DC Circuit Reverses in CCI v. FCC

7/23. The U.S. Court of Appeals (DCCir) issued its opinion [12 pages in PDF] in Communications and Control, Inc. v. FCC, reversing and remanding the FCC's decision not to correct an error in the longitude of a broadcast license where the error was obvious on its face. The latitude and longitude in the application placed the transmitter in the Pacific Ocean.

In 1993 the Federal Communications Commission (FCC) granted Communications and Control, Inc. (CCI) a broadcast license to operate a non-nationwide Phase I 220 MHz trunked radio system under the call sign WPCX448. CCI's application provided a latitude and longitude, and the location of Mount Allison, Milpitas, California. The application contained an error of one degree in the longitude. The error placed the location of the transmitter in the Pacific Ocean.

The FCC also granted a license to another licensee for a location in Stockton, California, 84 kilometers from Mount Allison. CCI constructed its station on Mount Allison -- not in the Pacific Ocean. CCI later discovered its error and requested the FCC to correct the error in the license. ComTech, which later obtained the second license, complained of interference. In several orders, the FCC refused CCI's request, and instructed CCI to submit its license for cancellation.

CCI appealed. The Court of Appeals set aside the FCC's orders as arbitrary and capricious in violation of the Administrative Procedure Act. It rejected two arguments that the FCC advanced on appeal.

First, the Appeals Court wrote that the "simple ipse dixit that CCI’s typographical error rendered its license void ab initio does not do it, especially in light of the Commission's practice of correcting, without much ado, typographical errors such as this one. The Commission's departure from this practice, with no explanation, renders its void ab initio rationale arbitrary and capricious."

The Court added that "the Commission's void ab initio rationale makes no sense. The license the Commission granted CCI specified Mount Allison as the transmitter site, a fact later confirmed by CCI itself when it notified the Commission that it had built its transmitter and was operating from Mount Allison. For the Commission seven years later to pronounce CCI's license void ab initio because the geographic coordinates provided specify a point in the Pacific Ocean is, politely speaking, unreasonable. The Commission must have known -- from CCI's license and CCI's notice -- that CCI was operating from a mountain, not the ocean; with minimal effort the Commission staff could have determined the precise location."

Second, the Appeals Court wrote that the FCC's "second rationale fares no better. It offers only a partial, and ultimately inadequate, explanation of the inevitable dismissal of CCI's application -- even had it contained the correct coordinates at the outset -- because CCI requested a transmitter site less than 120 kilometers from ComTech's site. The sites would have been deemed ``mutually exclusive,´´ the Commission says, because section 90.723 of the Commission rules provides that ``the separation of cochannel base stations shall be 120 kilometers.´´"

But, the Court noted that "This general requirement, however, is significantly qualified by the rule's second sentence, which states that a station separation of less than 120 kilometers ``will be considered on a case-by-case basis upon submission of a technical analysis indicating that at least 10 dB protection will be provided to an existing station's 38 dBu signal level contour.´´"

The FCC did not engage in the required case-by-case analysis. The Court added that the FCC "did not mention the provision or, more significantly, why it was unavailable to CCI."

This case is Communications and Control, Inc. v. FCC and USA, U.S. Court of Appeals for the District of Columbia, App. Ct. No. 03–1213, an appeal of final orders of the FCC.

Verizon and Skype Announce New VOIP Services

7/23. On July 22, the same day the Senate Commerce Committee (SCC) amended and approved S 2281, the "VOIP Regulatory Freedom Act of 2004", Verizon announced the availability of a residential VOIP service that it calls VoiceWing. Verizon stated in a release that this service will provide unlimited calls within the United States (but not to outside of the U.S.) for a fixed monthly rate. Verizon stated that it will charge $34.95 a month for its own DSL subscribers, and $39.95 per month subscribers to other DSL services and cable modem service subscribers.

On July 23, Skype Technologies announced "agreements with COLT, iBasis, Level 3, and Teleglobe to provide call termination services worldwide. The agreements are in place in preparation for SkypeOut, a soon-to-be-launched pre-pay service that allows people to call any telephone number in the world from anywhere in the world using the Skype software."

To date, Skype has provided a free service that enables people to use their computers and broadband connections to communicate via internet protocol with other Skype users. Skype developed the peer to peer VOIP application, which it allows users to download for free. There is no charge for any amount of calls, anywhere in the world. Its reach, however, is limited to other Skype users.

The new SkypeOut service will enable Skype users to communicate with people not on the Skype network. However, Skype did not disclose the pricing of its SkypeOut service. See also, Level 3 release.

See also, S 2281 as amended on July 22, 2004.

Bush Signs Executive Order Naming the PCAST as the National Nanotechnology Advisory Panel

7/23. President Bush signed an executive order that designates the President's Council of Advisors on Science and Technology (PCAST) to serve as the National Nanotechnology Advisory Panel. See, notice in the Federal Register, July 27, 2004, Vol. 69, No. 143, at Page 44891.

The Congress enacted S 189, the "21st Century Nanotechnology Research and Development Act", in November of 2003. It is now Public Law 108-153. This bill authorizes appropriations ($3.7 Billion) over four years (FY 2005-2008) for nanotechnology R&D programs at the National Science Foundation (NSF), Department of Energy (DOE), Department of Commerce's (DOC) National Institute of Standards and Technology (NIST), National Aeronautics and Space Administration (NASA), and Environmental Protection Agency (EPA). The NSF would be receive the largest portion of the funding. See, story titled "Bush Signs Nanotech R&D Funding Bill" in TLJ Daily E-Mail Alert No. 792, December 4, 2003.

The Act also provides that "The President shall establish or designate a National Nanotechnology Advisory Panel" that "shall consist primarily of members from academic institutions and industry. Members of the Advisory Panel shall be qualified to provide advice and information on nanotechnology research, development, demonstrations, education, technology transfer, commercial application, or societal and ethical concerns."

The PCAST is the secretive body co-chaired by Floyd Kvamme and John Marburger. See, list of members.

More News

7/23. The Department of Commerce's (DOC) Bureau of Industry and Security (BIS/BXA) published a notice in the Federal Register stating that it is recruiting private sector members for its six Technical Advisory Committees (TACs). The Information Systems TAC provides advice to the DOC on Control List Categories 3 (electronics), 4 (computers), and 5 (telecommunications and information security). Members of TACs serve for four years. See, Federal Register, July 23, 2004, Vol. 69, No. 141, at Pages 43970 - 43971.

7/23. The Council on Competitiveness released a report [27 pages in PDF] titled "Innovate America: Thriving in a World of Challenge and Change". This report states that "hundreds of leaders and scholars from universities, corporations, professional societies, industry associations and government agencies have joined to form the National Innovation Initiative (NII)." The present report is merely an interim report. It adds that "In December, the National Innovation Agenda will lay out this strategy with clear recommendations and identify how the different stakeholders – private sector, academia, labor and government -- can participate." This interim report argues that "we must embrace a new strategy to sustain and strengthen our national innovation ecosystem", but does not define the term "national innovation ecosystem". Nevertheless, the report describes innovation as something that is organized "at a societal level", and involves collaboration between large corporations, research universities, and certain government agencies.

Senate Commerce Committee Passes VOIP Regulation Bill

7/22. The Senate Commerce Committee (SCC) amended and approved S 2281, the "VOIP Regulatory Freedom Act of 2004". This bill began as an attempt to restrict regulation of voice over internet protocol (VOIP) applications. It would have removed states from the regulatory process, and limited the Federal Communications Commission's (FCC) authority to impose regulations. The bill as amended by the SCC now includes numerous opportunities for states to tax and regulate VOIP applications. The bill's title now misrepresents its content. See also, S 2281 as amended on July 22, 2004. See, full story.

Summary of VOIP Related Bills

7/22. There are three major bills pending in the Congress that address the subject of regulation and taxation of voice over internet protocol (VOIP) applications.

First, there is S 2281, the "VOIP Regulatory Freedom Act of 2004", introduced by Sen. John Sununu (R-NH) on April 5, 2004. Moreover, there are now two vastly different versions of this bill -- the bill as introduced, and the bill as approved on July 22, 2004 by the Senate Commerce Committee (SCC).

Second, there is HR 4129, also titled the "VOIP Regulatory Freedom Act of 2004", introduced by Rep. Chip Pickering (R-MS) on April 2, 2004. HR 4129 and S 2281, as introduced, were similar, but contained several differences in the section dealing with FCC authority to regulate connected VOIP applications.

Third, there is HR 4757, the "Advanced Internet Communications Services Act of 2004" introduced by Rep. Cliff Stearns (R-FL) and Rep. Rick Boucher (D-VA) on July 6, 2004.

Definitions. S 2281 (Sununu) and HR 4129 (Pickering) provide key definitions of VOIP application and connected VOIP application. These are important, in part, because some of the authorities to tax and/or regulate apply only to connected VOIP applications, while others apply to any VOIP application.

S 2281, as approved by the SCC, defines "Voice-over-Internet-protocol application" as "the use of software, hardware, or network equipment for real-time 2-way or multidirectional voice communications over the public Internet or a private network utilizing Internet protocol, or any successor protocol, in whole or part, to connect users notwithstanding -- (i) the underlying transmission technology used to transmit the communications; (ii) whether the packetizing and depacketizing of the communications occurs at the customer premise or network level; or (iii) the software, hardware, or network equipment used to connect users." It also provides that VOIP applications "do not include an application that is used solely for voice communications that both originate and terminate on the public switched telephone network". These provisions are the same in S 2281 as introduced and HR 4129.

S 2281, as approved, then defines a connected VOIP application as "a VOIP application that is capable of receiving voice communications from, or sending voice communications to, the public switched telephone network." This is slightly varied from S 2281 as introduced and the same as HR 4129.

S 2281, as introduced, and HR 4129 also contain definitions of other terms, such as "regulate", "customer", and "universal service". These are not in S 2281 as approved.

HR 4757 (Stearns/Boucher) contains two key definitions First, it creates the class of "advanced Internet communications service", or AICS. It defines this as "an IP network and the associated capabilities and functionalities, services, and applications provided over an Internet protocol platform or for which an Internet protocol capability is an integral component, and services and applications that enable an end user to send or receive a communication in Internet protocol format, regardless of whether the communication is voice, data, video, or any other form."

Second, it creates the subclass of "advanced Internet communications voice service", or AICVS. It defines this as "an advanced Internet communications service that is offered to the public for a fee, and that provides real-time voice communications, and in which that voice component is the primary function of the service."

Limitation of State Authority. S 2281 as introduced, HR 4129 (Pickering), and HR 4757 (Stearns/Boucher) largely remove the states from regulating and taxing VOIP applications (including connected VOIP applications) and AICS (including AICVS). S 2281 as approved maintains the basic limitation on state authority, but then proceeds to create numerous exceptions that swallow the rule.

S 2281 as introduced and HR 4129 contain three key provisions. First, they provide that "Notwithstanding any other provision of law, responsibility and authority to regulate the offering or provision of a voice-over-Internet-protocol application is reserved solely to the Federal Government." (See, Section 2(a).)

Second, they provide that "No State or political subdivision thereof may enact or enforce any law, rule, regulation, standard, or other provision having the force or effect of law that regulates, or has the effect of regulating, the offering or provision of a VOIP application." (See, Section 2(b).)

Third, they provide that "Any responsibility or authority to regulate the offering or provision of a VOIP application that, pursuant to subsection (a), is reserved by the Federal Government may not be delegated, by any Federal agency or officer, to any State or political subdivision thereof." This clause is important because the Federal Communications Commission (FCC) has a history of delegating authority to the states in the absence of a Congressional mandate, or authority, to do so. For example, earlier this year the U.S. Court of Appeals (DCCir) overturned key provisions of the FCC's triennial review order's provisions on the unbundling requirements of incumbent local exchange carriers (ILECs) on the grounds that they constituted impermissible delegation of rulemaking authority to state public utilities commissions. (See, Section 2(c).)

HR 4757 provides that an AICS (including an AICVS) "shall be considered an interstate service". This would have the effect of prevented states from regulating these services. HR 4757 also provides that an AICS "shall be considered neither a telecommunications service nor an information service for purposes of the Communications Act of 1934". Telecommunications services and information services are existing regulatory categories that are addressed in the Communications Act, FCC orders, and court opinions. The effect of this bill would be to remove an AICS from these regulatory categories.

HR 2281 and HR 4129 also contain a ban on state taxation of VOIP applications. (See, Section 7.)

Exceptions to Limitations on State Authority. S 2281 as approved maintains two of the basic limitations on state authority -- that VOIP application regulation is reserved to the federal government, and that states are prohibited from regulating VOIP applications. It deletes the ban of delegation of federal authority to the states by federal agencies.

S 2281, as approved by the SCC, added six major exceptions to the general provisions limiting state authority. First, it allows states to regulate and tax connected VOIP applications with respect to 911 and E-911 services.

It provides that "nothing in this Act limits (1) State jurisdiction of 9-1-1 or enhanced 9-1-1 services, including State jurisdiction over connected VOIP applications with respect to 9-1-1 and enhanced 9-1-1 services; or (2) the ability of State and local governments to require providers of all connected VOIP applications to collect fees to support the provision of 9-1-1 or enhanced 9-1-1 services." This language was added on July 22 in an amendment offered by Sen. Conrad Burns (R-MT). Sen. Burns has led the effort in the Senate on E-911 implementation. (See, Section 2(d).)

Second, S 2281 as approved allows states to tax and regulate VOIP application providers with respect to intercarrier compensation. It provides that "Nothing in this Act shall be construed to exempt providers of a VOIP application from requirements imposed by a State commission on all providers of telecommunications services ... to pay appropriate compensation for the transmission of a VOIP application over the facilities and equipment of another provider". (See, Section 2(e)(1).)

Third, S 2281 as approved allows states to tax and regulate VOIP application providers with respect to subsidization of other service providers, which is also referred to as universal service. It provides that "Nothing in this Act shall be construed to exempt providers of a VOIP application from requirements imposed by a State commission on all providers of telecommunications services ... to contribute on an equitable and nondiscriminatory basis to the preservation and advancement of universal service." (See, Section 2(e)(2).)

These second and third exceptions were included in an amendment offered by Sen. Byron Dorgan (D-ND).

It is important to note the Sen. Burns' amendment regarding 911 and E-911 applies only to connected VOIP applications, while Sen. Dorgan's amendment regarding intercarrier compensation and universal service apply to any VOIP service. Any VOIP service includes free software applications that enable consumers, among other thing, to use their computers to engage in voice communications. That is, the Dorgan amendment allows states to tax service providers who are providing free services. It would also force providers to collect and maintain information about users. This would have the consequence, among other things, of either forcing the service providers to charge (to enable them to pay the taxes), cease providing the service, or go or remain offshore.

Finally, S 2281 as approved states to regulate any VOIP application if the statute or regulation is a criminal prohibition, a consumer protection measure, or an unfair or deceptive trade practices. It provides that "Nothing in this Act shall be construed to affect the authority of a State to enact or enforce criminal laws or regulations of general applicability regarding doing business in that State, consumer protection, or unfair or deceptive trade practices." (See, Section 2(c).)

These are broad categories. The ability of states to engage in a wide range of regulatory activities would be limited only by the creativity of state legislative draftsmen in characterizing their bills.

Limitations on FCC Authority. S 2281, as introduced, and HR 4129, having reserved VOIP application regulation to the federal government, then provide that the FCC cannot promulgate any rules, except in three cases involving connected VOIP applications.

These bills, as introduced, provide that "Except as specifically provided in this Act and notwithstanding any other provision of law, the Commission shall not impose any rule or regulation on, or otherwise regulate, the offering or provision of a VoIP application." Both bills enumerate three powers: universal service, interprovider compensation, and law enforcement surveillance, although they differ significantly in the specifics.

Neither bill gives the FCC authority to extend E911 rules to VOIP applications. And, neither bill gives the FCC authority to extend disability rules to VOIP applications. However, both bills provide that the FCC shall appoint a body of industry representatives for purposes of developing "consensus guidelines, protocols, or performance requirements" pertaining to E911, "improving use by the disabled community", "improving reliability", and "ensuring appropriate security".

S 2281, as approved, removes that ban on FCC rulemaking, as well as the section containing the three exceptions for universal service, interprovider compensation, and law enforcement surveillance. It replaces these sections with a single section requiring the FCC to conduct an E-911 rulemaking proceeding. It provides that "Not later than 180 days after the date of enactment of this Act, the Commission shall conclude a proceeding establishing a transition period at the end of which all providers of connected VOIP applications are required to provide, to the extent technically feasible and not economically unreasonable, 9-1-1 and enhanced 9-1-1 services comparable to those provided by other telecommunications carriers."

Finally, both S 2281, as introduced, and HR 4129 maintain the Federal Trade Commission's (FTC) authority to regulate unfair and deceptive trade practices, but give no new rule making authority to the FTC. S 2281 as approved deletes this provision.

HR 4757 (Stearns/Boucher) provides that, except as provided in the bill, neither the FCC nor any state "may regulate the rates, charges, terms, or conditions for, or entry into, or exit from, the provision of, any advanced Internet communications service." It then limits the regulation of an AICS to four areas -- E–911 services, disabilities access, universal service taxation, and providing "just and reasonable compensation for use of the public switched telephone network", that is, intercarrier compensation.

CALEA. There is currently much debate regarding the modification of communications technologies to facilitate surveillance by law enforcement entities, as required by the Communications Assistance for Law Enforcement Act (CALEA). The FCC currently has an open proceeding (RM 10865). The VOIP related bills take vastly different approaches.

HR 2218 as introduced provides that the FCC "shall require a provider of a connected VOIP application to provide access to necessary information to law enforcement agencies not less than that required of information service providers."

This should be read in the context of the language of the CALEA, which imposes requirements upon "telecommunications carriers". The CALEA provides that "telecommunications carriers" does not include "persons or entities insofar as they are engaged in providing information services".

HR 4129 (Pickering) is more supportive of the Department of Justice and the Federal Bureau of Investigation. It  contains a long and complex subsection creating statutory requirements for providers of "connected VOIP applications" to "ensure that its equipment, facilities, or services are capable of ... enabling the government to intercept communications transmitted using such application ... delivering such intercepted communications and call-identifying information to the government".

HR 4129 does not expand the CALEA to include connected VOIP applications. Rather, it creates a new requirement, with a separate statutory basis. But, in the end, it makes the requirements imposed on providers of connected VOIP applications similar to the requirements imposed by the CALEA upon telecommunications carriers.

HR 4129 states that the requirements for connected VOIP applications must be "for the same purposes, to a similar extent, and subject to similar limitations and protections" as are required under the CALEA.

HR 2218, as approved, deletes the provision giving the FCC authority with respect to the CALEA. It delays consideration of the issue while the General Accounting Office (GAO) conducts a study.

This is a significant provision. The bill spells out in detail the topics that must be covered by the GAO report. Also, it is important that the bill assigns responsibility to the GAO rather than the DOJ or FCC. This may reflect an understanding on the part of some members of Congress that the FCC, which has rulemaking authority under the original CALEA, has implemented the Act in a manner that expands the obligations and costs imposed upon communications carriers beyond those required by the Act.

Moreover, a GAO report would include considerable detail about, among other things, the "technical capability to intercept and analyze communications over the public Internet or using the Internet protocol" and "problems, if any, law enforcement has encountered in intercepting or analyzing communications over the public Internet or using the Internet protocol".

The DOJ is required to prepare annual reports on Title 18 wiretaps and Title 50 FISA surveillance. These reports are almost devoid of detail. The DOJ and FBI have submitted letters, comments, and petitions to the FCC regarding CALEA and VOIP. However, these could not be described as open, candid or objective. In contrast, a GAO report could provide the most detailed and objective document that is available to the public that addresses government surveillance of new internet based communications technologies.

HR 4757, in its enumerated list of powers, omits reference CALEA. Rep. Boucher has long be a critic of the FCC's and the Department of Justice's implementation of the CALEA, particularly in the context of new internet based technologies.

House Passes US Morocco FTA Bill

7/22. The House passed HR 4842, the "United States-Morocco Free Trade Agreement Implementation Act", by a vote of 323-99. See, Roll Call No. 413. Most of the votes against the bill were cast by Democrats.

On Wednesday, July 21, the Senate passed its version of the bill, S 2677, also titled the "United States-Morocco Free Trade Agreement Implementation Act", by a vote of 85-13. See, Roll Call No. 159. See also, story titled "US Morocco FTA Bill Moves in Congress" in TLJ Daily E-Mail Alert No. 943, July 22, 2004.

Sen. Wyden Blocks FTC Nominees

7/22. The Senate Commerce Committee (SCC) held a meeting, the agenda of which included consideration of the nominations of Deborah Majoras and Jonathan Liebowitz to be Federal Trade Commission (FTC) Commissioner. The Committee did not vote on either nomination, because Sen. Ron Wyden (D-OR) invoked the Senate's two hour rule.

Majoras would replace the current Chairman, Timothy Muris. Leibowitz would fill a Democratic position on the FTC.

Majoras' nomination is opposed by Sen. Wyden (at right) and Sen. Barbara Boxer (D-CA). While the FTC handles many technology related issues, the delay of consideration of these nominees is not technology related. On June 2, the SCC held a hearing on these nominations at which Sen. Wyden and Sen. Boxer explained at length that their opposition relates to gasoline prices. See, story titled "Senate Commerce Committee Holds Hearing on FTC Nominees" in TLJ Daily E-Mail Alert No. 910, June 3, 2004.

Sen. Wyden stated on July 22 that "I fully expect the next chair of the Federal Trade Commission to immediately get in the game on the issue of gasoline prices, and this nominee has significant and ongoing conflicts of interest regarding one of the nation's biggest oil companies." See, Wyden release.

Sen. Wyden invoked the 2 hour rule. Rule XXVI of the Standing Rules of the Senate, at paragraph 5(a), provides, in part, that "Notwithstanding any other provision of the rules, when the Senate is in session, no committee of the Senate or any subcommittee thereof may meet, without special leave, after the conclusion of the first two hours after the meeting of the Senate commenced and in no case after two o'clock postmeridian unless consent therefor has been obtained from the majority leader and the minority leader (or in the event of the absence of either of such leaders, from his designee)." (Parentheses in original.).

This is a rarely invoked measure. When it is invoked, it is usually a last ditch dilatory effort by a Senator who lacks the votes to stop or delay a measure by democratic means.

Sen. Trent Lott (R-MS) invoked the 2 hour rule to limit a Senate Commerce Committee meeting on May 16, 2002.

It is possible that President Bush would give recess appointments to Majoras and Leibowitz. Article 2, Section 2, paragraph three of the U.S. Constitution provides that "The President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session."

There would be some irony in this. If this were to occur, a Republican President would give a recess appointment to Liebowitz, a nominee selected by the Democratic leadership, to get around obstructionist tactics of Democrats.

Senate Commerce Committee Approves Satellite Home Viewer Extension Bill

7/22. The Senate Commerce Committee approved S 2644, the "Satellite Home Viewer Extension and Rural Consumer Access to Digital Television Act of 2004".

The Committee approved an amendment in the nature of a substitute offered by Sen. John McCain (R-AZ) and Sen. John Ensign (R-NV), who are also the sponsors of the bill, to shorten the phase-in period for existing two dish markets and establishing a satellite provider's ability to import distant signals.

In the House, there is HR 4501, the "Satellite Home Viewer Extension and Reauthorization Act of 2004", sponsored by Rep. Fred Upton (R-MI) of the House Commerce Committee, and HR 4518, also titled the "Satellite Home Viewer Extension and Reauthorization Act of 2004", sponsored by Rep. Lamar Smith (R-TX) of the House Judiciary Committee. The Judiciary Committee approved this bill on July 7.

Senate Commerce Committee Approves Junk Fax Bill

7/22. The Senate Commerce Committee approved by voice vote S 2603, the "Junk Fax Prevention Act of 2004", without amendment.

This bill, which is sponsored by Sen. Gordon Smith (R-OR), would amend 47 U.S.C. § 227 to preserve the "established business relationship" exception to the general ban on unsolicited faxes.

On June 24, the House Commerce Committee amended and approved its bill, HR 4600, the "Junk Fax Prevention Act of 2004". See, story titled "House Commerce Committee Approves Junk Fax Bill" in TLJ Daily E-Mail Alert No. 927, June 28, 2004. On June 20, the full House passed HR 4600 by voice vote. See, story titled "" in TLJ Daily E-Mail Alert No. 942, July 21, 2004.

Rep. Greenwood Will Not Seek Re-election

7/22. Rep. James Greenwood (R-PA) announced that he will not run for re-election. He further announced that he will become the President of the Biotechnology Industry Organization (BIO), effective on January 5, 2005. He is a senior member of the House Commerce Committee, and the Chairman of its Subcommittee on Oversight and Investigations. See, statement by Rep. Greenwood.

Rep. Greenwood will replace Carl Feldbaum, who has been in charge of the BIO since 1993.

In addition, the BIO issued a release that provides a heart wrenching explanation from Rep. Greenwood (at right) for his switch. He stated that "had virtually any other organization approached me, I would have politely declined to interview. However, I passionately believe in the promise of biotechnology to find cures and treatments for the diseases that force parents to watch their children suffer and die, and children to endure their parents disintegration into the clutches of Parkinson's and Alzheimer's diseases ... the research and the science that BIO's members represent hold so much potential: regenerative medicine to enable us to repair our organs and spinal cords, biotech crops and foods which can help feed the hungry, and biofuels to help save the environment."

Rep. Greenwood's departure may have policy consequences in two information technology areas. First, as Subcommittee Chairman, he presided over an investigation of fraud in the Federal Communications Commission's (FCC) e-rate subsidy program. Rep. Billy Tauzin (R-LA), who was the full Committee Chairman until February of this year, was also active on this issue. Under their leadership, the Subcommittee on Oversight and Investigations has pursued e-rate fraud more aggressively that the Senate Commerce Committee, the FCC, and most of the entities receiving e-rate subsidies.

At a hearing on July 22 of the Subcommittee regarding fraud at the San Francisco School District, Rep. Greenwood and Rep. Tauzin were absent. The Vice Chairman, Rep. Greg Walden (R-OR) presided, and the new full Committee Chairman, Rep. Joe Barton (R-TX), participated. However, based on the statements and questions of Rep. Walden and Rep. Barton at the July 22 hearing, they intend to pursue e-rate fraud, and fraud related legislation, as enthusiastically as did Rep. Greenwood and Rep. Tauzin.

Rep. Greenwood is also currently the leading proponent on the House Commerce Committee of legislation to create a new federal intellectual property right to incent the development and maintenance of electronic databases. In the current Congress, he is a cosponsor of HR 3261, the "Database and Collections of Information Misappropriation Act'". Rep. Tauzin is another cosponsor. In contrast, Rep. Barton does not share their views on protecting databases.

Rep. Nadler Introduces Bill to Criminalize Accessing Stored E-Mail

7/22. Rep. Jerrold Nadler (D-NY) and others introduced HR 4977, the "E-mail Privacy Protection Act of 2004". The bill would amend the Wiretap Act and the Stored Communications Act, to provide that accessing stored e-mail communications, including by e-mail service providers, can constitute criminal violations. This bill responds to the recent Appeals Court decision in USA v. Councilman, and perhaps also, Google's announcement of its proposed Gmail service.

Rep. Nadler (at right) is a senior member of the House Judiciary Committee, which has jurisdiction over this bill. While this bill deals with internet privacy, an issue also addressed by the House Commerce Committee, since this bill only would amend the Criminal Code, it falls within the jurisdiction of the House Judiciary Committee.

The bill would do two things. First, it would amend the definition in the Wiretap Act of "electronic communication" to include certain stored communications. Second, it would add a new subsection in the Store Communications Act that would prohibit an electronic communication service provider from acquiring or using electronic communications that it has stored.

18 U.S.C. § 2510(12) currently provides that ''electronic communication'' means "any transfer of signs, signals, writing, images, sounds, data, or intelligence of any nature transmitted in whole or in part by a wire, radio, electromagnetic, photoelectronic or photooptical system that affects interstate or foreign commerce, but does not include -- (A) any wire or oral communication; (B) any communication made through a tone-only paging device; (C) any communication from a tracking device (as defined in section 3117 of this title); or (D) electronic funds transfer information stored by a financial institution in a communications system used for the electronic storage and transfer of funds;"

HR 4977 would amend this by by inserting the phrase "and includes any temporary, intermediate storage of that communication incidental to the electronic transmission thereof," after the word "commerce".

On June 29, 2004 the U.S. Court of Appeals (1stCir) issued its split opinion in USA v. Bradford Councilman, a criminal case involving the Wiretap Act and unauthorized accessing of the content of stored e-mail messages. (There was no Stored Communications Act charge in that case.) The Court held that there was no violation of the Wiretap Act when stored e-mail was accessed, because, since it was in storage, there was no interception within the meaning of the statute.

The Court noted that § 2510 contains definitions of both "wire communication" and "electronic communication", and that the definition of "wire communication" includes "any electronic storage of such communication", while the definition of "electronic communication" makes no reference to stored communications. See, story titled "1st Circuit Holds Wiretap Act Does Not Apply to E-Mail in Storage" in TLJ Daily E-Mail Alert No. 930, July 1, 2004.

Second, Rep. Nadler's bill would create a new prohibition in the Stored Communications Act. It would add to 18 U.S.C. § 2701 a new subsection (d): "Improper Acquisition by Service Provider -- Whoever, being a provider of an electronic communication service, or an agent or employee of such a provider, acquires or uses the contents of a stored electronic communication of which that provider, agent, or employee is not an intended recipient other than for the purposes of providing that electronic communication service, shall be fined under this title or imprisoned not more than 5 years, or both."

This section would have the effect of prohibiting the sort of e-mail snooping conducted by the defendant in the Councilman case. However, it is written in language that is broad and vague enough to possibly encompass services such as Google's Gmail that mechanically scan e-mail to facilitate the targeting of ads.

Google's Gmail is a new free browser based e-mail service that provides users with one gigabyte of storage space, which is far more than any other free e-mail service. In addition, Google's equipment scans e-mail messages, searches for key words, and then displays targeted advertisements with e-mail messages in the browser. Google further states that no person reads the messages.

See also, stories titled "Google's New Free E-Mail Service Starts Privacy Debate" in TLJ Daily E-Mail Alert No. 870, April 6, 2004; "Privacy Groups Request That Google Suspend Its New Free Gmail Service" in TLJ Daily E-Mail Alert No. 872, April 8, 2004; "EPIC Inquires About Use of Google Technologies by FBI" in TLJ Daily E-Mail Alert No. 889, May 3, 2004; and "Privacy Groups Argue that All Google Gmail Users May Be Criminals" in TLJ Daily E-Mail Alert No. 891, May 5, 2004.

The three original cosponsors of the bill are Rep. Janice Schakowsky (D-IL), Rep. Carolyn Maloney (D-NY) and Rep. Dennis Kucinich (D-OH).

Rep. Inslee Introduces E-mail Privacy Act

7/22. Rep. Jay Inslee (D-WA) and others introduced HR 4956, the "E-mail Privacy Act of 2004". Like the Rep. Jerrold Nadler (D-NY) bill, HR 4977, this bill responds to the Appeals Court opinion in USA v. Councilman, and provides increased legal protection under the Criminal Code for stored e-mail communications. However, Rep. Inslee's bill would provide less onerous limitations upon the activities of e-mail service providers.

Like Rep. Nadler's bill, Rep. Inslee's bill would amend the definitional section of the Wiretap Act, 18 U.S.C. § 2510. However, Nadler's bill would amend the definition of "electronic communication" while Inslee's bill would amend the definition of "intercept".

Currently, subsection 2510(4) defines ''intercept'' as "the aural or other acquisition of the contents of any wire, electronic, or oral communication through the use of any electronic, mechanical, or other device."

Rep. Inslee's bill would add on to this definition the following phrase: "and, with respect to an electronic communication, includes the acquisition of the contents of the communication through the use of any electronic, mechanical, or other device, at any point between the point of origin and the point when it is made available to the recipient".

Also, like Rep. Nadler's bill, Rep. Inslee's bill would amend the Stored Communications Act.

Currently, 18 U.S.C. § 2701(a) contains the basic prohibition, while subsection (c) provides exceptions.

Subsection (c)(1) provides that the basic prohibition does not apply to conduct authorized "by the person or entity providing a wire or electronic communications service". Hence, in the Councilman case the defendant, Bradford Councilman, was not charged with violation of the Stored Communications Act because he was an officer of the service provider.

Rep. Inslee's bill would amend subsection (c)(1) by adding the following phrase: "to the extent the access is a necessary incident to the rendition of the service, the protection of the rights or property of the provider of that service, or compliance with section 2702".

Since, Councilman secretly snooped on one of his customers for commercial advantage, he could have been charged under the Stored Communications Act, if Rep. Inslee's language had been law at the time.

Nevertheless, the language of Rep. Inslee's bill would still allow service providers to access stored communications if it is "a necessary incident to the rendition of the service" or for other reasons. Arguably, mechanically reading e-mail in a free e-mail service to place targeted ads on web pages displaying that e-mail would "a necessary incident to the rendition of the service".

Nevertheless, both bills lack clarity.

Rep. Inslee (at right) stated in a release that "The American people are no longer confident that the law protects their right to communicate privately via E-mail or other Internet communications, and Congress will act to modernize America’s privacy laws if the courts fail to maintain a strong privacy standard."

The three original cosponsors of the bill are Rep. Roscoe Bartlett (R-MD), Rep. Jeff Flake (R-AZ) and Rep. William Delahunt (D-MA). Rep. Flake and Rep. Delahunt are members of the House Judiciary Committee, which has jurisdiction over this bill.

Rep. Flake stated in the same release that "People who communicate through E-mail deserve and expect the same privacy rights as those who use the telephone. This bill reaffirms that expectation."

Rep. Crane Introduces Bill to Provide Tax Break for Certain Spectrum Based and Information Technologies in Vehicles

7/22. Rep. Phil Crane (R-IL), Rep. Michael Rogers (R-MI), and Rep. Sander Levin (D-MI) introduced HR 4931, the "Intelligent Vehicle Highway Safety Act of 2004". This bill would amend the Internal Revenue Code to provide a limited itemized deduction for expenditures for intelligent vehicle technology systems.

Rep. Crane (at right) and Rep. Levin are both senior members of the House Ways and Means Committee, which has jurisdiction over this bill. This bill would give a tax break to individuals and companies that purchase cars and other vehicles with certain spectrum based or information technologies. It primarily covers safety related technologies, but also covers certain national security, property protection and inventory management technologies.

The bill would provide a deduction of up to $1,000 for purchasing vehicles that include "a positional communications and tracking device", or a technology that "assists in verification of driver identity, such as biometric identifiers and electronic ignition locks".

The bill would also cover "a device that warns or informs a driver of driving conditions or location, such as collision warning systems, automated collision notification systems, vehicle rollover warning systems, lane departure warning systems, and fatigue management systems". It would also cover "a roll stability control system".

The bill would also cover "an electronic seal". The bill does not define this term, but it may pertain to radio frequency devices affixed to containers that track their movement past reader devices, and provide information as to whether or not tampering has occurred.

While the bill clearly covers certain vehicular safety technologies, such as vehicle collision avoidance technologies, it is not clear that it would cover certain other public safety technologies, such as those that facilitate emergency vehicle traffic signal preemption and traffic management.

The bill states that its purpose is to "encourage and accelerate the nationwide production, retail sale, and consumer use of new commercial and consumer motor vehicles with intelligent vehicle technology systems".

This bill would use tax policy to promote these technologies. In addition, the Congress has appropriated money for the Department of Transportation (DOT) to develop and promote intelligent transportation systems (ITS). See, the DOT's ITS website.

Moreover, the Federal Communications Commission (FCC) has long been involved in promulgating rules pertaining to the spectrum based aspects of these technologies.

The FCC initiated a rulemaking proceeding in 1998. It adopted its Report and Order on October 21, 1999 (which it released on October 22) allocating 75 megahertz of spectrum at 5.850-5.925 GHz to the mobile service for use by Dedicated Short Range Communications (DSRC) systems operating in the Intelligent Transportation System (ITS) radio service. However, this R&O did not adopt licensing and service rules or spectrum channelization plans. This R&O is FCC 99-305 in ET Docket 98-95 and RM-9096. See, also, the FCC's Office of Engineering and Technology's (OET) ITS webpage.

The FCC adopted another NPRM on November 7, 2002. See, story titled "FCC Adopts Intelligent Transportation Systems NPRM" in TLJ Daily E-Mail Alert No. 546, November 11, 2002. The FCC adopted its latest ITS Report and Order [78 pages in PDF] on December 17, 2003. (However, it did not release this R&O until February 10, 2004.) This R&O is FCC 03-324 in WT Docket No. 01-90, ET Docket 98-95 and RM-9096

This R&O adopted licensing and service rules for DSRC operating in the ITS service. It also adopted the interoperability standard know as ASTM E2213-02 or ASTM-DSRC. It also made possible licensing in the 5.9 GHz band for both public safety and nonpublic safety uses. See also, separate statement [PDF] of Chairman Michael Powell, and statement [PDF] of Commissioner Jonathan Adelstein.

Rep. Hooley Introduces Children's Listbroker Privacy Act

7/22. Rep. Darlene Hooley (D-OR) introduced HR 4955, the "Children's Listbroker Privacy Act" a bill to restrict the sale of personal information about children.

This is the House version of S 2160, also titled the "Children's Listbroker Privacy Act", which was introduced by Sen. Ron Wyden (D-OR) on March 3, 2004. See, story titled "Senators Introduce Children's Listbroker Privacy Act" in TLJ Daily E-Mail Alert No. 851, March 8, 2004. That bill was referred to the Senate Commerce Committee, of which Sen. Wyden is a member. The Committee has taken no action on the bill.

The bill provides that, subject to exceptions, "It is unlawful -- (1) to sell personal information about an individual the seller knows to be a child; (2) to purchase personal information about an individual identified by the seller as a child, for the purpose of marketing to that child ..."

The bill also creates exceptions to the general rule where there is parental consent, and where the purchaser of the information certifies in writing to the seller that the information will not be used for marketing, and for what purpose the information will be used.

The bill would give civil enforcement authority to the Federal Trade Commission (FTC) under the unfair or deceptive act or practice provision of the FTC Act. The bill would also give the states authority to bring civil actions for damages.

HR 4955 was referred to the House Commerce Committee. There are no original cosponsors. The Senate bill is cosponsored by Sen. Lisa Murkowski (R-AK) and Sen. Ted Stevens (R-AK).

6th Circuit Addresses Statute of Limitations and Award of Attorneys Fees in Music Copyright Case

7/22. The U.S. Court of Appeals (6thCir) issued its opinion in Bridgeport Music v. Rhyme Syndicate Music, a copyright case involving music sampling, the incorporation of short segments of one musical recordings into another recording. Although, the issues on appeal in this case involve the application of the three year statute of limitations for copyright infringement claims pursuant to 17 U.S.C. § 507(b), service of process, and the award of attorneys fees to the prevailing party pursuant to 17 U.S.C. § 505.

The Appeals Court affirmed the District Court's summary judgment for one defendant on the basis that the plaintiff had actual knowledge of its infringement claims more than three years before it filed its complaint. The Appeals Court also affirmed the District Court's the dismissal of the complaint as to two other defendants for lack of proper service.

The Appeals Court vacated and remanded (in a divided portion of the opinion) the District Court's award of attorneys fees to the defendant that prevailed on the statute of limitations claim. The Appeals Court held that its was the prevailing party within the meaning of Section 505, but "attorney fees are not to be awarded automatically to every prevailing party". The Appeals Court held that the plaintiff had advanced an objectively reasonable claim, and that, on remand, the District Court should should consider the factors articulated by the Supreme Court in Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994).

This case is Bridgeport Music, Inc., et al. v. Rhyme Syndicate Music, et al., U.S. Court of Appeals for the 6th Circuit, App. Ct. Nos. 03-5005 and 03-5744, an appeal from the U.S. District Court for the Middle District of Tennessee, at Nashville, D.C. No. 01-00706, Judge Thomas Higgins presiding.

People and Appointments

7/22. The Senate Commerce Committee approved the nomination of Benjamin Wu (at right) to be Assistant Secretary for Technology Policy for the Department of Commerce.

7/22. The Senate Commerce Committee approved the nomination of Brett Palmer to be Assistant Secretary for Legislative and Intergovernmental Affairs for the Department of Commerce.

7/22. The Senate rejected a motion to invoke cloture on the nomination of David McKeague to be a Judge of the U.S. Court of Appeals for the 6th Circuit by a vote of 53-44. See, Roll Call No. 162. A three fifths majority is required to pass a cloture motion. Cloture motions cut off a filibuster. It was almost a straight party line vote, with Republicans and Sen. Zell Miller (D-GA) and Sen. Ben Nelson (D-NE) voting in favor, and Democrats voting against. President Bush stated after the vote that "These filibuster tactics are shameful and inconsistent with the Senate's constitutional obligation." He added that "the use of this obstructionist tactic by some Democrats has become commonplace. With today's action, ten appeals court nominees have now been filibustered." See, statement by Bush.

7/22. The Senate rejected a motion to invoke cloture on the nomination of Richard Griffin to be a Judge of the U.S. Court of Appeals for the 6th Circuit by a vote of 54-44. See, Roll Call No. 161.

7/22. The Senate rejected a motion to invoke cloture on the nomination of Henry Saad to be a Judge of the U.S. Court of Appeals for the 6th Circuit by a vote of 52-46. See, Roll Call No. 160. See also, floor statement by Sen. Orrin Hatch (R-UT) in support of Saad, Griffin and McKeague, and statement by Sen. Patrick Leahy (D-VT) in opposition to the three nominees.

7/22. President Bush announced his intent to nominate Gregory Jenner to be an Assistant Secretary of the Treasury for Tax Policy. He is now a Deputy Assistant Secretary for Tax Policy. Before that, he was a partner in the Tax and Legislative Groups of the law firm of Venable Baetjer. And before that, he worked for the Treasury Department and the Senate Finance Committee. See, White House release.

More News

7/22. The U.S. District Court (DMd) issued a memorandum opinion [27 pages in PDF] in the multidistrict litigation titled "In re Wireless Telephone Radio Frequency Emissions Products Liability Litigation". This opinion remands several actions to the Superior Court for the District of Columbia.

7/22. The Senate Judiciary Committee held an executive business meeting, the agenda of which included consideration of S 1635, the "L-1 Visa (Intracompany Transferee) Reform Act of 2003", and HR 1417, the "Copyright Royalty and Distribution Reform Act of 2004". However, the Committee did not consider either of these items.

7/22. The House Ways and Means Committee's Subcommittee on Health held a hearing titled "Electronic Prescribing". See, prepared testimony of Craig Fuller (National Association of Chain Drug Stores), Thomas Sullivan (Women’s Health Center Cardiology), and Jonathan Teich (Harvard University). Also, the House Commerce Committee's Subcommittee on Health held a hearing titled "Health Information Technology: Improving Quality and Value of Patient Care".

7/22. The European Commission (EC) released a report [12 pages in PDF] titled "First Annual Report on Radio Spectrum Policy in the European Union; State of Implementation and Outlook". See also, EC release.

Indictment Charges Theft of Customer Data Held By Acxiom

7/21. A grand jury of the U.S. District Court (EDArk) returned a 144 count indictment against Scott Levine. The indictment alleges, among other things, that Levine operated an e-mail marketing business that accessed and stole personal information about individuals from the database company Acxiom, in violation of 18 U.S.C. §§ 1030.

The indictment states that Acxiom Corporation is "a corporation with offices in Little Rock and Conway, Arkansas. Acxiom is one of the world's largest repositories for personal, financial, and company data. It provides the service of storing huge amounts of customer provided data as well as enhancing the quality and utility of that data through various proprietary computer processes."

The indictment does not identify the names of the business customers of Acxiom whose data was stolen. It references them as, for example, "Company No. 1". Nor does the indictment identify the number of individuals whose data was stolen, or the exact types of information stolen, such as social security numbers, e-mail addresses, or credit card numbers.

The indictment states that "Acxiom uses it File Transfer Protocol (FTP) server, (``ftp.acxiom.com´´), located in Conway, Arkansas, to store data being transferred. FTP is a method of communication used to send and receive files such as spreadsheets, word-processing documents or databases via the Internet. Acxiom customers may place data on the FTP server for Acxiom to retrieve and process. Acxiom may also place information on the FTP server that it has analyzed and processed for the customer to retrieve. Each Acxiom customer has a username and password for accessing ``ftp.acxiom.com´´ which is shared by Acxiom and the customer."

The indictment charges only Levine. It states that he "was the controlling force behind Snipermail".

The indictment states that "Snipermail.com, Inc. ... was a Florida corporation, located in Boca Raton, Florida area, engaged in the business of distributing advertisements via the Internet to email addresses on behalf of advertisers or their brokers. Snipermail purported to maintain a database containing several million e-mail addresses which it claimed were obtained via a ``double verified opt-in process´´. Once the customer confirmed an interest in receiving such promotion, Snipemail required them to complete an online form providing various demographic and geographic information about themselves. Snipermail then rented the e-mail addresses and other relevant information to other businesses for use in their advertising campaigns after purportedly determining which subscribers matched the target group for the advertiser. In many instances, however, ad campaigns were sent to a general population of e-mail addresses without regard to the targeted requirements of an agreement with the broker."

The indictment alleges that Levine "conspired with persons known and unknown ... to violate the laws of the United States by committing certain offenses, that is: (1) to intentionally access a protected computer without authority or in excess of authority and thereby obtain information in violation of Title 18, United States Code, Section 1030(a)(2)(C); (2) to knowingly and with intent to defraud possess fifteen or more devices with are unauthorized access devices ... in violation of Title 18, United States Code, Section 1029(a)(3); ..."

The indictment names, but does not indict, numerous other individuals who are alleged to be a part of this conspiracy. The indictment alleges that the conspirators "would access Acxiom's ``ftp.acxiom.com´´ server from Snipermail, a supplier of services to one or more of Acxiom's customers, exceed the authorization extended to such suppliers by entering areas which they had no authority to enter, and download files which they had no authority to download."

The indictment further states that "the conspirators would decrypt Acxiom encrypted password files in order to have access to greater amounts of Acxiom data, incorporate the stolen data into the Snipermail system, and sell the newly acquire information together with their existing data to Snipermail clients."

The complaint contains 144 separate counts. This is because it enumerates 139 individual instances of unauthorized file downloads from Acxiom's ftp server by conspirators. The indictment identifies the data, time, and file size of each such download. Many of the downloads ranged in the hundreds of megabytes.

The Department of Justice (DOJ) also issued a press release that states that "The charges stem from an alleged scheme to steal vast amounts of personal information from a company database and represent what may be the largest cases of intrusion of personal data to date." This DOJ release also states that the total theft amounted to "8.2 gigabytes of data".

As a comparison, a typical issue of the TLJ Daily E-Mail Alert is about 50 kilobytes (KB), or, about one twentieth of a megabyte (MB). If TLJ continues to publish daily on business days, at the rate of about 50 KB per issue, TLJ will have sent out about 8.2 gigabytes (GB) of data after about 650 years.

The DOJ release also states that "While the stolen data contained personal information about a great number of individuals and could have resulted in tremendous loss if the information were used in a fraudulent scheme, there is no evidence to date that any of the data was misused in this way."

While this indictment was returned in the Eastern District of Arkansas, it was prepared by attorneys in the U.S. Attorneys Office and in the Computer Crimes and Intellectual Property Section (CCIPS) of the DOJ headquarters in Washington DC.

This case is U.S.A. v. Scott Levine, U.S. District Court for the Eastern District of Arkansas, D.C. No. 4:04CR000175WRW.

More About Acxiom. Acxiom is a company that manages customer information for credit card issuers, banks, automotive manufacturers, retailers and others.

A representative of Acxiom testified before House Commerce Committee's Subcommittee on Commerce, Trade, and Consumer Protection on July 26, 2001. She described Acxiom activities in her prepared testimony. The hearing was titled "How Do Businesses Use Customer Information: Is the Customer's Privacy Protected?".

Acxiom's CEO provided written testimony [PDF] to the Federal Trade Commission (FTC) on June 18, 2003 for a workshop on information and privacy. He asserted that "Acxiom undertakes exceptional security measures to protect the information we maintain for our own information products and around the information we process for our clients to ensure that information will not be made available to any unauthorized person or business. We use a variety of multi-level security systems to control access to our services and information products."

This is not the first Section 1030 case involving theft of Acxiom data. For example, on December 18, 2003, Daniel Jeremy Baas pled guilty in U.S. District Court (SDOhio) to a one-count information charging him with exceeding authorized access to a protected computer and obtaining information, in violation of 18 U.S.C. §§ 1030(a)(2) and (c)(2)(B)(iii), in connection with his theft of data from Acxiom. See, 2003 DOJ release.

The present case grew out of the 2003 case. The DOJ's July 21, 2004 release states that "In July 2003, investigators with the Sheriff's Office in Hamilton County, Ohio, discovered during the course of an unrelated investigation that an Ohio resident named Daniel Baas had illegally entered into an Acxiom file transfer protocol (ftp) server and had downloaded significant amounts of data." It added that "During the course of that investigation, and in follow up internal investigations conducted by Acxiom, investigators discovered a second set of intrusions into Acxiom. Those intrusions came from a different internet protocol address and form the basis of the indictment of Scott Levine."

Also, published correspondence of the Defense Advanced Research Projects Agency (DARPA) reveals that the DARPA, and in particular, its now terminated Total Information Awareness (TIA) project, which was run by John Poindexter, examined working with Acxiom.

For example, on February 5, 2004, 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  DARPA regarding its interest in "huge databases of commercial transactions that cover the world", and in working with Acxiom, "the nation's largest commercial data warehouse company". See, story titled "E-Mail Shows DARPA's Interest in Huge Databases of Commercial Information" in TLJ Daily E-Mail Alert No. 831, February 6, 2004.

US Morocco FTA Bill Moves in Congress

7/21. The House Ways and Means Committee approved HR 4842, the "United States-Morocco Free Trade Agreement Implementation Act". See, HWMC release.

The full House could approve the bill as early as Thursday, July 22. The House Rules Committee is scheduled to meet at 7:00 AM on July 22 to adopt a rule for its consideration by the full House.

On July 20, the Senate Finance Committee (SFC) approved S 2677, the "United States-Morocco Free Trade Agreement Implementation Act", by a vote of 21-0. See, SFC release [PDF]. Then, on Wednesday, July 21, the full Senate approved S 2677 by a vote of 85-13. See, Roll Call No. 159.

Sen. Charles Grassley (R-IA) (at right), the Chairman of the SFC, commented on the recent rapid pace of passage of trade related legislation. He said that "We have an historic opportunity to strengthen our relations with Morocco with the passage of the United States-Morocco Free Trade Agreement Implementation Act. Passage of this legislation follows on the heels of a strong Senate vote in favor of the United States-Australia Free Trade Agreement last week. The Australia bill itself was preceded by renewal and extension of the Africa Growth and Opportunity Act, which passed the Senate by unanimous consent on June 24 of this year. Prior to that, the Senate was able to work out its differences and pass the JOBS Act by a vote of 92 to 5. Each of these bills passed in an election year, a year in which many pundits argued that nothing would get done. I also want to point out the broad bipartisan support which each of these bills received. In my mind, it’s that element -- bipartisanship -- that’s the key to our success." See, release [PDF].

See also, floor statement by Sen. Max Baucus (D-MT), the ranking Democrat on the SFC.

U.S. Trade Representative (USTR) Robert Zoellick praised the Senate, and added that "Free trade is on offense, and the cause of open markets is now advancing on all fronts. In the last twelve months, Congress has approved four new free trade agreements, all with large bipartisan majorities. Working together with Congress, the Administration is putting Trade Promotion Authority to good use and America is at the forefront of the global move toward expanded trade." See, USTR release [PDF].

House Judiciary Committee Passes Family Movie Act

7/21. The House Judiciary Committee approved HR 4586, the "Family Movie Act of 2004" by a vote of 18-9. The vote broke down along party lines, with Republicans voting for the bill and Democrats voting against the bill. However, Rep. Zoe Lofgren (D-CA), who represents a Silicon Valley district, voted for the bill.

Rep. Lamar Smith (R-TX), the Chairman of the HJC's Subcommittee on Courts, the Internet and Intellectual Property (CIIP), introduced this bill on June 16, 2004.

This bill would permit home viewers of DVDs to use software that filters out certain types of content. Currently at issue is a filtering technology sold by ClearPlay.

Rep. Smith (at right) stated that "Parents have the right to decide what their children watch on screen in the privacy of their own home and the right to protect their children from sex, violence, and profanity in movies. Raising children may be the toughest job in the world. Parents need all the help they can get. Parents should be able to mute or skip over anything they want if they feel it's in the best interests of their children."

The CIIP Subcommittee held a hearing on June 17, 2004. Marybeth Peters, the Register of Copyrights, wrote in her prepared testimony [PDF] that "I do not believe that such legislation should be enacted -- and certainly not at this time. As you know, litigation addressing whether the manufacture and distribution of such software violates the copyright law and the Lanham Act is currently pending in the United States District Court for the District of Colorado. A summary judgment motion is pending. The court has not yet ruled on the merits. Nor has a preliminary injunction been issued -- or even sought. At the moment, providers of such software are free to sell it and consumers are free to use it. If the court ultimately rules that the making or distribution of the software is unlawful -- a ruling that I believe is unlikely -- the time may then be opportune to consider legislation. But meanwhile, there is every reason to believe that the proposed Family Movie Act is a solution to a problem that does not exist."

This case is Robert Huntsman, et al. v. Steven Soderbergh, et al., U.S. District Court for the Eastern District of Colorado, D.C. No. 02-M-1662 (MJW).

The bill has yet to be passed by the Senate.

Federal Reserve Board Reports on State of the Economy

7/21. Alan Greenspan, the Chairman of the Federal Reserve Board (FRB), testified before the House Financial Services Committee on July 21, and before the Senate Banking Committee on July 20. He presented the FRB's Monetary Policy Report to the Congress [27 pages in PDF]. This report states that "purchases of computers and software remained on the solid uptrend that has been evident for the past couple of years, and real outlays on communications equipment increased further".

Greenspan stated in his prepared testimony for the two committees that "Economic developments in the United States have generally been quite favorable in 2004, lending increasing support to the view that the expansion is self-sustaining. Not only has economic activity quickened, but the expansion has become more broad-based and has produced notable gains in employment."

He did not address technology sectors of the economy in his prepared testimony. However, the Monetary Policy Report to the Congress does summarize the state of the tech sector. It states that "For the most part, businesses appear to be shaking off the extraordinary reluctance to undertake new investment projects that was evident in 2002 and 2003. Indeed, although outlays on nonresidential construction have not yet turned up decisively, real spending on equipment and software (E&S) has been advancing briskly."

It also states that "Real E&S spending rose at an annual rate of more than 15 percent in the second half of last year, and it posted another sizable increase in the first quarter of 2004 despite flat business purchases of motor vehicles and a dip in deliveries of aircraft. Excluding transportation equipment, real spending on E&S rose at an annual rate of 13½ percent in the first quarter. In the high-tech category, real purchases of computers and software remained on the solid uptrend that has been evident for the past couple of years, and real outlays on communications equipment increased further, reaching a level about 20 percent above the low in the fourth quarter of 2002."

Also on July 21, FRB Vice Chairman Roger Ferguson gave a speech in which he offered his take on the 2001 recession and investment in internet related technology.

He stated that "the 2001 recession seems to have been kicked off by unreasonable expectations about the profitability of investment in technology related to the Internet. One manifestation of these overly optimistic expectations was that the nominal share of high-tech investment in overall equipment and software spending rose from about 35 percent in the mid-1990s to almost 45 percent by the end of 2000. By the time more-sober assessments of the profitability of the high-tech sector came to the fore, huge sums of money had been sunk into capital equipment and software and into new enterprises. A serious reconsideration of these expenditures contributed to a sharp retrenchment of business investment."

EPIC Files FOIA Complaint Against DOD Seeking Records Regarding Data Mining Project

7/21. The Electronic Privacy Information Center (EPIC) filed a complaint [7 pages in PDF] in U.S. District Court (DC) against the Department of Defense (DOD) alleging violation of the Freedom of Information Act (FOIA) in connection with the EPIC's request for records of the DOD pertaining to the DOD's data mining project named "Verity K2 Enterprise".

Background. On May 27, 2004 the General Accounting Office (GAO) released a report [71 pages in PDF] titled "Data Mining: Federal Efforts Cover a Wide Range of Uses". This report covers 199 different data mining efforts at 52 different federal agencies.

In particular, this GAO report disclosed and briefly described the DOD's Verity K2 Enterprise project. It stated that it "Mines data from the intelligence community and Internet searches to identify foreign terrorists or U.S. citizens connected to foreign terrorism activities". The report also stated that the project uses both personal data, and private sector data. See, story titled "GAO Reports on Data Mining at Federal Agencies" in TLJ Daily E-Mail Alert No. 907, May 28, 2004.

On May 17, 2004, a DOD advisory committee named the Technology and Privacy Advisory Committee (TAPAC) released a report [140 pages in PDF] titled "Safeguarding Privacy in the Fight Against Terrorism" regarding data mining by the DOD and the rest of the federal government, the Defense Advanced Research Projects Agency's (DARPA) Total Information Awareness (TIA) program, and individual privacy. The report concluded that data mining is an important tool for fighting terrorism, and should be used, but with more concern for the protecting individual data privacy of U.S. persons. See, story titled "DOD Advisory Committee Backs Data Mining, with Attention to Privacy" in TLJ Daily E-Mail Alert No. 900, May 18, 2004.

The TAPAC was formed following various Congressional actions pertaining to the DARPA's TIA project. On February 7, 2003, the DOD announced in a release that it "will establish two boards to provide oversight of the Total Information Awareness Project ..."

On March 10, 2003, the DOD published a notice in the Federal Register stating that it established the TAPAC. The DOD stated that "The TAPAC will advise the Secretary of Defense concerning the legal and policy considerations implicated by the application of pattern queries/data correlation technology to counter-terrorism and counter-intelligence missions." See, story titled "DOD Establishes Technology and Privacy Advisory Committee" in TLJ Daily E-Mail Alert No. 620, March 11, 2003.

FOIA Dispute. The EPIC complaint states that on May 21, 2004, the EPIC submitted a FOIA request to the DOD requesting "all agency records (included but not limited to electronic records) concerning Defense Intelligence Agency (``DIA´´) use of a program or system known as ``Verity K2 Enterprise´´ for the purpose of analyzing intelligence and detecting terrorist activities." (Parentheses in original.)

The complaint also states that the EPIC requested expedited processing, and that the DOD has not produced responsive records, and has not responded to its request for expedited processing.

The complaint quotes extensively from the TAPAC's report, especially its recommendations regarding the protection of privacy.

The complaint alleges three causes of action under the FOIA, which is codified at 5 U.S.C. § 552 -- that the DOD has failed to timely respond to a request for expedited processing, that the DOD has failed to grant a request for expedited processing, and that the DOD has failed to complete its processing of the EPIC's request. The complaint requests that the Court order the DOD to immediately process the request for records, and produce records.

The TAPAC is chaired by Newton Minow, a former Chairman of the Federal Communications Commission (FCC). The EPIC website lists Mary Minow as a member of its Advisory Board.

People and Appointments

7/21. Intel Corporation named Bruce Sewell General Counsel, effective November 1, 2004. He will replace Thomas Dunlap. See, Intel release.

More Capitol Hill News

7/21. The House Ways and Means Committee (HWMC) approved HR 2971, the "Social Security Number Privacy and Identity Theft Prevent Act of 2004", by a vote of 33-0. See, HWMC release.

7/21. The House Commerce Committee's Subcommittee on Telecommunications and the Internet held a hearing titled "The Digital Television Transition: What We Can Learn From Berlin?" See, prepared statement of Rep. John Dingell (D-MI). See also, prepared testimony [26 pages in PDF] of Mark Goldstein (Government Accounting Office), prepared testimony of Greg Schmidt (LIN Television Corp. and the National Association of Broadcasters), and prepared testimony [PDF] of Michael Willner (Insight Communications and the National Cable & Telecommunications Association).

7/21. The House Government Reform Committee's Subcommittee on on Technology, Information Policy, Intergovernmental Relations and the Census held a hearing titled "Where's the CIO? The Role, Responsibility and Challenge for Federal Chief Information Officers in IT Investment Oversight and Information Management". See, report [68 pages in PDF] of the General Accounting Office (GAO) titled "Federal Chief Information Officers: Responsibilities, Reporting Relationships, Tenure, and Challenges"; prepared testimony [20 pages in PDF] of David Powner of the GAO titled "Information and Technology Management: Responsibilities, Reporting Relationships, Tenure, and Challenges of Agency Chief Information Officers"; and prepared testimony of Ira Hobbs (CIO of the Department of the Treasury).

7/21. The U.S. Court of Appeals (11thCir) issued its opinion [28 pages in PDF] in Peat v. Vanguard Research, a trade secrets case involving plasma energy systems. This is a diversity case to which the court applied the law of state in which the case arose, the Alabama Trade Secrets Act, which is codified at ALA. CODE § 8-27-1, et seq. The District Court found that Vanguard breached its contract with Peat and appropriated Peat's trade secrets, and awarded compensatory damages on both claims. The District Court reduced the jury's punitive damages award on the trade secrets claim. The Court of Appeals affirmed in part and reversed in part. It granted a new trial on the trade secrets claim based upon the erroneous admission of evidence by the District Court. This case is Peat, Inc. v. Vanguard Research, Inc., U.S. Court of Appeals for the 11th Circuit, App. Ct. No. 03-11565, an appeal from the U.S. District Court for the Northern District of Alabama, D.C. No. 99-02553-CV-BE-NE.

Go to News from July 16-20, 2004.