FCC Denies Comcast's Petition for Stay Pending Judicial Review of Tennis Channel Order

8/9. The Federal Communications Commission (FCC) denied Comcast's Petition for Stay Pending Judicial Review [132 pages in PDF] by the U.S. Court of Appeals (DCCir) of the FCC's order regarding Comcast's distribution of the Tennis Channel.

FCC Commissioner Ajit Pai released a statement in which he wrote that "Had Comcast's petition been presented to the full Commission, I would have voted to stay the Commission’s Order for the reasons Commissioner McDowell and I set forth in our Joint Dissenting Statement." See, dissent.

On July 24, 2012, the FCC released a redacted copy [47 pages in PDF] of its Memorandum Opinion and Order (MOO) in the matter of the Tennis Channel's complaint against Comcast. This MOO affirms the conclusion of an administrative law judge (ALJ) that Comcast violated the FCC's program carriage rules, and must provide equal carriage to Tennis Channel (TC).

The MOO disclosed that the majority of the FCC Commissioners assert that the FCC has broad authority to make decisions for cable companies, and other multichannel video programming distributor (MVPD), regarding what programming to distribute, and at what tier to distribute them.

See, story titled "FCC Asserts Broad MVPD Program Carriage Authority" in TLJ Daily E-Mail Alert No. 2,412, July 26, 2012.

The FCC adopted this MOO on July 16, but did not release it to the public until July 24, 2012. This MOO is FCC 12-78 in MB Docket No. 10-204 and File No. CSR-8258-P.

FTC Sues and Settles With Google for Circumventing Apple Safari Browser's Blocking of Third Party Cookies

8/9. The United States, acting on behalf of the Federal Trade Commission (FTC), filed a complaint [26 pages in PDF] in the U.S. District Court (NDCal) against Google alleging violation of Sections 5(l) and 16 of the FTC Act in connection with Google's circumvention of the Apple Safari browser's default setting for blocking of third party cookies.

Section 5(a), which is codified at 15 U.S.C.§ 45, provides that "unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful". The FTC previously brought and settled an action against Google, based upon an alleged violation of Section 5(a), involving Google Buzz. That action concluded with a consent order. The present action does not allege that Google's circumvention itself is actionable. Nor does it allege that Google's circumvention violated its privacy policy in violation of Section 5(a). Rather, the complaint alleges that Google's circumvention, and resulting serving of ads, violated the terms of the consent order, which barred Google from misrepresenting its privacy related practices, and that this constitutes a violation of Section 5(l), which authorizes the FTC to enforce its consent orders. Section 16, which is codified at 15 U.S.C. § 56, authorizes the Attorney General to bring actions on behalf of the FTC.

The parties simultaneously filed a short proposed order [PDF] the settles this action with minimal inconvenience to Google. The proposed order contains no finding of wrongdoing, liability, violation of law, or violation of the previous FTC order. Indeed, the proposed order contains no findings or stipulation of facts regarding the events that gave rise to this action. There is a fine of $22.5 Million, which for a company with Google's market capitalization, is negligible.

This structuring of the complaint, and settlement with no finding of wrongdoing, or even findings of fact, works to the advantage of Google in related pending class action litigation.

The proposed order provides that "Until February 15, 2014, Defendant will maintain systems configured to instruct Safari-brand web browsers to expire any DoubleClick.net cookie placed by Defendant through February 15, 2012 if those systems encounter such a cookie, with the exception of the DoubleClick opt-out cookie."

February 15, 2014 is nearly two years to the day after the Wall Street Journal and Jonathan Mayer, a graduate student at Stanford University, published reports of Google's circumvention.

This settlement is particularly lenient in light of Google being a repeat violator of federal law in its advertising practices. See, story titled "Google to Pay $500 Million for Allowing Its AdWords Program to be Used to Promote Illegal Online Drug Sales" in TLJ Daily E-Mail Alert No. 2,292, August 24, 2011. See also, story titled "FTC Issues and Settles Complaint Against Google" in TLJ Daily E-Mail Alert No. 2,213, March 31, 2011.

See, full story.

Commentary: Claims that the USA/FTC Did Not Bring Against Google

8/9. This piece addresses some claims that the USA and/or Federal Trade Commission (FTC) might have brought against Google for its circumvention of of the Apple Safari browser's blocking of third party cookies, but did not.

Notably, there is no claim against Google for the underlying act of circumvention. Claims might include reliance upon the unfairness prong of the unfair or deceptive trade practices statute, interception of electronic communications in violation of the Wiretap Act, or unauthorized access to a protected computer system.

First, the USA or FTC might have pled in this complaint that Google's act of circumvention itself is an unfair trade practice under Section 5 of the FTC Act.

Section 5(a), which is codified at 15 U.S.C.§ 45, provides that "unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful". Most FTC privacy related actions (other than those involving children and the COPPA) charge violation of the deceptive prong. However, the FTC has taken action based upon the unfairness prong before.

For example, in 2005, in an action against BJ's Wholesale Club, the FTC alleged unfairness in the context of data security. The FTC alleged in its administrative complaint that BJ's "did not employ reasonable and appropriate measures to secure personal information collected at its stores", such as encryption, and that "This practice was an unfair act or practice". See also, FTC web page with hyperlinks to pleadings in that proceeding.

In 2011, in FTC v. Frostwire, the FTC alleged unfairness in the context of default privacy settings. It filed a complaint in the U.S. District Court (SDFl) that alleged, in Count III, that "FrostWire for Android mobile file-sharing application was likely to cause a significant number of consumers installing and running it to unwittingly share personal files stored on their mobile computing devices with the public", thus increasing "consumers' vulnerability to identity theft", and that this constitutes "unfair acts or practices in violation of Section 5 of the FTC Act". See also, FTC web page with hyperlinks to pleadings in that proceeding.

Also, on March 26, 2012, the FTC released a report [112 pages in PDF] titled "Protecting Consumer Privacy in a Era of Rapid Change: Recommendations for Businesses and Policy Makers" that contains statements that may imply a forthcoming increased reliance upon unfairness, rather than deception, as the basis for FTC interpretation of its statutory authority under Section 5 of the FTC Act. See also, stories titled "FTC Releases Second Report on Privacy Issues" and "Commentary: Unfair v. Deceptive Conduct" in TLJ Daily E-Mail Alert No. 2,357, March 26, 2012.

Next, in the just filed complaint against Google, the USA might have pled civil violation of the Computer Fraud and Abuse Act (CFAA), which is codified at 18 U.S.C. § 1030. It bans certain unauthorized access to a protected computer system. The USA could also have brought a criminal CFAA charge in a separate criminal action.

Or, the USA might have alleged violation of 18 U.S.C. § 2511, which bans intercepts of electronic communications.

Or, the USA might have alleged violation of 18 U.S.C. § 2701, the Stored Communications Act (SCA). This statute provides that "whoever ... intentionally accesses without authorization a facility through which an electronic communication service is provided ... or ... intentionally exceeds an authorization to access that facility ... and thereby obtains, alters, or prevents authorized access to a wire or electronic communication while it is in electronic storage in such system shall be punished".

There are private rights of action under the CFAA, Wiretap Act and SCA (but not the FTC Act).

Hence, Google is now a defendant in numerous class action lawsuits that arise out of the Safari circumvention and that allege violation of these statutes.

On June 12, 2012, a U.S. Judicial Panel on Multidistrict Litigation issued an order that centralizes eight pending putative class actions in the U.S. District Court (DDel). Google is incorporated in Delaware, and other defendants are located in nearby metropolitan areas.

Reaction to the Google Settlement

8/9. The Federal Trade Commission's (FTC) settlement with Google regarding its circumvention of the Apple Safari browser's blocking of third party cookies received a wide range of comments. Some criticized the FTC for not going far enough against Google. Some praised the FTC. Some argued that it was inappropriate for the FTC to take action against Google in this matter.

First, the five member Commission was not unanimous. Commissioner Thomas Rosch faulted the FTC for letting Google off without admitting liability.

Rosch (at right) wrote in his dissent that "There is no question in my mind that there is ``reason to believe´´ that Google is in contempt of a prior Commission order. However, I dissent from accepting this consent decree because it arguably cannot be concluded that the consent decree is in the public interest when it contains a denial of liability."

Similarly, John Simpson of Consumer Watchdog stated in a release that the fine in this case "is woefully insufficient considering that Google refused to admit any liability or wrongdoing".

Sen. John Rockefeller (D-WV) stated in a release that "I commend the FTC for using its existing consent order against Google to hold the company accountable for misleading users of the Safari Internet browser about their online privacy".

Sen. Rockefeller (at left) continued that "I will continue to push for common sense privacy legislation to give consumers the ability to choose what information companies collect about them and how they use it. In the meantime, it is imperative that the FTC continues to make sure that individual companies abide by the promises they make about consumers’ privacy. Without strong enforcement actions, companies have shown a preference for profits over consumer protection."

Rep. Joe Barton (R-TX) praised the FTC in a release. He wrote that "Google was wrong to circumvent the anti-tracking program in the Safari system. Google compounded their culpability by misleading the FTC and the public about their actions."

Rep. Ed Markey (D-MA) also commended the FTC in a release. Rep. Barton, Rep. Markey and Rep. Cliff Stearns (R-FL) wrote the FTC regarding Google's Safari circumvention back in February. See, story titled "Representatives Urge FTC to Investigate Google's Safari Circumvention" in TLJ Daily E-Mail Alert No. 2,341, February 19, 2012.

Leslie Harris, head of the Center for Democracy and Technology (CDT), stated in a release that "It's telling that the FTC included a count for violating an industry code of conduct ... This settlement sends an unambiguous message to companies that the FTC is ready and willing to aggressively monitor and enforce such codes."

Berin Szoka (head of Tech Freedom) and Geoffrey Manne (International Center for Law and Economics), came to Google's defense. They wrote in a statement that "The FTC holds Google liable for a statement in a help page that was true when made and became untrue only because Apple quietly changed how its Safari browser handles cookies."

Szoka (at right) and Manne elaborated. "Of course, companies do have a duty to ensure the accuracy of what they tell consumers about privacy as their own practices evolve. But holding them responsible for monitoring everything their rivals do that might affect their own past privacy statements will only discourage them from explaining their privacy practices in the first place. This is sadly ironic, as policymakers have spent years bemoaning the inadequacy of privacy policies and demanding companies do more to educate consumers. This is, at best, a pyrrhic victory for privacy."

They concluded that "Such arbitrary regulation-by-settlement undermines the rule of law and harms consumers by deterring privacy disclosures."

Ryan Radia of the Competitive Enterprise Institute (CEI) also criticized the FTC. He wrote in a release that "Although Google found itself in the FTC’s crosshairs this time, the agency could have just as easily targeted any number of other Web companies for similarly minor missteps."

Radia said that "While punishing businesses that defraud their customers is among government’s legitimate roles, Google’s only mistake here was failing to realize a software tweak by Apple rendered one of Google’s help pages inaccurate. There is no evidence that any users were ‘taken in’ or harmed by this inaccurate help page, nor does the FTC allege that Google knew or should've known that its help page was wrong."

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8/9. The U.S. Patent and Trademark Office (USPTO) published a notice in the Federal Register (FR) that announces, describes, recites, and sets the effective date (August 9, 2012) for, it rules changes that incorporate classification changes adopted by the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks. See, FR, Federal Register, Vol. 77, No. 154, August 9, 2012, at Pages 47528-47530.

8/9. Quynh Trong Nguyen pled guilty in the U.S. District Court (EDVa) to criminal copyright infringement in connection with his sale of counterfeit and altered computer software, including Adobe Acrobat, Microsoft Office, and Autodesk AutoCAD. The Office of the U.S. Attorney for the Eastern District of Virginia stated in a release that he "sold more than $2.3 million in copyright-infringing computer software ... through several Internet websites operated from his home in Annandale, Virginia".

Senate JEC Recommends More IP Enforcement by DHS and Quicker USITC § 337 Decisions

8/8. The U.S. Congress's Joint Economic Committee released a staff report [4 pages in PDF] titled "The Impact of Intellectual Property Theft on the Economy". It finds that "IP theft has increased in recent years" and that this has harmed the U.S. economy.

It focuses on foreign based intellectual property (IP) infringement -- particularly in the People's Republic of China (PRC), enforcement efforts by Department of Homeland Security's (DHS) Customs and Border Protection (CBP), and private Section 337 actions before the U.S. International Trade Commission (USITC).

It recommends that "Strengthening IP enforcement and providing more timely resolution of foreign infringement complaints can help combat IP theft".

Sen. Bob Casey (D-PA) (at right), the Chairman of the JEC, stated in a release that "Counterfeiting and piracy have become increasingly widespread, especially from China, hampering innovation and competitiveness and costing America jobs at a time when far too many are looking for work".

This report states that "Innovation drives economic growth and job creation. Protection of intellectual property (IP), through patents, trademarks and copyrights, is critical to ensuring that firms pursue innovation. Counterfeiting and piracy erode the returns on innovation and slow economic growth because of the negative impacts on companies, consumers and governments."

"IP infringement harms companies through lost revenue, the costs of IP protection, damage to brand, and decreased incentives to innovate because of potential theft. Consumers are harmed when they purchase counterfeit goods of lower quality, some of which, such as counterfeit medicines, may pose health or safety risks. Governments lose tax revenue and bear enforcement costs. Decreased incentives to innovate resulting from IP infringement reduce economic growth, weaken the nation’s competitiveness, and decrease job creation." (Footnote omitted from this and other quotations.)

The report states that the PRC "accounts for the vast majority of pirated goods seized at the U.S. border." Specifically, the DHS/CBP data shows that "Goods from China accounted for more than three-fourths of the value of counterfeit products seized in the United States from 2004-2009."

The report states, regarding actions brought in the USITC pursuant to 19 U.S.C. § 1337, that "Resolution of foreign infringement complaints often take substantial time to resolve" and "some firms are forced out of business before the infringement investigation is completed".

It also states that "Small businesses are unlikely to have the financial resources to protect themselves from IP theft or pursue enforcement actions when facing losses. Data on investigations initiated and completed by the U.S. ITC show that while small businesses represent 79.0 percent of all businesses in the U.S., they comprise only 10.5 percent of firms filing complaints regarding intellectual property infringement."

The MPAA praised the JEC report in a release.

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8/8. The Department of the Treasury's (DOT) Treasury Inspector General for Tax Administration (TIGTA) released a report [51 pages in PDF] titled "Substantial Changes Are Needed to the Individual Taxpayer Identification Number Program to Detect Fraudulent Applications". The Internal Revenue Service (IRS) assigns Individual Taxpayer Identification Numbers (ITIN) to persons not eligible for Social Security Numbers (SSN), such as illegal aliens. This TIGTA report found that IRS management "is interested only in the volume of applications that can be processed, regardless of whether they are fraudulent", thus resulting in fraudulently obtained ITINs, "the creation of fictitious identities", fraudulent tax returns, and the federal government being defrauded of "billions of dollars". Moreover, the report found that the IRS "Created an environment which discourages tax examiners responsible for reviewing ITIN applications from identifying questionable applications" and "Eliminated successful processes used to identify questionable ITIN application fraud patterns and schemes". The report describes a scam based upon the Additional Child Tax Credit. This is a refundable credit that is not limited to the amount of an individual's tax liability. It can result in a tax refund that is larger than federal income tax withholding for that year. Indeed, one can receive a refund even if no income tax was withheld. This report is dated July 16, 2012. The TIGTA did not release it to the public until August 8, 2012.

8/8. The National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) released its draft SP 800-152 [26 pages in PDF] titled "A Profile for U. S. Federal Cryptographic Key Management Systems (CKMS)". The dadline to submit comments is October 10, 2012.

Microsoft Reaffirms Its Commitment to Do Not Track By Default

8/7. Brendon Lynch, Chief Privacy Officer of Microsoft, wrote a short piece titled "Do Not Track in the Windows 8 Setup Experience". He confirms Microsoft's commitment to do not track by default.

Microsoft announced in May that do not track (DNT) will be the default setting for Internet Explorer 10. See, story titled "Microsoft's Next Brower Will Have Do Not Track on by Default" in TLJ Daily E-Mail Alert No. 2,389, June 4, 2012.

Lynch wrote in his August 7 piece that "In the Windows 8 set-up experience, customers will be asked to choose between two ways of configuring a number of settings: ``Express Settings´´ or ``Customize.´´ ... DNT fits naturally into this process. Customers will receive prominent notice that their selection of Express Settings turns DNT ``on.´´  In addition, by using the Customize approach, users will be able to independently turn ``on´´ and ``off´´ a number of settings, including the setting for the DNT signal."

The Federal Trade Commission (FTC) released a report [112 pages in PDF] on March 26, 2012, titled "Protecting Consumer Privacy in a Era of Rapid Change: Recommendations for Businesses and Policy Makers". It states that while companies that make browsers offer "a mechanism to limit online tracking", "consumers are largely unaware of their ability to limit or block online tracking through their browsers, in part because these options may be difficult to find".

The FTC report states that FTC "staff supports a more uniform and comprehensive consumer choice mechanism for online behavioral advertising, sometimes referred to as ``Do Not Track.´´ Such a universal mechanism could be accomplished by legislation or potentially through robust, enforceable self-regulation. The most practical method of providing uniform choice for online behavioral advertising would likely involve placing a setting similar to a persistent cookie on a consumer's browser and conveying that setting to sites that the browser visits, to signal whether or not the consumer wants to be tracked or receive targeted advertisements. To be effective, there must be an enforceable requirement that sites honor those choices."

The World Wide Web Consortium (W3C) has a Tracking Protection Working Group that is working on a standard regarding what DNT means, and what web sites are expected to do, or not expected to do, in response to a user's DNT expression. See, W3C's March 13, 2012 draft document titled "Tracking Preference Expression".

A user gets a web page by using a browser on a computer that sends a request in hypertext transfer protocol (HTTP) via the internet. The server for that web page sends back the code that the user's browser renders as a viewable web page. A concept behind implementing a DNT regime is that a user's browser would send a HTTP header to servers with every request for web pages that indicates that the user does not wish to be tracked. DNT works only if the contacted web servers and advertisers honor these requests.

Recent history has shown that getting web sites and advertisers to honor consumer choices may prove difficult. See, for example, story titled "FTC Sues and Settles With Google for Circumventing Apple Safari Browser's Blocking of Third Party Cookies" in TLJ Daily E-Mail Alert No. 2,425, August 9, 2012.

GAO Reports on Mobile Phone RF Emissions

8/7. The Government Accountability Office (GAO) released a report [46 pages in PDF] titled "Telecommunications: Exposure and Testing Requirements for Mobile Phones Should Be Reassessed".

The report states that the Federal Communications Commission's (FCC) "current RF energy exposure limit for mobile phones, established in 1996, may not reflect the latest evidence on the thermal effects of RF energy exposure and may impose additional costs on manufacturers and limitations on mobile phone design."

It continues that the "FCC regulates RF energy emitted from mobile phones and relies on federal health and safety agencies to help determine the appropriate RF energy exposure limit. However, FCC has not formally asked FDA or EPA for their assessment of the limit since 1996, during which time there have been significant improvements in RF energy research and therefore a better understanding of the thermal effects of RF energy exposure."

"This evidence has led to a new RF energy exposure limit recommendation from international organizations. Additionally, maintaining the current U.S. limit may result in additional costs for manufacturers and impact phone design in a way that could limit performance and functionality. Reassessing its current RF energy exposure limit would ensure that FCC’s limit protects the public from exposure to RF energy while allowing industry to provide telecommunications services in the most efficient and practical manner possible."

This report recommends that the FCC "reassess the current RF energy exposure limit, including its effects on human health, the costs and benefits associated with keeping the current limit, and the opinions of relevant health and safety agencies, and change the limit if determined appropriate".

The report is dated July 24, but it was not released to the public until August 7, 2012. It was prepared for House Commerce Committee (HCC) Democrats.

People and Appointments

8/7. Rep. John Conyers (D_MI) won the Democratic primary for the Michigan 13th District. His current district is the 14th. As a result of redistricting, much of his old district is a part of the new district. However, the new 13th District also includes suburban areas not in his old district. He is the ranking Democrat on the House Judiciary Committee (HJC).

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8/7. The Copyright Royalty Board (CRB) published a notice in the Federal Register (FR) that requests comments regarding the Alliance of Artists and Recording Companies' (AARC) motion for partial distribution in connection with 2011 DART Sound Recordings Fund royalties. The deadline to submit comments to the CRB is September 6, 2012. See, FR, Vol. 77, No. 152, August 7, 2012, at Pages 47120-47121.

10th Circuit Denies Qwest's Challenge to FCC's Denial of Forbearance

8/6. The U.S. Court of Appeals (10thCir) issued its opinion [43 pages in PDF] in Qwest v. FCC, denying Qwest's petition for review of a Federal Communications Commission (FCC) order denying a request for forbearance under 47 U.S.C. § 160.

The order under review is the FCC's Memorandum Opinion and Order (MOO) [67 pages in PDF], adopted on June 15, 2010, and released on June 22, 2010. It is FCC 10-113 in WC Docket No. 09-135.

The FCC denied Qwest's petition for forbearance from applying certain dominant carrier regulations imposed on incumbent local exchange carriers (ILECs) and certain statutory requirements that require ILECs to unbundle network elements. Qwest's petition pertains to mass market retail services in the Phoenix MSA.

The FCC's denial was based upon a market power analysis adopted by this MOO. Moreover, this analysis included the questionable conclusion that wireless service providers were not in competition with Qwest's wireline voice services.

See, full story.

People and Appointments

8/6. Lisa Robinson was named Director, Collections and Income Tracking, of the Harry Fox Agency (HFA). See, HFA release.

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8/6. The U.S. Patent and Trademark Office (USPTO) published a notice in the Federal Register (FR) that announced, describes, recites, and sets the effective date for, new rules, written pursuant to Section 6 of the Leahy Smith America Invents Act, regarding ex parte reexamination, inter partes review, and post grant review. These and other AIA rules take effect on September 16, 2012. See, FR, Vol. 77, No. 151, August 6, 2012, at Pages 46615-46631.

Go to News from August 1-5, 2012.