Tech Law Journal Daily E-Mail Alert
June 27, 2001, 8:00 AM ET, Alert No. 217.
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Trade Promotion Authority Bill Introduced
6/26. Sen. Bob Graham (D-FL) and Sen. Frank Murkowski (R-AK) introduced a bill to provide the President with trade promotion authority, formerly known as fast track authority. Graham and Murkowski stated that the bill includes "worker rights, environment, information technologies, and compliance and enforcement to standard list of principal negotiating objectives." See, Graham release and Murkowski release. See also, State Department release.
Sen. Phil Gramm (R-TX), who is a cosponsor, stated in a release that "The president, without fast-track authority, has been helplessly sidelined in terms of trying to expand American markets through major trade negotiations. This bill gives us a very effective way to get America back in the game -- a game that we are experts at playing and a game that we can win. This bill allows trade agreements, under fast-track procedures, to include clearly trade- related labor and environmental concerns. But it does it in a very restrained and careful way so that no president can go out and negotiate in a trade agreement provisions that write domestic law."
4th Circuit Rules on Class Action Certification
6/26. The U.S. Court of Appeals (4thCir) issued its opinion in Lienhart v. Dryvit Systems, a case regarding standards for granting a petition to appeal class certification under Federal Rule of Civil Procedure 23(f). The Appeals Court adopted a five factor sliding scale test to guide the consideration of such petitions. It followed, with elaboration, the test adopted by the 11th Circuit in Prado-Steiman v. Bush, 221 F.3d 1266 (2000). It also granted the petition in the present case, and held that certification of the class was inappropriate.
Rule 23(f) provides that "A court of appeals may in its discretion permit an appeal from an order of a district court granting or denying class action certification under this rule if application is made to it within ten days after entry of the order. An appeal does not stay proceedings in the district court unless the district judge or the court of appeals so orders."
ASCENT v. FCC
6/26. The U.S. Court of Appeals (DCCir) issued its opinion in ASCENT v. FCC, a petition for review of an FCC order. In 1999 the FCC issued an order in which it determined that the discount for resale provision of Section 251(c)(4) applies when an ILEC offers DSL service to an end user, but not when it offers DSL service to an ISP. ASCENT filed a petition for review of the FCC order, claiming that it is contrary to the Communications Act, and unreasonable. The Appeals Court denied the petition.
Privacy News
6/26. The Center for Digital Democracy released a report [PDF] on interactive television (ITV) and privacy. The report is titled "TV That Watches You: The Prying Eyes of Interactive Television." It concludes that "technology is now being put into place with the goal of collecting information from individual consumers and families. This information will be harvested in data profiles, which will then be used to target individual consumers with personalized advertising. The same technologies that threaten privacy on the Internet, including data mining, user modeling, and intelligent agents are now being adopted by the U.S. television industry."
6/26. The Association for Competitive Technology (ACT) released information regarding a public opinion poll on attitudes regarding privacy. The ACT stated that "76% of consumers feel that privacy protection is a priority, but not a top priority. Consumers put the issue of strengthening privacy protections behind improving education, fighting crime and drug abuse, reforming health care, dealing with the energy problem, protecting the environment and reforming Social Security and Medicare. Privacy was ranked 7th out of nine issues of social concern." See, ACT release and summary. The ACT did not publish the poll questions.
What Digital Divide?
6/26. The Progressive Policy Institute (PPI), a Democratic think tank, released a report [PDF] titled "Clear Thinking on the Digital Divide". The reports states that "there is no compelling rationale for the government to subsidize computer purchases and Internet access for individuals. Broad subsidization is not warranted at a stage when many non-users could afford to become users if they wished to." The report concludes that "It's easy to forget that the Internet and the World Wide Web are still in their infancy -- a decade ago, there were less than 50 Web sites in existence. At such an early stage, we would expect differential rates of takeup by different groups of Americans. But that doesn't mean that public policy should not work to increase Americans' access to these key technologies. We believe that the best way to do this for now is to help expand community access, especially by leveraging private sector funding, leadership, and volunteers." Andrew Leigh and Robert Atkinson wrote the report. See also, PPI release.
Subcommittee Holds Hearing on Internet Taxes
6/26. The House Judiciary Committee's Subcommittee on Commercial and Administrative Law held a hearing on HR 1552 and HR 1675, both of which are titled the "Internet Tax Nondiscrimination Act." These two bills would prevent state and local governments from imposing taxes on Internet access. HR 1552 would also extend the existing ban on multiple or discriminatory taxes on electronic commerce for five years, while HR 1675 would make it permanent. Gov. Tommy Engler and Democrats on the Subcommittee also advocated allowing states to impose sales taxes on e-commerce.
In late 1998 the Congress passed, and President Clinton signed, the Internet Tax Freedom Act (ITFA). It imposed a three year moratorium on multiple or discriminatory taxes on e-commerce, and Internet access taxes. This ban expires on October 21 of this year. At the Subcommittee hearing there was no debate over whether the existing moratorium should be extended, either temporarily or permanently. Instead, the debate focused on whether, and if so how, the Congress should also address the question of allowing state and local governments to impose sales taxes on remote sellers -- both catalogue and Internet.
Rep. Mel Watt (D-NC) stated that he is concerned about "the unlevel playing field between retailers who sell over the Internet and retailers who have fixed locations within the state." He added that "those problems will only get worse, not better, over time." Rep. John Conyers (D-MI), the ranking Democrat on the Judiciary Committee, and Rep. Anthony Weiner (D-NY), expressed similar concerns.
Rep. Chris Cox (R-CA), sponsor of the ITFA in 1998, as well as HR 1552 and 1675, testified regarding the various tax plans to "shake down the Net" that the ITFA precluded. Rep. Cox. stated that "the questions of sales tax simplification are important" but "are intellectually separable from" the extension of the ITFA moratorium. He stated that since "time is of the essence", the Congress should pass legislation extending the existing ban. See also, prepared statement of Rep. Cox.
Gov. James Gilmore (R-VA) testified in favor of passage of HR 1552 or 1675. Gov. Tommy Engler (R-MI) recommended that Congress "enact legislation giving the states the authority to collect and remit sales taxes and uses taxes". He also stated that there should be a uniform and simplified sales and use tax system. Robert Comfort testified on behalf of Amazon.com. He advocate passed of either HR 1552 or 1675.
Digital Rights Management Patent
6/26. The U.S. Patent and Trademark Office issued U.S. Patent No. 6,253,193 to InterTrust Technologies Corp. InterTrust, which is based in Santa Clara, California, provides digital rights management software. The patent discloses systems and methods for secure transaction management and electronic rights protection. The patent abstract states that "Electronic appliances such as computers equipped in accordance with the present invention help to ensure that information is accessed and used only in authorized ways, and maintain the integrity, availability, and/or confidentiality of the information." See, Intertrust release.
Patent Reexamination
6/25. Rep. Zoe Lofgren (D-CA) placed extended remarks in the Congressional Record regarding HR 2231, the Patent Reexamination Enhancement Act of 2001, which she introduced on June 19. She wrote that "an invalid patent -- a patent that either should never have been issued or which confers protection beyond what is entitled -- can cause significant damage not only to individual companies but to competitors. Those individuals who rely on their patent and discover a defect, or those who face the threat of litigation on the basis of a patent that is invalid each have a substantial interest in having a mechanism to 'fix' the problem with the patent. This is why I am calling for an enhancement of our patent reexamination system."
Her bill would expand the grounds upon which one may initiate a patent reexamination. She wrote that "Under current law, reexaminations may be based only on patents or printed publications. In a number of fast-moving technologies, such as business methods and software, there is often a substantial body of information that is not formally published or found in patents, so that other information is not considered when making the determination to issue a patent." See, Congressional Record, June 25, 2001, at Page E1191.
The bill is cosponsored by Rep. Howard Coble (R-NC), Chairman of the House Courts, Internet, and Intellectual Property Subcommittee.
Gart v. Logitech
6/26. The U.S. Court of Appeals (FedCir) issued its opinion in Gart v. Logitech, a patent infringement case involving computer mouses. Samuel Gart holds U.S. Patent 4,862,165 which relates to ergonomically shaped computer mouses for reducing muscle fatigue. Gart filed a complaint against Logitech, a producer of mouses and other computer input devices, in U.S. District Court (CDCal) alleging infringement of this patent. On cross motions for summary judgment, the District Court determined that Logitech did not infringe the patent either literally or under the doctrine of equivalents. The District Court also determined on a motion for summary judgment the starting dates for accrual of damages pursuant to 35 U.S.C. 287(a). Gart then brought this appeal. The Appeals Court vacated the grant of summary judgment of no infringement, either literally or under the doctrine of equivalents, and remanded for further proceedings. The Appeals Court also reversed in part the  287 determination. 
Online Auction Fraud
6/25. Rep. Billy Tauzin (R-LA), the Chairman of the House Commerce Committee, and Rep. Heather Wilson (R-NM) sent a letter to the CEOs of Yahoo, eBay and Amazon seeking details on marketplace efforts to curb online auction fraud, and specifically shilling, the practice of driving up bidding prices on behalf of the seller. "The ability to disguise identity, revoke bids and maintain multiple online identities may facilitate undesirable practices like shilling," wrote Tauzin and Wilson. "Although there are copious statistics on Internet auction fraud, there is little analysis of the practices that facilitate that fraud. We request your assistance in determining the causes of online auction fraud as well as solutions to help protect consumers and boost confidence in e-commerce."
Wednesday, June 27
10:00 AM. The House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property will hold a legislative hearing on S 487, the "Technology, Education, and Copyright Harmonization Act of 2001." This is a bill to extend the distance learning exemption to copyright infringement to Internet technologies. Location: Room 2141, Rayburn Building.
10:30 AM. House Commerce Committee Chairman Billy Tauzin (R-LA) and Meg Whitman, P/CEO of eBAY will hold an on the record media availability to discuss online fraud and other Internet issues. Location: Room 2218, Rayburn Building.
12:00 NOON. eBay P/CEO Meg Whitman will speak at a Congressional Internet Caucus luncheon on "Opportunities Facing the Internet". RSVP to Catherine at 202-638-4370 or RSVP@netcaucus.org . Location: Room SC-5, U.S. Capitol Building.
12:15 PM. The Federal Communications Bar Association's Cable Committee will host a luncheon. The speaker will be Kenneth Ferree, the new Chief of the FCC's Cable Services Bureau. Location: NCTA, 1724 Massachusetts Ave., NW, Washington DC. The price to attend is $15.00. RSVP to Arlice Johnson.
Thursday, June 28
9:00 AM. The United States Trade Representative will hold a meeting of the Industry Sector Advisory Committee on Services (ISAC-13). The agenda includes trade promotion authority and international trade agreements. The meeting will be open to the public from 9:00 to 9:45 AM, and closed to the public from 9:45 AM to 12:00 NOON. See, notice in Federal Register. Location: Conference Room 6057, Department of Commerce, 14th Street between Pennsylvania and Constitution Avenues, NW., Washington DC.
9:30 AM. The House Financial Services Committee's Subcommittee on Domestic Monetary Policy, Technology and Economic Growth will hold a hearing titled ESIGN -- Encouraging the Use of Electronic Signatures in the Financial Services Industry. Location: Room 2128, Rayburn Building.
10:00 AM. The Senate Appropriations Committee's Commerce, Justice, State, and the Judiciary Subcommittee will hold a hearings on proposed budget estimates for FY 2002 for the Federal Communications Commission and Securities and Exchange Commission. Location: Room 192, Dirksen Building.
More News
6/26. FCC Commissioner Kathleen Abernathy hired Matthew Brill to be her common carrier Legal Advisor. He previously worked at the law firm of Wilmer Cutler & Pickering in its Communications Group. He has represented AOL, other ISPs, and wireline and wireless carriers in proceedings before the FCC and in federal courts of appeals. See, release.
6/26. The House Science Committee's Subcommittee on Research held a hearing titled Reinventing the Internet: Promoting Innovation in IT. The witnesses were Eric Benhamou (3Com), Anita Jones (Univ. of Virginia), Alfred Berkeley (Nasdaq), and Cita Furlani (National Coordination Office for Information Technology R&D).
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