News Briefs from June 1-5, 2001

Tauzin Dingell Bill Criticized at Judiciary Committee Hearing
6/5. The House Judiciary Committee held a hearing on HR 1542, the Tauzin Dingell bill to provide protection to the Bell companies. Committee members made statements, and four witness testified. See, prepared statements of Jim Glassman (AEI), Margaret Greene (BellSouth), Clark McLeod (McLeod USA), and Tom Tauke (Verizon). HR 1542 would provide, among other things, interlata data relief for the RBOCs. Rep. Chris Cannon (R-UT) and Rep. John Conyers (D-MI) are sponsors of a competing pair of bills that would provide further protection for CLECs. Supporters of both the Tauzin Dingell bill and the Cannon Conyers bills assert that their bills would promote the deployment of broadband services.
Rep. James Sensenbrenner (R-WI), the Chairman of the Committee, stated in his opening opening statement that he has not taken a position in the debate. He also explained the limited jurisdiction of the Judiciary Committee over HR 1542: "The referral to this Committee by the Speaker is specifically, quote, for consideration of such provisions in the bill and amendment recommended by the Committee on Energy and Commerce as to close or narrow the purview of the Attorney General under Section 271 of the Communications Act of 1934." He then devoted himself to keeping the hearing in order and on schedule.
Rep. Conyers, the ranking Democrat on the Committee, is an ardent opponent of the Tauzin Dingell bill. He stated that "The Telecommunications Act of 1996 unleashed a flood of new investment directed at that last mile bottleneck. Many new companies were created to bring consumers new choices, including new services. And these competitive carriers use all of the means open to them to compete against monopolies that have become entrenched over the course of a century. ... Believing in the promise of the 96 Act the CLECs invested billions of dollars ... But, today most of the companies have been devastated by behavior and procrastination on the part of the Bell systems, which have ironically regrouped, and in some ways become stronger than they were before the 1996 Telecommunications Act."
Two witnesses testified in favor of the bill: Tom Tauke and Margaret Greene. Both work for Bell companies that would benefit from the protections offered by the bill. Tauke argued that the provisions of the Telecom Act of 1996 that require the Bells to open their networks to competitors should apply to voice, but not data, communications. He said that "HR 1542 stops the application of rules that were intended for the voice telephony market to the broadband services market. These are two very distinct markets." Green argued that the cable companies which offer broadband Internet access are not subject to regulation, so the phone companies should not be either. Several members of the Committee also spoke in favor of the bill, including Rep. Rick Boucher (D-VA), Rep. Bob Goodlatte (R-VA), and Rep. Spencer Bachus (R-AL).
Two witnesses opposed the Tauzin Dingell bill: Clark McLeod, of McLeadUSA, and James Glassman, a resident fellow at the American Enterprise Institute and publisher of the Tech Central Station web site. McLeod stated that HR 1542 "strengthens the Bell monopoly by restricting access to the local loop." He added that "it is moving our industry towards re- monopolization."
Glassman stated that "HR 1542 is being promoted as a way to boost deployment of high-speed data services. In fact, it will produce the opposite result. It will severely harm prospects for sustainable and effective telecommunications competition and it will further deter the deployment of broadband Internet technology and do substantial damage to the U.S. economy as a result. You cannot have real consumer choice and the benefits that flow from it without competition, and you cannot have competition without competitors. HR 1542 would eviscerate the crucial provisions of the Telecommunications Act of 1996 that have created the competitive local exchange carrier (CLEC) industry and, make no mistake, kill that industry kill the competitors, both current and future."
Several members of the Committee criticized HR 1542, including Conyers, Cannon, Nadler, and Weiner.
Glassman: Bells Push HR 1542 to Slow CLEC Investment
6/5. The Bell companies and their lobbyists have been pushing hard for passage of HR 1542, the Tauzin Dingell bill. It currently has 100 cosponsors in the House. Also, it has been approved by the House Commerce Committee. However, it is widely regarded to have very little chance of passing the Senate. This has lead to speculation as to why the Bell companies are lobbying and advertising intensively for the bill.
James Glassman offered his explanation at the House Judiciary Committee's hearing on the bill. He stated during his oral testimony and responses to questions that HR 1542 has had the effect of drying up new investment in CLECs.
However, he went a step further in the written testimony that he submitted the the Committee. He suggested that stopping the flow of capital to CLECs is the RBOCs' purpose in pushing this bill. He stated the "The high level of uncertainty introduced simply by Congressional consideration of HR 1542 is exactly the type of force that squashes investment. Moreover, it raises the possibility that the Bell monopolies are purposefully lobbying heavily for bills such as this one because they are well aware that uncertainty about those changes can itself accomplish the job of slowing CLEC investment. Because of their smaller size and greater need for financial resources, CLECs suffer disproportionately when regulatory uncertainty contributes to raising the costs for financial capital. That is one of the preliminary conclusions of our study, but common sense would indicate its truth."
Carlisle Appointed to Common Carrier Bureau
6/5. FCC Chairman Michael Powell appointed Jeffrey Carlisle Senior Deputy Chief of the Common Carrier Bureau, effective June 11, 2001. Carlisle currently practices law, and is VP for interconnected services and regulatory affairs at INLEC Communications, a company that constructs and manages broadband infrastructure within residential apartment buildings. Previously, he was an associate in the Washington DC office of the law firm of O'Melveny & Myers, where he focused on telecommunications mergers and acquisitions and competitive entry into local exchange markets.
Two Representatives Oppose NTR Status for PRC
6/5. Rep. Dana Rohrabacher (R-CA) and Rep. Sherrod Brown (D-OH) introduced HJRes 50, a joint resolution disapproving the extension of the waiver authority contained in section 402(c) of the Trade Act of 1974 with respect to the People's Republic of China (PRC). The resolution would prevent the extension of normal trade relations status (formerly known as most favored nation status) to the PRC. It was referred to the House Ways and Means Committee. See, Rohrabacher release and Brown release.
Media Coverage of Court Proceedings
6/5. Sen. Charles Grassley (R-IA), Sen. Charles Schumer (D-NY), and others, introduced S 986, a bill that would allow federal trial and appellate judges to permit cameras in their courtrooms. The bill would also direct the Judicial Conference, the federal courts' principal policy making body, to draft non-binding guidelines that judges can refer to in making a decision pertaining to the coverage of a particular case. It was referred the the Senate Judiciary Committee, of which both Grassley and Schumer are members.
Sen. Grassley stated that "Chief Justice Rehnquist allowed the delayed audio broadcasting of the oral arguments before the Supreme Court in the 2000 presidential election dispute. The Supreme Court's response to our request was an historic, major step in the right direction. Since then, other courts have followed suit, such as the live audio broadcast of oral arguments before the D.C. Circuit in the Microsoft antitrust case and the televising of appellate proceedings before the Ninth Circuit in the Napster copyright case. The public wants to see what is happening in these important judicial proceedings, and the benefits are significant in terms of public knowledge and discussion."
Computer Crime
6/5. Michael Wallace plead guilty in U.S. District Court to two counts of theft of government property and unauthorized removal of classified materials. The defendant, a  former computer specialist for the Department of State, stole computer equipment from the government and removed equipment containing classified national security information without authorization. See, DOJ release.
USPTO Authorization
6/5. Rep. Howard Coble (R-NC), Rep. Howard Berman (D-CA), and Rep. John Conyers (D-MI) introduced HR 2047, a bill to authorize appropriations for the USPTO for FY 2002, and for other purposes. It was referred to the House Judiciary Committee.
USPTO Seeks Comments Regarding Business Method Patents
6/5. The USPTO published a notice in the Federal Register requesting comments from the public regarding optional search criteria used during examination of patent applications related to computer implemented Business Methods in Class 705. The USPTO seeks comments concerning databases, documenting practices, procedures, and developments, in specific industries within the computer implemented business method field, to identify additional information and materials that could be considered during the examination process. The recommended database will be reviewed quarterly. Database recommendations received before June 30, 2001, will be included in the first evaluation process which will commence on July 31, 2001.
GAO Reports on USPTO Lease
6/5. The GAO issued a report [PDF] written for Sen. James Inhofe (R-OK) and Sen. John McCain (R-AZ) regarding Acquisition of Leased Space for the USPTO. The report concluded: "we found nothing improper in GSA's award of the lease for the PTO facility. This procurement has also been reviewed by the Department of Commerce's (DOC) Inspector General and later in litigation in federal court. None of these reviews resulted in a conclusion that the procurement activities had been conducted improperly." Currently, the USPTO has 33 leases occupying all or portions of 18 buildings in Crystal City, Virginia. On June 1, 2000, the GSA signed a 20 year lease with LCOR Alexandria for 2.2 million rentable square feet to house 7,100 USPTO staff at the Carlyle site in Alexandria, Virginia. The lease is valued at $1.24 Billion over 20 years, plus operating expenses and taxes.
More News
6/5. MusicNet and Napster announced they have reached an agreement under which Napster will become an affiliate of MusicNet. See, Napster release.
6/5. The Intellectual Property Owners Association gave its Legislator of the Year award to Sen. Bob Bennett (R-UT).
6/5. The American Enterprise Institute hosted a book event titled Privacy in Perspective. The author and speaker was Fred Cate, an AEI Visiting Scholar and Indiana University Law School professor.
HP Settles Pitney Bowes Patent Suit for $400M
6/4. Hewlett-Packard and Pitney Bowes settled litigation between the two companies. Pitney Bowes filed a complaint in U.S. District Court (DConn) against HP in 1995 alleging infringement of a patent involving print technology. Trial of the case had been scheduled to begin on June 5. Under the terms of the settlement HP will pay Pitney Bowes $400 Million in cash, and the two companies will enter into a technology licensing agreement. The two companies issued substantially identical releases. See, HP release and Pitney Bowes release.
AT&T Sues Microsoft for Patent Infringement
6/4. AT&T filed a complaint in the U.S. District Court (SDNY) against Microsoft alleging patent infringement. The patent in suit is U.S. Patent No. RE 32,580, a reissue of U.S. Patent No. 4,472,832. The AT&T web site states that "This patent revolutionized speech coding by dramatically reducing transmission rates for high-quality speech." It further states that "The patent for the digital speech coder was issued in 1984 and reissued in 1988 to Bishnu Atal, an AT&T Labs technology director and AT&T Fellow. Widely used by digital cellular systems today, Atal's invention revolutionized speech coding by dramatically reducing transmission rates for high-quality speech." See, AT&T summary.
Lans v. DEC
6/4. The U.S. Court of Appeals (FedCir) issued its opinion in Lans v. DEC, a patent infringement case. Hakan Lans, who was issued U.S. Patent No. 4,303,986, sued DEC and other computer equipment manufacturers alleging infringement of this patent. The District Court granted summary judgment to defendants on the grounds that Lans lacked standing, since he had assigned the patent to a entity not a party to the suit. The Appeals Court affirmed.
Nevada Legislature Passes Internet Gambling Bill
6/4. The Nevada State Senate approved Assembly Bill 466, a bill to authorize the licensing and operation of Internet gambling, by a vote of 17 to 4. The State Assembly approved the bill on April 25.
FEC Annual Report Addresses Regulation of Internet Speech
6/4. The Federal Election Commission (FEC) issued its Annual Report 2000 [99 pages in PDF]. The report addresses Internet issues at page 26-28. The report reviews seven previously published advisory opinions issued during 2000. It also contains a brief statement that the FEC has not ruled out conducting a rule making proceeding regarding regulation of speech on the Internet.
The FEC issued a Notice of Inquiry (NOI) on November 1, 1999 stating that it was examining many questions regarding application of the Federal Election Campaign Act (FECA) to activity on the Internet. This NOI revealed that the FEC was considering treating common activities such as email and hyperlinking as political contributions or expenditures under the FECA, and hence subject to FEC regulation, reporting requirements, and/or contribution limits. The FEC received over 1,000 comments in response to its NOI. Almost all opposed any FEC action. Following this response, the FEC took no further action. In particular, it did not commence a rule making proceeding. See, TLJ stories: FEC to Review Campaign Activity on the Internet (November 8, 1999), Citizens Urge FEC to Stay Away from the Internet (January 12, 2000), Parties, Corporations, and Unions File Comments with the FEC (January 13, 2000), and Groups File Comments with FEC about Campaign Activity on the Internet (January 13, 2000).
The FEC's just released Annual Report 2000 comments on this proceeding. It states as follows: "Status of Rulemaking. Although the Commission has issued a number of advisory opinions on the application of the law to Internet activity, many issues remain unanswered. In 2000, the Commission reviewed and analyzed some 1,200 comments that it received in response to a 1999 Notice of Inquiry on the use of the Internet in campaigning. These comments will help the agency decide whether to proceed with further rulemaking on this subject."
PPI Backs Anti Spam Legislation
6/4. The Progressive Policy Institute (PPI) a think tank of the New Democrats released a paper titled "E-Mail Spam Labeling: Why the Cyberlibertarians Have It Wrong." It states that the House Judiciary Committee "gutted" HR 718, a bill sponsored by Rep. Heather Wilson (R-NM) and Rep. Gene Green (D-TX), that the House Commerce Committee had previously adopted. The PPI report also defended an amendment offered by Rep. Melissa Hart (R-PA), which was adopted by the Judiciary Committee, that would require any spam that contained pormographic content to be labeled as such. The report specifically rebuts another report by the Center for Democracy and Technology which criticized the Hart amendment. The PPI report was authored by Shane Ham.
6/5. The House Judiciary Committee issued its report on its version of HR 718.
Antitrust News
6/4. The U.S. Court of Appeals (4thCir) issued its opinion in Microbix v. Biowhittaker, a private antitrust action. Microbix filed a complaint against Biowhittaker in U.S. District Court (DMd) in 1997 alleging violation of 1 and 2 of the Sherman Act, and asserting various state law claims. The District Court granted summary judgment to the defendants on all claims. The Appeals Court affirmed in an "unpublished" opinion.
People and Appointments
6/4. Timothy Muris was sworn in as Chairman of the FTC. See, FTC release.
6/4. Thomas Horan replaced Clint Odom as Senior Legal Advisor for the FCC's Cable Services Bureau. Horan was previously an attorney in the Consumer Protection and Competition Division. Odom left the FCC. See, FCC release [PDF].
6/4. Onnig Dombalagian was named as an attorney fellow in the SEC's Division of Market Regulation, Office of Market Supervision. Dombalagian was previously an associate in the Washington DC office of the law firm of Cleary Gottlieb. Annette Nazareth, Director of the Division of Market Regulation, said that Dombalagian "will be a significant asset as the Commission works to update its regulation of the markets in light of recent innovations in technology and new trading instruments." See, SEC release.
6/4. The Cellular Telecommunications & Internet Association (CTIA) named Kimberly Kuo as its VP for Communications. She previously worked for enfoTrust networks as SVP for  Marketing and Corporate Communications. Prior to that, she was SVP for Investor Relations at Value America. She has also worked as Director of Communications for America Online, and as VP of Marketing and PR for The American Compass. She was also press secretary to former Sen. Bob Dole (R-KS). She also worked on his 1996 presidential campaign, and as Deputy Press Secretary for Vice Presidential Candidate Jack Kemp. See, release.
CDT Criticizes Anti Spam Bills
6/1. The Center for Democracy and Technology (CDT) issued a report criticizing the version of HR 718 that was adopted by the House Judiciary Committee on May 24. HR 718, the Unsolicited Commercial Electronic Mail Act of 2001, was introduced by Rep. Heather Wilson (R-NM), Rep. Gene Green (D-TX) and others on February 14. It was amended by the House Telecom Subcommittee, and again by the full House Commerce Committee. The version approved by the House Judiciary Committee is substantially different. It includes an amendment offered by Rep. Melissa Hart (R-PA) that would require that senders of unsolicited commercial e-mail to label all e-mail containing sexually oriented material. The CDT report states that the Hart amendment "would set a terrible precedent. It is fundamentally distinct from the requirement prohibiting false header information, which applies to all commercial email, regardless of content and which is subject to objective determination. In contrast, mandatory content labeling is a form of forced speech, which is as offensive to the Constitution as forced silence. And deciding when something is properly labeled or not involves the government directly in the type of picking and choosing among otherwise legal content that is also incompatible with the First Amendment." The CDT report also supports "anti-spoofing provisions", which are in both the Commerce and Judiciary versions of the bill, but not the criminal penalties. The CDT report also opposes "federalization of ISP terms of service", which is in the Commerce version.
ITAA Opposes California Discovery Bills
6/1. The Information Technology Association of America (ITAA) sent a letter [PDF] to California State Assembly Speaker Bob Hertzberg and Senate President Pro Tem John Burton opposing Assembly Bill 36 and Senate Bill 11. The letter states that "Simply by filing a lawsuit, intellectual property, business plans, employee emails, and medical records would be made public -- without a requirement for evidence of wrongdoing. Trial lawyers are proposing this self serving legislation under the guise of consumer protection. However, this is nothing more than a legal gimmick that will provide them more efficient ways to force settlement and to line their pockets." ITAA President Harris Miller stated in a separate release that "The technology industry's most valued assets -- intellectual property and other proprietary information -- will disappear when disclosed to competitors and the public under these bills. They are an attempt by certain California lawyers to line their pockets by holding the high tech industry hostage to frivolous claims and forcing fast settlements rather than risk exposure of core business models and ideas. It is the height of hypocrisy that they would push this legislation under the guise of consumer protection."
9th Circuit Rules in Trade Dress Case
6/1. The U.S. Court of Appeals (9thCir) issued its opinion [PDF] in Clicks Billiards v. Sixshooters, a trade dress infringement case. Clicks Billiards is a Texas corporation that operates a chain of billiards halls in the Southwest, including two in Phoenix, Arizona. Sixshooters is an Arizona corporation that hired a key employee of Billiards, and then opened a single billiards hall in Phoenix modeled after Clicks' halls. Clicks filed a complaint against Six in U.S. District Court (DAriz) under the Lanham Act, 15 U.S.C. 1051 et seq., alleging that Six infringed its trade dress. The district court granted summary judgment to Six, finding that Clicks had not presented sufficient evidence to raise a triable issue of fact on the basic trademark issues of functionality, secondary meaning, and likelihood of confusion. The Appeals Court reversed and remanded.
DC Circuit Affirms FCC in CNM v. FCC
6/1. The U.S. Court of Appeals (DCCir) issued its opinion in Coalition for Noncommercial Media v. FCC, a petition for review of the FCC's order swapping the status of two television channels licensed to the Western New York Public Broadcasting Association. The petition was denied.
PSINet Files Chapter 11 Petition
6/1. PSINet filed a Chapter 11 bankruptcy petition in U.S. Bankruptcy Court (SDNY). In addition, four Canadian subsidiaries filed for protection under the Companies' Creditors Arrangement Act statutes in the Ontario Superior Court of Justice. See, release.
CO Publishes Rule Changes
6/1. The Copyright Office of the Library of Congress published its final regulations for filing a claim to royalties collected under the cable statutory license, 17 U.S.C. 111, and the satellite statutory license, 17 U.S.C. 119. Under the new rules, a party who files a joint claim on behalf of multiple copyright owners must list the name and address of each copyright owner to the joint claim. The regulations take effect on July 1, 2001. See, notice in the Federal Register, June 1, 2001, Vol. 66, No. 106, at Pages 29700 - 29704. See also, PDF copy in Library of Congress web site.
FEC Fines PACs
6/1. The Federal Election Commission (FEC), the agency responsible for enforcing federal campaign finance law, assessed civil penalties against 33 entities for filing late reports during the 2000 election cycle. It fined the E*Trade Group Inc. PAC $1,725 for filing a late October Quarterly 2000 report. The FEC also fined the Viacom International Inc PAC $800, and the Cincinnati Bell Inc Federal Political Action Committee $425, for filing late their October Quarterly 2000 reports. See, FEC release.
McCormick Picked to Head USTA
6/1. The U.S. Telecom Association (USTA), a trade association which represents the baby Bell companies, named Walter McCormick to be its new President and CEO. He replaces Gary Lytle, who had briefly been Interim President and CEO following Roy Neel's resignation. Neel, who is a longtime friend and advisor of Al Gore, announced his departure after Gore lost the 2000 election. McCormick, in contrast, has Republican ties. McCormick was previously President & CEO of the American Trucking Associations. Prior to that he was a partner it the Washington DC office of the law firm of Bryan Cave, where he was head of the regulatory affairs group. Before that he was General Counsel of the Transportation Department during the Presidency of the elder George Bush. He served under Transportation Secretary Andrew Card, who is now the younger George Bush's Chief of Staff. And before that, he was on the staff of the Senate Commerce Committee, which has jurisdiction over telecommunications issues, and oversees the FCC. He was the General Counsel of the Commerce Committee in the 99th Congress. The Democrats regained control of the Senate after the 1986 elections. McCormick then became the Republican Staff Director and Chief Counsel in the 100th, 101st, and 102nd Congresses. See, USTA release.
Normal Trade Relations Status for the PRC
6/1. President Bush notified the Congress of his intent to extend Normal Trade Relations status to the People's Republic of China. Also, Secretary of State Colin Powell wrote that "The president's action is necessary despite passage of legislation last October to give permanent normal trade relations status to China, because China must accede to the World Trade Organization before permanent status takes effect. That accession has not yet happened, though negotiators from many countries are hard at work on it right now." See, Powell statement. Bush also released a statement in which he said that "Normal Trade Relations status is important if we are to promote American values of transparency and accountability and ensure that the Chinese government adheres to the rule of law in its dealings with its own people as well as with the international community." See also, Bush's letter to Congress, and memorandum of Secretary of State Powell.
FTC Obtains Preliminary Injunction Against Rhinopoint.com
6/1. The Federal Trade Commission filed a complaint in U.S. District Court (NDIll) against New Millennium Concepts, dba rhinopoint.com alleging deceptive acts or practices in violation of 5(a) of the Federal Trade Commission Act, 15 U.S.C.  45(a).
The complaint alleges that defendant falsely represented that consumers who signed up as members of rhinopoint.com, by paying an initial setup fee and disclosing personal information on the member profile form, would receive monthly marketing surveys and would be reimbursed for their monthly Internet access charges after completing the monthly surveys. The complaint further alleged that the defendant collected about $500,000 in set-up fees and obtained consumers' personal information, but did not follow up with marketing surveys or pay Internet access fees for most of the consumers. In addition, the Court entered a stipulated preliminary injunction order that prohibits misrepresentations, freezes the defendants' assets, and bars the use of the consumer data, pending trial. See also, FTC release.
People and Appointments
6/1. U.S. Attorney General John Ashcroft appointed Patrick O'Toole interim United States Attorney for the Southern District of California. He succeeds Gregory Vega who resigned effective May 31. O'Toole has been with the United States Attorney's office in San Diego since 1982. See, release.
6/1. The World Intellectual Property Organization's Coordination Committee approved proposals by Director General Kamil Idris to appoint two new Deputy Directors General and extend the mandates of two current Deputy Directors General and two Assistant Directors General. The Committee supported the nominations of Ambassador Philippe Petit of France and Ambassador Rita Hayes of the U.S. to the posts of Deputy Director General. The Committee also extended the mandates of Roberto Castelo of Brazil and Shozo Uemura of Japan. The Committee also extended the terms of Francis Gurry of Australia and Geoffrey Yu of Singapore as Assistant Directors General. See, release.
More News
6/1. The Office of Personnel Management (OPM) approved a request for a special pay scale by the USPTO for patent examiner and patent examiner related positions. See. USPTO release.
6/1. Roosevelt Bailey was sentenced in U.S. District Court (SDInd) to 18 months imprisonment following his guilty plea to trafficking in counterfeit computer software, including Adobe products, and tax evasion. See, DOJ release.

Go to News Briefs from May 26-31, 2001.