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Monday, November 29, 2010

The Bayh-Dole Act: Selected Issues in Patent Policy and the Commercialization of Technology

Wendy H. Schacht
Specialist in Science and Technology Policy

Congressional interest in facilitating U.S. technological innovation led to the passage of P.L. 96- 517, Amendments to the Patent and Trademark Act (commonly referred to as the Bayh-Dole Act after its two main sponsors). The act grants patent rights to inventions arising out of governmentsponsored research and development (R&D) to non-profit institutions and small businesses with the expressed purpose of encouraging the commercialization of new technologies through cooperative ventures between and among the research community, small firms, and industry.

Patents provide an economic incentive for companies to pursue further development and commercialization. Studies indicate that research funding accounts for approximately one-quarter of the costs associated with bringing a new product to market. Patent ownership is seen as a way to encourage the additional, and often substantial investment necessary for generating new goods and services in the private sector. In an academic setting, the possession of title to inventions is expected to provide motivation for the university to license the technology to companies for commercialization in expectation of royalty payments.

The Bayh-Dole Act has been seen as particularly successful in meeting its objectives. However, while the legislation provides a general framework to promote expanded utilization of the results of federally funded research and development, questions have been raised as to the adequacy of current arrangements. Most agree that closer cooperation among industry, government, and academia can augment funding sources (both in the private and public sectors), increase technology transfer, stimulate more innovation (beyond invention), lead to new products and processes, and expand markets. However, others point out that collaboration may provide increased opportunities for conflicts of interest, redirection of research, less openness in sharing of scientific discovery, and a greater emphasis on applied rather than basic research. Additional concerns have been expressed, particularly in relation to the pharmaceutical and biotechnology industries, that the government and the public are not receiving benefits commensurate with the federal contribution to the initial research and development.

Actual experience and cited studies suggest that companies which do not control the results of their investments—either through ownership of patent title, exclusive license, or pricing decisions—tend to be less likely to engage in related R&D. The importance of control over intellectual property is reinforced by the positive effect P.L. 96-517 has had on the emergence of new technologies and techniques generated by U.S. companies.



Date of Report: November 16, 2010
Number of Pages: 27
Order Number: RL32076
Price: $29.95

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Thursday, November 25, 2010

Chemical Facility Security: Reauthorization, Policy Issues, and Options for Congress


Dana A. Shea
Specialist in Science and Technology Policy

The Department of Homeland Security (DHS) has statutory authority to regulate chemical facilities for security purposes. This authority expires in December 2010. The 111th Congress is taking action to reauthorize this program, but the scope and details of its reauthorization remains an issue of congressional debate. Some Members of Congress support an extension, either shortor long-term, of the existing authority. Other Members call for revision and more extensive codification of chemical facility security regulatory provisions. The tension between continuing and changing the statutory authority is exacerbated by questions regarding the current law’s effectiveness in reducing chemical facility risk and the sufficiency of federal funding for chemical facility security.

Key policy issues debated in previous Congresses contribute to the reauthorization debate. These issues include the universe of facilities that should be considered as chemical facilities; the appropriateness and scope of federal preemption of state chemical facility security activities; the availability of information for public comment, potential litigation, and congressional oversight; and the role of inherently safer technologies.

Congress is faced with a variety of options. Congress might allow the statutory authority to expire. Congress might permanently or temporarily extend the expiring statutory authority in order to observe the impact of the current regulations and, if necessary, address any perceived weaknesses at a later date. Congress might codify the existing regulation in statute and reduce the discretion available to the Secretary of Homeland Security to change the current regulatory framework. Alternatively, Congress might substantively change the current regulation’s implementation, scope, or impact by amending the existing statute or creating a new one.

The Department of Homeland Security Appropriations Act, 2010 (P.L. 111-83) extended the existing statutory authority through October 4, 2010, and provided DHS with additional chemical facility security funding relative to FY2009. The Continuing Appropriations Act, 2010 (P.L. 111- 242) extended the statutory authority through December 3, 2010. The House of Representatives has passed H.R. 2868, which addresses chemical facility, water treatment facility, and wastewater treatment facility security. This legislation includes provisions of H.R. 3258 and H.R. 2883. H.R. 2868 has been ordered reported as amended by the Senate Committee on Homeland Security and Governmental Affairs.

Members have introduced other bills in the 111
th Congress to address security at chemical facilities and other facilities that possess chemicals. S. 2996/H.R. 5186 would extended the existing authority until October 4, 2015, and establish chemical security training and exercise programs. H.R. 2477 would extend the existing statutory authority until October 1, 2012. H.R. 261 and S. 3599 would alter the existing authority. S. 3598 would authorize EPA to establish certain risk-based security requirements for wastewater facilities. In addition, draft legislation is reportedly under development by the Department of Homeland Security.


Date of Report: November 15, 2010
Number of Pages: 27
Order Number: R40695
Price: $29.95

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Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions

Charles Doyle
Senior Specialist in American Public Law

The United States Supreme Court in Skilling v. United States construed the honest services branch of the federal mail and wire fraud statutes to reach no more than cases involving bribery or kickbacks. The mail and wire fraud statutes, 18 U.S.C. §§ 1341 and 1343, impose criminal penalties for the use of mail or interstate wire communications to deprive another of money or property through a “scheme or artifice to defraud.” In its 1987 McNally decision, the Court had held that while the fraud statutes reached schemes to deprive another of property rights, they did not cover “the intangible right of the citizenry to good government.” Congress responded almost immediately by enacting the “honest services” statute, 18 U.S.C. § 1346, which declares that the phrase “scheme or artifice to defraud” in the mail and wire statutes also encompasses depriving “another of the intangible right of honest services.”

In its 2009 term, the Court was presented with three honest services cases—Skilling, Black and Weyhrauch. Each offered the Court a slightly different prerequisite for an honest services conviction—for Weyhrauch, a public official, it was an underlying state law violation; for Black, in the private sector, it was foreseeable harm; for Skilling, an Enron executive, it was private gain. The Court instead returned to the pre-McNally case law which it felt Congress intended the honest services statute to revive. In the pre-McNally world, most of the honest services cases, the core cases, involved bribery or kickbacks. This, the Court said, is what Congress meant when it spoke of honest services: the deprivation of honest services, public or private, by bribery or kickbacks.

To construe the statute otherwise, the Court felt, would ground the statute on “a vagueness shoal.” In fact, three members of the Court refused to endorse the majority opinion in full because they thought the honest services statute unconstitutionally vague on due process grounds. Should Congress desire a more inclusive definition of honest services fraud, the Court urged that it “employ standards of sufficient definiteness and specificity to overcome due process concerns.”

The Court sent each of the three cases back to the lower courts—Black and Skilling, for a determination of whether erroneous jury instructions on honest services fraud had so tainted their convictions as to require a new trial or whether the instructions simply constituted harmless error; Weyhrauch, for the reconsideration in light of the Court’s Skilling decision.

Thereafter, the Justice Department urged that the definition of honest services be expanded to cover undisclosed self-dealing deprivations of honest services. Two bills, S. 3854 (Senator Leahy) and H.R. 6391 (Representative Weiner), both captioned the Honest Services Restoration Act, would do so. H.R. 6391 covers only undisclosed self-dealing by public officials—federal, state, and local. S. 3854 reaches both public and private undisclosed self-dealing.



Date of Report: November 12, 2010
Number of Pages: 28
Order Number: R40852
Price: $29.95

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Wednesday, November 24, 2010

The Communications Decency Act: Section230(c)(1) and Online Intermediary Liability


Kathleen Ann Ruane
Legislative Attorney

Julia Tamulis
Law Intern


Recent focus on the harmful effects of prostitution advertisements posted on interactive websites, such as Craigslist, has prompted increased interest in section 230(c)(1) of the Communications Decency Act of 1996 (CDA). Specifically, section 230(c)(1) asserts that “no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” Section 230(c)(1) has proven to bar recovery to those seeking to hold Craigslist and other interactive service providers liable for harmful thirdparty content.

Without Supreme Court guidance regarding the scope of section 230(c)(1), courts have struggled with the statute’s broad language when determining whether a defendant merits this federal immunity. In ambiguous fact patterns, most courts have construed section 230(c)(1) in favor of immunity for interactive websites even in the face of significant personal harm endured by individuals as a result of third-party postings or advertisements.

This report discusses the legal background to the publisher’s exception of CDA section 230(c)(1). It then analyzes the legislative history behind passage of the CDA, the terms of 47 U.S.C. § 230(c)(1), and the CDA’s impact on publisher and distributor liability for websites. This report also reviews court treatment of 47 U.S.C. § 230(c)(1), noting a general analytical framework that has emerged.



Date of Report: November 19, 2010
Number of Pages: 13
Order Number: R41499
Price: $29.95

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Tuesday, November 23, 2010

Regulation of Broadcast Indecency: Background and Legal Analysis


Kathleen Ann Ruane
Legislative Attorney

Two prominent television events placed increased attention on the Federal Communications Commission (FCC) and the broadcast indecency statute that it enforces. The airing of an expletive by Bono during the 2003 Golden Globe Awards, as well as the “wardrobe malfunction” that occurred during the 2004 Super Bowl halftime show, gave broadcast indecency prominence in the 109th and 110th Congresses, and resulted in the enactment of P.L. 109-235 (2006), which increased the penalties for broadcast indecency by tenfold.

Federal law makes it a crime to utter “any obscene, indecent, or profane language by means of radio communication” (18 U.S.C. § 1464). Violators of this statute are subject to fines and imprisonment of up to two years, and the FCC may enforce this provision by forfeiture or revocation of a broadcaster’s license. The FCC has found that, for material to be “indecent,” it “must describe or depict sexual or excretory organs or activities,” and “must be patently offensive as measured by contemporary community standards for the broadcast medium.” The federal government’s authority to regulate material that is “indecent” but not obscene was upheld by the Supreme Court in Federal Communications Commission v. Pacifica Foundation, which found that prohibiting such material during certain times of the day does not violate the First Amendment.

In 1992, Congress enacted P.L. 102-356 (47 U.S.C. § 303 note), section 16(a) of which, as interpreted by the courts, requires the FCC to prohibit “indecent” material on broadcast radio and broadcast television from 6 a.m. to 10 p.m. Under P.L. 109-235, “indecent” broadcasts are now subject to a fine of up to “$325,000 for each violation or each day of continuing violation, except that the amount assessed for any continuing violation shall not exceed a total of $3,000,000 for any single act or failure to act.” Fines may be levied against broadcast stations, but not against broadcast networks. The FCC appears to have the statutory authority to fine performers as well (up to $32,500 per incident), but has taken the position that “[c]ompliance with federal broadcast decency restrictions is the responsibility of the station that chooses to air the programming, not the performers.”

The federal restriction on “indecent” material applies only to broadcast media, and this stems from the fact that there are a limited number of broadcast frequencies available and that the Supreme Court, therefore, allows the government to regulate broadcast media more than other media. This report discusses the legal evolution of the FCC’s indecency regulations, and provides an overview of how the current regulations have been applied. The final section of the report considers whether prohibiting the broadcast of “indecent” words regardless of context would violate the First Amendment. This question arises because the Supreme Court in Pacifica left open the question whether broadcasting an occasional expletive, as in the Bono case, would justify a sanction.



Date of Report: November 8, 2010
Number of Pages: 33
Order Number: RL32222
Price: $29.95

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