|News Briefs from
November 16-20, 2001
Microsoft Settles Private Overpricing Antitrust Class Actions
11/20. Microsoft announced that it settled over 100 private antitrust class
action lawsuits against it alleging that it overpriced its products. Microsoft
also stated that the parties would file a Settlement Agreement with the U.S. District
Court (DMD). See, MSFT
release and statement
by Microsoft CEO Steve Ballmer.
The District Court, Judge
Frederick Motz presiding, has scheduled a hearing on this proposed
settlement for Tuesday, November 27. This settlement does not affect the ongoing
government antitrust litigation against Microsoft; nine states have not yet
joined in the settlement announced earlier this month. Also, plaintiffs'
attorneys in state court actions alleging overpricing that are pending in
California will likely object to this settlement.
Microsoft stated that "Under the proposed settlement, Microsoft will
provide more than $1 billion in cash, training, support and software to help
make computer technology more accessible to public schools serving nearly 7
million of America's most economically disadvantaged children. Details of the
five year education program are outlined in a Settlement Agreement signed by the
parties on Monday, which will be filed with the Federal District Court of
Maryland later today. The program, if accepted by the Court, will provide cash,
computer hardware, software, technical assistance and training to over 12,500
schools and more than 400,000 teachers who work in those schools."
The terms of the proposed settlement also provide that the plaintiffs' attorneys
will receive reasonable attorneys fees in an amount to be determined by the
Microsoft also announced that it will record a pre-tax charge of approximately
$550 million in the quarter ending December 31, 2001, resulting from the
settlement of more than 100 class action lawsuits." See, MSFT
FTC Settles Case Against Deceptive Web Operation
11/20. The FTC announced settlement of a case
that it brought in May against the operators of a web business that deceived
consumers. Defendants falsely claimed that RhinoPoint.com would pay Internet
access fees for consumers who paid membership fees and divulged their personal
and financial information. See, FTC release. Under
the terms of the Stipulated
Final Judgment, defendants are barred from making future misrepresentations
to consumers, and from using, disclosing, or selling any of the personally
identifying information that they collected. They are also required to destroy
On May 23, 2001, the FTC filed a complaint in U.S. District Court (NDIll)
against New Millennium Concepts, Inc., dba rhinoPoint, and its principal, Karl
Kay, alleging deceptive acts or practices in violation of § 5(a) of the
Federal Trade Commission Act, 15 U.S.C. § 45(a).
The complaint alleged that defendant falsely represented that consumers who
signed up as members of rhinopoint.com, by paying an initial setup fee and
disclosing personal information on the member profile form, would receive
monthly marketing surveys and would be reimbursed for their monthly Internet
access charges after completing the monthly surveys. The complaint further
alleged that the defendant collected about $500,000 in set-up fees and obtained
consumers' personal information, but did not follow up with marketing surveys or
pay Internet access fees for most of the consumers.
E-911Phase II Petitions for Reconsideration
11/20. On November 13, Cingular Wireless,
Nextel, and Verizon Wireless filed petitions
seeking reconsideration of certain provisions of the FCC's October 12 orders
addressing and conditionally approving requests for waivers and approval of
revised deployment plans for wireless Enhanced 911 services. On November 20, the
FCC issued a notice
that set deadlines for comments on these petitions for reconsideration.
Oppositions and comments are by December 19, 2001; reply comments are due by
January 4, 2002.
See, November 13 petitions for reconsidertion: Cingular's petition
[PDF], Nextel's petition
[PDF], and Verizon's petition
[PDF]. See also, FCC release
summarizing the orders released on October 12, and the October 12 orders: FCC
FCC 01-295 Order,
FCC 01-296 Order,
FCC 01-297 Order,
and FCC 01-299 Order.
(CC Docket No. 94-102.)
Illegal Export of Computers to Libya and Syria
11/20. The Bureau of Export Administration
(BXA) published a notice
in the Federal Register that it has affirmed an injunction against Tetrabal
Corp. and Ihsan Medhat Elashi in connection with the export of computer products
to Libya and Syria in violation of the Export Administration Regulations (EAR).
The notice contains a BXA order of November 10 affirming the Administrative
Law Judge's (ALJ) November 2 Recommended Decision and Order regarding
Tetrabal Corporation, Inc., and Ihsan Medhat Elashi, and denying the appeals of
Tetrabal and Elashi.
Tetrabal Corp. and Elashi are related to Infocom. On September 6, the BXA
enjoined Infocom, its officers, and others, from selling computer equipment to
Libya and Syria in violation of the Export Administration Regulations (EAR).
See, Federal Register, November 20, 2001, Vol. 66, No. 224, at Pages 58112 -
More on FTC DOJ Hearings on Antitrust and IPR
11/20. On November 15 the Antitrust Division
of the Department of Justice and the FTC
announced that they will jointly hold a hearing on antitrust and intellectual
property. On November 20, the FTC published a notice
in the Federal Register regarding this hearing. It states that "The
hearings will begin in January 2002 and will conclude later in the spring.
Specific dates and more specific topic listings will be provided in a later
notice and in press releases. Any interested person may submit written comments
responsive to any of the topics to be addressed; such comments should be
submitted no later than the last session of the hearings." The notice also
states that "The hearings will focus primarily on the implications of
antitrust and patent law and policy for innovation and other aspects of consumer
welfare. Copyright and trademark issues as they arise in particular high-tech
contexts also may be considered." See, Federal Register, November 20, 2001,
Vol. 66, No. 224, at Pages 58146 - 58147.
Copyright Office Requests Comments in Rate Proceedings
11/20. The Copyright Office (CO)
published a notice
in the Federal Register regarding its digital performance right in sound
recordings rate adjustment proceedings. It contains a notice of inquiry and
request for notices of intention to participate. The notice states that the CO
"is requesting comments as to whether the rate adjustment proceeding to
determine reasonable rates and terms for the public performance of sound
recordings by new subscription services should be consolidated with the rate
adjustment proceeding to determine reasonable rates and terms for the public
performance of sound recordings by pre-existing satellite digital audio radio
services and pre-existing subscription services." Comments and Notices of
Intent to Participate are due no later than December 20, 2001. Reply comments
are due no later than January 22, 2002. See, Federal Register, November 20,
2001, Vol. 66, No. 224, at Pages 58180 - 58181.
11/20. The Copyright Office
in the Federal Register regarding the distribution of 1998 and 1999 cable
royalty funds. The notice requests public comments. It states that the CO
"is announcing the schedule for a Phase I CARP proceeding to distribute
1998 cable royalty funds collected under section 111, 17 U.S.C. In addition, the
Office is seeking comment as to the advisability of consolidating the 1998 Phase
I distribution proceeding with the Phase I distribution proceeding for the 1999
cable royalty funds." Comments on consolidation are due no later than
December 20, 2001. See, Federal Register, November 20, 2001, Vol. 66, No. 224,
at Page 58179 -58180.
Express Mail Deliveries to USPTO
11/20. The USPTO issued a notice regarding
express mail deliveries to the USPTO. On Friday, November 16, 2001, the USPS
issued a memorandum stating that it is temporarily and immediately suspending
Express Mail service to Washington DC, ZIP Codes 202xx through 205xx (e.g.,
The USPTO stated that it "is designating this interruption in the Express
Mail service of the USPS as a postal service interruption within the meaning of
35 U.S.C. 21(a) and 37 CFR 1.6(e). The USPTO is establishing the following
address which may be used (as an alternative to the address set out in 37 CFR
1.1) on an emergency basis for patent-related correspondence being delivered to
the USPTO by the USPS's Express Mail service: U.S. Patent and Trademark Office,
P.O. Box 2327, Arlington, VA 22202."
USPTO Puts PDF Fillable Forms Online
11/20. The USPTO announced that the first
set of ten patent forms are available in its web site in PDF fillable format.
See, USPTO Forms page.
See also, USPTO
People and Appointments
11/20. David Fiske was named Director of the FCC's Office of Media
Relations. He has been acting Director of the office since January. He has
worked at the FCC since 1995. He previously was a reporter for Warren
Publications. He has also worked on Capitol Hill and for CBS. See, FCC
11/20. The Federal Communications Commission
(FCC) named Dale Hatfield to lead the inquiry of technical and
operational issues affecting deployment of wireless enhanced 911 (E911)
services. Hatfield is the Director of the Interdisciplinary Telecommunications
Program at the University of Colorado at Boulder. He was previously Chief of the
FCC's Office of Engineering and Technology.
11/20. The law firm of Howrey & Simon
announced the promotion of several associates to partner in technology related
fields. Juliana Cofrancesco focuses on international trade and
intellectual property matters involving semiconductors, computers, electronics,
telecommunications, and other industries. Chris Cooper focuses on
antitrust, including mergers, acquisitions and joint venture transactions,
including Hart Scott Rodino compliance and filing and foreign competition
filings. Buckmaster DeWolf focuses on intellectual property litigation,
including patent, copyright, and trademark. Thomas Mavrakis focuses on
intellectual property matters, especially electrical engineering topics, such as
semiconductor manufacturing, integrated circuit design, computer architecture
and database software. Andrew Piatnacia specializes in patent litigation,
primarily in the electronics area, including microprocessors, memory chips,
circuits, phase locked loops, disk drive technology and software. Jennifer
Sklenar focuses on patent litigation involving biotechnology, including
electronic device patents. Hillary Snyder focuses on counseling and
representing clients before the Antitrust Division and the Federal Trade
Commission in merger, civil, and criminal investigations. Stephen Weissman
specializes in antitrust and trade regulation matters. Matthew Wolf
focuses on patent, copyright, and trade secret issues, including patent matters
concerning voice recognition software. See, release.
11/20. President Bush issued a Memorandum
directing that the main Department of Justice building in Washington DC be named
the "Robert F. Kennedy Department of Justice Building". See also, statement
by President Bush at dedication ceremony and DOJ release.
Insider Trading at nVIDIA
11/19. The Securities and Exchange
Commission (SEC) filed seven civil complaints in U.S.
District Court (NDCal) against 15 individuals alleging illegal insider
trading of nVIDIA stock. The complaints name 11 employees of nVIDIA and 4
persons who were tipped by nVIDIA defendants. See, SEC release. (N.D.Cal,
San Jose Div., Case Nos. 01-21067 through 21073.)
nVIDIA Corporation is a Santa Clara,
California, based maker of computer graphics processors. The SEC states that on
March 5, 2000, nVIDIA notified all of its employees by e-mail that it had
won a lucrative contract to provide graphics components for Microsoft's video
game console known as the X-Box. A second
e-mail notified the employees that the information was confidential. The SEC
continues that 11 employees, mostly engineers, nevertheless used this
confidential, material, non public information to purchase nVIDIA stock, and to
tip 4 others outside of nVIDIA, who also purchased stock. When Microsoft
announced the contract on March 10, nVIDIA's stock price rose to more than twice
its March 6 close.
In addition, a grand jury of the U.S. District Court (NDCal) returned
indictments against four nVIDIA engineers, Atul Bhagat, David Chang, Geoffrey
Chang, and Robert Prevett, charging insider trading. The indictments were
returned on November 13, but unsealed on November 19.
[PDF] of Robert Prevett charging securities fraud, insider trading, and tipper
liability, in violation of 15 U.S.C. §§ 78j and 78ff, and 17 C.F.R. §
240.10b-5. See also, indictment
[PDF] of Geoffrey Chang, indictment
[PDF] of David Chang, and indictment
[PDF] of Atul Bhagat. Another employee, Jon Lin, was changed by information
NMPA Sues P2P Music Services for Copyright Infringement
11/19. Several songwriters and music publishers filed a complaint [PDF] in U.S.
District Court (CDCal) against MusicCity
(provider of Morpheus), Consumer Empowerment BV (aka FastTrack), and Grokster alleging contributory and vicarious
copyright infringement in connection with their operation of peer to peer music
The complaint alleges that "Defendants provide users with an enhanced peer
to peer service for infringing copyrighted musical compositions. Like Napster,
defendants provide their respective users with the infrastructure, facilities,
technological means, and ongoing support and services to infringe copyrighted
musical compositions. Defendants participate in, facilitate, materially
contribute to, and encourage these infringements from start to finish. Their
services are extensive, highly integrated closed systems that anonymously
connect users and encourage and enable them to pool their previously private
music files into what is effectively a massive database of millions of such
files so that they can all make free copies. To shield this pirate's haven,
defendants have made their services anonymous and have employed encryption
technology." See, Complaint, at ¶ 24. D.C. No. 01-09923 GAF(SHx).
Count one alleges contributory copyright infringement in violation of 17 U.S.C.
§§ 106, 115, and 501. Count two allege
vicarious copyright infringement in violation of the same sections. Plaintiffs
seek statutory damages in the amount of $150,000 with respect to each work
infringed; plaintiffs also seek preliminary and permanent injunctive relief.
Plaintiffs seek class action status to represent all music publishers
represented by the Harry Fox Agency.
The plaintiffs, who are members of the National
Music Publishers Association (NMPA), are Jerry Leiber, Mike Stoller, Famous
Music, Peer International Corporation, and Criterion Music. They are represented
by the law firms of Paul Weiss and Davis Wright & Tremaine.
Songwriter Stoller said in an NMPA release that
"This lawsuit seeks to preserve the important principles that the courts
recognized in our case against Napster -- that commercial businesses have a
legal obligation to compensate songwriters for the use of their creative works,
irrespective of the technology they use to do so. When millions of people use
the Morpheus service, they are doing so not because they think the technology is
'cool.' They are using it because they can get our songs without paying for
them. This has got to stop."
CDT Criticizes GovNet Plans
11/19. The Center for Democracy and Technology
(CDT) submitted a comment
to the General Services Administration (GSA)
regarding the planned government intranet known as GovNet.
The CDT stated that if GovNet is over utilized, then "important public
information and meetings that should take place on the Internet will be held in
secret". It also stated that "the model will encourage similar efforts
for companies, governments and organizations thus sapping important resources
from the public Internet".
CDT also wrote that, on the other hand, if GovNet is under utilized, then
"vast public resources that could have gone to create research and services
to better secure Internet services will have gone to waste".
On October 10, the GSA issued an RFI
[MS Word] titled "Request for Information for a Government Network Designed
to Serve Critical Government Functions (GOVNET)". This RFI states that
"GOVNET will be a private Internet Protocol (IP) network shared by
government agencies and other authorized users only. GOVNET will provide
connectivity among users to a defined set (to be determined) of service delivery
The RFI also asserts that "There will be no interconnections or gateways to
the Internet or other public or private networks" and that "GOVNET
will support critical government functions and will be immune from malicious
service and/or functional disruptions to which the shared public networks are
EU Commissioner Addresses Internet Policy
Liikanen gave a speech in
Washington DC in which he reviewed recent EU Internet related legislation, and
offered policy recommendations. He is the EU Enterprise and Information
Society Commissioner. He spoke to the European American Business Council.
Telecommunications. He stated in the prepared text of his speech that
"we should continue to democratise access to new communication services by
completing telecoms liberalisation to drive prices further down, both within the
EU and outside via the new WTO/GATS negotiations on services." However, he
added that "much remains to be done to create a level playing field for all
competitors. Indeed, the EU telecoms market remains fragmented along national
lines within the EU."
Convergence. He stated that "Another major challenge is to adapt
telecoms regulation to the Internet driven convergence between telecoms,
computers and the media. A new regulatory package for electronic communications
based on convergence and technological neutrality, should be accepted in the
next few weeks by the EU member countries and European Parliament."
Areas to be Regulated. Liikanen said that "The European e-commerce
framework is a light one. Legislation is limited to what is strictly necessary
in order to avoid any over regulation which would act as a deterrent. It sets
rules and principles that are valid throughout the European Union only in
essential areas such as personal data, privacy, copyrights, legal
responsibility, illegal and harmful content, cyber crime, and taxation."
Privacy. He stated that "we need to cater for the need for security
and confidence in cyberspace." He continued that "Legislation has been
adopted to protect personal data. It grants individuals the right to access and
correct their personal data, and to opt out of their use for direct
Spam. "A proposed piece of legislation aims to secure the
confidentiality of electronic communications, and foresees prior consent (or
opt-in) to receive unsolicited commercial communications is now in the hands of
the legislators," said Liikanen.
Other Legislation. Liikanen also addressed recent EU legislation in the
areas of liberalization of encryption restraints, electronic signatures, network
security, and cyber crime.
Promoting Content. He stated that government in the EU plays an important
role in providing content and applications for the Internet. He cited electronic
government services and digitizing Europe's cultural heritage as examples.
Digital Divides. Finally, he addressed "digital divide" issues.
He said that schools must be connected, and "Schools must provide all young
Europeans with the essential digital skills they need to live and work in the
digital age." He also advocated "life long learning",
"public Internet access points", and investing in technologies for the
sick, elderly and disabled.
FTC Cautions Internet Retailers
11/19. The Federal Trade Commission's
(FTC) Division of Enforcement sent 72 letters to online retailers warning them
to comply with federal regulations pertaining to quick ship claims. The FTC
reminded online retailers that the Mail or
Telephone Order Merchandise Rule (aka Mail Order Rule) also applies to
online orders. It requires merchants to ship orders to buyers within the time
stated, or, if no time is stated, within 30 days. The FTC conducted a surf of
110 Internet retailers, and found that 72 made quick ship claims. See, FTC release.
16 C.F.R. § 435 provides, in part, that "In connection with mail or
telephone order sales in or affecting commerce ... it constitutes an unfair
method of competition, and an unfair or deceptive act or practice for a seller:
(a) (1) To solicit any order for the sale of merchandise to be ordered by the
buyer through the mails or by telephone unless, at the time of the solicitation,
the seller has a reasonable basis to expect that it will be able to ship any
ordered merchandise to the buyer: (i) Within that time clearly and conspicuously
stated in any such solicitation, or (ii) if no time is clearly and conspicuously
stated, within thirty (30) days after receipt of a properly completed order from
SBC Names Daley President
11/19. SBC named William Daley its new
President. Daley will report directly to SBC's Chairman and CEO Edward Whitacre.
SBC is the incumbent local exchange carrier in California, Nevada, Texas,
Oklahoma, Kansas, Arkansas, Missouri, Illinois, Michigan, Ohio, Wisconsin, and
Indiana. SBC also holds a majority equity interest in Cingular Wireless.
Daley was former President Bill Clinton's Secretary of Commerce from January
1997 to June 2000. He resigned in June 2000 to become Chairman of former Vice
President Al Gore's presidential campaign. Whitacre stated in a release
that "His appointment as president of SBC signals the importance of
governmental matters to our company's ability to grow revenues ..."
People and Appointments
11/19. Alan Beller was named Director of the Securities and Exchange Commission's (SEC)
Division of Corporation Finance, and Senior Counselor to the Commission. See, SEC release.
11/19. Frank Hunger
joined the Washington DC office of the law firm of Covington
& Burling as of counsel. He was Assistant Attorney General for the Civil
Division at the U.S. Department of Justice in the Clinton administration. He is
also former Vice President Al Gore's brother in law. He will focus on
litigation, including product liability and class actions. See, CB release [PDF].
NextWave and FCC Make Announcement
11/16. FCC Chairman Michael Powell released a statement
regarding its dispute with NextWave over spectrum licenses. He wrote that
"discussions have concluded between the government, the auction 35 winners
and Nextwave." He added that "Before the agreement is effective, it
must be ratified by the Department of Justice,
which we expect. In addition, Congressional action will be required to implement
the settlement." His statement lacks details on the terms of this
Background. NextWave Communications
obtained spectrum licenses at FCC auctions in 1996. The FCC permitted NextWave
to obtain the licenses under an installment plan, thus creating a debtor
creditor relationship between NextWave and the FCC. NextWave did not make
payments required by the plan, and filed a Chapter 11 bankruptcy petition. The
FCC was blocked by the bankruptcy court, citing § 525 of the
Bankruptcy Code. The U.S. District Court (SNDY) affirmed. The U.S. Court of Appeals (2ndCir)
issued its order reversing and remanding the case on Nov. 24, 1999; it issued
explaining its reversal in May 2000. The FCC then re-auctioned this spectrum to
Verizon Wireless, VoiceStream and
other successful bidders, which intend to use it for 3G wireless, and other,
DC Circuit. NextWave petitioned the FCC to reconsider its cancellation of
its licenses. The FCC refused, and NextWave petitioned for review by the Court of Appeals (DCCir). The DC
Circuit ruled on June 22, 2001, that the 2nd Circuit had not already addressed
NextWave's bankruptcy claims. It wrote in its opinion
that the FCC is prevented from canceling the spectrum licenses by § 525 of
the Bankruptcy Code. It wrote that the FCC "violated the provision of the
Bankruptcy Code that prohibits governmental entities from revoking debtors'
licenses solely for failure to pay debts dischargeable in bankruptcy. The
Commission, having chosen to create standard debt obligations as part of its
licensing scheme, is bound by the usual rules governing the treatment of such
obligations in bankruptcy." See, 254 F.3d 130 (D.C. Cir. 2001).
Powell. Chairman Powell further wrote that the FCC "has fought
aggressively for years to recapture these licenses, insisting they were public
assets that could not be held by private companies (and insulated from
repossession in bankruptcy) that did not comply with the terms of the auction.
Regrettably, the D.C. Circuit has interpreted the law differently, and without a
prospective legislative change, the public will bear this risk in future
NextWave. NextWave also issued a release.
It states: "The agreement provides for NextWave to receive net proceeds in
excess of $6 billion from the U.S. government in exchange for the C and F block
PCS licenses, and it allows the FCC to move forward with implementation of
Auction 35. The documentation of the agreement has been finalized, and it has
been signed by NextWave and the wireless service providers. The agreement is
contingent on Congress enacting legislation, and it also must be approved by the
bankruptcy court overseeing NextWave's Chapter 11 reorganization. Following
those events, the Company intends to file a new plan of reorganization."
FCC Commissioners Debate Regulatory Classification of DSL
11/16. The FCC announced, but did not
release, its order (FCC 01-338) approving SBC's
application to provide in-region interLATA service originating in Arkansas and
Missouri. This was expected. SBC may now offer long distance phone service in
these states. See, FCC
release and SBC
release. (CC Docket No. 01-194.)
In addition, three of the four FCC Commissioners wrote separate statements in
which they addressed the FCC's regulatory treatment of high speed Internet
access service in its yet to be released order. At issue is the interconnection
requirements of 47
U.S.C. § 251. Specifically, § 251(c)(4) provides, in part, that
"each incumbent local exchange carrier has the following duties: ... (A) to
offer for resale at wholesale rates any telecommunications service that the
carrier provides at retail to subscribers who are not telecommunications
carriers; and (B) not to prohibit, and not to impose unreasonable or
discriminatory conditions or limitations on, the resale of such
telecommunications service ..."
Abernathy wrote in her statement
that the FCC "appropriately concludes ... that, because we have never held
that an incumbent LEC's DSL Internet access service -- as opposed to a distinct
end-user DSL transport service -- is subject to section 251(c)(4), we cannot
find that SBC is in violation of checklist item 14. Whether SBC's DSL Internet
access service is subject to section 251(c)(4) turns on whether the provision of
that service entails the provision of a "telecommunications service . . .
at retail." The Commission has prudently declined to reach a definitive
conclusion on this issue in this adjudicatory proceeding in light of the 90-day
statutory deadline for decision and the fact that our ultimate resolution of
this issue likely will have significant implications in other regulatory
contexts." (Footnote omitted.)
However, she added that "my analysis of this question is not free from
doubt, and both I and the Commission may adopt a different approach in the
future based on a more fully developed record."
Similarly, Commissioner Michael
Copps wrote in his statement
that "a separate proceeding with a full record can clarify the situation
..." He continued: "I am seriously troubled that, for small business
and residential customers, SBC does not make available for resale pursuant to
section 251(c)(4) any DSL service offerings. SBC currently offers two types of
broadband DSL services. First, SBC sells directly to large businesses. These
services are retail offerings, and SBC makes them available at a wholesale
discount to competitors wishing to resell them. For small businesses and
residential customers, however, SBC generally provides DSL services only to its
own Internet provider and to unaffiliated Internet providers. Citing the AOL
Bulk Services Order, SBC claims that it is not providing DSL at retail, thus
triggering no obligations under section 251(c)(4). Yet, a strong argument can be
made that the AOL Bulk Services Order was premised on the expectation that there
would be a retail offering from which discounts would be calculated."
In contrast, Commissioner Kevin
Martin wrote in his statement
that he supports the Order, and that "While the Commission may ultimately
address this issue in more detail, those who argue that this high speed Internet
access service provided to end users should be subject to section 251(c)(4) must
show how, in light of the precedent described above, this is a
"telecommunications service" being offered "at retail."
Trial of Terrorists Before Military Tribunals
11/16. President Bush published in the Federal Register a Military
Order dated November 13, 2001 regarding "Detention, Treatment, and
Trial of Certain Non Citizens in the War Against Terrorism". It provides
for the detention and trial by military tribunal of terrorists who are not U.S.
citizens. The order does not define the term terrorism; the order does not
explicitly include, or exclude, cyber terrorism. Moreover, the President retains
authority to determine which individuals will be subject to trial by military
tribunal. See, Federal Register, November 16, 2001, Vol. 66, No. 222, at Pages
57831 - 57836.
The President's order applies to "any individual who is not a United States
citizen with respect to whom I determine from time to time in writing that: (1)
there is reason to believe that such individual, at the relevant times, (i) is
or was a member of the organization known as al Qaida; (ii) has engaged in,
aided or abetted, or conspired to commit, acts of international terrorism, or
acts in preparation therefor, that have caused, threaten to cause, or have as
their aim to cause, injury to or adverse effects on the United States, its
citizens, national security, foreign policy, or economy; or (iii) has knowingly
harbored one or more individuals described in subparagraphs (i) or (ii)
GAO Reports on IT at Federal Overseas Operations
11/16. The GAO released
a report [PDF] titled
"Information Technology: State Department Led Overseas Modernization
Program Faces Management Challenges". It calls for more rigorous management
The report states that the State Department
"is in the early, formative phase of a long term plan to acquire and deploy
a common knowledge management system for overseas based agencies engaged in
foreign affairs activities. This system is to provide functionality ranging from
basic Internet access and e-mail to mission critical policy formulation and
crisis management support."
The report concludes that there is a need for more rigorous management controls,
without which "it is unlikely that State and its agency partners will
deliver needed operational system capabilities on time and within budget."
The 51 page report was prepared for Rep.
Henry Hyde (R-IL), Chairman of the House Committee on
Rep. Markey Opposes Microsoft Settlement
11/16. Rep. Ed Markey (D-MA), the
ranking Democrat on the House Telecom Subcommittee, sent a letter [PDF]
to Attorney General John Ashcroft complaining about the DOJ's and Microsoft's Proposed Final Judgment.
He wrote that "I believe that the reported settlement agreed to by the
Department represents a weakening in our government's commitment to a
competitive marketplace and an abandonment of its responsibility to protect
Rep. Markey added that "The proposed settlement has a number of
deficiencies, the most egregious of which is its failure to adequately address
one of the central issues of contention in the antitrust case: Microsoft's
illegal strategy of bundling so-called 'middleware' products, such as browsers,
instant messaging software, and media players, into its monopoly Windows
operating system." He also stated that "government officials seeking
to correct a violation would have little recourse except to make a Federal case
out of it. That's obviously a poor remedy in the fast paced technology
The Microsoft settlement does not require any Congressional approval. Also, the
House Telecom Subcommittee has no oversight authority over the DOJ.
House to Vote on Trade Promotion Authority Bill
11/16. Rep. Dick Armey (R-TX) announced
that the House is scheduled to vote on HR 3005, the
Bipartisan Trade Promotion Authority Act of 2001, on December 6, 2001. See, release.
The House Ways and Means Committee
passed the bill by a vote of 26 to 13 on October 9.
Trade promotion authority (TPA), which is also known as fast track, would give
the President authority to negotiate trade agreements which can only be voted up
or down, but not amended, by the Congress. TPA strengthens the bargaining
position of the President, and the U.S. Trade
Representative, in negotiations with other nations.
Technology companies that export equipment, software, or services, and that seek
greater protection abroad for their intellectual property rights, stand to
benefit from enactment of TPA.
Sen. Frank Murkowski (R-AK) said that
"I am hopeful that the House will act on a bill to provide the President
TPA this session, and that the Finance Committee will have the opportunity to
mark-up that bill for a vote on the floor before we leave for the
holidays." Cong. Record, November 15, pages S11933-4.
Sen. Max Baucus (R-MT) stated that
"any new grant of fast track negotiating authority must address the
concerns of Congress on issues like preservation of U.S. trade laws. It must
also ensure that Congress has an active role in trade negotiations." Cong.
Record, November 15, page S11899.
The protectionist Sen. Robert Byrd (D-WV)
said that "we must not be asleep at the wheel as the one sided trade jalopy
goes rumbling down the fast track". Cong. Record, November 16, page S11985.
Rep. Baird Introduces Bill to Fund Computer Security Research
11/16. Rep. Brian Baird (D-WA)
introduced HR 3316, the Computer Security Enhancement and Research Act of 2001.
He said that it "establishes a research and development program on computer
and network security at the National Institute of
Standards and Technology. It also strengthens the institute's existing
responsibilities in developing best computer security practices and standards in
assisting Federal agencies to implement effective computer and network
security." See, Cong. Record, November 16, at pages H8331-2.
Rep. Baird stated that "Telecommunications and computer technologies are
vulnerable to attack from far away by enemies who can remain anonymous, hidden
in the vast maze of the Internet. Examples of systems that rely on computer
networks include the electric power grid, rail networks, and financial
transaction networks. Just as enemies are achieving a sophistication to use the
most complex weapons against us, our vital computer networks have become more
interconnected and more accessible and, therefore, more vulnerable via the
The House Science Committee, of
which Rep. Baird is a member, held hearings on October 10 and 17 on cyber
security. On October 17, Virginia Gov. James Gilmore recommended that "we
need an entity to develop and implement a comprehensive plan for research,
development, test and evaluation of processes to enhance cyber security in the
same manner as we must do for other potential terrorist attacks. This is where
our colleges and universities can have a dramatic impact not only in developing
needed immediate capacity, but in training the next generation of "cyber
soldiers" to protect our critical information systems and
infrastructures." See, prepared testimony.
Gov. Gilmore is also Chairman of the Advisory Panel to Assess the
Capabilities for Domestic Response to Terrorism Involving Weapons of Mass
Destruction, which is also known simply as the Gilmore Commission.
Rep. Baird provided further details about his proposal. "The research
program is authorized for a 10 year period, growing from $25 million in the
first year to $85 million in the fifth year. This may sound like a substantial
amount of money, but the billions of dollars that are lost in successful
computer attacks makes this paltry by comparison. Although the award would go to
universities, the research projects may involve collaboration with for-profit
companies that develop information security products."
The bill is cosponsored by Reps. Jim
Matheson (D-UT), Mark Udall (D-CO), and Michael Honda (D-CA). It was
referred to the House Science Committee.
SEC Chairman Gives Another Speech
11/16. Securities and Exchange Commission
(SEC) Chairman Harvey Pitt gave a speech in Washington DC.
He stated that "one of our major initiatives is to improve our disclosure
system, supplementing it by putting more meaningful information into investors'
hands more promptly". He suggested that "we have an incredible array
of new technologies to assist us. We should aggressively take advantage of
technology, and harness it to make our markets even more efficient, and more
responsive to investor needs."
More New Bills
11/16. Rep. Robert Andrews
(D-NJ) introduced HR 3313, a bill to protect small businesses from
increased tariffs and other retaliatory actions taken by the U.S. during a trade
dispute. It was referred to the House
Ways and Means Committee.
11/16. Sen. Patrick Leahy (D-VT) and Sen. Charles Grassley (R-IA) introduced S 1723,
a bill to amend the Fair Credit Reporting Act (FRCA) with respect to the two
year statute of limitations. The purpose of the bill is to alter the
consequences of the November 13 opinion [PDF]
of the Supreme Court of the U.S. in
TRW v. Adelaide Andrews. The bill was referred to the Senate Banking Committee.
People and Appointments
11/16. Three international antitrust law specialists joined the law firm of Latham & Watkins: Abbott Lipsky, Michael
Egge and John Colahan. All three previously worked at Coca Cola. See,
Milliken was named director of Virginia Governor Elect Mark Warner's
transition team. He is also the partner in charge of the Venable law firm's McLean, Virginia, office.
11/16. Jody Westby was named Consulting Counsel to the law firm of Wiley Rein & Fielding. She specializes in
e-commerce and information and infrastructure security. She was previously Chief
Administrative Officer and Counsel for In-Q-Tel,
the CIA's venture capital firm. Prior to that, she was a Senior Fellow and
Director of IT Studies for The Progress &
Freedom Foundation and Director of Domestic Policy for the U.S. Chamber of Commerce. See, WRF
11/16. The House passed HR 3009,
the Andean Trade Promotion and Drug Eradication Act, by a voice vote.
11/16. The U.S.
Court of Appeals (DCCir) issued its opinion
in Celtronix v. FCC,
a petition for review of the FCC's 1997 grace
period order regarding auction of Interactive Video and Data Service
(IVDS) licenses. The Appeals Court affirmed the FCC order.
Go to News Briefs from November 11-15,