Posted: Oct 28, 2013 4:00pm ET
On Wednesday, House Judiciary Committee Chairman Bob Goodlatte (R-VA) introduced a long-awaited bipartisan bill, the Innovation Act, to combat the growing threat from patent assertion entities (PAEs), often called patent trolls. This bill requires heightened pleading standards for patent suits, including descriptions of which patents are actually infringed, as well as how they are infringed. Transparency is another key element, with the requirement that plaintiffs disclose any party which has a financial interest in the patent at issue, as well as an allowance for defendants to join these other parties in the litigation. There is a cost-shifting mechanism in the Innovation Act that can allow a court to require that the loser pays for the winning side’s litigation fees. In cases where there is litigation between a troll and a manufacturer, cases against end users are stayed until the resolution of the case against the manufacturer. The Innovation Act also expands the Patent and Trademark Office’s post-grant review authority of business method patents, which are frequently the subject of patent suits involving trolls.
Despite the divisions in Congress over a wide range of issues, efforts to limit patent trolling are an area with real momentum on both sides of the aisle. Republican and Democratic co-sponsors of the Innovation Act include, among others, Anna Eshoo (D-CA), Zoe Lofgren (D-CA), Jason Chaffetz (R-UT), and Spencer Bachus (R-AL). Additionally, Senate Judiciary Committee Chairman Patrick Leahy (D-VT) expressed his support for Chairman Goodlatte’s bill and stated that he is continuing to work on patent reform legislation with Senator Mike Lee (R-UT) and others.
Bad news for trolls might also come soon from the country’s highest court. Last month, the Supreme Court granted certiorari in two cases regarding the award of attorney’s fees in so-called “exceptional” patent infringement claims where it is determined that the claims were 1) brought in bad faith and 2) objectively baseless. In Highmark, Inc. v. Allcare Management Systems, Inc., the Court will evaluate whether or not a trial court’s finding that a case was exceptional (resulting in a subsequent grant of attorney’s fees) is entitled to deference at the appellate level. And in Octane Fitness v. Icon Health and Fitness, the Court will examine whether the test for “exceptional” cases used by the U.S. Court of Appeals for the Federal Circuit (which hears appeals of patent cases and creates patent case law) is too strict and, therefore, actually incentivizes trolling lawsuits. Reversals in either of these cases could potentially raise the stakes significantly for trolls in filing claims.
These newer developments all come in the wake of an investigation into patent trolling activities by the FTC, as well as actions against accused trolls by several state attorneys general. While the ultimate fate of the legislation and outcome of the Supreme Court cases remains unclear, patent trolling may soon become a much more risky game to play. We are hopeful that our members will keep us informed of any developments in this area that affect them.
Posted: Sep 24, 2013 12:15pm ET
Yesterday, I wrote about the proposal by the Internet Corporation for Assigned Names and Numbers (ICANN) (which manages domain names (DNS) on the Internet) to expand dramatically the number of those names. Rather than the 22 names we all know (e.g., “.com” “.gov”), ICANN now intends to add more than a thousand new names – but so far, without sufficient care about the potential harms to consumers, businesses and Internet users. These concerns about an overly rapid Top Level Domain rollout are very widespread. Governmental entities – and even ICANN’s own subgroups – have identified serious potential harms.
Here is what some of our leading companies and industries are saying:
- A coalition of electric cooperatives in New Mexico: “[ we are ] concerned about the potential for the gTLD expansion to disrupt and compromise the security of not only their computer networks and communications systems, but also the infrastructure and facilities – such as power lines, switches, substations and transformers – used to transmit and distribute electricity throughout their service regions. …The Electric Cooperatives are concerned that this expansion of Internet addresses could compromise network security… The Electric Cooperatives believe that it is not solely their four cooperatives that face this threat, but all of the electric utility industry and, indeed, potentially the entire energy sector throughout the United States.”
The electric cooperatives went on to state, “the Electric Cooperatives urge ICANN to delay the roll-out and implementation of the new gTLDs, so as to provide sufficient time to study the potential adverse impacts of new gTLDs on the safety and reliability of electric transmission and distribution grids.”
- General Electric: “The correlation between frequency and risk for any particular gTLD cannot be determined without additional contextual information. ICANN should endeavor to develop a more sophisticated risk model, and commission further studies on this subject…We strongly urge ICANN to exercise due caution in this area, and to not delegate any gTLD for which there is any question regarding risk until that risk is fully understood.”
- Microsoft, Verisign, and Yahoo: “These issues must be addressed to preserve the stability, security and resiliency of the DNS. Allowing known risks to remain unresolved would be irresponsible and inconsistent with ICANN’s core mission. It is crucial that ICANN’s leadership recognizes and works with the appropriate technical bodies to ensure these issues and risks are defined, evaluated, and addressed comprehensively. This is of particular concern to operators of Internet infrastructure whose networks and customers will be negatively impacted. The cost to business of transferring known risks to unknowing end users is substantial and must be avoided. As described by the SSAC [the Security and Stability Committee of ICANN] and verified by the recent Interisle study, the delegation of new strings that are already widely in use as internal identifiers in enterprise, government, and other private networks into the root of this multi-billion user ecosystem will present substantial security risks. If and when delegations occur, these naming collisions will cause breakage in existing networks, negatively impacting enterprises, governments, and end users who are unaware of the source of the problem.”
Microsoft, Verisign, and Yahoo! then emphasized, “Unexpected name collisions caused by new gTLDs being delegated into the root could have devastating consequences…Any such negative impacts may have serious consequences for those who rely on the DNS, and this should raise significant liability concerns.”
- The United States Telecom Association (US Telecom), a major organization representing Verizon, AT&T, as well as other telecommunications entities, noted, “…it is feasible that public safety agencies may have internal local name spaces with the potential for collisions with new gTLDs. Similarly, there are several new proposed gTLDs that could potentially collide with internal local name spaces containing highly sensitive personal conditions, including .HIV. Of course, this does not take into account the various gTLDs with seemingly innocuous names (e.g. .FLS) that in a global environment that uses multiple languages, could very well resolve to internal local name spaces containing critical sensitive information."
US Telecom then stated, “Given the uncertainty surrounding the potential for domain name collisions, combined with the uncertainty over the potential impact of such collisions, it is imperative for ICANN to conduct additional study on this issue. USTelecom strongly urges ICANN to conduct a follow-up study to more fully understand the full spectrum of risks to private networks, equipment and devices posed by all new gTLDs and to develop appropriate mitigation measures as necessary.”
- The Online Trust Alliance (a global organization addressing the end-to-end trust issues and challenges faced by consumers, online merchants and online financial services companies): “A single domain collision has the potential to bring down the entire IT organization of an enterprise… ICANN should undertake further study on this potentially serious and expensive remediation issue.”
- The Chertoff Group (a global security advisory firm headed by former Secretary of Homeland Security Michael Chertoff, and whose team includes former CIA Director Michael Hayden): “…we believe it is prudent to conduct additional analysis on the security and liability risks associated with these new gTLDs, particularly with regard to key resources and critical infrastructure.”
- The American Insurance Association: “…the current 21-day comment period provides insufficient time to research this issue. We … respectfully request that ICANN grant an extension of time” [to conduct research].
- The United States Council for International Business: “we feel the ICG study does not provide sufficient analysis of risks to internal namespace posed by a broad range of new gTLDs.”
So, let’s see: electricity providers; national security experts; telecommunications providers; insurers; Internet users; large manufacturers; national advertisers; and groups representing business generally—these are just some of the entities that stress that we’re not ready for a major deployment of new gTLDs, and that the rush to roll them out will expose consumers, businesses and users of the Internet to major risk of harm. The concern about ICANN’s plans is growing and very serious. ANA believes ICANN needs to step back, collect more information, and assess the potential implications before delegating new strings into the root. If not, the very stability and security of the Internet will be jeopardized.
Posted: Sep 23, 2013 3:45pm ET
The Internet Corporation for Assigned Names and Numbers (ICANN) manages domain names (DNS) on the Internet, and it is planning a dramatic expansion of those names. Rather than the 22 names we all know (e.g., “.com” “.gov”), ICANN now intends to add potentially more than a thousand new names. Unfortunately, as the Association of National Advertisers has been warning for some time, ICANN appears to be rushing to deploy those names without taking the necessary steps to ensure the stability and security of the Internet. The potential harms to consumers, businesses and Internet users could be very serious, increasing the dangers of fraud, deception, phishing, cybersquatting and other cyber harms. Yet ICANN plows ahead on its determined – and potentially very dangerous – schedule.
Various governmental entities have stated real concerns about the DNS expansion. Officials at the Federal Trade Commission (FTC) have said that, “the potential for consumer fraud is great, and that the planned deployment was a “potential disaster.” Commissioner Julie Brill stated at ANA’s Advertising Law & Public Policy Conference, “I remain concerned, as I have been since ICANN first announced its plans, that the expansion could create opportunities for scammers to defraud consumers online, shrink law enforcement’s ability to catch scam artists, and divert the resources of legitimate businesses into litigating and protecting their own good names.” The Chairman of the US Senate Committee that oversees Internet issues, Jay Rockefeller, wrote to ICANN urging that a limited round of domain name deployment be done at first, so as to permit a one-year review period as to its effectiveness. In July, the US Senate Appropriations Subcommittee with jurisdiction over Internet issues called on the Department of Commerce to assess whether ICANN will have in place the necessary security elements to protect stakeholders during the DNS deployment.
Posted: Sep 5, 2013 9:15am ET
In July, I wrote about the growing number of legislative proposals that have been put forward in Congress to battle patent assertion entities, more commonly referred to as “patent trolls.” So-called patent trolls get their names by operating much like a troll from folklore. They produce nothing, buy up broad patents, and then hide and wait until the time is right to strike unsuspecting businesses with threats of highly damaging and expensive litigation. Trolls from folklore often meet their end in sunlight. For patent trolls, legislative and regulatory sunlight appears to be the only appropriate remedy. As we await expected major anti-patent troll legislation from Chairman Goodlatte and Chairman Leahy of the House and Senate Judiciary Committees respectively, momentum has begun to build against patent trolling in other areas.
On August 30th, the Government Accountability Office (GAO) released a report on patent infringement litigation. This report found that between 2010 and 2011, the number of patent infringement lawsuits increased by roughly 33 percent. GAO further found that between 2007 and 2011, the number of defendants in patent litigation increased by 129 percent. The GAO determined that up to twenty percent of those suits were brought by patent trolls. This percentage, however, likely did not capture the true magnitude of the problem, as it is important to note that companies often settle with trolls well before a trial or even the filing of a complaint. Most importantly, this report notes that much of the problem in this arena is sparked by the grant of overly broad patents, especially for business method patents relating to software. A number of the pending legislative proposals would help to remedy this problem. This report will certainly provide momentum to efforts already underway.
State Attorneys General also have begun to indicate a willingness to step in to stop patent trolls. On August 20th, Minnesota Attorney General Lori Swanson announced a settlement with a patent troll known to some as the “scanner troll.” This entity claimed to own a patent on scanning office documents to e-mail and targeted a number of businesses with demand letters threatening litigation if it was not paid $1,000 or more for each employee using the technology. Some of these letters even contained a draft complaint in an effort to increase the threat. Under the terms of the settlement, the company may not send further demand letters without the prior permission of the Attorney General’s office and may not grant its patent rights to any other entity unwilling to comply with these terms. Vermont Attorney General Bill Sorrell also filed a lawsuit against this same patent troll in May alleging unfair business practices under Vermont’s Consumer Protect Act.
The FTC has also indicated its willingness to step into the game. Chairwoman Edith Ramirez has stated that she believes the FTC should use its Section 6(b) investigative subpoena authority to determine whether or not patent trolls may be committing unfair business practices.
The abuse of the patent system by so-called trolls is harmful to innovation and economic growth. The American Intellectual Property Law Association found that patent litigation can cost as much as $650,000 for smaller claims, and as much as $5 million for larger claims. When costs of settlement to avoid litigation were factored in, the White House Report stated that as much as $29 billion was paid by companies to patent trolls in 2011. While recent actions by Attorneys General indicate a growing willingness to fight back against abusive practices, the GAO Report demonstrates that broader reform is needed to help provide the sunlight necessary to put a stop to the “trolling industry.” ANA is continuing to work hard as a part of several coalitions to ensure that such reform happens as soon as possible.
Posted: Aug 28, 2013 2:30pm ET
Name Collision is a major concern for global brands and consumers as ICANN prepares to roll out more than 1,000 new web site suffixes or top level domains (such as .hotel, .buy, .bank, .sucks, and .gripe). Name collision occurs when new top level domains (TLDs) are identical to internal company domains, which can lead to major conflicts that could raise significant security and stability issues for the Internet.
ICANN’s preparations for this deployment have been woefully inadequate. ANA, which represents the interests of major global advertisers, has long expressed concerns about ICANN’s persistent rush to deploy these domains before it has adopted sufficient protections for consumers and brandholders. To date, those protections have been anything but sufficient.
ICANN itself has recently raised red flags that it may not fully know the true ramifications of a roll-out of new TLDs by stating that as many as 20% of all of the proposed TLDs present a large potential risk for name collision. A recent 3rd party report commissioned by ICANN admits that the chance of clashes is significantly larger than ICANN initially suggested.
What is more concerning is that the third-party report readily admits that the data only counted the number (and not the types) of potential name clashes, which means ICANN has virtually no data to determine whether delegating new TLDs could interrupt important public safety communications, government web traffic, e-commerce applications, internal corporate communications or just casual web traffic.
Yesterday, ANA sent a letter to ICANN strongly expressing its concerns, stating that “ICANN must know what underlying services could potentially ‘break’ on the Internet to begin to gauge risk” before rolling out any new TLDs. ANA’s member companies are working to determine if clash issues are present within their networks. However, ANA has hundreds of members that must generate new data to determine the potential service failures on their respective network. These issues are highly technical, complex, and they will take more time than ICANN has allowed for a thorough assessment.
It is extremely disappointing that ICANN is forcing companies to rush to conduct this analysis when ICANN has been aware of clash issues since 2009.
ICANN’s failure to determine adequately the extent of the problem means that many companies are only now learning about these clash issues on the eve of the planned new TLD deployment.
ANA calls on ICANN to fulfill its mission to maintain Internet security and stability in the public interest and postpone the rollout until the full extent of name collisions can be determined.
Posted: Aug 9, 2013 1:30pm ET
Today, we sent a letter to ICANN President & CEO Fadi Chehadé asking for an extension of the public comment period for proposals to mitigate name collision risks. In our letter, we argue that the current due date for comments, August 27th, is wholly insufficient given the amount of time needed by stakeholders to run a full technical analysis of possible risks, as well as the fact that many companies are currently short-staffed due to summer vacations. We call for the comment period to be extended to November 1, 2013 and for the reply comments to be due on November 22, 2013.
Companies who are in agreement with these views should strongly consider sending requests for an extension of the comment period as well.
On a related note, Verisign has responded to the letter it received from NTIA on August 2, 2013. This exchange of letters provides interesting background on the security issues which prompted ICANN’s recent release of a third-party report on name collision risks in new Top Level Domains earlier this week.
Posted: Aug 6, 2013 2:30pm ET
I have a guest post on The Hill's Congress Blog on the announcement by Mozilla to block third-party cookies in its Firefox browser. The post also discusses the recent actions of the industry's self-regulatory program, the Digital Advertising Alliance (DAA). You can read the post at The Hill's website.
Earlier this week, the DAA ran an ad in Advertising Age on the Mozilla initiative. You can view that ad here.
Posted: Jul 31, 2013 10:11am ET
A new front in the ongoing assault against food, beverage and restaurant marketing has recently opened up.
Last week, Rep. Rosa DeLauro (D-CT) introduced legislation (H.R. 2831) to eliminate the tax deductibility of advertising expenses for marketing to children of “food of poor nutritional quality.” It uses the most recent Dietary Guidelines to determine which foods meet the criteria, and broadly defines marketing to include advertising on television, radio, print, the Internet and social media, product packaging, point of sale displays, character licensing, and celebrity endorsements. The use of the Dietary Guidelines is significant in that the guidelines proposed by the Interagency Working Group on Food Marketed to Children (consisting of the FDA, FTC, USDA and CDC) set far more sweeping and stringent nutritional standards for which foods could be marketed to children. If the IWG guidelines ever were to take effect, it could lead to an extremely high baseline for marketing food and beverages to children.
Meanwhile, a senior member of the U.S. Senate is also pressing to get rid of the tax deduction. Recently, four powerful members of the U.S. Senate – Richard Blumenthal (D-CT), Dick Durbin (D-IL), Tom Harkin (D-IA) and Jay Rockefeller (D-WV) – recently wrote a letter to Viacom urging it to implement strong nutrition standards for marketing. In a statement released concurrently with the letter, Senator Rockefeller noted that he is working to eliminate the tax deduction for advertising of “junk food” to children. As Senator Rockefeller states, “this effectively results in the federal government footing the bill for corporations to market junk food and sugary beverages – that are directly tied to increased rates of obesity – to children.” His statement further indicates that he will push for a provision to end the deduction as part of the Senate Finance Committee’s consideration of tax reform. As the second ranking member of the Senate’s tax writing committee, Rockefeller’s views have to be seriously considered.
Obesity continues to be a major health concern.The American Medical Association recently recognized obesity as a disease. The pressure on Congress to be seen as taking action against a public health threat will remain high. These proposals to end the tax deductibility of some food advertising are a clear shot across the bow.
Posted: Jul 30, 2013 2:00pm ET
In a time when the Congress too often looks like it cannot agree on anything, one issue seems to be gaining both momentum and increasing bipartisan support. That issue is combating the growing business of patent trolling and the legislative proposals to curb it.
When used properly, patents foster innovation by granting limited exclusive rights to inventors. The public is served by the advent of newer and better technologies and products, and producers benefit by reaping rewards for expensive research and development. However, if abused, patent rights serve only to stifle growth and hinder economic progress.
In recent years, a growing number of patent infringement claims have been filed by patent assertion entities, also called “patent trolls.” They exist not by producing or manufacturing patentable products themselves, but instead by purchasing numerous patents with broadly defined terms and then filing infringement suits against manufacturers and service providers with deep pockets. The trolls also attack numerous end users like small businesses or advertisers with shallower pockets, but far less ability to fight extortionist demands.
The White House recently released a report showing that as many as 100,000 companies were threatened with litigation by patent trolls in the last year and that these suits inflict significant harm on both companies and the economy. Given the immense cost of patent litigation, most businesses settle with these trolls, even though the trolls would likely lose at trial. The trolls grow further energized and enriched and are only incentivized to repeat the process over and over again with new claims.
Members of Congress on a bipartisan basis have shown their mounting frustration with these practices with a burst of legislative initiatives just this year:
- H.R. 2766, co-sponsored by Representatives Darrell Issa (R-CA) and Judy Chu (D-CA) would amend the Leahy-Smith Investments Act to expand the US Patent and Trademark Office’s post-grant review authority for business method patents (those commonly used by patent trolls). Currently, only business method patents related to “financial services” are subjected to this stricter review. A similar bill, S. 866, was introduced by Senator Chuck Schumer (D-NY).
- H.R. 2639, introduced by Representatives Hakeem Jeffries (D-NY) and Blake Farenthold (R-TX) would require heightened pleading standards in complaints for patent infringement suits with regard to the identity of the party bringing the suit and the actual infringement alleged. Further, it would allow for suits against end users to be stayed until suits against the manufacturer have been resolved.
- H.R. 2024, introduced by Representative Ted Deutch (D-FL) requires the owner and any other parties with interests in a patent to disclose themselves to the US PTO when the patent is filed. Should the patent owner change, the new owner must likewise disclose all parties with interests. The collection of damages in a suit is barred if entities have not complied with these requirements.
- H.R. 845, co-sponsored by Representatives Peter DeFazio (D-OR) and Jason Chaffetz (R-UT) would allow for the recovery of legal fees in any wrongful patent infringement suit.
- Senator Patrick Leahy (D-VT) and Congressman Bob Goodlatte (R-VA), the chairmen of the Senate and House Judiciary Committees respectively, released draft legislation in May incorporating many different approaches to diminishing patent trolling.
The White House, in June, announced seven legislative recommendations, as well as five executive directives, designed to combat abusive practices by patent trolls. Federal Trade Commission Chairwoman Edith Ramirez said in a June speech that she believes the FTC should use its investigative authority (basically, subpoena powers) under Section 6(b) of the FTC Act to investigate these practices. And the Attorney General of Vermont recently filed suit against an alleged patent troll that had sent demand letters to a number of Vermont organizations, including non-profits.
ANA is working as a part of several coalitions to address these abusive and economically damaging actions. We are focusing on indemnity issues, as well as proposed legislative fixes. We signed a letter to congressional leadership, along with more than 50 others organizations from nearly every sector of the economy, encouraging legislative action against patent trolls. We are working to collect data on demand letters and the numbers of suits threatened against our members.
There is serious momentum to address this problem. Advertisers need to step up to fight these entities in order to protect themselves and the consumers they ultimately serve. Please let ANA know if your company is confronted with patent troll issues so we can effectively stay on top of trends in this area and help combat these problems.
Digital Advertising Alliance Releases Guidelines for Expansion of Self-Regulatory Principles to Mobile Media
Posted: Jul 24, 2013 12:00pm ET
The Digital Advertising Alliance (DAA), of which ANA is a founding member, released guidelines today for expanding its self-regulatory program of consumer choice to the mobile environment. These guidelines cover cross-app, personal directory, and precise location data in mobile apps.
The release of these mobile guidelines is critically important given the explosion of the mobile environment as a major point of contact with consumers and the enormous number of activities that are now carried out with the use of mobile devices. These guidelines demonstrate that the DAA is the real mechanism for true consumer choice in the online world.
ANA President and CEO Bob Liodice said, “The DAA program is not only global, but now also mobile. The expansion of the DAA program into the mobile realm is an extraordinarily important development. Mobile is, by far, the fastest growing media category. Half of all U.S. adults now have a connection to the web through either a smartphone or tablet, so it’s all the more critical that they have control over how they receive advertising on their mobile devices. The DAA mobile guidelines give them that control.”