Sen. Dorgan Criticizes Offshore Outsourcing of Software Development

9/15. The Senate began its consideration of HR 5684, the "United States-Oman Free Trade Agreement Implementation Act".

Sen. Byron Dorgan (D-ND) spoke at length in opposition. See, Congressional Record, September 15, 2006, at pages S9655-6. He said, "This trade agreement really needs to be defeated. It will probably not be because we don't have thoughtful debates."

One reason for opposing this FTA, said Sen. Dorgan (at right), is outsourcing of software development. "So the point is this: We have a serious trade problem. It is not just textiles, it is not just manufacturing. One-half of the Fortune 500 companies are now outsourcing software development."

He related a story about "Natasha Humphreys, a young woman I spoke to on the phone not too long ago. She did everything right. She is a young African-American woman who went to Stanford. She got her college degree and then went to work for Palm Pilot. By the way, her last job at Palm Pilot before she lost her job was to train her successor from India who would work for one-fifth of the price. So my point is, it is not just manufacturing and textiles, it is high tech, it is many other jobs as well."

Sen. Charles Grassley (R-IA) spoke in support of the bill.

The House approved HR 5684 on July 20, 2006, by a vote of 221 to 205. See, Roll Call No. 392.

Commerce Department Proposes to Mandate Reporting of International IP Transactions

9/15. The Department of Commerce's (DOC) Bureau of Economic Analysis (BEA) published a notice in the Federal Register that announces, describes, recites, and sets the comment deadline (November 14, 2006) for, its notice of proposed rulemaking (NPRM) regarding the mandatory reporting of transactions with foreign person involving services (including telecommunications, information services, and news gathering) and intangible assets (including intellectual property).

The notice contains the proposed text of the new rule. It is at Federal Register, September 15, 2006, Vol. 71, No. 179, at Pages 54448-5445. The current rule is codified at 15 C.F.R. § 801.10 [3 pages in PDF].

Both the current rule, and the proposed rule, provide for reporting every five years. Both apply to sales by U.S. persons to foreign persons. Both also apply to purchases by U.S. persons from foreign persons. Both impose mandatory reporting requirements. The current rule has a $500,000 minimum threshold for reporting purchases, and $500,000 for reporting sales, while the proposed rule has $1/$2 Million minimum thresholds. That is, the proposed rule would raise the thresholds. Both require reporting of transactions involving telecommunications, information services, data processing, and research and development.

One thing that is new about the proposed rule is that is adds a long enumeration of intellectual property (IP) related transactions. The current rule does not extent to IP.

The BEA proposes to replace its BE-20 reporting form, which is titled "Benchmark Survey of Selected Services Transactions with Unaffiliated Foreign Persons", with a new form BE-120, titled "Benchmark Survey of Transactions in Selected Services and Intangible Assets with Foreign Persons"

The BEA notice states that "If adopted the BE-120 survey would be conducted once every five years beginning with fiscal year 2006."

It adds that "A BE-120 report is required from each U.S. person that had sales to foreign persons that exceeded $2 million during the fiscal year covered of any of the types of services or intangible assets listed in paragraph (c) of this section, or had purchases from foreign persons that exceeded $1 million during the fiscal year covered of any of the types of services or intangible assets listed in paragraph (c) of this section."

Then, "paragraph (c) of this section" includes a long and expanded list of types of transactions.

It includes "telecommunications services", "research, development", "data processing services", "data base and other information services". However, all of these are covered by the current rule. Perhaps, by raising the thresholds, the new rule would make any efforts by the BEA to estimate the scope of offshore outsourcing more difficult, and less accurate.

The list also includes "disbursements to fund news-gathering costs of broadcasters; disbursements to fund news-gathering costs of print media; ... disbursements to fund production costs of broadcast program material other than news". It also includes "financial services" and "legal services".

Finally, the proposed rule adds a long list of IP related transactions. It states that "The intangible assets covered by the BE-120 survey are rights related to: Industrial processes and products; books, compact discs, audio tapes and other copyrighted material and intellectual property; trademarks, brand names, and signatures; performances and events pre-recorded on motion picture film and television tape, including digital recording; broadcast and recording of live performances and events; general use computer software; business format franchising fees; and other intangible assets, including indefeasible rights of users."

The notice also states that the BEA proposes to request "voluntary" reporting when the minimum thresholds are not met. Moreover, anyone who "receives the BE-120 survey form from BEA", but does not meet the minimum thresholds for mandatory reporting, must submit a "Basis for not reporting data" form.

People and Appointments

9/15. Richard Barth was named first Assistant Secretary for Policy Development at the Department of Homeland Security (DHS). He previously worked for Motorola as corporate vice president for homeland security strategy. See, DHS notice.

More News

9/15. The Government Accountability Office (GAO) released a report [51 pages in PDF] titled "E-Government Travel: Participation by Small Businesses and Estimated Program Savings".

9/15. Janes Ginsburg (Columbia Law School) wrote a paper titled "'Une Chose Publique'? The Author's Domain and the Public Domain in Early British, French and US Copyright Law". The Social Science Research Network (SSRN) has published an abstract. SSRN provides access to the entire paper to its subscribers. See also, Cambridge Law Journal, November 2006.

Summary of 911 VOIP Provisions in Senate's Port Security Bill

9/14. The Senate approved HR 4954, the port security bill, after several days of debate and amendment, on Thursday, September 14. The Senate added to the bill an amended version of the "IP-Enabled Voice Communications and Public Safety Act of 2006". See, full story.

CIIP Subcommittee Considers Bill to Allow Late Application for Patent Extension

9/14. The House Judiciary Committee's (HJC) Subcommittee on Courts, the Internet, and Intellectual Property  held a hearing on HR 5120, a bill to amend 35 U.S.C. § 156 regarding late filings of applications for extensions of patent terms with the U.S. Patent and Trademark Office (USPTO).

This bill would allow the USPTO to consider applications for patent extensions that are filed within five days of the 60 day time limit if the applicant files a petition that shows that the delay in filing the application was unintentional. The effect is to extend the time limit for certain extension applications from 60 to 65 days. However, the change would apply retroactively. There is one company, The Medicines Company, that stands to gain from this bill. One the other hand, generic pharmaceutical manufacturers stand to gain if this bill is not enacted.

Jon Dudas, Director of the U.S. Patent and Trademark Office (USPTO), wrote in his prepared testimony that the USPTO "does not at this time have a position on this proposed legislation".

He added that "We are aware of one current application for patent term extension that would immediately benefit from enactment of the bill. That application is related to patent number 5,196,404". See, U.S. Patent No. 5,196,404.

Clive Meanwell, Ch/CEO of The Medicines Company, wrote in his prepared testimony, that his company stands to loose its patent protection for its one marketed product because it filed its extension application one day beyond the 60 day deadline. He spoke in favor of the bill.

Kathleen Jaeger, President of the Generic Pharmaceutical Association, wrote in her prepared testimony [PDF] that this bill is "special interest legislation that does nothing but help one company to the detriment of all consumers and taxpayers"

John Thomas, a professor at Georgetown University, wrote in his prepared testimony [PDF] about the Hatch-Waxman Act generally. He wrote that Act "represents an effort to refine, within the pharmaceutical industry, the central problem of any intellectual property regime: Encouraging the labors that lead to innovation, on one hand, and disseminating the fruits of those labors, on the other. Thus, the Hatch- Waxman Act codified an expedited generic marketing approval protocol, but also provided for term extension for patents on approved drugs. Patent term extension is unquestionably a fundamental part of a statute that, for all of its perceived flaws, has been highly successful in both encouraging the generic drug industry and promoting the discovery and development of new drugs by brandname firms."

CDT Releases Internet Watch List

9/14. The Center for Democracy and Technology (CDT) released a report titled "Internet Watch List". The CDT states that this lists "bills that threaten the bedrock of Internet privacy and civil liberties".

Leslie Harris, the CDT's Executive Director, stated in a release that "We always see bad bills moving in the waning days of the session, but this year's crop is particularly troubling, ... Taken together, these measures threaten to undermine our First and Fourth Amendment rights; weaken our privacy; hobble technological innovation; and change the fundamental nature of the Internet for the worse. If even one of these misguided legislative gambits succeeds we will all be the worse for it."

The list is organized by topic, rather than by bill numbers. For some legislative initiatives, there are either multiple pending bills, or the initiatives are included in larger legislative packages. In some other cases, no bills have yet been introduced, but the CDT expresses concern that language may be attached to other bills in the closing days of the 109th Congress.

FISA Procedure. There are many pending bills that would revise the Foreign Intelligence Surveillance Act (FISA). The CDT singles out two of these for criticism on civil liberties grounds.

One is HR 5825, the "Electronic Surveillance Modernization Act", sponsored by Rep. Heather Wilson (R-NM). The House Judiciary Committee (HJC) held a hearing on September 12, 2006. It is scheduled to mark up the bill on Wednesday, September 20.

The other is S 2453, the "National Security Surveillance Act of 2006", sponsored by Sen. Arlen Specter (R-PA). The Senate Judiciary Committee (SJC) approved this bill on September 13. 2006. However, the SJC also approved S 2455, the "Terrorist Surveillance Act of 2006", sponsored by Sen. Mike DeWine (R-Ohio), and S 3001, the "Foreign Intelligence Surveillance Improvement and Enhancement Act of 2006", sponsored by Sen. Arlen Specter (R-PA) and Sen. Dianne Feinstein (D-CA). The CDT supports S 3001.

The CDT report states that "Cloaked in terms of judicial review and modernization, the Specter and Wilson bill would permit the National Security Agency to turn its vacuum cleaners on American citizens and create a vast database of information, which the government could data mine at will, outside any judicial or congressional oversight, in a fashion reminiscent of the Total Information Awareness program."

It adds that "both Specter and Wilson bills in their current form would ratify the President's program and permit warrantless surveillance far beyond anything the President has dared to undertake", and would "define large categories of electronic surveillance as not being electronic surveillance".

Web Site Labeling Mandates. The CDT report states that under several pending bills, "Web site operators could be imprisoned for failing to attach government-sanctioned ``sexually explicit´´ labels to a broad range of online content. As written, the provisions would require labeling of a great deal of constitutionally protected Internet content, including Web pages that depict no nudity or sexual acts and those that already carry an array of voluntary ratings and content labels."

The CDT argues that "A mandatory federal statute, however, would do nothing to protect children and would violate the First Amendment of the Constitution."

On July 13, 2006, the Senate Appropriations Committee (SCC) amended and approved HR 5672, the appropriations bill for science, the Departments of State, Justice, and Commerce, and related agencies, for the fiscal year ending September 30, 2007. The SCC added an amendment that criminalizes the operation of a web site that contains "sexually explicit material" (SEM) without warning labels.

In addition, the Senate Commerce Committee (SCC) approved an amendment to Title VIII of HR 5252, the huge communications reform bill, on June 28, 2006, that contains a similar mandate. There are also several stand alone bills with a similar mandate.

See also, stories titled "Senate Appropriations Committee Approves Website Labeling Mandate" and "CDT Argues That Internet Filtering and Web Site Labeling Bills Threaten Free Speech" in TLJ Daily E-Mail Alert No. 1,426, August 7, 2007.

Data Retention Mandate. No bills have been introduced. However, the House Commerce Committee considered, but ultimately did not include, a hastily drafted amendment during its mark up of it communications reform bill in April. See, stories titled "Amendment by Amendment Summary of Full Committee Mark Up of COPE Act" in TLJ Daily E-Mail Alert No. 1,360, Friday, April 28, 2006, and "House Commerce Committee Considers Data Retention Mandate" in TLJ Daily E-Mail Alert No. 1,365, May 8, 2006.

Also, in May of 2006, the House Judiciary Committee (HJC) announced that it would hold a hearing on a bill titled the "Internet Stopping Adults Facilitating the Exploitation of Today's Youth (SAFETY) Act of 2006." A HJC staff member told TLJ in May that this bill would contain a data retention mandate for internet service providers. However, the HJC cancelled the hearing. See also, story titled "House Judiciary Committee to Consider Data Retention Mandate" in TLJ Daily E-Mail Alert No. 1,372, May 17, 2006. (Bills with this title were later introduced in the House and Senate, but without a data retention mandate.)

Department of Justice (DOJ) officials have made clear their strong interest in a data retention mandate in contacts with the Congress, contacts and comments with the Federal Communications Commission (FCC), and public speeches. For example, on April 20, 2006, Attorney General Alberto Gonzales gave a speech in which he advocated a data retention mandate for internet service providers. See, story titled "Gonzales Proposes Data Retention Mandate, Web Site Labeling, and Ban on Deceptive Source Code" in TLJ Daily E-Mail Alert No. 1,357, April 25, 2006.

The CDT report states that the DOJ "wants to force Internet service providers to retain massive amounts of data regarding their customers' Internet usage -- ostensibly in order to bolster the ability of law enforcement to investigate child exploitation and national security cases."

It continues that "Forcing ISPs to retain information for millions of customers raises significant privacy concerns, greatly increases the likelihood of data breach and identity theft, and imposes significant costs on ISPs that would be passed on to customers."

The CDT reports adds that "There is a serious danger that data retention language will be quietly attached to a larger legislative package before adjournment."

Social Networking Web Sites and the DOPA. The CDT report opposes enactment of HR 5319, the "Deleting Online Predators Act of 2006", or DOPA. The full House approved it on July 26, 2006, under suspension of the rules, by a vote of 410-15. See, Roll Call No. 405. The Senate has not yet approved it.

The CDT states that this bill "would force schools and libraries that receive federal ``e-rate´´ funding to block virtually all interactivity on their Internet-enabled computers. Chat rooms and social networking sites -- including many blogging services -- would be off limits to the young people who rely on schools and libraries for their Internet access."

It adds that "The bill covers forms of free expression that are not only completely legal, but in many cases appropriate and even valuable for minors. In addition to violating the constitutional rights of both speakers and listeners, DOPA would also exacerbate the serious ``digital divide´´ between children whose parents can afford personal computers and children who must use the Internet through their school or library."

This bill builds on the Children's Internet Protection Act (CIPA), which amended 47 U.S.C. § 254, the universal service section of the Communications Act. The FCC's e-rate program, which taxes communications to subsidize telephone service, internet access, and internal wiring at schools and libraries, is based loosely on Section 254(h).

The CIPA, which is codified at Section 254(h)(5), added the requirement that schools receiving e-rate subsidies must, among other things, certify to the FCC that they are "enforcing a policy of Internet safety for minors that includes monitoring the online activities of minors and the operation of a technology protection measure with respect to any of its computers with Internet access that protects against access through such computers to visual depictions that are (I) obscene; (II) child pornography; or (III) harmful to minors", and that they are "enforcing the operation of such technology protection measure during any use of such computers by minors".

The DOPA would amend 47 U.S.C. § 254(h)(5)(B) to add the requirement that schools also certify that they are enforcing a policy that "protects against access to a commercial social networking website or chat room unless used for an educational purpose with adult supervision".

See, story titled "House Republicans Introduce Bill to Expand CIPA to Include Chat Rooms and Social Networking Sites" in TLJ Daily E-Mail Alert No. 1,368, May 11, 2006; story titled "House Approves DOPA" in TLJ Daily E-Mail Alert No. 1,426, August 7, 2007; and story titled "CDT Argues That Internet Filtering and Web Site Labeling Bills Threaten Free Speech Alert" in TLJ Daily E-Mail Alert No. 1,426, August 7, 2007.

CALEA. The CDT report states that "The Justice Department has circulated legislation that would amend the 1994 Communications Assistance for Law Enforcement Act (CALEA) to require Internet companies to design their services and applications to be wiretap-friendly."

It adds that "If such a measure were enacted, it would allow unprecedented government intervention into the design of the Internet, undermining Americans' privacy and security, threatening technological innovation, and imposing significant, even prohibitive, costs on start-ups and new services. To make matters worse, nobody in the administration has explained why it needs this sweeping authority over technological development."

There is no pending legislation. Moreover, the DOJ has found the Federal Communications Commission (FCC) more receptive than the Congress to expanding CALEA like regulation. The DOJ has obtained through the rule making process some of what it has not been able to get from the Congress.

See, story titled "FCC Further Amends CALEA Statute" and "Commentary: Administrative Process and the FCC" in TLJ Daily E-Mail Alert No. 1,365, May 8, 2006. See also, story titled "FCC Amends CALEA Statute" in TLJ Daily E-Mail Alert No. 1,191, August 9, 2005.

Network Neutrality. The report states that "Earlier this year the House passed a telecommunications bill without enforceable Internet neutrality language. In the Senate Commerce Committee, solid Internet neutrality language failed narrowly."

The report adds that "CDT supports narrowly tailored language that would preserve the essential neutrality of the Internet while leaving broadband providers free to experiment with non-neutral agreements elsewhere on their networks."

Data Security. The CDT report states that "the several data breach bills that have been considered, the weakest one seems to have gathered the most steam. The Financial Data Protection Act of 2006, H.R. 3997, came close to a vote on the House floor in July and remains a threat to pass in the closing weeks of the congressional session. Rather than bolstering consumer rights, the bill would preempt stronger state laws that already protect consumers."

The CDT adds that "If this bill passes, many Americans will wake the next morning with fewer protections against identity theft. What's particularly distressing is that all of the other bills addressing this issue -- while not without concerns -- are better than H.R. 3997. A bill approved by the House Commerce Committee contains some strong provisions. It should be combined with language offered by Sens. Arlen Specter (R-Pa.) and Patrick Leahy (D-Vt.) that sets stricter standards for government use of privately collected data."

Broadcast Flag. The CDT report argues that "A flag regime would give the Federal Communications Commission (FCC) unprecedented authority to regulate entry of new consumer technologies into the marketplace. Also, a flag regime could prevent, among other things, "fair use" of clips from broadcast news or political debates. If Congress wishes to proceed with flag legislation, it should at a minimum include carefully crafted limits and safeguards, rather than giving the FCC blank-check authority. A version of broadcast flag legislation included in the Senate telecommunications bill contains some but not all of the safeguards that CDT believes are essential."

Audio Flag. Finally, the CDT report opposes audio flag proposals. It states that "Unlike broadcast flag legislation, the target here is not large-scale piracy. Rather, the goal is to restrict certain types of private, personal copying, even if the content is never shared with anyone else and never touches the Internet."

It argues that "The recording industry may have a point that technological changes warrant a careful look at existing arrangements concerning music licensing statutes and fees. But Congress should not respond by authorizing an audio flag regime under which the FCC would gain broad new jurisdiction to regulate technology and to curtail Americans' established ability lawfully to make personal, non-commercial recordings off the radio."

It adds that "Currently, a version of audio flag legislation is included in the Senate telecommunications bill. Several other bills include provisions that would limit personal copying of music by withholding key licenses or exemptions from any company offering products with personal copying capability. One of these bills could set dangerous precedents regarding the copyright treatment of server and buffer copies necessary for Internet transmissions."

FCC Paper Finds Statistical Relationship Between Local Ownership and Local Programming

9/14. Sen. Barbara Boxer (D-CA) raised the subject of a Federal Communications Commission (FCC) paper [24 pages in PDF] titled "Do Local Owners Deliver More Localism: Some Evidence From Local Broadcast News" at the Senate Commerce Committee's (SCC) hearing on September 12, 2006, on Kevin Martin's re-nomination to the FCC. Sen. Boxer stated that the paper had been suppressed. Martin said then that he was not familiar with the paper, and that he had not read it.

The paper, which is dated from 2004, reports on the analysis of statistics on broadcast news stories. The FCC examined over 4,000 stories from 60 stations in 20 different markets. The FCC characterized stories as local or non-local, and the station as locally owned or not. The FCC then conducted a multivariate regression analysis of several models.

In one of these, the independent variable was the total number of seconds of local news at each station. One of the dependent variables was the dichotomous variable for whether the station was locally owned or not. This model's estimate for the coefficient for the local ownership variable was large, positive and statistically significant at the 1 percent level. This suggests stations that are locally owned are more likely to air more local programming than stations that are not locally owned.

The paper also tested a model in which the independent variable is local on location news. Here too the regression results estimated a coefficient for the independent variable for local ownership that was large, positive and statistically significant. The FCC paper states that its multivariate regression "results suggest that local ownership adds almost five and one-half minutes of local news, and over three minutes of local on-location news."

The paper adds that "These findings may have policy implications for both Congress and the Federal Communications Commission."

Sen. Boxer also wrote a follow-up letter to Chairman Martin. Martin wrote a letter [PDF] in response on September 14. He characterized the paper as "a June 2004 draft of an FCC staff working paper that examined the impact of local television station ownership on local news coverage".

Martin wrote that "As I indicated at the hearing, I was not Chairman at the time that this report was drafted. I had not seen -- nor was I aware of -- this draft report before you brought it to my attention. No one on my staff had seen this report nor were they aware of it."

"I am not aware of any other commissioners, past or present, who knew of the report." He continued that "It is unclear why this report was never released to the public. I am attempting to determine why, but the senior management of the Media Bureau and the Chairman of the Commission at the time are no longer at the Commission."

He added that "In the meantime, the report appears to cover issues relevant to both our open localism proceeding and our recently commenced media ownership proceeding. Accordingly, we included it in the record for both of those proceedings on Tuesday."

Also on September 14, 2006, Rep. John Dingell (D-MI), the ranking Democrat on the House Commerce Committee (HCC), and Rep. Ed Markey (D-MA), the ranking Democrat on the HCC's Subcommittee on Telecommunications and the Internet, sent a letter [2 pages in PDF] to Martin.

They described the paper as "missing" and "suppressed", and said its absence from the FCC's public record is "highly controversial".

EU's Kroes Addresses Competition and Innovation

9/14. Neelie Kroes, European Commissioner for Competition, gave a speech at Fordham University in New York, New York. She discussed, among other topics, innovation, Microsoft, venture capital, and telecommunications.

She asserted that "In our many dealings with Microsoft ... central to the Commission's rationale for intervention has been the importance of preserving the incentive for firms to innovate. In this regard, an artificial interoperability advantage for a super-dominant player actually dampens the market's incentives to innovate since companies know that however good their products are, they cannot compete on the merits of these products."

Kroes (at left) also stated that "Similarly, tying to a super-dominant platform can send signals which limit available venture capital and deter innovation in adjacent product markets, by large and small companies alike. Our enforcement philosophy has therefore been guided by these principles, and our actions are designed to maximise the level of innovation in the market. This will result in benefits in terms of industrial competitiveness – and will ultimately, I believe, translate into more consumer choice and lower prices."

She also discussed telecommunications. She said that "liberalisation has led to the emergence of a multitude of competitors for fixed-line and mobile voice services as well as Internet connections. Research by the OECD indicates that mobile subscriber growth rates are positively correlated with the number of competing networks in the market. So competition not only gives more customers access to mobile services, faster and at lower prices."

She added that, "But it also grows existing markets and creates new ones, provides market entry opportunities for new firms, and lowers the input cost of telecommunication services, as well as widening the choice of available services. So, I think it is evident from the EU’s experience that a carefully planned and executed liberalisation policy is a central piece of a comprehensive modern industrial policy."

Senate Judiciary Committee Puts Off Consideration of Judicial Nominees and Perform Act

9/14. The Senate Judiciary Committee (SJC) held an executive business meeting. The SJC did not reach a quorum, and hence, no business was conducted.

The SJC rarely takes up all of the items on its agenda. It often fails to attain a quorum. Not attending meetings is one way members block approval of certain items. For example, only one Democrat attended the meeting. Senate Democrats oppose several of the Court of Appeals nominees of President Bush who were up for consideration.

The agenda included consideration of several judicial nominees, including Terrence Boyle (to be a Judge of the U.S. Court of Appeals for the 4th Circuit), William Haynes (4th Circuit), Kent Jordan (3rd Circuit), Peter Keisler (DC Cir), William Myers (9th Circuit), Randy Smith (9th Circuit) Valerie Baker (USDC for the Central District of California), Philip Gutierrez (Central District of California), Marcia Howard (Middle District of Florida), John Jarvey (Southern District of Iowa), and Sara Elizabeth Lioi (Northern District of Ohio).

Nevertheless, the inclusion of items on the SJC agenda indicates some intent by the Chairman to move those items.

PERFORM Act. The agenda also included S 2644, the "Platform Equality and Remedies for Rights Holders in Music Act of 2006", or "Perform Act".

Sen. Dianne Feinstein (D-CA) introduced this bill on April 25, 2006. The companion bill in the House is HR 5361, also titled the PERFORM Act. It is similar, but not identical, to S 2644. It is sponsored by Rep. Howard Berman (D-CA) and Rep. Mary Bono (R-CA).

S 2644 would amend 17 U.S.C. § 112, regarding ephemeral recordings, and 17 U.S.C. § 114, regarding exclusive rights in sound recordings. It addresses content protection, and the collection of statutory licenses under Section 114.

It would particularly affect satellite music services. It is opposed by XM Satellite Radio and the Consumer Electronics Association (CEA), but supported by the Recording Industry Association of America (RIAA).

See also, stories titled "Summary of the Sen. Feinstein's Perform Act", "Music Licensing, Satellite Radio, and Perform Act Debated", and "Summary of the RIAA Complaint Against XM Satellite Radio" in TLJ Daily E-Mail Alert No. 1,384, June 5, 2006.

The House bill has not yet been approved by the House Judiciary Committee (HJC), or even its Subcommittee on Courts, the Internet and Intellectual Property. It was not on the agenda for the HJC mark up on Wednesday, September 13.

Moreover, while Rep. Lamar Smith (R-TX) is trying to move a new composite copyright bill, it does not include any version of the PERFORM Act. See, HR 6052 [100 pages in PDF], the "Copyright Modernization Act of 2006".

Other Bills. The SJC agenda for September 14 also included consideration of several other bills, including S 2831, the "Free Flow of Information Act of 2006", sponsored by Sen. Richard Lugar (R-IN). This bill limits prosecutors, government agencies, and others from compelling journalists to disclosure certain information.

The agenda also included S 394, the "Openness Promotes Effectiveness in our National Government Act of 2005", or "OPEN Government Act", sponsored by Sen. Jon Cornyn (R-TX) and Sen. Patrick Leahy (D-VT). This bill would amend the Freedom of Information Act (FOIA). It addresses among other topics, agency fees and requests by journalists.

The agenda also included S 1845, the "Circuit Court of Appeals Restructuring and Modernization Act of 2005", sponsored by Sen. John Ensign (R-NV). This bill would split the 9th Circuit.

Senate Adopts National Alert System Amendment

9/14. The Senate approved Sen. Jim DeMint's (R-SC) national alert system amendment to HR 4954, the port security bill, by a vote of 95-0, on Tuesday, September 12, 2006. See, Roll Call No. 240. The Senate approved the port security bill, as amended, on Thursday, September 14.

This is Amendment No. 4921. It contains a revised version of S 1753, the "Warning, Alert, and Response Network Act", or "WARN Act".

Sen. DeMint (at right) introduced S 1753 on September 22, 2005. The Senate Commerce Committee amended and approved this bill on December 8, 2005.

The DeMint amendment, as adopted by the Senate on September 12, provides that "There is established a National Alert System to provide a public communications system capable of alerting the public on a national, regional, or local basis to emergency situations requiring a public response."

It adds that the "National Alert System ... will transmit alerts across the greatest possible variety of communications technologies, including digital and analog broadcasts, cable and satellite television, satellite and terrestrial radio, wireless communications, wireline communications, and the Internet to reach the largest portion of the affected population."

The amendment instructs the Federal Communications Commission (FCC) to write rules designed to impel FCC wireless licensees to transmit National Alert System alerts.

The amendment provides that "Within 60 days after the date on which the National Alert Office adopts relevant technical standards based on recommendations of the Working Group, the Federal Communications Commission shall initiate a proceeding and subsequently issue an order -- (A) to allow any licensee providing commercial mobile service (as defined in section 332(d)(1) of the Communications Act of 1934 (47 U.S.C. 332(d)(1))) to transmit National Alert System alerts to all subscribers to, or users of, such service; and (B) to require any such licensee who elects under paragraph (2) not to participate in the transmission of National Alert System alerts, to provide clear and conspicuous notice at the point of sale of any devices with which its service is included, that it will not transmit National Alert System alerts via its service."

Sen. Jon Cornyn (R-TX) stated in the Senate on September 12 that "The amendment will create a national alert office within the Department of Homeland Security and will ensure that the office will work closely with the National Oceanic and Atmospheric Administration, NOAA, to bring together the wealth of expertise in both of these agencies to create an alert system that will transmit alerts in response to all threats to public safety, whether they are a terrorist attack, a natural disaster or a manmade accident."

"The amendment directs this new office to develop a 21st century alert system that takes advantage of new technologies", said Sen. Cornyn. "The new system would use multiple modes of communication, providing alerts not only by television and radio but also cell phones, Blackberries, and other wireless devices such as the Internet, satellite television, and other means of communication."

Sen. Ted Stevens (R-AK), the Chairman of the SCC, stated "I think we are closer to passing the WARN Act. We have been working for 3 years through the Homeland Security and appropriations bill to move DHS to improve the national alerting system. This amendment is a large step forward."

"The purpose of this amendment", said Sen. Stevens, is "to move the emergency alert system out of the area of broadcast radio and television into the wireless era. We need to give the Nation an alerting system that harnesses all the capabilities of the digital age. When disaster strikes, we know not everyone will be listening to the radio or television, but almost all Americans will be carrying a mobile phone, a Blackberry, or a PDA. There are over 200 million wireless subscribers in the United States."

He continued that "This amendment will provide a tool for emergency managers at all levels of Government--Federal, State, or local--so they can quickly and effectively reach all affected individuals with specific lifesaving instructions. In addition to the threat posed by terrorist attacks, this system, the system created by this amendment, will give our managers the ability to alert communities of other hazards such as natural disasters or manmade accidents."

Sen. Stevens added that "It is already funded. I worked during last year's budget reconciliation bill to provide $106 million for this program."

People and Appointments

9/14. President Bush announced his intent to nominate Michele Davis to be Assistant Secretary of the Treasury (Public Affairs). She is currently Deputy National Security Advisor and Deputy Assistant to the President for Communications for the National Security Council (NSC). See, White House release.

9/14. President Bush named Jeremy Katz to be Special Assistant to the President for Policy. A White House release states that "Katz recently served as Special Assistant to the Chief of Staff for Policy at the White House".

9/14. President Bush named Myriah Jordan to be Special Assistant to the President for Policy. A White House release states that Jordan recently served as Special Assistant to the Chief of Staff for Policy at the White House.

More News

9/14. The Federal Communications Commission (FCC) published a notice in the Federal Register that corrects its August 9, 2006, notice in the Federal Register regarding its Further Notice of Proposed Rulemaking (FNPRM) regarding its media ownership rules. The original notice omitted the Supplemental Initial Regulatory Flexibility Analysis. The deadlines for submitting comments remain unchanged. The FCC adopted this FNPRM on July 21, 2006, and released the text [36 pages in PDF] on July 24, 2006. See, story titled "FCC Adopts FNPRM on Rules Regulating Ownership of Media" in TLJ Daily E-Mail Alert No. 1,397, June 22, 2006. This FNPRM is FCC 06-93 in MB Docket No. 02-277, MM Docket No. 01-235, MM Docket No. 01-317, MM Docket No. 00-244, and MB Docket Nos. 06-121. See also, notice in the Federal Register, August 9, 2006, Vol. 71, No. 153, at Pages 45511-45515. The just published notice is at Federal Register, September 14, 2006, Vol. 71, No. 178, at Pages 54253-54255.

9/14. The National Institute of Standards and Technology (NIST) released its Draft Special Publication 800-76-1 [33 pages in PDF] titled "Biometric Data Specification for Personal Identity Verification". The deadline to submit comments is 5:00 PM on October 5, 2006.

9/14. Thomas Barnett, the Assistant Attorney General in charge of the USDOJ's Antitrust Division, gave a speech titled "Criminal Enforcement Of Antitrust Laws: The U.S. Model" in New York, New York.

9/14. BellSouth filed a complaint in U.S. District Court (SC) against the City of Greensboro alleging that it is widening its roads, thereby compelling BellSouth to move fiber optic and copper cables and other communications equipment located in BellSouth's easements, without compensating BellSouth. BellSouth asserts that this constitutes an uncompensated taking, and seeks $753,000. See, BellSouth release. That is, BellSouth acquired easements from property owners adjacent to roads. The City is now taking property to widen its roads, without paying BellSouth for its easements. The 5th Amendment provides, in part, "nor shall private property be taken for public use without just compensation".

9/14. The Media Access Project, Consumers Union, Consumer Federation of America, and Free Press wrote a letter [2 pages in PDF] to Federal Communications Commission (FCC) Chairman Kevin Martin regarding the FCC's release on September 12, 2006, of a 2004 FCC study titled "Do Local Owners Deliver More Localism: Some Evidence From Local Broadcast News". See also, story titled "FCC Paper Finds Statistical Relationship Between Local Ownership and Local Programming" in TLJ Daily E-Mail Alert No. 1,450, September 15, 2006. The four groups, which are critical of the FCC's 2003 order regarding its various media ownership rules, argued that Martin should "request an independent investigation on how and why this localism report was suppressed and to make the report publicly available as part of the media ownership proceeding record."

Paulson Advocates Free Trade and IPR

9/13. Henry Paulson, the Secretary of the Treasury, gave a speech in Washington DC regarding trade between the U.S. and the People's Republic of China, and trade generally. He advocated free trade, market reforms, and protecting intellectual property rights. He said that "China cannot achieve its goal of being a modern economy if it fails to adhere to the rule of law and fair trade and encourage the innovation that is the engine of growth for developed -- and developing -- economies."

Paulson (at right) said that "There are no islands of economic stability in today's world. Globalization and interdependence are here to stay. No nation can turn back the clock. In today's interdependent world, U.S. exports and U.S. employment opportunities are affected by how well our major trading partners are doing."

For example, he noted that "Japan's economic reforms over the past five years have produced an economic recovery, and we all have benefited from the boost to global growth and the increase in Japanese import demand. Japan's reforms are not complete, and they must continue.  However, these steps demonstrate the importance of growth-enhancing reforms in major economies as an effective way to increase jobs in the United States and prosperity globally."

He said too that "The United States has a huge stake in a prosperous, stable China -- a China able and willing to play its part as a global economic leader. We are not afraid of Chinese competition. We welcome it."

He argued that "nations that reform their economies and open themselves to competition benefit their citizens greatly. They have better jobs, improved living standards, and greater opportunity. At the same time, those nations that try to close themselves off from competition, hinder free markets, and fail to invest in their people, simply get left behind."

He also argued that "Protectionist policies do not work and the collateral damage from these policies is high. By closing off competition and blocking the forces of change, protectionism reduces the losses of the present by sacrificing the opportunities of the future. Jobs saved in the short term job are off-set by more job losses and a lower standard of living in the future.

Finally, he focused on intellectual property. "Another pressing issue is greater protection for intellectual property rights. China cannot achieve its goal of being a modern economy if it fails to adhere to the rule of law and fair trade and encourage the innovation that is the engine of growth for developed -- and developing -- economies.

He added that "U.S. businesses lost billions of dollars in sales last year due to the illegal acquisition and use of their copy-righted ideas and products in China."

He concluded that "When I visit China in the coming days I will discuss these issues with the Chinese leadership, and I will use a Chinese saying indicating that it is for the good of both of our economies that they undertake these changes, for our economic fortunes are interconnected. I will say: We want you to succeed."

DOJ's Barnett Slams Europe on Antitrust, iPods and Single Firm Conduct Analysis

9/13. Thomas Barnett, the Assistant Attorney General in charge of the USDOJ's Antitrust Division, gave a speech titled "Interoperability Between Antitrust and Intellectual Property". He warned that "regulatory second-guessing of private firms' solutions to technological problems, which I perceive to be on the increase, threatens to harm the very consumers it claims to help".

He diplomatically did not mention the EU, Europe, France, or any EU state by name in the prepared text of his speech. However, the details of his speech, and recent actions in Europe, indicate that he directed his comments mainly at Europe for its abuse of governmental authority to damage competition and harm consumer welfare.

In particular, he slammed France and other European nations for faulty competition analysis, and misguided pursuit, of Apple for its development and sale of iPod devices and iTunes service.

See, full story.

HJC Approves Bill Regarding Specialized Patent Judges

9/13. The House Judiciary Committee (HJC) amended and approved HR 5418, an untitled bill that would establish a limited ten year pilot program in a least five U.S. District Courts to develop expertise in judges and court staff in patent and plant variety cases. This pilot program would further facilitate, but not require, the assignment of patent and plant variety case to judges participating in the pilot program. Judges' participation would be voluntary.

See also, story titled "Reps. Issa and Schiff Introduce Bill to Create Pilot Program for Specialized Patent Judges" in TLJ Daily E-Mail Alert No. 1,376, May 23, 2006. The sponsors are Rep. Darrell Issa (R-CA) and Rep. Adam Schiff (D-CA)

The HJC approved by unanimous voice vote an amendment in the nature of a substitute (AINS). It then approved the bill as amended, by unanimous voice vote.

No members of the HJC spoke in opposition to the bill. However, both Rep. Howard Berman (D-CA) and Rep. Schiff argued that the Committee should approve this bill as a part of comprehensive patent reform legislation.

The bill would also authorize the appropriation of $5 Million per year for training judges participating in the pilot program, and for "compensation of law clerks with expertise in technical matters arising in patent and plant variety protection cases, to be appointed by the courts designated under subsection (b) to assist those courts in such cases".

The program would not require that patent cases to be assigned to certain judges. Rather, judges in the participating districts would elect whether or not to be in the program. Any participating judge who is randomly assigned a patent case would keep that case. Any non-participating judge who is randomly assigned a patent case would have the option of having that case reassigned to a participating judge.

Rep. Issa (at right) said at the HJC meeting that the AINS makes some changes. For example, "in order to insure that this does not end up being forum shopped, or that it does not end up being in small districts, the change will require that in order to be a member of a patent pilot program, you must be a district that has at least ten judges, with at least three opting-in."

Rep. Issa also issued a release on September 13. He stated that "The core intent of the pilot program is to steer patent cases to judges that have the desire and aptitude to hear patent cases, while preserving the principle of random assignment to help avoid forum shopping."

The bill as introduced requires the Administrative Office of U.S. Courts (AOUSC) to submit reports to the Congress on the pilot program, including its success in developing judicial expertise in patent and plant variety cases, its improvement of the efficiency of the courts, and whether or not the program should be made permanent and applied to all district courts.

The AINS would add the requirement that the AOUSC's reports also include a comparison of participating judges to non-participating judges in reversal rates and the time that it takes them to proceed to trial or summary judgment.

The AINS also requires the AOUSC to report on forum shopping. Specifically, the AINS requires that AOUSC reports include a "discussion of any evidence indicating that litigants select certain of the judicial districts designated" to participate in the pilot program "in an attempt to ensure a given outcome".

The HJC Subcommittee on Courts, the Internet, and Intellectual Property's (CIIP) held a hearing on October 6, 2005, titled "Improving Federal Court Adjudication of Patent Cases". One of the witnesses was Kimberly Moore. President Bush has since nominated her to be a Judge of the U.S. Court of Appeals for the Federal Circuit.

She wrote in her prepared testimony that there is forum shopping by patentees, and that this gives them an unfair advantage. She wrote that "I propose that a single judge or a small number of judges in each judicial district be designated to adjudicate all the patent cases filed there. To the extent possible, the docket of the designated judge should not be limited to patent cases. Ideally, the judge who is appointed to this role would be technically educated or trained and/or have a patent background. This proposal would considerably limit the number of potential judges who would preside over patent cases and increase predictability without loosing the percolation and considered development of the law." See also, story titled "Bush Nominates Kimberly Moore for Federal Circuit" in TLJ Daily E-Mail Alert No. 1,374, May 19, 2006.

Neither Moore's proposal, nor HR 5418, would do anything to allow a change of venue in a patent case from one district to another. However, other proposals would allow this. See for example, Section 7 of HR 5096 [22 pages in PDF], the "Patents Depend on Quality Act of 2006", or "PDQ Act", sponsored by Rep. Rick Boucher (D-VA) and Rep. Berman.

HR 5418 As Approved by House Judiciary Committee

9/13. The House Judiciary Committee (HJC) amended and approved HR 5418 on September 13, 2006. The following text shows how the amendment in the nature of a substitute changes the bill as introduced. Deletions are shown in strikethrough. Additions are show in red. (Readers whose e-mail software deletes HTML formatting may not observe which text is strikethrough and which is red.)

SECTION 1. PILOT PROGRAM IN CERTAIN DISTRICT COURTS.

(a) Establishment ESTABLISHMENT.---

(1) IN GENERAL- There is established a program, in each of the United States district courts designated under subsection (b), under which--

(A) those district judges of that district court who request to hear cases under which one or more issues arising under any Act of Congress relating to patents or plant variety protection must be decided, are designated by the chief judge of the court to hear those cases;

(B) cases described in subparagraph (A) are randomly assigned to the judges of the district court, regardless of whether the judges are designated under subparagraph (A);

(C) a judge not designated under subparagraph (A) to whom a case is assigned under subparagraph (B) may decline to accept the case; and

(D) a case declined under subparagraph (C) is randomly reassigned to one of those judges of the court designated under subparagraph (A).

(2) SENIOR JUDGES- Senior judges of a district court may be designated under paragraph (1)(A) if at least one 1 judge of the court in regular active service is also so designated.

(3) RIGHT TO TRANSFER CASES PRESERVED- This section shall not be construed to limit the ability of a judge to request the reassignment of or otherwise transfer a case to which the judge is assigned under this section, in accordance with otherwise applicable rules of the court.

(b) Designation DESIGNATION.--- The Director of the Administrative Office of the United States Courts shall, not later than 6 months after the date of the enactment of this Act, designate not less than 5 United States district courts, in at least 3 different judicial circuits, in which the program established under subsection (a) will be carried out. The Director shall make such designation from among the 15 district courts in which the largest number of patent and plant variety protection cases were filed in the most recent calendar year that has ended except that the Director may only designate a court in which ---

(1) at least 10 district judges are authorized to be appointed by the President, whether under section 133(a0 of title 28, United States Code, or on a temporary basis under other provisions of law; and

(2) at least 3 of the court have made the request under subsection (a)(1)(A).

(c) Duration DURATION.--- The program established under subsection (a) shall terminate 10 years after the end of the 6-month period described in subsection (b).

(d) Applicability APPLICABILITY.--- The program established under subsection (a) shall apply in a district court designated under subsection (b) only to cases commenced on or after the date of such designation.

(e) Reporting to Congress REPORTING TO CONGRESS.---

(1) IN GENERAL- At the times specified in paragraph (2), the Director of the Administrative Office of the United States Courts, in consultation with the chief judge of each of the district courts designated under subsection (b) and the Director of the Federal Judicial Center, shall submit to the Committee on the Judiciary of the House of Representatives and the Committee on the Judiciary of the Senate a report on the pilot program established under subsection (a). The report shall include an analysis of ---

(A) an analysis of the extent to which the program has succeeded in developing expertise in patent and plant variety protection cases among the district judges of the district courts so designated;

(B) an analysis of the extent to which the program has improved the efficiency of the courts involved by reason of such expertise; and

(C) with respect to patent cases handled by the judges designated pursuant to subsection (a)(1)(A) and judges not so designated, a comparison between the 2 groups of judges with respect to ---

(i) the rate of reversal by the Court of Appeals for the Federal Circuit, of such cases on the issues of claim construction and substantive patent law; and

(ii) the period of time elapsed from the date on which a case is filed to the date on which trial begins or summary judgment is entered;

(D) a discussion of any evidence indicating that litigants select certain of the judicial districts designated under subsection (b) in an attempt to ensure a given outcome; and

(C) (E) an analysis of whether the pilot program should be extended to other district courts, or should be made permanent and apply to all district courts.

(2) TIMETABLE FOR REPORTS- The times referred to in paragraph (1) are--

(A) not later than the date that is 5 years and 3 months after the end of the 6-month period described in subsection (b); and

(B) not later than 5 years after the date described in subparagraph (A).

(3) PERIODIC REPORTING- The Director of the Administrative Office of the United States Courts, in consultation with the chief judge of each of the district courts designated under subsection (b) and the Director of the Federal Judicial Center, shall keep the committees referred to in paragraph (1) informed, on a periodic basis while the pilot program is in effect, with respect to the matters referred to in subparagraphs (A), (B), and (C)  (A) through (E) of paragraph (1).

(f) Authorization for Training and Clerkships AUTHORIZATION FOR TRAINING AND CLERKSHIPS.--- In addition to any other funds made available to carry out this section, there is authorized to be appropriated not less than $5,000,000 in each fiscal year for--

(1) educational and professional development of those district judges designated under subsection (a)(1)(A) in matters relating to patents and plant variety protection; and

(2) compensation of law clerks with expertise in technical matters arising in patent and plant variety protection cases, to be appointed by the courts designated under subsection (b) to assist those courts in such cases.

Amounts made available pursuant to this subsection shall remain available until expended.

Senate Bill Provides $90 Million for Study of the Effect of Internet, DVDs, Video Games and Other Electronic Media on Youth

9/13. The Senate approved S 1902, the "Children and Media Research Advancement Act'' or "CAMRA Act'', by unanimous consent. This bill authorizes the appropriation of $90 Million over five years to establish and fund a program on children and the media at the Centers for Disease Control and Prevention to study the role and impact of electronic media in the development of children. There was no debate, and no roll call vote.

Sen. Joe Lieberman (D-CT) introduced this bill on October 20, 2005. Sen. Ted Stevens (R-AK) moved its approval on September 13.

The bill provides for studies to be conducted on the effect of electronic media, "including television, motion pictures, DVD's, interactive video games, digital music, the Internet, and cell phones", on youth.

These studies would examine the effect upon "Cognitive areas such as language development, attention span, problem solving skills (such as the ability to conduct multiple tasks or `multitask'), visual and spatial skills, reading, and other learning abilities.", "Physical areas such as physical coordination, diet, exercise, sleeping and eating routines", and "Socio-behavioral areas such as family activities and peer relationships including indoor and outdoor play time, interactions with parents, consumption habits, social relationships, aggression, and positive social behavior."

Rep. Ed Markey (D-MA) introduced the companion bill in the House, HR 4124, also titled the "Children and Media Research Advancement Act", on October 24, 2005. That bill was referred to the House Commerce Committee.

House Judiciary Committee Holds Over Consideration of Copyright Modernization Act

9/13. The House Judiciary Committee (HJC) held a meeting to mark up bills. HR 6052 [100 pages in PDF], the "Copyright Modernization Act of 2006", was on the agenda. However, the HJC did not take up this bill.

This bill includes a revised and expanded version of HR 5553 [57 pages in PDF], the "Section 115 Reform Act of 2006", or SIRA, and a revised version of HR 5439 [PDF], the "Orphan Works Act of 2006", and several other provisions. See also, story titled "Rep. Smith Combines Orphan Works Bill, SIRA, and Other Copyright Act Amendments" in TLJ Daily E-Mail Alert No. 1,447, September 12, 2006.

Rep. James Sensenbrenner (R-WI) presided at the meeting. He did not explain why the HJC did not take up HR 6052.

Rep. Lamar Smith (R-TX), the Chairman of the HJC's Subcommittee on Courts, the Internet, and Intellectual Property (CIIP), is the sponsor of HR 6052, HR 5553 and HR 5439. He spoke with reporters after the meeting. He said that he hopes that the HJC will take up the bill at a mark up next week.

He stated that "I am determined that we mark it up this year, and I have the Chairman's agreement to that, and this just gives us another week to work on it."

He added that "I think we are going to make progress in September, and we will make additional progress in a lame duck session."

"There are I think relatively few minor issues that are still being discussed, and if we can make progress on them, we will, and if we can't, we are going to go forward", said Rep. Smith. When asked if the issues are with the SIRA or orphan works sections of the bill said "I don't want to point to any specific issue."

He concluded "There are still discussions going on on several issues, that I expect to be resolved. We are going to go forward the next time whether they are resolved or not."

More Capitol Hill News

9/13. The House Judiciary Committee (HJC) held a meeting to mark up bills on Wednesday, September 13, 2006. The agenda included HR 5825, the "Electronic Surveillance Modernization Act". However, the HJC did not take up this bill.

9/13. The Senate Judiciary Committee (SJC) approved, without amendment, S 2453, the "National Security Surveillance Act of 2006". This bill is sponsored by Sen. Arlen Specter (R-PA), the Chairman of the SJC.

9/13. The Senate Judiciary Committee (SJC) approved, without amendment, S 2455, the "Terrorist Surveillance Act of 2006". This bill is sponsored by Sen. Mike DeWine (R-Ohio) and Sen. Lindsey Graham (R-SC).

9/13. The Senate Judiciary Committee (SJC) approved, without amendment, S 3001, the "Foreign Intelligence Surveillance Improvement and Enhancement Act of 2006". This bill is sponsored by Sen. Arlen Specter (R-PA) and Sen. Dianne Feinstein (D-CA).

9/13. The Senate Judiciary Committee (SJC) held an executive business meeting. S 2468 was on the agenda. It has been on many prior SJC agendas. However, it was not voted out of Committee. It would provide standing for civil actions for declaratory and injunctive relief to persons who refrain from electronic communications through fear of being subject to warrantless electronic surveillance for foreign intelligence purposes.

People and Appointments

9/13. President Bush nominated Thomas Hardiman to be a Judge of the U.S. Court of Appeals for the 3rd Circuit. See, White House release. Bush previously appointed Hardiman to be a Judge of the U.S. District Court (WDPenn); the Senate confirmed him in 2003. Before that, he worked for the law firms of Reed Smith, Cindrich & Titus, and Skadden Arps.

9/13. The Senate confirmed George Holding to the the U.S. Attorney for the Eastern District of North Carolina for the term of four years. See, Congressional Record, September 13, 2006, at page S9575.

9/13. The Senate confirmed Mary Ourisman to be Ambassador to Barbados and other small Caribbean nations. See, Congressional Record, September 13, 2006, at page S9575. See also, column titled "People and Appointments" in TLJ Daily E-Mail Alert No. 1,415, July 21, 2006.

More News

9/13. The Office of the Attorney General of the State of Texas issued a release regarding the status of Texas v. Sony BMG. The release states that "In November 2005 Attorney General Abbott sued SONY BMG alleging that approximately 50 titles of music CDs released in 2005 containing XCP copy protection software violated numerous anti-spyware and consumer protection laws. The lawsuit is still pending." It adds that "Despite a recall of these potentially harmful CDs, it has been reported to the Office of the Attorney General that about 3.4 million CDs with XCP technology remain unreturned. As part of its ongoing investigation, the Office of the Attorney General discovered an incompatibility between CDs with XCP technology and computers running certain versions of America Online (AOL) software." See also, story titled "Texas Sues Sony BMG Alleging Violation of Texas Spyware Statute" in TLJ Daily E-Mail Alert No. 1,258, November 22, 2005, and story titled "Texas Amends Spyware Complaint Against Sony BMG" in TLJ Daily E-Mail Alert No. 1,280, December 29, 2005.

Senate Commerce Committee Holds Hearing on Nominations of Martin and Kneuer

9/12. The Senate Commerce Committee (SCC) held a hearing on the re-nomination of Kevin Martin to be a Commissioner of the Federal Communications Commission (FCC), and John Kneuer to be Administrator of the National Telecommunications and Information Administration (NTIA).

Most of the Senators' comments and questions were directed at Martin and the FCC, and pertained to media concentration, universal service, network neutrality, and the SCC's communications reform bill. See stories regarding the mark up in TLJ Daily E-Mail Alert No. 1,404, July 5, 2006.

On the subject of network neutrality, supporters of the language contained in the bill, and the FCC's August 2005 policy statement [3 pages in PDF] on network neutrality, asked Martin questions to illicit facts in support of their position. Democratic supporters of a hard network neutrality mandate railed against the lack of a hard network neutrality mandate. The arguments on both sides were redundant of the debate during the mark up of the SCC bill.

Sen. Ten Stevens (R-AK) (at right), the Chairman of the SCC, commented that network neutrality is "the subject that is holding up the communications bill, and may well lead to its defeat".

He asked questions related to network neutrality. Martin said that there has been only one instance of abuse that has been brought to the FCC's attention, and that the FCC took action. Martin also said that the FCC has "ancillary authority" under Title I and the Brand X opinion to take action against broadband service providers.

Sen. Stevens also discussed and asked questions about universal service. He criticized the reverse auction methodology. He said that small carriers in small communities may be replaced by national wireless carriers.

Sen. Jim DeMint (R-SC) used his time to discuss emergency alert systems, to oppose a hard net neutrality mandate, and to ask about multicast must-carry requirements. He argued that this is not the time to impose a multicast must-carry mandate. He also asked whether the FCC will bring up the issue for a vote. Martin responded that there are no current plans to do so.

Sen. John Sununu (R-NH) asked Martin whether he supports a tax on internet access. Martin said no. Sen. Sununu asked Martin if Google Video and YouTube should be regulated by the FCC. Martin said no.

Sen. Sununu also criticized the FCC's order regarding taxation of VOIP services to support the FCC's universal service subsidy programs. He said that it is arbitrary for the FCC to determine that 65% of VOIP revenues are subject to USF contributions, while only 37% of wireless revenues are subject to USF contributions. Sen. Sununu said that this defies common sense.

Martin defended that FCC's order [151 pages in PDF] that imposed this rate. See also, story titled "FCC to Tax Interconnected VOIP Service Providers" in TLJ Daily E-Mail Alert No. 1,397, June 22, 2006, and story titled "FCC Releases Order and NPRM Regarding VOIP and Universal Service Taxes" in TLJ Daily E-Mail Alert No. 1,403, June 30, 2006.

Both Sen. Barbara Boxer (D-CA) and Sen. Byron Dorgan (D-ND) used their time to condemn media concentration, and advocate net neutrality.

Sen. Boxer also asked Martin what the FCC will do with respect to the National Security Agency (NSA) and phone records. Martin said that the issue of the application of the state secrets doctrine has not yet been resolved by the courts, and hence, he does not know whether the FCC could proceed at this time.

Sen. Mark Pryor (D-AR) asked question about internet indecency, video franchising, and net neutrality.

Sen. Conrad Burns (R-MT) discussed 911/E911 in rural areas. He also stated that he had questions for Kneuer regarding the ICANN, but that he would ask him to respond to written questions.

Martin's Prepared Testimony. Martin read prepared testimony [PDF]. He articulated a broad and vague philosophy for FCC regulation, while stating little about specific proceedings or legislative proposals.

He said that "If reconfirmed, I would continue to make decisions based on a fundamental belief that a robust, competitive marketplace, not regulation, is ultimately the greatest protector of the public interest. Competition is the best method of delivering the benefits of choice, innovation, and affordability to American consumers. Competition drives prices down and spurs providers to improve service and create new products."

He continued that "Government, however, still has an important role to play. The Commission should focus on creating a regulatory environment that promotes investment and competition, setting the rules of the road so that players can compete on a level playing field. For example, high speed Internet access offered by a phone company should be treated the same way as high speed Internet access offered by a cable operator."

He added that "Government also must act when necessary to achieve broader social goals. Thus, while I support eliminating economic regulations, I recognize that there are issues that the marketplace alone might not fully address. For instance, government should ensure that people with disabilities have access to communications in the same manner as all Americans, that people in rural areas, schools and libraries have access to affordable, current technology, and that the communications needs of the public safety community are met."

Prospects for Confirmation of Martin and Kneuer. Kneuer is the acting head of the NTIA. His predecessor, Mike Gallagher, functioned for a long time as an acting head also. Confirmation of Kneuer would be more honorary than substantive.

Martin's current fixed five year term as a Commissioner expired on June 30, but by statute he can serve until the Congress recesses at the end of 2007.

Bush announced his first nomination of Martin on April 6, 2001. He formally nominated him on April 30, 2001. The Senate confirmed him on May 26, 2001. The term of this five year appointment was July 1, 2001 through June 30, 2006.

Bush designated him Chairman on March 18, 2005. He replaced Michael Powell.

Bush nominated Martin on April 25, 2006, for an additional five year term beginning on July 1, 2006, and expiring on June 30, 2011.

While Martin's current term nominally ended on June 30, 2006, he remains a member of the FCC by operation of 47 U.S.C. § 154(c). It provides that "commissioners shall be appointed for terms of five years and until their successors are appointed and have been confirmed and taken the oath of office, except that they shall not continue to serve beyond the expiration of the next session of Congress subsequent to the expiration of said fixed term of office; except that any person chosen to fill a vacancy shall be appointed only for the unexpired term of the commissioner whom he succeeds. No vacancy in the Commission shall impair the right of the remaining commissioners to exercise all the powers of the Commission."

Thus, Martin can continue until the Congress recesses at the end of 2007. And of course, in the event that the Senate does not confirm him for a second term by then, President Bush could give then give him a recess appointment.

Thus, Martin has no immediate need to win confirmation from the Senate. (Only the Senate votes on confirmations.)

There was one feature of the September 12 hearing that distinguished it from other confirmation hearings of Senate committees. Senators often express their support for the nominee, and sometimes their opposition, at these hearings. Few Senators expressed how they intended to vote on either Martin or Kneuer, either in Committee, on in the full Senate.

HP and Pretexting. Martin spoke with reporters after the hearing. He was asked about the FCC's investigation of Hewlett Packard (HP) and its pretexting to obtain confidential phone call records from AT&T. He said that "We have sent out basic letters, but I can't really talk any further about our investigation."

He added that the FCC sent out letters of inquiry to AT&T. However, he declined to answer a question about whether AT&T is being investigated.

He was also asked whether the FCC has enough enforcement authority. Martin said that "When I actually testified before the Congress earlier this year, I said that I thought that some of the legislative proposals, like, potentially making it even illegal to just sell telephone numbers, you sell telephone information, would be helpful. We can get copies of that testimony, but I continue to think that we could have some additional tools, but we will take whatever steps we can with the tools that we have. But, I think additional tools would be helpful."

See, prepared testimony [10 pages in PDF] of Kevin Martin before a hearing of the House Commerce Committee on February 1, 2006.

He wrote then that "I recommend that the Commission's enforcement tools be strengthened. For example, the need to issue citations to non-licensees before taking any other type of action sometimes hinders us in our investigations, and allows targets to disappear before we are in a position to take action against them. Eliminating the citation requirement in section 503(b) of the Act would enable more streamlined enforcement."

He also recommended that "raising maximum forfeiture penalties, currently prescribed by statute, would assist the Commission in taking effective enforcement action, as well as act as a deterrent to companies who otherwise view our current forfeiture amounts simply as costs of doing business."

He also stated that "the one-year statute of limitations in section 503 of the Communications Act for bringing action has been a source of difficulty at times. In particular, when the violation is not immediately apparent, or when the Commission undertakes a complicated investigation, we often run up against the statute of limitations and must compromise our investigation, or begin losing violations for which we can take action."

He also said that "I believe that Congress could specifically make illegal the commercial availability of consumers' phone records. Thus, if any entity is found to be selling this information for a fee, regardless of how it obtained such information, it would face liability.

He also said that "Congress could overturn the ruling of a federal court that limited the Commission’s ability to implement more stringent protection of consumer phone record information. Specifically, when the Commission first implemented section 222, it required carriers to obtain express written, oral, or electronic consent from their customers, i.e., an ``opt-in´´ requirement before a carrier could use any customer phone records to market services outside the customer’s existing service relationship with that carrier. The Commission held that this ``opt-in´´ requirement provided consumers with the most meaningful privacy protection. In August of 1999, the 10th Circuit struck down these rules finding that they violated the First and Fifth Amendments of the Constitution."

See, August 18, 1999, opinion of the U.S. Court of Appeals (10thCir) in US West v. FCC, App. Ct. No. 98-9518

Martin added that "This ruling has resulted in a much broader dissemination of consumer phone records and thereby may have contributed to the proliferation of the unlawful practices of data brokers that we are seeing today."

Rep. Smith Combines Orphan Works Bill, SIRA, and Other Copyright Act Amendments

9/12. The House Judiciary Committee (HJC) announced that its markup session on Wednesday, September 13, will include HR 6052 [100 pages in PDF], to be offered by Rep. Lamar Smith (R-TX), the Chairman of the HJC's Subcommittee on Courts, the Internet, and Intellectual Property (CIIP), titled "Copyright Modernization Act of 2006".

Rep. Smith's (at right) bill contains revised versions of both HR 5553 [57 pages in PDF], the "Section 115 Reform Act of 2006", or SIRA, and HR 5439 [PDF], the "Orphan Works Act of 2006". Rep. Smith is the sponsor of both HR 5553 and HR 5439. (TLJ obtained the above hyperlinked copy from Rep. Smith's office.)

The CIIP Subcommittee approved the SIRA on June 8, 2006. The bill would revise 17 U.S.C. § 115 to provide digital music providers, such as Apple's iTunes, a blanket compulsory license for digital phonorecord deliveries and hybrid offerings. This bill comprises pages 2 through 86 of Rep. Smith's composite bill.

See also, story titled "CIIP Subcommittee Approves Section 115 Reform Act" in TLJ Daily E-Mail Alert No. 1,388, June 9, 2006.

The CIIP Subcommittee approved the orphan works bill on May 24, 2006. This bill would amend the Copyright Act by adding a new Section 514 titled "Limitation on remedies in cases involving orphan works". This bill comprises pages 86 through 96 of Rep. Smith's composite bill.

See also, story titled "House CIIP Subcommittee Approves Orphan Works Act of 2006" in TLJ Daily E-Mail Alert No. 1,378, May 25, 2006. See also, story titled "Rep. Smith Introduces Orphan Works Act of 2006" in TLJ Daily E-Mail Alert No. 1,377, May 24, 2006.

The bill would limit the remedies available to copyright owners in actions for infringement brought under Sections 502-505, where the infringer, before infringing, "performed and documented a reasonably diligent search in good faith to identify and locate the owner of the infringed copyright", but "was unable to locate the owner". The latest version of this bill contains numerous changes, including in the above quoted language (the words "identify and" are added).

This bill is based upon recommendations contained in the Copyright Office's (CO) report [133 pages in PDF] titled "Report on Orphan Works". See also, story titled "House CIIP Subcommittee Holds Hearing on Orphan Works" in TLJ Daily E-Mail Alert No. 1,326, March 9, 2006, and story titled "Copyright Office Recommends Orphan Works Legislation" in TLJ Daily E-Mail Alert No. 1,302, February 2, 2006.

Rep. Smith's bill is on the agenda for the Wednesday markup. However, it is listed fifth on the agenda. The HJC may not complete mark up of all of the bills on this agenda. Also, there are two HJC hearings scheduled for Thursday, September 14. Hence, a two day markup is unlikely. This copyright bill may not be marked up on Wednesday.

The orphan works bill and the SIRA both relate to copyright law. Beyond that, they have little in common.

The bill also contains, at pages 96-100, three more unrelated amendments to the Copyright Act. First, the bill would amend 17 U.S.C. § 411 regarding the effect of errors in copyright registrations. Second, the bill would amend the statutory damages language codified at 17 U.S.C. § 504(c)(1). Third, the bill addresses forensic resources for law enforcement agencies investigating intellectual property crimes.

HP Says Dunn Will Remain as a Director

9/12. Hewlett Packard announced in a release that "Patricia Dunn will remain as chairman through the company's Jan. 18, 2007, board meeting. Mark Hurd, the company’s chief executive officer and president, will succeed her and retain his existing positions. Dunn will continue to serve as a director."

HP's release discloses no new details about the scope of Dunn's or HP's efforts to obtain the confidential personal information of HP's directors or others.

HP's release also contains several quotations from Dunn, none of which express any remorse for her actions.

She said that "I am very proud of the progress HP has made over the past 18 months. During the remainder of my tenure as chairman, I look forward to completing the transition that is underway, including expanding the board, continuing to improve our corporate governance standards and bringing the current issues to resolution."

She asserted that "HP holds itself to the highest standards of business conduct".

She also said that "The company will work to put these matters behind us". Whether state and federal regulators and prosecutors will allow Dunn to "put these matters behind us" is another matter. See, story titled "House Commerce Committee Requests Records From HP Regarding Its Use of Pretexting to Obtain Confidential Records" in TLJ Daily E-Mail Alert No. 1,447, September 12, 2006.

Also, Federal Communications Commission (FCC) Chairman Kevin Martin spoke with reporters outside of the Senate Commerce Committee's (SCC) hearing room, following a hearing on his renomination to the FCC on September 12. He was asked questions regarding, but declined to comment on, the FCC's investigation.

Dunn did state that "Unfortunately, the investigation, which was conducted with third parties, included certain inappropriate techniques. These went beyond what we understood them to be, and I apologize that they were employed." However, she did not apologize to any of the persons whose personal information was fraudulently obtained.

HP also announced in this release that "Richard Hackborn, who has served on the board since 1992, has been designated lead independent director, effective in January. In addition to having been chairman of the company in 2000, he spent 33 years as an HP employee, concluding his career in 1993 as head of the PC and personal information product business."

More News

9/12. Rep. Jane Harman (D-CA) introduced HR 6056, the "Foreign Intelligence Surveillance Improvement and Enhancement Act of 2006". It was referred to the House Judiciary Committee and the House Intelligence Committee.

9/12. Rep. Dan Lungren (R-CA) and others introduced HRes 993, a  resolution expressing the sense of the House of Representatives with respect to raising awareness and enhancing the state of computer security. It was referred to the House Science Committee.

9/12. John White, Director of the Securities and Exchange Commission's (SEC), Division of Corporation Finance gave a speech in New York, New York, titled "SOX 404 -- Moving Forward". He said that "Compliance with the reporting requirements of Section 404 has been more costly than anticipated and has generated extensive controversy, but in my opinion it's also fair to say that it's proven to have a high value to investors and has shown a vast potential for improving the reliability of financial reporting." White also gave a speech on May 25, 2006, titled "Section 404: The Need for Input". Small public companies, and especially high tech companies, have argued that the SEC's implementation of Section 404 imposes considerable burdens on smaller companies, without benefiting investors. See also, stories titled "Atkins Says SEC Seeks More Rational Approach to Section 404" in TLJ Daily E-Mail Alert No. 1,395, June 20, 2006, and "GAO Reports that Section 404 of Sarbanes Oxley Burdens Small Public Companies" in TLJ Daily E-Mail Alert No. 1,366, May 9, 2006. The "Sarbanes-Oxley Act of 2002" was HR 3763 in the 107th Congress. It is now Public Law No. 107-204.

9/12. The Senate ratified the Investment Treaty with Uruguay (Treaty Doc. 109-9) without a roll call vote. This treaty was signed at Mar del Plata, Uruguay, on November 4, 2005. See also, Congressional Record, September 12, 2006, at pages S9446-7, and USTR release.

House Commerce Committee Requests Records From HP Regarding Its Use of Pretexting to Obtain Confidential Records

9/11. Leaders of the House Commerce Committee (HCC) and its Subcommittee on Oversight and Investigations wrote a letter to Patricia Dunn, the current Chairman of the Board of Hewlett Packard (HP) requesting records regarding the use of pretexting to fraudulently obtain confidential  personal information.

The letter recounts that on September 6, 2006, HP filed a Form 8-K with the Securities and Exchange Commission (SEC) in which it disclosed that HP had spied on its directors and others. It stated that it employed investigators who engaged in pretexting to fraudulently obtain the phone call records of directors.

The HCC leaders wrote that "The Committee is troubled by this information, particularly given that it involves HP -- one of America's corporate icons -- using pretexting and data brokers to procure the personal telephone records of the members of its Board of Directors and of other individuals without their knowledge or consent. Accordingly, we request that, pursuant to Rules X and XI of the U.S. House of Representatives, you provide the following records and information detailed below on or before Monday, September 18, 2006."

See, House Rule X, titled "Organization of Committees", and House Rule XI, titled "Procedures of Committees and Unfinished Business".

The letter was signed by Rep. Joe Barton (R-TX), the Chairman of the HCC, Rep. John Dingell (D-MI), the ranking Democrat on the HCC, Rep. Ed Whitfield (R-KY), Chairman of the HCC's Subcommittee on Oversight and Investigations, and Rep. Bart Stupak (D-MI), the ranking Democrat on the Subcommittee.

Rep. Whitfield (at right), and the others, asked HP to disclose the name of the outside investigative firm hired by HP, which HP referenced in its Form 8-K. They also asked for all associated contracts, letters of engagement, and investigative plans. They also asked for the names of all of the individuals engaged in the pretexting activities.

They also asked for "A list of all individuals or entities that were targets or subjects, or designated as targets or subjects" of HP's investigation. They also requested "A list of all individuals or entities whose telephone records or other personal consumer information were procured or attempted to be procured by the outside consulting firm or by any other party during the period January 1, 2005, to the present." Also, they requested "A list of all individuals whose telephone records or other personal consumer information were procured" since January 1, 2005, and "For each individual, describe the types of records that were procured."

These questions regarding the targets of HP's spying may prove significant. HP's vaguely worked Form 8-K makes clear that pretexting was used to obtain phone records, and that members of the Board of Directors were objects of the investigation. However, this Form 8-K is conspicuous for its lack of specificity regarding the scope of the investigation. It does not state whether or not other individuals' personal information was sought, such as those of any HP employees, or of reporters who write about HP. Nor does the Form 8-K identify whether or not pretexting was used to fraudulently obtain records other than phone records, such as banking and financial records.

The HCC letter also asked for certain records related to HP's outside counsel, Wilson Sonsini.

Finally, the HCC letter included a broader request for documents, to be answered by September 25, 2006. It requests "All records", including communications with investigator and outside counsel, related to HP's investigation. It adds, "Please do not provide any copies of the actual telephone records or any other records procured."

HP and/or the law firm of Wilson Sonsini may assert the attorney client privilege in an effort to avoid producing certain records.

See also, story titled "HP Admits Spying on its Directors via Pretexting to Obtain Confidential Home Phone Records" in TLJ Daily E-Mail Alert No. 1,443, September 6, 2006; story titled "Thomas Perkins' States That HP's Pretexting Practices Were Probable Unlawful Conduct" in TLJ Daily E-Mail Alert No. 1,444, September 7, 2006; and story titled "HP Board Continues to Meet" in TLJ Daily E-Mail Alert No. 1,446, September 11, 2006.

HP Board Continues to Meet

9/11. Hewlett Packard issued short release on Monday, September 11. It states that "The HP board of directors met for several hours Sunday morning. It has agreed to reconvene late Monday afternoon. No further statement will be forthcoming from the company before that time."

Last week HP filed a Form 8-K with the Securities and Exchange Commission (SEC) that disclosed that HP had spied on its directors, and journalists. It employed investigators who engaged in pretexting to fraudulently obtain the phone call records of directors.

See also, story titled "HP Admits Spying on its Directors via Pretexting to Obtain Confidential Home Phone Records" in TLJ Daily E-Mail Alert No. 1,443, September 6, 2006, and story titled "Thomas Perkins' States That HP's Pretexting Practices Were Probable Unlawful Conduct" in TLJ Daily E-Mail Alert No. 1,444, September 7, 2006.

No law enforcement agency has yet announced any criminal charges. HP has not yet announced the departure of its current Chairman, Patricia Dunn.

More News

9/11. The Copyright Royalty Board (CRB) published a notice in the Federal Register that announces, describes, recites its amendments to the procedural regulations governing the practices and procedures of the Copyright Royalty Judges in royalty rate and distribution proceedings. This notice also sets an effective date of September 11, 2006, Finally, while this is a final rule, the CRB requests public comments. Comments are due by November 13, 2006. See, notice in the Federal Register, September 11, 2006, Vol. 71, No. 175, at Pages 53325-53331.

9/11. Federal Communications Commission (FCC) Commissioner Deborah Tate gave a brief speech [PDF] in Boston, Massachusetts.

9/11. The Senate Finance Committee (SFC) held a hearing titled "NAFTA at Year Twelve". Sen. Charles Grassley (R-IA), the Chairman of the SFC, wrote in his opening statement [PDF] that "NAFTA resulted in the creation of the world’s largest free trade area" and "will continue to benefit the United States and its NAFTA partners in the coming years". Rep. Max Baucus (D-MT), the ranking Democrat on the SFC, wrote in his opening statement [PDF] that "Economic theory tells us that trade liberalization is beneficial for the United States, helping our economy grow and expanding the range of products and services available to our consumers. But we all know there is often a big difference between theory and practice." He added that "there are always winners and losers from trade liberalization." See also, prepared testimony in PDF of John Melle (Deputy Assistant U.S. Trade Representative for North America), Cathy Sauceda (U.S. Customs and Border Protection), Jim Magagna (Wyoming Stock Growers Association), Craig Lang (Iowa Farm Bureau Federation), Jerry Pacheco (International Business Accelerator), Sandra Polaski (Carnegie Endowment for International Peace), and Sidney Weintraub (Center for Strategic & International Studies). See, notice. Location: Room 215, Dirksen Building.

Go to News from September 6-10, 2006.