|News Briefs from
October 16-20, 2001
3rd Circuit Affirms in Check Point Trademark Case
10/19. The U.S.
Court of Appeals (3rdCir) issued its opinion in Checkpoint
Systems v. Check Point Software, a trademark case. Checkpoint Systems makes electronic
security control systems that track the physical location of goods, including
electronic article surveillance systems, access control systems, closed circuit
television systems, and radio frequency identification devices. It registered
the "CHECKPOINT" mark with the United States Trademark Office. Check Point Software Technologies makes
firewall software products. Checkpoint Systems filed a complaint in U.S.
District Court against Check Point Software Technologies alleging trademark
infringement and unfair competition in violation of the Lanham Act. The District
Court found no likelihood of confusion, and thus, held for the defendant on both
counts. The Court of Appeals affirmed.
FCC Files Petition for Writ of Certioriari in NextWave Case
10/19. The Federal Communications Commission
(FCC) filed a petition for writ of certiorari with the Supreme Court of the U.S.
in the NextWave spectrum dispute. The
FCC faced an October 19 deadline for filing.
NextWave obtained spectrum licenses at FCC auctions in 1996. The FCC permitted
NextWave to obtain the licenses, and make payments under an installment plan,
thus creating a debtor creditor relationship between NextWave and the FCC.
NextWave did not make payments required by the plan, and filed a Chapter 11
bankruptcy petition. The FCC cancelled the licenses. The U.S. Court of Appeals (DCCir) ruled in
its June 22, 2001, opinion
that the FCC is prevented from canceling the spectrum licenses by § 525 of the
The FCC now seeks review of this decision. It stated in its cert petition that
the issue is "Whether Section 525 of the Bankruptcy Code, 11 U.S.C. 525,
conflicts with and displaces the Federal Communications Commission’s rules for
congressionally authorized spectrum auctions, which provide that wireless
telecommunications licenses obtained at auction automatically cancel upon the
winning bidder’s failure to make timely payments to fulfill its winning
bid." The FCC elaborated that "the D.C. Circuit’s decision
dramatically expands the reach of bankruptcy law into an area that Congress has
traditionally reserved to the Commission ..."
NextWave bid $4.74 Billion in 1996 for the spectrum licenses at issue. The FCC
recently re-auctioned the spectrum, receiving $15.85 Billion in bids. Various
press accounts, citing anonymous sources, have stated in the last week that
NextWave, the FCC, and the re-auction winner are close to a settlement. Also,
FCC Chairman Powell has scheduled a press conference for Tuesday morning,
GAO Reports on Information Sharing and Cyber Attacks
10/19. The GAO released
a report [PDF] titled
"Information Sharing: Practices That Can Benefit Critical Infrastructure
GAO studied 11 organization to determine information sharing practices related
to protection of critical information infrastructure. The organizations were The
Agora, CDC, CERT/CC, Federal Computer Incident Response Center, International
Information Integrity Institute, InfraGard, Joint Task Force -- Computer Network
Operations, National Coordinating Center for Telecommunications, Network
Security Information Exchanges, N.Y. Electronic Crimes Task Force, and the North
American Electric Reliability Council.
The report states that "Information sharing and coordination are key
elements in developing comprehensive and practical approaches to defending
against computer based, or cyber, attacks, which could threaten the national
welfare. Such attacks could severely disrupt computer supported operations,
compromise the confidentiality of sensitive information, and diminish the
integrity of critical data." The report continues that "The importance
of sharing information and coordinating the response to cyber threats among
various stakeholders has increased as our government and our nation have become
ever more reliant on interconnected computer systems to support critical
operations and infrastructures, such as telecommunications, power distribution,
financial services, national defense, and critical government operations."
One of the challenges identified by the report is "overcoming new members’
initial reluctance to share information." The report elaborated that
"All of the participating organizations told us that initially establishing
trust among the original members was a challenge. This was because members were
reluctant to share their organization’s problems and vulnerabilities with
outsiders, some of whom were commercial competitors."
The report was prepared for Sen. Robert
Bennett (R-UT). Sen. Bennett and Sen. Jon
Kyl (R-AZ) are cosponsors of S 1456,
the Critical Infrastructure Information Security Act of 2001. One of the main
purposes of the bill is to encourage information sharing pertaining to cyber
security issues, by removing legal disincentives for such actions. The bill
would provide a Freedom of Information Act exemption for certain cyber
security information provided to certain federal agencies, including the NIPC,
Justice Department, Defense Department, and Commerce Department. The bill would
also provide an antitrust exemption for certain collaboration on cyber
The report also concluded that "All of the organizations identified trust
as the essential underlying element to successful relationships and said that
trust could be built only over time and, primarily, through personal
relationships." The report identified three "critical success
factors": secure communication mechanisms, support of senior managers, and
organization leadership continuity. The report also identified four
"challenges": developing agreements on the use and protection of
shared information, obtaining adequate funding, maintaining a focus on emerging
issues, and maintaining professional and administrative staff with appropriate
Macromedia Sues Adobe for Patent Infringement
10/19. Macromedia filed a complaint in U.S.
District Court (NDCal) against Adobe Systems
alleging patent infringement. Both Macromedia and Adobe make software products
for creating and editing web pages and web sites. Macromedia's products include
Dreamweaver, Dreamweaver UltraDev and Fireworks. Adobe makes GoLive. Macromedia
alleges in its two count complaint that Adobe infringed two of its patents, U.S.
Patent No. 5,845,299, titled "Draw-Based Editor for Web Pages",
Patent No. 5,911,145, titled "Hierarchical Structure Editor for Web
Macromedia seeks declarations that Adobe has infringed these two patents,
preliminary and permanent injunctions against further infringement, compensatory
damages, treble damages for willful infringement, interest and attorneys' fees.
Macromedia is represented by Darryl Woo of the law firm of Fenwick & West. The case was filed in the
San Jose Division of the Northern District of California, and is numbered
01-03940 SI (Judge Susan Illston).
More News 10/19. A grand jury of the U.S.
District Court (CDCal) returned an indictment against Peter Ebel charging
production, transportation and possession of child pormography. The evidence was
found by U.S. Customs on his PC and CDs when he arrived at Los Angeles
International Airport on a flight from Eastern Europe. See, release.
Sen. Bennett Says SEC Should Require Cyber Security Disclosure
10/18. Sen. Robert Bennett (R-UT)
stated that he is urging the new Securities and
Exchange Commission (SEC) Chairman, Harvey Pitt, to adopt rules requiring
covered companies to report on their preparations for cyber threats. Sen.
Bennett stated that the purpose would be to incent companies to devote more
resources to the threat, just as an earlier similar rule caused companies to
engage in Y2K remediation efforts.
Sen. Bennett spoke on this matter at the Center
for Strategic and International Studies' (CSIS) conference titled
"Strengthening Homeland Cyberdefense". He said that a important part
of the Y2K remediation effort was the SEC's rule requiring Y2K reporting. He
related that the SEC "said we are going to require you to reveal on your
reporting statements your level of Y2K preparedness. We will by fiat define that
as a material item that has to be reported. And then the companies started to
scramble, because when they have to deal with the SEC, it suddenly gets
Sen. Bennett continued: "Now, I have talked to the new Chairman of the SEC
about this aspect, because once again, the experience we have had with Y2K is
that these were not sunk costs, on which there was no return on
"I have had a number of companies come to me and say, 'You know, we really
grumbled and hated you with respect to Y2K, but when we did all of the
remediation, and looked at what a much better IT system we had than before we
made the fixes, we said, we are going to get a significant return on this
investment.' If you adopt the fail and fix notion with respect to cyber
terrorism, you are going to have much higher costs overall, than if you go in to
establish the security up front. We can get the SEC and other agencies to get
people to understand that, we will go a long way towards changing the culture in
American industry, and get the advantages that come out of the remediation
activities," said Sen. Bennett.
Sen. Bennett also spoke with reporters after the event. He stated that he would
like to see the SEC adopt rules, rather than have the Congress impose a mandate
on the SEC through legislation. He added: "The conversations are still very
preliminary, because Harvey Pitt is just beginning to get his feet under his
desk, so we have not got anything specific going. But, I have had the
conversation with him that this is an area where the SEC can be helpful. And he
has agreed to talk to me about it. And, we probably won't see anything
definitive out of them, maybe until sometime next year." He added, "I
am going on the Y2K precedent, that it can be done with rulemaking. And, I will
be in conversations with the folks at the SEC to see what would make sense and
how far they can go."
Sen. Bennett Promotes Cyber Security Bill
10/18. Sen. Robert Bennett (R-UT) spoke
in favor of S 1456,
the Critical Infrastructure Information Security Act of 2001, a bill which he
introduced, along with Sen. Jon Kyl (R-AZ).
One of the main purposes of the bill is to encourage information sharing
pertaining to cyber security issues, by removing legal disincentives for such
actions. He spoke at the Center for Strategic and
International Studies' (CSIS) conference titled "Strengthening Homeland
Cyberdefense" in Washington DC.
The bill would provide a Freedom of Information Act exemption for certain
cyber security information provided to certain federal agencies, including the NIPC,
Justice Department, Defense Department, and Commerce Department. The bill would
also provide an antitrust exemption for certain collaboration on cyber
FOIA Exemption. Sen. Bennett stated that "if information comes to
the government for analysis, and then under the Freedom of Information Act, the
government reveals that to the terrorists, that is really not too smart. So,
what we are saying is that you can share this kind of information with the
government, the Freedom of Information Act will not apply, and the government
will do its analysis, and then share that analysis back."
"Now there are those who say to me: 'Oh! This is terrible. The Freedom of
Information Act protects the public's right to know, and you have to prevent --
you are striking a blow against First Amendment, and freedom, and all of the
rest of that, for the public's right to know,' said Sen. Bennett. "The fact
is, if you do not put this kind of legislation in place, private industry will
not tell the government. So, the public is not going to get this information to
know either way. You are making absolutely no difference to the public's access
to this information. You are making a significant difference to the analyst's
right to this information."
Prospects for Passage. Sen. Bennett says that there is wide support for
the bill, but there is dispute as to how it should be handled. He said:
"Hell hath no fury like a Congressional chairman whose jurisdiction is
challenged. And, the various chairmen of the various committees all say, 'Yes,
this is a very important issue, and I will handle it.' " He continued that
the Senate Majority Leader, "Sen. Daschle, is struggling with how he can
deal with the various maharajas that preside over these Congressional
committees. Everyone of whom, as I say, is willing to take on the issue, but not
one of which is willing to give up any jurisdiction. And when everybody is in
charge, that means that nobody is in charge. It has been interesting. The bill
-- everybody likes my bill -- we can't find a home for it."
Funding for Cyber Security Programs
10/18. Harris Miller, President and CEO of the ITAA, gave a speech
in which he advocated a $10 Billion federal cyber security program. He spoke at
the Center for Strategic and International
Studies' (CSIS) half day conference titled "Strengthening Homeland
Cyberdefense" in Washington DC.
He stated that "strong steps to upgrade cyber security must be taken
immediately. These efforts must be conducted as part of critical infrastructure
protection for healthcare, utilities, transportation, telecommunications and
other critical industries. To do otherwise could leave the nation vulnerable to
cyber attacks. I personally think $10 billion in federal spending, grants and
loans is needed to get the job done."
He continued that $2.5 Billion should be appropriated to upgrade federal
government information systems. $3 Billion in grants should be provided to state
and local governments and other public entities to upgrade information systems.
$500 Million in grants should be made available to universities to provide more
curriculum and training in information security. Finally, Miller argued that $4
Billion in loans should be provided to small and medium sized businesses to
prepare for cyber attacks.
APEC Meeting Addresses E-Commerce
10/18. Representatives of the twenty-one nations participating in the Asia
Pacific Economic Cooperation (APEC) conference Shanghai, China, issued a joint
statement. The statement expressed "confidence in the immense potential
of Information and Communications Technology (ICT) and its applications in
upgrading the welfare and living standard of our people in the APEC
region". The statement also addressed several specific issues, including
e-commerce trade barriers, privacy, consumer protection, and closing digital
Promoting E-Commerce. The statement "endorsed the proposal of the
establishment of the APEC E-commerce Business Alliance. Ministers also welcomed
the proposal to strengthen economic and technical cooperation in the area of
E-commerce with a view to narrowing the gap between member economies in the
application of E-commerce."
E-Commerce Trade Barriers. The statement " recognised the growth of
global electronic commerce and the importance of a legal and policy framework
which both ensures business and public confidence and avoids unnecessarily
restrictive trade barriers while respecting national policy objectives in order
to allow E-commerce to develop its full potential to create new opportunities
Online Privacy and Consumer Protection. The statement "welcomed the
progress made by Electronic Commerce Steering Group (ECSG)". It also
"endorsed the proposal by the ECSG to develop APEC guidelines for online
consumer protection and noted the proposal to organize a public/ private sector
forum regarding online privacy and E-commerce during 2002."
Digital Divides. The statement "reaffirmed commitments to triple
access to the Internet by 2005, and to ensure that all groups within an economy
have access individually or through community- based services to the Internet by
DOC Official Discusses Digital Divide
10/18. Deputy Secretary of Commerce Samuel Bodman gave an interview with CCTV in
Shanghai, China, in which he addressed information technologies and digital
divides. He stated that there "will be a series of individual projects, be
they related to preventing the spread of infectious disease, to the very vital
programs that APEC is sponsoring on e-commerce and on educating the citizens of
this region about the opportunities made available by the Internet and by
related information technology. Attacking this whole question of the digital
divide such that the poorest person will have an opportunity to join in the
Internet revolution, if you will, and have an opportunity to improve his or her
life. And that's really what it's all about." See, transcript.
New WTO Round
10/18. Representatives of the twenty-one nations participating in the Asia
Pacific Economic Cooperation (APEC) conference Shanghai, China, reaffirmed their
support for a new round of WTO trade negotiations. See, joint
10/18. Secretary of State Colin Powell gave a speech
in Shanghai, China, in which he told his audience to "keep investing, keep
opening up avenues of opportunities for increased trade, keep destroying
barriers, let's move quickly. We want to see China and Taiwan enter the World
Trade Organization. We need to see the next round get started or launched; we
need to keep moving forward, we need to restore confidence in the world's
Net Tax Moratorium Set to Expire This Weekend
10/18. The Senate adjourned until Tuesday, October 23, without passing
legislation to extend the existing moratorium on Internet access taxes, and
multiple and discriminatory taxes on Internet commerce. The House passed HR 1552,
the Internet Non-Discrimination Act, by a unanimous voice vote on October 16,
extending the moratorium for two years.
Section 1101(a) of the Internet Tax Freedom Act, which was enacted in late 1998,
provides that "No State or political subdivision thereof shall impose any
of the following taxes during the period beginning on October 1, 1998, and
ending 3 years after the date of the enactment of this Act ... (1) taxes on
Internet access, unless such tax was generally imposed and actually enforced
prior to October 1, 1998 ... (2) multiple or discriminatory taxes on electronic
commerce." This moratorium expires on October 21.
As a consequence of the Senate's inaction, states will be free to impose new
Internet access taxes or multiple or discriminatory taxes on e-commerce next
Fifth Circuit Construes Innocent Infringer Defense
10/18. The U.S.
Court of Appeals (5thCir) issued its opinion
One v. BellSouth, a case involving the innocent infringer defense
in trademark actions. Plaintiff Dial One is a franchise holder. Two other
plaintiffs are franchisees. BellSouth and other defendants published yellow
pages and white pages directories that listed as a franchisee an entity that was
not in fact a franchisee. Plaintiffs filed a complaint in U.S. District Court (EDLa)
against BellSouth and others alleging infringement of the Dial One trademark in
violation of the Lanham Act. Defendants asserted the innocent infringer defense.
The District Court awarded Dial One lost franchise fees, and awarded the
franchisee plaintiffs lost profits. The Court of Appeals affirmed.
Sen. Hatch Introduces Cyber Crime Bill
10/18. Sen. Orrin Hatch (R-UT) introduced
the Cyberterrorism Prevention Act of 2001. Sen. Hatch described the bill in the
Senate on October 18 as "an important piece of legislation to prevent
terrorists from hijacking our computer system to wreak havoc with our essential
infrastructure. This bill provides law enforcement with critical tools to combat
The bill includes numerous changes to 18 U.S.C. § 1030,
the federal criminal code section dealing with "fraud and related activity
in connection with computers". Provisions of the bill would apply
generally, and not solely to terrorism. The bill would also authorize
appropriations of $50 Million for ten FBI regional computer forensic
The bill was referred to the Senate
Judiciary Committee, of which Sen. Hatch is the ranking Republican.
10/18. Six attorneys who practice in the areas of intellectual property and
litigation joined the Minneapolis office of the law firm of Fulbright & Jaworski. The six are Alan
Anderson, Ronn Kreps, Christopher Larus, Renee Jackson,
John Klos, and Sharna Wahlgren. See, release.
10/18. The temporary adjournment of the House of Representatives, and the
closing of its offices, due to biological threats, led to the postponement of
all scheduled hearings. The House
Commerce Committee's Subcommittee on Telecommunications and the Internet
postponed its hearing titled "Transition to Digital Television: Progress on
Broadcaster Buildout and Proposals to Expedite Return to Spectrum". The House Judiciary Committee's
Subcommittee on Courts, the Internet, and Intellectual Property postponed its
hearing titled "Intellectual Property Litigation".
10/18. Sen. Mike Enzi (R-WY) and others
1567, the Internet Tax Moratorium and Equity Act. See, Enzi release.
10/18. The U.S. Court of Appeals for the
District of Columbia Circuit heard oral argument in Celtronix Telemetry
v. FCC, No. 00-1400.
Gov. Gilmore Testifies on Cyber Terrorism
10/17. The House Science Committee
held at an abbreviated hearing titled "Cyber Terrorism – A View From the
Gilmore Commission." Virginia Gov. James
Gilmore offered his recommendations for dealing with the threat of cyber
Gov. Gilmore is the Chairman of the Advisory Panel to Assess Domestic Response
Capabilities for Terrorism Involving Weapons of Mass Destruction. This panel is
often referred to simply as the Gilmore Commission. It is charged with writing
three annual reports on terrorism, weapons of mass destruction, and cyber
terrorism. It issued its second report in December 2000. See, TLJ story, Advisory Panel
Reports on Cyber Terrorism, December 14, 2000.
Gov. Gilmore offered six recommendations. First, he praised President Bush's Executive
Order of October 16 creating an interagency cyber security panel with
representatives of federal agencies.
Second, he recommended that Congress create an independent advisory body,
similar to the Gilmore Commission, to evaluate programs designed to promote
cyber security and recommend strategies to the President and Congress.
Third, he recommended "an unprecedented partnership between the public and
private sectors. Sharing of intelligence and real time information concerning
impending or on-going cyber attacks will be critical. The private sector has
legitimate concerns about their customers' privacy and confidence, as well as
the value of their own proprietary information and earnings." He
recommended the creation of a not for profit entity that can represent the
interests of all affected stakeholders.
Fourth, he recommended the establishment of a special "Cyber Court"
patterned after the court established in the Foreign Intelligence Surveillance
Act (FISA). He elaborated that "prosecutors and investigators are often
impeded in the enforcement process because the lack of effective procedures and
understanding by many in the judiciary concerning the nature and urgency of
Fifth, he recommended creation of "an entity to develop and implement a
comprehensive plan for research, development, test and evaluation of processes
to enhance cyber security in the same manner as we must do for other potential
Sixth, he recommended that "all government agencies continue their Y2K
offices as 'cyber security offices.' "
Rep. Sherwood Boehlert (R-NY), the
Chairman of the Committee, stated that "What the recent anthrax attacks and
the attacks of September 11 have in common is that they turn our own basic
systems of daily connections against us -- in those cases, the postal system and
the transportation systems. Turning our computer systems against us would seem a
logical extension of that mode of operation." Rep. Boehlert also singled
out Gov. Gilmore's research and development recommendation as "music to our
ears." He said that the Committee is working on related legislation.
The Committee's hearing was cut short to facilitate closure of the House due to
biological threats. Following Gov. Gilmore's testimony, Rep. Boehlert, Rep. Ralph Hall (D-TX), and Rep. Vernon Ehlers (R-MI), made brief
statements praising his recommendations. Other Committee members did not speak,
and no questions were asked. The hearing will be completed at a later date.
Al Qaeda and Cyber Terrorism
10/17. Gov. Gilmore stated in his testimony to the House Science Committee that
"many people questioned whether nation states or rogue terrorists had the
capability to disrupt our critical infrastructures on a wide scale. Since
September 11, we must presume that they do."
Gov Gilmore told TLJ after the hearing that he believes that bin Laden's Al
Qaeda organization is capable of launching cyber attacks, but he has no specific
intelligence. He stated: "They are militarily organized. They have shown
themselves capable of setting themselves up in a very sophisticated way in a
variety of nation states. And, they have demonstrated that they have the money,
and financing to have access to major preparation and equipment. Therefore, you
must assume that this knowledge of computers and information technology is
available and can be purchased, and therefore, can be used as an attack. Yes.
So, we don't have any intelligence, but logically you must conclude that."
Rep. Ehlers Advocates Treating Hackers As Terrorists
10/17. Rep. Vernon Ehlers (R-MI), a
senior member of the House Science
Committee, stated at the Committee's hearing on cyber terrorism on October
17 that hackers should be treated the same as terrorists.
He praised all of the recommendations advanced by Gov. Gilmore regarding dealing
with cyber terrorism, but added that "hackers should also be considered
terrorism, and the penalties that hackers get should be commensurate with
terrorist activity, and not considered vandalism and pranks."
Rep. Ehlers made this statement at the close of the Committee's hearing, which
was cut short to facilitate closure of the House because of biological threats.
Because of the closing, his remarks were brief, and he was not afforded the
opportunity to question Gov. Gilmore about this view.
18 U.S.C. § 2332 and 2332b provide criminal penalties for terrorism. These
sections currently provide for up to life imprisonment for homicide and
kidnapping offenses, and up to 25 years imprisonment for damaging property.
Attempts and conspiracies to commit terrorist crimes are punished as though the
offense had been completed. Anti terrorism bills which have passed the House and
Senate would amend and enhance the anti terrorism laws.
Charles James Advocates Global Competition Network
10/17. Charles James, Assistant Attorney General in charge of the Antitrust Division, gave a speech in Paris
titled "International Antitrust in the 21st Century: Cooperation and
Convergence." He reviewed the history of cooperation between nations in
antitrust enforcement, and advocated development of the Global Competition
Referring to the General Electric - Honeywell matter, he stated that "we
have come to understand that cooperation alone will not resolve some significant
areas of difference among antitrust regimes that must be addressed if we are to
maintain the integrity of antitrust on a global stage."
He stated that "because both markets and firms are becoming increasingly
global, antitrust agencies increasingly are finding that they are reviewing
mergers that are also being reviewed by five, ten, or twenty other agencies
around the world. When transactions are reviewed by multiple authorities, the
risk of substantive and procedural conflicts can increase dramatically, and
effective cooperation among a large number of agencies can be extraordinarily
He added that "We support the proposed Global Competition Network (GCN) ...
a venue where senior antitrust officials from developed and developing countries
formulate and develop consensus on proposals for procedural and substantive
convergence in antitrust enforcement."
House Passes Anti Money Laundering Bill Without Internet
10/17. The House passed HR 3004, the
Financial Anti Terrorism Act , by a vote of 412 to 1. See, Roll
Call No. 390. The sole vote in opposition was cast by Rep. Ron Paul (R-TX). The version of the
bill just approved by the House deleted the provisions contained in the version
adopted by the House Financial
Services Committee on October 11 that would have barred the use of credit,
credit cards, or electronic funds transfers in connection with illegal Internet
gambling. See, committee
version [PDF], at §§ 307 and 308.
The Senate passed it anti money laundering bill last week as a part of its anti
terrorism package, S 1510,
the USA Act. The House anti terrorism bill, HR 2975, the PATRIOT Act, does not
include anti money laundering provisions. For this reason, and because of other
differences between the two anti terrorism packages, a conference committee must
resolve the differences.
Congress Adjourns for Several Days
10/17. The House adjourned midday on October 17 until 12:30 PM on Tuesday,
October 23, 2001. All House office buildings in the Capitol complex are closed.
The Hart, Dirksen and Russell Senate Office Buildings closed late on October 17,
and will remain closed through Sunday, October 21. The purpose of the closures
is to allow environmental, law enforcement, and medical officials to test for
the presence of biological threats.
Copyright Office Closes
10/17. The Library of Congress, which includes the Copyright Office, announced that
"All Library of Congress buildings will be closed to the public and staff
beginning Thursday, October 18 until such time as testing of the air supply
systems is completed by the Centers for Disease Control. Although there is no
evidence of the anthrax bacteria in any part of the Library of Congress, the
buildings are being closed as a precautionary measure. These tests are being
conducted on all Capitol Hill complex buildings. Library officials are
estimating that the Library will reopen on Tuesday, October 23."
FCC Restricts Deliveries
10/17. The FCC issued two releases on October 17 pertaining to the filing of
documents with the FCC. One
release states that "Effective October 18, 2001, the Commission will no
longer accept hand delivered or messenger delivered paper filings at its
headquarters location, 445 - 12th Street, SW, Washington, DC 20554. The due date
for any filings due at the Commission Thursday October 18, 2001, or Friday
October 19, 2001, is hereby extended to Monday, October 22, 2001." A second
release states that "The staff at the Secretary's filing counter will
not accept documents enclosed in envelopes. Any filer or messenger carrying such
documents into the Commission's building will be asked to leave the building and
dispose of the envelope in a receptacle that will be placed outside the
building. Once this is done, the filer or messenger will be allowed to proceed
to the filing counter."
10/17. The law firm of Latham & Watkins
Nathan Co-Chair of its firmwide M&A Practice Group. See, release.
10/17. USTR Robert Zoellick gave a speech
at the Asia Pacific Economic Cooperation (APEC) forum in Shanghai, China.
10/17. The Senate Commerce Committee
approved by voice votes the nominations of Phillip Bond to be Under
Secretary for Technology, at the Department of Commerce, and John Marburger
to be Director of the Office of Science and Technology Policy. See, release.
10/17. The House Government Reform
Committee's Subcommittee on Technology and Procurement Policy postponed its
hearing titled "Turning the Tortoise Into the Hare: How the Federal
Government Can Transition From Old Economy Speed to Become a Model for
Electronic Government." The House adjourned on October 17 due to biological
threats. The hearing had been scheduled for 2:00 PM.
House Passes Internet Tax Nondiscrimination Act
10/16. The House passed HR 1552, the Internet Non-Discrimination Act, by a
unanimous voice vote. This bill extends the current moratorium on Internet
access taxes, and multiple and discriminatory taxes on Internet commerce, for
two years. The current ban expires on October 21. The measure was considered
under suspension of the rules, meaning that it could not be amended, and
required a two thirds majority for passage. The Senate has yet to pass
legislation to extend the ban.
Sen. Ron Wyden (D-OR) stated in a release
that "Congressman Cox and I have been working together for a long time to
ban discriminatory Internet taxes ... I hope his success today in the House will
pave the way for the Senate to expeditiously approve a similar two year
extension of the moratorium. I'm engaged in a bipartisan full court press to get
the Senate to pass a two-year extension before the moratorium expires this
Sunday so the Senate can return to its constructive conversations regarding a
more permanent solution."
Bush Issues Executive Order on Cyber Security
10/16. President Bush issued an executive
order titled "Critical Infrastructure Protection in the Information
Age". This order creates the "President's Critical Infrastructure
Protection Board", yet another executive branch board to coordinate federal
efforts and programs to protect information systems.
The order provides that "the Board shall recommend policies and coordinate
programs for protecting information systems for critical infrastructure,
including emergency preparedness communications, and the physical assets that
support such systems." The board's responsibilities will extend to
information systems and emergency preparedness communications.
The order also lists specific responsibilities of this newly created board,
including: coordinating outreach to and consultation with the private sector;
promoting information sharing with industry, state and local governments, and
non governmental organizations; coordinating programs and policies for
responding to information systems security incidents; coordinating federal
research and development; and promoting cyber crime programs, assisting federal
law enforcement agencies in gaining cooperation from executive branch
departments and agencies, and supporting federal law enforcement agencies'
investigation of illegal activities involving information systems for critical
The board will be large, and will be made up of cabinet members and other
executive branch officials. The FCC will have one representative on the board.
The order also creates a "National Infrastructure Advisory Council",
an advisory body made of representatives of the private sector, academia, and
state and local government. It "shall provide the President advice on the
security of information systems for critical infrastructure supporting other
sectors of the economy: banking and finance, transportation, energy,
manufacturing, and emergency government services."
The order further provides that the new board "shall work in coordination
with the Critical Infrastructure Assurance Office
(CIAO) and the National Institute of Standards
and Technology of the Department of Commerce, the National Infrastructure Protection Center (NIPC),
and the National Communications System (NCS)."
The order also references technological convergence. It states that
"Changes in technology are causing the convergence of much of telephony,
data relay, and internet communications networks into an interconnected network
of networks. The NCS and its National Coordinating Center shall support use of
telephony, converged information, voice networks, and next generation networks
for emergency preparedness and national security communications functions
assigned to them in Executive Order 12472." EO 12472 created the NCS in
Cyber Terrorism Panels to Meet
10/16. Cyberterrorism will be the topic of two events in Washington this week.
On Wednesday, October 17, at 10:00 AM, the House Science Committee will hold a
hearing titled "Cyber Terrorism -- A View From the Gilmore
On Thursday morning, October 18, the Center for
Strategic and International Studies (CSIS) will host a half day conference
titled "Strengthening Homeland Cyberdefense." Ron Dick, Director of
the FBI's National Infrastructure Protection
Center, will speak at 9:25 AM. There will be a panel titled "A Policy
Agenda for Homeland Cyberdefense," at 9:45 AM, with Sen. Bob Bennett (R-UT) and Rep. Sherwood Boehlert (R-NY). There
will be a panel titled "The Private Sector and Homeland Cyberdefense"
at 11:00 PM. The panelists will be Steve Blumenthal (Genuity), George Conrades (Akamai),
David Langstaff (Veridian), Gail Phipps (CACI International), Ernst Volgenau
(SRA International), and John Tritak (Critical Infrastructure Assurance Office).
John Hamre, P/CEO of the CSIS, and Harris Miller, P/CEO of the ITAA, will also
speak. See also, CSIS
NIPC Issues Report on Cyber Protest Hacking
10/16. The FBI's NIPC released a report [PDF] titled "Cyber
Protests: The Threat to the U.S. Information Infrastructure." The report
states that while "cyber protests that have occurred thus far have had
little impact on U.S. infrastructure ... Cyber protesters are becoming
increasingly more organized and their techniques more sophisticated but, most
likely, will continue to deface web sites and perform DoS attacks." Tthe
report also reviews the history of politically motivated hacking by Chinese,
Israeli, Palestinian, Pakistani, Indian, and Japanese hackers.
Rep. Hansen Opposes Reallocation of Military Spectrum for 3G
10/16. Rep. James Hansen (UT) said in
the House that "the continued viability of some of the very weapons systems
being used now is threatened by a concerted effort to reallocate portions of the
radio frequency spectrum from the military to the commercial sector." He is
a senior member of the House Armed Services
He continued that "This effort is being led by the telecommunications
industry, which is seeking access to additional frequencies to support
development of advanced wireless services. They have vigorously argued that
unless the Federal Government provides access to the 1755 through 1850 megahertz
frequency band, the United States will forfeit its leadership of the worldwide
He concluded: "Now, I do not pretend to know whether this claim is true or
not, but I do know that forcing the military to give up this particular part of
the frequency spectrum will have a significant negative effect on national
security and will put our service members at greater risk ... We have a solemn
obligation to protect the people of the United States, and no argument from any
special interest group will change that. So do not even think about asking for
access to military frequencies. The answer is no and will stay no."
FTC Takes Action Against Online Fraud
10/16. The FTC
filed civil complaint on October 11 in U.S. District Court (WDWash)
against Bargains & Deals Magazine and its principal, Michael Casey, alleging
that they made misrepresentations over the Internet to induce consumers to
purchase merchandise, and then either failed to deliver the merchandise promised
or did not send any merchandise. The complaint alleges violation of the FTC Act,
15 U.S.C. § 41 et seq., and the FTC's Mail Order Rule. The FTC also
obtained a temporary restraining order. See, FTC release.
The FTC filed an administrative complaint on October 11
against FanBuzz, Inc., alleging that its sold textile products over the Internet
without disclosing whether such products were made in the U.S.A., in violation
of the FTC Act and the Textile Fiber Products Identification Act. The FTC and
FanBuzz also filed an Agreement
Containing Consent Order, which prohibits future violations.
The FTC published a notice
in the Federal Register of the FanBuzz settlement; this notice also sets
November 11, 2001 as the deadline for public comments. See, Federal Register,
October 16, 2001, Vol. 66, No. 200, at Pages 52625 - 52626.
Anti Terrorism Legislation and Liberty
10/16. The House and Senate have yet to reconcile the differences between their
two anti terrorism bills, S 1510,
the USA Act, and HR 2975,
the PATRIOT Act.
On Thursday, October 18, The New Republic will host a panel discussion titled
"Security v. Liberty: Is There a Choice?" The speakers will be James
Woolsey (a former CIA Director), Rep. Bob
Barr (R-GA), Marc Rotenberg (EPIC), Fred Cate (University
of Indiana), and Jeffrey Rosen (The New Republic). This event will be at 6:30 PM
at National Press Club.
The Cato Institute published a paper [PDF] titled
"Watching You: Systematic Federal Surveillance of Ordinary Americans",
by Charlotte Twight. See also, executive summary
Rep. Chris Smith Introduces Spam Bill
10/16. Rep. Christopher Smith
(R-NJ) introduced HR 3146,
the Netizens Protection Act of 2001, an anti spam bill. It was referred to the House Commerce Committee.
The bill provides that "No person may initiate ... the transmission of an
unsolicited electronic mail message ... if the message (1) does not contain the
name, physical address, and electronic mail address of the person who initiates
the transmission of the message; (2) does not provide an electronic method by
which the recipient of the message can contact the person who initiated the
transmission of the message to request that no further such messages be sent
...; or (3)(A) is part of a bulk transmission of such messages; and (B) includes
information that is located in the subject line of the message and is false or
misleading with respect to the body of the message."
The bill would also create a private right of action for recipients of banned
spam. The bill also sets statutory damages at $500 per item. The bill would not
preempt state anti spam laws.
FCC May Fine SBC $2.52 Million for False Statements
10/16. The FCC announced its intent to fine
SBC $2.52 Million for filing inaccurate information in the Section 271
proceeding pertaining to Kansas and Oklahoma. The FCC issued a Notice of Apparent
Liability and Order and a release
[PDF] summarizing the order.
The FCC found that SBC submitted affidavits containing false information in
support of its request for permission to provide long distance service in Kansas
and Oklahoma. However, the FCC found that the conduct was negligent, rather than
Russell Frisby, President of Comptel,
stated in a release
that "The fine issued by the FCC this afternoon is the regulatory
equivalent of a 'five dollar' parking ticket. CompTel is disappointed that the
FCC did not take stronger action and send a message to SBC that the Commission
is serious about its role in opening local phone markets and that the accuracy
of information filed at the Commission is paramount."
SEC Commissioner Unger Advocates Securities Law Reform
10/16. SEC Commissioner Laura Unger gave a speech in which she
advocated updating securities laws and regulations in light of Internet
She stated that "the current regulatory system was created in a time when
technology was not what it is today." She said that some areas
"particularly need reform. The first is embracing technology and the
Internet in the offering process. Although companies raised more than $400
billion in the U.S. private market last year, the Commission's rules constrain
companies from taking advantage of low-cost electronic communications to raise
capital from potentially qualified investors. Eliminating the 'general
solicitation' prohibition in the private market would enable small companies to
use the Internet to reach a wider breadth of potentially qualified
Second, she advocated reforming "the distinctions between oral and written
communications that have become anomalous with advancements in technology. Is
streaming video 'oral' until it is archived? The legal distinctions between
written and oral communications mostly discourage disclosure - which does not
make for an efficient market. For example, to prevent issuers from 'conditioning
the market' during an offering, current rules limit how and what issuers
communicate to the public." She also addressed the oral versus written
distinction in the context of electronic roadshows.
Third, Unger stated that "the Internet could speed up the 'back office'
part of transactions - especially IPO investments. Although technology means
that access to an issuer's prospectus can be real time, the Commission continues
to insist on brokers satisfying the prospectus 'delivery' obligation. Any new
system will have to consider whether and to what extent access may be deemed
Commissioner Unger spoke to the Westchester / Southern Connecticut Chapter of
The American Corporate Counsel Association.
Senate Committee Holds Hearing on E-911
10/16. The Senate Commerce Committee
held an oversight hearing to examine the implementation of the Wireless
Communication and Safety Act and the integration of emergency 911 technologies.
This hearing had originally been scheduled for September 11. Senators encouraged
accelerated implementation. Tom Sugrue of the FCC's Wireless Telecommunications Bureau said that
"the Commission is serious about ensuring the deployment of wireless
In 1996, the FCC adopted rules which set October 1, 2001 as the deadline for
wireless carriers to begin the process of deploying technology to accurately
report the location of wireless 911 calls. In 1999, the Congress passed the
Wireless Communications and Public Safety Act, which mandated 911 as the
universal number for emergency calling and addressed carrier liability
protection and privacy issues. Earlier this month the FCC extended the October 1
deadline for five major carriers. See, FCC
Sen. Ron Wyden (D-OR) and Sen. Daniel Inouye (D-HI) presided at the
hearing. Sen. Conrad Burns (R-MT) and Sen. Gordon Smith (R-OR) also
participated. Sen. Wyden stated, "I don't want this to become the longest
running battle since the Trojan War." Sen. Inouye said to Thomas Sugrue
that "September 11 demonstrated to us how important 911 was ... So, I hope
you will get out the whip."
See also, prepared testimony of witnesses in PDF: Thomas Sugrue
(FCC Wireless Telecom Bureau), Michael
Amarosa (TruePosition, Inc.), Jenny Hansen
(State of Montana), John Melcher
(National Emergency Number Assoc.), Brett Sewell
(SnapTrack, Inc.), and Thomas Wheeler
7th Circuit Rules in Lanham Act 43(a) Case
10/16. The U.S.
Court of Appeals (7thCir) issued its opinion
Health Group v. BCE Emergis, a suit involving Section 43(a) of
the Lanham Act. Plaintiff, an intermediary between hospitals and insurers, filed
a complaint in U.S. District Court (NDIll) against defendant, another such
intermediary, alleging that defendant's use of the term "preferred provider
organization" was misleading, and violated Section 43(a)(1)(B) of the
Lanham Act, 15 U.S.C.
§ 1125(a)(1)(B). The District Court granted summary judgment to defendant.
The Court of Appeals affirmed. Judge Easterbrook wrote: "This entire suit
strikes us as one designed to hamstring a competitor whose success reflects its
ability to please its trading partners. If the vocabulary of a business such as
[defendant] is to be revised, that is a job for legislatures and regulatory
agencies, rather than for judges and juries in suits under the Lanham Act and
state consumer- fraud statutes."
Transition to Digital TV
10/16. The House Commerce Committee's
Subcommittee on Telecommunications and the Internet will hold a hearing on
Thursday, October 18, titled "Transition to Digital Television: Progress on
Broadcaster Buildout and Proposals to Expedite Return to Spectrum." The
witnesses will be Rick Chessen (Associate Bureau Chief, Mass Media Bureau, FCC),
Jim Yager (P/CEO of Benedek Broadcasting Corporation), Michael McCarthy (SVP of
Belo Corporation), John Lawson (P/CEO of APTS), Dean Goodman (COO of PAXtv),
Paul Crouch (President of Trinity Broadcasting Network), David Donovan
(President of MSTV), Michael Petricone (VP of Consumer Electronic Association),
Richard Green (P/CEO of CableLabs), and Brian Lamb (P/CEO C-SPAN).
10/16. The NCTA submitted a report [PDF]
regarding digital must carry requirements to the FCC. It rebuts the NAB's
to the FCC of August 14.
House to Vote on Extension of Net Tax Ban
10/16. The House of Representatives is scheduled to consider HR 1552, the Internet
Tax Nondiscrimination Act, under suspension of the rules. Under this
procedure, the time for debate will be limited, no amendments will be permitted,
and passage will require a two thirds majority.
This bill would extend the current moratorium on Internet access taxes, and
multiple and discriminatory taxes on Internet commerce. The current three year
ban expires on October 21. On October 10 the House Judiciary Committee approved an
amendment in the nature of a substitute offered by Rep. Spencer Bachus (R-AL) that provides
a two year extension. The original bill contained a five year extension.
The Senate is also likely to take up extension legislation this week.
Senate to Hold Hearing On E-911
10/16. The Senate Commerce Committee
will hold an oversight hearing on Tuesday morning, October 16, to examine the
implementation of the Wireless Communication and Safety Act and the integration
of emergency 911 technologies. The scheduled witnesses are Thomas Sugrue (Chief
of the FCC's Wireless Telecommunications
Bureau), Michael Amarosa (TruePosition),
Jenny Hansen (State of Montana), John Melcher (National
Emergency Number Association), Brett Sewell (SnapTrack), and Thomas Wheeler (CTIA). Sen. Daniel Inouye (D-HI), the Chairman of
the Communications Subcommittee, will preside.
10/16. The Washington Post reported in an October 16 story
by Christopher Stern that "The nation's major mobile telephone companies
have reached an agreement with NextWave Telecom Inc. in which they would pay
almost $16 billion to end a five-year dispute over a slice of airwaves".
NextWave obtained spectrum licenses at
FCC auctions in 1996. The FCC permitted NextWave to obtain the licenses under an
installment plan, thus creating a debtor creditor relationship. NextWave did not
make payments required by the plan, and filed a Chapter 11 bankruptcy petition.
then cancelled the licenses. However, the FCC was blocked by the bankruptcy
court, citing § 525
of the Bankruptcy Code. The U.S. District Court (SNDY) affirmed. The U.S. Court of Appeals (2ndCir)
issued its order reversing and remanding the case on Nov. 24, 1999; it issued
explaining its reversal in May 2000. The FCC then re-auctioned this spectrum to
Verizon Wireless, Voice Stream and other successful bidders, which intend to use
it for third generation wireless, and other, services.
NextWave next petitioned the FCC to reconsider its cancellation of its licenses.
The FCC refused, and NextWave petitioned for review by the U.S. Court of Appeals (DCCir). The DC
Circuit ruled on June 22 that the 2nd Circuit had not already addressed
NextWave's bankruptcy claims. It wrote in its opinion
that the FCC "violated the provision of the Bankruptcy Code that prohibits
governmental entities from revoking debtors' licenses solely for failure to pay
debts dischargeable in bankruptcy. The Commission, having chosen to create
standard debt obligations as part of its licensing scheme, is bound by the usual
rules governing the treatment of such obligations in bankruptcy."
10/16. The Internet Security Alliance picked John Thomas to be its
Director of Strategic Initiatives. The Internet Security Alliance is a
collaborative effort between Carnegie Mellon University’s Software Engineering
Institute (SEI) and its CERT Coordination Center
and the Electronics Industries Alliance (EIA).
10/16. Verizon named Allan Thoms to the newly created position of Vice
President - Public Policy and External Affairs for Verizon's Northwest Region.
He will be responsible for regulatory, governmental and external affairs for
Verizon in Washington, Oregon and Idaho. See, Verizon
10/16. President Bush signed HR 1860, the "Small Business Technology
Transfer Program Reauthorization Act of 2001," which extends the authority
for the Small Business Technology Transfer Program through FY 2009. See, White
Robert Zoellick gave a speech, and answered questions, in Singapore, regarding
trade, and a new round of WTO negotiations. See, transcript.
10/16. The U.S. Court of Appeals for the
District of Columbia Circuit heard oral argument in COMSAT Corp v. FCC,
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