Politics and Law

Google's staff representatives in Washington, D.C. are famously mild-mannered. But they showed a flash of steel on Thursday in a response to an incendiary article written by a political adversary paid by AT&T, Comcast, Verizon, and other communications companies.

The article in question was written by Scott Cleland, who alleged that Google is not paying its "fair share of the Internet's cost." He calculated it uses 16.5 of all consumer Internet traffic this year, yet pays only a fraction of that in bandwidth costs.

Cleland's anti-Net neutrality group, NetCompetition.org, is paid by telcos and cable companies to be a full-time, 24/7 Google critic. Some examples of Clelandisms: "Google steals," it connives in a "modern-day Machiavellian plot," and its executives dress funny.

Google has generally let those fusillades -- and those creative astroturfing efforts organized against it -- pass without much public comment. But Cleland's latest article prompted Richard Whitt, Google's Washington telecom counsel, to respond.

On the company's blog, Whitt lashed out at what he called Cleland's "payola punditry" He said: "We don't fault Mr. Cleland for trying to do his job. But it's unfortunate that the phone and cable companies funding his work would rather launch poorly researched broadsides than help solve consumers' problems."

And: "Mr. Cleland's calculations about YouTube's impact are similarly flawed. Here he confuses "market share" with 'traffic share.' YouTube's share of video traffic is decidedly smaller than its market share. And typical YouTube traffic takes up far less bandwidth than downloading or streaming a movie."

In other words, a low-quality streaming YouTube video takes only a small fraction as much bandwidth as a high-definition TV show, which iTunes is now offering. Another way to make that point is to realize that one company may sell a million vehicles and another may sell 100,000, but that doesn't say anything about the total vehicle weight -- a million bicycles have nowhere near the same mass as 100,000 Mack trucks.

For his part, in two brief telephone conversations on Thursday, Cleland stands by his work. He says, regarding his corporate sponsors: "I am fully disclosed."

About the criticisms raised by Google, Cleland replied: "I took a difficult subject that's never been written about before... This was a straightforward, transparent attempt to estimate something of significance."

Don't think this debate is going to be over anytime soon. The telcos and the cable lobbyists turned to Cleland around the same time as Google and its left coast allies (eBay, Amazon.com) were on the legislative attack and demanding sweeping, intrusive Net neutrality laws. Congress rejected them at the time. But with the Democrats about to control the legislative and executive branches, and with President-elect Obama's clearly-stated views on the topic, look for round two in the Net Neutrality Wars, contra my earlier predictions, to erupt next year.

The Department of Homeland Security is too reactionary to cybersecurity threats, policy experts said Wednesday, and needs to develop stronger incentives for the private sector to take preventative measures against cyberthreats.

The DHS cybersecurity initiative has come under heavy criticism, and some have suggested responsibility for cybersecurity be shifted to the White House. Panelists at a roundtable discussion Wednesday hosted by the House of Representative's Homeland Security Committee agreed there could be stronger leadership, but they emphasized that there are potentially more effective means of improving the nation's response to cyberthreats.

"I personally don't believe you can designate some person and say, 'You're responsible for securing the nation's computers,'" said Marc Rotenberg, executive director of the Electronic Privacy Information Center. "At the ground level, we're going to have the right system of incentives."

Those incentives could be legislative, he said, such as encryption requirements for electronic health records.

Regardless of how the government encourages network managers to protect their systems, it will be critical for the private and public sector to work together, panelists said.

"We're going to need encouragement so that there are incentives in place to invest the money necessary to make sure your machines are up to date, patched, and firewalled," said Fred Cate, director of the Center for Applied Cybersecurity Research at Indiana University. "Increasingly we need to worry about security as something we can convince others to engage in."

Marc Rotenberg, executive director of the Electronic Privacy Information Center

(Credit: Electronic Privacy Information Center)

If the private sector and private citizens are expected to cooperate with the government's cybersecurity efforts, it needs to trust them, panelists added. That requires more accountability and clearer missions for programs like "Einstein 2," the department's new intrusion detection system.

"The key point to understand is when we're looking at government surveillance, we need to know the reason for it," Rotenberg said. "If it's purely for security purposes, we would say that's OK, but it has to be solely for that purpose with a means of accountability."

The country also needs to take a more forward-looking approach to cybersecurity, the panelists said. Privacy implications should be considered from the very start of the development of security technologies, said Carol DiBattiste, senior vice president of privacy, security, compliance and government affairs for LexisNexis Group. Then, the government can develop policies around the technologies.

A more forward-looking approach should also include some creative thinking, Rotenberg said, such as devising ways to verify a person's identity without revealing their personal information.

"There ought to be more thinking of a strategic vision not just for the (Homeland Security Department) as a whole, but for each of its initiatives," Cate said. "What are the 10 top cybersecurity threats? Let's deal with those. The impetus to do something should not be stronger than the impetus to do something intelligent or thought through."

Policy experts on Wednesday criticized the secretive nature of government information collection programs.

(Credit: Stephanie Condon/ CNET News)

Americans leave behind countless digital footprints from everyday activities like making a phone call or using a credit card--footprints government agencies regularly track as part of their counterterrorism efforts.

The collection, retention, and dissemination of this information has dangerously escaped public oversight and congressional scrutiny, public sector experts warned Congress on Wednesday. If the next Congress and administration do not take steps to rein in these programs that are bloating the federal government, they said, it will come at the expense of both civil liberties and national security.

Policy experts laid out their concerns to the House Homeland Security Committee on Wednesday, which hosted a series of roundtable discussions on privacy and civil liberties. Too many loopholes exist in the Privacy Act, government data mining programs are ineffective, and information-sharing programs are growing without any accountability, they said.

"The truth is, we cannot do everything, so we have to set priorities that maintain the values of a free society," said Laura Murphy, president of Laura Murphy & Associates.

It is well founded that the government runs data-mining programs through which they monitor some people's activities in search of unusual information that may indicate terrorist activity is at work. However, there is "massive overclassification" of such national security programs, said Michael German, national security policy counsel for the American Civil Liberties Union.

The Homeland Security Committee should take more steps to hold data-mining programs publicly accountable, panelists said, particularly predictive data-mining programs, which aim to predict terrorist activity based on previously established patterns.

The federal government has been too secretive about predictive data mining, said Fred Cate, director of the Center for Applied Cybersecurity Research at Indiana University, because "the lesson from the (Total Information Awareness) debacle is just don't say what you're doing, and you won't get the pushback."

There would be pushback, panelists said, because there is zero evidence predictive data mining has ever or would ever be effective for combating terrorism.

"Predictive data mining is akin to alchemy or astrology in its relationship to science," said Tim Sparapani, senior legislative counsel for the ACLU.

Sparapani said the committee should do everything in its power to enact legislation explicitly shutting down predictive data mining.

Not only are these programs ineffective, but there are few legal limits to how information can be used once it is collected, breeding in people "a fundamental distrust and contempt" of the government, Cate said.

There should also be statutory limitations to how long such information can be retained, the panelists said.

"Enormous quantities of data are being acquired," Sparapani said. "We know all it does is create noise in the system."

Protections of the Fourth Amendment
There is also the danger that, as counterterrorism programs solicit more and more help from traditional law enforcement, the protections of the Fourth Amendment will be encroached upon. The Fourth Amendment has already "been rendered a paper tiger in the area of data mining," Cate said.

Increasingly, Murphy said, the Homeland Security Department refers to the goals of preventing crime and preventing terrorism interchangeably when providing guidance to its "fusion centers" across the country, where state and local law enforcement share intelligence with federal agencies.

About 60 fusion centers have been established in a number of states--without proper congressional oversight, German said.

"I would ask the committee to recognize demanding accountability from law enforcement agencies is essential to our security," he said, emphasizing the need for metrics. "If we can't measure how effective these programs are, then we shouldn't fund them."

Panelists also urged the Homeland Security Committee to hold a hearing to review the Information Sharing Environment, which Congress established in 2004 in response to the terrorist attacks of September 11, 2001. President Bush issued privacy guidelines for the ISE in 2006, but they are insufficient, they said.

"The ISE was enacted without any hearings on the civil liberties aspects on its creation," said Kate Martin, the director for the Center for National Security Studies. "If we're no longer going to have a government limited in how much information it collects, it should be limited in what it can share."

President Bush on Tuesday signed the Child Safe Viewing Act, requiring the Federal Communications Commission to explore the market for technologies that allow parents to censor the programming their children watch.

The new law requires the FCC to issue a notice of inquiry to examine what advanced content-blocking technologies are available for various communication devices and platforms. It also calls for the FCC to consider how to encourage the development and use of such technologies without affecting content providers' pricing or packaging.

The term "advanced blocking technologies" is defined in the law as technology that enables parents to protect their children from "any indecent or objectionable video or audio programming, as determined by such parent, that is transmitted through the use of wire, wireless, or radio communication."

The FCC will have to report its findings to Congress within 270 days.

The bill was introduced last year by Sen. Mark Pryor, D-Ark. It passed unanimously in the Senate and passed without objection in the House in October.

Updated at 6:30 p.m. PST with report on economic stimulus plan.

Telecom and tech companies joined with labor unions, public interest groups, and other organizations Tuesday to issue a "call to action" (PDF) for a national broadband strategy.

The coalition (PDF) is asking for President-elect Barack Obama and the next Congress to make national broadband deployment a top priority in 2009 and has set forth a framework for successfully implementing a broadband plan.

"The national broadband strategy should set out several clear, forward-looking, and attainable goals that take into account the ability of broadband to generate huge benefits in education, environmental protection, scientific research, medicine, health care, energy efficiency, transportation, and overall economic vitality," the call to action reads.

Those goals, it says, should include ensuring that every American home, business, and public and private institution has access to affordable, high-speed broadband and that Internet access is open to all providers and users. It also says network operators should have the right to manage their networks according to clear standards, and the broadband market should be as competitive as possible.

To meet those goals, the federal government should stimulate broadband investment, the coalition says, by means such as tax incentives, grants, or subsidies. It should also encourage broadband adoption among consumers, the coalition says.

The group, which includes Cisco Systems, Verizon, Google, the New America Foundation, Public Knowledge, the American Library Association, and others, intends to continue working together and will present more specific policy recommendations in the spring of 2009.

Meanwhile, the federal government's economic stimulus package is expected to include investment in broadband Internet infrastructure, a senior aide to House Speaker Nancy Pelosi told The Wall Street Journal on Tuesday.

With numerous and diverse groups pushing for President-elect Barack Obama to adopt open media principles, many are anxiously awaiting his choice for chair of the Federal Communications Commission, expecting it to signal what kind of media approach the new administration will take.

The media reform group Free Press is highlighting the significance of the selection in a new ad campaign and appeal for public input on what the next chair's top priorities should be.

The group's "Help Wanted" ad reads: "The American people seek a new leader at the Federal Communications Commission to take media and technology policy into the 21st century... Applicant must be willing to hold long and unruly public hearings and enjoy arcane telecom banter. Wardrobe malfunctions, NASCAR wreckage and fleeting expletives are discouraged."

It appears today in the classified sections of The Washington Post, Washington Times, Politico, and The Hill.

Free Press is also asking the public what the next FCC chair's top three priorities should be. The group offers up suggestions for people to choose, such as "protect an open Internet by enforcing Net neutrality" and "break up media conglomerates and return stations to local control."

"We'll be sure to pass along any good resumes," said Josh Silver, executive director of Free Press.

Those resumes would likely go to Susan Crawford or Kevin Werbach, who are leading the Obama transition team's review of the FCC. Both are academics who are on the advisory board for Public Knowledge, a nonprofit public interest group that promotes open Internet and media standards.

"Both Susan and Kevin are very well-respected academics who are supporters of open Internet principles across the board," said Free Press policy director Ben Scott.

President-elect Barack Obama's transition team anticipated the requests of open government advocates by copyrighting Change.gov under a Creative Commons license, but a coalition of groups in favor of more online freedom is asking for more.

The group released an open letter Tuesday morning to the Obama team, urging them to adopt certain principles on Change.gov so that no one is blocked in sharing or remixing transition-created material. The signatories include Web 2.0 evangelist Tim O'Reilly, Stanford Law professor Larry Lessig, MoveOn.org, Newt Gingrich's organization American Solutions, and the government transparency group the Sunlight Foundation. Visitors to the site hosting the letter can add their name to the petition endorsing its principles.

The letter encourages eliminating legal barriers to sharing material from Change.gov. The transition team achieved this by copyrighting the site under the Creative Commons license, the letter says.

"The transition's commitment to this principle is enormously important, and its attention to this matter--so quickly, and in midst of so many pressing issues--deserves praise," it says.

It also asks that there be no technological barriers for sharing content. For instance, it says, the transition team should not exclusively use YouTube to post videos, since YouTube does not authorize videos on its site to be downloaded.

The letter also says transition-produced content should not unfairly benefit one commercial entity over another or commercial entities over noncommercial entities.

"Ultimately, to ensure that new media can cover breaking news on a level playing field with traditional media, it would be advisable to carry press conferences and other live media events in real time on the Web site," the letter says.

The group is aiming to encourage the Obama team to adopt open Internet principles not only during the transition, but as it starts governing as well.

Eric Holder, President-elect Barack Obama's pick for attorney general, drew applause from liberal Democrats earlier this year when he denounced the Bush administration's warrantless wiretapping program.

A review of Holder's public statements, speeches, and testimony when he was a top Justice Department official in the Clinton administration, however, reveals a more nuanced record on privacy. His remarks indicate support for laws mandating Internet traceability, limits on domestic use of encryption, and more restrictions on free speech online. He also called for new powers for federal prosecutors, some of which became law under President Bush as part of the USA Patriot Act.

Eric Holder

(Credit: Covington & Burling LLP)

In some cases, Holder's statements echoed the position of Justice Department staff members or political appointees, many of whom clashed with civil liberties groups. In others, the former deputy attorney general seems to have gone further than his colleagues in advocating more powers for police.

As one of the Clinton administration's most knowledgeable spokesmen on Internet crime, surveillance, and intellectual property infringement, Holder immersed himself in these topics and frequently appeared on Capitol Hill to address them. He also adopted some positions that former Attorney General Alberto Gonzales and other Bush administration officials would echo for the next eight years.

In 1999, Holder said that "certain data must be retained by ISPs for reasonable periods of time so that it can be accessible to law enforcement." A few years later, Gonzales said that Internet service providers must retain certain data for a "reasonable amount of time," and asked Congress to make it mandatory.

"What you get in an attorney general is an attorney general, and that's someone who is going to work to increase the power of law enforcement," said Jim Harper, a policy director at the libertarian Cato Institute in Washington, D.C.

A spokesman for the Obama transition team did not respond to requests for comment on Monday.

After Gonzales' unceremonious departure from the Bush administration, attempts in Congress to compel Internet providers to help identify what their users were doing have flagged, but some industry sources expect the measure to be revived in a solidly Democratic Congress next year. (A Democrat was one of the first legislators to embrace the idea.)

Free speech and censorship
In terms of free speech and pornography, Holder's views also previewed, in some ways, what Bush's attorneys general would later propose.

In 1998, Holder talked about using federal obscenity law to crack down on porn Web sites featuring consenting adult performers. "Investigation and prosecution of Internet obscenity is particularly suitable for federal resources," Holder wrote in a memo. "Prosecution of cases involving relatively small distributors can have a deterrent effect."

That could have been lifted from what Attorney General John Ashcroft said a few years later: "The Internet is perhaps the most pernicious medium for obscenity. The Department of Justice is committed unequivocally to the task of prosecuting obscenity."

Because a federal law exists that targets obscenity, the Justice Department is generally required to enforce it. But department officials aren't required to suggest additional laws restricting Internet speech.

In 1999, Holder suggested that courts might find additional restrictions on sexually explicit material acceptable. He said: "It seems to me that if we can come up with reasonable restrictions, reasonable regulations in how people interact on the Internet, that is something that the Supreme Court and the courts ought to favorably look at." Five years later, Attorney General Gonzales reached the same conclusion, suggesting that one such reasonable restriction would be mandatory Web labeling.

Efforts to restrict encryption
Another privacy flash point in the 1990s was encryption, including whether to regulate exports, and whether the federal government should--or could--outlaw hardware and software without backdoors for the government.

By today's standards, the idea seems almost quaint: strong encryption is now built into every major operating system, including Microsoft Windows and OS X. Laws encourage corporations to encrypt sensitive data, and every modern Web browser uses strong encryption to secure credit card numbers being transmitted over the Internet.

But a decade ago, the Justice Department was deadly serious in its demands for built-in-backdoors. One House of Representatives committee approved a bill banning encryption products (even Web browsers) without what was then known as "key escrow" or "key recovery." Meanwhile, Justice Department officials repeatedly made statements like law enforcement must "continue to have the same authority it has with the telephone" to access private communications even if they're scrambled.

Soon after Holder was confirmed as deputy attorney general in 1997, he selected an attorney called Robert Litt as his principal associate deputy. Litt had an unusual pedigree: he was the former partner of Clinton's personal attorney and someone who was dubbed a "partisan Democrat" by New York Times columnist William Safire.

Litt was already known in tech circles for telling Congress that, on the Internet, "not only do would-be terrorists have access to detailed information on how to construct explosives, but so do children." After Holder placed him in the new post, Litt told the Senate that the federal government was not seeking mandatory key escrow "at this time"--but argued that the U.S. Constitution nevertheless permitted it.

Rep. Zoe Lofgren, a California Democrat, asked Holder about encryption during a March 1998 hearing. She said, according to a transcript: "Does the Department of Justice or, to your knowledge, any other government agency, have plans to, through purchasing, to impose a domestic key recovery scheme on the United States?"

Holder did not say "No." Instead, he replied: "Our hope is that we can work with industry. We represent, obviously, law enforcement interests, and we think that there is a way in which we can come up with a solution that ultimately will be essentially acceptable to both sides."

"What he's saying is that government needs to have some sort of privileged access for encrypted information," said Cord Blomquist, a policy analyst and communications director at the nonpartisan Competitive Enterprise Institute. "Presumably the justification is that terrorists are communicating through encrypted messages and we want to listen in. Giving government privileged access to that is not only an attack on privacy, it's an attack on free speech itself."

That is not a uniform view. Marc Rotenberg, executive director of the Electronic Privacy Information Center, believes that Holder's past statements on encryption and surveillance "are fair topics to pursue at the nomination hearing."

But Rotenberg said any statements should be read narrowly and in context--suggesting that Holder may have been referring to data preservation after receiving a court order instead of preemptive data retention--and generally applauded his nomination. "Eric Holder is an outstanding public servant and would be a great attorney general, particularly after the last several years," Rotenberg said. "He is extremely well qualified, highly regarded, and has a deep commitment to the rule of law."

The American Civil Liberties Union declined to comment on Monday, saying it needed more than a few hours to review Holder's record and would prepare a full report. (When Bush announced Michael Chertoff's nomination to be Homeland Security Secretary, the ACLU did send out a press release the same day calling his nomination "worrisome.")

Another ambiguous statement came from Holder in 2000, when he warned that "a criminal using tools and other information easily available over the Internet can operate in almost perfect anonymity," apparently a reference to proxy services and disposable e-mail accounts.

Intellectual property piracy: "This is theft"
Less ambiguous were Holder's arguments for aggressive enforcement of U.S. intellectual property laws. In 1999, he joined the president of Adobe Systems at an event in San Jose, Calif., to announce that digital piracy had become a real problem and would become a "real priority" for the Justice Department.

"This is theft, pure and simple," Holder said at the time.

The Business Software Alliance, which counts Adobe Systems and Microsoft as members, applauded Holder's nomination this week. "He's smart, he's dedicated, open minded, he's very tenacious in pursuing the goals of the department," said BSA president Robert Holleyman. "We're very enthusiastic...He's a first rate choice."

Holleyman said he has no "concern" about Holder's previous restrictive views on encryption. "The way the debate has really shifted is increasingly technology is being used by cyber criminals for financially motivated crimes," he said. "I have complete confidence he'll be open-minded on how to best use technology."

Similarly, the U.S. Chamber of Commerce said in a blog post on Monday that: "Holder's selection offers the promise of not only greater enforcement of IP rights, but that a commitment to strong IP rights at home and abroad will be a hallmark of the Obama administration."

Since leaving the Justice Department, Holder has been a partner at the politically well-connected law firm of Covington and Burling. While there, he was hired by the Entertainment Software Rating Board to help fend off (PDF) aggressive federal regulators. He also was one of the attorneys representing Verizon (PDF) in its attempts to fend off a turbocharged subpoena from the recording industry that attempted to unmask a subscriber.

Proposed proto-Patriot Act in 1996
Another point of congruence between Holder and his successors can be found in his support for greater law enforcement surveillance powers during the Clinton administration. In early 2000, he asked Congress for a set of new laws, including granting police the ability to obtain nationwide court orders for telephone surveillance. Another targeted cyberstalking.

"We recognize the importance the public attaches to individual privacy, and any legislation must be carefully balanced to avoid unnecessary infringement on the privacy rights we hold dear in this country," Holder said.

Both of those proposals were signed into law by President Bush. The first became part of the Patriot Act. The second was glued onto a spending bill.

Salon.com columnist Glenn Greenwald views Holder as a "very positive step" for civil liberties, arguing that Holder publicly criticized the Bush Justice Department before many details surrounding the NSA spying program and Patriot Act implementation were even known, "and at a time when very few people were strongly criticizing Bush's executive power abuses." In 2004, Holder went on CNN and said that "I think the Patriot Act has been good," and would have been better if the Bush administration had not misused it. The Nation has has called Holder's support of the Patriot Act "unsettling."

An article in the Christian Science Monitor published a few weeks before the Patriot Act became law in October 2001 said: "After the Sept. 11 attacks, the Bush administration proposed loosening many of these constraints on domestic spying as part of a broad antiterrorism bill submitted to Congress...The Clinton administration unsuccessfully proposed similar changes in 1996 and 1998, says former Deputy Attorney General Eric Holder."

"It's fair to assume that in (the Justice Department), the permanent staff has a permanent and constantly growing wish list of law enforcement goodies," said Harper, the Cato policy director. "It may help to educate liberals and progressives who believe that Eric Holder will magically roll back the department's aggression toward civil liberty."

CNET News' Stephanie Condon contributed to this report.

President-elect Barack Obama's transition team has licensed the site Change.gov under the Creative Commons Attribution 3.0 License, giving visitors more freedom to use content from the site.

Change.gov was previously was copyrighted under an "All Rights Reserved" notice.

Stanford Law Professor Larry Lessig, who noted the change on his blog Monday, called the move "consistent with (Obama's) values of any 'open government' and with his strong leadership on 'free debates.'"

The license under which the site is copyrighted allows visitors to copy, distribute, display, and perform material from the site, as well as to remix it, as long as the work is attributed to its source.

The site says the transition team has adopted "a policy of terminating, in appropriate circumstances and at our sole discretion, subscribers or account holders who are deemed to be repeat infringers."

In general, works produced by the U.S. government are exempt from copyright protection. The General Services Administration has strict standards for granting government domains, though not all sites with the .gov domain are federal departments or programs. The Obama transition team did not respond right away to calls for comment on the status of Change.gov as a government Web site.

If the site had been entered in the public domain, there would be no need to attribute material back to Change.gov.

"Building an ethic for attribution, however, is a good thing in my view," said Lessig, who is on the Creative Commons board.

WASHINGTON--Trends indicate that more and more commercially successful innovations are backed by federal dollars, a researcher said Monday, and politicians should do even more--even create a cabinet-level Innovation Department--to support the innovation economy if they want to kick-start the wider national economy.

"We need economic policies that pull us out of the recession but are oriented towards innovation," said Fred Block, a sociology professor from the University of California at Davis. "What we have to do as a country is figure out how to walk and chew gum at the same time."

Block co-authored a report released Monday that urges President-elect Barack Obama to integrate support for innovation in the stimulus package he is expected to sign at the start of his term. At a conference in here Monday, academics and industry representatives pointed out the weaknesses of innovation economy and ways the government could address the systemic problems. The conference was sponsored by the Economic Policy Institute, the Information Technology and Innovation Foundation, the Breakthrough Institute, the University of California Washington Center, and the Ford Foundation.

UC Davis professor Fred Block on Monday gave his innovation policy recommendations for the incoming administration.

(Credit: Stephanie Condon/ CNET News)

Block's paper suggests increased funding for federal innovation, new mechanisms to fund fledgling technology companies, increasing public knowledge about the government's role in innovation, and creating a cabinet-level Innovation Department. The new department, Block said, would not run innovation programs itself but instead oversee interdepartmental collaboration and the use of best practices, among other things.

While some conference attendees suggested that asking for innovation policy reform at the start of the new administration was asking for too much, Block said now is the time to bring together influential constituencies with an interest in innovation policy--labor leaders looking for job creation, environmentalists interested in green technologies, and the business community.

"There's the potential in the moment for these groups to cohere into a political coalition so we just don't have stimulus but 'stim-novation,'" Block said, coining a term.

The significance of government support for innovation research and development is evident in R&D Magazine's annual "R&D 100 Awards," which recognize products that skillfully combine research with commerce, Block said. In 2006, 88 domestically produced innovations won recognition from R&D Magazine, and of those, 77 had benefited from public funds. The recognition of government-backed products has increased over the years, Block said.

The industry is clearly interested in more government collaboration, the other conference speakers said. Venture capital firms have been closely following the Department of Energy's entrepreneurs-in-residence (EIR) program, said Victor Hwang, managing partner of T2 Venture Capital.

Established in the fall of 2007, the EIR program funds VC-sponsored entrepreneurs to work in national research labs in order to develop plans to commercialize new clean energy technologies. The first three entrepreneurs were funded with a total of $300,000. On November 19, the Department of Energy announced it is expanding the program to include five more entrepreneurs, funded at $50,000 each.

"With a very minuscule amount of money you can get the whole industry to pay attention because it's been waiting for something like this to happen," Hwang said. "There's no reason this couldn't happen on a wider scale at other agencies."

Federal support could be especially helpful for cases of market failure in which fragmented, state-based policies are insufficient, the panelists said. In today's global economy, entrepreneurs need to be able to find business partners outside their own geographic region, Hwang said, but the free market does not provide a wide enough social network for that. Even state agencies will rarely look outside of their own constituencies, he said.

It is difficult for innovators to accommodate inconsistent state-level policies, such as broadband or e-waste policies, said Sun Microsystems Senior Vice President David Douglas. Sun has 10 employees who simply track state laws, he said.