News Briefs from September 1-5, 2001

FBI Executes Search Warrant on Islamic ISP
9/5. The FBI executed a sealed search warrant at the offices of Internet service provider InfoCom Corporation, in a suburb north of Dallas, Texas.
Several Islamic groups held a press conference to criticize the action. The Council on American Islamic Relations (CAIR) and others issued a release in which they stated that "Early yesterday morning, more than 80 agents from the FBI, INS, Customs Service, and other federal agencies raided the offices of Infocom Corporation in Richardson, Texas." It added that "Infocom hosts web sites for some 500 companies worldwide", including a number of Middle Eastern web sites. CAIR also described the action as an "anti Muslim witch hunt."
On August 13 the Wall Street Journal published an opinion piece by Daniel Pipes and Steven Emerson which stated that "The very existence of both Hamas and Islamic Jihad is largely attributable to organizing and funding from individuals living in the U.S." The piece then went on to discuss the use of web sites based in the U.S.
JCS Chairman Testifies on 3G
9/5. General Henry Shelton, Chairman of the Joint Chiefs of Staff, testified to the Senate Appropriations Committee's Subcommittee on Defense on a wide range of issues, including reallocating of spectrum currently used by the military for use by Third Generation (3G) wireless services. See, prepared testimony.
He stated that "I am concerned that further reallocation of frequency spectrum for commercial use, without comparable spectrum to execute DoD's critical functions, will have a major impact on our ability to execute our missions. Our success on the battlefield largely depends on our ability to use advanced communications technology to exchange vital information between decision-makers, commanders, and deployed forces."
One of the spectrum bands being proposed for reallocation is the 1755-1850 MHz band, currently used by the military. General Shelton stated that "this proposal is problematic for two reasons. First, according to our analysis, sharing with commercial users is not possible due to interference over large geographical areas and metropolitan centers. Second, moving DoD communications to a different, but comparable, spectrum could be problematic due to the lengthy transition period required."
His prepared testimony on 3G spectrum on September 5 was identical to his prepared testimony on 3G spectrum to the House Armed Services Committee on June 28, 2001.
House Passes Patent Bills
9/5. The House passed by voice votes three non controversial intellectual property related bills -- HR 1866, HR 1886, and HR 2048. HR 1866 overturns the 1997 opinion of the U.S. Court of Appeals (FedCir) in In Re Portola Packaging, in which the Court held that the restriction on the scope of patent reexaminations to "substantial new questions" precludes the consideration of prior art that was before the examiner. The key language of the HR 1866 amends 35 U.S.C. 303(a) and 312(a). It adds the following: "The existence of a substantial new question of patentability is not precluded by the fact that a patent or printed publication was previously cited by or to the Office."
HR 1886 affords all participants, including third party requesters, in reexamination proceedings, judicial review before federal appeals courts. HR 2048 requires the Attorney General to submit a report to the House and Senate Judiciary Committees regarding the effectiveness of State Justice Institute operations.
9/5. The USPTO published a notice in the Federal Register regarding its notice of proposed rulemaking (NPRM) pertaining to requirements for claiming the benefit of prior filed applications under 18 month publication of patent applications. Comments are due by October 5, 2001. See, Federal Register, September 5, 2001, Vol. 66, No. 172, at Pages 46409 - 46415.
9/5. The USPTO published the September issue of the PTO Pulse in its web site.
AAI Questions HP Compaq Merger
9/5. The American Antitrust Institute released a statement regarding the proposed merger of HP and Compaq in which it asserted that "The proposed merger threatens to lessen competition in a number of ways. First, it will altogether eliminate competition between two of the three largest firms. Second, there is widespread speculation that the remaining firms in the industry will for strategic reasons seek merger partners to offset the combined HP/Compaq's new power with retailers and suppliers. If there is likelihood that this gigantic merger event will trigger a rapid consolidation of the industry, then the government should intervene."
Video Competition and Broadband Internet Access
9/5. September 5 was the deadline to file reply comments with the FCC in its Notice of Inquiry (NOI) regarding video competition. The NRTC submitted a comment [PDF] in which it stated the "the cable industry is limiting its broadband offerings almost exclusively to metropolitan areas" and that "Satellite distribution technology -- not cable -- represents the best option available to provide High speed Internet Access as well as local television service throughout rural America." It further argued that the FCC should take steps to promote access in rural areas. Similarly, Northpoint and Broadwave jointly submitted a comment [PDF] in which they argued that the multichannel video program distribution (MVPD) "marketplace is currently bereft of competitive alternatives" and that DBS providers and others are trying to delay deployment of Northpoint's technology, which they assert will provide MVPD, local TV, and broadband Internet access to rural areas at affordable prices.
The NCTA submitted a comment [PDF] in which it concluded that "Despite the annual protestations of competitors seeking artificial regulatory boosts from the Commission, the evidence of full and effective competition among providers of video programming is compelling. Competition has arrived, it is here to stay, and the Commission should say so ..." AT&T submitted a comment [PDF] in which it argued that the MVPD market is not dominated by cable.
On June 20, 2001 the FCC adopted a NOI into the status of competition in the market for the delivery of video programming. The FCC stated in a release that "The NOI seeks information that will allow the FCC to evaluate the status of competition in the video marketplace, prospects for new entrants to that market, and its effect on the cable television industry and consumers. The NOI also solicits information regarding the extent to which consumers have choices among video programming distributors and delivery technologies." See, CS Docket No. 01-129.
9/5. The U.S. Attorney's Office (SDNY) announced the formation of a Computer Hacking and Intellectual Property (CHIPs) unit, comprised of five Assistant U.S. Attorneys specializing in computer and intellectual property crimes. The unit will focus on computer intrusions, Internet and computer fraud, theft of trade secrets and economic espionage, theft of computer and high tech equipment components, criminal copyright and trademark offenses, and other forms of computer, Internet, and electronic crimes. See, USAO release.
On July 20, 2001, Attorney General John Ashcroft announced that eight CHIPs would be formed. The other locations for new CHIPs units are CDCal (Los Angeles), SDCal (San Diego), NDGa (Atlanta), DMass (Boston), NDTex (Dallas), WDWash (Seattle), and the EDVa (Alexandria, Virginia). The NDCal (San Francisco) already had a CHIPs unit. See, Ashcroft speech.
Report Opposes New Privacy Legislation
9/5. The Pacific Research Institute released a report titled "Consumer Privacy: A Free Choice Approach." The report concludes that "New laws governing the collection of consumer information are not needed to bolster electronic commerce, protect businesses from state government legislation, or to emulate other countries. Instead, new information restrictions would usurp consumer choice, drive up prices for consumers, and strangle business, especially small business, with red tape."
The report, which was written by Sonia Arrison, also concludes that "The FTC's Fair Information Practice Principles (FIPPs) are unnecessary, costly, and, worst of all, may wind up giving consumers less privacy. One of the worst potential unintended consequences of the FIPPs is that consumers, under the impression that the government is protecting them, will lose interest in the technologies that protect privacy."
California Court Rejects Filed Rate Doctrine Defense in Slamming Case
9/5. The California Court of Appeal (3rd) issued its opinion [PDF] in Lovejoy v. AT&T, a slamming case. Lovejoy filed a complaint in California state court against AT&T alleging fraud in connection with the unauthorized switching of a telecommunications carrier. Lovejoy alleged that AT&T falsely asserted that he had authorized the switching of his 800 service, and then terminated the service, reassigned his number, and ruined his business. AT&T moved for judgment on the pleadings,  arguing that the conduct plead by Lovejoy does not constitute actionable fraud, and that the action is barred by the filed rate doctrine. The trial court dismissed the case based in its interpretation of the law of fraud. Lovejoy appealed. The Court of Appeal, addressing both the fraud issues and the filed rate doctrine, reversed and remanded.
Shapiro Named Interim US Atty for ND California
9/5. The Department of Justice announced the appointment of David Shapiro as the interim United States Attorney for the Northern District of California. See, USAO release.
Kermit the Frog Joins FCC
9/5. The FCC announced that "The Hallmark Channel, in association with The Jim Henson Company, has donated the Kermit the Frog image to the FCC for use in a promotional campaign to bring attention to the availability of the V-Chip." Meanwhile, Commissioner Gloria Tristani's last day at the FCC is Friday, September 7. She has chaired the FCC's V-Chip Task Force since its creation in May of 1999, and has served as the FCC's spokesman on V-Chip matters. Tristani stated that "The critical next step for the V-Chip is creating greater awareness among parents of the V-Chip technology and the ratings system for television programming." Her replacement was not immediately available for comment. See also, FCC V-Chip page.
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9/5. The Senate Intelligence Committee cancelled its hearing on the information leak provisions of the FY 2002 Intelligence Authorization Bill.
Internet Crime
9/4. A grand jury of the U.S. District Court (CDCal) returned an indictment against Gregory Howearth for interstate travel for the purpose of having sex with a minor and use of the Internet to entice a minor to engage in illegal sexual activity. Howearth had communicated in an Internet chat room with an undercover law enforcement officer who posed as a thirteen year old. See, USAO release.
Senate Begins Debate on Export Administration Act
9/4. The Senate returned from its August recess, and began debate on S 149, the Export Administration Act of 2001. The bill is a major overhaul of export control laws. It passed the Senate Banking Committee on March 22, 2001, by a vote of 19 to 1. It would ease restraints on the export of most dual use products, such as computers and software. However, it would raise penalties for violation of remaining prohibitions. It would also repeal provisions of the 1998 National Defense Authorization Act which require the President to use MTOPS to set restrictions on the export of high performance computers.
The bill is sponsored by Sen. Mike Enzi (R-WY). It is supported by Sen. Paul Sarbanes (D-MD), the Chairman of the Senate Banking Committee, Sen. Phil Gramm (R-TX), the ranking Republican on the Committee, and by President Bush. However, it is opposed by a small faction in the Senate led by Sen. Fred Thompson (R-TN), Sen. John Warner (R-VA), and Sen. Richard Shelby (R-AL).
The Senate defeated, by a vote of 74 to 19, an amendment offered by Sen. Fred Thompson (R-TN) that would have increased the power of agencies to delay license applications for an additional 60 days. This amendment would have allowed reviewing agencies to extend the time limits on reviewing export license applications if they determined that "due to the complexity of the analysis" or "because of the potential impact on the national security or foreign policy interests of the United States" a further delay is warranted. Under current law, and S 149, an exporter wishing to export an item on a control list must apply for a license. The application must be sent to the Secretary of Commerce, who then refers it to other interested departments. The agencies must provide a recommendation to approve or deny the license within 30 days of that referral. S 149 also contains six specific circumstances in which further time may be taken. Sen. Enzi argued that passage of the Thompson amendment would "significantly undermine the discipline of the entire review process, and effectively create gridlock".
Secretary of State Colin Powell, Secretary of Defense Donald Rumsfeld, and Secretary of Commerce Donald Evans wrote a letter to Sen. Trent Lott (R-MS), the Republican Majority Leader, urging passage of the bill. "President Bush strongly supports the bill as passed by the Senate Banking Committee and wants to move forward in this important area. We urge you to support S. 149," the three wrote.
The current Export Administration Act was scheduled to lapse on August 20. However, President Bush issued an Executive Order on August 17 extending it. President Bush also wrote a letter to the Speaker of the House of Representatives and the President of the Senate regarding this decision.
Sen. Gramm Announces Retirement
9/4. Sen. Phil Gramm (R-TX) announced that he will not run for re-election in the 2002 election. Sen. Gramm is the ranking Republican on the Senate Banking Committee. He has been involved in many technology related debates.
He is a strong supporter of the Export Administration Act of 2001, which is currently being debated by the full Senate. His retirement may open the way for Sen. Richard Shelby (R-AL) to become either ranking Republican or Chairman of the Committee. Sen. Shelby is an an opponent of the bill.
In the 104 and 105th Congresses Sen. Gramm supported and moved legislation to limit meritless class action securities litigation against technology companies. See, the Private Securities Litigation Reform Act of 1995 (PSLRA), and the Securities Litigation Uniform Standards Act of 1998 (SLUSA).
The landmark Gramm Leach Bliley Act carries Sen. Gramm's name. This landmark legislation removes New Deal era restrictions on affiliations among banks, securities firms, and insurance companies. It also contains new privacy provisions regarding non-public personal information.
Finally, while immigration issues do not fall within the jurisdiction of the Senate Banking Committee, Sen. Gramm has been an advocate of amending visa laws to enable companies to hire highly skilled technology workers from other countries.
Rep. Horn Announces Retirement
9/4. Rep. Steve Horn (R-CA) announced that he will not run for re-election. The California legislature, which is controlled by Democrats, redrew district lines to eliminate his district. He is Chairman of the House Reform Committee's Subcommittee on Government Management, Information and Technology. During the 105th Congress his subcommittee issued low grades to government agencies on their level of computer security, and studied Year 2000 conversion efforts of government agencies. See, Horn release.
Bush Announces 13 U.S. Attorneys
9/4. President Bush announced his intent to nominate 13 U.S. Attorneys. Among these is the nomination of Thomas DiBiagio for the District of Maryland. DiBiagio is currently a partner in the Washington DC law firm of Dyer Ellis & Joseph. From 1991 to 2000 he was Assistant U.S. Attorney for the District of Maryland. See, White House release and Dyer Ellis bio.
The other nominations are as follows: William Duffy (Northern District of Georgia), Maxwell Wood (Middle District of Georgia), Edward Kubo (District of Hawaii), Steven Colloton (Southern District of Iowa), Donald Washington (Western District of Louisiana), Jeffrey Collins (Eastern District of Michigan), Gregory Lockhart (Southern District of Ohio), Sheldon Sperling (Eastern District of Oklahoma), Mary Beth Buchanan (Western District of Pennsylvania), Daniel Bogden (District of Nevada), Peter Hall (District of Vermont), Thomas Johnston (Northern District of West Virginia).
Insider Trading
9/4. Malcolm Wittenberg plead guilty in U.S. District Court (NDCal) to one count of insider trading, in violation of 15 U.S.C. 78j and 78ff. The Plea Agreement [PDF] states that Wittenberg learned of a pending merger of Sun Microsystems and Forte Software in the course of his representation of Forte. He then traded in Forte Software stock. Wittenberg admitted that he used material, non public information when he purchased stock in Forte Software. The plea agreement also states that Wittenberg at all relevant times was an attorney and partner in the San Francisco office of the Oakland law firm of Crosby Heafey Roach & May. Wittenberg has left the firm, but the firm web site lists him as "of counsel". It further states that he "currently represents clients in all aspects of acquiring and protecting patents and trademarks. He also has extensive experience in technology licensing and product distribution, representing clients in both domestic and international transactions." See also, April 16, 2001 two count indictment [PDF] and September 4, 2001 USAO release.
Federal Reserve and XML
9/4. Ferguson also gave a speech at the Federal Reserve Bank of Philadelphia titled "The Evolving Financial and Payment System". He stated that "accelerating changes in technology have created new financial products and services as well as whole new ways of conducting financial business." He stated that XML, or extensible markup language, "is becoming increasingly important in the financial markets and that it raises interesting possibilities for the future." The Federal Reserve Board's Payments System Development Committee held a one day workshop in June on the implications of XML for the payment system.
9/4. Robert Mueller begins as Director of the FBI.
9/4. Kenneth Wilson joined the Menlo Park office of the law firm of Perkins Coie (PC) as a partner in the firm's intellectual property practice. Wilson handles patent, copyright, trademark, trade secret and other technology related litigation, and counsels high tech companies on intellectual property matters. Wilson was previously a partner in the Palo Alto office of the law firm of Wilson Sonsini. See, PC release.
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9/4. The Senate Finance Committee reported S 643, a bill to implement the agreement establishing a U.S. Jordan free trade area. See, Rept. No. 107-59.
9/4. National Science Foundation (NSF) published a notice in the Federal Register that the Advisory Committee for Cyberinfrastructure will hold a meeting on September 14, 2001, from 2:00 - 5:00 PM, at Room 1150, National Science Foundation, 4201 Wilson Boulevard, Arlington, Virginia. The purpose of this meeting is to develop a plan for the preparation of a report to the NSF regarding advanced cyberinfrastructure and the evaluation of the existing Partnerships for Advanced Computational Infrastructure. See, Federal Register, September 4, 2001, Vol. 66, No. 171, at Page 46293.
9/4. The Copyright Office (CO) published a notice in the Federal Register that it is extending the period for filing comments regarding the determination of reasonable rates and terms for the digital performance of sound recordings. The CO is extending the period to file comments to proposed regulations that will govern the RIAA collective when it functions as the designated agent receiving royalty payments and statements of accounts from nonexempt, subscription digital transmission services which make digital transmissions of sound recordings under the provisions of  114 of the Copyright Act. Comments and Notices of Intent to Participate in a Copyright Arbitration Royalty Panel Proceeding are due by September 19, 2001. See, Federal Register, September 4, 2001, Vol. 66, No. 171, at Page 46250.
WIPO Releases Second Report on Rights in Domain Names
9/3. The WIPO released its report (and executive summary) titled "The Recognition of Rights and the Uses of Names in the Internet Domain Name System: Report of the Second WIPO Internet Domain Name Process." The first WIPO report on the domain name process addressed trademarks and domain names. It recommended the establishment of the existing dispute resolution procedure to deal with disputes concerning the bad faith registration and use of trademarks as domain names. This second report addresses International Nonproprietary Names (INNs) for pharmaceutical substances, names and acronyms of international intergovernmental organizations (IGOs), personal names, geographical identifiers, and trade names which are the names used by enterprises to identify themselves.
INNs. The report recommended that "a simple mechanism be established which would protect INNs against identical domain name registrations."
IGOs. The report recommended that "States, as the constituents of IGOs, should work towards the establishment of an administrative dispute- resolution procedure, akin to the UDRP, where an IGO could bring a complaint that a domain name was the same or confusingly similar to the name or acronym of the IGO, that it has been registered without legal justification and that it is likely to create a misleading association between the holder of the domain name registration and the IGO in question."
Personal Names. The report concluded that "it was found that there are no existing international norms dealing with their protection and that national legal systems provide for a wide diversity of legal approaches to their protection ... it is suggested that the international community needs to decide whether it wishes to work towards some means of protection of personal names against their abusive registration as domain names."
Geographical Identifiers. The report states that there is "considerable evidence of the widespread registration of the names of countries, places within countries and indigenous peoples as domain names by persons unassociated with the countries, places or peoples. However, these areas are not covered by existing international laws and a decision needs to be taken as to whether such laws ought to be developed."
Trade Names. The report recommended that no action be taken to protect trade names.
HP to Purchase Compaq
9/3. Hewlett Packard and Compaq Computer announced a definitive merger agreement. Carly Fiorina, currently C/CEO of HP, will continue as C/CEO of the merged entity. Michael Capellas, C/CEO of Compaq, will be President. HP stated in a release that "Under the terms of the agreement, unanimously approved by both Boards of Directors, Compaq shareowners will receive 0.6325 of a newly issued HP share for each share of Compaq, giving the merger a current value of approximately $25 billion. HP shareowners will own approximately 64% and Compaq shareowners 36% of the merged company. The transaction, which is expected to be tax-free to shareowners of both companies for U.S. federal income tax purposes, will be accounted for as a purchase." The transaction is subject to regulatory and shareholder approvals. See also, Compaq release.

Go to News Briefs from August 26-31.