US Courts Releases 2003 Data on Interception of Wire Oral & Electronic Communications

4/30. The Administrative Office of the United States Courts released its 2003 annual report [10 pages in PDF] on interception of phone, oral and electronic communications.

The full title is "Report of the Director of the Administrative Office of the United States Courts on Applications for Orders Authorizing or Approving the Interception of Wire, Oral, or Electronic Communications". It covers the time period January 1, 2003 through December 31, 2003. This report is required by 18 U.S.C. § 2519.

It contains little data. For example, in breaking down court orders for intercepts by category of offense, the only two categories are drug related offenses, and everything else.

Also, this report only addresses authorizations for interception of wire, oral and electronic communications under Chapter 119 of Title 18 of the U.S. Code, 18 U.S.C. §§ 2510-2522, which is also sometimes referred to as "Title III" (of the Omnibus Crime Control and Safe Streets Act of 1968).

This report does not include data on authorizations for use of pen registers and trap and trace devices (which are intended only to obtain phone numbers and internet addressing and routing information, and not the content of communications). This authority is addressed at 18 U.S.C. §§ 3121-3127. Section 3126 provides for a separate report on these orders.

Nor does this report include data on orders issued pursuant to the Foreign Intelligence Surveillance Act (FISA). Nor does it address national security letters which enable the FBI, without a court order, to obtain records from a "wire or electronic communication service provider" in "an authorized investigation to protect against international terrorism or clandestine intelligence activities". See, 18 U.S.C. § 2709.

What the report does reveal is that the vast majority of intercept orders pertain to cell phones, that the vast majority of investigations are drug related, and the majority are issued by state, not federal, courts.

It states that "1,442 intercepts authorized by federal and state courts were completed in 2003".

Of these, 578 were federal, and 864 were state. And, among the states, New York authorized the most -- 328.

Of these 1,442 intercepts, 1,104 were authorized in connection with drug related investigations. A minority, 338, were for all other categories of investigations combined.

The report also provides historical data back to 1993. It shows that while the number of intercepts for drug related investigations grew substantially, from 679 to 1,104, the number of intercepts for other categories of investigations remained relatively constant, 297 in 1993 and 338 in 2003.

The report also provides data on intercepts by method of surveillance. It provides data on three types of surveillance: telephone, microphones, and electronic. First, it states that 1,271 authorizations were for telephones. Moreover, "1,154 wiretaps involved cellular/mobile telephones, either as the only type of device under surveillance (1,085 cases) or in combination with other types of telephones (69 cases)."

Second, the report states that 49 authorizations pertained to "Electronic wiretaps". It adds that "32 of these involved electronic pagers, 12 involved computers, and 5 involved other electronic devices such as fax machines".

Finally, the report states that 24 authorizations involved microphones.

These numbers, of course, do not add up to the total number of authorizations. (1,271 + 49 + 24 = 1,344) This is 98 less than 1,442. The report does not explain the other 98 intercept authorizations. Actually, the number of unidentified authorizations is likely greater because some authorizations pertain to multiple methods of interception.

The report addresses encryption. It states that "In 2003, no instances were reported of encryption being encountered on federal wiretaps. One state jurisdiction reported that encryption was encountered in a wiretap terminated in 2003; however, the encryption was reported to have not prevented law enforcement officials from obtaining the plain text of communications intercepted."

DOJ Reports that 1,724 FISA Orders Were Issued for Electronic Surveillance and Physical Search in 2003

4/30. The Department of Justice (DOJ) sent a letter [2 pages in PDF] to the Administrative Office of the United States Courts (AOUSC) regarding applications made, and orders issued, pursuant to the Foreign Intelligence Surveillance Act (FISA).

The letter is very brief. It states that "During calendar year 2003, 1727 applications were made to the Foreign Intelligence Surveillance Court for electronic surveillance and physical search. The 1727 applications include applications made solely for electronic surveillance, applications made solely for physical search, and combined applications requesting authority for electronic surveillance and physical search simultaneously. The Court approved, in whole or in part, 1724 applications."

The report also states that "During calendar year 2003, the Court made substantive modifications to the Government's proposed orders in 79 applications presented to the Court."

This report is required by 50 U.S.C. § 1807, which provides that "In April of each year, the Attorney General shall transmit to the Administrative Office of the United States Court and to Congress a report setting forth with respect to the preceding calendar year -- (a) the total number of applications made for orders and extensions of orders approving electronic surveillance under this subchapter; and (b) the total number of such orders and extensions either granted, modified, or denied."

Also on April 30, the AOUSC released its 2003 annual report [10 pages in PDF] on interception of phone, oral and electronic communications. This report, which is required by 18 U.S.C. § 2519, addresses authorizations for interception of wire, oral and electronic communications under Chapter 119 of Title 18 of the U.S. Code, 18 U.S.C. §§ 2510-2522, which is also sometimes referred to as "Title III" (of the Omnibus Crime Control and Safe Streets Act of 1968).

This wiretap report states that "1,442 intercepts authorized by federal and state courts were completed in 2003". Of these, 578 were federal, and 864 were state.

The total number of FISA orders exceeded the total number of wiretap orders in 2003. Moreover, if only federal wiretap orders are considered, then there were over three time more FISA orders than there were federal wiretap orders in 2003.

See also, story titled "US Courts Releases 2003 Data on Interception of Wire Oral & Electronic Communications" in TLJ Daily E-Mail Alert No. 889, May 3, 2004.

A wiretap order, which enables law enforcement agencies to obtain the content of a phone call or e-mail, is issued by a judge upon a showing of probable cause. This is a very high standard.

There is a separate, and low, standard for FISA orders. Under current law, a significant purpose of the surveillance must be foreign intelligence gathering, including intelligence regarding terrorists. Nominally, FISA orders are not available in domestic criminal investigations.

More News

4/30. The U.S. Court of Appeals (DCCir) issued its opinion [19 pages in PDF] in Communications Vending Corp. v. FCC. The Court denied petitions for review of the Federal Communications Commission's (FCC) ruling that local telephone companies unreasonably imposed certain end-user charges on independent payphone providers from 1986 to 1997. This case is Communications Vending Corporation of Arizona, Inc., et al.  v. FCC and USA, U.S. Court of Appeals for the District of Columbia, App. Ct. Nos. 02-1364, 03–1010, and 03–1012.

4/30. The Internet Corporation for Assigned Names and Numbers (ICANN) announced that it has "extended its public comment period for all of the new sTLD applications until 23.59 UTC 14 May". See, ICANN release.

4/30. The Library of Congress published a notice in the Federal Register announcing the vacatur of its
order rejecting the initial and revised reports of the Copyright Arbitration Royalty Panel (CARP) in the Phase II
proceeding to determine the distribution of 1997 cable royalty funds in the syndicated programming category. The Librarian's Order as well as the initial and revised CARP reports are being vacated as moot because the parties have resolved their dispute. See, Federal Register, April 30, 2004, Vol. 69, No. 84, at Pages 23821 - 23822.

4/30. Rep. Jay Inslee (D-WA) introduced HR 4255, the "Computer Software Privacy and Control Act". This bill provide that, unless consent of the user is obtained, "It is unlawful for any person knowingly to transmit to a protected computer owned or operated by another person, or transmit to a protected computer prior to the first retail sale of such computer, any computer software, or any component thereof, that -- (1) collects personal information about an owner or operator of that protected computer and transfers such information to any person other than such owner or operator; (2) monitors or analyzes the content of the Internet web pages accessed by an owner or operator of such computer and transfers information regarding the accessing of such web pages to any person other than such owner or operator; or (3) modifies default computer settings or computer settings previously selected by the owner or operator of that computer" regarding the browser's default home page, the internet connection settings if such changes would result in charges, internet search services, or files and data stored on the computer. This bill would give the Federal Trade Commission (FTC) and states civil enforcement authority. It would also amend the criminal code, at 18 U.S.C. § 1030, regarding computer fraud. The bill was referred to the House Commerce Committee.

Senate Passes Weakened Version Internet Non-discrimination Act

4/29. The Senate passed an amended version of S 150, the "Internet Tax Non-discrimination Act of 2003". The Senate passed a compromise version offered by Sen. John McCain (R-AZ). See, text of bill as enacted by the Senate.

The Senate bill extends the moratorium of the 1998 Internet Tax Freedom Act until November 1, 2007. However, the bill also includes numerous exceptions and qualifications that provide state and local governments a wide range of opportunities to tax internet access. The House passed its version of the bill last September. It's moratorium is permanent, and lacks the exceptions and qualifications found in the Senate version.

The Congress passed the original Internet Tax Freedom Act (ITFA) at the end of the 105th Congress in late 1998. The Senate version of the bill, S 442 ES (105th), was ultimately added to the huge Omnibus Appropriation Bill, which was passed by both houses, and signed by former President Clinton. It became Public Law No. 105-277.

It barred states, for three years, from imposing "(1) taxes on Internet access, unless such tax was generally imposed and actually enforced prior to October 1, 1998; and (2) multiple or discriminatory taxes on electronic commerce."

In 2001 the Congress extended this moratorium through November 1, 2003. The moratorium has expired.

S 150, as enacted by the Senate, extends, through November 1, 2007 the ban on "Taxes on Internet access" and "Multiple or discriminatory taxes on electronic commerce." It addresses grandfathering in a separate section.

The bill also replaces the 1998 ITFA's definition of "tax on Internet access". The bill provides that "The term `tax on Internet access´ means a tax on Internet access, regardless of whether such tax is imposed on a provider of Internet access or a buyer of Internet access and regardless of the terminology used to describe the tax."

Broadband DSL Service. The 1998 ITFA imposed a moratorium on taxes on internet access, but, the ITFA's definition of "internet access" excluded "telecommunications services". The present bill provides that "The term `Internet access service´ does not include telecommunications services, except to the extent such services are purchased, used, or sold by a provider of Internet access to provide Internet access."

This clarifies that the ban on internet access taxes extends to broadband DSL and wireless internet access services provided by phone companies or others.

Grandfathering. The present bill also changes the grandfathering language of the original ITFA.

It provides that for pre-1998 taxes the ban "does not apply to a tax on Internet access that was generally imposed and actually enforced prior to October 1, 1998, if, before that date, the tax was authorized by statute and either -- (A) a provider of Internet access services had a reasonable opportunity to know, by virtue of a rule or other public proclamation made by the appropriate administrative agency of the State or political subdivision thereof, that such agency has interpreted and applied such tax to Internet access services; or (B) a State or political subdivision thereof generally collected such tax on charges for Internet access." (Emphasis added.)

It then provides that for pre-2003 taxes the ban "does not apply to a tax on Internet access that was generally imposed and actually enforced as of November 1, 2003, if, as of that date, the tax was authorized by statute and -- (A) a provider of Internet access services had a reasonable opportunity to know by virtue of a public rule or other public proclamation made by the appropriate administrative agency of the State or political subdivision thereof, that such agency has interpreted and applied such tax to Internet access services; and (B) a State or political subdivision thereof generally collected such tax on charges for Internet access." (Emphasis added.)

The difference between the two provisions is the use of the words "or" and "and". For pre-1998 taxes, either (A) or (B) must be met, while for pre-2003 taxes, both (A) and (B) must be met.

It further provides that for pre-1998 taxes, the grandfathering clause expires on November 1, 2007, and that for pre-2003 taxes, the grandfathering clause expires on November 1, 2005.

Exceptions for Universal Service, E911, VOIP and More. The present bill also contains several exceptions to the moratorium, for internet access not billed separately from telecommunications service, for taxes or fees imposed for providing universal support subsidies, and for taxes or fees imposed for 911 or E-911 services, and for taxes on VOIP services.

First, it provides that "If charges for Internet access are aggregated with and not separately stated from charges for telecommunications services or other charges that are subject to taxation, then the charges for Internet access may be subject to taxation unless the Internet access provider can reasonably identify the charges for Internet access from its books and records kept in the regular course of business."

The universal service exception provides that "Nothing in this Act shall prevent the imposition or collection of any fees or charges used to preserve and advance Federal universal service or similar State programs -- (1) authorized by section 254 of the Communications Act of 1934 (47 U.S.C. 254); or (2) in effect on February 8, 1996."

The voice over internet protocol exception (VOIP) provides that "Nothing in this Act shall be construed to affect the imposition of tax on a charge for voice or similar service utilizing Internet Protocol or any successor protocol. This section shall not apply to any services that are incidental to Internet access, such as voice-capable e-mail or instant messaging."

Another exception is found in the definitions contained in the bill. It provides that "The term `tax on Internet access´ does not include a tax levied upon or measured by net income, capital stock, net worth, or property value." Thus, state and local governments can tax the internet access providers under this bill. They would then pass on this cost to their customers through higher prices. The net effect on consumers would be similar to a tax their internet access.

Reaction. Walter McCormick, P/CEO of U.S. Telecommunications Association (USTA), issued a statement. He wrote that the bill "will help to end unnecessary, burdensome taxes that limit consumer choice by forcing them to pay more for one high-speed Internet service than another." The USTA's membership includes phone companies the provide internet access by DSL technology.

Robert Sachs, P/CEO of the National Cable & Telecommunications Association (NCTA), issued a statement praising Senate passage of the bill. He wrote that "President Bush, and Senators John McCain, George Allen and Ron Wyden deserve enormous credit for their efforts to preserve a 'tax-free environment' in which cable and other broadband providers can continue to invest billions of dollars in order to bring affordable high-speed Internet service to all Americans."

Robert Holleyman, P/CEO of the Business Software Alliance (BSA), wrote in a statement that "The full promise of the Internet and Web innovation cannot be achieved without ensuring access to the Internet is unencumbered by taxes that will undoubtedly increase costs to consumers." He added that "While the Senate bill temporarily extends the moratorium, we strongly encourage the House and Senate conferees to agree on a permanent ban."

Harris Miller, Information Technology Association of America (ITAA), stated in a release that "Additional, burdensome taxes on Internet access would only stifle growth in the technology sector, when our national goal should be to expand the educational and economic opportunities that come with access to the Internet. As the high tech sector begins to recover, we're seeing increased investment in IT products and services as well as the creation of new jobs. Additional taxes would hamper investment in broadband and only stifle the recovery that is already underway."

House Bill. The House passed its version this bill on September 17, 2003. The House bill is HR 49, and is also titled the "Internet Tax Nondiscrimination Act".

The key language of HR 49 amends the ITFA to read as follows:

"(a) MORATORIUM- No State or political subdivision thereof may impose any of the following taxes:
(1) Taxes on Internet access.
(2) Multiple or discriminatory taxes on electronic commerce."

The parallels the Senate bill. However, there are numerous significant differences. First, the House bill eliminates grandfathering altogether. Second, the House bill makes the moratorium permanent.

The House bill does not include any of the long list of exceptions contained in the Senate bill. That is, it makes no exceptions for universal service taxes or fees, E911 taxes or fees, or VOIP taxes or fees.

The House bill, like the Senate bill, contains language that clarifies that DSL service is covered. However, it uses different language.

The next steps are appointment of members of a conference committee, which would work out the differences between the two bills, followed by House and Senate passage of that conference report, and finally, signature by the President.

More Background on Senate Bill. See, story titled "Senate Commerce Committee Approves Bill to Extend Internet Tax Moratorium" in TLJ Daily E-Mail Alert No. 709, August 1, 2003; story titled "Sen. Alexander Introduces Bill Regarding Internet Tax Moratorium" in TLJ Daily E-Mail Alert No. 838, February 17, 2004; and story titled "Senators Write in Opposition to State Taxation of Internet Access" in TLJ Daily E-Mail Alert No. 845, February 27, 2004.

Background on House Bill. Rep. Cox introduced the bill on HR 49, the "Internet Tax Nondiscrimination Act", on January 7, 2003. See, story titled "Rep. Cox and Sen. Wyden Introduce Bill to Make Permanent Net Tax Ban" in TLJ Daily E-Mail Alert No. 580, January 10, 2003. The House Judiciary Committee's Subcommittee on Commercial and Administrative Law held a hearing on April 1, 2003. See, story titled "House Subcommittee Holds Hearing on Bill to Make Internet Tax Moratorium Permanent" in TLJ Daily E-Mail Alert No. 635, April 2, 2003. The Subcommittee approved the bill on May 22, 2003. The full Committee amended and approved the bill on July 16, 2003. See, story titled "House Judiciary Committee Approves Internet Tax Bill", also published in TLJ Daily E-Mail Alert No. 700, July 17, 2003. The full House passed the bill on September 17, 2003.

Google Files IPO Registration Statement with SEC

4/29. Google Inc. filed a Form S-1 registration statement [171 pages in PDF] with the Securities and Exchange Commission (SEC) for a proposed initial public offering (IPO) of its Class A common stock.

The statement provides that there will be a dual class voting structure, which will leave the founders, Larry Page and Sergey Brin, in control of the company. It addresses the competitive threats that Google faces from other companies that may develop advanced search capabilities, such as from Microsoft and Yahoo. It addresses technological threats, such and index spamming and click through fraud. Finally, it addresses a number of legal and regulatory issues that could affect Google, such as the EU's privacy directive and the FASB's March 31 Exposure Draft which proposes to require the expensing of employee stock options.

Voting Structure. The statement reveals that Google "will have two classes of authorized common stock, Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to ten votes per share and is convertible at any time into one share of Class A common stock."

The registration statement offers a detailed explanation for this arrangement. It argues that "the standard structure of public ownership may jeopardize the independence and focused objectivity that have been most important in Google's past success and that we consider most fundamental for its future. Therefore, we have designed a corporate structure that will protect Google’s ability to innovate and retain its most distinctive characteristics."

It adds that "outside pressures too often tempt companies to sacrifice long-term opportunities to meet quarterly market expectations".

It continues that this structure "will make it harder for outside parties to take over or influence Google. This structure will also make it easier for our management team to follow the long term, innovative approach emphasized earlier."

Finally, it states that "While this structure is unusual for technology companies, it is common in the media business and has had a profound importance there. The New York Times Company, the Washington Post Company and Dow Jones, the publisher of The Wall Street Journal, all have similar dual class ownership structures."

As for management, the statement says that Page, Brin, and CEO Eric Schmidt now "run Google as a triumvirate".

Competitive Threats. The registration statement discusses the competitive threats that Google faces, particularly from Microsoft and Yahoo.

It states that "We face formidable competition in every aspect of our business, and particularly from other companies that seek to connect people with information on the web and provide them with relevant advertising. Currently, we consider our primary competitors to be Microsoft and Yahoo. Microsoft has announced plans to develop a new web search technology that may make web search a more integrated part of the Windows operating system. We expect that Microsoft will increasingly use its financial and engineering resources to compete with us. Yahoo has become an increasingly significant competitor, having acquired Overture Services, which offers Internet advertising solutions that compete with our AdWords and AdSense programs, as well as the Inktomi, AltaVista and AllTheWeb search engines."

The statement also points out that both Microsoft and Yahoo have more employees, longer operating histories, and more established relationships with customers. It also points out that Microsoft has more money.

Technological Threats. The registration statement also reviews various technologies that pose a threat to Google that are of a malicious and/or fraudulent nature.

These include index spamming (which attempts to manipulate Google's linking based ranking of results), click-through fraud (which attempts to create that appearance that more users are clicking on ads in the Google web site), and "malicious applications that make changes to our users' computers and interfere with the Google experience".

The registration statement also identifies a potential practice that would interfere with Google's search technology. It states that "An increasing amount of information on the Internet is provided in proprietary document formats such as Microsoft Word. The providers of the software application used to create these documents could engineer the document format to prevent or interfere with our ability to access the document contents with our search technology. This would mean that the document contents would not be included in our search results even if the contents were directly relevant to a search. These types of activities could assist our competitors or diminish the value of our search results. The software providers may also seek to require us to pay them royalties in exchange for giving us the ability to search documents in their format. If the software provider also competes with us in the search business, they may give their search technology a preferential ability to search documents in their proprietary format."

The registration statement does not address whether or not any of these hypothetical practices would be actionable, whether or not circumvention of such technologies by Google would be actionable by companies such as Microsoft, or whether or not affirmative defenses to such actions would exist.

Stock Options Accounting. Google states that "There has been ongoing public debate whether stock options granted to employees should be treated as a compensation expense and, if so, how to properly value such charges. On March 31, 2004, the Financial Accounting Standard Board (FASB) issued an Exposure Draft, Share-Based Payment: an amendment of FASB statements No. 123 and 95, which would require a company to recognize, as an expense, the fair value of stock options and other stock-based compensation to employees beginning in 2005 and subsequent reporting periods."

See, FASB's Exposure Draft and story titled "FASB Proposes Expensing of Stock Options" in TLJ Daily E-Mail Alert No. 867, April 1, 2004.

The registration statement cautions that "If we elect or are required to record an expense for our stockbased compensation plans using the fair value method as described in the Exposure Draft, we could have significant and ongoing accounting charges."

Privacy. The registration statement discusses privacy regulation, and in particular, the EU privacy directive. It states that "We also face risks associated with international data protection. The interpretation and application of data protection laws in Europe and elsewhere are still uncertain and in flux. It is possible that these laws may be interpreted and applied in a manner that is inconsistent with our data practices. If so, in addition to the possibility of fines, this could result in an order requiring that we change our data practices, which in turn could have a material effect on our business."

The registration statement also addresses privacy in the context of its recently announced Gmail service. Although, the statement discusses this, not as a legal or regulatory issue, but rather as something that could harm the Google brand.

It states that "We are adding other powerful services such as Gmail that provides an efficient one gigabyte Gmail account for free. By releasing services for free, we hope to help bridge the digital divide."

It adds that "People have in the past expressed, and may in the future express, objections to aspects of our products. For example, people have raised privacy concerns relating to the ability of our recently announced Gmail email service to match relevant ads to the content of email messages. Some people have also reacted negatively to the fact that our search technology can be used to help people find hateful or derogatory information on the web. Aspects of our future products may raise similar public concerns. Publicity regarding such concerns could harm our brand."

See also, stories titled "Privacy Groups Request That Google Suspend Its New Free Gmail Service" in TLJ Daily E-Mail Alert No. 872, April 8, 2004, and "Google's New Free E-Mail Service Starts Privacy Debate" in TLJ Daily E-Mail Alert No. 870, April 6, 2004.

Other Legal and Regulatory Issues. The registration statement also covers other legal and regulatory issues. For example, it states that "Foreign, federal, state or local government regulation that could impede our ability to post ads for various industries". It also states that "Our ability to protect our intellectual property rights" could "affect our operating results".

EPIC Inquires About Use of Google Technologies by FBI

4/29. The Electronic Privacy Information Center (EPIC) submitted requests for records to the Federal Bureau of Investigation (FBI), and other federal law enforcement and intelligence agencies, pursuant to the Freedom of Information Act (FOIA), 5 U.S.C. § 552, regarding Google's new e-mail service, which it has named "G-mail". See, for example, request sent to the FBI.

The EPIC seeks information about "use of Google search technology for law enforcement and intelligence purposes". It also compares Gmail to the FBI's Carnivore.

The FOIA requires only federal agencies to produce information. The EPIC cannot compel Google to produce records through the FOIA process.

The EPIC requests "all records, including but not limited to correspondence, memoranda, reports, presentations, and legal opinions, concerning or involving communications between agency officials and representatives of Google Inc. regarding use of Google search technology for law enforcement and intelligence purposes, and particularly the possible use of Google's Gmail service for law enforcement and intelligence investigations."

The requests states that "Because Gmail combines tremendous storage capacity with search technology, the service could also analyze vast amounts of personal information on every Internet user who subscribes to the Gmail service or corresponds with a subscriber the Gmail service." Furthermore, "Gmail performs automated searches of users' e-mail for keywords upon which inferences are made. These inferences are then used to draw specific inference about the activities and interests of particular Internet users. This function is similar to that which the FBI's Internet data interception tool DCS/1000, formerly known as Carnivore, performs."

The request states that "We are interested to know whether any federal agency has considered the use of the Gmail service to further law enforcement investigations or intelligence gathering activities by, for example, targeting advertising to Internet users that could lead to the collection of evidence or intelligence by a federal agency."

The request elaborates that "there is a particular urgency for the public to obtain information about communications that agency officials have had with Google representatives about actual or potential use of Google's search technology and Gmail to pursue law enforcement and intelligence investigations. The government activity at issue here -- cooperating with one of the world's leading private purveyors of search technology for law enforcement and intelligence investigatory purposes -- raises serious privacy issues that will affect a significant portion of the public."

These FOIA requests are directed to federal agencies, not to Google. However, they also disparage Google's Gmail service by implication. Moreover, on April 7, 2004 the EPIC joined with others in writing a letter to Google urging it "to suspend the Gmail service until the privacy issues are adequately addressed". See, story titled "Privacy Groups Request That Google Suspend Its New Free Gmail Service" in TLJ Daily E-Mail Alert No. 872, April 8, 2004.

Also, Privacy International a group based in London, United Kingdom, submitted a complaint [13 pages in PDF] on April 19 to the European Commission, Canada, Australia, and regulatory agencies in 15 countries in Europe about Google's Gmail service.

On the other hand, Google has its defenders. On May 1 Clyde Wayne Crews of the Cato Institute wrote in an essay titled "Freedom to Choose Google's 'Gmail'" that "nothing is free: The Gmail tradeoff is that emails a user receives will be scanned by machine, and advertisements, based on trigger words, will appear within one's browser. The method is rather like the tailored ads that appear whenever one searches the Web, except that it responds to key words or phrases typed in the body of a message."

He also wrote that "The idea of government, which routinely and invades individual privacy, acting as a defender of email privacy, is preposterous. The Patriot Act gave the government enhanced ``trap and trace´´ capabilities of our private email. Granted, the inability to delete Gmail messages is worrisome, and Google may rethink this subpoena-friendly tilt toward Patriot Act-style invasiveness. But we need not ban Google's offering; we can simply use another email service-or ask Google to improve it."

Adam Thierer, also of the Cato Institute, was more blunt in a letter posted in Declan McCullagh's Politech in which he complained about the "lunacy from the privacy absolutists". He wrote, "What part of VOLUNTARY is it that these privacy fundamentalists do not understand? How many times and in how many ways must it be said: YOU DO NOT HAVE TO SIGN UP FOR THIS FREE SERVICE!"

However, he added that "If you're concerned about how government might co-opt this service for its own nefarious ends, that is not a Google problem, that is a Big Government problem. Let's work together to properly limit the surveillance powers of government instead of shutting down any new private service or technology that we feel the feds might have to chance to abuse."

Senate Judiciary Committee Approves Four Intellectual Property Bills

4/29. The Senate Judiciary Committee (SJC) unanimously approved, without amendment, four major bills affecting intellectual property: S 2192 (CREATE Act), HR 1561 (USPTO fee bill), S 2237 (PIRATE Act), and S 1932 (ART Act). The Committee held over S 1933 (EnFORCE Act).

Sen. Patrick Leahy (D-VT), the ranking Democrat on the SJC, stated that the SJC may make some changes to HR 1561 before consideration by the full Senate. Also, Sen. Orrin Hatch (R-UT) stated that some or all of these bills may be combined into a single bill. See, full story.

Representatives Write Ridge About Cyber Security

4/29. Leading members from both parties on the House Homeland Security Committee wrote a letter [2 pages in PDF] to Tom Ridge, the Secretary of Homeland Security, requesting information about the Department of Homeland Security's (DHS) implementation of the President’s February 2003 National Strategy to Secure Cyberspace, and requesting Ridge's views on the organization of the DHS's National Cybersecurity Division (NCSD).

The letter was signed by Rep. Chris Cox (R-CA), Chairman of the Committee, Rep. Jim Turner (D-TX), the ranking Democrat on the Committee, Rep. Mac Thornberry (R-TX), the Chairman the Subcommittee on Cybersecurity, Science & Research and Development, and Rep. Zoe Lofgren (D-CA), the ranking Democrat on the Subcommittee.

The letter states that "We request a detailed action or implementation plan that links the Department’s cyber program and budget needs to the National Strategy to Secure Cyberspace."

It also states that "We would appreciate receiving your views on both the effectiveness and organizational placement of the National Cybersecurity Division."

See also, story titled "Bush Administration Releases Final Cyber Security Plan" in TLJ Daily E-Mail Alert No. 605, February 17, 2003, and story titled "House Democrats Criticize Bush Administration on Cyber Security and Use of IT" in TLJ Daily E-Mail Alert No. 818, January 19, 2004.

House Subcommittee to Hold Hearing on Digital Fair Use Bill

4/29. The House Commerce Committee's Subcommittee on Commerce, Trade, and Consumer Protection announced that it will hold a hearing on HR 107, the "Digital Media Consumers' Rights Act of 2003" on Wednesday, May 12.

Rep. Rick Boucher (D-VA) and Rep. John Doolittle (R-CA) introduced this bill on January 7, 2003, and an earlier version, HR 5544 (107th Congress), in late 2002. It would roll back the anti-circumvention provisions of the Digital Millennium Copyright Act (DMCA) by creating fair use exceptions to the bans on circumvention of technological measures to protect copyrighted works, and by providing an exception for scientific research into technological protection measures.

See, story titled "Reps. Boucher and Doolittle Introduce Digital Fair Use Bill" in TLJ Daily E-Mail Alert No. 582, January 14, 2003, and stories titled "Reps. Boucher and Doolittle Introduce Digital Media Consumer Rights Act" and "Summary of the Digital Media Consumer Rights Act" in TLJ Daily E-Mail Alert No. 532, October 4, 2002.

This is an intellectual property bill. It has been referred to both the House Judiciary Committee, which tends to support intellection property protections, and the House Commerce Committee, which often does not. The bill also contains a provision requiring that certain information be placed on the labels of music discs, and providing that a violation would constitute an unfair or deceptive trade practice within the meaning of the Federal Trade Commission Act. This serves as the basis for Commerce Committee jurisdiction.

9th Circuit Grants Rehearing in Case Regarding Personal Jurisdiction Over Internet Retailers

4/29. The U.S. Court of Appeals (9thCir) issued an order [PDF] the the case Gator.com v. L.L. Bean be reheard en banc. The three judge panel issued its opinion [16 pages in PDF] on September 2, 2003 holding that personal jurisdiction over an out of state defendant may be based upon its operation of a web site that engages in electronic commerce.

The three judge panel held that L.L.Bean (which is a corporation based in the state of Maine that sells clothing and related items to consumers by direct mail and over the internet) has substantial or continuous and systematic contacts with California sufficient to support a finding of general jurisdiction.

It wrote that "It is increasingly clear that modern businesses no longer require an actual physical presence in a state in order to engage in commercial activity there. With the advent of ``ecommerce,´´ businesses may set up shop, so to speak, without ever actually setting foot in the state where they intend to sell their wares. Our conceptions of jurisdiction must be flexible enough to respond to the realities of the modern marketplace." It added that "Businesses who structure their activities to take full advantage of the opportunities that virtual commerce offers can reasonably anticipate that these same activities will potentially subject them to suit in the locales that they have targeted."

It also distinguished L.L.Bean from some other smaller entities that engage in e-commerce, or merely operate a web site. It wrote that L.L.Bean is "a multi-million dollar company that concedes that its agents regularly do business around the country, including flying to California to meet with vendors. Nor does this case present issues whose disposition will rely on access to L.L. Bean's facilities or records. Moreover, the burden on Gator if it were forced to proceed in Maine would be at least equal to, if not more severe, than the burden faced by L.L. Bean."

The body of case law regarding personal jurisdiction over out of forum parties based upon internet activity is growing, but not consistent. The Supreme Court has yet to take a case in this area.

See also, story titled "9th Circuit Rules on Personal Jurisdiction Over Internet Retailers" in TLJ Daily E-Mail Alert No. 731, September 3, 2003.

This case is Gator.com Corp. v. L.L. Bean Inc., U.S. Court of Appeals for the 9th Circuit, App. Ct. No. 02-15035, an appeal from the U.S. District Court for the Northern District of California, Magistrate Judge Maria-Elena James presiding, D.C. No. CV-01-01126-MEJ.

FTC and DOJ Bring First CAN SPAM Act Cases

4/29. The Federal Trade Commission (FTC) filed a complaint [PDF] in U.S. District Court (NDIll) against several individuals (Daniel J. Lin, Mark M. Sadek, James Lin, and Christopher M. Chung) and their business (Phoenix Avatar). The complaint alleges that they engaged in the e-mail marketing of diet patches and herbal supplements.

This complaint alleges violation of the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (also known as the CAN-SPAM Act), which is codified at 15 U.S.C. § 7701, et seq., and the Federal Trade Commission Act.

Counts I and II allege violation of the FTCA for making false statements about the products being marketed. Counts III & IV allege violation of civil provisions of the CAN SPAM Act for sending spam with false header information, without disclosure that the content is advertising, without opt out notices, and without a valid physical postal address.

The FTC also sought, and obtained a Temporary Restraining Order [PDF]. See also, memorandum [PDF] in support of motion for TRO. This case is FTC v. Phoenix Avatar, U.S. District Court for the Northern District of Illinois, Case No. 04C 2897.

In addition, on April 23, the U.S. Attorneys Office for the Eastern District of Michigan filed a related criminal complaint [22 pages in PDF] in the U.S. District Court (EDMich) against these four individuals charging violation of the criminal provisions of the CAN SPAM Act, which are codified at 18 U.S.C. § 1037. This case is USA v. Daniel Lin, et al., U.S. District Court for the Eastern District of Michigan, D.C. No. 04-80383.

The FTC also filed a complaint [15 pages in PDF] on April 28 in U.S. District Court (NDIll) against Global Web Promotions Pty Ltd., Michael John Anthony Van Essen, and Lance Thomas Atkinson alleging civil violation of the FTCA and the CAN SPAM Act. This case is FTC v. Global Web Promotions, U.S. District Court for the Northern District of Illinois, D.C. No. 04C 3022.

The Congress passed S 877, the CAN-SPAM Act, late last year. On December 16, 2003, President Bush signed the bill. It became Public Law No. 108-187. This is the first criminal prosecution under the CAN SPAM Act.

Jeffrey Collins, the U.S. Attorney for the Eastern District of Michigan, stated in a release on April 29 that "This case marks the Nation's first criminal prosecution under the Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act, which went into effect on January 1, 2004 ... The cyber scam artists who exploit the Internet for commercial gain should take notice. Federal law now makes it a felony to use falsehood and deception to hide the origin of the spam messages hawking your fraudulent wares. Thanks to the great detective work of the Federal Trade Commission, the Postal Inspection Service, and the cooperation of Internet Service Providers such as Microsoft and AOL, as well as other companies and private citizens, we do have the capacity to track unlawful spammers down and bring them to justice."

More Capitol Hill News

4/29. The House Commerce Committee's Subcommittee on Commerce, Trade, and Consumer Protection held a hearing titled "Spyware: What You Don't Know Can Hurt You". See, prepared testimony of Mozelle Thompson (Federal Trade Commission), prepared testimony of Howard Beales (Director, Bureau of Consumer Protection, FTC), prepared testimony of Ari Schwartz (Center for Democracy and Technology), prepared testimony of Dave Baker (EarthLink), and prepared testimony of Jeffrey Friedberg (Microsoft).

4/29 The Senate Appropriations Committee's Subcommittee on Commerce, Justice, State, and the Judiciary held a hearing on intellectual property issues. See, opening statement of Sen. Ted Stevens (R-AK), the Chairman of the full Committee, and opening statement of Sen. Judd Gregg (R-NH), the Chairman of the CJS Subcommittee. See, also prepared testimony of witnesses: Jack Valenti, CEO of the Motion Picture Association of America (MPAA), Doug Lowenstein, President of the Entertainment Software Alliance (ESA), Robert Holleyman, CEO of the Business Software Alliance (BSA), Mitch Bainwol, CEO of the Recording Industry Association of America (RIAA).

People and Appointments

4/29. Sen. Orrin Hatch (R-UT), the Chairman of the Senate Judiciary Committee, spoke about the nomination of Jonathan Liebowitz to be a Commissioner of the Federal Trade Commission (FTC) at a Committee meeting. Sen. Hatch praised Liebowitz, who was previously a long time Judiciary Committee staff assistant to Sen. Herb Kohl (D-WI).

4/29. Joe Pouliot was named Communications Director for the House Science Committee. He has been the acting Communications Director since March.

4/29. David Mayorga was named Administrative Clerk of the House Science Committee. He has been, and remains, Special Assistant to the Chief of Staff of the Committee.

4/29. Hector Ruiz, the P/CEO of AMD, was named Chairman of the Board of AMD. He replaces W.J. Sanders, who is retiring from the Board. In addition, Paulett Eberhart was elected to the Board of Directors, replacing Friedrich Baur. See, AMD release.

4/29. The Intellectual Property Owners Association (IPO) announced two new members of its Board of Directors: Todd Dickinson, the chief IP counsel at General Electric Co., and a former Director of the U.S. Patent and Trademark Office (USPTO), and Noreen Krall, chief IP counsel at Sun Microsystems, Inc.

More News

4/29. Phillip Bond, the Under Secretary for Technology at the Department of Commerce, gave a speech titled "We Need a Velvet Revolution in Learning" at the Symposium on Enhancing Education Through Technology in Pasadena, California.

4/29. The Department of Commerce's (DOC) Bureau of Industry and Security (BIS) published a notice in the Federal Register summarizing its final rule revising items subject to export controls. See, Federal Register, April 29, 2004, Vol. 69, No. 83, at Pages 23597 - 23615.

Comcast Withdraws Proposal to Acquire Disney

4/28. Comcast announced that "it has withdrawn its proposal to merge with Disney, effective immediately." See, Comcast release. Brian Roberts, P/CEO of Comcast, stated in this release that "We have always been disciplined in our approach to acquisitions. Being disciplined means knowing when it is time to walk away. That time is now. ... It has become clear that there is no interest on the part of Disney's management and Board in putting Comcast and Disney together ... As a result, we have withdrawn our offer."

Tech Companies Seek Senate Passage of USPTO Fee Bill

4/28. 102 companies and 32 groups, many of which are involved in information technology, sent a letter [3 pages in PDF] to members of the Senate urging them to support HR 1561, the "United States Patent and Trademark Fee Modernization Act of 2004".  The Senate Judiciary Committee is scheduled to mark up the bill on Thursday, April 29, along with several other intellectual property related bills.

The bill contains increases in user fees that implement the U.S. Patent and Trademark Office's (USPTO) 21st Century Strategic Plan. It also provides for U.S. outsourcing of patent searches, and an end to the diversion of user fees to subsidize other government programs.

The letter states that "Patents and trademarks are the currency that drives America’s high-tech economy. The PTO serves a critical role in the promotion and development of innovation and commercial activity in our country. Yet issues of patent quality affect the value of these assets and continue to result in substantial, expensive litigation and uncertainty over legal rights in new products. Moreover, the time it takes to receive a patent is skyrocketing -- according to the PTO, patent pendency will rise dramatically to 45 months by 2009. To address this crisis in quality and pendency, the PTO in its 21st Century Strategic Plan has proposed sweeping changes that we support, but the PTO lacks the funds to implement the plan."

The House passed this bill on March 3, 2004 by a vote of 379-28. See, Roll Call No. 38. See also, story titled "House Passes USPTO Fee Bill" in TLJ Daily E-Mail Alert No. 849, March 4, 2004.

Lawsuit Challenges Constitutionality of Law Allowing FBI to Obtain Records from Electronic Communication Service Providers

4/28. The American Civil Liberties Union (ACLU) published in its web site a complaint [14 page PDF scan] that it filed in U.S. District Court (SDNY) against Attorney General John Ashcroft, FBI Director Robert Mueller, and FBI Senior Counsel Marion Bowman.

The complaint is heavily redacted. Moreover, while material redacted from pleadings typically includes factual allegations, and the products of pretrial discovery, the ACLU has redacted text that constitutes a cause of action and relief sought. In addition, the name and description of the second plaintiff is redacted. The complaint even redacts part of the paragraph in which the ACLU describes itself. Hence, the action cannot be fully characterized on the basis of this redacted complaint.

The complaint does, however, contain an unredacted cause of action. The unredacted material states that the ACLU challenges the constitutionality of 18 U.S.C. § 2709, a section that was amended by the USA PATRIOT Act in late 2001.

Section 2709, which was originally enacted as part of the Electronic Communications Privacy Act of 1986 (ECPA), concerns the national security authority of the President (and his agents) to obtain records from a "wire or electronic communication service provider" in "an authorized investigation to protect against international terrorism or clandestine intelligence activities". These requests are also sometimes referred to as National Security Letters or NSLs.

This authority does not concern wiretapping, or seizure of communications, of the targets of investigations. Rather, it concerns obtaining records from the service provider, such as subscriber information, including names, addresses, telephone numbers, e-mail addresses, and credit or debit card information.

Since these NSLs are based upon national security authority, there is no requirement that prior judicial approval be obtained. This serves as a basis for the ACLU's legal challenge.

See, full story.

Congressional Committees Consider Extension of Satellite Home Viewer Improvement Act of 1999

4/28. The House Commerce Committee's Subcommittee on Telecommunications and the Internet amended and approved a committee print of a bill to reauthorize the Satellite Home Viewer Improvement Act (SHIVA). The SHIVA authorizes satellite television carriers to provide more television broadcast programming to subscribers by allowing the transmission of local broadcast signals into local markets. See, 17 U.S.C. § 122. The SHIVA also extended the authority for satellite carriers to provide distant or national broadcast programming to subscribers. See, 17 U.S.C. § 119.

Parts of the SHIVA will expire on December 31, 2004, if not extended. These include the statutory copyright license to satellite operators allowing them to provide signals of distant network affiliates to unserved customers, the retransmission consent exemption that allows satellite operators to retransmit distant network signals to an unserved household, and the grandfathering of certain distant signal subscribers.

The Telecommunications Subcommittee held a hearing on this issue on April 1. See, prepared testimony of witnesses: Eloise Gore (Federal Communications Commission), David Moskowitz (Echostar Communications), Eddy Hartenstein (DirecTV), Robert Lee (National Association of Broadcasters), and Frank Wright (National Religious Broadcasters).

On April 28, the Subcommittee approved the committee print [22 pages in PDF] of a bill to be titled the "Satellite Home Viewer Extension and Reauthorization Act of 2004". The Subcommittee also approved two amendments.

The first amendment [1 page in PDF], offered by Rep. Fred Upton (R-MI), the Chairman of the Subcommittee, would, among other things, allow grandfathered Grade B subscribers who have both distant and local signals at the date of enactment to keep their distant signal or their local signal, but not both.

The second amendment [2 pages in PDF], offered by Rep. Ed Markey (D-MA), the ranking Democrat on the Subcommittee, would amend 47 U.S.C. § 338 to extend privacy protections to satellite service subscribers. It provides that "A satellite carrier shall provide to each subscriber to the transmission service of such satellite carrier the same protections for the privacy rights of such subscriber that a cable operator is required to provide to a subscriber for cable service under section 631."

The full Committee has yet to approve the committee print.

Also, the House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property will meet to markup a committee print of the "Satellite Home Viewer Extension and Reauthorization Act of 2004" on Thursday, May 6, 2004.

The Senate Commerce Committee will hold a hearing on reauthorization of the Satellite Home Viewers Improvement Act of 1999 on Tuesday morning, May 4, 2004. The witnesses will be Charlie Ergen (Ch/CEO of Echostar), Jim Yager (CEO of Barrington Broadcasting Company), Eddy Hartenstein (Ch/CEO of DirecTV), Araceli De Leon (Telemundo Communications), and Gigi Sohn (Public Knowledge).

On January 21, 2004, Sen. Orrin Hatch (R-UT), Sen. Patrick Leahy (D-VT), Sen. Mike DeWine (R-OH), and Sen. Herb Kohl (D-WI) introduced S 2013, the "Satellite Home Viewer Extension Act of 2004'". This is a short and simple bill that would amend 17 U.S.C. § 119 to provide that "This section shall cease to be effective after December 31, 2009". It would also delete the reference to termination on December 31, 2004.

6th Circuit Rules on Compensation for ISP Bound Traffic

4/28. The U.S. Court of Appeals (6thCir) issued its opinion in Verizon North v. Strand, a case involving compensation for ISP bound traffic.

Verizon is an incumbent local exchange carrier (ILEC). Coast to Coast Telecommunications (Coast) (which is now Allegiance Telecom) was a competitive local exchange carrier that served ISPs. Coast had no interconnection agreement with Verizon. Coast claimed that Verizon was responsible for the costs of terminating ISP bound traffic originating from Verizon customers. Coast filed a tariff with the MPSC regarding reciprocal compensation charges.

When Coast attempted to collect from Verizon, Verizon refused to pay. Coast then filed an application with the MPSC, which held that interconnection between two local exchange carriers can be accomplished by interconnection agreement, or by tariff. And, the MPSC held that Verizon had to pay Coast for the termination charges.

Verizon filed a complaint in U.S. District Court (EDMich) against the MPSC Commissioners, the MPSC and Coast, seeking declaratory and injunctive relief. The District Court vacated the MPSC order. This appeal followed.

The Appeals Court affirmed the District Court. It held that the "MPSC order is inconsistent with the negotiation and arbitration provisions of § 252 and thus is preempted" by the Communications Act.

This case is Verizon North, Inc. v. John Strand, Robert Nelson, and David Svanda, in their official capacities as Commissioners of the Michigan Public Service Commission, and Coast to Coast Telecommunications, Inc., App. Ct. No. 02-2322, an appeal from the U.S. District Court for the Eastern District of Michigan, at Detroit, D.C. No. 00-71442, Judge George Woods presiding.

People and Appointments

4/28. Margaret Egler was named Regional Counsel for the Federal Communications Commission's (FCC) Enforcement Bureau's (EB) western region field office. Diane Hsu was named Regional Counsel for the south central region. Sharon Webber was named Regional Counsel for the northeast region. These are newly created positions. Egler was previously Deputy Bureau Chief for Policy in the FCC's Consumer & Governmental Affairs Bureau. Hsu was previously Deputy Division Chief of the Wireline Competition Bureau's (WCB) Telecommunications Access Policy Division (TAPD). Webber was Deputy Division Chief in the WCB's TAPD. See,. FCC release.

4/28. Terri Fish joined the Electronic Industries Alliance (EIA) as Director of Corporate and Government Affairs. She previously worked as a legislative affairs specialist on technology and telecommunications issues for Commerce Secretary Don Evans. She has also previously worked for the House Science Committee, Rep. Curt Weldon (R-PA) and Rep. John Boehner (R-OH). See, release.

More News

4/28. The European Commission released a draft regulation [16 pages in PDF] implementing the EC's January 20, 2004 merger regulation [22 pages in PDF]. The EC releases this for comment purposes. Comments are due by May 26, 2004. The merger regulation is titled "COUNCIL REGULATION (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation)".

4/28. The Recording Industry Association of America (RIAA) announced that it has filed complaints, on behalf of its member companies, in U.S. District Courts against an additional 477 persons, alleging copyright infringement in connection with the distribution of music files over peer to peer networks. The RIAA also announced that some of the individuals targeted by these actions are using university networks. See, RIAA release.

4/28. The U.S. District Court (NDCal) issued its First Supplemental Case Management Order [3 pages in PDF] in U.S. v. Oracle.

4/28. Rep. Mark Green (R-WI), Rep. Phil English (R-PA), and Rep. Cass Ballenger (R-NC) introduced HRes 609. This resolution states that it is the sense of the House that if,
  "(1) nationals of a foreign country are violating copyrights, patents, or trademarks of persons under the laws of the United States, and
  (2) the government of that foreign country is not using its best efforts to end such violations, to respect those copyrights, patents, and trademarks, and to enforce internationally recognized laws and rules relating to intellectual property,
  then the United States Government should take steps to prohibit the importation of products or services of those nationals until the executive branch can certify to the Congress that those foreign nationals have ceased violating the copyrights, patents, and trademarks of persons under the laws of the United States, and that foreign country is using its best efforts to end such violations, to respect those copyrights, patents, and trademarks, and to enforce internationally recognized laws and rules relating to intellectual property."
This resolution was referred to the House Ways and Means Committee.

President Bush Advocates Conversion to Electronic Medical Records

4/27. President Bush gave a speech in Baltimore, Maryland in which he advocated the use of electronic records in the health care industry. He also issued an executive order regarding "the development and nationwide implementation of an interoperable health information technology infrastructure".

President Bush continued his now ten day old series of speeches on technology related issues. First, he gave a series of speeches in which he advocated extending the electronic surveillance provisions of the USA PATRIOT Act. Then, on Monday, April 26, he gave a speech in which he advocated universal and affordable access to broadband by 2007, a ban on broadband access taxes, a permanent research and development tax credit, federal spending on research and education, easier access to federal land for fiberoptic cables and transmission towers, and conversion to electronic medical records. On Tuesday, he focused on the subject of electronic records in the health care industry.

Bush stated that "the health care industry is missing an opportunity, if patients, in order to make sure they get quality care, have to carry files from one specialist to the next. It's like IT, Information Technology, hasn't shown up in health care yet."

He continued that "We're here to talk about how to make sure the government helps the health care industry become modern in order to enhance the quality of service, in order to reduce the cost of medicine, in order to make sure the patients, the customer is the center of the health care decision-making process."

Bush also issued an executive order regarding "the development and nationwide implementation of an interoperable health information technology infrastructure".

This order provides that the Secretary of Health and Human Services shall establish the position of "National Health Information Technology Coordinator".

It elaborates that "the work of the National Coordinator shall be consistent with a vision of developing a nationwide interoperable health information technology infrastructure that ... Ensures that appropriate information to guide medical decisions is available at the time and place of care; ... Improves health care quality, reduces medical errors, and advances the delivery of appropriate, evidence-based medical care; ... Reduces health care costs resulting from inefficiency, medical errors, inappropriate care, and incomplete information ..."

The order also provides that this new office shall "develop, maintain, and direct the implementation of a strategic plan to guide the nationwide implementation of interoperable health information technology in both the public and private health care sectors ..."

Bush also used this speech in Baltimore to review some of the points he has made in recent speeches regarding making broadband access widely available. He said that "if we want to stay competitive and innovative, that we've got to have broadband in every household in America by the year 2007. And there's way to do that with the government having to provide all the capital. We ought not to tax access to broadband. If you want something to flourish, don't tax it."

He also said that "we've got to make sure that regulatory policy in Washington is conducive for the spread of broadband. For example, one of the things that's probably going to need to be done is they need to build towers on federal lands in order for over-the-air internet services to work out into the remote regions of our country. They don't need a bunch of paperwork and hassle in order to build a tower on federal land."

Bush Addresses Privacy of Electronic Medical Records

4/27. President Bush also discussed privacy in the context of electronic medical records in his speech in Baltimore, Maryland. He said that "the federal government has got to make sure the privacy rules are strong. You're going to hear us talk about medical -- electronic medical records. And that's exciting. But it's not so exciting if you're a patient who thinks somebody could snoop on your records, to put it bluntly."

He continued that "there's a lot of people in America who say, good, I want there to be good information technology in the health care field, I just don't want somebody looking at my records unless I give them permission to do so. And I fully understand that. And your records are private, if that's the way you want them to be. But there's a way to address this, the privacy issue."

Bush, however, did not explain his statement that "there's a way to address this".

The Department of Health and Human Services (DHHS) has promulgated a rule, pursuant to its authority under the Health Insurance Portability and Accountability Act (HIPAA), to protect the privacy of patients. See, the DHHS's web page titled "Office for Civil Rights -- HIPAA".

Tommy Thompson, the Secretary of Health and Human Services, accompanied President Bush on the stage at this speech in Baltimore. Bush praised Thompson.

President Bush's executive order of April 27 provides for a new "National Health Information Technology Coordinator" at the DHHS, which will be responsible, among other things, for ensuring "that patients' individually identifiable health information is secure and protected."

This order also provides that that this new office will develop a "strategic plan to guide the nationwide implementation of interoperable health information technology", and that this plan will "Address privacy and security issues related to interoperable health information technology and recommend methods to ensure appropriate authorization, authentication, and encryption of data for transmission over the Internet".

For more information on medical records privacy, see the Center for Democracy and Technology's (CDT) web page titled "Medical Records Privacy", the Electronic Privacy Information Center's (EPIC) web page titled "Medical Privacy", and the Privacy Rights Clearinghouse's (PRC) web page titled "Medical Records Privacy".

Also, Privacilla.org released a report earlier this month titled "Health Privacy in the Hands of Government: The HIPAA Privacy Regulation -- Troubled Process, Troubling Results". The report argues that electronic medical records, maintained in interoperable formats, pose a threat to consumer privacy, and that a single federal regulation promulgated by the DHHS is an expensive and ineffective way to attempt to protect consumer privacy.

This report states that "Health information in paper files, or in electronic formats that are not interoperable, is relatively protected because it can not be passed willy-nilly among different users on different computer systems."

It continues that "One of the goals of the broader HIPAA law was to eliminate the inefficiency created by incompatible electronic formats. The ``Electronic Transactions and Code Sets´´ regulation created standards for the content and format of common health care transactions and named standards-maintenance organizations to keep them updated. In seeking to create efficiency, it began the elimination of practical obscurity in health records. This increased the threat to privacy and the specter of combined, poorly secured databases of Americans’ health information."

It states that "The final HIPAA privacy regulation contains a variety of crisscrossing and overlapping policies, some of which even conflict with privacy. Overall, it reduces consumers' power to demand privacy from health care providers on the terms they want, replacing consumer power with a uniform federal regulatory regime."

This report argues that a major source of the medical records privacy problem is "the persistence and continuing growth of third-party payers in the health care market" -- employer provided health insurance and government health insurance programs such as Medicare and Medicaid, that stand between patients and doctors.

The Privacilla.org report explains that "the average corporate health plan is relatively generous" and that "many workers are almost fully insulated from the cost of their health care". Similarly, "patients without private health insurance are often covered by government health insurance such as Medicare or Medicaid. These people also pay only a portion of the actual costs of the medical resources they use".

The consequence, the report argues, its that "In both the employer- and government-provided health insurance contexts, the patient is not the customer of the doctor or hospital. Rather, the patient is the beneficiary of an arrangement by the government or between the employer and the insurer." And as a result, "As health care costs have continued to spiral upward, both government and employer-sponsored plans have had to become stingier about what services they cover. Without the discipline that consumers show with their own dollars ... plans must increasingly review whether patients are seeking appropriate care. To do this, they must investigate the medical conditions, treatments, and prognoses of individual patients. They must use patient information to study the cost-efficacy of treatments." And this, Privacilla.org concludes, "opens up reams and reams of otherwise private health information".

Senate Passes Bill Allowing Delay in INTELSAT IPO

4/27. The Senate passed S 2315 by unanimous consent, without debate. See, Congressional Record, April 27, 2004, at Page S4443. This is a short and untitled bill to amend the Open-Market Reorganization for the Betterment of International Telecommunications (ORBIT) Act to extend the deadline for INTELSAT's initial public offering (IPO) from June 30, 2004 to December 31, 2005.

Sen. Conrad Burns (R-MT) introduced this non-controversial bill on April 8, 2004. See, story titled "Sen. Burns Introduces Bill to Allow Delay in INTELSAT IPO" in TLJ Daily E-Mail Alert No. 874, April 12, 2004.

The ORBIT Act mandates the privatization of INTELSAT, which has already occurred. The Act also sets a deadline of December 31, 2002 for an initial public offering of stock in INTELSAT. That deadline has already been extended. Sen. Burns now seeks a further extension.

Sen. Burns stated at the time that he introduced the bill that "the market is simply not conducive for a successful IPO".

More News

4/27. The Federal Communications Commission's (FCC) hosted the first day of a two day conference titled "Enhanced 911 Coordination Initiative". FCC Chairman Michael Powell spoke. He briefly referenced voice over internet protocol (VOIP). He said that "As was discussed at the Commission’s IP Solutions Summit last month, the agreement between NENA and the Voice On the Net (VON) Coalition on how voice over IP providers will deliver location information to PSAPs exemplifies what can be achieved from public/private partnerships. While the Commission grapples with this issue, it is encouraging to know that consumers are being provided some basic level of E911 capability for VoIP services." See, text of speech.

4/27. Rep. Judy Biggert (R-IL) introduced HR 4218, the "High Performance Computing Revitalization Act of 2004". The bill was referred to the House Science Committee, which scheduled, and then postponed, a hearing on the bill. The hearing had been set for April 29. It has not yet been rescheduled. Rep. Biggert stated in the House on April 27 that this bill "will ensure that America remains a leader in the development and use of supercomputers". She elaborated that "The original legislation that my bill amends, the High Performance Computing Act of 1991, gave rise to an interagency planning process that was initially highly successful. Unfortunately, that planning process has lost the vitality it had in its early years. Congress must find a way to reinvigorate the interagency process. My bill does so by requiring the Director of the Office of Science and Technology Policy at the White House to develop and maintain a research, development and deployment roadmap for the provision of high-performance computing systems for use by the research community in the United States." See, Congressional Record, April 27, 2004, at Pages H2381-2.

Bush Addresses Broadband Access Taxes, Research and Development, and Conversion to Electronic Medical Records

4/26. President Bush gave a speech in Minneapolis, Minnesota to the annual convention of the American Association of Community Colleges. He addressed many technology related topics.

Summary. Bush spoke about the importance of innovation to the U.S. economy. To promote and incent innovation he advocated making the research and development tax credit permanent. He also advocated federal spending on research and education. However, he said nothing about incenting innovation through copyright, patent and other intellectual property rights.

He also spoke about the importance of promoting broadband deployment. He said that he wants to see multiple providers, affordable service, and broadband "spread to all corners of the country". To promote broadband he advocated banning taxes on broadband access. He also said that the federal government must increase access to federal land for fiberoptic cables and transmission towers (but he said nothing about obstacles to broadband deployment posed by local governmental entities that control access to rights of way).

Bush also advocated setting standards for broadband over powerline (which is the subject of a Federal Communications Commission (FCC) proceeding), and providing more spectrum for wireless broadband. He also expressed his support for the FCC, and for FCC Chairman Michael Powell in particular.

Bush also proposed converting the medical records system from paper to electronic files, and stated that the federal government is setting standards for electronic records.

Finally, he promoted community colleges, to train workers for jobs in new technologies. And, he opposed isolationist trade policies.

See, full story.

Senate Begins Consideration of Internet Tax Non-Discrimination Act

4/26. The Senate voted 74-11 for a motion to invoke cloture on the motion to proceed to consider to S 150, the "Internet Tax Non-discrimination Act of 2003", a bill to extend that ban on internet access taxes. See, Roll Call No. 71. See also,

The original Internet Tax Freedom Act (ITFA) imposed a temporary ban on taxes on internet access, and multiple or discriminatory taxes on e-commerce, subject to a grandfather clause. It expired in 2001. The Congress passed the Internet Non-Discrimination Act (INDA) in late 2001. It extended the ban of the ITFA through November 1, 2003. This extension has expired.

In the current Congress, the House version of the extension bill, which is again titled the "Internet Non-Discrimination Act" makes the ban of the ITFA permanent. It also eliminates the grandfather clause. Finally, it provides that the moratorium applies to telecommunications services, "to the extent such services are used to provide Internet access". The House has passed this bill.

In the current Congress, the Senate version of the INDA (S 150) that was passed by the Senate Commerce Committee makes the ban of the ITFA permanent, sunsets the grandfather language of the ITFA after October 1, 2006, provides that the moratorium applies to telecommunications services "to the extent such services are used to provide Internet access", and adds an exemption for any taxes imposed to fund universal service subsidies.

Sen. Lamar Alexander (R-TN) was one of the eleven Senators to vote against moving forward with consideration of S 150. On February 12, 2004 he and others introduced S 2084, the "Internet Tax Ban Extension and Improvement Act". The title of the bill is not descriptive of its content. It would nominally extend the Internet Tax Freedom Act through November 1, 2005. However, it would also allow a range of new taxes that could be imposed by state and local governments.

President Bush gave a speech in Minneapolis, Minnesota on April 26. He stated that "Broadband technology must be affordable. In order to make sure it gets spread to all corners of the country, it must be affordable. We must not tax broadband access. If you want broadband access throughout the society, Congress must ban taxes on access."

Adam Thierer of the Cato Institute stated in a release on April 26 that "If Congress fails to renew the Internet Access Tax moratorium, it could open the floodgates of state and local taxation of online services and activities. We should not let state and local government turn this global medium into their latest cash cow."

More Background on Senate Bill. See, story titled "Senate Commerce Committee Approves Bill to Extend Internet Tax Moratorium" in TLJ Daily E-Mail Alert No. 709, August 1, 2003; story titled "Sen. Alexander Introduces Bill Regarding Internet Tax Moratorium" in TLJ Daily E-Mail Alert No. 838, February 17, 2004; and story titled "Senators Write in Opposition to State Taxation of Internet Access" in TLJ Daily E-Mail Alert No. 845, February 27, 2004.

Background on House Bill. Rep. Cox introduced the bill on HR 49, the "Internet Tax Nondiscrimination Act", on January 7, 2003. See, story titled "Rep. Cox and Sen. Wyden Introduce Bill to Make Permanent Net Tax Ban" in TLJ Daily E-Mail Alert No. 580, January 10, 2003. The House Judiciary Committee's Subcommittee on Commercial and Administrative Law held a hearing on April 1, 2003. See, story titled "House Subcommittee Holds Hearing on Bill to Make Internet Tax Moratorium Permanent" in TLJ Daily E-Mail Alert No. 635, April 2, 2003. The Subcommittee approved the bill on May 22, 2003. The full Committee amended and approved the bill on July 16, 2003. See, story titled "House Judiciary Committee Approves Internet Tax Bill", also published in TLJ Daily E-Mail Alert No. 700, July 17, 2003. The full House passed the bill on September 17, 2003.

Supreme Court Denies Certiorari in Telecom Cases

2/26. On April 26, the Supreme Court denied certiorari in North Carolina Pay Phone Association v. FCC, a case involving whether the Federal Communications Commission (FCC) has authority under 47 U.S.C. § 276 to regulate the rate charged for a pay telephone line provided by a local exchange carrier (LEC) that is not a Bell operating company (BOC).

The FCC issued an order in which it concluded that Section 276 does not explicitly forbid non-BOC LECs from discriminating. The U.S. Court of Appeals (DCCir) issued its opinion [17 pages in PDF] affirming the FCC's order on July 11, 2003. See also, story titled "DC Circuit Upholds FCC Payphone Order" in TLJ Daily E-Mail Alert No. 697, July 14, 2004.

The North Carolina Pay Phone Association then filed a petition for writ of certiorari with the U.S. Supreme Court, which petition the Supreme Court just denied. See, Order List [9 pages in PDF] at page 7. This is Supreme Court No. 03-897.

The Office of the Solicitor General wrote in its brief in opposition that "Section 276 does not give the Commission general authority to regulate the rates charged by LECs for payphone lines, which are considered an intrastate service. Rather, the authority Congress gave the Commission over line rates extends only to BOCs and not to non-BOC LECs. In particular, Congress crafted ``nondiscrimination safeguards´´ that apply only to the BOCs. 47 U.S.C. 276(a)."

Also on April 26, the Supreme Court denied certiorari in AT&T v. Bobby Gene Allen, a class action lawsuit against AT&T involving the collection of a city sales taxes by AT&T from non-residents of that city. The Supreme Court wrote that "The motion of Council on State Taxation for leave to file a brief as amicus curiae is granted. The petition for a writ of certiorari is denied." The action was brought in state court in Oklahoma. The trial court certified the class. The Oklahoma Court of Civil Appeals affirmed the certification. The Oklahoma Supreme Court declined to review the case. AT&T then filed a petition for writ of certiorari with the U.S. Supreme Court, which petition the Supreme Court just denied. See, Order List [9 pages in PDF] at page 7. This is Supreme Court No. 03-1046.

FCC Releases NPRM on Unlicensed Use of the 3650-3700 MHz Band

4/26. The Federal Communications Commission's (FCC) released its Notice of Proposed Rulemaking (NPRM) [43 pages in PDF] regarding unlicensed use of the 3650-3700 MHz band. This spectrum may be used by wireless internet service providers (WISPs).

The FCC announced, but did not release, this NPRM at its April 15, 2004 meeting. See, story titled "FCC Announces NPRM Regarding Unlicensed Use in the 3650-3700 MHz Band" in TLJ Daily E-Mail Alert No. 878, April 16, 2004.

The NPRM states that "This band appears particularly well suited to respond to the needs expressed by the growing number of entrepreneurial wireless internet service providers (WISPs) who are today bringing broadband services to consumers in rural areas of the United States who have many fewer choices for such services than consumers in more populated areas. WISPs have been asking the Commission for additional spectrum for unlicensed uses to provide both backhaul service and broadband service to their customers."

The NPRM explains that "the central proposal of this Notice would allow unlicensed devices to operate in either all, or portions of, this radiofrequency (RF) band under flexible technical limitations with smart/cognitive features that should prevent interference to licensed satellite services. Specifically, we propose to allow these devices to operate with higher power than currently authorized under Part 15 of the Rules subject to cognitive technology safeguards."

The NPRM adds that "In order to foster the development of the unlicensed use that we propose herein, we also seek comment on whether to restore a uniform primary allocation for all Fixed Satellite Service (FSS) earth stations in the band regardless of the date the earth stations were authorized, and whether to delete the existing co-primary allocations for the Fixed Service (FS) and Mobile Service (MS) in this band. We also seek comment on other options that could also allow for the provision of licensed terrestrial service in this band."

This NPRM is FCC 04-100 in ET Docket Nos. 04-151, 02-380, and 98-237. Comments will be due 75 days from date of publication of a notice in the Federal Register. Reply comments will be due 105 days from date publication in the Federal Register. This publication has not yet occurred.

FCC Releases Report and Order Regarding RFID

4/26. The Federal Communications Commission's (FCC) released its Third Report and Order [21 pages in PDF] adopting regulations allowing the operation of radio frequency identification (RFID) systems in the 433.5-434.5 MHz band.

The FCC announced, but did not release, this Third Report and Order at its April 15, 2004 meeting. This item is FCC 04-98 in ET Docket No. 01-278. See also, story titled "FCC Announces Report and Order Regarding Use of RFID with Shipping Containers" in TLJ Daily E-Mail Alert No. 878, April 16, 2004.

More News

4/26. The Supreme Court denied certiorari in in Senior Technologies, Inc. v. R.F. Technologies, Inc., No. 03-1042, a patent case. See, Order List [9 pages in PDF] at page 3.

4/26. The European Union published in its website a document [4 pages in PDF] titled "Interview with Mario Monti, Commissioner responsible for competition: The EU gets new competition powers for the 21st Century". It includes statements by Mario Monti (Commissioner), and statements by Philip Lowe (Director-General for Competition).

4/26. Kamil Idris, Director General of the World Intellectual Property Organization (WIPO), issued a statement on the occasion of World Intellectual Property Day.

Go to News from April 21-25, 2004.