|News Briefs from
September 6-10, 2001
California Court Rules on Duty to Defend 43(a) Claims
9/10. The California
Court of Appeal (1/5) issued its opinion [PDF],
in part, in El-Com
Hardware v. Fireman's Fund, a case regarding an insurer's duty to
defend and indemnify in Lanham Act Section 43(a) suits. El-Com Hardware and Penn
Fabrication make similar products.
Fireman's Fund issued an insurance policy to El-Com Hardware that provided
coverage for "Advertising Injury Liability." Penn sued El-Com alleging
patent infringement, unfair competition for copying its product's design, and
false designation of origin under Section 43(a) of the Lanham Act (15 U.S.C. § 1125)
for copying its product. El-Com tendered the defense of the Penn action to
Fireman's Fund. It declined to defend.
El-Com then filed a complaint in California Superior Court against Fireman's
Fund alleging breach of an insurance contract and breach of the covenant of good
faith and fair dealing. El-Com argued that a Section 43(a) claim constitutes an
advertising injury covered by the policy. The trial court granted summary
judgment to Fireman's Fund. The Court of Appeal reversed.
CPNI and Location Privacy
9/10. The FCC released a document
[32 pages in PDF] titled "Clarification Order and Second Further Notice of
Proposed Rulemaking." It pertains to maintaining the privacy of personally
identifiable information held by telecommunications carriers.
CPNI. CPNI is customer proprietary network information. 47 U.S.C. § 222
provides, in part: "Except as required by law or with the approval of the
customer, a telecommunications carrier that receives or obtains customer
proprietary network information by virtue of its provision of a
telecommunications service shall only use, disclose, or permit access to
individually identifiable customer proprietary network information in its
provision of (A) the telecommunication service from which such information is
derived, or (B) services necessary to, or used in, the provision of such
telecommunications service, including the publishing of directories."
E-911 Bill and Location Privacy. The 106th Congress enacted, and
President Clinton signed, the Wireless Communications and Public Safety Act of
1999. This bill was S 800,
sponsored by Sen. Conrad Burns (R-MT),
and HR 438, sponsored by Rep. John
Shimkus (R-IL). It designated 911 as the universal emergency service number,
and promoted wireless 911 service. The bill also amended § 222 to include cell
phone call location information in the definition of CPNI.
New Technologies. § 222 covers only telecommunications carriers.
However, with the development of PDAs, in car map
and traffic services, wireless tollbooth collection systems, Blackberry e-mail pagers, Bluetooth enabled devices, and anything
else that can be embedded with a GPS chip, or other technology, personally
identifying data, including location data, is being collected by entities which
are not telecommunications carriers.
The FCC adopted rules pursuant to § 222 in its CPNI Order on February 26, 1998.
US West and other telecommunications carriers challenged the constitutionality
of the order on First Amendment free speech grounds. The 10th Circuit agreed,
and vacated that part of the order pertaining to opt in requirements. See, opinion
of the U.S. Court of Appeals (10thCir) in U S WEST v. FCC, 182 F.3d 1224 (10th
Cir. 1999), cert. denied, 120 S. Ct. 2215 (Jun. 5, 2000).
In this latest document, the FCC seeks "to obtain a more complete record on
ways in which customers can consent to a carrier's use of their CPNI." It
further requests "comment on whether it is possible for the Commission to
implement a flexible opt-in approach that does not run afoul of the First
Amendment, or whether opt-out approval is the only means of addressing the
constitutional concerns expressed by the 10th Circuit."
The document primarily goes to the 10th Circuit decision. However, the FCC also
requests comment on the implications of the E-911 Act. (See, paragraph 22 and
Comments will be due 30 days after publication in the Federal Register, and
reply comments will be due 45 days after publication. See, Docket Nos. 96-115
DOT Says GPS Is Vulnerable
9/10. The Department of Transportation
released a report
[113 pages in PDF] titled "Vulnerability Assessment of the Transportation
Infrastructure Relying on the Global Positioning System." It concludes that
the GPS is susceptible to unintentional disruption from such causes as
atmospheric effects, signal blockage from buildings, and interference from
communications equipment, as well as to potential deliberate disruption. See, DOT release.
War on Drugs, Technology and Privacy
9/10. A broad range of groups wrote a letter
to Sen. Patrick Leahy (D-VT), Chairman of
the Senate Judiciary Committee
regarding the use of new technologies in the War on Drugs that diminish
individual privacy. Specifically, they urged the Committee to examine privacy
issues at its hearing on September 11 on the nomination of John Walters
to be Director of National Drug Control Policy.
They wrote that "Rapid advances in technology have unfortunately brought
with them new opportunities for the invasion of privacy in the form of programs
like Carnivore, a system designed to allow the FBI to sift through vast
quantities of internet communications, or 'Know Your Customer,' a proposed
regulation requiring banks to collect personal financial information about their
customers, 'profile' them, and report 'suspicious activities' to the Government.
The misguided drug war is often a driving force behind these initiatives."
Among the 63 signatories of the letter are representatives of the Free Congress Foundation (FCF), Center for Democracy and Technology (CDT), ACLU,
Eagle Forum, American Conservative Union, and Libertarian Party. See also, FCF release and
Tauzin Dingell Bill
9/10. The Competitive Telecommunications
Association (CompTel), a group based in Washington DC that represents
competitive local exchange carriers, issued a release regarding HR 1542, the
Tauzin Dingell bill. It states that the bill "is likely to come to a floor
vote in the next few weeks". It also states that CompTel is not about
"to cut a deal" with legislators promoting the bill.
5th Circuit Rules on FCC CALLS Order
9/10. The U.S.
District Court (5thCir) issued its opinion
in Texas Office of Public
Utility Counsel v. FCC, a petition for review of the FCC's CALLS
Order. The Appeals Court affirmed in part, and reversed in part.
The CALLS (Coalition for Affordable Local and Long Distance Service) Order,
which provides for an irrational interstate access charge and universal service
regime, was adopted by the FCC on May 31, 2000, following meetings at the FCC
which admitted some, but not all, interested parties. See, text
version (without footnotes) and MS
Word version. (CC Docket No. 94-129).
These petitioners, Texas Office of Public
Utility Counsel (TOPUC), National
Association of State Utility Consumer Advocates (NASUCA), and intervenor Consumer Federation of America (CFA),
filed a petition for review of the FCC's CALLS Order with the U.S. Court of
Appeals. They asserted that the CALLS Order violates the procedural requirements
of the Administrative Procedure Act and substantive provisions of the
Telecommunications Act of 1996. More specifically, they asserted that the
Subscriber Line Charge (SLC) price cap increase violates § 254(b)(1) and
§ 254(i)'s purported affordability mandate, that it contravenes § 254(k)'s
prohibition against unreasonable allocation of joint and common costs, and that
the 1996 Act requires the FCC to conduct a comprehensive, forward looking study.
The Court of Appeals affirmed the CALLS Order in most respects, but remanded for
further analysis the portions regarding the $650 million Universal Service Fund
and the X-Factor.
FCC Enforcement Bureau News
9/10. The FCC hired five new lawyers to work in its Enforcement Bureau on
competition enforcement matters. The five attorneys, and the firms from which
they were hired, are as follows: Rosemary McEnery (Howrey
Simon), Lisa Saks (Howrey Simon), Maureen Del Duca (Jenner & Block), David Janas (Mintz Levin),
Hillary De Nigro (Milbank Tweed). See, FCC
9/10. The FCC's Enforcement Bureau released
an Order of
Forefeiture imposing a $920,000 fine against All American Telephone, Inc. (AAT)
for violations of the Communications Act of 1934 and the FCC's anti slamming
rules. See also, FCC
GAO Releases Report on SEC Information Systems
9/10. The GAO released
a report [PDF] titled
"Information Systems: Opportunities Exist to Strengthen SEC's Oversight of
Capacity and Security." The report assesses "the effectiveness of the
Securities and Exchange Commission's (SEC) oversight of capacity planning and
security procedures for information systems at the securities and options
exchanges and clearing organizations." It concludes that the various
components of the SEC’s Automation Review Policy (ARP) program "provide
it with a reasonable level of assurance that the SROs address capacity,
security, and other information system issues. However, SEC's ARP oversight
could be improved." The report was prepared at the request of Rep. John
Dingell (D-MI), the ranking Democrat on the House Commerce Committee.
9/10. Paul Roye of the SEC gave a speech to investment
advisors in Philadephia. Among the topics that he discussed was electronic
record keeping by investment advisors, and the recently promulgated changes
to Rule 204-2, implementing the Electronic Signatures in Global and National
Commerce Act, also known as the E-SIGN Act. Roye is Director of the SEC's
Division of Investment Management. He addressed the National Symposium on
Investment Adviser Regulation.
9/10. The U.S. Court of Appeals for the
District of Columbia Circuit heard oral argument in High Plains Wireless
v. FCC, No. 00-1292. Judges Ginsburg, Edwards and Sentelle presided.
9/10. FCC Wireless Telecommunications Bureau
(WTB) fees changes go into effect. See, WTB
Ferree Addresses Cable and Broadband Regulation
9/9. Kenneth Ferree, Chief of the FCC's Cable
Services Bureau, gave a speech
at a meeting of the National Association of Telecommunications Officers and
Advisors in Miami Beach, Florida, on FCC regulation of cable and broadband
services. He argued that people must "disenthrall ourselves from the
regulatory answers appropriate for a more static past."
Ferree stated that "it has been suggested that the cable industry missed an
entire upgrade cycle in the mid-90s because of rate regulation. ... We cannot
therefore help but recognize that there is a trade-off between our desire for
lower subscriber rates on one hand and our desire to see broadband services
deployed more widely, particularly in rural areas, on the other hand."
He concluded that "as the Cable Services Bureau moves forward into the new
broadband world, we will be just as careful not to reduce consumer surplus
through imposition of anachronistic regulatory requirements, as we will be
vigilant against market failures that may require affirmative government
remedies. ... In both instances, we will work in partnership with state and
local authorities for common and consistent solutions -- solutions that will be
based on the new facts and circumstances, and not necessarily tied to any
preconceived notions bound to the past.
Much of his address devoted to a comparison of the evolution of species to
10th Circuit Rules on Scienter Requirement of PSLRA
9/7. The U.S.
Court of Appeals (10thCir) issued its opinion
v. Fleming Companies, a class action securities action involving
application of the Private Securities Litigation Reform Act (PSLRA). Congress
passed the PSLRA, 15 U.S.C. § 78u-4, to insulate defendants, and especially
info and bio tech companies, from abusive class action law suits. The PSLRA
creates both a safe harbor for forward looking statements, and a heightened
pleading requirement. Plaintiffs must "state with particularity facts
giving rise to a strong inference that the defendant acted with the required
state of mind." See, 15 U.S.C. § 78u-4(b)(2). The Appeals Court affirmed
the District Court's dismissal. Seven circuits have now addressed the scienter
requirement of the PSLRA, but without consensus.
District Court. Plaintiffs filed a complaint in the U.S. District Court (WDOkla) against
Fleming Companies, and several of its officers, alleging securities fraud under
Section 10b of the Securities Exchange Act of 1934. They sought class action
status. Defendants moved to dismiss pursuant to FRCP 12(b)(6). Plaintiffs twice
amended their complaint. The District Court dismissed the complaint, stating
that the second amended complaint did not meet the pleading requirements for
scienter set forth in the PSLRA.
Other Circuits. Six other circuits have previously addressed this issue,
reaching various results. See, Janas v. McCracken (In re
Silicon Graphics Sec. Litig.), 183 F.3d 970 (9th Cir 1999); Novak v. Kasaks,
216 F.3d 300 (2d Cir); In re
Advanta Corp. Sec. Litig., 180 F.3d 525 (3d Cir 1999); Bryant v.
Avado Brands, 187 F.3d 1271 (11th Cir 1999); Greebel
v. FTP Software, 194 F.3d 185 (1st Cir 1999); and Helwig
v. Vencor, (6th Cir 2001).
Holding. However, the 10th Circuit had not previously ruled on this
issue. The Appeals Court held that plaintiffs can adequately plead scienter by
setting forth facts raising a strong inference of intentional or reckless
misconduct. The Court also held that "the most reasonable reading of the
PSLRA in regard to motive and opportunity pleadings is the view adopted by the
First Circuit in Greebel and the Sixth Circuit in Helwig. The PSLRA was
obviously intended to eliminate frivolous securities litigation through its
heightened scienter pleading requirements. Allegations of motive and
opportunity, with nothing more, could allow potentially frivolous lawsuits to go
forward with only minimal allegations of scienter. But evidence of motive and
opportunity may be relevant to a finding of scienter, and thus may be considered
as part of the mix of information that can come together to create the
"strong inference" of scienter required by the PSLRA. When reviewing a
plaintiff's allegations of scienter under the PSLRA, a court should therefore
examine the plaintiff's allegations in their entirety, without regard to whether
those allegations fall into defined, formalistic categories such as "motive
and opportunity," and determine whether the plaintiffs' allegations, taken
as a whole, give rise to a strong inference of scienter."
Attorneys. The plaintiffs are represented by several law firms, including
Milberg Weiss, a law firm
based in San Diego that specializes in bringing securities class action suits
against technology companies. Defendants are represented by several law firms,
including Brobeck Phleger.
USTR Zoellick Discusses Trade Promotion Authority
Robert Zoellick held a press conference in Mexico City at which he addressed
progress in the U.S. Congress on passing trade promotion authority (formerly
called fast track). See, transcript.
He stated that House Ways and Means
Committee Chairman Bill Thomas (R-CA) "will probably try to push
forward early in September. He's been having discussions with some of his
Democratic colleagues, about how to try to do so in a way that deals with
environmental labor as well as trade issues in a positive consentive based
fashion, and that will be the process that you will see unfold in the course of
September." See, HR 2149.
He also stated that Sen. Bob Graham
(D-FL) and Sen. Frank Murkowski
(R-AK) have a bill in the Senate, and that Sen.
Max Baucus (D-MT) and Sen. Charles
Grassley (R-IA), the Chairman and ranking Republican on the Senate Finance Committee, have been
"having discussions". See, S 1104.
He concluded that "the President and I, and Secretary Evans, and Secretary
Veneman, and our colleagues who will also be spending a lot of time on trying to
secure that authority over the course of the next two months. President Bush is
the first President not to have that authority from the five prior presidents,
and one of the arguments that we made is that frankly in many areas the United
States has been falling behind because we don't have that trade negotiating
Also on September 7, Zoellick issued a release in which he
stated that "Expanding our access to foreign markets can help ignite
economic recovery and expansion by providing American farmers, workers and
businesses new opportunities to sell their products overseas. U.S. Trade
Promotion Authority is an important part of President Bush's plan for opening
markets and promoting American economic prosperity. I look forward to continuing
to work with the Congress to get TPA enacted this fall."
USTR Zoellick Addresses PR China Joining WTO
Robert Zoellick released a statement regarding
the PR China's accession to the World Trade
Organization (WTO). He stated that "China made commitments on insurance
as part of its bilateral accession agreement with the United States. These
commitments will be incorporated into China's WTO accession agreement, and
therefore would be applicable for all WTO members. We expect China to uphold all
of its commitments and obligations."
Intel and Via Technologies in Patent Dispute
9/7. Intel filed a complaint in U.S. District Court (DDel)
against Via Technologies
(Via) and S3 Graphics alleging patent
infringement. Intel alleges that Via's P4X266 and P4M266 chipsets infringe Intel
patents. Meanwhile, Via announced that it has filed a complaint with the Taiwan
Fair Trade Commission alleging anti competitive behavior by Intel. Via also
announced that it would file a patent infringement action against Intel in the
U.S. It states that Intel's Pentium 4 infringes its patents. See, Via release.
FTC Approves Chevron Texaco Merger
9/7. The FTC
approved a consent order allowing the proposed merger of Chevron and Texaco,
with divestiture requirements. See, Agreement Containing
Consent Order. See also, Chevron
release, and FTC
release. These are oil companies, not technology companies. However, the
FTC's disposition of this merger may be pertinent to technology companies that
are contemplating mergers and other transactions.
9/7. The National Association of Broadcasters
(NAB) held a convention in New Orleans from September 5-7. See, speech by
FCC Commissioner Michael Copps, speech by
Edward Fritts, P/CEO of the NAB, and speech by Hillary Rosen,
P/CEO of the RIAA.
9/7. A grand jury of the U.S. District
Court (NDTex) returned a nine count indictment against David Horne for
various crimes related to the distribution of child pornography via an AOL
account. See, USAO
Federal Circuit Decisions in Patent Cases
9/7. The U.S.
Court of Appeals (FedCir) issued its opinion in GFI
v. Franklin Corporation, a pair of patent case appeals involving
a number of issues, including unenforceability for inequitable conduct,
the doctrine of equivalents, obviousness, and waiver of attorney
client privilege for testifying at trial. The patent in suit is U.S.
Patent No. 5,064,244, which discloses a reclining sofa with push button
9/7. The U.S.
Court of Appeals (FedCir) issued its opinion in Schaefer
Fan v. J&D Manufacturing, a case in which the Appeals Court
upheld a District Court interpretation of a settlement agreement in a
patent infringement case.
Update on Intel v. Via
9/7. Intel filed a complaint in U.S. District Court (DDel)
against VIA Technologies
(VIA) and S3 Graphics alleging patent
infringement. Intel alleges that VIA's P4X266 and P4M266 chipsets infringe
the following patents: U.S. Patent No. 6,145,039 titled "Method and
Apparatus for an Improved Interface Between Computer Components", U.S.
Patent No. 6,009,477 titled "Bus Agent Providing Dynamic Pipeline Depth
Control", U.S. Patent No. 5,761,449 titled "Bus System Providing
Dynamic Control of Pipeline Depth for a Multi-Agent Computer", U.S. Patent
No. 5,615,343 titled "Method and Apparatus for Performing Deferred
Transactions", U.S. Patent No. 5,659,689 titled "Method and Apparatus
for Transmitting Information on a Wired-Or Bus".
9/7. September 7 was Gloria Tristani's last day as an FCC Commissioner.
See, Tristani's farewell
9/7. The ICANN began a
round of meetings, that will continue through September 10, in Montevideo,
Uruguay. See meeting web site for
agenda and other information.
9/7. The U.S. Department of State is hosting a conference from September 5
through 7 titled "NetDiplomacy". See, State
9/7. The U.S. Court of Appeals for the
District of Columbia Circuit heard oral argument in Fox v. FCC, No.
00-1222. Judges Ginsburg, Edwards and Sentelle presided. The case is a challenge
to the FCC media ownership rules.
9/7. BellSouth released a statement
in opposition to S
1364, the Telecommunications Fair Competition Enforcement Act of 2001,
introduced by Sen. Ernest Hollings
(R-SC) on August 3, 2001.
Senate Judiciary Committee Chairman Comments on Microsoft Case
9/6. Sen. Patrick Leahy (D-VT), the
Chairman of the Senate Judiciary
Committee, released a statement
regarding the Justice Department's (DOJ) announcement
that it would not seek the break up of Microsoft. The Committee has both
oversight authority over the DOJ and jurisdiction over antitrust legislation.
Sen. Leahy wrote that "This decision avoids lengthy additional trial time
and is cause for cautious optimism that this case will be resolved more quickly
for the benefit of all consumers. The Department's intention to pursue remedies
targeted at Microsoft's conduct may produce more immediate results for
consumers, competitors and computer sellers than any structural solution could.
But prosecutors should hold to their original intention of securing a remedy
that will genuinely rectify the competitive problems revealed through the trial
process -- not just for the short term but over the long haul. With the brisk
pace of change in the computer and high-tech industries, it will be no easy task
to ensure that the remedies proposed will be effective in the competitive
environment today as well as tomorrow. ..."
Evans Proposes Legislation to Delay 3G Spectrum Auctions
9/6. Commerce Secretary Donald Evans wrote a letter
to Vice President Dick Cheney in which he proposed delaying "auction
deadlines for spectrum bands that are candidates for use in connection with
third generation (3G) advanced mobile wireless services." He also enclosed
bill to accomplish this purpose. The NTIA,
which is a part of the Commerce Department,
has management responsibilities for spectrum assigned to government users. The FCC
manages spectrum used by the private sector.
Evans elaborated that "While the Federal Government is committed to
identifying spectrum for 3G services as expeditiously as possible, the current
statutory auction deadline affecting certain of the bands under consideration
does not provide sufficient time to conclude the identification process and
conduct an auction before September 30, 2002. Accordingly, this legislative
proposal shifts the statutory deadlines originally established in the Balanced
Budget Act of 1997 for completion of the auctions of and collection of receipts
for spectrum licenses in the 1710-1755 MHz and 2110-2150 MHz bands from
September 30, 2002, to September 30, 2004."
U.S. Jordan Free Trade Agreement
9/6. Sen. Max Baucus (D-MT) gave a speech
in the Senate in which he advocated passage of S 643, a bill
sponsored by Sen. Baucus that would implement the U.S. Jordan
Free Trade Agreement (FTA) [PDF]. This FTA was negotiated by the Clinton
administration last year, but has not yet been ratified by the Senate. Trade
with Jordan is minimal. However, controversy has arisen because many see this
FTA as a blueprint for future FTAs. The main dispute is whether these FTA's
should contain language addressing labor and environmental issues, as does this
This FTA is also significant because it contains extensive language pertaining
to intellectual property and e-commerce. This FTA addresses
patents, trademarks, copyright, and enforcement of IPR. It also provides that
the parties will not impose new customs duties on electronic transmissions.
Sen. Baucus noted that the "Bush Administration supports it and has no
intention or renegotiating a new agreement. The Jordanian Parliament ratified
the Agreement last May. Our colleagues in the House have already approved the
implementing legislation for the agreement." (See, HR 2603.) He
urged swift passage without amendment.
DOJ Will Not Seek Break Up of Microsoft
9/6. The Antitrust Division of the
Department of Justice (DOJ) announced that "it will not seek a break-up of
the company in remand proceedings before the U.S. District Court. It also
informed the company that it does not intend to pursue further proceedings on
the tying count of the original complaint." It also stated that it would
not pursue its tying claim. See, DOJ release.
On June 28, the U.S. Court of Appeals (DCCir)
issued its en banc
opinion in USA v. Microsoft, affirming in part, and reversing in part, Judge
Jackson's Final Judgment
(June 7, 2000). The Appeals Court vacated Judge Jackson's break up order on
several grounds. It also reversed on the tying count. However, the Appeals Court
affirmed in part Judge Jackson's judgment that Microsoft violated § 2 of
the Sherman Act by employing anticompetitive means to maintain a monopoly in the
operating system market.
On September 6, the Antitrust Division also stated that "In view of the
Court of Appeals' unanimous decision that Microsoft illegally maintained its
monopoly over PC-based operating systems -- the core allegation in the case --
the Department believes that it has established a basis for relief that would
end Microsoft's unlawful conduct, prevent its recurrence and open the operating
system market to competition. Pursuing a liability determination on the tying
claim would only prolong proceedings and delay the imposition of relief that
would benefit consumers."
The Antitrust Division "will seek an order that is modeled after the
interim conduct- related provisions of the Final Judgment previously ordered in
The Antitrust Division added that it "will ask the court for a period of
expedited discovery to investigate developments in the industry since the trial
concluded, and to evaluate whether additional conduct- related provisions are
necessary, especially in the absence of a break-up. ..."
Robert Levy, a Senior Fellow
at the Cato Institute, a libertarian think
tank, offered an analysis. "Today's announcements are not concessions to
Microsoft, but to reality. A breakup of Microsoft was effectively rejected by
the U.S. Court of Appeals. And the court imposed a much tougher burden of proof
if the government wants to prevail on its tying claim." Levy continued that
"What's really going on is a declaration by the Justice Department and,
significantly, by the attorneys general who are co-plaintiffs, that they will
not waste their time with lost causes and hard to prove charges that won't lead
to incremental conduct remedies. Instead, the government wants to move ahead
aggressively and quickly to restrict Microsoft's behavior and, maybe, to prevent
Windows XP from establishing a major toehold in the market." Levy conclude
that "The $64,000 question remains: Why is the Bush administration --
supposed champions of free markets -- proceeding with this pitiful lawsuit,
which transforms our antitrust laws into a corporate welfare program for
Jonathan Zuck, President of ACT, a pro Microsoft group,
praised the decisions not to seek a break up, and to drop the tying claim. He
added, "We invite the European Union to reach similar conclusions."
Export Administration Act Passes Senate
9/6. The U.S. Senate passed S 149, the
Export Administration Act of 2001, by a vote of 85 to 14. The bill, a major
rewrite of the export control regime, 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 Senate also
approved two amendments.
Sen. Mike Enzi (R-WY), the sponsor of the
bill, said afterwards that "I'll continue to keep up pressure on the House
so we can send a good bill to the President for his signature." President
Bush supports the Senate version of the bill. The House International
Relations Committee passed a substantially different version of the bill, HR 2581, on
August 1. "I will encourage the House to pass legislation that is identical
or nearly so to the version we passed in the Senate today," said Sen. Enzi.
"This bill dramatically enhances our national security needs by increasing
penalties, by focusing attention on truly sensitive items, and granting the
President new control authority in cases involving national security and
terrorists," said Sen. George Allen
(R-VA), another co-sponsor of the bill. "At the same time, this legislation
will remove unnecessarily burdensome punitive regulatory controls on mass market
and readily available foreign technology products that have hindered the
competitiveness of U.S. technology industries."
Sen. Robert Bennett (R-UT) also spoke
in favor of the bill. He stated that "The borderless economy is a reality
of the future. It cannot be turned back. We have to accept this new reality and
say the best national security step we can take is to keep American technology
firms absolutely in the forefront, and the best way to keep them in the
forefront is to give them the opportunity to compete in the largest possible
market that they can."
Kyl Amendment. One amendment, offered by Sen.
Jon Kyl (R-AZ), adds language to Section 506(g) to give the Secretary of
Commerce enhanced authority in responding to a country that refuses to allow
post shipment verification of an exported item. It provides: "(3) REFUSAL
BY COUNTRY. If the country in which the end-user is located refuses to allow
post- shipment verification of a controlled item, the Secretary may deny a
license for the export of that item, any substantially identical or directly
competitive item or class of items, any item that the Secretary determines to be
of equal or greater sensitivity than the controlled item, or any controlled item
for which a determination has not been made pursuant to section 211 to all
end-users in that country until such post-shipment verification is
Thompson Amendment. The other amendment, offered by Sen. Fred Thompson (R-TN), tightens the
definition of a "directly competitive item" in Section 211, regarding
foreign availability and mass market status, and clarifies that an item is not
directly competitive if it is "not of comparable quality" as the
controlled item. Both amendments were approved by voice votes.
Subcommittee Holds Hearing on Telework
9/6. The House Government Reform
Committee's Subcommittee on Technology and Procurement Policy held a hearing
titled "Public Service for the 21st Century: Innovative Solutions to the
Federal Government's Technology Workforce Crisis." Witnesses related a
variety of government related obstacles to telework in both the public and
private sectors, including application of the multitude of local tax laws to
interjurisdictional telework arrangements, confusing IRS rules for home office
deductions, the threat of OSHA regulation, and the lack of residential broadband
Rep. Tom Davis (R-VA), the Chairman
of the Subcommittee, said in his prepared
statement that "Advances in computer and telecommunications technology
have facilitated the rapid growth of telework in the private sector. While
companies enjoy increased productivity, job satisfaction, and employee morale as
a result of telework programs, the Federal government’s success has been
inconsistent. " He added that "an aggressive telecommuting policy may
help the federal government address the shortage of information technology (IT)
Robert Robertson of the General Accounting Office
said in his prepared
testimony that there are many obstacles to telework. He stated that
"certain federal and state laws and regulations, including those governing
taxes, workplace safety, workforce recordkeeping, and liability for home
workplace injuries can also act as potential barriers to telecommuting for both
the public and private sectors." He also testified that there are
management concerns, including "assessing whether the employer has the
types of positions and employees suitable for telecommuting; protecting
proprietary and sensitive data; and establishing cost-effective telecommuting
Harris Miller, President of the Information
Technology Association of America (ITAA), said in his prepared
testimony that the slow deployment of broadband Internet access services and
security concerns also serve as a barriers to telework. He also cited several
regulatory burdens, including a patchwork of over 7,000 taxing jurisdictions,
unclear rules for home office deductions, and the specter of OSHA regulation of
See also, prepared testimony of Teresa Jenkins
(Office of Personnel Management), David Bibb
(U.S. General Services Administration), Mark
Straton (Siemens Enterprise Networks), and Robert
EPIC Condemns Monitoring of Computers of Judiciary
9/6. Marc Rotenberg, Executive Director of the Electronic
Privacy Information Center (EPIC), sent a letter
to the Administrative Office of the United States Courts regarding the
electronic monitoring of the employees of the federal judiciary. He wrote:
"I strongly urge the Judicial Conference to end the practice of monitoring
the computer terminals of employees of the federal judiciary."
Rotenberg also stated that "the practice of logging the web sites that are
viewed by members of the judiciary and their staff, without prior notice, could
be a violation of the Electronic Communications Privacy Act of 1986, 18 USC §
2510 et seq., and that the use of this information in a disciplinary proceeding
would be in violation of the Act." See, 18 U.S.C. Chapter 119.
The Judicial Conference of the United States is scheduled to meet on September
11 to consider a report [PDF]
by its Committee on Automation and Technology.
9/6. The SEC announced that it filed a
civil complaint in the U.S. District
Court (NDCal) against M&A West, Inc. (MAWI) and four individuals
alleging violations of federal securities laws, including fraud and sale of
unregistered securities. MAWI is a self proclaimed "Internet
incubator" engaged in developing Internet related technology companies.
See, SEC release.
9/6. The U.S. Attorneys Office (NDCal)
announced the unsealing of an 82 count indictment
[PDF] charging two of the individuals associated with MAWI, Thomas Eck and Zahra
Gilak, with stock manipulation and money laundering. See, USAO release.
9/6. Costa Rican law enforcement authorities arrested Alyn Waage and
James Webb in San Jose, Costa Rica, pursuant to United States arrest warrants
for mail fraud and securities fraud issued in connection with an Internet based
investment fraud scheme that allegedly netted the defendants more that $50
Million. Defendants have been charged by criminal complaint filed in the U.S. District Court (EDCal). See, CCIPS release.
Hacker Gets 4 Months
9/6. Raymond Torricelli was sentenced in U.S.
District Court (SDNY) to 4 months imprisonment for various hacking offenses,
including unauthorized access to computers, credit card fraud, and password
He illegally intruded into computers used by NASA to perform satellite design
and mission analysis concerning future space missions, and by the Jet Propulsion
Laboratory's (JPL) Communications Ground Systems Section. He also installed a
program name "rootkit" which, when run on the computers, allowed him
to gain complete access to all of a computer's functions without having been
granted these privileges by the authorized users of that computer. He then
proceeded to use the computers to host chat rooms, which he used, among other
things, to promote pornographic web sites.
Torricelli also intercepted usernames and passwords traversing the networks of
San Jose State University, which he used to gain free Internet access, or to
gain unauthorized access to still more computers. See, CCIPS release.
Federal Circuit Decisions in Patent Cases
9/6. The U.S.
Court of Appeals (FedCir) issued its opinion in Ecolab
v. Envirochem, an appeal from a pair of opinions in a patent
infringement case. The Appeals Court reversed the opinion finding literal
infringement, and affirmed the opinion finding that neither estoppel
nor laches precluded the plaintiff from obtaining an injunction.
9/6. The U.S.
Court of Appeals (FedCir) issued its opinion in Kustom
Signals v. Applied Concepts, affirming a grant of summary
judgment of non infringement in a suit involving makers of radar devices for
traffic police. The patent in suit is U.S.
Patent No. 5,528,246, titled "Traffic Radar with Digital Signal
Senate Judiciary Committee Approves Prost for Federal Circuit
9/6. The Senate Judiciary Committee
unanimously approved the nomination Sharon Prost to be a judge of the U.S. Court of Appeals for the Federal Circuit.
Prost is a long time staff assistant to Sen.
Orrin Hatch (R-UT), the ranking Republican on the Committee.
Muris Names Executive Assistant
Chairman Timothy Muris appointed Christine Wilson to be his Executive
Assistant. She previously was an associate in the antitrust practice group in
the Washington DC office of the law firm of Howrey Simon. Prior to that, she
worked at Collier
Shannon. See, FTC
9/6. The law firms of Latham &
Watkins (LW) and Stibbe Paris announced that they will combine, giving the
firm 95 lawyers in Paris and over 200 attorneys throughout Europe. Olivier
Delattre will be the Managing Partner of LW's Paris office. The office will
focus on mergers and acquisitions, capital markets, project finance, banking and
finance, intellectual property and information technology, European Union
competition, labor and tax. See, LW release.
9/6. Gregory Jenner joined the Venable
law and lobbying firm as a partner in the firm's Tax and Legislative and
Regulatory groups, the firm announced today. Mr. Jenner is a former partner in
the Price Waterhouse Coopers national
office where he was the national office leader for InfoComm. See, release.
9/6. The U.S. House of Representatives approved HJRes 51
and HR 2833, regarding the bilateral trade agreement between Viet Nam and the
U.S. that was negotiated last year by the Clinton administration.
9/6. People for the American Way, a liberal
group based in Washington DC, released a report titled
"John Ashcroft's First Six Months at the Justice Department: The Right Wing
Dream Team Takes Over." While the report harshly criticizes Attorney
General Ashcroft on numerous old social issues, such as abortion, school prayer,
gun control, and capital punishment, it contains no criticism on new technology
related issues, such as electronic privacy, encryption rights, CALEA, and
intellectual property rights.
9/6. The U.S. Court of Appeals for the
District of Columbia Circuit heard oral argument in Verizon v. FCC,
9/6. The U.S. Court of Appeals for the
District of Columbia Circuit heard oral argument in National Association
of Broadcasters v. FCC, No. 00-1054.
Go to News Briefs from September 1-5.