Senators Debate Internet Taxes

10/15. Sen. Mike Enzi (R-WY), Sen. Byron Dorgan (D-ND) and others introduced S 1736, titled the "Streamlined Sales and Use Tax Act", a bill to authorize state and local taxing entities to collect taxes from out of state remote sellers, including internet retailers. Sen. Enzi and Sen. Dorgan also spoke in support of this bill in the Senate. Also on October 15, Sen. Ron Wyden (D-OR) went to the Senate floor to warn that a version of the Internet Tax Nondiscrimination Act (INDA) being advanced by state and local governments would give state and local governments "explicit permission to tax what Internet users do once they get on line", including sending e-mail.

Streamlined Sales and Use Tax Act. S 1736 is the Senate version of HR 3184, introduced on September 25, 2003 by Rep. Ernest Istook (R-OK) and others. These two bills are re-introductions of bills that did not pass in the 107th Congress: HR 1410, sponsored by Rep. Ernest Istook (R-OK), and S 512, sponsored by Sen. Byron Dorgan (D-ND). S 1736 was referred to the Senate Finance Committee.

Sen. Enzi stated that "Our bill will also help states begin to recover from years of budgetary shortfalls." He also asserted that "This bill is not a disguised attempt to increase taxes or put a new tax on the Internet."

Sen. Dorgan (at left) stated in the Senate that "Collecting a sales tax in a face-to-face transaction on Main Street or at the mall is a relatively simple process. The seller collects the tax and remits it to the State or local government. But with remote sales -- such as catalog and Internet sales -- it's more difficult. States cannot require a seller to collect a sales tax unless the business has an actual location or sales people in the State. So most States, and many localities, have laws that require the local buyer to send an equivalent ``use tax´´ to the State or local government when he or she did not pay taxes at the time of purchase. The reality, of course, is that customers almost never do that. It would be a major inconvenience, and people are not accustomed to paying sales taxes in that way."

"Internet and catalog sellers correctly argue that collecting and remitting sales taxes would be a significant burden. Understandably, they contend that, unless things change, it would be difficult for them to have to comply with tax laws from thousands of different jurisdictions -- 46 States and thousands of local governments -- with different tax rates and all of the idiosyncrasies regarding what is taxable and what is non-taxable. This is a legitimate complaint", said Sen. Dorgan.

But, he continued, many states have approved the "Streamlined Sales and Use Tax Agreement'', to "dramatically simplify and streamline how State sales taxes are identified and collected. And, by harmonizing State sales tax rules, bringing uniformity to definitions of items in the sales tax base, significantly reducing the paperwork burden on retailers, and incorporating a seamless electronic reporting process the agreement will significantly reduce the burden of collection on all sellers."

The bill provides that once the state compact is adopted by 10 States with at least 20 percent of the population, those states would then have the authority to collect sales or use taxes from out of state sellers.

States cannot do this now without federal legislation. The U.S. Supreme Court ruled in Quill v. North Dakota, 504 U.S. 298 (1992), that state and local taxing authorities are barred under the Commerce Clause from requiring remote sellers without a substantial nexus to the taxing jurisdiction to collect sales taxes for sales to persons within the jurisdiction. However, the Court added that Congress may extend such authority. S 1736 and HR 3184 would extend such authority.

If a state decides to collect taxes from out of state residents, the legislators in this state would be taxing people who cannot vote in their next election. Hence, this method of raising revenue is popular with state and local governments. However, federal legislative proposals to authorize such tax schemes have heretofore failed to pass. By voting for such legislation, Senators and Representatives would be enabling the collection of taxes from their voters.

For example, on November 15, 2001, when the Senate extended the moratorium first enacted in the Internet Tax Freedom Act, the Senate also rejected, on a roll call vote of 57-43, an amendment offered by Sen. Enzi and Sen. Dorgan, that would have allowed state and local taxing authorities to require out of jurisdiction sellers to pay taxes.

Internet Tax Nondiscrimination Act. Supporters of legislation such as S 1736 have often tried to tie this issue to the internet tax moratorium issue. The original Internet Tax Freedom Act, which was passed as part of a larger omnibus bill in late 1998, contained a three year moratorium. It expired on October 20, 2000. The 107th Congress passed HR 1552, also titled the Internet Tax Nondiscrimination Act, which extended the moratorium until November 1, 2003. In January, bills were introduced in the House and Senate to make permanent this moratorium. All of these bills have been sponsored by Sen. Ron Wyden (D-OR) and Rep. Chris Cox (R-CA).

The House passed its version of the latest bill, HR 49, titled the "Internet Tax Nondiscrimination Act", or INDA, on September 17, 2003.

The Senate has yet to pass its version of the bill, S 52, also titled the "Internet Tax Nondiscrimination Act". These bills would make permanent the current moratorium on internet access taxes, and multiple and discriminatory taxes on internet commerce. They would amend Section 1101 of the Internet Tax Freedom Act, which is codified at 47 U.S.C. 151 note.

Also on October 15, Sen. Wyden went to the Senate floor to criticize a proposed version of the INDA. He said that "I had been under the impression that we were just about ready to bring this bill to the floor, but in the last few days a proposal that I find truly alarming has been brought forward by some of the State and local officials. I come to the floor this morning to make sure the Senate is actually familiar with the language that is being brought forward."

Sen. Wyden (at right) had inserted into the Congressional Record a copy of the proposal. See, Congressional Record, October 15, 2003, at pages Pages S12567-9.

He continued that "what some State and local officials now seek to do is to change the definition of ``Internet access,´´ which, under current law, cannot be taxed. In doing so, what it would do is give States and localities explicit permission to tax what Internet users do once they get on line. That would mean you could have games, music, magazines, newspapers, information services, financial services, research services, or other products of services, in effect, facing a barrage of new taxes."

Sen. Wyden warned that under this proposed language "Consumers could be taxed every time they check a bank statement online. They could be taxed for paying their bills online. They could be taxed each time they check the sports scores online or listen to the weather on streaming radio. Every time a consumer turns to Google research service, they could be taxed for each key stroke."

"But by redefining the definition of Internet access, as the proposal does that I have put into the Congressional Record today, in effect you give a green light to State and local authorities all across the country to tax services that are integral to Internet access, including e-mail", Sen. Wyden concluded.

EPIC Files FOIA Suit Seeking DOJ Records Regarding Lobbying Over PATRIOT Act Amendment

10/15. The Electronic Privacy Information Center (EPIC) filed a complaint in U.S. District Court (DC) against the Department of Justice (DOJ) alleging violation of the Freedom of Information Act (FOIA), codified at 5 U.S.C. § 552. The EPIC seeks expedited processing and release of records pertaining to lobbying by U.S. Attorneys in opposition to legislative proposals to revise or limit investigative powers authorized in the USA PATRIOT Act.

On September 10 the EPIC submitted a FOIA request to the DOJ requesting records related to an August 14, 2003 memorandum from Guy Lewis, of the DOJ's Executive Office for United States Attorneys, regarding an amendment offered in the House by Rep. Butch Otter (R-ID).

Rep. Otter offered an amendment to HR 2799, the Commerce, Justice, State and the Judiciary, and Related Agencies Appropriations Act for FY 2004. This is House Amendment 292. The House approved this amendment by a vote of 309-118 on July 22, 2003. See, Roll Call No. 408.

This short amendment provides, in full, that "None of the funds made available in this act may be used to seek a delay under Section 3103a(b) of title 18 United States Code." The PATRIOT Act, at Section 213, amended 18 U.S.C. § 3103a to allow a court to order the delay of notice of a search warrant, if it finds "reasonable cause". This is also sometimes referred to as the "sneak and peak" provision. (Rep. Otter's amendment could not address substantive law, since it was an amendment to an appropriations bill, which can only address appropriations.)

The House passed the bill, as amended. The Senate has not yet approved an CJS appropriations bill for FY 2004. The Senate Appropriations Committee passed S 1585, its version of the bill, on September 5, without the Otter amendment.

There are several substantive bills pending in the Congress that would address delayed notice of search warrants.

For example, on October 2, Sen. Larry Craig (R-ID), Sen. Richard Durbin (D-IL), Sen. Mike Crapo (R-ID), Sen. Russ Feingold (D-WI), Sen. John Sununu (R-NH), Sen. Ron Wyden (D-OR), and Sen. Jeff Bingaman (D-NM) introduced S 1709, the "Security and Freedom Ensured Act of 2003", or SAFE Act. This bill, would, among other things, amend 18 U.S.C. § 3103a to limit the authority to delay notice of search warrants. See, story titled "Senators Craig and Dubin Introduce Bill to Modify PATRIOT Act" in TLJ Daily E-Mail Alert No. 753, October 6, 2003.

Similarly, on October 1, Sen. Patrick Leahy (D-VT) and others introduced S 1695, the "PATRIOT Oversight Restoration Act". It pertains to the sunsetting of various provisions of the USA PATRIOT Act. This Act was passed by the 107th Congress as HR 3162 shortly after the terrorist attacks of September 11, 2001. It became Public Law 107-56 on October 26, 2001. The original PATRIOT Act provides that some of its provisions sunset, or cease to have effect, on December 31, 2005. Sen. Leahy's bill provides for the sunsetting of more provisions.

See, story titled "Sen. Leahy Introduces Bill to Expand List of Surveillance Provisions of PATRIOT Act to Be Sunsetted" in TLJ Daily E-Mail Alert No. 757, October 14, 2003.

Another bill, S 1701, the "Reasonable Notice and Search Act", introduced by Sen. Russ Feingold (D-WI) on October 2, would also sunset Section 213.

The EPIC also filed a motion for a preliminary injunction, seeking expedited processing of its request for records. See, memorandum [17 pages in PDF] in support of motion for preliminary injunction. It argues that this is matter of interest to the public and news media, and that "The current and ongoing debate on the Patriot Act will be hampered by further delay in DOJ’s response to plaintiff’s request."

The EPIC memorandum quotes from an August 22, 2003 article in the Washington Post, which states that the DOJ "urged U.S. attorneys to contact congressional representatives who voted against a key anti-terrorism provision of the USA Patriot Act, part of a broad-based publicity campaign on behalf of the law ..."

The EPIC now seeks records pertaining to this lobbying campaign.

FCC Approves SBC Long Distance Applications for  IL, IN, OH & WI

10/15. The Federal Communications Commission (FCC) announced that the Commission adopted a Report and Order approving SBC's Section 271 application to provide in-region interLATA service in the states of Illinois, Indiana, Ohio and Wisconsin. The FCC issued a brief press release [MS Word], but not the Report and Order. The release says little about the Report and Order.

The FCC release states that FCC Commissioners Kevin Martin, Jonathan Adelstein, and Michael Copps each wrote separate statements. The FCC did not release these statements.

On August 26, the Department of Justice's (DOJ) Antitrust Division submitted its evaluation [PDF] to the FCC in which it wrote that "Because serious issues remain concerning SBC's ability to render accurate wholesale bills, the Department is not in a position to support SBC's application based on the current record. The Department does not, however, foreclose the possibility that the Commission may be able to satisfy itself regarding these issues prior to the conclusion of its review."

See, story titled "DOJ Submits Its Evaluation of SBC Long Distance Application for Four States" in TLJ Daily E-Mail Alert No. 728, August 28, 2003.

Meanwhile, AT&T, which will now have to compete with SBC in these four states offered its long distance customers in these four states "30 minutes of free domestic long distance calling on us for a month". See, AT&T release.

This is FCC WC Docket No. 03-167.

4th Circuit Holds That Policy Covering Property Damage Does Not Extend to Damage to Software

10/15. The U.S. Court of Appeals (4thCir) issued its split opinion [21 pages in PDF] in AOL v. St. Paul, a dispute over whether an insurer (St. Paul) has a duty to defend and indemnify its insured (AOL) in a collection of lawsuits brought by AOL users alleging that the version 5.0 of the AOL internet access software had substantial bugs, and was incompatible with their computers' other applications software and operating systems, causing the computers to be damaged. The District Court ruled that St. Paul had no duty under the insurance contract to defend and indemnify. The divided Court of Appeals affirmed.

AOL purchased insurance from St. Paul Mercury Insurance Company. The relevant language of the policy provides that St. Paul will "pay amounts" that AOL "is legally required to pay as damages for covered ... property damage."

The policy defines property damage as physical damage to tangible property of others, including all resulting loss of use of that property; or loss of use of tangible property of others that isn't physically damaged.

The policy also includes an "impaired property" exclusion that provides that St. Paul is not obligated to cover property damage to impaired property, or to property which isn't physically damaged, that results from faulty or dangerous products or completed work, or a delay or failure in fulfilling the terms of a contract or agreement.

Numerous lawsuits were filed against AOL, most of which were consolidated into a single multi-district action in the Southern District of Florida. AOL tendered the defense of these actions to St. Paul, which denied coverage. AOL settled the claims. AOL also filed a complaint in U.S. District Court (EDVa) against St. Paul alleging wrongful denial of coverage. This is a contract action based upon diversity of citizenship, to which Virginia law applies.

The District Court granted summary judgment to St. Paul on the grounds that the computer users' underlying complaints did not allege physical damage to tangible property within the meaning of the insurance policy, and that any damage from loss of use of tangible property fell within a policy exclusion.

AOL appealed. It argued, unsuccessfully, that damage to software is physical damage to tangible property. The Appeals Court affirmed the District Court. Judge Niemeyer wrote the opinion of the Court, in which Judge Wilkinson joined.

Judge Traxler wrote a long dissent. He argued that "Whether computer software should be considered tangible or intangible property is a difficult question that has yet to be definitively answered by the state courts. In my view, however, it is unnecessary to even reach that question, because the allegations of the underlying complaint sufficiently allege damage to the computers themselves, thus bringing the claims against AOL within the scope of the policy’s coverage for claims of ``physical damage to tangible property of others.´´ Accordingly, I respectfully dissent."

This case is America Online, Inc. v. St. Paul Mercury Insurance Company, Nos. 02-2018 and 02-2084, appeals from the U.S. District Court for the Eastern District of Virginia, at Alexandria, Judge Gerald Bruce Lee presiding, D.C. No. CA-01-1636-A.

Snow Addresses Executive Stock Options

10/15. Secretary of the Treasury John Snow gave a speech to the Conference Board in New York City in which he addressed, among other topics, stock options for corporate executives. He did not, however, address stock options for rank and file workers, or accounting issues pertaining to stock options.

Snow (at right) stated that "In retrospect, the whole mess might be understood in part at least as an extension of efforts to tie management compensation to corporate performance. That was the original rationale for most stock option grants, and options serve a good purpose, up to a point. But somewhere along the line they got out of hand. Stock options came to be viewed as a ``freebie,´´ and every economist knows that anything free will be consumed to excess."

"Then, of course, we had the irrational exuberance of the stock market in the late 90s, which led to option payouts far beyond the grantors -- or grantees -- imaginations. Over-reliance on options and the market bubble created the ``perfect storm´´ for corporate America."

"I do not mean to indict stock options", said Snow. "There is a role for options. But options were intended to motivate long-term behavior. They were meant to tie executive compensation to the long-term success of an enterprise. Instead, they too often became a vehicle for near-term cash payouts. Unfortunately in many cases they shortened the time horizon of management and accentuated the ``short-term-itis´´ that addicted the markets in the 90s."

"Their original purpose was twisted, and in many cases managers and boards failed to show the common sense or judgment to back down from the excesses." Snow added that "Public reaction was predictable when managers walked off with millions upon millions after exercising options in companies that then proceeded to unravel -- companies such as Enron, WorldCom, Global Crossing, and Tyco - once darlings of Wall Street.

He concluded that "Corporate America suffered a setback from which it is still reeling. Today, the issue of compensation is center stage. Compensation policy has not yet been fully and appropriately addressed. Addressing it must be a priority for every corporate board."

There are numerous bills pending in the Congress pertaining to stock options. See, for example, HR 1372 and S 979, the "Broad-Based Stock Option Plan Transparency Act of 2003", and S 182 and HR 626, the "Ending the Double Standard for Stock Options Act".

People and Appointments

10/15. President Bush nominated Robert McFarland to be Assistant Secretary of Veterans Affairs (Information & Technology). He was previously VP for government relations with Dell. See, White House release.

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10/15. The Federal Communications Commission (FCC) announced the removal of one item from the agenda for its Thursday, October 16, meeting. The FCC will not consider an Order to resolve issues raised in the Auction No. 52 Comment Public Notice related to the FCC's authority to auction Direct Broadcast Satellite (DBS) licenses and eligibility for the DBS licenses currently available. See, FCC release [PDF]. See also, the FCC web page titled "Auction 52: Direct Broadcast Satellite Service". This is AUC-03-52.

10/15. Rep. Tom Davis (R-VA), the Chairman of the House Government Reform Committee, wrote a letter to Stephen Perry, Administrator of the General Services Administration (GSA), regarding the General Accounting Office's (GAO) report titled "Planned E-Authentication Gateway Faces Formidable Development Challenges".  He wrote to express concern with the progress of the GSA's "implementation of its E-Authentication initiative and the challenges associated with developing the E-Authentication Gateway, which is the cornerstone of the initiative". Rep. Davis continued that "September 2003 was the original deadline for the E-Authentication Gateway to be operational.  That goal has now been pushed back to March 2004.  Based upon the limited progress cited by GAO, there is real doubt whether this project can be completed, even by the revised date.  This raises many concerns because of the potential this delay has to adversely affect the development of the other 24 OMB E-Government initiatives."

10/15. Several interest groups praised S 1709, the "Security and Freedom Ensured Act of 2003", or SAFE Act. This is another bill to roll back a few of the more controversial provisions of the USA PATRIOT Act. It was introduced on October 2 by Sen. Larry Craig (R-ID), Sen. Richard Durbin (D-IL), Sen. Mike Crapo (R-ID), Sen. Russ Feingold (D-WI), Sen. John Sununu (R-NH), Sen. Ron Wyden (D-OR), and Sen. Jeff Bingaman (D-NM). See, story titled "Senators Craig and Dubin Introduce Bill to Modify PATRIOT Act" in TLJ Daily E-Mail Alert No. 753, October 6, 2003, and "Sen. Leahy Introduces Bill to Expand List of Surveillance Provisions of PATRIOT Act to Be Sunsetted" in TLJ Daily E-Mail Alert No. 757, October 14, 2003. The Senate Judiciary Committee has schedule a hearing to examine criminal terrorism investigations and prosecutions relating to national security for 10:00 AM on Tuesday, October 21. The groups supporting S 1709 included the Center for Democracy and Technology (CDT), Free Congress Foundation (FCF), American Library Association (ALA), the American Conservative Union (ACU) and others. See, CDT release and ACLU release.

10/15. The Progress & Freedom Foundation (PFF) released a report [60 pages in PDF] titled "Taxes and Regulation: The Effects of Mandates on Wireless Phone Users", by Thomas Lenard and Brent Mast of the PFF. See also, PFF release.

10/15. The Progress and Freedom Foundation (PFF) released a report [28 pages in PDF] titled "A Survey of Government-Provided Telecommunications: Disturbing Growth Continues Unabated", and written by Kent Lassman and Randolph May of the PFF. The report finds an increase in the number of states and municipalities entering the market as service providers.

10/15. The California Court of Appeal issued its opinion in Barrett v. Rosenthal, an internet defamation case involving California's strategic lawsuit against public participation (SLAPP) statute and 47 U.S.C. § 230(c)(1), regarding interactive computer service immunity. This case is Stephen Barrett, et al. v. Ilena Rosenthal, California Court of Appeal, First Appellate District, Division Two, Case No. A096451, an appeal from the Superior Court for Alameda County, Super. Ct. No. 833021-5.

International Panel Addresses Spam

10/14. The Forum on Technology & Innovation hosted a panel discussion on Capitol Hill titled "International Challenges to Controlling Spam". Sen. John Ensign (R-NV) and Sen. Ron Wyden (D-OR), the Co-Chairs of the Forum, gave introductions. The other panelists were Howard Beales, Director of the Federal Trade Commission's (FTC) Bureau of Consumer Protection, Andrew Pinder, U.K. Prime Minister Tony Blair's e-Envoy, Charles Curran, Assistant General Counsel at America Online, and Paul Judge, Chief Technology Officer at Cipher Trust.

Sen. Wyden used the occasion to describe and promote S 877, the "Controlling the Assault of Non-Solicited Pormography and Marketing Act of 2003", or "CAN-SPAM Act". This bill, which is sponsored by Sen. Conrad Burns (R-MT), Sen. Wyden, and others, was amended and approved by the Senate Commerce Committee on June 19, 2003. See, amendment in the nature of a substitute [36 pages in PDF]. See also, story titled "Senate Commerce Committee Passes Spam Bill" in TLJ Daily E-Mail Alert No. 685, June 20, 2003.

There are numerous other spam related bills pending in the Congress. See, story titled "Spam Bills Pending in the House and Senate" in TLJ Daily E-Mail Alert No. 696, July 11, 2003.

Pinder reviewed spam and privacy related legislation in the European Union and the United Kingdom. He said that the U.K.'s legislation, which flows from an EU Directive, will become effective in December. He summarized that "unauthorized spamming will be an offense", that "people will have a right not to get spam unless they opt in", and that "there is an exception for relationships with existing customers".

He continued that in addition to the legislative ban, there needs to be international cooperation to deal with cross border issues, and new technological innovation, such as firewall and anti-virus technologies.

"Finally, we have started to make links between spamming, on the one hand, and the spread of viruses, on the other", said Pinder. "We regard spamming not just as a matter of nuisance, or a matter of offense, but also, in some respects, a matter of national security. Some of our e-mail systems are at threat through viruses. And many viruses spread using the same techniques as spam. Therefore, one can't really distinguish between the two things. One has got to attack all of it together."

He was also asked to comment on legislative proposals pending in the Congress that would include opt out, rather than opt in, systems. Pinder responded that "We understand why you are taking the approach that you are doing." He added that "We felt that opt in was the strongest. It seems to be acceptable to our business community. And, therefore, that is what we are going with. But having said that, what we are most concerned with, is not whether your legislation is the same as ours, clearly, given the different contexts."

Andrew Miller, a Member of Parliament who attended the luncheon, then rose to address the U.S. Constitution, its First Amendment, and the implications for the regulation of spam. He said that "The question that you need to pose to yourselves, perhaps, is did your forefathers, when drafting this fantastic piece of work, really intent the phrase about Congress not making laws to abridge the freedom of speech actually intent -- of course, they didn't -- did they have the intent to allow people to bombard your homes obscene pormography, to force my 84 year old mother, an invalid living on her own for whom the internet is a great freedom tool. Why should she be forced, as she said to me when I left for this trip, why should she be forced to receive adverts for Viagra.

Miller continued, "Now, this was not in minds of the authors of the Constitution. And what we need to find is a way around this. So, the answer is not in having a debate about who is right and who is wrong in terms of opt in opt out. We all recognize that we have got a very very serious problem that is disrupting businesses. We have got evidence of that. To a degree, it is an offense and an affront to the dignity of many families, and we have got to find practical ways of making our law enforcement agencies cooperate to overcome these difficulties. The opt in opt out argument is a nice academic one, but that isn't going to solve the problem that we are all facing."

The FTC's Beales addressed the nature of the spam problem, and what the FTC is doing about it. He stated that "much of it is already clearly illegal". He said that the FTC has studied spam and found that two thirds, on its face, has some obvious false claim. He added that other spam has other problems, such as offers for the sale of prescription drugs without a prescription, or offers for the sale of illegal cable descramblers. He concluded that only 16 percent of the spam in a sample studied by the FTC did not have some clear problem.

"It is also important to look at who the spam is coming from", said Beales. The FTC studied domain names of those sending spam, and found that none of the senders were Fortune 500 companies. "We are not dealing with legitimate businesses interested in obeying the law. We are dealing, to a considerable extent, with often clearly fraudulent operators, who know perfectly well what the law is, and have chosen to hide behind the anonymity that e-mail makes possible in order to engage in fraud. Part of the difficulty is that e-mail can be sent from anywhere, to anyone in the world, and the recipient doesn't know who sent it."

Beales continued that "A big part of the problem today is that it is possible to stay right here and look like your message came from abroad, by bouncing it off of open relays or open proxies somewhere else around the world."

So, Beales explained that the strategy of the FTC in pursuing fraudulent spammers is "to follow the money."

"If you want to get money from people, then they have to send that money somewhere, somehow in the real world", said Beales. "So, we look for where is the money going. And that has been typically the person that we have prosecuted." However, he added that once they found this person, assets were usually dissipated.

But he said this is difficult. First, domain names are registered with false information. He stated that "you have to try to follow the billing information. But that may be false too. Or, it may be a stolen credit card number. What we typically find in our investigations, is ten or fifteen, or sometimes even more sequential subpoenas as we peel the onion, if you will, to try to figure out where in the real world is the person who is actually doing this. We can do it, but it is slow, and time consuming ..."

Pinder was asked about the Whois database, which lists contact information for domain name registrants. Much of the data submitted is false. Beales responded that the Whois database "is our starting point in all of these investigations." He also said the "we have been closely involved with the Whois issue, because it is very much an enforcement problem for us."

Beales continued that "On the other hand, it is not reasonable to require a full investigation of every domain name registration by the registrars. I think it could make a practical difference, like pull the registration, once you find out that is phony. And, it would help our enforcement efforts considerably. I don't know what the fraction is, but there is ... a surprising number of domains that Mickey has registered."

Beales also answered a question about the idea of a do not e-mail registry similar to the telemarketing do not call registry. He praised the do not call list, but added that "we could not say the same thing about a do not spam list. We can say with considerable confidence that do not call will reduce the number of unwanted calls you get, and it will do it noticeably and significantly and, we think, fairly quickly. We have no confidence at all that that would be true about a do not spam list. And, in fact, the Chairman has said, that his advice to consumers, if there was one, was don't waste your time spending the time to sign up. We just don't think it will work."

AOL's Curran reviewed some of the tools that spammers use to evade the technological measures intended to filter spam. He covered the generation of false header information, abuse of free e-mail services, open proxies and relays, and zombie networks. He stated that open proxies are "currently the dominant form of abuse"

People and Appointments

10/14. The Senate Banking Committee held a hearing on the renominations of Roger Ferguson to be Vice Chairman of the Board of Governors of the Federal Reserve System, and Ben Bernanke to be a member of the Board of Governors. See, Ferguson's prepared testimony, and Bernanke's prepared testimony.

10/14. President Bush announced his intent to nominate Walter Kelley to be a Judge of the U.S. District Court (EDVa). While the Eastern District of Virginia includes tech heavy northern Virginia, Kelley has been nominated for an opening in the Norfolk division. He is currently a partner in the Norfolk office of the law firm of Troutman Sanders. He focuses on civil litigation, and has considerable experience with information technology related patent infringement and copyright infringement cases. See, White House release.

10/14. Nancy Higgins was named EVP of Ethics and Business Conduct and Chief Ethics Officer of MCI WorldCom. She was previously VP, Ethics and Business Conduct, for Lockheed Martin. She will report to Ch/CEO Michael Capellas. See, release.

Cert Denied

10/14. The Supreme Court denied certiorari without opinion in Bridgeport Music, Inc., et al. v. Still N the Water Publishing, et al., No. 03-215. See, Order List [15 pages in PDF] at page 4. This is a music copyright case involving sampling of copyrighted works in rap and hip hop music recordings. The U.S. District Court (MDTenn) dismissed for lack of personal jurisdiction over out of state defendants. The U.S. Court of Appeals (6thCir) issued its opinion on May 5, 2003 affirming the dismissal for lack of personal jurisdiction.

10/14. The Supreme Court denied certiorari, without opinion, in Baxter v. Abbott Laboratories, No. 03-59. See, Order List [15 pages in PDF] at page 12. This is a drug patent case arising in the U.S. District Court (NDIll) and appealed to the U.S. Court of Appeals (FedCir).

NIST Releases Five IT Security Publications

10/10. The National Institute of Standards and Technology's (NIST) Computer Security Division released five publications pertaining to information technology security for government agencies.

First, the NIST released a document [71 pages in PDF] titled "Security Considerations in the Information System Development Life Cycle", by Tim Grance, Joan Hash, and Marc Stevens. This is NIST Special Publication (SP) 800-64. This document is a guideline to help government agencies select and acquire cost effective security controls by explaining how to include information system security requirements in the system development life cycle process. . This document supersedes NIST Special Publication 800-4, titled "Computer Security Considerations in Federal Procurements: A Guide for Procurement Initiators, Contracting Officers, and Computer Security Officials", published in March 1992.

Second, the NIST released a document [PDF] titled "Building an Information Technology Security Awareness and Training Program". This is SP 800-50.

Third, the NIST released a document [PDF] titled "Guideline on Network Security Testing". This is SP 800-42.

Fourth, the NIST released a document [PDF] titled "Guide to Selecting Information Security Products". This is SP 800-36.

Fifth, the NIST released a document [PDF] titled "Guide to Information Technology Security Services". This is SP 800-35.

Supreme Court Grants Certiorari in COPA Case

10/14. The Supreme Court granted petitions for writ of certiorari in Ashcroft v. ACLU, No. 03-218. See, Order List [15 pages in PDF] at page 2. This will be the second time for the Supreme Court to consider the Child Online Protection Act (COPA), which bans sending to minors over the web material that is harmful to minors. On March 6, 2003 the U.S. Court of Appeals (3rdCir) issued its opinion [59 pages in PDF] holding the COPA unconstitutional on first amendment grounds. See, full story.

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10/14. Sen. John Cornyn (R-TX) and Sen. Kay Hutchison (R-TX) introduced S 1720, a bill to provide for federal court proceedings in Plano, Texas. The bill was referred to the Senate Judiciary Committee. Plano was once a small town north of Dallas. It lies in the Sherman Division of the Eastern District of Texas. The Dallas Ft. Worth metropolitan area has grown to encompass Plano, which now has a quarter million people, and the facilities of many high tech companies. Almost all of the Dallas Ft.Worth metropolitan area lies in the Northern District of Texas. This bill would leave Plano in the Eastern District, but amend 28 U.S.C. § 124(c)(3) to provide that the Court for the Sherman Division shall be held at both Sherman and Plano. Plaintiffs frequently file lawsuits against large technology companies with minimal ties to the Eastern District of Texas in the Eastern District of Texas. See for example, Sendo v. Microsoft, Cisco v. Huawei and FutureWei, Microtune v. Broadcom, BellAtlantic v. AT&T, Intergraph v. Intel, McClure v. AOL Time Warner, MIT v. Abacus Software, and many other cases. Although, the Texarkana Division appears to be the most popular with plaintiffs' lawyers.

10/14. The Department of Commerce (DOC) announced the formation of a "task force to study how deployment of a new industry-developed version of the Internet Protocol, known as IPv6, will affect competitiveness, security and the needs of Internet users." The DOC stated in a release this task force will involve the DOC's National Telecommunications and Information Administration (NTIA) and National Institute of Standards and Technology (NIST). The DOC further stated that it will solicit public comments, and hold a public meeting.

10/14. The Supreme Court announced that it "will take a recess from Monday, October 20, 2003, until Monday, November 3, 2003". See, Order List [15 pages in PDF] at page 15.

10/14. The Federal Election Commission (FEC) fined Cablevision Systems Corporation Political Action Committee $1,000 for the non-filing of a 12 day pre-general election report in 2002, and $1,600 for the late filing of a 30 day post-general election report in 2002. Cablevision provides broadband internet service, digital cable TV, and digital voice service. See, FEC release.

10/14. Sen. Rick Santorum (R-PA) introduced a series of bills pertaining to duties on the importation of electron guns for cathode ray tubes, plasma display panels, and liquid crystal display panels. See, S 1722, S 1723, and S 1724. These bills were referred to the Senate Finance Committee.

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10/13. U.S. Trade Representative (USTR) Robert Zoellick issued a release [PDF] regarding his plans to attend the Fifteenth Ministerial Meeting of the Asia Pacific Economic Cooperation (APEC) forum in Bangkok, Thailand, on October 17-18. This release also identifies an agreement between the U.S. and Singapore regarding telecommunications. It states that "APEC's contribution to trade liberalization will be highlighted by an agreement reached in the context of APEC's telecommunications working group, where the United States and Singapore agreed to begin mutually recognizing test data and product approvals of telecommunications equipment from each others economy. The United States and Singapore agreed to move forward with this initiative under their bilateral FTA. Singapore is the fourth APEC economy (following Chinese Taipei, Canada, and Australia) to sign such an agreement with the United States. This agreement will speed exports and lower costs for equipment suppliers, helping spur growth in a sector where U.S trade surpassed $40 billion in 2002 (exports $22 billion, imports $23 billion)." (Parentheses in original.)

10/13. VeriSign wrote a letter to the International Corporation for Assigned Names and Numbers (ICANN) regarding its IDN program.

Go to News from October 6-10, 2003.