TLJ News: January 16-20, 2007.

TLJ News from January 16-20, 2007

District Court Rules in Atlantic v. XM

1/19. The U.S. District Court (SDNY) issued a Memorandum and Order [23 pages in PDF] in Atlantic Recording Corporation v. XM denying XM Satellite Radio's motion to dismiss.

Record companies filed a complaint against XM alleging infringement of their distribution rights, and other claims. XM is a licensed satellite broadcast with a statutory performance license under 17 U.S.C. ง 114. However, it did not obtain distribution rights from the record companies. XM asserted that it did not distribute, and that the Audio Home Recording Act (AHRA), at 17 U.S.C. ง 1008, which provides immunity from infringement actions for the "distribution of a digital audio recording device", immunizes it from the record companies' claims. The District Court held that XM's service titled "XM + MP3" makes it both a broadcaster (for which it has a statutory license) and a distributor (for which it has not purchased rights), and that the AHRA does not immunize its conduct.

On May 16, 2006, members of the Recording Industry Association of America (RIAA) filed a complaint in U.S. District Court (SDNY) against XM alleging various copyright related claims. See, stories titled "Summary of the RIAA Lawsuit Against XM Satellite Radio", "Music Licensing, Satellite Radio, and Perform Act Debated", and "Summary of the Sen. Feinstein's Perform Act" in TLJ Daily E-Mail Alert No. 1,384, June 5, 2006.

The argument of Atlantic Recording and other RIAA members is that satellite radio is not merely a broadcast service that performs music, like traditional terrestrial radio; it also enables users to substitute the service for purchases of music. That is, the RIAA argued that it is a digital music distribution technology. Hence, while XM now pays a statutory performance license under Section 114 of the Copyright Act, which is codified at 17 U.S.C. ง 114, it must also pay to license the distribution of copyrighted music, as do Apple's iTunes and other distribution services.

Section 114 provides that XM and other pre-existing satellite radio service providers are permitted to perform sound recordings publicly by means of a subscription digital audio transmission, provided that they operate in a manner similar to traditional terrestrial broadcast radio.

XM argued that it performs music, but does not distribute it, and hence, it is like radio, and not like iTunes. Moreover, it argued the the Audio Home Recording Act (AHRA) provides it immunity from claims for copyright infringement. It asserted that its service is like tape recorders and blank tapes purchased by consumers for private recording and use.

The original complaint alleged direct infringement of distribution rights, unauthorized digital phonorecord delivery, direct infringement of reproduction rights, and ephemeral recordings infringement. It also alleged inducement of infringement, and contributory and vicarious infringement. Finally, it alleged state law claims of common law copyright infringement and unfair competition for pre-1972 claims.

The complaint alleged that XM's services are not like traditional terrestrial broadcast radio. The complaint alleges that XM provides a "digital download subscription service that obliterates the careful limits Congress imposed in Section 114".

XM filed a motion to dismiss for failure to state a claim, pursuant to Rule 12(b)(6), Federal Rules of Civil Procedure. It argued that it is shielded from infringement actions by the Audio Home Recording Act of 1992 (AHRA), which is codified at 17 U.S.C. งง 1001-1010.

The key provision, Section 1008, provides in full that "No action may be brought under this title alleging infringement of copyright based on the manufacture, importation, or distribution of a digital audio recording device, a digital audio recording medium, an analog recording device, or an analog recording medium, or based on the noncommercial use by a consumer of such a device or medium for making digital musical recordings or analog musical recordings."

The District Court opinion provides a detailed discussion of the relevant facts. It states that "XM is a licensed satellite radio broadcaster", and that the "songs used in XM’s music programming include the Record Companies’ copyrighted recordings".

The opinion states that "XM radio broadcasts can only be received by XM subscribers who use radio receivers capable of decrypting XM’s broadcast signal." XM makes money "from subscription fees; XM listeners pay a monthly subscription fee of $12.95 in exchange for their ability to receive XM service and programming on an XM compatible radio receiver."

The District Court's opinion then describes XM's service titled "XM + MP3" that is at the heart of this litigation. It states that "XM has made it possible for subscribers to hear broadcasts over special receivers marketed as ``XM + MP3ดด players. ... XM + MP3 players are different from ordinary XM radios because they do more than receive XM radio broadcasts. XM + MP3 players have three distinct features. Aside from receiving XM radio broadcasts, an XM + MP3 player allows a user to store MP3 files, which he or she already owned or acquired from outside sources. ... Additionally, XM + MP3 players permit subscribers to record, retain and library individually disaggregated and indexed audio files from XM broadcast performances; the Record Companies refer to this final feature as a ``digital download delivery serviceดด and this feature is the subject of this litigation." (Footnotes and citations omitted.)

The opinion adds that "All functionalities of an XM + MP3 player are controlled entirely by XM", including activation of service, termination, and "marking broadcast songs so that they can not be stored or saved".

It states that "while listening to XM programming, an XM + MP3 user can instantly record any song he or she hears at the touch of a button. ... a user can record and store in its entirety any broadcast song he or she hears, even if the user started listening to the song after it began to play."

It also states that "XM provides XM + MP3 users with playlists from blocks of broadcast programming which have been disaggregated into individual tracks. ... XM sends users these digital playlists with title and artist information included. ... These playlists identify all songs broadcast over a particular channel and during a particular period of time. ... Users can then scroll through a playlist and select which song(s) to store for future replay, and which to delete. ... A consequence of this utility is that XM + MP3 users can hear and store individual songs without actually listening to XM broadcast programming. "

The opinion also notes that XM enables users of this service to use a song search feature, which alerts the user when a song is played on any XM channel. Moreover, it states "With an XM + MP3 player, subscribers can store up to 50 hours of stored broadcast music, the approximate equivalent of 1,000 songs. ... Each of these songs is available for unlimited replay, for as long as the user maintains an XM subscription." (Footnotes and citations omitted.)

XM argued that it is distributor of a "digital audio recording device" (DARD) within the meaning of Section 1008. That is, it asserted that its XM + MP3 player is a DARD, and that Section 1008 therefore immunizes it from infringement actions based upon the use of these DARDs.

The District Court began its analysis by noting that "there is no precedent to guide the Court's interpretation of the AHRA where, as here, a purported distributor of a DARD primarily and simultaneously operates as a satellite radio broadcaster."

The Court then wrote that XM is a licensed broadcaster, and that this license permits "consumers to record from live broadcasts", but that this "does not extend to permitting consumers to record the music, whether or not heard at the time of broadcast, for as long as they pay XM the monthly subscription fee."

It continued that "The protected use of a consumer to record music for noncommercial use does not contemplate the commercial recording by a broadcaster to be ``leasedดด to the consumer for only as long as she pays the subscription fee to that broadcaster. The consumer does not own the recording; if the fee stops, so does the music."

The Court reasoned that the complaint alleges copyright violation arising out of XM's operating as an unauthorized distribution of copyrighted music. "XM is not being sued for actions taken in its capacity as a DARD distributor; therefore, XM is not immunized from this suit under the protection offered by the AHRA."

It also wrote that "By broadcasting and storing this copyrighted music on DARDs for later recording by the consumer, XM is both a broadcaster and a distributor, but is only paying to be a broadcaster."

The District Court concluded that "under the AHRA, XM is protected from suit based on actions taken in its capacity as a distributor of audio recording devices, but it is not immunized from suit based on its conduct as a satellite radio broadcaster, or from suit based on its actions as an XM + MP3 content delivery provider. The question presented here is plain: whether the conduct alleged in the Record Companies’ Complaint falls within the ambit of conduct protected by the AHRA. The Court finds that because of the unique circumstances of XM being both a broadcaster and a DARD distributor and its access to the copyrighted music results from its license to broadcast only, that the alleged conduct of XM in making that music available for consumers to record well beyond the time when broadcast, in violation of its broadcast license, is the basis of the Complaint, and being a distributor of a DARD is not. Thus the AHRA, on these facts, provides no protection to XM merely because they are distributors of a DARD."

The District Court therefore denied XM's motion to dismiss.

Steven Marks, General Counsel of the RIAA, stated in a release that "We're pleased that the court has rejected XM's attempt to misuse the Audio Home Recording Act (AHRA) as a legal loophole for distributing sound recordings to its subscribers. The AHRA was never intended to allow a service offering distributions of music to duck paying creators what they are due."

"As the court stated, `XM is both a broadcaster and a distributor, but is only paying to be a broadcaster.ด XM directly competes with other distribution services like Rhapsody, Napster and iTunes. It only follows that they should obtain distribution licenses just as those services have." Marks added that "Parity among digital music services is a key issue in today’s marketplace. With convergence from every direction, it is essential that all services operate on a level playing field where fair competition can thrive."

The Consumer Electronics Association (CEA) stated in a release that "With the motion to dismiss denied, it would be premature for Congress to act on this issue while the judicial process moves forward. Music lovers across the country are adopting innovative digital technologies to enjoy their lawfully acquired content where and when they want; we urge that they won't be disenfranchised and business models will adapt to better serve today's digital customers."

See also, amicus brief [25 pages in PDF] of the CEA and the Home Recording Rights Coalition.

On January 11, 2007, Sen. Dianne Feinstein (D-CA) and others introduced S 256, the "Platform Equality and Remedies for Rights Holders in Music Act of 2007", or "Perform Act".

This case is Atlantic Recording Corporation, et al. v. XM Satellite Radio, Inc., U.S. District Court for the Southern District of New York, D.C. No. 06 CV 3733 (DAB)(GWG), Judge Deborah Batts presiding.

2nd Circuit Rules in Internet Free Speech Case

1/19. The U.S. Court of Appeals (2ndCir) issued its opinion [18 pages in PDF] in Zieper v. Metzinger, an internet censorship case involving the First Amendment free speech clause, and government immunity. It affirmed the judgment of the District Court for the government.

Introduction. This cases addresses the recourse that speakers have when government prosecutors and law enforcement agents take actions to stop internet publication of speech that is protected by the First Amendment, but stop short of initiating prosecution, issuing or obtaining orders restraining speech, or physically preventing the speech, such as by seizure of persons, equipment, or files.

The job of prosecutors is to imprison people, seize things, and stop criminal conduct. In the present case, prosecutors did not do any of these things. Moreover, the government insists that notwithstanding their actions, including the use of the grand jury process, and deployment of FBI and local police, there was no implication that they would do any of these things to the plaintiffs. Rather, it asserts that their action were merely attempts to convince the plaintiffs not to engage in lawful conduct. The government argues that there were no implied threats of coercion. The Court of Appeals opinion does not relate the government's argument regarding why it did not deploy a non-prosecutorial agency for this task, or inform the plaintiffs that there was no threat of prosecution.

On the other hand, while the government's premise is tenuous, the plaintiffs have sued for violation of their free speech rights, notwithstanding the fact that they were able to engage in the internet speech at issue.

In this case, federal prosecutors and the FBI sought, but ultimately failed, to prevent publication of a movie on the internet. The plaintiffs, who made the movie and operated the web site on which it was published, sued for violation of their First Amendment rights. The ACLU represents them.

The District Court disposed of the issues on appeal by summary judgment.

The Court of Appeals held that there are triable issues of fact on the First Amendment claims, so the government is not entitled to summary judgment on those claims.

However, the District Court also granted summary judgment on the government's claim of limited immunity. The Court of Appeals affirmed. It held that governmental actors are shielded from suits for damages unless their actions violate clearly established rights of which an objectively reasonable official would have known. It reasoned that, given the case precedent at the time, the government agents did not violate clearly established rights. But, the Court of Appeals added, this case establishes new precedent that would be considered if a case with the same underlying facts arose in the future.

Appeals Court's Recitation of Facts. Michael Zieper wrote, directed, and produced a short movie titled "Military Takeover of New York City". The Court of Appeals opinion describes this as a fictional portrayal of "plans for a military takeover of Times Square" on New Years Eve. The opinion does not identity why the military would want Times Square, or what it would do with it once it seized it.

Mark Wieger ran a web hosting service named BECamation. Zieper was a customer of BECamation. He published the movie on the internet using space provided by BECamation. The Court of Appeals opinion states that "Wieger rented his internet space from a company called Online Marketing", which in turn leased from GTE Internetworking.

The Federal Bureau of Investigation (FBI) and U.S. Attorneys Office (USAO) took notice of the movie. Joseph Metzinger was an FBI agent assigned to the case. Lisa Korologos was the Assistant U.S. Attorney USA assigned to the case.

The FBI and USAO attempted to terminate continued availability of the movie on the internet. They succeeded, temporarily. The government actions included a grand jury proceeding, a grand jury subpoena for records, visits by FBI and local law enforcement officers to Zieper's home, telephone calls, and requests to Wieger and Zieper that the movie be removed from the internet.

Metzinger and Korologos stated that their job was to stop a riot and that they wanted to get the video offline. They also raised the subject of going to Online Marketing and GTE Internetworking.

Wieger removed the movie from the internet, but later put it back. The military did not take over Times Square. There were no riots. But, this case is still in litigation, seven years later.

District Court. Zieper, Wieger and BECamation filed a complaint in the U.S. District Court (NJ) against the former Attorney General, U.S. Attorney, and FBI Director. They also named Metzinger and Korologos.

In the present appeal, the only remaining defendants are Metzinger and Korologos. The only remaining counts are the allegations that Metziner and Korologos, acting in their individual capacities, violated the plaintiffs' First Amendment rights. Also, the case was transferred to the Southern District of New York.

Metzinger and Korologos moved for summary judgment on the First Amendment claims, and on the theory of qualified immunity. The District Court granted summary judgment to Metzinger and Korologos on basis of qualified immunity. It also held that no reasonable jury could find that Metzinger's contact with Zieper amounted to threats or coercion in violation of the First Amendment, but that there was a triable issue of fact on the issue of coercion as to a conversation with Wieger.

Court of Appeals. The Court of Appeals affirmed the judgment of the District Court. It held that the plaintiffs' claims are barred by the doctrine of qualified immunity. It also held that neither of the defendants are entitled to summary judgment on their First Amendment argument.

The Court of Appeals, quoting from earlier cases, wrote that "First Amendment rights may be violated by the chilling effect of governmental action that falls short of a direct prohibition against speech", and that the First Amendment prohibits government officials from encouraging the suppression of speech in a manner that "can reasonably be interpreted as intimating that some form of punishment or adverse regulatory action will follow the failure to accede to the official's request".

The Court of Appeals held that "that a rational juror could conclude that the officers' actions and comments could reasonably be interpreted as an attempt to coerce Zieper into removing his film from the internet".

The plaintiffs' nevertheless lose, because the Court of Appeals held that the doctrine of qualified immunity applies. It wrote that this doctrine provides that governmental actors are shielded from suits for damages unless their actions violate clearly established rights of which an objectively reasonable official would have known.

The Court of Appeals continued that "it was clearly lawful for defendants to request that plaintiffs remove from the internet a video which they may have believed posed a danger to the public safety. However, in making this request, the defendants were forced to walk a difficult line: They could lawfully explain why the government was concerned about the video and request its removal, so long as none of their statements or actions might reasonably be interpreted as coercive. In walking this line, much of what the defendants here did was unobjectionable: They were free to contact both plaintiffs, to explain that the government was concerned about the video's effect on the general public, and to request that plaintiffs remove it from the internet. However, as we held above, a reasonable juror could conclude that some of the defendants’ actions here did cross the sometimes fine line between an" attempt to convince and an attempt to coerce. (Footnote omitted.)

"Notwithstanding our conclusion that a reasonable juror could find a First Amendment violation, under our case law, the defendants are entitled to qualified immunity if it would not have been clear to a reasonable officer in their position that their conduct was unlawful." The Court of Appeals reviewed its case precedent, and concluded that "our pre-existing law would not have made apparent to a reasonable officer that defendants’ actions crossed the line".

It wrote that the "defendants here are entitled to qualified immunity because an officer could reasonably believe that" their statements "would be interpreted as simply an explanation of why they were concerned about the video and not a threat of prosecution under the criminal statute."

The Court of Appeals added this statement at the end of its opinion. "Moreover, as a result of our holding that a reasonable juror could conclude that the defendants’ actions violated the First Amendment, officials who are in a similar situation in the future will be on notice that they must be especially careful to make sure that the totality of their actions do not convey a threat even when their words do not."

This case is Michael Zieper, Mark Wieger, and BECamation v. Joseph Metzinger and Lisa Korologos, U.S. Court of Appeals for the 2nd Circuit, App. Ct. No. 05-5250-cv, an appeal from the U.S. District Court for the Southern District of New York.

Paper Addresses Vulnerability of GPS and other Satellite Systems to PRC Attacks

1/19. The U.S.-China Economic and Security Review Commission released a paper [80 pages in PDF] titled "An Assessment of China's Anti-Satellite and Space Warfare Programs, Policies and Doctrines". The author is Michael Pillsbury.

The paper consists of a review and analysis of "Chinese writings" relevant to satellite and space warfare. It argues that the People's Republic of China has developedsatellite shoot down capability, and is developing a range of anti satellite and space warfare technologies.

The paper also addresses some of the commercial consequences of potential actions by the PRC.

For example, the paper quotes at length a Chinese paper on how to take down the GPS system. That Chinese paper states that the low earth orbit satellites are easy targets, that the ground stations around the world are vulnerable to attacks, and that the satellites' signals are subject to RF interference.

Pillsbury comments that "These recommendations are most surprising because the three authors show no concern about the vast economic catastrophe that destroying the GPS system would bring to the world. Rather, GPS appears to be merely a US military system."

Pillsbury's paper concludes that PRC attacks on satellites "could have a catastrophic effect not only on US military forces, but of the US civilian economy".

PFF Releases 2007 Policy Agenda

1/19. The Progress and Freedom Foundation (PFF) released a summary [10 pages in PDF] of its policy proposals for 2007. This summary attaches a hyperlinked collection of recent papers that elaborate on these proposals.

The PFF opposes network neutrality mandates, and argues that "communications should be treated like other industries with more focus on antitrust enforcement instead of preemptive regulations".

The PFF argues that the "Congress should resist the urge to pass laws that interfere with markets for copyrighted goods. To create new content distribution business models, producers often use digital rights management technology to package or mark digital goods to exclude free riders, just as locks on doors are the "front line" in keeping out burglars."

With respect to patent law reform, the PFF states that "the system already works well for a significant number of companies", so the first rule should be "do no harm".

The PFF advocates less regulation of media ownership and content. It states that "With new technologies and outlets radically reshaping the communications and mass media landscape, traditional regulatory assumptions have been thrown into question and old rules have become counter-productive." It also advocates "greater First Amendment parity among modern media providers by leveling the playing field in the direction of greater freedom for all operators / platforms".

It argues that data security and privacy proposals should be subjected to "careful benefit-cost analysis, including full examination of consumer benefits from services and technologies affected by these proposals".

It opposes legislation that would impose "Avoid open-ended, intrusive data retention mandates" on providers of internet services.

The PFF argues that the Internet Corporation for Assigned Names and Numbers (ICANN) "should free up entry and let the market determine the number of top-level domains (TLDs)", and that "the U.S. should continue to resist moving to a multilateral governance approach."

The PFF wants lower taxes on both wireline and wireless services. It adds that "if Streamlined Sales and Use Tax Agreement (SSUTA) legislation is enacted, participation by the States should be voluntary. Mandating SSUTA compliance would seriously erode the benefits of tax competition that are an important part of our federal system."

People and Appointments

1/19. Warren Maruyama was named to be the next General Counsel at the Office of the U.S. Trade Representative (OUSTR). He will replace James Mendenhall. Maruyama is currently an attorney in the Washington DC office of the law firm of Hogan & Hartson. See, OUSTR release.

1/19. Mark Prater was named Deputy Staff Director for the Republican staff of the Senate Finance Committee (SFC). He replaces Ted Totman. Prater will also continue as Chief Tax Counsel. He has worked for the SFC since1990. Stephen Schaefer was named Chief International Trade Counsel on the Republican staff. Claudia Bridgeford was named International Trade Policy Advisor. See, Sen. Charles Grassley's (R-IA) release [PDF].

1/19. James Baker, Counsel for Intelligence Policy in the Department of Justice's (DOJ) National Security Division (NSD), will take a leave of absence to teach a course on national security investigations and litigation at Harvard University Law School, and to be a Resident Fellow at Harvard's Kennedy School of Government. He has worked on Foreign Intelligence Surveillance Act (FISA) matters. Margaret Nolen will be the acting Counsel for Intelligence Policy. Kenneth Wainstein remains the Assistant Attorney General in charge of the NSD. See, DOJ release.

1/19. Michael Heimbach was named Special Agent in Charge of the Federal Bureau of Investigation's (FBI) Washington Field Office (WFO) Counterterrorism Division. See, FBI release.

More News

1/19. The Federal Communications Commission (FCC) published in its web site its Form 477 [MS Excel] and its document [17 pages in PDF] titled "Instructions for Local Telephone Competition and Broadband Reporting Form (FCC Form 477)" for the filing due by March 1, 2007. The FCC's Public Notice [PDF] (DA 07-117) states that "All facilities-based providers of wired or wireless broadband connections to end user locations, all local exchange carriers, and all non-reseller commercial mobile radio service (CMRS) providers offering mobile telephony are required to file Form 477 twice each year."

1/19. The Federal Communications Commission's (FCC) International Bureau (IB) stated in a release [PDF] that it released its annual year end circuit status report for U.S. international facilities based common carriers. This report is available on the FCC's web page titled "Circuit Status Report".

1/19. Rep. John Dingell (D-MI), the Chairman of the House Commerce Committee (HCC), and Rep. Bart Stupak (D-MI), the Chairman of the HCC's Subcommittee on Oversight and Investigations, sent a letter [PDF] to Chris Cox, Chairman of the Securities and Exchange Commission (SEC) regarding Mark Hurd's sale of Hewlett Packard stock just prior to HP's disclosure of its pretexting scandal in an SEC filing in August of 2006. The two Representatives asked Cox to inform them when the SEC concludes its investigation into whether Hurd engaged in illegal insider trading. They also attached a copy of a letter to them from Hurd dated December 21, 2006, in which Hurd asserted that "My August Trade was not a case of ``bullet-dodging.ดด" Hurd also wrote in that letter that "The decisions and trade I made are consistent with the legal opinion I received from HP Legal in advance of making the August Trade." The then head of the HP legal department, Ann Baskins, subsequently left HP under disgraceful circumstances following public disclosures of her role in the HP pretexting scandal.

1/19. Rep. John Dingell (D-MI), the Chairman of the House Commerce Committee (HCC), Rep. Joe Barton (R-TX), and other senior members of the HCC, sent a letter [2 pages in PDF] to the Government Accountability Office (GAO) regarding cyber security at the Department of Energy (DOE). They asked him to "review DOE's cyber security programs, and provide a report to us on the security of unclassified and classified information networks". They also stated that "If left unattended, cyber security weaknesses at DOE could allow individuals or groups backed by nation-states the opportunity to penetrate DOE's networks and gain access to sensitive and classified information. We know the hackers are out there, and they continue to target DOE assets and stage their attacks on a daily basis." See also, the DOE's February 2006 document [51 pages in PDF] titled "Revitalization of the Department of Energy Cyber Security Program".

Gonzales Testifies Before Senate Judiciary Committee

1/18. The Senate Judiciary Committee (SJC) held a hearing titled "Oversight of the U.S. Department of Justice". The witness was Attorney General Alberto Gonzales.

The Department of Justice (DOJ) released two statements. First, there is Gonzales' long statement, which is twenty numbered pages when printed on paper. He did not read this at the hearing. Second, there is Gonzales' short statement, which reflects his opening remarks.

Terrorist Surveillance Program. Sen. Patrick Leahy (D-VT), the Chairman of the SJC), Sen. Arlen Specter (R-PA), the ranking Republican, and many of the Democrats on the Committee praised the Bush administration's announcement on January 17, 2006, that it would not renew the Terrorist Surveillance Program (TSP).

The Bush administration announced that the National Security Agency (NSA) will henceforth obtain approval from the Foreign Intelligence Surveillance Court (FISC) to conduct terrorism related electronic surveillance where one party is in the U.S. and one party is outside of the U.S.

See, January 17 letter [PDF] from the DOJ to the U.S. Court of Appeals (6thCir) , and story titled "NSA to Obtain FISA Authority for Disputed Electronic Surveillance" in TLJ Daily E-Mail Alert No. 1,521, January 17, 2007.

At the January 18 hearing, Gonzales wrote in his short statement that "Court orders issued last week by a Judge of the Foreign Intelligence Surveillance Court will enable the government to conduct electronic surveillance -- very specifically, surveillance into or out of the United States where there is probable cause to believe that one of the communicants is a member or agent of al Qaeda or an associated terrorist organization -- subject to the approval of the FISA Court."

Alberto Gonzales However, Gonzales (at right) declined to provide details about the FISC orders.

Gonzales' long statement contains a description of the TSP that appears to have been drafted prior to the January 17 announcement.

Sen. Leahy wrote in his opening statement, most of which he recited verbatim, that "This reversal is a good first step, but there are still several outstanding questions that remain. To ensure the balance necessary to achieve both security and liberty for our Nation, the President must also fully inform Congress and the American people about the contours of the Foreign Intelligence Surveillance Court order authorizing this surveillance program and of the program itself."

Data Retention Mandate. Gonzales wrote in his short statement that "I continue to hear from federal, state and local law enforcement that they need access to the information that will help us find online predators and child pornographers." He also repeated this line in his oral testimony.

Gonzales' long statement contains 14 paragraphs regarding online pornography and predators. However, it does not contain a request for new legislation.

Sen. Orrin Hatch (R-UT) raised the subject of child pornography. He first advocated the creation of a new commission to study the subject "with a particular focus on the internet". He added that "the internet is part of the problem".

AG Gonzales stated he would like to talk with Sen. Hatch about that. He added that "we need more resources".

Sen. Orrin Hatch Sen. Hatch (at left) also said that "You in the past have expressed the concern that investigators in child exploitation case sometimes hit dead ends because internet service providers have not kept data that would help determine the sources of images posted on the internet. How big a problem is this for law enforcement? And, is there something that Congress can do to help solve it?"

Gonzales responded, "Well it is a problem. You are right. We are engaged, we have encountered investigations, where the evidence is no longer available, because, there is no requirement to retain the data. Many ISPs do retain data for commercial purposes, and let me just say, most ISP companies are great partners for the law enforcement community, so I want to commend them for their efforts. However, for those few cases where we need that information, the question is, how do get, how do we maintain that evidence. And so, for that reason, I have had discussions with the ISP community, with victims' groups, with privacy groups, about whether or not it makes sense to have some kind of legislation to do data retention -- not data retained by the government, but data retained by ISPs -- that could be accessed with a court order, by the Department of Justice, from a court judge. And, I think, I would like to have a discussion with the Congress about that."

The DOJ sought legislation in the 109th Congress that would have imposed data retention mandates on internet services providers. Gonzales also gave several speeches on this subject. See for example, April 20, 2006, speech, and 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. See also, story titled "Gonzales Says Foreign Governments Should Have Access to Information Collected under Data Retention Mandate" in TLJ Daily E-Mail Alert No. 1,365, May 8, 2006.

However, while the DOJ and others are building support for legislation mandating data warehousing, any bill might have to move through the House Commerce Committee's (HCC) Subcommittee on Communications and the Internet. Its Chairman is Rep. Ed Markey (D-MA). See, story titled "Rep. Markey Advocates Data Destruction Bill" in TLJ Daily E-Mail Alert No. 1,429, August 10, 2006.

On the other hand, Rep. Diana DeGette (D-CO), a member of the HCC, is a data retention mandate proponent. See, story titled "House Commerce Committee Considers Data Retention Mandate" in TLJ Daily E-Mail Alert No. 1,365, May 8, 2006.

Gonzales' long statement offers a description of the online activities of pornographers and predators. It states that "the Internet is increasingly used by sexual predators and abusers as a tool for exploiting and victimizing our children through both child pornography and cyberenticement."

"The Internet has contributed to a significant increase in the proliferation and severity of such images. It provides deviants with an easily accessible and seemingly anonymous means of accumulating and distributing vast collections of images of child sexual abuse."

It adds that "As the Internet and related technologies have grown and evolved, children are also increasingly at risk of being sexually solicited online by predators. Law enforcement is uncovering an escalating number of ``enticementดด cases, where perpetrators contact children in chat rooms or through instant messaging and arrange to meet at a designated location for the purpose of making sexual contact."

Gonzales' long statement also contains some prosecution data. It states that "In 2006, federal prosecutors charged 1,638 defendants with child pornography or cyberenticement. Of these, 1,242 were sentenced to prison. This is up from 715 defendants charged in 2000. Over the last ten years, the FBI’s Innocent Images National Initiative has gone from 68 defendants charged and convicted as a result of their efforts to 1,018 in 2006."

Internet Drug Sales. Gonzales wrote in his short statement that "I hope we can discuss an emerging problem -- the abuse of prescription drugs purchased over the Internet -- and the things we can do together to address this issue. Prescription drug abuse is now the second largest form of drug abuse in the United States and the only rising category of abuse among youth. Feeding this abuse is the proliferation of illicit websites that offer controlled substances for sale, requiring little more than a cursory online questionnaire and charging double the normal price. Make no mistake: these illicit websites are not about getting necessary medicine to those in need."

He added that "We must preserve legitimate access to medications over the Internet while preventing online drug dealers from using cyberspace as a haven for drug trafficking. I look forward to working with Congress to ensure that controlled substances are dispensed over the Internet only for legitimate medical purposes."

He also read this language verbatim at the hearing.

Intellectual Property. Gonzales' long statement reviews recent DOJ activities to enforce intellectual property rights (IPR). It also contains a statement regarding legislative proposals for the 110th Congress.

It states that "We will continue to seek legislation that would, among other things, increase penalties for intellectual property crimes, clarify that registration of a copyright is not required for a criminal prosecution, make attempts to commit copyright infringement a crime and increase the tools investigators have at their disposal to track potential intellectual property crimes."

Other Issues. Sen. Jon Kyl (R-AZ) praised the DOJ for prosecuting internet gambling cases.

Sen. Leahy, Sen. Specter, and criticized the practice of issuing Presidential signing statements. Gonzales defended the practice.

Sen. Dianne Feinstein (D-CA) complained, and asked questions, about the selection process for U.S. Attorneys.

Sen. Charles Grassley (R-IA) wrote in his opening statement that he wants "assurances that the Department of Justice is doing all it can to enforce antitrust laws". However, while he wrote that the DOJ's Antitrust Division should be "pro-active" in all industries, his main concern is agribusiness consolidation.

Several members raised the subjects of habeas corpus, sentencing guidelines, rendition, the anthrax investigation, and/or violent crime.

Some members of the SJC, such as Sen. Ted Kennedy (D-MA), focused on issues largely unrelated to the jurisdiction of the SJC, such as going to war with Iran. Gonzales said that he was unaware of any plans to go to war with Iran.

Richard Hertling and William Moschella sat immediately behind AG Gonzales at the hearing.

DOJ's Masoudi Addresses Antitrust, Standard Setting and IPR

1/18. Gerald Masoudi, a Deputy Assistant Attorney General in the Department of Justice's (DOJ) Antitrust Division, gave a detailed speech titled "Efficiency in Analysis of Antitrust, Standard Setting, and Intellectual Property" in Brussels, Belgium.

He discussed the current state of thinking at the DOJ about the practices of standards development organizations (SDOs) and intellectual property (IP). He said that "The application of antitrust law to certain standard-setting practices, including the use of ex ante licensing regimes by SDOs and certain actions by SDO members, is unsettled" and that "U.S. antitrust agencies are reserving judgment on the many SDO practices that have not come before them."

He addressed reasonable and nondiscriminatory licensing (RAND) commitments and predisclosure, which he said have spawned "unforeseen problems and evasion strategies". However, he devoted much of his speech to ex ante licensing, and in particular, the DOJ's VITA business review letter in October of 2006.

He first discussed the underlying economic rationale for IP protection, and stated that "As a general rule of thumb, antitrust law should not prohibit practices that make standard setting more efficient". He also stated that "Businesses should feel confident that if they have ideas for creative, efficient, and procompetitive ways to structure SDOs, antitrust law will not stand in the way."

He explained hold ups. He said that "If SDO members first do the work of selecting a standard and only then discover that the standard infringes a patent right, the patent owner is said to be in a position to "hold up" the standard: the patent owner, knowing that the SDO has already chosen the technology as its preferred method, may be able to demand a higher royalty than if the negotiation had been conducted before the standard was set. This can inject inefficiency into the process in at least three ways: first, uncertainty; second, delay; and third, under some conditions, an allegedly uneconomical royalty rate."

He then said that there have been three attempts to solve this inefficiency: "reasonable and nondiscriminatory licensing (RAND) commitments; predisclosure; and now, ex ante licensing".

The said that "RAND has been a partial success. The ``nondiscriminatoryดด portion of this approach can provide a way for similarly-situated producers to ensure that they are treated alike, and can prevent a patentee from pursuing a potentially exclusionary strategy of charging higher rates to its horizontal competitors, although disputes may arise over the degree to which any licensee is similarly situated as compared to another."

However, he said that the "reasonable" component of RAND "has proven to be a weaker link". In particular, "The practical enforceability of reasonableness provisions is suspect".

He next discussed predisclosure. He explained that this "requires an entity participating in an SDO to disclose all intellectual property rights that may bear upon the standard, including issued patents and pending patent applications".

He continued that "In practice, there are a number of problems that predisclosure causes or cannot solve, including: underdisclosure, particularly inadvertent nondisclosure when a patentee does not anticipate the direction in which a standards effort will eventually go; overdisclosure, particularly unnecessary disclosure of trade secrets covering technology that ultimately will not be incorporated into the standard; and an unclear remedy for violations".

So, he said, "SDOs are increasingly looking to a third solution, ex ante licensing, which would require all those participating in standard-setting activities within an SDO, before the standard is set, to state the maximum royalty rate and other terms that they would demand if the standard uses their technology."

He said that there is a legal objection to ex ante licensing. That is, it "could be or could facilitate price fixing, and may violate the antitrust laws in one of two ways. First, it could facilitate horizontal sell-side price fixing, by creating a forum in which potential horizontal competitors share prices and other terms. Second, it could facilitate buy-side monopolization, or monopsonization, under which potential licensees may band together to drive licensee fees and other terms to artificially low levels, thereby damaging the incentive to engage in research and development in areas that may be the subject of standards efforts."

He continued that the source of legal concerns are two opinions, Sony Elecs., Inc. v. Soundview Techs., Inc., 157 F. Supp. 2d 180 (D. Conn. 2001), and Golden Bridge Tech., Inc . v. Nokia, Inc., 416 F. Supp. 2d 525 (E.D. Tex. 2006), which he summarized.

He then reviewed prior DOJ statements on ex ante licensing, which are as follows:

June 3, 2005 speech [15 pages in PDF] by Hewitt Pate, former Assistant Attorney General (AAG) in charge of the Antitrust Division, titled "Competition and Intellectual Property in the U.S.: Licensing Freedom and the Limits of Antitrust", at page 9.
September 23, 2005, speech [PDF] by FTC Chairman Deborah Majoras titled "Recognizing the Procompetitive Potential of Royalty Discussions in Standard Setting".
October 30, 2006, business review letter from AAG Thomas Barnett to Robert Skitol, attorney for the VMEbus International Trade Association (VITA). See also, DOJ release and story titled "DOJ Approves VITA Patent Policy" in TLJ Daily E-Mail Alert No. 1479, October 31, 2006.

He stated that the VITA business review letter "is the latest and most specific word from the U.S. enforcement agencies as to intersection of antitrust, IP, licensing, and standard setting law". He cautioned that any attempt to use the ex ante licensing process "as a sham to cover horizontal price fixing would result in per se Sherman Act Section 1 liability". But, "the restrictions put in place by VITA appear to promote efficiency if they are followed and enforced".

He also stated that "One should resist the temptation to treat the latest statement from the Antitrust Division as the only safe way to proceed, or to conclude that if a policy deviates in any of its particulars from one cleared by the Division, it necessarily violates the antitrust laws".

In addition, he said that there is "no affirmative requirement in antitrust law that businesses must create a RAND, disclosure, or ex ante licensing system. Doing nothing remains an option".

Finally, he said that "one reason to encourage different approaches to ex ante licensing is that experimentation and competition between SDOs, as in any corner of the marketplace, is a good thing".

House Bill Would Create Congressional Trade Office

1/18. Rep. Peter DeFazio (D-OR) and fifteen other Democrats introduced HR 548, an untitled bill to create a Congressional Trade Office (CTO). The bill was referred to the House Ways and Means Committee.

The bill would create an office that would duplicate some of the functions of the Office to the U.S. Trade Representative (OUSTR). It would make the CTO an adjunct to the OUSTR and State Department in many executive functions, including trade negotiations, dispute resolution, and enforcement. However, the bill stops short of transferring executive authority from the executive to the legislature.

The head of this office would be appointed by the Speaker of the House of Representatives and the President pro tempore of the Senate.

The bill provides that the CTO and its personnel would "participate as observers in bilateral, regional, and multilateral trade negotiations".

It further provides that they would "Participate as observers on the United States delegation at dispute settlement panel meetings of the World Trade Organization" and "Evaluate the results obtained by the United States in dispute settlement proceedings at the World Trade Organization, under the North American Free Trade Agreement, and under any trade agreement"

The CTO would be tasked with monitoring compliance with trade agreements by "consulting with the affected industries and interested parties", "analyzing the success of those agreements based on the effect of the agreements on specific industries and the economy", and "assessing the extent to which those agreements comply with environmental goals" and "labor goals".

The bill also authorizes the CTO to "secure information, data, estimates, and statistics directly from any department, agency, or establishment of the executive branch of Government and any regulatory agency or commission of the Government. All such departments, agencies, establishments, and regulatory agencies and commissions shall furnish the Director any available material which the Director determines to be necessary in the performance of his or her duties and functions". The bill then requires the CTO to "post on an Office website all information, data, estimates, and statistics obtained under this Act", except information "exempted from disclosure by law" or which the CTO determines to fall within certain other exempted categories.

House Bill Would Regulate Inmate Phone Services

1/18. Rep. Bobby Rush (D-IL), Rep. Rick Boucher (D-VA), and other Democrats introduced HR 555, the "Family Telephone Connection Protection Act of 2007", a bill that would authorize the Federal Communications Commission (FCC) to write rules that regulate telephone services provided to inmates.

The recitation of findings states that inmates pay as much as $1 per minute, and connection fees of as much as $3.95, because of the lack of competition at prisons, and commissions paid to the prisons.

The bill would authorize the FCC to set maximum rates, to require service providers to offer debit account services, to prohibit "the payment of commissions by providers of inmate telephone service to administrators of correctional institutions", and to require prisons to allow multiple service providers.

It also provides that inmate phone service providers are subject to the interconnection requirements of 47 U.S.C. ง 251 and the procedural requirements of 47 U.S.C. ง 252.

The bill preempts state laws and regulations that are inconsistent with relevant FCC regulations.

The bill states that the FCC's regulations shall be "technologically neutral". But, the bill references "telephone service", and does not authorize the FCC to require prisons to allow service providers to offer other communications or IP based services.

The bill was referred to the House Commerce Committee.

People and Appointments

1/18. President Bush nominated Mario Mancuso to be Under Secretary for Export Administration at the Department of Commerce, the head of the Bureau Industry and Security (BIS). The BIS, among other things, regulates the export of dual use items, such as computers, microprocessors, software and encryption products. He is currently Deputy Assistant Secretary of Defense for Special Operations and Combating Terrorism at the Department of Defense (DOD. Before that, he was Special Counsel to the DOD's General Counsel. He previously worked for the law firm of Ropes and Gray. See, White House release and release.

More News

1/18. Federal Communications Commission (FCC) Chairman Kevin Martin gave a speech [5 pages in PDF] at the Association of National Advertisers Advertising Law and Business Affairs Conference in New York City.

1/18. Federal Communications Commission (FCC) adopted and released an order [10 pages in PDF] that forbears from applying certain Universal Service and Telecommunications Relay Service requirements to calls placed by armed forces personnel stationed or deployed outside the United States to their families or friends at home.

1/18. Federal Reserve Board (FRB) Governor Susan Bies gave a speech in Tucson, Arizona, titled "Economic Outlook and Developments in Mortgage Markets". She stated that "the demand for information technology equipment is likely to be well maintained, in part because of the recent introduction of a new generation of microprocessing chips and more-efficient large servers."

1/18. The Austin, Texas, law firm of Barry & Loewy, and the Houston, Texas, law firm of Arnold & Itkin announced in a release that they filed four Julie Doe complaints in the Los Angeles Superior Court, a trial court in the state of California, against MySpace, Inc., and News Corp., alleging negligence and other claims. The complaints allege that MySpace and its parent corporation, News Corp., are liable for injuries to MySpace users that were inflicted by other MySpace users. The complaint alleges that each of the Julie Doe plaintiffs were sexually assaulted by men who they met in the MySpace web site. These cases are numbered SC092421, SC092423, SC092424, SC092422.

NSA to Obtain FISA Authority for Disputed Electronic Surveillance

1/17. The Bush administration announced that it will obtain approval from the Foreign Intelligence Surveillance Court (FISC) to conduct terrorism related electronic surveillance where one party is in the U.S. and one party is outside of the U.S.

President Bush and the Department of Justice (DOJ) had previously relied upon Presidential Constitutional authority, and the Congressional resolution authorizing the use of force (which is Public Law No. 107-40, adopted on September 18, 2001), and did not obtain FISC, or other court, approval.

This electronic surveillance program, which is conducted by the National Security Agency (NSA), and which the Bush administration has titled "Terrorist Surveillance Program" and "TSP", was first publicly disclosed by the New York Times in December of 2005. Some members of the House and Senate have disputed the President's authority to conduct this electronic surveillance program outside of the context of the Foreign Intelligence Surveillance Act (FISA).

Also, the ACLU and others challenged the legality of this program. On August 17, 2006, the U.S. District Court (EDMich) issued its opinion [44 pages in PDF] in ACLU v. NSA, enjoining the program. See, story titled "District Court Holds NSA Surveillance Program Violates Constitution" in TLJ Daily E-Mail Alert No. 1,433, August 17, 2006. That order is stayed, and the case is on appeal.

The DOJ wrote in a letter [PDF] to the U.S. Court of Appeals (6thCir) on January 17, 2007, that "a Judge of the Foreign Intelligence Surveillance Court has issued orders authorizing the Government to target for collection international communications into or out of the United States where there is probable cause to believe that one of the communicants is a member or agent of al Qaeda or an associated terrorist organization, and that, as a result of these orders, any electronic surveillance that was occurring as part of the TSP will now be conducted subject to the approval of the Foreign Intelligence Surveillance Court. In light of these circumstances, the President has determined not to reauthorize the Terrorist Surveillance Program when the current authorization expires."

This case is American Civil Liberties Union, et al. v. National Security Agency, et al., U.S. Court of Appeals for the 6th Circuit, App. Ct. Nos. 06-2095 and 06-2140.

This letter to the Court of Appeals also attaches a letter to Sen. Patrick Leahy (D-VT), the Chairman of the Senate Judiciary Committee (SJC), and Sen. Arlen Specter (R-PA), the ranking Republican on the SJC.

This letter to the Senators adds that "In the spring of 2005 -- well before the first press account disclosing the existence of the Terrorist Surveillance Program -- the Administration began exploring options for seeking such FISA Court approval. Any court authorization had to ensure that the Intelligence Community would have the speed and agility necessary to protect the Nation from al Qaeda -- the very speed and agility that was offered by the Terrorist Surveillance Program. These orders are innovative, they are complex, and it took considerable time and work for the Government to develop the approach that was proposed to the Court and for the Judge on the FISC to consider and approve these orders."

This letter continues that "The President is committed to using all lawful tools to protect our Nation from the terrorist threat, including making maximum use of the authorities provided by FISA and taking full advantage of developments in the law. Although, as we have previously explained, the Terrorist Surveillance Program fully complies with the law, the orders the Government has obtained will allow the necessary speed and agility while providing substantial advantages."

The DOJ did not release details of the new FISC process.

Sen. Patrick Leahy (D-VT), the Chairman of the Senate Judiciary Committee (SJC), stated in a release that "I welcome the President's decision not to reauthorize the NSA's warrantless spying program and instead to seek approval for all wiretaps from the Foreign Intelligence Surveillance Court, as the law has required for years."

"We must engage in all surveillance necessary to prevent acts of terrorism, but we can and should do so in ways that protect the basic rights of all Americans including the right to privacy. The issue has never been whether to monitor suspected terrorists but doing it legally and with proper checks and balances to prevent abuses." Sen. Leahy added that "Providing efficient but meaningful court review is a major step toward addressing those concerns."

Sen. Arlen Specter (R-PA), the ranking Republican on the SJC, spoke on the floor of the Senate. He said that he is "glad".

He opposes warrantless electronic surveillance. He introduced S 4051, the "Foreign Intelligence Surveillance Oversight and Resource Enhancement Act of 2006", in the 109th Congress, which he reintroduced as S 187 in the 110th Congress, to address this issue.

He said that "When the matter moved into litigation in the federal court in Detroit declared the surveillance program unconstitutional and then the appeal was taken to the 6th Circuit I introduced substitute legislation, S. 4051, last year and reintroduced it already this year, which would provide for expedited review in the federal courts and a mandate that the Supreme Court take it up and arrangement where the Administration had disclosed and there were changes made in the Foreign Intelligence Surveillance Act there could be a warrant for all out-going calls but not in-coming calls because there were so many."

He added, "I am glad to see that we may now have all of that resolved. We are not sure; I want to know all of the details of this program."

Martin Discusses FCC Activities

1/17. The five Commissioners of the Federal Communications Commission (FCC) gathered at the FCC headquarters in Washington DC to hear reports from the heads of various bureaus and offices of the FCC. The Commission adopted no orders at this event. After this annual ceremony, Chairman Kevin Martin held a news conference with reporters.

These heads of bureaus and offices gave brief overviews of their activities in the past year, and outlined some of the major active proceedings. The Commissioners thanked them, and their staffs, for their hard work and good service, and stated that they looked forward to working with them this year.

See, FCC web page with hyperlinks to presentation slides used by the heads of bureaus and offices at this January 17 event.

Kevin Martin Martin (at right) began his news conference by providing an overview of the Commission's near term priorities. He said that the "number one" priority of the Commission is broadband deployment and access to new technologies.

He said that the Commission's activities regarding broadband will increasingly focus on the wireless front.

He said that the Commission will continue to be active on competition in video services. Among the issues will be competitors' access to programming, multi-unit dwellings, and pole attachments.

He said that the Commission will address consumer protection, especially in the context of privacy and CPNI and early termination fees of wireless carriers.

He said that the Commission will continue to address public safety and homeland security issues, including law enforcement "access to communications" (he did not use the term surveillance) and 911.

He also said that "competition will be the best protector of consumer interests", but that the Commission will not be afraid to step in with regulation in areas such as "privacy" and "public safety goals".

Martin then took questions from reporters, many of which pertained to media ownership, and the FCC's various proceedings regarding the regulation of ownership of media, and transitioning to digital television.

Privacy/CPNI. Martin also answered questions regarding privacy and CPNI. He said that this item is on circulation, and could be adopted at any time. He added that if the Commission does not act before the February 23 meeting, he would put this on the agenda for that meeting.

The CPNI statute, which is codified at 47 U.S.C. ง 222(c), requires carriers to keep confidential the customer proprietary network information (CPNI) that they possess. Martin did not discuss what entities would be affected by the FCC's new rules. However, he used the word "carriers".

He also said that the FCC is considering requiring carriers to use passwords or passcodes before they can divulge information either online or over the telephone. He also discussed sharing of information among carriers. He said that the FCC is considering requiring consumer consent for this.

The FCC's open rulemaking proceeding is Docket No. 96-115 and RM-11277. The FCC adopted its NPRM on February 10, 2006. See, story titled "FCC Adopts NPRM Regarding Privacy of Consumer Phone Records" in TLJ Daily E-Mail Alert No. 1,308, February 13, 2006. It released the text [34 pages in PDF] on February 14, 2006. The NPRM is FCC 06-10. See also, story titled "FCC Rulemaking Proceeding on CPNI May Extend to Internet Protocol Services" in TLJ Daily E-Mail Alert No. 1,310, February 15, 2006.

Ownership. With respect to the FCC's media ownership proceedings, Martin would make no predictions regarding when the Commission would act. He said that there are still more hearings to be scheduled and held, and a record to be developed.

He also addressed the FCC's cable ownership proceeding opened in September of 2001. He said that the FCC should either bring that to a conclusion, or seek comment on it in the context of the other media ownership issues. He did not express a preference for either alternative.

Early Termination Fees. He also discussed early termination fees of wireless carriers. He said that the Commission could act in that proceeding within two or three months of its February 23 meeting.

The Cellular Telecommunications & Internet Association (CTIA) has filed a petition for declaratory ruling with the FCC seeking a ruling that early termination fees in wireless carriers' service contracts are "rates charged" for CMRS within the meaning of 47 U.S.C. ง 332(c)(3)(A). This proceeding is WT Docket No. 05-194.

Martin also commented on FCC authority. He compared 911 regulation to regulation of early termination fees. He said that the state of Minnesota had imposed 911 regulation upon VOIP service providers. Service providers requested relief from the FCC, and the FCC declared that the service at issue is interstate and cannot be regulated by states. See, Memorandum Opinion and Order [41 pages in PDF], story titled "FCC Adopts Order on Vonage's VOIP Petition" in TLJ Daily E-Mail Alert No. 1,015, November 10, 2004, and story titled "FCC Releases Vonage VOIP Order" in TLJ Daily E-Mail Alert No. 1,018, November 15, 2004.

However, Martin continued, the FCC then turned around and imposed VOIP 911 regulation itself. See, FCC's May 19, 2005, First Report and Order and Notice of Proposed Rulemaking [90 pages in PDF]. This item is FCC 05-116 in WC Docket No. 04-36 and WC Docket No. 05-196. See also, stories titled "FCC Adopts Order Expanding E911 Regulation to Include Some VOIP Service Providers", "Summary of the FCC's 911 VOIP Order", "Opponents of FCC 911 VOIP Order State that the FCC Exceeded Its Statutory Authority", and "More Reaction to the FCC's 911 VOIP Order", in TLJ Daily E-Mail Alert No. 1,139, May 20, 2005; and story titled "FCC Releases VOIP E911 Order" in TLJ Daily E-Mail Alert No. 1,148, June 6, 2005.

Martin argued that if the FCC preempts state authority, this does not imply that the FCC is taking an anti-consumer position.

Other Issues. The Hollywood Reporter asked Martin about broadcaster liability for crowd noise, such as spectators holding up signs. Catherine Bohigian (Chief of the FCC's Office of Strategic Planning and Policy Analysis) instructed Martin not to answer, on the grounds that there is pending litigation. Martin declined to answer, on the grounds that there is pending litigation.

Multichannel News asked if the FCC would limit cable and telco participation in auctions for the sale of spectrum returned as a result of the DTV transition, to ensure that there would be an independent third broadband service provider. Martin said that "I don't have any particular thoughts on it", but that there must be "neutral criteria" and the FCC must treat all platforms the same.

Martin was asked how the FCC would react to proposed mergers of satellite radio companies XM and Sirius, or satellite TV companies Directv and Echostar.

Martin said that the FCC will take a look at anything that comes before it. However, he added, with respect to satellite radio, that there is a prohibition against one entity owning both providers. Also, he noted that the FCC previously rejected a satellite TV merger. See, story titled "FCC Declines to Approve EchoStar DirectTV Merger" in TLJ Daily E-Mail Alert No. 528, October 11, 2002.

Martin also touched on universal service, intercarrier compensation, broadcasters' sale of air time, and Kyle McSlarrow's comments about a time warp at the FCC.

Martin declined to discuss some other issues, such as the FCC's pending proceeding regarding cable program access.

AG Gonzales Discusses Judiciary

1/17. Attorney General Alberto Gonzales gave a speech regarding the federal judiciary. He said that there should be more federal judges, and that they should be paid more. He opposed judicial activism. Also, he wants the Democratic Senate to approve President Bush's judicial nominees.

He also opposed the creation of an Inspector General (IG) for the federal judiciary. There were bills in the 109th Congress that would have created an IG. On April 27, 2006, Rep. James Sensenbrenner (R-WI) and Rep. Lamar Smith (R-TX) introduced HR 5219, the "The Judicial Transparency and Ethics Enhancement Act of 2006", while Sen. Charles Grassley (R-IA) introduced S 2678, the companion bill in the Senate. The House Judiciary Committee (HJC) approved HR 5219 on September 27. The full House did not act on the bill. Neither the Senate Judiciary Committee (SJC), nor the full Senate, acted on the Senate bill.

Alberto Gonzales Gonzales (at right) advocated raising the pay of federal judges. He also advocated creating more judgeships.

He said that judicial independence does not mean immunity from criticism. He said that "criticism comes with the territory".

He argued against judicial activism. He said that "when courts apply an activist philosophy that stretches the law to suit policy preferences, they actually reduce the credibility and authority of the Judiciary. In so doing, they undermine the rule of law that strengthens our democracy".

He added that "If the American people disagree with a law Congress has enacted or a policy of the Executive Branch, they have the right to vote Congress or the President out of office. That is the method by which the Constitution keeps control in the hands of the people and keeps our limited government limited."

He discussed, briefly and in very broad strokes, some of the criteria used by the Bush administration to select judicial nominees.

Finally, he discussed the Senate's power of "advice and consent". Gonzales said that "when the Framers provided for nominations to proceed with the advice and consent of the Senate, they assumed that body would at least consider the nominees." He noted that there are many vacancies, some of which the Administrative Office of the U.S. Courts has designated "judicial emergencies".

"The President has nominated, and is continuing to nominate, strong candidates to fill these vacancies, and we look forward to working with the Senate to confirm them", said Gonzales.

Gonzales spoke at the American Enterprise Institute (AEI) in Washington DC.

FCC Releases Latest Phone Subscribership Data

1/17. The Federal Communications Commission's (FCC) Wireline Competition Bureau's (WCB) Industry Analysis and Technology Division (IATD) released its latest report [50 pages in PDF] titled "Telephone Subscribership in the United States". See also, FCC release [PDF].

The report states that in July of 2006 94.6% of households had phone service. This is up from 92.8% in March. This is huge increase over just four months.

Moreover, FCC data shows two huge increases, and two huge decreases, in four of its last five reports. The four largest changes in several decades occurred in this two year time frame. This suggests that there may be increased inaccuracy in FCC data collection.

The FCC changed the wording of its question for the November 2004 survey, just before the volatility began. The question was previously "Is there a telephone in this house/apartment?". It has since been "Does this house, apartment, or mobile home have telephone service from which you can both make and receive calls? Please include cell phones, regular phones, and any other type of telephone."

Penetration peaked at 95.5% in March of 2002, and again in March of 2003.