TLJ News from August 26-31, 2012

Online Prostitution Ringleaders Sentenced

8/31. The U.S. District Court (EDVa) sentenced Otasowie Christopher Asuen to serve 33 months in prison. On June 6, 2012, he pled guilty to money laundering and conspiring to travel and use interstate facilities in aid of a racketeering enterprise. Although, the underlying activity was running a online prostitution business.

The Office of the U.S. Attorney for the Eastern District of Virginia stated in a release that Asuen "owned an online prostitution business -- first named Prime DC and later DMV INDYS -- that used Craigslist and Backpage to recruit prostitutes from throughout the United States to work in the Washington, D.C., area. He paid the travel and hotel costs and received 40 percent of the women’s hourly rate; the women would keep 60 percent. Once the prostitute arrived at the pre-arranged hotel, he or an associate would take their photograph and post it -- along with details about the prostitutes, the services they would perform, and their rate -- on the business’s website to solicit clients."

In a related online prostitution case, on May 16, Kuraye Tamunoibi Akuiyibo pled guilty to the same charges, plus violent crime in aid of racketeering. On August 2 the District Court sentenced him to serve 51 months in prison. See, USAO's August 2 release.

Republican Platform Addresses Tech Related Issues

8/31. The Republican National Committee (RNC) released the 2012 Republican Party platform [62 pages in PDF]. It addresses numerous technology related topics, including trade related intellectual property issues, violation of trade agreements by the People's Republic of China, negotiation of new trade agreements, cyber security, spectrum auctions and inventory, FCC regulation generally, and proposals internet regulation to be considered at the December meeting of the World Conference on International Communications. See, full story.

FAA Opens Proceeding on Use of Personal Electronic Devices on Aircraft

8/31. The Federal Aviation Administration (FAA) announced in a release on August 27, 2012, that it will study the use of personal electronic devices (PEDs) on commercial aircraft.

The FAA stated that it "is forming a government-industry group to study the current PED policies and procedures aircraft operators use to determine when these devices can be used safely during flight. Current FAA regulations require an aircraft operator to determine that radio frequency interference from PEDs are not a flight safety risk before the operator authorizes them for use during certain phases of flight."

Also, on August 31, the FAA published a notice in the Federal Register (FR) that requests public comments. The deadline to submit comments is October 30, 2012.

This notice states that "We are reviewing the policies, guidance, and procedures that establish the methods and criteria aircraft operators use to determine if they can allow PED usage during flight. The FAA has long recognized that PEDs have the potential for causing interference with aircraft navigation or communication systems."

It continues that "Smart phones, personal computers, and wireless technology have become ingrained in peoples' day-to-day lives. Passengers not only use these devices to remain connected to their work, family, and friends, but also to read books, play games, and accomplish many of their day-to-day tasks. This has naturally led to the passengers' desire to use PEDs from the time they board an aircraft until they exit the aircraft at their destination. In some cases, a transmitting radio is embedded in a PED so that the operation of the transmitter is not apparent to the user. Many of these devices incorporate transmitters such as Bluetooth, Wi-Fi, and cellular phone modems, which may operate without specific actions from the passenger."

It also states that "Under FAA regulation, the aircraft operator is responsible for determining which PEDs may be used by the passengers and during which phase of flight this utilization may occur. The aircraft operator is best suited to make the determination of which PEDs would not cause interference with the navigation or communication system on its aircraft. The operators' PED policy determines what types of devices may be used on board their aircraft and during which phase(s) of flight. The responsibility for enforcing an aircraft operator's PED policy typically falls on the cabin crew. On occasion, enforcement of a commercial airline's PED policy results in a conflict between a flight attendant and a passenger. Noncompliance with crewmember safety instructions on the use of PEDs has resulted in passengers being removed from an aircraft and, in some cases, has caused in-flight diversions."

Doug Johnson of the Consumer Electronics Association (CEA) stated in a release that "We applaud the FAA's announcement regarding the formation of a government-industry group to study the current policies and procedures aircraft operators use to determine when portable electronic devices (PEDs) can be used safely during flight.  E-readers, smartphones and tablets, for example, are commonplace devices for entertainment and business needs during air travel."

See, FR, Vol. 77, No. 170, August 31, 2012, at Pages 53159-53163.

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Deborah Tate8/31. The Minority Media and Telecom Conference (MMTC) published a short piece titled "Facebook Should Not Be for Kids". The author is Deborah Tate (at right), a former Federal Communications Commission (FCC) Commissioner. She wrote that "A lot of people are wondering why Facebook would be contemplating adding children under 13 as users. In fact, as we all know millions of children are already participating in this social media platform even though there has been a policy against it." She added that "As more examples of personal data are made public and more kids face online issues such as cyberbullying, geo tracking and stalking, teens and their parents are becoming increasingly concerned. And they should be. There are very real consequences to sharing highly personal data on Facebook." She argued that "Facebook is not and should not be for kids".

Representatives Write DOJ and DHS Regarding Domain Name Seizure Policies

8/30. Rep. Zoe Lofgren (D-CA), Rep. Jared Polis (D-CO) and Rep. Jason Chaffetz (R-UT) sent a letter to the Attorney General Eric Holder, head of the Department of Justice (DHS), and Secretary Janet Napolitano, head of the Department of Homeland Security (DHS), regarding domain name seizures begun in November of 2010 under the title of "Operation In Our Sites".

See, story titled "DOJ and DHS Seize Domain Names of Web Sites Engaged in Infringing Sales" in TLJ Daily E-Mail Alert No. 2,167, December 3, 2010. See also, the DHS's web page titled "Operation In Our Sites".

First, the three Representatives do not concede that the DOJ and DHS have "legal authority to seize these domains under these circumstances".

Second, they wrote that "if a website's domain is seized, it needs to be given meaningful due process that comports with the U.S. Constitution and U.S. law."

Third, they wrote that the program begun in November of 2010 "has resulted in the seizure of domains without sufficient due process and transparency".

They also propounded numerous interrogatories. For example, "What is the process for determining which sites to target?", and "Do government agents consider whether a site complies with the DMCA safe harbors?"

They also ask, "How many sites have attempted to retrieve their domains, via any process, judicial or informal, and what is the status of those cases?"

They also ask, "What specific steps has the DOJ and ICE taken to ensure that domain name seizure cases proceed without unnecessary delays, and that website owners seeking to restore their domain names have swift access to the officials and documents necessary to resolve their cases?"

See also, related TLJ stories:

TPI Essay Addresses FCC's Proposed USF Tax on Broadband

8/30. The Technology Policy Institute (TPI) published a short essay titled "Is a Broadband Tax a Good Idea". The author is the TPI's Scott Wallsten.

This pertains to the Federal Communications Commission's (FCC) system of taxation to fund its waste, fraud and abuse plagued universal service subsidy programs. The FCC asked in its April Further Notice of Proposed Rulemaking (FNPRM) [182 pages in PDF], among other things, whether it should tax broadband internet access service (BIAS), and if so, how. See, FNPRM at paragraphs 65-72. The FCC adopted this FNPRM on April 27, and released it on April 30, 2012. It is FCC 12-46 in WC Docket No. 06-122 and GN Docket No. 09-51.

See also, related story in this issue titled "Summary of Comments Submitted to the FCC Regarding Proposed USF Tax on Broadband".

(The FCC also asks if it should also tax one way VOIP service providers and/or text messaging services.)

Wallsten offers an economic analysis of the proposal to tax BIAS on two criteria: efficiency and equity.

His efficiency analysis is based upon the classical theory of price elasticity of demand (PED). Wallsten argues that a tax on broadband would be efficient because of the low PED.

Wallsten's equity argument pertains to "how much people of different income levels pay". He argues that a tax on broadband would not be equitable.

He argues that "a broadband tax may actually be efficient relative to some other options". Some critics of the proposal argued in comments to the FCC that taxing broadband would tend to decrease consumption of it, and this runs contrary to the FCC's goal of promoting broadband consumption. See especially, comments submitted by BIAS providers and the NCTA.

Wallsten argues, however, that taxing it would not have much effect. He wrote that "for the typical household, fixed (and, increasingly, mobile) broadband has likely become quite inelastic." (Parentheses in original.)

He cites survey data that shows most consumers would be willing to pay much more for their broadband service. He then argues that "While no recent study has specifically evaluated price elasticity, the large gap between prices and willingness to pay suggests that a tax of any size likely to be considered might not be hugely inefficient overall."

PED is a concept addressed in price theory and microeconomics texts. PED is a measure of the responsiveness of the total demand for something to a change in its price. A tax, such as a FCC mandatory universal service contribution, increases the price. Demand is inelastic when a change in the price has little effect upon demand. When conceptualized in terms of supply and demand curves in Cartesian coordinates, the downward sloping demand curve is steep. Demand is elastic when a change in the price has great effect upon demand; the demand curve is flatter.

The FCC's FNPRM acknowledged that some have argued that taxing BIAS "could discourage broadband adoption". The FCC asked for "empirical data ... regarding the potential impact of assessing broadband Internet access services on consumer adoption or usage of services. Would assessing broadband Internet access service in the near term undermine the goals of universal service?"

The FCC received many comments that merely stated that taxation could affect demand, without further data or economic analysis. But then, the FCC is a agency that is run by lawyers, and that lacks in house economic analysis capabilities.

Wallsten next argued that the proposed tax on broadband would be inequitable. If it were a connection based tax, then it "is the same for everyone regardless of income, making the tax regressive. The tax becomes even more regressive because much of the payments go to rural residents regardless of their income while everyone pays regardless of their income, meaning the tax includes a transfer from the urban poor to the rural rich."

If the tax varied with the tier of service, this "may lead to other efficiency problems if it reduces demand for higher tiers of service".

Finally, Wallsten argues that "The real solution is to dramatically reduce spending on ineffective universal service programs in order to minimize the amount of money needed to fund them."

Summary of Comments Submitted to the FCC Regarding Proposed USF Tax on Broadband

8/30. This article summarizes some of the comments submitted in response to the Federal Communications Commission's (FCC) April Further Notice of Proposed Rulemaking (FNPRM) [182 pages in PDF] regarding its universal service fund (USF) tax and subsidy programs.

This FNPRM covered many issues related to the FCC's USF tax regime. This article focuses on the FCC's request for comments on whether it should also tax broadband internet access service (BIAS).

The deadline for initial comments was July 9. The deadline for reply comments was August 6. See, notice in the Federal Register, Vol. 77, No. 110, Thursday, June 7, 2012, at Pages 33896-33944.

The US Telecom wrote in its comments that if the FCC were to tax broadband service, then "it must seriously examine including more participants in the broadband ecosystem", such as "edge providers whose business plans ultimately depend on ubiquitous broadband" and horizontal network layer participants.

Google submitted comments in which it argued for shifting to a connections based system. It wrote that "facilities-based providers of access connections could be required to contribute based on the number of access connections in service". Google opposes taxing "services used over a network", or over the top applications. See also, reply comments.

Similarly, Microsoft, owner of Skype, submitted comments in which it argued that the FCC should not tax "over-the-top" or "network-independent" applications, such as VOIP, e-mail, or instant messaging.

Microsoft also noted that "many such over-the-top communications applications are offered for free, thus further complicating any revenues-based approach". It also stated that "it is highly unlikely that any over-the-top communications provider today has the billing and operational backend to easily calculate, assess, remit" universal services taxes. Finally, it pointed about that taxing over the top applications would be inequitable, because it would reach certain applications, such as VOIP that connects to the PSTN, but not others, such as PC to PC VOIP.

Microsoft also argued at length against taxing one way VOIP and text messaging services. And, Microsoft wants the FCC to shift from a revenue based system to a connections based system. See also, reply comments.

The Information Technology Industry Council (ITIC) submitted comments in which it argued for "a system that assesses a flat fee on end user broadband connections". It wrote that some services are free but ad supported or bundled with other hardware or software products, while others are fee supported. It wrote that a revenue based system would discriminate against fee based services. In contrast, taxing free services that are bundled with other products, or are ad supported, would be "burdensome, difficult, and costly for companies to maintain compliance".

Verizon wrote in its comments that taxing broadband would increase revenues, but would "run counter to many of the Commission's policy goals, including specifically its goals of achieving increased broadband adoption and promoting broadband deployment". Moreover, it would be difficult to draw a line between BIAS and "the applications and services that rely on broadband". See also, reply comment.

The National Telecommunications and Cable Association (NCTA) wrote in its comments that the FCC "must take care that its efforts to reform the contribution system do not have unintended consequences, such as discouraging consumers from adopting broadband services".

It argued that "assessing broadband could inadvertently skew competition in the broadband marketplace. For example, a regime that imposed a larger contribution burden on faster tiers of residential service (e.g., through a revenue-based or capacity-based assessment) would be of great concern. Cable operators have invested billions of dollars upgrading their networks to DOCSIS 3.0 technology in order to provide consumers with increasing broadband speeds and capabilities. A regime that imposes a greater contribution burden on services provided by companies that invest in broadband upgrades than it does on services provided by competitors that choose not to upgrade their networks creates all the wrong incentives for investment."

It also stated that "we would be concerned about any regime that unduly affects broadband adoption. As noted above, from a consumer perspective, the universal service contribution has the same effect as a tax. Generally speaking, governments try to avoid imposing taxes on products or services that they want to encourage consumers to use (and tax those products or services that they would like to discourage). A new contribution regime could discourage people from buying broadband service, or upgrading to a faster tier of service, which would undermine or conflict with the Commission's stated policy goal of reducing consumers' costs of buying or upgrading broadband service." (Parentheses in original.) See also, reply comments.

Time Warner Cable wrote in its comments that imposing "contribution mandates" on BIAS "would risk undermining the Commission's concerted efforts to promote increased broadband adoption and further infrastructure investment".

EarthLink, Integra Telecom, and tw telecom submitted joint comments in which they argued that the FCC "must impose contribution obligations on providers of broadband Internet access service", noting that the FCC already subsidizes BIAS.

And, some comments pointed that 17 U.S.C. § 254 only authorizes the FCC to tax a "telecommunications carrier" that provides "telecommunications service", while the FCC proposes to tax non-taxable information services. Others argued that Section 254 does authorize taxing BIAS.

See also, AT&T comments and reply comments, Sprint Nextel comments, T-Mobile USA comments, Comcast comments and reply comments, and CTIA comments and reply comments.

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8/30. The Federal Communications Commission (FCC) adopted and released a Notice of Apparent Liability for Forfeiture [11 pages in PDF] that fines LDC Telecommunications, Inc. $1,108,000 for slamming consumers (switching consumers' long distance service provider with their authorization). This NAL is FCC 12-97. FCC Commissioner Ajit Pai wrote that given the egregious nature of LDC's conduct, the fine is too small.

8/30. The Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA) announced in a release the NTIA head Lawrence Strickling and Federal Communications Commission (FCC) Chairman Julius Genachowski met on August 29, 2012. They are required by statute to hold a biannual meeting on spectrum issues. This release states that they discussed "implementation of the spectrum-related provisions of the Middle Class Tax Relief and Job Creation Act of 2012, as well as the President’s initiative to make available 500 MHz of spectrum for wireless broadband and the recent report from the President's Council of Advisors on Science and Technology. They agreed that efforts to identify spectrum must include all available options, including both clearing spectrum and sharing spectrum where appropriate. They specifically discussed ongoing and planned activities to make additional spectrum available for wireless broadband including: industry/government collaboration and testing to determine the viability of sharing federal spectrum in the 1695-1710 MHz and 1755-1850 MHz bands with commercial wireless services; a planned FCC proposal to free up a substantial amount of spectrum through TV incentive auctions; an FCC proposal planned for later this year regarding the use of 100 megahertz of spectrum for small cells that NTIA identified at 3.5 GHz as part of its Fast Track evaluation; a pending FCC proposal to repurpose Mobile Satellite Service (MSS) S-band spectrum for AWS-4; a pending proposal to revise the rules for the Wireless Communications Service at 2.3 GHz to accommodate mobile broadband; and NTIA studies of additional spectrum for unlicensed devices in the 5 GHz band."

8/30. The Office of the U.S. Attorney for the Northern District of Illinois charged David Tresch, a former Chief Information Officer of the law firm of Mayer Brown, with one count of mail fraud in connection with his alleged defrauding of the firm. The USAO stated in a release he defrauded "the firm of at least $850,000 over the last year as a result of an allegedly fraudulent billing scheme with a vendor company". The USAO alleged that he "approved payments to a vendor for work that had not been performed, and in turn, pocketed hundreds of thousands of dollars from that vendor". The USAO added that "The firm reported his alleged criminal activity to federal authorities and cooperated in the ensuing investigation." See also, complaint filed with the U.S. District Court (NDIll).

8/30. The American Antitrust Institute (AAI) released a paper [28 pages in PDF] titled "Music Industry Consolidation: the Likely Anticompetitive Effect of the Universal/EMI Merger". The author is the AAI's Flavia Fortes. She argues that this is a four to three merger that would "negatively impact innovation incentives in an industry that is currently being shaped by nascent platform competition. There is a substantial risk that, post-merger, Universal would have the ability and incentive to leverage its extensive music catalogue to restrain entry of new digital service providers, likely leading to less innovation and fewer choices for digital music listeners". She urges the Federal Trade Commission (FTC) to block the merger.

8/30. The NIST CSD published a notice in the Federal Register (FR) requesting comments regarding the second draft FIPS 140-3, titled "Security Requirements for Cryptographic Modules". The deadline to submit comments is October 1, 2012. See,  FR, Vol. 77, No. 169, August 30, 2012, at Pages 52692-52693.

PRC Trade Secrets Thief Sentenced to Four Years in Prison

8/29. U.S. District Court (NDIll) sentenced Hanjuan Jin, a former Motorola software engineer who stole trade secrets, to serve four years in prison.

The grand jury returned an indictment in April of 2008 charging her will three counts of violation of 18 U.S.C. § 1832(a)(3) in connection with her theft of Motorola (now Motorola Solutions) trade secrets. See, story titled "Grand Jury Indicts Software Engineer for Theft of Communications Software Trade Secrets" in TLJ Daily E-Mail Alert No. 1,740, April 1, 2008.

Section 1823(a)(3) provides in part that "Whoever, with intent to convert a trade secret, that is related to or included in a product that is produced for or placed in interstate or foreign commerce, to the economic benefit of anyone other than the owner thereof, and intending or knowing that the offense will, injure any owner of that trade secret, knowingly ... receives, buys, or possesses such information, knowing the same to have been stolen or appropriated, obtained, or converted without authorization ... shall ... be fined under this title or imprisoned not more than 10 years, or both".

On February 8, 2012, the District Court found her guilty of theft of trade secrets following a bench trial conducted by Judge Ruben Castillo. See, story titled "More Tech Crimes" in TLJ Daily E-Mail Alert No. 2,342, February 20, 2012.

The Office of the U.S. Attorney for the Northern District of Illinois elaborated in a release that she worked for Motorola from 1998 through February of 2006, when she took medical leave. She then worked in the People's Republic of China (PRC) for Sun Kaisens, a Chinese telecommunications company that developed products for the Chinese military, without informing Motorola. She then returned to Motorola, for two days, during which time she accessed technical documents belonging to Motorola on its secure internal computer network, and then attempted to flea to the PRC with Motorola documents.

Judge Castillo wrote in his February opinion that she conducted a "purposeful raid to steal technology".

Acting USA Gary Shapiro stated in the release that "We will do everything we can to guard our economic and national security from the theft of American trade secrets, and this case shows that we can work with victim corporations to protect the trade secrets involved".

This case is U.S.A. v. Huanjan Jin, U.S. District Court for the Northern District of Illinois, Eastern Division, D.C. No. 08 CR 192.

FCC Issues Order on Reconsideration of STA Order

8/29. The Federal Communications Commission (FCC) adopted and released an Order on Reconsideration [3 pages in PDF] (OR) regarding its July 31, 2012 Order [23 pages in PDF] regarding Special Temporary Authority (STA) to operate public safety broadband networks confined to the existing public safety broadband spectrum (763-768MHz/793-798 MHz).

On reconsideration, the FCC has decided to "entertain STA applications filed pursuant to the STA Order that contemplate  ... operations that span the existing public safety broadband spectrum and the 700 MHz D Block (758-763 MHz/788-793 MHz)".

The spectrum bill enacted in February of this year (which was part of the "Middle Class Tax Relief and Job Creation Act of 2012") requires the creation of an interoperable public safety broadband network using the existing public safety broadband spectrum (763-769 MHz/793-799 MHz) and the D Block (758-763 MHz/788-793 MHz). See, stories titled "Obama Signs Spectrum Bill into Law" in TLJ Daily E-Mail Alert No. 2,345, February 23, 2012, "House and Senate Negotiators Reach Agreement on Spectrum Legislation", "Summary of Spectrum Bill", and "Reaction to Spectrum Bill" in TLJ Daily E-Mail Alert No. 2,339, February 17, 2012, and story titled "House and Senate Pass Spectrum Bill" in TLJ Daily E-Mail Alert No. 2,340, February 18, 2012.

This OR is FCC 12-96 in PS Docket No. 12-94, WT Docket No. 06-150, PS Docket No. 06-229. See also, story titled "FCC Releases Public Safety Network Order" in TLJ Daily E-Mail Alert No. 2,417, July 31, 2012.

Internet Technical Standards Bodies Oppose Internet Regulation

8/29. The IEEE, Internet Architecture Board (IAB), Internet Engineering Task Force (IETF), Internet Society, and World Wide Web Consortium (W3C) released a statement in opposition to proposals that the International Telecommunications Union (ITU) institute an internet regulation regime at the World Conference on International Telecommunications (WCIT) in December in Dubai.

These five internet technical standardization bodies wrote, in full, as follows:

The five groups also published a web site titled "OpenStand".

The Center for Democracy and Technology (CDT) praised this statement. See, release and release.

DOJ Dismisses Rojadirecta Domain Names Case

8/29. The Department of Justice (DOJ) filed a voluntary dismissal with the U.S. District Court (SDNY) of its in rem complaint regarding two domain names owned and used by Puerto 80 Projects, S.L.U.

This will allow the return of seized domain names.

On February 1, 2011, Immigration and Customs Enforcement (ICE) agents enforced a warrant signed by a federal Magistrate Judge authorizing the seizure of rojadirecta.com and rojadirecta.org, based upon the Court's finding of probable cause to believe that the domain names were subject to forfeiture because they had been used to commit criminal violations of copyright law.

Puerto 80 contested the seizures. Also, several US based interest groups made this seizure a cause celebre in their opposition to U.S. government policies regarding seizure of domain names to enforce intellectual property rights.

The Electronic Frontier Foundation (EFF), Public Knowledge (PK) and Center for Democracy and Technology (CDT), filed an amicus curiae brief with the District Court in this case.

See also, August 4, 2011, order of the District Court denying Puerto 80's petition for the return of the seized domain names. And see, amicus curiae brief filed with the U.S. Court of Appeals (2ndCir) by the EFF, PK and CDT.

Sherwin Siy of the PK stated in a release on August 29 that "this case shows that the procedures for seizing domain names are flawed. It is far too easy for the government to seize domain names and hold them for an extended period even when it is unable to make a sustainable case of infringement."

He added that "The constant expansion of copyright enforcement laws has given us a system where website owners are effectively treated as guilty until proven innocent. These sorts of abuses are likely to continue until there are adequate safeguards to assure accountability."

David Sohn of the CDT stated in a release that "the seizure of Rojadirecta's domain names was an unconstitutional prior restraint on speech. Giving back the domain names now can't change the fact that significant impairment to speech rights has already occurred. Even worse, the Government's decision to walk away from the case means that there won't be any appellate ruling on the important legal issues at stake. So if law enforcement engages in a similar seizure tomorrow -- perhaps against an entity that lacks the resources to contest the seizure in court -- there's nothing to stop this saga from repeating itself all over again."

Republicans Address Free Trade Agreements at Convention

8/29. Sen. Rob Portman (R-OH) and former Secretary of State Condi Rice gave speeches at the Republican National Convention in which they discussed free trade, free trade agreements, and the People's Republic of China (PRC).

Rice said in her speech that "We must work for an open global economy and pursue free and fair trade -- to grow our exports and our influence abroad."

She said that "In the last years, the United States has ratified three trade agreements, all negotiated in the Bush Administration. If you are concerned about China's rise -- consider this fact -- China has signed 15 Free Trade Agreements and is negotiating 20 more. Sadly we are abandoning the playing field of free trade -- and it will come back to haunt us."

Those three US FTAs are with Korea, Columbia and Panama. Negotiations were completed late during the Bush administration. However, the Democratic controlled House and Senate during the 110th and 111th Congresses did not approve them. Also, the Obama administration delayed. Finally, the House and Senate approved implementing legislation during the 112th Congress in 2011.

While the Obama administration has not concluded, or even initiated, any bilateral FTAs, it has pursued multilateral trade agreements. It concluded the Anti-Counterfeiting Trade Agreement (ACTA), and is currently negotiating the Trans-Pacific Partnership Agreement (TPPA).

The Clinton and Bush administrations were more active in concluding bilateral FTAs. However, the US currently has only 19 bilateral FTAs in effect. Moreover, many of these are with small nations, with small economies, such as Jordan, Honduras, Guatemala, Dominican Republic, Costa Rica, and El Salvador.

Also, the US has Trade and Investment Framework Agreements (TIFA) with a larger number of nations. The Office of the U.S. Trade Representative (OUSTR) announced in a release on August 31 that the "United States and Cambodia have agreed to begin exploratory discussions on a potential bilateral investment treaty".

Nevertheless, the US has neither a FTA nor TIFA with such key trading partners as Japan, Taiwan, PRC, India, or Brazil.

There are people in the US and other countries who advocate such agreements. See for example, story titled "Panel Discusses Possible FTA with Taiwan" in TLJ Daily E-Mail Alert No. 1,418, July 26, 2006.

Also, while Rice discussed the disparate pursuit of FTAs by the US and PRC, she said nothing about the European Union's, Japan's or other nations' pursuit of FTAs. For example, last month the EU Trade Commissioner Karel De Gucht gave a speech regarding opening FTA negotiation with Japan.

Sen. Robert PortmanSen. Portman (at right) was briefly the U.S. Trade Representative during the Bush administration. He said in his convention speech that "While this administration has been dragging its feet, other countries have been busy negotiating hundreds of new trade agreements to benefit their workers and their farmers, taking away our opportunities."

He continued that "President Obama has been so driven to advance his big government ideology that he has abandoned the daily economic work that a government must do to open markets, restore business confidence and create the climate for job growth."

"Take trade with China. China manipulates its currency giving it an unfair trade advantage. So why doesn’t the president do something about it? I'll tell you one reason -- President Obama could not run up his record trillion dollar deficits if the Chinese did not buy our bonds to finance them."

"We need to knock down these trade barriers abroad", said Sen. Portman.

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8/29. The U.S. District Court (DC) sentenced Thomas A. Bowdoin, Jr., aka Andy Bowdoin, to serve 78 months in prison in connection with his having run a fraudulent internet based advertising scheme. He pled guilty to wire fraud (18 U.S.C. § 1343) in May. The Office of the U.S. Attorney for the District of Columbia stated in a release that he "ran a Ponzi scheme disguised as an online advertising company. AdSurf Daily, Inc., or ASD, drew in large numbers of investors by promising huge returns on their investments. Thousands of victims, many from the Washington, D.C. area, lost money through the scheme." See also, indictment filed on.November 23, 2010, and USAO web page with hyperlinks to other documents.

8/29. Jeramiah B. Perkins pled guilty in the U.S. District Court (EDVa) to one count of conspiracy to commit criminal copyright infringement. See, 18 U.S.C. § 371 and 17 U.S.C. § 506 and 18 U.S.C. § 2319. The Office of the U.S. Attorney for the Eastern District of Virginia stated in a release that he was one of the leaders of the "IMAGiNE Group, an organized online piracy group seeking to become the premier group to first release Internet copies of new movies only showing in theaters." The USAO continued that "Perkins and his co-conspirators sought to illegally obtain and disseminate digital copies of copyrighted motion pictures showing in theaters. Perkins admitted he took the lead in renting computer servers in France and elsewhere for use by the IMAGiNE Group. He also admitted he registered domain names for use by the IMAGiNE Group, and opened e-mail and PayPal accounts to receive donations and payments from persons downloading or buying IMAGiNE Group releases of pirated copies of motion pictures and other copyrighted works. Perkins directed and participated in using receivers and recording devices in movie theaters to secretly capture the audio sound tracks of copyrighted movies and then synchronized the audio files with illegally recorded video files to create completed movie files suitable for sharing over the Internet among members of the IMAGiNE Group and others." See also, 18 U.S.C. § 2319B and story titled "Camcorder Infringement in Movie Theaters" in TLJ Daily E-Mail Alert No. 2,052, March 1, 2010.

8/29. Kobo, Inc. and the American Booksellers Association (ABA), a trade group that represents independent book sellers, announced "a new partnership". Kobo will sell e-book readers, and e-books of ABA members. Kobo stated in a release that "Booksellers will be able to offer a total experience for their customers including a full line of eReaders, eReading accessories, and ebooks from Kobo’s catalog of nearly 3 million titles. ABA members will share in the revenue on every sale. The program includes valuable training, in-store merchandising, marketing, sales, and logistics solutions to help independents be successful. ABA members will also be able to offer ebooks directly to their customers online." This service will compete with the e-book retail sales operations of Amazon, Barnes and Noble, and Apple.

8/29. Google resumed its sale of the Grooveshark app in its Android app store on August 28, and then ceased sales on August 30. Grooveshark is an online music service that enables users to upload copyrighed sound recordings, which other users can access. There is pending litigation, brought by major record companies. Grooveshark argues in part that since all music on its servers is uploaded by users, and since it complies with take down requests from rights holders, it is immune from liability for infringement under 17 U.S.C. § 512.

ITIF Argues for Strong IP Protection in TPP Agreement

8/28. The Information Technology and Innovation Foundation (ITIF) released a paper [32 pages in PDF] titled "Gold Standard or WTO-Lite? Why the Trans-Pacific Partnership Must Be a True 21st Century Trade Agreement". The author is the ITIF's Stephen Ezell.

The parties to the ongoing TPP negotiations are Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the US. However, many, including the ITIF, argue that the TPP agreement should also serve as "a foundation upon which a stronger set of global trade rules can be built".

This paper states that "while the TPP has the potential to be a model 21st century free trade agreement, it will only become so if it both includes and holds the nations that sign it to the very highest standards, including those regarding intellectual property rights (IPR) protection; liberalized trade in services; transparency and openness in government procurement practices; restrictions on preferential treatment toward state-owned enterprises (SOEs); elimination of a host of non-tariff barriers (NTBs), including barriers to foreign direct investment (FDI)" and "market access".

It adds that "a number of significant outstanding issues remain to be negotiated and successfully concluded, especially those regarding IPR protection and enforcement as well as market access rights, if the TPP is to be regarded as a true 21st century trade agreement".

The ITIF argues that "it would be a mistake for the United States to enter into a sub-standard TPP that offers only weak IP protections or that permits countries to maintain their mercantilist practices; doing so would in fact be far worse than not joining the agreement."

It notes that the Obama administration "understandably desires to score a quick win on trade, particularly in an election year and with the country facing the prospect of prolonged unemployment and economic stagnation".

This paper does not reference an opinion piece published in Politico on August 17, written by Democratic pollster Douglas Schoen, titled "Democrats Trans Pacific Partnership tighrope".

Schoen wrote that "In any other year, these sorts of trade negotiations would be a sideshow for inside-the-Beltway policy experts. With unemployment at 8.3 percent, however, and voters tuning in to hear what both candidates plan to do about it, adopting a strong IP framework is as politically sensible as any domestic policy platform gets."

Much of this ITIF paper argues for the inclusion of IPR provisions that are not related to information or communications technology, such as "12 years of data exclusivity for biologics".

However, it argues for copyright protection, noting that many of the participating nations are on the Office of the U.S. Trade Representative's (OUSTR) Priority Watch List or Watch List for copyright related matters. The ITIF also argues that the TPP agreement "should require parties to criminalize the willful theft of trade secrets".

This paper also argues that greater IP protection would promote innovation, and would be in the economic interests of the US, other nations that join in the TPP agreement, and the rest of the world.

This extensively footnoted paper does not reference groups, including US based groups, that are arguing for what the ITIF would likely label as "weak IP protections".

See for example, Computer and Communications Industry Association's (CCIA) opinion piece, opinion piece, and release, and comments submitted to the Intellectual Property Enforcement Coordinator. See also, Public Knowledge (PK) opinion piece and related story in this issue titled "Public Knowledge Argues for IP Balance In TPPA".

People and Appointments

8/28. Mike Zerdu announced his departure from interactive gaming company Zynga. See, release.

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8/28. The Securities and Exchange Commission (SEC) filed a civil complaint [19 pages in PDF] in the U.S. District Court (SDNY) against Wwebnet, Inc. and Robert L. Kelley alleging violation of federal securities laws, including Section 10b fraud, in connection with alleged misrepresentations to investors regarding use of investor funds to develop software. See also, SEC release. This case is SEC v. Wwebnet, Inc and Robert L. Kelly, U.S. District Court for the Southern District of New York, D.C. No. 12 CV 6581, Judge Kaplan presiding.

8/28. The American Antitrust Institute (AAI) released a paper [28 pages in PDF] titled "The Latest Issues at the Crossroads of Antitrust and IPR", to be delivered by AAI head Albert Foer at the 7th Seoul International Competition Forum, in Seoul, Korea, on September 5, 2012.

2nd Circuit Rules Internet Streaming of TV Programming is Not a Cable Service

8/27. The U.S. Court of Appeals (2ndCir) issued its opinion [38 pages in PDF] in WPIX v. ivi, holding that a business that streams copyrighted broadcast TV programming over the internet without consent is not a "cable system" within the meaning of 17 U.S.C. § 111 that is entitled to a compulsory license.

This is a victory for TV broadcasters. Also, since this case concerns an injunction, the Court applied the four part test for the award of equitable relief, which includes a weighing of the public interest. The Court found that consumers benefit from this holding, because "the public has a compelling interest in protecting copyright owners' marketable rights to their work and the economic incentive to continue creating television programming".

The National Association of Broadcasters' (NAB) Dennis Wharton stated in a release that "This confirms that Congress never intended to allow Internet providers to retransmit broadcast programming without the consent of copyright owners."

See, full story.

People and Appointments

8/27. Kathy Savitt joined Yahoo as Chief Marketing Officer. See, Yahoo release.

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8/27. The Department of Justice's (DOJ) Antitrust Division's (AD) Economic Analysis Group (EAG) announced the Fall 2012 schedule of economic seminars.

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8/26. The Minority Media and Telecom Council (MMTC) released the third of a three part series titled "The Competition Conundrum: Can Competition Be Bad News for the Spectrum Crunch?". See, part 1, part 2 and part 3. The author is Latoya Livingston.

Go to News from August 21-25, 2012.