Morgan Reed, Executive Director of the Association for Competitive Technology, released the following statement in response to the letter from Senators Reid, Schumer, Lautenberg and Udall calling for mobile applications stores to block the distribution of traffic software apps like Trapster and PhantomALERT.

While I applaud the Senators for seeking to curb drunk driving, their criticism of online travel apps misses the point.  These programs feature information about speed and red light cameras by mapping publicly available information provided by law enforcement agencies.  There is also a social networking element of the apps which allows users to submit traffic information so drivers can avoid traffic jams.  This makes these programs very popular attracting tens of millions of users. Law enforcement authorities have embraced these services expressing their strong approval for products that reduce speeding and improve traffic safety.

These traffic apps rely on user-submitted and law enforcement provided information.  Any one of the programs’ users can submit a warning about a traffic obstruction as simply as emailing a friend or posting a message on their Facebook profile. The suggestion that the government should compel Apple, RIM, or other mobile application stores to block programs that simply allow users to report information based on location is misguided at best. Taken to its conclusion, that would require blocking apps like Foursquare and Loopt.  Having the government act as arbiter of which products should be sold in stores is a slippery slope that few would welcome.

Today, Victoria Espinel, the Intellectual Property Enforcement Coordinator (“IPEC”), released a White Paper on Intellectual Property Enforcement Legislative Recommendations.  The following quotes may be attributed to Thomas Sydnor II, Fellow for Intellectual Property at the Association for Competitive Technology.

“This White Paper shows why President Obama chose wisely when he chose Ms. Victoria Espinel to be the nation’s first Intellectual Property Enforcement Coordinator. The White Paper presents a thoughtful, balanced list of proposed improvements to existing laws intended to enhance the enforceability of the existing intellectual property rights that have made America the world’s most successful net exporter of a vast array of expressive works, trusted brands, and important inventions.

“In particular, I would commend the IPEC for conducting a thorough and long-needed review of the extent to which we need to update our nation’s anti-counterfeiting laws in light of the rise in international trade and the increasing use of the Internet as a means to inject potentially dangerous counterfeit products into our public and private supply chains.

“In addition, the IPEC has also proposed useful improvements to our copyright laws. For example, the IPEC proposed that felony penalties for willful commercial copyright piracy should be available regardless of whether streaming or downloading technologies were used to commit the crime.  This change would make existing laws more effective and more technology neutral.”

The Association for Competitive Technology and the developer community support the measures taken by Apple to address concerns about in-app purchasing practices of some vendors in the App Store.

“Apple’s changes to its in-app purchase API  will prevent abuses of the system, but require some developers to re-examine the user experience of their app” said ACT Executive Director Morgan Reed, “These are reasonable steps to take to maintain a healthy mobile apps ecosystem.”

ACT has met with regulators and legislators regarding this issue and believes these changes should alleviate concerns expressed by consumers.  Recognizing that the problems emerged in a small number of apps that use in-app purchasing, Reed was pleased that Apple did not succumb to pressure to set prices for digital goods.

“Neither Apple nor the government should be in the business of imposing prices for digital goods. Developers are exploring numerous business models and price points to determine what works best for them and their customers.  We must not be hamstrung by arbitrary pricing rules before we even get out the door.”

The Association for Competitive Technology (ACT) applauds Chairman Goodlatte for holding a hearing today on the role of innovation and intellectual property in the U.S. economy.  Consideration of this issue could not come at a more important time.  Our economy grows, and creates jobs, when entrepreneurs bring exciting new products and services to the market without fear that someone will steal their idea.

“ACT has long been an advocate for intellectual property,” said ACT executive director Morgan Reed. “With policy discussion often bogged down by the minutiae of patent, copyright and trademark complexity, it is easy to overlook that IP remains the lifeblood of the innovation economy. Startups get off the ground and attract investors because people have confidence that, if they create an exciting new product, they can build a business around it.  It is this commerce in ideas from which new industries emerge and jobs are created.

“Economic data suggests that protecting our innovation will be critical to the nation’s long-term success. Currently, 72% of our gross domestic product is domestic consumption.  Meanwhile, China’s share is roughly half that. To lower our reliance on domestic consumption, we need to bring our goods to new markets.  And since businesses will only sell in foreign markets where pirates and counterfeiters are kept at bay, we need strong intellectual property protections to do that.

“National Geographic recently produced a segment featuring the most typical person in the world. Apparently he is 28 years old, earns less than $12,000 per year, has no bank account, but has a mobile phone.  This highlights where our export opportunities are.  Most of the world is moving toward smartphones, attracted by the number of apps that we create in abundance.  Our software developers have a world of opportunity before them but can only succeed if they can sell products without them being stolen, copied or counterfeited.

“Chairman Goodlatte’s attention to this issue today is welcomed by our country’s small business developers who only want a chance to succeed in a fair marketplace.  As small business grows, so does our nation’s economy. Protecting our intellectual property is vital for our innovation economy to flourish.”

The Association for Competitive Technology applauds the introduction of the American Research and Competitiveness Act of 2011.

The bill, introduced by a bipartisan group led by Reps. Kevin Brady (R-Texas) and Anna Eshoo (D-Calif.) permanently expands and extends the Research and Development (R&D) Tax Credit.

“Innovation is the engine of our U.S. economy, spawning new technologies and industries that lead to job creation,” said ACT executive director, Morgan Reed. “But it requires significant investment in research and product development to bring new technologies to market.

“While the R&D Tax Credit has proven helpful to encourage business investment, its full effectiveness has been thwarted by the stop-start nature of its implementation.  Dependent on annual renewal by Congress has led to lapses and uncertainty about its long-term viability.  If businesses cannot count on the availability of the credit, they are unlikely to budget for it and commit as many resources to R&D as they could.

“The introduction of today’s legislation is exactly what is needed to encourage more R&D investment and growth in job creating industries. If Congress is serious about economic recovery and job creation, this is an easy measure to support.”

The Association for Competitive Technology applauds today’s House passage of H.R. 628, the Patent Pilot Program, which will serve to educate judges about patent law and some of the technical issues that arise in claims before federal court. Jonathan Zuck, president of the Association for Competitive Technology, issued the following statement in support of the bill:

“I applaud the leadership shown by Congressman Darrell Issa to help address the problem of congestion in our patent system.  The pilot program initiated by the bill will help judges identify some of the meritless lawsuits that bog down our patent courts.  While innovators will continue to be wary of bad actors who abuse the patent system, less time spent in court defending against frivolous claims means more resources to invest in innovation and job creation.”

H.R. 628 passed the House by a vote of 371-1 this afternoon.  Since an identical version of the bill passed the Senate earlier this week, today’s House passage means the bill will head to the President’s desk where he is expected to sign it and enact it into law.

The Association for Competitive Technology and a diverse group representing a broad cross-section of the business sector have filed an amicus brief in the Fourth Circuit Court of Appeals  seeking reversal of certain key holdings in a U.S. District Court’s ruling the case of Rosetta Stone Ltd. v.  Google Inc.

Publisher of popular language instruction software, Rosetta Stone has filed suit against Google to halt the internet advertising giant from promoting criminals that steal and counterfeit its software.  Google users searching for “Rosetta Stone”  are often confronted with advertisements for counterfeit copies of the software being sold by foreign criminal syndicates. Google allows counterfeiters and pirates to place search-based advertisements throughout its internet advertisement network.  This not only depresses trademark holder’s sales, but often requires them to bid in AdWords auctions just to protect their own trademarks.

“Google is using its search advertising dominance to shakedown trademark holders,” said ACT executive director Morgan Reed.  “It allows counterfeiters to advertise on its networks, forcing companies like Rosetta Stone to outbid pirates to prevent them from selling fraudulent copies of its software.  Since Google controls 78% of the search advertising marketplace, Rosetta Stone has no choice but fight the counterfeiters by continually paying Google more money for advertising”.

Complicating matters is that pirates place ads in response to search queries based on keywords, geographic location and a constantly changing number of other variables.  This forces Rosetta Stone to continually search for the pirates’ ads in different places, using different criteria, in the effort to combat counterfeiting. Trademark holders’ efforts to find and stop counterfeiters using Google’s search advertising networks is a giant game of whack-a-mole.

While Google allows trademark holders to register complaints against counterfeiters, Google makes it a very cumbersome process, and often too costly and time consuming for small businesses.

The brief focuses on two key aspects of the district court’s ruling regarding settled tenets of trademark law.  First, the district court applied the wrong standard on the issue of dilution under in order to prove that Google had ‘diluted’ its trademarks that are not required under federal trademark dilution law. This has broad-reaching adverse implications for all owners of famous brands seeking to protect their brands from dilutive uses by others.
Second,  the brief points out problems with Google’s interpretation of “functionality”, an element of the law intended to prevent a person from claiming trademark rights in ‘functional’ product features.   In extending the functionality doctrine to protect Google’s use of trademarked words in its ‘AdWords’ program, the court opened the door for anyone to claim that its use of another party’s famous brand name is beneficial to its business and thereby escape liability for trademark infringement.