FCC Releases Agenda for February 12 Meeting

2/5. The Federal Communications Commission (FCC) released the agenda [3 pages in PDF] for its meeting of Thursday, February 12. It includes consideration of a memorandum opinion and order (MO&O) regarding Pulver.com's voice over internet protocol (VOIP) petition, and a notice of proposed rule making (NPRM) regarding internet protocol (IP) services, including VOIP. It also includes consideration of a NPRM regarding broadband over powerline (BPL).

Pulver.com Petition. First, the FCC will consider a Memorandum Opinion and Order concerning Pulver.com's petition for declaratory ruling regarding the classification of its Free World Dialup (FWD) service.

Pulver.com's FWD is a closed network that uses specialized equipment. Traffic is carried by the users' ISPs using broadband connections. Pulver.com seeks a ruling that its service is neither "telecommunications" nor a "telecommunications service". It filed its petition [11 pages in PDF] on February 5, 2003. This is WC Docket No. 03-45.

There are several other pending VOIP related petitions. See, stories titled "Level 3 Files VOIP Petition With FCC" and "Summary of Other VOIP Proceedings at the FCC" in TLJ Daily E-Mail Alert No. 815, January 14, 2004.

AT&T has filed one of these. It seeks a ruling that access charges do not apply to its service in which calls originate and terminate on circuit switched PSTN facilities, but are routed on internet backbone. AT&T filed its petition [37 pages PDF] on October 18, 2002. This is WC Docket No. 02-361.

On January 29, Rep. Billy Tauzin (R-LA), the Chairman of the House Commerce Committee, wrote a letter to FCC Chairman Michael Powell, and the other FCC Commissioners, regarding AT&T's petition. He wrote that "I am extremely concerned that the Commission's continued failure to clarify the rules governing traffic over AT&T's IP backbone could jeopardize our ability to keep telephone rates in rural areas affordable." He requested that "by February 5, 2004 you provide me with a direct answer to the following question: Do the Commission's existing access charge rules apply to the long-distance service described in AT&T's petition?" See, story titled "Tauzin Asks FCC for Prompt Response on AT&T VOIP Petition" in TLJ Daily E-Mail Alert No. 827, February 2, 2004.

IP/VOIP NPRM. Second, the FCC will consider a Notice of Proposed Rulemaking (NPRM) concerning issues relating to services and applications making use of the Internet Protocol (IP), including but not limited to VOIP.

Chairman Powell stated at the FCC's December 1, 2003 VOIP workshop that the FCC would soon issue a NPRM "to inquire about the migration of voice services to IP-based networks and gather public comment on the appropriate regulatory environment for these services".

See also, story titled "FCC Holds VOIP Forum", December 1, 2003, also published in TLJ Daily E-Mail Alert No. 790, December 2, 2003.

Broadband Over Powerline NPRM. Third, the FCC will consider a NPRM regarding new requirements and measurement guidelines for Access Broadband over Power Line Systems. This is ET Docket No. 03-104.

On April 23, 2003, the FCC adopted a Notice of Inquiry [21 pages in PDF] in this proceeding, which is titled "In the Matter of Inquiry Regarding Carrier Current Systems, including Broadband over Power Line Systems". It released the text on April 29. See also, notice in the Federal Register, May 23, 2003, Vol. 68, No. 100, at Pages 28182 - 28186.

See also, story titled "FCC Announces NOI Regarding Broadband Over Powerlines" in TLJ Daily E-Mail Alert No. 628, April 24, 2003, and story titled "FCC Releases NOI on Broadband Over Power Lines" in TLJ Daily E-Mail Alert No. 656, May 7, 2003. The NOI is FCC 03-100.

Fourth, the FCC will consider a Report and Order and Second Further NPRM regarding several interstate access charge and universal service reforms affecting rate-of-return local exchange carriers. This is CC Docket No. 00-256 and CC Docket No. 96-45.

Fifth, the FCC will consider a NPRM to amend its service disruption reporting requirements.

The meeting will be at 9:30 AM in the FCC's Commission Meeting Room, TW-C305, at 445 12th Street, SW. The meeting will be open to the public and webcast by the FCC.

FBI Now Seeks a Rulemaking to Expand CALEA to Cover VOIP Services

2/5. On January 28, 2004, Federal Bureau of Investigation (FBI) Deputy General Counsel Patrick Kelley wrote a short letter to Federal Communications Commission (FCC) General Counsel John Rogovin. Also, on February 5, John Malcolm, of the Department of Justice's (DOJ) Criminal Division, met with two FCC Commissioners. Kelley's letter, and Malcolm's notice [PDF] of ex parte meeting, state that the FBI now plans to file a petition for a rule making with the FCC that would expand the requirements of the CALEA to voice over internet protocol (VOIP).

FBI Letter. The letter states that "this letter confirms that the Department of Justice (DOJ), Federal Bureau of Investigation (FBI), and Drug Enforcement Administration (DEA) will jointly file a petition before the FCC seeking comprehensive rules to implement the Communications Assistance for Law Enforcement Act of 1994 (CALEA). The petition, which we intend to file within the next several weeks, will address a variety of issues including what broadband services and service providers should be subject to CALEA, as well as the procedures needed to bring those services and providers into compliance with CALEA."

The letter also states that "we also hereby reiterate the position previously taken before the FCC, that it is necessary to address CALEA issues in a comprehensive, technology neutral, manner rather than in a piecemeal fashion, one service provider or technology at a time. Accordingly, we are requesting that the CALEA rule making be completed prior to the other related but non-CALEA specific broadband proceedings pending before the FCC. Otherwise, the outcome of the non-CALEA broadband proceedings could serve to prejudice the outcome of the CALEA rule making proceeding. We believe that it is particularly important for the FCC to directly and thoughtfully consider, by means of a comprehensive CALEA rule making, the multiple regulatory theories that may be employed to subject broadband providers to CALEA."

DOJ Filing. Also, on February 5, 2004, John Malcolm, a Deputy Assistant Attorney General in the Criminal Division of the DOJ, filed with the FCC a notice [3 pages in PDF] of an ex parte meeting that he held on February 5, 2004 with FCC Commissioner Jonathan Adelstein, FCC Commissioner Michael Copps, and some of their staffs.

Malcolm wrote that "The purpose of the meetings was to discuss the Communications Assistance for Law Enforcement Act (.CALEA.), 47 C.F.R. § 1001 et seq., in the context of the above-referenced dockets. Specifically, the DOJ and FBI reiterated their request that the Commission hold that CALEA applies to voice over IP services, wireline broadband Internet access service, and cable modem broadband Internet access service as the Commission issues its decisions in the pending proceedings."

The "above-referenced dockets" include the various petitions pending before the FCC for declaratory rulings pertaining to VOIP services.

Malcolm's notice further states that "our understanding is that the FCC would consider a CALEA rulemaking expeditiously, and we have no objection to the FCC proceeding with other business with that understanding, provided that CALEA applicability issues were expressly preserved in intervening rulings. We added that our petition requesting a CALEA rulemaking, which we expect to file shortly, will contain arguments that we believe could permit the FCC to pursue a deregulatory approach under the Telecommunications Act, but preserve CALEA's applicability. However, we emphasized that, if the FCC believes that such arguments would not be sustainable, then we would urge the Commission to ensure that CALEA applies to these services by whatever means appropriate."

Malcolm is the head of the DOJ's Computer Crimes and Intellectual Property Section (CCIPS).

This letter and notice of ex parte meeting do not elaborate on the FBI's arguments as to why the FCC should impose CALEA requirements upon VOIP services. For a recent statement by the FBI of its arguments, see December 15, 2003 filing [9 pages in PDF]. This filing does not however, identify what would be the nature of a VOIP regulatory regime.

FCC February 12 Meeting. The FCC has announced that the agenda [3 pages in PDF] for its meeting of Thursday, February 12 includes consideration of a memorandum opinion and order (MO&O) regarding Pulver.com's voice over internet protocol (VOIP) petition, and a notice of proposed rule making (NPRM) regarding internet protocol (IP) services, including VOIP.

The FCC will consider a MM&O concerning Pulver.com's petition for declaratory ruling regarding the classification of its Free World Dialup (FWD) service. Pulver.com's FWD is a closed network that uses specialized equipment. Traffic is carried by the users' ISPs using broadband connections. Pulver.com seeks a ruling that its service is neither "telecommunications" nor a "telecommunications service".

It filed its petition [11 pages in PDF] on February 5, 2003. This is WC Docket No. 03-45. There are also several other pending VOIP related petitions. See, stories titled "Level 3 Files VOIP Petition With FCC" and "Summary of Other VOIP Proceedings at the FCC" in TLJ Daily E-Mail Alert No. 815, January 14, 2004. However, none of these are on the agenda for the February 12 meeting.

The FCC will also consider a Notice of Proposed Rulemaking (NPRM) concerning issues relating to services and applications making use of the Internet Protocol (IP), including but not limited to VOIP. Chairman Powell stated at the FCC's December 1, 2003 VOIP workshop that the FCC would soon issue a NPRM "to inquire about the migration of voice services to IP-based networks and gather public comment on the appropriate regulatory environment for these services". See also, story titled "FCC Holds VOIP Forum", December 1, 2003, also published in TLJ Daily E-Mail Alert No. 790, December 2, 2003.

CALEA Statute. The Communications Assistance for Law Enforcement Act (CALEA) is codified at 47 U.S.C. §§ 1001-1010. Congress passed the CALEA in 1994 for the purpose of allowing law enforcement authorities to maintain their existing wiretap capabilities in new telecommunications devices. It enumerated that wireline, cellular, and broadband Personal Communications Services carriers must make their equipment capable of certain surveillance functions.

Section 103 (47 U.S.C. § 1002) provides, in part, that "a telecommunications carrier shall ensure that its equipment, facilities, or services that provide a customer or subscriber with the ability to originate, terminate, or direct communications are capable of expeditiously isolating and enabling the government ... intercept, to the exclusion of any other communications, all wire and electronic communications carried by the carrier within a service area to or from equipment, facilities, or services of a subscriber of such carrier concurrently with their transmission to or from the subscriber's equipment, facility, or service, or at such later time as may be acceptable to the government".

The Act also requires telecommunications carriers to ensure that its facilities are capable of enabling the government "to access call-identifying information".

However, the CALEA also provides that its provisions do not apply to "information services". Subsection 103(b) provides that "The requirements of subsection (a) of this section do not apply to -- (A) information services ..."

Subsection 102(8) provides that "The term ``telecommunications carrier'' ... (C) does not include -- (i) persons or entities insofar as they are engaged in providing information services".

Previous FBI Efforts. The FBI's letter of January 28, and the DOJ's filing of February 5, do not reflect a recently found interest on the part of the FBI and DOJ in VOIP services. The FBI has long been attempting to induce the FCC to rule that various VOIP, and other broadband based services, are subject to CALEA requirements.

For example, as early at April 15, 2002, the FBI submitted a comment [15 pages in PDF] in the FCC's wireline broadband proceeding, Nos. 02-33, 95-20, and 98-10.

Moreover, while the FBI asserts that the FCC should not proceed in a "piecemeal fashion, one service provider or technology at a time", the FBI has heretofore declined to submit a comprehensive petition for a rulemaking, and has instead proceeded in a piecemeal fashion, one technology at a time.

It first sought to have the FCC apply the CALEA applies to "DSL and other forms of wireline broadband Internet access", in its April 15, 2002 filing. Then, it sought to have the FCC apply the CALEA to "cable modem service", in its June 17, 2002 comment [16 pages in PDF] in the FCC's cable broadband proceeding, No. 02-52.

Also, rather than submitting a petition for a comprehensive rule making, which would be a public, on the record, process, the FBI has long pursued a non-public and secretive approach. It has been using ex parte meetings with FCC Commissioner's and staff to lobby for the rulings that it seeks.

Ex parte meetings are not open to the public, and there is no written record. The only requirement is that the party file a notice of ex parte communication. These notices are available in the FCC's web site. The filings made by the FBI and DOJ reveal little about what transpired during these closed meetings.

See, for example, the FBI's July 11, 2003 filing [15 pages in PDF], July 15, 2003 addendum [2 pages in PDF], July 23, 2003 notice [2 pages in PDF], and August 1, 2003 notice [PDF]. Only the July 11 filing contains a substantive summary.

See also, story titled "FBI Wants Broadband Internet Access Classified As A Telecommunications Service So That CALEA Will Apply" in TLJ Daily E-Mail Alert No. 707, July 30, 2003.

E-Mail Shows DARPA's Interest in Huge Databases of Commercial Information

2/5. The Electronic Privacy Information Center (EPIC ) published in its web site a copy of two e-mail communications [3 pages in PDF] from May of 2002 exchanged between personnel of the Defense Advanced Research Projects Agency (DARPA) regarding the DARPA's interest in "huge databases of commercial transactions that cover the world", and in working with Acxiom, "the nation's largest commercial data warehouse company".

One e-mail message was written by Lt. Col. Doug Dyer of the DARPA's IAO to John Poindexter, who was the head of the DARPA's Information Awareness Office (IAO) until his resignation in August. The IAO's projects included Total Information Awareness (TIA), which the DARPA renamed Terrorism Information Awareness (TIA). The IAO's projects also included Futures Markets Applied to Prediction (FutureMap).

These projects have been terminated, and Poindexter resigned, effective on August 29, 2003. However, in May of 2002, the TIA project was active.

Also, Poindexter wrote a letter [5 pages in PDF] on August 12, 2003, just before his departure, advocating the merits of his work at DARPA. See also, story titled "Poindexter Writes About Uses of Information Technology to Fight Terrorism" in TLJ Daily E-Mail Alert No. 719, August 15, 2003.

Dyer's e-mail of May 21, 2002 to Poindexter states that "Axciom is the nation's largest commercial data warehouse company ($1B/year) with customers like Citibank, Walmart, and other companies whose names you know. They have a history of treating privacy issues fairly and they don't advertise at all. As a result they haven't been hurt as much as ChoicePoint, Seisint, etc by privacy concerns and press inquiries. Essentially, Acxiom buys or otherwise acquires transaction information, uses a key, proprietary technology they call Abilitec that links these transactions uniquely with a person/address pair (UUIDs for both), and then projects from this database to provide datasets to their customers."

"Acxiom also hosts supercomputers that enable their customers to do analysis and data mining." Dyer added that "Acxiom spends about $50M for data on US data and covers more than 80% of the population."

He then wrote that the DARPA can work with Acxiom in four ways.

"1) Engage Acxiom in conjunction with the Rand study to identify all relevant databases ..."

"2) Have Acxiom provide us with a statistical data set ... for use in the TIA critical experiment ..."

"3) Acxiom's Jennifer Barrett is a lawyer and chief privacy officer. She's testified before Congress and offered to provide help. One of the key suggestions she made is that people will object to Big Brother, wide-coverage databases, but they don't object to use of relevant data for specific purposes that we can all agree on. Rather than getting all the data for any purpose, we should start with the goal, tracking terrorists to avoid attacks, and then identify the data needed (although we can't define all of this, we can say that our templates and models of terrorists are good places to start). Already, this guidance has shaped my thinking."

"4) Ultimately, the US may need huge databases of commercial transactions that cover the world or certain areas outside the US. This information provides economic utility, and thus provides two reasons why foreign countries would be interested. Acxiom could build this mega-scale database."

Finally, Dyer wrote that "At any rate, there is little or no chance that Acxiom or any other commercial data warehouse/mining company is likely to advance the state of the art. Any innovation DARPA might pay for would be quickly intertwined with proprietary technologies. This doesn't reduce the security/economic utility of a system like the one described in (4)."

Dyer's e-mail was also addressed to a "rpopp", who  responded by e-mail to Dyer. "rpopp" was the username of Robert Popp, Deputy Director of DARPA's Information Awareness Office.

The EPIC obtained copies of these e-mail communications from the Department of Defense (DOD) in response to a request made pursuant to the Freedom of Information Act (FOIA), which is codified at 5 U.S.C. § 552.

Six weeks before the terrorist attacks of September 11, 2001, Acxiom's Jennifer Barrett testified at hearing held by House Commerce Committee's Subcommittee on Commerce, Trade, and Consumer Protection titled "How Do Businesses Use Customer Information: Is the Customer’s Privacy Protected?"

She wrote in her July 26, 2001 prepared testimony that "Acxiom’s business includes two distinct components: database managment services and information products. Database management services represent 90% of our company's revenue. These specialized computer services assist companies in better managing their customer information by making accurate ``customer recognition´´ possible across multiple lines of business and across multiple points of sale. These same services also assist companies by helping them save costs and secure a better return on investment through more focused direct marketing."

She continued that "Our information product offerings provide needed intelligence for three primary functions: (1) our directory products provide telephone information necessary to locate, verify or contact consumers by phone; (2) our enhancement products provide the information businesses need to better understand their customers and their market; and (3) our list products provide access to consumers who are potential future customers."

See also, story titled "House Holds Hearing on Privacy" in TLJ Daily E-Mail Alert No. 236, July 27, 2001.

On September 22, 2003, the EPIC submitted a complaint to the Federal Trade Commission (FTC) in which it alleged that JetBlue Airways Corporation and Acxiom violated Section 5 of the Federal Trade Commission Act (FTCA), codified at 15 U.S.C. § 45(a)(1), in connection with the disclosure of consumer personal information to Torch Concepts Inc., a defense contractor and data mining company.

The EPIC alleges that JetBlue collected personal information from its customers through its web site, and promised customers in its privacy policy that it would not share this information, but did in fact provide the information to an information mining company at the request of the DOD. The EPIC alleges that this constitutes a deceptive trade practice that violates the FTCA.

See also, story titled "EPIC Submits Privacy Complaint To FTC Regarding JetBlue" in TLJ Daily E-Mail Alert No. 744, September 23, 2003.

People and Appointments

2/5. Apple announced that EVP and CFO Fred Anderson will retire on June 1, 2004. Peter Oppenheimer, Apple's SVP of Finance and corporate controller, will become the new CFO. Apple added that it "intends to appoint Anderson to its Board of Directors upon his retirement". See, Apple release.

House Committee Holds Hearing on L Visas

2/4. The House International Relations Committee (HIRC) held a hearing titled "L Visas: Losing Jobs Through Laissez-Faire Policies?" Witnesses asserted the the L visa program, as well as other visa categories, are being abused by U.S. technology companies to replace U.S. workers with aliens.

There are bills pending in the House and Senate to limit the use of L visas. However, the Judiciary Committees have jurisdiction over these bills.

Rep. Henry Hyde (R-IL), the Chairman of the Committee, wrote in his opening statement that "L visas have been issued since their creation in 1970. They appear to have been used at first largely as the means for which they were intended by Congress: to allow legitimate, high level executives and managers to come to the United States to set up shop or take over continuing operations, thus generating jobs in the local American community. Well and good."

But, Rep. Hyde asked, "Are we being lax in the ``off-shoring´´ of American jobs, often facilitated by ``in-shore´´ training first given to L visa holders right here in the United States so they can take new skills -- and American jobs -- home with them?"

L Visa Program. The intent of the H1B visa program is to enable U.S. employers to hire highly skilled aliens, including technology workers, on a temporary basis, to make up for a shortage of such workers in the U.S. In contrast, the intent of the L1 visa program is to enable U.S. multinational companies to transfer existing employees who are executive, managers, or possess specialized or advanced knowledge, to work in the U.S.

8 U.S.C. 1101(a)(15)(L) provides the relevant definition for L visas: "an alien who, within 3 years preceding the time of his application for admission into the United States, has been employed continuously for one year by a firm or corporation or other legal entity or an affiliate or subsidiary thereof and who seeks to enter the United States temporarily in order to continue to render his services to the same employer or a subsidiary or affiliate thereof in a capacity that is managerial, executive, or involves specialized knowledge, and the alien spouse and minor children of any such alien if accompanying him or following to join him".

The HIRC stated in a release that "The number of L-Visas issued by the U.S. government has tripled during the past 20 years, to about 113,000 in 2002. However, one witness, Harris Miller, stated that counting is difficult because of renewals and re-entries into the U.S., and that "a large percentage of the number were family members, not workers".

Pending Legislation. On July 24, 2003, Sen. Chris Dodd (D-CT) introduced S 1452, the "USA Jobs Protection Act of 2003".

It would limit a U.S. employer's ability to bring an alien worker, such as a computer programmer, to the U.S. to be subcontracted out to other companies. The bill provides that "No alien may be admitted or provided status as a nonimmigrant described in section 101(a)(15)(L) unless the importing employer has filed with the Secretary of Labor an application stating the following:
  (i) The employer will not place the nonimmigrant with another employer where--
    (I) the nonimmigrant performs duties in whole or in part at 1 or more worksites owned, operated, or controlled by such other employer; and
    (II) there are indicia of an employment relationship between the nonimmigrant and such other employer."

The Dodd bill would also make it more difficult for U.S. employers to use L visas to displace U.S. workers with alien workers. It provides that an L visa shall not be issued unless the employer has filed an application stating that "The employer did not displace and will not displace a United States worker employed by the employer within the period beginning 180 days before and ending 180 days after the date of filing of any visa petition supported by the application".

Sen. Dodd's bill would also require that alien workers with L visas be paid as their U.S. counterparts. It provides that an L visa shall not be issued unless the employer has filed an application stating that "the actual wage level paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question", or "the prevailing wage level for the occupational classification in the area of employment".

The Dodd bill would also reduce the term of L visas from 5 to 7 years to 3 to 5 years.

Also on July 24, 2003, Rep. Nancy Johnson (R-CT) introduced HR 2849, the companion bill to S 1452.

The Dodd bill has no cosponsors. It was referred to the Senate Judiciary Committee. Sen. Dodd is not a member.

The Johnson bill has 28 cosponsors. It was referred to the House Judiciary Committee and its Immigration Subcommittee. One of these cosponsors is Rep. John Hostettler (R-IN), the Chairman of this Subcommittee.

Witness Testimony. The witness panel was stacked with persons who criticized abuse of the L visa program by U.S. technology companies.

Daniel Stein of the Federation for American Immigration Reform wrote in his prepared testimony that "American workers, already hard hit by the job losses of the past few years, are being pounded as well by the unfair competition coming from the importation of foreign workers willing to take American jobs for lower wages. Some of our nation's best jobs in the high tech industry are increasingly being surrendered to foreign workers coming in through both the H-1B and the L-1 program."

Similarly, Michael Gildey of the AFL-CIO wrote in his prepared testimony that the L visa program was created "to facilitate the ``intra-company transfer´´ of strategic personnel within global corporations that have U. S. facilities", but has since "morphed into something that now victimizes highly skilled, American professionals".

Sona Shah wrote in his prepared testimony about abuse of various visa programs at one tech company in the hiring of programmers. Patricia Fluno, a computer programmer, wrote in her prepared testimony about loosing her job to an L visa holder.

Harris Miller, President of the Information Technology Association of America (ITAA), was the sole defender of the L visa program, and technology companies, on the witness panel.

He wrote in his prepared testimony that "Our member companies have long relied on the ability to move their talent around in order to gain practical business experience in different parts of the globe. Often, workers in the United States on L-1 visas are being groomed for bigger things, but in order to move upwards, they must gain working knowledge of the U.S. operations of their company. In today’s increasingly global competitive environment in which movement of skilled personnel is so fundamentally important to a company’s strategic success, the L-1 visa and other temporary work visas for skilled workers are even more important than previously."

Miller also stated that "Most countries around the world have a similar temporary visa category that allows U.S. employees of multinationals to work in their countries on a temporary basis."

Miller concluded that "Our companies actively use the category and do not want to see it changed. ITAA opposes legislation to alter the current L-1 visa program. We also oppose new regulations or amendments to the existing regulations. We specifically oppose the legislation introduced" by Sen. Dodd and Rep. Johnson.

House Subcommittee Holds Hearing on False Domain Name Registration Data

2/4. The House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property held a hearing on internet domain name fraud and HR 3754, the "Fraudulent Online Identity Sanctions Act".

See, related story in this issue, titled "Representatives Introduce Bill to Deter Domain Name Fraud".

Timothy Trainer, President of the International AntiCounterfeiting Coalition (IACC), stated in his prepared testimony [8 pages in PDF] that persons who sell counterfeit goods online often provide false information when registering domain names. He said that "there is not sufficient deterrence to stop the practice of individuals obtaining Registered Names by using false information."

Scott Evans, of the International Trademark Association (INTA), wrote in his prepared testimony [9 pages in PDF] cybersquatters too often provide false registration information. He stated that "Whois serves a vital role in preventing domain name fraud. ... Trademark owners value Whois data in order to resolve domain name disputes (e.g., cybersquatting), learn the contact details for owners of websites offering counterfeit products or other infringement of intellectual property, manage trademark portfolios, provide due diligence on corporate acquisitions, and identify company assets in insolvencies/bankruptcies."

He continued that "trademark owners have for many years been encountering instances of blatantly inaccurate or missing data often from fictitious entities listing false addresses, as well as information that is simply out of date."

Evans added that "we have not seen any concrete steps by ICANN or domain name registrars to improve Whois accuracy." The INTA therefore supports efforts "to try and develop new statutory tools that will help accomplish this goal."

Rick Wesson, CEO of Alice's Registry, and Vice-Chair and Chief Technical Officer of the Registrars Constituency within Internet Corporation for Assigned Names and Numbers (ICANN), wrote in his prepared testimony that "the registrants for Internet domain names are a global population. Registrars in France sell to registrants in the US and US based registrars sell domains to registrants in India and many other countries. Performing analysis on the registrant data when the registrant is located in one of over 200 countries is difficult but not beyond the reach of all but the largest Internet based businesses."

He expressed support for HR 3754, stating that "it might indeed have a deterrent effect". However, he continued that "As it stands, the proposed legislation does not impact registrars. With no provision barring registrars from accepting fraudulent registrant data or requiring a registrar verify registrant data, I expect the industry to continue on its present course."

He added that "With simple regulation that registrars validate the accuracy of their Whois data, then law-enforcement can uphold the law. With out it, law-enforcement will just be swimming around in invalid data. It’s that simple. The technology exists, but legislation needs to require a reasonable effort on registrars' part to use it. Please add a requirement that registrars be involved in validating a potentially accurate representation of those they register."

Mark Bohannon, of the Copyright Coalition on Domain Names (CCDN), wrote in his prepared testimony [14 pages in PDF] that "The Whois database remains riddled with inaccurate data".

He continued that "the legislation on the table at this hearing takes the right approach. It targets the “bad actors” who are using the Internet to commit crimes, infringe on intellectual property rights, or commit cybersquatting. It focuses solely on those already convicted of serious crimes, or found liable for online infringements, and who also have chosen to try to hide their tracks, complicate the work of law enforcement and undermine public confidence in e-commerce by deliberately inserting materially false contact data into Whois."

He added that "we look forward to working with all the key participants to increase the incentives on domain name registries and registrars to demand accurate data, to take reasonable steps to verify the accuracy of the data they receive, and to cancel the registrations of registrants who refuse to live up to this obligation."

House Committee Holds Hearing on Competition in Communications

2/4. The House Commerce Committee's Subcommittee on Telecommunications and the Internet held a hearing titled "The Current State of Competition in the Communications Marketplace".

See, prepared testimony of witnesses: Michael Balhoff (Managing Director of the Telecommunications Group at Legg Mason), Frank Louthan VP of Equity Research at Raymond James Financial), Adam Quinton (Merrill Lynch), and Ned Zachar (Weisel Partners, Director of Telecom Services Research).

Rep. John Dingell (D-MI), the ranking Democrat on the Commerce Committee, wrote in a prepared statement that the Communications Act needs an overhaul.

Rep. Dingell (at right) He wrote that "there is virtually no correlation between the regulations that presently govern the communications marketplace and the networks and services that comprise this market today"

"Despite all the advances in technology and, in particular, the digitization of modern communications networks, the industry is still governed by laws that were passed before the emergence of the Internet", wrote Dingell. "Of the two major titles of the Communications Act that govern the communications marketplace, the first was written many years ago to regulate the offering of switched analog voice service over a copper wire; the second was written nearly as many years ago to regulate the offering of an analog one-way video service over coaxial cable."

He added that "the analog world contemplated by the Communications Act no longer exists."

He concluded, "I remain hopeful that Congress will soon change course and fundamentally overhaul the law to reflect the advances in the modern communications marketplace. I am encouraged by recent comments from Senator Stevens that he will look to reexamine the Communications Act during the next Congress, and I intend to push this Committee to undertake a similar endeavor."

Rep. Tauzin to Retire from Congress

2/4. Rep. Billy Tauzin (R-LA), the Chairman of the House Commerce Committee, will not run for re-election in November. He will also relinquish the Chairmanship of the Commerce Committee, effective February 16.

Rep. Tauzin (at right) became Chairman at the start of the 107th the Congress in January 2001. Before that, he was the Chairman of the Telecom Subcommittee.

Last August, the ranking Democrat on the Senate Commerce Committee, Sen. Ernest Hollings (D-SC), announced that he will not seek re-election. See, story titled "Sen. Hollings Will Not Run in 2004" in TLJ Daily E-Mail Alert No. 711, August 5, 2003.

Sen. Hollings has been associated with the interests of the competitive local exchange carriers (CLECs), while Rep. Tauzin's actions have more often been supported by the incumbent local exchange carriers (ILECs). BellSouth released a statement lamenting that Rep. Tauzin "will be missed".

In addition, Sen. John Breaux (D-LA), the senior Senator from Louisiana, and a member of the Senate Commerce Committee, and its Communications Subcommittee, announced in December that he will not seek re-election.

Rep. Tauzin may represent the Pharmaceutical Research and Manufacturers of America (PhRMA) before the Congress. This has promoted another interest group, Common Cause, to complain. See, statement.

People and Appointments

2/4. The Senate confirmed Mark Filip to be a Judge of the U.S. District Court (NDIll) by a vote of  96-0. See, Roll Call No. 8.

More News

2/4. The Copyright Office published a notice in the Federal Register listing arbitrators eligible for service on a Copyright Arbitration Royalty Panel (CARP) during 2004 and 2005. See, Federal Register, February 4, 2004, Vol. 69, No. 23, at Pages 5370 - 5371.

2/4. The Copyright Office published a notice in the Federal Register announcing a new policy for delivering documents to the Office of the General Counsel (OGC). It states, among other things, that "Hand deliveries made by commercial couriers and messengers may no longer be made directly to the Library of Congress". It also states that hand deliveries for the OGC by private parties must be delivered to Room LM-401 of the Madison Building. See, Federal Register, February 4, 2004, Vol. 69, No. 23, at Pages 5371 - 5372.

2/4. The House Financial Services Committee's Subcommittee on Capital Markets held a hearing titled "The Role of Attorneys in Corporate Governance". See, opening statement [PDF] of Rep. Mike Oxley (R-OH), Chairman of the full Committee, opening statement [PDF] of Rep. Paul Gillmor (R-OH), opening statement [PDF] of Rep. Paul Kanjorski (D-PA), the ranking Democrat on the Subcommittee, and opening statement [PDF] of Rep. Rahm Emanuel (D-IL). See also, prepared testimony in PDF of witnesses: Linda Madrid (American Corporate Counsel Association), Stanley Keller (Palmer & Dodge), Richard Painter (University of Illinois College of Law), George Cohen (University of Virginia Law School), and Thomas Morgan (George Washington University Law School).

Representatives Introduce Bill to Deter Domain Name Fraud

2/3. Rep. Lamar Smith (R-TX) and Rep. Howard Berman (D-CA) introduced HR 3754, the "Fraudulent Online Identity Sanctions Act", a bill to provide additional civil and criminal remedies in actions that also involve domain name fraud. See, full story.

Defendant Pleads Guilty to Hijacking PayPal Accounts

2/3. Alec Scott Papierniak pled guilty in U.S. District Court (NDCal) to one count of wire fraud in violation of 18 U.S.C. § 1343 in connection with his operation of a web and e-mail based scam to fraudulently obtain the user names and passwords of PayPal users, thereby enabling him to engage in fraudulent purchases and transfers of funds. See, USAO release.

Papierniak admitted in his plea agreement [7 pages in PDF] that "Over a period of time from approximately January 2002, and continuing through to September 2003, I falsely and fraudulently obtained user names and passwords for Paypal accounts, allowing me to ``hijack´´ those accounts and engage in fraudulent purchases and transfers of funds."

He continued that "I created and used fake, or ``spoofed,´´ PayPal webpages, which appeared to be valid PayPal webpages, but in reality were false and fraudulent, and which requested PayPal users to log on and enter their user names and passwords. I then emailed messages that appeared to be from PayPal directing the recipients to connect to a linked webpage. Upon clicking on the webpage link, the recipient was connected not to the legitimate PayPal website, but to the above-described spoof site created and maintained by myself. This spoof site was virtually identical in appearance to the valid PayPal site, and directed the individual to login with a user name and password. I set up the spoof site to incorporate a ``back-end email account,´´ which, upon the individual logging on, would secretly email the individual’s user name and password to an email account controlled by myself. In this way, I was able to obtain the user names and passwords for PayPal accounts without the owner's permission or knowledge."

He added that "I also emailed a ``key logger´´ virus to certain PayPal users, purporting to originate from a legitimate PayPal email address, by emailing a slightly modified version of a legitimate PayPal email, stating that the victim/recipient needed to install a security update in order to access PayPal. The email would appear to come from PayPal and would contain a file titled ``Fraudbuster,´´ or ``Account Manager,´´ both PayPal administrative file names. Once their computers were infected with the virus, the victims’ keystrokes were captured and sent to the me at an account I had created on his website."

Finally, he admitted that "Once I had falsely and fraudulently obtained the user names and passwords for the PayPal accounts, I transferred funds from the hijacked accounts to my own use."

Papierniak's sentencing is scheduled for May 10, 2004 at 1:30 PM before Judge James Ware in San Jose.

EC Releases Communication on Information Technologies

2/3. The European Commission (EC) released a communication [17 pages in PDF] titled "Connecting Europe at high speed: recent developments in the sector of electronic communications". It summarizes developments pertaining to information and communications technologies (ICTs), including electronic communications, broadband and Third Generation (3G) technologies. It contains a review of industry developments, economic analysis, and a discussion of policy.

Erkki Liikanen (at left), the EC's Information Society Commissioner, summarized the communication in a release. He stated that "Our report takes the temperature of the sector. It shows considerable improvement over the last year, largely due to continuing growth in mobile, broadband and Internet services. For 2004, demand for mobile data services may replace broadband as a key force for recovery. The regulatory framework and technologies are now there, but to exploit their full potential what we now need is clear and renewed political commitment at the highest level to making eEurope a reality."

The communication addresses the relationship between use of information technologies and gains in worker productivity, and hence, economic growth. He stated that "production of ICTs contributes directly to overall productivity growth and has strongly contributed to the acceleration in performance in the United States. A similar effect is evident also in some European countries, although the size of the ICT-producing sector is smaller."

It adds that "the diffusion of ICTs is a prime contributor to productivity growth elsewhere in the economy. However, simply investing in computers and modern communications is not enough. Productivity gains are only achieved when firms reorganise their business processes and invest in training. This takes time and, as European companies invested less and later in ICTs than their American competitors, productivity gains are expected with a lag.".

Consequently, the communication suggests less regulation. It makes a plea for "flexibility in product and labour markets facilitating the take up of new technologies, the reorganisation of business practices and the re-skilling of the workforce."

More News

2/3. The U.S. Court of Appeals (7thCir) issued its opinion [4 pages in PDF] in Adco v. Rovell. This case involves legal malpractice in the negotiation of the transfer of intellectual property rights (IPR), and legal malpractice in subsequent litigation over legal malpractice in the negotiation of the transfer of IPR. The issue on appeal is whether the company that developed the process that constitutes IPR had standing to sue, after it had assigned its claim. The District Court held that it lacked standing. The Court of Appeals its claim lacked substance, and affirmed. This case is Adco Oil Company v. Michael Rovell, U.S. Court of Appeals for the 7th Circuit, No. 03-2575, an appeal from the U.S. District Court for the Northern District of Illinois, Eastern Division, D.C. No. 03 C 341, Judge James Moran presiding.

2/3. The Federal Communications Commission (FCC) and the United South and Eastern Tribes, Inc. entered into a Memorandum of Understanding [5 pages PDF scan] regarding the development of best practices in siting communications towers. See also, FCC release [PDF].

2/3. The Federal Communications Commission (FCC) published a reminder in the Federal Register. The FCC reminds video programming distributors, among other things, of their responsibilities under the FCC's closed captioning benchmarks for new English and Spanish language nonexempt video programming for the period between January 1, 2004, and December 31, 2005. See, Federal Register, February 3, 2004, Vol. 69, No. 22, at Pages 5154 - 5155.

2/3. The Copyright Office published a notice in the Federal Register announcing "the initiation of a voluntary negotiation period for determining reasonable rates and terms for two compulsory licenses which, in one case, provides for a public performance of a sound recording by a new subscription service, and in the second instance, allows for the making of an ephemeral phonorecord of a sound recording in furtherance of making the permitted public performance. The rates and terms will be for the period beginning January 1, 2005 and ending on December 31, 2006." See, Federal Register, February 3, 2004, Vol. 69, No. 22, at Page 5196.

2/3. The Department of Justice (DOJ) published a notice in the Federal Register announcing that the deadline for state and local law enforcement agencies to submit applications to the DOJ's Office of Juvenile Justice and Delinquency Prevention (OJJDP) to participate in the Internet Crimes Against Children Task Force Program is March 19, 2004. See, Federal Register, February 3, 2004, Vol. 69, No. 22, at Pages 5187 - 5193.

2/3. Federal Communications Commission (FCC) Chairman Michael Powell gave a speech [7 pages in PDF] regarding telecommunications in Indian country, and the Memorandum of Understanding [5 pages in PDF] between the FCC and the United South and Eastern Tribes, Inc. regarding tower citing.

Bush Releases Budget Proposal for FY 2005

2/2. The Bush administration released it budget proposals for fiscal year 2005. It contains proposals for appropriations for the operation of government. See, links to the budget proposal by agency in PDF, and links to the summaries of the budget by agency in HTML. The summaries are shorter, less technical, and more polemical than the actual budget proposals.

Bush Budget Proposal for Commerce Department

2/2. The Bush administration's proposed budget for FY 2005 for the Department of Commerce (DOC) contains appropriation, fee, and policy information for many of the technology related entities in the federal government, including the USPTO, NTIA, BIS, OTP, and NIST. See, the proposed budget summary in HTML for the DOC, and the proposed budget [45 pages in PDF] for the DOC.

USPTO. The President's budget proposal for the U.S. Patent and Trademark Office (USPTO) contains several significant statements. It proposes to make $1,533 Million available to the USPTO in FY 2005. It also proposes no fee diversion in FY 2005. See, related story in this issue titled "Bush Budget Proposes Ending USPTO Fee Diversion".

NTIA. The President's proposed budget for the National Telecommunications and Information Administration (NTIA) would reduce funding from $48 Million in FY 2004 to $25 Million in FY 2005. This is part on a continuing downward trend. However, NTIA salaries and expenses have grown from 12 Million in FY 02 to 22 Million (proposed) in FY 05. The decreases in the overall NTIA funding is the result of the Bush administration's phasing out of grant programs administered by the NTIA.

The budget summary states that it "continues to strengthen the spectrum management capabilities" of the NTIA "by providing funding for laboratory upgrades, and spectrum management and research in support of the Administration's Spectrum for the 21st Century Initiative. In addition, the Administration will again propose legislation to streamline the current process for reimbursing Federal agencies that must relocate from spectrum auctioned to commercial users."

It also states that "The Budget provides no funds for Public Telecommunications Facilities, Planning and Construction grants. This program has recently targeted most of its funding toward the purchase of digital transmission equipment by public broadcasting stations. The Budget proposes that a portion of the Corporation for Public Broadcasting’s already enacted 2005 funding be made available for this purpose."

BIS/BXA. The administration proposal provides $76,516,000 for the Bureau of Industry and Security (BIS), which is also still known as the Bureau of Export Administration (BXA). This is up from $68,203,000 in FY 2004.

The budget proposal states that "The export administration program safegards U.S. national and economic security, nonproliferation, and trade interests by effectively administering U.S. export control laws relating to dual-use technologies and weapons of mass destruction; removes outdated export controls; develops, promotes, and implements policies which ensure a strong and technologically superior defense industrial base; oversees compliance by the U.S. business community with the Chemical Weapons Convention (CWC); and implements the Nation's computer and encryption export policy."

The dual use technologies affected by the BIS administered export control regime include certain computers and software products.

OTP. The administration proposal for the Technology Administration's Office of Technology Policy (OTP) is  $8,294,000, up from $6,411,000 in FY 2004.

The President's budget summary states that "The Technology Administration (TA) is the principal civilian technology agency working with industry to improve U.S. industrial competitiveness and serves as an advocate for U.S. industry in the Executive Branch, before Congress, and in international fora. It discharges this role through the leadership of the Under Secretary for Technology; through the Office of Technology Policy's analysis, formulation, and advocacy of policies to maximize the contribution of technology to economic growth; through the technology development, diffusion, and commercialization programs of the National Institute of Standards and Technology; and through the dissemination of technological information by the National Technical Information Service."

That is, OTP personnel write reports and give speeches. But, the OTP has no rule making, adjudicatory, grant making, standard setting, or other, authority.

NIST. The President proposes to reduce funding for the National Institute of Standards and Technology (NIST) from $610 Million in FY 2004 to $521 Million in FY 2005.

The President's budget summary states that this budget proposal "provides increased funding for NIST laboratories in order to meet Commerce’s challenge of promoting state-of-the-art industrial standards that support technological innovation. NIST laboratories specialize in electronics, manufacturing, engineering, chemical science, physics, materials science, building and fire research, and information technology. The upgrade to NIST’s lab facilities continues with $31 million to equip and operate the Advanced Measurement Laboratory, a new facility designed to meet cutting edge research requirements, and $25 million for continued renovations of NIST’s Boulder, Colorado facilities."

It also states that "The fundamental scientific research and advanced facilities capabilities of NIST support the innovation priorities of the interagency National Nanotechnology Initiative at $53 million and Networking and Information Technology Research and Development (R&D) at $33 million. The Budget provides funding for NIST’s ongoing research efforts in homeland security standards development related to biometric identification, threat detection, and high-rise safety. These activities will provide more accurate identification of individuals seeking to enter the United States, improve the capability to detect nuclear and radiological weapons and help prevent smuggling of these weapons across our borders, and update building and fire standards along with operational guidance for building owners and emergency responders."

Summary Data for the Department of Commerce, FY 2002-2005 (in Millions)

Bush Budget Proposes No USPTO Fee Diversion in FY 05

2/2. The Bush administration's summary of the proposed budget for FY 2005 for the Department of Commerce (DOC) provides for no user fee diversion in FY 2005.

The summary of the proposed budget contains the following statement regarding the U.S. Patent and Trademark Office (USPTO): "This Budget supports the fee legislation and a spending level of $1.5 billion that will allow PTO to continue implementation of its strategic plan. This proposal provides PTO full access to its fee collections in 2005."

See, full story.

Bush's FCC Budget Proposal Addresses Broadband and Spectrum Policy

2/2. The Bush administration's proposed budget summary for "Other Agencies" includes the President's proposal for the Federal Communications Commission (FCC). It proposes a budget of $292,958,000, $273 million of which would be offset directly by regulatory fees.

The FY 2004 budget is $273,958,000. See, HR 2673, the omnibus appropriations bill, signed by President Bush on January 23, 2004. This is an increase of $19 Million, or 6.9%, which covers increases in salaries and benefits.

The actual proposed budget [110 pages in PDF] for the FCC is at pages 1125-1128 of the budget document, and the 41st-44th pages of the PDF file containing the portion of the budget covering independent agencies.

The FCC issued a release [PDF] that states that "The requested FY 2005 funding level will cover mandatory increases for salaries and benefits and inflationary increases for office space rental, supplies, printing, postage and contractual services. The budget level also includes funds for maintenance and modernization of technology systems that directly further all aspects of our performance; information technology equipment to support our multiyear lifecycle management program; replacement monitoring vehicles; technical monitoring and test equipment to ensure the Commission has up-to-date tools to achieve the agency's Spectrum and Homeland Security initiatives; and skills based training for critical FCC program areas."

OSTP. The proposed budget [9 pages in PDF] for the Executive Office of the President provides $7,081,000 for the Office of Science and Technology Policy (OSTP). This is up from $7,027,000 in FY 2004.

NSF. The proposed budget [5 pages in PDF] for the National Science Foundation (NSF) provides $4,452,310,000, up from $4,276,600,000 in FY 2004.

NTIA Seeks Public Comments on Spectrum Management

2/2. The National Telecommunications and Information Administration (NTIA) published a notice in the Federal Register stating that it is "conducting a comprehensive review to develop recommendations for improving the United States' spectrum management policies regarding the organization, processes, and procedures affecting Federal government, State, local and private sector spectrum use" and requesting public comments, by March 18, 2004.

This notice of inquiry (NOI) states that this review is being made pursuant to a "Spectrum Policy in the 21st Century signed by President George W. Bush on May 29, 2003." Seven months lapsed between the President's memorandum, and the NTIA's issuance of this NOI.

TLJ published a story titled "Bush Issues Spectrum Policy Memorandum" in TLJ Daily E-Mail Alert No. 675, June 6, 2003. That story summarized the content of the President's memorandum, and elaborated on the administrative and legislative process. It concluded that "one major consequence of the President's announcement is the likely delay of consideration of any major spectrum reform proposals for several years."

The NTIA is also hosting two related conferences in connection with its mission for the President to develop a spectrum policy for the 21st Century.

It will host a two day conference titled "Public Safety Spectrum Management Forum" on February 10-11. It will be at Omni Shoreham Hotel, 2500 Calvert Street, NW. See, notice.

It will host a two day conference on February 12-13 titled "Forum on Spectrum Management Policy Reform". See, agenda [PDF]. It will be held in the Lecture Room, National Academy of Sciences Building, 2100 C Street, NW.

The NTIA's NOI propounds 31 questions, some of which include subparts. It also states that this is "only intended to assist in identifying the issues and should not be construed as a limitation on comments that may be submitted".

The NOI asks whether the current system of dividing spectrum management between the NTIA and the Federal Communications Commission (FCC) presents "obstacles to the most efficient and benefical use of the spectrum", and whether spectrum management should be combined.

The NOI asks questions about the NTIA's and FCC's versions of the United States Table of Frequency Allocations.

The NOI asks numerous questions regarding "long-range planning activities by NTIA, the FCC, and other Federal agencies".

The NOI asks for definitions of the terms "technical efficiency", "economic efficiency" and "functional efficiency."

It goes on to ask many questions relating to the efficient use of spectrum. For example, it asks "What incentives or changes in policy should be imposed on the Federal and private sector spectrum users or potential users to use the
spectrum more effectively and efficiently?", "What mechanisms could be established for promoting improved spectrum sharing between Federal agencies and the private sector?", and "How could the general spectrum management oversight of Federal users be improved?"

However, the NTIA's NOI does not anywhere ask for comments regarding creating property rights in spectrum, or a market based system. The NOI does not even mention "markets".

The NOI does not use the word "property", and only mentions "rights" in two contexts. First, it asks "Should NTIA establish a pilot secondary lease program whereby the Federal government can lease temporary and/or preemptable access to Federal government spectrum to non-government users?" Second, it asks "Are there commercial applications for short term spectrum rights, such as overnight data caching, special event, or seasonal use?"

The NOI also asks questions regarding policy tools to streamline the deployment of new and expanded services and technologies.

Finally, the NOI asks questions regarding the spectrum needs of national security and homeland security, public safety, federal transportation infrastructure, and science.

The citation for the NTIA notice is Federal Register, February 2, 2004, Vol. 69, No. 21, at Pages 4923 - 4926.

IIPI Paper Examines Tax Deductions for IP Donations

2/2. The International Intellectual Property Institute (IIPI) released a paper [48 pages in PDF] titled "IP Donations: A Policy Review". The paper, which was written by Ron Layton and Peter Bloch, is a review of the US tax regime under which corporations may be entitled to deductions for donations of intellectual property, particularly patents, to non-profit institutions, such as universities.

In 1958, Internal Revenue Service (IRS) Revenue Ruling 58-260 confirmed the deductibility of donated patents. However, some, including Sen. Charles Grassley (R-IA), the Chairman of the Senate Finance Committee, have since argued that the regime has been abused.

In addition, the IRS recently announced that it will crack down on excessive claims of deductions. In late December of 2003, the IRS issued an undated notice [3 pages in PDF] that states that the IRS "is aware that some taxpayers that transfer patents or other intellectual property to charitable organizations are claiming charitable contribution deductions in excess of the amounts to which they are entitled under § 170 of the Internal Revenue Code." See, story titled "IRS Plans Crack Down on Charitable Contributions Deductions Involving Transfers of Intellectual Property" in TLJ Daily E-Mail Alert No. 805, December 23, 2003.

The IIPI paper states that "Since revenue ruling 58-260, the IRS has allowed donor corporations to revalue their patents before donating, by ignoring book value and assessing the present value of future potential income streams from the patent or group of patents at issue. Allowing deductibility on this present-value basis created a significant tax incentive for donor corporations, particularly since most of the patents involved in the process have been inactive (``orphaned´´) and thus a liability to the owner, rather than an asset."

The IIPI paper identifies two consequences of this regime. "First, American taxpayers are bearing the cost of the tax deductions without being able to measure the likely benefits. And, second, the system in place has created the unintended cost of tax abuse, or perceived tax abuse, in part at least because of the difficulties in defining a rigorous and objective assessment system for the current value of particular patents with uncertain futures."

Recently, Sen. Grassley, and others, have sought to address abuses of this tax regime through legislation.

First, Sen. Grassley succeeded in adding language to the Senate's version of HR 2, the "Jobs and Growth Tax Relief Reconciliation Act of 2003", a major tax cut bill. See, "Senate Passes Tax Bill with Limitation of Deduction for Charitable Contributions of Intellectual Property" in TLJ Daily E-Mail Alert No. 664, May 19, 2003. This bill ultimately became law (Public Law No. 108-27) on May 28, 2003, but without Sen. Grassley's IP language.

Sen. Grassley has also inserted language addressing this issue into S 1637, the "Jumpstart Our Business Strength (JOBS) Act". This is a huge tax bill, the primary purpose of which is to revise tax law to bring it into compliance with World Trade Organization (WTO) rulings that the US Foreign Sales Corporation (FSC) tax regime, and its replacement, the Extraterritorial Income (ETI) tax regime, constitute illegal export subsidies.

Sen. Grassley introduced the bill on September 18, 2003. The Senate Finance Committee amended and approved the bill on October 2, 2003. See also, Committee Report, No. 108-192.

Section 495 of the bill would amend 26 U.S.C. § 170, which pertains to charitable contributions, to limit the deduction for contributions of patents, copyrights, trademarks, trade names, trade secrets, know-how, software, and similar property.

EC Proposes Community Patent Court

2/2. The European Commission (EC)  issued a release that states that the EC proposes the establishment of a Community Patent Court.

The release states that "The European Commission has presented proposals for two Council Decisions establishing a Community Patent jurisdiction, under the aegis of the European Court of Justice, to allow the resolution of disputes within the future Community Patent system, in particular those on infringements and on the validity of Community Patents. Under the proposals, the jurisdiction of the Court of Justice would be exercised by a new Community Patent Court. The new system would mean that judgements over Community Patent rights would be effective throughout the EU, avoiding the expense, inconvenience and confusion that can occur when judgements in several different national courts are required."

Frits Bolkestein (at right), the Internal Market Commissioner, stated that "To maximise the benefits of the Community Patent, we need a single Community Patent Court, under the ultimate jurisdiction of the European Court of Justice, so that disputes are judged with EU-wide effect. I am confident the Council will adopt the necessary decisions quickly, as broad agreement in principle was already reached at the March Competitiveness Council."

Bolkestein added, "But of course, setting up the jurisdictional arrangements without finalising adoption of the Community Patent Regulation itself is about as useful as a new pair of skis in the desert. So above all I hope the Council will agree on the final points of detail on the Community Patent still at issue and adopt the Regulation. Europe's companies have been crying out for too long for access to pan-European patent protection at reasonable cost with minimum red-tape and maximum legal certainty."

The EC release elaborates that "The first proposal presented by the Commission would confer on the Court of Justice formal jurisdiction concerning certain disputes over Community Patents, in particular those concerning alleged infringements of patents and challenges to the validity of patents."

"The second proposal would establish the Community Patent Court, whose seven judges would be appointed by the Council of Ministers, to exercise the Court of Justice's jurisdiction on its behalf. It also sets up a specialised chamber within the Court of First Instance to hear appeals against the Community Patent Court's judgements. In exceptional cases, a decision of the Court of First Instance could be subject to review by the Court of Justice."

See, document titled "Proposal for a Council Decision conferring jurisdiction on the Court of Justice in disputes relating to the Community patent" and document titled "Proposal for a Council Decision establishing the Community Patent Court and concerning appeals before the Court of First Instance".

See also, the EC's web page titled "Community Patent".

CDT Releases Paper on DMV Fraud

2/2. The Center for Democracy and Technology (CDT) released a paper [7 pages in PDF] titled "Unlicensed Fraud: How bribery and lax security at state motor vehicle offices nationwide lead to identity theft and illegal driver’s licenses".

The CDT conducted its investigation of fraud in state departments of motor vehicles merely by searching for news stories with the Google search engine, and then reviewing those stories. However, it found "23 cases of publicly reported fraud or lax security in 15 different states".

It found that "Thousands of fraudulent driver's licenses were issued through bribed state employees in 2003." It also found that state officials have sold drivers license data, and that thieves have stolen drivers license data.

The CDT then commented that "Many individuals continue to call for a national ID card or ``strengthened´´ driver's licenses using biometric information such as digital fingerprints to try to better secure the license. Yet, these programs do not even begin to address the most basic issue of rampant fraud in the system. As with many programs, technologies for providing better and more secure licenses are only as strong as the management procedures that utilize them. In fact, creating a nationally linked system without first reducing fraud would only increase pressure and incentives for abuses of the system."

The CDT offered several recommendations. For example, it wrote that the "Congress should require the General Accounting Office (GAO) to build an internal and external fraud and security index and rank the states and their improvements in each area."

It also stated that "It is time for the federal government to get tough and raise the federal offense for a crime that affects nationwide security. This will allow the federal government to bring cases where states have failed to act."

NCTA Proposes Framework for Regulation of VOIP

2/2. The National Cable Telecommunications Association (NCTA) released a paper [47 pages in PDF] titled "Balancing Responsibilities and Rights: A Regulatory Model for Facilities-Based VoIP Competition". It proposes a regulatory framework for voice over internet protocol (VOIP). The NCTA finds that much of the regulation of PSTN telecommunications regulation ought to be applied in some manner to certain VOIP services.

The NCTA paper states that "any VoIP service that meets a baseline test as proposed herein can, and should, meet certain public policy responsibilities and requirements".

The paper provides a "baseline test". It states that its "proposed four-prong test requires that a VoIP service (1) use North American Numbering Plan (``NANP´´) resources, (2) receive calls from -- or terminate them to -- the public switched telephone network (``PSTN´´), (3) represent a possible replacement for POTS, and (4) use Internet Protocol transmission between the service provider and the end user customer, including use of an IP terminal adapter and/or IP-based telephone set."

Then, the NCTA paper states that the regulatory regime that should be imposed upon these VOIP services includes "the Communications Assistance for Law Enforcement Act (``CALEA´´), the offering of 911/E911, access for the disabled, and appropriate contributions to universal service."

In addition, it states that "generally applicable consumer protection rules that apply to all businesses should apply to VoIP service providers. These include such requirements as ``do not call´´ and ``do not mail.´´"

The paper also addresses intercarrier compensation. It states that the FCC has issued a notice of proposed rulemaking to revise its intercarrier compensation rules. The NCTA paper states that "the new rules should apply to VoIP-based services that utilize the PSTN as well".

The NCTA also elaborates on universal service in the context of VOIP. It begins by stating that "regulators should expect VoIP services that make use of NANP resources to ultimately contribute to federal and state universal service programs on a par with other contributors."

But it adds that there is a "need to modify the current universal service contribution mechanism, particularly with respect to VoIP services. Under the current contribution mechanism, assessments are based on interstate telecommunications revenues. Applying this mechanism to VoIP service would be fraught with difficulty for several reasons."

"First, because most consumer VoIP services today are offered without regard to interstate and intrastate distinctions, arbitrary judgments would be required as to which portion of VoIP service revenue is interstate and which is intrastate. Second, because the regulatory classification of VoIP service has not been determined, an arbitrary judgment would be required as to what portion of VoIP revenue is telecommunications revenue." The NCTA paper concludes that the "best solution to this problem would be the adoption of a numbers-based contribution mechanism."

The NCTA paper then addresses those regulatory regimes that should not be imposed upon these VOIP services. It states that "there are a number of legacy utility requirements that should not be imposed on VoIP service providers. Most such requirements date from the era of a single provider of phone service and are inappropriate for competitors using nascent technologies that offer alternatives to incumbent providers. In particular, a number of legacy requirements relate to billing, payment, credit and collection, and quality of service standards. Competitive marketplace forces, rather than prescriptive rules, can address these issues much more effectively for non-incumbent providers of VoIP services. Regulators should make a comprehensive effort to review and eliminate such regulatory requirements for VoIP services."

The paper also states the the VOIP regulatory framework should provide certain rights to these VOIP service providers. It states that "VoIP service providers, particularly facilities-based providers, do, however, require certain rights irrespective of whether the provider's service is ultimately determined to be an ``information service,´´ a ``telecommunications service," or another type of service."

It states that "These rights relate generally to interconnection and the exchange of traffic, the right to obtain telephone numbers and have them published in telephone directories, the right to access the facilities and resources necessary to provide VoIP customers with full and efficient 911/E911 services, the right to be compensated fairly for terminating traffic delivered from other entities and the right to non-discriminatory access to universal service support."

And finally, "facilities-based VoIP providers need access to poles, ducts, conduits and rights-of-way, regardless of the ultimate regulatory classification of VoIP services."

See also, NCTA release.

Documents Describe Microsoft's Government Security Program

2/2. The Electronic Privacy Information Center (EPIC) published in its web site copies of two documents pertaining to Microsoft's program titled "Governmental Security Program", or GSP.

The first document is a presentation outline [20 page PDF scan] titled "Microsoft Government Security Program", dated March 17, 2003. The second is a Microsoft document [PDF] is titled "Microsoft's Government Security Program: Participants Procedure Guide: Microsoft Confidential".

The second item states that the GSP is "a global initiative that provides national governments and international organizations with access to Windows source code and other technical information they need to be confident in the security of the Microsoft Windows platform."

The EPIC obtained the documents from the National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) in response to a request made pursuant to the Freedom of Information Act (FOIA), which is codified at 5 U.S.C. § 552.

People and Appointments

2/2. William Davenport was named Chief of the Federal Communications Commission's (FCC) Enforcement Bureau's (EB) Investigations and Hearings Division (IHD). The IHD is responsible for resolution of complaints against broadcast stations and other Title III licensees on non-technical matters, including indecency. He was previously Deputy Chief and Assistant Chief of the IHD. Before joining the FCC in 1999, he was an associate in the Washington DC office of the law firm of Preston Gates. See, EB release.

2/2. Hillary De Nigro was named Deputy Chief of the FCC's EB's Investigations and Hearings Division (IHD). She was previously Assistant Chief of the IHD. Before joining the FCC in 2001, she was an attorney in the law firms of Milbank Tweed and Akin Gump. See, EB release.

2/2. Cathy Carpino was named Assistant Division Chief of the FCC's EB's Investigations and Hearings Division (IHD). She previously worked in the FCC's Wireline Competition Bureau's (WCB) Competition Policy Division. She worked on broadband matters, the Triennial Review proceeding, and the WCB's Virginia Arbitration. Prior to joining the FCC in 2001, she worked at the Massachusetts Department of Telecommunications and Energy overseeing its Section 271 proceeding and various arbitrations. She has also worked on Capitol Hill. See, EB release.

2./2. David Brown was named Assistant Division Chief of the FCC's EB's Investigations and Hearings Division (IHD). He previously was an attorney advisor in the IHD. He has also worked as an Interim Legal Advisor to FCC Commissioner Kevin Martin. See, EB release.

2/2. James Shook was named Special Counsel in the FCC's EB's Investigations and Hearings Division (IHD). He has worked for the FCC since 1980, most recently as a senior trial attorney in the IHD. See, EB release.

2/2. David Janas was named Special Counsel in the FCC's EB's Investigations and Hearings Division (IHD). He was previously an attorney advisor in the IHD. Before joining the FCC in 2001 he was an associate in the Washington DC office of the law firm of Mintz Levin. See, EB release.

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2/2. Sen. Byron Dorgan (D-ND) praised the National Telecommunications Cooperative Association (NTCA) on the occasion of its 50th anniversary in a statement in the Senate. See, Congressional Record, February 2, 2004, at page S368.

Go to News from January 26-31, 2004.