OVERNIGHT TECH: Industry eyes on Supreme Court

THE LEDE: Members of the tech industry are watching closely to see how far the Supreme Court will go as it considers the validity of software patents.

The high court heard arguments Monday in the case Alice Corp. v. CLS Bank, which calls into question the validity of Alice Corp.’s patent for adding a computer to the escrow process. The court must decide whether adding a computer element to an “abstract idea” — which would not be eligible for patents — deserves protections under patent law.

While many expect the court to strike down the patent at question in the case, the court could rule broadly on what kind of software inventions should get patent protections at all.

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“The justices are clearly struggling” to decide “whether they want to try to go with a broader ruling,” said Matt Levy, patent counsel at the Computer and Communications Industry Association. Levy’s group includes Google, Facebook and Yahoo, which have been vocal advocates for patent reform efforts to curb “patent trolls,” or companies that profit by bringing and threatening to bring frivolous infringement lawsuits, usually based on weak software patents.

“There are ways they could write this so they just kind of punt while dealing with the Alice patents,” he said.

“It would be hard to blame them” for avoiding the broader and more difficult question of when software inventions are original enough to warrant patent protections, “but I think they’re trying hard not to do that,” he said.

Levy pointed to the justices’ line of questioning in search of how far patent protections should be extended to software and computer-enabled inventions. Justice Stephen Breyer “tried asking [the parties] what the right test should be and nobody could get a good answer,” he said. Breyer, along with Justices Sonia Sotomayor, Anthony Kennedy, Elena Kagan and Ruth Bader Ginsburg, is “struggling trying to come up with a test,” he said.

But the court has an incentive to find some kind of test for software patents, Levy continued. “If they don’t actually provide some clarity and define things more clearly," he said, "then the Federal Circuit is going to keep” issuing splintered rulings that leave the tech industry with little guidance about what kinds of patent protections to pursue.

Some worry the court will rule too broadly and wipe out protections for legitimate software patents. Marian Underweiser, intellectual property counsel at IBM, said a broad test could “render invalid at the door ... many inventions that I think we all would agree are meritorious.” IBM filed an amicus brief with the court that argued for protections for software patents without weighing in on Alice Corp.’s patents.

“A computer isn’t an abstraction,” Underweiser said.

Instead of considering whether Alice Corp.’s patent is warranted under the part of patent law that prohibits protections for “abstract ideas,” Underweiser said, the court should be considering whether the patent is warranted under the part of patent law that requires patents be granted for non-obvious inventions. “The kind of claims that are creating problems are really obvious” and therefore don’t deserve patent protections, she said.

Broadcasters oppose FCC crackdown: The National Association of Broadcasters strongly opposed Federal Communications Commission (FCC) votes on Monday that will limit cooperation between broadcast companies. The agency voted unanimously to keep large broadcasters — the top four in any media market — from teaming up in negotiations with cable and satellite companies over payment for broadcast content in the hopes of keeping consumers’ television bills low.

“Broadcasters are not responsible for higher pay TV bills,” NAB Vice President of Communications Dennis Wharton said in a statement opposing the vote. “The notion that a punitive crackdown on local TV stations will lead to lower cable rates is simply not credible.”

In a more contentious vote involving dissents from the commission’s two Republicans, the agency voted to keep large broadcasters from sharing advertising sales resources. Previously, broadcast companies could not own more than one of the top four stations in any media market, but stations could pool their advertising sales resources through Joint Services Agreements (JSAs). FCC Chairman Tom Wheeler said Monday that these JSAs were allowing large broadcast companies to control multiple stations while skirting the agency’s rules.

Wharton called the agency’s move an “arbitrary and capricious decision.”

The agency has allowed these resource-sharing agreements between broadcasters for years, he said, but “that model is now declared illegal, based on the arguments of [cable and satellite] companies whose” own resource-sharing practices “make JSAs seem pale by comparison,” he said.

Wharton, echoing criticism from Republicans in the agency and in Congress, also criticized the FCC for moving forward with new rules without completing a long overdue review of its media ownership rules.

Another round of STELA: The Satellite Television Extension and Localism Act (STELA) is back in Congress on Tuesday. This time it’s the Senate Commerce Committee that will explore reauthorizing the law when it expires at the end of the year.

The law has become the first battle in the larger war over reforming the laws over broadcast, satellite and cable TV, though the Senate panel has tipped its hand about what additional reforms might be contained in a STELA bill. In a statement before the hearing, committee Chairman Jay Rockefeller (D-W.Va.) said that the panel should “seize opportunities that present themselves, not take a pass for another day.”

“For me, the touchstone will always be whether the Committee’s STELA reauthorization legislation advances the public interest,” he added. “And that is non-negotiable.”

In prepared testimony, National Cable and Telecommunications Association President Michael Powell asked lawmakers for a handful of “overdue” reforms “that would prune away outdated legal requirements, directly benefit consumers and promote a more level playing field among competing providers of multichannel video services.” The cable trade group wants Congress to drop a security requirement for set-top cable boxes, limit broadcasters from engaging in joint negotiations and end a stipulation that “must buy” broadcast stations are carried at the lowest tier of service.

TiVo CEO Tom Rogers will argue against the proposed set-top box change. Keeping the existing requirement, he said in prepared testimony, “remains an essential, pro-consumer policy today.”

FCC forming task force on Comcast merger: The FCC is putting together a task force to potentially examine the implications of a merger between Comcast and Time Warner Cable, the country’s top two cable companies, Chairman Tom Wheeler said Monday. While Comcast says the merger would not reduce competition, because the two companies do not compete in any markets, public interest groups worry it would give too much market power to Comcast, which is already the largest cable Internet company. The Department of Justice and state officials are currently examining the proposed merger.

In the meantime, the FCC is “frequently in touch with the Justice Department” and beginning to think about how it would examine the merger, Wheeler said.

“Even though something hasn’t been filed [with the agency], we’ve begun to think how we want to organize,” he said, declining to provide details on the task force. “When we are in fact presented with something ... then we will announce we’re going to handle it,” he said.

Viacom blackout on horizon: Million of cable customers will lose access to MTV, Nickelodeon and a host of other Viacom-owned channels unless the company reaches a deal with cable companies by midnight. The blackout, based on a fight over licensing fees, would affect about 5 million people, many of them in small and rural areas.

Officials with the National Cable Television Cooperative, a trade group of small and medium-sized cable companies, expected the talks to go down to the wire.

Tech groups back legal treaty funding: A collection of technology trade groups are urging Congress to approve the Justice Department’s budget for reforming the Mutual Legal Assistance Treaty (MLAT) process. The treaty agreements, which allow for cooperation between governments, “only carry weight if they are both recognized and appropriately supported,” wrote the Internet Association, Entertainment Software Association, Computer and Communications Industry Association, BSA/the Software Alliance, Information Technology Industry Council and Software and Information Industry Association.

The groups urged leaders of the House and Senate Appropriations committees to give the Justice Department the $24.1 million it asked for to comply with the treaties. Tech groups have warned that revelations about the National Security Agency and other spying have led to conflicts between different governments, which could be solved with better MLAT processes.

Fixing the process is necessary, the groups wrote, to “reduce the risk that countries adopt harmful data localization requirements that could not only fragment the Internet but actually harm human rights interests.”

Feinstein staffer heads to tech coalition: Brian Weiss, the former communications director for Senate Intelligence Committee Chairwoman Dianne Feinstein (D-Calif.), is headed to the tech CEO group TechNet. Weiss will lead the policy group’s media strategy as vice president of public affairs and communications, a new position.

“I’ve operated at the intersection of Washington and Silicon Valley and look forward to working with many more innovative companies to communicate their social and economic impact and to advocate for public policies to keep that positive momentum going in the years ahead,” he said in a statement.

Weiss previously worked for former Sens. Evan Bayh (D-Ind.) and John Breaux (D-La.), as well as Warner Music Group and the sports management company IMG Worldwide.

Former lawmaker lobbying for family TV channel: Former Rep. Sue Myrick (R-N.C.) is lobbying for Inspiration Network, according to lobbying disclosure records. The network, which reaches more than 75 million households, aims to “positively impact people’s values, beliefs and behavior through values-based entertainment programming,” it claims. Myrick is lobbying on its behalf in congressional negotiations over satellite television regulations.

 

ON TAP

Bloomberg Government is hosting a patent event in the morning. Rep. Thomas Massie (R-Ky.) and Federal Trade Commission Commissioner Maureen Ohlhausen are scheduled to speak.

Starting at 12:30, TechNet and the Bipartisan Policy Center are holding a discussion on the future of tech policy.

The Senate Commerce subcommittee on Communications will debate STELA reauthorization at 2:30 p.m.

 

IN CASE YOU MISSED IT

The FCC voted Monday to crack down on cooperation between broadcasters.

The commission also voted to boost Wi-Fi capabilities by releasing more of the airwaves for use.

The Supreme Court on Monday seemed willing to strike down contested software patents in a case that could set intellectual property precedent for years to come.

Congressional Democrats are cheering the FCC’s votes.

Comcast’s proposed $45 billion purchase of Time Warner Cable is “not particularly scary,” according to Comcast Executive Vice President David Cohen. 

 

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