Tech Law Journal Daily E-Mail Alert
March 9, 2001, 8:00 AM ET, Alert No. 140.
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House Passes Bush Tax Bill
3/8. The House passed HR 3, the Economic Growth and Tax Relief Act of 2001, President Bush's proposal to reduce tax rates, by a vote of 230 to 198. See, Roll Call No. 45.
SEC & the Internet
3/8. The U.S. District Court (NDIll) approved a settlement agreement in the SEC's civil enforcement action against Yun Soo Oh Park, an Internet stock picker known as Tokyo Joe, and the company that he controls. Tokyo Joe and his company consented to entry of an order that enjoins them from violating the antifraud and other provisions of the federal securities laws, and orders them to pay $324,934 in ill-gotten gains and $429,696 in civil penalties. They also agreed to post a hyperlink to the court order on the home page of their stock picking web site. The SEC had charged Tokyo Joe and his company with defrauding subscribers by failing to disclose that he purchased shares of the stock that he was recommending and that he planned to sell his shares when the price rose following his recommendations. The SEC had also charged Tokyo Joe with illegal touting. The Court had previously rejected Tokyo Joe's argument that he was not an "investment advisor" within the meaning of the Investment Advisors Act. Said SEC Enforcement Director Richard Walker, "This case has established groundbreaking precedent. Those who are in the business of offering investment advice on the Internet may take on the same duties and responsibilities as other investment advisers."  See, SEC release.
3/2. Acting SEC Chairman Laura Unger gave a speech in Washington DC in which she addressed regulation of financial portals. She stated that "Financial portals provide a central location where investors can find all types of financial information and portfolio analysis tools. They can aggregate their financial account data, and they can also click on hyperlinks to broker-dealer websites to open brokerage accounts and enter trades. ... But as portals have gained in popularity, with Yahoo! Finance and other financial portals becoming household words, broker-dealers are increasingly finding themselves competing with the financial portals for customers. At least one of the questions broker-dealers ask is why aren't the portals registered? My first question, though, is: what are the portals doing? What are their relationships with the broker-dealers they hyperlink to? What are their business arrangements and compensation arrangements? How do the hyperlinks work, and what do they look like? We're all familiar with the various factors considered in analyzing whether an entity must register as a broker-dealer. But these are difficult questions with broad-ranging implications. ... I'm in the process of organizing a roundtable to discuss some of these issues in April."
3/2. SEC Commissioner Isaac Hunt gave a speech in Washington DC in which he suggested re-examination of the subject of online communications made during a public offering, especially during the waiting period. He stated that the "Internet provides a mechanism that would allow investors and companies to get together on a non-selective basis to discuss a company's public offering. It is my hope that the Commission will find a way to allow companies and investors to take greater advantage of the Internet and thus ... transform the waiting period into the education period."
Judiciary Markup
3/8. The House Judiciary Committee approved several tech related bills at a mark up session. HR 809, a bill to make minor technical corrections to various antitrust laws, was approved without debate or amendment. S 320, a bill to make technical corrections in patent, copyright, and trademark laws, was adopted quickly with a technical amendment. HR 741 was also adopted. It amends the Trademark Act of 1946 to implement the Madrid Protocol, an international trademark treaty. The Protocol seeks to provide a one-stop inexpensive method for trademark registration and protection.
More IP News
2/28. A panel of the WIPO Arbitration and Mediation Center issued its opinion in a domain name dispute resolution proceeding involving www.yahooasian.com and 4 other domain names which include the word "yahoo." Yahoo!, the Santa Clara, California, based Internet giant filed a complaint against the Thai company formed in 2000 that registered the five variations on its trademark. The panel found that the five domain names are confusingly similar to the Yahoo! trademark, that the respondent has no rights or legitimate interest in the disputed domain name, and that the disputed domain names were registered in bad faith. It ordered, therefore, that the five domain names be transferred to Yahoo!
3/6. The European Patent Office published in its web site PDF copies of 88 decisions of its Board of Patent Appeals from 2000 and early 2001.
3/8. The U.S. Court of Appeals (DC Cir) heard oral argument in Platte River Cellular Limited Partnership v. FCC.
New Documents
Tauzin: statement re EU Privacy Directive, 3/8 (HTML, TLJ).
Hunt: speech re initial stock offerings and the Internet, 3/2 (HTML, SEC).
Unger: speech re SEC regulation of financial portals, 3/2 (HTML, SEC).
Updated Sections
Calendar (updated daily).
News from Around the Web (updated daily).
Quote of the Day
"The EU Privacy Directive is the EU's Helms-Burton."

Jonathan Winer, testimony at House Trade Subcommittee hearing, March 8.
EU Privacy Directive Criticized at Hearing
3/8. The House Commerce Committee's Subcommittee on Commerce, Trade, and Consumer Protection held a long hearing titled EU Data Protection Directive: Implications for the U.S. Privacy Debate. The event provided several subcommittee members and witnesses the opportunity to criticize the EU Privacy Directive, as well as the Safe Harbor.
Committee Chairman Billy Tauzin (R-LA) was not present, but submitted a scathing criticism of the EU Privacy Directive for the record. He called it "an effort to impose the EU's will on the U.S." It also "could be the imposition of one of the largest trade barriers ever seen and is a direct reversal of the efforts we have made in various free trade agreements." Moreover, "the costs would be in the multi-billions, and are all costs that will be passed on to consumers." He also wrote that the Europeans do not enforce it against themselves; "In fact, a number of nations have not even bothered to ... enact implementing legislation." He suggested that EU enforcement against U.S. companies would therefore constitute a "double standard." He also pointed out that the EU Privacy Directive creates a private right of action. This, Tauzin wrote, would infringe U.S. sovereignty, and subject U.S. companies to financially crippling class action lawsuits. Tauzin also criticized the Safe Harbor.
Subcommittee Chairman Cliff Stearns (R-FL) presided. He stated that "I am concerned about the potentially regressive impact of the Directive ... on international commerce and more specifically on commerce between the European Community and the United States. I am not convinced ... that the safe harbor provisions negotiated by Ambassador Aaron in the previous administration will help mitigate the concern over regressive effects." Rep. Steve Buyer (R-IN) attacked the EU for trying to set standards for the rest of the world, and for opposing free trade. He also quipped that he understands "the good judgment of my ancestors to leave the continent." Two Democrats had kind words for the EU Privacy Directive, Rep. Diana DeGette (D-CO) and Rep. Ed Markey (D-MA). However, Markey's comments were directed mostly at the privacy provisions of the Gramm Leach Bliley bill, which he called "a pathetic joke", the Republican Party, for denying him floor votes on privacy amendments, and corporate America, for violating privacy.
Two Europeans testified, Stefano Rodota (Chairman of the EU Data Protection Working Party) and David Smith (Office of the UK Information Commissioner). Smith often qualified his remarks with the statement that he did not speak on behalf of the EU. Rodota speaks English with difficulty. Moreover, the two confused subcommittee members with contradictory or non-responsive responses to questions about EU law and procedure. See, Rodota statement and Smith statement.
Finally, the subcommittee heard from a panel of U.S. and Canadian witnesses. Jonathan Winer, an attorney with the law firm of Alston & Byrd, condemned the EU Privacy Directive in his testimony; "The stakes are not just protecting privacy, but simultaneously protecting sovereignty, protecting Constitutional freedoms, especially the freedom of expression, and preventing the risk of serious harm to the U.S. and to the global economy." Former Ambassador David Aaron read a statement in which he said that "there are a number of fundamental problems with the European Directive. First, it was conceived over a dozen years ago when there was no World Wide Web  ..." In contrast, Joel Reidenberg, a law professor at Fordham University, praised the Directive. See, statement. Barbara Lawler of Hewlitt Packard explained her company's participation in the Safe Harbor. Denis Henry of Bell Canada also testified.
Computer Crime
3/8. The FBI's NIPC issued an advisory and a release regarding "a series of organized hacker activities specifically targeting U.S. computer systems associated with e-commerce or e-banking. Despite previous advisories, many computer owners have not patched their systems, allowing these kinds of attacks to continue ..." The advisory states that "several organized hacker groups from Eastern Europe, specifically Russia and the Ukraine ... have penetrated U.S. e-commerce computer systems by exploiting vulnerabilities in unpatched Microsoft Windows NT operating systems." They download proprietary information, customer databases, and credit card information, and then extort money under the guise of providing security services. Microsoft also commented. "One of the most troubling aspects of these attacks is that virtually all of them were carried out via known vulnerabilities for which patches have been available for months or, in some cases, years," said Scott Culp, Security Program Manager of the Microsoft Security Response Center, in a Security Bulletin. See also, Microsoft companion article.
3/6. Mark Dipadova and Theresa Ford plead guilty in U.S. District Court (DSC) to conspiracy to traffic in counterfeit watches and other goods, in violation of 18 U.S.C.  371. They conducted their criminal operation through a website formerly located at www.fakegifts.com. This case is being prosecuted by AUSA Dean Eichelberger. See, DOJ release.
3/8. A grand jury of the U.S. District Court (EDCal) returned an indictment against three individuals for wire fraud and mail fraud for operating a fraudulent bidding ring on the eBay auction web site. The indictment alleges that the defendants created more than 40 User IDs on eBay using false registration information, and then used those aliases to place fraudulent bids to artificially inflate the prices of hundreds of paintings they auctioned on eBay. The case is being prosecuted by AUSAs Christopher Sonderby and Michael Malecek. See, DOJ release.
3/7. Jesus Oquendo was convicted in U.S. District Court (SDNY) of illegal computer intrusion and electronic eavesdropping. He is a former computer security specialist whose hacking began with access to the offices of his first victim. See, DOJ release.
More News
3/8. The House Commerce Committee's Subcommittee on Telecommunications and the Internet held an information gathering hearing titled Technology and Education: A Review of Federal, State, and Private Sector Programs. See, witness statements: Kate Moore (USAC), David Spencer (Michigan Virtual Univ.), Dan Domenech (Fairfax County Pub. Sch.), Dale McDonald (Nat. Cath. Educ. Assoc.), Judith McHale (Discovery Comms.), Hal Krisbergh (WorldGate Comms.), Rae Grad (PowerUP), Jennifer House (Classroom Connect), Emlyn Koster (Liberty Science Center). 
3/8. EU Trade Commissioner Pascal Lamy gave a speech in Washington DC on EU US trade disputes.
Copyright Law & Online Education
3/7. Sen. Orrin Hatch (R-UT) and Sen. Patrick Leahy (D-VT) introduced S 487, the Technology Education and Copyright Harmonization Act -- TEACH Act. This bill would amend  110(2) of the Copyright Act to expand the educational use exemption in the copyright law to include online distance learning.
3/7. Sen. Hatch stated in the Senate that "copyright law contains a number of exemptions to copyright owners' rights relating to face-to-face classroom teaching and instructional broadcasts. While these exemptions embody the policy that certain uses of copyrighted works for instructional purposes should be exempt from copyright control, the current exemptions were not drafted with online, interactive digital technologies in mind. As a result, the Copyright Office concluded that the current exemptions related to instructional purposes are probably inapplicable to most advanced digital delivery systems ..." He added that "the primary goal of this legislation is ... to promote digital distance learning by permitting certain limited instructional activities to take place without running afoul of the rights of copyright owners."
3/7. Sen. Leahy stated in the Senate that S 487 "makes three significant expansions in the distance learning exemption in our copyright law ... First, the bill eliminates the current eligibility requirements for the distance learning exemption that the instruction occur in a physical classroom or that special circumstances prevent the attendance of students in the classroom. Second, the bill clarifies that the distance learning exemption covers the temporary copies necessarily made in networked servers in the course of transmitting material over the Internet. Third, the current distance learning exemption only permits the transmission of the performance of 'non-dramatic literary or musical works,' but does not allow the transmission of movies or videotapes, or the performance of plays."
Tech Education Bills
3/7. Rep. Mark Udall (D-CO) introduced HR 932, the Science Teacher Scholarships for Scientists and Engineers Act, a bill to provide scholarships for scientists and engineers to become certified as science, mathematics, and technology teachers in elementary and secondary schools. It was referred to the House Science Committee. See, release.
3/7. Sen. Mike Crapo (R-ID) introduced S 473, a bill to amend the Elementary and Secondary Education Act of 1965 to improve training for teachers in the use of technology. It was referred to the Senate Committee on Health, Education, Labor, and Pensions.
3/7. Sen. Pat Roberts (R-KS) introduced S 478, a bill to establish and expand programs relating to engineering, science, technology and mathematics education. It was referred to the Committee on Health, Education, Labor, and Pensions. He stated that "the American educational system is not producing enough students with specialized skills in engineering, science, technology, and math ... As a result of this shortage of skilled workers, Congress had to increase the number of H-1B visas by almost 300,000 from fiscal year 2000 to fiscal year 2002." He also stated that this is a national security issue. "We don't have the people to do the job to protect our country in regard to cyber threats ..."
Today
10:00 AM. The USTR will conduct a hearing regarding software and music piracy in Russia and Brazil. It will conduct a hearing on the two countries' eligibility for duty free status under the Generalized System of Preferences (GSP). Pursuant to The Trade Act of 1974, the GSP program grants duty-free treatment to designated eligible articles that are imported from designated beneficiary developing countries, including the Russian Federation and Brazil. The IIPA filed petitions on Aug. 21, 2000, requesting that the duty free status of these countries be withdrawn. See, petition re Russia [PDF] and petition re Brazil [PDF]. On Jan. 10, 2001, the USTR published a Notice in the Federal Register regarding this hearing. See, Vol. 66, No. 7, at Pages 2034 - 2035. Location: Office of the U.S. Trade Representative, 1724 F Street, NW, Washington DC.
12:00 NOON. FTC Commissioner Thomas Leary will deliver the keynote address at the 37th Annual Symposium on Associations and Antitrust, sponsored by the Antitrust and Association Law Committee of the Bar Association of the District of Columbia. Location: Hilton Washington & Towers, 1919 Connecticut Avenue, NW, Washington DC.
Deadline to file reply comments with the FCC in response to its notice of proposed rulemaking (NPRM) regarding reallocation of spectrum for use by Third Generation (3G) wireless services. 3G is intended to provide broadband Internet access to portable devices. See, Federal Register, Jan. 23, 2001, Vol. 66, No. 15, Pages 7438 - 7443. ET Docket No. 00-258.
10:00 AM. The NTIA will release a report titled Assessment of Compatibility between Ultrawideband (UWB) Systems and Global Positioning Systems (GPS) Receivers.
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