 | |
| |
TechnologyDaily Mobile
Back To the Future For IP
by Sarah Lai Stirland
Rapid fire changes in the technology and media industries during the past few years have reshaped the legal landscape, presenting lawmakers with tough policy issues to frame.
So far, they have not arrived at any conclusions.
Large, publicly traded technology firms such as Hewlett-Packard, IBM and Microsoft as well as the university community have accumulated giant portfolios comprised of thousands of patents. The phenomenon, which bloomed over the last several years, has created a novel marketplace for ideas. But in the process, it has spawned new kinds of litigation threatening small inventors' ability to innovate and potentially harming the bottom lines of the large corporations.
Silicon Valley companies, the financial services industry and other sectors sought to address the litigation issue this year by lobbying for reforms of the nation's patent system.
Meanwhile, the entertainment industry has been seeking to curb illegal online file sharing. Major players in the world of digital media pushed lawmakers to overhaul laws on what the industry calls an archaic system for licensing music.
The Supreme Court ultimately had the final word this year on how the law should govern technology companies' role in facilitating copyright infringement. In June, the court ruled that entities expressly promoting products to encourage infringement could be held liable for the infringing activities of the products' users. Congress took no action to offer a legislative answer to the court ruling.
Few of the other big ticket items on lawmakers' action agenda made much progress.
The Year That Wasn't For Patent Reform
The House Judiciary Subcommittee on the Courts, the Internet and Intellectual Property took the lead on patent reform this year. The subcommittee circulated in early summer a blockbuster bill containing a wish list of reforms that would have dramatically altered the nation's system for issuing patents. The list incorporated ideas from the Business Software Alliance, as well as ideas from reports issued by the Federal Trade Commission and the National Academy of Sciences. But by September, with strong opposition from the pharmaceutical, biotechnology and small inventor sectors, many of those ideas were removed.
It was apparent at the subcommittee's last hearing in September that differences remain between the information technology industry and pharmaceutical coalitions. They have concerns over the way juries assess damages. They also differ over a provision on where patent infringement cases can be brought.
A representative of the pharmaceutical industry said recently that its members are still contemplating the impact of the proposed legislation.
"We are still carefully reviewing the legislation with an eye toward making sure that patent protection, which is so essential to the development of new medicines for patients, is not compromised," said Pharma Senior Vice President Ken Johnson.
Despite the substantial changes to the legislation, Silicon Valley firms are still keen for their Washington representatives to work with the other stakeholders so that the subcommittee can take action.
"This issue is so important to us that we are still interested in seeing a bill move," said Josh Ackil, vice president of government relations at the Information Technology Industry Council.
For its part, Senate Judiciary's Intellectual Property Subcommittee has been exploring other avenues to hobble patent litigation, according to sources. Committee aides have been examining existing legal procedures that could be codified in a bill.
The ideas range from automatically awarding attorneys' fees to the winners of patent infringement cases, to awarding monetary damages to defendants who win on appeal. The proposals have a common thread in that they are designed to raise the financial stakes for potential patent infringement plaintiffs who are looking to cash in with questionable lawsuits. Observers do not expect any movement on the legislation until February, after the committee gets through the confirmation process for Judge Samuel Alito, President Bush's current nominee to succeed retiring Supreme Court Justice Sandra Day O'Connor.
Music Licensing Stuck In Quagmire
Meanwhile, no official action on either the House or Senate side has been taken on the issue of modernizing the way businesses can license music.
Lawmakers heard from a wide spectrum of music and new media industry executives this year. The executives urged Congress to clarify the rules regarding the types of licenses that webcasters and others need to transmit music via the Internet. The executives also asked for an overhaul of the nation's licensing laws to enable seamless, and legal, music transactions.
Like the debate among patent holders, negotiations have foundered over the issue of money. Music publishers and webcasters cannot agree on the rate at which musical compositions should be licensed. Talks on the issue failed this summer.
The online digital-music licensing debate is a complex one. It is likely to become more protracted next year as the functional capabilities of digital satellite radio become almost indistinguishable with those of current online music digital downloading and subscription services.
The recording industry fired off a preliminary salvo early this November during testimony before the House Judiciary panel's subcommittee on intellectual property.
Recording Industry Association of America CEO Mitch Bainwol during the hearing asked lawmakers to update the law to reflect the new reality of converged digital services. Specifically, he said that much of the functionality of the new digital radio services effectively transforms those radio services into digital music download services, which means that the labels stand to lose the revenues that would have accrued from the downloads.
During his testimony, Bainwol urged lawmakers to harmonize the rules governing the delivery of music across the various kinds of digital pipes.
Currently, to prevent the displacement of music sales, Internet radio services are subject to extensive rules that regulate audiences' listening habits. For example, the rules prohibit Internet radio stations from streaming specific sound recordings within an hour of a listener's request, or at a listener-designated time.
Satellite radio is not subject to these kinds of rules. So listeners can easily record and archive tunes without paying download fees. Recording labels, Bainwol said, have little influence over these practices because the satellite services are entitled to a compulsory license. That means that the services are allowed to broadcast the music without obtaining specific permission as long as they pay royalties established by statute.
"It is now clear that satellite radio, especially with proposed features allowing permanent copying and disaggregation, presents the same issues as these other digital platforms and should be brought into conformity," Bainwol said in written testimony.
Despite the complexity of the subject matter and the overlapping issues, Congress likely will continue to examine and address the relevant questions next year, given stakeholders' dissatisfaction with the ambiguities in current law. But any consensus on the issue could be complicated by the consumer electronics industry's opposition to the recording sector' ideas on changing the rules for digital satellite radio services.
NEW FEATURE
-Advertisement-
-Advertisement-
-Advertisement-
