News from September 26-30, 2004

Hatch and Leahy Continue to Work on an Inducement of Infringement Bill

9/30. The Senate Judiciary Committee held an executive business meeting on Thursday, morning, September 30. The agenda again included consideration of S 2560, "Inducing Infringement of Copyrights Act of 2004". And again, the Committee did not take up this bill.

Instead, Sen. Orrin Hatch (R-UT) and Sen. Patrick Leahy (D-VT) organized an afternoon meeting with proponents and opponents of the bill, which creates a cause of action for inducement of infringement. Sen. Hatch and Leahy are the Chairman and ranking Democrat on the SJC. Their staffs presided at the meeting. Sen. Hatch participated in part of the meeting. See also, SJC's September 24 draft of the bill.

This meeting will continue on Friday morning, October 1, 2004. Also, the SJC scheduled another business meeting for Tuesday, October 5. (Its normal time for business meetings is Thursday morning.)

Sen. Hatch wrote in his prepared statement for the Thursday morning business meeting that "Senator Leahy and I are continuing our efforts to bring the affected parties together as we refine our copyright legislation, S.2560. While I do not contemplate action on this bill at today’s mark-up, negotiations will continue this afternoon to perfect language that will help bring an end to the rampant abuse of copyrighted material, for example, by some file sharing programs that facilitate the theft of music. At the same time, we must protect the rights of legitimate technology firms to develop faster and better products."

He added that "If I have to, I will lock up all of the key parties in a room until they come out with an acceptable bill that stops the bad actors and preserves technological innovation. I hope we will be able to bring the Committee a new draft at next week’s mark-up."

Sen. Leahy wrote in a prepared statement that "I have tried to work with Chairman Hatch on a number of fronts and we have had our share of successes. He and I are working hard in a bipartisan way to bring to fruition efforts to improve the law and provide appropriate and focused legal remedies to protect against copyright infringement."

Representatives from proponents of legislation, including the Entertainment Software Association (ESA), Motion Picture Association of America (MPAA), and the Recording Industry Association of American (RIAA), participated in the afternoon meeting.

Representatives from opponents, including the Center for Democracy and Technology (CDT), Consumer Electronics Association (CEA), Earthlink, Intel, Verizon, and the U.S. Telecommunications Association (USTA), also participated.

People and Appointments

9/30. Marcy Greene was named Assistant Division Chief of the Federal Communications Commission's (FCC) Enforcement Bureau's (EB) Telecommunications Consumers Division. The FCC stated in a release [PDF] that her responsibilities will include "managing and supervising investigations of potential violations of the Commission’s consumer protection rules for common carriers and other companies, as well as other matters."

More Capitol Hill News

9/30. The Senate Commerce Committee's Subcommittee on Communications held a hearing on the the security of the internet root servers and domain name system. See, prepared testimony of David Gross (Department of State), prepared testimony of John Kneuer (National Telecommunications and Information Administration), prepared testimony of Pat Twomey (P/CEO of the Internet Corporation for Assigned Names and Numbers), prepared testimony of Pat Morrissey (Department of Homeland Security), prepared testimony of Ari Balogh (VeriSign), and prepared testimony of Bill Manning (B Root Server).

9/30. The House Judiciary Committee amended and approved HR 3143, the "International Consumer Protection Act of 2003", a bill pertained to Federal Trade Commission (FTC) authority with respect to cross border fraud. HR 3143, which is sponsored by Rep. Cliff Stearns (R-FL) and Rep. Janice Schakowsky (D-IL) has already been approved by House Commerce Committee; it was also jointly and sequentially referred to the Judiciary, Financial Services, and International Relations Committees, for a period expiring on October 1, 2004. On October 1, these Committees were granted an extension for further consideration ending not later than November 19, 2004. The House Judiciary Committee on September 30 approved an amendment in the nature of a substitute offered by Rep. James Sensenbrenner (R-WI), the Chairman of the Committee, that consists of the substantive language from HR 4996, which is Rep. Stearns' and Rep. Schakowsky's revised version of the bill.

9/30. The Senate Judiciary Committee held over consideration of HR 2391, the "Cooperative Research and Technology Enhancement (CREATE) Act of 2004", at its September 30, 2004 business meeting. The House and Senate have both passed their own versions of this bill. The two versions are identical, so the only dispute is over who ultimately claims sponsorship.

9/30. The Senate Judiciary Committee amended and approved S 1635 the "L-1 Visa (Intracompany Transferee) Reform Act of 2003", at its September 30, 2004 business meeting.

9/30. The Senate Judiciary Committee approved S 2373 at its September 30, 2004 business meeting. This bill modifies the prohibition on recognition by U.S. courts of certain rights relating to certain marks, trade names, or commercial names, in the case of confiscations by the communist government of Cuba.

9/30. Sen. Joe Biden (D-DE) introduced S 2874, a bill to authorize appropriations for international broadcasting operations and capital improvements, in order to expand U.S. broadcasting to Arab and Muslim audiences. The bill was referred to the Senate Foreign Relations Committee.

More News

9/30. The Federal Communications Commission's (FCC) Wireline Competition Bureau (WCB) released an Order [9 pages in PDF] that amends the timing provisions of its Order and Notice of Proposed Rulemaking [47 pages in PDF] released on August 20, 2004 in its proceeding on the Section 251 unbundling requirements of incumbent local exchange carriers. The August 20 Order and NPRM pertains to unbundling rules following the March 2, 2004 opinion [62 pages in PDF] of U.S. Court of Appeals (DCCir) in USTA v. FCC (USTA II). This present Order (and attached Protective Order) is DA 04-3152 in WC Docket No. 04-313 and CC Docket No. 01-338.

9/30. The Federal Communications Commission (FCC) released the text [119 pages in PDF] of its Report and Order to allow for the digital conversion of low power TV (LPTV) and TV translator stations. The FCC announced, but did not release, this item at its September 9, 2004 meeting. This item is FCC 04-220 in MB Docket 03-185.

9/30. The Government Accountability Office (GAO) released a report [58 pages in PDF] titled "Interdepartment Radio Advisory Committee: IRAC Representatives Effectively Coordinate Federal Spectrum but Lack Seniority to Advise on Contentious Policy Issues".

9/30. The Copyright Office (CO) published a notice in the Federal Register that summarizes and states the effective date (November 1, 2004) for its rule specifying notice and recordkeeping requirements governing the reporting of certain uses of sound recordings performed by means of digital audio transmissions pursuant to statutory license
for the period October 28, 1998, through March 31, 2004. See, Federal Register, September 30, 2004, Vol. 69, No. 189, at Pages 58261 - 58262.

9/30. The Recording Industry Association of America (RIAA) announced that it "filed copyright infringement lawsuits against more than 700 illegal file sharers, including individuals at 26 different universities across the country". See, RIAA release.

District Court Holds National Security Letters Statute Unconstitutional

9/29. The U.S. District Court (SDNY) issued its opinion [122 page PDF scan] in ACLU v. Ashcroft, holding unconstitutional 18 U.S.C. § 2709, which provides that the Federal Bureau of Investigation (FBI) may issue National Security Letters (NSL) to phone companies and internet service providers (ISP) to certain obtain customer records. The Court held that the statute violates the Fourth Amendment because its allows the FBI to issue the order without any judicial involvement or review. The Court also held that it violates the First Amendment free speech clause because it bars the phone company or ISP from disclosing that it has received the NSL. The Department of Justice (DOJ) announced that it will appeal.

In April of this year the American Civil Liberties Union (ACLU) disclosed that it had filed a complaint in the District Court on behalf of itself and an undisclosed ISP. See, heavily redacted complaint [14 page PDF scan]. The just released opinion still does not identify the ISP. Nor does it reveal other details about the facts alleged, and causes of action plead, in the complaint.

The named defendants are Attorney General John Ashcroft, FBI Director Robert Mueller, and FBI Senior Counsel Marion Bowman. See also, story titled "Lawsuit Challenges Constitutionality of Law Allowing FBI to Obtain Records from Electronic Communication Service Providers" in TLJ Daily E-Mail Alert No. 887, April 29, 2004.

18 U.S.C. § 2709 was enacted as part of Title II of the Electronic Communications Privacy Act of 1986 (ECPA).

The statute has been amended several times since 1986. Most recently, the 2001 USA PATRIOT Act amended it to remove the requirement that there be a nexus to a foreign power. It expanded the scope to cover anything "relevant to an authorized investigation to protect against international terrorism or clandestine intelligence activities".

The Court wrote that "Generally speaking, Title II (as amended) allows the Government to obtain stored electronic communications information without the subscriber's permission only through compulsory process, such as a subpoena, warrant, or court order. Section 2709 is a notable exception to these privacy protections because it permits the FBI to request records upon a mere self-certification -- issued to the ISP or telephone company, not to the subscriber or to any court -- that its request complies with the statutory requirements." (Parentheses in original. Footnote omitted.)

§ 2709(a) provides that "A wire or electronic communication service provider shall comply with a request for subscriber information and toll billing records information, or electronic communication transactional records in its custody or possession made by the Director of the Federal Bureau of Investigation under subsection (b) of this section."

§ 2709(c) provides that "No wire or electronic communication service provider, or officer, employee, or agent thereof, shall disclose to any person that the Federal Bureau of Investigation has sought or obtained access to information or records under this section."

§ 2709(b)(2) provides that the FBI may "request the name, address, and length of service of a person or entity if the Director (or his designee) certifies in writing to the wire or electronic communication service provider to which the request is made that the information sought is relevant to an authorized investigation to protect against international terrorism or clandestine intelligence activities, provided that such an investigation of a United States person is not conducted solely upon the basis of activities protected by the first amendment to the Constitution of the United States." (Parentheses in original.)

The Court concluded that "S 2709 violates the Fourth Amendment because, at least as currently applied, it effectively bars or substantially deters any judicial challenge to the propriety of an NSL request. In the Court's view, ready availability of judicial process to pursue such a challenge is necessary to vindicate important rights guaranteed by the Constitution or by statute. On separate grounds, the Court also concludes that the permanent ban on disclosure contained in § 2709(c), which the Court is unable to sever from the remainder of the statute, operates as an unconstitutional prior restraint on speech in violation of the First Amendment."

The Court also enjoined the government "from using S 2709 in this or any other case as a means of gathering information from the sources specified in the statute." However, the Court stayed enforcement of its judgment for 90 days, to enable the DOJ to appeal.

The Department of Justice announced that it will appeal. Mark Corallo, the DOJ's Director of Public Affairs, stated in a release that "The New York district court has struck down as unconstitutional an important act of Congress, the 1986 National Security Letter statute (18 USC 2709). That decision takes away a tool for fighting terrorism that the Congress has authorized. The Department of Justice Department will appeal that decision."

He added that "The Justice Department will continue to defend our ability to protect the American people from our terrorist enemies."

He also stated that "We will also work with the Congress to clarify, improve and, where necessary, enhance our legal tools to fight the terrorists and prevent another attack."

This case is John Doe, American Civil Liberties Union, and American Civil Liberties Union Foundation v. John Ashcroft, Robert Mueller, and Marion Bowman, U.S. District Court for the Southern District of New York, D.C. No. 04-2614, Judge Victor Marrero presiding.

FCC Hosts Discussion of Wireline Competition Bureau Topics

9/29. The Federal Communications Commission's (FCC) Wireline Competition Bureau (WCB) hosted an event at which senior officials in the WCB discussed issues before the FCC and WCB. The speakers were Jeffrey Carlisle (Bureau Chief of the WCB), Michelle Carey (Division Chief of the WCB's Competition Policy Division), Jane Jackson (Associate Bureau Chief of the WCB), and Richard Lerner (Associate Bureau Chief and Chief of Staff of the WCB).

Carlisle discussed the WCB's current regulatory framework, which is based upon classifying services as either telecommunications or information, and then applying all of the requirements associated with that classification. He suggested that it would be helpful if Congress were to give the FCC more discretion with regulatory definitions. He also discussed network neutrality and Chairman Powell's notion of network freedom, as well as the possibility of replacing a service categorization approach with a network layers approach to regulation. See, following story titled "Carlisle Discusses the FCC's Bipolar World, Powell's Network Freedoms, and a Network Layers Model of Regulation".

Carlisle and Carey discussed issues related to the regulation of voice over internet protocol (VOIP) services. See, following story titled "FCC Officials Discuss VOIP Regulation".

E-Rate Fraud. Carlisle discussed the House Commerce Committee's investigation into fraud and abuse of the FCC's e-rate subsidy program. The Subcommittee on Oversight and Investigations has held three hearings.

Carlisle state that "schools and libraries is something that we hear about from them quite frequently. I had the pleasure of testifying before the Oversight and Investigations Subcommittee last Wednesday about it. That is going to continue to be an issue ..."

He continued that "I think that the Oversight and Investigations Subcommittee quite rightfully believes that it wants to really look into this program, and see if it is being administered efficiently, and to eliminate waste fraud and abuse. So I think there has been a lot of interest about that, and there will continue to be a lot of interest in the foreseeable future."

Recommendations for Practitioners. The speakers also addressed how people who practice before the FCC can be more effective in their dealings with the WCB.

Jackson suggested that "much goes on late in the game" through ex parte communications. Hence, she recommended that "you really need to watch what other people are filing", and promptly respond to new arguments and information.

She also cautioned that if practitioners come in with new arguments late in the process, the FCC's order is less likely to be sustained on review.

Carlisle offered several recommendations. First, he said that he has lots of problems, so, "solve my problems". That is, do not merely advocate what the FCC should not do. Rather, "come in and actually help me solve a problem." He added, "Give us the plan; help us connect the dots."

Second, he reiterated a point that is often made by FCC officials at gatherings with practitioners -- "just respond to our data requests". He elaborated that when they ask for data it is because they believe the parties have it. Also, "if we had it, we would not be asking you". He pleaded that parties should not withhold data, and complained that "I have seen this over and over and over again."

Third, he recommended that practitioners should not overstate their cases. That is, don't ask for too much, and be willing to compromise.

Other Subjects. Carlisle said that the three most important issues before the WCB are now (1) the triennial review remand, (2) the jurisdictional decision on voice over internet protocol (VOIP), and (3) access charges, intercarrier compensation, and universal service.

Lerner said that changes need to be made to the universal service contribution mechanism, because broadband and VOIP and wireless long distance are putting pressure on the current mechanism. He suggested that the FCC needs to move to a "number or connection based assessment".

The FCC's Monica Desai organized and moderated this event. She also asserted that the Federal Communications Bar Association (FCBA) hosted this event.

Carlisle Discusses the FCC's Bipolar World, Powell's Network Freedoms, and a Network Layers Model of Regulation

9/29. The Federal Communications Commission's (FCC) Wireline Competition Bureau (WCB) hosted an event at which senior officials in the WCB discussed issues before the FCC and WCB.

Jeffrey Carlisle, the Bureau Chief of the WCB, said that the FCC lives in a "bipolar world" in which much depends on the dichotomy of telecommunications service and information service. He suggested that it would be helpful to give the FCC more discretion with regulatory definitions.

He also discussed network freedom, network neutrality, bit discrimination, and a layers model of regulation. He took no position on whether the FCC should ensure network freedom or neutrality; it is a matter for the Commissioners. However, he said that there is a sea change in regulatory theory at the FCC as the FCC moves from focusing on opening a network that was designed to be closed, to, perhaps, keeping open a network that was designed to be open. He suggested that a network layers model could help, but that the current bipolar model does not recognize layers.

WCB's Bipolar World. The FCC's Monica Desai, who moderated the discussion, asked how the Telecommunications Act of 1996 should be revised. Carlisle responded first that "Congress is going to do what they want, and they are going to focus on what they want. And, they will ask us if we have an opinion. Or, they won't ask us."

Nevertheless, Carlisle continued that it would be helpful to allow more discretion with regulatory definitions. He said, "I said in my Congressional testimony in July on VOIP that one of the major issues that we have -- and it touches on competition, it touches on universal service, it touches on everything -- are these definitions that we have to deal with. The 1996 Act sets up a bipolar world ..."

Carlisle testified before the House Commerce Committee's Subcommittee on Telecommunications and the Internet on July 7, 2004. The hearing was titled "Voice Over Internet Protocol Services: Will the Technology Disrupt the Industry or Will Regulation Disrupt the Technology?"

He stated in his prepared testimony that "it is important when dealing with the public policy implications of revolutionary new technologies to start from the perspective of how to best create the world we all want to live in, rather than applying regulatory structures that may have been rendered obsolete. The relevant question is how we as a society deal with the fundamental change in electronic communication we are witnessing, rather than falling into rather abstract fights over definitions."

He continued that the FCC "can only act as it may be allowed under the Act, which divides the world into regulated telecommunications services and unregulated information services. While the Commission certainly has some ability to fine tune treatment of new technologies given its discretion and the flexibility granted to it by Congress, the Commission is still constrained by this structure. If you believe that VOIP and other new technologies are working changes in the telecommunications market such that new regulatory approaches are necessary, you may need to consider whether the tools the Commission has today are sophisticated enough for the task."

Carlisle elaborated at the September 29 event that the 1996 Act "sets up a bipolar world of telecommunication service and information service. You are one or the other. And it is based on our telecom service information service distinction."

He continued, "The problem is, is that everything depends on those definitions. So, the dynamic that you set up is that if you have one interest group that wants something to be a telecommunications service for a specific reason, they will push to get that, get it defined as such, and they won't care about any of the other implications. I think you probably need, given how technology is changing, you need a somewhat more nuanced approach to it. Now just what that is, I am not entirely sure. Because, I think, I don't know whether it is politically feasible actually have a very broad, sort of, discretion to the FCC to define things as they see them. But having some sort of approach that allows us to handle technologies that develop, outside of this very binary structure, would be tremendously helpful."

Network Freedom and Network Neutrality. Later in the program Carlisle, and the other WCB officials, were asked a long question regarding Chairman Michael Powell's four "net freedoms", "bit discrimination", and "layered approach" to regulation. He was asked "to what extent, if we are moving towards this broadband VOIP world, to what extent are you concerned about making it official policy to have these net freedoms, or relatedly, are you looking at the layered approach that some are suggesting? How does this all figure in to the thinking of the Bureau?"

On February 8, 2004 Powell gave a speech [PDF] titled "Preserving Internet Freedom: Guiding Principles for the Industry" at the Silicon Flatirons Symposium at the University of Colorado School of Law in Boulder, Colorado. He discussed his concept of "network freedom", and referenced the concept of "network layers". See, story titled "Powell Opposes Regulations to Impose Broadband Network Neutrality" in TLJ Daily E-Mail Alert No. 833, February 10, 2004.

Powell argued in that speech for a concept that he called "Net Freedom" -- the concept that consumers should be able to use their broadband connections to "use the content, applications and devices they want", without restrictions imposed by their broadband service providers. He also argued that at this time "the case for government imposed regulations regarding the use or provision of broadband content, applications and devices is unconvincing and speculative". However, he outlined a voluntary "road map" of rules to be followed by broadband service providers.

Powell's discussion of "network freedom" responded to various arguments that have been made for "network neutrality". For example, the Coalition of Broadband Users and Innovators (CBUI) has filed numerous comments with the FCC urging that it write a nondiscrimination rule. See especially, comment [3 pages in PDF] filed on November 18, 2002, and comment [23 pages in PDF] filed on July 17, 2003. See also comment [17 pages in PDF] submitted by law professors Lawrence Lessig (Stanford) and Timothy Wu (University of Virginia) on August 22, 2003 urging that the FCC adopt a network neutrality rule. See also, story on this subject titled "Cato Study Opposes FCC Imposition of Network Neutrality" in TLJ Daily E-Mail Alert No. 816, January 15, 2004.

Carlisle stated at the FCC's September 29 event that issues such as net freedom, bit discrimination, and layered models are a concern at the FCC. But, he said it was up to the Commissions to decide how to proceed on network freedoms and network neutrality.

He said this. "I think that it is a concern. I don't know though, whether it is a concern that, in the future that we have to be worried about, or a concern, something that we have to do now. What appropriate action would be to take now? Should the Commission move towards actually having a, sort of, rule structure around the net neutrality and the four freedoms? Should, is it more appropriate instead to say, policy of the Commission? I don't know. Those are decisions that the Chairman is going to have to discuss with the other Commissioners, and figure out, you know, what they want to do, and the timing of that."

Carlisle went on to discuss an ongoing "sea change" in regulatory theory at the FCC. "This issue is symptomatic of a larger, you know, sort of, bit discrimination issue, is symptomatic of a larger, sort of, sea change, in regulatory theory. I don't think that it should be put any other way. I am not exaggerating it; I am not underestimating it; I am not understating it either. I think we are moving from a world where for 30 years our regulations have been about, sort of, trying to open up a network that was designed as being a closed network. Well, now we have a network that was designed as being an open network, on which there could possibly be bottleneck access.

"Query, whether there is bottleneck access if you have multiple platforms providing access. But, theoretically, there could be bottleneck access, at least, in certain markets. So, what do you -- isn't that really a change in what you are doing from opening up networks, to ensuring that networks that are open remain open, at least to people who want to provide applications and services over that network That is really how the internet grew up. That is the strength of the internet. Is that where the regulatory theory now needs to go? Is it appropriate for us to have that role?"

Network Layers Approach to Regulation. Powell made only brief reference to "layers" in his February 8, 2004 speech. He said that "We must ensure that the various capabilities of these technologies are not used in a way that could stunt the growth of the economy, innovation and consumer empowerment. Thus, we must expand our focus beyond broadband networks -- the so-called ``physical layer´´ of the Internet's layered architecture."

The proponents of a network layers approach to regulation argue against regulating by categorizing industry sectors (telecommunications, information, cable) and then assigning to each category its own collection of rules. Instead, they argue that the regulatory model should consider the layers that make up the communications system. Stated in its simplest version, there are three layers: the physical layer across which communications travel, the code layer which includes such things as internet protocols, and the content layer of things that are communicated over the system.

For further discussions of the concepts of network layers, and network layers based regulation, see paper [74 pages in PDF] titled "A Horizontal Leap Forward: Formulating A New Public Policy Framework Based On The Network Layers Model" by Rick Whitt of MCI WorldCom; paper titled "A Layered Model for Internet Policy" by Kevin Werbach; and paper [19 pages in PDF] titled "From Consumers to Users: Shifting the Deeper Structures of Regulation Toward Sustainable Commons and User Access" by Yochai Benker. See, also book by Lawrence Lessig titled The Future of Ideas: The Fate of the Commons in a Connected World, at Chapter 2, and especially at pages 23-25.

Carlisle stated in his House testimony on July 7, 2004 that "MCI and others argue that the primary benefit of using IP to transmit voice is that it allows industry to move from using networks that are optimized for and dedicated to a single function, voice, to a network capable of delivering multiple functions. Accordingly, regulation should reflect the fact that services and applications are no longer tied to the physical infrastructure. If dozens or hundreds of competing services and voice applications are provided over the infrastructure layer, there is little or no justification for continued common carrier regulation at those levels. Rather, the focus of common carrier regulation should be on underlying facilities, where issues of market power might still exist."

On September 29, Carlisle asked rhetorically whether it is an appropriate role for the FCC to ensure that open networks remain open. He stated that "I think, the bit discrimination issue is, sort of, symptomatic of that larger issue. And, I, you know, think that the role for the Bureau in that is probably, sort of, doing the hard work in terms of trying to think what that means for our regulatory policies going forward."

He stated that "The things like the layered model model help you on that." But, he concluded, the WCB's regulatory model is bipolar, and doesn't recognize layers.

FCC Officials Discuss VOIP Regulation

9/29. The Federal Communications Commission's (FCC) Wireline Competition Bureau (WCB) hosted an event at which senior officials in the WCB discussed issues before the FCC and WCB, including voice over internet protocol (VOIP) applications and services. See, full story.

Opponents Criticize Latest Draft of Inducing Infringement of Copyright Act

9/29. Opponents of S 2560, the "Inducing Infringements of Copyright Act of 2004", have written letters to Senators urging them not to approve the bill. The Senate Judiciary Committee (SJC) has scheduled a business meeting for Thursday, September 30 at 9:30 AM. Consideration of S 2560 is on the agenda.

The agenda also includes consideration of other intellectual property and technology related bills, including HR 2391, the "Cooperative Research and Technology Enhancement (CREATE) Act of 2004", S 1635 the "L-1 Visa (Intracompany Transferee) Reform Act of 2003", and S 2373, a bill pertaining to recognition by U.S. Courts of trademarks confiscated by the communist government of Cuba. The agenda also includes consideration of numerous other bills, private bills, resolutions, and nominations.

On September 28, 2004 fifty companies and trade groups wrote a letter in which they argued against approval of draft version of the bill released by SJC staff on September 24.

They wrote that "The new draft, like the original S. 2560, relies on a vague and indeterminate ``totality of circumstances´´ standard of intent. Like the first Copyright Office draft, it predicates liability on undefined ``affirmative acts´´ -- but unlike that draft, is not limited to the ``dissemination´´ of works. Rather, the draft is addressed to the very introduction of products and services into commerce, and equates ``inducement´´ with the foreseeability of any significant infringement, no matter how positive the potential economic and social contribution of the product or service may be. This extends well beyond any concept that the Copyright Act or the Supreme Court has yet embraced; it would effectively expand copyright monopolies and, correspondingly, devalue patent grants. It thus implies a fundamental realignment of our intellectual property system."

The argue that "There seems a substantial likelihood that staple hardware and software products that are considered legal today would be found illegal tomorrow."

The signatories include phone companies, consumer electronics makers, library groups, and technology related trade groups. The signatories also include Earthlink, Google, Yahoo, Sun Microsystems and Red Hat.

Also on September 28, Jerry Berman, President of the Center for Democracy and Technology (CDT), wrote a letter [2 pages in PDF] to Sen. Orrin Hatch (R-UT), Sen. Patrick Leahy (D-VT), and the other members of the SJC urging them not to approve S 2560.

He states that the draft version of the bill released by SJC staff on September 24 should not be approved because it "would chill new technologies".

He asserts that this bill could impact iTunes, e-mail, and instant messaging, and that "Providers of ISP services, DVD recorders, Internet search tools, home media centers, or even computers could face liability if just a small percentage of people use their products unlawfully, resulting in ``widespread infringement.´´ They face huge monetary damages or injunctions, and could even be forced by courts to redesign their products."

He also asserts that the bill's "exceptions to liability are too narrowly worded to exempt developers and providers of valuable products and services."

People and Appointments

9/29. Russell Hanser was named Special Counsel to the Chief of the Federal Communications Commission's (FCC) Wireline Competition Bureau's (WCB) Competition Policy Division (CPD). He has worked on the VOIP aspects of the IP enabled services proceeding, the triennial review order, Section 271 applications, and other matters. Before joining the FCC he worked for the law firm of Wilmer Cutler & Pickering. In addition, Terri Natoli was named Assistant Chief of the CPD. She has worked on the Pulver.com petition, broadband and VOIP issues, and other matters. Before she joined the FCC in 2002, she worked for Teligent. She previously worked for GTE and Sprint. See, FCC release.

9/29. William Swanson was named to the Board of Directors of Sprint. He is CEO of Raytheon Company. See, Sprint release.

More News

9/29. Electronic Privacy Information Center (EPIC) published the 2004 edition of a book titled Litigation Under the Federal Open Government Laws. This book covers the Freedom of Information Act (FOIA), Privacy Act, Government in the Sunshine Act, and Federal Advisory Committee Act. This book is edited by Harry Hammitt. It is 572 pages. Its price is $40.00. See, EPIC order page.

9/29. The Progressive Policy Institute (PPI) released a paper [20 pages in PDF] titled "Technological Innovation Without Big Brother". It concludes that "with the right rules and safeguards in place, government can increase its use of advanced information technology tools and realize significant benefits for society as a whole without causing unacceptable harms to the privacy of citizens." The paper was written by Shane Ham, a former PPI policy analyst, and Robert Atkinson, Director of the PPI's Technology and New Economy Project. The PPI is a Democratic Party think tank. See also, summary.

9/29. The House Judiciary Committee (HJC) amended, and then approved by a vote of 19-12, those portions of HR 10, the "9-11 Recommendations Implementation Act", that fall within its jurisdiction. See, HJC release. Also on September 29, the House Financial Services Committee approved those portions of the bill that fall within its jurisdiction. See, HFSC release.

FCC News

9/29. The Federal Communications Commission (FCC) announced that it will delay the enforcement of its Red Light Rule from October 1, 2004 to November 1, 2004. The FCC explained it a Public Notice [PDF] that "Once the rule takes effect, anyone filing an application or seeking a benefit that is discovered to be delinquent in debt owed to the FCC will be notified of the delinquency and given 30 days to pay the debt in full or make other satisfactory arrangements. Failure to do so will result in dismissal of the application or other request for a benefit. The rule is scheduled to go into effect on October 1, 2004."

House Approves Copyright Bill

9/28. The House approved HR 4077, the "Piracy Deterrence and Education Act of 2004 ", by a voice vote. The Senate has yet to take any action on this bill. See, full story.

Senate Judiciary Committee Releases Agenda for September 30 Meeting

9/28. The Senate Judiciary Committee released the agenda for its business meeting of Thursday, September 30, 2004. The agenda includes 14 nominations, 16 bills, 6 private bills, and 4 resolutions. The Committee typically holds over most of the items on its agenda. This agenda includes the Inducing Infringement of Copyrights Act.

Nevertheless, the items on its agenda include the following:

Inducement of Infringement. S 2560 is the bill sponsored by Sen. Orrin Hatch (R-UT), Sen. Patrick Leahy (D-VT), and others, to create a new cause of action in the Copyright Act for inducement of infringement. See, draft version of this bill released by the Senate Judiciary Committee on September 24, 2004.

This bill was on the Committee' agenda last week, but was held over.

CREATE Act. This is the "Cooperative Research and Technology Enhancement (CREATE) Act of 2004", a bill to promote collaborative research.

The House passed its version of the bill, HR 2391, on March 10, 2004 by a voice vote. See, story titled "House Passes CREATE Act" in TLJ Daily E-Mail Alert No. 854, March 11, 2004. The Senate approved its version, S 2192, on June 25, 2004. The bills are substantially the same. The report language that accompanies the two bills differs.

These bills amend Section 103(c) of the Patent Act, which is codified at 35 U.S.C. § 103, to address the August 8, 1997 opinion of the U.S. Court of Appeals for the Federal Circuit in OddzOn Products, Inc. v. Just Toys, Inc., which ruled that derived prior art may serve as evidence of obviousness.

Section 103(c) currently provides a safe harbor for inventions that are the product of collaboration involving co-inventors within a single company. However, scientific research is increasingly being conducted jointly by multiple companies, universities, government labs, and/or other entities.

The holding in the OddsOn case threatens to discourage collaborative research, where the scientists involved are not employed by the same company or entity. Basically, the Court interpreted Section 103(c) to mean that prior art under Sections 102(f) or 102(g) could be used to determine the obviousness of an invention where there is no common ownership or assignment of the invention and information being shared among the collaborators, and the information exchanged is not publicly known. The bill amends Section 103 to provide that patentability is not precluded in the case of research conducted across entities pursuant to a joint research agreement.

9th Circuit Rules in Compelled Speech Case

9/28. The U.S. Court of Appeals (9thCir) issued its split opinion [PDF] in RJ Reynolds v. Shewry, a First Amendment case involving compelled speech. This case does not involve any technology or communications industry sectors. It is about tobacco. However, government compelled speech has a long history in communications.

The state of California imposes a tax on cigarettes. It then uses some of the revenues to fund a media advertising campaign that criticizes the tobacco industry. The majority wrote that "this campaign has been to portray the tobacco industry itself as deceptive and as an enemy of the public health".

R.J. Reynolds and other tobacco companies filed a complaint in U.S. District Court (EDCal) against Sandra Shewry, in her capacity as Director of the California Department of Health Services, and others, alleging that California violates their First Amendment right not to be compelled to fund speech.

The District Court granted California's motion to dismiss for failure to state a claim upon which relief can be granted. The tobacco companies brought this appeal.

Judge Raymond Fisher wrote the opinion of the Court, in which Judge Betty Fletcher joined. The majority affirmed the District Court.

The Court distinguished the Supreme Court's recent opinion in United States v. United Foods, Inc., 533 U.S. 405 (2001).

In that case Justice Anthony Kennedy wrote, in holding unconstitutional a tax used to fund speech, that "Just as the First Amendment may prevent the government from prohibiting speech, the Amendment may prevent the government from compelling individuals to express certain views ... First Amendment concerns apply here because of the requirement that producers subsidize speech with which they disagree."

Judge Fisher reasoned that United Foods is inapplicable because in the California case the "tax is used to produce a message that indisputably comes from the government itself."

Fisher wrote too that "It has long been established that the First Amendment prohibits the government from compelling citizens to express beliefs that they do not hold", but that "Nothing in United Foods suggests that the compelled speech doctrine applies to situations where the government imposes an excise tax on private citizens and then uses the money to speak in the name of the government itself."

He concluded that "When the government acts as a speaker it may espouse views that directly contradict those of taxpayers without interfering with taxpayers’ freedom of expression. In a democracy based on majority rule, such a conclusion is inescapable."

Judge Stephen Trott wrote a dissent in which he quoted from the Constitution ("Congress shall make no law ... abridging the freedom of speech"), from Thomas Jefferson ("To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves is sinful and tyrannical"), and from John Marshall ("the power to tax is the power to destroy").

He concluded that "review under any of the available standards reveals that the compelled assessments in this case constitute an exceptional case of government intrusion on the right not to be compelled to finance speech. Indeed, the Act is designed to force one particularly disfavored group to fund speech directly undermining that group's reputation. Such state action offends the very essence of the First Amendment."

This case is R.J. Reynolds Tobacco Company, et al. v. Sandra Shewry, et al., U.S. Court of Appeals for the Ninth Circuit, App. Ct. No. 03-16535, an appeal from the U.S. District Court for the Eastern District of California, D.C. CV-03-00659-LKK, Judge Lawrence Karlton presiding.

People and Appointments

9/28. BellSouth announced several changes in its Washington DC office. Gregg Morton was named VP of Legislation and Chief of Staff of the BellSouth Governmental Affairs, in Washington DC. He is a long time BellSouth employee, and a native of South Carolina. Robert Blau was named VP -- Public Policy Development. He had been VP -- Executive and Federal Regulatory Affairs. Jonathan Banks was named VP -- Executive and Federal Regulatory Affairs. Herschel Abbott remains VP -- Government Affairs. Bill McCloskey remains BellSouth's Washington DC press contact.

More News

9/28. The Federal Communications Commission (FCC) released the text [128 pages in PDF] of its Ninth Annual Report to Congress on the state of competition in Commercial Mobile Radio Services (CMRS). The FCC adopted, but did not release, this item at its September 9, 2004 meeting. See, story titled "FCC Adopts Report to Congress on Competition in the Commercial Wireless Industry" in TLJ Daily E-Mail Alert No. 976, September 14, 2004. This item is FCC 04-216 in WT Docket No. 04-111.

9/28. The House Commerce Committee's Subcommittee on Commerce, Trade and Consumer Protection held a hearing titled "Protecting the Privacy of Consumers' Social Security Numbers". The hearing also addressed HR 2971, the "Social Security Privacy and Identity Theft Act". See, prepared testimony [24 pages in PDF] of Barbara Bovbjerg (Government Accountability Office), and prepared testimony of Chris Hoofnagle (Electronic Privacy Information Center). Rep. Cliff Stearns (R-FL), the Chairman of the Subcommittee, presided. See, Stearns release.

Donaldson Addresses New Technologies and Regulation NMS

9/27. Securities and Exchange Commission (SEC) Chairman William Donaldson gave a speech in New York City to the Financial Services Leadership Forum in which he stated that one of his goals at the SEC is to "make the securities markets more efficient and transparent by updating practices and requirements and taking advantage of modern technology".

William DonaldsonDonaldson (at right) elaborated that "Since the creation of the national market system in 1975, new technologies and trading patterns have strained the existing facilities and rules that link our securities markets. The Commission has started the process of putting forward ideas on how to modernize our markets in the form of proposed Regulation NMS."

He added that "It encompasses a broad set of proposals designed to improve the regulatory structure of the U.S. equity markets. These proposals target four substantive areas -- trade-throughs, market access, sub-penny quoting, and market data. While this is an issue that certainly merits action sooner rather than later, any reforms we initiate will have far-reaching consequences. We are still reviewing a number of proposed enhancements to NMS and hope to bring forth our new rules shortly."

Ridge Addresses Public Safety Interoperability

9/27. Secretary of Homeland Security Tom Ridge gave a speech in New Orleans, Louisiana at an event titled "Technologies for Public Safety in Critical Incident Response Conference and Exposition 2004". He addressed, among other topics, public safety interoperability. See also, DHS release.

He stated that the Department of Homeland Security (DHS) has established an Office of Interoperability and Compatibility (OIC), effective October 1, and that its Director will be David Boyd.

Ridge said that the OIC "will incorporate and build on SAFECOM’s bottom-up approach and expand the focus on interoperability beyond communications into equipment, training, and other areas that may be identified in the future."

He added that "interoperability does not happen overnight. There is no switch that you can just turn on that allows everyone to communicate with each other. It is a process that has taken, and will continue to take, many years. The interoperability process is a continuum moving from simply swapping radios, to electronic patches that can receive signals transmitted over any system and re-broadcast them to all the others, to a system where everyone is working on a common frequency."

"The process involves interdependent parts moving together -- from technology and training to governance, standard operating procedures, and frequency of use of the communications tools. All these aspects must be in place and be synchronized to achieve success", said Ridge.

Attorney General John Ashcroft also spoke at this conference. He stated that the Department of Justice's (DOJ) National Institute of Justice has taken steps to "Develop computer algorithms to improve the analysis of handwriting samples".

People and Appointments

9/27. Marc Gary was named General Counsel of BellSouth. He joined BellSouth in 2000. Before that he was a partner at the law firm of Mayer Brown & Platt.

More News

9/27. The Government Accountability Office (GAO) released a report [54 pages in PDF] titled "Department of Homeland Security: Formidable Information and Technology Management Challenge Requires Institutional Approach". This report finds that the Department of Homeland Security (DHS) "is working to address the daunting challenge of standardizing and integrating the various legacy IT environments and management approaches it inherited from its predecessor agencies while it is concurrently attempting to ensure that existing levels of IT support for critical homeland security missions are not only maintained but improved in the near term. To do so, the department has, among other things, made progress in establishing seven key information and technology management disciplines. However, fully establishing and institutionalizing these disciplines remains a work in progress that has yet to be accomplished."

9/27. The Department of Justice's (DOJ) Antitrust Division's Director of Operations, which includes the Premerger Notification Unit (PNU), moved from the DOJ's Patrick Henry Building on D Street to the DOJ's main building on Pennsylvania Ave., effective September 27. The new mailing address for the PNU is Department of Justice, Antitrust Division, Office of Operations, Premerger Notification Unit, 950 Pennsylvania Avenue, NW, Room 3335, Washington, DC, 20530. See, DOJ release.

9/27. The U.S. Court of Appeals (1stCir) issued its opinion on petition for rehearing in USA v. Hilton, a case regarding the Child Pornography Prevention Act (CPPA), and computer generated images. This case was commenced in 1997, before passage of the PROTECT Act. In 2002 the Supreme Court issued its opinion [PDF] in Ashcroft v. Free Speech Coalition, 535 U.S. 234, holding unconstitutional on First Amendment and overbreadth grounds provisions of the CPPA banning computer generated images depicting minors engaging in sexually explicit conduct. The Supreme Court's opinion opened the door for all digital child pornographers to escape conviction by falsely asserting that their images are computer generated. This is an assertion that is difficult for prosecutors to disprove beyond a reasonable doubt. Hence, the Congress passed the Prosecutorial Remedies and Other Tools to end the Exploitation of Children Today Act of 2003 (or PROTECT Act). This bill shifted the burden of proof on the issue of virtual pornography from the prosecution to the defense. See, §§ 501-513 of the conference report [118 pages PDF] on S 151 (107th Congress). See also, story titled "House and Senate Pass Conference Report on Child Protection Bill" in TLJ Daily E-Mail Alert No. 642, April 11, 2003.

9/27. The Federal Communications Commission (FCC) released the text [137 pages in PDF] of its Report and Order and Further Notice of Proposed Rulemaking regarding wireless services in rural areas. The FCC adopted, but did not release, this item at its July 8, 2004 meeting. This item is 04-166 in WT Docket Nos. 02-381, 01-14, and 03-202.

Go to News from September 21-25, 2004.