7/27. The U.S. Court of Appeals (9thCir) issued its opinion [22 pages in PDF] in Verizon v. Covad, a case regarding the filed rate doctrine. The Appeals Court affirmed a District Court holding that the filed rate doctrine prevents an ILEC from suing a CLEC under theories of state law misrepresentation and unfair business practices in a billing dispute arising out of interpretation of an interconnection agreement. However, the Appeals Court added that the parties to an interconnection agreement can sue to enforce what they have filed.

The filed rate doctrine is a 19th Century principle that was developed to address the practices of railroad monopolies, such as price discrimination. It was based upon the assumption the market competition and the law of contract failed to operate effectively in this context. Much later, principles for regulating railroad common carriers, including the filed rate doctrine, were transplanted into the Communications Act for the purpose of regulating telecommunications common carriers.

The doctrine requires that common carriers and their customers adhere to tariffs filed and approved by appropriate regulatory agencies. For the purposes of the present case, the filed tariffs are the interconnection agreements negotiated by the incumbent phone companies and their competitors, and filed with the state regulatory agencies.

While the doctrine limited the perceived unfair practices of railroads, it is also now used by phone companies as a shield to insulate them from lawsuits by customers and consumers.

The Telecommunications Act of 1996 gave the Federal Communications Commission (FCC) broad authority to forbear from regulation in certain situations. See, 47 U.S.C. § 160. However, the 1996 Act also excluded 47 U.S.C. § 251(c) from FCC forbearance authority.

Verizon Delaware and other Verizon subsidiaries are the plaintiffs. They are incumbent local exchange carriers (ILECs), and therefore have obligations under 47 U.S.C. § 251 to lease access to their networks to competitors, such as Covad, a defendant in this case, and to enter into interconnection agreements that set forth rates, terms and conditions. Verizon and Covad entered into and filed interconnection agreements.

They dispute the billing for trouble shooting in connection with customer complaints about connections. Verizon argues that Covad issued false trouble shooting tickets to Verizon. For example, it alleges that Covad signed customers up for service, even where DSL service was not yet available, and then sent trouble shooting tickets to Verizon, and that it sent trouble shooting tickets to Verizon for connection problems arising from Covad's equipment.

Verizon filed a complaint in U.S. District Court (NDCal) against Covad alleging California state law claims for intentional misrepresentation, negligent misrepresentation, and unfair competition in violation of Cal. Bus. & Prof. Code § 17200. Covad raised the filed rate doctrine, and alleged three counterclaims -- intentional misrepresentation, negligent misrepresentation, and unfair competition.

The District Court granted summary judgment to Covad on Verizon's state law claims, pursuant to the filed rate doctrine. It also dismissed Covad's counterclaims. The District Court opinion is reported at 232 F. Supp. 2d 1066.

Verizon appealed, and Covad cross-appealed. The Appeals Court affirmed in part, reversed in part, and remanded.

Judge John Noonan wrote the opinion of the Court, in which Judges Stephen Reinhardt and Richard Paez joined. The Court held that the filed rate doctrine prevents the recovery of any charge not specified in the relevant tariff -- in this case, the interconnection agreement. But, the Court also held that this does not prevent Verizon from suing to enforce what it has filed.

Judge Noonan had no kind words for the filed rate doctrine, but wrote that he was constrained by Congressional statutes.

47 U.S.C. § 160(a) provides that "the Commission shall forbear from applying any regulation or any provision of this chapter to a telecommunications carrier or telecommunications service, or class of telecommunications carriers or telecommunications services, in any or some of its or their geographic markets, if the Commission determines that (1) enforcement of such regulation or provision is not necessary to ensure that the charges, practices, classifications, or regulations by, for, or in connection with that telecommunications carrier or telecommunications service are just and reasonable and are not unjustly or unreasonably discriminatory; (2) enforcement of such regulation or provision is not necessary for the protection of consumers; and (3) forbearance from applying such provision or regulation is consistent with the public interest."

But, 47 U.S.C. § 160(d) provides that "Except as provided in section 251(f) of this title, the Commission may not forbear from applying the requirements of section 251(c) or 271 of this title under subsection (a) of this section until it determines that those requirements have been fully implemented."

Judge Noonan wrote that "The filed rate doctrine is a tough and durable barrier to any effort by a regulated carrier to collect more for its services than what is set by the public, filed tariff."

Nonetheless, he wrote, "the filed rate doctrine now functions in the telecommunications field as an anomaly. It is a relict, open to repudiation by the FCC. The tariffs that are filed are not filed federally but with state agencies. Should not the law of the particular state govern each IA’s enforcement? It is tempting to believe that, in Congress’s new perspective, a suit for fraud of the kind before us should be allowed to proceed."

Nevertheless, he concluded that the Court is constrained by the language of Section 160. "With the creation of the exception to forbearance and to the rule of contract, the market and state remedies, Congress preserved a niche where the filed rate doctrine appears to remain alive. The last phrase of the statutory exception -- ``until it determines that those requirements have been fully implemented´´ -- is obscure. But we need not explore its meaning. No one contends that the FCC has made such a determination. Therefore, there is no forbearance."

The Court also ruled on dismissal of Covad's counterclaims.

This case is Verizon Delaware, Inc. et al. v. Covad Communications Company and Dieca Communications, Inc., U.S. Court of Appeals for the 9th Circuit, App. Ct. Nos. 03-15453 and 03-15557, appeals from the U.S. District Court for the Northern District of California, D.C. Nos. CV-01-20524-JF and CV-01-20524-JF, Judge Jeremy Fogel presiding.

7/27. Attorney General John Ashcroft and other government officials held a press conference to announce the unsealing of an indictment [39 pages in PDF] returned by a grand jury of the U.S. District Court (NDTex) against an organization and six individuals, alleging that they provided material support to HAMAS, which is on the State Department's list of designated foreign terrorist organizations. See, DOJ release and USAO release.

This is one in a series of related Department of Justice (DOJ) criminal indictments and Department of Commerce (DOC) proceedings involving the Elashi family and their Dallas area computer business, Infocom.

The present indictment states that "In or around 1988, The Holy Land Foundation For Relief and Development ("HLF") was created by, among others, the defendants Shukri Abu-Baker, Mohammad El-Mezain and Ghassan Elashi, to provide financial and material support to HAMAS." It continues that "In 1992, the HLF relocated to Richardson, Texas", which is a suburb of Dallas.

The indictment states that the HLF, which is a named defendant, "sponsored orphans and needy families in the West Bank and Gaza. While the program was mantled with a benevolent appearance, the HLF specifically sought orphans and families whose relatives had died or were jailed as a result of furthering HAMAS' violent campaign, including suicide bombings."

One of the individual defendants is Ghassan Elashi. Elashi family members, including Ghassan, have been involved in computer equipment sales companies in the Dallas, Texas area. They have also been the object of many actions by the DOC's Bureau of Industry and Security (BIS/BXA), which regulates the export of computers, and the DOJ, both for their export of computer equipment to the Middle East, and for their association with terrorists.

See, for example, story titled "Indictment Alleges Dallas Computer Business Was Funded by Middle Eastern Terrorist" in TLJ Daily E-Mail Alert No. 571, December 19, 2002.

A December 2002 indictment [PDF] states that "Infocom was and is engaged in the business of selling computer systems, networking, telecommunications and Internet services. The defendant Infocom also exported computers and computer components to customers primarily located in the Middle East."

The present indictment states that Elashi "was the original Treasurer and became the Chairman of the Board of the HLF in 1999." It further states that he "is related by marriage to HAMAS Deputy Political Bureau Chief and Specially Designated Terrorist Mousa Abu Marzook. The defendant Ghassan Elashi was an organizer and leader of the criminal activity involving his co-defendants' activities through the defendant HLF."

Another defendant, Shukri Abu-Baker, was involved in the same Dallas area computer business as the Elashis. The indictment states that he "was the President, Secretary and Chief Executive Officer of the HLF".

The 42 count indictment alleges one count of conspiracy to provide material support to a foreign terrorist organization in violation of 18 U.S.C. § 2339B(a)(1), and 11 counts of providing material support to a foreign terrorist organization in violation of 18 U.S.C. § 2339B(a)(1). These charges are new.

Some of the other counts of the complaint are similar to charges brought in earlier indictments. The indictment also alleges conspiracy to deal in the property of a specially designated terrorist in violation of 50 U.S.C. §§ 1701-1706, dealing in the property of a specially designated terrorist in violation of 50 U.S.C. §§ 1701-1706), conspiracy to commit money laundering in violation of 18 U.S.C. § 1956(h), and money laundering in violation of 18 U.S.C. § 1956(a)(2)(A).

Finally, the indictment alleges conspiracy to impede and impair the Internal Revenue Service and to file false return of organization exempt from income tax in violation of 18 U.S.C. § 371, and filing false returns of organization exempt from income tax in violation of 26 U.S.C. § 7206(1).

The other defendants named in the indictment are Haitham Maghawri, Akram Mishal, and Mufid Abdulgader.

7/27. The General Accounting Office (GAO), an arm of the Congress, released a report [69 pages in PDF] titled "Critical Infrastructure Protection: Improving Information Sharing with Infrastructure Sectors".

The report states that "Federal policy and law, including the Homeland Security Act of 2002, call for critical infrastructure protection (CIP) activities intended to enhance the security of the cyber and physical, public, and private infrastructures that are essential to national security, national economic security, or national public health and safety. Federal policy, evolving since the mid-1990s, has encouraged the voluntary creation of information sharing and analysis centers (ISAC) to facilitate the private sector's participation in CIP by serving as mechanisms for gathering and analyzing information and sharing it among the infrastructure sectors and between the private sector and government."

The report addresses many different types of infrastructure, including cyber and telecommunications. The report also addresses information sharing by the private sector, and by government agencies.

One of the more controversial issues leading up to the passage of the Homeland Security Act was whether, and if so how, to create a new Freedom of Information Act (FOIA) exemption for sharing critical infrastructure information with the government. The exemption, which was included in the Act, was vigorously supported by many information technology companies and their trade groups. The relevant statutory provisions are at §§ 211-215 of HR 5005 (107th Congress). These sections are collectively named that "Critical Infrastructure Information Act of 2002".

The report states that "much of the reluctance by ISACs to share information has focused on concerns over potential government release of that information under the Freedom of Information Act, antitrust issues resulting from information sharing within an industry, and liability for the entity that discloses the information. However, our recent discussions with the ISACs -- as well as the consensus of the ISAC Council -- identified additional factors that may affect information sharing by both the ISACs and the government."

The report also notes that the "DHS recently issued the interim rule for submitting protected critical infrastructure information, which provides restrictions on the use of this information and exempts it from release under the Freedom of Information Act. However, it remains to be seen whether these protections will encourage greater private-sector trust and information sharing with the federal government."

On February 20, 2004, the Department of Homeland Security (DHS) published a notice [PDF] in the Federal Register that summarizes, discusses and recites its interim rule implementing the Critical Infrastructure Information Act of 2002 {PDF]. See, Federal Register, Vol. 69, No. 34, February 20, 2004, at Pages 8074-8089.

See also, story titled "DHS Begins Rulemaking Proceeding on FOIA Exemption for Critical Infrastructure Information" in TLJ Daily E-Mail Alert No. 645, April 16, 2003, and and story titled "DHS Announces Adoption of Rules Implementing the Critical Infrastructure Information Act" in TLJ Daily E-Mail Alert No. 840, February 19, 2004. See also, the DHS's web page titled "Protected Critical Infrastructure Information (PCII) Program"

The report discusses some of these additional factors affecting information sharing. "These included the sensitivity of the information (such as law enforcement information), legal limits on disclosure (such as Privacy Act limitations on disclosure of personally identifiable information), and contractual and business limits on how and when information is disclosed (e.g., the Financial Services ISAC does not allow any governmental or law enforcement access to its database). But the Council also emphasized that perhaps the greatest barriers to information sharing stem from practical and business considerations in that, although important, the benefits of sharing information are often difficult to discern, while the risks and costs of sharing are direct and foreseeable. Thus, to make information sharing real, it is essential to lower the practical risks of sharing information through both technical means and policies, and to develop internal systems that are capable of supporting operational requirements without interfering with core business. Consequently, the technical means used must be simple, inexpensive, secure, and easily built into business processes."

The report begins with two broad and vague recommendations. It states that the "DHS can take two key actions to improve the effectiveness of its information-sharing efforts with the ISACs and others. First, a number of challenges have been identified by the ISAC community that could be addressed with the development of an information-sharing plan that, among other things, defines the roles and responsibilities of the various stakeholders and establishes criteria for providing the appropriate incentives to address the challenges. In addition, DHS's ability to gather, analyze, and disseminate information could be improved by developing information sharing-related policies and procedures for its components."

The report was prepared for the Chairmen and ranking Democrats of two of the House Homeland Security Committee's subcommittees.

7/23. President Bush signed an executive order that designates the President's Council of Advisors on Science and Technology (PCAST) to serve as the National Nanotechnology Advisory Panel. See, notice in the Federal Register, July 27, 2004, Vol. 69, No. 143, at Page 44891.

The Congress enacted S 189, the "21st Century Nanotechnology Research and Development Act", in November of 2003. It is now Public Law 108-153. This bill authorizes appropriations ($3.7 Billion) over four years (FY 2005-2008) for nanotechnology R&D programs at the National Science Foundation (NSF), Department of Energy (DOE), Department of Commerce's (DOC) National Institute of Standards and Technology (NIST), National Aeronautics and Space Administration (NASA), and Environmental Protection Agency (EPA). The NSF would be receive the largest portion of the funding. See, story titled "Bush Signs Nanotech R&D Funding Bill" in TLJ Daily E-Mail Alert No. 792, December 4, 2003.

The Act also provides that "The President shall establish or designate a National Nanotechnology Advisory Panel" that "shall consist primarily of members from academic institutions and industry. Members of the Advisory Panel shall be qualified to provide advice and information on nanotechnology research, development, demonstrations, education, technology transfer, commercial application, or societal and ethical concerns."

The PCAST is the secretive body co-chaired by Floyd Kvamme and John Marburger. See, list of members.

7/26. Microsoft responded to the July 13, 2004 recommendation [6 pages in PDF] of the Japanese Fair Trade Commission (JFTC) that its Windows licensing agreements violate Japan's anti-monopoly and unfair trade practices statutes. Microsoft rejected the recommendation. The next step is for the JFTC to initiate a hearing procedure.

Microsoft stated in a release that "After careful examination of the contents of the Recommendation, Microsoft has decided that it is unable to accept the demands of the Recommendation, and has today informed the JFTC of this decision."

It added that "Microsoft believes that the licensing contracts concerned are not in violation of any of the Antimonopoly Act, and as such has decided not to accept the JFTC's Recommendation."

The JFTC recommendation states that "Microsoft, when licensing Windows OS to personal computer manufacturers ... has concluded agreements with PC manufacturers containing certain provisions that a licensee covenants not to sue, bring, prosecute, assist or participate in any judicial, administrative or other proceedings of any kind against Microsoft, its subsidiaries, or other licensees for infringement of the licensee's patents. Such conduct by Microsoft shall be construed as dealing with PC manufacturers on conditions which unjustly restrict their business activities, which the JFTC concluded correspond to the Subsection 13 of the Unfair Trade Practices, violating the section 19 of the Antimonopoly Act."

The July 13 recommendation set a response deadline of July 26. It further notified Microsoft that "If the recommendation is accepted, the JFTC will issue a decision, a legally binding order with the same elimination measures as those in this recommendation. Otherwise, the JFTC will initiate a hearing procedure."

The House and Senate will not meet from July 26 through September 6.

The Democratic National Convention will be held in Boston, Massachusetts on July 26 through July 30.

9:00 AM - 1:30 PM. The National Institute of Standards and Technology (NIST) and the National Telecommunications and Information Administration (NTIA) will hold a public meeting on Internet Protocol version 6 (IPv6). Location: Room 4830, Department of Commerce, 1401 Constitution Avenue, NW. See, NTIA notice July 20, 2004, and notice in the Federal Register, July 15, 2004, Vol. 69, No. 135, at Page 42422.

10:00 AM - 3:00 PM. The Federal Communications Commission's (FCC) Technological Advisory Council will meet. See, FCC notice [PDF] and notice in the Federal Register, July 6, 2004, Vol. 69, No. 128, at Pages 40638. Location: FCC, 445 12th St., SW., Room TW-C305.

2:00 - 4:00 PM. There will be a meeting of the WRC-07 Advisory Committee, Informal Working Group 3: IMT-2000 and 2.5 GHz Sharing Issues. See, FCC notice [PDF]. Location: FCC, 445 12th Street, SW, Room 7-B516 (South Conference Room 7th Floor), Washington DC.

Federal Communications Commission (FCC) Auction No. 56 is scheduled to begin. This pertains to licenses in the 24 GHz Service in the 24.25-24.45 GHz and 25.05-25.25 GHz bands. See, notice in the Federal Register, April 20, 2004, Vol. 69, No. 76, at Pages 21099 - 21110.

Deadline to submit nominations to the Department of Commerce for consideration for the 2005 Medal of Technology awards. See, notice.

Deadline to submit comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) regarding unlicensed use of the 3650-3700 MHz band. The FCC adopted this NPRM on April 15, 2004. This item is FCC 04-100 in ET Docket Nos. 04-151, 02-380 and 98-237. See, notice in the Federal Register, May 14, 2004, Vol. 69, No. 94, at Pages 26790 - 26803. See also, story titled "FCC Announces NPRM Regarding Unlicensed Use in the 3650-3700 MHz Band" in TLJ Daily E-Mail Alert No. 878, April 16, 2004.

Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) regarding changes to the FCC Form 477 local competition and broadband data gathering program. This NPRM is FCC 04-81 in WC Docket No. 04-141. See, notice in the Federal Register, May 27, 2004, Vol. 69, No. 103, at Pages 30252 - 30277.

2:00 - 4:00 PM. The American Bankers Association (ABA) will host an event titled "Phishing: Keeping Your Customers From Getting Caught". The speakers will include Wayne Abernathy (Assistant Secretary for Financial Institutions at the Treasury Department), William Henley (Federal Deposit Insurance Corporation), Dan Larkin ( Chief of the FBI's Internet Crime Complaint Center's Cyber Division), and Mark Mendelsohn (Department of Justice, Computer Crime and Intellectual Property Section). The event will be webcast and telecast. See, notice and registration page. Location: 1120 Connecticut Avenue, NW.

9:00 AM - 4:30 PM. The Federal Communications Commission's (FCC) Media Bureau will sponsor a symposium titled "A La Carte MVPD Pricing". Location: FCC, 445 12th Street, SW, Room TW-C305 (Commission Meeting Room).

9:00 AM - 4:30 PM. The National Institute of Standards and Technology's (NIST) Judges Panel of the Malcolm Baldrige National Quality Award will hold a partially closed meeting. See, notice in the Federal Register, June 28, 2004, Vol. 69, No. 123, at Pages 36063 - 36064. Location: 222, Red Training Room, Gaithersburg, MD.

Extended deadline to submit comments to the Federal Communications Commission (FCC) regarding its proceeding titled "In the Matter of Review of the Commission's Broadcast and Cable Equal Employment Opportunity Rules and Policies". This is MM Docket No. 98-204. See, notice of extension [PDF].

9:30 AM - 1:00 PM. The Federal Communications Commission's (FCC) Internet Policy Working Group (IPWG) will host an event that it describes as "a roundtable discussion to address international issues associated with the migration of communications services and applications to IP-based technologies". See, FCC notice [PDF]. Location: FCC, 445 12th Street, SW, Commission Meeting Room.

Extended deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its Public Notice (DA 04-1454) regarding a la carte and themed programming and pricing options for programming distribution on cable TV and direct broadcast satellite systems. This is MB Docket No. 04-207. See, notice of extension [PDF].

Deadline to submit applications to the Department of Commerce's (DOC) Technology Administration (TA) to join the TA's business development mission to Northern Ireland and the Republic of Ireland. This delegation will include U.S. based senior executives representing the information and communications technology sector. See, notice in the Federal Register, May 26, 2004, Vol. 69, No. 102, at Pages 29928 - 29930.

9:30 AM. The Federal Communications Commission (FCC) will hold a meeting. The event will be webcast. Location: FCC, 445 12th Street, SW, Room TW-C05 (Commission Meeting Room).

7/27. Maureen Ohlhausen will be become the acting Director of the Federal Trade Commission's (FTC) Office of Policy and Planning (OPP). She will replace Todd Zywicki, who will depart on July 29. He will return to the George Mason University School of Law. Although, he will be a visiting professor at Georgetown University Law Center during the 2004-5 academic year. See, FTC release.

While Zywicki was the OPP Director, the FTC released two technology related reports. First, there is the March 29, 2004 report [61 pages in PDF] titled "Possible Anticompetitive Barriers to E-Commerce: Contact Lenses".

Second, there is the July 3, 2003 report [139 pages in PDF] titled "Possible Anticompetitive Barriers to E-Commerce: Wine". See, story titled "FTC Report Concludes That Allowing Direct Sales of Wines Would Enhance Consumer Welfare" in TLJ Daily E-Mail Alert No. 692, July 7, 2003. This report concluded that consumer welfare would be enhanced by allowing direct shipment of wines.

He also testified regarding this report and this issue at an October 30, 2003 hearing of the House Commerce Committee's Subcommittee on on Commerce, Trade, and Consumer Protection titled "E-Commerce: The Case of Online Wine Sales and Direct Shipment". See, story titled "House Subcommittee Holds Hearing on Internet Wine Sales" in TLJ Daily E-Mail Alert No. 761, October 31, 2003.

Zywicki also cosigned a letter [15 pages in PDF] on March 31, 2004 to the several members of the New York Assembly and Senate regarding direct wine sales. See, story titled "" in TLJ Daily E-Mail Alert No. 867, April 1, 2004.

Zywicki also gave a speech [PDF] titled "Competition Policy and Regulatory Reform: Means and Ends" in Tokyo, Japan on November 20, 2003.

7/27. Richard Nottenburg was named Chief Strategy Officer of Motorola. Motorola stated in a release that he "will oversee corporate strategy, mergers and acquisitions, Motorola Ventures, business intelligence and new initiatives. He will report directly to Ed Zander, Motorola's chairman and chief executive officer."

7/27. Daniel Ostergaard was named Executive Director of the Department of Homeland Security's (DHS) Homeland Security Advisory Council (HSAC). He previously worked for Florida Governor Jeb Bush. Before that, he served on active duty in the U.S. Coast Guard. See, DHS release.

7/27. The Federal Communications Commission (FCC) adopted and released an Order that adopted a Consent Decree with the Verizon Telephone Companies resolving two FCC investigations into whether Verizon violated certain accounting safeguards and non-discrimination requirements under 47 U.S.C. § 272. Verizon will pay a $300,000 fine. See, FCC release.

7/27. Several groups filed an amicus curiae brief [29 pages in PDF] with the U.S. Court of Appeals (DCCir) in support of the Electronic Privacy Information Center (EPIC) in EPIC v. DOJ, a Freedom of Information Act (FOIA) case regarding expedited processing of a request for records pertaining to the lobbying efforts of United States Attorneys to oppose a legislative proposal to limit investigative authority granted by the PATRIOT Act. The EPIC filed its brief [35 pages in PDF] on July 13, 2004. See, story titled "EPIC Files Appeal Brief in FOIA Case Regarding DOJ Lobbying Over PATRIOT Act Amendment" in TLJ Daily E-Mail Alert No. 937, July 14, 2004. The amici curaie are the Reporters Committee for Freedom of the Press (RCFP), National Security Archive (NSA), American Society of Newspaper Editors (ASNE), Society of Professional Journalists (SPJ), and American Civil Liberties Union. See also, RCFP release.

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