News Briefs from June 11-15, 2001

Ninth Circuit Rules in Electronic Surveillance Case
6/15. The U.S. Court of Appeals (9thCir) issued an en banc opinion [PDF] in Cramer v. Consolidated Freightways, a case regarding surreptitious electronic surveillance of employees and the right to privacy. The Appeals Court rejected an argument that the LMRA preempted this state law privacy action.
Facts and Trial Court Proceedings. Consolidated Freightways (CF), a trucking company, installed hidden cameras and microphones in employee bathrooms. This violates the California criminal code. Employees and others filed two separate complaints in California Superior Court alleging violation of privacy based upon state law. CF removed both cases to the U.S. District Court (CDCal), where they were consolidated. CF argued that 301 of the Labor Management Relations Act (LMRA) preempted the state law action because the plaintiffs were subject to a collective bargaining agreement (CBA). The trial court dismissed as to all plaintiffs, except those who were not employees of CF.
Holding. The Appeals Court was unimpressed with the preemption argument. It held that since the CBA did not cover privacy claims, there could be no preemption. However, the Court continued that " when an employer's surreptitious surveillance constitutes a per se violation of established state privacy laws, the employees affected thereby may bring an action for invasion of privacy regardless of the terms of the collective bargaining agreement governing their employment." The parties to a CBA cannot bargain to do that which is illegal. Judge Raymond Fisher wrote the opinion of the en banc panel. Judge Tallman wrote a concurring opinion. Judge O'Scannlain dissented. Reversed and remanded.
Group One v. Hallmark
6/15. The U.S. Court of Appeals (FedCir) issued its opinion in Group One v. Hallmark Cards, a patent infringement and trade secrets case. On summary judgment, the District Court ruled the patent in suit was invalid pursuant to the on sale bar, 35 U.S.C.  102(b). The Appeals Court affirmed on the state law trade secrets claim, but reversed as to the on sale bar. (Federal Circuit opinions are available from its web site.)
ORBIT Act Report
6/15. The FCC sent its annual report [PDF] to Congress on progress made in achieving the goals of the Open-market Reorganization for the Betterment of International Telecommunications (ORBIT) Act. The Act seeks "to promote a fully competitive global market for satellite communication services for the benefit of consumers and providers of satellite services and equipment by fully privatizing the intergovernmental satellite organizations, INTELSAT and Inmarsat". The report concludes that "policy goals regarding the promotion of a fully competitive global market for satellite communications services are being met ... ."
People and Appointments
6/15. FCC Commissioner Kathleen Abernathy named Bryan Tramont to be her Senior Legal Advisor. He was previously Senior Legal Advisor to former FCC Commissioner Harold Furchtgott-Roth. He is also currently an adjunct professor at Catholic University in Washington DC. Tramont is also a former associate in the Washington DC office of the law firm of Wiley Rein & Fielding. Abernathy also named Ann Monahan to be her Confidential Assistant, and Tjuana Price to be a Staff Assistant (with responsibility of scheduling). See, release.
6/15. USTR Robert Zoellick named Regina Vargo Assistant USTR for the Americas. See, USTR release.
DC Circuit Upholds FCC in Qwest v. FCC
6/15. The U.S. Court of Appeals (DCCir) issued its opinion in Qwest v. FCC, a petition for review of an FCC order. The Appeals Court denied the petition of Qwest and others to the FCC's order granting complaints by paging carriers that local exchange carriers (LECs) improperly imposed charges for facilities used to deliver LEC originated traffic and for Direct Inward Dialing numbers in violation of 201(b) and 251(b)(5) of the Communications Act and regulations thereunder.
DC Circuit Upholds FCC in NECA v. FCC
6/15. The U.S. Court of Appeals (DCCir) issued its opinion in NECA v. FCC, a petition for review of an FCC order adopting a formula for distributing money from the Universal Service Fund (USF) to subsidize high cost telephone service providers and thereby promote telephone subscribership. The Appeals Court denied the petition.
Judge Dismisses All Claims in DC Tower Case
6/15. The U.S. District Court (DDC) issued its opinion [PDF] in American Towers v. District of Columbia. The District of Columbia (DC) issued a permit to American Towers (AT) to build a 756 foot communications tower in Northwest DC. AT started construction. DC then revoked the permit. AT filed a complaint for declaratory and injunctive relief that would allow it to proceed with construction, asserting violations of several sections of the Communications Act, and the equal protection and due process clauses of the Constitution. The Court ruled for DC on all claims, and dismissed with prejudice.
More News
6/15. The FCC's Office of Engineering and Technology provided a tutorial on voice over the Internet, including next generation networks based on VoIP, soft switches, media gateways, media servers, VoIP standardization status, and market drivers of VoIP technologies. See, FCC notice.
6/15. The Senate Government Affairs Committee's Subcommittee on Investigations held the second of two hearings on cross border fraud, focusing on U.S. Canadian law enforcement cooperation.
Subcommittee Approves USPTO Authorization Act
6/14. The House Judiciary Committee's Subcommittee on Courts, Internet and Intellectual Property approved HR 2047, the "Patent and Trademark Office Authorization Act of 2002," with one amendment, by a unanimous voice vote. The bill, which is sponsored by Rep. Howard Coble (R-NC), Rep. Howard Berman (D-CA), Rep. John Conyers (D-MI), and Rep. Johnny Isakson (R-GA), would reauthorize appropriations for the USPTO.
HR 2047 provides that there is "authorized to be appropriated to the United States Patent and Trademark Office for salaries and necessary expenses for fiscal year 2002 an amount equal to the fees collected in fiscal year 2002." Hence, it seeks to end the diverson of USPTO user fees to fund other government programs. HR 2047 would also require the USPTO to develop a strategic plan that sets forth goals and methods regarding enhancing patent and trademark quality, reducing patent and trademark pendancy, and developing computer systems. Also, HR 2047 would authorize $50 Million for FY 2002 to develop an electronic system for the filing and processing of patent and trademark applications. The amendment adopted by the Subcommittee provides that this $50 Million authorization is for FY 2002 only.
Sen. Feinstein Introduces Privacy Bill
6/14. Sen. Dianne Feinstein (D-CA) introduced S 1055, a bill titled the Privacy Act of 2001. This is a long and comprehensive bill dealing with many privacy related topics. It would restrict the dissemination of personally identifiable information, limit the use of social security numbers, amend the Gramm Leach Bliley bill, regulate the use of medical information privacy, and extend drivers license privacy. The bill was referred to the Senate Judiciary Committee. See, Feinstein release.
Personally Identifiable Information. Title I of the bill provides that "It is unlawful for a commercial entity to collect personally identifiable information and disclose such information to any nonaffiliated third party for marketing purposes or sell such information to any nonaffiliated third party, unless the commercial entity provides (A) notice to the individual to whom the information relates in accordance with the requirements of subsection (b); and (B) an opportunity for such individual to restrict the disclosure or sale of such information." It would also preempt similar state laws, and provide civil enforcement authority to the FTC.
Social Security Numbers. Title II of the bill provides limitations on the use of social security numbers. It provides that "no person may display any individual's social security number to the general public without the affirmatively expressed consent of the individual ... no person may sell or purchase any individual's social security number without the affirmatively expressed consent of the individual ... No person may obtain any individual's social security number for purposes of locating or identifying an individual with the intent to physically injure, harm, or use the identity of the individual for any illegal purpose". This title of the bill provides for criminal enforcement and a private right of action.
Financial Information. Title III of the bill contains comprehensive amendments to the Gramm Leach Bliley bill regarding the sale of nonpublic personal information.
Health Information. Title IV of the bill contains comprehensive prohibitions on the sale of health information.
Sen. Murray Introduces Telecom Planning Grant Bill
6/14. Sen. Patty Murray (D-WA) and others introduced S 1056, a bill titled the Community Telecommunication Planning Act of 2001. The bill authorizes the federal government to make grants totaling $60 Million in FY 2002 (and unspecified amounts thereafter) for "community telecommunications infrastructure planning". Local governments, non-profits, and public utilities would be eligible. Priority would go to rural and underserved areas. The bill was referred to the Senate Commerce Committee. She said in the Senate that "This bill can open the door for thousands of small and rural areas across our state to tap the potential of the information economy." See, Murray release.
Sen. Byrd Addresses Trade with China
6/14. Sen. Robert Byrd (D-WV) addressed a hearing of the U.S. China Congressional Commission. He stated that the PR of China is "operating in the United States, to procure advanced dual-use and military technology, such as high-performance computers and navigation and communications equipment. Some sources estimate that there are as many as 3,000 Chinese government front companies operating in the United States." See, statement.
Armey Asks Ashcroft to Consider Constitutionality of Carnivore
6/14. House Majority Leader Dick Armey (R-TX) wrote a letter to Attorney General John Ashcroft regarding the Justice Department's e-mail surveillance system know as Carnivore. Rep. Armey asked AG Ashcroft to consider whether the FBI's use of Carnivore constitutes an unwarranted search in violation of the 4th Amendment, in light of the Supreme Court's June 11 opinion [PDF] in Kyllo v. U.S.
Armey stated that "The Court ruled that thermal imaging devices allowed 'police technology to erode the privacy guaranteed by the Fourth Amendment.' " Armey quoted from Kyllo: "Where... the Government uses a device that is not in general public use, to explore details of a private home that would previously have been unknowable without physical intrusion, the surveillance is a Fourth Amendment "search," and is presumptively unreasonable without a warrant." He then suggested that "It is reasonable, then, to ask whether the Internet surveillance system formerly known as "Carnivore" similarly undermines the minimum expectation that individuals have that their personal electronic communications will not be examined by law enforcement devices unless a specific court warrant has been issued."
E-911 Hearing
6/14. The House Commerce Committee's Telecom Subcommittee held a hearing titled "Ensuring Compatibility with Enhanced 911 Emergency Calling Systems: A Progress Report." See, prepared statements of Rep. Billy Tauzin (R-LA) and Rep. Fred Upton (R-MI). See also, prepared testimony of witnesses: Michael Amarosa (True Position), Steve Clark (U.S. Cellular), James Nixon  (VoiceStream Wireless), Andrew Rimkus (Airbiquity), Steve Souder (9-1-1 Emergency Communications Center), Tom Sugrue (FCC Wireless Telecommunications Bureau).
House Policy Committee Backs Trade Promotion Authority
6/14. House Policy Committee, a Republican group chaired by Rep. Chris Cox (R-CA), issued a statement in support of granting trade promotion authority the President. The report states that "Trade Promotion Authority does not mean that Congress gives carte blanche to the President and the Executive Branch. However, because our trading partners cannot negotiate separately with 535 Members of Congress, it is an essential prerequisite to winning meaningful international trade agreements. Just as labor contracts are negotiated between designated representatives, rather than among all union members and all members of the corporate board, so too the United States must speak with one voice in trade negotiations."
Cross Border Fraud Hearings
6/14. The Senate Government Affairs Committee's Subcommittee on Investigations held the first of two hearings on cross border fraud, focusing on U.S. Canadian law enforcement cooperation. The hearing continues on June 15 at 10:00 AM in Room 342 of the Dirksen Building.
Appellate Jurisdiction in Patent Cases
6/14. The U.S. Court of Appeals (9thCir) issued its opinion [PDF] in Breed v. Hughes Aircraft. The Appeals Court transferred the appeal to the U.S. Court of Appeals for the Federal Circuit for lack of jurisdiction. Ben Breed is an inventor who consulted for Hughes Aircraft until the dispute which led to this litigation. He asserts that Hughes failed to honor an oral agreement regarding the development of technology, by failing to give him work after the DARPA awarded Hughes a contract involving magnetics. Breed filed a complaint in U.S. District Court against Hughes Aircraft alleging 13 state law claims relating to breach of contract and misappropriation of trade secrets, and one claim for correction of named inventor under the patent statute, 35 U.S.C. 256. Breed asserted jurisdiction in the District Court based on both diversity and patent jurisdiction. The District Court granted summary judgment in favor of Hughes, and Breed appealed to the Ninth Circuit. The Appeals Court dismissed, without reaching the merits or the appeal, because the District Court's jurisdiction was based in part on 28 U.S.C. 1338. It held that the Federal Circuit has exclusive jurisdiction over of any appeal from a final decision of the District Court if the jurisdiction of that court was based, in whole or in part, on 1338.
Export Controls
6/14. The GAO released a report [PDF] titled "Export Controls: State and Commerce Department License Review Times Are Similar." The report concluded that "In fiscal year 2000, the average State Department license application review took 46 days while the average Commerce Department review took 50 days." Pursuant to the Arms Export Control Act, the State Department controls the export and import of defense articles and services. However, the Export Administration Act and Executive Order 12981 give the Department of Commerce authority to review and issue licenses for the export of dual use commodities. This is items having both commercial and military applications, and includes many software and computer hardware products. The report was prepared at the request of Sen. James Inhofe (R-OK) and Sen. Daniel Akaka (D-HI), of the Senate Armed Services Committee's Subcommittee on Readiness and Management Support.
Online Fraud
6/14. The FTC announced a new round of enforcement actions against the fraudulent marketing of supplements and other health products on the Internet. See, FTC release.
People
6/14. SEC Commissioner Paul Carey died. See, SEC release.
6/14. The Senate confirmed Charles James to be an Assistant Attorney General. He will be responsible for the Antitrust Division of the Department of Justice.
6/14. The National Cable and Telecommunications Association elected new directors at its annual convention in Chicago, Illinois. Michael Willner, President of Insight Communications, was elected Chairman of the Board. See, NCTA release.
6/14. Verizon named David Valdez to run its privacy efforts. He was previously employed at the NTIA. He replaces Shelley Harms. See, release.
More News
6/14. The Supreme Court of California issued an opinion [PDF] in Aguilar v. Atlantic Richfield, an antitrust case. The Court's opinion addresses standards for ruling on motions for summary judgment in antitrust actions for unlawful conspiracy.
6/14. The USTR released a statement regarding US - PRC discussions regarding the PRC's accession to the WTO.
6/14. The Senate passed S 1, the Better Education for Students and Teachers (BEST) Act, by a vote of 91 to 8. The House previously passed a different version of the education bill.
Judiciary Committee Reports HR 1542 Unfavorably
6/13. The House Judiciary Committee held a meeting to mark up HR 1542, the Tauzin Dingell bill, and HR 1698 and 2120, a pair of competing bills sponsored by Cannon and Conyers. The Committee adopted an amendment to HR 1542 offered by Rep. James Sensenbrenner (R-WI), and then voted to report the bill as amended unfavorably. The Committee rejected HR 2120 by a vote of 15 to 19. The Committee took no action on HR 1698. The meeting was brief by Judiciary Committee standards. Only one roll call vote was taken. Subsequently, all parties claimed victory. See, committee release.
Tauzin Dingell. HR 1542, titled the Internet Freedom and Broadband Deployment Act of 2001, is sponsored by Rep. Billy Tauzin (R-LA) and Rep. John Dingell (D-MI), the Chairman and ranking Democrat on the House Commerce Committee. It was reported by the Commerce Committee, after long and bitter mark up sessions last month. Its backers, including the Regional Bell Operating Companies (RBOCs), argue that it will promote the deployment of broadband services. It is a regulatory relief bill. The RBOCs are required by the Telecom Act of 1996 to open their local facilities to competitors (Section 251); they are also barred from offering in region interlata service until they have satisfied the FCC that they have met a checklist of items pertaining to local competition (Section 271). The bill would, among other things, provide regulatory relief for interlata data (but not voice) services. Supporters of HR 1542 argued at the mark up that broadband cable services are not regulated, so DSL service should not be either.
Sensenbrenner Amendment. The Judiciary Committee, which has jurisdiction over antitrust matters, was given a sequential referral granting it only limited time and jurisdiction over HR 1542. The Committee was not permitted to rewrite the bill. Rather, it had authority only over the Attorney General's consultative authority under Section 271. Pursuant to this limited grant, Rep. Sensenbrenner, the Chairman of the Committee, offered an amendment with two specific provisions. First, while HR 1542 removes certain regulation of RBOCs by the FCC, the Sensenbrenner amendment would then replace it with antitrust regulation of the RBOCs by the DOJ Antitrust Division. The amendment states that "Section 271 ... is amended by adding at the end the following: ... Neither a Bell operating company, nor any affiliate of a Bell operating company, may begin providing high speed data service or Internet backbone service in any in-region State ... unless it files with the Attorney General of the United States an application to provide such service; and ... the Attorney General ... approves such application ..." The Sensenbrenner amendment would also reverse the opinion of the U.S. Court of Appeals in Goldwasser v. Ameritech, in which the Court addressed the application of antitrust law to RBOCs. Proponents of HR 1542 argued against the amendment, and argued that it was beyond the jurisdicition of the Judiciary Committee. Chairman Sensenbrenner ruled the Sensenbrenner amendment to be in order. The Committee then adopted the amendment by a voice vote.
The Committee then adopted by a voice vote a motion made by Rep. Chris Cannon (R-UT) to report the bill, as amended, unfavorably. Cannon is one of the leaders of the opposition to HR 1542.
Legislative Intent. The committee's consideration of HR 1542 illustrates the difficulty of discerning a "legislative intent." Much of the Committee's debate and compromise was conducted prior to the public meeting. The Committee members did not debate or explain the meaning of their reporting the bill unfavorably. There was no roll call vote on either the passage of the Sensenbrenner amendment, or the decision to report HR 1542 negatively. Consequently, immediately after the meeting, Members, industry representatives and committee staff offered conflicting interpretations of the committee's intent in statements that are not a part of the legislative record.
Opponents of HR 1542 called the Committee's action a double victory. According to Julian Epstein, chief minority counsel, the HR 1542 lobby was defeated when the Committee adopted the Sensenbrenner amendment; and it was defeated again when HR 1542 was reported unfavorably. Supporters of HR 1542, such as Ben Cline, Rep. Bob Goodlatte's Chief of Staff, offered a different spin. They argued that by reporting HR 1542 as amended the Committee was expressing its intent that the version of HR 1542 reported by the Commerce Committee was the better bill. This spin does not address why HR 1542's supporters were not able to defeat the Sensenbrenner amendment. Had they had a majority of the votes, they likely would have asked for a roll call vote.
Russell Frisby, President of the Competitive Telecommunications Association (CompTel), spoke with reporters after the meeting, and issued release. He stated that "Today is also a great victory for the competitive industry. We set out with two simple goals, and we have achieved all of them. HR 1542 has been negatively referred and strong anti-trust enforcement has once again reclaimed its rightful place in telecommunications." In contrast, Gary Lytle, P/CEO of USTA, a group which represents the RBOCs, stated in a release that "Today, the Judiciary Committee rejected a version of H.R. 1542 that would have added additional burdensome, unfair regulations to the provision of high-speed Internet access by telephone companies, and we expect this version of the bill is likely dead."
If the bill proceeds, it would go next to the House Rules Committee, and then to the House floor, pursuant to whatever rule is adopted by the Rules Committee. Whether the House Republican leadership, with so many pressing items on its agenda, will bring this bill to the floor, is another question. The bill's consideration would take time; the debate would be a divisive and bitter; and, the bill has very little chance of passing the Senate.
The House Judiciary Committee also narrowly rejected HR 2120, the Broadband Antitrust Restoration and Reform Act. This bill was introduced on June 12 by Rep. Chris Cannon (R-UT), Rep. John Conyers (D-MI), Rep. Darrell Issa (R-CA), and Rep. Jerrold Nadler (D-NY).
Sarbanes Plans to Take S 149 to Senate Floor
6/13. Sen. Paul Sarbanes (D-MD), the new Chairman of the Senate Banking Committee, addressed S 149, the Export Administration Act of 2001, during an unrelated hearing on the nomination of Roger Ferguson to be a Governor of the Federal Reserve System. Sen. Sarbanes said that "the Committee reported out earlier this year a reauthorization of the Export Administration Act by a 19-1 vote. That legislation has been strongly endorsed by the Administration and we hope to take it up on the Senate floor as soon as the floor schedule permits." See, statement. This bill would ease restraints on the export of most dual use products, such as computers and software.
New Democrats Announce E-genda 2001
6/13. The New Democratic Coalition, a group of moderate Congressional Democrats, released its e-genda 2001. See, release.
Trade Promotion Authority Bill Introduced in House
6/13. Rep. Phil Crane (R-IL) and others introduced a bill in the House to grant the President trade promotion authority, which is also known as fast track authority. The bill would give the President the authority to negotiate trade agreements that the Senate can approve or reject, but not amend. The bill does not give the President authority to include non trade related issues, such as labor or environmental provisions, in trade agreements. Rep. Crane is Chairman of the House Ways and Means Committee's Subcommittee on Trade.
Commerce Secretary Don Evans released a statement in which praised Rep. Crane, and stated the case for fast track authority. He wrote: "There are more than 130 preferential trade agreements in the world today. The U.S. belongs to two. We have to get off the sidelines and back into the game. We must provide our negotiators with the power they need to sit down at the bargaining table and secure new trade agreements that open more markets. If we don't move ahead, we risk falling behind." Similarly, Sen. Charles Grassley (R-IA), the ranking Republican on the Senate Finance Committee, stated that "It's time to move beyond ideological differences over trade promotion authority and start looking at concrete proposals. Congressman Crane is putting forward a strong, specific proposal for members' consideration. I look forward to working with him and other members to reach a broad, bipartisan consensus about the scope and substance of trade promotion authority. The introduction of this bill is a good start."
FCC's ECFS System is Down
6/13. The FCC stated that "the Electronic Comment Filing System (ECFS) experienced major hardware failure, which has rendered the system unavailable for receiving and viewing of submissions in docketed and rulemaking proceedings. We are currently working to resolve the technical problems. However, due to the serious nature of the technical problems, ECFS will not be available until Monday, June 18, 2001." See, FCC release [PDF].
Inslee Addresses Unions and High Tech Companies
6/13. Rep. Jay Inslee (D-WA) spoke in the House about unions and high tech companies. He stated that "a lot of folks have thought in the new economy where we have high tech jobs and software and biotech that the importance of collective bargaining or organized labor would fade away. I just want to say today that from the perspective of the high tech economy represented by my district, the importance of collective bargaining to people remains just as large and fundamental as it always has been in this country." He then went on to discuss events at a hospital and at the University of Washington. Rep. Inslee represents a Seattle area district that includes Redmond, home of Microsoft.
Roger Ferguson
6/13. The Senate Banking Committee held a hearing on the nomination of Roger Ferguson to be a Member of the Board of Governors of the Federal Reserve System. Ferguson, who is currently a Governor, was the Board of Governors' point man on Year 2000 conversion preparations. The Committee will vote on the nomination at its June 20 oversight hearing on the condition of the U.S. financial system. Sen. Paul Sarbanes (D-MD), the Chairman of the Committee said that Ferguson "has served with great distinction." See, statement. See also, prepared statement of Ferguson.
More News
6/13. Rep. Rush Holt (D-NJ) introduced HR 2148, a bill to reestablish the Office of Technology Assessment. It was referred to the House Science Committee.
6/13. The House Science Committee approved HR 100, the National Science Education Act, sponsored by Rep. Vern Ehlers (R-MI), and HR 1858, the National Mathematics and Science Partnerships Act, sponsored by Rep. Sherwood Boehlert (R-NY). See, release.
6/13. Jesus Oquendo was sentenced in U.S. District Court (SDNY) to 27 months in prison for computer hacking and electronic eavesdropping. He is a former computer security specialist whose hacking began with physical access to the offices of his first victim. See, release.
Rep. Sawyer Introduces Privacy Bills
6/12. Rep. Tom Sawyer (D-OH) introduced HR 2135, the Consumer Privacy Protection Act. It was referred to the House Commerce Committee. Rep. Sawyer also introduced HR 2136, Confidential Information Protection Act, a bill to protect the confidentiality of information acquired from the public for statistical purposes. It was referred to the Government Reform Committee.
Rep. Sawyer described his two bills in a release. He stated that "the Sawyer Consumer Privacy Protection Act ... provides for notice of potential secondary uses of information; consumer choice for personal information such as phone numbers and addresses; consumer consent to allow dissemination of Social Security numbers and financial information; and giving consumers improved access to their personal information." He also stated that "On the federal government side, more than 70 federal agencies collect individual and business data, but only 12 are covered under OMB issued regulations providing some form of confidential data protection. The Sawyer Confidential Information Protection Act would extend the protections government wide."
Bunning Re-Introduces Social Security Privacy Bill
6/12. Sen. Jim Bunning (R-KY) and Sen. Tom Harkin (D-IA) introduced S 1014, a bill to amend the Social Security Act to enhance privacy protections for individuals, to prevent fraudulent misuse of the Social Security account number. It was referred to the Finance Committee. This is a revision and re-introduction of a bill sponsored by Sen. Bunning in the 106th Congress, S 2876.
Sen. Bunning explained the bill in the Senate. He stated, "This bill prohibits the sale of Social Security numbers by the private sector, Federal, State and local government agencies. This bill strengthens existing criminal penalties for enforcement of Social Security number violations to include those by government employees. It amends the Fair Credit Reporting Act to include Social Security number as part of the information protected under the law, enhances law enforcement authority of the Office of Inspector General, and allows Federal courts to order defendants to make restitution to the Social Security trust funds. This bill would also prohibit the display of Social Security numbers on drivers licenses, motor vehicles registration, and other related identification records, like the official Senate ID Card."
Muris Praises Pitofsky and Comments on Antitrust
6/12. The new Federal Trade Commission Chairman, Timothy Muris, gave a speech at the National Press Club in Washington DC in which he praised former FTC Chairman Robert Pitofsky. He reviewed Pitofsky's role in reforming the FTC over the last 30 years, and his tenure as Chairman for the last 6 years. Muris also added a few comments about his views on antitrust law, and the application of antitrust law to intellectual property. See also, FTC release.
Muris addressed the role of economics in antitrust. "I believe that economics has a crucial role in informing the FTC's judgment about how best to carry out its mission. Modern discussion about developments in industrial organization economics often focuses on putting economic ideas into allegedly neat "Chicago" and "Post-Chicago" compartments. This is a sterile exercise. Regarding antitrust, we must have solid economic analysis that is firmly grounded in facts and real world institutions. These traits characterize what might simply be called good economics, rather than economics of any 'school.' "
Muris continued that "there is widespread agreement that the purpose of antitrust is to protect consumers, that economic analysis should guide case selection, and that horizontal cases, both mergers and agreements among competitors, are the mainstays of antitrust. Moreover, today there is bipartisan recognition that antitrust is a way of organizing our economy. A freely functioning market, subject to the rules of antitrust, provides maximum benefits to consumers."
Finally, Muris touched on intellectual property. He stated: "No field of law better demonstrates the Pitofsky Commission's willingness to engage difficult and complex matters than the relationship between antitrust doctrine and intellectual property. In these and other areas, the Commission confronted special challenges posed by innovation competition, e-commerce, globalization, and rapid technological change. Although I have disagreed with some of the Pitofsky Commission's initiatives here, we agree that the potential for anticompetitive abuse of intellectual property is an increasingly important area. While recognizing the necessity of protecting valid intellectual property rights, future Commissions will no doubt remain active."
House Committee Holds Hearing on Export Controls
6/12. The House International Relations Committee held a hearing on the Export Administration Act, which expired in 1990. Since then the administration has used a series of temporary emergency powers to continue its export control regime. The current extension expires on August 20. There is legislation pending to extend the act, and reform the export control regime.
Rep. Henry Hyde (R-IL), the Chairman of the Committee, presided. He said in his opening statement that "we face a growing proliferation threat from countries on our terrorism list, such as Iran, Iraq, Libya and North Korea, but we also confront a resurgent China -- a country whose marketplace attracts our high-tech companies and whose military build-up concerns our defense planners." Rep. Tom Lantos (D-CA), the ranking Democrat, was also active at the hearing, which was sparsely attended by other members of the Committee.
The Committee heard from and questioned two panels of witnesses. First, there was a legislative panel made up of Sen. Phil Gramm (R-TX), Sen. Fred Thompson (R-TN), and Rep. Chris Cox (R-CA). Second, the Committee heard from a panel made up of Richard Cupitt (University of Georgia), Paul Freedenberg (Association for Manufacturing Technology), and Dan Hoydish (UNISYS). See, prepared statements of Cupitt, Freedenberg, and Hoydish.
Sen. Gramm advocated reforming the export control regime to try to meet two objectives. Gramm stated that America's objectives are to "dominate the world in terms of high tech production and technology". Also, "as the the world's only superpower ... we want to protect those items that have a substantial impact potentially on our national security." He advocated passage of S 149, the Export Administration Act of 2001, sponsored by Sen. Mike Enzi (R-WY). It would ease restraints on the export of most dual use products, such as computers and software. The Senate Banking Committee approved S 149 by a vote of 19 to 1 on March 22. Gramm stated that there are now 90 to 95 votes in the Senate to pass the bill.
Sen. Thompson testified in opposition to the Export Administration Act of 2001. He raised several specific objections. He stated that the bill's definition of "foreign availability" is too broad. He that the standard imposed upon the President to stop export of items subject to foreign availability is too high. He stated that he wants the Defense Department to have more of a say in the process. He also wants a "blue ribbon commission" to study the issue before the Congress acts. He added that the opponents of the bill in the Senate include Senators Helms, Kyl and Shelby.
Rep. Cox testified regarding the technology acquisition program of the People's Republic of China. He stated that under the current system, "we are achieving the worst of all possible worlds". He stated that the U.S. is gaining little security from its current export control regime. He advocated moving from a unilateral to a multilateral system.
Deadlines Set for FNPRM on Spread Spectrum Devices
6/12. The FCC published a Further Notice of Proposed Rulemaking (FNPRM) in the Federal Register regarding spread spectrum devices. This FNPRM proposes to revise the rules for frequency hopping spread spectrum systems operating in the 2.4 GHz band to reduce the amount of spectrum that must be used with certain types of operation, and to allow new digital transmission technologies to operate pursuant to the same rules as spread spectrum systems. This FNPRM was adopted by the FCC on May 10. This publication also sets deadlines for comments. Comments must be filed on or before August 27, 2001, and reply comments must be filed on or before September 25, 2001. See, Federal Register, June 12, 2001, Volume 66, Number 113, at Page 31585 - 31589. (ET Docket 99-231.)
Frequency hopping spread spectrum technology is used to increase bandwidth in wireless computer local area networks and wireless cable modems. Many technology companies plan to produce Internet devices, computer peripherals, hardware components, software, or services in this new market. Wire networks are often too expensive or too complicated for residential customers and small businesses.
Tauzin Dingell News
6/12. American Enterprise Institute (AEI) Resident Scholar Tom Hazlett wrote a letter to House Judiciary Committee Chairman James Sensenbrenner (R-WI) disputing the June 5 testimony of AEI Resident Fellow James Glassman at the Committee's hearing on HR 1542. Glassman criticized HR 1542 and stated that market uncertainty resulting from House consideration of HR 1542 has reduced the flow of investment capital to CLECs and driven down CLEC stock prices.
Tauzin Opposes SEC Regulation of Financial Portals
6/12. Rep. Billy Tauzin (R-LA), Chairman of the House Commerce Committee, wrote a letter to Acting SEC Chairman Laura Unger stating that "The SEC needs to be careful not to create the impression that it is considering regulation of Internet portals. Internet portals do not fall within the jurisdiction of the SEC. Absent direction from Congress, there is no basis for the SEC to extend regulation to Internet portals."
The SEC held a public roundtable on May 23 on the issue of regulating financial portals as broker dealers. Also, on March 2, Unger gave a speech on this topic. She stated that "Financial portals provide a central location where investors can find all types of financial information and portfolio analysis tools. They can aggregate their financial account data, and they can also click on hyperlinks to broker-dealer websites to open brokerage accounts and enter trades. ... But as portals have gained in popularity, with Yahoo! Finance and other financial portals becoming household words, broker-dealers are increasingly finding themselves competing with the financial portals for customers. At least one of the questions broker-dealers ask is why aren't the portals registered? My first question, though, is: what are the portals doing? What are their relationships with the broker-dealers they hyperlink to? What are their business arrangements and compensation arrangements? How do the hyperlinks work, and what do they look like? "
Lamar Smith Introduces Broadband Loans Bill
6/12. Rep. Lamar Smith (R-TX) introduced HR 2139, the Rural America Broadband Deployment Act, a bill to create a program at the Department of Agriculture to provide loans to entities that deploy broadband services in rural areas. The bill would authorize the appropriate of $100 Million for each of fiscal years 2002 through 2004. The bill defines "broadband" as at least 200 Kbps downstream. The bill was referred the Agriculture Committee and the Commerce Committee.
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6/12. Verizon filed a complaint in U.S. District Court (NDCal) against Covad alleging that it falsified complaints about Verizon's service. Covad is a competitive DSL service provider. See, Verizon release.
6/12. The House Judiciary Committee's Subcommittee on the Constitution held an oversight hearing titled "Constitutional Issues Raised by Recent Campaign Finance Legislation Restricting Freedom of Speech."
Muris Fills Top FTC Positions
6/11. The new Federal Trade Commission Chairman, Tim Muris, announced his selection of top staff. Joseph Simons will be Director of the Bureau of Competition, which carries out the FTC's antitrust responsibilities. Howard Beales will be Director of the Bureau of Consumer Protection, which handles, among other things, online privacy and fraud issues. David Scheffman will be Director of the Bureau of Economics. William Kovacic will be General Counsel. Anna Davis will be Director of Congressional Relations. See, FTC release.
Joseph Simons (Competition Bureau) was a partner is the Washington DC office of the law firm of Clifford Chance. He focused on representing clients before the FTC, DOJ Antitrust Division, and other agencies in antitrust and regulatory matters. He also worked with Muris at the FTC during the late 1980s. See, Clifford Chance bio.
Howard Beales (Consumer Protection Bureau) is a "Chicago school" economist who was a professor at the business school at George Washington University in Washington DC. He was an Associate Professor of  Strategic Management & Public Policy in the School of Business and Public Management. He specializes in consumer research, contract law, economics of commercial free speech, applied macro-economics, advertising, public policy toward business, safety and health regulations. Beales and Muris worked together at the FTC in the 1980s. They have also co-authored academic works. See, Howard Beales and Timothy Muris, State and Federal Regulation of National Advertising, The AEI Press, Washington DC, 1993. See, Amazon listing (out of print).
David Scheffman (Bureau of Economics) is yet another former FTC employee picked by Muris. He worked at the FTC from 1979 through 1988, including as Director of the Bureau of Economics. Scheffman, who will join the FTC on June 25, is an economics professor at Vanderbilt University's Owen Graduate School of Management. See, Vanderbilt bio.
William Kovacic (General Counsel) was a professor at The George Washington University Law School. He worked at the FTC from 1979 through 1983, first with the Bureau of Competition's Planning Office and later as an attorney advisor to Commissioner George Douglas. He also was a professor at George Mason University School of Law, where Muris also taught. Law students may also know of Kovacic as an author of the nutshell titled Antitrust Law and Economics [Amazon]. See, GWU bio.
Anna Davis (Congressional Relations) also worked at the FTC in the 1980s. Most recently, she was Director of JD Career Services at Georgetown University Law Center.
9th Circuit Certifies Trade Secrets Question to California Court
6/11. The U.S. Court of Appeals (9thCir) issued an order [PDF] in Cadence v. Avant certifying a question to the California Supreme Court in a theft of trade secrets case. The question is: "Under the California Uniform Trade Secrets Act ("UTSA"), Cal. Civ. Code 3426, when does a claim for trade secret infringement arise: only once, when the initial misappropriation occurs, or with each subsequent misuse of the trade secret?"
Cadence and Avant compete in the field of integrated circuit design automation. A key employee of Cadence left to go to work for Avant. Cadence objected. After negotiations, the two companies entered into a settlement agreement that included a mutual general release. It was later discovered that Avant had copied certain Cadence source code line by line prior to the date of the release. Cadence filed a complaint in U.S. District Court (NDCal) against Avant alleging theft of its copyrighted and trade secret source code. Avant argued that because Cadence had released all its claims existing at the time of the release, any claims based on continuing or future misuse of trade secrets that were stolen prior to the date of the release are barred. Cadence argued that the only claims it had released were those for misappropriation occurring before the effective date of the release, and not claims for continuing misuse of its trade secrets after the date of the release. The Appeals Court wrote that the question certified to the California Supreme Court is dispositive of the case, yet not answered by the statute or California precedent.
Microsoft v. Bristol
6/11. The U.S. Court of Appeals (2ndCir) issued its opinion in Microsoft v. Bristol Technology vacating Judge Hall's award of $1 Million in punitive damages based upon a jury verdict that awarded Bristol $1 in compensatory damages.
Bristol filed its 14 count Complaint in the U.S. District Court (DConn) against Microsoft in 1998. 12 of the counts alleged violations of federal or state antitrust law. The jury ruled for Microsoft on all of these counts. A very small part of the case was a claim that Microsoft violated the Connecticut Unfair Trade Practices Act (CUTPA). Last July, the jury found that Microsoft had violated CUTPA, but awarded Bristol only $1 in compensatory damages. U.S. District Court Judge Hall then awarded Bristol $1,000,000.00 in punitive damages. Subsequently, the parties reached a settlement, under which Bristol agreed not to oppose this motion for vacatur.
Unlike the more famous antitrust trial before Judge Thomas Jackson in the District of Columbia, which involved Microsoft's Windows operating systems for desktop PCs, this Connecticut case involved Microsoft's NT operating systems for workstations and servers. Microsoft would not give NT 4.0 source code to Bristol under the terms sought by Bristol; and this, Bristol alleged, violated antitrust law. Bristol alleged monopoly leveraging of Microsoft's alleged monopoly of PC operating systems, refusal to deal in connection with its alleged monopoly in workstation operating systems, refusal to deal in connection with its alleged monopoly in departmental server operating systems, denial of an alleged essential facility, and attempted monopolization of the markets for workstation and departmental server markets. The Complaint also alleged six violations of Connecticut antitrust law.
This opinion was issued on May 17, but was only just published in the Second Circuit's web site. See also, TLJ Summary of Bristol v. Microsoft.
Section 605 Broadcast Rights
6/11. The U.S. Court of Appeals (6thCir) issued its opinion in National Satellite Sports v. Time Warner, a case regarding broadcast rights. National Satellite Sports (NSS) obtained the exclusive right to broadcast a boxing match to commercial establishments in Ohio. Time Warner obtained the exclusive right to broadcast the event on a pay per view basis to its Ohio residential customers. A business was erroneously listed as a residential customer of Time Warner, and ordered the event through Time Warner's service. NSS filed a complaint in U.S. District Court (NDOhio) against that customer and Time Warner alleging violation of the Federal Communications Act of 1934, 47 U.S.C. 151-613, which prohibits the unauthorized divulgence of wire or radio communications. The District Court entered summary judgment in favor of NSS. The Appeals Court affirmed.
Suggestive v. Descriptive Trademarks
6/11. The U.S. Court of Appeals (8thCir) issued its opinion [PDF] in B&B Hardware v. Hargis, a trademark infringement case. B&B filed a complaint in U.S. District Court (EDArk) against Hargis alleging trademark infringement. The District Court entered judgment upon a jury verdict of noninfringement. B&B appealed on the sole issue of a jury instruction regarding the distinction between suggestive and descriptive marks. The Appeals Court affirmed.
Supreme Court Opines on Searches
6/11. The Supreme Court of the U.S. issued its opinion [PDF] in Kyllo v. U.S., a case holding that the thermal imaging of a home to detect lamps used for growing marijuana constitutes a search within the meaning of the Fourth Amendment. This is not a tech case. However, the analysis of the court may be of interest to those who are concerned about how the Supreme Court will ultimately rule in cases involving government acquisition of computer and Internet based communications. Also, the breakdown may be of interest. Scalia wrote the opinion, and was joined by Thomas, Souter, Ginsburg and Breyer. The Court did not split on ideological grounds. It was the older members the Court, Rehnquist, O'Connor, Stevens, and Kennedy, who dissented.
FCC Commissioner Copps Picks Staff
6/11. FCC Commissioner Michael Copps announced the appointment of three interim members of his personal staff: Jordan Goldstein, Susana Zwerling, and Lauren Van Wazer. See, FCC release.
Goldstein, who was named Senior Legal Advisor, will focus on common carrier matters. Goldstein was previously a legal advisor to former Commissioner Susan Ness. Goldstein has also been legal counsel to the Chief of the Common Carrier Bureau (CCB), an attorney in the CCB's Policy and Program Planning Division, and before that, an attorney at the NTIA.
Zwerling was named interim Legal Advisor; she will focus on mass media and cable issues. She was previously Assistant Bureau Chief for Planning and Communication in the Mass Media Bureau (MMB). Prior to that she was special counsel to the Chief of the MMB, and an attorney advisor in the Policy and Rules Division. Before joining to the FCC in 1997 she was a trial attorney in the Telecommunications Task Force of the Antitrust Division of the Department of Justice. And prior to that, she was an associate in the New York City office of the law firm of Debevoise & Plimpton. She also was a legislative assistant to former Representative and now Sen. Charles Schumer (D-NY).
Van Wazer was named interim Legal Advisor; she will focus on wireless and international issues. She was previously a senior staff attorney in the Commercial Wireless Division of the FCC's Wireless Telecommunications Bureau. Prior to that she was an associate at the law firm of Arnold & Porter. In addition, Ms. Van Wazer also has a background in engineering, a rarity amongst the multitude of lawyers at the FCC. She is a graduate of the University of Pennsylvania's Moore School of Electrical Engineering, where she received a B.S.E. in Systems Science Engineering. She also worked in AT&T's Network Services Department.
Sachs Addresses NCTA Convention
6/11. NCTA P/CEO Robert Sachs gave a speech at the NCTA convention in Chicago, Illinois, in which he asserted that "cable is one industry where the 1996 Telecommunications Act has produced real consumer benefits. Rate deregulation has enabled us to invest billions in new technology, new programming and customer care, bringing competitive choices to consumers." He continued that "We're not only competing with DBS for every subscription television viewer, we're competing vigorously with phone, wireless and satellite companies to provide consumers high-speed data. And cable companies are the only facilities-based competitors to the regional Bell monopolies in residential markets. Despite all the obstacles, we now serve more than one million residential phone customers. And Internet protocol telephony promises an even more efficient means to deliver voice over cable."
Washington Wonks Debate National E-Commerce Strategy
6/11. The Progressive Policy Institute (PPI) hosted a panel discussion titled Do We Need a National E-Commerce Strategy? in the Cannon House Office Building in Washington DC. The panelists were Rob Atkinson (PPI's Technology and New Economy Project), Adam Theier (Cato), Jeff Eisenach (Progress & Freedom Foundation), and Mark Cooper (Consumer Federation of America).
Atkinson argued for a national e-commerce strategy. See also, a report [PDF] authored by Atkinson. He proposed that the federal government should spend more on research and development, work to resolve "chicken and egg problems" (he cited digital certificates as an example), fight resistance of middlemen (such as car dealers) to disintermediation by Internet based sales, deal with threats to e-commerce from European companies, and promote e-government.
Eisenach agreed that the federal government should spend more on R&D, promote e-government, and play an international leadership role. However, he criticized most of the rest of the PPI proposal. He stated that there needs to be less government, not more. He added that the federal government should also repeal the excise tax on telephones and refrain from regulating online privacy. Theier, of the libertarian Cato Institute, criticized the PPI proposal as "industrial policy." He argued that the government should not be picking winning and losing technologies under the guise of R&D funding or solving "chicken and egg problems". He also stated that middlemen, such as car dealers and wine distributors, represent a political failure, and should be dealt with through Constitutional challenges in court. Mark Cooper argued in favor of open access.
The Progressive Policy Institute, which is a Washington DC based Democratic think tank, also released a report titled "Stop Subsidizing Off-line Consumers." The report argues that the cost to many companies of providing goods and services online is less than the cost for offline transactions, yet prices to consumers do not reflect this. The report cites as examples airline ticket sales, consumer banking, and music sales. The report makes no recommendations for government action. The report was written by Robert Atkinson.
Trade News
6/11. Commerce Secretary Donald Evans gave a speech on free trade and trade promotion authority at a dinner at the Woodrow Wilson International Center for Scholars in Washington DC. He reiterated the theme that free trade is a moral imperative, and that to effectively negotiate free trade agreements with other nations, the President must have fast track trade promotion authority.
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6/11. The FCC's Office of Engineering and Technology hosted a tutorial on the use of graphical models (GMs) for speech recognition. GMs are flexible statistical abstractions that offer promising new approaches to automatic speech recognition. This was one of a series of technology tutorials offered by the FCC.
6/11. The Cellular Telecommunications & Internet Association (CTIA) announced its new Board of Directors and Executive Committee for 2001 - 2002. Rick Ekstrand of Rural Cellular Corporation was elected Chairman, Tim Donahue of Nextel Communications was elected Vice Chairman, Mohan Gyani of AT&T Wireless was elected Secretary, and Terry Addington of First Cellular of Southern Illinois was elected Treasurer. See, release.

Go to News Briefs from June 6-10.