrum provides new 'public opportunity' airwaves for next generation innovation by tech entrepreneurs and will help meet the growing demand for wireless Internet access." Also, "The incentive auctions authorized today will deliver more bandwidth for commercial wireless services."

The CCIA's Cathy Sloan added in this release that "We are glad to see that the FCC will retain some discretion to assign licenses in the public interest and to prevent monopolization of licensed spectrum."

Matt Wood of the Free Press stated in a release that "Unfortunately, reports on today's deal also suggest that harmful provisions about auction design remain in the text, though the damage may not be as great as we initially feared. We are glad that the agreement would preserve at least some of the tools the FCC needs to assign licenses in the public interest and prevent further erosion of competition among wireless providers. Parts of the bill the House passed in December would all but ensure that AT&T and Verizon lock up all the most valuable spectrum in any future auction, further tightening the effective duopoly these companies already hold. Bidder-eligibility language aside, the Commission would retain general authority to adopt rules encouraging competitive entry and growth by providers of all sizes."

Harold Feld of the Public Knowledge stated in a release that "“We commend the negotiators from the Senate and House for coming up with a bill that will preserve the future of unlicensed spectrum while also allowing for the Federal Communications Commission to have flexibility in creating spectrum auctions to protect competition."

Gary Shapiro, head of the Consumer Electronics Association (CEA), stated in a release that the "we commend the Conferees for including voluntary spectrum auctions in the conference report and urge quick passage by the House and Senate."

FTC Releases Report on Mobile Apps for Kids

2/16. The Federal Trade Commission (FTC) released a report [34 pages in PDF] titled "Mobile Apps for Kids: Current Privacy Disclosures Are Disappointing". It finds that there is a "lack of information available to parents prior to downloading mobile apps for their children". See also, FTC release.

It states that FTC staff "designed and conducted a survey of the apps offered for children in the two largest U.S. app stores", Google's Android Market and Apple's App store.

The report states that "Mobile apps can capture a broad range of user information from the device automatically -- including the user's precise geolocation, phone number, list of contacts, call logs, unique device identifiers, and other information stored on the mobile device -- and can share this data with a large number of possible recipients."

See also, story titled "Representatives Question Apple About iOS Apps that Seize Address Book Data" in TLJ Daily E-Mail Alert No. 2,338, February 16, 2012.

The report continues that "These capabilities can provide beneficial services to consumers -- for example, access to maps and directions, and the ability to play interactive games with other users -- but they also can be used by apps to collect detailed personal information in a manner parents cannot detect."

The report's key findings are as follows: "While staff encountered a diverse pool of apps for kids created by hundreds of different developers, staff found little, if any, information in the app marketplaces about the data collection and sharing practices of these apps. Staff found almost no relevant language regarding app data collection or sharing on the Apple app promotion pages, and minimal information (beyond the general ``permission´´ statements required on the Android operating system) on just three of the Android promotion pages. In most instances, staff was unable to determine from the promotion pages whether the apps collected any data at all, let alone the type of data collected, the purpose of the collection, and who collected or obtained access to the data." (Footnotes omitted. Parentheses in original.)

This report also makes recommendations for private sector parties. "App developers should provide this information through simple and short disclosures or icons that are easy to find and understand on the small screen of a mobile device. Parents should be able to learn what information an app collects, how the information will be used, and with whom the information will be shared. App developers also should alert parents if the app connects with any social media, or allows targeted advertising to occur through the app." (Footnote omitted.)

It recommends that "Third parties that collect user information through apps also should disclose their privacy practices, whether through a link on the app promotion page, the developers' disclosures, or another easily accessible method."

It also recommends that "the app stores should provide a more consistent way for developers to display information regarding their app's data collection practices and interactive features".

However, the report does not make legislative recommendations.

This report also discloses that the FTC "currently is engaged in a project to update its existing business guidance, ``Dot Com Disclosures,´´ about online advertising disclosures. As part of this project, the agency will host a public workshop in 2012 to gain input from interested parties, including industry representatives, consumer groups, and consumer disclosure experts." (Footnote omitted.)

It adds that "One of the topics that will be addressed is mobile privacy disclosures, including how they can be short, effective, and accessible to consumers on small screens. Staff anticipates that the workshop discussion will spur further development in this area."

People and Appointments

2/16. The Senate Judiciary Committee (DJC) held an executive business meeting at which it held over consideration of the nomination of Andrew Hurwitz to be a Judge of the U.S. Court of Appeals (9thCir).

2/16. President Obama nominated Elissa Cadish to be a Judge of the U.S. District Court (DNev). See, White House news office release and release.

2/16. President Obama nominated Paul Grimm to be a Judge of the U.S. District Court (DMd). See, White House news office release and release.

2/16. President Obama nominated Mark Walkera to be a Judge of the U.S. District Court (NDFl). See, White House news office release and release.

2/16. The Senate Judiciary Committee (DJC) held an executive business meeting at which it approved by voice votes four nominations for the U.S. District Court: John Lee (Northern District of Illinois), John Tharp (Northern District of Illinois), George Russell (District of Maryland), and Kristine Baker (Eastern District of Arkansas).

More News

2/16. Massoud Habibion, aka Matt Habibion and Matt Habi, pled guilty in the U.S. District Court (DC) to conspiracy to illegally export computers from the U.S. to Iran through the United Arab Emirates (UAE). Also, Mohsen Motamedian, aka Max Motamedian and Max Ehsan, pled guilty to obstruction of justice. The Department of Justice (DOJ) stated in a release that the two are co-owners of Online Micro LLC, and that the company "purchased 1,000 computer units from Dell Inc. for approximately $500,000" for export to Iran via the UAE. The DOJ added that the defendants illegal exports were discovered when "Dell began receiving service calls concerning Dell computer units from individuals in Iran".

2/16. The Department of Justice's (DOJ) Antitrust Division published a notice in the Federal Register (FR) that announces that the PXI Systems Alliance filed a notification of a change in its membership, pursuant to the National Cooperative Research and Production Act of 1993, which pertains to limiting antitrust liability of standard setting consortia. See, FR, Vol. 77, No. 32, Thursday, February 16, 2012, at Pages 9265-9266.

2/16. The Department of Justice's (DOJ) Antitrust Division published a notice in the Federal Register (FR) that announces that the ODVA filed a notification of a change in its membership, pursuant to the National Cooperative Research and Production Act of 1993, which pertains to limiting antitrust liability of standard setting consortia. See, FR, Vol. 77, No. 32, Thursday, February 16, 2012, at Page 9266.

2/16. The Department of Justice's (DOJ) Antitrust Division published a notice in the Federal Register (FR) that announces that the Interchangeable Virtual Instruments Foundation filed a notification of a change in its membership, pursuant to the National Cooperative Research and Production Act of 1993, which pertains to limiting antitrust liability of standard setting consortia. See, FR, Vol. 77, No. 32, Thursday, February 16, 2012, at Page 9266.

Go to News from February 11-15, 2012.