The Patent and Trademark Office will soon begin its second round of fee-setting, said PTO Deputy Director Michelle Lee in a speech Tuesday. Lee, who was the keynote speaker at the Intellectual Property Owners Education Foundation luncheon, spoke about the changing landscape of the IP community and continued PTO efforts to work with the IP community to provide the best services possible. Lee also noted that while the agency’s Patent Trial and Appeal Board has performed admirably, the agency has asked the public about possible ways to further improve its operations. Lee said that the agency would soon begin a proposed rulemaking process on possible changes, seeking public input. Lee's nomination to head the office was approved by the Senate Monday (see 1503100031).

The International Intellectual Property Alliance applauded the U.S. Trade Representative’s Special out-of-cycle report on “notorious” IP markets. IIPA said in a Friday news release that it welcomed USTR’s inclusion of possible bad IP actors in the domain registrar industry. The report, which USTR released Thursday (see 1503050040), reviews IP protections and other market practices in foreign countries and highlights those nations with the most problematic IP standards, and IIPA filed comments in the review earlier (see 1502060043). USTR’s “listing process works, commanding the attention of marketplace operators and responsible governments,” IIPA Counsel Steven Metalitz said in the release. “This year’s report again mentions markets removed from the list, either because they were shut down by law enforcement, or because the market operators have taken appropriate steps to ensure their market is not used for piracy.”

The issue of some domain registrars allegedly supporting online piracy was highlighted in the U.S. Trade Representative Special 301 out-of-cycle report on “notorious” IP markets. The report, which USTR released Thursday, reviews IP protections and other market practices in foreign countries and highlights those nations with the most problematic IP standards (see 1502060043). ICANN has an agreement with registrars that they should act when “notified of illegal activity,” including piracy and counterfeiting, said the report. “Some registrars, however, reportedly disobey court orders and other communications, including from government enforcement authorities,” said USTR. “Some registrars apparently even advertise to the online community that they will not take action against illicit activity, presumably to incentivize registrations by owners and operators of illicit sites.” The report singled out several infringing websites as particularly problematic, including 4shared.com (British Virgin Islands), Baixeturbo.org (U.K.) and Bajui.com (Canada). “The theft we're shining a light on today is detrimental not only to creators and inventors, but also to consumers, who may be deceived and even endangered by Notorious Markets engaging in counterfeiting and piracy,” said USTR Michael Froman in a separate news release. “The infringing marketplaces listed in the USTR report -- many of which exist online -- undermine this framework that benefits both content creators and consumers,” said MPAA CEO Chris Dodd in a news release. “These notorious markets enable the theft of content on a massive scale, diminishing U.S. competitiveness, discouraging reinvestment from creators, and ultimately harming the consumer experience.” IP groups filed comments earlier this year suggesting which markets should be added to the list (see 1502060043); the Electronic Frontier Foundation slammed the report as “unfair” to foreign countries like Vietnam and Russia (see 1502090037).

CEA will join the United for Patent Reform coalition, the group that the National Retail Federation and others launched in January to promote enactment of patent reform legislation, CEA said Wednesday. President Gary Shapiro said in a statement: “A tsunami of bogus patent claims is killing jobs and innovation, while costing the U.S. economy $1.5 billion a week. Republicans, Democrats and the White House all agree that the patent extortion racket must be stopped. Congress must expeditiously pass the Innovation Act to hold patent trolls accountable for their frivolous lawsuits and baseless threats.” Though CEA has made patent reform one of its highest legislative priorities, it stopped short in January of committing to joining the coalition, saying only it was “considering how we can be most helpful” (see 1501200025). Coalition members from the tech industry include Adobe, Amazon, Cisco, Dell, Facebook, Google, Oracle and Verizon. The coalition's website says membership spans a wide diversity of companies and trade groups from many industries.

Patent reform legislation introduced by Sen. Chris Coons, R-Del., lacks the robustness needed to stop frivolous patent litigation, said CEA President Gary Shapiro Tuesday. The Coons legislation, called the Support Technology and Research for Our Nation’s Growth (STRONG) Patents Act, “has a few modest provisions aimed at improving our patent system,” Shapiro said. "Halting the epidemic of bogus patent lawsuits will require a more robust and multifaceted approach, including fee-shifting, similar to that taken by the Innovation Act,” Shapiro said. “The STRONG Patents Act appears less like real patent reform and more like a patent troll-led effort to draft a ‘fig leaf’ bill for senators to sign on to so they can pretend they are supporting patent reform, while shielding the legalized extortion of the patent trolls.”

Ericsson sued Apple over 41 patents covering many aspects of iPhones and iPads, said the plaintiff in a news release Friday. After Apple refused the offer to have a court determine fair licensing terms binding to both companies, Ericsson filed two complaints with the International Trade Commission and seven with the U.S. District Court in Tyler, Texas, it said. A jury in that court last week found against Apple in another lawsuit by Smartfish (see 1502270013). The patents in question for Ericsson are related to 2G and 4G/LTE standards as well as design of semiconductor components, user interface software, location services and applications, as well as the iOS operating system, it said. Ericsson seeks exclusion orders in the ITC proceedings and damages and injunctions in the court actions. Apple also sued, asking U.S. District Court in San Francisco to find that it does not infringe on a small subset of Ericsson's patents, said the release. Apple didn't comment.

Congress needs to support the “Next Great Copyright Office,” Copyright Alliance CEO Sandra Aistars said in an op-ed for The Hill Thursday. “Step one in any review of the [Copyright] Act needs to focus on modernizing the Copyright Office itself.” All the witnesses and most House Judiciary Committee members at a hearing Thursday expressed support for CO modernization and independence (see 1502260057). Copyright experts told us last week that separating the CO from the Library of Congress has as much broad-based support as any issue in copyright (see 1502200040). “Copyright issues tend not to split across partisan lines, though there can be a so-called ‘copyright/copyleft’ split on certain substantive issues,” Aistars said. “The one area many seem to agree on regardless of their other views is that the Copyright Act has become progressively less comprehensible to ordinary people at the same time that copyright issues are becoming ubiquitous in our day-to-day lives,” she said. “All of these stakeholders require a modern, efficiently functioning Copyright Office with appropriate regulatory and adjudicatory powers,” but the CO “lacks administrative control over even its own budget and infrastructure needs,” Aistars said. “Because no agency exists with comprehensive, independent rulemaking authority in the copyright sphere, issues better suited for regulatory action continue to be resolved directly in the Act, or worse -- are ignored entirely.”

Congress needs to fix “copyright’s draconian, unpredictable civil penalties,” the Electronic Frontier Foundation said in a blog post Wednesday. “High and unpredictable penalties can make relying on fair use a game of financial Russian roulette for artists and innovators.” EFF promoted Fair Use Week, which includes universities, Authors Alliance and the R Street Institute as participants. “Congress could help fix these problems by clarifying that statutory damages should never apply to a copyright user who relies on a fair use defense in good faith, even if the defense is unsuccessful,” EFF said.

The Senate Judiciary Committee Thursday unanimously approved Michelle Lee to lead the Patent and Trademark Office. Sen. Orrin Hatch, R-Utah, said he was pleased that the committee unanimously approved Lee’s appointment, but said he was “disappointed” she was not “more forthcoming during the confirmation process” when asked about patent troll legislation: “This is a critical problem that demands an effective legislative solution, and the USPTO Director must be actively involved in that process.” Hatch encouraged Lee to be more forthcoming if any other Senator asked her a question before her appointment to lead the PTO is put to a full Senate vote. Information Technology Industry Council CEO Dean Garfield urged the full Senate to quickly approve Lee’s nomination, saying the office “plays a critical role in advancing innovation because intellectual property is the foundation for the new products and cutting-edge technologies that are growing our economy and transforming our world.”

Apple was ordered to pay $532.9 million because its iTunes software infringed three patents owned by Smartflash, said a verdict from U.S. District Court in Tyler, Texas. The case, filed in May 2013, alleged that Apple’s software infringed three patents held by Smartflash and originally Patrick Racz and Herman-ard Hulst, who signed the patents over to the company in 2002. The jury ruled Apple’s software infringed on those patents, and did so willfully. Apple said it refuses to pay another company for its own ideas and has been left with no choice but to take the fight up through the court system, in a statement Wednesday. It said Smartflash "makes no products, has no employees, creates no jobs, has no U.S. presence, and is exploiting our patent system to seek royalties for technology Apple invented." The patents covered a portable data carrier for storing data and managing access to the data via payment information and/or use status rules, court documents said. They also cover a computer network that serves data and manages access to data by, for example, validating payment information. The complaint said the parts that infringe on Smartflash’s patents include the software components responsible for buying digital content or applications from iTunes, the software components responsible for providing digital content or apps upon payment validation, the software components that provide in-app payment functionality, the software components that provide in-app advertising functionality, the software components that store payment distribution information indicating to whom payments should be made for purchased digital content or apps, and the software components that install, on a computer or server, any version of iTunes that can access the iTunes Store, any version of the App Store app, or any version of the Mac App Store. A lawyer for Smartflash didn't comment.