|News from June 11-15, 2003|
Sen. McCain Introduces Telecom Bill
6/13. Sen. John McCain (R-AZ), introduced S 1264, the "FCC Reauthorization Act of 2003". The bill would reauthorize the Federal Communications Commission (FCC) through 2007. However, the bill also contains many significant substantive provisions pertaining to media ownership rules, e-rate fraud, FCC enforcement, private causes of actions against common carriers, lobbying by former FCC officials, and the effect of bankruptcy on spectrum auctions.
Sen. McCain (at right), the Chairman of the Senate Commerce Committee, also announced that the Committee will meet on Thursday, June 19, to mark up this bill, and others.
Bill Summary. This bill would change the Section 202(h) media ownership biennial review provision. It would require the FCC to prepare annual reports on fraud in its e-rate program. It would raise the statutory caps on fines and forfeitures for violations of the Communications Act. It would provide a private right of action, and recovery of damages, for violation of FCC rules and orders by common carriers, and thus address the 2001 holding of Second Circuit in Conboy v. AT&T. It would preclude a successful bidder in a spectrum auction from using bankruptcy to avoid its obligation to pay for its spectrum license, and thus address the holdings of the DC Circuit and the Supreme Court in the NextWave case. It would enumerate various FCC staff positions subject to the one year lobbying ban. It would also prevent industry from paying travel expenses for FCC staff to attend conventions.
FCC Chairman Michael Powell (at right) stated in a release [PDF], "I applaud and support Senator McCain's introduction of the FCC Reauthorization Act of 2003. The bill contains several provisions that I have long advocated. Increased enforcement authority and penalties, clarifications to the biennial review standard and timing, and important bankruptcy provisions will make the FCC a more effective agency. I look forward to working with the Senate Commerce Committee on these and other important telecommunications issues."
E-Rate Program Fraud. The bill would require to FCC to write annual reports on fraud and abuse in the schools and libraries universal service subsidies program, also known as the e-rate. The bill states that the FCC "shall conduct an investigation into the implementation, utilization, and Commission oversight of activities authorized by section 254(h) of the Communications Act of 1934 (47 U.S.C. 254(h)) ... for each of fiscal years 2004 through 2007, with a particular emphasis on determining the specific fraud or abuse of Federal funds that has occurred in connection with such activities or operations."
Thus, the bill would not require the FCC to report on fraud that has already occurred, or fraud that occurs after FY 2007.
Sen. McCain stated in the Senate that "Serious allegations of fraud in the operation of the e-rate fund have been raised in recent months, and we should provide the Commission adequate resources to ensure that e-rate funds are being used for the purposes intended." See, Congressional Record, June 13, 2003, at page S7882.
Media Ownership. The bill would revise the biennial review provision of Section 202(h) of the Telecommunications Act of 1996 (S 652 in the 104th Congress, Public Law No. 104-104).
Section 202(h) provides that "The Commission shall review its rules adopted pursuant to this section and all of its ownership rules biennially as part of its regulatory reform review under section 11 of the Communications Act of 1934 and shall determine whether any of such rules are necessary in the public interest as the result of competition. The Commission shall repeal or modify any regulation it determines to be no longer in the public interest."
Sen. McCain's bill would amend Section 202(h) to read as follows:
"(h) FURTHER COMMISSION REVIEW.--
(1) IN GENERAL.--The Commission shall review its rules adopted pursuant to this section, and all of its ownership rules quinquennially (beginning with 2007), and shall determine whether -- (A) any rule requires strengthening or broadening; (B) any rule requires limiting or narrowing; (C) any rule should be repealed; or (D) any rule should be retained.
(2) CHANGE, REPEAL, OR RETAIN.--The Commission shall change, repeal, or retain such rules pursuant to its review under paragraph (1) as it determines to be in the public interest."
This would accomplish several significant changes. First, reviews would take place every five years, instead of every two years. Second, it deletes the reference to "necessary" which the DC Circuit found to be critical to its interpretation. Third, it removes the presumption in favor of repealing or relaxing ownership rules.
Enforcement. The bill would increase certain statutory caps on penalties ten fold, and extends statute of limitations on certain actions.
Sen. McCain stated that "The bill would increase the Commission's ability to enforce the Communications Act of 1934, the 1934 Act, by raising the statutory cap on Commission fines and forfeitures by a factor of ten. The Commission has sought this increased enforcement ability to ensure communications providers do not accept Commission fines as a ``cost of doing business.´´ The bill also increases the statute of limitations for violations of FCC rules or regulations from one year to two years. The legislation also allows the Commission to assess fines against direct broadcast satellite (DBS) operators for violations of the Communications Act in the same manner that the Commission may assess fines against broadcasters and cable operators."
Lobbying Restrictions. The bill contains two provisions related to lobbying. First, it would limit payment of travel costs of FCC officials and staff. Second, it would expand the list of FCC positions subject to the one year ban on lobbying.
Sen. McCain stated that the bill "would ban any payment or reimbursement to the FCC of travel costs for FCC officials or staff from a nongovernmental sponsor of a convention, conference, or meeting. Recent reports indicate that during the last eight years, FCC officials and staff have taken more than 2,500 trips paid for by the industries they regulate. Although this is perfectly legal and it is often appropriate for FCC officials and staff to attend such conventions, conferences, or meetings, it should be without the appearance of impropriety."
The one year ban on lobbying is codified at 18 U.S.C. § 207. It provides, at § 207(c)(1) that "... any person who is an officer or employee ... of the executive branch of the United States (including an independent agency), who is referred to in paragraph (2), and who, within 1 year after the termination of his or her service or employment as such officer or employee, knowingly makes, with the intent to influence, any communication to or appearance before any officer or employee of the department or agency in which such person served within 1 year before such termination, on behalf of any other person (except the United States), in connection with any matter on which such person seeks official action by any officer or employee of such department or agency, shall be punished ..."
Paragraph (2), in turn, provides guidance as to which persons the restriction of paragraph (1) applies. Sen. McCain's bill would add an enumerated list of FCC positions subject to the one year ban. It lists the chiefs of the bureaus (MB, WCB, WTB, IB, OET, EB, CGAB). It also includes the chief of OSP, the Inspector General, the General Counsel, and the Director of OLA.
Sen. McCain said that "The bill would impose a one year lobbying ban on high-level FCC staffers who leave the FCC's employment."
Spectrum Licenses, Bankruptcy and Security Interests. The bill also addresses the situation presented in the NextWave case.
Sen. McCain stated that "the bill would ensure that valuable spectrum does not lie fallow unnecessarily. It precludes a successful bidder in a spectrum auction from using bankruptcy to avoid its obligation to pay for its spectrum license. The bill also establishes an office within the Commission for the recording and perfecting of security interests related to licenses."
Specifically, the bill would provide that "The bankruptcy laws shall not be applied (A) to avoid, discharge, stay, or set-off any pre-petition debt obligation to the United States arising from an auction under this Act, (B) to stay the payment obligations of the debtor to the United States if such payments were a condition of the grant or retention of a license under this Act, or (C) to prevent the automatic cancellation of licenses for failure to comply with any monetary or non-monetary condition for holding any license ..."
The bill would also provide that "A debtor in a proceeding under the bankruptcy laws shall have no right or interest in any portion of the proceeds from an auction of any license reclaimed by the Commission for failure to pay a monetary obligation of the debtor to the United States in connection with the grant or retention of a license under this Act."
Finally, the bill would provide that the FCC may "(A) establish rules and procedures governing security interests in licenses, or the proceeds of the sale of licenses, issued by the Commission; and (B) establish an office within the Office of Secretary for the recording and perfection of such security interests without regard to otherwise applicable State law."
These amendments would only apply prospectively. It would only apply "to cases and proceedings commenced on or after the date of enactment of this Act."
Private Cause of Action Against Common Carriers for Violation of FCC Rules and Orders. The bill would also provide for the recovery of damages for injuries caused by common carriers as a result of their violation of the Communications Act or FCC rules or orders. Section 206 currently provides for recovery of damages for violation of the statute, but not for violation of rules or orders. This change addressed the holding of the Second Circuit in Conboy v. AT&T.
Sen. McCain stated that "The need for this clarification is underscored by the recent decision by the United States Court of Appeals or the Second Circuit in Conboy v. AT&T Corp. Moreover, the new section would allow for the recovery of attorneys' fees in complaints filed either in district court or at the FCC."
On February 26, 2001, the U.S. Court of Appeals (2ndCir) issued its opinion in Conboy v. AT&T, a case regarding the Telecommunications Act of 1996 and electronic privacy. The Appeals Court affirmed the District Court's decision dismissing the plaintiffs' complaint.
The plaintiffs, Edward and Eileen Conboy, filed a class action complaint in U.S. District Court (SDNY) alleging that AT&T improperly disseminated personal information about them to AT&T Universal Card Services (UCS) to help UCS collect credit card debt, in violation of § 222 of the Telecommunications Act of 1996, FCC regulations thereunder, the Fair Debt Collection Practices Act, and New York State law.
Plaintiffs were neither the debtors, nor guarantors of the debt; their daughter is law was the debtor. Nevertheless, AT&T gave UCS their unlisted phone number. UCS made between 30 and 50 harassing phone calls to them, some at unusual hours. The District Court dismissed the entire complaint for failure to state a claim upon which relief can be granted. The Appeals Court affirmed.
The Appeals Court wrote that "The text of the Telecommunications Act contains no language that explicitly provides a private right of action for damages for violations of the two FCC regulation at issue here. Section 401(b) of the Communications Act permits private parties to enforce FCC ``orders,´´ but it does not provide authority for the recovery of damages. Moreover, no private right of action for money damages can be implied."
(The Appeals Court also held in Conboy that the Plaintiffs could not sue for violation of the statute, because they "failed to allege recoverable damages". That is, they could not recover for mere harassment.)
Peter Keisler, formerly with Sidley Austin, argued and won the case for AT&T. On June 5, the Senate confirmed him to be Assistant Attorney General in charge of the Civil Division. The Electronic Privacy Information Center filed an amicus brief on behalf of the harassed phone customers, but lost.
S 1264 would amend 47 U.S.C. § 206 to read as follows: "A common carrier that does, or causes or permits to be done, any act, matter, or thing prohibited or declared to be unlawful in this Act, or in any rule, regulation, or order issued by the Commission, or that fails to do any act, matter, or thing required to be done by this Act, or by any rule, regulation, or order of the Commission is liable to any person injured by such act or failure for the full amount of damages sustained in consequence of such act or failure, together with a reasonable attorney's fee. The amount of the attorney's fee shall be -- (1) fixed by the court in every case of recovery in a judicial proceeding; or (2) fixed by the Commission in every case of recovery in a Commission proceeding.''
Section 206 currently provides: "In case any common carrier shall do, or cause or permit to be done, any act, matter, or thing in this chapter prohibited or declared to be unlawful, or shall omit to do any act, matter, or thing in this chapter required to be done, such common carrier shall be liable to the person or persons injured thereby for the full amount of damages sustained in consequence of any such violation of the provisions of this chapter, together with a reasonable counsel or attorney's fee, to be fixed by the court in every case of recovery, which attorney's fee shall be taxed and collected as part of the costs in the case."
People and Appointments
6/13. The Senate confirmed Hewitt Pate to be an Assistant Attorney General at the Department of Justice (DOJ) by a vote of 71-0. See, Roll Call No. 226. He replaces Charles James as head of the Antitrust Division.
House Passes Class Action Fairness Act
6/12. The House amended and passed HR 1115, the "Class Action Fairness Act", by a vote of 253-170. See, Roll Call No. 272. This bill amends 28 U.S.C. § 1332, regarding diversity of citizenship. It provides federal jurisdiction in certain class actions with a minimum total of aggregated claims where any member of a class of plaintiffs is a citizen of a state different from any defendant.
This bill is sponsored by Rep. Bob Goodlatte (R-VA) (at right), Rep. Rick Boucher (D-VA), and many other members of the House.
The House approved an amendment [3 pages in PDF] offered by Rep. James Sensenbrenner (R-WI), Rep. Boucher, Rep. Goodlatte, Rep. Jim Moran (D-VA), Rep. Cal Dooley (D-CA), Rep. Charles Stenholm (D-TX) and Rep. Lee Terry (R-NE). It broadens the category of class action that would remain in state court. First, this amendment raises the amount in controversy required for federal court jurisdiction from $2 Million to $5 Million. Second, it allows federal courts to return some intrastate class actions in which the law of that state governs to the courts of that state.
The bill would also require increased judicial scrutiny of class action settlements that provide for coupon and other non-cash settlement payments to plaintiffs. It would also prohibit geographic discrimination in awards to plaintiffs.
Rep. Goodlatte stated in a release that "With the House passage of this critical legislation we move one step closer to streamlining the ability of the courts to deal with class action lawsuits by making it easier for those involved in the case to transfer large multistate suits from the state courts to the federal courts ... Federal courts were actually designed by the Framers of the Constitution to handle large cases that crossed state boundaries. Neither federalism nor common sense support the current system’s handling of interstate class actions."
Rep. Goodlatte added that "This bill will help end the forum shopping abuses and resultant extortionate settlements that plague class action litigation today ... Presently, the only winners are the lawyers who may get a half-billion dollar payday. The Class Action Fairness Act will help ensure that real plaintiffs with real grievances are protected against settlements that give the lawyers millions and mere coupons to the consumers."
The House rejected three amendments offered by Democrats. See, amendment [2 pages in PDF] offered by Rep. Sheila Lee (D-TX), amendment [PDF] offered by Rep. Zoe Lofgren (D-CA) and Rep. Linda Sanchez (D-CA), and amendment [14 pages in PDF] offered by Rep. Max Sandlin (D-TX) and Rep. John Conyers (D-MI).
This bill has yet to pass the Senate. Rep. Goodlatte also stated that "We are optimistic that this legislation will pass in the Senate, and the President has indicated that he will sign it into law".
This bill is a re-introduction of HR 2341 (107th), which passed in the House by a vote of 233-190. See, story titled "Reps. Goodlatte and Boucher Re-Introduce Class Action Fairness Act" in TLJ Daily E-Mail Alert No. 619, March 10, 2003. However, the Senate did not pass that bill.
Rep. Sanders Introduces Bill to Reverse FCC's Media Ownership Report & Order
6/12. Rep. Bernie Sanders (Soc-VT) and others introduced HR 2462, the "Protect Diversity in Media Act". It provides that "The final rules adopted by the Federal Communications Commission pursuant to its media ownership proceeding, and announced by the Commission on June 2, 2003, shall be invalid and without legal effect."
Moreover, the bill provides that "The Federal Communications Commission shall not apply section 202(h) of the Telecommunications Act of 1996 or section 11(b) of the Communications Act of 1934 (47 U.S.C. 161(b)) to any review of broadcast media ownership rules after the date of enactment of this Act."
In addition to Rep. Sanders, the bill has 26 cosponsors. All are Democrats. Several are members of the House Commerce Committee, which has jurisdiction -- Rep. Sherrod Brown (D-OH), Rep. Janice Schakowsky (D-IL) and Rep. Hilda Solis (D-CA).
See, stories titled "FCC Announces Revisions to Media Ownership Rules" and "Reaction to the FCC's Media Ownership Announcement" in TLJ Daily E-Mail Alert No. 672, June 3, 2003.
4th Circuit Declines to Rule on Scienter Requirements of PSLRA
6/12. The U.S. Court of Appeals (4thCir) issued its unpublished opinion [9 pages in PDF] in Svezzese v. Duratek. This is a class action securities fraud suit against a radioactive waste management services company, and several of its officers. The issue before the Court is the scienter requirements of the Private Securities Litigations Reform Act (PSLRA). The District Court dismissed the complaint. The Court of Appeals affirmed.
It is a nine page opinion on an important issue that explains the basis for the disposition. Yet, the Court designated it as nonprecedential.
The Appeals Court noted that "Under the 1995 Private Securities Litigation Reform Act (PSLRA), a securities fraud complaint must also meet heightened pleading standards, particularly with respect to scienter. See 15 U.S.C.A. § 78u-4(b)". The Appeals Court reviewed the various standards adopted by other federal circuits, but stated that "We have not yet adopted a specific standard as to what precisely a plaintiff must plead in order to meet the PSLRA's scienter requirement."
Following a review of the facts of the case, it concluded that "all of the allegations in the complaint, whether considered individually or collectively, fail to provide a sufficient basis to meet even the most lenient PSLRA pleading standard." Hence, the 4th Circuit has yet to interpret the meaning of the scienter requirement under the PSLRA. Most of the other circuits have weighed in, and adopted one of three standards.
J.D. Edwards Files Complaint Against Oracle
6/12. J.D. Edwards filed a complaint [12 pages in PDF] in state court in Denver, Colorado, against Oracle in connection with Oracle's hostile offer to acquire PeopleSoft.
On June 2, J.D. Edwards and PeopleSoft announced a definitive agreement under which PeopleSoft will acquire J.D. Edwards. See, PeopleSoft release [4 pages in PDF] and J.D. Edwards release.
On June 6, Oracle made a hostile bid for PeopleSoft. Oracle stated in a release [PDF] that it will "commence a cash tender offer to purchase all of the outstanding shares of PeopleSoft ... for $16 per share, or approximately $5.1 billion." See also, Oracle document [PDF] titled "Frequently Asked Questions Document". See, story titled "Oracle Makes Hostile Bid for PeopleSoft" in TLJ Daily E-Mail Alert No. 676, June 9, 2003.
The three count complaint alleges intentional interference with contract, intentional interference with prospective business relations of J.D. Edwards, and intentional interference with prospective business relations of PeopleSoft. PeopleSoft is not a plaintiff. However, J.D. Edwards alleges that since it is has a binding contract to merge with PeopleSoft, economic benefits to PeopleSoft will accrue to it.
J.D. Edwards seeks declaratory relief, $1.7 Billion in compensatory damages, unspecified punitive damages, and cost and attorneys fees.
Bob Dutkowsky, Ch/P/CEO of J.D. Edwards, stated in a release that "Oracle's sole aim is to disrupt a merger that will create value for the key stakeholders of J.D. Edwards and PeopleSoft ... Oracle’s unsolicited offer for PeopleSoft will only destroy value for our companies' shareholders, customers and employees and the technology community overall. We will not sit by idly while Oracle pursues this arrogant, unlawful and destructive course of action."
Also named as defendants are Pepper Acquisition Corporation and John Does 1-50. The complaint alleges that Pepper is a wholly owned subsidiary of Oracle "formed for the sole purpose of making a tender offer for the Common Stock of PeopleSoft." The complaint alleges that "Does 1 through 50 participated in or caused the tortious conduct identified in this Complaint."
The complaint alleges that "Oracle's purpose in this effort is to prevent the competition it would face if the J.D. Edwards/PeopleSoft Contract is consummated, while its chosen method for achieving its objective is an illusory offer to acquire PeopleSoft. Oracle's so-called offer is conditioned upon PeopleSoft breaching the Contract with J.D. Edwards."
J.D. Edwards has its headquarters in Denver, Colorado. It is represented by David Berger of the the Silicon Valley law firm of Wilson Sonsini. Local counsel in Denver is Stephen Baity of the law firm of Godin Baity.
SEC and U.S. Atty. Charge Former Network Associates Controller
6/12. The Securities and Exchange Commission (SEC) filed a civil complaint in U.S. District Court (NDCal) against Terry Davis, a former VP and Controller of Network Associates, alleging violation of federal securities laws in connection with a scheme to overstate Network Associates' revenues and earnings and thereby inflate its stock price. Also, on June 11, the U.S. Attorneys Office (NDCal) charged Davis by criminal information [PDF] with securities fraud in violation of 15 U.S.C. § 78j(b) and § 78ff, 17 C.F.R. § 240.10b-5, and aiding and abetting under 18 U.S.C. § 2.
The SEC's civil complaint alleges that he "filed false and misleading financial statements with the Commission from at least the second quarter of fiscal 1998 through at least the fourth quarter of fiscal 2000". Moreover, the complaint alleges that while Davis knew of the fraud, he sold shares of Network Associates.
The four count SEC complaint alleges fraud in violation of Section 10(b) of the Exchange Act Section 10(b) and Rule 10b-5 thereunder; insider trading in violation of Section 17(a) of the Securities Act, Section 10b of the Exchange Act, and Rule 10b-5 thereunder; falsifying books and records and making false statements to auditors in violation of Section 13(b)(5) Exchange Act and Rules 13b2-1 and 13b2-2 thereunder; and aiding and abetting violations in violation of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13. See also, SEC release.
Davis entered a plea of guilty to the criminal charges in U.S. District Court. See also, USAO release.
Legislators Re-Introduce Bills to Address State IPR Sovereign Immunity
6/12. Sen. Patrick Leahy (D-VT) introduced S 1191 the "Intellectual Property Protection Restoration Act of 2003" on June 5, 2003. Rep. Lamar Smith (R-TX) and Rep. Howard Berman (D-CA) introduced the companion bill in the House, HR 2344, also titled the "Intellectual Property Protection Restoration Act of 2003".
Eleventh Amendment. "The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State."
Supreme Court Cases. The problem addressed by these bills results from the recent Supreme Court opinions interpreting the 11th Amendment. For example, in Seminole Tribe v. Florida the Court held that the Congress lacks authority under Article I of the Constitution to abrogate the States' 11th Amendment immunity from suit in federal courts. The Court extended this to the context of intellectual property in the 1999 rulings in Florida Prepaid v. College Savings Bank (invalidating the Patent and Plant Variety Protection Remedy Clarification Act) and College Savings Bank v. Florida Prepaid (invalidating the Trademark Remedy Clarification Act).
S 1191 and HR 2344. S 1191 and HR 2344 state that one of the purposes is to "help eliminate the unfair commercial advantage that States and their instrumentalities now hold in the Federal intellectual property system because of their ability to obtain protection under the United States patent, copyright, and trademark laws while remaining exempt from liability for infringing the rights of others".
Sen. Leahy (at right) stated in the Senate that "I believe that there is an urgent need for Congress to respond to the Florida Prepaid decisions, for two reasons. First, the decisions opened up a huge loophole in our Federal intellectual property laws. If we truly believe in fairness, we cannot tolerate a situation in which some participants in the intellectual property system get legal protection but need not adhere to the law themselves. If we truly believe in the free market, we cannot tolerate a situation where one class of market participants have to play by the rules and others do not."
Second, said Sen. Leahy, these were 5-4 decisions. He said that "Over the past decade, in a series of five-to-four decisions that might be called examples of ``judicial activism,´´ the current Supreme Court majority has overturned Federal legislation with a frequency unprecedented in American constitutional history. In doing so, the Court has more often than not relied on notions of State sovereign immunity that have little if anything to do with the text of the Constitution. ... We are faced with a choice. We can respond -- in a careful and measured way -- by reinstating our democratic policy choices in legislation that is crafted to meet the Court's stated objections. Or we can run away, abdicate our democratic policy-making duties to the unelected Court, and go down in history as the incredible shrinking Congress." See, Congressional Record, June 5, 2003, at Page S7479-80.
This bill would do several things. First, it would prevent states from recovering damages for infringement of state owned intellectual property (either patent, copyright or trademark), unless they have first waived their 11th Amendment sovereign immunity from suits against them for their infringement of the intellectual property of others.
Second, it would provide that states that violate intellectual property rights "in a manner that deprives any person of property in violation of the fourteenth amendment of the United States Constitution, shall be liable to the party injured in a civil action in Federal court for compensation for the harm caused by such violation." The bill contains similar language for violations which constitute takings under the 5th Amendment.
Legislative History. Sen. Leahy has been trying for many years, without success, to pass legislation addressing this problem. He sponsored similar legislation in the 107th Congress -- S 2031, the "Intellectual Property Protection Restoration Act of 2002". Sen. Sam Brownback (R-KS) was a cosponsor. However, at the beginning of the 108th Congress, he gave up his seat on the Judiciary Committee, and is not longer active on this issue.
S 2031 (107th), in turn, was a revised version of S 1611 (107th), the "Intellectual Property Protection Restoration Act of 2001, introduced on November 1, 2001.
The related bill in the House was HR 3204 (107th), sponsored by Rep. Howard Coble (R-NC) and Rep. Howard Berman (D-CA). Rep. Coble was the Chairman of the House Subcommittee on Courts, the Internet, and Intellectual Property in the 107th Congress. Rep. Smith is now the Chairman.
Sen. Dianne Feinstein (D-CA), who is also a member of the Senate Judiciary Committee, is the main obstacle to passage of this legislation. She represents UC Berkeley and other California institutions that do not want to give up their immunity.
See also, story titled "Senate Judiciary Committee Considers Federalism and Intellectual Property" in TLJ Daily E-Mail Alert No. 522, October 3, 2002, and "Sen. Leahy Reintroduces Bill to Close 11th Amendment Loophole to IPR" in TLJ Daily E-Mail Alert No. 394, March 22, 2002.
People and Appointments
6/12. President Bush announced his intent to nominate Pamela Harbour to be a Commissioner of the Federal Trade Commission (FTC) for the remainder of a seven year term expiring September 25, 2009. She is a partner in the New York City office of the law firm of Kaye Scholer. Previously, she worked for 11 years in the Office of the Attorney General of the State of New York. She was Deputy Attorney General and Chief of the Public Advocacy Division. She was also Assistant First Deputy to Attorney General Eliot Spitzer. If confirmed, she will replace Sheila Anthony. See, White House release and second release.
6/12. The Senate confirmed Clay Johnson to be Deputy Director for Management at the Office of Management and Budget (OMB). See, OMB release.
6/12. The Senate confirmed John Woodcock to be Judge of the U.S. District Court (DMaine).
6/12. The House passed HR 2312, the "ORBIT Technical Corrections Act of 2003". The bill was introduced on June 3, 2003 by Rep. John Shimkus (R-IL). The bill states that it would "amend the Communications Satellite of 1962 to provide for the orderly dilution of the ownership interest in Inmarsat by former signatories to the Inmarsat Operating Agreement." Specifically, it provides that "Clause (ii) of section 621(5)(A) of the Communications Satellite Act of 1962 (47 U.S.C. 763(5)(A)) is amended -- (1) by striking `December 31, 2002' and inserting `June 30, 2004'; and (2) by striking `June 30, 2003' and inserting `December 31, 2004'."
6/12. The Federal Communications Commission (FCC) released an order regarding Cingular Wireless's possible violations of the enhanced 911 (E911) Phase II provisions of the FCC's Rules for its Global System for Mobile Communications (GSM) network and the FCC Order granting Cingular a waiver of the E911 Phase II rules for its GSM network. The order adopts and attaches a consent decree under which Cingular is fined (the order designates this as a "voluntary contribution") $675,000. See also, FCC release.
House Passes Commercial Spectrum Enhancement Act
6/11. The House passed HR 1320, the "Commercial Spectrum Enhancement Act", by a vote of 408-10. See, Roll Call No. 260.
This bill, which is sponsored by Rep. Fred Upton (R-MI), would change the process for reallocating spectrum from federal users to commercial users, such as for Third Generation (3G) wireless services. For example, the Department of Defense (DOD) currently uses spectrum in the 1710-1755 MHz band. The National Telecommunications and Information Administration (NTIA) and Federal Communications Commission (FCC) have identified this band for reallocation for 3G services. The DOD will incur expenses to relocate to other spectrum bands. The bill would create a Spectrum Relocation Fund, funded by auction proceeds, to compensate federal agencies for the cost of relocating. The bill would replace the current role of the House and Senate Appropriations Committees.
The House Commerce Committee's Telecommunications and Internet Subcommittee held a hearing on March 25. See, TLJ story titled "House Subcommittee Holds Hearing On Commercial Spectrum Enhancement Act", March 25, 2003.
The Subcommittee marked up the bill on April 9, 2003. See, story titled "House Subcommittee Approves Spectrum Relocation Fund Bill", TLJ Daily E-Mail Alert No. 641, April 10, 2003.
The full Committee approved the bill on April 30. See, story titled "House Commerce Committee Passes Spectrum Relocation Bill" in TLJ Daily E-Mail Alert No. 653, May 1, 2003.
The Senate version of the bill is S 865, which was introduced on April 10, 2003, by Sen. John McCain (R-AZ) and others. Neither the Senate, nor the Senate Commerce Committee, has yet passed the bill.
House Rules Committee Adopts Rule for Class Action Fairness Act
6/11. The House Rules Committee adopted a structured rule for the consideration of HR 1115, the "Class Action Fairness Act". The full House may take up the bill on Thursday, June 12.
This bill would, among other things, amend 28 U.S.C. § 1332, regarding diversity of citizenship. It would provide federal jurisdiction in certain class actions with a minimum total of aggregated claims where any member of a class of plaintiffs is a citizen of a state different from any defendant.
The bill would also require increased judicial scrutiny of class action settlements that provide for coupon and other non-cash settlement payments to plaintiffs. It would also prohibit geographic discrimination in awards to plaintiffs.
Rep. Bob Goodlatte (R-VA), Rep. Rick Boucher (D-VA) and others introduced this bill on March 6, 2003. It is a re-introduction of HR 2341 (107th), which passed in the House by a vote of 233-190. See, story titled "Reps. Goodlatte and Boucher Re-Introduce Class Action Fairness Act" in TLJ Daily E-Mail Alert No. 619, March 10, 2003.
The House Judiciary Committee held a hearing on May 15, and then amended and passed this bill on May 21, 2003, by a vote of 20-14. It was a largely party line vote, with Republicans supporting the bill, and Democrats opposing it. However, Rep. Boucher, a cosponsor of the bill, voted for it. See, story titled "House Committee Holds Hearing on Class Action Reform Bill" in TLJ Daily E-Mail Alert No. 664, May 19, 2003.
The rule governing consideration by the full House makes in order four amendments. First, there is an amendment [3 pages in PDF] offered by Rep. James Sensenbrenner (R-WI), Rep. Boucher, Rep. Goodlatte, Rep. Jim Moran (D-VA), Rep. Cal Dooley (D-CA), Rep. Charles Stenholm (D-TX) and Rep. Lee Terry (R-NE). This is bipartisan amendment supported by the sponsors of the bill. It would broaden the category of class action that would remain in state court. First, this amendment would raise the amount in controversy required for federal court jurisdiction from $2 Million to $5 Million. Second, it would allow federal courts to return some intrastate class actions in which the law of that state governs to the courts of that state.
Second, there is an amendment [2 pages in PDF] offered by Rep. Sheila Lee (D-TX) that would prevent domestic corporations from not being subject to the jurisdiction of federal courts, and liability in class action lawsuits filed in federal courts, through mergers or repatriations with foreign companies.
Third, there is an amendment [PDF] offered by Rep. Zoe Lofgren (D-CA) and Rep. Linda Sanchez (D-CA) that would amend section 4(a) of the bill, which would amend 28 U.S.C. § 1332, to preserve the ability of local prosecutors to enforce state antitrust and consumer protection laws in state courts.
Fourth, there is an amendment [14 pages in PDF] offered by Rep. Max Sandlin (D-TX) and Rep. John Conyers (D-MI). This is an amendment in the nature of a substitute.
Sen. Schumer Introduces Spam Bill
6/11. Sen. Charles Schumer (D-NY) introduced S 1231, the "Stop Pornography and Abusive Marketing Act", or SPAM Act. See also, Sen. Schumer's summary of the bill [PDF].
The bill has been referred to the Senate Commerce Committee, of which Sen. Schumer is not a member. The Committee is scheduled to hold a mark up session on Thursday, June 19. The agenda include a spam bill sponsored by Sen. Conrad Burns (R-MT), Sen. Ron Wyden (D-OR), and others -- S 877, the "Controlling the Assault of Non-Solicited Pormography and Marketing Act of 2003", or "CAN-SPAM Act". Senators Burns and Wyden are members of the Committee, and have been working on spam legislation for years. The agenda does not reference Sen. Schumer's bill.
Sen. Schumer (at right) stated in a release that "The avalanche of pormography being sent to kids by spammers makes checking email on par with watching an X-rated movie. Parents need to be able to keep offensive material out of the family room and I'm working with the Christian Coalition to do just that".
The bill addresses "unsolicited commercial e-mail" or "UCE", which it defines as a "commercial electronic mail message that is sent to a recipient -- (i) without prior affirmative consent or implied consent from the recipient; or (ii) to a recipient who, subsequent to the establishment of affirmative or implied consent under clause (i), has expressed, ... a desire not to receive commercial electronic mail messages from the sender."
The bill would create a national no spam registry to be maintained by the Federal Trade Commission (FTC). The bill provides that "it shall be unlawful for a person to initiate UCE to a registered electronic mail address". The FTC would have authority to promulgate implementing regulations, and to initiate civil enforcement proceedings.
The bill provides that the FTC "may impose a civil penalty not to exceed $5,000 for each violation". It specifies that "each day of violation shall constitute a separate offense." The bill also provides the FTC "may impose a civil penalty not to exceed $100,000 for each unauthorized use of the Registry".
The bill also requires certain UCE to be labeled. It states that "it shall be unlawful for any person to initiate the transmission of any UCE to a protected computer unless the message provides clear and conspicuous identification that the message is an advertisement or solicitation, by providing, as the first characters in the subject line, `ADV:´."
However, the bill also provides an exception for e-mail sent by members of self-regulatory organizations that have been approved by the FTC.
The bill provides that "It shall be unlawful for a person to initiate the transmission of commercial electronic mail or UCE in violation of Internet Service Provider policies with respect to electronic mail, account registration and use, or other terms of service."
The bill also prohibits false information, including in headers or subject lines. It states that "It shall be unlawful for a sender to initiate the transmission of commercial electronic mail or UCE to a protected computer that contains false, misleading, or deceptive information in the subject line, header or router information, or the body of the message, including the information regarding unsubscribe option ..."
The bill also requires a return address and opt out opportunity. "All commercial electronic mail and UCE shall contain ... A functioning return electronic mail address or other Internet-based mechanism, clearly and conspicuously displayed, that -- (i) a recipient may use to submit a reply electronic mail message requesting not to receive any future UCE from that sender at the electronic mail address where the message was received; and (ii) remains capable of receiving such messages or communications for no less than 30 days after the transmission of the original message." The bill also provides that all commercial electronic mail and UCE must contain "Clear and conspicuous notice ... of the opportunity to decline to receive further commercial electronic mail and UCE from the sender." And finally, the bill provides that "It shall be unlawful for a sender to initiate transmission of commercial electronic mail or UCE to a recipient after that recipient has exercised the unsubscribe option this section."
The bill also provides that "It shall be unlawful for any person to initiate the transmission of commercial electronic mail or UCE without identifying the valid, physical address of the sender in a clear and conspicuous manner."
The bill also bans the assembling of e-mail lists through automated address harvesting.
The bill gives enforcement authority to a wide range of governmental entities, including the Federal Trade Commission (FTC), and states. It also creates a private cause of action for individuals, but not as a class action.
The Schumer bill is broader than the Burns/Wyden bill. The Burns/Wyden spam 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 Burns/Wyden 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.
Sen. McCain Introduces FTC Reauthorization Bill
6/11. Sen. John McCain (R-AZ) and Sen. Gordon Smith (R-OR) introduced S 1234, the "Federal Trade Commission Reauthorization Act of 2003". This bill is scheduled for markup by the Senate Commerce Committee on Thursday morning, June 19.
The bill would authorize appropriations for the Federal Trade Commission (FTC) for fiscal years 2004 through 2006. The bill also contains extensive revisions to the Federal Trade Commission Act (FTCA) to increase the authority of the FTC to deal with cross border fraud, including internet and telecommunications based scams.
Much of the bill is noncontroversial. However, several of its provisions are noteworthy, including its proposals to create exemptions from liability for information sharing, to create a new FOIA exemption, and to amend the ECPA to enable the FTC to obtain e-mail from ISPs without notice to the customers.
Exemption from Liability and FOIA Exemption. The bill would both create a limitation on liability, and a Freedom of Information Act (FOIA) exemption, for certain information shared by the private sector with the FTC. The covered entities include ISPs, domain name registrars, and financial institutions.
The covered communications include anything that a covered entity "voluntarily provides" to the FTC "that it reasonably believes is relevant to (1) a possible unfair or deceptive act or practice, as defined in section 5(a) of this Act, or (2) assets subject to recovery by the Commission, including assets located in foreign jurisdictions".
This section then provides the following immunity. The covered entity "shall not be liable to any person under any law or regulation of the United States, or any constitution, law, or regulation of any State or political subdivision of any State or any Territory or the District of Columbia, for such disclosure or for any failure to provide notice of such disclosure. The preceding sentence does not provide any exemption from liability for the underlying conduct reported." Also, the covered entity "shall be exempt from liability in accordance with the provisions of section 5318(g)(3) of title 31".
This section also provides the following FOIA exemption. "Material submitted pursuant to this section with a request for confidential treatment shall be exempt from disclosure under section 552 of title 5, United States Code."
Specifically, the entities covered by this section include "A courier service, a commercial mail receiving agency, an industry membership organization, a payment system provider, a consumer reporting agency, a domain name registrar and registry, a provider of remote computing services or electronic communication services, to the limited extent such a provider is disclosing consumer complaints received by it from a customer or subscriber, or information reflecting such complaints; and ... a bank or thrift institution, a commercial bank or trust company, an investment company, a credit card issuer, an operator of a credit card system, and an issuer, redeemer, or cashier of travelers' checks, checks, money orders, or similar instruments."
ECPA Amendment. The bill would also amend the Electronic Communications Privacy Act (ECPA) to allow the FTC to obtain e-mail communications from service providers, without notice to the customer.
Specifically, the bill provides that "When section 2703(b)(1)(B) of title 18 would otherwise require notice, notwithstanding such requirements, the Commission may obtain, through compulsory process described in subsection (a)(1) or through judicial subpoena,
(A) from a provider of remote computing services, access to or copies of the contents of a wire or electronic communication ... or (B) from a provider of electronic communications services, access to or copies of the contents of a wire or electronic communication that has been in electronic storage in an electronic communications system for more than 180 days, ...
without prior notice to the customer or subscriber, upon an ex parte showing to an appropriate United States district court by a Commission official that there is reason to believe that notification of the existence of the process may cause an adverse result described in subsection (a)(2). Upon such a showing, the presiding judge or magistrate judge shall issue an exparte order granting a delay of notice for a period not to exceed 90 days. A court may grant extensions of the period of delay of notice of up to 90 days, upon application by the Commission and a showing that the requirements for delayed notice under subsection (b)(2) continue to apply."
Verizon, which recently fought an unsuccessful battle to keep the RIAA from obtaining from it information about subscribers engaged in copyright infringement, opposes this change to the ECPA. Sarah Deutsche of Verizon testified at a hearing of the Senate Commerce Committee last week that the bill "would allow the FTC to obtain, using its own administrative subpoena, the text of email messages (or ``stored communications´´) without prior notice to the subscriber or customer, as currently required by Section 2703(b)(1)(B). This provision is inconsistent with the preceding provision in ECPA (Section 2703(b)(1)((A)), which does not permit criminal law enforcement agencies (or any other ``governmental entity´´) to obtain this same information without notice to the customer in the absence of a judicially-ordered search warrant. There is no reason why the FTC should operate under different rules than that required for other law enforcement agencies." (Parentheses in original.) See, prepared testimony.
EPIC Files FOIA Complaint Regarding Computer Assisted Passenger Screening System
6/11. The Electronic Privacy Information Center (EPIC) filed a complaint [7 pages in PDF] in U.S. District Court (DC) against the Department of Homeland Security (DHS), the Transportation Security Administration (TSA), and the Department of Defense (DOD) alleging violation of the Freedom of Information Act (FOIA), codified at 5 U.S.C. § 552, in connection with its failure to release agency records concerning airline passenger screening procedures.
The complaint states that "TSA has been engaged in the development of what it describes as ``the next generation of the Computer Assisted Passenger Prescreening System (CAPPS II).´´" The complaint further states that the EPIC requested agency records that address "Any existing legal, statutory and/or regulatory frameworks concerning governmental access to and use of transactional and other records about individuals. This request includes, but is not limited to, any assessments of the legal authority (or lack thereof) for information collection activities planned or proposed for the CAPPS II project". The EPIC also requested agency records that address "Potential privacy and/or civil liberties implications of the activities planned or proposed for the CAPPS II project." Finally, the complaint states that the defendant agencies have failed to complete their processing of the EPIC's FOIA request within the time period allowed by the statute.
The EPIC wants the Court to order the agencies to release the requested records.
David Sobel, EPIC General Counsel, stated in a release that "Millions of air passengers may soon have vast amounts of their personal data scrutinized by CAPPS II ... It is time for the government to be more forthcoming about this system and its likely impact on privacy rights."
He added that "CAPPS II is the government data-mining initiative that will likely affect the public in the near future, so the details need to disclosed and debated".
The case has been assigned to Judge Colleen Kotelly. This is D.C. No. 03-CV-1255.
Total Information Awareness Oversight Board to Meet
6/11. The Department of Defense (DOD) published a notice in the Federal Register stating that its Technology and Privacy Advisory Committee (TAPAC) will hold a public meeting on June 19 from 9:00 AM to 5:00 PM.
On February 7, 2003, the DOD announced in a release that it "will establish two boards to provide oversight of the Total Information Awareness Project, the program designed to develop tools to track terrorists. The two boards, an internal oversight board and an outside advisory committee, will work with the Defense Advanced Research Projects Agency (DARPA), as it continues its research. These boards will help ensure that TIA develops and disseminates its products to track terrorists in a manner consistent with U.S. constitutional law, U.S. statutory law, and American values related to privacy."
On March 10, the DOD published a notice in the Federal Register stating that it is establishing the TAPAC. See, Federal Register, March 10, 2003, Vol. 68, No. 46, at Page 11384.
The June 11 notice states that "The purpose of the meeting is for presentations of interest and discussion concerning the legal and policy considerations implicated by the application of advanced information technologies to counter-terrorism and counter-intelligence missions."
The meeting will be held at the Hyatt Arlington, 1325 Wilson Blvd., Arlington, VA. For more information, contact Lisa Davis, TAPAC Executive Driector, at 703 695-0903. See, Federal Register, June 11, 2003, Vol. 68, No. 112, at Page 34909.
FTC Seeks Increased Authority to Regulate Spam
6/11. The Federal Trade Commission (FTC) proposed to the Congress that it amend various substantive and procedural statutes to facilitate its ability to address unsolicited commercial e-mail. FTC Chairman Timothy Muris submitted lengthy prepared testimony on behalf of the FTC at Congressional hearings on FTC reauthorization on June 11 in which he addressed spam.
Substantive Law Proposals. Muris proposed amending and expanding the existing Telemarketing and Consumer Fraud and Abuse Prevention Act (TCFAPA) to specifically address spam. He wrote that "Substantive legislative changes also could aid in the FTC’s law enforcement efforts against spam. Although Section 5 of the FTC Act provides a firm footing for spam prosecutions, additional law enforcement tools could make more explicit the boundaries of legal and illegal conduct, and they could enhance the sanctions that the agency can impose on violators."
He continued that the TCFAPA "provides a model for addressing unsolicited commercial e-mail. Amendments to the TCFAPA would authorize the FTC to adopt rules addressing deceptive and abusive practices with respect to the sending of unsolicited commercial e-mail." He elaborated on several proposals for amendments to the TCFAPA.
"First, amendment of the statute would give the FTC general discretionary authority via rulemaking to address deceptive practices relating to spam", wrote Muris. "Second, amendment of the statute would give discretionary authority via rulemaking to address abusive practices relating to spam. Specific abusive practices might include: sending any recipient an unsolicited commercial e-mail message after such recipient has requested not to receive such commercial e-mail messages; failing to provide a reasonable means to “opt out” of receiving future e-mail messages; and sending unsolicited commercial e-mail to an address obtained through harvesting or a dictionary attack.
"Third, amendment of the TCFAPA would ensure that the Rule embodies the same standard of liability that is embodied in Section 5 of the FTC Act, without a general requirement to show intent or scienter. Imposition of intent or scienter requirements would unnecessarily complicate enforcement, and also would actually constrict the scope of the FTC’s existing authority under Section 5 to attack spam. Fourth, the amended statute would provide that the Rule would be enforceable, like all FTC Rules, through FTC actions in federal district court, and it further would provide that violators would be subject to preliminary and permanent injunctions and could be ordered to pay redress to consumers."
Procedural Law Proposals. Muris wrote in his prepared testimony that the FTC also seeks several amendments to procedural statutes. For example, he wrote that "we are requesting that the FTC Act be amended to provide that FTC attorneys may apply for a court order temporarily delaying notice to an investigative target of a CID issued to a third party in specified circumstances, when the Right to Financial Privacy Act (``RFPA´´) or the Electronic Communications Privacy Act (``ECPA´´) would require such notice."
Muris added that "The FTC's experience is that when fraud targets are given notice of FTC investigations they often destroy documents or secrete assets. Currently RFPA and ECPA provide a mechanism for delaying notice, but the FTC's ability to investigate would be improved by tailoring the bases for a court-ordered delay more specifically to the types of difficulties the FTC encounters, such as transfers of assets offshore."
Next, Muris requested that "the ECPA be clarified to allow the FTC to obtain complaints received by an ISP regarding a subscriber. Frequently, spam recipients complain first to their ISPs, and access to the information in those complaints would help the agency to determine the nature and scope of the spammer's potential law violations, as well as lead the agency to potential witnesses."
He also requested that "the scope of the ECPA be clarified so that a hacker or a spammer who has hijacked a bona fide customer's email account is deemed a mere unauthorized user of the account, not a ``customer´´ entitled to the protections afforded by the statute. Because of the lack of a statutory definition for the term “customer,” the current statutory language may cover hackers or spammers. Such a reading of the ECPA would permit the FTC to obtain only limited information about a hacker or spammer targeted in an investigation. Clarification to eliminate such a reading would be very helpful."
Finally, he requested that "the ECPA be amended to include the term ``discovery subpoena´´ in the language of 18 U.S.C. § 2703. This change is particularly important because a district court has ruled that the FTC staff cannot obtain information under the ECPA from ISPs during the discovery phase of a case, which limits the agency’s ability to investigate spammers."
Criminal Law Proposals. Muris wrote in his prepared testimony merely that "the possible criminalization of false header and routing information should be explored. There is some debate over whether the wire fraud statute covers fraud in the sending of e-mail communications. The FTC staff is discussing this issue with criminal authorities to determine whether a specific statute that criminalized this conduct would clear up any statutory confusion or encourage spam prosecutions. At this time, the FTC has no recommendations on whether changes in the criminal code are necessary or appropriate".
Pending Bills. There are already several legislative proposals pending in the Congress. For example, On May 23, 2003, Rep. Richard Burr (R-NC) and others introduced HR 2214, the "Reduction in Distribution of Spam Act of 2003". This bill would require that commercial e-mail messages contain the identity of the sender and an opt out mechanism. It would provide ISPs, states, and the FTC with enforcement authority, but only in federal court. The bill creates no private right of action, and prohibits class actions. The bill would also criminalize sending commercial e-mail with a false identity of the sender, certain sezually oriented messages, and certain automated e-mail address harvesting practices. The bill also contains a limited preemption clause. See, story titled "Another Spam Bill Introduced in House" in TLJ Daily E-Mail Alert No. 671, June 2, 2003.
On May 1, 2003, Rep. Zoe Lofgren (D-CA) and others introduced HR 1933, the "Restrict and Eliminate the Delivery of Unsolicited Commercial Electronic Mail or Spam Act of 2003", aka the "REDUCE Spam Act".
On April 10, 2003, 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 FTC, states, and internet access providers, but not individuals. The bill would preempt state UCE laws, with exceptions. See, story titled "Senators Burns and Wyden Re-Introduce Can Spam Bill" in TLJ Daily E-Mail Alert No. 643, April 14, 2003.
Congressional Reaction. Sen. Conrad Burns (R-MT), Chairman of the Senate Commerce Committee's Communications Subcommittee, stated in a prepared statement that "I am troubled by the direction the Commission has taken in its testimony today."
Sen. Burns (at right) continued that "Rather than a broad grant of rulemaking over ``abusive and deceptive´´ practices as exists in the FTC’s telemarketing authority, I believe that the best way to proceed in this area is with specific requirements set forth by the Congress. Senator Wyden and I have been working on antispamming legislation for several years now and in fact the CAN-SPAM bill is scheduled for the June 19 markup in the Committee. We have been working to identify appropriate guidelines for legitimate businesses and strong enforcement tools to combat bad actors and I am confident that the right balance has been struck in the CAN-SPAM bill. While focused rulemaking may provide assistance by following specific provisions set forth by the Congress, I am extremely wary of wide grants of vague additional authority."
Rep. Bill Tauzin (R-LA), the Chairman of the House Commerce Committee, stated in his prepared statement that "I was surprised to find the FTC has a legislative proposal for spam included in its reauthorization package, although I'll note that many of the issues raised by the FTC are included in Mr. Burr's anti-spam bill, H.R. 2214. That bill provides the FTC with more streamlined APA rulemaking authority to give the Commission more flexibility to respond to changes in the marketplace. In addition, H.R. 2214 gives the FTC and the Department of Justice all of the enforcement powers they currently enjoy under the FTC Act -- the same powers the Commission is requesting here today. Since H.R. 2214 does not supercede the FTC's authority to enforce against spam under its unfair and deceptive trade practices authority, it should be a nice supplement to the Commission's existing authority. In fact, H.R. 2214 may go even further than the FTC proposal as it allows consumers the opportunity to opt out of all commercial email, not just unsolicited commercial email."
Rep. Cliff Stearns (R-FL), Chairman of the House Commerce Committee's Subcommittee on Commerce, Trade and Consumer Protection, wrote in a prepared statement that "What I find curious about the proposal and an issue that I would like to further explore with the Commissioners is the qualifying language that surrounds the proposal, making the proposal seem tentative. Specifically, the Commission's testimony prefaces the proposal by stating that even though ``Section 5 of the FTC Act provides a firm footing for spam prosecutions, additional law enforcement tools could make more explicit the boundaries of legal and illegal conduct….´´ More significantly, the statement concludes by stating that ``[a]dmittedly, [the Commission] recognize[s] that these legal steps will not solve the growing spam problem. Nor is it clear what impact these steps will have on some of the other problems associated with spam (e.g., volume and security).´´"
FTC Seeks End to Communications Common Carrier Exemption
6/11. The Federal Trade Commission (FTC) proposed to the Congress that it amend the Federal Trade Commission Act (FTCA) to end the exemption for common carriers subject to the Communications Act from the FTCA's prohibitions on unfair or deceptive acts or practices and unfair methods of competition. See, full story.
People and Appointments
6/11. Bruce McDonald was named Deputy Assistant Attorney General for Regulatory Matters at the Department of Justice's (DOJ) Antitrust Division. He is a partner in the trial division of the Houston, Texas, office of the law firm of Baker Botts. He focuses on antitrust matters. The Baker Botts web site states that his clients have included a number of technology and communications companies, including Alcatel, BMC Software, Dell, Electronic Data Systems, GTE, Lotus Development, Raytheon, Silicon Graphics, Tele-Communications, Inc., and Texas Instruments. See, DOJ release.
6/11. The National Cable & Telecommunications Association (NCTA) announced the election of officers. Glenn Britt (Ch/CEO of Time Warner Cable) was elected Chairman of the Board of Directors, Brian Roberts (P/CEO of Comcast Corporation) was elected Vice Chairman, Tom Rutledge (Cablevision Systems Corporation) was elected Secretary, and Nickolas Davatzes (A&E Television Networks) was elected Treasurer. See, NCTA release.
6/11. The Senate confirmed Richard Wesley to be a Judge of the U.S. Court of Appeals for the Second Circuit by a vote of 96-0. See, Roll Call No. 215. Wesley is currently an Associate Justice of the Court of Appeals of New York.
6/11. The Senate confirmed Mark Kravitz to be a Judge of the U.S. District Court for the District of Connecticut by a vote of 97-0. See, Roll Call No. 217.
6/11. The Senate confirmed Ronnie Greer to be a Judge of the U.S. District Court for the Eastern District of Tennessee by a vote of 97-0. See, Roll Call No. 216.
6/11. The House Commerce Committee's Subcommittee on Telecommunications and the Internet held a hearing titled "The Spectrum Needs of Our Nation's First Responders". See, prepared testimony of Rep. Jane Harman (D-CA) and prepared testimony of Rep. Curt Weldon (R-PA). See also, prepared testimony of witnesses: Ed Thomas (FCC Office of Engineering & Technology), James Tamlyn (Charlevoix Cheboygan Emmet Central Dispatch Authority, Michigan), Norman Jacknis (Westchester County), Gene Adamczyk (Michigan State Police), Gregory Brown (Motorola), Jim Haynie (American Radio Relay League), Vincent Stile (Association of Public Safety Communications Officials International), Timothy Donahue (Nextel), and Stephen Carrico (Wisconsin Public Service Corporation).
6/11. The Copyright Office (CO) published a notice in the Federal Register that provides notification of "an agreement which sets rates and terms for the reproduction and performance of sound recordings made by a noncommercial webcaster under the section 112 and 114 statutory licenses. Noncommercial webcasters who meet the eligibility requirements may choose to operate under the statutory licenses in accordance with the rates and terms set forth in the agreement published herein rather than the rates and terms adopted by the Librarian of Congress in an earlier proceeding." See, Federal Register, June 11, 2003, Vol. 68, No. 112, at Pages 35008 - 35012.
Go to News from June 6-10, 2003.