Cox Discusses Competing XBRL Taxonomies

12/5. Securities and Exchange Commission (SEC) Chairman Chris Cox gave a speech to the 14th International XBRL Conference in Philadelphia, Pennsylvania, titled "The Promise of Interactive Data". He frequently speaks on this subject. One topic that he addresses was international use of XBRL.

Cox said that "it's worth noting that the SEC is committed to doing everything in our power to ensure that XBRL remains a truly international, stateless, and open source standard. All of the XBRL software development that we do, and that we support, will be open source. It will be contributed to the global effort to eliminate friction in the exchange of financial information, so that company data can travel at the speed of light, 24/7, with built-in automated quality control."

While the SEC is developing XBRL for the US Generally Accepted Accounting Procedures (GAAP), the European Union (EU) is developing XBRL for their competing International Financial Reporting Standards (IFRS). Cox praised David Tweedie, the head of the International Accounting Standards Board, and former head of Britain's Accounting Standards Board.

Cox stated that "As Sir David and I follow the roadmap to 2009 that our agencies have laid out, by which we hope to eliminate the requirement that reports using International Financial Reporting Standards be reconciled to U.S. GAAP, it is already possible to imagine that XBRL taxonomies -- written without bias toward any particular set of accounting rules -- could be used to instantly translate any given set of financial data from one accounting system to another. So even if the world is never quite possessed of a global accounting Esperanto, we will still be able to speak the same language."

Cox also gave a few updates on the SEC's progress and plans. He said that "This job of completing the XBRL taxonomies for U.S. GAAP is already finished for many industries." He also said that "the SEC has no intention of getting into the financial analysis business, or the financial software business, and we won't attempt to compete with web-based financial portals or other financial service providers".

Cox also said that "earnings releases, analyst research, credit ratings" and other information could be XBRL tagged.

He added that "it's our 1930s-era reporting standards that are acting as a brake on the rapid adoption of better disclosure technology that's shelf-ready right now."

House Approves Bill to Allow USPTO to Extend Deadlines After Disasters

12/5. The House approved HR 4742 by voice vote without amendment. This bill would amend the Title 35 to allow the Director of the US Patent and Trademark Office (USPTO) to extend patent and trademark related filing deadlines following hurricanes and other disasters.

The bill provides that the Director may "waive statutory provisions governing the filing, processing, renewal, and maintenance of patents, trademark registrations, and applications therefor to the extent the Director deems necessary in order to protect the rights and privileges of applicants and other persons affected by an emergency or a major disaster."

This short bill also provides that "A decision not to exercise, or a failure to exercise, the waiver authority provided by this subsection shall not be subject to judicial review."

Rep. Lamar Smith (R-TX), the Chairman of the House Judiciary Committee's (HJC) Subcommittee on Courts, the Internet and Intellectual Property, introduced this bill on February 14, 2006. The HJC approved the bill, without amendment, on March 15, 2006. See, story titled "HJC Approves Bill to Allow USPTO to Waive Statutory Requirements After Disasters" in TLJ Daily E-Mail Alert No. 1,330, March 16, 2006. See also, House Report No. 109-408.

People and Appointments

12/5. The Federal Communications Commission (FCC) announced the appointment of members to its Commercial Mobile Service Alert Advisory Committee. See, FCC release [PDF].

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12/5. Federal Communications Commission (FCC) Commissioner Robert McDowell gave a speech [8 pages in PDF] in New York, New York. "I trust free people acting within free markets to make better decisions for themselves than those of us in government", said McDowell. "Government should not adversely interfere with the relationships between consumers and entrepreneurs. Rather, government should try to remove barriers to entry and allow competition to flourish." But, he added, there are market failures that must be addressed by regulation. He talked about regulation affecting new and future delivery platforms. He said that "we have a full plate of issues before us that may affect the delivery of these new and improved platforms", including the digital television transition, spectrum auctions, the broadcast white space rulemaking proceeding, digital audio broadcasting, media ownership, video franchising, and the integration ban.

12/5. The US Patent and Trademark Office (USPTO) announced the opening of a USPTO art gallery. This is not prior art. It is oil on canvas, and related items, created by USPTO employees. See, USPTO release, and gallery, located in the Madison Building, 600 Dulany Street, Alexandria, Virginia.

12/5. The Office of the US Trade Representative (OUSTR) released a document [47 pages in PDF] titled "Annual Reform Recommendations from the Government of the United States to the Government of Japan under the U.S.-Japan Regulatory Reform and Competition Policy Initiative".

DOJ Report Discusses FBI's Failures in Creating a Secure Web Accessed File System

12/4. The Department of Justice's (DOJ) Office of the Inspector General released a partial copy [112 pages in PDF] of a report titled "Sentinel Audit II: Status of the Federal Bureau of Investigation's Case Management System". "Sentinel" is the FBI's latest name for its botched efforts to build an electronic, web accessed, file system.

This report is another in a series of DOJ/OIG reports, Government Accountability Office (GAO) reports, and prepared testimonies for Congressional committees that details the FBI's long running failure to establish a secure, electronic, web based, case management file system. The report addresses past failures, current problems, and prospects for completion.

This report does not estimate or describe the harm done to law enforcement and anti-terrorism efforts by the FBI's failure to modernize its file system.

The FBI now uses the name "Sentinel" to describe its spending program for a case management system. It previously named this spending program "Virtual Case File" or "VCF". The "VCF" program, in turn, was a part of the FBI's "Trilogy" program. The just released report states that the "Virtual Case File" program was an "unsuccessful 3-year, $170 million effort".

The report also states that this "Sentinel" program will provide the FBI "with a web-enabled case management system that includes records management, workflow management, and evidence management; and records search and reporting capabilities, all of which will replace its current paper-based case management system."

The FBI has estimated the price of the "Sentinel" to be $425 Million. The report states, however, that the program will require more funding.

Sen. Patrick Leahy (D-VT), the incoming Chairman of the Senate Judiciary Committee (SJC), released a statement. He wrote that "The Bush Administration's mismanagement of this project seems to know no bounds. Today's finding by the Department of Justice Office of Inspector General that the FBI will need an additional $56.7 million over what the President requested in his budget for next year to continue the Sentinel project, and that these additional costs could have an adverse impact on the FBI’s counterterrorism and other programs, are cause for deep concern."

Sen. Leahy (at right) added that the "Congress has been told that Sentinel will cost the American taxpayers $425 million to complete and that this system will not be fully operational until 2009. Yet the OIG finding of significant funding problems with Sentinel at this early stage calls the FBI’s cost estimate for this program into serious question."

He added that "After watching the FBI waste five years and more than $170 million of taxpayer dollars on the Trilogy program, I remain seriously concerned about the handling of this project. The American people cannot afford another fiasco."

The SJC will hold a hearing titled "FBI Oversight" on Wednesday, December 6, 2006, at 9:30 AM.

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12/4. Attorney General Alberto Gonzales gave a speech in Washington DC in which he discussed protecting children from predators. The prepared text of his speech includes no requests for new laws regulating internet services. However, he discussed the Internet Crimes Against Children Task Forces, and stated that "I look forward to ... A day when we never hear from the people who brag on the Internet about being revolutionaries ..." in connection with their illegal conduct.

FTC Obtains $465,000 Judgment Against Company that Induced Spam

12/2. The U.S. District Court (DNev) signed a Stipulated Judgment and Order for Permanent Injunction [18 pages in PDF] in USA v. TJ Web Productions LLC, a case brought by the Federal Trade Commission (FTC) against a company that operated an affiliate marketing program that induced others to send pormographic commercial e-mail messages on its behalf.

The judgment enjoins the defendant from further violation of the CAN SPAM Act, which is codified at 15 U.S.C. § 7701, et seq., and the FTC's Adult Labeling Rule, which is codified at 16 C.F.R. § 316.4. It also requires the defendant to pay a $465,000 civil penalty.

See also, the FTC's January 30, 2007, release describing this judgment, and the FTC's July 20, 2005, complaint [10 pages in PDF].

This case is USA v. TJ Web Productions LLC, U.S. District Court for the District of Nevada, D.C. No. CV-S-05-0882-RLH-GWF.

DC Circuit Rules in Case Regarding Bells' Discrimination in Favor of Affiliates

12/1. The U.S. Court of Appeals (DCCir) issued its opinion [15 pages in PDF] in BellSouth v. FCC, vacating and remanding an order of the Federal Communications Commission (FCC). The FCC had concluded that BellSouth's discount plan for special access services violates Section 272, which bars the baby bells from discriminating in favor of their own affiliates.

BellSouth is a regional Bell operating company that, among other things, sells special access services. In 1999, it created its Transport Savings Plan (TSP), which gave its customers the option of earning price discounts in exchange for committing to purchase certain volumes of services for no less than five years. The opinion of the Court of Appeals describes this TSP in detail.

AT&T, a purchaser of special access services from BellSouth, complained to the FCC that the TSP discriminated in favor of BellSouth's long distance affiliate in violation of 47 U.S.C. § 272(c)(1) and (e)(3).

Subsection (c)(1) provides, in part, that "In its dealings with its affiliate described in subsection (a) of this section, a Bell operating company -- (1) may not discriminate between that company or affiliate and any other entity in the provision or procurement of goods, services, facilities, and information, or in the establishment of standards".

Subsection (e)(3) provides, in part, that "A Bell operating company ... shall charge the affiliate described in subsection (a) of this section, or impute to itself (if using the access for its provision of its own services), an amount for access to its telephone exchange service and exchange access that is no less than the amount charged to any unaffiliated interexchange carriers for such service". (Parentheses in original.)

The FCC reviewed that details of BellSouth's TSP and concluded that it violated the statute by creating a volume discount plan that, though facially neutral, favored small and growing companies such as its own affiliate.

BellSouth filed a petition for review with the Court of Appeals. The Court reviewed the details of the TSP and concluded that it does not discriminate in favor of BellSouth's affiliate. Hence, it vacated the order of the FCC, and remanded.

AT&T and BellSouth have announced plans to merge. The FCC is delaying its decision on AT&T's and BellSouth merger review application. The Court of Appeals noted that "Approval of the merger would not moot this case because the Commission has ordered BellSouth to terminate the TSP with respect to all customers, not just AT&T."

This case is BellSouth Telecommunications, Inc. v. FCC and USA, U.S. Court of Appeals for the District of Columbia, App. Ct. No. 05-1032, a petition for review of a final order of the FCC. Judge Tatel wrote the opinion of the Court of Appeals, in which Judges Kavanaugh and Williams joined.

3rd Circuit Construes Sherman Act in Dispute Between AT&T and Prepaid Phone Card Seller

12/1. The U.S. Court of Appeals (3rdCir) issued its opinion [PDF] in AT&T v. JMC Telecom, affirming the judgment of the District Court for AT&T on JMC's Sherman Act counterclaim. JMC alleged that there was an implicit agreement between AT&T and JMC to restrict JMC's prepaid phone card sales to the maritime sector.

The Court of Appeals opinion also addresses issues related to the filed rate doctrine, federal preemption, and tariffs. These other issues are not addressed in this article.

JMC Telecom previously was a wholesaler, marketer, and designer of prepaid telephone cards. It operated in the maritime market. This market includes ships and their crew members and cruise ships and their passengers.

AT&T and JMC entered into an agreement that provided that AT&T would sell prepaid calling services to JMC, and JMC would sell the services as prepaid telephone cards to end users. It is no longer in business.

JMC alleged that AT&T provided bad service, and sought to renegotiate the agreement.

JMC also alleged that the two companies had an implicit agreement that restricted JMC’s sales territory for the cards to the maritime sector.

AT&T filed a complaint in U.S. District Court (DNJ) against JMC seeking to collect amounts that it alleged were owing under the agreement. JMC counterclaimed against AT&T alleging violations of the Sherman Act, federal common law, and state law. The District Court ruled for AT&T on its claim, and against JMC on its counterclaims. JMC brought the present appeal. The Court of Appeals affirmed.

Section 1 of the Sherman Act, which is codified at 15 U.S.C. § 1, provides, in part, that "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal."

The Court of Appeals rejected JMC's first antitrust argument -- refusal to deal. The Court of Appeals wrote that a supplier can deal with, or refusal to deal with, a distributor, so long as it does so independently, as AT&T did.

The Court of Appeals also rejected JMC's second argument that AT&T violated the Sherman Act by prohibiting JMC from selling the cards to nonmaritime customers. JMC argued that the agreement between the two companies represented a horizontal, rather than vertical, restraint.

A horizon restraint is a per se violation of the Sherman Act. Vertical restraints are subject to the rule of reason.

The Court of Appeals wrote that "The problem with JMC’s argument, however, is that the relationship was primarily vertical. Although we agree that the relationship had horizontal elements, it is undisputed that AT&T supplied telecommunications service to JMC for resale. The fact that AT&T also sold phone cards at the resale level does not change the analysis. Vertical restraints are generally not per se violations of the Sherman Act, even where a distributor and manufacturer also compete at the distribution level, i.e., have some form of horizontal relationship (a/k/a/ dual distributor arrangement), as is the case here." (Parentheses in original.)

JMC did not also, or alternatively, argue that the alleged restraint should be analyzed under the rule of reason. Hence, the Court of Appeals affirmed the judgment of the District Court without subjecting the alleged restraint to rule of reason analysis. Also, the Court of Appeals did not address whether or not JMC suffered antitrust injury.

The Court of Appeals relied upon the 2nd Circuit's 1997 opinion in Electronics Communications Corp. v. Toshiba America Consumer Products, which is reported at 129 F.3d 240.

This case is AT&T Corporation v. JMC Telecom LCC, U.S. Court of Appeals for the 3rd Circuit, App. Ct. No. 05-1304, an appeal from the U.S. District Court for the District of New Jersey, D.C. No.99-cv-02578. Judge Greenberg wrote the opinion of the Court of Appeals, in which Judges Roth and Buckwalter joined.

Rep. Markey to Seek Chairmanship of Telecommunications and Internet Subcommittee

12/1. Rep. Ed Markey (D-MA) announced that he will seek the Chairmanship of the House Commerce Committee's Subcommittee on Telecommunications and the Internet. See, release.

Markey (at left) was the Chairman of the Subcommittee before the Republicans gained a majority in the House in the 1994 elections, and has been the ranking Democrat on the Subcommittee since then.

He has served in the House for 30 years. Rep. John Dingell (D-MI), who has served in the House for over 50 years, is the Democrat on the HCC with the most seniority. He is set to become Chairman of the full Committee. Rep. Henry Waxman (D-CA) also has more seniority than Rep. Markey on the full Committee. Rep. Fred Upton (R-MI) is the outgoing Chairman of the Subcommittee.

Rep. Markey's announcement means that he will not seek the Chairmanship of the House Resources Committee in the 110th Congress.

Markey boasted in his release that he "is the author and co-author of numerous landmark telecommunications laws", including "the Cable Act of 1992", that he "has repeatedly led efforts to protect consumer privacy", and that he is now focused on "the need to keep the Internet an open platform by adopting strong rules for ``net neutrality´´ and to promote policies to make broadband services competitive, available and affordable to all Americans."

During the HCC's consideration of its communications reform bill, he advocated a net neutrality mandate, and buildout requirements for broadband service providers.

Gigi Sohn, head of the Public Knowledge, a Washington DC based interest group that favors a network neutrality mandate, stated in a release that she is "delighted". She added that "We look forward to working with him on Net Neutrality, video franchising and a host of other issues as we forge a comprehensive telecommunications policy suitable for the broadband era."

DHS Discloses Some Details of Electronic Database of Personal Information

12/1. The Department of Homeland Security (DHS) disclosed details in a November 2 notice in the Federal Register (FR) of a program that involves using a computer database to aggregate and analyze data on individuals. The DHS states that the primary purpose of this the database program is to use data analysis techniques to generate risk assessment scores for all persons who travel into or out of the US, and certain other persons and cargo, for the purpose of improving the operations of the DHS's Customs and Border Protection (CBP).

Also, on November 22, 2006, the DHS completed a Privacy Impact Assessment [30 pages in PDF]. It states that under this program personally identifiable information (PII) "is collected to ensure that people and cargo entering or exiting the United States comply with all applicable U.S. laws."

Several groups have filed comments with the DHS complaining primarily about the privacy implications of creating unchallengeable risk assessment scores. However, the DHS's explanations of the program also reveal that the DHS will store PII on individuals, and will give data to a wide range of requestors other than the CBP or DHS.

While the DHS database may assist in generating, maintaining, and disseminating in real time risk assessment scores to assist air and border security operations, this database, as described in the FR notice, also creates a general purpose database of PII available to a wide range of governmental and non-governmental requestors for purposes unrelated to air or border security.

Nothing in the FR notice or Privacy Impact Assessment (PIA) indicate that this program is not distinct from the DHS's CAPPS -- CAPPS II -- Secure Flight program.

The program is titled "Automated Targeting System" or ATS. It also covers cargo. However, this article focuses on individuals' PII and risk assessment scores.

DHS Notice in the Federal Register. The November 2 FR notice begins with a convoluted discussion. It describes either a new system of records, or a previously existing system of records. This notice lacks clarity as to whether it discloses a new system of records, as required by the Privacy Act of 1974, pertaining to the rating of individuals' security risks, or whether it merely discusses a previously existing system of records already in use.

The FR notice states that "The new system of records will be effective December 4, 2006, unless comments are received that result in a contrary determination." See, Federal Register, November 2, 2006, Vol. 71, No. 212, at Pages 64543-64546. (TLJ failed to report this notice at the appropriate time.)

This FR notice also states that this ATS program "is the enforcement screening module associated with the Treasury Enforcement Communications System and was previously covered by the Treasury Enforcement Communications System ``System of Records Notice.´´"

The FR notice reveals that the DHS is using computer database technology to aggregate and analyze personally identifying information from a wide range of sources for the purpose of generating risk assessment scores of international air or auto travellers, transportation crews, persons involved in international trade, persons involved in transport, and cargo.

The DHS asserts that these records are not subject to certain Privacy Act requirements, such as the right of individuals to access and contest information about them.

The FR notice states that the "computer database" will be located in Washington DC, but can be accessed from numerous "computer terminals".

The FR notice also states that this Treasury Enforcement Communications System (TECS) "is established as an overarching law enforcement information collection, targeting, and sharing environment. This environment is comprised of several modules designed to collect, maintain, and screen data, conduct targeting, and share information. Among these modules, the Automated Targeting System performs screening of both inbound and outbound cargo, travelers, and conveyances. As part of this screening function, the Automated Targeting System compares information obtained from the public with a set series of queries designed to permit targeting of conveyances, goods, cargo, or persons to facilitate DHS's border enforcement mission."

The FR notice then states that a "risk assessment" is "created" and "stored" in this "Automated Targeting System".

The data collected in this program includes names, telephone numbers, e-mail addresses, payment information, address, billing address, travel itinerary, and other data.

The Privacy Impact Assessment (PIA) also lacks clarity in many sections. It begins with the statement that this is "an Intranet-based enforcement and decision support tool that is the cornerstone for all CBP targeting efforts. CBP uses ATS to improve the collection, use, analysis, and dissemination of information that is gathered for the primary purpose of targeting, identifying, and preventing potential terrorists and terrorist weapons from entering the United States. Additionally, ATS is utilized by CBP to identify other violations of U.S. laws that are enforced by CBP."

What DHS Will Do With the Data. The PIA states that "It assists the CBP officer’s decision-making process about whether a passenger or crewmember should receive additional screening prior to entry into or departure from the country because the traveler may pose a greater risk for violation of U.S. law."

The purpose of the program goes beyond fighting terrorism. For example, the PIA adds one purpose of the program is identifying "travelers at high risk for involvement in ... intellectual property rights infringement".

Who Else Can Access or Obtain ATS Data. The FR notice asserts that "the system may not be accessed under the Privacy Act for the purpose of contesting the content of the record". However, the FR notice adds that "all or a portion of the records or information contained in this system may be disclosed outside DHS" to a wide range of other parties.

The PIA states that most of the parties with direct terminal access will be in the DHS. Most parties outside will request data from the DHS.

The FR notice states that all or any data in the system may be disclosed to "Federal, state, local, tribal, or foreign governmental agencies ... where CBP believes the information would assist enforcement of civil or criminal laws". Thus, the purposes of the program go beyond homeland security to enforcement of any local, state, federal, or foreign civil or criminal laws.

The FR notice also states that data may be disclosed to "Federal, state, local, tribal, or foreign governmental agencies" for the purpose of "hiring or retention of an individual, or issuance of a security clearance, license, contract, grant, or other benefit".

The FR notice also states that data may be disclosed to litigants in civil or criminal litigation. Specifically, it provides that "To a court, magistrate, or administrative tribunal in the course of presenting evidence, including disclosures to opposing counsel or witnesses in the course of civil discovery, litigation, or settlement
negotiations, or in response to a subpoena, or in connection with criminal law proceedings".

The FR notice also states that data may be disclosed to "third parties during the course of a law enforcement
investigation to the extent necessary to obtain information pertinent to the investigation".

The FR notice also enumerates many other circumstances under which data may be disclosed to other parties.

The PIA provides less detail on disclosure of data outside of the DHS.

Individuals' Access to Their Own Information. The FR notice asserts that individuals cannot obtain their data by a direct request to the DHS.

However, it provides that they can obtain their data indirectly by obtaining it through the office of a Senator or Representative. The FR notice states that data may be disclosed "To a Congressional office, for the record of an individual in response to an inquiry from that Congressional office made at the request of the individual to whom the record pertains".

The PIA states that while individuals do not have access to their ATS data, including their risk assessment score, they may have access to, and an opportunity to contest, some of the systems of records from which the DHS acquires data for the ATS program, such as state Department of Motor Vehicle data.

EFF Comment. On November 30, 2006, the Electronic Frontier Foundation (EFF) filed a comment [9 pages in PDF] with the DHS regarding this ATS. It is signed by David Sobel and Marcia Hofmann, attorneys in the EFF's Washington DC office. The EFF has also submitted a request for records from the DHS regarding this program pursuant to the federal Freedom of Information Act (FOIA).

Sobel and Hoffman wrote that there are "substantial privacy issues raised by the newly disclosed system of records".

They wrote that the ATS "is a data-mining system that the agency will use to create ``risk assessments´´ for tens of millions of travelers. It will include information that is not ``relevant and necessary´´ to accomplish its stated purpose of improving security. Individuals will have no right to access information about themselves contained in the system, nor to request correction of information that is inaccurate, irrelevant, untimely or incomplete. While personal information contained in the ATS will not be accessible to the affected individuals, it will be made readily available to an untold numbers of federal, state, local and foreign agencies, as well as a wide variety of ``third parties,´´ including “contractors, grantees, experts, consultants, students, and others.´´ The ``risk assessments´´ created by the system and assigned to tens of millions of law-abiding individuals will be retained by the government for 40 years."

Sobel stated in an EFF release that "The government is preparing to give millions of law-abiding citizens 'risk assessment' scores that will follow them throughout their lives ... If that wasn't frightening enough, none of us will have the ability to know our own score, or to challenge it. Homeland Security needs to delay the deployment of this system and allow for an informed public debate on this dangerous proposal."

Neither the EFF's David Sobel nor the DHS immediately returned phone calls from TLJ.

The ACLU also submitted a comment to the DHS. The ACLU issued a release that states that "Innocent people are going to get caught up in this program, and they will have precious little recourse under it ... When some unknown government computer, using unknown sources of information, tags you as a `security risk´ and begins circulating that label around the government, you will have no meaningful way of finding out why you were given that label, let alone challenging its validity."

Public Hearing. The DHS's Homeland Security Advisory Council's Secure Borders and Open Doors Advisory Committee will hold a partially open meeting on Wednesday, December 6, 2006. The open portion of the meeting will be from 1:00 to 2:30 PM at the Hilton Washington, Washington Room, 1919 Connecticut Avenue, NW. See, notice in the Federal Register, November 29, 2006, Vol. 71, No. 229, at Page 69139.

People and Appointments

Al Warren, who founded Warren Communications, died. Warren Communications publishes Communications Daily, Washington Internet Daily, and other periodicals and reports. See, recollection by Patrick Ross, who was previously a reporter and editor for various Warren publications. Paul Warren is the President and Executive Publisher of Warren Communications.

More News

12/1. The Copyright Royalty Board published a notice in the Federal Register that announces, explains, recites, and sets the effective date (January 1, 2007) of, rules changes that provide for a cost of living
adjustment of 1.3% in the royalty rates paid by colleges, universities, or other nonprofit educational institutions that are not affiliated with National Public Radio for the use of copyrighted published nondramatic musical compositions in the ASCAP, BMI and SESAC repertoires. See, Federal Register, December 1, 2006, Vol. 71, No. 231, at Page 69486.

Go to News from November 26-31, 2006.