TLJ News from October 6-10, 2013

Republicans Query DHHS Regarding IT Failures in ObamaCare's FFM

10/10. Fifteen Republican members of the House Commerce Committee (HCC) sent a letter to Kathleen Sebelius, Secretary of Health and Human Services, regarding information technology (IT) failures that have "prevented consumers from completing the enrollment tasks" required by the regulatory regime often referred to as "ObamaCare".

In addition, the HCC announced that it will hold a hearing on the subject on Thursday, October 24, at 9:00 AM. This hearing is titled "PPACA Implementation Failures: Didn't Know or Didn't Disclose?". See, notice.

They wrote that the cause of these problems "is not yet clear", but may be "due to inadequate server capacity or poor software coding and system architecture" in the "federally facilitated marketplace", or FFM.

Hence, they propound three interrogatories, to be answered in writing by October 16, 2013. They ask, for example, "what is causing the nationwide failures", and what "changes or fixes" have been performed or recommended?

The letter also includes a request for production of documents, to be answered by October 23, 2013. They request any "analyses or memoranda ... discussing or analyzing the failures".

The HCC Republicans also sent a similar letter to contractor Quality Software Services, Inc. (QSSI), and a similar letter to contractor CGI. These letters also request "all communications, including e-mail" between QSSI and HHS, and between CGI and HHS, regarding the FFM.

See also, HCC's October 10 release, and October 11 release.

ITIF Releases Report on US EU TTIP Negotiations

10/10. The Information Technology and Innovation Foundation (ITIF) released a report [34 pages PDF] titled "How to Craft an Innovation Maximizing T-TIP Agreement". The authors are the ITIF's Michelle Wein and Stephen Ezell.

It states that the ongoing negotiations between the US and European Union (EU) for trade a agreement titled "Transatlantic Trade and Investment Partnership", or "TTIP", "should be designed to maximize technological innovation in the two regions".

"Ideally, the T-TIP would eliminate all tariffs and non-tariff barriers to trade. However, realistically, both the European Union and the United States are going to make tradeoffs, and it is important to make these tradeoffs in a manner that promotes innovation-based trade as a fundamental driver of global growth."

This report states that innovation based industries include information and communication technology (ICT), life sciences, aerospace, and clean energy.

The report makes numerous more specific recommendations.

Some of these recommendations are incompatible with political circumstances and declarations made by the EU. For example, Karel De Gucht, the European Trade Commissioner, gave a speech in Prague, Czech Republic on the TTIP negotiations in which he said that the EU will not remove regulatory barriers to trade, or "renounce the right to regulate in future to reach the level of protection that their citizens choose". Nevertheless, the ITIF wants the TTIP to create "science-based regulatory regimes in the pharmaceutical, automotive and agricultural sectors".

The ITIF recommends that the TTIP agreement "Eliminate all tariffs in trade on innovation industries", and "Liberalize trade in innovative services, especially telecommunication services and audiovisual services".

The ITIF also recommends that the TTIP agreement "Prohibit the use of data center localization as a condition of market access" and "Honor existing international data flow agreements, such as the Safe Harbor".

The report recommends that the agreement "prevent restrictions on the import and use of commercial encryption technologies".

The report also recommends that the agreement "Adopt a common definition for trade secrets: any information that has economic value (actual or potential), is not generally known to the public, and for which the trade secret owner has taken reasonable measures to keep private". (Parentheses in original.)

The report also recommends that the agreement "Establish a bilateral R&D participation model in order to coordinate cross-border pre-competitive research partnerships" and "Allow companies participating in pre-competitive research to freely transfer ownership and access rights for foundational IP to affiliates across and between the European Union and the United States."

The report also recommends lowing barriers to foreign direct investment, ending government production subsidies (especially in aerospace), and provide 12 years of data exclusivity for biopharmaceutical products.

See also, stories titled "EU and US Announce Beginning of Transatlantic Trade and Investment Partnership Negotiations" in TLJ Daily E-Mail Alert No. 2,523, February 13, 2013, "Marantis Outlines Objectives of US EU TTIP Negotiations" in TLJ Daily E-Mail Alert No. 2,537, March 20, 2013, and "OUSTR Announces Request for Comments and Hearing Regarding US EU TTIP" in TLJ Daily E-Mail Alert No. 2,547, April 8, 2013.

More News

10/10. Karel De Gucht (at left), the European Trade Commissioner, gave a speech in Prague, Czech Republic, titled "Transatlantic Trade and Investment Partnership (TTIP) -- Solving the Regulatory Puzzle". He said that the EU will not remove regulatory barriers to trade, or "renounce the right to regulate in future to reach the level of protection that their citizens choose". See also, stories titled "EU and US Announce Beginning of Transatlantic Trade and Investment Partnership Negotiations" in TLJ Daily E-Mail Alert No. 2,523, February 13, 2013, "Marantis Outlines Objectives of US EU TTIP Negotiations" in TLJ Daily E-Mail Alert No. 2,537, March 20, 2013, and "OUSTR Announces Request for Comments and Hearing Regarding US EU TTIP" in TLJ Daily E-Mail Alert No. 2,547, April 8, 2013.


President Obama Picks Yellen to be FRB Chairman

10/9. President Obama announced his selection of Janet Yellen to be Chairman of the Board of Governors of the Federal Reserve System. The outgoing Chairman is Ben Bernanke.

Janet YellenYellen (at right) is currently one of its Governors. On September 29, 2010, the Senate confirmed her to be a member for a term of 14 years from February 1, 2010. And, the Senate confirmed her to be Vice Chairman for a term of 4 years. See, Congressional Record, September 29, 2010, at Page S7777.

Yellen, like President Obama, has faith in the ability of government to stimulate economic and job growth.

She has also provided the President cover against charges that his policies have maintained high unemployment and underemployment rates.

For example, she gave a speech in Washington DC on February 11, 2013 in which she stated that there has been "weak recovery in employment" during the Obama administration, but attributed this to "globalization and technological change", and a "mismatch between the skills possessed by the unemployed and those demanded by employers", rather that the President's or the FRB's policies.

Sen. Jeff Sessions (R-AL), the ranking Republican on the Senate Budget Committee, stated in a release that "The idea that the Fed has the insight to micromanage the economy, taming bubbles with targeted precision was demolished after they not only failed to see but contributed to the last financial bubble."

He charged that "while Fed policy has aided large and sophisticated investors who capitalize on low borrowing rates it has squeezed the middle class and working Americans who prudently save their money. The stimulus mindset in Washington -- both fiscal and monetary -- has not produced strong, sustainable growth."

Sen. Sessions concluded that "Cash pay for wage earners has declined while Wall Street has been enriched and the size of government has soared. Our nations long-term plan surely cannot be to supplement declining wages through ever more government subsidy and borrowing. The nation must begin a steady and firm move toward a sound money policy that creates confidence and stability in our struggling economy."


USTR Declines to Overturn USITC's Section 337 Samsung Exclusion Order

10/8. Michael Froman, the U.S. Trade Representative, announced his decision to deny Samsung's request to overturn a Section 337 exclusion order of the U.S. International Trade Commission (USITC) that affects certain Samsung mobile devices that infringe Apple patents.

Denial of such a request would be standard, but for the USTR's granting of a similar request in August to Samsung's US rival, Apple, which the USITC found had infringed Samsung patents.

The USITC performs a judicial function in Section 337 proceedings. Parties may, and often do, seek judicial review by the U.S. Court of Appeals (FedCir) pursuant to 5 U.S.C. 706. In addition, the President may overturn these exclusion orders within 60 days, pursuant to 19 U.S.C. 1337(j). These requests are typically denied.

The Office of the U.S. Trade Representative (OUSTR) is a part of the Executive Office of the President (EOP). Froman acted on behalf of the President.

Section 337, which is codified at 19 U.S.C. 1337, provides, in part, that "The importation into the United States, the sale for importation, or the sale within the United States after importation by the owner, importer, or consignee, of articles that ... infringe a valid and enforceable United States patent or a valid and enforceable United States copyright registered under title 17". Moreover, this section empowers the USITC to issue exclusion orders.

See, full story.

Rep. Sensenbrenner Presses DOJ for Answers to Questions About Section 215 Abuse

10/8. Rep. James Sensenbrenner (R-WI) sent a letter to Attorney General Eric Holder that propounds several interrogatories for the Department of Justice (DOJ) regarding its interpretation of Section 215 of the USA PATRIOT Act.

This letter follows up on his letter of September 6, 2013 to the DOJ. Rep. Sensenbrenner is concerned about, among other things, use of Section 215 by the Obama administration to target gun owners for activities protected by the Second Amendment of the Constitution.

Rep. James SensenbrennerRep. Sensenbrenner (at right) asked questions, and requested written responses by September 30. The DOJ did not respond. So, he sent this second letter, that propounds the same interrogatories.

The Obama DOJ is unlikely to provide a responsive set of answers. The Bush DOJ also repeatedly slighted him on Section 215 and related surveillance issues.

See for example, story titled "Inspector General Fine to Leave DOJ" in TLJ Daily E-Mail Alert No. 2,166, December 2, 2010. See also, subsection titled "Rep. Jim Sensenbrenner on Caproni" of story titled "Obama Nominates Caproni to District Court" in TLJ Daily E-Mail Alert No. 2,474, November 19, 2012.

The Foreign Intelligence Surveillance Court (FISC) released a heavily redacted copy [46 pages in PDF] of a document titled "Amended Memorandum Opinion" that pertains to "ongoing daily production" to the National Security Agency (NSA) of "certain call detail records or "telephony metadata" in bulk, pursuant to Section 215 of the USA PATRIOT Act.

Questions for the DOJ. In both letters Rep. Sensenbrenner asked, does the DOJ "believe" that Section 215 "authorizes it to collect all records of commercial transactions between Americans?"

Also, does the DOJ "believe that it has the authority to bulk collect all records of firearms sales?"

Also, does the DOJ "believe that Section 215 allows the administration to assemble a database of gun owners?"

Also, "Is the administration collecting records in bulk other than phone records?"

Finally, he asked "If the Department does not believe it has the authority to collect records of commercial transactions in bulk, how does the Department distinguish phone records from commercial transactions?"

September 6 Letter. Rep. Sensenbrenner wrote in his September 6 letter that "the administration has collected the details of every call made by every American, even though the overwhelming majority of these calls have nothing to do with terrorism."

He asserted that in enacting Section 215, the "Congress intended to allow the government to access specific records. The administration's interpretation to allow for bulk collection is at odds with Congressional intent and with both the plain and legal meanings of ``relevance."

He continued that this "flawed interpretation ... would seem to support bulk collection of other personal data."

He wrote that the FBI "could easily conclude that it is interested, not only in the type of firearms being purchased, but also in who is selling firearms to whom -- thereby ascribing importance to the connection between the buyers and sellers. The potential importance of these connections makes commercial transactions like firearms sales indistinguishable from phone records under the administration's analysis. The administration's sweeping legal view of Section 215 could support building a national gun registry despite Congress's express disapproval and the Second Amendment."

Section 215. This authority is codified at 50 U.S.C. 1861. It is also known as Section 501 of the FISA. The 2001 surveillance act (Section II of the USA PATRIOT Act) amended Section 1861/501 in its Section 215. Hence, this authority is usually, but not always, referred to as Section 215 authority.

See also, HR 3162, 107th Congress, titled "USA PATRIOT Act", signed October 26, 2001, Public Law 107-56.

This 1861/501/215 authority enables the FBI to obtain from the body titled "Foreign Intelligence Surveillance Court" (FISC), an order requiring the production business records, including phone company, ISP, library, and bookseller records. While the FISC body bears very few attributes of an Article III court, the statute counts the FISC as a court.

This section 1861 further provides that if the government submits an application to the court that states that there are "reasonable grounds to believe that the tangible things sought are relevant to an authorized investigation", then the "judge shall enter an ex parte order as requested". This is a very low standard. The judge is left with almost no discretion.

Precisely, section 1851 requires that such application "shall include ... a statement of facts showing that there are reasonable grounds to believe that the tangible things sought are relevant to an authorized investigation (other than a threat assessment) conducted in accordance with subsection (a)(2) to obtain foreign intelligence information not concerning a United States person or to protect against international terrorism or clandestine intelligence activities, such things being presumptively relevant to an authorized investigation if the applicant shows in the statement of the facts that they pertain to -- (i) a foreign power or an agent of a foreign power; (ii) the activities of a suspected agent of a foreign power who is the subject of such authorized investigation; or (iii) an individual in contact with, or known to, a suspected agent of a foreign power who is the subject of such authorized investigation".

The referenced subsection (a)(2) merely requires that the investigation be conducted pursuant to "guidelines approved by the Attorney General" and that it "not be conducted of a United States person solely upon the basis of activities protected by the first amendment to the Constitution".

It should also be noted that Section 1851 also requires that the FBI's application contain an "enumeration of the minimization procedures adopted by the Attorney General". However, Roger Vinson's order does not reference minimization.

Section 1861 also grants broad immunity from liability for anyone who complies with a Section 1861 order.

More News

10/8. President Obama held a press conference to address federal appropriations and debt ceiling. However, in response to one question, he touched on trade, the People's Republic of China (PRC), intellectual property and the Trans Pacific Partnership Agreement (TPPA). He said this "our cooperation with China is not a zero-sum game. There are a lot of areas where the Chinese and us agree. On trade, in particular, though, here is an area where part of what we're trying to do is raise standards for, for example, intellectual property protection, which sometimes is a big problem in China. And if we can get a trade deal with all the other countries in Asia that says you've got to protect people's intellectual property that will help us in our negotiations with China." See, transcript.

10/8. The parties to the ongoing Trans Pacific Partnership Agreement (TPPA) negotiations released a joint statement, in which they announced that "our countries are on track to complete the ... negotiations". The participating nations are Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, US, and Vietnam.


Supreme Court Denies Certiorari in Technology Patents v. T-Mobile

10/7. The Supreme Court denied certiorari in Technology Patents v. T-Mobile UK, a patent case against foreign carriers, domestic carriers and handset makers, and software companies. See, October 7 Orders List [94 pages in PDF] at page 75.

This lets stand the October 17, 2012 opinion of the U.S. Court of Appeals (FedCir). The patent in suit is U.S. Reissue Patent No. RE39870, titled "Global paging system using packet-switched digital data network and remote country designation".

Technology Patents LLC (TPLLC), inventor Aris Mardiossian's company, sued over one hundred companies in the U.S. District Court (DMd) alleging patent infringement. The District Court dismissed the foreign carriers for lack of personal jurisdiction. The District Court construed claims, and then granted summary judgment (SJ) of non-infringement in favor of the domestic carriers, handset makers and software companies.

TPLLC appealed. The Court of Appeals affirmed the claim constructions. It affirmed the SJ of noninfringement as to the domestic carriers. It affirmed that the judgment against the domestic carriers applies equally to the foreign carriers. It affirmed the SJ of noninfringement as to the software companies with respect to some claims, vacated as to others, and remanded.

TPLLC petitioned for writ of certiorari, raising issues regarding jurisdiction and summary judgment.

This case is Technology Patents LLC v. T-Mobile (UK) Ltd., et al., Supreme Court of the U.S., Sup. Ct. No. 12-1292, a petition for writ of certiorari to the U.S. Court of Appeals for the Federal Circuit, App. Ct. No. 2011-1581. The Court of Appeals heard an appeal from the U.S. District Court for the District of Maryland, D.C. No. 07-CV-3012.

Supreme Court Denies Certiorari in Patent Reexamination Case

10/7. The Supreme Court denied certiorari in Finjan v. USPTO. This lets stand the decision of the Court of Appeals affirming the USPTO's rejection upon re-examination of all claims in an anti-virus patent. See, October 7 Orders List [94 pages in PDF] at page 11.

Finjan is the assignee of U.S. Patent No. 6,167,520 titled "System and method for protecting a client during runtime from hostile downloadables", issued on December 26, 2000.

In 2007, the U.S. Patent and Trademark Office (USPTO) granted a request for ex parte reexamination. In 2009, the examiner rejected all claims as anticipated by the book [Amazon] titled "Rx PC: The Anti-Virus Handbook", written by Janet Endrijonas, and published in 1993. The examiner concluded that the antivirus program described in Endrijonas included the same elements as the claimed invention.

Finjan appealed the examiner's rejection to the Board of Patent Appeals and Interferences (BPAI). In 2011, the Board affirmed the examiner's rejection. In 2013, the U.S. Court of Appeals (FedCir) affirmed. See, January 11, 2013 per curiam judgment of the Court of Appeals, affirming, without opinion.

(The America Invents Act, which was enacted in 2011, renamed the BPAI the Patent Trial and Appeal Board (PTAB).)

See also, Solicitor General's brief, and Supreme Court's docket. This case is Sup. Ct. No. 12-1245 and App. Ct. No. 2011-1542.

Supreme Court Denies Certiorari in Case Involving Rule 11 Sanctions and Fee Shifting in Patent Cases

10/7. The Supreme Court denied certiorari in Raylon v. Complus Data Innovations, a patent infringement case involving the issue of awarding Rule 11 sanctions, and Section 285 costs and attorneys fees, in patent cases. See, October 7 Orders List [94 pages in PDF] at page 13.

This lets stand the December 7, 2012 opinion [33 pages in PDF] of the U.S. Court of Appeals (FedCir) which overturned the District Court's denial of sanctions and costs and attorneys fees.

By denying certiorari, the Supreme Court passed up an opportunity to address disincentives to asserting, filing, and pursuing meritless patent infringement actions.

However, there are numerous bills pending in the Congress that would provide, among other things, for shifting of costs and attorneys fees, and for the posting of bonds, in some patent cases. See, story titled "Summary of Pending Patent Reform Bills" in TLJ Daily E-Mail Alert No. 2,592, August 29, 2013.

There are also pending bills that would deter frivolous claims and defenses in litigation generally. See, for example, HR 2655 [LOC | WW], the "Lawsuit Abuse Reduction Act of 2013", and story titled "House Judiciary Committee Approves Bill to Provide Greater Sanctions for Frivolous Complaints and Defenses" in TLJ Daily E-Mail Alert No. 2,599, September 11, 2013.

The patent in suit pertains to a hand held device that enables law enforcement agencies to issue tickets. The defendants are all software integrators and ticket writing device manufacturers. Raylon filed complaints in the U.S. District Court (EDTex) alleging infringement of the same patent against Complus Data Innovations, Inc., Casio America, Inc. and Casio Computer Co., Ltd., Symbol Technologies, Inc., and others. The District Court consolidated the cases.

The District Court construed the claims in the patent, and granted summary judgment of non-infringement to all defendants.

Defendants moved for sanctions under Rule 11 of the Federal Rules of Civil Procedure (FRCP), and costs and attorneys fees under 35 U.S.C. 285, which the District Court denied.

Rule 11(b) provides, in part, that "By presenting to the court a pleading, written motion, or other paper -- whether by signing, filing, submitting, or later advocating it -- an attorney or unrepresented party certifies that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances".

Rule 11(c) provides, in part, that "If, after notice and a reasonable opportunity to respond, the court determines that Rule 11(b) has been violated, the court may impose an appropriate sanction on any attorney, law firm, or party that violated the rule or is responsible for the violation. Absent exceptional circumstances, a law firm must be held jointly responsible for a violation committed by its partner, associate, or employee."

Section 285, of the Patent Act, provides in full that "The court in exceptional cases may award reasonable attorney fees to the prevailing party."

The Court of Appeals determined that Rayon's claim constructions were objectively unreasonable and that Raylon had made "multiple frivolous arguments" to the District Court.

It reversed the District Court's denial of Rule 11 sanctions, and remanded to the District Court to determine the proper sanction. It vacated and remanded the denial of costs and attorneys fees, on the grounds that the District Court had relied upon its Rule 11 analysis, which the Court of Appeals rejected.

While the Court of Appeals sent the case back to the District Court, it wrote little regarding what sanctions should be imposed. It did write that they may be set at a level sufficient to deter repetition of such conduct or comparable conduct by others similarly situated.

This case is Raylon, LLC v. Complus Data Innovations, Supreme Court of the U.S., Sup. Ct. No. 12-1354, a petition for writ of certiorari to the U.S. Court of Appeals for the Federal Circuit, App. Ct. Nos. 2011-1355, 2011-1356, 2011-1357, 2011-1358, and 2011-1359. The Court of Appeals heard appeals from the U.S. District Court for the Eastern District of Texas, D.C. Nos. 09-CV-0355, 09-CV-0356, and 09-CV-0357. See also, Supreme Court's docket.

Supreme Court Ends Hartman's Claim to Have Invented the Internet

10/7. The Supreme Court denied the motion of the petitioner for leave to proceed in forma pauperis in Dorothy Hartman v. USPTO. See, October 7 Orders List [94 pages in PDF] at page 9. This puts to rest Hartman's broad claim to have invented the internet.

Hartman applied to the U.S. Patent and Trademark Office (USPTO) for a business method patent in 2004. She replaced its claims in 2011. The USPTO rejected all of her claims for indefiniteness. The Patent Trial and Appeal Board (PTAB) affirmed in 2012. The U.S. Court of Appeals (FedCir) affirmed in 2013.

The Court of Appeals wrote in its March 8, 2013 opinion [5 pages in PDF] that "In essence, Hartman claimed to have invented the Internet." But, she failed in many claims to "recite any specific steps". In other claims, she recited steps that "are similar to those taken by users of prior-art online databases". Hence, all of her claims fail for indefiniteness.

See also, Supreme Court's docket. This case is Sup. Ct. No. 12-10884, and App. Ct. No. 2013-1070.

Supreme Court Denies Certiorari in Challenge to the AIA's False Marking Amendments

10/7. The Supreme Court denied certiorari in Public Patent Foundation v. McNeil PPC, a challenge to the Constitutionality of the provisions of the America Invents Act (AAI) that amended 35 U.S.C. 292 to limit patent false marking cases. See, October 7 Orders List [94 pages in PDF] at page 84.

This lets stand the May 3, 2013 summary order of the U.S. Court of Appeals (FedCir), which affirmed the judgment of the U.S. District Court (SDNY), which upheld the Constitutionality of the statutory changes made by the Congress in 2011.

The Public Patent Foundation (PPF) is associated with the Cardozo Law School in New York City. It filed a complaint in the District Court alleging false marking in 2009. The Congress then amended the statute, with retroactive application, to eliminate standing in false marking cases for third parties that have not suffered a competitive injury as a result of the false marking.

The PPF advanced very tenuous arguments that the statute is unconstitutional under the due process and intellectual property clauses. The District Court rejected these arguments, and dismissed. The Court of Appeals affirmed.

This case is Public Patent Foundation v. McNeil PPC, Inc., et al., Supreme Court of the U.S., Sup. Ct. No. 13-16, a petition for writ of certiorari to the U.S. Court of Appeals for the Federal Circuit, App. Ct. No. 2012-1274. The Court of Appeals heard an appeal from the U.S. District Court for the Southern District of New York, D.C. No. 09-CV-5471. See also, Supreme Court's docket.

GAO Issues Report on Shortage of Lithium-7

10/7. The Government Accountability Office (GAO) released a report [31 pages in PDF] titled "Managing Critical Isotopes: Stewardship of Lithium-7 Is Needed to Ensure a Stable Supply".

The GAO reports that Lithium-7 (Li-7) is a critical component for the operation of the 65 pressurized water reactors (PWRs) that produce 13 percent of the electricity in the US. The US has not produced Li-7 in 50 years. Only the People's Republic of China (PRC) and Russia make it, and those supply sources are becoming unreliable. Moreover, the GAO reports, the Department of Energy (DOE) is underestimating domestic demand, and the scope of the impending problem.

Li-7 is not used in information and communications technology (ICT). And, this report does not address other Lithium isotopes, or the use of Lithium based compounds, many of which have applications in ICT. However, this Li-7 issue is much like the rare earth materials (REMs) issue. REMs are critical to ICT, as Li-7 is critical to PWRs. The US no longer produces either REMs or Li-7. The PRC produces both. The DOE is responsible for studying both REMs and Li-7, but appears inattentive to both.

Federal action that would incent domestic production could assure a reliable supply of REMs and Li-7.

The report was prepared at the request of Rep. Dan Maffei (D-NY), the ranking Democrat on the House Science Committee's (HSC) Subcommittee on Oversight. There are several PWRs, as well as boiling water reactors, in his upstate New York district.

Also, the Comanche Peak Nuclear Power Plant, which operates two PWRs, is located to the southwest of the Dallas Fort Worth (DFW) metropolitan area. It is a major electricity supplier, employer and tax payer in the area. Rep. Eddie Bernice Johnson (D-TX), the ranking Democrat on the HSC, represents a south Dallas district.

Rep. Eddie Bernice JohnsonRep. Johnson (at left) issued a release that states that the "GAO identified several options to mitigate a potential lithium-7 shortage, including establishing a domestic reserve and building a domestic lithium-7 production capability. According to federal officials GAO interviewed, a pilot plant capable of producing Li-7 would take about 5 years to construct at a cost of $10 to $12 million."

The House passed a bill on September 18, HR 761 [LOC | WW], the "National Strategic and Critical Minerals Production Act of 2013", that would facilitate domestic product of REMs, among other things.

That bill addresses the federal permitting processes that delay or block efforts to extract materials from the ground. The just released report does not state whether or not extraction or other permitting processes are an obstacle to domestic Li-7 production. However, it does state that new technology for separating the Li-7 isotope will likely have to be developed.

Votes on HR 761 and Democrats' amendments all broke down along party lines. Rep. Maffei voted against the bill, as did almost all Democrats, but was one of the few Democrats who broke ranks to vote against some Democratic amendments. Rep. Bill Owens (D-NY), another upstate Democrat from an adjacent district, voted for the bill. See, story titled "House Passes Rare Earths Bill" in TLJ Daily E-Mail Alert No. 2,604, September 24, 2013.

The just released GAO report also compares the shortage of Li-7 to the "shortage of rare earth elements". It states that "Controlling most of the market on rare earth materials production, China caused a shortage when it decreased its exports of rare earth materials". And, "if not mitigated, a lithium-7 shortage could possibly lead to the shutdown of one or more" PWRs.

It concludes that "relying on two foreign producers to supply a chemical that is critical to the safe operation of most of the commercial nuclear power reactors in the United States places their ability to continue to provide electricity at some risk".

It suggests that one possible solution would be domestic stockpiling by the DOE. Another would be "building a domestic lithium-7 production capability" which "would reduce or eliminate the need for importing supplies", but "would take several years to develop the technology and construct a production facility".

ICT Uses of Lithium. Li-7, which is critical to PWRs, is a stable isotope of the element Lithium, which is number 3 on the Periodic Table. Lithium is extracted from the earth, either in brine or hard rock mineral. There is much Lithium in known deposits inside the US.

Lithium based products include both rechargeable lithium-ion and disposable batteries for a wide range of portable ICT and other devices.

Other Lithium based compounds are used in mobile phones, optical modulators, fiber optic communications, telescopes, and some other specialty optics applications.

Other uses of Lithium include high strength to weight metal alloys (including in aircraft airframes), heat resistant glass and ceramics (including in ovenware), high energy propellants (including in rockets and torpedoes), and nuclear weapons.

The just released report does not address whether there exist risks of shortages of any of these Lithium based compounds.

NRC's 2008 Report. The National Research Council (NRC) released a 264 page report in 2008 titled "Minerals, Critical Minerals, and the U.S. Economy".

The NRC wrote that, as of 2008, "we conclude that the current importance of lithium would be low, but believe that this element must be followed closely as this situation could change in the future". It suggests that one situation that might change would be the use of Li-ion batteries in hybrid cars. (The DOE and automakers now report that Li-ion batteries are now being used in cars, including for both hybrid and stop-start systems.)

Li-ion batteries have greater efficiency properties (higher energy densities and slower charge loss rates) than alternative lead acid batteries, but cost more, and have volatility problems, as Boeing and purchasers of its 787 Dreamliner have since learned.

In addition, the NRC report finds the "supply risk for lithium to be at least moderate".

The 2008 report also notes that "lithium is widely distributed in the Earth's crust" and the US "is the leading consumer of lithium-based products". (See, NRC report at pages 153-154.)

ITIF Report Advocates Investment Tax Credit

10/7. The Information Technology and Innovation Foundation (ITIF) released a report [39 pages in PDF] titled "Restoring America's Lagging Investment in Capital Goods". The authors are the ITIF's Luke Stewart and Robert Atkinson.

It states that investment in new equipment and software has stagnated, and the government must act. "Between 1980 and 1989, business investment in equipment, software and structures grew by 2.7 percent per year on average and 5.2 percent per year between 1990 and 1999. But between 2000 and 2011 it grew by just 0.5 percent per year". Moreover, it states that investment in the computer sector has declined.

The paper recommends that the "Congress should use the tax code to more strongly encourage investment in machinery, equipment and software, ideally through a new investment tax credit, while the administration should establish a task force on market short-termism to recommend policies to ameliorate it."

More specifically, it recommends that "Congress should enact an investment tax credit (ITC) to provide a 35 percent credit on all capital expenditures made above 75 percent of a base amount. The ITC would be modeled on the Alternative Simplified Research and Experimentation Tax Credit (ASC). The ASC provides a credit of 14 percent on R&D expenditures above 50 percent of the average of the firm's R&D expenditures over the previous three years. Similarly, the base for the ITC would be the average expenditures on qualifying capital equipment over the last three years, with the credit applying to all expenditures made above 75 percent."

Alternatively, "If Congress does not enact an ITC, it should at least allow firms to expense, for tax purposes, the entire cost of equipment and software in the first year instead of having to depreciate the costs over a number of years."

The current R&D tax credit is scheduled expire on December 31, 2013. See, story titled "R&D Tax Credit Extended" in TLJ Daily E-Mail Alert No. 2,504, January 7, 2013.

There bills pending in this Congress, as in every Congress, that would extend and/or modify this credit. See for example, stories titled "R&D Tax Credit Bills Introduced", "Sen. Coons Re-Introduces Bill to Allow Start Ups An R&D Payroll Tax Credit", and "Rep. Holt Introduces Bill to Create Tax Credit for Investing in Small Businesses with High Rates of Spending on Research" in TLJ Daily E-Mail Alert No. 2,521, February 7, 2013.

This ITIF paper has nothing to say about one tax credit proposal that is pending in the Congress to incent start ups, and the formation of start ups, by allowing a credit against payroll taxes. See, S 193 [LOC | WW], the "Startup Innovation Credit Act of 2013".

People and Appointments

10/7. President Obama nominated Kelly Welsh to be General Counsel of the Department of Commerce (DOC). See, White House news office release and release. She is General Counsel of Northern Trust, where she has worked since 2000. Before that, she worked for Ameritech, one of the Regional Bell Operating Companies formed by the breakup of AT&T 30 years ago. Ameritech merged with Southwestern Bell in 1999, and that entity merged with AT&T in 2006. Federal Election Commission (FEC) records disclose that Welsh has long been a generous financial contributor to Democratic campaigns, like the Secretary of Commerce, Penny Pritzger.

10/7. President Obama nominated Arun Madhavan Kumar to be Assistant Secretary of Commerce and Director General of the U.S. and Foreign Commercial Service. See, White House news office release and release. Kumar recently worked for KPMG.

10/7. The Georgetown University's (GU) McDonough School of Business's (MSB) Georgetown Center for Business and Public Policy announced senior policy scholars, fellows, and affiliates. See, release.

More News

10/7. The Supreme Court denied certiorari in Eastland Music Group v. Lionsgate Entertainment, a trademark case. See, October 7 Orders List [94 pages in PDF] at page 16. This lets stand the short February 21, 2013 opinion of the U.S. Court of Appeals (7thCir), which affirmed the Rule 12(b)(6) dismissal by the U.S. District Court (NDIll) of the plaintiff's complaint. The plaintiff, Eastland Music Group (EMG), which registered the trademark "PHIFTY-50", made a rap album in 2003. Lionsgate Entertainment is a movie company that made a movie that opened in 2011 titled "50/50". The title referred to the main character's chances of surviving cancer. EMG filed a complaint alleging trademark infringement. The District Court dismissed. The Court of Appeals affirmed. It wrote that "The title of a work of intellectual property can infringe another author's mark only if the title falsely implies that the latter author is its origin." It cited Dastar v. Twentieth Century Fox Film, 539 U.S. 23 (2003). This case is Eastland Music Group, LLC v. Lionsgate Entertainment, Inc., Sup. Ct. No. 12-1501, and App. Ct. No. 122928.