| House Subcommittee Approves
Bill to Limit Business Activity Taxes |
7/16. The House
Judiciary Committee's Subcommittee on Commercial and
Administrative Law amended and approved HR 2526,
the Internet Tax Fairness Act of 2001. The Subcommittee first
approved by a unanimous voice vote an amendment offered by Rep. Bob Barr (R-GA),
the Chairman of the Subcommittee. It then approved by voice
vote the bill as amended.
The bill is sponsored by Rep. Bob Goodlatte
(R-VA), Rep. Rick
Boucher (D-VA), and Rep.
Chris Cox (R-CA). As introduced, the bill contained a
short section permanently extending the Internet Tax Freedom
Act (ITFA). The rest of the 11 page bill dealt with state and
local business activity taxes (BATs).
Rep. Barr's amendment changes the title of the bill from the
"Internet Tax Fairness Act of 2001" to the
"Business Activity Modernization Act of 2002", and
deletes Section 2 of the bill as introduced, which provided
for a permanent extension of the Internet Tax Freedom Act (ITFA).
The original ITFA was passed in 1998. It created a three year
moratorium on multiple and discriminatory Internet taxes, and
taxes on Internet access. The ITFA was temporarily extended
last fall.
The remainder of the bill as introduced is unaffected by the
amendment. The bill would limit the imposition of business
activity taxes (BATs) on electronic and other interstate
commerce by state and local taxing authorities. However, the
bill does not address sales taxes.
The bill would prohibit several Internet related BATs,
including taxes on "The use of the Internet to create or
maintain a World Wide Web site accessible by persons" in
the taxing jurisdiction. The bill would also prohibit BATs on
the use of an ISP, on-line service provider, internetwork
communication service provider, or other Internet access
service provider, or web hosting service. It would also
prohibit BATs on the "use of any service provider for
transmission of communications, whether by cable, satellite,
radio, telecommunications, or other similar system."
Also, the bill would prohibit BATs based on the "presence
or use of intangible personal property ... including patents,
copyrights, trademarks, logos, ... electronic or digital
signals, and web pages ..."
The bill provides that no state or local taxing authority may
impose a BAT unless the taxed entity "has a substantial
physical presence" in the jurisdiction. The bill further
prohibits BATs on the leasing or owning of property in the
jurisdiction for less than 30 days, and on the assigning of
employees, representatives or agents in the jurisdiction for
less than 30 days. Finally, the bill prohibits BATs based on
contracts, licenses, permits, loans, deposits, and securities.
Rep. Barr stated at the hearing that the bill "would
provide much needed clarity". He elaborated that
"while the Supreme Court has established a physical
presence threshold for the collection of sales taxes, it has
not fully articulated a fully coherent basis for determining
when a non resident business enterprise has a sufficient
economic presence to justify the imposition of business
activity taxes."
He added that "Some states have aggressively used this
uncertainty to aggressively assess and collect taxes on multi
state corporations that have virtually no contact or
connection with the taxing state." Moreover, said Rep.
Barr, "While large corporations are often prepared to
defend themselves against these sometimes spurious claims,
small businesses, particularly those which use the Internet to
reach out to the national market place, sometimes accept
tenuous tax claims simply to avoid costly litigation
expenses."
He concluded that "HR 2526 would reduce this
vulnerability by establishing a bright line physical presence
requirement for states and localities as a prerequisite to
collect business activity taxes on interstate
enterprises."
Finally, he said that the "extension of the Internet tax
moratorium last year obviates the need for revisiting the
Internet tax question at this time."
Rep. Darrell Issa
(R-CA) also spoke in favor of the bill. He stated that
"often the Internet -- we act like it is something new --
and every problem we face is something new. The fact is, the
Internet is facing the same problem that small multi state
businesses have faced for a long time. This legislation is a
good start at looking at problems of operations in one state,
relatively small presence in another state, one in which they
have few, if any employees, no substantial capital investments
of any sort, and yet the taxing authorities would like to have
them and their accountants spend tens of thousands of dollars
on paperwork in the hopes that they will get a piece of
whatever profit that company has."
Rep. Mel Watt (D-NC)
spoke in opposition to the bill. He said that "I think
the impact of this bill is going to be substantial. I think
this is going to present real problems for state and local
governments and taxing authorities." He said that many
state and local governments face revenue shortfalls, and
"this bill will increase those shortfalls".
The Software and Information
Industry Association (SIIA) supports the bill. SIIA
President Ken Wasch stated in a release that "We are
pleased to see this critical step today towards establishing
'bright line' nexus standards for business activity taxes.
Such clarification is extremely necessary in our digital
economy to eliminate the potential for double taxation and
uncertainty among businesses." |
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| Appeals Court Upholds GLB
Rules in Trans Union v. FTC |
7/16. The U.S.
Court of Appeals (DCCir) issued its opinion
in Trans
Union v. FTC, rejecting a challenge to the Federal Trade Commission's
(FTC) rules implementing the privacy provisions of the Gramm
Leach Bliley (GLB) Act.
Trans Union is a
credit reporting agency (CRA) within the meaning of the Fair
Credit Reporting Act (FCRA), 15
U.S.C. §§ 1681, et seq. It filed a complaint in the U.S. District Court (DC)
against the FTC challenging the regulations promulgated by the
FTC and other federal agencies to implement the privacy
provisions of the GLB Act, 12 U.S.C. §§ 6801, et seq. The
District Court upheld the FTC's regulations. Trans Union
appealed.
The Court of Appeals wrote that Trans Union argued that
"the regulations unlawfully restrict a CRA's ability to
disclose and reuse certain consumer information because (1) a
CRA is not a "financial institution" subject to the
FTC's rulemaking authority under the GLBA; (2) the
regulations' definition of the statutory term ``personally
identifiable financial information´´ (PIFI) is overbroad;
(3) the regulations' restrictions on reuse of information are
inconsistent with the GLBA; and (4) the challenged regulations
infringe Trans Union's right of free speech under the First
Amendment to the United States Constitution." The Appeals
Court rejected these arguments, and affirmed the District
Court. |
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| Appeals Court Rules Iowa
Communications Network Eligible for Universal Service |
7/16. The U.S.
Court of Appeals (DCCir) issued its opinion
in USTA
v. FCC, denying a petition for review of a Federal Communications Commission
(FCC) order finding that the Iowa Communications Network
(ICN) is a common carrier eligible for universal service
subsidies.
The petitioner is the U.S.
Telecom Association (USTA), a group that represents local
exchange carriers, which are traditional recipients of
universal services subsidies pursuant to 47 U.S.C.
§ 254. The ICN is a state agency that provides subsidized
high speed telecommunications services in the state of Iowa,
especially in areas inadequately covered by local exchange
carriers. It administers a statewide fiber optics network.
The Court of Appeals first examined at length whether the USTA
has standing to challenge this order. It concluded that it
does. The Court then addressed the FCC's determination that
the ICN is a common carrier eligible for universal service
subsidies. It concluded that it is. |
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| District Court Issues
Injunction Order in Washington Post v. Gator |
7/16. The U.S.
District Court (EDVa) issued its Order in Washington
Post v. Gator granting plaintiffs' motion for a
preliminary injunction. The order bars the Gator Corporation from causing
it pop-up ads to be displayed on any web site owned by or
affiliated with the plaintiffs, including the Washington Post, New
York Times, Boston Globe, Chicago Tribune, LA Times, and Wall
Street Journal.
The Washington Post, and other major news publishers with web
sites, allege web based trademark infringement, copyright
infringement, and related claims in their complaint
[99 pages in PDF] and motion for preliminary injunction. (See,
Memorandum
in Support of Plaintiffs' Motion for Preliminary Injunction
[35 pages in PDF]). The Court heard oral argument on the
motion on Friday, July 12.
The Court enjoined Gator from the following acts:
"1. Causing it pop-up advertisements to be displayed on
any website owned by or affiliated with the Plaintiffs without
the express consent of the Plaintiffs;
2. Altering or modifying, or causing any other entity to alter
or modify, any part of a any website owned by or affiliated
with the Plaintiffs, in any way, including its appearance or
how it is displayed;
3. Infringing, or causing any other entity to infringe
Plaintiffs' copyrights;
4. Making any designations of origin, descriptions,
representations or suggestions that Plaintiffs are the source,
sponsor or in any way affiliated with Defendant's advertisers
on their web sites, services and products, and;
5. Infringing, or causing any other entity to infringe,
Plaintiffs' trademark and/or other service mark rights"
The complaint states that Gator is "a parasite on the Web
that free rides on the hard work and investments of Plaintiffs
and other website owners. Gator makes money by placing
advertisements for third parties on the Plaintiffs' websites
without Plaintiffs' authorization." |
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| People and Appointments |
7/16. The Senate
Commerce Committee approved the nomination of Jonathan
Adelstein to be a Commissioner of the Federal Communications Commission
(FCC).
7/16. Christopher Libertelli was named Legal Advisor to
Federal Communications
Commission (FCC) Chairman Michael Powell for wireline
competition related matters. He went to work for the FCC in
1999. Before that, he was an associate with the law firm of Dow Lohnes & Albertson.
See, FCC
release [PDF].
7/16. Kyle Dixon was named Deputy Bureau Chief of the Federal Communications Commission's
(FCC) Media Bureau, and Special Counsel to FCC Chairman
Michael Powell for broadband policy. He was previously Legal
Advisor to Powell on common carrier and broadband issues.
Before he went to work for the FCC he worked for the law firm
of Hogan & Hartson.
See, FCC
release [PDF].
7/16. Simon
Wilkie was named Chief Economist of the Federal Communications Commission
(FCC). He replaces David Sappington, who returned to
the Department of Economics at the University of Florida.
Wilkie is an economics professor at the California Institute of
Technology. He has also taught at Columbia and the University of Rochester,
where he received his doctorate. He also worked as a post
doctoral fellow at Bell Communications Research (BellCore). He
applies game theory to telecommunications. See, FCC
release. [PDF].
7/17. President Bush formally nominated Roel Campos to
be a Commissioner of the Securities
and Exchange Commission (SEC) for a term expiring on June
5, 2005. Bush announced that he would nominate Campos, a radio
company owner and former assistant U.S. Attorney, back in May.
See, White
House release. |
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| Senate Subcommittee Holds
Hearing on FBI's Antiquated Computers |
7/16. The Senate
Judiciary Committee's Subcommittee on Administrative
Oversight and the Courts held a hearing to examine the Federal Bureau of Investigation's
(FBI) computer problems. Sen.
Charles Schumer (D-NY), the Chairman of the Subcommittee,
presided. The only witness was Sherry Higgins, Project
Management Executive in the Office of the Director of the FBI.
She testified that the FBI has a three year plan to update its
equipment, networking and database access.
Higgins, who went to work for the FBI four months ago, stated
in her prepared testimony that the FBI has "antiquated
computer workstations". For example, she stated that in
the case of the FBI's investigative information system,
"users navigate with the function keys instead of the
point and click method common to web based applications.
Simple tasks, such as storing an electronic version of a
document today, require a user to perform twelve separate
functions ..."
Sen. Schumer also pointed out that the FBI has five major
investigative databases, but that they are not connected. He
added that "If an agency cannot coordinate information
and make it easily accessible, the entire house of cards will
fall. We all felt the effects of this scenario on September
11. I pray to God we never feel it again, but if we don't fix
our communications and technological woes, we could."
Sen. Jeff Sessions
(R-AL) expressed concerns about the costs of the upgrade, and
the security of the FBI's computer systems in light of the
Robert Hanssen case.
Higgins testified that the FBI has a plan. It intends to
acquire new workstation computers. It will also obtain
printers and scanners. The FBI will upgrade to a point and
click graphical unit interface. Moreover, its computers will
have "Microsoft Office applications". They will also
be networked. Moreover, the FBI plans to enable the searching
of its multiple investigative databases with a single query.
Higgins stated that the upgrade will take 36 months. She
described this as "our aggressive deployment
schedule".
Sen. Schumer described the FBI's deployment schedule as
"unacceptable". Furthermore, he stated that
"I'd like to propose the idea of forming an advisory
group made up of representatives from the private sector to
work with the FBI on their technology development."
Sen. Schumer also discussed appropriations. He said that
Congress appropriated $223 Million for FY01 for the FBI's
Information Management, Automation and Telecommunications (IMAT).
It appropriated $507 Million for FY02. He also said that the
Senate Appropriations Committee has recommended a supplemental
appropriation of $30 Million for FY02. Moreover, he said, the
FBI has requested an increase of $48 Million for FY03, to $555
Million.
The President's proposed
budget [PDF] for FY03 for the Department of Justice for
FY03 estimates that there will be 25,464 full time equivalent
employees at the FBI. $555 Million, divided by 25,464
employees, comes to $21,795 per employee per year for
information technology. |
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| Greenspan Addresses Tech
Sector |
7/16. Federal
Reserve Board Chairman Alan
Greenspan appeared before the Senate Banking
Committee to present the Federal
Reserve's Monetary Policy Report to the Congress. Both the
report, and his prepared
testimony address the technology sector.
He first addressed the general economic situation in his
prepared testimony. He stated that "Over the four and one
half months since I last testified before this Committee on
monetary policy, the economy has continued to expand, largely
along the broad contours we had anticipated at that time.
Although the uncertainties of earlier this year are as yet not
fully resolved, the U.S. economy appears to have withstood a
set of blows -- major declines in equity markets, a sharp
retrenchment in investment spending, and the tragic terrorist
attacks of last September -- that in previous business cycles
almost surely would have induced a severe contraction. The
mildness and brevity of the downturn, as I indicated earlier
this year, are a testament to the notable improvement in the
resilience and flexibility of the U.S. economy."
He also focused on technology. He said that "business
spending has been depressed. The recent economic downturn was
driven, in large measure, by the sharp falloff in the demand
for capital goods that occurred when firms suddenly realized
that stocks of such goods -- both those already in place as
well as those in inventory -- were excessive. The resulting
declines in the production of capital goods were particularly
sizable in the high tech sector. Monthly shipments of
computers and peripherals, for example, fell by about 40
percent from their peak in 1999 through their trough in 2001.
Sales by communications equipment producers slumped just as
sharply.
He added that "The collapse of many Internet firms and
the difficulties of the high tech sector more generally led to
a significant drop in the demand for office space that was
exacerbated as the economic slowdown widened beyond the tech
sector."
The Monetary Policy Report states that "Real business
spending on equipment and software (E&S) was little
changed in the first quarter after having dropped sharply last
year. In the high tech category, real expenditures moved up in
the first quarter after a double digit decline in 2001.
Outlays for computers posted large gains in inflation adjusted
terms in both the fourth and first quarters; many businesses
apparently postponed computer replacement over much of last
year but now seem to be taking advantage of ongoing
technological progress and the associated large declines in
prices. In contrast, real expenditures for communications
equipment were little changed in the first quarter after
having plunged by one third during 2001. Excess capacity in
the provision of telecom services is continuing to weigh
heavily on the demand for communications equipment. Business
outlays for software edged down in real terms in the first
quarter."
The report also states that "While exports of computers
continued to fall, exports of semiconductors rose for the
first time in nearly two years." Finally, it states that
"Business outlays for software edged down in real terms
in the first quarter." |
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| Copyright Office Notice |
| 7/16. The Copyright
Office published a notice
in the Federal Register directing "all claimants to
royalty fees collected in 1999, 2000 and 2001 for the
distribution of digital audio recording devices and media to
submit comments as to whether a controversy exists as to the
distribution of the royalty fees in the 1999, 2000 and 2001
Musical Works Funds." Comments and notices of intention
to participate are due by September 16, 2002. See, Federal
Register, July 16, 2002, Vol. 67, No. 136, at Pages 46698 -
46699. |
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| About Tech Law Journal |
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Privacy
Policy
Notices
& Disclaimers
Copyright 1998 - 2002 David Carney, dba Tech Law Journal. All
rights reserved. |
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| Wednesday, July 17 |
The House will meet at 10:00 AM for legislative business.
9:00 AM. The Congressional
Internet Caucus Advisory Committee, Transatlantic Policy
Network (TPN), and European Internet Foundation (EIF) will
host two roundtable discussions on intellectual property (9:00
AM) and broadband (10:00 AM). The panelists include members of
the European parliament. Location: Reserve Officers
Association, 1st and Constitution, NE.
9:30 AM. The Senate
Commerce Committee will hold a hearing on legislation to
authorize funding for the FTC. FTC Commissioners
Timothy Muris, Mozelle Thompson, Sheila Anthony, Orson
Swindle, and Thomas Leary will testify. Location: Room 253,
Russell Building.
10:00 AM. Federal
Reserve Board Chairman Alan
Greenspan will testify before the House Financial
Services Committee. He will deliver his semi annual report
on monetary policy. See, notice.
Location: Room 2128, Rayburn Building.
10:00 AM. The House
Judiciary Committee will meet to mark up several bills,
including S 487,
the Technology, Education, and Copyright Harmonization Act
of 2001 (TEACH Act). Webcast. Press contact: Jeff Lungren
or Terry Shawn at 202 225-2492. Location: Room 2141, Rayburn
Building.
12:00 NOON. The Congressional
Internet Caucus Advisory Committee will host a luncheon.
The scheduled speakers include Richard Clarke (Special Advisor
to the President for Cyberspace Security) and Kathleen
Abernathy (FCC Commissioner). An RSVP is required to
attend. Contact either rsvp
@netcaucus.org or call Danielle at 202 638-4370. Location:
Reserve Officers Association, 1st and Constitution, NE.
1:00 - 4:00 PM. The Department of Commerce's (DOC) Technology Administration
will host a workshop on digital entertainment and its
availability to consumers. Phil Bond (Under Secretary of
Commerce for Technology) and James Rogan (Director of the
USPTO) will co-host the event. For more information, contact
Chris Israel, Deputy Assistant Secretary for Technology
Policy, at 202 482-5687. See, notice
in the Federal Register. Location: Room 4830, Hoover Building,
1401 Constitution Ave., NW.
3:00 PM. FTC Chairman Timothy
Muris will hold a press availability to "discuss a three
day public workshop that will explore the potential
anticompetitive effects on e-commerce of certain state
regulations, and how certain e-commerce business practices may
raise antitrust concerns". See, FTC notice.
Reporters may participate by telephone conference (call 1 800
720-5830, Chairperson Bruce Jennings, Confirmation #13029107).
Location: FTC, Room 481, 600 Pennsylvania Ave., NW.
Extended deadline to submit reply comments to the FCC in response
to its notice of proposed rulemaking regarding its unbundling
analysis under § 251
of the Communications Act and the identification of specific
unbundling requirements for incumbent local exchange carriers.
See, May 29 order
[PDF] extending deadline from June 5 to July 17. See also, notice
in the Federal Register. This is CC Docket No. 01-338. |
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| Thursday, July 18 |
The House will meet at 10:00 AM for legislative business.
9:30 AM. The House
Commerce Committee's Subcommittee on Commerce, Trade, and
Consumer Protection will hold a hearing titled "Are
All Online Travel Sites Good for the Consumer: An Examination
of Supplier Owned Online Travel Sites". See, notice.
Webcast. Press contact: Ken Johnson or Jon Tripp at 202
225-5735. Location: Room 2123, Rayburn Building.
9:30 AM. The Senate Special
Committee on Aging will hold a hearing on identify
theft. Howard Beales, Director of the FTC's
Bureau of Consumer Protection, will testify. Location: Room
628, Dirksen Building.
10:00 AM. The House
Judiciary Committee's Subcommittee on Courts, the
Internet, and Intellectual Property will hold an oversight
hearing titled "The U.S. Patent and Trademark Office:
Fee Schedule Adjustment and Agency Reform". Location:
Room 2141, Rayburn Building.
10:00 AM. The Senate
Judiciary Committee will hold an executive business
meeting. The agenda
includes S 2395,
a bill regarding counterfeiting and copyright piracy. See, amendment
in the nature of a substitute released on July 11. Press
contact: Mimi Devlin at 202 224-9437. Location: Room 226,
Dirksen Building.
10:00 AM. The Senate
Banking Committee will hold a hearing on the nominations
of Paul Atkins and Harvey Goldschmid to be
Commissioners of the SEC. See, notice.
Location: Room 538, Dirksen Building.
12:00 NOON - 2:00 PM. The National Youth Science Camp (NYSC)
and Entrust, Inc. will host a luncheon and panel discussion
titled the "Role of Technology in Establishing
Homeland Security". Former NATO Commander General
Wesley Clark and Sen. Robert
Byrd (D-WV) are scheduled to deliver the keynote
addresses. Lunch will be served. Interested media should RSVP
by contacting Caroline Dietz at 202 715-1532 or caroline.dietz
@dittus.com. Location: Room 325 (Senate Caucus Room),
Russell Building.
2:00 PM. The Senate
Judiciary Committee will hold a hearing on pending
nominations. Press contact: Mimi Devlin at 202 224-9437.
Location: Room 226, Dirksen Building.
2:00 PM. The Senate
Appropriations Committee's Subcommittee on Commerce,
Justice, State, and the Judiciary will meet to mark up several
appropriations bills, including that for the Departments of
Commerce, Justice, and State, the Judiciary, and related
agencies. Location: Room S-128, Capitol Building.
2:30 PM. The Senate
Commerce Committee will hold a hearing on the nominations
of Kathie Olsen and Richard Russell to be
Associate Directors of the Office
of Science and Technology Policy. Press contact: Andy
Davis at 202 224-6654. Location: Room 253, Russell Building.
5:00 PM. Hearing before the U.S. District Court (DC)
in EPIC v. Department of Defense, a Freedom of
Information Act case. This hearing concerns whether the DOD
can charge the EPIC fees. This is Case Number 02-1233.
Location: 333 Constitution Ave., NW.
Deadline to submit comments to the FCC in response
to its request for comments on the FCC's Office of Plans and Policy's
(OPP) Working
Paper No. 35 [PDF], titled "Horizontal Concentration
in the Cable Television Industry: An Experimental
Analysis" authored by Mark Bykowsky, Anthony Kwasnica and
William Sharkey. See, Public
Notice [PDF]. |
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| Friday, July 19 |
The House will meet at 9:00 AM for legislative business. No
votes expected after 6:00 PM.
12:30 PM. SEC Chairman Harvey
Pitt will give a luncheon speech. Location: Ballroom, National Press Club, 529 14th
St. NW, 13th Floor.
Deadline to submit applications to the Department of Education for Community
Technology Centers Program grants for Fiscal Year 2002 to
create or expand community technology centers that will
provide disadvantaged residents of economically distressed
urban and rural communities with access to information
technology and related training. See, notice
in the Federal Register.
Deadline to submit comments to the State Department regarding
the effects of the privatization of Inmarsat and INTELSAT on U.S. industry,
jobs, and industry access to the to the global marketplace.
See, notice
in the Federal Register. |
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| Monday, July 22 |
Day one of a two day seminar hosted by the American Intellectual Property
Law Association on the Patent Cooperation Treaty. See, online
brochure [PDF]. Location: Crystal Gateway Marriott,
Arlington, VA.
2:00 - 4:00 PM. The FCC's Advisory
Committee for the 2003 World Radiocommunication Conference
(WRC-03 Advisory Committee) will hold a meeting. See, notice
in Federal Register. Location: FCC, 6th Floor South Conference
Room (6-B516), 445 12th Street, SW.
Deadline to submit comments to the FCC in response
to its Notice of Proposed Rule Making "regarding the
sunset of the statutory requirements under section 272 imposed
on Bell Operating Companies (BOCs) when they provide
in-region, interLATA services and seeks comment on whether,
and if so, under what conditions, the structural and
nondiscrimination safeguards established in section 272 should
be extended by the Commission either generally or with respect
to specific states." See, notice
in the Federal Register. |
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| Tuesday, July 23 |
11:00 AM. The Cato Institute
will host a panel discussion titled "Who Rules the
Root? ICANN, Domain Names, and the Battle over Internet
Governance". The scheduled speakers are Milton
Mueller (author of Ruling
the Root: Internet Governance and the Taming of Cyberspace),
Ira Magaziner (SJS Advisors), Michael Roberts (The Darwin
Group), and Harold Feld (Media
Access Project). Lunch will follow. See, Cato notice.
Location: 1000 Massachusetts Avenue, NW.
Deadline to file reply comments with the Federal Communications Commission's
(FCC) Spectrum Policy Task
Force in response to its request for comments on spectrum
policy, including taking steps toward market oriented
allocation and assignment policies, interference, efficient
use of spectrum, public safety communications, and
international issues. See, Public
Notice [PDF].
Day two of a two day seminar hosted by the American Intellectual Property
Law Association on the Patent Cooperation Treaty. See, online
brochure [PDF]. Location: Crystal Gateway Marriott,
Arlington, VA. |
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