|News Briefs from
November 11-15, 2001
Senate Passes Bill to Extend Internet Tax Moratorium
11/15. The Senate passed HR 1552, the
Internet Tax Nondiscrimination Act (INDA), without amendment, by a voice vote,
on Thursday evening, November 15. This bill extends the moratorium on Internet
access taxes, and multiple and discriminatory taxes on Internet commerce, for
two years. In 1998 the Congress passed the Internet Tax Freedom Act (ITFA),
creating a three year moratorium that expired on October 21, 2001. The INDA
amends and extends the ITFA. The House passed the INDA on October 16. President
Bush will promptly sign the bill.
The Senate also rejected, on a roll call vote of 57 to 43, an amendment offered
by Sen. Mike Enzi (R-WY) and Sen. Byron Dorgan (D-ND), that would have
allowed state and local taxing authorities to require out of jurisdiction
Internet sellers, and other remote sellers, to collect sales taxes. See, statement by Sen. Enzi.
The U.S. Supreme Court ruled in Quill v. North
Dakota, 504 U.S. 298 (1992), that state and local taxing authorities are
barred under the Commerce Clause from requiring remote sellers without a
substantial nexus to the taxing jurisdiction to collect sales taxes for sales to
persons within the jurisdiction. However, the Court added that Congress may
extend such authority. Senators and Representatives who favor giving state and
local governments authority to require remote sellers to collect sales taxes
have sought to use the extension of the ITFA as leverage for passage of their
Sen. George Allen (R-VA), a supporter
of the ITFA and INDA, stated during the debate that "what is being
tried here with the Enzi Dorgan amendment is to abrogate and negate a settled
constitutional law from court decisions, whether it was the Quill decision or
Bella Hess decision that says there can't be taxation without
representation." See, Allen
statement. Meanwhile, Rep. Chris Cox
(R-CA), the sponsor of HR 1552, stated that "The bottom line is that
consumers know that for the next two years, the Internet will not be singled out
for unfair tax treatment."
Senators Specter and Leahy Call for Hearing on Military
11/15. Sen. Arlen Specter (R-PA) and Sen. Patrick Leahy (D-VT) went to the floor
of the Senate on Thursday, November 15, to challenge President Bush's order
regarding the use of military tribunals to try terrorists, and to call for a
hearing. Sen. Leahy is Chairman of the Senate Judiciary Committee; Sen.
Specter is a senior Republican member. See, Congressional Record, November 11,
2001, at pages S11888-90.
Sen. Specter said that "I have written today to the chairman of the
Judiciary Committee suggesting that prompt hearings be held on this
subject." He later suggested holding a hearing on November 27 that would
include ttestimony from Attorney General John Ashcroft.
He continued that "The Constitution provides that the Congress is empowered
to define and punish violations of international law, as well as to establish
courts with exclusive jurisdiction over military offenses. Under articles of
war, enacted by Congress, and statutes, the President does have the authority to
convene military commissions to try offenses against the law of war. Military
commissions could be convened to try offenses, whether committed by U.S. service
members, civilian U.S. citizens, or enemy aliens, and a state of war need not
exist. So there has been a delegation of authority by the Congress. But under
the Constitution it is the Congress that has the authority to establish the
parameters and the proceedings under such courts."
Sen. Leahy responded that "we should have hearings on this -- actually a
number of these steps. One of the difficult things, as the Senator knows, is
getting the Attorney General to come up here and testify." Sen. Leahy and
other Democrats on the Senate Judiciary Committee viciously criticized Ashcroft
during his confirmation hearing earlier this year.
Senators Debate Doha Agreement and New WTO Round
11/15. Sen. Frank Murkowski (R-AK)
praised the results of the meeting in Doha. He said that "yesterday the WTO concluded
its fourth ministerial meeting in Doha, Qatar. Circumstances leading to this
meeting were not auspicious. There is a war on, after all, and the Middle East
is not the most comfortable place for the champions of globalization and
progress. With the global economic slowdown, protectionism is on the rise. Not
exactly the best time to undertake talks to expand global trade."
Sen. Murkowski said that "the WTO ministerial meeting was a great success.
The WTO initiated a new Round of international trade negotiations, setting forth
an ambitious agenda by overcoming difficult objections from the EU, the
developing world, and even those in this country who are less than appreciative
of the importance of international trade." Cong. Record, November 15, pages
11/15. Sen. Max Baucus (D-MT) was less
impressed by the Doha meeting. "I am unsettled by the results of this
session in several areas. The agreement reached today in Doha makes it even more
clear why Congress must have deeper involvement in our international trade
policy. Without a doubt, there are positive items in the documents to launch the
negotiation. I am pleased that the United States was able to negotiate forward
looking language on agriculture. There are some good things there -- for
example, goals of improving market access and reducing market distortions,
particularly export subsidies. But these are vague commitments, and Europe and
some of its allies have already demonstrated their strident opposition to
meaningful progress in this area. The devil is in the details -- and the details
have yet to be worked out. On the other side of the ledger, I am extremely
troubled by the decision to re-open the agreements reached just a few years ago
on antidumping and anti-subsidy measures." Cong. Record, November 15, page
Sen. Baucus is Chairman of the Senate
Finance Committee, which has jurisdiction over most trade related issues.
Sen. Murkowski is a senior Republican on the Committee.
Senate Passes Conference Report on CJS Bill
11/15. The Senate agreed to the conference report on HR 2500, the
FY 2002 appropriations bill for the Departments of Commerce, Justice, and State,
the Judiciary, and related agencies. The House passed this conference report on
November 14. This bill includes funding for most of the technology related
departments and commissions, including the USPTO, FCC, FTC, DOJ, NTIA, NIST, BXA,
DOJ Files Competitive Impact Statement in Microsoft Antitrust
11/15. The Department of Justice's Antitrust
Division filed its Competitive
Impact Statement (CIP) with the U.S. District Court (DDC) in U.S. v.
Microsoft, the government's antitrust case. This CIP reviews the background of
the case, the allegations contained in the complaints, and the June 28, 2001 opinion
of the U.S. Court of Appeals (DCCir). It also explains the provisions of Proposed Final Judgment
(PFJ) filed on November 2, 2001. Finally, the CIP explains why the DOJ was
justified in agreeing to the terms contained in the PFJ.
The CIP states that "The United States considered a number of alternatives
to the Proposed Final Judgment. The United States is satisfied, however, that
the requirements and prohibitions contained in the Proposed Final Judgment,
supported by strong compliance and enforcement procedures, provide a prompt,
certain and effective remedy for the violations Microsoft has committed."
The CIP also points out what would have been the consequences of protracted
litigation: "Given the substantial likelihood that Microsoft would avail
itself of all opportunities for appellate review of any non consensual judgment,
the United States estimated that a litigated result would not become final for
at least another two years. The remedies contained in the Proposed Final
Judgment are not only consistent with the relief the United States might have
obtained in litigation, but they have the advantages of immediacy and
As for Microsoft's competitors and others who advocated harsher penalties, the
CIP points out that "any person who has been injured as a result of conduct
prohibited by the antitrust laws may bring suit in federal court to recover
three times the damages suffered ..."
DOJ and FTC to Hold Hearing on Antitrust and IPR
11/15. The Antitrust Division and FTC announced that they will jointly hold a
hearing on antitrust and intellectual property. The hearing will examine
"the importance of the various types of intellectual property to businesses
and innovation, the frequency and types of licensing, pooling and other
arrangements for transfer or joint use of intellectual property, competition
issues in patent settlements and unilateral refusals to deal involving
intellectual property." See, DOJ release,
FTC release, and FTC notice to be
published in Federal Register. The hearings will be held at the FTC
headquarters, at 600 Pennsylvania Ave., NW, in Washington DC, and will be open
to the public. None of these items states the time or date of the hearing.
House Holds Hearing on Cyber Security
11/15. The House Commerce Committee's
Subcommittee on Commerce, Trade, and Consumer Protection held a hearing titled
"Cyber Security: Private Sector Efforts Addressing Cyber Threats".
Witnesses testified regarding the nature of cyber threats, and methods for
dealing with cyber threats. Some witnesses opposed government interference with
the market and government security mandates. Some also advocated passage of
legislation to give businesses less disincentive to share information regarding
cyber threats, including FOIA and antitrust exemptions. Some witnesses advocated
tougher criminal sanctions, more funding for law enforcement, and more funding
and tax incentives for education, training and development of new cyber security
Rep. Cliff Stearns (R-FL), the
Chairman of the Subcommittee, presided. He said in his opening
statement that "As for cyber terrorism, since September 11th we have
learned that determined terrorists do have the wherewithal to undertake the
unexpected. Terrorists and their recruits also have grown up in the digital age
and thus most probably possess the technical skills to undertake concerted and
effective cyber terror attacks. And as the real and virtual worlds have become
more closely intertwined, cyber terrorism can potentially engender greater pain
and tragedy and thus become more attractive to unscrupulous terrorists."
Howard Schwartz, Chief Security Officer of Microsoft, testified that "I
believe we need to let the Internet economy and the information technology
industry operate as a market. That means that it must operate without government
Schwartz also testified that "Microsoft strongly supports adding new cyber
crime provisions to the anti terrorism laws and the criminal code. We see a need
for increased funding for law enforcement personnel, training, and equipment. We
support tougher penalties on criminal hackers, such as civil forfeiture of
personal property used in committing these crimes, and we seek clear guidance
from the Sentencing Commission on how courts should punish these convicted
felons. We strongly support greater international cooperation among law
enforcers in these time-sensitive investigations. And we want ISPs to have the
authority to share information voluntarily with the entire government once they
see that life or limb are endangered."
In contrast, Warren Axelrod of Pershing testified that current criminal laws and
law enforcement efforts provide no deterrence to illegal cyber attacks. He said
the problem is that almost nobody gets caught.
John Casciano, an SVP at SAIC, testified that
there are several things that Congress might do, including encouraging industry
to "define standards for due diligence in the development and validation of
secure software by developers, and its secure implementation and operation by
users. In the event these standards were not met they would provide a basis for
judicial allocation of liability and compensation." He also suggested
"tax subsidies or other incentives for improved cyber protections for
certain industries", and federal funding for education and training
programs for cyber security skills and for the development of new cyber security
All witnesses concurred that the Congress should pass legislation to provide an
exemption from the Freedom of Information Act (FOIA) for cyber security
information voluntarily shared with the federal government. On September 24, Sen. Bob Bennett (R-UT) introduced S 1456, the
Critical Infrastructure Information Security Act (CIISA), a bill to give
companies incentives to share information in order to help defend against cyber
attacks. It contains both FOIA and antitrust exemptions.
See, prepared testimony of witnesses: Howard
Schmidt (Microsoft), John
Casciano (SAIC), Christopher
Klaus (Internet Security Systems), Mary
Ann Davidson (Oracle), David
Morrow (EDS), Warren
Axelrod (Pershing), Dave
McCurdy (Electronic Industries Alliance), and Mark
Doll (Ernst & Young).
Rep. Billy Tauzin (R-LA), the
Chairman of the full Committee, submitted a statement
for the record. At the conclusion of the hearing Rep. Stearns stated that he
hopes "industry will step up to the plate ... if not, obviously, Congress
could mandate security standards, which we don't want to do."
More New Bills
11/15. Rep. Steny Hoyer
(D-MD) introduced HR 3302, a bill to establish the Capitol Telephone Exchange
Board. It was referred to the House
11/15. Rep. Lindsey Graham (R-SC) and
others introduced HR 3301, a bill to provide federal reimbursement to State and
local governments for a limited 10 day sales, use, and retailers' occupation tax
holiday. It was referred to the House
Ways and Means Committee. See, Rep. Graham's release.
People and Appointments
11/15. Charles Greenwood was confirmed by the Senate to be Coordinator
for Asia Pacific Economic Cooperation (APEC).
11/15. Behrooz Shariati
joined the Silicon Valley office of the law firm of McDermott Will & Emery as a partner in the
firm's Intellectual Property Department. He practices in the area of
intellectual property counseling and litigation relating to Internet related
software, hardware and networking technologies. Prior to practicing law, he was
a programmer. See, release.
West joined the San Francisco office of the law firm of Morrison & Foerster as of counsel in the
firm's litigation department. He is a former Special Assistant Attorney for the
State of California, and former Assistant U.S. Attorney in San Jose. As Special
Assistant AG he advised AG Lockyer on high tech crime, Internet policy, civil
rights, elder abuse and crime prevention issues. See, MoFo
11/15. The Senate Judiciary
Committee postponed it November 11 business meeting.
Telecommunications (BT) stated that it "received final court approval
prior to the demerger of the mmO2 business. The demerger process involves the
creation of two new holding companies: one for the BT Group businesses, and one
for the mmO2 businesses through a court approved Scheme of Arrangement. The High
Court of Justice in England and Wales today completed hearings which sanctioned
the Scheme of Arrangement and approved the reduction of the share capital of BT
provided for under the Scheme." See, BT release.
11/15. The Court of Appeal of California issued its opinion [PDF]
in ComputerXpress v. Lee Jackson, a suit involving the California SLAPP statute.
11/15. The House Judiciary Committee's
Subcommittee on Immigration and Claims postponed its legislative hearing on HR
3231, a bill to replace the Immigration and Naturalization Service (INS) with
the Agency for Immigration Affairs.
House Passes Conference Report on CJS Bill
11/14. The House passed the conference report on HR 2500 by a
vote of 411 to 15. See, Roll
Call No. 438. This is the Commerce, Justice, State, and the Judiciary
Appropriations Act for FY 2002 Conference Report. This includes funding most of
the technology related agencies and departments, including the USPTO, FCC, FTC,
DOJ, NTIA, NIST, BXA, and SEC.
Politics, Antitrust and Baseball
11/14. Rep. John Conyers (D-MI)
introduced HR 3288, the "Fairness in Antitrust in National Sports Act of
2001". The acronym is the FANS Act. The bill would amend the Clayton Act to
make the antitrust laws applicable to the elimination or relocation of major
league baseball franchises. It was referred to the House Judiciary Committee, of which
Rep. Conyers is the ranking Democrat.
Rep. Conyers submitted a statement for the Congressional Record in which he said
that "I was shocked by Major League Baseball's decision just two days later
to eliminate two teams as early as December 15th of this year. This is why it is
imperative that Congress move quickly on the FANS Act to insure that anti
competitive decisions by Major League Baseball concerning the elimination or
relocation of teams are subject to the antitrust laws like all other
professional sports and businesses."
The bill is also cosponsored by much of the Minnesota delegation. Their state
would be impacted by the loss of the Minnesota
Twins. Montreal, home of the Expos,
the other team likely to be eliminated, has no representation in the Congress.
11/14. Sen. Paul Wellstone (D-MN)
introduced S 1704, the Senate version of the FANS Act. It is cosponsored by Sen. Mark Dayton (D-MN).
Harvey Pitt Addresses Securities Regulation
Chairman Harvey Pitt gave a speech
in Washington DC in which he stated that securities regulation will have to
adapt to both new electronic technologies and differing regulatory and
accounting standards around the world. However, he offered no framework for how
"the global community could regulate the global marketplace and create a
veritable seamless web of interconnectedness".
Pitt said that "We live in a global economy, with global markets, engaged
in fierce global competition, with boundaries that are expanding exponentially
given the Internet and changing technology. If there ever was a time when we
could view the world solely through the prism of U.S. securities regulation,
that time is also long past."
He addressed the once "clear boundaries separating categories of investment
intermediaries", changes in financial services and investment products, the
changing needs and natures of investors, and approaches to full and fair
He also stated that "Recent studies show that roughly one out of every two
U.S. households invests in securities. While retail investors today have greater
access, via electronic technology, to financial information and execution
systems, it is an open question whether these same investors have sufficient
training and adequate time to use these tools." However, he offered no
further elaboration on this point.
GAO Releases Report on Internet Backbone Market
11/14. The GAO released
a report [PDF] titled
"Characteristics and Competitiveness of the Internet Backbone Market".
The report summarizes the physical structure of interconnection, and the two
types of financial arrangements for interconnection among backbone providers --
peering and transit.
The report also states that "No publicly available data exist to allow a
precise economic evaluation of the competitiveness of the Internet backbone
market." It does relate, however, that industry participants view the
backbone market as competitive, and more competitive now that a few years ago.
The report further recommends that "the FCC periodically evaluate whether
existing data collection efforts are providing needed information on the
Internet backbone market and, if deemed appropriate, exercise its authority to
establish a more formal data collection program."
The report also states that the "Future evolution of this market is likely
to be largely affected by two types of emerging services. First, demand is
likely to increase for time sensitive applications, such as Internet voice
service. Second, it is expected that more 'broadband' -- bandwidth intensive --
content, such as video, will flow over the Internet in the coming years."
This 43 page report was prepared for Sen. Herb
Kohl (D-WI) and Sen. Mike DeWine
(R-OH), the Chairman and ranking Republican, respectively, of the Senate Judiciary Committee's
Subcommittee on Antitrust, Business Rights and Competition.
District Court Denies Preliminary Injunction in SunGard Case
11/14. The U.S. District Court (DDC)
issued its Redacted
Memorandum Opinion [PDF] in USA
v. SunGard Data Systems, denying the government's motion for
On October 22, the Department of Justice
(DOJ) filed a civil complaint in U.S. District Court (DDC)
against SunGard and Comdisco seeking to block SunGard's purchase
of Comdisco's Availability Solutions (AS) business for $825 Million. See, DOJ release.
AS provides disaster protection and relief to keep computer systems accessible
in disasters and other disruptions. Only July 16, Comdisco filed a Chapter 11
bankruptcy petition in U.S. Bankruptcy Court (NDIll). The
Bankruptcy Court ordered that the relevant Comdisco assets be sold at an
auction. SunGard offered the highest of two bids at an October 11 auction --
$825 Million. See, October 12 Comdisco
The DOJ also sought a preliminary injunction, arguing that the acquisition would
substantially lessen competition in the market for shared hotsite disaster
recovery services for mainframe and midrange computers, in violation of the
The District Court denied the request for an injunction. It concluded that
"In light of the decreasing costs of equipment and telecommunications and
the rapidly evolving computer technology, the Court cannot accept the
government's overly narrow and static definition of the product market. The
defendants' customers, as well as their computer systems, are simply too varied
and too dissimilar to support any generalizations. Therefore, the central
premise of the government's case – that there are ``a substantial number of
customers for whom there are no competitive alternatives´´ ... has not been
proven." (Citation omitted.)
The original opinion was dated November 14; the public redacted version was
released on November 21.
Conference to Take up Bankruptcy Bill
11/14. There will be a conference on HR 333,
the Bankruptcy Abuse Prevention and Consumer Protection Act of 2001 on
Wednesday, November 14. The House passed its version of the bill by a vote of
306 to 108 on March 1. This is a large and broad bill. However, some provisions
relate to online privacy. Section 231 of the House version requires the removal
of the names of children from bankruptcy filings. In contrast, Section 231 of
the Senate version of the bill, passed on July 17, prevents the sale by the
bankruptcy trustee of personally identifiable information collected by the
debtor, if the debtor had a policy against disclosure. See, HJC release.
The House conferees are Sensenbrenner, Hyde, Gekas, Smith (TX), Chabot, Barr,
Conyers, Boucher, Nadler, Watt (NC), Oxley, Bachus, LaFalce, Tauzin, Barton,
Dingell, Boehner, Castle, and Kildee. The Senate conferees are Leahy, Kennedy,
Biden, Kohl, Feingold, Schumer, Durbin, Hatch, Grassley, Kyl, DeWine, Sessions
NTIA Seeks Public Comment on Broadband Issues
11/14. The National Telecommunications and
Information Administration (NTIA) released a copy of a notice
to be published in the Federal Register requesting comments on deployment of
broadband networks and advanced telecommunications services. The NTIA, which is
a part of the Department of Commerce, is one
federal agency involved in developing U.S. telecommunications and Internet
The notice propounds several dozen questions, including: "What should be
the primary policy considerations in formulating broadband policy for the
country? ... How should broadband services be defined? ... What is the current
status of (1) supply and (2) demand of broadband services in the United States?,
and Do the interconnection, unbundling, and resale requirements of the
Telecommunications Act of 1996 reduce incumbent local exchange carriers' (ILECs')
incentives to invest in broadband facilities and services?"
Comments will be due within 30 of publication in the Federal Register, which has
not yet happened.
WTO Members Agree to Launch New Round of Trade Negotiations
11/14. 142 countries participating in the World
Trade Organization (WTO) meeting in Doha, Qatar, adopted a declaration
[PDF] in which they agreed to begin a new round of global trade negotiations.
release. Among the topics to be negotiated are e-commerce, antitrust policy,
trade in services, and TRIPS.
Promoting E-Commerce; Duties on E-Commerce. Paragraph 34 of the
declaration states, in full: "We take note of the work which has been done
in the General Council and other relevant bodies since the Ministerial
Declaration of 20 May 1998 and agree to continue the Work Programme on
Electronic Commerce. The work to date demonstrates that electronic commerce
creates new challenges and opportunities for trade for Members at all stages of
development, and we recognize the importance of creating and maintaining an
environment which is favourable to the future development of electronic
commerce. We instruct the General Council to consider the most appropriate
institutional arrangements for handling the Work Programme, and to report on
further progress to the Fifth Session of the Ministerial Conference. We declare
that Members will maintain their current practice of not imposing customs duties
on electronic transmissions until the Fifth Session."
Services. Paragraph 15 addresses "negotiations on trade in services". USTR Robert Zoellick
stated that "In the area of services, we're very pleased, because the
declaration sets the stage for a commencement of negotiations on new
liberalization commitments on sectors that would include telecommunications,
financial services, energy, audio visuals, express delivery -- but much of the
focus is on other sectors. It's worth recording that these negotiations are
really important to our long-term growth because the service sector now
represents 62 percent of the U.S. economy." See, transcript.
Antitrust Policy as Trade Barrier. Paragraphs 23-25 provide that
negotiations will take place on the "interaction between trade and
competition policy". Paragraph 25 states, in part, that "In the period
until the Fifth Session, further work in the Working Group on the Interaction
between Trade and Competition Policy will focus on the clarification of: core
principles, including transparency, non-discrimination and procedural fairness,
and provisions on hardcore cartels; modalities for voluntary cooperation; and
support for progressive reinforcement of competition institutions in developing
countries through capacity building."
TRIPS and Pharmaceutical Patents. Paragraphs 17-19 address the TRIPS
Agreement. Paragraph 17 states, in full, that "We stress the importance we
attach to implementation and interpretation of the Agreement on Trade Related
Aspects of Intellectual Property Rights (TRIPS Agreement) in a manner supportive
of public health, by promoting both access to existing medicines and research
and development into new medicines and, in this connection, are adopting a
Technology Transfers. Paragraph 37 provides that "We agree to an
examination ... of the relationship between trade and transfer of technology,
and of any possible recommendations on steps that might be taken within the
mandate of the WTO to increase flows of technology to developing
President Bush. Bush stated that "I commend the decision by the
world's trading nations, meeting in Qatar, to launch a new round of global trade
negotiations. This bold declaration of hope by the World Trade
Organization (WTO) has the potential to expand prosperity and development
throughout the world and revitalize the global economy. It also sends a
powerful signal that the world's trading nations support peaceful and open
exchange and reject the forces of fear and protectionism." See, WH
Fighting Terror with Trade
11/14. The Progressive Policy Institute
(PPI), a Democratic party think tank, released a paper
titled "Fighting Terror With Trade". It argues that many problems in
the Middle East derive, not from globalization, but from lack of globalization
and trade in the Middle East.
The paper, written by Ed Gresser, states that "Some leftist thinkers have
speculated that anti Americanism in the Middle East has its roots in popular
resentment of globalization. But the facts are the reverse." This PPI paper
elaborates that "Most Middle Eastern countries maintain trade barriers that
are among the highest in the world. Egypt, for example, imposes a 54 percent
tariff on clothes; Syria bans imports of processed foods, puts a 250 percent
tariff on cars, and requires a license for all imports."
The paper continues that many regions of the world that were recently embroiled
in wars and violence have obtained stability and greater prosperity through
trade integration programs, such as the NAFTA, South America's Mercosur,
European Union, and the Association of Southeast Asian Nations (ASEAN) Free
Trade Area. In contrast, "Middle Eastern nations have done the opposite by
imposing trade restrictions and sanctions on one another. The high trade
barriers common throughout the Arab world block routine intraregional trade. The
Arab League's boycott of Israel, the region's natural source of technology and
capital, further worsens the environment." Moreover, "Eleven of the
Arab League's 22 members, and Iran as well, remain outside the World Trade
Organization (WTO)." The paper concludes that the U.S. should encourage
Middle Eastern nations to join the WTO, and negotiate bilateral free trade
Tauzin Dingell Bill News
11/14. CEOs of 107 telecom companies sent a letter [PDF]
to House Speaker Denny Hastert opposing HR 1542,
the Tauzin Dingell bill, and requesting that it not be brought to the House
floor for a vote. They wrote that "If enacted into law, its consequences
would be devastating for our New Economy companies and consumers. ... H.R. 1542
could create the worst possible scenario -- four megacompanies each possessing
an unregulated monopoly over local telephone services and Internet access."
Robert McCormick, P/CEO of the USTA, a group that represents ILECs,
released a rebuttal statement.
He argued that "By declaring the market for high speed Internet services to
be a free market, the Tauzin Dingell bill eliminates the barriers to investment
in broadband, unleashing opportunities throughout the telecom and technology
CompTel Addresses Broadband Rights of Way
11/14. The Competitive Telecommunications
Association (CompTel) issued a release regarding rights of way. It wrote
that "The bureaucratic morass of permits and licenses and building codes
has received less attention than the more visible problems of lack of local loop
competition, but the problems over public rights of way have created serious
paralysis in broadband deployment. Instead of getting services to customers,
providers are finding themselves stuck in halls of local and state governments,
trying to negotiate through a maze of permit and licensing arrangements."
CompTel also released a twelve point list titled "Public Rights of Way
Principles". Among its recommendations are the following: "Rights of
way access shall extend to all entities which provide intrastate, interstate or
international telecommunications or telecommunications services or deploy
facilities used directly or indirectly in the provision of such
telecommunications or telecommunications services. In exercising its legitimate
management authority, a government entity should ensure that service providers
have reasonable and non-discriminatory access to public rights of way. A
government entity's authority to manage the rights of way shall not include
regulatory control over the provider’s operations and services."
Senate Holds Hearing on Biometric Identifiers
11/14. The Senate Judiciary
Committee's Technology, Terrorism, and Government Information Subcommittee
held a hearing on biometric identifiers. See, prepared testimony of witnesses: Michael
Kirkpatrick (FBI), Monte Belger
Lyons (Identix), Bill Willis (Iridian
Huddart (Recognition Systems), Richard Haddock
(LaserCard Systems), Joanna Lau (Lau
Technologies). See also, prepared statement
of Sen. Orrin Hatch (R-UT).
7th Circuit Rules in Copyright Case
11/14. The U.S.
Court of Appeals (7thCir) issued its opinion
Wakeen Doll Company v. Ashton Drake Galleries, a copyright
infringement case involving "Love Me Tender" dolls. The Appeals Court
affirmed the District Court's denial of Ashton's JMOL, but vacated the award
of attorneys fees.
People and Appointments
11/14. Linda Blair was named Deputy Chief of the FCC's Enforcement Bureau. She was previously
Associate Chief of the Bureau. She will be responsible for overseeing the
Bureau's regional and field offices, its Technical and Public Safety Division,
and the broadcast and other Title III responsibilities of the Investigations and
Hearings Division. She will also be a Deputy on the Commission's new Homeland
Security Policy Council. She has worked for the FCC since 1988.
11/14. Andrew Oosterbaan was named Chief of the Child Exploitation and Obscenity
Section (CEOS) of the Criminal
Division of the Department of Justice. He has worked in the CEOS since
January of 2000. The DOJ stated in a release the
Oosterbaan "helped devise, implement, and manage Operation Avalanche, a
first of its kind undercover initiative involving unprecedented cooperation
between local, state, and federal law enforcement to protect children in
cyberspace by targeting thousands of subscribers to online child pornography web
11/14. The law firm of Fenwick & West
announced an expansion of its Washington DC office. David Hayes
(Chairman of the firm's Intellectual Property Group), Kevin Kelso
(Corporate Group), Stuart
Meyer (Litigation and Intellectual Property), Brian Kelly
(Licensing), and Christopher Tobin (Patent) will work in the Washington
DC office either full or part time. See, FW
11/14. The FCC announced the creation of a
Homeland Security Policy Council. FCC Chief of Staff Marsha MacBride will be its
Director. The two Deputy Directors will be be Linda Blair and Brad Berry, who
are Deputy Chiefs in the Enforcement Bureau. See, FCC
Supreme Court Rules on Statute of Limitations in Identity
11/13. The Supreme Court of the U.S.
issued its opinion
[PDF] in TRW v. Adelaide Andrews, a case regarding the running of the two
year statute of limitations governing suits based on the Fair Credit Reporting
Background. Adelaide Andrews had her identity stolen. An imposter
obtained her name, social security number, and other information, which she
provided to a radiologist. This imposter then used this information to apply for
credit in Andrews' name. TRW, a credit reporting agency now known as Experian, disclosed her credit record upon
Lower Courts. Andrews filed a complaint in U.S. District Court (CDCal)
against TRW alleging violation of the FCRA. She filed her suit 17 months after
learning of TRW's disclosures, but more than two years after the disclosures.
The District Court ruled that the statute of limitations had run. However, the U.S. Court of Appeals (9thCir) reversed.
FCRA. The FCRA, 15
U.S.C. § 1681, et seq., requires credit reporting agencies to maintain
reasonable procedures designed to assure maximum possible accuracy of the
information contained in credit reports, limits the furnishing of such reports
to certain statutorily enumerated purposes, and creates a private right of
action allowing injured consumers to recover any actual damages caused by
negligent violations. It further provides that suits for violation of the Act
must be brought "within two years from the date on which the liability
arises." However, in the case of willful misrepresentation, suit must be
brought within two years of discovery by the plaintiff.
Supreme Court. The Supreme Court reversed the decision of the Ninth
Supreme Court Denies Cert in On Sale Bar Case
11/13. The Supreme Court of the U.S.
denied a petition for writ of certiorari in Robotic
Vision Systems v. View Engineering, without opinion, thereby
letting stand an opinion
of the U.S.
Court of Appeals (FedCir) regarding the on sale bar in patent infringement
On Sale Bar. 35
U.S.C. § 102(b) provides that "A person shall be entitled to a
patent unless ... the invention was ... on sale in this country, more than
one year prior to the date of the application for patent in the United
Background. Robotic is the assignee of U.S.
Patent 5,463,227, which discloses a method of scanning the leads on
integrated circuit devices that are arranged in rows and columns on a multi
pocketed tray. The application for the '227 patent was filed on June 24, 1992,
thus making June 24, 1991 the critical date for the purpose of applying §
Lower Court Proceedings. As soon as the patent was granted, Robotic filed
a complaint in the U.S. District Court (CDCal)
against View alleging that its three dimensional scanning machines infringed the
patent '227 patent. View filed a motion for summary judgment on the grounds that
the patent was invalid under the on sale bar. The District Court held that claim
1 of the '227 patent is invalid. The District Court applied the Supreme Court's
two part test in Pfaff v. Wells
Electronics, 525 U.S. 55 (1998); the invention was (1) the subject of a
commercial offer for sale before the critical date, and (2) ready for patenting
before the critical date, and hence, the patent is invalid. The Appeals Court
affirmed on May 7, 2001.
Fed Circuit Rules in SSL v. Lockheed Martin Patent Case
11/13. The U.S.
Court of Appeals (FedCir) issued its opinion in Space
Systems / Loral v. Lockheed Martin, a patent infringement case
involving the on sale bar.
Ford Aerospace & Communications Corp. (Ford), the predecessor of Space
Systems / Loral (SSL), was the original assignee of U.S.
Patent No. 4,537,375, titled "Method and apparatus for thruster
transient control". This patent discloses an attitude control system for
maintaining the position and orientation of a satellite. SSL filed a complaint
District Court (NDCal) against Lockheed Martin alleging patent infringement.
The District Court ruled, on summary judgment, that the patent was invalid under
the on sale bar.
§ 102(b) provides that "A person shall be entitled to a patent
unless ... the invention was ... on sale in this country, more than one
year prior to the date of the application for patent in the United States."
Prior to the patent application, Ford contracted with SociJtJ Nationale
Industrielle Aerospatiale. Fred Chan, a Ford employee, and inventor of the
patent, sent to Aerospatiale an engineering proposal, prior to the patent
application, describing the system, including rough drawings, and an estimate of
the cost of developing the system. The District Court held that Chan's proposal
demonstrated conception of the invention, that the invention was ready for
patenting upon conception, and that this proposal was an on sale event.
The Appeals Court reversed and remanded. It held that the District Court erred
in ruling that the invention was ready for patenting upon conception as
communicated in Chan's engineering proposal. It reasoned that for a complex
technique, "wherein the inventor himself was uncertain whether it could be
made to work, a bare conception that has not been enabled is not a completed
invention ready for patenting." The Appeals Court did not reach the
question of whether an offer of sale had been made.
8th Circuit Rules on Advertising Injury and Copyright
11/13. The U.S.
Court of Appeals (8thCir) issued its opinion [PDF] in
Insurance v. Complete Music, a case regarding an insurer's duty
to indemnify for losses to its policy holder resulting from copyright
infringement by its policy holder.
Complete Music is a franchisor of mobile disc jockey services. GRE Insurance
sold Complete Music an insurance policy that covered " 'advertising injury'
caused by an offense committed in the course of advertising your goods, products
or services." The policy further provided that " 'Advertising Injury'
means injury arising out of one or more of the following offenses: ...
Infringement of copyright, title or slogan."
Complete Music distributed compilation music discs produced by another company,
which was not licensed to make the discs. In a separate action, the Recording Industry Association of America (RIAA)
sued Complete Music for copyright infringement. Complete Music then tendered the
defense to its insurer, GRE, and asserted coverage under the advertising injury
section of the policy. GRE declined coverage. Complete settled with the RIAA for
In the present action, GRE filed a complaint in U.S. District
Court (DNeb) against Complete Music seeking a declaration that it has no
duty under the policy to indemnify Complete Music in the RIAA action. The
District Court ruled for GRE. The Appeals Court affirmed.
The Appeals Court elaborated that "Complete Music failed to establish the
requisite causal connection between its advertising activities and the copyright
infringement by its franchisees. The evidence shows that the primary objective
of its advertising activities was to induce the sale of franchises, not
copyright infringement. ... It was the playing of the copyrighted songs that
infringed, and this could have occurred independent of Complete Music's
Rep. Dreier Addresses TPA
11/13. Rep. David Dreier (R-CA),
Chairman of the House Rules Committee,
spoke in the House in favor of granting the President Trade Promotion Authority
(TPA). He stated that TPA "will allow us to finally make serious progress
in the effort to forge new trade agreements that benefit our constituents.
Without TPA we can give up any notion of leading the world in opening new
markets, promoting worker protection, and setting international technological
standards. And by refusing to entrust our negotiators with the authority to move
ahead on trade agreements, we are crippling American industries. ... We must set
aside our differences and recognize that the compromise embodied in H.R. 3005
will benefit the American people." See, Congressional Record, Nov. 13,
2001, at page H8037.
Rep. Brown Addresses TPA
11/13. Rep. Sherrod Brown
(D-OH) spoke in the House against TPA. He stated that "the Bush
administration's trade representative, Bob Zoellick, sought to link the trade
negotiating authority known as Fast Track to our Nation's antiterrorism efforts.
... Mr. Zoellick's call for an absolute trade negotiating authority in the name
of patriotism must be recognized for what it is, pure and simple political
House to Vote on CJS Bill
11/13. The House Rules
Committee adopted a rule
for consideration of the conference report on HR 2500, the
Commerce, Justice, State, and the Judiciary Appropriations Act for FY 2002. This
bill includes funding for most of the technology related agencies and
departments, including the U.S. Patent and Trademark Office, FCC, FTC, DOJ, NTIA,
NIST, BXA, and SEC. The rule provides that "All points of order against the
conference report and against its consideration are waived. The conference
report shall be considered as read."
Bush and Putin Meet
11/13. U.S. President Bush and Russian President Vladimir Putin issued a joint
statement regarding the U.S. Russian economic relationship. They stated that
"We declare support to other U.S. Russian investment projects in various
fields and, above all, in high technology areas." They also stated that
both support Russia's goal of joining the World
Trade Organization (WTO).
They continued that "We will work together to build confidence in the
climate for trade and investment between our two countries. An important element
of this activity is Russia's integration into the rules based global trading
system of the World Trade Organization. We confirm our commitment and place
considerable priority to working together in an effort to accelerate Russia's
WTO accession negotiations, based on standard conditions."
The two Presidents also issued a second
statement in which they said that "The United States and Russia will
cooperate, including through the support of direct contacts between the business
communities of our countries, to advance U.S. Russian economic, trade, and
investment relations. The achievement of these goals requires the removal of
legislative and administrative barriers, a transparent, predictable investment
climate, the rule of law, and market based economic reforms. To this end, it is
important to reduce bureaucratic constraints on the economy and to combat
economic crime and corruption."
The White House press office also released a statement
on Russian accession to the WTO. "The United States strongly supports
Russia's goal of World Trade Organization (WTO) accession, and is committed to
helping accelerate the accession process at a pace acceptable to Russia. ... In
order to accede to the WTO, Russia must negotiate a 'protocol package' of
commitments with WTO Members that require reform of its trade regime."
People and Appointments
11/13. The Board of Directors of Novell
announced the appointment of Novell P/CEO, Jack Messman, as Chairman of
the Board. The former Chairman, Eric Schmidt, resigned. See, release.
11/13. The Senate confirmed Edith Clement to be a Judge of the U.S. Court of Appeals (5thCir) by a vote
of 99 to 0.
11/13. Verizon Delaware named Bonnie Metz to the newly created position
of Vice President, Government Affairs. She will oversee legislative matters,
contacts with state and federal regulatory agencies, and community relations.
11/13. Sunil Bhardwaj was named VP of Finance and CFO of the law firm of Wilson Sonsini Goodrich & Rosati. See, WSGR
11/13. The Supreme Court of the United
States released its Order
List for November 13. It contains the following item: "D-2270 IN THE
MATTER OF BILL CLINTON Bill Clinton, of New York, New York, having
requested to resign as a member of the Bar of this Court, it is ordered that his
name be stricken from the roll of attorneys admitted to the practice of law
before this Court. The Rule to Show Cause, issued on October 1, 2001, is
11/13. The Senate Judiciary
Committee postponed its hearing to examine homeland defense issues, focusing
on sharing information with local law enforcement.
Doha, WTO and IPR
11/12. Representatives of the Office of the U.S.
Trade Representative (USTR) held a press conference at the Fourth World Trade Organization (WTO) Ministerial in
Doha, Qatar, regarding trade related aspect of intellectual property (TRIPS).
Representatives of about 140 nations that are members of the WTO are in Doha to
negotiate an agreement to launch a new round of global trade talks. See, transcript.
11/12. The WTO issued a release
regarding the status of talks in Doha, Qatar, to launch a new round of trade
talks. The release contained the following: "Intellectual property (TRIPS)
/ Public health / Access to medicines -- Minister Luis Ernesto Derbez Bautista
of Mexico reported considerable progress in the consultations. He said a new
draft has been prepared, and that it is almost a final draft."
11/12. The USTR issued a release titled
"10 Ways Global Trade Negotiations Would Benefit Developing Nations".
Intellectual property protections is one of the topics that it addresses. It
states that "The existing TRIPs agreement can help to strengthen
intellectual property rights around the world, while providing flexibility to
help deal with tragic pandemics such as HIV/AIDS, malaria, and tuberculosis. As
developing countries have implemented the intellectual property protections in
TRIPs, they have begun to benefit from increased technology transfer and
investment -- two key factors in long term economic growth. Strong, effective
intellectual property protection is the cornerstone on which an attractive
investment climate is built, as companies will have greater incentives to invest
in countries if they are confident there is a legal structure to protect their
innovations from unauthorized copying. A strong intellectual property regime
also discourages brain drain, as it encourages the best and the brightest in
developing nations to carry out research at home, confident that the fruits of
their labors will enjoy patent protections."
11/12. The Washington DC based law firm of Wilmer
Cutler & Pickering (WCP) and the Berlin law firm of Quack Rechtsanwälte will merge
as of January 1, 2002. See, WCP
11/12. Michael Solender rejoined the Washington DC office of the law firm
of Arnold & Porter as a partner.
He was previously General Counsel of the Consumer
Product Safety Commission (CPSC). See, release.
11/12. The ICANN began a three day meeting
titled "Security and Stability of the Internet Naming and Address
11/12. IBM announced that it formed the IBM Privacy Institute and the IBM
Privacy Management Council to focus on privacy and data protection
challenges facing its enterprise customers and the marketplace. See, IBM release.
Taiwan Joins WTO
11/11. The World Trade Organization (WTO)
announced that the WTO's Ministerial Conference approved "by consensus the
text of the agreement for Chinese Taipei's entry into the WTO. Chinese Taipei
will become legally a member 30 days after the WTO receives notification of
the ratification of the agreement by Chinese Taipei's Parliament." See, WTO release.
Go to News Briefs from November 6-10,