News from April 6-10, 2003

House and Senate Pass Conference Report on Child Protection Bill

4/10. The House and Senate both passed the conference report [118 pages PDF] on S 151, the "Prosecutorial Remedies and Other Tools to End the Exploitation of Children Today Act of 2003", or "PROTECT Act". The House passed the bill by a vote of 400-25. See, Roll Call No. 127. The Senate passed the bill by a vote of 98-0. See, Roll Call No. 132. The bill contains several tech related items, including a ban on use of certain misleading domain names, provisions pertaining to computer generated images, and an expansion of the list of offenses that may serve as a predicate for the issuance of a wiretap order. See, full story.

Rep. Putnam Addresses Broadband Policy

4/10. Rep. Adam Putnam (R-FL) spoke in the House regarding broadband policy. He stated that "a recent broadband technology decision by the Federal Communications Commission presents serious issues for rural America and the agricultural industry as a whole."

He elaborated that "Perhaps no small- to mid-sized business sector has been more affected by technology than agriculture, where computer systems monitor crop production, satellites relay soil moisture information and cell phones coordinate efforts."

"However, last year, when the House passed the Tauzin-Dingell bill, which would remove outmoded restrictions on local phone companies in exchange for aggressive system modernization and network build-out requirements, by adopting the business as usual stance, the FCC refused an opportunity to move in the direction that American agriculture and rural America has by adopting new technology, and instead attempted to require some companies to give deep discounts to their competition. Capital investment by these companies will suffer greatly in central Florida and throughout rural America", said Rep. Putnam.

He concluded that "if local phone companies have little interest and no real incentive to invest heavily in urban and wealthy suburban areas, rural and small-town Americans will once again get the short end of the stick. I join my colleagues on both sides of the aisle, including the gentleman from Louisiana (Mr. Tauzin) and the gentleman from Michigan (Mr. Dingell) in strongly urging the FCC to reconsider their position. Rural America needs the technological progress regulatory reform could bring." See, Congressional Record, April 10, 2003, at page H3056.

Sen. McCain Introduces Bill to Create Spectrum Relocation Fund

4/10. Sen. John McCain (R-AZ) and others introduced S 865, the "Commercial Spectrum Enhancement Act". This is the Senate's version of HR 1320, also titled the "Commercial Spectrum Enhancement Act".

This bill would facilitate the reallocation of spectrum from federal users, such as the Department of Defense (DOD), to commercial users, such as Third Generation (3G) wireless service providers. 3G is intended to provide broadband internet access for portable devices. The bill would create a "Spectrum Relocation Fund", funded out of auction proceeds, to pay for relocation costs of federal entities whose spectrum is reallocated. The bill would apply to, but not be limited to, the 1710-1755 MHz band.

Sen. John McCainSen. McCain (at right) explained that "The bill would establish a separate fund on the books of the United States Treasury called the Spectrum Relocation Fund. When spectrum occupied by a Federal agency is auctioned, the proceeds from the auction would be deposited into the fund. Federal agencies would be able to withdraw from the fund the estimated expenses associated with the relocation, with additional expenses being approved by the Office of Management and Budget, with notice provided to Congress and the General Accounting Office, GAO, as necessary." See, Congressional Record, April 10, 2003, at S5191.

He continued that "Currently, when spectrum assigned to a Government agency is auctioned, the law requires the agency to negotiate with the winning bidder to determine the cost of purchasing or returning new equipment necessary for the agency to transfer out of the spectrum band. These negotiations would be time-consuming and difficult for both parties. This bill would eliminate the need for lengthy negotiations between these parties. Thus it would accelerate the pace of introduction of new services using the spectrum."

The bill's other original sponsors are Sen. Byron Dorgan (D-ND), Sen. Sam Brownback (R-KS), and Sen. John Ensign (R-NV). The bill was referred to the Senate Commerce Committee. Sen. McCain is the Chairman.

The House Commerce Committee's Subcommittee on Telecommunications and the Internet amended and approved HR 1320 on April 9, 2003. See, amendment in the nature of a substitute [PDF] approved by unanimous voice vote.

See also, stories titled "House Subcommittee Approves Spectrum Relocation Fund Bill", TLJ Daily E-Mail Alert No. 641, April 10, 2003; "House Subcommittee Holds Hearing On Commercial Spectrum Enhancement Act", TLJ Daily E-Mail Alert No. 631, March 26, 2003; and "Rep. Upton Introduces Spectrum Relocation Bill", TLJ Daily E-Mail Alert No. 629, March 24, 2003.

Senators Burns and Wyden Re-Introduce Can Spam Bill

4/10. Sen. Conrad Burns (R-MT) and Sen. Ron Wyden (D-OR) introduced S 877, the "Controlling the Assault of Non-Solicited Pormography and Marketing Act of 2003", or "CAN-SPAM Act".

The bill would create civil bans on sending unsolicited commercial e-mail (UCE) with false header information, or with intentionally false or misleading content. It would also require UCE senders to include a return e-mail address, and ban sending further UCE to persons who have objected to receiving more UCE. It would also ban the practice of sending UCE to lists of addresses that have been harvested from websites by automated means.

The bill would give enforcement authority to the Federal Trade Commission (FTC), states, and internet access providers, but not individuals. The bill would preempt state UCE laws, with exceptions.

False Header Information. The bill would ban false header information in unsolicited commercial e-mail (UCE). It provides 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. For purposes of this subsection, header information that is technically accurate but includes an originating electronic mail address the access to which for purposes of initiating the message was obtained by means of false or fraudulent pretenses or representations shall be considered materially misleading."

False or Misleading UCE. The bill would also ban false or misleading UCE. It provides that "It is unlawful for any person to initiate the transmission, to a protected computer, of a commercial electronic mail message that contains, or is accompanied by, header information that is materially or intentionally false or materially or intentionally misleading. ..." The bill would similarly ban deceptive subject lines.

Return Address and Opt Out. The bill would also require UCE senders to provide "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" UCE.

Then, the bill would bar UCE senders from sending any further UCE to persons who have so objected.

E-Mail Address Harvesting. The bill would also ban sending UCE to lists of harvested e-mail addresses. It provides that "It is unlawful for any person to initiate the transmission, to a protected computer, of an unsolicited commercial electronic mail message that is unlawful under subsection (a)," [that is, with false header information, false or misleading content, or in violation of the recipient's objection] "or to assist in the origination of such a message through the provision or selection of addresses to which the message will be sent, if such person knows that, or acts with reckless disregard as to whether (A) the electronic mail address of the recipient was obtained, using an automated means, from an Internet website or proprietary online service operated by another person ..."

Enforcement. Primary responsibility for enforcement would be given to the Federal Trade Commission (FTC).

However, the bill would also give states a limited right to enforce the provisions contained in the bill. The bill provides that "In any case in which the attorney general of a State has reason to believe that an interest of the residents of that State has been or is threatened or adversely affected by any person engaging in a practice that violates section 5 of this Act, the State, as parens patriae, may bring a civil action on behalf of the residents of the State in a district court of the United States of appropriate jurisdiction or in any other court of competent jurisdiction" for injunctive relief and damages. The bill also sets upper limits on awards of damages.

The bill would also give a cause of action to internet access providers who have been harmed by a violation of the act. They could obtain, in federal court, injunctive relief and/or damages, which are also limited by the bill.

Finally, the bill creates no private right of action.

Preemption of State Laws. The bill provides that "This Act supersedes any State or local government statute, regulation, or rule regulating the use of electronic mail to send commercial messages." However, it also provides that "Act does not supersede or pre-empt (A) State trespass, contract, or tort law or any civil action thereunder; or (B) any provision of Federal, State, or local criminal law or any civil remedy available under such law that relates to acts of fraud or theft perpetrated by means of the unauthorized transmission of commercial electronic mail messages."

Sen. Conrad BurnsSen. Burns (at right) stated in the Senate that "Spam has become more than just an inconvenience that we have learned to live with; it has now become a fundamental part of any e-mail inbox with serious economic consequences. According to one study done by a consulting group, spam will cost U.S. businesses more than $10 billion this year alone. Spam also makes working on the Internet less efficient, by clogging up servers on one end and inboxes on the other. I want some accountability brought to bear on this issue, and feel that by introducing this legislation today, we have taken an appropriate and meaningful step to tame a horse we can't seem to break just yet. This problem continues to escalate, and experts warn that more than half of e-mail traffic will be spam by this summer." See, Congressional Record, April 10, 2003, at S5204.

Senators Burns and Wyden also introduced anti-spam legislation in the 106th and 107th Congresses. Their bill in the last Congress, S 630 (107th), was approved by the Senate Commerce Committee on May 17, 2002. However, the full Senate did not pass the bill.

Sen. Burns is the Chairman of the Senate Commerce Committee's Communications Subcommittee. Sen. Wyden is also a member of the Communications Committee.

The bill is also cosponsored by Sen. Ted Stevens (R-AK), Sen. John Breaux (D-LA), Sen. Craig Thomas (R-WY), Sen. Mary Landrieu (D-LA), and Sen. Charles Schumer (D-NY).

See also, Burns release and Wyden release.

Also, AOL stated in a release that "We are pleased that Members of Congress like Senators Burns and Wyden are fighting hard for online consumers in the ongoing battle against spam and spammers. We look forward to working with them, and other lawmakers ..."

Rep. Tauzin Presses SEC for Documents Regarding Accounting Practices of Telecom Companies

4/10. Rep. Billy Tauzin (R-LA), the Chairman of the House Commerce Committee, wrote a letter to Securities and Exchange Commission (SEC) Chairman William Donaldson regarding the SEC's refusal to produce copies of records requested by the Committee.

On June 2, 2002, Rep. Tauzin and Rep. Jim Greenwood (R-PA) wrote a letter to former SEC Chairman Harvey Pitt requesting information and documents pertaining to the SEC's investigations of the accounting practices of 13 companies, including WorldCom, Qwest, Global Crossing, and Xerox. See, story titled "WorldCom: Rep. Tauzin Requests Information From SEC", TLJ Daily E-Mail Alert No. 464, July 8, 2002.

The SEC refused to produce documents, pursuant to a claim that they are "non public". Rep. Tauzin wrote that this refusal is "without any lawful basis or justification".

He continued that "With the exception of legitimate claims of executive privilege by the President, there is no lawful basis upon which a Federal agency or independent commission can refuse to provide information to the Congress. This Committee routinely receives from Federal agencies information categorized as non-public, deliberative, pre-decisional, proprietary, confidential, privileged, and even classified. I cannot recall any other situation in which an agency has refused to provide this Committee with documents on the grounds that they were "non-public" records, and the SEC's action in this regard is simply unacceptable."

Legislators Pressure FCC on Media Ownership Rules

4/10. Sen. Ernest Hollings (D-SC) and 14 other Senators wrote a letter [2 page PDF scan] to Federal Communications Commission (FCC) Chairman Michael Powell regarding its media ownership proceeding.

They wrote that "We note with disappointment your announcement that the FCC's revised media ownership rules will be released in final form June 2nd without any opportunity for the Congress or the public to review them beforehand. We believe is is virtually impossible to serve the public interest in this extremely important and highly complex proceeding without letting the public know about and comment on the changes you intend to make to these critical rules."

"We again urge the Commission to provide full disclosure of any proposed changes before they are made final", wrote Sen. Hollings and others.

The letter was signed by Senators Hollings, Snowe, Dorgan, Lott, Hutchison, Inouye, Rockefeller, Wyden, Boxer, Nelson, Lautenberg, Cantwell, Collins, Murray, and Allard. Most are members of the Senate Commerce Committee, which oversees the FCC. However, neither Sen. John McCain (R-AZ), the Chairman of the full Committee, nor Sen. Conrad Burns (R-MT), the Chairman of the Communications Subcommittee, signed the letter.

Sen. Hollings also wrote a letter [PDF] to Sen. McCain on April 9. He wrote that "Following our conversation last week, I appreciate your willingness to hold a hearing on media consolidation."

Sen. Hollings continued that "In light of Chairman Powell's recent announcement that the FCC will conclude its review of media ownership rules by June 2, it is critical that the Committee be permitted to discuss these issues with the Commissioners prior to their decision. Given the importance of these proceedings and limited time remaining before the Commission's expected order, I would urge you to schedule a hearing as soon as possible following the Easter recess and invite all five FCC commissioners to testify so that we may discuss matters related to this proceeding in a public forum. Such a hearing will not only afford Members with the opportunity to explore the options under consideration, but, more importantly, will permit frank discussion about the impact of potential rule changes on the core values of competition, diversity, and localism that are fundamental to serving the public interest."

The Senate Commerce Committee has already held one hearing on media ownership this year, on January 30, 2003.

Meanwhile, on April 10, Rep. Fred Upton (R-MI), the Chairman of the House Commerce Committee's Subcommittee on Telecommunications and the Internet, wrote a letter to FCC Chairman Michael Powell on media ownership. He wrote, "Respectfully, I expect that, by June 2nd, you and your colleagues will complete the Commission's work in this proceeding."

Rep. Upton continued, "Given the extensive public record which the Commission has developed, the level of public participation, and the lengths to which the Commission has gone to examine the current media landscape, I believe that any delay beyond June 2nd in completing this proceeding would be inexcusable. Such delay would reflect extremely poorly on the Commission's ability to adhere to congressionally mandated reviews of matter within the Commission's purview."

Rep. Upton noted that the FCC has already conducted and released 12 studies, received over 15,000 public comments, and conducted two field hearings.

6th Circuit Rules On Trademark Infringement And Post Domain Portion of URLs

4/10. The U.S. Court of Appeals (6thCir) issued its opinion in Interactive Products Corporation v. a2z, a trademark case involving placement of trademarked terms in the post domain portion of URLs. The Appeals Court held that there is no infringement because there is no likelihood of confusion.

The Congress and courts have already addressed the topic of the use of trademarked terms in domain names. This case deals with the use of trademarked terms, not in the domain, but in the post domain path of uniform resource locators (URLs). For example, is a domain name. But, courts2002/riaa_verizon/ 20030121.asp is the complete URL of a file in the Tech Law Journal web site. "Verizon" is a trademarked term that appears in the post domain portion of this URL.

In the present case, both Interactive Products Corporation (IPC) and a2z Mobile Office Solutions make portable computer stands for holding laptop computers in cars. IPC makes a product named "Lap Traveller". It holds a trademark for this term. a2z makes a product named "Mobile Desk". a2z maintains a website the uses the string "laptraveller" in post domain URLs. IPC filed a complaint in U.S. District Court (SDOhio) against a2z and others alleging trademark infringement for placing IPC trademarks in the post domain portion of URLs of files in the a2z website.

More specifically, the complaint alleges federal trademark infringement (15 U.S.C. § 1114), state trademark infringement (Ohio Deceptive Trade Practices Act, Ohio Revised Code § 4165.02, and Ohio common law), false designation of origin and false advertising (5 U.S.C. § 1125), trademark dilution, breach of agreement, and tortious interference with business relationships.

The District Court, finding no likelihood of confusion, granted summary judgment to IPC on all claims. This appeal followed.

The Court of Appeals affirmed. The Court wrote that for federal and state trademark infringement, as well as false designation of origin, the "touchstone of liability" is "likelihood of confusion". Thus, "to succeed on any of its trademark claims at issue in this appeal, IPC must show that the presence of its trademark in the post-domain path of a2z's portable computer stand web page is likely to cause confusion among consumers regarding the origin of the goods offered by the parties."

The Appeals Court concluded that "Because post-domain paths do not typically signify source, it is unlikely that the presence of another's trademark in a post-domain path of a URL would ever violate trademark law. For purposes of the present case, however, it is enough to find that IPC has not presented any evidence that the presence of ``laptraveler´´ in the post-domain path of a2z's portable computer stand web page is likely to cause consumer confusion regarding the source of the web page or the source of the Mobile Desk product, which is offered for sale on the web page."

Treasury Official Addresses Information and Identity Theft

4/10. Wayne Abernathy, Assistant Secretary of the Treasury for Financial Institutions, gave a speech titled "The Many Ugly Faces of Identity Theft". He said that identity thieves use individuals' personal information to commit financial fraud. However, he argued that in an information based economy the solution is not to restrict the use of information. Rather, he argued that law enforcement authorities and financial institutions should have more information, to fight identity theft.

He said that "We live in a country that offers to consumers the widest variety of financial services anywhere on earth, at the lowest cost anywhere on earth, to the broadest range of the population anywhere on earth. That is a marvelous achievement that we must not surrender."

He elaborated that "This achievement is made possible by information, broad information, instantaneous information. Today, you can walk into practically any bank anywhere in America and obtain that very day a financial product suited to the needs of you and your family. And that is not just because the banker can look at your credit history and learn who you are, confident that he is getting the full story, but also because that banker can draw upon the information of a million people like you, and can define your risk and price it."

He detailed the widespread practice of identity theft, the methods used by thieves, and the harm that it causes to individuals. He then noted that "Some would say, ``stop that information flow, that information is what feeds the identity thieves.´´ But what would we give up? Who would we cut off from access to the home loan, the business loan, the college loan?"

Abernathy argued that "Instead, we can use information to fight the crime. The banker stops the identity thief when the banker knows more about his customer than the thief does. The police can catch the crook if information can jump state lines faster than the crook can. The victim's records can be restored if information on his clean record can be sent quickly to all parts of the nation."

He said that people need to "recognize the danger to our modern, information based economy. And rather than back away from the crime, we need to take it head on. To do that we need to recognize that it is not information that makes the crime possible. It is lack of information. The identity thief wears a mask. When the merchant or the banker can look behind the mask, and he knows what he sees, then we will strike a major blow at the crime.

Abernathy spoke to the 2003 Banking Institute of University of North Carolina School of Law's Center for Banking and Finance in Charlotte, North Carolina.

Bills Introduced

4/10. Rep. Anthony Weiner (D-NY) introduced HR 1763. The Congressional Records describes this as "a bill to amend the Communications Act of 1934 to facilitate an increase in programming and content on radio that is locally and independently produced, to facilitate competition in radio programming, radio advertising, and concerts, and for other purposes". Rep. Weiner stated in a release that "The songs that make it onto radio play lists should be determined by traditional market forces, like the quality of the product and consumer tastes. But pay for play and other payola schemes substitute cash payments for market forces, lining the pockets of some promoters, at the expense of everybody else. ... It's about time Clear Channel lived up to its responsibility as the largest radio owner in the nation, and cut its ties with independent promoters." The bill was referred to the House Commerce Committee.

4/10. Sen. Jon Kyl (R-AZ) and Sen. John Cornyn (R-TX) introduced S 887, a bill to amend the Internal Revenue Code of 1986 to apply an excise tax to excessive attorneys fees for legal judgments, settlements, or agreements. The bill was referred to the Senate Finance Committee.

4/10. Rep. Ed Markey (D-MA), and other Representatives, introduced HR 1709, a bill pertaining to the privacy of individually identifiable health information. See also, "Dear Colleague" letter [PDF scan] from Rep. Markey, Rep. John Dingell (D-MI), and Rep. Henry Waxman (D-CA). The bill was referred to the House Commerce Committee, Ways and Means Committee, and Education and the Workforce Committee.

More News

4/10. The Federal Communications Commission (FCC) released a report [50 pages in PDF] titled "Telephone Subscribership in the United States: (Data Through November 2002)". The national level is 95.3%. See, FCC release [PDF]. The report was prepared by Alexander Belinfante of the Industry Analysis and Technology Division, of the FCC's Wireline Competition Bureau.

4/10. The Senate Judiciary Committee approved S 274, the Class Action Fairness Act, a bill pertaining to class action procedure. One provision of the bill provides that class actions could be removed from state court to federal court by a defendant or an unnamed class member if the total damages exceed $5 Million and parties include citizens from multiple states. See, story titled "Sen. Grassley Introduces Class Action Reform Bill", TLJ Daily E-Mail Alert No. 600, February 10, 2003.

4/10. Rep. Chris Cox (R-CA), the Chairman of the Republican's House Policy Committee, announced Subcommittee Chairmen for the 108th Congress. The Chairman of the Biotechnology, Telecommunications, and Information Technology Subcommittee is Rep. Jerry Weller (R-IL).

FTC Seeks Budget Increase

4/9. The House Appropriations Committee's Subcommittee on Commerce, Justice and the Judiciary (CJS) held a hearing on the budget for the Federal Trade Commission (FTC). FTC Chairman Timothy Muris testified.

The FTC requests an appropriation for fiscal year 2004 of $191,132,000 and 1,074 full time equivalent (FTE) employees. This is an increase of $14,524,000 from FY 2003.

Muris' prepared testimony summarizes the activities of the FTC with respect to internet fraud and privacy, including the FTC's do not call registry, identity theft, the Eli Lilly action, fraudulent spam, implementation of the Childrens Online Privacy Protection Act, and the FTC's survey of online gambling.

He also summarized the FTC's activities with respect to competition, including the Rambus action, the joint FTC/DOJ hearings on intellectual property and antitrust, and the FTC Internet Task Force's evaluation of potentially anticompetitive regulations and business practices that could impede e-commerce.

7th Circuit Rules on Jurisdiction Over Appeals in Patent Cases

4/9. The U.S. Court of Appeals (7thCir) issued its opinion [13 pages in PDF] in Aura Lamp v. ITC, a case regarding jurisdiction over appeals in patent cases. The jurisdiction of the District Court rested upon a patent claim. Hence, the Seventh Circuit held that the Federal Circuit has exclusive jurisdiction over the appeal. However, what is notable about this case is that the Seventh Circuit, having found that it lacked jurisdiction, proceeded to dismiss the case upon the merits.

Perhaps the Seventh Circuit has held that there is an exception to the Federal Circuit's exclusive jurisdiction where the regional circuit finds, upon the merits, that the appeal is "clearly doomed".

Aura Lamp and International Trading Corporation (ITC) entered into several contracts pertaining to lighting products. Aura filed a complaint in U.S. District Court (EDIll) against ITC alleging breach of contract; it also sought a declaration that a patent held by ITC is invalid. The District Court dismissed the case for lack of prosecution and violation of discovery orders. Aura appealed, not to the Federal Circuit, but to the Seventh Circuit.

28 U.S.C. § 1338 provides, in part, that "The district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents, plant variety protection, copyrights and trademarks. Such jurisdiction shall be exclusive of the courts of the states in patent, plant variety protection and copyright cases."

28 U.S.C. § 1295, in turn, provides, in part, that "The United States Court of Appeals for the Federal Circuit shall have exclusive jurisdiction -- (1) of an appeal from a final decision of a district court of the United States ... if the jurisdiction of that court was based, in whole or in part, on section 1338 ..."

The Appeals Court held that it has no jurisdiction, and dismissed the case. The Court wrote that "Section 1338 grants original jurisdiction to the district courts over any civil actions arising under the federal patent laws, among other things."

The Court reasoned that "Aura Lamp's complaint contains a claim for patent invalidity. ... Thus, the jurisdiction of the district court was based, at least in part, on the patent laws and jurisdiction over the appeal lies exclusively with the Federal Circuit. This is true even though the district court resolved the case without reference to patent law." Hence, the Appeals Court concluded that the Federal Circuit has exclusive jurisdiction over this appeal.

The Appeals Court, however, did not transfer the appeal to the Federal Circuit. It dismissed the case. It wrote that "At this stage of the proceedings, we may ``take a peek´´ at the merits because whether the appeal has any possible merit bears significantly on our decision to transfer or dismiss the appeal. ... We may do so even though we lack jurisdiction to decide the merits."

The Court continued that "Here, because the case was dismissed for want of prosecution and violations of discovery orders, the district court's ruling rests on procedural matters not unique to patent law. The ruling would thus be reviewed under the law of our own circuit." And, the Court concluded, under the law of the Seventh Circuit, reversal would require a determination of abuse of discretion by the District Court. The Court held that there was no such abuse of discretion.

The Court concluded that "The appeal is ``clearly doomed´´ and there is no reason to waste judicial resources or the resources of the parties by transferring the case."

House Subcommittee Approves Spectrum Relocation Fund Bill

4/9. The House Commerce Committee's Subcommittee on Telecommunications and the Internet amended and approved HR 1320, the Commercial Spectrum Enhancement Act, by a unanimous voice vote.

Rep. Billy Tauzin (R-LA), the Chairman of the full Committee, explained the purpose and nature of the bill. He said in his opening statement that "H.R. 1320 will accomplish the dual goals of making spectrum available for advanced commercial uses and fully compensating federal agencies required to relocate spectrum operations to make bands available for commercial use. It will ensure that at least 90 MHz of new spectrum is made available for advanced wireless services that will give consumers mobile high-speed Internet access and other innovative applications."

He added that "this bill does not reflect normal congressional process. This bill takes away the normal role that the Appropriations Committees plays in how government receipts are distributed to and spent by federal agencies." He added that this may cause problems for supporters of the bill when they seek passage by the House and Senate.

Rep. Billy TauzinRep. Tauzin (at right) explained that "It is important that we alter the normal process because relocation will never occur if federal agencies are subjected to the appropriations process to relocate spectrum operations. These agencies must have absolute certainty that the money will be available and that they can spend it. And the current relocation rules are fatally flawed. Auction bidders have to pay twice -- once to the Treasury and another time to the agencies. That process is beyond cumbersome. These rules give potential auction bidders no incentive to participate in an auction because they have no idea how much they will have to spend to relocate government spectrum users."

Rep. John Dingell (D-MI), the ranking Democrat on the full Committee, criticized spectrum management generally, but stated that he supports HR 1320.

Rep. Fred Upton (R-MI), the Chairman of the Subcommittee, presided at the hearing. He offered an amendment in the nature of a substitute, [PDF]. He said that this amendment has the support of the Department of Defense (DOD) and the National Telecommunications and Information Administration (NTIA)

Ted Kassinger, General Counsel of the Department of Commerce (DCO), wrote a letter [PDF scan] to Rep. Upton and Rep. Ed Markey (D-MA) on April 8. He stated that "I want to reiterate the Administration's support for enactment of legislation to create a spectrum relocation fund. Such a fund is an important spectrum management tool that will streamline and shorten the process for reimbursing incumbent government users, which in turn, will facilitate their relocation to comparable spectrum and thus expedite the opening of the original spectrum to new services and technologies."

He added that the "Chairman's amendment in the nature of a substitute will not only provide for full reimbursement of all relocation costs incurred by incumbents in relocating to new spectrum or utilizing an alternative technology, but also will provide a streamlined mechanism for making the funds available to relocating Federal agencies and greater certainty to auction bidders and incumbents. Moreover, this bill addresses most of the concerns the Administration had with the bill as introduced."

NTIA Director Nancy Victory testified in support of creating a spectrum relocation fund at the March 25, 2003 hearing to the Subcommittee. See, prepared testimony. See also, TLJ story titled "House Subcommittee Holds Hearing On Commercial Spectrum Enhancement Act", March 25, 2003.

This bill would facilitate the relocation of spectrum from federal users, such as the DOD, to commercial users, such as Third Generation (3G) wireless service providers. 3G is intended to provide broadband internet access for portable devices. The bill would create a "Spectrum Relocation Fund", funded out of auction proceeds, to pay for relocation costs of federal entities whose spectrum is reallocated. The bill would apply to, but not be limited to, the 1710-1755 MHz band.

Rep. Upton summarized the changes made by his amendment in the nature of a substitute. He said that it would provide the NTIA with 12 months to apprise the Federal Communications Commission (FCC) of the cost estimates of, and timelines for, relocation of government spectrum operations before an auction of frequencies used by such operations occurs. It would also create a unified fund for auction proceeds rather than separate accounts. It would also require surplus auction proceeds to be returned to the Treasury no later than eight years after their initial deposit in the Spectrum Relocation Fund. It would also provide a notice to Congress if additional transfers to an agency will exceed 10% of the original amount transferred for relocation. It would also provide an active role for the General Accounting Office (GAO) to review costs incurred during relocation. Finally, it would limit the applicability of the fund to frequencies eligible under current law.

Rep. Ed MarkeyRep. Markey (at right), the ranking Democrat on the Subcommittee, advocated creation of a "Digital Dividends Trust Fund" that would provide grants for educational technology projects, teacher training, digitizing cultural materials in libraries, public safety, and other things. He offered, but later withdrew, an amendment [PDF] to the amendment in the nature of a substitute to create such a fund.

Rep. Markey also offered, but withdrew, another amendment [PDF] to the Upton amendment. This second amendment would have provided that "nothing in this Act or the amendments made by this Act shall be construed as limiting the Federal Communications Commission’s authority to allocate bands of frequencies that are reallocated from Federal use to non-Federal use for unlicensed, public safety, shared, or non-commercial use." He explained that auctions should not be mandated, for example, for spectrum reallocated for unlicensed use or for public safety. This amendment would also have required the NTIA to write a report on policy options that are available to compensate government agencies for the relocation of spectrum operations to accommodate unlicensed, public safety, shared, or non-commercial purpose.

Rep. Markey withdrew his amendments after Rep. Upton committed to holding a hearing, and working with Rep. Markey, on the issues addressed by Rep. Markey's amendments.

Rep. Bart Stupak (D-MI) stated that he is concerned about the lack of adequate spectrum and funding for first responders. He stated that he had an amendment to allow use of spectrum relocation trust funds for public safety purposes. He did not offer the amendment. Rep. Upton committed to holding a hearing on this matter, "with an eye towards moving legislation".

Rep. Eliot Engel (D-NY), who represents a New York City district, stated that public safety officials from New York want a solid block of public safety spectrum, and more money for equipment.

House Science Committee Holds Hearing on Nanotechnology

4/9. The House Science Committee held a hearing titled "The Societal Implications of Nanotechnology". The hearing also focused on HR 766, the Nanotechnology Research and Development Act of 2003.

Rep. Sherwood Boehlert (R-NY), the Chairman of the Committee, and a sponsor of HR 766, said in his opening statement that "the most extravagant fear about nanotechnology is that it will yield nanobots that will turn the world into ``gray goo.´´ That's not a fear I share, but I do worry that the debate about nanotechnology could turn into ``gray goo´´ -- with its own deleterious consequences."

He added that "The one thing we can be sure of is that nanotechnology will be neither the unalloyed boon predicted by technophiles nor the unmitigated disaster portrayed by technophobes. The truth will be in between, and it is worth probing."

Rep. Boehlert also stated that Hr 766 "authorizes research grants on societal and ethical consequences, and requires that that research be integrated with the physical science research. We will mark up that bill on April 30 and I expect it to be on the House floor the following week."

Several witnesses referenced Michael Crichton's book, Prey [Amazon], a science fiction thriller about a predatory cloud of self sustaining, self reproducing, intelligent nano-particles that escape from a laboratory. Vicki Colvin of Rice University said in her prepared testimony that "This may be gripping science fiction; it is not science fact."

See also, prepared testimony of Ray Kurzweil [45 pages in PDF] , Langdon Winner (Rensselaer Polytechnic Institute), and Christine Peterson (Foresight Institute), and Science Committee release.

See also, article in the April 2000 issue of Wired Magazine titled "Why the future doesn't need us", by Bill Joy, the Chief Scientist at Sun Microsystems.

Fed, Treasury & SEC Report on Resiliency of Financial System to Terrorist Attacks

4/9. The Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission released a joint paper titled "Interagency Paper on Sound Practices to Strengthen the Resilience of the U. S. Financial System" The purpose of the paper is to to advise financial institutions on steps necessary to protect the financial system from terrorist threats such as the September 11, 2001 attacks.

The paper addresses, among other topics, resiliency of the telecommunications infrastructure, telecommunications redundancy, back up data centers, and the integrity of data transmission.

For example, the paper states that "A number of firms have expressed concerns about the resilience of telecommunications and other critical infrastructure, and the current limitations on an individual firm's ability to obtain verifiable redundancy of service from such carriers. Firms that establish geographically dispersed facilities can achieve additional diversity in their telecommunications and other infrastructure services, which will provide additional resilience in ensuring recovery of critical operations. A number of financial firms are sponsoring industry-wide efforts to explore common infrastructure issues and approaches."

The report also states that "Firms that play significant roles in critical financial markets should maintain sufficient geographically dispersed resources, including staff, equipment and data to recover clearing and settlement activities within the business day on which a disruption occurs."

It continues that "Examples of such arrangements range from maintaining a fully operational geographically dispersed back-up facility for data and operations to utilizing outsourced facilities in which equipment, software, and data are stored for staff to activate. Firms are addressing critical staffing issues in various ways, such as cross training, utilizing staff at underused systems to share or shift loads, rotating employees off-site, and establishing work shifts. A number of firms use outsourced back-up solutions for recovering clearing and settlement activities and data storage. However, numerous commenters expressed concern about the small number of recovery facilities, their lack of geographic diversity and the cost of ensuring availability of facilities during a wide-scale disruption. Firms that use outsourced back-up solutions should take into consideration any heightened risks that could affect access to those facilities during a wide-scale disruption."

GM, Hughes and News Corps Announce Directv Deal

4/9. General Motors and Hughes Electronics announced on April 9 that "GM intends to split off Hughes, and simultaneously sell GM's 19.9 percent economic interest in Hughes to News Corp. ... for $14 per share, or approximately $3.8 billion." See, Hughes release. Direct broadcast satellite service provider DirecTV is a unit of Hughes.

Hughes also stated that "The transaction is subject to a number of conditions, including approval by a majority of each class of GM stockholders -- GM $1-2/3 and GM Class H -- voting both as separate classes and together as a single class. The transaction, which has been approved by the GM, Hughes and News Corp. boards of directors, remains subject to regulatory clearance under the Hart-Scott-Rodino Act and by the Federal Communications Commission. Completion of the transaction is also contingent on the receipt of a favorable ruling from the Internal Revenue Service that the split-off of Hughes from GM would be tax-free to GM and its stockholders for U.S. Federal Income Tax purposes."

The parties to the transaction held a telephone conference call on April 9. News Corp.'s Rupert Murdoch stated that "we expect the transaction to close by the end of calendar 2003". He also stated that News Corp. would follow the Federal Communications Commission's (FCC) program access regulations. A recorded replay is available at 800-839-2808.

On April 10, the Consumers Union (CU) issued a release condemning the proposed transaction. It stated that it "fears that a News Corp. purchase of DirecTV is likely to lead to higher prices for both satellite TV and cable TV customers. Rather than use DirecTV to compete with cable companies and drive down prices, News Corp. can maximize its profits by raising prices for its popular TV network, news channel, and sports programming distributed by all cable and satellite companies."

The CU added that "This transaction comes at a time when the Federal Communications Commission is considering relaxing or eliminating limits on local and national television station ownership, and considering abandoning the prohibition on owning a newspaper and television broadcast station in the same community. Consumers Union believes that the News Corp./DirecTV deal illustrates the danger of allowing one company to gain excessive control over local and national media properties, and calls on the FCC to tighten rather than loosen current media ownership rules."

People and Appointments

4/9. President Bush nominated three persons to be federal judges: Ronnie Greer (U.S. District Court for the Eastern District of Tennessee), Thomas Hardiman (U.S. District Court for the Western District of Pennsylvania), and William Pryor (U.S. Court of Appeals for the Eleventh Circuit). See, White House release.

4/9. President Bush nominated James Jochum to be an Assistant Secretary of Commerce. See, White House release.

4/9. The Senate confirmed Richard Bennett to be a Judge of the U.S. District Court for the District of Maryland by a vote of 99-0. See, Roll Call No. 131.

4/9. The Senate confirmed Dee Drell to be a Judge of the U.S. District Court for the Western District of Louisiana by a vote of 99-0. See, Roll Call No. 130.

4/9. Sprint announced that President and Chief Operating Officer Ronald LeMay is leaving the company, effective April 9. He will provide consulting services for one year. See, Sprint release.

More News

4/9. Microsoft published in its web site a transcript of the April 3 oral argument before the U.S. Court of Appeals (4thCir) in Sun Microsystems v. Microsoft, No. 03-1116. Previously, the U.S. District Court (Maryland) issued a preliminary injunction against Microsoft in this antitrust action. The District Court held in its December 23, 2002 opinion [42 pages in PDF] that Microsoft must carry the latest Java runtime environment on any product carrying Microsoft's .NET, including Windows XP. Microsoft appealed.

4/9. The World Intellectual Property Organization (WIPO) announced that the WIPO Summit on Intellectual Property and the Knowledge Economy, which had been scheduled for April 24-26 in Beijing, China, will not take place as scheduled. The WIPO cited "prevailing circumstances". See, WIPO release.

4/9. Ciena announced that it will acquire WaveSmith. Ciena makes optical networking systems and software. WaveSmith, which is privately held, makes multiservice switching equipment. See, Ciena release.

4th Circuit Holds North Carolina Ban On Internet Wine Sales Is Unconstitutional

4/8. The U.S. Court of Appeals (4thCir) issued its opinion [20 pages in PDF] in Beskind v. Easley, holding that North Carolina's ban on direct shipment of wine from out of state wineries to North Carolina residents violates the Commerce Clause. See, full story.

DC Circuit Vacates FCC's Slamming Fines

4/8. The U.S. Court of Appeals (DCCir) issued its opinion [12 pages in PDF] in AT&T v. FCC, vacating Federal Communications Commission's (FCC) orders that fined AT&T for slamming.

AT&T changed the long distance carrier of two customers without their authorization, a practice know as "slamming". The FCC fined AT&T $80,000 (by forfeiture orders). AT&T then brought this petition for review.

The Appeals Court vacated the forfeiture orders, holding that the FCC's requirement that telecommunications carriers guarantee that the actual line subscriber has authorized the service change order exceeds the FCC's statutory authority to prescribe procedures to verify that authorization.

More News

4/8. The General Accounting Office (GAO) released a report [27 pages in PDF] titled "Defense Acquisitions: Steps Needed to Ensure Interoperability of Systems That Process Intelligence Data". The report pertains to battlefield intelligence systems, such as reconnaissance aircraft, satellites, and ground stations. The report finds that "At times, these systems are not interoperable -- either for technical reasons (such as incompatible data formats) and/or operational reasons. Such problems can considerably slow down the time to identify and analyze a potential target and decide whether to attack it." (Parentheses in original.). It further finds that the Department of Defense's "process for testing and certifying that systems will be interoperable is not working effectively".

4/8. The Copyright Office (CO) published a notice in the Federal Register stating that its "interim rule governing the form, content, and manner of service of notices of termination of transfers and licenses granted by authors on or after 1978 is being adopted as a final rule with one change". See, Federal Register, April 8, 2003, Vol. 68, No. 67, at Pages 16958 - 16959.

4/8. The House Government Reform Committee's Subcommittee on Technology, Information Policy, Intergovernmental Relations and the Census held an oversight hearing titled "Cyber Security: The Challenges Facing Our Nation In Critical Infrastructure Protection". See, prepared testimony [75 pages in PDF] of Robert Dacey (General Accounting Office), and prepared testimony of Mark Forman (Office of Management and Budget).

9th Circuit Rules in Reciprocal Compensation Case

4/7. The U.S. Court of Appeals (9thCir) issued its opinion [33 pages in PDF] in Pacific Bell v. Pac-West Telecomm, three consolidated appeals involving reciprocal compensation.

47 U.S.C. §§ 251 and 252 require incumbent local exchange carriers (ILECs), such as Pacific Bell, to allow competitive local exchange carriers (CLECs), such as Pac-West, to interconnect with their network. Section 251(b)(5) further provides for "reciprocal compensation". That is, when a customer of one local exchange carrier calls a customer of a another local exchange carrier who is within the same local calling area, the first carrier pays the second carrier for completing the call.

The Appeals Court wrote that "When Congress drafted the Act, it did not foresee the dramatic increase in Internet usage and the subsequent increase in telecommunications traffic directed to Internet Service Providers ("ISPs") like America OnLine or Earthlink. Not long after Congress adopted the Act, newly formed CLECs began targeting ISPs to benefit from the reciprocal compensation provisions in interconnection agreements and the compensation they would receive from the one-way traffic that flows into ISP customers but does not flow in the opposite direction. ... Thus, CLECs with ISP customers receive far more compensation from the ILEC for completing its customers’ calls than they pay to the ILEC because ISPs do not reciprocate with calls back to the originating ILEC."

This opinion addresses two rulemaking orders of the California Public Utilities Commission (CPUC) and one arbitration proceeding before the CPUC that dealt with disputes between ILECs and CLECs over reciprocal compensation.

CLECs petitioned the CPUC for an order declaring that calls to ISPs should be treated as local traffic subject to reciprocal compensation provisions in interconnection agreements. The CPUC issued two orders requiring that reciprocal compensation provisions in interconnection agreements in California apply to calls made to ISPs. The CPUC also approved an arbitrated interconnection agreement between Pacific Bell and Pac-West that required reciprocal compensation for calls to ISPs.

The U.S. District Court (NDCal) granted summary judgment in favor of the CLECs and CPUC on the two CPUC orders.

The Court of Appeals reversed the summary judgment upholding the two CPUC orders. It held that the orders are contrary to the Communications Act because they exceed the CPUC's statutory authority under § 252 over interconnection agreements. However, the Appeals Court affirmed the District Court's summary judgment upholding the Pacific Bell / Pac-West interconnection agreement.

The Appeals Court also rejected an argument that the Eleventh Amendment bars the ILECs' claims against the CPUC, citing the Supreme Court's May 20, 2002 opinion [22 pages PDF] in Verizon Maryland v. PSC of Maryland.

Supreme Court News

4/7. The Supreme Court issued its opinion [35 pages in PDF] in State Farm v. Campbell, holding that an award of $145 Million in punitive damages, based on an award of $1 Million in compensatory damages, is excessive and violates the due process and equal protection clauses.

4/7. The Supreme Court denied certiorari in FutureSource v. Reuters, a case involving the affect of a bankruptcy sale upon a contract involving intellectual property rights. See, Order List [10 pages in PDF] at page 3. See also, November 27, 2002 opinion [8 pages in PDF] of the U.S. Court of Appeals (7thCir), and story titled "7th Circuit Reverses in FutureSource v. Reuters" in TLJ Daily E-Mail Alert No. 562, December 6, 2002.

4/7. The Supreme Court denied certiorari in Ty v. Perryman, a trademark dilution case. See, Order List [10 pages in PDF], at page 8. See also, October 4, 2002 opinion [PDF] of the U.S. Court of Appeals (7thCir), and story titled "Posner Opinion Provides Economic Analysis of Trademark, Dilution & Cybersquatting" in TLJ Daily E-Mail Alert No. 524, October 7, 2002.

Intel and Via Settle Patent Litigation

4/7. Intel and Via Technologies announced that they "reached a settlement agreement in a series of pending patent lawsuits related to chipsets and microprocessors. The agreement encompasses 11 pending cases in five countries involving 27 patents." See, Intel release and similar Via release.

Intel stated that "Under terms of the settlement both companies will dismiss all pending legal claims in all jurisdictions. The companies also entered into a ten-year patent cross license agreement covering each company's products. As part of the agreement Intel granted VIA a license to sell microprocessors that are compatible with the x86 instruction set but not pin compatible or bus compatible with Intel microprocessors."

Intel also stated that it "agreed for a period of three years, not to assert its patents on VIA bus or pin compatible microprocessors. Intel also granted VIA a four year license to design and sell chip sets that are compatible with the Intel microprocessor bus and agreed not to assert its patents on VIA or its customers or distributors on such chip sets for a fifth year. The agreement will be royalty bearing to Intel for some products. The license agreements do not apply to S3 Graphics, a company partially owned by VIA."

See, prior TLJ coverage of Intel Via litigation: "Intel and Via Technologies in Patent Dispute", TLJ Daily E-Mail Alert No. 264, September 10, 2001; "Update on Intel v. Via", TLJ Daily E-Mail Alert No. 265, September 11, 2001; "More Intel Via Patent Infringement Suits Filed", TLJ Daily E-Mail Alert No. 274, September 27, 2001; and "Intel and Via Settle Patent Disputes Re K7 Chipsets", TLJ Daily E-Mail Alert No. 328, December 14, 2001.

People and Appointments

4/7. The Senate confirmed Cormac Carney to be a Judge of the U.S. District Court for the Central District of California by a vote of 80-0. See, Roll Call No. 126.

4/7. Jim Schlichting was named a Deputy Chief of the Federal Communications Commission's (FCC) Office of Engineering and Technology (OET). He has worked for the FCC since 1985. See, FCC release [PDF].

4/7. Catherine Seidel was named a Deputy Bureau Chief of the Federal Communications Commission's (FCC) Wireless Telecommunications Bureau (WTB). She will oversee matters before the WTB's Public Safety and Private Wireless Division, and the Policy Division. She joined the FCC in 1994. Before that, she worked for Bell Atlantic (now Verizon). See, FCC release [PDF].

Peter Tenhula4/7. Peter Tenhula (at right), who is the Director of the Federal Communications Commission's (FCC) Spectrum Policy Task Force, was named to the additional position of Acting Deputy Bureau Chief of the FCC's Wireless Telecommunications Bureau (WTB). He will oversee matters before the WTB's Commercial Wireless Division, and the Auctions and Industry Analysis Division. See, FCC release [PDF].

4/7. David Furth was named Associate Bureau Chief and Counsel to the Bureau Chief of the of the Federal Communications Commission's (FCC) Wireless Telecommunications Bureau (WTB). See, FCC release [PDF].

4/7. John Branscome was named Legal Advisor in the office of the Chief of the Federal Communications Commission's (FCC) Wireless Telecommunications Bureau (WTB). He will advise the Bureau Chief and Deputies on wireless regulatory issues, including matters before the WTB's Auctions and Industry Analysis Division. He joined the FCC in 1999. Before that, he worked for the law firm of Wilkinson Barker & Knauer. See, FCC release [PDF].

4/7. Jennifer Tomchin was named Legal Advisor in the office of the Chief of the Federal Communications Commission's (FCC) Wireless Telecommunications Bureau (WTB). He will advise the Bureau Chief and Deputies on wireless regulatory issues, including matters before the WTB's Policy Division. She joined the FCC in 2001. Before that, he worked for the law firm of Fleischman and Walsh. See, FCC release [PDF].

4/7. Zelda Bailey was named Director of the Boulder Laboratories of the Department of Commerce's National Institute of Standards and Technology (NIST), effective May 5, 2003. See, NIST release.

4/7. President Bush nominated Robert McCallum to be Associate Attorney General at the Department of Justice. Bush had previously announced his intent to make the nomination. See, White House release.

4/7. Peter Davidson was named SVP for Federal Government Relations, and Deputy General Counsel, at Verizon. Previously, he was General Counsel at the office of the U.S. Trade Representative (USTR). Before that, he was VP for Congressional Affairs at Qwest Communications. Before that, he was General Counsel and Policy Director for former Rep. Dick Armey (R-TX). See, Verizon release.

More News

4/7. The Department of Commerce's (DOC) Technology Administration (TA) released an its third annual report that measures science and technology indicators in fifty states, the District of Columbia and Puerto Rico. This report, titled "The Dynamics of Technology Based Economic Development", is published in the TA web site in PDF in four files. See, Contents, Part 1, Part 2, and Part 3.

4/7. Sen. Orrin Hatch (R-UT) introduced S 800, a bill to prevent the use of a misleading domain name with the intent to deceive a person into viewing obscenity on the internet. The bill was referred to the Senate Judiciary Committee.

4/7. House and Senate conferees met and reached an agreement regarding S 151, the "Prosecutorial Remedies and Tools Against the Exploitation of Children Today Act of 2003", also known as the PROTECT Act. Proponents of this legislation intend to pass the conference report before the Congress recesses at the end of this week for its Easter recess. See also, release of Sen. Orrin Hatch (R-UT) and statement by Sen. Patrick Leahy (D-VT).

Go to News from April 1-5, 2003.