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Intellectual Property
Patent Bill Backers Float Alternative
     Supporters of a Senate bill that would overhaul the U.S. patent system sent a proposal to Capitol Hill this week that would alter several of the legislation's most controversial provisions. Stakeholders say they hope the changes will assuage critics and help ensure prompt action on the bill, which the Senate may take up after the forthcoming Easter congressional recess. The recommendations from the Coalition for Patent Fairness -- which backs the bill and includes firms such as Cisco Systems, News Corp., Time Warner and others -- follow months of closed-door discussions with Senate staffers and opponents of the bill. Some groups have resisted language that would alter the standard for calculating damages in infringement lawsuits. Under the changes sent to Senate Judiciary Chairman Leahy, Judiciary ranking member Arlen Specter, R-Pa., and Sen. Orrin Hatch, R-Utah, the bill would be more closely aligned with existing statutory terms of novelty and non-obviousness, which are underlying principles of patentability. According to the coalition, the "entire market value" rule that, when applied, allows the owner of a component invention to capture the value of a larger infringing product that unlawfully incorporates its creation, should be clarified. The group said "the inventor must prove the inclusion of the invention in a product is what predominantly causes consumers to purchase the product." The group also addressed in its recommendations what some view as inadequate jury instruction in patent cases. "It is indispensable for the bill also to provide judges with the legal guidance on how a reasonable royalty is to be calculated," the letter said. The Innovation Alliance, which represents many firms whose business models depend on licensing patents, joined the trade groups for medical device manufacturers and venture capitalists in submitting their own damages language last month. Those organizations have cited numerous problems with the Senate version of the legislation. But an Innovation Alliance spokesman said the Coalition for Patent Fairness' proposal represents "three giant steps backward."

Intellectual Property
House Panel Approves Measure To Bolster IP Enforcement
     The House Judiciary Courts, the Internet and Intellectual Property Subcommittee approved a bill this week that would bolster U.S. intellectual property enforcement. The panel, however, stripped the legislation of a section that would have allowed multiple statutory damages to be awarded in cases involving infringement of compilations -- such as an entire music album made up of individual tracks. Existing law provides for penalties of up to $30,000 for each non-willful violation and up to $150,000 per willful violation. Critics argued that the bill as introduced would end up tripling or quadrupling damages. House Judiciary Chairman Conyers noted that the damages issue "is not going anywhere [and] it still needs to be considered quite carefully." Another change adopted by the panel would clarify that language to expand civil forfeiture provisions for IP crimes requires the showing of a substantial link between the property and the crime. Advocates of "fair use" of copyrights worried the bill "could ensnare materials and devices that have a fleeting connection" to the crime, Berman said. In response to Justice Department criticism, text also was removed from the bill that would have required all FBI agents to receive IP-related crime training and replaced with language that would require training only for U.S. attorneys assigned to computer hacking and IP units and FBI agents who support those offices. The Bush administration has expressed other concerns about the bill's proposed creation of a permanent IP division within the Justice Department and the establishment of an executive-level office to oversee domestic and global copyright and trademark laws. Those sections of the bill went unchanged -- but subcommittee Chairman Howard Berman, D-Calif., said discussions with the affected agencies have begun.

Intellectual Property
AFL-CIO Opposes Senate Patent Bill
     The AFL-CIO formally came out this week against the current version of a Senate bill that would overhaul the U.S. patent system. Senate Majority Leader Reid wants to bring the bill to the floor in April or May. The labor group's decision comes on the heels of a similar announcement last week by the Communications Workers of America, International Brotherhood of Teamsters, United Steelworkers and other unions. The AFL-CIO, which decided not to oppose the House companion bill that passed in September, has problems with language that would alter the standard for calculating damages in infringement cases and challenging patents after they are granted, an AFL-CIO spokeswoman said. Steve Elmendorf, spokesman for bill supporter the Coalition for Patent Fairness, said many of the AFL-CIO's concerns are similar to ones "they raised a year ago and have been addressed by multiple revisions to the bill." Meanwhile a group of House lawmakers called on House leaders to hold a hearing on the international implications of the patent bill. The House bill as written "would weaken our strong patent system and open American companies and their intellectual property to foreign pirates," said Rep. Donald Manzullo, D-Ill. However, the founders of a dozen technology companies, including online movie rental firm Netflix, Palm Inc., and Juniper Networks sent a letter to Senate leaders this week expressing support for the bill. The legislation strikes the right balance to "protect the rights of innovators while simultaneously allowing innovation to grow and thrive," the firms said.

Lobbying
Software Firms To Push Agenda Next Week
     Computer executives will converge on Washington next week to urge lawmakers to pass high-tech-friendly legislation and push for full funding of technology programs in President Bush's FY09 budget request. In anticipation of their lobbying blitz, chief technology officers from Apple, Dell, Microsoft, Symantec and other members of the Business Software Alliance sent a letter to House and Senate leaders this week outlining their legislative priorities. Overhauling the U.S. patent system is at the top of their list. They also urged Congress to support the administration's $2.1 billion request to fund the Patent and Trademark Office. BSA member companies together hold more than 89,000 U.S. patents and are among the top 15 U.S. companies awarded patents in 2006 and 2007. BSA also is pushing legislation that would close legal loopholes that hamper law enforcement efforts to apprehend and prosecute cybercriminals. The firms said they also want increased funding for basic research, more focus on math, science, engineering and technology education, and an increase in the number of H-1B visas for skilled foreigners.

Telecommunications
Martin Reverses, Favors Testing DTV Switch
     FCC Chairman Kevin Martin appeared to reverse course this week on conducting trials of the digital television transition in various cities before the official Feb. 17 switchover to gauge the impact of terminating analog transmission. "I told [the commissioners] that I thought that was a good idea, but there were no markets that have volunteered," Martin said, adding that he has asked broadcasters to help identify potential test cities. But he said he did not think the FCC had the authority to require participation in such a test. Martin commented one day after announcing that he supports Democratic FCC Commissioner Michael Copps' idea of field testing several aspects of the changeover, including digital reception and consumer reaction. Martin's newfound flexibility comes as the Senate Commerce Committee prepares for the latest in a series of DTV oversight hearings and as the Commerce Department continues to be plagued by churn among top officials responsible for helping to guide the transition. In January, Martin appeared to dismiss the idea of DTV testing, saying he did not want to be distracted from the larger changeover. He said the agency's considerable progress on several DTV-related items in recent months has made him more open to market trials.

Telecommunications
Dorgan Seeks To Undo Relaxation Of Media Ownership Limits
     Sen. Byron Dorgan, D-N.D., followed through on his earlier promise to introduce a resolution of disapproval aimed at nullifying the FCC's relaxation of its media ownership limits in December. With the agency's two Democrats strongly opposed, the three Republican FCC commissioners permitted newspapers to combine with broadcast outlets in the nation's top 20 markets and set criteria for such combinations in smaller cities. "The FCC says this is a modest compromise, but make no mistake, this is a big deal," Dorgan said. He warned that the new rules could spur a wave of media consolidation in markets of all sizes. Proponents of the change, including FCC Chairman Kevin Martin, said it was needed to aid struggling newspapers. The resolution faces steep hurdles because it would require passage in both chambers, considered a tall order, especially in an election year. The Bush administration already has endorsed the new rules.

Homeland Security
Chertoff Gives Defense Of Virtual Fence
     Homeland Security Secretary Chertoff strongly defended border security projects undertaken by his department, asserting that virtual fencing in Arizona is working and that border-control efforts are not being delayed by three years. "I have read in the newspapers that there is a three-year delay and for the life of me I cannot figure out where that comes from," Chertoff said this week, which marks the five-year anniversary of his department. "There's no doubt that the process of working out some of the kinks delayed this by five to six months, but to say it's three years, I don't know where that comes from." GAO testified before the House Homeland Security Committee last month on the department's SBInet border security program, which includes the building of a 28-mile virtual fence in southern Arizona. GAO said while the technology will be deployed in two areas in 2008, the project will not be completed until 2011. Chertoff argued that the GAO report is not "terribly different" from what the department has conceived for SBInet. He said the virtual fence "does add value" but acknowledged it "wasn't as good as it could be." Among Chertoff's other key goals for the rest of the Bush administration is to have a major cybersecurity initiative up and running and begin implementing a law that requires states to issue residents secure driver's licenses and identification documents. Chertoff said he also wants to make progress this year on implementing a system that uses biometrics to verify when foreigners leave the country by air and have an electronic travel-authorization system in place for citizens of countries who do not need visas to travel to the United States.

Homeland Security
FBI Director Says New Office Will Address Abuses
     FBI Director Robert Mueller was grilled this week by the Senate Judiciary Committee over his agency's efforts to eliminate abuses in the issuances of so-called national security letters, which allow agents to analyze telephone, computer, and bank records in suspected terrorism cases without court warrants. Mueller said the Justice Department will soon release an audit from 2006 that highlights more problems, many of which predate the reforms that have been put in place. Mueller said the FBI created a new office of integrity and compliance to "identify in advance areas of potential risk" and pledged "continued vigilance in this area." The Justice Department inspector general told the committee last March that the FBI might have broken the law thousands of times since 2003 and hundreds of those cases could have involved improper use of security letters. Judiciary ranking member Arlen Specter, R-Pa., pressed Mueller for his take on the more than 40 lawsuits brought against telecommunications firms for aiding government eavesdropping initiatives. Mueller called the cases a "disincentive to the type of cooperation we need to be effective" and said they will hamper intelligence agencies' relationships with the firms if they proceed. "Disincentive, hamper, hinder -- I don't hear you saying it would stop," Specter countered.

Homeland Security
Bush Names Civil Liberties Board Members
     President Bush last week quietly named three Republicans that he wants to serve on the five-member White House Privacy and Civil Liberties Oversight Board -- a month after the terms of its original members expired. Nominees for the two Democratic slots and the executive director position have not been announced. The board, which was established in 2004 at the behest of the 9/11 Commission, was reconstituted last year as an independent agency amid concerns over its autonomy. If confirmed, Homeland Security Department civil liberties officer Daniel Sutherland would chair the group for six years, constitutional law professor Ronald Rotunda would serve a four-year term and General Electric Chief Security Officer Francis Taylor would serve two years. Taylor, a former ambassador and Air Force brigadier general, was a member of the original board.
     Senate Judiciary Chairman Leahy said he believes the board can serve a crucial role and it is important to get the group up and running, an aide said. House Homeland Security Intelligence Subcommittee Chairwoman Jane Harman, D-Calif., said "there are huge issues outstanding which require privacy and civil liberties concerns built in at the front end" and the delay in naming new members was unfortunate. Harman said Sutherland, who has testified repeatedly before the Intelligence subcommittee, "brings some strong credentials" and has worked hard on privacy issues from within Homeland Security. But Lisa Graves of the Center for National Security Studies urged Congress to reject the appointments, arguing that Sutherland and Taylor have worked to implement "anti-civil liberties policies."

Trade
Finance Leaders Working On Trade Assistance Compromise
     Senate Finance Chairman Baucus and ranking member Charles Grassley, R-Iowa, have agreed to work on a compromise measure to renew Trade Adjustment Assistance for workers who lose their jobs due to foreign competition. That is a significant step forward in reauthorizing TAA, which stalled because Baucus lacks the necessary Republican support to move forward on his bill. Baucus' bill, which he introduced last year with Sen. Olympia Snowe, R-Maine, would expand TAA to cover service-sector workers, including transportation, and those whose jobs are lost to countries that are not U.S. trading partners; expand healthcare tax credits for unemployed workers and double funds for retraining, among other provisions. Grassley has not taken a position on it but "has some ideas of his own," an aide said. The House passed a similar TAA renewal bill last year, which the White House threatened to veto because it would expand the program to more workers without correcting what it sees as flaws in the existing program. While Grassley's support could be crucial to winning the 60 votes likely needed to pass a bill in the Senate, if the measure is scaled back it could cost labor support. Baucus has said TAA reauthorization is his top trade priority and one he wants completed before he'll consider any pending trade agreements. Meanwhile, Baucus also said this week that it could backfire on the White House if President Bush sends up the U.S.-Colombia free trade agreement next week without the assent of Democratic leaders. "I think that would be unwise," Baucus said, reiterating that many lawmakers prefer to act on TAA first.

Trade
U.S. Files New Trade Complaint Against China
     The Bush administration has filed a complaint with the World Trade Organization over China's treatment of U.S. suppliers of financial information services. The United States asserts that China is breaking world trade laws by requiring foreign financial information suppliers to operate through a government-chosen distributor. The action is the most recent in a series of cases taken against China over the past two years by the administration, which is trying to fend off efforts in Congress to enact tariffs against Chinese exports because of the country's trade practices. Lawmakers are particularly concerned about China's currency policy, which critics contend artificially cheapens Chinese exports while making U.S. products sold in China more expensive. Previous WTO actions by the United States have included cases involving China's treatment of U.S. auto parts and intellectual property. In this case, the United States claims that China's use of a government-chosen distributor disadvantages U.S. companies by preventing them from establishing local operations to provide services. In addition, the administration contends the Chinese regulatory agency is too closely aligned with Chinese firms. In launching the case, the United States, joined by the European Union, is formally requesting a dispute settlement consultation with China in an effort to resolve the matter before proceeding further.

E-Government
Computer Problems Plague Census
     Increasingly costly efforts to automate a key aspect of the next census have become unacceptable, so the Census Bureau could return to a paper-based system, Commerce Secretary Gutierrez told lawmakers at a hearing this week. The hand-held computers designed for census canvassers have experienced significant schedule, performance and cost issues, Gutierrez said. A task force to re-examine their use was assembled and will advise Gutierrez on the best course of action by the end of March. Sen. Tom Coburn, R-Okla., said GAO raised concerns about the bureau's automation plan as far back as 2004. Necessary changes in the automation system could add as much as $3 billion to the cost of the census, which has grown from an estimated $11.2 billion to $11.8 billion.
     Gutierrez declined to estimate the additional cost at the hearing. The hand-held devices were developed in a contract with the Harris Corp. They were intended to be used by canvassers in the field to communicate with a central office. The chief financial benefit to using the devices would be to reduce visits to residences, said GAO's Mathew Scire. If the hand-held devices work as planned, census takers could find out whether completed forms had been sent to the Census Bureau by residents before making visits, he said. Gutierrez offered four options for moving ahead. Only one of his options would use the devices.

Budget
Lawmakers Push For More R&D Funding
     Reps. Rush Holt, D-N.J., and Judy Biggert, R-Ill., the co-chairmen of the Congressional Research Caucus, joined scientists, engineers and graduate students this week to push for additional funding of major science agencies as lawmakers consider President Bush's FY09 budget request. The event, sponsored by the Science Engineering and Technology Working Group, was aimed at pushing for more money for NASA, the National Science Foundation, Defense Department and the Energy Department's Office of Science. Congress has been "under investing significantly in research in virtually every sector of our economy," said Holt, a former physics professor. White House science adviser John Marburger told the House Commerce-Justice-Science Appropriations Subcommittee last week that the requested $147 billion for research and development reinforces Bush's commitment to the America Competes Act, a 2007 law that authorized increases in science, math and technology funding. Appropriators failed to fully fund the law for FY08 and Biggert said she and others are angling for a $500 million supplemental.

Politics
Compared To TV, Little Money Spent On Online Political Ads
     Political candidates will spend billions of dollars on television and direct response advertising in 2008 but the Internet is expected to attract only $73 million during this campaign cycle, according to a report released this week by the Institute for Politics, Democracy and the Internet. The disparity is the result of an overreliance on the Internet for earned media and a lack of understanding about its role as an increasingly efficient and measurable medium, the report said. Nevertheless, the study predicts more candidates will utilize paid Web advertising this year than in all previous elections combined.
     "It's no longer true that the only way campaigns can reach voters is by purchasing ads on network television," the institute's director, Julie Barko Germany, said. The rise of blogs and social networking communities has led voters to consume political information in new ways, she said. Political marketers spend an average of 1.6 percent of their budget online, compared to 7 percent by their commercial counterparts. The authors said search engine marketing, display advertising and lead-generation marketing can all affect public awareness and voter intent. Political marketers are "extremely savvy when it comes to fundraising, e-mail marketing and use of Web 2.0 applications like video sharing, blogs and social networks," but they have only recently discovered the power of Internet ads, ValueClick Vice President Matthew Boyd said.