| Subcommittee Approves 5
Year Extension of Internet Tax Freedom Act |
8/2. The House
Judiciary Committee's Commercial and Administrative Law
Subcommittee approved HR
1552 the Internet Tax Nondiscrimination Act, on a
voice vote. The bill would extend for five years the current
moratorium on multiple or discriminatory Internet taxes, and
taxes on Internet access. The current moratorium, which was
enacted in the Internet Tax Freedom Act in 1998, is set
to expire on October 21.
Rep. Bob Barr (R-GA),
Chairman of the Subcommittee, presided. He said that without
an extension, "I think you would see some liberties being
taken with taxation of the Internet." He stated that
"we have got to get something through very quickly that
will preserve the moratorium." He added that a 5 year
extension is a compromise, noting that many Members would
prefer the permanent extension contained in HR
1675, which is also titled the Internet Tax
Nondiscrimination Act. Finally, he said that "I think the
administration agrees with us."
Gekas Amendment. Rep. Barr pointed out that
"Internet sales comprise less than 1% of total retail
sales." Rep. George
Gekas (R-PA) offered, but then withdrew, an amendment that
would provide that the moratorium be extended for 5 years, or
until the total value of retail goods sold in electronic
commerce in the U.S. reaches 5 percent of the total value of
all retail goods sold in the U.S., whichever comes first.
Quill Decision. Rep.
Mel Watt (D-NC) and Rep.
Jerrold Nadler (D-NY) both argued that any legislation
should both extend the current moratorium, and address state
collection of sales and use taxes, which is not affected by
the moratorium. Currently, Quill
v. North Dakota, 504 U.S. 298 (1992), provides that state
and local taxing authorities are barred under the Commerce
Clause from requiring remote sellers without a substantial
nexus to the taxing jurisdiction to collect sales taxes for
sales to persons in the jurisdiction; however, the Court added
that Congress may extend such authority.
Sales Tax Bills. Congress has passed no legislation
pertaining to sales and use taxes. However, there are several
bills pending in the Congress that would provide this
authority. See, for example, HR
1410, sponsored by Rep.
Ernest Istook (R-OK), and S
512, sponsored by Sen.
Byron Dorgan (D-ND). Moreover, several Senators have
attempted, unsuccessfully, to draft a "compromise
bill" that would allow states to require remote sellers
to collect sales taxes. The main issue in dispute involves
requiring states to simplify their tax codes.
Rep. Nadler stated that "I don't believe we can totally
divorce these two issues." He added that an impending
expiration of the moratorium "leverage" for passing
a sales and use tax bill, and that passing a five year
extension would take away this leverage. Rep. Watt stated that
the moratorium extension and sales tax issues "should
continue on parallel tracks."
Watt Amendment. Rep. Watt offered an amendment that
provides that "states are authorized to enter into an
Interstate Sales and Use Tax Compact", and that after
being signed by the 25 states, the "Congress shall
consent to the Compact within 365 days ... after the
adopting States transmit the Compact to Congress or such
compact shall be deemed to be withdrawn after the 365 day
period." Rep. Barr ruled the amendment non germane. Rep.
Nadler stated that he too had an amendment to offer, but would
save it for the full committee mark up session. |
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| AMT Relief Bill Introduced |
8/2. Represenatives Richard
Neal (D-MA), Tom
Davis (R-VA), Zoe
Lofgren (D-CA), Jerry
Weller (R-IL), and 9 others introduced a bill
in the House to reform the Alternative Minimum Tax (AMT)
treatment of Incentive Stock Options (ISOs). The bill would
provide relief to some workers at high tech companies who
exercised stock options before their companies' stock prices
plummeted in 2000.
The problem with existing tax law, say the sponsors, is an
unfair anomaly in the tax code. Some employees exercised
incentive stock options in 2000 provided by their employers.
The price of the stock at the time that the employee exercised
the option was often much higher than the price when the
option was granted. Hence, the employee realized a significant
gain. However, many of these employees then held on to the
stock, for example, to obtain long term gains tax treatment.
But then, for many of these employees, the price of the stock
dropped precipitously. This left some employees with a huge
tax bill -- sometimes more than the value of the stock, or
even their entire net worth. See, sponsors' release.
Related Bills. Sen.
Joe Leiberman (D-CT) introduced a companion bill in the
Senate. The bill introduced on August 2 refines HR
1487, which Rep. Lofgren introduced on April 4. The list
of sponsors of HR 1487 grew to 49 members.
Current Law. Incentive Stock Options is codified
at 26
U.S.C. § 422. The Alternative Minimum Tax is codified at 26 U.S.C.
§ 56.
Text of Bill. The bill provides, in relevant part, as
follows: "In the case of an incentive stock option (as
defined in section 422 of the Internal Revenue Code of 1986)
exercised during calendar year 2000, the amount taken into
account under section 56(b)(3) of such Code by reason of such
exercise shall not exceed the amount that would have been
taken into account if, on the date of such exercise, the fair
market value of the stock acquired pursuant to such option had
been its fair market value as of April 15, 2001 (or, if such
stock is sold or exchanged on or before such date, the amount
realized on such sale or exchange)."
Sponsors. The thirteen original sponsors of the bill
include representatives of districts with concentrations of
high tech companies, including Lofgren (Silicon Valley), Dunn
(Seattle area), Davis, Moran and Wolf (northern Virginia),
Doggett (Austin, Texas), and Cannon (Provo and Orem, Utah).
There are also several members of the Ways and Means
Committee, which has jurisdiction, on the sponsorship list,
including Neal, Weller, Matsui, and Dunn. |
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| GAO Reports on Legal Fees
Paid to Attorneys for IP and Antitrust Work |
8/2. The GAO
issued a report
[PDF] titled "Hourly Fees Paid by Various Federal
Agencies to Private Attorneys for Legal Services". The
report was prepared at the request of Rep. William Delahunt
(D-MA), a member of the House Judiciary Committee.
Intellectual Property Services. The report addressed
fees paid by NASA and the Veterans Administration (VA) for
legal services involving intellectual property law. It stated
that NASA paid $210 per hour to prepare a patent application.
Also, the VA paid an average of $308 per hour for "advice
on the government's legal rights in certain software products
and on the potential liability under various trade secret
laws."
Antitrust Division. Another item in the report is that
in FY 2000 "the Antitrust
Division had 17 contracts and paid an average hourly fee
of $271." The report did not identify the names of firms
or individual attorneys, or the work which they performed. Nor
did it state whether $271 per hour was paid for work on
competitive analyses of applications to provide in region
interLATA services. |
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| Senate Committee Approves
NTIA Nominee Nancy Victory |
8/2. The Senate
Commerce Committee held a hearing on August 1 on several
pending nominations, including that of Nancy Victory to be
Assistant Secretary of Commerce for Communications and
Information. On August 2 the Committee voted en bloc to
approve these nominations without any dissenting votes.
Victory is on track to become the next head of the National Telecommunications
and Information Administration (NTIA). William Hatch has
been acting head since the departure of Greg Rohde shortly
after the inauguration of President Bush.
Role of the NTIA. Sen.
Conrad Burns (R-MT) described the NTIA as "one of the
most important seats" at the Department of Commerce at
the August 1 hearing. It has spectrum management
responsibilities with respect to spectrum bands assigned for
government use. This puts it at the center of the debate over
locating and reallocating spectrum for use by third generation
(3G) wireless services, which is intended to bring broadband
Internet access to portable devices. Similarly, the NTIA is
involved in the debate over emerging ultrawideband (UWB)
technologies. It also administers a grant program for
communications related projects. Finally, it serves as the
administration's advocate before the FCC, the Congress, and in
public forums on many communications and Internet issues.
Victory testified that her two main issues will be locating
spectrum for new uses, and promoting broadband deployment. In
response to a question from Sen. Byron Dorgan (D-ND),
she stated that she hoped to be an "activist". Sen.
Burns advised her that "your function is primarily in the
area of policy."
Broadband Deployment. Sen. George Allen (R-VA)
asked Victory about efforts to promote deployment of broadband
Internet access services in rural areas. She responded that
this is "definitely a goal". She added that "I
don't believe that the administration has taken a position on
any of the legislative proposals yet." Nor did she state
her views on the Tauzin Dingell bill, or any other legislative
proposals. She only stated that any government action
"should be technology neutral." Sen. Allen added
that in addition to copper and cable, fiber, wireless, and
satellite will be important to broadband deployment.
Sen. Dorgan also used to occasion to advocate broadband
deployment in rural areas, such as his home state of North
Dakota. He stated that broadband access "has to be
supported by the Universal Service Fund."
3G Wireless. Sen. Allen asked her, "Would you be
willing to identify the most promising chunks of the
spectrum?" She responded, "I don't think I could
identify for you what is the best option." She continued
that her role would be to try to create a climate in which all
sides come to the table and compromise. She also ducked a
question on the timing of the 1710-1755 MHz spectrum auction.
Finally, she suggested that she would institute incentives for
efficient use of spectrum; however, she added, "I don't
know what those mechanisms would be at this time."
Conflicts of Interest. Sen. Dorgan questioned Victory
about conflicts of interest, and a story
in the Wall Street Journal on August 1 that stated that
Victory and her husband "own large amounts of stock in
companies such as Verizon Communications Corp. that would
benefit from controlling valuable government- owned airwaves
needed to deliver advanced "third generation"
wireless-data services ..." She responded that "I no
longer own that stock. I sold it quite a while ago." She
also stated that there is one matter in which she will recuse
herself -- ultrawideband (UWB). Sen. Dorgan expressed his
support for her confirmation. |
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| Revolving Door for Telecom
Lawyers |
8/2. Nancy Victory is just one of many telecom lawyers who
have moved between the Washington DC law firms, such as Wiley Rein & Fielding (WRF),
that represent telecom and Internet companies and trade
groups, and the government agencies and offices, such as the
NTIA and FCC, that regulate them.
Victory until recently was a partner at WRF. Her husband, Michael
Senkowski, remains head of WRF's Communications Practice.
He is also a former Administrative Assistant to the Chairman
of the FCC. Victory will join many other former WRF attorneys
who now hold top positions in government regulating telecom
and Internet companies. Kevin Martin,
one of the five FCC Commissioners, was once an associate at
WRF. Bryan
Tramont, who is Senior Legal Advisor to newly appointed
FCC Commissioner Kathleen Abernathy, also worked at WRF. Maria
Cino, the new Assistant Secretary of Commerce and Director
General of the United States and Foreign Commercial Service,
is another WRF veteran. Bruce Mehlman, who is now Assistant
Secretary of Commerce for Technology Policy, has also worked
at WRF, as well as on the Hill.
Similarly, WRF is full of attorneys who have worked at the
regulatory bodies. For example, lead partner Richard
Wiley is a former FCC Chairman. Finally, Victory will
replace Greg Rohde, who has never worked at WRF. However,
before moving to the NTIA, he was the top telecom aide to Sen.
Dorgan, who presided over Victory's confirmation hearing. |
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| DC Circuit Rules in Adrx v.
Biovail |
| 7/31. The U.S.
Court of Appeals (DCCir) issued its opinion
in Andrx
Pharmceuticals v. Biovail, appeals from two
District Court decisions in a private antitrust case
involving patents and Food and Drug Administration drug
applications. The Appeals Court affirmed the District
Court's dismissal of the antitrust counterclaim for failure to
sufficiently allege injury, but reversed its decision to do so
with prejudice. Remanded. |
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| Export Administration Act
Consent Agreement |
8/1. Sen. Fred
Thompson (R-TN), an opponent of S
149, the Export Administration Act of 2001, and Sen. Tom Daschle (D-SD),
the Senate Majority Leader, engaged in a discussion on the
Senate floor regarding a unanimous consent request to bring up
the bill after the August recess.
Sen. Daschle stated that the "Export Administration Act
is part of the unanimous consent agreement that we entered
into a moment ago. It allows the majority leader to call up
the bill on September 4. I say to my colleagues, and
especially to my colleague from Tennessee, that this is an
agreement he and I discussed prior to entering into the
agreement. It acknowledges that we would have at least 2 full
days of debate that would accommodate the interest of the
Senator from Tennessee in discussing this issue prior to the
time I would file a cloture motion. I confirm that for the
RECORD, and fully expect that those 2 full days of debate will
be immediately following the time we come back." Sen.
Thompson agreed to this unanimous consent request. See,
Congressional Record, August 1, 2001, at page S8535. |
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| Appeals Court Denies
Microsoft's Motion for Rehearing |
8/2. The U.S.
Court of Appeals (DCCir) issued an order
[PDF] denying both Microsoft's July 18 Petition
for Rehearing and the government's July 13 Motion
for Immediate Issuance of Mandate. Microsoft had sought
review on the sole issue of commingling of certain software
code specific to web browsing with software code used for
other purposes in certain files in Windows 98. Microsoft
stated that the June 28 opinion
of the U.S. Court of Appeals "accepted the district
court's conclusion that such "commingling" had
occurred and that it violated Section 2 of the Sherman Act.
The Court's ruling with regard to "commingling" of
software code is important because it might be read to suggest
that OEMs should be given the option of removing the software
code in Windows 98 (if any) that is specific to Web
browsing."
The Court wrote, in its brief order, "Upon consideration
of appellees' motion for immediate issuance of the mandate,
the response thereto, appellant’s petition for rehearing,
and the response thereto, it is ORDERED that the motion for
immediate issuance of the mandate be denied. It is FURTHER
ORDERED that the petition for rehearing be denied. Nothing in
the Court’s opinion is intended to preclude the District
Court’s consideration of remedy issues."
Steve DelBianco, VP of the Association
for Competitive Technology (ACT), a pro Microsoft group,
criticized the Court's order. He stated in a release that
"The industry needs some clarity on this matter, since it
is not completely clear as to whether the appeals court ruling
on "commingling of code" was narrow and relevant
only to user access to the browser, rather than to other
innovations in Windows. Continued confusion on this matter
could be disastrous given the life or death stakes for the
thousands of programmers currently porting their software to
Windows XP. These programmers and their companies have made a
crucial business decision to rely upon those features to be
part of the operating system and deserve to have some
stability sooner rather than later." |
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| Friday, August 3 |
9:00 AM - 5:00 PM. Day one of a two day conference titled
"6th Annual Independent Inventor's Conference." The
conference its hosted by U.S.
Patent and Trademark Office (USPTO) and the Office of
Independent Inventor Programs (OIIP). See, USPTO
notice. Location: The DoubleTree Hotel, 300 Army Navy
Drive, Arlington, Virginia.
9:30 AM. The House
Commerce Committee's Subcommittee on Oversight and
Investigations will hold a hearing for titled "How Secure
is Sensitive Commerce Department Data and Operations? A Review
of the Department's Computer Security Policies and
Practices." Location: Room 2123, Rayburn House Office
Building. The scheduled witnesses are Robert Dacey (Director,
Information Security Issues, GAO), Johnnie Frazier (Inspector
General, Commerce Dept.), Samuel Bodman (Deputy Secretary,
Commerce Dept.), and Thomas Pyke (Acting CIO, Commerce Dept.).
Deadline to file comments with the FCC in its Notice of
Inquiry (NOI) regarding video competition. On June 20, 2001
the FCC adopted a NOI into the status of competition in the
market for the delivery of video programming. The FCC stated
in a release
that "The NOI seeks information that will allow the FCC
to evaluate the status of competition in the video
marketplace, prospects for new entrants to that market, and
its effect on the cable television industry and consumers. The
NOI also solicits information regarding the extent to which
consumers have choices among video programming distributors
and delivery technologies." Reply comments are due by
September 5. See, CS Docket No. 01-129. |
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| Correction |
| The calendar section of the August 2 Daily E-Mail Alert (No.
240) stated that the Senate Commerce
Committee would vote on the nomination of Nancy Victory
to be head of the NTIA on Friday, August 3. In fact, the
Committee voted on her nomination on Thursday, August 2. See,
story at left. |
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| Saturday, August 4 |
| 9:00 AM - 5:00 PM. Day two of a two day conference titled
"6th Annual Independent Inventor's Conference." The
conference its hosted by U.S.
Patent and Trademark Office (USPTO) and the Office of
Independent Inventor Programs (OIIP). See, USPTO
notice. Location: The DoubleTree Hotel, 300 Army Navy
Drive, Arlington, Virginia. |
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| Monday, August 6 |
9:00 AM - 5:00 PM. The FCC's Consumer/Disability
Telecommunications Advisory Committee will meet. Location:
FCC, 445 12th Street, SW, Room TW-C305, Washington DC.
Deadline for the FCC to file
a petition for rehearing before the U.S. Court of Appeals (DCCir)
in NextWave v. FCC, the never ending battle over
cancellation of the bankrupt NextWave's spectrum
licenses. See, June 22, 2001 opinion
of the Appeals Court. |
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| People and Appointments |
8/2. The Senate confirmed Robert Mueller to be FBI
Director by a vote of 98 to 0.
8/1. The Senate confirmed Harvey Pitt to the Chairman
of the SEC.
8/2. President Bush announced his intent to nominate Roscoe
Howard to be U.S. Attorney for the District of Columbia.
See, White
House release.
8/2. President Bush nominated Jeffrey Howard to be a
U.S. Circuit Judge for the First Circuit, and Terrence
O'Brien to be a U.S. Circuit Judge for the Tenth Circuit. See White
House release.
8/2. Sony's U.S. holding company named Nicole Seligman
to be General Counsel. She is a partner in the Washington DC
law firm of Williams & Connolly. She was one of former
President Clinton's impeachment defense attorneys. She is also
married to Joel Klein, who was an Assistant Attorney
General in charge of the Antitrust Division in the Clinton
administration, and architect of the Microsoft antitrust
litigation.
8/2. The RIAA
named Joel Flatow to be its General Manager, West Coast
Affairs. See, RIAA release. |
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| More News |
7/31. The U.S. Court of
Appeals (FedCir) issued its opinion in Viskase
v. American National Can, a patent
infringement case involving shrink wrap. The Appeals Court
affirmed in part, reversed in part, and remanded.
8/2. Rhythms NetConnections,
a DSL
service provider, filed a Chapter 11 petition for bankruptcy
in U.S. Bankruptcy Court (SDNY).
8/2. The Copyright
Office published a notice
[PDF] in the Federal Register of several very minor changes to
its rules found at 37 CFR 202.1 and 202.17. Each correction
changes Latin phrases into italic font. |
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