Source: http://www.techlawjournal.com/alert/2012/08/06.asp
Timestamp: 2020-04-07 07:20:42
Document Index: 256377501

Matched Legal Cases: ['§ 1125', '§ 1153', '§ 7206', '§ 7207', '§ 1028', '§ 1028', '§ 1028']

TLJ Daily E-Mail Alert No. 2,422, August 6, 2012.
Monday, August 6, 2012, Alert No. 2,422.
FTC Withdraws 2003 Policy Statement on Remedies of Disgorgement and Restitution in Competition Cases
7/31. The Federal Trade Commission (FTC) released a statement that announces that the FTC has withdrawn its 2003 policy statement regarding the pursuit of monetary equitable remedies, including disgorgement and restitution, in competition cases. The vote was 4-1, with FTC Commissioner Maureen Ohlhausen dissenting.
This action suggests that the FTC may more frequently seek disgorgement of profits from allegedly anticompetitive conduct, rather than relying solely on structural and behavioral remedies.
The just released statement mentions no cases or types of cases. However, it might be noted that this action might signal FTC anticipation of what remedies it will seek if, or when, it takes action against Google regarding its online search practices.
The FTC is investigating whether Google is using its market share and market power in online search to steer users to its own web products and secondary services, and discriminating against other web sites with which it competes, in violation of the Sherman Act and/or FTC Act.
The FTC adopted this item, titled "Policy Statement on Monetary Equitable Remedies in Competition Cases", on July 25, 2003, by a 5-0 vote. The FTC did not request comments on this matter, or provide public notice that it would consider taking this action.
The 2003 policy statement announced that the FTC "will consider the following three factors in determining whether to seek disgorgement or restitution in a competition case. First, the Commission will ordinarily seek monetary relief only where the underlying violation is clear. Second, there must be a reasonable basis for calculating the amount of a remedial payment. Third, the Commission will consider the value of seeking monetary relief in light of any other remedies available in the matter, including private actions and criminal proceedings. A strong showing in one area may tip the decision whether to seek monetary remedies. For example, a particularly egregious violation may justify pursuit of these remedies even if there appears to be some likelihood of private actions. Moreover, the pendency of numerous private actions may tilt the balance the other way, even if the violation is clear."
The vote in 2003 was 5-0. See, story titled "FTC Releases Policy Statement on Use of Equitable Remedies of Disgorgement and Restitution in Competition Cases" in TLJ Daily E-Mail Alert No. 709, August 1, 2003.
The just released statement asserts that "the practical effect of the Policy Statement was to create an overly restrictive view of the Commission's options for equitable remedies".
It elaborates that "Because the ordinary purpose and effect of anticompetitive conduct is to enrich wrongdoers at the expense of consumers, competition cases may often be appropriate candidates for monetary equitable relief. Although our decisions and orders generally focus on structural or behavioral remedies intended to curb future competitive harm, the agency’s mission to protect consumers and competition also includes, where appropriate, taking action to remedy the actual, realized effects of antitrust violations."
Ohlhausen (at left) wrote in her dissenting statement that "I have not been presented with any evidence that the Policy Statement has inappropriately constrained the Commission in the nine years it has been in effect. This begs the questions why the agency needs to rescind the Policy Statement now and why it should not perhaps be revised rather than rescinded altogether."
Since 2003 the FTC has sought disgorgement in two cases, neither of which involved information or communications technology (ICT):
FTC v. Perrigo Co., U.S. District Court (DC), D.C. No. 1:04CV1397. See, FTC web page with hyperlinks to pleadings. The FTC alleged horizontal market allocation by drug makers.
FTC v. Lundbeck, Inc., U.S. District Court (DMinn), D.C. No. 08-6379. See, FTC web page with hyperlinks to pleadings. The FTC alleged anticompetitive acquisition of rights in two drugs. The FTC lost in the District Court, and in the U.S. Court of Appeals (8thCir). See, August 19, 2011 opinion of the Court of Appeals.
Just prior to the adoption of the 2003 policy statement, the FTC sought disgorgement in a case involving electronic databases, FTC v. The Hearst Trust, U.S. District Court (DC), D.C. No. 1:01CV00734. See, FTC web page with hyperlinks to pleadings.
FTC Commissioners Orson Swindle and Thomas Leary dissented from the FTC's decision to bring that action. In particular, they objected to seeking disgorgement. They wrote in their dissent that "Without expressing a view on whether that extraordinary remedy should ever be available in an antitrust case, we believe that, if a violation is proved, existing private remedies are adequate to ensure that respondents do not benefit from any possible wrongdoing and that their customers can be made whole."
House Judiciary Committee Passes Technical Amendment to Trademark Dilution Statute
8/1. The House Judiciary Committee (HJC) passed HR 6215 [LOC | WW], an untitled bill to amend the Trademark Act regarding remedies for dilution, without amendment, by unanimous voice vote.
15 U.S.C. § 1125(c) pertains to "Dilution by blurring; dilution by tarnishment". It provides that holders of certain famous marks may bring a federal action, and obtain injunctive relief, against someone who dilutes that mark by either blurring or tarnishment.
Subsection 1125(c)(6), which this bill would amend, provides, among other things, that a federal trademark registration is a complete bar against a claim against the holder, based upon either common law or state statute, to prevent dilution by blurring or tarnishment. It preempts state law dilution claims directed at marks registered with the U.S. Patent and Trademark Office (USPTO).
This bill would amend Subsection 1125(c)(6), which is titled "Ownership of valid registration a complete bar to action". As amended, this subsection would be as follows:
The ownership by a person of a valid registration under the Act of March 3, 1881, or the Act of February 20, 1905, or on the principal register under this chapter shall be a complete bar to an action against that person, with respect to that mark, that --
This corrects a technical error. Rep. Lamar Smith (R-TX), the sponsor of the bill, explained that in 2006, the 109th Congress passed HR 683, the "Trademark Dilution Revision Act of 2006", or "TDRA". It is Public Law No. 109-312. He said that the Senate Judiciary Committee (SJC) reformatted text that had been reported by the House Judiciary Committee (HJC). However, in this reformatting the SJC also inadvertently changed its meaning. He said that no one caught the error at the time.
For more on trademark dilution, and TLJ's first attempt to explain this bill, see story titled "Rep. Smith Introduces Bill to Tweak Trademark Dilution Statute" in TLJ Daily E-Mail Alert No. 2,414, July 28, 2012.
Rep. Smith's Explanation. Rep. Smith (at right) read a prepared statement at the August 1 mark up session explaining this bill. It is transcribed below.
"The purpose of the Federal Trademark Dilution Act of 1995 is to protect famous trademarks from subsequent uses that blur the distinctiveness of the mark, or tarnish or disparage it, even in the absence of a likelihood of confusion. Dilution does not rely upon the standard test of infringement -- that is, likelihood of confusion, deception, or mistake. Rather it applies when the unauthorized use of a famous mark reduces the public's perception that the mark signifies something unique, singular, or particular. In other words, dilution can result in a loss of the mark's distinctiveness, and possibly the owner's rights in it."
"Congress enacted amendments to the original dilution statute in 2006. Last year two law professors discovered a technical problem with one of the 2006 changes. During Senate consideration of the House bill, the section that provides a federal registration defense to a dilution action was reorganized. This produced an unexpected and unintended change to the law. As originally drafted in the House, the provision was designed to encourage federal registration of trademarks. This is a worthy policy goal that prevents state laws from interfering with federally protected marks and ensures that registered marks are protected nationwide. The House version promoted this, and barred a state action for dilution against a federally registered mark."
"However, the Senate reformatted the house text in such a way as to create a bar against a state action for dilution, as as well as a state or federal action based on a claim of actual or likely damage or harm to the distinctiveness or reputation of a mark. This means that a federal registration defense is available to both state and federal claims."
"Congress couldn't have intended such an outcome. If all dilution claims including federal claims are barred by registration, it becomes difficult to cancel a diluting mark that is registered. This encourages illegitimate mark holders to register diluting marks, which forces legitimate mark holders to expend greater resources to monitor registrations, as well as other marks being used in commerce."
"And, that is why we introduced HR 6215, to amend the Federal Trademark Dilution Act. This bill simply reformats the affected provision to clarify that federal registration only constitutes a complete bar to a state claim based on dilution or actual or likely damage or harm to the distinctiveness or reputation of a mark. The change applies prospectively. This bill ensures that the trademark community is protected from those who look to use this loophole as a way to disparage legitimate trademarks and cost the holders time and money."
Rep. Conyers and Rep. Chaffetz Introduce Bill to Provide for Visas for Entrepreneurs
7/26. Rep. John Conyers (D-MI) and Rep. Jason Chaffetz (R-UT) introduced HR 6210 [LOC | WW], the "American Investment and Job Creation Act".
This bill would amend the Immigration and Nationality Act to direct the Department of Homeland Security's (DHS) U.S. Citizenship and Immigration Services (USCIS) to hand out visas to entrepreneurs and job creators. It was referred to the House Judiciary Committee (HJC).
Rep. Chaffetz (at right) stated in a release that "This bill does not increase the number of visas available. It refocuses current immigration laws to provide opportunities for highly educated and skilled entrepreneurs to establish small businesses."
This release explains that "Current immigration laws provide 140,000 annual ``employment-based´´ green cards for needed workers in our economy. Immigrant entrepreneurs who start businesses and create jobs are only eligible for temporary visas, such as E-2 ``treaty investor visas.´´ H.R. 6210 would allow entrepreneurs to qualify for existing employment-based green cards."
This bill would amend 8 U.S.C. § 1153, which pertains to allocation of immigrant visas. Subsection (b) provides for preference allocation for employment based immigrants. Subsection (b)(2), which this bill would revise, pertains to "Aliens who are members of the professions holding advanced degrees or aliens of exceptional ability".
Treasury IG Reports That IRS Hands Out Billions in Fraudulent Refunds to ID Thieves
8/2. The Treasury Inspector General for Tax Administraton (TIGTA) released a report [40 pages in PDF] titled "There Are Billions of Dollars in Undetected Tax Refund Fraud Resulting From Identity Theft".
This review focuses on identity theft related to tax refunds, which occurs when an individual uses another person's name and Social Security Number (SSN) to file a fraudulent tax return in order to obtain a fraudulent tax refund.
This report finds that there were 1,125,634 incidents of identity theft that impacted tax administration in 2011 that were identified by either taxpayers or the IRS. This is up from 440,581 in 2010. However, the report adds that there are many more incidents which are not detected by taxpayers or the IRS.
The report states that "While the amount of fraudulent tax refunds the IRS detects and prevents is substantial, it does not know how many identity thieves are filing fictitious tax returns and how much revenue is being lost due to the issuance of fraudulent tax refunds."
The report contains an estimate for the total amount or fraudulent tax refunds issued in 2010. It states that the IRS "identified almost 1.5 million tax returns with potential fraudulent tax refunds totaling in excess of $5.2 billion that were not detected by the IRS".
It concludes that, "Based on our analysis, we estimate the IRS could issue approximately $21 billion in fraudulent tax refunds resulting from identity theft over the next five years."
The report is dated July 19. It was released to the public on August 2. It was prepared for the SFC.
• FTC Withdraws 2003 Policy Statement on Remedies of Disgorgement and Restitution in Competition Cases
• House Judiciary Committee Passes Technical Amendment to Trademark Dilution Statute
• Rep. Conyers and Rep. Chaffetz Introduce Bill to Provide for Visas for Entrepreneurs
• Treasury IG Reports That IRS Hands Out Billions in Fraudulent Refunds to ID Thieves
• More Tax Return ID Theft Bills Introduced
11:00 AM. FCC Chairman Julius Genachowski will speak at an event hosted by Connect2Compete. Location: Latin American Youth Center, Community Room, 1st Floor, 1419 Columbia Road, NW.
9:00 AM. The Federal Communications Commission's (FCC) Advisory Committee for the 2015 World Radiocommunication Conference (WRC-15) will hold its first meeting. See, notice. Location: FCC, Commission Meeting Room, Room TW-C305, 445 12th St., SW.
More Tax Return ID Theft Bills Introduced
8/2.. Rep. Richard Nugent (R-FL) introduced HR 6205 [LOC | WW], the "Protect and Save Act of 2012", a bill that pertains to tax return identity theft, on July 26, 2012. It bill was referred to the House Ways and Means Committee.
On July 25, Sen. Bill Nelson (D-FL) and Sen. Tom Coburn (R-OK) introduced S 3432 [LOC | WW], the "Identity Theft and Tax Fraud Prevention Act". It was referred to the Senate Finance Committee (SFC).
These are different bills, but have some overlapping provisions. Both would require the IRS to issue a confidential unique identifier, or personal identification number, to any person who has filed an identity theft affidavit.
Also, both bills would restrict access to the Department of Commerce's (DOC) Death Master File. S 3432 would also increase criminal penalties.
HR 6205 would also require a Government Accountability Office (GAO) study "to examine the role of prepaid debit cards and commercial tax preparation software in facilitating fraudulent tax returns through identity theft".
On August 2, the House passed HR 4362 [LOC | WW], the "Stopping Tax Offenders and Prosecuting Identity Theft Act of 2012", or "STOP Identity Theft Act of 2012". See, story titled "House Passes Tax Return ID Theft Bill" in TLJ Daily E-Mail Alert No. 2,418, August 2, 2012.
HR 4362 would make tax fraud (26 U.S.C. § 7206 or 26 U.S.C. § 7207) a predicate offense for elevating identity theft (18 U.S.C. § 1028) to aggravated identity theft (18 U.S.C. § 1028A). It would also amend 18 U.S.C. § 1028, which currently prohibits only the theft of the identity of an individual person, to also prohibit the theft of the identity of a business or other entity.
The sponsors of HR 4362 are Rep. Debbie Schultz (D-FL) and Rep. Lamar Smith (R-TX).
The Florida delegation is prominent in sponsoring tax return identity theft bills. The just released TIGTA report [40 pages in PDF] states that last year the Tampa Police Department announced that it had uncovered about $130 Million in tax fraud in the Tampa, Florida area.