News from January 1-5, 2002
Antitrust Division Reorganizes
1/4. The Antitrust Division of the Department of Justice announced a reorganization. Charles James, who was appointed Assistant Attorney General in charge of the Antitrust Division by President Bush early last year, stated in a release that this "positions the Antitrust Division to address the challenges of the New Economy in the 21st Century while strengthening enforcement capability in traditional industries." See also, new organizational chart [PDF].
There will be five Deputy Assistant Attorneys General (DAAGs) for the following areas: Regulatory, Economic, Civil, Criminal, and International.
Regulatory. Hewitt Pate is the DAAG for the Regulatory area who was picked last year. He was previously an antitrust lawyer for the law firm of Hunton & Williams. He will preside over three sections: Network & Technology Section, Telecommunications & Media Section, and Transportation, Energy & Agriculture Section. The Network & Technology Section was previously named the Computers and Finance Section. It will now "focus on increasingly sophisticated high technology, networking, and intellectual property issues." The Telecommunications & Media Section was previously named the Telecommunications Task Force. The DOJ release states that "in this era of technology convergence this section's work extends beyond telecommunications and to reflect the permanent need for a section that concentrates on these industries". The third section is Transportation, Energy & Agriculture. The reorganization eliminates the Health Care Task Force.
Economic. Michael Katz is the DAAG for the Economic area; he was selected for this post last summer. From 1994 through 1996 he was Chief Economist at the FCC. More recently, he was a professor of economics and business at the University of California at Berkeley's Haas School. The Economic area includes three sections: Economic Litigation, Economic Regulation, and Competition Policy.
Civil. Deborah Herman, a former law partner of Charles James at Jones Day, is the DAAG for the Civil area. This area will include Litigation I Section, Litigation II Section, and Litigation III Section. Litigation I and II Sections are being created by splitting up the old Litigation II Section. Litigation III Section is the renamed Civil Task Force. The DOJ release states only that "Each of these sections will be responsible for the full range of civil enforcement -- including merger and non-merger matters -- in their assigned commodities."
Criminal. The former Litigation I Section will be renamed the National Criminal Enforcement Section. It is part of the Criminal area.
International. The International area contains just one section: Foreign Commerce.
Rep. Boucher Complains to RIAA about Copy Protection Technology
1/4. Rep. Rick Boucher (D-VA) sent a letter to Recording Industry Association of America (RIAA) P/CEO Hillary Rosen and IFPI Chairman Jay Berman regarding CD and DVD copy protection, and consumer rights under copyright law. He wrote that "record labels have begun releasing compact discs into the market which apparently have been designed to limit the ability of consumers to play the discs or record on personal computers and perhaps on other popular consumer products, such as DVD players, video game consoles, and even some CD players, for traditional fair-use purposes such as space shifting."
This, wrote Boucher, "may prevent or inhibit consumer home recording using recorders and media covered by the Audio Home Recording Act of 1992 (AHRA)."
The Audio Home Recording Act of 1992, Public Law 102-563, is codified in Chapter 10 of the Copyright Act. See, 17 U.S.C. § 1001, et seq. It was passed in response to the music industry's shift from the use of analog formats, such as vinyl records and audio tapes, to the digital format of CDs. The AHRA permits manufacturers to sell digital audio recording technology to consumers, who can then use it to copy for private non commercial use. In return, the AHRA sets up a royalty fund to compensate copyright owners for losses resulting from such use.
In particular, 17 U.S.C. § 1008 provides that "No action may be brought under this title alleging infringement of copyright based on the manufacture, importation, or distribution of a digital audio recording device, a digital audio recording medium, an analog recording device, or an analog recording medium, or based on the noncommercial use by a consumer of such a device or medium for making digital musical recordings or analog musical recordings." §§ 1003 - 1007 establish the associated royalty payment system.
Rep. Boucher's letter also propounds five interrogatories regarding copy protection technology. For example, he asks: "have any discs entered the U.S. market that may not be copied on a device or on media for which a royalty has been paid under the AHRA?"
Sen. Daschle Addresses Tech Issues
1/4. Sen. Tom Daschle (D-SD), the Senate Majority Leader, gave a speech on the economy in which he addressed several technology related issues. He advocated passage of legislation that would create tax credits for broadband service, grant the President trade promotion authority, make the R&D tax credit permanent, and double civilian R&D funding. He stated that "By embracing fiscal discipline, investing in people and technology, and opening up new markets abroad, we helped lay a foundation for a new growth economy."
Broadband Tax Credits. Sen. Daschle stated that "High speed, broadband Internet access has become an indispensable tool for businesses, schools, libraries, and hospitals. And access to this service is fast becoming the line between the haves and have nots in the information age. We should create tax credits, grants, and loans to make broadband service as universal tomorrow as telephone access is today." He did not reference any specific bills. However, Sen. Daschle is a sponsor of S 88, the Broadband Internet Access Act of 2001. This bill, which was introduced by Sen. Jay Rockefeller (D-WV) on January 22, 2001, is sponsored by 66 Senators.
Trade Promotion Authority. Sen. Daschle stated that he supports trade promotion authority, which is also called TPA and fast track. TPA gives the President authority to negotiate trade agreements which can only be voted up or down, but not amended, by the Congress. TPA strengthens the bargaining position of the President, and the U.S. Trade Representative (USTR), in trade negotiations with other nations.
Sen. Daschle stated that "we must open new markets and help workers who are hurt by trade. No country is better situated to thrive in this global information economy than the United States of America. That is why I support fast track and intend to bring it up for a vote in the full Senate early this year. In the Finance Committee, we passed a bill that addresses critical labor and environmental issues."
The House passed its version of the TPA bill, HR 3005, the Bipartisan Trade Promotion Authority Act of 2001, by a roll call vote of 215 to 214 on December 6, 2001. See, TLJ Daily E-Mail Alert No. 323.
However, Sen. Daschle added that "we need to recognize that not everyone benefits. Some workers are displaced. ... That is why, as part of our consideration of fast track, Senate Democrats are proposing to expand Trade Adjustment Assistance. We believe that we should expand assistance to all workers who are hurt by global production shifts."
R&D Tax Credit. He stated that "we should act to make the research and development tax credit permanent -- the sooner, the better." For decades, the Congress has passed a series of short term extensions of this tax credit. Sen. Daschle added that "the R&D tax credit is one of the most effective mechanisms to encourage innovation, increase business investment and keep the economy growing."
R&D Funding. Sen. Daschle stated that "Over the past century, federal investments in research have helped split the atom, sequence the genome, invent the microchip, the laser, and the Internet ... and helped create millions of jobs. In this century, nanotechnology, robotics, advanced energy technologies like fuel cells and solid state lighting, and biotechnologies like gene therapy, have the potential to do the same. We should double civilian R&D funding, including funding for the National Science Foundation. And we should fully fund the Advanced Technology Program -- to speed these innovations to market." He also said that "Expanded investments in areas such as physics, computer science, mathematics, and electrical engineering -- are essential to maintaining America's economic and technological leadership in the 21st century."
DOJ Recommends Approval of Verizon RI 271 Application
1/4. The Antitrust Division of the Department of Justice (DOJ) issued its Evaluation [PDF] recommending that the Federal Communications Commission (FCC) approve Verizon's Section 271 application to provide long distance services in the state of Rhode Island. It cited the availability of facilities based competition, especially cable telephony. However, it urged the FCC to examine Verizon's pricing of unbundled network elements (UNEs). See, DOJ release and Verizon release.
Verizon has already gained approval from the FCC under 47 U.S.C. § 271 to provide in region interLATA services in the states of Connecticut, Massachusetts, Pennsylvania, and New York. The DOJ concluded that "Verizon has generally succeeded in opening its local markets in Rhode Island to competition and recommends approval of Verizon’s application for Section 271 authority in Rhode Island, subject to the Commission satisfying itself as to the pricing issues ..."
The DOJ eleborated that "CLECs serve approximately 9.2 percent of all residential lines in Rhode Island. Most CLEC service to residential customers in Rhode Island is facilities based, including that provided over the cable television facilities of Cox Communications. Cox’s cable telephony service is available to between 75 and 95 percent of homes in the state. The wide-spread availability of facilities based competition, which is the type of competitive entry best able to ensure healthy ongoing competition and deregulation, counts heavily in favor of granting Verizon’s application." (Footnotes omitted.)
However, the DOJ added that "Other CLECs serve approximately 1.1 percent of all residential lines through resale, and less than one-tenth of 1 percent of such lines by means of the UNE-platform. ... While there is significantly less competition to serve customers by means of the UNE platform, the Department does not believe there are any material non-price obstacles to competition in Rhode Island." It concluded that the FCC should examine Verizon's UNE pricing in Rhode Island to determine "whether Verizon’s prices are cost-based."
10th Circuit Rules in § 252 Interconnection Case
1/4. The U.S. Court of Appeals (10thCir) issued its opinion in U.S. West v. Sprint, holding the CLECs, when negotiating interconnection agreements with ILECs, can opt into tariff provisions.
Background. U.S. West (now known as Qwest) is an incumbent local exchange carrier (ILEC) in the state of Colorado. Sprint and MCI, as competitive local exchange carriers (CLECs), sought entry to Qwest's market for local phone service. They each attempted unsuccessfully to negotiate interconnection agreements with Qwest. They each then filed petitions with the Colorado Public Utilities Commission (CPUC), which arbitrated the disputes. Qwest sought judicial review in the U.S. District Court (DColo), which vacated portions of the arbitrations orders. Sprint and MCI then brought the present appeal. The Appeals Court reversed and remanded.
Section 251. § 251, enacted as part of the Telecom Act of 1996, requires ILECs, including the Qwest, to open up their networks to their competitors. 47 U.S.C. § 251(a)(1) provides that "... Each telecommunications carrier has the duty - (1) to interconnect directly or indirectly with the facilities and equipment of other telecommunications carriers ..."
§ 251(c) further provides that ILECs have "The duty to provide, for the facilities and equipment of any requesting telecommunications carrier, interconnection with the local exchange carrier's network -- (A) for the transmission and routing of telephone exchange service and exchange access; (B) at any technically feasible point within the carrier's network; (C) that is at least equal in quality to that provided by the local exchange carrier to itself or to any subsidiary, affiliate, or any other party to which the carrier provides interconnection; and (D) on rates, terms, and conditions that are just, reasonable, and nondiscriminatory, in accordance with the terms and conditions of the agreement and the requirements of this section and section 252 ..."
A competitor can negotiate an agreement with an ILEC. Indeed, 251(c)(1) imposes a duty upon ILECs to negotiate in good faith. Alternatively, if negotiation fails, either party can petition the state commission that regulates local phone service to arbitrate.
Section 252. This section provides procedures for negotiation, arbitration, and approval of agreements. 47 U.S.C. § 252(i) provides that "A local exchange carrier shall make available any interconnection, service, or network element provided under an agreement approved under this section to which it is a party to any other requesting telecommunications carrier upon the same terms and conditions as those provided in the agreement."
CPUC. MCI and Sprint sought provisions in their interconnection agreements with Qwest giving them "most favored nation", or "pick and choose", clauses affording them the right to pick any clause from any other interconnection agreement either agreed to or arbitrated by any other carrier that interconnected with Qwest, and to purchase services from Qwest out of any effective tariffs filed by Qwest with the CPUC. The CPUC required Qwest to "make available any interconnection, service, or network element provided under an agreement approved under Section 252(i) of the Act to which it is a party to Sprint upon the same terms and conditions as those provided in the agreement."
District Court. Qwest filed complaints in the District Court challenging the CPUC's orders. The District Court consolidated these cases. In particular, Qwest challenged the right of CLECs to purchase services out of Qwest's Colorado tariffs. The District Court ruled in favor of Qwest. It held that neither § 252 nor the FCC's implementing regulation permit CLECs to opt into tariff provisions. It wrote that such a requirement "would eviscerate the provisions of 251 and 252 of the Act which require that the parties negotiate the terms of an interconnection agreement and arbitrate those terms that they are not able to agree to".
Appeals Court. The Tenth Circuit reversed. It held that the tariff opt-in provisions of the CPUC orders do not violate either § 252(i) or the FCC regulation. The Court remanded to the District Court with instructions to enter judgment in favor of Sprint and MCI.
People and Appointments
1/4. Joseph Nacchio, Ch/CEO of Qwest Communications, will chair the next term of the Federal Communications Commission's (FCC's) Network Reliability and Interoperability Council (NRIC). The group provides recommendations to the FCC and telecom industry regarding optimal reliability and interoperability of public telecommunications networks. In addition, in July of 2001, President Bush picked Nacchio to be Vice Chairman of the National Security Telecommunications Advisory Committee (NSTAC); he will be Chairman starting in March of 2002.The outgoing chair of the NRIC is James Crowe, P/CEO of Level 3 Communications.
Third Circuit Holds Evidence Obtained in Computer Search Inadmissable
1/4. The U.S. Court of Appeals (3rdCir) issued its split opinion in USA v. Zimmerman, reversing a conviction that was based upon evidence found in a computer.
Background. Several parents, students, and former students of the defendant, a high school coach, provided local police with information regarding improper sexual conduct by the coach. Police obtained a search warrant which covered his "Computer and any computer related or attached equipment, including but not limited to hard drives, keyboard, mouse(s), printers, terminals, display screens, modems and connectors, cables, magnetic and optical media storage devices, any sexual materials including photos, ..." Police conducted a search of his computer, and found child pormography.
District Court. A grand jury of the U.S. District Court (WDPenn) returned a one count indictment of Zimmerman alleging possession of child pormography in violation of 18 U.S.C. § 2252A(a)(5)(B). He filed a motion to suppress evidence obtained from the search of his computer. The District Court denied his motion. He entered a conditional plea of guilty, and filed this appeal.
Appeals Court. The Appeals Court reversed, 2-1, pursuant to the Fourth Amendment. Judge Barry opined that police had probable cause to search for adult pormography, but did not have fresh probably cause to search for child pormography; hence, evidence of child pormography is inadmissible under the exclusionary rule. Judge Alito wrote a dissent in which he argued that the good faith exception to the exclusionary rule should be applied in this case.
USPTO Revises Rules of Practice Re PCT Applications
1/4. The U.S. Patent and Trademark Office (USPTO) published a notice in the Federal Register that it has adopted a rule revising its rules of practice relating to applications filed under the Patent Cooperation Treaty (PCT).
The notice states that last year "the PCT Assembly adopted an amendment to the PCT Article 22 ... to change its time limit for entering the national stage of twenty months from the priority date of the PCT application to a time limit of thirty months from the priority date of the PCT application."
The notice continues that "With this amendment to PCT Article 22, the time limit under PCT Article 22 and the time limit under PCT Article 39 will be the same: thirty months from the priority date of the PCT application. Thus, the PCT will provide a single time period for national stage commencement for PCT applications, regardless of whether the applicant filed a Demand for an international preliminary examination. Therefore, applicants will no longer be required to file a Demand for an international preliminary examination under PCT Article 31 (and pay the international preliminary examination fees under 37 CFR 1.482) in order to delay commencement of the national stage until thirty months from the priority date. An applicant's decision whether to file a Demand under PCT Article 31 may be based upon whether the applicant wants an international preliminary examination report, and not upon whether the applicant wants to delay commencement of the national stage until thirty months from the priority date."
This rule is effective April 1, 2002. See, Federal Register, January 4, 2002, Vol. 67, No. 3, at Pages 520 - 524.
BXA Amends Control List Regarding Computer Electronics
1/3. The Bureau of Export Administration (BXA) published a notice in the Federal Register that it has amended its rules regarding export of dual use items. These are changes to the Commerce Control List (CCL), which identifies items subject to Department of Commerce export controls. There are numerous changes regarding microprocessors and other computer components and technologies. These rule changes are effective January 3, 2002. See, Federal Register, January 3, 2002, Vol. 67, No. 2, at Pages 457 - 478.
People and Appointments
1/3. The U.S. Telecom Association (USTA), a Washington DC based group that represents incumbent local exchange carriers, announced expanded roles for its three VPs who oversee legislative, policy and regulatory efforts. Michael Rubin will continue to lead the lobbying efforts, with the title of VP, Government Affairs and Chief Lobbyist. David Cohen will manage the newly created policy division as VP, Policy. Lawrence Sarjeant will oversee the law department as VP, Law and General Counsel. The USTA is lobbying for passage of HR 1542, the Tauzin Dingell bill. See, USTA release.
1/3. California Governor Gray Davis announced the appointment of Jesse Szeto as Assistant Secretary of the Division of Science, Technology and Innovation, of the Technology, Trade and Commerce Agency.
Cal App Upholds State Spam Statute Against Commerce Clause Challenge
1/2. The California Court of Appeal (1/2) issued its opinion [PDF] in Ferguson v. Friendfinders, holding that a California statute that regulates the use of unsolicited e-mail advertising does not violate the dormant commerce clause of the U.S. Constitution. The Court rejected the notion that any state regulation of the Internet violates the commerce clause.
Proceedings Below. Mark Ferguson, a California resident, filed a complaint in California Superior Court for San Francisco County against Friendfinders, Inc. and Conru Interactive, Inc., two California businesses located in Palo Alto, California, alleging that they sent unsolicited e-mail advertisements that did not comply with the requirements set forth in § 17538.4 of the California Business and Professions Code. He also alleged trespass, unfair business practices, and unlawful advertising practices. He sought class action status. Defendants filed a demurrer, which the trial court granted. The trial court held, among other things, that "California Business and Professions Code section 17538.4 unconstitutionally subjects interstate use of the Internet to inconsistent regulations, therefore violating the dormant Commerce Clause of the United States Constitution."
The Statute: Requirements for Unsolicited Advertising E-mail. § 17538.4 provides that no unsolicited advertising e-mail may be sent in California unless in meets certain enumerated requirements. Subsection (a) provides that there must be a return e-mail address for recipients to use to opt out of receiving further e-mail. Subsection (b) provides that there must be a notice at the top of the e-mail notifying the recipient of the right to opt out. Subsection (c) provides that once a recipient has notified the sender of his decision to opt out, the sender cannot send that person any further unsolicited e-mail.
The Statute: Limited to In State Mailers. § 17538.4 also contains restrictions on its scope. Subsection (d) provides, in part, that "this section shall apply when the unsolicited e-mailed documents are delivered to a California resident via an electronic mail service provider's service or equipment located in this state."
Dormant Commerce Clause. Article I, Section 8, of the Constitution provides that "The Congress shall have Power ... to regulate Commerce with foreign Nations, and among the several States ..." The dormant commerce clause is the judicial concept that the Constitution, by delegating certain authority to the Congress to regulate commerce, thereby bars the states from legislating on certain matters that affect interstate commerce, even in the absence of Congressional legislation. It is applied to block states from regulating in a way that materially burdens or discriminates against interstate commerce. See, Gibbons v. Ogden, 22 U.S. 1 (1824), and Cooley v. Board of Wardens, 53 U.S. 299 (1851). More recent treatments of the concept include Healy v. The Beer Institute, 491 U.S. 324 (1989), and CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69 (1987).
Court of Appeal. The Court of Appeal reversed the trial court. The Court reasoned that the dormant commerce clause entails a two part enquiry: first, whether the state regulation discriminates against interstate commerce, and second, whether the regulation imposes a burden on interstate commerce that is clearly excessive in relation to the local benefits.
The Court stated that the first part of the analysis invokes the strict scrutiny test. However, it noted that the statute equally affects in state and out of state e-mailers. Hence, there is no discrimination against out of state e-mailers. Moreover, the Court reasoned, since the statute only applies to e-mailers sent via a service provider or equipment located in California, it cannot be said to regulate commerce wholly outside of California.
The Court stated that the second part of the analysis involves a balancing test. It found that protecting its citizens from the harmful effects of unsolicited e-mail is a legitimate state interest, and the statute furthers that interest. On the other side of the scale, the Court found that regulating unsolicited e-mail does not burden interstate commerce. Rather, it benefits it by reducing fraud. Moreover, the requirements imposed upon the senders are slight. Hence, in applying the balancing test, the benefits of the statute outweigh the burdens.
Washington Statute. The state of Washington has also upheld its anti spam statute against a dormant commerce clause challenge. See, Commercial Electronic Mail Act, Chapter 19.190 Revised Code of Washington, at RCW 19.190.020. On October 29, 2001, the Supreme Court of the United States denied a petition for writ of certiorari in this case, Heckel v. Washington. The California Court of Appeal relied on this Washington precedent.
SEC Files Internet Stock Fraud Complaint
1/2. The Securities and Exchange Commission (SEC) filed a civil complaint with the U.S. District Court (NDCal) against Ned Sneiderman alleging violation of federal securities laws in connection with the posting of a fake press release on a Yahoo message board regarding a stock traded on the NASDAQ.
The complaint states that he "posted a phony press release on an Internet stock discussion board in which Extreme Networks ... a Santa Clara technology company, purported to announce a cash tender offer for Viasource Communications ... a small Florida technology company. The fabricated press release caused Viasource stock to double in price on volume nearly seven times that of the previous trading day. The price increase caused Viasource's market capitalization to be artificially inflated by nearly $4.7 million. ... Minutes before posting the false press release, Sneiderman had purchased shares of Viasource stock."
The complaint elaborates that Sneiderman used his home computer to post the phony release to the Yahoo stock discussion board for Viasource, and that he used the same computer to purchase shares of Viasource in his online brokerage account.
The complaint alleges violation of § 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. §§ 240.10b-5, thereunder. The complaint seeks injunctive and monetary relief. This is D.C. No. C-02-0001 JW. See, SEC release.
WTO AB Addresses U.S. Statute Affecting Confiscated Trademarks
1/2. A World Trade Organization (WTO) Appellate Body (AB) issued a report [108 pages in PDF] titled "United States -- Section 211 Omnibus Appropriations Act of 1998". The report found that portions of Section 211, which is directed at trademarks confiscated by Castro's Cuban communists, violates WTO rules. However, AB report found that WTO members may protect trademarks by establishing their own trademark ownership criteria that take into consideration uncompensated takings.
Section 211. The U.S. Congress enacted the Omnibus Appropriations Act of 1998 at the tail end of the 105th Congress. It was a massive bill containing appropriations for a wide range of agencies. It also contained a large number of non appropriations items, such as the original Internet Tax Freedom Act, and Section 211, which is the subject of this WTO AB report.
Section 211 provides, in part, that "No U.S. court shall recognize, enforce or otherwise validate any assertion of treaty rights by a designated national or its successor- in- interest under sections 44 (b) or (e) of the Trademark Act of 1946 (15 U.S.C. 1126 (b) or (e)) for a mark, trade name, or commercial name that is the same as or substantially similar to a mark, trade name, or commercial name that was used in connection with a business or assets that were confiscated unless the original owner of such mark, trade name, or commercial name, or the bona fide successor- in- interest has expressly consented." It further provides that "The term ``designated national´´ has the meaning given such term in section 515.305 of title 31, Code of Federal Regulations, as in effect on September 9, 1998, and includes a national of any foreign country who is a successor- in- interest to a designated national." This regulation, in turn, identifies post 1959 Cuba. Hence, the statute applies to trademarks confiscated by Castro's communist government after its take over of Cuba.
Havana Club Rum. The present proceedings resulted from a dispute between claimants to the use of the mark "Havana Club" in the U.S. in connection with the sale of rum. Bacardi Ltd, a Bermuda corporation, claims that it acquired the mark from the original owner. Pernod Ricard, a French company, claims that it acquired the mark from Castro's communist government.
Earlier Proceedings. The European Communities initiated a WTO proceeding in which they alleged that Section 211 is inconsistent with the obligations of the U.S. under the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement). A WTO panel ruled previously. Both sides appealed that ruling.
AB Report. The WTO Appellate Body wrote that Section 211 violates WTO rules. It is contrary to the national treatment and most favored nation obligations under WTO rules. However, the AB added that "this ruling is not a judgment on confiscation as that term is defined in Section 211. The validity of the expropriation of intellectual or any other property rights without compensation by a WTO Member within its own territory is not before us. Nor do we express any view, nor are we required to express any view in this appeal, on whether a Member of the WTO should, or should not, recognize in its own territory trademarks, trade names, or any other rights relating to any intellectual or other property rights that may have been expropriated or otherwise confiscated in other territories. ... However, where a WTO Member chooses not to recognize intellectual property rights in its own territory relating to a confiscation of rights in another territory, a measure resulting from and implementing that choice must, if it affects other WTO Members, comply with the TRIPS Agreement, by which all WTO Members are voluntarily bound. In such a measure, that WTO Member must accord "no less favourable treatment" to the nationals of all other WTO Members than it accords to its own nationals, and must grant to the nationals of all other WTO Members ``any advantage, favour, privilege or immunity´´ granted to any other WTO Member.
Both the USTR and EU issued press releases claiming victory. See, USTR release and EU release.
Bush Relaxes Computer Export Controls
1/2. President Bush announced that he is relaxing certain controls on the export of high performance computers and microprocessors. This change applies to "Tier 3 countries", which include Russia, Israel, India, Pakistan, and China. Currently, U.S. exporters are required to notify the Department of Commerce of proposed exports to Tier 3 countries of computers with the capacity to conduct at least 85,000 Millions of Theoretical Operations Per Second (MTOPS). President Bush raised this level to 190,000 MTOPS.
This change will become effective after the expiration of a 60 day notice period for the U.S. Congress. Bush wrote a letter to Congressional leading informing them of the change. He wrote, in part: "In accordance with the provisions of section 1211(d) of the National Defense Authorization Act for Fiscal Year 1998 (Public Law 105-85), I hereby notify you of my decision to establish a new level for the notification procedure for digital computers set forth in section 1211(a) of Public Law 105-85. The new level will be 190,000 millions of theoretical operations per second (MTOPS). In accordance with the provisions of section 1211(e), I hereby notify you of my decision to remove Latvia from the list of countries covered under section 1211(b)."
See also, White House release and statement by the Deputy Press Secretary. 
SEC Sues Software CEO for False Financial Statements
1/2. The SEC announced that it filed a civil complaint in U.S. District Court (DUtah) against Bruce Acacio alleging violation of federal securities laws. Acacio is the Ch/CEO of California Software Corporation, an Irvine, California, based software company. The complaint alleges, among other things, that Acacio provided false and misleading information in the offer and sale of securities, falsified the books and records of an issuer of securities, and provided false information to auditors in connection with the audit of financial statements. Acacio simultaneously consented to entry of an injunction enjoining him from future violations of federal securities laws; he also agreed to pay $30,000 in penalties. (See, SEC v. Acacio, U.S. District Court for the District of Utah, D.C. No. 2:01CV-1010ST.)
USTR Imposes Prohibitive Duties on Ukraine for Failure to Protect IPR
1/2. The Office of the United States Trade Representative (USTR) published a notice in the Federal Register that it has determined to impose prohibitive duties on certain imports from the Ukraine in order "to obtain the elimination of the acts, policies, and practices of the Government of Ukraine that result in the inadequate protection of intellectual property rights". This action was taken as a result of the Ukraine's failure "to use existing law enforcement authority to stop the ongoing unauthorized production of optical media products and failure to enact an optical media licensing regime ..." The 100% duties cover fuel oil, fertilizers, cooper, aluminum, and other products. The duties take effect on January 23, 2002. See, Federal Register, January 2, 2002, Vol. 67, No. 1, at Pages 120 - 121.
People and Appointments
1/2. Robert Borchardt will be the 2002 Chairman of the Board of Governors of the Electronic Industries Alliance (EIA). Borchardt is Ch/CEO/P of Recoton Corporation, a producer and marketer of consumer electronic accessories, home speakers and car audio products and video game products. See, EIA release.
1/2. Motorola announced that Edward Breen is P/CEO, effective January 1, 2002, and has been elected to the Board of Directors. He will report to Christopher Galvin, the Ch/CEO. See, Motorola release.
1/2. The law firm of Latham & Watkins named eight new partners, including Kenneth Schuler, Raymond Grochowski, and Howard Armstrong. Kenneth Schuler is based in the firm's Chicago office, where he litigates cases involving intellectual property rights. Raymond Grochowski is in the Communications Law Practice Group in the Washington DC office; he focuses on federal regulation of, and purchase, sale and financing of, broadcast stations, satellite earth and space stations and mobile communications services facilities and businesses; he also advises clients in Internet related matters. Howard Armstrong is in the Corporate Department and the Telecommunications and Wireless Practice Group in the San Diego office; he focuses on corporate finance, mergers and acquisitions, commercial transactions, and general company representation for public and private companies. See, L&W release.
1/2. The Venable law firm named five new partners, including Marcia Auberger, of the Washington DC office. She focuses on domestic and international trademark prosecution, including analysis of trademark searches, clearance of marks, preparation of trademark applications, responding to Trademark Office correspondence, maintenance of domestic and international trademark portfolios, and represents client before the Trademark Trial and Appeal Board. See, Venable release.
More News
1/2. The U.S. District Court (DC) issued an order [PDF] in the Microsoft antitrust case setting a hearing for January 7 on Microsoft's motion to amend the scheduling order (to delay the trial date). Nine of the state plaintiffs have not joined in the settlement agreement negotiated by Microsoft, the Department of Justice, and the other state plaintiffs. The hearing will be held at 9:15 AM before Judge Colleen Kotelly. This is Civil Action No. 98-1233 (CKK).
1/2. The U.S. Patent and Trademark Office (USPTO) announced that it "discovered a programming error that has resulted in Notices of Allowance mailed on or after November 13, 2001 and before December 23, 2001 being printed with a zero (0) in the patent term adjustment field, regardless of whether the application is entitled to patent term adjustment or not." See, USPTO notice.
1/2. The Senate Government Affairs Committee will hold a hearing regarding the collapse of Enron, and how it might be exploited for political purposes. Sen. Joe Lieberman (D-CT) is the Chairman of the full Committee. Sen. Carl Levin (D-MI), Chairman of its Permanent Subcommittee on Investigations, also announced that his subcommittee is investigating Enron. See, Levin release and statement.
1/2. The GAO released a report [PDF] titled "Purchase Cards: Control Weaknesses Leave Two Navy Units Vulnerable to Fraud and Abuse". It reviews the breakdown of internal controls over purchase card activity at two Navy units in San Diego, California -- the Space and Naval Warfare Systems Command (SPAWAR) Systems Center and the Navy Public Works Center. The report found that the two units are "vulnerable to fraudulent, improper, and abusive purchases and theft and misuse of government property" and recited instances of abuse. For example, the GAO could not verify that certain items, "including laptop computers, personal digital assistants (PDA) such as Palm Pilots, and digital cameras, were in the possession of the government." The GAO also found that PDAs were purchased "without documented government need", and that flat panel monitors were purchased at excessive prices. The report also sets out recommendations for more effective management control.
Taiwan Joins WTO
1/1. Taiwan became the 144th member of the World Trade Organization (WTO). Secretary of Commerce Don Evans stated in a release that "I congratulate Taiwan on this historic achievement. Taiwan's accession to the WTO will further open Taiwan's market to American exports of industrial goods and services, including key telecommunications and financial services sectors."

Go to News Briefs from December 26-31, 2001.