Tech Law Journal Daily E-Mail Alert
April 27, 2001, 8:00 AM ET, Alert No. 175.
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Cyber Crime Funding
4/26. The Senate Appropriations Committee's Subcommittee on Commerce, Justice, State, and the Judiciary held a hearing on the Department of Justice FY 2002 budget. See, prepared testimony of Attorney General John Aschcroft. His statement addresses increased funding for cyber threats. "The nation's growing dependency on technology systems has resulted in a heightened vulnerability of our banking system, critical transportation networks, and vital government services, while also significantly increasing the incidence and complexity of crime. To address the emerging cyber threat, the FY 2002 budget includes $33 million in increased resources. Within this amount, $28.14 million will support the FBI's counter-encryption capabilities, and the development of cyber technologies for the interception and management of digital evidence. For the U.S. Attorneys, $2.95 million is included to support 24 new positions for the prosecution of crimes committed using the Internet. And, $1.9 million is included for the Criminal Division for 14 new positions to continue coordinating the rising number of investigations and prosecutions of multi-jurisdictional national and international intrusion; denial of service attacks and virus cases; and to provide increased network security and encryption capabilities for its automated infrastructure."
New Bills
4/25. Rep. Robert Andrews (D-NJ) and Rep. Lindsay Graham (R-SC) introduced HR 1545, a bill to amend the Fair Labor Standards Act of 1938 to clarify the exemption from overtime compensation requirements for some computer professionals. It provides that an "employee who is a computer systems, network, or database analyst, designer, developer, programmer, software engineer ... compensated at a rate of not less than $27.63 an hour ... shall be considered an employee in a professional capacity ..." The bill was referred to the House Education and Workforce Committee.
4/25. Sen. George Allen (R-VA) and Sen. Conrad Burns (R-MT) introduced S 777, a  bill to permanently extend the moratorium enacted by the Internet Tax Freedom Act. The bill was referred to the Senate Commerce Committee. On April 24, Rep. Chris Cox (R-CA), Rep. Bob Goodlatte (R-VA), and Rep. Tom Davis (R-VA) introduced HR 1552, a bill to extend the moratorium enacted by the Internet Tax Freedom Act through 2006.
4/25. Sen. Charles Grassley (R-IA), Chairman of the Senate Finance Committee, gave a speech [PDF] to the European - American Business Council in which he discussed a new round of trade negotiations, the foreign sales corporation tax regime, fast track trade negotiating authority. He stated that "the message I want to send today is that I want to work with Democrats and Republicans to find common ground to move trade promotion authority this year. It's important. By doing so, we'll provide additional momentum to launching a new round of negotiations in Qatar."
New Documents
HCC: HR 4125, Rush Amendment, and Markey Amendment, 4/26 (HTML, TLJ).
Ashcroft: testimony re DOJ funding, 4/26 (HTML, SenApprops).
Grassley: speech re trade, new round, and fast track, 4/26 (PDF, Grassley).
Cox: HR 1552, a bill to extend the moratorium enacted by the Internet Tax Freedom Act through 2006, 4/24 (HTML, LibCong).
Andrews: HR 1545, re exemption from overtime compensation requirements for some computer professionals, 4/25 (HTML, LibCong).
Quotes of the Day
"... the bill will not roll back the market-opening provisions of the Telecom Act. All the interconnection, unbundling, resale and co-location requirements contained in that law remain intact for the provision of local telephone service by competitors. ... the bill allows Bell companies to compete in the interLATA data services market."

Rep. John Dingell (D-MI), statement in support of HR 1542, April 26.
"Page 4, beginning on line 12, strike paragraph (20) and insert the following: "(20) DEFINITION OF HIGH SPEED DATA SERVICES.---The term 'high speed data service' includes any telecommunications service delivering data, represented by a string of binary bits transmitted digitally as a series of zeroes and ones, but such data services do not include, under any circumstances, bits representing voice communications, even though such voice services are also expressed digitally as a series of zeros and ones, data services being digital bits of special importance. Someone, preferably a senior corporate employee with years of experience in analyzing zeroes and ones, shall posses authority to determine which bits are which as they zip through a network literally at light speed. All decisions of such employee may be challenged and brought to the attention of government officials, but only after a wee bit, and only bit by bit." "

Rep. Ed Markey (D-MA), proposed amendment to HR 1542 regarding the distinction between voice and data, April 26.
HR 1542
4/26. The House Commerce Committee's Telecom and Internet Subcommittee approved HR 1542, with several amendments that do not alter the nature of the bill, by a roll call vote of 19-14. The bill is titled "The Internet Freedom and Broadband Deployment Act of 2001". It is sponsored by Rep. Billy Tauzin (R-LA) and Rep. John Dingell (D-MI), the Chairman and ranking Democrat of the full committee, and by many other members. It was also introduced in the 106th Congress as HR 2420. It would, among other things, exempt interLATA data from Section 271 requirements. Telecom Subcommittee Chairman Fred Upton (R-MI) stated that the full committee mark up will take place next week.
The bill was approved after a five hour continuous and contentious markup session at which 20 amendments were considered. The subcommittee approved amendments pertaining to FCC imposed penalties.
The Commerce Committee often operates by consensus, or near consensus. However, the committee was sharply divided on this bill. The division was not partisan. Six Republicans and eight Democrats voted against passage. See, roll call vote of April 26. Members from the California and the west, as well as members from districts with technology companies, tended to oppose the bill. Reps. Tauzin and Dingell sat through the markup, and led the debate in support of the bill. They had the votes necessary for passage, and to stop significant amendments. They argued that by exempting data, but not voice, traffic from the requirements of Section 271, the Bell companies would be incented to widely deploy DSL service.
Opponents and critics of the bill lacked the votes to stop it. So, they used the hearing to demonstrate strong opposition to the bill, and weaknesses in the bill. Rep. Bobby Rush (D-IL), who represents an inner city district, and Rep. Tom Sawyer (D-OH), who represents a partly rural Ohio district, offered a hastily drafted amendment that would mandate that the phone companies deploy broadband services in underserved urban and rural districts. Tauzin and Dingell quickly endorsed the concept of the amendment, but asked that it be withdraw for further redrafting. The amendment was withdrawn. Rush and Sawyer then voted for passage. But, Tauzin and Dingell's endorsement gave opponents of the bill the argument that if mandates are necessary to make the Bells deploy broadband, then the rationale for the bill -- that it will incent the Bells to deploy broadband -- is a sham.
Rep. Chip Pickering (R-MS) offered an amendment that would require ILECs to "obtain an outside, independent certification that such carrier can separate voice traffic from data traffic carried over its network and that it is capable of blocking interLATA voice traffic." Rep. Tauzin responded that the bill, which is based upon creating separate regulatory treatment for voice and data traffic, would not take effect if this amendment were adopted. He stated that voice and data cannot be distinguished, and therefore, if the amendment were adopted, ILECs would not be able to comply. Pickering introduced the amendment for the purpose of forcing Rep. Tauzin to make this admission. Rep. Ed Markey (D-MA) also threw a jab at the bill's data voice dichotomy by offering a comic amendment that would require Bell companies to appoint a senior employee to watch every digital bit that moves on its networks, and identify whether it is a voice bit or a data bit. The Pickering amendment failed 10 to 21, and Chairman Upton ruled the Markey amendment out of order.
Opponents of the bill also attacked the procedure used to rush the bill through the committee. Chairman Tauzin gave members a less than one week notice of the April 25 hearing and April 26 markup. Moreover, most members were out of town for the Easter recess when the notice was issued. A motion to postpone the markup for one week was tabled by a vote of 17 to 10. It would have passed, had not all of the Republican opponents of the bill voted to table.
Five members fervently opposed the bill throughout the five hour debate: Markey (D-MA), Davis (R-VA), Pickering (R-MS), Largent (R-OK), and Wilson (R-NM). Several others also joined in the debate against the bill, including Eshoo (D-CA), Cox (R-CA), Harmon (D-CA), and Stupak (D-MI). Tauzin and Dingell lead the debate in favor of the bill, and were sometimes joined by Green (D-TX) and Engel (D-NY). Rep. Rick Boucher (D-VA), who is also Co-Chair of the Internet Caucus, voted with Tauzin and Dingell throughout, but otherwise sat silently.
4/26. The FBI's National Infrastructure Protection Center (NIPC) issued an advisory that warns of increased attacks from hackers in the People's Republic of China. The advisory states "malicious hackers have escalated web page defacements over the Internet. This communication is to advise network administrators of the potential for increased hacker activity directed at U.S. systems during the period of April 30, 2001 to May 7, 2001. Chinese hackers have publicly discussed increasing their activity during this period, which coincides with dates of historic significance in the PRC: May 1 is May Day; May 4 is Youth Day; and, May 7 is the anniversary of the accidental bombing of the Chinese Embassy in Belgrade."
4/26. Junsheng Wang and Bell Imaging Technology Corp. plead guilty in U.S. District Court (NDCal) to theft and copying of the trade secrets of Acuson Corporation. Wang obtained documents providing the architecture for the Sequoia ultrasound machine that contained the trade secrets of Acuson from his wife, who worked for Acuson. Wang was arrested last August while carrying the trade secret documents at San Francisco International Airport as he was about to board a flight for Shanghai, PRC. Wang and Bell Imaging were charged in a criminal information [PDF] filed in U.S. District Court on April 19, 2001. Wang was charged with theft of trade secrets in violation of 18 U.S.C. 1832(a)(1); Bell Imaging was charged with copying of trade secrets in violation of 18 U.S.C. 1832(a)(2). Charges against a PRC company are pending. See, release.
4/25. A grand jury of the U.S. District Court (CDCal) returned an indictment against Steven Hevell charging him with running an investment scam involving securities in purported high tech companies. He was arrested on April 26. The indictment alleges that Hevell solicited and sold securities in three high technology companies that he controlled -- MicroWest Industries, Advanced Identification Technology, and Consolidated Imaging Centers Radiology Network. He falsely asserted that the three companies were engaged in acquiring and selling computer components and had developed a system to electronically transmit radiological images and fingerprints. 
4/26. FCC Commissioner Susan Ness stated in a release that "Although I do not know when the President will formally nominate or the Senate will confirm these excellent choices, I believe that an orderly transition is best accomplished by announcing when my time with the Commission will end. My departure will be no later than June 1st." See also, Powell reaction and Furchtgott-Roth reaction.
4/26. Margarita Tapia will be the Press Secretary for the Senate Judiciary Committee. She will replace Jeanne Lopato, who is now Director of Public Relations for the Energy Department. See, Sen. Hatch's release.
IP News
4/26. InterTrust filed a complaint in U.S. District Court (NDCal) against Microsoft alleging patent infringement. InterTrust's recently issued U.S. Patent No. 6,185,683 discloses systems and techniques for the secure delivery of electronic documents, execution of legal documents, and electronic data interchange. InterTrust alleges that Microsoft's Windows Media Player and other products implementing rights management functions directly and contributorily infringe this patent. See, InterTrust release.
4/26. The Copyright Office published in the Federal Register a notice of proposed rulemaking regarding the requirements for the submission of claims for royalties under the cable statutory license, 17 U.S.C. 111, and the satellite statutory license, 17 U.S.C. 119. Comments are due by May 21, 2001. See, Federal Register, April 26, 2001, Vol. 66, No. 81, at Pages 20958 - 20962.
4/25. The Business Software Alliance (BSA) announced that G.L. Homes of Florida Corp., a real estate developer based in Coral Springs, Florida, paid $119,922 to settle claims relating to unlicensed copies of Autodesk, Microsoft and Symantec software installed on its computers. See, BSA release.
Spam Hearing
4/26. The Senate Commerce Committee's Communications Subcommittee held a hearing on unsolicited commercial e-mail, and legislative options to deter it. Sen. Conrad Burns (R-MT) presided. See, prepared testimony of witnesses in PDF: Eileen Harrington (FTC), Jerry Cerasale (Direct Marketing Ass.), Jeremiah Buckley (Electronic Financial Services Council), David Moore (24/7 Media), Jason Catlett (Junkbusters), David McClure (US Internet Industry Association).
The USTR will hold a public hearing on further actions against Ukraine for its denial of adequate protection of intellectual property rights. On March 12, the USTR designated Ukraine as a "Priority Foreign Country" under the "Special 301" program. See, notice in the Federal Register, April 6, 2001, Vol. 66, No. 67, at Pages 18346 - 18348 and USTR release of March 13. See also, notice of change of location.
Deadline to file comments with the FCC regarding its annual report to various Congressional committees regarding the progress being made under the ORBIT Act in promoting competition in satellite communications services, and in privatizing INTELSAT and Inmarsat. See, FCC notice.
8:30 AM. The National Center for Policy Analysis will host a "privacy briefing". For more information call Joan Kirby at 202-628-6671. Location: Ballroom, National Press Club, 529 14th St. NW, 13th Floor, Washington DC.
9:00 - 11:00 AM. The Congressional Internet Caucus Advisory Committee will host a panel discussion titled "Intellectual Property in the Digital Age." Breakfast will be served. RSVP to Location: Room SC-5, U.S. Capitol Building.
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