Court of Appeals Denies Petitions for Review in Northpoint v. FCC

7/15. The U.S. Court of Appeals (DCCir) issued its opinion [PDF] in NorthPoint v. FCC, affirming the Federal Communications Commission's (FCC) rules allowing terrestrial multichannel video distribution and data service (MVDDS) to share the 12.2-12.7 GHz band with direct broadcast satellite (DBS) services, and affirming the FCC's decision to auction MVDDS use of the band.

At issue are the FCC's final orders allowing sharing of the 12 GHz band, and providing for the auctioning of this spectrum. Both Northpoint and DBS providers (EchoStar, Directv, SES Americom, and their Satellite Broadcasting and Communications Association) brought petitions for review and appeals.

See, full story.

Court Allows AOL To Waive A-C Privilege for Communications Between Corporate Counsel and Employees

7/15. The U.S. Court of Appeals (4thCir) issued its opinion [12 pages in PDF] in In Re: Grand Jury Subpoena, a case regarding application of the attorney client privilege to communications between attorneys for a corporation -- in this case AOL Time Warner -- and employees of the corporation. AOL, but not the employees, later asserted a waiver of the attorney client privilege. The Court of Appeals affirmed the District Court's denial of the three employees' motions to quash grand jury subpoenas for AOL's records regarding the communications.

This case grows out of the Securities and Exchange Commission's (SEC) and Department of Justice's (DOJ) investigation of AOL's relation with PurchasePro, a business to business (B2B) company. In house counsel for AOL, as well as outside counsel for AOL (the law firm of Wilmer Cutler) interviewed the three employees of AOL who bring the present appeals.

These attorneys stated to the employees before hand that the communications were privileged, that the privilege belonged to AOL, and that the decision to waive it belonged to AOL. They also stated that the attorneys could represent the employees. They also stated that the employees could retain their own counsel.

A grand jury of the U.S. District Court (EDVa) issued subpoenas for AOL's records regarding their communications with the three employees, including written records reflecting interviews. AOL asserted waivers of the attorney client privilege. Attorneys for the three employees asserted the attorney client privilege, and moved to quash the subpoenas. One of the three also asserted that that the information he disclosed to the investigating attorneys was privileged under the common interest doctrine.

The District Court denied the motions to quash. This appeal followed.

The Court of Appeals affirmed. It rejected that argument that the subjective understanding of the purported client is sufficient to create an attorney client relationship, with an attorney client privilege attaching to the purported client. Rather, the Court of Appeals held that the "essential touchstones for the formation of an attorney-client relationship between the investigating attorneys and the appellants were missing at the time of the interviews. There is no evidence of an objectively reasonable, mutual understanding that the appellants were seeking legal advice from the investigating attorneys or that the investigating attorneys were rendering personal legal advice."

The Court added that "An individual’s subjective belief that he is represented is not alone sufficient to create an attorney-client relationship", and that "the putative client must show that his subjective belief that an attorney-client relationship existed was reasonable under the circumstances." The Court concluded that the employees did not have a reasonable belief.

The Court opinion identifies only one of the three employees, Kent Wakeford. In January of 2005 a grand jury of the U.S. District Court (EDVa) returned an indictment of Wakeford, another former AOL employee, and three former Purchase Pro employees, alleging conspiracy, two counts of securities fraud, two counts of making false statements to PurchasePro’s auditors, and 17 counts of wire fraud. See, DOJ release [PDF].

This case is In Re: Grand Jury Subpoena, and consolidated appeals, U.S. Court of Appeals for the 4th Circuit, App. Ct. Nos. 04-4410, 04-4411, and 04-4673, appeals from the U.S. District Court for the Eastern District of Virginia, at Alexandria, Judge Gerald Bruce Lee presiding, D.C. Nos. CR-04-178-MG and CR-04-178. Judge Samuel Wilson (sitting by designation) wrote the opinion of the Court of Appeals, in which Judges Niemeyer and Wilkins joined.

DC Circuit Affirms in Shays v. FEC

7/15. The U.S. Court of Appeals (DCCir) issued its divided opinion [84 pages in PDF] in Shays v. FEC, a judicial resolution of disagreements between the Federal Election Commission's (FEC) and four Representatives and Senators regarding rules implementing the Bipartisan Campaign Reform Act of 2002 (BCRA).

This statute, which is also known as McCain Feingold, is now Public Law No. 107-155. Sen. John McCain (R-AZ) and Sen. Russ Feingold (D-WI) were the lead sponsors of the bill in the Senate. Rep. Christopher Shays (R-CT) and Rep. Marty Meehan (D-MA) were the lead sponsors in the House.

As required by the BCRA, the FEC promulgated implementing regulations.

Rep. Shays and Rep. Meehan then filed a complaint in the U.S. District Court (DC) challenging many of these regulations. Sen. McCain and Sen. Feingold submitted an amicus curiae brief. The District Court, Judge Colleen Kotelly presiding, overturned 14 parts of the FEC's implementing regulations. The District Court also held that the Congressmen have standing. See, Shays v. FEC, 337 F.Supp.2d 28 (D.D.C. 2004).

One part of the District Court's decision is significant for technology law, and in particular, for political speech on the internet. The BCRA provides for regulation of certain "public communications"s. It includes a definition of "public communication", which is now codified at 2 U.S.C. § 431(22). It provides that "The term ``public communication´´ means a communication by means of any broadcast, cable, or satellite communication, newspaper, magazine, outdoor advertising facility, mass mailing, or telephone bank to the general public, or any other form of general public political advertising."

The FEC promulgated a rule that provides that "The term public communication shall not include communications over the Internet." This is codified at 11 C.F.R. § 100.26. The District Court held that the FEC lacked authority to do this. Hence, certain internet communications, such as personal blogs, web sites, and e-mail, will now be subject to federal regulation under the FECA as "public communication"s.

The FEC appealed with respect to five of the fourteen overturned rules. It did not appeal the portion of the District Court ruling that threatens internet speech. The FEC voted 4-2 against appealing this part. The vote was partisan. The three Democrats on the Commission, and one of the three Republicans, voted against the appeal. Moreover, this one Republican, Brad Smith, stated on June 28 that he would have voted to appeal, if there had been a fourth vote.

The just issued opinion of the Court of Appeals has nothing to say about internet speech, political blogs, personal web sites, or e-mail lists. The Court of Appeals did, however, affirm the five challenged parts of the District Court's judgment.

As a result of the District Court's unchallenged ruling regarding regulation of internet speech, the FEC is now in the process of writing news rules regulating speech on the internet. The FEC adopted its notice of proposed rulemaking on March 24, 2005. It held two days of public hearings on June 28 and 29, 2005. It has yet to adopt and release its new rules.

Judge Karen Henderson wrote a fourteen page dissent to the just issued opinion. She raised the obvious question. How is it that Members of Congress have standing to challenge regulations? Neither Shays nor Meehan, nor McCain nor Feingold alleged any real injury from the FEC's regulations. The FEC has taken no action against them.

Rather, they essentially disagree with the regulations on policy grounds. However, they did claim injury based upon their allegation that the FEC's BCRA regulations do not sufficiently protect them from prohibited campaign practices.

The two Judges of the majority found that there is standing, based upon Shays' and Meehan's claim's of hypothetical harm to competition in elections. However, this opinion will not likely stand as precedent for the proposition that legislators have standing to challenge any regulation. The Court's finding of standing was based upon its analysis that the FEC's regulations pertain to election contests, and legislators are competitors in these contests. In contrast, many agency rules regulate commercial markets, and legislators are not economic competitors in most of these markets.

Also, the Court did not discuss the variety of legislative remedies available to legislators to influence the regulatory output of the federal agencies. The Congress can pass an another statute, including one revoking authority for the regulations, or mandating an new rulemaking proceeding. The Senate can reject the President's nominees for that agency. Finally, the Congress can withhold or limit funding for an agency.

This case is Christopher Shays and Martin Meehan v. FEC, U.S. Court of Appeals for the District of Columbia, App. Ct. No. 04-5352, an appeal from the U.S. District Court for the District of Columbia, Judge Colleen Kotelly presiding, D.C. No. 02cv01984.

GAO Reports on Pervasive Information Security Weaknesses at 24 Agencies

7/15. The Government Accountability Office (GAO) released a report [56 pages in PDF] titled "Information Security: Weaknesses Persist at Federal Agencies Despite Progress Made in Implementing Related Statutory Requirements".

The report finds that "Federal agencies have not consistently implemented effective information security policies and practices. Pervasive weaknesses exist in almost all areas of information security controls at 24 major agencies, threatening the integrity, confidentiality, and availability of information and information systems."

The report examined weaknesses in five areas. "Access controls were not effectively implemented; software change controls were not always in place; segregation of duties was not consistently implemented; and continuity of operations planning was often inadequate. These weaknesses exist because agencies have not yet fully implemented strong information security management programs. As a result, federal operations and assets are at increased risk of fraud, misuse, and destruction. In addition, these weaknesses place financial data at risk of unauthorized modification or destruction, sensitive information at risk of inappropriate disclosure, and critical operations at risk of disruption."

The GAO examined 24 federal agencies. The report found the Department of Justice (DOJ), Department of Commerce (DOC), and the Department of Homeland Security (DHS) lacking in all five areas. The GAO did not examine the Federal Communications Commission (FCC).

The report elaborates that "Federal agencies and our nation’s critical infrastructures -- such as power distribution, water supply, telecommunications, national defense, and emergency services -- rely extensively on computerized information systems and electronic data to carry out their missions. The security of these systems and data is essential to prevent data tampering, disruptions in critical operations, fraud, and inappropriate disclosure of sensitive information. Protecting federal computer systems and the systems that support critical infrastructures has never been more important due to escalating threats of computer security incidents, the ease of obtaining and using hacking tools, the steady advances in the sophistication and effectiveness of attack technology, and the emergence of new and more destructive attacks."

The report also finds that "the government is making progress in its implementation" of the provisions Federal Information Security Management Act (FISMA), which the Congress enacted in 2002, but that "agencies continue to have difficulty effectively protecting their information and information systems".

The report was prepared for the Chairman and ranking Democrats on the House Government Reform Committee (HGRC) and the Senate Homeland Security and Governmental Affairs Committee.

Rep. Tom Davis (R-VA), Chairman of the HGRC, stated in a release that "Today's GAO report makes several recommendations that would help improve the accuracy of the reporting requirements and give oversight bodies, such as this Committee, a more complete picture of the agencies' information security progress. The FISMA process is not a perfect one. I think it provides the agencies with a strong management framework, but I recognize that it is not a panacea; there may be a need for amendments to facilitate implementation of the security concepts that drive FISMA."

Rep. Davis added that "The FISMA process is still a young one; as it matures, the guidance will go through growing pains and require further changes. Given the ever evolving nature of cyber-threats, complacency is not an option. Having said that, we want to ensure that FISMA compliance does not become a paperwork exercise where agencies comply with the letter, but not the spirit, of the law. We don't want them filling out forms to simply fill out forms."

On Tuesday, July 19, 2005 at 2:00 PM, the Senate Homeland Security and Governmental Affairs Committee's Subcommittee on Federal Financial Management, Government Information, and International Security will hold a hearing titled "Securing Cyberspace: Efforts to Protect National Information Infrastructures Continue to Face Challenges". The witnesses will be David Powner (GAO), Andy Purdy (acting Director of the National Cyber Security Division of the Department of Homeland Security), Paul Skare (Siemens Power Transmission & Distribution Inc.), and Thomas Jarrett (Delaware Department of Technology and Information). See, notice.

8th Circuit Holds That It Has Jurisdiction Over Patent Counterclaims

7/15. The U.S. Court of Appeals (8thCir) issued its opinion [11 pages in PDF] in Schinzing v. Mid-States Stainless, a case involving patent issues.

The plaintiff, Walter Schinzing, is an inventor. The present case involves technology for washing wheelchairs. Schinzing holds a patent. He entered into a agreement with Mid-States Stainless, Inc. in which he licensed the technology, in return for the payment of royalties.

However, he did not sue Mid-States for patent infringement. Rather, he filed a complaint in state court in the state of Minnesota alleging breach of the license agreement for failure to pay royalties. Mid-States removed the action to the U.S. District Court (DMinn), and counterclaimed for declaratory judgment of patent invalidity and non-infringement. (Mid-States argues that the patented invention was based in part upon a prior student report prepared for a class at the University of Northern Iowa.)

The District Court held that Mid-States breached the license agreement, and that the patent is not invalid. The District Court also denied Mid-States' motion for judgment on the non-infringement issue.

Mid-States appealed, to the 8th Circuit, rather than the Federal Circuit. The 8th Circuit affirmed in part, reversed in part, and remanded. But first, it addressed the jurisdictional question.

The Court of Appeals held that "We are required to exercise jurisdiction, however, under the holding of Holmes Group v. Vornado Air Circulation, 535 U.S. 826, 829-31 (2002), which makes clear that the Federal Circuit’s jurisdiction attaches when a plaintiff's well-pleaded complaint asserts a claim arising under federal patent law, but not when the patent issue is raised for the first time in a defendant's counterclaim. Because Schinzing's complaint alleged no claims arising under federal patent law and the patent issues arise solely from Mid-State’s counterclaim, appellate jurisdiction properly lies with us."

The Congress may enact legislation that would replace the rule announced in Vornado, and Court of Appeals cases implementing Vornado.

On June 16, 2005, Rep. Lamar Smith (R-TX), the Chairman of the House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property (CIIP), introduced HR 2955, the "Intellectual Property Jurisdiction Clarification Act of 2005". The CIIP Subcommittee held a hearing on this issue on March 17, 2005. The CIIP Subcommittee approved HR 2955 on June 28, 2005. See also, story titled "CIIP Subcommittee to Mark Up Intellectual Property Jurisdiction Clarification Act" in TLJ Daily E-Mail Alert No. 1,162, June 27, 2005.

The full Committee has not yet approve the bill. Also, the Senate has yet to approve such a bill.

One of the arguments that the opponents of Vornado and its progeny have advanced is that allowing multiple circuits to hear appeals on patent law issues will result in a lack of uniformity. However, the Court of Appeals held in the present case that "In examining this case, we adopt the Federal Circuit's precedent on substantive issues of patent law."

In addition, the Court of Appeals concluded that the District Court failed to construe the claims of the patent, and therefore, remanded.

This case is Walter Schinzing v. Mid-States Stainless, Inc., U.S. Court of Appeals for the 8th Circuit, App. Ct. No. 04-2535, an appeal from the U.S. District Court for the District of Minnesota. Judge Wollman wrote the opinion of the Court of Appeals, in which Judges Gibson and Colloton joined.

People and Appointments

7/15. Thomas Donohue resigned as a Director of Qwest. Donohue is the P/CEO of the U.S. Chamber of Commerce. See, Qwest release.

More News

7/15. The Progressive Policy Institute (PPI), a Democratic think tank based in Washington DC, released a paper [7 pages in PDF] titled "The Progressive Case for CAFTA". It was written by Edward Gresser of the PPI. See also, summary.

7/15. The Progress and Freedom Foundation (PFF) released a paper [PDF] titled "Confusing Success with Access: Correctly Measuring Concentration of Ownership and Control in Mass Media and Online Services". It was written by Bruce Owen.

7/15. The World Trade Organization (WTO) released its annual report [180 pages in PDF] for 2005.

3rd Circuit Denies Petition for Review in SBC v. FCC

7/14. The U.S. Court of Appeals (3rdCir) issued its opinion [46 pages in PDF] in SBC v. FCC, a petition for review of the Federal Communications Commission's (FCC) final order of September 3, 2003, regarding intercarrier compensation. (See, 18 FCC Rcd 18441.)

The order under review, which the FCC characterized as an interpretation of its rules, provided that a competitive local exchange carrier (CLEC) is entitled to the tandem rate where the CLEC's switch serves a geographic area comparable to the area served by the incumbent local exchange carrier's (ILEC) tandem switch.

The FCC issued the order under review without a formal rulemaking proceeding, and without adhering to the notice and comment requirements of the Administrative Procedure Act (APA).

SBC, which is an ILEC, filed a petition for review with the Court of Appeals. It asserted that the order violated the notice and comment requirement, and that it was arbitrary and capricious.

First, SBC argued that the the order under review made substantive changes to the FCC's Local Competition Order, and therefore, was legislative in nature, and hence, subject to the requirements of the APA. The FCC asserted that the order under review was interpretative in nature, and hence, not subject to the notice and comment requirements of the APA.

The Court of Appeals ruled that the order under review "did not modify or substantively change the FCC’s prior interpretation of the regulation or impose new duties upon regulated parties, and therefore the APA’s notice and comment requirements do not apply. The Order Under Review is, at most, interpretative. It simply clarified, and explained, an existing rule." Hence, the Court denied the petition for review on this issue.

Second, SBC argued that the under under review is arbitrary and capricious.

The Court of Appeals began with a 15 page summary of the provisions of the Telecommunications Act of 1996 pertaining to interconnection by telecommunications carriers, intercarrier compensation, the Local Competition Order, and the order under review.

The Court then offered a briefer summary. It wrote, "To reiterate, when a customer of carrier A makes a local call to a customer of carrier B, carrier B must use its facilities to connect (or ``terminate´´) that call to its customer. Under the Act, carrier A (the ``originating´´ carrier) is required to compensate carrier B (the ``terminating´´ carrier) for using carrier B's facilities to connect the call to carrier B's customer."

The Court continued that "SBC is an ILEC. As we also explained earlier when discussing the hub-and-spoke design that typifies “traditional” telephone networks, when a call goes through SBC’s tandem switch, SBC incurs additional costs because it has to transport the call from the tandem switch to the end-office switch. More specifically, SBC must (I) switch the call at the tandem switch, (ii) transport the call to the end-office switch that serves the CLEC's customer, and then (iii) switch the call at the end-office switch and deliver it to that customer. Under the 1996 Act, SBC can recover the costs of each of those functions from the CLEC. The costs are grouped together into a single rate known as the ``tandem interconnection rate,´´ or ``tandem rate,´´ and that is the rate that the CLEC must pay SBC for using SBC’s network to complete calls to the CLEC’s customer."

Fianlly, it wrote that "However, the same is not true when a local customer of SBC calls a CLEC’s customer because the CLEC will frequently have the advantage of more efficient and sophisticated technology that was not available when SBC built its network. Accordingly, the CLEC may not duplicate SBC's end-office switch and tandem switch network in terminating traffic. According to SBC, the CLEC’s new technology will not involve the three distinct functions to connect an incoming call. SBC claims that the CLEC’s compensation for completing the call should therefore reflect the CLEC's reduced costs. SBC submits that the functional equivalency test better captures that actual cost than the geographic area test because the equivalency inquiry allows the greater efficiency of more modern technology to be factored into the equation. According to SBC, the geographic area test ignores any differences between its network and the CLEC's network by only focusing on the area served by competing carriers."

SBC argued that the FCC's order is an arbitrary and capricious implementation of 47 U.S.C. § 252 because it ensures that a CLEC will receive the higher tandem interconnection rate for all the local traffic terminated over its networks, whether or not it has incurred the costs related to tandem switches.

The Court held that this argument is time barred, but nevertheless, concluded that the argument is without merit. It quoted the admonition of the Supreme Court in Verizon Communications Inc. v. FCC, 535 U.S. 467 (2002), wherein the Supreme Court wrote that "Whether the FCC picked the best way to set these rates is the stuff of debate for economists and regulators versed in the technology of telecommunications and microeconomic pricing theory. The job of judges is to ask whether the Commission made choices reasonably within the pale of statutory possibility in deciding what and how items must be leased and the way to set rates for leasing them."

The Court of Appeals held that the FCC's order contains a acceptable interpretation of the statute, and survives that scrutiny. The Court denied the second argument in the petition for review.

This case is SBC, Inc. v. FCC and USA, U.S. Court of Appeals for the 3rd Circuit, App. Ct. No. 03-4311, a petition for review of a final order of the FCC. Judge McKee wrote the opinion of the Court of Appeals, in which Judge Buckwalter (a District Court Judge on senior status) joined. Former Judge Michael Chertoff (now Secretary of Homeland Security) participated through oral argument, but "resigned before the opinion was filed".

House Intelligence Committee Marks Up Bill to Extend Expiring Provisions of PATRIOT Act

7/13. The House Intelligence Committee (HIC) amended and approved HR 3199, the "USA PATRIOT and Intelligence Reform Reauthorization Act of 2005", by a voice vote. The HIC version of the bill would permanently extend 14 of the 16 sections of the PATRIOT Act that are scheduled to sunset at the end of this year.

The bill as introduced, also would make permanent two provisions of the Intelligence Reform and Terrorism Prevention Act of 2004 (IRTPA) that are scheduled to sunset. However, the HIC approved an amendment offered by Rep. Alcee Hastings (D-FL) that extends the sunset on § 6001 of the IRTPA, the lone wolf provision, for five years.

The HIC also approved an amendment offered by Rep. Leonard Boswell (D-IA) that would amend 50 U.S.C. § 1805, to affect roving wiretap authority under the Foreign Intelligence Surveillance Act (FISA).

This amendment provides that "in cases where the facility or place at which surveillance will be directed is not known at the time the order is issued, the applicant shall notify a judge having jurisdiction under section 103 within a reasonable period of time, as determined by the court, after surveillance begins to be directed at a new facility or place, and that such notice shall contain a statement of the facts and circumstances relied upon by the applicant to justify the belief that the facility or place at which the electronic surveillance was directed is being used, or is about to be used, by the target of the electronic surveillance."

The HIC rejected three amendments on voice votes. First, the HIC rejected an amendment in the nature of a substitute offered by Rep. Jane Harman (D-CA). Second, the HIC rejected an amendment offered by Rep. C.A. Ruppersburger (D-MD) that would have provided for a further sunset for ten sections of the PATRIOT Act that fall within the jurisdiction of the HIC. Third, the HIC rejected an amendment offered by Rep. Anna Eshoo (D-CA) that would have created an exception to § 215 for libraries and booksellers.

The HIC also released Rep. Peter Hoekstra's (R-MI) opening statement [PDF].

The House Judiciary Committee, which also has jurisdiction over this bill, amended and approved this bill on July 13. See, stories titled "House Judiciary Committee Marks Up Bill to Extend Expiring Provisions of PATRIOT Act" and "Summary of Amendments to HR 3199 Approved by the House Judiciary Committee" in TLJ Daily E-Mail Alert No. 1,174, Thursday, July 14, 2005.

See also, stories titled "House Judiciary Committee to Mark Up Bill to Make Permanent the Sunsetted Provisions of the PATRIOT Act" and " Summary of HR 3199 IH" in TLJ Daily E-Mail Alert No. 1,172, July 12, 2005.

Senators Introduce Bill to Extend Expiring Provisions of PATRIOT Act

7/13. Sen. Arlen Specter (R-PA), Sen. Dianne Feinstein (D-CA), and Sen. Jon Kyl (R-AZ) introduced S 1389, the "USA PATRIOT Improvement and Reauthorization Act of 2005". This bill would permanently extend 14 of the 16 sections of the 2001 PATRIOT Act that are scheduled to sunset at the end of this year. The bill also adds new reporting requirements, procedural safeguards, and modifications of government powers under various provisions of the criminal code and the FISA that were amended by the PATRIOT Act.

This bill would sunset § 206 (regarding roving wiretaps) and § 215 (regarding access to business records, including library and bookseller records, under the FISA) in four years. The other fourteen sections of Title II of the PATRIOT Act that sunset on December 31, 2005, would be permanently extended.

This bill would also sunset the lone wolf provision of § 6601 of the Intelligence Reform and Terrorism Prevention Act of 2004 (IRTPA) in four years. The bill would also repeal the sunset of material support provision of § 6603 of the IRTPA.

This bill would revise roving wiretap authority under the Foreign Intelligence Surveillance Act (FISA). Sen. Specter (at right) explained that "This makes it clear that, although such orders may ``rove´´ from one phone to another when the target changes devices, the Government cannot ``rove´´ from one investigative target to another, seeking to identify the right person. Through this change, we avoid rewarding terrorists or spies who successfully conceal their identities, but we also protect innocent Americans from unwarranted surveillance." See, Congressional Record, July 13, 2005, at Page S8223.

The bill also revises 18 U.S.C. § 2702, which allows service providers to voluntary disclose to the government customers' electronic communications. The statute currently provides for disclosures "to a governmental entity, if the provider reasonably believes that an emergency involving immediate danger of death or serious physical injury to any person justifies disclosure of the information". S 1389 would change this to allow disclosures "to a governmental entity, if the provider, in good faith, believes that an emergency involving immediate danger of death or serious physical injury to any person requires disclosure without delay of the information". That is, the bill would replace the reasonableness requirement with a good faith requirement. It switches from an objective to a subjective test.

The bill would also amend the pertinent definitional section to add the provision that "the term `governmental entity´ means a department or agency of the United States or any State or political subdivision thereof.". That is, service providers could also disclose customer communications to state and local police. These changes arguably lower the privacy protections for the users of electronic communications services.

This bill would also makes many changes regarding § 215. Sen. Specter offered this summary: "First, the bill eliminates the mere certification of relevance required by current law and enhances the factual showing that must be made by the Government to obtain records. It also requires the court to agree with the adequacy of the Government's factual showing, and adds several procedural protections including heightened approval requirements and increased reporting for orders seeking sensitive materials, like library or medical records. Specifically, the bill requires the Government to submit ``a statement of facts´´ showing ``reasonable grounds to believe that the records or other things sought are relevant´´ to an authorized investigation."

Sen. Specter continued that "The bill then addresses concerns about the FISA judge acting as a ``rubber stamp´´ by requiring the court to find that the facts establish ``reasonable grounds to believe´´ the items sought are relevant. The bill also adds an explicit right to consult counsel; provides for judicial review; requires approval of the FBI Director or Deputy Director for orders concerning library records and other sensitive materials; and adds annual reports to Congress regarding use of the provision to obtain library records, book sales records, firearms sales records, health information or tax information."

The bill would also revise delayed notice of search warrant authority. § 213 of the PATRIOT Act is not scheduled to sunset. Sen. Specter stated that his bill "does not eliminate seriously jeopardizing an investigation as a basis for delay. Instead, the bill enhances reporting requirements -- including the addition of new public reporting requirements--to ensure that DOJ continues to use this authority responsibly. The bill also requires the court to set a ``date certain´´ for notice to be provided, eliminating concerns about indefinite delays. The bill permits extensions of the delay period, but requires that extensions be granted only ``upon an updated showing of the need for further delay.´´ Finally, the bill limits extensions to 90 days each, which parallels the notice requirements for criminal wiretaps and ``bugs´´ which are arguably more invasive that a one-time search, because they may require covert entries and they continue to collect personal data for extended periods of time."

This bill also addresses national security letter authority. This is in § 505 of the PATRIOT Act, rather than in Title II. It is not one of the sections scheduled to sunset this year. Sen. Specter stated that "The bill incorporates legislation introduced by Senator Cornyn to address a 2004 Federal district court decision holding a national security letter, or NSL, served on an Internet service provider unconstitutional. This legislation permits disclosure to legal counsel; allows court challenges; and permits judicial enforcement of NSLs."

The bill would add new reporting requirements regarding § 206 (regarding roving wiretaps), § 212 (emergency voluntary disclosure of electronic communications by service providers), § 213 (regarding delayed notice of search warrants, aka sneak and peak warrants), § 214 (regarding pen register and trap and trace device orders under the FISA).

House Judiciary Committee Marks Up Bill to Extend Expiring Provisions of PATRIOT Act

7/13. House Judiciary Committee (HJC) amended and approved HR 3199, the "USA PATRIOT and Intelligence Reform Reauthorization Act of 2005" by a vote of 23-14. This bill, as amended, makes permanent fourteen of the sixteen sections of the PATRIOT Act that are scheduled to sunset at the end of this year. It creates a new ten year sunset for § 206 (regarding roving wiretaps) and § 215 (regarding access to business records, including library records, under the FISA). It also makes permanent two provisions of the Intelligence Reform and Terrorism Prevention Act of 2004 (IRTPA) that were scheduled to sunset. See, full story.

DHS Announces Reorganization Plans

7/13. The Department of Homeland Security (DHS) announced plans for reorganization. It stated in a release that it has a "six point agenda" regarding reorganizing the DHS's "policies, operations, and structures". See also, speech by Secretary of Homeland Security Michael Chertoff, and organizational chart [PDF].

The organizational chart lists an "Under Secretary for Preparedness". It also lists an "Assistant Secretary for Cyber & Telecommunications", who reports to the Under Secretary for Preparedness. There is not currently a Directorate for Preparedness.

The DHS release states that the currently existing "Information Analysis and Infrastructure Protection Directorate will be renamed the Directorate for Preparedness and consolidate preparedness assets from across the Department. The Directorate for Preparedness will facilitate grants and oversee nationwide preparedness efforts supporting first responder training, citizen awareness, public health, infrastructure and cyber security and ensure proper steps are taken to protect high-risk targets."

The release also states that Assistant Secretary for Cyber & Telecommunications will be responsible for "identifying and assessing the vulnerability of critical telecommunications infrastructure and assets; providing timely, actionable and valuable threat information; and leading the national response to cyber and telecommunications attacks".

Secretary Chertoff (at left) stated in his speech that "We also keenly appreciate the efficiencies and vulnerabilities of our modern technology upon which so much of society depends. To centralize the coordination of the efforts to protect our technological infrastructure, we will also create the new position of assistant secretary for cyber and telecommunications security within the preparedness directorate."

The organizational chart also lists an "Under Secretary for Policy". It also lists an "Assistant Secretary for Policy", who reports to the Under Secretary for Policy. There is not currently a Directorate for Policy. This will require Congressional legislation.

The DHS release states that "A new Directorate of Policy, ultimately led by an Under Secretary upon enactment of legislation, will serve as the primary Department-wide coordinator for policies, regulations, and other initiatives. This Directorate will ensure the consistency of policy and regulatory development across various parts of the Department as well as perform long-range strategic policy planning. It will assume the policy coordination functions previously performed by the Border and Transportation Security (BTS) Directorate. It will also create a single point of contact for internal and external stakeholders by consolidating or co-locating similar activities from across the department."

Rep. Zoe Lofgren (D-CA), who represents a Silicon Valley district, commented in a release that "I am gratified to see that Secretary Chertoff has recognized the importance of creating the position of Assistant Secretary for Cybersecurity and Telecommunications within the Department of Homeland Security. At this higher level, the Assistant Secretary will be able to coordinate better with Secretary Chertoff, as well as officials throughout the Department, other federal agencies, and the private sector. The position will allow the Department to better protect our nation's cyber infrastructure from attacks by hackers, criminals and terrorists and to help ensure that cybersecurity is a priority in our nation's homeland security strategy."

Robert Holleyman, P/CEO of Business Software Alliance (BSA), praised the DHS's reorganization plans. He wrote in a release that "Physical security and cybersecurity must be addressed in tandem in today’s digital world. The plan unveiled by the U.S. Department of Homeland Security serves as a profound step in the right direction, specifically through the establishment of new senior positions with responsibility over cybersecurity and critical infrastructure protection. The technology industry remains fully committed to assisting the talented staff assembled at the Department and looks forward to furthering the public-private partnerships established to better protect our nation."

Bush Picks Stewart Baker for DHS Policy Position

7/13. President Bush announced his intent to nominate Stewart Baker to be "Assistant Secretary of Homeland Security (Policy)" at the Department of Homeland Security (DHS). See, White House release and DHS organizational chart [PDF].

Pursuant to the DHS's just announced reorganization, there will be a new Directorate for Policy, headed by an Under Secretary for Policy. However, this reorganization will require Congressional legislation. The President's plan is to place Baker in this yet to be created position of Under Secretary.

Baker is currently a partner in the Washington DC office of the law firm of Steptoe & Johnson. He represents internet service providers and other technology companies. For example, he recently prepared comments for the U.S. Internet Service Provider Coalition (USISP) and for the Telecommunications Industry Association (TIA) in the Federal Communications Commission's (FCC) rulemaking proceeding regarding imposing CALEA like obligations upon providers of internet services. See, for example, TIA comment and reply comment of April, 2004, and comment of November, 2004. See also, USISP comment of November, 2004, and reply comment of December, 2004.

He was previously General Counsel for the Commission on the Intelligence Capabilities of the United States Regarding Weapons of Mass Destruction. Before that, he was General Counsel for the National Security Agency (NSA).

More People and Appointments

7/13. President Bush announced his intent to nominate Tracy Henke to be Executive Director of the Office of State and Local Government Coordination and Preparedness at the Department of Homeland Security (DHS). Henke is currently Deputy Associate Attorney General at the Department of Justice (DOJ). She previously worked for Sen. Christopher Bond (R-MO). See, White House release.

7/13. President Bush announced his intent to designate James Lambright to be acting President of the Export-Import Bank of the United States. See, White House release.

Federal Circuit Issues En Banc Opinion on Claim Construction

7/12. The U.S. Court of Appeals (FedCir) issued its divided en banc opinion [PDF] in Phillips v. AWH Corporation, a case regarding claim construction in patent infringement actions. The patent in suit is not important. It is U.S. Patent No. 4,677,798, pertaining to steel shell panels that can be welded together to form vandalism resistant walls. This significance of this case, which attracted numerous amicus curiae briefs, lies in its review of claim construction procedure, and in particular, the use of extrinsic evidence, such as dictionaries. The majority adhered to its prior opinions. Judges Mayer wrote a scathing dissent which Judge Newman joined.

The majority opinion, written by Judge Bryson, reviews at length, and reaffirms, the Federal Circuit's prior opinions on claim construction, including Markman v. Westview Instruments, Inc., 52 F.3d 967 (1995 en banc), affirmed by the Supreme Court, at 517 U.S. 370 (1996); Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576 (1996); and Innova/Pure Water, Inc. v. Safari Water Filtration Systems, Inc., 381 F.3d 1111 (2004).

With respect to extrinsic evidence, the Court wrote that "we have also authorized district courts to rely on extrinsic evidence", and that "dictionaries and treatises can be useful in claim construction", but that "We have viewed extrinsic evidence in general as less reliable than the patent and its prosecution history in determining how to read claim terms".

The Court identified several weaknesses of extrinsic evidence. First, it wrote that "extrinsic evidence by definition is not part of the patent and does not have the specification's virtue of being created at the time of patent prosecution for the purpose of explaining the patent's scope and meaning".

Second, "while claims are construed as they would be understood by a hypothetical person of skill in the art, extrinsic publications may not be written by or for skilled artisans and therefore may not reflect the understanding of a skilled artisan in the field of the patent".

Third, "extrinsic evidence consisting of expert reports and testimony is generated at the time of and for the purpose of litigation and thus can suffer from bias that is not present in intrinsic evidence. The effect of that bias can be exacerbated if the expert is not one of skill in the relevant art or if the expert's opinion is offered in a form that is not subject to cross-examination".

Fourth, "there is a virtually unbounded universe of potential extrinsic evidence of some marginal relevance that could be brought to bear on any claim construction question".

Fifth, "undue reliance on extrinsic evidence poses the risk that it will be used to change the meaning of claims in derogation of the "indisputable public records consisting of the claims, the specification and the prosecution history," thereby undermining the public notice function of patents." (Citation omitted.)

The Court concluded that "extrinsic evidence may be useful to the court, but it is unlikely to result in a reliable interpretation of patent claim scope unless considered in the context of the intrinsic evidence. Nonetheless, because extrinsic evidence can help educate the court regarding the field of the invention and can help the court determine what a person of ordinary skill in the art would understand claim terms to mean, it is permissible for the district court in its sound discretion to admit and use such evidence. In exercising that discretion, and in weighing all the evidence bearing on claim construction, the court should keep in mind the flaws inherent in each type of evidence and assess that evidence accordingly."

Judge Mayer and Newman used this case to attack the Federal Circuit's entire approach to claim construction. Mayer wrote in dissent that "Now more than ever I am convinced of the futility, indeed the absurdity, of this court's persistence in adhering to the falsehood that claim construction is a matter of law devoid of any factual component."

"In our quest to elevate our importance, we have, however, disregarded our role as an appellate court; the resulting mayhem has seriously undermined the legitimacy of the process, if not the integrity of the institution." Mayer continued that "In the name of uniformity, Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc), held that claim construction does not involve subsidiary or underlying questions of fact and that we are, therefore, unbridled by either the expertise or efforts of the district court. What we have wrought, instead, is the substitution of a black box, as it so pejoratively has been said of the jury, with the black hole of this court. Out of this void we emit ``legal´´ pronouncements by way of ``interpretive necromancy´´; these rulings resemble reality, if at all, only by chance."

"Regardless, and with a blind eye to the consequences, we continue to struggle under this irrational and reckless regime, trying every alternative -- dictionaries first, dictionaries second, never dictionaries, etc., etc., etc. Again today we vainly attempt to establish standards by which this court will interpret claims. But after proposing no fewer than seven questions, receiving more than thirty amici curiae briefs, and whipping the bar into a frenzy of expectation, we say nothing new, but merely restate what has become the practice over the last ten years -- that we will decide cases according to whatever mode or method results in the outcome we desire, or at least allows us a seemingly plausible way out of the case. I am not surprised by this. Indeed, there can be no workable standards by which this court will interpret claims so long as we are blind to the factual component of the task."

Mayer added that "While this court may persist in the delusion that claim construction is a purely legal determination, unaffected by underlying facts, it is plainly not the case. Claim construction is, or should be, made in context: a claim should be interpreted both from the perspective of one of ordinary skill in the art and in view of the state of the art at the time of invention. ... These questions, which are critical to the correct interpretation of a claim, are inherently factual. They are hotly contested by the parties, not by resort to case law as one would expect for legal issues, but based on testimony and documentary evidence."

The Court of Appeals received over thirty amicus briefs.

Mark Lemley, a professor at Stanford Law School, wrote a brief [26 pages in PDF] for Microsoft, IBM, Google and Micron. See also, brief [PDF] of the American Intellectual Property Law Association (AIPLA), and brief [PDF] of the Intellectual Property Owners Association (IPO). Also, Dennis Crouch has published copies of many of the party and amicus briefs in his web site, Patently-O.

This case is Edward Phillips v. AWH Corporation, et al., U.S. Court of Appeals for the Federal Circuit, App. Ct. No. 03-1269 and 03-1286, an appeal from the U.S. District Court for the District of Colorado.

Senate IP Subcommittee Holds Hearing on Music Licensing Reform

7/12. The Senate Judiciary Committee's (SJC) Subcommittee on Intellectual Property held a hearing titled "Music Licensing Reform". The hearing focused on 17 U.S.C. § 115 and online music services. Sen. Patrick Leahy (D-VT) wrote in his opening statement that "It does appear that there are problems with the current licensing system."

Marybeth Peters, the Register of Copyrights, wrote in her prepared testimony that "The compulsory license governing the reproduction and distribution rights for nondramatic musical works has been in effect for 96 years, but it is now outdated and in need of holistic reform. Prior attempts to amend the present section 115 license in the Copyright Act and the Copyright Office’s corresponding regulations have proven insufficient with respect to the emergence of online music services. The digital environment has exposed fatal defects in the current music licensing structure caused in major part by the artificial division between the licensing of public performance rights and the licensing of reproduction and distribution rights."

Peters added that "Reform is necessary not only to promote the availability of a wide variety of music to the listening public, but also to assist in the music industry’s continuing fight against piracy."

Rob Glaser, the Ch/CEO of RealNetworks, testified on behalf of the Digital Media Association. He wrote in his prepared testimony that "By clarifying and simplifying the compulsory composition mechanical license and the statutory sound recording performance license, this Subcommittee and the Congress will provide RealNetworks and the entire online music industry with business and legal certainty and dramatically reduced complexity. Modernizing these statutes will significantly enhance our ability to offer exciting royalty-paying online music services that will win even more consumers away from pirate networks."

He argued that the Congress should "Replace the dysfunctional Section 115 compulsory mechanical song-by-song license with a simple, comprehensive statutory blanket license that can be administered digitally and triggered on one notice". He added that the Congress should provide that "the payment due when a composition is streamed is entirely in the form of performance royalties, and the payment due when a composition is distributed as a download is entirely in the form of mechanical royalties".

See also, prepared testimony of Rick Carnes (Songwriters Guild of America), prepared testimony of Glen Barros (Comcord Records), prepared testimony of Ish Cuebas (Trans World Entertainment), prepared testimony of David Israelite (P/CEO of the National Music Publishers’ Association), and prepared testimony of Del Bryant (P/CEO of BMI).

More News

7/12. The U.S. Court of Appeals (3rdCir) issued its opinion [29 pages in PDF] in US v. Bell, in which the Court of Appeals affirmed the District Court's permanent injunction of a web site operator who published information about tax laws and the Internal Revenue Service (IRS). The Court of Appeals held that the First Amendment does not protect "unlawful tax advice". This case is US v. Thurston Bell, U.S. Court of Appeals for the 3rd Circuit, App. Ct. No. 04-1640, an appeal from the U.S. District Court for the Middle District of Pennsylvania, D.C. No. 01-cv-02159.

7/12. President Bush signed S 1282, at bill that amends the Communications Satellite Act of 1962. The White House press office stated in a release that this bill "eliminates certain limitations on officers, managers, and directors of successor entities to the International Telecommunications Satellite Organization (INTELSAT) and the International Mobile Satellite Organization (Inmarsat); repeals certain criteria for the privatization of INTELSAT and Inmarsat; and requires the United States to preserve the space segment capacity of the Global Maritime Distress and Safety System."

House Judiciary Committee to Mark Up Bill to Make Permanent the Sunsetted Provisions of the PATRIOT Act

7/11. Rep. James Sensenbrenner (R-WI), the Chairman of the House Judiciary Committee (HJC), introduced HR 3199 [9 pages in PDF], the "USA PATRIOT and Intelligence Reform Reauthorization Act of 2005". This bill would make permanent all of the sixteen sections of the PATRIOT Act that are scheduled to sunset at the end of this year. It also makes permanent two provisions of the Intelligence Reform and Terrorism Prevention Act of 2004 (IRTPA).

Both the HJC and the House Intelligence Committee will meet on Wednesday at 10:00 AM to mark up the bill. HJC Democrats are prepared to offer and debate numerous amendments. The HJC will likely continue its mark up on Wednesday (and on Thursday and Friday, if necessary) until completed. A HJC aide stated on July 11 that "we will stay here until we finish it", and that the bill will likely be considered by the full House next week.

The bill would permanently extend all of the sunsetted provisions of the PATRIOT Act, most of which are in Title II of the PATRIOT Act. Many pertain to law enforcement access to communications and data, especially those involving new information technologies. The bill would also make several limited changes to current law.

Some members of the HJC plan to offer amendments. Some support the continuance of a sunset provision, mainly to give the Department of Justice (DOJ) incentive to cooperate with the Congress in its exercise of oversight authority. Some support more checks and balances to surveillance powers, mainly to minimize the likelihood that governmental powers will be abused. Proposals also include increased reporting requirements, judicial oversight or heightened standards for judicial oversight, and application of the rule regarding suppression of evidence.

The HJC, and its Crime Subcommittee, have conducted a thorough series of twelve hearings on the expiring provisions. These hearings have been conducted in a bipartisan manner. Other Congressional committees have held one or several hearings.

The HJC considered and marked up the original PATRIOT Act in 2001 in bipartisan fashion. However, the bipartisan approach to reviewing the expiring provisions was tested last month when some Democrats injected partisan theatrics into the process.

On June 10, the HJC held a hearing titled "Reauthorization of the USA PATRIOT Act". Some Democrats sought to convert this hearing into an open ended examination of the Bush administration's policies related to the war on terrorism, regardless of whether the issues relate to any the sunsetted provisions of the PATRIOT Act, or even to any provision of the PATRIOT Act, or matters within the jurisdiction of the HJC.

Following the hearing some Democrats, including House Minority Leader, Rep. Nancy Pelosi (D-CA), leveled personal attacks on Rep. Sensenbrenner, and Republicans generally. She made partisan and defamatory statements about Rep. Sensenbrenner, and the conduct of Committee's hearings. See, story titled "Commentary: Partisan Theatrics Threaten Efforts to Place Limits in Title II of PATRIOT Act" in TLJ Daily E-Mail Alert No. 1,152, June 13, 2005.

Rep. Sensenbrenner's strategy may now be to draft and enact a bill that has the minimum concessions necessary to ensure a majority on the HJC, and perhaps the full House, and to defeat amendments, based upon Republican solidarity. The mark up scheduled to begin on July 13, unlike the HJC's mark up of the original PATRIOT Act back in 2001, may be rancorous and partisan.

There is a similarity between the House enactment of the original PATRIOT Act in 2001, and the current consideration of HR 3199. The PATRIOT Act was rushed through the Congress immediately after the terrorist attacks of September 11, 2001, while terrorist atrocities were fresh in the voters' memories. HR 3199 has been rushed to markup immediately after the terrorists attacks of July 7, 2005 in London, while terrorists atrocities are fresh in the voters' memories.

Nevertheless, the mark up of this bill may be long, and hard fought. One likely category of amendments is proposals to maintain a sunsetting clause, to give the HJC sufficient leverage to engage in effective oversight in the future.

TLJ spoke with Rep. Jerrold Nadler (D-NY) late on July 11. He suggested that an amendment would be offered that would provide "a four year sunset", for the same set of provisions that are currently sunsetted, or a similar set of provisions.

Rep. Nadler also suggested that amendments would address § 505(a) of the PATRIOT Act and national security letters to obtain. He said that the Sensenbrenner bill "does not solve our problems with Section 505". He said that the government can still aim a national security letter at an internet service provider or library, with minimal safeguards.

Rep. Nadler also said that while the bill's language regarding Section 215 is an improvement, he is still "not satisfied with the 215 amendments" in the Sensenbrenner bill.

Rep. Nadler also stated that Democrats are concerned regarding the process being followed. He said that "Democrats were not consulted on this bill whatsoever".

President Bush gave a speech about the war on terrorism at the Federal Bureau of Investigation (FBI) Academy at Quantico, Virginia, on July 11. He stated that "one of the important tools federal agents have used to protect America is the Patriot Act. I call on Congress to reauthorize the 16 critical provisions of this act that are scheduled to expire at the end of this year. The terrorist threats against us will not expire at the end of this year, and neither should the protections of the Patriot Act."

Summary of HR 3199 IH

7/11. Rep. James Sensenbrenner (R-WI), the Chairman of the House Judiciary Committee (HJC), introduced HR 3199 [9 pages in PDF], the "USA PATRIOT and Intelligence Reform Reauthorization Act of 2005", on July 11, 2005.

Section 3 of HR 3199 is the key section of the bill. It provides that "Section 224 of the USA PATRIOT ACT is repealed." § 224 is the section of the PATRIOT Act that provides that 16 enumerated sections of the Act expire at the end of 2005. Thus, this language makes these 16 sections permanent.

Moreover, most of these sections are made permanent without any modification. Sections 6, 7, and 8 of the bill make limited changes to three sections of the PATRIOT Act -- § 203(b), regarding the sharing of information, § 207, regarding the duration of Foreign Intelligence Surveillance Act (FISA) surveillance of non U.S. persons, and § 215, regarding access to business records, including library records, under Section 501 of the FISA.

Section 4 of HR 3199 repeals the sunset clause in § 6001 of the Intelligence Reform and Terrorism Prevention Act of 2004 (IRTPA), the lone wolf amendment to the FISA. The IRTPA was S 2845 in the 108th Congress. It is now Public Law 108-458. § 6001 provides as follows:

SEC. 6001. INDIVIDUAL TERRORISTS AS AGENTS OF FOREIGN POWERS.
  (a) IN GENERAL- Section 101(b)(1) of the Foreign Intelligence Surveillance Act of 1978 (50 U.S.C. 1801(b)(1)) is amended by adding at the end the following new subparagraph:
    `(C) engages in international terrorism or activities in preparation therefore; or'.
  (b) SUNSET- The amendment made by subsection (a) shall be subject to the sunset provision in section 224 of Public Law 107-56 (115 Stat. 295), including the exception provided in subsection (b) of such section 224.

That is, § 6001 expanded the definition of "agent of a foreign power" for the purposes of the FISA to include lone wolf terrorists. § 6001(b) added that the PATRIOT Act sunsetting clause also applies to this new definition. HR 3199 removes the sunset. It maintains the lone wolf definition.

Section 5 of HR 3199 repeals the sunset clause of § 6603, the "material support" provision of the IRPTA. The HJC issued a statement that makes the following argument. "The problem with this sunset is that" it "would allow a criminal offense, and not a law enforcement tool, to expire. Furthermore, this sunset effectively makes the underlying provision unconstitutional. Section 6603 of the IRPTA addressed the prohibition against providing material support to terrorists and amended the law to address court concerns on the constitutionality of the material support provision."

Section 6 of HR 3199 pertains to information sharing between law enforcement and intelligence agencies under § 203(b) of the PATRIOT Act. Representatives and Senators refer to this section when these speak of "information sharing" and "tearing down the wall".

Section 6 provides, in full, that "Section 2517(6) of title 18, United States Code, is amended by adding at the end the following: ``Within a reasonable time after a disclosure of the contents of a communication under this subsection, an attorney for the Government shall file, under seal, a notice with a judge whose order authorized or approved the interception of that communication, stating the fact that such contents were disclosed and the departments, agencies, or entities to which the disclosure was made.´´"

This requires the government to make disclosure to the Court. There is no requirement that government agencies report to the Congress.

Section 7 of HR 3199 pertains to § 207 of the PATRIOT Act and the duration of FISA surveillance of non U.S. persons. It provides among other things, that a FISA pen register and trap and trace device order for non U.S. persons may be for up to one year.

Section 8 of HR 3199 pertains to § 215 of the PATRIOT Act, which has received more public attention that any of the other of the sunsetted provisions of the PATRIOT Act.

This section would raise the standard for the issuance of a § 215 order. The information sought must either not concern a U.S. person, or be "relevant to an ongoing investigation to protect against international terrorism or clandestine intelligence activities". This is still a very low standard.

This section also provides that a recipient of a § 215 order may consult with an attorney, and challenge the order. This section also identifies a judicial review process.

PR China Agrees to Increased Prosecution of IPR Violations, and Other IPR Terms

7/11. The U.S.-China Joint Commission on Commerce and Trade (JCCT), a government to government consultative mechanism, met in Beijing, People's Republic of China, on July 11, 2005. The U.S. delegation stated that China agreed to increase its criminal prosecution of intellectual property rights violations, and to delay issuing its draft regulations on government software procurement.

The Office of the U.S. Trade Representative (USTR) issued a release that describes the outcome of the JCCT meeting. See also, substantially identical Department of Commerce (DOC) release.

USTR Robert Portman (at right) stated in another release that "Today we have made some progress in areas of key concern to U.S. businesses, particularly with regard to IPR enforcement, including cracking down on fake goods in China; preventing restrictions on what the Chinese government buys from American companies; and, ensuring U.S. products can be freely distributed in China ... But our work is far from finished. We remain concerned about many areas and we will redouble our efforts to address these issues with the Chinese Government."

The USTR release states that "China has agreed to increase the number of criminal prosecutions for IPR violations relative to the total number of IPR administrative cases.  The Supreme People’s Court, Supreme People’s Procuratorate, and Ministry of Public Security have issued draft guidelines for public comment to ensure the timely referral of IPR violations from administrative bodies to criminal prosecution."

The USTR also states that "By the end of 2005, the Chinese government will complete its legalization program to ensure that all central, provincial and local government offices are using only licensed software, and will extend the program to enterprises (including state-owned enterprises) in 2006." (Parentheses in original.)

The USTR also states that "By June 30, 2006, the State Council intends to submit to the National People’s Congress the legislative package needed for China to accede to the WIPO Internet Treaties.  China will also begin immediately a nationwide crack-down on Internet piracy, including through enforcement at Internet cafes."

With respect to government software procurement, the USTR states that "China will delay issuing draft regulations on software procurement, as it further considers public comments and makes revisions in light of WTO rules. The draft software regulations threatened to close off a market with a potential value of over $8 billion to U.S. firms.  China announced that it will accelerate its efforts to join the WTO Government Procurement Agreement (GPA) and towards this end will initiate technical consultations with other WTO Members."

The USTR also states that "China agreed to a new dialogue under the JCCT Information Technology Working Group to discuss capitalization requirements, resale services, and other issues agreed to by the two sides" pertaining to telecommunications market access.

Carlos Gutierrez, the U.S. Secretary of Commerce, and a member of the U.S. delegation, stated in a release that "The real outcome of this meeting will be known when we see the results in the months ahead. We will monitor all commitments closely ... This year’s JCCT is a step forward in strengthening market access for U.S. goods in China -- particularly in the area of computer software -- as well as improving the enforcement of intellectual property rights. However, we still have much more work to do before we are satisfied with progress in these and other areas".

Robert Holleyman, P/CEO of the Business Software Alliance (BSA), stated in a release that "We are encouraged by the commitments made at the JCCT meeting and look forward to working with Chinese authorities to help implement effective anti-piracy measures. Deterring piracy requires adequate resources and enforcement actions and we are encouraged by the commitments made by the Chinese government to take these important steps."

Holleyman added that "We were also heartened to hear that China will not issue software procurement regulations pending further work with industry and governments. BSA members were also encouraged by China’s commitment to hasten its efforts to join the WTO Government Procurement Agreement (GPA). BSA believes this is a very important step to ensure open and fair access to government markets for all software makers, and we look forward to working with Chinese authorities as this process moves forward".

Myron Brilliant, U.S. Chamber of Commerce's VP for Asia, stated in a release that "The results of the meeting demonstrate that the JCCT process continues to be a constructive one that delivers tangible results for U.S. exporters, and investors ... But even as we recognize China's renewed commitment to enforce intellectual property rights and address other U.S. commercial concerns, we underscore that words are not a substitute for action."

FCC Approves Alltel Acquisition of Western Wireless

7/11. The Federal Communications Commission (FCC) adopted, but did not release, a Memorandum, Opinion and Order (MOO) in its antitrust merger review (nominally, a license transfer proceeding) regarding Alltel Corporation's acquisition of Western Wireless Corporation.

The FCC issued a short release [3 pages in PDF], and each of the four Commissioners wrote a short statement. The release states that the FCC approved the merger, subject to certain conditions.

The Department of Justice (DOJ) approved the merger, and filed a complaint and consent decree with the U.S. District Court (DC). The consent decree requires Alltel to divest in 16 markets. See, story titled "DOJ Approves Alltel's Acquisition of Western Wireless, With Divestitures" in TLJ Daily E-Mail Alert No. 1,170, July 8, 2005.

The FCC release states that "the FCC concluded the acquisition generally is not likely to cause competitive harm in most mobile telephony markets. In reaching these conclusions the Commission analyzed many factors regarding the likely horizontal effects of the merger, including substitutability of products and services, possible competitive responses by rival carriers, spectrum aggregation, deployment of advanced wireless services, network effects on the merged company, and penetration rates in local markets. The Commission concluded that anti-competitive effects are unlikely in all but 16 of the FCC’s 734 Cellular Market Areas (CMAs), where the merger would cause significant competitive harm that exceeds the likely public interest benefits of the merger in those areas."

The release then states that the FCC "conditioned its consent on the companies divesting WWC business units -- customers, infrastructure, and cellular spectrum -- in 16 CMAs."

The FCC also imposed a condition regarding roaming. In addition, the FCC announced that "In the near future, the Commission plans to initiate a new proceeding to examine whether our rules regarding the roaming requirements applicable to CMRS providers should be modified to take into account current market conditions and developments in technology. This proceeding will afford interested parties an opportunity to comment on a variety of roaming issues, including manual and automatic roaming, technical considerations, and small and rural carrier roaming concerns."

See also, statement [PDF] by Chairman Kevin Martin, separate statement [PDF] by Commissioner Kathleen Abernathy, separate statement [PDF] by Commissioner Michael Copps, and separate statement [PDF] by Commissioner Jonathan Adelstein.

This MOO is FCC 05-138 in WT Docket No. 05-50.

GAO Reports Information Security Weaknesses at DHS

7/11. The Government Accountability Office (GAO) released a report [36 pages in PDF] titled "Information Security: Department of Homeland Security Needs to Fully Implement Its Security Program".

This report finds that the Department of Homeland Security (DHS) "has not fully effectively implemented a comprehensive, departmentwide information security program to protect the information and information systems that support its operations and assets."

Moreover, it concludes that "Until DHS addresses these weaknesses and fully implements a comprehensive, departmentwide information security program, its ability to protect the confidentiality, integrity and availability of its information and information systems will be limited."

The report notes that the GAO performed only a limited review with respect to the DHS's United States Visitor and Immigrant Status Indicator Technology (US-VISIT) program. Nevertheless, the GAO reports that there are weaknesses in the information security plan of the US-VISIT program. See, report, at page 15.

The US-VISIT program is an entry and exit system to record the arrival and departure of aliens, verify their identities, and authenticate their travel documents through comparison of biometric identifiers. The DHS is also studying the use of radio frequency identification (RFID) technology to automatically record the entry and exit of covered individuals. The DHS's latest notice in the Federal Register pertaining to the US-VISIT program provides further details on the program. See, Federal Register, July 7, 2005, Vol. 70, No. 129, at Pages 39300 - 39323.

See also, the Electronic Privacy Information Center's (EPIC) US-VISIT web page.

The report was prepared for Sen. Joe Lieberman (D-CT), the ranking Democrat on the Senate Homeland Security and Governmental Affairs Committee.

GAO Reports on Health Information Technology

7/11. The Government Accountability Office (GAO) released a report [68 pages in PDF] titled "Information Technology: Federal Agencies Face Challenges in Implementing Initiatives to Improve Public Health Infrastructure".

This report pertains to current federal health information technology initiatives for assisting the government in responding to public health emergencies. These include initiatives include the Center for Disease Control and Prevention's (CDC) Public Health Information Network (PHIN) and the Department of Homeland Security's (DHS) National Biosurveillance Integration System (NBIS) and Biological Warning and Incident Characterization System (BWICS).

This report finds that "Federal agencies have made progress on major public health IT initiatives, although significant work remains to be done."

On Wednesday, July 20, at 9:30 AM, the Senate Health, Education, Labor, and Pensions Committee will hold a business meeting. The agenda includes consideration of S 1355, the "Better Healthcare through Information Technology Act".

Also on July 20, at 10:00 AM, the Senate Budget Committee will hold a hearing on the federal role in, and budget implications of, health information technology.

People and Appointments

7/11. President Bush announced his intent to appoint the following individuals to be Members of the Advisory Committee for Trade Policy and Negotiations for terms of two years: Craig Barrett (Intel), Jose Behar (UMG), Michael Campbell (Arch Chemicals), Stephanie Harkness (Pacific Plastics & Engineering), and Maria Guadalupe Taxman. See, White House release.

More News

7/11. The Progress & Freedom Foundation (PFF) relocated its offices to 1444 Eye Street NW, Suite 500. Phone numbers, the fax number, e-mail addresses and the web site remain the same. See, PFF release.

7/11. The Federal Communications Commission (FCC) published a notice in the Federal Register that extends the comment period on reserve prices or minimum opening bids and other auction procedures for Auction No. 63. Comments are due by July 13, 2005. Reply comments are due by July 20, 2005. See, Federal Register, July 11, 2005, Vol. 70, No. 131, at Page 39775.

7/11. President Bush signed S 714, the "Junk Fax Prevention Act of 2005". See, White House release.

Go to News from July 6-10, 2005.