By Kate Tummarello and Julian Hattem - 02/26/14 07:25 PM EST
THE LEDE: A forthcoming reauthorization bill from Republicans on the House Energy and Commerce Committee would make some changes to the current video marketplace, according to people familiar with the committee’s plans.
Rep. Greg Walden (R-Ore.), chairman of the House Commerce subcommittee on Communications, had indicated in the past that he wanted to pass a clean bill to reauthorize the Satellite Television Extension and Localism Act, which governs the video marketplace, including negotiations between broadcasters and cable and satellite companies.
The bill would allow cable and satellite companies to sell basic programming packages that do not include broadcast channels. It would also allow cable and satellite companies to reject broadcasters’ attempts to negotiate as a group, allowing the companies to negotiate with individual broadcasters instead.
The bill would also do away with government protections afforded to broadcasters during the parts of the year that Nielsen collects ratings information for advertising purposes. Currently, broadcasters can drop cable and satellite companies during these “sweeps weeks” — which often contain high-profile programming — but cable and satellite companies are unable to drop broadcasters.
Finally, the bill would end federal rules that require cable boxes and other set-top box devices, such as Roku and Apple TV, to include a specific type of additional security device, in the hopes of making the set-top box market more competitive.
If introduced, that bill would combine previous proposals from committee members on both sides of the aisle.
Last year, Rep. Anna Eshoo (D-Calif.) — ranking member of Walden’s subcommittee — introduced a bill to allow customers to choose more specific programming packages from cable and satellite companies, and Rep. Steve Scalise (R-La.) introduced a bill that would similarly allow cable and satellite companies to offer more specific programming packages. Earlier in the year, Reps. Bob Latta (R-Ohio) and Gene Green (D-Texas) introduced a bill to eliminate the federal rules about security devices in set-top boxes.
A committee aide declined to comment on the specific provisions in or timeline of the bill, but said the committee leadership intends to introduce its legislation during the first quarter of this year. The committee is holding a hearing next week to discuss reauthorization of the video marketplace bill.
Supreme Court hears patent cases: The Supreme Court heard oral arguments in two patent cases Wednesday. Both cases, Octane Fitness v. Icon Health Fitness and Highmark Inc. v. Allcare Health Management Systems, deal with “fee-shifting” standard in patent cases, or the federal circuit court’s decision to make the losing party of a patent case pay the winning party’s fees.
Fee-shifting is one of the more controversial patent reform provisions in front of Congress as it attempts to crack down on “patent troll” activity, which is bringing or threatening to bring frivolous patent infringement lawsuits. Advocates for fee-shifting say the measure would increase the costs of bringing frivolous lawsuits, while opponents say it could keep some patent holders from bringing legitimate suits.
According to the lawyers who argued the Octane case — which focuses on the federal circuit’s decision not to invoke fee-shifting in a patent case over exercise equipment — in front of the Supreme Court, the justices had in mind the federal government’s attention to patent troll activity.
“Everybody recognizes that the patent system is being abuse,” said Rudolph Telscher, an attorney at Harness Dickey that who on behalf of Octane Fitness. Telscher said he thinks “the Supreme Court recognizes the standard does not balance the system in the right way” and encourages weak patent infringement suits.
Carter Phillips, an attorney at Sidley Austin who argued on behalf of Icon Health Fitness, said there was “certainly an undercurrent” of concern about widespread abuse of the patent system, especially among Justices Stephen Breyer and Antonin Scalia. Overall, Phillips said the Supreme Court sees a need for a clear standard for when courts should shift fees in patent cases and doesn’t want “an arbitrary regime” that varies between courts and judges.
“The court seems concerned about not having some kind of bright line test,” he said.
Online businesses lobby House on online sales tax: Representatives from online business groups met with House Judiciary offices Wednesday to talk about an online sales tax, an issue that will be in front of the committee during a hearing next week.
Participants included representatives from Goodwill as well as the bookstore, agricultural manufacturing and cigar manufacturing industries, according to Carl Szabo, policy counsel at NetChoice, the online business trade group that organized the fly-in. Szabo said the committee members, including Democrats and Republicans, that met with the online business representatives were “quite receptive and interested in listening to new ideas.”
NetChoice has lobbied against the Marketplace Fairness Act — the online sales tax bill that passed the Senate last year — and came out in favor of House Judiciary Committee Chairman Bob Goodlatte’s (R-Va.) online sales tax principles, which aim to allow for an online sales tax system that would not disadvantage or unduly burden online businesses. Szabo said Judiciary members seem open to new ways to meet Goodlatte’s principles not found in the Senate’s Marketplace Fairness Act.
Ad tax measure under fire: Broadcasters are protesting a provision in Ways and Means Committee Chairman Dave Camp's (R-Mich.) tax reform bill unveiled on Wednesday. The measure, which limits the amount of advertising that can be deducted, would hurt radio and TV broadcasters and ding the economy, the National Association of Broadcasters (NAB) said.
"NAB strongly opposes any job-killing proposal that would limit the ability of thousands of large and small businesses from fully deducting their annual advertising expenses,” NAB spokesman Dennis Wharton said in a statement. “NAB will work with lawmakers and other stakeholders to ensure the advertising tax deduction continues to create economic prosperity and well-paying jobs."
Under current law, the IRS usually allows people to deduct advertising expenses like other business-related charges. Camp’s provision would change that. Only 50 percent of some types of advertising costs would be deductible; the other half would be amortized over a decade. Other changes would limit the amount of advertising costs that could be expensed.
Over the next decade, the change would bring in about $169 billion, according to the Joint Committee on Taxation.
AT&T to propose IP transition trial: AT&T will file a proposal for its first IP transition trial with the Federal Communication Commission (FCC) Thursday, according to previously filed documents with the agency. At the company’s urging, the FCC voted earlier this year to allow telephone companies to consider experiments related to the IP transition, which is the switch from older telephone technology to new Internet-based phone technology.
AT&T will be the first major carrier to propose such a trial. Earlier this month, Iowa Network Services submitted its first proposal for an IP transition trial. In a statement last week, FCC Chairman Tom Wheeler said the trial proposals “are important steps in the Commission’s effort to determine how the IP transition can be conducted in a manner that preserves the enduring values of the Network Compact — universal service, public safety, competition and consumer protection.”
King wants White House should disclose NSA searches: Sen. Angus King (I-Maine) wants President Obama to tell lawmakers how often the National Security Agency (NSA) searches a database of millions of Americans’ phone records. The White House has reportedly received four different options for reforming the controversial surveillance program, only one of which would end it entirely. King said on Wednesday that the president should consider his plan for disclosing to Congress the number of times NSA officials search the phone records.
“This provision could be part of a reasonable compromise that keeps the costs of reforming this program low, ensures the legislative branch is equipped to identify constitutional violations, and at the same time makes certain that this information can be accessed quickly for legitimate national security purposes,” he said in a statement. “I urge the president to consider ideas like this as he makes his final decision.”
King attached an amendment to a Senate bill reforming the NSA last year, which would require the director of national intelligence to report to Congress how often the spy agency has searched the records on a quarterly basis. The amendment was unanimously adopted by the Senate Intelligence Committee.
Academics to testify on FTC: The House Commerce subcommittee on Trade will hold a hearing Friday to examine the Federal Trade Commission as it turns 100 years old. Friday’s hearing will include law professors from the University of Pennsylvania, University of Baltimore, University of Colorado and the University of Michigan. A professor from George Washington University’s business school is also slated to testify, as is the founder of the International Center for Law and Economics, a think tank.
The head of the NSA and the military’s Cyber Command, Gen. Keith Alexander, is testifying before the Senate Armed Services Committee about the Pentagon’s fiscal 2015 authorization request at 9:30 a.m.
At 1:30 p.m., the Senate Homeland Security and Governmental Affairs Committee will hold a hearing on how the government recycles electronics.
IN CASE YOU MISSED IT
A Democrat on the FCC is defending the agency’s controversial study of newsroom practices.
Sen. Joe Manchin (D-W.Va.) on Wednesday called for financial regulators to ban the virtual currency bitcoin.
Apple is challenging a district court ruling that found it broke the law by conspiring to set the price of e-books.
The NSA wants to extend the amount of time that it can hold on to people’s phone records.
A bipartisan group of Senators are calling on Internet companies, cable companies and others in the video market to weigh in as Congress reconsiders a law that governs that market.
Follow Hillicon Valley on Twitter: @HilliconValley, @ktummarello, @jmhattem