|News from December
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
and corporate partner Dennis DeBroeck,
intellectual property partner David Hayes, tax
Schrotenboer and litigation partner Claude Stern. In
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
group, and James Fuller
will continue as chair of the tax group. See, F&W
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.
12/14. Rep. Ed Markey (D-MA) released
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
12/14. World Trade Organization (WTO) Director
General Mike Moore gave a speech
regarding organization changes in the WTO Secretariat, and staff appointments
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
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
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.´´ 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
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
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
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
House Subcommittee Holds Hearing on DMCA § 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 § 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. §§ 109 and 117, and the
relationship between existing and emergent technology and the operation of §§
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
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
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. § 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. § 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.
§ 1201(b)(1)(A) and 18 U.S.C. § 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. § 1201(b)(1(C) and 18 U.S.C. §
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
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
settlement agreement [PDF] between NextWave, the FCC, DOJ, and re-auction
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
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
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
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
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.
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
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
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."
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
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'
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.
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
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
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
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
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
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
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
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
Moore (Chairman Emeritus of Intel), Kenneth Nwabueze
(CEO of SageMetrics), Steven
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.
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
12/12. The U.S.
Court of Appeals (2ndCir) issued its opinion
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
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
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
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.
[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 § 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 § 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
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.
§ 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
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
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
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 groups´´ 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
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 test´´ as laid down in the Merger Regulation and of the
``significant lessening of competition test´´ 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.
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