Congress in ’07: Privacy, patents on agenda

Some technology vendors and advocacy groups see new opportunities in the U.S. Congress in 2007, with issues such as patent reform and data protection getting fresh life under a Democratic-controlled legislature.

Democrats took control of the Senate and the House of Representatives in November’s election, and many technology advocates say they expect Democrats will focus on some issues on the backburner in the past Republican Congress. Some tech vendors praised Republicans for their focus on free trade and Internet tax moratoriums, but others say the Republican Congress failed to act on several important issues.

“We’re excited about the new Congress,” said Jack Krumholtz, managing director of federal government affairs and associate general counsel at Microsoft Corp. “We think there’s an opportunity to get some things done.”

Here’s a list of tech-related issues likely to come up in Congress in 2007:

Privacy and data breach notification

Advocacy groups such as the Center for Democracy and Technology (CDT) have long called for comprehensive legislation to protect personal privacy, including rules for organizations handling personal data and limits on government surveillance. In November 2005, after a rash of data breaches, Microsoft joined privacy advocates in calling for legislation, including a baseline data protection standard and giving individuals control over how their personal data is used.

Krumholtz and Leslie Harris, CDT’s executive director, both said they hope the Democratic Congress will take a new look at privacy legislation. In addition, Democrats are likely to investigate the Bush administration’s surveillance programs, such as monitoring phone calls and Internet conversations, and its use of data mining to assess risks posed by individual travellers.

“There has been basically no oversight,” Harris said of the Republican Congress.

Part of comprehensive privacy legislation would be a data breach notification provision, Krumholtz added. After a series of high-profile data breaches in early 2005, members of Congress introduced about a dozen bills requiring organizations with data breaches to notify affected customers, but the issue was held up partly because several congressional committees claimed jurisdiction.

Cybersecurity vendors and many other tech companies will renew the call for data breach notification legislation in 2007. “Clearly, the data breach concerns have only gotten more acute over the last year,” Krumholtz said.

Patent reform

Many large tech companies, including Microsoft, Dell Inc. and eBay Inc., have long called for patent reform. Some of those companies have asked Congress to make it more difficult for so-called patent “trolls” to win huge patent awards or get injunctions, forcing large companies to shut down entire product lines because of one infringing component.

Tech companies complain about people who buy up patents just to collect license fees, but many small inventors own patents and don’t have the means to bring the patented products to market.

But the U.S. Supreme Court may have pre-empted Congress on the issue of patent injunctions. In a May, the court set aside a lower court decision to stop eBay from using the “buy it now” feature on its Web site because of a patent dispute. The Supreme Court ruled that a lower court must weigh several factors before granting a patent junction, instead of granting near-automatic injunctions as in recent years.

After the Supreme Court action, Congress’ attention is likely to focus on the quality of patents granted, an issue that has wide support in the patent community. Tech groups have pushed for more money for the U.S. Patent and Trademark Office and a post-patent review process as a way to challenge patents.

Some small inventors agree that better patent examinations are needed, but they have objected to other proposals pushed by tech groups, including changing the way patents are awarded.

Many companies pushing for patent reform “are doing their best to eviscerate America’s patent system to avoid the consequences of their politely put unauthorized use of inventors’ property,” said Ronald Riley, president of the Professional Inventors Alliance.

Large pharmaceutical firms also have fought patent reform, but Christopher Hankin, senior director of federal affairs at Sun Microsystems Inc., said he expects the Democratic Congress will be less cozy with big pharma than many Republicans are.

“We could work these issues out,” he said of the patent debates. “Unfortunately, we never got to the situation where the other side felt the need to negotiate.”

Broadband reform and network neutrality

Two committees spent many hours in 2006 working on broadband bills with the goal of encouraging broadband adoption and improving services offered. But Congress failed to agree on a final bill before adjourning this month, partly because of a contentious debate about net neutrality provisions that would prohibit broadband providers from giving preferential treatment to their own Web content and blocking or slowing competitors’ content.

Then, in mid-December, the U.S. Federal Communications Commission (FCC) voted to streamline the franchising process that broadband providers must go through to offer television over IP (Internet Protocol), in competition with cable TV providers. Franchising reform was one of the major drivers of the 2006 broadband bills, and after the FCC action, lawmakers may have less enthusiasm to tackle a wide-ranging broadband bill.

Officials from Verizon Communications Inc., one of the major backers of franchise reform, say they will back away from the issue in Congress in 2007, focusing instead on state legislation and on rule making at the FCC.

But individual pieces of the broadband bills may still move forward. Net neutrality ended up as a largely partisan issue, with Democrats generally supporting a law, and some on their side will likely push the issue again. But it’s still hotly debated, and Republicans in the Senate could use parliamentary rules to hold up a net neutrality bill, just as Democrats held up the broadband bill in 2006, warned one Senate Republican staffer, speaking on background.

Rules that make it easier for municipal governments to offer wireless broadband will be on the agenda. Representative Rick Boucher, a Virginia Democrat, said he will push for a law similar to municipal broadband proposals in the last broadband bill. Some broadband carriers have pushed state legislatures to pass laws prohibiting municipal broadband services, but Boucher noted that many residents of his rural Virginia district have no access to cable or DSL (Digital Subscriber Line) service.

Municipal wireless has a “role to play where commercial operators don’t see an opportunity,” Boucher said.

Also likely will be attempts to revamp the Universal Service Fund (USF), a federal program that subsidizes telecom and Internet services in rural and poor areas. Part of the USF money goes to the E-Rate program, which helps wire schools and libraries, but has been marred by fraud and rigged bidding in recent years.

USF, which raises about US$7 billion a year, collects a tax on interstate telephone calls and cellular service, but as more phone traffic moves away from traditional long-distance plans, critics say a new source is needed. Most groups involved with USF agree the funding system is broken, but some lawmakers have called for the program to be abolished altogether.

Boucher in March cosponsored a bill that would include services such as VOIP (voice over IP) as USF funding sources and allowing recipients of USF money to deploy broadband services. The measure went nowhere, partly because of Republican calls to abolish USF. Boucher said he’s optimistic USF reform will get another look in the next Congress.

H-1B visas and the innovation agenda

Many tech companies will continue to push for an increase in the cap on H-1B visas for high-skilled immigrant workers. Microsoft and other tech companies have asked for an increase in the cap from 65,000 workers a year to 115,000. The 2007 cap was reached two months before the fiscal year started in October.

A Senate bill introduced in March sought to raise the cap, but the H-1B proposal was stalled when a larger debate about legal and illegal immigration grew contentious. Microsoft has “thousands” of open technical positions, and a higher cap is needed, Krumholtz said.

U.S. schools aren’t providing enough graduate students in technology fields to keep up with the demand for the top level of workers, he said. “What we’re talking about is the cream of the crop,” he added.

Some tech worker groups have complained that tech companies break the rules by hiring H-1B workers for less than the prevailing U.S. wage. Lawmakers are beginning to notice complaints about the abuses, said Russell Harrison, legislative representative for grassroots affairs at the Institute of Electrical and Electronics Engineers-USA, which represents IT workers.

“Rather than a simple discussion of whether or not to increase the cap, the new Congress will, I think, look more seriously at reforming the program,” Harrison said.

Many tech companies have included the H-1B program as part of a larger push often called the “innovation agenda.” Leaders of both parties have talked up proposals to promote U.S. innovation, including more money for math and science education, more money for IT training programs and broadband availability for all U.S. residents.

But Republicans failed to act on many of those proposals, and new House Speaker Nancy Pelosi, a Democrat from San Francisco, didn’t include the innovation agenda in her “first 100 hours” plan, even though she repeatedly called on Republicans to pass innovation items during the last two years.

“I’m not sure how much of a priority it will really be,” Harrison said. “Plus, some of the Democrats seem to be sincerely interested in controlling spending. I suspect new programs … will be hard to pass next year for lack of money.”