|News Briefs from
October 26-31, 2001
House Committee Passes Internet Gambling Bill
10/31. The House Financial
Services Committee amended and approved HR 556,
the Unlawful Internet Gambling Funding Prohibition Act, by vote of 34 to
18. The bill would attempt to stem illegal Internet gambling by preventing the
use of credit cards, wire transfers, and other financial instruments in
connection with illegal Internet gambling.
Rep. Mike Oxley (R-OH), the Chairman
of the Committee, offered an amendment in the nature of a substitute that was
approved. It provides that "No person engaged in the business of betting or
wagering may knowingly accept, in connection with the participation of another
person in unlawful Internet gambling (1) credit ... (including credit extended
through the use of a credit card); (2) an electronic funds transfer ... ; (3)
any check ...; or (4) the proceeds of any other form of financial transaction as
the Secretary may prescribe by regulation ..."
The bill further provides the "district courts of the United States shall
have original and exclusive jurisdiction to prevent and restrain
violations". It allows both the U.S. and states to bring actions under the
act for injunctive relief. However, the bill states that "No provision of
this section shall be construed as authorizing an injunction against an
interactive computer service ... unless such interactive computer service is
acting in concert or participation with a person who violates this
Then, the bill provides that "any appropriate Federal banking agency"
may issue an order directed to "any insured depository institution" to
stop extending credit, electronic funds transfers, or money transmitting
service, and to stop paying, transferring, or collecting any check, draft or
other instrument, if it has "actual knowledge" of the violation of
Rep. Oxley offered this explanation: "This bill makes nothing legal now
that isn't currently so, nor does it make illegal anything that law enforcement
does not currently consider unlawful. What it does is make it a crime to accept
payment by credit card, check or electronic funds transfer for unlawful Internet
gambling transactions, and requires a bank, credit card company or EFT entity to
stop payment to a particular named site when ordered by a court to do so."
He continued that "No dramatic shift in business practices is mandated or
authorized under this legislation. This bill does not require that banks or
credit card companies stop processing all Internet gambling transactions.
Rather, institutions must only make a good faith effort to discontinue
processing transactions to or from specific unlawful Internet gambling
businesses that have been singled out in court orders."
Rep. Michael Castle (R-DE) spoke in
opposition to the bill. He stated that it would place too much burden on
financial institutions, and not enough on the Justice Department. Rep. Barney Frank (D-MA) opposed the bill
on other grounds. He stated that the federal government should not be regulating
gambling. "People often spend their money unwisely," said Rep. Frank.
"I don't think we should set ourselves up as the household budget
manager." Rep. Maxine Waters
(D-CA) and Rep. Mel Watt (D-NC) also
argued against passage of the bill.
Rep. Jim Leach (R-IA), the sponsor of
the bill, stated that "Internet gambling is the single easiest way to
launder money". He also made the point that "this is the single
biggest privacy vote this committee will ever take". He said the online
gamblers give their credit card information to illegal businesses, and do not
know what use those entities will make of this information.
Rep. John LaFalce (D-NY) also spoke
in favor of the bill. He said that this bill "falls short of providing a
definitive prohibition, it offers a number of improvements to current law and
may be the strongest bill we can achieve at this time."
Bill Limits Collection of Personal Data by Government Web
10/31. The House passed the conference report on HR 2590,
the appropriations bill for the Treasury Department, U.S. Postal Service, the
Executive Office of the President, and certain Independent Agencies for FY 2002.
Section 638 of the bill contains a limitation on the use of web sites by
government agencies to collect personally identifying information. The vote was
339 to 85.
It provides that "None of the funds made available in this or any other Act
may be used by any Federal agency (1) to collect, review, or create any
aggregate list, derived from any means, that includes the collection of any
personally identifiable information relating to an individual's access to or use
of any Federal Government Internet site of the agency; or (2) to enter into any
agreement with a third party (including another government agency) to collect,
review, or obtain any aggregate list, derived from any means, that includes the
collection of any personally identifiable information relating to an
individual's access to or use of any nongovernmental Internet site."
However, this section also provides exceptions for "any voluntary
submission of personally identifiable information", "any action taken
for law enforcement, regulatory, or supervisory purposes, in accordance with
applicable law" and "any ... system security action taken by the
operator of an Internet site and is necessarily incident to the rendition of the
Internet site services or to the protection of the rights or property of the
provider of the Internet site."
Rep. Armey Says House Will Insist on Two Year Extension of Net
10/31. House Majority Leader Dick Armey
(R-TX) released a statement
regarding legislation to extend the Internet tax moratorium. The House passed HR 1552,
a bill that provides a two year extension, on October 10, 2001. The Senate has
not acted. The moratorium expired on October 21.
Rep. Armey stated that "The Senate should immediately take up and pass the
two-year extension passed by the House." He added that the House bill
already marks a significant compromise. We will not consider anything less than
the clean, two-year extension we passed."
"If the Senate continues to refuse to take up and pass the House bill
as-is, the conclusion is obvious," said Rep. Armey. "The Senate wants
to tax the Internet."
Surveillance of Cable Subscribers Under the Anti Terrorism
10/31. Rep. Billy Tauzin (R-LA),
Chairman of the House Commerce
Committee, submitted a statement for the Congressional Record regarding the
meaning and intent of Section 211 of HR 3162,
the anti terrorism bill, which President Bush signed into law on October 26.
Section 211 of the anti terrorism act amends Section 631 of the Communications
Act of 1934 (47 U.S.C.
§ 551), which prohibits cable companies from disclosing certain customer
information. Section 211 was included in the bill to clarify that laws regarding
interception and disclosure of wire and electronic communications apply to cable
service providers when they provide telephony or Internet access services.
Without this new provision, terrorists and other criminals could have avoided
surveillance by obtaining telephone service from cable operators. However, this
section still excepts "records revealing cable subscriber selection of
video programming from a cable operator."
Rep. Tauzin's statement articulates this purpose. However, he offers further
information about the underlying intent of the Congress. For example, he states
that under Section 211 the government can obtain a "cable subscriber's
name, address, or the means of payment" but not what programs he watched.
Second, he stated that the privacy protection for cable video programming does
not extend to "streaming of content over the Internet".
Rep. Tauzin stated that section 211 "clarifies that cable television
subscribers continue to enjoy certain privacy protections, while also ensuring
that law enforcement officials have the same ability to gain access to cable
subscriber Internet and telephony information as they do with conventional
telephone service. The drafters of this language intend the phrase 'records
revealing cable subscriber selection of video programming from a cable operator'
to mean information about which video programming service or services a cable
subscriber has purchased from a cable company. It does not include information
such as a cable subscriber's name, address, or the means of payment.
Importantly, this language does not impose any new requirements on cable
companies to maintain or collect additional records containing subscriber
Rep. Tauzin continued that " 'Video programming' is intended to refer to
traditional video programming services comparable to broadcast television ... as
opposed to the emerging types of video programming services that enable
subscribers to communicate with other viewers or subscribers. Nor does 'video
programming' include streaming of content over the Internet."
Rep. Tauzin also stated that "to the extent a cable company enables its
subscribers to communicate with other persons through the provision of telephone
service or Internet access service, it must comply with the same laws, found in
title 18, governing the interception and disclosure of wire and electronic
communications that apply to any other telephone company or Internet service
provider. In these instances, Section 631 simply would not apply."
See, Congressional Record, October 31, 2001, at page E1969.
DOJ Authorizes Monitoring of AC Communications Used to Further
10/31. The Department of Justice's Bureau of
Prisons (BOP) published a notice
in the Federal Register stating that it has adopted an interim rule regarding
monitoring of communications by detainees of the Bureau of Prisons. It provides
that the Attorney General may order the monitoring of attorney client
communications of detainees whom he suspects are using those communications to
further a terrorist act. See, Federal Register, October 31, 2001, Vol. 66, No.
211, at Pages 55061 - 55066.
The BOP interim rule provides, in part, that "In any case where the
Attorney General specifically so orders, based on information from the head of a
federal law enforcement or intelligence agency that reasonable suspicion exists
to believe that a particular inmate may use communications with attorneys or
their agents to further or facilitate acts of terrorism, the Director, Bureau of
Prisons, shall, in addition to the special administrative measures imposed under
paragraph (a) of this section, provide appropriate procedures for the monitoring
or review of communications between that inmate and attorneys or attorneys'
agents who are traditionally covered by the attorney client privilege, for the
purpose of deterring future acts that could result in death or serious bodily
injury to persons, or substantial damage to property that would entail the risk
of death or serious bodily injury to persons."
The interim rule further requires notice to both the detainee and his attorney
that communications are being monitored, and a statement that
"communications between the inmate and attorneys or their agents are not
protected by the attorney client privilege if they would facilitate criminal
acts or a conspiracy to commit criminal acts, or if those communications are not
related to the seeking or providing of legal advice".
The DOJ also requests public comments on this interim rule. Comments are due by
December 31, 2001. Send comments to: Rules Unit, Office of the General Counsel,
Bureau of Prisons, HOLC Room 754, 320 First Street, NW., Washington, DC 20534.
Colin Powell Addresses Trade and Technology
10/31. Secretary of State Colin Powell gave a speech
in Washington in which he praised the benefits of trade, trade promotion
authority, and technology.
He stated that "in this new century, we have the potential to lift tens of
millions of people out of poverty, to help them give voice to their aspirations
for a better life, and to free the human spirit within them. I believe in the
power of trade and technology, because I have seen it here in America, I have
seen how it works. Our country has the world's highest standard of living and
the largest and most innovative economy, in large part thanks to you, the
manufacturers of America, willing to take advantage of technology and the new
open trading opportunities that exist."
Benefits of World Trade. Powell stated that trade and investment
"lift people out of poverty and expand the global middle class",
"create conditions for expanded personal freedom", "support rule
by law, not by political whim", "promotes international
responsibility", and "are the keys to open and vibrant societies that
are receptive to new ideas".
Trade Promotion Authority. Powell also argued that "most important
of all, we need Trade Promotion Authority, TPA. Because for the United States to
be credible at the negotiating table, our trading partners need to know that
there will be no further negotiation on an agreement once we have reached an
agreement with them. And that is what TPA does. It gives us credibility in the
negotiating process and paves the way for US leadership."
Technology at the State Department. Powell stated that "We are all
on the same web page, so to speak. For I believe that trade and technology -- my
children are trying to make me literate in all this stuff -- I've gotten pretty
good. In fact, I scare the devil out of the guys at the State Department.
Because I say, we're all going to be on the Web at State, all 30,000 computers
that we have around the world, I want everyone to have Internet access
immediately. And that's costing us a bunch of money, and it's causing people to
change the way we think about doing things."
USTR Announces Out of Cycle Special 301 Reviews
10/31. U.S. Trade Representative (USTR)
Robert Zoellick announced the outcome of "out-of-cycle" Special 301
reviews for the adequacy and effectiveness of intellectual property protection
in Malaysia, Costa Rica, and Lithuania. Malaysia was moved from the Priority
Watch List to the Watch List. Costa Rica was maintained on Priority Watch List.
Lithuania was maintained on the Watch List. See, USTR
Section 301 is the statutory means by which the United States asserts its
international trade rights, including its rights under WTO Agreements. In
particular, under the "Special 301" provisions of the Trade Act of
1974, the USTR identifies trading partners that deny adequate and effective
protection of intellectual property or deny fair and equitable market access to
U.S. artists and industries that rely upon intellectual property protection.
Placement on the Watch List or Priority Watch List indicates that a country does
not provide an adequate level of protection.
Zoellick stated that "Pirating U.S. intellectual property is theft. It
cheats Americans and hurts those countries that need strong IP protection to
promote investment, innovation, and technology in the marketplace." He
added that "We are gratified that some countries have made progress and are
showing a commitment to sustained enforcement. For example, in the last year
pirated products are harder to find in Malaysia, and the thieves are moving out.
Strong legislation regarding optical disks has been passed and is being
implemented largely on schedule. The Malaysian Government campaign to stamp out
piracy has been steady, and they have given us no reason to believe that the
progress will not continue."
See also, International
Intellectual Property Alliance release [PDF].
More Trade News
10/31. Rep. Henry Hyde (R-IL)
introduced HR 3189,
a bill to extend the Export Administration Act until April 20, 2002.
10/31. Rep. Marcy Kaptur (D-OH)
stated in the House, again, that Doha, Qatar, is not an appropriate site for the
WTO ministerial." She cited Qatar's opposition to U.S. actions in
Afghanistan, Qatar's record on human rights, and Qatar's treatment of women.
Kaptur is also a leading protectionist on trade issues. See, Congressional
Record, October 31, 2001, at page H7563-4.
10/31. Rep. Joe Knollenberg
(R-MI) also spoke in the House about trade and granting the President trade
promotion authority. He stated that "we have to pass trade promotion
authority now. If we do not, we will let down America's world class workers,
farmers and businesses. The global marketplace is increasingly competitive.
Without TPA, America will lag behind. Our foreign competitors have negotiated
some 130 preferential agreements while we, absent TPA, have negotiated exactly
three. We need to get back in the game." See, Congressional Record, October
31, 2001, at page H7534.
DOJ Files Amicus Brief in NARM v. Sony
10/31. The U.S. Department of Justice filed
an amicus curiae brief
v. Sony, a case involving antitrust law. The National Association of Recording Merchandisers
(NARM) filed an eleven count complaint [PDF] in U.S. District Court (DDC)
against Sony alleging violation of Sherman Act (illegal tying, reciprocal
dealing, and exclusive dealing), the Robinson Patman Act, the Lanham Act, and
other laws. NARM complained about Sony's bundling of products and services on
digital sound recordings sold to NARM members.
The DOJ brief addresses only the antitrust and Robinson Patman Act issues. The
DOJ wrote that "it is our view that the complaint fails to provide an
adequate factual predicate for NARM's claims that Sony has violated the federal
antitrust laws through its inclusion of hyperlinks and related products and
services in the music CDs that it sells to NARM retailers or through its
relationships with record clubs such as Columbia House." The DOJ also wrote
that "the Robinson Patman Act does not apply to the transactions
The brief was prepared by David Seidman of the DOJ's Antitrust Division.
Rep. Boehlert Discusses Computer Security
10/31. Rep. Sherwood Boehlert
(R-NY), Chairman of the House Science
Committee, moderated a "webchat" with representatives of companies
that address computer security. The participants were Paul Kurtz (National
Security Council), John Conlin (Vericept), Peter Tippett (TruSecure Corp.), Bob
Brennan (Connected Corp.), Randy Sandone (Argus Systems Group), Buky Carmeli (SpearHead
Security Technologies), and Joe Magee (Top Layer Networks, Inc.).
Rep. Boehlert 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, our postal system and our
transportation system. Turning our computer systems against us would seem to be
a logical extension of that mode of operation. And, as we noted last week, we
are more and more reliant on those computer networks."
FCC Common Carrier Bureau Announces Appointments
10/31. Eric Einhorn was named Deputy Division Chief of the Accounting
Policy Division of the FCC's Common Carrier
Bureau. Before joining the FCC in 1999, he was an associate at the law firms
Berlin and Cadwalader Wickersham & Taft.
10/31. John Stanley was named Assistant Division Chief of the Policy and
Program Planning Division of the FCC's Common Carrier Bureau. Before joining the
FCC in 1999, he worked at the law firm of Wiley,
Rein & Fielding. See, FCC
10/31. Tamara Preiss was named Chief of the Competitive Pricing Division
of the FCC's Common Carrier Bureau. Before joining the FCC in 1997, she worked
for the law firm of Sidley & Austin.
10/31. Deena Shetler was named Deputy Chief of the Competitive Pricing
Division of the FCC's Common Carrier Bureau. Most recently, she was a Legal
Advisor to former Commissioner Gloria Tristani on common carrier matters. Before
joining the FCC in 1996, she was an antitrust and commercial litigation
associate at the law firm of Howrey & Simon.
10/31. Jack Zinman was named Deputy Chief of the Competitive Pricing
Division of the FCC's Common Carrier Bureau. See, FCC
People and Appointments
10/31. Thomas Pickard, the Deputy Director of the FBI, will retire at the
end of November. Pickard, 50, has been overseeing the investigations into the
"Pentbom" terrorist attacks of September 11 and the anthrax mailings.
10/31. Richard Smith, CTO of the Privacy Foundation, will leave,
effective November 1, to become an independent security consultant.
10/31. Peter Bonfield, Chief Executive of BT Group, will stand down at
the end of January 2002. See, BT release.
10/31. The Board of Directors of Qwest Communications extended the employment
contract of Chairman and CEO Joseph Nacchio through December 31, 2005.
10/31. Richard Cook was named Vice Chairman of the American Electronic Association. He is P/CEO
of MAPICS. See, AEA
10/31. U.S. Secretary of Commerce Don Evans met with Romanian Prime Minister
Adrian Nastase. Afterwards Sec. Evans released a statement
in which he said that "I fully support the new partnership between Qualcomm,
of San Diego, California, and the Government of Romania for the standardization
and implementation of Code Division Multiple Access (CDMA) wireless technology
in that country."
10/31. The U.S.
Court of Appeals (10thCir) issued its opinion
Neon Inc. v. Trent McKenzie, a case involving the Oklahoma
Uniform Trade Secrets Act.
9th Circuit Rules on Implied Licenses to Copy
10/30. The U.S.
Court of Appeals (9thCir) issued its opinion
[PDF] in Foad
v. MGA, a copyright case involving a project plan for a shopping
center, which turned on the Appeals Court's interpretation of whether an implied
license to copy existed.
Foad Consulting Group prepared a preliminary and revised plot plan for a
proposed 45.5 acre shopping center in Arroyo Grande, California, pursuant to
contracts with a developer, GenCom. GenCom then transferred its rights to
develop the project to Claire Enterprises, which in turn, hired Musil Govan
Azzalino (MGA), another architectural and engineering firm. MGA used and copied
much of Foad's prior plans. Foad registered a copyright in its work.
Foad filed a complaint in the U.S.
District Court (CDCal) against MGA alleging infringement of its copyright in
the shopping center project plans that it had prepared. The District Court
granted summary judgment to MGA. It based its decision upon the merger
doctrine (i.e., that courts will not protect a copyrighted work from
infringement if the idea underlying the copyrighted work can be expressed in
only one way, lest there be a monopoly on the underlying idea). Foad appealed.
MGA argued the merger doctrine and fair use on appeal. The Appeals Court
affirmed, on grounds not raised by the parties -- implied license to copy.
The Appeals Court wrote that "The Copyright Act permits copyright holders
to grant nonexclusive copyright licenses by implication. But whether a copyright
holder has properly granted another a nonexclusive license by implication is a
matter of state contract law, provided that the state law does not conflict with
the Copyright Act or its underlying policies. In this case, the February 1996
contract granted GenCom an implied license to copy and adapt Foad's revised plot
plan and to publish the resulting derivative work in aid of constructing the
project for which it was designed."
While this is a copyright case, the opinion of the Appeals Court is largely a
discussion of contract law. The Appeals Court stated the issue as follows:
"Which law, state or federal, governs the creation of an implied,
nonexclusive copyright license?" It concluded that "while federal law
answers the threshold question of whether an implied, nonexclusive copyright
license can be granted (it can), state law determines the contract question:
whether a copyright holder has, in fact, granted such a license."
Judge Betty Fletcher wrote the opinion of the Appeals Court. An incensed Judge
Alex Kozinski wrote a separate opinion in which he concurred in the result, but
not the implied license analysis. He wrote that it is "dangerous" to
base an opinion on an argument not raised by the parties. He also disputed the
majority's analysis of contract law.
USTR Zoellick Addresses WTO Round and Tech
Robert Zoellick gave a speech
in Washington DC to the Council on Foreign
Relations titled "The WTO and New Global Trade Negotiations: What's at
Stake". He advocated a new round of World
Trade Organization (WTO) negotiations, and addressed provisions regarding
electronic commerce, information technology, and intellectual property rights.
E-Commerce. Zoellick stated that "The WTO rules also need to be
updated to tap the potential of high tech innovations and e-commerce.
Transactions over networks are providing enormous growth opportunities for any
service that can reach customers electronically -- be it retailing, financial,
information, or entertainment services. The opportunity for developing countries
is vast -- providing them with new, more efficient means to reach global markets
for products and services in which they have a competitive advantage."
Information Technology and Developing Nations. "One of our primary
objectives in launching a new global negotiation is to use trade and openness to
bring new opportunities and new hope to the poorest among us," said
Zoellick. "The flagging fortunes of so many developing nations, coupled
with the difficult economic times, underscores the importance of launching new
global trade negotiations. The trade liberalization ushered in by the Uruguay
Round highlights the potential of more trade for developing nations. In the six
years following the round's completion, exports from developing nations grew by
nearly $1 trillion, to a level of $2.4 trillion. Last year, developing countries
exported $73 billion worth of information technology to the United States -- a
43 percent increase since 1996, the year before the multilateral Information
Technology Agreement had been implemented."
TRIPS and Pharmaceutical Patents. Zoellick stated that "the Bush
Administration is implementing a flexible policy on intellectual property as it
relates to medicines to treat HIV/AIDS and other pandemics. This flexibility ...
enables countries and companies to help deal with this tragic pandemic by
encouraging low-cost access to critical medicines. At the same time, the
preservation of intellectual property rules ensures incentives to develop
medicines and biotechnology that can help us cure and treat diseases that have
plagued humankind since our origin. I recognize that some of the least developed
countries in the WTO find it difficult to fully comply with the pharmaceutical
patent rules governing world trade. In response to these difficulties, the
United States has proposed granting the least developed countries a 10-year
extension, to 2016, to come into full compliance with all pharmaceutical related
patent obligations under the TRIPs agreement."
Japan. After delivering his prepared speech, Zoellick said that he is
"extremely disappointed" by Japan's lack of effort in building support
for launch of a WTO round of negotiations. See, State
10/30. AOL Time Warner named Iris Knobloch its SVP for international
relations and strategic policy in Europe. She will be based in London. She was
previously worked for the law firms of Norr
Stiefenhofer & Lutz and O'Melveny
& Myers. See, AOLTW
10/30. The Copyright Office
published a notice
in the Federal Register regarding royalty payments for retransmission of over
the air broadcast signals. The notice "directs all claimants to royalty
fees collected under the section 119 statutory license in 2000 to submit
comments as to whether a Phase I or Phase II controversy exists as to the
distribution of those fees, and a Notice of Intention to Participate in a
royalty distribution proceeding." Comments and Notices of Intention to
Participate are due by November 29, 2001. Reply comments are due by December 31,
2001. See, 17 U.S.C. §
119. See also, Federal Register, October 30, 2001, Vol. 66, No. 210, at
Pages 54789 - 54791.
10/30. Sen. Larry Craig (R-ID) and others
introduced S 1588,
a bill to provide a one year extension of the date for compliance by certain
covered entities with the administrative simplification standards for electronic
transactions and code sets issued in accordance with the Health Insurance
Portability and Accountability Act of 1996 (HIPAA). Sen. Craig stated in the
Senate that this bill "includes language to clearly differentiate between
this provision and the privacy provision of HIPAA. It was our intention all
along that the medical privacy regulations not be affected by our legislation,
and we believe this bill accomplishes that goal."
10/30. The U.S.
Court of Appeals (FedCir) issued opinions in Special Devices v. OEA (Nos.
01-1053 and 01-1078) and Special Devices v. OEA (No. 01-1201). In the former
opinion, issued on October 26, the Appeals Court held that OEA's U.S.
Patent 5,404,263 is invalid under the on-sale bar of 35 U.S.C. § 102(b).
In the later opinion, issued on October 30, the Appeals Court dismissed for lack
of jurisdiction appeals from the District Court's holding that the underlying
patent infringement suit was exceptional, thus justifying an award of attorney
fees. These are both appeals from the U.S. District Court for the Central
District of California, Judge Dickran Tevrizian presiding.
President Bush Issues Directive on Student Visas
10/29. President Bush issued his Homeland
Security Presidential Directive-2, which pertains to "Combating
Terrorism Through Immigration Policies". The purpose of the directive is to
diminish abuse of student visas by aliens in the U.S. It also addresses the use
of databases, merging of databases, and data mining, to identify potential
The Directive states that the U.S. "benefits greatly from international
students who study in our country. The United States Government shall
continue to foster and support international students." However, the
"Government shall implement measures to end the abuse of student visas and
prohibit certain international students from receiving education and training in
sensitive areas, including areas of study with direct application to the
development and use of weapons of mass destruction."
Database Technology. The Directive also instructs the Director of the Office of Science and Technology Policy (OSTP)
to "make recommendations about the use of advanced technology to help
enforce United States immigration laws, to implement United States immigration
programs, to facilitate the rapid identification of aliens who are suspected of
engaging in or supporting terrorist activity, to deny them access to the United
States, and to recommend ways in which existing government databases can be best
utilized to maximize the ability of the government to detect, identify, locate,
and apprehend potential terrorists in the United States."
The Directive continues that "Databases from all appropriate Federal
agencies, state and local governments, and commercial databases should be
included in this review. The utility of advanced data mining software
should also be addressed. To the extent that there may be legal barriers to
such data sharing, the Director of the OSTP shall submit to the Director of the
Office of Management and Budget proposed legislative remedies."
Supreme Court Denies Certiorari in Spam Case
10/29. The Supreme Court of the United
States denied certiorari in Heckel v. Washington, No. 01-469. This is
a petition for writ of certiorari seeking review of a Supreme Court of
Washington opinion upholding Washington's anti spam statute against a Commerce
At issue is Washington State's Commercial Electronic Mail Act, Chapter 19.190
Revised Code of Washington. RCW
19.190.020 provides, in part: "(1) No person may initiate the
transmission, conspire with another to initiate the transmission, or assist the
transmission, of a commercial electronic mail message from a computer located in
Washington or to an electronic mail address that the sender knows, or has reason
to know, is held by a Washington resident that: (a) Uses a third party's
internet domain name without permission of the third party, or otherwise
misrepresents or obscures any information in identifying the point of origin or
the transmission path of a commercial electronic mail message; or (b) Contains
false or misleading information in the subject line."
Jason Heckel is a spammer who repeatedly sent unsolicited commercial e-mail to
Washington state residents that contained false subject line and transmission
information. Washington filed a complaint
against him in King County Superior Court, in Washington. The Superior Court
ruled on summary judgment that the statute violates the dormant Commerce
Clause of the U.S. Constitution. The Supreme Court of Washington
reversed on June 7, 2002, holding the statute does not unconstitutionally burden
interstate commerce. The Supreme Court of the U.S. declined to hear the case,
without opinion, on October 29, 2001.
Representatives Seek Tax Credits for Broadband Deployment
10/29. House Minority Leader Dick
Gephardt (D-MO), Rep. Anna Eshoo
(D-CA), and others sent a letter
to Senate Majority Leader Tom Daschle
(D-SD) and Sen. Max Baucus (D-MT) urging
them to include language from HR 267
and S 88,
the Broadband Internet Access Act, in the economic stimulus package. The House
has already passed an economic stimulus bill, without the Broadband Internet
Access Act. The Senate has yet to pass its version of the bill.
HR 267 is sponsored by Rep. Phil English
(R-PA), Rep. Bob Matsui (D-CA), and
almost 200 other Representatives. S 88 is sponsored by Sen. Jay Rockefeller (D-WV), and 62
other Senators. These companion bills would provide tax credits for deployment
of broadband facilities in rural and underserved areas. Specifically, they
provide a credit of 10% of the qualified expenditures incurred by the taxpayer
with respect to qualified equipment with which "current generation"
broadband services are delivered to subscribers in rural and underserved areas.
They also provide a credit of 20% of the qualified expenditures incurred by the
taxpayer with respect to qualified equipment with which "next
generation" broadband services are delivered to subscribers in rural areas,
underserved areas, and to residential subscribers.
"Current generation" broadband services is defined in the bills as the
transmission of signals at a rate of at least 1.5 Mbps downstream, and at least 200
Kbps upstream. "Next generation" broadband services is defined as at
least 22 Mbps downstream and 5 Mbps upstream.
In addition to the traditional arguments for spurring broadband deployment,
Reps. Gephardt, Eshoo, and others, also added the post September 11 argument
that "As the U.S. Postal System has become the target of terrorist attacks,
electronic mail has become increasingly important. To quickly deliver large
documents and images, however, more bandwidth is necessary."
NTIA Awards Contracts for Management of .us and .edu Domains
10/29. The National Telecommunications and
Information Administration (NTIA) awarded a four year contract to NeuStar to manage the .us top level domain.
release and NeuStar
The NTIA also announced a five year agreement with Educause to manage the .edu top level
domain. VeriSign currently manages the .edu domain; that contract expires on
November 10, 2001. Educause will operate the registry and registrar services at
no cost to the government. It will not charge a registration fee for its
services, but may propose a fee in the future to recover costs, subject to
government approval. See, NTIA release
FCC Creates Media Ownership Working Group
10/29. FCC Chairman Michael
Powell announced the creation of a Media Ownership Working Group at the FCC.
Its members will include Kenneth Ferree (Chief of the Cable Services Bureau), Paul Gallant (Special
Advisor to the Chief of the Cable Services Bureau), Nandan Joshi (Attorney
Advisor in the Office of General Counsel),
Jonathan Levy (Deputy Chief of the Office of
Plans and Policy), Robert Ratcliffe (Deputy Chief of the Mass Media Bureau), David Sappington (Chief
Economist), Royce Sherlock (Deputy Chief of the Policy Division of the Cable
Services Bureau). See, FCC
10/29. Nokia's Board of Directors extended the contract of Jorma Ollilaas
as Chairman and CEO through 2006. See, Nokia release.
10/29. David Cohen joined the Washington DC law firm of Wilmer Cutler & Pickering as counsel in
the firm's Litigation Section. He was previously Acting Deputy General Counsel
and Associate Deputy General Counsel with the Department
of the Treasury. He will specialize in complex civil and white collar
criminal defense, including representing financial institutions in enforcement
matters, money laundering issues, and internal and congressional investigations.
10/29. The law firm of McDermott Will & Emery
will open an office in Munich, Germany, on January 2, 2002. Ralf Eckert, Martin
Kock, Jörg Kretschmer, Christian von Sydow and Ralf Weisser will launch this
office. It will focus on corporate, M&A, taxation, media and
telecommunications law. See, MWE
10/29. The NTIA published in its web site the fall issue of the
NTIA Spectrum News.
Bush Signs Anti Terrorism Bill
10/26. President Bush signed HR 3162,
the "anti terrorism bill". It contains many provisions that will
increase the ability of law enforcement, intelligence, and other government
agencies to combat terrorism, including expanded authority to conduct electronic
surveillance of phone and Internet communications. Bush said at a signing
ceremony at the White House that "These terrorists must be pursued, they
must be defeated, and they must be brought to justice. And that is the purpose
of this legislation." See, transcript.
Bush Summarizes Anti Terrorism Bill
10/26. President Bush stated at the signing ceremony for the anti terrorism bill
that "We're dealing with terrorists who operate by highly sophisticated
methods and technologies, some of which were not even available when our
existing laws were written. The bill before me takes account of the new
realities and dangers posed by modern terrorists. It will help law enforcement
to identify, to dismantle, to disrupt, and to punish terrorists before they
Bush continued that "Surveillance of communications is another essential
tool to pursue and stop terrorists. The existing law was written in the era of
rotary telephones. This new law that I sign today will allow surveillance of all
communications used by terrorists, including e-mails, the Internet, and cell
phones. As of today, we'll be able to better meet the technological challenges
posed by this proliferation of communications technology. Investigations are
often slowed by limit on the reach of federal search warrants. Law enforcement
agencies have to get a new warrant for each new district they investigate, even
when they're after the same suspect. Under this new law, warrants are valid
across all districts and across all states." See, transcript.
Pen Registers and Trap and Trace Devices
10/26. § 216 is one of the key sections of the anti terrorism bill, HR 3162.
It expands law enforcement agencies' (LEAs') authority with respect to the use
of pen registers and trap and trace devices (PR&TTs). These are both old
telephone industry concepts. A pen register records the numbers that are dialed
or punched into a telephone. The current law covers "wire"
communications only. Specifically, a pen register is "a device which
records or decodes electronic or other impulses which identify the numbers
dialed or otherwise transmitted on the telephone line to which such device is
attached ..." See, 18 U.S.C. § 3127(3).
§ 216 provides that the concept of a pen register would be expanded from merely
capturing phone numbers, to capturing routing and addressing information in any
electronic communications, including Internet communications. § 216
similarly expands the concept of trap and trace devices. Under current law, this
is "a device which captures the incoming electronic or other impulses which
identify the originating number of an instrument or device from which a wire or
electronic communication was transmitted." See, 18 U.S.C. § 3127(4).
§ 216 extends PR&TT authority to addressing and routing information. It
also provides that a single order shall apply nationwide. This section will
serve as the legal authority for technologies that monitor e-mail systems, such
as the FBI's Carnivore.
There are three different standards for obtaining surveillance orders -- one for
obtaining PR&TT orders, another for wiretap orders under Title III (which
allow the government to obtain the content phone conversations), and a third for
orders under the Foreign Intelligence Surveillance Act (FISA). The standard for
PR&TT orders is a very low standard. § 216 provides that "the
court shall enter an ex parte order authorizing the installation and use of a
pen register or trap and trace device anywhere within the United States, if the
court finds that the attorney for the Government has certified to the court that
the information likely to be obtained by such installation and use is relevant
to an ongoing criminal investigation." Issuance of the order is mandatory,
and the standard -- mere relevance -- is low. In contrast, wiretap orders are
within the discretion of the Judge, and require a showing of probable cause.
Hence, it is critical whether the information sought by LEAs can be obtained by
a mere PR&TT order, or requires a full blown Title III order.
Routing and Addressing v. Content. Much of the debate over the extension
of PR&TT authority focused on what information in an Internet communication
can be obtained under a PR&TT order, and what information requires a Title
III order. § 216 provides that the following can be obtained under a
PR&TT order: "dialing, routing, addressing, or signaling information
transmitted by an instrument or facility from which a wire or electronic
communication is transmitted, provided, however, that such information shall not
include the contents of any communication".
House Committee Report. To the extent that legislative history may be
pertinent, the House Judiciary
Committee's report elaborates on this point. House Report
107-236 states that: "This section updates the language of the statute
to clarify that the pen/register authority applies to modern communication
technologies. Current statutory references to the target `line,' for example,
are revised to encompass a 'line or other facility.' Such a facility includes: a
cellular telephone number; a specific cellular telephone identified by its
electronic serial number (ESN); an Internet user account or e-mail address; or
an Internet Protocol (IP) address, port number, or similar computer network
address or range of addresses. ... Moreover, the section clarifies that orders
for the installation of pen register and trap and trace devices may obtain any
non-content information -- 'dialing, routing, addressing, and signaling
information' -- utilized in the processing or transmitting of wire and
electronic communications. [Footnote 1: Thus, for example, non-content
information contained in the 'options field' of a network packet header
constitutes 'signaling' information and is properly obtained by an authorized
pen register or trap and trace device.] Thus, for example, an order under the
statute could not authorize the collection of email subject lines, which are
clearly content. Further, an order could not be used to collect information
other than 'dialing, routing, addressing, and signaling' information, such as
the the portion of a URL (Uniform Resource Locator) specifying Web search terms
or the name of a requested file or article."
Technology Mandates. § 222 is also relevant to § 216. It provides
that "Nothing in this Act shall impose any additional technical obligation
or requirement on a provider of a wire or electronic communication service or
other person to furnish facilities or technical assistance. A provider of a wire
or electronic communication service, landlord, custodian, or other person who
furnishes facilities or technical assistance pursuant to section 216 shall be
reasonably compensated for such reasonable expenditures incurred in providing
such facilities or assistance." Rep
Bob Goodlatte (R-VA) and Rep. Rick
Boucher (D-VA) had this language inserted because of their concern about the
history of the Communications
Assistance for Law Enforcement Act (CALEA). Congress passed this Act in 1994
to enable law enforcement authorities to maintain their existing wiretap
capabilities in new telecommunications devices. The Congress had cell phones in
mind. It provides that wireline, cellular, and broadband PCS carriers must make
their equipment capable of certain surveillance functions. However, the FBI has
since sought an implementation of CALEA that expands surveillance capabilities
beyond those provided in the statute. This has imposed a financial burden upon
service providers, and hence, their customers.
Key Tech Related Provisions of the Anti Terrorism Bill
10/26. HR 3162 is named the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA
PATRIOT ACT). It is a huge and broad bill that covers immigration, money
laundering, relief for victims of terrorism, and foreign intelligence. It also
affects surveillance of Internet communications. See, article titled "Pen
Registers and Trap and Trace Devices," above. However, there are numerous
other tech related provisions. Some of the key provisions are summarized below.
Predicate Offenses for Wiretaps. HR 3126 expands the list of crimes which
can serve as the basis for issuance of Title III wiretap orders. § 201
adds crimes relating to terrorism to the list of predicate offenses for the
issuance of a wiretap order. § 202 adds crimes relating to computer fraud and
abuse to the list of predicate offenses for the issuance of a wiretap order.
Voice Mail. § 209 allows the seizure of voice mail messages pursuant a
Subpoenas to Electronic Communications Service Providers. § 210
expands the types of records that law enforcement agencies (LEAs) may obtain,
pursuant to a subpoena, from electronic communications service providers. It
requires service provides to produce "name", "address",
"local and long distance telephone connection records, or records of
session times and durations", "length of service (including start
date) and types of service utilized", "telephone or instrument number
or other subscriber number or identity, including any temporarily assigned
network address", and "means and source of payment for such service
(including any credit card or bank account number)". Currently, users can
register with ISPs with false names. This section enables LEAs to establish a
user's identity through his method of payment.
Cable is Covered. § 211 provides that laws regarding interception
and disclosure of wire and electronic communications apply to cable service
providers when they provide telephony or Internet access services. However, this
section still excepts "records revealing cable subscriber selection of
video programming from a cable operator."
Computer Trespassers. § 217 expands LEAs' authority to intercept
computer trespasser communications. It provides that "It shall not be
unlawful under this chapter for a person acting under color of law to intercept
the wire or electronic communications of a computer trespasser transmitted to,
through, or from the protected computer, if (I) the owner or operator of the
protected computer authorizes the interception of the computer trespasser's
communications on the protected computer; (II) the person acting under color of
law is lawfully engaged in an investigation; (III) the person acting under color
of law has reasonable grounds to believe that the contents of the computer
trespasser's communications will be relevant to the investigation; and (IV) such
interception does not acquire communications other than those transmitted to or
from the computer trespasser." This section is intended to enable LEAs to
come to the assistance of companies, universities, and other entities that are
subject to distributed denial of service, or other, attacks.
Four Year Sunset. § 224 provides a four year sunset that applies to
some, but not all, sections of the bill. It does apply to §§ 201 and 202
(expanding the list of predicate offenses for wiretaps), 209 (voice mail), 210
(scope of subpoenas for electronic communications service providers), and 217
(computer tresspasser information). The sunset provision does not apply to
§ 216 (expansion of pen register and trap and trace authority),
§ 211 (cable services), or § 222 (no technology mandates).
More Anti Terrorism Act News
10/26. The Department of Justice released a
redacted copy of a document [PDF]
titled "Field Guidance on New Authorities: Enacted in the 2001 Anti
Terrorism Legislation". This is a detailed summary of HR 3162,
PATRIOT Act, which was signed into law by President Bush on
October 26. The Department of Justice put out a short release.
Others have written summaries and commentaries. Sen. Patrick Leahy (D-VT), Chairman of the Senate Judiciary Committee, has a
section by section summary of the
entire bill. See also, short CDT criticism and summary
and ACLU criticism and
summary of the electronic surveillance provisions.
Free Trade and Trade Promotion Authority
10/26. The Progressive Policy Institute
(PPI), a New Democrats think tank, released a report [PDF]
titled "The Facts About American Trade and a Debate That Misses the
Point". The report states that during the 1950s and 1960s natural resource
products and basic manufactures made up the majority of U.S. imports and
exports. However, by the 1990s, information technologies led U.S. exports. The
report states that "semiconductors, computers, and high tech services
dominate our world trade." The report concludes that the current debate
over the appropriate place of labor and environmental standards in trade
agreements fails to grasp the basic questions -- how to "give Americans the
education, training and other tools necessary to compete in such an
economy" and "how to best develop the infrastructure of rules and
agreements that will fit a world economy in which America's greatest
opportunities and advantages lie in newly emerging industries." The report
was written by Edward Gresser and Sarah West.
FTC Announces NPRM to Extend Children's Online Privacy
10/26. The Federal Trade Commission (FTC)
announced a notice of proposed rulemaking (NPRM) regarding its Children's Online
Privacy Protection Rule. It proposes to extend the time period during which web
site operators may use an e-mail message from the parent, coupled with
additional steps, to obtain verifiable parent consent for the collection of
personal information from children for internal use by the web site operator.
The current rule expires on April 21, 2002. The FTC proposes to extend this
until April 21, 2004. The deadline to submit comments to the FTC is November 30,
2001. See, FTC release
and notice to be
published in the Federal Register.
FCC Commissioner Martin Addresses Broadband Policy
10/26. FCC Commissioner Kevin Martin gave a speech titled
"Framework for Broadband Deployment" at a NARUC
convention in northern Virginia. He advocated facilities based competition, less
taxation of broadband, a rocket docket for enforcement proceedings, and fewer
state, local and federal regulations.
Martin stated that "Encouraging broadband deployment should be a
fundamental priority of the Commission and government in general." But, he
said, "I am not speaking of making industrial policy. Rather, I think the
government should be focusing on eliminating disincentives to broadband
deployment that already exist."
Facilities Based Competition. He argued that facilities based
competition, rather than requiring sharing of facilities, is the best way to
promote broadband deployment. He stated that "In the past, the Commission
adopted a framework that may have discouraged facilities based competition,
allowing competitors to use every piece of the incumbents' network at super
efficient prices. This regime creates significant disincentives for the
deployment of new facilities that could be used to provide broadband. Under such
a regime, new entrants have little incentive to build their own facilities,
since they can use the incumbents' cheaper and more quickly. And incumbents have
some disincentive to build new facilities, since they must share them with all
their competitors. The goal of the Telecommunications Act was to establish a
competitive and deregulated environment. But to get to true deregulation, we
need facilities based competition."
Taxation of Broadband. Martin stated that "at every level,
government too often sees broadband deployment and telecommunications more
generally as a potential revenue stream." He cited federal and state excise
taxes, as well as local franchise fees.
Unnecessary Regulation. Martin stated that "At every level of
government, we ought to work to remove regulatory underbrush -- burdensome
regulations that may be impeding deployment. For competitive carriers, many of
these hurdles occur at the state and local levels. These include local rights of
way, permits for zoning and tower siting, and franchise fees that I have already
discussed. Many of these local restrictions are the most cumbersome and
difficult for broadband providers to navigate through. Some state and local
governments -- and the federal government with respect to federal lands -- could
be more proactive in facilitating deployment by streamlining these permitting
Open Access Proceeding. Martin also referenced the FCC's cable open
access proceeding. The FCC issued a Notice
of Inquiry on September 28, 2001, regarding whether the FCC should require
providers of broadband Internet access over cable facilities to provide access
to competing ISPs. Martin stated that "we ought to complete the cable open
access proceeding. Personally, I would be very cautious about applying that type
of legacy regulatory regime to a new and innovative service. I believe that we
should be striving to achieve regulatory parity by providing deregulatory
Enforcement Rocket Docket. Martin also stated that "We should also
consider changing our enforcement procedures to make an effective and reliable
rocket docket -- that all parties can use to resolve disputes quickly."
Bruce Mehlman Addresses Broadband
10/26. Bruce Mehlman gave a speech titled
"Building Our Broadband Future". He is Assistant Secretary for
Technology Policy at the Department of Commerce.
He spoke at a NARUC convention.
Regulatory Barriers. He cited a number of state, local and federal
government obstacles to broadband deployment, including the expense of obtaining
access to rights of way, licensing fees, tower siting restrictions, building
codes and zoning regulations. He also cited government regulatory barriers to
broadband content, such as local licensing laws and prohibitions on interstate
practice of medicine.
Copyright and Broadband. Mehlman stated that "Until industry can
resolve concerns over digital rights management and copyright protection for
movies, music and games, the biggest drivers of commercial broadband adoption
will remain on the sidelines."
Spectrum Management. He also identified spectrum management as an issue,
but merely stated that "the FCC and NTIA can lead careful examinations of
federal spectrum policies to maximize the efficiency with which we manage this
However, Mehlman concluded that "I look to technology solutions more than
policy fixes to get broadband to all Americans."
4th Circuit Affirms in Boyle v. USPTO
10/26. The U.S.
Court of Appeals (4thCir) issued its short unpublished opinion
v. USPTO, a trademark case. The Solicitor of the USPTO
denied John Boyle's request to depose a trademark examiner as a third party
witness. Boyle filed a complaint in the U.S. District Court (EDVa)
against the USPTO. The District Court dismissed his action. He appealed. The
Court of Appeals affirmed.
7th Circuit Rules in Identity Theft Case
10/26. The U.S.
Court of Appeals (7thCir) issued its opinion
v. Monteiro, an appeal from a sentencing condition in an identity
theft case. Joel Monteiro is a career fraud artist. He used the identities of
numerous other persons to fraudulently obtain credit accounts. He then made
purchases, including computers from Sears, equipment from Ameritech, and
services from MCI WorldCom. He was indicted on four counts of mail fraud in
violation of 18 U.S.C.
§ 1341 and one count of access device fraud in violation of 18 U.S.C. § 1029(a)(2)
and (c)(1)(b). However, he was allowed to plead to only one count of access
device fraud. The District Court sentenced him to 33 months of imprisonment. It
also sentenced him to serve a three year term of supervised release, with the
condition that his "person, residence, and vehicle shall be subject to
search and seizure upon demand of any law enforcement officer." He appealed
the condition. The Appeals Court vacated and remanded.
People and Appointments
10/26. President Bush announced his intent to nominate Richard Russell to
be Associate Director of the Office of Science
and Technology Policy (OSTP). Russell has been Chief of Staff of the OSTP
since January. He previously worked for the House Science Committee. The OSTP is a
part of the Executive Office of the President. See, White
10/26. Michael Robinson was named Director of the SEC's
Office of Public Affairs, Policy Evaluation, and Research. Previously, he was
Vice President of Corporate Communications at the investment firm of Friedman Billings Ramsey. Before that, he was a
spokesman for Mobil, and the National Association
of Securities Dealers. See, SEC release.
10/26. The USPTO published a notice [PDF]
in the Federal Register announcing appointments to its Performance Review Board.
See, Federal Register, Vol. 66, No. 208, October 26, 2001, at page 54234.
Go to News Briefs from October 21-25,