|InterTrust v. Microsoft
|7/19. InterTrust, a
provider of digital rights management technologies,
announced that it will file a second amended complaint in the
U.S. District Court (NDCal)
against Microsoft adding a claim for infringement of
Patent No. 5,920,861, which discloses techniques for
defining, using, and manipulating rights management data
structures. InterTrust will seek monetary damages and
injunctive relief, including an injunction prohibiting further
infringement by Microsoft products, including Microsoft's Reader
(application for reading electronic books) and Digital
Asset Server. See, release.
InterTrust filed its original complaint on April 26, 2001,
alleging infringement of its U.S.
Patent No. 6,185,683. On June 27, InterTrust filed its first
amended complaint [PDF], adding a claim for infringement
of its U.S.
Patent No. 6,253,193. (Case No. C 01 1640 JL.)
|House Holds Hearing on
|7/18. The House
Judiciary Committee's Commercial & Administrative Law
Subcommittee held a hearing on HR
1410, the Internet Tax Moratorium and Equity Act,
sponsored by Rep.
Ernest Istook (R-OK) and others. This bill would
temporarily extend that existing moratorium on multiple and
discriminatory Internet taxes, and Internet access taxes. It
would also provide that state and local taxing authorities may
require out of jurisdiction Internet sellers (and other remote
sellers) to collect sales taxes.
The U.S. Supreme Court ruled in Quill
v. North Dakota, 504 U.S. 298 (1992) that state and local
taxing authorities are barred under the Commerce Clause from
requiring remote sellers without a substantial nexus to the
taxing jurisdiction to collect sales taxes for sales to
persons within the jurisdiction. However, the Court added that
Congress may extend such authority. HR 1410 would provide such
ITFA. Congress passed the Internet Tax Freedom Act (ITFA)
in 1998, creating the existing three year moratorium, which
expires on October 21 of this year. Proponents of increasing
state and local taxing authority seek to bundle their
proposals with a moratorium extension. Some others seek only
an extension of the moratorium contained in the ITFA. Rep. Chris Cox (R-CA) is
sponsoring a pair of bills that would do only this.
State Tax Base. Rep.
Jerrold Nadler (D-NY) supports Rep. Istook's bill. He
stated that Congress should "enable state and local
governments to levy sales and use taxes" This, he said,
is for the purpose of "protecting the tax bases of state
and local governments." Rep. Spencer Bachus
(R-AL) stated that "you have those taxes being undermined
because more and more people are going to the Internet".
Grover Norquist of Americans
for Tax Reform countered that the Internet is not a threat
to state and local tax collection. First, he said that it
accounts for about 1% of sales, while the "state
governments are flush with resources" that they do not
tax, such as services. Norquist added that Internet retailers
are taking sales away from catalogue sellers, not brick and
mortar retailers located within the taxing jurisdictions.
States Rights. Rep. Istook testified that this is not
just a tax collection issue -- it is a states rights issue
also. That is, if states are not able to put their policies
into effect with revenues collected from sales taxes,
political power will shift to Washington. Norquist retorted
that this states rights argument is "George Wallace's
Privacy. Rep. Bob
Barr (R-GA) and Norquist raised the issue of privacy.
Under the proposed legislation, retailers would need to
collect data, including individuals' names, addresses, items
purchased, and locations of purchases. Norquist pointed out
that this would enable the government to track individuals. He
also reminded the Subcommittee that "this government
can't keep people's FBI files private". Rep. Istook
responded that "the government's interest is in the
overall level of sales", not individual level data. Rep. Mel Watt (D-NC)
argued that "this is pretty much a red herring
issue", noting that the IRS already collects far more
statement of Subcommittee Chairman Bob Barr, and prepared
testimony of Rep. Ernest Istook. See also, prepared
testimony of other witnesses: Grover
Julian, and Jon
|Senate Approps Committee
Approves CJS Bill
|7/19. The Senate
Appropriations Committee approved its version of HR
2500, the appropriations bill for the Departments of
Commerce, Justice, and State, and for the Judiciary, and for
related agencies, including the FCC, FTC, and SEC. The House
passed its version of this bill, which is also known at the
CJS appropriations bill, on July 18. See, Senate
The Senate version of the bill now includes $73.0 Million for
$43.4 Million is for public telecommunications facilities,
planning and construction, and $15.5 Million for information
infrastructure grants. The bill also includes $252.5 Million
for the FCC, $514
Million for the SEC, and
$696.5 Million for the NIST.
The Senate bill also provides $1.1 Billion for the USPTO,
which is a part of the Department of Commerce. The House bill
provides $1.129 Billion. The USPTO is funded by fees collected
from users. However, the amount of fees collected exceeds that
made available to the USPTO. The difference is diverted to
subsidize other government programs, a practice that is
opposed by the intellectual property community.
7/19. The House
Judiciary Committee postponed indefinitely its scheduled
mark up of HR
2047, the Patent and Trademark Office Authorization Act of
2002. The bill provides that "There are authorized to be
appropriated to the United States Patent and Trademark Office
for salaries and necessary expenses for fiscal year 2002 an
amount equal to the fees collected in fiscal year 2002
..." Hence, it seeks to end the diversion of USPTO fees
to fund other government programs.
|People and Appointments
|7/19. The Department of Justice formally announced the
appointments of Hewitt Pate, Deborah Herman, and Michael Katz
to be Deputy Assistant Attorney Generals (DAAGs) in the
Department of Justice (DOJ) Antitrust Division;
however, these selections have long been public knowledge. Hewitt
Pate was appointed DAAG in charge of regulatory matters;
he will oversee airline, transportation, energy and other
regulatory matters. He previously was a partner in the
litigation, intellectual property and antitrust section of the
law firm of Hunton &
Williams. See, DOJ
release and Hunton
7/19. Deborah Herman was appointed DAAG in charge of
civil enforcement. She was previously a partner in the
antitrust litigation section of the law firm of Jones Day. She has
experience in telecommunications and high technology issues.
7/19. Michael Katz was appointed DAAG in charge of
economic analysis. He is a professor of economics and business
at the University
of California at Berkeley's Haas School. He also directs
the school's Center for Telecommunications and Digital
Convergence. From 1994 through 1996 he was Chief Economist at
the FCC. His areas
of interest include networks industries, intellectual property
licensing, telecommunications policy, and cooperative research
and development. See, DOJ
release and Berkeley
7/19. The Senate
Banking Committee held a hearing on the nomination of Harvey
Pitt to be Chairman of the Securities
and Exchange Commission.
7/19. The Senate
Judiciary Committee approved the nomination of Roger
Gregory to be a Judge on the U.S. Court of Appeals
7/19. The Senate
Judiciary Committee approved the nomination of Ralph
Boyd to be Assistant Attorney General for the DOJ's Civil Rights
Division, and the nomination of Robert McCallum to
be Assistant Attorney General for the DOJ's Civil Division.
1189, re FCC rules on media concentration, 7/18 (HTML,
re responses to Microsoft's petition for rehearing, 7/19 (PDF,
|Friday, July 20
|8:00 AM. FTC Chairman Timothy Muris will speak at the
National Chamber Foundation Democratic Privacy Retreat.
Location: Lansdowne Resort, Leesburg, Virginia.
9:30 AM. The House
Commerce Committee's Subcommittee on Telecommunications
and the Internet will hold a a hearing titled "An
Examination of the Entertainment Industry's Efforts to Curb
Children's Exposure to Violent Content." The scheduled
witnesses are Lee Peeler (Federal Trade Commission). Douglas
Lowenstein (Interactive Digital Software Association), Jack
Valenti (Motion Picture Association of America), Hilary Rosen
(Recording Industry Association of America), Doug McMillon
(Wal-Mart Stores), Daphne White (The Lion & Lamb Project).
Location: Room 2123, Rayburn Building.
|Monday, July 23
|1:00 PM. The Senate
Commerce Committee's Science, Technology, and Space
Subcommittee will hold a hearing to examine E-health and
consumer empowerment focusing on current and future use of
technology for improvement of health. Location: Room 253,
|SEC v. Stadtt Media
|7/18. The SEC announced
that it settled all claims in SEC
v. Stadtt Media, a civil securities fraud
action pending in the U.S. District Court (NDTex).
Stadtt Media, and four of its owners and employees,
fraudulently raised over $900,000 from about 50 investors for
the development of a website called C-Magazines.com.
Defendants falsely represented that Stadtt Media owned patents
on Internet related inventions and that a major investment
banking firm was committed to underwriting a $100 Million
initial public offering. The defendants consented to final
judgments that impose permanent injunctions and other
equitable relief against them. However, no civil penalties
were imposed, and payment of disgorgement was ordered, but
waived for inability to pay.
|7/19. The U.S. Court
of Appeals (DCCir) issued an order
[PDF] in USA v. Microsoft regarding Microsoft's July 18
for rehearing [PDF]. The Court wrote, "Upon
consideration of appellant’s petition for rehearing filed on
July 18, 2001, it is ORDERED that appellees respond thereto
and do so on or before August 3, 2001. A reply to the response
will not be accepted by the court."
7/19. The House rejected HJRes 50
by a vote of 169 to 259. See, Roll
Call No. 255. This resolution, which is sponsored by Rep. Dana Rohrabacher
(R-CA) and Rep.
Sherrod Brown (D-OH), would have ended normal trade
relations with China. Specifically, it would have disapproved
of the extension of the waiver authority contained in § 402(c)
of the Trade Act of 1974 with respect to the People's Republic
7/19. The Senate
Judiciary Committee approved S
407, the Madrid Protocol Implementation Act, a bill to
amend the Trademark Act of 1946 to provide for the
registration and protection of trademarks in order to carry
out provisions of certain international conventions.
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