|News from February
Senate Committee Holds Hearing on Broadband and Protecting
2/28. The Senate Commerce Committee
held a hearing titled "Protecting Content in a Digital Age -- Promoting
Broadband and the Digital Television Transition" at which it heard
different views from the copyright and technology industries regarding piracy of
Disney's Michael Eisner urged the "Congress to act to facilitate the
establishment of open and common standards for technological protection of
creative content in digital distribution."
In contrast, Intel's Leslie Vadasz stated
that "Any attempt to inject a regulatory process into the design of our
products will irreparably damage the high tech industry: it will substantially
retard innovation, investment in new technologies, and will reduce the
usefulness of our products to consumers." Similarly, Cisco's Andreas Bechtolsheim stated that
"The best way to protect content is through technology, not government.
Proven content protection technology exists today that does not require new
legislation for efficacy. Alternative technologies that would require new
legislation to be effective in our opinion are not technically sound because the
protection offered by the law can never be as strong as protection offered by
the strength of encryption and mathematics."
Sen. Ernest Hollings (D-SC), the
Chairman of the Committee, wrote in his opening
statement [PDF] that "With the exception of rural America and some
underserved areas, there is no broadband availability problem; we have a demand
problem. 80% can get it, only 10-12% take it. Most Americans don't want to pay
$50 a month for faster access to email. If more content were available online,
consumers would come."
"But there is almost no legal, high quality content available on the
Internet. Why? Because there is no single, open standard providing technological
protection to copyrighted products to give content owners the confidence to
place their premium content online. The same is true for digital television,
where piracy deters programmers from putting digital content over the
airwaves," said Sen. Hollings.
"America has had copyright law on the books since the Constitution. But in
an era when products are delivered digitally, the copyright laws mean less and
less. Absent strong technological protections layered on top of the copyright
laws, it is virtually impossible to enforce the law as it exists."
Hollings concluded that "Senator Stevens and I are planning legislation
that would place a deadline on affected industries to come together to solve
these problems in private sector talks. If they do, we will empower government
enforcement so that all consumer devices comply with the private sector's
solution. If they don't, the government's technologists and engineers, in
consultation with the private sector will step in."
See, prepared testimony of Michael Eisner
(Ch/CEO of Disney), Peter Chernin
(P/COO of News Corp.), Leslie Vadasz
(EVP of Intel), Andreas
Bechtolsheim (Cisco), James Meyer
(Thomson Multimedia), Robert Perry
(Mitsubishi Digital Electronics America), and Jack Valenti
(P/CEO of the Motion Picture Association of America).
FTC Sues Sellers of Non Existent Domain Names
2/28. The Federal Trade Commission (FTC) filed
a complaint [PDF] in U.S.
District Court (NDIll) against TLD Network Inc. alleging violation of
Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), in
connection with advertising and selling over the Internet non existent .usa
domain names. The District Court issued a Temporary Restraining Order
[PDF] against defendants, which also affects all domain name registrars.
The complaint states that "Since approximately October 2001, Defendants
have sold domain names ending in the suffix ``.usa.´´ ... Defendants send, or
authorize others to send on their behalf, unsolicited commercial email to
consumers, including consumers in the United States, advertising the
availability of their domain names. ... Defendants advertise their domain names
on Internet Web sites ... Defendants sell their domain names for $59 each. ...
Many consumers, including consumers in the United States, have purchased such
The complaint states that in reality, "In order for a domain name to be
readily accessible over the Internet, whether by its address or through indexing
by a search engine, the name must be recognized and registered under protocols
developed by the Internet Corporation for Assigned names and Numbers (ICANN).
ICANN currently does not recognize any of the domain names being sold by
Defendants, and has no plans to introduce domain names with the suffixes sold by
The TRO enjoins defendants from making false or misleading statements regarding
domain names. It also requires that "any party hosting any Web pages or Web
sites for Defendants ... Immediately take whatever steps may be necessary to
ensure that Web pages ... cannot be accessed by the public ..."
The TRO also requires "any other domain name registrar" to
"Immediately suspend the registration and prevent the transfer of"
domain names used by defendants to advertise their" non existent domain.
The TRO also freezes defendants' assets, enjoins the destruction of records, and
expedites discovery. It set a hearing for March 11.
The complaint, motion for TRO, and memorandum in support
[PDF] were filed on February 28. The FTC held a press conference on March 11 in
Washington DC to announce the action. See also, FTC release.
Howard Beales, III, Director of the FTC's Bureau of Consumer Protection, stated:
"They sent deceptive spam, and they sold worthless web addresses from their
Web sites. By closing down this operation we're sending a strong signal: We will
not tolerate deceptive spam."
House Committee Holds Hearing on Export Controls
2/28. The House Armed Services Committee
held a hearing on Export Administration Act of 2001.
The Senate version of the bill, S 149, is
sponsored by Sen. Mike Enzi (R-WY). It
would modernize export control laws. It would ease restraints on most dual use
products, such as computers and software, but increase penalties for violations.
The Bush Administration supports this version of the bill. The Senate passed it
by a vote of 85 to 14, five days before the terrorist attacks of September 11,
over the opposition of a small group of Senators who assert that it would harm
The House International
Relations Committee passed a much different version just before the August
2001 recess, HR 2581,
also titled the Export Administration Act of 2001.
Administration officials testified in favor of the Senate version of the bill.
The Committee heard testimony from J.D. Crouch (Assistant Secretary of Defense
for International Security Policy), James Jochum (Asst. Secretary of Commerce
for Export Administration), and Vann Van Diepen (Acting Deputy Assistant
Secretary of State).
Rep. Bob Stump (R-AZ), Chairman of the
Committee, said in his opening
statement that "reform is always in the eye of the beholder and the
concern over this bill is that it will open the floodgates and allow some of our
most sensitive technologies to flow into labs and arsenals of nations who have
consistently demonstrated hostility to United States' interests and could one
day become military adversaries".
See also, prepared testimony of Joseph
Christoff (GAO), Edmund
Rice (Coalition for Employment Through Exports), Gary
Milhollin (Wisconsin Project on Nuclear Arms Control).
Rep. Goodlatte Addresses Trip to Russia and EU
2/28. Rep. Bob Goodlatte (R-VA)
discussed the Congressional delegation trip to Russia and Europe last month to
promote the Internet, intellectual property rights, and e-commerce. See, transcript of media roundtable.
The delegation met with members of the Russian Duma, Czech Parliament, German
Bundestag, and European Parliament. The delegation, which traveled over the
Presidents' Day recess, was made up of Reps. Goodlatte, Rick Boucher (D-VA),
Lamar Smith (R-TX), John LaFalce (D-NY), Charles Taylor (R-NC), and James Walsh
Rep. Goodlatte stated that the delegation urged Russia not to mandate encryption
restraints, including mandatory key escrow or a key recovery system. The group
also urged Russia to enforce intellectual property rights. The Congressmen
discussed broadband deployment, privacy, safe harbor provisions, unsolicited
e-mail, and other issues with the Europeans.
Encryption in Russia. Rep. Goodlatte stated that "One of the issues
we encountered is something that we faced here about four or five years ago, and
that is the government's effort to control communications on the Internet, to
have a back door key into people's computer programs and their
communications." He said that "Even after September 11, with the PATRIOT Act,
the administration did not put forward a proposal for key escrow or key
recovery. That may in part be do to the fact that Attorney General Ashcroft
was the leading proponent of the legislation in the
Senate that I was promoting in the House,
which garnered a tremendous amount of support here and wound up resulting in the
administration doing an almost 180 degree reversal of their position on their
issue of government control of encryption. They basically backed away from it
and allowed U.S. companies to get into the international marketplace, sell their
strongly encrypted products in other countries around the world, because other
countries' products were being sold in the United States."
"Now we show up in Moscow and find companies like Oracle and Microsoft
confronting exactly the same problem there -- a government intending to move
forward on a key escrow or key recovery type of system," said Rep.
Goodlatte. "And, so we hope we made some progress in suggesting to them
that this type of system would not work, that it would have an effect of
hindering people's ability to use the Internet securely, willingness to use the
Internet, willingness of foreign companies to do business in Russia, and that
would hinder the overall growth of the Internet in Russia, which is starting to
IPR in Russia. Rep. Goodlatte said that the delegation also talked to
Russian officials about piracy of intellectual property. He stated that pirate
copies Microsoft's Windows XP sells on the streets of Moscow for $2.80.
"In Russia, it seems to be a problem with corruption to which the
government seems to turn its head. Sometimes it doesn't take steps. I know that
Microsoft, for example, had an office in Russia. It closed the office about a
year ago because of their frustration in terms of attempting to combat
Goodlatte stated that "we raised these issues with them, from the
standpoint not only of it being a concern of the U.S. companies, but really,
another hindrance to the ability of Russia to grow their economy in the
direction that I presume they want to grow it. They certainly expressed a lot of
interest in information technology and growing the Internet and so on. But, the
point that we made to them was that, unless you protect intellectual property,
people will not create intellectual property in Russia."
He added that "they also have some companies in their infancy creating
computer software, programming, and other types of things. But they don't have a
tradition of protecting intellectual property. These companies will never get
off the ground because their products will be ripped off by their own citizenry.
And, I think that concept was well received."
EU and Privacy. Rep. Goodlatte stated that "We basically agreed to
continue to work on the safe harbor provisions, because we are nowhere near
seeing the United States go for opt in, and I don't see them coming around and
changing what they have already put in place." He also pointed out that
"Ironically, U.S. companies that operate on the opt out basis have better
privacy disclosure rules -- studies have consistently shown this -- than the
European companies that are supposedly under these very strict directives."
Goodlatte concluded: "Basically, in one sentence, we don't want to take the
information out of the information age. If you can't understand who your
customer is, and then provide them with information that is useful to them, in
ways that the Internet and computers are far more capable of doing than direct
mail or television or telephone calls, or all of the other intrusive ways that
people have calling you up and offering you information."
3G Wireless. Rep. Goodlatte also addressed Third Generation wireless
services, which are intended to bring broadband Internet access to portable
devices. He said that the Europeans "actually got a jump on us by rolling
out 3G technology sooner than we did. But, because the government took a leading
role in picking the technology that was going to work, they are now finding that
it is not the best technology. And the U.S., which is behind, because we don't
have access to as much spectrum, seems to be developing better technology."
Goodlatte added that "the problem that we have with roll out on that is
government. Government, particularly, in this case, the Defense Department and
other governmental sectors, they control big chunks of wireless spectrum. ...
The Europeans had more spectrum available because they had less defense and
security uses and needs for it. But, because government is a little bit too much
dictating how they use it, they got a lead, but may be frittering the advantage
away. And, we may catch up with them, if we can free up that spectrum, to apply
this better technology."
FCC Sets Comment Deadlines in Broadband Framework NPRM
2/28. The Federal Communications Commission
(FCC) published a notice
in the Federal Register regarding its notice of proposed rule making (NPRM)
regarding the appropriate regulatory framework for broadband access to the
Internet over wireline facilities. The FCC announced this NPRM
[58 pages in PDF] at its February 14 meeting. This Federal Register notice
summarizes the NPRM and sets deadlines. Comments are due April 15, 2002. Reply
comments are due May 14, 2002.
This NPRM states that "we examine the appropriate classification for
wireline broadband Internet access service. As discussed more fully below, we
tentatively conclude that, as a matter of statutory interpretation, the
provision of wireline broadband Internet access service is an information
service. In addition, we tentatively conclude that when an entity provides
wireline broadband Internet access service over its own transmission facilities,
this service, too, is an information service under the Act. In addition, we
tentatively conclude that the transmission component of retail wireline
broadband Internet access service provided over an entity’s own facilities is
``telecommunications´´ and not a ``telecommunications service.´´ We seek
comment on these tentative conclusions and ask additional questions with regard
to the proper classification of wireline broadband Internet access
See, Federal Register, February 28, 2002, Vol. 67, No 40, at pages 9232 - 9242.
RIAA Defends CD Copy Protection
2/28. Hillary Rosen, P/CEO of the Recording
Industry Association of America (RIAA), wrote a letter [PDF] to Rep. Rick Boucher (D-VA) regarding CD
copy protection. She wrote that "record companies have both a legal right
and a responsibility to utilize technology to protect their companies' revenues
and jobs, and their artist's income and careers."
Rep. Boucher wrote a letter
to the RIAA and the International Federation of
the Phonographic Industry (IFPI)
on January 4, 2002, in which he asked, among other things, "What methods
have been used or are planned for use by your member companies to alter CD
content or ancillary encoding so as to constrain functions of personal computers
or other devices?" He also questioned whether CD copy protection violates
the Audio Home Recording Act (AHRA). See, 17 U.S.C. §§ 1001, et
CD Copy Protection Technology. Rosen provide little information about CD
copy protection methods. Rather, she defended it use. She wrote that "the
ease with which CDs can be copied has resulted in mass distribution for which
the creators get no reward. The evidence of the problem is everywhere. Internet
piracy and file swapping services continue to proliferate."
She added that "If technology can be used to pirate copyrighted content,
shouldn't technology likewise be used to protect content? Isn't it incumbent on
copyright owners to do whatever they can to protect the economic value of their
works and the jobs and careers of the hundreds of thousands of individuals who
create, produce, market and distribute music?"
She wrote little about copy protection technologies. She stated that "There
are a multitude of technologies available that offer some form of copy
protection for CDs. Each of them has different characteristics and performs
However, she continued that "Copy protection technologies are constantly
evolving ..." She also wrote that "Decisions on CD copy protection are
being made by record companies individually, on a company by company basis. ...
RIAA is not privy to their individual plans." Moreover, "The
particular methods by which each technology operates are proprietary to its
owner, and are confidential".
AHRA. Rep. Boucher wrote in his January 4 letter: "I am particularly
concerned that some of these technologies may prevent or inhibit consumer home
recording using recorders and media covered by the Audio Home Recording Act of
1992 (AHRA). As you know from your personal involvement in its drafting, the
AHRA clearly requires content owners to code their material appropriately to
implement a basic compromise: in return for the receipt of royalties on
compliant recorders and media, copyright owners may not preclude consumers from
making a first generation, digital to digital copy of an album on a compliant
device using royalty-paid media. Under the AHRA, any deliberate change to a CD
by a content owner that makes one generation of digital recording from the CD on
covered devices no longer possible would appear to violate the content owner’s
obligations under the statute."
Rosen rejected this argument in her letter of February 28. She wrote: "Your
letter suggests that the use of CD copy protection technology might somehow
violate the terms of the Audio Home Recording Act (``AHRA´´). In fact,
however, this is clearly not the case. The devices primarily used to rip CDs are
general purpose computer devices, which are explicitly excluded from the
coverage of the AHRA. Moreover, the AHRA was a legislative compromise reached
years before the development of peer to peer systems and the resultant massive
infringements they facilitate. The AHRA primarily imposes obligations on
manufacturers of ``digital audio recording devices,´´ ..."
Rosen added that "The only requirement imposed on distributors of recorded
music is that they encode accurately the information used by SCMS" (Serial
Copy Management System). "Nothing in the AHRA affirmatively requires that a
CD be copiable, let alone recordable in any particular device. Certainly, there
is not policy justification for ... some kind of broad affirmative right to copy
CDs," wrote Rosen.
2/28. Rep. Saxby Chambliss (R-GA),
Rep. Jane Harman (D-CA), and others
3825 [PDF], the Homeland Security Information Sharing Act, a bill to provide
for the sharing of homeland security information by federal intelligence and law
enforcement agencies with state and local entities. Rep. Chambliss and Rep.
Harman are the Chairman and ranking Democrat on the House Intelligence
Subcommittee on Terrorism and Homeland Security. The bill was referred to the
House Intelligence Committee, the House
Judiciary Committee, and the House
Government Reform Committee. See also, Harman
2/28. Rep. Bart Stupak (D-MI) and Rep. John LaFalce (D-NY) introduced HR
3829, a bill to repeal the provisions of the Private Securities Litigation
Reform Act (PSLRA) and the Securities Litigation Uniform Standards Act (SLUSA)
that limit private securities actions. The bill was referred to the House Financial Services
Committee and the House Judiciary
2/28. Sen. Patrick Leahy (D-VT) and Sen. Charles Grassley (R-IA) introduced S
1974, the FBI Reform Act of 2002. It was referred to the Senate Judiciary Committee. See,
Leahy and Grassley's summary.
People and Appointments
2/28. President Bush announced his intent to nominate Christopher Conner
and John Jones to be U.S. District Court Judges for the Middle District
of Pennsylvania. See, WH
2/28. Ronnie Chan will not seek re-election to the Board of Directors of Motorola at the May 6, 2002 annual
shareholders meeting. See, Motorola
2/28. Kevin Donovan was named Assistant Director of the Federal Bureau of Investigation (FBI) in charge
of the New York Office. He will replace Barry Mawn, who will retire in
March, 2002. See, FBI release.
2/28. The U.S. Telecom Association (USTA), a
group that represents the baby Bells, gave a "Lifetime Achievement
Award" to Rep. John Dingell
(D-MI) at a conference on February 28. On February 27, the House passed the
Tauzin Dingell bill, which would provide regulatory relief for the baby Bells.
See, USTA release.
2/28. Edward Reilly joined the New York office of the law firm of Morgan Lewis as a partner in its Business
and Finance Practice. He will focus on advising private equity and venture
capital fund investors and emerging growth companies. He was previously a
partner at the law firm Brobeck Phleger &
Harrison in New York. Before that, he was a partner at LeBoeuf Lamb Greene & MacRae. See, ML release.
2/28. The Office of the U.S. Trade Representative
(USTR) published a notice
in the Federal Register stating that it will hold a public hearing concerning
negotiation of a U.S. Singapore Free Trade Agreement on Monday, April 1,
2002. The USTR stated that the agreement is "expected to include provisions
on trade in services, investment, trade related aspects of intellectual property
rights, competition, government procurement, electronic commerce, trade related
environmental and labor matters, and other issues." Parties wishing to
testify orally at the hearings must provide written notification of their
intention by 12:00 NOON, Monday, March 18, 2002. See, Federal Register, February
28, 2002, Vol. 67, No. 40, at pages 9349 - 9351.
2/28. The U.S.
Court of Appeals (7thCir) issued its opinion
v. Kah Choon Chay, an appeal from the sentence in a case
involving criminal copyright infringement by auctioning counterfeit computer
games on eBay and other auction sites. Chay plead guilty in U.S.
District Court (WDWisc) to one count of trafficking in counterfeit documents
and packaging for computer programs in interstate commerce in violation of 18
U.S.C. § 2318(a). The District Court sentenced him to eight months of
incarceration, three years of supervised release, and $49,941.02 in restitution
to the owners of the copyrighted programs that he had pirated. The Appeals Court
2/28. The U.S. Chamber of Commerce and
the Privacy Leadership Initiative
(PLI) released a document
[57 pages in PDF] titled "Privacy Made Simple: A Do It Yourself Guide to
Privacy Management". See also, Chamber
2/28. The Senate Judiciary Committee
postponed its business meeting, which had been scheduled for Thursday morning,
2/28. The Commerce Department's National
Telecommunications and Information Administration (NTIA) published a notice that it is
seeking to fill the position of Associate Administrator for Spectrum Management.
This is a Senior Executive Service position that pays $125,972 - $138,200.
Applications are due by March 27. This position is the principal official of the
executive branch of government responsible for the management of the federal
government's use of the radio frequency spectrum.
House Passes Tauzin Dingell Bill
2/27. The House passed HR 1542,
the Internet Freedom and Broadband Deployment Act, also known as the Tauzin
Dingell bill, by a vote of 273 to 157. See, Roll
Call No. 45.
The Tauzin Dingell bill provides regulatory relief to the Baby Bell phone
companies. It provides that "Except to the extent that high speed data
service, Internet backbone service, and Internet access service are expressly
referred to in this Act, neither the Commission, nor any State, shall have
authority to regulate the rates, charges, terms, or conditions for, or entry
into the provision of, any high speed data service, Internet backbone service,
or Internet access service, or to regulate any network element to the extent it
is used in the provision of any such service; nor shall the Commission impose or
require the collection of any fees, taxes, charges, or tariffs upon such
It would also amend Section 251 to provide that "neither the Commission nor
any State shall require an incumbent local exchange carrier to provide unbundled
access to any network element for the provision of any high speed data
The House approved an amendment
in the nature of a substitute [PDF] offered by Rep. Billy Tauzin (R-LA) and Rep. James Sensenbrenner (R-WI),
as amended by an amendment
[PDF] offered by Rep. Fred Upton
(R-MI) and Rep. Gene Green (D-TX) that
increases the maximum penalties that may be imposed on phone companies for
violations of telecommunications law, and an amendment [PDF] offered by Rep. Steve Buyer (R-IN) and Rep. Adolphus Towns (D-NY) that provides
certain guarantees to competitive local exchange carriers.
The House rejected a broader amendment
[PDF] offered by Rep. Chris Cannon
(R-UT) and Rep. John Conyers (D-MI)
by a vote of 173 to 256. See, Roll
Call No. 44.
After two years' of hearings, committee mark ups, speeches, and media
advertising, the final passage was relatively brief. The House Rules Committee had limited the
matters which the House could consider to one amendment in the nature of a
substitute, and three further amendments. The Rules Committee also strictly
limited time for the debate. Supporters argued that the bill would spur
broadband deployment. Opponents argued that it would not. Supporters argued that
it would increase competition. Opponents argued that it would not. Finally, much
of the argument in the end focused on objections to the Rules Committee's
restrictions, and last minute procedural maneuvers to get around them.
Sen. Hollings Criticizes Tauzin Dingell Bill
2/27. While the House was debating the Tauzin Dingell bill, Sen. Ernest Hollings (D-SC) held a press
conference to criticize the bill. He called it "blasphemy, a total
fraud." He said that "it has nothing to do with broadband; it has
nothing to competition." Rather, he said it is an attempt by the Baby Bells
to extend their monopolies to long distance.
He also commented on the lobbying and political contributions by the Bells.
"It is a cash and carry government," said Sen. Hollings.
Sen. Hollings stated that one way to promote broadband would be to pass
legislation giving tax credits for deployment of broadband facilities in rural
"No one can point to a law that prevents broadband," added Hollings.
He said that most people could purchase broadband service, if they wanted it.
Rather, "it is a lack of demand" that is limiting broadband use. He
said that people do not want to pay $50 per month just to get their e-mail more
Sen. Hollings suggested that dealing with demand issues would promote broadband
use. He said that digital rights management must be addressed, so that content
providers will make more material available online. The Senate Commerce Committee, which
Sen. Hollings chairs, is holding a hearing on this topic on Thursday, February
28, at 9:30 AM.
Sen. Hollings also stated that the Congress must pass a privacy bill. He added
that "we are getting close, very close. I think we can get one out this
year." If the Senate were to pass a privacy bill, it would then have to
pass the House Commerce Committee,
which is chaired by Rep. Billy Tauzin
(R-LA) -- the blasphemer.
FRB Chair Greenspan Testifies on Economy
2/27. The House Financial
Services Committee held a hearing to receive the testimony of Alan Greenspan,
Chairman of the Federal Reserve Board,
on monetary policy. He stated in his prepared
testimony that "increasing signs have emerged that some of the forces
that have been restraining the economy over the past year are starting to
diminish and that activity is beginning to firm. ... One key consideration in
the assessment that the economy is close to a turning point is the behavior of
He added that "Inventories, especially among producers and purchasers of
high-tech products, did run to excess over the past year, as sales forecasts
went badly astray; alas, technology has not allowed us to see into the future
any more clearly than we could previously. But technology did facilitate the
quick recognition of the weakening in sales and backup of inventories. This
enabled producers to respond forcefully, as evidenced by output adjustments that
have resulted in the extraordinary rate of inventory liquidation we experienced
late last year."
FRB Vice Chair Addresses High Tech and Productivity
2/27. Roger Ferguson,
Vice Chairman of the Federal Reserve
Board, gave a speech
in Canton, Ohio, titled "A Review of Economic Developments in 2001 and the
Economic Outlook". He stated that "signs of economic recovery are
increasing". He also addressed the affect of information technology on
productivity and economic growth.
He stated that "Perhaps the most notable feature of our economy in recent
years, however, has been the acceleration in productivity." He continued
that "Productivity growth continued over the four quarters of 2001. That it
increased is impressive, given the historical tendency of productivity growth to
turn negative when the economy enters recession. This performance provides
additional evidence that the improvements in productivity growth that we have
witnessed since the mid 1990s have been largely structural and will persist for
"But the fundamental factor leading me to be cautiously optimistic that
much of the improvement is likely to be sustained is my outlook for the state of
technological advancement in the United States," said Ferguson.
"Booming investment in the 1990s was due importantly to steep declines in
prices of high tech equipment, which largely reflected rapid technical progress.
About 1/2 percentage point of the increase in productivity growth in the 1995-99
period can be attributed to this so called capital deepening. Although the
extraordinary pace of investment spending in those boom years was not
sustainable, I believe that technological progress will continue to drive down
the cost of information technology in the coming years, inducing still robust
growth of the capital stock. Moreover, businesses have reaffirmed their
intentions to improve productivity by substituting cost saving high tech capital
Senate Commerce Committee Holds Hearing on Digital Divide
2/27. The Senate Commerce Committee's
Subcommittee on Science, Technology and Space, held a hearing on S 414, the
NTIA Digital Network Technology Program Act, and a bill to remedy various
"digital divides". This bill would authorize $250 Million per year for
five years for a grant program for digital network technologies.
S 414 is sponsored by Sen. Max Cleland
(D-GA), Sen. Ernest Hollings (D-SC),
and ten other Senators. It would establish a grant program for educational
institutions to be administered by the Department of Commerce's National Telecommunications and Information
The entities that could receive grants under this bill include historically
black colleges and universities, Hispanic serving institutions, tribally
controlled colleges and universities, Alaska Native serving institutions, Native
Hawaiian serving institutions, and other institutions that have "enrolled a
substantial number of minority, low income students".
Sen. Ron Wyden (D-OR), the Chairman of
the Subcommittee, stated that "the debate about the digital divide is
whether this country is going to tolerate an information aristocracy or
not." He added that this is not a partisan issue.
Sen. George Allen (R-VA) concurred that
this should not be a partisan issue. He also used the hearing to promote S 488, the
Education Opportunity Tax Credit Act. This bill would provide a $1000 per child
tax credit for families purchasing "computer technology or equipment".
Sen. Allen is the sponsor.
The Subcommittee heard from two panels of witnesses, all of whom represent
groups that would receive grants provided by this bill. All expressed their
support for the bill. The panel of witnesses did not include a representative of
the NTIA. Sen. Byron Dorgan (D-ND) also
participated in the hearing.
Senate Judiciary Committee Holds Hearing on Sovereign Immunity
2/27. The Senate Judiciary Committee
held a hearing on sovereign immunity and the protection of intellectual
property. Sen. Patrick Leahy (D-VT), the
Chairman of the Committee, introduced S 1611,
the Intellectual Property Protection Restoration Act of 2001, on November 1,
The bill states that one of its purposes is to "help eliminate the unfair
commercial advantage that States and their instrumentalities now hold in the
Federal intellectual property system because of their ability to obtain
protection under the United States patent, copyright, and trademark laws while
remaining exempt from liability for infringing the rights of others".
Sen. Leahy also sought unsuccessfully to pass similar legislation in the last
Congress, while Sen. Orrin Hatch (R-UT)
was Chairman of the Senate Judiciary Committee. In addition, Rep. Howard Coble (R-NC) and Rep. Howard Berman (D-CA) introduced HR 3204,
the companion bill to S 1611 in the House. Reps. Coble and Berman are the
Chairman and ranking Democrat on the House
Judiciary Committee's Courts, Internet and Intellectual Property
Waiver of Sovereign Immunity. The purpose of these bills is to prevent
states from infringing patents, copyrights and trademarks. The bills would,
among other things, prevent states from recovering damages for infringement of
state owned intellectual property, unless they have first waive their 11th
Amendment sovereign immunity from suits against them for their infringement of
the intellectual property of others.
Abrogation under the 5th or 14th Amendments. The two bills would also
provide that states that violate intellectual property rights "in a manner
that deprives any person of property in violation of the fourteenth amendment of
the United States Constitution, shall be liable to the party injured in a civil
action in Federal court for compensation for the harm caused by such
violation." The bills contain similar language for violations which
constitute takings under the 5th Amendment.
Ex Parte Young Doctrine. Finally, these bills would codify the Ex parte
Young doctrine, which permits injunctions against state officials. See, 209 U.S.
Supreme Court Opinions. The problem addressed by these bills arose in
1996 when the Supreme Court of the U.S. ruled in Seminole Tribe of
Florida v. Florida that the Congress lacks authority under Article I of the
Constitution to abrogate the States' 11th Amendment immunity from suit in
federal courts. See also, the 1999 opinions of the Supreme Court in Florida Prepaid
Postsecondary Education Expense Board v. College Savings Bank (invalidating
the Patent and Plant Variety Protection Remedy Clarification Act) and College Savings
Bank v. Florida Prepaid Postsecondary Education Expense Board (invalidating
the Trademark Remedy Clarification Act).
Eleventh Amendment. "The Judicial power of the United States shall
not be construed to extend to any suit in law or equity, commenced or prosecuted
against one of the United States by Citizens of another State, or by Citizens or
Subjects of any Foreign State."
James Rogan, Director of
the U.S. Patent and Trademark Office (USPTO)
stated in his prepared
testimony at the February 27 hearing that "Intellectual property owners
view the current situation as inequitable. In their view, State institutions
profit from federally protected intellectual property and are permitted to bring
suit to protect their own intellectual property, but are shielded from monetary
damages as defendants. This inequity skews our system of intellectual property
protection, because the penalties in place to discourage infringement do not
apply to State entities. The Administration shares some of these concerns."
Rogan added that "The Commerce Department supports the objective of
ensuring that owners of intellectual property rights have a proper remedy when a
State infringes upon those intellectual property rights. As such, we believe
that a legislative answer to the questions raised by the Florida Prepaid cases
Rogan also pointed out that "Although a State would be required to waive
its sovereign immunity in infringement suits involving all types of federally
protected intellectual property in order to obtain patent, trademark, or
copyright damages, it is not clear under the current draft bill that a State
owner of a semiconductor chip design or plant variety would be required to waive
immunity in order to obtain damages for infringement of this intellectual
property." He suggesting adding appropriate language to address this
Marybeth Peters, the
Register of Copyrights, stated in her prepared testimony
that S 1611 is a "carefully balanced bill. It provides copyright
owners with effective tools to restore their ability to obtain appropriate
remedies for infringement by States while remaining, I believe, within Congress'
constitutional authority. The Copyright
Office supports enactment of S 1611."
Michael Kirk, Executive Director of the American
Intellectual Property Law Association, expressed support for S 1611 in his opening statement.
He also stated that the recent Supreme Court decisions render the U.S.
vulnerable to World Trade Organization (WTO)
determinations that it is in violation of the Agreement on Trade Related Aspects
of Intellectual Property Rights (TRIPS).
William Thro, an attorney for the state of Virginia, opposed S 1611 in his prepared testimony.
He said that it is bad policy, and unconstitutional. He asserted that "By
forcing the States to choose between waiving sovereign immunity and being able
to enforce their own intellectual property rights, it violates the doctrine of
unconstitutional conditions." He also asserted that "States are not
engaged in a widespread practice of abusing intellectual property rights".
Keith Shraad, of the National Information Consortium, testified regarding an
egregious violation of intellectual property rights in software by the state of
Georgia, and its abuse of sovereign immunity. See, prepared testimony.
See also, prepared
testimony of Paul Bender, a professor at the Arizona State University
College of Law, in support of S 1611.
Ways & Means Committee Holds Hearing on WTO Tax Rulings
2/27. The House Ways and Means
Committee held a hearing on the World Trade
Organization's (WTO) extraterritorial income decision.
The WTO has ruled that the U.S. Extraterritorial Income Exclusion Act (ETI), and
its predecessor, the Foreign Sales Corporation Act (FSC), constitute illegal
export subsidies. These tax regimes greatly benefit U.S. companies that export
their products, including high tech exporters such as Microsoft, Cisco and
Motorola. The U.S. unsuccessfully argued to the WTO that the U.S. has a global
tax system, while European nations have territorial tax systems, that this puts
U.S. exporters at a competitive advantage, and that tax regimes such as ETI and
FSC that exempt certain foreign source income from taxation merely level the
Rep. Bill Thomas (R-CA), the
Chairman of the Committee, stated in his opening statement, that "Four
times the WTO has sent the United States this same clear message -- our tax
system as it is currently constituted violates international trade rules.
In the opinion of the Chairman of this committee, the time has come for us to
listen. Our corporate tax structure is in need of major restructuring, not
another attempt at a short term fix. More fundamental reform is required."
Rep. Jim Ramstad (D-MN) stated in
statement that "we must begin to examine whether the foundations of our
worldwide tax system are sustainable if American businesses are to remain
competitive in our global economy. We already have too many examples of former
U.S. companies that now are headquartered overseas because of our burdensome
international tax system. The WTO's most recent decision and the resulting
sanctions facing our businesses is another wake-up call for reform."
Rep. Phil Crane (R-IL), Chairman of
the Trade Subcommittee, once again stated that the solution is to abolish the
corporate income tax altogether.
See, prepared testimony of witnesses: Peter
Davidson (General Counsel, United States Trade Representative), Barbara
Angus (Department of the Treasury), Gary
Hufbauer (Institute of International Economics), Peter
Merrill (Price Waterhouse), and Stephen
Shay (Ropes & Gray).
FCC Reports on Local Phone Competition
2/27. The Federal Communications Commission
(FCC) released a report
[21 pages in PDF] titled "Local Telephone Competition: Status as of June
30, 2001". It states that "Competitive local exchange carriers (CLECs)
reported 17.3 million (or 9.0%) of the approximately 192 million nationwide
switched access lines in service at the end of June 2001, compared to 14.9
million (or 7.7% of nationwide lines) at the end of the preceding year. This
represents a 16% growth in CLEC market size during the first six months of
2001." It also states that "The 72 providers of mobile wireless
telephone services that reported data as of June 30, 2001 served about 114
million subscribers." See also, FCC
release [2 pages in PDF].
EPIC Releases Report on Electronic Surveillance and the DOJ
2/27. The Electronic Privacy Information Center
(EPIC) released a report
[PDF] titled "Paying for Big Brother: A Review of the Proposed FY2003
Budget for the Department of Justice." It states that "Included in the
DOJ Budget are many new surveillance and electronic security programs."
The report warns that "the Budget documents released thus far lack adequate
transparency and level of detail concerning the Department’s programs that
would allow a fair public evaluation of their necessity, efficacy, and possible
risks to civil liberties and Constitutional values."
For example, the report states that "The Department Justice plans a large
scale Identification Systems Integration (ISI) that would greatly increase the
sharing and compilation of personal information held by federal agencies. The
FY2003 Budget requests a total increase in funding of $23.5 million. There is no
information in the budget materials provided to the public that indicate privacy
or security issues have been considered in the development of ISI."
Sen. Biden Addresses Digital Divides
2/27. Sen. Joe Biden (D-DE) spoke in the
Senate regarding digital divides. He stated that "the widening gap between
those Americans who use or have access to telecommunications technologies, like
computers and the Internet, and those who do not. Surprisingly, there are those
naysayers who suggest that the ``digital divide´´ does not exist, that it is a
myth or fabrication of consumer and civil rights advocates. ... No matter the
reason for these naysayers' doubt, the unequivocal answer to their question ``is
there really a digital divide´´ is a resounding ``YES.´´ "
He also stated that "I am shocked by the Bush administration's apparent
efforts to dismantle many programs designed to eliminate the inequality of
access to technology. These programs, including the popular E-Rate Program, have
a demonstrated record of success connecting roughly 1 million public school
classrooms and 13,000 community libraries to modern telecommunications
networks." See, Cong. Rec., Feb. 27, 2002, at page S1244.
FTC Releases Documents Pertaining to FTC-ATR Agreement on
2/27. The Federal Trade Commission (FTC)
published in its web site a collection of documents that pertain to the
controversial, and as yet, unimplemented, Memorandum of
Agreement [2.3 MB PDF file] negotiated by Timothy Muris, FTC Chairman, and Charles James, Assistant
Attorney General in the Department of Justice in charge of the Antitrust Division (ATR). See, FTC release.
See, ABA Antitrust Section Letter [PDF 128KB], Letter from the
Business Roundtable, the National Association of Manufacturers and the U.S.
Chamber of Commerce [PDF 128KB], Number of
Enforcement Actions and Substantial Investigations by DOJ and FTC, by Industry
FY1997 - Present [HTML], Clearance
Delays [HTML], Initial
Recommendations [HTML], and Letters
from former antitrust enforcement officials [PDF 774KB].
People and Appointments
2/27. The Securities and Exchange Commission
(SEC) named Carol Stacey Chief Accountant of the SEC's Division of
Corporation Finance. See, SEC
2/27. Rep. Greg Meeks (D-NY)
3809, the Economic Development and Technology Workforce Enhancement Act of
2002. This bill would amend the Internal Revenue Code with respect to small
issue bonds. It was referred to the House
Ways and Means Committee.
2/27. David Marchick joined the law firm of Covington
& Burling as a Special Counsel in the firm's Washington DC office. He
will focus on international trade and transportation issues. He previously
worked at Bid4Assets. Before that, he worked in several positions in the Clinton
administration. He was Deputy Assistant Secretary for Trade Policy at the State
Department, and Principal Deputy Assistant Secretary of Commerce for Trade
Development. He also held international trade policy positions at the White
House and the Office of the U.S. Trade Representative (USTR). See, CB release.
House Crime Subcommittee Approves Cyber Security Bill
2/26. The House Judiciary Committee's
Subcommittee on Crime amended and approved HR 3482, the
"Cyber Security Enhancement Act of 2001", by a unanimous voice vote.
Rep. Lamar Smith (R-TX), the
sponsor of the bill, and Chairman of the Subcommittee, offered an amendment in the
nature of a substitute. (This is a revised version of his amendment in the
nature of a substitute released on February 14.) Rep. Sheila Lee (D-TX) offered an amendment
to Rep. Smith's amendment in the nature of a substitute. It pertains to
sentencing guidelines. It was adopted by a unanimous voice vote. Then, Rep.
Smith's amendment, as amended, was adopted.
The bill contains provisions relating to sentencing guidelines for computer
hacking crimes, authority of Internet service providers (ISPs) and others to
voluntarily disclosure the content of information to law enforcement and other
government entities, appropriations for the National
Infrastructure Protection Center (NIPC), the Creation of an Office of
Science and Technology at the Department of
Justice (DOJ), and other topics. The bill further amends several sections of
the criminal code that were just recently amended by the USA PATRIOT Act, which
is also known as the anti terrorism bill.
Rep. Smith stated at the hearing that "America must protect our national
security, critical infrastructure, and economy from cyber attacks. Penalties and
law enforcement capabilities must be enhanced to prevent and deter such criminal
behavior. Until we secure our cyber infrastructure, a few keystrokes and an
Internet connection is all one needs to disable the economy or endanger lives. A
mouse can be just as dangerous as a bullet or a bomb."
The bill is supported by the DOJ and industry groups, such as the Business Software Alliance (BSA) and Information Technology Association of America (ITAA).
The Center for Democracy and Technology (CDT)
has taken the lead in raising concerns about the bill, particularly its Section
The two Democrats present for the mark up, Rep.
Bobby Scott (D-VA) and Rep.
Sheila Lee (D-TX), expressed their support for the bill, but also voiced
concerns which they hope to have addressed before the bill is marked up by the
full committee. Both addressed the "good faith" versus
"reasonably believes" standard in Section 102 of the bill. That is the
bill, as adopted, would permit an ISP (or others) to voluntarily disclose to
government entities the contents of communications if it "in good faith,
believes that an emergency involving danger of death or serious physical injury
to any person requires disclosure of the information without delay". This
expands the voluntary disclosure provision.
Rep. Scott also discussed, but did not offer, three different amendments.
He stated that he would like to work with other members to address the matters
contained in the amendments prior to the full committee mark up. Two of these
draft amendments pertain to voluntary disclosure. A third would amend 18 U.S.C.
§ 2515 regarding the prohibition of the use as evidence of intercepted
Rep. Bob Goodlatte (R-VA) did not
offer as an amendment a bill which he is sponsoring, HR 3716, the Online
Criminal Liability Standardization Act of 2002. It provides that "no
interactive computer service provider, or corporate officer of such provider,
shall be liable for an offense against the United States arising from such
provider’s transmitting, storing, distributing, or otherwise making available,
in the ordinary course of its business activities as an interactive computer
service provider, material provided by another person." The bill further
provides that "The liability limitation created by this section does not
apply if the defendant intended that the service be used in the commission of
the offense." However, afterwards he stated that he is still working
towards having a version of his bill included when the full committee marks up
The Crime Subcommittee held a hearing on this bill on February 12. It met to
mark up the bill on February 14, but lacked a quorum do to the beginning of the
Presidents' Day recess. The full Judiciary Committee may mark up the bill within
Summary of the Cyber Security Bill As Adopted by the Crime
2/26. The following is a cursory summary of the HR 3482, as adopted by the House
Crime Subcommittee on February 26. See, amendment in the
nature of a substitute, as amended by the Lee amendment.
Section 101 of the bill would require the U.S.
Sentencing Commission to amend the federal sentencing guidelines with
respect to violations of 18 U.S.C. § 1030,
which pertains to crimes involving intentionally accessing a computer without
authorization, or in excess of authorized access. Rep. Lee offered an amendment
to Rep. Smith's amendment in the nature of a substitute, which replaces the
entirety of Section 101. It was adopted by a unanimous voice vote.
Section 102 of the bill, which is the most controversial item, would
amend 18 U.S.C.
§ 2702(b), regarding voluntary disclosure of the contents of
communications. Currently, the statute provides that "A person or
entity may divulge the contents of a communication ... (6) to a law enforcement
agency ... (C) if the provider reasonably believes that an emergency involving
immediate danger of death or serious physical injury to any person requires
disclosure of the information without delay." The bill would allow the
disclosure "to a governmental entity, if the provider, in good faith,
believes that an emergency involving danger of death or serious physical injury
to any person requires disclosure of the information without delay."
Hence, the bill would lower the standard that ISPs and others must meet before
they voluntarily release information -- from "reasonably believes" to
"good faith". It also removes the immediacy requirement. It also
expands the set of entities to which information can be released -- from
"law enforcement agency" to "governmental entity".
Section 103 provides, in full, that "Section 2520(d)(3) of title 18,
United States Code, is amended by inserting ‘‘or 2511(2)(i)’’ after
‘‘2511(3)’’." This amends the computer tresspasser provision
of the recently enacted USA PATRIOT Act to allow providers to rely on the good
Section 104 of the bill would authorize the appropriation of
$125,000,000 for the FBI's National
Infrastructure Protection Center (NIPC) for fiscal year 2003. This is up
from $57,500,000 in the original version of the bill.
Section 105 of the bill would amend 18 U.S.C. § 2512,
which pertains to the advertising of certain illegal devices. The statute
prohibits the advertising of "any electronic, mechanical, or other device,
knowing or having reason to know that the design of such device renders it
primarily useful for the purpose of the surreptitious interception of wire,
oral, or electronic communications." Section 105 of the bill would
specifically include advertising on the Internet.
Section 106 of the bill would amend 18 U.S.C. §
1030(c), which pertains to punishment of crimes involving intentionally
accessing a computer without authorization or in excess of authorized
access. For example, the bill would increase the maximum penalty to life
imprisonment for crimes where the "offender knowingly or recklessly causes
or attempts to cause death".
Section 107 of the bill would ensure that providers of communications
remain covered under 18 U.S.C. § 2703(e), a "no cause of action
provision," which protects providers from law suits when they legally
assist law enforcement with an investigation under the new emergency disclosure
exception created in the USA PATRIOT Act.
Section 108 of the bill would amend 18 U.S.C. § 3125, regarding emergency
use of pen registers and trap and trace (PRTT) devices. Currently, under 18
U.S.C. § 3125, law enforcement authorities may use PRTT devices for 48 hours in
certain emergency situations, while court authority is being sought. Section 108
would expand the list of situations to include "an immediate threat to a
national security interest" and "an ongoing attack on a protected
computer that constitutes a crime punishable by a term of imprisonment greater
than one year".
Section 109 of the bill would raise penalties for illegally intercepting
cell phone conversations, and increase penalties for unlawful access to
Sections 201 through 206 of the bill pertain to the creation of an Office
of Science and Technology at the Department of Justice.
House Rules Committee Defines Terms of Debate on Tauzin
2/26. The House Rules Committee
adopted a rule for consideration of HR 1542, the Tauzin
Dingell bill. The House is scheduled to debate and vote on the bill on
Wednesday and Thursday, February 27-28.
The Rules Committee determined that the House will not consider either the
version of the bill reported by the House
Commerce Committee, or that reported unfavorably by the House Judiciary Committee. Instead,
the House will consider an amendment in the nature of a
substitute [PDF] offered by Rep.
Billy Tauzin (R-LA) and Rep.
James Sensenbrenner (R-WI). They are the Chairmen of the Commerce Committee
and Judiciary Committee, respectively.
The Rules Committee also determined that only three amendments may be offered.
Moreover, they must be offered in the order specified by the Rules Committee;
and, they cannot be further amended.
The first amendment [PDF]
is offered by Rep. Fred Upton (R-MI)
and Rep. Gene Green (D-TX). It would
increase the maximum penalties that may be imposed on phone companies for
violations of telecommunications law.
The second amendment [PDF]
is offered by Rep. Chris Cannon
(R-UT) and Rep. John Conyers (D-MI).
It provides numerous line by line changes. It provides that nothing in the
Tauzin Dingell bill "shall restrict or affect in any way the application
and enforcement of the Federal and State rules in effect on the date of
enactment of such Act relating to the rates, charges, terms, and conditions for
the purchasing or leasing of telecommunications services and network elements by
competitive telecommunications carriers." It also provides that the bill
"shall not restrict or affect in any way -- the authority of the Commission
to adopt regulations to prohibit unsolicited commercial e-mail messages",
or to adopt regulations regarding customer proprietary network information (CPNI),
pormography, or access by persons with disabilities.
The third amendment [PDF]
is offered by Rep. Steve Buyer (R-IN)
and Rep. Adolphus Towns (D-NY). It is
a substitute amendment to the Cannon Conyers amendment. Reps. Buyer and Towns
describe it as follows: "Guarantees that CLECs have access to customers
served by Bell company high speed networks under FCC -- regulated rates, terms,
and conditions. Preserves rules governing CLECs access to Bell facilities,
including a rule that permits CLECs to "line share" on Bell copper
facilities exclusively for the purpose of providing high speed Internet service.
Requires Bell companies to allow CLECs to connect their own high speed Internet
facilities to Bell services and equipment."
Tauzin Sensenbrenner Amendment
2/26. The amendment in the nature of a substitute offered by Rep. Billy Tauzin (R-LA) and Rep. James Sensenbrenner (R-WI)
would provide regulatory relief to the Baby Bell phone companies with respect to
high speed data services.
It provides that "Except to the extent that high speed data service,
Internet backbone service, and Internet access service are expressly referred to
in this Act, neither the Commission, nor any State, shall have authority to
regulate the rates, charges, terms, or conditions for, or entry into the
provision of, any high speed data service, Internet backbone service, or
Internet access service, or to regulate any network element to the extent it is
used in the provision of any such service; nor shall the Commission impose or
require the collection of any fees, taxes, charges, or tariffs upon such
It would also amend Section 251 to provide that "neither the Commission nor
any State shall require an incumbent local exchange carrier to provide unbundled
access to any network element for the provision of any high speed data
Section 9 of the amendment pertains to antitrust law. It provides that
"Section 601(b) of the Telecommunications Act of 1996 (Public Law 104-104;
110 Stat. 143) is amended by adding at the end the following new paragraph:
``(4) CONTINUING OPERATION OF THE ANTITRUST LAWS.—Paragraph (1) shall be
interpreted to mean that the antitrust laws are -- (A) not repealed by, (B) not
precluded by, (C) not diminished by, and (D) not incompatible with, the
Communications Act of 1934, this Act, or any law amended by either such Act.´´
Sen. Hollings Denounces Tauzin Dingell Bill
2/26. If the Tauzin Dingell bill were to pass the House, it would still face
strong opposition in the Senate. For example, Sen. Ernest Hollings (D-SC), the Chairman
of the Senate Commerce Committee,
which has jurisdiction over the bill, gave a speech in the
Senate on Monday, February 25, in which he called the bill
Sen. Hollings stated that "the communications bill by Congressmen Tauzin
and Dingell that the House will vote on this week is blasphemy. Hailed as a way
to enhance competition, it eliminates it. Touted as a way to enhance broadband
communications, it merely allows the Bell companies to extend their local
monopoly into broadband."
Senators Kohl & DeWine to Hold Hearings on Cable and
2/26. The Senate Judiciary Committee's
Subcommittee on Antitrust, Competition, and Business and Consumer Rights
announced that it will hold a pair of hearings on communications related
mergers. The first hearing, scheduled for March 6, is titled "Dominance in
the Sky: Cable Competition and the Echostar Direct TV Merger". The second
hearing, scheduled for April 10, is titled "Dominance on the Ground: Cable
Competition and the ATT Comcast Merger". Sen.
Herb Kohl (D-WI) will preside. Sen. Mike
DeWine (R-OH) is the ranking Republican on the Subcommittee.
AG Ashcroft Testifies on DOJ Budget
2/26. The Senate
Appropriations Subcommittee's Subcommittee on Commerce, Justice, State, and
the Judiciary held a hearing regarding the Department
of Justice (DOJ) budget
request for Fiscal Year 2003. Attorney General John Ashcroft testified.
Ashcroft said in his prepared
statement that "For information technology critical to the FBI's
efforts to combat the threat of terrorism, our total budget request for the FBI
includes an increase of $109.4 million to support several new and ongoing
projects. These resources will support projects such as the FBI's efforts to
scan and digitally store 5 million documents related to terrorist groups and
organizations, data management and warehousing, collaborative capabilities,
information technology support for Legal Attaches, continuity of operations for
FBI Headquarters and offsite facilities, state of the art video teleconferencing
capabilities and increased staffing and funding to support FBI mainframe data
center upgrades. Funding is also sought to perform necessary maintenance on
enterprise wide legacy systems, applications and the Trilogy network."
Electronic Surveillance. He stated that the budget requests "$61.8
million in additional funding to enhance the FBI's surveillance capability to
collect evidence and intelligence. These resources will enhance both physical
and electronic surveillance capabilities and enable automated sharing of
information collected as electronic surveillance intelligence and/or evidentiary
USAO IP Telephony. "Our budget requests an additional $11 million to
complete the third and final phase of the overall telecommunications convergence
initiative in United States Attorneys Offices throughout the Nation:
implementing Internet Protocol telephony. This convergence will enable the U.S.
Attorneys to encrypt all transmissions, share resources and use
telecommunications bandwidth more effectively, and reduce overall operating and
maintenance by establishing a common, standardized telecommunications
Internet Crimes Against Children. Ashcroft also stated that "Our
budget also seeks an increase of $6.1 million to expand the Internet Crimes
Against Children Task Force Program by establishing a regional task force in at
least 40 states and expanding capacity building activities through research,
training and technical assistance."
Senate Banking Committee Holds Hearing on Financial Reporting
2/26. The Senate Banking Committee
held a hearing to examine accounting and investor protection issues, focusing on
proposals for change relating to financial reporting by public companies,
accounting standards, and oversight of the accounting profession. See, prepared
statements of witnesses: Walter
Schuetze (SEC Chief Accountant, 1992-95), Michael Sutton
(SEC Chief Accountant, 1995-98), Lynn Turner
(SEC Chief Accountant, 1998-2001), and Dennis
Beresford (Chairman, Financial Accounting Standards Board, 1987-97).
Lynn Turner stated that "The SEC also needs to be provided with the
resources to acquire technology that can aid in the electronic screening of
filings for potential issues and unusual trends in financial performance. SEC
Chairman has indicated he wishes to hire a highly qualified Chief Information
Officer. This is long overdue and will require additional funds. But new and
enhanced technologies can be a powerful, efficient and effective tool in
identifying problems at an earlier date."
WIPO Reports on Cybersquatting and Dispute Resolution
2/26. The World Intellectual Property
Organization (WIPO) reported that the total number of cybersquatting cases
received by the WIPO grew by "100% in the last quarter of the year.
Moreover, it is anticipated that the internationalization of domain names will
also create new opportunities for cybersquatters as it becomes possible to
register domain names in non-ASCII characters such as Chinese."
The WIPO also reported that "In 2001, the total number of cases filed with
WIPO under the Uniform Dispute Respolution Policy (UDRP), the dispute policy for
the .com, .net and .org categories, reached 1,506 compared with 1,841 in 2000.
This suggests that an expedited on-line dispute resolution service has been
effective in dissuading Internet pirates from hijacking names." See, WIPO release.
People and Appointments
2/26. The Federal Communications Commission's (FCC) Common Carrier Bureau (CCB) named three
counsel to the Bureau Chief, Dorothy Attwood: Scott Bermann, Jessica
Rosenworcel, and Christopher Libertelli. Bergmann will be a Legal
Counsel for local competition, broadband deployment and numbering issues. He has
been an attorney advisor in the Industry Analysis Division of the CCB since
1996. Rosenworcel will be a Legal Counsel for universal service and broadband
issues. She has been an Attorney Advisor in the Policy Division of the CCB since
1999. Before that, she was an associate with the law firm of Drinker Biddle & Reath. Libertelli will be a
Special Counsel to the Bureau Chief for Competition Policy; he will coordinate
and advance competition policy proceedings. He has
been a Legal Counsel to the Bureau Chief since last summer. He previously worked
as an associate in the Washington DC office of the law firm of Dow Lohnes & Albertson. See, FCC
2/26. Rex Heinke joined the Los Angeles office of the law firm of Akin
Gump as a litigation partner. He focuses on intellectual property, First
Amendment, and entertainment and media law. He was the lead attorney for the Los
Angeles Times and Washington Post in the case LA Times v. Free Republic, a case
involving copyright infringement by a political discussion web site.
2/26. Novell named Christopher Stone
to the newly created position of Vice Chairman. See, Novell
2/26. The Senate confirmed Robert Blackburn to be a U.S. District Court
Judge for the District of Colorado, and Cindy Jorgenson to be a U.S.
District Court Judge for the District of Arizona.
2/26. World Trade Organization (WTO) Director
General Mike Moore gave a speech titled
"Globalisation: the Impact of the Doha Development Agenda on the Free
Market Process" to a U.S. Chamber of Commerce meeting in Florida.
2/26. The California
Court of Appeal (1/1) issued its opinion [PDF]
Marine Insurance Services v. Gateway Freight Services, a
subrogation action involving air carrier liability. This case arises out of the
loss of a shipment of hard disk drives from Malaysia to San Francisco via China
Airlines. The Court of Appeal affirmed the Superior Court's dismissal of the
Go to News Briefs from Febuary 21-25,