Supreme Court Upholds CTEA in Eldred v. Ashcroft

1/15. The Supreme Court issued its opinion [89 pages in PDF] in Eldred v. Ashcroft, upholding the constitutionality of the Copyright Term Extension Act, which retroactively extended the maximum duration of copyrights. Justice Ruth Ginsburg wrote the opinion of the Court, in which Kennedy, O'Connor, Rehnquist, Scalia, Souter, and Thomas joined. Both Breyer and Stevens wrote dissenting opinions.

Justice Ginsburg wrote that the Copyright Clause delegates to the Congress the authority to set the terms for copyright protection, and the Supreme Court will defer to the Congress' determinations. She also wrote that the First Amendment does not limit the Congress' power to extend copyright terms. She wrote "The First Amendment securely protects the freedom to make -- or decline to make -- one's own speech; it bears less heavily when speakers assert the right to make other people's speeches. To the extent such assertions raise First Amendment concerns, copyright's built-in free speech safeguards are generally adequate to address them." Such safeguards, wrote Ginsburg, include fair use, and the principle that copyright protects expressions, but not the ideas or facts contained in expressions. See, full story.

Sen. Burns Announces Tech Agenda

1/15. Sen. Conrad Burns (R-MT), the incoming Chairman of the Senate Communications Subcommittee, announced his top technology related priorities for the 108th Congress. He stated in a release that his highest priorities are bills pertaining to spam, spectrum reform, and E-911. His other priorities include broadband expensing, ICANN reform, wireless privacy, online privacy, universal service reform, digital democracy, and the US Asia Network.

He stated that "This is a robust agenda, but also very realistic. We are already well underway in building a consensus within Committee that will lead to swift passage of many of these priorities." Sen. Burns also sponsored a collection of technology related bills in the 106th Congress, which he called the "Digital Dozen". Many of those bills became law.

Spam. Sen. Burns (at right) said that "SPAM is the Trojan Horse for E-Commerce. When consumers begin to feel their personal information has become a commodity for out-of-control marketers they will turn away from shopping online." See, release.

He sponsored a bill in the 107th Congress to regulate spam. S 630, titled the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2002, or the CANSPAM Act, was approved by the Senate Commerce Committee, but not by the full Senate. He has not yet introduced a spam bill in the 108th Congress.

His bill in the 107th Congress would have done two things. First, it criminalized sending spam with false header information. Second, it required the spam sender to provide a return e-mail address, and then criminalized sending more spam to someone who opted out of receiving further messages.

Specifically, S 630 provided that "Any person who initiates the transmission, to a protected computer in the United States, of an unsolicited commercial electronic mail message, with knowledge and intent that the message contains or is accompanied by header information that is materially false or materially misleading shall be fined or imprisoned for not more than 1 year, or both, under this title."

It also provided that "It is unlawful for any person to initiate the transmission to a protected computer of an unsolicited commercial electronic mail message that does not contain a functioning return electronic mail address or other Internet-based mechanism, clearly and conspicuously displayed, that (i) a recipient may use to submit, in a manner specified by the sender, a reply electronic mail message or other form of Internet-based communication requesting not to receive any future unsolicited commercial electronic mail messages from that sender at the electronic mail address where the message was received ..."

And finally, S 630 provided that "If a recipient makes a request to a sender, using a mechanism provided pursuant to paragraph (3), not to receive some or any unsolicited commercial electronic mail messages from such sender, then it is unlawful (A) for the sender to initiate the transmission to the recipient ..."

Sen. Burns stated that "I am confident America will see the SPAM bill leave the Senate before the summer."

Spectrum Allocation. Sen. Burns stated that he "is committed to moving away from the failed current auction model, which has resulted in numerous bankruptcies at companies and failed promises for consumers", and "will examine potentially revolutionary ideas, such as using a royalty based approach."

He has not yet introduced a spectrum reform bill. However, he added that he "will work on a draft bill as soon as the second half of the GAO report is released at the end of this month dealing with the experiences of other countries."

The General Accounting Office (GAO) released a report [77 pages in PDF] titled "Telecommunications: Better Coordination and Enhanced Accountability Needed to Improve Spectrum Management", on September 30, 2002. See, story titled "GAO Reports on Spectrum Management", in TLJ Daily E-Mail Alert No. 520, October 1, 2002.

E-911. Sen. Burns, who sponsored the original enhanced 911 bill, which became law in 1999, stated that he plans to "ensure rapid deployment of E-911 technologies, addressing PSAP readiness, and the lack of a unified funding structure in addition to carrier action on meeting E-911 mandates."

He also stated that a new E-911 Caucus is scheduled to begin on February 24. He and Sen. Hillary Clinton (D-NY) will be the Co-Chairs.

Broadband Expensing. Sen. Burns, Sen. Max Baucus (D-MT), and others, have already introduced S 160, the Broadband Expensing Act. This bill would amend the Internal Revenue Code to allow the expensing of certain broadband Internet access expenditures. It is similar to S 88 (107th), the bill introduced in the previous Congress by Sen. Jay Rockefeller (D-WV). However, Sen. Burns' bill would allow certain broadband deployment expenditures to be expensed, rather than provide tax credits. See, story below.

Online Privacy. Sen. Burns has promoted -- unsuccessfully -- privacy legislation in the past. He stated that in the current Congress he will "continue to support strong protections for consumers in the digital environment." He stated that his proposal, which has not yet been introduced, "adopts a ``two-tiered´´ approach, requiring an opt-in consent for sensitive information and opt-out for everything else. The bill also preempts inconsistent state laws or regulations."

FCC Holds "State of the FCC" Meeting

1/15. The Federal Communications Commission (FCC) held a meeting to hear reports for Bureau Chiefs and the head of the Office of Engineering and Technology. FCC Chairman Michael Powell called it the annual "state of the Federal Communications Commission" meeting. The FCC took no actions.

The presenters gave mainly retrospective summaries of accomplishments of their bureaus or offices, including proceedings completed, actions taken, and reports made. They also addressed employment levels, backlogs and other administrative matters. See, PowerPoint presentations of each presenter.

The FCC Commissioners widely praised the work of FCC staff, but made very few comments about pending or impending FCC proceedings. Commissioner Michael Copps stated that he would like the FCC to revisit the definition of indecency. In particular, he stated that he would like to expand the definition to include violent programming. Chairman Michael Powell responded that the the FCC is restricted by opinions of the Supreme Court interpreting the First Amendment.

OET Chief Ed Thomas suggested that action may be taken this year to amend the FCC's rules to facilitate the provision of broadband Internet access services over powerlines. He added that technological advancements in the past year may turn power companies into the third major broadband competitor.

Senators Write AG Ashcroft Re Data Mining by DOJ

1/15. Sen. Patrick Leahy (D-VT), Sen. Russ Feingold (D-WI), and Sen. Maria Cantwell (D-WA) wrote a letter [8 page PDF scan] to Attorney General John Ashcroft to "inquire about ``data mining´´ operations, practices and policies at the Department of Justice."

The three wrote that "We raise this inquiry against the backdrop of public concern over the Total Information Awareness System (TIA) being developed under the supervision of Admiral Poindexter within the Defense Advanced Research Project Agency (DARPA). TIA is intended, according to Department of Defense officials, to generate tools for monitoring the daily personal transactions by Americans and others, including tracking the use of passports, driver's licenses, credit cards, airline tickets, and rental cars. The Administration's goal is to turn these tools over to law enforcement agencies. According to press reports, one such tool, a software program called ``Genoa,´´ has already been delivered by DARPA to the Department of Justice."

Sen. Leahy (at right) is the ranking Democrat on the Senate Judiciary Committee, which oversees the Department of Justice, but not the Department of Defense, or DARPA. Sen. Feingold and Sen. Cantwell are members of the Committee.

The letter propounds numerous interrogatories to the DOJ. For example, it asks the DOJ to "identify any private sector or proprietary databases obtained or being used by the Department of Justice for data-mining or pattern-recognition activities as well as any databases from government agencies outside DOJ being used for such purposes."

CompTel Releases UNE-P Report

1/15. The Competitive Telecommunications Association (CompTel) released a report [8 pages in PDF] regarding the unbundled network element platform (UNE-P).

CompTel wrote that "UNE-P remains the fastest growing form of local competition, serving an estimated 10 million residential and small business lines by the end of 2002."

It further argued that "UNE-P is unmistakably the principal driver of competitive growth in the local market today. During the first half of 2002, UNE-P accounted for more than 85% of the net growth in competitive access lines. Said differently, if UNEP were eliminated, competitive activity – and, importantly, competitive benefit – would decline by roughly 85%. Not only would competition slow overall, the decline would reduce benefits most dramatically for the typical residential and small business customers that depend on analog services for their basic communications needs."

People and Appointments

1/15. Judith Mann will become Federal Communications Commission (FCC) Chairman Michael Powell's Confidential Assistant (CA). She replaces Powell's longtime CA, Antonia McGowan, who will become Deputy Agenda and Publications Group Manager in the Office of the Secretary. The CA handles, among other things, Chairman Powell's scheduling. See, FCC release [PDF].

1/15. President Bush announced his intent to appoint James Hoffa (General President of the International Brotherhood of Teamsters), and Paul Beckner (P/CEO of Citizens for a Sound Economy) to the Advisory Committee for Trade Policy and Negotiations for two year terms. See, White House release.

1/15. President Bush announced his intent to nominate three persons to be U.S. District Court judges: Dee Drell (Western District of Louisiana), Patricia Minaldi (Western District of Louisiana), and Cecilia Altonaga (Southern District of Florida). See, White House release.

More News

1/15. The Office of Personnel Management (OPM) announced a new government wide payroll program titled e-Payroll. See, OMB release.

1/15. Federal Trade Commission (FTC) Chairman Timothy Muris gave a speech titled "Improving the Economic Foundations of Competition Policy" at a George Mason University Symposium.

1/15. The National Telecommunications and Information Administration (NTIA) submitted a comment to the Federal Communications Commission (FCC) in response to its Report and Order and Further Notice of Proposed Rulemaking in the proceeding titled "In the Matter of Amendment of Parts 2 and 25 to Implement the Global Mobile Personal Communications by Satellite (GMPCS) Memorandum of Understanding and Arrangements. This is IB Docket No. 99-67 and RM No. 9165.

1/15. The Securities and Exchange Commission (SEC) filed a civil complaint in U.S. District Court (DUtah) against ClearOne Communications, Inc., and two of its officers, alleging violation of federal securities laws in connection with its overstatement of revenues, income and accounts receivable in Forms 10-Q and Forms 10-K. ClearOne makes video and audio conferencing products. See also, SEC release.

1/15. Qwest filed Section 271 applications with the Federal Communications Commission (FCC) to provide in region interLATA services in the states of South Dakota, Oregon and New Mexico. See, release.

Software, Computer and Music Companies Reach Agreement on Digital Copyright Issues

1/14. Three industry groups, the Recording Industry Association of America (RIAA), the Business Software Alliance (BSA), and the Computer Systems Policy Project (CSPP), reached an agreement regarding policies that they will advocate in the 108th Congress regarding digital copyright issues. The agreement is compromise and truce between industries that previously advocated conflicting policies. One of the key provisions is that "Technical protection measures dictated by the government ... are not practical". This is a retreat by the music industry. Also, the movie industry is not a party to this agreement. Another key provision is that "Legislation should not limit the use or effectiveness" of "unilateral technical protection measures that limit unauthorized access, copying or redistribution of products". Another key provision is support for "technical measures to limit illegal distribution of copyrighted works", subject to certain limitations. See, full story.

Sen. Boxer and Sen. Allen Introduce WiFi Spectrum Bill

1/14. Sen. Barbara Boxer (D-CA) and Sen. George Allen (R-VA) introduced S 159, the Jumpstart Broadband Act, a bill to require the Federal Communications Commission (FCC) to promptly set aside a large block of spectrum for unlicensed broadband wireless devices, such as those employing 802.11 technology.

The bill would require the FCC to allocate 255 MHz of contiguous spectrum for unlicensed use by wireless broadband devices. The bill further would require the National Telecommunications and Information Administration (NTIA) to write standards for interference protection. And, all of this is to be done in six months.

More specifically, the bill provides that "Within 180 days after the date of enactment of this Act, the Commission shall allocate not less than an additional 255 megahertz of contiguous spectrum in the 5 gigahertz band for unlicensed use by wireless broadband devices while ensuring that Department of Defense devices and systems are not compromised."

The bill further provides that "Within 180 days after the date of enactment of this Act, the National Telecommunications and Information Administration shall, after consultation with all interested agencies and parties, including the Department of Defense, establish standards for interference protection that is reasonably required to enable incumbent Federal government agency users of spectrum allocated under paragraph (1) to continue to use that spectrum, and advise the Commission of those standards."

The bill does not specify any wireless technology, such an 802.11 standard. Nor does it set minimum transfer rates to qualify as "broadband". The bill references "wireless broadband devices" that are "capable of 2-way digital communications". It further states that "broadband devices" must be "capable of reliably transmitting voice, data, and/or video simultaneously between and among digital devices and between these devices and the Internet, on a consistent basis, at data transfer rates no slower than those defined from time to time by the Commission."

Currently, for the purpose of measuring broadband use, the FCC counts any lines "Over 200 kbps in at least one lirection". See, the FCC's twice yearly reports on high speed Internet access written by the FCC's Wireline Competition Bureau's Industry Analysis and Technology Division.

Sen. Boxer stated that "We need this legislation to unleash the potential of new, exciting technologies that promise to deliver high-speed broadband connections wirelessly. Currently, congestion and interference from numerous devices such as cordless phones, ham radios, microwave ovens, ham radios and garage door openers is limiting the potential of these new networks." See, Cong. Record, Jan. 14, 2003, at S300-1.

Sen. Allen stated that "The goal of the Jumpstart Broadband Act is to create an environment that embraces innovation and encourages the adoption of next-generation wireless broadband Internet devices. Most important, our legislation will build confidence among consumers, investors and innovators in the telecommunications and technology industries to eventually make the broadband dream a reality." See, Cong. Record, Jan. 14, 2003, at S301-2.

He continued that "Over this past few years Congress, and specifically the Senate, have been locked in debate over the best approach to promote and encourage widespread broadband adoption. ... However, the current debate over broadband has focused only on two platforms, Digital Subscriber Line, DSL, and cable and the regulatory treatment of those services. This perspective fails to consider that alternative modes or other technologies are available that can jumpstart consumer driven investment and demand in broadband services. I think it is beneficial to shift the policy discussion away from this debate and focus on something positive Congress can do that fosters innovation, stimulates the technology and telecom sectors, and encourages the adoption of broadband services."

He added that "Our legislation complements and encourages the exciting work being done in the area of Wireless Local Area Networks, WLANs. Also known as Wireless Fidelity or WiFi, this technology provides wireless broadband service operating in the unlicensed spectrum bank with up to 10 megabits of capacity and an always-on connection. WiFi is a technology driven platform, viewed by many as a possible answer to wire-line limitations and obstacles that exist in the current marketplace. WiFi however is only the beginning and this legislation will create an environment where cognitive radios and dynamic frequency selection of technologies can grow and innovate to offer services that are unimaginable today."

Sen. Boxer and Sen. Allen circulated a draft version of this bill in November of 2002. The draft bill, and the bill as filed, are very similar. One key change is that the draft specified spectrum below 6 MHz, while the bill as filed specifies spectrum in the 5 MHz band.

The bill was referred to the Senate Commerce Committee, of which both Sen. Boxer and Sen. Allen are members.

Sen. Burns and Sen. Baucus Introduce Broadband Expensing Bill

1/14. Sen. Conrad Burns (R-MT) introduce S 160, the Broadband Expensing Act, a bill to amend the Internal Revenue Code to allow the expensing of certain broadband Internet access expenditures.

Sen. Burns is the incoming Chairman of the Senate Commerce Committee's Subcommittee on Communications. This is a tax bill. Hence, it was referred to the Senate Finance Committee. However, Sen. Max Baucus (D-MT), who is a cosponsor of the bill, is the ranking Democrat on the Finance Committee. Sen. Orrin Hatch (R-UT), a senior Republican on the Finance Committee, is another cosponsor.

Sen. Burns stated in the Senate that his bill would "provide tax incentives to accelerate the deployment of ``broadband´´ high-speed Internet access across the country." See, Cong. Record, Jan. 14, 2003, at S 302-3.

He continued that "Although many urban and suburban areas now have access to a broadband connection, many rural areas still do not. And that places rural areas at a disadvantage in a number of ways in terms of economic development, educational opportunities, health care and numerous other applications. By creating a financial incentive to encourage broadband providers to extend their networks into rural and other underserved areas, we can help overcome that disadvantage."

Sen. Burns also explained the expensing provision of his bill. "The bill will create a temporary tax incentive for providers in the form of ``expensing,´´ allowing an immediate deduction of a capital expenditure in the first year of service rather than depreciating that investment over time. In the case of ``current generation´´ broadband investments in rural and underserved areas, the bill will allow 50 percent expensing of the investment, with the rest to be depreciated according to normal depreciation schedules. And where providers build out ``next generation´´ broadband networks, which are typically more expensive, the bill will provide for 100 percent expensing."

He continued that "it provides 50 percent expensing for investments in rural and underserved areas of ``current generation´´ broadband technologies, which are defined as those delivering at least 1.0 megabits per second of information downstream to the subscriber, and at least 128 kilobits per second upstream from the subscriber."

"It provides 100 percent expensing for investments in ``next generation´´ broadband technologies, which are defined as those delivering at least 22 megabits per second of information downstream to the subscriber, and at least 5 megabits per second upstream from the subscriber. It is technology neutral, it makes no difference if you are using as your medium copper wire, coaxial cable, optical fiber, terrestrial wireless, satellite or something else. If you deliver the threshold speeds, you are eligible for the benefit. And it sunsets in 5 years. The intent is not to provide a permanent benefit to the telecom sector, but rather to provide incentive to build out new infrastructure within a short time period", said Sen. Burns.

Sen. Burns also said that his bill "generally mirrors the broadband tax credit legislation" that Sen. Jay Rockefeller (D-WV) introduced in the 107th Congress. See, S 88 (107th) and HR 267 (107th). Sen. Burns added that "The only difference in that bill and the one we are introducing today is the form of the incentive, expensing rather than tax credits." Rep. Phil English (R-PA), a member of the House Ways and Means Committee, introduced HR 267 earlier this month. It is substantially identical to HR 267 in the 107th Congress, and S 88 (107th).

Sen. Baucus (at right) also spoke in the Senate in support of the bill. He said that "The Broadband Expensing Act will allow businesses to depreciate their capital investment quicker, allowing them to deploy next generation networks at a faster pace. In short, the benefits are two-fold: businesses will benefit by receiving an incentive to roll out their network into rural areas. And customers will benefit by being able to send and receive massive amounts of data much faster than before." See, Cong. Record, Jan. 14, 2003, at S303.

Sen. Baucus also said that this bill will "help us move to the ``next generation´´ of broadband state of the art systems that carry much greater amounts of data than copper wire and coaxial cable."

Sen. Orrin Hatch also spoke in support of the bill. He said that "Our major metropolitan areas, of course, have access to high-speed Internet services. But the connections to most homes and many businesses have not been upgraded, meaning that data signals hit a bottleneck there and slow down dramatically. Consequently, many wonderful Internet applications, such as video conferencing, large file sharing, telemedicine, and distance learning, are ineffective or unavailable. And this is certainly true outside the metropolitan areas of Utah, in the rural communities that are found all over the State." See, Cong. Record, Jan. 14, 2003, at S303-4.

GAO Reports on Homeland Security IT Issues

1/14. The General Accounting Office (GAO) released a report [34 pages in PDF] titled "Homeland Security: Information Technology Funding and Associated Management Issues".

The report "identified $2.9 billion in IT funding for homeland security for fiscal year 2002 and for fiscal year 2003. For fiscal year 2002, $1.2 billion is for organizations (agencies, departments, or components of these) proposed to move to the Department of Homeland Security. For fiscal year 2003, $1.7 billion is for organizations proposed to move to the new department. However, total reported IT funding for homeland security is likely understated, ..."

The report also states that "The organizations that are proposed to move to the new department will face IT management issues. Of those organizations with significant IT funding that are proposed to move to the new department, the FBI’s National Infrastructure Protection Center, the INS, the Coast Guard, and Customs have a large number of GAO recommendations that still require action."

The report elaborates that "the majority of open recommendations are associated with securing information (information security), having an architecture or blueprint to guide system development efforts (enterprise architecture), managing IT investments (investment management), and developing and acquiring information systems (systems development and acquisition)." (Parentheses in original.)

The report was prepared for Sen. Carl Levin (D-MI) and Sen. Susan Collins (R-ME), who head the Senate Governmental Affairs Committee's Subcommittee on Investigations.

BIS Amends Rules for Export of Microprocessors

1/14. The Bureau of Industry and Security (BIS), which is still also known as the Bureau of Export Administration (BXA), announced that it has adopted amendments to its rules governing the export of general purpose microprocessors. See, notice in the Federal Register, January 14, 2003, Vol. 68, No. 9, at Pages 1796-1801. See also, MS Word version of notice.

The BIS summarized the changes as follows: "This final rule removes license requirements for exports and reexports of general purpose microprocessors to most destinations to conform with changes in the List of Dual-Use Goods and Technologies maintained and agreed to by governments participating in the Wassenaar Arrangement. This rule retains license requirements for exports and reexports to designated terrorist-supporting countries. In addition, this rule establishes a new license requirement for the export or reexport of general purpose microprocessors if, at the time of the export or reexport, the exporter or reexporter knows, has reason to know, or is informed by BIS that the item will be or is intended to be used for a ``military end-use´´ in a country that is of concern for national security reasons or by a ``military end-user´´ in such a country."

Secretary of Commerce Don Evans stated in a release that "This rule furthers the President's commitment to streamline and strengthen the U.S. export control system ... This regulatory change is necessary to ensure that U.S. industry can compete on a level playing field in the growing international market for microprocessors, while protecting vital U.S. national security interests."

The rule takes effect on January 14, 2003. For more information, contact Sharron Cook, at the BIS Office of Exporter Services, at 202 482-2440 or scook@bxa.doc.gov.

Groups Write House Armed Service Committee Re Total Information Awareness

1/14. Nine groups wrote at letter [3 pages in PDF] to Rep. Duncan Hunter (R-CA), the new Chairman of the House Armed Services Committee, and Rep. Ike Skelton (D-MO), urging the Congress "to stop further development of a Defense Advanced Research Projects Agency (DARPA) system called ``Total Information Awareness´´".

These groups wrote that "TIA would put the details of Americans' daily lives under the scrutiny of government agents, opening the door to a massive domestic surveillance system. Congress should prohibit the development of TIA." They added that "Congress should not allow the Defense Department to develop unilaterally a surveillance tool that would invade the privacy of innocent people inside the United States."

The signatory groups are the American Civil Liberties Union, American Conservative Union, Americans for Tax Reform, Center for Democracy and Technology, Center for National Security Studies, Eagle Forum, Electronic Frontier Foundation, Electronic Privacy Information Center, and Free Congress Foundation.

USPTO Orders Reexamination of NTP Patents

1/14. The U.S. Patent and Trademark Office (USPTO) ordered a reexamination of five patents held by NTP, Inc. The patents, which pertain to wireless e-mail technology, are at the heart of ongoing litigation between NTP and Research in Motion (RIM). NTP has already obtained a jury verdict of infringement against RIM, the maker of the Blackberry portable communications devices.

The patents to be reexamined are U.S. Patent Nos. 5,625,670 titled "Electronic mail system with RF communications to mobile processors", 5,631,946 titled "System for transferring information from a RF receiver to a processor under control of a program stored by the processor and method of operation thereof", 5,819,172 titled "Electronic mail system with RF communications to mobile radios", 6,067,451 titled "Electronic mail system with RF communications to mobile processors", and 6,317,592 titled "Electronic mail system with RF communications to mobile processors".

35 U.S.C. § 303 provides that the Director of the USPTO, within three months of the filing of a request for reexamination, "will determine whether a substantial new question of patentability affecting any claim of the patent concerned is raised by the request ..."

NTP filed a complaint in U.S. District Court (EDVa) against RIM in November 2001 alleging patent infringement. On November 21, 2002, the trial jury returned a verdict of infringement against RIM, and awarded NTP over $23 Million in damages.

This case is NTP, Inc. v. Research in Motion, Inc.. It is pending in the U.S. District Court for the Eastern District of Virginia, at Richmond, Judge James Spencer presiding. It is D.C. No. 3:01CV767. NTP is represented by James Wallace of the law firm of Wiley Rein & Fielding.

RIM stated that "Of the eight patents listed in the original complaint, only five patents were litigated during the jury trial. Four of the five patents litigated have now been ordered to be reexamined." See, RIM's January 14, 2003 release. See also, RIM's November 21, 2002 release, and RIM's November 21, 2001 release.

E-Commerce Proponent to Become Solicitor General of Texas

1/13. The Federal Trade Commission (FTC) announced that Ted Cruz will leave his position as Director of the FTC's Office of Policy Planning at the end of January to become Solicitor General of the State of Texas. See, FTC release.

At the FTC Cruz has been active in studying and advocating the reduction of unnecessary regulatory barriers to electronic commerce. In his new job in Texas, he will represent a state known for imposing barriers to e-commerce. Texas ranked 31st in the Progressive Policy Institute's statistical study [huge PDF file] titled "The Best States for E-Commerce". This March 2002 study rated Texas low in particular for its regulatory barriers to Internet based sales of automobiles and wine, and mortgage lending.

He testified on September 26, 2002, at the House Commerce Committee's Subcommittee on Commerce, Trade and Consumer Protection hearing titled "State Impediments to E-Commerce: Consumer Protection or Veiled Protectionism?" See, prepared testimony.

He co-signed a letter from the FTC and Department of Justice (DOJ) to the American Bar Association (ABA) regarding the ABA's proposed definition of the practice of law. One of the issues addressed in this long letter was the impact on e-commerce. This letter stated that "In addition to the significant restrictions on consumer choice and increases in consumer costs that flow from an overly broad definition of the practice of law in the non-electronic realm, such restrictions are also likely to impede substantially the growth of e-commerce and software-based solutions. The Internet is changing how many goods and services are delivered, and consumers benefit from the increased choices and convenience and decreased costs that the Internet can deliver. Yet over-broad restrictions on the practice of law can impair the growth of e-commerce by (1) prohibiting or increasing the costs of electronic provision of forms or other legal self-help computer programs, (2) negatively impacting Internet mortgage lenders who rely on lay real estate closers, and (3) restricting the ability of providers to experiment and develop new forms of Internet services touching on legal matters that could benefit consumers directly."

He co-signed a comment to the state of Connecticut on March 27, 2002, criticizing state bans on sales of contact lens by out of state vendors as unnecessary to protect health, and an impediment to e-commerce. He co-signed an amicus curiae brief [PDF] filed with the U.S. District Court (Okla) in a case filed by an Internet based casket retailer against the state of Oklahoma challenging the constitutionality of Oklahoma's Funeral Services Licensing Act. Cruz also helped organize a workshop at the FTC on October 8 through 10, 2002, titled "Possible Anticompetitive Efforts to Restrict Competition on the Internet". See, workshop web site, with links to testimony of participants.

Before his appointment at the FTC, Cruz was briefly Associate Deputy Attorney General at the Department of Justice. Before that, he was a Domestic Policy Advisor on the Bush Cheney campaign. He also assisted in the preparation of briefs for the U.S. Supreme Court and Florida Supreme Court on behalf of George Bush during the Florida election contest. Before that, he was an associate at the Washington DC law office of Cooper Carvin & Rosenthal. He also clerked for Judge Mike Luttig (4th Cir) and Chief Justice William Rehnquist.

Consumer Groups Write Senate Commerce Committee Re Regulation of Bells

1/13. The Consumers Union (CU) and the Consumer Federation of America (CFA) wrote a letter to Sen. John McCain (R-AZ) and Sen. Ernest Hollings (D-SC), the Chairman and ranking Democrat on the Senate Commerce Committee, regarding impending Federal Communications Commission (FCC) actions pertaining to "competition in local telephone and advanced Internet service markets".

The two groups argue in the letter that "Congress has a simple choice to make: either regulate the Bell's wires to promote competition by preserving unbundled network element (``UNE´´) pricing and availability, or deregulate at the wholesale level, allowing the Bells to expand their local market dominance into long distance. If you choose the latter course, it is virtually certain that the vast majority of consumers will never see meaningful competition for their local and long distance needs, and therefore the states and FCC will need to regulate to prevent inflated prices and discriminatory practices."

They added that "The only thing that Congress must not permit is the path that appears to be favored by Chairman Powell-deregulation of the Bell monopolies -- a path that short-circuits local competition in violation of the Act without any protection for consumers. That would be the worst of both worlds -- no regulation to protect consumers and no competition to keep prices and service quality in check."

Supreme Court Returns from Recess

1/13. The Supreme Court returned from its long holiday recess. It released no opinions. However, it did release a long Order List [32 pages in PDF]. What is most significant is the cases that the Supreme Court decided not to review.

First, it denied certiorari in a case involving personal jurisdiction based upon Internet activities (ALS Scan v. Digital Services Consultants). Second, the Supreme Court denied certiorari in a copyright case involving the fair use defense (Ty v. Publications International).

Finally, the Supreme Court issued an order in the Intel v. Advanced Micro Devices. It stated, in part, that "The Solicitor General is invited to file a brief in this case expressing the views of the United States." See, stories below.

Supreme Court Requests Solicitor General Brief in Intel v. AMD

1/13. The Supreme Court announced in its Order List [32 pages in PDF] that the Solicitor General is invited to file a brief in Intel v. Advanced Micro Devices. On June 6, 2002, the U.S. Court Court of Appeals (9thCir) issued its opinion [10 pages in PDF] in this case holding that discovery is available in the U.S. pursuant to 28 U.S.C. § 1782 for a complainant in an Article 82 antitrust matter before the European Commission.

Advanced Micro Devices (AMD) filed a complaint with the Directorate General-Competition of the European Commission alleging that Intel violated Article 82 of the EC Treaty, which prohibits "abuse by one or more undertakings of a dominant position within the common market." AMD then sought discovery from Intel under 28 U.S.C. § 1782, which provides that "The district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal ..."

AMD sought documents from Intel pertaining to another antitrust action in the U.S. against Intel (Intergraph case). Intel objected. AMD sought to compel discovery in the U.S. District Court (NDCal). The District Court held that the EC action was not a proceeding within the meaning of Section 1782. AMD appealed.

The Court of Appeals stated that Section 1782 is broad and inclusive and includes quasi judicial and administrative bodies, and preliminary investigations leading to judicial proceedings. It held that "the EC is an administrative body and that the investigation being conducted by its Directorate is related to a quasi- judicial or judicial proceeding. AMD has the right to petition the EC to stop what it believes is conduct that violates the EC Treaty, to present evidence it believes supports its allegations, to have the EC evaluate what it presents and to have the resulting action (or inaction) reviewed by the European courts. Although preliminary, the process qualifies as a ``proceeding before a tribunal´´ within the meaning of 28 U.S.C. § 1782."

Moreover, the Appeals Court held that Section 1782 does not "require a threshold showing on the party seeking discovery that what is sought be discoverable in the foreign proceeding." The Appeals Court reversed and remanded to the District Court.

The case has attracted outside attention. For example, the U.S. Chamber of Commerce filed an amicus curiae brief. It argued that "Under the Ninth Circuit's ruling, any company that operates abroad can obtain nearly unlimited access to the business documents and competitive plans of its business rivals by filing a complaint with the European Commission and then seeking discovery under 28 U.S.C. § 1782. Under the Ninth Circuit's decision, the company is allowed this discovery without taking on any costs or risks of litigation, even though the discovery is not necessary to the decisionmaking of the Commission. By breezing past the statutory requirements that limit Section 1782 discovery to an "interested person" "for use in a proceeding in a foreign or international tribunal" and ignoring the discovery rules of the European Commission, the Ninth Circuit's ruling, if not reviewed by this Court, would open the door to businesses seeking to harass and obtain sensitive information from their U.S.-based rivals by exploiting the liberal discovery rules of the United States."

Perhaps the Solicitor General himself, Ted Olson, will not file the brief. Prior to his appointment as Solicitor General, he was a partner in the law firm of Gibson Dunn & Crutcher, which represents AMD in this case. O'Melveny & Myers represents Intel.

Supreme Court Denies Certiorari in Personal Jurisdiction Case

1/13. The Supreme Court denied certiorari in ALS Scan v. Digital Service Consultants, a case regarding personal jurisdiction over an out of state Internet Service Provider (ISP). On June 14, the U.S. Court of Appeals (4thCir) issued its opinion holding that the District Court lacks personal jurisdiction. (This is SCUS No. 02-463.)

ALS Scan is a Maryland corporation with its place of business in Columbia, a Maryland suburb situated between Washington DC and Baltimore. ALS Scan is in the business of taking girly pictures, which it then markets over the Internet. ALS Scan alleges that Alternative Products and Robert Wilkins copied some of its photographs, and published them in their web sites for commercial gain. Digital Service Consultants is an ISP in Georgia that provides web hosting services to Alternative Products and Wilkins.

ALS filed a complaint in U.S. District Court (DMd) against Digital, Alternative, and Wilkins alleging copyright infringement. Digital filed a motion to dismiss for lack of personal jurisdiction. Digital alleged that it has no office or customers in Maryland, that it derives no revenues from Maryland, and that it does not advertise in Maryland, except by having a web site. The District Court granted Digital's motion to dismiss for lack of personal jurisdiction. ALS filed this interlocutory appeal. The Court of Appeals affirmed.

The Appeals Court hinted that Supreme Court review might be appropriate. It wrote that "Until the due process concepts of personal jurisdiction are reconceived and rearticulated by the Supreme Court in light of advances in technology ..." However, the Supreme Court did not take the hint. It denied certiorari.

See also, stories titled "Internet Shoes: Two Appeals Courts Address Internet Based Personal Jurisdiction", "Fourth Circuit Holds No Personal Jurisdiction Over Out of State Web Host", and "DC Circuit Suggests Personal Jurisdiction Over Out of State Online Brokerage", all published in TLJ Daily E-Mail Alert No. 452, June 17, 2002.

There have also been several more recent cases addressing personal jurisdiction based upon Internet contacts. On January 9, 2003, the U.S. District Court (CDCal) issued an opinion in MGM v. Grokster in which it denied Sharman Network's motion to dismiss for lack of personal jurisdiction. Sharman, which now owns the key assets of Kazaa, is organized in Vanuatu. Sharman provides free software, known as the Kazaa Media Desktop (KMD), that can be downloaded and used to search for and exchange digital music, movies, and other mostly copyrighted works, using FastTrack file sharing technology. The Court based its finding of personal jurisdiction largely on the fact that Sharman had made the KMD software available to about two million residents of California. See, story titled "District Court Squeezes Sharman on Internet Based Personal Jurisdiction" in TLJ Daily E-Mail Alert No. 581, January 13, 2003.

On December 10, 2002, the High Court of Australia issued its opinion in Dow Jones v. Gutnick, a case involving personal jurisdiction and other procedural issues in a tort action brought in Australia for an allegedly defamatory news story published on the Internet by Dow Jones, a U.S. publisher. The Court held that because of publication on the Internet, the Australian courts have jurisdiction. See, story titled "High Court Rules Australia Has Jurisdiction Over Dow Jones Based on Web Publication", TLJ Daily E-Mail Alert No. 564, December 10, 2002.

On December 13, 2002, the The U.S. Court of Appeals (4thCir) issued its opinion [12 pages in PDF] in Young v. New Haven Advocate, holding that a court in Virginia does not have jurisdiction over two small newspapers, and their editors and reporters, located in Connecticut, who wrote allegedly defamatory stories about a Virginia prison warden and published them on the Internet. The Court held that the web publication did not establish minimum contacts because the newspapers are not directed at a Virginia audience. See, TLJ story titled 4th Circuit Rules in Internet Jurisdiction Case.

More Court Opinions

1/13. The U.S. Court of Appeals (FedCir) issued its opinion [MS Word] in Plant Genetic Systems v. Dekalb, a patent infringement case involving the issue of enablement. The U.S. District Court (DConn) concluded that certain claims of PGS's U.S. Patent No. 5,561,236 titled "Genetically engineered plant cells and plants exhibiting resistance to glutamine synthetase inhibitors, DNA fragments and recombinants for use in the production of said cells and plants" were invalid for lack of enablement. 35 U.S.C. § 112 requires that a patent application must "contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention." The Appeals Court affirmed.

House Organizational News

1/13. House Speaker Denny Hastert (R-IL) released a list of committee chairmen for the 108th Congress last week. Speaker Hastert also released a tentative list of Republican committee members for the 108th Congress.

Judiciary Committee. The House Judiciary Committee handles many technology related issues. Its Court, Internet and Intellectual Property (CIIP) Subcommittee has jurisdiction over patent, copyright, trademark and related issues. Its Crime Subcommittee has jurisdiction over cyber-crime bills. Its Commercial and Administration Law (CAL) Subcommittee has jurisdiction over bills to extend or make permanent the moratorium on new or discriminatory Internet taxes. Its Immigration Subcommittee has jurisdiction over H1B visas.

There will be Republican turnover on the Judiciary Committee. Former Rep. Lindsay Graham (R-SC) was elected to the Senate seat previously held by former Sen. Strom Thurmond (R-SC). He had also been a member of the CIIP Subcommittee. Former Rep. Bob Barr (R-GA) lost in the Republican primary after redistricting placed in the same district as another Republican incumbent. He had been Chairman of the CAL Subcommittee, and worked to secure passage of the bill extending the Internet Tax Freedom Act.

The tentative list of Republican committee assignments lists Rep. Darrell Issa (R-CA) as a member of the House Commerce Committee, but not the House Judiciary Committee. In the 107th Congress Rep. Issa was a member of the Judiciary Committee, and its CIIP Subcommittee, as well as the International Relations Committee. Rep. Issa has issued a release stating that he has been appointed to the Commerce Committee. However, it is silent on whether he retains his other committee assignments.

This could be a significant development. Rep. Issa (at right) is one of the few persons to have been elected to Congress who has either an understanding of the patent process, or electronics technology. He holds 36 consumer electronics patents, and has litigated to protect his intellectual property rights. He founded a company named Directed Electronics, which makes automobile convenience, audio and security products. He is also a former Chairman of the Consumer Electronics Association (CEA). His web site biography also states that during his army service "he worked as a bomb disposal technician, tank platoon commander, and a computer R&D specialist."

Rep. Issa has already introduced one bill in the 108th Congress to amend the Patent Act. On January 8, he introduced HR 242, the Plant Breeders Equity Act of 2003, a bill to amend 35 U.S.C. § 162.

However, Rep. Issa's expertise would not go to waste on the Commerce Committee. The Commerce Committee, which has long been aggressive in asserting and expanding its jurisdiction, has been active on several intellectual property issues in recent Congresses. In the 105th Congress the Committee passed a bill pertaining to the rights of owners of databases. (The Judiciary Committee also passed a much different database protection bill.) The Commerce Committee is also increasingly addressing copyright issues involved in the broadcasting of copyrighted works. It is currently working with interested parties on promoting the transition to digital TV, which includes several copyright issues. It also oversees the Federal Communications Commission (FCC), which is currently conducting a rulemaking proceeding regarding the "broadcast flag".

The new Republican members of the Judiciary on the tentative list are all freshman: Rep. John Carter (R-TX), Rep. Marsha Blackburn (R-TN), Rep. Steven King (R-IA), and Rep. Tom Feeney (R-FL).

The tentative appointment of Rep. Carter (at right) may be significant for some technology related issues. He is a retired state judge, which makes him an obvious candidate for appointment to the Judiciary Committee. However, his newly created 31st District is in the Austin, Texas area, and includes Round Rock and Williamson county. The Austin area is home to many technology companies. The largest employer in Round Rock is Dell Computers. Other leading employers in Round Rock include Cypress Semiconductor, and Abbot Labs (pharmaceuticals), Sears (which has an Internet sales and customer call facility), and DuPont Photomasks (which makes photomasks, a enabling technology used in the manufacture of semiconductor and other microelectronic devices). See, list of leading employers in Round Rock, Texas.

Rep. Blackburn was elected from the 7th District in Tennessee, which stretches from the suburbs of Memphis to the suburbs of Nashville, the center of the country music industry. The district was previously represented by former Rep. Ed Byrant (R-TN), who made an unsuccessful run in the Republican Senate primary. Rep. Blackburn is a former state Senator.

Rep. Feeney is a former speaker of the Florida House. He represents the newly created 24th District in the Orlando, Florida area. Rep. King  is a former state legislator elected from the Iowa 5th District.

Commerce Committee. The tentative list of Republican committee assignments also lists several changes in the membership of the House Commerce Committee. The new Republican members of the Committee will tentatively be Rep. Mike Ferguson (R-NJ), Rep. Mike Rogers (R-MI), Rep. Darrell Issa (R-CA), and Rep. Butch Otter (R-ID).

The members of the Committee who have left include former Rep. Greg Ganske (R-IA), who made an unsuccessful run for the Senate, former Rep. Ed Bryant (R-TN), who ran for Senator from Tennessee, but lost in the primary to now Sen. Lamar Alexander (R-TN), and former Rep. Bob Ehrlich (R-MD), who was elected Governor of Maryland. In addition, Rep. Tom Davis (R-VA), who was a member of the Committee, as well as its Telecom Subcommittee, in the 107th Congress, is not listed on the Republican's tentative committee membership list for the 108th Congress.

People and Appointments

1/13. President Bush announced his intent to nominate Mark Everson to be the Commissioner of the Internal Revenue Service (IRS). He is currently the Deputy Director for Management with the Office of Management and Budget. See, White House release and Treasury release.

1/13. President Bush announced his intent to nominate Clay Johnson to be the Deputy Director for Management at the Office of Management and Budget. He is currently Assistant to the President for Presidential Personnel and Deputy to the Chief of Staff. He previously worked for the Bush Cheney transition team, and for Bush when he was Governor of Texas. See, White House release.

1/13. President Bush announced his intent to nominate Dina Powell to be Assistant to the President for Presidential Personnel. See, White House release.

More News

1/13. The U.S. Patent and Trademark Office (USPTO) released the list of top patent recipients in 2002. The top ten, in order, are IBM, Canon, Micron, NEC, Hitachi, Matsushita, Sony, GE, HP, and Mitsubishi. See, USPTO release.

People and Appointments

1/12. AOL Time Warner announced in a release that "Steve Case has decided to step down as Chairman effective at the Annual Shareholders Meeting in May."

Go to News from January 6-10, 2003.