News from November 21-25, 2003

7th Circuit Rules in Copyright and Database Protection Case

11/25. The U.S. Court of Appeals (7thCir) issued its opinion [13 pages in PDF] in Assessment Technologies v. Wiredata, a copyright infringement case. Judge Richard Posner wrote the opinion for the three judge panel, holding that extracting the data from an electronic database incorporated within a copyrighted program does not constitute copyright infringement. See, full story.

ALJ Dismisses FTC's Patent Ambush Complaint Against Unocal

11/25. An Administrative Law Judge issued his Initial Decision [74 pages in PDF] in the proceeding captioned "In the Matter of Union Oil Company of California", dismissing the Federal Trade Commission's (FTC) administrative complaint against Union Oil Company of California (Unocal) under the Noerr-Pennington doctrine, and because the FTC "lacks jurisdiction to decide the fundamental and substantial patent issues raised by the allegations of the Complaint."

The FTC filed its Administrative Complaint on March 4, 2003 alleging that Unocal subverted the California regulatory standard setting proceedings relating to low emissions gasoline standards, in violation of Section 5 of the FTC Act.

The Complaint alleged that "To address California's serious air pollution problems, the California Air Resources Board (``CARB创) initiated rulemaking proceedings in the late 1980s to determine ``cost-effective创 regulations and standards governing the composition of low emissions, reformulated gasoline (``RFG创). Unocal actively participated in the CARB RFG rulemaking proceedings and engaged in a pattern of bad-faith, deceptive conduct, exclusionary in nature, that enabled it to undermine competition and harm consumers. Through a pattern of anticompetitive acts and practices that continues even today, Unocal has illegally monopolized, attempted to monopolize, and otherwise engaged in unfair methods of competition in both the technology market for the production and supply of CARB-compliant ``summer-time创 RFG and the downstream CARB ``summer-time创 RFG product market."

The complaint further alleged that "Although Unocal knew by July 1992 that most of the pending patent claims based on its emissions research had been allowed by the United States Patent and Trademark Office, Unocal concealed this material information from CARB and other participants in the CARB RFG proceedings. Until Unocal's public announcement of its RFG patent rights on January 31, 1995, Unocal continued to perpetuate the false and misleading impression that it did not possess, or would not enforce, any proprietary interests relating to RFG."

"But for Unocal's fraud, CARB would not have adopted RFG regulations that substantially overlapped with Unocal's concealed patent claims; the terms on which Unocal was later able to enforce its proprietary interests would have been substantially different; or both." Moreover, the Complaint alleged, "Unocal's ``patent ambush创 also has permitted it to undermine competition and harm consumers in the downstream product market for ``summer-time创 reformulated gasoline in California."

Unocal raised the Noerr Pennington doctrine, which provides that parties are not liable for violation of federal antitrust laws for activities intended to influence the government, even if for the purpose of eliminating competition. See, Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961) and United Mine Workers v. Pennington, 381 U.S. 657 (1965).

With respect to Noerr-Pennington, the ALJ held that "Noerr-Pennington immunizes Respondent's efforts to induce CARB to adopt regulations on low emissions, reformulated gasoline" and that "Noerr-Pennington immunity exists even if CARB did not know that it was being asked to enact a regulation that would restrain trade."

In addition, the ALJ held that "The sham petitioning exception does not apply in this case" and that "The Walker Process exception does not apply in this case".

With respect to patent law jurisdiction, the ALJ held that "To determine whether there is any set of facts that, if proven, could support the allegations of conduct directed at Auto/Oil Group and WSPA separate from the alleged violations stemming from Respondent's efforts to get CARB to adopt regulations favorable to Respondent would require an in depth and thorough analysis of what Respondent's ``proprietary interests创 were, which ``proprietary interests创 were and were not included in any patent, what was patented, what was not patented, the scope of Respondent's patents, the scope of any competitor's patents, whether any competitor products or methods exist or could be invented, whether any of the competitor products or methods that could be created or invented infringed, and whether refineries could be reconfigured so as to avoid or minimize infringement of Respondent' s patents."

The ALJ continued that "The scope of Respondent's patents, the scope of any competitor's patents, whether any of the competitor products or methods that could be created or invented infringed, and whether refineries could be reconfigured so as to avoid or minimize infringement of Respondent's patents are issues raised by the allegations of the Complaint and are substantial patent law issues."

The ALJ concluded that "Due process and fairness require that the issues raised in the allegations of the Complaint, entangled in numerous patent issues, be thoroughly and completely examined and resolved" and that "The FTC has no jurisdiction over the allegations in this Complaint in Docket 9305 that depend on the resolution of substantial questions of federal patent law."

This Initial Decision was written by Administrative Law Judge Michael Chappell. This is Docket No. 9305. See also, FTC release of November 26, 2003, and FTC's collection of pleadings in this proceeding.

Posner Addresses Copyright Misuse

11/25. The U.S. Court of Appeals (7thCir) issued its opinion in Assessment Technologies v. Wiredata, a copyright infringement case. While the holding of the case is that that extracting the data from an electronic database incorporated within a copyrighted program does not constitute copyright infringement, the opinion also addresses, in dicta, the doctrine of copyright misuse.

Judge Richard Posner wrote the opinion for the three judge panel. This is at least the third time is just over one year that Judge Posner has written about misuse in published opinions.

He also wrote the opinion [PDF] for the 7th Circuit in Scheiber v. Dolby Laboratories, in which the Appeals Court applied the doctrine of misuse in a patent case. He criticized the application of the doctrine, writing that the Appeals Court was compelled to follow Supreme Court precedent. However, in that case he criticized the application of the doctrine of misuse in a competition or antitrust context.

In the present case, as well as in the opinion in Ty, Inc. v. Publications International Ltd., Judge Posner discusses taking the doctrine of misuse away from its origins in patent law, and its grounding in competition or antitrust analysis, and making it a copyright doctrine that might be more relevant to digital content.

History of the Doctrine of Misuse. The doctrine of misuse was first developed in patent law. The Supreme Court held that there is a defense of patent misuse to prevent the holders of patents from using the authority extended to them under the Patent Act to prevent competition in products that are not protected by patent. See, Morton Salt Co. v. Suppiger Co., 314 U.S. 488 (1942). Similarly, in Brulotte v. Thys Co., 379 U.S. 29 (1964), the Supreme Court held that a patent holder's attempt to collect royalties beyond the term of the patent constitutes misuse of the patent

The doctrine of patent misuse is similar to, but not identical to competition, or antitrust, analysis. Judge Posner criticized it application in an competition context in the June 17, 2002 opinion [PDF] in Scheiber v. Dolby Laboratories. See also, story titled "7th Circuit Criticizes But Follows Brulotte" in TLJ Daily E-Mail Alert No. 453, June 8, 2002.

Recently, the doctrine of misuse has been extended from patent law to copyright law. The leading cases are Lasercomb America v. Reynolds, 911 F.2d 970 (4thCir 1990); Practice Management Information Corp. v. AMA, Alcatel U.S.A., Inc. v. DGI Technologies, Inc., 166 F.3d 772 (5thCir 1999), and DSC Communications Corp. v. DGI Technologies, 81 F.3d 597 (5thCir 1996).

In Lasercomb the Court found copyright misuse where the holder of a copyright in computer software used a license agreement that barred licensees from using ideas contained in its software to write their own software. In Alcatel the Court found copyright misuse where the holder of a copyright in software licensed its use on the condition that the licensee also use it only in conjunction with the copyright holder's hardware. The DSC case involved development of a competing microprocessor card.

However, while these cases have extended the doctrine of misuse to copyright, and have applied it in the context of computer software and hardware, these cases still basically apply a variety of competition analysis to find misuse.

Napster asserted the defense of copyright misuse in A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001). The 9th Circuit rejected the copyright misuse defense in that case. In that case the alleged misuse arose out of alleged anticompetitive actions by the record companies in the online music distribution market.

Assessment Technologies v. Wiredata In this case, Judge Posner speculated, but did not rule on, the issue of copyright misuse. He wrote that "To try by contract or otherwise to prevent the municipalities from revealing their own data, especially when, as we have seen, the complete data are unavailable anywhere else, might constitute copyright misuse."

He continued that "The doctrine of misuse ``prevents copyright holders from leveraging their limited monopoly to allow them control of areas outside the monopoly创, citing A&M Records v. Napster.

He continued that "No effort has been made by WIREdata to show that AT has market power merely by virtue of its having a copyright on one system for compiling valuation data for real estate tax assessment purposes. Cases such as Lasercomb, however, cut misuse free from antitrust, pointing out that the cognate doctrine of patent misuse is not so limited, 911 F.3d at 977-78, though a difference is that patents tend to confer greater market power on their owners than copyrights do, since patents protect ideas and copyrights, as we have noted, do not."

He added that "The argument for applying copyright misuse beyond the bounds of antitrust, besides the fact that confined to antitrust the doctrine would be redundant, is that for a copyright owner to use an infringement suit to obtain property protection, here in data, that copyright law clearly does not confer, hoping to force a settlement or even achieve an outright victory over an opponent that may lack the resources or the legal sophistication to resist effectively, is an abuse of process."

But he concluded, "We need not run this hare to the ground".

Ty v. Publications International. In this more obscure case about Beanie Baby toys, Judge Posner offered a lengthy analysis of the purposes and economics of copyright protection. And in doing so, he hinted that copyright misuse might endanger copyrights. However, he did not decide this case on this issue.

The plaintiff in the District Court was Ty Inc., the manufacturer of Beanie Babies. These a toys made by putting bean pellets inside of bags, that are designed to resemble animals. Ty holds copyrights to these as "sculptural works". Publications International, Ltd. (PIL) publishes books, including For the Love of Beanie Babies and Beanie Babies Collector's Guide, which contain pictures of Beanie Babies, and text. That is, PIL took and published pictures (derivative works) of Ty's Beanie Babies (copyrighted works). However, these pictures were part of a guide to Beanie Babies marketed to collectors. Hence, PIL asserts that use of the pictures constitutes fair use. Ty differs. Unlike some other Beanie Baby book publishers, PIL has no license from Ty.

Ty filed a complaint in U.S. District Court (NDIll) against PIL alleging copyright and trademark infringement. PIL conceded that the Beanie Babies are copyrighted, and that its books are derivative works, but asserted the affirmative defense of fair use. The District Court ruled on summary judgment that the copying was not fair use, and granted Ty an injunction on the copyright claim.

PIL appealed. The 7th Circuit reversed and remanded. And, the Supreme Court denied certiorari.

Judge Posner hinted at misuse arising out of copyright licensing practices and litigation strategies intended to suppress critical reviews of its products -- a purpose that is contrary to the underlying purposes of copyright protection.

This is the gyst of his argument. Ty makes a product for kids. It sets production levels and low prices at levels that do not result in a clearing of the market. Hence, there is excess demand at Ty's price and quantity of production. This, among other things, creates a secondary market for the product. This secondary market, in turn, creates advertising for the product, and increases future demand.

However, for there to be an effective secondary market, there must be literature on the product, including collectors' guides. Posner then reasoned: "Granted, there is some question how, if Beanie Babies collectors' guides are indeed a complement to Beanie Babies (and they are), and Ty has a monopoly of Beanie Babies (and it does), Ty can get a second monopoly profit by taking over the guides market. The higher the price it charges for guides, the lower will be the demand for such guides and hence for collecting Beanie Babies and so the less effective will Ty's strategy of marketing Beanie Babies as collectibles be. This is the sort of question that has engendered skepticism among economists about the antitrust rule against tie-in agreements. But there is an answer here: Ty wants to suppress criticism of its product in these guides."

Posner also wrote that "ownership of a copyright does not confer a legal right to control public evaluation of the copyrighted work."

He also noted that "Some of the text" in PIL's guide "is quite critical, for example accusing Ty of frequent trademark infringements. Ty doesn't like criticism, and so the copyright licenses that it grants to those publishers whom it is willing to allow to publish Beanie Baby collectors' guides reserve to it the right to veto any text in the publishers' guides. It also forbids its licensees to reveal that they are licensees of Ty. Its standard licensing agreement requires the licensee to print on the title page and back cover of its publication the following misleading statement: ``This publication is not sponsored or endorsed by, or otherwise affiliated with Ty Inc. All Copyrights and Trademarks of Ty Inc. are used by permission. All rights reserved.创"

However, he left it at that. He wrapped up this line of analysis with the statement, "We need not consider whether such a misleading statement might constitute copyright misuse, endangering Ty's copyrights."

FCC Releases Order Regarding Service Rules for 3G Spectrum

11/25. The Federal Communications Commission (FCC) released its Report and Order [83 pages in PDF] in its proceeding titled "In the Matter of Service Rules for Advanced Wireless Services in the 1.7 GHz and 2.1 GHz Bands".

The FCC announced, but did not release, this Report and Order (R&O) on October 16, 2003. See, story titled "FCC Announces Services Rules for 3G Spectrum" in TLJ Daily E-Mail Alert No. 761, October 20, 2003. This R&O is FCC 03-251 in WT Docket No. 02-353.

This R&O containing service rules for Advanced Wireless Services (AWS) in the 1710-1755 MHz and 2110-2155 MHz bands. The R&O states that this proceeding pertains to "broadband access and increasing competition in the provision of such broadband services both in terms of the types of services offered and in the technologies utilized to provide those services."

Third Generation (3G) wireless is another term that has been used to describe the planned use of these bands. The FCC's R&O explains its use of the the terms AWS and 3G. "AWS is the collective term the Commission uses for new and advanced wireless applications, such as voice, data and broadband services provided over a variety of high-speed fixed and mobile networks, and which are popularly referred to as International Mobile Telecommunications-2000 (IMT-2000) or ``third generation创 (3G) systems. The ``3G创 nomenclature is based on the popular view that analog cellular systems represent the first generation of advanced wireless devices, that digital cellular and broadband Personal Communications Service systems represent the second, and that the next deployment of wireless technologies (which we include in the collective term ``AWS创) represents the third generation."

The R&O states that "Licensees in these bands will have the flexibility to provide any fixed or mobile service that is consistent with the allocations for this spectrum. We will license this spectrum under our market-oriented Part 27 rules and, in order to accommodate differing needs, our band plan includes both localized and regional geographic service areas and symmetrically paired spectrum blocks with the pairings being composed of different bandwidths. Our licensing plan will allow the marketplace rather than the Commission to ultimately determine what services are offered in this spectrum and what technologies are utilized to provide these services."

On November 7, 2002 the FCC adopted a Second Report and Order in which it allocated spectrum for advanced services in the 1710-1755, 2110-2150 and 2150-2155 MHz bands. See, story titled "FCC Adopts 3G Order and NRPM" in TLJ Daily E-Mail Alert No. 546, November 11, 2002.

Senate Passes Another Version of Spam Bill

11/25. The Senate amended and passed S 877, the "Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003", also known as the "CAN-SPAM Act of 2003", by voice vote.

The Senate passed its first version of the bill on October 22, 2003 by a vote of 97-0.  See, TLJ story titled "Senate Passes Burns Wyden Anti-Spam Bill" in TLJ Daily E-Mail Alert No. 765, October 24, 2003. On November 22, the House passed another version of the bill by a vote of 392-5. See, Roll Call No. 671. See also, story titled "House Passes Spam Bill" in TLJ Daily E-Mail Alert No. 785, November 24, 2003.

The bill just passed by the Senate is a third version. Hence, the Congress has not yet passed a spam bill.

Sen. Conrad Burns (R-MT), a sponsor of the bill, issued a release that states that "The House of Representatives is expected to give final approval in December for the President's signature into law." On Tuesday afternoon, November 25, the House went into recess until December 8.

See also, stories titled "Senators Burns and Wyden Re-Introduce Can Spam Bill" in TLJ Daily E-Mail Alert No. 643, April 14, 2003; "Senate Commerce Committee Passes Spam Bill" in TLJ Daily E-Mail Alert No. 685, June 20, 2003; and "House Judiciary Committee Holds Hearing on Spam Bill", "House Commerce Committee Holds Hearing on Spam Bills" and "Spam Bills Pending in the House and Senate" in TLJ Daily E-Mail Alert No. 696, July 11, 2003.

DC Circuit Dismisses Petitions for Review in AT&T v. FCC

11/25. The U.S. Court of Appeals (DCCir) issued its opinion [17 pages in PDF] in AT&T v. FCC, dismissing petitions for review of a Federal Communications Commission (FCC) declaratory ruling in a proceeding pertaining to charging access fees for access to a wireless network. The Appeals Court wrote that the issues raised by the petitions are not properly before the Appeals Court.

This is a consolidation of several petitions for review, filed by AT&T, Sprint Spectrum and Cellco Partnership, of a declaratory ruling of the FCC responding to a primary jurisdiction referral from the U.S. District Court (WDMo).

The Appeals Court wrote that "The referral arose during the course of litigation between AT&T and Sprint in Missouri in which Sprint sought compensation from AT&T for its use of Sprint抯 wireless network. AT&T removed the case from state court to the federal district court, which then referred specific questions to the FCC under the doctrine of primary jurisdiction. In its referral order, the district court inquired of the FCC (1) whether Sprint may charge access fees to AT&T for access to the Sprint PCS wireless network and, if so, (2) the reasonableness of Sprint抯 charges."

The Appeals Court continued that "After receiving petitions for declaratory rulings from both AT&T and Sprint, along with public comments, the Commission held that Sprint is entitled to collect access charges from AT&T only to the extent that a contract between the parties imposes a payment obligation on AT&T. The FCC declined to determine the reasonableness of any rate until after the district court determined whether the parties are bound by a contract. Both AT&T and Sprint raise numerous challenges to the Commission抯 ruling, none of which are properly before this court for review. Accordingly, we dismiss the petitions for review."

The Appeals Court held that the petitions of AT&T and Sprint are unripe for review.

This case is AT&T Corporation v. FCC and USA, respondents, and Qwest Communications International, Inc., et al., intervenors, and consolidated cases, Nos. 02-1221, 02-1240, 02-1263, and 02-1275, petitions for review of a declaratory ruling of the FCC.

FCC Publishes Notices Regarding Secondary Leasing of Spectrum

11/25. The Federal Communications Commission (FCC) published three items related to its proceeding titled "In the Matter of Promoting Efficient Use of Spectrum Through Elimination of Barriers to the Development of Secondary Markets". First, it published in its web site an Erratum [2 pages in PDF] to its October 6, 2003 Report and Order (R&O) and Further Notice of Proposed Rulemaking (FNPRM). Second, it published in the Federal Register its notice of the adoption of final rules in this R&O. Third, it published in the Federal Register a notice regarding its FNPRM.

The FCC adopted its original Notice of Proposed Rulemaking [61 pages in PDF] on November 9, 2000. See, TLJ story titled "FCC Discusses Secondary Markets for Wireless Spectrum", and TLJ news analysis titled "Mobile Internet Access Devices and the Internet", both dated November 10, 2000.

The FCC adopted its Report and Order and Further Notice of Proposed Rulemaking [198 pages in PDF] on May 15, 2003. See, story titled "FCC Adopts Order Allowing Some Secondary Leasing of Spectrum", in TLJ Daily E-Mail Alert No. 663, May 16, 2003. However, the FCC did not release this document until October 7, 2003. See, story titled "FCC Finally Releases R&O and FNPRM in Secondary Spectrum Markets Proceeding" in TLJ Daily E-Mail Alert No. 755, October 8, 2003.

The November 25 Erratum states that the October 6 item "determined that the particular services affected by the Commission抯 streamlined transfer and assignment application processing policies were identical to those services encompassed within the spectrum leasing policies. The text of one of the rule provisions, however, mistakenly did not reflect this determination."

The notice of the R&O in the Federal Register (November 25, 2003, Vol. 68, No. 227, at Pages 66252 - 66286) addresses the erratum, summarizes the new final rules in this R&O, and provides that most of the new rules take effect on January 26, 2004.

The notice of the FNPRM in the Federal Register (November 25, 2003, Vol. 68, No. 227, at Pages 66231 - 66251) summarizes the FNPRM and confirms the deadlines for public comments. Comments are due December 5, 2003. Reply comments are due January 5, 2004.

This R&O and FNPRM is FCC 03-113 in WT Docket No. 00-230. For more information, contact Paul Murray of the FCC's Wireless Telecommunications Bureau at 202 418-7240 or Paul.Murray@fcc.gov.

More Capitol Hill News

11/25. The House adjourned until 9:30 AM on December 8, 2003.

11/25. The Senate adjourned until 10:00 AM on December 9, 2003.

Tech Crime Report

11/25. A grand jury of the U.S. District Court (NDCal) returned an indictment against Charles T. Booher alleging eight counts of violation of 18 U.S.C. 875(c) in connection with alleged threats made by e-mail and telephone. The Indictment [7 pages in PDF] states that Booher repeatedly e-mailed a Canadian company demanding that he be taken off of their e-mail spam list. For example, the indictment alleges that he wrote that "I am going to locate you, disable you using either a quick 22 calibre to your lower spine and then duck tape and plastic shrink raps [sic]. Then I am going to kidnap you and take you to my secret hiding place. There I will castrate you ... using crude gardening tools, I will use a lightweight torch to cauterize your wounds and you will be awake and conscious during the entire procedure. Then I am going to prepare your genitals into some kind of meat loaf dish ..." This message continued. The Indictment quotes from other e-mails, that it alleges that he sent, referring to ice picks, shotguns, radioactive materials, biohazards, and a movie titled "Hannibal II". The indictment does not allege that he took any affirmative steps towards carrying out any of these threats. This case is U.S.A. v. Charles T. Booher, U.S. District Court for the Northern District of California, at San Jose, D.C. No. CR No. 03-20170. See also, USAO release.

11/25. Eric John Norton pled guilty in U.S. District Court (EDCal) to one count of wire fraud, one count of falsely pretending to be an officer or employee of the United States, and using that false status to obtain property. Norton falsely represented that he worked for the Senate Judiciary Committee, and other Senate committees, and thereby purchased airline tickets at reduced rates, which he then resold at higher rates. See, USAO release [PDF].

People and Appointments

11/25. The Senate confirmed James Loy to be Deputy Secretary of Homeland Security, by voice vote.

11/25. President Bush nominated Juan Sanchez to be a Judge of the U.S. District Court for the Eastern District of Pennsylvania. See, White House release.

11/25. President Bush nominated Marcia Cooke to be a Judge of the U.S. District Court for the Southern District of Florida. See, White House release.

11/25. President Bush nominated Mark Warshawsky to be Assistant Secretary of the Treasury for Economic Policy. He is currently Deputy Assistant Secretary for Economic Policy, Microeconomic Analysis. Before that, he worked for the TIAA-CREF Institute. See, White House release and release.

11/25. President Bush appointed James Wilkinson to be Deputy Assistant to the President and Deputy National Security Advisor for Communications. Bush also appointed of Sean McCormack to be Special Assistant to the President and Senior Director of the National Security Council Press Office. Both appointments are be effective December 1, 2003. See, White House release.

11/25. Gregory Cooke was named Deputy Director of the Federal Communications Commission's (FCC) Enforcement Bureau's Office of Homeland Security. He has worked at the FCC since 1995. Prior to that, he worked in the New York City office of the law firm of Willkie Farr & Gallagher. See, FCC release.

11/25. BellSouth announced numerous appointments and departures among its top officers. See, BellSouth release.

11/25. Michael Sears resigned as a member of Sprint's board of directors, effective November 25, 2003. See, Sprint release.

More News

11/25. The National Telecommunications and Information Administration (NTIA) filed a comment with the Federal Communications Commission (FCC) in its proceeding titled "In the Matter of Amendment of Part 22 of the Commission抯 Rules To Benefit the Consumers of Air-Ground Telecommunications Services Biennial Regulatory Review -- Amendment of Parts 1, 22, and 90 of the Commission's Rules". The NTIA states that the FCC should specify the unwanted emissions to be covered by the term out-of-band emission (OOBE) consistently with the International Telecommunications Union (ITU) definition, and ensure that any rules adopted provide appropriate restrictions on all unwanted emissions. The NTIA also states that the FCC "should either maintain the masks or provide a set of out-of-band and spurious domain emission limits that can be applied to all PMS equipment". This is WT Docket No. 03-103.

11/25. November 24 was the deadline to submit comments to the Department of Commerce's National Telecommunications and Information Administration (NTIA) regarding the adequacy of its preparation process for the International Telecommunications Union's (ITU) World Radiocommunication Conferences (WRC). The next WRC is in 2007. See, NTIA's notice in the Federal Register, October 23, 2003, Vol. 68, No. 205, at Pages 60646-60648. The NTIA stated in its web site that it "is currently conducting an overall review of the entire conference preparatory process and how the current process can be improved or modified." The NTIA also published in its web site four comments that it received. See, comments submitted by the United States ITU Association [PDF], Winstar Communications, LLC [PDF], New York Satellite Industries, LLC and Final Analysis Communication Services, Inc., and National Aeronautics and Space Administration.

11/25. The Department of Commerce (DOC) and the U.S. Trade Representative (USTR) announced that they have restructured their jointly administered industry trade advisory committee system. This restructuring includes the creation of a new Industry Trade Advisory Center and 16 new Industry Trade Advisory Committees (ITACs). The new ITAC 8 is titled "Information and Communications Technologies, Services, and Electronic Commerce". The DOC and USTR have not yet completed the chartering of the new ITACs, appointing of members, or scheduling of meetings. See, DOC release.


Bush Signs Defense Authorization Act

11/24. President Bush signed HR 1588, the "National Defense Authorization Act for Fiscal Year 2004," which authorizes defense and military appropriations for fiscal year 2004. See, White House release.

The House passed the conference report on November 7, 2003, by a vote of 362-40. See, Roll Call No. 617. The Senate passed the conference report on November 12 by a vote of 95-3. See, Roll Call No. 447.

Some of the provisions of the bill are technology related. First, the bill authorizes the appropriation of $11,029,557,000 for fiscal year 2004 for "the Defense Science and Technology Program, including basic research, applied research, and advanced technology development projects."

This bill also requires the Department of Defense (DOD) to conduct research and development on network centric operations, requires the DOD to conduct a "Global Research Watch" program, requires the Defense Advanced Research Projects Agency (DARPA) to prepare biennial reports, and expands the authority of the DOD to support and pay for math, science, engineering and technology (MSET) education.

Network Centric Operations. Section 234 of the bill provides that "The Secretary of Defense shall carry out a program of research and development to promote the development of high-speed, high-bandwidth communications capabilities for support of network-centric operations by the Armed Forces."

This section provides that its purposes are "(1) To accelerate the development and fielding by the Armed Forces of network-centric operational capabilities (including expanded use of unmanned vehicles, satellite communications, and sensors) through the promotion of research and development, and the focused coordination of programs, to achieve high-speed, high-bandwidth connectivity to military assets. (2) To provide for the development of equipment and technologies for military high-speed, high-bandwidth communications capabilities for support of network-centric operations."

The bill also enumerates some areas of research and development, including "improved spectrum access through spectrum-efficient communications for support of network-centric operations", "high-speed, high-bandwidth communications", "networks, including complex ad hoc adaptive network structures", "communications devices, including efficient receivers and transmitters", and "computer software and wireless communication applications, including robust security and encryption".

Global Research Watch Program. The bill also requires the DOD to carry out a Global Research Watch program to "monitor and analyze the basic and applied research activities and capabilities of foreign nations in areas of military interest, including allies and competitors" and to "provide standards for comparison and comparative analysis of research capabilities of foreign nations in relation to the research capabilities of the United States."

This program is also required to "establish and maintain an electronic database on international research capabilities, comparative assessments of capabilities, cooperative research opportunities, and ongoing cooperative programs".

DARPA Biennial Strategic Plan. Section 232 of the bill requires the Defense Advanced Research Projects Agency (DARPA) to prepare a strategic plan every two years.

MSET Education. Section 233 of the bill amends 10 U.S.C. 2192, to enhance the authority of the Secretary of Defense to support mathematics, science, engineering and technology education. This bill adds the authority to make grants to support other entities, including other federal agencies, state agencies, and private sector entities.

Appeals Court Sets Expedited Briefing Schedule in Number Portability Case

11/24. The Federal Communications Commission's (FCC) number portability rules go into effect on Monday, November 24. Meanwhile, the Court of Appeals has set an expedited briefing schedule on wireline carriers' motion for stay of the FCC's rules.

The United States Telecom Association (USTA) and CenturyTel filed with the FCC a Joint Petition for Stay Pending Judicial Review [17 pages in PDF] on November 18, 2003. The FCC issued its Order [MS Word] denying this petition on November 20.

The USTA and CenturyTel filed an emergency motion for stay with the U.S. Court of Appeals (DCCir) on November 21. See, USTA release.

The Court of Appeals set an expedited briefing schedule on the motion for stay. The FCC's response is due by 4:00 PM on Wednesday, November 26. The USTA's and CenturyTel's reply is due by 4:00 PM on Tuesday, December 2, 2003.

The USTA and CenturyTel seek a stay of the FCC's November 10 Memorandum Opinion and Order and Further Notice of Proposed Rulemaking [35 pages in PDF] regarding number portability. The November 10 order requires that wireline carriers must port numbers to wireless carriers in certain circumstances. The November 10 order is FCC 03-284 in CC Docket No. 95-116. See, story titled "FCC Releases LNP Order That Addresses Wireline to Wireless" in TLJ Daily E-Mail Alert No. 776, November 11, 2003. See also, story titled "Powell Addresses Number Portability" in TLJ Daily E-Mail Alert No. 784, November 20, 2003.

People and Appointments

11/24. President Bush nominated Jane Boyle to be a Judge of the U.S. District Court for the Northern District of Texas. She is currently the U.S. Attorney for the Northern District of Texas, which includes most of the Dallas Ft Worth metropolitan area. From 1990 through 2002 she was a Magistrate Judge. Before that she was an Assistant District Attorney for Dallas County, and an Assistant U.S. Attorney. See, White House release.

11/24. Steven Berry was named SVP, Governments Relations of the National Cable & Telecommunications Association (NCTA), effective January 2, 2004. Berry has been SVP of Government Affairs at the Cellular Telecommunications & Internet Association (CTIA) since 1997. He has also been Chief Counsel and Director of International Operations and European Affairs for the Senate Foreign Relations Committee, Assistant Secretary of State for Legislative Affairs at the Department of State, Republican Chief of Staff for the House Foreign Affairs Committee, and Republican Counsel for the House Permanent Select Committee on Intelligence. See, NCTA release.

11/24. Mary McDowell joined Nokia as SVP and General Manager, Enterprise Solutions, and member of the Nokia Group Executive Board, effective January 1, 2004. She previously worked for Hewlett Packard. See, Nokia release.

More News

11/24. The Senate Judiciary Committee cancelled its executive business meeting, scheduled for Monday, November 24. The agenda had included numerous non technology related bills, and several judicial and Department of Justice (DOJ) nominations.

11/24. Federal Communications Commission (FCC) Commissioner Kathleen Abernathy issued advice [PDF] for consumers on wireless local number portability, and a related brochure [2 pages in PDF].

11/24. The Federal Communications Commission (FCC) filed with the U.S. Court of Appeals (DCCir) a pleading [21 pages in PDF] titled "Opposition of the Federal Communications Commission to the Petition for Writ of Mandamus". This case is In re Cellular Telecommunications & Internet Association, U.S. Court of Appeals for the District of Columbia, No. 03-1270. It pertains to the FCC's wireless number portability rules, which went into effect on November 24, 2003.

11/24. Armando Villa was sentenced by the U.S. District Court (SDFl) to served thirty months imprisonment for criminal copyright infringement. The Department of Justice (DOJ) stated in a release that Villa sent spam e-mail messages, and placed classified advertisements on the internet, advertising the sale of software programs; however, he sold software that he had unlawfully reproduced for purposes of commercial advantage and private financial gain.


House Passes Spam Bill

11/22. The House amended and passed S 877, the "Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003", also known as the "CAN-SPAM Act of 2003", by a vote of 392-5, early on Saturday morning, November 22. See, Roll Call No. 671.

The Senate passed its version of the bill on October 22, 2003 by a vote of 97-0. The bill, as amended by the House, must be passed by the Senate, and signed by the President, to become law. However, the language of the bill just passed by the House was negotiated by both Representatives and Senators who are involved in promoting anti-spam legislation. Also, the Department of Justice (DOJ) announced the administration's support for this version of the bill.

Rep. Zoe Lofgren (D-CA) and Rep. Mike Honda (D-CA), who both represent Silicon Valley districts, were two of the five to votes against the bill.

The bill, as amended, provides for both criminal and civil penalties, with enforcement by the Federal Trade Commission (FTC), state attorneys general, internet service providers, and the Department of Justice (DOJ).

The bill requires senders of commercial e-mail to give their recipients an opportunity to opt out of receiving future messages.

The bill would amend the criminal code to prohibit, among other things, sending multiple commercial e-mails that falsify the identity of the sender, the return address or routing information of an e-mail, or the subject matter of messages.

The bill also contains language preempting related state statutes.

The bill also gives the FTC authority to establish a do not spam registry similar to the do not call registry. However, FTC Chairman Timothy Muris has already stated that he believes, given the lawless nature of spammers, that a do not e-mail list would not work. See, August 19, 2003 speech and story titled "Muris States Spam Debate on Capitol Hill is Veering Off On the Wrong Track" in TLJ Daily E-Mail Alert No. 722, August 20, 2003.

The DOJ issued a release after House and Senate negotiators reached an agreement. "The Departments of Justice and Commerce are pleased that Congress is poised to pass long-awaited anti-spam legislation. The bill proposed for final passage will be a useful step in helping consumers and businesses to combat unsolicited commercial e-mail, better known as 'spam.' The Administration believes that problems with spam cannot be solved by federal legislation alone; the development and adoption of new technologies will also be necessary. The bill will help address some of the problems associated with the rapid growth and abuse of spam by establishing a framework of technological, administrative, civil, and criminal tools, and by providing consumers with options to reduce the volume of unwanted e-mail."

Internet service providers praised the bill. America Online issued a release that states that "This is a critical new law that will help us turn the tide against spam in the online medium for good. This bill provides meaningful tools to law enforcement and Internet Service Providers to hold spammers accountable for their actions. We're very pleased that the tough enforcement provisions in this new Federal legislation will allow enforcement efforts to pursue the most egregious spammers who use the worst kind of spamming techniques to send the most offensive and unwanted email to our members. The legislation targets the state-of-the-art computer fraud techniques used by spammers, and provides for strong criminal and financial penalties."

Microsoft Chairman Bill Gates stated in a release that "passage of the anti-spam bill is a milestone in the battle against spam, and a major step toward preserving e-mail as a powerful communication tool." He added that "the spammers who deluge computer users with billions of unwanted e-mails will face significant penalties for their illegal actions. Microsoft particularly supports the strong enforcement provisions, and the ban on falsifying the origin of e-mail solicitations and illegally obtaining lists of e-mail addresses, both of which will help Internet service providers prosecute spammers."

See also, stories titled "Senators Burns and Wyden Re-Introduce Can Spam Bill" in TLJ Daily E-Mail Alert No. 643, April 14, 2003; "Senate Commerce Committee Passes Spam Bill" in TLJ Daily E-Mail Alert No. 685, June 20, 2003; "House Judiciary Committee Holds Hearing on Spam Bill", "House Commerce Committee Holds Hearing on Spam Bills" and "Spam Bills Pending in the House and Senate" in TLJ Daily E-Mail Alert No. 696, July 11, 2003; and "Senate Passes Burns Wyden Anti-Spam Bill" in TLJ Daily E-Mail Alert No. 765, October 24, 2003.

Senators Introduce Bill to Increase Protection of Pre-Released Movies and Other Unpublished Works

11/22. Sen. John Cornyn (R-TX), Sen. Dianne Feinstein (D-CA) and others introduced S 1932, the "Artists' Rights and Theft Prevention Act (ART Act)". The two Senators announced, but did not release, the bill at a press conference on November 13. They introduced the bill on Saturday, November 22.

Statutory provisions relating to criminal copyright infringement are found in both Title 18 (criminal code) and Title 17 (copyright act). 17 U.S.C. 506 contains the criminal prohibition on certain acts of copyright infringement. 18 U.S.C. 2319 provides penalties for violations of 17 U.S.C. 506.

First, this bill would add a new Section 2319B to the criminal code prohibiting the unauthorized recording of motion pictures in a motion picture exhibition facility. Second, the bill would revise both 18 U.S.C. 2319 and 17 U.S.C. 504 to make it easier to prosecute, and obtain civil remedies for, certain acts of copyright infringement.

Currently, Section 2319 provides, in part, that "Any person who commits an offense under section 506(a)(1) of title 17 -- (1) shall be imprisoned not more than 5 years, or fined in the amount set forth in this title, or both, if the offense consists of the reproduction or distribution, including by electronic means, during any 180-day period, of at least 10 copies or phonorecords, of 1 or more copyrighted works, which have a total retail value of more than $2,500". S 1932 would make it easier to prove distribution of "at least 10 copies".

Sen. Dianne FeinsteinSen. Feinstein (at right) and Sen. Cornyn held a press conference on November 13, 2003. Sen. Feinstein stated that "the bill makes it easier for prosecutors to convict individuals who put pre-released material on the Internet or for aggrieved parties to file lawsuits. This would include songs that have not yet been released to the public, movies still in theaters, software not yet in stores, and so on." See, statement.

She continued that "Current law requires that a prosecutor, or plaintiff in a civil suit, prove ten illegal downloads or $2,500 in damages. But this is difficult to prove, and often prevents charges from being brought. This legislation says that anyone who uploads pre-released, copyrighted material should clearly know that it might be downloaded ten, a hundred - even millions of times, for an incalculable cost. By removing the proof of damages requirement from the law, we make it easier to catch and punish those individuals who are stealing pre-released material and giving it to the public for free."

Videotaping in Movie Theaters. Section 3 of the bill would add to Title 18 a new Section 2319B, that provides, in part, that "Whoever, without the consent of the copyright owner, knowingly uses or attempts to use an audiovisual recording device in a motion picture exhibition facility to transmit or make a copy of a motion picture or other audiovisual work protected under title 17, United States Code, or any part thereof, in a motion picture exhibition facility shall (1) be imprisoned for not more than 3 years, fined under this title, or both".

Criminal Infringement of a Commercial Prereleased Copyrighted Work. Section 4 of the bill would add a new subsection to 18 U.S.C. 2319, which is the section of the criminal code that provides penalties for criminal copyright infringement, as provided in 17 U.S.C. 506.

The bill would provide that "in the case of a computer program, a non-dramatic musical work, a motion picture or other audio-visual work, or a sound recording protected under title 17, United States Code, that is being prepared for commercial distribution, it shall be conclusively presumed that a person distributed at least 10 copies or phonorecords of the work, and that such copies or phonorecords have a total retail value of more than $2,500, if that person -- (A) distributes such work by making it available on a computer network accessible to members of the public who are able to reproduce the work through such access without the express consent of the copyright owner; and (B) knew or should have known that the work was intended for commercial distribution."

Civil Remedies for Commercial Prereleased Copyrighted Work. Section 5 of the bill would add similar language to 17 U.S.C. 504, which provides remedies for copyright infringement in a civil action.

Both Section 4 and 5 of the bill also address what constitutes a work that is prepared for commercial distribution. The copyright owner must have "a reasonable expectation of substantial commercial distribution" and the work has not yet been so distributed.

The movie videotaping section would create a narrow prohibition. It would apply only to movies and other "audiovisual works", as defined in 17 U.S.C. 101. The expansion of the concept of distribution would only apply to a "computer program, a non-dramatic musical work, a motion picture or other audiovisual work, or a sound recording".

Nevertheless, while this bill, at bottom, expands protections of unpublished works, the original underlying purpose of the Copyright Act was to incent the creation and publication of works by protecting published works.

Authorization for Appropriations. Finally, the bill would authorize the appropriation to the Department of Justice (DOJ) "an additional $5,000,000 for each of fiscal years 2005, 2006, 2007, 2008, and 2009 to prosecute violations of section 2319 of title 18, United States Code."

Critics of recent copyright related bills have argued that imposing new responsibilities on the DOJ to prosecute copyright infringers, or perform other copyright related responsibilities, would diminish the DOJ's resources for prosecuting other crimes. This section responds to those criticisms.

The other original cosponsors of the bill are Sen. Orrin Hatch (R-UT), Sen. Gordon Smith (R-OR), Sen. Lamar Alexander (R-TN), and Sen. Lindsey Graham (R-SC).

Mitch Bainwol, Ch/CEO of the Recording Industry Association of America (RIAA), praised the bill and its sponsors in a release. He also stated that "Just this week, two major artists have been forced to release their albums earlier than planned because Internet ripping groups distributed their music in pre-release form worldwide."

"Artists work day and night to get their music just right. Releasing an album before it is intended for sale to the public scoops the legitimate market for that work and damages a crucial sales period", said Bainwol. "The findings in this bill reflect the effects that piracy has had on record sales over the past three years. Sales in the music industry are down 31 percent. In 2000, the ten top selling albums sold 60 million units, in 2001 they sold 40 million units and in 2002 the top ten selling albums sold only 34 million units."

More News

11/22. President Bush signed HJRes 79, a resolution that provides continuing appropriations for the activities of the federal government through January 31, 2004. See, White House release.

11/22. Federal Reserve Board (FRB) Governor Mark Olson gave a speech titled "Functional Regulation and Financial Modernization" to the National Conference of Insurance Legislators in Santa Fe, New Mexico in which he discussed the effect of technology on financial services. He stated that "While we as regulators and legislators have the responsibility for setting and maintaining standards of safety and soundness for the benefit of consumers, we cannot ignore the power of market forces to cause the continual development of consumer financial products. Improvements in technology and consumer techno-literacy have prompted dramatic changes in all financial industries. Yet with all the changes we have seen, we are likely still in the early stages of realizing the full benefit of technological innovation. Our efforts as regulators and legislators will continue to be relevant only when they are consistent with these changing market forces."


Six Senators Ask P2P Companies To Obey Laws

11/21. Sen. Lindsey Graham (R-SC), Sen. Dianne Feinstein (D-CA), Sen. Gordon Smith (R-OR), Sen. Dick Durbin (D-IL), Sen. John Cornyn (R-TX), and Sen. Barbara Boxer (D-CA) sent a letter to executives of peer to peer (P2P) file copying networks, Grokster, Bearshare, Blubster, eDonkey2000, LimeWire, and Streamcast Networks, stating that "Purveyors of peer-to-peer technology have legal and moral obligation to conform to copyright laws, and end the pormographic trade over these networks."

Senators Graham, Feinstein, Durbin and Cornyn are members of the Senate Judiciary Committee, which has jurisdiction over intellectual property bills.

The letter states that "recent studies by the General Accounting Office and Palisades Systems, a respected technology company, clearly demonstrate that your software currently is being used almost exclusively as a means of illegally trading copyrighted material and distributing pormography, including child pormography. For example, the Palisades report concluded that 97 percent of all the material available on file-sharing services was either copyrighted or pormography; 99 percent of audio files requested on file-sharing services were copyrighted; and 42 percent of all requests on file-sharing services were for adult or child pormography."

The letter asks that the P2P companies provide clear notice to users of the risks of using P2P software, incorporate effective copyright and pormography filters, and change the default setting that provides for sharing of files.

The Senate Judiciary Committee held a hearing on this topic on September 9, 2003. Linda Koontz of the GAO wrote in her prepared testimony that "Child pormography is easily found and downloaded from peer-to-peer networks." She added that "Juvenile users of peer-to-peer networks are at significant risk of inadvertent exposure to pormography, including child pormography. Searches on innocuous keywords likely to be used by juveniles (such as names of cartoon characters or celebrities) produced a high proportion of pormographic images ..." See also, story titled "Senate Judiciary Committee Hears Testimony on Porm on P2P Networks" in TLJ Daily E-Mail Alert No. 736, September 10, 2003.

House and Senate Pass Conference Report on Credit Reporting Bill

11/21. The House passed the conference report on HR 2622, the "National Consumer Credit Reporting System Improvement Act of 2003", late on Friday night, November 21, by a vote of 379-49. See, Roll Call No. 667. The Senate agreed to the conference report on Saturday, November 22. See, House Report 108-396. President Bush will sign the bill.

This is a large bill that includes provisions pertaining to prevention of identity theft and restoration of identity theft victim credit history, use of and consumer access to credit information, accuracy of consumer report information, use and sharing of medical information in the financial system, and financial literacy.

Secretary of the Treasury John Snow issued a statement: "I congratulate Chairman Oxley and Chairman Shelby, subcommittee chairman Bachus, Ranking Members Frank and Sarbanes, and the House and Senate conferees on completing their excellent work to strengthen the provisions of the Fair Credit Reporting Act. This legislation embodies the Administration recommendations I outlined on June 30 to fight identity theft and to make our credit reporting system, which is the envy of the world, even more effective in extending credit and financial services to more and more people. Because of the work of the conferees, American consumers and law enforcers will have important new tools to fight identity theft, and consumer credit information will be more accurate and will be handled more safely than ever before. We will all benefit from this major legislation."

Sen. Hatch Introduces Bill With Numerous Amendments to Copyright Act

11/21. Sen. Orrin Hatch (R-UT), Sen. Dianne Feinstein (D-CA) and Sen. John Cornyn (R-TX) introduced S 1933, the "Enhancing Federal Obscenity Reporting and Copyright Enforcement Act of 2003", also named the "EnFORCE Act". The title of the bill is memorable, but not descriptive. This bill contains six mostly unrelated amendments to the Copyright Act.

First, the bill would amend 17 U.S.C. 411, regarding the registration of copyrights with the Copyright Office. The bill would add a new subsection that provides that "A certificate of registration shall satisfy the requirements of this section and section 412 irrespective of any inaccurate information therein, unless -- (A) the inaccurate information was included on the application for copyright registration with knowledge that it was inaccurate; and (B) the inaccurate information, if known, would have caused the Register of Copyrights to refuse registration."

Sen. Orrin HatchSen. Hatch (at right) explained that "Some accused infringers have tried to avoid liability for statutory damages by challenging the accuracy of the information in copyright registrations; this bill clarifies that courts should resolve such challenges by applying the existing judicial doctrine of fraud-on-the-Copyright-Office." See, Hatch release.

Second, the bill would amend 17 U.S.C. 504 regarding remedies for copyright infringement. Subsection 504(c)(1) pertains to actual damages and profits. It provides that "For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work."

S 1933 would amend subsection 504(c)(1) to provide the exception that "the court in its discretion may determine that such parts are separate works if the court concludes that they are distinct works having independent economic value".

Sen. Hatch explained that "disputes have arisen about how many ``works创 have been infringed for purposes of computing statutory damages. These disputes are important for the music industry, which has received inconsistent adjudications about whether an album consisting of ten songs counts as one or ten works for statutory-damages computation. The bill gives courts discretion to conform the law of statutory damages to changing market realities."

Third, the bill would amend 17 U.S.C. 115, which pertains to, among other things, compulsory licensing in the music industry. Subsection 115(c)(3)(B) pertains to the application of antitrust law to negotiations regarding royalties payable under compulsory license. The would provide that "Section 115(c)(3)(B) of title 17, United States Code, is amended in the first sentence by striking `under this paragraph and inserting `under this section."

Sen. Hatch commented that this provision "will expand an existing antitrust exemption to conform the law to market realities. Today, an antitrust exemption in the Copyright Act gives record companies and music publishers the flexibility they need to negotiate mechanical royalty rates in the rapidly evolving market for legal music downloading. These parties now need the same flexibility to ensure that they can negotiate royalties associated with innovative forms of physical phonorecords, like enhanced compact disks and DVD audio disks."

He added that "the music industry has sometimes been criticized for being too slow to adapt its business models to new technologies. The industry is now responding to such concerns by developing new products and new distribution channels. The EnFORCE Act will ensure that federal law allows the music industry to provide consumers with these innovative products and services."

Fourth, the bill would require that "The Attorney General shall ensure that any unit in the Department of Justice responsible for investigating computer hacking or responsible for investigating intellectual property crimes is assigned at least 1 agent to support such unit for the purpose of investigating crimes relating to the theft of intellectual property and that each such agent has received training in the investigation and enforcement of intellectual property crimes."

Fifth, the bill would authorize the appropriation to the Department of Justice (DOJ) of $5,000,000 for each of fiscal years 2005 through 2009 to provide for these agents responsible for intellectual property crimes.

Sixth, the bill would require that the DOJ shall include in its reports to the Congress information about "the number of misdemeanor prosecutions and the number of felony prosecutions under sections 2252, 2252A, 2252B, 2260, 2318, 2319, 2319A, and 2320 of title 18, United States Code, commenced and concluded during the last preceding fiscal year, including, in the case of those offenses where applicable, detailed information concerning -- (1) the types of works involved; (2) the tangible media of expression and means of reproduction and distribution involved; and (3) in the case of prosecutions concluded, the disposition of such prosecutions, such as the number of convictions and acquittals, and the sentences imposed."

Sen. Hatch stated that "The bill also requires the Department of Justice to report to Congress detailed information about the scope of its efforts to investigate and prosecute crimes involving the sezual exploitation of minors or intellectual property."

Sections 2252, 2252A, 2252B, and 2260 pertain to crimes involving pormography, obscenity, and exploitation of minors. Sections 2318, 2319, 2319A, and 2320 pertain to intellectual property crimes.

Section 2318 pertains to counterfeit labeling, documentation and packaging of computer programs, phonorecords, and movies. Moreover, there are proposals to revise and strengthen this section. For example, on November 21, 2003, Rep. Lamar Smith (R-TX) introduced HR 3632, the "Anti-counterfeiting Amendments of 2003". See, story titled "Rep. Smith Introduces Bill to Strengthen Ban on Counterfeit Labeling of Software, Movies and Music" in TLJ Daily E-Mail Alert No. 787, November 26, 2003.

Section 2319 pertains to criminal infringement of copyrights. Section 2319A pertains to the unauthorized fixation of and trafficking in sound recordings and music videos of live musical performances. Section 2320 pertains to trafficking in counterfeit goods or services.

Rep. Smith Introduces Bill to Strengthen Ban on Counterfeit Labeling of Software, Movies and Music

11/21. Rep. Lamar Smith (R-TX) introduced HR 3632, the "Anti-counterfeiting Amendments of 2003", a bill to revise and expand 18 U.S.C. 2318, which pertains to trafficking in counterfeit labels, documentation and packaging of computer programs, phonorecords, and movies.

The bill contains numerous changes. For example, the bill would expand the scope of activities encompassed by counterfeit labeling to include such things as using genuine labels with an item for which they were not intended, and altering the number of authorized users of computer programs.

Currently, a "counterfeit label" is defined as "an identifying label or container that appears to be genuine, but is not". The bill would add that a "counterfeit label" also includes "a genuine certificate, licensing document, registration card, or similar labeling component (i) that is used by the copyright owner to verify that a phonorecord, a copy of a computer program, a copy of a motion picture or other audiovisual work, or documentation or packaging is not counterfeit or infringing of any copyright; and (ii) that is, without the authorization of the copyright owner (I) distributed or intended for distribution not in connection with the copy or phonorecord to which such labeling component was intended to be affixed by the respective copyright owner; or (II) in the case of a computer program, altered or removed to falsify the number of authorized copies or users, type of authorized user, or edition or version of the computer program".

This bill would also add a new subsection to Section 2318 that creates civil remedies for violation of this section, including injunctive relief and actual or statutory damages.

The bill was referred to the House Judiciary Committee (HJC). Rep. Smith is the Chairman of its Subcommittee on Courts, the Internet and Intellectual Property (CIIP). The original cosponsors of the bill are Rep. Ric Keller (R-), Rep. Robert Wexler (D-FL), Rep. Bob Goodlatte (R-VA), Rep. Elton Gallegly (R-CA), and Rep. John Carter (R-TX). All are members of the HJC and CIIP.

Senators Introduce Bill Related to FSC/ETI Replacement

11/21. Sen. Gordon Smith (R-OR) and Sen. John Breaux (D-LA) introduced S 1922, the "American Manufacturing Jobs Act of 2003", a bill to amend the Internal Revenue Code to comply with World Trade Organization (WTO) rulings that the Foreign Sales Corporation (FSC) and Extraterritorial Income (ETI) tax regimes constitute illegal export subsidies.

The Senate Finance Committee has already approved and reported a FSC/ETI replacement bill, S 1637, the "Jumpstart Our Business Strength (JOBS) Act". (See also,  Report No. 108-192.)

Sen. Smith offered an explaination of the difference between his bill, and provisions contained in S 1637. He stated in the Senate that "I am, however, concerned that the domestic manufacturing benefit in S. 1673 is not applied equally to all U.S. manufacturers. This bill includes a provision--a ``haircut''--that provides less of a benefit to companies that also manufacture abroad." (The reference to S 1673 is an error. The correct number is 1637.)

Sen. Smith continued. "For example, a company that has 55 percent of its manufacturing in the United States and 45 percent abroad will calculate its benefit under the bill and then reduce that benefit by a fraction--the numerator of which is the gross receipts from domestic manufacturing over the same derived from worldwide manufacturing. This company thus suffers twice. First, the domestic manufacturing benefit in S. 1673 is less valuable than the benefit currently provided under FSC/ETI. Second, this company's manufacturing benefit is further reduced by the ``haircut'' merely because it also has overseas manufacturing operations in order to be closer to their markets."

He concluded that "I believe that by eliminating the ``haircut'' and providing a tax rate cut for all manufacturers who employ American workers, we can help to revitalize the U.S. manufacturing sector."

The full text of the bill is printed in the Congressional Record, November 21, 2003, at Pages S15416-7. The bill was referred to the Senate Finance Committee. Both Sen. Smith and Sen. Breaux are members of the Committee.

FCC Sets Comment Deadlines in 271(b)(2) Rulemaking

11/21. The Federal Communications Commission (FCC) published a notice in the Federal Register that summarizes, and sets deadlines for comments on, the FCC's Notice of Proposed Rulemaking (NPRM) regarding implementation of 47 U.S.C. 272(b)(1).

The notice states that the FCC "seeks comment on whether the operating, installation, and maintenance (OI&M) sharing prohibition is an overbroad means of preventing cost misallocation or discrimination by Bell operating companies (BOCs) against unaffiliated rivals. It also seeks comment on whether the prohibition against joint ownership by BOCs and their section 272 affiliates of switching and transmission facilities, or the land and buildings on which such facilities are located, should be modified or eliminated." See, Federal Register, November 21, 2003, Vol. 68, No. 225 at Pages 65665 - 65667.

Comments are due by December 8, 2003. Reply Comments are due by December 16, 2003.

This NPRM is FCC 03-272 in WC Docket No. 03-228. The FCC adopted this NPRM on November 3, 2003, and released it on November 4, 2003. For more information, contact Christi Shewman at 202 418-1686 or christi.shewman@fcc.gov.

Bills Introduced

11/21. Rep. Richard Baker (R-LA), Rep. Anna Eshoo (D-CA), Rep. David Dreier (R-CA), introduced HR 3574, the "Stock Option Accounting Reform Act". This is the House companion bill to S 1890, introduced by Sen. Mike Enzi (R-WY), Sen. Harry Reid (D-NV) and others on November 19. These bills would require the expensing of stock options, but only for the top five executives of companies, with exemptions for small businesses and start ups. HR 3574 was referred to the House Financial Services Committee. Rep. Baker is the Chairman of its Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises. The other original cosponsors of the House bill are Rep. Mark Kennedy (R-MN), Rep. Mike Honda (D-CA), Rep. Ellen Tauscher (D-CA), Rep. Zoe Lofgren (D-CA), and Rep. Eric Cantor (R-VA). See also, story titled "Senators Introduce Bill to Require Expensing of Stock Options Granted to Officers" in TLJ Daily E-Mail Alert No. 784, November 21, 2003.

11/21. Rep. Christopher Shays (R-CT), Rep. Jay Inslee (D-WA), Rep. David Price (D-NC), and Rep. Mark Green (R-WI) introduced HR 3630, the "Congressional Research Accessibility Act", a bill to make available to the public, on the internet, Congressional Research Service products. The bill was referred to the House Administration Committee. See also, Shays release.

11/21. Rep. Bud Cramer (D-AL) introduced HR 3590, a bill to amend the Internal Revenue Code to allow employers a credit against income tax to encourage them to have their employees provide volunteer services that aid science, mathematics, and engineering education in grades K-12. The bill was referred to the House Ways and Means Committee.

11/21. Sen. Charles Grassley (R-IA) and Sen. Jeff Sessions (R-AL) introduced S 1921, a bill to amend 28 U.S.C. S 44, to provide for 11 circuit judges on the U.S. Court of Appeals for the District of Columbia. Section 44 currently provides for 12 judges. The bill was referred to the Senate Judiciary Committee.

11/21. Rep. Vernon Ehlers (R-MI) introduced HR 3577, an untitled bill to authorize appropriations for the Department of Transportation (DOT) for research and development. The bill would authorize appropriations totaling $2,096,000,000 for fiscal years 2004 through 2009. Section 108 of the bill, which is subtitled the "Intelligent Transportation Systems Act of 2003", pertains to the DOT's Intelligent Transportations Systems (ITS), which the bill defines as "electronics, communications, or information processing used singly or in combination to improve the efficiency or safety of a surface transportation system". The bill was referred to the House Science Committee, of which Rep. Ehlers is a member.

11/21. Rep. Curt Weldon (R-PA) and Rep. Robert Andrews (D-NJ) introduced HR 3644, the "Homeland Security Technology Improvement Act of 2003". The bill would mandate the establishment of a "multi-agency homeland security technology, equipment, and information transfer program to allow for the transfer of technology, equipment, and information to State, regional, and local fire, emergency medical service, and law enforcement agencies".

11/21. Rep. Brad Sherman (D-CA) introduced HR 3631, the "Television Viewer Privacy Act of 2003". The bill would provide that "An interactive video-related service provider may not collect, maintain, or disclose any personal viewing information regarding a subscriber to the service that is personally identifiable, without the prior written or electronic consent of such subscriber", with certain exceptions, such as for billing purposes, or pursuant to a court order. The bill provides for enforcement by states and by the Federal Trade Commission (FTC).

11/21. Rep. Vernon Ehlers (R-MI) and Rep. Mark Udall (D-CO) introduced HR 3598, the "Manufacturing Technology Competitiveness Act of 2003". The bill would provide that "The President shall establish an interagency committee on manufacturing research and development, which shall include representatives from the Office of Science and Technology Policy, the National Institute of Standards and Technology, the Small Business Administration, the Science and Technology Directorate of the Department of Homeland Security, the National Science Foundation, the Department of Energy's Office of Industrial Technology, a representative of the Department of Energy National Laboratories with expertise in manufacturing research, and any other agency that the President may designate."

People and Appointments

11/21. DirecTV announced that Roxanne Austin, its President and Chief Operating Officer, will leave the company "upon completion of The News Corporation's acquisition of 34 percent of HUGHES common stock. DIRECTV is a unit of HUGHES." See, DirecTV release.

More News

11/21. The U.S. Court of Appeals (DCCir) issued its opinion [20 pages in PDF] in Sioux Valley v. FCC, in which the Appeals Court denied petitions for review of an order of the Federal Communications Commission (FCC) regarding the auction of the Interactive Video and Data Services (IVDS) spectrum band (Auction No. 2). This case is Sioux Valley Rural Television Inc. v. FCC and USA, Nos. 021208 and 021269, petitions for review of a final order of the FCC.

11/21. The U.S. Court of Appeals (5thCir) issued its opinion [10 pages in PDF] in Coserv v. Southwestern Bell, a case regarding the compulsory arbitration language of 47 U.S.C. 252(b)(2). The Court held that "only issues voluntarily negotiated by the parties pursuant to 252(a) are subject to the compulsory arbitration provision". This case is Coserv Limited Liability Corporation and Multitechnology Services LP v. Southwestern Bell Telephone Company, Public Utility Commission of Texas, Rebecca Klein, Paul Hudson and Julie Parsley, No. 02-51065, an appeal from the U.S. District Court for the Western District of Texas.

11/21. Karen Evans, who is the Administrator for E-Government, Information and Technology Policy at the Office of Management and Budget (OMB), wrote a memorandum to the Chief Information Officers of executive branch agencies regarding reports to the OMB under the E-Government Act of 2002. The memorandum states that "Agency reports are due from agency Chief Information Officers to OMB on December 15, 2003 and should be submitted electronically to Danny Costello at dcostell@omb.eop.gov." On August 1, 2003, the OMB released a memorandum [13 pages in PDF] regarding "Implementation Guidance for the E-Government Act of 2002". This memorandum, M-03-18, states that it "(1) outlines new E-Government Act requirements for Federal agencies; (2) explains what agencies are expected to provide under the E-Gov Act to support ongoing initiatives and new activities, including reports; and (3) explains how the Act authorizes certain ongoing governmentwide initiatives. This guidance also explains, throughout the document, how the E-Government Act fits within existing IT policy, such as OMB Circulars A-11 and A-130."


Go to News from November 16-20, 2003.