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 Court.
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 release.
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 the data.
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 01-294 Order, 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 - 58115.
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 published notice 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., 20231).
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 release.
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 release.
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. See, FCC release [PDF].
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.
More News
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.
See, indictment [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 [PDF].
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 copying services.
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 points.
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 vulnerable".
EU Commissioner Addresses Internet Policy
11/19. Erkki 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 marketing."
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 the buyer."
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 agreement.
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 its opinion 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, services.
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 auctions."
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 Section 271 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 ..."
Commissioner Kathleen 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 controls.
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 International Relations.
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 consumers."
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 sector."
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 Internet."
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, release.
11/16. John 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. See, release.
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 release.
More News
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, 2001.