News Briefs: December 11-15, 2001.

News from December 11-15, 2001

Tauzin Dingell Bill News
12/14. On December 12 House Majority Leader Dick Armey (R-TX) announced that the House would vote on HR 1542, the Tauzin Dingell bill, on Friday, December 14. Also on December 12, Rep. David Dreier (R-CA), the Chairman of the House Rules Committee, stated in the House that "today a Dear Colleague letter is going to be sent to all Members informing them that the Committee on Rules is planning to meet this week to grant a rule which may limit the amendment process for HR 1542, the Internet Freedom and Broadband Deployment Act of 2001." See, Cong. Record, at H9264.

On December 13 House Majority Leader Dick Armey (R-TX) announced that the House vote on the Tauzin Dingell bill has been postponed until next year -- probably March.

On December 14 The U.S. Telecommunications Association (USTA), a group which is lobbying heavily for passage of the Tauzin Dingell bill, announced that it is "Enlarging the government affairs operations of USTA, doubling the number of Congressional lobbyists". It also stated that it is "Establishing tactical committees, made up of members that work closely with USTA staff to help execute legislative, regulatory, communications and PAC strategies." See, USTA release.

People and Appointments
12/14. The law firm of Fenwick & West announced a new management structure. The principal feature of the new structure is the formation of an Executive Committee, made up of the two Managing Partners and five other members, to develop and implement strategic plans. The two Managing Partners will be responsible for day to day management of the firm. The initial members of the new Executive Committee are Gordon Davidson, who has been re-elected as chair of the firm, managing partners John McNelis and Laird Simons, and corporate partner Dennis DeBroeck, intellectual property partner David Hayes, tax partner Ronald Schrotenboer and litigation partner Claude Stern. In addition, Matthew Quilter was elected chair of the firm's corporate group, and Timothy Roake was elected chair of the litigation group. David Hayes will continue as chair of the intellectual property group, and James Fuller will continue as chair of the tax group. See, F&W release.

12/14. FTC Commissioner Orson Swindle was named head of the U.S. delegation to the OECD Experts Group for Review of the 1992 OECD Guidelines for the Security of Information Systems. See, FTC release.

More News
12/14. Rep. Ed Markey (D-MA) released a statement in which he criticized NBC for its decision to air hard liquor ads on the NBC network. He said that "pitching hard liquor when under aged children are in the audience is shameful." Rep. Markey is the ranking Democrat on the House Commerce Committee's Telecom and Internet Subcommittee.

12/14. World Trade Organization (WTO) Director General Mike Moore gave a speech regarding organization changes in the WTO Secretariat, and staff appointments and changes.

12/14. Thomas Leahy was sentenced by the U.S. District Court (WDWash) to one week in jail for unlawfully manufacturing audio and video recordings of live musical concerts, without the consent of the performers, and then selling the CD and VHS video cassette recordings for commercial advantage or private financial gain. He also lost his computer. See, USAO release.

James Addresses Antitrust, Telecom, and Technology
12/13. Charles James, Assistant Attorney General for the Antitrust Division, gave a speech at the
19th Annual Institute on Telecommunications Policy & Regulation regarding antitrust enforcement and the telecommunications industry. He summarized the Antitrust Division's basic principles for reviewing telecom mergers. He discussed network effects and the essential facilities doctrine. In addition to telecom mergers and Section 271 applications by phone companies, he also discussed new technologies, such as Internet backbone, broadband facilities, and Third Generation wireless.

James began by stating that he has "limited knowledge" of these issues, but praised the knowledge of others in the Antitrust Division, including Hew Pate and Michael Katz. He also praised FCC Chairman Michael Powell, and the FCC's merger review process.

Consent Decrees. James stated that "the antitrust policy in this area has been made through consent decrees -- consensual arrangements, rather than litigated results." He elaborated that this is the case because counsel for merging parties are under pressure to "get the deal done." He cautioned that people should "read our consent decrees, but don't get married to them." He also questioned whether many merger reviews would have had different outcomes if they had been litigated. He specifically referenced the wireless mergers.

He also said that "We have asserted Internet backbone markets, and I know that that is a very complex matter in some cases. And, we have talked about broadband delivery mechanisms, again, another complicated and quickly evolving area. And, one has to always worry about how these cases would have fared in a litigation context."

Core Principles. James said that "There are three unifying principles that ... will guide our review process in telecommunications. First, and foremost, ... there is no such thing as a convenient facilities doctrine, as distinguished from an essential facilities doctrine. Second point, the Antitrust Division is not the Federal Antitipping Agency. And third, it is not the Antitrust Division's mission to punish success."

Essential Facilities Doctrine. James joked that there is no such thing as a convenient facilities doctrine. "Wouldn't it be nice if everybody got to free ride on other people's facilities. That is not what rule guides our policy," he said. Rather, "The antitrust approach should ask whether the transaction at issue will cause real exclusion or preclusion in a manner that maximizes or enhances market power."

He also stated that "facilities based competition is the thing that we are hoping will emerge ..." He also said that "competition in the broadband world, is likely to come ... from a variety of platforms", and that controlling one platform may not foreclose others from entry.

However, he elaborated that "We need to protect companies from cross subsidized predation or discriminatory access. But we have to do so without extended preferences that are unrelated to efficiency. One of the things that we see in terms of our work in the merger area, and our work in the 271 area, is that the sort of overly expansive creation of duties to deal, to share facilities, and the imposition of competitor obligations to cooperate could potentially stifle innovation. We should not loose sight of that point certainly in either the regulatory or antitrust enforcement context."

Networks. James' second point was that the Antitrust Division is not the Federal Antitipping Agency. He explained that "tipping occurs in the network where a significant combined penetration rate can cause certain consumers that have not already chosen the network to go with the larger entity. We in the Antitrust Division do not see our role as looking for markets that are about to tip and then throwing our bodies in the way of the process."

James continued that "Tipping in the network industry can have actually beneficial effects that lead to the achievement of efficiencies and a benefit to consumers that result from the increased likelihood of systems compatibility and changeability. Our role is not to prevent implementation or adoption of a single industry standard, or the creation of a dominant network, where that dominant network really flows from efficiency."

However, James added that the Antitrust Division is concerned "where a participant with market power, or monopoly power, may be engaging in anticompetitive conduct that is designed to maintain the monopoly or to illegally extend the monopoly into another market ..." However, he concluded that "in the competitive market occasionally somebody wins. And when somebody wins, that is not necessarily a ... non competitive result.

Economies of Scale. James said that his final point is that "the Antitrust Division does not and should not punish success." He then elaborated on this principle in the context of mergers involving economies of scale. He cautioned that "one of the ways in which we see this, very often, is that people talk about new technologies. ``Boy, if we had all of the spectrum, we could create a 3G cellular platform that is going to do this, that and the other thing.ДД And the fact of the matter is that these plans are not fully fleshed out. No one knows what the technologies people are going to be deploying, and no one knows how much spectrum is required in order to do. And guess what. If you don't know, you don't get to merge on the basis of an economies of scale defense."

Charles James also testified on December 12 before the Senate Judiciary Committee regarding the proposed settlement of the Microsoft antitrust case. See, prepared testimony.

Nano Tech Alliance Advocates Funding for Basic Research
12/13. The Progressive Policy Institute (PPI) and the Nano Business Alliance jointly hosted a panel discussion on Capitol Hill on the public policy implications of the emerging science and business of nano technology. The panelists seek to educate legislators and government agencies on the promises of nano tech. They also advocate federal funding of basic research supporting nano tech.

The panelists were be Rob Atkinson (PPI), Mark Modzelewski (NanoBusiness Alliance), Mike Roco (National Nanotechnology Initiative), Steve Johns (Ardesta Capital), Meyya Meyyapan (NASA Ames Center for Nanotechnology), Steve Wilson (NYU Center for Advanced Materials and Nanotechnology), Stephan Maebius (Foley & Lardner), and Josh Wolfe (Lux Capital).

NASA's Meyyapan defined nano technology as "a way to create functional materials ... or a device, or a structure, or a system, at the nano scale level. But it is not just the nano scale level. ... At the nano scale the properties are going to be completely differently. We are talking about exploiting physical properties, chemical properties, mechanical properties, electrical properties, magnetic properties, biological properties." He stated that some of its major applications are in "computing, electronics, and data storage". Other panelists stated that promising applications include quantum dots, improved plastics, architecture of molecules by design, drugs that can attack specific cells, and other biomedical uses.

Meyyapan also addressed government support and funding for nano tech. He said that one of the best things that has happened for nano tech has been support from the Clinton and Bush administrations. He added that "that is very important because, actually, the companies generally will not fund something that is risky. ... So, the single most important thing is to keep the pipeline coming through, OK, on basic research on nano. That is the role of the government." He also said that other countries are spending on nano tech, and "we do not want to fall back. So, our first priority is to keep the pipeline full."

Tech Law Journal spoke with Robert Atkinson. He stated that we are "at the beginning stages of exploring nano. I think that there is no doubt that we need to appropriate more funds for it, and upgrade the initiative that we do have." He also suggested that a nano tech bill will soon be introduced in the Senate.

TLJ also spoke with Stephan Maebius after the event regarding patent law issues. He stated that patent law is flexible and accommodates new technologies. Hence, changes to the patent statute will not be necessary. However, he stated that it will be important to educate patent examiners at the USPTO on these new technologies. He elaborated that this is important to ensure that quality patents will be issued, and to limit patent pendancy. The risk, said Maebius, is the issuance of an overly broad patent. He also added that the length of patent pendency might be reduced by forming a nano technology group at the USPTO. He also stated that the Congress is currently considering legislation regarding the patent re-examination process that would be relevant to nano technology patents.

House Subcommittee Holds Hearing on DMCA Ї 104 Report
12/12-13. The House Judiciary Committee's Subcommittee on Courts, the Internet and Intellectual Property held two days of hearings titled "The Digital Millenium Copyright Act: Section 104 Report."

The Copyright Office (CO) was directed by Ї 104 of the Digital Millennium Copyright Act (DMCA) to provide a report evaluating the effects of the amendments made by Title I of the DMCA and the development of electronic commerce and associated technology on the operation of 17 U.S.C. ЇЇ 109 and 117, and the relationship between existing and emergent technology and the operation of ЇЇ 109 and 117. The CO Report recommended that the first sale doctrine not be extended to digital transmissions. However, the CO did recommend creating an exemption from liability for infringement of a copyright owner's reproduction right for temporary buffer copies that are incidental to a licensed digital transmission of a public performance of a sound recording -- that is, buffer copies made during audio streaming over the Internet.

See, Marybeth Peters' (Register of Copyrights) prepared testimony of December 12. See also, opening statement of Rep. Howard Coble (R-NC), the Chairman of the Subcommittee, and opening statement of Rep. Howard Berman (D-CA), the ranking Democrat on the Subcommittee. See also, prepared testimony of witnesses on December 12: Carey Ramos (National Music Publishers Association), Cary Sherman (Recording Industry Association of America), and Emery Simon (Business Software Alliance).

See, statements and testimony of December 13 hearing: Rep. Coble, Rep. Berman, Marybeth Peters, Marvin Berenson (Broadcast Music Inc.), Jonathan Potter (Digital Media Association), and Gary Klein (Consumer Electronics Assoc.).

Sklyarov and Prosecutors Reach Agreement
12/13. The U.S. Attorney's Office (NDCal) and Dmitry Sklyarov entered into a Pretrial Diversion Agreement [PDF] in which Sklyarov admits to facts relevant to the criminal copyright law charges that are pending against him, and promises to cooperate in the prosecution of his former employer, Elcomsoft. The Agreement further provides for his release and return to Russia. It also provides that his prosecution will be deferred for one year, and if he completes his obligations under the Agreement, that charges against him will be dropped. See also, USAO release.

On August 28, 2001, a grand jury of the U.S. District Court (NDCal) returned a five count indictment [PDF] against Elcom Ltd., aka Elcomsoft Co. Ltd., and Dmitry Sklyarov for criminal violations of copyright law in connection with their marketing and sale of a program that circumvents Adobe's e-book reader. Elcomsoft and Sklyarov were charged with violation of the anti circumvention section of the Digital Millennium Copyright Act (DMCA), 17 U.S.C. Ї 1201. Sklyarov had also been charged by criminal complaint [PDF] with a single count of trafficking in a product designed to circumvent copyright protection measures, on July 17.

Adobe Systems makes the eBook Reader, a program which can read books in an electronic format named eBook. The program is downloadable at Adobe's web site. Users can then purchase encrypted electronic books in eBook format from online bookstores, such as Amazon.com, and read them with the eBook Reader. The books are encrypted to protect copyright interests. Elcomsoft and Sklyarov produced software that enables people to copy and read these electronic books without paying.

The indictment states that Elcomsoft, a software company based in Moscow, Russia, and Sklyarov, an employee of Elcom, designed, produced, and marketed a program named the Advanced eBook Processor (AEBPR). This program circumvents the Adobe Acrobat eBook Reader by removing all limitations on an ebook purchaser's ability to copy, distribute, and print ebooks.

Count One alleges conspiracy to traffic in technology primarily designed to circumvent and marketed for use in circumventing, technology that protects a right of a copyright owner in violation of 18 U.S.C. Ї 371. Counts Two and Three both allege trafficking in technology primarily designed to circumvent technology that protects a right of a copyright owner in violation of 17 U.S.C. Ї 1201(b)(1)(A) and 18 U.S.C. Ї 2. Count Four and Five both allege trafficking in technology marketed for use in circumventing technology that protects a right of a copyright owner in violation of 17 U.S.C. Ї 1201(b)(1(C) and 18 U.S.C. Ї 2.

The Pretrial Diversion Agreement contains a recitation of admissions by Sklyarov. For example, Sklyarov admits that "as part of my employment with Elcomsoft, I wrote a part of computer program titled the Advanced eBook Processor ("AEBPR"). ... The only use of the AEBPR is to create an unprotected copy of an electronic document. Once a PDF file is decrypted with the AEBPR, a copy is no longer protected by encryption. This is all the AEBPR program does."

The Agreement also attaches a copy of Sklyarov's speech at the DefCon Nine conference in Las Vegas in July that lead to his arrest. Sklyarov further agrees to be deposed under oath.

Representatives Introduce Bill to Implement NextWave Settlement
12/13. Rep. Bill Tauzin (R-LA), Rep. James Sensenbrenner (R-WI), Rep. Bill Thomas (R-CA), and Rep. John Conyers (D-MI) introduced HR 3484, the Prompt Utilization of Wireless Spectrum Act of 2001, a bill to implement the proposed settlement agreement [PDF] between NextWave, the FCC, DOJ, and re-auction winners.

Rep. Tauzin, the Chairman of the House Commerce Committee, said in a statement in the Congressional Record (December 14, at E2318) that "Nextwave's C block licenses have laid fallow for too long and need to be put to good use. The settlement agreement authorized by the prompt utilization of Wireless Spectrum Act of 2001 may not be the prettiest or easiest way to ensure that these licenses are put to good use. But this legislation, and the corresponding settlement, appear to be the best way to put them to good use."

Similarly, Rep. Conyers, the ranking Democrat on the House Judiciary Committee, said in a statement in the Congressional Record (December 14, at E2312) that "It benefits the government by providing ten billion dollars in revenues to our Treasury. It benefits the original license holder by preserving the benefit of the bargain it had originally negotiated. It benefits our bankruptcy code, by preserving the doctrine of the stay and the power of the courts to enforce it, even against the government. And it benefits consumers by permitting the spectrum to come on the market as soon as possible, fostering much needed competition."

The bill was referred to the House Commerce Committee, House Judiciary Committee, House Ways and Means Committee, and House Budget Committee. The settlement agreement is premised upon passage of implementing legislation by December 31, 2001.

Rep. Smith Introduces Cyber Crime Bill
12/13. Rep. Lamar Smith (R-TX) and Rep. Sherwood Boehlert (R-NY) introduced HR 3482, a bill pertaining to cyber crimes. The bill was referred to the House Judiciary Committee, of which Rep. Smith is a member.

Rep. Smith, who is the Chairman of the Crime Subcommittee, issued a release which states that the bill "strengthens cyber crime and cyber terrorism laws by providing better coordination and resources for law enforcement. The bill recommends that the U.S. Sentencing Commission amend its guidelines to strengthen cyber crime penalties to better reflect the seriousness of the offence."

He also stated that the bill "provides liability protection to Internet Service Providers who make a good faith effort to assist law enforcement and establishes an Office of Science and Technology at the Department of Justice that will coordinate the development and technical assistance for new law enforcement technologies.

Microsoft Appoints Compliance Officers
12/13. Microsoft announced the appointment of two compliance officers -- Odell Guyton and David Dadoun -- to facilitate compliance with federal, state and legal obligations, including the proposed antitrust consent decree with the Department of Justice and nine states. David Dadoun is a former antitrust enforcement lawyer with the Federal Trade Commission (FTC). He will administer the Microsoft's antitrust compliance program under the proposed consent decree. See, proposed final judgment at Section IV.C. See also, MSFT release.

People and Appointments
12/13. The members of the Federal Election Commission (FEC) elected David Mason Chairman and Karl Sandstrom Vice Chairman for 2002. See, FEC release.

More News
12/13. Covad issued a release in which it stated that the U.S. Bankruptcy Court (DDel) "approved the reorganization plan for Covad Communications Group, Inc. and Covad anticipates that it will exit from its pre-negotiated bankruptcy around December 20, 2001, the expected date the plan becomes effective.

12/13. The U.S. Court of Appeals (FedCir) issued its opinion in In Re Thrifty, affirming the decision of the TTAB. The TTAB had sustained the Examining Attorney's refusal to register the mark proposed in the service mark application on the grounds that it failed to provide an acceptable description of the mark. The applicant sought a mark "in the color blue" placed on the wall of a building.

Daschle Introduces Bill to Authorize Funds for Technology for Rural Police
12/12. Sen. Tom Daschle (D-SD) and Sen. Tim Johnson (D-SD) introduced S 1787, the Rural Safety Act of 2001. It was referred to the Senate Judiciary Committee. This is a bill to promote rural safety and improve rural law enforcement which includes a section on use of technology.

It authorizes appropriations of $40,000,000 over five years for grants to rural and tribal police departments to "(A) improve police communications through the use of wireless communications, computers, software, videocams, databases and other hardware and software that allow law enforcement agencies to communicate and operate more effectively; and (B) develop and improve access to crime solving technologies, including DNA analysis, photo enhancement, voice recognition, and other forensic capabilities."

Calif Supreme Court to Hear Case Re Jurisdiction Over Non Resident DeCSS Poster
12/12. The Supreme Court of California announced that it will hear an appeal in Pavlovich v. Superior Court, which is also known as the DVD copy control jurisdiction case. (Case Nos., S100809 and H021961.) See, Conference Results for 12/12/2001 [PDF] at page 1.

On August 7, 2001, the Court of Appeal of California (6) held that California's long-arm jurisdiction statute reaches owners, publishers, and operators of web sites when, in violation of California law, they make available for copying or distribution trade secrets or copyrighted material of California companies.

The issue on appeal, and in the opinion below, is not the merits of the case; it is not whether or not the defendant violated the trade secrets or copyrights of the plaintiff. Rather, the issue is whether the California courts have authority to try this case. California's long arm jurisdiction statute authorizes California courts to "exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States."

The DVD Copy Control Association (DVD CCA) filed a complaint in the Superior Court for Santa Clara County California against Matthew Pavlovich and others alleging misappropriation of trade secrets and other claims. Pavlovich published the DeCSS program in a web site which he owned and operated. He is not a resident of California. He also testified that he knew that the movie industry was based in California, and that DeCSS would harm that industry. He sought to quash the summons.

DVD is sometimes known as Digital Versatile Disc. CSS is a Content Scrambling System for DVD to protect intellectual property rights by means of encryption. DeCSS is a decryption tool that facilitates infringement.

House to Vote on Tauzin Dingell Bill
12/12. House Majority Leader Dick Armey (R-TX) announced that the House is scheduled to vote on HR 1542, the Tauzin Dingell bill, on Friday, December 14. The House Rules Committee has yet to adopt a rule governing debate, amendments, and other items.

FCC Announces NPRM on Regulatory Framework for ILECs' Broadband Services
12/12. The Federal Communications Commission (FCC) announced, but did not release, a Notice of Proposed Rulemaking (NPRM) initiating a comprehensive examination of the regulatory framework for incumbent local exchange carriers' (ILECs') provision of broadband services.

The FCC issued a release in which it stated that this NPRM seeks comments on what changes the FCC should make in its regulatory requirements for ILECs' broadband service, including "What the relevant product and geographic markets should be for broadband services", "Whether incumbent LECs possess market power in any relevant market", and "Whether dominant carrier safeguards or other regulatory requirements should govern incumbent LECs' provision of broadband service." This is Docket No. CC 01-337.

FCC Chairman Michael Powell said in a statement that "In this proceeding, the Commission will ask whether potentially robust competition among multiple types of broadband service providers suggests that we should avoid subjecting incumbents to the same regulatory burdens that we impose on these carriers with respect to their provision of local telephone service. That is, we ask whether incumbent LECs, which are so clearly dominant in the provision of local phone service, must also be treated as dominant as they use DSL and other technologies to provide high speed telecommunications services in competition with cable modem service providers and other types of platforms." Powell added that "I for one have an open mind as to how these questions should be answered."

See also, statement by Commissioner Michael Copps.

FCC Postpones Issuance of UWB Report and Order
12/12. The Federal Communications Commission (FCC) had originally included on the agenda for its meeting of December 12 a First Report and Order to provide for new ultra wideband (UWB) devices. However, this item was removed from the agenda earlier in the week. This is ET Docket No. 98-153.

Michael Gallagher, Deputy Assistant Secretary of Commerce, stated in a release that "We appreciate the Federal Communications Commission's (FCC's) recognition of the importance of developing a unified government approach on Ultrawideband. We will continue to work quickly and hard to achieve the proper balance between protecting the national security and meeting 21st century technology needs."

FTC Releases Further Guidance on Privacy Provision of GLB
12/12. The Federal Trade Commission (FTC) published a document titled "Frequently Asked Questions for the Privacy Regulation: December 2001". The document states that its purpose is "to assist financial institutions in complying with the privacy provisions of the Gramm Leach Bliley Act (GLB Act) and the Commission's financial privacy regulation." This is a staff guidance.

GAO Releases Report on Computer Controls at FRB
12/12. The GAO released a letter [PDF] to the Board of Governors of the Federal Reserve System regarding "Federal Reserve Banks: Areas for Improvement in Computer Controls".

Senate Finance Committee Approves Trade Promotion Authority Bill
12/12. The Senate Finance Committee approved its version [75 pages in PDF] of HR 3005, the Bipartisan Trade Promotion Authority Act of 2001, by a vote of 18 to 3.

The Committee will meet again on Thursday, December 13, to complete action on this bill. The Committee voted early because Sen. Robert Byrd (D-WV), the leading opponent of free trade in the Senate, invoked a rarely used rule to shut down the meeting. Sen. Charles Grassley (R-IA), the ranking Republican on the Committee, stated afterwards that Sen. Byrd "invoked a Senate rule that prohibits committees from meeting two hours after the Senate convenes. Because of the time limit, Finance Committee members voted to approve the trade promotion authority legislation subject to amendment. It is uncertain whether or not amendments will become part of the bill before it is taken up by the full Senate."

The three negative votes were cast by Sen. Jay Rockefeller (D-WV), Sen. Kent Conrad (D-ND), and Sen. Robert Torricelli (D-NJ). One of the votes in favor was cast by Sen. Tom Daschle (D-SD), the Senate Majority Leader. Whether he will promptly schedule this bill for a vote in the full Senate is a separate question. Secretary of Commerce Donald Evans, who has been lobbying Members of Congress on this bill, said in a release that "I hope Senator Daschle's support in Committee means the Senate will vote on TPA as soon as possible."

Economic Stimulus Bill and Tech
12/12. The Senate Republican High Tech Task Force wrote a letter to House and Senate negotiators for the "economic stimulus" package requesting that they include the language contained in S 88, the Broadband Internet Access Act of 2001. The group argued that this bill would promote broadband deployment, stimulate the economy, and close a "digital divide".

The Telecommunications Industry Association (TIA) also wrote a letter to House and Senate leaders asking that the "economic stimulus" legislation include not only the language of S 88, but also "a 30 percent depreciation deduction for capital expenses on IT equipment and a five year net operating loss (NOL) carry back provision."

S 88 is sponsored by Sen. Jay Rockefeller (D-WV), and 64 other Senators. It would provide tax credits for deployment of broadband facilities in rural and underserved areas. Specifically, it would provide a credit of 10% of the qualified expenditures incurred by the taxpayer with respect to qualified equipment with which "current generation" broadband services are delivered to subscribers in rural and underserved areas. It would also provide a credit of 20% of the qualified expenditures incurred by the taxpayer with respect to qualified equipment with which "next generation" broadband services are delivered to subscribers in rural areas, underserved areas, and to residential subscribers.

"Current generation" broadband services is defined in the bill as the transmission of signals at a rate of at least 1.5 Million bits per second (Mbps) downstream, and at least 200,000 bits per second upstream. "Next generation" broadband services is defined as at least 22 Mbps downstream and 5 Mbps upstream.

Rep. Boehlert Addresses Cyber Security
12/12. Rep. Sherwood Boehlert (R-NY), the Chairman of the House Science Committee, gave an address to an Information Technology Association of America (ITAA) conference titled "Developing Cyber Security Solutions in the e-Gov Era". Rep. Boehlert used the occasion to discuss HR 3394, the "Cyber Security Research and Development Act", which is sponsored by Rep. Boehlert and Rep. Ralph Hall (D-TX), the ranking Democrat on the Committee. It would authorize the funding of new research and education programs pertaining to cyber security.

Rep. Boehlert stated that "HR 3394 is designed to attract current researchers into the field of cyber security and to create a cadre of students who will become the next, we hope more numerous, generation of researchers. And the bill is designed to promote risky research that can get beyond the current paradigms in cyber security design".

Intel and Via Settle Patent Disputes Re K7 Chipsets
12/12. Intel announced that it settled some of its pending patent infringement disputes with Via. Intel stated in its release that it "reached a settlement agreement with Via Technologies Inc. in a pending patent litigation related to chipsets that support Advanced Micro Devices microprocessors. The agreement was reached after Via redesigned its products in an effort to avoid infringing on Intel's patents. Under terms of the settlement, Intel will drop its patent infringement suit regarding U.S. Patent Nos. 5,926,651 and 5,051,622, which was scheduled for trial on Jan. 22."

Via announced in its release that "The dismissal terminates all litigation between VIA and Intel relating to VIA's K7 chipsets. While VIA has dismissed its counterclaims against Intel, no payments of any kind have been made to Intel in connection with Intel's dismissal of its remaining claim. VIA will not pay a royalty, and its K7 chipset products are no longer subject to a possible injunction arising from this litigation."

Various lawsuits in the Delaware, Texas, Germany, the United Kingdom, and Hong Kong between Intel and Via regarding Pentium 4 technology are still pending.

People and Appointments
12/12. House Majority Leader Dick Armey (R-TX) announced that he will retire at the end of the 107th Congress. See, statement.

12/12. President Bush nominated Raymond Orbach to be Director of the Office of Science at the Department of Energy, which includes the Office of Advanced Scientific Computing Research. Orbach is a Professor of Physics and Chancellor of the University of California at Riverside (UCR). He specializes in experimental and theoretical condensed matter physics. See, White House release and UCR release.

12/12. President Bush announced his intent to appoint the following people to the Presidents Council of Advisors on Science and Technology (PCAST): Charles Arntzen (ASU), Norman Augustine (Princeton), Carol Ann Bartz (P/CEO of Autodesk), Kathleen Behrens, Erich Bloch, Stephen Burke (President of Comcast), Gerald Clough (President of Georgia Tech), Michael Dell (Ch/CEO of Dell), Raul Fernandez, Marye Anne Fox (Chancellor of North Carolina State University), Martha Gilliland (Provost of Tulane), Ralph Gomory (President of the Sloan Foundation), Bernadine Healy, Robert Herbold (EVP of Microsoft), Bobbie Kilberg (President of the Northern Virginia Technology Council), Walter Massey (Princeton), Gordon Moore (Chairman Emeritus of Intel), Kenneth Nwabueze (CEO of SageMetrics), Steven Papermaster, Luis Proenza (President of the University of Akron), George Scalise (President of the Semiconductor Industry Association), and Charles Vest (President of MIT). The PCAST is an advisory committee created by President Bush by Executive Order 13226. It is Chaired by Floyd Kvamme. See, White House release.

12/12. Chuck Dziedzic will retire from the FCC at the end of the year after a long carreer. In 1995, he joined the Video Services Division as Assistant Chief. His responsibilities have included the transition of the MDS/ ITFS spectrum from analog to two way services in a digital environment and 3G use of the spectrum. See, FCC release.

More News
12/12. The U.S. Court of Appeals (2ndCir) issued its opinion in USA v. BMI, an antitrust case involving interpretation and enforcement of the BMI consent decree, which pertains to music licensing and related matters. The Appeals Court affirmed in part, and vacated and remanded in part.

12/12. The U.S. Court of Appeals (FedCir) issued its divided opinion in Smith v. Ethicon, a patent claim construction case involving affixing sutures within bones. Plaintiffs, Smith & Nephew and John Hayhurst, the holder U.S. Patent No. 5,601,557, filed a complaint in U.S. District Court (DOr) against Ethicon alleging patent infringement. The District Court granted summary judgment of non-infringement, both literal and under the doctrine of equivalents. Judge Newman wrote the opinion of the Court of Appeals vacating and remanding, in which Judge Gajarsa joined. Judge Michel wrote a lengthy dissent.

House Committee Holds Hearing on NextWave Settlement
12/11. The House Commerce Committee's Subcommittee on Telecommunications and the Internet held a hearing on the proposed settlement agreement involving NextWave and disputed spectrum licenses. Key members of the Committee, including Chairman Billy Tauzin (R-LA), argued that the Congress should swiftly approve legislation implementing the settlement.

Rep. Tauzin stated that "this settlement ought to be approved as rapidly as we can do it." He stated that "this gets the spectrum out", and that "it respects the property rights" of auction winners. FCC Chairman Michael Powell testified at the hearing in defense of the settlement. He urged the Congress to "consider what posture the Government actually is in, as opposed to where we all wish it stood." He argued that the settlement is the best alternative available. See, Powell statement.

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 by December 31, 2001. The Congress is currently on the verge of recessing for the year.

The proposed settlement has encountered opposition in Congress. On December 6, Sen. Ernest Hollings (D-SC) and Sen. John McCain (R-AZ), the Chairman and ranking Republican on the Senate Commerce Committee, announced their opposition to the proposed settlement. See, transcript [PDF] of press conference.

Rep. Fred Upton (R-MI), the Chairman of the Subcommittee, argued that "there is probably not a better alternative than what is on the table before us." Rep. Rick Boucher (D-VA), a senior Democrat, argued that the settlement is in the public interest for several reasons. He argued that there is currently an acute shortage of spectrum, and the deal would allow immediate use of the disputed spectrum; he argued that the federal government would derive $10 Billion in revenue from the deal; he argued that it would provide an economic stimulus; and, he argued that it would facilitate the deployment of Third Generation (3G) wireless services.

Several members of the Committee stated that the House should take more time to examine the settlement before passing any legislation. Rep. Ed Markey (D-MA), the ranking member of the Telecom Subcommittee, criticized the settlement, and concluded that "Congress would do well to further examine this settlement with more time next year." See, Markey statement. Similarly, Rep. John Dingell (D-MI), the ranking Democrat on the full Committee, stated that "I think that there are many questions to be asked and answered before we legislate."

See also, prepared testimony of witnesses: Joseph Hunt (U.S. Department of Justice), Denny Strigl (Verizon Wireless), Frank Cassou (NextWave Telecom), and Jim Winston (Urban Communicators).

NextWave obtained spectrum licenses at FCC C Block 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 Ї 525 of the Bankruptcy Code. The U.S. District Court (SNDY) affirmed. However, the U.S. Court of Appeals (2ndCir) issued its order and opinion of reversal in May 2000. The FCC then proceeding to re-auction the disputed spectrum in Auction 35. NextWave next petitioned the FCC to reconsider its cancellation of its licenses. The FCC refused, and NextWave petitioned for review 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 Ї 525 of the Bankruptcy Code. The FCC has petitioned the Supreme Court for writ of certiorari. The Supreme Court has not yet announced a decision on this petition. The terms of the settlement agreement require that implementing legislation be passed by the Congress by December 31.

NextWave Spectrum Licenses and Wireless Internet Services
12/11. Under the terms of the proposed NextWave settlement agreement [PDF], the disputed spectrum would immediately be made available to the Auction 35 winning bidders, including Verizon Wireless, Cingular, and others.

Rep. Rick Boucher (D-VA) and Verizon Wireless CEO Denny Strigl argued at the hearing of the House Telecom Subcommittee on December 11 that the proposed settlement would facilitate the deployment of Third Generation (3G) wireless services. 3G is a technology that is intended to bring broadband Internet access to portable devices.

Strigl testified that "most European countries are way ahead of us" on both the licensing of 3G spectrum, and in the development of related software and hardware. He added that "without the spectrum out there, that you are licensing, we are not only behind -- we are desperately behind."

In response to a question from Rep. Boucher, Strigl said that "it is difficult to say exactly any amount of spectrum that will be devoted to 3G services as opposed to voice services. Our intention is to meet our capacity demands, and at the same time roll out 3G services over the entirety of our spectrum. Here is what I know for certain: that without this spectrum, we cannot devote any of the spectrum we have to anything other than voice and short messaging services. Data -- particularly high speed data -- is not a possibility in our major cities with the limited spectrum that we have today."

Rep. Boucher stated that "in the event that Congress does not approve this settlement, and for various reasons, the companies that successfully bid for this spectrum in the re-auctions, decide to take their investment dollars elsewhere, because the complexities that arise out of the absence of Congress approval, you would see an effect, then, on the ability of the United States to have the near term deployment of Third Generation services." Strigl agreed with this statement.

Rep. Boucher also asked: "And you would say that this spectrum is essential to carriers to have to deploy Third Generation services?" Strigl agreed.

Theft of Trade Secrets
12/11. The U.S. District Court (NDCal) sentenced Say Lye Ow to 24 months of imprisonment on a felony charge of copying a trade secret in violation of the Economic Espionage Act of 1996, 18 U.S.C. Ї 1832. He stated in his Plea Agreement [PDF] of September 14, 2001, that he copied without authorization computer files relating to the design and testing of the Merced microprocessor, now known as Itanium. He further stated that he knew that the materials contained trade secrets belonging to Intel, and that he copied them for use at his then new employment at Sun Microsystems. See, USAO release.

PR China Now a WTO Member
12/11. The People's Republic of China became the 143rd member of the World Trade Organization (WTO). December 11, 2001, was 30 days after the PR China notified the WTO that it had completed its domestic ratification of its accession package.

Commerce Secretary Donald Evans released a statement in which he said that its "accession to the WTO will open China's market to American exports of industrial goods, services, and agriculture to an unprecedented degree, and strengthen the world economy. For the first time, American firms have unprecedented freedom to trade in China by buying and selling their own products there."

FEC to Request Public Comments on Computer Based Voting Systems
12/11. The Federal Election Commission (FEC) announced that it will adopt and release at its Thursday, December 13, meeting a request for public comment on two volumes of voluntary standards for states and voting system vendors for computer based voting systems. Public comments will be due by February 1, 2002.

The FEC also stated in a release that the proposed standards will include the "Conclusion that controls cannot be developed at the present time to make remote Internet voting sufficiently risk resistant to be confidently used by election officials and the voting public, therefore standards cannot be written for the testing and qualification of these systems."

DOJ Executes Search Warrants in Software Piracy Investigations
12/11. The Department of Justice (DOJ) announced that "in three separate federal law enforcement actions federal agents executed approximately 100 search warrants worldwide against virtually every level of criminal organizations engaged in illegal software piracy over the Internet." See, DOJ release.

One action, titled "Operation Buccaneer" by the DOJ, is targeting "organizations engaged in the illegal distribution of copyrighted software, games and movies over the Internet". It involves the "execution of 58 search warrants ... within the United States and abroad."

A second action, titled "Operation Bandwidth" by the DOJ, is an undercover investigation of "entities and individuals involved with illegal access to computer systems and the piracy of proprietary software utilizing ... storage sites on the Internet." The DOJ also stated that it resulted in the "execution of over 30 search warrants across the United States and Canada."

A third action, titled "Operation Digital Piratez" by the DOJ, is another undercover investigation which resulted in the execution of 8 search warrants. The DOJ stated that it in addition to software piracy "sites and those who operated them, it also targeted the ``cracking groupsДД specifically created for the purpose of pirating software so that it may be distributed over the Internet in violation old U.S. copyright laws."

The DOJ announcement did not reference any arrests, indictments, or other charges.

EU Commission Releases Paper on Merger Regulation
12/11. The Commission of European Communities released a document [PDF] titled "Green Paper on the Review of Council Regulation (EEC) No 4064/89". See also, Annexe I and Annexe II [both PDF]. This paper proposes revisions to the Commission regulation regarding mergers, No. 4064/89. In particular, it addresses increasing the Commission's jurisdiction over merger reviews (at the expense of member states), other procedural issues, and the "respective merits of the ``dominance testДД as laid down in the Merger Regulation and of the ``significant lessening of competition testДД used in certain other jurisdictions." See also, EU release.

People and Appointments
12/11. The Senate confirmed John Bates to be a U.S. District Judge for the District of Columbia, Kurt Engelhardt to be a U.S. District Judge for the Eastern District of Louisiana, and Julie Robinson to be a U.S. District Judge for the District of Kansas.

Go to News Briefs from December 6-10, 2001.