Microsoft Offers Rewards for Information Leading to Convictions of People Who Launch Malicious Code

11/5. Microsoft announced that it has created an "Anti-Virus Reward Program" to provide monetary rewards for information resulting in the arrest and conviction of persons who launch malicious viruses and worms on the internet. Microsoft stated that the program is initially funded with $5 Million.

Microsoft stated that there is a $250,000 reward "for information leading to the arrest and conviction of those responsible for unleashing the MSB1ast.A worm". Microsoft clarified that "Although two arrests were made in connection with the B and C variants of the MSB1ast worm, those responsible for releasing the original worm this summer remain at large. The worm was designed to attack Microsoft's www.windowsupdate.com Web site, which provides fixes for vulnerabilities and helps protect users against malicious attacks."

Microsoft also offered a $250,000 reward for "information that results in the arrest and conviction of those responsible for unleashing the Sobig virus".

See, Microsoft release and statement for Keith Lourdeau of the Federal Bureau of Investigation (FBI).

Senate Commerce Committee Holds Hearing on Aviation Security & CAPPS II

11/5. The Senate Commerce Committee held a hearing that addressed a wide range of issues pertaining to aviation security, including the Computer Assisted Passenger Prescreening System (CAPPS II).

Stephen McHale (Deputy Administrator, Transportation Security Administration), Penrose Albright (Assistant Secretary Plans Programs, Budgets, Science and Technology Directorate, Department of Homeland Security), and William Parrish (Acting Assistant Secretary Information Analysis, Information Analysis and Infrastructure Protection) submitted joint prepared testimony that addressed, among other topics, CAPPS II.

They wrote that the "TSA is moving forward with the development of the second-generation Computer Assisted Passenger Prescreening System (CAPPS II), which will help us to focus our screening resources where they will be most effective."

Before September 11, 2001, the commercial airlines conducted passenger screening, and administered the CAPPS I, subject to federal guidelines. In late 2001, the Congress passed the Aviation and Transportation Security Act, which created the Transportation Security Administration (TSA) as a unit of the Department of Transportation (DOT). This Act gave the TSA responsibility for airport passenger screening. In late 2002, the Congress passed the Homeland Security Act, which, among other things, created the Department of Homeland Security (DHS), and transferred the TSA from the DOT to the new DHS.

The proposed new CAPPS II, the next generation passenger screening system, if implemented, would be a government (TSA) run system that replaces CAPPS I. It has been criticized and opposed by former Rep. Bob Barr (R-GA), the Electronic Privacy Information Center (EPIC), the ACLU, and others, on privacy grounds.

Also, on October 1, 2003. President Bush signed HR 2555, the "Department of Homeland Security Appropriations Act, 2004." The bill contains language prohibiting the use of funds for the CAPPS II program until the General Accounting Office (GAO), which is an arm of the Congress, issues a report to the appropriations committees of the Congress in which it finds that the CAPPS II program meets certain specified criteria set out in the bill.

However, while this language is in the bill, and the President signed the bill, the President wrote in a separate signing statement that this language is ineffective under the Supreme Court's opinion in INS v. Chadha. Bush wrote that while the language is mandatory, he will construe it as merely advisory. See, story titled "Homeland Security Appropriations Bill Purports to Restrict Use of Funds for CAPPS II", October 1, 2003, also published in TLJ Daily E-Mail Alert No. 751, October 2, 2003.

The prepared testimony of the DHS further states that "CAPPS II is yet another layer in our system of systems to address a continuum of security threats with minimal impact on airline customers and operations. CAPPS II is intended to identify terrorists and other high-risk individuals before they board commercial airplanes. CAPPS II will conduct a risk assessment of each passenger using national security information and information provided by passengers during the reservation process -- including name, date of birth, home address and home phone number, and provide a ``risk score´´ to TSA. The ``risk score´´ includes an ``authentication score´´ provided by running passenger name record (PNR) data against commercial databases to indicate a confidence level in each passenger’s identity. CAPPS II will be a threat-based system under the direct control of the Federal Government and will represent a major improvement over the decentralized, airline-controlled system currently in place."

The DHS testimony also states that "In developing CAPPS II, TSA is very mindful of the rights, liberties, and freedoms that define our Nation and differentiate our society from those who seek to harm us. CAPPS II is being designed and will be built with the explicit requirement that privacy protection not become a cost of increased aviation security. CAPPS II is undergoing a rigorous course of testing and will not be implemented until it has successfully passed this test phase.

The DHS testimony also states that the "TSA is cooperating fully with the U.S. General Accounting Office (GAO) so that GAO can issue the report called for in the Department of Homeland Security Appropriations Act, 2004, by February 15, 2004. Moreover, we are committed to continuous testing, evaluation and assessment of the system that is designed to ensure compliance with privacy policies -- by our own experts, independent overseers, and the public. DHS is also contemplating creation of an advisory council to review DHS programs, including CAPPS II.

It states that "CAPPS II would not retain data on U.S. passengers who are permitted to fly. Information would be stored only for a sufficient time to assess that a U.S. traveler is who he or she claims to be and to evaluate Government information related to terrorist threats and practices. Information would not be kept after completion of the traveler’s reserved itinerary, apart from a necessary audit trail that would not be searchable by passenger name or other personal identifier."

Finally, the DHS prepared testimony states that "As part of its ongoing dialogue with the public on CAPPS II and related issues, DHS issued a revised Interim Final Privacy Notice, which provides information regarding CAPPS II, including the type of data that the system will review, and how the data will be used. The Notice requested public comment, and the closing date for submission of comments was September 30, 2003. We are now in the process of reviewing the many comments we received."

The TSA published a Privacy Act notice and request for comments in the Federal Register on January 15, 2003 in which it proposed to establish a new system of records to support the development of the new version of the CAPPS. See, Federal Register, January 15, 2003, January 15, 2003, Vol. 68, No. 10, at Pages 2101 - 2103. The TSA published a second Privacy Act notice and request for comments in the Federal Register on August 1, 2003, in which it announced that it received "substantial comments ... in response to the prior notice", and that "significant changes have been made to date to the proposed CAPPS II system and to the CAPPS II Privacy Act notice in light of these comments". See, Federal Register, August 1, 2003, Vol. 68, No. 148, at Pages 45265 - 45269.

See, for example, comment [17 pages in PDF] submitted by the Center for Democracy and Technology (CDT), and comment [18 pages in PDF] submitted by the Electronic Privacy Information Center (EPIC). See also, story titled "TSA Receives Comments In CAPPS II Privacy Act Proceeding" in TLJ Daily E-Mail Alert No. 751, October 2, 2003.

Cathleen Berrick of the GAO wrote in her November 5 prepared testimony [36 pages in PDF] for the Senate Commerce Committee that "CAPPS II is planned to be a government-run program that will provide real–time risk assessment for all airline passengers. Unlike the current system, TSA is designing CAPPS II to identify and compare personal information with commercially available data to confirm a passenger’s identity. The system will then run the identifying information against government databases and generate a "risk" score for the passenger. The risk score will determine the level of screening that the passenger will undergo before boarding. TSA currently estimates that initial implementation of CAPPS II will occur during the fall of 2004, with full implementation expected by the fall of 2005.

Berrick also wrote that the "TSA faces a number of challenges that could impede their ability to implement CAPPS II. Among the most significant are the following: concerns about travelers’ privacy rights and the safeguards established to protect passenger data; the accuracy of the databases being used by the CAPPS II system and whether inaccuracies could generate a high number of false positives and erroneously prevent or delay passengers from boarding their flights; the length of time that data will be retained by TSA; the availability of a redress process through which passengers could get erroneous information corrected; concerns that identify theft, in which someone steals relevant data and impersonates another individual to obtain that person’s low risk score, may not be detected and thereby negate the security benefits of the system; and obtaining the international cooperation needed for CAPPS II to be fully effective, as some countries consider the passenger information required by CAPPS II as a potential violation of their privacy laws."

She also wrote that the GAO expects to "to issue a final report on our work in early 2004".

More Reaction to the FCC Broadcast Flag Item

11/5. Rep. Billy Tauzin (R-LA), the Chairman of the House Commerce Committee, commented on the Federal Communications Commission's (FCC) Report and Order Further Notice of Proposed Rulemaking [72 pages in PDF] in its proceeding titled "In the Matter of Digital Broadcast Content Protection".

He stated that "The FCC has taken yet another important step to bring digital television to American consumers by adopting the 'Broadcast Flag' rules. Absent the broadcast flag, content providers would be hesitant to make high-value digital content available to consumers. And unless exciting content is available, consumers will find little reason to embrace digital television. Implementation of this technology will help to preserve the viability of free, over-the-air broadcasting. Without content protection for such broadcasts, digital programming might migrate disproportionately to cable and satellite systems for which consumers must pay subscription fees."

See also, story titled "FCC Releases Broadcast Flag Rule", also published in TLJ Daily E-Mail Alert No. 772, November 5, 2003.

The Center for Democracy and Technology (CDT) stated in a release that "the FCC has incorporated several significant improvements over the MPAA's initially proposed rule. These include: attempting to specify objective ``functional criteria´´ to be used in the initial review of protection technologies; clarifying that the flag rule is designed only to help curtail indiscriminate redistribution of video content online and is not intended to restrict any other forms of copying; allowing software-based protection technologies; and adopting an ``ordinary-user´´ standard for resistance to hacking, rather than requiring certified protection technologies stop all committed hackers."

However, the CDT stated that "it still remains unclear what technologies and consumer uses will ultimately be permitted under the ruling."

The CDT also wrote that "More broadly, the broadcast flag rule represents a troubling precedent for direct FCC regulation of the architecture of digital devices and places the FCC squarely in the middle of the ongoing copyright debate. The effect of the flag on innovation and on the computer remains a serious concern."

Robert Holleyman, P/CEO of the Business Software Alliance (BSA), stated in a release that "The decision by the FCC today reflects its commitment to promote the transition to digital television. Technology companies are strong proponents of this transition. It will enable consumers to chose the medium through which they view broadcast television programming, including computers, and make available substantial bandwidth now used for analog broadcasting."

However, he continued that "Technology companies have worked hard through broad based private sector standards, setting efforts to determine ways to effectively control the misappropriation of broadcast content, and we remain committed to private sector efforts. Thus, while we have not yet seen the specific content of the order, we continue to have reservations about the need for regulatory intervention in this area at this time."

Larry Blanford, P/CEO of Philips Consumer Electronics North America, stated in a release that "We are pleased that the Commission has established an open and transparent process for evaluating competing content protection technologies, taking into account how such technologies will affect consumers’ use and enjoyment of digital TV content and ensuring that the technologies are licensed on fair, reasonable and nondiscriminatory terms that protect competition. Philips further appreciates the Commission's recognition of the 18-month manufacturing cycle needed to implement whatever technological solutions might ultimately be decided upon."

He continued that "Philips remains committed to doing everything it can to ensure that consumers’ fair use expectations are preserved and that the new regulation does not impede the ability of consumers to reap and enjoy the full benefits of the digital products they already own and that will be available in the future."

Microsoft Addresses Spam Legislation

11/5. Microsoft released a statement regarding spam legislation in the Congress. It wrote that the bill recently passed by the Senate "would add clout to the dozens of lawsuits filed by Microsoft and other Internet service providers to curb abuses by some of the biggest spammers."

On October 22, 2003 the Senate amended and passed S 877, the "Controlling the Assault of Non-Solicited Pormography and Marketing Act of 2003'", also known as the "CAN-SPAM Act of 2003", by a vote of 97-0. See, Roll Call No. 404. See also, story titled "Senate Passes Burns Wyden Spam Bill" in TLJ Daily E-Mail Alert No. 765, October 24, 2003.

However, while there are spam bills pending in the House, none have been passed. See, stories titled "Spam Bills Pending in the House and Senate", "House Judiciary Committee Holds Hearing on Spam Bill", and "House Commerce Committee Holds Hearing on Spam" in TLJ Daily E-Mail Alert No. 696, Friday, July 11.

Microsoft wrote that "Last month marked an important milestone as the United States Senate voted 97-0 to outlaw the shadiest tactics used by many spammers. Like similar legislation in the House of Representatives, the Senate bill targets spammers’ favorite ploys for defeating filters and other countermeasures. It bans misleading subject lines, requires that advertising messages be clearly identified, and mandates warning labels on sexually oriented spam. It prohibits mass mailings to e-mail addresses generated by automated programs, which harvest addresses from the Web, or recombine letters and numbers into huge lists of possible user names."

Microsoft added that "The legislation also attacks spammers’ efforts to avoid detection. It prohibits senders of unsolicited commercial e-mail from falsifying return addresses or routing information. Messages must include a valid physical address for the sender, and must comply with recipients’ requests not to receive further mail."

People and Appointments

11/5. The Senate confirmed Roger Titus to be a Judge of the U.S. District Court for the District of Maryland by a vote of 97-0. See, Roll Call No. 438.

11/5. President Bush nominated William Duffey to be a Judge of the U.S. District Court for the Northern District of Georgia. See, White House release.

11/5. President Bush nominated Peter Sheridan to be a Judge of the U.S. District Court for the District of New Jersey. See, White House release.

11/5. President Bush nominated James Loy to be Deputy Secretary of Homeland Security. See, White House release.

More News

11/5. Rep. Adam Putnam (R-FL), Chairman of the House Government Reform Commmittee's Subcommittee on Technology, Information Policy, Intergovernmental Relations and the Census, announced the formation of the "Corporate Information Security Working Group". He issued a release listing member of this group. It includes Harris Miller (President of the Information Technology Association of America), former Rep. Rick White (P/CEO of TechNet), Bruce Josten (EVP of the U.S. Chamber of Commerce), Robert Holleyman (P/CEO of the Business Software Alliance), Dave McCurdy (President of the Electronics Industry Alliance), Jerry Jasinowski (President of the National Association of Manufacturers), and other corporate leaders.

FCC Releases Broadcast Flag Rule

11/4. The Federal Communications Commission (FCC) adopted and released a Report and Order Further Notice of Proposed Rulemaking [72 pages in PDF] in its proceeding titled "In the Matter of Digital Broadcast Content Protection". This item promulgates rules that include a broadcast flag mandate. The FCC's interest in copyright protection is promoting a transition to DTV. See, full story.

House Passes E-911 Implementation Act

11/4. The House passed HR 2898, the "E-911 Implementation Act of 2003", by unanimous voice vote. The bill, which is sponsored by Rep. John Shimkus (R-IL), Rep. Anna Eshoo (D-CA) and others, would authorize the appropriation of $500 Million in grants over five years to upgrade public safety answering point (PSAP) facilities, establish an E-911 Coordination Office at the Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA) to improve coordination among federal, state and local public safety officials, penalize states for redirecting E-911 funds collected from consumer's cell phone bills, and direct the FCC to study E-911 implementation in rural areas.

Rep. Fred Upton (R-MI), Chairman of the House Subcommittee on Telecommunications and the Internet, stated in the House that "what many of our constituents may not realize is that when they make a 911 call from their cell phones, many emergency dispatch centers, otherwise known as public service answering points or PSAPs, cannot automatically locate where that call is coming from, unlike when such calls are made from landlines." See, Congressional Record, November 4, 2003, at page H10289.

Rep. Upton (at right) stated that "we need to help our Nation's PSAPs cope with the financial demands of becoming Phase II ready. This bill answers the call by providing a significant grant program in the amount of $100 million a year for 5 years, with a 50 percent non-Federal match requirement to States and municipalities to help them procure their Phase II equipment as well as their training."

He added that "we need to ensure coordination and information sharing at all levels of government and with the other stakeholders as they continue to sort through the maze of challenges that lay ahead. This bill answers that call, too, by not only incentivizing States to have statewide E-911 coordinators, but also establishing a new Federal E-911 Coordination Office that will be a joint program office between NHTSA and the NTIA."

Finally, he stated that "some States have raided their E-911 surcharge monies collected from wireless customers for things completely unrelated to E-911. This is nothing more than picking the pockets of consumers and stealing the funds which should be going toward deployment of this life-saving technology. This bill answers that call by creating disincentives to States who raid those E-911 funds. More to the point, no entity will be eligible for grant monies under this bill if they reside in a State that is raiding those E-911 surcharge accounts."

Rep. Eshoo stated in the House that "Our bill ensures there is no difference in response between landline and cellular phones because every second counts when there is a life-threatening emergency."

Rep. Shimkus stated in the House that "With our passage today, we now set a marker to our friends across the rotunda to say, let's move. Because this is just one part of the long dance that we have. We have to pass it here. They have to pass it. Hopefully, now we can get them to accept our language to move it more rapidly and then we can get something to the President's desk, because the sooner we get it into legislation, the sooner we get authorization language in the battle, then when the appropriations cycle begins, right now really. Even though we have not finished this year, we already should be looking at next year's appropriations cycle. We have got to get our placeholder there. We have got to get the marker in. As soon as this becomes true and just in the legislative language, we are going to have a lot of success."

Rep. John Dingell (D-MI), the ranking Democrat on the House Commerce Committee, stated that "I am pleased to support this important bill and look forward to working with the appropriators to ensure that this grant program is fully funded."

See also, stories titled "Representatives Introduce E911 Implementation Act" in TLJ Daily E-Mail Alert No. 707, July 30, 2003; and "House Commerce Committee Approves E-911 Implementation Act" in TLJ Daily E-Mail Alert No. 751, October 2, 2003.

This bill has yet to be passed by the Senate. However, on July 17, 2003, the Senate Commerce Committee (SCC) approved S 1250, the "Enhanced 911 Emergency Communications Act of 2003 ", by unanimous voice vote. S 1250 has language that is similar, but not identical, to HR 2898. See, story titled "Senate Commerce Committee Approves E-911 Bill" in TLJ Daily E-Mail Alert No. 701, July 18, 2003.

Ninth Circuit Holds Sound Recording Sampling is De Minimis Copying

11/4. The U.S. Court of Appeals (9thCir) issued its split opinion [PDF] in James Newton v. Beastie Boys, a copyright infringement case.

Background. James Newton is an accomplished jazz flutist. In 1978 he composed a song titled "Choir," a piece for flute and voice intended to incorporate elements of African-American gospel music, Japanese ceremonial court music, traditional African music, and classical music, among others. He is also a professor in the music department at California State University at Los Angeles, and a former Guggenheim fellow.

The Beastie Boys are a group of aging pop rappers whose career reached its artistic apex with the 1986 release of the song titled "(You Gotta) Fight For Your Right (To Party!)" (Parentheses in original.)

The Beastie Boys engage in the practice of sampling, or, the incorporation of short segments of other musical recordings into their own recordings. They used a six second sample from Newton's "Choir" in their song, "Pass the Mic". The lyrics are unremarkable. This song looped, or repeated, the sample forty times.

The Beastie Boys obtained license to use the sound recording, but not the underlying composition. ECM Records holds all rights in the sound recording. Newton retained all rights in the composition. Both are protected by copyright.

District Court. Newton filed a complaint in the U.S. District Court (CDCal) against each of the Beastie Boys and various other involved entities alleging infringement of his copyright in the music composition, as well as Lanham Act violations for misappropriation and reverse passing off.

The District Court dismissed the Lanham Act claims, and granted summary judgment to the Beastie Boys on the grounds that the short sample lacked sufficient originality to merit copyright protection, and because the copying was de minimis. Newton appealed.

Court of Appeals. The Court of Appeals affirmed in a split opinion. It held that the sample is original, and qualifies for copyright protection, but that it constitutes de mininis copying. Both the majority and dissent concluded that sampling is de minimis only if an average audience would not recognize the appropriation. They differed as to whether there was a question of fact to be submitted to the jury on this issue.

Judge Mary Schroeder wrote the opinion of the Court. Judge David Thompson joined. Judge Susan Graber dissented.

This case is not about the moral rights of authors, for the simple reason that, except in the case of certain visual art works, the Copyright Act does not implement the moral rights provisions of the Berne Convention.

Article 6bis of the Berne Convention provides that "Independently of the author's economic rights, and even after the transfer of the said rights, the author shall have the right to claim authorship of the work and to object to any distortion, mutilation or other modification of, or other derogatory action in relation to, the said work, which would be prejudicial to his honor or reputation."

Perhaps composers who find themselves in Newton's position have a claim that sounds in the nature of a violation of their moral rights not to have their works distorted or mutilated. But, this right does not exist in the U.S., so composers are left to protect the integrity of their work with copyright infringement and Lanham Act remedies that are designed to address economic harms.

This case is James Newton v. Michael Diamond, Adam Horowitz, Adam Yauch, dba Beastie Boys, Capitol Records, et al., U.S. Court of Appeals for the 9th Circuit, No. 02-55983, an appeal from the U.S. District Court for the Central District of California, D.C. No. CV-00-04909-NM, Judge Nora Manella presiding.

Senate Committee Holds Hearing on Database Security

11/4. The Senate Judiciary Committee's Subcommittee on Terrorism, Technology and Homeland Security held a hearing titled "Database Security: Finding Out When Your Information Has Been Compromised".

Sen. Patrick Leahy (D-VT), the ranking Democrat on the full Committee, wrote in his opening statement that "As technology has advanced, and particularly since the terrorist attacks of September 11th, there has been a surge in government and private sector efforts to create large databases that compile extensive personal information, often through so-called data-mining. The Bush Administration has done this in the name of homeland security, and private companies have argued that gathering this information is essential to their commercial ventures."

He continued that "Administration projects like the Total Information Awareness initiative threatened to violate privacy and other civil liberties and provoked an overwhelming outcry from the public. Just recently we learned that a DOD contractor, Torch Concepts, obtained an airline passenger database without those passengers’ knowledge, used it in ways not admitted to the airline, and publicly released the personal information of one of those unsuspecting passengers."

He concluded that "I am particularly concerned that criminals view these databases as virtual goldmines for illegal activities, most notably identity theft."

Sen. Dianne Feinstein (D-CA) discussed S 1350, the "Notification of Risk to Personal Data Act", which she introduced on June 26, 2003. It would require government agencies, commercial entities or individuals that own or license electronic databases containing personal information to notify individuals whose information is stored in those databases when the security of the database is breached.

See also, story titled "Sen. Feinstein Introduces Bill to Require Disclosure of Unauthorized Access to Electronic Data" in TLJ Daily E-Mail Alert No. 691, July 1, 2003.

Sen. Feinstein (at right) wrote in her opening statement that "Unfortunately, data breaches are becoming all too common and current law does not require notification to consumers when these breaches occur."

She said that "If individuals are informed of the theft of their Social Security numbers or other sensitive information, they can take immediate preventative action. They can place a fraud alert on their credit report to prevent crooks from obtaining credit cards in their name; They can monitor their credit reports to see if unauthorized activity has occurred; They can cancel any affected financial or consumer or utility accounts; They can change their phone numbers if necessary; Prompt notification will also help combat the growing scourge of identity theft."

David McIntyre P/CEO of TriWest Healthcare Alliance, a health care company, wrote in his testimony about a burglary of a TriWest office that resulted in the theft of computer equipment and files containing personal information of 500,000 people, including names, addresses and social security numbers.

He said that it is important to notify customers promptly after a breach. He stated that "Health care professionals talk about the ``Golden Hour´´ when they refer to the window in which it is critical that heart attack victims receive medical attention if they are to have high odds for survival and a reasonable quality of life. What I quickly discovered is that there is a ``Golden Hour´´ when it comes to aiding consumers in protecting themselves against identity theft as well. The experts told me that if it we wanted the best chance of protecting our customers from identity theft, we had no more than a couple of weeks to reach our customers and assist them in contacting the credit bureaus so they could act to place fraud flags on the credit files."

Evan Hendricks, the Editor of Privacy Times, identified several threats to data security and privacy in his prepared testimony. He wrote that "identity theft continues as one of the fastest growing crimes".

Second, he said that "there is a community of hackers constantly probing and testing data security. We still do not know the percentage of hackers that are hacking for malicious purposes. However, we do know that there is a community of ``Carders,´´ that is, hackers who specialize in obtaining and trafficking in credit card numbers."

Third, he said that "there is not a strong organizational culture of data security throughout many organizations, even though they maintain or have access to the personal data of millions of Americans. This is due in part to the relative ``newness´´ of the electronic data age, but in my opinion, more attributable to the absence of long-standing and well-known law and policy that would require organizations to take seriously the issues of data security and privacy."

Finally, he said that "Another concern is the trend towards outsourcing data processing chores to overseas firms in lower-wage countries, including The Philippines, India, Pakistan and Jamaica."

He wrote that S 1350 is a good starting point, but that legislation should also include a private right of access to data, include a private right of action, and curtail the use of social security numbers as personal identifiers.

Mark MacCarthy, an SVP at Visa USA, also testified. He wrote in his prepared testimony that it is "a top priority" at Visa to "protect consumers from the effects of information security breaches".

FCC Releases Report and Order Adopting Rules to Implement Various WRC Decisions

11/4. The Federal Communications Commission (FCC) released a Report and Order [99 pages in PDF] that amends Parts 2, 25 and 87 of the FCC's rules to implement various decisions made at World Radiocommunication Conferences (WRC).

The report and order contains this introductory summary: "By this action, we amend Parts 2, 25, and 87 of our Rules to implement domestically various allocation decisions from several World Radiocommunication Conferences ("WRCs") concerning the frequency bands between 28 MHz and 36 GHz, and to otherwise update our Rules in this frequency range. The following actions are the most significant to non-Federal Government operations: (1) implementation of generic mobile-satellite service ("MSS") allocations in the bands 1525-1559 MHz and 1626.5-1660.5 MHz ("L-band"); (2) allocation of the band 1164-1215 MHz to the radionavigation-satellite service ("RNSS"); (3) deletion of unused and limited fixed-satellite service ("FSS") and broadcasting-satellite service ("BSS") allocations from the band 2500-2690 MHz; and (4) upgrade of the Earth exploration-satellite service ("EESS") allocation in the band 25.5-27 GHz from secondary to primary. In addition, at the request of the National Telecommunications and Information Administration ("NTIA"), we implement various allocation changes for the space science services and the inter-satellite service ("ISS"), most of which involve spectrum primarily used by the Federal Government. These actions conform our Rules to previous WRC decisions and are expected to provide significant benefits to the American public."

The report and order addresses secondary mobile satellite service (MSS) use of the 14-14.5 GHz band. It states, at Paragraph 72, that "The band 14-14.5 GHz is allocated for FSS uplinks on a primary basis for non-Federal Government use. This band is heavily used by Very Small Aperture Terminals ("VSATs") for uplinking to geostationary satellites.138 These VSAT systems provide video and data communications and are widely deployed at business locations, ranging from the largest corporate headquarters to the smallest convenience stores."

It concludes, at Paragraph 76, that "We are allocating the band 14-14.5 GHz to the MSS, including AMSS (Earth-to-space), for non-Federal Government use on a secondary basis ..." It continues that "we believe that such use of the band appears to be technically feasible and would be helpful in meeting the growing demand for two-way broadband data and communications capabilities for commercial aircraft passengers and crew. Further, WRC-03 added a worldwide secondary AMSS allocation in this band. We find that conforming the US Table to this recent international allocation is desirable because it will facilitate an important new use of the 14-14.5 GHz band on a non-interference basis to other uses of the band."

This proceeding is titled "In the Matter of Amendment of Parts 2, 25, and 87 of the Commission's Rules to Implement Decisions from World Radiocommunication Conferences Concerning Frequency Bands Between 28 MHz and 36 GHz and to Otherwise Update the Rules in this Frequency Range Amendment of Parts 2 and 25 of the Commission's Rules to Allocate Spectrum For Government and Non-Government Use in the Radionavigation-Satellite Service". It is ET Docket No. 02-305. This report and order is FCC 03-269 in RM-10331. This report and order was adopted on October 31, and released on November 4.

Pascal Lamy Discusses EU FSC Retaliation

11/4. Pascal Lamy, Trade Commissioner of the European Commission, gave a speech titled "Trade Crisis?" at the European Institute in Washington DC. He addressed the Cancun ministerial, China, bilateral agreements, and U.S. EU trade disputes, such as FSC, beef and bananas, genetically modified foods, and steel.

One of the topics that he addressed in detail was the United States' Foreign Sales Corporation (FSC) and Extraterritorial Income (ETI) tax regimes, that the World Trade Organization (WTO) has held to constitute illegal export subsidies. The EU, which is entitled to impose retaliatory tariffs, has threatened tariffs on U.S. technology exports. The Congress is currently working on repeal and replacement legislation.

Lamy (at right) stated, "So the common denominator between the FSC and steel case -- or indeed their link with the bananas and hormone cases -- is not whether or not the EU is going to retaliate or not, which areas our retaliation will hit, when we are going to do it, and so on. The question to answer, as the US put it in the hormone and bananas cases back in 1999, or on GMOs, where the US has launched a case this autumn, is: when is the other side going to bring itself into conformity with the rules? On steel, when is the US going to lift the tariffs it imposed back in the spring of 2002? On FSC, when is the US going to pass the repeal legislation, which we have been eagerly awaiting for three years now, to end the illegal export subsidies which have been around for years and years. And you will understand that this has been my primary focus in discussions over the last couple of days."

He also stated that "For those who remain interested in the simpler question (whether or not we will retaliate), the answer is yes, if the US does not move to comply within the clearly recognised deadlines. Consider FSC, where we have been waiting for compliance since November 2000 when the WTO Appellate Body found against the FSC for compliance. We have said that retaliation will begin in the early part of next year if FSC is not repealed before the end of the year."

People and Appointments

11/4. Elizabeth Kessler was appointed to be a Deputy Associate Attorney General in the Department of Justice's (DOJ) Office of the Associate Attorney General. She will handle antitrust and environmental matters. She previously was Deputy General Counsel for Environment and Nuclear Programs at the Department of Energy. She has also worked for the Department of State as a Foreign Service Officer, for the Senate Judiciary Committee's Subcommittee on Immigration, and the DOJ's Civil Division and Office of the Solicitor General. See, DOJ release.

11/4. Gerald Reynolds was appointed to be a Deputy Associate Attorney General in the Department of Justice's Office of the Associate Attorney General. He will handle civil consumer, immigration, and terrorism related litigation. He was previously Assistant Secretary for Civil Rights at the Department of Education. He has also worked as Senior Regulatory Counsel with the Kansas City Power and Light Company, as President and Legal Counsel for the Center for New Black Leadership, and for the law firm of Schatz & Schatz, Ribicoff & Kotkin. See, DOJ release.

11/4. Michael Wiggins was appointed to be a Deputy Associate Attorney General in the Department of Justice's Office of the Associate Attorney General. He will handle civil rights and criminal matters. He was previously the Principal Deputy Assistant Attorney General in the Civil Rights Division. Before that, he was an attorney with the law firm of Kilpatrick Stockton in Atlanta, Georgia. See, DOJ release.

11/4. Tracey Henke was appointed to be a Deputy Associate Attorney General in the Department of Justice's Office of the Associate Attorney General. She will handle violence against women and budget matters. She was previously the Principal Deputy Assistant Attorney General in the DOJ's Office of Justice Programs (OJP). Before that, she worked for Sen. Christopher Bond (R-MO) and for former Sen. John Danforth (R-MO). See, DOJ release.

11/4. President Bush announced his intent to nominate David Hossein Safavian to be Administrator for Federal Procurement Policy at the Office of Management and Budget (OMB). He is currently Chief of Staff for the General Services Administration (GSA). He was previously Chief of Staff for Rep. Chris Cannon (R-UT). He has also been as shareholder and managing partner at Janus-Merritt Strategies, and an associate in the Washington DC office of the law firm of Preston Gates & Ellis. See, OMB release.

More News

11/4. The Federal Communications Commission (FCC) held an event titled "Rural Wireless Internet Service Provider (WISP) Showcase and Workshop". See, remarks [PDF] by FCC Chairman Michael Powell, and agenda [PDF].

11/4. The Federal Communications Commission (FCC) issued several documents intended to provide information to consumers about wireless local number portability (WLNP). The FCC has adopted rules that require wireless carriers to make WLNP available to consumers in the top 100 Metropolitan Statistical Areas (MSA) starting November 24, 2003. In other areas, wireless carriers must make WLNP available by May 24, 2004, or within six months of a wireless carrier's receiving a porting request from another carrier, whichever is later. See, FCC release [PDF], document [3 pages in PDF] titled "Wireless Local Number Portability: FCC Consumer Facts", Availability List [PDF], and Availability Map [PDF].

11/4. The Federal Communications Commission (FCC) released a report [50 pages in PDF] titled "Telephone Subscribership in the United States (Data Through March 2003)". It addresses telephone subscribership levels in the United States, and provides tables and charts with breakdowns by state, race, age, employment status, and income. The report estimates that 95.5% of all households in the United States have telephone service. See also, FCC release [PDF]. It was written by Alexander Belinfante of the Industry Analysis and Technology Division of the Wireline Competition Bureau.

11/4. The U.S. Patent and Trademark Office (USPTO) announced that the Trademark Trial and Appeal Board (TTAB) "has expanded the options for electronically filing documents in trademark disputes. Using the Electronic System for Trademark Trials and Appeals (ESTTA) system, parties to a dispute now can file more documents electronically with the TTAB, including requests for extension of time to oppose and notices of opposition. Parties also can use ESTTA to file motions and other documents in inter-partes cases." See, USPTO release.

Bush Nominates Fran Harvey for DOD/NII

11/3. President Bush announced his intent to nominate Francis Joseph (Fran) Harvey to be Assistant Secretary of Defense for Networks and Information Integration (NII). NII handles most of the information and communications technology related projects of the Department of Defense (DOD). NII responsibilities include information management, command and control, communications, network centric warfare, security, information assurance, information operations, spectrum, space systems, space policy, surveillance and reconnaissance, intelligence, and counterintelligence.

Harvey is currently Vice Chairman of Duratek, Inc., a company located in Columbia, Maryland that manages radioactive waste for nuclear power plants, the Department of Energy, the Department of Defense, and other entities. Before that, he worked for Westinghouse from 1969 to 1997, including as Chief Operating Officer of its Industries and Technology Group.

Duratek is a portfolio company of the Carlyle Group, a private equity investment firm. Harvey is also a director of other Carlyle companies, including IT Group, Inc., Gardner Technologies, Inc. (wine bottle cork technology), and Kulman Electric Corp. Carlyle is chaired by former IBM Chairman Lou Gerstner. Former Federal Communications Commission (FCC) Chairman William Kennard is a Managing Director in Carlyle's Global Telecommunications and Media Group.

Harvey has a doctorate in metallurgy and material sciences.

FCC Fines AT&T For Violation of FCC Do Not Call Rules

11/3. The Federal Communications Commission (FCC) released a Notice of Apparent Liability for Forefeiture [12 pages in PDF] pertaining to consumer allegations that AT&T violated the FCC's do not call rules. This NAL effectively fines AT&T $780,000 for making telephone solicitation calls to 29 consumers on 78 separate occasions after those consumers had requested that AT&T not call them again, in violation of 47 C.F.R. 64.1200(e). See also, FCC release.

FCC Chairman Michael Powell stated in a release that "Today's enforcement action demonstrates our resolve in the fight to protect consumers from unwanted and intrusive telephone calls. This puts telemarketers on notice that we will take all measures necessary to protect consumers who chose to be left alone in their homes. Together with our partners at the Federal Trade Commission, we will remain vigilant to ensure that telemarketers respect the wishes of consumers."

An unrepentant AT&T stated in a release that this investigation "concerns claims by customers who believed they were on an AT&T-specific list and received a call they think was from AT&T". It added that "We are confident we can persuade the FCC in its fact-finding proceeding that there were not 78 do-not-call violations."

Sen. Grassley Meets with Lamy Re FSC/ETI

11/3. Sen. Charles Grassley (R-IA), Chairman of the Senate Finance Committee, and Pascal Lamy, the Trade Commissioner of the European Union met to discuss trade issues, including replacement legislation for the Foreign Sales Corporation (FSC) and Extraterritorial Income (ETI) tax regimes, which the World Trade Organization (WTO) held to be illegal export subsidies.

The WTO ruling permits the EU to impose retaliatory tariffs. The EU has released a various lists of items that may be subject to retaliatory tariffs.

Sen. Grassley (at right) stated afterwards that "I think Commissioner Lamy understands how committed I am to bringing the United States into compliance on FSC/ETI. I hope the Senate will vote soon on my bipartisan bill to repeal ETI. Depending on what happens in the House, we may be able to go to conference before the end of the year. In any event, I'm optimistic that we can deliver a bill to the President early next year."

"I impressed on Commissioner Lamy that sanctions will not in any way impact how quickly we move this legislation through the Congress. I also stressed how disappointed I am by the rhetoric coming out of Brussels threatening sanctions. Why would you want to increase trade tensions when we're actively moving to resolve the dispute? It just doesn't make sense."

On October 27, the House Ways and Means Committee approved FSC/ETI replacement legislation, HR 2896, the "American Jobs Creation Act of 2003" by a vote of 24-15.

On September 18, 2003, Sen. Grassley introduced S 1637, the "Jumpstart Our Business Strength (JOBS) Act". The Senate Finance Committee amended and approved this bill on October 2, 2003.

See also, S 1475, the "Promote Growth and Jobs in the USA Act of 2003". This bill was introduced on July 28, 2003 by Sen. Orrin Hatch (R-UT), a member of the Senate Finance Committee. However, it has not been approved by the Committee.

The House bill has broader support from software, computer, information technology, and communications companies. Its supporters include AOL Time Warner, Apple, Cisco, Dell, eBay, EDS, HP, IBM, Iomega, Oracle, Sun Microsystems, Telcordia, TI, BellSouth, AT&T, SBC, and Verizon.

See also, stories titled "Grassley and Baucus Organize Meeting on FSC/ETI Issue" in TLJ Daily E-Mail Alert No. 511, September 18, 2002; "Deputy Treasury Secretary Addresses FSC/ETI and WTO Rulings" in TLJ Daily E-Mail Alert No. 526, October 9, 2002; "Rep. Thomas Writes Colleagues Re FSC Dispute" in TLJ Daily E-Mail Alert No. 622, March 13, 2003; "WTO Authorizes FSC/ETI Related Tariffs" in TLJ Daily E-Mail Alert No. 657, May 8, 2003; "Legislators Introduce Bills to Repeal ETI Regime and Extend R&D Tax Credit" in TLJ Daily E-Mail Alert No. 715, August 11, 2003; and "Senate Finance Committee Approves FSC/ETI Replacement Bill" in TLJ Daily E-Mail Alert No. 753, October 6, 2003.

More Trade News

11/3. The Department of Commerce (DOC) announced that the DOC awarded a $399,853 grant to the Advanced Television Systems Committee (ATSC) Forum to fund its Hemispheric Digital Television (DTV) Initiative. The DOC stated that the grant will generate export revenues. See, DOC release.

11/3. Secretary of the Treasury John Snow gave a speech to the U.S.-Japan Business Council annual meeting in Washington DC. He stated that, previously, "many in the United States viewed growth in Japan as a threat to the U.S., as if world output were a zero-sum game. We now recognize that growth abroad adds to opportunities for American workers and producers, and enhances prosperity in the United States. We welcome the contribution that Japanese firms have made to U.S. employment by investing here." He added that "the nature of the issues has shifted away from market access, and towards market development, regulation, and corporate governance. These are issues that affect domestic firms as well as foreign firms in Japan. And these issues are often detailed and technical. Current financial services issues, such as the development of defined contribution pensions and regulatory transparency, are industry issues, not foreign firm issues."

Supreme Court News

11/3. The Supreme Court denied certiorari, without opinion, in Biltmore Forest v. FCC, No. 03-48. See, Order List [15 pages in PDF] at page 2.

11/3. The Supreme Court denied certiorari, without opinion, in Consumers Union v. Suzuki. See, Order List [15 pages in PDF] at page 3. A split three judge panel of the U.S. Court of Appeals (9thCir) issued an opinion [31 pages in PDF] on June 25, 2002 reversing a District Court dismissal of a suit alleging product disparagement by Consumer Reports; the District Court had dismissed the case pursuant to New York Times v. Sullivan. A split en banc panel (13-11) denied rehearing on May 19, 2003. This is Supreme Court No. 03-281, Appeals Court No. 00-56043, and District Court No. CV 96-00340 AHS.

11/3. The Supreme Court announced that it will take a recess from Monday, November 17, 2003, until Monday, December 1, 2003. See, Order List [15 pages in PDF] at page 15.

People and Appointments

11/3. President Bush nominated Gene Pratter to be a Judge of the U.S. District Court for the Eastern District of Pennsylvania. See, White House release.

More News

11/3. James Harper, the Editor of Privacilla.org, released a report titled "Affiliate-Sharing and Consumers: How ``Privacy´´ Regulation Misses the Mark, Hits Marketing". The report states that "The relationship between affiliate-sharing and consumer privacy has long been assumed and advocated for, but never deeply studied. Affiliate-sharing regulation may advance privacy for some set of consumers, but others -- possibly a large majority -- may get little benefit from it." It adds that "Experience in the marketplace and with prior regulation suggests that affiliate-sharing is not a significant privacy concern for consumers." It concludes that "It is unwise to pass blanket privacy laws for the benefit of a few privacy outliers, but this may well be what has happened in California and what is threatened for the whole nation in current congressional debates."

11/3. The General Accounting Office (GAO) released a report [PDF] titled "Information Technology: Benefits Realized for Selected Health Care Functions".

Go to News from October 36-31, 2003.