WTO Concludes AJCA Still Violates DSB's FSC/ETI Rulings

9/30. A panel of the World Trade Organization (WTO) released its report [34 pages in PDF] that concludes that certain provisions of the American Jobs Creation Act of 2004 (which is also known as the Jobs Act and AJCA) still constitute illegal export subsidies in violation of the US's WTO obligations.

Previously, a WTO dispute settlement body (DSB) found fault with the FSC and ETI tax regimes. While the AJCA repealed the FSC/ETI provisions of US law, it also included transitional language, and some grandfathering. The EU again complained to the WTO.

The just released WTO report concludes that "to the extent that the United States, by enacting Section 101 of the Jobs Act, maintains prohibited FSC and ETI subsidies through the transition and grandfathering measures at issue, it continues to fail to implement fully the operative DSB recommendations and rulings to withdraw the prohibited subsidies and to bring its measures into conformity with its obligations under the relevant covered agreements."

See, full story.

EC Issues Statement Regarding Plans to Digitize Libraries

9/30. The European Commission (EC) issued a statement regarding "its strategy to make Europe's written and audiovisual heritage available on the Internet".

It states that "The Commission proposes a concerted drive by EU Member States to digitise, preserve, and make this heritage available to all." The release, using the vague language typical of EC statements, adds that "the results of an online consultation on digitisation and digital preservation issues (2005) will feed into Commission Proposal for a Recommendation (2006). The results will also be an input for other relevant initiatives such as the review of EU copyright rules (2006) and the implementation of the Community R&D programmes (2007). A High Level Group on digital libraries will advise the Commission on how to best address the identified challenges at European level". (Parentheses in original.)

It also states that the EC "has made €36 million available for research on advanced access to our cultural heritage and digital preservation in the fifth call for proposals under the sixth research framework programme for R&D (2005). Under the seventh framework programme (FP7), the research on digitisation, digital preservation and access to cultural content will be considerably stepped up, inter alia through a network of Centres of Competence in the fields of digitisation and preservation (2007), and between 2005 and 2008, the eContentplus programme will contribute €60 million towards making national digital collections and services interoperable and facilitating multilingual access and use of cultural material."

In December of 2004 Google announced its plans to digitize library works, without government funding or regulation. See, release.

More News

9/30. The Federal Communications Commission (FCC) released its tenth annual report [107 pages in PDF] on the state of competition in the Commercial Mobile Radio Services (CMRS) industry. See also, FCC release [3 pages in PDF]. This report is FCC 05-173 in WT Docket No. 05-71.

US Consul General Discusses Trade and IPR in Hong Kong

9/29. US Consul General James Cunningham gave a speech titled "U.S. Hong Kong Economic Relations" to the Chinese Manufacturers' Association of Hong Kong.

He praised Hong Kong for a "strong tradition of rule of law, free flow of information, respect for intellectual property rights, an admirable entrepreneurial spirit", and its other attributes. He also said that Hong Kong is a "model for China's economic development".

He also focused in intellectual property rights. He said that "We have also worked productively with Hong Kong on the protection of intellectual property rights. An effective IPR regime transforms the creative talents of people into high-value assets, and is essential to today's economy. Hong Kong has made strides in this regard over recent years and in many respects serves as a model for the region. We look to Hong Kong to sustain the pace of its enforcement activities aimed at local producers and vendors of infringing products, to work with us to develop the means to combat the growing challenge of internet piracy, and to maintain its efforts against end-use piracy and the cross-boundary flow of infringing products."

Bush Picks Thomas Rosch for FTC

9/29. President Bush nominated Thomas Rosch to be a Commissioner of the Federal Trade Commission (FTC), for the remainder of a seven year term expiring September 5, 2012. If confirmed by the Senate, he will replace Thomas Leary. See, White House release and release.

Rosch is a partner in the San Francisco office of the law firm of Latham & Watkins (LW). He was previously a partner in the law firm of McCutchen Doyle Brown & Enerson (now Bingham McCutchen). He focuses on antitrust and trade regulation law.

He was Director of the FTC's Bureau of Consumer Protection from 1973 to 1975. He is also a past Chairman of the California State Bar Association's Antitrust and Unfair Competition Law Section, and a past Chairman of the ABA's Antitrust Section. In 1989 was a member of the Special Committee to Study the Role of the Federal Trade Commission.

Rosch was counsel for Lexmark in Arizona Cartridge v. Lexmark. In this case he successfully argued that the print on the outside of a box can give rise to an enforceable contract limiting consumers' use of the product, and that designing and marketing a consumer technology product with built in non-interoperability does not constitute an unfair business practice. See, story titled "9th Circuit Rules in Arizona Cartridge v. Lexmark", in TLJ Daily E-Mail Alert No. 1,225, October 3, 2005.

More Trade News

9/29. The House Ways and Means Committee (HWMC) held a hearing titled "Implementation of the United States Bahrain Free Trade Agreement". See, HWMC web page with hyperlinks to statements and testimony.

9/29. The Senate Foreign Relations Committee's Subcommittee on East Asian and Pacific Affairs held a hearing on U.S. Japan relations. See, prepared testimony [6 pages in PDF] of Richard Lawless (Department of Defense), prepared testimony [6 pages in PDF] of Christopher Hill (Assistant Secretary of State for East Asian and Pacific Affairs), prepared testimony [3 pages in PDF] of Amelia Porges (Sidley Austin Brown & Wood), prepared testimony [8 pages in PDF] of Stephen MacMillan (P/CEO of Stryker Corporation), and prepared testimony [9 pages in PDF] of Gerald Curtis (Columbia University).

People and Appointments

9/29. The Senate confirmed John Roberts to be Chief Justice of the United States by a vote of 78-22. See, Roll Call No. 245. He also took the oath of office at a White House ceremony on September 29. See, transcript. All of the votes against Roberts were cast by Democrats. Most were cast by Senators from rust belt states. The west coast Senators split: Feinstein (CA), Boxer (CA), Cantwell (WA) voted no, while Wyden (OR) and Murray (WA) voted yes. Reid (NV), Inouye (HI) and Dayton (MN) also voted no.

9/29. President Bush nominated Judge James Payne to be a Judge of the U.S. Court of Appeals for the Tenth Circuit. See, White House release. He is currently a Judge of the U.S. District Court (EDOkla). President Bush appointed him. He was confirmed by the Senate on October 23, 2001. From 1988 until 2001 he was a Magistrate Judge in that District. See, DOJ biography and resume.

9/29. President Bush nominated Margaret Spellings to be a Representative of the U.S. to the 33rd General Conference of the United Nations Educational, Scientific and Cultural Organization. See, White House release and release.

9/29. The CTIA announced its Board of Directors for 2006. Len Lauer (Sprint Nextel COO) will be Chairman. He will replace the outgoing Chairman, Terry Addington (P/CEO of First Cellular of Southern Illinois). Michael Kalogris (CEO of Suncom Wireless) will be Vice Chairman. Cindy Christy (President of Lucent Mobility Solutions) will be Secretary. Dennis Miller (President of Midwest Wireless will be Treasurer. The other new Board members will be Bret Comolli (CEO of Asurion), Eric DeMarco (CEO of Wireless Facilities), David Peterschmidt (P/CEO of Openwave Systems), and Ronald Smith (President of Bluegrass Cellular). See, CTIA release.

More News

9/29. The Center for Democracy and Technology (CDT) wrote a letter [3 pages in PDF] to Michael Gallagher, head of the National Telecommunications and Information Administration (NTIA) regarding the .xxx internet domain. It wrote that "We understand that on August 11, 2005, you sent a letter to Dr. Vinton Cerf, the chairman of the board of directors for the Internet Corporation for Assigned Names and Numbers (ICANN), requesting this delay. Although CDT neither supports nor opposes the creation of a .xxx domain, we believe this action sets a troubling and potentially destabilizing precedent for direct U.S. Government intervention in the day-to-day management of the Internet's global addressing system. Furthermore, because the delay appears to be sought in this instance specifically because of the content of the speech for which the .xxx domain is intended, the demand for a delay in approval treads dangerously close to crossing a well settled First Amendment line -- potentially stifling the creation of a forum intended for a specific type of constitutionally protected speech." The CDT asks the NTIA to "remove itself from the .xxx decision-making process".

9/29. The Progress and Freedom Foundation (PFF) released a paper [PDF] titled "The American System: A Schumpeterian History of Standardization". This is the first in a series of three by Andrew Russell.

9/29. The Recording Industry Association of America (RIAA) announced the filing of another round of lawsuits by its member companies against individuals using peer to peer systems to infringe copyrighted works. See, release.

GAO Reports on Real Estate Brokers and Use of the Internet

9/28. The Government Accountability Office (GAO) released a report [pages in PDF] titled "Real Estate Brokerage: That May Affect Price Competition".

This report comes three weeks after the filing of a civil complaint in the U.S. District Court (NDIll) by the Department of Justice's (DOJ) Antitrust Division against the National Association of Realtors (NAR). The DOJ alleges violation of federal antitrust laws in connection with the NAR's obstruction of real estate brokers who use internet tools to offer services to consumers.

The GAO report states that "The Internet has increased consumers' access to information about properties for sale and facilitated new approaches to real estate transactions. Many brokers post on Web sites information -- in varying degrees of detail -- about properties they have contracted to sell (``listings´´), enabling consumers to obtain such information without consulting a real estate broker. The Internet also has fostered the creation or expansion of a number of Internet-oriented real estate brokerage and related firms, including some discount brokers and services that refer clients to brokers."

However, the GAO report adds that "several potential obstacles to further expansion of the Internet's role in real estate brokerage exist, including the extent to which listing information is made available for brokers to post online. For example, NAR has considered allowing listing brokers to decide which other brokers may display their MLS listings online. Some brokers' refusal to allow their listings to be posted on certain brokers' Web sites could constrain potential buyers' Internet searches for properties for sale, potentially limiting the business of Internet-oriented brokers. Internet-oriented discount brokers may also face resistance from traditional brokers and may be affected by the state laws that prohibit or restrict commission rebates to consumers."

But, the GAO adds that "other factors, such as the lack of a uniform sales contract for residential real estate and of a uniform technology to facilitate related processes -- such as inspection, appraisal, financing, title search, and settlement -- may inhibit the use of the Internet for accomplishing the full range of activities needed for real estate transactions."

The DOJ complaint seeks to enjoin the NAR "from maintaining or enforcing a policy that restrains competition from brokers who use the Internet to more efficiently and cost effectively serve home sellers and buyers, and from adopting other related anticompetitive rules".

It alleges that "The brokers against whom the policy discriminates operate secure, password-protected Internet sites that enable the brokers' customers to search for and receive real estate listings over the Internet. These websites thus replace or augment the traditional practice by which the broker conducts a search of properties for sale and then provides information to the customer by hand, mail, fax, or e-mail. Since these websites were first developed in the late 1990s, brokers' use of the Internet in connection with their delivery of brokerage services has become an important competitive alternative to traditional ``brick-and-mortar´´ business models."

It further alleges that "Defendant's members include traditional brokers who are concerned about competition from Internet-savvy brokers". It continues: "In response to such concerns, defendant, through its members, adopted a policy (the ``VOW Policy´´) limiting this new competition. The VOW Policy significantly alters the rules governing multiple listing services (``MLS´´). MLSs collect detailed information about nearly all properties for sale through brokers and are indispensable tools for brokers serving buyers and sellers in each MLS's market area. Defendant's local Realtor associations (``member boards´´) control a majority of the MLSs in the United States."

The complaint adds that this "VOW Policy permits brokers to selectively or generally withhold their clients' listings from VOW operators by means of an ``opt-out´´ right. In essence, the VOW Policy allows traditional brokers to block the customers of targeted competitors from using the Internet to review the same set of MLS listings that the traditional brokers provide to their customers."

The DOJ complaint concludes that this scheme "restricts the manner in which brokers with efficient, Internet-based business models may provide listings to their customers, and imposes additional restrictions on brokers operating VOWs that do not apply to their traditional competitors. Defendant thus denies brokers using new technologies and business models the same benefits of MLS membership available to their competitor brokers, and it suppresses technological innovation, discourages competition on price and quality, and raises barriers to entry. Defendant -- an association of competitors -- has agreed to a policy that suppresses new competition and harms consumers."

See also, story titled "DOJ Sues National Association of Realtors for Obstructing Internet Based Brokers" in TLJ Daily E-Mail Alert No. 1,210, September 9, 2005.

House Ways and Means Committee Holds Hearing on Trade with Japan

9/28. The House Ways and Means Committee (HWMC) held a hearing titled "United States Japan Economic and Trade Relations". The main focus of the hearing was Japan's exclusion of beef produced in the U.S.

For example, Rep. Jerry Moran (R-KS), who represents a beef producing district in the state of Kansas, wrote in his prepared testimony that "Losing our annual 1.7 billion dollar export market to Japan is having a large and negative impact on our entire beef industry and it also puts at risk our well-established bilateral trade relationship."

While there is nothing technology related about trade in beef products, unresolved disputes involving agriculture can impact trade relations in other areas. Rep. Bill Thomas (R-CA), the Chairman of the Committee, wrote in his opening statement that "self-protectionism and isolationism threaten the current WTO negotiations and poison the atmosphere for free trade".

Wendy Cutler, the Assistant U.S. Trade Representative for Japan, Korea and Asia-Pacific Economic Cooperation Affairs, praised Japan at length in her prepared testimony for its handling of trade related issues involving technology, e-commerce and communications.

She wrote that "In recent years, Japan has significantly lowered retail rates for calling mobile networks, and by reducing monopoly control over networks and equipment, Japan has created conditions for one of the most competitive broadband markets in the world."

She continued that Japan "has significantly strengthened its intellectual property rights regime by, for example, extending the term of copyright protection for cinematographic works from 50 to 70 years. And it has bolstered the independence and staffing of its antitrust watchdog, the Japan Fair Trade Commission or JFTC, so that it can better promote a competitive environment in the Japanese market for domestic and foreign companies alike."

She also said that "In the telecommunications sector, Japan is poised to make substantial blocks of spectrum available primarily for new wireless entrants, helping break a longstanding oligopoly and thereby creating opportunities not only for U.S. telecommunications companies wanting to expand into the wireless business in Japan, but also equipment suppliers to those companies."

And, she said that "Japan is also removing numerous regulatory impediments to e-commerce, further strengthening copyright protection, cooperating closely with the private sector to combat spam, improving government network security, ensuring effective and transparent implementation of its new Privacy Law, and improving foreign firms' access to bidding on government IT systems."

She concluded that "we have and will continue to make good progress in our efforts to further open markets in Japan in key sectors such as telecommunications, information technologies," and other sectors.

Michael Mussallem, CEO of Edwards Lifesciences Corporation, wrote in his prepared testimony that the makers of medical devices, diagnostic products and medical information systems face problems with government regulators around the world. He wrote that "This is the situation we are facing in Japan, and it is getting more difficult every year. Japan’s system for approving use of new medical technologies is the slowest and most costly in the developed world."

See also, HWMC page with hyperlinks to written testimony of all witnesses.

People and Appointments

9/28. President Bush nominated Virginia Kendall to be Judge of the U.S. District Court for the Northern District of Illinois. Kendall is a federal prosecutor. Chicago is in this district. See, White House release.

9/28. President Bush nominated Timothy Batten to be Judge of the U.S. District Court for the Northern District of Georgia. Batten is a partner in the Atlanta law firm of Schreeder Wheeler & Flint. This district includes Atlanta. See, White House release.

9/28. President Bush nominated Kristi DuBose to be Judge of the U.S. District Court for the Southern District of Alabama. See, White House release.

9/28. President Bush nominated Thomas Johnston to be a Judge of the U.S. District Court for the Southern District of West Virginia. See, White House release.

9/28. President Bush nominated Keith Watkins to be a Judge of the U.S. District Court for the Middle District of Alabama. See, White House release.

9/28. President Bush nominated Carol Dinkins and Alan Charles Raul to be the Chairman and Vice Chairman of the Privacy and Civil Liberties Oversight Board. See, White House release. Bush announced his intent to make these nominations back on June 10, 2005. See, story titled "Bush Names Members of Privacy and Civil Liberties Oversight Board" in TLJ Daily E-Mail Alert No. 1,151, June 10, 2005.

9/28. Robert Bonner retired as Commissioner for U.S. Customs and Border Protection at the Department of Homeland Security (DHS). See, statement by Secretary of Homeland Security Michael Chertoff.

More News

9/28. The House approved HR 3402, the "Department of Justice Appropriations Authorization Act, Fiscal Years 2006 through 2009", by a vote of 415-4. See, Roll Call No. 501.

9/28. The Senate Judiciary Committee's (SJC) Subcommittee on Antitrust, Competition Policy and Consumer Rights postponed its hearing titled "Video Competition in 2005 -- More Consolidation, or New Choices for Consumers?", which had been scheduled for September 28.

9/28. The Government Accountability Office (GAO) released a letter and presentation slides [41 pages in PDF] titled "Agency Telework Methodologies: Departments of Commerce, Justice, State, the Small Business Administration, and the Securities and Exchange Commission". The letter states that the agencies studied, including the Department of Commerce (DOC) and Department of Justice (DOJ), "could report the actual number of employees who telework and how often they do so". The GAO sent the letter to Rep. Frank Wolf (R-VA), the Chairman of the House Appropriations Committee's Subcommittee on Science, the Departments of State, Justice, and Commerce, and Related Agencies.

9/28. The Government Accountability Office (GAO) released a report [56 page in PDF] titled "Defense Trade: Enhancements to the Implementation of Exon-Florio Could Strengthen the Law's Effectiveness". This report states that the manner in which the Committee on Foreign Investment in the United States (CFIUS) "implements Exon-Florio may limit its effectiveness. For example, Treasury, in its role as Chair, and some others narrowly define what constitutes a threat to national security -- that is, they have limited the definition to export-controlled technologies or items and classified contracts, or specific derogatory intelligence on the foreign company. Other members have argued that this definition is not sufficiently flexible to provide for safeguards in areas such as protection of critical infrastructure, security of defense supply, and preservation of technological superiority in the defense arena."

State Department Official Addresses IPR Protection in Ukraine

9/27. Anthony Wayne gave a speech in which he discussed protection of intellectual property rights in Ukraine.

He stated that "I have been particularly impressed by the ability of the Ukrainian government to keep working toward President Yushchenko's economic goals, even after the cabinet dismissal of September 8. In the last twenty days, we have seen significant progress on our bilateral trade agenda, including constructive discussions on Ukraine's accession to the World Trade Organization and on enforcement of intellectual property rights."

Wayne (at right) is Assistant Secretary for Economic and Business Affairs at the Department of State. He spoke at an event in Washington DC titled "Ukraine Mature Statehood Forum".

He continued that "Protection of intellectual property has been a key issue for the United States in our economic relations with Ukraine for several years now. We were very glad to see the enactment on August 2 of amendments to Ukraine's law on Laser-Readable Discs. We had been urging their passage for several years. With the passage of these amendments, the U.S. government was very pleased on August 30 to restore normal tariff levels on a range of Ukrainian products, lifting sanctions that we had put in place in 2002."

On August 31, 2005 the Office of the U.S. Trade Representative (USTR) announced in a release the "lifting of 100% tariff sanctions that since 2002 had been imposed on $75 million worth of Ukrainian exports to the United States." It also announced that it will conduct a Special 301 out of cycle review. See, story titled "USTR Lifts Trade Sanctions on Ukraine and Announces Special 301 Out of Cycle Review" in TLJ Daily E-Mail Alert No.1,205, September 1, 2005.

Friday, October 14, 2005 is the deadline to submit comments to the USTR regarding its out of cycle reviews of Ukraine and Saudi Arabia. See, notice in the Federal Register, September 8, 2005, Vol. 70, No. 173, at Pages 53410 - 53412, and notice in the Federal Register, September 14, 2005, Vol. 70, No. 177, at Pages 54436 - 54437.

Wayne also stated, "But effective protection of intellectual property does not end with passage of legislation. You need strong enforcement; you need vigilance and commitment. The U.S. government is in the midst of a three-month review of Ukraine's efforts to strengthen its IPR enforcement through effective prosecution and penalties against piracy and counterfeiting, border controls, and other means. Among the important outcomes of the review will be a decision on whether to move Ukraine off the Priority Foreign Country designation and an assessment of its eligibility for benefits under the Generalized System of Preferences, or GSP. We have received some encouraging reports on the work of the Ukrainian government in IPR enforcement, and we very much hope that the government can document these good results and clarify some of the outstanding questions that we have."

FTC Takes Action Against Mortgage Lender for Failure to Protect Customer Data

9/27. The Federal Trade Commission (FTC) filed an administrative complaint [4 pages in PDF] against Superior Mortgage Corp. alleging violation of the confidentiality provisions of the Gramm Leach Bliley Act (GLBA), and the FTC's rules thereunder, in connection with its failure to implement reasonable safeguards to protect the security of the personal information of its customers. The FTC and Superior simultaneously entered into an Agreement Containing Consent Order [PDF].

The complaint alleges that "Through its offices and websites, respondent has collected sensitive customer information in connection with the mortgage application process, including customer names, Social Security numbers, credit histories, and bank and credit card account numbers. Since the Rule’s effective date until at least May 2005, respondent failed to implement reasonable policies and procedures to protect the security and confidentiality of the information it collects."

For example, the FTC alleges that Superior failed to implement appropriate password policies to limit access to company systems and documents containing sensitive customer information, and that it failed to encrypt or otherwise protect sensitive customer information before sending it by e-mail.

The FTC alleged that this violates Title V of the GLBA, which is codified at 15 U.S.C. § 6801 et seq., and the FTC's Standards for Safeguarding Customer Information Rule, which is codified at 16 C.F.R. Part 31. See also, FTC release.

FCC Again Extends Its Deadline for VOIP Providers to Cut Off Customers

9/27. The Federal Communications Commission (FCC) released another document titled "Public Notice" in which the FCC once again extends it voice over internet protocol (VOIP) consumer cutoff deadline for certain interconnected VOIP service providers.

The FCC wrote that its Enforcement Bureau (EB) "will not pursue enforcement action", until October 31, 2005, against certain interconnected VOIP providers.

The FCC further wrote that those providers that have not received acknowledgements from at least 90% of their subscribers must also submit a status report to the FCC by October 25, 2005.

The FCC previously mandated that every interconnected VOIP service provider must send every one of its subscribers an FCC mandated statement regarding E911, and that every interconnected VOIP service provider must send to every one of its customers the FCC mandated VOIP warning stickers. The FCC mandate further required that every interconnected VOIP service provider obtain acknowledgement from every one of its subscribers, and that it "disconnect, no later than August 30, 2005, all subscribers from whom it has not received such acknowledgements". The FCC has twice announced extensions. See, first extension [4 pages in PDF], and the just released further extention [3 pages in PDF].

The FCC wrote in the just released item that "at least 21 providers have received acknowledgments from 100 percent of their subscribers and at least 32 others have obtained acknowledgements from 90 percent or more of their subscribers", and that the EB "will not pursue enforcement action against such providers". (The FCC did not identify the names of any providers that have reached 90%, or that remain below 90%.)

The FCC also wrote that "To the extent that a provider has not received acknowledgements from at least 90% of its subscribers, we intend to continue forbearing from enforcement of our acknowledgment requirement until October 31, 2005, provided that these providers submit a status report to us by October 25, 2005."

The just released order, which the FCC states that it is "further guidance", further amends the order portion of the FCC's First Report and Order and Notice of Proposed Rulemaking [90 pages in PDF], numbered FCC 05-116, adopted on May 19, 2005, and released on June 3, 2005.

For more information on the May 19 order, see, story titled "FCC Releases VOIP E911 Order" in TLJ Daily E-Mail Alert No. 1,148, June 6, 2005. See also, stories titled "FCC Adopts Order Expanding E911 Regulation to Include Some VOIP Service Providers", "Summary of the FCC's 911 VOIP Order", "Opponents of FCC 911 VOIP Order State that the FCC Exceeded Its Statutory Authority", and "More Reaction to the FCC's 911 VOIP Order", in TLJ Daily E-Mail Alert No. 1,139, May 20, 2005.

The FCC amended its May 19 order with a document [PDF], titled "Public Notice", dated July 26, 2005, that established an August 30 deadline to shut off service to certain VOIP customers.

The July 26 item, which is numbered DA 05-2085, required, among other things, that every interconnected VOIP service provider must send every one of its subscribers an FCC mandated statement regarding E911, and that every interconnected VOIP service provider must send to every one of its customers the FCC mandated VOIP warning stickers. This order further requires that every interconnected VOIP service provider obtain acknowledgement from every one of its subscribers, and that it "disconnect, no later than August 30, 2005, all subscribers from whom it has not received such acknowledgements".

For more information on the July 26 item, see story titled "FCC Amends E911 VOIP Order's Subscriber Notice, Reporting and Cancellation Requirements" in TLJ Daily E-Mail Alert No. 1,184, July 28, 2005.

Then, on August 26, 2005, the FCC issued a document [4 pages in PDF] that extended the customer cutoff deadline for thirty days (from August 30 to September 28). The August 26 item, which is numbered DA 05-2358, provided, in part, that the FCC "will continue to refrain, for an additional 30 days -- until September 28, 2005 -- from enforcing the requirement that VoIP providers obtain affirmative acknowledgements ..." However, this item also provided that this extension only applies to interconnected VOIP service providers who "filed reports on or before August 10, 2005 in accordance with the July 26" order.

For more information on the August 26 item, see story titled "FCC Delays Its VOIP Customer Lockout Mandate for 30 Days" in TLJ Daily E-Mail Alert No. 1,202, August 26, 2005.

These orders and other items are part of the FCC's proceedings titled "In the Matter of IP-Enabled Services" and numbered WC Docket No. 04-36, and titled "E911 Requirements for IP-Enabled Service Providers" and numbered WC Docket No. 05-196.

The just released item is numbered DA 05-2530.

House Subcommittee Holds Hearing on State Business Activity Taxes

9/27. The House Judiciary Committee's (HJC) Subcommittee on Commercial and Administrative Law held a hearing on HR 1956, the "Business Activity Tax Simplification Act of 2005", or "BATSA".

Rep. Bob Goodlatte (R-VA), Rep. Rick Boucher (D-VA), two of the leading technophiles in the House, and others, introduced HR 1956 on April 28, 2005. See also, story titled "House Subcommittee to Hold Hearing on Goodlatte Boucher BAT Bill" in TLJ Daily E-Mail Alert No. 1,219, September 22, 2005.

The Supreme Court ruled in Quill v. North Dakota, 504 U.S. 298 (1992) that state and local taxing authorities are barred under the Commerce Clause from requiring remote sellers without a substantial nexus to the taxing jurisdiction to collect sales taxes for sales to persons within the jurisdiction. The Court added that Congress may extend such authority. Some states now take the position that the holding in Quill only reaches sales taxes, and that states are free to tax businesses with no in state physical presence, based upon their business activities.

HR 1956 requires a physical presence for imposition of business activity taxes (BATs) by states. It provides that "No taxing authority of a State shall have power to impose, assess, or collect a net income tax or other business activity tax on any person relating to such person's activities in interstate commerce unless such person has a physical presence in the State during the taxable period with respect to which the tax is imposed."

The bill sets out in detail minimal activities, such as attending training conferences, that do not constitute physical presence.

The bill also defines "net income tax", and "other business activity tax". The latter means "(i) a tax imposed on or measured by gross receipts, gross income, or gross profits; (ii) a business license tax; (iii) a business and occupation tax; (iv) a franchise tax; (v) a single business tax or a capital stock tax; or (vi) any other tax imposed by a State on a business for the right to do business in the State or measured by the amount of, or economic results of, business or related activity conducted in the State." BAT does not include a "transaction tax".

HR 1956 would protect businesses that sell products over the internet from being subjected to a multitude of taxes, and tax filing requirements, in jurisdictions in which they have no presence.

See, full story.

People and Appointments

9/27. President Bush announced his intent to appoint Timothy Adams to be a member of the Board of Directors of the Overseas Private Investment Corporation. See, White House release. Adams is Under Secretary of the Treasury for International Affairs. He worked on the Bush Cheney 2000 campaign on technology related issues. Before that, he was the Managing Director of the G7 Group.

9/27. BellSouth announced that Pat Shannon will become its Chief Financial Officer. He has worked at BellSouth since 1997. He will replace Ron Dykes, who will retire at the end of this year.

More News

9/27. The Government Accountability Office (GAO) sent and released a letter and presentation slides [25 pages in PDF] to Sen. John Warner (R-VA) and Sen. Carl Levin (D-MI) titled "Briefing on DOD’s Report on Commercial Communications Satellite Services Procurement Process". Sen. Warner and Sen. Levin are the Chairman and ranking Democrat on the Senate Armed Services Committee.

9/27. The House Rules Committee adopted a rule for consideration of HR 3402, the "Department of Justice Appropriations Authorization Act, Fiscal Years 2006 through 2009". The Committee did not make in order an amendment pertaining to Section 505 of the PATRIOT Act, regarding national security letters.

9/27. The National Music Publishers' Association (NMPA) announced that it gave its 2005 NMPA President's Award to Sen. Orrin Hatch (R-UT). See, NMPA release [PDF].

Treasury Secretary Advocates Free Trade

9/26. John Snow, the Secretary of the Treasury, gave a speech in Washington DC in which he addressed the Doha Development Agenda (DDA).

He said that "Arguably, the greatest step our governments can take to generate increased growth and poverty reduction is through the removal of trade barriers under the Doha Round negotiations."

He continued that the DDA "places particular emphasis on integrating developing countries into the global economy so that they may increasingly reap the benefits of trade liberalization. As the World Bank has shown, about three-quarters of the projected income gains from global trade liberalization for developing countries are expected to come from reducing their own barriers. For developing countries to realize these benefits, however, they too need to reduce their own trade barriers substantially.

Snow (at left) said that "Liberalization in services could deliver some of the greatest gains from the Doha round and is an essential element to the DDA. The income gains from services trade have been estimated to be much greater than from the liberalization of goods alone."

"Financial sector liberalization is particularly important for economic growth and poverty reduction, yet the quality and quantity of offers made has been extremely disappointing. Without a change in course, we are concerned that the Doha round could generate almost no new liberalization in trade in services -- a missed opportunity for development and poverty reduction. Therefore all countries, but especially developing countries which stand to benefit the most, should make WTO commitments to provide effective market access in services, including financial services."

On September 14, 2005, President Bush gave a speech at the United Nations, in New York City, in which he said that "we must bring the Doha trade talks to a successful conclusion". Bush also proposed the elimination of "all tariffs, subsidies and other barriers to free flow of goods and services". See, story titled "Bush Advocates Conclusion of Doha Round" in TLJ Daily E-Mail Alert No. 1,214, September 15, 2005.

Snow discussed Bush's speech. He said, "As President Bush stated in his recent address to the United Nations, eliminating trade barriers is the key to overcoming poverty in the world's poorest nations. And so he said, ``the United States is ready to eliminate all tariffs, subsidies and other barriers to free flow of goods and services as other nations do the same.´´ While not all may be willing to meet this challenge, we strongly urge other members of the Development Committee and their constituencies, whether they be from high-income, middle-income, or low-income countries, to offer significant, broad trade liberalization measures by the Hong Kong Ministerial so the growth and development potential of the Doha Round can be realized."

Trade negotiators are working to reach agreement before the World Trade Organization (WTO) holds its Sixth WTO Ministerial Conference in Hong Kong, China, on December 13-18, 2005. See, WTO notice.

GAO Finds Information Security Weaknesses at FAA

9/26. The Government Accountability Office (GAO) released a report [37 pages in PDF] titled "Information Security: Progress Made, but Federal Aviation Administration Needs to Improve Controls over Air Traffic Control Systems".

The report finds that the Federal Aviation Administration's (FAA) information security program "still has significant weaknesses that threaten the integrity, confidentiality, and availability of its systems -- including weaknesses in controls that are designed to prevent, limit, and detect access to those systems."

It elaborates that "the agency was not adequately managing its networks, system patches, user accounts and passwords, or user privileges, and it was not always logging and auditing security-relevant events."

Rep. Tom Davis (R-VA), Chairman of the House Government Reform Committee, stated in a release that the "FAA must address these weaknesses in controls designed to prevent, limit, and detect access to its systems. The FAA is responsible for promoting the safe, orderly, and expeditious flow of air traffic in the U.S. and it relies on IT systems and networks to accomplish its mission. Given the ever evolving nature of cyber-threats, and the thought of someone with malicious intent accessing FAA's IT systems, complacency is not an option".

Communist China Announces More Regulation of Unhealthy Online News

9/26. Xinhua, an arm of the government of the People's Republic of China (PRC), announced a "new regulation on online news services". See, release.

It states that "Services that provide online news stories, that have bulletin board systems (BBS) or have the function of sending short messages containing news contents to individual mobile phones are all subject to the regulation."

The Xinhua announcement further states that "News sites set up by news organizations but publishing not just their own stories, and sites by other organizations featuring news stories must get approval from the State Council Information Office. Sites by news organizations that only carry their own stories should register at the main office or provincial information offices."

It adds that "The regulation also spells out that media attached to the central government or directly under provincial governments are not allowed to provide any stories to other online news sites without approval."

Xinhua's release states that this regulation was issued by the PRC's Ministry of Information Industry (MII) and the PRC State Council's Information Office.

Xinhua also wrote that "Anyone who finds unhealthy online stories can visit http://net.china.cn and report." The PRC government created the net.china.net website in 2004 "for people to report illegal and unhealthy on-line information in a bid to create a better cultural environment for juveniles". See, November 6, 2004 release.

More News

9/26. Attorney General Alberto Gonzales gave a speech in Miami, Florida, to the International Association of Chiefs of Police in which he discussed computer and internet related crimes.

9/26. The National Telecommunications and Information Administration (NTIA) announced the award of $21.4 Million in Public Telecommunications Facilities Program (PTFP) grants for fiscal year 2005. See, NTIA summary and list of awards.

9/26. Jon Dudas, head of the U.S. Patent and Trademark Office (USPTO), gave a speech in Miami, Florida, at an event titled "Conference on the Global Intellectual Property Marketplace". See, USPTO release.

Go to News from September 26-31, 2005.