7th Circuit Holds Downloading Copyrighted Music with P2P Software is Not Fair Use

12/9. The U.S. Court of Appeals (7thCir) issued its opinion [9 pages in PDF] in BMG Music v. Gonzalez, a copyright infringement case brought by BMG against an individual who downloaded music with the Grokster peer to peer (P2P) software. The Court of Appeals affirmed the District Court's summary judgment for BMG.

The Supreme Court wrote on June 27, 2005 in its opinion [55 pages in PDF] in MGM v. Grokster that "one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties." See, story titled "Supreme Court Rules in MGM v. Grokster" in TLJ Daily E-Mail Alert No. 1,163, June 28, 2005.

However, that case was a dispute between copyright holders (such as record companies) and P2P services. None of the individuals who downloaded copyrighted music were parties to that case. The Supreme Court held that the P2P services could be held vicariously liable for the direct infringement by others. The District Court held that individuals who use the Grokster software to download copyrighted files directly infringe copyrights. However, this holding was not an appeal issue before the Court of Appeals or the Supreme Court.

The present case, BMG Music v. Gonzalez does squarely address whether an individual's downloading of copyright music files with the Grokster software is infringement. The Court of Appeals wrote that it unequivocally is infringement.

See, full story.

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12/9. BellSouth's Herschel Abbott stated in a release that "we are fully supportive of Chairman Martin's call for a la carte and family friendly programming tiers. IPTV holds much promise for the consumer and greater programming options is just one example of how consumers will benefit by having choice in video service providers. As long as content can be acquired in a manner that allows flexibility, we would look forward to meeting the needs of our customers with even more choice through a la carte and family-tiered offerings."

12/9. Verizon Wireless stated in a release that on November 29, 2005, the Superior Court in Sacramento, California, entered an injunction against Intelligent Alternatives, a telemarketing firm, barring it from making auto-dialer and prerecorded calls to cell phones. VW also stated that VW has a "record of protecting customer privacy", and describes other recent lawsuits filed by VW.

House and Senate to Vote on Conference Report on PATRIOT Act Extension Bill

12/8. Sen. Arlen Specter (R-PA), the Chairman of the Senate Judiciary Committee, and Rep. James Sensenbrenner (R-WI), the Chairman of the House Judiciary Committee, both announced that House and Senate conferees have completed work on the conference report on HR 3199, the "USA PATRIOT Improvement and Reauthorization Act of 2005". See, full text of the conference report [219 pages in PDF].

Rep. Sensenbrenner filed the conference report (House Report 109-333) in the House on Thursday, December 8. Sen. Specter held a news conference at 11:00 AM in the Capitol Building.

Sen. Specter said that "it has been a very very difficult conference", but "we hammered out what I think is a good bill". He predicted that both the House and Senate would approve the conference report next week.

However, a group of Senators announced their opposition to the conference report on December 8, and predicted that the Senate will not approve it. See, following story titled "Senate Opponents Say Conference Report Lacks Support in Senate".

The House approved its version of HR 3199 on July 21, 2005. See, story titled "House Approves PATRIOT Act Extension Bill" in TLJ Daily E-Mail Alert No. 1,180, July 22, 2005. The Senate approved its bill on July 29, 2005. This required the appointment of a conference committee to produce a common bill. The just released conference report is the product of this committee.

USA PATRIOT is an acronym. The Act was given an long and awkward title for the purpose of generating this acronym. The full title is "Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001".

FISA is also an acronym. It is the "Foreign Intelligence Surveillance Act of 1978". Although, it now encompasses more than "foreign intelligence". Many of the provisions of the PATRIOT Act, and the conference report, amend the FISA.

The 107th Congress enacted the PATRIOT Act quickly after the terrorist attacks of September 11, 2001. It was HR 3162. It became Public Law 107-56 on October 26, 2001. The bill was approved by the House on October 24, 2001 by a vote of 357-66. See, Roll Call No. 398. Three Republicans and sixty-two Democrats voted against the bill.

Much of Title II of the PATRIOT Act pertains to electronic surveillance affecting new technologies. § 224 of the PATRIOT Act provides that many of the provisions of Title II sunset at the end of 2005, unless extended. Both the House and Senate versions of the bill approved last summer permanently extended almost all of the sunsetted provisions. They focused on sunsets for, and modifications of, just a few of the sunsetted provisions, including § 215, regarding access to business records, including library records, under the FISA.

The key phrase of the conference report is "Section 224 of the USA PATRIOT Act is repealed."

The technology and communications related sections of the PATRIOT Act that are now made permanent include the following:

§ 207, regarding delayed notice of search warrants.
§ 209, which is mistitled "Seizure of voice-mail messages pursuant to warrants", but is actually broader.
§ 212, titled "Emergency disclosure of electronic communications to protect life and limb".
§ 214, titled "Pen register and trap and trace authority under FISA".
§ 217, titled "Interception of computer trespasser communications".
§ 220, titled "Nationwide service of search warrants for electronic evidence".

Although, the conference report does contain language that modifies the surveillance and seizure powers addressed in §§ 207, 212, 213, 214, and 215.

The conference report contains some extensive revisions to the statutory provisions addressed by §§ 206 (roving surveillance authority under the FISA) and § 215 (access to business records under FISA). These issues were the most controversial for the members of the conference committee.

The conference report maintains a qualified four year sunset for §§ 206 and 215.

With respect to § 213, the conference report provides for delayed notice of search warrants (referred to by some as sneak and peak) for 30 days. The House bill had provided for a 180 day delay. The Senate bill had provided for a 7 day delay. (§ 213, titled "Authority for delaying notice of the execution of a warrant", is not included in the sunset provisions of § 224, so there was no need to extend it.)

Senate Opponents Say Conference Report Lacks Support in Senate

12/8. When Sen. Arlen Specter (R-PA) held his news conference to announce the conference report on the PATRIOT Act extension bill, staff for other Senators distributed statements expressing opposition to the conference report.

Sen. Russ Feingold (D-WI) wrote in a statement that "I will do everything I can, including a filibuster, to stop this Patriot Act conference report, which does not include adequate safeguards to protect our constitutional freedoms."

Sen. Feingold (at left) and five other Senators wrote in another statement that "We are gravely disappointed that the conference committee made so few changes to the Patriot Act reauthorization package that was circulated before the Thanksgiving recess. As we said then, we cannot support a conference report that does not contain modest but critical improvements, similar to those in the Senate-passed bill, to the most controversial provisions of the Patriot Act. We indicated before Thanksgiving that we would oppose a conference report like the one filed in the House today, and we believe many of our colleagues will join us."

The six Senators are Sen. Feingold, Sen. Dick Durbin (D-IL), Sen. Larry Craig (R-ID), Sen. John Sununu (R-NH), Sen. Ken Salazar (D-CO), and Sen. Lisa Murkowski (R-AK).

The statement continued that "The sunsets this year provide our best opportunity to make the meaningful changes to the Patriot Act that the American public has demanded. We believe that this conference report will not be able to get through the Senate, while the Senate bill would easily pass the House if its leadership would bring it to a vote. We call on our House colleagues to reject this conference report, and to take up and pass the Senate compromise bill. We still can -- and must -- make sure that our laws give law enforcement agents the tools they need while providing safeguards to protect the constitutional rights of all Americans."

Reaction to Conference Report on the PATRIOT Act Extension Bill

12/8. Supporters and opponents of the conference report on HR 3199, the "USA PATRIOT Improvement and Reauthorization Act of 2005", offered comments on the report. See, full text of the conference report [219 pages in PDF].

Attorney General Alberto Gonzales (at right) stated in a release that "I applaud the House and the Senate conferees for coming together to produce a comprehensive USA PATRIOT Reauthorization bill. The Department strongly supports the bill, which reauthorizes all of the sunsetting provisions of the USA PATRIOT Act, creates a new national security division at the Department of Justice, helps clarify certain existing authorities, provides additional protections against the threat of attacks on mass transportation systems and at our seaports, and grants us additional tools to protect Americans from terrorism. I urge both houses of Congress to act promptly to pass this critical piece of legislation."

Jim Dempsey of the Center for Democracy and Technology (CDT) stated in a release that "The conference report as it stands today is not an acceptable compromise. Congress is missing an opportunity to preserve the PATRIOT Act's investigative tools while protecting privacy with some modest checks and balances."

He continued that "CDT supported the Senate renewal bill as the least that should have been done to move the pendulum back to the center. The reported deal swings too far in the direction of the weaker House bill. It still allows the government to get private data on people who are not suspected of having any connection to terrorism. And the conference report expands the impact of National Security Letters, which are issued with no judicial review, by making it easier to enforce them and harder for recipients to resist them."

The CDT release adds that the "Conference Report does not require the government to show any connection, however tangential, between the records it seeks-including personal records like medical and insurance records-and a suspected terrorist. The government can still request entire databases, with no specific focus on individuals".

Caroline Fredrickson, of the ACLU, stated in a release that "This sham compromise agreement fails to address the primary substantive concern raised by millions of Americans, as well as civil liberties, privacy and business organizations and lawmakers from both sides of the aisle and in both chambers. It is unfortunate that some would cave in to political pressure from the White House and reject common sense protections that were included in the unanimously supported Senate bill."

She added that "If adopted, this reauthorization bill would continue to permit the FBI to access a huge array of extremely private records of innocent Americans without having to demonstrate a connection between the records sought and a suspected foreign terrorist or terrorist organization. A shorter sunset on a few controversial powers will not protect our privacy and does not redress in any way the FBI’s ability to use National Security Letters to pry into people’s private affairs, with no judicial oversight."

Korean Government Orders Microsoft to Remove Functionality From Software

12/8. The Korean Fair Trade Commission (KFTC) issued a document [7 pages in PDF] titled "The findings of the Microsoft case", that finds that Microsoft's products violate Korean antitrust law, and orders Microsoft to redesign its software, and give Korea about $33 Million.

This document, in English translation, released on December 6, states that the KFTC decided "to order Microsoft Corporation and Microsoft Korea, inter alia, to unbundle the tied product, including Windows Media Player, and to impose surcharge of approximately 33 billion won (approximately 31 million US dollars) for violation of the Monopoly Regulation and Fair Trade Act (hereinafter the ``MRFTA´´), including abuse of market dominant position." (Parentheses in original.)

This document states that the "KFTC found the following practices by Microsoft to be violative of the MRFTA. First, tying Windows Media Service to the Windows Server Operating System, where Microsoft has market dominance. Second, tying Windows Media Player to the Windows PC Operating System, where Microsoft has monopoly power. Third, tying instant messaging programme to the Windows PC Operating System, where Microsoft has monopoly power."

This KFTC document orders Microsoft to "unbundle Windows Media Service from Windows Server Operating System, with 180 days after the decision."

It also orders Microsoft to "offer two versions of Windows PC Operating System, within 180 days after the decision."

It adds that "One version will be stripped of Windows Media Player and instant messenger. Another version will be newly installed with ``Media Player Centre´´ and ``Messenger Centre´´ that will contain links to web-pages that allow consumers to download competing media players and instant messengers, so that competing softwares can be equally installed into Windows PC Operating System."

It also states that "for Windows PC Operating Systems already sold and currently in use by consumers at the time of decision, Microsoft is required to provide users with ``Media Player Centre´´ and ``Messenger Centre´´ through CDs or internet updates."

Microsoft issued a release in which it stated that "We disagree with the Commission's decision and strongly believe that Microsoft has operated within Korean law."

Microsoft added that "We intend to appeal this decision because it is inconsistent with Korean law. Nevertheless, we will continue developing products for Korean consumers in a way that complies with all laws and is pro-competitive. Microsoft has long felt that Korea is an important center of innovation for our industry. We remain committed to Korea and look forward to continuing to serve the interests of Korean consumers as well as the rest of the Korean information technology industry."

The U.S. Department of Justice's (DOJ) Antitrust Division criticized this action by the KFTC, just as it has often criticized the EU for taking a similar action against Microsoft in 2004.

Bruce McDonald, a Deputy Assistant Attorney General in the Antitrust Division, stated in a December 7 release that "The Antitrust Division believes that Korea's remedy goes beyond what is necessary or appropriate to protect consumers, as it requires the removal of products that consumers may prefer. The Division continues to believe that imposing 'code removal' remedies that strip out functionality can ultimately harm innovation and the consumers that benefit from it."

McDonald stated that "Sound antitrust policy should protect competition, not competitors, and must avoid chilling innovation and competition even by 'dominant' companies. Furthermore, we believe that regulators should avoid substituting their judgment for the market's by determining what products are made available to consumers."

He continued that "The European Commission adopted a similar approach in its challenge to Microsoft's bundling Windows Media Player. Since then, demand in Europe for the version of the operating system with the media player code removed has been lackluster, suggesting limited effect on competition from the type of unbundling remedy the Korean Fair Trade Commission is pursuing."

"Addressing Microsoft's exclusionary conduct, the United States' final judgment provides clear and effective protection for competition and consumers. Microsoft is prohibited from preventing computer manufacturers and end users from choosing alternatives to software like Windows Media Player and Windows Messenger. The United States continues to be active in its enforcement of Microsoft's compliance with the judgment, and this work has resulted in substantial changes to Microsoft's business practices", said McDonald.

The US and the EU, and now the US and Korea, have taken different approaches to Microsoft in particular, and single firm conduct in general. See, for example, September 10, 2004 speech in Tokyo, Japan, by former Assistant Attorney General Hewitt Pate titled "Securing the Benefits of Global Competition". See also, story titled "Pate Addresses US Competition Law And Differences With EU" in TLJ Daily E-Mail Alert No. 975, September 13, 2004.

The Antitrust Division and the Federal Trade Commission (FTC) will hold hearings on single firm conduct early next year. See, story titled "Antitrust Division and FTC to Hold Hearings on Single Firm Conduct" in TLJ Daily E-Mail Alert No. 1,262, November 30, 2005.

Sen. Specter Outlines Schedule for Senate Judiciary Committee

12/8. Sen. Arlen Specter (R-PA), the Chairman of the Senate Judiciary Committee (SJC), held a news conference to discuss and answer questions on the conference report HR 3199, the "USA PATRIOT Improvement and Reauthorization Act of 2005". He also used the occasion to summarize the near term schedule of the SJC.

Sen. Specter (at right) stated that members have been occupied with negotiating the conference report. He predicted that the Senate will approve the conference report next week.

He said that next, in early January, the SJC will hold hearings on the nomination of Judge Sam Alito to be a Justice of the Supreme Court. He said that next the SJC will tackle asbestos legislation. And finally, it will take up comprehensive immigration reform.

He said nothing about patent reform legislation.

PFF Paper Opposes Content Based Restraints of Satellite Radio Broadcasts

12/8. The Progress and Freedom Foundation (PFF) released a paper [16 pages in PDF] titled "The Future of Radio Regulation: The Need for a Level Playing Field". The author is Adam Thierer, a Senior Fellow at the PFF. He states that "XM and Sirius have made impressive strides since their birth in late 2001", and that they pose a threat to terrestrial radio broadcasters. In addition, there are other threats, including various portable music devices, such as iPods.

He notes that "terrestrial radio broadcasting remains one of America’s most heavily regulated media sectors". He argues that "the best way to solve this parity problem is not through line-of-business restrictions on new players or technologies, but rather though the comprehensive liberalization of the traditional terrestrial radio broadcast sector."

Thierer responds to proposals, such as those expressed in HR 998, the "Local Emergency Radio Service Preservation Act of 2005". This bill states in its recitation of findings that there should "local origination of programming". This bill distinguishes this from "localized content". The stated rationale of the bill is that to preserve the former, the Congress must prohibit satellite radio broadcasters from providing the latter.

The bill would require the FCC to amend its rules to provide that "(1) digital audio radio satellite service licensees shall not, using any capability either on a satellite or in a radio receiver, provide services that are locally differentiated or that result in programming being delivered to consumers in one geographic market that is different from the programming that is delivered to consumers in any other geographic market; and (2) digital audio radio satellite service repeaters shall be restricted to simultaneously retransmitting the programming transmitted by satellite directly to digital audio radio satellite service subscribers' receivers, and may not be used to distribute any information not also transmitted to all subscribers' receivers."

The bill would also require the FCC to conduct a rule making proceeding to "to determine whether digital audio radio satellite service licensees should be permitted to provide locally oriented services on nationally distributed channels".

Thierer argues that the best way to preserve terrestrial radio is not to burden its competitors with regulation, but to remove the regulations that burden terrestrial radio. He argues that "Free, over-the-air radio can have a future if it is freed of its regulatory chains. This will require the elimination of the various ``public interest´´ mandates, content controls, ownership regulations, and other rules that make it difficult for traditional broadcasters to meet the new challenges posed by satellite radio operators and other new media competitors."

Thierer recommends that the Congress "remove all speech controls from traditional radio and guarantee them the same First Amendment status and rights as all other media providers; free terrestrial broadcasters from all other ``affirmative´´ public interest obligations; completely relax media ownership rules to ensure that struggling local radio stations can potentially be saved by larger operators if new competition threatens their financial viability; and, allow radio broadcasters to use their spectrum flexibly for whatever purpose they wished (including selling it to someone else for alternative uses)." (Parentheses in original.)

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12/8. The Department of Justice (DOJ) announced that Thomas Barnett, the acting Assistant Attorney General in charge of the Antitrust Division, wrote a business review letter that states that the DOJ will not challenge the creation of a free edition of the Denver Post newspaper. There are two newspapers in Denver, Colorado, the Denver Post and the Rocky Mountain News. They participate in a joint operating agreement that the DOJ approved in 2001.

12/8. The Business Software Alliance (BSA) and International Data Corporation (IDC) released a report titled "Global Economic Impact Study on Piracy Reduction". See also, BSA release.

8th Circuit Upholds North Dakota's Ban on Use of Professional Telemarketers to Solicit Charitable Contributions

12/7. The U.S. Court of Appeals (8thCir) issued its opinion [19 pages in PDF] in Fraternal Order of Police v. Stenehjem, a challenge to a state law restricting telemarketing.

North Dakota enacted a statute that prohibits certain telephone solicitations of North Dakota residents who register with the state's do not call list. The statute exempts telephone solicitations made by charitable organizations if "the telephone call is made by a volunteer or employee of the charitable organization" and the caller makes specified disclosures. That is, it provides no exemption for professional fundraising solicitors. Professional telephonists are permitted to make calls that advocate, as opposed to seeking money.

The plaintiffs are organizations that hire professional fundraising solicitors. The defendant, Wayne Stenehjem, is the Attorney General of the state of North Dakota.

The plaintiffs filed a complaint in U.S. District Court (DND) against Stenehjem in his official capacity challenging the statute under the First Amendment. The District Court held that a part of the statute is a content based restraint of protected speech, that it is entitled to review under a strict scrutiny standard, and that the regulation is impermissible. This appeal followed.

The Court of Appeals reversed. It held that the regulation is content neutral. It explained that "First, North Dakota has not distinguished between professional and in-house charitable solicitors because of any disagreement with the message that would be conveyed, for the message would be identical regardless of who conveyed it. Second, the regulation can be justified without reference to the content of the regulated speech, for North Dakota’s interest is in protecting residential privacy." The Court added that since "solicitation may reasonably be viewed as more invasive than advocacy, we conclude that the Act is a content-neutral regulation."

Next, since the Court held that the restraint is not content based, it held that the statute is not subject to strict scrutiny. Rather it is subject to lower standard set by the 8th Circuit in 2001 in Fed’n of the Blind of Arkansas, Inc. v. Pryor, 258 F.3d 851. The Court recited this standard: "(a) whether the State had a sufficient or ``legitimate´´ interest; (b) whether the interest identified was ``significantly furthered´´ by a narrowly tailored regulation; and (c) whether the regulation substantially limited charitable solicitations."

The Court reasoned that the statute satisfies this three part test. First, it wrote that residential privacy is a significant government interest. Second, it wrote that the statute is narrowly tailored. Third, it wrote that the statute does not substantially limit charitable solicitations. Funds may still be solicited by employees and volunteers of charities, and anyone may solicit persons not on the do not call list.

Judge Wollman wrote the opinion of the Court of Appeals, in which Judge Holmes joined. Judge Heaney wrote a short dissent. He stated that the statute is not narrowly tailored.

This case is Fraternal Order of Police, North Dakota State Lodge, et al. v. Wayne Stenehjem, U.S. Court of Appeals for the 8th Circuit, App. Ct. Nos. 03-3848, 04-1619 and No. 04-1620, appeals from the U.S. District Court for the District of North Dakota.

GAO Reports There is Widespread Domain Name Registration Dishonesty

12/7. The Government Accountability Office (GAO) released a report [51 pages in PDF] titled "Internet Management: Prevalence of False Contact Information for Registered Domain Names". The report consists of a four page letter, and presentation slides.

The report states that "we estimate that 2.31 million domain names (5.14 percent) have been registered with patently false data in at least one of the required contact information fields. In addition, we estimate that 1.64 million domain names (3.65 percent) have incomplete information in one or more of the required fields. In total, we estimate that 3.89 million domain names (8.65 percent) had at least one instance of patently false or incomplete data in the required Whois contact information fields." (Parentheses in original.)

The GAO's methodology was to randomly select and investigate 900 domains, 300 each from the .com, .net, and .org top level domains, and then draw inferences from this sample.

The report also states that the Department of Commerce and the Internet Corporation for Assigned Names and Numbers (ICANN) "have taken steps to ensure the accuracy of contact data in the Whois database, including implementing a Registrar Accreditation Agreement that requires registrars to investigate and correct any reported inaccuracies in Whois contact information for the domain names they register, and an amendment to their memorandum of understanding that required ICANN to implement measures to improve the accuracy of Whois data. ICANN has also published additional information and guidance for registrars regarding their obligations to investigate and correct data inaccuracies, and implemented a system to receive and track complaints about inaccurate and incomplete data."

The report is addressed to Rep. Lamar Smith (R-TX) and Rep. Howard Berman (D-CA), the Chairman and ranking Democrat on the House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property.

Rep. Smith stated in a release on December 7, 2005, that "With the holiday shopping season well underway, consumers need assurance that their online purchases are not actually online scams ... One way for online consumers to identify who they are really buying from is to look up their vendor's WHOIS registration record." He added that "Today, we have a better sense of the problems consumers face when they shop online ... I look forward to working further on this issue next year to protect American consumers from online fraud."

Rep. Smith's and Rep. Berman's interest in domain name registration dishonesty is longstanding, and broad. They are also concerned about the association of domain name fraud with intellectual property theft.

The GAO's presentation slides state that "users of the Whois service have broadened over time to include law enforcement officials, owners of intellectual property, and others seeking contact information about Web site owners for a variety of reasons".

The GAO's presentation slides also state that "Data accuracy is important to the effectiveness of the Whois service in helping Internet operators to resolve technical network issues, as well as helping law enforcement officers to investigate such things as intellectual property misuse or online fraud. According to federal agency officials, accurate Whois data have the potential to allow law enforcement officials to identify individuals involved in criminal activities on the Internet more quickly than if such information were not available."

On February 3, 2004, Rep. Smith and Rep. Berman introduced HR 3754 (108th Congress), the "Fraudulent Online Identity Sanctions Act", a bill to provide additional civil and criminal remedies in actions that also involve domain name fraud. See, story titled "Representatives Introduce Bill to Deter Domain Name Fraud" and story titled "House Subcommittee Holds Hearing on False Domain Name Registration Data" in TLJ Daily E-Mail Alert No. 830, February 5, 2004.

This bill was not enacted as a stand alone bill. However, an amended version was included as Title II of HR 3632 (108th), the "Intellectual Property Protection and Courts Amendments Act of 2004", which was enacted into law. It is now Public Law No. 108-482.

The bill did not create any new civil or criminal prohibition of registering a domain name with false information. Instead, it created a rebuttable presumption of willfulness in trademark and copyright infringement cases, where the violation also involves registering a domain name with false information.

First, the bill amended 11 U.S.C. § 1117 (Trademark Act of 1946) to provide that "In the case of a violation referred to in this section, it shall be a rebuttable presumption that the violation is willful for purposes of determining relief if the violator, or a person acting in concert with the violator, knowingly provided or knowingly caused to be provided materially false contact information to a domain name registrar, domain name registry, or other domain name registration authority in registering, maintaining, or renewing a domain name used in connection with the violation."

Second, the bill amended 17 U.S.C. § 504, the section of the Copyright Act that provides remedies for infringement, to provide that "In a case of infringement, it shall be a rebuttable presumption that the infringement was committed willfully for purposes of determining relief if the violator, or a person acting in concert with the violator, knowingly provided or knowingly caused to be provided materially false contact information to a domain name registrar, domain name registry, or other domain name registration authority in registering, maintaining, or renewing a domain name used in connection with the infringement."

Third, the bill amended the sentencing provisions of the Criminal Code that are codified at 18 U.S.C. § 3559 to add a sentencing enhancement for offenses that involve falsification relating to domain names. It provides that "If a defendant who is convicted of a felony offense (other than offense of which an element is the false registration of a domain name) knowingly falsely registered a domain name and knowingly used that domain name in the course of that offense, the maximum imprisonment otherwise provided by law for that offense shall be doubled or increased by 7 years, whichever is less." (Parentheses in original.)

IRS Releases Proposed Rules Regarding Electronic Tax Preparation

12/8. The Internal Revenue Service (IRS) released two related items pertaining to tax return preparers' use and disclosure of tax return information. First, it published a notice in the Federal Register that describes, recites, and sets the comment deadline for proposed changes to its rules implementing 26 U.S.C. § 7216. Second, the IRS published in its web site a notice [16 pages in PDF] that describes and contains a "proposed revenue procedure", and requests public comments.

The notice in the Federal Register states that "The current regulations were written in a paper filing era. They do not address current common industry practices, such as electronic preparation or filing of tax returns. The regulations are silent on taxpayers' consent to the disclosure or use of tax return information in an electronic environment. The proposed regulations address these issues."

26 U.S.C. § 7216 provides, in part, as follows:

"Any person who is engaged in the business of preparing, or providing services in connection with the preparation of, returns of the tax imposed by chapter 1, or any person who for compensation prepares any such return for any other person, and who knowingly or recklessly--
   (1) discloses any information furnished to him for, or in connection with, the preparation of any such return, or
   (2) uses any such information for any purpose other than to prepare, or assist in preparing, any such return,
shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than $1,000, or imprisoned not more than 1 year, or both, together with the costs of prosecution."

IRS Commissioner Mark Everson (at right) stated in a release that "Safeguarding of tax return information is critical ... It's vital we update the preparation rules for the 21st century. Americans ought to know when their tax returns are being outsourced and prepared abroad. In particular, I want to thank Massachusetts Rep. Ed Markey and others for drawing our attention to this important issue."

Rep. Ed Markey (D-MA) stated in a release [PDF] that "When I first raised concerns about the privacy issues that the outsourcing of tax preparation services back in February 2004, Commissioner Everson indicated that the IRS shared my concern about these practices and was committed to protecting taxpayers from having their confidential financial information compromised".

Rep. Markey continued that "Today, the IRS is taking an important step to fulfill that commitment by proposing regulations that would require the taxpayer's affirmative consent to be obtained before any tax preparer could outsource information to a foreign entity. This requirement should help ensure that taxpayers retain control over who gets access to sensitive personal information about their finances, since consumers are unlikely to agree to have their tax returns sent to countries with weak privacy protections. I commend Commissioner Everson for taking my concerns about this matter seriously and for ensuring that the IRS takes the lead in protecting taxpayer's privacy rights."

Public comments on both the proposed rule changes, and the proposed revenue procedure, are due by March 8, 2006. The IRS will hold a public hearing on both items on April 4, 2006.

See, Federal Register, December 8, 2005, Vol. 70, No. 235, at Pages 72954 - 72964. The notice containing the proposed revenue procedure it IRS Notice 2005-93.

People and Appointments

12/7. Nancy Morris will become Secretary of the Securities and Exchange Commission (SEC) upon the retirement of Jonathan Katz in early January of 2006. See, SEC release.

12/7. The Technology CEO Council named Edward Zander to be its new Chairman. Zander is the Ch/CEO of Motorola. He replaces Craig Barrett, Chairman of Intel. See, release.

More News

12/7. The House approved HR 4340, the "United States-Bahrain Free Trade Agreement Implementation Act", by a vote of 327-95. See, Roll Call No. 616. Republicans voted 212-13, while Democrats voted 115-81.

12/7. The House Judiciary Committee's (HJC) Subcommittee on Courts, the Internet, and Intellectual Property (CIIP) held an oversight hearing titled "International IPR Report Card -- Assessing U.S. Government and Industry Efforts to Enhance Chinese and Russian Enforcement of Intellectual Property Rights". See, prepared testimony of Chris Israel (Coordinator for International Intellectual Property Enforcement at the Department of Commerce), prepared testimony [PDF] of Victoria Espinel (Assistant U.S. Trade Representative for IPR), prepared testimony [PDF] of Eric Smith (President of the International Intellectual Property Alliance), and prepared testimony Joan Vidov (President of Films by Jove, Inc.).

12/7. America Online (AOL) and the National Cyber Security Alliance (NCSA) released a report [11 pages in PDF] titled "AOL/NCSA Online Safety Study". It consists of results of a survey of 354 home computer users regarding cyber security. See also, NCSA release.

12/7. The U.S. Court of Appeals (10thCir) issued its opinion in Dominion Video Satellite v. Echostar Satellite, a dispute regarding a broadcast satellite transponder lease agreement. Pursuant to an arbitration provision in the agreement, the parties submitted their dispute to arbitrary. Dominion prevailed. The U.S. District Court (DColo) confirmed the arbitration award. It also awarded Dominion $63,436.02 in attorneys' fees and costs incurred in responding to EchoStar's frivolous and vexatious motions. EchoStar appealed the confirmation of the arbitration award on several grounds, including federal preemption, First Amendment, claim preclusion, impossibility, and justiciability. It also appealed the award of attorneys fees. The Court of Appeals affirmed the District Court. It went on to invite Dominion to file a motion for further attorneys' fees defending against EchoStar's frivolous appeal. This case is Dominion Video Satellite, Inc. v. Echostar Satellite, LLC, U.S. Court of Appeals for the 10th Circuit, App. Ct. Nos. 04-1465 and 05-1080, appeals from the U.S. District Court for the District of Colorado, D.C. No. 03-K-0607. Judge Tacha wrote the opinion of the Court of Appeals, in which Judges O'Brien and Baldock joined.

DC Circuit Holds GLB Privacy Provisions Do Not Apply to Lawyers

12/6. The U.S. Court of Appeals (DCCir) issued its opinion [34 pages in PDF] in ABA v. FTC, holding that the Federal Trade Commission (FTC) exceeded its statutory authority when it asserted that the privacy provisions of the Gramm Leach Bliley Act (GLBA) extend to lawyers and law firms. See, full story.

Comptel Urges Delay in Markup of Telecom Bill

12/6. Earl Comstock, the CEO of Comptel, and officers of over fifty of its member companies, wrote a letter [PDF] to Rep. Joe Barton (R-TX), the Chairman of the House Commerce Committee (HCC), and Rep. John Dingell (D-MI), the ranking Democrat, regarding proposed telecom reform legislation.

The letter states that "the proposed schedule for marking up the bill in subcommittee this month leaves insufficient time to develop needed changes". The signers urge the HCC leaders to "postpone the markup".

The signers also identify the topics that are complex and require more time. "They include the fact that the proposed legislation would subject providers who use both circuit-switching and packet switching to two overlapping and conflicting regulatory regimes; how to balance the non-discrimination principles of net neutrality with legitimate network management needs; and how to modify the existing cable regime with respect to two-way IP based video services."

They added that "further changes to the legislation are needed to ensure that interconnection continues to occur and that local loops and special access remain available to competitors as provided under the FCC’s rules today. These are difficult issues to wrestle with and many Members we have met with have expressed a desire to have more time to understand the effects of the draft legislation and any amendments."

People and Appointments

12/6. The U.S. Chamber of Commerce's National Chamber Litigation Center (NCLC), named Joaquin Carbonell to be the Chair of its Board of Directors. He is EVP and General Counsel of Cingular Wireless. He replaces William Barr, EVP and General Counsel of Verizon Communications. See, release.

12/6. Meyer Eisenberg, the Securities and Exchange Commission's (SEC) Deputy General Counsel and acting Director of the Division of Investment Management, will retire from the SEC in January of 2006. He will become Visiting Professor of Law at Willamette University College of Law in Salem, Oregon. See, SEC release.

12/6. Michele Layne was named an Associate Regional Director for Enforcement in the Securities and Exchange Commission's (SEC) Pacific Regional Office. This office is located in Los Angeles, California. It handles enforcement for southern California, Arizona, Nevada, Hawaii, Oregon, Washington, Idaho, Montana, and Alaska. She replaces Sandra Harris, who has left the SEC. The other leader of this office is Briane Mitchell. See, SEC release.

More News

12/6. The House Rules Committee adopted a closed rule for consideration of HR 4340, the "United States-Bahrain Free Trade Agreement Implementation Act".

12/6. The Association of American Universities (AAU), Association of Research Libraries (ARL), Association of American University Presses (AAUP), and Association of American Publishers (AAP) wrote a guide [36 pages in PDF] titled "Campus Copyright Rights & Responsibilities: A Basic Guide to Policy Considerations". See also, AAU release [PDF] and AAP release.

Go to News from December 1-5, 2005.