|News Briefs from June
Supreme Court Denies Cert in Metro PCS Case
6/29. The Supreme Court of the U.S.
denied certiorari in U.S. v. General Wireless Inc. PCS. See, Order
List at pages 17-18. General Wireless, which is now named Metro PCS, intends
to provide cellular service in several cities using code division multiple
access (CDMA) technology. The Supreme Court, without opinion, declined to review
a decision of the bankruptcy court allowing Metro PCS to keep 14 personal
communications service (PCS) spectrum licenses that it had obtained at an FCC
auction, after paying only a part of its auction bids. As in the NextWave case,
the FCC had sought to cancel the spectrum licenses, and re-auction the spectrum.
(See, Docket No. 00-1621.)
More Supreme Court News
6/29. The Supreme Court of the U.S. denied certiorari in Tuvell v. Microsoft.
List at page 11. See also, "unpublished" opinion of
the U.S. Court of Appeals (1stCir). (Docket No. 00-1784.)
6/29. The Supreme Court of the U.S. issued a recess order. It stated that
"The Court will take a recess from today until Monday, October 1,
2001." See, Order
List at page 20.
DC Circuit Denies Petition for Review in E-911 Case
6/29. The U.S. Court of Appeals (DDC) issued its opinion
in U.S. Cellular v. FCC,
a petition for review of an FCC order pertaining to deployment of new emergency
911 technologies. Wireless carriers argued that the order contravenes the cost
causation principle contained in CompTel v. FCC, is
arbitrary and capricious, violates the Regulatory Flexibility Act, and amounts
to an unconstitutional taking. The Appeals Court denied the petition.
6/29. The FTC sent a letter to the
State of North Dakota stating that North Dakota's financial privacy statute is
not preempted by the Gramm Leach Bliley Act. The FTC opined that the two
statutes are not inconsistent. See, FTC release. See also, North
Dakota Disclosure of Customer Information law, N.D. Cent. Code, ch. 6-08.1-01 to
6-08.1-08 (amended 2001), and Subtitle A of Title V of the Gramm Leach Bliley
Act, 15 U.S.C. §§ 6801-6809.
6/29. The Information Technology
Association of America (ITAA) praised FCC Chairman Michael Powell for
writing a letter
[PDF] on June 27 to Commerce Secretary Don Evans regarding third generation
wireless services. Powell wrote that "additional time is necessary to allow
the Commission and the Executive Branch to complete a careful and complete
evaluation of the various possible options for making additional spectrum
available for advanced wireless services." See, ITAA
6/29. Peter Doyle was named Chief of the FCC's Mass Media Bureau's Audio
6/29. Jim Harper was named an Adjunct Fellow of the Progress and Freedom Foundation (PFF), a
Washington DC based non profit organization that studies technology policy.
Harper focuses on privacy and e-commerce issues. He is also the principal of the
PolicyCounsel.Com consulting firm,
and the Editor of Privacilla.org.
Senate CJS Subcommittee Discusses FCC Budget and Policy
6/28. The Senate Appropriations
Committee's Commerce, Justice, State, and the Judiciary (CJS) Subcommittee
held a hearings on the proposed budgets for FY 2002 for the Federal Communications Commission and Securities
and Exchange Commission. See, prepared
testimony of FCC Chairman Michael Powell. The hearing served as a forum for
discussing several difficult issues facing the FCC, including how to extend the
universal service goals of ubiquity and affordability to new communications
media (such as broadband Internet access and instant messaging), how to allocate
more spectrum for third generation wireless services, and the Bell companies'
efforts to rewrite key provisions of the Telecom Act of 1996.
Universal Service and New Technologies
6/28. Sen. Ted Stevens (R-AK), the
ranking Republican on the Appropriations Committee, raised the subject of
universal service at the CJS hearing. He represents a state with voters widely
dispersed over vast rural and remote areas where the cost of communications
services is high.
The longstanding policy of promoting universal service for voice
telecommunications was codified in Section
254 of the Telecom Act of 1996. Only telecommunications services are subject
to universal service support contributions. Also, this section, as interpreted
by the FCC, has extended universal service support to schools and libraries for
telecommunications, as well as for Internet access and internal wiring costs.
Stevens pointed out while new methods of communications, such as broadband
Internet access and instant messaging are becoming increasingly important, rural
areas are likely to fall behind urban areas without universal service support
for these services. He also stated that with only telecommunications services
currently contributing, new technologies are also going to have to pay their
way. "I continue to be worried about the future of the universal service
fund," said Sen. Stevens. "The revenue base of universal service is
declining, and the demands are increasing." He suggested that "one
solution might be taxing the Internet ... to support the universal service
fund." However, he added that he does not support this yet.
Chairman Powell stated that he is committed to the universal service goals of
ubiquity and affordability, whatever the architecture of the communications.
However, he added that he "reserves judgment" on who should
contribute. He pointed out also that the FCC is constrained by a court decision
preventing the FCC from tapping intrastate revenues for universal service, and
by the language of Section 254. He suggested that a legislative solution may be
Tauzin Dingell Bill
6/28. Sen. Hollings, the Chairman of the Appropriations Committee's CJS
Subcommittee (as well as Chairman of the Commerce Committee) ridiculed the Bell
companies for lobbying the Congress to pass HR 1542 (the
Tauzin Dingell bill). He stated that the Bells are carrying on a "big
charade". The Bells seek legislation that would exempt interlata data
service (as distinguished from voice service) from the requirements of Section 251 of the Telecom Act of 1996.
They assert that when the 1996 Act was being drafted, data communications were
not considered, and were not intended to be covered by Section 251. Sen.
Hollings, who was intimately involved in negotiations over the drafting of the
bill, refuted this claim. He stated that Bell companies were involved in
negotiations -- "they wrote the words". He continued that data was
referenced over 470 times. He concluded that the Bells are engaged in "a
big charade, a big straw man to extend their monopoly."
Sen. Dan Inouye (D-HI) and Sen. Hollings
both asked Chairman Powell for his views on HR 1542. Powell stated that he would
not take a position on the bill. Instead, he said there are two competing views
of competition in the market for broadband services. One view is that
competition exists between different "pipelines". These are currently
cable and phone networks, but may in the future may also include wireless and
satellite. He said that under this view, it does not matter whether there is
competition between providers of the same service; competition is between the
different pipelines. This, he said is the view of the proponents of HR 1542. He
then said that the other view of broadband competition holds that there must be
competition within each technology. Sen. Hollings was unimpressed. He said,
"Let me correct that." He proceeded to explain that the intent of
Congress in passing the 1996 Act was to require competition in local phone loop.
6/28. Both Sen. Hollings and Sen. Stevens discussed spectrum policy with
Chairman Powell at the CJS hearing. The FCC has recently taken very tentative
steps towards developing secondary markets for spectrum, and moving towards
property rights in spectrum. Sen. Hollings asked, "Who owns the spectrum?
Are you and I the trustee" for spectrum? Powell answered that "it is
clear that spectrum is the public property of the American taxpayers."
Powell added that it is the function of the FCC to put spectrum to its highest
and best use. He also stated that the FCC can reclaim licensed spectrum.
3G Wireless. Sen. Stevens focused specifically on third generation (3G)
wireless services, which are intended to bring broadband Internet access to
portable devices. Currently, the Defense Department is vigorously opposing the
reallocation or sharing of any of the spectrum in the 1755 to 1850 MHz band
which it now uses, but which has been identified for possible use by 3G
services. Sen. Stevens suggested that one solution may be to ask the DOD to be
"hard headed about what the really need," and allow the rest to be
re-auctioned, with most of the proceeds from the sale of spectrum licenses going
back to the DoD to fund new defense technologies. Chairman Powell responded,
"I think it is a creative idea."
NextWave. Chairman Powell spoke with reporters after the hearing about
the June 22 opinion
of the U.S. Court of Appeals (DCCir) in NextWave v. FCC. He stated that
"This is a major blow to the legal and regulatory foundation of our auction
policy." He declined to state whether the FCC would appeal.
FCC's Lack of Engineering Expertise
6/28. Chairman Powell and Sen. Hollings discussed the FCC's lack of
technical expertise at the CJS hearing. The FCC is and agency of lawyers. It
lacks staff who can understand the new technologies that the FCC seeks to
regulate. The FCC has no trouble attracting the brightest lawyers, because a
short stint at the FCC greatly increases the earning capacity of these lawyers.
Most go to work for the law firms that represent companies regulated by the FCC,
or the companies themselves. There is no comparable payoff for engineers.
Moreover, they are asked to work at the lowly levels of GS-5 and GS-7.
Powell stated that "we cannot depend on those we regulate for on-the-job
tutorials while we make decisions. Over the last six years, our engineering
staff has decreased by more than 20 percent. Within the next four years, 40
percent of our engineering staff will be eligible to retire."
Sen. Hollings asked of the FCC's FY 2002 budget request, "does this take
care of the engineers and the lawyers too?" Chairman Powell responded
"no, it does not over time take care of it." He added that this budget
request, which barely covers cost of living adjustments, "is the first
step." He will seek more funding later.
Appeals Court Rules in USA v. Microsoft
6/28. The U.S. Court of Appeals (DCCir)
issued its en banc opinion
in USA v. Microsoft. This is an antitrust action brought by the Department of
Justice's Antitrust Division and by
individual states. The Court of Appeals affirmed in part, reversed in part, and
remanded in part the District Court's judgment assessing liability. It vacated
in full the Final Judgment containing the break up order. Finally, it remanded
the case to a different trial judge.
District Court Proceedings. The District Court, Judge Thomas Jackson
presiding, determined that Microsoft had maintained a monopoly in the market for
Intel compatible PC operating systems in violation of § 2 of the Sherman
Antitrust Act; attempted to gain a monopoly in the market for Internet browsers
in violation of § 2; and illegally tied two purportedly separate products,
Windows and Internet Explorer, in violation of § 1. See, Judge Jackson's Conclusions of Law
(April 3, 2000). The District Court then issued a Final Judgment requiring
Microsoft to submit a proposed plan of divestiture, with the company to be split
into an operating systems business and an applications business. See, Judge
Jackson's and Final Judgment
(June 7, 2000). Microsoft appealed.
Holding Re Violation of the Sherman Act. The Appeals Court affirmed in
part and reverse in part the District Court's judgment that Microsoft violated
§ 2 of the Sherman Act by employing anticompetitive means to maintain a
monopoly in the operating system market. The Appeals Court reversed the District
Court's determination that Microsoft violated § 2 of the Sherman Act by
illegally attempting to monopolize the internet browser market. The Appeals
Court remanded the District Court's finding that Microsoft violated § 1 of the
Sherman Act by unlawfully tying its browser to its operating system. The Appeals
Court also stated this its holding extends to the District Court's findings with
respect to the state law counterparts of the plaintiffs' Sherman Act claims.
Holding Re Breakup Order. The Appeals Court also vacated the District
Court's Final Judgment ordering the break up of Microsoft, on several grounds.
First, the Final Judgment was based on a number of liability determinations that
the Appeals Court reversed. Second, the District Court erred in failing to hold
an evidentiary hearing to address remedies specific factual disputes.
Holding Re Jackson's Appearance of Partiality. Third, the "trial
judge engaged in impermissible ex parte contacts by holding secret interviews
with members of the media and made numerous offensive comments about Microsoft
officials in public statements outside of the courtroom, giving rise to an
appearance of partiality. The Appeals Court added that "the actions of the
trial judge seriously tainted the proceedings before the District Court and
called into question the integrity of the judicial process." The Appeals
Court ordered reassignment to another trial judge.
Microsoft Chief Software Engineer Bill Gates said that "The ruling lifts
the cloud of breakup over the company, reverses the tying claim, and says
clearly that we did not attempt to monopolize the browser market." See,
by Bill Gates.
Congressional Reaction To Microsoft Ruling
6/28. Sen. Herb Kohl (D-WI) and Sen. Mike DeWine (R-OH), the Chairman and
Ranking Member of the Senate Subcommittee on Antitrust, Business Rights and
Competition, issued a joint statement: "The recent DC Circuit court ruling
is a split decision that reflects the important balance that must be struck
between ensuring competitive markets and allowing businesses room to innovate --
both of which are important for consumers. The court overturned the breakup
order, but at the same time confirmed that Microsoft had engaged in illegal
monopoly maintenance. Today's decision does not end the Microsoft litigation,
and further proceedings will likely continue in the coming months. The full
implications of this decision will be known only over time as antitrust law is
applied to the entire high technology industry, but it is clear that the
antitrust laws must play a key role in ensuring competitive markets in this
sector. We will continue to monitor future developments in the case closely but
feel strongly that the case must remain above politics. Whatever the outcome of
this particular case, we will continue to work to assure that no one company can
abuse a dominant market position to the detriment of competition and
6/28. Rep. Dick Armey (R-TX) stated that
"I applaud today's ruling because it’s good for American competitiveness.
It sends the message that innovation in America will be rewarded, not punished.
Our antitrust laws should not be used to hold our most successful companies back
to give the competition a chance to catch up. That kind of tired economic
thinking is exactly what our new economy does not need. Government needs to get
off the back of our innovators so that high tech America can prosper." See,
Stearns Introduces Bill to Limit State Jurisdiction over
6/28. Rep. Cliff Stearns (R-FL) and
others introduced HR 2421,
the "Jurisdictional Certainty Over Digital Commerce Act". The bill
would bar states from regulating the sale of digital goods and services over the
Internet. It would provide a single legal standard in the U.S. covering the sale
of downloaded software, e-books, games, and other products, as well as services.
The bill states that "Responsibility and authority to regulate digital
commercial transactions is reserved solely to the Federal Government" and
that "No State or political subdivision thereof may enact or enforce any
law, rule, regulation, standard, or other provision having the force or effect
of law that regulates, or has the effect of regulating, digital commercial
transactions." The bills also defines "digital commercial
transaction" as "a commercial transaction for a digital good or
digital service that is carried out in its entirety by means of the
Internet." The bill contains several exceptions, including state regulation
pertaining to health, safety, fraud, and crimes. It also exempts
The bill also contains the findings that "digital commercial transactions
in digital goods and digital services are inherently interstate in nature"
and that "State regulation of such digital commercial transactions creates
significant and harmful burdens on interstate commerce". Rep. Stearns said
in a release that
"It is important to inject jurisdictional certainty with respect to
commercial transaction in digital goods and services. Having 50-plus separate,
and at times incongruent, regulations governing interstate commercial
transactions poses a substantial burden to interstate commerce in general, and
to e-commerce specifically."
6/28. The House Financial
Services Committee's Subcommittee on
Domestic Monetary Policy, Technology and Economic Growth held a hearing
titled ESIGN -- Encouraging the Use of Electronic Signatures in the Financial
Services Industry. See, opening statement
[PDF] of Rep. Peter King (R-NY), the Subcommittee Chairman. See also, prepared
testimony [PDF] of witnesses: Eileen
Harrington (FTC), Christopher Roe
(American Insurance Assoc.), Thomas Crocker
(Alston & Bird), Jeremiah Buckley
(Electronic Financial Services Council), Louis Rosenthal
(Financial Services Roundtable), Margot Saunders
(National Consumer Law Center).
Bush Calls PCs Energy Vampires
6/28. President Bush gave a speech
at the Department of Energy in Washington DC in which he described certain
electronic equipment, such as PCs, as energy "vampires". He stated
that "I want to talk about what's called vampires, and announce to the
nation the new vampire slayer, and that's the Secretary of Energy, Spence
Abraham. Because of our desire for instant convenience, many of the
appliances in our homes carry unnecessarily high energy costs. Because
we're used to a computer coming on instantly or a TV snapping on as a result of
a remote switch, common day appliances eat enormous amounts of energy.
The Consumer Electronics Association was not
amused. It issued a release in
which it stated that "to refer to our products as energy monsters is
misleading and inaccurate." It continued that "In many cases, our
products are part of the solution to the energy debate. Many home networking
products help save energy by providing increased control over home heating,
cooling and lighting systems. Information technology and telecommunications
products allow teleworking and remote access to information and entertainment
content, both of which save fuel and reduce smokestack emissions. Consumers who
stay home and enjoy a movie on their home theater also help save fuel and reduce
air pollution. A few of our products (such as calculators, watches and radios)
rely on solar power." It concluded that "encouraging the adoption of
unnecessary and more restrictive energy consumption criteria threatens a
manufacturers ability to provide competitively priced products with compelling
features that meet consumer demand for performance. In short, asking the public
to pay more for less disregards consumers' interests. Consumers who seek energy
efficient products can find them in the marketplace today."
Dot Kids Domain Bill Introduced
6/28. Rep. John Shimkus (R-IL) and Rep. Ed Markey (D-MA) introduced HR 2417, the
"Dot Kids Domain Name Act of 2001." The bill would the Secretary of
Commerce to enter into agreements with the ICANN for the addition of a new
top-level Internet domain to the root system as a location of any material that
is harmful to minors.
Another Broadband Bill Introduced
6/28. Rep. John McHugh (R-NY)
2401, the "Rural America Digital Accessibility Act". The bill
provides for grants and loan guarantees to bring broadband telecommunications
services to underserved rural areas.
Gallup Conducts Poll on Online Privacy
6/28. The Gallup Organization released the results of a poll of e-mail users
regarding online privacy. Gallup stated that 66% of respondents "think the
government should pass more laws to ensure online privacy". Gallup also
stated that "Frequent Internet users - those who spend 15 hours or more
online each week - are more likely to favor the passage of new laws (75%) than
are infrequent users (63%). Also, Democrats (73%) are more likely than
Republicans (60%) to favor more privacy laws." See, release.
6/28. The Copyright Office published
in the Federal Register that it has completed its annual review of Copyright
Office regulations and adopted several non- substantive amendments to clarify,
update and correct the text of the regulations. See, Federal Register, June 28,
2001, Vol. 66, No. 125, at Pages 34372 - 34374.
6/28. The U.S. Court of Appeals (7thCir)
issued its opinion
in USA v. Walton. This is a criminal case in which an employee of Perdue
University used a networked workstation to download pictures from the Internet,
and store them on a network server. He was charged, convicted, and sentenced for
possession of child pormography in violation of 18 U.S.C. § 2252(A)(a)(5)(B),
and receiving child pormography in violation of 18 U.S.C. § 2252A(a)(2). He
appealed on several issues, all of which the Appeals Court rejected.
6/28. The House Judiciary Committee
issued its reports on HR 1866 (Report
107-120) and HR 1886 (Report
107-121), both of which pertain to patent reexaminations. Both bills were
approved by the Committee on June 20 by unanimous voice votes.
House Holds Hearing on the TEACH Act
6/27. The House Judiciary Committee's
Subcommittee on Courts, the Internet, and Intellectual Property held a
legislative hearing on S 487, the
Technology, Education, and Copyright Harmonization Act of 2001, also known as
the TEACH Act. This bill, which passed the Senate on June 7 by unanimous
consent, would extend the distance learning exemption to infringement contained
in Section 110 of
the Copyright Act to Internet technologies.
Rep. Howard Coble (R-NC), the
Subcommittee Chairman, and Rep. Howard
Berman (D-CA), the ranking member, both advocated passage of S 487, as
passed by the Senate, without further amendment. Rep. Coble stated that "it
is my preference to move S 487 expeditiously and without amendment through the
Committee and to the House floor." All witnesses advocated passage of S
487, as passed by the Senate. Register of Copyrights Marybeth Peters testified
that the "Copyright Office strongly supports the carefully negotiated
compromise reflected in S 487 as passed by the Senate." Allan Adler of the Association of American Publishers, and
John Vaughn of the Association of American Universities, also testified in
support of S 487.
Non Profit Libraries. There is a second version of the bill, HR 2100, the
Twenty-First Century Distance Learning Enhancement Act, that is sponsored by Rep. Rick Boucher (D-VA) and Rep. Darrell Issa (R-CA). It has one major
difference. It would add nonprofit libraries to the covered entities. The Senate
bill covers educational institutions, but not libraries. The difference is
significant. The original version of S 487 was opposed by content owners who
feared that the original version would have allowed abuse of the exemption.
Under the direction of the bill's cosponsors, Sen.
Orrin Hatch (R-UT) and Sen. Patrick Leahy
(D-VT), representatives of affected groups negotiated for several weeks to
produce a compromise version of the bill. The Boucher version ignores that
compromise, and the consensus that it built. Neither Rep. Boucher nor Rep. Issa
attended the hearing, and no other member of the Subcommittee advocated their
version of the bill.
Anti Circumvention Provisions. Rep.
Zoe Lofgren (D-CA) had a different concern with the language of the bill.
The bill requires that educational institutions "not engage in conduct that
could reasonably be expected to interfere with technological measures used by
copyright owners to prevent such retention or unauthorized further
dissemination". She does not want the bill to prevent professors from
presenting papers on encryption at academic conferences. She suggested that this
language may warrant further clarification.
Background. S 487 would extend the exemption for distance learning to
cover the Internet and other digital delivery media. The bill is of immediate
concern to rural schools, where students are dispersed, and colleges that are
offering online courses to distant students and busy adults who cannot attend
their brick and mortar classroom sessions. The bill may also facilitate a shift
from face to face classroom based models of education to online teaching models.
When Congress amended copyright law in 1976 to create the distance learning
exemption, the hot new technology was analog closed circuit TV. That statute did
not reference the Internet. Also, the 1976 law did not address the copying of
files from one computer to another that is an inherent part of the operation of
the Internet. S 487 would exempt "work produced or marketed primarily for
performance or display as part of mediated instructional activities transmitted
via digital networks", provided that several conditions are met. One of
these conditions is that it be "made by, at the direction of, or under the
actual supervision of an instructor as an integral part of a class session
offered as a regular part of the systematic mediated instructional activities of
... an accredited nonprofit educational institution".
Rep. Coble Comments on NYT v. Tasini
6/27. Rep. Howard Coble (R-NC), the
Chairman of the House Courts, Internet and Intellectual Property Subcommittee,
spoke with reporters after the TEACH Act hearing about the Supreme Court's June
[PDF] in New
York Times v. Tasini, a case regarding the application of
copyright law to the republication of the articles of free lance writers in
electronic databases. He stated that "I don't disagree with that
opinion." However, he added, "Let us examine that in detail." He
also stated that no groups have contacted him regarding legislation to change
the outcome of NYT v. Tasini. Justice Stevens wrote in his dissent to that 7-2
opinion that "congressional action may ultimately be necessary".
eBay's Whitman Visits Congress
6/27. eBay P/CEO Meg Whitman spoke at
a Congressional Internet Caucus
luncheon. She was joined at the head table by Sen.
Conrad Burns (R-MT), Sen. Bob Bennett
(R-UT), Rep. Bob Goodlatte (R-VA),
Jerry Berman and Todd Cohen (eBay Director of Public Policy). She advocated
"anti spam legislation, including an e-mail anti harvesting
prohibition". She elaborated that "what we see is robots come to the
site ... who steal the e-mail addresses off of the site." This, she said,
upsets eBay customers, and violates their privacy. However, she also stated that
she is opposed to online privacy legislation at this time. She stated that
"self regulation has a pretty good chance of succeeding." She also
stated that the Internet shakeout has left fewer companies. These companies are
stronger, and are in business for the long run, and hence, are less apt to
commit privacy violations.
Whitman also advocated passage of "strong database protection". In the
106th Congress (1999-2000) the House Judiciary Committee and the House Commerce
Committee passed vastly different database protection bills. Neither was
considered on the House floor. Todd Cohen predicted that the House will pass a
database protection bill in this Congress, because both committees now have new
chairmen, Rep. James Sensenbrenner
(R-WI) and Rep. Billy Tauzin (R-LA),
who are committed to working together to pass a bill.
Whitman also advocated "increased cyber security penalties and
enforcement." She said that "eight or ten times a day someone will try
to hack the site." She also backed an "extension of the Internet tax
Several Representatives attended the luncheon, including Sue Myrick (R-NC), Vern
Ehlers (R-MI), Jeff Flake (R-AZ), Jane Harman (D-CA), Adam Smith (D-WA), and
Lamar Smith (R-TX).
Brownback Introduces ILEC Relief Bills
6/27. Sen. Sam Brownback (R-KS)
introduced S 1126 [PDF] and S 1127 [PDF] in the Senate. S
1126 is titled the "Broadband Deployment and Competition Enhancement Act of
2001". S 1127 is titled the "Rural Broadband Deployment Act of
2001". Both are intended to incent the local phone companies to deploy of
DSL services. Both follow the regulatory relief approach of the Tauzin Dingell
bill, HR 1542. S 1126 would remove certain requirements imposed on incumbent
local exchange carriers (ILECs) by Section
251 of the Telecom Act of 1996 when providing broadband services. S 1127
would provide further regulatory relief to ILECs, but applies only to rural
"My singular objective, in both bills, is high-speed Internet access for
everybody in America by 2007," said Sen. Brownback in a statement [PDF] in the
Senate. "New approaches will be needed to achieve universal broadband
availability. Some of my colleagues have introduced legislation consisting of
tax incentives or loan subsidies. Programs such as these can help to deliver on
the commitment to make broadband universally available, but these proposals
alone will not achieve that goal. Deregulation has a key role to play in this
effort." He continued that "The broadband market, distinct from the
local telephone market, is new. Yet, federal and State regulators are placing
local telephone competition regulations on broadband-specific facilities
deployed by incumbent local exchange carriers (ILECs) – the only regulated
broadband service providers – as if they were part and parcel of their local
telephone service. This is simply not the case. The local telephone market is
not synonymous with the broadband market. The disparate regulatory treatment of
phone companies deploying broadband and all other broadband service providers is
serving to deny broadband to many rural communities."
InterTrust Amends Patent Infringement Complaint
6/27. Intertrust Technologies filed an amended
complaint [PDF] in U.S. District Court (NDCal) against Microsoft
alleging infringement of U.S. Patents Nos. 6,185,683
The complaint was amended to include a claim of infringement of the '193 patent,
which was issued on June 26. It discloses systems and methods for secure
transaction management and electronic rights protection. The patent abstract
states that "Electronic appliances such as computers equipped in accordance
with the present invention help to ensure that information is accessed and used
only in authorized ways, and maintain the integrity, availability, and/or
confidentiality of the information." The '683 patent also pertains to
digital rights management. The two count complaint seeks declarations that
Microsoft has infringed, has induced others to infringe, and has contributorily
infringed, both patents; it also seeks preliminary and injunctive relief, and
NTIA and FTC Release Report on E-SIGN Consumer Consent
6/27. The NTIA and
on the consumer consent provisions of the E-SIGN Act. Last year, the Congress
passed, and President Clinton signed, the Electronic Signatures in Global and
National Commerce (ESIGN) Act, a bill intended to promote electronic commerce by
providing for the acceptance of electronic signatures and records in interstate
commerce. The Act required this report.
The report concluded that "the benefits of the consumer consent provision
of ESIGN outweigh the burdens of its implementation on electronic commerce. The
provision facilitates e-commerce and the use of electronic records and
signatures while enhancing consumer confidence. It preserves the right of
consumers to receive written information required by state and federal law. The
provision also discourages deception and fraud by those who might fail to
provide consumers with information the law requires that they receive. The
consumer consent provision in Section 101(c)(1)(C)(ii) appears to be working
satisfactorily at this stage of the Act's implementation." See also, NTIA release
and FTC release.
Eileen Harrington, Associate Director of Marketing Practices at the FTC's Bureau
of Consumer Protection, will testify regarding the report to the House Financial Services
on Domestic Monetary Policy, Technology and Economic Growth at 9:30 AM on
Thursday, June 28.
Powell Proposes 3G Delay
Chairman Michael Powell
wrote a letter
[PDF] to Commerce Secretary Donald Evans regarding the timetable for identifying
additional spectrum for use by third generation (3G) wireless services. 3G
services are intended to bring broadband Internet access to portable devices.
The Department of Commerce previously released a plan suggesting the
completion of a 3G allocation proceeding by the end of July. Chairman Powell
wrote that "As July draws near, however, it is apparent that additional
time is necessary to allow the Commission and the Executive Branch to complete a
careful and complete evaluation of the various possible options for making
additional spectrum available for advanced wireless services." He concluded
that "the public interest would be best served by additional time for
informed consideration, even if this results in some delay in reaching
DOJ Requires Thomson to Divest Computer Based Testing Assets
6/27. The U.S. Department of Justice, Antitrust
Division, reached an settlement agreement in which it approved Thomson Corporation's acquisition of Harcourt General Inc. businesses from
Reed Elsevier subject to Thomson's
sale of certain overlapping products and services resulting from the
acquisition. Thomson will sell certain college textbook products and portions of
Assessment Systems, Inc., a computer based testing business. To put this
agreement into effect, the DOJ filed a complaint and proposed consent decree in
U.S. District Court (DDC). See, DOJ release,
Charles James, the recently appointed Assistant Attorney General in charge of
the Antitrust Division, stated that "Without these divestitures, college
students would likely have paid higher prices for a variety of important
textbooks. In addition, both professional organizations that offer computer
based tests, and candidates seeking to take those tests, would likely have faced
higher prices and diminished innovation for such services."
Rep. Armey Addresses Privacy
6/27. House Majority Leader Dick Armey
(R-TX) gave a speech to
the Federalist Society on privacy. He stated that "We shouldn't allow
ourselves to be distracted by false notions of privacy that encourage more
government control over our lives. Instead, conservatives must embrace privacy
-- but on our terms, not theirs. For privacy, properly understood, is about
reining in the most intrusive force in the lives of Americans. Today, that force
is the federal government."
FTC and Netpliance Reach Consent Agreement
6/27. The FTC filed a complaint [PDF]
in U.S. District Court (WDTex) against Netpliance alleging violation of Section 5
of the Federal Trade Commission Act (FTCA), the Truth in Lending Act (TILA), and
the FTC's Mail Order Rule. Netpliance is a Delaware corporation based in Austin,
Texas, that sells i-opener, a basic Internet access device, and Internet access
service. The FTC simultaneously filed a proposed consent
decree [PDF] settling the matter.
Complaint. Count I of the complaint alleges that Netpliance engaged in
deceptive advertising in violation of § 5 of the FTCA by claiming that the i-opener
provides access to all of the Internet's content and by claiming that the i-opener
is equivalent to a personal computer with respect to its Internet related
performance. Count II alleges that Netpliance misrepresented the price of the i-opener,
in violation of § 5 of the FTCA. Count III alleges that Netpliance failed to
disclose that i-opener users must use Netpliance's ISP to access the Internet,
in violation of § 5 of the FTCA. Count IV and V allege deceptive billing
practices and unauthorized charging of debit and credit card numbers, in
violation of § 5 of the FTCA. Count VI - VIII alleges violations of the TILA or
Mail Order Rule.
Consent Decree. Under the terms of the proposed consent decree,
Netpliance is enjoined from further deceptive advertising, required to reimburse
consumers for improperly billed charges, and fined $100,000. This settlement is
subject to court approval.
NIST Approves PIPS 140-2
6/27. The National Institute of Standards and
Technology (NIST) published a notice
in the Federal Register announcing its approval of Federal Information
Processing Standard (FIPS) 140-2, Security Requirements for Cryptographic
Modules. FIPS 140-2 supersedes FIPS 140-1, and is compulsory and binding on
federal agencies for the protection of sensitive unclassified information. This
standard is effective November 25, 2001. See, Federal Register, June 27, 2001,
Vol. 66, No. 124, at Pages 34154 - 34155.
6/27. Rep. John Dingell
(D-MI) wrote a "Dear Colleague" letter
[PDF] to members of Congress urging them to support HR 1542, the Tauzin Dingell
6/27. The Metropolitan Washington Council of Governments gave the USPTO
an award for its Trademark Work at Home Program. 90 out of 400 trademark
examining attorneys telecommute from home using workstations supplied by the
USPTO. See, USPTO
6/27. Rep. Bob Goodlatte (R-VA)
and Rep. Rick Boucher (D-VA)
introduced the Class Action Fairness Act.
6/27. The U.S.
Court of Appeals (FedCir) issued its opinion in Durel v. Osram Sylvania,
a patent infringement case involving electro- luminescent phosphor particles
used to illuminate watches and instrument panels in cars. Reversed.
Subcommittee Holds Hearing on Internet Taxes
6/26. The House Judiciary Committee's
Subcommittee on Commercial and Administrative Law held a hearing on HR 1552 and HR 1675, both of
which are titled the "Internet Tax Nondiscrimination Act." These two
bills would prevent state and local governments from imposing taxes on Internet
access. HR 1552 would also extend the existing ban on multiple or discriminatory
taxes on electronic commerce for five years, while HR 1675 would make it
permanent. Gov. Tommy Engler and Democrats on the Subcommittee also advocated
allowing states to impose sales taxes on e-commerce.
In late 1998 the Congress passed, and President Clinton signed, the Internet Tax Freedom Act
(ITFA). It imposed a three year moratorium on multiple or discriminatory taxes
on e-commerce, and Internet access taxes. This ban expires on October 21 of this
year. At the Subcommittee hearing there was no debate over whether the existing
moratorium should be extended, either temporarily or permanently. Instead, the
debate focused on whether, and if so how, the Congress should also address the
question of allowing state and local governments to impose sales taxes on remote
sellers -- both catalogue and Internet.
Rep. Mel Watt (D-NC) stated that he is
concerned about "the unlevel playing field between retailers who sell over
the Internet and retailers who have fixed locations within the state." He
added that "those problems will only get worse, not better, over
time." Rep. John Conyers
(D-MI), the ranking Democrat on the Judiciary Committee, and Rep. Anthony Weiner (D-NY), expressed
Rep. Chris Cox (R-CA), sponsor of the
ITFA in 1998, as well as HR 1552 and 1675, testified regarding the various tax
plans to "shake down the Net" that the ITFA precluded. Rep. Cox.
stated that "the questions of sales tax simplification are important"
but "are intellectually separable from" the extension of the ITFA
moratorium. He stated that since "time is of the essence", the
Congress should pass legislation extending the existing ban. See also, prepared statement
of Rep. Cox.
Gov. James Gilmore (R-VA) testified in favor of passage of HR 1552 or 1675. Gov.
Tommy Engler (R-MI) recommended that Congress "enact legislation giving the
states the authority to collect and remit sales taxes and uses taxes". He
also stated that there should be a uniform and simplified sales and use tax
system. Robert Comfort testified on behalf of Amazon.com. He advocate passed of
either HR 1552 or 1675.
Trade Promotion Authority Bill Introduced
6/26. Sen. Bob Graham (D-FL) and Sen. Frank Murkowski (R-AK) introduced a
bill to provide the President with trade promotion authority, formerly known as
fast track authority. Graham and Murkowski stated that the bill includes
"worker rights, environment, information technologies, and compliance and
enforcement to standard list of principal negotiating objectives." See, Graham release and Murkowski release.
See also, State
Sen. Phil Gramm (R-TX), who is a
cosponsor, stated in a release that "The president, without fast-track
authority, has been helplessly sidelined in terms of trying to expand American
markets through major trade negotiations. This bill gives us a very effective
way to get America back in the game -- a game that we are experts at playing and
a game that we can win. This bill allows trade agreements, under fast-track
procedures, to include clearly trade-related labor and environmental concerns.
But it does it in a very restrained and careful way so that no president can go
out and negotiate in a trade agreement provisions that write domestic law."
Sen. Byrd Opposes Trade Promotion Authority
6/26. Sen. Robert Byrd (D-WV) spoke in the
Senate against granting the President trade promotion authority. He stated that
it would be "a wholesale surrender of Congress' constitutional authority
over foreign commerce, as well as the evisceration of the normal rules of
procedure for the consideration of Presidentially negotiated trade
agreements." Sen. Byrd's speech was a reaction to the introduction in the
Senate of S 1104 by Sen. Bob Graham
(D-FL), Sen. Frank Murkowski (R-AK),
Sen. Byrd also spoke on the importance of Roman history to the present debate
over trade negotiations. "First, Sulla became dictator in 82 B.C. He was
dictator from 82 to 80. Then he walked away from the dictatorship, and he became
counsel in 79. He died in 78 B.C., probably of cancer of the colon,"
explained Sen. Byrd.
4th Circuit Rules on Class Action Certification
6/26. The U.S.
Court of Appeals (4thCir) issued its opinion
v. Dryvit Systems, a case regarding standards for granting a
petition to appeal class certification under Federal Rule of Civil Procedure
23(f). The Appeals Court adopted a five factor sliding scale test to guide the
consideration of such petitions. It followed, with elaboration, the test adopted
by the 11th Circuit in Prado-Steiman
v. Bush, 221 F.3d 1266 (2000). It also granted the petition in the present
case, and held that certification of the class was inappropriate.
Rule 23(f) provides that "A court of appeals may in its discretion permit
an appeal from an order of a district court granting or denying class action
certification under this rule if application is made to it within ten days after
entry of the order. An appeal does not stay proceedings in the district court
unless the district judge or the court of appeals so orders."
ASCENT v. FCC
6/26. The U.S.
Court of Appeals (DCCir) issued its opinion
in ASCENT v.
FCC, a petition for review of an FCC order. In 1999 the FCC
issued an order
in which it determined that the discount for resale provision of Section 251(c)(4) applies when an ILEC offers
to an end user, but not when it offers DSL service to an ISP. ASCENT filed a petition for review of the FCC
order, claiming that it is contrary to the Communications Act, and unreasonable.
The Appeals Court denied the petition.
Gart v. Logitech
6/26. The U.S.
Court of Appeals (FedCir) issued its opinion in Gart
v. Logitech, a patent infringement case involving computer
mouses. Samuel Gart holds U.S.
Patent 4,862,165 which relates to ergonomically shaped computer mouses for
reducing muscle fatigue. Gart filed a complaint against Logitech, a producer of mouses and other
computer input devices, in U.S. District Court (CDCal) alleging
infringement of this patent. On cross motions for summary judgment, the District
Court determined that Logitech did not infringe the patent either literally or
under the doctrine of equivalents. The District Court also determined on a
motion for summary judgment the starting dates for accrual of damages pursuant
to 35 U.S.C. § 287(a).
Gart then brought this appeal. The Appeals Court vacated the grant of summary
judgment of no infringement, either literally or under the doctrine of
equivalents, and remanded for further proceedings. The Appeals Court also
reversed in part the § 287 determination.
6/26. The Center for Digital Democracy
released a report
[PDF] on interactive television (ITV) and privacy. The report is titled
"TV That Watches You: The Prying Eyes of Interactive Television." It
concludes that "technology is now being put into place with the goal of
collecting information from individual consumers and families. This information
will be harvested in data profiles, which will then be used to target individual
consumers with personalized advertising. The same technologies that threaten
privacy on the Internet, including data mining, user modeling, and intelligent
agents are now being adopted by the U.S. television industry."
6/26. The Association for
Competitive Technology (ACT) released information regarding a public opinion
poll on attitudes regarding privacy. The ACT stated that "76% of consumers
feel that privacy protection is a priority, but not a top priority. Consumers
put the issue of strengthening privacy protections behind improving education,
fighting crime and drug abuse, reforming health care, dealing with the energy
problem, protecting the environment and reforming Social Security and Medicare.
Privacy was ranked 7th out of nine issues of social concern." See, ACT release
The ACT did not publish the poll questions.
What Digital Divide?
6/26. The Progressive Policy Institute (PPI),
a Democratic think tank, released a report [PDF] titled
"Clear Thinking on the Digital Divide". The reports states that
"there is no compelling rationale for the government to subsidize computer
purchases and Internet access for individuals. Broad subsidization is not
warranted at a stage when many non-users could afford to become users if they
wished to." The report concludes that "It's easy to forget that the
Internet and the World Wide Web are still in their infancy -- a decade ago,
there were less than 50 Web sites in existence. At such an early stage, we would
expect differential rates of takeup by different groups of Americans. But that
doesn't mean that public policy should not work to increase Americans' access to
these key technologies. We believe that the best way to do this for now is to
help expand community access, especially by leveraging private sector funding,
leadership, and volunteers." Andrew Leigh and Robert Atkinson wrote the
report. See also, PPI
Digital Rights Management Patent
6/26. The U.S. Patent and Trademark Office issued U.S.
Patent No. 6,253,193 to InterTrust
Technologies Corp. InterTrust, which is based in Santa Clara, California,
provides digital rights management software. The patent discloses systems and
methods for secure transaction management and electronic rights protection. The
patent abstract states that "Electronic appliances such as computers
equipped in accordance with the present invention help to ensure that
information is accessed and used only in authorized ways, and maintain the
integrity, availability, and/or confidentiality of the information." See, Intertrust
The bill is cosponsored by Rep. Howard
Coble (R-NC), Chairman of the House Courts, Internet, and Intellectual
Abernathy hired Matthew Brill to be her common carrier Legal Advisor.
He previously worked at the law firm of Wilmer
Cutler & Pickering in its Communications Group. He has represented AOL,
other ISPs, and wireline and wireless carriers in proceedings before the FCC and
in federal courts of appeals. See, release.
6/26. The House Science Committee's
Subcommittee on Research held a hearing titled Reinventing the Internet:
Promoting Innovation in IT. The witnesses were Eric Benhamou (3Com), Anita
Jones (Univ. of Virginia), Alfred Berkeley (Nasdaq), and Cita Furlani (National
Coordination Office for Information Technology R&D).
6/26. EU Competition Commissioner Mario Monti
gave a speech
in Brussels on antitrust cooperation between the U.S. and E.U.
Elinger joined the Seattle office of the law firm of Preston Gates & Ellis as of counsel
in the firm's Business Department and, the emerging growth company and venture
capital practice group. Her practice emphasizes business transactions and
general corporate matters, particularly private and public equity financings,
venture capital transactions, mergers and acquisitions, and strategic
transactions for emerging and developing entities, including technology and
intellectual property agreements. See, release.
Ogden joined the Washington DC office of the law firm of Wilmer Cutler & Pickering as a partner. He
was previously Assistant Attorney General for the Civil Division of the U.S.
Department of Justice. See, release.
Go to News Briefs from June 21-25, 2001.