TLJ News from December 16-20, 2012

Sen. Leahy and ECPA Reform

12/20. Sen. Patrick Leahy (D-VT) spoke in the Senate regarding the VPPA amendments bill and ECPA reform.

On December 18, 2012, the House passed HR 6671 [LOC | WW], a bill that amends the Video Privacy Protection Act (VPPA) to facilitate practices of social media web sites. The sponsor is Rep. Bob Goodlatte (R-VA), who will be Chairman of the House Judiciary Committee (HJC) in the 113th Congress. See, story titled "House Passes Video Privacy Protection Act Amendments" in TLJ Daily E-Mail Alert No. 2,494, December 19, 2012.

The Senate passed this bill on December 20. See, story titled "Senate Passes VPPA Amendments" in TLJ Daily E-Mail Alert No. 2,496, December 21, 2012. This bill is ready for President Obama's signature.

When the Senate Judiciary Committee (SJC) approved an earlier version of this bill, HR 2471 [LOC | WW], on November 29, 2012, it added a section that would require a warrant for accessing cloud stored e-mail. See, November 29 red line markup of HR 2471 and story titled "Senate Judiciary Committee Approves Leahy Bill to Require Warrant for Accessing Cloud Stored E-Mail" in TLJ Daily E-Mail Alert No. 2,479, November 30, 2012. That section will not be enacted into law in the 112th Congress.

However, Sen. Leahy stated on December 20 that he looks forward to working with Rep. Goodlatte in the 113th Congress to update the Electronic Communications Privacy Act (ECPA). He said that the SJC "reported a good proposal to ensure a warrant requirement for e-mails and we should move forward quickly to enact it." See, Congressional Record, December 20, 2012, at Pages S8320-1.

"Like many Americans, I am concerned about the growing and unwelcome government intrusions into our private lives in cyber space. Last month, the Judiciary Committee overwhelmingly passed my legislative proposal to update the Electronic Communications Privacy Act, ECPA, to require a search warrant in order for the government to obtain our e-mail and other electronic communications stored with third-party service providers."

He continued that "When we worked to enact ECPA in 1986, no one could have imagined the way the Internet and mobile technologies would transform how we communicate and exchange information today. But, after three decades, this critical privacy law has been outpaced by the explosion of new technologies and the expansion of the government's surveillance powers."

He said that "My legislative reforms to the Electronic Communications Privacy Act are likewise deserving of such broad and bipartisan support. I urge us to join together in the Congress to enact these important privacy updates without delay."

Senate Approves Resolution on Sex Based Interactive Computer Service

12/20. The Senate approved SRes 439 without objection. Sen. Richard Blumenthal (D-CT) and others introduced this resolution on April 25, 2012.

It states that it is "Resolved, That the Senate ... calls on Village Voice Media Holdings, LLC to act as a responsible global citizen and immediately eliminate the ``adult entertainment'' section of the classified advertising website Backpage.com to terminate the website's rampant facilitation of online sex trafficking".

The House has not passed it. However, there are two related resolutions pending in the House, HRes 646 and HRes 649.

People who use Backpage.com may commit crimes, and be subject to criminal prosecution. However, the owners and operators of Backpage.com have Section 230 immunity.

47 U.S.C. § 230 provides in part that "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider."

The U.S. District Court (EDMo) upheld this immunity in its August 15, 2011, opinion, also reported at 809 F.Supp.2d 1041. See, M.A. v. Village Voice Media Holdings, LLC, U.S. District Court for the Eastern District of Missouri, D.C. No. 4:10cv1740 TCM, Magistrate Judge Thomas Mummert presiding.

Craigslist.com voluntarily removed the adult services section of its web site two years ago.

USPTO Urges Enactment of Rep. Smith's Patent Bill

12/20. The U.S. Patent and Trademark Office's (USPTO) Dana Colarulli wrote a short piece urging passage of HR 6621 [LOC | WW], an untitled bill that would make numerous changes to patent law.

Rep. Lamar Smith (R-TX) introduced this bill on November 30, 2012. See, story titled "Rep. Smith Introduces Patent Bill" in TLJ Daily E-Mail Alert No. 2,487, December 10, 2012. The House Judiciary Committee (HJC) held no hearings or mark up sessions. The House passed this bill on December 18, 2012. See, story titled "House Passes Rep. Smith's Patent Bill" in TLJ Daily E-Mail Alert No. 4,494, December 19, 2012.

The Senate Judiciary Committee (DJC) has held no hearings or mark up sessions. The Senate has not yet passed this bill.

Colarulli wrote that "It is important to move ahead this year with this pending legislation containing helpful amendments".

He explained that the bill "makes a number of corrections and improvements to patent law which have been identified as necessary or advisable during the public reviews of proposed rulemaking, as well as discussions and consultations that occurred during the past year".

Rep. Dana Rohrabacher (R-CA) and 69 other House Republicans, along with 19 Democrats, voted against this bill in the House, in part because of its Section (m), which may be a prelude to eliminating many of the several hundred still pending pre June 7, 1995 applications.

Colarulli wrote that this section "requires the USPTO to report on the handling of pre-1995, pre-Uruguay Round applications that have now been pending for more than a decade and a half."

He added that "This bill does not address one issue related to the estoppel standard for possible federal court litigation following the completion of a post-grant review proceeding. Clarity is needed to ensure that the provision functions as Congress intended and I am hopeful it will be addressed in a future bill in the next Congress."

Colarulli is the Director of the USPTO's Office of Governmental Affairs. Before joining the USPTO he worked for the Intellectual Property Owners Association.

Senate Passes VPPA Amendments

12/20. The Senate passed HR 6671 [LOC | WW] on December 20, 2012. This is a bill to revise the Video Privacy Protection Act to facilitate practices of social media web sites. See, story titled "House Passes Video Privacy Protection Act Amendments" in TLJ Daily E-Mail Alert No. 2,494, December 19, 2012. This bill is now ready for President Obama's signature.

House Passes National Defense Authorization Act Conference Report

12/20. The House passed House Report No. 112-705, the conference report on HR 4310 [LOC | WW], the "National Defense Authorization Act for Fiscal Year 2013", by a vote of 315-107, late on Thursday, December 20. See, Roll Call No. 645.

See also, entire conference report [1,613 pages in PDF], and Section 1085, regarding "Sense of the Congress Regarding Spectrum".

The Senate is scheduled to consider this conference report on Friday, December 21.

There are many technology related provisions in this bill.

Spectrum. Section 1085 provides that "It is the sense of Congress that ... the United States mobile communications industry is a significant economic engine" and that "there is a pressing need for additional spectrum for mobile broadband services".

It is also "the sense of Congress that ... consideration should be given to both the supply of spectrum for licensed networks and for unlicensed devices".

It is also "the sense of Congress that ... the long-term solution must include reallocation and sharing of Federal Government spectrum for private sector use".

Finally, it is the sense of the Congress that all interested parties continue the "collaborative efforts between industry and government stakeholders that have been launched by the National Telecommunications and Information Administration to assess and recommend practical frameworks for the development of relocation, transition, and sharing arrangement and plans for 110 megahertz of Federal spectrum in the 1695–1710 MHz and the 1755–1850 MHz bands".

See, the NTIA's March 2012 report [155 pages in PDF] titled "An Assessment of the Viability of Accommodating Wireless Broadband in the 1755 - 1850 MHz Band". See also, story titled "NTIA Releases Report on 1755-1850 MHz Band" in TLJ Daily E-Mail Alert No. 2,358, March 27, 2012.

PRC Cyber and Electronic Warfare. This conference report, at Section 1271, would add the following language to the existing requirements for an annual report on the People's Republic of China (PRC): "Developments in China's asymmetric capabilities, including its strategy and efforts to develop and deploy cyberwarfare and electronic warfare capabilities, details on the number of malicious cyber incidents originating from China against Department of Defense infrastructure, and associated activities originating or suspected of originating from China."

Sen. Wyden Introduces Data Cap Bill

12/20. Sen. Ron Wyden (D-OR) introduced S 3703 [LOC | WW | PDF], the "Data Cap Integrity Act of 2012".

This bill would provide that internet access service providers must obtain permission from the Federal Communications Commission (FCC) before they can impose a "data cap".

It would require the FCC to write and enforce rules that regulate internet access service providers' service and pricing plans.

It provides that "An Internet service provider may not impose a data cap on the consumers of the provider unless the provider is certified by the Commission".

This bill will certainly not be enacted in the few remaining days of the 112th Congress. It is unlikely to be enacted in the 113th Congress. Sen. Wyden has likely introduced this bill to influence public debate about usage based pricing (UBP) for consumer broadband access, and to influence business practices and pricing plans.

See, full story.

OUSTR Reports on JCCT Commitments

12/20. The Office of the U.S. Trade Representative (OUSTR) issued a release that summarizes representations made by the People's Republic of China (PRC) in the closed meetings of the U.S.-China Joint Commission on Commerce and Trade (JCCT) on December 18 and 19, 2012.

This release does not disclose what commitments the US made to the PRC.

Software Use by State Owned Enterprises. The OUSTR stated that "China confirmed that it requires state-owned enterprises under the authority of the China Banking Regulatory Commission and central state-owned enterprises directly supervised by the State-Owned Assets Supervision and Administration Commission of the State Council to purchase and use legitimate software, including but not limited to operating system and office suite software."

Robert Holleyman, head of the Business Software Alliance (BSA), commented in a release that "We're glad China has made clear it is committed to curbing illegal software use in its state-owned enterprises ... Piracy has been a persistent problem throughout the Chinese economy, but this represents a real opportunity to start bringing it under control. State-owned enterprises account for a huge share of China's industrial output. More effectively upholding intellectual property laws in that sector will make a big difference. But the challenge will be effectively verifying compliance."

Compelled Technology Transfers. The OUSTR stated that "China reaffirmed that technology transfer and technology cooperation are the autonomous decisions of enterprises. China will not make this a precondition for market access. If departmental or local documents contain language inconsistent with the above commitment, China will correct them in a timely manner."

It added that "Article 21 of China's 2007 MLPS Administrative Measures specifies an indigenous intellectual property requirement for the selection of information security products for level three and above with the objective of protecting national information security. China will conduct a process to revise this measure and seek the views of all parties, including through dialogue with the United States."

This PRC Multi Level Protection Scheme, or MLPS, has the effect of restricting sales of IT security products by US and other foreign businesses in the PRC.

Finally, the OUSTR stated that "The United States and China will maintain communication on U.S. concerns regarding whether China’s High and New Technology Enterprise Certification Administration Measures and related rules apply equally to Chinese and foreign invested enterprises or contain technology transfer or intellectual property localization requirements, including through the U.S.-China Innovation Dialogue."

Encryption. The OUSTR stated that "China agreed it will not mandate any particular encryption standard for commercial 4G Long Term Evolution telecommunications equipment."

Regulatory Processes. The OUSTR stated that "China confirmed that it will take the views of all stakeholders into full consideration in regard to the regulation of information technology and telecommunications hardware, operating systems, applications, app stores, and other related services.  The United States and China will continue to discuss this issue at the working level as China works to revise and improve the current draft."

Trademarks. "The United States and China agree to continue close communications and exchanges through the existing channels to promote the work in developing solutions to the issue of bad faith trademark registrations."

Cyber Security. "The United States and China agreed to hold a technical dialogue in Spring 2013 to discuss approaches to improving cybersecurity in critical infrastructure."

See also, story titled "JCCT Meeting Concludes" in TLJ Daily E-Mail Alert No. 2,495.

Photographers and Visual Artists Comment on Instagram TOS

12/20. The American Society of Media Photographers (ASMP) and other groups that represent photographers and visual artists issued a statement regarding the terms of service (TOS) announced by Facebook's Instagram on December 17, 2012.

See, story titled "Facebook's New Instagram Terms Affect Users' Privacy and Proprietary Interests" in TLJ Daily E-Mail Alert No. 2,493, December 18, 2012. See also, Facebook Instagram statement of December 20, 2012.

The ASMP, Professional Photographers of America (PPA), National Press Photographers Association (NPPA), Picture Archive Council of America (PACA), American Photographic Artists (APA) and Graphic Artists Guild (GAG) wrote in this statement that they "have received numerous objections regarding the proposed change to Instagram's terms of use."

They wrote that "The terms provide Instagram with a perpetual right to sell users' content without payment or notification, and requires the content owner to represent and warrant to Instagram that Instagram's use will not violate any third party rights, including publicity and privacy rights. We are pleased that Instagram is listening to the complaints and we are willing to work with them and review any proposed terms to avoid new terms that are confusing or misleading. For example, it is unreasonable to expect any content creator to have obtained releases from third parties depicted in the content, or to indemnify Instagram for any third party rights for any commercial use of the content."

They added that "even if a service states that the content owner retains copyright to content uploaded, the undersigned visual art associations object to terms of use which require users to grant the service provider with broad perpetual rights in the content that exceed the rights necessary for the user to enjoy the service, and in particular any grant of commercial use to either the service provider or any third party which may violate third party publicity rights."

They concluded that "Any grant of rights to commercialize photographs without informed consent of the creator and/or payment violates the norms of this community, including the rights of photographers, artists and their licensing representatives under our copyright system, as well as the rights of third parties."

People and Appointments

12/20. President Obama announced his intent to nominate Ruth David and Maria Zuber to be members of the National Science Foundation's (NSF) National Science Board. See, White House news office release. David is P/CEO of Analytic Services Inc. Before that she worked for the Central Intelligence Agency (CIA). Zuber is a professor of geophysics at the Massachusetts Institute of Technology (MIT).

12/20. Dave Levinthal will join the Center for Public Integrity (CPI) on January 7, 2013. He has worked for Politico since July of 2011. Before that, he worked for the Center for Responsive Politics. See, CPI release.

More News

12/20. The Executive Office of the President (EOP) released a document titled "National Strategy for Information Sharing and Safeguarding".

12/20. The U.S. Court of Appeals (11thCir) issued its opinion [31 pages in PDF] in Miller's Ale House v. Boynton Carolina Ale House, a case involving common law trademark, trade dress, Section 43 of the Lanham Act, and copyright. The Court of Appeals affirmed the District Court's summary judgment for Boynton Carolina. This case is Miller's Ale House, Inc. v. Boynton Carolina Ale House, LLC, U.S. Court of Appeals for the 11th Circuit, App. Ct. No. 10-15140, an appeal from the U.S. District Court for the Southern District of Florida, D.C. No. 9:09-cv-80918-KAM. Judge Tjoflat wrote the opinion of the Court of Appeals, in which Judges Martin and Robert Dawson (USDC/WDArk sitting by designation) joined.

12/20. Geoffrey Manne and Berin Szoka of the Tech Freedom wrote a piece titled "Time for Congress to Cancel the FTC’s Section 5 Antitrust Blank Check" that was published in the Technology Liberation Front. They wrote that "High-tech companies are particularly likely to find themselves the targets of Section 5 sabre-rattling. Cutting-edge companies are often antitrust test-cases because technological innovation goes hand-in-hand with innovations in business practices, from consumer pricing to “coopetition” partnerships between rivals. They’re more likely to settle rather than litigate because they’re terrified of squandering money, investor goodwill and management time on litigation -- lest, like Microsoft, they fall behind their rivals even as they are demonized as rapacious monopolists in the press."

12/20. The Federal Trade Commission (FTC) granted early termination on December 19, 2012 of the HSR waiting period for two transactions: (1) Cisco Systems and Meraki, and (2) Citrix Systems and Zenprise. See, FTC notice.

12/20. The Recording Industry Association of America's (RIAA) Joshua Friedlander wrote a short piece titled "Streaming Music and Investment".

12/20. The U.S. Court of Appeals (7thCir) issued its opinion in Adams v. Raintree Vacation Exchanges, a case regarding the enforceability of contract forum selection clauses by non-parties. The plaintiffs are Charles Adams and other purchasers of timeshare interests resort villas in Mexico. Because of a series of mergers, the defendants' predecessor, which signed the contracts with Mexico forum selection clauses, no longer exists. Plaintiffs filed a complaint in state court in Illinois, and sought class action status. Defendants removed the action to the U.S. District Court (NDIll). Defendants also moved to dismiss pursuant to the forum selection clause. The District Court granted the motion. The Court of Appeals affirmed. In this opinion, Judge Posner elaborated on the test for whether a nonparty to the contract containing such a clause can enforce it, and whether a nonparty will be bound by it if sued. The test is whether the nonparty is closely related to the suit. See also, the 9th Circuit's 2007 opinion in Holland America Line v. Wärtsilä North America, 485 F.3d 450. This case is Charles Adams, et al. v. Raintree Vacation Exchanges, LLC, et al., U.S. Court of Appeals for the 7th Circuit, App. Ct. No. 11-3576, an appeal from the U.S. District Court for the Northern District of Illinois, Eastern Division., D.C. No. 10 C 3264, Judge Virginia Kendall presiding. Judge Richard Posner wrote the opinion of the Court of Appeals, in which Judges Kanne and Rovner joined.

FTC Releases Expanded COPPA Rules

12/19. A divided Federal Trade Commission (FTC) released a notice, to be published in the Federal Register, that announces, describes, recites, and sets the effective date of, its new rules related to the COPPA and the regulation of privacy related online business practices.

This notice states that these new rules are "consistent with the requirements of the Children's Online Privacy Protection Act", which the Congress hastily enacted back in 1998. However, whether these new rules are indeed consistent with the COPPA will likely be subjected to judicial review.

FTC Chairman Jonathan Leibowitz stated that "the Internet of 2012 is vastly different from the Internet of more than a decade ago, when we first issued the COPPA Rule. Since then, we have seen the rise of smartphones, tablets, social networks, and more than a million apps",  which "exacerbate the privacy risks to children".

Jonathan LeibowitzLeibowitz (at right) said that the new rule expands the definition of personal information to include geolocation information, photographs, and videos. He said that the new rule covers "persistent identifiers like IP addresses and mobile device IDs, which could be used to build massive profiles of children by behavioral marketers."

He also said the new rules closes "a loophole that allowed apps and websites to permit third parties to collect personal information from our children -- through plug-ins -- in ways that they could not have done themselves without parental consent. And we extend coverage in some of those cases to the third parties doing the collection too". See, statement.

In contrast, FTC Commissioner Maureen Ohlhausen dissented, arguing that the FTC has exceeded its statutory authority.

And, Daniel Castro of the Information Technology and Innovation Foundation (ITIF) stated in a release that "Due in part to FTC rule making, the Internet has failed to live up to its potential in bringing forth a new era of compelling and educational child-friendly websites. This recent announcement is just another example of how federal child privacy laws harm children more than help them."

See, full story.

Senate Passes Economic Espionage Penalties Bill

12/19. The Senate amended and passed HR 6029 [LOC | WW], the "Foreign and Economic Espionage Penalty Enhancement Act of 2012", on December 19, 2012. The House passed this bill on August 1, 2012.

The House version of this bill would increase the maximum penalty for economic espionage, which is codified at 18 U.S.C. § 1831, from 15 to 20 years. It would also increase the maximum fine from $500,000 to $5,000,000. It would also increase the maximum fine for corporations and other organizations. The statute currently provides that "Any organization that commits any offense described in subsection (a) shall be fined not more than $10,000,000." HR 6029 provides that the maximum fine is "not more than the greater of $10,000,000 or 3 times the value of the stolen trade secret to the organization, including expenses for research and design and other costs of reproducing the trade secret that the organization has thereby avoided".

The Senate bill deletes the provision regarding maximum prison terms.

See, stories titled "Representatives Introduce Bill to Increase Penalties for Economic Espionage" in TLJ Daily E-Mail Alert No. 2,405, July 9, 2012, and "House Passes Bill that Increases Penalties for Economic Espionage" in TLJ Daily E-Mail Alert No. 2,418, August 2, 2012.

Sen. Rockefeller Complains About Violent Video Games

12/19. Sen. John Rockefeller (D-WV) announced in a release that "I have introduced legislation to direct the National Academy of Sciences to investigate the impact of violent video games and other content on children's well-being."

He added that "Recent court decisions demonstrate that some people still do not get it."

The Supreme Court ruled 7-2 in Brown v. EMA & ESA last year that video games are speech protected by the First Amendment. A state can only restrict video games content if the restriction satisfies the Supreme Court's stringent strict scrutiny test. It must be "justified by a compelling government interest and is narrowly drawn to serve that interest".

See, June 27, 2011 opinion, and story titled "Supreme Court Holds First Amendment Protects Video Games" in TLJ Daily E-Mail Alert No. 2,250, June 28, 2011.

He said that "we need to do more and explore ways Congress can lay additional groundwork on this issue".

Sen. Rockefeller also said that "I will be calling on the Federal Trade Commission and the Federal Communications Commission to expand their work in this area. The FTC has reviewed the effectiveness of the video game ratings system. The FCC has looked at the impact of violent programming on children. Changes in technology now allow kids to access violent content on-line with less parental involvement. It is time for these two agencies to take a fresh look at these issues."

JCCT Meeting Concludes

12/19. The U.S.-China Joint Commission on Commerce and Trade held two days of closed meetings in Washington DC on December 18 and 19, 2012.

The Department of Commerce (DOC) asserted in a release that there was "meaningful progress on key elements".

Rebecca Blank Rebecca Blank (at right), the acting Secretary of Commerce, stated in this release that "we were able to address U.S. concerns relating to intellectual property and innovation, to agree on the elimination of significant regulatory obstacles that were impeding U.S. exports, and to secure meaningful steps for dealing with core issues in China’s Government Procurement Agreement accession."

This release adds that "The U.S. and Chinese governments also today signed agreements related to enhancing understanding and measurement of bilateral trade, and increasing the numbers of reverse trade missions which support China's continued development while creating more U.S. exports and jobs." However, the DOC did not release the text of any such agreements.

Antitrust News

12/19. The Federal Trade Commission (FTC) granted early termination on December 18 of the HSR waiting period for the transaction involving Toshiba Corporation and NuFlare Technology, Inc. See, FTC notice of December 19. NuFlare is a semiconductor company.

12/19. The Department of Justice's (DOJ) Antitrust Division published a notice in the Federal Register (FR) that announces that Connected Media Experience, Inc. 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. 244, December 19, 2012, at Pages 75190-75191

12/19. The Department of Justice's (DOJ) Antitrust Division published a notice in the Federal Register (FR) that announces that the ODVA, Inc. 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. 244, December 19, 2012, at Page 75191.

People and Appointments

12/19. Sen. Patrick Leahy (D-VT) announced in a release that he will remain Chairman of the Senate Judiciary Committee (SJC) in the 113th Congress. He stated that "Chairing the Judiciary Committee and maintaining my seniority on the Appropriations Committee will allow me to protect both the Constitution and Vermont."

12/19. The Senate Commerce Committee (SCC) has not yet voted on numerous nominations, including those of Mignon Clyburn (FCC) and Joshua Wright (FTC). The SCC had rescheduled a meeting for December 18, which it rescheduled for December 19. The SCC meet on December 19, but lacked a quorum.

More News

12/19. 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 for, changes to its rules of practice in patent cases to implement the micro entity provision of the America Invents Act (AIA). Under this provision certain patent fees are reduced by 75% for micro entities. The effective date is March 19, 2013. See, FR, Vol. 77, No. 244, December 19, 2012, Pages 75019-75035.

Berin Szoka12/19. Berin Szoka (at right) of the Tech Freedom wrote a short piece titled "FTC's Revised COPPA Rule Invites Court Challenge, Will Cripple Kids' Sites". He wrote that "by deeming persistent identifiers as personal information per se, the FTC's new rule runs contrary to established U.S. privacy law: federal courts have unanimously decided that IP addresses do not allow the contacting of a specific individual." He also wrote that "the COPPA statute does not allow the FTC to impose liability on sites that do not collect children's information merely because the operator may somehow benefit from an ad network or plug-in operator collecting information -- provided the third party neither targets children nor shares information with the site operator." Also, "If a third party becomes liable once a single employee ``recognizes the child-directed nature´´ of a website -- whatever that means -- COPPA will become the worst kind of notice-and-takedown system: Would a single complaint -- or tweet -- from a parent or activist group create ``knowledge?´´" See also, FTC notice and story titled "FTC Releases Expanded COPPA Rules" in TLJ Daily E-Mail Alert No. 2,494, December 19, 2012.

12/19. The National Geographic Society (NGS) posted an item in Facebook's Instagram that states that "@NatGeo is suspending new posts to Instagram. We are very concerned with the direction of the proposed new terms of service and if they remain as presented we may close our account." See also, story titled "Facebook's New Instagram Terms Affect Users' Privacy and Proprietary Interests" in TLJ Daily E-Mail Alert No. 2,493, December 18, 2012.

12/19. The U.S. Court of Appeals (FedCir) issued its opinion in In Re Marsha Fox, affirming decision of the USPTO/TTAB, which affirmed the refusal of the trademark examiner to register "Cock Sucker". The Court of Appeals held that it is unregistrable under 15 U.S.C. § 1052(a), which provides for the refusal of registration of trademarks that are "immoral ... or scandalous matter". This case is In Re Marsha Fox, U.S. Court of Appeals for the Federal Circuit, App. Ct. No. 2012-1212, an appeal from the U.S. Patent and Trademark Office's Trademark Trial and Appeal Board. Judge Dyk wrote the opinion of the Court of Appeals, in which Judges Prost and O'Malley joined.

12/19. The U.S. Embassy to the People's Republic of China (PRC) announced in a release that the 10th Plenary Session of the U.S.-China Joint Liaison Group on Law Enforcement Cooperation (JLGLEC) met in Guangzhou, PRC, on December 17-18, 2012. The U.S. delegation included Assistant Secretary of State for International Narcotics and Law Enforcement Affairs William Brownfield and Deputy Assistant Attorney General Bruce Swartz. The U.S. stated that the participants "discussed ways to address the pressing transnational criminal threats that affect both countries. The talks resulted in commitments to target chemical precursors to illicit drugs and cooperate on combating firearms smuggling and Internet child pornography." The U.S. added that the JLGLEC "has evolved into a wide-ranging forum focused on global law enforcement concerns shared by the United States and China, such as cybercrime, corruption, intellectual property violations", and other matters.

House Judiciary Committee Subcommittee Chairmen Named

12/18. The House Judiciary Committee (HJC) Republicans named Subcommittee Chairmen for the 113th Congress. See, release.

Rep. Howard Coble (R-NC) will be Chairman of the Subcommittee on Courts, Intellectual Property and the Internet. This Subcommittee will have jurisdiction over bills directed at curbing online piracy, as well as other bills related to copyright, patents, and trademarks.

This will be Rep. Coble's second stint as Chairman of the IP subcommittee. Also, it might be recalled that he sponsored HR 2281 (105th Congress), the "Digital Millennium Copyright Act".

Rep. Jim Sensenbrenner (R-WI) will be Chairman of the Subcommittee on Crime, Terrorism, Homeland Security, and Investigations. This subcommittee will have jurisdiction over bills to reform the Electronic Communications Privacy Act (ECPA), as well as other bills pertaining to wiretaps, electronic surveillance, and computer hacking.

Rep. Spencer Bachus (R-AL) (at right) will be Chairman of the Subcommittee on Regulatory Reform, Commercial and Antitrust Law.

Rep. Trent Franks (R-AZ) will be Chairman of the Subcommittee on the Constitution and Civil Justice.

Rep. Trey Gowdy (R-SC) will be Chairman of the Subcommittee on Immigration and Border Security.

The HJC also announced new Republican members. See, release.

Rep. Bachus will return to the HJC. He took a three term leave of absence to be the ranking Republican and then Chairman of the House Financial Services Committee.

The other new members will be:

Neither Rep. Coble, Rep. Bachus, Rep. Farenthold nor Rep. Labrador are cosponsors of HR 3261 [LOC | WW], the "Stop Online Piracy Act" or "SOPA". However, Rep. Goodlatte is a cosponsor. Also, during the HJC mark up of the bill in December of 2011, he was its most expert and informed advocate.

House Passes Video Privacy Protection Act Amendments

12/18. The House approved, without amendment, HR 6671 [LOC | WW], by voice vote. This is a bill to revise the Video Privacy Protection Act to facilitate practices of social media web sites.

Rep. Bob Goodlatte (R-VA) introduced this bill on December 17, 2012. However, he also introduced an earlier version, HR 2471 [ LOC | WW], last year. HR 6671 contains the version adopted by the Senate Judiciary Committee (SJC) on November 29, 2012. See, November 29 red line markup of HR 2471.

Rep. Goodlatte introduced HR 2471 on July 8, 2011. The House Judiciary Committee (HJC) amended and approved this bill on October 13, 2011. The full House passed this bill on December 6, 2011.

The VPPA was enacted by the 100th Congress in 1988 just after the public debates and Senate hearings pertaining to the nomination of Judge Robert Bork to be a Justice of the Supreme Court, which involved disclosure of his video rental records. That bill was Public Law No. 100-68. It is codified at 18 U.S.C. § 2710.

The VPPA provides that "A video tape service provider who knowingly discloses, to any person, personally identifiable information concerning any consumer of such provider shall be liable to the aggrieved person".

The purpose of this bill is to allow companies, such as Facebook, to operate a web site that discloses users' video rentals and recommendations with an easy one time online opt-in procedure, rather than requiring consent every time the user wants to recommend a video.

Rep. Goodlattee stated in the House that "This bill is extremely similar to H.R. 2471, which passed the House overwhelmingly a year ago. This newer version incorporates provisions suggested by the Senate that allows greater consumer flexibility in their video sharing habits. I support these enhancements to the bill."

He explained that this bill updates the VPPA "to allow videotape service providers to facilitate the sharing on social media networks of the movies watched or recommended by users. Specifically, it is narrowly crafted to preserve the VPPA's protections for consumers' privacy, while modernizing the law to empower consumers to do more with their video consumption preferences, including sharing names of new or favorite TV shows or movies on social media in a simpler way. However, it protects the consumer's control over the information by requiring consumer consent before any of this occurs, and it makes clear that a consumer can opt in to the ongoing sharing of his or her favorite movies or TV shows without having to provide consent each and every time a movie is rented."

Rep. Goodlatte also stated that "It also makes clear that written affirmative consent can be provided through the Internet and can be withdrawn at any time. The bill we are considering today requires that the consent be distinct and separate from any other form setting forth other legal and financial obligations. Companies must provide consumers with the clear and conspicuous option to withdraw their consent to share at any time. Finally, a consumer's consent to share expires after 24 months unless the consumer chooses to opt in again.

House Passes Theft of Trade Secrets Clarification Act

12/18. The House approved, without amendment, S 3642 [LOC | WW], the "Theft of Trade Secrets Clarification Act of 2012", by a vote of 388-4. See, Roll Call No. 632. The Senate passed it last month. It is now ready for President Obama's signature.

Sen. Patrick Leahy (D-VT) and Sen. Herb Kohl (D-WI) introduced this bill on November 27, 2012. The Senate passed this bill, by unanimous consent, without debate, late on the same day. See, story titled "Senate Passes Theft of Trade Secrets Clarification Act" 2,477, November 28, 2012.

This bill would amend the Economic Espionage Act, which is codified at 18 U.S.C. § 1832, and which criminalizes theft of trade secrets. It is a response to the April 11, 2012 opinion of the U.S. Court of Appeals (2ndCir) in U.S. v. Aleynikov, App. Ct. No. 11-1126. It clarifies that theft of software source code can constitute a violation of Section 1882.

Rep. Bobby Scott (D-VA) stated in the House that "S. 3642 responds to a recent Federal court decision that exposed a gap in Federal law. In April of this year, the Second Circuit Court of Appeals held that the Federal statute prohibiting the theft of trade secrets does not apply to computer source code in some circumstances."

Rep. Scott continued that "In the Aleynikov case, the defendant, a computer programmer who worked for Goldman Sachs, electronically copied and remotely stored thousands of lines of source code from the company's internal, high-frequency trading system and then downloaded that code to his new employer's server after leaving Goldman Sachs."

Rep. Scott said that "Because the code that was stolen is a component of an internal computer system, the court found that it is not covered by the statute because it was not produced for, or placed in, a product in interstate or foreign commerce. This bill will close the gap exposed in that case by clarifying that the statute applies to both products and services which are used in or intended for use in interstate or foreign commerce."

House Passes Rep. Smith's Patent Bill

12/18. The House approved, without amendment, HR 6621 [LOC | WW], an untitled bill that would make numerous changes to the Patent Act, by a vote of 308-89. See, Roll Call No. 631. 70 Republicans voted against this bill.

Rep. Smith introduced this bill on November 30, 2012. There has been no hearing or markup for any of the sections of this bill. See also, story titled "Rep. Smith Introduces Patent Bill" in TLJ Daily E-Mail Alert No. 2,487, December 10, 2012.

The Congress enacted the America Invents Act (AIA), HR 1249 [LOC | WW], earlier in this Congress. President Obama signed it into law on September 16, 2011. It is now Public Law No. 112-29.

Rep. Smith stated in the House that the "AIA fundamentally changes our Nation's innovation infrastructure. With any such substantive and wide-ranging legislation, unforeseen issues may arise as implementation occurs. H.R. 6621 corrects many of these issues."

Although, he only addressed two items in this bill. He said in opening that the bill will correct "an inadvertent scrivener's error" regarding "post-grant review estoppel provision in the Leahy-Smith AIA". He also addressed pre-GATT applications in response to statements by Rep. Dana Rohrabacher (R-CA).

Rep. John Conyers (D-MI) praised the bill. He said that it "clarifies that the Advice of Counsel section applies to civil actions commenced on or after the date of this legislation's enactment. Why is that important? Well, because the America Invents Act created a new section that prevents use of evidence of an accused infringer's failure to obtain advice of counsel, or his failure to waive privilege and introduce such opinion, to prove either willfulness or intent to induce infringement. This provision, however, failed to specify when the new authority would go into effect, and it makes a series of other technical clarifications to the act."

Rep. Mel Watt (D-NC) wrote in a statement submitted for the Congressional Record that "important adjustments have been made to ensure that inadvertent ``dead zones,´´ in which post grant review proceedings could not be initiated as intended, are eliminated. H.R. 6621 will also tighten language to prevent dilatory tactics and gamesmanship in the newly created derivation proceedings. A third fundamental correction involves PTO funding and will guarantee that all PTO administrative costs will be covered either by patent fees or trademark fees."

Pre GATT Applications. Section (m) of the bill is titled "Report on Pre-GATT Applications". This section may be directed at eliminating many of the several hundred of these pre June 7, 1995 applications. It requires that the USPTO submit a report to the Congress that identifies, among other things, "the inventor and assignee named on each such application".

Rep. Dana Rohrabacher (R-CA), who voted against the bill, stated that one of the patent system's "basic tenets has been the steadfast adherence to the principle of total confidentiality of a patent application until the patent is granted. Congress has repeatedly stood by that principle even though there have been many powerful forces in this country trying to eliminate that concept".

But, he continued that HR 6621 threatens this principal by requiring the U.S. Patent and Trademark Office (USPTO) to "submit a report to Congress on certain patent application sections. This report, as mandated by this bill, will include information about the applications that have been traditionally kept confidential, including the name of the inventor, which has always been confidential to prevent these inventors from attack by very powerful interests who would steal their invention."

Rep. Smith explained in rebuttal that "The report on pre-GATT applications refers to applications that were filed prior to the Uruguay Round amendments taking effect in June 1995. The 103rd Congress intended for a brief transition period as the United States patent system was updated. Unfortunately, a small number of applicants have engaged in clearly dilatory behavior and continue to maintain pending applications with effective filing dates that predate 1995. In fact, some of these applications have been pending for 20, 30, and even 40 years."

He continued that "The 103rd Congress never intended for such applications to stay pending for half a century. To remove such technology from the public domain in 2012, would bear no relation to the patent system's Constitutional purpose to promote the progress of science and the useful arts. Now it is important for the 113th Congress and the Public to learn fully about these applications from the USPTO. The Committee expects that the report will contribute to an understanding of whether these applications present special circumstances that require further action to protect the public's interests."

Rep. Smith added that "Those who may have concerns about this report must understand that there is no way to ``target´´ these submarine applications -- the targets are, in fact, the people who will be sued once these submarine patents surface. The real targets are American job creators like small businesses, innovators and university researchers. And the public has a right to know in advance if certain widely used and long known technology is about to be withdrawn from the public domain."

Rep. Smith concluded, "The patent system was never intended to be a playground for trial lawyers and frivolous lawsuits. Sound patents should issue in a timely manner and should be used to create wealth and jobs."

Obama Signs Patent Law Treaties Implementation Act

12/18. President Obama signed into law S 3486 [LOC | WW], the "Patent Law Treaties Implementation Act of 2012". See, White House news office release.

This act implements two patent law treaties, the "Hague Agreement Concerning International Registration of Industrial Designs", concluded in 1999, and the "Patent Law Treaty", concluded in 2000. The Senate did not ratify these treaties until 2007.

See also, story titled "Senate Judiciary Committee Approves Patent Law Treaties Implementation Act" in TLJ Daily E-Mail Alert No. 2,452, September 20, 2012.

USPTO Seeks Comments on Creation of Patent Small Claims Process

12/18. The U.S. Patent and Trademark Office (USPTO) published a notice in the Federal Register (FR) in which it seeks comments regarding whether there should be a small claims process for patent enforcement.

The Copyright Office (CO) has an open inquiry regarding creation of a small claims process for copyright. However, that inquiry was promoted by members of Congress, and is related to efforts by members of Congress, the CO and others to enact broader legislation, sometimes referred to as "orphan works" legislation, that would diminish the rights of certain individual and small business rights holders.

See, stories titled "Copyright Office Seeks Comments on Creating a Process for Adjudicating Small Copyright Claims", "Orphan Works Legislation and Adjudicating Small Copyright Claims", and "Summary of First Round of Comments on Creating a Process for Adjudicating Small Copyright Claims" in TLJ Daily E-Mail Alert No. 2,445, September 11, 2012.

The CO also has an open inquiry on "orphan works". See, story titled "Copyright Office Issues Notice of Inquiry on Orphan Works" in TLJ Daily E-Mail Alert No. 2,468, November 2, 2012.

The USPTO's FR notice states that it seeks information regarding "whether there is a need and desire for this
type of proceeding, in what circumstances is this proceeding needed if such a need exists, and what features this proceeding should possess."

"In particular the USPTO seeks information about core characteristics of a patent small claims proceeding including characteristics such as subject matter jurisdiction, venue, case management, appellate review, available remedies, and conformity with the U.S. constitutional framework", such as the 7th Amendment right to trial by jury."

Comments are due by March 18, 2013. See, FR, Vol. 77, No. 243, December 18, 2012, at Pages 74830-74831.

DOJ Settles With Penquin in E-Books Antitrust Action

12/18. The Department of Justice's (DOJ) Antitrust Division settled with another defendant, Penguin, in the e-books antitrust action that it filed against Apple and five e-book publishers in April. Only Apple and Holtzbrinck Publishers (Macmillan) continue to contest the action.

The DOJ filed a complaint [36 pages in PDF] on April 11, 2012 in the U.S. District Court (SDNY) alleging violation of Section 1 of the Sherman Act in connection alleged conspiring to increase the prices that consumers pay for e-books.

The DOJ simultaneously settled with Hachette (which includes Little Brown), Harper Collins, and Simon & Schuster. See, stories titled "DOJ Sues Apple and Book Publishers Alleging E-Book Price Collusion" and "Analysis of DOJ's Sherman Act Claim Against Apple and E-Book Publishers", and related stories in TLJ Daily E-Mail Alert No. 2,368, April 11, 2012.

On September 6, 2012, the District Court released its Opinion and Order [48 pages in PDF] approving the settlement agreement between the DOJ and the settling defendants, Hachette, HarperCollins, and Simon & Schuster. See, story titled "District Court Approves Settlement in Apple E-Books Case" in TLJ Daily E-Mail Alert No. 2,442, December 6, 2012.

Jamilla Ferris, Chief of Staff for the Antitrust Division, stated in a release that "Since the department’s settlement with Hachette, HarperCollins and Simon & Schuster, consumers are already paying lower prices for the e-book versions of many of those publishers' new releases and bestsellers".

The DOJ added that "A trial against Macmillan and Apple currently is scheduled to begin in June 2013."

Facebook's New Instagram Terms Affect Users' Privacy and Proprietary Interests

12/18. Facebook, owner of Instagram, published revised terms of service (TOS) for its Instagram service, that take effect on January 16, 2012, that provide that "you hereby grant to Instagram a non-exclusive, fully paid and royalty-free, transferable, sub-licensable, worldwide license to use the Content that you post on or through the Service".

The new TOS state that "any Content will be non-confidential and non-proprietary and we will not be liable for any use or disclosure of Content" and "None of your Content will be subject to any obligation of confidence on the part of Instagram, and Instagram will not be liable for any use or disclosure of any Content you provide."

The new TOS also state that if users "send us content, information, ideas, suggestions, or other materials, you further agree that Instagram is free to use any such content, information, ideas, suggestions or other materials, for any purposes whatsoever, including, without limitation, developing and marketing products and services, without any liability or payment of any kind to you".

All of these statements lie deep in a long and technically worded document. This long document also states that Facebook "does not claim ownership of any Content that you post on or through the Service".

However, there is also a short and colloquial page in the "Blog" section titled "Privacy and Terms of Service Changes on Instagram" that states that "Nothing has changed about your photos' ownership", without referencing changes regarding licensing and other things. This statement is true.

But, whether it constitutes deception by omission in violation of Section 5 of the FTC Act is a question that might be presented to the Federal Trade Commission (FTC) in a complaint. Section 5, which is codified at 15 U.S.C. § 45, prohibits "unfair or deceptive acts or practices in or affecting commerce".

TLJ spoke with professor William McGeveran of the University of Minnesota law school. He focuses on information law, including intellectual property, data privacy, communications and technology, and free speech.

He said that this new language is "common among other social networks". He said that this change "is a small deal", but that there is criticism "every time Facebook tweaks" its policies.

He also said that the primary use of user content is likely to be things like Facebook's sponsored posts. He elaborated under the new TOS a user who takes and posts pictures grants Instagram license to use those pictures. However, there are likely to be persons in those pictures who have not released their rights. So, for example, Instagram pictures are not likely to appear in commercial magazine ads.

He also said that he would not describe the blog post as "deceptive", but rather as a "mistake". He said that Facebook "tends to use salesmen's language", and this "raises people's suspicions".

Facebook is a company with history at the FTC. In November of 2011 the FTC brought and settled an administrative action against Facebook for the sharing of users' information, in a manner that was inconsistent with its statements to its users, in violation of Section 5 of the FTC Act. See, story titled "FTC Imposes Privacy Related Terms on Facebook" in TLJ Daily E-Mail Alert No. 2,315, November 29, 2012, and story titled "FTC Releases Decision and Order in Administrative Action Against Facebook" in TLJ Daily E-Mail Alert 2,426, August 10, 2012.

Chris Hoofnagle, Director of Information Privacy Programs at the Berkeley Center for Law & Technology, wrote a December 2011 filing with the FTC that "Information-intensive companies such as Facebook follow a Machiavellian public relations strategy when introducing new programs. Without warning, these companies introduce ``features´´ that invariably result in more information being shared with advertisers, wait for a negative reaction, and then announce minimal changes without affecting the new feature. They explain away the fuss with public relations spin ... This strategy works, time and time again."

See also, related TLJ stories:

People and Appointments

12/18. Former Judge Robert Bork (USCA/DC) died. Bork was best known for his very public Supreme Court confirmation battle in 1987. Bork's scholarly writings had a profound effect upon the transformation of antitrust law. In works such as The Antitrust Paradox (first published in 1978), he argued that antitrust law should promote consumer welfare, not protect competitors, and that application of the law should be based upon economic analysis, and advance economic efficiency. See, statement of Sen. Orrin Hatch (R-UT).

12/18. The Federal Communications Commission (FCC) announced that it seeks applications for the position of Director of Health Care Initiatives. The deadline to apply is January 7, 2013. See, notice.

More News

12/18. Rep. Rush Holt (D-NJ) introduced HR 6678 [LOC | WW], a bill to amend the Internal Revenue Code to encourage research at community colleges and other institutions of higher education. It was referred to the House Ways and Means Committee and House Education and Workforce Committee.

12/18. Rep. Tom Reed (R-NY) and Rep. Lloyd Doggett (D-TX) introduced HR 6682 [LOC | WW], the "Standard Data and Technology Advancement Act of 2012" or "Standard DATA Act", a bill to establish consistent requirements for the electronic content and format of data used in the administration of certain human services programs under the Social Security Act. It was referred to the House Ways and Means Committee and the House Commerce Committee. Rep. Reed stated in a release that "By using a common language and consistent data standards, we can increase the integrity and effectiveness of these programs -- saving taxpayer dollars as a result".

12/18. Officers and Directors of Facebook filed with the Securities and Exchange Commission (SEC) Form 4 disclosures of the sale of stock on December 18, 2012. See:

12/18. The U.S. Court of Appeals (11thCir) issued a revised opinion in the Hospitallers trademark case. Hospitallers have been around since the 11th Century. This is a trademark dispute between two current Hospitaller entities. The plaintiff is an order of the Roman Catholic Church. The defendant is an ecumenical group. The plaintiff filed a complaint in the U.S. District Court (SDFl) alleging trademark infringement (for using marks confusingly similar to those that the plaintiff had registered with the USPTO) and false advertising claims (for claiming a Middle Ages pedigree) under the Lanham Act, and state law claims for unfair competition and violation of the Florida Deceptive and Unfair Trade Practices Act. The defendant counterclaimed for fraud upon the USPTO (for failure disclosure the defendant's use of similar marks). The defendant prevailed in the District Court on all claims. The Court of Appeals affirmed in part (on the false advertising claim) and reversed in part. The Court of Appeals reversed on the fraud on the USPTO claim, and vacated the cancellation of marks. It vacated and remanded on the infringement claim. This case is Sovereign Military Hospitaller Order of Saint John of Jerusalem of Rhodes and of Malta v. The Florida Priory of the Knights Hospitallers of the Sovereign Order of Saint John of Jerusalem, Knights of Malta, The Ecumenical Order, U.S. Court of Appeals for the 11th Circuit, App. Ct. No. 11-15101, an appeal from the U.S. District Court for the Southern District of Florida, D.C. No. 9:09-cv-81008-KLR. Judge Wilson wrote the opinion of the Court of Appeals, in which Judges Pryor and Martin joined.

12/18. The Department of Justice's (DOJ) Antitrust Division published a notice in the Federal Register (FR) that announces that the Cable Television Laboratories, Inc. (Cable Labs) 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. 243, December 18, 2012, at Page 74877.

12/18. A trial jury of the U.S. District Court (NDCal) returned of verdict of guilty in U.S. v. Shiu Lung Leung. This was a retrial. The District Court declared a mistrial as to this defendant following a trial concluded in March. This is another in the long running series of Department of Justice's (DOJ) Antitrust Division's prosecutions involving price fixing for thin film transistor liquid crystal displays (TFT-LCD). Leung is a former senior executive of the Taiwan based AU Optronics Corp. AU Optronics, two of its executives, and its US subsidiary were previously found guilty. See, DOJ release.

12/18. Nielsen Holdings announced in a release that "it has signed a definitive agreement to acquire Arbitron".

Update on Tax Return Identity Theft Legislation

12/17. Sen. Amy Klobuchar (D-MN) and Sen. Jeff Sessions (R-AL) introduced S 3688 [LOC | WW], the "Stopping Tax Offenders and Prosecuting Identity Theft Act of 2012'" or "STOP Identity Theft Act of 2012", a bill pertaining to tax return identity theft. It was referred to the Senate Judiciary Committee (SJC).

This is another bill intended to fight tax return identity theft, in which criminals file false tax returns using the name and social security number of another person, in order to fraudulently receive a refund owed to that person. The practice is rampant.

The Treasury Inspector General for Tax Administraton (TIGTA) released a report [40 pages in PDF] on August 2, 2012, that states that for 2010 it "identified almost 1.5 million tax returns with potential fraudulent tax refunds totaling in excess of $5.2 billion that were not detected by the IRS". See, story titled "Treasury IG Reports That IRS Hands Out Billions in Fraudulent Refunds to ID Thieves" in TLJ Daily E-Mail Alert No. 2,422, August 6, 2012.

The just introduced bill has overlap with HR 4362 [LOC | WW], a House bill with the same title. Rep. Debbie Schultz (D-FL) and Rep. Lamar Smith introduced HR 4362 on April 17, 2012. See, story titled "Rep. Smith and Rep. Schultz Introduce Bill Pertaining to Tax Return Identity Theft" in TLJ Daily E-Mail Alert No. 2,374, April 18, 2012.

The House passed HR 4362 on August 1, 2012. See, story titled "House Passes Tax Return ID Theft Bill" in TLJ Daily E-Mail Alert No. 2,418, August 2, 2012.

Sen. Klobuchar and Sen. Sessions also filed the text of S 3688 as an amendment to HR 4362, Amendment No. 3343, on December 17.

Both S 3688 and HR 4362 would amend 18 U.S.C. § 1028, which currently prohibits only the theft of the identity of an individual person, to also prohibit the theft of the identity of a business or other entity. Although, the language of the two bills differs.

Both bills would require the Department of Justice (DOJ) to report on "trends in the incidence of tax return identity theft" and the "effectiveness" of existing statutory tools for prosecution, and make recommendations for "additional statutory tools".

HR 4362 would make tax fraud (26 U.S.C. § 7206 or 26 U.S.C. § 7207) a predicate offense for elevating identity theft (18 U.S.C. § 1028) to aggravated identity theft (18 U.S.C. § 1028A). S 3688 does not contain this language.

However, S 3688 would amend 18 U.S.C. § 1028(b)(3), which specifies punishments, to provide that identity theft in violation of § 1028(a) that also involves tax fraud in violation of § 7206 or § 7207, is punishable at the highest level, up to 20 years in prison.

Neither bill would do anything to change the methods by which the IRS processes returns and issues refunds.

There are other related bills pending in the House and Senate. See, HR 6205 [LOC | WW], the "Protect and Save Act of 2012", introduced on July 26, 2012, and S 3432 [ LOC | WW], the "Identity Theft and Tax Fraud Prevention Act", introduced on July 25, 2012. See also, story titled "More Tax Return ID Theft Bills Introduced" in TLJ Daily E-Mail Alert No. 2,422, August 6, 2012.

Rep. Conyers and Rep. Watt Argue that FTC Can Bring Antitrust Action Under Section 5

12/17. Rep. John Conyers (D-MI) and Rep. Mel Watt (D-NC) sent a letter to the Federal Trade Commission (FTC) regarding its investigation of Google's business practices.

They wrote that "While we do not take a position on the merits of the claims alleged against Google, we do believe that concerns about the use of Section 5 are unfounded."

Section 5 of the FTC Act, which is codified at 15 U.S.C. § 45, provides in part that "The Commission is hereby empowered and directed to prevent persons, partnerships, or corporations ... from using unfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce".

Citing a small number of old cases, they wrote that "Well established legal principles set forth by the Supreme Court provide ample authority for the FTC to address potential competitive concerns in the relevant market, including search."

Rep. Conyers is the ranking Democrat on the House Judiciary Committee (HJC). Rep. Watt is the ranking Democrat on the HJC's Subcommittee on Intellectual Property, Competition and the Internet.

Commentary. The FTC has statutory authority to enforce antitrust laws under the Sherman Act and Clayton Act. There are well developed bodies of judicial case law that construe and give meaning to their various sections.

In contrast, Section 5 of the FTC Act has hardly been invoked as an antitrust statute for decades. The FTC did rely upon Section 5 of the FTC Act in its administrative action against Intel in 2010, but that was settled by consent agreement, so the FTC's authority to proceed under Section 5 was not subjected to judicial review. See, story titled "FTC and Intel Settle Antitrust Claims" and related stories in TLJ Daily E-Mail Alert No. 2,018, August 4, 2010.

There is no body of case law that gives meaning to Section 5 as an antitrust statute. This is what makes it so attractive to advocates of aggressive FTC regulation. Invoking Section 5 may enable the FTC to regulate conduct that is not unlawful under the antitrust statutes.

Since the invocation of Section 5 would mean relying upon four words, without any body of case law, there is little to constrain the FTC in determining what constitutes a violation of Section 5. And, there is little to put Google or other companies on notice in advance as to what might constitute a violation of Section 5.

9th Circuit Addresses Personal Jurisdiction in IP Case

12/17. The U.S. Court of Appeals (9thCir) issued its opinion [21 pages in PDF] in Washington Shoe v. A-Z Sporting Goods, a copyright case involving the issue of personal jurisdiction over a distant defendant. The Court of Appeals took a minimalist view of due process, minimum contacts, and purposefully directing activities at the forum state.

This opinion suggests that a distant defendant can be hauled into federal court in the 9th Circuit when its only contacts with the forum state are allegations of intentional infringement of intellectual property rights of an in forum rights holder, and receipt of cease and desist letters from that rights holder.

A-Z Sporting Goods operates a physical store located in the state of Arkansas. It sold children's rain boots that it purchased from China. These boots were counterfeit knock offs of boots made by the Seattle based Washington Shoe Company (WSC).

A-Z has no facilities or employees in Washington. It has no web store that sells to customers in Washington. WSC sent A-Z cease and desist letters. A-Z then ceased selling the knock off boots in its one store, but sold the remainder to a thrift store.

WSC filed a complaint in the U.S. District Court (WDWash) alleging copyright infringement, trade dress infringement, and unfair competition. A-Z filed a motion to dismiss for lack of personal jurisdiction, which the District Court granted. The Court of Appeals reversed.

The Court of Appeals applied the 9th Circuit's 2010 opinion [20 pages in PDF] in Brayton Purcell v. Recordon & Recordon, also known as Brayton Purcell II, 606 F.3d 1124. That opinion states that the three part test for whether there is specific jurisdiction is as follows:

In the present case, the Court of Appeals focused on the first prong. It wrote that the act of selling the remaining boots to a thrift shop was a purposeful act. And, since A-Z had received letters from WSC stating that it was based in Washington, and that it was a rights holder, A-Z directed its purposeful activity at the state of Washington.

This case is Washington Shoe Company v. A-Z Sporting Goods, Inc. et al., U.S. Court of Appeals for the 9th Circuit, App. Ct. Nos. 11-35166 and 11-35206, appeals from the U.S. District Court for the Western District of Washington, D.C. No. 2:09-cv-01042-RSL, Judge Robert Lasnick presiding. Judge Jay Bybee wrote the opinion of the Court of Appeals, in which Judges Carlos Bea and Michael Hawkins joined.

Federal Circuit Addresses Cross Licensing Agreements and Reissue Patents

12/17. The U.S. Court of Appeals (FedCir) issued its opinion [14 pages in PDF] in Intel v. Negotiated Data, a patent infringement case involving the effect on reissue patents of an earlier patent cross licensing agreement in the semiconductor industry, known in this case as the "National Agreement".

Negotiated Data alleged infringement of the reissue patents. The U.S. District Court (EDTex) granted summary judgment of license and noninfringement in favor of Intel. The Court of Appeals affirmed on the grounds that Intel is licensed to practice the reissue patents in suit.

The Court of Appeals wrote that "At bottom, the scheme set forth in § 252 does not support Intel’s simplistic proposition that a reissue patent replaces the original patent nunc pro tunc. The question remains, however, whether the National Agreement itself is properly interpreted, under California law, to extend the license granted thereunder to the Reissue Patents."

It held that it does. "The National Agreement does not explicitly discuss reissue patents, but the grant of license under the National Patents is without limitation and without reference to any specific claims. The Agreement thus evinces the parties’ intent that the license so granted extend not only to the claims then in existence but also to the full scope of any coverage available by way of reissue for the invention disclosed. To interpret the Agreement otherwise would allow the unilateral act of the licensor to place the licensee, which sought to eliminate any infringement risk and effect a global peace with the licensor for all claims in all patents, in a position of being exposed to further risk relating to the exact same inventions that were subject to the license."

This case is Intel Corporation v. Negotiated Data Solutions, Inc., U.S. Court of Appeals for the Federal Circuit, App. Ct. No. 2011-1448, an appeal from the U.S. District Court for the Eastern District of Texas, D.C. Nos. 08-CV-0319 and 11-CV-0247, Judge David Folsom presiding. Judge Linn wrote the opinion of the Court of Appeals, in which Judges Prost and Wallach joined.

People and Appointments

12/17. Sen. Daniel Inouye (D-HI) died.

Sen. Tim Scott12/17. South Carolina Governor Nikki Haley appointed Rep. Tim Scott (R-SC) to fill the seat vacated by the resignation of former Sen. Jim DeMint (R-SC). Rep. Scott (at right) was first elected to the House of Representatives in 2010. DeMint resigned to become head of the Heritage Foundation. See, story titled "Sen. DeMint to Leave Senate to Lead Heritage Foundation" in TLJ Daily E-Mail Alert No. 2,485, December 7, 2012.

12/17. The Senate confirmed Fernando Olguin to be a Judge of the U.S. District Court for the Central District of California. See, Congressional Record, December 17, 2012, at Page S8094.

12/17. The Senate confirmed Thomas Durkin to be a Judge of the U.S. District Court for the Northern District of Illinois. See, Congressional Record, December 17, 2012, at Page S8094.

12/17. Lona Nallengara was named acting Director of the Securities and Exchange Commission's (SEC) Division of Corporation Finance. He will replace Meredith Cross, who is leaving the SEC at the end of the year. See, SEC release.

12/17.  John Ramsay was named acting Director of the Securities and Exchange Commission's (SEC) Division of Trading and Markets. He will replace Robert Cook. See, SEC release.

12/17. Time Warner Cable announced in a release that Kevin Leddy has been named EVP, Corporate Strategy.

David Christopher12/17. David Christopher (at right) was named Chief of Operations at the Copyright Office (CO), effective December 17, 2012. He has worked at the CO since 2006. For the past 18 months he has been head of the CO's Information and Records Division. He replaces Melissa Dadant, who will retire in February. Maria Pallante remains the Register of Copyright. The CO stated in a release that he "will supervise the day-to-day operations of the Copyright Office, including financial controls, budget, human capital, statutory royalty investments, mandatory deposit and acquisitions, contracts and strategic planning functions. ... His first assignment will be to oversee a strategic reorganization of the Copyright Office, to better align the business functions with business needs and better manage resources".

More News

12/17. The Federal Trade Commission (FTC) granted early termination on December 14 of the HSR waiting period for the transaction involving Thoma Bravo Fund X, L.P., SRS Software, Inc., and SRS Software, LLC.. See, FTC notice of December 17. SRS Software provides electronic health records software and health information technology.

12/17. Sprint announced in a release that it "has entered into a definitive agreement to acquire the approximately 50 percent stake in Clearwire ... it does not currently own for $2.97 per share, equating to a total payment to Clearwire shareholders, other than Sprint, of $2.2 billion."

12/17. The U.S. Court of Appeals (9thCir) issued its amended opinion [22 pages in PDF] in US v. Oliva, a case regarding law enforcement intercepts of cell phone conversations under the Wiretap Act. The Court of Appeals affirmed the District Court's denial of a motion to suppress evidence obtained from wiretaps. The surveillance orders at issue authorized the government to tap "background conversations intercepted in the vicinity of [a target phone number] while the telephone is off the hook or otherwise in use". (Brackets in Court of Appeals opinion.) The opinion also addresses standing to challenge admissibility of wiretap evidence. This case is US v. Jorge Ortiz Oliva and US v. Pablo Barajas Lopez, U.S. Court of Appeals for the 9th Circuit, App. Ct. Nos. 10-30126 and 10-30134, appeals from the U.S. District Court for the District of Oregon. Judge Raymond Fisher wrote the opinion of the Court of Appeals, in which Judges Richard Paez and Richard Clifton joined.

12/17. The U.S. Court of Appeals (FedCir) issued its divided opinion [24 pages PDF] in IGT v. Alliance Gaming, a patent and antitrust case involving computerized gaming machines and systems. The Court of Appeals affirmed the judgment of the U.S. District Court (DNev). This case is IGT v. Alliance Gaming Corporation, et al., U.S. Court of Appeals for the Federal Circuit, App. Ct. No. 2011-1166, an appeal from the U.S. District Court for the District of Nevada, D.C. No. 04-CV-1676, Judge Robert Jones presiding. Judge Jimmie Reyna wrote the opinion of the Court of Appeals, in which Judge Linn joined. Judge Bryson dissented.

12/17. The Government Accountability Office (GAO) released a report [31 pages in PDF] titled "Export Controls: Compliance and Enforcement Activities and Congressional Notification Requirements under Country-Based License Exemptions".

12/17. The Electronic Frontier Foundation (EFF) released a chart titled "E-Reader Privacy Chart, 2012 Edition" that describes the performance of nine e-readers on seven criteria.

People and Appointments

12/16. Japan held legislative elections on December 16. The Liberal Democratic Party and a coalition party won two thirds of the seats in the lower house of the Diet. As a consequence, Shinzo Abe will replace Yoshihiko Noda as Prime Minister. President Obama stated in a release that "I congratulate Liberal Democratic Party President Shinzo Abe on his party's success in the elections in Japan today. The U.S-Japan Alliance serves as the cornerstone of peace and prosperity in the Asia-Pacific and I look forward to working closely with the next government and the people of Japan on a range of important bilateral, regional and global issues. I also extend my appreciation to Prime Minister Noda for his many contributions to U.S.-Japan relations."

Go to News from December 11-15, 2012.