Harvey Pitt Resigns

11/5. Securities and Exchange Commission (SEC) Chairman Harvey Pitt announced his resignation.

Control of Senate Switches to Republicans

11/5. Control of the Senate will switch from the Democrats to the Republicans as a result of the November 5 general election. Democrats and their allies held a slim one vote majority before the election. The Republicans now have at least a 51 vote majority, with two seats still undecided.

The change of control will have major consequences across a wide range of policy areas. It will also affect confirmations, particularly of judges. However, the most important consequences for technology lie in the changes in in control of a few committees.

Chairmanship of the Senate Commerce Committee will switch from Sen. Ernest Hollings (D-SC) to Sen. John McCain (R-AZ).

Sen. Hollings (at right) has been the Senate's leading opponent of the Tauzin Dingell bill, and any other legislation to provide regulatory relief to the Bell companies. He has also sought to restrain FCC Chairman Michael Powell's market oriented approach to regulation.

Sen. Hollings is also the sponsor of S 2048, the Consumer Broadband and Digital Television Promotion Act, a bill to mandate copy protection technology. He is also a cosponsor of Sen. Joe Biden's (D-DE) bill, S 2395, the Anticounterfeiting Amendments of 2002.

Moreover, the Communications Subcommittee Chairmanship will likely return to Sen. Conrad Burns (R-MT).

Chairmanship of Senate Appropriations Committee will switch back from Sen. Daniel Inouye (D-HI) to Sen. Ted Stevens (R-AK). However, more important for technology will be the change of control of the Commerce Justice State and the Judiciary Subcommittee. Sen. Hollings also chairs this subcommittee. The Chairmanship may go to Sen. Judd Gregg (R-NH). Early this year, Sen. Hollings threatened to cut appropriations for the Federal Trade Commission (FTC) in order to pressure Charles James (head of the Antitrust Division) and Timothy Muris (Chairman of the FTC) to drop their plans to streamline the assignment of merger transactions.

The Chairmanship of the Senate Finance Committee will switch back from Sen. Max Baucus (D-MT), who won re-election, to Sen. Charles Grassley (R-IA). However, on technology related issues that fall within the jurisdiction of the Committee, the two have not diverged. Both, for example, worked for passage of trade promotion authority legislation.

The Chairmanship of the Senate Judiciary Committee will switch back from Sen. Patrick Leahy (D-VT) to Sen. Orrin Hatch (R-UT). This switch will have tremendous consequences in some non technology areas, such as confirmation of judges. The two also differ on several technology related homeland security issues.

However, there is no Democratic Republican split, or left right split, on the Senate (or House) Judiciary Committee on intellectual property issues.

The Judiciary Committee also has a subcommittee with jurisdiction over antitrust issues. However, while the Chairmanship will likely switch back from Sen. Herb Kohl (D-WI) to Sen. Mike DeWine (R-OH), there will be few consequences. The two see eye to eye on antitrust matters, and conduct subcommittee matters in joint and cooperative fashion.

A larger antitrust issue is who President Bush will appoint to replace Charles James as Assistant Attorney General in charge of the Department of Justice's Antitrust Division.

Several seats have opened on the Senate Judiciary Committee for Republicans. Sen. Strom Thurmond (R-SC) did not run for re-election. Rep. Lindsey Graham (R-SC) won his seat with 54% of the vote. He is an attorney, and is currently a member of the House Judiciary Committee. Hence, he is a likely candidate for appointment to the Committee. Another current member of the Committee, Sen. Robert Torricelli (D-NJ), dropped out of his race for re-election.

Several other races are noteworthy. Sen. Mike Enzi (R-WY), who leads the effort in the Senate to pass to pass the Export Administration Act, won re-election. Meanwhile, one of the leading opponents of this legislation, Sen. Fred Thompson (R-TN), did not seek re-election. Republican Lamar Alexander won his seat.

Two Democrats on the Commerce Committee lost their re-election bids. Sen. Jean Carnahan (D-MO) lost to Jim Talent. Sen. Max Cleland (D-GA) lost to Rep. Saxby Chambliss (R-GA).

Finally, former FCC Commissioner Gloria Tristani challenged Sen. Pete Domenici (R-NM) for a New Mexico Senate seat. She lost 65-35.

Republicans Retain Control of House

11/5. Republicans retained control of the House of Representatives. Moreover, no Representatives active in debates on technology related legislation lost in their re-election efforts on November 5.

Rep. Billy Tauzin (R-LA) and Rep. John Dingell (D-MI), the Chairman and ranking Democrat on the House Commerce Committee each easily won re-election. Rep. Tauzin won 87% of the vote in his district, while Rep. Dingell won 72%. Although, Rep. Dingell faced a serious primary challenge in August as a result of redistricting.

Rep. Fred Upton (R-MI) (69%) and Rep. Edward Markey (D-MA) (unopposed), the Chairman and ranking Democrat on the Telecommunications Subcommittee, both won easy re-election. Rep. Cliff Stearns (R-FL) (65%) and Rep. Adophus Towns (D-NY) (98%), the Chairman and ranking member of the Commerce, Trade, and Consumer Protection Subcommittee, both won handily.

Rep. James Sensenbrenner (R-WI) (86%) and Rep. John Conyers (D-MI) (83%), the Chairman and ranking Democrat on the House Judiciary Committee, both won.

Rep. Howard Coble (R-NC) and Rep. Howard Berman (D-CA), the Chairman and ranking Democrat on the Courts, Internet and Intellectual Property Subcommittee, both won. However, Rep. Coble cannot continue as Chairman, because he is term limited under Republican rules. Rep. Bob Goodlatte (R-VA) (unopposed) and Rep. Lamar Smith (R-TX) (73%) are the leading contenders for the Chairmanship. Rep. Smith has backed intellectual property protection and cyber security legislation recently. Rep. Goodlatte is one of the House's most active and knowledgeable members on technology related issues.

On the Democratic side, Rep. Berman will likely remain as ranking Democrat. He is a Southern Californian who is a committed defender of the intellectual property rights of the entertainment industry. However, if he were to decline the position, the ranking Democrat would likely be Rep. Rick Boucher (D-VA) (66%), who is highly knowledgeable on tech issues, and a leading proponent of fair use rights and narrowing the anti circumvention provisions of the DMCA.

The northern Virginia incumbents all won easily: Rep. Jim Moran (D-VA) (60%), Rep. Tom Davis (R-VA) (83%), and Rep. Frank Wolf (R-VA) (72%).

The Silicon Valley area incumbents also all won easily: Rep. Zoe Lofgren (D-CA) (67%), Rep. Anna Eshoo (D-CA) (68%), Rep. Mike Honda (D-CA) (65%), and Rep. Ellen Tauscher (D-CA) (75%).

Rep. George Gekas (R-PA) (49%), a senior member of the Judiciary Committee, narrowly lost his re-election bid. Rep. Connie Morella (R-MD) (47%), a senior member of the House Science Committee, also lost.

Rep. John Shimkus (R-IL) (55%) defeated Rep. Dave Phelps (D-IL) (45%). The two were thrown together by redistricting. Rep. Shimkus is a member of the Commerce Committee, and its Telecom Subcommittee. In the present Congress, he has pushed the Dot Kids bill.

Rep. Charles Pickering (R-MS) (64%) defeated Rep. Ronnie Shows (D-MS) (35%). Rep. Pickering is a member of the Commerce Committee, and its Telecom Subcommittee. He was a leading opponent of the Tauzin Dingell bill.

USTR Zoellick Writes Congress Re Trade Negotiations

11/5. U.S. Trade Representative (USTR) Robert Zoellick wrote a letter [PDF] to Sen. Robert Byrd (D-WV), the President Pro Tem of the Senate, and a substantially identical letter [PDF] to Rep. Denny Hastert (R-IL), the Speaker of the House, to notify the Congress of administration efforts to negotiate a free trade agreement with south African nations. He stated that the negotiations with the Southern African Custom Union (SACU) will cover the protection of intellectual property, promotion of electronic commerce, and increased access for telecommunications companies. He also wrote a second letter [PDF] to Sen. Byrd and Rep. Hastert regarding U.S. trade goals. This letter addressed IPR, e-commerce, telecommunications, antitrust, and the dispute settlement process.

He wrote that "the President intends to initiate negotiations for a free trade agreement (FTA) with the five member countries of the Southern African Customs Union (Botswana, Lesotho, Namibia, South Africa and Swaziland, hereinafter ``SACU´´) ..." (Parentheses in original.) See also, USTR release.

Intellectual Property. With respect to intellectual property, Zoellick (at right) wrote in his SACU letter that the U.S. will "Seek to establish standards that reflect a standard of protection similar to that found in U.S. law and that build on the foundations established in the WTO Agreement on Trade-Related Aspects of Intellectual Property (TRIPs Agreement) and other international intellectual property agreements, such as the World Intellectual Property Organization Copyright Treaty and Performances and Phonograms Treaty, and the Patent Cooperation Treaty."

He also stated that the U.S. will seek to "Establish commitments for SACU countries to strengthen significantly their domestic enforcement procedures, such as by ensuring that government agencies may initiate criminal proceedings on their own initiative and seize suspected pirated and counterfeit goods, equipment used to make or transmit these goods, and documentary evidence. Seek to strengthen measures in SACU countries that provide for compensation of right holders for infringements of intellectual property rights and to provide for criminal penalties under the laws of SACU countries that are sufficient to have a deterrent effect on piracy and counterfeiting."

He reiterated the same concepts in his broader trade letter.

E-Commerce. With respect to electronic commerce, Zoellick wrote in his SACU letter that the U.S. will "Seek to affirm that the SACU countries will allow goods and services to be delivered electronically on terms that promote the development and growth of electronic commerce" and "to ensure that the SACU countries do not apply customs duties in connection with digital products or unjustifiably discriminate among products delivered electronically."

In his broader trade letter, he added that the U.S. will "Seek to obtain greater market access for U.S. products and services delivered electronically, including a prohibition on the application of customs duties to electronic transmissions."

Telecommunications. Zoellick wrote in his SACU letter that the U.S. will "Pursue an ambitious approach to market access, including enhanced access for U.S. services firms to telecommunications and any other appropriate services sectors in SACU markets."

In his trade letter he wrote more broadly that the U.S. will "Pursue further commitments from WTO members to open their markets in virtually all service sectors, including professional services such as accounting, engineering, architecture, and legal services; computer and related services; advertising; telecommunications services; audiovisual services; express delivery services; construction services; wholesale, retail, and franchising distribution services; educational and training services; environmental services; energy services; financial services, including insurance, banking, securities, and other financial services; and tourism services."

Antitrust. Zoellick wrote in his trade letter that the U.S. will "Seek to ensure that work in the WTO on trade and competition policy plays a constructive role in furthering the development of a culture of competition among WTO members, such as through developing a peer review process to promote sound antitrust policies among members".

He also wrote that the U.S. will "Seek to ensure that work in the WTO on trade and competition policy does not undermine U.S. antitrust laws and the effective enforcement of those laws, and that U.S. antitrust enforcement decisions are not subject to WTO dispute settlement procedures."

Dispute Resolution. Finally, he wrote in his trade letter that he wants to make the "WTO dispute settlement procedures more transparent, effective, and fair." He did no specifically reference the FSC tax regime dispute with the EU.

The HTBC wrote in an ex parte communications disclosure [2 pages in PDF] that it argued that "the best way to reach universal adoption of broadband is strong facilities based broadband competition among cable modem, wireline broadband (xDSL/fiber), satellite and wireless alternatives." It added that the FCC "should refrain from imposing unbundling obligations on incumbent local exchange carriers' new, last mile broadband facilities, including fiber and DSL and successor technologies deployed on the customer side of the central office."

It added that "competitive entrants should continue to have access to core copper loops and be able to collocate their equipment in ILEC central offices."

The HTBC also wrote that it "has raised concerns about consumers' access to content and applications over the Internet and has asked the Commission to vigilantly monitor the cable and wireline markets to ensure basic principles of connectivity are maintained."

Present at the meeting were representatives of Texas Instruments, Catena Networks, Intel, Corning, the Telecommunications Industry Association, the ITIC, the National Association of Manufacturers.

PFF Releases Report Ranking States in Use of IT

11/4. The Progress & Freedom Foundation (PFF) released a report [62 pages in PDF] titled "The Digital State 2002: How State Governments Use Digital Technologies". The report ranks the fifty states according to how well their governments use, deploy and manage information technology.

The PFF used a questionaire to collect information from the states in eight areas. First, "The use of the Internet and Intranets to locate, file and store paperwork as well as for procurement and intra-governmental projects." Second, "The use of the Internet for tax information, forms and filing as well as for digital record keeping." Third, "The use of the Internet for program information, eligibility requirements and processing applications for administrative purposes. In addition, the security of access to client records was measured." Fourth, " The use of the Internet and two-way, digital multimedia applications for law enforcement, judicial and corrections officials as well as to provide public information."

Fifth, "Measures for online or digital access to, and promotion of, information about state government and the electoral process and the use of the Internet as an information management tool for the legislature." Sixth, "Measures of institutional arrangements for digital policy decision making and long-term infrastructure management." Seventh, "The use of digital technologies for education, including functions in the areas of administration, instruction and reporting." And eighth, "The use of geographic information systems and data -- in intra-governmental and in transportation policy -- as well as institutional arrangements for collecting and making GIS available to the public."

The PFF ranked states in each of these eight categories, and overall. The top ranked state was Arizona. The next nine states were Michigan, Washington, Illinois, Wisconsin, Virginia, Utah, Indiana, South Dakota, and Maryland. The report contains the overall ranking of only the top 25 states. California was not in the top 25.

It report was written by Kent Lassman of the PFF.

People and Appointments

11/4. James Carter was named Deputy Assistant Secretary of the Treasury for Policy Coordination. He was previously an Associate Director of the National Economic Council. Before that, he was a senior economist on the staff of Congress' Joint Economic Committee. He has also worked as an economic and budget advisor to former Sen. John Ashcroft (R-MO) and Republican National Committee (RNC) Chairman Haley Barbour. See, Treasury release.

President Signs Bill Containing Tech Related Provisions

11/2. President Bush signed HR 2215, the 21st Century Department of Justice Appropriations Authorization Act. See, White House release. This massive bill contains far more than just an authorization for appropriations of the Department of Justice. It contains many tech related provisions.

The bill amends the Copyright Act to facilitate distance learning. This is also known as the TEACH Act. It amends the Patent Act regarding inter partes reexamination, and other matters. It also includes the Madrid Protocol Implementation Act.

The bill also requires the DOJ to annually report certain information to the Congress regarding use of the Carnivore e-mail surveillance system. It also changes the procedure for serving certain search warrants upon ISPs. It also modifies the process for extending H1B visas for high tech workers.

See, stories titled "DOJ Authorization Bill Changes Procedure for Service of Search Warrants on ISPs", "DOJ Authorization Bill Includes Carnivore Reporting Provisions", and "DOJ Authorization Bill Modifies Extension Procedure for H1B Visas" in TLJ Daily E-Mail Alert No. 519, September 30, 2002.

District Court Approves Microsoft Settlement

11/1. The U.S. District Court (DC) released its rulings on the proposed settlement in the Microsoft cases, and the non-settling states requests for further remedies. The Court largely approved the proposed settlement, and rejected the requests for further remedies. The Court also issued a 22 page Executive Summary [PDF] of its rulings.

The District Court, Judge Colleen Kotelly presiding, issued its Order [2 pages PDF] and Memorandum Opinion [97 pages PDF] conditionally approving the proposed settlement reached by the Department of Justice (DOJ) and Microsoft. This is D.C. No. 98-1232. See also, Order [2 pages PDF] and Memorandum Opinion [101 PDF] approving the settlement as to the nine settling states. This is D.C. No. 98-1233. The two cases were consolidated shortly after filing in 1998.

Following trial, judgment, and partial reversal by the U.S. Court of Appeals (DCCir), the parties reached a settlement last November. They submitted a revised settlement agreement in February of this year. See, Second Revised Proposed Final Judgment, filed on February 27, 2002.

The Court wrote in its Order that pursuant to the Tunney Act, "with the exception of § VII of the proposed judgment ("SRPFJ"), entry of the SRPFJ as the final judgment is this action is in the public interest, as set forth in the accompanying Memorandum Opinion ..." The Court added that "in order to obtain final approval of the SRPFJ, Plaintiff and Microsoft shall submit to the Court a proposed amendment to § VII ... not later than November 8, 2002"

The Memorandum Opinion provides that the Court requires further amendment of the settlement regarding "retention of the Court's jurisdiction". § VII currently provides for retention of jurisdiction. The Court now requires that this be amended to give the Court authority "to take action sua sponte in conjunction with the enforcement of the decree". Sua sponte is Latin for "of one's self". In this context, it means that the Court can act on its own motion, without being prompted or requested by the parties.

The Memorandum Opinion continues that "The Court considers it imperative, in this unusually complex case, for the Court's retention of jurisdiction to be clearly articulated and broadly drawn. Such clarity and broad reservation of powers are necessary to ensure that the Court may require action of the parties when it deems appropriate and need not wait for the partes to file a motion before action is taken."

This would include "the power to sua sponte issue orders or directions regarding to the final judgment, including, but not limited to orders regarding the construction or carrying out of the final judgment, the enforcement of compliance therewith, and the punishment of any violation thereof."

The Court wrote, in conclusion, that "While the proposed final judgment, in general, is appropriately crafted to address the anticompetitive conduct, as well as conduct related thereto, the Court regards the document as laudable not for these traits alone, but for the clear, consistent, and coherent manner in which it accomplishes its task. Far from an amalgam of scattered rules and regulations pieced and patched together to restrict Microsoft's anticompetitive business conduct, the proposed final judgment adopts a clear and consistent philosophy such that the provisions form a tightly woven fabric. The proposed final judgment takes account of the theory of liability advanced by Plaintiffs, the actual liability imposed by the appellate court, the concerns of the Plaintiffs with regard to future technologies, and the relevant policy considerations. The product, although not precisely the judgment the Court would have crafted, with the exception of the reservation of jurisdiction, does not stray from the realm of the public interest."

The Court also released its Final Judgment [14 PDF] and Memorandum Opinion [344 PDF] regarding the requests for further remedies.

Attorney General John Ashcroft said in a release that the DOJ "is pleased with the court's decision approving the Department's settlement with Microsoft. That decision confirms that the Final Judgment furthers the public interest by fully and effectively addressing Microsoft's unlawful conduct and restoring the competitive conditions in the computer software industry."

Ashcroft continued that "The court's decision is a major victory for consumers and businesses who can immediately take advantage of the Final Judgment's provisions. The Final Judgment provides certainty and stability to the vital computer sector of our economy and creates an environment where companies will be encouraged to develop and deploy new middleware technologies with full confidence that their efforts will not be impeded by anticompetitive practices. In fact, Microsoft has already modified its licensing practices to permit computer manufacturers to substitute competing middleware products for those provided as part of its operating system, modified its new XP operating system, and begun to release important interfaces and protocols that will enable third-parties to develop products and services that will interoperate with Windows."

He added that the DOJ "is strongly committed to ensuring that Microsoft complies with the Final Judgment and will continue to closely monitor Microsoft's implementation of its terms."

Bill Gates spoke at a news conference on November 1. He stated that "We believe that today's ruling, largely affirming the settlement we reached with the Department of Justice and the nine states represents a fair resolution of this case. It's a major milestone. We thank the mediator, the federal government and the nine states that helped forge the settlement, and we appreciate the court's extensive work. This settlement puts new responsibilities on Microsoft, and we accept them. We recognize that we will be closely scrutinized by the government and our competitors. We will devote the time, energy and resources needed to meet these new rules. I am personally committed to full compliance." See, transcript.

Reactions to the Microsoft Rulings

11/1. Various entities and individuals offered their praise or criticism for the District Court's rulings in the Microsoft antitrust cases. The following is a sampling.

Jeffrey Eisenach and Thomas Lenard of the Progress & Freedom Foundation stated in a release that "Today’s decision threatens to shatter 20 years of broad consensus among antitrust scholars and jurists.  Until today, it was generally agreed that companies that possess market power were prohibited from engaging in a limited and well defined set of behaviors that harm consumers, slow innovation and restrict competition. Further, when such behaviors occurred, it was understood that the antitrust authorities and the courts would impose remedies designed to (a) restore competition, (b) deprive the violator of ill-gotten gains and (c) prevent similar conduct going forward. Indeed, these are precisely the principles embodied in the Appeals Court decision that set the stage, and which should have formed the basis for, today’s ruling."

Eisenach and Lenard continued that "In adopting the Justice Department’s proposed settlement, Judge Kollar Kotelly’s decision not only flaunts the guidance offered by the Court of Appeals, but eviscerates the modern antitrust consensus. In so doing, it signals to firms in every industry that it is permissible to engage in heretofore illegal conduct -- or, at the very least, that the gains from doing so are likely to exceed the costs, even if you get caught."

Jonathan Zuck of the Association for Competitive Technology (ACT) stated in a release that "The Department of Justice and these state attorneys general have fundamentally changed the way Microsoft has to do business, and consumers and the industry have already started to see the benefits. For the past year, Microsoft has been living up to this tough but fair settlement, which goes far beyond the Court of Appeals ruling. This case has hung like a dark cloud over the industry for four years: slowing investment, innovation and economic growth. We, like the majority of the industry, hope it is finally over."

Ken Wasch of the Software & Information Industry Association (SIIA) stated in a release that the SIIA " is disappointed in today's decisions by Judge Kollar Kotelly. We believe that she sorely overestimates the value of the Proposed Settlement. In our opinion, it will prove an ineffective remedy to Microsoft's anti-trust violations. Her ruling gives consumers and competitors little assurance that Microsoft will refrain from using its monopoly power to gain unfair market advantages, which ultimately hurt all consumers."

Wasch added that "The nine non-settling states should be thanked for their vision and foresight in declining to sign onto the weak settlement entered into a year ago by the U.S. Department of Justice, Microsoft and nine settling states. We hope that the non-settling states will consider an Appeal ..."

The Computer and Communications Industry Association (CCIA) issued a release in which it stated that "The decision by Judge Kollar Kotelly to not overturn the flimsy and inadequate remedy, which a newly elected and politically beholden Justice Department reached with Microsoft, is very disappointing and yet not totally surprising."

The CCIA continued that "Once the Justice Department, which started out as a diligent prosecutor of a lawbreaking monopolist, switched sides and became the virtual ally of the convicted monopolist, the dynamics of the case were transformed. The Judge, who missed hearing the trial evidence firsthand, decided to give great deference to the judgment of the Justice Department under the Tunney Act. That resulted in bestowing unwarranted credibility upon both Justice, and by association, Microsoft. The remedy therefore assumes a sincere change in behavior and attitude by Microsoft, but their actual current practices reveal a continuation of and expansion of monopoly abuse."

Virginia Court Affirms Denial of Motion to Quash Subpoena for AOL Records on Anonymous Poster

11/1. The Virginia Supreme Court issued its opinion [MS Word] in AOL v. Nam Tai Electronics, affirming a Virginia trial court order refusing an ISP's (AOL) motion to quash a subpoena duces tecum based upon an electronics company's (Nam Tai) California action against anonymous persons who allegedly published false and defamatory messages about it on a Yahoo message board. See also, opinion [TXT] without footnotes. Bottom line: AOL cannot protect the anonymity of its subscriber in this case. See, full story.

EPIC Report Criticizes P3P

11/1. The Electronic Privacy Information Center (EPIC) released a report [8 pages in PDF] titled "Why is P3P Not a PET?" It argues that the World Wide Web Consortium's (W3C) Platform for Privacy Preferences Project (P3P) is not a privacy enhancing technology (PET).

The EPIC report defines PETs as "protocols, standards, and tools that directly assist in protecting privacy, minimizing the collection of personally identifiable information, and when possible, eliminating the collection of personally identifiable information." (Footnotes omitted.)

It argues that "P3P fails as a privacy enhancing mechanism because P3P does not aim at protecting personal identity, does not aim at minimizing the collection of personally identifiable information, and is on a completely different trajectory than the one prescribed by the definition of PETs. P3P provides no genuine privacy protection: instead of being used to minimize the collection of personally identifiable information, P3P can easily be used to obtain data from consumers by facilitating the collection of personal information through the guise of notice and choice." (Footnotes omitted.)

The report was written by Ruchika Agrawal for the conference titled "W3C Workshop on the Future of P3P", to be held on November 12-13 at AOL in Dulles, Virginia.

GAO Reports on Federal Agency Transfer of Intellectual Property

11/1. The General Accounting Office (GAO) released a report [102 pages in PDF] titled "Intellectual Property: Federal Agency Efforts in Transferring and Reporting New Technology".

The 1980 Bayh Dole Act and the Technology Transfer Commercialization Act of 2000 (TTCA) require that the GAO issue a report to Congress on the implementation of these acts at least every 5 years. (The Bayh Dole Act was titled the "The Patent and Trademark Law Amendments Act"; it is Public Law No. 96-517; it is codified at 35 U.S.C. § 200, et seq. The TTCA was HR 209 in the 106th Congress; it is Public Law No. 106-404.)

The Bayh Dole Act provides that inventions created under government contracts and grants may become the property of the contractors and grantees. The TTCA pertains to the licensing of inventions created in federal facilities. It requires, among other things, that federal agencies with laboratories and technology transfer functions to provide the Office of Management and Budget (OMB) with reports on their technology transfer programs.

This GAO report provides "information on how federal agencies had identified, patented, and licensed inventions created in their own facilities during fiscal years 1997-2001." It addresses "(1) the extent to which the agencies complied with the [TTCA] requirement to submit reports on their technology transfer activities to OMB and the Department of Commerce at the time they submit their fiscal year 2003 budget requests and (2) what the agencies have done -- since the issuance of our 1999 report on the issue -- to improve compliance with reporting requirements under the Bayh Dole Act for inventions created under contracts and grants." (Brackets inserted by TLJ.)

This report states that "These acts generally have been considered a success, because the federal agencies and their funding recipients now can profit from their inventions and thus have a greater incentive to produce new technology. In addition, the technology created is more likely to be made available to those who can use it."

The report found that "Federal agencies did not fully comply with the requirement of the [TTCA] that they submit reports on their technology transfer activities to the [OMB] and the Department of Commerce ..." (Brackets added.) Moreover, it found that contractors and grantees are not complying with their reporting obligations under the Bayh Dole Act.

The report was prepared for Sen. Patrick Leahy (D-VT) and Sen. Orrin Hatch (R-UT), the Chairman and ranking Republican on the Senate Judiciary Committee, Sen. Ron Wyden (D-OR) and Sen. George Allen (R-VA), the Chairman and ranking Republican on the Senate Commerce Committee's Subcommittee on Subcommittee on Science, Technology, and Space, Rep. Howard Coble (R-NC) and Rep. Howard Berman (D-CA), the Chairman and ranking Democrat on the House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property, and Rep. Vernon Ehlers (R-MI) and Rep. James Barcia (D-MI), the Chairman and ranking Democrat on the House Science Committee's Subcommittee on the Environment, Technology, and Standards. The report was signed by John Stephenson, Director, Natural Resources and Environment, at the GAO.

There is also another GAO document [13 pages in PDF] titled "Intellectual Property: Industry and Agency Concerns Over Intellectual Property Rights". It was prepared as testimony for a hearing of the House Government Reform Committee's Subcommittee on Technology and Procurement Policy on May 10, 2002. It too took the position that "the framework for promoting and protecting intellectual property rights in the government has been considered a success." However, others at the hearing said otherwise.

Rep. Tom Davis (R-VA), who presided at the hearing, said in his opening statement that most leading information technology companies refuse to do research for the government because of intellectual property and red tape concerns.

He stated in his prepared testimony that "In an environment where private sector R&D spending accounts for almost three fourths of the total spent in the United States, the Government's role has changed to become a partner in innovation, rather than the sole driving force. Because IP right are the most valued assets of companies, the Government must ensure that its policies and procedures reflect this partnership for innovation."

Richard Carroll, of the Small Business Technology Coalition, said in his prepared testimony that the prevailing attitude of the government is "We paid for it. We own it." Carroll said that "for small high tech companies in particular, the government culture of ``we pay for it, we own it´´ has a chilling effect on their interest in innovating for the government. Understand, that these companies are the most likely to bring forth the innovations needed to transform our defense systems, and to meet the needs of homeland defense with rapid, innovative, and affordable solutions. These new ideas represent the heart of their company's assets, and their ability to offer strong competitive alternatives to the status quo is clearly predicated on some level of intellectual property protection. If they lose that intellectual property because the government provides it to their competitors, the very survival of the company is threatened." See, list of witnesses, with links to prepared testimony.

11/1. Jana Monroe was named Assistant Director of the Federal Bureau of Investigation (FBI) for the Cyber Division. She was previously Special Agent in Charge of the Los Angeles field office. She replaces Larry Mefford, who was named Assistant Director of the FBI's for the Counterterrorism Division. Mefford, in turn, replaces Pasquale D'Amuro, who was named Executive Assistant Director for Counterterrorism / Counterintelligence. All three are career FBI officials. See, FBI release.

More News

11/1. The U.S. Patent and Trademark Office (USPTO) announced that it has implemented an electronic bulk mailing system in cooperation with the U.S. Postal Service (USPS). Under this new Trademark Postal System the USPTO will send information to the USPS via the Internet. The USPS will then print, stamp and mail postcards containing the information.

11/1. Jonathan Rubin of the American Antitrust Institute published a paper titled "Why the EchoStar Hughes Merger Can't be Fixed".

Go to News from October 26-31, 2002.