|News from December
Divided Court Upholds Injunction Against Spamming by Ex Intel
12/10. The California
Court of Appeal (3) issued its opinion [PDF]
in Intel v. Hamidi, an appeal of an
injunction issued against a former Intel employee barring him from sending
unsolicited e-mail to addresses on Intel's computer systems. The injunction was
based upon California tort law pertaining to trespass to chattels. A divided
Court of Appeal panel affirmed the injunction.
Background. Intel fired Hamidi. He
was an angry ex-employee with a talent for spamming. He and another defendant (FACE Intel, which defaulted) obtained
Intel's e-mail address list and on six occasions sent e-mail to up to 29,000
employees. Intel was unable to block this e-mail.
Superior Court. Intel filed a complaint in the Superior Court of
Sacramento County, California, against Hamidi and another party alleging
nuisance and trespass to chattels. The District Court granted summary judgment
to Intel on the trespass to chattels claim, and granted it an injunction which
states that "defendants, their agents ... are hereby permanently restrained
and enjoined from sending unsolicited e-mail to addresses on INTEL's computer
Court of Appeal. A divided three judge panel of the Court of Appeal
affirmed the injunction. Justice Fred
Morrison wrote the opinion of the Court, in which Arthur
Scotland joined. Daniel
Kolkey wrote a dissent (beginning at page 35).
Trespass to Chattels. Relying on Prosser, the Restatement 2d Torts, and
case law, the Court stated that trespass to chattels occurs when one
intentionally intermeddles with another's chattel where the intermeddling is
harmful to the possessor's materially valuable interest in the physical
condition, quality, or value of the chattel. The Court also held that
"demonstrating harm is not necessary" when damages are not sought. The
Court added that Intel "showed it was hurt by the loss of productivity
caused by the thousands of employees distracted from their work and by the time
its security department spent trying to halt the distractions after Hamidi
refused to respect Intel's request to stop invading its internal, proprietary
e-mail system by sending unwanted emails to thousands of Intel's employees on
the system." The Court concluded that Intel "showed he was disrupting
its business by using its property and therefore is entitled to injunctive
relief based on a theory of trespass to chattels."
Trespass to Chattels in Cyberspace. The Court noted that while trespass
to chattels has been a rarely invoked legal theory, it has enjoyed a revival
with the development of cyberspace. Citing several recent cases, the Court wrote
that sending electronic mail can constitute trespass to chattels. See, for
example, CompuServe v.
Cyber Promotions (S.D. Ohio 1997) 962 F.Supp. 1015; Hotmail
Corporation v. Van$ Money Pie (N.D.Cal. 1998); America Online v.
IMS (E.D.Va. 1998) 24 F.Supp.2d 548; and eBay Inc. v. Bidder's Edge, Inc. (N.D.Cal.
2000) 100 F.Supp.2d 1058.
Free Speech. Hamidi, and two amicus curiae parties, also argued that the
injunction violates federal First Amendment and California Constitution free
speech rights. The Court held that the First Amendment is not implicated,
because there was no state action; this is a dispute between private parties.
Moreover, the Court wrote, "Judicial enforcement of neutral trespass laws
has been held not to constitute state action." Also, the Court rejected a
public forum argument. It wrote that "Private e-mail servers differ from
the Internet; they are not traditional public forums. ... The Intel e-mail
system is private property used for business purposes. Intel's system is not
transformed into a public forum merely because it permits some personal use by
Dissent. Judge Kolkey dissented on the issue of trespass to chattels. He
wrote that "While common law doctrines do evolve to adapt to new
circumstances, it is not too much to ask that trespass to chattel continue to
require some injury to the chattel (or at least to the possessory interest in
the chattel) in order to maintain the action." He distinguished the other
spam trespass to chattel cases on the basis that in those cases the spammers
"burdened the computer equipment, thereby interfering with its operation
and diminishing the chattel's value".
First Circuit Rules on Advertising Injuries and IPR Claims
12/10. The U.S.
Court of Appeals (1stCir) issued its opinion
v. Travellers Indemnity, a case regarding whether an insurance
policy covering advertising injuries applies to suits for trade dress
infringement and patent infringement. The Appeals Court held that there is no
coverage in this case.
Background. Ekco sells kitchen products, including metal tea kettles.
Chantal Cookware, which also makes tea kettles, alleged that Ekco copied one of
its tea kettles. Chantal filed a complaint in another action in U.S. District
Court (SDTex) against Ekco alleging trade dress infringement and unfair
competition under both the Lanham Act, 15 U.S.C. § 1125(a), and state law, and
for infringement of a design patent covering a Chantal tea kettle, pursuant to
35 U.S.C. § 271. Travellers Indemnity had issued an insurance policy to Ekco.
Ekco asserted that Travellers had a duty to defend an indemnify it in the
Chantal proceeding, pursuant to the policy's advertising injury provisions.
Insurance Policy. The policy provides coverage for "Advertising
injury", which it defines as "injury arising out of one or more of the
following offenses: a. Oral or written publication of material that slanders or
libels a person or organization or disparages a person's or organization's
goods, products or services; b. Oral or written publication of material that
violates a person's right of privacy; c. Misappropriation of advertising ideas
or style of doing business; or d. Infringement of copyright, title or
District Court. Ekco filed the a complaint in the present action in New
Hampshire state court. Travellers removed the case to U.S. District Court (DNH),
based upon diversity. On cross motions for summary judgment, the District Court
ruled in favor of EKCO -- that there was coverage. This appeal followed.
Appeals Court. The First Circuit, construing the meaning of the term
"advertising", held that there was not coverage, and reversed and
Supreme Court Rules Utility Patents May Be Issued for Plants
12/10. The Supreme
Court issued its opinion [PDF]
AG Supply v. Pioneer Hi-Bred, a case involving patents in plants.
Justice Clarence Thomas, writing for a six justice majority, wrote that utility
patents may be issued for plants pursuant to 35 U.S.C. § 101;
hence, the Plant Variety Protection Act, 7 U.S.C. § 2321 et
seq., and the Plant Patent Act of 1930, 35 U. S. C. §§ 161-164,
are not the exclusive means of obtaining a federal statutory right to exclude
others from reproducing, selling, or using plants or plant varieties.
Supreme Court Denies Cert in PSLRA Case
12/10. The Supreme Court denied
certiorari in Scholastic Corp. v. Truncellito, a case regarding
pleading standards in class action securities suits under the Private Securities
Litigation Reform Act (PSLRA). See, December 10 Order
List at page 6 (No. 01-397). See also, opinion of the
U.S. Court of Appeals (2ndCir).
Bush Administration to Raise MTOPS Threshold for HPC Exports
12/10. The State Department issued a release
in which it stated that the "Bush administration intends to raise sharply
the threshold for exports of advanced computers to a group of more than 40
countries including Russia, China, India, Pakistan and Israel". It also
stated that "the threshold for export without a license to the group called
Tier 3 countries will rise to cover computers capable of 190,000 million
theoretical operations per second (MTOPs), up from 85,000 MTOPs now."
Meehan Bill Would Ban Internet Tobacco Sales
12/10. Rep. Marty Meehan (D-MA)
3456, the "Tobacco Free Internet for Kids Act", a bill to prohibit
the Internet sale of tobacco products to minors. He also introduced a similar
bill, HR 2914,
in the 106th Congress. That bill was referred to the House Commerce Committee, but never
received a hearing or a vote. See, Meehan
12/10. Larry Cockell was named SVP and chief security officer of AOL Time
Warner, effective January 14, 2002. He is currently Deputy Director of the U.S.
Secret Service. See, AOL
12/10. The law firm of Cooley Godward
announced that eight of the firm's attorneys will become partners, effective
January 1, 2002. The new partners include Christopher Pace, Ricardo
Rodriguez, James Vazquez Azpiri, and Kevin Zimmer. Pace
focuses on intellectual property litigation, mass tort and securities class
action litigation, antitrust, and business litigation for technology companies,
in the firm's San Diego office. Rodriguez focuses on patent litigation in the
firm's Palo Alto office. Azpiri works in the San Francisco office, where he
focuses on business immigration, including the representation of technology
companies with respect to hiring and retaining foreign employees. Zimmer
counsels clients on intellectual property portfolio development and enforcement
in the San Diego office. See, Cooley
4th Circuit Upholds 'Carry One Carry All' Rule Against Free
12/7. The U.S.
Court of Appeals (4thCir) issued its opinion
Broadcasting and Communications Association v. FCC, a case in
which direct broadcast satellite (DBS) carriers challenged the constitutionality
of the "carry one, carry all" rule of the Satellite Home Viewer
Improvement Act of 1999 (SHVIA). The District Court upheld the rule. The Court
of Appeals affirmed.
Background. The SHVIA created a statutory copyright license that allows
DBS carriers to carry the signals of local broadcast TV stations without
obtaining authorization from the holders of copyrights in programs. The SHVIA
also imposes a "carry one, carry all" rule, at 47 U.S.C. § 338(a)(1),
under which any DBS carriers that choose to take advantage of the statutory
copyright license by carrying one broadcast station in a local market to carry
all requesting stations in that market.
District Court. The Satellite Broadcasting
and Communications Association (SBCA), DirecTV,
and EchoStar filed a complaint in the
U.S. District Court (EDVa) against the FCC
alleging that the "carry one, carry all" rule violates the Copyright
Clause, the First Amendment, and the Due Process and Takings Clauses of the
Fifth Amendment. The National Association of
Broadcasters (NAB) and PBS intervened on the side of the FCC. The District
Court granted the FCC's motion to dismiss. See, SBCA v. FCC, 146
F.Supp.2d 803 (E.D. Va. 2001). The District Court held that the "carry one,
carry all" rule is a content neutral regulation of the satellite carriers'
speech and upheld the rule under intermediate First Amendment scrutiny. In
addition, the court rejected the satellite carriers' other arguments. This
First Amendment. The Appeals Court first held that the restriction upon
speech imposed by the SHVIA is content neutral, and therefore, intermediate
scrutiny, rather than strict scrutiny, applies. The Court reasoned that DBS
carriers, like the cable operators discussed by the Supreme Court in Turner Broadcasting
System v. FCC, 512 U.S. 622 (1994) (aka Turner I), function primarily as
conduits for the speech of others. However, both DBS carriers and cable
operators "engage in speech protected by the First Amendment when they
exercise editorial discretion over the menu of channels they offer to their
subscribers." The Court continued that since the restriction does not
follow from government disagreement with the content carried, or the carrier's
choice of content, it is a content neutral restriction.
The Appeals Court then held that the restriction on speech imposed by the SHVIA
meets the intermediate scrutiny test, as announced by the Supreme Court in U.S.
v. O'Brien, 391 U.S. 367 (1968). That is, "it furthers an important or
substantial governmental interest; if the governmental interest is unrelated to
the suppression of free expression; and if the incidental restriction on alleged
First Amendment freedoms is no greater than is essential to the furtherance of
that interest." The Court found that the "carry one, carry all"
rule advances the goal of preserving a multiplicity of broadcast outlets for
over the air viewers.
Copyright Clause. The Appeals Court rejected the DBS carriers' argument
that the SHVIA exceeds Congress's authority under the Copyright Clause by
playing favorites by using the copyright power to protect the speech of
independent local broadcasters. The Appeals Court stated that the
"Congress's powers under the clause to grant copyright protection and to
define the scope of that protection are very broad". It continued that
"The copyright power certainly includes the authority to grant statutory
copyright licenses like those created by SHVIA and the Cable Act. These
statutory licenses are designed to ensure that the high transaction costs
involved in privately acquiring copyright clearances for the retransmission of
broadcast programming do not unduly restrict the free flow of information to the
public." The Court concluded that "We see no reason why the Copyright
Clause would prohibit Congress from conditioning its grant of a statutory
copyright license on compliance with the carry one, carry all rule. ... Congress
was simply performing its constitutionally assigned task of striking a balance
between the interests of authors and the public interest."
The Appeals Court also denied three petitions for review of the FCC's SHVIA
order that had been consolidated with this appeal.
Hold Out States Seek Further Remedies Against Microsoft
12/7. Nine states filed a pleading
[PDF] titled "Plaintiff Litigating States' Remedial Proposals" with
the U.S. District Court (DC) in the Microsoft antitrust case. Most of the 40
page document is comprised of single spaced text constituting proposed
additional language restraining the activities of Microsoft. It requests that
the Court enter judgment stating that "Microsoft shall disclose and license
all source code for all Browser products and Browser functionality ..." It
also requests the Court to compel Microsoft to include Sun Microsystems' version
The Justice Department and nine states entered into a proposed settlement on
November 2. They submitted a revised proposed
settlement agreement on November 6. Nine states (California, Connecticut,
Florida, Iowa, Kansas, Massachusetts, Minnesota, Utah, and West Virginia) and
the District of Columbia have not joined in that settlement.
The nine hold out states condemned the agreement negotiated by the Justice
Department and other states. They wrote that "Unlike the previously
announced settlement between the Department of Justice ("DOJ") and
Microsoft, these remedies create a real prospect of achieving what the DOJ said
it intended to accomplish: ``stop Microsoft from engaging in unlawful conduct,
prevent any recurrence of that conduct in the future, and restore competition in
the software market ...´´ "
Microsoft issued a release
in which it stated that the proposals were "extreme and not commensurate
with what is left of the case".
Excerpts from Holdout States' Proposed Remedies
12/7. The following are excerpts from the "Plaintiff Litigating States'
Remedial Proposals" filed in the Microsoft antitrust case on Friday,
December 7. These parties request that the Court include in its final judgment
the following language:
Ban on Binding. "Microsoft shall not, in any Windows Operating
System Product (excluding Windows 98 and Windows 98 SE) it distributes beginning
six months after the date of entry of this Final Judgment, Bind any Microsoft
Middleware Products to the Windows Operating System unless ..."
Disclosure of APIs. "Microsoft shall disclose to ISVs, IHVs, IAPs,
ICPs, OEMs and Third-Party Licensees ... all APIs, Technical Information and
Communications Interfaces ..."
"Microsoft shall not take any action that it knows, or reasonably should
know, will directly or indirectly, interfere with or degrade the performance or
compatibility of any non-Microsoft Middleware when Interoperating with any
Microsoft Platform Software ..."
"Microsoft shall not enter into or enforce any Agreement in which a third
party agrees, or is offered or granted consideration, to: a. restrict its
development, production, distribution, promotion or use of (including its
freedom to set as a default), or payment for, any non-Microsoft product or
"Microsoft shall not condition the granting of a Windows Operating System
Product license, ... on a licensee agreeing to license, promote, distribute, or
provide an access point to, any Microsoft Middleware Product."
No Retaliation. "Microsoft shall not take or threaten to take any
action adversely affecting any individual or entity that participated in any
phase of the antitrust litigation ..."
Default Middleware. "Microsoft shall not, in any Windows Operating
System Product ... make Microsoft Middleware the Default Middleware for any
functionality unless the Windows Operating System Product (i) affords the OEM or
Third-Party Licensee the ability to override Microsoft’s choice of a Default
Middleware and designate other Middleware the Default Middleware for that
functionality, and (ii) affords the OEM, Third-Party Licensee or non-Microsoft
Middleware the ability to allow the end user a ... choice to designate other
Middleware as the Default Middleware in place of Microsoft Middleware."
Source Code. "Microsoft shall disclose and license all source code
for all Browser products and Browser functionality."
Java. "For a period of 10 years from the date of entry of the Final
Judgment, Microsoft shall distribute free of charge, in binary form, with all
copies of its Windows Operating System Product and Internet Browser (including
significant upgrades) a competitively performing Windows compatible version of
the Java runtime environment (including Java Virtual Machine and class
libraries) compliant with the latest Sun Microsystems Technology Compatibility
Kit as delivered to Microsoft ..."
Apple. "Microsoft shall port each new major release of Office to the
Macintosh Operating System within 60 days of the date that such version becomes
commercially available for use with a Windows Operating System Product ..."
IPR. "Microsoft shall, within 20 days of request, license to IAPs,
ICPs, IHVs, ISVs, OEMs and Third-Party Licensees all intellectual property
rights owned or licensable by Microsoft that are required to exercise any of the
options or alternatives provided or available to them under this Final Judgment
(including without limitation enabling their product(s) to Interoperate
effectively with Microsoft Platform Software), on the basis that: a. the license
shall be on a royalty-free basis and all other terms shall be reasonable and
non-discriminatory; b. the license shall not be conditional on the use of any
Microsoft software, API, Communications Interface, Technical Information or
Standards. If Microsoft publicly claims that any of its products are
compliant with any technical standard ("Standard") that has been
approved by, or has been submitted to and is under consideration by, any
organization or group that sets standards (a "Standard-Setting Body"),
it shall comply with that Standard.
Special Master. "... the Court will appoint a special master (the
"Special Master") to monitor Microsoft’s obligations under the Final
People and Appointments
12/7. On Thursday, December 6, the Senate confirmed Susan Bies and Mark
Olson to be members of the Board of Governors of the Federal Reserve System. On Friday,
December 7, they were sworn in to office. See, FRB
12/7. James Rogan
was sworn in as head of the USPTO.
12/7. The FCC's Common Carrier Bureau
released a notice
[PDF] titled "Proposed First Quarter 2002 Universal Service Contribution
Factor". (CC Docket No. 96-45.)
12/7. President Bush made a statement
regarding the implementation of the U.S. Jordan
Free Trade Agreement [PDF].
12/7. The FBI's National Infrastructure
Protection Center (NIPC) published the December
7 issue of Highlights [PDF] in its web site. It also published the December 3
issue of CyberNotes [PDF]; this is a bi-weekly summary of cyber
vulnerabilities, malicious scripts, information security trends, virus
information, and other critical infrastructure related best practices. (Issue
House Passes Trade Promotion Authority Bill
12/6. The House passed HR 3005,
the Bipartisan Trade Promotion Authority Act of 2001, by a roll call vote of 215
to 214. See, Roll
Call No. 481. It is sponsored by Rep.
Bill Thomas (R-CA), Rep. Cal Dooley
(D-CA), and others. Trade promotion authority (TPA), which is also known as fast
track, gives 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 (USTR), in trade negotiations with other nations.
Proponents of the bill stated that without this authority, the President's
bargaining power is limited, and as a result, the U.S. is not a party to most
free trade agreements. Opponents said the bill lacked sufficient protections for
labor, human rights, and the environment.
House Speaker Denny Hastert (R-IL)
stated during the floor debate that "If this vote prevails, the President
has the authority to negotiate further trade agreements. That is it. The
President still has to bring those agreements back to the Congress for approval.
If we don't like those deals, we can still reject them. But if we vote down this
legislation, we send a terrible signal to the rest of the world. We say to the
world that the Congress will not trust the President to take a lead on trade. We
say to the world that the Congress is not interested in promoting trade."
He added in his speech
that "There are 170 free trade agreements around the world. The United
States has been party to two of them. We can either watch from the sidelines or
get in the game. Our high-tech communities, our farmers, our manufacturing
sector, our exporters, they all want us to get in the game."
Rep. Bill Thomas (R-CA), the
Chairman of the House Ways and Means
Committee, which has jurisdiction over this bill, led the effort to pass the
bill. He led the negotiations with pro-trade Democrats that resulted in the
addition of language pertaining to labor rights and the environment that won the
support of some Democrats. Thomas also managed the floor debate in support of
Rep. Cal Dooley (D-CA), Rep. William Jefferson (D-LA), Rep. Bill Tanner (D-TN), and Rep. Jim Moran (D-VA), were the Democrats
who actively worked for passage of the bill. Rep. David Dreier (R-CA) also actively
promoted the bill. As Chairman of the Rules
Committee, he sent the bill to the floor with a rule that did not allow any
amendments. Speaker Hastert, and other Republican leaders, rounded up Republican
votes for the bill. The entire Democratic leadership opposed the bill. Bush
administration officials, especially Commerce Secretary Donald Evans and U.S.
Trade Representative Robert Zoellick, lobbied extensively in support of the
USTR Zoellick released a statement after the
vote. He said that "Today's vote will help increase momentum for our trade
agenda. We are moving forward with the global trade negotiations launched in
Doha last month, because we believe it is in America's strong interest to seize
the opportunity to further open the world's markets for American farm products,
goods, and services. We will press ahead on the practical work to achieve our
vision for a Free Trade Area of the Americas."
President Bush also released a statement
commending the House. He said that "Trade Promotion Authority will give me
the flexibility I need to secure the greatest possible trade opportunities for
America's farmers, workers, families, and consumers. Trade Promotion Authority
is a key part of our trade agenda. It will help us pursue and complete trade
agreements, including the global trade negotiations launched last month in Doha,
The bill has yet to pass the Senate. Because of the different make up of the
Senate, there is broader support in that body for TPA. Rep. Thomas stated after
the vote that "you don't need to worry about a cliff hanger vote in the
Senate." However, he added that it remains to be seen if and when the
Senate Democratic leadership will bring the bill to the Senate floor vote.
Analysis of the TPA Vote
12/6. The strongest predictor of a Member's vote on the Trade Promotion
Authority (TPA) bill was party affiliation. All but 21 Democrats voted against
TPA. All but 23 Republicans voted for TPA. The few defections tended to follow
Every Democrat in New England, the Mid Atlantic and Midwest, except Rep. Baron Hill (D-IN), voted against the
bill. However, nine Republicans from these northern states broke party ranks and
vote against the bill.
Also, in the Southern states facing the Atlantic ocean another 8 Republicans
voted against the bill. In contrast, the western part of the South accounted for
most of the Democrats who voted for the bill: 5 from Texas, 2 from Louisiana,
and one each from Missouri, Arkansas, Tennessee, Kentucky, Oklahoma, and Kansas.
Also, some of the Democrats who crossed over to vote for the bill either
represent Mexican border districts, major seaports, or both. These include
Norman Dicks (Tacoma), Sue Davis (San Diego and Mexican border), Jim Davis
(Tampa), William Jefferson (New Orleans), Ruben Hinojosa (Mexican border), and
Solomon Ortiz (Corpus Christi and Mexican border).
The West Coast state members voted almost completely along party lines. None of
these Republicans voted against the bill. Only three Democrats voted for the
bill: Cal Dooley, Sue Davis, and Norman Dicks.
Technology, IPR and TPA
12/6. Technology companies that export equipment, software, or services, and
that seek greater protection abroad for their intellectual property rights,
stand to benefit from the enactment of Trade Promotion Authority. Technology
companies, and tech groups, such as the Business
Software Alliance, advocated passage of the bill.
During the debate on the bill, Members of the House who represent districts with
technology companies and workers stressed the importance of TPA for technology
trade. Rep. Jennifer Dunn (R-WA), whose
Seattle area district is home to many Microsoft workers, stated that "trade
promotion authority means strengthening intellectual property standards"
and "reducing piracy" abroad. Similarly, Rep. Jay Inslee (D-WA) said that
Microsoft's "intellectual property is frequently stolen overseas."
House Minority Leader Dick Gephardt
(D-MO) noted that while trade agreements used to be about getting tariffs down,
they now cover other things, such as "how do we get intellectual property
laws in countries to be enforced."
Nevertheless, members from tech districts, and members who have traditionally
been strong supporters of tech, tended to vote along party lines. For example,
Rep. Inslee strongly condemned the bill during the debate, and voted against it.
Similarly, the members of the Silicon Valley area delegation, who are all
Democrats (Anna Eshoo, Zoe Lofgren, Mike Honda, and Ellen Tauscher), voted
against the bill. Rep. Rick Boucher
(D-VA), a Co-Chair of the Internet Caucus, also voted no. Only a few tech
Democrats crossed over to vote for the bill. Rep. James Moran from northern Virginia
was one of its most vocal supporters. Rep.
Bill Etheridge from the Research Triangle in North Carolina also voted for
215 to 214
12/6. Legislative votes are frequent, routine, and dull events. The House has
held almost 500 roll call votes so far this year. Few of these votes are either
close or controversial. The TPA vote was an exception.
Members vote electronically on the floor of the House. Each member has a Vote ID
Card which is inserted into a slot. The the Member then pushes a
"yes", "no", or "present" button. Votes then
appear on a giant electronic board on a wall high above the chamber floor. When
someone votes "yes", a green light appears by their name. When someone
votes "no", a red light appears. If a Member makes a mistake, or
wishes to change a vote, they may do so. The rules also allow Members to vote
with paper ballots in the well of the House, just in front of the Speaker's
Chair. There is a red ballot for voting "no", and a green ballot for
voting "yes". See, House voting procedure.
Speaker Hastert scheduled fifteen minutes for the TPA vote. As the fifteen
minutes progressed, the "no" column held a slight lead throughout.
Normally, shortly after the end of the time allotted for the vote, the acting
speaker asks if there are any more votes, and then closes the vote by banging
the gavel. After the end of 15 minutes the "no" votes were still ahead
by about 10 votes. Many members had not yet voted, even though they stood in the
chamber. Hastert kept the vote open while TPA proponents tried to find more
votes. The "no" lead slowly came down as Hastert, Thomas, Dreier, and
other TPA proponents schmoozed with wavering Republicans.
After half an hour, Democrats yelled to close the vote. Hastert had his arm
around a 27 year old Republican from Florida who had voted "no". But,
this freshman would not budge. Dreier sat talking with a fellow Republican from
southern California, who would not cast his vote. After 45 minutes Democrats
clapped in unison. Hastert prowled the aisles looking for more votes. It was an
arm twisting contest, and Hastert was determined to keep the clock running until
he was ahead. After an hour, Hastert was still down three votes; no more
movement was taking place. But, the House chamber remained packed with Members
awaiting the finish.
A dejected Bill Thomas marched down into the well, and grabbed a red ballot. He
swung around to face the Republicans. He angrily held the card high over his
head. This is a sign of defeat and surrender. (By voting against the proposition
he would preserve the option of later bringing a motion for reconsideration.)
Others rushed to the well to dissuade him.
Then, a vote switched. On the electric scoreboard, the "yes" votes
were down by just one vote. Two wavering Republicans, who had not voted, cast
"yes" votes. The scoreboard flashed 215 "yes", to 214
"no". The gavel dropped immediately. Hastert would allow no time for
any more vote changes. It was over. TPA passed.
Afterwards, Hastert, Thomas, Dreier, Democrats who voted for the bill, and
others, walked out the main front door of the House of Representatives to hold a
celebratory press conference in the evening twilight. Secretary of Commerce
Donald Evans and USTR Robert Zoellick joined them in front of the Capitol
Building. Seattle's Jennifer Dunn proclaimed that this means "increased
jobs at Microsoft and the dot coms." Dreier was jubilant. Thomas was
emotional; he started to thank the Democrats who actively supported the bill --
Dooley, Tanner, and Jefferson -- and broke down and cried. Hastert said "It
is nice to have this bill over."
Senators Hollings and McCain Condemn NextWave Settlement
12/6. Sen. Ernest Hollings (D-SC) and Sen. John McCain (R-AZ) announced their
opposition to the proposed settlement agreement in the NextWave matter. See, transcript
of December 6 press conference. On November 27 the FCC released the proposed
settlement agreement [PDF] between the Federal
Communications Commission (FCC), NextWave, the Department of Justice (DOJ), and the Auction 35
winners. The agreement requires approval by the bankruptcy court, and passage of
legislation by Congress.
McCain. Sen. McCain, who is the ranking Republican on the Senate Commerce Committee, which has
jurisdiction over telecommunications and the FCC, stated that "We want this
issue examined in the proper hearing process. We want the FCC to come forward.
We want people to come forward and make their case, so the American people can
know what's going to happen to billions of their tax dollars here."
Sen. McCain continued that "The principal defects in this process are
secrecy and timing. The settlement negotiations have been ongoing for months, as
we all know. The 66 page NextWave settlement agreement and its associated
enabling legislation ... were sent to the Congress about one week ago, on
November 28th. Remarkably -- remarkably -- the terms of this settlement demand
that Congress pass this week old legislation and appropriate $6 billion
immediately, no later than December 31st. Remarkable. ... Not only do the
settling parties demand the Congress and the president enact their legislation
according to their short schedule, they also demand that the Congress and the
president enact it without any amendments or changes -- not even a comma. This
process shows profound contempt for this legislature ..."
Background. NextWave obtained spectrum licenses at FCC auctions in 1996.
The FCC permitted NextWave to obtain the licenses, and make payments under an
installment plan, thus creating a debtor creditor relationship between NextWave
and the FCC. NextWave did not make payments required by the plan, and filed a
Chapter 11 bankruptcy petition. The FCC cancelled the licenses. However, the FCC
was blocked by the bankruptcy court, citing § 525 of the
Bankruptcy Code. The U.S. District Court (SNDY) affirmed. The U.S. Court of Appeals (2ndCir)
issued its order reversing and remanding the case on Nov. 24, 1999; it issued
explaining its reversal in May 2000. The FCC then proceeding to re-auction the
disputed spectrum. NextWave next petitioned the FCC to reconsider its
cancellation of its licenses. The FCC refused, and NextWave petitioned for
review by the Court of Appeals in the District of Columbia. The U.S. Court of Appeals (DCCir) ruled in
its June 22, 2001, opinion
that the FCC is prevented from canceling the spectrum licenses by § 525 of
the Bankruptcy Code. The FCC has petitioned the Supreme Court for writ of
Hollings. Sen. Hollings, who is Chairman of the Senate Commerce Committee, was just
as critical. However, he has some additional reasons. He agrees with the Second
Circuit holding, disagrees with the District of Columbia holding, and wants the
FCC to pursue its appeal. His opposition goes to the nature of spectrum
licenses. He believes that there are not, and should not be, any property rights
in spectrum. He stated that "the public, the people, own the spectrum, and
the trustee of the people's spectrum is the Federal Communications Commission.
There is no need for legislation. They ought not to be sending legislation; they
ought to pursue the appeal. They say it's a 50-50 chance whether or not it will
be prevail or not before the Supreme Court. If it doesn't prevail, then we're
going to have the court finding that there is an ownership in spectrum, and you
can get it ..."
The House Judiciary Committee also
held a hearing on the settlement last week. The House Commerce Committee has planned a
hearing for Tuesday, December 11.
House Committee Authorizes Cyber Security Funding
12/6. The House Science Committee
approved HR 3394,
the Cyber Security Research and Development Act, by a unanimous voice vote. The
bill, which is sponsored by Rep.
Sherwood Boehlert (R-NY) and others, would authorize the funding of new
research and education programs pertaining to cyber security.
Rep. Boehlert stated at the committee meeting that "Experts from industry,
government and academia have told us that we simply do not have enough people
conducting enough promising research on how to protect our computers and
networks." He added that currently the federal government spends about $60
Million on cyber security research. He called this a "pittance". HR
3394 calls for additional funding of about $800 Million over five years.
The money would go to a variety of research and education projects. The bill
contains new or additional funding for five National
Science Foundation (NSF) programs. First, it would authorize appropriations
of $233 Million over 5 years to the NSF to make "network security research
grants". Second, it would authorize $144 Million over 5 years to the NSF to
award to universities "to establish multi disciplinary Centers for Computer
and Network Security Research." These programs would fund research
regarding "authentication and cryptography; ... computer forensics and
intrusion detection; ... reliability of computer and network applications,
middleware, operating systems, and communications infrastructure; and ...privacy
The bill would also authorize funding to be administered by the NSF for training
undergraduate university students ($95 Million), community college students ($6
Million), and doctoral students ($90 Million) in cyber security fields.
The bill also authorizes funding for programs at the National Institute of Standards and Technology (NIST).
One item authorizes $275 Million for NIST to assist universities that partner
with for profit entities in long term, high risk, cyber security research.
Another item authorizes $32 Million for in house research at NIST.
Rep. Eddie Johnson (D-TX) offered
an amendment that she said would "keep in mind the historical black
colleges" and hispanic colleges. Rep. Boehlert said he shared her concern,
and "we will work cooperatively and do something from the floor." Rep.
Johnson then withdrew her amendment.
Rep. Boehlert stated that he expects the bill to be voted on by the full house
early next year. A companion bill has not yet been introduced in the Senate.
House Committee Passes Bill Authorizing Funding for Info Tech
12/6. The House Science Committee
passed HR 3400,
the Networking and Information Technology Research Advancement Act, by a
unanimous voice vote. This bill, which is sponsored by Rep. Nick Smith (R-MI) and others,
would authorize appropriations totaling nearly $7 Billion over five years for
information technology research and development.
Most of the funding authorized by this bill would go to the National Science Foundation (NSF), Department of Energy's Office of Science, and National Aeronautics and Space Administration
The Committee passed an amendment by unanimous voice vote that was offered by Rep. James Matheson (D-UT) that adds a new
section to the bill creating a "Crisis Management Enabling Technology
Rep. John Larson (D-CT) also offered
an amendment, which he withdrew. Rep.
Sherwood Boehlert (R-NY), the Chairman of the Committee, stated that
"we will continue to work together" on this matter. The amendment
would add a new section to the bill authoring funding for "Broadband
NTIA Chief Discusses Broadband
12/6. NTIA chief Nancy Victory gave a speech
titled "Removing Roadblocks to Broadband Deployment" at a conference
of the Competition Policy Institute in Washington DC. She stated that "The
question is -- what are the right policies to ensure broadband services develop
and are made available in a manner that best benefits our country?"
However, she did not answer her question.
GAO Reports on E-Commerce and Taxes
12/6. The GAO released
a letter [PDF] to Sen. Max Baucus (D-MT) and Sen. Charles Grassley (R-IA) dated
November 6, 2001, regarding state and local revenue loss from Internet sales.
The two Senators asked the GAO to determine whether the Census Bureau's
estimates of e-commerce in 1999 provide a basis for revising the GAO's 2000
report on sales tax losses from e-commerce. The GAO concluded that it could not
update its 2000 report because Census Bureau's definition of e-commerce is
broader than Internet sales. See also, GAO report [PDF] of June 30,
2000, titled "Sales Taxes: Electronic Commerce Growth Presents Challenges;
Revenue Losses Are Uncertain."
SEC Chief Accountant Addresses Reporting and Disclosure
12/6. Robert Herdman, Chief Accountant of the SEC gave a speech in Washington DC to
the American Institute of Certified Public Accountants regarding accounting and
financial disclosure. He stated that "Our existing system of financial
reporting and disclosure was developed back in the 1930s and is showing its age.
During the last 70 years, technology has advanced to a point where computers and
the Internet are a part of our everyday lives. But relatively few changes have
been made to the Commission's rules regarding what financial information is
disseminated and how it is communicated. As a result, it seems like no better
time exists than now to consider modernizing the system. So, we will take a
fresh look, one that is no-holds barred in terms of being open to new
Unger Issues Recommendations on SEC Regulation FD
Commissioner Laura Unger released a report titled
"Special Study: Regulation Fair Disclosure Revisited". The SEC adopted
the controversial Regulation FD on August 10, 2000. It requires that when an
issuer discloses material information, it must do so publicly.
Unger's report recommends that the SEC should make it easier for issuers to use
technology to satisfy Regulation FD. The SEC should expand opportunities for
issuers to disseminate information online, such as through web sites, web casts,
and e-mail alerts. She also recommended that the SEC should provide more
guidance on materiality, and that the SEC should analyze what issuers are
Senate Committee Holds Hearing on Anti Terrorism Policies
12/6. The Senate Judiciary Committee
held another hearing in its ongoing series of hearings titled "DOJ
Oversight: Preserving Our Freedoms While Defending Against Terrorism."
Attorney General John Ashcroft testified in support of the Bush administration's
anti terrorism policies. He stated in his prepared
testimony that "We have used the provisions allowing nationwide search
warrants for e-mail and subpoenas for payment information. And we have used the
Act to place those who access the Internet through cable companies on the same
footing as everyone else." See also, opening statement of Sen. Patrick Leahy (D-VT), Chairman of
the Committee, and opening
statement of Sen. Orrin Hatch (R-UT),
the ranking Republican.
FCC Closes Library to the Public
12/6. The FCC released a notice
in which it stated that "Effective December 5, 2001, and until further
notice, the FCC Library will be closed to the public. This action is necessary
because the Commission is using a portion of the FCC Library to house FCC
30th Nation Accedes to WIPO Copyright Treaty
12/6. The nation of Gabon acceded to the World Intellectual Property
Organization (WIPO) Copyright Treaty
(WCT). Gabon is only the 30th nation to do so. However, this accession means
that the WCT will enter into force in three months -- on March 6, 2002. The
other nations which have acceded are Argentina, Belarus, Bulgaria, Burkina Faso,
Chile, Colombia, Costa Rica, Croatia, Czech Republic, Ecuador, El Salvador,
Gabon, Georgia, Hungary, Indonesia, Japan, Kyrgyzstan, Latvia, Lithuania,
Mexico, Panama, Paraguay, Peru, Republic of Moldova, Romania, Saint Lucia,
Slovakia, Slovenia, Ukraine, and U.S. See, WIPO release
Trade Promotion Authority Vote Today
12/6. The House is scheduled to debate and vote on HR 3005, the
Bipartisan Trade Promotion Authority Act of 2001 on Thursday, December 6.
This bill would give the President fast track trade negotiating authority. The House Rules Committee adopted a closed rule late on Wednesday,
December 5, for consideration of the bill. The rule provides for consideration
of a manager's amendment
[PDF], which includes numerous additional provisions, including language
pertaining to labor rights, trade in textiles, and agriculture.
12/6. Rep. Peter Defazio (D-OR)
3422, a bill to establish a Congressional Trade Office. It was referred to
the House Ways and Means Committee.
12/6. Sen. Joe Biden (D-DE) and Sen. Jesse Helms (R-NC) introduced
S 1779, a bill to authorize the establishment of Radio Free Afghanistan. It
was referred to the Senate Committee on Foreign Relations.
People and Appointments
12/6. Rob Stoddard will join the National
Cable & Telecommunications Association (NCTA) as SVP for Communications
and Public Affairs, effective January 2, 2002. He is currently SVP for Public
Relations at AT&T Broadband. See,
12/6. The law firm of Fulbright &
Jaworski announced new partners, effective January 1, 2002. The list
includes Lucas Elliot, who focuses on general commercial and complex tort
litigation, with a concentration on information technology and
telecommunications litigation. See, F&J
12/6. The The U.S. Court of Appeals for
the District of Columbia Circuit heard oral argument in Channel 32 Hispanic
v. FCC, No. 00-1527.
12/6. The FBI's National Infrastructure
Protection Center (NIPC) issued an updated advisory
regarding the mass mailing worm called "Goner".
12/6. The House Judiciary Committee's
Subcommittee on Commercial and Administrative Law and Subcommittee on Courts,
the Internet, and Intellectual Property held a joint hearing on the proposed
settlement agreement between NextWave, the FCC, the DOJ, and the Auction
35 winning bidders. See, prepared testimony of Jay Bybee (DOJ), John Rogovin (FCC),
(NextWave), and Stephen
Roberts (Eldorado Communications).
12/6. The NTIA
held the first session of a two day conference regarding its grant program named
"Technology Opportunities Program", or TOP. See, agenda.
Nancy Victory, head of the NTIA, gave introductory
12/6. The House passed HR 3008,
a bill to reauthorize the trade adjustment assistance program under the
Trade Act of 1974, by a vote of 420 to 3. See, Roll
Call No. 477.
Go to News Briefs from December 1-5, 2001.