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Tech Law Journal |
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1/20. Rep. Anna Eshoo (D-CA) and Rep. Chris Cannon (R-UT) introduced HR 237, the Consumer Internet Privacy Enhancement Act. The bill prevents commercial web site operators from collecting personally identifiable information (PII) from users of their web sites unless they first give notice of what information is collected and how it will be used, and give the users the opportunity to limit the use of that information. The bill gives civil enforcement authority to the FTC, and provides for "safe harbor" self-regulatory plans that are approved by the FTC. See also, Cannon release and TLJ story. 1/20. George Bush was sworn in as President. The Senate confirmed in a single voice vote the following of President Bush's cabinet nominees: Spencer Abraham (Energy), Donald Evans (Commerce), Paul O'Neill (Treasury), Rod Paige (Education), Colin Powell (State), Donald Rumsfeld (Defense), and Ann Veneman (Agriculture). The Senate has yet to vote on other nominees, including John Ashcroft (Justice), Gale Norton (Interior), and Robert Zoellick (USTR). 1/19. The USTR released a statement regarding the outcome of Special 301 out-of-cycle reviews of Ukraine, Macau, Korea, United Arab Emirates, Hungary, Slovenia and the West Bank/Gaza Strip. Special 301 reviews examine the adequacy and effectiveness of intellectual property protection in certain countries. The USTR stated that "A decision on whether to identify Ukraine as a Priority Foreign Country was deferred until March 1, 2001." It also stated that "Korea remains on the Priority Watch List ... we look to Korea to significantly expand its enforcement of intellectual property rights, particularly against software piracy." 1/19. The U.S. District Court (Alaska) sentenced Scott Dennis, its former computer systems administrator, to six months incarceration and 240 hours of community service for launching three denial of service attacks against the servers of the U.S. District Court (EDNY). "It is kind of bad when your security chief starts blasting other people's computers," Asst. U.S. Atty. Dan Cooper told Tech Law Journal. Dennis plead guilty to one misdemeanor count of violation of 18 U.S.C. §1030(a)(5)(c). "It is not the first time a U.S. District Court system has come under attack," added Cooper; there was an attack against the Western District of Washington. Dennis no longer works for the U.S. District Court. See also, FBI release. 1/19. The Treasury Dept., Justice Dept. and Clinton/Gore OMB released a report [81 pages in PDF] titled "Financial Privacy in Bankruptcy: A Case Study on Privacy In Public and Judicial Records." It concluded that "the goal of protecting personal financial information be given increased emphasis in the bankruptcy system. Bankruptcy information policy should better balance society’s interests in fair and efficient case administration, bankruptcy system integrity, government accountability, and the debtor’s privacy. As electronic tools for accessing case information develop and improve, there is an increased need for analysis of access issues to ensure the integrity and proper administration of the system." The report further recommended that "the general public continue to have access to some general information [including] that an individual has filed for bankruptcy, the type of bankruptcy proceeding, the identities of parties in interest, and other core information." However, the report recommended that "the general public not have access to certain highly sensitive information that poses substantial privacy risks to the debtor. This information may include, among other items: Social Security numbers, credit card numbers, loan accounts, dates of birth, and bank account numbers." See also, Treasury release. 1/19. USPTO chief Todd Dickinson resigned. The USPTO published a report listing his achievements. 1/19. TechNet and the National Venture Capital Association hosted an event titled "New Economy Policy Luncheon" at the National Press Club in Washington DC. Sen. Ron Wyden (D-OR) predicted that the Congress will pass a privacy bill this year. Rep. David Dreier (R-CA) said Congress should give the President fast track trade negotiating authority. Rep. Cal Dooley (D-CA) advocated placing a moratorium on the FASB's ability to eliminate the pooling method of accounting in mergers. Sen. Bob Bennett (R-UT) said that Internet sales should be taxed like other sales. Sen. Evan Bayh (D-IN) and Rep. John Boehner (R-OH) both advocated education reform. Jim Barksdale said "staple a green card on every doctorate in engineering and computer science" in the U.S., ... and "let's make 'em a citizen ... make 'em salute the flag or something." The other speakers included Floyd Kvamme (Kleiner Perkins), Meg Whitman (eBay), Bob Herbold (Microsoft), Rick White (TechNet), Mark Heesen (NVCA), and Rep. Billy Tauzin (R-LA). 1/19. Rep. Billy Tauzin (R-LA) addressed the reorganization of the House Commerce Committee at a luncheon. He stated that committee will have a Trade and Consumer Protection Subcommittee that will have jurisdiction over the FTC and online privacy. It will be chaired by Rep. Cliff Stearns (R-FL). "I want you also to know that we have reorganized the Committee in a fashion that will place the telecommunications high tech issues in front of a panel chaired by Fred Upton of Michigan, and will put Mike Bilirakis in charge of the health jurisdiction, in which many of these privacy concerns, obviously, are going to be extraordinarily sensitized." 1/19. The U.S. Court of Appeals (1st Cir) issued its opinion in Accusoft v. Palo and Weiczner, a case involving a dispute over rights in and copyright royalties and revenues from piece of image processing software. Accusoft contracted with Palo to develop a library of software routines for manipulating computer images, which was marketed as Image Format Library (IFL). Weiczner originally was Accusoft's director of sales for the IFL. Palo and Weiczner later formed their own business, Snowbound Software, which sold a product based upon IFL. Both Palo and Accusoft registered copyrights. Both sides filed complaints in U.S. District Court (DMass) alleging copyright infringement, breach of contract, and related claims. The parties reached a settlement on the eve of trial under which Accusoft transfered right in the software to Palo, and allowing Accusoft to temporarily license it. The court incorporated this agreement into an order. The parties then promptly filed cross motions for contempt for breach of the agreement. The Court decided numerous disputes over royalties and revenues. This appeal followed. Affirmed in part, reversed in part, and remanded. 1/19. The USITC announced that it has voted to institute a Section 337 investigation of cartridges, and components thereof, used in Hewlett Packard ink jet printers. HP filed a complaint on Dec. 22, 2000, and an amended complaint on Jan. 17, that allege importation into the U.S. of ink jet printer cartridges, and components thereof, that infringe HP patents. The respondents are Microjet Technology, of Taipei, Taiwan; Printer Essentials.com, of Reno, Nevada; Price-Less Inkjet Cartridge Company, of Port Charlotte, Florida; Cartridge Hut and Paperwork Plus, of Sun City, California; and ABCCo.net, of Port Charlotte, Florida. 1/19. The newly merged AOL Time Warner announced several new executive appointments. Randall Boe was named SVP and General Counsel. He was previously VP and Deputy General Counsel of America Online. See, release. Meanwhile, the company's list of Senior Corporate Executives, which was last updated on Jan. 19, lists George Vrandenburg as EVP for Global and Strategic Policy and Paul Cappuccio as EVP, General Counsel, and Secretary. 1/19. Bill Clinton pardoned former CIA Director John Deutch, who has been accused of mishandling national secrets by transferring files to an insecure home computer connected to the Internet. 1/19. Outgoing FCC Chairman Wm. Kennard wrote a letter [PDF] to Sen. Ernest Hollins (D-SC) with two recommendations for new legislation regarding the transition to digital television. Broadcasters have received additional spectrum for digital signals, and still retain their analog spectrum. This analog spectrum is supposed to be reauctioned to other licensees, particularly for use by new technologies. Kennard wrote: "In order to ensure an expeditious transition to digital television and rapid development of returned analog spectrum for new technologies and services, the 107th Congress should consider amending the exception contained in 309(j)(14) ..." This contains an exception that allows analog stations to continue to use some channels beyond 2006 under certain circumstances. Kennard proposed setting a firm date of Dec. 31, 2006 for all channels. Kennard further recommended an addition to 309(j)(14)(E) that reads as follows: "The commission is authorized to prescribe by rulemaking a fee to be assessed on any television broadcast licensee that continues analog broadcasting after December 31, 2006. The fee shall be assessed on an annual basis and may increase in each succeeding year after 2007." Second, Kennard recommended that Congress require the FCC to mandate that TV equipment be capable of receiving digital TV broadcast signals after Jan. 1, 2003, on a phased in basis. 1/19. The FCC's WTB published a notice [PDF] asking for public comment on Verizon's request for another delay of the auction of the 747-762 and 777-792 MHz bands. Comments are due by Jan. 24. This spectrum is currently being used by legacy media -- over 100 analog television broadcasters. These incumbents will continue to use it at least until the end of 2006. As part of the conversion of television from analog to digital, this spectrum is to be reauctioned on March 6. This spectrum may be used by the new licensees to deploy high speed Internet access, including Third Generation (3G) wireless services. Verizon wrote a letter to the FCC WTB (a copy is attached to the FCC notice) asking for a postponement of the auction on the grounds that the C Block auction is still proceeding. However, Verizon has sought delay before. Lowell Paxon, Chairman of Paxon Communications had this response: "We cannot support a fourth delay of the 700 MHz auction. This most recent action by Verizon will put the continuation of the information revolution in the U.S. in grave jeopardy. The FCC has given the wireless companies more than sufficient time to put their spectrum plans in order." See, Paxson release. For background, see the FCC WTB's 700 MHz Band Auction 31 Fact Sheet. 1/19. Outgoing FCC Chairman Wm. Kennard issued a press release that states that he released a report on a global digital divide. The FCC web site has published the release, but not the report. 1/18. David Smith, aka Mafiaboy, plead guilty in Montreal Youth Court in Canada to 56 counts, including mischief to property in excess of $5000 against Internet sites including CNN.com, Yahoo.com, and EBay.com, in connection with the Feb. 2000 distributed denial of service (DDoS) attacks. See, FBI release. 1/18. The U.S. Court of Appeals (FedCir) issued its opinion in Globetrotter Software v. Elan Computer Group, a case regarding construction of a patent claim. Globetrotter filed a complaint in U.S. District Court alleging patent infringement regarding its U.S. Patent No. 5,390,297, which is directed toward a license management system for controlling the number of concurrent copies of a program in use on a computer network. It enables software licensers to monitor compliance with license agreements. Elan and other defendants produce license management software. Globetrotter appealed the District Court's denial of its motion for preliminary injunction. The Appeals Court affirmed. 1/18. The Washington DC law firm of Wilmer, Cutler & Pickering announced that Thomas Hicks joined the firm as a partner in the DC office. In March 2001 he will move to the firm's new Tysons Corner Virginia office. He previously co-managed Greenberg Traurig's Tysons Corner office. He practices in the areas of corporate finance, tax, mergers and acquisitions, and technology transactions. He is a former general counsel of the Northern Virginia Technology Council, and is a member of its Board of Directors and Executive Committee. See, release. 1/18. The Senate Foreign Relations Committee approved the nomination of Colin Powell to be Secretary of State by unanimous voice vote. 1/18. The NTIA released a study [huge PDF file] on the effect of ultrawideband (UWB) on existing public safety and national security systems. UWB operates across a wide range of spectrum frequencies at low power levels using very narrow pulses. Hence, there is the potential for interference. It is a promising technology that can be used for wireless networks, remote sensing or tracking, and ground penetrating radars. The NTIA conducted interference tests on the Air Route Surveillance Radar (1240-1370 MHZ), Airport Surveillance Radar (2700-2900 MHZ) and Air Traffic Control Beacon System (1090 MHZ), and developed mathematical simulation models for other systems. The NTIA found that there is a potential to operate UWB in the 3 GHz-6 GHz range. The study is titled "Assessment of Compatibility Between Ultrawideband Devices and Selected Federal Systems." See also, prepared statement of NTIA chief Greg Rohde. 1/18. The NTIA released its Annual Report for the year 2000. The report reviews the major activities of the NTIA, and contains policy recommendations. See also, statement by NTIA chief Greg Rohde. 1/18. The NTIA published in the Federal Register its Notice of Proposed Rulemaking (NPRM) regarding compensating incumbent federal agency users in the 1755-1850 MHz band that may be required to modify their systems as a result of spectrum reallocation for 3G wireless uses. The NTIA released the NPRM on Jan. 17. See, TLJ story. However, the Federal Register notice contains deadlines for submitting comments. Comments are due on or before March 19, 2001. Reply comments are due April 18, 2001. 1/18. The FCC released a Notice of Inquiry [PDF] regarding cable interactive television services. Interactive TV (ITV), which is in a very early stage of development, is intended to combine video and data services, integrate web content with video programming, allow real-time interaction between viewers, and facilitate television commerce. The Notice of Inquiry (NOI) seeks comments on many topics, including: • whether any other distribution platform does or might possess market power in the distribution of ITV services, and if so, what regulatory approach might be warranted; • the likely ITV delivery capabilities of other delivery platforms, such as DBS and DSL; • whether ITV distributors that the FCC finds to have the power to act anticompetitively should be subject to regulations that require nondiscriminatory treatment of unaffiliated ITV providers. • what should be the legal classification of ITV services; and, • how the FCC should enforce any rules regarding ITV services. 1/18. The Commissioners of the FCC were divided over how to proceed on interactive TV. Outgoing FCC Chairman Wm. Kennard released a statement supporting the NOI. Commissioner Tristani released a statement in which she complained that the FCC did not go far enough; she wanted a full blown rule making proceeding. In contrast, Commissioner Furchtgott-Roth wrote a dissent in which he argued that it is improper to "raise the specter of government regulation ... for services that are still in their gestational period." He also argued that the FCC lacks legal authority to conduct the proceeding because the Cable Act prevents the FCC from regulating cable content. 1/18. NCTA CEO Robert Sachs condemned the FCC's Notice of Inquiry regarding ITV services. He said that "asking dozens of hypothetical questions about regulating a business which has yet to take form still puts the cart before the horse, in regulatory terms. Interactive TV is just starting to develop and is likely to evolve in different ways. There is no evidence to suggest that government regulation is called for here." See, release. 1/18. The FCC announced that Chief of Staff Kathy Brown "will be leaving the Agency shortly. She can be reached at kathybrown99 @hotmail.com." See, FCC release. 1/18. Wm. Kennard, the outgoing Chairman of the FCC, wrote a report [PDF] titled "Report to Congress on the Public Interest Obligations of Television Broadcasters as They Transition to Digital Television." See also, summary [HTML] and letter [PDF] to Senators. 1/18. The U.S. Attorney's Office for the Northern District of California announced several personnel changes. Beginning on Jan. 22, George Bevan will be the Chief of Narcotics, and Susan Badger will be the Chief of General Crimes. Both will report to David Shapiro, who remains Chief of the Criminal Division. Bevan replaces Kathy Bostick who will become corporate counsel for Microsoft in Singapore. Badger prosecuted Operation Cyberstrike in 1988, in which seven defendants were convicted of criminal copyright infringement for operating computer bulletin boards offering pirated software. See, release. 1/18. Intel announced several promotions. It named Thomas Dunlap Senior Vice President. He was already General Counsel and Secretary of the company, with responsibility for legal and government affairs. He has been with Intel since 1974. See, release. 1/18. The FBI's NIPC placed at the top of the home page of its web site a hyperlink to an advisory regarding distributed denial of service attacks that it originally issued on Oct. 13, 2000. Advisory No. 00-055 states that "New variants of the Trinity and Stacheldraht Distributed Denial of Service (DDoS) tools have been found in the wild. As was demonstrated in February of this year, DDoS attacks can bring down networks by flooding target machines with more traffic than the machines can process." The NIPC did not elaborate on why it republicized this advisory. The NIPC issues three level of warnings: assessments, advisories, and alerts. Advisories have the middle level of urgency. 1/18. The FBI's NIPC published a list of courses offered to federal, state, and local law enforcement officers on conducting network intrusion investigations. Courses are taught by the NIPC's Training and Continuing Education Unit at Quantico, Virginia. 1/18. Cal. Gov. Gray Davis announced the release of $167 million in education technology grants for high schools. 1/18. The U.S. Court of Appeals (4th Cir) issued its opinion in Baltimore Scrap Corp. v. David Joseph Co., a case involving § 1 of the Sherman Antitrust Act. This is not a high tech case; it is about scrap metal processing. However, tech companies, and their attorneys, may find the Court's discussion of the Noerr Pennington doctrine pertinent. Baltimore Scrap sued David Joseph Co. and others alleging that the defendants violated the Sherman Act by surreptitiously financing litigation in state court in order to prevent or delay Baltimore Scrap's entry into the market. The defendants argued that the Noerr-Pennington doctrine immunizes those who petition the courts from antitrust liability. The district court agreed, and dismissed the suit. See, opinion. The Appeals Court affirmed. 1/17. A federal grand jury in South Carolina returned an indictment against Mark Dipadova and Theresa Ford for trafficking in luxury goods, such as Rolex and Cartier watches, bearing counterfeit trademarks, in violation of 18 U.S.C. § 371, the federal conspiracy statute, and 18 U.S.C. § 2320, the trademark infringement statute. The defendants sold the infringing items through a web site located at www.fakegifts.com. In addition, the two defendants were indicted for making false statements to federal agents in connection with the investigation, in violation of 18 U.S.C. § 1001. Asst. U.S. Atty. Dean Eichelberger will prosecute the case. See, DOJ release. 1/17. The American Library Association's Executive Board voted to initiate legal action to challenge the Children's Internet Protection Act, which became law in Dec. of 2000. The Act requires schools and libraries which receive e-rate subsidies to use a porn filtering technology on Internet access computers used by children. See, release. 1/17. The GSA began construction of the USPTO's new consolidated headquarters facility in Alexandria, Virginia. See, USPTO release. 1/17 The SEC instituted an administrative proceeding, and issued an order, against Mark Lynch, a CPA, and former CFO of MicroStrategy. The SEC states that Lynch knowingly or recklessly participated in the material overstatement of MicroStrategy's revenues and earnings in its financial statements included in periodic reports and registration statements filed with the SEC, and that he falsified books and records. The Order bars Lynch from appearing or practicing before the SEC as an accountant. Also, in December of 2000 the SEC filed a civil complaint in U.S. District Court (DDC), and obtained a judgment against, Lynch, enjoining him from violating § 17(a) of the Securities Act, § 10(b) of the Exchange Act, or Rules 10b-5 and 13b2-1 thereunder. 1/17. The NTIA released Notice of Proposed Rulemaking (NPRM) regarding compensating incumbent federal agency users in the 1755-1850 MHz band that may be required to modify their systems as a result of spectrum reallocation for 3G wireless uses. Most of these incumbent users are military. Third Generation (3G) wireless services are intended to bring broadband Internet access to portable devices. See also, TLJ story. 1/17. The NTIA and FCC hosted a public meeting between government and industry representatives on Third Generation (3G) wireless services. The meeting was held in the Ronald Reagan Building, in Washington DC, and addressed sharing, band segmentation, and alternative band issues regarding both the 1755-1850 and 2500-2690 MHz bands. NTIA chief Greg Rohde also used the occasion to announce a NPRM on compensating incumbent federal agency users that are required to modify their systems as a result of reallocation of their spectrum to the private sector. See, statement by Rohde. The meeting was otherwise uneventful. The next public meeting will be on Feb. 15. 1/17. President Elect Bush has not yet named his nominee for head of the NTIA. Greg Rohde is currently in the position. He is the Clinton administration's point man on identifying and reallocating spectrum for use by 3G wireless services. He is the former telecom staff assistant to Sen. Byron Dorgan (D-ND), and is popular with industry stakeholders and on Capitol Hill. James Dederian is handling NTIA transition for the incoming Bush administration. Reporters asked Rohde about this at a meeting on 3G wireless on Jan. 17. "They are playing this pretty close to their chests," said Rohde. He was also asked what would become of the current 3G initiatives under the Bush administration. "Leadership and direction from the very top," said Rohde, "is the only way this can happen." But, he declined to predict what would happen. 1/17. Senate committees continued to hold confirmation hearings on key Bush cabinet nominees. The Senate Finance Committee held a hearing on the nomination of Paul O'Neill to be Secretary of the Treasury. The Senate Judiciary Committee held the second day of hearings on the nomination of John Ashcroft to be Attorney General. The Senate Foreign Relations Committee held the second of day of hearings on the nomination of Colin Powell to be Secretary of State. Powell and O'Neill are likely to be quickly and easily confirmed. Ashcroft faces opposition from liberal social groups and some Democrats in the Senate, but will likely be confirmed. 1/17. The Electronic Privacy Information Center (EPIC) wrote kind words about Attorney General nominee John Ashcroft in the lead item of its Jan. 17 e-mail alert. EPIC noted that the DOJ is involved in many electronic privacy issues, including implementation of CALEA, critical infrastructure protection, Carnivore, and the proposed Council of Europe cyber-crime treaty. EPIC then quoted extensively from a 1997 speech that Ashcroft gave on electronic privacy. "The outrages against privacy committed by federal law enforcement agencies means one thing: Now, more than ever, we must protect citizens' privacy from the excesses of an arrogant, overly powerful government. Law enforcement is using advances in digital technology as an excuse to insist on intrusions into privacy that were never allowed in the pre-digital era," said Ashcroft. 1/17. Nydia Bonnin was named deputy staff director to the House Commerce Committee. She previously worked for the National Republican Congressional Committee, as senior finance advisor. She has also worked as director of federal government relations for oil company Atlantic Richfield, as an aide to former Rep. Bill Paxon (R-NY), and as an aide to former Rep. Charles Canady (R-FL). The committee also has jurisdiction over energy issues. 1/17. The FCC approved the merger of WorldCom and Intermedia. The FCC adopted an order approving the application for transfer of licenses. The Antitrust Division of the Department of Justice (DOJ) reached an agreement with the parties in November of 2000. The DOJ, WorldCom and Intermedia agreed all of Intermedia's assets would be divested, except its controlling interest in Digex. To put this agreement into effect the DOJ filed a complaint and proposed consent decree in the U.S. District Court (DDC) on Nov. 17. The objection of the DOJ related to the circumstance that both WorldCom and Intermedia owned Internet backbone networks. Intermedia also provides voice and data services. Digex provides web and applications hosting for e-businesses. 1/17. The U.S. Court of Appeals (5th Cir.) issued its opinion in Prostar v. Massachi, a case regarding the appropriate statute of limitations to apply to an action for cable piracy (brought under 47 U.S.C. §§ 553 and 605). The federal statute specifies no limitation. The trial court applied the one year prescriptive period for delictual actions under Louisiana law. The Court of appeals reversed, holding that the three year limitation of the Copyright Act applies (17 U.S.C. § 507). 1/17. The U.S. Court of Appeals (Fed Cir) issued its opinion in Tronzo v. Biomet, an appeal regarding compensatory and punitive damages in a patent infringement case. Tronzo filed suit in 1988 against Biomet alleging infringement of a patent on a hip replacement device (U.S. Patent No. 4,743,262) and violation of Florida law (breach of a confidential relationship, fraud, and unjust enrichment). The trial court jury found for Tronzo on all counts, and awarded compensatory and punitive damages, which were then capped by the court at $7,134,000 for compensatory damages, and $20,000,000 for punitive damages, to avoid double recovery. In a previous appeal, the Federal Circuit reversed the finding of patent infringement, upheld the finding of liability under state law, but reversed with respect to computation of damages. On remand, the trial court reduced these awards to $520 and $52,000, respectively, without allowing Plaintiff a new trial. Tronzo then brought this second appeal. The Appeals Court reinstated the $20 Million punitive damages award on the grounds of waiver; Biomet did not raise it in the first appeal. 1/16. Two plaintiffs named Bruce and Leslie Forrest filed a complaint [PDF] in the Superior Court for the District of Columbia against Verizon Communications, and its subsidiary, Verizon Internet Services, alleging breach of contract, fraud and misrepresentation in connection with Verizon's DSL service. Plaintiffs, who are represented by the law office of Cohen Milstein, seek class action status. Count one alleges breach of contract for promising, but not providing, seven day per week service. Count two alleges violation of the Virginia Consumer Protection Act (VCPA). See, Virginia Code §§ 59.1-200 for making false and deceptive statements about the service. Count three alleges false advertising under the VCPA. Count four alleges negligent misrepresentation. Plaintiffs seek damages and injunctive relief preventing continuing false or deceptive practices. See, Cohen Milstein release. Verizon Internet Services is a Delaware corporation which is based in Reston, Virginia. Cohen Milstein is a 25 attorney law firm with offices in Washington DC and Seattle that specializes bringing class action lawsuits. 1/16. Dennis Devaney was sworn in as a Commissioner of the USITC. He is a Republican who was appointed by Clinton on Jan. 3, 2001, for the period expiring at the end of the first session of the 107th Congress. He was previously Of Counsel in the Detroit office of the law firm of Butzel Long and a Professor of Law at Wayne State University Law School. Prior to that, he was Of Counsel in the Washington DC office of Winston & Strawn. See, USITC release. The USITC has authority under Section 337 to investigate unfair practices in import trade involving infringement of patents, copyrights, trademarks, and other intellectual property rights. 1/16. The Senate Judiciary Committee held the first day of hearings on the nomination of John Ashcroft to be Attorney General. The Senate Foreign Relations Committee held the first day of hearings on the nomination of Colin Powell to be Secretary of State. Both hearings continue on Jan. 17. 1/16. Secretary of Commerce Norman Mineta and executives from 19 information technology companies announced the formation of the Information Technology Information Sharing and Analysis Center. See, DOC release. See also, TLJ story. 1/16. The IT-ISAC met to elect officers: • President: Howard Schmidt, Chief Security Officer, Microsoft. POC: Bill Guidera, 202-263-5914. • Vice President: Gregory Akers, VP, Customer Advocacy IT, Cisco Systems. POC: Ken Watson, 512-378-1112. • Secretary: Phillip Lacombe, President, Information and Infrastructure Protection Sector, Veridian. POC: David Keyes, 703-383-3680. • Treasurer: Todd Gordon, VP, IBM Business Continuity and Recovery Services, IBM. POC: Tim Hackman, 202-515-5115. • Outside Legal Counsel (not member of the Board): Lino Lipinsky, McKenna & Cuneo LLP, 202-496-7243. 1/16. Outgoing SEC Chairman Arthur Levitt gave a wide ranging speech in Philadelphia in which he addressed a investor rights and the state of securities markets. He touched on the Internet. He stated that "getting the facts could not be more important in a day and age when we are bombarded with more information than ever before. That's due, in no small part, to the Internet, which in many respects has leveled the playing field and empowered America's investors. But beware, the Internet – with its low cost, anonymity, and large number of innocent investors – also makes it ripe for out-and-out fraud. Chat rooms are a case in point. Chat rooms increasingly have become a source of information – and misinformation – for many investors." Levitt has announced that he will leave the SEC next month. 1/16. The USTR published in the Federal Register a request for comments regarding countries that deny adequate and effective protection of intellectual property rights. Section 182 of the Trade Act of 1974 requires the USTR to identify countries that deny adequate and effective protection of IP rights or deny fair and equitable market access to U.S. persons who rely on IP protection. This provision is also referred to as "Special 301". Comments are due by 12:00 NOON on Friday, Feb. 16, 2001. See, Federal Register, Jan. 16, 2001, Vol. 66, No. 10, at Pages 3640 - 3641. 1/16. The Intellectual Property Owners Association (IPO) announced that Wayne Paugh, who is currently an aide to Rep. Dana Rohrabacher (R-CA), will become its Intellectual Property Counsel - Government Affairs, effective Feb. 5. 1/16. The outgoing Clinton-Gore administration released a report [huge PDF file] on electronic commerce. It is a lengthy glossy exercise in self-praise. It was written by the "U.S. Government Working Group on Electronic Commerce" and is titled "Leadership for the New Millennium: Delivering on Digital Progress and Prosperity." It proclaims that "This report outlines the Clinton-Gore Administration's success in making the Internet a tool for both social and economic growth." It states that "The Clinton-Gore Administration has played a major role in nurturing the medium ..." and that the "Clinton-Gore Administration and its partners have made particular progress in connecting Americans." 1/16. The U.S. Court of Appeals (5thCir) issued a split opinion in AT&T v. BellSouth and LPSC, a case concerning application of the 11th Amendment to suits brought against state public services commissions (PSCs) regarding their decisions on interconnection. The Court ruled 2 to 1 that a telecom carrier is not barred by the 11th Amendment from bringing suit in federal district court against a state PSC under the Telecom Act of 1996 for judicial review of whether the commission's arbitration determination with respect to an interconnection agreement meets the requirements of the Act. The 1996 Act requires the incumbent local exchange carriers (ILECs, such as BellSouth) to facilitate market entry. For example, they are required under 47 U.S.C. § 251(c) to share their network with competitors, who can purchase local telephone services at wholesale rates for resale to end users, lease elements of the incumbent's network on an unbundled basis, or interconnect its own facilities with the ILEC's network. The Act provides that either party can petition the state PSC to mediate. In the present case, AT&T attempted to negotiate an interconnection agreement with BellSouth, failed to reach agreement, and petitioned the Louisiana PSC to mediate, which resolved the dispute in BellSouth's favor. AT&T appealed to the U.S. District Court, which dismissed, pursuant to the 11th Amendment. Reversed. 1/16. The U.S. Court of Appeals (DCCir) issued its opinion in MD/DC/DE Broadcasters Association v. FCC, a petition for review of the FCC's latest race and sex based hiring rules for broadcasters. The Court vacated the FCC's rules in their entirety on the grounds that they are unconstitutional under equal protection analysis. The Court ruled that the FCC rules put pressure on broadcasters to recruit women and minorities, that the rules are a race based classification to which the strict scrutiny test applies, that the rules are not narrowly tailored to meet a compelling state interest, and that hence, they are unconstitutional. See also, outgoing Chairman Wm. Kennard's reaction, and Commissioner Tristani's reaction. The Court also vacated the FCC's previous rules in 1998 in its opinion in Lutheran Church v. FCC. See, TLJ story of April 16, 1998. 1/16. DSL provider NorthPoint Communications filed a petition for Chapter 11 protection with the U.S. Bankruptcy Court (NDCal). CEO Liz Fetter blamed Verizon: "When Verizon unexpectedly pulled out of the merger and its interim funding obligations, which we believe was a breach of Verizon's agreements with NorthPoint, it created a funding shortfall." See, release. 1/16. Verizon resubmitted its Section 271 application to provide long distance service in Massachusetts to the FCC. See, release. 1/16. Members of the House have begun to introduce bills for the 107th Congress. Many bills introduced at this stage are re-introductions of bills that were pending at the close of the last Congress. Among the new bills are: HR 41, a bill to permanently extend the R&D tax credit, by Rep. Nancy Johnson (R-CT) and Rep. Robert Matsui (D-CA). Johnson and Matsui have sought to pass this bill for a long time. The 106th Congress passed a temporary extension; HR 89, the Online Privacy Protection Act, a bill to require the FTC to promulgate regulations affecting web site operators, by Rep. Rodney Frelinghuysen (R-NJ); HR 90, the Know Your Caller Act, a bill to prohibit telemarketers from interfering with the caller ID service in telephone solicitations, by Rep. Rodney Frelinghuysen (R-NJ); HR 91, the Social Security On-line Privacy Protection Act, by Rep. Rodney Frelinghuysen (R-NJ); HR 100, a bill to establish and expand education programs relating to science, mathematics, engineering, and technology, by Rep. Vernon Ehlers (R-MI); HR 101, the National Science Education Enhancement Act, by Rep. Vernon Ehlers (R-MI); HR 102, the National Science Education Incentive Act, a bill to provide certain tax incentives, including tuition tax credits for undergraduate teaching education in science, math, science, engineering, and technology (SMET), and for certain contributions benefiting SMET education, by Rep. Vernon Ehlers (R-MI). 1/15. The Consumer Federation of America released a report titled "Antitrust as Consumer Protection in the New Economy: Overview of Lessons from the Microsoft Case." It defends Judge Jackson's decision. 1/12. The Department of Justice filed its brief with the U.S. Court of Appeals (DCCir) in the Microsoft antitrust case. It urges affirmance of Judge Thomas Jackson's judgment. The amici curiae in support of the government also filed their brief [PDF]. These were AOL, CCIA, ProComp, and SIIA. The attorneys on this brief included Ken Starr and Robert Bork (both of whom are former members of the Court of Appeals for the District of Columbia), and Walter Dellinger (who, like Starr and Bork, is a former Solicitor General). Microsoft's reply brief is due on Jan. 29. Final briefs are due on Feb. 9. 1/12. FCC Chairman William Kennard announced his resignation from the FCC, effective Jan. 19, 2001. His term would have ended in June. See, FCC release. For the next few months, Chairman Kennard will serve as a Senior Fellow at the Aspen Institute's Communications and Society Program in Washington DC. See, Aspen release. 1/12. Gary Lytle, the acting CEO of the U.S. Telecom Association advocated legislation to regulate Internet access. He stated that "Americans -- and providers of high-speed Internet services -- now face a crazy patchwork of broadband regulation. ... This patchwork of regulation will stifle the future development of Internet applications, products and services. ... The time is ripe for Congress to adopt a uniform policy that allows all broadband competitors and technologies to compete on equal deregulated footing ..." See, release. The USTA represents incumbent local exchange carriers (ILECs, i.e., phone companies). These companies are required, as telecommunications carriers, to provide access to their facilities to competing ISPs. Other technologies for providing Internet access are not subject to the same blanket requirement. 1/12. The Xinhua News Agency published a release on Internet copyright infringement in the People's Republic of China. 1/12. The FCC published a document [PDF] titled "Principal FCC Achievements During Chairman Kennard’s Tenure 1997-2001." 1/12. NetZero filed a complaint in U.S. District Court (CDCal) against AT&T and Predictive Networks alleging patent infringement. NetZero, an ISP and web marketer, alleges that AT&T infringed U.S. Patent No. 6,157,946, which applies to a process that enables an ISP to display ads or messages through a window that is separate from the browser. NetZero filed a complaint against Juno on Dec. 26, 2000, alleging infringement of the same patent. It obtained a 65 day Temporary Restraining Order (TRO) against Juno on Jan. 5, 2001. 1/12. The U.S. District Court (DMd) dismissed 38 complaints filed against Microsoft alleging violation of federal antitrust laws. Many other private antitrust actions are still pending against Microsoft. 1/12. Rep. Billy Tauzin (R-LA), Chairman of the House Commerce Committee, and Rep. Fred Upton (R-MI), Chairman of the Telecom Subcommittee, wrote a letter to Michael Roberts, President of ICANN stating their plans to hold a hearing in February on the process for creating new top level domains. 1/12. Jessica Wallace is the new Telecom Counsel for the House Commerce Committee. She previously worked as a Legislative Assistant to Rep. Billy Tauzin (R-LA), and before that as a lobbyist for the law office of Verner Liipfert, and as a Legislative Assistant to Rep. Cliff Stearns (R-FL). During the last Congress, Justin Lilley was the Telecom Counsel. He is now at News Corp. 1/12. The U.S. Court of Appeals (2ndCir) issued its opinion in NCA v. AT&T affirming the lower court's judgment that AT&T violated the statute and regulations requiring common carriers to provide services to resellers on the same terms that such services are provided to end users. See, 47 U.S.C. 202(a). 1/12. The Antitrust Division of the Department of Justice (DOJ) published in the Federal Register a notice that it filed a proposed Final Judgment, Stipulation, and Competitive Impact Statement in USA v. WorldCom and Intermediate Communications. WorldCom and the DOJ reached their agreement regarding WorldCom's acquisition of Intermedia back in Nov. of 2000. They agreed that WorldCom would divest all of Intermedia's assets, except its controlling interest in Digex. To put this agreement into effect the DOJ filed a complaint and proposed consent decree in the U.S. District Court (DDC) on Nov. 17. The objection of the DOJ related to the circumstance that both WorldCom and Intermedia owned Internet backbone networks. Intermedia also provides voice and data services. Digex provides web and applications hosting for e-businesses. The purpose of this notice is to seek public comment. Comments are due within 60 days of this notice. See, Federal Register, Jan. 12, 2001, Vol. 66, No. 9, at Pages 2929 - 2939. 1/12. EPIC and Privacy International started a web site that publishes privacy related news. It is named privacy.org. 1/12. The CCIPS of the DOJ published a revised version of its manual titled "Seizing Computers and Obtaining Evidence in Electronic in Criminal Investigations." See also, release. 1/12. Appeal Briefs are due to filed with the U.S. Court of Appeals (DCCir) from the Department of Justice, the states, and amici in support of the government, in the Microsoft antitrust case. See, scheduling order [PDF]. 1/12. Sixty small technology companies and the Association for Competitive Technology (ACT) wrote an Open Letter to the 107th Congress and Bush administration regarding the Microsoft antitrust case. They stated: "We're deeply troubled by the potential legacy of the outgoing Justice Department, which could undermine our industry’s future and threaten our nation’s recent economic success. ... Misguided application of antitrust laws, such as the case against Microsoft, ignores the realities of our industry and could create disastrous new rules to govern competitive behavior in the 'new economy.' " the group also published the letter as an advertisement [PDF] in the paper versions of the Washington Post and Wall Street Journal. See also, ACT release. 1/11. Transportation Secretary nominee Norman Mineta gave a speech in Tokyo, Japan, in which he advocated less regulation and more competition in telecommunications and Internet services. He stated: "We all know that lack of competition weakens the competitive fiber of every industry. Just take a look at the Internet. While I recognize that Japanese cell phone and mobile Internet access exceed that in America, the dearth of true telecom competition makes Internet access less affordable here than in the U.S. That's a major reason why ... Internet penetration is only 23% in Japan, less than half the U.S. rate. In effect, the de facto monopoly of Japan's local telecom market -- combined with a weak and ineffective regulatory system -- significantly dampens incentives for Japanese entrepreneurs to develop a web-based economy, and also deprives consumers of the savings from increased web-based information and competition." 1/11. Charles Rule joined Fried Frank as the lead antitrust partner in its Washington DC office. He was Assistant Attorney General for the Antitrust Division during the administration of George Bush Sr. He was then head of the antitrust department at Covington & Burling. He has also counseled Microsoft in the government's antitrust case. See, release. 1/11. A grand jury of the U.S. District Court (CDCal) returned an indictment against DEA agent Emilio Calatayud. The indictment states that over a six year period he searched various law enforcement computer systems and databases to obtain sensitive information, and then sell it to a private investigations firm, Triple Check Investigative Services. The indictment charges Calatayud with five counts of computer fraud, five counts of wire fraud, and receiving a bribe. See, release. The DEA is a part of the U.S. Department of Justice. 1/11. WTO Director General Mike Moore gave a speech in Hyderabad, India, on free trade and information technology. He stated that "developing countries need at least four things. One is skilled workers. India has plenty of them: it accounts for a third of the world's software engineers. Two more are access to computer technology at world prices and efficient, low-cost telecoms. ... The final requirement for success in the digital age is free access to rich-country markets. Rich-country markets are reasonably open, but obstacles remain, for instance, for Indian software engineers who want temporary visas to work in America or Europe." He also advocated a new round of trade negotiations. 1/11. Rep. Fred Upton (R-MI) will be the new Chairman of the Telecom Subcommittee of the House Commerce Committee. Much of the technology related legislation in the House must pass through this subcommittee. 1/11. Senate Commerce Committee announced its membership for the 107th Congress. It has jurisdiction over many high tech related items. Newly appointed members are Barbara Boxer (D-CA), John Edwards (D-SC), and Jean Carnahan (D-MO), Gordon Smith (R-OR), Peter Fitzgerald (R-IL), John Ensign (R-NV), and George Allen (R-VA). The returning members are Ernest Hollings (D-SC), Daniel Inouye (D-HI), Jay Rockefeller (D-WV), John Kerry (D-MA), John Breaux (D-LA), Byron Dorgan (D-ND), Ron Wyden (D-OR), Max Cleland (D-GA), John McCain (R-AZ), Ted Stevens (R-AK), Conrad Burns (R-MT), Trent Lott (R-MI), Kay Hutchison, (R-TX), Olympia Snowe (R-ME), and Sam Brownback (R-KS). Departing members include Bill Frist (R-TN), who left to take another committee assignment, Slade Gorton (R-WA), whose lost his re-election bid, and John Ashcroft (R-MO), who lost his bid for re-election, and is now President Elect Bush's nominee to be Attorney General. McCain will be Committee Chairman; Hollings will be the Ranking Minority Member; and Burns will be Chairman of the Communications Subcommittee. See, release. 1/11. Sen. Maria Cantwell (D-WA) has been appointed to the Senate Judiciary Committee. She is a former Real Networks executive who now represents Microsoft's home state. Sen. Orrin Hatch (R-UT), who will become Chairman after Jan. 20, strongly supports the government's antitrust action against Microsoft. In addition to antitrust matters, the Committee has jurisdiction over immigration (including H1B visas) and crime. 1/11. The FCC approved the merger of AOL and Time Warner with conditions. This FCC proceeding is nominally a license transfer proceeding; the parties applied for radios licenses held by Time Warner to be transferred to the merged entity. However, the proceeding is in the nature of an antitrust merger review, redundant of the review already completed by the FTC, an agency that has statutory authority to conduct antitrust merger reviews. Moreover, the antitrust analysis conducted by the FCC concerned Internet operations, not the radio licenses. The decision was expected. The FCC almost never rejects license transfer requests. Rather, it often withholds its approval of license transfers until it extracts the concessions from the parties that it seeks. The numerous concessions in the matter mostly regulate Internet operations of AOL Time Warner for for which the FCC does not issue licenses: instant messaging (IM), interactive TV, and broadband Internet access over cable facilities. While the FCC has released its own summary [PDF] of its Order approving the merger, a press release, and statements by each of the five Commissioners, it has not released the most important document -- the Order itself. 1/11. The FCC imposed several significant conditions upon its approval of the merger of AOL and Time Warner. AOL Time Warner (AOL) shall not restrict the ability of any current or prospective ISP customers to select and initiate service from any unaffiliated ISP which, pursuant to a contract with AOL, has made its service available over AOL's cable facilities. AOL must permit each ISP to have a direct billing arrangement with those high-speed Internet access subscribers to whom the ISP sells service. AOL's instant messaging (IM) services must interoperate with competing IM providers before it can offer videoconferencing and other streaming video over IM. The FCC's Cable Services Bureau will have continuing oversight authority over the merged company. 1/11. All five FCC Commissioners voted to approve the AOL Time Warner merger, but released separate statements. Chairman Kennard wrote a statement summarizing and defending the FCC's action. He concluded: "With the merger of AOL and Time Warner, we are seeing the creation of a new platform for communications based on the Internet. Our challenge is to make sure that consumers get the full benefits of this new world technology without importing the dangers of monopoly and bottlenecks from the old world. We have met this challenge." Tristani wrote in her statement that she would have taken an even more regulatory approach. She stated that she had "advocated for even more forceful conditions aimed at achieving interoperability" of IM. Furchtgott-Roth wrote in his dissent that the FCC has no legal authority to conduct antitrust merger reviews; hence, he approved of the merger, but dissented from the imposition of conditions. Powell, who is rumored to be President Elect Bush's likely choice to be the next FCC Chairman, wrote the most detailed and reasoned opinion. He stated that "the record and the anticompetitive theory did not support mandating interoperability" of IM. Ness wrote in a brief comment, "You've Got Approval!" 1/11. Sen. Hillary Clinton (D-NY) was appointed to three committees without any significant jurisdiction over technology related issues: Health, Education, Labor and Pensions Committee; Budget; and Environment and Public Works. (The HELP Committee does have some authority over medical privacy issues.) 1/11. An individual named Alexander Markaron filed a complaint [PDF] in U.S. District Court (SDNY) against VA Linux, two of its officers and directors, and Credit Suisse First Boston alleging violations of federal securities laws. The plaintiff, who is represented by the law firm of Milberg Weiss, seeks class action status. Count one alleges violation of § 11 of the Securities Act by VA Linux. Count two alleges violation of § 12(a)(2) of the Securities Act by Credit Suisse. Count three alleges controlling person liability for violation of § 15 of the Securities Act by the officers and directors. Count four alleges § 10b and Rule 10b-5 fraud by Credit Suisse. VA Linux provides Linux based software and support services for ASPs, e-commerce companies, and ISPs. Credit Suisse was the lead underwriter in an initial public offering (IPO) of VA Linux shares in December of 1999. Milberg Weiss is a law firm that specializes in bringing class action securities suits against technology companies when their stock prices drop. 1/11. The U.S. Court of Appeals (5thCir) issued its opinion in Lone Star Ladies v. Schlotsky's reversing the trial court's dismissal of a class action securities complaint for failure to comply with the heightened pleading requirements of the Private Securities Litigation Reform Act (PSLRA). This is not a technology case. Schlotsky's is a restaurant chain. But, the PSLRA was enacted by the Congress in large part to limit frivolous federal class action securities suits against technology companies. Plaintiffs sued Schlostky's and several of its officers and directors alleging violations of federal securities laws, and sought class action status. The U.S. District Court (WDTex) granted defendants' 12(b)(6) motion to dismiss for failure to pleaded facts sufficient to give rise to a strong inference of scienter as required by the PSLRA. The trial court denied plaintiffs' motions to amend complaint, and dismissed with prejudice. Reversed and remanded. 1/11. Govworks.com filed a petition for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court (SDNY). 1/11. James Toupin has been named General Counsel of the USPTO, effective Jan. 28, 2001. He is a former Deputy General Counsel at the USITC. He also was Assistant General Counsel for Litigation and Special Projects at the USITC from 1987 to1994. He previously worked at the law firm of Memel Jacobs from 1985 to1987, and at Covington & Burling from 1978 to1985. Bernard Knight has been named Deputy General Counsel for General Law of the USPTO. He was previously a Senior Trial Attorney at the Department of Justice. John Whealan has been named Deputy General Counsel for Intellectual Property Law and Solicitor. See, release. 1/11. President Elect George Bush announced that Robert Zoellick will be new U.S. Trade Representative. He previously worked in the Bush Sr. administration as Deputy Chief of Staff and Under Secretary of State for Economics. He also worked at Treasury Dept. during the Reagan administration. He worked under James Baker. See, State Dept. release. Outgoing USTR Charlene Barshefsky praised Zoellick in a release. 1/11. The NTIA will host a government - industry meeting on Third Generation (3G) wireless services on January 17, 2001. The meeting will be held from 9:30 AM to 12:30 PM in the Polaris Room of the Ronald Reagan Building (Concourse Level), 1300 Pennsylvania Ave. 1/11. ICANN published information about its next round of meetings, to be held in Melbourne, Australia, on March 10-13. 1/11. The National Telecommunications and Information Administration (NTIA) published a notice in Federal Register regarding Technology Opportunity Program (TOP) grants. The NTIA will award $42.5 Million in grants in FY 2001, up from $12 Million in FY 2000. These grants go to state, local, and tribal governments, colleges and universities, and non-profit entities to extend advanced telecommunications technologies to inaccessible, rural and underserved urban communities. See also, NTIA release. The NTIa will host a series of workshops around the country to assist grant applicants. See, NTIA's online registration page. 1/11. The U.S. Court of Appeals (FedCir) heard oral argument in Octel v. Theis. This is an appeal from a final judgment of the U.S. District Court (NDCal) in a patent infringement case. The trial court dismissed on the grounds of res judicata. The court had previously adjudged the patent in suit invalid, the Federal Circuit had affirmed, and the Supreme Court had denied certiorari. But, appellant thinks the original Patent Office determination should carry more weight. The patent concerns voice processing services, such as voice mail. |
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